CalNonprofits Articles

By Peter Manzo, President & CEO, United Ways of California and CalNonprofits Board Member

The nonprofit sector is where Californians come together to live their values, but we all do so in an environment heavily affected by government, and the choices government enacts through budgets have a significant impact on the results nonprofits can achieve.

Nonprofits involved in K-12 education will find plenty of good news in Governor Brown’s proposed 2015 budget, but community organizations fighting poverty will be disappointed to see the budget carry forward years of steep cuts to supports for low income families and individuals. 

California was derided as ungovernable just a few years ago, even before the 2008 global financial implosion. Thankfully, California’s finances are greatly improved, due to a recovering economy and the additional tax revenues from the passage of Proposition 30 that the Governor championed. California is no longer compared to Greece, but austerity is still the Governor’s prevailing theme.  

During the crisis, California made painful cuts to supports for vulnerable families and individuals, and many expected that as the state’s situation improved, funding would be restored, but this hasn’t happened. The proposed budget fails to restore childcare funding or reimbursement rates for providers; it does not increase CalWORKs grants, which are currently worth less than half of the federal poverty level (the purchasing power of CalWORKs grants has dropped more than half since 1989-90); it leaves in place cuts of 1/3 of the state’s contribution to SSI/SSP for seniors and people with disabilities. The budget also does not address the loss of redevelopment funds and the burgeoning affordable housing crisis. Ominously, future projections of balanced budgets appear to assume those cuts will remain in place, threatening to become the new normal.

Education is a bright spot. The Governor’s proposal continues his priority of making significant investments in K-14 education with an increase of about $8 billion, including $1 billion for community colleges.  Additionally, thanks to the passage of Prop 30, through the Local Control Funding Formula (LCFF) K-12 schools have received $65.7 billion to date, a 39 percent increase from four years ago. Even with these increases, California will rank 46th in the U.S. in per pupil spending. Higher education funding is still well below pre-recession levels; the Governor’s budget proposes $120 million increases for both the CSU and UC systems, and sets up a high stakes battle between the Governor and the UC by making the increase conditional on no UC tuition hike.

The expansion of health enrollment under the Affordable Care Act is a “big [expletive deleted] deal,” to invoke Vice President Biden’s memorable quip. The Governor, Covered California and state and county officials should be proud of the work they have done to implement the Affordable Care Act and expand Medi-Cal. Enrollments have been far higher than predicted (4 million in Medi-Cal plus approximately 1.6 million through Covered California), and over time the improvements in health outcomes and financial security afforded by health coverage will bring significant benefits for low- and moderate-income families. But the Governor’s budget proposal for health care relies almost entirely on federal funds to carry out the expansion of coverage, and does not proposed restoring the reimbursement rates for Medi-Cal providers that were cut by 10 percent during the recession, making California’s rates among the lowest in the nation. Not doing so increases the risk of higher costs for the state over the longer run as individuals lack sufficient access to preventive and primary care.

For the arts, the Governor’s budget proposed just $1.1 million in funding for the California Arts Council from the general fund, compared to the $6 million arts advocates won in last year’s budget debate. Arts advocates are optimistic they can get back to last year’s level of funding, but even if so, California’s per capita funding for the arts would be 15 cents, compared to the national average of $1.15.

On the environment, the Governor’s budget put details to his inaugural speech call urging California to show leadership in the battle against climate change. He proposes using funds from the state's three-year-old cap-and-trade program on efforts such as low-carbon transportation, projects that link affordable housing to transportation hubs, energy efficiency, urban forests and to fund construction of the $68 billion bullet train that will run through the Central Valley. 

Brown’s budget proposal also calls for spending $532 million from the water bond (which was Proposition 1 on last November’s ballot). The main areas where he would allocate money this year are watershed restoration, water recycling projects, drinking water and wastewater treatment plants, with some funds proposed for rebates for people buying water-efficient appliances.

Some areas where nonprofits are leaders -- such as animal welfare -- are typically barely visible in the state budget and are funded at local levels.

Budgets are about priorities, as the old saw goes. The Governor’s emphasis on debt reduction shows he is determined to demonstrate California can manage its finances responsibly, and his budget’s investments in education make a strong statement that building human capital is our ticket to the future. But improving education will not build that future if we do not also invest more in human services and income supports for low-income families and individuals, so they are better able to take advantage of opportunities to learn. Thankfully, actual revenues have exceeded projections for the past three years, so if that pattern holds, there may be room for increasing investment in some of the neglected areas.

The Governor’s proposal is just the opening move, as there will be hearings from February through May, with the May Revise, alternative proposals and a compromise before a June vote.
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United Ways of California improves health, education and financial stability results for low-income California families by coordinating the statewide advocacy and community impact work of 34 California United Ways.

Other relevant analyses of the state budget can be found here:

The California Budget Project
http://www.cbp.org/publications/state_budget_land.html

Health Access
http://www.health-access.org/images/pdfs/budgetissuebrief_2-2015_healthaccess.pdf

Western Center on Law & Poverty
http://campaign.r20.constantcontact.com/render?ca=700abae1-8773-46f5-9e50-130fb9c69f70&c=18096970-dda1-11e3-9797-d4ae5275b546&ch=1905a3c0-dda1-11e3-9813-d4ae5275b546

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