Nonprofits and the 2012 State Budget

This summer, the N.C. General Assembly made adjustments to the FY2012-2013 state budget. Last year, legislators passed a state budget with steep cuts for nonprofits.

It's essential that North Carolina nonprofits work together to avoid further cuts that will force nonprofits to eliminate more jobs and reduce essential services. Learn what you can do to make a difference.

 

What's the status of the FY2012-2013 state budget?

On June 21, the N.C. Senate and N.C. House of Representatives approved a compromise state budget for FY 2012-2013 (H.B. 950). The Center has prepared a summary chart comparing how nonprofits fare in the final budget compared to the House and Senate proposals. The final budget includes:

  • Very little restoration of state funding for nonprofit grants and contracts that were cut in last year’s budget.
  • Elimination of appropriations for some nonprofit programs with proven results, such as the Teaching Fellows and the N.C. Healthy Start Foundation, plus more possible reductions in nonprofit grants and contracts through “management flexibility” cuts that some agencies must make.
  • Replacement of some recurring funding, including nonprofit health and human service appropriations and state support for the Clean Water Management Trust Fund, with non-recurring money.
  • A requirement that the N.C. Department of Health and Human Services (DHHS) cut an additional $5 million in grants and contracts for nonprofits next year.  DHHS would no longer have the flexibility to avoid these cuts to nonprofits by finding other funds, as it wisely chose to do this year.
  • A requirement that the N.C. Department of Commerce cut its grants and contracts with nonprofits by $1.2 million, a greater reduction than was in either the House or Senate proposal.
  • Elimination of state funding for the Housing Trust Fund.
  • Establishment of an oversight committee to develop a new grants management system that would change reporting requirements for nonprofits with state grants.
  • Removal of state matching funds required for North Carolina to receive $4 million in federal Help America Vote Act (HAVA) funds. These state funds had been included in both the House and Senate versions of the budget. This could make it harder for many people served by nonprofits to vote this fall.

 

For more details, see the final budget bill and money report. The budget now goes to the Governor for her consideration. If the Governor vetoes the budget, and legislators aren’t able to override her veto, it’s possible that the General Assembly will not pass a budget adjustment bill this year and will stick with the funding levels that it approved last year.

On May 10, Governor Bev Perdue released her proposal for adjustments to the FY2012-2013 state budget . Highlights included:

  • Restoration of funding for early childhood nonprofits.
  • Support for some nonprofits that lost federal funding.
  • A ¾ of a penny increase in the sales tax to pay for restoration of education funding. Together NC, a partner of the Center, notes that the sales tax increase would help avoid deeper cuts to nonprofits and other public investments.

What happened last year?

In 2011, the General Assembly passed a budget that included many steep cuts for nonprofits, such as:

  • Cutting Smart Start funding by 20%;
  • $5 milli0n cut in grants and contracts to nonprofit health and human service providers (The N.C. Department of Health and Human Services was able to avoid most of these cuts by finding other funding sources to cover its grants and contracts with nonprofits.);
  • 15-20% cuts for community economic development nonprofits;
  • Elimination of the Health and Wellness Trust Fund;
  • 87.5% cut in funding for the Clean Water Management Trust Fund; and
  • 15% cut in N.C. Arts Council grants.

The Senate removed a House budget proposal that would have severely limited the ability of nonprofits to spend state grant money on salaries.

 

These state budget cuts have led to job loss in North Carolina.In 2011, 43% of nonprofits with state grants and contracts had to cut staff.  Of these, 122 nonprofits told the N.C. Center for Nonprofits that they laid off a total of 872 employees due to reductions in state grants and contracts.  This includes 628 full-time employees and 244 part-time employees.  Nonprofits with state grants and contracts were three times more likely to lay off staff than nonprofits without state funds.

 

Cuts in state grants and contracts with nonprofits also mean that fewer North Carolinians are receiving essential services.  In 2010 and 2011, 38% of nonprofits with state grants and contracts had to reduce their programs or services.  Coupled with an increase in demand for nonprofits’ services, this means that state and local governments are bearing a greater burden and that many North Carolinians – including seniors, low-income families, people with disabilities, and victims of domestic violence – are not having their basic needs met.

 

What can your nonnprofit do?