September 3, 2010

The scale of the budget cuts being carried out by state governments is so vast that some programs and agencies will disappear for good. Lee Sustar reports.

STATE BUDGET cuts across the U.S. are wiping out entire networks of social service providers--and worse is to come, according to studies of the states' fiscal crises.

According to the Center for Budget and Policy Priorities (CBPP) in Washington, the states face a combined $260 billion budget deficit in fiscal years 2011 and 2012, setting the stage for the most savage cuts in social programs in decades.

Some typical examples: the cutoff of some 10,000 poor families in Arizona from temporary cash assistance due to shorter time limits; the elimination of 2,350 people in Washington state from a program that provides medical care for those unable to work; the elimination in California of all funding for the state's domestic violence shelter program, as well as maternal, adolescent health programs; and, in California again, the cutoff of almost all funding for services for people with HIV and AIDS.

Phil Oliff, a policy analyst at the CBPP, noted what he calls "really devastating cuts" in state services:

Weekend service cuts leave a New York City subway station empty (Richard B. Levine)

We see them in K-12 education, in higher education, in programs that serve the elderly and disabled, in health care programs, and in state child care subsidies. Clearly, we are in a far deeper economic downturn and a far worse fiscal crisis than we've seen since the Great Depression, and certainly the cuts that states have been making have been absolutely devastating to state services.

The latest round of budget cuts have eviscerated entire programs and even threaten the existence of nonprofit agencies that often provide social services on behalf of state governments, said Karen Batia, chief clinical officer at Heartland Alliance, a leading social service agency in Chicago:

What we're seeing is the combination of many, many cuts over the last several years, and the delayed payments [from the state of Illinois], where the organizations and the infrastructure has been so eroded that we're seeing organizations fold. So the impact for our organization is one that impacts our ability to manage our cash flow and to be able to pay our vendors, and be an organization that pays its bill in an orderly fashion because the state isn't paying us for services that we have already provided.

Many smaller agencies haven't been able to cope with these pressures. "You are seeing [social service provider] systems simply shut down," Batia said. "This is happening in the city of Chicago, and even more so outside of Chicago, where we don't have as many organizations. We will not be able to simply bring folks back, or organizations back, to provide this care. It's going to be altering our system for very long time."

Batia added that the states' short-term cost savings will lead to much higher costs later, in both human and fiscal terms:

Those folks, if they aren't receiving care from us, will go to the emergency room, will go to shelters and also will end up in jail. So what you see is the cost simply being shifted to other parts of our system and our society, and you'll see more people on the streets, as well--those who aren't able to tolerate going to those other systems of care.

The picture is similar across the U.S. According to the recent Fiscal Survey of States by the National Governors Association and the National Association of State Budget Officers, "State general fund spending has been so negatively affected by this recession that both fiscal 2009 and fiscal 2010 saw declines in state spending. This two-year decline is unprecedented and is only the second time that state general fund spending has declined in the history of the fiscal survey."

At the same time, the providers of those services--public employees--are reeling from pay cuts--either in the form of unpaid furlough days or a straightforward cut in wages.

Others have lost their jobs altogether. According to the federal government, state and local governments have eliminated 242,000 jobs since August 2008. And a study by the Rockefeller Institute in New York found that the number of jobs in state government is lower today than it was prior to the recession, the first time that's happened in the recessions that followed the Second World War.

Those trends are likely going to get worse, said Kai Filion, a policy analyst at the Economic Policy Institute in Washington, D.C. "Over the last six months, the recovery just stalled," he said.

Because states typically experience their worst downturn in tax revenues one to two years following a recession, even a strong recovery wouldn't improve state budgets right away. And the current weak expansion--and the risk of a double-dip recession--guarantees that more cuts are to come if there's no more relief from Washington. "The problems are just building up over time, and will just get worse," Filion said.

BEHIND THE numbing numbers of the budget cuts and the dire economic forecasts are tales of suffering that rarely make it into the mainstream media.

Consider the case of Morris and Bonita Freeman, who in recent years have taken six children into foster care, adopting two of them, at their home in Crete, Ill., outside Chicago. The youngest, said Bonita Freedman, was born with crack in her system and has special needs.

"She's been diagnosed as bipolar, with hyperactive attention-deficit disorder," Freeman said. "But the state never did 'specialize' her"--that is, designate her as a special needs child, which would entitle her to greater services that are, of course, more expensive. It's a typical budget-cutting move by the Illinois Department of Children and Family Services, social workers say.

The Freemans took in the little girl and her three siblings on an emergency basis after the children's previous foster care family dropped them off at a police station, refusing to care for them. Now they want to adopt those kids, in part because they would likely be split up in order to place them in other foster home.

All four kids were affected by their birth mother's crack addiction, Freeman said. "The doctor said we're just trying to balance them out. We are never going to make them normal. We are just trying to make them function in society."

The Freemans are prepared to take on that challenge. But they're frustrated at their inability to get the children all the help they need--and the lack of state-funded respite care to allow her and her husband to take a little break.

Freeman sees the impact of the state budget cuts at her job, too. She's a manager at the Crete branch of the New Hope Center, a home for mentally disabled adults. In the past, she said, state funds allowed New Hope to take out the residents a couple of times a month, to a restaurant or a show, to provide much-needed stimulation. But now those funds are gone--and with it, a small diversion makes life a better or the patients.

New Hope is itself reeling from the impact of the budget crisis, and may have to combine operations with four or five other agencies as a result, Freeman said. We are trying to merge to keep the costs down," she said. "We provide 24-hour supervision"--which is expensive.

When social service agencies merge or downsize, social work jobs are lost--like that of Alison McKenna in Chicago. As McKenna described:

I was the coordinator of a specialized foster care program. I worked with foster care case workers and their supervisors to ensure that abused and neglected children, with special needs received the services that they needed." Soon after my layoff, the entire foster care program was closed. Some of my colleagues are still looking for work, but what concerns me even more is the welfare of the most vulnerable children in Illinois: young children who have had multiple psychiatric hospitalizations, significant developmental delays and complex medical needs. The children were transferred to other agencies. Specialized therapy services abruptly ended. Where are these children now? I don't know, and I have little confidence in the system that is meant to care for them.

THE STATE budget crisis could be mitigated--and eventually overcome--if more emergency federal aid was dispatched to the states.

While the 2009 stimulus bill did shore up state finances to some extent with $140 billion in funds, the impact of that spending is fading. Moreover, the $26 billion in federal aid approved by Congress last month--$10 billion for education jobs, $16 billion for Medicaid--is far too little and much too late.

As Oliff of the CPBB pointed out, states "are seeing an increase in demand for state services at the same time they are continuing to see depressed revenues. So the new federal aid will help significantly, but clearly will not solve the entire problem." What's more, Congress' insistence on cutting food stamps to help pay for the aid is an indication of the budget austerity that's on track no matter what the outcome of the November elections.

It doesn't have to be this way. Robert Schiller, the prominent Yale economist and no radical, argues that big federal spending to stop and roll back layoffs in state and local governments is needed immediately to provide both a jobs program to stimulate the economy as well as restore services. Since most states are barred by law from running a budget deficit, the federal government could share revenue with them to make up the shortfall.

As Schiller wrote in the New York Times August 28:

We need to respect existing government bureaus and organizations for their ideas, and get down to the business of financing important jobs temporarily, and on a huge scale. This will avert more layoffs, and perhaps give cities and states time to recover to the point they can pay local employees from local revenue.

Yet the Obama administration is heading the other way. Having tried to outflank the Republicans by offering his own austerity measures in the form of a freeze on discretionary spending, Barack Obama has only reinforced the political momentum of those out to kill off the already weak U.S. welfare state.

Rather than try to rally supporters for a bold new program of federal spending to cut unemployment and boost the economy, Obama is likely to take his cues from his commission on Social Security and Medicare, which is stacked with budget cutters and privatizers.

So just two years after the federal government started pumping trillions of dollars into the banks--and after nearly a decade of war spending vastly expanded an already bloated Pentagon budget--we're told that the neediest in society must do with less, or nothing at all. Less health care for poor kids. Less cash assistance for those unable to work. Less access to quality public education.

That will leave those suffering from state budget cuts--public employees and recipients of social services--with no option but to organize and fight back.