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Nonprofits throughout the city fear the de Blasio administration will hold up previously awarded City Council discretionary funds as the city faces a potential $6 billion budget gap in the next two years due to the pandemic.
There’s a pool of up to $457 million at stake — money funneled through Council members that nonprofits use to cover everything from services for seniors to afterschool programs.
Some vendors received a portion of the earmarked money after the contracts were formally registered with the city comptroller by various city agencies.
But many nonprofits say they are still waiting for their funds for the current fiscal year — and have already spent their own money or borrowed from banks in anticipation of getting the funds from the city this year.
“Nonprofits need to know if their contracts will be registered,” said Michelle Jackson, acting executive director for the Human Services Council, an umbrella group that represents 170 service providers in New York City.
“They really need clarity,” she added.
On Tuesday, City Comptroller Scott Stringer asked Mayor Bill de Blasio to clarify his position on the issue and to detail how much of the money is outstanding.
Stringer’s office has heard from numerous nonprofits that say they are still waiting for their fiscal year 2020 contracts to be submitted for registration, his letter to the mayor states.
“Delaying or stopping execution and registration of these contracts could cause significant financial harm to the city’s nonprofits — harm that some organizations will not recover from,” he wrote.
Summer Jobs Program Crushed
His letter to City Hall also questioned the wisdom of the decision to eliminate the Summer Youth Employment Program (SYEP), a move expected to save the city $124 million while zapping jobs for 75,000 young people.
“In addition to the impact on program participants, the decision means SYEP providers are now forced to abruptly lay off staff,” he said. “And since providers can no longer submit for program expenses, they will be saddled with costs associated with the remainder of the program.”
The fiscal prognosis for the next few years is bleak, according to Stringer and the Citizens Budget Commission, though they differ on the numbers.
“CBC analysis of prior recessions suggests a similar recession could result in up to $20 billion in revenue shortfalls over three fiscal years,” the group said in a statement.
Stringer estimates the city could face a $6 billion budget gap in fiscal years 2020 and 2021.
Nonprofits are worried that the city could now look to claw back some of the City Council’s discretionary grants.
Carlyn Cowen, the chief policy and public affairs officer for the Chinese-American Planning Council, said her organization hasn’t “gotten guidance from agencies” on whether the funds will come through.
“We are concerned because so many agencies are on the precipice, cash flow-wise,” she said.
The organization, with 5,000 employees, has $620,000 of discretionary funds that remain unpaid, she said. The group provides after-school programs, citizenship classes and adult literacy courses.
Juan Soto, a spokesperson for Council Speaker Corey Johnson, said: “We are concerned about what we’re hearing with regards to discretionary contracts and are working vigorously with the administration to ensure that all discretionary providers are reimbursed for services provided.”
‘Need Is Going to Escalate’
When the coronavirus crisis hit and nonessential businesses were forced to close, nonprofits already operating under a heavy financial burden expressed concern that city funding would be yanked due to their inability to meet some performance targets.
In response, the Mayor’s Office of Contract Services issued guidance on March 18 that assured social service providers “as long as they are working with their contracting agencies on a plan to continue, modify or suspend services, they will get paid their contracted expenses.”
The de Blasio administration also explained that it would cover the added costs of service changes like setting up staff to work remotely due to coronavirus.
The city also sped up the maligned contract registration process for agreements negotiated through its procurement system, according to reps from multiple nonprofits.
“It’s a silver lining in this tragedy. We had a flurry of activity in the past few weeks,” said Rabbi Moshe Wiener, executive director of the Jewish Community Council of Greater Coney Island.
But he’s concerned about the long-term future of the after-school programs and senior centers the organization operates.
“The need for human services is going to escalate after the emergency,” he said, noting that he hopes the federal government issues another stimulus package to help localities cover their budget shortfalls.
‘It’s Very Scary’
A City Hall spokesperson noted that the administration has been helping nonprofits amid the crisis.
“We responded rapidly to stabilize the sector through issuing guidelines to support their fiscal health, disbursing hundreds of millions of dollars in contract advance and invoice payments, prioritizing invoice processing, and declaring that their employees are an essential workforce,” said the spokesperson, Laura Feyer.
She conceded, though, that the city is still not sure how to handle the City Council grants.
“The City Council is currently developing guidance for processing discretionary contracts,” she said.
Some nonprofits might be wiped out if the City Council money is taken away, said JoAnne Page, CEO of The Fortune Society, which assists formerly incarcerated people.
Her organization is especially taxed with the release of up to 1,500 inmates from city jails due to the COVID-19 outbreak. The group provides housing, education and job training to former detainees.
“This money is not pork,” she said. “It is essential to the services we deliver. For us, it’s millions of dollars. It’s very scary.”
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