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Federal Cutbacks Have Uneven Impact on Nonprofits

“Low-income individuals and families are seeing cuts in most of their services.”

July 11, 2013
Tom Blackburn-Rodriguez - Contributing Writer ( , Maui Weekly

Many of Maui's nonprofit social and human service agencies are facing uncertainty as they move into the fifth month of the federal budget cutbacks--known as "sequestration"--that went into affect on March 1.

For Stacey Moniz, executive director of Women Helping Women (WHW), "It is a scary time."

The mission of WHW is to end domestic violence through advocacy, education and prevention, and to offer safety, support and empowerment to women and children, victims of domestic violence.

Article Photos

Head Start Teacher Claudia Blair (left) and Teaching Assistant Sheila Yamamoto supervise mealtime at Maui Economic Opportunity’s Kīhei Head Start classroom. MEO has been notified of a 5.27 percent cut for Head Start, which means a $105,000 funding reduction and 40 fewer children and their families being served.

"At this point, we have had one funder cut by about ten percent, but the dollar impact isn't that high to shut us down," Moniz said. "We also are hoping to receive Community Development Block Grant (CDBG) funding, but I hear that is on the chopping block. That would be a loss of almost $90,000 in building repairs for the shelter. Many of our funding sources haven't said how we will be affected yet."

That uncertainty is in contrast to the view expressed by Dana Alonzo-Howeth, executive director of Malama I Ke Ola Health Center (formerly the Community Clinic of Maui). Alonzo-Howeth is not expecting cuts in her funding and does not have any cause to believe that "cuts will be coming our way."

In part, this is because the health center benefited from funding previously received under the American Recovery and Reinvestment Act (ARRA) designed to help prepare the clinic for the coming impact of the Affordable Care Act, when more people will have medical insurance and are expected to increase their use of medical facilities such as the health center.

First, a bit of history about sequestration, what it is and how we got here.

Sequestration means a reduction in federal funding for various budget categories. Congress passed sequestration as part of the Budget Control Act of 2011. Overall, the spending reductions are approximately $85.4 billion in the federal fiscal year 2013 (Oct. 1, 2012, to Sept. 30, 2013) and cuts of a similar size are programmed to occur from 2014 to 2021, unless modified by Congress in subsequent budget legislation.

Congress passed sequestration as a way to force a significant federal deficit reduction deal between President Barack Obama and Congress, with the idea being that budget cuts under sequestration would be so drastic that no one would ever let them happen. However, no grand deficit reduction agreement was reached, and the cuts almost no one wanted went into effect.

On March 1, as sequestration was about to take effect, President Obama posted on the White House Website the following statement: " if Congress allows this meat-cleaver approach to take place, it will jeopardize our military readiness; it will eviscerate job-creating investments in education and energy and medical research. It won't consider whether we're cutting some bloated program that has outlived its usefulness, or a vital service that Americans depend on every single day. It doesn't make those distinctions."

The sequestration cuts are split 50-50 between defense and nondefense spending with Social Security, Medicaid, federal pensions and veteran's benefit exempt. In September 2011, the nonpartisan Congressional Budget Office (CBO) estimated that sequestration would reduce 2013 economic growth by about 0.6 percentage points (from 2 percent to 1.4 percent, or about $90 billion) and affect the creation or retention of about 750,000 jobs by the end of 2013.

All of these numbers are academic to Judy Mikami, associate and long-term care director for the Na Pu'uwai Native Hawaiian Health Care System. According to Mikami, her clinic receives federal grant funds to operate primarily on Molokai and Lana'i. They have received notification of a 6.2 percent funding reduction to take affect Aug. 1.

"Now we are trying to see what to keep and what to cut, because every program is important It has impacted us because we would have to cut programs and not serve as many people," Mikami said, explaining that most of their clients are below the poverty level and generally cannot afford medical care, do not have adequate insurance or have no medical insurance at all.

Maui Economic Opportunity (MEO) CEO Lyn McNeff reports that the MEO Head Start program has been told to take a 5.27 percent cut that will result in 40 less children and their families being served.

"The future impact is that it will be compounded each year," said McNeff. "Low-income individuals and families are seeing cuts in most of their services. The safety net will be shattered and it will cost more to pick up the pieces than the prevention in the first place."

One of Maui's most critical programs for seniors is Meals on Wheels, which provides upwards of 400 meals a day in Maui County (325 on Maui Island alone) to qualified home-bound frail and disabled clients 60-plus years of age. The program seems to be safe for the time being.

According to Program Specialist Luanne Fujimoto, "We do have a program and have not been given any indication of it dissolving or being eliminated."

Deborah Arendale, executive on aging in the Maui County Office on Aging, acknowledges the seniors' meals program has taken a cut in federal funding of 8.4 percent, but she says that this cut has been replaced with county and state funding. However, Arendale sees this as a temporary solution that will not work if sequestration continues for 10 to 11 years, when demand will continue to grow as the population ages, leading to a cut in services.

"We have entered into an uncertain financial environment," said Arendale.

The Women and Infant Children (WIC) special supplemental nutrition program may not as fortunate as Meals on Wheels. The WIC program is a federally funded, short-term intervention program providing counseling and food assistance to low-income pregnant and post-partum women and children up to age 5.

According to State Department of Health WIC Services Branch Chief Linda Chock, Congress has appropriated less WIC funds due to sequestration. In the previous federal fiscal year, Hawai'i WIC was given $36,219,877 to cover food and administrative expenses. To date this fiscal year, the program is at $33,588,210--a cut of 7.3 percent.

To maintain the same level of service--in spite of the funding cut--WIC is reviewing provider contracts to ensure they are serving 95 percent of their assigned caseload, selectively not filling administrative positions at the state level, requiring the purchase of the least costly cheese for meals effective July 1, and requiring the purchase of the least costly eggs effective Oct. 1.

The CDBG administered by the County of Maui is funded by the federal Department of Housing and Urban Affairs (HUD). According to its Website, CDBG's "main objective is to improve communities, primarily for persons of low and moderate income by providing decent housing, suitable living environments and expanded economic opportunities." Many Maui nonprofits have relied on CDBG funding for building repairs, solar installations and building construction.

Funding for the CDBG program is rumored to be uncertain, and county officials are anxiously following developments in Washington, D.C. Herman Andaya, chief of staff to Mayor Alan Arakawa, said the program that normally receives about $2 million annually is cutting back on administrative expenses and has moved out of the Trask Building in Wailuku and into the County Building to save on rent.

The federal housing assistance program for low-income renters known as Section 8 has 3,000 applicants in a waiting line that was closed last year. According to Jo-Ann Ridao, the county's director of Housing and Human Concerns, Section 8 "is not going to see any new funding."

On Maui, sequestration appears to be more like a tornado than a hurricane, touching down indiscriminately on one program and skipping to another, leaving some harmed and some untouched.

It appears that Maui's sequestration tornado has touched down indiscriminately, leaving some intact and devastating others.

That uncertain impact worries County Council Chair Gladys Baisa. "I am hearing that the cut in federal funds will mean cuts in programs like Head Start, mental health, medical treatment, rental subsidy, rehabilitation, elderly and other services, but it is too early to really know. With the additional county funding we have budgeted, some of the cuts could be mitigated, but there will still be impacts. I wish I had specifics, but I think the agencies won't know for sure until next year."



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