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May 31, 2016

Survey Finds Pa. Charities Paid Dearly in State Budget Fight

Pennsylvania nonprofits shed hundreds of jobs and lost hundreds of thousands of dollars to interest payments on bridge loans due to last year’s budget impasse, which blocked the flow of state money for six months, the Pittsburgh Post-Gazette reports, citing a new study.

The survey of service providers by the United Way of Pennsylvania and statewide and Pittsburgh-area nonprofit associations found that 135 groups had to borrow money – from banks, their own cash reserves, or from vendors in the form of delayed payments – during the battle between Democratic Gov. Tom Wolf and the Republican-controlled state legislature over spending and tax plans.

Forty-five groups collectively owe $532,000 in interest on loans they took out to maintain operations during the crisis, which lasted from the July 1 start of the fiscal year until Mr. Wolf signed a partial budget in late December that freed funds for schools and social-service groups. The equivalent of more than 380 full-time workers were laid off, furloughed, or had compensation cut or frozen, according to the study, and nonprofits across the state reduced or eliminated services.

Another casualty was charities’ confidence in the state to make timely payments, said Laura Maines, executive director of Every Child, Inc., a Pittsburgh nonprofit serving at-risk kids in foster care. “Some trust was broken between the provider community and state government, and we can’t count on them to do what they need to do by June 30,” the deadline for the state to adopt a new budget, she said.