Vermont’s poor will find their primary safety net in tatters if a provision in President Barack Obama’s $3.73 trillion budget proposal takes effect next fall, advocates say. On Oct.1, 2011 — the beginning of the 2012 fiscal year — the Community Services Block Grant, which stitches together a quilt of emergency assistance and poverty reduction programs, is slated to be cut in half, for a savings of $350 million.
Shaun Donahue administers the Vermont Office of Economic Opportunity, which receives the federal funds and uses them to make grants to Vermont’s five Community Action Partnerships.
He and other advocates say that programs for low-income people, such as the Community Services Block Grant and LIHEAP, the Low Income Home Energy Assistance Program, received proportionately larger cuts than other programs in the President’s budget. Donahue calls the cuts “a direct attack on the poor.”
Vermont’s $3.7 million share of this year’s grant staffs emergency food shelves, helps people find safe housing, insulates mobile homes, provides financial literacy training, helps micro-businesses access capital, trains workers for green jobs, enrolls the neediest in general assistance programs, runs teen centers and Head Start programs and provides crisis fuel assistance.
Currently, the block grant money serves 55,000 Vermonters whose incomes fall under 125 percent of the federal poverty level — $10,890 for one person or $22,350 for a family of four.
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Angus Chaney, Vermont OEO’s community services program administrator, says, “Our CAP (Community Action Partnership) agencies” — private, nonprofit organizations headquartered in Burlington, Rutland, Westminster, Barre and Newport — “want to provide services as much as they can, but there’s probably no way to maintain all services at current levels with this significant a funding cut.”
Impact statements by the community action agencies foretell a cascade of system failures resulting from the cut in block grant funds. The staff of BROC-Community Action in Southwestern Vermont sketches the following scenario: Tenants who are unable to get help with utility bills abandon their apartments, shelters become overwhelmed and the homeless begin congregating on the doorsteps of churches, businesses and city hall. The ripple effects spread throughout the community. Pipes freeze, real estate deteriorates, buildings are condemned, squatters move in and crime increases.
The block grant money accounts for only part of the community action agencies’ budgets, but it’s a crucial part. It can be used for salaries, and it serves as yeast for fundraising. The agencies leverage, on average, more than $12 in public and private funds with every dollar of block grant money they receive. The Central Vermont Community Action Council raises $20 with every block grant dollar.
The block grant money stretches other funds.
Liz Schlegel, community outreach director for the Central Vermont Community Action Council, gave an example. The Barre agency receives an allocation from the state for 3SquaresVT (food stamp) counseling, but it’s not enough to hire a staff person. So the agency “fluffs” it with block grant money and hires a staffer to do 3Squares counseling plus housing assistance. That person provides services in Orange, Washington and Lamoille counties.
The loss of block grant money would cut a swath through various programs:
- Currently, the Central Vermont Community Action Council has satellite offices in Morrisville, Bradford and Randolph. If block grant funding is lost, it may become necessary to close them. Clients in those areas would have to travel to Barre for in-person services — a major barrier to access for the rural poor.
- The agency gets 60 phone calls a day from people seeking housing assistance, and 20-to-30 walk-in clients. Although the volume of requests is too great for one person to handle, staffing would have to be cut to a single employee. The reduction could lead to an increase in evictions and homelessness.
- Last year financial counselors helped clients recover more than $1 million in tax refunds and earned income tax credits through the tax assistance program. That money was spent in the community. Tax assistance would have to be curtailed.
- Head Start programs would shrink. Between nine and 11 full-time-equivalent positions would be eliminated, including teachers, administrators, curriculum developers and staff who support families. The school year might start later and end earlier. The number of slots for children would be reduced.
Unlike categorical grants, which define in detail who and what the funds can be used for, block grants have broad guidelines. Because of their flexibility, community action agencies from East Los Angeles to Island Pond use block grant money to tailor antipoverty programs to fit the needs of their diverse communities.
Schlegel says this flexibility enables community action agencies to act as social entrepreneurs.
Block grant funds played an indispensable role in expanding a local revolving loan fund into a regional fund and ultimately into Community Capital, a statewide program that makes loans to microenterprises. Because of the block grant’s flexible guidelines, it was possible to pay a program director to focus on making connections with banks and alternative financial groups while another person made loans. When a $700,000 federal grant was announced in 2005, the Central Vermont Revolving Loan Fund had developed the infrastructure that enabled it to launch a statewide microenterprise lending program.
“If (the block grant funds) didn’t exist, you might be able to fund the person to process and make loans, but you wouldn’t be able to fund the growth,” Schlegel said. “If you didn’t have flexible financing, you would only be able to do business counseling. We can’t take Head Start financing and apply it to business development.”
The effects of the cutting the Community Services Block Grant would reach beyond the community action agencies.
John Sayles, the Vermont Foodbank’s chief executive officer, notes that his organization relies on a network of local food shelves to get food into the hands of people who need it. “We can’t operate without the agencies,” he said. (The food bank functions as a wholesaler that aggregates food from many sources and supplies it to the local agencies.)
Four of Vermont’s five community action agencies run food shelves that distribute most of the state’s charitable food. The Chittenden Emergency Food Shelf, the food bank’s largest customer, distributed more than a million pounds of food last year – “more food than any other food shelf in the state,” Sayles said. Some community action agencies say the cut in block grant funds may force them to close their emergency food shelves or reduce hours because of losing core funding for salaries.
“Closing food shelves in this state would be catastrophic,” Sayles said. “The need is still growing.” While the smaller, volunteer-run food shelves are critical, Sayles noted that “they can’t move the volume of food that we move through our community action partners.”
If the system breaks down, the burden will fall on the food bank to do “retail” distribution, Sayles said. But the food bank receives almost no state funding, and its federal grants are tied to categorical programs with inflexible guidelines. (“We could effectively serve more people in Vermont if we had more flexibility in those programs,” Sayles observed.) Because the food bank is funded almost entirely by private donations, replacing the distribution system would require a major expansion of fundraising.
If you don’t feed people properly, if you don’t house people properly, you’re going to pay more later, and you’re not ever going to get back to square one because they’ve lost huge chunks of their lives and we, collectively, have lost all that productivity.”
~ Doug Hoffer
It’s not clear at this point how much money Vermont’s community action agencies would lose if the budget proposal were enacted because, in addition to cutting the Community Services Block Grant allocation by 50 percent, the President has proposed changing the way the funds are distributed. The current mechanism for determining how much money a state receives is a formula based on the size of the population living in poverty; a minimum ensures that small states receive funds. The President proposes replacing the formula with a competitive process.
The budget proposal doesn’t provide specifics about the competitive process, and it doesn’t indicate whether the small state minimums would be preserved. Donahue and Chaney declined to speculate on how the new program might affect Vermont because of the number of unknowns. However, Chaney observed that making such fundamental changes to the program might require rewriting the statute.
The budget narrative explains the 50 percent reduction in the program, citing “documented failures in program oversight and accountability, with the likely result that even grossly negligent CAAs continue to receive funding.” It adds that because of weak reporting, the government doesn’t know what the community action agencies are accomplishing with the funds.
“In order to ensure that CSBG funding is used most effectively,” it says, “the Administration proposes to cease funding the CSBG program through the existing non-competitive funding structure. Instead, the Budget provides $350 million to fund the highest-performing Community Action Agencies so that scarce taxpayer dollars are targeted to high-performing agencies that are most successful in meeting important community needs.”
The change to a competitive grant structure reflects the attraction that the Race to the Top concept holds for the President. It animates his plan for educational reform, and it appears in another context in his budget message: “We are committing to … making tens of millions of dollars of (surface transportation) funds subject to a competitive ‘Race to the Top’ process.”
A glimpse at how a competition for funds might play out can be had by looking at the two rounds of Race to the Top education grants. According to the National Journal, 11 states and the District of Columbia won grants; another 20 states that applied got nothing.
Schlegel, whose agency has had outstanding success in leveraging matching grants, was incredulous at the idea of eliminating all support for those who have the least-able grant writers. “Now we’re doing ‘Survivor’ for everybody in the country!” she exclaimed.
Vermont’s Democratic representative and senator both oppose reducing the Community Services Block Grant program. “In a time of great economic hardship, the last programs we should be cutting are the safety nets that provide food, clothing and heating assistance to the most vulnerable,” said Rep. Peter Welch in an e-mail.
Likewise Sen. Patrick Leahy, a senior member of the Appropriations Committee and champion of the block grant program, responded, “Hard decisions about the budget need to be made, but this is one cut that should not be ratified by Congress.” (Sen. Bernard Sanders is on fact-finding trip to Afghanistan and Pakistan and was not contacted.)
Deep cuts in the Community Services Block Grant program would create serious problems for state government, which has no infrastructure for delivering the services provided by the community action agencies. Rep. Ann Pugh, D-Chittenden, chairwoman of the House Human Services Committee, said, “I think it would be devastating to our safety net.”
She called programs funded by the block grant “the backbone of the state’s approach to vulnerable citizens,” especially for those who don’t fit into categorical grant pigeonholes like “families” or “senior citizens.”
“The State of Vermont has turned to community action agencies to assist in delivering critical programs,” Pugh said. “In some respects we have asked them to do more with limited, if any, funding from the state. A reduction in funding puts a lot of initiatives at risk, and the state has budget gap of $176 million. We can’t pick it up.
“(The community action agencies have) solid delivery systems and critical programs,” she added. “They’ve been effective. They help transition people out of deep poverty, so it will be devastating at a time when we still have a big budget gap.”
Doug Hoffer, an independent policy analyst, provided an analogy to illustrate the long-term effects of trying to save money by cutting services to the poor. He compared it to deferring maintenance on roads and bridges, observing, “You end up paying more later.”
Hoffer cited a 1990s analysis by the Urban Institute that tracked the effect on children of growing up in poverty and related it to their future earning power. The poor children were not ready for school. They didn’t learn as well. They had to repeat grades.
“In addition to being a tragedy for the children, it has impacts on the larger society that we collectively end up paying for,” Hoffer said. “All these things are interrelated, and you can put a dollar figure on it. If you don’t feed people properly, if you don’t house people properly, you’re going to pay more later, and you’re not ever going to get back to square one because they’ve lost huge chunks of their lives and we, collectively, have lost all that productivity.
“It’s a simple equation,” Hoffer said. “You either invest in people now, or you pay to fix them later.”
