County Council Public Hearing Testimony

April 7 was an historic night for the collective nonprofit sector in Montgomery County. For the first time testimony on the county's operating budget from the nonprofit sector as a whole was presented to the county council in a public hearing. The testimony was developed from the convening of nonprofit leaders on April 1st. Becky Wagner, Nonprofit Montgomery's co-chair, did a terrific job in testifying - unlike most folks who read from their written testimony, Becky spoke directly to the Council about two key issues for the entire sector. These issues: maintaining at least the current level of support for safety net services nonprofits and providing and raising the inflationary adjustment in the County Executive's budget from 1% to 2%, and to 3% if at all possible in this year of huge county deficits. To read the bullet points for the oral testimony and the full written testimony, press on the link for the full article.

ORAL TESTIMONY ON THE ’09 OPERATING BUDGET
To the
MONTGOMERY COUNTY COUNCIL
APRIL 7, 2007

• Nonprofit Montgomery! thanks the members of the County Council

• Unique moment - collective voice – convening of 80

• Rich tradition of county-nonprofit partnership

• We are the social safety net for the community – safety net needs more resources to meet growing needs, but maintain investment at least at current levels; many of us are preparing to serve more as the economic realities settle into our community; we ask your support as we plan to do more, without increases in support.

• Inflationary adjustments for contracts are essential to continue and expand service delivery - the current budget recommends 1% ; We urge a minimal increase of 2%. Just as you are negotiating employee contracts, we know you are aware that we too struggle to pay our employees competitive wages, provide benefits and keep the lights on! (Note: every 1% increase is $225,000 according to council staff).

• We want to work with the County Executive and Council to pursue new ways of doing business: we have begun this conversation with the County Executive and once the budget period is past - we hope to work with you to create efficiencies and develop creative solutions to our County's challenges - e.g., the expanded inclusion of nonprofits in the county’s cooperative purchasing agreements; some advance payment mechanisms for a portion of county contracts, as other jurisdictions have done.

• If you will consider our ability to leverage and save county dollars you will recognize that we are part of the answer to sustaining Montgomery County's service during this economic downturn.

• Recognize our Economic Impact - 16.5% of private employment; $1.7 billion in wages; $3.6 billion in spending in 2000, a substantial percentage of which is spent within Montgomery County.

• Use our Eyes, Ears and Expertise

WRITTEN TESTIMONY ON THE ’09 OPERATING BUDGET
To the
MONTGOMERY COUNTY COUNCIL
APRIL 7, 2007

Nonprofit Montgomery! thanks the members of the County Council for the opportunity to testify at this public hearing on the FY’09 Operating Budget. Thank you also for the role the Council has played in continuing the rich tradition of partnership between county government and nonprofits.

This is a unique moment for the Montgomery County nonprofit community because this is the first time we are coming before you with a collective voice to address budget concerns that affect the nonprofit sector as a whole.

Eighty nonprofit leaders came together at a convening on April 1 co-sponsored by Nonprofit Montgomery! and the Funders Roundtable of Montgomery County to discuss the County Executive’s proposed FY’09 operating budget and to consider a collective response to the budget on issues representing the nonprofit sector as a whole. Our written and oral testimony represent the consensus of the convening attendees, after discussion and lively debate.

As is always true at Nonprofit Montgomery! convenings, nonprofit leaders in attendance represented large, mid-size and small organizations who deliver critical services for Montgomery County. Some of the leaders present are at the helm of nonprofits with a long and rich history. Others, most often working in communities that embody the “new” Montgomery County, are delivering needed services. Many of these organizations are not only of high quality, but have grown from community grassroots and meet the particular requirements of ethnic, cultural and other communities.

County government enlists the skills and abilities of the nonprofit sector to carry out many of the county’s goals and mandates to provide a social safety net for Montgomery County’s most vulnerable residents. At the same time, the nonprofit sector leverages many times over every county dollar we receive with private funding, state and federal government grants and contracts, as well as volunteer hours. In addition, we prevent current and future costs that would otherwise be required if our programs did not exist. We have included below specific information developed recently on the impact and return on investment of the county’s nonprofit sector.

Our written testimony has three parts:
• two recommendations on budget issues that affect the nonprofit sector as a whole;
• specific ways in which we hope you will work with us in the important period after the budget has been adopted; and
• statistics on the impact and return on investment of the nonprofit sector in Montgomery County. (Attached to the testimony is an expanded briefing on the impact of nonprofits in the county, including leverage of dollars received, cost savings and economic impact)

Recommendations on FY’09 Operating Budget

1. Investment in social safety net programs for poor and vulnerable - Working with county government, the nonprofit sector is the social safety net for the most vulnerable of Montgomery County’s residents. Given the economic realities at the national, state, county and individual levels today, we continue to lose ground as more and more residents face economic hardships including loss of jobs, health care insurance and, in some cases, their homes.

There is no question that a strong and adequate safety net needs more resources to meet the county’s growing needs. We want to make this point clear because we are already seeing significant increases in service requests across the sector. We recognize the arduous decisions you face in crafting a balanced budget when confronted with unprecedented deficits in the coming years. However, we ask that you, at minimum, maintain the investment in safety net programs serving our most vulnerable neighbors in the FY’09 operating budget.

2. Inflation adjustment - Nonprofits are facing major increased costs for energy and health care similar to the county government and other Montgomery County businesses. In addition, one of the well-documented dilemmas for nonprofits is providing fair compensation to staff members in terms of both salaries and benefits while also keeping our commitment of offering services to those who need them.

Our staff members are facing the same economic challenges bringing many of their fellow county residents to our doors. As nonprofit leaders, we must find ways to make fair compensation adjustments so employees can meet their own “inflation adjustments.” Reasonable inflation adjustments for contracts are essential to continue and expand service delivery.

The County Executive’s budget recommends 1% inflationary adjustment. We urge the Council to adopt a minimal increase of 2%. Just as you are negotiating employee contracts, we know you are aware that we too struggle to pay our employees competitive wages, provide benefits and keep the lights on!

Working Together on New Ways of Doing Business

One of Nonprofit Montgomery!’s goals is to bring nonprofit leaders together to share ideas, “best practices,” and innovations in order to continually strengthen the county’s nonprofit sector as a whole. In many cases, we will be building on innovations that are already being developed by nonprofits within Montgomery County but are not necessarily known widely. In other cases, taking an evidence-based approach, we will be identifying what has worked in other areas.

We want to work with the County Executive and Council to pursue new ways of doing business. With the support of the County Executive’s Office of Community Partnerships, we have begun this conversation with the executive branch. Our top priority for this work in 2007-2008 has been the solicitation, execution and administration of county contracts with the nonprofit sector. We have an ongoing procurement working group comprised of County government department heads and nonprofit leaders. The group, chaired by David Dise and Uma Ahluwalia, is implementing a jointly developed work plan.

Based on this work, Nonprofit Montgomery! is taking the lead in putting forth ideas and generating feedback from nonprofits about ideas for increased nonprofit inclusion in county contracts that could yield cost savings. Thus far, the top 3 areas of interest to nonprofits – given their wide ranging impact on the budgets of nonprofits– are gasoline, insurance and telephone services. Another area we are exploring is various methods of providing advance payments on selected contracts with nonprofits, based on techniques and experiences from other jurisdictions and Montgomery County’s own past experience with this approach.

We believe there are many other creative solutions that can be developed with this type pf partnership approach. We look forward to working with you and your staffs to create efficiencies and develop creative solutions to our County's challenges during this difficult period.

Impact and return on investment of the nonprofit sector in Montgomery County

If you will consider our ability to leverage and save county dollars you will recognize that we are part of the answer to sustaining Montgomery County's service during this economic downturn. Nonprofits save money, multiply every dollar they receive, and strengthen our county, our communities and our residents in innumerable ways.

The nonprofit sector is also an important part of the overall economic base of Montgomery County. The sector comprises 16.5% of private employment; $1.7 billion in wages; $3.6 billion in spending in 2000 (latest published figures), a substantial percentage of which is spent within Montgomery County.

What follows is a detailed overview of the ways in which investments in nonprofits in Montgomery County provides a substantial ROI to the County. We hope it will provide valuable information to you, and also serve as the basis for further discussion with you and your staff.

IMPACT and RETURN ON INVESTMENT

Nonprofits save money, multiply every dollar they receive and strengthen our county and our communities. A few examples follow:

Nonprofits save money by preventing and solving problems, now and in the long term.

 If 50% of elderly adults who receive in-home care from the Jewish Social Services Agency (JSSA) were instead placed in nursing homes, the total annual cost would be 15 times higher – or $96 million a year – than the $6 million it costs for JSSA to provide services and keep those 1,000 elders in their homes.

Nonprofits multiply the financial resources they receive from individuals, corporations, government, and foundations by accessing other funding sources, employing volunteers, and using every donated good and service.

 Manna Food Center turns each dollar of cash into $5 worth of food through food donations and distribution. Manna serves 2,000 families each month with donations from grocery stores, community food drives, individuals, and the USDA surplus food program.

 Interfaith Works has a $47,000 contract supporting the Interfaith Clothing Center and Up-county Interfaith Clothing Center. This $47,000 contract leverages $230,000 in contributions from individuals, corporations and foundations. It results in contributions of clothing and household goods valued at $3.4M and 19,900 hours of volunteer service. The program served 14,548 individuals last year. The opportunity to access services at the centers helps families pay their less forgiving bills such as rent and utilities.

 The Arts and Humanities Council reports that more than 11,000 volunteers contributed close to 800,000 hours in 2001 at a value of $11.2 million.

Nonprofits strengthen our community by connecting people to each other, to services and to issues that matter to all of us.

 The United States has more soccer players than any other nation, and soccer is the fastest growing team sport in the country, in part because it crosses so many cultural boundaries. MSI, the largest youth sports organization in Montgomery County, provides 15,000 young people with the chance to play soccer, regardless of age, location, income, or physical ability. MSI receives no county funding and contributes to the maintenance and development of soccer fields at county public schools and parks.

 IMPACT Silver Spring educates and trains diverse residents in leadership and advocacy so that they can work across lines of race, class, and culture on challenging community issues. Parents who participate in IMPACT’s Parent Training Institute learn how to get involved in their children’s education, joining action teams at local schools, creating parent groups for immigrant parents, collaborating with administrators to make school-wide improvements, and making PTAs more inclusive. Last year, IMPACT engaged 200 minority, low-income parents – many of them immigrants – in five schools.

 In 1990, Imagination Stage in Bethesda pioneered its innovative approach to bringing together deaf and hearing students in the same classes and productions. Last year, more than 1,000 children and young adults participated in its Deaf Access programs and exhibit tours, along with more than 20,000 audience members.

 Identity, serving up-county Latino youth, is working to challenge negative stereotypes often associated with Latinos throughout the county. Youth volunteers are actively engaged in developing peer networks and contributing to the general community, including volunteering. They are also engaging their parents in community activism, especially in their schools.

 The Music Center at Strathmore in Maryland is a state-of-the-art 1,976-seat concert hall and education center. Supported by a public and private venture between the State of Maryland, Montgomery County, and corporate and individual philanthropists, the Strathmore offers audiences an impressive range of arts programming through its founding partners: the Baltimore Symphony Orchestra, the Washington Performing Arts Society, the National Philharmonic, the Levine School of Music, CityDance Ensemble, and the Maryland Classic Youth Orchestra.

ECONOMIC IMPACT

Working in partnership with business, government and concerned citizens,
nonprofits have a substantial impact on the economic base of Montgomery County.

 Nonprofit employment accounts for 16.5% of total private employment in Montgomery County, representing 38,650 jobs.

 From 1998 to 2005, nonprofit employment in the county grew 22.11% compared to a total employment growth of 9.8%. Nonprofit wages in this period grew 68.7% compared to total wage growth of 45.2%.

 In 2005, Montgomery County nonprofits generated $1.7 billion in wages or 6.3% of the County’s total wages from public and private sectors combined

 In 2000, nonprofits in Montgomery County spent nearly $3.6 billion, a significant percentage of which was spent within Montgomery County.

 Statewide, Maryland’s nonprofits generated $9.9 billion in wages in 2005, or more than 8% of the state’s total payroll. These wages translated into an estimated $450 million of personal income tax revenue for Maryland’s state and local governments and approximately $1.9 billion in federal tax revenues.

The Context

Have you used nonprofit services lately? Although we often think of nonprofits as serving only our most vulnerable neighbors, in fact, every person at every income level in Montgomery County has turned at some time or another to a nonprofit for services, whether to attend a world class symphony, to make sure a middle-school daughter is in a vibrant after-school program, to provide day care services for an elderly dad with Parkinson’s, or to advocate for improved traffic patterns, additional stop signs or storm drains for the neighborhood.

One of the main selling points for businesses and individuals moving to Montgomery County is the high quality of life, and much of this is made possible through the nonprofit community. Although we all use nonprofits - and also often volunteer our time and money to them - few of us know the impact of the nonprofit community and the tangible and quantifiable results they provide so cost-effectively.

What nonprofits do best is change lives by leveraging public and private dollars to achieve concrete, measurable results. This has already translated into huge cost savings for County government and the private sector, whose employees also use nonprofit services. As if this payoff wasn’t enough, nonprofits employ a significant percent of the private workforce in the county (16.5%) and generate substantial personal income tax contributions.

Thank you for the opportunity to share this testimony.

~ MaryAnn Holohean
Director
Nonprofit Montgomery!

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Important Testimony on Monday, April 7

Representing the collective nonprofit sector for the first time in public hearings on the '09 operating budget, Nonprofit Montgomery! is testifying before the County Council on this coming Monday night, April 7, sometime between 7:15 and 7:45 PM. The Council hearings start at 7:00 PM and we are speaker #15.

Please plan to attend the Council hearing on Monday during the time of the testimony. Having both funders and nonprofits supporting our appearance before the Council will send a very strong message. The hearings will be held in the Council Office Building, 100 Maryland Avenue, Rockville, 3rd floor Council hearing room.

On Tuesday, April 1st, The Funders' Roundtable of Montgomery County and Nonprofit Montgomery! hosted a convening of 80 nonprofit leaders. Attendees at the convening agreed unanimously that Nonprofit Montgomery! should present testimony before the County Council on the '09 budget, communicating budget concerns, such as inflationary increases, that affect the nonprofit community as a whole.

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October 2007 Brown Bag Minutes

At this fifth Brown Bag, panelists discussed the Maryland “Budget Crisis” or “Structural Budget Deficit” discussed by policy-makers and in the media relating to the state’s “general fund” budget, which accounts for roughly half of state spending in Maryland – or over $14.5 billion in 2007. The projected shortfall to continue current services and operations within the general fund budget in the next budget year (FY 2009) is approximately $1.42 billion (almost one of every ten dollars being spent today).

Panelists included:
Henry Bogden, Director, Maryland Budget and Tax Policy Institute
Chuck Short, Special Assistant to the County Executive
Pamela Cudahy, President/CEO, St. Luke's House, Inc.

Nonprofit Montgomery! and
Montgomery County Office of Community Partnerships (OCP)
Fifth Brown Bag Lunch
October 16, 2007

Meeting Notes

Panel Topic: “Not a Spectator Sport: The Role of Nonprofits in the Maryland
Budget Solution”

Welcome and Introductions
MaryAnn Holohean welcomed the participants to the October meeting and introduced the panelists.

Participants were asked to complete and return the questionnaire in preparation for the
2008 meetings.

Henry Bogden, Acting Chief of the Budget and Tax Institute

“What You Should Know About Maryland’s Budget Challenge”
· The budget crisis or structural budget deficit refers to the state’s General Fund Budget, which accounts for approximately half of state spending in Maryland.

• The General Fund Budget is money raised through state taxes (80%), the lottery (4%), corporate income (4%) and other fees (12%). It does not include federal dollars, gasoline tax, and tuition at state colleges and universities tuition or motor vehicle fees.
• 83% of the General Fund supports education (47%), health (26%) and public safety (10%). The General Fund also supports aid to local government programs.
  · Structural budget deficit is when “ongoing/recurring costs exceed ongoing/recurring revenues (what is being paid for does not lineup with incoming revenue).
• Maryland’s structural revenue problem stems from:
  o Increased obligations in critical areas such as education, health, and public safety over recent decades
  o Revenues not growing with obligations
  o Tax cuts without regard for growing needs
• Maryland is not a high-spending state; this is a revenue problem.
  Maryland has not grown a revenue base that keeps up with the spending
  o Maryland is still spending the same amount of wealth as 30 years ago.
  o The proportion of Marylanders’ personal income being
  collected to pay for state and local government is lower than in 46 of the 50 states.
  o All state and local government spending in Maryland represents a
  smaller investment of collective income than any other state in the country.
  · The projected shortfall to continue current programs and services in the next budget year (FY09) is $1.62 billion.
  
  · The Governor must present a balanced budget.
• The Department of Legislative Services has prepared a document to present possible cuts – “Doomsday Budgets”
  o These reductions (10% of the General Fund Budget) would be spread over state agencies.
  o Reductions include:
  - A quarter billion in state workforce ‘savings’
  - $500 million in cuts to K-12 education and libraries
  - $32 million from DHMH budget
  - $37.5 million from medical care programs
  - Elimination of property tax relief for low income renters
  - Elimination of General Fund support for DHCD capital program
  o Total number of proposed reductions – 150.
• The Governor has proposed a fairly progressive mix of revenue and spending reductions, which include restructuring of income and sales tax.
  o The plan would balance the General Fund Budget for the next several
  years and close the structural budget gap by fiscal year 2011.
  o The proposal includes two new initiatives with general funds.
  - A new health initiative, which would be partially funded by the increased tobacco tax.
  - Increased funding for higher education funded by proceeds from the increase in corporate income tax.
  o The plan would seek to make the state’s tax system more progressive through income tax rate changes and increasing the refundable earned income tax credit.
  o Also included in the plan, is a phased reduction of the state property tax.
  o Unaddressed in the plan is the revenue to meet the needs of the already under-funded programs that exist.
  - There are disabled individuals and seniors still waiting for services.
  - There are foster care issues.
  o Many problems will be left unaddressed with this new budget plan.
  o The plan will not work without the “special session” that the Governor has requested.
  - More revenue has to be generated in FY08.
  - Generated revenue will be moved to the FY09 budget.
  o If slots are realized, any revenue over $425 million will be used for
  school construction.
  · The problem is political.
• Those opposed to taxes and ‘big” government will exploit the natural resistance to paying more.
• Historically, spending constraints and cuts have not generated any pushback.
• There is no pushback for the advocacy side.
  o Legislators need to hear that people care about these programs.
  o Advocates must influence what the legislators are hearing in their districts.
  o Know who your legislators are and how to contact them.
  o Delegations from three counties hold the bulk of the votes.
  · A solution must be worked on at the grassroots level.
• Develop partnerships and coalitions.
• Engage board members, volunteers, donors, etc.
• Use media, mailings and websites for publicity.
• Engage the community through informational meetings, special events, rallies, etc.
• Contact legislators.

Charles “Chuck” Short – Special Assistant to the County Executive
· First problem - The state budget crisis causes a crisis for the County.
· Timing is everything.

• A balanced budget must be presented by the Governor in January.
• A balanced budget must be presented by the County Executive in March.
• If the special session does not solve the problem, the Governor’s budget will reflect this is January – Doomsday.
• The County’s budget, which is currently under preparation, will have to be reworked.
  · The County is currently looking at a $300 million deficit, which will be resolved by mid-February. If the special session does not resolve the state’s budget crisis, the County will face another $150 million in cuts.
• All of the counties are pretty much in the same situation – facing severe reductions.
  · Second problem – Montgomery County needs to raise taxes.
• The increase will be in property tax – the only tax the County can control. The only question is how much.
  · The greatest disaster is a dramatic increase in taxes with a dramatic decrease in services.
• This happened in 1992, which lead to a countywide referendum that was defeated by 2 percentage points.
  - If the referendum had passed, many jobs, especially those in the nonprofit sector would not exist.
  · With an increase in taxes, county services, at the minimum, must be held at the same level.
  · A political problem for Montgomery County is that the state will increases taxes in January
  (sales tax will increase from 5% to 6%) and the property tax will increase July 1st.
  · 53% of the income tax that will be raised by the state will come from Montgomery County -
  only a small portion of that will come back.
  · Practical thoughts:
• Nonprofits will need to advocate – participate, but don’t “play.”
  - The best way to participate is in an informed and strategic way.
  - Be informed, be careful.
  - The message should not be to protect the nonprofits, but to protect services.
• Understand the difference between posturing and positioning. Where are they trying to go?
  · With higher taxes, private nonprofit agencies will have to figure a way to maintain services.
  · Taxpayers revolt – your services will go first.
  · How can you convince the persons who are paying for your program that it is money well spent?
• Right work, right way, right pay!
  
  Pamela Cudahy, President/CEO, St. Luke’s House, Inc.
  St. Luke's House, Inc., (SLH) was founded in 1971 by concerned citizens from St. Luke's Episcopal Church in Bethesda, MD, to address the needs of patients being released from state psychiatric hospitals who had no place to go. SLH was established independently soon thereafter, and the first group home was opened. (http://stlukeshouse.org/aboutus.html)
  · This is the time to take action, make voices heard. It is not about the nonprofits, but the services – the means to an end.
  · How are we serving the general community? Not everyone has the understanding or the empathy.
• Nonprofits must become more sophisticated in their approach.
  · If programs are not funded, where do these needs go?
• Needs and people do not go away. They are like shifting sand – moving from
  place to place.
• Must be able to show how lives are impacted by the lack of services.
  · Nonprofits must be able to put a human face on problems for the community and legislators to see – take them to Annapolis.
  · Create coalitions and partnerships – numbers count.
• Find partners in other parts of the State.
• Find ways to get together and get the message out.
• Identify the vulnerable.
  
  Questions/Comments
  · When do the nonprofits get the word about cuts?
• Example – Did not find out about a program cut until September, which was retroactive to July 1.
  · Nonprofits with small staffs spend so much time grinding out the service that there is very little time left to find out what is going on with the budget cuts.
  · Coalition-type work is very effective for this situation. Draft letters, lay out a strategy, share the load.
  · When advocating, only two things matter – money and votes.
• If you don’t have money, you can influence votes. Don’t forget to utilize e-mail – eight e-mails about the same subject represent a public outcry.
• No amount of votes is too small.
  · African Immigrant Community has no idea what is going on in terms of taxes being raised. They do not know about the issues in order to vote.
• Communication is key.
• In the African Immigrant Community there are many small nonprofits that are being operated with no or little support from government.
  · There is room for everyone at the table, but the rules of the table change.
  · Nonprofits have to become more and more skilled at what people are buying.
• Must be skilled in knowing what the person is buying – political, financial, and human, etc.
  · How far can a 501(c)(3) go in advocacy?
• A 501(c)(3) organization may choose to elect to participate in lobbying activities under the safe harbor provisions of the tax code by filing form 5768 with the Internal Revenue Service. Once that has been elected, the organization is subject to specific expenditure limits for lobbying activities (election is optional; the organization may prefer to rely on the general rule of “no substantial part” of income . . .” particularly if lobbying activities are minimal.) The expenditure limits under the election rules are graduated, beginning at 20% of the first $500,000 of the organization’s expenditures for charitable “exempt function” purposes.
  · Nonprofits must work together to create coalitions and partnerships – money is not coming top-down, but from all over.
  · Human service side of a private nonprofit – not in it for the money, but for the principle side of it (a moral and just community).
• Justice and fairness – that’s the message.
  · What can be done as agencies to help the County and State government get the message out about who needs the services?
• Look at different coalitions; see what they are doing. Join with them – don’t duplicate the work.
• Community statements – just don’t stand alone.
• “Gee whiz” statements.
  · Challenge – to have someone on the board to monitor legislation.
  · County Council should put out a request for persons to be on the review committees during the grant process.
  · Four levels to work through – individual, executive (County), Council members, State.
  · Advocacy fair – how to write a letter to my legislator; have experts in the room; target small, emerging nonprofits.
• League of Women Voters has a program on how to lobby your legislator.
• Maryland Nonprofits also has a program geared toward this subject.
  · Maryland Nonprofits – Coalition for the State
  
  
  October 17, 2007- Nonprofit EXPO and the Montgomery County Charity Campaign Kickoff in the Executive Office Building, Cafeteria, 11:00 a.m. - 4:00 p.m.
  

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