State’s late payments hurting nonprofits

State’s late payments hurting nonprofits
Fiscal problems affect community agencies
Wednesday, June 17, 2009
By Michael Lamendola (Contact)Gazette Reporter

CAPITAL REGION — The Albany Pine Bush Preserve Commission is running out of money because the state is six months late in reimbursing $4 million in contract expenses to the agency, its director said on Tuesday.

The commission is using reserves to pay staff and operate programs, but it expects to exhaust those reserves by the end of the year, said Executive Director Chris Hawver.

“We have a $4 million deficit,” Hawver said. “We have another six months to go in reserves.”
The Pine Bush commission is in the fourth year of a five-year, $12.5 million contract with the state. The state provides the money through the Environmental Protection Fund.

Hawver said the $4 million deficit goes back to 2007-08, but that the commission submitted bills to the state for payment of these expenses in January. “I am hopeful that within the next eight weeks we will get the funding,” he said.

During the first six months of the year, the Nature Conservancy, a member of the commission, supported the commission but it can no longer do so, Hawver said. Hence, the need for state support.

The state provides $2 million toward the commission’s $2.6 million annual budget, Hawver said. The rest comes from grants and local support.

The commission is a public-private partnership formed by the state Legislature to protect and manage the Albany Pine Bush, an ecological area that is home to rare and endangered species.
The commission consists of the state Department of Environmental Conservation, the state Office of Parks, Recreation and Historic Preservation, the Nature Conservancy, the city of Albany, the towns of Colonie and Guilderland, Albany County and four citizen representatives.
When Hawver inquired about the payment delay, he said state officials reminded him about the state’s difficult fiscal situation. The state Division of Budget is responsible for disbursing the funds. Spokesman Jeffrey Gordon said the state has been forced to manage the Environmental Protection Fund closely this year because of fiscal pressures on the fund and on the state.
“So there have been some delays in payments; they have taken longer than they have in the past,” Gordon said.

Another factor is that the state fund receives one of its largest replenishments in June through the real estate transfer tax. “When that happens, we will begin moving payments more readily,” Gordon said.

Hawver said the commission’s role will likely increase should the state grant the city of Albany’s request to expand the Rapp Road landfill. The state DEC gave the final approval June 3 to the city’s final environmental impact statement, which outlines environmental ramifications of the dump expansion.

Hawver said the commission will work with the city on a large habitat restoration project.
“They need us at the table and we need to pay salary and staff,” Hawver said.

NONPROFITS’ PLIGHT
While the commission’s problem is a payment issue, some nonprofits are finding that the state is consistently late in approving or renewing contracts with nonprofits, forcing them to perform services without a contract in place and without any payments.

State Comptroller Thomas P. DiNapoli said he found in 2008 that 87 percent of nonprofit contracts were approved on average 184 days late. He is proposing new regulations to make the state more responsive to a nonprofit’s contractual needs, including a requirement that ensures nonprofits are paid interest required by law when their contracts are processed late.

DiNapoli said, “In recent months, an increasing number of organizations were unable to make payroll, faced eviction or risked losing other funding because their state contract was significantly delayed.”

Denise Harlow, chief executive officer for the New York State Community Action Association, said community agencies have had to go into debt to run programs while awaiting state payments through contracts.

“It puts us at a disadvantage. We are running programs on their own lines of credit with banks, and we then have to pay interest on those lines of credit. State contracts don’t cover interest. It is costing us money,” she said.

DiNapoli said the state paid $144,906 in interest to nonprofits for processing their contracts late in 2008, a 29 percent decrease from the year before.

Hawver said that while he agrees with the need for more timely action by the state, he does not support the interest payment proposal. “The simple way is if the cash is available to pay it. Then you don’t have to pay interest. You don’t use state funds to pay interest on state funds,” he said.
Harlow said the delays are due to many factors, such as lack of communication between agencies, lack of staffing and “tremendous amounts of duplication.”

Other nonprofits contacted said the state lag is a problem but something they have learned to work around.

Denis Wilson of the Fulmont Community Action Agency said, “the lag has never created a problem for us.” The agency receives money for Meals on Wheels and other community service programs.