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Nonprofits Eye Federal COVID Relief Funds In State Budget Fight

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Courtesy: Marrakech
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An artist at East Street Arts, a social enterprise run by nonprofit Marrakech

Founded by two Yale University students 50 years ago, New Haven nonprofit Marrakech was created to help people with disabilities achieve goals. Starting with children, the organization offers support to individuals in the foster care system, students who want to go to vocational school or college and internship opportunities, and adults seeking employment. 

A lot of this work is done under contract for the state of Connecticut. And that, says Marrakech director Heather LaTorra, means she has a dilemma.

“One of our staff just told her manager that her son got a job at McDonald’s and makes more than her. That breaks my heart. Our staff is worth more than that,” she said. 

For over a decade, nonprofit organizations that do social services work for the state of Connecticut have seen state funding fail to keep pace with the cost of living. And as their costs -- and demand for services -- continue to rise, they’ve been left out of pocket, and many of their staff are woefully underpaid. 

For this year’s state budget proposal, many have come together to campaign for an additional $461 million in funding to make up for the over-decadelong deficit. And advocates say with the advent of the federal American Rescue Plan, the state has a unique opportunity to make this happen.

The American Rescue Plan, recently passed by  Congress, will do a lot more than provide $1,400 stimulus checks to many citizens across the nation. In addition, the plan will help many nonprofits that have been impacted by the pandemic.

Nonprofits are expected to receive $7.25 billion from the Paycheck Protection Program, which provides federal loans for small businesses to keep their staff employed. And crucially for state-contracted nonprofits, the plan will provide a 7.35% increase in the federal share of Medicaid. That means, among other things, care providers who work in home and community-based services could receive a pay raise.

“The federal program will provide Connecticut with $4.2 billion in direct aid to state and local government. And a substantial portion of that will be in an enhanced federal match under the Medicaid program,” said Gian-Carl Casa, president and CEO of the CT Community Nonprofit Alliance. “That’s going to help enable the state to meet some of the needs.”

Like many, social service nonprofits have been squeezed extra hard during the pandemic. New Haven’s Marrakech was forced to pivot when the pandemic altered the way its service was operated. 

The organization says it had some success with its clients’ adaptability to social distancing and connecting with others virtually. But those adaptations brought additional financial pressures that only highlighted a decade of underfunding.

And chronically low wages are pushing many employees to seek similar positions elsewhere. 

LaTorra identifies this as a key component that has affected the organization over the years. 

“What happens to us is our staff use us for training ... and then they apply for a state job,” she said.

During a public hearing earlier this month before the Appropriations Committee on Gov. Ned Lamont’s budget for Connecticut’s health agencies, co-chair Rep. Toni Walker (D-New Haven) said she understands the frustrations of nonprofits and is listening to the need for increased funding. 

“We are working very hard to try to get nonprofits the appreciation and economic support that they deserve because they do so much for us to be able to survive,” she said. 

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