California Charity Advocates Plead Their Cases and Brace for Cuts

Sitting in a cafe across the street from the state capitol in Sacramento, a handful of nonprofit advocates compare notes about the toll that California’s fiscal woes are taking on charities. Their mood is alternately somber and feisty.

As the state prepares for another round of spending cuts to social services, they commiserate over the state’s political gridlock, worry about how angry the voters have become, and say it is time for nonprofit groups to become a united force.

“It’s sort of like being in war,” says Kathryn A. Lynch, a nonprofit advocacy consultant, adding that policymakers at both state and national levels seem afraid of their constituents.“Everybody’s shellshocked. They don’t really know how to take the next step.”

Emerging Problems

The country’s recession has taken a severe toll on many state budgets, with joblessness, foreclosures, and business failures translating into plummeting tax revenues. In a recent analysis, the Pew Center on the States said 10 states were in especially severe fiscal peril—including California’s neighbors Arizona, Nevada, and Oregon. But it said California was in the worst shape of all. While much of that is due to the bad economy, the state also has a history of difficulties in making tough budget decisions.

Catherine M. Barankin, director of public policy at the California State Alliance of YMCAs, tells her colleagues in the cafe that cuts in state spending on child-care programs have hurt YMCA’s across the state at a time when the need for such services is great. “It’s hard for me to go to a meeting of my YMCA’s and say the government is looking out for you,” she says.

The talk turns to the need for a nonprofit-power movement. “We have more staff than state government in the collective nonprofit world, yet we don’t act that way,” says Brian E. Bolton, executive director of the Volunteer Centers of California and a member of the California Association of Nonprofits board.

“We’re down to that point with the crisis in funding that we have to say, okay, what do we expect from this nonprofit sector and what do we expect from the government?”

‘It’s Really Frightening’

Just hours after the nonprofit advocates meet over coffee in February, legislators gather in the capitol for a hearing on some of Gov. Arnold Schwarzenegger’s proposals for fresh spending cuts, this time to help close a budget shortfall of almost $19-billion over the next 16 months. In 2009 the state slashed money for health and social services, prisons, colleges and universities, state employees, parks, counties, state parks, and more.

But new holes have emerged, and the governor has proposed more than $2.9-billion in health and human services cuts in the 2009-10 fiscal year, which started July 1, and the budget for 2010-11. The hearing room is jammed with people waiting to testify before the Senate Budget and Fiscal Review Committee—welfare-rights advocates, people in motorized wheelchairs, blind people, people wearing yellow, green, and blue T-shirts with sayings like “Child Care Keeps Parents Earning and Children Learning” and “Patients Before Profit.”

On the docket: proposals to cut spending on child-care subsidies, welfare cash assistance for families with children, a program that provides services to help old, disabled, and blind people stay in their homes, and monthly payments to supplement Social Security for such people.

A parade of California residents line up to plead with the lawmakers to reject the proposals: They would force some disabled people into costly nursing homes. Cash-assistance plans stimulate the economy. California’s poor are in dire straits because of the state’s high cost of living. Some cuts would deprive the state of matching federal money and some would shift costs to cash-strapped counties. The state should find money instead by ending some corporate tax breaks or taxing oil extraction.

Kathleen Berman, a member of the Capitol chapter of the California Council of the Blind who is disabled and legally blind, listens from her wheelchair in an aisle near the front of the room.

“It’s really frightening,” she says. “California has always been one of the leaders of disability rights, accessibility, making life a little more equal. Now we’re back to hills and mountains. I see a lot of mountains.”

She is not optimistic about the fate of the governor’s proposals.

“I don’t expect we’re really going to make much of an impact today,” she says. “Their minds are pretty much made up. There’s nowhere else to cut.”

But things could get even worse. When unveiling his 2010-11 budget in January, Governor Schwarzenegger, a Republican, said that if California does not get $6.9-billion in federal money—including new economic-stimulus money that Congress has not approved—he will propose entirely eliminating some programs, including welfare cash assistance, in-home help for old and disabled people, and reduced-cost health insurance for children from low-income families.

Poverty Simulation

The day after the budget hearing, members of a new coalition, Step Up California: Campaign to Cut Poverty, gather in the Capitol basement. They have planned a “poverty simulation” to try to sensitize lawmakers to the stresses faced by the state’s growing number of poor people. They have set up tables to represent homeless shelters, banks, utility companies, jails, social-work organizations—and participants pretend to be low-income people trying to navigate daily life.

Several Assembly members show up to speak before the simulation starts, all authors of a bipartisan resolution that asks Californians to do what they can to fight poverty.

One in four homeless Americans lives in California, the resolution notes, and four of the 10 metropolitan areas with the highest foreclosure rates are in California. The state has been at the forefront of technological and cultural innovation, it says, and Californians should “apply this innovative spirit to reducing poverty and increasing economic opportunities.”

The resolution does not promise any state money to the effort.

“We make a mistake when we think government is the be-all, end-all and the savior that can really help,” Connie Conway, a Republican from the Central Valley area who introduced the resolution, says afterward. She says she would like to explore alternatives, like government partnerships with charities because “they do so much more with less.”

Another Assembly member—Anthony Adams, a Republican from Hesperia, in Southern California—tells the group: “A budget is not just numbers, it’s about people and their lives.”

But that philosophy has caused him some grief. Mr. Adams won election in 2006 on a no-new-taxes pledge. Then last year, as the state veered toward insolvency, he bucked most of his Republican colleagues and supported a budget bill that included more than $12-billion in higher taxes.

Anti-tax conservatives, egged on by a couple of radio hosts, started a recall drive. They gathered more than the roughly 36,000 signatures needed to put the recall to a vote, but the secretary of state’s office said not enough of them were valid to allow the election to proceed.

Mr. Adams does not regret his vote. Without a budget fix, the state would have had to halt services to people who “literally face life and death issues without some help from state-provided safety nets.”

But he has decided—for a variety of reasons, he says—not to seek reelection.

From Bad to Worse

A woman at the poverty simulation is wearing a T-shirt that asks, “Would Jesus Cut Welfare?” and carries the text of a Bible verse from the Book of Isaiah (“Destruction is certain for the unjust judges. …They deprive the poor, the widows, and the orphans of justice.”)

She is Diana Spatz, a former welfare recipient who earned a college degree from the University of California at Berkeley and then created a nonprofit group, Lifetime, to help low-income parents get postsecondary education and training.

She tells a story about the shirt, one that illustrates a certain Groundhog Day element to California’s budget problems. Shortly after Governor Schwarzenegger took office at the end of 2003, Lifetime (Low-Income Families’ Empowerment Through Education) brought people to the Capitol to protest his proposals to cut health and welfare payments. Even then, the budget was suffering big shortfalls, and Mr. Schwarzenegger—who was voted in after Gov. Gray Davis was recalled—had promised to get the state’s fiscal house in order.

The protesters brought T-shirts, including some like the one Ms. Spatz is wearing, and displayed them on the Capitol steps, she says. They delivered a T-shirt to the governor’s office and to every member of the budget committee, she recalls, and held a sit-in at the governor’s office.

As tough as things were then for people on welfare, she says, it’s even worse now: The purchasing power of California’s payments has sharply declined since she was on welfare in the early 1990s.

Ms. Spatz repeats a story she told the budget hearing the day before the poverty simulation about a former real-estate broker and his wife who came to Lifetime after he lost his job. “They owned their own home, he had a Mercedes, she was a soccer mom. He made $120,000 a year and they ended up homeless and on welfare.” He can’t find a job, she says, even at McDonald’s, which rejected him because he isn’t bilingual.

Bracing for the Worst

After the budget hearing, the Legislature met in a special session to consider Governor Schwarzenegger’s plan for balancing the 2010-11 budget. It adopted some budget fixes but postponed decisions on social-services cuts until later. In theory, the Republican governor and Democratic-controlled Legislature should adopt a balanced budget before the new fiscal year starts on July 1. But last year, the state had to start issuing IOU’s when July 1 came and went without a final package to close spending gaps.

“Everybody’s going to lose, so there’s no incentive to cut a deal early,” says Shannon M. Lahey, executive director of Catholic Charities of California United, which leads the Step Up California coalition along with groups including Jericho, an interfaith antipoverty group. She and her colleagues are bracing for the worst. “We’re trying to pull together and do what we can,” she says. “But the next round of cuts are going to be a tsunami.”