Drop-Off in Grant Funding

Non-profits and other organizations hit hard by county budget
Morgan Hill – A dreary county budget outlook and dwindling grant funding have local non-profits and social service organizations worried they’ll be serving South County’s neediest with even fewer resources.

Last month, Santa Clara County Executive Pete Kutras announced that county social service agencies are facing $5 million in budget cuts next year. For community organizations that rely on county money and the county’s ability to attract outside funding, that means their own budgets may shrink as well.

“We have to seek other funding if we want to keep up levels of service,” said David Cox, executive director of St. Joseph’s Family Center in Gilroy. “Basically the bottom line is if the funding is not there we’re not able to serve families to the same extent.”

Cox said his organization has taken a 40 percent hit to the amount of county funds it’s received during the last three years. This year, St. Joseph’s is getting just $25,000 for its children and families programs, about half of what it needs.

“The good thing for us is we’re one of the only comprehensive direct aid services organizations down here,” Cox said. “We can show that there’s a strong need for services down here and we’re at the forefront of serving those needs.”

The county’s persistent budget deficit – $126 million in the current fiscal year and a projected $111 million for the year beginning July 1 – is compounded by difficulties the county has had securing grant funding.

In fiscal 2003-04, the county received $1.6 million in grant money for social services programs. In fiscal 2004-05, only $730,000 in social services grants came into the county.

County officials say the drop-off is due mostly to an overall reduction in philanthropy, but the county has trimmed grant writing positions as part of larger staff cuts to balance its budget. Mary Stephens, the county’s budget operations manager, said the county aggressively pursues outside funding, but there is a reluctance to seek many grants because the money is temporary and creates expectations that can’t be met when the grant expires. She said most of the county’s $80 million social services budget is devoted to state-mandated programs that the state doesn’t fund.

“The problem is we use a grant to add staff and provide a service that the community gets used to and finds valuable. Then the grant disappears and we have to use discretionary revenue to keep that program going. It makes our job even harder,” Stephens said. “They’re sometimes more valuable than what we’re required to do, but you have to do what’s required first and then do the extras.”

And cutting the social services budget will make it even tougher to attract outside funding because most grant programs require the county to provide matching funds.

Erin O’Brien, the CEO of Community Solutions in Morgan Hill, said the county limits itself by not figuring out creative ways to replace expired grants.

“We live with that as our reality, but the county isn’t used to doing that,” O’Brien said. “We’re used to patching things together. Services have been cut so much, we need to be flexible to deal with that.”

And in addition to losing grant funding, tighter county finances cause community organizations to take losses on services they provide for the county. Community Solutions is proposing to provide new programs at Morgan Hill juvenile detention center. O’Brien said it will be impossible to not lose money on the deal.

“We will lose money because of the way it’s funded,” she said. “Agencies can only take so many of those on. Our capacity has gone down all over the place. Almost all of our programs have shrunk.”

Kutras has said repeatedly that he’s interested in finding long-term solutions to the county’s budget deficit. He’s proposed using more of so-called one time funds, usually money left over from county programs or unexpected state funding, to finance county services, and county supervisors will consider asking voters next year to approve a new sales tax to pay for social services and healthcare. A new half-cent tax would add $164 million a year to county coffers.

“A sales tax would put us more in control of our own destiny,” Stephens said. “We’re always at the mercy of what the state and the feds decide and we can’t do it that way anymore.”