Running on Empty

By Dr. Margaret Gibelman, DSW, Director of the Doctoral Program, Wurzweiler School of Social Work

Several of the articles in this issue of Currents concern the impact of fiscal cutbacks on social service agencies and how agencies are meeting these challenges. Question about the fiscal viability of social services are being echoed in every state and city in the U.S.

We’ve been here before. At various times in the profession’s history, commentators have cautioned that social services were in jeopardy and that the profession faced a crisis. For example, throughout the Reagan Administration and, a decade later, when the Republican-controlled Congress during the Clinton Administration issued its “Contract with America ” the literature echoed the view that the profession’s future was precarious. Doing “more with less” became both a reflection of reality and a rallying cry. Social workers mobilized through such strategies as educating decision makers about the successful outcomes of social service interventions and highlighting areas of unmet need, creating partnerships with clients, allied professionals, and concerned citizens, and refining skills to enhance effectiveness. Social work did indeed survive, finding ways to stem the tied of cuts and/or reaching out to embrace new areas of practice to augment or replace practice areas hard hit by retrenchment

The current scenario can be considered yet another swing in the pendulum concerning the desire to decrease the federal government’s role in financing and delivering human services. In 2003, the philosophical and political stance to devolve government of its responsibility for human services (termed “privatization”) occurs in concert with a belief that economic stimulation can best be accomplished through tax cuts.

What is new now compared to earlier periods of retrenchment is that a number of conditions and forces have coalesced. In earlier years, there was, to borrow a term from the Reagan era, a “trickle down” effect that worked to protect social service programs. When federal budget cuts were initiated, states often compensated by increasing their own funding levels for social services. This fallback option is not available now. The National Governors’ Association reported in May, 2002 that state budgets are in the worst shape in 20 years, with no immediate prospects for improvement. States have dipped into their reserves and, much like the situation with the federal government, budget surpluses are gone.

Public social service agencies have generally been less severely hard hit by budget cuts than their nonprofit counterparts. This is because over 50% of the budgets of most nonprofit agencies are derived from government contracts. One benefit of contracting from a public sector point of view is that in times of retrenchment, contracts can be canceled. Indeed, in New York City , nonprofit agencies were put on notice about the unstable state of contract funding long before the doomsday city budget gained its name.

Nonprofits, however, have also had fallback positions in times of retrenchment. In the last two decades, many nonprofits have successfully diversified their funding sources. When contracts have dried up, there were other sources to which to turn. These included corporations, foundations, and individual donations. But in 2003, these options have also evaporated. Poor profit showings and downsizing, combined with unprecedented scandals concerning corporate greed, have characterized corporate America in the past several years. The worth of foundations has been hard hit as the stock market consistently spiraled downward, resulting in fewer dollars to support nonprofits. Individual donations, too, have been affected by these same forces. As unemployment figures rise and life savings are plummeted by low interest rates and stock market losses, the ability of the middle and upper classes to contribute to charity has decreased.

The United Way of America , for example, has suffered from decreased charitable contributions on the part of individuals, translating to less dollars to support member agencies. Finally, charging fees for service is also affected by the overall economy. Individuals are less able or willing to pay for human services when they fear for their financial futures. Those who can pay may opt to seek services in the for-profit marketplace, perhaps accentuating the relatively new competition between nonprofit and for-profit providers.

Human service organizations are businesses, too. Their financial position is integrally related to their ability to carry out their programs of service. Diversification of funding sources to reduce fiscal dependence doesn’t work when the alternative sources are “running on empty”. The alternative systems that have worked in the past to ensure at least a modicum of a safety need can no longer be counted upon to serve this function. For individual agencies, answers may lie in making hard choices about program priorities and instituting severe cutbacks in some service areas.

This scenario would not be so bleak if it could be demonstrated that the need for social services had somehow also diminished. This is far from the case. In New York , we are still suffering the psychological effects of September 11, 2001 . Throughout the nation, fears of terrorism and the actuality of war has had an economic as well as psychological impact. The downturn in the economy brings with it rising unemployment, greater emotional stress, increased homelessness, and the like. The rise in human need occurs in a period in which the concept of “entitlement” to public benefits has been erased.

Now is the time for thinking “outside the box”. Following corporate patterns of survival, longer term solutions may lie in mergers, consolidations, and partnerships. Past alliances need to be strengthened to pool resources when possible, avoid service gaps, and monitor and document how budget impact upon individuals, families, and communities. Producing aggregate outcome data is something we are better equipped to do now than ever before.

While we have argued against deprofessionalization for decades, selective use of paraprofessionals and volunteers may need to be reconsidered. Fee structures may also need to be revisited, but with attention to the potential of pricing services out of the reach of some l clients.

Collaboration with other concerned professions and groups needs to be brought to new levels, particularly in regard to advocacy. The profession functions within a socio-political context. Rather than reacting to events after-the-fact, we need to fine tune our proactive abilities. Part of advocacy entails public relations skills. We need to “sell” human services as an indispensable component of a civil society. The agenda is challenging but critical in shaping the profession of the future.