2010 Regional Economic Insights for Non-Profit Leaders - Business ...

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2010 Regional Economic Insights for Non-Profit Leaders - Business ...

WHAT’S NEXT FOR THEREGION’S NONPROFITCOMMUNITY?Data and DialogueMay 18, 2010The Business Council of Fairfield County


REVIEWING THE NORM Revenue reductions, with continuing downwardpressure. Increased demand for services, with continuingupward pressure. Reduced staff. Board understanding and support. Uncertainty among elected government leaders. Caution among permanent government leaders.2


CONTEXT National private sector economic stabilization. State-level government crises throughout thenation. Deferral of meaningful choices by Connecticutuntil new governor takes office. FY11 budget may be calm before storm.3


LEADERS OF COMMUNITY SERVICEORGANIZATIONS MUST CONSIDER: Immediate revenue issues Immediate growth in demand Emerging emergencies (caused by responses tocurrent challenges) Underlying trends4


LEADERS OF COMMUNITY SERVICEORGANIZATIONS MUST ALSO CONSIDER: Staff burnout Donor fatigue New opportunities5


REVENUE SOURCES Earnings Government contracts Government grants Philanthropy Individuals Foundations Business Endowments Other?6


FORCES IMPACTING: INDIVIDUALS Unemployment will remain high (over 5%) inConnecticut for 3-5 years. Affluent employed are breathing easier. Equity values are recovery, but markets continueto be volatile. All taxes will increase.7


RECENT JOB LOSSES 2009 TO 20108FRBNY April 14, 2010 Regional Employment Briefing


LONGER TERM JOB GROWTH TRENDSFairfield County lost 6.8% ofjobs from June 2007 to Feb 20109FRBNY April 14, 2010 Regional Employment Briefing


FRBNY RECENT EMPLOYMENTASSESSMENT Employment across downstate NY and FairfieldCounty has leveled off in early 2010, but has notturned up significantly thus far. NYC private sector employment peaked 6 monthsinto the national recession and has not fallen asdeeply. Long Island appears to be outperforming NYCand the rest of the region.10FRBNY April 14, 2010 Regional Employment Briefing


SOURCES OF REVENUE AND FORCESIMPACTING EACH: STATE GOVERNMENT CT state government will face $ 4-4.5 billiondeficit in FY12 and FY13. Municipalities will receive less aid (includingeducation) in FY12. Unfunded liabilities for retirees are enormousand will not abate as economic growth returns. ARRA (stimulus) will produce islands of growthand spending in landscape of scarcity. 12


CT OFFICE OF FISCAL ANALYSIS BUDGETPROJECTIONS – MAY 4, 2010 Revenues have improved, expendituresdeclined since 2/2010 report But no sign of relief FY 12-14 face considerable deficits – more than 15%of estimated expenditures in each year FY 12 deficit significant as one-time stimulus, rainyday funds depleted.13CT Office of Fiscal Analysis, May 4, 2010 General Fund andTransportation Fund Budget Projections


OFFICE OF FISCAL ANALYSIS BUDGETPROJECTIONS – MAY 4, 2010$ millionsFY 10 FY 11 FY 12 FY 13 FY 14Est.(Deficit)/Surplus$ 139.3 ($371.7) ($3,373.2) ($3,165.9) ($3,146.2)% of Est.Expenditures0.8% 2.1% 17.6% 16.0% 15.3%Est. Expenditures $ 17,317.1 $ 17,787.5 $ 19,164.6 $ 19,776.6 $ 20,543.5Est. Revenue $ 17,456.4 $ 17,415.8 $ 15,791.4 $ 16,610.7 $ 17,397.314CT Office of Fiscal Analysis, May 4, 2010 General Fund andTransportation Fund Budget Projections


FORCES IMPACTING: STATE GOVERNMENT ARRA II is likely, but will be smaller, withdifferent objectives and higher performancestandards. ARRA I will produce islands of growth andspending in landscape of scarcity Use of funds in FY10 and 11 adds over $2.5 billion toOPM’s projected deficits Unfunded liabilities for retirees are enormousand will not abate as economic growth returns Estimated to exceed $61 billion15


LONG TERM OBLIGATIONS The state’s long-term obligations total $61.7 billion, up 7.1% from lastyear’s reported amount of $57.6 billion. This equates to approximately $17,628 for every man, woman andchild in Connecticut, up $1,002 from last year’s reported amount of$16,626. In comparison, total Personal Income Tax collections in FY 2010 willonly be $6.610 billion.LONG-TERM OBLIGATIONS(In Billions)Bonded Indebtedness - As of 9/30/2009 $ 18.0State Employee Pensions - Unfunded 6/30/2008 9.3Teachers' Pension - Unfunded 6/30/2008 6.5State Employees Post Retirement Health and Life - Unfunded 24.6Teachers' Post Retirement Health and Life - Unfunded 2.2GAAP Deficit 1.1Total $ 61.716CT Office of Policy and Management. November, 2009.


GROWTH IN SIGNIFICANT STATE EXPENDITURES120%State Employees Pension & Health Benefits: 110%100%Cumulative Growth over FY '0480%60%40%All Funds BudgetedExpenditures: 59%Medicaid: 54%CT Personal Income: 44%Municipal Aid: 39%Other Expenses: 37%20%Consumer Price Index: 25%0%'05 '06 '07 '08 '09 '10 Est. '11 Fcst. '12 Fcst. '13 Fcst. '14 Fcst.Fiscal Year17CT Office of Policy and Management. November, 2009


APPROPRIATIONS FY 1018CT Office of Fiscal Analysis, May 4, 2010 General Fundand Transportation Fund Budget Projections


APPROPRIATIONS FY 10 . . . IN SUM Of the $19.1 billion FY 10 gross appropriation forall funds 26.5% is designated for social service needs such ashealth care, cash assistance and childcare at $5.1 b 21% is for education at $4.0 b 11% is for debt service, ongoing payments of principaland interest on state bonds19CT Office of Fiscal Analysis, May 4, 2010 GeneralFund and Transportation Fund Budget Projections


SUMMARY OF LOCAL AID (INCLUDING FORECAST)ESTIMATED FORMULA GRANTS TO MUNICIPALITIES(In Millions)GRANT FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014State Owned PILOT $ 76.0 $ 76.5 $ 76.8 $ 76.8 $ 76.8 $ 76.8College & Hospital PILOT 115.4 115.4 115.4 115.4 115.4 115.4Pequot Grant 86.3 61.8 61.8 86.3 86.3 86.3Town Aid Road Grant 30.0 30.0 30.0 30.0 30.0 30.0LoCIP 30.0 30.0 30.0 30.0 30.0 30.0Miscellaneous General Grants 18.6 20.8 22.0 22.5 23.1 23.8Machinery & Equipment 57.3 57.3 57.3 57.3 57.3 57.3Subtotal - General Government $ 413.6 $ 391.8 $ 393.3 $ 418.3 $ 418.9 $ 419.6Public School Transportation $ 48.0 $ 48.0 $ 48.0 $ 48.0 $ 48.0 $ 48.0Non-Public School Transportation 4.0 4.0 4.0 4.0 4.0 4.0Adult Education 19.6 20.6 20.6 20.6 20.6 20.6Education Cost Sharing 1,882.9 1,889.6 1,889.6 1,889.6 1,889.6 1,889.6Magnet Schools 128.6 148.1 174.6 199.4 217.2 230.8Special Education - Student Based 140.0 120.5 120.5 120.5 120.5 120.5Miscellaneous Education Grants 146.4 147.1 147.2 148.5 149.8 151.1Subtotal - Education $ 2,369.5 $ 2,377.9 $ 2,404.5 $ 2,430.6 $ 2,449.7 $ 2,464.6Total - Formula Grants $ 2,783.1 $ 2,769.7 $ 2,797.8 $ 2,848.9 $ 2,868.6 $ 2,884.2• FY2009 Town Aid Road Grant includes $8 million in FY2007 surplus funds• Education Cost Sharing includes $269 million in ARRA funds in both FY2010 and FY2011• Grants to Municipalities comprises 14.6% of the FY2010 General Fund budget• Grants to Municipalities will be $2.8 billion in FY 2012 and FY2013 which is a 1.5% increase over the fiscal year 2009 level20CT Office of Policy and Management. November, 2009


OFFICE OF POLICY AND MANAGEMENT SUMMARY• Based on the enacted budget, the state is projected to experience significant deficits at the end ofFY2011-12, FY2012-13 and FY2013-14 that are unprecedented in our history.• The use of one-time revenues including federal ARRA dollars to support on-going programs andprojects adds over $2.5 billion to these projected deficits.• The budget reserve fund balance will be exhausted during FY2011.• Debt service will continue to grow and consume a significant portion of the budget.• The state faces significant long-term obligations including debt, unfunded pension liabilities andunfunded post-employment retirement benefits that are estimated to exceed $61 billion in total.• Budgeted “below the line” savings targets may be difficult to achieve.• Stagnant economic conditions and low-growth revenue projections will continue to be the mostsignificant challenges facing the state.CT Office of Policy and Management. November, 2009


FORCES IMPACTING: FOUNDATIONS Grants are down and redirected.22


Not surprising . . .23


FORCES IMPACTING: FOUNDATIONS Equity values are recovering Capacity-building will be an even greater focusFairfield County Community Foundation Center for Excellence24


FORCES IMPACTING: BUSINESS 2010 is a period of recovering profits, budget discipline. Matching gift reductions made in 2009 will continue. 2011 will see slight increase in formal giving, if Q3&4are as forecast. Business development spending within local marketsis returning.25


FORCES IMPACTING: MUNICIPAL BUDGETS Municipalities will receive less state aid (includingeducation) in FY12. Stimulus money awarded in 2009 and 2010 willcontinue to be spent. Workforce reductions and givebacks will continue. Reductions for local community-based organizations. Unfunded liabilities for retirees are enormous andwill not abate as economic growth returns.26


DRIVERS OF DEMAND (CONTINUED)28FRBNY April 14, 2010 Regional Employment Briefing


DRIVERS OF DEMAND (CONTINUED) Foreclosures – as of 4Q2009, mortgage delinquencyrates of 90+ days increased 4.9% in the county overthe prior qtr, and increased 2.7% year over year29FRBNY Database, May 2010


DRIVERS OF DEMAND (CONTINUED) Reduced public services at state and local levelwill leave unmet demand. Non-profit downsizing may cascade demandwithin service provider community.30


KEY INDICATORS Confidence Conference Board Index at highest reading sinceSept. 2008 Shows increased optimism in present day conditionsand in job and business outlooks Unemployment Transitioning from decline to improvement. Both jobs and unemployment rate up as “discouragedworkers” reenter job market. CT historically lags nation in timing of recovery.31


KEY INDICATORS Consumer credit delinquencies Bank card delinquency rate 60+ days in Fairfieldincreased 0.1% year over year, national averagedecrease 0.1% Interest rates Federal Reserve promises low rates for foreseeablefuture.32


POPULATIONS IMPACTED BY JOB LOSS:FAIRFIELD COUNTY EMPLOYMENT BY AGESubject Total In laborforcePopulation 16and overAGEEmployedUnempRateUnemp RateUS696,822 68.2% 63.5% 6.8% 6.4%16 to 19 47,814 45.6 33.9 25.7 20.720 to 24 51,796 78.9 67.5 14.3 11.325 to 44 226,396 83.3 78.1 6.1 5.645 to 54 148,185 81.9 78.3 4.3 4.555 to 64 104,494 73.7 70.9 3.9 4.165 to 74 61,072 33.4 31.9 4.5 3.975 years andover57,065 9.2 9.0 2.0 3.833US Census, American Community Survey, 2008 1 yr estimates


POPULATIONS IMPACTED BY JOB LOSS:FAIRFIELD COUNTY EMPLOYMENT BY RACEAND HISPANIC OR LATINO ORIGINSubject Total In laborforceEmplydUnempRateUnemp RateUSWhite 561,411 67.3% 63.2 6.0 5.5Black or AfricanAmerican67,246 69.7 61.1 12.3 11.7Asian 29,884 70.4 67.1 4.7 5.0Hispanic orLatino of origin(of any race)White alone, notHispanic orLatino99,054 74.5 68.8 7.6 7.5494,754 66.5 62.5 5.8 5.234US Census, American Community Survey, 2008 1 yr estimates


POPULATIONS IMPACTED BY JOB LOSS:FAIRFIELD COUNTY EMPLOYMENT BYPOVERTY AND DISABILITY STATUSSubjectBelowpoverty levelTotal In laborforce40,406With any 33,17disability 1EmplydUnempRateUnempRate US51.7% 36.8% 28.8% 22.6%44.4% 38% 14.5% 12.1%35US Census, American Community Survey, 2008 1 yr estimates


POPULATIONS IMPACTED BY JOB LOSS:FAIRFIELD COUNTY EMPLOYMENT BYEDUCATIONAL ATTAINMENTSubject Total In laborforceEmployedUnemplRateUSUnemplRatePop 25 to 64 479,075 80.8% 76.6 5.1% 5.0%Less than HSGradHS grad (inclequivalency)Some college orassociate’sdegreeBachelor’s degreeor higher46,537 70.9 64.0 9.7 9.9101,935 79.3 73.7 7.1 6.3105,335 82.3 77.8 5.4 4.8225,268 82.8 80.0 3.2 2.636US Census, American Community Survey, 2008 1 yr estimates


IMPLICATIONS This, too, shall pass – but not next year. Sustainable, 2-3 year financial plan assumingcontinued reductions from “the usual” publicsector sources would be wise. ARRA will continue to present opportunities –but state government’s approach to currentcompetitive pots suggests trouble if ARRA II ismore selective. It may be time to reframe the planning relationshipbetween the permanent state government andnonprofit service providers. Advocacy with gubernatorial candidates is essential.37


IMPLICATIONS Demand for service will not decline. Better, multi-year forecasting tools are needed. The impact of demographics must be factored in. Productivity gains are essential. Technology, reengineering, strategic alliances,mergers and more. Meaningful amounts of new operating funds arenot likely to come from foundations or business. Resources will continue to be constrained. Capacity-building grants to consortia or servicesfields may be attractive. Challenge grants to stimulate individual giving. “Cooperation grants” to enable shared administrativeservices.38


WHAT DO YOU THINK?39

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