THE FRAYING SAFETY NET

Steve Mellon, Post-Gazette JoAnn Lee rises before 6 each morning to help Beth Ferguson get ready for the day. The two women grew close during the year JoAnn worked as a job coach for Beth, who has Downs syndrome. JoAnn invited Beth to live in her home, which saves Crawford County tens of thousands of dollars a year. After Beth had a stroke, JoAnn didn't abandon her friend. She asked the county for financial help to adapt her house to Beth's changing needs. That's when the runaround began. Read more: Caring for Beth. Click photo for larger image. Related stories Foundations are generous, but have limits Caring for Beth Graphic: The waiting list for mental retardation services in Pennsylvania Tomorrow: Why some agencies thrive while others struggle

Each year, more than 230,000 Allegheny County residents seek help from nearly 400 agencies under contract with the county's Department of Human Services.

The help might be for weatherizing their homes in the face of soaring gas bills or putting food on the table when money runs out at the end of the month. It could be for job training, subsidized housing or help kicking an addiction.

For the most vulnerable, these nonprofit groups are the safety net that catches them before a stumble becomes a hard fall.

But that net is becoming increasingly tattered, and proposed federal and state budget cuts threaten to strain the system more.

Even before the Washington and Harrisburg budgets took a turn toward the austere, a majority of local human services agencies had struggled with deficits in recent years, while the need for critical services was growing. Now, with the possibility of serious funding cuts, the financial forecast for local providers is chilling.

Marsha Blanco, president and CEO of Achieva, the largest local agency serving the mentally disabled, was in Washington early this month meeting with lobbyists. The proposed cuts in federal social services spending, she was told, are going to hit "nearly every program at the federal level that affects people with disabilities."

Said Joyce Rothermel, co-founder of the Greater Pittsburgh Community Food Bank: "People who work in nonprofits and work with vulnerable populations are afraid."

At first glance, it's hard to see why there should be such anxiety.

Each year, more than half a billion dollars flow into Allegheny County from 80 different sources to fund human services programs. The outside tax revenue has grown by about a third in the past seven years.

The county, which contributes nearly $30 million in matching funds, distributes that money to 560 different programs.

This year, the federal and state grants to local programs total $685 million -- nearly $535 for each county resident.

Statewide, the total outlay for human services approaches $25 billion, nearly one-third more than five years ago.

Waiting lists for services

Yet, despite these extraordinary sums, County Human Services Director Marc Cherna and his counterparts throughout Pennsylvania have had to cut programs, even before the latest federal and state reductions were proposed.

"God forbid anyone need treatment after May 1" when agencies are running out of that fiscal year's allocation, said Lynn Cooper of the Pennsylvania Community Providers Association, whose members provide mental health, mental retardation and drug and alcohol services.

"It's like you never come up for air," said Stephanie Walsh, executive director of The Center for Victims of Violence and Crime, who has been scrambling since May to restore funding for a teen violence prevention program that was eliminated.

How does this happen? Where does more than half a billion dollars go, and why isn't it enough?

During the past 10 months, the Post-Gazette has been examining how we -- in Allegheny County, particularly, but also within Pennsylvania and in America as a whole -- fund and manage human services programs.

In interviews with state officials, national experts, program directors, frontline workers, their clients and others, the Post-Gazette found a system in which programs have grown, but so have the costs of doing business, the competition for funds and the waiting lists to get services.

As a result, many groups struggle with a chronic shortage of money, aggravated by the system's inefficiency and red tape.

Some of the problems:

Growing waiting lists -- Despite increasing expenditures, people are having more trouble getting services. The waiting list for residential and other services for mentally retarded Pennsylvanians who need help immediately has increased fivefold in six years, from 411 in May 1999 to more than 2,000 today. The family of Derek Warman, 16, of Whitehall says the severely disabled teen has been on the "emergency" waiting list -- meaning he needs immediate placement -- for nearly four years.

"I figured it would take a year. Now they're saying it could be 'indefinitely' because there's no money," said his mother, Rose, whose own medical problems have made caring for Derek difficult. "My last case manager told me that if I wanted services, I would have to drop him off at a hospital and abandon him. Needless to say, she's no longer my case manager."

Other examples: The waiting list for subsidized child care programs throughout Pennsylvania grew by more than 500 in one year, to 2,710, by late 2004; and Allegheny County's Department of Aging has had to turn away applicants for both the federal and state Family Caregivers Support program since January 2004. Instead, families have been directed to an alternative program, which has enough money but not enough providers willing to reach those in outlying areas. As of January, 68 people were on that waiting list.

Too much red ink -- A Post-Gazette review of tax filings by more than 100 nonprofit agencies holding year-to-year human service contracts with Allegheny County found that 70 percent had finished in the red at least once since 2000. A few well-known, established programs such as the Pittsburgh AIDS Task Force and the Rainbow Kitchen consistently show losses.

A recent Forbes Funds study by the Washington, D.C.-based Urban Institute found about 40 percent of Allegheny County nonprofit agencies providing human services could not cover their expenses in 2000 and 2001.

For people in need of help, a network of financially troubled providers can mean reduced services and increased user fees that many cannot afford to pay.

Too many competing agencies -- Given the nonprofit sector's financial struggles, some wonder if Allegheny County's list of 384 providers is too long. The counterargument says the large number of groups makes services more accessible, but others say that's not realistic. "I think the number [of providers] should be reviewed," said county Chief Executive Dan Onorato. His predecessor, Jim Roddey, agrees. "We are in a market that's shrinking, and we have far too many nonprofit organizations. Eventually you just can't sustain all those organizations."

Excessive paperwork -- Those trying to make the system function say paperwork and bureaucracy drain time and money that could be used for helping people in need. Cherna estimates that his department spends "a couple of million dollars" each year filling out required federal paperwork explaining why, for example, the county should be reimbursed for a child in foster care even though a judge has ordered the placement.

When Cambria County commissioners hired an outside consultant to review their human services operations last year, they found that county case managers and direct service staff were spending more than half their time on paperwork, "much of which is duplicative and unnecessary."

In the face of all these problems, Carol Mitchell, president and CEO of Verland in Sewickley, which provides housing for the severely mentally disabled, voiced a common complaint:

"More people need the care, but there's less money to go around. What do we do?"

Following its recent examination of local nonprofit human service providers, Urban Institute researchers Carol De Vita and Eric C. Twombly had a blunt answer:

"It is time to rethink how to help people in need."

Building silos

The inefficiencies in delivering human services start at the federal level, their roots embedded in the history of social movements in America.

As major social legislation such as the Social Security Act or the Civil Rights Act of 1964 created new programs, the result was "a series of self-contained agencies and programs that often had duplicative administrative procedures, rules and regulations," said Jerry Friedman, executive director of the American Public Human Services Association.

For each initiative, a separate funding "silo" was built, designed to raise money and treat a specific illness or address a particular social ill.

"Every time they identified a need, they created one program. Instead of amending programs, they started a new one," Friedman said. The growing list of projects "just eat up administrative costs and time, and they are quite confusing to the community and the clients who are served."

As the money moves from Washington to Harrisburg and other state capitals, the silos stay intact, each with restrictions on how and where the money can be spent, a condition Friedman refers to as "hardening of the categories."

So a homeless woman who is mentally ill, has an alcohol problem and is abusive to her child may need help from at least four different programs and four different caseworkers, generating four different intake forms and four different treatment plans -- if she knows where to go in the first place.

"It's hard to look at someone as a whole human being, because you're funded to deal only with their homelessness," said Michael Printz, executive director for Community Human Services Corporation in Oakland.

Pennsylvania Secretary of Public Welfare Estelle B. Richman is taking steps to address the silo issue with her Integrated Children's Services Plan. Among other things, the plan will require counties to provide a single entry point into the system for children and families, so they don't have to contact separate agencies for each type of service they need.

"There's never been a single point of authority," Richman said in a recent interview. "We have very vulnerable families. We have a lot of families who need services yet we make the ability to get these services as difficult as we can."

Cherna's department has received national accolades for its innovative approaches, starting with the consolidation of five separate departments into one human services department in 1997. With help from local foundations, DHS has developed a central repository of information from all the programs. To try to ensure money is well spent, Cherna will pay providers based on the number of people served, rather than underwrite an entire program.

But these kinds of improvements cannot offset the cuts appearing on the horizon.

Already this year, the Bush and Rendell administrations have proposed reductions in programs such as Medicaid, emergency food assistance, and Community Development Block Grants.

The block grant money was instrumental last fall in aiding flood victims, paying for new furnaces and helping with temporary housing. Last month, Onorato traveled to Washington to let lawmakers know the county needs that $18 million to $20 million in flexible funding. "I had a good reception from both sides of the aisle," he said. But that's no guarantee the allocations will be restored.

Too much duplication?

Another issue is how money is distributed, which can vary widely from state to state. Unlike such states as New Jersey or California, where funds move in a more direct line from the state to the communities, Pennsylvania channels the money through its 67 counties.

Some, including Cherna, say that approach shortens the distance between decision makers and those receiving services, so that those most familiar with the community can direct funds where they're needed.

He also favors the current system of having a multitude of providers, saying people are more comfortable getting services in their own neighborhoods, from people they know.

"I find the most effective service delivery is asking the people in the community itself what they need in their own community," he said. "The further you are away from the street, the less in touch you are with what people need."

But agencies that serve several counties say the state's rules force them to navigate through separate sets of regulations and application forms for each county.

And having more than 350 providers in Allegheny County alone means money must be set aside for 350 executive director salaries, 350 building rentals and 350 utility bills.

"This kind of duplication and redundancy is very expensive," Friedman said.

Combine that with federal and state demands for documentation -- Medicaid reimbursement, for example, requires written plans for every 15-minute segment of care provided in early intervention programs -- and agencies say they're spending more time and money on documenting compliance and less on helping people.

"We've had to add FTEs (full-time equivalent employees) to manage the paperwork, just to try to get the money in. But we haven't been able to add FTEs, in many programs, to provide more services to the kids," said Larry Breitenstein, president and CEO of Adelphoi Village USA, which runs programs for troubled youth across Pennsylvania, including group homes and foster care.

As agencies and county officials try to deal with silos, duplication and paperwork, they also have to be on guard constantly for sudden shifts in the playing field.

Consider what happened to the nationally recognized YouthPlaces program based in the Strip District, which provides after-school activities for 5,000 teens in neighborhoods such as East Liberty and the Hill District.

Despite a record of successes, Executive Director Lori Schaller learned three weeks before the 2003-04 fiscal year began that an $800,000 grant from the state Department of Labor -- representing about 35 percent of the program's budget -- had been withdrawn without warning after the state eliminated that pool of money.

In a matter of days, she had to redesign the entire program and was forced to lay off one-fourth of her management staff.

No cushion allowed

While that's an extreme example, agencies say they chronically feel vulnerable because they are not allowed to build reserves.

State regulations prohibit mental health and mental retardation agencies from accruing reserves of more than 3 percent of their allocations. Drug and alcohol programs and children and youth programs are required to send all unused money back to the state at the end of each fiscal year, leaving nothing to fall back on in a crisis.

"That's part of the discussion that needs to occur, this idea that no program should be working so close to the margin. Otherwise these agencies will constantly struggle," said the Urban Institute's De Vita. "The acquisition or loss of just one large contract or charitable gift can create volatile swings in the budget."

That's just what happened in 2003, when funding for Pennsylvania programs was held up for six months while Gov. Rendell and legislators wrangled over passage of a state budget. Some counties, including Allegheny, fronted money to providers, gambling that most of the funding would be restored. Other counties were forced to reduce services, cut back staff and borrow heavily as they tried to keep programs running.

Not everyone survived. According to the state Health Department, more than 20 human services agencies across Pennsylvania -- many in underserved rural counties -- closed their doors because of the interrupted funding.

Some think that may foreshadow what's to come, with proposed cuts in Medicaid and emergency food assistance perhaps marking the beginning of a growing sea swell of cuts.

"There are some real good programs out there that are either going to have to be basically subsidized in the near future, or they are going to close," said Gregg Behr, president of the Forbes Funds, which provides money to help agencies better manage their programs.

But others say the agencies themselves bear much of the burden of proving they should keep getting money in tight times.

		About this series Staff writer Steve Twedt and photographer Steve Mellon have spent the past 10 months examining how this region cares for its most vulnerable citizens -- the disabled, the elderly, addicts, homeless and hungry people, and others. This week's three-day package of stories is the first in an intermittent series that will look at how good a job society does of providing services for these groups, and how well money for those programs is spent.

Former county executive Roddey believes that the federal and state governments, county officials, the United Way and private foundations have to say, "We want to see how efficient you can be, and not just what your outcomes are."

While it might be ideal for programs to exist in each neighborhood or community, he added, "I think we will reach a point very soon where we will not be able to do that."

William J. Meyer, president and chief professional officer of United Way of Allegheny County, acknowledged that "it's rare" for United Way to tell a struggling provider to close its doors. "You're more inclined to help them with their problem, or manage them." But he said that might have to change.

"It will get to a crisis level because of what's happening in our economy. I think it's started already," he said.

"If we made no change whatsoever, I would say in five years there will be a major crisis, and it will start in the rural services," said Ron Barth, president and CEO of the Pennsylvania Association of Non-Profit Homes for the Aging. The association represents more than 350 providers of long-term and housing services for 70,000 elderly people.

"You can never avoid the laws of economics," Barth said. "If, after a certain point, services cost more than the revenues coming in, those services will disappear. You may hope they won't, but they will."

Tomorrow: Why some agencies thrive while others struggle.

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