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The State Budget and Structural Reform, Part 5

Aug 24, 2015
Editor’s Note: Throughout this year’s debate on the FY 2016 - FY 2017 biennial budget, the MetroHartford Alliance advocated for structural reforms that would establish a fiscal foundation supporting private sector job retention and growth as well as capital investment. In communications to policymakers and public forums on the budget, the Alliance continually stressed the need to adopt lasting, real reforms to bring sustainability to our state’s budget, such as those developed by the Connecticut Institute for the 21st Century

We are encouraged that the budget implementer includes language that directs the Secretary of the Office of Policy and Management to review the reports of the Institute and submit recommendations to the Governor and the Legislature’s Appropriations and Finance, Revenue and Bonding Committees.

In the interest of providing more details on the structural reforms for which the Alliance has advocated, we are sharing regular updates with our Investors.

Crafting a Survival Plan for Our Splintered Human Services Delivery System

The role of nonprofit organizations and the delivery of public services are fundamentally about the people who rely on the state for services, the quality of those services and the people who provide those services. As a state, we have committed to using significant public resources to serve those in need. 

Despite the fact that Connecticut, through seven different agencies, purchases $1.8 billion annually in services - a figure that does not include billions in spending on publicly provided, state-run programs - our current service model is a confusing, non-integrated, inconsistent and out-of-balance system that is neither efficient nor effective. Each of the seven agencies serves a unique region, and each has different:

• RFPs,
• contracts,
• rates,
• payment provisions,
• data reporting requirements, and
• performance and quality measures. 

This splintered approach makes it more difficult for individuals and families to obtain the services they need. It also makes it impossible to achieve or measure results on a population basis. 

The Nonprofit Service Provider Community: Critical to Clients and Connecticut’s Economy

Nonprofit service providers are a vital component of the state’s service delivery network and contribute significantly to Connecticut’s employment and economy. Importantly, reports show that Connecticut nonprofit service providers provide equivalent services more effectively than the state.  Analyses of the status of service delivery by nonprofit organizations in Connecticut have found that:

• It costs 2.5 times as much to take care of clients in a public program than in a private one.

• Public sector positions’ pay and benefits are significantly higher than comparable private/nonprofit provider positions and contribute significantly to long term debt obligations.

• Nonprofit service providers are not funded adequately to attract and compensate a qualified workforce.

• The nonprofit sector has experienced 10 consecutive years of financial decline.

The relationship between the state and nonprofit organizations has contributed to the declining fiscal health of nonprofit service providers and their employees.  The contracting process is difficult, inconsistent across agencies, time consuming and inherently unfair to nonprofit service providers. Developing solutions to these problems is the responsibility of government and should be done with input from the nonprofit service provider community.

Fortunately, improvement initiatives are underway at both the agency and the state level. Governor Malloy has appointed a nonprofit advocate in his office and has created a Cabinet on Nonprofit Health and Human Services.  CT21 offers these additional recommendations to improve the efficiency and effectiveness of service delivery:

• Transition the Cabinet on Nonprofit Health and Human Services to an Advisory Board that will create, direct and monitor a cross-agency human services organization.  This new cross-agency organization must be responsive, efficient, fair and accountable.

• Accelerate efforts in data collection and sharing that are key to measuring population outcomes. 

• Adopt best practices from states such as Washington, which establish clear priorities and use a facilitated process to achieve results.

It is critical that the nonprofit human service sector be viewed as an economic driver and job creator.  The nonprofit provider community must also be seen as a partner in improving the current system in order to ensure nonprofits’ survival in an increasingly constrained and competitive environment. The private provider community can help change existing state practices if it is seen as driving human service innovation and change, and if the state government pursues opportunities to utilize private services when they are cost effective and appropriate.

If you found this blog post of interest, you may also wish to read the May 18 Hartford Business Journal op-ed by Barry Simon, President and CEO of Oak Hill, Connecticut's largest nonprofit provider of services to people with disabilities.


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