In any given year, or month, or day we face challenges to doing our missions well. These challenges aren’t new, but the tsunami of so many hitting at the same time prevents us from performing at the level our missions require – and that must change.
It was with these thoughts in mind that I addressed the Senate Labor and Commerce Committee last month. I briefed legislators on the contributions nonprofits make to the Alaska economy, along with some of the challenges facing the sector and actions they can take to help us meet these challenges. I encourage you to listen to this recording of the committee hearing. Questions after my presentation provide important insights to how the committee members think about the issues facing Alaska.
In my testimony I also related specific examples of situations facing nonprofits – and they only scratch the surface of deeper issues that hamper our ability to attract and retain the workforce we need to serve the health, safety, and well-being of Alaska. Let me be clear, these challenges stretch beyond this administration and this legislative body, some are decades old. But the state of our economy, out-migration of Alaskans, and shifts in our workforce, call on us to fix these problems now. We simply cannot wait another year or another decade.
You are all part of this landscape, and your organization and mission will be affected by the decisions made and actions taken by lawmakers. We need your experience, perspectives, and ideas at the table as we work toward solutions. As you review these challenges and solutions, ask where you fit in, what you can do, what more you need to know to act now.
To be sure, nonprofits felt the effects of the pandemic differently depending on a variety of factors.
The demand on health and human service organizations increased almost overnight, and many others had to provide services with their physical doors closed. And yet, nonprofits nimbly adapted to meet the needs of Alaskans, at the same time enduring the economic hardships of the pandemic economy. While the health emergency has shifted, we know the economic and workforce impacts will persist for many years as we manage ever-changing health precautions, staffing shifts amidst the Great Resignation, unexpected costs in a lagging supply chain, waning volunteerism, and uncertain funding sources.
As nonprofits face rebuilding their business models, they do so knowing their ability to recover is part of building the foundation for a strong Alaska economy. Perhaps no better example of the pandemic’s impact exists than the challenge to provide adequate childcare services across the state.
Bottom line: Nonprofits are still trying to recover in the face of increased demand, loss of workers and volunteers, and deep shifts in funding.
It is essential to our ability to attract and retain employees that nonprofits are paid promptly for the work they do for the state, whether through grants, contracts, or Medicaid reimbursement. Unreliable cash flow not only creates undo stress and burnout on state and nonprofit employees, but it can also create life and death consequences when we are not able to meet the needs of those we serve. The additional weight of not paying for food or medical expenses for those in greatest need only creates dire consequences for people, organizations, and local governments. I shared two examples with the committee.
Eileen Arnold, executive director at the Tundra Women’s Coalition in Bethel says the nonprofit is “a cash poor agency in a cash poor community, in a cash poor region.” State funds are supposed to provide 25% of the general fund in advance, along with monthly reimbursement from federal funds. However, she says: “The advances are almost never advances. First quarter starts July 1, the “advance” came on August 2. The third quarter starts January 1, and the “advance” came on January 4.” Eileen is then in the difficult position of calling her vendors and asking them to wait for payment. She says her organization should be able to depend on prompt payments instead of spending time calling vendors and finding other ways to meet their financial obligations.
Pat Branson with the Kodiak Senior Center has a similar story. The Center received first quarter grant payments last year (the quarter started July 1) on October 3. They had to show expenses to complete their first quarter reports, which is necessary to trigger payments for the second quarter, but they had no revenue to reflect those expenses. Because of this, they did not receive their second quarter payments until November 4 and December 2. In order to complete their second quarter report, they had to spend those funds by December 31. She said: “Our agency had funds set aside, thank goodness, otherwise we would not have been able to meet payroll or deliver services to those 60 and older on Kodiak Island. I am not sure how other agencies got though with this payment glitch.”
These examples are current, but they are not new, and they are not unique to Alaska. We are hearing about prompt payment issues across many states as everyone struggles with a workforce shortage. That said, our challenge is exacerbated by an outdated IT system.
Bottom line: The significant and substantial delays by the state in payments on grants and contracts is hurting people, workers, and our economy.
One underfunding example of many is Head Start where 2,600 children are served in more than 100 Alaska communities. Mark Lackey, executive director of CCS Early Learning in Mat-Su, reports that they have a workforce crisis resulting in their inability to serve more children. He says they lack a full match from the state, which they could leverage with other funds to provide better wages and benefits and attract workers. More workers mean more children can be served and more parents can go to work.
Bottom line: Cuts or flat funding over the last decade have lessened our ability to serve Alaskans in need, compete in the workforce for quality staff, and leverage every dollar to secure additional funding for better results.
The Great Resignation is not reserved for one sector or one place – it’s affecting every workplace and is true for both nonprofits and state administrative staff.
Hope Community Resources, for example, reports their situation is similar to many other service providers within the Alaska Association on Developmental Disabilities (AADD) network. They have closed and consolidated eight assisted living homes, primarily because of staffing shortages. Hope values choice in its mission, but this option is significantly reduced without adequate staffing. One in three people funded to receive services in their own homes do not have staff because of shortages. Trained staff are not available to provide relief or cover vacations, increasing strain and burnout of remaining employees. All these factors result in reduced quality of life for a vulnerable population of Alaskans.
As another example, the Alaska Network on Domestic Violence and Sexual Assault member agencies have difficulty competing for new employees and keeping those they have. One agency has closed their Child Care Assistance program and is on the verge of closing a transitional housing facility that has been in operation over 40 years. Another reports that staff hired for community prevention are now covering shelters that must have round-the-clock personnel to ensure safety. Still another is turning away victims who need emergency shelter. With shortages of Village Public Safety Officers, state troopers, and sexual assault nurse examiners, the overall system to protect victims is fraying.
Bottom line: There are simply not enough qualified workers resulting in lost services and greater stress on those who stay.
These realities are sobering, to be sure. We did not get here quickly, and we understand it will take time to fix these problems – but it can’t take as long as it did to get to this point. Solutions are out there, and they can be found through leadership from the state and support from the nonprofit sector. We are ready to help. And these are the areas we view as most pressing:
If only it was that easy. We know this is both a workforce capacity and a technology problem as well as a process issue. Other states are seeking workable prompt payment solutions, and Alaska can lead the way if we focus on it. There are good ideas both within state departments and from leaders in our sector. Let’s learn from each other and from other states how to do it right in Alaska.
In recent legislative hearings, the challenges of the state’s outdated and overburdened technology system have become a source of many woes. We understand there was an effort more than a decade ago to update, streamline, and network the systems for efficiency and effectiveness but those steps were never completed, and it is hurting everyone. The cyber-attack only made the bad worse. In addition to hindering prompt payment to people, nonprofits, and others, it continues to hinder the system for background checks, which is critical to our ability to hire workers in all health and human service and childcare jobs. We must move away from the manual, slow processes and significantly overhaul the IT system so we can process the staff we all seek. Solutions have been proposed by the Alaska Mental Health Trust, Alaska Association for Developmental Disabilities, and others that could fix the problem with background checks. They may involve legislative or regulatory changes, but they need to be examined. We know the state can access many experts to guide the way in overhauling the whole system.
If the work is essential, so must be the worker. We are not going to find solutions to our workforce challenges until we can all offer a living wage, affordable health care, and other incentives. In addition, we must see, recognize, and thank our workers for doing an extremely hard job day in and day out. Nonprofits have never been fully staffed administratively because we don’t have enough unrestricted cash to pay for it. The state’s workforce also has clearly suffered significant cuts and vacant administrative jobs for as long as I can remember.
One way to cut jobs was to leave vacancies unfilled. After years of doing this, we now have many people working under pressure to do more with less. We see the impact in the slowness of SNAP payments and the inability to process Medicaid and other grant payments on time. We can fix this problem by asking each department to identify their true administrative needs to get the work done and then build our state budget from this informed position.
In its recent economic forecast, the Anchorage Economic Development Corporation lays out this problem for the city, but it can apply as well for the whole state. “The city has struggled with several factors that contribute to workforce availability and overall quality of life: high housing costs, low availability of childcare services, and uncertainty surrounding K-12 education funding being three of the most prominent in 2022.” There is no single solution to our workforce conundrum. It’s going to take the willingness to acknowledge the complexity of the challenge and work on solutions together.
My final request to the committee is to invite nonprofits to the table. I point out that “we are diverse in our experiences and skills. We are on the ground within communities across Alaska. We are a resource, and we are your partners. Yes, we might share more problems, but we will come with solutions. My colleagues around the state have been living these challenges for a long time, and they come with solutions. We are eager to work with legislators to ensure nonprofits don’t go out of business or fail to serve Alaskans.”
Are you ready to offer solutions? In getting ready for my testimony, I heard more great ideas about regulatory reforms, rate reviews, process overhauls, and new collaborations to leverage both people and money to better serve Alaska. We want to hear your regulatory and statutory ideas. We want what the legislature wants – and all Alaskans want – a strong economy and a stable workforce. We know our safety net is thin, our resources are short, and the tendency to cut instead of investing is high. But we must change that story if we want Alaska to thrive. My message to the legislature and to you is let’s be ready to work as partners to tackle our challenges and find workable solutions.