While the public's eye has been trained on the money that Bernard Madoff allegedly swindled from Jewish organizations, most Jewish charities are fearfully watching another, much larger donor that is falling on hard times: the government.
Jewish agencies such as nursing homes and community centers take in an estimated $10 billion each year from government sources - some 10 times the amount these agencies raise from the public. Most of the $10 billion is directed through state governments that are struggling mightily to stay afloat in the current economic downturn.
In California, where Governor Arnold Schwarzenegger is facing a spiraling economic crisis and a $14 billion budget gap, Los Angeles's Jewish Family Service is one of the agencies already feeling the squeeze. The agency, which oversees care of the elderly and disabled, took a cut of nearly $1 million to its budget this year. Twenty people were laid off as a result. Even more cuts are anticipated for the coming fiscal year, set to start in July. Worse, this month, due to the budgetary overruns, the state is set to stop sending checks - even for programs it had promised to cover.
California's situation may be the direst, but similar budget battles across the country have Jewish charities looking to President Obama's financial stimulus plan as the one ray of light in the darkness. The nearly $1 trillion plan is set to inject massive amounts of cash into struggling state budgets. In New York, Jewish organizations estimate that the stimulus plan could halve the budget cuts that will be necessary in 2010.
"The recession has pushed just about every other issue that we deal with in Washington to the sidelines," said William Daroff, Washington representative of American Jewish federations' umbrella group, United Jewish Communities. "This is the first-highest priority, the second-highest priority and the third-highest priority."
Earlier this month, 60 Jewish leaders from around the country descended on Washington for a hastily organized emergency mission to lobby congressional leaders on the stimulus bill.
At the root of the problem are the state budgets that have declined as tax revenues and investments have plummeted. The Center on Budget and Policy Priorities, a Washington think tank devoted to domestic budget issues, estimates that 46 states will not have enough money to cover their budgets this year and the next. In New York, the budget is set to run over by 25% in 2010; in California, the overrun will be 26% if things don?t change. Unlike the federal government, states are generally not allowed to run a deficit, and so the red pen has come out.
In the past few months alone, the crisis has already led to cuts that have seriously affected the services that Jewish agencies offer.
These cuts come as the fundraising campaigns of the Jewish federations, which ended last December, raised less than they did in 2007, and endowments returned less. But the largest sources of funding for almost all Jewish agencies are the state and federal governments.
In Ohio, $117 million flows from the government to Jewish agencies around the state. Joyce Garver Keller, who deals with the state government on behalf of Ohio's Jewish federations, just got the proposed state budget for 2010. She is bracing for nearly 20% cuts in government funding - a drop of $22 million. That will likely affect the state?s eight Jewish nursing homes, its Jewish day schools and the Holocaust memorial in Cincinnati, among other things. As she spoke to the Forward, Garver Keller took note of the stream of messages coming into her inbox, from people asking about the shortfalls.
"It's sort of like there's no place to run, no place to hide from this," Garver Keller said. "It's all you can do every morning to be positive."
Garver Keller, like most other communal professionals, said the cuts are particularly painful because they come at a time when the number of needy people - and thus the demand for services - is rising across the state.
Certainly, some of the cuts may be lessened by the federal stimulus plan now moving through Congress. The version passed by the House of Representatives on January 28 would offer nearly $100 billion to fund Medicaid, the program upon which many Jewish agencies rely. The Center on Budget and Policy Priorities estimates that the stimulus program may cover half the cuts being planned by states.
The Jewish federation in New York, for instance, had been anticipating that the $1.5 billion it receives in government money would drop 8%, or $120 million, in 2010. With the stimulus package in its current form, the cuts would amount to half of this.
"Things are still going to be serious, but they won't be as catastrophic as they would have been without the stimulus funding," said Ron Soloway, who is in charge of state government relations for UJA-Federation of New York.
Unlike many smaller not-for-profits that rely on state funding, Jewish agencies have the benefit of people like Soloway, who have been lobbying in state capitals and Washington to save specific programs.
Still, that is not always enough. Last year, Jewish Family Service of Los Angeles managed to lobby the state legislature to delete cuts that would affect it. But at the last minute, said Paul Castro, the agency's executive director, Schwarzenegger, wielding his power of line item veto, put the cuts back in before signing the legislation. This reduced Castro;s agency's budget by nearly $1 million.
This year, Castro said he is struggling with how to present his case to a state government that itself is faced with the task of cutting $26 billion - a quarter of its spending.
"What do we say - we know you don't have any money, but keep funding us?" Castro said. "We're not sure. We've never been in this situation before."
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