Budget delays pain nonprofits

POINT MACKENZIE — Nugen’s Ranch, a haven for those stricken with alcohol addiction, faced sad news regarding past and future financial uncertainty this week.

Henrietta Nugen, who passed away recently, co-founded the ranch with her husband Leonard in the 1970s.

The ranch also faces an interruption in state funding, which accounts for about 90 percent of the nonprofit’s revenue. That uncertainty puts the nonprofit enterprise in a delicate position moving forward. The facility provides long-term residential care to patients recovering from alcohol and other substance addictions, so closing down, even temporarily, is an unpalatable option, according to director Karen Nugen Logan, Henrietta’s and Leonard’s daughter.

“Basically, I operate off the grants I receive, the client fees I receive, and what we can get from the sale of our hay and vegetables here at the facility,” she said.

Because the ranch’s clients depend on the facility to keep them segregated from possible relapse, Logan has secured a line of credit. But as a 30-year veteran of the nonprofit field — where operating margins can be razor thin — she’s said she’s reluctant to tap the line of credit. The money ordinarily funds medical and psychological treatment and individual and group counseling for multiple-relapse patients suffering from alcohol and drug addiction, Logan said.

“While they’re here, they’re learning to live life clean and sober,” she said. “These people … have been admitted to many programs before, and this is probably one of their last chances to get (clean and sober).”

The ranch’s scope is relatively modest, boasting 26 beds (of which 20 are funded by the state), but it is no less essential to its clients.

Nugens Ranch isn’t alone in facing financial downturns. Alaska Family Services is considering trimming services and eliminating jobs, said president Donn Bennice. Officials at DayBreak Mental Health Services said they would continue service uninterrupted, through a combination of crafty cost savings and possibly a bit of luck. State grants account for about 10 percent of its total budget, or $250,000.

“We’re still gonna meet those needs,” said DayBreak clinical director Polly-Beth Odom. “The same thing with Mat-Su Behavioral Health, or Denali Family Services.”

Part of the reason (however small) DayBreak can continue operations came in the form of an employee injury, Odom said. Workman’s comp payments mean the cost of that employee is off the books, for now.

“It was terrible for her, but it was really fortunate for us that we had one less person on staff,” she said. “We didn’t have to lay anybody off and we could fill in her spot, which helped reduce our overhead.”

Numerous other agencies across the state will take at least a short-term hit from a long-anticipated delay in state grant funding. The delay is most easily identified among recipients of grants from the Department of Health and Social Services, like the community behavioral health program. About 200 organizations accounted for about $180 million in grants through the department in fiscal year 2015.

The impact of the hit varies among organizations. Deputy Department of Administration Commissioner John Boucher said it’s tough to calculate the true impact of the delay.

“The entire year’s grant is typically not granted in one fell swoop,” he said. “In terms of the dollar value, I imagine that there’s different drawing patterns for different grants.”

Officials said the delay resulted from a lengthy budget battle and the implementation of a new state accounting system.

“Payments from the department to grantees have been delayed due to implementation of the new statewide accounting system and the FY2016 operating budget development process,” legislative liaison Tony Newman wrote in an email.

The department usually has a clearer idea of what grants are available much earlier, but since there was no budget for Gov. Bill Walker to sign until June 30 — the last day of fiscal year 2015 — the department didn’t have a clear picture of what funding the Legislature would make available, several government officials said.

“The department is now finalizing grant award recommendations and has begun issuing grant award documents,” Newman wrote.

The awards documents would need to be reviewed and signed by the agencies, and sent back to the department. The funds would be disbursed a week to 10 days after the letter was returned, according to the letter.

Numerous grant recipients across the state, particularly those reliant on funds for the Department of Health and Social Services, face delays arising from the protracted spring struggles over the state’s operating budget and the introduction of a new accounting system, known as the Integrated Resource Information System, IRIS, to replace two pre-existing accounting systems: the Alaska Statewide Accounting System, known as AKSAS, and the Alaska State Payroll System known as AKPAY, in use since the 1980s. The payroll replacement won’t begin until next year.

The Legislature allocated roughly $88 million to fund the replacement, and the July 6 switchover date has been widely circulated since a May 5 letter from assistant commissioner Sana Efird, when officials warned of a month-long delay potentially as late as Aug. 1.

Andy Mills, spokesman with the Department of Administration, said the effects of the change appeared to vary among departments.

“I contacted the administrative services director, both Department of Public Safety and the Department of Health and Social Services,” he said. “They both said there’s something else going on. It’s not an IRIS-specific issue with the application, it has to do with the lateness of the budget really pressing all of our departments.”

Contact Brian O’Connor at 352-2269, brian.oconnor@frontiersman.com, or on Twitter @reporterbriano.