Fed cuts will have impact in county
Spending reductions Cuts on horizon By Gil Smart, Staff Writer email@example.com
Beginning this week, the "sequestration" takes another bite.
Nationwide, those who receive emergency unemployment compensation --federally funded benefits for those who have exhausted their 26 weeks of state-paid compensation -- will see the amount of their check reduced by 10.7 percent.
According to the Pennsylvania Department of Labor & Industry, that affects some 99,000 people across the commonwealth. In Lancaster County, 2,720 people received emergency unemployment benefits the week of Feb. 23, the most recent week for which figures are available.
Notices to recipients go out this week, said Sara Goulet, L&I spokeswoman. Pennsylvania has no control over the reduction in benefits, she said.
It's all because of the sequester.
The automatic, across-the-board federal spending cuts that went into effect earlier this month have had a limited impact both nationwide and locally so far. The most high-profile cutback here has been the impending closure of the air-traffic control tower at Lancaster Airport; the tower is scheduled to close April 7, idling seven workers.
Beginning April 1, Medicare providers will see a 2 percent cut in reimbursements; local hospitals expect this to cost millions.
Others are bracing for impact a little further down the road. Come July 1, as the new fiscal year dawns, housing programs may see funding curtailed. Local fire companies expect grants to be much harder to come by. School districts could see a significant drop in revenue. And the Head Start program administered by the Community Action Program of Lancaster County might be forced to cut 40 kids from the rolls.
"But it's not that simple," said Mark Esterbrook, CAP's CEO. "We expect next year's cut to be in the $300,000 range, but we don't know for sure.
"We'll get through June 30 of this year relatively unimpacted, but next fiscal year -- we'll see an impact on our clients, employees, and the community."
The sequester took effect March 1, forcing federal agencies to reduce spending by a combined $85 billion by the end of the fiscal year. For many agencies and school districts, it affects funding allocated as of July 1, 2013.
But cuts have already occurred elsewhere. Immigration & Customs Enforcement began releasing detainees from federal immigrant detention centers across the country in late February. Notices went out to thousands of federal workers earlier this month that they could be furloughed beginning in April.
The coming week will see three major sequester-related cutbacks: the closure of 149 air-traffic control towers across the country -- including the one at Lancaster Airport -- the reduction in Medicaid reimbursements, and the cut to emergency unemployment compensation.
The airport towers scheduled to be closed are operated by Federal Aviation Administration contractors.
Lancaster Airport director David Eberly has said the closure of the tower could create a dangerous situation for local pilots, but that it won't cripple operations at the airport.
Medical providers are nervously eyeing the impending Medicare cuts. At Lancaster General Hospital, the cutback could cost $1.2 million through the end of the hospital's fiscal year, said LGH Chief Financial Officer Dennis Roemer. "And if you consider that Medicare Advantage Plans may follow suit -- the government is reducing payments by 2 percent for the Medicare service population, they're likely to do the same for Medicare Advantage -- then that could have anywhere from a $3 million to $5 million impact on us annually," he said.
In last week's Sunday News, Harold Paz, CEO of Hershey Medical Center, wrote that the loss of funding could results in additional cuts to Hershey, a teaching and research hospital, due to budget cuts at the National Institutes of Health. All told, he wrote, the institution could be forced to eliminate up to 97 jobs.
Roemer said job cuts at LGH would be "a last resort, but it's always a possibility."
Jerry Askew, director of governmental relations for Health Management Associates -- owner of Lancaster Regional Medical Center and Heart of Lancaster Regional Medical Center -- declined to say how much those hospitals expected to lose from the Medicare cuts. "We're a publicly traded company," he explained.
However, he said the hospitals, and the parent company, "will make up this money through improved efficiencies."
"These cuts will definitely be difficult," he said, "but we will protect patient care at all costs."
The pending cuts to unemployment compensation will not affect everyone on unemployment. Those who have been receiving benefits for less than 26 weeks will see no change. But those who were still jobless after 26 weeks and receive federally funded emergency unemployment compensation will see the average unemployment check fall from about $337 a week to about $301.
That cut comes at a time when unemployment in both Pennsylvania and Lancaster County has worsened. Statewide, the unemployment rate was 8.2 percent in January, compared with 7.6 percent in January 2012. In Lancaster County, the January 2013 unemployment rate ticked up to 6.9 percent, up from 6.3 percent in January 2012.
Elsewhere, cuts aren't imminent. But local officials know they're coming.
At the Lancaster County Housing and Redevelopment Authorities, Executive Director Matthew Sternberg expects that funding cuts mean the agency will be able to serve about 700 clients who need Section 8 housing vouchers next year.
Currently, the authorities serve 790 such clients.
"We intend to try to accomplish [the reduction] by attrition," said Sternberg. "As people rotate off the program, we simply won't fill those spots."
Asked if the agency usually has that much attrition, Sternberg said: "No. We'll have to see what happens. It's not our intention to go in and start kicking people off the program."
For the current fiscal year, the authorities got $3.6 million in federal funding. Sternberg said he expects that to drop as low as $2.3 million this year. Block grant funding will be cut. Administrative funding will be cut, and it's already not covering the cost of personnel: "We're carrying our staff out of reserves and other funding sources," he said.
The agency, which serves residents everywhere in Lancaster County except for the city, simply needs to figure out how to make due with less, he said. "You're going to hear that from every agency," Sternberg said.
Robert C. Schellhamer, executive director of the Lancaster City Housing Authority, concurred. "It's happening across our whole industry," he said. "Our Section 8 program is going to be reduced by 6 percent."
Still, while the "sequester hurts badly, we're not at risk of taking anybody off the Section 8 program." On the other hand, the agency is authorized to serve as many as 1,003 families in the city, but is serving fewer than 900 families. There's just not enough money to serve more, he said.
At CAP of Lancaster County, CEO Esterbrook said the uncertainty over how much funding CAP could lose is making budgeting an impossible task. "We can build [the budget], we can use our best estimates, but in reality it's a joke," he said.
The agency's funding comes from 13 sources, many of them federal. "We'll try to revamp a few things. We want to maintain quality. We'll look for other ways to make rent," he said.
"But that's the great stressor -- what's the impact, how much and when?" he said.
"They haven't even told us."n
Sequestration's hits include airport and emergency unemployment benefits.