Some Minnesota Nonprofits Gain Reprieve

July 7, 2011       Don McNamara      

Several Minnesota nonprofits are breathing easier after court rulings deemed them essential services, meaning they can continue to receive state funding despite the state’s shutdown over a budget impasse.

To close a $5-billion deficit, Gov. Mark Dayton, a Democrat, has proposed raising revenues by $1.8 billion through increasing taxes on residents earning $1 million or more, as well as making spending cuts. The state Senate and House, both of which are controlled by Republicans, want to close the deficit solely through cuts in spending.

Lawmakers failedto reach a deal by midnight on June 30, with the result that the state has closed all but essential services and stopped spending money, including what would go to support some nonprofits.

The state must keep essential offices open, those considered necessary for health and safety, such as police and hospitals. Ramsey County District Court Judge Kathleen R. Gearin ruled that nonprofits facing hardship or potential closing were not essential, citing the state’s constitution. Gearin did appoint a Special Master, retired judge Kathleen Blatz, to review appeals from organizations seeking inclusion under the health and safety. Blatz does not issue rulings but makes recommendations to Gearin, who is free to follow or reject the recommendations.

On the first day of rulings, Gearin ruled that the services provided by BLIND Inc. and Southern Minnesota Regional Legal Services were essential. She also included the state’s licensing agencies so licenses can be renewed, but she did not include the agency that issues nurse registration.

The ruling came as good news to Shawn Mayo, executive director of BLIND Inc. in Minneapolis, which offers training to the blind. She said her organization was able to continue without cutbacks in services because it could draw from general funds. It has 15 full-time staff and three summer temporary staff. It will be adding five more summer temps next week. The organization serves 40 to 45 people and will begin its children’s program the second week of July.

Mayo said the staff was discussing options even before the shutdown and was willing to take whatever steps necessary to keep running.

“We were quite concerned about how long we could continue to provide services and about further sustainability,” Mayo said. She added that even though her organization can operate, it is a referral agency, so she is concerned that counselors to whom clients would have been referred and who are out of work may face serious backlogs when they do return to work.

“Our students are thrilled (about the ruling),” Mayo said. “They didn’t have anywhere else to go. And they’re what it’s really about.”Jon Pratt, executive director of the Minnesota Council of Nonprofits, said the problem is twofold: the immediate challenge of the shutdown and the post-shutdown budget, which he referred to as a “retrenchment budget.”

“The second part is the bigger problem,” Pratt said. “No one knows how much money for support of nonprofits will be included, so planning is almost impossible.” Decisions will have to be made on whether the state will make retroactive payments, for example.

“Some organizations have already closed their doors and suspended operations,” Pratt said.

He gave as an example the Minnesota Historical Society, which operates museums, historic sites, a library and various programs. It has temporarily closed operations, putting 400 people out of work, Pratt said.