Gov. Ned Lamont’s biennial budget proposal Wednesday set aside more funding for community nonprofits that deliver state-contracted services, but nonprofits are still concerned.
“Without federal ARPA [American Rescue Plan Act] funding fully annualized, the governor’s proposal is an effective $19 million cut for nonprofits in the first year,” said Gian-Carl Casa, CEO of the CT Nonprofit Community Alliance, comprising 290 nonprofits statewide.
“There is a waiting list of about 2,000 people who are waiting for services from the Department of Developmental Services,” he said.
The state receives Medicaid funds to pay for those services, but Casa said those funds, too, haven't kept pace with program costs — hence the waitlist.
Connecticut received $2.8 billion under ARPA nearly four years ago, and part of that funding is in investments adding to the state surplus.
Lamont proposed in his budget to set aside $157 million for nonprofit service providers — a move welcomed by advocacy groups.
Garth Harries, president and CEO of The Connecticut Project Action Fund, a nonprofit, said it was “heartening to hear Gov. Lamont describe some openness to sharing the state’s surpluses by responsibly modifying Connecticut’s fiscal rules.”
Lamont’s most recent allocation is in addition to the nearly $327 million the state offered nonprofits in fiscal year 2025.
State contracted nonprofits provide a variety of services, including residential and day services to people with developmental disabilities. They also provide substance abuse and mental health treatment, homeless shelters, re-entry programs and other vital human services, Casa said.
The push to tap into those state funds is exacerbated by federal funding cuts and historically low Medicaid reimbursement rates, Casa said.
“The major concern is that the system has been badly underfunded for years,” he said. “Overall, nonprofits are 30% behind in terms of buying power from where they were in 2007.”
"After nearly two decades of underfunding, nonprofit providers cannot absorb a cut, especially when federal funding is threatened and the state is projecting the eighth annual budget surplus,” Casa said.
A desire to spread around more of the state’s budget surplus was a sentiment echoed by Carmen R. Correa-Rios, chair of the Connecticut Association of Centers for Independent Living and executive director of the Center for Disability Rights.
"Connecticut’s fiscal health is strong and our request for a $1 million increase would protect our vital services. We will work with the General Assembly to support our request,” Correa-Rios said.
Medicaid rate increase
A Department of Social Services study of Medicaid reimbursement rates in Connecticut released in January found that the developmental disabilities services sector is grossly underfunded, with no cost-based basis for determining their rates.
The first phase of that study released in 2024 also found Connecticut’s rates for behavioral health outpatient services were less than 50% of those in comparable states and that rates for autism services were less than 78% of the benchmark.
The current recommendations include:
- Update fee schedules to ensure that different types of health care providers are paid fairly by setting Medicaid payments as a consistent percentage of the current Medicare Physician Fee Schedule (PFS).
- Create a timetable to update fee schedules every year.
- In cases where Medicare doesn't provide a good method for updating rates, use rates from other state Medicaid programs to set fair prices for services.
- Adjust how much is paid for different services. Some services might need more funding, while others could receive less, depending on state priorities like expanding access to care or improving outcomes.
Learn more
With focus on universal pre-K, Lamont unveils proposal for CT's next 2-year budget
