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Legislature Proposes Boost to Nonprofits and Safety Net Programs Serving New York’s Neediest

Nonprofits form the backbone of the state’s social service sector, and they may be getting some overdue relief in this year’s budget.

Jie Jenny Zou · March 13, 2025

| Image: Governor Kathy Hochul's Office / Flickr

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New York’s struggling nonprofits may get some overdue relief in this year’s budget.

Nonprofits form the backbone of the state’s social service sector, providing contracted services from mental health counseling and disability assistance to homeless shelters and other supportive programs. But providers have long complained of a system teetering on collapse due to chronic underfunding and perpetual understaffing.

Under Governor Kathy Hochul, the sector has received annual cost-of-living raises for the first time in years — a departure from the Cuomo administration. This year, Hochul is calling for a modest 2.1 percent increase, while the legislature’s budget proposals include a 7.8 percent increase that would more than double costs to $576 million. Groups like New York Disability Advocates are pushing for the higher raise in the hopes of reversing crippling turnover and high vacancies.

In a similar vein, an update will likely be made to New York’s oldest supportive housing model, where funding rates have remained nearly unchanged since the program’s inception in 1987. The State Supportive Housing Program (NYSSHP) includes over 20,000 permanent units that have fallen into disrepair with “leaky roofs, faulty elevators, and recurrent floodings.”

Under the governor’s and legislature’s proposals, the program could see reimbursement rates rise by at least 40 percent. Advocates say the program has been “slowly imploding for decades” with a third of nonprofit providers closing their doors, consolidating, or exiting the program entirely.

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The legislature has taken interest in expanding other programs for low-income New Yorkers, too.

Both chambers support adding $200 million to the Energy Affordability Program, which provides monthly utility discounts to 2.7 million low-income households. If expanded, EAP could address “sky-high” rate hikes and newly imposed tariffs.

It could also augment the federally funded LIHEAP program, which faces an uncertain future in Washington. In January, New York scrambled to reopen HEAP applications after funding for the popular program unexpectedly ran out months early.

There also seems to be consensus on investing at least $45 million on in-home senior services, which has racked up long waiting lists statewide. Funding provides meals, housekeeping, and other supportive services that allow the elderly to live independently and avoid expensive long-term care like nursing homes, which make up a growing portion of the state’s Medicaid spending.

The governor has emphasized the need to control health costs, with Medicaid accounting for the largest chunk of the budget by far, providing nearly 7 million New Yorkers with free or low-cost comprehensive coverage.

Medicaid is funded by a combination of federal, state, and local money, but federal support has declined even as enrollment has remained relatively high. The program is also being eyed for deep cuts by a Republican-led Congress looking to finance another round of Trump-era tax cuts.

According to Hochul, the Department of Health is expected to increase Medicaid spending by a whopping 13.7 percent, or $4.3 billion. But the Fiscal Policy Institute points out that underlying program growth is actually just 3.7 percent. Michael Kinnucan, FPI’s senior health policy director, chalked up the increase to the state picking up more of the tab due to declining federal support, as opposed to “runaway growth” in the program itself.

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Both legislative proposals include significantly higher provider reimbursement rates than the governor’s plan. This includes safety-net outpatient clinics, hospitals, and nursing homes. Both houses also want to restore $500 million for the Vital Access Provider Assurance Program to support distressed safety-net hospitals, which provide services to a higher share of Medicaid patients.

While Kinnucan was supportive of increased rates for safety-net clinics, calling it money “well spent,” he recommended a more targeted approach to hospitals and nursing homes, since disparities exist among facilities. He also urged the state to make a long-term plan for struggling safety-net hospitals, beyond temporary funding vehicles like VAPAP.

Healthcare advocates have urged the state to expand Medicaid coverage to vulnerable groups such as undocumented immigrants, youth exiting foster care, and people released from jails or prisons.

“With a state budget outlook that is better than anticipated and a surplus in state coffers, we believe now is the time to invest in care and services,” Medicaid Matters wrote in testimony to the state in February. The coalition represents over 75 organizations, including community-based providers who are calling on the state to raise reimbursement rates for primary care and mental health providers.

Funding for various Medicaid initiatives could come in part from a newly approved tax arrangement that Hochul estimates could bring in $1.4 billion this year.