By ROGER SCHNEIDER
THE GOSHEN NEWS
How soon and how much Goshen-area residents will notice automatic federal budget cuts that may begin Friday are mostly unknown.
Congress cut a deal last fall to institute across-the-board budget reductions that will trim $85 billion from the federal budget through Sept. 30 and $1.2 trillion over the next decade, according to The Associated Press. Some of those cuts will impact local agencies and services. For instance, all health providers that have Medicare patients will have a 2 percent reduction in their payments. Other services are also set to be reduced.
Pam Kennedy, the director of the combined Goshen and Warsaw Housing Authorities, said she got a notice from the Department of Housing and Urban Development agency warning to brace for a 6 percent reduction in housing assistance payments beginning Friday. The program provides rent and utility subsidies for low-income families.
“They suggest we set fair-market rents lower and double-check the utility allowance,” Kennedy said.
But that won’t happen in Goshen. This cut will be one in an ongoing series of financial reductions from HUD, Kennedy said. In 2010 the housing authority’s usual HUD support was reduced to 96 percent; in 2011 to 86 percent; and in 2012 to 74 percent.
“The sequester reduces it to 69 percent,” Kennedy said. “So we are supposed to streamline by not hiring more people and not giving raises and hopefully we will get through. What do they think we did when it went to 92, 86 and 74?”
Despite all the prior budget cuts, Kennedy said the Goshen agency has a financial cushion due to the City Council’s allocating $571,050 from its rainy day fund to bailout the agency in 2012. Also, a fund drive last year generated about $100,000 in private contributions to the agency.
“The Goshen Housing Authority is setting well for this because of the people who donated last year and the HAP cuts,” Kennedy said. “We are still sitting on that so we won’t be lowering the payments to landlords and stuff.”
She estimated that 285 families in the Goshen area benefit from the rental voucher program.
The agency is still rebuilding that program after several years of administration turmoil and financial stress that led to the merger of the Goshen and Warsaw agencies and the City Council bailout.
“We have been doing very well and we haven’t hardly dipped into it at all yet because we are not fully leased yet,” Kennedy said. “We have a cushion there where other people may not have a cushion. We are going to weather this.”
Schools across the Goshen area receive federal funds to help low-income students through several programs. In Goshen, Superintendent Diane Woodworth believes it will be some time until school administrators know the extent of the budget reduction’s impact.
“The most that could impact Goshen Schools would be Title I funding, Title II and Title III funding,” Woodworth said. “But it looks like it would be more in the fall. I think from what I’ve seen so far, they realize that we already have staff in place and that they would allow us to finish the year. So it would be some cuts for next year.”
Title I is a federal program to assist schools with high numbers of students from low-income families. All seven of Goshen’s elementary schools are now designated as Title I schools.
“We use (those funds) to provide additional tutoring services and supplies and materials,” Woodworth said. “So it’s a lot of staff people. If the cuts go through, we might have to scale that back and look at doing more with less. We’d have to make a hard decision maybe to cut services in all seven, or maybe go back to five.”
Some local students benefit from the Head Start early childhood education program that is also paid for with federal funds. That preschool program is geared toward helping low-income families.
“As far as what might happen with that,” Woodworth said, “I think we’d probably be looking at (fewer) classrooms.
Goshen Schools has six Head Start sessions split between morning and afternoon session in three classrooms.
The Elkhart County Highway Department uses some federal funds for local road and bridge construction projects, according to Superintendent Jeff Taylor. However, those funds have been fixed in federal legislation.
“I don’t think it will have any impact at all,” Taylor said. “The money the county receives in respect to highways is in a transportation bill that was passed. It was a two-year bill. I don’t think sequestration affects that. I think that is going to be safe.
Still, there’s uncertainty.
“Who knows what Washington is going to inevitably do,” Taylor said. “ There’s a lot of game-playing on both sides of the aisle. They could cut the transportation bill to make a statement. Who knows?”
He said Elkhart County has five projects scheduled that will use federal funds. Two of those projects are intersections, two are bridges and one is a bike trail. About $5 million in federal funding is involved. Some of the projects are budgeted for fiscal years 2014 and 2015 and wouldn’t be impacted by this year’s cuts.
Another local service, air traffic control, will also be unscathed. According to Goshen Municipal Airport manager Randy Sharkey, business at the airport will continue as usual.
“Locally here at the Goshen airport we will not feel any impact from the sequester at all,” Sharkey said.
That’s because the airport is not a controlled airport.
But the Federal Aviation Administration will cut back on air traffic control operations at smaller airports, those with less than 150,000 operations per year Sharkey said. The Associated Press reported Thursday that air traffic control towers at Gary, Muncie, Bloomington, Terre Haute, Columbus and West Lafayette might close due to the cuts.
When it comes to city services, Goshen Mayor Allan Kauffman, said the sequester’s impact is still unknown.
“I don’t know the trickle down effect and how it will affect Goshen,” he said. “I hope they find some reasonable compromise before then. Some (of the budget cuts) don’t hit right away. I’m in the dark here. Why can’t reasonable minds find a reasonable compromise here? It’s ridiculous.”
Staff writers John Kline and Sherry Van Arsdall contributed to this report