Cuccinelli: Some state payments to Virginia charities were unconstitutional

Virginia officials have frozen funding for some charitable organizations in recent months — including free medical clinics and community health groups — as they sort out which nonprofit groups the state can legally fund in the wake of the attorney general’s opinion that such use of taxpayer money is unconstitutional.

The January ruling from Attorney General Ken Cuccinelli II (R) that the state constitution bars grants to private charities threatens funding for a number of groups that have long relied in part on state money to fight child abuse, help AIDs patients and counsel low-income pregnant women.

When Cuccinelli’s opinion was released in January, it was widely thought to immediately affect only a handful of grants sought by Gov. Robert F. McDonnell (R) during the winter legislative session.

It is now clear that the opinion has had a far broader impact.

For months, Virginia officials have quietly been consulting with Cuccinelli’s office about whether to cancel payments to dozens of nonprofit organizations approved by the General Assembly last year in the state budget.

While the reviews have been underway, the state has suspended payments to some charities, including the Virginia Association of Free Clinics and CHIP of Virginia, an organization that works with low-income families and pregnant women.

On Friday, Cuccinelli’s office informed state officials that it had completed its review of a number of charities funded through the Virginia Department of Health, deeming some payments unconstitutional.

A department deputy commissioner said efforts are underway to find alternative routes for funding the groups.

But if new funding avenues that pass constitutional muster are not found, the decision could endanger millions of dollars in funding slated for groups that work with some of the state’s neediest residents. The agency said it would not release the names of the groups affected until next week, as allowed under public information laws, to give time for its officials to deliver the news.

In Virginia, legal opinions offered by the state attorney general are considered advisory and do not carry the force of law. In his 15 months in office, Cuccinelli has issued a stream of controversial legal interpretations, written in response to inquiries from lawmakers.

The opinions have sometimes been dismissed by political adversaries as legal missives that carry little practical weight. But the reaction of McDonnell and the machinery of state government to Cuccinelli’s opinion on charitable funding shows the far-reaching impact his legal pronouncements can have.

In the opinion, Cuccinelli held that grants to nonprofits violate the state constitution, which prohibits the General Assembly from appropriating funds “to any charitable institution which is not owned or controlled by the Commonwealth.”

State lawmakers have for years gotten around the constitution’s language by classifying charities as “historical” or “cultural” agencies.

Reviewing all funding

On the day Cuccinelli’s opinion was published, McDonnell’s chief of staff, Martin Kent, e-mailed every state agency head, asking that each department submit for constitutional review a list of all charitable groups slated for funding in the state budget.

“It is likely that some of those appropriations fall outside of the scope of the issue, but it is important for us to make that determination first before further disbursements are made,” Kent wrote.

Three months later, the issue has not been fully resolved, and “further disbursements” have continued to be held up.

Suspended payments have included $540,000 to the Virginia Association of Free Clinics, a network of 60 medical clinics that served 72,000 patients last year.

CHIP of Virginia has also been told to expect no more funds until the issue is worked out. The group is awaiting $283,000.

State officials confirmed that the Child Advocacy Centers of Virginia and Healthy Families of Virginia, groups that work to prevent child abuse, also will receive no further funds, pending the completion of the legal review.

“The longer this situation goes on, the more critical it’s going to get for our specific clinics,” said Lou Markwith, executive director of the free clinic association. “We’re going to have to cut back services.”

Jasen Eige, the governor’s counselor, said that when it became clear that at least 100 not-for-profit groups could be affected, agencies were asked to work with the attorney general’s office to determine whether funding could be released.

Eige said that with so many individual decisions to be made, the governor’s office has not been directly involved. “This is being handled on a case-by-case basis, at the agency level,” he said. “We don’t want to run afoul of the constitution, and we’re working with the attorney general’s office to try to figure out a solution to this.”

The result has been that the governor has delegated to the attorney general’s office enormous power to sign off or nix individual appropriations approved by the legislature, Sen. R. Edward Houck (D-Spotsylvania) said.

He said Cuccinelli will have to answer to needy Virginians if services are halted as a result. “What has set all this into motion is the attorney general’s opinion,” said Houck, a member of the Senate committee that writes the state budget. “I hope that level-headed people would understand that the opinion should not carry the day.”

Only offering guidance

Brian Gottstein, a spokesman for Cuccinelli, said that, when asked, lawyers in the office have offered guidance about the “scope of the constitutional prohibition,” but that Cuccinelli and his staff are not deciding which appropriations to approve.

“That is not the job of this office,” he said.

Some of the organizations may ultimately receive state funding. Cuccinelli’s opinion indicated that grants made directly by the state to charities were prohibited but that money spent indirectly by state agencies might be allowed.

For organizations funded through the health department, the completion of the attorney general review means payments to some groups now deemed constitutional will be unfrozen, health officials said.

But the unexpected halt in payments during the legal review has wreaked unexpected havoc on the organizations’ operations.

Markwith said he was given no advance notice that his group’s payments were to be frozen and just learned of it when the free clinic association’s March payment failed to arrive on time. The group has received state funding for nine years without questions.

Likewise, Lisa Specter-Dunaway, president and chief executive of CHIP of Virginia, said she learned that the state would halt reimbursements normally paid for services provided by the group’s nine local groups to low-income families only after asking about the issue.

The group has received state funding since 1995 and serves 3,000 families and 500 pregnant women each year.

If the state cancels funding to CHIP, she said half of the organization’s local branches would close and the others would shrink. “We will have more people continue in generational poverty,” she said.

At McDonnell’s request, the General Assembly last week inserted language into the state budget that would provide more flexibility for state agencies to contract with nonprofits in some instances if direct grants to the organizations are deemed unconstitutional.

But Eige acknowledged that the provision will not necessarily allow funding to flow in every case. “There may still be some cases where they just can’t work that out, and maybe the organization would lose funding,” he said.

Rosalind Helderman is a political enterprise and investigations reporter for the Washington Post.
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