Testimony of
Greg Olsen, Deputy Director
New York State Office for the Aging
Conducted by
Assembly Standing Committee on Aging the State of Senior Programs in the Current Economy
Monday, October 5, 2009
Good Morning Assemblyman Dinowitz and thank you for the opportunity to testify today on the State of Senior Programs in the Current Economy. Director Burgess sends his regrets for not being able to be here today.
The network of aging service providers, along with other human services providers, is facing unprecedented challenges in meeting the needs of a growing older population. The work has been made more difficult over the past two years by the worst financial crisis since the Great Depression. This crisis has resulted in state and local governments instituting budget reductions of a magnitude we could not even contemplate less than a year ago in order to close their structural budget gaps and realize recurring savings. Coupled with the financial crisis faced by states is the individual economic crisis now experienced by older adults, from mortgage foreclosures to significant devaluation of pension plans, coupled with rising costs for health care, food, transportation and energy.
At the same time, aging network providers, including the Area Agencies on Aging, have also reported increased costs for fuel, food, energy, insurance and administration. Needs are indeed growing based on population growth and the economic losses faced by older workers and retirees. Additionally, philanthropies have been negatively impacted by losses in the financial sector, reducing the fundraising that supplements declining grants and public funds, and forcing funding priorities to be reevaluated. For example, when Lehman Brothers and Bear Stearns went under, the New York City Meals on Wheels program lost tens of thousands of dollars in employee donations.
The enormous pressures faced by the aging network are not new and in fact have been developing as a result of years of flat funding of the Older Americans Act. In 1980, there were 35.6 million Americans age 60 and above and the Older Americans Act received $993 million in funding. (In 2007 dollars after adjusting for inflation this would be $2.5 billion). By 2000, the over 60 population had grown to 49 million and the act had increased to $1.5 billion. In 2007, with 53 million Americans age 60 and over the entire Older Americans Act was $1.85 billion. Additionally, the number of older Americans age 85 and above has more than doubled (141%) from 2.2 million in 1980 to 4.9 million in 2007 and the 75 plus group increased by 69% over that same time period (U.S Census, 2000, 2007; CRS Report to Congress, 2004, 2008). Thus, even before the current economic downturn the Older Americans Act funds needed to serve a much larger population with considerably fewer dollars after being adjusted for inflation. In comparison, the Medicaid budget has increased from $22 billion in 1980 ($90 billion in 2007 dollars adjusted for inflation) to $333 billion in 2007 (CMS, 2008). As an entitlement program Medicaid has grown with national increases in health care, long-term care and prescription drugs, while comparable needs in the non-medical arena have not kept pace with increases in either population or costs.
In better economic times, state budgets have supplemented flat federal funding for services to older Americans by providing additional funding in such areas as home delivered and congregate meals, transportation, and in-home service programs. Over the past decade, federal Older Americans Act appropriations to New York State have increased by only $5 million while over the same period, New York State increased its own commitment by $44 million. Currently, local governments have also contributed above and beyond what they are required to in order to serve those older adults most in need. Statewide, AAA’s report over $32 million in program support above their required match for state and federal programs.
However, state budgets are experiencing a precipitous decline in sales tax, business and personal income tax revenue, which may plummet further based on reports of continued job losses. As an example, New York, a state that has benefited from revenues derived from surcharges on Wall Street and income taxes on the bonuses of financial executives, faced an almost $18 billion budget deficit this year, the largest in history. How these large budget deficits coupled with poor economic performance will impact aging programs into the future is unknown.
Economic Security – Pre-Recession
Many older New Yorkers and families are struggling to make ends meet. The rise in fuel costs, property tax and housing costs, health care costs, prescription drugs, insurance, home energy related costs, food and other necessities are eroding the ability of older adults to cover their daily expenses. Census data indicates that almost 400,000 New Yorkers age 60 and older live below the federal poverty level ($10,400 for an individual). There has been recognition that the current methodology to calculate the poverty level is inadequate, which would mean many more older New Yorkers find themselves living in poverty and even more are living just above poverty. The current poverty rate is based on 1955 cost of an emergency food diet – calculated as three times the annual cost of groceries. Everyday costs besides food, such as medical costs, transportation, housing, or geographic variations are currently not counted.
In New York City, using the revised measure being advocated at the national level by the National Academy of Science’s, 33% of older adults fall below poverty using this new method. According to the 2005 Consumer Expenditure Survey, older adults ages 65 and older spend 5% of their incomes on personal insurance, 13% on health care, 16% on transportation, 34% on housing, and 13% on food - leaving the remaining 20% for items like clothes, personal care, entertainment, reading, education and other miscellaneous expenditures.
Income and Poverty – Prior to Recession
In many ways, New York is a study in contrasts. In terms of income, the State’s 2005 median household income was $49,480; yet, 14.5%of the population is living in poverty using the existing measure. Among the population aged 60 to 79 years old, eight percent of women are below the Federal poverty line ($10,210 per year) while four percent of men are below the federal poverty line. For those 85 and older, almost twelve percent of women and almost four percent of men are below the Federal poverty line. 
While economic security is a reality today for older people than perhaps ever before, older adults remain very vulnerable to a range of economic security problems as they age. Poverty and low incomes, prescription drug and other out-of-pocket health care costs, local property and other taxes and household and housing expenses remain vital concerns of older New Yorkers, particularly, with advancing age and among minority and impaired elderly.
Poverty figures from the 2000 Census indicate that 264,336, or 11.3%, of the State’s age 65 and older household population are at income levels below established poverty thresholds. Elderly poverty rates are the highest for older women, those living alone and the minority elderly. The 2000 Census reports that in New York State, 20% of people 75 or older living alone live in poverty. Of all New Yorkers 65 and older in poverty in 2000, almost 2 of 5 (37.9% are women age 75 and older, and over half (55.4 %) are living alone on incomes of under $8,259. The minority elderly, according to the 2000 Census, have the highest poverty rates. In comparison to 7.9 percent of non-minority age 65 or older in 2000, 23.4 percent of minority elderly age 65 or older were living in poverty.
Health care and long-term care costs disproportionately impact older persons and increase with the onset of chronic health conditions as they age. While more elders today, than in previous years, are insulated against rising costs by insurance covering gaps in Medicare, the privatization of Medicare has led to higher cost-sharing for older adults and a future that is uncertain in terms of how much of the risk the government will carry. Yet out-of-pocket expenditures continue to rise dramatically for the uninsured - often the poor and those with chronic health problems - as health care costs outpace inflation.
Household and housing costs also impact disproportionately on older adults. According to the 2000 Census, while comprising 12.5 percent of the household population, people 65 and older are 21.8 percent of all householders, owning or renting a disproportionate share of the State’s occupied housing units – over 1.5 million of the State’s 7.1 million homes.
New York State’s property tax initiatives have done much to ease the burden on older home owners. Still older adult householders face increasing costs for home fuel, maintenance and operations including electrical and other day-to-day expenses. According to the 2000 Census, housing costs consume approximately one-third of the income of 54 percent of elderly renters and 27 percent of elderly homeowners.
Gender
Women’s experiences of aging are greatly influenced by the roles they assume and the resources available to them. Women spend less time in the workforce than their male counterparts. This translates into lower pay rates, lower personal earnings, and lower retirement income compared with men. Also, the greater longevity among women compared to men tends to translate into women spending more time living alone as they age and more likely to be in need of long term care services, and therefore, Medicaid. Approximately 18 percent of women aged 50 to 64 live alone, and this more than triples among women aged 85 and older (56 percent). More women than men assume caregiving responsibilities for older family members which can often translate to gaps in their working careers as is true with child rearing. According to a soon to be released study of caregiving in New York, the typical caregiver is a 64-year-old female, who has either high school or some college education, and spends more than 20 hours a week providing care to her mother.
Women who assume elder care responsibilities early in life are at a higher risk of poverty later because of foregoing promotions, reducing their working hours or quitting their jobs altogether to care for a loved one. A challenge is to ensure equitable workforce opportunities, assist informal caregivers, and determine opportunities that provide coordinated, accessible formal caregiver services. This balance has the potential to support our families and the economy without jeopardizing the financial future of women.
Older New Yorker’s Today and Into the Future
In October, 2007, the DOW Jones Industrial Average closed at 14,164. In March of 2009, the DOW closed at 6,926, representing a 54% loss in value, a loss of $8.3 trillion in wealth. According to AARP, bankruptcy filing for those ages 75-84 are up 433% from 1991-2007. An AARP recent phone study found 59% of people ages 65 and older are having trouble paying for fuel, food and medicine – 18% report skipping meals and 10% report cut back on medications.
According to Dean Baker from the Center for Economic and Policy Research (CEPR) testifying to the US Senate Special Committee on Aging in February 2009, the future net worth of baby boomers fell by more than 45% from 2004-09 - from $150,000 to $82,000 (includes home equity). Those individuals between the ages of 55 and 64 saw their wealth fall by 38% - from $229,600 to $142,700.
Most of the wealth that Americans posses are in housing and the housing crisis reduced or eliminated the equity they had. Dean Baker reports that upwards of 30% of individuals, if they sold their homes, would need to bring money to their closing.
According to “A First Look at Older Americans and the Mortgage Crisis” by the AARP, those age 50 and over represent 28% of all mortgage delinquencies (30-180 days late and foreclosures). Older Americans with subprime loans are 17 times more likely to be in foreclosure than conventional loans.
Social services and charities are being stretched as well. Johns Hopkins University released the first study of the impact of the recession on non-profits from 2007-2009. It found:
Non-profits reported coping with the downturn through increased fundraising, cutting administrative costs, creating more collaborations, salary freezes, postponing new hires, and relying more heavily on volunteers. Interestingly, most non-profits reported that they did not reduce the number of people they served, in fact 86% either stayed the same or served more while only 14% reported serving less.
Workforce Issues
Older workers will become a larger proportion of the workforce in the coming decades. According to the Census Bureau, nearly a quarter of Americans ages 65 to 74 were working or looking for work in 2006, up 20% since 2000. 7 in 10 older workers plan to continue working full or part time following “retirement” from their main job. Over half of older workers said they must continue to work because they need the income or to obtain health care prior to age 65. (Source: A Work-Filled Retirement: Workers’ Changing Views on Employment and Leisure, from Work Trends #16 (2005), Heldrich Center for Workforce Development/Rutgers)
Older workers are:
Older workers experience several barriers to finding work. Many older workers:
Given this reality, AARP is supporting the WorkSearch Assessment System at 20 locations nationwide including New York City and is looking to expand it across the state. WorkSearch is a web-based assessment system geared to low-income, low-skilled job seekers. It also provides community-level job and career information and over 1,200 job-specific online courses.
NYSOFA’s Response
NYSOFA, per its mission and its direction by the Older Americans Act targets those older adults who are low-income, culturally and ethnically diverse and who are most frail and at-risk. NYSOFA and our partners at the community level play a very important role in helping to get information into the hands of older adults, their caregivers and families on the variety of existing benefits that they may be entitled to that would go a long way in helping them in this economic crisis. From food stamps to enrolling in Medicare Part D and the Low Income Subsidy Program, several thousands of dollars each year can be saved. In addition to the great work at the local level and the significant increase in partnerships, NYSOFA is working with other state agencies to better coordinate outreach and education efforts on the availability of existing programs and services that can help low-income New Yorkers receive the help they need buying groceries, paying for their home heating fuel, purchasing prescriptions, and paying for the Medicare Part A and B premiums, co-pays and deductibles.
NYSOFA has undertaken a statewide initiative called “Community Empowerment”. This effort is designed to raise the awareness of communities that their communities are getting older and the need to plan for that demographic shift is important in order to help those individuals remain as independent as possible for as long as possible and to ensure that they remain an active part of their community. This has important implications on state spending through Medicaid, and has a direct impact on the local economy if older adults remain in their community, spending their money to support the local economy and local tax base. Community Empowerment is about facilitating local planning processes to establish livable communities for people of all ages, to bring local stakeholders together to help them identify areas to focus on and develop self-help strategies to solve their own problems.
As part of the Community Empowerment strategy, Governor Paterson has supported this effort through state funding for the Community Empowerment Initiative. These 15 local grants will provide funding for innovative programs and activities that support and enhance opportunities for community participation in planning and creating aging friendly neighborhoods.
Applicants submitted proposals to either:
As part of Governor Paterson’s effort to promote and increase civic engagement and volunteerism, the Governor has asked NYSOFA to lead a National Governor’s Association Technical Assistance Grant focused on increasing volunteerism and providing workforce opportunities for older New Yorkers. This effort, with sister agencies, the Business Council, AARP and others has led to a plethora of activities including:
Since SFY 07-08 – 08-09, local programs served over 4,000 more home-delivered meal clients, and provided an additional 700,000 meals. The congregate meals program served 11,500 additional clients, with no change in the number of meals. HDM and congregate meals expenditures from the Administration on Aging increased by a combined $ 4 million while area agencies used existing resources through CSE, SNAP and other sources to provide additional dollars to the programs.
Fortunately, at the state level, Governor Paterson and the legislature recognize the value of NYSOFA administered programs and provided NYSOFA with additional $5 million for SNAP, CSE and EISEP in the SFY 2009-10 budget, despite the economic downturn, understanding that not providing services to this vulnerable population has a direct impact on a loss of local revenue and an increase in Medicaid spending to meet long-term care needs.
While the economic condition poses many challenges, leadership by Governor Paterson and NYSOFA have lead to a shift in the way we do business by directly engaging local stakeholders, state and local agencies and others to plan for the growth of the population, to be able to have access to innovative models of care and planning process that can be replicated locally to allow aging in the community, and to foster more collaborations among organizations and individuals to use resources more effectively and to better serve individuals in need.
I would like to thank you again and I would be happy to take any questions that you may have.
