Nonprofits and state departments are bracing for big cuts to federal funding associated with the so-called "fiscal cliff," and warn the worst-case scenario could spur further reductions to a social safety net already eroded in the economic downturn.

If the cuts aren’t averted, "all the programs that we care about the most are going to be significantly hit," said Kim Gennaula, president of Aloha United Way. "It’s a pretty scary scenario."

Nearly $32 million in federal funding to state departments is at risk by proposed across-the-board "sequestration" cuts that would begin taking effect in January, according to the state Department of Budget and Finance.

Talks are ongoing in Washington, D.C., to avert the "fiscal cliff" spending cuts and tax increases, but a deal is expected to only lessen the blow, not eliminate it.

Nonprofits and state officials agree that some cuts in federal funding, plus other aggressive deficit reduction efforts, are almost a certainty over the next decade as Congress seeks to get a handle on the nation’s mounting debt.

And Kalbert Young, state budget director, warned that nonprofits shouldn’t assume that the state can step in to make up for funds that are lost, given the slow pace of the economic recovery.

"Should federal sequestration reduce federal funding to state programs, it is not a foregone conclusion that the state would automatically supplant federal funds with state funds," he said. "Some programs may not be as fully funded."

He said most of the federal funding cuts will likely target social programs.

Because the state doesn’t know how big the federal cuts will be, Young’s office is coming up with several budget "contingency strategies" for the upcoming fiscal year.

The fiscal cliff describes the potential economic impact from deep spending cuts to the nation’s defense budget and domestic programs, coupled with the expiration of a series of Bush-era tax cuts.

The state Department of Education stands to take the biggest hit from the current sequestration plan. Of the $135 million it gets annually in federal funds, about $12 million is at risk, Young said.

Meanwhile, nearly $8 million in federal funds to the Health and Human Services departments could be cut in 2013, under a worst-case scenario.

The state Labor and Public Safety departments could also lose key funding.

Much of the federal funding that goes to state departments is "passed through" to organizations that provide key social services to the poor, mentally ill, homeless and others in need.

But state departments also use federal funding to helps cover a host of programs.

The $12 million worst-case cut to the DOE, for example, would hit special-education services and programs for schools with large populations of children living in poverty.

Amy Kunz, DOE chief financial officer, said the sequestration cuts could also affect efforts under way to boost student achievement and improve schools.

"We have very aggressive goals surrounding our strategic plan," she said. "Any reductions could potentially mean we couldn’t move as quickly as we want to."

Kunz added that the DOE is facing the prospect of deep federal cuts after weathering reductions in state funding during the economic downturn.

"We have been tightening our belt over the last several years," she said.

Social service providers, too, have been slashing expenses following federal and state spending reductions — oftentimes by doing more with less.

The prospect of further cuts — at a time of increased demand for services — is worrying many, said Lisa Mura­yama, president and CEO of the Hawaii Alliance of Nonprofit Organizations.

"We’re terming it a human cliff," she said. "It’s going to have a tremendous impact on real lives."

Nonprofits might also feel the pain from other elements of the fiscal cliff, not just sequestration.

A final deficit reduction plan could also include changes to the tax code, including proposed limits on tax deductions for charitable donations.

Murayama said if the deductions are reduced, people might give less — or might not give at all.

"Nonprofits are really going to be squeezed from all sides," she said. "It has really just been a perfect storm."

Kelvin Taketa, president and CEO of the Hawaii Community Foundation, a charitable services and grant-making organization, said he’s hopeful that Congress and the White House will strike a deficit reduction deal that spares as much as possible those in greatest need of help.

"The concern we all have is whether it’s going to be good policy or good politics," he said. "Everybody has felt like there has been an erosion of governmental funding over the years, and it’s accelerating. It’s really reaching crisis proportions."