As senior and youth populations continue to grow in Palo Alto, the city is looking to change the long-standing relationship between City Hall and the two nonprofits that are most involved in serving these two demographics.

The change is meant to shield the organizations -- Avenidas and Palo Alto Community Child Care -- from the year-to-year fluctuations in funding that local nonprofits receive from the city as part of the Human Services Resource Allocation Process, a city-funded grant program. The organizations are by far the biggest nonprofit recipients of city dollars. In the current fiscal year, they received $868,014 in grant funding ($431,185 for Avenidas and $436,830 for Palo Alto Community Child Care), which comprised 76 percent of the total program budget.

Under a proposal that the City Council's Policy and Services Committee backed by a 2-1 vote March 25, with Greg Schmid dissenting and Greg Scharff absent, the nonprofits would be funded separately rather than vying with dozens of other organizations for city dollars.

The grant program has been in place since 1984. In addition to consistently awarding Avenidas and PACCC more than $400,000 each in annual grants, the program provides much smaller contributions to more than a dozen other nonprofits, including Adolescent Counseling Services, InnVision and the Downtown Streets Team.

The change, which still has to get the approval of the full City Council, was made at the request of Avenidas and PACCC and with full support of Councilman Larry Klein, who noted that the two agencies have long had a special relationship with the city because they offer critical services that would otherwise have to be provided directly by the city. Both nonprofits were launched by the city in the 1970s to address a pressing community need before splintering off and becoming its own agency.

Avenidas, formerly known as Senior Services Center, provides an array of services for seniors, including case management, exercise and enrichment classes, day-care programs and services for home-bound seniors. The agency has been receiving city grants every year since 1978.

Palo Alto Community Child Care has received city funds since its inception in 1974. It is under contract to provide after-school services at 11 of the 12 elementary school sites, which serve about 600 children, according to the city. The agency's existing HSRAP contract helps it administer the city's child-care subsidy program for low-income families.

Given the two nonprofits' long-standing "special relationship" with the city, their continued inclusion in the broader grant program makes little sense, Klein said.

"I think it's misleading to include programs that really are city functions with ones where we're making relatively small contributions to -- organizations that are very useful but really not taking over, in a sense, a city function in the same way that PACCC and Avenidas do," Klein said.

Executive directors from the two agencies have supported the move. In a joint letter, Janice Shaul of PACCC and Lisa Hendrickson of Avenidas noted that because they make up the lion's share of the budget, they are often seen as attractive targets for funding reductions when other agencies look to join the allocation process.

The city's Human Relations Commission, which makes recommendations about which agencies to fund, has recommended on several occasions increasing the Avenidas and PACCC contracts by a lesser amount (or decreasing them by a great amount)than other grant recipients, the letter stated.

"When this happens, PACCC and Avenidas are forced to lobby the City Council directly to take action in opposition to the HRC recommendation," Shaul and Hendrickson wrote in December 2013. "This dynamic is uncomfortable for the City Council which relies on its commissions to deliver recommendations that it can support. And it is uncomfortable for the sole-source agencies because it puts them in competition with other human service providers with which they often collaborate."

The Human Relations Commission has been against the change in the process, arguing that removing the two largest grant recipients from the program would lessen the funding program's visibility and influence. In January, the commission voted to keep Avenidas and PACCC in the process but to include a provision that guarantees that these agencies will not lose money because of reallocation to other grantees. The provision also guarantees that the two agencies will receive the same cost-of-living increases that all other agencies in the program get and that in the case of budget reductions, the two agencies will bear their share, but no more than that.

Jill O'Nan, who chairs the Human Relations Commission, said she and her colleagues were primarily concerned about the generally low level of funding that the city has been granting to nonprofits, which has yet to be restored to its pre-2008 levels. She said the commission wanted to keep the two groups in the allocation process to make it more "visible."

"This community is unusual in our nation in that we have such a huge disparity between the wealthy and the non-wealthy," O'Nan said. "The people who are not wealthy really get marginalized to the point of being invisible. They are told by counties, states and private foundations, 'You don't need money. You're in Palo Alto.' It's really important that our city recognizes how isolated some of our agencies are."

Councilman Greg Schmid agreed that it's best to keep all the human-services agencies in the same funding mechanism, which allows the council to have a more comprehensive view of community needs.

"I think there is an advantage to having a human-services budget, rather than breaking it up into little pieces," Schmid said. "It's the one time of the year where the attention of the council turns to range of services."

But Councilwoman Gail Price agreed with Klein that Avenidas and PACCC have a special relationship with the city and should not be required to compete with other agencies in the grantee pool. Removing them from the broader grant process would make the budgets for these recipients more predictable.

"I feel by separating it out there may be an opportunity here to reduce a certain amount of angst that goes through this process," Price said.