COFAR blog

The State Auditor has reported that a major boost in state funding in recent years resulted in surplus revenues for human services providers in Massachusetts, but that those additional revenues have led to only minimal increases in wages for direct-care workers.

Meanwhile, the leadership of the Massachusetts House of Representatives quashed a state budget amendment last month that would have raised direct-care wages to $20 an hour. That amendment had been co-sponsored by more than a majority of the House membership.

In a May 8 report, State Auditor Suzanne Bump’s office reported that so called Chapter 257 funding, which was at least partly intended to boost direct-care wages, “likely did not have any material effect on improving the financial wellbeing of these direct-care workers.”

The state auditor examined financial records of 89 human services providers, most of them under contract with the Department of Developmental Services. Among those surveyed providers, Chapter 257 funding helped boost their surplus of revenues over expenses on average from roughly $120,000 in Fiscal Year 2010 to $404,000 in Fiscal 2017, the audit stated. That is an increase of 237%, or an increase of almost 30% a year, in surplus revenues.

However, the audit stated that during that time, the average hourly rates paid direct-care workers increased by only 24% in total, or about 3.1% per year, on average. The audit pointed out that the yearly increase in average direct-care wages only exceeded inflation by about 1% per year.

The audit found that the average hourly direct-care wage was $11.92 in Fiscal 2010, and rose to $14.76 as of Fiscal 2017.

Under Chapter 257, which was enacted in 2008, state funding rates for social-service programs are set by the Executive Office of Health and Human Services (EOHHS). Before Chapter 257 rates were implemented, state agencies typically negotiated multiyear contracts with human-service providers and established individual reimbursement rates for each contract.

As of Fiscal 2017, DDS contracts accounted for $1.3 billion, or more than 55% of total Chapter 257 funding in Massachusetts, the audit stated.

House leadership kills wage increase for direct-care workers

Last month, the House leadership killed an amendment to the proposed Fiscal 2020 state budget that would have required that additional state funding to the providers be used to boost direct-care wages to $20 an hour. The amendment had been sought by SEIU Local 509, a state employee union that also represents human service provider workers.

An SEIU official said that even the Baker administration had supported the amendment, but that the providers opposed it.

No similar amendment has been filed in the Senate, which is currently debating the Fiscal 2020 budget. The SEIU official said the union will instead push for passage of a bill in the current legislative session (H.1658) that would accomplish the same thing as the House amendment. That bill is currently in the Labor and Workforce Development Committee, which has yet to take action on it.

Although the providers reportedly opposed the SEIU amendment, the Arc of Massachusetts, a key provider lobbying organization, is supporting a related bill, HD.1130, which would set a minimum rate of $17 per hour for wages paid to entry-level direct-care workers.

But unlike H.1658, which would require that the funding for the direct-care wage increases come from Chapter 257 funds, HD.1130 does not specify a source of funding for raising direct-care workers’ wages. It appears the providers don’t want the money for higher direct-care wages to come from their Chapter 257 funding, even if that funding is providing many of them with surplus revenues.

In 2017, the SEIU issued a report asserting that Chapter 257 had enabled the providers to earn $51 million in surplus revenues. The state auditor’s report this month stopped short, however, of asserting, as the SEIU did in 2017, that the providers could and should have used surplus revenues garnered from Chapter 257 rates to boost direct-care wages.

Both the state auditor’s report and the SEIU’s 2017 report provide confirmation of a report by COFAR in 2012 that direct-care workers in the DDS contracted system had seen their wages stagnate and even decline in recent years while the executives running the corporate agencies employing those workers were getting double-digit increases in their compensation.

The SEIU’s 2017 report stated that during the previous six years, the providers it surveyed paid out a total of $2.4 million in CEO raises. The SEIU report concluded that:

This all suggests that the amount of state funding is not at issue in the failure to pay a living wage to direct care staff, but rather, that the root of the problem is the manner in which the providers have chosen to spend their increased revenues absent specific conditions attached to the funding. (my emphasis)

The Massachusetts Legislature needs to demonstrate that it is on the side of the human services caregivers who perform some of the most difficult and thankless work possible, and not strictly on the side of the corporate executives who wield virtually all of the political influence on Beacon Hill.

While we strongly support proposed reforms to the human services system such as establishing a registry of caregivers with substantiated abuse charges against them, a registry alone will not solve the abuse problem. The problem of abuse is very much the fault of poor management and a lack of training and supervision from top management. And it is a direct result of the underpayment of those caregivers.

The direct-care workers are on the front lines when it comes to making the system work. Yet, those people are easy to forget in the political power struggles at the State House; and to the extent they are remembered, it is often as the sole object of blame for the failures of the system as a whole.

The Legislature can begin to right those wrongs by supporting H.1658 and ensuring a living wage for direct-care workers.