COFAR blog

(COFAR Intern Joseph Sziabowski contributed to the research for this post.)

On July 28, Governor Baker signed the Fiscal Year 2023 state budget, which, among other things, directed for the first time that hundreds of millions of dollars be spent to raise the wages of direct-care staff working for corporate human services providers.

But more than a quarter of the way through the fiscal year, questions remain about the legislation, including the amount by which those wages will be raised.

The budget provision appears to be a big win for thousands of caregivers in the Department of Developmental Services (DDS) system, whose low wages have resulted in staffing shortages that have reached critical levels. Up to that point, the administration and Legislature appeared to have done little to address the staffing crisis.

However, neither DDS nor the Executive Office of Health and Human Services (EOHHS) appear to have projected the level to which the average direct-care wage in Massachusetts will increase due to the budget legislation.

The legislation (line item 1599-6903 of Chapter 126 of the Acts of 2022), specifically requires that any corporate human services provider receiving state funding under a special provider reserve account direct at least 75% of that funding to compensation for direct-care and front-line staff.

The legislation appropriated $230 million for the provider reserve account for Fiscal 2023. The 75% funding provision would appear to require that a total of $173 million in the reserve account be directed by human services providers to boost direct-care wages.

The legislation, however, did not set a target wage for direct-care workers that providers would be expected to pay under the line item funding requirement. The budget line item, in fact, implies that the Legislature does not currently know what the wage distribution is for direct-care workers in Massachusetts.

In our view, it is problematic that despite appropriating hundreds of millions of dollars in funding to the providers, neither the administration nor the Legislature appear to have set a goal as far as wages of the providers’ direct-care workers are concerned.

COFAR has called for a target minimum wage of $25 per hour for those workers. The U.S. Bureau of Labor Statistics (BLS)  lists an average direct care wage of $16.80 throughout the country as of May 2021. (The BLS wage category is Social and Human Services Assistants in Residential Intellectual and Developmental Disabilities facilities.)

There is a difference of more than $8 per hour, or nearly 50%, between the average direct care wage in the nation and what COFAR has proposed for workers in Massachusetts. But whether our goal or something considerably less might be achieved by the budget legislation is apparently unknown.

It also isn’t clear that the increased funding will actually find its way to the direct-care workers and will not be diverted to the provider executives. In our October 12 email query to both EOHHS Secretary Marylou Sudders and DDS Commissioner Jane Ryder, we also asked if the administration had issued any guidance to providers regarding the payment of higher direct-care wages, and how the money would be audited and tracked. As noted, we have not received any answers to those questions.

Legislative staffer assumes there is no wage projection

In response to the questions above, which we also posed to the Legislature’s Children, Families, and Persons with Disabilities Committee, a committee staff member said she had been informed by EOHHS that the administration has “set benchmarks from which providers choose to pay their direct-care workers – so pay rate decisions on exceeding those rates are still up to providers for the privatized group homes.” The benchmarks appear to be the BLS average wages noted above.

The legislative staffer added that, “I take this to mean they (the administration) don’t have projections for a raise in wages, whether they will exceed the benchmark rates or not. They will at least have to be at the benchmark rates.”

In other words, the administration appears to be concerned only that current and future rates paid by providers to their direct-care workers in Massachusetts be comparable to the national average rates calculated by the BLS.

Legislature does not know direct-care wage distribution

The Legislature, in fact, does not appear to know what the current wage distribution is for direct-care workers in the state’s human services system.

The Fiscal 2023 budget line item states that EOHHS to provide the Ways and Means committees as of March 3 of next year with a comparison of the median wages earned by direct-care and other workers in Massachusetts with the 75^th percentile wage estimate by the BLS.

What that seems to mean is that the Legislature would like to know whether direct-care workers in Massachusetts are in the upper quarter of the BLS wage range in the country. That still would not require EOHHS to project the likely impact of the requirement in the Fiscal 2023 budget that the providers spend 75% of their reserve fund revenues on raising those wages in Massachusetts.

Baker takes credit for increased funding to providers

On October 3, Governor Baker “touted” increases in funding his administration has provided to the corporate human services providers  — more than $800 million since 2015, according to The State House News Service. But in his remarks to the Massachusetts Providers’ Council, Baker apparently didn’t address the potential impact of the increases on direct-care wages.

In the same article, the News Service noted that, “The human services sector has struggled for years to attract and retain workers due to the combination of lackluster pay and the difficult nature of the work.”

The article didn’t question why a nearly billion-dollar increase in provider rates would not substantially raise the “lackluster pay” to the providers’ workers.

As we reported in August, much of that money appears to have gone to the providers’ executives. Between Fiscal Years 2012 and 2020, total compensation of CEOs, executive directors, and other DDS provider executives doing business in Massachusetts rose from $102.4 million to $125.5 million. That was a 23% increase.

Also, the average compensation paid per executive rose in that period from approximately $161,000 to $184,000 — a 14% increase.

As we have previously reported, both the state auditor and inspector general have found that increased state funding to the providers hasn’t necessarily translated into higher direct-care wages.

We are hopeful that this year will mark a meaningful increase in direct-care worker pay. But thus far, there has been no information as to what the actual impact of the increased funding will be on those wages.