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Fiscal 2023 state budget will finally require DDS providers to boost direct-care wages
Corporate providers to the Department of Developmental Services (DDS) and other human services agencies will be required to direct up to $173 million in state funding to boost wages of their direct-care workers, under the Fiscal Year 2023 state budget.
This past Sunday, 17 days into the new fiscal year, a state legslative House-Senate conference committee approved a budget plan that includes mixed results for our budget priorities. But it appears the approval of the direct-care wage provision is a big win.
On Monday, the Legislature gave formal approval to the overall $52.7 billion state budget, and sent it to Governor Baker for his signature.
Assuming that the governor does not veto it, the direct-care wage provision will require any corporate human services provider receiving state funding under a special reserve account to direct at least 75% of that funding to compensation for direct-care and front-line staff.
The problems of inadequate direct-care wages and resulting staffing shortages have reached critical levels in the state’s human services system; and, up to now, the administration and Legislature appear to have done little to address them.
The conference committee approved $230 million in funding for the provider reserve account for Fiscal 2023 — the same amount proposed by Governor Baker. The 75% funding provision would appear to require that $173 million in the reserve account be directed by human services providers to boost direct-care wages.
The passage of the funding provision was hailed by SEIU Local 509, a human services employee union that had been pushing for it, along with COFAR. But it remains unclear how much the requirement will raise direct-care wages, and how the 75% fundng provision will be tracked and enforced. We have called for a mnimum direct-care wage of $25 per hour.
On Twitter, Peter MacKinnon, president of Local 509, termed the enactment of the 75% wage provsion “a powerful statement of support for these essential workers and a significant first step in repairng the workforce crisis plaguing the human services industry.”
Additional reserve account funding proposed
The House earlier this week approved a separate bill (H.5034) that would establish a separate $100 million reserve fund based on federal COVID relief funding for the corporate providers, and would require that 90% of that reserve account be directed to direct-care staff.
The Senate has proposed funding that reserve account at $250 million, but has not yet acted on the legislation.
Conference committee approves flawed state commission budget language
The Fiscal 2023 budget also includes what we consider a flawed proposal to establish a state commission to study the history of institutional care in Massachusetts of persons with developmental disabilities and mental illness.
We had urged the conference committee not to approve what appeared to be a last-minute Senate budget amendment to establish the commission because it is not clear to us that the proposed commission will acknowledge major improvements since the 1980s in care and conditions in the state’s developmental centers or Intermediate Care Facilities (ICFs).
We support the establishment of a commission to study the full history of the state facilities. But our concern is that proponents of further deinstitutionalizaton and privatization in the DDS system could use the commission, as established in the budget, to call for the closures of the Wrentham Developmental Center and Hogan Regional Center, and potentally other state-run residential facilities.
Nominal increases approved in funding for ICFs and state-operated group homes
The budget conference committee also approved nominal funding increases for state-operated group homes and the Wrentham and Hogan ICFs.
Both the House and Sente essentially adopted the governor’s budget numbers for those line items. The ICFs and state-operated group homes will receive increases in the current year of between 5% and 6% from the just-completed fiscal year.
However, in inflation-adjusted terms, these budget increases amount to cuts in funding for both the ICFs and state-operated group homes. According to the Bureau of Labor Statistics, the inflation rate in New England was 7.9% as of June.
We will keep fighting for adequate funding for state-run services in Massachusetts. And we will continue to bring you news of the efforts at long last to address the direct-care wage problem in the state.
Direct care workers need more than an official state day and billboards in their honor
Governor Baker and an employee union recently honored home care workers in Massachusetts with an official state day and billboards.
But we think those workers might appreciate better pay and health benefits even more.
Baker and the 1199SEIU health care worker union teamed up to declare “Home Care Day” on September 4. The SEIU also funded the placement of 13 billboards in Boston, Worcester, Springfield, and other cities to highlight minority home care workers.
Tim Foley, vice president of 1199SEIU, told the State House News Service he hoped the billboards will “let home care workers know they are valued by so many families across the commonwealth and push elected leaders to invest in the workforce.”
We agree that the governor and Legislature need to do more to narrow the enormous gap that exists between the wages of direct-care workers and the executive salaries of the primarily private providers that employ them.
In 2018, Baker did sign legislation to raise the minimum wage of direct-care and other workers to $15 an hour; but it won’t reach that amount until 2023. In 2017, the Legislature rejected efforts to raise direct-care wages to $15 as of that year, and rejected a bid last year to raise direct care wages to $20 per hour.
A bill (H.4171) that would similarly raise hourly direct care wages to $20 has been stuck in the Health Care Financing Committee since last November.
Yet, it’s not as if the governor and Legislature are reluctant to provide continually rising levels of funding to the providers themselves. It’s just that the provider executives have chosen not to pass much of that increase through to the direct-care workers. Instead, they have greatly boosted their own personal wealth.
We reported in 2012 that direct-care workers working for corporate providers contracting with the Department of Developmental Services (DDS) had seen their wages stagnate and even decline in previous years while the executives running the corporate agencies were getting double-digit increases in their compensation.
Since 2012, the line item in the state budget for DDS-funded residential providers has increased by nearly 45 percent in inflation-adjusted terms, to over $1.5 billion in Fiscal 2020. That is according to the Massachusetts Budget and Policy Center’s online Budget Browser.
Yet, as State Auditor Suzanne Bump’s office reported last year, while that boost in state funding resulted in surplus revenues for the providers, those additional revenues led to only minimal increases in wages for direct-care workers.
Bump’s May 8, 2019 audit found that the average hourly direct-care wage was $11.92 in Fiscal 2010, and rose only to $14.76 as of Fiscal 2017. That’s an increase of only 24 percent over that eight-year period, an amount that only barely exceeded the yearly inflation rate.
Meanwhile, according to the audit, the increased state funding to the providers enabled them to amass a 237 percent increase in surplus operating revenues (total operating revenues over total operating expenses) during that same eight-year period. The increased state funding was at least partly intended to boost direct-care wages, but it “likely did not have any material effect on improving the financial well-being of these direct-care workers,” Bump’s audit stated.
In 2017, SEIU Local 509 in Massachusetts issued a report similarly asserting that increases in funding to human services providers enabled the providers to earn $51 million in surplus revenues. The union contended that the providers could and should have used the surplus revenues to boost direct-care wages.
Confirming our 2012 findings, 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)
So, as noted, it isn’t a matter of the providers not having the money. The governor and Legislature need to pass a bill such as H.4171, which would require providers to use up to 75 percent of their total state funding to boost direct-care worker salaries to at least $20 per hour.
In other words, if state-funded providers aren’t willing to pay a living wage to the workers they employ, then it’s time for the state to step in and require them to do so. If that were to happen, Governor Baker would have put some substance behind a declaration of a Direct-Care Worker Day in Massachusetts.
COFAR blog 