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Senate budget committee revives measure targeting state funding for direct care wages; but provider amendment would undo it

May 17, 2022 2 comments

The state Senate’s Ways and Means Committee has revived a state budget provision for the coming fiscal year that would require that hundreds of millions of dollars be spent to boost direct care wages in the human services system.

A similar provision was rejected last month in the House.

But an amendment filed this past week in the Senate on behalf of the corporate human services providers would override the Senate Ways and Means provision requiring that 75% of funding in a reserve account for the providers go toward boosting wages for their direct care workers.

The Senate budget amendment, which was filed by Senator Adam Gomez, would significantly raise the reserve account level while eliminating the 75% direct care wage funding requirement.  Gomez is Senate chair of the Children, Families, and Persons with Disabilities Committee.

The Senate is scheduled to vote next week on the budget for Fiscal Year 2023 and on amendments filed to it.

Last month, a budget amendment filed in the House to impose the 75% funding requirement was killed by the House leadership even though it had garnered 107 cosponsors, an amount comprising more than two thirds of the House membership.

Last week, the Senate Ways and Means Committee approved an overall state budget bill that revives the 75% requirement. The Ways and Means Committee also approved an increase in the provider reserve account, known as the Chapter 257 reserve account, from $79 million to $230 million.

Senator Gomez’s amendment (Amendment No. 466) would add $350 million to the $230 million approved for the reserve account by the Senate Ways and Means Committee and previously by the House. The amendment’s total proposed funding of $581 million in the reserve account has been sought by a coalition of corporate human services providers.

However, Gomez’s amendment no longer contains any language that requires that the additional $350 million go toward direct care wages.

Like the previous House amendment, the Senate Ways and Means language requires that 75% of the reserve account funding amount be used for “compensation for direct care, front-line and medical and clinical staff,” and states that the funding may include “hourly rate increases, wraparound benefits, shift differentials, overtime, hiring and retention bonuses or recruitment.”

Under the Senate Ways and Means plan, the 75% funding provision would require that more than $170 million be earmarked by corporate human services providers for direct care wages.

The House amendment went a step further than the Senate Ways and Means Committee provision by requiring that the providers sign a form attesting to a plan for spending the $170 million. The Senate Ways and Means provision doesn’t have that attestation requirement.

COFAR is strongly supporting the 75% funding requirement because it would address a key reason for staffing shortages in the state’s human services system. COFAR has called for a minimum wage for direct care workers in the DDS system of $25 per hour. Right now, the average hourly rate for these workers appears to be $16 or possibly even less.

In an email I sent to Senator Gomez and his staff yesterday, I noted that we are concerned that without specific language requiring that funding in the reserve account be used for direct care wages, there is little or no assurance that adoption of his amendment would lead to higher wages for those workers. I haven’t yet received a response to my message.

IG and state auditor have both found a lack of controls over promised funding for direct care wages

I also noted in my email to Gomez that the Massachusetts Inspector General’s 2021 Annual Report stated that the IG had examined how human services providers spent $139 million in federal COVID relief funds that the adminiistration disbursed in April 2020.

The IG report said the $139 million was supposed to be spent on “staffing, PPE, and infection control activities.” However, the Bureau received several hotline complaints “that the vendors received excessive funding and misspent it on executive compensation.” (my emphasis)

The Annual Report stated that the IG investigated the complaints and “found evidence that some vendors may have used the funds for unauthorized expenditures.”

The IG Annual Report added that the IG recommended that providers provide detailed expenditure reports, and that the Executive Office of Health and Human Services “coordinate and share information with DDS and other agencies.” However, the report said that EOHHS did not fully implement these recommendations.

Also, in a 2019 report, State Auditor Suzanne Bump’s office reported that 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 bottom line is that additional funding is needed to ensure that direct care wages in the human service sector are boosted to competitive levels. But controls are clearly needed to ensure that the money gets where it’s supposed to go, and doesn’t go instead into executives’ pockets.

Unfortunately, Senator Gomez’s amendment doesn’t provide for needed controls or even a spending reqirement with regard to the provider reserve account. The Senate Ways and Means language does at least establish a requirement that the increased funding go to direct care workers.

We need a $25-per-hour minimum wage for direct care workers in the DDS system

February 9, 2022 4 comments

We think it’s time for a meaningful boost in the minimum wage paid to direct-care workers in the Department of Developmental Services (DDS) system, particularly for those caregivers who are employed by corporate providers to DDS.

We’re suggesting a minimum wage rate for direct care workers of $25 per hour. Right now, the average hourly rate for these workers appears to be $16 or possibly even less. The situation is contributing to staffing shortages throughout the system and a resulting decline in the quality of care in group homes.

We think increasing the minimum wage to $25 is affordable, given that the state has a large projected budget surplus this year. Also, Gov. Baker is proposing a tax cut on capital gains and on inherited estates. We think that money could be used instead to boost direct care worker wages, which are unconscionably low.

At least some of the funding needed for a $25 minimum wage could potentially come from the providers themselves.

In 2019, Sate Auditor Suzanne Bump recognized that at least some of the continually increasing state funding to human services providers could be used to boost direct-care wages, but said that was not happening.

In her 2019 audit , Bump found that the average hourly direct-care wage was $11.92 in Fiscal 2010, and that it had risen only to $14.76 as of Fiscal 2017. That was an increase of only 24% over that eight-year period, an amount that only barely exceeded the yearly inflation rate.

According to Bump’s audit, the increased state funding to the providers provided them with a 237% increase in surplus operating revenues (total operating revenues over total operating expenses) during that same eight-year period.

Residential DDS provider revenues have grown to more than $1.4 billion

DDS corporate residential providers would receive $1.44 billion under Governor Baker’s  proposed state budget for Fiscal Year 2023, which begins in July. If that amount is approved by the Legislature, the provider group homes will have gotten an increase of $563 million, or 64%, since FY 2012, when adjusted for inflation.

That increase doesn’t even appear to include appropriations to a reserve fund (line item 1599-6903) intended to further boost contractual payments by the state to the residential providers. Baker’s Fiscal 2023 budget would increase the size of the provider reserve fund from $79 million to $230 million in the coming fiscal year.

On Jan. 31, I asked the staff of the Legislature’s Children, Families, and Persons with Disabilities Committee whether Senator Adam Gomez or Representative Michael Finn, the committee co-chairs, might comment on a $25 minimum wage for direct care workers. To date, I haven’t received an answer.

Pending bill would eliminate a disparity between state and provider wages

On February 8, I called and emailed Senator Cindy Friedman, Senate Chair of the Health Care Financing Committee, for comment on our proposal.

Friedman has proposed a bill (S.105), which would eliminate a “disparity” in wages between direct care workers working for human service providers and those working in state agencies over a five-year period. The amount of that disparity has apparently only been “guesstimated,” however, and the guesstimate is that the disparity is roughly 20%.

That guesstimate came from a staff member of the Children and Families Committee. If the guesstimate is correct, it appears that even after five years, Friedman’s bill would raise the wage of a worker making $16 an hour to roughly only $19 – a level nowhere near $25.

I haven’t yet heard back from Senator Friedman or her staff.

Friedman’s bill and a companion House bill (H.237) apply to caregivers working in residences overseen by the Executive Offices of Health and Human Services and Elder Affairs, and the Department of Housing and Community Development. The bills would require that the disparity be reduced to 50% as of July 2023, and to zero by July 2027.

Average pay is about $16 per hour

Data on the average wage earned by direct care workers in the DDS system is not easy to find. The federal Bureau of Labor Statistics lists an average hourly wage for “personal care aides” in Massachusetts of $16.29.

Personal care aides, according to the BLS, include workers in both group homes and private homes, and include persons who care for individuals with all types of disabilities, not just intellectual or developmental disabilities.

The BLS does publish data on personal care aides in residential facilities for persons with intellectual and developmental disabilities; but that data is for workers throughout the country, not just in Massachusetts. The average hourly wage in that catetory is $13.49.

Wage disparity amount has not been officially projected

The BLS wage data also do not differentiate between caregivers in state-run versus provider-run facilities.

The amount or amounts of the wage disparity are not specified in Senator Friedman’s legislation either. Her bill requires the agencies involved to provide a report to the Legislature as of next July 1 listing the disparity amount. The agencies must also project the amount of the appropriation needed to achieve those disparity reductions.

No one in a hurry to pass legislation to raise wages

Despite their potentially modest impact, S. 105 and H.237 have failed to make much headway over the past year in the Legislature. Friendman’s bill was referred to the Children and Families Committee in March 2021. It was reported favorably by the committee and sent to the House and Senate Ways and Means Committee only this week (February 7.)

In 2018, Governor 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.

Some federal funding to raise wages is due to be distributed next month

Gov. Baker signed legislation in December that would target hundreds of millions of federal economic stimulus dollars for human services workforce retention and recruitment as part of a $4 billion federal and state spending package. But it doesn’t appear that that money would provide for a permanent increase in direct care wages.

Some of the federal money will finally be distributed in the form of $500 checks to an estimated 500,000 low-income, direct-care workers starting in March, the State House News Service reported Tuesday (February 8).

But even when the full amount of the American Rescue Plan Act money is finally distributed, the legislation signed by Baker would set a ceiling of $2,000 on the total amount of funding per worker. A one-time payment of $2,000 will not substitute for a higher minimum wage.

Even so, Shannon Guenette, the executive director of Almadan, Inc., a DDS provider in western Massachusetts, first told us in August 2021 that her agency and other DDS providers throughout the state desperately needed the additional federal funding to retain workers in light of a worsening shortage of direct-care and clinical staff.

But Guenette said on February 1 that her agency’s wage rates would need to be at least $20 to $25 per hour “to hire the staff we need and compete with gas stations and fast-food restaurants. Many of our employees are really struggling with higher rents, higher grocery bills, higher utility costs, and increasing transportation costs,”  she said.

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