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Baker administration does not appear to have projected the impact of higher state funding on direct-care wages
(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 75th 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.
We need a $25-per-hour minimum wage for direct care workers in the DDS system
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.
Connecticut has moved ahead of Massachusetts on direct-care worker wages
It apparently took the threat of a major strike, but the Connecticut Legislature passed a bill and the Connecticut governor signed it earlier this year to raise the minimum wage of direct-care workers in that state’s Department of Developmental Services system to $14.75 an hour, starting January 1.
A similar effort fell short last year in Massachusetts when a budget amendment to raise direct-care wages to $15 was killed in a budget conference committee in the Massachusetts Legislature.
While Governor Charlie Baker signed separate legislation in June to raise the minimum wage across the board in Massachusetts to $15, that wage level won’t actually be reached until 2023. The minimum wage will rise to only $12 next year, whereas it will be close to $15 in Connecticut for human services workers as of January 1.
It seems that even though legislators and the administration of Governor Dannel Malloy in Connecticut are equally as tolerant of runaway privatization as they are here in Massachusetts, the Connecticut Legislature and governor have shown a greater recognition that increased privatization has resulted in low wages for direct care human service workers, and that low wages have had a negative impact on services.
In May, after the Connecticut Senate voted overwhelmingly in favor of setting the minimum direct-care wage at $14.75, Malloy made a statement that we have yet to hear Governor Baker make:
“For far too long,” Malloy said, “the people who provide care to our most vulnerable neighbors have been underpaid for their critical work.”
In fairness to Baker, Malloy made that statement only after 2,400 employees of nine corporate provider agencies in Connecticut voted in April to authorize a strike that was set to begin in early May. The workers in Connecticut are represented by the SEIU 1199 New England union.
Clearly hoping to avert that strike, the Malloy administration proposed raising the minimum wage for human services workers to $14.75 an hour and providing a five-percent raise for workers earning more than $14.75 an hour effective January 1.
The Malloy administration’s proposal, which was endorsed by the SEIU union and ultimately signed into law, applies to 19,000 union and non-union caregivers that staff some 170 group homes and other nonprofit agencies that receive Medicaid funding in Connecticut, according to The Connecticut Mirror.
As Connecticut Senate President Pro Tempore Martin Looney noted:
The work (those caregivers) do is among the most important in our state in terms of humanity. If we are to consider ourselves a humane and caring society, at long last we should begin at least to recognize the value of that work.
In Massachusetts, SEIU Local 509 helped organize a five-day strike for a living wage in July at CLASS, Inc., a DDS-funded day program provider based in Lawrence. The workers there were getting paid about $13 an hour and wanted a $1 increase. The company was offering an increase of only 40 cents.
The president of CLASS, meanwhile, was making about $187,500 a year, according to the state’s online UFR database.
In July, workers at CLASS, Inc. reached a settlement with management to raise the workers’ wages by 60 cents an hour. That would still leave the average worker there well below what direct-care workers will be earning in Connecticut.
The Massachusetts strike, moreover, didn’t have the impact on legislators and other policy makers here that the threat of the Connecticut strike apparently did in that state. Thus far, it isn’t apparent that there is any political will in Massachusetts to raise the minimum wage of direct-care workers to Connecticut’s level.
That is concerning because five years is a long time to wait for the minimum wage for direct-care workers to reach $15. Due to inflation alone, that $15 will be worth less to Massachusetts workers in 2023 than it would be if they were to receive it starting this January.
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