Issue Paper

Proposal:

The 1999-2001 state budget adopted by the Legislature last year contained a 3.5% wage pass-through for nursing home dietitians and food workers, laundry workers and housekeepers, as well as 5% wage pass-through for certified nursing assistants (CNA). While signing the CNA wage pass-through into law, Governor Thompson vetoed the 3.5% wage pass-through for the support service staff. A bill currently is in drafting which once again would offer a 3.5% wage pass-through supplement for housekeepers, laundry workers, and food workers, but would exclude dietitians. The original proposal would have applied the wage-pass through supplement to increased wages, benefits or staffing hours; the new proposal would apply the supplement only to wages and/or increased staffing. The fiscal note for the original proposal was $4 million GPR and $8.9 million all funds over the biennium; the soon-to-be-introduced wage pass-through proposal, which was crafted and is supported by both labor (AFSCME and Service Employees International Union) and management (Wisconsin Association of Homes and Services for the Aging [WAHSA] and Wisconsin Health Care Association [WHCA]), carries a price tag of $2.2 million GPR and $4.6 million all funds.

Supporting Arguments:

• The Legislature approved a 3.5% wage pass-through for housekeepers, laundry workers, dietitians and food workers in the 1999-2001-state budget. We would hope that similar support could be found for this less-expensive alternative.
  
  
• In his veto message, Governor Thompson explained his rationale for vetoing the 3.5% wage pass-through by stating: "Many nursing homes contract for dietary consulting services, and to a lesser extent, laundry and food service workers. Therefore, the wage pass-through may not apply to workers in those areas because the nursing home does not pay their wages directly."
  
  Our Response:
  
  
  1. To address one of the concerns raised by the Governor, we have eliminated dietitians from eligibility for a wage pass-through supplement in our modified proposal;
     
     
  2. A review of the combined WAHSA/WHCA database calls into question the Governor's assertion that "many" nursing homes contract for dietary consulting services, and to a lesser extent, laundry and food service workers. According to our c ombined database, of the 338 facilities whose 1998 Medicaid cost reports were reviewed, only 8 facilities (2.4%) contracted with outside providers for dietary services; 33 facilities (9.8%) contracted for laundry services and 13 facilities (3.87%) contracted for housekeeping services; and
     
     
  3. Neither the wage pass-through adopted in the budget bill nor the modified wage pass-through we are proposing would, or is intended to, supplement costs incurred by nursing facilities for the purchase of contracted services from outside service providers. The intent of the wage pass-through is to reward underpaid but invaluable facility staff while at the same time reduce facility reliance on outside service providers. The reason for the latter: It is a common belief that an over-reliance on outside service providers can diminish the continuity of care and services that is so necessary to maintain the quality of care and the quality of life of a nursing home resident.
     
     
• The purpose of this proposal is to provide additional funding to some of the lowest paid workers in a nursing home. According to the Legislative Fiscal Bureau (Please see page 12 of Legislative Fiscal Bureau Budget Paper #478 Nursing Home Reimbursement, dated 6/1/99), the average wage of nursing home dietitians and food workers in 1997 was $8.46/hour; for both housekeepers and laundry workers, it was $7.95/hour. The joint WAHSA/WHCA database of 338 nursing facilities, which includes for-profit, not-for-profit, county and municipal facilities, found that the average wage in 1998 for dietary staff was $8.44/hour; for housekeeping staff, it was $7.79/hour; and for laundry workers, it was $7.70/hour. (It should be noted that both the LFB figures and those from our database are overstated slightly for dietary staff because both include wages of dietitians, who are excluded from our proposal and who generally earn more than food workers). While the proposed wage pass-through will generate a wage hike of only approximately $.25/hour, for these three categories of workers, every little bit helps.
  
  
• Nearly 70% of the residents of Wisconsin nursing homes have their care paid for by Medicaid. These governmental funds are distributed to nursing homes through the nursing home payment formula, which sets facility-specific rates based on projections of each facility's allowable costs for the coming year. Based on the payment caps established under the nursing home formula, 87%, or 134 of the 154 WAHSA facilities whose 1998 Medicaid costs were reviewed, will not be fully reimbursed for the dietary, housekeeping and laundry costs they have incurred. The average loss for these 134 facilities was $141,537, or nearly $4 per resident day. Obviously, it is difficult for facilities to increase future wages for their staff when they are not reimbursed for their past costs.
  
  
• With today's low unemployment rates and tight labor market, wages in the $7.70-$8.50/hour range are barely competitive. According to figures compiled by the Department of Workforce Development, door-to-door salespeople, telemarketers, hand packagers, tire changers, dry cleaning spotters and many fast food restaurant employees are on average paid more than support service staff that serve elderly and disabled persons.
  
  
• Not only are nursing facilities having a difficult time competing with other private sector employees for staff; the State itself is a fierce competitor. According to a 2/17/00 State Department of Employment Relations job announcement, the starting pay (not the average wage as was listed for nursing home employees above) for food workers at state medical institutions, universities (other than UW-Madison) with state-operated food programs and the Veteran's Home at King ranges from $8.07/hour to $8.42/hour, not including the generous benefits and retirement package available to state employees. Nursing facilities, which rely so heavily on Medicaid, simply can't compete with that kind of a wage/benefits package.
  
  
• The Governor's veto message referred to high turnover rates for certified nursing assistants, but the tight labor market has impacted facility support service staffing as well. A joint WAHSA/WHCA survey last year found that 59.8% of the facility respondents had vacant dietary staff positions, with on average 12.4% of their budgeted positions unfilled. Of the responding facilities, 52.6% had vacant housekeeping positions, with on average 17.4% of their budgeted positions unfilled. While only 27.8% of the responding facilities reported vacant laundry positions, on average 23.1% of the budgeted positions at those facilities were unfilled.
  
  
• In his veto message, the Governor justified his support for a 5% wage pass-through for CNAs by pointing to the high turnover rates of CNAs and the threat of declining patient care as a result of low CNA wages. But as warranted as the CNA wage pass-through was, the proposed wage pass-through for housekeepers, food workers and laundry workers is equally justified. Those workers are paid even less than CNAs and, while CNAs provide most of the hands-on care in a nursing facility, the support service staff plays an equally essential role in enhancing the nursing home resident's quality of life. Simply ask a nursing home resident how important it is to him or her to have clean linens, clean bed sheets, clean clothes, a clean room and appetizing meals. Quality of life is every bit as important as quality care to a nursing home resident and it is the support service staff which is primarily responsible for maintaining and enhancing the quality of life of the nursing home resident.
  
  

The Wisconsin Association of Homes and Services for the Aging (WAHSA) is a statewide membership organization of not-for-profit corporations principally serving elderly and disabled persons. Membership is comprised of 190 religious, fraternal, private and governmental organizations which own, operate and/or sponsor 194 not-for-profit nursing homes, 71 community-based residential facilities, 39 residential care apartment complexes, 100 independent living facilities, and 446 community service programs which provide services ranging from Alzheimer's support, child day care, hospice and home care to Meals on Wheels. For more information, please contact the WAHSA staff at (608) 255-7060: John Sauer, Executive Director; Tom Ramsey, Director of Government Relations; or Brian Schoeneck, Financial Services Director.

WAHSA 204 South Hamilton Street Madison, WI 53703
Telephone: (608)255-7060 FAX:(608)255-7064