ARRM's Daily Dispatch

Summary of Governor Dayton's budget

The governor’s budget solves the FY 2012-13 general fund budget deficit through a mixture of increased revenues, a delay in the school aid payment shift, and permanent spending cuts.

Of the proposed solution, 24 percent is from the school shift buyback, 67 percent from increased revenue, and 9 percent from the net reduction in spending. Excluding the shift buyback, $950 million in spending cuts are offset by $465 million in new initiatives for a total impact on spending of $485 million. See table 1 for a breakdown of the separate revenue and spending components.

Table 1– Summary of Governor’s Proposal (dollars in millions)
FY 12-13 General Fund Deficit Spending Changes School Shift Buyback Spending Reductions New Initiatives Revenue Changes Tax Increases Health Care Surcharges HCAF TRansfers, Misc Revenue Cash Flow Account Reduction FY11 Changes Total	$(6,188) 1,940 1,455 950 (465) 4,129 3,356 877 (104) 136 (14) $6,191

Table 2 provides a similar summary of the major changes in the area of health & human services. The proposal relies heavily on increasing revenue, mainly through increasing Medicaid surcharges. The total general fund impact is $1.1 billion. Of the $330 million of new spending, about $250 million is from rate increases traditionally given to offset surcharge costs. Forty-one (41) percent of the $676 million in reductions are cuts to programs impacting the elderly and disabled – a total of $280 million.

Table 2 – Health & Human Services Changes (dollars in millions)
FY 12-13, HHS GF Impact Spending Reductions New Spending -mainly provider rate increases tied to surcharges Surcharge Revenue Misc. Revenue HCAF Transfer Adjustment	$1,122 676 (330) 877 14 (115)

Items Directly Impacting Providers:

Reduce Provider Rates & Grants: Effective 7/1/2011, reduces payment rates for home and community based providers by 4.5 percent, reduces aging and other continuing care grants by 4.5 percent, and reduces payment rates for nursing homes by 2 percent. This generates $144.5 million in savings in FY 2012-13.

Reduce Certain Congregate Living Rates: This proposal identifies approximately 3,600 individuals currently receiving waiver services in congregate care settings with “low” medical needs and reduces rates for their care. The rationale is to encourage them to be served in less expensive settings. Reductions for these rates would average 10 percent in FY 2012 and 2013, and 15 percent in FY 2014 and 2015, and is effective 10/1/2011. Saves $12.3 million in FY 2012-13.

Disability Waiver Enrollment Limits: This reinstates caps on waiver growth in current law that expired at the end of FY 2011. (DD at 6 per month, CADI to 60 per month, and TBI is reduced from 6 to 3 per month.) These caps would be effective 7/1/2011 through 6/30/2013. The proposal saves $45.8 million in FY 2012-13.

Eliminate Delayed 1% DD Waiver Acuity: This eliminates the 1 percent DD waiver acuity adjustment to county allocations that was delayed from July 1, 2009 to July 1, 2011. This adjustment is only to allocations, which counties then have discretion to spend. The acuity adjustment resumes July 1, 2011. Savings associated with this proposal is $9.0 million in FY 2012-13.

Restructure Licensing Fees: As part of a proposal to move licensing activity from the general fund to the state government special revenue fund, increases licensing revenue by $900,000 per year beginning in FY 2012. The budget page does not specify which fees would be increased, but mentions a 10 percent surcharge on existing fees (up to $150) for implementation of the state’s e-licensing system.

Licensing Fees for Background Studies: This adds a $20 fee for every provider licensed by the department to cover the cost of conducting these. The fee raises approximately $1 million per year beginning in FY 2012.

Other Items Impacting Individuals with Disabilities

Reduction in Children & Community Services Act (CCSA) Grants: $22 million

Managing Elderly Waiver & Alternative Care Programs: Makes various changes, notably reduced rates for components of 24 hour and regular customized living, restricted criteria for case mix L, require 3 ADLs for 24 hour customized living, and add staff for auditing - $26.1 million.

Increase MA-EPD Premium & Cost Share: Increases monthly premium from $35 to $65 and increases the unearned income obligation from .5 percent to 5 percent. Savings are delayed until FY 14-15 due to federal MOE requirements.

Rehab Service & Prior Authorization Changes: Eliminates coverage of specialized maintenance therapy (SMT), and eliminates one-time services thresholds for rehab therapies and replaces it with prior authorization requirement - $1.1 million.

Critical Access Dental Eligibility: Reduces eligibility and reduces who can receive CAD payments - $5.3 million.

Reduce Basic Care Rates: 0.5 percent reduction to outpatient hospital services and other basic care services that aren’t specified - $2.5 million.

Reduce Rates for Special Transportation Services: 4.5% ratable reduction for transportation services including ambulance, special transportation services (STS) and access transportation services (ATS) - $4.1 million.

Reduce SOS Mental Health Services: Closes the state behavioral health hospital in Willmar - $5.4 million.

Click here for this information in PDF format.

--Craig Wieber, Chief Fiscal Analyst

ARRM's Feb. 16 news release: Budget hits services to people with disabilities hard

ARRM's news release on the budget cuts is below. Feel free to use this with your local media.

SOUTH SAINT PAUL, Minn. – The Governor’s budget cuts at least $280 million in long term care services to people with disabilities and the elderly, 41 percent of the $680 in cuts to health and human services

“Something is out of whack here,” ARRM CEO Bruce Nelson said.

“We’re disappointed that the budget makes a disproportionately large cut to core services for vulnerable Minnesotans who are disabled or elderly,” he said.  “These services that are just as important as anything else the state provides and funds.  Why are the disabled and elderly being singled out?"

Over the past seven years their funding has lagged behind inflation by 13 percent, according to Nelson. “How do you run a business and keep already low-paid caregivers – who account for 76 percent of all funding – with big new cuts on top of that 13 percent?”

ARRM is a statewide association of private disability providers that support people with developmental and physical disabilities, autism, brain injuries and mental illness in their pursuit of meaningful lives.

Last week over 1,000 people with disabilities and their caregivers rallied at the capitol and met with legislators to stave off deep cuts. “Those good folks will continue to ask for the resources they depend on every day,” Nelson added.

Among the reductions to people with disabilities and elderly include:

• A 4.5 percent rate cut for home and community based services,
• A 2 percent rate cut for nursing homes plus other cuts specifically targeted at nursing homes,
  • Those two rate cuts save $144 million over two years,
• A medical need threshold for waivers along with person-centered supports for $12 million over two years,
• Elimination of acuity money for the DD waiver that went to counties, but was temporarily cut in unallotment last year, for another $9 million,
• Waiver slot limits continued for another two years with a reduction in TBI for 6 to 3 a month for total two year savings of $46 million,
• Background study $20 fee for all providers licensed by DHS and

An increase in the ICF/MR surcharge to $4,037 per licensed bed with a commensurate rate increase based on 95 percent occupancy.

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Bruce Nelson's reaction to the cuts in Star Tribune

ARRM CEO Bruce Nelson was quoted in the Star Tribune, yesterday, regarding the governor's proposed cuts. Unfortunately, the quote contains a small typo (AARM), but we're pleased the reporter captured Bruce's message.

"It really hits people with disabilities and the elderly disproportionately hard," said Bruce Nelson, with AARM, a coalition of service providers to people with disabilities. "We're going to see some layoffs, reduction of hours, cutbacks on either pay or benefits. It is going to make it more difficult to sustain quality support."

The full story is here: http://www.startribune.com/politics/local/116283509.html

--Barb Brynstad, Communications Director

Gov. Dayton, GOP legislators to fly around state Wednesday

On Wednesday, February 16th, Gov. Dayton and Republican legislative leaders will fly around the state--separately--to promote their budget views via news conferences. If you're in Duluth, Moorhead, Mankato, Rochester or (GOP only) Saint Paul, and want to attend, the Star Tribune posted times and locations here: http://www.startribune.com/politics/blogs/116247294.html.

Although you may not get an opportunity to speak directly to elected officials, your presence at the news conference will put disability issues onto their radar screens.

Alert: Gov’s budget hits disability services harder than most others services

Note: This information was also emailed to members as an ARRM Alert.

Gov. Mark Dayton’s proposed two-year budget, released at 10:30 a.m. today, would balance the state’s projected $6.2 billion deficit by:

• Raising $3.3 billion in new taxes,
• Continuing the K-12 education payment shift for $1.4 billion and
• Finding $1.6 billion in human services cuts and surcharges, offset by $331 in new spending.

The budget targets disability services with:

• A 4.5% rate cut for home and community based services and a 2% rate cut for nursing homes plus other cuts specifically targeted at nursing homes. Those two rate cuts save $144 million over two years.
• Reducing rates to providers for individuals with “lower” needs served in congregate care for $12 million
• Elimination of acuity money for the DD waiver that went to counties, but was temporarily cut in unallotment last year, for another $9 million
• Waiver slot limits continued for another two years with a reduction in TBI for 6 to 3 a month for total two year savings of $46 million
• Background study $20 fee for all providers licensed by DHS and
• An increase in the ICF/MR surcharge to $4,037 per licensed bed with a commensurate rate increase.

We have not yet been able to determine other possible disability cuts, such as dental, OP and OT.

ARRM’s early analysis shows that actual HHS cuts total $680 million, meaning that people with disabilities and the elderly would be hit disproportionately hard – shouldering $211 million or 31% of the total HHS reductions.

The governor was able to find money for his priorities, such as the K-12 education formula, military and veterans and local government aid.  Most people had expected a cut to local governments, a significant chuck of the overall budget.

The forecasted $6.2 billion will be adjusted in the next forecast in early March to be followed by the governor’s supplemental budget and proposals from the legislature.

ARRM is now walking the capitol press room.  We'll provide further analysis by late Wednesday.  Keep in mind that this is the first volley in the capitol budget battles and that we have developed strategies in anticipation of this scenario. In the meantime, stay on message about how the services you provide to vulnerable people with disabilities are a core function that government oversees and funds. 

We apologize for the delay since 10:30 a.m.  The state’s budget website crashed and just went live with needed information.

--Bruce Nelson, CEO, and Craig Weiber, Fiscal Analyst

Governor's budget includes cuts to providers

The budget Governor Dayton released today includes cuts to services for Minnesota's most vulnerable citizens: a 4.5 percent rate cut for home and community based services, and a 2 percent rate cut for nursing homes.

Unfortunately, it appears that the Minnesota Management & Budget (MMB) website has crashed beneath the weight of too many visitors. At this point, nobody can see the budget details. Thus, we'll provide a detailed analysis of the governor's budget via an Alert and a blog post as soon as the MMB website is back online.

As part of its response to Gov. Dayton's proposed budget, the GOP announced that its members will fly around the state tomorrow (St. Paul, Rochester, Mankato, Moorhead and Duluth). Please take advantage of this opportunity to connect with these legislators and talk about the impact of the governor's proposed cuts.

Update: Governor Dayton will also hit the road tomorrow: Duluth, Mankato, Moorhead and Rochester.

--Barb Brynstad, Communications Director

January revenue collections continue to exceed projections

Continuing a trend for the current fiscal year, revenue collections for the month of January were higher than anticipated. Revenue from all sources was 9.3 percent higher than estimated, just over $137 million. For the past seven months, the total amount collected above the forecast is $165.5 million. 

More revenue is always better than less, so this is good news. We won’t know the full extent of any changes in long-term revenue projections until the release of the next budget forecast at the end of February. Higher receipts are a good indication that the next forecast won’t show a significant decrease in tax collections. However, we don't know what effect this will have on the overall budget deficit, because spending estimates aren’t released monthly.

To read the story on this from the Star Tribune, click here. 

--Craig Weiber, Chief Fiscal Analyst

Disability advocates show up in droves for ARRM’s Day at the Capitol

ARRM hosted its annual Day at the Capitol event Tuesday, February 8^th, and with about 1,000 people registered, we shattered previous attendance records. ARRM members met with 154 of the 201 legislators (compared to 130 meetings last year), including 49 of the 60 newly-elected legislators.

During those meetings, you educated legislators about disability services and put a human face on big numbers and abstract concepts. Large groups of people attending legislative meetings; some legislators were floored by the sheer numbers of program sites and constituents in their districts. When it’s time for legislators to make really tough decisions this session, rest assured, lawmakers will remember your faces—and your stories.

The energy from the meetings carried through to the rally in the Capitol Rotunda. Speakers at the hour-long event included instrumental decision-makers, who saw—and heard—hundreds of advocates demanding “No more cuts.” They were:

• Speaker of the House Kurt Zellers
• House Minority Leader Paul Thissen
• House HHS Finance Chair Jim Abeler
• House HHS Reform Chair Steve Gottwalt
• Senate HHS Chair David Hann
• Representative Rod Hamilton
• Department of Human Services Commissioner Lucinda Jesson.

Our huge numbers also caught the attention of the news media. WCCO/CBS mentioned the rally on its 6 p.m. broadcast, and veteran Capitol reporter Mary Lahammer highlighted the event in her Politics in Minnesota and MinnPost columns.

While our Day at the Capitol was an energizing experience, we encourage you to keep working toward our goal of making disability services a priority this session:

1. Send a note to legislators, thanking them for meeting with you Tuesday.

2. Extend an invitation for a site visit. You’ve piqued their interest; now, show them the value of your important work.

3. Learn more about freshman legislators by downloading their biographies (republished with permission from Politics in Minnesota).

3. Friend your elected officials on Facebook or join their listservs. In an email update to his constituents Tuesday, Rep. Rick Hanson referenced economic impact information ARRM members left behind.

4. Join ARRM’s Facebook page, and follow our tweets on Twitter.

5. Attend a free hour-long grassroots advocacy and social media webinar for ARRM members only next Tuesday (Feb. 15th), presented by Washington D.C.’s advocacy guru, Stephanie Vance.

6.  Keep sending us your feedback! It increases ARRM’s ability to support our members with targeted, direct lobbying strategies.

Finally, we’d like to thank the Wingspan Choir and Organic Cowboys for providing musical entertainment, our sponsor, Mains’l for helping ARRM defray the cost of this event, and all the volunteers who helped make ARRM’s Day at the Capitol a great success.

Most of all, we want to thank you. All the work you are doing is truly making a difference, so let’s keep the momentum going!

--Sara Krogman, Field Coordinator, and Barb Brynstad, Communications Director

Possible action on 1099 issue in health care reform law

Included in last year’s health care reform bill (i.e., the Patient Protection and Affordable Care Act) was an item that will place a hefty reporting requirement on businesses. Beginning in 2012, all companies have to issue 1099 tax forms not just to contract workers, but to any individual or corporation from which they buy more than $600 in goods or services in a tax year. 

Last week in his state of the union address, President Obama offered to address this issue by saying, “We can start right now by correcting a flaw in the [health care] legislation that has placed an unnecessary bookkeeping burden on small businesses.” On the same day, two bills were introduced in the Senate to repeal the 1099 rules: one by Senate Finance Committee Chairman Max Baucus (D-MT) and Senate Majority Leader Harry Reid (D-NV), and another by Senator Mike Johanns (R-NE). The repeal has also shown up as an amendment to the Federal Aviation Administration (FAA) authorization bill. A recent story outlining new developments is available here.

Given that both the president and Members of Congress of both parties have identified this issue as something they would like to address, there is reason to be optimistic that an agreement to repeal these requirements can be reached. 

We’ll continue to pass along information on a possible repeal of the 1099 requirements as we receive it. 

--Craig Wieber, Chief Fiscal Analyst