Salary Reserve

Line Item	Description	FY01	FY02	FY03	FY04	FY05	H1 for FY06
1599-6901	Salary Reserve	$15,000,000	$5,000,000	$0	$0	$20,000,000

The Direct Care Worker Salary Reserve-also called the Purchase of Service (POS) Salary Reserve-was first created in the 1990s to provide modest but important salary increases for direct care workers who are employed by service providers that contract with state agencies under the Executive Office of Health and Human Services (EOHHS) and the Department of Elder Affairs (DEA). It is allocated within the Executive Office of Administration and Finance (EOAF) for distribution to these private providers.

Many community-based social and human services programs are contracted out to private, usually non-profit, provider agencies. Because state reimbursement levels for this contracted care are so low and usually have no built-in cost-of-living adjustments, employees at provider agencies receive notoriously low salaries and benefits for their difficult caregiving work. It has been estimated that more than half of these direct care workers have no health insurance coverage. Many work a second job to make ends meet.

Inadequate compensation of direct care workers has been named by many advocates as one of the most severe problems in the state's human services system. The consequence is extremely high turn-over rates, chronic worker shortages and a lack of qualified staff in all areas of service delivery. For persons who depend on state supports, these problems strongly weigh against successful access to, quality of, and continuity of care-serving as sources of often daily stress.

Line Item Analysis

Account:      POS Salary Reserve

Line Item:   1599-6901

Each time the Salary Reserve is funded the allocation serves a one-time purpose. To sustain the wage increases beyond a single year, these funds must be annualized into the budgets of all the agencies whose workers received a Salary Reserve-funded raise. [Editor's Note: Readers will notice that increases proposed by the governor's H1 for FY06 budget to many of the line items covered in People First are intended for maintaining POS Salary Reserve raises into the next fiscal year.]

 

Line Item	Description	FY01	FY02	FY03	FY04	FY05	H1 for FY06
1599-6901	Salary Reserve	$15,000,000	$5,000,000	$0	$0	$20,000,000	$0

FY01-FY05 Impact

In FY01, the Salary Reserve received $15 million, although at its highest earlier point it was allocated $28 million. It was slashed to $5 million in FY02 and eliminated in FY03 and FY04.

The FY05 allocation of $20 million was a significant victory for direct care workers, thanks to sustained advocacy on the part of many organizations. The legislature rejected the governor's initial proposal to de-fund the account entirely.

FY05 budget language earmarked $10 million of this total for workers earning under $25,000 per year ($12 or less per hour) and the other $10 million for workers earning $25,001-40,000 ($12-19 per hour). Language also stipulated that annualization funds would be provided in FY06, but that they would not in total be permitted to exceed $20 million-in other words, workers won't suffer a pay reduction in FY06, but neither are they budgeted for a cost-of-living increase in that year. The raises are in addition to any that were already set by collective bargaining agreements.

FY06 Needs

In FY06, advocates are seeking $60 million for the Salary Reserve account. The recommendation has broad support in the human services and disability advocacy communities.

H1 for FY06 Recommendations

H1 includes no funding for raising the salaries of the lowest paid direct care workers.

H1 does include a proposal of $5 million for a Purchase of Service Rate Adjustment (line item 1599-6902) for contracted service providers, but the money is marked for standardizing reimbursement rates and achieving efficiency standards, not for salary raises.[1]