BILL ANALYSIS
AB 1653
Page 1
Date of Hearing: May 10, 2005
ASSEMBLY COMMITTEE ON HUMAN SERVICES
Noreen Evans, Chair
AB 1653 (Haynes) - As Introduced: February 22, 2005
SUBJECT : In-home Supportive Services program; provider wage and
benefit reductions.
SUMMARY : Limits state participation in wages of In-home
Supportive Services (IHSS) providers to the minimum wage.
Specifically, this bill:
1)Provides that effective October 1, 2005, the state pay 65% of
the nonfederal share of wages and benefits negotiated by
public authority or nonprofit consortium up to the state
minimum wage;
2)Provides that the act is an urgency statute necessary for the
immediate preservation of the public peace, health or safety
within the meaning of Article IV of the Constitution, and
shall go into immediate effect.
EXISTING LAW :
1)Provides for the county-administered IHSS program, under which
qualified aged, blind and disabled persons are provided with
services in order to permit them to remain in their own homes
and avoid institutionalization.
2)Permits services to be provided under the IHSS program either
through the employment of individual providers, a contract
between the county and an entity for the provision of
services, the creation by the county of a public authority, or
a contract between the county and a nonprofit consortium.
3)Establishes a formula with regard to provider wages or
benefits increases negotiated or agreed to by a public
authority or nonprofit consortium and specifies that the state
pay 65% and the counties 35%, beginning with the 2000-01
fiscal year, of the nonfederal share of any increases up to
designated amounts, depending upon certification of specified
increases in revenues over the prior fiscal year.
FISCAL EFFECT : Unknown; the Administration estimates savings in
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fiscal year 2005-06 of $195 million, and $260 million annually
thereafter. However, the Administration's estimates assume
counties maintain wages with own funds, and do not consider
potential costs in Medi-Cal, food stamps, CalWORKs and long-term
institutional care to the extent that wages are reduced and
fewer IHSS providers are available to care for aged or disabled
consumers.
COMMENTS : This bill contains the Administration's proposal to
reduce state contributions to IHSS wages and benefits, a key
element of its 2005-06 social services budget.
The IHSS program serves eligible aged, blind, and disabled
individuals. The broad goal of the program is to provide care
to people in their own homes in order to avoid placement in
institutions like Skilled Nursing Facilities, Residential Care
Facilities, and other aggregate care settings.
The program provides: (1) domestic services like housework,
shopping for groceries and meal preparation; (2) non-medical
personal care services such as dressing and transportation; (3)
paramedical services like administering medications; and (4)
protective supervision for those who, due to cognitive decline
or dementia, cannot be left alone for extended periods.
Eligibility. IHSS is available to those who are aged (65 and
over), blind or disabled, living in their own homes (or are
capable of doing so if IHSS services are provided), with income
low enough to qualify for Supplemental Security Income/State
Supplementary Program (SSI/SSP) benefits. It serves
approximately 330,000 people who are aged, blind, and disabled.
Of those, 51% are disabled, 47% are aged and 2% are blind.
Funding. IHSS is funded with federal, state, and county funds.
There are three components: (1) the Medi-Cal Personal Care
Services Program (PCSP), (2) the IHSS Plus Waiver Program, and
(3) the IHSS Residual Program. Half of the costs of the PCSP
and IHSS Waiver Plus programs are borne by the federal
government, and the remainder is shared by the state (65%) and
counties (35%). The Residual program is entirely state and
county-funded. Before August 1, 2004, most people in the
Residual program were cared for by their parents or spouses.
These cases were largely transferred to the IHSS Plus Waiver
Program after the federal government approved the waiver last
summer. As a result, those cases became eligible for the 50%
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federal share. The Governor's proposed budget includes $231
million in state savings in 2005-06 as a result of the approval
of the IHSS Plus Waiver.
The Residual program is now a small component of IHSS.
Administration. The IHSS program is supervised at the state
level by the State Department of Social Services, and
administered at the local level by counties, who perform
eligibility determinations and assess the number of hours a
client needs (up to a maximum of 283 hours per month). Each
county is required to establish an employer of record for the
purposes of collective bargaining, background checks on care
providers, and other workforce development activities.
Service delivery modes. Counties deliver services in one of
three service delivery modes: Individual Provider (IP),
Contract, or Homemaker. A county can also use a combination of
different modes.
The vast majority of IHSS clients receive care services from an
individual provider, in which a client interviews, hires, and
fires a caregiver who is not an employee of the client, but
serves as an independent contractor. This mode of service
delivery relieves the client from the administrative tasks
associated with being an employer, such as withholding taxes and
carrying worker's compensation insurance.
Some counties provide IHSS services through a contract with a
home care agency. Such an agency employs and supervises
caregivers who provide care to clients in their home.
Additionally, counties can employ their own care providers to
deliver services to clients. Since they are county employees,
the county is responsible for their work.
Employer of Record. Counties must establish an employer of
record for the purposes of collective bargaining. Nearly all of
California's counties choose to meet this requirement through
the establishment of a Public Authority. Public Authorities
maintain registries of IP's, conduct background checks, and
negotiate with labor unions for wages and benefits. Five
counties choose to serve as their own employer of record. In
this case, the county negotiates directly with labor unions.
Employee wages. Since 2000, the state has contributed its 65%
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share of non-federal dollars to wage increases for IHSS workers,
up to a designated cap. Currently the limit is $10.10 for both
wages and health benefits. Subdivisions (d) and (e) of Section
12306.1 contain a "trigger" which increases the wage and benefit
level for which the state contributes its 65% share when General
Fund revenues increase by 5% over the prior year. The maximum
allowable wage and benefit hourly amount for which the state
will make its contribution is $12.10.
As of February 1, 2005, fourteen counties now pay at least $9.50
per hour in wages, and 93% of all IHSS workers statewide are
paid more than the state minimum wage, according to a survey
conducted by the California Association of Public Authorities
(CAPA). The survey also revealed that 28 Public Authority
counties, representing 90% of statewide IHSS workers, have a
binding collective bargaining agreement, and 22 of these "have
adopted some form of county protection within the local
ordinance or collective bargaining agreement that addresses
potential changes in state or federal sharing levels in IHSS
wages and/or benefits." The protection is either "re-opener
language" which requires a meet and confer process without
specifying outcomes, or language modifying wages or benefits if
state or federal funding is diminished. Six counties - Alameda,
Contra Costa, Mendocino, San Francisco, Santa Clara and Santa
Cruz - have no county protection and, if state participation
above the minimum wage is eliminated, would be obligated to
cover the cost from county funds.
Impact of wage reductions . As noted, the Administration assumes
that the withdrawal of state participation will not have an
immediate effect on actual wages paid to IHSS providers. DSS
asserts that "[i]t is possible that counties could access the
$93 million in county savings associated with the 2004 IHSS
Independence Plus Waiver to make up for the smaller State share
of wages and benefits." However, this still falls $100 million
short of the projected state savings, and, as the County Welfare
Directors Association observes, "just as the state has dedicated
the savings to other vital state priorities, so have the
counties." Additionally, the CAPA survey cited above found that
22 counties have negotiated agreements requiring either an
automatic reduction of wages or renegotiation of conditions when
anticipated state or federal funding is not available.
The bill potentially could affect the stability and quality of
care provided by IHSS workers and result in significant income
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losses as well as heightened demand for public benefit programs
serving low-income Californians. A study performed by Associate
Professor of Economics Candace Howes for the University of
California Institute for Labor and the Economy found that the
rise in IHSS wages for homecare workers in San Francisco County
from $5 to $10 per hour over a 52-month period increased the
supply of IHSS providers by 54%, and reduced the annual turnover
of the workforce by 30%. Professor Howes has estimated that a
reduction of the IHSS wage to the minimum would double the
turnover in San Francisco. Additionally, surveys she conducted
found that at least 12,000 providers statewide would look for
other work if wages fell, and 19% of consumers losing their
provider would need nursing home care. The savings of $33
million for the 28% of consumers who would do without a provider
would be far outweighed by the $137 million increase in nursing
home costs. The annual cost of providing IHSS care is $9,924,
compared to $60,000 estimated by the Legislative Analyst to be
the annual cost of nursing home care.
Moreover, Professor Howes estimated the lost IHSS worker income
at $550 million annually. Such losses would increase Medi-Cal
enrollment as well as CalWORKs and food stamp eligibility,
offsetting other projected savings.
Access to Medicaid services . Federal law governing the Medicaid
program (known as Medi-Cal in California) requires participating
states to "assure that payments ? are sufficient to enlist
enough providers so that care and services are available under
the plan at least to the extent that such care and services are
available to the general population in the geographic area." 42
U.S.C. 1396a(a)(30)(A). Inadequate rate payments have been
invalidated when courts have found that they effectively
resulted in a denial of access to necessary services. Most
recently, in Clayworth v. Bonta , 295 F.Supp. 1110 (E.D.Cal.
2003), the Court enjoined a 5% Medi-Cal fee-for-service provider
rate reduction, finding the proposed cut arbitrary because "the
State failed to consider the effect of a rate reduction on
beneficiaries' equal access to quality medical services, in view
of provider costs ?" The proposal contained in AB 1653
potentially raises similar legal issues.
Subcommittee Action . The Administration's budget proposal to
reduce the state contribution to IHSS wages was heard on April 6
in Budget Subcommittee #1 on Health and Human Services. The
proposal was rejected by a 4-0 vote.
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REGISTERED SUPPORT / OPPOSITION :
Support
California Department of Social Services (sponsor)
Opposition
American Civil Liberties Union (ACLU)
California Alliance for Retired Americans (CARA)
California Association of Homes and Services for the Aging
(CAHSA)
California Association of Public Authorities (CAPA)
California Foundation for Independent Living Centers
California State Association of Counties (CSAC)
County Welfare Directors Association of California (CWDA)
Gray Panthers California
IHSS Advisory Committee
In-Home Supportie Services Consortium
Planning for Elders In-Home Supportive Services (IHSS) and
Health Task Force
San Francisco IHSS Public Authority
Service Employees International Union (SEIU)
The County of Riverside IHSS Public Authority
The IHSS Public Authority of Marin
The Personal Assistance Services Council of Los Angeles
67 individuals
Analysis Prepared by : Casey McKeever / HUM. S. / (916)
319-2089