In Brief: Minimum Wage Increase Will Cost CDPA $9.3M in First Year

CDPAANYS has prepared an info brief on the first year cost of the minimum wage increase. The brief details that the minimum wage increase will result in approximately $9.3 million in costs for Consumer Directed Personal Assistance in the 2016-17 fiscal year. The minimum wage increase during this period will consist of December 31, 2016 – March 31, 2017.

Click here to access the brief in full: CDPAANYS Minimum Wage Info Brief

Text below:

The State Fiscal Year (SFY) 2016-17 budget included a minimum wage increase to $15 per hour. The increase is structured to accommodate economic factors related to geography and, in New York City, the size of the business. Because the Medicaid sector is either wholly or substantially dependent on the State for funding, the SFY 16-17 budget included $57 million to pay for the wage increase. It also exempted increases to Medicaid stemming from mandated wage increases from the Medicaid Global Cap.

During the budget process, the Consumer Directed Personal Assistance Association of New York State (CDPAANYS) surveyed its members to determine the cost impact of a minimum wage impact on consumers, workers and fiscal intermediaries (FIs) in the consumer directed personal assistance program (CDPA). This survey, based on the Governor’s proposal, assumed year one costs of $35 million to pay for minimum wage increases associated with CDPA.

After adoption of the SFY 2016-17 budget, CDPAANYS again surveyed its members. The wage’s slower pace of growth reduces the impact of the minimum wage increase on CDPA in the first year by almost 75%, to $9.3 million, made up solely of wages and associated costs such as worker’s compensation, payroll taxes and unemployment insurance.

This amount is largely concentrated in New York City, where wages were kept at $10 per hour for almost a decade by the City’s Human Resources Administration. Two FIs deliver the majority of CDPA services in New York City: Concepts of Independence and Chinese American Planning Council Home Attendant Services. Their contracts with HRA establish wages at $10 per hour. Our experience shows that many of the contracts written by both Mainstream Managed Care plans and Managed Long Term Care plans (collectively referred to as Managed Care Organizations, or MCOs) utilize this wage as a base. Therefore, we extrapolated our member information and determined an impact of $8.4 million within New York City.

While the compromise struck as part of the SFY 2016-17 budget was meant to mitigate the effects of the minimum wage increase on the Upstate region, it is evident that Medicaid reimbursement has been so low  that the impact is widespread. There is a large impact in rural counties; however, some urban or suburban areas are touched. The total cost impact for the “Upstate” area is estimated at $922,000.

county minimum wage impact year 1

    Counties Impacted by Minimum Wage Increase – Year 1

While the dollar amount is smaller, the economic impact on the FIs that provide these services Upstate, it often represents a much higher percentage of their budget. Because county Local Districts of Social Services (LDSS) have historically varied in their contracting, the impact across upstate counties varies tremendously. Typically, the FIs that provided CDPA to these LDSSs shoulder the majority of the wage impact in the first year. This is particularly true in smaller, rural communities.

In fact, of survey respondents who indicated that they would be impacted by the higher minimum wage, all of them were independent living centers (ILCs). CDPAANYS does not have preference in the type of entity serving as a FI in CDPA, we note that in these rural communities, ILCs often provide a range of services that help an individual thrive in the community, and in a few instances are the only local organization providing any FI services.

As a part of our survey, CDPAANYS also sought to learn whether its members felt that the minimum wage increase was unnecessary, a good first step in raising personal assistant wages, or not sufficient with much more dramatic raises necessary. All respondents supported the idea of a wage increase. Half of those surveyed thought that the minimum wage increase was an important first step in raising wages; but, did not go far enough. Another 30% felt that the minimum wage increase was insufficient, calling for more substantial raises for personal assistants in CDPA. This means a total of 80% of CDPAANYS survey respondents indicated that personal assistants deserve a higher wage than what the increased minimum wage allows them to pay. A more detailed report on how low wages impacts the industry will follow.

 

 

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