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Continued: Minnesota's fraying safety net

  • Article by: BRAD SCHRADE and WARREN WOLFE , Star Tribune staff writers
  • Last update: March 22, 2011 - 2:39 PM

For decades, Minnesota has relied on people like Joyce Hagen to deliver care to its most vulnerable residents.

A social worker with Lutheran Social Service, Hagen oversees 26 group homes that support developmentally disabled adults in the Twin Cities. Her staff not only dispenses medication, cooks and take residents to the doctor, but tight budgets are now forcing them to clip coupons and look for other savings. One group home manager has gone to the extreme of concocting homemade laundry detergent, which costs just a penny and a half per load.

"I'm worried," Hagen said recently. "I don't know where else to cut."

More than a million needy Minnesotans rely on the state's taxpayer-supported safety net, most of them low-income seniors, disabled persons and children who need health care and other services. But the crushing combination of a bad economy and the growing needs of an aging population are stretching the system like never before.

There's no way to fix the state's $6.2 billion financial hole without affecting that safety net -- which accounts for a third of state spending. Yet decisions on where to cut services are presenting Gov. Mark Dayton and the Republican-controlled Legislature with their most vexing challenge, given the potential harm those choices could bring.

With 8 percent annual growth in the Department of Human Services budget, everyone agrees that reform has to happen. Unchecked, that expansion threatens to chew up state revenue and crowd out other important programs.

In mid-January, Republicans took first whack with a bid to trim $71 million from the department's two-year $11.4 billion budget. The proposal includes less money for child support enforcement, less help to abused and neglected children and fewer emergency assistance grants. But it does little to address the big money areas of health care and long-term care, where nursing home and other providers are bracing for cuts of up to 15 percent.

"It's a fair bet to say you can't continue to do what we've been doing over the last 10 or 15 years," said Sen. David Hann, R-Eden Prairie, the new chairman of the Health and Human Services Committee. "Just say we'll keep adding the numbers, keep putting more people into the programs and increasing the unit costs for caring for these people by whatever x percent per year and expect that's going to be covered by general taxation. That's just not realistic."

Advocates won't be surprised if lawmakers resurrect past proposals that former Republican Gov. Tim Pawlenty couldn't get through a DFL-controlled Legislature, such as eliminating adult dental care in public health programs. Republican lawmakers who now control the purse strings have said they will balance the budget without raising taxes or harming vulnerable residents. Many outside the caucus believe that's not possible.

"There's no way it's going to be done without a lot of pain," said Rep. Tom Huntley, DFL-Duluth, former chairman of the Health and Human Services Finance Committee.

Advocates worry that interest groups and beneficiaries of social service programs will be pitted against each other, as groups jostle to protect their turf.

"With the budget crisis as deep as it is, no matter how much you increase revenue, there will be cuts deep enough that somebody is going being harmed by it," said Michael Scandrett, president of the LPaC Alliance, a division of Halleland Habicht law and consulting firm that focuses on improving the health care system. "The question is who? If you say you don't want to harm the most vulnerable, the question is where do you draw the line?"

A home on the edge

Of the state's 385 nursing homes, few are as close to the edge as Fair Meadow Nursing Home, a 50-bed facility owned by the city of Fertile in northwestern Minnesota. The home serves one of the poorest populations in the state, with four out of five residents on Medicaid.

Like his counterparts across Minnesota, the administrator at Fair Meadow fears lawmakers will significantly reduce state support, creating uncertainty about services for 18,000 frail Minnesotans who rely on state money to cover 75 percent of nursing home costs.

"If we get a cut of 5 percent, we'll probably let some staff go and stay in business for at least a year," said administrator Barry Robertson. "But 10 percent? I just don't know."

Since 2000, nearly 60 nursing homes across Minnesota have closed. A 10 percent reduction in reimbursement payments would save the state about $78 million over two years -- and perhaps doom two dozen other facilities.

"Many, many homes are on the edge financially because of a decade of rate cuts," said Patti Cullen, president of Care Providers of Minnesota, whose members operate nursing homes, assisted living and other and senior housing.

Even homes that aren't facing a financial crisis are worried about what this year's legislative session will bring. At Cerenity Care Center-Marian of St. Paul, staff members have not had a raise in four of the past six years because of dwindling state payments.

"We're putting off some equipment repairs and fix-up projects," said administrator Jeff Thorne. "But we do not want to cut staff or services. If we get more cuts, we'll have to look very hard."

Irv Rubbelke, a retired St. Paul firefighter who serves on the home's resident council, said he frets about Cerenity's ability to provide for his daily needs if state help is significantly reduced this year.

"You can't keep cutting their pay and expect to get the same care," said Rubbelke, 97.

Elderly residents won't be the only ones suffering if some nursing homes close, especially in small communities like Fertile.

"We're the largest employer [in the city of 840], and it could mean a loss of about 105 jobs and a $1.9 million payroll," Robertson said. "That's a hard hit, and it would be felt by everybody -- businesses, the school, everybody."

Preparing for the worst

In Brooklyn Park, Rochelle Turan's family has a lot riding on what happens at the State Capitol. Two of her three sons have developmental disabilities. Taylor, 14, and Marshall, 10, have severe behavior issues linked to their disabilities, and require constant attention and monitoring.

The boys can be aggressive and destructive, and the family has removed most items in the home that are fragile, such as lamps and window treatments.

"Everything is pretty much bolted to our house because of the behaviors," said Turan, 47.

To pay for in-home workers, speech and occupational therapy and other needs, the Turans receive about $100,000 a year in services through Medicaid, but they have a $400 a monthly co-payment because their income level is too high for full assistance. They also carry private insurance, which costs $600 a month and helps offset some of the expenses the state otherwise would pay.

With speech therapy, Taylor's verbal skills have improved. Marshall doesn't speak at all, and he suffers from a condition that produces frequent bouts of vomiting. Both boys have struggled with learning how to use the toilet, and the family washes about 30 loads of laundry a week.

Medicaid-funded programs like this one help about 65,000 elderly and disabled Minnesotans remain home and out of more expensive nursing homes and other institutions. The programs, which cost $1.8 billion last year, offer therapy, meals, transportation, personal care attendants, housekeeping and other services.

"We know these programs save the state money," said Gayle Kvenvold, CEO of Aging Services of Minnesota, a trade group representing mainly nonprofit nursing homes and senior housing providers. "But we don't have hard data to show how much."

If state support is drastically reduced, Turan said she and her husband would sell their house to help pay for care that keeps their sons out of an institution. "I just hope for the best and hope the right decisions are made," she said.

In Ramsey County, some 200 disabled adults rely on TSE Inc. for a ride to work. Among the participating employers: McDonald's, the Gap and Latuff Brothers Auto Body. The nonprofit group, which relies heavily on state and federal support, also provides job training and support for individuals with autism, Down syndrome and other intellectual disabilities.

Lynne Megan, TSE President and CEO, is preparing for a 5 percent rate cut, which likely will mean less staff. But Megan is determined to keep her fleet of 19 vans operating. Without a ride to work, she said, her clients won't be able to keep their jobs.

"People with disabilities can contribute to our communities," Megan said. "To take that opportunity away from them would be very hard. It would be difficult to do."

$2 billion in cuts?

Rep. Jim Abeler, R-Anoka, the new chairman of the Health and Human Services Finance Committee, has set an informal target of trimming at least $1 billion from Minnesota's projected increases in health and human services spending over the next two years. Others have said necessary spending reductions may be closer to $2 billion.

"People talk about cutting the budget, and maybe that will be true for some programs," Abeler said. "But overall, we'll spend more. We're just trying to cut back the increase in spending."

Many groups, fearing unintended damage by legislative cuts in services or payments, are offering their own proposals to reform or reorganize how their programs are delivered and financed. A group of seven major health providers and insurers has suggested ways to cut the deficit by $1.8 billion through unspecified cuts in services, raising alcohol and tobacco taxes, finding more federal matching dollars and other changes. Other groups will follow soon.

The months ahead are going to be a challenge for policymakers and those in various communities that rely on state services, said Kevin Goodno, a former legislator and human services commissioner who now lobbies the state on behalf of various groups that serve the disabled and elderly communities.

"It's really difficult. ... Any place you try to push down the budget or constrain growth in one part of the budget ... if there's a need out there it's going to push up someplace else," Goodno said. "You may see it in your state budget or it may be pushed out to counties, to non-profits or the safety net hospitals. It's going to get paid for and taken care of somehow."

brad.schrade@startribune.com • 612-673-4777 wolfe@startribune.com • 612-673-7253

  • about this series

  • In this 2011 series, Star Tribune reporters showed how the budget debate will play out across the state, from small towns to big cities, in the courts, schools, businesses, social services and state government.

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