Mesuda Hudug, a veteran home-health aide and licensed nursing assistant, is pleased with the recently negotiated contract between the Minnesota Department of Human Services and the Service Employees International Union (SEIU) that will boost the minimum wage from $13.25 to $15.25 by July 2022 for those who care for low-income elderly and disabled Minnesotans on Medicaid.

"I enjoy the work," said Hudug, who once worked in a nursing home. "I choose to work with individual clients. Some treat us like family."

That said, this can be tough work, with minimal paid time off, Hudug said. She didn't get paid for most of the time she had to quarantine last year after being exposed to a client with COVID-19.

The proposed contract, subject to approval by the Legislature, also increases the days for which full-time aides get time-and-a-half pay for working on holidays and increases the number of PTO days from six to nine.

This contract also would have pleased the late Sen. Jerry Relph, a Republican from St. Cloud, who had worked for several years with Democratic Rep. Jennifer Schultz, a University of Minnesota Duluth economist, on bills that would raise wages in a tough trade with a lot of worker turnover.

"All of a sudden we ran out of money," Relph said last June of the bill's failure as COVID-19 temporarily decimated the state budget. "But it improves life for the elderly and the disabled economically, through in-home services that gives them a more independent life and puts money back in the economy by paying more to the hardworking [personal care attendants] in their local communities."

Relph died last fall of COVID-related complications. However, the legislation, amid the anticipated turnaround in state finances over the next two fiscal years, is progressing.

It also includes funds to compensate PCA agency owners, who said their margin to cover payroll taxes, administrative salaries, office and other overhead costs has fallen from 26% of revenue in 2015 to an unsustainable 7.5% this year.

The drop is due to state funding shortfalls that didn't keep up with increasing wages, according to an analysis for the Minnesota First Provider Alliance, a group of personal care assistance providers, by accounting firm Clifton Larson Allen.

"We're incredibly excited about what the collective bargaining agreement could mean for our ability to pay our employees a livable wage," said Dena Belisle, president of the alliance. She owns a Lakeland PCA agency and is the mother of an adult son who is disabled.

"If the state had kept the proportion of wages and benefits established in its first collective bargaining agreement in 2015 and funded subsequent contracts to that level, PCA agencies would be reimbursed at $24.68 per hour instead of $17.80 per hour," she said.

The PCA employers estimate they will need double the $70 million budgeted for fiscal 2022-23 by Gov. Tim Walz in January to cover the increased cost of the SEIU contract and to fund their overhead costs at what they consider an acceptable 13.2% of revenue. That would translate into increasing the state funding to employers to $18.53 per hour in fiscal 2022 and $19.08 in fiscal 2023.

"I worked on this last year with Sen. Relph," said Rep. Todd Lippert, DFL-Northfield, author of the House bill this year. "The purpose is to get the PCA reimbursement on a path to a sustainable wage. I'm in favor of ratifying that [DHS-SEIU] 2022-23 contract. I've met with providers and have heard their concerns. My DFL colleagues in the House want to make sure that PCA providers, who employ primarily from [minority] communities, have what they need to stay in business."

Andre Best, owner of Best Care and a member of the provider board, has said wages and benefits as a percentage of the state's "reimbursement rate" has increased from 74% to 92% of revenue since 2015. His agency, which focuses on the Medicaid-funded program, cannot withstand the narrowing margin for long. He said smaller ones may close.

Democrats and Republicans, in what has been a fairly bipartisan effort, also are working with the Department of Human Services on establishing a rate structure that will move up modestly over time.

Last year, Minnesota and the federal government through Medicaid spent about $775 million to cover 40,000-plus indigent Minnesota elderly and disabled in their homes, full- and part-time.

That's real money. However, as Relph told me last year, at $20,000 or so per person, it's more economical than nursing-home care, which can be $90,000 annually for round-the-clock care.

It's important and economical to provide personal-care services that let people live at home.

Many aides in this program are friends or relatives who can make something of a living caring for a loved one. It requires a waiver from the federal government.