OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http://www.cga.ct.gov/ofa

HB-5460

AN ACT CONCERNING MINIMUM EMPLOYEE WAGES FOR PROVIDERS OF STATE-CONTRACTED HUMAN SERVICES.

AMENDMENT

LCO No.: 4798

File Copy No.: 200

House Calendar No.: 159


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 19 $

FY 20 $

Department of Developmental Services; Social Services, Dept.

GF - Potential Cost

21,537,000

43,072,000

Resources of the General Fund

GF - Potential Revenue Gain

10,768,500

21,536,000

Note: GF=General Fund

Municipal Impact: None

Explanation

The amendment strikes the underlying bill and its associated fiscal impact.

The amendment allows the Office of Policy and Management (OPM) to allocate funds to increase wages of certain employees who provide services to authorized consumers of the Department of Developmental Services (DDS) in FY 19. The estimated General Fund net impact associated with this legislation is $10.8 million in FY 19 (based on 1/1/19 implementation date) and $21.5 million when fully annualized in FY 20. The private providers of employment, day, and behavioral services (funded in DDS) and group home services (funded in the Department of Social Services - DSS) must provide documentation to OPM that such funds will only be used for:

(1) Increasing the minimum wage paid to employees to not less than $14.75 per hour, not later than January 1, 2019;

(2) Providing a wage increase of up to 5% to employees earning not less than $14.76 and not more than $30.00 per hour, not later January 1, 2019; and

Additionally, OPM shall reimburse providers, within available appropriations, for the cost of employer taxes, and other costs associated with the wage increase provisions and for the expansion of benefits.

The net impact is comprised of: (1) expenditures in the Behavioral Services Program and Employment and Day Services accounts in DDS and the Community Residential Services account in DSS, and (2) off-setting federal grants revenue associated with Medicaid waiver reimbursement (50%) for such services. A summary of the estimated General Fund cost and revenue impact of the amendment is provided below:

Cost Estimate

The costs described in the following sections reflect gross state costs. The net state impact, which factors in off-setting federal revenue, is outlined in the table above.

Wage Increases – The amendment provides for wage increases for workers of DDS private providers of group home and day services, which total approximately $19.3 million in FY 19 and $38.5 million when fully annualized in FY 20. The impact of the minimum wage of $14.75 per hour for employees under $14.75 and the 5% increase for employees earning not less than $14.76 and not more than $30.00 per hour is detailed below:

Wage Cost (1/1/19 implementation)

Benefit Costs Due to Wage Increase – The amendment provides, within available appropriations, for increased benefit costs (including social security and workers 'compensation) resulting from the wage increase which totals up to $2.5 million in FY 19 and $5.1 million when fully annualized in FY 20.

The amendment also requires OPM, within available appropriations, to reimburse providers for the expansion of benefits, which are not specified in the amendment and cannot be estimated at this time.

The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely for the purposes of information, summarization and explanation and does not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

Sources:

DDS Provider Cost Reporting and Survey data