I. Session summary

SESSION SUMMARY

Early start

Although this was a “policy and bonding year” for the legislature, they began having substantive hearings even before the session officially began. On Thursday, January 13, 2022, before the official start of the session, the Senate Human Services Reform Finance & Policy Committee, chaired by Jim Abeler (R-Anoka), held a hearing on multiple issues, the topics included the following: • Long-term care staffing concerns—Nursing homes, assisted living, group homes, independent living • Update on National Guard Deployment to nursing homes and other facilities—Current status; future plans • Gov. Walz long-term care short-term assistance plan • Update on CMS guidance/implementation of vaccine mandates for facilities

This type of hearing was frequent on the Senate side, as they tried to understand what was happening in our settings to try to develop a response to the ongoing challenges facing long-term care. We provided testimony to the committee, walking through the statistics on the loss of employees, the difficulties in recruiting and retaining staff and the implications for census.

The Senate consistently demonstrated bi-partisan concerns and interest in trying to determine how to address the increasing needs of long-term care. Testimony from Minnesota Department of Health (MDH) and Minnesota Department of Human Services (DHS) answered some of the legislator questions, but the defensiveness of DHS would be an ongoing theme throughout the session.

Governor’s supplemental budget

On Thursday, January 20, 2022, Governor Tim Walz released some of his big ideas for his 2022 supplemental budget. The governor stressed his focus on economic opportunity and investments. The complete supplemental budget was released at a later date, but this announcement was one of a series of announcements on priorities heading into the 2022 session.

There were three things of note for workers in long-term care, although they are not limited to just workers in long-term care, long-term care workers would qualify. First, the governor included a proposal of about $115 million for grants of up to $5,000 per worker for incentive payments, childcare expenses, and tuition reimbursement. Second, the governor included the essential worker pay bonus, allocating $1 billion dollars for payments of $1,500 per eligible worker. Finally, the governor included $2.73 billion to pay back the unemployment insurance fund.

Start of session

Monday January 31, 2022, marked the start of this year’s legislative session. Although they had a number of interim hearings, the floor sessions began January 31. There were different processes for the respective bodies. The House of Representatives continued remote hearings and remote options for floor sessions.

On the other hand, the Senate managed operations in a hybrid fashion that attempted to have more inperson as well as virtual options to attend and participate in hearings. The Capitol itself was open to the public and therefore lobbyists could try to talk to legislators during sessions or coming and going from session.

Budget surplus

The Minnesota budget and economic outlook remained positive. A forecast improvement of $1.507 billion for the current biennium led to a revised projected general fund surplus of $9.253 billion for FY 2022-23. A higher income, consumer spending, and corporate profit forecast results in an improved revenue projection while spending is slightly lower in E-12 education and health and human services.

The revenue and spending forecast changes were mostly one-time and the structural balance in the FY 2024-25 planning estimates remains positive and largely unchanged from November. Uncertainty due

to inflation and geopolitical conflict pose risk to the budget and economic outlook, and economists also are wary of possible impacts from the situation in Ukraine.

Drilling down a little further to fully understand the numbers of the surplus, approximately $4 billion of the surplus in the current biennium was one-time money. Then, in the out-years projections, it starts at approximately $6B in surplus, but if you allocate inflation adjustments, it decreases to around $5B in structural surplus.

As a reminder, there was still approximately $1B in federal ARPA money that the legislature can agree to allocate this session. If the legislature and governor do not allocate during the session, then the governor would be able to unilaterally spend when the session is over.

After the announcement, the governor suggested that because of the increase in one time money, he would suggest doubling the amount of the “Walz Checks” that the state could send out, and expressed some concern about future uncertainty because of inflation and the situation in the Ukraine.

Our messaging during session

On staffing, the testimony pointed out:

Currently there are approximately 23,000 open positions—this is about 20% of our workforce. Now we have had chronic issues with workforce, but this has reached new heights. In the fall when we surveyed our members, we were losing approximately 1,500 workers per month. So yes, we applaud the efforts the governor tried with the training of 1000 CNAs in three months. However, if you do the math, we would have lost 4,500 in the three months it took to train 1,000 new ones. So, we are down a net 3,500. Quite simply this is unsustainable.

On occupancy, the testimony pointed out:

Our staff shortage, combined with the lives lost during the pandemic, has caused a steep drop in our occupancy. At first, prior to vaccine availability, the occupancy decline was related to the pandemic, and our average dropped dramatically, to around 65%—down from the average of 85-90%. Because of our workforce challenges, and the inability to admit new residents, occupancy has not been able to rebound.

The results of our latest survey showed that 75% of nursing homes were limiting admissions. Although not as high, still striking is that 35% of assisted livings were limiting. This is not because they do not have open beds, it is because they don’t have staff to provide the care for the people in the beds. This has meant hospital backups, etc. But also, areas have reported there is no place for people from the community to get to the care they need. In some cases, entire counties do not have beds—this is clearly an access problem that needs to be fixed.

Finally, on cash flow, the testimony pointed out:

Despite what has been perceived as “lots of federal money” going to nursing homes and longterm care, there continues to be more expenses paid out than funds coming in—exacerbated by decreased occupancy.

For two years, providers have struggled with decreased occupancy and increased costs. Costs of testing, personal protective equipment (PPE) continues in these settings. Workers continued to use full PPE and be subject to testing—they have been living with it for two years. Providers have spent reserves, maxed out lines of credit and taken what one provider said to me “we are circling the drain.” Consider the implication of both inflationary increased costs for basic food and medical supplies and add on top of that pandemic related costs for overtime, PPE, and testing.

During the latest outbreaks, it wouldn’t be unusual for facilities to spend tens of thousands of dollars each week on PPE alone—money they won’t receive in their rates for nearly two years. One facility has estimated they were spending over $300,000 per month in overtime, PPE, and testing costs!

When we asked our members about cash flow—basically, they are surviving on a month-tomonth basis. About 40% of both nursing homes and assisted living said that if they were to miss one payment from the state, they could not cover the next payroll and other expenses. About another 25-30% said they could make it one month but then could not cover. So, that is approximately 65-70% of long-term care for older adults that could not make it more than one month, if the state missed a payment. Decreased occupancy and increased costs have resulted in severe cash flow challenges.

Session dynamics

As the legislative session continued to progress, the out-of-session political dynamics began to have an increasing effect. Redistricting maps came out—and this meant that many legislators were paired with other legislators in new districts, or gained a whole new section to their districts through lines moving. On top of redistricting, the political dynamic of who was running for governor started to creep into the session. While Governor Walz was unchallenged for the DFL endorsement, the Republicans had a hot race to endorse his opponent. This external dynamic lead to more challenging deal making as the session progressed. When the Republicans endorsed Dr. Scott Jensen as their candidate to challenge Governor Walz, the activities at the legislature took on an entirely new dynamic as the external political pressures made compromise and negotiation even more difficult.

This dynamic was very evident even in issues that all sides agreed should be handled “early in the session.” While all sides agreed that the state should help pay off the unemployment insurance increases due from corporations, because of the effects of the pandemic, that remained an open issue into April. While all sides agreed in concept on what they had termed a “essential worker bonus”, the issue became tied to the unemployment insurance buyback and as a result, also carried into April for the resolution.

Omnibus bills

In early May, both the House and Senate rolled out their various omnibus bills. These bills are tied to their respective bodies fiscal and policy priorities. The bodies first set their budget targets for spending, and then they put together bills that meet those targets. This year, the budgets and priorities of the bodies were wildly disparate. For example, the House education budget target was $1 billion dollars, while the Senate budget target was approximately $50 million dollars.

The bill of the greatest import to long-term care is typically the Health & Human Services omnibus bill. The House bill contained little or nothing for older adult services, but spent nearly $768 million general fund dollars, while the Senate clearly set older adults as a priority spending approximately $160.5 million in general fund and by including healthcare access fund monies, spent $350 million dollars on older adults.

As the negotiations on final targets began, the leadership of the House, Senate, and the governor have to agree on the final spending targets. This agreement came late in the process and as a result, the conferees were forced to work long and difficult hours to try to reconcile their spending differences. As the hours wore on, and the offers were exchanged, it became increasingly clear that the bodies had very different priorities, and the governor’s office became attached to the House proposals. The House and governor never came to within half of the Senate spending on older adult services, and tied their funding to a “Nursing Home Workforce Standards Board” which was rejected by the Senate. This dynamic continued until the last day and last hours of the session.

In the end, the governor, House, and Senate were unable to come to agreement on several omnibus bills, including public safety, education, and health and human services. As the time ran out, there was talk of trying to resolve the differences and then calling a special session to pass all of the unpassed omnibus bill agreements. However, with the deadlines and the pressure released from the end of session, there it remains difficult to see a path to resolution and agreement.

The session concludes with wasted opportunities.