Minnesota’s next Human Services budget will curb nursing home, disability payments

The Minnesota Legislature is nine days late and several dollars short in completing a budget that will fund the state government over the next two years. 

But lawmakers and Gov. Tim Walz say they have hit upon a deal to fund the Department of Human Services (DHS), which pays for the health care of nearly a quarter of Minnesotans. Assuming that deal holds, it’s a huge step in getting the budget done because it accounts for over 40% of state spending, once federal Medicaid money is included. 

Sen. Jim Abeler, R-Anoka, said in an interview Wednesday that the Human Services budget is done. 

At a press conference Wednesday, Walz confirmed the pact.

“We tied up what I consider to be probably the biggest (budget bill) in human services, a real effort to continue to deliver the best services in the country but at a cost containment,” Walz said. 

The bill follows the so-called global agreement between Walz and legislative leaders to reduce DHS spending by $272 million over the next two years compared to the Minnesota Management and Budget’s February spending forecast. 

The deal takes $16.9 billion from the state’s general fund and spends it on DHS from July 1, 2026, to June 30, 2028. 

State lawmakers say it is too difficult to anticipate how much a Republican-controlled Congress may cut Medicaid spending. 

Speaker Emerita Melissa Hortman, DFL-Brooklyn Park, has indicated that a special session of the state Legislature may be needed this fall after Congress passes its own budget bill. 

Here’s a rundown of what we know now state budget-wise. 

What is part of this Human Services deal at the Legislature?

Let me frustrate you with caveats about how little I know followed by excuses for not knowing. 

First, the deal was hammered out not in a conference committee between House and Senate leaders that took place in public, but rather a working group that met privately, save for a single desultory one-hour meeting last Thursday where nonpartisan legislative staffers grinded their teeth through a line-by-line reading of each spending item in the House, Senate and governor’s proposals. 

Second, while Abeler said the working group co-chairs have signed their names to a budget compromise, that compromise is not publicly available.

Said co-chairs are Sen. John Hoffman, DFL-Champlin, Rep. Mohamud Noor, DFL-Minneapolis, and Rep. Joe Schomacker, R-Luverne. (Though a longtime member of the Human Services committee, Abeler is not a co-chair.) As of late Wednesday afternoon, none of them returned requests for comment.

What do I know? 

So, the House passed a bill with hundreds of millions of dollars in spending reductions to long-term care waivers. This is a part of Medicaid where patients with a disability receive continual care at their home, or a small community setting.

The Senate, meanwhile, passed a bill more focused on reducing money received by nursing homes. 

The working group produced a “balanced bill where both the nursing homes and disability side are reduced in future spending,” Abeler said. 

The bill does this by capping the rate of reimbursement paid to health care providers who make a Medicaid claim.

One such rate is a consumer price index, specifically for medical goods and services. Another rate is called CWF, which stands for competitive workforce factor, and that measures the hourly wage of direct care staff in disability services. 

Per Abeler, the working group and Walz arranged a compromise where these growth rates would be capped at 4% annually. Compared to the state’s current growth rate plus numerous rate exceptions that providers, county governments and tribal nations successfully apply for, that would appear to save Minnesota untold millions of dollars, though perhaps at the cost of reduced care. 

The precise cuts should be made public when Walz calls a special session. 

Does this agreement include language about MinnesotaCare for undocumented immigrants?

No. 

Senate Majority Leader Erin Murphy, DFL-St. Paul wants a standalone bill that unwinds state subsidized health care for low-to-moderate income adults who are undocumented, while preserving such subsidies for children. 

This way DFLers can vote against their leadership without torpedoing a larger budget deal. 

But Speaker Lisa Demuth, R-Cold Spring, wants the contentious measure as part of a larger spending bill.

That spending bill, called the Health and Human Services spending bill, funds small components of DHS along with the Department of Health and portions of the Department of Children, Youth and Families. 

Publicly, neither Murphy nor Demuth have budged on their positions of where they want to see the MinnesotaCare for undocumented immigrants agreement. 

When will other spending agreements at the Legislature get announced?

Who the hell knows. 

At his press conference, Walz said that he was meeting tonight with Hortman, Murphy and Demuth and might have an overall budget deal as early as 10 p.m. tonight.

Walz also said that this budget “might be the one I’m most proud of” and the “most collaborative” during his gubernatorial tenure. 

But there were no specifics, and reporters have not been allowed to witness first-hand this super inspiring bipartisan cooperation. 

Plus, other working groups continue to meet, including one on the environment bill, which is set to publicly convene on Thursday.

Also, members of the education working group, responsible for nearly 40% of the state budget, said Wednesday that sticking points remain in their negotiations. 

A deal not getting done by June 1 holds symbolic value. Some public employees would get layoff notices then, since their jobs would not be funded beginning July 1, the new fiscal year. 

But that date “is not much of a speed bump for the average legislator,” Abeler said. “The real deadline is June 30.” 

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Editor’s note: This story was written by Matthew Blake for MinnPost.com.

This article first appeared on MinnPost and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.

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