DelARF provides testimony to the Joint Finance Committee


Thomas Cook and several DelARF members provided testimony at the Joint Finance Committee (JFC) hearings on the Department of Health Services budget during the week of February 22nd.   Please see the written testimony Thomas submitted to the Committee regarding Governor Markell’s recommended budgets for DSAMH and DDDS.

In the verbal testimony Thomas gave on February 24th regarding the DDDS budget, he took time to explain to the JFC the basis for the rates, which were originally set according to the DSP wage level derived from Bureau of Labor Statistics data that would be needed to reduce staff turnover to below 25%. He then discussed the problems DelARF members will continue to face if the JFC doesn’t move more rapidly to get to the highest wage level specified in the rate study, i.e., 100% of the benchmarked wage level.

The first problem is related to the expenses that are borne by the agencies for the other components of the rate, i.e., Employment Related Expenses, which covers payroll taxes and benefits like ACA-mandated health insurance for larger members; Program Indirect Expenses, which pays for clinical and supervisory staff: and Administrative Expenses. These non-wage components of the rate were studied in 2013 and consequently, they are already out of date due to health insurance premiums and other expenses that have increased in the three years since the study was done.

The second problem occurs because these expenses are expressed as a percentage of the base DSP wage and the only way agencies would be fully paid for them would be if the rate is funded at 100% of the rate study benchmark.  So, as long as the rate is funded below that level, agencies under contract to DDDS will have less funding than they actually need for their non-wage expenses, because the higher percentages for the non-wage components in the rate, which would be needed to fully cover these expenses, were not calculated for each of the lower benchmarked wage levels (at 80%, 85%, etc.).

Therefore, Thomas suggested that DDDS and the JFC revisit the amount that would be needed at benchmarked wage level, i.e., as a percentage of the base DSP wage each year, when determining how much state funding would be needed to take the next step toward fully funding the rate system.  While that would leave less money for improving DSP wages when future rate increases are granted, it would make the agencies whole for the other expenses they incur.

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