ST. PAUL, Minn. (The Reformer) – The Democratic-controlled Minnesota Senate passed a two-year human services budget, featuring extensive cuts as the state grapples with looming deficits.
The House, which is tied 67-67, passed its Department of Human Services budget bill on Monday with bipartisan support. The two bills achieve around $300 million in cuts, but they achieve the savings in different ways. The differences must be hashed out by members of both chambers in a conference committee.
DHS programs account for nearly one-third of state spending, and are expected to get more expensive in the coming years due to the aging population and increasing health care costs. Most of the spending is on Medical Assistance, Minnesota’s Medicaid program, which allocates more money per participant than nearly any other state.
Because DHS is such a large portion of the budget — rivaled only by education — state leaders have targeted the agency for cuts in the coming years to balance the books.
The floor debate over the bill highlighted an emerging sticking point in negotiations between Republicans and Democrats: public health insurance for undocumented Minnesota residents. Republican senators put forward amendments that would have repealed a 2023 law that opened up eligibility for MinnesotaCare — the state’s health insurance program for the working poor — to undocumented people.
Those amendments were tossed out by Democrats for being unrelated to the bill, but they portend what could be a difficult 12 days remaining in the legislative session, with both sides standing their ground on a contentious culture war issue.
The Senate bill would reduce payments to nursing homes. In the House, lawmakers instead targeted “rate exceptions,” which pay extra to caregivers of people with extraordinary needs, and pushed part of the cost of that program onto county governments.
The Senate budget sets similar limits on what services count towards that “rate exception,” but wouldn’t require counties to pay a share of the cost.
It would reduce payments to nursing homes in several ways: by capping the inflation adjustment for operational expenses to 4% per year; reducing reimbursement rates for low-quality nursing facilities; and changing the calculus so that fewer facilities get a bonus for high quality services.
The budget also includes proposals from Gov. Tim Walz to limit spending on certain services for people with disabilities: setting an 8-hour daily limit on in-home skill development support and training; reducing how much providers are paid to account for unexpected absences from day programs; and paying caretakers less while they are sleeping on night supervision shifts.
The Senate bill does push some other costs onto counties, requiring them to pay for 2% of the cost of residential services for people on Medical Assistance. It would cut some funding to counties for substance use disorder assessments, and cancel grants for some harm reduction measures passed by the Legislature in 2023.
Both the House and the Senate bills pay for raises for nursing home workers, as determined by the Nursing Home Workforce Standards Board; and for oversight of autism services providers, some of which have come under investigation for suspected fraud.
Sen. Jim Abeler, R-Anoka, the top Republican on the Senate Human Services Committee, was the only Republican to join Democrats in voting for the bill.
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