Az gov letter minimum wage 11212016

November 22, 2016 The Honorable Doug Ducey Governor 1700 West Washington Street Phoenix, Arizona 85007 Via electronic mail Dear Governor Ducey, I am writing on behalf of Mosaic to respectfully request you consider including an appropriate Medicaid provider rate increase in your upcoming budget request to account for the increasing minimum wage provisions of Prop. 206. As you know, Prop. 206 would gradually raise the minimum wage to $12.00 per hour by 2020 and starting in 2021 annually adjust the wage based on inflation.

Mosaic is a faith-based organization serving more than 3,700 people with intellectual disabilities in ten states, including 90 people in Arizona. Mosaic has been providing residential, supported, and host home services in Phoenix, Prescott, and Tucson since 1986. Together Mosaic’s 5,000 staff members, volunteers and the people we support work as partners providing services that are personalized to their wants and needs. Mosaic also participates in international outreach to fulfill its mission - "Embracing God's call to serve in the world, Mosaic advocates for people with intellectual disabilities and provides opportunities for them to enjoy a full life."

Mosaic supports its employees earning a living wage and believes that people who work to care for others should not have to raise their own families in poverty. To achieve its mission, Mosaic must continue to recruit and retain dedicated and qualified direct support staff. Staff turnover is the number one issue that concerns families of people Mosaic serves. Each time experienced staff members leave, the people they supported lose advocates who knew them well and understood their needs.

Because Mosaic and other providers rely heavily on federal and state funding, states must increase Medicaid reimbursement rates to account for workforce initiatives such as minimum wage and overtime increases. Human service providers are price takers, and Mosaic cannot increase its prices or shift costs to cover additional expenses like other businesses. Furthermore, disability service providers do not have a private pay or insurable client base to help defray additional costs, unlike other Medicaid providers such as hospitals, nursing homes, and physicians. Mosaic is 96 percent Medicaid funded and its operations are directly impacted by government’s budget pressures. If

rates are not increased to cover the costs, Mosaic and other providers will be put into a difficult position, which is further compounded by stagnant and declining revenues and increased demand for services. Inevitably, increased expenses without appropriate funding will lead to reduced hours and benefits for direct care workers, increased turnover, and a potential disruption of services for people with intellectual disabilities.

As you may be aware, human service providers in Arizona have been experiencing a direct care workforce shortage for the last several years. Mosaic in Arizona currently has 14 full-time employees, a 36 percent turnover rate, and three full-time and eight on-call positions unfilled.

Mosaic’s cost to comply with Prop. 206 and its ultimate wage of $12.00 per hour is estimated to be $228,000 based on 19 employees currently under the updated wage. Mosaic would also need to address wage compression issues so that people with more seniority and experience are not barely above an entry-level salary. The cost to address the administrative wage compression would be an additional $153,000. By 2020, it would cost Mosaic $381,000 to comply with the final provisions of Prop. 206.

To mitigate future financial burdens, we recommend the state set Medicaid provider payment rates that are sufficient to provide quality services for people with intellectual disabilities by enabling providers to pay direct support staff living wages and appropriate benefits. Better partnerships among human service providers and government entities will ensure people with disabilities continue to have quality, community-based services and supports.

Mosaic looks forward to partnering with you and the Arizona Legislature to ensure Medicaid services and payments are promoting positive outcomes for people with intellectual disabilities.

Sincerely, Traci Gruenberger Executive Director Mosaic in Arizona