Providers warn governor’s budget cuts would deepen workforce crisis for disability waiver services

Chair Rep. Fue Lee's Human Services Committee heard nearly three hours of public testimony warning that the governor’s budget proposal for human services would destabilize disability waiver services and the workforce that provides them.

Johnny Tvets, policy manager for ARM, a trade association representing disability waiver residential providers, told the committee that the proposal to “cap inflationary adjustments at 2%” would “exacerbate an already dire workforce crisis.” He said direct support professionals, “who are a majority women and people of color,” earn about $17 per hour and that the cap would “further erode their wages.”

The concern was echoed by Sarah Grafstrom, senior director of state and federal policy for ARM, who described local consequences if homes close: “When an individual's home closes, that means the family is now looking at, well, what do I do to support my loved one? Do I bring them home with me? Do I find a different home that maybe isn't in my community?”

Laurie Schluttenhofer, co‑president and CEO of Services for Opportunity Partners and a board member of MORE (Minnesota Organization for Habilitation and Rehabilitation), said two specific budget provisions would hit day and employment services. She cited a proposed reduction in the “absence and utilization factor” from 9.4% to 3.9% and said her organization saw an 11% absence rate in 2024. “Bringing this factor down to 3.9 would … equate … into over a 5% reduction in the rates paid to provide those services,” she said. Schluttenhofer also warned that capping future inflationary adjustments would make it harder to maintain competitive wages.

Speakers from multiple provider groups and members of the committee stressed the link between reimbursement, staff pay and program continuity: lower reimbursement forces providers to cut staff or close homes, disrupting people’s long‑standing residences and supports. Testimony cited a package of proposals—limiting rate exceptions, capping billable days at 351 per year and limiting individualized home supports with training to eight hours per day—that ARM estimated would cut about $600,000,000 from disability waiver services over four years.

Committee members responded with questions about local impacts and the timing of rate adjustments. Representative Gander said she has “worked with group home residents for a very long time” and described staff as “just subsisting,” and Representative Murphy and others pressed witnesses on how funding shortfalls translate into closed beds and reduced community access.

The committee did not take formal action; members noted DHS declined an invitation to testify today and that DHS and MDH will appear in future hearings to provide the administration’s view. Providers said they plan to return with legislative proposals aimed at restoring or protecting funding and at addressing workforce needs.

The committee’s public hearing record includes written testimony from additional providers that expands on the staffing and rate‑setting concerns raised in person.