Licensing and certification seeks exemption to transfer personnel dollars to operating; committee hears contract-staff cost premium

The Department of Health and Welfare asked the Joint Finance-Appropriations Committee on Jan. 13 to exempt its licensing and certification division from a statutory transfer restriction passed in 2024 so it can transfer personnel dollars to operating expense lines when necessary to hire contract nurses.

Analyst Alex Williamson said licensing and certification—responsible for inspecting and certifying health-care facilities—has historically used contracted nurses to perform surveys and inspections when staff were insufficient. Because the 2024 Legislature included language restricting transfers of personnel-cost (PC) funds to other expense classes for Health and Welfare (section 8 of Senate Bill 1268, 2024), the division has been required to seek one-time approval to repurpose personnel dollars for operating expenses each year. The division requested a supplemental exemption for fiscal 2025 to allow such transfers as needed and asked for the same flexibility in the 2026 budget if the legislature again limits PC transfers.

Williamson said the division has 71.9 authorized FTP and had 13.9 vacancies as of the budget submission. Licensing and certification's FY24 expenditures were almost entirely personnel and operating costs.

Director Alex Adams told the committee contracted nurses are materially more expensive than staff: roughly $35 an hour for a state employee vs. about $90–95 an hour for contract staff, a differential the director said arose during pandemic-era staffing shortfalls when contract reliance peaked. Adams said turnover in the division has improved since 2021 (from a high of about 21% down to single digits), but the division still relies on contract support at times to meet federal inspection cadence and statutory obligations for surveys.

Earlier transfers: committee members noted the division had requested a $400,000 transfer last year; Adams said the agency used about $300,000 and reverted about $100,000. Licensing staff said the supplemental request is intended to preserve the division's ability to ensure inspections occur on time rather than to permanently replace staff with contractors.

Why it matters: The division enforces licensing and inspection requirements for health and long-term-care facilities, and delays in surveys can affect facilities' certifications and providers' ability to operate. The requested exemption would give the division flexibility to respond quickly to staffing gaps without returning annually to the committee for approval.

Ending: The governor recommended the supplemental and the enhancement; department leaders said they would follow up with additional detail if the committee sought exact expenditure and contract-vs.-employee cost breakdowns.