The Shumlin administration can’t continue to shore up the budget of the Vermont Veterans’ Home in Bennington through General Fund dollars, according to a report released last week.
Jeb Spaulding, the secretary of the Agency of Administration, recommends that the home cut staff, and he may propose alternative sources of revenue for the facility in fiscal year 2016.
For the past several years, the state has helped the home meet budget targets with money from the General Fund. In fiscal year 2014, the state gave the home $1.3 million. That number grew to $2.7 million in fiscal year 2015, and the administration may seek more General Fund money for the facility in this year’s budget adjustment, according to the report.
The Shumlin administration has put the brakes on funding for the home in the coming year because budget-writers have their own daunting fiscal challenge to solve. The state faces a $100 million gap between projected tax receipts and expenditures in fiscal year 2016.
Sen. Dick Sears, D-Bennington, is concerned about the potential loss of workers.
“Those are 218 jobs in Bennington County that are hugely important to our local economy,” Sears said at a recent legislative committee meeting.
The report points to rising personnel costs as a key component of overspending at the home. The facility’s budget has nearly doubled over the past 12 years and most of the increase has come from staff compensation. The total amount spent on overtime pay has doubled in four years.
The administration’s plan for staffing reductions at the home will be included in the governor’s 2015 budget proposal, according to the report. The proposal may also include new revenues, such as a veterans lottery game or a percentage of break-open ticket sales, to support the Veterans’ Home. Break open tickets are gambling tickets sold at social clubs, such as the American Legion. The Shumlin administration’s previous attempt in 2013 to tax break open tickets failed.
No popular options
The Civil War-era estate in Bennington has served Vermont veterans for more than a century, and although it was originally funded through a state appropriation, the facility had been financially self-sufficient for decades until a few years ago when the resident population began to decline.
The home had hoped to increase the number of residents at the home but since January, 52 residents have died, according to its director Melissa Jackson. The average age of residents is 81.5.
Officials hoped a $40,000 marketing campaign would boost the resident population but those efforts have been unsuccessful, and the report concludes it’s not “realistic” to expect that the home will be able to increase occupancy to a sustainable level.
“None of (the options) are very palatable. On the other hand, people in this building (the Statehouse) … have some severe heavy-lifting to do, and there are going to be no popular options,” Spaulding told lawmakers at recent legislative committee meeting.
The facility has 171 beds and is staffed to house 150 residents, but it hasn’t had that level of occupancy since 2011, and its census has hovered around 130 for the past several years. The administration recommends reducing the home’s license from 171 beds to 130.
The annual per bed tax on nursing homes is $4,919.53, and the Veterans’ Home will pay $841,240 in the current fiscal year. It has to pay the assessment on the total number of beds whether they are full or vacant.
Reducing the number of beds to 130 would save the facility $177,000 on the nursing home tax, according to the report.
But that won’t be sufficient to make the home self-sustaining, and the report suggests new sources of revenue to help cover costs.
Unused office space on the home’s second floor could be renovated and used to expand the domiciliary, provide shelter for homeless veterans or developing programs with the VA Medical Center.
The home could also convert some of its double occupancy rooms to private rooms and charge higher rates. There were “several” potential residents who chose not to move to the home because it didn’t offer private rooms, according to the report.
State revenues to support the home could come from a “veteran centric lottery game,” or a percentage from break-open ticket sales.
That could potentially eliminate the home’s dependence on the General Fund, but lawmakers were unenthusiastic about the proposal at a recent hearing. Two years ago, the Shumlin administration proposed break-open tickets as a source of revenue for thermal efficiency programs. The plan stirred a public outcry.
Report calls Veterans’ Home financial management into question
The report indicates a number of areas where the Veterans’ Home has created financial hurdles for itself through poor management and overspending.
The home’s expenditures have nearly doubled in the past 12 years from $11.5 million in 2002 to $20.2 in 2014, and 65 percent of that is personnel costs.
Its lack of part-time workers and fixed staffing rates combined with a high call-out rate is costing the facility dearly. When someone calls out sick, the home is forced to call in another employee and pay them overtime, or use supplemental staff hired on a contract basis.
The home’s call-out rate reached a high of 12.3 in January 2012, and was 9.5 percent in October. That means staff called out, on average, nearly one out of every 10 days that month.
The facility spent up $856,000 on overtime in fiscal year 2014 up nearly 42 percent from $493,000 in fiscal year 2010. It spent an additional $277,000 on supplemental staff last fiscal year.
The workers at the home are represented by the Vermont State Employees Association.
Steve Howard, executive director of the association, told VPR that downsizing staff is not the right solution.
Citations from CMS
The Veterans’ Home relies heavily on reimbursements from state and federal health care programs to cover its costs.
However, it was cited by the Centers for Medicare and Medicaid services in 2012 for deficiencies, according to the report — though it does not mention what those violations were. That resulted in the withholding of payments from those programs for four months in 2012 and two-and-a-half months in 2013.
The citations also mean that the hospital receives additional CMS scrutiny, and for a time it chose to forgo efforts to increase its census in order to ensure compliance with CMS for existing residents.
The Veterans’ Home has also had problems with getting payments from its residents.
It has had to deal with a “sense of entitlement that some veterans have regarding their right to live at the home,” according to the report.
In October 2013, a resident had to be removed for nonpayment at a loss to the home. Some potential residents refuse to apply for Medicaid, which would cover their expenses to the home. The facility now works to avoid non-payments by verifying veterans’ ability to pay before they are admitted, the report says. Those who can’t pay and won’t apply for Medicaid aren’t admitted.
Does Vermont lag behind other states?
A lack of self-sufficiency among veterans’ homes is not unique to Vermont, the report says. Veterans’ homes in Rhode Island, Massachusetts and New Hampshire are funded with “100% General Fund.”
Spaulding said Friday that statistic was provided by the Vermont Veterans’ Home, which in turn plucked it from a report by the National Association of State Veterans’ Homes. VTDigger was not able to immediately verify whether the states support their homes entirely through general fund monies.
But Spaulding said it’s hard to believe that those states — — some of which are also facing tough budget years — don’t take advantage of available federal funds from Medicare and the Veterans Administration the same way Vermont does.
Maine doesn’t provide any general fund money to its veterans’ home, according to Spaulding.
“Just this week I asked my staff to call everyone of those states to verify what they do,” he added.
New Hampshire is currently looking at $18 million in spending cuts, and potentially more, to maintain a budget surplus, on its roughly $5.6 billion annual budget.
Rhode Island faces a $29 million shortfall in the current fiscal year on a roughly $8 billion budget as well as a looming $187 million budget gap next year; and Massachusetts is exploring spending cuts to address a $325 million budget shortfall on its $36.5 billion budget.
Vermont was forced to make $31 million in budget cuts over the summer and just before Thanksgiving the governor announced $17 million in budget cuts on a roughly $5.5 billion budget.
The state faces an anticipated budget gap for the coming year of close to $100 million.
Vermont supports its Veterans’ Home with state money in another way, by using a Medicaid global commitment waiver, which allows Vermont flexibility in how a mix of state and federal dollars are spent.
That’s in addition to payments made from Vermont’s Medicaid program for beneficiaries who live at the home.
THE ADMIN REPORT:
