Nursing home advocates are lauding Gov. Kristi Noem’s proposed budget, which calls for increased funding for the industry.
However, the discussion about nursing home funding is far from over.
Six nursing homes in South Dakota have closed in the past year. The Prairie Estates Care Center in Elk Point will shut its doors in January.
Advocates say closures are due to a combination of underfunding Medicaid, COVID-19 costs and understaffing.
The state reimburses nursing homes at 70 percent of costs for Medicaid residents. During her budget address Noem proposed $22 million in targeted increases to get the reimbursement rate up to 90 percent for long-term care facilities.
“These providers are critical to our state and ensure we can continue to take care of some of the most vulnerable among us,” Noem said.
Advocates for nursing homes in South Dakota say the announcement is a significant step in the right direction.
“To move it to 90 percent would be very significant and very welcome. God speed, I hope it comes soon so we don’t have further closings,” said Mark Deak, executive director of South Dakota Health Care Association. “I’m very hopeful the legislature will see the urgency of the situation as well.”
But the legislature may spend a large chunk of session looking at the reimbursement methodology for long-term facilities.
“I’m still working on the devil in the details,” said Republican state senator Jean Hunhoff, who sits on the state’s appropriation committee. That group ultimately crafts the state budget.
Hunhoff questions whether the current model is sustainable.
“Does there have to be some discussion with the industry that if we’re going to be able to fund and get closer to what they need to provide the services—what is that model and how is that going to have an impact on the dollars?” Hunhoff said.
Noem is also proposing a five percent pay increase for education, state employees and community health care providers.
Those groups are collectively referred to as the Big Three. Their cost-of-living adjustments are tied together.
It is one of the last budget items negotiated during legislative session. Last year, the Big Three received a six percent cost of living adjustment.
Noem said her five percent increase is designed to help the state compete with private industry wages.
“South Dakota has the fastest growing incomes in the country. If you don’t continue to invest in your employees, your providers, and your teachers they’re going to find good paying jobs somewhere else,” Noem said. “We need them, we need them here in this state.”
Both education and state employee groups are reacting positively to the governor’s announcement.
Loren Paul is the president of South Dakota Education Association. He said the five percent increase is a great start, but schools must cover more than just teacher salaries.
“The costs to school districts for heating school buildings, putting fuel in their busses, things like that, all their costs are up also,” Paul said. “As much as you can encourage it to go to salaries, there are other costs that go along with this.”
A spokesperson for a state employee group also views the proposed five percent increase favorably.
“We know inflation is around eight to ten percent, so we know it’s not matching that,” said Eric Ollila, executive director of South Dakota State Employees Organization. “But there are also funds for targeted jobs and equity adjustments."
Those dollars are significant to address increased wages for state prison workers and wage compression, Ollila said.
Ollila also applauds the governor’s proposed 100 percent paid family leave policy. SDPB employees are state employees.
Noem is also proposing an over $100 million tax cut by removing the sales tax on groceries.
Lawmakers will start crafting the budget when the legislature convenes on Jan. 10.
