Mark Dayton

Gov. Mark Dayton’s budget proposal last month earned praise from some local leaders with its plans to maintain local government aid funding at the current levels – an important funding source for many Minnesota communities, including East Grand Forks because LGA makes up about 30 percent of the city’s revenue.

But nursing home administrators across the state are still reeling from Dayton’s proposal, which called for deep cuts to nursing home and assisted living center funding while the state’s elderly population continues to increase.

Here’s part of an article I wrote for today’s Herald about the potential nursing home cuts and what could happen next as the Legislature’s Republican majority prepares its own budget this month:

An improved financial outlook recently lowered Minnesota’s deficit by more than $1 billion, but nursing homes still could take their biggest funding cuts in decades as lawmakers iron out the next budget while balancing a $5 billion shortfall.

A new budget forecast released Monday said the state’s deficit will be about $5 billion for the two-year period beginning July 1, down from the $6.2 billion estimate a few months ago.

The revised outlook allowed Gov. Mark Dayton to restore some of the nursing home and assisted living center funding he targeted for cuts in his budget proposal last month.

But Barry Robertson, administrator of the Fair Meadow Nursing Home in Fertile, Minn., said the updated budget still has deep cuts to nursing homes after years of minimal funding increases and skyrocketing prices for food, energy and health insurance.

Dayton’s original proposal would cause an annual reduction at Fair Meadow of more than $248,000, or about 8.2 percent of revenues. Robertson said even after the changes, the nursing home stands to lose about $166,000 or 5.5 percent of its revenues.

“5.5 percent is not manageable,” he said. “It’s better than the 8.23 percent cut, but it’s still a lot.”

Robertson said Fair Meadow would have to eliminate health insurance for employees and cut wages by 2.1 percent in order to make up the shortfall. But that’s not an option because the federal health care reform package passed by Congress last year will require the nursing home to offer health insurance by 2014 in order to avoid penalties.

That means Fair Meadow would have to cut employee wages by 8.7 percent to cover the difference, he said, an amount that’s too high considering that workers are not overpaid.

“It’s still a pretty bad situation,” he said.