Arlene Meyer is a busy woman. 

The 86-year-old starts each morning by watching the news in her room at Pine Crest Nursing Home in Merrill, Wisconsin. Then it’s off to the dining hall for breakfast so she can “BS with everybody out there.” She never skips her daily walk and devours books delivered by the public library each week — anything except romance or science fiction. 

The event calendar in Meyer’s room lists a smorgasbord of other options: manicures and mimosas, chair Zumba, trivia, Packers watch parties and beer pong. Meyer spent a recent Friday at an exercise class in an area of Pine Crest that later hosted a happy hour with live music. 

“The concept of old people, it’s out,” Meyer said, adding that “the days go by so fast” — an observation that surprises outsiders with duller expectations for nursing home life.

Meyer moved to Pine Crest in 2023 to recover from pneumonia. She liked it so much she stayed permanently. The nursing home’s social media posts show her holding a lizard, relaxing during a spa treatment and singing a Willie Nelson song at karaoke — photos that brought joy to those who know her.

“Sassy Arlene! Love it!” one person commented on a photo. “Happy you haven’t changed Arlene,” wrote another. 

Lincoln County owns Pine Crest, one of 36 county-owned nursing homes in Wisconsin. They tend to be better staffed, have higher quality of care and draw fewer complaints than facilities owned by for-profits and nonprofits, a WPR/Wisconsin Watch analysis of U.S. Centers for Medicare and Medicaid Services data shows. 

Wisconsin has more county-owned nursing homes than any state but Indiana. But perhaps not for long. 

Over more than three decades, residents in 22 Wisconsin counties lost public nursing homes to sales or closures. This year alone at least five counties — including Lincoln — considered selling, started the sales process or sold.

County leaders say they have only two options while facing financial pressures and staffing shortages: sell or close the homes. Local organizers disagree, arguing counties should continue providing high-quality care for low-income older people and disabled adults. 

Lincoln County’s board voted to sell Pine Crest to a for-profit at the start of this year. After that buyer backed out, the board is planning to find a new one.

Meyer worries about potential disruptions at Pine Crest.

“I love it here,” she said. “I sincerely do.”

A flurry of nursing home sales and closures

Meyer, a former Lincoln County Board supervisor, doesn’t own a phone, but she stays up to date on local happenings. It didn’t take long before she heard rumblings about selling Pine Crest. 

“I was teed off about it because of some of these SOBs,” Meyer said. “They said, ‘well, the cost factor.’ Now I think about what jerks were running this.”

Running a nursing home is expensive, and counties aren’t required to do so — something officials often realize during recessions and inflationary periods.

The financial crisis of 2007 and 2008 was Wisconsin’s busiest stretch for nursing home sales, with four counties selling.

Since inflation started surging in 2021, at least five counties outside of Lincoln have sold or considered selling: 

• Iowa County closed its nursing home in 2022 after failing to find a buyer.
• A private nursing home chain took over Washington County’s nursing home in July. 
• The St. Croix County Board considered selling before voting against it.
• Sauk County’s board this year approved a sale to a for-profit that still requires state health department approval. 
• Portage County heard interest from one prospective buyer but chose not to sell following public pushback. It will decide later this month whether to look for a different buyer.

Meanwhile, dozens of for-profit nursing homes have closed in recent years. 

Lincoln County started debating Pine Crest’s future in 2022 while the board sought budget cuts. Then-board chair Don Friske noticed Pine Crest had for years run substantial annual deficits.

That’s been the case since the 1980s for county-run nursing homes nationwide, said Anne Zahradnik, an associate professor of health administration at Marist College.

Those remaining “are a holdover from an orientation toward government solving problems,” she added. 

From ‘poor farms’ to nursing homes

Wisconsin’s county governments have a long history of housing vulnerable populations. 

Many ran “poor farms” or “poor houses” for residents experiencing poverty starting in the 1800s. Most states eventually created centralized nursing homes to serve older people and those with disabilities from across the state, while Wisconsin prioritized keeping people close to home. A Wisconsin network of local nursing homes and converted poor farms started receiving federal Medicaid funding in 1974, according to a Legislative Audit Bureau report.

Nursing homes for decades were the only long-term care option for populations they served, and people who relied on government assistance had few choices outside of county homes. 

That is changing as people increasingly age at home or in assisted living facilities that offer more independence at a lower cost. Wisconsin’s assisted living options hold more than double the beds of its nursing homes. 

But assisted living, unlike nursing homes, can’t care for people who need regular medical attention. Nor do they offer the same protections against evictions for residents who rely on Medicaid, the joint state and federal aid program to help low-income residents afford care. 

More than a quarter of nursing home beds, on average, at for-profit and county-owned nursing homes sit empty, according to federal Medicaid data.

Almost 40 of Pine Crest’s 120 beds are vacant, but Wisconsin can’t afford to lose them. 

Without nursing homes, hospitals struggle to find housing for their sickest patients, Zahradnik said. The Wisconsin Counties Association projects a need for roughly 10,000 new skilled nursing beds by 2035 as state demographics trend older. 

To keep Pine Crest running, Lincoln County’s board debated converting part of it into assisted living or even knocking it down to build a smaller nursing home with lower operation costs. Both options would require up-front money the county lacks, Friske said. 

The only remaining option the board sees: selling.

Counties struggle to keep up

Medicaid policy is complicated and frequently changes. The program is also how most nursing home residents pay for care. 

Lincoln County’s board lacks expertise on nursing home management, making it hard to keep up, Friske said, echoing officials in other counties.

“We’re horrible at it,” he said.

As the board discussed exiting the nursing home business, it learned the county was short more than $1 million in expected revenue to cover one year’s costs.  

The state has traditionally subsidized county-owned nursing homes, and it started increasing Medicaid reimbursements in 2022. The change shrunk ongoing county deficits to provide care, wrote Elizabeth Goodsitt, a spokesperson for the Wisconsin Department of Health Services, which distributes the nursing home supplements. 

That was positive. But shrinking those deficits meant counties would get smaller lump sum subsidies for operating nursing homes – something officials in multiple county governments didn’t anticipate, leading to budget shortfalls.

“Just when you think you’re one step ahead, you’re two steps back,” Washington County Executive Josh Schoemann said.

He described the unexpected loss of the subsidies as “just another brick in the wall” for a nursing home the county ultimately sold to a for-profit this year.

Lincoln County used federal pandemic funds to cover the unexpected subsidy loss — a short-lived option.

Despite supporting county-owned nursing homes, state officials don’t always effectively communicate with counties, said Rene Eastman, vice president of financial and regulatory services at LeadingAge Wisconsin, an advocacy group for older adults. 

Still, Eastman said, the recent Medicaid rate reimbursement hikes could ease financial pressures over time.

“If counties hung on for a little bit longer, they would really see the effects of that funding infusion, and they would see the increased need in their communities,” she said.

St. Croix County commits to nursing home

St. Croix County Board Vice Chair Bob Feidler said his colleagues didn’t seriously consider selling its nursing home. But a discussion about that possibility prompted opponents to flood an August board meeting. 

The board voted against selling, deciding that nursing home revenue would likely grow, aided by higher Medicaid rates and a federal grant to open a dementia wing. 

“All of a sudden, we went from what had been a negative revenue to barely a positive revenue, to a more solid projection,” Feidler said.

Many Lincoln County residents hope their board will reach the same conclusion. But increased Medicaid rates alone won’t cover needed costs outside of care, like renovating Pine Crest’s  building, Friske said. That would likely require a property tax increase.

“You can’t just go on a whim, ‘Hey, yeah, we’re going to throw this extra money on the property tax,’ ” Friske said. “People are struggling.”

County leaders have historically asked voters to support nursing homes through ballot measures.

Voters in Green County, for instance, approved an April ballot measure to continue funding their nursing home. 

Portage County voters approved one referendum in 2018 and a $20 million referendum four years later for the construction of a new nursing home — renovations that still haven’t started. Rising construction costs since the delay mean millions more are needed to fund the project, according to county board members who have blocked calls for a fresh referendum.

In Lincoln County, more than 80% of respondents to a 2023 Merrill Foto News and Tomahawk Leader online survey opposed selling Pine Crest.

But the board blocked two efforts to put Pine Crest’s future on the ballot.  

How private homes profit: Cutting staff, benefits 

Friske had gotten unsolicited calls from brokers even before putting Pine Crest on the market, as have officials in other counties. 

Why buy a money-losing nursing home?

For-profits can’t simply build new facilities. The state determines the need for nursing home beds in different communities — requiring newcomers to typically buy a license from an entity already operating a facility. 

Deficits under government ownership don’t mean private companies can’t turn a profit.  

They might find savings by rejecting applicants with behavioral issues who require costlier care. Counties that own a nursing home typically send higher-needs residents there. Counties that don’t own a nursing home still pay to send such residents to another facility that will accept them. 

Private owners frequently reduce staffing and benefits upon purchasing county-owned facilities, Eastman said. Lower staffing correlates with poorer care. 

The Centers for Medicare and Medicaid Services rates nursing home staff on a 1 to 5 scale, considering time they spent with residents and turnover. 

The median staff rating at Wisconsin’s county-owned nursing homes is 5, the highest possible, according to WPR and Wisconsin Watch’s analysis. That’s compared with a median rating of 3 at for-profit facilities in the state.

A sign outside of the Portage County Health Care Center touts its 5-star rating. Grace Skibicki, a resident of 13 years and a former care center nurse, recognizes that as impressive. 

She expects care to decline if a chain with a lower rating purchases it. She wouldn’t plan to stick around. 

“It’s really scary because you don’t know what’s going to happen to you,” Skibicki said.

Staff are also waiting to see what their future holds.

Nursing home work can be grueling with modest pay, accounting for significant staff turnover across the industry. But county-owned nursing homes employ public workers who earn county benefits and access to one of the country’s best-funded retirement systems. That may explain why median turnover trends at Wisconsin’s county-owned homes (41%) are lower than they are at for-profits (51%), WPR and Wisconsin Watch found. 

Wisconsin’s for-profit nursing homes drew a median of three substantiated complaints over the last three years, compared to a median of zero at county-owned facilities, which also fared better than for-profits and nonprofits in health inspection and overall quality ratings.

Nursing homes owned by Lincoln, Portage and Sauk counties all rate above average, but county officials believe private owners could run them better.  

Counties struggle to make quick decisions the fast-changing industry requires, Friske said.

Potential buyers named in Lincoln, Portage and Sauk counties all own multiple facilities across the state. Two own facilities in other states. That setup makes it easier for them to fund repairs or convert rooms to assisted living quickly without repeatedly asking taxpayers. 

Care & Rehab Company, which initially sought to buy Pine Crest, owns six facilities in Wisconsin and Minnesota. Two share Pine Crest’s “much above average” federal rating, but two others received “below average” ratings.  

People for Pine Crest

Dora Gorski kept her husband Ken at home for as long as possible. 

Ken, a father, veteran, martial arts instructor and first responder, was often too proud to admit to falling — even when Dora woke up to find him on the ground.

She initially got help from neighbors and home health aides who warned her about his worsening dementia. Ken eventually ended up hospitalized and in need of a wheelchair. 

When Dora realized she’d have no way to get him into their house upon their return, Pine Crest was her first call.

The woman in admissions knew Ken, who had taught her children aikido. Once he moved in, a maintenance worker recognized Ken as his former martial arts teacher. A caretaker told Dora she knew Ken, too — having worked with him as a phlebotomist. 

It turned out that Arlene Meyer, a fellow first responder who had long known Ken, lived down the hall.

“It was people who not just knew him as a doddering old man who is barely able to talk,” Dora said. “They knew him as a respected instructor.”

Two weeks before Ken’s death in December 2023, Pine Crest hosted his 90th birthday party. His children, former students and friends, including Meyer, packed a community room. 

“That meant a lot to Ken,” said Dora, who still participates in a group called “People For Pine Crest,” which opposes a sale.

“We own it. It’s our place. We all take pride in it being here,” she said.

The group spent 2023 urging the Lincoln County Board to keep the nursing home. Their flurry of petitions, yard signs, T-shirts, public testimonies, phone calls and emails didn’t work. The board voted to sell to Care & Rehab.

But an attorney and ally on the county board noticed a language problem in the sale agreement and sued the county to halt the sale.

Care & Rehab backed out before the case could move forward, offering People For Pine Crest a reprieve. 

But Friske, who lost reelection this spring, sees a ticking clock. He expects Pine Crest will face a fiscal crisis that will force a closure unless it sells. 

He resents any suggestion that his board colleagues don’t care about those who depend on Pine Crest.

“The county board is not a congressman from Missouri, Arkansas and Texas, telling Wisconsin how to live,” Friske said. “What’s happening here is friends and neighbors who are elected to the county board. They live here, their families are here, we’re all here.”

Lincoln County has just two other nursing homes, both in Tomahawk and with lower federal ratings.

Dora Gorski, who lives 20 minutes from Pine Crest, said the short distance allowed her to eat breakfast with Ken most mornings. That routine would have been tough to maintain — doubling the length of her drive — had he lived in one of Lincoln County’s two private facilities or the state veterans home in King, Wisconsin.

The county hopes to keep some nursing home beds in Merrill, said current Lincoln County chair Jesse Boyd, but they won’t be county-owned. He agrees with Friske’s financial outlook. 

“Right now, we’re drowning,” he said. 

The county now has lined up a couple of potential buyers for Pine Crest.

If a sale proceeds? Pine Crest won’t be the same, Gorski expects. For now it’s “full of neighbors and friends and people from our community, people who love us and know us,” she said.  

“You don’t find that in some big city, and you don’t find that in a private, for-profit nursing home.”

Wisconsin Watch is a nonprofit, nonpartisan newsroom. Subscribe to our newsletters for original stories and our Friday news roundup.

‘We own it. It’s our place.’ Worsened care feared as counties privatize their nursing homes is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.

A family stood outside the doors of St. Francis Community Free Clinic at 4:55 p.m. on a recent Monday, five minutes before it was set to open. 

A volunteer receptionist switched on the Oshkosh, Wisconsin, clinic’s “open” sign and welcomed them inside. Within minutes, more patients filed into the waiting room. Volunteers called people back to see Dr. Weston Radford on a first-come, first-served basis.

The clinic technically closes at 7 p.m. on Mondays, but Radford, who volunteers here weekly, said he often stays to treat patients past 8 p.m. — 14 hours after starting his workday as an internal medicine doctor at a private clinic nearby. 

Still the free clinic in its limited hours can’t reach everyone who needs it, including many who lack adequate health insurance.   

“Health care is still a big need that we’re not really filling,” Radford said. 

Health care is on the minds of plenty of Wisconsin residents ahead of the November election. 

More than two dozen people who responded to WPR’s America Amplified project said they want politicians to prioritize health care access. Eight called for expanding access to Medicaid, the joint state and federal aid program to help low-income residents afford care.

Wisconsin is home to more than 1.2 million Medicaid recipients and an estimated 310,000 people who lack insurance.  

Voters weighing their options for president have heard little from former President Donald Trump, a Republican, or Vice President Kamala Harris, a Democrat, about Medicaid policy. Still, their past records and party affiliations paint drastically different possibilities for the program after November, according to the health policy research firm KFF.

“Medicaid and its future, whether it faces existential threats, will depend on the outcome of this fall’s federal election,” said Edwin Park, a public policy professor at Georgetown University.

Trump previously pushed Medicaid cuts 

Residents could lose Medicaid access, experts say, if Trump as president successfully revives his past proposals to shrink the size of the program — leaving more low-income adults reliant on busy clinics like St. Francis.

Project 2025, a plan for a second Trump administration published by the far-right Heritage Foundation, including chapters written by former Trump administration officials, proposes major cuts to federal Medicaid spending and toughened eligibility requirements. 

Those proposals align with Trump’s track record. His administration increased scrutiny over eligibility for recipients, allowed states to add work requirements and proposed trimming around $1 trillion over 10 years from the federal Medicaid budget — cuts that Congress did not pass in 2017.

Nevertheless, Trump has tried to distance himself from Project 2025.    

“Only President Trump and the campaign, and NOT any other organization or former staff, represent policies for the second term,” Danielle Alvarez, a senior adviser for Trump’s campaign, wrote in a statement to WPR and Wisconsin Watch.

The campaign did not respond to questions about whether Trump supports Project 2025 proposals to limit state Medicaid funding through block grants and impose lifetime limits on benefits. 

“President Donald J. Trump is unwavering in his mission to lower costs for seniors and protect Social Security, Medicare, and Medicaid,” Jacob Fischer, a Wisconsin spokesperson for Trump’s campaign, told WPR and Wisconsin Watch.

A 16-page Trump policy plan promises protections for Medicare, the government health coverage for seniors and adults with disabilities, but never mentions Medicaid.

Harris touts high Medicaid enrollment with few specifics

Meanwhile, an 82-page Harris campaign document touts record-high coverage levels during her administration with President Joe Biden, but it doesn’t articulate specific Medicaid policies. 

A Harris campaign spokesperson did not directly answer when asked about specific Medicaid proposals.   

“Donald Trump is campaigning on a promise to repeal the Affordable Care Act and would spike costs under his extreme Project 2025 agenda, a stark contrast from Vice President Kamala Harris’ plan to take on Big Pharma and bring down health care costs for families across Wisconsin,” Brianna Johnson, the campaign’s Wisconsin spokesperson, responded via email.

Harris pushed a more dramatic health care overhaul in 2019 while running in the Democratic presidential primary. She cosponsored the failed “Medicare for All” bill, which would have granted Americans universal coverage to replace private-pay insurance and Medicaid. 

Harris has since sought to distance herself from Medicare for All. Trump has attacked Harris for having “flip flopped” on what his campaign calls a “socialist” proposal, and he has spread misleading claims about what it would have meant for immigrants who entered the country illegally. 

Harris does not mention Medicare for All in her current platform. She instead describes plans to bolster Medicare and the Affordable Care Act, commonly known as “Obamacare” — a law Trump has repeatedly pushed to repeal. 

What does Medicaid policy mean for Wisconsin?

Wisconsin has a smaller proportion of uninsured residents than most states, but it remains among just 10 that haven’t expanded Medicaid to cover adults below 138% of the federal poverty line, around $20,800 a year for a single adult. 

Adopting expansion would allow Wisconsin to extend government coverage to up to 90,900 additional adults and reap a net benefit of $1.7 billion over two years, according to a Wisconsin Policy Forum estimate. 

Trump’s Affordable Care Act repeal efforts would have ended Medicaid expansion nationwide. The federal government can’t force states to expand coverage, but Congress during the Biden-Harris administration approved financial incentives to encourage expansion.

Wisconsin’s Republican-led Legislature rejected the most recent expansion proposal. Legislators have argued it would cause more residents to overly rely on the government, increase private insurance costs and burden future taxpayers.

Republican expansion critics point out that of the states that haven’t expanded Medicaid, Wisconsin is the only one without what some call a coverage gap. 

That’s because the state’s Medicaid program covers low-income adults making up to the federal poverty level — the same point at which they qualify for subsidized plans on the federal Health Insurance Marketplace.

But Medicaid is seen as more comprehensive coverage than Marketplace options. Wisconsin’s Medicaid program covers dental care. But a Marketplace enrollee may need to pay an extra premium for dental coverage.

Two-thirds of respondents in a KFF poll of non-expansion states, including Wisconsin, said they favored expansion.

While voters in six Republican-led states approved Medicaid expansion through ballot initiatives since 2020, Wisconsin voters lack the ability to put referendums on the ballot.

Some experts see Wisconsin’s new electoral maps as a potential path for expansion.

This is the first election after the Wisconsin Supreme Court ordered lawmakers to draw new state Assembly and Senate district boundaries. The new maps create the possibility of Democrats gaining a majority in the state Assembly due to more competitive districts. 

While a Democrat-led Senate remains unlikely, control over one chamber could still move expansion debates forward, said Philip Rocco, an associate professor of political science at Marquette University.

“Even if there’s not a victory immediately, it might create some political momentum for one to happen eventually,” Rocco said.

Radford isn’t sure why Wisconsin hasn’t expanded Medicaid, but he remains hopeful.

It would ease some of his work at his day job at the private clinic. Having more people on Medicare or Medicaid could decrease worries about denials or big out-of-pocket costs.

“It’d be nice just to be able to treat the people what we think medically is the best for them,” Radford said.

Even under expansion, plenty of Wisconsin residents will still need to visit free clinics like St. Francis. 

‘We just take care of them’ 

Each week Radford sees patients who lack adequate private insurance, are in between coverage or can’t qualify for Medicaid because of their citizenship status.

Such needs aren’t new. Radford’s dad volunteered at St. Francis for around 30 years, spanning several  presidential administrations.

While health care policies have changed over time, the clinic’s mission hasn’t. No one at the front desk asks questions about insurance or other types of payment. No one gets turned away.

“People got to be seen,” Radford said. “So we just take care of them.”

Wisconsin Watch is a nonprofit, nonpartisan newsroom. Subscribe to our newsletters for original stories and our Friday news roundup.

Medicaid covers 1.2 million in Wisconsin. The election will determine its future is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.

Federal Trade Commission Chair Lina Khan made a surprise visit to Baraboo on Thursday, speaking at an event organized by Sauk County residents who sought to ratchet up pressure on state regulators to block the county’s sale of the nursing home it operates.

The Sauk County Board of Supervisors voted last month to sell the Sauk County Health Care Center to for-profit Aria Healthcare. The nursing home was built in 2008, but the county has operated a care facility in some form since 1871 — using it to treat diseases ranging from smallpox in the early 1900s to Alzheimer’s in the 1990s, according to the county’s website. 

Opponents fear that selling the publicly run nursing home will worsen care. 

Aria, which did not respond to multiple requests for comment, operates three Wisconsin facilities in the Milwaukee area. One facility received 39 federal health citations in a year, nearly 30 more than the U.S. average.

“The concerns that you’ve raised about what you worry will happen if this sale goes through is very salient for us,” Khan said.

Three other county boards in Wisconsin have attempted to privatize public facilities this year. Experts say nonprofit and government-owned facilities nationwide are exploring sales due to increasing labor costs and other challenges worsened by the pandemic.

“We’ve been watching with some alarm as more and more mergers and consolidation mean that fewer and fewer players are coming to control important parts of the health care system,” Khan said. 

The FTC, an independent agency that enforces antitrust law, typically reviews sales much larger than that of the Sauk County Health Care Center. That leaves the Wisconsin Department of Health Services to decide its fate, Khan said. 

State officials consider a company’s financial stability and past performance in evaluating a change of ownership application.

The state health department has not received that application for the Sauk County facility, spokesperson Elizabeth Goodsitt said.

The department will have 60 days to approve or deny the sale once it does.  

The department blocked the sale of three SSM Health nonprofit nursing homes to New Jersey-based Complete Care last month, citing the for-profit company’s frequent federal citations. Complete Care operates four Wisconsin nursing homes. The U.S. Centers for Medicare and Medicaid Services gives one of those homes “below average” ratings. 

“We have submitted additional information that we believe will address their concerns and hope to receive a final decision soon,” a Complete Care spokesperson told WPR and Wisconsin Watch in an email. 

The Sauk County nursing home has an “average” Medicare rating under its public ownership. One of Aria’s homes has a “below average” rating. The other two are “much below average.” 

That doesn’t worry Sauk County Board Chair Tim McCumber.

“Aria is committed to taking harder cases, and while they would love to see those ratings improve, it doesn’t take much to knock them down,” he said in an interview.

David Grabowski, a professor of health care policy at Harvard Medical School, calls that line of defense a bit of an excuse. Everyone is entitled to quality care, he said in an interview, and research suggests residents of public nursing homes often fare better than folks in privately owned homes.

“Really the safety net in a lot of markets are those government-owned facilities,” Grabowski added.

But local governments have been gradually selling nursing homes to for-profit companies over the past 25 years, he said. 

Joice Meyer, who lived at Sauk County Health Care Center in 2020 while recovering from temporary leg paralysis, said the county can’t let that happen.

“Sauk County is going to take care of you, and they always have, and I’m sure that they’re going to keep it up as long as they’re allowed to,” Meyer told the gathering in Baraboo on Thursday. 

Staff called her by name, making her feel like more than just another room number.

“I still have nurses that I see that remember me,” Meyer said. “I don’t think you’re going to get that in another kind of nursing home.”

Wisconsin Watch is a nonprofit, nonpartisan newsroom. Subscribe to our newsletters for original stories and our Friday news roundup.

In surprise Sauk County visit, FTC Chair Lina Khan hears concerns about nursing home sale is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.

The Social Development Commission was reeling from a scandal in 2013. 

The federal government had flagged numerous deficiencies in how the Milwaukee anti-poverty agency managed the city’s Head Start early childhood development services. Federal officials picked another vendor to run the program, costing SDC a $22 million contract that cut its budget by more than half, eliminated 154 jobs and prompted the CEO to resign.  

SDC would survive that blow. State, federal and local agencies over the next decade entrusted it with millions of dollars for services such as emergency furnace installation, tax support, career advancement, senior companionship and rent assistance. Over time, SDC absorbed other poverty-fighting initiatives, going on to earn more revenue in 2022 than 46 Wisconsin counties.  

About a decade later, another scandal leaves SDC’s future in doubt. The organization’s leaders this spring acknowledged having “misallocated” funds for its home weatherization program, costing SDC a $6.7 million state contract that created ripple effects across its wider budget. The details echoed those from 2013 and earlier in SDC’s tumultuous history.  

The agency in April abruptly shut down and laid off its entire staff, creating gaps in essential services for low-income Milwaukee residents. Former vendors and employees are still trying to collect payment for past work, and multiple SDC Board of Commissioners members have resigned. Whether the organization will ever reopen remains unanswered. 

What caused SDC’s unraveling? The results of a state audit launched just before its closing should fill in some details. Already clear, however, is that SDC’s past leaders significantly weakened internal financial controls with little outside scrutiny.   

State, county and city governments awarded SDC major contracts even after the organization eliminated its internal auditing department and board auditing committee, WPR and Wisconsin Watch found.

These actions should have raised red flags to any independent monitors, experts say. But few were looking at SDC’s broader operations. Wisconsin Watch and WPR could not locate a comprehensive government audit of the organization’s finances conducted before 1996, when dial-up internet was still popular and Mike Holmgren still coached the Green Bay Packers. 

SDC additionally failed to update financial procedures or internal controls for more than 15 years, even after eliminating the role of internal auditor.

SDC was created by governments but functions outside of them. State, county and city statutes define the organization as an intergovernmental commission, with each government appointing board representatives. No government claims broader oversight authority.

Government officials told WPR and Wisconsin Watch they largely focused on how SDC executes contracts with their individual offices — rather than broader operations issues. 

A Milwaukee County spokesperson wrote in an email: “there appears to be no statute or ordinance that directly assigns responsibility for monitoring SDC generally (to any entity – including the county, state, and city).”

“Who’s responsible for fixing this agency that is too big to fail?” asked Wyman Winston, who spent 50 years in community development, eight of them directing the Wisconsin Housing and Economic Development Authority.

State and local governments should intervene, regardless of how statutes delegate responsibility, he said, with the constitutional responsibility to protect residents’ welfare taking precedence. 

“Why would you let this entity that serves the largest number of people in the state with critical services wither away?”

SDC shutdown was no surprise

Toni Hamelin learned of SDC’s closing on April 26, a Friday. That left her little time to plan the next Monday’s breakfast, lunch and dinner for up to 40 children at the child care center where she works.

Like 30 other Milwaukee County child care centers that serve low-income families, Hamelin’s Bright Rainbow Academy counted on SDC to prepare and deliver meals through the federal Child and Adult Food Program.

SDC’s closing required her to arrive to work early to prepare meals including cabbage rolls, shepherd’s pie and chicken tacos — with nothing more than a crock pot, a roaster and a hot plate.

Hamelin said SDC’s shutdown wasn’t a surprise. The organization’s meal quality declined during her 30-plus years in child care, and SDC stopped sending infant formula over a year ago, she said.  

“I’ve been questioning things for sure, six months, because things just didn’t seem the way they were,” Hamelin said in July. 

But it took officials months longer to notice SDC again faced the type of trouble that clouded every decade in its history. 

Decades of scandals at SDC

Controversy has surrounded SDC since the 1960s, when residents argued over whether it should supply birth control and discuss police brutality. Within a decade, the scrutiny focused less on politics and more on corruption and mismanagement.

Headlines in the 1970s described leaders using grant dollars for lavish trips, moving SDC money into private accounts and keeping abysmal records that prevented auditors from investigating the agency.

During the turmoil, SDC leadership in the 1980s eliminated an internal auditing position. The organization’s outdated financial procedures manual referenced the role for years after it no longer existed.

SDC cemented its scandal-plagued reputation in the 1990s. 

The Milwaukee Journal Sentinel reported between 1993 and 1996 that SDC leadership tapped organization funds for resort stays for staff retreats, spent exponentially more on a board dinner for 285 people than a Thanksgiving dinner that served 295 seniors, hired an executive director who falsified items on her resume, lost key financial documents in a series of burglaries, spent $400,000 in grant dollars without approval on a suspended construction project and allowed 1 million pounds of food to rot in storage.

State and county auditors responded in 1996 by laying out three options for SDC: Close, become a part of an existing government office or make serious changes. 

Following some recommendations, SDC cut its board from 24 to 18 seats, created a comprehensive budget and rehired an internal auditing staff.

Just a few years later, however, it couldn’t account for grant money to feed low-income children.

By 2011 complaints surfaced over SDC’s management of Milwaukee’s Wisconsin Works and Head Start programs. The organization within two years lost both contracts and roughly 70% of its budget.

That prompted SDC to fire its internal audit staff – eliminating the same positions state auditors previously recommended creating.

Just as in the 1980s, the organization failed to update financial procedures to reflect the change, state records show.

Questions about oversight 

Weakened financial controls can make organizations more vulnerable to mismanagement or wrongdoing. Internal auditors serve a key governance role by offering objective views of an organization, said Mike Varney, the North American board chair of the Institute of Internal Auditors.

While external auditors typically review records from a prior year, internal auditors monitor financial controls and processes in real time, Varney said.

SDC’s internal audit team had caught serious issues, such as a lack of action around a $300,000 state weatherization grant in 2004. An internal audit just before the team was eliminated in 2013 revealed SDC was making inappropriate payments to employees.

Hearing that an organization removed internal auditing controls would “begin to raise red flags,” Varney said.

But SDC’s grantors didn’t seem overly concerned. Its government funding increased after the changes.

Even without internal auditing, the state still required SDC to contract an independent auditor to conduct an external audit, Tatyana Warrick, a Wisconsin Department of Administration spokesperson, wrote in a statement to WPR and Wisconsin Watch.

“The absence of an internal audit director should not be conflated to suggest there is a total absence of internal controls in that organization.”

Pandemic brings big contracts and big deficits

SDC faced a stress test in 2020 as time-limited federal pandemic dollars poured in, more than doubling its budget.

Its problems quickly snowballed. The organization’s balance in 2022 decreased by more than $600,000 — just under the combined worth of the 12 grants it was denied that year. In 2023, SDC lost out on 16 grants worth $16 million, board minutes show.    

Attorney William Sulton, who voluntarily provides legal counsel to SDC, said the organization’s former CEO George Hinton and former Director of Finance Patrick Kirsenlohr failed to act. They should have known about the financial problems but never acknowledged the full scope of the problems to the board, he said. Neither Hinton nor Kirsenlohr responded to requests for comment. 

Still, minutes from monthly board meetings in 2022 and 2023 show Kirsenlohr told the board that SDC would need to slice its administrative budget in half in 2024, that a food service program was operating at a $250,000 loss and that SDC sought a $1.5 million loan to help cover expenses. (The board did not approve the major loan application and lacked a procedure to do so, Sulton said.)

The board should have had better practices, Sulton said. But members likely lacked expertise to pick up on warning signs from SDC management, he added.

Around that time the board voted to eliminate its audit committee, typically a mechanism for members to learn about organizational finances and ask questions without management’s influence.

The board dissolved the committee because it never met, board chair Barbara Toles said, noting it happened before she joined. 

Sulton questions how helpful the committee could have been had it met. No one on SDC’s all-volunteer board had accounting expertise, he said.

Government grantors miss problems

Government grantors are required to monitor and report on their contracts. But they didn’t catch SDC’s fundamental vulnerabilities either until noticing SDC missed payments to some of its contractors. 

As a recipient of more than $750,000 in federal funding, SDC was required by the federal government to commission an annual external audit. CliftonLarsonAllen conducted the most recent audit, which examined 2022. SDC submitted it past a deadline. Auditors found no issues with SDC’s controls or financial reporting.

But year-in-review audits can’t stop financial missteps in real time.

And one report can’t always catch every issue simmering at lower levels of an organization as large and complex as SDC, said Brian Mayhew, executive director of the Center for Financial Reporting and Control at the University of Wisconsin-Madison.  

Who should have monitored SDC? 

No other organization like SDC exists in Wisconsin. 

State, county and city officials established SDC as a public, anti-poverty commission for the state’s largest county. Later, SDC also gained the title of Community Action Agency and joined a nationwide network of social service organizations intended to fight President Lyndon B. Johnson’s War on Poverty of the 1960s.

SDC’s dual titles make it hard to determine who oversees it.

A 1996 audit lists the city and county of Milwaukee as two of SDC’s founding entities. Meanwhile, state statutes give local governments authority to fund commissions like SDC.

Asked if the city of Milwaukee had monitoring authority over SDC, Jeff Fleming, a spokesperson for Mayor Cavalier Johnson, said no.

“SDC was intentionally structured so as not to be part of city, county or state government,” Fleming told Wisconsin Watch and WPR. “With that autonomy comes an independent obligation to manage funds and programs.” 

The federal government designated an office to oversee community action agencies. But in 1981, President Ronald Reagan eliminated that office and designated states to pass federal dollars to community action agencies like SDC. 

The decentralization of social welfare programs makes it harder to track taxpayer dollars, said Ryan LaRochelle, a senior lecturer at the University of Maine’s Institute for Leadership and Public Service.

“As you give more authority to the states, which are even sometimes less administratively capable than the federal government, it just gets really, really difficult.”

The inclusion of government officials on the SDC board offers some opportunities for scrutinizing the organization, but having so many other organizations appointing board members complicates accountability efforts.  

Auditors in 1996 recommended that SDC trim some of the 11 appointing organizations and the eight elected board seats at the time.

“It has been suggested that with so many appointing entities, none can be responsible for the performance of the agency as a whole, and public accountability is undermined,” auditors wrote.

That audit prompted the agency to cut six board seats, but by 2022 the number of appointed members rose to 12. Today, five of those appointing agencies have not filled their seats on the board, leaving the agency with 10 members to repair SDC. 

Representatives of each government typically focused mostly on SDC’s contracts with their organization. 

While the Wisconsin Department of Children and Families performed on-site reviews of SDC at least once every three years, other holistic reviews were less frequent. The Legislature and the county could have ordered comprehensive audits of SDC’s operations, but neither has exercised that power in more than two decades. 

State Rep. Robert Wittke, R-Racine and a co-chair of the Joint Legislative Audit Committee, said the committee has not received requests to investigate SDC since its closure and has “been busy with a number of other things.” 

His fellow co-chair, Sen. Eric Wimberger, R-Green Bay, wrote that accusations of fiscal mismanagement at SDC “raise major questions regarding this and similar quasi-governmental entities.”

Some SDC leaders seemed to view government oversight warily. The organization’s 2019-2024 strategic plan lists government oversight as one of three threats facing the organization, alongside state politics and SDC’s “sketchy brand.”

What happened this time? 

SDC’s latest trouble came from trying to continue programs it couldn’t afford after budget cuts, said Toles, the SDC board chair. Rather than scaling back operations, executive leadership tried to move funds around — using grant dollars for one program to cover costs for another following accounting errors. 

“And that’s a no-no,” Toles said. “Never do that.”

When that practice began is unclear, but by late 2023 the Wisconsin Department of Administration noticed SDC’s weatherization contractors weren’t getting paid on time. The agency terminated the weatherization contract in March and launched an audit into that SDC program. 

“It really is an example of state administrators and the tools that state administrators use actually working as they’re designed to work,” said Cheryl Williams, executive director for the National Association of State Community Services Programs.

The cancellation eliminated more than one-fifth of SDC’s proposed 2024 budget and prompted  layoffs of one-third of the agency’s staff. The final blow came when Hinton, before he resigned as CEO, told the SDC board that the agency couldn’t make payroll.

SDC wasn’t the first Wisconsin social service organization to lose a state weatherization contract due to mismanagement. Two others lost contracts in past years. SDC’s weatherization program grew in 2005 after another Milwaukee-based organization lost its contract.

What’s next for SDC? 

Hamelin, the child care director, learned about SDC’s closing on the same day the organization’s employees did.

Hamelin for three months struggled to afford the extra costs of buying three meals a day for Bright Rainbow Academy kids. She considered raising rates for parents, but another local organization stepped in to provide meals before that was necessary.

Bright Rainbow isn’t the only organization to move on since SDC’s closure.

Grantors at the state, county and city level told WPR and Wisconsin Watch they already reallocated funding previously pledged to SDC. At least three agencies plan to decide on next year’s grant before the end of the year.

Reopening will only become harder the longer SDC’s programs remain paused. 

Back during the scandals of the 1990s, state auditors wrote that no one could anticipate the consequences of an SDC closure. 

Winston, the former community development official, said Milwaukee residents still need the  vital services SDC provided.

His recommendation: “Look at what occurred, fix it, make sure it gets reestablished and that there are protections to make sure this doesn’t happen again.” 

Meredith Melland, a reporter with Milwaukee Neighborhood News Service and Report for America corps member, contributed reporting.

Wisconsin Watch is a nonprofit, nonpartisan newsroom. Subscribe to our newsletters for original stories and our Friday news roundup.

How Milwaukee’s giant anti-poverty agency unraveled: weak controls, little oversight is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.

Roughly five months have passed since the Social Development Commission abruptly shut down and laid off its entire staff, creating gaps in essential services for low-income Milwaukee residents. 

So what happened? The results of a state audit launched after its closing should fill in some details. Already clear, however, is that SDC’s past leaders significantly weakened internal financial controls with little outside scrutiny, an investigation by WPR and Wisconsin Watch found. 

Here are some takeaways from our investigation.  

What is SDC?

State, county and city officials established SDC as a public, anti-poverty commission for Milwaukee County.

The organization provided a range of services such as emergency furnace installation, tax support, career advancement, senior companionship and rent assistance.

Why did SDC pause its programs?

Pandemic relief grants more than doubled SDC’s budget in 2020. 

But as those extra dollars dwindled, SDC’s executive leadership failed to scale back operations. Instead, the agency moved funds around — using grant dollars for one program to cover costs for another. That’s a “no-no,” Barbara Toles, SDC board chair, said.

By late 2023, the Wisconsin Department of Administration noticed SDC’s weatherization contractors weren’t getting paid on time. The agency terminated SDC’s $6.7 million weatherization contract in March and launched an audit.

That loss eliminated more than one-fifth of SDC’s proposed 2024 budget and prompted layoffs of one-third of the agency’s staff. The final blow — and further layoffs — came after former management told the SDC board that the agency couldn’t make payroll.

Does SDC have a history of issues?

Controversy has surrounded SDC since it opened in the 1960s.

Headlines from SDC’s first decades described leaders using grant dollars for lavish trips, moving SDC money into private accounts and keeping abysmal records that prevented auditors from investigating the agency.

SDC cemented its scandal-plagued reputation in the 1990s. 

The Milwaukee Journal Sentinel reported at the time that SDC leadership lost key financial documents in a series of burglaries, spent $400,000 in grant dollars without approval on a suspended construction project and allowed 1 million pounds of food to rot in storage.

By 2011 complaints surfaced over SDC’s management of Milwaukee’s Wisconsin Works and Head Start programs. The organization within two years lost both contracts and nearly 70% of its budget.

Who’s in charge of SDC?

SDC was created by governments but functions outside of them. State, county and city statutes define the organization as an intergovernmental commission, with each government appointing board representatives. No government claims broader oversight authority.

Government officials told WPR and Wisconsin Watch they largely focused on how SDC executes contracts with their individual offices — rather than broader operations issues. 

The inclusion of government representatives on the SDC board offered some opportunities for scrutinizing the organization, but the vast number of other organizations that appointed board members complicated accountability efforts.  

Was SDC audited?

As a recipient of more than $750,000 in federal funding, SDC was required by the federal government to contract an independent auditor to conduct an external audit. The most recent audit examined 2022 and found no issues with SDC’s controls or financial reporting.

But year-in-review audits alone can’t guarantee an organization’s financial health, experts say.

Such audits can’t stop financial missteps in real time. Nor can one report catch every issue simmering at lower levels of an organization as large and complex as SDC, said Brian Mayhew, executive director of the Center for Financial Reporting and Control at the University of Wisconsin-Madison.

The Wisconsin Legislature and the county had power to order comprehensive audits of SDC’s operations. Neither has exercised that power in more than two decades. 

Were there signs of trouble?

SDC leadership’s elimination of the internal audit staff in 2013 and audit committee in 2022 should have raised red flags to any independent monitors, experts say. 

The board dissolved the audit committee because it never met, Toles said.

Weakened financial controls can make organizations more vulnerable to mismanagement or wrongdoing. Internal auditors serve a key governance role by offering objective views of an organization, said Mike Varney, the North American board chair of the Institute of Internal Auditors.

SDC additionally failed to update financial procedures or internal controls for more than 15 years, even after eliminating the role of internal auditor.

SDC’s grantors didn’t seem overly concerned. Its government funding increased after the changes. 

“The absence of an internal audit director should not be conflated to suggest there is a total absence of internal controls in that organization,” Tatyana Warrick, a Wisconsin Department of Administration spokesperson, wrote in a statement to WPR and Wisconsin Watch.

What’s happened since SDC halted services?

Former vendors and employees are still trying to collect payment for past work.

Meanwhile, grantors at the state, county and city level said they already reallocated funding previously pledged to SDC. At least three agencies plan to decide on next year’s grant before the end of the year.

Reopening will only become harder the longer SDC’s programs remain paused.

Meredith Melland, a reporter with Milwaukee Neighborhood News Service and Report for America corps member, contributed reporting.

Wisconsin Watch is a nonprofit, nonpartisan newsroom. Subscribe to our newsletters for original stories and our Friday news roundup.

Why did SDC fail? Takeaways from our investigation of Milwaukee’s anti-poverty agency is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.

Barbara Hendricks needs at least 10 residents to pay out of pocket for her 22-bed assisted living facility in Horicon, Wisconsin, to survive.

That’s because the other residents in the Dodge County home, Marvin’s Manor, rely solely on Medicaid, which Hendricks said pays her a little more than half the private-pay rate she charges — far below the cost of paying her workers.

“We will just make it,” Hendricks said.

Squeezing by required Hendricks to close the other assisted living facility she ran in Waupun. The decision to close by August left the city with no assisted living providers for seniors who rely on government funding after exhausting their savings. The facility sits empty after the closure forced 12 residents to find new homes, an increasingly difficult task for seniors already on Medicaid, the joint state and federal aid program to help low-income residents afford care.

“Going to see the residents now you can see they’re sad. They’re not home,” Hendricks said. “They’re just not home.”

Assisted living has grown in popularity across Wisconsin and the country, offering aging residents and people with disabilities more independence in less institutionalized settings than traditional nursing homes. But providers continue to struggle. Low state reimbursement rates through Medicaid have depressed provider revenue and worker pay.

That has led some facilities to oust residents who rely on government assistance or even close, limiting options for residents in need. 

In 2023 alone, 148 Wisconsin assisted living communities closed voluntarily, according to the Wisconsin Department of Health Services.

WPR and Wisconsin Watch obtained reports from 86 assisted living facilities that closed between 2020 and the first half of 2024, displacing more than 750 people. Each report asks providers to list their reasons for closure. About two-thirds blamed low Medicaid reimbursements or staffing shortages.

A Jefferson County provider cited “the historic and compounding gap between government long-term care provider reimbursement rates and the costs associated with providing care — in particular wages” as the biggest factor in its deficit.

The owner of a shuttered Green County facility wrote simply: “NO STAFF TO WORK.”

The state has incrementally boosted Medicaid reimbursement rates to cover assisted living and home health care, but not every provider benefited, and the rates continue to lag behind the cost of care.  

Democratic Gov. Tony Evers in August directed the state health department to spend more than $250 million in federal pandemic relief on assisted living. That was after the Republican-led Legislature’s budget writing committee blocked an earlier plan in an ongoing struggle over spending power.  

Long-term care experts say Evers’ action will help, but only temporarily, and it still falls short of the full cost of care. 

The emergency dollars must be spent by June 2025.

The Legislature will then decide whether to keep the funding in the state’s two-year budget. Republican leaders have previously called the rate increases too expensive. 

“I don’t think (state officials) understand it,” Hendricks said. “They don’t see it. They don’t live it. We do.”

Providers seek relief

Wisconsin since 2020 has increased its average monthly Medicaid payments by roughly $790 per care recipient. But not every provider has seen recent raises.

Reimbursement rates for some of Hendricks’ residents haven’t budged in five years, said her daughter Tonya Maldonado, who handles billing for the company. 

How is that possible? Managed care.

The state doesn’t reimburse providers directly. It pays managed care organizations, which negotiate rates with providers, aiming to limit costs. Wisconsin’s four MCOs later pay providers.

Managed care systems intend to provide higher value care to Medicaid recipients for less money, said Vincent Pohl, a senior researcher at Mathematica, a social policy research firm.

Managed care companies want to keep their costs low and maximize profits by passing as little Medicaid funding to providers as possible, Pohl said. They are navigating tough economics themselves, and historically low state reimbursement rates have left them little room to pass more money to providers, said Rene Eastman, vice president of financial and regulatory services at LeadingAge Wisconsin. 

The state has little say over how much MCOs pay providers for assisted living.

“Under federal rules, there are very few ways in which the department can direct a managed care organization to spend its money,” said Wisconsin Medicaid Director Bill Hanna.

But the state can set minimum Medicaid reimbursement rates for MCOs to send providers, Hanna said. It has done so for nursing homes and other forms of medical care, but assisted living facilities have long lacked such assurance. 

Evers’ pandemic relief plan sets aside $258 million to increase Medicaid reimbursements. Unlike previous increases, it guarantees minimum payments to providers.

Nearly two-thirds of assisted living providers will see a more than 40% increase to their reimbursement rates, the Department of Health Services estimates. Three-fourths of supportive home care services would see a more than 16% increase, showing that most providers are currently getting less from MCOs.

Hanna said some providers see the plan as a lifeline. 

“I got phone calls the day of the announcement, from providers who called and said, ‘We were about to tell our board we needed to start closing procedures, but because of the minimum fee, we’re able to stay open,’” he said.

Susan Osteen, president and CEO of Diverse Options in Fond du Lac County, hasn’t yet felt relief. 

“Whenever the state does something like this, we always just wait and see what’s coming next,” Osteen said. “And I don’t know what that’s going to mean for us.”

Diverse Options operates three four-bed assisted living homes for adults with developmental disabilities. The company closed an eight-bed facility in 2022 due to staffing issues.

Osteen says she’s waiting to see where the state sets minimum rates.

A reimbursement hike previously blocked by lawmakers would have required MCOs to reimburse providers at a $15.75 hourly wage for caregivers, up from the current $13.02 per hour. Britt Cudaback, an Evers spokesperson, said the governor’s latest proposal matched the previous plan. 

The hike would still fall short of the $18 to $22 per hour wages Osteen pays employees.

Meanwhile, some providers worry the minimum reimbursement rates will become ceilings in practice — with no motivation for MCOs to pay more competitive rates, said Janet Zander, advocacy and public policy coordinator with the Greater Wisconsin Agency on Aging Resources, Inc.

“Even those that are lifted, will they be lifted high enough to truly change the course that we’re experiencing now?” Zander asked.

Little room for error

Rosa Landa bought her first assisted living home in 2019, starting with just two residents in the Madison facility. With particularly low Medicaid reimbursement rates at the time, she dipped into her own savings to keep the home running — even before she had additional staff to pay. 

She considered closing Good Hand Care AFH before a slight Medicaid reimbursement hike allowed the home to survive and higher demands filled all four of its rooms.

Landa and her family take on most of the work alongside two employees. Their business turns a modest profit, but still-low Medicaid reimbursement rates offer little wiggle room.  

She and her husband opened a new home in Monona at the start of this year. So far, the new home only has one resident, leaving three of its four rooms sitting empty. Although more residents plan to move into the home soon, Landa can’t help worrying.

“I cannot breathe basically, until I see everybody in the house,” said Landa, who hadn’t heard about Evers’ $258 million plan.

The state health department will hold a webinar for providers in a month or two, Hanna said, and it will implement new rates by Oct. 1. All providers should start benefiting from the new rates by early 2025. 

But the change could be short-lived.

Continuing the higher rates after June would cost the state and federal governments an estimated $516 million over two years, adding to Wisconsin’s roughly $30 billion biennial Medicaid budget. The Department of Health Services will request the increase in the next budget cycle. 

While the department can set minimum rates on its own, the Legislature controls the funding to make it viable. 

A member of the Republican-controlled Joint Committee on Finance blocked the minimum rate from implementation in April. Committee leaders say they worry about the annual cost of maintaining higher rates once pandemic relief runs out.

“Just nine months ago, the Joint Committee on Finance approved nearly half a billion dollars in new money to support the long-term care industry in our state, bringing our total new investment in the past three budgets to well over a billion dollars,” committee co-chair Rep. Mark Born, R-Beaver Dam, wrote in a statement.

The state allocated more than half of new long-term care investments to nursing homes rather than assisted living facilities or at-home care, according to a WPR and Wisconsin Watch analysis of the past three state budgets.

But more than 90% of Wisconsin Medicaid recipients received long-term care outside of nursing homes or other institutional settings, according to an analysis of 2020 data by KFF, a health policy research firm.

It’ll be hard on the providers if the Legislature does not extend the rate increases from Evers’ plan —  especially for those who raise employee wages with the extra funding, Eastman of LeadingAge Wisconsin said.

“Once a caregiver wage is increased it’s extremely difficult and morally impossible to take that away,” Eastman said. “Providers need to be reassured that higher reimbursement will continue so that they can continue to pay their employees a fair and living wage.”

Jack Kelly of Wisconsin Watch contributed reporting. This story was co-published with WPR and Isthmus, an independent, local news source based in Madison.

Wisconsin Watch is a nonprofit, nonpartisan newsroom. Subscribe to our newsletters for original stories and our Friday news roundup.

Wisconsin’s long-term care crisis: Staffing troubles, low Medicaid rates prompt closures is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.

Gov. Tony Evers earlier this month announced a plan to spend $258 million in pandemic relief to increase Medicaid reimbursements to long-term care providers — a proposal previously halted by the Legislature’s Republican budget-writing committee.

The Democrat’s move kept long-term care, among other issues affecting families, in the middle of his tug of war with the Republican-controlled Legislature over spending authority. While a July Wisconsin Supreme Court ruling gave more leeway to the Evers administration, the outcome of a Tuesday vote on two constitutional amendment questions could shift some power back to the Legislature.

A yes vote on both questions would restrict the governor’s ability to allocate emergency federal funds without legislative approval.

Those votes and the outcome of any squabbling over Evers’ plan to boost compensation for long-term care providers will shape the spending power of each branch of government.

Evers’ Medicaid reimbursement increase is among few — if not the only — active statewide efforts to rescue long-term care providers as they endure challenges that threaten their service to elderly residents and people with disabilities.

As the proportion of Wisconsin’s senior population has grown in recent years, so has a crisis in the industry that cares for them. Low state reimbursement rates through Medicaid, the joint state and federal aid program to help low-income residents afford care, have depressed provider revenue and worker pay. That has fueled workforce shortages and facility closures that severely limit options for seniors and disabled adults who can’t afford to privately pay for care. 

Assisted living facilities on average pay caregivers between $17 and $20 an hour. State reimbursements assume caregivers make just $13 an hour, Mike Pochowski, president and CEO of the Wisconsin Assisted Living Association, said earlier this year. 

The increase would come from a pool of pandemic relief aid that the federal government sent to the state health department specifically for assisted living and home-based care industries.

The Wisconsin Department of Health Services earlier this year sought to increase Medicaid payments to providers. But doing so first required review from the Republican-controlled Joint Committee on Finance. 

That additional legislative oversight resulted from an effort by former Republican Gov. Scott Walker and allies to erode gubernatorial power during a lame-duck session in late 2018 before Evers succeeded him.

Walker signed a series of laws that increased the oversight authority of several legislative committees. That included giving the finance committee veto power over administration proposals to significantly increase Medicaid reimbursements.

The finance committee refused to schedule a hearing on the latest proposal after a member anonymously objected in April, blocking it from implementation. Committee leaders say they worry about the annual $103 million general revenue cost of maintaining higher Medicaid reimbursement rates once pandemic relief runs out.

Finance committee co-chair Rep. Mark Born, R-Beaver Dam, told Wisconsin Watch and WPR that the Legislature already made substantial investments in long-term care in the three most recent state budgets.

Committing the amount of money requested by the health department halfway through a budget cycle is “exceptionally rare,” Born said in a statement.

As the proposal sat, the Wisconsin Supreme Court ruled the finance committee could not legally block spending on conservation projects initiated by the governor’s administration.

The ruling may have emboldened Evers to move ahead on the reimbursement increase despite the finance committee’s inaction.

“Unfortunately, Republican lawmakers had objected to that plan and subsequently failed to take further action,” Evers communications director Britt Cudaback wrote in a statement to WPR and Wisconsin Watch. “Thus, the governor directed DHS to do it anyway using federal funds already allocated to the department.”

Tuesday’s constitutional amendment vote could affect those dynamics.

Although vague language in the proposed amendment creates ambiguity over the full scope of the potential, a yes vote would certainly grant the Legislature more authority over spending previously held by the executive branch, said Philip Rocco, an associate professor of political science at Marquette University. 

One possible outcome: Governors and the departments they oversee could no longer make decisions about federal emergency dollars, such as boosting compensation to care providers, without the Legislature’s oversight.

While the amendments are most clearly aimed at power over undesignated and unanticipated federal dollars, they could impact other types of funding, said Bryna Godar, a staff attorney at University of Wisconsin Law School’s State Democracy Research Initiative.

Split party control between the Legislature and governorship means Wisconsin residents can expect continued legal fights over the scope of the Legislature’s power regardless of Tuesday’s election outcome, Rocco said. 

Asked for his reaction to the administration’s move, Joint Finance Committee Co-chair Sen. Howard Marklein, R-Spring Green, wrote in an email to WPR and Wisconsin Watch: “We have had a productive dialogue with DHS on this topic and I had hoped that we would come to an agreement. I look forward to continuing the discussion during the budget process next session.”

The federal pandemic funds that Evers allocated for the rate hike last through March 2025. The Legislature will control any future changes through the next two-year budgeting process that culminates in July 2025.

Evers’ plans to increase reimbursement rates beginning in October 2024 make political sense, Rocco said.

“It is a lot harder to repeal something than it is to stop it from being enacted in the first place.”

Nearly two-thirds of assisted living providers would see reimbursement rate increases of about 40% while three in four supportive home care providers would see increases of about 16% — raises that many providers say they can’t afford to lose.

Wisconsin Watch is a nonprofit, nonpartisan newsroom. Subscribe to our newsletters for original stories and our Friday news roundup.

Long-term care caught up in Wisconsin government’s battle over spending power is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.