16.A.
City Council Meeting - FINAL (AMENDED)
- Meeting Date:
- 10/15/2019
- Co-Submitter:
- Jack Fitchett
Information
TITLE:
Consideration and Adoption of Resolution No. 2019-45: A resolution approving an Intergovernmental Agreement (IGA) between the Arizona Department of Economic Security and the City of Flagstaff to provide up to $150,000 in voluntary city funding to qualified developmental disability service providers within the city limits of Flagstaff, Arizona; and establishing an effective date.
STAFF RECOMMENDED ACTION:
1) Read Resolution No. 2019-45 by title only
2) City Clerk reads Resolution No. 2019-45 by title only (if approved above)
3) Adopt Resolution No. 2019-45
2) City Clerk reads Resolution No. 2019-45 by title only (if approved above)
3) Adopt Resolution No. 2019-45
Executive Summary:
The purpose of this Agreement is to provide for increased state and local funding in FY2020 to developmental disability services (DDS) providers operating within City limits, to help pay for increased labor costs due to an increase in the minimum wage.
The Arizona Department of Economic Security (ADES) will distribute the funding. The funding will be distributed to Division of Developmental Disabilities (DDD) Qualified Vendors who provide services to ALTCS/DDD members in zip codes 86001, 86003, and 86004 within the City of Flagstaff limits.
The ADES will provide funding not to exceed $350,000 from DDD’s Medicaid expenditure authority with the combined funds from DDD and the City will go to DDD Qualified Vendors in Flagstaff. The ADES will spend two dollars ($2) of the DDD’s Medicaid expenditure authority monies for each dollar ($1) that the City provides as voluntary payments to DDD’s Qualified Vendors. The City will provide up to $150,000 in funding, which has already been budgeted.
The ADES will determine which DDD Qualified Vendors are eligible to be funded as authorized by House Bill 2747, Section 108 on pages 78 - 79. (See Attached). The ADES will refund any of the City’s unspent voluntary payment to the City by July 31, 2020. The ADES will provide quarterly funding distribution reports to the City. The reports will include DDD Qualified Vendors name, date of payment, ADES amount and City amount. The agreement expires August 31, 2020 unless extended by mutual agreement, not to exceed five (5) years. The agreement may be terminated by mutual agreement at any time.
The Arizona Department of Economic Security (ADES) will distribute the funding. The funding will be distributed to Division of Developmental Disabilities (DDD) Qualified Vendors who provide services to ALTCS/DDD members in zip codes 86001, 86003, and 86004 within the City of Flagstaff limits.
The ADES will provide funding not to exceed $350,000 from DDD’s Medicaid expenditure authority with the combined funds from DDD and the City will go to DDD Qualified Vendors in Flagstaff. The ADES will spend two dollars ($2) of the DDD’s Medicaid expenditure authority monies for each dollar ($1) that the City provides as voluntary payments to DDD’s Qualified Vendors. The City will provide up to $150,000 in funding, which has already been budgeted.
The ADES will determine which DDD Qualified Vendors are eligible to be funded as authorized by House Bill 2747, Section 108 on pages 78 - 79. (See Attached). The ADES will refund any of the City’s unspent voluntary payment to the City by July 31, 2020. The ADES will provide quarterly funding distribution reports to the City. The reports will include DDD Qualified Vendors name, date of payment, ADES amount and City amount. The agreement expires August 31, 2020 unless extended by mutual agreement, not to exceed five (5) years. The agreement may be terminated by mutual agreement at any time.
Financial Impact:
Funding for the initial term of the agreement is included in the adopted FY2020 budget in account 001-09-402-1310-1-4206 Non-department.
Policy Impact:
No policy impacts at this time.
Connection to Council Goal, Regional Plan:
Connection to Council Goals:
1. Economic Development
2. Personnel
Connection to the City of Flagstaff Strategic Plan:
1. Work in partnership to enhance a safe and livable community
1. Economic Development
2. Personnel
Connection to the City of Flagstaff Strategic Plan:
1. Work in partnership to enhance a safe and livable community
Has There Been Previous Council Decision on This:
Council directed staff to help provide funding for developmental disability services providers, at public meetings held in February, March, April, May 2019. At a public meeting in June 2019 the Council approved the FY 2020 budget, which includes $150,000 in funding for DDS providers operating in City limits.
Options and Alternatives:
1. Approve the Agreement; or
2. Do not approve the Agreement and direct staff to propose use of $150,000 for other community needs.
2. Do not approve the Agreement and direct staff to propose use of $150,000 for other community needs.
Background and History:
In the November 2016 General Election City voters passed the Minimum Wage Act (Proposition 414, a local voter initiative) in the November 2016 election. The Minimum Wage Act increases the City of Flagstaff’s minimum wage from $8.05 per hour in 2016 to $15.00 by 2021, or $2.00 above the State minimum wage, whichever is greater, through set increases on determined dates commencing on July 1, 2017.
In the same November 2016 General Election Arizona voters passed the Fair Wages and Healthy Families Act (the “FWHFA”) (Proposition 206, a state voter initiative) raising the State minimum wage from $8.05 per hour to $12.00 per hour by 2020 through set increases on determined dates to begin January 1, 2017.
On March 21, 2017, the City Council adopted Ordinance No. 2017-08, amending the Minimum Wage Act by a super-majority vote of 6-1, to provide for gradual increase in the minimum wage to $15.00 an hour by 2021, as contemplated by voters. Without this amendment, there would have been a drastic increase in the minimum wage from $8.05 to $12.00 an hour (almost a 50% increase) within six months, due to the compounding effect of the passage of the FWHFA.
As a result of the Minimum Wage Act (and the FHWFA), many Flagstaff employers had to start paying employees more money for their work. Currently the local minimum wage is $12.00 per hour, and the State minimum wage is $11.00 per hour.
On January 29, 2019 SB1225 titled; Appropriation; Developmental Disabilities Services Providers was introduced by Senator Sylvia Allen (LD6). The purpose of SB1225 was to provide emergency funding in the amount of $508,600 from the State general fund and $1,176,100 from developmental disabilities Medicaid authority to developmental disabilities services providers (DDSPs) that experienced the highest mandated labor cost increases for services provided in a geographic service area located in northern Arizona as designated by the Arizona health care cost containment system administration due to the passage of proposition 414 which established higher incremental minimum wage rate increases than the State. SB1225 passed its assigned committees and passed the Senate with a vote of 26-4 on February 14, 2019. SB1225 was then transmitted to the House. On April 4, 2019, a proposed amendment to SB1225 was introduced by Representative Regina Cobb (LD 5). SB1225 was introduced into the Appropriation Committee with the following proposed amended language:
The amendment to SB1225 passed the Appropriation Committee with a vote of 9-2. City staff provided City Council with the proposed amended language and began discussions on providing voluntary payments as noted in the amended language of SB1225. City staff at the direction of city council began reviewing options to provide city funding in support of the amended language of SB1225 through the city’s FY2020 budget process. City staff identified $50,000 for City Council consideration. City Council then modified the approval amount to total $150,000. The $150,000 was approved by City Council during the April 2019 Council retreat and approved in June 2019 as part of the final budget. The governor signed HB2747 which specified ADES will spend two dollars ($2) of the DDD's Medicaid expenditure authority monies for each dollar ($1) that the City provides as voluntary payments to DDD's Qualified Vendors.
In the same November 2016 General Election Arizona voters passed the Fair Wages and Healthy Families Act (the “FWHFA”) (Proposition 206, a state voter initiative) raising the State minimum wage from $8.05 per hour to $12.00 per hour by 2020 through set increases on determined dates to begin January 1, 2017.
On March 21, 2017, the City Council adopted Ordinance No. 2017-08, amending the Minimum Wage Act by a super-majority vote of 6-1, to provide for gradual increase in the minimum wage to $15.00 an hour by 2021, as contemplated by voters. Without this amendment, there would have been a drastic increase in the minimum wage from $8.05 to $12.00 an hour (almost a 50% increase) within six months, due to the compounding effect of the passage of the FWHFA.
As a result of the Minimum Wage Act (and the FHWFA), many Flagstaff employers had to start paying employees more money for their work. Currently the local minimum wage is $12.00 per hour, and the State minimum wage is $11.00 per hour.
On January 29, 2019 SB1225 titled; Appropriation; Developmental Disabilities Services Providers was introduced by Senator Sylvia Allen (LD6). The purpose of SB1225 was to provide emergency funding in the amount of $508,600 from the State general fund and $1,176,100 from developmental disabilities Medicaid authority to developmental disabilities services providers (DDSPs) that experienced the highest mandated labor cost increases for services provided in a geographic service area located in northern Arizona as designated by the Arizona health care cost containment system administration due to the passage of proposition 414 which established higher incremental minimum wage rate increases than the State. SB1225 passed its assigned committees and passed the Senate with a vote of 26-4 on February 14, 2019. SB1225 was then transmitted to the House. On April 4, 2019, a proposed amendment to SB1225 was introduced by Representative Regina Cobb (LD 5). SB1225 was introduced into the Appropriation Committee with the following proposed amended language:
1. Decreasing the $508,600 amount to $172,924;
2. Inserting the one-time emergency clause;
3. Inserting that the department may spend $1 of the monies appropriated by this subsection for each $2 that the city of Flagstaff provides;
4. Eliminating the “Arizona health care cost containment system administration” and replacing it with “the city of Flagstaff.”
The amendment to SB1225 passed the Appropriation Committee with a vote of 9-2. City staff provided City Council with the proposed amended language and began discussions on providing voluntary payments as noted in the amended language of SB1225. City staff at the direction of city council began reviewing options to provide city funding in support of the amended language of SB1225 through the city’s FY2020 budget process. City staff identified $50,000 for City Council consideration. City Council then modified the approval amount to total $150,000. The $150,000 was approved by City Council during the April 2019 Council retreat and approved in June 2019 as part of the final budget. The governor signed HB2747 which specified ADES will spend two dollars ($2) of the DDD's Medicaid expenditure authority monies for each dollar ($1) that the City provides as voluntary payments to DDD's Qualified Vendors.
Key Considerations:
The City and State funding appropriations to help DDS providers pay for increased labor costs are for this fiscal year only. The City, State, and local community will need to work together to find a long-term solution for ensuring that DDS providers can afford to provide services in Flagstaff, and to ensure that all Flagstaff workers are paid at least minimum wage. The City has limited funding to help provide social services, and there are many competing needs.
The DES is requiring the form of Agreement that is attached to this staff summary.
The DES is requiring the form of Agreement that is attached to this staff summary.
Community Benefits and Considerations:
None.
Community Involvement:
DDS providers provide important services to the Flagstaff community.
Expanded Options and Alternatives:
Local DDS providers Hozhoni Foundation and Quality Connection expressed concerns of keeping their services within the City limits due to the increase in labor costs associated with the Minimum Wage Act coupled with the FWHFA. City staff had numerous discussions with Hozhoni staff and social service provider associations regarding the SB1225, HB2747 and the voluntary amount the City will allocate towards reducing their labor costs.