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The SEIU's overreach

California may lose $6.8 billion in federal funding as the SEIU takes its wage fight to Washington.

May 12, 2009

The budget deal that the Legislature grudgingly approved in February left few Californians unbruised. State programs were slashed and taxes and fees were hiked in an effort to close a $42-billion budget gap, causing many to decry the impact on vulnerable residents and struggling businesses. Some of those voices carried further than others, however. Now, the state could lose $6.8 billion in supplemental Medicaid dollars because of a complaint lodged by the union representing home healthcare workers, many of whom face reductions in their already low wages. Although we don't like the cuts, we don't think the federal government should use its leverage to pressure California on behalf of a well-connected group.

Counties negotiate the home healthcare workers' wages and benefits, with the federal government covering half the cost and the state about a third. The state's contribution is capped, however, so it doesn't pay any share of the costs above $12.10 an hour. The budget deal lowers that cap to $10.10 on July 1. Twenty counties exceed the new cap, and some are contractually bound to make up for the loss in state dollars.

The Service Employees International Union, whose negotiators won those contracts, is now using them as ammunition against the wage reductions. The economic stimulus package that Congress enacted in mid-February offers billions of dollars to states to help them keep their healthcare programs for the poor from running short of cash. The bill includes a "maintenance of effort" clause to prevent states from using the new federal dollars to lower their spending on healthcare at counties' expense. The SEIU argued that California's cuts violated that clause, and at least one attorney at the federal Department of Health and Human Services has agreed.

That stance is unreasonable, and Washington should drop its threat to rescind the extra Medicaid dollars. State officials were discussing a cut to home healthcare long before the stimulus package passed, so Sacramento is hardly using federal dollars to lower its own spending. Beyond that, the situation smacks of the SEIU -- which, inappropriately, joined a conference call among state and federal officials on the wage issue -- trying to refight in Washington a battle it lost in Sacramento.

The home healthcare program can be a cost-effective alternative to nursing homes. But a harsh reality of the state's budget mess is that lawmakers have been forced to cut many valuable services, and any move to restore the $74 million in wages would likely lead to rollbacks in other parts of the program -- so if health workers don't take a pay cut, some may lose their jobs. The SEIU loses either way.

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