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Bill proposes change to family residential service rate in effort to maintain care

Home-based adult foster care providers often operate on slim margins for what is a 24/7/365 job. Any funding reduction could have a devastating effect.

Without revising a 2023 law, that fear could be realized.

Sponsored by Rep. Kim Hicks (DFL-Rochester), HF3712 would both delay by two years — from Jan. 1, 2026 to Jan. 1, 2028 — implementation of adult family foster care rate tiers that were passed last year, and establish an Advisory Task Force on Family Residential Services.

The House Human Services Policy Committee approved the bill as amended Wednesday and sent it to the House Human Services Finance Committee.

“We passed legislation that removed this service from the waiver-rate system and established flat tier rates for the service effective 2026,” Hicks said. “As these are being looked at by providers there is growing concern about what they may mean for the future of the service.”

Sara Grafstrom, senior director of state and federal policy at the Association of Residential Resources in Minnesota, said initial modeling shows “drastic rate reductions” for some family foster care providers that could lead to them shutting down.

“With over 1,200 family residential providers in the state, the loss of even a few represents a major loss to the network of providers who do this work,” she said.

Delaying the implementation date, Hicks added, would allow a task force, per the bill, “to evaluate proposed family residential services rate modifications and the impact any proposed payment methodology would have on existing family residential services and licensed adult family foster care providers.”

Specified rate recommendations would be due the Legislature by Aug. 1. 2026.

A second report would be due Jan. 15, 2029: “an assessment of the development and implementation of the family residential service rate methodology and the impact of the rate methodology on family residential services and adult family foster care providers.”

Angela Strasser is a family residential services provider in Farmington.

“If the new tiered system is not reevaluated and providers are forced to accept the rates that were passed, 70% of all family residential service providers will close their doors. In calculation, this is approximately 3,300 individuals that we currently support. Is Minnesota ready to take that on? Where will the individuals we support go? If they are lucky enough to find placement, who will support them?”

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