Colorado Pay Gaps Extend to Non-State Employees

I follow the state budget very closely. Perhaps it doesn’t sound like as fun as many things I could be doing—skiing, hiking, rafting, getting a root canal—but when you run a nonprofit, charitable agency that relies on over $5 million a year in state funds, you learn to find state fiscal politics interesting.

So, when I read the recent Colorado Sun article reprinted in the Durango Herald (Monday, December 4th) touting discrepancies in state worker pay, I knew this wasn’t the entire story.

The short recap is that a recent pay study revealed that even with a 5% pay raise in 2023, state workers earn an average of 8% less than comparable roles in the private sector.

In full disclosure, I have yet to get my hands on the actual study. But this article raised serious questions about pay equity, particularly equity with providers under state contracts.

The same budget cycle that allotted a 5% pay raise to state employees gave a mere 3% increase to Medicaid providers in the state—after a year of 8% inflation.

Let me assure you that Medicaid providers (including hospitals and physicians, but also home health aides, physical and occupational therapists, nutritionists, and support professionals serving people with disabilities) are not well paid. The formula for setting Medicaid rates builds in a “budget neutrality” factor that essentially works like this: 1) a rate study is performed to determine the cost of providing a service and then 2) that number is multiplied by 70% to set the Medicaid reimbursement rate. It is by design that the rates are below the actual cost.

For some providers, this gap is filled with private insurance and private pay. For many of us, these rates are the main or sole source of our income, leaving our employees much further behind their for-profit sector colleagues than the state’s 8% gap. We squeezed blood out of a turnip to get a 3% COLA in our budget this year, the highest cost-of-living increase we’ve seen in over 10 years. Compound this discrepancy over the years and you can see how easily our critical workers fall behind even the “iniquitous” pay of state workers.

This pay gap shows up in practice, too. My colleagues on the front range are frequently lured away from the private sector to state jobs due to the significant increase in potential earnings. Private, nonprofit organizations spend thousands of dollars to recruit, train, and retain excellent staff, only to have our state partners scoop them up with promises of higher wages, expanded influence, and a guaranteed pension.

I sincerely believe state employees should be paid fair, competitive wages. But I believe that state contractors providing essential services should be paid fair, competitive wages, too.

If you care about equity and you care about state-supported services being available in rural communities, I hope you will pay attention to the state budget. More importantly, I urge you to vote when matters impacting the budget are on the ballot.