Governor releases HHS funding proposal

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Governor releases HHS funding proposal


The joint House-Senate Health and Human Services Budget Subcommittee met this week to hear the Governor’s funding recommendations for services under the subcommittee’s purview. The HHS budget represents 26 percent of the state’s general fund—second only behind education—and funds many services critical to the well-being of Iowa children and their families. 

All in all, the Governor’s budget proposal takes some important first steps in key areas, but leaves other opportunities on the table.

Here are some highlights of the Governor’s proposal, which primarily addresses FY 2020 (which starts in July), but also includes some supplemental budget appropriations for the current fiscal year. 

Child Care

Last year, the General Assembly directed DHS to use up to $3 million of the amount appropriated for child care assistance to increase reimbursement rates for participating providers. This rate increase took place January 1, 2019—covering the second half of the fiscal year—for an annualized impact of $6 million. It also made some additional rate increases using federal funds. The table here provides a comparison of the half-day reimbursement rates for different age groups and settings before and after the rate change. The Governor recommends continuing the same level of child care assistance funding for FY 20.

Last year’s legislation was a nice victory, but we still have a way to go. Providers are still not paid at rates reflecting that national standard and families still struggle to enter the child care assistance program because of the woefully low income eligibility cutoff: 145 percent of the federal poverty level. This week Sen. Brad Zaun (R-Urbandale) introduced a bill that would raise the eligibility cutoff to 200 percent of the federal poverty level. We support this bill and look forward to working with our partners in moving it through the legislative process.

Child Welfare

The Governor recommends a $2.8 million investment to update the old, cumbersome DHS computer system. This is a great first step in helping DHS workers collect and share data in real time. The Governor is also including $5.5 million in FY 20 and $9.2 million in FY 21 in the Technology Reinvestment Fund budget for a new Child Welfare Information System, which would help the state ensure program quality and the safety of children. 

She is also recommending an additional $1.52 million for caseload relief, which will allow the department to add 29 new FTE positions for social workers and support staff. This boost still doesn’t get Iowa to the caseload ratio recommended by the Child Welfare League of America, but it is a start. 

The governor’s budget document acknowledges that the federal Families First Fostering Prevention Services Act (FFPSA) will significantly change the child welfare system by restructuring how the federal government funds child welfare services. Two of the major changes will be:

  1. Permitting funds to be used on evidence-based family preservation services for children at risk of entering the child welfare system.
  2. No longer paying for placements that are not in foster family homes.

DHS is working with experts from the Annie E. Casey Foundation “to analyze data, administer fiscal planning, and crosswalk approved evidence-based model programs with current Iowa needs and services," and plans to implement the new FFPSA requirements starting July 1, 2020. 


The Governor is recommending a supplemental appropriation of $141.1 million to the Medicaid budget for the current fiscal year, 2019. The major contributors are:

  • An approximately $100 million increase in the capitation rates for the private managed care organizations administering the state’s program (which the state agreed to pay last year and reflects a 7.5 percent rate increase).
  • About $21 million in risk corridor payment to MCOs. A risk corridor is an agreement between the state and the MCOs, where the state steps in to help protect MCOs from unexpectedly high losses by paying the difference if the MCO spends more in medical care than it collects in revenue. 
  •  A reduction in revenue from the Health Care Trust Fund (based on revenue from tobacco tax) due to fewer people smoking and more vaping, which is not taxed in the same way as tobacco products. 

The Governor also recommends an increase of approximately $11.6 million for the Children’s Health Insurance Program (hawk-i) due to the phasedown of an enhanced federal matching rate. Iowa received a temporary boost in federal funding through the Affordable Care Act that was designed to assist the states in keeping children’s coverage strong at a time of significant change. Beginning in October, our state’s share of CHIP costs will start returning to its traditional levels. 

Children’s Mental Health 

The Governor is recommending an increase of $306,250 to the addictive disorders program within the Department of Public Health. This increase will expand the Your Life Iowa call referral system, which currently offers information, support and referrals for people experiencing addition or who are suicidal, to include for similar resources for children and families experiencing mental-health issues.

The Governor is also recommending an increase of $1.2 million to reduce the waiting list for the Children’s Mental Health Waiver. The waiver is currently capped at 1,014 children served, and as of August 2018, 882 children were on the waiting list (although children are placed on the waiting list before eligibility is determined, so some of those may not ultimately qualify).

02/01/2019 3:25 PM |Add a comment
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