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Iowa DHS seeks 3.6 percent state spending hike in fiscal 2018

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DES MOINES – The Iowa Council on Human Services voted unanimously Tuesday to approve a $1.814 billion request that would boost state funding for social service programs for more than a million needy and vulnerable Iowans by 3.6 percent in the 2018 fiscal year that begins next July 1.

Chuck Palmer, director of the state Department of Human Services, said his agency anticipates needing an additional $62.9 million – nearly $47.9 million for medical assistance and another $15 million to replace one-time sources – to operate core programs and services in the next fiscal year.

“We feel this is a responsible budget,” Palmer told the council members, noting that the state’s Medicaid program likely will grow due to anticipated enrollment and cost growth while there is uncertainty regarding federal funding that comprises about 70 percent of the combined $5.977 billion DHS spending plan.

The council members approved a separate provision that seeks another $35.94 million to finance staffing/salary needs and an array of other administrative, institutional, technology and service areas should state revenues become more plentiful than expected. DHS officials said they “likely” would be faced with reducing some of the agency’s 4,347 service delivery and 282 general administrative staff if those extra funds don’t materialize.

The fiscal 2018 request along with a nearly $1.865 billion proposal for fiscal 2019 now go to Gov. Terry Branstad, who present a new biennial spending plan to the Iowa Legislature next January. Human services spending for the state’s 1,002,587 young, disabled and elderly clients makes up the second-largest component of yearly state spending.

“We’ve had to be fairly nimble in constructing this budget,” Palmer said. “There’s a long way to go. This is the start.”

Generally, Palmer said he regarded next fiscal year’s request as a “status quo” budget, with the exceptions of the $1.366 billion medical assistance program that reflects current service level adjustments and money needed to “backfill” one-time funding sources in this year’s enacted budget. He said the request was in line with Gov. Terry Branstad’s goal of providing predictability and stability in state government’s budgeting process.

The budget documents included a projected $110 million in savings the state expects to achieve from switching April 1 to a privately managed Medicaid program administered by three managed care organizations (MCOs) now in charge of services being provided to about 600,000 clients, DHS officials said.

Palmer said those savings are “baked into” the contracts with Amerigroup, AmeriHealth Caritas and United Healthcare which run approximately three years with a current rate schedule effective through June 30, 2017.

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