Cuts coming in federal aid, Branstad warns departments

DES MOINES - Gov. Terry Branstad said Monday that he's already warning state agencies and departments to brace for an expected reduction in federal money flowing to states, as Congress and the Obama administration wrestle with ways to reduce the federal deficit and national debt.

Iowa now gets about $6.1 billion a year in federal aid, said David Roederer, director of the state Department of Management. That's about the same amount as the state revenue that makes up the entire general fund.

During his weekly news conference, Branstad said Iowa and other states “need to be prepared for a significant reduction in federal funding” that likely will not be covered by future state appropriations.

“When you have a federal government that's racking up more than a trillion-dollar increase in the national debt every year, and 40 percent of the money that they're spending is borrowed money, we know that that is not sustainable,” he said. “... We're going to have to find ways to deliver these services in a better and more efficient manner.”

Roederer said Iowa Workforce Development services would be the first affected, followed by education and health and human services.

“Any reductions are going to be significant,” he warned.

The initial impact already is being felt at the job services agency, where Iowa officials recently closed 36 workforce offices and budget negotiators are squabbling over funding to maintain 16 regional unemployment offices and at least three satellite facilities.

Workforce Development officials last week considered a pilot project to end in-person claim assistance at a Des Moines office. The move could have been expanded statewide as a way to save a significant share of the projected $5 million loss in federal money that state officials expect will occur next fiscal year. Branstad said he scrapped that experiment because he believes there needs to “be a human element” in those offices.

At the same time, he noted that Iowans seeking to re-enter or move up in the workforce will need higher skills that include being able to work with technology - such as the computers at workforce development kiosks around the state.