County officials say they need transition money for Iowa mental-health redesign

State budget makers will be facing pressure to spend money early in the 2013 legislative session to cover Medicaid and mental health costs through June 30 even before they tackle expanding needs in the fiscal 2014 state spending plan.

County officials say they need millions of transition dollars in the next six months to make the switch to a regional delivery system for equalized mental-health services or they will be forced to reduce their help for recipients or create waiting lists to receive services.

The split-control Legislature pushed the Medicaid financing issue into the 2013 session when an impasse over public funding of abortion services stalled action on a budget piece that now will require a supplemental appropriation estimated as high as $45 million.

On top of that, counties say the state will have to pick up county costs ranging anywhere from about $1.5 million recommended by the state Department of Human Services to $48 million under a worst-case statewide scenario. A decision will have to come early next year because counties will have to certify their budgets by March and the state has set an April 1 deadline for counties to form regional delivery partnerships.

“This issue has to get resolved and it's got to get resolved now,” said Rep. Dave Heaton, R-Mount Pleasant, a member of a legislative panel studying the fiscal viability of the mental health and disability services redesign. Committee members requested more information regarding transition costs before they meet again on Jan. 11. “We're going to have to find a solution to this so we can get our resources in line to take care of the Medicaid care that we've got out there.”

Bill Peterson, executive director of the Iowa State Association of Counties (ISAC), said his association has contended for the past five years that state funding has left mental health services short by $40 million to $50 million, so “it's not that surprising to us when we looked at the aggregate number.”

DHS analysis of 32 county requests for transition funds found that those counties owed about $22.1 million in undisputed state bills as of Oct. 31. Similarly, about $26 million was owed by the remaining counties, but they did not request state transition funds to balance their ledgers. State officials projected three scenarios for addressing the projected expenses for non-Medicaid mental health services that ranged from $1.5 million to $11.6 million in state help.

“I think we need to make sure that as we transition to this regional service delivery approach we make sure all the counties have the resources they need and they don't throw people out in the street who need mental health services,” said Sen. Joe Bolkcom, D-Iowa City, a committee co-chairman.

Sen. Jack Hatch, D-Des Moines, said the state is going to have to come with “gap” funding to get through the transition of moving from a county-based to a redesigned regional service delivery system that maintains the goal of not ending core services or creating waiting lists.

However, Deb Schildroth of Story County said services are being cut, waiting lists have been started and “more of that will snowball” without adequate state assistance.

Linn County Supervisor Linda Langston, whose county would receive $2.2 million under the DHS' $11.6 million scenario, said hard decisions already are being made as counties approach the midpoint of the fiscal year and pressure will build as they formulate fiscal 2014 spending plans.

“All things flow downhill and counties are at the bottom of that hill,” Langston told committee members Tuesday, “and we are very deeply in the valley right now.”

Gov. Terry Branstad expressed concern Tuesday over rising medical costs putting pressure on state finances budget given that federal Medicaid changes will shift about $57 million to the state in fiscal 2014. “We're looking at $100 million additional cost to Medicaid right off the top” even before state policymakers confront issues pertaining to a proposed federal Medicaid expansion in 2014.