Millions for mental health care at risk if surplus isn’t spent

HIAWATHA — County supervisors on the board that governs regional mental health and disability services advocated Thursday for spending down much of its nearly $9.2 million surplus before the end of the budget year next month by boosting support for initiatives within its nine-county area to avoid the state withholding future funds.

As the end of fiscal 2023 looms on June 30, the East Central Mental Health Region governing board directed regional staff to draft a plan for how to spend part of the surplus — at least about $4.2 million that goes beyond the state-mandated fund balance — to better pay mental health care providers, who are seeing high levels of demand for underfunded services.

The Iowa Department of Health and Human Services allocates state property tax dollars to regions, but if regions carry too much of a surplus the agency withholds further dollars. That essentially means providers within the region lose out on funding that would otherwise go toward enhancing services and addressing unmet local needs.

State lawmakers require the regions to hold fund balances of 20 percent, but that will drop to 5 percent next fiscal year.

Regional Chief Executive Officer Mae Hingtgen asked the board for direction at the board’s meeting Thursday at the Kirkwood Regional Center on how to spend the fund balance, or whether to let it remain as is. The region covers services in nine counties: Benton, Bremer, Buchanan, Delaware, Dubuque, Iowa, Johnson, Jones and Linn.

“These dollars are appropriated for the taxpayers of the region to have spent on people in the region who have these needs,” said Johnson County Supervisor Rod Sullivan, who represents the county on the board. “I hear from people certainly in my own county there’s plenty of unmet need, so I think we should do what we can to get the money out the door.”

Dubuque County Supervisor Ann McDonough said it made her heart ache that the board had so much available to spend when there are millions of dollars needed on the ground that could be spent in partnership with providers.

In recent months, supervisors pressed for more funding for the Linn and Johnson County mental health access centers, anticipating the region would end up holding a multimillion-dollar surplus. The board passed a fiscal 2024 budget in March that allocated $2.9 million to the facilities — up from the initially proposed $2.5 million.

County officials have said regional funding and low Medicaid reimbursement rates don’t cover the cost of services, and for Linn County the resource gap is a barrier to the access center’s expansion to be open around the clock.

It’s these kinds of services — and others such as youth or homeless shelters — that supervisors are looking to better fund with the available surplus.

McDonough said the region is being too conservative in the awards it makes, and there’s not a follow-up process to reconsider increasing allocations. She and Linn County Supervisor Ben Rogers took issue with CEO Hingtgen’s lack of recommendations for spending down the surplus, which McDonough said felt like a scramble to now allocate with only about five weeks to go.

Rogers said this region could decide to be a model and opt to supplement the gap providers face from low Medicaid reimbursement rates.

“We have so much in fund balance that's not being spent down, and now by legislative decree, we have to surrender it,” Rogers said. “And we have surrendered it for last year. Now it's May 25, and we're going to come back at the end of June, asking for proposals (from providers).”

Saddled with a surplus every year that’s in excess of the state-mandated fund balance, the supervisors urged better financial planning to ensure the board isn’t faced with the same issue in future years of having one month to figure out how to spend millions.

“There has to be a solution to this that is sustainable. We cannot run into this brick wall year after year,” McDonough said. “ … We have so much money left at the end of the year when we know our communities, it is dry earth still, that there's not enough services.”

McDonough suggested forming a subcommittee of the board focused on finances.

Deborah Seymour-Guard, finance coordinator for the region, said there are a number of challenges involved with budget estimates. She said sometimes providers aren’t billing for services in a timely fashion, so it’s impossible to accurately track how much is spent. Additionally, regional staff said sometimes services may not come to fruition until a later date than anticipated, throwing off providers’ estimates.

She suggested possibly boosting funding allocated to the Linn and Johnson County mental health access centers, which she estimated could spend down at least $2 million. Access hubs in Dubuque and Benton counties, which are not state-designated facilities and provide a smaller scope of services, could potentially get a boost as well.

Supervisors indicated support for reviewing previous proposals that were not fully funded, particularly increasing allocations to the access centers and hubs.

If the region opted not to further spend down its surplus, McDonough said that would fuel lawmakers’ arguments in the future to reduce the amount of funding for regions — hindering the board’s ability to support ideas such as jail diversion and access centers.

Lobbyist Gary Grant said one of the region’s legislative priorities for the 2023 legislative session — to boost the required fund balance from 5 to 10 percent — didn’t gain traction among lawmakers because some of the 14 regions have too much of a surplus.

“Now, I do think the legislature understands the utility of being 10 percent rather than 5 percent,” Grant said. “However, as long as there are regions out there that way exceed that, I think it’s going to fall on deaf ears.”

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