Iowa looking at 'fairly significant' funding increases for human services

State human services officials Tuesday proposed a $187 million increase in state funding for programs to aid young, poor, sick, disabled and elderly Iowans in fiscal 2014.

Charles Palmer, director of the state Department of Human Services (DHS), said the 11.7 percent increase is needed to cover a complex mix of funding needs that include rising Medicaid costs, the loss of up to $38 million in federal matching money, and a $52 million shortfall due to legislative underfunding of the current Medicaid program and state costs associated with the shift of mental health services from a county-based network to a regional delivery system.

“This is one of the most difficult budgets that I've been associated with,” Palmer told members of the Iowa Council on Human Services who are slated to make final recommendations Wednesday on requests for the fiscal 2014 and 2015 budget years that will be forwarded to Gov. Terry Branstad for inclusion in the two-year spending plan he will present to lawmakers in January. “It's a large increase and, frankly, an increase that going forward is not sustainable at this level of growth into the future.”

The two-year request included a proposed 7.9 percent increase in fiscal 2015 that would equate to a $141 million increase over the fiscal 2014 proposal, DHS budget officials said.

“On many, many fronts, we stay status quo,” Palmer said.

The fact that the Legislature adjourned last May without fully funding the DHS budget due to an impasse on abortion-related issues meant the department had to build those expected supplemental appropriations into the fiscal 2014 framework – somewhat skewing the true budgeting picture, agency officials said. Also, Iowa's relatively healthy economic situation compared with other parts of the nation contributed to a 2 percent drop under the federal matching funds formula that likely will have to be made up with state dollars.

“As we considered our budget requests for fiscal 2014 and fiscal 2015, we recognized the need to maintain stability in the state's overall budget, considering the slow economic recovery from the recent recession as well as the potential economic impact of the current drought,” Palmer said in his cover letter attached to the inch-thick budget document. “As such, we focused improved results on only those efforts we consider essential.”

Palmer said the budget sought to maintain the current level of DHS field staff that likely will serve an increase number of cases and retained current bed levels at the state institutions under the department's control. At the request of the state Department of Management, DHS officials did not include any new money for salary increases given that state officials will begin collective bargaining contract talks in November with unionized state workers covering the next two fiscal years.

Also, the DHS budget proposal did not include any funding for an expansion of the Medicaid program envisioned under the federal health-care reforms slated to take effect in fiscal 2014 – decisions that Palmer said will be impacted by the outcome of the 2012 election and subsequent decisions made by elected officials.

Overall, the fiscal 2014 department budget totaled nearly $5.192 billion, with about $1.785 billion coming from the state general fund and the other 66 percent from federal and non-general fund sources. The following year's total was $5.348 billion, with nearly $1.926 billion coming from the state general fund and the other 64 percent from other federal and state sources.