State human services spending could top $2 billion in fiscal 2021

A look toward the rotunda from a stairway at the Iowa State Capitol building in Des Moines on Tuesday, Jan. 10, 2017. (The Gazette)
A look toward the rotunda from a stairway at the Iowa State Capitol building in Des Moines on Tuesday, Jan. 10, 2017. (The Gazette)

DES MOINES — State spending to support programs for vulnerable children, disabled and elderly Iowans would top $2 billion for the first time ever in fiscal 2021 if Gov. Kim Reynolds accepts and lawmakers approve funding requests being sought by the state Department of Human Services.

DHS officials Tuesday unveiled a budget package for the fiscal year beginning next July 1. It would provide nearly $7.353 billion in federal and state funding to cover Medicaid, mental health, food assistance, child welfare and support and other services for nearly 1 million Iowans — or 32.5 percent of the state’s population.

“I’m excited about the budget proposal that we’re presenting today. I think it’s on par with what the needs of Iowans have,” said Gerd Clabaugh, interim DHS director. “We believe the budget request for fiscal 2021, as presented, provides the resources needed to deliver services to Iowa’s most needy and vulnerable citizens.”

Overall, DHS officials believe they will receive nearly $5.347 billion in federal funding in fiscal 2021 and the state request for $2.006 billion (or 27.3 percent of overall human services spending) would boost current-year appropriations by $148.2 million, or about 8 percent.

The new request of roughly $124 million more for Medicaid includes $67.8 million to cover this year’s rate increase for the two private managed care organizations, or MCOs, administering the Medicaid program. But state Medicaid director Michael Randol said there was no adjustment yet for potential rate increases that might be negotiated to take effect next July 1 and run through June 30, 2021.

“The state fiscal 2021 funding request now has no funding in there for MCO increases,” Randol said. “At this point, it’s not known what it may or may not be.”

About 88 cents of every dollar spent by the state’s human services agency goes to cover various health programs.


“Health care costs are going up everywhere. Maybe the real issue is what we pay for health care as a nation, rather than this budget,” said council chairman Mark Anderson in assessing the agency’s fiscal 2021 budget request the board will vote on Wednesday and forward to Reynolds by Oct. 1.

The Republican governor will use the recommendations as part of her deliberations in assembling a spending plan for next fiscal year that she will present to lawmakers in January.

“You don’t really understand the depth and breadth of everything DHS does until you sit through the budget meeting,” Anderson said. “It’s very impressive what these folks can do with a relatively small amount of money. I just couldn’t be more impressed.”

Other pieces of the $148 million increase above this fiscal year’s $1.858 billion allotment for DHS programs includes money to cover declining federal contributions in some areas, $17 million each for increased medical assistance needs and lower drug rebates and funds to cover shortfalls related to actual claims and state revenue changes that affected DHS budgets.

About 5 percent of the fiscal 2021 budget request, or $361.7 million, would cover staff salaries and benefits for DHS employees.

Rep. Joel Fry, R-Osceola, co-chairman of the House-Senate health & human services budget subcommittee, said Tuesday represented the “first blush” in the fiscal 2021 budget process. He made no predictions what kind of reception it would get when the GOP-led General Assembly convenes next January.

“We have a Medicaid population that is growing, and it doesn’t surprise me that more money is being discussed around Medicaid,” Fry said. “We’ll certainly do what we can within the constraints of the whole budget when you put it altogether.”

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