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MH/DS REGIONAL FUNDING COMPROMISE APPROVED

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In a normal session (if there is such a thing), funding for regional mental health and disability services (MH/DS) is one of the last issues resolved.  This year, lawmakers worked with stakeholders to get a compromise a full week before session ended, with the final votes coming in before the end-of-session deals started being made.  

Rep. Ken Rizer (R-Linn) and Sen. Randy Feenstra (R-Sioux) worked out a final compromise (SF 504)  that will:

  • Allow regions to begin levying a per capita rate.  To come up with this new rate, the region would take its current dollar cap, and divide it by the total population. While this new rate is still based on 1995 budgets, it will now shift with population.  If a region grows in population, their budgets can grow as well.

  • Set new limits on fund reserves.  Because of the timing of property tax payments, counties need to have enough money in the bank to get through the first three months of their fiscal year (July-September).  That is why they are allowed to keep 25% of their budget in reserve. This bill changes that - smaller regions (less than 100,000 population) can still keep that amount in reserve, but regoins with more population are now limited to 20%.
     
  • Force regions to spend down large reserves.  Some regions were able to build up large fund balances, but most have a plan to spend those down.  In many areas, it takes time to roll out a new service.  Regions compare it to buying a house; you have to save money until you have enough for the downpayment.  The bill gives regions four years to spend down excess reserves (that is - funds over that allowed 25% or 20%).

This plan works works for most regions, and may even work for them permanently.  Two regions are not fixed by this, and needed an extra patch to make it work.  To address this, the bill will:

  • Require Broadlawns to give Polk County $6.3 million each year for three years.  Broadlawns is a taxpayer-supported hospital and has built up a large reserve, but that money will be gone soon with changes happening with nationally with health care reform and locally with the health insurance market. Polk will need a permanent fix after this - they are only allowed to levy $30.87 per capita, but their budget is $44.47 per capita.
     
  • Direct Scott County to work with DHS to come up with a plan, and in the meantime use their fund balance to get through the next two years.  Scott County is currently levying only $19.22, while the rest of their region is levying the max (most at $47.28).  This helps a little by allowing all of the counties in the region to levy $30.78 (including Scott) - but they still come up $3 million short.
     
  • Hold an interim committee during the summer of 2018 to see how things are going, and make recommendations to fix any "outlier" regions.  Legislators are hoping that this fix will take care of most regions, but they know there will be a few regions that need a special fix.  They also acknowledge that these special fixes may be different for each region. They would do that in 2018, and come back into session in 2019 to make any adjustments needed.

While this is more of a patch than a fix, counties and advocates supported the compromise because it gives them more stability than they've had before, and may very well fix things for most of the state.  Only time will tell, but the good news is that we have time to figure it out.