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NEW PLAN FOR MH/DS FUNDING RELEASED

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The state’s 14 mental health and disability services (MH/DS) regions asked legislators to consider their plan to stabilize funding for services by allowing each region to adjust their property taxes to collect up to $47.28 per person.  Sen. David Johnson, an Independent from Northwest Iowa, sponsored a bill to do this (Senate File 365).  Unfortunately, the Iowa Farm Bureau opposed this approach, and has made passage of it unlikely.

A new plan to fund these services surfaced in the Iowa Senate two weeks ago and passed out of Senate Ways & Means Commitee on Thursday, April 6 (SSB 1187).  Last week, the House introduced a similar plan (HSB 194), which has not yet passed out of House Ways & Means Committee.  The House and Senate are actively working with county supervisors, MH/DS regions, advocates for mental health and disabilities services, providers, faith community, and Farm Bureau to come up with a bill that is workable financially and politically.  (Politically because, one way or another, property taxes will increase to pay for these services).

Like all things MH/DS - this is complicated.  Here is a quick review of SSB 1187 and HSB 194:

  • Set a new base "per capita" levy for each region.  Multi-county regions would combine their 1995 revenue caps, then divide by population. That is the new “regional per capita” rate.  The new regional per capita rates could not exceed $47.28 per capita.  Multi-county regions would determine the amount each county would contribute from levies, but the total of those levies couldn’t be more than the new regional per capita rate. 
     
    • This plan supposedly fixes all but one multi-county region (Eastern Iowa Region).  They would be able to generate $9 million in funds from property taxes, but their budgets are currently $12 million.  They are $3 million short, with now way to bridge that gap.  Both House & Senate are trying to find a way to fix this issue.
       
    • Polk County is locked in at the very same $14.4 million cap they have now (which equates to $31.40 per capita). But Polk's budget is $44.47 per capita - so they are $6.3 million short.  The bills take different approaches to fix this problem, both using funding from Broadlawns (county hospital in Polk) to offset some of the costs.  HSB 194 lowers the Broadlawns levy by $6.3 million for five years, and permanently raises Polk County's per capita rate at $45.  The Senate is working on its approach, which will involve a combination of Broadlawns providing some funds for three years, and allowing Polk County's per capita levy rate to increase over that time. 
       
  • Regions with fund balances exceeding 25% (20% in the House) would be required to lower their levies by the amount they are over that allowed reserve  (that is - they have to spend down their excess fund balance before taxing more). SSB 1187 allows reserves in excess of 25% to be spent down over three years; HSB 194 allows counties to pay for up to 50% of their budgets with reserve funds (allowing htem to spend down over time aas well).  This is also an area both chambers are still working on; counties would like more flexibility in this area to spend down reserves that may build up right before launching a new service.
  • Regions/counties would be able to levy the new per capita rate, which adjusts for population each year (so if population grows - levy capacity grows) - it is not a hard dollar cap moving forward, so it is more sustainable than the current system.   
  • Regions/counties would also be able to adjust their per capita rate for inflation each year - 1% for FY19, FY20; 2% for FY21, FY22.  Farm Bureau is actively lobbying to eliminate this allowed growth factor.
  • Another study committee is appointed to evaluate how the funding is working, and determine if this is a sustainable long-term fix.
The plan gets mixed reviews from advocates - the formula creates stability and equalizes taxes within regions, but it starts with $114 million in taxing authority despite region budgets for next year being set at $132 million.  That means the formula is about $18 million short from the beginning- $3 million short for Scott County, and $7 million short for Polk County.  For Polk County, Broadlawns Hospital will help pay for MH/DS services in the Polk County region until the county's levy gets to a sustainable level (currently $45/per capita; eventually $47.28 per capita).  There is no "solution" yet for Scott County (Eastern Iowa Region).  

Stay tuned - this will move quickly once a deal is reached.