State official: Next year’s human services budget a challenge

DES MOINES – The head of the state's human services agency Monday warned Gov. Terry Branstad and state legislators to expect some 'storm clouds” ahead as budget-makers wrestle with shrinking federal match money and new demands in funding programs that help 973,223 vulnerable Iowans – many who are children or elderly.

'We recognize that this is going to be a year of challenges,” said Charles Palmer, director of the state Department of Human Services, in presenting a request for a 7 percent spending increase beginning next July 1 that would push state general fund spending for DHS programs and services above $1.9 billion.

Social services programs that primarily are health and Medicaid services are among the most-volatile budget areas and represent the second-largest piece of what likely will be a fiscal 2016 state general fund spending plan that tops $7 billion.

The requested $1.9 billion in state general fund spending that will comprise about 30 percent of the agency's overall $6.28 billion budget from all federal, state and other outside sources will include adjustments needed to make up for tens of millions of dollars in declining federal matching money for programs where Iowa's share is cut because the state has recovered from the recession better than other parts of the country.

'We can't handle that,” Branstad said of the initial DHS request for a 7 percent spending increase. 'It's obviously going to have to be pared back. We're going to have to do that in a thoughtful way.”

The five-term GOP governor said the human services budget situation is not as dire as in 2011 when the state had to cover programs that were funded by one-time federal stimulus money, but he expected there would be more focus on containing costs as the state is slated to begin gradually taking on a growing share of Medicare expansion approved as part of the Iowa Health and Wellness program during the 2013 session.

'It's a big problem, especially the whole Medicaid area and the cost increases there, and the fact that we're getting penalized because we're doing better than other states so we're picking up a bigger and bigger share,” Branstad said. 'It's a challenge and it's something we're going to have to manage better.”

Palmer told Branstad there have been cost savings generated by the state's mental health and disability redesign that shifted to a regional service delivery network and reduced costs associated with integrated health homes. He also noted that Iowa hospitals have seen a significant drop in the number of uninsured patients that has reduced charity care costs by more than $32 million during the first six months of 2014.

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