Bill Description: Senate Bill 1375 appropriates the maintenance budget for Health and Human Services

Rating: -1 

Is the continuation or growth in ongoing spending, if any, inappropriate for the changes in circumstances, scope of the agency, or current economic environment? Conversely, is the continuation or growth in ongoing spending appropriate given any change in circumstances or economic pressures?

This bill would reduce the general funds base by $18,308,300, increase the dedicated base by $745,200, and decrease the federal funds base by $26,370,400 for a total base reduction of $43,933,500. The total budget decreases from a FY26 original appropriation of $6,014,852,600 to a new FY27 maintenance appropriation of $5,728,135,200, a decrease of 90.87 FTP and $286,717,400, or 4.8%. Note that most of the reductions have to do with the end of federal funding for projects as they are completed and do not include enhancements, which distorts the comparison.

The particularly large drop from the FY26 original to FY27 maintenance budget is mostly attributable to the removal of over $145 million in federal and over $50 million in dedicated and general fund one-time appropriations. Note the relatively small total base reduction. 

These agencies implemented a 4% provider rate cut as their contribution to the governor’s holdbacks. However, from FY20 to FY27 this group of agencies has also grown significantly faster than inflation and population growth would prescribe. A maintenance budget must begin with the correct baseline before its growth or reduction can be rationalized as either positive or negative. For this budget, not only is the baseline too high, but it has not participated in reductions to the same degree as other agencies.

Additionally, these reductions are illusory. The Department of Health and Welfare’s Indirect Support Services unit will be receiving over $185 million per year through the federal rural health transformation fund. Due to the fact DHW spending increases are mostly statutorily mandated benefits increases, the term maintenance budget loses significance. Mandatory enhancements, meaning benefit payments, are set to increase by hundreds of millions more in FY27. These enhancements are functionally required, and should be included in the maintenance budget for all intents and purposes.

This budget fails to grapple with the runaway costs of entitlement programs, which have been spared from all reductions outside of the 4% provider rate cut implemented by the department itself. This budget implemented neither the DOGE recommendation (repeal medicaid expansion) nor any of the governor’s suggestions. Given the unsustainability of the programs contained in the department of health and welfare at both state and federal level, this budget does not take seriously the consistent cost overruns that threaten the financial solvency of the entire agency.

(-1)