House Study Bill 194 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON VANDER LINDEN) A BILL FOR An Act relating to county funding of mental health and 1 disability services by modifying the mental health and 2 disability services property tax levy and certain county 3 hospital property tax levies, requiring the use of 4 specified reserve funds, and including effective date and 5 applicability provisions. 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 7 TLSB 2688YC (2) 87 md/hb/rh/rj

H.F. _____ Section 1. Section 222.73, subsection 2, paragraph b, Code 1 2017, is amended to read as follows: 2 b. The per diem costs billed to each mental health and 3 disability services region shall not exceed the per diem costs 4 billed to the county region in the fiscal year beginning July 5 1, 1996 2016 . However, the per diem costs billed to a county 6 may be adjusted for a fiscal year to reflect increased costs 7 to the extent of the percentage increase in the statewide per 8 capita expenditure target amount, if any per capita growth 9 amount is authorized by the general assembly for that fiscal 10 year in accordance with section 331.424A . 11 Sec. 2. Section 230.20, subsection 2, paragraph b, Code 12 2017, is amended to read as follows: 13 b. The per diem costs billed to each mental health and 14 disability services region shall not exceed the per diem costs 15 billed to the county region in the fiscal year beginning July 16 1, 1996 2016 . However, the per diem costs billed to a mental 17 health and disability services region may be adjusted annually 18 to reflect increased costs, to the extent of the percentage 19 increase in the statewide per capita expenditure target amount, 20 if any per capita growth amount is authorized by the general 21 assembly for the fiscal year in accordance with section 426B.3 . 22 Sec. 3. Section 331.424A, subsection 1, Code 2017, is 23 amended by striking the subsection and inserting in lieu 24 thereof the following: 25 1. For the purposes of part 6 of division III of this 26 chapter, this section, and chapter 426B, unless the context 27 otherwise requires: 28 a. “Annual inflation factor” means the percentage 29 established as follows and used to adjust the regional per 30 capita expenditure target amount for each region: 31 (1) For the fiscal year beginning July 1, 2018, one hundred 32 one percent. 33 (2) For the fiscal year beginning July 1, 2019, one hundred 34 one percent. 35 -1- LSB 2688YC (2) 87 md/hb/rh/rj 1/ 12

H.F. _____ (3) For the fiscal year beginning July 1, 2020, one hundred 1 two percent. 2 (4) For the fiscal year beginning July 1, 2021, one hundred 3 two percent. 4 (5) For the fiscal year beginning July 1, 2022, and each 5 succeeding fiscal year, one hundred percent. 6 b. “Base expenditure amount” is an amount determined for 7 each county that is the lesser of the following amounts: 8 (1) The county’s base year expenditures for mental health 9 and disabilities services, as defined in section 331.424A, 10 subsection 1, paragraph “a” , Code 2017. 11 (2) The product of the statewide per capita expenditure 12 target amount multiplied by the county’s population for the 13 fiscal year beginning July 1, 2017. 14 c. “Cash flow reduction amount” means the amount calculated 15 under subsection 4 and used to reduce a county budgeted amount 16 under subsection 9. 17 d. “County budgeted amount” means the amount calculated 18 under subsection 9 and certified for levy under subsection 6. 19 e. “County services fund” means a county mental health and 20 disabilities services fund created pursuant to this section. 21 f. “Population” means the population shown by the latest 22 preceding certified federal census or the latest applicable 23 population estimate issued by the federal government, whichever 24 is most recent and available as of July 1 of the fiscal year 25 preceding the fiscal year to which the funding calculations 26 apply. 27 g. “Region” means a mental health and disability services 28 region formed in accordance with section 331.389. 29 h. “Regional per capita expenditure target amount” means the 30 amount determined in subsection 8 for each region. 31 i. “Statewide per capita expenditure target amount” means 32 forty-seven dollars and twenty-eight cents. 33 Sec. 4. Section 331.424A, subsection 4, Code 2017, is 34 amended by striking the subsection and inserting in lieu 35 -2- LSB 2688YC (2) 87 md/hb/rh/rj 2/ 12

H.F. _____ thereof the following: 1 4. a. An amount shall be reserved in the county services 2 fund to address cash flow obligations in the next fiscal year, 3 subject to the limitations of this subsection. The cash flow 4 amount for a county’s services fund shall be specified in the 5 regional governance agreement entered into by the county under 6 section 331.392. 7 b. For each fiscal year beginning on or after July 1, 8 2017, of a county’s cash flow amount maintained in the county 9 services fund, an amount equal to the county’s cash flow 10 reduction amount shall be used for the payment of services 11 provided under the regional service system management plan 12 under section 331.393. 13 c. For each fiscal year beginning on or after July 1, 2017, 14 each county’s cash flow reduction amount shall be determined as 15 follows and shall result in a reduction of the county budgeted 16 amount determined pursuant to subsection 9: 17 (1) For each county located in a region having a population 18 of one hundred thousand or over, the county’s cash flow 19 reduction amount equals the county’s cash flow amount minus 20 twenty percent of the gross expenditures budgeted from the 21 county services fund for the fiscal year in progress. However, 22 the cash flow reduction amount shall not be less than zero and 23 shall not exceed fifty percent of the county budgeted amount 24 determined under subsection 9 prior to any reduction resulting 25 from the cash flow reduction amount. 26 (2) For each county located in a region having a population 27 of one hundred thousand or less, the county’s cash flow 28 reduction amount equals the county’s cash flow amount minus 29 twenty-five percent of the gross expenditures budgeted from the 30 county services fund for the fiscal year in progress. However, 31 the cash flow reduction amount shall not be less than zero and 32 shall not exceed fifty percent of the county budgeted amount 33 determined under subsection 9 prior to any reduction resulting 34 from the cash flow reduction amount. 35 -3- LSB 2688YC (2) 87 md/hb/rh/rj 3/ 12

H.F. _____ Sec. 5. Section 331.424A, subsections 6 and 7, Code 2017, 1 are amended to read as follows: 2 6. For each fiscal year, the county shall certify a levy 3 for payment of services. For each fiscal year, county revenues 4 from taxes imposed by the county credited to the county 5 services fund shall not exceed an amount equal to the county 6 budgeted amount of base year expenditures for mental health 7 and disability services for the fiscal year . A levy certified 8 under this section is not subject to the appeal provisions of 9 section 331.426 or to any other provision in law authorizing 10 a county to exceed, increase, or appeal a property tax levy 11 limit. 12 7. Appropriations specifically authorized to be made from 13 the mental health and disabilities county services fund shall 14 not be made from any other fund of the county. 15 Sec. 6. Section 331.424A, subsection 8, Code 2017, is 16 amended by striking the subsection and inserting in lieu 17 thereof the following: 18 8. a. (1) Except as provided in subparagraph (2), for the 19 fiscal year beginning July 1, 2017, the regional per capita 20 expenditure target amount is the sum of the base expenditure 21 amount for all counties in the region divided by the population 22 of the region. 23 (2) For a region comprised of one county having a population 24 of four hundred thousand or over, for the fiscal year beginning 25 July 1, 2017, the regional per capita expenditure target amount 26 means forty-five dollars. 27 b. For the fiscal year beginning July 1, 2018, and each 28 subsequent fiscal year, the regional per capita expenditure 29 target amount shall be an amount equal to the regional 30 per capita expenditure target amount for the immediately 31 preceding fiscal year multiplied by the annual inflation factor 32 established in subsection 1 for the fiscal year. However, 33 application of the annual inflation factor in any fiscal year 34 shall not result in a regional per capita expenditure target 35 -4- LSB 2688YC (2) 87 md/hb/rh/rj 4/ 12

H.F. _____ amount that exceeds the statewide per capita expenditure target 1 amount. 2 Sec. 7. Section 331.424A, Code 2017, is amended by adding 3 the following new subsection: 4 NEW SUBSECTION . 9. For the fiscal year beginning July 1, 5 2017, and each subsequent fiscal year, the county budgeted 6 amount determined for each county shall be the amount necessary 7 to meet the county’s financial obligations for the payment 8 of services provided under the regional service system 9 management plan approved pursuant to section 331.393, not to 10 exceed an amount equal to the product of the regional per 11 capita expenditure target amount multiplied by the county’s 12 population, and reduced by the amount of the county’s cash flow 13 reduction amount for the fiscal year, if applicable. 14 Sec. 8. Section 331.432, subsection 3, Code 2017, is amended 15 to read as follows: 16 3. Except as authorized in section 331.477 , transfers 17 of moneys between the county mental health and disabilities 18 services fund created pursuant to section 331.424A and any 19 other fund are prohibited. 20 Sec. 9. Section 347.7, subsection 1, paragraph a, Code 2017, 21 is amended to read as follows: 22 a. (1) If a county hospital is established, the board 23 of supervisors, at the time of levying ordinary taxes, shall 24 levy a tax at the rate voted not to exceed fifty-four cents 25 per thousand dollars of assessed value in any one year for the 26 erection and equipment of the hospital, and except as provided 27 in subparagraph (2), also a tax not to exceed twenty-seven 28 cents per thousand dollars of value for the improvement, 29 maintenance, and replacements of the hospital, as certified by 30 the board of hospital trustees. 31 (2) (a) However, in In counties having a population of 32 two hundred twenty-five thousand or over, the levy for taxes 33 payable in the fiscal year beginning July 1, 2001, and for 34 subsequent fiscal years beginning before July 1, 2017 , for 35 -5- LSB 2688YC (2) 87 md/hb/rh/rj 5/ 12

H.F. _____ improvements and maintenance of the hospital shall not exceed 1 two dollars and five cents per thousand dollars of assessed 2 value in any one year. 3 (b) In counties having a population of two hundred 4 twenty-five thousand or over, the levy for taxes payable in 5 the fiscal year beginning July 1, 2017, and for subsequent 6 fiscal years beginning before July 1, 2022, for improvements 7 and maintenance of the hospital shall not exceed one dollar and 8 seventy-three cents per thousand dollars of assessed value in 9 any one year. 10 (c) In counties having a population of two hundred 11 twenty-five thousand or over, the levy for taxes payable in the 12 fiscal year beginning July 1, 2022, and for subsequent fiscal 13 years, for improvements and maintenance of the hospital shall 14 not exceed two dollars and five cents per thousand dollars of 15 assessed value in any one year. 16 Sec. 10. Section 426B.1, subsection 2, Code 2017, is amended 17 to read as follows: 18 2. Moneys shall be distributed from the property tax 19 relief fund to counties for the mental health and disability 20 regional service system for providing county base property tax 21 equivalent equalization payments and the per capita growth 22 amount established pursuant to section 426B.3 mental health and 23 disabilities services , in accordance with the appropriations 24 made to the fund and other statutory requirements. 25 Sec. 11. Section 426B.2, Code 2017, is amended to read as 26 follows: 27 426B.2 Property tax relief fund payments. 28 1. The director of human services shall draw warrants on the 29 property tax relief fund, payable to the county treasurer in 30 the amount due to a county in accordance with section 426B.3 31 statutory requirements , and mail the warrants to the county 32 auditors in July and January of each year. 33 2. As used in this chapter and in section 331.424A , for 34 purposes of population-based funding calculations, “population” 35 -6- LSB 2688YC (2) 87 md/hb/rh/rj 6/ 12

H.F. _____ means the population shown by the latest preceding certified 1 federal census or the latest applicable population estimate 2 issued by the federal government, whichever is most recent and 3 available as of July 1 of the fiscal year preceding the fiscal 4 year to which the funding calculations apply. 5 Sec. 12. REPEAL. Section 426B.3, Code 2017, is repealed. 6 Sec. 13. COUNTY BUDGET RECERTIFICATION. If this Act takes 7 effect on or after March 15, 2017, notwithstanding section 8 24.17, for the fiscal year beginning July 1, 2017, a county may 9 recertify the county’s budget as necessary to implement the 10 provisions of this Act. A budget recertified pursuant to this 11 section must be recertified in duplicate to the county auditor 12 not later than thirty days after the effective date of this 13 Act, and protests to the budget shall be filed not later than 14 ten days after the county’s budget is recertified. 15 Sec. 14. MENTAL HEALTH AND DISABILITY SERVICES FUNDING —— 16 FISCAL VIABILITY REVIEW DURING 2020 LEGISLATIVE INTERIM. The 17 legislative council is requested to authorize a study 18 committee to analyze the viability of the mental health and 19 disability services funding provisions in this Act, including 20 the methodology used to calculate and determine the base 21 expenditure amount, the county budgeted amount, the regional 22 per capita expenditure target amount, the statewide per capita 23 expenditure target amount, the cash flow reduction amount, and 24 the annual inflation factor. The study committee shall consist 25 of five members of the senate, three of whom shall be appointed 26 by the majority leader of the senate and two of whom shall 27 be appointed by the minority leader of the senate, and five 28 members of the house of representatives, three of whom shall 29 be appointed by the speaker of the house of representatives 30 and two of whom shall be appointed by the minority leader 31 of the house of representatives. The study committee shall 32 meet during the 2020 legislative interim to make appropriate 33 recommendations for consideration during the 2021 legislative 34 session in a report submitted to the general assembly by 35 -7- LSB 2688YC (2) 87 md/hb/rh/rj 7/ 12

H.F. _____ January 15, 2021. 1 Sec. 15. SAVINGS PROVISION. This Act, pursuant to section 2 4.13, does not affect the operation of, or prohibit the 3 application of, prior provisions of law amended or repealed 4 by this Act, or rules adopted under chapter 17A to administer 5 prior provisions of law amended or repealed by this Act, for 6 fiscal years beginning before July 1, 2017. 7 Sec. 16. EFFECTIVE UPON ENACTMENT. This Act, being deemed 8 of immediate importance, takes effect upon enactment. 9 Sec. 17. APPLICABILITY. This Act applies to fiscal years 10 beginning on or after July 1, 2017. 11 EXPLANATION 12 The inclusion of this explanation does not constitute agreement with 13 the explanation’s substance by the members of the general assembly. 14 This bill relates to county funding of mental health 15 and disability services by modifying the mental health and 16 disability services property tax levy and certain county 17 hospital property tax levies, requiring the use of specified 18 reserve funds, and includes effective date and applicability 19 provisions. 20 Under current law, for the fiscal period beginning July 1, 21 2013, and ending June 30, 2018, county revenues from property 22 taxes levied by the county and credited to a county mental 23 health and disabilities services fund created pursuant to Code 24 section 331.424A (county services fund) shall not exceed the 25 lower of the amount of the county’s base year expenditures for 26 mental health and disability services or the amount equal to 27 the product of the statewide per capita expenditure target 28 for the fiscal year beginning July 1, 2013, multiplied by the 29 county’s general population for the applicable fiscal year. 30 After June 30, 2017, current law provides that county revenues 31 from property taxes levied and credited to the county services 32 fund shall not exceed an amount equal to the county’s base year 33 expenditures for these services. 34 The bill amends Code section 331.424A relating to the amount 35 -8- LSB 2688YC (2) 87 md/hb/rh/rj 8/ 12

H.F. _____ of county funding for mental health and disability services 1 and the amount of property taxes levied for payment of such 2 services. 3 The bill establishes a methodology for establishing a 4 regional per capita expenditure target amount. For a region 5 comprised of one county with a population of 400,000 or over, 6 for the fiscal year beginning July 1, 2017, the regional per 7 capita expenditure target amount is $45. For the fiscal year 8 beginning July 1, 2017, for all other regions the regional 9 per capita expenditure target amount is the sum of the base 10 expenditure amount for all counties in the region, divided 11 by the population of the region. The bill defines “base 12 expenditure amount” as the lesser of either the county’s 13 base year expenditures for mental health and disabilities 14 services, as defined in section 331.424A, Code 2017, or the 15 product of $47.28 multiplied by the county’s population for 16 the fiscal year beginning July 1, 2017. For the fiscal year 17 beginning July 1, 2018, and each subsequent fiscal year, the 18 regional per capita expenditure target amount is an amount 19 equal to the regional per capita expenditure target amount 20 for the immediately preceding fiscal year multiplied by the 21 annual inflation factor for the fiscal year, as specified in 22 the bill. However, the bill prohibits the application of the 23 annual inflation factor from resulting in a regional per capita 24 expenditure target amount that exceeds the statewide per capita 25 expenditure target amount. 26 Under the bill, a county is required to certify a property 27 tax levy for payment of services in an amount not to exceed the 28 county budgeted amount for the fiscal year. For the fiscal 29 year beginning July 1, 2017, and subsequent fiscal years, 30 each county’s budgeted amount shall be the amount necessary 31 to meet the county’s financial obligations for the payment of 32 services under the regional service system management plan, not 33 to exceed an amount equal to the product of the regional per 34 capita expenditure target amount multiplied by the county’s 35 -9- LSB 2688YC (2) 87 md/hb/rh/rj 9/ 12

H.F. _____ population, and reduced by the county’s cash flow reduction 1 amount funds, if applicable. 2 Under current law, counties are required to reserve an 3 amount to address cash flow obligations in the next fiscal 4 year that does not exceed 25 percent of the gross expenditures 5 budgeted from the county services fund for the fiscal year in 6 progress. Under the bill, for each fiscal year beginning on or 7 after July 1, 2017, of the county’s cash flow amount maintained 8 in the county services fund, an amount equal to the county’s 9 cash flow reduction amount shall be used for the payment of 10 services provided under the regional service system management 11 plan. Each county’s cash flow reduction amount is also used to 12 reduce the amount of the county budgeted amount for the fiscal 13 year. For each county located in a region with a population 14 of 100,000 or over, the county’s cash flow reduction amount 15 equals the county’s cash flow amount minus 20 percent of the 16 gross expenditures budgeted from the county services fund for 17 the fiscal year in progress. For each county located in a 18 region with a population of 100,000 or less, the county’s cash 19 flow reduction amount equals the county’s cash flow amount 20 minus 25 percent of the gross expenditures budgeted from the 21 county services fund for the fiscal year in progress. However, 22 the cash flow reduction amount for any county may not be less 23 than zero and may not exceed 50 percent of the county budgeted 24 amount prior to any reduction resulting from the cash flow 25 reduction amount. 26 The bill amends Code section 347.7, relating to county 27 hospital tax levies. Under current law, in counties with a 28 population of 225,000 or more, the county hospital levy for 29 improvements and maintenance of the hospital is capped at $2.05 30 per thousand dollars of assessed value. Under the bill, for 31 fiscal years beginning on or after July 1, 2017, but before 32 July 1, 2022, the levy for improvements and maintenance of the 33 hospital in counties with a population of 225,000 or more is 34 capped at $1.73 per thousand dollars of assessed value. For 35 -10- LSB 2688YC (2) 87 md/hb/rh/rj 10/ 12

H.F. _____ fiscal years beginning on or after July 1, 2022, the levy for 1 improvements and maintenance of the hospital in counties with 2 a population of 225,000 or more is again capped at $2.05 per 3 thousand dollars of assessed value. 4 The bill repeals Code section 426B.3 relating to per capita 5 funding and repayments of Medicaid offset amounts and makes 6 conforming Code changes to other provisions of law. 7 The bill provides that, notwithstanding the deadline for 8 certifying a county budget, for the fiscal year beginning 9 July 1, 2017, a county may recertify the county’s budget as 10 necessary to implement the bill if the bill takes effect after 11 the budget certification deadline. A budget recertified 12 pursuant to the bill must be recertified to the county auditor 13 no later than 30 days after the effective date of the bill, 14 and protests to the budget must be filed no later than 10 days 15 after the county’s budget is recertified. 16 The bill requests the legislative council to authorize 17 a study committee to analyze the viability of the mental 18 health and disability services funding provisions in the bill, 19 including the methodology used to calculate and determine 20 the base expenditure amount, the county budgeted amount, the 21 regional per capita expenditure target amount, the statewide 22 per capita expenditure target amount, the cash flow reduction 23 amount, and the annual inflation factor. The study committee 24 shall consist of 10 legislative members appointed as specified 25 in the bill. The study committee shall meet during the 2020 26 legislative interim to make appropriate recommendations for 27 consideration during the 2021 legislative session in a report 28 submitted to the general assembly by January 15, 2021. 29 The bill takes effect upon enactment and applies to fiscal 30 years beginning on or after July 1, 2017. 31 The bill does not affect the operation of, or prohibit the 32 application of, prior provisions of law amended or repealed by 33 the bill, or rules adopted to administer prior provisions of 34 law amended or repealed by the bill, for fiscal years beginning 35 -11- LSB 2688YC (2) 87 md/hb/rh/rj 11/ 12