SF 504 (LSB 2312SV (2) 87)

SENATE FILE 504

BY  COMMITTEE ON WAYS AND MEANS

(SUCCESSOR TO SSB 1187)

A BILL FOR

An Act relating to the funding of mental health and disability services, by modifying the mental health and disability services property tax levy, providing for the transfer of certain county hospital property taxes, providing for the use of certain excess cash flow amounts, and including effective date and applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 222.73, subsection 2, paragraph b, Code 2017, is amended to read as follows:
   b.  The per diem costs billed to each mental health and disability services region shall not exceed the per diem costs billed to the county region in the fiscal year beginning July 1, 1996 2016. However, the per diem costs billed to a county may be adjusted for a fiscal year to reflect increased costs to the extent of the percentage increase in the statewide per capita expenditure target amount, if any per capita growth amount is authorized by the general assembly for that fiscal year in accordance with section 331.424A.
    Sec. 2.  Section 230.20, subsection 2, paragraph b, Code 2017, is amended to read as follows:
   b.  The per diem costs billed to each mental health and disability services region shall not exceed the per diem costs billed to the county region in the fiscal year beginning July 1, 1996 2016. However, the per diem costs billed to a mental health and disability services region may be adjusted annually to reflect increased costs, to the extent of the percentage increase in the statewide per capita expenditure target amount, if any per capita growth amount is authorized by the general assembly for the fiscal year in accordance with section 426B.3.
    Sec. 3.  Section 331.424A, subsection 1, Code 2017, is amended by striking the subsection and inserting in lieu thereof the following:
   1.  For the purposes of part 6 of division III of this chapter, this section, and chapter 426B, unless the context otherwise requires:
   a.  “Annual inflation factor” means the percentage established as follows and used to adjust the regional per capita expenditure target amount for each region:
   (1)  For the fiscal year beginning July 1, 2018, one hundred one percent.
   (2)  For the fiscal year beginning July 1, 2019, one hundred one percent.
   (3)  For the fiscal year beginning July 1, 2020, one hundred two percent. 
   (4)  For the fiscal year beginning July 1, 2021, one hundred two percent.
   (5)  For the fiscal year beginning July 1, 2022, and each succeeding fiscal year, one hundred percent.
   b.  “Base expenditure amount” is an amount determined for each county that is the lesser of the following amounts:
   (1)  The county’s base year expenditures for mental health and disabilities services, as defined in section 331.424A, subsection 1, paragraph “a”, Code 2017.
   (2)  The product of the statewide per capita expenditure target amount multiplied by the county’s population for the fiscal year beginning July 1, 2017.
   c.  “Cash flow reduction amount” means the amount calculated under subsection 4 and used to reduce a county budgeted amount under subsection 9.
   d.  “County budgeted amount” means the amount calculated under subsection 9 and certified for levy under subsection 6.
   e.  “County services fund” means a county mental health and disabilities services fund created pursuant to this section. 
   f.  “Population” means the population shown by the latest preceding certified federal census or the latest applicable population estimate issued by the federal government, whichever is most recent and available as of July 1 of the fiscal year preceding the fiscal year to which the funding calculations apply.
   g.  “Region” means a mental health and disability services region formed in accordance with section 331.389.
   h.  “Regional per capita expenditure target amount” means the amount determined in subsection 8 for each region.
   i.  “Statewide per capita expenditure target amount” means forty-seven dollars and twenty-eight cents.
    Sec. 4.  Section 331.424A, subsection 4, Code 2017, is amended by striking the subsection and inserting in lieu thereof the following:
   4.  a.  An amount shall be reserved in the county services fund to address cash flow obligations in the next fiscal year, subject to the limitations of this subsection. The cash flow amount for a county’s services fund shall be specified in the regional governance agreement entered into by the county under section 331.392. Amounts transferred from a county hospital fund to the county services fund pursuant to section 347.7, subsection 1, paragraph “c”, shall not be considered part of the cash flow amount reserved under this subsection.
   b.  For each fiscal year beginning on or after July 1, 2017, of a county’s cash flow amount maintained in the county services fund, an amount equal to the county’s cash flow reduction amount shall be used for the payment of services provided under the regional service system management plan under section 331.393.
   c.  For each fiscal year beginning on or after July 1, 2017, each county’s cash flow reduction amount equals the county’s cash flow amount minus twenty-five percent of the gross expenditures budgeted from the county services fund for the fiscal year in progress. However, the cash flow reduction amount shall not be less than zero and shall not exceed one-third of the county budgeted amount determined under subsection 9 prior to any reduction resulting from the cash flow reduction amount.
    Sec. 5.  Section 331.424A, subsections 6 and 7, Code 2017, are amended to read as follows:
   6.  For each fiscal year, the county shall certify a levy for payment of services. For each fiscal year, county revenues from taxes imposed by the county credited to the county services fund shall not exceed an amount equal to the county budgeted amount of base year expenditures for mental health and disability services for the fiscal year. A levy certified under this section is not subject to the appeal provisions of section 331.426 or to any other provision in law authorizing a county to exceed, increase, or appeal a property tax levy limit.
   7.  Appropriations specifically authorized to be made from the mental health and disabilities county services fund shall not be made from any other fund of the county.
    Sec. 6.  Section 331.424A, subsection 8, Code 2017, is amended by striking the subsection and inserting in lieu thereof the following:
   8.  a.  For the fiscal year beginning July 1, 2017, the regional per capita expenditure target amount is the sum of the base expenditure amount for all counties in the region divided by the population of the region.
   b.  For the fiscal year beginning July 1, 2018, and each subsequent fiscal year, the regional per capita expenditure target amount shall be an amount equal to the regional per capita expenditure target amount for the immediately preceding fiscal year multiplied by the annual inflation factor established in subsection 1 for the fiscal year. However, application of the annual inflation factor in any fiscal year shall not result in a regional per capita expenditure target amount that exceeds the statewide per capita expenditure target amount.
    Sec. 7.  Section 331.424A, Code 2017, is amended by adding the following new subsection:
   NEW SUBSECTION.  9.  For the fiscal year beginning July 1, 2017, and each subsequent fiscal year, the county budgeted amount determined for each county shall be the amount necessary to meet the county’s financial obligations for the payment of services provided under the regional service system management plan approved pursuant to section 331.393, not to exceed an amount equal to the product of the regional per capita expenditure target amount multiplied by the county’s population, and reduced by the amount of the county’s cash flow reduction amount for the fiscal year calculated under subsection 4, if applicable.
    Sec. 8.  Section 331.432, subsection 3, Code 2017, is amended to read as follows:
   3.  Except as authorized in section 331.477, transfers of moneys between the county mental health and disabilities services fund created pursuant to section 331.424A and any other fund are prohibited.  This subsection does not apply to transfers made pursuant to section 347.7, subsection 1, paragraph “c”.
    Sec. 9.  Section 347.7, subsection 1, Code 2017, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  c.  For the fiscal year beginning July 1, 2017, and subsequent fiscal years, if a county having a population of two hundred twenty-five thousand or over has a county budgeted amount under section 331.424A, subsection 9, that is equal to the product of the regional per capita expenditure target amount multiplied by the county’s population, as those terms are defined in section 331.424A, the board of supervisors may transfer from a county public hospital fund to the county services fund created pursuant to section 331.424A, an amount not to exceed the product of the county’s population multiplied by the remainder of the statewide per capita expenditure target amount minus the regional per capita expenditure target amount for the county, as those terms are defined in section 331.424A.
    Sec. 10.  Section 426B.1, subsection 2, Code 2017, is amended to read as follows:
   2.  Moneys shall be distributed from the property tax relief fund to counties for the mental health and disability regional service system for providing county base property tax equivalent equalization payments and the per capita growth amount established pursuant to section 426B.3 mental health and disabilities services, in accordance with the appropriations made to the fund and other statutory requirements.
    Sec. 11.  Section 426B.2, Code 2017, is amended to read as follows:
   426B.2  Property tax relief fund payments.
   1.  The director of human services shall draw warrants on the property tax relief fund, payable to the county treasurer in the amount due to a county in accordance with section 426B.3

statutory requirements, and mail the warrants to the county auditors in July and January of each year.
   2.  As used in this chapter and in section 331.424A, for purposes of population-based funding calculations, “population” means the population shown by the latest preceding certified federal census or the latest applicable population estimate issued by the federal government, whichever is most recent and available as of July 1 of the fiscal year preceding the fiscal year to which the funding calculations apply.
    Sec. 12.  REPEAL.  Section 426B.3, Code 2017, is repealed.
    Sec. 13.  COUNTY BUDGET RECERTIFICATION.  If this Act takes effect on or after March 15, 2017, notwithstanding section 24.17, for the fiscal year beginning July 1, 2017, a county may recertify the county’s budget as necessary to implement the provisions of this Act. A budget recertified pursuant to this section must be recertified in duplicate to the county auditor not later than thirty days after the effective date of this Act, and protests to the budget shall be filed not later than ten days after the county’s budget is recertified.
    Sec. 14.  MENTAL HEALTH AND DISABILITY SERVICES FUNDING —— FISCAL VIABILITY REVIEW DURING 2020 LEGISLATIVE INTERIM.  The legislative council is requested to authorize a study committee to analyze the viability of the mental health and disability services funding provisions in this Act, including the methodology used to calculate and determine the base expenditure amount, the county budgeted amount, the regional per capita expenditure target amount, the statewide per capita expenditure target amount, the cash flow reduction amount, and the annual inflation factor. The study committee shall consist of five members of the senate, three of whom shall be appointed by the majority leader of the senate and two of whom shall be appointed by the minority leader of the senate, and five members of the house of representatives, three of whom shall be appointed by the speaker of the house of representatives and two of whom shall be appointed by the minority leader of the house of representatives. The study committee shall meet during the 2020 legislative interim to make appropriate recommendations for consideration during the 2021 legislative session in a report submitted to the general assembly by January 15, 2021.
    Sec. 15.  SAVINGS PROVISION.  This Act, pursuant to section 4.13, does not affect the operation of, or prohibit the application of, prior provisions of law amended or repealed by this Act, or rules adopted under chapter 17A to administer prior provisions of law amended or repealed by this Act, for fiscal years beginning before July 1, 2017.
    Sec. 16.  EFFECTIVE UPON ENACTMENT.  This Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 17.  APPLICABILITY.  This Act applies to fiscal years beginning on or after July 1, 2017.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to the funding of mental health and disability services, by modifying the mental health and disability services property tax levy, providing for the transfer of certain county hospital property taxes, and providing for the use of certain excess cash flow amounts.
   Under current law, for the fiscal period beginning July 1, 2013, and ending June 30, 2018, county revenues from property taxes levied by the county and credited to a county mental health and disabilities services fund created pursuant to Code section 331.424A (county services fund) shall not exceed the lower of the amount of the county’s base year expenditures for mental health and disability services or the amount equal to the product of the statewide per capita expenditure target for the fiscal year beginning July 1, 2013, multiplied by the county’s general population for the applicable fiscal year. After June 30, 2017, current law provides that county revenues from property taxes levied and credited to the county services fund shall not exceed an amount equal to the county’s base year expenditures for these services. 
   The bill amends Code section 331.424A relating to the amount of county funding for mental health and disability services and the amount of property taxes levied for payment of such services. 
   The bill establishes a methodology for establishing a regional per capita expenditure target amount. For the fiscal year beginning July 1, 2017, the regional per capita expenditure target amount is the sum of the base expenditure amount for all counties in the region, divided by the population of the region. The bill defines “base expenditure amount” as the lesser of either the county’s base year expenditures for mental health and disabilities services, as defined in section 331.424A, Code 2017, or the product of $47.28 multiplied by the county’s population for the fiscal year beginning July 1, 2017. For the fiscal year beginning July 1, 2018, and each subsequent fiscal year, the regional per capita expenditure target amount is an amount equal to the regional per capita expenditure target amount for the immediately preceding fiscal year multiplied by the annual inflation factor for the fiscal year, as specified in the bill. However, the bill prohibits the application of the annual inflation factor from resulting in a regional per capita expenditure target amount that exceeds the statewide per capita expenditure target amount.
   Under the bill, a county is required to certify a property tax levy for payment of services in an amount not to exceed the county budgeted amount for the fiscal year. For the fiscal year beginning July 1, 2017, and subsequent fiscal years, each county’s budgeted amount shall be the amount necessary to meet the county’s financial obligations for the payment of services under the regional service system management plan, not to exceed an amount equal to the product of the regional per capita expenditure target amount multiplied by the county’s population, and reduced by the county’s cash flow reduction amount, if applicable.
   Under current law, counties are required to reserve an amount to address cash flow obligations in the next fiscal year that does not exceed 25 percent of the gross expenditures budgeted from the county services fund for the fiscal year in progress. The bill requires an amount to be reserved in the county services fund to address cash flow obligations in the next fiscal year as specified in the regional governance agreement. For each fiscal year beginning on or after July 1, 2017, of a county’s cash flow amount maintained in the county services fund, an amount equal to the county’s cash flow reduction amount is required to be used for the payment of services provided under the regional service system management plan. Each county’s cash flow reduction amount equals the county’s cash flow amount minus 25 percent of the gross expenditures budgeted from the county services fund for the fiscal year in progress. However, the bill prohibits the cash flow reduction amount from being less than zero or more than one-third of the county budgeted amount determined under the bill prior to any reduction resulting from the cash flow reduction amount. Amounts transferred from a county hospital fund to the county services fund, as authorized in the bill, shall not be considered part of the reserved cash flow amount.
   The bill amends Code section 347.7, relating to county hospital tax levies. The bill provides that for the fiscal year beginning July 1, 2017, and subsequent fiscal years, if a county with a population of 225,000 or more that has a county budgeted amount equal to the product of the county’s population multiplied by the regional per capita expenditure target amount, the board of supervisors may transfer from the county hospital fund to the county services fund an amount not to exceed the product of the county’s population for the applicable fiscal year multiplied by the remainder of the statewide per capita expenditure target amount minus the regional per capita expenditure target amount for the county. Amounts transferred by a county under this provision are available to the county for the payment of mental health and disability services. 
   The bill repeals Code section 426B.3 relating to per capita funding and repayments of Medicaid offset amounts and makes conforming Code changes to other provisions of law. 
   The bill provides that, notwithstanding the deadline for certifying a county budget, for the fiscal year beginning July 1, 2017, a county may recertify the county’s budget as necessary to implement the bill if the bill takes effect after the budget certification deadline. A budget recertified pursuant to the bill must be recertified to the county auditor no later than 30 days after the effective date of the bill, and protests to the budget must be filed no later than 10 days after the county’s budget is recertified.
   The bill requests the legislative council to authorize a study committee to analyze the viability of the mental health and disability services funding provisions in the bill, including the methodology used to calculate and determine the base expenditure amount, the county budgeted amount, the regional per capita expenditure target amount, the statewide per capita expenditure target amount, and the annual inflation factor. The study committee shall consist of 10 legislative members appointed as specified in the bill. The study committee shall meet during the 2020 legislative interim to make appropriate recommendations for consideration during the 2021 legislative session in a report submitted to the general assembly by January 15, 2021.
   The bill takes effect upon enactment and applies to fiscal years beginning on or after July 1, 2017.
   The bill does not affect the operation of, or prohibit the application of, prior provisions of law amended or repealed by the bill, or rules adopted to administer prior provisions of law amended or repealed by the bill, for fiscal years beginning before July 1, 2017.