S.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 2312XC (18) 87 md/hb/rh/rj 1/ 10

S.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. “County budgeted amount” means the amount calculated 15 under subsection 9 and certified for levy under subsection 6. 16 d. “County services fund” means a county mental health and 17 disabilities services fund created pursuant to this section. 18 e. “Population” means the population shown by the latest 19 preceding certified federal census or the latest applicable 20 population estimate issued by the federal government, whichever 21 is most recent and available as of July 1 of the fiscal year 22 preceding the fiscal year to which the funding calculations 23 apply. 24 f. “Region” means a mental health and disability services 25 region formed in accordance with section 331.389. 26 g. “Regional per capita expenditure target amount” means the 27 amount determined in subsection 8 for each region. 28 h. “Statewide per capita expenditure target amount” means 29 forty-seven dollars and twenty-eight cents. 30 Sec. 4. Section 331.424A, subsections 4, 6, and 7, Code 31 2017, are amended to read as follows: 32 4. An amount shall be reserved in the county services 33 fund to address cash flow obligations in the next fiscal 34 year. The cash flow amount shall not exceed twenty-five 35 -2- LSB 2312XC (18) 87 md/hb/rh/rj 2/ 10

S.F. _____ percent of the gross expenditures budgeted from the county 1 services fund for the fiscal year in progress. Amounts in 2 excess of the twenty-five percent limitation shall be used 3 for payment of services and shall result in a corresponding 4 reduction of the county budgeted amount under subsection 9. 5 The cash flow amount for a county’s services fund shall be 6 specified in based on the financial provisions of the regional 7 governance agreement entered into by the county under section 8 331.392 . Amounts transferred from a county hospital fund to 9 the county services fund pursuant to section 347.7, subsection 10 1, paragraph “c” , shall not be considered part of the cash flow 11 amount reserved under this subsection. 12 6. For each fiscal year, the county shall certify a levy 13 for payment of services. For each fiscal year, county revenues 14 from taxes imposed by the county credited to the county 15 services fund shall not exceed an amount equal to the county 16 budgeted amount of base year expenditures for mental health 17 and disability services for the fiscal year . A levy certified 18 under this section is not subject to the appeal provisions of 19 section 331.426 or to any other provision in law authorizing 20 a county to exceed, increase, or appeal a property tax levy 21 limit. 22 7. Appropriations specifically authorized to be made from 23 the mental health and disabilities county services fund shall 24 not be made from any other fund of the county. 25 Sec. 5. Section 331.424A, subsection 8, Code 2017, is 26 amended by striking the subsection and inserting in lieu 27 thereof the following: 28 8. a. For the fiscal year beginning July 1, 2017, the 29 regional per capita expenditure target amount is the sum of the 30 base expenditure amount for all counties in the region divided 31 by the population of the region. 32 b. For the fiscal year beginning July 1, 2018, and each 33 subsequent fiscal year, the regional per capita expenditure 34 target amount shall be an amount equal to the regional 35 -3- LSB 2312XC (18) 87 md/hb/rh/rj 3/ 10

S.F. _____ per capita expenditure target amount for the immediately 1 preceding fiscal year multiplied by the annual inflation factor 2 established in subsection 1 for the fiscal year. However, 3 application of the annual inflation factor in any fiscal year 4 shall not result in a regional per capita expenditure target 5 amount that exceeds the statewide per capita expenditure target 6 amount. 7 Sec. 6. Section 331.424A, Code 2017, is amended by adding 8 the following new subsection: 9 NEW SUBSECTION . 9. For the fiscal year beginning July 1, 10 2017, and each subsequent fiscal year, the county budgeted 11 amount determined for each county shall be the amount necessary 12 to meet the county’s financial obligations for the payment 13 of services provided under the regional service system 14 management plan approved pursuant to section 331.393, not to 15 exceed an amount equal to the product of the regional per 16 capita expenditure target amount multiplied by the county’s 17 population, and reduced by the amount of the county’s cash flow 18 amount in the county services fund as provided in subsection 19 4 that exceeds twenty-five percent of the gross expenditures 20 budgeted from the county services fund for the fiscal year in 21 progress, if applicable. 22 Sec. 7. Section 331.432, subsection 3, Code 2017, is amended 23 to read as follows: 24 3. Except as authorized in section 331.477 , transfers 25 of moneys between the county mental health and disabilities 26 services fund created pursuant to section 331.424A and any 27 other fund are prohibited. This subsection does not apply 28 to transfers made pursuant to section 347.7, subsection 1, 29 paragraph “c” . 30 Sec. 8. Section 347.7, subsection 1, Code 2017, is amended 31 by adding the following new paragraph: 32 NEW PARAGRAPH . c. For the fiscal year beginning July 33 1, 2017, and subsequent fiscal years, if a county having a 34 population of two hundred twenty-five thousand or over has 35 -4- LSB 2312XC (18) 87 md/hb/rh/rj 4/ 10

S.F. _____ a county budgeted amount under section 331.424A, subsection 1 9, that is equal to the product of the regional per capita 2 expenditure target amount multiplied by the county’s 3 population, as those terms are defined in section 331.424A, the 4 board of supervisors may transfer from a county public hospital 5 fund to the county services fund created pursuant to section 6 331.424A, an amount not to exceed the product of the county’s 7 population multiplied by the remainder of the statewide per 8 capita expenditure target amount minus the regional per capita 9 expenditure target amount for the county, as those terms are 10 defined in section 331.424A. 11 Sec. 9. Section 426B.1, subsection 2, Code 2017, is amended 12 to read as follows: 13 2. Moneys shall be distributed from the property tax 14 relief fund to counties for the mental health and disability 15 regional service system for providing county base property tax 16 equivalent equalization payments and the per capita growth 17 amount established pursuant to section 426B.3 mental health and 18 disabilities services , in accordance with the appropriations 19 made to the fund and other statutory requirements. 20 Sec. 10. Section 426B.2, Code 2017, is amended to read as 21 follows: 22 426B.2 Property tax relief fund payments. 23 1. The director of human services shall draw warrants on the 24 property tax relief fund, payable to the county treasurer in 25 the amount due to a county in accordance with section 426B.3 26 statutory requirements , and mail the warrants to the county 27 auditors in July and January of each year. 28 2. As used in this chapter and in section 331.424A , for 29 purposes of population-based funding calculations, “population” 30 means the population shown by the latest preceding certified 31 federal census or the latest applicable population estimate 32 issued by the federal government, whichever is most recent and 33 available as of July 1 of the fiscal year preceding the fiscal 34 year to which the funding calculations apply. 35 -5- LSB 2312XC (18) 87 md/hb/rh/rj 5/ 10

S.F. _____ Sec. 11. REPEAL. Section 426B.3, Code 2017, is repealed. 1 Sec. 12. COUNTY BUDGET RECERTIFICATION. If this Act takes 2 effect on or after March 15, 2017, notwithstanding section 3 24.17, for the fiscal year beginning July 1, 2017, a county may 4 recertify the county’s budget as necessary to implement the 5 provisions of this Act. A budget recertified pursuant to this 6 section must be recertified in duplicate to the county auditor 7 not later than thirty days after the effective date of this 8 Act, and protests to the budget shall be filed not later than 9 ten days after the county’s budget is recertified. 10 Sec. 13. MENTAL HEALTH AND DISABILITY SERVICES FUNDING —— 11 FISCAL VIABILITY REVIEW DURING 2020 LEGISLATIVE INTERIM. The 12 legislative council is requested to authorize a study 13 committee to analyze the viability of the mental health and 14 disability services funding provisions in this Act, including 15 the methodology used to calculate and determine the base 16 expenditure amount, the county budgeted amount, the regional 17 per capita expenditure target amount, the statewide per 18 capita expenditure target amount, and the annual inflation 19 factor. The study committee shall consist of five members of 20 the senate, three of whom shall be appointed by the majority 21 leader of the senate and two of whom shall be appointed by 22 the minority leader of the senate, and five members of the 23 house of representatives, three of whom shall be appointed by 24 the speaker of the house of representatives and two of whom 25 shall be appointed by the minority leader of the house of 26 representatives. The study committee shall meet during the 27 2020 legislative interim to make appropriate recommendations 28 for consideration during the 2021 legislative session in a 29 report submitted to the general assembly by January 15, 2021. 30 Sec. 14. SAVINGS PROVISION. This Act, pursuant to section 31 4.13, does not affect the operation of, or prohibit the 32 application of, prior provisions of law amended or repealed 33 by this Act, or rules adopted under chapter 17A to administer 34 prior provisions of law amended or repealed by this Act, for 35 -6- LSB 2312XC (18) 87 md/hb/rh/rj 6/ 10

S.F. _____ fiscal years beginning before July 1, 2017. 1 Sec. 15. EFFECTIVE UPON ENACTMENT. This Act, being deemed 2 of immediate importance, takes effect upon enactment. 3 Sec. 16. APPLICABILITY. This Act applies to fiscal years 4 beginning on or after July 1, 2017. 5 EXPLANATION 6 The inclusion of this explanation does not constitute agreement with 7 the explanation’s substance by the members of the general assembly. 8 This bill concerns county funding of mental health and 9 disability services and the mental health and disability 10 services property tax levy and includes effective date and 11 applicability provisions. 12 Under current law, for the fiscal period beginning July 1, 13 2013, and ending June 30, 2018, county revenues from property 14 taxes levied by the county and credited to a county mental 15 health and disabilities services fund created pursuant to Code 16 section 331.424A (county services fund) shall not exceed the 17 lower of the amount of the county’s base year expenditures for 18 mental health and disability services or the amount equal to 19 the product of the statewide per capita expenditure target 20 for the fiscal year beginning July 1, 2013, multiplied by the 21 county’s general population for the applicable fiscal year. 22 After June 30, 2017, current law provides that county revenues 23 from property taxes levied and credited to the county services 24 fund shall not exceed an amount equal to the county’s base year 25 expenditures for these services. 26 The bill amends Code section 331.424A relating to the amount 27 of county funding for mental health and disability services 28 and the amount of property taxes levied for payment of such 29 services. 30 The bill establishes a methodology for establishing a 31 regional per capita expenditure target amount. For the 32 fiscal year beginning July 1, 2017, the regional per capita 33 expenditure target amount is the sum of the base expenditure 34 amount for all counties in the region, divided by the 35 -7- LSB 2312XC (18) 87 md/hb/rh/rj 7/ 10

S.F. _____ population of the region. The bill defines “base expenditure 1 amount” as the lesser of either the county’s base year 2 expenditures for mental health and disabilities services, as 3 defined in section 331.424A, Code 2017, or the product of 4 $47.28 multiplied by the county’s population for the fiscal 5 year beginning July 1, 2017. For the fiscal year beginning 6 July 1, 2018, and each subsequent fiscal year, the regional 7 per capita expenditure target amount is an amount equal to 8 the regional per capita expenditure target amount for the 9 immediately preceding fiscal year multiplied by the annual 10 inflation factor for the fiscal year, as specified in the 11 bill. However, the bill prohibits the application of the 12 annual inflation factor from resulting in a regional per capita 13 expenditure target amount that exceeds the statewide per capita 14 expenditure target amount. 15 Under the bill, a county is required to certify a property 16 tax levy for payment of services in an amount not to exceed the 17 county budgeted amount for the fiscal year. For the fiscal 18 year beginning July 1, 2017, and subsequent fiscal years, 19 each county’s budgeted amount shall be the amount necessary 20 to meet the county’s financial obligations for the payment of 21 services under the regional service system management plan, not 22 to exceed an amount equal to the product of the regional per 23 capita expenditure target amount multiplied by the county’s 24 population, and reduced by specified excess cash flow reserve 25 funds, if applicable. 26 Under current law, counties are required to reserve an 27 amount to address cash flow obligations in the next fiscal 28 year that does not exceed 25 percent of the gross expenditures 29 budgeted from the county services fund for the fiscal year 30 in progress. Under the bill, a county’s cash flow amount in 31 the county services fund that exceeds 25 percent of the gross 32 expenditures budgeted from the county services fund for the 33 fiscal year in progress must be used for services and reduces 34 the county’s budgeted amount calculated under the bill and 35 -8- LSB 2312XC (18) 87 md/hb/rh/rj 8/ 10

S.F. _____ levied as property taxes. Amounts transferred from a county 1 hospital fund to the county services fund, as authorized in the 2 bill, shall not be considered part of the reserved cash flow 3 amount. 4 The bill amends Code section 347.7, relating to county 5 hospital tax levies. The bill provides that for the fiscal 6 year beginning July 1, 2017, and subsequent fiscal years, 7 if a county with a population of 225,000 or more that has a 8 county budgeted amount equal to the product of the county’s 9 population multiplied by the regional per capita expenditure 10 target amount, the board of supervisors may transfer from the 11 county hospital fund to the county services fund an amount 12 not to exceed the product of the county’s population for the 13 applicable fiscal year multiplied by the remainder of the 14 statewide per capita expenditure target amount minus the 15 regional per capita expenditure target amount for the county. 16 Amounts transferred by a county under this provision are 17 available to the county for the payment of mental health and 18 disability services. 19 The bill repeals Code section 426B.3 relating to per capita 20 funding and repayments of Medicaid offset amounts and makes 21 conforming Code changes to other provisions of law. 22 The bill provides that, notwithstanding the deadline for 23 certifying a county budget, for the fiscal year beginning 24 July 1, 2017, a county may recertify the county’s budget as 25 necessary to implement the bill if the bill takes effect after 26 the budget certification deadline. A budget recertified 27 pursuant to the bill must be recertified to the county auditor 28 no later than 30 days after the effective date of the bill, 29 and protests to the budget must be filed no later than 10 days 30 after the county’s budget is recertified. 31 The bill requests the legislative council to authorize 32 a study committee to analyze the viability of the mental 33 health and disability services funding provisions in the bill, 34 including the methodology used to calculate and determine 35 -9- LSB 2312XC (18) 87 md/hb/rh/rj 9/ 10

S.F. _____ the base expenditure amount, the county budgeted amount, the 1 regional per capita expenditure target amount, the statewide 2 per capita expenditure target amount, and the annual inflation 3 factor. The study committee shall consist of 10 legislative 4 members appointed as specified in the bill. The study 5 committee shall meet during the 2020 legislative interim to 6 make appropriate recommendations for consideration during the 7 2021 legislative session in a report submitted to the general 8 assembly by January 15, 2021. 9 The bill takes effect upon enactment and applies to fiscal 10 years beginning on or after July 1, 2017. 11 The bill does not affect the operation of, or prohibit the 12 application of, prior provisions of law amended or repealed by 13 the bill, or rules adopted to administer prior provisions of 14 law amended or repealed by the bill, for fiscal years beginning 15 before July 1, 2017. 16 -10- LSB 2312XC (18) 87 md/hb/rh/rj 10/ 10