House File 1038 - Introduced HOUSE FILE 1038 BY COMMITTEE ON APPROPRIATIONS (SUCCESSOR TO HSB 331) A BILL FOR An Act relating to the opioid settlement fund, creating an 1 opioid reserve account, requiring a report to the general 2 assembly, and making appropriations. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 2991HV (1) 91 lh/ko

H.F. 1038 Section 1. Section 12.51, Code 2025, is amended to read as 1 follows: 2 12.51 Opioid settlement fund. 3 1. As used in this section unless the context otherwise 4 requires: 5 a. “Administrative services organization” means the same as 6 defined in section 225A.1, as enacted in 2024 Iowa Acts, ch. 7 1161, §1. 8 b. “Behavioral health district” means the same as defined in 9 section 225A.1, as enacted in 2024 Iowa Acts, ch. 1161, §1. 10 c. “Behavioral health provider” means the same as defined in 11 section 225A.1, as enacted in 2024 Iowa Acts, ch. 1161, §1. 12 d. “Department” means the department of health and human 13 services. 14 e. “District behavioral health advisory council” means the 15 same as defined in section 225A.1, as enacted in 2024 Iowa 16 Acts, ch. 1161, §1. 17 f. “Evaluation panel” means a group whose members include 18 all of the following: 19 (1) The attorney general or the attorney general’s 20 designee. 21 (2) The director of the department or the director’s 22 designee. 23 (3) The drug policy director of the office of drug control 24 policy or the director’s designee. 25 1. 2. a. An opioid settlement fund is created in the 26 office of the treasurer of state. The fund shall be separate 27 from the general fund of the state and the balance in the fund 28 shall not be considered part of the balance of the general fund 29 of the state. 30 b. The state portion of any moneys paid to the state as a 31 result of a national settlement of litigation with entities 32 that manufactured, marketed, sold, distributed, dispensed, 33 or promoted opioids, made in connection with claims arising 34 from the manufacturing, marketing, selling, distributing, 35 -1- LSB 2991HV (1) 91 lh/ko 1/ 6

H.F. 1038 dispensing, or promoting of opioids, shall be deposited in the 1 fund. 2 c. This subsection does not apply to such moneys paid to 3 the state that are earmarked for or otherwise required to be 4 transferred or distributed to counties, cities, or other local 5 governmental entities. 6 2. 3. a. Moneys in the fund shall not be transferred, 7 used, obligated, appropriated, or otherwise encumbered except 8 as provided in this section . 9 b. Moneys in the fund shall only be used pursuant to 10 appropriations from the fund by the general assembly for 11 purposes of abating the opioid crisis in this state, which 12 may include but are not limited to the purposes specified in 13 section 135.190A for moneys in the opioid antagonist medication 14 fund. 15 3. c. Notwithstanding section 8.33 , moneys in the fund 16 that remain unencumbered or unobligated at the close of a 17 fiscal year shall not revert. Notwithstanding section 12C.7, 18 subsection 2 , interest or earnings on moneys in the fund shall 19 be credited to the fund. 20 4. For each fiscal year for the period beginning July 1, 21 2025, and ending June 30, 2028, there is appropriated from the 22 fund to the department the following amounts: 23 a. Nine million one hundred thousand dollars for 24 distribution to administrative services organizations to 25 facilitate crisis response, early intervention, treatment, and 26 recovery of opioid addiction for the behavioral health district 27 for which an administrative services organization has been 28 designated. 29 (1) To receive moneys under this paragraph, an 30 administrative services organization must submit a proposal, 31 related to the behavioral health district for which the 32 administrative services organization has been designated, to 33 the evaluation panel that contains all of the following: 34 (a) Proposed uses of the moneys by the behavioral health 35 -2- LSB 2991HV (1) 91 lh/ko 2/ 6

H.F. 1038 district that are sustainable, effective, and evidence-based. 1 (b) A list of the current opioid-related initiatives within 2 the behavioral health district that are funded by moneys from 3 the national settlements that are earmarked for or otherwise 4 required to be transferred or distributed to counties, cities, 5 or other local governmental entities. 6 (2) The evaluation panel shall review each proposal to 7 ensure that the proposal conforms to the requirements and 8 limitations of the master settlement agreements. 9 (3) The evaluation panel shall approve or deny each 10 proposal, and shall give priority to proposals that include 11 documentation of evidence-based practices that effectively 12 address opioid addiction. 13 b. Three million nine hundred thousand dollars for the 14 following purposes: 15 (1) Statewide prevention initiatives that comply with the 16 master settlement agreements. 17 (2) The department shall conduct an evaluation of each 18 program and service funded by moneys from the fund. The 19 department’s evaluation must include measurable outcomes as 20 determined by the evaluation panel. 21 5. There is created in the fund an opioid reserve account 22 under the control of the department, consisting of moneys 23 appropriated to the account. The moneys in the account are 24 appropriated to the department to support behavioral health 25 districts’ efforts to increase capacity for opioid-related 26 services. 27 a. An administrative services organization may submit an 28 application to the evaluation panel for moneys to facilitate a 29 behavioral health district’s efforts to increase capacity for 30 opioid-related services by increasing the number of behavioral 31 health providers. 32 b. The application must demonstrate the behavioral health 33 district’s need to increase capacity for opioid-related 34 services in the behavioral health district, and the ability to 35 -3- LSB 2991HV (1) 91 lh/ko 3/ 6

H.F. 1038 sustain the increased capacity. 1 c. The evaluation panel shall review, and accept or deny, 2 each application from an administrative services organization. 3 6. a. For each fiscal year for the period beginning July 1, 4 2026, and ending June 30, 2028, the department shall submit a 5 report to the general assembly on or before September 1 of the 6 fiscal year that contains the following: 7 (1) Recommendations from each district behavioral health 8 advisory council for future disbursements from the fund. 9 (2) The evaluation conducted by the department pursuant 10 to subsection 4, paragraph “b” , for the immediately preceding 11 fiscal year. 12 b. The department shall make each report publicly available 13 on the department’s internet site. 14 Sec. 2. OPIOID RESERVE ACCOUNT. There is appropriated from 15 the opioid settlement fund created in section 12.51 to the 16 department of health and human services for the fiscal year 17 beginning July 1, 2025, and ending June 30, 2026, the following 18 amount, to be deposited in the opioid reserve account created 19 by this Act: 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,000,000 21 EXPLANATION 22 The inclusion of this explanation does not constitute agreement with 23 the explanation’s substance by the members of the general assembly. 24 This bill relates to the opioid settlement fund (fund), 25 creates an opioid reserve account (account), and requires a 26 report to the general assembly. 27 The bill provides a standing appropriation from the fund 28 to the department of health and human services (HHS) for 29 FY 2025-2026, FY 2026-2027, and FY 2027-2028. For each of 30 the fiscal years, $9.1 million is appropriated to HHS for 31 distribution to administrative services organizations (ASO) to 32 facilitate crisis response, early intervention, treatment, and 33 recovery of opioid addiction in the ASO’s behavioral health 34 district (district). To receive moneys, an ASO must submit 35 -4- LSB 2991HV (1) 91 lh/ko 4/ 6

H.F. 1038 a proposal to an evaluation panel (panel) containing the 1 proposed uses of the moneys by the district, and a list of the 2 current opioid-related initiatives within the district funded 3 by moneys from the national settlements that are earmarked 4 for or otherwise required to be transferred or distributed to 5 counties, cities, or other local governmental entities. The 6 attorney general, the director of HHS, and the drug policy 7 director of the office of drug control policy, or their 8 designees, make up the panel. The panel shall review, and 9 approve or deny, each proposal, and give priority to proposals 10 containing documentation of evidence-based practices that 11 effectively address opioid addiction. 12 For each fiscal year, $3.9 million is appropriated to HHS 13 for statewide prevention initiatives, and for HHS to conduct an 14 evaluation of each program and service funded by moneys from 15 the fund. HHS’s evaluation must include measurable outcomes as 16 determined by the panel. 17 The bill creates an account in the fund under the control 18 of HHS to support districts’ efforts to increase capacity for 19 opioid-related services (services). An ASO may submit an 20 application to the panel for moneys to facilitate a district’s 21 efforts to increase capacity for services by increasing the 22 number of behavioral health providers. The ASO’s application 23 must demonstrate the district’s need to increase capacity 24 for services in the district, and the ability to sustain the 25 increased capacity. The panel shall review, and approve or 26 deny, each application from an ASO. 27 The bill requires HHS to submit a report to the general 28 assembly for FY 2025-2026, FY 2026-2027, and FY 2027-2028 29 on or before September 1 containing recommendations from 30 each district behavioral health advisory council for future 31 disbursements from the fund, and the evaluation conducted by 32 HHS for the immediately preceding fiscal year. HHS shall make 33 each report publicly available on HHS’s internet site. 34 The bill appropriates from the fund to HHS $20 million for FY 35 -5- LSB 2991HV (1) 91 lh/ko 5/ 6

H.F. 1038 2025-2026 to be deposited in the account. 1 -6- LSB 2991HV (1) 91 lh/ko 6/ 6