Working group hears how new federal funds could affect health and human services

While the regular 2021 legislative session fizzled out with a paucity of resolution on setting the state budget, it bears remembering that a whole lot of extra money was thrown into the conversation in the session’s final week.

Not until May 10 did the federal government offer Minnesota guidance on uses for the billions of dollars that would be sent its way as part of the American Rescue Plan Act. With a constitutionally mandated May 17 adjournment date for the Legislature, there wasn’t much time to figure out how to spend it.

Now that the Legislature is preparing to return for a special session to complete its work, the hope is that more clarity arrives as to how the federal windfall affects different areas of the state budget. On Monday, the budget’s largest area was addressed in a meeting of the health and human services working group – which is, basically, the Health and Human Services Conference Committee under a different name.

The Department of Human Services’ directors of fiscal policy and budget laid out their understanding of how much is coming in from the feds and the guidelines for its use.

But one key deadline looms: The state must submit a spending plan to the federal government by June 13.

Elyse Bailey, the department’s fiscal policy director, said she believes that deadline can be met if legislation with budget appropriations is ready to go this week or next. Sen. Jim Abeler (R-Anoka) expressed optimism that the working group could meet that deadline.

The funds discussed at the hearing come from two pots of money: The Consolidated Appropriations Act and the American Rescue Plan Act. As outlined by Bailey and the department’s budget director, Dave Greeman, the aforementioned millions would be earmarked for:

• a 10% enhancement of federal Medical Assistance percentages for home and community-based services (projected to exceed $560 million);
• child care funding ($526.5 million);
• substance use block grants ($42.1 million);
• mental health block grants ($34.1 million); and
• pandemic emergency assistance funds ($14.4 million).

“This is a profound opportunity to enhance our system and the experience of people receiving services through home and community-based services,” Bailey said.

The federal money must all be spent by March 31, 2024, and Rep. Tina Liebling (DFL-Rochester) warned of potential “fiscal cliffs” approaching when federal funds run out. She also emphasized that there’s a lot in the health and human services budget that’s not covered by the federal funds and will need to come from the General Fund.