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This week in Des Moines
A Legislative Update from Iowa House Republicans
How Iowa's Ending Balance Has Been Used

With the discussion on the state budget and school aid funding, many Iowans have been asking how the state’s ending balance has been used over the past few years.   Often portrayed as a “surplus” by the Democrats and the media, in reality the ending balance is the revenue collected by the state but not spent.  Which is why Republicans refer the ending balance as an “overpayment” by the taxpayers.  Below is a list of the various ways portions of the Ending Balance have been returned to the taxpayers or used in other ways that help address priorities of Iowans. 
 
Returning it to the taxpayers – During the 2015 and 2016 legislative sessions, IRC coupling bills have been passed.  These bills both took funds from the ending balance and returned them to the taxpayers.  The amounts were:
  • 2015 (SF 126) - $98.98 million
  • 2016 (HF 2433) - $97.6 million
Taxpayers Trust Fund - Some funds that may have gone into the Ending Balance was deposited into Taxpayers Trust Fund.  $60 million dollars was deposited in the Taxpayers Trust Fund in FY 2013 and FY 2014. Taxpayers were returned $84.6 million in FY 2014 and $27.4 million in FY 2015.  There is still $8.1 million in the Taxpayers Trust Fund that will also be returned to the taxpayers.
 
Lower State Tax collections - In the past two years, the revenue forecast for the General Fund has not been met by actual tax collections.  In those cases, the Ending Balance is used to fill in the gap between projected revenues and actual revenues.  In FY 2015, $127 million of the ending balance was used to fund the difference.  It is expected that the amount needed in FY 2016 will be $128.7 million.
 
Filling the Cash Reserve Fund and the Economic Emergency Fund – By law, the state’s two reserve funds are required to equal 10 percent of the General Fund budget for that particular year.  Over the last few years, funds remaining in the ending balance have been used to add to the reserve funds.  Here is the amount of funds used to meet the statutory requirement of 10% of the General Fund being held in reserve:
  • FY 2013 - $21.1 million
  • FY 2014 - $47.2 million
  • FY 2015 – $26.8 million
  • FY 2016 – $22.3 million
Natural Disaster Relief – In 2011, the Legislature decided to have the state’s share of disaster aid payments and state-funded disaster relief  (known as Performance of Duty) to be paid annually out of the Economic Emergency Fund.  The ending balance would then refill the EEF once the payments have been made.   Here are the amounts that have been paid in recent years for Performance of Duty:
 
Paying off state debt – During the 2013 legislative session, the General Assembly took a portion of the ending balance - $113.8 million - and used that money to pay off four series of bonds issued by the State.  The bonds were:
  • Honey Creek Premier Destination Park Bonds
  • 2002 Prison Infrastructure Revenue Bonds;
  • 2010 Taxable I-Jobs Bonds;  and
  • School Infrastructure Bonds.
Making Strategic, One-time Investments in Iowa -  During the 2013 and 2015 legislative sessions, the General Assembly also took part of the ending balance for one-time investments.  In 2013, the amount spent on these was $64.5 million on economic development initiatives, completing various infrastructure projects at the Dept. of Corrections and the Board of Regents, and assisting UNI.  In 2015, the amount spent was $57 million, with $43 million of this to supplement the Medicaid program.  Additional resources were spent on radio communications equipment for the Department of Public Safety, a one-time peak of commercial and industrial property tax replacement claims, and mental health services.
 
Initial Investment into the State’s Water Quality Initiative – In 2013, the Legislature made a substantial investment in the Water Quality initiative established by the Dept. of Agriculture, Dept. of Natural Resources, and Iowa State University.  As part of the Strategic Investments and Debt Reduction bill, the legislature provided an initial investment of $20 million for the initiative.


Managed Care Begins April 1

After months of resistance by legislative Democrats in Iowa over the transition to managed care, the program will go live on April 1, 2016.
 
House Republicans have focused on how to make the system better and ensure that Medicaid recipients have all of the information they need to be confident in the change.  However, Democrats have focused on scaring Medicaid members, telling them that their benefits will be gone and deaths will result from this change to managed care.
 
The status quo is no longer an acceptable option for Medicaid members or Iowa taxpayers because of skyrocketing costs in the program and the absence of accountability measures for health outcomes.  The past year has been filled politically motivated rhetoric, discontent and resistance to change.  Despite perpetuating many of the scare tactics and fear pushed by Democrats, the media has managed to report a few success stories:
 
According to a report by America’s Health Insurance Plans, the following are examples of what managed care has done in other states:
  • New York City - Medicaid participants report better access to care than patients in the fee-for-service program and are more likely to have a regular source of care and to go to a doctor’s office rather than an emergency room
  • Rhode Island - Infant mortality rates have dropped from 4.5 deaths per 1,000 births to 1.9 per 1,000 since health plans began came into the state for Medicaid members.
  • Wisconsin - Children with asthma enrolled in managed care are less likely to require hospitalization than asthmatic children in the state’s fee-for-service program.
  • Oregon - Participation in treatment programs for substance abuse for people receiving care through health plans has increased nearly 40%.
  • California - Medicaid members enrolled in health plans were up to 38% less likely to have been hospitalized.
These are just a few examples of what managed care is able to do.  The focus needs to be on ensuring that this program works for Iowans that need assistance during the transition.  In addition, there are safeguards in place for Medicaid members:
  • Medicaid members will be able to keep their current case manager until  September 30, 2016.
  • Managed Care Organizations (MCOs) are required to continue current service plans until a new plan is created and agreed upon.
  • MCOs cannot reduce or modify a service plan without additional assessments.
  • MCOs have to ensure access to enrollees’ current prescriptions during the transition.
  • The state will monitor the MCO member services helplines to ensure timely and accurate information is available to beneficiaries. 
The full report referenced above can be found here.
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House Republican Budget Principles:

1. We will not spend more than the state collects;

2. We will not use one-time money to fund on-going needs;

3. We will not balance the budget by intentionally under funding programs; and

4. We will return unused tax dollars to Iowa's taxpayers
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