Johnson County staff told supervisors the East Central Iowa Mental Health and Disability Services (MHDS) region'closeout budget was revised and accepted by the state, but new HHS language raises the possibility that component counties could be held responsible for unpaid regional obligations if the regional entity dissolves.

Deb Seymourgaard, finance coordinator for MHDS Central Region, told the board the region resubmitted a closeout budget and that the state's June 10 operational guidance accepted a $3,574,007 budget after an initial $3.97 million request was rejected. Seymourgaard said the region's cash balance as of June 30 was $4,381,275 with outstanding checks leaving roughly $4,268,330 available to cover outstanding expenses as currently known.

Why it matters: The state rescinded regional authority under Iowa Code Chapter 225C pursuant to House File 2673 effective July 1, 2025, requiring regions to close out and submit budgets. County officials said some state guidance includes language that could make counties liable for any remaining obligations after transition if a regional 28E dissolves.

Seymourgaard outlined the closeout budget components: estimated accrued service expenses based on a five-year history (excluding one-time special projects), transitional staffing and administration through late August or December for certain positions, audit costs, payroll and benefit accruals and other closeout liabilities.

She said the state initially rejected the larger budget because it exceeded other regions' submissions; the region revised the request downward and the June 10 guidance accepted the revised figure. Seymourgaard noted a fourth-quarter payment was re-estimated to include retention pay and other payouts and that prepaid items should provide additional cushion.

Seymourgaard highlighted a paragraph in the June 10 guidance that raised legal concern: it says that if a region's service obligations and administrative costs exceed remaining regional monies, "those debts remain due and owing after the transition period concludes and become the responsibility of the region's component counties should the administrative entities 28 e become dissolved." She said local attorneys and regional members may interpret that differently than HHS attorneys and that at least one region anticipates it cannot pay outstanding July obligations.

Supervisors asked for ongoing updates. Seymourgaard said she will continue to provide monthly reports to the regional governing board and will send the county a copy of the closeout PowerPoint for distribution.

Ending: County staff will monitor cash, accrual submissions and state guidance and will update the board monthly. Seymourgaard emphasized the region's current balance should cover anticipated closeout expenses unless an unanticipated large bill appears.