Nicollet County OKs regional mental health contracts and reviews possible state cost shifts that could add hundreds of thousands to county budgets

Nicollet County Health and Human Services (HHS) reported on two regional contract items and presented preliminary estimates of fiscal impacts to counties under proposed state budget changes; the board approved the contracts and discussed next steps on advocacy.

Regional contracts: Cassie (HHS presenter) described two contracts under the South Central Community Based Initiative, a joint powers board that serves multiple counties including Nicollet. The initiative administers the Adult Mental Health Initiative and crisis grants to support case management, community support services and a county clubhouse program. Cassie said the clubhouse served 70 members in February 2024, made more than 1,000 outreach calls and provided community support services to 13 individuals. The board approved the continuing purchase-of-service contract for the period (noted in materials as 02/2025–02/1926 in the packet text) and a short-term contract allocating underspent regional funds; the county stands to receive up to $52,581 from a regional redistribution of underspent funds. Cassie said county spending in the relevant services exceeds grant dollars by $146,000 and that the redistributed funds would not fully close that gap.

Why it matters: The contracts support local adult mental health services that HHS staff and commissioners described as important to preventing hospitalizations and filling gaps in nonbillable, voluntary supports such as the clubhouse. Cassie said the region has a strong working relationship among counties to manage grants and services.

State budget cost-shift briefing: Cassie summarized several proposed changes in Governor Wells’ budget recommendations for FY2026–FY2027 that, if enacted, would shift costs to counties. She cited three areas of concern presented to the Association of Minnesota Counties (AMC): - A proposed county share of 5% for residential waiver services (the county’s early estimate is preliminary and staff said more precise data requests have been sent to the Minnesota Department of Human Services). - A proposed change to the county share of costs for the Minnesota sex offender program (noting a prior move from 10% to 25% and a new proposal to shift to 40%). Nicollet staff estimated a half-year impact of roughly $95,000 in 2025 and about $190,000 annually thereafter for their county based on current civil commitments. - Changes in behavioral health funding that could move county share from about 23% to 50% and reduce an administrative allocation; staff estimated an added county cost of roughly $31,530 per year and an $18,000 administrative allocation loss.

Cassie provided county-level estimates for fiscal impacts over several years but cautioned the numbers are preliminary, rely on statewide and census data, and will be refined as county-specific data from DHS become available. She said the county would transition increased costs to the levy if the proposals were enacted and that the Association of Minnesota Counties will continue advocacy. A commissioner asked staff to share AMC talking points so commissioners can advocate as opportunities arise.

Board action and context: The board approved both contracts (the long-term purchase-of-service agreement and the short-term contract to claim redistributed underspent regional funds). Board discussion emphasized the importance of the services and the county’s limited authority to fill all funding gaps. Staff said opportunities to draw down underspent regional funds have occurred before and that these types of one-time redistributions are not guaranteed annually.

Ending: HHS staff will continue to refine county fiscal estimates, coordinate with AMC on advocacy and proceed with contract execution and reporting for the South Central Community Based Initiative contracts.