AHS proposes 5.8% general‑fund increase, prioritizes substance‑use care and shelter expansions

The Agency of Human Services on Thursday proposed a 5.81% increase in its general‑fund budget for fiscal year 2026, driven mainly by Medicaid cost pressures, repayment of pandemic‑era corrections side letters and a set of initiatives to fill gaps in the state’s substance‑use system of care.

Jenny Samuelson, secretary of the Agency of Human Services, told the Senate Appropriations Committee that “this is primarily a current services budget,” and that roughly 5.34% of the increase is tied to current‑services pressures, “primarily at the Medicaid consensus,” including utilization and eligibility changes.

The proposal matters because it attempts to preserve services that AHS said have demonstrated results while adding limited new capacity where state officials say gaps remain in addiction treatment and shelter capacity. The department also described investments intended to bridge potential federal funding changes for primary care supports.

Key numbers and near‑term actions

- Overall increase: 5.81% in the general‑fund–based budget; AHS said 5.34% of that is for current services. - Positions: AHS proposed about 3,835 permanent positions, an increase of six positions from FY25. - Medicaid pressure: The presentation cited a $21.4 million general‑fund increase for Medicaid caseload and utilization. - Nursing homes: A statutory nursing‑home rebase and inflationary adjustment was listed at $6.3 million in general fund. AHS noted nursing‑home bed‑day utilization has returned to pre‑pandemic levels. - Corrections side letters: $17.9 million in general fund would move components of pandemic‑era side letters for corrections into the collective‑bargaining base. AHS said the side‑letter measures reduced a vacancy rate that exceeded 30% and currently hovers near 17.9%.

Substance‑use initiatives and recovery housing

AHS said its initiative work concentrates on gaps in the residential continuum and transition supports for people leaving treatment. The budget proposal includes a combination of one‑time and base funding to expand residential capacity and recovery supports.

Samuelson described a plan for a 15‑bed “recovery campus” that pairs recovery housing with on‑site treatment and life‑skills services; AHS cited an estimated cost of $1.5 million for a recovery campus and an additional $500,000 in one‑time startup funds tied to an RFP process. “The recovery campus really takes and marries together recovery housing with essential treatment services and life skill services all in one space,” Samuelson said.

AHS also recommended funding to evaluate and begin converting one corrections facility into a residential treatment site for incarcerated people who volunteer for more intensive care; Samuelson said the preliminary estimate and planning dollars are intended to support design work and a partial conversion (she cited St. Johnsbury as a likely site under consideration). AHS said treatment in corrections would remain voluntary.

Officials said roughly 70% of the corrections population currently receives medication‑assisted treatment, but that many individuals would benefit from a higher level of residential care and transition support.

Shelters, general assistance and hotel/motel usage

AHS described moving several shelter expansions funded with one‑time dollars in the prior year into the base budget to create permanent capacity. Samuelson said the large one‑time appropriation last year (cited by the department as $10 million for emergency shelters) helped community providers stand up ongoing emergency shelters and family shelters in places including Waterbury and Williston; the budget would move that funding into the base so those shelters become permanent.

The presentation also listed other shelter funding lines: $3.3 million to assist in moving shelters into the base and a larger line, described by AHS during discussion, of about $22 million focused on shelters to address unmet need (AHS said the general‑assistance housing program is fully subscribed and has turned away more than 600 eligible households because hotel capacity is exhausted). AHS said it will continue targeted one‑time funding for startup costs for specialized family and medical‑respite shelters.

Pretrial supervision and cross‑program links

AHS said it will expand a Department of Corrections‑run pretrial supervision pilot that AHS likened to “probation‑and‑parole–like services” for people released before trial. The pilot began in one county and the budget would fund expansion to a second county; AHS said preliminary results from the initial county have been successful. AHS framed pretrial supervision as complementary to substance‑use interventions by providing accountability and connection to treatment while someone awaits trial.

Bridge funding for primary care and SASH

AHS reported ongoing negotiations tied to the state’s movement from an all‑payer model toward the federal AHEAD model. The department proposed one‑time funds to bridge Medicare‑funded supports for Blueprint community health teams and SASH (Support and Services at Home). The presentation cited amounts of roughly $10.8 million and $4.5 million in different program lines to continue these services while transitions are worked through.

Other fiscal shifts and savings

AHS described several offsets that reduce the net general‑fund impact: an estimated $3.1 million in savings tied to an increased federal match for a population described as “childless new adults,” a $3.5 million reduction for lower childcare financial assistance caseloads, reach up and family‑services caseload adjustments, and a $6.1 million Department of Corrections net vacancy saving. The agency said some federal changes (FMAP) had a favorable effect this year but cautioned about future uncertainty.

What the committee asked and next steps

Committee members asked about public‑safety impacts of hotels used for sheltering, how recovery campuses will be structured and whether policy frameworks should precede capital expansions. Senator Watson raised concerns about local policing demands where hotels are used for sheltering and whether the state should provide support; Samuelson and other AHS staff said the department has sometimes funded security and that the topic implicates multiple budgets. A senator noted the need for a policy framework to guide funding of recovery campuses and said the committee will review related legislation and reports later in the year.

AHS told the committee that departments would provide line‑by‑line “ups and downs” appropriations detail in subsequent hearings. No formal votes or enactments took place during the presentation.

Ending

AHS framed the FY26 request as chiefly a current‑services budget to maintain previously established programs and to address identified gaps in substance‑use treatment, shelter capacity and pretrial supervision. Agency staff said they would return with departmental appropriation details for further review by the committee.