Corrections committee recommends support for $1 million IT upgrades, flags $335,000 ADS invoice increase

The House Corrections & Institutions Committee recommended on Jan. 22 that the Appropriations Committee approve a governor’s budget adjustment that includes $1,000,000 to upgrade Department of Corrections (DOC) information systems tied to the 11/15 Medicaid waiver and an additional roughly $300,000–$335,000 increase in the Department’s Agency of Digital Services (ADS) service-level agreement costs.

The committee’s recommendation (12–7 on the committee count) covers two related items in the governor’s midyear general fund budget adjustment: a $1,000,000 capacity-building request (listed in the document as $500,000 general fund and $500,000 federal funds) to enhance DOC’s offender management and electronic health-record systems for Medicaid billing under the 11/15 waiver; and an increase to the ADS SLA invoice that Deputy Commissioner Kristen Calvert said exceeds the department’s original estimate.

Why it matters: the 11/15 waiver allows DOC to bill Medicaid for eligible services beginning Jan. 1, 2026, and the committee was told the systems upgrades are required for the department to identify and bill Medicaid for those services. Committee members said approving the upgrade now would let the department implement technical changes before the waiver takes effect and draw federal funds that, by statute and policy as explained to the committee, must be reinvested in correctional health services rather than replace state funding.

Kristen Calvert, Deputy Commissioner of Corrections, told the committee that the ADS service-level invoice for DOC runs about $1.1 million to $1.2 million annually and that the budget adjustment line being considered represents roughly a $335,000 increase over the estimate used in the department’s FY25 budget. Calvert said ADS recalculates invoices midyear based on current employee counts, licensing usage and services, which can produce higher charges than the prebudget estimate. "Our annual ADS SLA invoice is about 1.1 to 1,200,000, and this is 335,000," Calvert said.

Ashley Berliner, director of Medicaid policy at the Agency of Human Services, described how the waiver generates federal dollars for services delivered inside DOC and how federal reimbursement produces state savings that the department plans to reinvest. "For the first time, we're getting federal Medicaid dollars in both walls of the facility," Berliner said. "Every federal dollar that comes in ... can't be replacing state funds. So any state fund savings because of that federal dollar has to be reinvested into the correctional setting." Berliner told the committee the year-one estimate of gross savings used to draw federal match is about $3,200,156 and that the administration has earmarked roughly $3,000,000 in year-one capacity-building funds across DOC, vendor systems and a new state case-management team.

Committee members pressed for additional detail from ADS on how it computes the midyear invoice and for written backup on the savings calculations that underpin the federal match. Calvert agreed to request ADS provide its calculation methodology so the committee would have that information before its Appropriations recommendation deadline.

The committee approved forwarding a recommendation in favor of the budget adjustment to the Appropriations Committee after discussion. Committee members said the request is likely acceptable because the technical upgrades are needed to implement the waiver on schedule, but several members asked staff to provide a clearer ADS cost justification before the Appropriations hearing.

Details and next steps: the technical upgrade is described in the budget adjustment document as a $1,000,000 total request (500,000 general fund and 500,000 federal funds) for offender management and electronic health-record enhancements; the ADS SLA increase called out by DOC staff adds roughly $300,000--$335,000 to the department's annual ADS charges (bringing the department's ADS-related spending closer to an estimated $1.4 million for the year if approved). The committee expects ADS to submit a calculation of the invoice methodology and will transmit the committee's recommendation and any requested intent language to Appropriations.