South Dakota DSS asks legislature to cover FMAP drop, trims Medicaid staffing after expansion rollout

The Department of Social Services told the Joint Committee on Appropriations on Jan. 24, 2025, that the state must replace federal Medicaid dollars after a drop in South Dakota’s FMAP and the end of a temporary expansion FMAP boost.

DSS Cabinet Secretary Matt Althoff and Chief Financial Officer Jason Simmons presented the agency’s FY2026 request, saying the department’s total budget request is $1.84 billion and that about 35% of that is state general fund. "Our request this year is $1,840,000,000," Jason Simmons said. Simmons told the committee a 2.02% decline in the federal medical assistance percentage will force the state to add roughly $15 million in general funds for DSS programs.

Why it matters: The FMAP shift and the expiration of a 5% expansion FMAP boost together require additional state general funds if the department is to maintain current services. At the same time, DSS recommended reductions in several budget areas and proposed removing temporary positions added during the expansion launch because enrollment and application volumes fell below earlier actuarial projections.

DSS emphasized the human side of the numbers. "These numbers represent South…