Monroe County council budget session flags health department funding gap after IU Health contract ends

Monroe County Councilors continued the 2026 budget review on Sept. 10, focusing on a shortfall in public-health funding after the county’s long-running contract with IU Health ended and state changes to the Health First Indiana program shifted how local services can be funded.

During the meeting, County Auditor Carly Woodruff presented the county’s simplified calculation of a potential total budget deficit and its levy-driven scenarios. “This shows the maximum property tax levy that we're allowed in 2026,” Woodruff said, and her spreadsheet showed a countywide deficit estimate of just over $8.1 million using the current gateway requests and a projection that the general fund could finish 2026 with about $14 million if the levy were adopted near the $23 million range described in her presentation.

The health department’s director, Lori Kelly, told councilors department staff have been moved between funds because of the state-level changes. Kelly said several positions previously supported by Health First Indiana or IU Health contracts were transitioned into locally controlled funds and that at least one nursing contract payment planned with IU Health will no longer occur. "We will be looking at removing that, and then or transferring that to be able to provide nursing services in 2026," Kelly said, describing an unsettled plan to replace the nursing contract.

Councilors pressed for options and contingency plans. Councilor Peter Iverson warned the council that the fund’s 4-B analysis “is not looking very healthy” and said the health fund will need “some pretty big work… to the tune of a little…