House Finance Division 3 trims DHHS budget, shifts modest PDAB funds to Glencliff amid contentious DEI vote

House Finance Committee Division 3 approved a slimmed-down Department of Health and Human Services (DHHS) budget package and a series of technical changes to House Bill 1 and House Bill 2 after hours of discussion about priorities, service availability and how to balance scarce general-fund dollars.

The division, which considers DHHS programs including developmental disability services, community mental health, hospitals and state-operated facilities, voted 14–10 to advance its HB1/HB2 package. Members also voted, 14–11, to move funding described for the Prescription Drug Affordability Board (PDAB) into operating support for Glencliff School, citing immediate staffing needs.

Division 3 leaders said the work reflected the committee's limited choices after revenue estimates tightened. Committee members repeatedly framed decisions as tradeoffs among direct-care needs, long-term program commitments and the department's statutory responsibilities.

Why this matters: Division 3 oversees services relied on by people with severe behavioral health needs, residents of state facilities and people on developmental-disability wait lists. Committee members said their top priority was preserving direct patient care and hospital/discharge capacity while finding modest savings elsewhere.

What the committee did

- Approved a package of DHHS technical and policy changes intended to bring the committee's spending plan under its revenue estimate and to reallocate limited resources toward direct care. The package includes revenue adjustments, temporary suspensions of smaller statewide pilot programs and several accounting cleanups intended to clarify funding flows.

- Reallocated the division's PDAB appropriation. Division members voted to zero out the PDAB line in HB1/HB2 (the item shown on the division's change list as the PDAB appropriation) and apply the funds to address underfunded personnel lines at Glencliff School, a state-operated facility for people with developmental disabilities. Division members said Glencliff had a multi-million-dollar personnel shortfall tied largely to reliance on contract staff and difficulty recruiting permanent nurses.

- Adopted, after a separate motion and roll call, an amendment restricting use of state funds for certain initiatives described in the amendment as "DEI-related activities" in state contracts and programs. The amendment was hotly contested in committee and ultimately passed by a narrow margin after a successful motion to reconsider earlier in the meeting.

Key details and fiscal figures

- Division 3 presented its HB1 summary showing roughly $50 million in program-level HB1 adjustments for FY2026 in the department portfolio under its jurisdiction. Committee materials flagged a total funding gap the finance committee continued to address across divisions.

- The PDAB appropriation in the governor's budget had been roughly $256,000 in FY2026 and $267,000 in FY2027 (about $523,000 for the biennium). Division 3 voted to remove that appropriation from HB1 and direct the funds to Glencliff-related personnel lines; the motion passed 14–11.

- Committee members said Glencliff's staffing shortfall is on the order of $2,000,000 per year (division members and staff described this as an estimate by providers and facility leadership), and the reallocated PDAB funds were described by members as a modest immediate supplement rather than a full solution.

- Division 3 also included, among other measures, a 3% reduction to Medicaid provider rates (a controversial step members said was necessary to meet the committee's revenue targets). Committee staff noted that reductions in Medicaid rates can have downstream effects on federal match and provider participation; the committee asked the department to estimate associated federal-fund impacts as the budget process continues.

Debate highlights

Lawmakers on both sides described the session as a series of painful choices. Representative Murray, who opposed several division actions, warned the cuts would leave people without services and said, "At the time when we are cutting virtually every other program in the state, this is not the time to expand a program that is so costly." (paraphrase)

Opponents of deleting PDAB funding said the board had produced policy work and recommendations the state could use to reduce drug spending; supporters of the reallocation said the immediate staffing crisis at Glencliff could not wait. Representative Seaworth, who moved the reallocation, summarized that choice as prioritizing direct care in the current scarce environment.

The committee also tussled over an amendment that would prohibit state agencies and their contractors from using state funds for activities the amendment defined as "diversity, equity and inclusion" programs that classify people by race, ethnicity or "other group characteristics for the purpose of achieving demographic outcomes." The amendment was contentious: opponents repeatedly warned it could create legal liability and unintentionally affect protected groups; supporters said it was needed to limit what they described as outcome-focused contracting and use of public dollars.

Process and next steps

Division 3 voted its package forward to the full Finance Committee with instructions to the Legislative Budget Assistant to compile final technical changes. Committee leaders repeatedly told members the draft would be revisited in the remaining Finance meetings and during House'Senate conference activity; several members urged the department and budget staff to produce more precise federal-match and program-level impact estimates before final votes. The committee also authorized staff to prepare revised bill language and fiscal notes where necessary.

What to watch next

- The Department of Health and Human Services was asked to provide more detailed estimates of federal-match impacts associated with Medicaid rate changes and other adjustments.

- Several members signaled they intend to press for additional funding in the Senate or conference committee, citing Glencliff staffing, community behavioral-health investments and the new Youth Development Center construction needs.

- The PDAB policy and funding question could re-emerge as a standalone bill or as part of future budget adjustments; the division's action removed its current appropriation but did not formally repeal the board's enabling statutes.

Ending note

Division 3 members said the budget work reflected scarce choices and that the package advanced was the product of compromise: an attempt to preserve core services while trimming lower-priority spending and finding one-time or technical revenues. Several members warned that if revenues weaken further, divisions will have to make deeper, more consequential service cuts.