Appropriations panel reviews DPHHS budget; FMAP decline, Medicaid caseloads and a 3% provider-rate increase drive costs

The House Appropriations subcommittee (Section B) opened a hearing on the Department of Public Health and Human Services’ portion of House Bill 2, where lawmakers heard that the DPHHS request for the 2027 biennium totals about $7.33 billion in all funds and places new pressure on the general fund.

Chair Joe Gillette, chair of the House Appropriations Subcommittee (Section B), opened the session, noting the committee’s extensive six‑week review of the agency and the number of senators and representatives sitting on the subcommittee. “This opens Section B,” Chair Gillette said at the start of the hearing.

Why it matters: DPHHS is one of the state’s largest spending agencies and the presentation made clear changes in federal matching (FMAP), Medicaid caseload forecasts and provider payments will determine how much state general fund support is needed. Director Charlie Brereton, director of the Department of Public Health and Human Services, told the committee the executive request shows a reduction in some base dollars but a sizable increase in general‑fund need for the next biennium.

“The executive budget request for DPHHS represents a reduction over the base budget in state fiscal year 02/1926 and a slight increase in the base budget in state fiscal year 02/1927,” DPHHS Director Charlie Brereton said. He told members the request nevertheless reflects a 12% and 18% increase in general funds in the two fiscal years compared with base years, driven largely by changes to the Federal Medical Assistance Percentage and spending for state‑run health care facilities.

Key figures and drivers - DPHHS all‑funds total for the 2027 biennium presented to the committee: about $7.33 billion (the chair described this as roughly 1% lower than the '25 biennium figure). - Medicaid expansion: Brereton described the program as a large line item, “about $2,000,000,000 over the biennium,” as presented in the executive budget. - FMAP effects: committee members were told a 1 percentage‑point decrease in FMAP would increase state general‑fund obligations by roughly $16–$17 million. - LFD caseload model: the subcommittee adopted Legislative Fiscal Division (LFD) Medicaid caseload projections in most places; adopting the LFD projections reduced the budget about $35 million compared with the executive’s numbers, according to the chair’s presentation. - Provider rate increase: the subcommittee approved a 3% across‑the‑board provider rate increase; Chair Gillette said the 3% equals approximately $45 million in general fund and about $150 million in all funds.

During the presentation LFD staff demonstrated interactive budget tools and historical trends showing the DPHHS portion of state spending. LFD analyst Josh Platt walked members through state resources and spending classes and highlighted that Medicaid and related health services make up a very large share of the state budget.

What the committee decided (subcommittee level): members adopted the LFD Medicaid caseload methodology in most divisions and approved a 3% provider rate increase. The committee also declined to move one executive proposal that would have shifted SNAP into a statutory appropriation, choosing instead to keep SNAP appropriations visible in House Bill 2.

Staff and next steps: the department and LFD staff told members they will provide additional detail on decision packages and the biennial outlook, and the subcommittee indicated it will continue to reconcile provider‑rate, caseload and FMAP effects as the session progresses.

Ending: Committee members said they will watch FMAP and other federal factors closely and requested follow‑up material about DPHHS decision packages and assumptions. Director Brereton and LFD staff remained available for questions following the presentation.