Appropriations panel recommends $397.8 million federal rural health grant bill to full committee

The Appropriations Division on Wednesday reviewed a draft appropriation bill to accept and administer federal Rural Health Transformation grant funds and voted to recommend the draft to the full appropriations committee.

Brady, legislative council staff, told the panel the draft (bill draft 25.1392.01000) would appropriate $397,800,000 in federal grant funds — two federal fiscal years’ worth of funding — and includes line-item transfer authority and limits clarifying how grant-funded salaries are counted against transfer caps. "The first item is section 1, and this is appropriating the $397,800,000 of the federal grant funds," Brady said.

The Department of Health and Human Services’ legal and financial staff outlined implementation requirements and constraints. Jonathan Hall, the department’s chief legal officer, described limited, time-bound exemptions to certain state statutes (for example, surplus property rules, cooperative purchasing restrictions and procedural review of terms-and-conditions) intended to remove legal obstacles to obligating federal funds without running afoul of existing procurement or property statutes. "We looked at various laws ... to make sure that those roadblocks were out of the way," Hall said.

Donna Ockland, the department’s chief financial officer, explained that while the department needs legislative appropriation authority to accept and obligate the grant, CMS (the Centers for Medicare & Medicaid Services) will have final approval over allowability and positions tied to the grant. "We do not need legislative appropriation to accept the grant. We do need legislative ... authority to accept the grant. We do need the appropriation," Ockland said, adding that CMS must approve positions and many awards.

Committee members pressed staff on program design and limits. Senators and representatives raised concerns that language requiring grant recipients to acknowledge funding will not continue beyond the federal program could discourage innovative designs meant to be sustained; Brady and other members said the legislature could pursue continuation in later sessions if a program proves successful. Representative Murphy and others pressed on capital and construction limits; Hall and Ockland said CMS rules constrain significant building expansions or retrofits but allow smaller renovations, equipment, and project-dependent approvals. "CMS has put very limited structure in place ... maybe some alterations, and dealing with equipment," Hall said.

Questions also covered procurement flexibility (creating a prequalified pool of architects and engineers to speed projects), the scope of pilot programs such as EatWell North Dakota (questions about which recipients — for example, schools or senior centers — are eligible), public engagement numbers (the department reported about 1,200 survey submissions), cash-flow and reimbursement timing (the department expects to do weekly draws from CMS and must obligate first‑year funding by the federal obligation deadline), staffing and administrative caps (current state FTE authority and a 10% administrative cap on the grant), and whether large bulk purchases (for example, ambulances) could be made by the state for distribution.

After discussion, Representative Steaman moved and Representative Murphy seconded a motion to recommend the bill draft to the full appropriations committee; a roll-call recorded multiple affirmative votes and the chair declared the motion carried. The committee will reconvene next week for public hearings when the bill goes before the full committee.

The department and legislative council said they will return with clarifications requested by members — for example, precise answers on EatWell North Dakota eligibility, how CMS will handle long lead times for purchases, and the exact number of listening-session participants — during the special session review.