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JLBC conditionally approves $3.3 million transfer within DES to shore up state‑only DDD case management funding
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Summary
The committee approved a transfer of $3.3 million from HCBS Medicaid funds to the DES state‑only case management line to address immediate cash‑flow needs, and attached reporting and review requirements for DES—monthly breakout by diagnosis, review of a Minnesota audit, and formal deficiency letters to appropriations leaders.
The Joint Legislative Budget Committee gave a favorable review—subject to conditions—to a Department of Economic Security (DES) request to transfer $3.3 million from the Home and Community Based Services (HCBS) Medicaid line to the state‑only case management line that funds developmental disabilities (DDD) state‑only case management services.
Brian Wilkoski (JLBC staff) introduced the transfer request. Wes Fletcher, DES deputy director of operations, said DES faces shortfalls in three DDD line items and that the state‑only case management account is experiencing immediate cash‑flow needs; the transfer would allow DES to meet near‑term obligations on the state‑only side while the department continues analysis of HCBS trends and prepares supplemental requests.
Members pressed DES on several points: the timing of formal budget‑shortfall notices (Fletcher said notices were submitted in the department’s September budget submittal and in later letters), the reason state‑only grew from roughly $6 million to $9 million in a year (DES attributed growth to overall DDD program increases and higher percentage growth within the smaller state‑only population), and whether policy changes or fraud could explain the spike. Fletcher said there had been no recent policy changes to expand state‑only eligibility and described increased diagnoses (including autism) and rising service costs as contributing factors. DES said it uses IVV and post‑payment reviews and is conducting a procurement for an outside firm to examine program vulnerabilities.
Representative Gress proposed—and the committee adopted—several conditions to the favorable review. Those written provisions require DES to: submit formal letters to legislative appropriations leaders reporting budget deficiencies pursuant to the statute cited on the record (ARS 35 1 31 part d); report monthly to JLBC staff a breakout of DDD populations by diagnosis; and review the Minnesota audit of DDD services and report back to JLBC within 30 days on Arizona’s status relative to the audit’s findings. The committee approved the motion by voice vote with those provisions attached.
The transcript records robust questioning from multiple members about program growth, cost drivers (including autism diagnoses and general health‑care inflation), whether people might be moving to Arizona to use DDD services, and potential implications for longer‑term budgeting and supplemental requests. Members also asked DES to follow up on legal obstacles to imposing waiting periods for state‑only programs and to provide more granular trend reporting.
