Panel weighs phased plan to stop using foster youths’ federal benefits for care costs; DHHS warns of budget gap
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Summary
Lawmakers reviewed amendment 30‑55‑H to change how DHHS handles federal benefits for children in care. The amendment phases implementation (deadlines in 2027–2028), requires ABLE accounts and annual accountings and carries an estimated $280,000 startup cost and a projected multi‑million annual general fund gap as federal benefits shift back to children.
Aimed at conserving federal benefits for foster children, Representative Wallner’s amendment (30‑55‑H) to HB 6‑61 received detailed review at the Feb. 9 House Finance Division 3 work session. The amendment phases tasks over 2027–2028, directs DHHS to change representative‑payee practices, and requires accounting and procedures to preserve children’s federal benefits rather than using them to offset program costs.
Karen Rosenberg, policy director at the Disability Rights Center, walked members through a timeline embedded in the amendment: by June 30, 2027 the department should establish procedures for ABLE accounts and benefit screening; by July 1, 2027 DHHS should stop automatically seeking to be a child’s representative payee when an appropriate payee exists and should pursue alternatives; and by June 30, 2028 the department should formalize policies, procedures and annual accounting practices to ensure benefits are conserved for children’s transition needs.
"The first deadline for the department ... would not be due until 06/30/2027," Rosenberg said, adding the amendment phases the work to give the department time to implement. She said many procedural pieces already exist in department policy but that operational steps—setting up ABLE accounts, establishing manager roles and training—require work and resources.
Budget numbers prompted the most sustained questioning. The department submitted a fiscal worksheet that shows a one‑time implementation cost (contracting or similar startup work) of roughly $280,000 in SFY27; DHHS counsel recommended using a contract rather than hiring 7–8 permanent staff in year one because contracting appeared cheaper in the analysis. DHHS staff also warned of lost revenue: when the department ceases redirecting federal benefits to cover certain care costs, the state will need to replace that revenue with general funds. DHHS provided an illustrative estimate of roughly $2,000,000 in annual lost revenue that the committee would need to budget in a subsequent biennium.
Nathan White, DHHS chief financial officer, cautioned lawmakers not to assume offsetting federal funding. "There is likely little to no additional IV‑E available," he said, and he urged the committee to be cautious about building a budget that depends on uncertain federal reimbursements. Rosenberg and members noted some federal sources and administrative claiming (Title IV‑E administrative claiming and other mechanisms) that could help pay implementation costs, and they asked that those possibilities be reflected in the formal fiscal note.
Members asked about legal and retroactivity risks, given recent federal statements and an executive order discussed earlier in the session. DHHS counsel agreed to research whether explicit non‑retroactivity language or additional statutory protections would be necessary to limit future litigation risks.
Committee directions: members asked for a formal fiscal note from LBA, considered amending effective dates and funding language to align implementation with available resources, and requested department follow‑up on staffing, anticipated vacancy rates, and detailed revenue‑loss estimates. The chair signaled further work sessions and said amendment language should be refined before the committee votes.
"We will meet again," Chair Maureen Mooney said, and asked DHHS to work with Representative Wallner on amendment language, effective dates and funding direction.
