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House Appropriations committee to fold H.558 school-based Medicaid changes into budget
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Summary
Lawmakers on the House Appropriations Committee heard that H.558 would move administration of school-based Medicaid billing from the Agency of Education to the Agency of Human Services, simplify reimbursement rules, and shift related grant authority into the budget with technical fund cleanups; staff said the changes are budget-neutral.
Representative Emily Kornheiser of Brattleboro, chair of the House Ways and Means Committee, told the House Appropriations Committee on March 18 that H.558 would transfer administration of the school-based Medicaid services program from the Agency of Education to the Agency of Human Services to reduce paperwork and improve federal compliance.
"We're really excited about it because it means more money for the Agency of Human Services, more money for the Education Fund and likely much more money for districts and lowered administrative costs," Representative Emily Kornheiser said, summarizing the bill's goals.
Jen Harvey of the Office of Legislative Council walked the committee through the bill's structure, saying it adds provisions into Title 33 (Medicaid statutes), adjusts Title 16 (education statutes), and directs AHS to adopt rules identifying covered services and supervisory-union participation requirements. "The Agency of Human Services will have sole responsibility for determining and maintaining program compliance," Harvey said.
Harvey described the fund mechanics the bill would create: a school-based Medicaid reimbursement special fund in Title 33 to receive federal reimbursements, a proposed allocation that would make 55% of reimbursements available to supervisory unions, and an administrative set‑aside that starts at 25% for agency costs and is scheduled to decrease to 20% beginning in fiscal 2028 (with the administrative-percentage reduction taking effect July 1, 2027). The bill would transfer any year-end balance in the special fund into the Education Fund.
Emily Byrne of the Joint Fiscal Office told the committee the governor's recommended budget already reflects many of the proposed programmatic changes and treats the shift as net neutral to the state's overall appropriation totals. Byrne said the GovRec includes a $17,400,000 increase recorded for school-based Medicaid grants moving from the Agency of Education to the Agency of Human Services but that the transaction was designed to be budget-neutral.
Byrne and staff described several "clean up" adjustments the switch enables: replacing some special-fund appropriations with general-fund authority for agencies that will no longer draw from the school-based Medicaid fund, and moving corresponding spending authority into AHS administration. Committee staff cited examples discussed in the hearing, including a $3,700,000 general-fund increase for AOE paired with a like-sized reduction in special-fund authority and a separate 1.7 million swap involving the Child Development Division and other agency accounts.
The committee also discussed and agreed to correct a technical coding error discovered in budget documents: about $1,100,000 of spending authority had been mistakenly assigned to the HIT fund rather than to the school-based Medicaid fund; AHS flagged the error and staff will correct it in web reports and budget schedules.
Committee members asked about district-level impacts. Kornheiser and Harvey said districts currently experience substantial paperwork and billing friction, and the bill's design removes certain statutory spending controls at the district reimbursement stage on the premise that billing and claiming are already tightly monitored. Harvey emphasized that the bill also requires AHS to collaborate with AOE, the Vermont Association of School Business Officials, the Vermont Council of Special Education Administrators and local district officials through a phased implementation process to address regional variation in capacity.
The committee agreed to include the bill's language in the budget rather than advancing a separate bill, with joint fiscal and staff to incorporate the technical appropriations changes and to coordinate timing and effective-date reconciliation with Finance and Management.
The Appropriations Committee did not take a formal recorded vote on H.558 at the hearing; members signaled support to place the language in budget documents and asked staff to return with any floor timing or amendment implications.
