House Approves Government Reorganization

Senate File 2088 “Government Reorganization” was passed 98-0 by the House this past Monday after countless amendments and two days of debate. The bill passed by the House is significantly different than the one passed by the Senate; making their reconciliation complicated. The version passed by the House is estimated to save $70.6 million to the state’s general fund and $55.7 million to other funds in Fiscal Year 2011.

The government reorganization bill aims to create efficiencies and cut costs in many aspects of state government. One major reorganization aspect of the bills is the consolidation of most of the state’s information technology systems. The consolidation will save an estimated one million dollars in Fiscal Year 2011 with little disruption to the public.

Another provision of the bill directs that doctors can only write prescriptions for a maximum of seven days for any drug not on the Medicaid Preferred Drug List without first seeking approval. This would save approximately $117,000 of general fund monies. The bill also directs the state to create new means to aid in the identification of Medicaid fraud.

In another section, the bill prohibits DHS from accepting new applications to the Family Support Subsidy program. This program aids low-income families with mentally or emotionally disabled children. This is estimated to save the general fund about $355,000. The bill also directs DHS to cap the legal fees paid to families who adopt at $500. The savings is estimated to be about $145,800. The general fund will save $7.5 million with a new DAS centralized purchasing system and about $1.5 million with the closure of two prison work farms near Fort Madison.

The bill not only aims to save money, but some sections actually bring money into the general fund. Under the bill, the Department of Revenue can hire five full-time employees to aid in the collection of taxes owed to the state. This is estimated to bring in an additional $2.7 million to the general fund. Another way the bill makes more money for the state is through the lowering of the gambling setoff threshold. This is estimated to bring in $4.6 million for the general fund.

This is just a sampling of where the total savings come from, a more comprehensive spreadsheet is available from fiscal services. The amount of savings actually realized by Senate File 2088 will remain an estimate until a final version is agreed to by the House and Senate.