Legislators navigate cuts, compromises in $7 billion HHS budget agreement

After weeks of negotiations, legislative leaders have finalized a $7 billion health and human services budget for the 2026-27 biennium. It would reduce General Fund spending by $70 million compared to the February forecast base for programs operated by the Health Department, Department of Human Services and Department of Children, Youth and Families.

Reflecting stipulations of the global agreement among Gov. Tim Walz and legislative leaders, the budget shows savings related to making undocumented adults ineligible for Minnesota Care, though the language is in a separate bill.  

Members of a working group on health and human services heard a walkthrough of the agreement Sunday in advance of Monday’s special session.

Legislators said there’s a lot in the bill to be proud of and to vote “yes” for, while they acknowledged compromises made.

Sen. Paul Utke (R-Park Rapids) said he isn’t sure savings anticipated will be realized. “There’s lots of reductions in the spreadsheet, but I don’t see reductions to the agencies.”

[MORE: See the spreadsheet, bill summary, bill language, combined testimony]

Health care provisions

Among the cost saving efforts in the agreement are ones that would establish a centralized contracting system for non-emergency medical transport, such as transferring patients, with a projected savings of $48.33 million. Repealing authority to seek a federal waiver for a public option for health insurance would have a one-time savings of $21 million.

The agreement would not increase the health care provider tax but would increase many licensing and inspection fees to cover agency costs.

Emergency medical services providers would see $16 million in grants to help cover operating deficits and $2.4 million allocated for staff training and education grants across two programs.

Other provisions in the budget agreement would provide:

• $18.86 million to extend access to audio only telehealth;
• $6.5 million for grants to community-based HIV/AIDS support service providers;
• $2.6 million to strengthen infectious disease prevention efforts;
• $1 million for a grant to Change the Outcomes opioid education program;
• $1 million grant to Catholic Charities for its homeless elders program; and
• $250,000 in one-time funding for a health care worker well-being initiative focused on mental health.

Other provisions would:

• establish a certified midwife program;
• remove chiropractic services for adults from those being covered by Medical Assistance;
• reduce sexual and reproductive health grants by $1 million;
• establish a dementia services program;
• increase base funding to the Rare Disease Advisory Council;
• expand the Medication Repository Program, operated by RoundtableRx;
• prohibit some midyear prescription formulary changes;
• increase directed payments to certain pharmacies;
• establish a non-opioid directive for patients;
• require education on recognizing signs of abuse in infants;
• develop guidelines for mental health warnings on social media platforms; and
• establish a county-administered rural medical assistance program, which would allow counties to directly manage Medical Assistance benefits for their residents.

Children, youth and families

A big priority for the House Children and Families Finance and Policy Committee this past session was to fund an upgrade and modernization of the Social Service Information System used for child welfare cases.

In the agreement that was signed as part of the Health/Children and Families Working Group, the information system upgrade and modernization is still funded, just not at the $40 million level in fiscal year 2026 when it was passed by theHouse during the regular session.

According to the spreadsheet posted by the working group the upgrade would only get $35 million. Another $10 million was cut from a prior IT modernization appropriation.

The agreement also would provide a $12 million investment to attack food insecurity throughout the state with $5 million appropriated for regional food banks, $5 million for food shelf programs, $1 million for prepared meals, and another $1 million for food sovereignty programs.

Among the cuts to the children and families portion of the agreement is $21.1 million to cancel tribal planning money, $7.8 million in a Department of Children, Youth and Families transition account reconciliation, $3.2 million in TANF refinancing, and $3 million to reduce restorative practices initiatives grants.

— Session Daily writer Todd Abeln contributed to this story.