Bill to reshape state government could reduce services to disabled Iowans, say Democrats, state employees

Iowa Senate Republicans last week advanced a roughly 1,600-page government reorganization bill, Senate File 514, filed by Reynolds that would, among other provisions, shrink the number of state agencies and create more agency leaders who are appointed by the governor and subject to Iowa Senate confirmation, rather than being elected by state boards or commissions.

Democrats called the bill a “power grab” by the governor, arguing on the Senate floor the bill will reduce government oversight and hurt the quality of government services for some Iowans.

Reynolds has said she's not trying to accumulate power, and that the move is intended to reduce the size and cost of government and increase efficiency. The governor’s offices estimates it would save $215 million over the next four years.

Reynolds and Republican lawmakers have said the mergers will happen without laying off any state employees, and that savings will come from eliminating more than 500 unfilled positions.

An analysis from the nonpartisan Legislative Services Agency estimates that the reorganization would result in the elimination of 214 full-time equivalent positions and result in $12.4 million less in spending per year. Of that, $6.4 million would come from the reduction of full-time equivalent positions.

The LSA fiscal note, though, states the department has not identified whether these positions are currently filled or unfilled.

About half the reduction in spending, $6.4 million, would be from the state's general fund, while $5.8 million of the reduction would come from federal funds and $196,000 from other funds, according to the analysis.

An earlier estimate from Reynolds’ office predicted the bill would eliminate 513 currently vacant positions and save $18 million this year, $3 million of which would come from the state's general fund.

Reynolds’ office did not respond to multiple messages last week seeking to clarify the discrepancy between the LSA analysis and estimates provided by her office and included in recommendations made in a 68-page report produced by a Virginia-based consulting firm. Guidehouse was paid nearly $1 million by the state, which used federal pandemic relief funds.

The governor’s office also did not respond to questions as of press deadline about whether state employees will have to re-interview or reapply for their position as state agencies work to identify redundant and overlapping roles and remove non-critical positions to generate budget savings. Reynolds’ office as well did not respond to questions about a Guidehouse recommendation that lists three positions with the Department of Natural Resources — two with the Iowa Lottery and 23 with the Department of Revenue — that would be “outsourced.”

Concerns raised about impact on disabled Iowans

Sen. Pam Jochum, a Democrat from Dubuque, during floor debate questioned the impact the bill and the reduction of full-time employees will have on the delivery of services to Iowans with disabilities.

Jochum highlighted a portion of the bill that would eliminate 25 full-time equivalent positions from Iowa Vocational Rehabilitation Services (IVRS), reducing spending by $1.2 million.

The state agency assists Iowans with disabilities find and keep a job, explore college and vocational training, access economic support via Social Security disability benefits, and to live independently in their homes.

Currently, the vocational rehabilitation program is under the Department of Education at the state and federal level to align with the agency’s ability to identify and provide pre-employment transition services to high school students with disabilities, starting at the ninth grade.

Under the governor’s bill, vocational rehabilitation would become part of Iowa Workforce Development (IWD), a move Jochum said would impact its ability to draw down federal funds to help pay for programs and could potentially cost the state millions in federal funding.

Jochum — who proposed an amendment to keep the status quo that failed — said moving vocational rehab out of the Department of Education would make it more difficult for IVRS staff to access educational records of high school students in Iowa who are on Individual Education Plans for students with special needs, as well as collaborate with school staff and Area Education Agencies across the state to provide pre-employment transition services.

Vocational rehabilitation contracts with school districts and education agencies to provide services and share cost of employees. Revenue from which it uses to augment state funding and meet match requirements to access federal funding.

Providing pre-employment transition services to students with disabilities aligns with requirements under the Department of Education. Jochum questioned whether that can be effectively delivered under Iowa Workforce Development’s service model.

If not and school districts decide partnering with IVRS is no longer beneficial, the loss in revenue could jeopardize nearly a quarter of the federal funding it receives to provide services to disabled Iowans.

A state official and agency employee, who requested anonymity because they are not authorized to speak to the media about the topic, echoed those concerns.

The lack of easy access to a shared reporting system with the move to IWD would mean parents, students and teachers will have additional steps and paperwork to complete to get students services through IVRS, which has aligned the process to connect students and delivery of services with the Iowa Department of Education, the state official said.

Additionally, the move would assign vocational rehabilitation staff to work the floor and reception area of Iowa Works offices, which also has a potential financial impact, Jochum and state officials said. Regulations prohibit federal program dollars being spent on benefits and services outside of the state-federal vocational rehabilitation program.

Jochum as well questioned how the reduction of 25 full-time equivalent positions will impact the services disabled Iowans receive.

“(IVRS) is a top performer and is one of the lead states to delivering services to students with disabilities,“ Jochum said on the Senate floor. ”This is about children who need a hand up. Voc Rehab needs to remain under the Department of Education.“

A second state official, who also requested anonymity because they are not authorized to speak to the media on the topic, said IVRS identified two positions unfilled and not needed in discussions with Iowa Workforce Development, and questioned how they would continue to adequately serve disabled Iowans with 25 fewer positions.

According to an agency performance report from fiscal year 2021, IVRS has managed a waiting list of eligible job candidates seeking vocational rehabilitation services since May 2002.

“We have focused on increased staff capacity through expansion of third-party contracts,” the report states, including providing employment services for workers age 55 and older as well as a specific focus on students with disabilities in transition.

“This allows IVRS to focus on serving individuals with the most significant disabilities as well as providing for increased access for students in high school who are under an Individual Education Plan or covered under section 504,“ the report states. ”So while the IVRS caseload appears to be a constant, in actuality IVRS is serving substantially more individuals with disabilities. We also are assisting core partners in learning how to serve those individuals for whom the disability is not as significant as those served by IVRS.“

Republicans push back on complaints

Sen. Jason Schultz, R-Schleswig, who chairs the Iowa Senate State Government Committee and managed the bill during floor debate, countered Iowa Senate Democrats’ complaints.

“It doesn’t add or subtract services. It simply aligns the people already doing the work, causing efficiencies when there are deficiencies in personnel,” Schultz said closing remarks during floor debate. “It does not fire or lay off anybody.”

Specific to vocational rehab, Schultz said federal funding is not expected to be lost, because funding itself comes from the Workforce Innovation and Opportunity Act.

“It’s a workforce program from the federal government,” Schultz said. “ … So aligning all of these programs under one workforce agency makes sense and promotes the efficient delivery of services. This is in alignment. This is an efficiency. … Any reductions in actual state employees is through attrition, but there will be (full-time positions) that are eliminated.”

Here's how position eliminations break down among different state agencies, according to the LSA analysis:

Department of Health and Human Services: The bill would eliminate 110 unfilled full-time-equivalent positions as it absorbs a variety of other state departments. That would result in a cost savings of $6.4 million, of which $4.4 million would come from federal funds and $2 million would come from the state's general fund.

Department of Inspections, Appeals and Licensing: The bill would eliminate 20 full-time-equivalent positions. The department has not identified whether these positions are filled or unfilled. That would result in a cost savings of $1.6 million, of which $1.4 million will be federal funds and $162,000 will be state funds.

Iowa Economic Development Authority, Department of Cultural Affairs, Iowa Finance Authority: The bill would eliminate five positions within the Department of Cultural Affairs, at a cost reduction of about $356,000 annually. Merging IEDA with the Iowa Finance Authority will eliminate another 14 positions, half of which were funded; however, the department has not determined whether the positions are filled or unfilled. That would save the state about $140,000 per year.

Public Employment Relations Board: The bill would create an executive director of the board, appointed by the governor, at a cost of $157,000, while moving three board members from full-time positions to part-time positions, paid on a per diem basis, saving $277,000.

Iowa Workforce Development: The bill would eliminated 63 funded positions and four unfunded positions. Of the 63 positions, 39 would be from Iowa Workforce Development, reducing spending by $2.9 million; 25 would be from Vocational Rehabilitation Services, reducing spending by $1.2 million; and three would be from other programs, reducing spending by $72,000.

Iowa Department of Education: The bill would add one division administrator position at a cost of $144,000.

Board of Parole: Would change three part-time members to full-time salaried positions at an additional annual cost of $200,000. Two of the board’s five members are already salaries.