The Minnesota Senate Human Services Committee heard a two‑hour overview on Jan. 15 of the Department of Human Services (DHS) budget and forecasts, with agency staff and the committee fiscal analyst saying Medicaid and long‑term‑care waiver spending will drive most growth in the coming biennium.

Kyle Raymond, fiscal analyst to the committee, told members the combined health and human services budget for the 2026–27 biennium is roughly $60,000,000,000, with general‑fund spending of about $23,650,000,000. He said federal funds account for a majority of the total — about 52% — largely because of federal matching for Medical Assistance (MA).

The presentation and subsequent discussion focused on where state general‑fund dollars flow within the combined budget area. Elise Bailey, budget director at the Department of Human Services, told the committee DHS’s portion of the general‑fund base is about $19.8 billion, and that the portion of DHS under this committee’s jurisdiction is roughly $15.7 billion. She said the human services committee’s own general‑fund base for the 2026–27 biennium is about $16.8 billion.

Why it matters: Medical Assistance and long‑term care programs account for the vast majority of the DHS budget, leaving limited room in the general fund for other priorities. Bailey said MA and related long‑term‑care waivers and services constitute about 89% of DHS spending; long‑term‑care waivers and home‑based services alone accounted for roughly $15.3 billion of DHS’s base in the agency’s figures.

Committee members repeatedly pressed for detail on what is driving recent growth. Raymond and Bailey cited three drivers: policy changes enacted in 2023 that raised provider rates (including increases for elderly‑waiver and PCA services), a rise in enrollment for some waiver programs, and increases in average costs per enrollee. Raymond said the November forecast showed higher case loads and higher projected costs than prior estimates.

"DHS, even after the split, we impact over a quarter of Minnesotans," Bailey told the committee, stressing the department’s scope as she described program counts and caseloads. Bailey said in fiscal 2024 DHS served roughly 1.3 million MA enrollees and about 102,000 Minnesota Care enrollees. The department’s figures showed about 89,000 people receiving long‑term‑care services at home and 12,000 people living in nursing facilities as of the most recent snapshot.

Disability waivers emerged as a central concern. Bailey said spending on disability waiver programs — including CADI and DD waivers — rose sharply and contributed materially to the November forecast increase. She told senators that growth came from more people accessing waivers, changes in the age profile of enrollees, increased racial and ethnic diversity among new enrollees, and rises in both the number and type of services authorized through waiver support plans. Bailey also said the use of rate exceptions for providers (requests for higher per‑unit rates to serve particular clients) has increased.

Senator Glenn Gruenhagen (R) pressed for comparative analysis with other states, saying Minnesota ranks high in per‑person Medicaid spending and that the committee should examine how states facing similar demographic change control costs. "This graph is gonna bankrupt us," Gruenhagen said of a chart showing projected spending growth. Multiple members asked staff to gather comparative and historical data to inform future policy choices.

Workforce and cost pressures were another major focus. Committee members noted longstanding shortages in direct‑care workers and low historical wages in home‑and‑community‑based services; Bailey said the agency has implemented substantial rate increases in recent sessions in part to stabilize the provider market. She also highlighted demographic pressures: the state’s aging population means more demand for long‑term supports.

The committee and DHS staff flagged several ongoing transitions that affect budgeting and jurisdictional accounting. Most notably, the Department of Children, Youth, and Families (DCYF) and the Department of Direct Care and Treatment (DCT) have been split out of DHS for budgeting purposes: DCYF became effective in fiscal 2025 and DCT will be represented separately starting in fiscal 2026 (effective July 1, 2025). Bailey said roughly $2.4 billion in programmatic spending and nearly 500 DHS employees moved to DCYF in the split; DCT is expected to receive a roughly $700 million budget and most DCT‑related employees currently at DHS will move to the new agency.

Senators also asked about the federal match and how it varies by population. Raymond summarized that federal matching percentages differ across MA populations (for example, some adult MA populations receive a higher federal match than others) and that changes to federal funding assumptions (including a gradually declining FMAP) affect state general‑fund exposure.

What the committee asked DHS to provide next: members requested deeper, disaggregated data on the disability waiver growth (age, service type, and drivers), regional capacity questions — notably licensed nursing‑home bed counts and rural capacity — and comparative benchmarks with other states that have dealt with similar demographic trends. Bailey and Raymond said staff would supply additional tables from the November forecast and other DHS data in follow‑up.

No formal decisions or votes were taken on Jan. 15; the hearing was an informational budget and policy preview. The committee scheduled follow‑up topics, including more detailed DHS briefings next week on eligibility determination and redeterminations, MNChoices reassessment, and provider payment issues.

Ending: Committee leadership framed the budget hearing as the start of a multi‑week review. Several senators urged the group to use comparative and historical data to shape decisions this session; DHS staff asked members to identify which data and comparative studies they wanted to prioritize so the agency could return with targeted analyses.