State, federal cost shifts to human services add to County’s dilemma
County boards rarely dive into budget discussions in early July, but when it comes to Lyon County’s 2027 budget, it’s unfortunately never too early.
The board of commissioners on Tuesday were the recipients of a double-dose of bad news concerning next year’s budget. And although extremely preliminary, the County is bracing itself for what could be a double-digit levy increase for next year.
The first morsel of bad news came early during Tuesday’s meeting when the board heard from Stacy Timm, executive director of Southwest Health and Human Services.
Cuts at the federal level and additional spending requirements at the State level, commissioners have learned, will put the burden on counties next year.
“Cost shifts are happening for all counties across the state, and actually all states in the country,” said Timm.
Programs that will be affected include the Supplemental Nutrition Assistance Program (SNAP), a federal entitlement program that helps low-income Minnesotans purchase nutritional foods and provides support to help stretch household budgets.
“We have known this was going to happen, but we’ve been waiting on the State to give us details about how much this would impact us,” Timm said.
The passage of H.R.1, also known as the One Big Beautiful Act, last July, reduced reimbursement for the program from 50% to 25%. As of today, Timm said, there are indications that SNAP will lose $381,000 in 2027.
The other program that will be affected — this one by a State cost shift — is the Long Term Services and Support, which includes people who are on either elderly or disability waivers, specific to residential services.
“These are folks who are in assisted living homes, group homes or with developmental disabilities,” Timm said. “Last session, in 2025, the State was going to shift this cost to counties; AMC (Association of Minnesota Counties) and commissioners went to the Legislature and talked about how significant that would be for counties; they decided to delay it by a year.”
This cost shift was a surprise to SWHHS, Timm said. She added that the difficult aspect of this one is that they won’t know how much the shift for 2027 will be until this November or December.
“In 2025, the cost shift would’ve been $730,000,” Timm said. “So we’re estimating it will be around that $700,000 mark.”
Together, the combined cost shifts from the federal government will amount to more than $1 million for SWHHS. The cost shifts, plus insurance, contracts and wages, means SWHHS would need an additional $2.1 million in 2027.
“We’ve been really fiscally responsible; this has nothing to do with how we’re been doing fiscally,” Timm said. “(The federal government) is increasing services for constituents, but they are requiring counties to fund those.”
SWHHS serves Lyon, Murray, Redwood, Pipestone, Rock and Lincoln counties, among others. Lyon County presently has a Joint Powers Agreement with SWHHS, in which the proposed levy for SWHHS — which has a zero percent error rate — is not to exceed a 10% increase in the county budget.
“If the board (of commissioners) would set it at that, it tools $1.39 million — we need $2.1 (million); that’s a pretty significant margin to make up,” said Timm.
Timm said SWHHS has already paused some hirings and is looking at other areas where cuts can be made or revenue can be increased.
“It is really difficult; every position we fill actually brings revenue in,” Timm said. “So we don’t get the actual amount of that position because we’re losing revenue by not filling it.
Timm said the only human service SWHHS provides that is not mandated is its restorative justice program, which Timm recommends not be cut.
“The public doesn’t understand what is mandated,” Commissioner Gary Crowley said. “I’ve heard from people, ‘Why are we spending all that money?’ We don’t have a choice on these services. We have talked about the 10%, that’s all you can go — realistically, it’s going to take 15% for this coming year.”
Timm said a return trip to St. Paul to advocate for counties will likely happen again, but it’s that by no means is a sure bet, as many veteran legislators are retiring and will be replaced by newcomers to the State Legislature.
”We’re going into a new year with a lot of new people in the Legislature, and it’s hard for a ‘first-grader’ to come in and make changes until they get their foot in the door and understand the process,” Crowley said.
The SWHHS discussion served as an ominous precursor to Tuesday’s talk about Lyon County’s 2027 preliminary budget.
“It’s about a month early, but I feel it’s necessary to have a broad overview on the budget and some of the challenges that we’re facing,” Lyon County Administrator Loren Stomberg said. “We do know that our health insurance has been running very high; we will be getting the renewal projections for that probably toward the end of this month.”
Last year, the board was able to get the levy increase for 2026 just under 10%; doing so for 2027 might not be possible.
“If we give everybody what they received for appropriations in 2026, if we continue on with our bond proceeds and levy for the bond payments and if we don’t use reserves to prop up the levy, my gut is telling me we’re going to be close to (a) 15%-16% (levy increase),” said Stomberg, who said any general projections given now are very fluid.
The County’s debt levy now stands at $1,264,000; using reserves to buy down the debt is one option Stomberg presented to trim the preliminary levy. Others are tightening the County’s belts within departments and lowering its appropriations to a minimum level. Stomberg said it’s important to not dig into the County’s reserves to lower the levy.
“The paths that you can take … do you want to reduce your cash, do you want to reduce your appropriations, or do you want to say, ‘This is the cost of government?”
Crowley said the board should set a goal to keep the levy under 10%.
“I want to get it down — we’re going to have to do some cuts,” he said. “There’s going to be some people not happy, but I think we’ve gotta do it.”
Commissioner Rick Anderson said the County also needs to examine its Joint Powers Agreements as some don’t involve core services.
