Agency of Education urges Senate to restore reinvestment language in H.558, preserve rulemaking authority

Katie Smith, special education finance director at the Agency of Education, told the Senate Appropriations Committee the agency is asking lawmakers to restore statutory language in H.558 and to preserve AOE rulemaking authority over school‑based Medicaid reinvestment.

"We respectfully ask that the committee restore and retain the full statutory language in 16 29 59 a as introduced in H.558 to ensure Medicaid reinvested funds are used for prevention and intervention programs," Smith said, reading the agency’s written testimony. She said AOE’s role in reviewing reinvestment plans, aligning investments with district standards and tracking outcomes is "essential to sustaining this work."

The request stems from federal guidance and a planned transition to a cost‑based Medicaid model. AOE staff said the program amounts to roughly $50 million–$60 million in Medicaid claims, including about $50 million reported as currently unspent in district reinvestment accounts. Smith said striking the statute and removing reporting and rulemaking language would disrupt local planning, weaken accountability and risk double payments for state‑placed students.

Cassandra Ryan of AOE (introduced by staff) elaborated on rulemaking and fiscal issues, saying the agency wants new rules that will be subject to public comment and stakeholder engagement rather than embedding every detail in statute. Ryan also warned that moving the implementation date from July 1 to Oct. 1 would be "problematic" because AOE had not included the necessary spending authority for FY27 in its budget request even though AHS had made a similar request for administration.

Committee members asked for clarity about whether the House budget version of H.558 retained the rulemaking authority AOE seeks. JFO and witnesses said multiple draft versions and drafting changes meant some original introduced language did not appear in subsequent texts, and members requested follow‑up with House Education and JFO staff.

The hearing produced no formal vote on H.558; AOE offered to provide additional written language and return for further testimony. The committee asked staff to review the bill language and the budget implications so senators could reconcile statute, rule authority and FY27 spending authority in conference work.