How are local public health services financed?

Funds for local public health services come from various sources, and the exact mix of funding varies significantly from one local public health agency to the next. The sources of funds may be grouped into four general categories:

• Federal and state funds: The state receives federal funds through block grants that are paid to the state and then distributed by the state to local agencies. The state also provides general aid-to-county funds. In fiscal year 2012, the total amount of state and federal funds allocated to the state Division of Public Health was approximately $748 million. About 73 percent of that amount ($547 million) was distributed to counties.[1]
• Medicaid:  A major source of funding for many local health departments is the state Medicaid program, which in fiscal year 2012 was composed of about 75% federal funds and 25% state funds. Medicaid provides direct reimbursement for services to Medicaid-eligible clients, as well as an annual cost settlement.
• County appropriations: County appropriations are a source of revenue for every local health department in the state, though the percentage of a health department’s budget that comes from county appropriations varies a great deal.[2] A new maintenance of effort requirement was enacted by the legislature in 2012. Effective July 1, 2014, in order to remain eligible for state and federal funding, a county must maintain its appropriation to its local public health agency from ad valorem tax receipts at a level equal to the amount appropriated in fiscal year 2010-2011.[3]
• Other: Local health departments also receive revenues from a variety of other sources, including fees for environmental health services, fees for clinical services that have sliding fee scales, grants received directly by the local health department, and in some areas Medicare reimbursements for services such as home health or diabetes care.

All funds received or spent by a local health department must be budgeted, disbursed, and accounted for in accordance with the Local Government Budget and Fiscal Control Act.[4] The budgeting, disbursing, and accounting for a county health department or consolidated human services agency is done by the county’s budget officer and finance officer. District health departments and public health authorities are responsible for performing these functions themselves.