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Iowa bracing for drop in federal assistance, Branstad says

Rod Boshart, CR Gazette –

Gov. Terry Branstad said Monday he already is warning state agencies and departments to brace for an expected reduction in federal money flowing to states as Congress and the Obama administration wrestle with ways to reduce the federal deficit and national debt.

Iowa currently gets about $6.1 billion in federal aid through a myriad of supplements, programs, grants and other sources to fund government operations along side a roughly equal amount of state general fund and related financial pools, said David Roederer, director of the state Department of Management.

During his weekly news conference, Branstad told reporters that Iowa and other states “need to be prepared for a significant reduction in federal funding” that likely will not be covered by future state appropriations.

“When you have a federal government that’s racking up more than a trillion dollar increase in the national debt every year, and 40 percent of the money that they’re spending is borrowed money, we know that that is not sustainable. That’s not going to continue, and so we’re going to have to find ways to deliver these services in a better and more-efficient manner,” the Iowa governor said.

“We need to do that throughout state government and we’re telling all of the agencies and departments of state government, the state’s not going to be able to pick up all of the federal money that’s lost,” he added. “We’re going to have to find ways to try to be able to deliver the services in a more efficient way knowing full well that we’re going to see the amount of federal dollars reduced. I expect over the foreseeable future that that’s what is going to happen.”

Roederer said he was uncertain how big of a financial hit state government might take when federal contributions are reduced, but he said “any reductions are going to be significant” and it’s a situation that Iowa officials are monitoring very carefully. He said the initial impact is being felt at Iowa Workforce Development offices, where Iowa officials recently closed 36 workforce offices and budget negotiators are squabbling over funding to maintain 16 regional unemployment offices and three – possibly more — satellite offices as they work to finalize the $6.2 billion state budget for the 2013 fiscal year that begins July 1.

Iowa Workforce officials last week considered a pilot project to end in-person claim assistance at a Des Moines office that could have been expanded statewide as a way to save a significant share of the projected $5 million loss in federal money that state officials expect will occur in the next fiscal year. Branstad told reporters he scrapped that experiment when he was informed of the transition plan because he believes there needs to “be a human element” in those offices. At the same time, he noted that Iowans seeking to re-enter the workforce or better themselves will need higher skills that include being able to work with technology such as the online computers at IWD kiosks around the state.

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