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Greetings!
We wanted to share this message from DSHS Secretary Angela Ramirez regarding an updated budget announcement.
I don’t have to tell you that the work at DSHS never stops. The programs and people you support continue to need you. The work remains as consequential as ever. Behind so much of this work is, of course, the budget. While some of us might live for budget spreadsheets and some of us do not, I want to share a top-line budget update because it drives so much of the work we are all committed to.
The 2026 Legislative Session concluded last week with the passage of the 2026 Supplemental Operating and Capital budgets. Faced with fiscal constraints and increasing pressure caused by federal cuts and policies, the proposed budgets balance additional revenue options, budget reductions, and budget additions necessary to maintain access to public assistance programs.
Once signed into law by Governor Ferguson, the 2026 Supplemental Operating budget increases the agency’s appropriation authority by $719.5 million total funds, including $670 million to fund maintenance-level needs, such as increased costs due to forecasted caseload growth and service use, and $49.6 million for policy-level budget items.
Policy-level funding to support current programs and address new statutory requirements includes:
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Electronic Health Records (EHR) - $2.7 million to implement a new EHR at the Western State Hospital (WSH) campus. An EHR will improve efficiency and coordination of care, strengthen connections between facility and community care, enhance service delivery, and support recruitment and retention of hospital staff.
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Brockmann Warm Closure - $200,000 per fiscal year to support the warm closure of the Brockmann campus while DSHS works with community partners to recommend how best to use the campus.
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State Hospital Overtime – $14.9 million for anticipated overtime staffing costs at WSH and Eastern State Hospital (ESH).
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ESH Radio System Upgrades – $576,000 to upgrade the radio system at the ESH campus to support an immediate hospital need for an Emergency ALL-CALL dispatch function.
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ADA Compliance – $1.4 million to comply with the U.S. Department of Justice settlement agreement to support deaf and hard of hearing residents at BHHA facilities and comply with the Americans with Disabilities Act by providing equal access to its services and to ensure effective communication for people who are deaf or hard of hearing.
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SCC – Power Failure – $996,000 in one-time funding for costs related to the 2025 island-wide emergency power outage on McNeil Island.
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SOLA Forecast - $25.4 million and 81.4 FTEs to maintain current operations of 222 state-operated living alternatives (SOLA) beds. This funding was previously provided on a one-time basis but is now ongoing.
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RHC Transitions to Community - $2.2 million to fund three SOLA beds to transition residents from Rainier School to community settings. The 2025-27 biennial budget funded nine SOLA beds for this purpose, and this step adds three beds for a total of 12 additional SOLA beds.
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Developmental Disabilities Community Services Account - $2 million for community support and services for people with intellectual and developmental disabilities. The Legislature directed DSHS to establish a strategic planning workgroup and submit a comprehensive 10-year strategic plan to increase statewide access to appropriate community-based services and support.
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Noncitizen Program - $17.8 million to phase in nearly 1,200 noncitizen slots to maintain services for lawfully present immigrants who would otherwise lose access to services due to federal H.R. 1 changes to Medicaid eligibility.
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Adjust Consumer Direct Employer (CDE) Rates - $12 million to fund the impact of last year’s Business and Operations tax increase on the CDE that took effect after rates had been set.
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Adult Day Services Rates - $908,000 for a 10% increase to adult day rates and to restructure the rates from three geographic regions to two geographic regions.
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H.R. 1 and Other IT Costs – $20 million to increase Automated Client Eligibility System contractor support to expand the capacity to implement system enhancements, including changes made to the Supplemental Nutrition Assistance Program with the passage of H.R. 1.
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H.R. 1: Work Requirements Staffing – $14.9 million and 61.2 FTEs for temporary staffing before IT system enhancements can be implemented to monitor and track work participation for the increased number of adults subject to SNAP work requirements as passed in H.R.1.
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H.R. 1: Work Requirement IT Project – $8.4 million for IT enhancements necessary to create a work requirement verification hub in conjunction with the Health Care Authority.
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H.R. 1: Job Training Services – $4.2 million and 0.7 FTE to expand the Basic Food Employment and Training program to serve more participants statewide and accommodate the increased number of adults subject to SNAP work requirements as passed in H.R.1.
Policy-level funding reductions total $237.8 million. Highlights include:
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Maple Lane Delay - A reduction of $20.2 million as Maple Lane Behavioral Health and Treatment Center will not spend its current appropriation due to delays in the remodel to the Baker and Chelan units.
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Olympic Heritage Behavioral Health – A reduction of $14.9 million due to an expected underspend at the Olympic Heritage Behavioral Health residential treatment facility.
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Program Underspend - A one-time reduction of $10.4 million to capture anticipated underspending in the Individual and Family Services and Employment and Day budget units.
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SOLA Administration - An ongoing reduction of $784,000 in administrative support for SOLAs.
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CMS Eligibility Staff for DDA and ALTSA – Funding is reduced by half due to the Centers for Medicare and Medicaid Services extending the requirement to streamline Medicaid enrollment until Oct. 1, 2034. The total reduction is $1.4 million.
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Nursing Home Rates - A reduction of $19.7 million to phase down rate add-ons previously incorporated into rebased nursing facility rates. In state fiscal year 2027, the direct care and indirect care low-wage equity add-on is reduced by 50%. Beginning in state fiscal year 2029, the low-wage equity add-on is fully reduced, and the inflation add-on and the minimum wage add-on are also removed.
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Assisted Living Rebase - A one-time reduction of $45 million to reflect a one-year delay in the statutorily required rebase of assisted living facility rates scheduled for state fiscal year 2027.
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AAA Case Management - A reduction of $5 million to implement a 3% reduction for Area Agencies on Aging case management services.
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Administrative Reduction - An agencywide administrative reduction of $4 million to reflect savings in reduced overtime, travel, goods and services, and professional service contracts.
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Administrative Reduction - $2.8 million are reduced to implement administrative reductions across Program 110, which includes the Finance, Technology and Analytics Administration and the Office of the Secretary.
Reimaging DSHS – While the Reimagine DSHS request legislation did not pass the Legislature, and the final budget did not include the appropriation needed to submit an updated written cost allocation plan to comply with the Code of Federal Regulations, the budget bill does acknowledge the Legislature’s intent to make budget structure changes in the 2027-29 biennial operating budget. We will evaluate potential options for the 2027-29 biennial budget request and will share that information in the near future.
Capital Budget highlights include:
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Emergency Generator Replacement - $6.1 million to design and install an emergency power system for McNeil Island. Emergency generators allow areas to be lit and safe, along with providing power to operate vital building access controls, security surveillance systems, fire alarm systems, heating and cooling systems, and kitchen operations.
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Eastern State Hospital Security Assessment - $250,000 to conduct an independent security assessment of the ESH campus. The assessment will identify additional security needs, cost estimates and implementation schedules for future capital investments to provide additional security for patients and staff.
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Western State Hospital Door Replacement Project - $1.9 million to install fire-resistance doors in Building 27 and comport with fire code requirements.
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Minor Works Projects - $4.2 million to fund minor work projects across DSHS facilities necessary for code compliance and to maintain life safety.
You can find full details of the final budgets at this link: www.fiscal.wa.gov
This was my first legislative session as DSHS Secretary. It was challenging and it is clear more challenges are ahead. That being said, the final budgets represent a balanced approach that embrace Governor Ferguson’s key priorities of affordability, transportation infrastructure, addressing Washington state’s tax code, and responding to federal actions and policies like H.R. 1.
Thank you.
Sincerely,
Angela Ramirez
Secretary
Washington State Department of Social and Health Services
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