Gov. Kim Reynolds signs into law 'compromise' on spending $56M in opioid settlement funds
More than $56 million in settlement money Iowa has received to battle the opioid crisis can now be spent after years of legislative inaction.
Gov. Kim Reynolds on Friday, June 6, signed into law House File 1038 , outlining how Iowa will spend the millions of dollars the state has received through national settlements with drug manufacturers and pharmaceutical companies.
Lawmakers broke a stalemate over how to spend the money in the final hours of the 2025 legislative session.
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“The opioid crisis continues to impact Iowa families,” Reynolds said in a statement. “I’m thankful the Legislature reached an opioid settlement fund agreement this session to immediately distribute $29 million to providers and appropriate ongoing available funds to support early intervention, prevention, treatment and recovery.”
Despite some concerns that the legislation was overly prescriptive, it passed with broad support in both chambers late May 14, gliding through the Senate unanimously and getting the House's approval in an 84-1 vote. Rep. Brian Lohse, R-Bondurant, cast the sole vote against it.
The new law largely uses the Senate's plan for state agencies to lead the charge in awarding future settlement funds but has elements of the House's proposal for a "bottom up" approach guided by the behavioral health districts closest to opioid addiction services — though not to the extent some lawmakers wanted.
House Appropriations Committee Chair Gary Mohr, R-Bettendorf, during floor debate called the legislation "a fair compromise" between the governor's office and two chambers that would help communities combat opioid abuse.
"There were significant differences between the original bills in the House and the Senate, and had we continued down those paths, we would have gone a third year without using these funds to address opioid abuse in Iowa, so all three sides have now agreed to changes in their approaches and find some common ground," Mohr said.
To spend the backlogged settlement funds, the legislation directs $29 million to the Iowa Department of Health and Human Services to give to various organizations across the state toward infrastructure. Another $27 million can be used for programming needs among the state's seven new behavioral health districts.
That money comes from fiscal year 2025, the current budget year ending June 30.
Senate Minority Leader Janice Weiner, D-Iowa City, said on the floor before the chamber's vote that it seemed opioid settlement funds had been "used as a political bargaining chip." She shared during a 2024 debate on opioid legislation that her daughter has a co-occurring substance use disorder.
"It's their (Iowans') futures and their kids' futures, and they deserve a good, clean process, which we could have done," Weiner said. "We've had 122 days. I don't wish on anyone the feeling of waking up every day wondering if it's going to be the day you find out your child's died of an overdose, and then trying to figure out how you explain that to your grandchild."
As settlement dollars started coming to Iowa, lawmakers in 2022 set up the Opioid Settlement Fund to collect and divvy up the funds. The money had gone unallocated until the 2025 legislative session, as House and Senate lawmakers disagreed on the appropriate level of legislative oversight in awarding money.
With no consensus on how to distribute funding, the amount of unspent opioid settlement money grew to more than $56 million.
The Iowa Attorney General's Office anticipates the state will receive more than $325 million from the opioid settlements through fiscal year 2039. Half the funds are allocated to local governments based on population and the other half goes to the state, all for use on opioid addiction treatment and prevention services.
The bill sunsets in 2030, allowing lawmakers to revisit the process of allocating settlement funds and make tweaks as needed.
How will future settlement funds be awarded?
Starting July 1 through June 30, 2030 — budget years 2026 through 2030 — the bill directs 75% of funds to Iowa HHS and 25% to the Iowa attorney general’s office to use to combat and treat opioid addiction.
The state's seven behavioral health districts under the new behavioral health system, which is slated to come online July 1, also have a role in deciding how funds are spent.
The overhauled behavioral health system combines 32 previously separate mental health and substance use districts into seven in an effort to streamline service access. The administrative services organization overseeing the system — the Iowa Primary Care Association — would submit plans from the districts detailing how they would use the funds on treatment and prevention for opioid addiction.
Iowa HHS and the Attorney General's Office would have to submit an annual report by Nov. 1 to the general assembly and the governor with information on how funds are used and if they achieved the intended outcomes. It also would include information on the initiatives funded with local governments' share to avoid duplicating resources.
The report would need to have input from each district behavioral health advisory council with recommendations for how future funds are spent.
Some lawmakers echoed the House's initial concerns about legislative oversight in the process of awarding funds.
"We have absolutely no idea where the funds are going to be distributed to once they reach the department," Rep. Rob Johnson, D-Des Moines, said during floor debate.
Which organizations will be awarded funds?
Several Democrats took issue with lawmakers funneling much of the $29 million to 10 organizations that are not named in the bill and that they said Iowa HHS had not identified before they took a vote.
Iowa HHS has since identified the organizations .
The bill includes carveouts that give:
- $3 million to YSS in Ames to support a recovery high school program to provide services to students.
- $5 million to Des Moines-based UCS to expand Medication-Assisted Treatment services.
- $1.5 million to Flowstate Health in Council Bluffs to provide jail-based mental health and substance use care.
- $2 million to Agape in Sioux City for recovery housing and post-treatment support services.
- $2 million to provide local peer overdose responder services to provide services in emergency rooms in Black Hawk, Des Moines, Carroll and Wapello Counties.
- $4.5 million to provide grants to establish community-based recovery support service facilities in Black Hawk, Clinton, Linn, Polk and Pottawattamie Counties.
- $1.5 million for grants to Barikiwa in Des Moines and One City United in Waterloo to establish recovery cafes in behavioral districts 5 (south central Iowa) and 7 (eastern Iowa).
- $1.5 million for grants to recovery respite facilities for women recovering from or receiving treatment for substance use disorder in Linn, Polk, Pottawattamie and Woodbury Counties.
- $3 million for a grant to Community & Family Resources in Fort Dodge.
- $2 million for a grant to Vera French in Davenport.
- Nonprofits could apply to HHS for grants from a $3 million pool to develop recovery housing in behavioral health districts that don't currently have any.
Senate Appropriations Committee Chair Tim Kraayenbrink, R-Fort Dodge, said during floor debate that Iowa HHS recommended the projects and disputed concerns about the bill being passed in the session's final hours.
"Just because it's done on the 11th hour, I don't know if you'd want the first car off the assembly line or if you'd want the one that's been on there the longest and has been tested a little bit more," Kraayenbrink said.
Sen. Janet Petersen, D-Des Moines, said it was time to get these dollars out to Iowans across the state.
“I know sometimes when a bill comes to us late at night, it's not necessarily how you would have done it, but it's time," Petersen said.
Marissa Payne covers the Iowa Statehouse and politics for the Register. Reach her by email at mjpayne@registermedia.com . Follow her on X, formerly known as Twitter, at @marissajpayne.
This article originally appeared on Des Moines Register: Gov. Kim Reynolds signs into law 'compromise' on spending $56M in opioid settlement funds
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