Lawmakers propose ‘radical’ change at DHS after leadership exodus

Recent resignations have renewed a push from legislators to break up the sprawling, $18B department.

Former Human Services Commissioner Sen. Tony Lourey
Then-incoming Dept. of Human Services commissioner, state Sen. Tony Lourey, answers questions from the media, alongside Gov.-elect Tim Walz and Lt. Gov.-elect Peggy Flanagan on Jan. 3. Lourey abruptly announced his resignation Monday.
Elizabeth Dunbar | MPR News file

Families on welfare, children in the foster care system, sex offenders, seniors in long-term care facilities, people living with disabilities or struggling with mental health or substance abuse — in Minnesota, all depend on services from a single state agency: the Department of Human Services.

The sprawling, $18 billion agency makes up one-third of the state budget every two years and has the largest number of state employees overall, in part because of the stunning number of services it provides Minnesota’s most vulnerable residents. And in recent days, it has been an agency in turmoil because of a series of leadership resignations.

First two veteran deputy commissioners, Chuck Johnson and Claire Wilson announced they would be leaving. Then Commissioner Tony Lourey abruptly announced his resignation, followed by chief of staff Stacie Weeks.

The exodus comes just six months into Gov. Tim Walz’s administration, who has appointed Pam Wheelock to lead the agency in the interim and promises no disruption of services for Minnesotans.

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Wheelock said Wednesday that Johnson and Wilson had rescinded their resignations and would stay on at the agency.

Chuck Johnson and Claire Wilson
Chuck Johnson, deputy commissioner for operations, and Claire Wilson, deputy commissioner for policy, have reversed their resignations after former Commissioner Tony Lourey left his post.
Courtesy Department of Human Services

The situation has left Minnesota lawmakers seeking answers about what’s going on inside the agency and — for some — fueled a push to reorganize and break up the massive department.

“I’ve been on more health care task forces than I care to think about, and they never come up with actual reform, they just come up with another program to pile on top of an existing program,” said Sen. Michelle Benson, R-Ham Lake, who chairs the committee that oversees health and human services spending. “I think it’s time for us to take a radical look at the way the Department of Human Services is structured, and the culture at human services.”

At its core, the department’s largest mission is to provide economic assistance and health care coverage to low-income Minnesotans, from families on welfare and in need of food stamps to people who work but can’t afford their health insurance. The department handles billions in state funding as well as federal grants.

But it has plenty of other functions: it provides legal services across the agency and houses its own IT staff. The agency has its own branch that investigates fraud and abuse in human services and another that oversees licensing of healthcare and other facilities. It also provides treatment to 731 sex offenders housed in high-security facilities in St. Peter and Moose Lake.

The only thing that connects services for families on welfare, for example, and sex offenders in treatment is the fact that they are both housed within the same department.

Breaking up the agency is not a new proposal, and it’s not just Republicans who are interested in the idea. In 2015, after months of work, former DFL legislator and House Speaker Paul Thissen submitted a proposal to divide the department and it’s roughly 20 divisions into five separate state agencies, reorganizing existing staff to avoid additional cost to taxpayers Currently, the agency has two deputy commissioners and five assistant commissioners.

Thissen’s plan, which he said would create more transparency and accountability, would group things such as aging and disability services into one agency, and divisions that handle low-income health care coverage and mental health services into another. Programs for children and families would be under a single agency, and there would be a separate entity to handle the sex offender program and the psychiatric hospital in St. Peter.

“Most of these agencies will still be among the largest agencies in state government, even after the reform is implemented,” Thissen, who is now a Minnesota Supreme Court Justice, said at the time.

His ideas line up with some proposed by Republicans in control of the Senate this year. They proposed a bill that would separate the department’s office of the inspector general, which investigates claims of fraud and abuse, into its own independent agency.

“Right now they are investigating themselves. That’s just a stereotypical conflict of interest,” said Sen. Jim Abeler, R-Anoka, who chairs a health and human services policy committee. He also suggested the licensing function within human services could be its own agency.

“It’s just too big,” he added. “There’s some deep problems at DHS with some of the staff and culture. It tends to eat commissioners.”

Jim Abeler answers a question during a forum in 2014. Abeler suggested the licensing function within human services could be its own agency.
Tim Pugmire | MPR News 2014

But Rep. Tina Liebling, DFL-Rochester, who chairs the Health and Human Services Finance committee in the House, said it’s already been split up.

The Minnesota Department of Health, which works on community and environmental health issues, infectious disease control and health care policy, is already separate from the Human Services Department. When the Department of Health was under fire for a backlog of complaints of abuses in elder care facilities, human services had to step in to help out, she said.

“I don't think there’s any magic formula here,” she said. “I’m certainly open to that discussion, but it’s not as simple as it sounds.”

Some have criticized the Human Services Department as managing from crisis to crisis. In March, the Office of the Legislative Auditor told lawmakers it found fraud in a DHS program that administers assistance for low-income families to pay for child care. The report prompted the Walz administration to put DHS Inspector General Carolyn Ham on paid leave pending an investigation. She’s still on leave.

The department has also been at the center of multiple data breach controversies, and it took heat over spiking premiums surrounding the rollout of MNsure, the state’s health insurance exchange.

Teddy Tschann, a spokesperson for the governor, said in a statement the “governor will continue working with legislators on both sides of the aisle to ensure the agency is functioning as effectively as possible.”

At the very least, Benson said, the department needs more oversight. In the past, she’s recommended creating an advisory board to review its operations. But she said the shakeup is a chance for Walz to seek input from the private sector and push for fundamental changes to the agency.

He did that with MNLARS, a state licencing and registration system that was plagued with technical difficulties. A blue ribbon commission that included representatives from outside of government recommended scrapping the state system and starting over with a private-sector vendor.

“Sometimes we need to step outside of our comfort zone. Government isn’t always the answer for everything,” Benson said. “This is a great opportunity for the governor to attempt to take a victory lap on something that will be a stain.”