Minnesota Department of Human Services Commissioner Jodi Harpstead is moving ahead with changes at the embattled state agency. Gov. Tim Walz is also acting to quell problems in the wake of turmoil and allegations of financial mismanagement.

As Access Press went to press, Walz was poised to announce how he would possibly restructure DHS. Some state lawmakers have called for DHS to be split up. But that has raised red flags for the state’s counties, which work with DHS to provide an array of human services programs. For counties, dealing with multiple state agencies instead of one could be problematic.

DHS has an $18.5 billion budget. It serves more than one million Minnesotans in many programs, including programs that serve Minnesotans with disabilities.

As December began Harpstead announced key appointments, including new leadership for the Community Supports Administration. Community Supports has a $393 million annual budget and includes disability services, mental health, substance use disorder services and housing support. This division already has seen change with the reform in substance abuse disorder program payments and changes to the Medicaid waiver program.

Gertrude Matemba-Mutasa, former executive director of the Phyllis Wheatley Community Center in north Minneapolis, will be assistant commissioner of Community Supports.

Doug Annett, former vice president at Opportunity Partners, will take a new state post as deputy assistant commissioner of Community Supports. Annett has also served on the board of directors of ARRM.

Harpstead is also setting up an outside advisory council that will include Bill George, former Medtronic CEO. House and Senate leaders and community representatives will also be part of the task force. George will co-chair with someone else, who has yet to be named.

Harpstead and her team have had to move quickly to address concerns including more than 200 violations of state procurements laws and more than $90 million in overpayments for substance abuse treatment services.

The latter could mean difficult cuts to county and tribal programs, as they have been ordered to pay back the funds. Many counties have said they cannot pay the funds back, as 2020 budgets have already been approved and/or they simply don’t have the money available. They contend it is the state’s error, not theirs.

In his last legislative meeting before stepping down, Rep. Nick Zerwas, R-Elk River, said the overpayments are a huge burden for counties and the tribes.

“The tribes don’t have the money. The counties don’t have the money,” he said. “The state is going to be left holding the bag at the end of the day.”

Speaking before state House members December 2, Harpstead didn’t say what changes could be coming to DHS. One idea might be to split off the Direct Care and Treatment division, which treats people with disabilities, mental illnesses, chemical dependency, the elderly, and sex offenders.

Some state lawmakers have expressed a desire to split DHS into several smaller agencies. But Harpstead countered that such a split could be more expensive for the state. She said that splitting off the large Direct Care and Treatment division might make the most sense. It alone accounts for 4,900 of the agency’s 7,300 employees.

One area Harpstead discussed with state lawmakers is that of addressing problems raised in a recent Legislative Auditor’s report, which took sharp issue with the lack of internal controls at DHS. A new program, Operation Stopgap, now calls for multiple department heads to sign off on payments

 “The buck stops right here,” Harpstead said. But while apologizing for past DHS problems, she also said that the problems shown represent a small part of the many things DHS does.

Legislators had mixed reactions to Harpstead’s remarks. DFLers praised her efforts toward reform. Republicans were more skeptical, saying they need to see major efforts at reform and systems change before they can consider new programs or new funding.

Republicans also said they are disappointed that an investigation into former DHS Inspector general Carolyn Ham ended with no disciplinary action. That investigation focused on fraud in the state’s childcare assistance program, and the distrust between Ham and the anti-fraud investigators in her own office. Ham is being reassigned to a different role at DHS.