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The $100 million challenge: Budget deal requires ‘blue ribbon’ panel to find big savings in state health and human services spending

House Speaker Melissa Hortman, Gov. Tim Walz, and Senate Majority Leader Paul Gazelka
MinnPost photo by Peter Callaghan
As part of the deal struck to resolve the 2019-21 Minnesota state budget, Gov. Tim Walz and legislative leaders agreed to create a “Blue Ribbon Commission on Health and Human Services.”
Waste, fraud and abuse, at least the search for it, has become a legislative cliché — and often a political cudgel — for Republicans to beat up on “big-government” Democrats.

But now that cliché will no longer be only the stuff of campaign brochures. As part of the deal struck to resolve the 2019-21 Minnesota state budget, Gov. Tim Walz and legislative leaders agreed to create a “Blue Ribbon Commission on Health and Human Services.” Its charge? To find $100 million in savings from those two spending categories.

Between the Department of Human Services and the Department of Health, the state administers dozens of programs for low-income residents, including nursing care for the elderly as well as medical assistance and child abuse prevention and intervention. About 1.1 million residents receive medical coverage via state Medicaid and another 89,000 through MinnesotaCare. On an average day, more than 10,000 children and young adults are in foster care, 31,000 families receive monthly assistance from the Minnesota Family Investment Program, and 25,000 seniors over age 85 are in state-subsidized nursing homes.

The 17-member commission has until October of 2020 to find the savings. If they fail, an equal amount will be taken from state reserves in the 2021-23 state budget, unless a future Legislature does something different. The commission will be co-chaired by Health Commissioner Jan Malcolm and Human Services Commissioner Tony Lourey, though under the budget language Lourey will convene the first meeting.

A $100 million target might not seem like a lot of money in a state general fund budget that spends more than $48 billion over two years ($15 billion of which goes toward health and human services programs). But the waste, fraud and abuse concept continues to occupy much of partisan legislative debate over the growth in state spending. 

Backers of the panel say designating an amount makes it seem more real. “We wanted some incentive and something to shoot for that were literal savings that would be a result of having this blue ribbon panel,” said Senate Majority Leader Paul Gazelka, R-Nisswa. “It’s a kind of a step for all of us to say we want to work together to depress waste and fraud and use that money for the people who actually want and need the services.” 

State Rep. Tina Liebling
State Rep. Tina Liebling
Both parties speak about cost savings, though often in different ways, and they had no common estimates for possible savings. Without agreeing yet on how, the leaders decided to set a target for how much.

Rep. Tina Liebling, the DFLer from Rochester who is chair of the House Health and Human Services Finance subcommittee, said she thinks the commission will help the DFL and GOP at least have common language about the numbers. She was critical of GOP budget proposals that she said include “fake savings” in health and human services spending.

“That’s where the idea got its start,” she said of the commission. “In order to come to some closure on the budget, we’d have to have a mechanism for examining some different savings ideas to see if they really could be fleshed out.”

Gazelka, Walz and House Speaker Melissa Hortman are likely to announce their appointments to the panel in the next few weeks, with the legislative leaders getting two each and Walz naming the rest. 

Walz is charged with getting representatives with expertise in health care and social services; “cultural responsiveness”;  innovation; and from people with experience in purchasing services. A labor leader must be included, as must experts in health and human services technology.

Lourey said Tuesday he expects the panel will include private sector leaders as well as academics with expertise in health and social programs, along with health care providers and consumers. Malcolm suggested county officials who deliver services in partnership with the state.

Lourey, a veteran member of the state Senate before being appointed to run the Department of Human Services late last year, said he thinks the commission is “real” and not just a political response to GOP criticism of spending. “It’s a shared concern about making sure that we have sustainable programs,” he said. “We need to be cognizant of the growth trends. We need to understand where they come from, largely it is driven by demographics but, that said, we might have learnings from other groups that could help us.

“It wasn’t just something to get us through this session,” he said. 

And while he admitted to initially being conflicted about whether it was a good idea to have elected legislators on the commission, he now says he thinks it will be helpful. “Having legislative leaders at the table during these discussions really helps when you get into the Legislature,” Lourey said. “Disagreeing over what the numbers are — how much things cost, what is driving increases, what a particular change will save, if anything — has been a barrier to productive conversations in the past.” Sitting together might get the parties more quickly to a common set of numbers, he said.

Malcolm agreed. “We often don’t have core agreement on concepts and definitions and clarity of the purpose of programs and associated numbers,” she said. “We often presume too much of people’s shared understandings of the concepts. That is in and of itself a helpful goal for this process.”

Malcolm, who was state health commissioner from 1999 to 2003 before returning to run the Department of Health in 2018, said the commission has a short timeline, but that she accepts the challenge. “It’s not going to be an easy thing, but we think it’s an achievable thing to find that $100 million in the out biennium,” she said. “But we don’t want to stop there. That’s a short-term goal, but we want to really go beyond that and look at a longer-term strategy to change the cost-curve in fundamental ways. I hope we don’t let the shortness of the timeline constrain us from some of the ideas that might take a longer time to develop.”

Tony Lourey
MinnPost photo by Peter Callaghan
Human Services Commissioner Tony Lourey said Tuesday he expects the panel will include private sector leaders as well as academics with expertise in health and social programs along with health care providers and consumers.
Malcolm also said she wants to look for ways to work more closely with Lourey’s department, since the goals or both are similar. In fact, many of the counties that deliver programs don’t break them down between human services and health, she said.

There are only two deadlines for the commission: Oct. 1, 2020, when the commission must report its findings to Walz and the Legislature; and Oct. 2, 2020, when it must dissolve. Lourey said he hopes to have the first meetings of the commission by fall. He also said he wants to provide an opportunity for public involvement, even though the budget language doesn’t require it. 

While both Lourey and Malcolm can name designees to serve in their place, both said they intend to take on the job themselves.

It is up to Lourey and Malcolm to decide when the commission meets and how it will work, though the bill setting up the body tells gave them some hints, directing it to: increase administrative efficiencies; identify duplicity of services among counties, tribes and the state; look at “cost-drivers” in health and human services programs; and “reducing fraud and improving program integrity.”

While allegations of fraud and abuse in the child care assistance program (CCAP) got most of the attention during the 2019 legislative session, the budgets passed by lawmakers this year already took specific aim at that program. And any savings from CCAP going forward would not count against the $100 million target. Instead, the money would stay within the program to reduce a long waiting list for child care assistance. 

“With all the things that DHS touches and the fact that we really haven’t done much of this in this area, I think we can make a difference when there’s willing partners,” Gazelka said. “I’m looking forward to the possiblities of dealing with some bureaucracies that I don’t think we really have for the last eight years.”

Liebling agreed. “We have very different ideas about what does it mean to trim the HHS budget,” Leibling said. So the commission was not charged to “go forth and find good ideas” but to actually hit a target that could be written into the budget. “It’s a place to really hash out where can money actually be saved.”

Senate Majority Leader Paul Gazelka
MinnPost photo by Peter Callaghan
Senate Majority Leader Paul Gazelka
Leibling said DFL budget writers don’t doubt that there are savings to be found in the massive programs that spend billions of dollars. “But the question is can you find it, how much can you find, and what did it cost you to find it,” she said. “It isn’t a question of can we find some, it’s a question of how can we structure ourselves to really do that in a way that’s gonna work.” 

As with the budget deal itself, Gazelka pointed to the mid-session agreement to address the troubled MNLARS licensing computer system, as key to creating the commission. Walz and legislative leaders of both parties agreed to try to end the political bickering over MNLARS, which had been built by Minnesota Driver and Vehicle Services within the Department of Public Safety, and ask for outside expertise, which led the state to look to private companies for a new system.

That agreement — and the relationship built with Walz by forging it — gave Gazelka confidence that he had a “willing partner” in Walz for looking at government spending in different ways.“I’m hoping that’s the pattern across the agencies,” Gazelka said. 

That’s why he is willing to suspend use of the potent political messaging that DFLers don’t care about waste in government spending. “I gave the governor credit for working with us on MNLARS and therefore cooperation on new funding streams to make that work,” he said. “That’s a pattern that we think is good for Minnesota and the governor should get just as much credit as us in focusing on that.”

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Comments (8)

  1. Submitted by Vonnie Phillips on 06/26/2019 - 12:06 pm.

    I find it interesting the most obvious fraudulent behavior that goes on within the social service system, non-custodial parents receiving benefits for their children that live somewhere else; grandmother, friends and relatives. Deal with this first. If relatives and friends are taking care of children that are not theirs, then they should receive the social welfare benefits, if they’re eligible, not absent parents.

  2. Submitted by Michael Ofjord on 06/26/2019 - 12:51 pm.

    I have no expertise on budgeting and administration. None. But all of us want to save and be good stewards of our own money, and that shouldn’t vary among Democrats or Republicans. So, this concept of saving $100 million should be a no brainer. But for those who will complain for various reasons that too much is spent in health and human services, I can tell you that after working 40 years or so with various social service agencies that depend on the State to pay for services, the pay we have received from that department has barely kept up with inflation. So, the ones who take care of the vulnerable population are vulnerable because of the lack of a decent salary. Twelve bucks and hour to start doesn’t cut it these days. Does Paul Gazelka care? I don’t think I want to answer my own question.

  3. Submitted by Joel Stegner on 06/26/2019 - 12:54 pm.

    A place to start is making sure that providers are not billing for services that are not received, and using substantial fines when they are proven to be making inflated charges. On the other hand, rewards should be offered for providers who identify ways to provide less expensive services with no decline in outcome. As most costs are provider related, that is where to start, rather than denying needy people services.

  4. Submitted by lisa miller on 06/26/2019 - 12:55 pm.

    Ask those who do the important actual ground work–those who work in the facilities or for the counties. And then listen to what they say and be open to modifying programs. Provide surveys with write in options to state and county employees. Too often programs measure success by only relying on data/narratives managers of the programs provide.

  5. Submitted by Henk Tobias on 06/26/2019 - 01:04 pm.

    Let’s be clear Republicans don’t give a hoot about waste fraud and abuse, they never have. For them its all about keeping taxes low on their political patrons and ensuring that people with a darker skin tone aren’t getting “free stuff” that Republicans don’t think they deserve. They’ve been doing this little dance forever and everyone with any sense knows it.

  6. Submitted by Kathie Noga on 06/26/2019 - 04:58 pm.

    As someone who has to use the human service system because I often have to take temporary jobs rather than permanent ones, I hope when they cut the money it is actual waste. I am very afraid they will start cutting services to people instead. What we need is very simple: bus and train routes to places in the suburbs with the jobs and also having during the day bus access in these places, so we can do interviews. We need training in specific areas, so us temporary workers can get permanent jobs. Did you know 40% of the work force is temporary? It never used to be that high. After the recession I have only been able to get temporary work. Before the recession I had two jobs which were permanent ones. It would help to process applications faster and to inform people when they need to apply elsewhere. I applied for Medical Assistance in February and then they changed over to a new system in April. You used to go through the county. Now you have to go through MNSure. I was not able to call Human Services until after my temp. job ended at the end of May because we did not have phones on your desk. Even with a cell phone, there was little time to call with two 15 minute breaks and half hour for lunch. They told me I had to apply via MNsure and told me to go to Briva Health for help, which was very smart thing to do. They know how to navigate the system. Most people would not have their knowledge of the system. I had to apply at the beginning of June. Still have not heard yet when I will be getting it. With unemployment it takes so long for you to get it after you apply because they give the employer 10 days to respond. When employers respond right away, it helps the person applying. You get it so much faster. When the employer does not respond, then you have to wait. I actually sent them a copy of a prin out of an e-mail showing I asked for another assignment. They have the contact information of the agency. They could call the agency to speed up the process, but they wait for the employer. This is where they should change the system and contact them. It would help a lot.

  7. Submitted by Terry Frawley on 06/26/2019 - 06:51 pm.

    The whole concept of allocating funds for a specific project and then tracking that program to determine if it useful seems to be difficult for the state. If there is no tracking, then the program needs to be terminated.

    What programs are duplicate efforts aimed at the same or similar population? Can programs be combined to achieve desired goals?
    Let’s inject a little common sense into the process!

    Does the legislature read the Legislative Auditor’s report? If so, why don’t they address the issues brought forward? If the law requires tracking and it is not done, why isn’t Attorney General Ellison pressing charges? Is he doing his job? We are on a slippery slope of politics!

    Who runs this state? Who can Minnesotan’s hold accountable?

  8. Submitted by Paul Udstrand on 06/27/2019 - 03:12 pm.

    Tim Pawlenty spent 8 years looking for waste and abuse and he claimed to find a grand of $80 million. That’s $10 million a year, and these guys think they can $100 million? On the bright side, this is yet another opportunity to demonstrate that Republicans are delusional when it comes the cost of government.

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