Gov. Tim Walz has opted for an MBA to run DHS.
Monday, Walz announced his choice of Lutheran Social Service President Jodi Harpstead to be the Department of Human Services’ next commissioner.
In brief remarks after the announcement, Harpstead complimented Walz for working with a divided Legislature during the 2019 legislative session to win a budget that includes the provider tax, a critical source of funding for DHS programs. And she said she hoped to allow the rank-and-file workers of the agency to get back to work providing services.
“I accepted this appointment because I could,” she said, noting that Lutheran Social Service is stable and able to handle a transition to a new leader. In addition to running one of the state’s primary nonprofit social services agencies, Harpstead was a manager at Medtronic’s pacemaker and defibrillator division for 23 years. Lutheran Social Service has 2,300 employees, while the division she worked with at Medtronic had 6,000. DHS has 7,263 workers.
“I’m eager to see how private-sector skills can be useful in the public sector,” Harpstead said. “As the first commissioner of DHS with an MBA instead of a law or social work degree, I’m grateful for all I learned at one of Minnesota’s greatest corporations, Medtronic, and one of Minnesota’s finest nonprofits, Lutheran Social Service.”
Shedding light on Lourey hire
Harpstead’s background stands in contrast to that of Walz’s initial choice to run the massive agency, former state Sen. Tony Lourey, who abruptly resigned last month after two top deputies said they couldn’t work at the agency under his leadership.
Walz said he had initially gone with Lourey because of the overriding necessity of winning a continuation of the medical provider tax, which was scheduled to sunset at the end of this year.
Walz — with Lourey’s help — succeeded in convincing Senate Republicans that the 2 percent tax on medical services and procedures was vital. In accepting Lourey’s resignation, however, Walz agreed with Lourey’s assessment that a different “skill set” is now needed for the department.
On Monday, Walz also revealed he had initially considered candidates with strong management skills and experience when he hired Lourey — including Harpstead and Claire Wilson, a DHS deputy who was one of the two whose resignation may have sparked Lourey’s departure.
But the need for someone with legislative skills led Walz to choose Lourey, who had become an expert in the state Senate on health and human services policy and budgeting.
“As we made the decision and choose Commissioner Lourey, some of the things that were in deep consideration at the time were obviously the upcoming budget session and — I have to be very candid — the sunset of the provider tax,” Walz said Monday. “We were looking for that legislative experience.
“What I saw as a priority, that provider tax hanging out there with a sunset on it … would have devastated all the programs,” he said. “That did weigh into my decision-making.”
At the time of Lourey’s appointment, Wilson and Megan Koepke were also publicly identified as finalists for the job, though Harpstead was not.
DHS still facing ‘significant challenges’
DHS has the second largest budget of any agency in the state, behind only education. But unlike education, which is managed at hundreds of school districts, DHS is run with a large bureaucracy of managers and front-line service providers. Much of the work involves determining eligibility and overseeing contracts with private and nonprofit entities. One million Minnesotans benefit from the services the agency delivers or pays for.
When Lourey resigned, Walz opted against hiring an acting commissioner from within the agency, a choice that was complicated by the planned — and since rescinded — resignations of top deputies Wilson and Chuck Johnson. Instead, Walz went with Pam Wheelock, who had worked in both public- and private-sector management jobs over the last two decades. A former commissioner of finance for Gov. Jesse Ventura, Wheelock had also worked as St. Paul Mayor Norm Coleman’s deputy mayor.
Harpstead will take over Sept. 3 — after the State Fair, as she put it — but will spend time with Wheelock to learn the agency.
Wheelock has spent the last three weeks meeting with legislative leaders and learning the issues facing the DHS. It is Wheelock who will take the lead in giving testimony at a joint hearing Tuesday before Senate committees with oversight of health and social services.
Wheelock was asked for a preview of what she might tell Senate committees filled with critics of the agency. “DHS is a big agency,” she said. And with every change of governor there is a change in the top leadership. “Simply put, that’s what’s happened in this agency. We had a change of leadership. But the wealth of the work, the competency, the compassion, the capabilities of the staff of this agency, the will to move the work forward is just really impressive and tremendous.
“Does the agency have issues? Of course it does,” she said. “There will always be issues. Our job is to identify those issues, deal with them promptly and capably and move forward toward solutions. I think the use of the terminology of chaos and turmoil is misplaced, and it’s time for all of us to move on.”
Senate Republican leaders, however, may be unmoved. Sens. Julie Rosen and Michelle Benson have made requests under the state’s Data Practices Act for documents related to Lourey’s resignation and the ongoing investigation into to the official responsible for investigating waste and abuse in the child care assistance program. That employee, Carolyn Ham, has been on paid leave from her job as inspector general pending an investigation into an unspecified complaint. Recently she has been assigned to another legal position in the agency pending completion of that outside investigation.
On Monday, Benson, the chair of the Senate Health and Human Services Committee, released a statement on the change at the top of DHS. “The department is facing significant challenges and I can only hope that she will not accept the status quo,” said Benson. “We expect to hear more from her during Senate confirmation hearings.”
And on Tuesday, at the opening of the Senate hearing on DHS, Benson directly addressed Wheelock’s “move on” comments: “I can tell you it’s not time to move on,” she said. “It’s time to learn a lesson.”