The catalogue of state government’s costly ineptitude continues to grow.
The Masquerade of Good Government,” the cover story of the fall 2019 issue of Thinking Minnesota, documented nearly a decade’s worth of inept decision-making in St. Paul that has produced a pile of scandals and epic policy disasters. But the drama didn’t stop after we went to press.
Before the ink could dry, powerful Met Council Chair Nora Slawik quit due to “the stress of the job” and became the second Walz cabinet member to leave after less than a year. On the heels of the MNsure and MNLARS debacles, another massive state IT failure was exposed in the MnCHOICES program for families with disabilities. Then, a federal audit revealed that the state had paid out millions of taxpayer dollars in health benefits for hundreds of dead people.
It’s gotten to the point where the Minnesota Department of Human Services (DHS) is divulging new scandals in batches to clear the backlog. On November 18, DHS hit a trifecta, announcing three separate flubs that will cost taxpayers a total of $23 million in overpayments to substance abuse providers, welfare assistance recipients and child foster care providers.
The same day that the news broke, Democratic Governor Tim Walz let the mask slip by admitting “these are not the last of the issues we are going to surface.”
To keep Minnesotans informed about these and other emerging scandals, American Experiment has launched a “Scandal Tracker” (AmericanExperiment.org). As of this writing, the tracker included nearly 50 state government failures involving mismanagement, cronyism/corruption, IT failures and data breaches.
“Minnesotans want to think our state is functioning, if not perfectly, at least better than most,” says John Hinderaker, American Experiment’s president. “But the evidence shows pervasive mismanagement, incompetence, and even corruption at the highest levels of state government. At least a billion dollars has been wasted by state government since 2016 alone.”
State leaders may have once hoped to quarantine the fallout to within the Capitol complex. But the repercussions are devolving from a political scandal to significant hardships for local communities, as DHS tries to claw back $9 million in mistaken overpayments. To no one’s surprise, some county and tribal officials are defying St. Paul to protect their property taxpayers from bearing the consequences of state incompetence.
According to a letter DHS sent to Kandiyohi County, the county owes money for the department’s funding mistakes. “The frustration has been building,” Kandiyohi County Commissioner Harland Madsen stated. “We’re at a tipping point. It absolutely cannot continue the way it is.”
A new low
Another revelation transcends mere incompetence into the morbid. We’ve learned through a federal audit that the state continued to pay health insurance costs for hundreds of dead people between 2014 and 2016. Minnesota paid $3.7 million for post-mortem health benefits for deceased Medicaid enrollees that had yet to be stricken from the rolls. The fiasco turned out to be yet another technology-related failure of the flawed METS eligibility system, which the Center highlighted in our last edition.
In the meantime, the Star Tribune revealed a far more costly IT scandal in the MnCHOICES platform, which administers a $3 billion annual program to help Minnesotans with physical and developmental disabilities. State taxpayers have sunk $600 million into the development of the platform.
“MnCHOICES is so unstable,” the paper reported, “that a single errant keystroke can determine whether a medically fragile child gets round-the-clock care at home—or almost no support at all.” Tom Steward UNMASKED MINNESOTA THINKING
Given the unreliable nature of the state computer system, county field workers often manually enter data and rely on pen and paper to complete their work. State bureaucrats now expect the platform to cost $170 million a year to operate—10 times the original estimate. An expected 2019 upgrade has been pushed back until 2021 at the earliest. And once again, no one has been held accountable for the breakdown.
‘This has got to change’
DHS is far from the only agency that needs an intervention. Under legislative pressure, the Department of Administration admitted that state government routinely ignores contract laws designed to protect taxpayers from the sort of scandals engulfing DHS. A compliance review revealed that 32 agencies violated state law nearly 1,800 times within a year. The Department of Employment and Economic Development (DEED) was the worst offender. Its 584 contract violations were three times more than the 184 violations at DHS. Other serial violators included the Department of Health (146), Department of Corrections (114), MN.IT (83) and the Department of Public Safety (83).
“It is very, very troubling that there’s this attitude that we can go ahead and spend whatever we want and then we’ll tell you what it’s for,” Senate Finance Chair Julie Rosen (R-Vernon Center) said at an oversight hearing. “This has got to change.”
Characteristically, the Walz administration downplayed the scandal with Minnesota Management and Budget Commissioner Myron Frans, telling reporters the violations were “technical issues [that] do not rise to the level of fraud or abuse.”
This pattern of shrugging off criticism of agency incompetence and inaction may be hitting a wall. The usually low-key Legislative Auditor Jim Nobles publicly called out Walz at a November oversight hearing in hopes “the administration would finally pay attention” to years of DHS fiascos.
The state’s top watchdog issued a report documenting “troubling dysfunction” at the agency.
“The fact that so many DHS management officials allowed the department to make millions of dollars in unauthorized payments over multiple years is inexcusable,” Nobles said in his report. “We think fundamental and deep reforms within DHS are needed.”
Yet, at least one key legislator seemed to be more interested in the tone of the report than the conclusion of millions of wasted taxpayer dollars.
House Health and Human Services Finance Committee Chair Rep. Tina Liebling (DFL-Rochester) accused Nobles of grandstanding in his reports.
“Sometimes, very frankly, it feels to me as though you’re playing for headlines,” Liebling said. “I’m not looking for attention from the media,” Nobles fired back.
“I’m looking for attention from you.”
Soft around the edges
Nobles may have to keep on waiting, judging by the 90-day report issued by Walz’s third DHS Commissioner Jodi Harpstead. In her first appearance before a House legislative oversight committee, Harpstead portrayed DHS as a “high-capacity Department that is soft around the edges.” She went on to dismiss the $107 million in reported overpayments at the agency so far this year as less than a tenth of one percent of her budget. Rather than cutting into the seven layers of management unearthed by auditor Nobles, Harpstead proposed adding more senior managers to her already top-heavy administration.
Follow American Experiment’s Scandal Tracker and Capitol Watch newsletter for further developments.