Nebraska lawmakers consider breaking up biggest agency, DHHS

12/31/2014

By Deena Winter  

AP file photo

HUMAN SERVICES: A woman testifies before the Nebraska Legislature’s Health and Human Services Committee in 2013.

By Deena Winter | Nebraska Watchdog

LINCOLN, Neb. — Nearly two decades ago, Nebraska’s four agencies dealing with health and human services were broken, so the state put them together, Humpty-Dumpty style, and the effort was hailed as a national model for streamlining. But now Nebraska lawmakers are considering breaking up the huge Health and Human Services Department, saying it has become too large and unwieldy.

The Nebraska Department of Health and Human Services has been rocked by scathing audits and embarrassing scandals in recent years, and the incoming governor is bringing in new leadership. But lawmakers wonder whether that will be enough to fix all that ails DHHS, and they’re talking about breaking up the perpetually troubled department, which was the subject of an interim study, LR535.

Sen. Heath Mello, D-Omaha, sponsored the study, saying in his six years as senator it has become clear DHHS has significant challenges, as it has grown in size and complexity, straining oversight by lawmakers and the state auditor.

Until 1996, health and human services functions were delegated to four agencies — aging, health, public institutions and social services, with juvenile services handled by corrections.

Lawmakers began consolidating the four agencies into three in 1997, and Gov. Dave Heineman completed the consolidation in 2007, combining those three into one agency with six divisions.

The department now accounts for more than a third of all state spending and has grown at a rate of more than 5 percent annually since 1995. With more than 6,000 employees, it’s nearly three times as big as any other state agency.

“I do not believe it is a coincidence that as the size and complexity of the department has grown, issues within the department have also grown in frequency and in magnitude,” Mello said during an interim hearing on his resolution.

The department has been the frequent target of scathing state audits. In the past 14 years, the state auditor has done 103 audits of the department, often finding mismanagement. Cindy Janssen, a manager in the state auditor’s office, said the biggest concern has been a lack of cooperation and obstruction in DHHS.

“We feel that comes from the top down,” she told lawmakers.

In one case, management told employees all responses to auditors’ questions had to go through the DHHS internal auditor and could be answered only by an administrator or manager.

Janssen said the audits often find a weak financial management system and inadequate monitoring of programs to ensure they maximize federal funding.

Among the department’s black eyes in recent years:
• The feds sued the state over abuse and neglect of developmental disabled people at the Beatrice State Developmental Center, resulting in its decertification and the loss $29 million in federal funding.
• The botched privatization of the child welfare system that required the repayment of up to $22 million.
• A disastrous attempt to computerize sign-ups for public benefits, with huge waiting times and backlogs.

“Public confidence in the ability of the department to perform its stated mission of ‘helping people live better lives’ has never been at a lower level,” Mello said, saying the department might need “serious structural reforms.”

Nebraska Watchdog file photo

TIME FOR A CHANGE? Sen. Heath Mello says he thinks DHHS might need serious structural reforms.

Mello said he’s optimistic about the new leadership Gov.-elect Pete Ricketts will bring to the agency but thinks lawmakers should consider hiring a consultant to evaluate the department’s structure and programming.

Former Lt. Gov. Kim Robak told lawmakers the idea of restructuring the agency feels like déjà vu all over again. When Ben Nelson was governor, five agencies were consolidated into three amid similar frustrations.

She was chief of staff for Nelson in 1991 and 1992 before becoming lieutenant governor in 1993 and was frustrated working with state agencies that they didn’t talk to each other, duplicated each other’s work and even opposed each other’s federal funding requests at times.

Money was tight and drove decisions, with five budget-cutting special sessions in two years, she said. She asked Nelson to let her tackle the dysfunction spread across the five agencies, whose directors didn’t get along. They brought in a consultant to come up with an action plan for lawmakers to improve services, simplify the system and save money.

The Nelson administration combined four agencies into three in 1997, cutting 400 jobs and saving $22 million in the first two years.

“I testified before Health and Human Services and said, ‘Look, this is an experiment. If it doesn’t work, take them back apart. It may be too big, and we may find out that it’s too big,’ ” Robak recalled.

Nebraska’s move was hailed as a national model, she said.

“Other states were watching us thinking this is really cool, and everyone was saying, ‘It’s not going to work, it’s not going to work.’ And maybe it hasn’t,” Robak said. “But I will say this, I thought that the vision was an appropriate vision.”

Robak questioned whether DHHS’s problems are mindset, culture and leadership issues.

“It may be structural, senator. I can’t say. But I will say the frustration level then is similar to the frustration level you have today,” she said. “We had the same goal almost 20 years ago, and it’s frustrating that it hasn’t been met.”

She doesn’t think BSDC problems would have happened then, because it was more visible in a separate public institutions department.

State employees told a legislative committee investigating BSDC problems in 2008 that when Nelson consolidated state agencies, BSDC disappeared into the bureaucratic behemoth and lost control over staff development, human resources, personnel and financing. They said there was no clear direction and they had trouble getting attention from the state.

Sen. Mike Gloor, R-Norfolk, said he thinks it comes down to the quality of people in charge, not the structure of the department.

Sen. Bob Krist, R-Omaha, said the Legislature has stepped in to deal with problems in BSDC, child welfare and now corrections, but he’s not sure it’s a structural problem, either.

“In my world there’s no such thing as a personality conflict,” he said. “It’s the lack of ability or wanting to get along. And some of that comes from building up a silo and you’re not going to let anybody else use their money.”

Robak said she thinks the reforms failed because the culture didn’t change.

Sen. John Harms, R-Scottsbluff, agreed, saying, “Any organizational structure will work if you have the right culture.”

“As we got more involved in this thing over the years, it’s pretty clear to me that … about (at the) mid-management level, this thing all comes unglued,” Harms said.

Robak said the arrival of a new governor will help, but it’ll be a slow process and could take four to eight years.

“It sounds easy. It is incredibly difficult,” she said. “We started it. We didn’t finish it.”

Sen. Kathy Campbell, R-Lincoln, said her committee considered breaking children’s services out of DHHS during the child welfare crisis, but the governor’s chief of staff, Larry Bare, discouraged that, saying it costs a lot of money to create a new government division.

Don Leuenberger, hired to help with the consolidation transition during the Nelson administration, worked under five Nebraska governors, serving as budget director for a couple of those years.

He said Nebraska was a model not because it combined agencies but because it involved communities in the new structure.

“But structure is not the answer to leadership,” he said.

People ask him how he feels about the prospect of lawmakers breaking up the department he worked hard to consolidate.

“If I feel ownership about anything, I don’t want it to be an organizational chart,” he told lawmakers.

The time might be right to make changes now, he said.

“We’re coming off of a period right now of a lot of stress,” Leuenberger said. “So the timing may be there.”

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