Lutheran Social Service chief to lead troubled state agency

ST. PAUL (AP) — Gov. Tim Walz named Lutheran Social Service of Minnesota chief executive Jodi Harpstead to take over the troubled Department of Human Services on Monday, choosing a leader with experience managing large organizations to replace his first choice who abruptly resigned.

Pam Wheelock will continue as acting commissioner of the department, the largest state agency in Minnesota, until Harpstead takes over Sept. 3. Tony Lourey, a policy expert, stepped down as human services commissioner last month. Wheelock will also represent the agency Tuesday at a Minnesota Senate hearing on the department’s recent turmoil.

Harpstead has held the top spot at Lutheran Social Service since 2011, managing a nonprofit that has more than 2,300 employees. Before that, she worked for 23 years at medical device maker Medtronic, where she managed a defibrillator product line with over 6,000 employees.

Walz, a Democrat, noted at a news conference that Harpstead already runs an organization that offers a broad array of human services — including housing, crisis shelters, mental health counseling, adoption, financial counseling, senior nutrition, foster care and services for the disabled.

“That is about the exact job description of the Department of Human Services in many cases,” the governor said. “The vast majority of the programs are supported by government contracts … meaning Jodi has worked with DHS closely over many years and has a great understanding of this agency.”

The department accounts for nearly one-third of state spending, or about $13.3 billion in the current two-year budget, and serves about 1 million residents, including those who are poor, young or elderly, physically disabled and mentally ill. It has about 6,700 employees. Only schools get a bigger share of the state’s budget.

Lourey, a former state senator, came into the new Walz administration with a reputation as one of the Legislature’s top experts on human services and the department’s budget. But he lasted just six months in a job that has been called one of the toughest in state government. Harpstead had also been a finalist for the position.

Walz told reporters that Lourey edged out Harpstead at the time because of his legislative experience. The governor said that his priorities back then were passing a human services budget and preserving a tax on health care providers that he said would have decimated health programs if it had been allowed to lapse.

Lourey succeeded in addressing both goals during this year’s legislative session, but he struggled with the day-to-day job of running an agency that had long been under fire for its handling of alleged fraud, data breaches and other administrative problems. He stepped down just days after two deputy commissioners resigned without explaining to the public why they did so. Lourey’s chief of staff also resigned. The two deputies rescinded their resignations after Walz brought in Wheelock.

Harpstead said she plans to pick up where Wheelock leaves off. She plans to rebuild the department’s leadership team, prepare an agenda for next year’s legislative session and convene a blue ribbon commission with Health Commissioner Jan Malcolm that the 2019 Legislature mandated.

The commission is supposed to find $100 million in savings on health and human services spending. The commission was a concession to Republicans who contend the department is riddled with waste, fraud and abuse.

On Tuesday, two committees in the GOP-controlled Senate that oversee the department will hold a joint hearing on the agency’s woes. Topics will include a review of a report by the nonpartisan legislative auditor that documented significant fraud within the department’s Child Care Assistance Program for low-income working parents, the ensuing placement on leave of the department’s inspector general pending an investigation that only recently began, and overpayments of more than $25 million to two American Indian tribes for substance abuse treatment programs.