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Minnesota Department of Human Services Commissioner Tony Lourey. Kelly Humphrey / Brainerd Dispatch

Top-level leadership churn fuels questions, frustration at the Minnesota Capitol

ST. PAUL — The revolving door at the Minnesota Department of Human Services remained in motion this week as top-level officials resigned, provoking deputies at the agency to stay on after announcing they'd leave.

At week's end, former DHS Commissioner Tony Lourey was out, along with his chief of staff Stacie Weeks. And deputy commissioners Chuck Johnson and Claire Wilson said they'd rescind their less than week-old resignations.

And on Friday, another deputy commissioner, this time at the Department of Corrections, announced that she would resign immediately to pursue "widespread reform" outside the department. The department launched an investigation into the deputy, which was ongoing on Friday.

The shake-up prompted demands for reform at DHS, an agency that provides services to more than 1 million Minnesotans and takes in about $18 billion every two years. And it raised questions about transparency at the top levels of state government as leaders, including those slated to resign, issued limited or no public comment about their decisions.

“It’s too early in the Walz administration to have a scandal of this size,” House Minority Leader Kurt Daudt, R-Crown, said. “It’s time that the Walz administration is transparent and honest with Minnesotans about what is going on at DHS."

Following the news of Lourey's resignation, Gov. Tim Walz told reporters that there was nothing nefarious about the shuffle in leadership at the department. And he said Lourey had made the decision to leave and to do so quickly to make room for Pam Wheelock, the acting commissioner.

"I think Commissioner Lourey did not want to see drama around this, he did not want to see speculation. He did not want to see a lame-duck commissioner," Walz said Monday. “I will take Commissioner Lourey at his word that he felt he was not the right person at this time."

A 'dumpster fire' at DHS

The turmoil started last week when Johnson and Wilson announced they would resign from their deputy commissioner roles at DHS after decades there. Neither issued public comment and their resignation letters were kept private, protected by state laws that shield personnel data.

Their departures had to do with their disagreement with the direction the agency was taking, Walz said. But beyond that, it was unclear (and remains unclear) what compelled them to step down.

Within hours of those announcements, the St. Paul Pioneer Press reported that an investigation into a top DHS inspector tasked with investigating fraud in the state's child care assistance program had yet to start four months after it launched. And during those four months, Inspector Carolyn Ham remained on paid leave, collecting more than $42,000 in salary.

Within two days, Lourey in a face-to-face conversation with the governor, said he planned to step down.

Lourey submitted his letter of resignation Monday and left his office at the end of the day. Walz said he hadn't asked Lourey to make the move and that it didn't signal that the former DFL state senator had been fired.

On Monday morning, reporters received an email from Walz burying the lede of Lourey's departure and highlighting the appointment of Pam Wheelock as acting DHS commissioner. Wheelock, a former commissioner of finance in the Ventura administration, deputy mayor of St. Paul and chief operating officer at Twin Cities Habitat, took over the post on Tuesday. She is also a former interim president and CEO of Blue Cross Blue Shield of Minnesota.

In his letter of resignation shared by the governor's office, Lourey said he wanted to step aside to give someone else a chance to execute Walz's vision at DHS. He also looked back on perceived successes in bringing across the finish line a $48 billion, two-year state budget that kept in place a tax on health care providers that funds care for low-income people. And Lourey touted a $100-a-month increase to cash assistance payments, which are set to begin next year.

"I believe a new leader is necessary to best execute your vision for human services and continue the critical work of improving the health of Minnesotans across the state," Lourey wrote in his resignation letter to Walz.

On Tuesday, Lourey's chief of staff Stacie Weeks submitted her resignation, following Lourey out the door.

While Lourey's resignation letter was made public, he didn't speak with reporters about his decision to step down. Johnson, Wilson and Weeks declined to make public comments about their moves this week.

State Rep. Mary Franson, R-Alexandria, at a press conference on Monday likened the situation at DHS to a "dumpster fire" and called on the Walz administration and new leaders at DHS to take the issue of child care fraud more seriously.

“Since Gov. Walz has taken office, the department has been embroiled in chaos,” Franson said. "Picture that puppy you see as a GIF and it says, 'It's fine,' and meanwhile all around the puppy there's fire. That's Gov. Walz saying, 'It's fine.' Meanwhile, the Department of Human Services is under siege."

The Office of the Legislative Auditor earlier this year found that there was "pervasive" fraud in the state's child care assistance program. Walz on Monday said Lourey's resignation wasn't related to the child care fraud issue.

The DFL governor said claims that there was a scandal at DHS are inaccurate. Instead, he said, Lourey chose to step down because he felt he wasn't a good fit for the position. And others made their decisions to leave because they disagreed with the direction at DHS.

“There’s going to be a desire to find more drama than is there, those of you that know me know that I don’t do drama,” Walz told reporters.

Four days into her tenure as acting DHS commissioner, Wheelock told Forum News Service that she'd advocate for tending to issues of the day and broader responsibilities of the agency, rather than looking backward at the issues that influenced the resignations.

"I know of nothing that suggests it's a good use of my time to look in the rearview mirror," Wheelock said. "I’m completely satisfied that individuals made personal and professional decisions that met their needs and my work is really very future-oriented. My goal is to bring some stability to the organization.”

Wheelock said she is well equipped to take over the commissioner post, which she described as likely "the toughest job in state government."

Two back on board and a call for reform

On Wednesday, Johnson and Wilson announced they would stay on at the department and rescinded their resignations. They didn't comment on their decision to stay but Wheelock said their presence would help ensure a steadier transition at DHS.

And while two key legislative leaders said they felt confident in the way Wheelock was entering into her tenure at DHS, others said the state should investigate to better understand what fueled the leadership churn.

"We just don't have any information on what's the root cause of all this unhappiness and turmoil within the agency, " Rep. Nick Zerwas, R-Elk River, said. “Since four people decided they needed to jump ship in the matter of a long weekend, we need to figure out what’s really going on there.”

Rep. Tina Liebling, D-Rochester, said reopening the disagreements would be counterproductive. She suggested that new department heads work on putting in place recent programs enacted by the Legislature, including new efforts to weed out fraud.

"I have no reason to believe that there’s any sort of scandal," said Liebling, who chairs the House Health and Human Services Finance Division. "I think it's just Commissioner Lourey not having the entire skill package he needs to be successful in that position."

State Sen. Michelle Benson, R-Ham Lake, said the state needs to take a "radical look" at the way the department is structured. Benson chairs the Senate Health and Human Services Finance and Policy Committee and she said the state should consider breaking off certain sectors housed under the department into separate agencies.

She also urged the governor to follow the course he and state lawmakers took in reviewing problems with MNLARS, the state's embroiled vehicle registration and licensing system, and call in a review from private industry experts.

“It just might be the case that DHS is too big of an entrenched bureaucracy, even for somebody with Tony Lourey’s experience, to transform,” Benson said. “Obviously there is a significant cultural issue that is going to need to be remedied. We cannot have the same cast of characters if we hope for significant change in this department."

A top corrections commissioner steps down

On Friday, Sarah Walker, Department of Corrections deputy commissioner of community services, resigned effective immediately.

In her letter of resignation, Walker said she wanted to advance "wide-spread reform" outside the department after working with the department for about six months.

"In my short time as deputy commissioner, I have become convinced that my voice and skills are best suited for pushing for widespread reform from the outside," Walker wrote in her letter of resignation. "There are unique opportunities at the local and national level to advance significant reforms and reduce racial disparities and I feel compelled to contribute to those efforts without encumbrance."

A DOC spokeswoman said the department had received complaints about Walker and an investigation was ongoing.

Walker said the complaints that stemmed the investigation were likely politically motivated, but she said she welcomed the chance to clear her name.

"I am proud of my time at the DOC and any allegations of wrongdoing are baseless and purely political," she wrote in a statement. "I welcome any investigation that is questioning my ethics. I am an open book and I actually believe in transparency."

News of the resignation of a top corrections deputy commissioner fueled additional questions Friday about turnover under the Walz administration.

Department of Corrections Commissioner Paul Schnell appointed Walker, a long-time advocate for criminal justice reform who lobbied at the Capitol and founded the Minnesota Second Chance Coalition, in January.

Schnell in a statement said he wished Walker well in her future pursuits and appreciated her work with the department.

“While Sarah’s tenure with the agency was short, her contribution in helping us think about and frame the future of criminal justice reforms was valued."