DHS–$40 Million in Mistakes

Yesterday, Thursday, October 27, 2005, I chaired a Legislative Emergency Board Subcommittee in Salem. Two important agenda items involved Oregon’s Department of Human Services (DHS).

The first issue related to DHS’s final accounting for the 2003-05 biennium. Last spring DHS borrowed $77 million from Oregon’s General Fund (GF) and promised to pay it

back from revenues they expected to receive during the first quarter of the 2005-07 biennium. Yesterday DHS appeared before my Subcommittee to explain why they could repay only $22 million. In other words, they are short $55 million. Although $18 million was accounted for, through a series of forecasting and accounting errors DHS stands with empty pockets and a balance sheet dripping with $37 million of red ink.

In defense of DHS, the director and finance officer stated that DHS has more than 150 revenue sources. They then admitted that in the 2003-05 DHS budget one revenue source was a cluster that contained $16 million of federal money from a program that no longer existed. DHS also has an antiquated accounting system with an inexperienced accounting staff–allegedly because of a rash of recent retirements. In addition, DHS has just welcomed onboard a new Director, the third director this year. Blend these excuses together and you already know the conclusion…no one is accountable and Oregon taxpayers are left to pay the bill. This is totally unacceptable, but what is even more revealing is the attitude displayed in the second DHS issue.

My Subcommittee was presented with an October 3, 2005 letter from DHS requesting permission to convert the 18,000 square foot 6th floor of a Portland office building from "medical treatment space" to a psychiatric ward. A fairly simple request that was expected to be approved without much discussion. Unfortunately for DHS, I had a few questions about the request. I wanted to make sure that we were not going to interfere with the medical care for needy Oregonians by taking an 18,000 square foot "medical unit" out of commission without providing for those patients in some other facility.

First I asked about the lease and was told DHS had leased four floors of the Portland office building in 1995, and had recently extended that lease for another 10 years. Although my impromptu interrogation is a little hazy, I believe it went something like the following:

Question: How much does the space cost?

Answer, $1.50 per square foot.

Then it got interesting. I said we have two issues here”¦the use of the 6th floor for the past 10 years and the proposed future use as a psychiatric ward. Then the million dollar question”¦

Question, What is the 6th floor being used for currently?

Answer: Nothing.

Question: Nothing?

Answer: Sometimes we hold a meeting there.

Question: You have 18,000 square feet of empty space at $1.50 per square foot per month?

Answer: Yes, but it was necessary to take the extra space as part of the lease negotiation and it will be helpful for the future psychiatric ward.

Question: Are you telling us the 6th floor has been empty for the entire 10 years since 1995?

Answer: Yes, but it was necessary in order to lease the other three stories DHS has used all of that time.

As the reality of what was being said sank in, the tension became palpable. In behalf of every Oregon taxpayer I then responded, direct and to the point. I told the DHS leaders in the room that spending $27,000 per month for empty space for 10 years was unconscionable. I told them DHS could have sub-leased the space or moved another agency into the space, but to let 18,000 feet of prime Portland office space stay empty for 10 years was a gross waste of taxpayer’s dollars. If the rental rate was $1.50 for the entire 10 years it totals $324,000 per year, or $3.24 million in wasted taxpayer’s money from 1995 to 2005.

Last night I mentioned to one of the DHS leaders who had attended the Subcommittee meeting that I wanted to know what other empty space DHS had sitting dormant in their buildings. She gave me a slight ray of hope when she said the DHS finance officer had left the Subcommittee meeting, gone back to his office and immediately requested copies of all DHS leases to answer that question for himself.

In conclusion, Ending Balance errors of $37 million, plus wasted lease payments of $3.24 million mean over $40 million of senseless, wasted money. I understand and I am painfully aware that every tax dollar came from some Oregonian’s wallet or bank account. I wish each DHS director, assistant director, finance officer and accountant would spend five minutes thinking about what could have been done with that 40 million tax dollars. How many hungry families could have been fed? How many children and adults with disabilities could have received care? How many addicts could have received drug and alcohol treatment, to lift them out of addiction and save their lives and their families? With a fraction of that money the need for additional State Troopers on our highways could easily have been solved.

Every tax dollar is a public trust. Every public servant and elected official is a steward over that public trust. Forty million dollars wasted…It’s a crying shame.

This morning Karen Minnis, the Speaker of the House, announced the forming of a Special House Task Force to study and assist DHS. I was named to serve as Chairman of that Task Force. I will keep you posted.


Dennis Richardson
State Representative
Speaker Pro Tempore

Reprinted with Permission of author. Published in his Legislative Update Newsletter on 10/28/05