DHS Budget Woes—The Genie Is Out Of The Bottle

As Chair of the Oregon Legislature’s Emergency Board Sub-Committee on Human Services, I had intended to delay discussing the storm clouds on the Department of Human Services (DHS) budget’s horizon until the revised forecasts were submitted. But, since the December 7th Oregonian article by Michele Cole has let the genie out of the bottle, it is appropriate to discuss what is presently known.

The public’s trust for DHS is at an all-time low, yet the agency continues to dig itself into a deeper hole. As you may recall, last year Oregon voters were threatened with dire cuts to human services if the Measure 30 tax increases were not approved. Only two months after voters soundly rejected the tax increases, the agency “discovered” $117 million due to a “miscalculation.”

Last April, DHS told the Legislature it required a “loan” of $77 million to make it through the final quarter of the 2003-05 biennium, and gave the promise to repay the loan from revenues that were expected in the following quarter.

When DHS came back to the Emergency Board on October 27, 2005, the agency reported that it could only repay $22 million of the $77 million loan. Although some of the shortfall was understandable, DHS admitted it had miscalculated its revenue streams by some $37 million. It was during that October E-Board Human Services Subcommittee meeting that DHS admitted it was spending $27,000 per month to rent an empty floor of a Portland medical facility. After further questioning DHS representatives admitted the agency had been paying rent on the unoccupied floor since 1995″”failing to utilize the sixth floor of the building for more than a decade.

DHS’s present conundrum can be summarized in a single question. Since DHS proposed its 2005-07 biennial budget using the same erroneous revenue forecasts that resulted in the $37 million shortfall for the final quarter of the 2003-05 biennium, what does that portend for revenue shortfalls during the eight quarters of the 2005-07 biennium? By next month we should know the answer to this question, but one thing is for sure, there are dark clouds forming over Oregon’s Department of Human Services. The Oregonian article indicates DHS expects the shortfall to exceed $55 million. In truth it may be double that amount or even multiples of that amount.

Like any family suffering from a loss of expected income there are only two options, decrease expenditures or increase income. For DHS it is the same principle, only with more zeros in the numbers. DHS must have a balanced budget, so the consequences of such a dramatic reduction in DHS revenues would be either substantial cuts in services or a special session of the legislature to infuse more money into the DHS budget. For now all we can do is wait for the revised revenue and caseload figures, evaluate alternatives and then work to do what is best for Oregon and her citizens.

Dennis Richardson

State Representative

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  • The Truth

    Uh Dennis, did you bother to read that the shortfall is due largely to a cut in FEDERAL FUNDING? DHS can’t be faulted for that, nor can you frankly. They are not mismanaged, you are just trying to destroy all govt, especially the agency that does the most good for disadvantaged Oregonians.

    • Mike Derrick

      Keyword “Oregonians” DHS could save a lot of money by not giving benifits to illegals.

  • Re: “Dennis, did you bother to read that the shortfall is due largely to a cut in FEDERAL FUNDING?”

    Answer: While it is true DHS’s $37 million shortfall was due to Federal Funding, the miscalculation was that DHS had relied on federal funding for a program that no longer existed. $14.6 million of revenues were expected from Medicaid Upper Payment Limit (MUPL) money, which have not been paid by the Feds for years. In addition, before DHS was consolidated into one agency, different rates of federal “match” money was paid to each of the human services agencies. After the various agencies were consolidated into a single agency, DHS was given a consolidated reimbursement rate. DHS failed to recalculate the change in revenues that would occur with the consolidation of federal match rates. The result was a loss of federal revenue in excess of $22 million for the final quarter of the 2003-05 biennium. Thus, these two items alone generate $37 million of federal revenues mistakenly anticipated by DHS in the final quarter of the last biennium.
    So, in answer to the above question, the shortfall was due to a “LOSS” not a “CUT,” of FEDERAL FUNDING and it was an expensive DHS mistake to include non-existent federal funding in their revenue forecast to begin with. I am not anti-DHS. I am pro-transparency in all aspects of DHS operations. DMR

  • JTT

    Rep. Richardson- First I wonder where the public trust for the legislature is in comparison to DHS? If, as you say, public trust for DHS is at an all-time-low, is it possible that the public esteem for the legislature could have possibly outperformed?

    Your article seems to suggest that the caseload reductions DHS “threatened” if Measure 30 didn’t pass never materialized. I hope you weren’t seriously suggesting that. If you were, then can you explain what happened to the Medically Needy Program? or perhaps what happened to OHP Standard? I’m sure none of those people felt threatened as their supply of perscription medication dwindled before they had to go to the ER to get care (paid for by your and my health insurance premiums).

    So, now that you have enjoyed your cheap shot at DHS for poor forecasting and mismanagement, can you tell us what you did as Chair of the Human Services committee last session to make meaningful changes to DHS and improve access to healthcare, so that taxpayers don’t have to keep these poor nasty freeloaders on the public dime? You seem to consistently rant against this agency, but I’m wondering what you have done as a lawmaker to “do what is best for Oregon and her citizens”.

    Finally, I’m also curious if the onus for making these revenue projections is only on DHS or if the responsibility is shared with the legislature and its staff.

    Thanks for participating in this open forum.

    • Re: JTT’s questions on Medical Needy Program, OHP Standard Plan and Cheap Shots.
      From the complexity of your questions you are obviously not uninformed on these issues. Nevertheless, assuming you are merely misinformed, I will do my best to answer you one more time.
      First, The popularity of the legislature, or lack thereof, is not relevant to DHS’s poor budgeting and accounting practices. I did not become a legislator to be popular.
      Second, The Medical Needy Program was not cut by Measure 30. It ended during the Special Legislative Sessions in 2002. There was $9 million placed in the 2003-05 budget to hold a spot while Oregon tried to get the Feds (CMS) to approve a match for what was referred to as the “MEDS” program. The Feds denied Oregon’s MEDS program request because the new federal Medicare prescription program (MMA) was coming out, so there was no further federal money being approved for new state prescription drug programs. Once CMS denied Oregon’s request for MEDS, the $9m became part of the $179m lost tax revenue backfill.
      Third, The OHP Standard Plan had approximately 90,000 “clients” in it when the legislative session began in January 2003. In April 2003 the Standard Plan population were required to start paying a sliding-scale monthly premium with a $6 minimum. Primarily due to the requirement to pay a monthly premium, by May 2003 the Standard Plan population had decreased to 60,000. By the time the legislative session ended in August 2003 it was down to 52,000. Currently, it is at about 28,000 and is expected to bottom out at 24,000. There are no “general fund” tax dollars supporting the Standard Plan at this time. It is funded with Provider Tax revenues. Although the Standard Plan had only 52,000 beneficiaries when the DHS’s 2003-05 budget was passed, DHS included funding in its budget as if there were 85,000 beneficiaries in the Standard Plan population. When the tax increases were voted down (Measure 30), the funding for 40,000 non-existent “phantom” Standard Plan beneficiaries became a major source of “discovered” back-fill money to restore services to several key programs.
      Finally, Your reference to me taking “a cheap shot” at DHS is misguided. There is nothing cheap about DHS. Millions of taxpayers’ dollars are at stake. I serve Oregon’s citizens and I am an advocate for the poor. I view myself as a purchasing agent for Oregon taxpayers, with the responsibility to assure every tax dollar is being spent in the most effective and efficient manner. I understand that those needy Oregonians who left the OHP Standard Plan, whether from a failure to pay the monthly premium or due to reduced state funding, still require medical care—which either comes from hospital E.R.’s, Federally Qualified Health Clinics (FQHC’s), or other community safety net clinics and facilities. I am committed to seeing that Oregon’s most needy, who cannot care for themselves, get the care they need. Wherever possible that care should come from their own or their family’s resources. If those resources are inadequate, then local community resources should have the opportunity—neighbors helping neighbors in need. If local resources are inadequate, then the state and federal government should step in. Oregon’s current system for health care is unsustainable. Anyone who does the numbers knows this is true. I am determined to work with anyone and everyone who truly cares about solving Oregon’s health care crisis. As Chair the DHS Review Task Force and a member of the House OHP Task Force, I know these issues are too important to become political red meat. The first step is to open up state government. Complete transparency is required to restore public trust in DHS and every other government agency. What is broken should be exposed and repaired. What is working well should be praised and emulated. If anyone is interesting in being part of this process, please go to http://www.leg.state.or.us/comm/int_comms/dhs_review/home.htm

  • Alan Grosso

    DHS and most other government “handout” agencies need to scrutinize those it provides benefits to. Get rid of the all the scammers hiding income, those who flash their OHP papers while they speak on their expensive cell phone, single mothers who are once again pregnant and immigrant parents of wealthy children who own resturants. If you think this kind of nonsense does not go on – you all have your heads in the sand.

    We are adding immigrants (probably both legal and illegal) to the OHP faster than they are coming here. They are people who do not speak the language making it even more difficult to find a job in America. I see it every day as I work in the Health Care industry.

    What is best for Oregon’s citizens is to have people who can sustain themselves in this country and not look for others to provide them with benefits. There should also be strict limitations on services provided.

    Frankly – we shouldn’t give them another dime. Let the cuts happen.

    • questions

      Last time I checked, Grosso wasn’t a good Anglo-Saxon name. Which means at some point, your ancestors probably didn’t speak English all that well…Fortunately, they weren’t one of the 25% of immigrants historically who returned to the country they emigrated from, and you get to live in one of the most welcoming countries in the world. And fortunately, your ancestors didn’t allow xenophobic organizations spewing similar diatribes to chase them back to the old country.

      one final point. Let’s cut off all benefits. Then all poor and middle class (plenty can’t afford health care) folks (citizens and illegals alike) will end up in emergency rooms. That’s a great use of tax dollars, and will certainly help drive down health care costs.

  • scottr

    People without certain benefits already wind up in emergency rooms. The hospitals then pass what costs they can through the entire health care provider system, and the rest of us foot their bills through increased premiums.

    If the state provides benefits, the rest of us foot the bill through higher taxes or pay the price through less funding for other programs.

    Cut off all state-funded health care benefits, require health insurance or cash payments for all health care services, lower my premiums and lower my taxes. We can reevaluate after the dust settles. By that time, most of the freeloaders will have relocated to Washington or Canada, and the needs of truly needy can be addressed.

  • Rick Hickey

    Why in the hell is DHS working on a saturday, every month, to help ILLEGAL ALIENS get every penny of Oregons tax payer money? Yes the “Carousel of Information” You Rhino’s keep trying to sell us that Illegal “Immigrants” are good for the economy! Well then why do they need one penny from Government? I have NEVER gotten or asked for OHP or WIC or unemployment checks or…Okay so 3.5 Mil live in Oregon but one agency overspend by $55 Mil?

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