Problems in many state agencies likely to continue under Gov. Kate Brown’s tumultuous administration

by Sen. Doug Whitsett

Prior to the start of every Legislative Assembly, the Department of Administrative Services (DAS) releases its State Agency Legislative Contact Directory. This document is very useful for lawmakers, not least because it provides information on how to reach department heads and their legislative liaisons to obtain assistance for constituents who may be having problems with those agencies.

The most recent edition of the directory was from just over a year ago, and is dated January 9, 2015. Anyone hoping to use the current document will encounter significant difficulty with regards to several agencies whose directors and senior staff have been sacrificed amid continued controversy and public outrage.

Just over a year ago, the director of DAS resigned his position after requesting that the Oregon State Police investigate a whistleblower who released disgraced former governor John Kitzhaber’s e-mails to a member of the news media. The whistleblower was threatened with 6,000 counts of official misconduct by the office that employed Kitzhaber’s nephew as a prosecutor, one for each individual e-mail that was leaked to a Willamette Week reporter. Due partly to public outcry, no criminal charges were filed against the whistleblower. He ultimately reached a substantial financial settlement with the state in exchange for promises to not file a civil lawsuit. The controversy ultimately lead to the passage of a bill to provide additional legal protections to whistleblowers in state government and non-profit organizations, which was signed into law by Governor Brown on March 29.

Meanwhile, the former DAS director is now overseeing a major bureau for the City of Portland.

The Oregon Health Authority’s (OHA) director has been on the job for just over a year now. She is the fourth person to head Oregon’s biggest spending agency since December 2013.

Steady leadership is definitely needed at that agency. OHA continues to struggle with significant legal issues, including ongoing lawsuits with Oracle regarding the failed $300 million Cover Oregon debacle. The agency is currently negotiating a lawsuit settlement with Coordinated Care Organization (CCO) FamilyCare in an effort to avoid losing nearly half a billion dollars in funding. OHA recently rejected a settlement offer, prompting FamilyCare to file a complaint and motion for a temporary restraining order against OHA. The agency has given FamilyCare until April 5 to settle the dispute under threats of finding it in breach of contract and moving its members to a different CCO.

OHA must also deal with an anticipated budget shortfall of at least a half-billion dollars for the 2017-19 biennium. The deficit will result largely from its massive expansion of Oregon Health Plan Medicaid enrollment and the federal government’s gradual drawdown of payments intended to cover the costs of Oregon Medicaid expansions under Obamacare. The agency is also facing already negotiated salary increases of around 30 percent for its more than 4,000 employees over the next four years, as well as likely annual one percent Public Employee Retirement System (PERS) contribution increases for at least the next six years. Significant additional cost increases related to the new minimum wage law are certain to occur.

The failed Cover Oregon private sector insurance exchange has been assigned to the Department of Consumer and Business Services (DCBS). That agency chose to use the “free” national Obamacare exchange to provide access to private health insurance policies. We understand DCBS is now contemplating creating another new Oregon state insurance exchange, because it seems apparent that the use of the national exchange will not only not be “free” in the future, but may be prohibitively expensive to use.

A recent poll conducted by the Portland Business Journal shows that Oregonians are understandably reluctant to pursue a state-run exchange, given the embarrassing history of expensive failures that has occurred to date.

Moreover, one of Oregon’s fastest growing and largest private health care insurers, Moda, appears to be experiencing significant financial distress. Multiple cash infusions from outside sources and double-digit annual insurance premium increases have been required to maintain company solvency. Earlier this year, state regulators put the company under “supervision” due to those, and other, concerns.

All of this came after Oregon Health and Science University loaned $50 million to Moda, a risky proposition that many people found to be both troubling and questionable.

Other state agencies have experienced turnover at the highest levels. The Department of Human Services (DHS) director stepped down last summer after it was revealed that some of that agency’s top officials ignored complaints for more than a decade of foster care abuses at Give Us This Day, a politically well-connected nonprofit organization. Investigations into Give Us This Day are ongoing.

Earlier this month, the new director of DHS fired two of its top officials as news spread that a $20 million lawsuit has been filed against the agency alleging that DHS caseworkers and top officials ignored the abuse of two children by their foster parents for over two years. The agency’s chief operating officer for the child welfare and self-sufficiency program and its director of the child welfare program were abruptly terminated without significant comment or explanation regarding their roles related to the most recent DHS debacle. A separate $3.5 million lawsuit has also been filed, alleging that DHS failed to protect a four-year-old girl at a foster home.

DHS will also face significant budget difficulties in paying its nearly 8,000 employees related to the already negotiated near 30 percent salary increases, increasing PERS contributions and the effects of the new minimum wage law. The agency estimated $54 million in projected impacts for just two of its divisions from the minimum wage increase set to take effect July 1.

Then there’s the Department of Environmental Quality. Its director submitted his resignation, effective March 15, following the revelation that neighborhoods in Southeast Portland were being subjected to pollution. A timeline submitted by the former director to Governor Brown about the series of events was found to be in direct contradiction to information contained in e-mails obtained by press outlets through records requests.

The Department of Energy is currently headed by its fifth director in the past five years. That agency is at the center of the storm of controversy regarding its management of the Business Energy Tax Credits (BETC) program. I am a member of a bipartisan, bicameral Department of Energy Oversight Committee appointed by Senate President Peter Courtney (D-Salem) and Speaker of the House Tina Kotek (D-Portland) to determine how the BETC and other agency programs were allowed to stray so far from their intended purposes.

The director of the Department of Revenue (DOR) announced his retirement last December, days after several Republican legislators, including Rep. Whitsett and I, asked state and federal officials to investigate the BETC program. The agency’s staff were allegedly instructed to limit or forego audits of entities with potential capital gains tax liabilities related to their purchase and sale of BETCs. Estimates of the potential taxes that may never be collected range around $20 million.

Governor Brown fired the director of the Employment Department earlier this year, under the guise of concerns regarding security lapses stemming from the agency’s computer systems. The outdated and inadequate status of the agency’s computer systems has been public knowledge for at least a decade. The legislative leadership has not only refused to fund computer upgrades for the agency but has repeatedly “repurposed” money saved by the agency to help pay for the much-needed new systems. I considered the former director to be one of the most trustworthy and effective agency heads in the entire executive branch.

Last fall, the director of the Department of State Lands (DSL) announced her resignation. The agency is controlled of the State Land Board, which is comprised of the state Governor, Treasurer and Secretary of State. DSL’s regulatory expansion in recent years has been nothing short of phenomenal.

In my opinion, DSL has engaged in gross overreach regarding its Essential Salmonid Habitat rulemaking, effectively expanding its regulatory influence from the headwaters to the sea. Moreover, the agency’s intended expansion of removal and fill permitting appears designed to seriously curtail or eliminate mining anywhere near an Oregon stream. The agency even contemplated expanding its emergency rulemaking efforts to broadly exclude the public from various state properties in Lake County, to the exclusion of certain activities on all state properties all of the time.

All of this fits a particular pattern. Executive agency departments seems to ignore significant problems for as long as possible, and action is only initiated when the news media or public entities make a big deal about it.

Too often, little is done to identify and address the cause of the problems. The typical executive response has been to deny knowledge and responsibility, remove or replace the head of the agency, and hope that the underlying issues somehow solve themselves.

That game of department-head musical chairs appears likely to continue under Governor Brown’s tumultuous administration.

Senator Doug Whitsett is the Republican state senator representing Senate District 28 – Klamath Falls