| Press Release |
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| December 27, 2005 |
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Governor Acts to Reform Financial Management of DHS
Administrative changes address budget shortfall without cutting services
Salem, OR—Governor Ted Kulongoski has directed the state Department of Human Services (DHS) to make dramatic changes in the financial management of its programs, partly to address a substantial budget shortfall, and partly to stave off cuts to critical public services for low-income Oregonians, the Governor’s office announced Tuesday.
“Now is not the time to overreact,” the Governor said with respect to a shortfall of $172 million in the DHS budget for the present biennium. “What’s needed is strong management to handle the problems that caused the shortfall. I have directed DHS to take the needed administrative measures without cutting services to the people who rely on DHS programs.”
On Tuesday, the director of DHS, Dr. Bruce Goldberg, notified the Governor by letter of the specific actions the department has taken or plans to take within the coming weeks. Goldberg has enlisted the help of former Portland schools superintendent Jim Scherzinger to act as a temporary chief financial officer for the department. Scherzinger will start work at DHS in early January.
“In accordance with your directives over the past weeks, DHS has undertaken to provide a clear and comprehensive explanation of our financial needs and the reasons behind them,” Goldberg wrote to the Governor. “I fully agree with you that the legislature and the public are entitled to such an explanation.”
Goldberg acknowledged in the letter that the Governor’s chief expectation is to preserve and enhance the programs and services that DHS provides to Oregonians, while improving the transparency and accountability of government. The director cited increasing caseload and increasing demand for services—primarily on the Oregon Health Plan—as the reason for $119.2 million of the shortfall. Reductions in federal help to the state accounts for another $23.8 million. Shifts in revenue and shortfalls associated with closing out the 2003-05 biennium were not included in the 2005-07 budget, and these account for $30 million.
Goldberg outlined aggressive new management measures within DHS:
- Administrative savings. These include vacancy savings and reductions in the amount spent on services the department uses, supplies and training. Such action will minimize the effects on services to Oregonians. Goldberg expects to save about $4 million in administrative savings.
- Tracking expenditures and revenue. Goldberg reported that DHS has sought technical help from the State Controller to improve its processes for estimating, tracking and reporting its revenue and expenses. The Controller has assembled a team that includes professionals from the Department of Treasury and other agencies to examine accounting processes, internal controls, banking and cash flow management. The team plans to issue recommendations in March.
- Forecasting and monitoring caseload. To improve the credibility and reliability of its forecasting models, Goldberg has proposed closer monitoring and more frequent review of trends in caseload management and comparisons to actual experience. As monthly caseloads become available, program managers can then compare them with projections and analyze them. More frequent review of trends will enable the department to give the Governor and the Legislature earlier notice if caseload does not live up to predictions. In addition, Goldberg informed the Governor that he is reviewing a proposal to move the caseload function of the department to the state Department of Administrative Services (DAS). More distance from the agency could improve the credibility of forecasting, Goldberg said.
At the Governor’s direction, Goldberg will form a workgroup comprised of Emergency Board members (legislators), and representatives from Budget and Management (an agency of DAS), and the Legislative Fiscal Office, which will closely follow caseload forecasts and actual experience. The workgroup will convene every 4-6 weeks, enabling legislators and managers to receive regular updates.
- Managing caseload. Goldberg’s letter described a department-wide effort to further improve caseload management, utilizing intensified measures such as auditing and program managing to raise the consistency and reliability of eligibility.
- Fiscal accountability. Goldberg told the Governor he’s working to assure appropriate expertise and personnel in managing the department’s finances. Scherzinger will help improve financial reporting and enhance the accountability of DHS programs, Goldberg said.
Goldberg noted that recent congressional action to make more cuts in federal help to the state creates a problem for the department. He asked for the Governor’s continued help to minimize the impact of federal cuts on people who rely on DHS programs.
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