Minnesota counties balk at paying $9 million for DHS errors

All seven metro counties say they will not pay for DHS mistakes

Mismanagement at the Department of Human Services has left counties on the hook for $9 million that was wrongfully spent. Now, the counties say they're not going to pay.

ST. PAUL, Minn. (FOX 9) - Officials from all seven counties in the Twin Cities Metro say they will not pay millions of dollars for mistakes made at the Minnesota Department of Human Services, asking state lawmakers to protect them.

Gov. Tim Walz is promising to address the issue during the 2020 legislative session, so counties don’t have to pay $8.8 million for money that was wrongfully spent.

DHS has accepted blame for improperly paying chemical dependency treatment providers for years. The state now must return $61 million to the federal government. But Minnesota law requires counties to shoulder a burden, too, even though they didn’t make the mistakes.

“We don’t know where that’s coming from. We can’t raise our budget. We can’t tax the taxpayers for that money,” Anoka County Commissioner Scott Schulte said. “We’ve more or less told DHS, you won’t be seeing that money from us directly.”

Anoka County’s share is $441,734. The state’s largest county, Hennepin, is on the hook for $2.2 million. On the other end, rural Dodge County is required to pay $46.47.

Jennifer DeCubellis, Hennepin County’s deputy administrator for health and human services, said the counties wanted to be strong partners with DHS. But the current situation doesn’t make any sense, she said.

“We don’t know of any business that operates with an open checkbook and we cannot set a precedent that we pay for things we don’t control. We cannot operate government that way,” DeCubellis said in an emailed statement.

County administrators told FOX 9 they were blindsided last month when they saw a list with each county’s share of the $8.8 million total cost.

Many administrators don’t trust the numbers because of widespread financial mismanagement at DHS, Schulte said. The agency has recently said $106 million in payment errors were uncovered this year alone.

“My biggest concern with all these numbers across the state of Minnesota in every county is, how do we know they’re real?” said Schulte, who is also the immediate past president of the Association of Minnesota Counties. “If DHS has missed on so many other numbers in the past couple of years, how can we trust this number?”

In Scott County, Administrator Lezlie Vermillion said she has still not gotten an invoice from DHS, only a letter reflecting a $100,863 required payment.

The county also hasn’t received any justification for that number, Vermillion said.

“We would be able to afford it, but it is still a substantial amount of money when you look at parks and highways and other things we have to provide,” she said. “The best resolution would be if the Legislature would deal with it.”

Similarly, administrators in Ramsey, Washington, Carver and Dakota counties said they had no plans to pay any money.

“The board is going to be very reluctant to pick up a state mistake and push the cost onto local property taxpayers,” said Tom Adkins, Washington County’s interim community services director.

Walz addressed the Association of Minnesota Counties’ annual conference on Monday. Several county officials in the audience said the first-term Democratic governor pledged to fix this issue in 2020.

“The governor is committed to working with the state legislature to find a solution for counties impacted by this issue,” Teddy Tschann, a Walz spokesman, told FOX 9.

The chemical dependency issue is the largest payment error uncovered so far at DHS, but not the only one.

Walz is asking lawmakers to consider paying $29 million so two Native American tribes don’t have to return money wrongfully spent on opioid treatments. In that case, the state’s legislative auditor has said DHS paid the tribes without any authorization, and did not document why or who made the decision.

The legislative auditor slammed DHS as “dysfunctional” because of the improper payments.

Minnesota has an estimated $1.3 billion budget surplus to work with over the next two years, state officials said last week. But Republican lawmakers said they would not bail out DHS for past mistakes without major structural changes at the troubled agency.