Gov. Tim Walz has selected Lutheran Social Service CEO Jodi Harpstead as the new leader of the Department of Human Services, capping a management shuffle at the embattled agency.

Monday's announcement ends — for now — a period of turmoil in the top ranks of the sprawling agency, which serves more than 1 million Minnesotans with the help of roughly 7,300 workers. Tony Lourey, a former DFL state senator and Walz's first DHS commissioner, resigned in July after two of his top deputies abruptly quit without explanation. The two deputies returned after Lourey resigned.

In Harpstead, Walz turns to someone nearly the opposite of Lourey, who was a leading human services policymaker in the Legislature but without experience running a large social services organization.

Harpstead managed 2,300 employees at Lutheran Social Service (LSS), which operates in all 87 counties and is a key contractor for the Department of Human Services (DHS). Before LSS, Harpstead was a corporate executive at Medtronic, where she worked for more than 20 years. She's the first DHS commissioner since a 1984 reorganization to have a master's degree in business administration.

The $17.5 billion agency oversees a wide range of services, including health care coverage for low-income Minnesotans, child protection, and services for people with mental illness or physical or developmental disabilities.

Harpstead praised the DHS workers she will soon be leading. "I am particularly proud to join the dedicated people of the department, who I know to be the same caring and competent people who I have worked with at LSS," she said.

Gov. Tim Walz on Monday appointed Jodi Harpstead, second from right, as the state’s new Human Services commissioner.

Harpstead will take over Sept. 3, replacing Pam Wheelock, a veteran public administrator who was appointed acting commissioner after Lourey resigned.

"What drew me to Jody Harpstead is that she's clearly a leader," said Walz, citing her ability to "provide purpose, direction and motivation to a group of people to achieve a common goal." He credited her with "a proven record of strong, compassionate leadership."

Harpstead will be leading an agency that has single divisions that are larger than entire state departments.

The DHS has also been hit with criticism after a series of high-profile missteps in recent months. The Legislative Auditor has opened an investigation into a report that the DHS overpaid two Indian bands approximately $25 million for substance-abuse treatment in recent years.

Separately, a compliance officer at DHS said she was the victim of retaliation after she raised alarms about the legality of some contracts there. Faye K. Bernstein, a lead contract specialist at the DHS, said she was verbally reprimanded and sidelined from her duties after she pointed out "serious noncompliance issues" with a group of contracts approved by leaders in the agency's behavioral health division, which awards millions of dollars each year in contracts for mental health and substance use treatment and services.

And Republican legislators have raised concerns about the status of Carolyn Ham, the DHS inspector general in charge of investigating fraud in the state's health and welfare programs. She was placed on leave and then reassigned pending an investigation after a legislative audit found significant fraud in the state's child care assistance program and found a rift between Ham and her own investigators. Republican legislators have charged the administration with stalling the Ham investigation.

These and other issues are expected to arise during a joint hearing Tuesday at 9 a.m. of two Senate committees with oversight responsibilities for the DHS. Harpstead will not participate in the hearing. Wheelock, who has been examining the agency's operations during her brief tenure, will represent the agency at the hearing.

State Sen. Michelle Benson, R-Ham Lake, who chairs one of the key health committees, released a statement saying she doesn't know Harpstead but expects to get to know her soon. "The department is facing significant challenges and I can only hope that she will not accept the status quo," Benson said. "We expect to hear more from her during Senate confirmation hearings."

Confirmation hearings for Walz appointees were not held during this year's legislative session and are expected in 2020.

Harpstead will make about $155,000 per year, or well less than half what she was earning at LSS, according to the nonprofit's IRS documents.

J. Patrick Coolican • 651-925-5042