GOP legislators, Pawlenty spar on plan for welfare investigators

As Republican legislative leaders call for new crackdowns on welfare fraud, an obscure proposal in Gov. Tim Pawlenty's budget is raising eyebrows: a plan to reorganize the state's main welfare fraud investigation program that would reduce the number of investigators statewide, have them cover more territory and increase their workloads.

The state Department of Human Services said it believes the new structure would enable a single investigator to complete 28 investigations per month, up from a current average of 17. But the plan from the Republican governor is drawing unusual criticism from House Minority Leader Marty Seifert and other GOP legislators, who oppose reducing the number of investigators from 31 to 25 while having them cover all of Minnesota's 87 counties instead of the 55 they now serve.

Opponents of the plan also said they were puzzled because the changes would save little money -- an estimated $15,000 in 2010.

"If anything, we should be increasing welfare fraud investigators," said Seifert, R-Marshall, who has led a Republican legislative effort over the past year to place more controls on state welfare payments. "... That's probably one of the first fissures [between Republican legislators and Pawlenty] you may see."

Charles Johnson, an assistant commissioner with the Department of Human Services, acknowledged that the plan is "certainly getting some fierce opposition" but said some of it included investigators trying to protect their jobs. He said the plan's main goal is to place the program under state control, rather than having it run by individual counties, as it is now. That new structure, he said, would enable investigators to move more freely about Minnesota to concentrate on areas where welfare fraud is greatest.

State officials said the program needs changes because the state and federal grants that fund it no longer cover the counties' costs and that the shortfall is likely to increase each year. In addition, officials said, data showed that the "most efficient" programs complete up to 30 investigations per month.

Pawlenty spokesman Brian McClung said the proposal was backed by the governor, in consultation with department administrators. "Our officials at DHS tell us that doing so will provide similar or better services, more efficiently and more effectively," he said.

Small slice

The program represents only a minute slice of the Department of Human Services' mammoth budget, which totaled $9.4 billion over the past two years. But according to state budget documents, the program is Minnesota's "main component" to control fraud in public assistance for food support, child care, Medicaid and general assistance. Its annual budget totals $2.8 million, and, according to the department, it saved $4.53 in collections or stopped disbursements for every $1 spent.

Fraud investigators completed nearly 7,500 investigations in 2007 and stopped or reduced benefits in 47 percent of them, according to the department. The program last year identified $12.9 million in overpayments and "cost avoidance" -- cases where potential payments were forestalled because recipients were found to be ineligible.

That same year, the state's public assistance health care programs alone had an average monthly enrollment of 662,000 individuals and the state's food support program served 250,000 people per month.

With a House committee today scheduled to hear a review of the Department of Human Services' fraud-prevention efforts, including testimony on the governor's proposals for the department, the proposal has left many puzzled. In a private briefing recently for House Republicans, a former Hennepin County welfare fraud investigator urged legislators to block the changes to the program, saying they would lead to a "loss of program integrity." To recipients intent on abusing public assistance, he said, welfare represented a "pot of gold."

One person who is confused by the proposed move is Dan Haley, a retired department supervisor who oversaw the program's creation in the early 1990s.

"It's a design for failure," said Haley, who called the savings from the reorganization "chump change." Daley, who retired four years ago, said that department administrators had over the years ignored pleas to increase the program's funding and that fraud investigators were already deployed to those areas where the highest number of fraud cases were occurring.

He also dismissed the department's claim that investigators, through the use of efficiencies, could complete more investigations. "You can jury-rig that number" to show an increase, he said. "Is a phone call considered an investigation?"

The proposal is "counterintuitive," said Rep. Nora Slawik, DFL-Maplewood, a member of the House Health Care and Human Services Finance Division.

Sen. Julie Rosen, R-Fairmont, agreed. "There's fraud -- it's real, and it's only going to get worse," she said. "In greater Minnesota, the sheer reality of space and distance -- or miles between -- you just can't go to this huge system. So, I think that needs to be rethought."

Preston Cowing, a welfare fraud investigator covering Brown and Sibley counties, has also expressed misgivings about the proposal.

In a letter to Pawlenty in December, Cowing was blunt. "Reducing the number and visibility of investigators would increase the amount of fraud and abuse in Minnesota's public assistance programs," said Cowing, the vice president of the Minnesota Fraud Investigators Association. "During this time of a declining economy, public assistance should be available to those who are truly needy, not the greedy."

Mike Kaszuba • 612-673-4388