A brief history of recent work on agency consolidations

A brief history of recent work on agency consolidations

Author: Andreas Dienner/Thursday, August 24, 2017/Categories: News and Views

As the House continues to mull over a suitable revenue package to cover the approved spending plan, two key components of Gov. Wolf’s budget proposal face a similarly tenuous road: the creation of a consolidated Department of Health and Human Services (DHHS) and Department of Criminal Justice (DCJ).

As originally proposed by Gov. Wolf in his February 7 budget address, the administration proposed two separate departmental consolidations aimed at cost savings and efficiency. First, the move of the Department of Human Services (DHS), Department of Health (DOH), Department of Aging, and Department of Drug and Alcohol Programs (DDAP) into DHHS; and the combination of the Department of Corrections (DOC) and Board of Probation and Parole (PBPP) into DCJ.

In the proposal, Gov. Wolf pinned savings from DHHS implementation at $104 million with continued savings as functions are combined and duplicity reduced. For DCJ, analysis of enabling legislation projected $10.6 million in savings for the coming fiscal year and up to $32.3 million by 2021-2022.

As revenue discussions have stalled after the passage of the 2017-2018 spending plan, the progress of these consolidations remains unclear. Enabling legislation for DHHS, HB 1000 and SB 746, was introduced in June by Rep. Stephen Bloom (R-Cumberland) and Sen. Judy Schwank (D-Berks), respectively, but has received no action. DCJ enabling legislation, SB 522, was passed out of the Senate in May but has not been moved in the House.

In the Senate’s revenue plan passed in late July, no provisions were included for DHHS. However, leadership indicated they hope to work towards that end yet this session.

In the House budget proposal, line items were carried forward for each of the four health-related agencies as if the consolidation will occur. However, Majority Leader Dave Reed (R-Indiana) clarified at the time that should not be interpreted as “a rubber stamp that we are automatically on board.”

This is not the first instance of such a consolidation, although previous changes were in areas considerably smaller in budgetary terms than DHS.

In 1996, the Department of Commerce merged with the Department of Community Affairs to create the Department of Community and Economic Development. In 2012, the Securities Commission and Department of Banking merged to create the Department of Banking and Securities. And, on a similar note, the Department of Environmental Resources was split into the Department of Environmental Protection and the Department of Conservation and Natural Resources in 1995.

Both current consolidation proposals were met with some level of skepticism in legislative hearings. DHHS in particular was heavily scrutinized through six additional hearings after budget hearings concluded.

Rep. Gene DiGirolamo (R-Bucks), House Human Services Committee Chairman, took the lead as one of the most outspoken opponents of the consolidation, describing it as "the worst decision I have ever seen" in his time in state government. He especially took issue with DDAP being buried in bureaucracy along with nine different deputy secretaries in the midst of an opioid crisis.

Rep. DiGirolamo even successfully moved HB 1248, requiring one year of studies and analysis before agency power can be transferred, from his committee. However, the bill was never taken up in the House.

Sen. Gene Yaw (R-Lycoming) took a similar measure by introducing SB 828, which would exclude DDAP from inclusion in the consolidation.

Rep. DiGirolamo also garnered the support of Rep. Aaron Kaufer (R-Luzerne), chair of the legislature’s Heroin Opioid Prevention and Education (HOPE) Caucus, in opposition to DDAP inclusion.

"I think it is a giant step backwards in terms of drug and alcohol programs,” Sen. Yaw said at a March 8 DHHS budget hearing. “The department was established four years ago and I'm not sure we really gave it a chance to get started especially in light of the heroin/opioid epidemic we are now experiencing."

At the same hearing, Sen. John Eichelberger (R-Blair) also voiced concern with seniors losing their voice with the change from the Department of Aging.

“I trust any secretary that is going to lead the Health and Human Services Department is going to take into consideration all vulnerable populations including the voice of seniors," Aging Secretary Teresa Osborne responded.

Other members of the Wolf administration, specifically DHS Secretary Ted Dallas, then DOH Secretary Karen Murphy, and DDAP Acting Secretary Jennifer Smith, also voiced similar optimism with the governor’s consolidation plan.

"A unified Health and Human Services organization transforms and organizes service delivery based on the citizens we all serve,” Sec. Smith said at a consolidation hearing. “The goals are less confusion and easier access to services for an improved experience.”

Sec. Dallas, Sec. Murphy, and Sec. Osborne unanimously agreed on the merits of the proposal.

A group of legislators also voiced concerns with the consolidation, focusing on a central theme of DDAP and Aging losing their direct access to the governor and being subdued by larger budget items within the department. Many legislators requested more time to consider the proposal to ensure proper roll out and best results.

Regarding DCJ, Sen. Lisa Baker (R-Luzerne) brought up concerns in hearings with the impact of the consolidation on PBPP independence, while Sen. Randy Vulakovich (R-Allegheny) and Rep. Dom Costa (D-Allegheny) voiced their outright opposition.

An additional hearing was held by the House Judiciary Committee on May 25, but the level of concern from advocates and legislators regarding DCJ paled in comparison to DHHS discussions.

However, a lack of support for legislation has not been the first obstacle the DHHS proposal has faced.

On January 24, former DDAP Secretary Gary Tennis was fired for undisclosed reasons. After speculation of potential conflicts of interest with Deb Beck, president of the Drug and Alcohol Service Providers Organization of Pennsylvania, Tennis argued he was let go due to his opposition to including DDAP within DHHS. Specifically, he believed DDAP would lose its unique voice in such a large agency as it was created only five years ago in July 2012.

Additional cabinet shifts were soon to come in the Wolf administration. Jennifer Smith, then DDAP Deputy Secretary, stepped up as DDAP Acting Secretary upon the departure of Tennis. When DOH Secretary Karen Murphy left for a position at Geisinger in July, Physician General Rachel Levine took her place in an acting capacity.

Then, on May 23, Gov. Wolf announced that Insurance Commissioner Teresa Miller was chosen as the prospective inaugural secretary for DHHS. In the meantime, Miller was transitioned to DHS Secretary effective August 21 in place of Sec. Dallas, who will be serving elsewhere in the administration. Jessica Altman, Chief of Staff for the Pennsylvania Insurance Department, has taken on the role of acting commissioner.

That left Sec. Osborne as the only constant in related cabinet leadership from before the governor’s proposal, with four agencies seeing new individuals at the helm.

“We must move forward at some point sooner rather than later,” deputy chief of staff to Gov. Wolf Eric Hagarty said at a July 27 meeting of the Medical Assistance Advisory Committee, regardless of a revenue package. He described the House as “the wild card,” and declined to provide a specific timeline for implementation.

Meanwhile, different concepts of agency consolidation are starting to take shape, including contemplation of a modified version consolidating DHS and DOH while excluding DDAP and Aging has also been discussed among legislators.

Provisions made in the FY 2017-2018 spending plan also make provisions for the Office of the Budget to easily transfer money to a new consolidated agency should a decision about the consolidations be made outside the context of the budget-related conversation.

With meetings and conversations ongoing to come up with a satisfactory revenue package, especially in the House, the future structure of five departments and one board remains uncertain.