Commissioner Tony Lourey resigns abruptly in DHS shake-up

The commissioner of the state's sprawling social service agency abruptly resigned Monday after just six months on the job, producing the first major shake-up of the new administration of Gov. Tim Walz.

Tony Lourey, who left the state Senate to become the commissioner of Human Services in January, wrote a letter to Walz saying his resignation would take effect at the end of the day, stunning some members of the Minnesota Legislature. No reason was given.

Lourey's sudden departure comes after the resignations of his two top deputies last week, raising anew questions about chaos at the top ranks of the $17.5 billion state agency.

Walz announced that Pam Wheelock — most recently chief operating officer at Twin Cities Habitat for Humanity, with a long résumé of top private and public sector jobs — will take over as acting commissioner. It's unclear whether she or her permanent replacement will ask the deputy commissioners Claire Wilson and Charles Johnson to stay now that Lourey is out.

Walz, who was inaugurated in January, said during a Monday news conference that Lourey was not fired and left of his own volition. They spoke in person at length Sunday night.

Walz declined to address mounting speculation over Lourey's departure: "There's going to be a desire to find more dramas than is there. Those of you who know me know I don't do drama."

The staff tumult comes at a difficult time for the agency. DHS has been under increased pressure from lawmakers to rein in spending and crack down on fraud in state-licensed programs while simultaneously meeting the care needs of the state's expanding population of poor, elderly and frail people in the state's Medical Assistance program.

Republican lawmakers held a news conference Monday decrying the pace of an investigation of the agency's Inspector General Carolyn Ham, who was placed on paid leave in March after the legislative auditor found high levels of fraud in the state's child-care assistance program.

The state has also struggled to meet a burgeoning demand for home care services amid a severe shortage of care workers.

In his resignation letter, Lourey said he was proud of the administration's accomplishments during his time at the Department of Human Services. The agency boosted funding for the state's cash assistance program for families, maintained the health provider tax that Republicans sought to end, and broke down silos between mental health and chemical dependency, he said.

But while Lourey sought to put a positive spin on the department and its leadership, some lawmakers expressed deep misgivings about the circumstances surrounding his exit.

Sen. Jim Abeler, chairman of the Human Services Reform Finance and Policy Committee, said the sudden departure of the three top administrators at DHS represents "absolutely the biggest crisis this agency has ever seen." He said it is unlikely that Lourey left on his own accord, given his dedication to the agency and its mission.

"This is a giant iceberg," said, Abeler, R-Anoka. "There is something just below the surface that none of us know about."

Johnson and Wilson, who announced their departures Thursday, have not return repeated phone calls and e-mails.

Walz said Lourey merely decided he was not the right leader at this moment. "You have a complex agency. I think the skill set that Commissioner Lourey possessed was incredibly helpful," Walz said. "I think now with the complexity of delivery of [child care] and some of the other things, I will take Commissioner Lourey at his word that he felt he was not the right person at this time to do that."

With his quick unexplained departure, Lourey continues to be a headache for the Walz administration. Republicans won the special election to replace Lourey, expanding their majority in the Senate to 35-32 and empowering the GOP to thwart major DFL proposals such as paid family leave and a gas tax for roads.

In his resignation letter, Lourey said he believes a social safety net is key to making Minnesota one of the best places to live and that social programs — and the state workers who run them — allow people to lead healthier lives and "demonstrate our collective compassion for one another." But he made clear he is no longer the one to lead DHS.

"I believe a new leader is necessary to best execute your vision for human services and continue the critical work of improving the health of Minnesotans across the state," he wrote in his resignation letter.

Rep. Tina Liebling, DFL-Rochester, chairwoman of the House Health and Human Services Policy Committee, said Lourey called her last week to inform her that Johnson and Wilson were leaving the agency. He provided no details of the reason for their departures, nor did he give any indication that he would be resigning, she said.

But Liebling said she could tell by the tone of Lourey's voice that he was "struggling with what had happened" at the agency.

"It's important to remember that this is the hardest job in state government, harder than being governor," Liebling said. "My sense is that maybe he didn't have the right mix of skills for the position. … It's such a mission impossible."

Wheelock, who will take over the job Tuesday, was meeting with senior leadership in the department Monday. Meanwhile, legislators of both parties raised concerns about the upheaval at the massive state agency.

"It's too early in the Walz administration to have a scandal like this," said House Minority Leader Kurt Daudt, R-Crown. "Minnesotans deserve answers and transparency from Governor Walz about what's going on."

Sen. Michelle Benson, R-Ham Lake, who chairs a key health care committee, called on Walz to turn to private sector experts to examine the agency, much as he did with the state's flawed car registration system earlier this year.

The three top-level resignations are likely to delay a number of major initiatives at DHS, which serves 1.2 million people, including some of the state's most vulnerable populations. The agency had embarked on efforts to streamline billions of dollars in Medicaid benefits for frail and elderly Minnesotans; eliminate long-standing barriers to community inclusion for individuals with disabilities; and crack down on fraud in the state's Child Care Assistance Program for low-income families.

"This brings any momentum this agency has to a complete stop," said Sen. John Hoffman, DFL-Champlin, a member of the Human Services Reform Finance and Policy Committee. "It's a sad moment for our state when you have more than 1 million people left in the lurch without any explanation."