Washington lawmakers took calculated risks when they adopted a budget that lopped more than $4 billion in state programs and spending this year, but officials say the reality of the cuts is going to take time to set in.
One budget choice getting a close look recently from Republican Rep. Gary Alexander and state labor unions is in the Office of Financial Recovery at the state’s largest agency, the Department of Social and Health Services. DSHS is getting rid of close to 500 full-time positions over two years, and about 16 are being eliminated in the 95-employee unit that recovers overpayments for Medicaid and other medical services.
Some employees in the unit have told Alexander that they fear the state will lose more in unrecovered overpayments than the job cuts will save.
A critic of the cuts told another legislator that the state would save a bit more than $1 million with the job cuts while losing more than $50 million in overpayments that won’t get collected — a pennywise-and-pound-foolish approach that makes no sense, if it plays out as planned in August.
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Roger Wilson, chief financial officer for DSHS, says the risk of such a shortfall is real, but he doesn’t think it will happen. He said recently the Office of Financial Recovery hopes to save about $2.4 million from the job reductions while avoiding any loss in overall collections, which were running about $460 million for the first 11 months of the recently ended fiscal year.
“It’s possible in the short term that we won’t take in the same amount we took in last year. I don’t know how much,” Wilson acknowledged in an interview. “We’re going to have to pick up the slack. There are some pieces of the work that cost us a lot more to collect. Those are the areas where we will cut.”
Wilson said there was talk about becoming more efficient in the unit, even before the legislative cuts were approved. He also said he lacks choices — short of shutting down programs — in a budget that directs the agency to limit reductions in field services and maximize cuts in administration.
The cuts include four staffers hired by DSHS for a special mission several years ago to recover $6 million in questionable mental-health payments, a goal the agency met and nearly doubled, Wilson said. Those positions are no longer needed, and seven other positions getting cut are accountants not tied to revenue-generation, Wilson added.
“I’m sorry that we have to do this. We go through considerable effort to groom staff and get them to where they can work as a team. It’s hard to break up the team,” Wilson said.
Some workers in the unit are skeptical, and the question of DSHS cutting staff that adds money to the agency arose Tuesday night during a telephone town hall meeting hosted by state Rep. Brendan Williams, D-Olympia.
“As a businessman and a taxpayer this doesn’t necessarily make the best sense,” a participant who called himself Eric told Williams by phone. “We’ve been working with the office of the secretary (at DSHS) and I believe she is listening.”
Williams said he would try to intervene and avoid such cuts, which the Washington Federation of State Employees also has been monitoring. But federation spokesman Tim Welch said the negotiations were more focused on preserving job options for the 16 workers — of which only two had no clear options yet, according to DSHS.
Some of the revenue agents losing jobs might qualify for jobs at the Department of Revenue, which is adding tax-collectors, according to Wilson.
Alexander, a House member from Thurston County, said Friday he doubts the agency can restructure its operation to pull in the same amount of money with fewer staffers.
“They are taking the cuts to the areas that provide revenue to the state. ... I’ve had a number of people internally as well as outside the division asking me,” said Alexander, who is his party’s lead voice on the budget in the House. “It makes no sense to me.”
Alexander said that in contrast, the Department of Revenue is operating on a principle that collections are tied to staffing.
Revenue is getting money for 49 tax collectors — 28 to improve tax collections and 21 to increase them, according to Kate Lykins-Brown, a spokeswoman for the governor’s Office of Financial Management, which is monitoring the budget cuts and their effects.
The expectation is that Revenue will collect $60.2 million more in state general fund taxes and $7.7 million more for local governments over the next two years as a result of beefing up its staff, she said.
Democratic lawmakers who control the House and Senate are deferring to state agencies to manage the cuts as best they can, according to Rep. Kelli Linville, a Bellingham Democrat and top budget-writer in the House. She did not take issue with the DSHS proposal.
“I would like to depend on the agency to have looked into that,” Linville said. “If they say they don’t think it’s going to have that impact, it makes sense to me they would make that kind of a cut.”
Sen. Rodney Tom, a Medina Democrat and one of the top Senate negotiators on the budget this year, said he had not heard specific concerns about DSHS’ cuts in the making. He acknowledged there are many risks in the budget and said this is one of them.
Tom disputed the comparison with the Department of Revenue, though, saying Revenue is supposed to use its new staff to improve tax collections from out-of-state payers that might not be aware of what they owe. He said that is a different situation from the DSHS cuts. Tom and Linville also said lawmakers clearly told DSHS and other agencies to look for cuts in places that did not harm the delivery of services needed by the public.
Lykins-Brown of OFM said the premise that cuts to the DSHS recovery staff will automatically lower state revenues is “shaky.” She and Carole Holland, a senior budget assistant to the governor in the area of human services and corrections, say the situation will be monitored.
Tom and Linville also acknowledged that their efforts to reduce spending had drawn some push-back from interest groups, including at least four lawsuits seeking to block cuts.
Those include: a suit on behalf of three developmentally disabled children; a suit by four home care agencies; a suit by the Washington Health Care Association and seven nursing facility owners; and a suit by the state’s long-term care ombudsman and four people who had received adult day-health services through Medicaid.
“We’re monitoring that very closely, obviously,” Holland of the governor’s budget office said of the suits. Holland added there is always a risk that as vendor rates are cut some providers will walk away.
Brad Shannon: 360-753-1688