A $362,000 bill from the Minnesota Department of Human Services has Olmsted County commissioners looking for action.

“It’s alarming,” Commissioner Stephanie Podulke said of the payment request the county received Monday.

Deputy County Administrator Paul Fleissner said the amount largely stems from inappropriate state billing for substance abuse treatment.

“It should have been state- and county-paid,” he said, noting the state mistakenly used federal funds to pay for treatment.

Also included in the state request are payments related to foster care and the state's cash welfare assistance program.

The letter from state DHS Commissioner Jodi Harpstead states the improperly spent funds were identified through a review process as the department seeks to rebuild trust and react to revelations of financial mismanagement.

The funds are a portion of the more than $48 million the state has already committed to repaying due to inappropriate use of federal funds. 

Commissioner Sheila Kiscaden said the timing couldn’t be worse.

“We’re at a place where our levies have been set and we’re finalizing our budget,” she said.

County Board Chairman Jim Bier expressed frustration with the state’s claim and said he’d like to see repercussions on the state level for the related errors. At the same time, he said, he expects counties will likely be forced to pay for the state-level mistakes.

County Administrator Heidi Welsch said Olmsted County has no plans to write a check immediately.

“We will pause before we pay it,” she said, noting counties throughout the state are seeking more information.

Fleissner said the payment requests came without verification of how the amounts were determined.

“How do we know $362,000 is accurate? It’s just on a piece of paper,” he said.

He said the county wants to see additional evidence to back the state’s claim..

Welsch said if county leaders decide to pay the amount requested, the funds are available.

“We have reserves to cover things like this,” she said. Yet, those funds could have been used elsewhere.

Other counties could see financing options.

Eric Ratzmann, the state department’s county relations director, has indicated the state is working on options to allow counties to repay the federal funds, which total approximately $9 million throughout the state.

“The Department consulted with staff from the Association of Minnesota Counties and the Minnesota Association of County Social Service Administrators to discuss potential options for collaborating with counties in addressing these issues in the least disruptive way possible,” he said in an email to counties throughout the state. “Further information will be forthcoming.”

Welsch, however, said the issue highlights the tension that exists between the state department and counties that implement many of the state programs.

“We’re like the front door of DHS, and we don’t get treated like equal partners,” she said.

Kiscaden suggested counties throughout the state should work on creating changes over time, rather than simply reacting to immediate concerns. She said a slower, methodical approach at the state level could transform how services are delivered while ensuring integrity in the state system.

Fleissner said revamping the system while ensuring services are provided would take time but could be a way to address tension between counties and the state..

Bier expressed doubts.

“I don’t have confidence that they will do it,” he said of potential reforms.

Commissioner Gregg Wright said that’s why Olmsted County should find a united approach with other counties.

“We need to form an alliance with other like counties to put a proposal together for the Legislature,” he said, noting the alternative could be immediate reaction at the state level that fails to address county concerns.

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