Tim O’Malley, who did a deep dive and then wrote a report for Gov. Tim Walz on program integrity, has called for culture change in state agencies as a critical step to address the current fraud crisis.
He observed that state agency culture is built around services and meeting the needs of customers, often at the expense of program integrity.
He’s right. I can’t speak specifically about other agencies, but I spent over 30 years at the Department of Human Services — the current epicenter of fraud concerns — and O’Malley’s critique holds up.
In fact, it is especially an issue at the Department of Human Services because the agency is responsible for services for the most vulnerable Minnesotans. It is a workplace that attracts people who are primarily there because they want to help others.
That’s a good thing — it is a contributing factor to Minnesota’s strong and effective safety net. But there are trade-offs, and, it turns out, one of those might be attention to program integrity.
Culture can be mysterious and very hard to change. If O’Malley is right that most or all state agency cultures undervalue program integrity, how do we make this change? It might help to examine how and why we got where we are.
Let’s start with an overarching aspect of government culture I wrote about in 2023: Policy is the priority, and operations take a backseat. In other words: We spend a lot of of time, attention and resources on public policy, and not enough on public administration.
And, program integrity and compliance have historically been on the operations side of this divide.
An added factor in the culture of Minnesota state government is the challenge of maintaining adequate agency staffing.
Money for staff was a constant challenge over my decades in state government. Why? Undoubtedly, a prime factor is that hiring more bureaucrats is not great politics for anyone.
Funds are limited, so why spend money on something no one wants?
But it’s not just the fault of politicians. The bias against adding staff permeates the whole budget process and all the players involved. At each step — starting with agencies, going to the governor’s office, onto the Legislature – staffing requests (or FTEs, to use the bureaucratic jargon) are scrutinized, questioned and often reduced.
This can ebb and flow based on political leadership and the health of the state’s budget, but the bias is real.
It’s in the culture.
The default agency staffing plan is the minimum number of people to run programs and ensure services are delivered to the people — the policy priority. Operations are treated as extra.
And program integrity is labor intensive. Licensing and provider enrollment —the process of screening and approving new service providers — require staff to review and follow-up on applications. Investigations — following up on tips, reviewing documents — can be aided by IT and now AI, but investigations must be done by real people.
For the social services programs — the focus of current fraud concerns — there is another cultural influence at work: prioritizing funding for services over administration. In other words, as much money as possible should go out the door, even if that means shortchanging the administration of the programs.
This culture is part of a scarcity mindset in human services. The needs are great, the services are costly to provide, and it’s never possible to meet all the needs.
A legislator once told me the health and human services committees were known as “hell and human sacrifices” among members because the available resources can never meet the overwhelming needs.
This culture includes another set of stakeholders: the private organizations that provide the services funded by the state. These providers — and their associations and lobbyists — advocate for simple administrative requirements and oppose complex documentation and payment policies – the very policies that strengthen program integrity and may prevent fraud.
In my experience, this lobbying comes from legitimate providers and other advocates who want to reduce administrative costs and burden so more money can go to services for people who need it.
But the result can make it easier for unscrupulous providers to thrive.
This cultural stew — agency staff focused on policy, a bias against funding staff, a scarcity mindset that prioritizes services over administration — undermines the attention and investment needed for strong program integrity.
There’s a saying that culture beats strategy every time. Culture is hard to change in part because it is hard to understand — or to even notice when you’re sitting in the middle of it.
So, it is good that O’Malley called it out, and change is needed by all the actors in the system.
Elected officials need to put more value on agency operations and staffing needs — not just in response to a crisis, but as part of being good stewards of the effective operation of state government.
Service providers and advocates who care about human services need to understand that fraud is an existential threat to the services they provide. They should come to the table with a different mindset, ready to accept additional administrative burdens to protect programs against bad actors.
Culture change at the Department of Human Services and other state agencies may matter most, because agencies have an institutional role that can transcend the politics of the moment.
But agencies exist in this broader cultural stew.
History suggests that once the white-hot political atmosphere falls away and some other issue replaces fraud as the crisis du jour, elected officials and service providers will back-slide into old habits.
Can changing culture at state agencies alone sustain the needed focus on program integrity?
We need to try, but I’m not sure I’d bet against culture.
