LINCOLN — After years of repeated issues in the Nebraska Department of Health and Human Services, a lawmaker said Thursday that structural change could improve the state agency.

Legislative Bill 1086, introduced by State Sen. Lynne Walz of Fremont, would eliminate the current “umbrella” structure of DHHS, the largest state agency. The department would instead be broken into three on July 1, 2025: Children and Family Services, Public Health and Healthcare.

The first two, Children and Family Services and Public Health, would elevate existing divisions, while the Department of Healthcare would be composed of the three Divisions of: Behavioral Health, Developmental Disabilities, and Medicaid and Long-Term Care.

Walz pointed to various recent concerns as justification, including a lack of response to mental health needs, a scandal with financial mismanagement and underperformance by Saint Francis Ministries to handle child welfare services in eastern Nebraska and hundreds of millions of dollars in accounting errors.

“That’s just a short list of problems that I’ve witnessed during my time in the Legislature, but I don’t think it’s all of it,” Walz told her fellow Health and Human Services Committee members.

It’s not any individual’s fault, Walz cautioned, adding that people are working the best they can to provide services in stressful and highly complicated situations.

“The current system is just way too big to handle the intricacies of the needs overseen by divisions,” Walz added. “It’s pretty obvious that something needs to change.”

The modern-day DHHS was established in 2007 under then-Gov. Dave Heineman to increase efficiencies, Walz said, but those proposed incentives have not been realized. Sixteen states operate under the umbrella model, Walz said.

A very large fiscal note from DHHS estimates the possible need to triple current staff, with hundreds of new employees and hundreds of millions in increased costs to the state.

Walz downplayed the projected cost and said DHHS officials are savvy enough to divide their areas without adding additional staff.

Dr. Tom Safranek, who retired as the state epidemiologist in 2021 after more than 30 years of service, was one of two people to testify in support. He said he worked for DHHS before the mid-1990s mergers of similar health and human services areas, before they were consolidated.

Safranek said the Division of Public Health, particularly, has been negatively impacted by many controversies and problems that Walz mentioned, leaving it “marginalized.”

“When the umbrella agency was proposed, it was considered an experiment, and that experiment has now run for about 25 years,” Safranek testified. “It’s time to look back.”

Since the start, Safranek added, it has felt as though top appointments were “patronage appointments” rather than credible, public health leaders, creating morale problems. He suggested allowing a small committee to solicit and screen applications and recommend top names to the governor.

Under the bill, the director of public health could jointly serve as the state chief medical officer if they were licensed to practice medicine and surgery in Nebraska.

Micheal Dwyer, a 40-year veteran of the Arlington Volunteer Fire and Rescue, said well-intentioned workers “can be crushed” by the weight or power in a “behemoth” such as DHHS. This could include layers and layers of rules and regulations.

“Many times (rules and regulations) only serve to feed the bureaucracy and give power to a culture of defiance that prohibits real progress,” Dwyer said.

Tony Green, director of the Division of Developmental Disabilities in DHHS, testified in opposition. He said that since the DHHS became one department, it has made “great strides” to integrate programs into a single, cohesive agency.

“If the Legislature were to break up the department down into smaller agencies, this would nullify progress made thus far,” Green testified.

It is DHHS’s request to remain as a single agency, Green said, to “continue our collaboration to meet the needs of Nebraskans.”

Walz said that since introducing her bill, she’s heard people remark that it’s funny to want to eliminate DHHS, but she said it’s no laughing matter.

It’s not funny, Walz said, when senior citizens are displaced, when jails are filled because of a lack of mental health resources, when children are taken out of abusive situations but they still aren’t safe or when Nebraskans are left without food, transportation, shelter or clothing.

“I don’t think that any time that we’re unable to provide the people who live in Nebraska opportunities to succeed with dignity and respect and be accountable for those funds and those services and we can’t provide them, I don’t think that’s funny,” Walz said.

The No. 1 priority for families is health and safety, Walz said, so conversations about changing DHHS are warranted.

The committee took no immediate action on LB 1086.

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