ST. PAUL, Minn. (AP) — Gov. Tim Walz will soon announce a restructuring of the troubled Department of Human Services, the largest agency in state government, its chief said Monday.

Commissioner Jodi Harpstead declined to specify what changes might be coming for her department, which some lawmakers think is too big to run effectively. But she said the easiest move might be splitting off its Direct Care and Treatment division, which treats people with mental illnesses, disabilities, chemical dependency, the elderly, and sex offenders.

The commissioner cautioned that counties have expressed “serious concerns” to her about a bigger breakup because their social service programs prefer dealing with a single state agency. And she said splitting departments doesn’t necessarily lead to long-term cost savings.

She made the announcement at a House committee hearing as she delivered a report on her first 90 days on the job. The Democratic governor hired Harpstead this summer from Lutheran Social Service of Minnesota, where she was chief executive, after his first commissioner, Tony Lourey, abruptly resigned in July amid turmoil in upper management that was never fully explained to the public or lawmakers.

Harpstead said she found the department is “not in a free fall, in crisis, in total chaos.” In a department of 7,300 employees, she said, over 7,200 are doing good work. She said “inappropriate payments” that have generated explosive revelations this year totaled $106.5 million over the past six years, compared with total payments of $96.1 billion, or just 0.1% of total payments in that period. But she vowed to go after that 0.1% “because every dime matters.”

The commissioner also dropped what GOP lawmakers called a “bombshell,” disclosing that Carolyn Ham won’t return as the department’s inspector general but will remain with the agency.

Ham was put on paid leave in March following a sharply critical legislative auditor’s report on fraud within the agency’s Child Care Assistance Program, which she was responsible for monitoring. The auditor’s office found a “serious rift” between Ham and the department’s child care fraud investigators.

Harpstead told reporters afterward that no disciplinary action will be taken against Ham, but she declined to provide details about what her agency’s internal review might have found because it involved personnel matters. She said Ham does not want to remain inspector general, so they’re now looking for a new role for her.

Republican lawmakers on the panel criticized what they called a lack of public accountability for problems at the agency that predated Harpstead. They pointed out that she has not fired anyone for recently revealed overpayments of millions of dollars in federal money to tribes and counties for addiction treatment programs, nor has she disciplined Ham or anyone else for fraud within CCAP, the scale of which remains in dispute.

They also faulted her for resisting a “full forensic audit” to root out any fraud, waste and abuse that has gone undetected in the department — an idea Walz has supported.

“My concern is that there are real, fundamental issues. And the more we try to minimize it, and the more we try and downplay it ... I think you are stopping what really needs to happen for a full, deep-dive analysis of the department,” GOP Rep. Nick Zerwas, of Elk River, told Harpstead. Zerwas was attending his last official function before he leaves office Friday over health issues.

Harpstead acknowledged that her department has an image problem and has a long way to go to restore “trustworthiness,” one of her top themes since taking the job.

“When we run billions of dollars of taxpayer money and every Minnesotan has an opinion about how that should be spent, we quickly become the department everyone loves to criticize,” Harpstead said. “Fair enough. We can live with that. I would ask Minnesotans to look at the department’s overall results, read the stories of the lives supported with their taxpayer dollars through DHS’s work, and make a fair judgment of the total picture.”

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