DES MOINES — Gov. Kim Reynolds said Tuesday the former Department of Human Services director served “at the pleasure of the governor” and she used flexibility the law gives her to chart a new direction aimed at “taking this agency to the next level.”
“We’ve done some good things, we’ve made some significant gains. I believe that we can do better,” Reynolds told reporters in defending the decision last month to seek Jerry Foxhoven’s resignation as Human Services’ head — a leadership change she lamented has become “a distraction” to rolling out her vision for improving government.
“This is an at-will, political appointment that serves at the pleasure of the governor and I have indicated that there were several factors that went into this decision and I made the decision to go in a different direction,” Reynolds, who had appointed Foxhoven to the role about two years earlier, said at a weekly news conference.
“I have to have the flexibility to find the right person. It’s about the right person in the right seat that’s a part of that team to really make a difference for Iowans in this state and that’s what I’m focused on,” Reynolds added.
The Osceola Republican said Human Services has transitioned through some challenging times, including the switch to a privately managed Medicaid system, but she said that “I don’t believe that the agency is where it should be and I think we can do better and, because of that, I’ve made the decision to go in a different direction and that’s what we’re doing.”
Foxhoven has said he thought his department’s funding — including federal money — of a health care policy adviser’s salary for the Governor’s Office could be illegal. But before he had time to consult with the Attorney General’s Office, Foxhoven was asked June 17 to resign.
The funding action is not illegal, Reynolds said, although she has asked Human Services to review the pay-sharing arrangement she said is “a long-standing practice” that dates to Gov. Robert D. Ray’s administration and was approved in three previous agreements signed by Foxhoven.
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Foxhoven — who oversaw the state agency that handles the Medicaid and child welfare programs, among others, that affect hundreds of thousands of Iowans — told The Gazette he had spoken to a special agent of the Office of Inspector General of the U.S. Department of Health and Human Services regarding the circumstances of his departure, and agreed to participate in an interview with State Auditor Rob Sand.
On Tuesday, Reynolds said she has not been contacted by federal officials on the matter and was surprised by Foxhoven’s allegations.
“I want to be clear, he never raised any concerns to me or my office about anything. We decided to go in a different direction, my chief of staff asked for his resignation and he resigned,” the governor said. “If he had a concern with that, he should have raised it with us and he did not raise — I want to be clear — he did not raise a concern with my office. I have no idea where that came from, none.”
The employee, Elizabeth Matney, was hired as a health policy adviser to the governor starting May 17. As the former bureau chief of managed care organization oversight and supports, her salary and benefits were paid evenly by state dollars and federal Medicaid funding.
The agreement in question stated the department’s budget would pay for Matney’s salary and benefits from May 17 to the end of fiscal 2019.
Matt Highland, the Human Services spokesman, said Matney’s salary for the state fiscal year “will be partially funded with federal Medicaid dollars, as she was entirely focused on the Medicaid transition during that time.”
“She played a critical role in administering this federal program to serve Iowans who rely on it,” he said in an email.
Department officials followed standard practice by drawing federal funds for work done in support of federal programs, Highland said. The department also consulted with the Attorney General’s Office on the matter “and believes it’s following the law.”
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An official with the U.S. Centers for Medicare and Medicaid Services confirmed that a state Medicaid agency could claim federal payment for costs deemed necessary for proper administration of the Medicaid program. But it must be approved.
The official added that administrative costs for the operation of an agency that performs functions other than overseeing the state’s Medicaid program may be allowed “when it can be demonstrated what fraction of its efforts are allocable to Medicaid claimable activities, and that fraction can accurately be identified and allocated.”
The latest salary agreement between Human Services and the Governor’s Office was not presented to Foxhoven. Documents provided by the Governor’s Office indicated the agreement was signed June 19, two days after Foxhoven resigned. His name was crossed out and replaced with Gerd Clabaugh, interim department director.
Reynolds asserted she has complied with a 2017 state law requiring disclosure of the names of public employees who have been fired or forced out and the basic reasons behind it. She said this ouster involved an employee who served at the governor’s discretion.
“We feel that we have complied with the law,” she said. “My staff on behalf of me asked him to resign and he did. We have complied with the law.”
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