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This publication is available in saicrofona from University Microfilms International. \\. Call tollfros 600-521.3044. Or mad inquiry to: .” University Microfilms International. 300 North Zest. Rood. Ann Arbor. Ml 415108. t1/4 impounded, the department will have spent less than was appropriated,” she said. “So the Legislature will look and see that they [DHS] spent less than we gave them for those programs, diverting them to cover the deficit. So for the ’92-93 budget, the battle for elderly and disabled clients will be to prove yet again that those needs exist.” The coming crisis also puts the Legislature on the spot, and taxpayers up the creek. “You put the Legislature in the position in 1991 to fund a $300 million hole,” said Pederson. “How do you plug it? You can’t move it from other places in the budget; we just got through scrubbing that budget and it’s tight. You have to pass a revenue bill. There’ll be an immediate need for a sales tax increase of one or two cents. If they had done something last spring, they could have handled it with a much smaller tax increase” \(because there would have been almost a year for those Hobby points to some less obvious consequences. “The impact is extremely harmful,” the Lieutenant Governor said. “What happens when there’s a threatened interruption in payments is that Medicaid providers which include hospitals, doctors, pharmacies, nursing homes, and so on won’t want to be a part of it. The Medicaid program is so underfunded not just in Texas but around the country that an increasing number of providers won’t fool with Medicaid. So those who do participate increasingly rely for a very large amount of their income on Medicaid. Every time there’s a threatened interruption, the system comes closer to a breakdown. Eventually, no one will want to mess with it.” Hobby also explained how the DHS’ s funding problems will influence state finance. “The crisis affected the integrity of programs and the fiscal integrity of the state badly. Anytime you borrow money from the future, that tells you there’s a bad situation. It’s a problem that the bond-rating services look at. It potentially could cause problems with the certification of the appropriations bill by the comptroller.” Sorting out the blame for this fiasco is much more difficult than the Bullock or Mosbacher campaign literature would indicate. By undertaking the noble goal of extending basic medical care and other services to a greater number of deserving Texans, the federal and state governments drove up the DHS budget. DHS should have done a better job in Medicaid forecasting. The Legislature deserves its share of blame for initially going along with estimates it knew were likely to be low, and for poor oversight, particularly during the hectic special sessions. The DHS obviously needs someone looking over its shoulder. As a special State Auditor’s report suggested, “To ensure that the best and most reliable projections are used in the state’s appropriation process, we suggest that the Legislature consider having budget projections for major programs verified, either by the Legislative Budget Board or by the State Auditor’s office.” That same report indicates, however, that the State Auditor itself should have looked more closely at DHS’s estimates. “We have not attempted to trace the history of these communications in detail or to explain differences in successive estimates,” it said. Unquestionably, the system needs an overhaul. Most of the fault for the 1990 crisis lies with the leadership of the Department of Human Services itself. “The budget crisis speaks very poorly of their management of the agency,” Caperton said \(while acknowledging that the department’s previous leadwith the staff,” said Hobby. “I have no doubt that the commissioner was under pressure from the board to come in with lower numbers.” “Had Mosbacher exerted leader ship, the deficit could have been faced and nipped in the bud. Now we’re facing possibly closing the agency.” It is unlikely that the public will ever know whether Rob Mosbacher Jr. put direct pressure on the staff, or whether a please-theboss mentality caused them to Use unrealistically optimistic assumptions \(in the same way American soldiers in Vietnam overestimated enemy casualties in order to match whether, as they claim, they just got it wrong. But the department leadership is clearly responsible for what followed those inaccurate estimates failing to ask for more money as it became increasingly clear more would be needed \(or at least that the figures were volapresenting a raft of ever-changing numbers, touting a patently fraudulent “miracle” plan, transferring money from programs by claiming falsely that it wasn’t needed, and ignoring federal government requirements. “The only proposals I heard from the leadership for resolving the problems,” said Friedholm, “were to violate federal law by not implementing some of those new requirements imposed by Congress, which would land us in federal court; or to delay implementation and borrow money, which is poor leadership. Delaying implementation is not serving people, and the agency delayed implementation.” It’s difficult to divide culpability for the Department of Human Services debacle between Commissioner Ron Lindsey and Chairman Rob Mosbacher Jr. “I have great sympathy for Lindsey,” Caperton said. “I think he’s a pawn for Mosbacher and the Republicans. I think they were telling him to fix things that can’t be fixed.” Mosbacher, who early in his term was so immersed in running the agency before Lindsey’s appointment that he once said, “People thought I was the commissioner,” backed away after the funding problems came to light. \(Mosbacher did not return Observer phone calN. His campaign spokesman, Mark Sanders, said the candidate’s campaign schedule lapses, and Lindsey’s excuses for them, make the Commissioner almost as responsible as Mosbacher. “To me,” said Friedholm, “the issue is not necessarily who gets what percentage of the blame, but what difference would effective leadership have made. Had Mosbacher exerted that kind of leadership, the deficit could have been faced and nipped in the bud. So now we’re facing substantial program cuts, and possibly closing the agency. Or we’ll have a steep increase in taxes to come up with $50 million [needed to pay immediate obligations]. If in the spring the department had treated it as the problem it really is, told the Legislature, ‘Here is the problem,’ and the Legislature had dealt with it, we could have solved it by now. Now all these programs are on line for drastic cuts in the spring.” So what will the Legislature do when it convenes in January, facing an untested governor and lieutenant governor and a ballooning DHS deficit? “They’ll have to pass a tax bill by March 1,” predicted Hobby. “It’ll have to be done, or programs like Medicaid, AFDC, and others will have to go through another wrenching crisis.” And if the Legislature fails to act? “It could have a devastating impact if something is not done,” said Senator Caperton. “Unless there is emergency action, the people who can least afford it will suffer.” Rob Mosbacher’s campaign theme was “Bold Visions.” But it was his lack of vision that resulted in a nearsighted strategy that left his department in debt. And it was lack of boldness that kept him from facing up to a crisis in the agency he was appointed to direct. THE TEXAS OBSERVER 9