Seeking efficiency, Alaska Gov. Mike Dunleavy is preparing an executive order to split the state’s largest agency in half, he said Tuesday.
The order, which will be introduced at the start of the legislative session, will separate the Department of Health and Social Services into a Department of Health and a Department of Family and Community Services. The health department will be in charge of Medicaid, public health and public assistance. The other agency will be in charge of children’s services, juvenile justice, Pioneer Homes and the Alaska Psychiatric Institute.
In a written statement, Dunleavy said the “reorganization will not reduce programs or services to Alaskans who are currently served.”
The Department of Family and Community Services will have about 1,800 employees; the Department of Health will have about 1,500. According to the state’s latest available workforce profile, that would make them the second and fourth-largest state departments, respectively.
Health and Social Services Commissioner Adam Crum said the split will make the two new agencies more efficient. Currently, Medicaid is such a large component of the combined agency that it absorbs the vast majority of the department’s administrative time. That became a significant problem during the coronavirus pandemic, he said.
“Over the course of the pandemic and the response, we did notice there was quite a bit of holes that really highlighted the need for more leadership and more bandwidth to deal with these critical issues to Alaska,” Crum said.
“We cover such a broad range of subjects, that you really only have time to hop from fire to fire,” he said.
Even before the pandemic, Health and Social Services division directors told Crum that they felt neglected because of attention on Medicaid, which accounts for roughly one-seventh of Alaska’s entire operating budget on its own.
The Alaska Legislature will have 60 days to disapprove the executive order. If lawmakers take no action, it will go into effect July 1.
The cost of the split was not immediately available. Crum and others said they expect it to be available by Feb. 15, when Dunleavy is required to submit any budget revisions to the Alaska Legislature. Crum said he expects initial costs to be higher because a second commissioner’s office will be needed. He believes the move will save money in the longer term because of efficiency gains.
Dunleavy himself said it will be done without any additional cost, even though the state would be adding a new commissioner and support staff.
“Now, some may say this is growing government. It’s not,” Dunleavy said. “It’s just splitting it out.”
Asked about administrative costs — work needed by other agencies to set up the new department, Dunleavy said he hasn’t gotten an estimate yet, “but our anticipation is that it’s going to be minimal. ... But quickly thereafter, we believe the efficiencies and better outcomes will result in lower costs for both departments.”
It’s the department’s biggest change since the first Alaska legislature created it as the Department of Health and Welfare in 1959. The department was renamed the Department of Health and Social Services in 1971, but its duties remained the same.
Senate President Cathy Giessel, R-Anchorage, is leaving office and won’t have a chance to consider the change, but she thinks it’s a good idea. She served on the gubernatorial transition teams for governors Frank Murkowski and Sarah Palin, and the idea was discussed then but never implemented.
“This department is much too large to keep an eye on,” she said.