This story was originally published by The Lund Report, an independent nonprofit health news organization based in Oregon. It is republished with permission. You can reach Nick Budnick at Nick@thelundreport.org.
FILE - The Oregon Health Authority headquarters in Salem, Ore.
Jake Thomas / The Lund Report
Oregon Health Authority leaders have reversed course less than a month after announcing layoffs, saying the agency will pursue other efforts to address budget overruns.
While the layoffs were small in number, the on-again, off-again nature of the agency’s layoffs show how challenging the next three years will be, with far greater layoffs looming as well as cuts to services for 1.4 million lower-income Oregonians.
Last month agency leaders informed employees that 10 people would be laid off as of July 31, before changing the number to nine. Through a spokesperson, agency leaders told The Lund Report that the “difficult decisions” were “not made lightly.”
Nevertheless, the news took employees by surprise in light of the agency having received a large increase in its budget in April. In internal staff meetings to discuss the layoffs, many employees faulted management for a lack of information and expressed concerns about overspending on consultants and other agency leadership priorities.
Then, in a virtual meeting with Gov. Tina Kotek on June 30, Kotek told health authority employees she would have done more to prevent layoffs, amounting to a public rebuke of how outgoing Director Sejal Hathi’s leadership team had handled things.
On Wednesday, Deputy Director Dave Baden sent an email to staff informing them that the layoffs were cancelled, adding that “We recognize the uncertainty this process has created for employees and their families.”
Asked what caused the agency to cancel the layoffs, a health authority spokesperson told The Lund Report in an email that the change “reflects further continued discussion with the Governor’s Office and state budget partners about how to address OHA’s fiscal challenges while minimizing impacts on employees, programs and the people OHA serves.”
Agency budget situation unclear, but major cuts lie ahead
Earlier this month an advisory group to Kotek that has been meeting in secret issued a list of what amounted to recommended cuts to the agency and the Medicaid-funded Oregon Health Plan, which provides health care to one in three Oregonians.
The cuts are intended to address changes to the Medicaid program spearheaded by Congressional Republicans that are expected to lead to millions more Americans going without health coverage.
State leaders have highlighted the cuts and changes expected to hit next year. In Oregon, about 200,000 people are expected to lose Oregon Health Plan membership, and the recommended cuts are intended to resolve a $421 million deficit projected for the 2027-29 budget period starting in a year’s time. Starting in 2029, the impacts are expected to be far worse.
The system had been in crisis even before the federal cuts started hitting, according to many in the industry who have faulted state leaders for failing to tackle the situation.
Meanwhile, the health authority has faced shortfalls internally. Since February, leaders of the Oregon Health Authority, a state government agency that is funded by Oregon taxpayers, have on numerous occasions refused to publicly divulge any details of its budget deficit, despite sharing them widely internally.
Records released under Oregon Public Records Law have shown that agency leaders were internally discussing projected agency overruns of $100 million by April 17, less than two weeks after the agency’s revised state budget approved by lawmakers was signed by Kotek.
That’s despite having pulled $170 million from a program used to pay providers serving lower-income Oregonians to fill an earlier budget hole caused by a flawed agency budget projection, sparking concerns about access to needed care.
As of last month the agency’s budget hole had shrunk to about $90 million, records show.
Agency leaders have declined to say what caused the overruns or how they will be resolved, although internal records show they hope to ask lawmakers for at least $35 million in additional funds later this year.According to a spokesperson, “OHA will continue working through the state budget process to address its remaining fiscal needs while advancing broader efforts to align resources with the agency’s highest priorities, identify additional efficiencies, and strengthen the agency’s long-term financial sustainability.”
Hathi’s last day as director of the agency is July 31. Former Department of Human Services director, Fariborz Pakseresht, will serve as interim director. He began at the Oregon Health Authority more than a week ago to work on a transition.
In a July 8 email to staff, Pakseresht wrote, “Strong organizations are built through trust, collaboration, curiosity, and a willingness to learn together. My commitment to you is that I will lead with openness, integrity, respect, and a genuine desire to understand before making decisions. We are undoubtedly facing difficult issues, but we will approach them together, guided by our mission and by our shared commitment to public service.”
This republished story is part of OPB’s broader effort to ensure that everyone in our region has access to quality journalism that informs, entertains and enriches their lives. To learn more, visit opb.org/partnerships.
