Ducey Shuts Down Testimony By Jeffries, Loftus On DES Debacle

Arizona State Capitol Executive Tower [Wikimedia Commons]

On Tuesday, Tim Jeffries, former director of the Department of Economic Security for Arizona was scheduled to appear before the House Committee on Federalism, Property Rights and Public Policy to discuss the massive software failure and associated costs of the State’s benefits program. Jeffries’ appearance was canceled after Governor Doug Ducey, through the House leadership made his opposition to the appearance known.

Jeffries was scheduled to appear with long-time and well-respected law enforcement veteran Charles Loftus, who served in the Department of Economic Security (DES) Office of Inspector General’s Office. The two men were invited to appear before the Committee by its chair, Representative Bob Thorpe.

Loftus was prepared to testify that the governor’s office was interfering with fraud investigations when known donors and suspected friends of the Governor came under investigation. Loftus with concurrence from his supervisors took the case to the Arizona Attorney General’s office for investigation and prosecution. Loftus was abruptly terminated along with Director Jeffries by Kirk Adams, Governor Ducey’s Chief of Staff and rumored dark money coordinator shortly after taking the case to the AG’s Office.

According to sources, the governor was afraid of being embarrassed by what Jeffries and Loftus had to report. Ignoring the separation of powers, House Majority Leader John Allen advised Thorpe that the testimony was not welcome in the House. Instead the Governor’s Office offered an appearance by Morgan Reed, the State’s CIO.

On Tuesday, Reed notified Thorpe that he was unable to make the meeting as well.

Jeffries, a fearless and devout man of faith, appeared on the James T. Harris show to discuss the matter.

[Listen to the interview here]

“I was invited by Representative Bob Thorpe, to speak before the Committee regarding the multi-million dollar failure and debacle that is a major software system for our state. Last week, I was invited. Yesterday I was disinvited. Yesterday the State’s CIO was invited, and today the State’s CIO said he could not appear. The net-net of this is unfortunately folks in the Executive Tower,” said Jeffries referring to the Governor’s Office “are not open to the transparency our citizens deserve and demand.”

Harris asked Jeffries about the fact that the governor was rumored to be afraid of being embarrassed. Jeffries said, “As you recall, I served as the director of Economic Security for 633 days, and on day 500, which would be July 13, 2016, I had an excellent meeting with the governor and his Chief of Operations, Henry Darwin. And in that meeting, I briefed them at the end about this massive failure – and I believe -scandal of this major software system. So at that time, I recommended quite enthusiastically, that the vendor be terminated and we stop the incineration of taxpayer dollars.” Jeffries said he thought at the time that the governor willing to tackle the issue. “Well here it is eight months later, and best I can tell $50 million more has been paid to this inept vendor; wasting taxpayer dollars. That $50 million does not even include time and materials; so we probably burned another $75 million of taxpayer funds because we don’t have a spine to do the right thing.”

Harris had asked Jeffries about legislation that Thorpe had hoped to pass that would limit time and material contract awards like that which was used for the development of the HEAPlus software system to facilitate the State’s Medicaid expansion under the Affordable Care Act. Jeffries explained to Harris why those contracts, as is the case with HEAPlus, are so reckless. “Amazingly, when Arizona moved down the road to bring in a new Medicaid system, which would be integrated with food stamps and welfare payments, when AHCCCS (the State’s welfare system) signed the agreement with this vendor (SIS, LLC) it was not a contract. It did not have deliverables, or milestones, or timelines, or claw backs. It was purely a time and materials agreement. Basically the State said – with taxpayer money –‘go to work,’ and the vendor said the initiative would take 20 months and cost $47 million. Okay; well that sounds like a short time, but a lot of money. When I briefed the governor and Chief Darwin on this we were at approximately 52 months and $102 million. And of course now we are rapidly approaching 60 months and well over $150 million, and that’s $100 million over projection and the system is only a third done.”

“It is breathtaking, and sickening to the core. The system was initiated as a result of the passage of Obamacare and the expansion of Medicaid in Arizona, and I won’t take any issue with that, but America knows that the federal government failed with the Obamacare system. Most of America knows that any number of states failed with their respective systems. We were just building a Medicaid expansion system basically, and we’re one of the big failures in the country, and no one knows it. And that’s ridiculous. I was in a meeting any number of months ago prior to my “resignation” from the Agency and a very well-intended deputy of AHCCCS said to me, as I was losing my mind about the money, the well-intended AHCCCS person said, ‘Director Jeffries this is federal money,’ and I said ‘yes, but that’s our money; that’s not free money. Federal money is not free money. It’s the most expensive money, and so even though the general fund investment in this rapidly approaching $200 million debacle – even with the bulk of it is federal funds – those are still federal funds expended, and it’s all out of our pockets.”

Harris asked Jeffries if it was true that “DES alone has projected at least $80 million in state employee time invested in the ‘solutioning’ and trouble-shooting the SIS system that DES eligibility workers darkly refer to as “HEAminus?” Jeffries replied, “I tasked a team, that I was privilege to lead for those 633 days in the spring and summer of last year, to give me an estimate of how much time just DES had burned on the system. The estimate was; DES time invested was upwards of $80 million, and that also includes not fully the lost time for system outages, for system delays, not to mention the suffering we subject our clients to because if you don’t mind me saying so government sucks.”

Harris asked about the fact that it is now well-known It is a well-known fact that Jeffries was targeted by the governor due to his desire to clean up the system and expose the corruption. Jeffries responded, “This is a sad, tragic, non-transparent, wholly unnecessary failure that most Americans citizens are hardwired to believe happens every day, which in government it does happen every day. Well, at least for our system it is happening every day. Because eight months ago our top rate IT team recommended we get out of the system. I recommended it to the governor; eight months later we’re still burning state and federal dollars on it.”

Harris asked Jeffries if he was surprised by the governors “heavy-handed approach” to the House Committee on Tuesday. Harris said, “It’s looking like telephone calls were made, orders were given, and this thing was shut-the-hell-down. Jeffries responded, “It was shut-the-hell-down and that is not only inept; it’s scandalous and bordering on corrupt because our citizens deserve better. I care for the governor. I still love him like a brother; big time. I place a lot of this on his Chief of Staff Kirk Adams; the master puppeteer, who never lead a large organization in his life. The governor trusts him to get stuff done and based on sources – I have sources because I’m still pretty connected at the Capital – more than a few people were dialed up and were told – directed – to not let this hearing happen. What’s interesting to me is one; it’s heavy handed, and two; what happened to the separation of powers in our state? Members of the House and Senate serve at the pleasure of our citizens; not at the pleasure of our governor. I’m hopeful that our House members and senators engage on this because we are wasting money, and it’s not the only thing that I know where tens of millions of dollars of being wasted.”

“Government should be better,” concluded Jeffries, “and it can be. I just paid my taxes and I looked at that Arizona line, and I thought wow -that’s great – some of that is going to HEAPlus and isn’t that a great an investment. It’s ridiculous.”

Rep. Mark Finchem stated, “I am deeply disturbed by these events. Many of my colleagues and I work diligently to hunt down waste, fraud and inefficiencies in our state government. Frankly speaking, I don’t care where hearings on such matters go, as long as we get to an honest & ethical conclusion.”

“It is our job to question, examine and hear testimony about the things that happen in all four branches of Arizona government. That is a big part of the purpose behind separation of powers. Right now I have many questions that will not be resolved until answered,” concluded Finchem.

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