Nebraska’s ‘Teflon governor’ Heineman leaves under cloud of scandals

By Deena Winter | Nebraska Watchdog

LINCOLN, Neb. — In February, the Washington Post released a list of the 10 most popular governors, with the caveat that the political fortunes of governors can change on a dime.

Nebraska Gov. Dave Heineman ranked ninth on the list, with the Post saying, “There was a reason why the entire Nebraska political universe was waiting to see whether Heineman would announce a Senate run last year: His popularity would have cleared the field for him.”

In 2012, he was considered the most popular governor in the nation — the only sitting governor with an approval rating in the 60s, according to Public Policy Polling.

But as Heineman wraps up an unprecedented 10 years at the state’s helm, his legacy has been undeniably stained by a number of scandals:

• Conditions at the Beatrice State Developmental Center, a state institution for developmentally disabled people, deteriorated to the point where the feds sued the state and withheld $28 million in federal funds. After a BSDC hospital was closed in 2008, an 18-year-old woman died three hours after going into seizures. In the wake of her death, Nebraska’s chief medical officer ordered the removal of 45 “medically fragile” residents from BSDC into the community. Then, to the state’s horror, one by one a dozen of them died, with relatives often blaming their abrupt uprooting.

• The governor tried to privatize the child welfare system in 2009, contracting with five private companies. All but one soon bowed out or lost their contracts as costs spiraled. Last year, the feds gave Nebraska 30 days to repay nearly $22 million in misspent federal funds related to the botched privatization effort. That has since been reduced to $12.5 million.

• The Department of Health and Human Services has been the subject of a string of scathing audits showing mismanagement, plundered and misspent millions — straining the governor’s relationship with State Auditor Mike Foley, a fellow Republican who was elected lieutenant governor in November.

• Several scandals have plagued the corrections system since the disastrous 2013 release of Nikko Jenkins, who went on to kill four Omahans within 10 days, just as he forewarned prison workers. Subsequent investigations found dangerous prisoners’ sentences have been miscalculated since 1995 and increasingly violent prisoners have been released through paroles and furloughs to avoid building a new prison as corrections employees made risky decisions.

• The state’s 2010 move requiring people to apply for public benefits online or by phone was widely criticized as a failure, with chronically tied-up phones, long waits and huge backlogs. State officials say wait times and processing have since improved.

• Within the space of two years, two consecutive lieutenant governors quit amid scandals: His first, Rick Sheehy, resigned after making thousands of personal phone calls to women who were not his wife on his state cell phone. Sheehy’s replacement, Lavon Heidemann, resigned after his sister obtained a protection order against him.

The state’s longest-serving lawmaker, Sen. Ernie Chambers, I-Omaha, calls Heineman “the Teflon politico” because “nothing seems to stick to him.”

“He’s been in politics for so long people have gotten so used to him,” Chambers said. “I guess they accept anything he says.”

While Heineman seems to have remained popular with Nebraskans, he’s much more controversial with lawmakers: Two Republican senators being term-limited out of office declined to be interviewed about his legacy.

Fans and accolades

But Heineman has his fans in the Legislature. Chief among them is Sen. Beau McCoy, R-Omaha, who ran for governor, but was eliminated in the primary. He calls Heineman a mentor.

“I think he’s done a fantastic job,” McCoy said. “I think he’s going to leave office well acknowledged as the most successful governor in our state’s history.”

McCoy points to the state’s strong agriculture economy, all-time high graduation rate of nearly 90 percent, significant tax cuts, low unemployment even during the Great Recession and stellar business climate.

“The business climate and where we are as a state is far better than when he took office,” McCoy said. “Nebraska is in a better place today than what it was 10 years ago.”

Out on the campaign trail, he found Heineman still “extremely popular” with Nebraskans, and thinks he’d have won or U.S. Senate seat or another term if he were allowed to run again.

In one of his final weekly columns to Nebraskans, the governor laid out some of his top accomplishments:

• Modernizing the Nebraska Advantage Act, an economic development program Heinenman says enabled over 450 companies to invest nearly $12 billion and create more than 30,000 new jobs.

• Passage in 2007 of the largest tax cut in Nebraska history — with property and income tax relief and repeal of the estate tax. The next year, corporate income taxes were lowered for small businesses and this year another tax relief bill passed.

• A 2008 update of Nebraska’s student testing laws, with statewide testing and improved scores.

He said Nebraska is now the top cattle feeding state, ranked No. 1 in the nation for the most new and expanded corporate facilities per capita, ranked No. 2 for roads infrastructure and has the second best high school graduation rate in the United States.

Some scandals too

But Heineman’s administration was also rocked by several scandals.

ALLIES: Sen. Beau McCoy (left of governor) was an ally of the governor’s, helping him pass several tax relief bills, including $412 million in tax relief over the next five years.

Sen. Steve Lathrop, D-Omaha, headed up two of four special committees lawmakers created to investigate BSDC and prison debacles. Lathrop believes four legislative investigations are unprecedented, and sees a common thread in them.

“What is common in each is lack of leadership and a philosophy that indiscriminately cuts the resources necessary for his agencies to run government,” Lathrop said. “What we see as we look back on all of this is when you indiscriminately cut state government agencies, they don’t operate and it ends up costing us more money.”

The feds withheld $28 million in funding for developmentally disabled people, ordered $22 million in misspent child welfare repaid and Lathrop expects the corrections cleanup to cost tens of millions.

A 2011 audit showed child welfare costs went up 27 percent after the system was privatized, as the state failed to seek bids on multi-million dollar contracts, overpaid contractors millions and failed to document how money was spent.

BSDC was poorly run — with untrained staff and excessive overtime — and shortchanged to the point where Nebraska lost federal funds and was forced to spend an additional $80 million, by Lathrop’s estimate. State officials were warned repeatedly by the feds, but nothing changed until the feds sued, he said.

Even now, conditions have improved at the institution, Lathrop said, but the state still hasn’t fully complied with the federal consent decree, which should’ve been done years ago.

BSDC has since been recertified for Medicaid funding, and DHHS officials say they’re complying with the settlement agreement and the U.S. Department of Justice may end court oversight next year.

When Heineman embarked on big initiatives like privatizing child welfare or developing ACCESS Nebraska, it didn’t go well, Lathrop said. Child welfare reform “collapsed” because the state didn’t allocate enough resources to make the transition or properly pay providers, he said.

In the prison system, the Heineman administration avoided expanding prisons by paroling and furloughing more prisoners, to the point where the chairwoman of the state parole board said last week the governor’s office inappropriately leaned on the board to let more people go. The state was putting prisoners back on the streets with no treatment, with orders to get it in the community.

“We starved the place of programming,” Lathrop said.

Meanwhile, after the Jenkins serial murders, Heineman began pushing for inmates to earn their “good time” (which automatically cuts their sentences in half.)

“He’s in charge of running the place,” Lathrop said. “Every time there’s a mess, every time there’s a scandal, he talks about it like he’s not in charge of it.”

Lathrop traces several prison scandals back to the administration’s refusal to add more beds.

INTERROGATOR: Omaha Sen. Steve Lathrop led two investigations into scandals that occurred under Heineman’s watch.

“I think that Nikko Jenkins will be his legacy,” Lathrop said. “When there’s poor administration and poor leadership, stuff like Nikko Jenkins happens, and all the things we’ve heard about — stuff like BSDC will be part of his legacy.”

The governor’s spokeswoman, Jen Rae Wang, said Democrats are just repeating their usual talking points.

“The governor’s record on leadership is absolutely clear,” she said. “State government is run by people. No government is ever going to run perfectly.”

Even teflon doesn’t last a decade

McCoy said any governor — especially one serving an unprecedented 10 years — is going to encounter turbulence.

“Any governor’s going to deal with tough situations,” he said. “It’s how you handle them when you do.”

The Legislature partnered with Heineman to solve problems, he said, because it’s the policy-making branch. The Republican-dominated Legislature seemed more inclined to buck the governor in recent years, but that’s not unusual to McCoy.

“It’s not always going to be rosy between a chief executive and the legislative branch,” he said.

Sen. Heath Mello, D-Omaha, sees that differently. When controversy erupted, Heineman often blamed others and allowed problems to fester until lawmakers stepped in, he said.

“A lot of it came back to the culture and the management and the leadership in those agencies,” he said.

Sen. Jeremy Nordquist, D-Omaha, also said when problems surfaced, the governor and his team often failed to step in, so lawmakers stepped up.

“The leadership on that should have come from the executive branch,” he said.

Mello said the state has had success with economic development, job growth and education, but he’s bothered by the problems in two of the biggest agencies, DHHS and corrections.

“The question is who was minding the store over those two agencies?” he asked. “Running state government is the responsibility of the chief executive officer.”

Mello hopes the Legislature has a more collaborative, less combative relationship with Governor-elect Pete Ricketts.

“I’m optimistic that governor-elect Ricketts is really digging in to try to change the culture and the management and the leadership of these two agencies,” Mello said. “I’m optimistic that Ricketts is going to want to govern all state agencies.”

Nordquist isn’t so diplomatic. While Heineman is a personable, likable public speaker and politician, he was not a good leader, he said.

FRENEMIES: Appropriations Chairman Heath Mello sometimes clashed with Gov. Dave Heineman.

“Governor Heineman’s legacy is a lack of leadership and a lack of management,” he said. “Governor Heineman showed no interest in managing or solving problems or replacing leadership when it needed to be replaced.”

He championed politically popular things like tax relief and a crackdown on illegal immigration, Nordquist said, but even his hallmark property tax relief package was “widely popular and going to happen anyway.”

“I’m sure he would like to say his legacy is tax relief, and it’s the one thing he wants to hang his hat on. He was certainly involved in those discussions, but it wasn’t because of his leadership that he willed people into it,” Nordquist said.

He, too, is “excited” about the new administration, pointing to Ricketts’ hiring of an outside firm to find key directors.

Nordquist said Heineman’s relationship with the Legislature started out cordial, but deteriorated when he “couldn’t get his way” and “did things that were the equivalent of pouting,” such as declining to give the traditional session-ending speech one year.

The governor’s spokeswoman disagrees, saying, “This is not a governor who’s run from problems.”

“It has not gone unnoticed in the public that the most vocal adversaries of this administration are certainly pushing an agenda to try and frame their point of view,” Wang said. “He has a strong connection with the people of Nebraska.”

Heineman’s final attempt to push through a massive tax overhaul — eliminating the income tax by ending $2.4 billion worth of sales tax exemptions — failed, even though his fellow Republicans control the one-house Legislature.

“He had no ability inside the Legislature to get that done,” Nordquist said. “By that point his relationship with the Legislature was completely soured.”

Nordquist said the governor took a simplistic management style, making across-the-board cuts rather than a “thoughtful redesign of government.”

“It’s like taking a saw to a car… you don’t end up with a compact car,” he said.

Sen. John Harms, R-Scottsbluff, is among the Republicans who didn’t want to comment on Heineman’s legacy. Harms said the governor was definitely a conservative but “left the state with some serious issues.”

“I think history will judge what he’s done,” he said.

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