*Editor's note: This story has been updated throughout.
Kyle Janek, the head of the state’s embattled Health and Human Services Commission, will step down July 1 and be replaced by his deputy, Gov. Greg Abbott announced Friday.
Abbott announced that Chris Traylor, who had been poised to retire from the health agency, will take over for Janek. Traylor is a former commissioner of the Texas Department of Aging and Disability Services.
“I thank Dr. Janek for his years of dedication and service to the state of Texas,” Abbott said in a statement. “I look forward to working with Chris Traylor to make needed reforms to ensure that the millions of Texans who rely on the vital services HHSC performs are able to have the utmost trust in the agency."
News of Janek's departure came the same day Abbott announced he had signed into law legislation aimed at cleaning up the agency, which has been dogged by a contracting scandal. Government-issued reports have been sharply critical of Janek's leadership, and lawmakers have called for him to step down.
Janek told reporters Friday that it was his idea to leave the position — a job he said he loves — and that he's not sure what's next for him. He said he's leaving to make room for new leadership as the agency prepares for a massive reorganization. He also said a variety of challenges — including the surge of unaccompanied children crossing the state's southern border and the arrival in Texas of the country's first case of Ebola — gradually led him to realize why the job tends to have "a shelf life."
"It does take a toll at some point," said Janek, who took the helm at the agency in September 2012 after being appointed by then-Gov. Rick Perry.
Janek added: “Originally I thought perhaps I’d stay four years; three starts looking a whole lot better, and we’re coming up on that.”
Asked whether his decision to step down was related to contracting problems, Janek said the difficulties with contracting have been known for some time.
State Rep. Garnet Coleman, one of the legislators who had asked Janek to resign, said Friday that Traylor is "more than capable" of leading the commission at this time.
"You need some experience, some hands on the wheel," said the Houston Democrat, who first met Traylor in 1995. "He's a straight shooter, tells the truth. He's seasoned."
On Tuesday, Traylor was feted by co-workers at a retirement party inside an auditorium at the Texas Health and Human Services Commission headquarters in Austin as Janek watched the proceedings silently.
After Traylor's retirement was announced earlier this year, lawmakers hailed his departure as a loss for the state's health system. On Friday, Republican state Sen. Jane Nelson of Flower Mound — former chairwoman of the Senate Health and Human Services Committee — praised Traylor for forgoing his retirement.
"His institutional memory and his understanding of the mechanics of our programs will be a huge asset, especially as we transition to a more cohesive health and human services system," Nelson said in a statement.
As the head of the commission, Traylor will oversee the state’s health agencies, which employed more than 54,000 people and spent a combined $34.5 billion in 2013.
"I look forward to it," Traylor said in an interview. "I'm very, very excited."
He will take over the health commission as it prepares to partially consolidate the state’s health agencies. That coming transition makes now a good time for a leadership change, Janek said.
Pending approval from the governor, the Health and Human Services Commission, the Department of Aging and Disability Services and the Department of Assistive and Rehabilitative Services will be integrated into one “mega-agency.”
Traylor previously managed the last consolidation of the state's health agencies in 2004 after lawmakers voted to combine 12 health and human service agencies into five.
Coleman said many lawmakers already are familiar with Traylor. As the session went on — and Janek's future became more uncertain — Traylor became more of the "face of the Health and Human Services Commission" to the Legislature, Coleman said.
Traylor also led DADS from 2010 to 2012 at a time when the agency was under scrutiny from federal officials and lawmakers over substandard care at Texas' institutions for the disabled. In 2009, lawmakers agreed to a $112 million settlement with the U.S. Justice Department over extensive abuse and neglect at the taxpayer-funded facilities.
Prior to that, he served as Texas Medicaid director for three years.
Abbott also named Charles Smith, who now works at the state attorney general's office, as deputy executive commissioner of health and human services. At the attorney general's office, Smith is the deputy for child support.
For the past seven months, Janek, a former state senator, has weathered blistering criticism from lawmakers regarding a $20 million no-bid contract with the Austin firm 21CT.
The firm was contracted in 2013 by the commission's Office of Inspector General to provide Medicaid fraud tracking software. But questions about how 21CT was able to land a contract for software never tested in the Medicaid fraud arena eventually led to the firing in December of Doug Wilson, the inspector general, and his former deputy, Jack Stick, who had been promoted to general counsel.
The 21CT contract led to two audits and is still under investigation by the public integrity unit of the Travis County district attorney's office and the FBI.
Advocates say Traylor's time at DADS during the fallout of the feds' investigation is what best equips him to take over the health agency amid the contracting scandal.
Dennis Borel, executive director of the Coalition of Texans with Disabilities, described Traylor as someone with "clear-eyed vision" who works well with others in times of turmoil.
"If Dr. Janek was going to step down, my hope was the Chris would consider accepting that offer," Borel said. "This is the best possible outcome for this kind of change."
Patrick Svitek and Corrie MacLaggan contributed to this report.