State Health Department releases report amid financial mismanagement investigation

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OKLAHOMA CITY – A new year means a new leaf to turn over for an embattled state agency, facing allegations of financial mismanagement that has led to firings, furloughs, resignations and several investigations, including by the federal government.

The Oklahoma State Department of Health released a report Monday detailing problems with the agency and how it plans to move forward.

A law passed during the legislature’s first special session – unrelated to the state’s own budget problems – was in direct response to the OSDH’s own financial health: cut appropriations by 15 percent and report back on how the agency plans to fix its listing ship.

The report details steps the agency is taking after it announced last fall it needed $30 million to make payroll. The request to legislators – in the middle of trying to secure the state’s budget after a cigarette fee was ruled unconstitutional – led to resignations by agency leadership, firings, furloughs and layoffs.

Subsequently, a house investigative committee has been hearing testimony from state and former agency officials. Running alongside the house’s own inquiry is a state audit and an investigation by Oklahoma Attorney General Mike Hunter who, nearly two weeks ago, announced the FBI and Health and U.S. Department of Health and Human Services Inspector General would be joining.

“They are going to be collaborating with us in review of the matters at the health department,” Hunter said Dec. 19, without going into too much detail about the federal government’s role.

“Other than noting there are federal funds that flow into the health department, we’ll be collaborating with them to ensure that whatever we need to look at will be looked at thoroughly and with a level of detail that is merited by the magnitude of the problems.”

The “Corrective Action Report,” signed off by interim health commissioner Preston Doerflinger (who is also the state finance secretary and Office of Management and Enterprise Services Director) says the agency is reducing costs, suspending programs – like the child abuse prevention program – and making policy changes as it looks to cut 15 percent from its appropriations budget by June 2019.

Amid the state’s own financial crisis tasked to legislators during the first special session, HB 1028 was passed and signed in to law after the $30 million request, tasking the agency with cutting appropriations, assess the agency, its problems, possible solutions and report back.

The report says certain conditions usually present when fraud has been or is being committed existed at the agency, but stopped short of saying fraud occurred. However, it goes as far as saying that, according to current Chief Financial Officer Mike Romero, “Top Executive Management” made repeated attempts to prevent information about payroll problems “from being provided to any outside authority” as part of an annual agency audit by the State Auditor and Inspector’s Office.

The report also calls the agency’s culture – to deliver “any program regardless of the cost” – driven by top-level management, and that fiscal accountability was not promoted.

The same day it was announced federal authorities would be joining Hunter’s investigation, the health department’s former chief operating officer testified before a house panel looking in to the agency’s financial practices.

That evening, December 19, was capped off by dueling press conferences between Doerflinger and the State Auditor and Inspector General Gary Jones, pointing fingers at who knew what about the problems at the agency, and when.

The next day, Jones – a Republican candidate for governor – stepped aside from overseeing the audit, citing a fear of the appearance of personal bias in the investigation.

According to the OSDH report, some of the recommendations will have to go before the health department’s board, while other measures addressing financial problems at the agency have already been acted on.

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