OKLAHOMA CITY (OBV) – The initial financial examination report of an audit being conducted on the Oklahoma Department of Mental Health and Substance Abuse Services (ODMHSAS) is now on Gov. Kevin Stitt’s desk.
CPA David Greenwell prepared the report, which aims to give a transparent look at the Department of Mental Health’s financial operations. A $43-million deficit was previously discovered at ODMHSAS.
Greenwell worked with ODMHSAS and the Oklahoma Office of Management and Enterprise Services (OMES) to examine financial practices, evaluate short term funding needs, and give recommendations for future procedures.
The report shows that ODMHSAS has a projected $29.9 million supplemental funding need for FY2025. It also makes 52 recommendations to strengthen internal controls, financial accountability and service delivery at ODMHSAS.
“This report is the signal for a new beginning for the department,” Stitt said. “I’m grateful to David Greenwell for his quick work and to Commissioner Friesen and her team for their cooperation.”
Stitt said changes are being made at ODMHSAS that will prioritize ethical standards, modern accounting systems, and improved reimbursement protocols.
“No one signs up for a job like this thinking they’ll have to take on decades of financial mismanagement. Commissioner Friesen has navigated this challenge admirably and has kept me and my team informed every step of the way,” Stitt said. “Oklahomans will be better off now that we have a handle on this department.”
The report made the following recommendations:
- Hiring a Chief Financial Officer and internal auditor with deep public sector experience
- Adopting OMES-approved accounting systems for better interoperability
- Using advanced analytics to prevent fraud and improve decision-making
- Expanding training to promote a culture of ethical conduct and accountability
- Enhancing transparency through real-time dashboards and public reporting
“I’ve worked with many entities facing similar challenges,” Greenwell said. “Nothing about this department is permanently broken. With intentional adjustments to procedures, ODMHSAS will be able to get back to the business of caring for the most vulnerable Oklahomans.”
Stitt previously outlined the following three actions to stabilize ODMHSAS operations:
- A nationally respected, independent financial expert will be brought in to take temporary control of the department’s finances. This expert will assess the agency’s financial shortfall and produce an accurate and credible supplemental budget request for the Legislature.
- As previously announced, the Governor will name a well-regarded attorney with experience in complex investigations to conduct a full and independent review of ODMHSAS. The investigator will report directly to the Governor’s Office and will have full authority to follow the facts wherever they lead.
- The Governor has directed Oklahoma Healthcare Authority CEO Ellen Buettner, along with ODMHSAS officials, to conduct a top-to-bottom review of all Medicaid and federally funded functions within the agency. This effort will evaluate whether these responsibilities should be administered by a different agency or in a different manner to ensure greater accountability and efficiency.
The Department of Mental Health’s financial practices have been under intense scrutiny, including the audit, an Oklahoma House of Representatives select committee being created to review finances at the Department of Mental Health and Stitt appointing attorney Robert McCampbell as special counsel to conduct a full, independent investigation into the department.
Also, the Legislative Office of Fiscal Transparency (LOFT) is reviewing existing contracts and finances to provide a third party perspective on how the Department of Mental Health has handled state-appropriated money.
The select committee is reviewing the following issues:
- Reports of using current fiscal year funds to cover prior year expenses
- The cancellation of Certified Community Behavioral Health Clinic (CCBHC) contracts and its impact on service continuity
- The agency’s request for FY25 supplemental funding
- The unexplained allocation of $5 million for an electronic medical records (EMR) system that was never implemented
- Long-term budget planning for FY26
- Updates related to the federal court-ordered consent decree impacting ODMHSAS
“With just over a month remaining in the legislative session, this investigation is a top priority,” House Speaker Kyle Hilbert, R-Bristow, previously said. “Our goal is to understand the department’s financial practices, ensure accountability and determine whether additional funding is truly necessary before the session concludes.”
Allie Friesen, commissioner of the Department of Mental Health, testified before the committee during the first day of hearings. She said the Department of Mental Health has a $43-million deficit. She said that amount was reduced from an originally discovered $63-million shortfall.
“Likely, within the last year and a half, I have shared a similar concern and questions,” Friesen said regarding concerns over the Department of Mental Health’s finances. “I am hopeful we all will leave today with clear alignment as to the current situation of the Department of Mental Health and Substance Abuse Services, how we got here and where our vision is moving forward.”
The deficit was discovered in February. Friesen said she was alerted to some potential concerns over ODMHSAS’s Title 19 funding, and was told the department was potentially short of the amount of funds needed for Fiscal Year 2025.
Friesen was asked if she could identify the source of the deficiency.
“The initial concern was that the true amount that the department required was not originally requested. At a high level, it seems as if, historically, the required Title 19 funds that the Department of Mental Health needed in order to pay the Healthcare Authority for our portion of the costs was not adequately requested,” she said.
Friesen said her goal is for the Department of Mental Health to be a reliable, accountable and transparent organization.
“Unfortunately, that is not what this administration inherited,” she said. “We realize that the communications and the coverage and the rumors that are flying around are not positive. And we have been very open with that. We want to shine a light on the things that have been seen before. And that is not to have some kind of witch hunt, that’s not to get anybody in trouble. That is to fix the system so that we can be accountable, and that this legislative body feels comfortable and confident in appropriating dollars [to the Department of Mental Health and Substance Abuse Services], knowing that they are going to where they are supposed to go.”
She said the situation at the Department of Mental Health has been and still is “chaotic.”
“Frankly, we are moving towards a much more stable, confident place as an organization,” she said.
Oklahoma Attorney General Gentner Drummond criticized Stitt for not firing Friesen.
“Commissioner Friesen offered no satisfactory answers for the agency’s ability or inability to meet payroll obligations. The commissioner is simply not equipped for the job – and she never was,” Drummond said. “Gov. Stitt hired a counselor who doesn’t have a license to run our Mental Health Department, nor does she have the leadership experience. Is it any wonder the department is in financial meltdown?”
Friesen said she’s not a politician and has failed to “understand how all these pieces fit together.”
“I own that and am trying to learn from smarter people around me as to how to better navigate through that,” she said. “My priority has been and will always be ensuring access to high-quality care. We have made mistakes and we have tried to quickly own those mistakes as quickly as humanly possible.”
Stitt began pursuing an investigation following “disturbing discoveries” related to the previous ODMHSAS leadership’s finances and contracting practices.
“I’ve had frustrations with the mental health department for years and now that we have Commissioner Allie Friesen putting a fresh set of eyes on the department, it’s clear there are problems that need special attention,” Stitt said. “What we need is an independent third party who can focus all their energy on shining light on this agency and rooting out bad actors.”
Stitt’s investigation will look into every aspect of the Department of Mental Health, including its finances, employment records and contracting practices to see if any laws were broken, according to officials from the governor’s office.
Stitt previously said Friesen found points of concern after she fired the Department of Mental Health’s chief financial officer as well as other lieutenants within the agency.
“Sometimes, when you have people at agencies who have been there for 30-40 years, they’re moving the ball pretty good, they understand how this building works and they’re paying every invoice so nobody squawks,” Stitt said.
ODMHSAS needs new leadership, according to Drummond.
“Oklahomans who are suffering from mental health challenges and substance abuse are the ones who stand to lose the most while this fiasco continues to play out,” Drummond said. “The buck stops with the commissioner and the governor. It is past time for Gov. Stitt to take action and correct course.”
Stitt said Friesen is trying to make the Department of Mental Health more efficient and focus spending where it needs to go.
“You’re seeing the bureaucracy kick and scream as she is actually putting a spotlight on this stuff,” Stitt said. “I tell people, ‘Let’s shine a light on some of these dollars. Let’s see where all the mice scatter to. That’s what you’re seeing right now – the rats are running and they’re screaming.”
The Governor said some contracted mental health providers are charging the state exorbitant sums.
“The numbers that I have seen, we have some providers charging the state, on the mental health side, up to $6,700 per patient, per month. And then some are charging $2,700. That’s a question we’re all digging into,” Stitt said. “If you’re in business and you can bill the state, and [the state] automatically pays it out without asking questions, that’s a pretty good business model. If you’re [a] business and can send unlimited invoices and get paid, I bet you some of those businesses get pretty good at figuring out how to continue to bill the state.”
Friesen said Stitt is firmly behind implementing accountability and transparency in the Department of Mental Health.
“My top priority is the well-being of the Oklahomans in our care, and I want to get everything out in the open so we can focus back in on our core mission. The department welcomes this investigation and will fully cooperate,” Friesen said.
