Paul Monies, Oklahoma Watch
Documents released Friday (December 15) by the state Department of Health include a summary of alleged deceptions within the agency that include fraudulent budget reports to state finance officials and omissions in reporting the agency’s financial position to the Legislature and the State Board of Health.
The records, provided in response to an Open Records Act request made by Oklahoma Watch, include an October memo from Health Department Chief Financial Officer Mike Romero that outlined initial findings to the agency’s chief operating officer.
The memo, marked “confidential,” is the most comprehensive picture to date of the agency’s alleged financial mismanagement, which has led to an emergency, $30 million cash infusion from the Legislature, almost 200 job reductions and the resignation or firing of much of the agency’s former leadership team.
Highlights from the memo include:
–Debt of more than $30 million as a result of the financial maneuvers, constituting “unconstitutional indebtedness of a state agency.”
–Creation of agency “borrows,” or transfers, that amount to “fictional assets.”
–False claims that liabilities were reconciled.
–Breaching restricted federal funds, such as a fund for an HIV/AIDs program, and restricted state funds, such as revolving funds.
–Agency payroll expenses that grew to $150.8 million in fiscal year 2018, up from $132.7 million in 2011.
–Money “fronted” on contracts, including more than $13 million to the Tobacco Settlement Endowment Trust and $1.5 million to the University of Oklahoma Health Sciences Center.
–An absence of business discipline on health programs where “a wish or desire gets executed without deliberation.”
–Omissions to the Legislature and the Board of Health regarding the financial position of the agency.
The release of records comes amid multiple investigations and audits, including the state’s multicounty grand jury to explore possible criminal charges and an investigative audit by the state auditor’s office. A special House investigative committee looking into the health department heard from four top officials earlier this week, including those from Gov. Mary Fallin’s office and the Office of Management and Enterprise Services.
The memo details several warning signs that led to a deeper examination of financial issues. Among them was “hyper-control” over financial reports to the board of health and high turnover of prior financial directors and chief financial officers. There were also complaints from vendors for nonpayment or delayed payments.
Former top leaders at the agency displayed a “cavalier attitude about implementing normal financial reporting objectives” and used casual excuses to avoid addressing impending financial problems, according to the memo.
NOTE: Paul Monies has been a reporter for 15 years and was most recently an energy reporter for The Oklahoman newspaper in Oklahoma City. He now covers state government and social policy issues or Oklahoma Watch. Oklahoma Watch is a nonprofit, nonpartisan media organization that produces in-depth and investigative journalism on a range of public-policy issues facing the state. For more Oklahoma Watch content, go to www.oklahomawatch.org. This report was reposted at CapitolBeatOK.com, with permission of Oklahoma Watch.