State Auditor finds $28 million budget gap at Dept. of Mental Health

The Oklahoma State Auditor said the Department of Mental Health and Substance Abuse Services is short $28 million. This is the second audit released this week that digs into the agency's questionable finances. 

Part 1 of 2 audit reports of ODMHSAS's financial management over five years 

State Auditor Cindy Byrd said this is part one of two reports, but she found some glaring financial and systemic issues. She also said the urgency of this problem forced her office to delay other important audits.  

The initial report showed ODMHSAS will need more than $28 million to get through the fiscal year. Byrd pointed to the agency's questionable spending and missteps in budget planning.

“There’s no money missing,” Byrd said. “This agency was not communicating well with legislators about the true needs of the agency.” 

Calls for ODMHSAS changes in leadership 

Gov. Kevin Stitt asked Byrd to look at the financial management of the department to help lawmakers craft next year’s budget. ODMHSAS commissioner Allie Friesen told lawmakers this month her agency wouldn’t make payroll. 

Attorney General Gentner Drummond called for Stitt to fire her from her position. Friesen has blamed past leadership for the budget confusion. Byrd said the facts point to several people. 

Years of mismanagement under multiple leaders 

“It is the result of multiple administrations,” Byrd said. 

However, Byrd found questionable spending took place during Friesen’s time as commissioner. 

“We saw a big spike in payroll services,” Byrd said. 

Byrd’s report showed that last year alone, 38 people were hired with salaries of at least $100,000. There were 376 pay raises greater than 10% with an annual value of $4,073,948.  

“That’s not typical,” Byrd said. “We feel like those positions need to be analyzed to see if they’re necessary for the mission of the agency.” 

The need for qualified financial experts within the Department of Mental Health 

Byrd said the agency needs experience and recommended ODMHSAS hire a qualified chief financial officer. 

“Who has experience with Medicaid billing and understands governmental accounting,” Byrd said. 

Byrd said the department needs experts who prevent mistakes and avoid a budget column filled with question marks. 

“Making sure they’re steering them in the right direction,” Byrd said.  

What’s next? 

Byrd said her team is working on part two of this report, but she didn't have a timeline. That report will reveal who is to blame for this financial shortfall. 

“The taxpayers need answers on why an agency had a shortfall of close to thirty million dollars,” Byrd said. 

In a statement, an ODMHSAS spokesperson said, “We’ve created a large table of external diverse experts to help us bring light and end years of corruption. We are reviewing Cindy Byrd’s document, and we look forward to the additional contributions from third-party investigators and financial auditors in the coming months.” 

Byrd’s preliminary recommendations for ODMHSAS 

Budget and Financial Practices  

• Separate supplemental funds in a revolving fund to be used only for existing and essential fiscal year 2025 obligations, supported with documentation/explanations. 

• Utilize realistic budget practices that reflect the agency’s true needs and financial position. Adequate funds must be requested for core operations. 

• Comply with OMES monitoring efforts and financial practices as outlined in House Bill 2785. 

Department Structure and Personnel 

• Hire a qualified CFO with state government financial experience as soon as possible. 

• Implement an internal audit department in line with 43A O.S. § 2- 205 and applicable internal audit standards. 

• Evaluate the qualifications of recent executive hires, and consider shifting funding from unnecessary executive positions to fulfill operational obligations. 

• Scrutinize recent and ongoing terminations to ensure they are not retaliatory. 

Internal Controls  

• Assess and improve the agency’s control environment and communication practices in line with Government Standards for Internal Control. 

• Obtain an independent, in-depth audit of internal controls in key financial areas.