State Auditor and Inspector Cindy Byrd released the preliminary findings of an audit of Oklahoma’s mental health department Tuesday. (Photo by Nuria Martinez-Keel/Oklahoma Voice)
OKLAHOMA CITY — A growing number of high-dollar executive hires and “questionable spending” on a Super Bowl commercial and Narcan machines have contributed to the financial disarray at the state’s mental health department, the state auditor reported Tuesday.
The audit of the Oklahoma Department of Mental Health and Substance Abuse Services also reported that leadership at the agency is unable to understand and explain some complex issues within the agency and that employees were forced to sign nondisclosure agreements and discouraged from cooperating with investigations.
State Auditor and Inspector Cindy Byrd said the report’s preliminary findings, released Tuesday, revealed “some glaring financial and systemic issues” at a “massive state agency” that has a budget of over $750 million.
“It needs a director with executive managerial experience and a mastery of basic budgetary and compliance skills,” she said in a statement.
Gov. Kevin Stitt speaks to Oklahoma Department of Mental Health and Substance Abuse Services Commissioner Allie Friesen during a Contingency Review Board meeting Oct. 8. (Photo by Emma Murphy/Oklahoma Voice)
The audit comes amid reports of financial shortfalls, canceled or cut contracts and other disarray at the department. The Oklahoma State Auditor and Inspector’s Office expects to release a more detailed audit at a later date.
Although Gov. Kevin Stitt requested the audit in March, on Tuesday his spokesperson said the report didn’t fulfill his request, is “politically charged” and wastes taxpayer dollars because it duplicates work already completed.
The audit found that since January 2024, when Stitt named Allie Friesen commissioner, her agency has hired 38 people at a salary exceeding $100,000 and awarded 376 employees pay raises greater than 10%. Only 17 of new hires were medical while the rest were executive hires. The agency’s payroll was over $150 million in budget year 2024, according to the audit.
The audit urged the agency to reexamine its recent executive hires and review terminations to ensure they weren’t retaliatory.
The state’s transition to a Medicaid managed care health care insurance system has created issues paying providers which also impacted the agency’s budget. The agency also hasn’t communicated effectively that there have been changes in the federal government’s Medicaid reimbursement rates since the end of the COVID-19 pandemic, the audit found.
The transition to managed care “caused a lag in both billing and payments after implementation,” the audit found, creating issues with properly paying claims. Payments have been made to the wrong parties and sent to wrong locations.
The payment issues affect the department’s cash flow, the report found.
The mental health department’s existing budget request, made by Friesen to lawmakers at the beginning of the year, was impacted by the governor’s request for executive branch agencies to submit flat budget requests and “difficulty explaining complex and misunderstood needs related to topics like Medicaid growth and pended payments, which resulted in a lack of urgency around these issues,” according to the audit.
The mental health department also began the current budget year with a deficit as $9.4 million from its current budget was used to pay last year’s debts, according to the audit. But the audit also flagged “questionable” spending and said there’s increasing pressure on employees from agency leadership with required nondisclosure agreements.
Oklahoma’s Mental Health Commissioner Allie Friesen testifies before a select committee investigating her agency’s finances on May 5. (Photo by Emma Murphy/Oklahoma Voice)
The pressure on employees also included “employing armed guards, locking down the administrative floor, and even threatening employees in meetings,” according to the report. One lawmaker on the select committee previously asked agency leadership about a report that someone had threatened to go “full cop mode” on staff that hadn’t signed an NDA, but leadership said they were not aware of this instance.
While testifying to a select committee of state lawmakers, Friesen admitted that some employees were asked to sign NDAs, but that it was an optional practice.
But the report from the state auditor’s office revealed agency staff told investigators they were “required” to sign the NDAs. Staff also reported to investigators issues with leadership not attending meetings, signing documents, having to learn about “internal events” through the media, and frequently changing the supervisor structure so they don’t know who to report to.
Friesen did not directly comment on the findings, but agency spokesperson Maria Chaverri said the department is reviewing the state auditor’s report.
“We’ve created a large table of external diverse experts to help us bring light and end years of corruption,” she said in a statement. “… We look forward to the additional contributions from third party investigators and financial auditors in the coming months.”
Friesen’s agency has come under fire and is the subject of a handful of probes. A certified public accountant appointed by Stitt most recently reported a nearly $30 million shortfall for the current budget year, and lawmakers are currently working to finalize the agency’s budget for the upcoming fiscal year.
Byrd said the state agency needs $28.7 million in emergency funding to make it through the current budget year.
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Some providers have reported a lack of reimbursements for services provided to indigent populations, and Byrd’s report found over $87.6 million of those. These payments are historically reimbursed with funds still available at the end of the budget year, but not at 100%.
Stitt has continued to express his support for Friesen and previously said she is “shining a light” on bureaucracy and agency mismanagement. The commissioner has previously blamed her predecessors for many of the issues at the state agency.
“This is disappointing,” he said in a statement Tuesday. “On behalf of the Oklahoma taxpayers, I asked for a financial audit of the financial management of the last five years, not an exploration into whether or not Cindy Byrd approves of the culture of the department. This reeks of politics. Oklahomans deserve an audit done in good faith and a report that gives them the answers they deserve.”
Byrd said the urgency of Stitt’s audit request forced her office to put other investigations on the “backburner,” including one of the Oklahoma Turnpike Authority, but plans to resume them immediately.
In addition to the report from the state auditor, reports from the Legislative Office of Fiscal Oversight, a select investigative committee of lawmakers and David Greenwell, an accountant appointed by Stitt, have publicly shared their own findings. None of their numbers for the agency’s deficit have been the same.
Robert Campbell, a special investigator appointed by Stitt, has not yet released a report. He was appointed May 8.