On March 2, 2018, 150 Oklahoma Health Department staff members lost their jobs because of years of fraud orchestrated by Department leaders. This was the second round of layoffs (both happened during the worst flu season on record), and followed a $30 million bailout.
In October, the Health Department admitted it was short "more than $10 million," and tried to put the blame on funding cuts and higher costs. Shortly after that, political appointees began resigning. The missing money grew to $30 million, and rumors swirled that the Department had misspent federal money. Documents dropped in December allege illegal spending and coverups back to 2011. The state launched two investigations and then the federal government began one more—all are ongoing. A whistleblower resigned in disgust, and the interim director resigned in disgrace.
The Health Department disaster was predictable. Waste and fraud happen where there is lots of money but little transparency and accountability. They are especially likely when people decide their own good intentions are more important than good management and following the law.
OCPA recommends that the legislature conduct regular oversight hearings, with subpoena power, of the state’s largest agencies. The legislature has the power of the purse, and it should use it to compel agencies to be transparent and to hold them accountable. If agency leaders do not provide clear and honest answers to the people’s elected representatives, the legislature should cut that agency’s administrative budget.
OCPA also calls for federal funds transparency. Every agency that receives federal funding should report annually on how it obtained the funds, how it spent the funds, and on any “strings attached.” Some federal funding can actually override state priorities in ways that legislators should at least know about. And when an agency like the Health Department misspends federal funds, that may result in the state legislature being required to appropriate money to pay a federal penalty.
Medicaid was created in the 1960s to pay for medical care for very poor Americans who were also either disabled, elderly, or children. The program was designed in Washington, D.C., uses both federal and state funding, and is administered at the state level. Obamacare was designed to force an expansion of Medicaid to able-bodied, working-age adults. But even before Obamacare, Medicaid enrollments and costs were rapidly rising.
In fact, Oklahoma’s state share of Medicaid costs increased 194% from 2003 to 2016. State government now spends more than $2 billion on the program, with $3 billion more coming from the federal government (it all comes from taxpayers, one way or the other). About 800,000 Oklahomans receive Medicaid benefits today.
Like any welfare program, Medicaid is subject to fraud. This happens in two ways: providers can bill for services not provided or people who do not qualify take benefits. Most anti-fraud efforts focus on providers because individual instances of that kind of fraud are likely to involve more money. But as enrollment has grown, some states have started doing better checks when it comes to recipients. There is also concern that state Medicaid agencies often see their job as increasing the size of the program, rather than controlling costs and preventing fraud.
OCPA recommends changing state law to require the Oklahoma Health Care Authority (the state’s Medicaid agency) to contract with an independent vendor to do quarterly checks to ensure that those receiving benefits are eligible. Current legislation to do this is House Bill 1270, which has passed the House (63-25, March 22, 2017) and the Senate (39-5, April 26, 2017). Because the Senate changed the bill, it needs to repass in the House and then it can go to the Governor for her signature.
For more about Medicaid audits, please read this article from OCPA’s Perspective magazine.
Predicting the future is a notoriously tricky business. In a special “Energy” issue in 1981, National Geographic prophesied that U.S. oil production was in permanent decline and that the gasoline shortages of the 1970s would become a permanent fixture of the 1980s and beyond. The next big thing was nuclear power. No, solar. Or maybe geothermal. Wait, the sure bet is windmills. The twirling towers just needed a nudge from politicians, in the form of tax dollars, according to supportive ideologues and investors.
In 2001, Oklahoma legislators took the bait. Then-Gov. Frank Keating wrote about this mistake.
In 2001, when I served as governor of Oklahoma, I signed legislation creating the Zero Emissions Tax Credit for industrial wind energy. The tax credit was designed to give a jump-start to a wind industry in its infancy in Oklahoma at the time. It was sold to us as a low-cost way to broaden our already robust energy and economic development program. It was supposed to create jobs and develop a more prosperous future for Oklahoma.
Signing this legislation was simply a mistake. What was promised to cost the state less than $2 million annually when I was in office has soared to $113 million for the 2014 tax year and is expected to cost billions in the future. Wind farms average 10 to 13 permanent jobs, which hardly lives up to the promised employment growth.
Because the tax credits weren’t limited or capped, the Zero Emissions Tax Credit has warped into a scam costing taxpayers millions to the detriment of other publicly funded services.
OCPA recommends capping the amount of tax credits and reimbursements that can be paid out to wind companies each year, and repealing the sales tax exemption for windmills. This would continue some good work—advancing OCPA recommendations—that the legislature did last year. None of this will end wind energy in Oklahoma—something most wind power advocates admit. But it will protect state tax collections from being given away to a politically favored industry, allowing those dollars to be spent on core services instead.
He pushes the gun into your ribs and demands your wallet. As he pulls out your cash and credit cards, he says “This will really help me produce my next indie film.” And so here’s the question: Does that make it okay? According to the Oklahoma Film + Music Office, you should feel good about such a transaction.
The state of Oklahoma writes checks worth up to $4 million every year to filmmakers to subsidize their movies. This is a straightforward wealth transfer—you get taxed, filmmakers get a check. Of course, it’s supposed to create jobs, but even at that the program is a failure. The state Incentive Evaluation Commission recommends sunsetting the program, finding "no evidence that the Oklahoma film industry has strengthened during the time the rebate has been available."
Actually, it’s even worse than all that. Many subsidized movies never go anywhere. The state has paid out millions to people making movies nobody ever sees. On the other hand, the biggest subsidized hit was a film by Harvey Weinstein.
OCPA recommends ending (right now, not just allowing it to sunset) the Hollywood Handout. State legislators can do this in the budget bill that will be agreed on this May. This would save $4 million per year that could be used for core services. For example, this amount of money could provide nursing home care for more than 200 Oklahomans.
No state agency is less accountable than the Tobacco Settlement Endowment Trust, or TSET. It has a guaranteed stream of funding from Oklahoma’s share of the 1998 settlement with tobacco companies. It has a governing board, with none of its members elected. And it has a vague, open-ended mission.
Today, TSET also has a bank account worth over $1 billion. It continues to grow, with annual payments of about $50 million and no end in sight. Each year, TSET spends the endowments earnings on a mix of programs, from high-priority health care to dubious media campaigns to the totally absurd.
How absurd? TSET spends hundreds of thousands of dollars every year on a publicity program for bars and nightclubs. It also pays lavishly for billboards and other advertising to nag Oklahomans about what they drink. TSET has also directed state funds to organizations that lobby for higher government spending and is mixed up in the Health Department scandal.
After coming under pressure from lawmakers last fall, TSET’s board temporarily directed some of its funds to state health care programs. But taxpayers and service recipients should not be subject to the whims on an unelected board.
OCPA recommends redirecting future tobacco settlement payments to critical state health care services, rather than promoting bars or posting billboards. OCPA also recommends giving the legislature greater say over how existing funds are spent; this is what companion measures Senate Joint Resolution 50 and Senate Bill 896 would do.
For more about TSET’s strange priorities, see this article from OCPA’s Perspective magazine.