Budget & Tax

Ray Carter | May 20, 2019

Department of Health finances defy budget critics’ claims

Ray Carter

Legislative Democrats have argued state government should not set aside $200 million into savings, as provided for in the Republican-authored budget. Instead, Democrats say the money would be better spent at agencies.

But in making that case, Democrats have chosen an odd agency to champion: the state Health Department, where financial mismanagement led to an “emergency” $30 million appropriation last year that officials later determined was not needed.

During House floor debate on this year’s general appropriation bill, which spent a record amount that topped $8 billion, House Democratic Leader Emily Virgin of Norman cited a list of agencies she said were being shortchanged. The Department of Health was among them.

“The Department of Health has been cut by $14 million over the last 10 years,” Virgin said. “We’re giving them about $6 million, but $2 million of that is simply pass-through to crisis pregnancy centers.”

Virgin’s claim of budget cuts at the agency is undercut by a special investigative audit of the Health Department that was released in May 2018 in the aftermath of the agency’s financial challenges. That audit found, “Although the agency claimed that the current financial ‘crisis’ is due in part to decreasing revenues, that claim does not reflect the full picture. While appropriated revenues decreased $7 million between fiscal year (FY) 2011 and FY 2017, non-appropriated revenues increased $20 million during the same time period.”

A multi-county grand jury report, released alongside the investigative audit, found the agency’s spending had outpaced its revenue, even though the agency’s total funding had steadily increased.

The grand jury found that “by not correctly reporting its budgetary figures, and by hiding these monies in a way that the Legislature would not know they existed, the OSDH requested and received appropriations from the Legislature by presenting itself in a false financial position.”

By hiding cash and presenting a false picture of its finances, the grand jury concluded that the Department of Health was able to “continue spending at levels well beyond its supported revenue. From FY11 through FY17, OSDH expenditures increased by $15 million, while revenues only increased by $13 million.”

In the 2016 budget year, the grand jury found the agency spent $16 million more than it took in, yet did not default on payroll because of “off-books monies.”

“Budgeted revenue and expenses were double what actual revenue and expenses were since 2011, and further, expenses outstripped revenue in all but two of the last seven years,” the grand jury report revealed.

The agency is now under new leadership.

Despite Democratic complaints, Sen. Frank Simpson notes the Department of Health is still receiving a healthy increase in its appropriation.

“In fact, the Health Department is getting a 10.7-percent budget increase over last year,” said Simpson, an Ardmore Republican who chairs the Senate Appropriations Subcommittee on Health and Human Services.

He said some of the new funding will pay to upgrade information technology at the agency. During last year’s investigation, officials concluded the agency had been able to hide money due in part to continued use of almost-obsolete accounting programs.

“Some of that is to help upgrade their computer system,” Simpson said. “They’re really antiquated. Half the agency can’t communicate with the other half because of the incompatible software.”

Simpson said this year’s state budget also restores funding to federally qualified health centers, an area where cuts were made when the Health Department previously claimed a shortfall in November 2017.

Even with lawmakers voting to boost the agency’s funding, Simpson said there may still be areas where greater efficiencies can be found, such as potential duplication between county health departments and the state department. He said lawmakers will be examining the agency further in the coming interim.

During the agency’s budget crisis, 198 positions were eliminated to reduce expenses. After it was later determined those layoffs were not financially necessary, the department began the process of rehiring and refilling many jobs, a task that is still ongoing. But Simpson said he hopes the agency will “scrutinize refilling those positions.”

If the agency has “survived” without filling a position “for over a year,” Simpson said, it’s worth asking, “Do they really need it?”

Ray Carter Director, Center for Independent Journalism

Ray Carter

Director, Center for Independent Journalism

Ray Carter is the director of OCPA’s Center for Independent Journalism. He has two decades of experience in journalism and communications. He previously served as senior Capitol reporter for The Journal Record, media director for the Oklahoma House of Representatives, and chief editorial writer at The Oklahoman. As a reporter for The Journal Record, Carter received 12 Carl Rogan Awards in four years—including awards for investigative reporting, general news reporting, feature writing, spot news reporting, business reporting, and sports reporting. While at The Oklahoman, he was the recipient of several awards, including first place in the editorial writing category of the Associated Press/Oklahoma News Executives Carl Rogan Memorial News Excellence Competition for an editorial on the history of racism in the Oklahoma legislature.

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