Oklahoma State Auditor and Inspector Cindy Byrd has released Part 1 of her audit on the Oklahoma Department of Mental Health and Substance Abuse Services.

Byrd said this initial report includes an estimate of the fiscal year 2025 budget shortfall, a summary of issues that she said led to the budget crisis and preliminary recommendations.

Byrd’s report said ODMHSAS needs $28,699,086 in supplemental funding to finish the fiscal year, which ends June 30th.

One of the first issues with the Fiscal Year 2025 budget, according to Byrd’s report, was that the agency used $9.4 million of FY 25 funds for FY 24 expenditures, which meant they started FY 25 in a deficit.

The report also pointed to problems with Medicaid payments and the transition to what’s called managed care, where Medicaid benefits are provided through private insurance companies. Those insurers are called Managed Care Organizations and the report said the following issues were discovered:

• Claims paid using the state’s tax ID number rather than provider

identifiers, resulting in combined payments to multiple state

entities,

• Payments made out to the wrong party,

• Payments sent to the wrong location, and

• Claims paid by physical check in error.

Byrd’s report also highlighted an increase in payroll expenses within the agency. According to the report, 38 people, 21 of those being administrative roles, were hired between January 2024 and April 2025 with salaries higher than $100,000. In that same timeframe, the report said 376 people received pay increases higher than 10 percent.

Byrd’s data showed payroll expenditures increased 49% from FY 18 through FY 24.

Also called into question were the agencies past spending practices.

“The Department’s budget was also impacted by questionable past spending highlighted in the press, including Narcan machines and a related advertising campaign, promotional costs for the 988 Mental Health help line including a regional Super Bowl ad, and the paused Donahue Behavioral Health campus construction project. Critical purchasing decisions like these impact future available funds.” The report states.

The report also highlighted employees feeling “pressure due to the current tone at the top of ODMHSAS.” According to the report, investigators were notified some staff were required to sign nondisclosure agreements and discouraged from cooperating with the investigation.

Plus, the report said ODMHSAS staff told investigators about concerns with structural changes and lack of communication from the management level, including leadership:

-Not attending meetings or signing documents,

-Employing armed guards, locking down the administrative floor, and even threatening employees in meetings,

-Failing to inform employees of internal events that the employees then learn about through the media,

-Constantly changing the supervisory structure, leading to employees being unaware who their supervisor is and having to research this information online.

Byrd’s report recommended ODMHSAS hire a qualified CFO with state government financial experience, utilize realistic budget practices that reflect the agency’s true needs and financial position, obtain an independent, in-depth audit of internal controls in key financial areas, among other recommendations.

You can read the full report here.

Governor Kevin Stitt’s office also released a report this week with the findings of another review of ODMHSAS.

Read that report here.