Health Department used federal HIV/AIDS money for other purposes
Over a period of several years, the state Health Department shifted some federal money into programs it was never intended to fund.
Now officials say the state Health Department faces a $30 million funding shortfall this year, which could grow if the agency has to repay the federal government.
In August, the state Health Department was forced to end an $8.5 million program with the Oklahoma Tobacco Settlement Endowment Trust that funded grants for things like lighted walking trails at city parks and school playground equipment across the state, records show.
The state Health Department ended the grant program after it came dangerously close to missing a payment for a federally funded program to help treat HIV and AIDS patients.
Since 2011, the state Health Department has spent $4.9 million on the Certified Healthy Oklahoma program. The state Health Department contracted with TSET to administer the grants and promote the program.
Over the past five years, the Certified Healthy Oklahoma program has provided schools and cities with more than $2.5 million in grants to promote fitness and health. The grants are provided as incentives for implementing wellness policies like banning smoking on city property and increasing opportunities for physical activity.
As part of the program, the city of Ada was awarded a $100,000 grant in 2015 to install new lighting and emergency call boxes on a municipal walking trail. Rural school districts in Porum and Warner used grant money for things like new drinking fountains, physical education and playground equipment.
With its finances rapidly unraveling in August, the state Health Department abruptly ended its funding of the Certified Healthy Oklahoma program. The state Health Department also asked TSET for the immediate return of $3 million so it could repay money owed to a federal HIV and AIDS program, Doerflinger said.
At a news conference last week, Interim Health Commissioner Preston Doerflinger, who has been tasked with helping to untangle the state Health Department's complicated finances, acknowledged that the agency had borrowed between different pots of money to finance certain programs, including funds that were supposed to be restricted for a specific use.
"These actions were taking place in order for the agency to pursue various and costly programs beyond the agency's core public health initiatives," Doerflinger said.
Audits pointed out problems
State auditor reports dating back to 2015 pointed out problems with the state Health Department's handling of federal money, records show.
A state audit of federal funds that year found the state Health Department was not reconciling expenditures with the Office of Management and Enterprise Services in a timely manner, with as much as six months lag time on monthly reports.
Reconciliation is an accounting process to ensure financial records are accurate.
The audit also found problems with the state Health Department's handling of federal funds from the U.S. Department of Agriculture for nutritional programs.
"Unallowable activities and/or costs could occur and not be detected when timely reconciliations are not performed," the audit found.
Federal money for public health programs makes up the bulk of the state Health Department's annual budget.
Of the agency's current $393 million budget, $235 million (57 percent) is federal money. Just 16 percent of the state Health Department's current funding, about $63.5 million, is from state appropriations.
Cash flow problems at the state Health Department came to a head earlier this year when the department missed payments on invoices for a federally funded HIV and AIDS treatment program.
The Ryan White HIV/AIDS Program helps pay for insurance premiums and medication for HIV and AIDS patients. It is the largest federally funded program for people with HIV.
The federal Health Resources and Services Administration, which administers the Ryan White program, became aware over the past several months that the state Health Department had unpaid invoices for HIV care and treatment that it should have had enough money to cover, said Martin Kramer, a spokesman for the agency.
The Oklahoman has filed an open records request to find out the amount of the unpaid invoices. Kramer would only say the unpaid amount was "less than $2 million." The money has since been repaid.
Doerflinger said issues with funding for the Ryan White program led to the discovery of deeper financial problems within the agency.
"That was a catalyst for a lot of this," Doerflinger said.
The state Health Department had reached a point earlier this year when it was about to miss a payment on a health insurance premium assistance program for HIV and AIDS patients, Doerflinger said.
At the state Health Department's request, TSET immediately returned $3 million from the Certified Healthy Oklahoma program in August, according to agency records.
The state Health Department used the money returned from TSET to repay the Ryan White HIV/AIDS program, Doerflinger said.
"It was a very critical time, but it just got them through that," Doerflinger said.
TSET will continue to evaluate the efficiency of the Certified Healthy Oklahoma grant program and its future funding, executive Director John Woods said in a statement.
"While we value the partnership with the Oklahoma State Department of Health, we recognize the difficult budgetary situation they are in and understand the department needed additional funds to carry out the work," Woods said.
In a letter to TSET dated Aug. 8, former Senior Deputy Health Commissioner Julie Cox-Kain acknowledged that state Health Department funding for Certified Healthy Oklahoma grants had continued although a contract for the program expired in 2013.
Cox-Kain blamed the end of the state Health Department's funding for the grant program on dwindling state and federal funding.
"In addition to state reductions, declines in federal revenue place increased budget pressure on the state Health Department to the point we can no longer sustain our current programs," she wrote in the letter.
Cox-Kain resigned in October along with Health Commissioner Terry Cline as budget problems at the agency continued to mount. Attempts to reach her were unsuccessful.
It was not until Sept. 27 that the state Health Department publicly acknowledged its funding problems and announced plans for layoffs and work furloughs.
The state Health Department is now seeking $30 million in supplemental funding from the Oklahoma Legislature. Without additional money, the agency will not be able to pay its employees by the end of November, Doerflinger said last week.
Brianna Bailey joined The Oklahoman in January 2013 as a business writer. During her time at The Oklahoman, she has walked across Oklahoma City twice, once north-to-south down Western Avenue, and once east-to-west, tracing the old U.S. Route 66.... Read more ›
Dale Denwalt has closely followed state policy and politics since his first internship as an Oklahoma Capitol reporter in 2006. He graduated from Northeastern State University in his hometown of Tahlequah. Denwalt worked as a news reporter in... Read more ›