Part 2 in a series from Steve Anderson.
| My fellow citizens of Oklahoma the OSDH fraud is even worse than we thought! We have more data and it is worse than we even thought----and possibly going to become even more troubling for the state’s taxpayers who ultimately will have to pony up the dollars to cover the fraud and incompetency. Now that more and more is coming out on what happened at the Oklahoma State Department of Health (OSDH) I am even more convinced that there is a need for a wide scale house cleaning at OSDH, the Office of Management and Enterprise Services (OMES) and the State Auditor and Inspector’s Office (SAI). Every one of these entities has culpability and I do not say that without a great deal of regret. There are people at each of these agencies who I know and like personally. That being said that does not change the facts, which documents just released reveal a stunning amount of blatant fraud at OSDH and the high level of incompetency at OMES and SAI. OSDH’s Chief Financial Officer Mike Romero sent an email that delineated the following issues to OSDH’s Chief Operating Officer in October that was reported on OklahomaWatch’s website Friday evening. |  |
“Debt of more than $30 million as a result of the financial maneuvers, constituting “unconstitutional indebtedness of a state agency.”
- Creation of agency “borrows,” or transfers, that amount to “fictional assets.”
- False claims that liabilities were reconciled.
- Breaching restricted federal funds, such as a fund for an HIV/AIDs program, and restricted state funds, such as revolving funds.
- Agency payroll expenses that grew to $150.8 million in fiscal year 2018, up from $132.7 million in 2011.
- Money “fronted” on contracts, including more than $13 million to the Tobacco Settlement Endowment Trust and $1.5 million to the University of Oklahoma Health Sciences Center.
- An absence of business discipline on health programs where “a wish or desire gets executed without deliberation.”
- Omissions to the Legislature and the Board of Health regarding the financial position of the agency.
The memo, marked “confidential,” is the most comprehensive picture to date of the agency’s financial mismanagement, which has led to an emergency, $30 million cash infusion from the Legislature, almost 200 job reductions and the resignation or firing of much of the agency’s former leadership team.
The level of deceit and inability of the respective state monitoring agencies to catch this sort of unsophisticated and easily detectable fraud and misreporting is beyond troubling. It is fine and good that much of management has been fired but there is a need to go through the chain of command at OSDH and find EVERYONE who knowingly participated in this fraud.
The bumbling of the supposed monitoring agencies would be laughable if it were not so traumatic for so many people. There are those that need help from OSDH services who now will not receive them and those who lost their jobs who were NOT part of the duplicity.
The ludicrousness of having Preston Doerflinger from OMES and the State Auditor Gary Jones testify and point fingers at each other and OSDH in front of a House Committee without shouldering the considerable amount of blame each has should not be lost on the citizens of Oklahoma.
OMES, under Denise Northrup and Preston Doerflinger, houses the Office of the State Comptroller Lynne Bajema who is fully involved in every transaction according to their webpage: “directs the daily operations of the Division of Central Accounting and Reporting (DCAR), which is responsible for establishing the policies and procedures for state financial transactions and for executing those transactions in accordance with the various state statutes, federal regulations, and governmental accounting and reporting standards.”
Agencies CANNOT transfer funds from one account to another without OMES authorization. They literally must contact OMES and have OMES make the journal entry and transfer. I will not quote the whole of the webpage here but anyone who is even harboring a bit of doubt about Ms. Bajema’s failure contributing to this whole debacle please to go the OMES website and the Office of State Comptroller page and read her responsibilities in her own words. If she was in fact performing her job OSDH could not have gotten away with this subterfuge. There are no doubt additional employees who should be retrained or fired to rectify this awful situation.
Preston Doerflinger is one of the highest paid employees in state government and along with Denise Northrup who is Chief Executive Officer of OMES are in “charge” of Ms. Bajema’s office. When you are management your job is to put in place processes that ensure those under you are doing their job. All three of these individuals are responsible for OSDH being able to perpetrate this continuing fraud that this author has received indications from credible sources that is even worse than the $30 million that is known to date.
Governor Fallin must act and act decisively. The state’s Consolidated Annual Financial Report is in question which will effect bond ratings and make Oklahoma the laughingstock of the country. And maybe this is the tip of the iceberg not only at OSDH but you have to wonder how much more has occurred in other state agencies while OMES has failed to do its job. If she does not fix the oversight agency right now it will continue and/or allow those who may be doing the same thing time to cover up their work or resign without repercussions.
Which leads us to the SAI and their performance of their audit function. Here is their statutory obligations per state law if anyone doubts their complicity in allowing this to go on:
“Except as otherwise provided by law, the State Auditor and Inspector shall audit at least once every two (2) fiscal years the books and accounts of all state agencies whose duty it is to collect, disburse or manage funds of the state. The State Auditor and Inspector shall audit a state agency each fiscal year if that state agency is required to be audited on an annual basis pursuant to the federal Single Audit Act of 1984, as amended, 31 U.S.C., Section 7501 et seq. If the state agency is audited only once every two (2) fiscal years, the audit shall cover both fiscal years.”
Folks the items listed by CFO Romero are easy to spot in any audit so there is NO excuse for why the SAI did not catch those. Not to mention that if SAI met the federal Single Audit Act requirements they could not have missed the improper transfers.
Gary Jones must accept his responsibility in this and clean house in the SAI and replace those employees who did this ‘work’. Better yet outsource the audits to a competent private CPA firm which will not miss these things but will have liability insurance that will allow for recovery of some of the damage for taxpayers if they do.
