As confusion over a nebulous budget hole continues to muddle the 2025 legislative session, the House of Representatives announced an investigative committee today that — with subpoena power — will compel public testimony about issues within the Oklahoma Department of Mental Health and Substance Abuse Services.
The announcement comes days after the Office of Management and Enterprise Services notified three certified community behavioral health centers that their contracts with ODMHSAS to serve Tulsa County are being terminated effective May 10. Combined, the developments underscore systemwide tensions in a state with top-10 rates of mental illness, a failing competency restoration system and a behavioral health bureaucracy largely lacking transparency.
“The events of the past several weeks have caused considerable uncertainty about the future of mental health services for thousands of Oklahomans,” said Zack Stoycoff, executive director of the Healthy Minds Policy Initiative. “Inconsistent and confusing messaging has left patients and providers in limbo, with layoffs of clinical staff at substance use treatment providers and threats to community mental health centers charged with the care of tens of thousands of people.”
When it convenes at 1:30 p.m. Thursday, the House investigative committee will become the third state government body reviewing ODMHSAS’ budget books. The Legislative Office of Fiscal Transparency has been interviewing individuals and reviewing documents since March, and State Auditor Cindy Byrd’s office has been tasked with a deeper financial audit likely to take months — if not years — to complete. But the inspections don’t stop there. On Monday, Gov. Kevin Stitt’s office announced his intention to appoint a special investigator within ODMHSAS to dig into contracts and other agency details.
Beyond those four reviews, state and federal law enforcement have been examining state mental health contracts and arrangements for months, according to several people with direct knowledge of the inquiries. As stakeholders await clarity about what such criminal inquiries may or may not reveal, last week’s decision by OMES to end contracts in Tulsa County underscores the high-stakes nature of the decisions at hand.
“There have been some of those allegations. I haven’t seen any kind of criminality right now. I think a lot of it’s just incompetence,” said House Appropriations and Budget Committee Chairman Trey Caldwell (R-Lawton). “I think that’s one thing that this legislative investigative committee — I hope — really digs into: Was there any level of criminality, or was it just incompetence, or what? Why are we as a large state agency not able to balance our books?”
Caldwell and his counterpart, Senate Appropriations and Budget Committee Chairman Chuck Hall (R-Perry), have each expressed frustration with attempts to gauge the accurate depth of the budget hole facing ODMHSAS. The numbers relayed to lawmakers have changed from week to week, with the apparent gap for Fiscal Year 2025 — which ends June 30 — being pegged at $43 million before suddenly shrinking Monday when ODMHSAS declared it was only $6.2 million following “a comprehensive, agency-wide review of revenue streams and expenditures, including Title XIX Medicaid contracts, value-based payments, the enhanced tier payment system and operational efficiencies.”
Hall stopped somewhere short of confident when asked about the $6.2 million formal supplemental request Tuesday at the Capitol.
OSDE supplemental request
In addition to ODMHSAS’ now formal request for an FY 25 supplemental appropriation, Hall said the State Department of Education has asked for a $22 million supplemental appropriation for employee “flex benefit allowances” to close this fiscal year.
“My reaction to the $6.2 million number is that the bar keeps changing. It gives me pause to want to know what the real number is. I do like the trend — that we’re trending down — but I want to verify that this is exactly what the need is,” Hall said. “All of us want to know what the number truly is. It’s going to be hard for me to want to jump out and fund something if I don’t know if it fixes the problem.”
Hall said understanding the ODMHSAS budget gap for FY 25 and the agency’s baseline needs for Fiscal Year 2026 — which officials said remains unclear despite early reports estimating a necessary $54 million increase — will be crucial for full state budget decisions to move forward.
“I don’t believe we have all the facts. So it’s hard for me to render a decision or to make a decision — particularly on base funding — until we have all the facts,” Hall said. “I certainly can’t finalize the budget unless I know what the number is going to be for FY 26. I can’t come to a bottom line until I know the bottom line.”
Uncertainty ensues with Tulsa County contracts ending
As lawmakers look for answers — and hope back-dated reimbursement cuts to substance use disorder providers are ultimately avoided — a separate development in the mental health world shocked providers, nonprofit leaders and lawmakers last week.
On April 10, OMES cancelled the Tulsa County contracts of Family and Children’s Services, CREOKS and Grand Mental Health — a decision that stems from FCS’ pending appeal of ODMHSAS’ 2023 decision to grant CREOKS and Grand Mental Health expanded catchment areas in Tulsa County.
“It is the state’s job to ensure that all contracts prioritize accountability and transparency,” Christa Helfrey, public information manager for OMES, said Monday. “We are committed to being good partners with all agencies as we navigate the state’s procurement processes.”
Later that day, Bonnie Campo of OMES clarified that OMES is “supporting ODMHSAS to identify immediate procurement options” for the continuation of behavioral health safety net services in Tulsa County. Exactly when a new request for proposal might be posted — and whether current agreements with FCS, CREOKS and GMH could be extended in the meantime — remains unclear.
That level of uncertainty has left the certified community behavioral health centers scrambling. Brent Black, the CEO of CREOKS, said his organization has reached out to OMES and ODMHSAS “to learn more about this situation.”
“We have reached out to state officials for clarification about our Tulsa CCBHC contract status. While we await further information, we will continue to provide these vital services without disruption,” Black said. “We have served the Tulsa metro area for more than 40 years, and we look forward to continuing this important work in our community. The Oklahomans who need our services rely on us to provide high-quality care and we will continue to deliver nothing less as we work through this contractual issue. Our clients always come first.”
In their contracts with ODMHSAS, CCBHCs are eligible to receive enhanced Medicaid reimbursement for agreeing to provide services to Oklahoma’s uninsured population, which has grown in recent years. Governed by local boards of directors, CCBHCs form the state’s social safety need for mental health needs.
“We have received assurances there will be no interruption in CCBHC services while a new method of contract procurement is developed,” said Chris Posey, director of marketing communications for Family and Children Services.
Josh Cantwell, who was promoted from chief financial officer to CEO of Grand Mental Health near the end of 2024, said his organization is awaiting clarification about the next steps for ensuring services in Tulsa County.
“We have provided, and will continue to provide, ODMHSAS the requested details for continued funding and full transparency related to our financial standing. Since receiving the notice of termination from OMES, there have been several updated statements and communications on the matter but, to date, we are not in receipt of any formal notice that rescinds or restates the original OMES formal notice of the May 10 contract termination,” Cantwell said. “While we await formal clarification from the state on the notice of contact cancelation, and any further details required for continued funding, we fully support Gov. Stitt’s and Commissioner (Allie) Friesen’s recent call for a third-party investigation of ODMHSAS.”
Grand Mental Health and CREOKS have been singled out by Stitt in recent weeks owing to the Fiscal Year 2023 salaries of their executive directors topping $1 million each.
“I think Oklahomans would be very interested to know that we have nonprofit CEOs in the mental health space at Grand Lake Mental Health making $1.3 million,” Stitt said. “That is a lot of money for Oklahoma that they are making off of the taxpayer. So we should be asking questions. Are those dollars going on target and actually helping folks? Or are they being spent at the top level of the bureaucracy, so to speak?”
In an April 2 press release from ODMHSAS, Stitt and Commissioner of Mental Health Allie Friesen criticized the seven-figure salaries for CEOs at GMH and CREOKS.
“For too long, these entities have been allowed to grow and scale without the necessary accountability,” Friesen said. “Oklahomans rely on these services, and we must ensure that taxpayer dollars are being spent responsibly. Our goal is to bring immediate transparency to how CCBHCs operate and ensure they are truly benefiting the people they were designed to serve.”
The press release said the million-dollar GMH and CREOKS executive salaries stood “in contrast” with Sandhills Center for Mental Health in North Carolina, an organization with three times as much annual revenue but one-fourth of the CEO compensation ($333,129). However, in November 2023, the North Carolina secretary for health and human services directed that Sandhills be “dissolved” and merged into the operations of another entity. The dissolution of Sandhills revealed that a counselor who contracted with Sandhills had submitted fraudulent reimbursement claims to the organization. She pleaded guilty to 21 criminal counts in August.
Ron Brady, the director of marketing and public relations for Grand Mental Health, noted “discrepancies” when trying to compare Oklahoma CCBHCs to the shuttered Sandhills organization, which ran a managed care program for North Carolina’s Medicaid system.
Brady also confirmed that Larry Smith, the CEO of Grand Mental Health whose $1.3 million salary has drawn criticism, was terminated in November.
“The board did our own internal audit at the time that led up to Larry Smith’s departure, and in November 2024, the board took immediate steps to address the issue, including termination of the then-CEO and immediate reduction of leadership compensations by more than $2.5 million,” Brady said. “Much like [ODMHSAS] is going through its own investigation and research of additional administrations, I think our board did the same thing and sort of recognized the need for a change, and with that change came compensation changes, organizational changes.”
Brady said GMH is “about a year and a half ahead” of what ODMHSAS is doing “in terms of internal investigation and adjustments.”
During that time, attention also has been drawn to Grand Mental Health’s business relationships with HunterCare Coordinated Care Health Solutions, against which the state of Oklahoma and the U.S. Department of Justice filed a federal False Claims Act complaint in December. MyCare Technologies, a subsidiary of HunterCare, provides the software used by Grand Mental Health’s widely noted iPad project, which connects public safety professionals with mental health providers.
Brady said GMH leaders were not in a position to speak further about Smith’s termination or any investigations into HunterCare.
Black, the CEO of CREOKS for 22 years, said his $1.1 million salary in the prior two fiscal years actually includes nearly $500,000 payments approved by his board in lieu of life insurance benefits. A husband and father of three, Black said he has a congenital heart defect that has caused him to have multiple surgeries and has left him virtually unable to obtain traditional life insurance. Instead, he said his board approved two years worth of additional annuity compensation. He also said that CREOKS engages in corporate work outside of its CCBHC status. He said he is paid about $425,000 as CEO of CREOKS the CCBHC, plus another $250,000 or so for CREOKS’ business ventures that include managing software used by mental health providers and real estate leases.
On April 10, when OMES notified FCS, CREOKS and GMH that their Tulsa County contracts were being canceled, an ODMHSAS spokesperson said the FCS protest of the redrawn catchment areas had advanced far enough to warrant a reset.
“Rather than continuing to spend taxpayer money on extended litigation, OMES has determined that reissuing the proposal is in the best interest of the state,” said Kelsey Davis, the senior director of communications for ODMHSAS. “OMES has informed ODMHSAS of alternative procurement options. ODMHSAS is fully committed to ensuring continued access to care without uninterrupted services.”
On Friday, Davis sent another statement, this time from Friesen.
“As we navigate these complex and concerning contracting issues, our priority remains clear: protecting access to care for Oklahomans who depend on these services. We are grateful to the governor for recognizing the critical importance of ensuring a clear path forward for uninterrupted critical mental health services across the state and are grateful for his reiteration that we are not and will not terminate any core service contracts,” Friesen said. “We understand the confusion caused by recent events and are working closely with OMES and our community partners to implement a contractual stopgap. This issue is entirely unrelated to funding gaps or contract optimization. Our commitment to delivering high-quality behavioral health services remains strong as we work toward lasting solutions and operational excellence.”
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House committee eyes budget, contracts at ODMHSAS
According to Speaker Kyle Hilbert’s press release announcing the new House investigative committee that will examine ODMHSAS issues, Friesen is set to be among the first people called to testify about the agency’s troubles.
“It is our constitutional duty to oversee and appropriate state funds, and we take that role very seriously,” said Hilbert (R-Bristow). “We have just over a month left in this legislative session and we still don’t have a clear understanding of how much state funding ODMHSAS needs. This public hearing will help us get to the bottom of what has happened and what needs to happen moving forward.”
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Speaking Monday, Caldwell agreed and said Oklahoma’s more specific problems in the mental health arena — including a new consent decree to improve competency restoration services and the need for additional in-patient beds — are only at risk of being exacerbated.
“How much are we really short, and what else are we going to uncover over there when we get in there? Are they properly vetting all these contracts? I mean, there’s a lot of rumors floating out there right now that there’s a lot of these sole-source contracts that are not up to snuff,” Caldwell said. “Some of these contracts that they know aren’t going to be fully actualized, they’ll put them down as a $5,000 contract or a $50,000 contract, and they only use 5 or 10 percent of it, and then they use the rest of the money as fungible resources in their agency, knowing that they’ll never fully use the entirety of that contract. So there are all kinds of accounting problems over there, and it’s something that has to be investigated.”
Rep. Mark Lawson (R-Sapulpa) has been tasked with chairing the House investigative committee. He said both the baffling budget bungle and ODMHSAS’ sudden announcement of back-dated cuts for substance use disorder providers will be examined.
“We of course are concerned about word of canceled contracts and a potential gap in mental health services for many Oklahomans. We have been assured by the governor and his team that the state intends to reissue RFPs for such services soon and there will be no drop off in services in the meantime,” Lawson said. “We are monitoring this situation very closely and are in contact with providers to ensure Oklahomans get the critical services they need. We continue to be concerned about a lack of clarity around mental health funding and what is needed to fulfill state obligations for the current and next fiscal years. We take our constitutional authority to appropriate tax dollars seriously and expect executive agencies to stay within their budgets to deliver quality mental and behavioral healthcare to Oklahomans.”
Through the creation of special investigative committees, the House has subpoena power, allowing it to procure documents and summon individuals to testify. The most recent investigative committee was created in 2022 to look into the Department of Tourism and Recreation’s contract with Swadley’s Foggy Bottom Kitchen. Before that, an investigative committee was formed in 2017 when lawmakers were told up to $30 million was missing from the Oklahoma State Department of Health.
