The Oklahoma House special committee formed to investigate financial issues with the Department of Mental Health and Substance Abuse Services heard more than three hours of testimony Thursday, pressing Commissioner Allie Friesen for details about financial decisions, non-disclosure agreements, now-cancelled contracts in Tulsa County and whether planned reimbursement cuts had been halted.
Friesen said those cuts — announced March 18 in evening emails to substance use disorder providers — would not occur after the agency realized the value-based payment model was “holding up [the providers’] core functions.”
“We have made mistakes, and I am trying to confidently acknowledge and take ownership of those mistakes,” said Friesen, who became commissioner in January 2024 and who has forced out a slate of longtime ODMHSAS leaders amid concerns the agency has failed its fiduciary duty while being too cozy with certain provider groups and vendors. “The largest overarching change is, frankly, what manifested in us learning about this funding gap in the first place. What is concerning, as a tax-paying citizen and someone who is new to state government, is the lack of transparency around anything that goes wrong and the culture of ‘make it look good.’ (…) The resistance that has been on the other side of this culture change is, frankly, shocking.”
But during her two hours of testimony — sworn under the “pain and penalty of perjury” — Friesen evaded some questions and seemed uncertain about others. She declined to opine on whether “mismanagement” was to blame for what she originally told lawmakers was an annual budget gap in the range of $43 million to $60 million.
“I cannot respond to that specific question due to multiple ongoing, pending investigations,” Friesen said, later revealing more details about the inquiries. “These are investigations that are ongoing under the (ODMHSAS) Inspector General’s Office.”
Friesen also would not commit to providing the committee with copies of documents it has signed with current and former employees. Friesen said numerous settlement agreements have been struck with staff who have been shown the door, and she said “the quick nature with which information has been leaving our administrative offices” spurred her to ask many current employees to sign non-disclosure agreements.
Rep. Chris Kannady (R-OKC), an attorney who serves as the state staff judge advocate in the Air National Guard, pressed Friesen on why such agreements would be needed at ODMHSAS and whether the agency would provide them to the House committee. Friesen said, “Potentially,” but that she would need to check with her general counsel.
Asked during a recess of the committee if he could think of any legitimate reason for ODMHSAS to withhold its non-disclosure agreements from the House investigative committee, Kannady quipped, “I’m still trying to figure out why they have non-disclosure agreements.”
Friesen also appeared hesitant to reveal what her agency knew about the April 10 cancellation of contracts in Tulsa County with a trio of certified community behavioral health centers — Family and Children’s Services, CREOKS and Grand Mental Health. Prior to Friesen’s arrival, ODMHSAS had redrawn catchment areas in Tulsa County to the benefit of CREOKS and GMH, a controversial decision that triggered an FCS appeal and spurred criticisms that the agency under prior Commissioner Carrie Slatton-Hodges had played favorites.
With the FCS appeal featuring damning depositions and other drama, the Office of Management and Enterprise Services sent termination notices to all three organizations April 10, with plans formulating to rebid the Tulsa County area for mental health safety net services. Whether Friesen and ODMHSAS executives knew the contracts were being canceled that day became a topic of gossip in the industry and the Capitol, prompting House committee members to ask her repeatedly about the situation.
Friesen initially denied knowing the contracts were being canceled by OMES. She then said her general counsel was unaware of the decision because she was on a “well-deserved two-week vacation.” But as the questions continued, Friesen suddenly admitted that OMES had emailed someone at ODMHSAS who had passed the information Friesen’s assistant general counsel April 9 — the day before the letters went out.
Stitt ‘kept thinking there’s something wrong’
While Friesen has been painted by some as a bumbling outsider who has struggled over her first 16 months in state government, Gov. Kevin Stitt has repeatedly voiced support for the changes she is making and the disruption of status-quo practices within the mental health agency.
Ahead of Thursday’s House hearing, Stitt praised Friesen for handling the tumultuous circumstances she inherited and the change she is pushing.
“You’re seeing the bureaucracy kick and scream as she is actually putting a spotlight on this stuff,” Stitt said. “I tell people, ‘Let’s shine a light on some of these dollars, let’s see where all of the mice scatter to,’ and that’s what you’re seeing right now. The rats are running, and they’re screaming.”
During his first year as governor, Stitt asked for and received the hiring and firing authority for directors of major agencies like ODMHSAS. After the Legislature gave him that authority in 2019, he moved on from 13-year Commissioner of Mental Health Terri White, promoted Slatton-Hodges from inside the agency and finally selected Friesen from the private sector after Slatton-Hodges’ unexplained departure.
Stitt revealed Thursday that his office “kept thinking there’s something wrong” at ODMHSAS.
“When people that report to me come to me and everything’s always working perfectly and they tell me they’re not making any changes and nothing else is happening and they’re not doing anything different that’s been done for 20 years, unless you think government’s working perfectly, I don’t buy that,” Stitt said. “I’m always a little apprehensive or (…) my red flag comes up when they tell me everything’s working perfectly, right? Plus, when you’re cozying up to the vendors and when you cozy up to all the folks that — in this industry, we’re supposed to be holding them accountable, not being their best friends, especially when we’re funding $800 million to this industry. We need to have a great relationship, but it’s OK to have a little bit of distance from those folks to hold them accountable. I think that’s ultimately what we were feeling.”
Tasked with chairing the committee, House Majority Leader Mark Lawson outlined the investigation’s intent at the outset of Thursday’s meeting.
“We have an obligation as the Legislature to deliver to the people of the state of Oklahoma a balanced budget every year,” said Lawson (R-Sapulpa). “Currently, we have a lot of questions surrounding the financial position of the Department of Mental Health and Substance Abuse Services. So the intention is to get a better understanding so that we, as a Legislature, can make as informed decisions as possible as we look for a potential supplemental appropriation to the department to finish out Fiscal Year ’25, which is the budget year we are currently in, as well as appropriate the correct amount of money so that the department can perform their duties as outlined by us, as the Legislature, for Fiscal Year ’26.”
House investigative committees have subpoena power, allowing them to compel both documents and testimony for their review. The committee’s Thursday agenda listed 11 individuals for potential testimony. But after two hours of questions and answers with Friesen on Thursday afternoon, Lawson announced that ODMHSAS interim CFO Skip Leonard, Legislative Office of Fiscal Transparency director Regina Birchum, former ODMHSAS chief of staff Barrett Brown and OMES purchasing director Amanda Otis would instead testify next week.
Friesen testifies for 2 hours at outset of ODMHSAS investigation
A video recording of the investigative committee’s meeting is available to watch on the House website. The following moments from Friesen’s testimony, with time stamps in parentheses, may be notable to those following the House ODMHSAS investigation:
- While it did not seem to assuage legislators’ concerns, Friesen attempted to clarify the reason that she has reduced the estimated shortfall value. In a new document provided to committee members, Friesen attributed the initial $63 million figure to having “not enough budgeted in FY 25 for Title XIX,” the federal statute guiding Medicaid funding. The document shows the figure reduced to $43 million after the agency reallocated “validated, unencumbered funds already within the agency’s budget (…) to Title XIX.” The figure dropped to $20 million next to the notation, “two contracts canceled, fixed rate reviews, and value-based payments.” After a further budget review, “only looking at actuals year to date and estimated expenses, including the renewal of value-based payments to our substance use providers,” ODMHSAS is now requesting only $6.2 million in additional funding to get through the rest of the fiscal year, which ends June 30. Asked by Rep. Ellyn Hefner (D-OKC) if she was now “100 percent certain” of the Title XIX funding gap, Friesen responded affirmatively (2:42 p.m.);
- When, exactly, Friesen understood the breadth of ODMHSAS’ budget woes remains unclear. Friesen said she received general concerns about the budget Dec. 6, but no exact figures on what might be occurring (1:40 p.m.). Such a statement seems to contradict an October 2024 budget review that showed the agency had at least a $33.9 million shortfall in Medicaid funding. Friesen said specific Title XIX funding concerns came to light “about six weeks ago” (1:49 p.m.), and the first specific funding gap estimate was made Feb. 25 (2:06 p.m.);
- Friesen acknowledged rectified “mistakes” her agency had made, including terminating an emergency psychiatric program (2:17 p.m.) and announcing cuts to addiction services providers, also known as substance use disorder providers. Those cuts, she said, were intended to save money from bonus payments, as opposed to funding to support core services. “However, upon hearing very clearly from the community that they need these payments, we pivoted as quickly as possible,” Friesen said (1:52 p.m.);
- Friesen diverted many questions about the cause of the shortfall to ODMHSAS interim CFO Skip Leonard, who is set to testify next week, but she said the main cause of agency financial woes stemmed from the department not adequately requesting money of the Legislature (1:47 p.m.). When Rep. T.J. Marti (R-Broken Arrow) asked if she was certain the cause was the lowballed request and not “mismanagement of funds,” Friesen said, “I can’t respond to that specific question due to multiple pending, ongoing investigations” (2:02 p.m.); and
- Four ODMHSAS officials retired or resigned in December 2024. When asked if those employees had been required to sign NDAs, Friesen responded they had not been required to, but some did (2:58 p.m.). After consulting with her general counsel, Friesen clarified that she was referencing “settlement agreements,” not NDAs (3:00 p.m.). Several members of the committee were intrigued by the contracts, and Lawson requested Friesen provide those to the committee within the next week. Friesen also said current employees had been asked to sign NDAs, although they were not required to do so.
Tulsa County District Attorney Steve Kunzweiler followed Friesen by testifying Thursday afternoon. While no member of the committee asked the career prosecutor whether the issues at hand potentially involve criminal violations, Kunzweiler spoke extensively about his own concerns with ODMHSAS:
- “I would quite honestly say to you as a prosecutor since 1989, the state of mental health in Oklahoma was better in the late ’80s and early ’90s than what it is today,” Kunzweiler said (4:00 p.m.). As a result of state institutions being closed and mental health resources being diverted to other structures, he said law enforcement officers have made more arrests of individuals in mental health crisis or dealing with a substance abuse disorder;
- Kunzweiler talked at length about ODMHSAS delaying mental health competency restoration services for pre-trial defendants, which spurred a class-action lawsuit recently settled with a consent decree for the agency to improve services and decrease wait times. “I’m sorry I’m saying this, but shame on the Department of Mental Health that it took citizens of this state to sue them in the federal court of Tulsa County and obtain a judgment or a consent decree,” he said (4:13 p.m.);
- At the end of his 15-minute opening remarks, Kunzweiler said he believes Friesen wants to do what is best for the state, but he also said the Legislature “ought to seriously consider” breaking up the department into separate agencies for substance abuse and mental health to prevent “this issue where people are languishing in jails or languishing in facilities with poor oversight” (4:15 p.m.);
- Rep. Melissa Provenzano (D-Tulsa) asked Kunzweiler if he believed the canceled CCBHCs were retaliatory after Kunzweiler’s public disdain for delays in ODMHSAS’ mental health competency restoration services. “Just as a prosecutor, that makes sense to me,” Kunzweiler said (4:36 p.m.). However, Friesen emphasized the contracts with Tulsa County CCBHCs were canceled amid the Family and Children’s Services appeal and that new ones would be negotiated, with no planned disruption to services. Further, it was OMES that canceled the contracts, not ODMHSAS.
Tulsa Police Department Lt. Amber McCarty and Deputy Chief of Operations Mark Wollmershauser followed Kunzweiler on Thursday. Wollmershauser acknowledged the importance of CCBHCs for law enforcement officers, who are not as well equipped to handle mental health crises, but said he has not noticed any disruption in services so far. After nearly four hours, the meeting adjourned with only three of the originally 11 planned speakers testifying.
After the meeting, Lawson said he is looking forward to hearing from Leonard — the agency’s interim CFO — next week before he considers how to ensure the Legislature keeps ODMHSAS properly funded.
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“I want to hear what he has to say before I render a judgment on whether or not that $6.2 [million] is indeed substantial enough and adequate to get them through the rest of the fiscal year. I hope so,” Lawson said. “I am certainly proud of Commissioner Friesen for enduring two hours of grilling questions. I do believe that she came with the intent to give us good and honest information, and I appreciate her testimony today, but we’ll have to see what their request is, and what the testimony of their CFO will be.”
After the meeting, House Speaker Kyle Hilbert released a statement emphasizing the importance of the committee’s findings as the end of session looms next month.
“With just over a month remaining in the legislative session, this investigation is a top priority,” said Hilbert (R-Bristow). “Our goal is to understand the department’s financial practices, ensure accountability and determine whether additional funding is truly necessary before the session concludes.”
Hilbert acknowledged other officials are looking deeper into ODMHSAS’ finances. State Auditor and Inspector Cindy Byrd is conducting a forensic audit of the agency while LOFT reviews its contracts, and Stitt has announced he will appoint a special investigator to conduct an independent review internally for ODMHSAS.
(Correction: This article was updated at 11:03 a.m. Friday, April 18, to correct reference to the Inspector General’s Office mentioned by Friesen.)
