Testifying for the second time in front of a House investigative committee examining the agency she leads, Oklahoma Department of Mental Health and Substance Abuse Services Commissioner Allie Friesen went on the attack this morning, accusing former department officials of “abuse, negligence and likely corruption” that has led to the payroll problems revealed to legislators last week.
“We’ve continued to uncover information that was intentionally withheld by internal finance staff. This is as recent as last week. This individual that had actively withheld information has since resigned,” Friesen said. “Individuals who operated within a closed culture created and protected information that was crucial for core leadership to have access to, and certainly as a Legislature, as the primary investor in our organization, you need access to that data as well. That culture didn’t just hide financial data. It actively excluded accountability. Information was safeguarded among a select circle and left the rest of us, including myself, until very recently, navigating in the dark.”
Seated alongside Friesen, ODMHSAS project manager Michael Rupke also testified to a new concerning discovery. For years, he said, the agency has manipulated employee vacancy rates at state-run facilities in order to create a balanced budget.
“When I started inquiring about this with the existing finance team, I was informed that the previous CFO had said that the vacancy rate was not an actual representation of vacancies at those facilities. It was used as a budget balancing tool,” Rupke said. “So for example, some of the facilities were artificially inflated and deflated in their payroll expenditure.”
That revelation became the latest in a cascade of issues that have snowed ODMHSAS into a budget fiasco that has frozen Fiscal Year 2026 appropriation negotiations. Before lawmakers can decide how much the agency needs for the fiscal year starting July 1, however, they have been trying for weeks to get accurate answers about what level of supplemental appropriation is necessary to finish out FY 25.
Those conversations have revealed red flags like mysterious financial accounts with no clear purpose and de facto revolving funds. The agency’s latest crisis bubbled up last week after Friesen said she learned ODMHSAS has insufficient funds to pay employees and maintain services through the end of the fiscal year. Late Friday, the agency recanted that claim, saying “swift action and collaboration that has taken place over the past 24 hours” means ODMHSAS can “confirm that payroll will be processed for the fiscal year as scheduled.”
But that pronounced has since proven untrue, Friesen and Rupke revealed at Monday’s meeting, where senators joined representatives for the first time during the three-week inquiry.
“This is only good through May 21,” Rupke said of the agency’s ability to pay its employees. “This next payroll coming up on Wednesday (May 7), we can make that, but the agency is not able to do one after that due to the budgetary checks and balances within the [Office of Management and Enterprise Services] accounting system.”
Rupke said the agency believes it needs $23 million in supplemental funding to make payroll for the rest of the fiscal year, but ODMHSAS Commissioner Allie Friesen offered a caveat.
“We are, as Mike outlined, very, very confident in this number,” Friesen said. “But again, nothing is 100 percent [accurate], because as time passes, we continue to uncover more concerns that can potentially shift the number.”
Rupke said he has “zero confidence” to find funds elsewhere in the agency to make payroll, and Friesen requested the help of other state agencies to untangle the web of her agency’s cash flow.
“Any and everyone that is willing to sit down and whiteboard with us,” Friesen said when asked who, exactly, she would like help from. “We need House fiscal staff, Senate fiscal staff, OMES, [the Legislative Office of Fiscal Transparency], because we all seem to be coming up with different numbers, and that’s concerning for obvious reasons. So something is not right, and we want to seek to understand what that is and how we can course correct.”
Despite resignation, ODMHSAS inspector general office continues inquiries
After Monday’s meeting, House investigative committee Chairman Mark Lawson (R-Sapulpa) expressed frustration that Friesen had not explicitly asked for help sooner, given that the agency knew it had serious budget problems since February.
“I think we would be in a much different position if that would have been a report. I think immediately, if they would have come forward and said, ‘This is bigger than we can handle, we would like some help,’ it would be much different,” Lawson said after the meeting.
First testifying April 17, Friesen said she could not answer certain questions about the agency’s budget situation, and she claimed a $6.2 million supplemental appropriation was all that ODMHSAS needed to maintain operations through June 30. Repeatedly saying it is one of her priorities to make sure ODMHSAS never finds itself in such dire straits again, Friesen told the committee April 17 that ODMHSAS’ inspector general was conducting internal investigations. Since then, inspector general Dewayne Moore has resigned.
“The inspector general deserves nothing but respect,” Friesen said after the meeting. “He’s been with the organization for over 26 years, and we were sad to see him go. It has absolutely nothing to do with our internal operations or investigations, and our IG office will continue to operate with the announcement of a new inspector general in the coming days.”
But whether the results of those investigations will be announced to the public, sent to law enforcement agencies or at least shared wtih legislative leaders is unclear. Friesen said the inspector general reports directly to her, with her legal team also conducting a review of the inspector general’s findings. But asked what will happen after that, ODMHSAS attorney Andrea Golden-Muse stepped in.
“It kind of depends on the results of the investigation themselves,” Golden said. “I don’t think there’s any more we can say on that right now.”
Senate Health and Human Services Committee Chairman Paul Rosino (R-OKC) seemed to suggest the bell has been rung to trigger public interest into the results of any investigations.
“We heard ‘fraud and corruption.’ We heard that. So if there is fraud and corruption, that is something that we should take very seriously and pay attention to and drill that down. And if an outside entity needs to be involved in that, then they will have to decide, because that was a public hearing, and I’m sure that’s been heard by many, that they feel there was some fraud and corruption,” Rosino said after the meeting.
He added that he was “a little bit angry about today,” emphasizing that the Senate intends to make sure payroll obligations can be met but that other discussions about ODMHSAS financial needs may have to wait.
“I thought we were going to have some resolution, and it doesn’t seem like we do,” Rosino said. “It seems like we’re still up in the air, and that’s why we’re saying the House and the Senate will come together to take care of what we need to, but after that, we are going to have to drill down these numbers deeper, and we are running out of time. The clock is ticking.”
Senate leaders: ODMHSAS funding gap may be about more than payroll
The House formed its investigative committee to determine how much money ODMHSAS needs to survive the rest of the year after learning of the situation in late March, but Monday marked the first time the investigative committee convened as a joint effort between the House and Senate. At his first meeting, Senate Appropriations and Budget Committee Chairman Chuck Hall (R-Perry) said he had reviewed the agency’s funds from state appropriations and revolving funds and suggested ODMHSAS actually may have enough money for payroll.
“It appears to me, based on these numbers that I’m looking at, that you have the money to be able to cover payroll through the end of the year,” Hall said. “But what I think that we’re slowly beginning to uncover is that if there’s a $23 million gap, that it may not be necessarily all about payroll, that we’re talking about operational dollars that I wonder if we’re addressing.”
Rosino agreed.
“That has been my concern from the beginning. I’ve said from the start, I don’t think you guys need this money. I think you just have to drill down and try to find where some of it is, and that’s my concern,” Rosino said. “It makes perfect sense to me that if [Hall is] looking at these funds, and there’s money to get you to the end of the year, if we give you a supplemental, and — this is what I think we’re concerned about — if we give you the supplemental and you don’t really need it, then you have excess cash.”
The agency has made a habit of operating in a manner that allows it to withhold cash in years past and disperse it to certified community behavioral health centers for the purpose of supporting uncompensated care they provide to the uninsured. At the committee’s prior meeting, LOFT director Regina Birchum testified the agency does not have its own official revolving fund to carry money from one fiscal year to the next.
“But we would note that the agency, in practice, has been having a revolving fund by over-encumbering funds to different account codes,” Birchum said last week. “And I suspect the reason that an agency might do something like that is to give themselves budget flexibility.”
Rosino’s claim that he has believed from the start the agency needs no extra money may seem surprising, given that when the agency initially announced its shortfall, the estimated figure stood around $63 million. But the $63 million figure was quickly whittled down to $43 million, to $20 million, then to a $6.2 million supplemental request before the payroll woes came to light and the number jumped back to $23 million.
Speaking Monday — three days after Gov. Kevin Stitt announced he would be hiring an “independent financial expert will be brought in to take temporary control of the department’s finances” — Friesen said the reason estimated figures have changed so much over the past month is that her agency is continuously uncovering new information about poor financial practices.
“These numbers are changing not because we’re indecisive or disorganized, but because we are, for the first time in a very long time, uncovering the full depth of financial instability that has been hidden under layers of dysfunction. Those who are attempting to paint our efforts as incompetence are conveniently ignoring the reality of the situation,” Friesen testified, later referencing a popular board game to make her point. “Oklahomans deserve answers to this, too. This is our money. This is taxpayer money, and we take that very seriously, and frankly it has been treated like monopoly money.”
Friesen and previous interim CFO Skip Leonard — whose contract Friesen said expires this week as interim CFO — have taken heat from committee members over the past month of investigations. That criticism briefly came to a head Monday, beginning when Rep. Dell Kerbs (R-Shawnee) said the agency’s financial spreadsheets are “not worth the paper they’re printed on.”
“Where’s our certainty as far as the payroll number?” Kerbs asked.
Friesen, who had expressed multiple times that she is not confident in her agency’s financial figures, said she would need help from other state agencies to be sure of the figure.
“Again, Representative, respectfully, we have answered that question to the best of our ability at this point,” she said.
Sen. Todd Gollihare (R-Kellyville) followed with a line of questioning regarding whether Friesen requested an agency audit during her nomination and confirmation process in early 2024. Friesen paused and said she had articulated a desire for more information.
“Sir, respectfully, I would ask that we stay with our three points that have been outlined on the agenda, and I would defer to the chairman to assist me in that,” she said.
Rosino agreed the questioning was not relevant to the meeting’s agenda. In her opening remarks, Friesen had acknowledged the criticism she has faced both by the public and by state officials — particularly Attorney General Gentner Drummond, a gubernatorial candidate who called for her to be fired Friday and again Monday.
“I want to be unequivocally clear that this administration has never shied away from any challenge, and we don’t plan to anytime soon,” Friesen said. “These truths and facts of the matter are inconvenient, and I realize (they) are uncomfortable. If the decision is made from some party — the executive branch, the legislative branch, the general public — (that) wants to push me out, that’s fine, but there’s going to be somebody else sitting in this chair next year, and the funding gap will have doubled.”
After Rosino and Hall suggested the agency could find the funds necessary to make payroll for the rest of the year, Rosino called for a recess to hold a discussion among members of the House and Senate appropriations teams. After reconvening, Rosino and Lawson made closing remarks and adjourned the meeting, despite several more items being listed on the agenda.
“I appreciate that the department is saying that they are not confident in their numbers, but the Legislature stands ready to take care of our state employees. But at this time, (we are) probably not moving further with any other kind of budget requests until we really understand the financial situation at the Department of Mental Health and Substance Abuse,” Rosino said. “And I know we keep hearing that you want partnerships and you want help, and we would need to understand a little more what that exactly means — in what regard and who you want involved, and who should be involved, whether you’re looking for outside help, inside help, because we keep hearing ‘help,’ but we’re not sure exactly what that help means.”
