COMMENTARY (Part I): It didn’t start with County Commissioners, and didn’t end with the Health Department – Dealing with mismanagement, waste, fraud and abuse in Oklahoma Government
Published: January 2nd, 2018
OKLAHOMA CITY – The high costs of mismanagement, waste, fraud and abuse in Oklahoma government get documented from time to time. At a time when there is persistent demand for higher taxes and increased spending, the past can inform the present.
Many Oklahomans believe taxes are high enough, and government could be more efficient.
This two-part commentary reviews some persistent problems facing the Sooner State’s government, broadly outlining issues facing three key agencies – The Department of Health, the Department of Corrections, and the PK-12 portion of public education.
Each of these parts of our shared government are “cost-drivers” in terms of state spending, which merits particular attention to the challenges their governance presents.
While the Health Department is, at present, Exhibit A, the problems are systemic
Presently, the worst issues are illustrated by the scandal at the Oklahoma Department of Health.
But before offering some detail on that, a word on state spending.
Simply put, state government spending is higher than ever.
That is a factual statement. However often it is challenged.
As Curtis Shelton, a policy analyst, explained four months ago, in an essay co-authored with Dave Bond of the Oklahoma Council of Public Affairs (OCPA):
“In discussions about taxes and state government spending in Oklahoma, some advocates insist that available funding has been slashed to the bone for important public services.
“However, the claim is simply not true. While state appropriations in Oklahoma have fallen below previous years, total state government spending in Oklahoma is higher than ever — more than $3.83 billion higher than 10 years ago.
“It’s important to understand the difference between state appropriations and total state government spending. State appropriations make up ‘the state budget’ that lawmakers at the Oklahoma Capitol vote on every legislative session in order to provide a portion of the funding for specific state agencies.
“Total state spending, on the other hand, is the sum of all the many different sources of funding that flow to — and are spent by — Oklahoma’s state government agencies each year. This includes state appropriations, as well as federal grants, non-appropriated spending, ‘off the top’ apportionments, and more. For the last several years, state appropriations have made up only about 40 percent of total state government spending in Oklahoma.” (http://www.www.capitolbeatok.com/reports/analysis-oklahoma-state-government-spending-higher-than-ever)
There’s more from Shelton and Bond: “Oklahoma’s state government operates on a fiscal year that runs July 1 through June 30. For Fiscal Year 2007, which began July 1, 2006, lawmakers at the state Capitol appropriated $6.64 billion. For FY 2016, lawmakers appropriated $7.13 billion.
“So, Oklahoma state lawmakers appropriated $490 million more for state services in FY 2016 than they had 10 years prior, an increase of more than 7 percent.”
Despite such straight-forward and credible details, arguments about total state spending will continue. Before the state of Oklahoma embarks on the oft-demanded tax increases Governor Mary Fallin and many others want, here is a look at some of the factors pointing the other way.
Here and there, voices across the past seven years have advocated for spending, management and other unimplemented reforms that could point to a better way forward.
On one thing most Oklahomans might agree (or perhaps not): There are practical results that flow from the methodical – at times even prideful – inability or unwillingness of state officials to manage always-limited government resources efficiently.
The Health Department’s problems didn’t begin last year
The Health Department scandal of 2017-18 is not unique in state history.
In state history the County Commissioners’ scandal remains the best-known and the most thoroughly documented state government scandal in history. In the end 230 (http://newsok.com/article/2056279)
to 240 (http://newsok.com/article/3538560) commissioners or suppliers were convicted, yet the total financial cost in stolen or misappropriated resources will never be fully known.
The current Health scandal is shocking, but not really unique in agency history.
In the 1990s, in just one program – the “Healthy Futures” campaign run by once-powerful lobbyist Mike Williams – investigators proved that Williams was paid $3.5 million for a campaign (consisting of four parts) to promote both healthy ways of living and to publicize government and private efforts to make people in the state live longer and better.
The problem was that no one could document how $2.1 million of that money was spent (http://newsok.com/article/2605953). Investigations of Williams and his firm began in 1994, and did not conclude until 1998. In the end, he entered a guilty plea to only a single felony count of fraud, admitting $14,847.82 in fraudulent travel claims under one state contract. In his plea deal, Williams avoided a long sentence and paid only modest restitution.
Nonetheless, final disposition of the case was a partial victory for Oklahoma City Democrat state Rep. Linda Larason, who had questioned the payments to Williams for years (beginning in 1993). (http://newsok.com/article/2424835). All along, she contended the money could have been better spent in direct services to those in need, rather than in hefty payments channeled through a well-connected lobbyist.
The outcome was also vindication for reporters at The Oklahoman, the state’s largest newspaper, who doggedly pursued the case for years.
On January 2, 2018, The Oklahoman reminded us all, in an editorial, that the Health Department was the “home” (in 2000) of multiple “ghost employees” – people paid as if they were working, without having to actually show up. The editorial reminded us, “At least five ex-legislators and 21 relatives of former or current legislators were on the agency’s payroll at that time.” (http://newsok.com/oklahoma-government-employee-system-needs-review-reform/article/5577638)
That was then, this is now:
The latest scandal at the Oklahoma Department of Health is a doozie. Details are know through the work of Oklahoma Watch, The Oklahoman and some other news organizations.
The FBI is investigating, as is the state’s multi-county grand jury. Federal agencies are looking at the matter, as is the state House Special Investigation Committee (http://www.www.capitolbeatok.com/reports/commentary-government-right-sizing-voter-sentiment-and-the-top-state-news-story-of-2017). The improper diversion of at least $30 million in federal money has raised fears that taxpayers may be on the hook for another $115 million in revenue that helped to support two state hospitals (http://www.www.capitolbeatok.com/reports/state-could-lose-115-million-in-medicaid-funds-for-teaching-hospitals).
The agency’s temporary leadership on New Year’s Day issued a “corrective action plan” (https://www.ok.gov/health2/documents/OSDH%20Corrective%20Action%20Report.pdf). This will no doubt do some good for some time. But a permanent corrective will require regular and meaningful audits of agency activities and spending, by independent examiners.
Justice Reinvestment (2012) and the Popular Will (2016) – Time to Act on a Bipartisan Consensus
It seems clear that the current financial scandals, in at least two areas of Oklahoma government, are not unique. As can be discerned by any student of these matters, some spending crunches flow from explicit wrong-doing by state officials or private vendors.
Other financing challenges are not necessarily a result of wrong-doing, per se, but are predictable results of mismanagement, neglect or waste. It can be argued that is the case with the current crisis in Corrections.
It’s not as if the problem is inscrutable or beyond the reach of positive and pro-active steps for reform. Indeed, the government of Oklahoma has actually had to work rather hard to avoid implementation of an unprecedented level of bipartisan accord on the need for sentencing and prison reform – consensus which has existed at least since 2012.
The state’s prisons are overcrowded, and many Oklahomans have grown weary of the state’s unenviable position atop incarcertion rates for both women and men (http://www.www.capitolbeatok.com/reports/we-re-still-no-1-prison-crowding-plan-runs-into-questions-comments-awkward-silences).
The Legislature approved, and Governor Mary Fallin signed into law, a previous package of criminal justice reforms six years ago. The measures were guided through the process by then Speaker of the House Kris Steele, a Shawnee Republican.
However, those measures were never fully implemented after Fallin “slow-played” implementation (http://www.www.capitolbeatok.com/reports/gov-fallin-s-team-defends-rebuff-of-prison-reform-funding).
Many local district attorneys opposed the Justice Reinvestment Initiative (JRI), as the earlier legal reforms were popularly known. Then, Steele’s successor (Speaker T.W. Shannon, R-Lawton) had a mixed record on criminal justice reform (http://www.www.capitolbeatok.com/reports/special-report-how-actions-by-gov-fallins-staff-weakened-the-justice-reinvestment-initiative ), while Fallin let a couple of years pass before she renewed her support for and focus on reforms.
Ultimately, the governor’s own task force on criminal justice (http://www.www.capitolbeatok.com/reports/special-report-how-actions-by-gov-fallins-staff-weakened-the-justice-reinvestment-initiative) launched in 2015 advocated incremental reforms along the lines of JRI. Fallin backed two ballot initiatives in 2016, applauding popular approval in post-election comments (http://www.www.capitolbeatok.com/reports/oklahoma-governor-mary-fallin-promises-to-sustain-renewed-momentum-for-criminal-justice-reform).
Late in that campaign, many prosecutors and some law enforcement officials broke strongly against State Questions 780 and 781. However, despite those criticisms the propositions prevailed easily.
S.Q. 780 garnered 831,123 yes votes (58.23 percent of the total cast), while S.Q. 781 gained 795,475 votes in support (56.22 percent of the total). In pressing for approval, former Speaker Steele (author of the original JRI reforms) had fashioned an unprecedented bi-partisan coalition with advocates across the political spectrum (http://www.www.capitolbeatok.com/reports/broad-coalition-presses-for-historic-criminal-justice-reform-in-oklahoma).
After that hard-won victory, impetus behind the pair of ballot initiatives was thwarted by the will of one legislator (http://www.www.capitolbeatok.com/reports/state-rep-scott-biggs-and-the-four-corners-stalling-tactic-on-criminal-justice-reform), who has now resigned (http://www.news9.com/clip/13969594/capitol-report-special-session). This leaves hope that reform could edge forward in 2018.
Part II of this commentary/review of Oklahoma governance will examine the most substantial portion of public education spending – PK-12 schools.