Federal funds used like ‘line of credit,’ CFO says
As Chief Financial Officer Michael Romero began digging into problems he found at the Oklahoma State Department of Health, he learned the agency was insolvent and regularly spent more cash than it had budgeted.
When he asked around the agency, where he began working in April 2017, Romero inquired whether it maintained a line of credit to pay its bills.
“If we have line of credit, that’s a bad thing,” Romero told the House Special Investigation Committee. “If we’re doing that, we’re going to put ourselves in peril with other bills.”
Ultimately, he learned that money from the Ryan White
Fund that’s used for supplemental insurance and other support for people with HIV and AIDS was being diverted to payroll. Over the next few months, he warned fellow executives at the department, board members and officials with the state auditor’s office.
Romero expressed frustration Friday that it took so long for anyone to respond adequately to his warnings. In late September, a month before three of the agency’s top officials resigned and the public became aware that at least $30 million was needed to meet expenses this budget year, Romero told one of those officials that the agency’s longtime financial practices could be criminal.
Along with the Oklahoma House investigation, there are other inquiries by the state auditor, Oklahoma’s multicountry grand jury and the FBI.
The state Department of Health is trying to recover since Health Commissioner Terry Cline, Deputy Commissioner Julie Cox-Kain and Business Planning Director Felesha Scanlan resigned in October. State Finance Secretary Preston Doerflinger was chosen to replace Cline, and the Legislature approved an emergency $30 million appropriation to help the agency meet its obligations.
Romero is one of the few people in senior leadership who are still employed at the department.
He said that the agency’s accounting software contributed to bad financial practices, including the use of restricted funds for operational costs. Ultimately, Romero told the committee, he believes that no one knew the agency was running out of money until he came on board.
“I think that what was happening was that
these folks didn’t even understand that they were going to bankrupt with this methodology because they didn’t understand how it worked,” he said. “They just knew that if they wanted to do something, there was going to be money because there always had been.”
Romero expressed criticism of how former leadership created an atmosphere of fear, with employees afraid of losing their jobs for speaking out or otherwise going against management.
At one point, Romero said that his financial report to the Legislature was amended to disguise non-budgeted expenses.
“‘Do things our way’ was tone of senior leadership,” he said.
“The whole thing from beginning to end reminded me of oppressive totalitarian regimes. I was outraged and livid about this.”