Health agency bills should be just a start

AMONG the biggest Oklahoma political scandals of 2018 was financial mismanagement at the state Department of Health, which received a $30 million bailout it didn’t need because no one knew how much money the agency had.

Several measures have been filed by Sen. Ron Sharp, R-Shawnee, that he says could prevent a reoccurrence. It’s welcome some lawmakers are taking this issue seriously. But good intentions aren’t enough. Any new legislation must prevent financial abuses at agencies, and there’s reason to question if all proposed measures will achieve the intended effect.

Sharp’s Senate Bill 176 would require the state auditor and inspector to audit the Department of Health every year, instead of every two years. The bill also would require the department to release an internal audit of all local, state and federal funds at the agency.

Yet the Health Department scandal effectively involved two sets of books. In financial documents presented to the Legislature and state auditors, state funds were shown as being federal money. Internally, agency officials knew better and were using the inflated federal accounts as a slush fund. According to a multicounty grand jury report, that system “allowed the OSDH to spend beyond its means for years without running out of money.”

The grand jury report also noted agency leadership kept this system “hidden from the oversight of the Executive Branch and the Legislature” and that the department’s senior leadership prevented the agency’s internal auditor from meeting with the Department of Health’s board of directors.

Put simply, the financial shenanigans went undetected by state auditors during biannual audits, by legislators during the annual budget process, and by the governor’s office in its ongoing oversight of the state budget. How would making an audit requirement annual instead of biannual change the ability of agency officials to commit the same fraud that escaped notice in biannual audit inspections?

SB 177 would require all state agencies to post on their websites a balance sheet and statement of revenues, expenditures and changes in fund balances. But if an agency is using two sets of books, how does SB 177 prevent the posting of fake numbers? Is the hope that increased transparency might lead to closer inspection by outside groups that leads to detection of fraud?

On the other hand, SB 173, which would make it a felony for agency leaders to create or possess any public funds that “are not reported to the Legislature or that are not designated for a particular purpose by a federal grant or state statute,” has more teeth. If agency leaders know fraud can result in a 20-year prison term, even if they don’t personally benefit from that activity, it could discourage malfeasance. Because no official stole money for personal use at the Health Department, no one faced charges when fraud was uncovered.

It’s true, as Sharp notes, that his bills enact recommendations made in a grand jury review of the Health Department. Yet while those recommendations are a starting point, lawmakers should go further. The 2018 scandal highlighted enormous shortfalls in oversight of state spending. Efforts to prevent similar abuses elsewhere may require more significant reforms than what have been proposed so far.