Health agency corrective plan has more layoffs, cuts

A report from the Oklahoma State Department of Health shows it could slash its budget by about one-third next year through layoffs and program cuts.

If the department enacts all the proposed reductions in its corrective plan, it will cut its budget by about twice as much as the Legislature demanded, lay off 198 people and possibly end grants that support childabuse prevention programs and health centers.

The health department has been in turmoil since at least October, when officials acknowledged it was struggling to make payroll. Thencommissioner Terry Cline and deputy commissioner Julie Cox-Kain resigned. The State Auditor’s Office, a grand jury and federal officials all are investigating alleged overspending and shifting of money, possibly going back as far as 2011.

The Legislature passed and Gov. Mary Fallin signed a bill appropriating $30 million to stabilize the health department, but they also required the department to submit a corrective plan by Jan. 1 and to cut its budget by 15 percent before July 2019. To meet those requirements, the department

would need about $8 million in cuts, but the corrective plan would reduce spending by about $17.8 million.

The largest percentage of the cuts would come from layoffs, which would save about $10.1 million in the budget year starting in July. Jamie Dukes, spokeswoman for the health department, said the department doesn’t plan any more layoffs beyond the 198 announced in December.

Programs that were suspended this fall as the department faced a budget shortfall may not return in the coming budget year, even after the cash infusion. The corrective plan included $3.5 million in savings from cutting grants to child-abuse prevention programs and to federally qualified health centers for services to patients without insurance.

Dukes said the department would decide which contracts to pursue after learning how much funding will be available in the coming budget year.

“Agency leadership will plan and prioritize all of the agency service delivery areas,” she said. “Service delivery will now occur according to actual available funding.”

The report also included some smaller savings ideas, including:

• Reducing restaurant food-safety inspections.

• Combining some children’s mental health and child-abuse prevention programs under one director.

• Setting up a new information technology system to reduce the cost of processing health licenses.

• Getting rid of two rented office spaces in Oklahoma City.

• Making energy efficiency upgrades to department buildings.

• Selling unneeded computers.

The department also pledged to review “every dollar” in the budget and “reinvest” savings into mandated services. Tom Dunning, spokesman for the Oklahoma Public Employees Association, said he hoped that review includes input from employees who work directly with the public and people who use department services.

“The folks who are in the trenches or are in the community would have valuable advice on whether to reduce a program or not,” he said.

Changes near the top

The report also suggested an organizational shake-up could be coming. The most visible change it suggested would involve creating a chief medical officer position to oversee the department’s health programs, leaving the commissioner free to focus on management issues. Currently, the commissioner must have a medical degree, a doctorate in

public health, or at least five years of experience in health services administration, but isn’t required to have business or management experience.

In addition to recommending a change to the commissioner’s role, the report suggested having the chief financial officer report directly to the commissioner and adding a controller to oversee day-to-day financial management, leaving the CFO free to focus on the department’s “strategic direction.”

The department also has begun assessing its offices and services and regrouping them into three categories: those that prevent disease, promote health and protect health. The report expressed hope that putting similar offices together would increase efficiency.

The report offered little clarity on how the health department found itself short of cash late last year, though it repeated allegations that previous leadership had expanded the department’s functions, and didn’t reduce staff when it had to make budget cuts.

In the report, CFO Mike Romero, who started in April, said top officials in the department paid little attention to finance. The CFO position had been vacant for about a year before Romero started in April, and the department hadn’t produced typical financial statements for some time.

Romero alleged Cline

and Cox-Kain took actions usually reserved for command during natural disasters when he raised allegations of improperly using agency funds to make payroll in June.

“It appeared this was an avenue to stifle communications and actions of the CFO,” the report said. “It became apparent top executive management had no intention of taking the appropriate actions to address OSDH’s financial risk.”

No one answered at phone numbers listed for Cline and Cox-Kain.

Some employees knew the department had financial problems, the report said, but couldn’t force action on their concerns. That would have included “empowering” employees and allowing them to make more decisions on the department’s priorities list.

“Employees are anxious and demoralized,” the report said. “Their hard work and successes have been overshadowed by the devastating events that have occurred which, for most, was completely unexpected.”

Dunning said he has seen some encouraging steps, including setting up a hotline where employees can report concerns.

“Hopefully employees will feel more empowered to call without fear of a backlash,” he said.

To view the full report, go to www.ok.gov/ health2 and search for “Corrective Report.”