Oklahoma State Auditor Cyndi Byrd’s report for fiscal year 2024, released Monday afternoon, questioned costs totaling nearly $25 million in federal funds.
Although the questioned costs decreased dramatically from fiscal year 2023, which boasted $93 million, the federal government can still demand a refund from the state of every questioned dollar.
Byrd and her staff examine all of Oklahoma’s federal grant programs with expenditures greater than $30 million and report their findings in a single federal audit every year. Expenditures identified as at risk of noncompliance or worse are labeled as questioned costs.
Questioned costs are any expenditures that do not comply with the law, cannot be documented or appear unreasonable or unethical.
Byrd highlighted three major bodies with questioned costs: the Department of Human Services, the Office of Management and Enterprise Services and the Department of Mental Health and Substance Abuse.
The Department of Human Services
Questioned costs in the Department of Human Services totaled $14.8 million. Three months ago, a DHS employee was found to have misappropriated almost $2 million from the Low-Income Home Energy Assistance Program.
Byrd’s team flagged two questionable payments with no up-to-date application from recipients, which was then investigated by DHS. The employee was the main full-time LIHEAP program administrator and is now facing a felony indictment.
The Department of Human Services also questioned costs of $14.5 million in child care funds. Costs for childcare services peaked in fiscal year 2023, but they remained above $400 million in 2024.
Byrd listed three reasons for the continued questioned costs at the Department of Human Services: existing subsidy verification controls were inadequate, check-in procedures were not being implemented and required health and safety inspections during overnight hours were not conducted.
She reported that one daycare center, for approximately two years, was paid to accommodate nearly twice the number of children it was licensed to serve. Her team also found numerous discrepancies in the enrollment forms submitted by many daycares. Some had duplicate forms for children, as well as forms for children who hadn’t been born yet.
Byrd’s team also flagged digital check-in apps as opportunities for mismanagement of funds. These digital apps may not be equipped with geo-fencing mechanisms, meaning data can be changed at any time within a 10-day window, from anywhere, by any person who has access to the parents’ device and login information.
“We can also confirm the check-in data is full of irregularities, including questionable timestamps,” Byrd said. “Some of the most concerning timestamp patterns were associated with parents who worked for the daycare owners or were family members of the daycare owners.”
Approximately 89% of facilities operating overnight did not receive a site visit between the hours of 6 p.m. and 6 a.m., according to Byrd. She claimed the safety of the children, conditions of the daycare and number of children in attendance were not monitored by DHS.
The Childcare Desert Program, which created much of last year’s questioned costs, has generated more than $24 million in questioned costs over a two-year period. Byrd said from 2023-2025, the program lost 103 providers.
“Our findings demonstrate that there is an urgent need for a special investigative audit at DHS childcare services,” Byrd said. “However, my team cannot act unless they receive a request from the DHS director, the governor, the attorney general, or another official. If nothing is done, the situation will only get worse.”
Byrd’s team also highlighted the need to reduce the payment error rate for SNAP. In October 2027, the federal government will slash SNAP benefits for states that have a payment error rate of 6% or higher. The higher the payment error rate, the more a state will have to pay.
Oklahoma has an error rate of approximately 11%.
“We have received the State Auditor’s report released late this afternoon,” Sylvia Corkill, public information officer for DHS, said in an email response to the auditor’s report. “Our leadership team will conduct a thorough, methodical review of the findings in the coming days and will address the substance of the evaluation once that review is complete.”
The Office of Management and Enterprise Services
The $3.8 million in questioned costs identified for the Office of Management and Enterprise Services is largely a continuation of problems Byrd and her staff have reported in previous years, including the potential clawback of substantial federal funds.
The questioned costs relate to the emergency rental assistance program, a COVID-era initiative aimed at helping people maintain their housing.
In a 2024 statement, OMES claimed it was continuing to work in partnership with the State Auditor’s Office as it reviewed and responded to the findings outlined in the State Auditor’s April 2024 report on the emergency rental assistance program.
Byrd said she is working closely with Director Mark Wood and his staff to address the issue.
The Department of Mental Health and Substance Abuse
Byrd’s office found $6.2 million in questioned costs in the Department of Mental Health and Substance Abuse. Their main findings focused on the proposed Donahue Behavioral Health campus, which was intended to replace the existing Griffith Memorial in Norman.
The department incurred more than $6 million in design and planning expenses but could not provide any documentation or other evidence that it had evaluated the Donahue Project’s long-term feasibility.
Byrd said there was no evidence that they adequately explored the possible effects of rising construction costs before investing taxpayer dollars into the design of this new facility. Taxpayers received no benefit from the $6 million spent on the facility, money in addition to the almost $30 million they paid to bail the mental health department out of its budget crisis last year.
Looking Forward
Although the federal government is still reviewing fiscal year 2021, Byrd said to expect to hear about clawbacks on that soon.
“Any amount of questioned costs that we can’t verify provided services back to the taxpayers is a problem, regardless of dollar amount,” Byrd said. “We can do better than that, and our citizens deserve better than that.”
Oklahoma Watch, at oklahomawatch.org, is a nonprofit, nonpartisan news organization that covers public-policy issues facing the state.
