What the federal government giveth, it also taketh away.
Oklahoma Gov. Kevin Stitt alluded to that new reality in his Feb. 2 state of the state speech, imploring legislators to rein in spending amid federal funding uncertainty.
“Recent federal shutdowns and a $38 trillion dollar federal debt show us that the federal government isn’t a reliable partner,” Stitt said. “It’s essential that we maintain a conservative financial position.”
But just weeks earlier, the federal government awarded Oklahoma $223 million in rural health care grants, part of the Trump administration’s One Big Beautiful Bill Act. The $50 billion grant program came as the Republican Congress ordered $911 billion in Medicaid cuts in the next decade.
The Oklahoma State Department of Health will administer the five-year Rural Health Transformation grant from the federal Centers for Medicare and Medicaid Services. If it meets benchmarks, the state could get more than $1 billion for rural health care projects through 2031.
The award comes less than a year after the Health Department returned $157 million in federal pandemic grants under the state’s Division of Governmental Efficiency. The state effort copied the oftentimes chaotic federal DOGE project run by businessman Elon Musk in the first few months of the second Trump administration.
The Health Department cut 51 employees last year from a pull-back in certain federal grants. Affected positions included planning jobs related to its Emergency Preparedness and Response Service and interpreting services jobs, as well as some administrative jobs, the agency said.
Oklahoma Among Top Rural Health Grantees
Oklahoma last month submitted its revised budget for the Rural Health Transformation program after the state received more money than expected. Only Texas, Alaska, California and Montana received more than Oklahoma in the first year. The average state award was $200 million.
The Health Department, helped by Boston Consulting Group, shaped its application last summer by holding listening sessions with rural communities, tribes and health care providers and associations. The state paid BCG $875,000 for the consulting work.
Stitt, in a Nov. 5 letter supporting the application, noted the challenges facing rural Oklahomans when accessing health care but said he was heartened by some homegrown solutions. Those included a rural hospital buying a car to help get patients to medical appointments and a volunteer transport initiative in southwestern Oklahoma.
“These regions face combined challenges of limited access to prevention and treatment, workforce shortages, aging infrastructure, financially-strained providers, all of which have led to higher rates of chronic disease and shortened life expectancy,” Stitt said in the letter.
Oklahoma’s plan covers more than two dozen programs to address health care access, workforce development, technology and preventative health. Programs include remote health monitoring for maternal health, expanding “grow your own” training programs at CareerTechs to teach practical nurses in high schools and money to rural schools to promote a new version of the presidential fitness test.
In a Feb. 12 webinar, Health Commissioner Keith Reed noted the compressed timelines the federal government put on applicants and the rollout of the Rural Health Transformation program.
“It’s a great deal of funding, potentially,” Reed said. “We’re talking about a billion dollars plus over five years. It’s taxpayer money. We have to be good stewards of that and do it the right way. At the same time, we’re going to work very hard to make sure we can avoid being overly bureaucratic and slowing down the process.”
The infusion of federal money for rural health care comes before massive cuts to Medicaid take effect. The One Big Beautiful Bill Act gave states several years to prepare for the biggest of those cuts, which happen after 2028. The Rural Health Transformation program can’t be used to shore up any Medicaid needs.
The Oklahoma Health Care Authority, which operates SoonerCare, told lawmakers it needs another $495 million just to maintain coverage for the current population covered by the program. Stitt last month ordered a 90-day review of federal benefit programs like Medicaid and the Supplemental Nutrition Assistance Program.
Echoes of Executive-Legislative Branch Skirmishes
The rollout of the Rural Health Transformation program has echoes of other large federal spending programs in the wake of the COVID-19 pandemic. Many in the Legislature bristled at the lack of consultation from the governor’s office when the first Trump administration sent billions to the state for the CARES Act. When the Biden administration sent $1.87 billion to the state for ARPA pandemic relief, the Legislature created a new process that gave it much more input and oversight.
House Speaker Kyle Hilbert, R-Bristow, said the CARES Act funding had to be spent quickly in an emergency, while the federal government gave states more of a runway – until the end of 2026 – for ARPA projects. With the Rural Health Transformation funds, the Health Department had to first identify where it was going to spend the money, he said.
“They have met with the Legislature, and I’ve had meetings with the commissioner about where they’re going,” Hilbert said. “But it is something that I think legislatively we’re going to need to continue to watch to make sure funds are spent appropriately.
“As we have said repeatedly in all of this since 2020, we don’t want to use federal funds to start up recurring programs that we then have to use state funds to keep going after the federal funds run out.”
Senate Democratic Leader Julia Kirt said the push and pull of federal funds for health care and public health makes it hard to plan for long-term needs. She pointed to the Department of Transportation’s Eight-Year Construction Plan and the Oklahoma Water Resources Board’s 50-year Comprehensive Water Plan as good examples of taking short-term politics out of the state’s future needs.
“We don’t do interdisciplinary or interagency planning much, and it used to be the federal government were the ones that would actually spur some of that planning,” Kirt said. “Now they’re doing these hasty, overnight, ‘Tell us your ideas’ stuff. A popcorn listening session doesn’t lead to strategy.”
Kirt said the state’s move away from board oversight of agencies contributes to a lack of transparency and long-range planning. She said the Trump administration’s short-lived decision to pull, then quickly restore, $1.9 billion in federal mental health grants is emblematic of the problem.
“This presidential administration is not respectful of what it takes to implement programs on the ground,” Kirt said. “It’s just so disrespectful to communities and to organizations that have made plans and done all that work.”
Trump Funding Threats
Trump, in his second term, has given new meaning to the “bully pulpit” description of the presidency. He’s threatened – and followed through – on federal cuts to states run by Democratic governors. States that sued the administration over those cuts have largely succeeded in federal court, but not without months of uncertainty.
In a twist, Trump last week went after Stitt on social media over invites to a White House function involving the bipartisan National Governors Association, which Stitt chairs. That led to a round of questions to legislative leaders at the Capitol over whether Trump might decide to pull federal funds to Oklahoma.
Oklahoma Republican gubernatorial hopefuls, with an eye to the primary in June, continued to distance themselves from Stitt and backed Trump in the NGA dispute.
For its part, the Health Department said the Rural Health Transformation program was specifically outlined in federal statute.
“While we also have concerns about the potential instability of some federal grants, this program seems to have strong bipartisan support, which hopefully reduces the risk of volatility,” the agency said in a written response.
Hilbert said the uncertainty reinforces recent state budgets that have kept a cushion of savings in case of a federal government shutdown or pull-back in federal funds.
“With federal dollars, it’s not something you should take for granted,” Hilbert said. “Any state that becomes overly dependent on federal subsidies, you do so at your own risk.”
