Oklahoma State Auditor Flags Nearly $25 Million in Questioned Costs

Oklahoma State Auditor Flags Nearly $25 Million in Questioned Federal Costs

Oklahoma State Auditor Cyndi Byrd has identified nearly $25 million in questioned federal costs in Oklahoma across three major state agencies, raising concerns about whether some taxpayer-funded expenditures were properly documented, administered or allowed under federal rules.

The findings are part of Oklahoma’s fiscal year 2024 statewide federal audit. According to original reporting from Oklahoma Watch, the largest questioned costs were found at the Oklahoma Department of Human Services, followed by the Department of Mental Health and Substance Abuse Services and the Office of Management and Enterprise Services.

Oklahoma State Auditor Finds Nearly $25 Million in Questioned Costs

The Oklahoma State Auditor questioned federal costs totaling approximately $24.8 million for fiscal year 2024.

That represents a substantial decline from the approximately $93 million in questioned costs identified for fiscal year 2023. However, questioned costs can still carry significant financial consequences for Oklahoma.

The federal government can potentially require the state to repay money when expenditures are ultimately determined to be improper or unsupported.

According to the Oklahoma State Auditor and Inspector, the office audits state agencies and programs to help ensure public funds are properly accounted for and spent according to applicable requirements.

Questioned costs generally include expenditures that do not comply with applicable laws or regulations, lack adequate documentation or appear unreasonable.

Three agencies accounted for the major findings in the latest report: the Oklahoma Department of Human Services, Office of Management and Enterprise Services and Oklahoma Department of Mental Health and Substance Abuse Services.

DHS Accounts for $14.8 Million in Questioned Federal Spending

The largest share came from the Oklahoma Department of Human Services, where auditors identified approximately $14.8 million in questioned costs.

About $14.5 million involved childcare funding.

Auditors cited problems with subsidy verification controls, check-in procedures and required health and safety inspections at facilities providing overnight care.

According to Oklahoma Watch, auditors found one daycare center had been paid for approximately two years to accommodate nearly twice the number of children it was licensed to serve. Auditors also reported enrollment discrepancies that included duplicate forms and forms associated with children who had not yet been born.

Digital childcare check-in systems were another concern.

Byrd said auditors found irregularities in check-in timestamps, including concerning patterns involving parents who either worked for daycare owners or were related to them.

Auditors also found approximately 89% of facilities operating overnight did not receive a site visit between 6 p.m. and 6 a.m.

Byrd called for a special investigative audit of DHS childcare services but said her office would need a request from an authorized state official before beginning one.

The audit also highlighted Oklahoma's SNAP payment error rate, which is approximately 11%. Byrd warned that federal changes scheduled for October 2027 could impose additional costs on states with error rates of 6% or higher.

DHS told Oklahoma Watch that agency leadership would conduct a thorough review of the findings before responding to the substance of the audit.

Mental Health and OMES Also Face Millions in Questioned Costs

The Oklahoma Department of Mental Health and Substance Abuse Services accounted for approximately $6.2 million in questioned costs.

Those findings centered largely on design and planning expenses for the proposed Donahue Behavioral Health campus.

Auditors said the department could not provide documentation showing it had adequately evaluated the project's long-term feasibility before spending more than $6 million on planning and design.

Byrd also questioned whether the agency sufficiently considered rising construction costs before investing taxpayer dollars in the project.

The Office of Management and Enterprise Services accounted for another approximately $3.8 million in questioned costs.

Those findings largely involve continued issues surrounding the federal Emergency Rental Assistance Program created during the COVID-19 pandemic. The program was established by the U.S. Department of the Treasury to help eligible households maintain housing during the pandemic.

Byrd said her office is working with OMES leadership to address those issues.

For Oklahoma taxpayers, questioned federal spending does not automatically mean every dollar was stolen or improperly spent. It means auditors found expenditures that require further explanation, documentation or review — and some could ultimately be subject to federal repayment demands.

The federal government is also still reviewing Oklahoma's fiscal year 2021 spending, and Byrd said the state could soon learn whether federal funds from that year will be clawed back.

“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.”

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