The Oklahoma State Capitol is pictured. (Photo by Kyle Phillips/For Oklahoma Voice)
OKLAHOMA CITY — The Oklahoma Mental Health Department will need an extra $20 million legislative appropriation to cover some costs in the current budget year.
And in addition to its current state appropriation of $403 million, the agency says it’s requesting an extra $79.5 million in the upcoming budget year. This will cover $20 million in Medicaid matching costs for both the current and upcoming budget year, $22.5 million in IT software upgrades and $17 million to implement a court agreement to fix the state’s competency restoration system and to cover any related fines for noncompliance.
The Oklahoma Department of Mental Health and Substance Abuse Services’ $20 million fiscal year 2026 supplemental budget request will cover the agency’s share of Medicaid matching costs, which is the state’s share of the program’s funding. It comes after the agency already received an extra $27.4 million appropriation from the Legislature and as officials continue to cut or eliminate contracts with mental health and substance abuse providers .
The agency was not yet able to provide a number Friday identifying the total scope of these cuts.
Rep. Carl Newton, R-Cherokee, said Friday he wasn’t familiar with the details of the agency’s budget request, but he’s not surprised that a supplemental appropriation is needed.
Newton, chair of the House Health and Human Services Oversight Committee and a member of a select committee investigating the department’s finances, said he doesn’t think the Legislature would be opposed to an additional appropriation.
“We planned on doing a supplemental but we had to make a budget,” he said. “It’s our constitutional responsibility to get (the budget) done by May, and so we get that, but we knew that if they could get a handle on the budget, we’d probably have to add some more to that. But we wanted at least have something to get to them to get started.”
In the tumultuous final weeks of Legislature’s session, deficiencies in the agency’s budget first came to light and led to weeks of investigative hearings, the firing of former Commissioner Allie Friesen and an emergency appropriation so the agency could make payroll.
Various reports, including from the State Auditor and Inspector and the Legislative Office for Fiscal Transparency, found a pattern of overspending at the state agency.
In an attempt to right-size the agency’s budget, at least 300 line items, or parts of provider contracts for specific services, had been identified for cancellation or nonrenewal as part of its process to identify duplicative or unnecessary services.
Interim Commissioner Gregory Slavonic, appointed by Gov. Kevin Stitt, said the cuts “brought spending in line” with the agency’s budget. However, the agency is still receiving invoices for the 2025 budget year. He said that’s a “remnant of past practices” where funding from the current budget year paid for costs from previous years.
The agency is also struggling to implement a legislatively-approved court settlement that requires the agency to provide improved competency restoration services on a set timeline. The state fell short of the agreed standards during their first compliance check. The settlement sets forth financial penalties for noncompliance.
The Mental Health Department cannot publicly identify a dollar amount for the total scope of contract cuts needed to correct spending until all of these invoices have been received, an agency spokesperson said.
“Every program has a personal story behind it,” Slavonic said in a statement. “We understand how much peer support and community services mean to the people they’ve helped. But our responsibility is to fund programs that align with our behavioral health mission, meet statutory requirements and stay within the budget provided by the Legislature.”
The agency’s contracting process has been “reformed” to ensure a more competitive bidding process with an open request for proposals system, according to a news release.
“Stabilizing the budget was one of my top priorities, but it’s only part of the story,” Slavonic said. “Reorganization, transparency and meeting our consent decree milestones are equally important. We’re proving that good stewardship and good care go hand in hand.”
Senate Minority Leader Julia Kirt, D-Oklahoma City, said she’s concerned by the latest budget numbers provided and wants to be sure what data this budget request is based on. She said she needs a better idea of what the agency needs and specifics of their plan for providers.
“We need a lot more solidity,” she said. “But mental health care does not stay stagnant, so I mean, costs go up and down based on challenges folks are facing. So it’s going to be very hard. We have to look at averages. We have to look at it over time. So I hope they’re using historic data to help inform them”
Kirt said she would like to take action before session begins in February, potentially through a special session.
“I would love to do a supplemental sooner because I think if these cuts are about cash flow, we need to take care of that,” she said. “If they’re not willing to do a special session … make it be one of the first things we do when session opens.”
