The former Oklahoma State Department of Health Chief Operations Officer testified Tuesday to the House investigative committee.
Deborah Nichols laid out a timeline of the agency’s finances starting around January 2016. That’s when the agency pulled the plug on a remodel of three floors of its headquarters days before the bid was signed because the money for the project wasn’t there.
"So, that was one of the first red flags," Nichols said. "You don't — you don't know that you don't have $8 million. You either have it or you don't have it."
Nichols, who resigned last month, said the co-mingling of state and federal funds obscured financial mismanagement from state finance officials, which ultimately lead to the state department of health needing a $30 million supplemental appropriation.
"OMES has no apparent ability to distinguish what's federal and what's not federal, and the agency's not helping this problem, either, because they're moving state funds and revolving funds into these federal funds and paying payroll," Nichols said.
Nichols said any state audits of the health department were focused on transactions rather than the agency’s overall finances, like an independent auditing firm would do.
Nichols told lawmakers the agency's leaders were good-hearted people with bad business sense. She said what she would want in a chief financial officer is someone who would tell agency leaders if they couldn’t afford certain plans.
"The CFO was taking, literally, directions on a day-to-day basis from folks in the commissioner's office," Nichols said. "And they were coming over and saying, 'I want you to transfer funds from this place over here.'"
Nichols said agency leaders didn’t understand the consequences of what they were doing, but auditors were afraid of losing their jobs if they spoke up.
