Oklahoma mental‑health agency seeks $57.7 million as commissioner outlines reorganization, consent‑decree exposure and 988 funding gap

Commissioner Ali Friesen, head of the Oklahoma Department of Mental Health and Substance Abuse Services, told the Senate appropriations subcommittee that her agency is asking for $57,667,350 in supplemental and recurring funds to stabilize operations, complete upgrades and respond to litigation.

Friesen, confirmed about eight months and appointed about a year ago, described a reorganization that separates the agency into three operational “buckets”: a hospital enterprise (11 state hospitals and 12 satellite facilities), a governmental enterprise that handles rulemaking and oversight, and shared services such as finance and HR. “The goal from the beginning of my time here has been to raise the bar for mental‑health services for Oklahomans,” she said, citing a new vision, “Dedicated to Excellence.”

The nut of Friesen’s budget presentation was that the agency needs one‑time and recurring funding for several priorities: closing gaps caused by federal reimbursement rate changes (FMAP), building a statewide competency restoration program in light of pending litigation, upgrading electronic medical records (EMR), and implementing a statewide incident/safety reporting system. Friesen told the committee the $57,667,350 figure is subject to change depending on final vendor selections and the ultimate terms of any court‑approved agreements.

Key discussion points

• Consent decree / class action settlement: Friesen said the agency inherited two significant legal matters. She described a class action from Tulsa and a Department of Justice review that had been ongoing for roughly two years. She said agency counsel negotiated substantial reductions from an earlier proposed settlement amount; the revised draft is in “preliminary approval” at the court but must receive full legislative approval before any consent decree enters. Friesen cautioned that if the decree is entered, the agency’s annual costs will depend on consultant decisions and how the agency meets performance obligations.

• FMAP and ARPA gaps: Interim CFO Skip Leonard explained that federal rate changes and end of pandemic FMAP adjustments have created an ongoing shortfall. He described two related items: a year‑to‑year FMAP reduction (about $10,800,000 was discussed as an annual impact) and an earlier ARPA‑era FMAP savings gap originating in 2021 that produced an immediate multi‑million dollar shortfall (Leonard cited roughly $23,000,000.96 as the earlier gap figure). The agency asked the committee to allow time to present a three‑year projection of anticipated FMAP impacts.

• 988 crisis line sustainability: Friesen credited the legislature’s investment in the 988 crisis line with a “57% reduction in law enforcement calls that are related to mental health” in one partnership cited with the Oklahoma City Police Department. She said the program is currently funded largely by federal grants but those grants will expire; the current 988 grant is encumbered through the end of FY26 and costs about $4,000,000 annually. The agency plans to pursue multi‑year grant strategies and other revenue sources to avoid year‑to‑year funding gaps.

• EMR, incident reporting and safety: The agency is moving from paper medication records and a home‑grown event reporting system to a modern electronic medical record and an enterprise incident reporting platform. Friesen said the EMR vendor procurement is near final selection and that EMR and collateral equipment (barcode scanners, medication scanners) will have one‑time and annual maintenance costs. Deputy Commissioner Kim Corcoran described the incident reporting system as a Joint Commission requirement that will improve data, root‑cause analysis and prevention efforts across facilities.

• Naloxone vending machines and harm reduction: Friesen defended the concept of naloxone vending machines as an innovative harm‑reduction tool but said the agency paused the original deployment to reset procurement and sustainability plans after finding high per‑unit costs and staffing burdens for restocking. She said some machines can be retained, others repurposed or donated, and that partners including hospitals and Certified Community Behavioral Health Clinics (CCBHCs) are being considered for placement.

• Workforce and compensation: Friesen said the agency is roughly 28% below market for many clinical and operational roles and proposed salary increases and recruitment investments, including roughly 22 positions at six‑figure ranges that the agency argues are needed to lead facilities and reduce long‑term costs. She said current total FTEs across the agency are “just above 2,200” (the figure on the agency’s earlier Budgeted Personnel Report was lower); she asked the committee for time to reconcile and validate FTE counts and stated she had low confidence in some historical figures.

• Internal controls and accounts: Friesen acknowledged discovery of multiple unauthorized bank accounts and other financial control failures inherited from prior administration activity. She told the committee the agency closed the accounts, recovered roughly $30,000 (including cashing CDs), and has engaged auditors and compliance work to prevent recurrence.

Why it matters

The department operates a statewide hospital system with hundreds of inpatient beds and a network of community programs; funding changes, litigation exposure and gaps in federal reimbursements directly affect operations and access to crisis and inpatient care. The agency’s request mixes one‑time implementation costs (EMR, safety reporting) with recurring program needs (988, consent decree obligations and state match for federal programs). Committee members pressed for line‑by‑line details, precise FTE counts and clear contingencies tied to the consent‑decree timing.

The meeting ended with the committee asking the commissioner to return with reconciled FTE and salary details, clearer three‑year FMAP projections, precise cost estimates for EMR and the incident reporting system, and an update on the legal settlement timeline. Friesen pledged ongoing transparency and said the agency would provide further documentation and vendor‑level estimates as they are finalized.