State Health Department Head, Deputy Resign Amid Questions Over Agency Finances

Updated Oct. 31

The top official and a senior deputy at the Oklahoma State Department of Health have resigned amid findings that the agency overspent and mismanaged finances for years.

In an emergency meeting Monday night, the Oklahoma State Board of Health accepted the resignations of Health Commissioner Terry Cline and Senior Deputy Commissioner Julie Cox-Kain, effective immediately. The department is grappling with an unexplained $10 million cash crunch, recently implementing furloughs and program cuts and announcing layoffs.

Cline was replaced on an interim basis by Preston Doerflinger, Oklahoma’s finance secretary.

“The resignation of Commissioner Cline came on the heels of information received by the Board that OSDH is faced with an immediate financial loss predicated upon multiple years of over-expenditures and fiscal mismanagement,” according to a statement issued by the health board.

Original Exclusive: Layoffs Sign of Health Department’s Cash Crisis

The agency’s business planning director, Felesha Scanlan, also resigned Monday. And a day later, the department confirmed that its general counsel, Don Maisch, was no longer employed there. It’s not clear whether he was terminated or resigned.

The department declined to make Cline and Cox-Kain available for interviews when Oklahoma Watch raised questions recently about its cuts to programs, efforts to bill the Tulsa and Oklahoma city-county health departments for costs related to testing and medications for sexually transmitted diseases, and the $10 million shortfall.

Also on Monday, the agency signed an engagement letter with State Auditor and Inspector Gary Jones laying out the issues to be covered in a special audit of the agency’s finances.

The letter, signed on behalf of the health department by Deborah Nichols, chief operating officer, said the special audit would cost an estimated $100,000.

“This fee estimate is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit,” the letter from Jones said. “We will endeavor to minimize cost and work to complete the audit in a timely manner.”

In a statement Monday, Martha Burger, chairwoman of the health department board, said the board takes allegations of financial mismanagement seriously.

“I would like to reiterate how seriously this board takes these matters today,” Burger said. “We are committed to working with the department of health to resolve them. We know there are going to be questions about the financial health of the department and we have questions as well. We are going to work hard to get to the bottom of them.”

Burger implored the agency’s employees to keep focused on their mission to deliver public health services.

“I would urge them to do their best to stay focused on that mission and to try not to let the distractions of this investigation get in the way. We truly appreciate their work,” Burger said.

In a statement, Gov. Mary Fallin praised the health department’s board for taking swift action to stabilize the agency’s finances.

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“My office has enlisted the help of the fiscal staff of the Office of Management and Enterprise Services, the state attorney general’s office and the office of the state auditor and inspector to look into the matter to immediately investigate and bring forth clarity to the situation and offer solutions to ensure proper fiscal management of the state health department,” Fallin said in the statement. “Legislative leaders have been briefed about the situation.”

By law, the commissioner at the health department is supposed to have a medical degree, a doctorate or a master’s degree with at least five years of experience in delivering health services. Doerflinger previously ran the Oklahoma Department of Human Services on an interim basis in 2012.

Terri Watkins, spokeswoman at the Oklahoma Attorney General’s office, said the law doesn’t mention the qualifications of interim health commissioners.

“Our opinion is that those qualifications will apply to any permanent director, but they won’t apply to an interim director,” Watkins said.

Denise Northrup, Fallin’s former chief of staff who is chief operating officer of the Office of Management and Enterprise Services, will take over from Doerflinger on an interim basis at OMES, the governor said Tuesday.

Cline has been commissioner at the health department since June 2009. Before that, he was commissioner of the Department of Mental Health and Substance Abuse Services, a position he held since 2001.

Cox-Kain, who was appointed senior deputy commissioner in 2014, has been with the agency for more than 25 years. Previously, she was chief operating officer and had several other administrative roles.