This story has been updated.
The top financial officer at the embattled Oklahoma State Department of Health resigned Thursday after clashing with the agency’s new leadership over secret grand jury testimony and the direction of financial changes at the agency.
Chief Financial Officer Mike Romero cited “multiple conflicts of interest” in a resignation letter addressed to Interim Health Commissioner Preston Doerflinger, the state Board of Health and agency employees. Romero also said he had “very serious concerns on multiple levels” over the health department’s information technology spending, much of which goes to the Office of Management and Enterprise Services, which Doerflinger previously led.
Romero, who appeared before a state multicounty grand jury in November and January, said he believed his testimony was getting back to Doerflinger, possibly via the agency’s general counsel. Proceedings before the grand jury are held in secret.
“Essentially, these actions show me that the interim commissioner is using others, including his general counsel, to stay abreast of the proceedings and to analyze the financial communications provided by me with this compromising activity,” Romero said in his resignation letter.
Health department spokesman Tony Sellars confirmed Romero’s resignation Thursday afternoon but said the agency would have no further comment. Terri Watkins, a spokeswoman for Attorney General Mike Hunter, said her office doesn’t comment on grand jury proceedings.
Romero’s surprise resignation comes just weeks after he testified before a special House investigative committee looking into the financial turmoil at the health department. Doerflinger had publicly praised Romero on several occasions and elevated him to a top leadership position at the agency.
In his Jan. 12 testimony, Romero laid out a timeline of financial problems at the health department – problems that led to the resignations of former Commissioner Terry Cline and other top officials at the end of October.
Romero, who joined the agency in April 2017, said his concerns over a cash crunch were brushed aside last summer by its former leaders. He then alerted the state auditor and OMES officials of the problems.
Denise Northrup, OMES’ interim director, challenged Romero’s account and the earlier committee testimony of Deborah Nichols, the former chief operating officer at the health department. Both had mentioned the high costs of IT services provided by OMES as part of the reason it faced a $30 million shortfall and risked not being able to make its payroll. (The Legislature made an emergency supplemental appropriation to the health department in December.)
“The committee should be made aware that agencies are in the driver’s seat when it comes to IT investments,” Northrup said in a Jan. 16 letter to the committee. “… OMES has worked with OSDH for several years to identify solutions to replace its legacy system, but previous OSDH leadership placed the project on hold.”
Northrup said Romero mistakenly characterized an October conversation he had with OMES budget analysts about using restricted federal funds to cover payroll.
“OMES was trying to understand whether the problem was a cash flow problem or a no-cash issue; cash flow meaning OSDH expected cash to arrive, just not timely enough to make payroll; no cash meaning that OSDH was going to run out of cash and didn’t expect it to be replenished,” Northrup said in the letter. “This inquiry has been characterized as a recommendation – it was not. It was a discussion addressing any and all possibilities.”
Rep. Josh Cockroft, the investigative committee’s chairman, said members will review Romero’s resignation letter, which Cockroft said raised serious concerns about discussions before the grand jury.
“This paints a picture of a dysfunctional agency,” Cockroft told Oklahoma Watch after meeting with Romero on Thursday morning. “We’ve been told the culture at the agency has changed, and this doesn’t seem to be the case. It shows the system is broken and is still broken.”
Later Thursday, Cockroft provided additional details about the resignation, which he said came after Doerflinger and Romero argued over a Jan. 23 memo sent by Northrup. Romero sent Doerflinger a response to the Northrup memo on Wednesday.
“It was then, according to Mr. Romero, that Doerflinger offered that Mr. Romero’s memo conflicted testimony another OSDH employee gave before the attorney general’s grand jury, testimony which is supposed to be confidential,” Cockroft said in a statement. “The possibility of agency leadership sharing confidential testimony from a grand jury proceeding is deeply troubling and unacceptable.”
The Northrup and Romero memos go into detail about the health department’s financial systems and how funds are tracked by OMES’ PeopleSoft system. They differ on how to update the health department’s aging internal financial systems and how OMES should track restricted federal funds and payroll on the PeopleSoft system.
Romero said the health department spent “millions of dollars of federal funds and other state and revolving funds” on IT projects and outside contracts. He said a conservative estimate of those costs exceeded $82 million since 2012.
“A substantial bit of honest and open discussion will be required to address the issues related to the problems with the state’s accounting system of record, the responsibility for the new accounting system needed at the OSDH and where the lapses have occurred in the identification of the relevant problems,” Romero said in his Jan. 31 memo.
On Monday, the House investigative committee is scheduled to hear from Bo Reese, the state’s chief information officer, about IT services provided to state agencies by OMES.
Rep. Kevin Calvey, R-Oklahoma City, a member of the committee, said he expected the questions would also cover IT issues raised by Romero in his memo. Calvey and two other members of the committee, Rep. Bobby Cleveland, R-Slaughterville, and Rep. Tom Gann, R-Inola, said they appreciated Romero’s prior work with the committee on health department financial reporting and IT spending.
“Mr. Romero’s resignation opens up an entire new perspective about the lack of oversight in our state budget,” Gann said in a news release.