Problems involving child care grants, rental assistance and an abandoned mental health construction plan accounted for most of the total.
OKLAHOMA CITY — A federally required audit of Oklahoma’s use of federal money found nearly $25 million in questioned costs, with most of the total tied to child care grants, rental assistance and an abandoned mental health construction plan.
The state’s fiscal year 2024 Single Audit examined about $13.9 billion in federal expenditures during the year that ended June 30, 2024. State Auditor and Inspector Cindy Byrd said it marked the fourth consecutive report in which auditors warned state officials about problems managing federal money.
“This is the fourth Single Audit in a row in which we have warned lawmakers and agency directors about the consequences of mishandling federal money,” Byrd said.
A questioned cost is not necessarily a finding that money was stolen or entirely wasted. The term includes spending that auditors believe violated federal requirements, lacked adequate documentation or appeared unreasonable. Federal agencies ultimately determine whether money must be repaid.
Child care programs draw largest findings
The Oklahoma Department of Human Services accounted for about $14.5 million in questioned costs involving child care programs.
The largest finding involved $12.6 million from the Child Care Desert Grant Program, which was intended to expand care in areas without enough licensed providers. Auditors examining 71 facilities found payments based on unverified attendance, incorrectly calculated awards, missing spending records and money used for purposes outside the grant’s rules. Some providers also closed before completing a required two-year operating period.
The questioned costs represented almost 95% of the Desert Grant money tested.
DHS partially agreed with the finding. The agency acknowledged opportunities to strengthen oversight but disputed the auditor’s treatment of unsupported spending and said the findings overstated the state’s actual financial exposure. DHS said it has taken corrective steps to improve monitoring.
The audit also found that inadequate separation of duties allowed a former DHS employee to direct nearly $688,000 in federal energy and water assistance payments to fraudulent vendors during fiscal year 2024. DHS said it terminated the employee, referred the matter for investigation and is changing how vendors and payments are handled.
Rental assistance and abandoned hospital plan
The Office of Management and Enterprise Services had about $3.8 million in questioned costs involving the Emergency Rental Assistance program. Auditors cited unsupported payroll and other expenses and said accumulated questioned costs from the program now exceed $23 million.
OMES said oversight of the program was transferred to its Grants Management Office in fiscal year 2025 and that new monitoring procedures have been put in place. The agency agreed with several of the spending findings but partially disputed the auditor’s broader conclusions about how quickly it could have corrected earlier problems.
Auditors also questioned $6.2 million spent by the Oklahoma Department of Mental Health and Substance Abuse Services on planning and design for the proposed Donahue Behavioral Health Campus.
The original construction plan was abandoned in 2025 after rising costs and funding shortfalls. The department instead moved toward buying and renovating a vacant hospital. Auditors concluded the earlier work produced no usable project and provided no measurable value to the replacement plan.
Mental Health partially agreed with the finding but disputed that the entire $6.2 million was wasted or unallowable. The agency said the Donahue proposal was an active, legislatively funded project when the expenses were incurred and plans a more detailed review of the spending.
Byrd’s office said questioned costs across Oklahoma’s five most recent Single Audits now total more than $200 million. That does not mean the state has received a bill for the full amount, but federal agencies could seek repayment of costs they ultimately reject.
