DHS Director: Oklahoma budget cut scenarios range “from the terrible to the unthinkable”

Unless lawmakers find new revenues to close their budget shortfall, Oklahoma is looking at unprecedented cuts to the most basic services of state government, including those for the most vulnerable seniors, children, and people with disabilities. Even before next year’s budget, the Oklahoma Department of Human Services (OKDHS) will run out of money in May to pay for in-home care of 25,000 seniors and individuals with severe disabilities unless the Legislature acts quickly to provide supplemental funds.

Yesterday, OKDHS Director Ed Lake sent a message to all employees of the agency stating that further cuts would threaten the elimination of entire programs serving very vulnerable adults and children. The cuts could even undo the progress made under court order to improve our child welfare system. Here is Director Lake’s message in full:

Dear Employees:

Both the State House of Representatives and the Administration recently asked DHS and other state agencies to provide scenarios of various state fiscal year 2018 potential budget reduction percentages up to 14 percent. The attached document was provided to the House, Senate, and Administration detailing the specific programs and services that would be subject to significant reductions or elimination, the amount of state dollars that might be saved from those reductions or eliminations of services, and the anticipated impacts to the individuals served at the various reduction levels.

The reduction scenarios at almost every level depicted can be accurately described as ranging from the terrible to the unthinkable.

To give some perspective to the worst case scenario of the 14 percent figure, a cut of that magnitude would mean an actual reduction of $147.5 million from our current state dollar operating budget of $733 million, and cause reductions to or elimination of entire programs providing critical health and safety services for vulnerable seniors, people with disabilities, and children.

Even if DHS received a “flat appropriation” for the upcoming fiscal year of $680 million (assuming $34 million in supplemental funding is received for the current fiscal year and annualized in SFY-18), we would still face making some reductions to meet obligations for which we have not received new funding.

As you well know, our agency has been challenged over the past two years to make more than $80 million in cuts to our budget due to reduced state appropriations, state revenue failures, and increasing costs in delivering vital services.

In making these prior-year reductions, we followed the same framework to guide our decisions: 1) Minimize service impacts to clients; 2) Minimize impacts on employees who work directly with clients; 3) Look first within the department for more reductions than its proportionate share; and, 4) Protect our core services and functions to the greatest extent possible.

Each year, more than 60 percent of the cuts made were internal to DHS. Our workforce has taken a tremendous hit as we have reduced more than 1,200 positions outside of Child Welfare Services–nearly a 30 percent statewide reduction.

We have taken the same kinds of measures responsible businesses take during times of economic crisis, making extremely difficult decisions to reduce payroll and administrative costs, support contracts, and non-core services. In addition, we have exchanged state dollars for federal funding wherever possible. DHS is a more efficient and leaner state agency as a result; but, so many cuts have been made that our ability to continue providing our core services is now threatened.

Because the services we provide are critical to the health and safety of so many vulnerable Oklahomans, we have tried to protect the people we serve from the devastating consequences of significant budget reductions. However, we have reached the point where we can no longer do that—there is nothing of substance left to cut aside from programs and services. The point has come where real people—very vulnerable adults and children—will lose basic and high-skilled services that keep them in their own homes or communities, or worse, lose protections that keep them safe.

Unfortunately, if we are forced to cut programs and services we would also have to cut some or all of the staff positions and contracts associated with those particular programs, depending on whether the program is to be reduced or eliminated. We know that this level of cuts would also require us to reduce our physical presence across the state by closing several county offices and consolidating staff into nearby offices or using telework alternatives.

To reach the extreme levels of budget cuts being contemplated for state agencies means we would no longer be able to protect Child Welfare Services from reductions. We have done so despite the impact that has had on other areas of DHS in order to ensure that our efforts to meet our obligations and progress under the terms of the Compromise and Settlement Agreement (“Pinnacle Plan”) are as fully supported as possible. That commitment has, in fact, supported the significant progress made in child welfare. But the potential reductions in child welfare contracts would create a placement crisis for foster children, adversely affect the safety of kids, and increase worker caseloads. This would significantly jeopardize most of the progress that has been made with the Pinnacle Plan and risk DHS’ good faith efforts to resolve the monitoring of our foster care system. It would also mean that the more than $230 million the state and the Department have invested into these improvements will have been for nothing.

We do not know what lies ahead regarding available state funding, additional revenue failures, or how funding will be apportioned to various state agencies for the next fiscal year. We will continue to provide the Legislature with the clearest information possible so they can make fully informed decisions about setting funding priorities–based on the facts, not on stereotypes about government or the people being served. Our circumstances are, in fact, dire, and these fiscal issues must be addressed to prevent the dismantling of critical services.

Please know that even developing a list of these options was unconscionable for us as leaders and we all hope the Legislature will find solutions to the budget shortfall and prevent at least some of these catastrophic cuts. At this point, there have been no decisions made as to which of these budget options we may be forced to implement. We will continue to keep you informed of budgetary developments as they occur and of the actions we must take as a result.

Sincerely,

Ed Lake, Director