Oklahoma Proposes Sweeping Mental Health System Overhaul After Budget Crisis Leaves Providers Reeling

Oklahoma health officials rolled out an ambitious plan this week to fundamentally reshape the state's troubled mental health system, potentially dissolving the Department of Mental Health and Substance Abuse Services entirely and redistributing its responsibilities across other state agencies.

The restructuring proposal, unveiled during a hastily organized press conference on Tuesday, comes as mental health providers across Oklahoma are still struggling to recover from millions of dollars in funding cuts imposed last fall—cuts that eliminated critical support programs, reduced services for vulnerable populations, and left organizations scrambling to plug budget gaps through emergency fundraising.

The timing reflects the cascading crises that have plagued the mental health agency over the past year: multimillion-dollar budget shortfalls that surfaced during the 2025 legislative session, the unprecedented firing of the agency's commissioner, repeated failures to meet federal consent decree deadlines that have cost the state more than $3 million in fines, and a revolving-door leadership problem that has left the agency struggling to recruit permanent leadership.

"We have a situation where one agency's failure creates a second failure for a secondary agency," said Clay Bullard, who serves as both Oklahoma's Secretary of Health and CEO of the Oklahoma Health Care Authority. "The secondary agency being the larger agency, which provides services to 1 in 4 Oklahomans."

A System Under Stress

The Department of Mental Health and Substance Abuse Services was thrust into crisis mode at the end of the 2025 legislative session when it revealed a massive budget shortfall that multiple state audits later traced to patterns of overspending. The revelation led to the firing of former Commissioner Allie Friesen and a series of emergency appropriations from the legislature.

But the money came with consequences. In an effort to close the budget gap, agency officials announced in fall 2025 that they would trim what they deemed duplicative or unnecessary services. What followed was a wave of funding cuts that rippled through the state's network of mental health and substance abuse providers.

Mental Health Association Oklahoma lost $694,480 in state funding, forcing the nonprofit to eliminate two entire programs: Creating Connections, a support program for adults with severe mental illness that had operated since 2001, and a statewide coalition for children's mental health professionals and advocates.

"It helped people who were stable stay stable and stay independent and stay housed," said Carrie Blumert, the organization's CEO, describing the Creating Connections program that provided support groups, case management, and education to people living with some independence but needing additional resources.

The organization's drop-in center in Tulsa—which serves adults experiencing mental illness or homelessness with case management, housing assistance, and support groups—survived the cuts but now operates with 20% less funding. That translates into fewer resources for staff helping clients obtain state IDs and birth certificates, providing clothing assistance, offering food items, and supplying bus tokens.

"I think when the Department of Mental Health makes these cuts, sometimes they don't realize the domino effect that organizations have to deal with," Blumert said.

Mark Davis, the organization's chief programs officer, noted that while staffing at the drop-in center hasn't been reduced, "we now have a smaller budget for assistance and supplies."

The Ripple Effects

Family & Children's Services saw its contract for a crisis stabilization unit at its crisis care center cut by roughly half. The agency says the funding stream will be eliminated entirely by next year, with officials arguing that other area providers now offer many of those services.

Amanda Bradley, the organization's vice president of crisis services, described the squeeze: "We're kind of being pushed into a situation to be doing more for individuals with just less funding."

The Tulsa County Sheriff's Office lost $15,200 in state funding for alcohol compliance checks at local restaurants and stores—enforcement aimed at preventing underage alcohol access. The checks haven't been conducted since July.

"While we understand the need for departments to manage and control spending, we hope this funding can be restored in the future so this important work may continue," said Casey Roebuck, a spokesperson for the sheriff's office. "The ultimate goal of this program is simple but critical: to protect young people and save lives by preventing underage access to alcohol."

GRAND Mental Health, which operates urgent care facilities, a detox and treatment center, mobile crisis teams, and street outreach in Tulsa County, faced proposed cuts that spokesperson Ron Brady described as potentially "pretty catastrophic in terms of people not able to get help that needed it." The organization negotiated a funding extension through the end of 2025 and entered a new contract in 2026, though Brady said there's ongoing concern about future support given federal cuts and state budget shortfalls.

A Plan to 'Right the Ship'

Into this environment stepped Interim Commissioner Admiral Greg Slavonic, appointed in June 2025 to stabilize an agency in free fall. Slavonic, who had previously been tapped to rescue another troubled state agency in 2023, didn't know when he accepted the role that he was the only candidate.

"This by far probably is the biggest challenge that I've had to deal with," Slavonic said this week. He had originally planned to retire in January but stayed on to address what he described as communication, culture, and financial problems at the agency.

But Slavonic's tenure is ending in May. And rather than recruit another commissioner to lead an agency that officials acknowledge is not "an easy job to recruit to," state health leaders are proposing a radical restructuring.

The three-part plan, outlined by Bullard during Tuesday's press conference, would gradually strip the Department of Mental Health of most of its responsibilities, potentially dissolving it as an independent agency:

First, efforts to comply with a federal consent decree—which requires Oklahoma to fix a broken system that keeps people languishing in jails instead of receiving mental health treatment—would be moved into a separate "Forensic Services Division" under the Department of Health. Services would still be provided in existing facilities by mental health department employees, but under the direction of this new division.

The consent decree has been a persistent source of frustration and expense for the state. Oklahoma has repeatedly failed to meet court-imposed deadlines, resulting in more than $3 million in fines while hundreds of people deteriorate in county jails each month waiting for mental health evaluations and treatment.

Second, all grants, administrative functions, and non-facility personnel groupings would shift to the Department of Health.

Third, that would leave the Department of Mental Health overseeing only state-run mental health and substance abuse facilities, including Oklahoma's Certified Community Behavioral Health Clinics (CCBHCs)—federally certified clinics that provide mental health and substance abuse treatment regardless of ability to pay. Most of Oklahoma's CCBHCs are already privatized, but the agency has floated ideas about finding private owners for the remaining publicly-run facilities.

To manage this transition, officials want the legislature to pass legislation allowing Department of Health Commissioner Keith Reed to serve dual roles, overseeing both his current agency and what remains of the mental health department. Under current state law, agency heads cannot oversee two departments simultaneously.

Bullard acknowledged they don't yet have a lawmaker committed to carrying such legislation.

'Back to Basics' or Deeper Crisis?

State health officials framed the restructuring as a necessary "back to basics" approach to stabilize a system in crisis.

"Now is the time to build on the momentum we've created and put the system on stable footing for the long term," Slavonic said in a press release.

But the proposal has caught some lawmakers off guard. According to reporting by NonDoc, the hastily called press conference appeared premature, with legislators saying they hadn't been fully briefed on the restructuring plans before officials went public.

Meanwhile, the financial pressures continue mounting. The Department of Mental Health has requested $461.5 million in state funding from the legislature for the next fiscal year—a roughly 14% increase that includes $22.5 million for technology upgrades officials say would enable more accurate accounting, $49 million for Medicaid matching funds, and $30.2 million to meet consent decree requirements.

The Oklahoma Health Care Authority, which Bullard also leads, faces its own cash flow crisis and has requested an additional $494 million in appropriations for next fiscal year.

Senate Appropriations Chairman Chuck Hall told Oklahoma Watch that the legislature plans to allocate $17 million in the upcoming fiscal year specifically to help the mental health department meet consent decree requirements and avoid additional court-imposed fines.

What Gets Lost in Restructuring

For the organizations and individuals who depend on Oklahoma's mental health system, the restructuring proposal raises questions about whether administrative reshuffling addresses the fundamental problems that have plagued the agency: inadequate funding, difficulty recruiting and retaining qualified leadership, and a service delivery model that has repeatedly failed to meet the needs of the state's most vulnerable populations.

Maria Chaverri, a spokesperson for the Department of Mental Health, said in a statement that the contract adjustments were "one part of a broader fiscal stabilization effort" and that "all 77 counties continue to have access to life-saving care."

But providers tell a different story. Blumert at Mental Health Association Oklahoma said her organization has had to significantly increase fundraising efforts to fill budget gaps for programs that saw reductions. As a nonprofit largely dependent on state and federal funding, GRAND Mental Health is continuing to seek additional funding sources through grants and private donors.

"We want to be mindful of the state's limitations, and so we want to be able to provide those services, but it would be irresponsible not to seek additional funding services," Brady said.

The question Oklahoma faces is whether consolidating agencies and redistributing responsibilities will resolve the underlying issues—or whether it simply rearranges organizational charts while the people waiting in county jails for mental health treatment, the families seeking services for children in crisis, and the adults trying to maintain stability with limited support continue falling through the cracks of a system that has yet to figure out how to meet their needs with the resources it has.

Jennifer Hogan, a spokesperson for the mental health agency, offered reassurance: "All of our consumers and our patients will still get what they need. It may be under a different moniker, it may be within a different department, but all of those services will remain."

For providers still recovering from last fall's funding cuts and facing ongoing uncertainty about future support, that promise rings somewhat hollow. When administrators at GRAND Mental Health lie awake worrying about whether state contracts will survive the next legislative session, when counselors at Family & Children's Services are asked to serve more people with less funding, when participants in Mental Health Association Oklahoma's support programs lose access to services that helped them stay housed and stable—administrative restructuring doesn't change those realities.

It just changes who's responsible for managing them.