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Oklahoma AG calls for resignation of cabinet secretary after audit shows agency mismanaged millions

Shelley Zumwalt, Oklahoma Secretary of Tourism, at a Medal of Honor ceremony at the Oklahoma State Capitol in April 2024.
Legislative Service Bureau
Shelley Zumwalt, Oklahoma Secretary of Tourism, at a Medal of Honor ceremony at the Oklahoma State Capitol in April 2024.

State Auditor Cindy Byrd says Oklahoma is becoming a “no-bid state,” thanks to mismanagement at the Oklahoma Office of Management and Enterprise Services that started during the COVID-19 pandemic.

The audit finds at least $30 million and up to $100 million of questionable costs passing through OMES.

Byrd finds the agency created a new set of rules for vendor contracts that bypass the competitive bidding process. Other issues include exorbitant management fees for the distribution of rental assistance and a cushy contract for the husband of an agency leader.

As a result, Attorney General Gentner Drummond is calling for the resignation of Secretary of Tourism Shelley Zumwalt. She is the former OMES director. Zumwalt denies the allegations and has told reporters she won’t be resigning.

‘Becoming a no-bid state’

In 2019, OMES introduced “Statewide Contracts” for vendors. Under one of these contracts, a company would no longer be required to participate in a competitive bidding process. Competitive bidding is meant to ensure contract work is the most cost-effective use of taxpayer dollars.

“Oklahoma is rapidly becoming a no-bid state,” reads a release from Byrd’s office. “This is a grave disservice to every Oklahoman.”

The audit report says there were no written protocols to ensure these “Statewide Contracts” were legal. Byrd’s office recommends OMES develop policies and procedures for these contracts and present them to the state legislature, which could decide whether to eliminate them or affirm their legality.

Conflicts of interest

During her time in leadership positions at OMES, Zumwalt hired software company “Phase 2” for millions of dollars of work. But Zumwalt never disclosed to the state that her husband was the vice-president of Phase 2, despite being required to fill out annual conflict of interest forms.

After Zumwalt became its Chief Innovation Officer, OMES paid her husband’s company around $7 million in taxpayer money for software services.

Zumwalt became the Executive Director of the Oklahoma Employment Security Commission in May 2020. During her time there, the OESC paid Phase 2 $8.5 million across five contracts.

Zumwalt only revealed her conflicts of interest at Phase 2 when she became director of the Oklahoma Tourism and Recreation Department in 2022. She also serves as Gov. Kevin Stitt’s Secretary of Tourism, Wildlife and Heritage.

After the release of the audit report, Attorney General Gentner Drummond called for Zumwalt’s resignation, calling her actions “wholly inappropriate and potentially unlawful.”

“This level of self-dealing represents an unforgivable breach of trust that disqualifies Ms. Zumwalt from overseeing the expenditure of our tax dollars,” Drummond said in a statement.

Pandemic relief pandemonium

Federal pandemic relief money brought even more questionable costs through OMES.

The Office contracted with the non-profit Communities Foundation of Oklahoma (CFO) to distribute $241 million in federal rental assistance. The audit found CFO mismanaged around $25 million, which included inflated administrative fees, undistributed grants, ineligible grants, unallowable bonuses, and inappropriate expenditures. The latter includes more than $33,000 in costs including “visits to entertainment venues, cooking class, succulent planting class, painting, and restaurants.”

OMES also spent more than $718,000 on questionable contracts with former employee Jill Geiger. A year after Geiger left the OMES Budget Department in 2019, her consulting company was awarded a no-bid contract to oversee the distribution of the agency’s federal pandemic relief grants, including the Emergency Rent Assistance distributed through CFO.

According to the audit, Geiger’s company did not have the experience or credentials to oversee federal grant funds, which Byrd said requires a “high level of expertise.” The audit couldn’t always determine whether Geiger’s company had completed the work it was paid for.

The foundation also used state funds to pay Geiger’s company an additional $41,000 without a contract.

Graycen Wheeler is a reporter covering water issues at KOSU.
Robby Korth joined StateImpact Oklahoma in October 2019, focusing on education reporting.