Oklahoma State University Returns $4.8M After Hospital Project Fails

Oklahoma State University (OSU) has agreed to return $4.8 million to the Oklahoma State Department of Mental Health and Substance Abuse Services following the cancellation of plans for a new mental health facility. The decision was made during a meeting of OSU’s Board of Regents on December 5, 2023, where it was determined that the funds would be refunded after the state agency faced significant financial challenges.

The mental health project, intended for the OSU Oklahoma City (OSU-OKC) campus, was designed to replace the aging Griffin Memorial Hospital in Norman. The state agency had initially committed to a budget of $147 million for the Donahue Behavioral Health Campus, which was to be constructed on OSU-OKC property. However, the agency’s plans fell through due to funding issues and leadership changes, prompting a pivot to the acquisition of a former hospital site in southwest Oklahoma City.

In December 2023, OSU and the state agency entered into a lease agreement for the project. The state agency had paid $10 million of the total $13 million owed to OSU under the terms of that lease. OSU utilized this funding to vacate existing facilities, relocate programs and staff, and prepare the site for construction. OSU President Jim Hess indicated that the university had spent about $5.2 million of the received funds and was not legally required to return the unspent balance.

Hess stated, “We felt that it was in the interests of the state to return the amount of money that had not been spent. There was about $4.8 million still remaining to be spent, but when the project wasn’t going to come to fruition, we just wanted to be good partners and citizens and stewards of the public’s money.”

As the legislative session progressed in early 2025, it became increasingly clear that funding for the Donahue facility would not materialize. Compounding this issue, Allie Friesen, the commissioner of the mental health agency, was dismissed in the critical final hours of the session, a move that drew criticism from Governor Kevin Stitt, who had appointed her. Subsequently, Greg Slavonic, a retired U.S. Navy Rear Admiral, was appointed as the interim director of the agency.

Under Slavonic’s leadership, the agency shifted its strategy, purchasing the former SSM Health hospital at the intersection of SW 59th Street and Pennsylvania Avenue for $18.5 million. An additional $41.5 million is allocated for renovations and upgrades to transform the facility into a mental health center. The total expenditure of $60 million will be financed through funds from the American Rescue Plan Act, which were originally designated for the Donahue facility.

The agency’s communications office has not yet responded to inquiries regarding the reimbursement from OSU. Hess noted that the $10 million paid to OSU was sourced from private donations raised by the agency, which OSU was not initially aware of. He suggested that the $4.8 million being returned is intended for the foundations that contributed to the initial funding.

This development highlights the complexities involved in public health funding and the challenges faced by state agencies in securing necessary resources for vital projects. As Oklahoma navigates these fiscal hurdles, the focus remains on ensuring that mental health services continue to be accessible and effective for those in need.