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 a planned mental health hospital. The decision came during a meeting of the OSU/A&M Board of Regents on December 5, 2023, where regents authorized the payment in light of the project’s failure to secure adequate funding.

The project intended to establish the Donahue Behavioral Health Campus on the OSU-Oklahoma City campus, located near the intersection of Interstate 40 and Interstate 44. However, plans fell through, prompting the state agency to pivot towards purchasing a former hospital in southwest Oklahoma City instead. The new facility aims to replace the aging Griffin Memorial Hospital in Norman, which has been operational for over a century.

Initial preparations for the Donahue facility had included a budget of $147 million, with early work commencing on the OSU-OKC site. A lease agreement was established between OSU and the state agency, which included a payment of $10 million from the state for the rights to use the land. OSU utilized these funds to vacate existing facilities and relocate programs and staff to accommodate the new development.

OSU President Jim Hess explained that the university had spent approximately $5.2 million of the initial payment, leaving roughly $4.8 million unspent. “We were under no obligation to return the remainder of the money,” Hess stated. “But we felt that it was in the interests of the state to return the amount that had not been spent. We wanted to be good partners and stewards of the public’s money.”

The funding challenges became more pronounced as the 2025 session of the Oklahoma Legislature progressed. As time ran out, it became evident that the necessary funding for the Donahue facility would not be secured. Issues within the mental health agency’s leadership further complicated matters, culminating in the dismissal of its commissioner, Allie Friesen, in a controversial move that sparked criticism from Governor Kevin Stitt, who had appointed Friesen. Subsequently, the agency appointed Greg Slavonic, a retired U.S. Navy Rear Admiral, as interim director.

Under Slavonic’s leadership, the agency acquired the former SSM Health hospital, located at SW 59th Street and Pennsylvania Avenue, for $18.5 million. An additional $41.5 million is planned for renovations, with funding sourced from the American Rescue Plan Act that was initially allocated for the Donahue facility.

The OSU regents’ decision to return the unspent funds comes with the understanding that the Oklahoma Department of Mental Health and Substance Abuse Services intends to redirect this money to some of the private foundations that contributed to the project’s initial funding. “One of the things that happened along the way, just to be totally transparent, is when ODMH paid us the $10 million, they went out and raised money from private sources to pay that,” Hess noted.

While OSU’s return of the funds reflects a commitment to public service, it also highlights the broader challenges facing mental health initiatives in Oklahoma, where funding shortages and administrative issues continue to impede progress.