In September, the Idaho Division of Vocational Rehabilitation received federal approval to institute a waitlist for new applicants through an order of selection. (Luis Alvarez/Getty Images)
An Idaho government agency that helps people with disabilities with employment is continuing to face scrutiny — from auditors and state lawmakers — over its budget shortfall.
At the end of the 2024 Idaho legislative session, state lawmakers didn’t give the Idaho Division of Vocational Rehabilitation extra funds it requested at the end of the 2024 session — soon after it discovered a multi-million dollar budget shortfall.
Months later, the federal government offered the Idaho agency an extra $10 million and announced financial oversight measures, the Idaho Capital Sun previously reported.
Amid budget shortfall, Division of Vocational Rehabilitation offered $10M in fed emergency funds
But to fully access the extra federal funds, Idaho agency officials said they’d need another $2.7 million in state matching funds. That’s what the agency is asking the Idaho Legislature for this year — in a supplemental budget request for the current state fiscal year, which ends in June.
On Monday, the agency’s temporary new leader and a state auditor briefed state lawmakers on the Idaho Legislature’s powerful budget-setting committee, called the Joint Finance-Appropriations Committee, or JFAC, about the agency’s need for the extra funds, and state and federal oversight work.
“While the division has had well-documented shortcomings, the mission transcends temporary challenges. The people we serve and the employers they, in turn, will support need (the agency) to exist and thrive,” Idaho Division of Vocational Rehabilitation Services Interim Administrator Judy Taylor told the budget committee. “While not dismissing the past, I ask you to consider the future and support (the agency’s) budget request.”
After the budget committee meeting ended Monday morning, JFAC co-chair Wendy Horman, R-Idaho Falls, told the Idaho Capital Sun in a text message that she wasn’t sure “how to proceed with this budget yet.”
“There are so many parts. There were questions that the agency were unable to answer,” Horman added, such as why the agency needed a $2.7 million supplemental budget appropriation instead of $2.1 million, which she said would be the 10% match required for Idaho to fully access the $10 million in extra federal funds the agency received last year.
As the meeting closed, Horman said the committee may need another oversight hearing to set the budget.
Almost 2,000 qualified Idahoans with disabilities on agency’s waitlist, interim administrator says
In September, the Idaho Division of Vocational Rehabilitation received federal approval to institute a waitlist for new applicants through an order of selection.
Taylor, the agency’s interim leader, told lawmakers Monday that 1,950 qualified disabled Idahoans were on the waitlist — and the agency was already serving 2,735 clients. But she said the waitlist is underrepresented.
“The people that did bother to apply probably really need our help, but I know that waitlist is underrepresented. We will always have need; it will always probably increase as our population increases,” Taylor said in response to a question.
Next year, Taylor said she believes the new agency leader will have new budget requests.
“It doesn’t seem like it’s possibly the right timing, but our community providers haven’t had raises in quite a while,” Taylor told JFAC.
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State audit confirms Idaho agency overcommitted resources
Near the end of the 2024 legislative session, the agency requested a supplemental budget that lawmakers didn’t pass.
In May 2024, the federal government notified Idaho it placed the state’s vocational rehabilitation grant on “high risk” status due to “significant concerns” about the Idaho agency’s ability “to ensure appropriate financial accountability,” the Sun previously reported.
In September, when the Sun reported that the budget shortfall could jeopardize Idaho’ access to the grant that funds work in other state agencies, State Board of Education Executive Director Joshua Whitworth told the Sun the Idaho Division of Vocational Rehabilitation had overcommitted resources for three years. The state board is the parent agency of the Idaho Division of Vocational Rehabilitation.
An audit by the Idaho Legislative Services Office, released last month, confirmed the agency had overcommitted services, finding that the division didn’t “establish appropriate procedures and control activities to ensure compliance with appropriation laws applicable to fiscal year 2024.”
“The Division had been able to function within its appropriations each year because the services billed and paid each fiscal year were less than the total committed amount,” the state audit found. “However, with poor monitoring and an increasing cost of service per client, the portion of committed expenditures in the (Individualized Plans for Employment) that were used and thus payable finally exceeded the amount appropriated in fiscal year 2024.”
Agency leader references high failure rate, and threat of contractor taking control of agency
The Idaho Division of Vocational Rehabilitation hired a contractor to help with its budget issues, and it extended that contract through December 2025 for a total cost of nearly $2.5 million across both contracts, according to figures Idaho auditor April Renfro, with the Legislative Services Office, delivered to JFAC. Renfro also expressed concern about the agency hiring a contractor through a noncompetitive method.
Taylor, the agency’s interim leader, said the agency sought the contract through a non-competitive exemption because it needed someone who understood how to reprogram the agency’s case management system.
“The consultant that we engaged is one of the few people in the nation that know how to do that,” Taylor said.
That was achieved on Sept. 30, she said.
But because the agency “took the reallotment funds, part of what we had to do was go under even further scrutiny,” Taylor told JFAC.
Then the agency submitted more records for a reimbursement request, and received more feedback, she said.
“We put that first draw in, in early September. And in October, we had that bombshell of that 75% breakage rate. Our policies weren’t correct, our invoices weren’t correct, our documentation wasn’t up to snuff. Even our contracts … were not aligned with federal law,” Taylor told JFAC.
The agency’s federal funder, she said, “had no idea of the extent of our problem, until they started looking at all the documentation that we had sent them to support the charges. … There (were) major threats hanging over our head related to needing to get in a third-party fiduciary agent that would take over control of the agency.”
“The state of Idaho would have given up our autonomy and our rights to control one of our agencies,” she added. “This has never happened to a state.”
Responding to a question by Sen. Kevin Cook, R-Idaho Falls, about the 75% failure rate, Taylor replied that it was for one of the agency’s programs.
The agency is required to do a forensic audit going back to 2019, Taylor said.
“Do we anticipate that every year back to five years that we’re going to have a 75% failure rate?” Cook asked in a follow-up question.
Yes, Taylor replied.
“We have no reason to believe that we did things differently in the past than they’ve already looked at. So I would say yes,” Taylor said in JFAC.
Federal report concludes Idaho agency had flawed financial management system
Renfro and state lawmakers appeared to reference findings from a November 2024 federal Fiscal Monitoring Report related to the Idaho vocational rehabilitation agency. The State Board of Education provided that document to the Sun later Monday in response to a public records request.
The federal report concluded the Idaho Division of Vocational Rehabilitation “failed to implement a financial management system that meets Federal requirements …”
The federal Rehabilitation Services Administration “identified significant concerns due to the lack of procedures and internal controls related to the assignment and reporting of obligations and expenditures to the proper Federal award and non-Federal funding sources,” the report concluded.
The federal agency “found that (the Idaho Division of Vocational Rehabilitation) is not satisfying Federal requirements to account for expending funds within the appropriate period of performance for Federal grant awards,” and “expenditures are not being assigned appropriately or monitored for compliance,” the report concluded.
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IDVR Monitoring Report-2024-11-20 PRR (1)