Idaho committee strikes Health & Welfare admin budget to force corrections to audit findings

Members of the Idaho Legislature’s Joint Finance-Appropriations Committee took a symbolic hostage on Friday as part of the budget committee’s showdown with the Idaho Department of Health and Welfare over uncorrected issues that were flagged in an audit of the department.

When JFAC sets the fiscal year 2025 maintenance of current operations budgets on Monday, the committee will not include any funding for Idaho Health and Welfare’s indirect support services, Keith Bybee, budget and policy manager for the Idaho Legislative Services office, said. That would effectively zero out funding for the Idaho Department of Health administrative central hub, including the director’s office, IT support, human resources, legal services, fiscal services and more, Bybee said. 

“One of the approaches that are included in this package is to not fund a key and critical division in the Health and Welfare Department and that is indirect support services, with the idea here being that it is a negotiation piece for the agency to at least formalize some sort of response to outstanding audit and uncorrected findings back to this committee,” Bybee said during Friday’s meeting. “They have the entirety of the session, effectively, to come back and come back with an effective corrective plan.”

The total indirect support services budget, at the maintenance of operations level, is $46.8 million, Bybee told the Sun.

“It’s sort of the central hub of the Department of Health and Welfare, so it would be hard for the department to function without that budget going forward, but that is the message in there,” Bybee said during Friday’s JFAC meeting. 

Although the funding would not be included in the budgets JFAC sets Monday, the committee will consider approving the funding later in the legislative session if the Idaho Department of Health and Welfare corrects the findings from the audit, which JFAC ordered during the 2023 legislative session, before the legislative session adjourns for the year, JFAC co-chairs Sen. Scott Grow, R-Eagle, and Rep. Wendy Horman, R-Idaho Falls, told the Idaho Capital Sun.

Grow said JFAC co-chairs specifically picked the indirect support services budget as the budget to zero out because it does not include funding for any services Idahoans receive from the department.

The Department of Health and Welfare’s fiscal year 2025 budgets for public health services and Medicaid will be the last two budgets JFAC members will set this year, with the budget hearings scheduled for March 6 and March 7, respectively. 

“Shutting down administrative functions most definitely will impact the department’s ability to provide services to DHW patients and beneficiaries, who are among Idaho’s most vulnerable populations, including the elderly, disabled, and disadvantaged families,” Idaho Department of Health and Welfare spokesperson AJ McWhorter said in a written statement Friday afternoon. “However, JFAC sets the rules for budgeting, and as an executive branch agency, DHW will work within the rules.”

JFAC pushes Idaho Department of Health and Welfare to correct audit findings

At issue is an audit into the Idaho Department of Health and Welfare’s distribution of grant funds that the Idaho Legislative Services Office conducted and released in August. The audit found a lack of controls in the program that led to grant recipients using “the funds for ineligible purposes and for ineligible groups,” the Sun previously reported. 

At the time the audit was released, former Idaho Department of Health and Welfare Director Dave Jeppesen released a statement disagreeing with all findings in the audit. Jeppesen retired in December.

On Thursday, Idaho Legislative Services audit division manager April Renfro told JFAC that the Idaho Department of Health and Welfare has not submitted a corrective action plan for eight findings from the audit.

Also on Thursday, Dean Cameron, the Idaho Department of Health and Welfare’s interim director who stepped in when Jeppesen retired, wrote a letter to JFAC members promising to revamp how the department handles grants and to provide mandatory grant administration training, the Sun previously reported. 

Removing funding for the Idaho Department of Health and Welfare’s administrative central hub is a tactic JFAC is using to make sure Cameron follows through on his promise. 

Without a corrective plan to address the findings, “it calls into question our ability to appropriate funds for the agency,” Horman told reporters after Friday’s meeting.

Horman and Grow told the Sun the idea to remove the funding came together Thursday, after they received Cameron’s letter. 

Cameron himself is a former state senator who previously co-chaired JFAC.

A year of changes for Idaho’s Joint Finance-Appropriations Committee

Friday’s budget showdown was the latest development in what has already been a year of changes for JFAC. Grow and Horman have announced a series of significant changes they are enacting to budget setting procedures this year, including shortening the public portions of meetings to about half of their traditional three-hour length. 

Grow and Horman said the changes are designed to begin the budget setting process earlier in the legislative session and empower JFAC members to apply more scrutiny to budgets and new spending requests. 

Horman said removing the Idaho Department of Health and Welfare indirect support services funding will not affect current operations in the fiscal year 2024 budget or jeopardize services Idahoans are receiving from the Idaho Department of Health and Welfare.

The fiscal year 2025 budget takes effect July 1, on the first day of the state’s new fiscal year.