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Idaho agency reports 20% funding shortfall after 'internal control issues'

The dome of the Idaho Statehouse at sunset with an American flag and Idaho flag.
James Dawson
Boise State Public Radio

Idaho’s Division of Vocational Rehabilitation said Wednesday morning it needs an emergency infusion of $2.7 million after the discovery of apparent “internal control issues” leading to a significant budget shortfall.

The projected deficit of $4.7 million for the current fiscal year would account for nearly 20% of the agency’s annual budget.

The division’s director, Jane Donnellan, told the Joint Finance and Appropriations Committee her office has had three fiscal officers since 2022 and that she reviewed the division’s financial reports each month.

“How did you not know [about the shortfall?],” asked Rep. Britt Raybould (R-Rexburg).

“I was not provided the information, nor did I believe there was an issue based on the information that was being told to me,” Donnellan said.

“I relied on my fiscal team,” she added, noting she just learned about the shortfall on Friday, March 29.

But Donnellan also said in response to a separate question later in the hearing that she noticed an “increase” in spending in the agency’s December report.

“There’s a number of factors we’re looking into,” she said of how the projected shortfall occurred.

Donnellan didn’t respond to emailed questions asking to explain the timeline discrepancy, nor whether there’s an ongoing or potential criminal investigation.

Instead, she sent a statement saying, “The Division of Vocational Rehabilitation is committed to working with the Governor’s Office and Idaho Legislature to resolve the fiscal concerns with a goal of minimal disruption to the populations we serve.”

A financial audit published by the Legislative Services Office’s Audit Division on Jan. 4, 2024, found no problems with the agency’s financial controls. It reviewed records from 2019 to 2023.

“We did not identify deficiencies to report,” the audit concluded.

Donnellan wrote a response to the audit dated Dec. 21, 2023, agreeing with the findings.

“The Idaho Division of Vocational Rehabilitation (IDVR) values the services of the Legislative Audits Division to ensure that IDVR has adequate internal controls, is in compliance with rules and regulations, and is operating efficiently,” she wrote.

The division serves more than 8,000 Idahoans with physical and mental conditions annually to help them get – and keep – a job.

That could include paying someone’s tuition, offering job counseling or covering the cost of tools for a specific trade.

Donnellan requested – and JFAC ultimately voted to fund – $2.7 million in emergency cash to cover outstanding invoices.

She said the remaining $2 million gap will be covered by potentially pushing off some bills until the next fiscal year beginning July 1, and withholding services.

Rep. Wendy Horman (R-Idaho Falls), one of JFAC’s co-chairs, stopped the House from taking action on the additional appropriation Wednesday, saying new information had come to light.

That afternoon, Donnellan emailed legislative staffers offering more information about the failed payment that she said signaled the potential shortfall.

She said all invoices have been paid and that the agency has $2.1 million available in its budget.

JFAC ordered another audit of the agency immediately.

Gov. Brad Little’s chief of staff, Zach Hauge, also ordered an independent audit in response to the budget shortfall, saying the office is “very concerned” about the situation.

Copyright 2024 Boise State Public Radio

I cover politics and a bit of everything else for Boise State Public Radio. Outside of public meetings, you can find me fly fishing, making cool things out of leather or watching the Seattle Mariners' latest rebuilding season.

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