Idaho health agency ‘working diligently’ to bring reform after audit on grants

After previously disagreeing with a critical state audit that found flaws in how $72 million in grant funds were distributed, Idaho’s largest agency is now promising reforms.

The Idaho Department of Health and Welfare — under a new leader who is a longtime former Idaho lawmaker himself — will revamp how the agency handles grants in response to the 2023 audit of a child care grant program.

The state health department previously disagreed with all of the audit’s findings. The grants are under a separate investigation by a special prosecutor, appointed by Idaho Attorney General Raúl Labrador, who recently accused a former Idaho state employee who managed the grants of a crime, without offering more information.

Interim Idaho Department of Health and Welfare Director Dean Cameron detailed the agency’s plans in an email to a state auditor on Tuesday, obtained by the Idaho Capital Sun and shared with lawmakers.

Cameron just took over at the Idaho Department of Health and Welfare after its previous director Dave Jeppesen retired in December. Cameron also heads the Idaho Department of Insurance, which he has directed since 2015.

Most of the more than 400 grants the Idaho Department of Health and Welfare handles are doled out without problems, Cameron told the Idaho Capital Sun in an interview after a meeting Thursday of the legislature’s budget-setting committee. That didn’t happen in the grant flagged by the auditors, he said. But Cameron told the Sun the department is “working diligently to make sure that we act appropriately and respond appropriately.”

Idaho lawmakers who lead the Legislature’s powerful budget committee, the Joint Finance-Appropriations Committee — which ordered the audit last year, and which Cameron chaired for 15 years — are hoping to emphasize audits more in setting Idaho’s budget. They say that’s meant to make sure tax dollars are spent legally. Leaders of the committee say agencies that don’t respond properly to critical audits could see their funding cut.

Though Cameron didn’t speak before the committee Thursday, as it delved into agencies with unfixed audit findings, he got a warm welcome from members.

“As many of you know, he’s a longtime co-chair of this committee, so we’re grateful to have his expertise, specifically in audits in that agency now,” budget committee co-chair Rep. Wendy Horman, an Idaho Falls Republican, said of Cameron.

Horman said she looked forward to receiving a corrective action plan, timeline and evidence of the changes being implemented “so that we can continue to appropriate funds to Health and Welfare.”

“We want to bring the agencies into compliance, and I know you do too, with the governmental accounting standards. They are exacting, and we need to do that so taxpayers know their funds are being complied with the law and accounting standards,” Horman said.

How Health and Welfare will revamp policy

“As public servants, we all share a common goal: to serve honestly and in the public’s interest,” Cameron wrote to the auditor.

The state health department is working to develop training on grant administration that would be required for all employees who manage grants, Cameron wrote. That training will detail internal controls, the grant process, and record retention requirements, he said.

“The Department takes very seriously the role of the legislature and the role of the Joint Finance Appropriations Committee (JFAC) and remains committed to following all intent language, legislative guidance, and statute to both the letter and the spirit of the law,” Cameron wrote.

The agency will “review and update” its policy on employee conflict of interest to specify that employees with “close personal affiliations” to grant applications “must abstain from participating in the review and award process for those applications.” The agency will also develop “an annual employee conflict-of-interest disclosure and recertification process,” Cameron wrote.

“The Department recognizes that maintaining close communication and collaboration with the JFAC co-chairs and Legislative Budget Office is essential,” Cameron wrote. “We are committed to bringing forth issues for joint understanding, such as when there is a potential conflict between state and federal guidance.”

The audit, released last August, found a lack of internal controls in the Idaho Department of Health and Welfare led to the grants going toward ineligible uses. Auditors found the state health department didn’t keep proper records, overpaid individual organizations and exceeded the first-year fund cap, did not deliver payments on time, and did not ensure that funds follow age requirements or ensure budget plans did not include ineligible expenses.

Legislative auditors’ findings were serious enough to refer to the Idaho Attorney General’s Office for investigation of possible misuse of public funds, the audit found. Legislative Services Office’s audits are “very rarely” referred to the Idaho Attorney General’s Office, April Renfro, who led the audit, told lawmakers in November.

The audit found the Idaho Department of Health and Welfare was not in compliance with state law in its distribution of the child care grants. But the audit doesn’t state clearly that state law was broken, Renfro previously told the Sun, instead flagging that issue for law enforcement to investigate.

Cameron said on an initial examination, he didn’t see “anything criminal” in the way the grants were handled, but he cautioned that he’s only a week into his new job.

“Everything that I can see doesn’t appear that there’s any wrongdoing, maybe some anxiousness and efforts on part of the department that that maybe didn’t follow, as closely as it could. But nonetheless, we’ll fix that,” Cameron told the Sun.

“It’s my job to help the department fix those issues,” Cameron said.

Audits to influence Idaho budget setting

Legislators could tie audit findings to agency budgets, budget leaders say.

If audit findings are not fixed, Sen. C. Scott Grow, budget committee co-chair and an accountant, told the committee on Tuesday, “we’re hesitant to send more money in their direction.”

Horman, last November, told the committee that the Idaho Department of Health and Welfare’s previous response to the audit — not to pursue a corrective action plan, under Jeppesen — “calls into question our ability to authorize funds for the agency.”

Audits could also inform how legislators draft “intent language” in budget bills, directing how funds are to be spent. Lawmakers tacked on intent language in the budget bill for the Division of Occupational Licenses last year, for example, requiring the agency to present a plan to the Legislature for how the agency would reduce surplus funds that auditors found were higher than state law allowed for.

And “intent language” is law, Horman said.

“Compliance with it is not optional,” Horman told the committee.

Sen. Kevin Cook, an Idaho Falls Republican, asked for clarity on the role of audits.

“The audit has been performed. I don’t believe they’re the judge and jury to make sure that they’re following that. They’re there to inform us as JFAC or as legislators. What is the process forward? … Where do we make sure that this is complied with,” Cook asked in the hearing Thursday.

Auditors provide the information, replied Renfro, who manages the Legislature’s audit division. “But it is your decision as to what to do with that information,” Renfro said.

Horman stepped in.

“I think you used the term judge and jury,” Horman told Cook. “That is us. It is our duty to respond when we find a report from our auditors.”

Hearing was ‘good governance,’ Cameron says

The eight findings in the Idaho Department of Health and Welfare audit on the grants last August represent 14% of all the unfixed audit findings by all agencies in recent years, Renfro told the committee. The health department handles the most federal funds of Idaho state agencies, Renfro said.

The effort to boost the role of audits started before the audit on the Idaho Department of Health and Welfare, Horman told the Sun last week.

“But if we never needed an exhibit A for why it matters, it’s that,” Horman said.

Audits are not political weapons, Grow, an Eagle Republican told the committee. Auditors work independently to know that “everything is done according to the law,” he said.

“They don’t bend to anyone,” Grow said.

Audit findings must be fixed, he said, or the state could risk affecting it’s triple-A credit rating,

Agencies usually take five years to correct all findings from an audit, a new report on unfixed audit findings showed.

The committee hearing Thursday focused on audits, was “good governance,” Cameron told the Sun afterwards.

“Certainly there are politics at play, but what occurred upstairs just now,” he said, referring to JFAC, “and the audit approach and findings and the department’s response, that’s not political. That’s just honestly good governance.”

The budget committee is “the most important committee in the building,” he said. And he thinks Gov. Brad Little tapped him for the job because of his experience leading it years ago.

“And the seriousness of the situation,” he said.