Vocational Rehabilitation director warns of capped federal grant and rising caseloads; department explores $8 million IT upgrade

At a Senate Appropriations Human Resources Division hearing, Jim Fleming, interim director of the Vocational Rehabilitation (VR) program at the North Dakota Department of Health and Human Services, told lawmakers the program faces growing demand while operating under a federally capped grant that has seen no recent cost‑of‑living adjustment.

Fleming said VR’s federal award is roughly 78.7% federal and 21.3% state; unlike the child support program, VR’s grant is capped so the state cannot draw additional federal funds simply by increasing program spending. Fleming said flat federal funding, combined with rising provider and labor costs, presents a sustainability risk over coming biennia.

Caseload and services: Fleming told the committee that VR received about 2,400 new applications in the last year, completed roughly 1,760 employment plans and secured 249 supported or customized jobs. He said 30% of new applications come from teenagers and young adults, and that North Dakota has around 49,000 people of working age with a disability; about 23,000 of those are not currently working. Fleming said North Dakota ranks highly on performance metrics but noted the program’s caseload rose roughly 39% between 2021 and 2024, putting strain on staff.

Fleming outlined core services: pre‑employment transition services for students (ages 14–21) delivered in 71 participating schools, supported and customized employment, older‑individuals‑who‑are‑blind (OIB) services, and partnerships with job service, independent living centers and other local providers. He described the OIB grant as historically underfunded and said the department seeks to use Social Security reimbursement revenue and VR funds to sustain vision services.

IT and operations: Fleming said VR’s current case management software, AWARE (supplied by Alliance), is “clumsy” for workers and sometimes forces duplicate entries. The department is exploring whether to enhance AWARE or replace it with a new case system; Fleming said a Colorado cost estimate informed a proposed figure near $8,000,000 for a replacement and that the department has not yet issued an RFP. Fleming said a possible state share of about $1.7 million (Community Health Trust Fund) might be requested to leverage federal funds over the life of a phased project and that the department is exploring strategies to satisfy federal maintenance‑of‑effort rules while financing a multi‑year project.

Fleming detailed internal reforms to manage demand: centralizing and specializing staff roles, telework and “double‑bunking” office space to reduce lease costs, and a business‑outreach wing to expand employer hiring of people with disabilities. He said VR is searching for efficiencies and additional Social Security reimbursement revenue to offset costs.

Lawmakers pressed for data on caseload growth, demographic drivers and the mix of new applications; Fleming said the department will return with more breakdowns by age, region and source of referral. Committee members also asked whether a modernized IT system would reduce staffing needs; Fleming said improved technology could increase worker efficiency but that a final answer depends on the system chosen and whether caseload growth slows.

(Quotes in this article come directly from Jim Fleming’s and Sarah Stoltz’s testimony to the subcommittee.)