State auditors flag control failures at Vocational Rehabilitation; agency seeks $2.7 million state match for $10 million federal reallocation

Legislative auditors told the Joint Finance‑Appropriations Committee on Feb. 24 that Idaho’s Division of Vocational Rehabilitation (IDVR) failed to maintain sufficient internal controls and accurate federal reporting for fiscal year 2024, prompting the Rehabilitation Services Administration (RSA) to designate the division a high‑risk grantee and impose specific federal conditions.

Brooke Dupree, a budget and policy analyst with the Legislative Services Office, presented spending trends and described a September 2024 ‘‘non‑cognizable’’ adjustment in which the governor recognized a reallocation of roughly $10 million in federal Rehabilitation Services Administration funds to Idaho. Dupree emphasized that the federal reallocation requires state matching dollars; she and audit staff said the federal share is roughly 78.7% and the state share about 21.3% of funds expended under the grant.

What auditors found: April Renfro of the LSO audits division summarized a fiscal monitoring review RSA requested after IDVR notified the federal grantor that it could not secure supplemental state appropriations in time. The audit’s key conclusions included: - The division lacked adequate procedures and control activities to ensure compliance with annual appropriation laws for FY 2024. - The division’s financial management system and processes did not reliably account for obligations and expenditures, creating inaccuracies in federal financial reporting. - A corrective action plan submitted to the federal grantor was insufficiently detailed; RSA designated IDVR as a high‑risk grantee under 2 CFR 200.208 and demanded further corrective steps.

RSA then asked for a fiscal monitoring review and placed specific conditions on IDVR’s federal awards. Auditors said the division’s case management system did not communicate…