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JLARC report finds widespread financial, staffing, and controls problems at Virginia Department of Health
Summary
A JLARC review found the Virginia Department of Health has persistent financial management failures, high contractor reliance, and prolonged hiring delays; JLARC recommended 31 changes and regular legislative oversight through 2026.
Drew Dickinson, the project leader and chief legislative analyst for the Joint Legislative Audit & Review Commission (JLARC), told commissioners that the review of the Virginia Department of Health (VDH) identified extensive operational weaknesses in financial management, staffing and internal controls.
"This report has 31 recommendations," Dickinson said, noting most are directed to the agency, with some items for other state agencies and the General Assembly. He said VDH managed about $1,300,000,000 in fiscal year 2024 across roughly 165 federal grants and that errors have included fraudulent activity, overspending, duplicate vendor payments, and late or inaccurate reporting.
JLARC documented that in FY24 VDH paid about 29% of approximately 30,000 vendor invoices late, a problem that disrupted other state agencies' cash flows. Dickinson said the U.S. Environmental Protection Agency put VDH on a reimbursement basis in 2022 — rather than providing funds in advance — citing concerns about the department's grant management.
The report highlighted heavy reliance on contract staff: as of June 2024 contractors made up roughly 63% of the Office of Financial Management and about 36% of VDH's workforce overall. JLARC said many contract staff and their supervisors reported inadequate training and supervision, and that long‑term use of contractors raises the risk of employee misclassification and civil penalties.
On hiring, JLARC found VDH's average time to fill vacancies was 101 days in FY24, 26 days longer than the state average. Dickinson said hiring delays resulted in at least 490 qualified candidates taking other jobs or withdrawing applications over the prior 12 months. To address that, JLARC recommended funding at least four full‑time classified recruiter positions and other process improvements to reduce confusion about responsibilities and job descriptions.
On internal controls and accountability, JLARC recommended codifying staff responsible for internal controls, asking the Department of Accounts to conduct an independent review with a follow‑up, and directing the Office of the State Inspector General (OSIG) to handle hotline investigations so VDH's internal auditors can focus on agency audits. The commission also recommended adding at least two IT auditing positions funded by the General Assembly to help VDH meet state IT audit requirements.
VDH leadership responded that the agency accepts the recommendations and has taken steps since the commissioner's May 2023 appointment, including creating a grants management office, adding a controller position, instituting monthly operating reviews, and using ARPA funds to modernize financial systems. The commissioner told JLARC that the changes will take multiple years to implement and recommended sustained legislative oversight.
JLARC recommended that the General Assembly require semiannual written and in‑person progress reports from the VDH commissioner to the Joint Subcommittee on Health and Human Resources Oversight through at least December 2026. The commission paused for questions and discussed timelines, contractor oversight, and the scope of program impacts; no final vote or statutory change was taken at this meeting.
