The Joint Legislative Audit and Review Commission (JLARC) received a report from its staff on November 7 outlining serious problems with the Virginia Department of Health’s financial management, staffing, and workplace culture. JLARC members had directed this review in fall 2023, directing staff to review the operations and management of the Virginia Department of Health (VDH), to include evaluating the adequacy of its staffing structure and assessing its financial management. JLARC staff proposed 31 recommendations to address the extensive issues identified in the study, which included problems with financial oversight (the laxity of which enabled a recent, widely-reported deficit in the Office of Emergency Medical Services, which was partially attributed to embezzlement by an employee); inadequate management of federal grants; late payments to vendors, state agencies, and VDH staff; an overreliance on contractors; staffing shortages that limit the agency’s ability to fulfill its mission; and a negative workplace culture. JLARC staff noted that VDH leadership has taken steps to address the agency’s shortcomings, but encouraged the legislature to continue to monitor progress toward implementing JLARC’s recommendations.
Key findings and recommendations in the report include the following:
Financial management: VDH’s financial management has exhibited “substantial shortcomings,” requiring additional infusions of state funds on several occasions. VDH frequently pays invoices late. Although federal grants made up nearly half of VDH’s budget in FY 2024, the Department’s management of grants has been so haphazard that the Environmental Protection Agency now requires VDH to receive grant funds on a reimbursement basis, an unusual arrangement that creates cash flow challenges within the agency. JLARC recommended tapping resources in the Department of Human Resource Management and the Department of Accounts to assist VDH with filling key financial management positions. JLARC also recommended improving the training of existing staff, including directing the Department of General Services to assist with training on procurement and contract administration. The report also recommends that the Department of Accounts complete a quality assurance review of VDH’s key financial processes and internal controls.
Staffing: VDH has experienced substantial turnover in recent years among central office staff, and turnover rates in some health districts exceeded 20 percent in FY 2024. Staffing shortages have hampered VDH’s ability to meet key responsibilities, such as inspections of nursing homes and inpatient hospitals. VDH uses contractors to a greater degree than other state agencies or public health agencies in other states, which limits the development of institutional knowledge within the agency. The report includes a series of recommendations to improve the hiring process, to include development of more accurate job descriptions. JLARC recommends that VDH review its use of contractors and develop an internal policy to specify the circumstances under which contractors should be retained.
Agency management and accountability: VDH employees do not believe that the agency is well managed. Holding employees accountable for underperformance has proved challenging. JLARC recommended improving training for supervisors on the state’s performance management process, ensuring that all employees receive timely performance evaluations, and ensuring that supervisors have appropriate numbers of direct reports. To ensure that agency leaders are informed about agency operations and performance (including the performance of local health districts), JLARC recommended establishing an agency management dashboard, and routing certain allegations of fraud, waste, and abuse to the state Office of Inspector General so that VDH’s Office of Internal Audit will have capacity to conduct audits of local districts. JLARC also recommended codifying the role of the Chief Operating Officer and amending the statute setting out qualifications of the State Health Commissioner to require that person to have organizational leadership and administration experience.
JLARC’s final recommendation in the report is to ensure that the legislature continues to oversee agency progress by requiring semi-annual reports to the Joint Subcommittee on Health and Human Resources Oversight through at least December 2026.
VACo Contact: Katie Boyle