Budget committee chairs alerted Labrador to potential IDHW grant violations 

By Melissa Davlin, Idaho Reports 

The co-chairs of the Joint Finance-Appropriations Committee alerted Attorney General Raúl Labrador in February to concerns they had over the way the Idaho Department of Health and Welfare doled out grants, flagging potential violations to Idaho code. 

The information provided by Rep. Wendy Horman, R-Idaho Falls, and Sen. C. Scott Grow, R-Meridian, sparked an investigation into how IDHW awarded funds to the 80-plus recipients of the Community Partner Grant Program. On Thursday, IDHW asked a district court to halt the investigation into how the department awarded the grants.  

A 2021 debate resurfaces 

The controversy centers on the grant program, which a skeptical Idaho Legislature approved in 2021. The Community Partner Grant Program uses federal American Rescue Plan Act funds for after-school programming to address learning loss and behavioral health. One of the provisions of the approval was none of the funds would go to preschool programs, and would instead focus on children ages 5-13, with lawmakers writing the requirement into the appropriation itself.  

Horman told Idaho Reports on Thursday that she had heard concerns about grant recipients using funds for younger children before the beginning of the 2023 session. She brought up those concerns during a Jan. 17th budget hearing, at which IDHW director Dave Jeppesen presented the department’s budget request to lawmakers.  

“There has been robust discussion on funding preschool activities in the state,” Horman told Jeppesen at the hearing. “One of the ways that we successfully advocated for these funds to go to after-school programming with community partners, such as 4-H, was to assure the members that the funds would be restricted to use of those between the ages of 5 and 13.”  

Horman then asked Jeppesen if any of the funds had gone to programs that serve children younger than 5, “in direct opposition to the law.” 

Jeppesen said IDHW had put out a grant recipient guide that clearly stated the program parameters.  

“We have a checkbox on the application that says ‘I understand that these funds can only be used for 5 to 13-year-olds,’” Jeppesen said. “I actually personally went back and looked at every single application. I can tell you that every single application checked the box, every single application had verbiage that they understood that the money needed to be used for 5 to 13-year-olds, and every single application signed that they were going to do that.” 

Jeppesen then told the committee some of the grant recipients also serve children younger than 5, but those organizations understood the funds needed to serve their school-age children. 

Three weeks later, on Feb. 10, Jeppesen approached Horman and Grow to say the department had identified ten grant recipients that may have used funds to serve children ages 0-4.  

“He voluntarily came to us and shared with us that he had found some recipients that apparently were ineligible according to our state statute,” Grow said.  

Horman provided Idaho Reports with a list of “Community Grants with questions raised,” which she said came directly from IDHW. The list includes ten organizations that have received a total of $14 million in funds in the last two years, with an additional $1.8 million set to go out to the organizations in May 2023. 

“(Jeppesen) was very apologetic because he had provided a different answer in the hearing,” Horman told Idaho Reports. 

IDHW public information officer Niki Forbing-Orr confirmed the meeting happened. 

“We can confirm that a meeting happened on Feb. 10 where Director Jeppesen shared that some of the funding may have been used on children ages 0-4, but that each and every organization attested they also used the funding for children 5 and older,” Forbing-Orr wrote in an e-mail to Idaho Reports. “The department has always maintained that only eligible recipients received the grant money.” 

After the February 10 meeting, Horman and Grow went to Labrador’s office and presented him with the list. In March, Labrador sent civil investigative demands – a subpoena-like request for information and documents – to Jeppesen, two other IDHW employees, and all recipients of the grants, including those who weren’t on the list provided by Jeppesen. 

Petition to dismiss 

Jeppesen’s petition to dismiss the civil investigative demand, or CID, centers on three arguments: As attorney general, Labrador is investigating his own clients at IDHW, thus creating an adversarial relationship; Labrador has no statutory authority to investigate IDHW; and the AG’s office reaffirmed twice, in November and January, that the department was in compliance with federal legal guidelines and legislative intent.  

When Labrador announced the investigation, he informed Jeppesen and two DHW employees that they could not use the department’s deputy attorneys general that would normally represent state agencies in legal actions. Jeppesen hired Gjording Fouser to represent him.  

“(Labrador) has created an adversarial relationship against his own clients, which has generated and will generate entirely unnecessary costs that will ultimately be borne by the people of the State of Idaho, in violation of his statutory obligation to represent and advise (IDHW),” the petition states.  

According to the petition, lobbyist John Foster first raised the concern that the department had awarded grants to organizations that serve children younger than 5, in conflict with the statute. 

The department first asked the AG for guidance on the issue in November 2022, while former attorney general Lawrence Wasden was still in office. The department asked for guidance once again in January 2023, after Labrador had been sworn in. Both times, the AG’s office advised that according to both federal and state guidelines, grants could go to organizations that serve children younger than 5 as long as they also served children 5-13 years old.  

The petition, attached below, also takes issue with Labrador issuing CIDs. 

“It is difficult to understand why the Attorney General would choose to issue CIDs to his own clients,” the petition states. “Under ordinary circumstances, when a legitimate request is made, the Idaho Attorney General has a clear mechanism for obtaining documents from his clients: he simply asks.” 

In response to a request for comment from Idaho Reports, Labrador spokesperson Beth Cahill said Labrador wasn’t consulted before a deputy attorney general issued the second opinion in January. 

“The Wasden Attorney General’s office issued an opinion in November 2022. For some inexplicable reason, the same opinion was again issued on Jan 25th without any new analysis,” Cahill wrote in a message to Idaho Reports. “The only difference between the two opinions was that the January opinion excluded reference to one former DHW employee and was placed on letterhead with AG Labrador’s name at the top. Attorney General Labrador was never apprised of or consulted about this opinion and he wouldn’t have signed it.” 

Cahill’s full statement is below.  

JFAC takes action 

On Tuesday, the joint budget committee approved $28 million in childcare grants. Those funds come from the same pot of ARPA dollars as the Community Partner Grant Program.  

But the $28 million wasn’t the full amount of federal money available for those childcare grants. JFAC subtracted $14.4 million from that potential appropriation – the same amount of money that had already been doled out to the 10 organizations that may have used the money for children younger than 5. 

Grow said the committee felt it was appropriate to take the money away from the department’s appropriation, but not necessarily from the individual organizations that had already received the money. He added that he was ultimately satisfied with Jeppesen’s response. 

Forbing-Orr said the department plans to give the remaining $1.8 million in grant payments to the ten organizations in question. That payment is scheduled for May 1, 2023. 

“The department is committed to making payments as appropriations allow to all eligible recipients,” she wrote. 

But that doesn’t preclude the ongoing investigation from Labrador’s office.  

“The Idaho Attorney General is charged by statute with enforcing the Idaho Charitable Assets Protection Act and with representing both the Legislature (which asked for this investigation) and the Department of Health & Welfare,” Cahill wrote. “Appropriate conflict firewalls have been established.” 

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Full statement from Labrador spokesperson Beth Cahill  

“The Wasden Attorney General’s office issued an opinion in November 2022. For some inexplicable reason, the same opinion was again issued on Jan 25th without any new analysis,” Cahill wrote in a message to Idaho Reports. “The only difference between the two opinions was that the January opinion excluded reference to one former DHW employee and was placed on letterhead with AG Labrador’s name at the top. Attorney General Labrador was never apprised of or consulted about this opinion and he wouldn’t have signed it. 

“The Director’s Petition fails to tell the story of his own constantly shifting position on the grants. On January 17, 2023, the Director gave recorded testimony to JFAC in which he insisted that IDHW took every measure to comply with the law and ensure no grant funds went to serve children under 5. Then, on January 25, 2023, the Director obtained the second legal opinion stating that there was no problem issuing grant funds for children under 5. Shortly thereafter, the Director told members of JFAC that the money had been incorrectly distributed. The Director’s shifting accounts alone provide ample evidence support for AG Labrador’s belief that there may be an unlawful disbursement of charitable assets in violation of Idaho law. 
 
“The Idaho Attorney General has authority under the Charitable Assets Protection Act to investigate the State’s allocations of federal grant funds to charities. And so if the Attorney General has “reason to believe” a charity has used its “charitable assets” contrary to “[l]aw applicable to the charitable asset,” Idaho Code §§ 48-1906(1)(a), 48-1908, he can serve a CID on “any person”—not just alleged violators, but anyone “who is believed to have information, documentary material or physical evidence relevant to the alleged or suspected violation.”  Idaho Code § 48-611(1).  That includes the IDHW employees who were responsible for disbursing these unlawful grants. 
 
“The Idaho Attorney General is charged by statute with enforcing the Idaho Charitable Assets Protection Act and with representing both the Legislature (which asked for this investigation) and the Department of Health & Welfare.  Appropriate conflict firewalls have been established.”