RICHMOND, Va. -- Officials with the Virginia Department of Health (VDH) said that the Office of Emergency Medical Services (OEMS) is facing a $33 million budget shortfall due to, among other things, "possible fraudulent activity," and is seeking permission from state lawmakers for a funding mechanism to get things in order.
VDH Commissioner Dr. Karen Shelton revealed the dollar amount, which VDH had previously said was a multi-million dollar deficit, and potential fraud when addressing a House Appropriations subcommittee on Friday.
CBS 6's Melissa Hipolit broke the story of the budget shortfall and has been following its developments for months.
Shelton explained to lawmakers that OEMS is funded solely by vehicle registration fees paid to the Department of Motor Vehicles (DMV) and it is clearly spelled out how and where OEMS is to use that money.
"30% into operating, 10% into administration, 26% is actually returned to localities, [2%] of it then goes to the Virginia Volunteer Rescue Squad, 32% goes to the Rescue Squad Assistance Fund. And this is the fund whereby emergency medical services agencies can apply for grants for new equipment such as ambulances or other monitoring devices," said Shelton.
She said another portion they get from the DMV, $12.5 million, is mandated transferred back to the general fund at the end of the fiscal year.
Shelton said in June of 2023, OEMS did not have the money for the transfer to the general fund, and that prompted the audit which discovered various issues.
"Over the course of the audit, it was found that the Office of EMS had a $33.3-million over commitment as was a combination of funds that were owed from previous years, as well as funds that were over budgeted for Fiscal Year 24," said Shelton. "There was a history of moving funds between the buckets, which was not prescribed by code, that was covering shortfalls. There were services that were being provided that did not have appropriate funding and there was an overspending of contracts."
Shelton added there was little to no oversight of OEMS' budgeting process by VDH.
"When you have a failure of this magnitude there are probably several different things at play, but I can't comment into all of the specifics at this time," Shelton told CBS 6 afterward.
Shelton said VDH covered the $12.5 million but is now trying to meet the $33 million in obligations incurred by OEMS.
Making up that amount are payments owed to localities and EMS councils, previously awarded Rescue Squad Assistance Grants (the grant program has been frozen for spring 2024), replacing Trauma Funds "utilized for other activities", FY23 and prior unpaid operating obligations, and FY24 administrative contractual obligations.
The shortfall led to an annual training symposium to be canceled and local EMS councils reported their funding had been frozen.
Of the possible fraudulent activity, Shelton said along with an internal investigation, there are investigations being done by Virginia State Police, the Office of the State Inspector General, and the U.S. Attorney's Office for the Eastern District of Virginia.
Funding Solution
Shelton said Gov. Glenn Youngkin approved $8 million upsent in the last fiscal year to go towards the shortfall and has put a provision in his proposed two-year budget to allow VDH to keep the $12.5 million each year for the general fund for the rest.
When asked by CBS 6 why lawmakers should approve the funding and why the public should trust the money will be properly managed, Shelton said she understood there are concerns.
"There was a structure in place that did not have appropriate oversight. And so, we have corrected that at this time. So, we now have better oversight in place, as well as additional stop gaps to make sure that this will not happen," said Shelton. "We have restructured the department and we have also put into place additional oversight within the financial systems to help make sure that the compliance, everything's being checked into, and everything is going through the proper channels."
One lawmaker who has such concerns, who is not on the subcommittee that heard the presentation, is Del. Irene Shin (D - Fairfax). She wrote to VDH in October 2023, citing CBS 6's reports and asking for answers about the shortfall.
She sent the following statement to CBS 6 regarding VDH's update on the situation.
"The recent report on the ongoing OEMS financial scandal doesn’t provide the clarity I demanded when these financial irregularities were first reported last year. Now Virginia taxpayers are backfilling OEMS funding to make up for the shortfall when we still don’t have an accurate accounting of where the millions of dollars went. We’re talking about essential medical services. Virginians demand answers," said Shin.
OEMS Reforms
Since the discovery, Shelton said there are weekly meetings between leadership in OEMS (which has a new Acting Director after the previous one resigned in the midst of the investigation) and VDH.
She said they have also implemented "cost containment strategies" including eliminating non-essential travel, selling vehicles deemed non-essential to travel, and renegotiating contracts.
"As far as commitment to the rededication for the Office of EMS, we do have a workgroup of EMS leaders throughout the Commonwealth that are advising on EMS strategy," Shelton said. "As well, we have brought in a national recognized consultant to help us engage on the current structure and function, both of the Office of EMS and to see how we can make sure that EMS agencies across the state are supported properly in the future for their needs."
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