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Competitive Welfare-to-Work (WtW) grants have a "work-first" emphasis whose purpose is to provide welfare recipients with assistance for the transition to employment. ETA made awards based applicant proposals which responded to specific criteria established by ETA.
OIG Recommends Reconsideration of Stillman College WtW Grant
In January 1999 ETA awarded Stillman College (Tuscaloosa, Alabama) a $3.7 million competitive Welfare-to-Work (WtW) grant whose purposes were to place 850 hard-to-serve individuals in jobs over a 2-year period and provide the support necessary for lasting employment. In response to a complaint that Stillman did not adequately address noncompliance issues initially identified by ETA, we audited financial and program activities for the period January 4, 1999 through June 30, 2000.
We found inadequate financial accountability over the grant. Program expenditures reported to ETA could not be reconciled with expenditures recorded in the college’s general ledger, and financial reporting to ETA was inaccurate. We identified $194,936 of questionable charges to the WtW grant which included salary and fringe benefit overcharges, improper equipment purchases, and inappropriate reimbursements to a subcontractor.
We also found poor program performance. Program participants were being placed in unsubsidized employment at a rate considerably lower than that was proposed by Stillman in its grant application. This resulted in a doubling of the average cost per placement to about to $9,600 per placement. Additionally, we found no evidence to support 27 percent of the job placements Stillman reported to ETA. While the grant emphasized providing assistance to "hard-to-serve" welfare recipients, Stillman did not have a system for tracking grant funds used to assist this primary group of welfare recipients. Accordingly, it could not provide assurance that this group was being served in accordance with the stipulations of the grant.
ETA recently extended the grant to January 2, 2002, with a reduced job placement goal of 200 and a reduced budget of $2.9 million. This action will more than triple the average cost of each placement.
This reduction in performance expectations causes the OIG to question the viability of this grant program. Further, we are also concerned that the substantial reduction in performance expectations allowed by ETA calls the competitive grant process into question. Consequently, we recommend ETA reconsider the decision to extend the grant and ensure $194,936 in questioned expenditures are not charged to the WtW grant.
Stillman’s response to our draft report did not provide any additional information that altered our findings, conclusions or recommendations, but indicated a variety of improvements in the College’s accounting and reporting procedures have recently been put into place.
(Report No. 04-01-002-03-386, March 20, 2001)
