MEMORANDUM FOR:         RAYMOND J. UHALDE
                                                 Acting Assistant Secretary for
                                                     Employment and Training
 

FROM:                                     JOHN J. GETEK
                                                  Assistant Inspector General
                                                     for Audit

SUBJECT:                             ETA's Administration of JTPA Title III Demonstration Grant
                                                  No. 5502-5-00-87-60 Awarded to Central Texas Council of Governments
                                                  Management Letter Report 06-98-004-03-340

We conducted a limited scope performance audit of the Job Training Partnership Act (JTPA), Title III, Career Management Account (CMA) Demonstration Grant No. 5502-5-00-87-60 between the U.S. Department of Labor (DOL), Employment and Training Administration (ETA), and the Central Texas Council of Government (CTCOG), Service Delivery Area (SDA). Our objectives were to determine how the CMAs operated under this grant and to determine if there was a significant difference between the training strategies and outcomes for the CMA and control group participants. The audit findings are included in Final Audit Report Number 06-98-003-03-340 issued to your office on February 6, 1998.

This management letter is being issued to you to inform you of a deficiency we discovered relating to ETA's oversight in administering this demonstration grant.

It appears that ETA awarded this grant to the CTCOG without fully understanding the SDA's grant proposal. The number of CMA participants served under the grant was considerably less than ETA originally expected, yet program outcome goals were not revised and the budget was not reduced when ETA became aware of the reduced number of CMA participants to be served.
 

According to a CTCOG official, the original grant proposal was written to serve 300 participants at a cost of $1 million. CTCOG's intent was to provide CMAs to 200 participants while the other 100 participants (control group) were to be regular Title III participants not funded under this grant. However, ETA was apparently under the impression that 300 participants would be provided with grant-funded CMAs under the original proposal.

At ETA's request, prior to receiving the grant, CTCOG submitted a revised plan to serve 201 participants and reduced the grant budget from $1 million to $803,513. Yet, the reduction to serve only 201 participants is not reflected anywhere in the official grant document. However, grant file correspondence does indicate that the grantee would serve 201 participants. It is our understanding that at this time ETA expected the grantee to fund 201 CMA participants with the $803,513 budget.

However, the revised number of participants (201) the grantee intended to serve was apparently misunderstood by ETA. In October 1996, more than a year after the grant was awarded, at ETA's request, CTCOG submitted a second modification -- with no request for budget reduction -- to clarify that CMAs were to be provided to only 134 participants. Again, the official grant document was never modified. The grant still calls for 300 participants to be served, 270 participants (90 percent) to successfully complete services, and 240 (80 percent) to be placed in jobs. Therefore, revised expected outcomes under this grant -- based on 134 CMA participants -- were not defined.

While ETA awarded the $803,513 grant assuming that 201 participants would receive CMAs, ETA did not reduce the grant budget to a lower figure even when they discovered a year into the grant that 33 percent fewer CMA participants (134) would actually be served.

To ensure that grant funds are used as efficiently as possible to accomplish grant goals, ETA needs to fully understand what is to be delivered before the grant is awarded. Any changes to grant deliverables should clearly be described in the official grant document. Furthermore, reductions in the grant's deliverables should be accompanied by reductions in the grant's budget.

No response to this management letter is required.