Cash-Strapped Job Corps Faces Watchdog Scrutiny

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WASHINGTON, D.C. – Call it déjà vu all over again.

Job CorpsAfter years of troubling audits, Job Corps, the federal government’s largest vocational and academic training program for low-income youth, is back under scrutiny from Congress and its inspector-general’s office. This time, it’s being investigated for nearly $110 million in budget overruns and a Jan. 28 decision to rein in costs by freezing new enrollment.

The freeze turns away 1,000 young people every week from vocational and educational opportunities, but the weekly cost savings of the measure are difficult to quantify, admitted Jane Oates, the assistant secretary of the Employment and Training Administration (ETA), which oversees the program within the U.S. Department of Labor.

The $1.7 billion Job Corps program overspent its budget by $39 million in the 2011 fiscal year and by $69.5 million in FY 2012, but ETA leadership was not aware of the overspending until the summer of 2012, Oates testified last week in front of a Senate subcommittee on employment and workplace safety.

About 125 Job Corps centers around the country provide skills training to 60,000 people between the ages of 16 and 24 who are from disadvantaged backgrounds. Last month, a committee in the House of Representatives launched its own review of Job Corps’ budget shortfalls.

The Senate hearing marked just the beginning of its inquiry into spending and accountability practices at Job Corps, subcommittee chairman Sen. Bob Casey (D-Pa.) told Oates last week. “On one level, this is very basic budgeting that every single public agency has to do if you’re going to fulfill your obligation to those taxpayers, and if you fall short of that, you have some explaining to do,” Casey said sternly.

Saying she accepted ultimate responsibility, Oates blamed the overruns on poor financial forecasts by a senior staff member and the absence of a comptroller within her administration at the time. The office has since hired new staff, including a new budget officer and a comptroller, to improve its financial oversight, she said.

“I want to be clear at this point. There was no wrongdoing by contractors. It was inadequate staffing and monitoring on the part of the Job Corps program, and therefore, on the part of ETA,” Oates told the subcommittee.

Job Corps recently opened three new centers, Oates said, and their expenditures were not adequately factored into the program budget. “We did not appropriately plan for the increased costs in opening the centers,” Oates said. “We did not realize we didn’t have enough when the centers were fully operational.”

The program attempted to meet the shortfall by cutting leases, centralizing its vehicle fleet and eliminating $4 million in media advertising, Oates said. The program could have abbreviated the current year’s schedule to save money, but that would have left current participants weeks short of earning their professional credentials or GEDs, she said.

The program chose to honor its commitment to existing students, Oates said. Instead, on Jan. 28, Job Corps announced it would stop enrolling any new participants until it got its spending back on track and its vendor contracts renegotiated at lower terms, a process expected to last through June 30.

Dismayed reactions from young people flooded the Job Corps Facebook page at the time of the announcement, and continue to pop up regularly. “Oh this is fricking great. I am about to be homeless and this was my last option,” wrote a Facebook user called Akemi Mokoto, who identified himself as a Virginia resident, on Feb. 1. 

Several senators pointedly questioned Oates about her decision-making, asking whether alternatives to the enrollment freeze had been adequately considered. Asked by Sen. Johnny Isakson (R-Ga.) for the amount of the current budget shortfall at Job Corps, Oates demurred.

She had been advised by her procurement staff and her attorneys to refrain from releasing those numbers until contract negotiations with vendors were complete, Oates said. She could provide that data by April. 

Several senators expressed amazement at her position. “There ought to be a way to inform people in a confidential way about where things are,” Casey said. “That whole process is unacceptable when we’re talking about taxpayer money.”

Casey asked Elliott Lewis, the assistant inspector general for audit for the Labor Department, who also testified at the hearing, to expedite his ongoing investigation of Job Corps budget shortfalls. Congress needed answers quickly during budget season, Casey said. 

Several audits of the program were currently underway, Lewis testified, adding that his office had released 32 reports in the last five years alone, detailing some 175 recommendations for the program. 

Previous audits had documented numerous instances of program mismanagement, including misrepresentation of successful job matches for graduates. A 2011 audit found that more than 3,200 of the 17,700 reported job placements did not relate or related only minimally with the training received, such as graduates in office administration working fast food jobs, he said.

Several senators, including Casey, reacted with polite disbelief to Oates’ explanation for how better hiring would prevent such problems in the future. They had been hearing for years, Casey told her, that the problem has been diagnosed and solved.

“I’m sure you understand a high degree of skepticism,” he said.

If the suspension of new enrollment continues until June 30, as currently planned, up to 30,000 young people will have been turned away and 10,000 people would have lost their jobs, according to the National Job Corps Association (NJCA), which opposes the freeze. The NJCA is a trade association of public, private and nonprofit stakeholders in Job Corps.

Photo by US Department of Labor | Flickr