The Employment Development Department Updated Its Procedures Related to Obtaining Discretionary Federal Funding for Workforce Investment
The Employment Development Department (EDD) updated the grant identification and analysis procedures (grant seeking procedures) it uses to seek discretionary federal grant opportunities in response to a recommendation in our March 2012 report titled Federal Workforce Investment Act: More Effective State Planning and Oversight Is Necessary to Better Help California’s Job Seekers Find Employment, Report 2011 111. Specifically, our follow up audit confirmed that EDD created a system for identifying, reviewing, and choosing whether to apply for discretionary grant opportunities related to workforce investment. Between April 2012 and April 2015, EDD applied for two grants, and was awarded a combined total of $8.7 million for them. Although we found that EDD did not consistently follow its grant seeking procedures, it was able to provide us with additional documentation indicating that it had adequately considered the available grant opportunities.
Factors to consider when determining whether to pursue a grant opportunity:
- Does the purpose of the grant fall within the scope ofthe Employment Development Department’s (EDD) employment and training services?
- Does EDD have the expertise to write the grant application?
- Does EDD have the time and resources to apply for the grant?
- Does EDD have the resources to meet the requirements of the grant?
- Does EDD have the support of required partners to meet the requirements of the grant?
- Is it more advantageous for other state or local agencies or multiple organizations to apply for the grant?
Sources: EDD’s Workforce Services Division’s grant recommendation procedures.
In April 2012 EDD established updated procedures to look for and analyze grant opportunities. As shown in the Figure below, these procedures require EDD’s Workforce Services Division (division)3 staff to search for and track grant opportunities related to workforce training and employment activities and to document information related to these grant opportunities and EDD’s decisions as to whether to apply for them. Staff are to prepare an executive summary, which includes information about eligible applicants, the potential grant amount, required partners, and any other special requirements. The division’s senior management and the deputy director of the Workforce Services Branch (deputy director) use this information to analyze EDD’s ability to pursue the grant or determine whether another California entity would be better positioned to apply for the opportunity. Factors EDD considers in its decision regarding whether to apply for a grant include those listed in the text box. Once division senior management and the deputy director decide whether EDD should apply, staff are expected to memorialize and electronically file the documentation related to EDD’s decision. Following EDD’s decision, the California Workforce Investment Board (state board)4 and, in some cases, the Labor and Work Force Development Agency ratify it. The state board also searches for grant opportunities but does not have a formal process for these activities, as we discuss later in this report.
Employment Development Department’s Workforce Services Branch Procedures for Seeking Grant Funding
Sources: EDD’s Workforce Services Division’s grant recommendation procedures.
* The division is part of the Workforce Services Branch.
Through its process EDD identified 34 potential grants that had application deadlines between April 2012 and April 2015, as indicated on its Grant Research Tracking Sheet (tracking sheet). We reviewed 17 of these 34 grants during our follow up audit. For these 17 grants, EDD generally demonstrated that it evaluated its ability to pursue the 10 grants for which it was eligible to apply. As indicated in Table 2, EDD applied for two of these 10 grants. In 2014 EDD identified and applied for a Job Driven National Emergency Grant that funded a project to prepare participants for in demand jobs by providing work based training, such as apprenticeships, customized training, and on the job training. The $6.2 million grant award also funded supportive services in the 11 California counties that were the focus of the grant. In the same year, EDD identified and applied for a Disability Employment Initiative grant that will help expand the capacity of the one stop service delivery system. The $2.5 million award is designed to improve employment outcomes for disabled youth and adults by increasing the number of individuals who receive credentials or participate in existing programs.
For the remaining eight grants we reviewed for which EDD was eligible, its reasons for not pursuing the grants had merit. EDD declined to pursue grants for which it believed it was not well positioned. Through its process, EDD considers whether it is more advantageous for other state or local agencies or organizations to pursue workforce investment grant opportunities. For example, EDD chose to forgo pursuing an H1 B Ready to Work Partnerships (H1 B Ready) grant opportunity in 2014 because it believed local organizations were better suited to administer the program. Specifically, this grant was designed to provide individualized counseling, training, and other specialized services to long term unemployed workers that would lead to employment in certain occupations and industries. Applicants for this grant were required to design their programs to support industries and occupations in demand in their regions and for which employers use H 1B visas to hire foreign workers. H 1B visas allow employers to hire nonimmigrant foreign workers in specialty occupations that require highly specialized knowledge and the attainment of at least a bachelor’s degree or its equivalent. Applicants for the H1 B Ready grant were also required to have at least three employers or a regional industry association consisting of at least three employers actively engaged in the project. EDD noted on its executive summary for this grant that the program addresses the specific workforce needs of certain locations and of employers who hire foreign workers using H 1B visas. Thus, instead of pursuing this grant, EDD chose to issue an information notice on its website to alert local organizations to the opportunity. Two local organizations in California received a combined total of nearly $12 million through this grant.
EDD Does Not Consistently Document Its Analyses and Decisions Related to Discretionary Grant Funding Opportunities
Although EDD took action to update its procedures for identifying and evaluating discretionary federal grant opportunities related to workforce investment, it does not consistently follow them. As part of its updated grant‑seeking procedures, EDD included procedures to ensure that it retains documentation of the steps it takes in seeking grant opportunities. These procedures require staff to identify grant opportunities related to workforce investment; to document, on a tracking sheet and in executive summaries, the consideration of these opportunities and its decision to pursue or forgo the grant; and to electronically retain supporting documentation. However, EDD did not consistently prepare executive summaries, record its decisions, or retain supporting documentation.
EDD failed to prepare executive summaries documenting its consideration of three of the 10 grants we reviewed for which it was eligible. For one of the three grants—the Workforce Innovation Fund grant available in 2014—management and staff of the division were unable to locate an executive summary or any other analyses. Through inquiries with EDD’s Fiscal Programs Division, however, we obtained an email prepared by the deputy director that contained an analysis of the grant and a decision not to apply. His analysis concluded that EDD was not in a strong position to submit a competitive application because the application process was quite burdensome regarding supporting data, evaluation requirements, and evidence‑based support, and the application time frame was very short. For the YouthBuild grant offered in 2012, EDD did not prepare an executive summary because staff indicated on EDD’s tracking sheet that it was not eligible to apply. We determined that EDD was technically eligible to apply, given that eligible applicants include public agencies that carry out activities under WIA. However, this grant is intended to assist at‑risk youth in obtaining a high school diploma and acquiring occupational skills training through the construction or rehabilitation of housing in their community. According to a manager in the division, YouthBuild is inherently a local program whose strategy is to fund temporary jobs for specific youth in specific neighborhoods, and as such a state‑level program is unlikely to be able to implement this program effectively. Thus, a specialized or local entity would appear to be best suited for this grant. For the third grant—the Disability Employment Initiative grant—EDD indicated on its tracking sheet that it did not prepare an executive summary because it had already decided to apply for the grant. As discussed previously, EDD received an award for this grant.
For the other seven grants we reviewed, EDD prepared an executive summary; however, it did not include the factors it considered for three of these grants or a recommendation on whether to pursue the opportunity for three of the grants. Once staff identify a grant for which EDD is eligible to apply, EDD’s procedures require them to prepare an executive summary that documents the factors considered and a recommendation on whether to apply. However, as Table 2 shows, three of the seven executive summaries did not address the factors EDD considered in making its decision to pursue or forgo the grant, and three did not include a recommendation on whether to pursue the grant. According to the division chief, staff who prepare executive summaries and the tracking sheet do not have the knowledge and expertise to address all of the factors that have to be considered when determining whether or not to pursue a grant opportunity. He further said that EDD’s senior management often discusses these factors during meetings or in email communications that are not documented in EDD’s grants tracking system. According to EDD’s procedures, staff are also supposed to electronically file documentation related to the grants it decides to forgo in a documentation folder on EDD’s computer system. However, EDD had only three documents stored in this folder, related to two grants it evaluated during fiscal year 2011–12.
|GRANT NAME||FISCAL YEAR||EXECUTIVE SUMMARY PREPARED||EXECUTIVE SUMMARY INCLUDED FACTORS THE EMPLOYMENT DEVELOPMENT DEPARTMENT (EDD) CONSIDERED||EXECUTIVE SUMMARY INCLUDED A RECOMMENDATION|
|Serving Young Adult Ex-Offenders Through Training and Service-Learning||2011–12|||||||
|Workforce Data Quality Initiative||2011–12||||X|||
|Advanced Manufacturing Jobs and Innovation Accelerator Challenge||2012–13||||X||X|
|Pay for Success Pilot Projects||2012–13||||X||X|
|H1-B Ready to Work Partnerships||2013–14|||||||
|Job‑Driven National Emergency Grants*||2013–14||||||X|
|Workforce Innovation Fund Grants||2013–14||X||n||n|
|American Apprenticeship Initiative||2014–15|||||||
|Disability Employment Initiative Grants*||2014–15||X||n||n|
Sources: EDD’s Workforce Services Division’s grant documentation, and Grant Research Tracking Sheet.
= EDD followed its process.
X = EDD did not follow its process.
n = EDD did not prepare an executive summary. Therefore, we did not count these items as errors.
*Grants for which EDD applied and received a grant award.
Further, EDD’s tracking sheet did not identify three grants available between April 2012 and April 2015 related to workforce investment for which it was eligible. EDD’s procedures require that staff identify grant opportunities related to workforce training and employment activities and update EDD’s tracking sheet with certain information related to each grant, including EDD’s eligibility. Although these three grant opportunities are not on its tracking sheet, according to the division chief, EDD identified and considered each of them. However, because EDD did not follow its process and document its identification and evaluation of these grant opportunities, we were unable to substantiate the assertion that EDD considered them.
The division chief also said that the three grants either were not in line with EDD’s core mission and the services it provides or contained requirements that would have been difficult for EDD to meet, so that it would not have been a competitive applicant. Our review of these three grant opportunities found that the reasons EDD gave for not pursuing them appear to have merit. For example, EDD did not list on its tracking sheet the National Farmworker Jobs Program grant that was available in 2013. This program is intended to assist eligible migrant and seasonal farmworkers and their dependents to prepare for and retain jobs that provide stable, year round employment, both within and outside agriculture. The United States Department of Labor’s solicitation for this grant required applicants to demonstrate an understanding of the employment challenges facing migrant and seasonal farmworkers and their dependents, and a familiarity with the agricultural industry and labor market needs of the intended service area. Thus, this opportunity targets a specific industry and service area that would appear to fit best with a specialized or local entity. According to the division chief, EDD was not best suited to pursue this grant because EDD does not have the expertise and resources to administer this type of program at the local level. The division chief also said there are local organizations in California that are long standing recipients of funding under this program and are better suited to apply for and administer such a program in California. He further stated that it would not be in the best interests of the State to have EDD compete against these organizations for the limited funding provided through this grant solicitation. One local organization in California was awarded $1.8 million through this grant opportunity.
According to the division chief, the elimination of EDD’s grants unit in early 2012, as discussed in the Introduction, significantly contributed to EDD not consistently following its grant seeking procedures. Specifically, the division chief explained that the grants unit was dedicated to administering the award of statewide workforce investment grants to local entities and seeking additional grant opportunities. When the grants unit was eliminated, he said EDD assigned responsibility for carrying out EDD’s grant seeking and other job duties to one staff member. As a result, he said, staff did not always adequately document EDD’s identification and consideration of additional grant opportunities. Nevertheless, because EDD has not consistently followed its process for identifying and analyzing grant opportunities, it lacks a historical record that could help it efficiently pursue future grant opportunities. Further, when EDD does not follow its process, it risks missing grant opportunities or may be unable to demonstrate that it has considered every opportunity that would help the State maximize federal funding for workforce investment.
The State Board Lacks Formal Processes to Document Its Analyses and Decisions Related to Pursuing Discretionary Grant Funding for Workforce Investment
The state board lacks a formal process for identifying and evaluating grant opportunities and does not track or consistently document the results of its efforts. While EDD and the state board both search for and evaluate grant opportunities related to workforce investment, the state board generally lacks documentation of its efforts. Only after making inquiries of EDD were we able to obtain documentation supporting the state board’s decisions to forgo two grant opportunities for which it was eligible. Specifically, the state board provided documentation indicating that it considered applying for the grants but could not explain why it ultimately chose to forgo these opportunities. By failing to track and document its efforts, the state board will have difficulty demonstrating that it has evaluated the merits of pursuing grant funding related to workforce investment.
The state board does not have a formal process in place to identify, evaluate, and document its decisions related to grant opportunities. According to its chief of operations (operations chief), the state board has historically been responsible for making high level policy recommendations, and EDD has been responsible for program administration activities. He further said it was a natural expectation that EDD would be responsible for seeking federal grant opportunities, given that all federal funds the state board receives must flow through EDD. However, he acknowledged that since June 2013, the state board has taken a more proactive and collaborative role with EDD in identifying, analyzing, and applying for federal grant opportunities. For example, the state board’s assistant director for workforce innovation (assistant director) stated that several staff members research potential grant opportunities. Additionally, the assistant director and EDD’s Workforce Services Division chief told us that the state board and EDD are in the process of formalizing policies for collaborating on grant research activities, which they plan to finalize by the end of December 2015. This process will delineate the roles and responsibilities of both entities, including the steps each will take to pursue grant opportunities.
This planned action is in line with a Government Finance Officers Association (GFOA)5 best practice that recommends that governments develop a formal grants policy addressing the steps to take before applying for or accepting grants. According to GFOA’s Establishing an Effective Grants Policy best practice, an effective grants policy maximizes the benefits and minimizes the risks of grant funding by providing guidance to staff regarding how to perform associated processes and procedures. One recommended element of a grants policy is a requirement to assess the extent to which a grant is consistent with the government’s mission, strategic priorities, and/or adopted plans.
In addition to lacking a formal process, the state board lacked documentation explaining why it did not apply for two grants identified on EDD’s tracking sheet for which the state board was eligible. When we inquired with the state board regarding these grants, the assistant director said the state board does not have a method for documenting grants it has researched or the reasons it decided to forgo particular opportunities. In the first instance, we noted during our review of EDD’s tracking sheet that the state board was responsible for taking the lead on pursuing the Advanced Manufacturing Jobs and Innovation Accelerator Challenge grant. This grant provided funding for competitive, high potential regional partnerships that accelerate innovation and strengthen capacity in advanced manufacturing. The operations chief explained that the state board did not pursue this grant because at the time it was fully immersed in the completion of its strategic plan and the grant was for a relatively small amount for a large state such as California, but he could not provide documentation related to the state board’s decision not to apply. However, after gathering further documentation from EDD’s division, we found that the state board, along with EDD, had signed a letter pledging support for the East Bay Area Advanced Manufacturing Medical/Biosciences Pipeline for Economic Development. This regional partnership in fact received an award of $2.2 million for this grant.
In another case, the state board was eligible to apply for the Veteran’s Workforce Investment Program grant but could provide no documentation of its evaluation of the grant or its decision to forgo the opportunity. The operations chief provided some emails related to the state board’s and California Department of Veterans Affairs’ interest in the grant, but explained that the opportunity came up after EDD’s grants unit was eliminated, as we discuss in the Introduction. Specifically, the operations chief explained to other state board personnel in a May 2012 email that the state board would most likely have to draft the grant proposal itself, since EDD no longer had a grant solicitation unit. However, the operations chief could not provide additional documentation related to this effort. Only after gathering further documentation from EDD’s Fiscal Programs Division were we able to determine that the state board had decided against applying for the grant and instead to provide support to a local board that intended to apply for the grant. Nevertheless, the state board was unable to provide us with this information. Without a formal grant policy in place to track and document its efforts, the state board will have difficulty demonstrating that it has evaluated the merits of pursuing federal grant funding related to workforce investment.
To ensure that its grant seeking process is effective in considering grant opportunities related to workforce investment, EDD should update its grant identification and analysis procedures by December 31, 2015, to include the following:
- Identification of the appropriate level of management or staff to analyze and document the factors considered in pursuing or forgoing grant opportunities.
- Documentation of grant analyses, including factors considered in pursuing or forgoing grant opportunities.
- Documentation of decisions related to pursuing or forgoing grants.
- A method for ensuring that the process is consistently implemented.
- Training of appropriate management or staff about EDD’s grant seeking process.
To ensure that the State maximizes federal funding opportunities related to workforce investment, EDD and the state board should formalize their collaborative grant seeking procedures by December 31, 2015, to clearly define their respective roles and responsibilities in the grant seeking process.
To ensure that the state board assesses the merits of pursing federal funding for workforce investment programs in California, it should establish procedures by December 31, 2015, that include, at a minimum, the following:
- The methods it will use to identify federal grant opportunities.
- The factors it will consider in its decisions to pursue or forgo applying for these grants.
- The process by which it will document its analyses of grants and its final decisions to either pursue or forgo grant opportunities.
- A method for ensuring that the process is consistently implemented.
We conducted this audit under the authority vested in the California State Auditor by Section 8543 et seq. of the California Government Code and according to generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives specified in the Scope and Methodology section of the report. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.
ELAINE M. HOWLE, CPA
September 29, 2015
Jim Sandberg-Larsen, CPA, CPFO, Audit Principal
Angela Dickison, CPA, CIA
Joseph L. Porche, Staff Counsel
For questions regarding the contents of this report, please contact Margarita Fernández, Chief of Public Affairs, at 916.445.0255.
3 The division is part of the Workforce Services Branch. Go back to text
4 Effective January 1, 2016, the California Workforce Investment Board will become the California Workforce Development Board. Go back to text
5 The GFOA represents public finance officials throughout the United States and Canada. Its mission is to enhance the professional management of governmental financial resources by identifying, developing, and advancing financial strategies, policies, and practices. Go back to text