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California State Auditor Report Number : 2015-508

Follow-Up—Federal Workforce Investment Grants
The Employment Development Department Established Procedures for Seeking Discretionary Grants, but Needs to Strengthen Them



The Workforce Investment Act of 1998 and the Workforce Innovation and Opportunity Act

The United States Congress (congress) enacted the federal Workforce Investment Act of 1998 (WIA) to, among other things, consolidate, coordinate, and improve employment, training, literacy, and vocational rehabilitation programs in the United States. Specifically, WIA reformed federal job training programs and created a new, comprehensive workforce investment system. The cornerstone of this system is one stop service delivery, which unifies numerous training, education, and employment programs in each community so that individuals can have seamless access to workforce investment services. WIA required each state’s governor to establish a state workforce investment board, to submit a state workforce investment plan, to designate local workforce investment areas (local areas) within the state, to oversee the creation of local workforce investment boards (local boards), and to certify one local board for each local area in the state. For the purposes of delivering workforce investment services, California has designated 48 local areas. Each local area is governed by a local board that sets policy for the workforce investment system within the local area.

Workforce Innovation and
Opportunity Act Core Programs

Youth, adult, and dislocated worker programs under Title I-B aim to:

Education and literacy services for adults under Title II aim to:

Wagner-Peyser employment services under Title III aim to:

Vocational rehabilitation services under Title IV aim to:

Sources: The Workforce Innovation and Opportunity Act (Public Law 113-128) and Title 29, United States Code, sections 49b and 701.

Congress passed the Workforce Innovation and Opportunity Act (WIOA) in 2014 to strengthen the U.S. workforce development system through innovation in, and alignment and improvement of, employment, training, and educational programs, and to promote individual and national economic growth. WIOA retains the framework of the workforce investment system established by WIA. However, WIOA replaces WIA and amends the Wagner Peyser Act and the Rehabilitation Act of 1973. Among other things, WIOA requires states to establish a plan for coordinating the activities related to core programs, described in the text box, and for improving access to training services. In general, WIOA’s provisions became effective on July 1, 2015. However, some provisions of WIOA become effective on other dates. For example, WIOA provisions requiring new unified state plans become effective on July 1, 2016.

Administration of WIOA Programs and Activities in California

The California Workforce Investment Board (state board)2 and the Employment Development Department (EDD) play key roles in implementing WIOA. The state board is an advisory body that is responsible for developing workforce related policies. For example, the state board is responsible for assisting the governor in creating a unified state plan, developing and continuously improving the statewide workforce investment system, developing allocation formulas for the distribution of certain funds to local areas, and developing and updating comprehensive state performance measures. Under state law that takes effect in January 2016, EDD has the authority to administer the requirements of WIOA, including establishing accounting, monitoring, auditing, and reporting criteria and procedures to ensure California’s compliance with WIOA’s objectives and requirements.

Workforce Investment Funding

The United States Department of Labor (Labor) administers several WIOA programs at the federal level and provides funding to states that implement workforce investment programs. The categories of workers Title I funding targets include youth, adult, and dislocated workers. The federal government generally uses a formula rather than a competitive process to allot these funds to the states (formula based funding). WIOA requires states that receive Title I formula based funding for adult and dislocated workers to use the funds to provide career and training services through the one stop service delivery system. These services include individual eligibility determination, initial skills assessments, job search and placement assistance, career counseling, and occupational skills and on the job training. Title I also provides formula based funding for workforce investment activities for eligible youth, such as assessing service needs and academic and skill levels.

Both WIA and WIOA allow each state’s governor to reserve up to 15 percent of the Title I formula based funding for statewide workforce investment activities for youth, adult, and dislocated workers. To award these reserved funds to local organizations, EDD’s Solicitation and Grants Unit (grants unit) coordinated with the state board regarding policy initiatives and developed and implemented a statewide process for soliciting proposals. For example, during fiscal year 2011–12, EDD awarded $5 million of these reserved funds to local organizations to administer the Veterans’ Employment Related Assistance Program. The grants unit also researched discretionary grant funding opportunities offered by Labor and other federal agencies for workforce investment programs. These discretionary grants are generally awarded on a competitive basis, and EDD’s grants unit prepared the applications for the grants EDD chose to pursue.

However, beginning in 2011, as part of the annual federal appropriations acts, Congress reduced the percentage of Title I funding that governors could reserve. For each year from 2011 through 2013, Congress reduced the percentage to 5 percent, which EDD used to cover its cost of administering workforce investment programs in California. For this reason, according to the chief of EDD’s Workforce Services Division (division), EDD phased out its grants unit beginning in early 2012 through a combination of staff attrition and the redirection of remaining staff to other positions in the department by the end of that year. The division then became responsible for seeking grant opportunities. In 2014 Congress increased the reserve level to almost 9 percent and, beginning July 1, 2015, further increased it to 10 percent. As a result, EDD is currently in the process of reestablishing a grants unit to administer the award of these funds and research grant opportunities. The division chief said EDD began establishing a new grants unit in early 2015 and finished hiring staff for the unit in August 2015.

Like EDD, the state board researches discretionary grant funding opportunities for workforce investment. As we discuss in more detail in the Audit Results, EDD and the state board are currently working to define their respective roles in the collaborative grant seeking process.

The amount of workforce investment formula based funding the federal government awarded to California ranged between $391 million and $411 million annually for fiscal years 2011–12 through 2014–15. The federal government also awarded between $80 million and $84 million annually for fiscal years 2011–12 through 2014–15 to California for Wagner Peyser Act services. EDD staff provide these services, which include job search assistance, job referrals, placement assistance for job seekers, reemployment services to unemployment insurance claimants, and recruitment services for employers with job openings, at one stop centers throughout California. In addition to formula based funding, EDD applied for and was awarded $8.7 million for two discretionary grants between April 2012 and April 2015.

Scope and Methodology

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, we reviewed the State’s administration of WIA funding. We made several recommendations to EDD, other state agencies, and the Legislature regarding a variety of issues related to the administration of WIA. This follow up audit focuses on one recommendation we made to EDD related to maximizing federal funding opportunities. In September 2012 EDD indicated that it had fully implemented this recommendation. Table 1 shows the recommendation we reviewed and the methods used to follow up on EDD’s implementation.

Table 1
Selected Recommendation in the California State Auditor’s Report 2011‑111 and the Methods Used to Follow Up on Its Implementation
To ensure that the State maximizes federal funding opportunities related to workforce investment, the Employment Development Department (EDD) should take the following steps:
  1. Update its written policy to include, at a minimum, the following procedures:
    1. The methods it will use to identify federal grant opportunities.
    2. The factors it will consider in its decisions to pursue or forgo applying for these grants.
    3. The process by which it will document its final decisions to either pursue or forgo grant opportunities.
  • Obtained and assessed EDD’s policies and procedures for identifying and pursuing federal funding opportunities and determined the methods EDD uses to identify federal grant opportunities, the factors it considers in its decisions to pursue or forgo grant opportunities, and the process by which EDD documents its final decisions to either pursue or forgo grant opportunities.
  • Determined whether EDD adhered to its policies and procedures for identifying and pursuing federal funding opportunities for 17 grants judgmentally selected from EDD’s electronic Grant Research Tracking Sheet (tracking sheet) with grant application deadlines between April 2012 and April 2015.
  • Determined whether EDD received funding for the 17 selected grants by reviewing grant award documents and grant awards listed on the United States Department of Labor’s website.
  • Identified the population of workforce investment grant opportunities with grant application deadlines between April 2012 through April 2015 and performed the following.
    • Determined whether EDD identified the opportunities on its tracking sheet.
    • Determined whether EDD applied for and received an award for grants it was eligible to pursue.
    • Interviewed EDD management to determine why EDD did not pursue grants for which it was eligible and did not apply.
  • Obtained an understanding of the California Workforce Investment Board’s roles, responsibilities, and processes related to seeking federal grant funding for the State’s workforce investment programs.

Sources: California State Auditor’s (state auditor) 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, the state auditor’s analysis of EDD’s six month response, and information and documentation identified in the table column titled Method.


2 Effective January 1, 2016, the California Workforce Investment Board will become the California Workforce Development Board. Go back to text

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