Report 2011-111 Summary - March 2012
Federal Workforce Investment Act:
More Effective State Planning and Oversight Is Necessary to Better Help California's Job Seekers Find Employment
Our audit of the Workforce Investment Act of 1998 (WIA) highlighted the following:
- The California Workforce Investment Board (state board) has not always complied with federal and state laws.
- Although required by state law since 2006, the state board failed to develop a strategic workforce plan for California.
- Only 38 percent of the state board membership represented the business sector as of February 2012, instead of a majority as WIA requires.
- It has not taken steps to identify unnecessary duplication among WIA programs and activities.
- The Employment Development Department (EDD) can improve its administration of WIA funding.
- Because EDD did not always demonstrate its compliance with WIA provisions when awarding a certain type of funding to local workforce investment boards and a community-based organization, it increased the State's risk of losing WIA funding.
- It is not maximizing the federal funding opportunities available for workforce investment—we noted six missed opportunities for federal grants that could have provided up to $10.5 million in additional funds for the workforce investment efforts in the State.
RESULTS IN BRIEF
The State of California's oversight of programs and activities funded by the federal Workforce Investment Act of 1998 (WIA) has multiple shortcomings that involve those entities charged with implementing WIA. In California the Office of the Governor (governor's office), the California Workforce Investment Board (state board), the Employment Development Department (EDD), and local workforce investment boards (local boards) are responsible for administering different facets of WIA. The U.S. Congress intended WIA as the framework for a unique national workforce preparation and employment system designed to meet both the needs of the nation's businesses and the needs of job seekers; however, the state board has failed to develop a strategic workforce plan for California, as required by state law since 2006. Further, the state board has not included in its membership the required majority of members who represent the State's business community. Federal and state laws also direct the state board to ensure the coordination of WIA programs and activities, but the state board has not taken steps to identify any unnecessary duplication.
Although state law does not set an explicit deadline for completing the strategic workforce plan, it does envision updates to the plan every five years. In explaining why the state board had not developed the plan, the acting executive director offered several reasons, among them that the previous administration did not require it.1 However, we did not find these reasons sufficient to absolve the state board of its responsibility under state law. Without a strategic workforce plan, the State cannot ensure that its workforce investment system provides life-long learning for all Californians, promotes self-sufficiency, links education and training to economic development, and prepares California to compete successfully in the global economy as the Legislature intended.
Furthermore, the state board has failed to maintain in its membership a majority of members who represent businesses throughout the State, a situation that violates the requirements of WIA and that may prevent the state board from making recommendations that adequately represent California's business community. As of February 2012 only 10 of the 26 members, or 38 percent, of the state board membership represented the business sector, instead of a majority of the members as WIA requires. According to one of its undersecretaries, the California Labor and Workforce Development Agency (Labor Agency), to which both the state board and EDD report, is aware of the need to appoint additional business members. The Labor Agency is working with the state board's staff and the governor's office to solicit and recruit new members to the board as soon as possible.
Our audit also revealed that the state board is not fulfilling its responsibility to identify unnecessary duplication among WIA programs and activities. Both WIA and state law require the state board to assist the governor in developing and continuously improving the statewide workforce investment system by developing links to assure coordination and nonduplication among workforce programs and activities. The cornerstone of the State's workforce investment system is one-stop service delivery, which unifies numerous training, education, and employment programs into a single system in each community so that individuals can have seamless access to workforce investment services. Although the state board has been developing relationships with other entities, it does little to ensure the nonduplication of services that program participants receive via the one-stop delivery system. According to the acting executive director, it is the state board's position that EDD is in the best position to evaluate the nonduplication of services to program participants because it works directly with local boards and service providers. Nevertheless, if the state board were exercising its legal authority to review the local boards' plans, it would be able to identify, and to reduce if necessary, any duplication of services to program participants. However, the state board did not begin reviewing the local boards' plans until program year 2011.2 Moreover, its review of the local plans did not include steps to identify unnecessary duplication of services.
To review the local boards' plans and the activities funded by WIA, the state board needs performance measures and data from workforce investment activities around California. EDD could not provide those entities involved in workforce investment programs and activities with sufficient data to develop performance measures specifically for California because the primary function of its Job Training Automation (JTA) system is to meet federal reporting requirements. In January 2011 EDD entered into a more than six-year agreement with a vendor to replace its JTA system with a Web-based system that supports the business requirements of the State's one-stop delivery system. EDD stated that the primary function of the new system is also to meet federal reporting requirements. Because the new system is an off-the-shelf system and significant changes would likely be quite costly, EDD believes the State will have limited capability for capturing additional data elements for state-specific reporting requirements.
However, the State's ability to capture additional data elements for state-specific performance measurements becomes increasingly important because of recent legislation. Legislation enacted in October 2011 provides the State with an opportunity to link education and training to economic development and to develop additional performance indicators that determine if its training programs are effective. In addition, other legislation enacted in October 2011 requires the governor to establish, through the state board, standards for certification of high-performance local boards by January 1, 2013. The law requires the state board, in consultation with representatives from the local boards, to initiate a stakeholder process to determine the appropriate metrics and standards for high-performance certification. The state board most likely will need state-specific data to develop and implement the metrics under this law. EDD stated it will begin using the Web-based system in July 2012 and, given the current project schedule for the new system, it will be able to analyze proposals for capturing new data elements in December 2012. Until EDD fully implements the new system and the State ensures that it has an effective process for approving and adding state-specific data elements to the system, the State continues to be very limited in its ability to develop and implement state-specific performance measures for WIA programs and activities.
In addition, because EDD did not always demonstrate its compliance with WIA provisions when awarding a certain type of funding to local boards and a community-based organization, it increased the State's risk of possibly losing WIA funding. Specifically, WIA requires EDD to award additional assistance funds to local areas that experience natural disasters, mass layoffs, plant closings, or other dislocation events when these events substantially increase the number of unemployed individuals. Our review of 17 projects identified seven for which EDD awarded a total of $16.7 million in additional assistance funds to local boards and a community-based organization even though these local entities did not refer to specific dislocation events in their applications. For example, EDD awarded $7.5 million in additional assistance funds to a community-based organization. In its applications, this organization stated it would provide services to migrant and seasonal farm workers but failed to identify specific dislocation events. The chief of the workforce services division stated that he believes EDD is in compliance with WIA's additional assistance requirements. The chief acknowledged that the local boards could have more fully detailed or articulated specific events in their applications, but he stated he was confident that the local boards applying for the additional assistance funds had a demonstrated need. Nevertheless, because the local boards and the community-based organization did not identify specific dislocation events that led to a substantial increase in the number of unemployed individuals in their areas, EDD is unable to demonstrate that its awards for the seven projects met WIA's requirements.
Finally, EDD is not maximizing the federal funding opportunities available for workforce investment, and thus it is not availing itself of additional funds the State can use to help job seekers obtain employment. Although EDD has a written policy applicable to grant applications, this policy is outdated and provides only high-level direction. The deputy director of EDD's workforce services branch stated that he directed staff to proactively identify and apply for all applicable grants relevant to workforce development from appropriate agencies, but we noted six missed opportunities for federal grants that could have provided up to $10.5 million in additional funds for the workforce investment efforts of the State. Because EDD does not have a grant review and approval process that documents its identification of grant opportunities and its decisions related to pursuing such opportunities, we were unable to substantiate EDD's stated reasons for foregoing grant opportunities.
To ensure that the state board promptly develops a strategic workforce plan, the Legislature should consider amending the pertinent statutes to establish a due date for the plan.
To assist the governor in the development, oversight, and continuous improvement of California's workforce investment system, the state board should collaborate with state and local entities involved in workforce investment programs or activities to develop and implement a strategic workforce plan, as state law requires. The strategic plan should include, at a minimum, the following attributes:
- State-specific performance measures for evaluating the efficiency and effectiveness of activities and programs funded by WIA.
- Procedures for approving the addition of data elements to EDD's Web-based system and for the exchange of data between EDD and the state board to facilitate the development and implementation of performance measures that are specific to California.
To ensure that the state board meets WIA requirements related to the composition of the board, the Labor Agency should continue working with the governor's office to identify and appoint to the board—as soon as possible—enough representatives from businesses in California to constitute a majority of the board's members.
To ensure the coordination and nonduplication of services to program participants, the state board should continue to exercise its legal authority to review the local boards' plans.
To assist the state board and other entities involved in workforce investment programs and activities in developing and implementing performance measures specific to California, EDD should ensure that it works with the state board to develop procedures for approving the addition of data elements to its Web-based system and for the exchange of data between EDD and the state board.
To comply with WIA requirements and eliminate the State's risk of losing funds, EDD should award additional assistance funds only to local boards or community-based organizations that clearly demonstrate that their local areas experience natural disasters, mass layoffs, plant closings, or other dislocation events when such events substantially increase the number of unemployed individuals.
To ensure it maximizes federal grant opportunities, EDD should update and implement its written policy related to pursuing such funding.
The Labor Agency, state board, and EDD agreed with our recommendations.
1 When we performed our audit fieldwork, the state board's chief operating officer was its acting executive director. In January 2012 the governor appointed a new executive director. For clarity in this report, we refer to the state board's chief operating officer as the acting executive director.
2 The U.S. Department of Labor's program year runs from July 1 through June 30.