By Nate Rau
The effectiveness of the state's $52 million job training program has been called into question after auditors found regional job training centers across the state were inflating their numbers to hit strict performance measures and keep their federal funding.
Since the recession began in 2008, the state's 13 local workforce training centers have been faced with a major challenge: Federal performance measures continue to rise, but high unemployment has led many dispirited workers to give up on job searches and leave their training programs voluntarily.
State auditors say the training centers -- which provide training and other assistance to out-of-work adults, displaced workers and youths looking for jobs -- responded to this challenge by padding their statistics.
According to an audit by the state comptroller released last month, the training centers failed to remove people who didn't find jobs in a timely manner or continue their training. By doing so, the training centers, which are operated by either nonprofit groups or local government agencies, kept their statistics up and avoided the prospect of losing their federal funding.
As a result of the audit, the state announced last week that it had halted payments for two contracts awarded to an Indiana company that has continued collecting approximately $1.1 million in fees, despite being cited in two successive state audits for contracting irregularities under state job training programs conducted at the centers.
According to the audit, the state Department of Labor and Workforce Development's unemployment benefits program sent out more than $73 million in overpayments and payments due to fraud in recent years. The state lacked the necessary measures to recoup much of those wrongful payments, and a backlog of unemployment claims led to a crash in the department's customer service for out-of-work Tennesseans. The problems combined to threaten the integrity of the state's unemployment program, auditors say.
Rep. Diane Black, R-Gallatin, said she was troubled by the news that the state's worker training program was not being run as efficiently as possible.
"The state's audit ... underscores a serious problem we are seeing across the country with inefficient and poorly administered federal job training programs that are failing to use taxpayer dollars effectively and failing to adequately help unemployed Americans obtain the skills they need to get back to work," Black said.
Trainees should have been removed
The regional job training centers are measured by the percentage of participants they help find jobs, the percentage of workers who keep their jobs, and their trainees' average annual salary after they go back to work.
Failing to meet the performance measures, which are negotiated with the U.S. Department of Labor, can eventually lead to a loss of funding. For instance, regional training centers across the state are required to find jobs for 76 percent of their trainees within 90 days after completing their training. If a person in the program goes 90 days without receiving any training or finding a job, he or she is supposed to be removed from the system, which can hurt a training center's performance.
But according to the audit, the training centers were deliberately not removing some trainees from their system for fear of bringing their stats down. The audit found that 29 percent of the randomly selected participants were not removed from the system. Some participants lingered in the program for as long as five years.
"Based on our inquiries, LWIAs (local workforce investment areas) kept participants who did not successfully complete the program in the (database) for years to show that these participants were still active in the program and thereby to avoid reporting those participants as unsuccessful exits from the program," the audit stated.
"The program director at one LWIA told us that this has been the practice of LWIAs due to strict and unachievable performance measures."
The audit did not specify which of the 13 training centers was engaged in the practice of manipulating its performance numbers. Brian Clark, executive director for the Nashville Career Advancement Center, which is the regional training program for Davidson, Rutherford, Wilson and Trousdale counties, said the training centers face a tough predicament.
The Nashville Career Advancement Center has regularly been achieving its own performance measures for job placement, retention and average annual salary, but Clark acknowledged the poor job climate has made its work more difficult. Clark said the challenge is to keep an out-of-work person engaged in the training program at a time when jobs are scarce.
The training program primarily focuses on low-earning, low-skilled workers. For instance, the 13 regional programs must help those they successfully place in jobs maintain cumulative average annual earnings of $13,700. Last year, 28,088 people used the state's workforce development program.
"I would agree the performance measures are mighty high," Clark said. "We have workshops (that deal) with job loss. That's supposed to be one of the most traumatic events of your life. You're laid off and you can't do the things a father or mother thinks they should be able to do -- pay the rent, feed the kids, do all these things. So they really get down in the dumps, so part of what we have to do is lift them up.
"We have to bring them out of it emotionally and then try to get them engaged. Some engage very quickly, and some fall back off."
Marla Rye, executive director at WorkForce Essentials Inc., which provides workforce training for nine counties including Sumner, Williamson and Dickson, said she believed the audit's findings were minor. She pointed out that the audit did not call into question the number of people who found jobs through its program. She said that program directors face difficult decisions when deciding whether to remove someone from the system.
"There's a lot of different reasons that people stay in the program longer than you might think," Rye said. "We only fund training that is two years in length, so we may have someone enrolled in the program for two years.
"So, say they went to Vol State Community College and while our goal is to get that person right into the workforce, that person may elect to transfer to (Middle Tennessee State University) to complete a four-year degree. That would be a negative result for us, unless we held that person and put that individual in a holding pattern."
Failure to keep accurate statistics
The audit also found that the regional training centers were not properly documenting whether participants had completed the training process. According to the audit, 30 percent of the randomly selected files did not contain proper documentation.
The audit said that failing to keep accurate statistics "increases the risk of improper funding."
John Fontaine of Murfreesboro expressed frustration with the level of support he received at the career center in Rutherford County. Fontaine was laid off at the Nissan motor manufacturing plant in Smyrna, where he worked for 21 years.
Under a state law passed in 2012, laid-off workers are required to visit their local career center or make other efforts to find work or face losing their unemployment check. Fontaine said he received poor customer service and would wait for up to 90 minutes to simply be handed a job application.
"It needs to be redone and basically have something that if it's your first time, come talk to a person on what you need to do," he said.
The state labor department said interim Commissioner Burns Phillips would take the appropriate steps to ensure that the local training centers report accurate and up-to-date information. The department did not outline for The Tennessean what steps would be immediately taken to bring improvements.
"I hate to see taxpayer dollars wasted, especially when the money should be helping folks find jobs. I hope the department and the legislature will work to correct these mistakes quickly," said Rep. Jim Cooper, D-Nashville.