Advisory Report CARES Act: Key Areas of Concern Regarding Implementation of Dislocated Worker Grant Provisions
Summary
Advisory report no. 19-20-005-03-391 from the U.S. Department of Labor Office of Inspector General to the Employment and Training Administration (ETA), issued June 23, 2020 and addressed to John P. Pallasch, Assistant Secretary for Employment and Training. It sets out the OIG's key areas of concern about ETA's implementation of the Dislocated Worker Grant (DWG) provisions of the CARES Act, under which ETA received $345 million. The report states that, as of June 2, 2020, DOL had awarded DWGs to 50 recipients for over $222 million. Drawing on past audit work, it groups its concerns under eligibility, program effectiveness, and program compliance and monitoring. It closes with the signature block of Elliot P. Lewis, Assistant Inspector General for Audit.
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REPORT TO THE EMPLOYMENT
AND TRAINING ADMINISTRATION
ADVISORY REPORT
CARES ACT: KEY AREAS OF
CONCERN REGARDING
IMPLEMENTATION OF DISLOCATED
WORKER GRANT PROVISIONS
DATE ISSUED: JUNE 23, 2020
REPORT NUMBER: 19-20-005-03-391
U.S. Department of Labor – Office of Inspector General
TABLE OF CONTENTS
INSPECTOR GENERAL’S REPORT .................................................................... 1
RESULTS ............................................................................................................. 2
ELIGIBILITY ............................................................................................... 2
PROGRAM EFFECTIVENESS .................................................................. 3
PROGRAM COMPLIANCE AND MONITORING ....................................... 5
OIG OVERSIGHT OF PANDEMIC RESPONSE................................................... 6
CONCLUSION ...................................................................................................... 7
-i-
U.S. Department of Labor Office of Inspector General
Washington, D.C. 20210
INSPECTOR GENERAL’S REPORT
John P. Pallasch
Assistant Secretary
for Employment and Training
U.S. Department of Labor
200 Constitution Ave, NW
Washington, DC 20210
This advisory report presents the Office of Inspector General’s (OIG) key areas
of concern regarding the Department of Labor’s (DOL) Employment and Training
Administration’s (ETA) implementation of Dislocated Worker Grant (DWG)
provisions included in the Coronavirus Aid, Relief, and Economic Security
(CARES) Act of 2020. ETA received $345 million to prevent, prepare for, and
respond to COVID-19 for dislocated workers assistance. The concerns presented
in this report represent years of oversight work relating to ETA grant programs,
including the use of prior stimulus funds and the Department’s response to past
natural disasters.
Due to the COVID-19 pandemic, the President declared a national emergency on
March 13, 2020. The CARES Act became law on March 27, 2020. As of June 2,
2020, DOL awarded DWGs to 50 recipients for over $222 million to help address
the workforce-related impacts of COVID-19. DWGs are to provide eligible
participants with both disaster-relief employment as well as employment and
training activities.
Since COVID-19 first infiltrated the United States in early 2020, it has had a
major impact on the workforce. As of May 28, 2020, over 40 million U.S. workers
have filed applications for unemployment benefits since business closures went
into effect to combat the pandemic. One purpose of DWGs is to set up
employment-related services for such dislocated workers to transition back to the
workforce.
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U.S. Department of Labor – Office of Inspector General
RESULTS
The OIG has published numerous audit reports identifying areas for improvement
in ETA’s grant programs. Based on these reports, we identified key areas of
concern that ETA and the states should consider as they distribute an additional
$345 million of DWG funds included in the CARES Act. These areas to be further
discussed in the report include: eligibility, program effectiveness, and program
compliance and monitoring.
Our past audit work included recommendations to address deficiencies identified
in each of these areas. In most cases, ETA initiated corrective actions, including
improvements in its oversight, as well as state operations. However, initiating
corrective actions does not assure such actions are effective or will continue to
be effective in addressing program risks and weaknesses.
Supported by the Workforce Innovation and Opportunity Act of 2014, Dislocated
Worker Grants temporarily expand the service capacity of dislocated worker
training and employment programs at the state and local levels by providing
funding assistance in response to large, unexpected economic events that cause
significant job losses. As ETA and the states implement the relevant CARES Act
provisions and in light of the $345 million available for dislocated workers, ETA
and the states need to ensure DWGs are utilized effectively, efficiently, and in
compliance with current laws and regulations.
ELIGIBILITY
A principle challenge faced by states is ensuring the program only serves
individuals who are eligible to receive disaster-relief employment as well as
employment and training activities. Accurate determinations of eligibility are
critical to ensure DWGs temporarily expand capacity to serve dislocated workers
and to meet the increased demand for employment and training services as a
result of COVID-19.
Our audit conducted on Superstorm Sandy’s National Emergency Grant 1 (now
known as DWG) found ETA’s policy to verify participant eligibility did not ensure
participants in fact were eligible for the program and were most in need of jobs.
OIG found sampled sub-grantees could not provide evidence to support program
1 DOL OIG, “Superstorm Sandy National Emergency Grants: ETA Awarded Funds Promptly, But
Could Improve Grant Modification and Eligibility Verification Processes,” (March 26, 2015, Report
No. 02-15-204-03-390)
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eligibility for more than one-third of their participants. We estimated $7.8 million
went towards assisting participants without evidence they were eligible for the
program.
Specifically, grantees did not have evidence for 37 percent of sampled
participants to prove eligibility for the program because ETA officials did not
require cross-verification of self-certified, pre-program employment status for
participants. We found the sampled participants did not meet criteria for long-
term unemployment and had no evidence beyond check-offs or case notes to
support the participants’ self-certification they had met one of the other two
qualifying criteria, dislocated worker or out-of-work, due to Superstorm Sandy.
For example, participants who self-certified, their only eligibility to qualify for the
program was that they were long-term unemployed. However, state wage
records reported earnings in the 27 weeks prior to the program for these
participants.
On March 18, 2020, ETA issued Training and Employment Guidance Letter
(TEGL) 12-19 to inform state and local workforce development officials of the
policies and priorities that govern the award and use of DWG funds, pursuant to
the Workforce Innovation and Opportunity Act (WIOA). The TEGL requires states
collect all documentation necessary to demonstrate that each participant is
eligible in accordance with the federal regulations. For DWG funds, ETA must
ensure states follow this new guidance and collect documentation to demonstrate
participants are eligible for the program.
PROGRAM EFFECTIVENESS
With respect to program effectiveness, prior OIG audits have identified ETA’s
history of grantees not meeting grant goals and objectives. We are concerned
that similar problems could carry over to CARES Act-funded DWGs.
DWGs may provide eligible participants disaster-relief employment to address
COVID-19 impacts within their communities, as well as employment and training
services. One of the objectives of employment recovery-type DWGs is to offer
reemployment services to eligible individuals affected by mass layoffs, such as
those occurring due to the COVID-19 pandemic, as businesses are unable to
continue operations. ETA describes that DWGs are intended to temporarily
expand capacity to serve dislocated workers and meet the increased demand for
WIOA employment and training services, with a purpose to reemploy laid off
workers and enhance their employability and earnings.
Our work related to past DWG funding to achieve goals of participant
employment under the American Recovery and Reinvestment Act of 2009
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(Recovery Act) showed that only a fraction of participants obtained employment.
The Recovery Act was passed to assist those workers most impacted by the
recession by creating and preserving jobs. The Recovery Act provided $500
million for research, labor exchange, and job training projects to prepare workers
for careers in energy efficiency and renewable energy. For example, the Green
Jobs training program focused on preparing individuals for jobs in green industry
sectors.
Our audit to assess the effectiveness of the Green Jobs training program found
that with 88 percent of the grant periods elapsed, the impact of the training
program had been limited in terms of reported employment outcomes. 2 Out of a
target of 81,254, grantees collectively reported, 30,857 participants (38 percent)
gained employment. While grantees reported that 49 percent of participants who
obtained jobs retained employment for at least 6 months, the reported number of
11,613 represents only 16 percent of the planned retention goal of 71,017. Based
on this finding, we recommended that ETA improve future discretionary grant
programs by ensuring that training, placement, and retention goals contained in
grant agreements are sufficiently comparable among grantees to fully contribute
to the overall success and cost efficiency of the program.
Another example pertaining to program effectiveness was our audit of the
performance evaluation system for ETA’s discretionary grants. 3 We found there
was limited assurance that such grants achieved their intended goals. ETA
certified all sampled grantees’ performance as acceptable, even though
achievement of grant goals, which included employment for participants, ranged
from 0 percent to 100 percent. Furthermore, ETA did not follow its own rules
requiring the evaluation of grantee performance. This was because ETA had not
considered a need to develop and implement a process to ensure capturing
information about grantee performance during the closeout phase that could be
used towards future grant design and investments. We recommended that ETA
develop criteria for determining acceptable performance for discretionary grant
programs that lacked such criteria, and implement a process that captures
grantee performance results to inform future ETA grant programs. For DWGs,
ETA needs to ensure grantees that are awarded grant funding meet the goal of
assisting workers displaced by the COVID-19 pandemic to either obtain
temporary disaster relief employment until their place of business resumes
2 DOL OIG, “Recovery Act: Green Jobs Program Reports Limited Success In Meeting
Employment And Retention Goals As Of June 30, 2012,” (October 25, 2012, Report No. 18-13-
001-03-390)
3 DOL OIG “ETA Needs To Enhance Its Performance Evaluation Process For Discretionary
Grantees At Closeout And Use Results For Future Grant Investments,” (December 20, 2012,
Report No. 02-13-201-03-390)
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normal operations or receive new skills training that would translate into
employment in a different field.
PROGRAM COMPLIANCE AND MONITORING
ETA must ensure that grants fully meet the objectives of its solicitations and its
monitoring over the use of the stimulus funding is sufficiently designed and
executed. Without appropriate level of oversight and transparency, ETA cannot
ensure whether its management of approximately $345 million in supplemental
DWG program funding will achieve the desired outcome and sufficiently meet the
requirements of the CARES Act. Despite the urgency to disburse federal funding
as quickly as possible to help dislocated workers during the current crisis, past
audit work has shown that with an accelerated timetable for awarding DWGs,
ETA needs to be vigilant in program compliance and monitoring.
Compliance
In our audit of ETA’s Year-End National Emergency Grants, ETA made awards
to grantees whose applications did not fully meet the objectives of its
solicitations. 4 OIG found grant applications, totaling $55.9 million and serving
13,762 participants that did not: 1) explain how proposed training would lead to
industry-recognized credentials; or, 2) contain lower-budgeted costs for training
or higher-budgeted costs for administrative activities as indicated by the grant
solicitations. At least a year after the grants had been awarded, ETA continued to
work with grantees to modify their initial applications, and none of the sampled
grants had been modified to meet the solicitation requirements.
As a result, grantees may not have provided participants with the type of training
opportunities to obtain industry-recognized credentials that would lead to in-
demand jobs. Moreover, available funds may not have been fully leveraged to
train and properly serve participants. We recommended ETA to review all Year-
End National Emergency Grants awarded to verify whether they had met
solicitation requirements. We also recommended ETA to allow its staff sufficient
time to review grant applications and only award grants that fully meet the
solicitation requirements. Alternatively, ETA issued guidance that allows
applicants to submit an abbreviated emergency application to ETA to enable
timely delivery of assistance after a disaster. These grant recipients must then
modify the grant within 60 days of award by providing a full application for review
and approval.
4 DOL OIG, “ETA Needs To Improve Awarding Of Year-End National Emergency Grants,”
(September 30, 2015, Report No. 02-15-205-03-390)
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In our audit of On-TheJob (OJT) Training National Emergency Grants, OIG
found OJT contracts not consistently designed and implemented. 5 The sub-
grantees and service providers were allowed to develop and implement their own
contracts for the grant, which resulted in inconsistencies with the original terms
and conditions in the OJT contracts. OIG recommended ETA require grantees to
follow agency grant guidance to ensure that OJT contracts are designed in
compliance with the terms and conditions of the grant, including documentation
requirements.
In terms of grant compliance, ETA needs to ensure DWGs under the CARES Act
are awarded to grantees whose applications meet the solicitations’ objectives of
providing disaster relief employment and career and training services, or are
modified within a reasonable timeframe after award.
Monitoring
In a Recovery Act audit, the OIG found ETA could have better monitored the use
of reemployment services’ funds to adhere to standards of transparency and
accountability. 6 ETA needed to provide additional guidance to direct spending
more effectively and to report more meaningful results. ETA did not establish
adequate standards for client service, or collect enough information on state
activities to demonstrate whether the $247.5 million were effectively and
efficiently spent. In this case, the standards of transparency and accountability
established by the Recovery Act were not met because of the lack of results-
oriented goals, objectives, and measurable outcomes.
ETA needs to monitor its grantees to ensure DWG funds are used in compliance
with the applicable cost principles. The agency also must provide technical
assistance to grantees not meeting grant goals.
OIG OVERSIGHT OF PANDEMIC RESPONSE
Phase 1 of the OIG’s Pandemic Response Oversight Plan 7 is to aid DOL by
providing advisory reports based on past programmatic issues identified by the
5 DOL OIG, “Recovery Act: Outcomes From On-TheJob Training National Emergency Grants,”
(March 25, 2014, Report No. 18-14-001-03-390)
6 DOL OIG, “Recovery Act: DOL Could Have Better Monitored the Use of Re-employment
Services Funds to Adhere to Standards for Transparency and Accountability,” (March 31, 2011,
Report No. 18-11-005-03-315)
7 U.S. Department of Labor, Office of Inspector General Pandemic Response Oversight Plan
(April 15, 2020)
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U.S. Department of Labor – Office of Inspector General
OIG to help the Department avoid historical pitfalls while implementing its
pandemic response. As noted in this advisory report, ETA grant programs face
historic challenges in four key areas and the agency needs to be proactive
about addressing these challenges.
The OIG will continue to monitor and assess in various phases the actions of
ETA related to COVID-19 DWG funding, including future actions in response to
any new legislation enacted by Congress. Our Oversight Plan will evolve
accordingly, as well as to address areas of risk identified during the completion
of our oversight efforts.
CONCLUSION
Federal agencies are tasked with a difficult charge – rapid implementation of
programs in a manner that meets the intent of the CARES Act. Strong
implementation plans and oversight controls are critical to ensure the use of
funds as intended and ultimately achieve desired outcomes.
The rapid deployment of CARES Act funding is critical to help mitigate the
adverse economic impact of the COVID-19 pandemic on dislocated workers.
However, anticipating and addressing the increased inherent risks that come with
expanded funding capacity is essential to meeting the intent of the Act. The
OIG’s recommendations from prior audit work in this area are indicative of which
direction ETA should take with its risk assessment and response to COVID-19.
According to our prior audit work, swift fund deployment under rapidly changing
circumstances can result in shortcomings in the effective and efficient
management of stimulus funding programs. To meet the requirements of the
CARES Act, accurate eligibility determination is critical to ensure DWGs
temporarily expand capacity in order to serve dislocated workers in need and
meet their increased demand for employment and training services. Keeping past
systemic weaknesses in mind, ETA must ensure:
• States collect complete documentation to support participant eligibility;
• States establish clear and achievable program goals; and
• CARES Act funding is sufficiently designed and executed, and costs are
accurately tracked and reported.
Our past audit work has included recommendations to assist ETA in addressing
deficiencies identified in the areas listed above. In many cases, ETA has already
implemented corrective actions that include monitoring and oversight
improvements. However, as ETA implements relevant CARES Act provisions,
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the agency needs to go further to ensure that DWG funds do assist with
regaining our economic momentum as quickly as possible by examining
workforce-related impacts of COVID-19. When implementing the stimulus
program activities, it is critical for ETA to focus on the areas of concern
highlighted in this advisory report as they are intended to guide ETA on how to
best serve the surge in dislocated workers by expediting their return to the
workforce.
Elliot P. Lewis
Assistant Inspector General for Audit
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(800) 347-3756 or (202) 693-6999
Fax
(202) 693-7020
Address
Office of Inspector General
U.S. Department of Labor
200 Constitution Avenue, NW
Washington, DC 20210
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