Audit Report

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Report Number:  03-99-018-03-386

Issue Date:     September 20, 1999

The Welfare-to-Work (WtW) formula grant program was authorized by the Balanced Budget Act of 1997 (BBA) to move hard-to-employ welfare recipients into unsubsidized jobs and economic self-sufficiency. The Act authorized $3 billion for WtW grants in Fiscal Years (FYs) 1998 and 1999. After certain set-asides, approximately 25 percent is awarded through a competitive grant process, and the remaining 75 percent is distributed by formula to the states. WtW formula grant funds must be spent within 3 years of the award.

The Office of Inspector General (OIG) performed an audit to determine the status of program implementation for seven state WtW formula grantees. The 7 states represented 48 percent of the $1 billion in formula grant funds awarded for FY 1998.

All but one of the seven states we visited were slow in implementing their WtW program because of factors that were either unforeseen or not considered when the states developed their WtW service and outcome levels and spending estimates. Specifically:

• WtW program and administrative requirements mandated by the authorizing legislation were viewed as restrictive by WtW grantees. This caused WtW grantees difficulties in identifying eligible clients; arranging necessary matching funds; and developing financial reporting systems capable of tracking expenditures by client populations, cost categories, and program activities.

• At the same time, as grantees were struggling with the perceived challenges of the WtW requirements, sufficient funding under the less restrictive Temporary Assistance for Needy Families (TANF) program was available to serve the client population targeted by WtW. As a result, local service providers with access to the less restrictive TANF funds opted to spend those funds first.

 
• Launching WtW, a major new Federal program, required that state and local plans be developed and approved, service provider procurement actions completed, and coordination arrangements with other agencies finalized. Moreover, the entities responsible for WtW are, in most cases, also responsible for implementing the Workforce Investment Act of 1998 (WIA), which will make sweeping reforms to the Nation's workforce development system, in their respective jurisdictions.

To accelerate the progress in implementing the WtW formula grant program, OIG recommended that the Employment and Training Administration (ETA):

• Seek legislative changes to permit the Secretary of Labor to amend the length of time the states have to spend the WtW formula grant funds;

• Work with the U.S. Department of Health and Human Services' (DHHS') Administration for Children and Families to develop a strategy that effectively integrates TANF and WtW so that all funding sources are used to provide workforce investment services to TANF and WtW eligible recipients;

 
• Continue to pursue the legislative changes currently being proposed to: (1) simplify and expand the definition of eligible recipients more accurately to reflect characteristics of hard-to-employ, long-term TANF recipients and (2) streamline and simplify financial reporting requirements;

• Explore, with states not reviewed as part of this audit, whether the matching requirement is an issue that affects their implementation of the WtW formula grant program, and seek appropriate legislative changes if needed; and

• Continue to take an active role in assisting states and local agencies that are having problems implementing their WtW programs, and provide the necessary technical assistance to help them address barriers that may be impeding progress in getting the program fully operational.

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