EXECUTIVE SUMMARY

The purpose of the Welfare-to-Work (WtW) program, which was authorized by the Balanced Budget Act of 1997 (BBA), is to prepare hard-to-employ long-term welfare recipients and other eligible individuals for, and place them into, lasting unsubsidized employment. WtW activities should be grounded in the "work-first" philosophy of the Temporary Assistance for Needy Families (TANF) program established under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), the legislative centerpiece of welfare reform. The BBA authorized $3 billion for WtW grants in Fiscal Years (FYs) 1998 and 1999. Of this amount, approximately $700 million was awarded to grantees selected through a competitive grant process carried out in three separate rounds, with the remainder distributed by formula to the states. Competitive grants were intended to develop innovative approaches to serve the targeted population. The U.S. Department of Labor's (DOL) Employment and Training Administration (ETA) is responsible for administering the WtW program at the Federal level.

The Office of Inspector General (OIG) performed an audit to assess the effectiveness of the WtW competitive grant program. Our audit scope included performance data reported by 19 randomly selected, first- and second-round competitive grantees as of September 30, 2000. In addition, we analyzed employment and earnings outcomes obtained for a random sample of 765 participants served by the 19 grantees we audited.

Program Outcomes

The purpose of WtW is to place individuals in lasting unsubsidized employment. Yet, we found only 191, or one-quarter, of the 765 participants in our sample were documented as continuously employed more than 6 months, whether in one or more jobs. Overall 59 percent (451 of 765) of the sample participants worked in unsubsidized employment at some point during or after their participation, and 31 percent (241 of 765) of the total, were still employed at the time of our audit. The case files for 418 of the 451 employed participants noted hourly wage rates, which we did not confirm, that averaged $7.36. Three quarters of the employed participants worked 30 hours or more per week. It should be noted that, at the time of our audit, the grantees did not know the current employment status of 110, or one out of four, of the 451 employed participants in our sample.

Performance Data and Evaluation

We concluded that the reported program data was not reliable. We found significant errors in data that contributed to ETA's computed WtW performance measures. Specifically, we project that the number of competitive grant participants reported as placed in unsubsidized employment by the 122 competitive grantees in our universe was overstated by 43 percent. We also project that the number of participants reported as retained 6 months in unsubsidized employment was overstated by 86 percent.

We further found that 13 of the 17 sample grantees that reported earnings gains to ETA used improper and unsupportable methodologies to compute the measure, and that 11 grantees reported earnings gains on a cumulative, rather than quarter-by-quarter, basis, contrary to reporting instructions.

Most grantees in our sample did not report consistent and accurate performance data because they did not maintain accurate records and/or they did not understand, or did not adhere to, the definitions of individual data elements included in ETA's reporting instructions. We also found that, while ETA had made numerous efforts to train grantees concerning the reporting requirements, ETA's monitoring visits did not include attempts to verify the accuracy and completeness of reported performance data. The monitoring guide used by ETA staff does not require grantee records to be reviewed to determine the accuracy or completeness of performance data reported on the grantees' Financial Status Reports, which include both financial and performance information.

Finally, we found that WtW evaluation studies, current and planned, will not provide ETA with the information necessary to determine which innovative approaches or interventions worked and which did not. New and innovative approaches for moving welfare recipients into lasting employment was one of the underlying purposes of the competitive grant program. The evaluations only measure specific grantee operations that may not necessarily reflect the WtW competitive grant program as a whole.

Recommendations

To improve services to those participants served by WtW grantees and provide a solid foundation for evaluating the WtW competitive grant program, we recommend that the Assistant Secretary for Employment and Training:

1. require grantees to follow up with participants in unsubsidized employment to determine if additional services are needed to assure employment retention;

2. conduct data validation reviews at the grantee level to ensure that the performance data being reported are accurate and complete; and

3. work with the U.S. Department of Health and Human Services to reexamine the current approach being used to evaluate the WtW competitive grant program. We recommend that a national evaluation be designed to assess the innovative approaches being used to move welfare recipients from welfare dependency to economic self-sufficiency.

Agency's Response

In the response to our draft report, the Assistant Secretary for Employment and Training agreed with each of the reported recommendations and will act upon them. Specifically, ETA will:

1. work with competitive grantees to assure that they do a better job of following up with participants in unsubsidized employment to determine if additional services are needed to assure employment retention;

2. carry out their previously planned second stage of monitoring by conducting data validation reviews at the grantee level to ensure that the performance data being reported are accurate and complete; and

3. work with the U.S. Department of Health and Human Services to re-examine the current approach being used to evaluate the WtW competitive grant program in order to assure that innovative approaches being used to move welfare recipients from welfare dependency to economic self-sufficiency are identified and assessed.

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