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Welfare-to-Work Competitive Grant Program Performance Audit
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] 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: require grantees to follow up with participants in unsubsidized employment to determine
if additional services are needed to assure employment retention; conduct data validation reviews at the grantee level to ensure that the performance data
being reported are accurate and complete; and 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: 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; 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 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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