Audit slams regional agency

An audit by the Commonwealth Budget Office released last week was sharply critical of the Regional Center for Workforce Excellence’s (RCWE) fiscal actions over the last four years.

The RCWE serves as the fiscal agent for the Workforce Investment Board (WIB) serving Warren, Forest, Erie, Venango, Crawford and Clarion counties, administering workforce development and training funds from federal, state and other grants, as well as matching funds.

The WIB mission statement is, “To connect people with jobs through collaborative workforce development efforts and strong partnerships with the economic development, business, education and government sectors in the Northwest Pennsylvania region.”

The audit listed issues in five key areas.

The board members, former board members and business partners of board members benefited financially from their relationship with the WIB.

The fiscal agent exceeded its authority and lacked transparency.

Unallowable, wasteful and misuse of workforce development funds.

Lack of internal controls over accounting.

Inaccurate accounting and use of grant funds.

In fiscal year 2010-2011, there was a one percent drop in Work Investment Act (WIA) money, a 27 percent drop in the number of people trained, and a 58 percent drop in money spent on training.

In 2011-2012, there was a six percent increase in funding, with drops in numbers of people trained and money spent on training of 62 percent and 64 percent, respectively.

According to the third finding in the audit, “Funding that could have been used for training of unemployed citizens was wasted on unnecessary or unreasonably priced goods or services. Such behavior is especially unpalatable when workforce development funds are limited and unemployment is high. Based on waiting lists, referred to as “referral lists,” maintained by CareerLink offices between May 2011 and May 2012, at least 32 individuals being serviced by one CareerLink office were not able to receive training because of a lack of WIA grant program funds.”

Administrative costs for WIA program grant money is capped at 10 percent, yet in 2012-2013 the WIA budget was $3,990,541 and administrative costs totalled over $548,000 with an additional $333,054 held back in case the commonwealth pulls back funding. This is more than 22 percent of the total budget.

The audit specifies that over $113,000 was spent on “food meetings,” including lunches purchased by the RCWE’s CEO for herself and other non-employees on a regular basis, with no documented business reason to have the meetings over lunch or even to have the meetings, expenses for employee functions like appreciation days, group meetings, and office moving, $27,087 for an annual dinner meeting, Christmas party meals purchased for WIB members, RCWE agent staff, and guests including a hotel room for a board member, and dinners for eight children.

“An additional $11,127.50 was spent for a website video that consists of WIB members talking about their vision, with no mention of specific information that would help someone trying to utilize workforce investment resources,” the audit reports.

“Finally, the move of the Erie CareerLink to the RCWE Holding Company building, which was not an ‘arm’s length transaction,’ (under which one party to the lease agreement is able to control or substantially influence the actions of the other) resulted in the CareerLink paying more per square foot than at their previous location. The rent for 23,768 square feet at the previous location was $15.81 per square foot, while they pay $24.43 per square foot at the RCWE Holding Company building.

“The space presently occupied by the CareerLink also contains a significant amount of empty cubicles. The rent they pay, which is the highest rent per square foot of any tenant in the building, allows the Holding Company to remain solvent. This rent is in excess of the allowable cost of ownership to units of State or local governments.

“During our audit period, the cost of ownership for the entire building was, at times, significantly less than the amount that the Erie CareerLink paid for its portion of rent. Rent paid by other tenants of the RCWE Holding Company building range from $17.30 to $19.67 per square foot.”