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Federal aid to help jobless find work misused to overpay bureaucrats

By Phillip Swarts

Thursday - 4/4/2013, 1:06pm  ET

A District of Columbia program misused $8.8 million in federal funds that were supposed to help the jobless find work, diverting the money instead to overpay bureaucrats or cover unrelated overhead expenses, investigators found.

The grants provided by the U.S. Labor Department’s Employment and Training Administration (ETA) were designed to support employment programs and unemployment insurance.  Instead, officials at the DC DOES program couldn't keep track of their own expenses, investigators said.

“D.C. DOES did not have sufficient controls and processes in place to ensure costs claimed for ETA grants were adequately supported by the general ledger and were reasonable, allocable, and allowable as set forth in federal cost principles,” the Labor Department’s inspector general general declared in a recent report.

Investigators analyzed $25 million the D.C. program received in federal grants and found that roughly a third of it had been wasted.  But their sample size was just part of the $89 million D.C. DOES received between 2008 and 2011.

For wasting money that should be helping people find jobs in this tough economy, the D.C. Department of Employment Services wins this week’s Golden Hammer, a weekly distinction awarded by the Washington Guardian to examples of excessive payments, wasted money and mismanaged tax dollars.

D.C. officials acknowledged the problems and said they are working “to develop and implement targeted corrective actions” that will include a “restructuring” of the D.C. DOES financial staff.

“We are confident that all deficiencies in the financial management of ETA funds have been addressed going forward and that through the corrective actions and reformative measure, DOES will be in full compliance with the federal costs principles and related DOL regulations,” said Lisa Mallory, director of the DOES office.

Investigators said the city employment office didn’t use accurate and up-to-date information to judge how much things would cost, instead using estimates that were often too high.  For example, 15 employees received almost $960,000 total in extra salary because they used “predetermined estimates instead of actual hours” to record the work they were doing, investigators said.

The agency is supposed to use the Financial Accounting and Reporting System, or FARS, as a database for acceptable costs.  Instead, investigators said DOES didn’t use the financial information and “lacked sufficient details regarding how and when adjustments from budget to actual costs should be performed.” 

That led them to overpay for things like rent, utilities, interest payments, and janitorial and security services, the inspector general said.

In addition, ten other city employees charged D.C. DOES for all of their administrative, support and technical services – even when the work they were doing was unrelated to the employment program.

“We also recommend that DC DOES develop and implement policies and procedures requiring employees to charge their time based on actual hours worked,” the inspector general said.