Naked City

Working It Out

Working It Out

During George W. Bush's first session as governor, the Texas Legislature was instructed to fabricate a "welfare reform" initiative that would jibe with the state's -- and the governor's -- pro-privatization, local-control-oriented, "right to work" philosophy. Four years later, according to a report issued by the state auditor's office, much of that program lies in ruins, thanks largely to the Texas Workforce Commission's lax oversight of 26 locally operated welfare-to-work programs.

The audit, which was harshly critical of the Workforce Commission, found that not only had the TWC given certification to 16 of 26 local workforce boards "before the boards had adequate business systems to administer the funds," it did little or nothing to ensure that private companies vying for contracts to provide job training and welfare services were financially stable or that their bids were reasonable. While the local boards were being formed, the report says, "the Commission procured $9.6 million in direct employment placement contracts through a flawed process" -- a process so full of holes, according to the report, that one company (Medical Assistance Program Advisors Inc.) which was awarded a bid went bankrupt less than five months later. "The commission was so busy getting some of these programs up that that was their primary concern," says Susan Riley, who oversaw the audit. "One of their comments was that their decision was to get [the boards] going and they would worry about the rest of it later; and, of course, it was the rest of it that we were worried about."

Other problems noted in the report:

  • TWC did not analyze the costs reported by local boards to ensure that what the state was being charged by contractors for services was fair, "nor did it review the bidders' financial statements" to determine that contractors were capable of providing the services they were bidding to provide.

  • The commission failed to keep adequate records of its process for awarding "scores" to bidders, which were used to determine which company won a bid.

  • The per-client price of similar welfare contracts varied widely, from less than $2,000 to nearly $3,000; moreover, the criteria for selection were inconsistent. "While the lowest bidder was chosen for [two contracts] presumably because of the lower price, in another area the contract was awarded to the evaluation team's choice, whose bid was more than double that of its competition."

  • After problems were found, the TWC allowed many of them to go uncorrected. Although the commission was not to blame for the fact that many boards failed to monitor their private contractors, the TWC was remiss, the report found, for failing to fill in the monitoring gap once the agency knew of its existence.

    Overall, the auditor's office found, the Workforce Commission's poor oversight of local welfare boards put as much as $830 million in federal and state funds in jeopardy.

    But the TWC can't bear all the blame for the problems faced by its local boards. Also at fault is a tough timeline, pushed by Gov. Bush and members of the Legislature, for implementing the plan. Since its creation four years ago, the Workforce Commission has been charged with the daunting task of consolidating 28 job training and welfare programs, forming 26 local workforce boards to contract out welfare services, and transferring state oversight of the programs to the boards, which are scattered around the state. "Hardly anybody had done a good job of understanding the enormity of that task and how hard it was to try to hand down authority for these programs to these local boards that did not have much experience," says Patrick Bresette, a welfare analyst with the Center for Public Policy Priorities.

    Prodded by the governor's office, which pushed the reorganization as a showcase for local control, the TWC began a mad rush to the finish line -- leaving some of the details, according to Bresette, in the dirt. "Early on, TWC was being very careful in monitoring and trying to certify whether the boards were ready, but that was taking a long time to do. Somewhere in the middle, the process got speeded up. There was less preparation being done as TWC became more interested in getting the boards on line and up and running and having responsibility to them." Although the commission had a process in place to monitor local boards as they began operation, "this process deteriorated as pressure mounted to get the boards up and running in 1997 and 1998," the auditor's report notes.

    The TWC disputes many of the auditor's findings in a lengthy memo attached to the report. (The TWC did not respond to the Chronicle's calls for comment.) Among its contentions, the commission maintains that the $9.6 million the auditor's office claimed was jeopardized by its procurement process was never actually at risk; that its monitoring program was in line with state and federal guidelines; and that the fiscal controls established by local workforce boards were adequate for the boards to assume responsibility for the funds.

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