Response to the Audit

Response From the Employment Development Department

September 22, 2015

Elaine M. Howle
California State Auditor
621 Capitol Mall, Suite 1200
Sacramento, California 95814

Dear Ms. Howle,

Thank you for the opportunity to respond to your audit report entitled “Follow-up - Federal Workforce Investment Grants: The Employment Development Department Established Procedures for Seeking Discretionary Grants, but Needs to Strengthen Them.”

As you know, the Employment Development Department (EDD) administers one of the largest public workforce systems in the world, providing both direct customer services and administrative support for various programs covered under what was formally the Workforce Investment Act and is now known as the Workforce Innovation and Opportunity Act. In doing so, EDD continues to focus on providing integrated services, enabling universal access, achieving increased accountability, supporting strong local board and private sector roles, and maintaining state and local flexibility. The EDD also must continue to satisfy the policy expectations of the Executive Branch and our federal control agencies related to our mission and responsibilities.

Regarding grant seeking, this is not an activity that is required of the Department; however, EDD agrees that updating its grant identification procedures and guidelines will help the Department better document its efforts to help maximize federal funding for workforce investment.

The EDD has and will consistently act to further improve upon the quality and effectiveness of its services when and where it has the resources and authority to do so. Leadership and management remain dynamic and responsive; therefore, guidelines and procedures will change over time to reflect how grant activities are managed. As noted in this audit, the decisions that were made by EDD all had merit. This report only identified issues related to maintaining the documentation of those decisions or steps. We are pleased that the report validates that the decisions made by program experts on whether or not to seek grant opportunities were appropriate.

The EDD agrees to implement the recommendations cited in your September 2015 draft report by December 31, 2015. Implementation of the recommendations will ensure the grant seeking process is effective in considering grant opportunities related to workforce investment by updating the grant identification and analysis procedures specified in the report. In addition, to ensure the State maximizes federal funding opportunities related to workforce investment, EDD will continue to work collaboratively with the California Workforce Investment Board to formalize grant seeking procedures.

Additionally, EDD respectfully requests consideration of the following clarifications as you finalize your draft report:

Page 13, first paragraph; does not reflect the fact that EDD staff can only make a preliminary decision that has to be ratified by the California Workforce Investment Board and also, in some cases, with the Labor and Workforce Development Agency.

Page 18, last sentence in the first paragraph; the National Farmworker Jobs Program grant solicitation that the Department of Labor did in 2013 was an aberration because it automatically renewed funding for most of its grantees. In fact, the same five California organizations that have been the longstanding recipients of these funds received a total of $18,907,060 in Program Year (PY) 2013, $19,947,000 in PY 2012, $19,380,015 in PY 2014, and $19,380,015 in PY 2015.

The report uses the word “discretionary” inconsistently with how it is used in the workforce system. In this report, it should not be interpreted as the grant activity specifically related to the Governor’s “Discretionary” funds. In this audit, it is referring to other “additional" funding.

We thank the California State Auditor staff for their professionalism and openness during this audit. If you have any questions with the update, please contact me at (916) 654-8210, or Gregory Riggs at (916) 654-7014.

Sincerely,

PATRICK W. HENNING JR.
Director

cc: David Lanier, Labor and Workforce Development Agency Greg Riggs, MIC 76

bcc: Fran Kennedy, MIC
Jose Luis Marquez, MIC
Ron Perez, MIC 78
Dennis Petrie, MIC
Audrey Traina, MIC 78
Project file
Chron

Response From the California Workforce Development Board

California Workforce Development Board
800 Capitol Mall, Suite 1022
Sacramento, CA 95814
September 15, 2015

Ms. Elaine M. Howle, CPA
State Auditor
California State Auditor
555 Capitol Mall, Suite 300
Sacramento, CA 95814

Subject: Follow-up – Federal Workforce Investment Grants #2015-508 September 2015

Dear Ms. Howle:

The California Workforce Development Board (State Board) agrees with the CSA’s recommendations pertaining to the State Board and agrees that implementing the recommendations will enable the State Board to maximize federal workforce investment funding opportunities using procedures that analyze and assess the merits of each opportunity.

Recommendation One: To ensure the State maximizes federal funding opportunities related to workforce investment, EDD and the State Board should formalize their collaborative grant seeking procedures by December 31, 2015 to clearly define the roles and responsibilities of both EDD and the State Board in the grant seeking process.

The State Board agrees with CSA’s recommendation. The State Board is in the process of finalizing with EDD the specific roles and responsibilities of each agency related to coordinated grant seeking procedures and these procedures will be in place by December 31, 2015.

Recommendation Two: To ensure the State Board assesses the merits of pursuing federal funding for workforce investment programs in California, it should establish procedures by December 31, 2015 that include, at a minimum the following:

The methods it will use to identify federal grant opportunities.
The factors it will consider in its decision to pursue or forego applying for these grants
The process by which it will document its analysis of grants and its final decision to either pursue or forego grant opportunities.
A method for ensuring that the process is consistently implemented.

The State Board agrees with CSA’s recommendation. The State Board will utilize the best practices identified by the Government Finance Officers Association to establish and implement procedures to identify, analyze, pursue or forego grant opportunities by December 31, 2015.

Should you have any questions or need additional information please do not hesitate to contact the State Board’s Chief of Operations Doug Sale at 916-657-1445.

Sincerely,

Tim Rainey
Executive Director

Comments

CALIFORNIA STATE AUDITOR’S COMMENTS ON THE RESPONSE FROM THE EMPLOYMENT DEVELOPMENT DEPARTMENT

To provide clarity and perspective, we are commenting on the response to our audit from the Employment Development Department (EDD). The numbers below correspond to the numbers we have placed in the margin of EDD’s response.

While preparing our draft report for publication, page numbers shifted. Therefore, the page numbers that EDD cites in its response do not correspond to the page numbers in our final report.

We thank EDD for providing this clarification. Following our discussion during the exit conference on September 3, 2015, we asked EDD to clarify what happens following its decision about whether it should apply for a grant opportunity. We modified the description of the EDD process shown in Audit Results to explain the California Workforce Investment Board’s role in ratifying the decision.

Information on the level of automatically renewed funding for certain grantees is beside the point. Although some grantees may receive automatically renewed funding, the focus of our audit was competitive grant opportunities such as the 2013 National Farmworker Jobs Program grant we discuss in Audit Results.

Our usage of the term discretionary grants is consistent with the federal government’s definition of discretionary grants. As we explain in the Introduction of the report, discretionary grants are generally awarded by the federal government on a competitive basis. Such grants, made by the federal government not the governor, were the focus of this report.