“I remain unsatisfied that the department understands the causes of the shortfall that originated in 2011 and appears to have continued through 2012,” said Sen. Johnny Isakson, R-Ga. “Both accounting measures and management systems have failed to assure the permanent stability of this program, whose purpose is to better lives and educate people.”
Job Corps, developed in 1964 as part of President Lyndon B. Johnson’s War on Poverty, serves about 60,000 students annually through about 125 Job Corps center campuses located throughout the United States and Puerto Rico. They are operated for the Labor Department by private companies through competitive contracting processes and by other federal agencies, such as the Agriculture Department, through interagency agreements.
Job Corps has been relatively successful. In 2011, about 73 percent of Job Corps participants got a job or entered another training program and 65 percent attained a high school degree, their GED diploma or a technical training certificate.
The program’s operating budget of $1.7 billion enjoys the support of both Democrats and Republicans, an oddity in a congressional landscape dominated by cost-cutting conversations.
“It’s been around for almost 50 years now and it would never survive without bipartisan support,” said Anand Vimalassery of the National Job Corps Association. “We’ve never faced a budget issue like this before and I think it’s caught a lot of people by surprise.”
Job Corps’ funding issues are many, but chief among them has been the program’s lack of a comptroller. During the Senate hearing, Oates noted that the department official responsible for such accounting duties was grossly inexperienced compared with the qualifications that a professional comptroller would have.
“The extent of Job Corps’ fiscal difficulties really went unrecognized,” she said. “This is largely because Job Corps lacked appropriate program-monitoring tools and controls, which in turn led to inadequate spending projections for the operations account.”
Casey called the lack of a comptroller “disturbing” and “stunning.”
“Anyone that knows anything about running a public agency knows that you’re in a lot better shape if you have a comptroller who can watch your spending, can put controls in place, can blow the whistle when people are misspending and do periodic reporting,” he said.
The way in which the program funds its job centers through reimbursable contracts is also blamed for Job Corps’ financial woes.
“Job Corps operates through cost reimbursement contracts; not fixed-price contracts,” Oates explained. “So, therefore, as long as a cost is allowable and allocable, I have to pay those costs.”
Senate labor policy staffers on the HELP Committee said they are evaluating the process and protocols for when costs exceed expectations. While they want to allow the program to retain the flexibility that reimbursable contracts allow for, there needs to be a more uniform assessment of whether those additional costs are reasonable and how they are approved, they said.
Oates also pegged the regulations and requirements in Job Corps’ operations handbook as being overly burdensome and contributing to unnecessary costs.
According to the Senate staffers, the Labor Department is in the process of significantly overhauling the management of the Job Corps. Indeed, the president’s fiscal 2014 budget request included a proposal to hire a cadre of people to handle the program’s financial troubles. The department has already created an Office of Financial Administration and hired a comptroller.