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Job Corps Hits Turning Point Under Congress' Watch

Douglas Graham/CQ Roll Call File Photo
Casey said the HELP subcommittee he chairs had been told that Job Corps’ financial struggles had been resolved, only to hear about enrollment freezes this year.

A banner typed across the front page of the Job Corps website in bold red letters reads, “Attention! Job Corps is enrolling students again!”

That’s welcome news for the nearly 10,000 low-income and at-risk students who have been turned away since January, when the education and job-training program announced that because of a funding shortfall it would immediately halt enrollment.

Despite the resumption of enrollments, Job Corps remains on shaky footing. Last week, as pressure from members of Congress mounted, Jane Oates, head of the Labor Department’s Employment and Training Administration, resigned after acknowledging sloppy accounting and poor management at the program.

Congress is vowing to keep close tabs on Job Corps, which offers students ages 16-24 free education or training to learn a career, earn a high school diploma or equivalency degree, and find and keep a good job. Lawmakers have been grilling Labor secretary nominee Thomas E. Perez about how he would fix the problems with the program if confirmed.

Both Sen. Bob Casey, D-Pa., who chairs a Health, Education, Labor and Pensions subcommittee, and Rep. John Kline, R-Minn., who chairs the Education and the Workforce Committee, have asked the Labor Department’s Office of Inspector General to investigate the funding mismanagement. The IG’s report is expected as early as this month.

The $61.5 million deficit the Job Corps posted in 2012 shocked members of Congress on both sides of the aisle, because officials at the Labor Department had assured them they were closely monitoring expenses after the program came up $39 million short the year before.

“I think there is a good bit of skepticism from this committee and among senators in both parties, because we’ve been hearing for years now that the problem is recognized and has been diagnosed and corrective action efforts are in place and that this won’t happen,” Casey said at an Employment and Workplace Safety Subcommittee hearing in March. “We thought we were there and then we hear about enrollment freezes.”

The Labor Department originally estimated that Job Corps would need to freeze enrollment until at least June 30. But the Obama administration has since freed up enough money from other employment training programs within the department to put the program back on solid financial footing. Still, many observers worry that mismanagement could persist, especially with the absence of a Labor secretary, and that the sequester could deal the program another blow.

The program has already asked its education and training centers to decrease enrollment by 20 percent for the foreseeable future, indicating that it hasn’t completely solved its budgetary issues.

“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.

Although Republicans in the Senate have been employing delay tactics to prevent Perez from being confirmed as Labor secretary for a variety of reasons, he has already promised to make the financial footing of Job Corps a top priority if confirmed.

“The program has been transformational across this country, and I further agree that the Department of Labor can, must and will do better,” Perez said. “I’ve had this discussion in almost all my meetings with senators ... and I have said to every one that you have my absolute commitment that, if confirmed, making sure the Job Corps is firing on all cylinders will be a top priority.”

Still, several lawmakers remain concerned that the program will run into another funding shortfall in 2013.

HELP staffers, in particular, questioned whether President Barack Obama’s budget request was sufficient, especially taking into account the new staff proposed to monitor the program’s finances and added operating costs for three new Job Corps centers.

“I’m a big believer in the Job Corps program,” Isakson said. “During times like these with such sustained, high unemployment, programs like Job Corps become critical to help thousands of young people get the education and training needed to get off and stay off unemployment. But as long as the department’s management fails to fill the leadership void on this issue, thousands of young adults will be missing out on an opportunity to change their lives for the better.”

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