Gov. Steve Beshear has asked for a state investigation into allegations that the Cabinet for Education and Workforce Development mismanaged federal workforce investment dollars that are used to help people find work.
Beshear asked the Finance and Administration Cabinet Office of Policy and Audit to look into the allegations that first surfaced in state Auditor Adam Edelen's statewide audit in January. The audit questioned if the cabinet was incorrectly charging staff time to the wrong federal workforce grants.
Those allegations as well as additional questions about the management of federal workforce dollars were also raised in emails by Charles Payne, a Lexington resident whose questions about the Bluegrass Area Development District were responsible in part for a 2014 state audit of the organization that manages federal workforce dollars for a 17-county region, including Fayette County.
Kerri Richardson, a spokeswoman for Beshear, said the two-term governor thought it was best to ask a separate state agency to review the federal workforce program.
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"The governor initiated an internal audit after receiving a written complaint from a citizen alleging problems with management of the state's workforce development programs," Richardson said. "While we have no reason to believe that there is any basis for the allegations, it is prudent to review the allegations because of taxpayers' money involved."
Pamela Trautner, a spokeswoman for the Finance and Administration Cabinet, said it's not clear how long the review will take.
"It is too early to determine when the review may be completed as (Office of Policy and Audit) is just now determining the scope of the review," Trautner said.
Cathy Lindsey, spokeswoman for the education and workforce development cabinet, said "The governor took the appropriate action, and the cabinet welcomes the examination."
The audit and review of the Cabinet for Education and Workforce Development's handling of federal workforce dollars comes at a crucial moment: the state is currently debating how to redraw workforce investment area districts. Fayette County and other areas of the state have asked to leave their current workforce investment area in part because of concerns of how Bluegrass Area Development District and other area agencies have managed federal workforce dollars.
In total, more than $49.8 million in federal workforce dollars flow through those 10 workforce investment area districts.
The Kentucky Workforce Investment Board — a state-wide board of business and other leaders — will advise Beshear on how to redraw those lines. But the cabinet workforce staff also makes recommendations.
Hugh Haydon, an Owensboro businessman, is the chairman of the Kentucky Workforce Investment Board.
Haydon, in an April 4 email to board members and several legislators, said the statewide workforce investment board has no staff to investigate some of the allegations of possible improprieties and mismanagement of programs that it helps guide and oversee.
"With no investigatory authority or independent staff of our own to look into Mr. Payne's questions, Governor Beshear has agreed to assign the Office of Internal Audit (OIA) of the Finance and Administration Cabinet to look further into the matters," Haydon wrote in the email obtained by the Herald-Leader. "Any results from the OIA review will be provided to the KWIB for our consideration."
Haydon did not return phone calls asking for comment.
Payne, in his email to Kentucky Workforce Investment Board members, said Edelen's audit showed that workforce staff was being told to charge staff time to a federal grant because the funding on a different federal grant had been depleted. Payne provided an email from a U.S. Department of Labor employee that specifically said that staff time could not be charged to that particular federal grant. In its response to Edelen's audit, workforce staff said that there was some confusion on how staff should account for time when there was a shutdown of the federal government and they could not charge time on certain grants.
Payne's email also included other concerns — such as excessive travel by top workforce investment staff and workforce area directors being told to code time on federal grants when staff were not trained to perform those duties. Payne also raises concerns about the number of statewide workforce investment staff, yet the amount of federal workforce grant funding has decreased.
In an interview, Payne said he began to look at some of the issues involving the statewide workforce development agency after concerns were raised about the management of Bluegrass ADD's handling of federal workforce training dollars. Edelen's 2014 audit of Bluegrass ADD showed that there were questions about how federal workforce investment dollars were spent. Yet, the state cabinet for workforce investment has not appeared to have made any attempt to see if those dollars were spent appropriately, Payne said.
But more importantly, Payne said he has concerns that federal workforce dollars aren't making it to the people who need it most — the unemployed.
"If it's damaged, let's get it fixed," Payne said. "There are a lot of people who depend on these programs."