The chairman of the Bluegrass Workforce Investment Board resigned Monday night, citing malfeasance and a disregard for federal law.
Daryl Smith, who has led that board since 2011, said he resigned because of continued problems between the board and the agency that controls its money, the Bluegrass Area Development District.
Smith is the economic development specialist for Kentucky Utilities.
The workforce board spends $7 million to $11 million of federal money each year to help match workers with available jobs in a 17-county region that includes Lexington.
State Auditor Adam Edelen found numerous problems in the relationship between the two when he conducted a special investigation of Bluegrass ADD nearly a year ago. He said Bluegrass ADD leaders had set up a conflict-ridden structure in which the ADD controlled the workforce board's decisions while providing all services for the workforce board.
"I am sad to report that I believe things are worse now than when the special examination was issued on March 4, 2014," Smith wrote in an email message Monday night to public officials and the media. "From my private-sector perspective, I have witnessed what I believe is a disregard for federal law. I see a culture of organizational conflicts of interest with related-party insider contracts that have choked out competition when I view open and fair competition as a fundamental tenet of federal grants."
Smith said the workforce board had been asked to take actions that he viewed as "highly questionable, at a minimum."
"I see politics and the control of workforce funds being more important to some than helping businesses solve workforce challenges and more important than helping individuals find quality jobs at family-sustaining wages," he wrote.
Smith said that Bluegrass ADD continued to control the workforce board's budgetary decisions and that requests to seek bids from competitors have been ignored.
Also at play is a request by the city of Lexington to opt out of the 17-county workforce board and form a separate workforce region. Doing that would divert millions of federal dollars from Bluegrass ADD, which has an annual budget of more than $24.4 million — 90 percent of which comes from federal and state grants.
Other Kentucky communities, including Bowling Green in Warren County, have made similar requests of Gov. Steve Beshear to withdraw from their existing workforce development regions. Some possible options for reorganizing workforce regions are expected this week, but final decisions will be made in March or April, said Cathy Lindsey, spokeswoman for the Education and Workforce Development Cabinet.
David Duttlinger, Bluegrass ADD's executive director, said ADD officials have responded to every point of the auditor's special exam. The agency has sought more involvement from the region's elected officials who serve on the ADD board and oversee the workforce board, he said.
"The local elected officials answered this call to duty and attended education seminars, met with the governor and organized themselves," Duttlinger said. "Unfortunately, some have misconstrued the local elected officials' engagement and debate over the direction of the workforce area as negative comments" toward the Workforce Investment Board, or WIB. "The discussion between the WIB and the local elected officials will continue, and when these discussions conclude, I am certain that good governance will prevail."
Lexington-Fayette Urban County Councilman Chris Ford said Smith has been instrumental in helping the council and city leaders understand the complicated financial relationship between the workforce board and Bluegrass ADD.
Smith's resignation didn't come as a surprise, Ford said, because more than a half-dozen other members have resigned in recent weeks.
Kevin Atkins, Lexington's chief development officer, said the rash of resignations from the workforce board signified that "the private sector has lost confidence in the ability of the Bluegrass ADD to manage a program that trains the workforce for our companies and our employees."
Atkins noted that the board no longer could meet because it now lacks enough members to reach a quorum.
Among the other members who have resigned is Monica Kidwell, human resources manager for Lectrodryer LLC in Lexington.
"What I have experienced in the last year is not what I had expected; we are mired in impasse," Kidwell wrote in her resignation email. "I had hoped that the requested guidance would allow us to move forward with our mission."