Federal labor officials have sided with the Bluegrass Area Development District in an ongoing dispute with the state over a multimillion-dollar federal workforce training program that serves 12,000 out-of-work or underemployed people in Central Kentucky.
That means Bluegrass will continue to serve as administrator for federal workforce training dollars in a 17-county area that includes Fayette County until at least Aug. 30, state workforce officials said Thursday. A temporary contract between the state and Bluegrass expires Aug. 30.
In a letter dated Aug. 12 and released Thursday by state officials, U.S. Department of Labor officials said the state’s decision in May to terminate Bluegrass as a workforce provider was premature because Bluegrass has not yet exhausted all of its state appeals.
The state’s move to discontinue using Bluegrass as the agent for workforce dollars came after the Cabinet for Education and Workforce officials ordered Bluegrass on March 31 to repay the state $898,525 — money the state says was misspent from 2010 and 2013. Some of those questioned costs include excessive travel and rent for Bluegrass’s Perimeter Drive building in Lexington. The money was paid to a nonprofit started by the founding director of Bluegrass.
The Bluegrass board voted to appeal the payment of the $898,525 and maintained that problems cited in the state’s final determination letter had been corrected.
In late May, Gov. Matt Bevin sent Bluegrass a letter saying the Education and Workforce Cabinet still had concerns about financial management of the district and would no longer use Bluegrass to administer the program come June 30, the end of Bluegrass’ contract. Bevin’s letter said a review by cabinet staff of 2015 spending revealed other questions about how those federal workforce dollars were being spent.
Bluegrass appealed the state’s decision to yank its designation as a federal workforce area to the U.S. Department of Labor, which oversees federal workforce training dollars. Bluegrass said the state was premature to terminate Bluegrass because its appeal of the $898,525 judgment was still pending.
Federal labor officials agreed with Bluegrass.
“Because the final determination is on appeal through the state appeal process ... the governor’s determination that there has been a ‘substantial violation’ ... is not yet final. If the Department were to review whether there has been a substantial violation at this time, there is significant risk that this determination would be based on facts that are later found to be incorrect through the state’s administrative appeals process,” the letter released Thursday said.
It’s not clear when Bluegrass’ appeal of the March 31 order will be completed. The letter said Bluegrass could appeal again to federal labor officials after a final ruling on its state appeal. That state appeal is being handled by an administrative law judge.
David Duttlinger, executive director of Bluegrass, said Thursday they were pleased with the federal government’s decision.
“The decision allows for the continuation of services in the workforce area without interruption and recognizes the authority of local control,” Duttlinger said.
Workforce and Education Cabinet officials said in a written statement they were disappointed that the more than 12,000 people who depend on those training programs still don’t know who will manage the program long term.
“We are disappointed by the new, extended timeline DOL has established; and as a result, we are exploring all possibilities to resolve the dispute in a more timely manner so that the state and local officials can move forward and provide top-notch workforce services to the citizens of the commonwealth without this distraction.”
A letter from federal labor officials attached to the ruling said they had “serious concerns” about the findings outlined in the March 31 final determination letter. “We will provide appropriate technical assistance to ensure that federal grant funds are appropriately managed,” the letter said.
Duttlinger said Bluegrass will meet with state officials to see if it can resolve all outstanding issues. Duttlinger said Bluegrass’ appeal of the nearly $900,000 judgment was set for early February.
“We are anxious to resolve all past matters and feel that this can be accomplished through meeting and working with the state,” Duttlinger said. “However, if this is not possible then we are prepared to proceed with the hearings of our appeal of the final determination to the Administrative Law Judge.”
The state had proposed moving the workforce contracts to two Louisville-based providers with prior experience with federal workforce training programs. The state agreed not to transfer the contract to the Louisville providers after Bluegrass filed its appeal with federal labor officials.
Bluegrass was awarded a new contract in January to continue to provide services until Sept. 30, 2017. That contract was for $11.4 million, which included some carry-over dollars from previous years. The awarding of the contract to Bluegrass prompted Education and Workforce Cabinet Secretary Hal Heiner to ask a group of locally elected officials who awarded the contract to rebid it. Some of those locally elected officials also serve on the executive committee of the Bluegrass board. The locally elected officials refused to rebid the contract.