N.J. audit finds Corzine administration steered federally-funded jobs for youths away from private sector

Date: April 29, 2010
Source: New Jersey Newsroom

Contrary to federal guidelines, state officials last year steered $17.7 million in federal stimulus money for summer youth employment programs away from private sector employers, potentially inhibiting future job possibilities for young workers, state Comptroller Matthew Boxer said Thursday.

The finding comes as part of an Office of the State Comptroller audit of federal stimulus funds targeted to provide employment for youth last summer. The state Department of Labor and Workforce Development and the state Employment Training Commission administered the aid for local so-called Workforce Investment Boards to subsidize the job opportunities who met federal guidelines.

The audit found the employment program attained its minimum objectives in providing summer work experience for thousands of youth from May 1 through Sept. 30. However, the audit also found several missed opportunities and weaknesses in program oversight, ranging from flawed state guidance to miscalculated job totals.

Regarding the selection of employers, the state advised the local boards that the stimulus funds could be used to subsidize wages for "public sector and nonprofit jobs." As a result, in interviews with auditors, local program operators said they believed that the stimulus funds could not be used to fund jobs in the private sector.

When asked by auditors why private-sector companies were excluded, Employment Training Commission staff stated they believed that organized labor groups in New Jersey would be displeased if federal funds were used to subsidize private-sector summer employment for youth.

Boxer said the audit found private-sector jobs would have offered a wider range of work experiences with the potential for continued employment after completion of the summer program, particularly in view of state and local budget constraints.

"Federal dollars were sent to New Jersey to provide opportunities for our youth and instead of maximizing those opportunities, state officials acted in a way that limited them," he said.

The audit also found that the state's limited attempts to measure the performance of the employment program were inadequate. Basic but valuable information - such as cost per program participant and the number of youth participants obtaining unsubsidized employment after the program ended - was either not compiled or not determined in a consistent manner, making it difficult to tell whether program goals were met and what elements of the program should be continued for future summer employment experiences.

"Whenever a program is created with taxpayer dollars, the government has an obligation to continually measure the performance of that program," Boxer said. "It's the only way to determine which programs are working, which programs need to be improved and which programs are no longer worth the taxpayer cost."

The audit found that the state Labor Department and and the Employment Training Commission failed to provide appropriate guidance on a range of other legal and programmatic issues. As a result, the content of worksite agreements prepared by local program operators varied widely and in some cases did not include basic legal conditions designed to protect youth participants and program operators.

For example, the Passaic County Workforce Investment Board encountered problems with the federal requirement that the funding be used to create new jobs and not to "supplant," or replace, current workers with federally funded workers.

As last summer approached, youth expecting to work at the Paterson Recreation Program were replaced with other teens who qualified for federal stimulus subsidies. In July, the Labor Department intervened and the more-than-100 federally funded workers were shifted, mid-summer, to other job sites not funded by the city of Paterson to avoid any "supplanting" issue.

The audit also found the Labor Department inaccurately reported the number of jobs created by the summer employment program, understating the correct figure by more than five percent. The state did not require program operators to submit documentation to support their jobs totals, which contributed to the inaccuracies.

The audit found no significant exceptions related to payroll, expenditures, or participant eligibility. The comptroller's office made seven recommendations to improve the Labor Department's oversight, which Boxer said the agency has committed to implement.

Assembly members Alison Littell McHose and Gary Chiusano (both R-Sussex) said the audit reveals what they described as a colossal failure in the effort to provide jobs and valuable training to young workers.

"At best, this audit reveals a huge void in communication and understanding of the intended goals of the federal stimulus funds," Chiusano said. "But at a time when our youth was scrambling for employment and could have gained valuable job training, the failure to properly instruct local boards on appropriate uses for the funds is inexcusable. If the improper guidance was intentional, then further investigation is certainly warranted to ensure those who were responsible are held accountable."

Chiusano and McHose noted they expressed concerns last year regarding the way federal stimulus funds were used in Paterson, which left hundreds of college students without summer jobs because of hiring restrictions.

"The lost opportunity for New Jersey's high school and college students to earn and learn because of misinformation is more than unfortunate, it is appalling," McHose said. "If this were an honest mistake, this audit raises the question of why administrators in the Employment Training Commission and Labor Department were not monitoring how the funds were disbursed and ensuring that the objectives of the program were being met. However, if the funds were intentionally kept from private sector employers, then there is another aspect of the audit that must be addressed. A potential career path in the private sector that could have resulted from a summer job would have benefited not only our youth, but would have demonstrated valuable use of taxpayer dollars. Sadly, a great opportunity was missed."