Job Corps: Assessment of Internal Guidance Could Improve Communications with Contractors
Published: 2015-01-22T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Job Corps—funded at about $1.6 billion in program year 2013—is the nation's largest residential, educational, and career training program for economically disadvantaged youth. In program years 2011 and 2012, ETA projected that Job Corps' costs would exceed its appropriations, and took action to resolve these gaps. In May 2013, DOL's inspector general reported internal control weaknesses and recommended improvements; however, questions remained about the funding transfers and spending cuts ETA implemented. GAO was asked to review these measures.
This report examines (1) how ETA selected the measures it implemented to address Job Corps' financial challenges, (2) the timeliness and completeness of ETA's communications to contractors, including center staff, and Congress, (3) how spending cuts affected applicants and students, and (4) steps ETA has taken since to improve Job Corps' financial management. GAO visited 8 of the 125 centers—selected based on their geographic diversity and other factors—and interviewed staff and students; reviewed ETA's internal notices to contractors and DOL's communications with Congress, and assessed ETA's guidance for internal notices using federal internal control standards; and analyzed ETA's enrollment data from program years 2010 through 2013.
section_title: What GAO Found
paragraphs: In selecting funding transfers and spending cuts to address Job Corps' projected funding gaps in program years 2011 and 2012, the Department of Labor's (DOL) Employment and Training Administration (ETA) considered various factors, including the potential effects on students and recommendations from stakeholders. After considering these factors, ETA used $38 million in funding transfers and implemented $75 million in spending cuts, which included several temporary suspensions of new enrollments, temporary cuts to training, and permanent cuts to student benefits and services, and administrative costs.
Job Corps' contractors, including center staff, said ETA's internal notices to implement spending cuts in program years 2011 and 2012 were sometimes not timely and complete. For example, in some cases, ETA issued a notice on a Friday that required a response by Monday or Tuesday. Staff at three of the eight centers GAO visited said they or other staff worked over the weekend to prepare responses, such as revised spending plans. GAO's review of ETA's internal notices found that 11 of 19 gave contractors 3 business days or fewer to implement a program change, respond, or both. Contractors also said ETA's notices sometimes lacked information they needed to effectively implement changes and communicate them to students and community partners, such as how long cuts would last. ETA officials said their communications were appropriate, given their oversight role and time constraints. Although ETA has guidance on the content of internal notices to contractors, it does not specify time frames for providing notice of program changes. Given challenges contractors identified, ETA's guidance may not ensure that, in accordance with federal internal control standards, contractors receive sufficiently detailed information at the appropriate time to effectively communicate and implement changes. With regard to Congress, while DOL met requirements for notification of funding transfers, some members sent letters to DOL expressing dissatisfaction with the timing and completeness of DOL's communications. The Workforce Innovation and Opportunity Act, subsequently enacted in 2014, requires DOL to provide more frequent and detailed reports to Congress on Job Corps' financial position.
ETA's spending cuts reduced the number of applicants and new enrollees, limited some training opportunities for students, and had other adverse effects. According to ETA data, Job Corps applicants decreased by about a third, from 79,567 in program year 2010 to 53,725 in program year 2012, and new student enrollments decreased by about a quarter, from 56,171 to 40,792 over the same time period. The final enrollment suspension, along with other factors, such as a reduction in outreach and admissions staff, also had subsequent effects on student recruitment. For example, after the enrollment suspension ended, it took Job Corps 8 months to reach over 90 percent of its planned enrollment goal.
In response to recommendations by DOL's inspector general for internal control improvements, ETA has implemented several initiatives to improve the tracking and reporting of Job Corps' financial information. ETA also has initiatives underway to help ensure that Job Corps' costs and appropriations are aligned and to assess the financial implications associated with program changes. While these are all important steps, it is too early to determine the extent to which they will help ETA improve its financial management of the program in the future.
section_title: What GAO Recommends
paragraphs: GAO recommends that ETA review the sufficiency of its guidance for internal notices about program changes. ETA concurred with this recommendation.

section_title: Letter
paragraphs: Many low-income youth face multiple barriers to obtaining the skills they  need to find and keep a job, go to college, or enter military service. The  Job Corps program, which is administered by the Department of Labor’s  (DOL) Employment and Training Administration (ETA), is the nation’s  largest residential, educational, and career technical training program for  economically disadvantaged youth between the ages of 16 and 24. In  program year 2013, Job Corps received about $1.6 billion in funding and  served on average approximately 32,000 youth through 125 centers in 48  states, the District of Columbia, and Puerto Rico.
In program years 2011 and 2012, ETA projected that Job Corps’ costs  would exceed its appropriations by approximately $39 million and $62  million, respectively, and took action to resolve the projected funding  gaps. In May 2013, DOL’s inspector general reported that several  factors, including budgetary and programmatic weaknesses, contributed  to Job Corps’ financial challenges and made several recommendations to  improve internal controls. You asked us to review the specific measures  ETA implemented to address Job Corps’ financial challenges, as well as  the effect they had on applicants and students. Specifically, we examined  (1) how ETA selected the measures it implemented to address Job Corps’  financial challenges in program years 2011 and 2012, (2) the timeliness  and completeness of ETA’s communications to Job Corps contractors,  including center staff, and Congress, (3) the effects ETA’s spending cuts  had on applicants and students, and (4) the steps ETA has taken since to  improve Job Corps’ financial management.
To address our objectives, we reviewed agency documentation and  summary-level financial data, and interviewed ETA and Job Corps  officials to identify the measures ETA implemented to address Job Corps’  financial challenges in program years 2011 and 2012. We also reviewed  the internal notices about program changes that ETA sent to Job Corps  center contractors’ corporate office and center staff, and outreach and  admissions contractors, and DOL’s communications with Congress. In  addition, we interviewed officials and staff from Job Corps’ six regional  offices, and visited eight Job Corps centers in five states: California,  Illinois, Kentucky, Maryland, and Oregon. These centers were selected to  reflect a mix of center operators, geographic diversity, and variations in  center size. During our visits, we interviewed select Job Corps center  contractors’ corporate office and center staff, outreach and admissions  contractors, and students. In addition, we reviewed Job Corps’ applicant,  enrollment, and student outcome data from program years 2010 through  2013. Based on our interviews with agency officials and review of relevant  documentation, we determined that these data, as well as ETA’s  summary-level financial data, were sufficiently reliable for our purposes.  To identify the steps ETA has taken since to improve Job Corps’ financial  management, we interviewed ETA officials, contractors, and DOL’s  inspector general. We also reviewed standards for internal control, and  relevant federal laws and regulations. Appendix I provides a more  detailed discussion of our scope and methodology.
We conducted this performance audit from September 2013 to January  2015 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: Job Corps’ Structure and Operations
paragraphs: ETA administers Job Corps’ 125 centers through its national Office of Job  Corps under the leadership of a National Director and a field network of  six regional offices located in Atlanta, Boston, Chicago, Dallas,  Philadelphia, and San Francisco (see fig. 1). Job Corps is operated  primarily through contracts, which according to ETA officials, is unique  among ETA’s employment and training programs; other such programs  are generally operated through grants to states. Ninety-seven of Job  Corps’ 125 centers are operated under contracts with large and small  businesses, nonprofit organizations, and Native American tribes. The  remaining 28 centers (called Civilian Conservation Centers) are operated  by the U.S. Department of Agriculture’s (USDA) Forest Service through  an interagency agreement with DOL. Both center contractors and the  USDA Forest Service employ Job Corps center staff who provide  program services to students. In addition, ETA contracts with 15  organizations to provide other supports for the program, including student  outreach and career assistance.
section_title: Job Corps’ Eligibility Criteria and Program Services
paragraphs: To be eligible for Job Corps, youth must be between the ages of 16 and  24 at the time of enrollment; meet low-income criteria; and have an  additional barrier to education and employment, such as being homeless,  a school dropout, or in foster care. Once enrolled, youth are assigned to a  specific Job Corps center, usually one that is located nearest their home  and offers a job training program of interest. The vast majority of students  live at Job Corps centers in a residential setting, while the remaining  students commute on a daily basis from their homes to their respective  centers. This residential structure is unique among federal youth  programs and enables Job Corps to provide a comprehensive array of  services, including housing, meals, clothing, financial assistance,  medical and dental care, and recreational activities, as well as academic  instruction and job training. Because Job Corps is self-paced, the length  of time students participate in the program varies. On average, students  participate in the program for 9.6 months; however, the maximum  enrollment period is generally 2 years.
section_title: Job Corps Financial Management
paragraphs: The Office of Job Corps is responsible for overseeing program operations  and monitoring Job Corps costs. Two other offices work in conjunction  with the Office of Job Corps and ETA’s six regional offices to monitor and  manage Job Corps program costs:
ETA’s Office of Financial Administration, which was created in August  2012 to strengthen internal controls and separate Job Corps’ budget  and accounting roles and responsibilities from the Office of Job Corps;  and
ETA’s Office of Contracts Management, which was created in 2010 to  centralize ETA’s acquisition and procurement functions, including  soliciting, evaluating, and awarding Job Corps contracts.
ETA also consults with and reports financial information on Job Corps to  DOL’s Office of the Chief Financial Officer, which is responsible for  department-wide financial management operations and reporting. In  addition, ETA closely works with DOL’s Office of the Assistant Secretary  for Administration and Management on budget and contracting issues.
ETA manages Job Corps funds across three different time periods: the  fiscal year (October 1 – September 30), program year (July 1 – June 30),  and contract year, which varies by contract.
Fiscal year. In DOL’s annual appropriations acts, Congress provides  funding for three Job Corps accounts—Administration; Construction,  Rehabilitation, and Acquisition (CRA); and Operations.  Administration funds are made available on a fiscal year basis, while  Operations and CRA funds are made available on a program year  basis. Table 1 shows the appropriations for each of Job Corps’  accounts made in fiscal years 2011 through 2013.
Program year. Job Corps operates on a program year basis, which  begins on July 1 of the fiscal year for which the appropriation is made,  and ends on June 30 of the following year. According to ETA officials,  operating on a program year gives Job Corps the flexibility to respond  to budget uncertainty. For example, if Congress passes a continuing  resolution, Job Corps would be minimally affected, if at all, because  its program year funding would cover its ongoing operations until June  30. However, ETA officials noted that if a continuing resolution lasts  beyond June 30, it would likely affect Job Corps’ operations.
Contract year. ETA awards contracts—and contractors manage their  budgets—on a contract year basis, which may begin and end at  different times based on the terms of the contract.
section_title: Job Corps’ Financial Challenges in Program Years 2011 and 2012
paragraphs: In program years 2011 and 2012, ETA officials projected that Job Corps’  Operations account would not have sufficient funds to cover program  costs. In May 2013, DOL’s inspector general reported that several  factors contributed to Job Corps’ financial challenges. These factors  included a combination of (1) untimely communication about projected  costs that exceeded appropriations; (2) initial planning for costs that did  not account for increased expenditures for three new centers; (3)  inaccurate accounting for projected obligations; and (4) a lack of  consistent monitoring of costs throughout the program year.
In response to these findings, DOL’s inspector general recommended that  ETA improve Job Corps’ internal controls in four areas: (1) policies,  procedures, and communication of information; (2) budget execution; (3)  data supporting spending projections and monitoring; and (4) monitoring  of projected and actual costs. ETA officials told us that they have  addressed all of the recommendations; however, as of January 2015,  DOL’s inspector general had not closed most of them because it had not  received sufficient documentation of ETA’s actions. ETA officials said that  they plan to provide the additional documentation to the DOL inspector  general, and are aiming to have all the recommendations closed in 2015.
section_title: ETA Considered Overarching Goals and Various Factors in Selecting Measures to Address Job Corps’ Financial Challenges
subsections: section_title: ETA Used Funding Transfers and Spending Cuts to Address Job Corps’ Financial Challenges in Program Years 2011 and 2012
paragraphs: ETA addressed Job Corps’ financial challenges in program years 2011  and 2012 through a combination of funding transfers and spending cuts.  In program year 2011, ETA primarily used transferred funds to resolve  Job Corps’ projected funding gap, whereas in program year 2012, ETA  relied more heavily on spending cuts. Over both program years, ETA  used $38.4 million in funding transfers and implemented $75.3 million in  spending cuts (see table 2). Most of these spending cuts—$60.3 million— were made through modifications to individual Job Corps center contracts  and reductions to the USDA Forest Service budget for operating its Job  Corps centers; the remaining cuts were implemented by the Office of Job  Corps across all centers and at the national level.
Over both program years, ETA’s spending cuts included:
Three temporary enrollment suspensions. ETA suspended  enrollment of new students in June 2012, from late November to  December 2012, and from late January to late April 2013.
Temporary cuts to training. ETA prohibited students from enrolling  in advanced training or the college program from January to April  2013.
Temporary reductions to maximum center enrollment levels. ETA  reduced maximum enrollment levels by 22 percent, on average,  across all centers. This eliminated unused slots but did not affect  students who were already enrolled.
Permanent cuts to student benefits and services. ETA reduced  student stipends and transition pay that students receive upon  graduation. ETA also increased the student-teacher ratio for  academic classes and reduced health services and recreational  activities.
Permanent cuts to administrative costs. ETA reduced national  contracts for academic support, career technical support, and the Job  Corps Data Center. ETA also reduced national advertising as well as  training and travel for center staff.
After using transferred funds and implementing spending cuts, ETA  reported that Job Corps ended program years 2011 and 2012 with $8  million and $40 million in obligated but unexpended operations funds,  respectively. For example, ETA indicated that in program year 2012, it  did not use these funds to make payments under the contracts because  contractors’ costs were lower than expected. Specifically, ETA officials  said that slower than anticipated enrollment after the final enrollment  suspension was lifted resulted in lower than expected costs. ETA  officials also noted that if Job Corps had been able to increase enrollment  more quickly, the amount of obligated but unexpended funds would have  been significantly less. Job Corps ended program year 2013 with $11  million in obligated but unexpended funds, which ETA officials described  as a typical amount of “carry-over funds.”
In a February 2014 response to a congressional inquiry and in its fiscal  year 2015 Congressional Budget Justification, ETA stated that the $40  million in obligated but unexpended program year 2012 operations funds  were to be “offset” from the contractors’ remaining program year 2013  allocations. This would allow program year 2013 funds to be used for a  variety of purposes. In addition, according to ETA officials, the agency  used funds that had been obligated for Job Corps contracts but remained  unexpended at the end of program years 2011 and 2013 for Job Corps  operations in program years 2012 and 2014, respectively, as specified in  individual contracts. With respect to all three years—program years 2011,  2012, and 2013—the basis and extent to which ETA used funds made  available for one program year for a subsequent program year, and the  mechanisms by which it did so, are unclear but beyond the scope of this  review.
section_title: In Selecting Measures, ETA Considered Overarching Goals, Various Factors Including Potential Effects on Students, and Recommendations from Stakeholders
paragraphs: ETA used different overarching goals to guide its decision-making  process for selecting measures to address Job Corps’ financial  challenges in program years 2011 and 2012. ETA officials said that in  program year 2011, their overall goal was to act quickly to end the  program year within budget because they had only 2 months to resolve  the projected funding gap before the program year ended. Officials said  that in program year 2012, their overall goals were to: (1) align Job Corps’  operating expenses with its appropriation, and (2) implement sufficient  spending cuts to avoid making additional cuts under sequestration in the  following program year.
In deciding the extent to which it would use funding transfers to address  Job Corps’ financial challenges in program years 2011 and 2012, ETA  considered three factors: (1) the time frame it had in which to act, (2) the  long-term effect on Job Corps’ financial position, and (3) the effect on Job  Corps accounts or other programs from which funds would be transferred.  For example, in program year 2011, ETA officials said they used most of  the amount available for transfer because there was little time remaining  in the program year to implement spending cuts and negotiate contract  modifications. However, in program year 2012, ETA officials said they  used transferred funds to a lesser extent because they believed that  making permanent spending cuts would better position the program to  absorb reductions under sequestration in the following program year. In  addition, to avoid adversely affecting the safety of Job Corps center  facilities, ETA officials said they decided not to transfer funds intended for  facility maintenance and improvements to program operations again in  program year 2012 after doing so the previous year.
In selecting spending cuts in program years 2011 and 2012, ETA  considered four factors: (1) the potential effect on students already  enrolled in Job Corps, (2) potential dollar savings, (3) the implementation  time frame, and (4) equity across contractors. For example, to minimize  adverse effects on students already enrolled in Job Corps, ETA officials  said they reduced biweekly stipends and transition pay—which students  receive upon graduation—only for new students who entered the program  on or after November 1, 2012. In addition, ETA officials told us they  considered reducing student enrollment at seven Job Corps centers in  program year 2012, but decided against this approach because it would  not have generated sufficient savings before the end of the program year,  and because it would have disproportionately affected certain contractors.  Instead, ETA officials said they decided to implement a third temporary  enrollment suspension because they believed it would more quickly and  equitably achieve sufficient savings.
ETA officials said they also considered all 38 recommendations received  from internal workgroups and other stakeholders, and implemented 21 of  them. In program year 2011, ETA received recommendations from the  Job Corps Cost-Effectiveness Workgroup before it projected the funding  gap. In program year 2012, ETA solicited recommendations for  spending cuts by convening two national workgroups in the areas of  health care and staffing, and asked contractors and the USDA Forest  Service to nominate participants. In addition to the recommendations  submitted by these workgroups, ETA also received several unsolicited  recommendations from the National Job Corps Association and two  center contractors, which offered alternatives to the third enrollment  suspension in program year 2012. ETA officials told us that they  implemented 21 of the 38 recommendations submitted by these  stakeholder groups (appendix II provides a list of spending cuts  implemented by ETA). ETA officials said they did not implement the  remaining 17 recommendations for various reasons including potential  adverse effects on students already enrolled; lack of evidence of savings;  and, lack of timely savings (appendix III provides a list of  recommendations not implemented by ETA). For example, officials said  they decided not to implement a recommendation to conduct a staff  compensation survey because it would have increased costs.
While ETA considered recommendations from stakeholders in selecting  spending cuts, it implemented a third enrollment suspension from late  January to late April 2013 despite concerns raised by stakeholders. For  example, the National Job Corps Association urged ETA to reconsider the  planned suspension, calling it a drastic step that would compromise the  mission of Job Corps. Similarly, a center contractor raised concerns that  the suspension would “significantly hurt a large number of students.” In  addition, more than 70 members of Congress expressed concerns about  the suspension, stating that it would not only be detrimental to students,  but would result in layoffs of Job Corps center staff. However, ETA  officials said they decided to implement this suspension because they  believed it would quickly and equitably achieve sufficient savings. ETA  officials also noted that, as program year 2012 progressed, they had  fewer options for spending cuts that would achieve sufficient savings.
section_title: Job Corps Contractors and Some Members of Congress Said That Communications Were Sometimes Not Timely and Complete
paragraphs: Job Corps center contractors’ corporate and center staff, and outreach  and admissions contractors, told us that the timing of ETA’s internal  notices regarding spending cuts in program years 2011 and 2012 in some  cases created challenges for staff. For example, in two cases, ETA  issued a notice on a Friday that required all contractors to submit a  response by the following Monday or Tuesday. Staff at three of eight  centers we visited said they or corporate staff worked over the weekend  to prepare responses, such as revised spending plans. Our review of  ETA’s internal notices regarding spending cuts found that 11 of 19—8 of  which were issued in program year 2012—provided all contractors,  including center staff, with short notice of program changes or a short  time frame in which to respond, or both. Specifically, seven notices  provided contractors 3 or fewer business days notice of program  changes; two required contractors to provide a response within 3  business days; and two notices did both. ETA officials said the timing of  their communications to contractors was appropriate, given their oversight  role and the time constraints they faced, and noted that they discussed  one program change with contractors before the related notice was  issued. They also emphasized that the internal notices we reviewed were  not contract modifications, which are the legally binding changes to the  terms of a contract. However, officials acknowledged that contractors  received these internal notices before they received contract-related  communications such as contract modifications. In our review of the 11  internal notices, we found that 2 informed contractors of upcoming  contract modifications, but both of the notices stated that program  changes were effective immediately.
In addition, Job Corps center contractors’ corporate and center staff, and  outreach and admissions contractors, told us that ETA’s internal notices  sometimes lacked information they needed to effectively implement  changes and communicate them to students and community partners. For  example, staff from 12 of the 15 contractors and centers we interviewed  told us that the internal notices did not include the total amount of the  projected funding gaps or how long the spending cuts would last. Five of  these contractors said this lack of information made it difficult to answer  questions from students and organizations they had formed partnerships  with in their communities. However, ETA officials said that they chose not  to share the total amount of the projected funding gaps with contractors  because it could have affected ETA’s ability to maximize savings during  contract negotiations. Further, three of the four outreach and admissions  contractors we interviewed told us that a partial stop-work order issued in  January 2013—which directed each contractor to immediately stop  outreach and admissions activities and reduce its staff to one—lacked  sufficient instructions. Specifically, two contractors said that the order  did not provide guidance on whether staff could continue to work to  accomplish required tasks, including notifying pending enrollees of the  enrollment suspension and securing offices and student files. Two  contractors said that the order did not provide sufficient guidance on staff  reductions, such as whether staff who were laid off could receive  severance pay or how long the reductions would last. Three contractors  noted that regional officials were unable to provide clear answers to their  questions. Due to this lack of guidance, two contractors decided not to lay  off staff until they had completed the required tasks, despite uncertainty  about whether they would be reimbursed for those costs. While these  contractors told us that they needed more information on how to  implement these changes, the partial stop-work order included the  minimum content required by federal regulations. Specifically, the partial  stop-work order included: (1) a description of the work to be suspended;  (2) instructions concerning the contractor’s issuance of further orders for  materials or services; (3) guidance to the contractor on action to be taken  on any subcontracts; and (4) other suggestions to the contractor for  minimizing costs. In addition, ETA officials said that the level of  information they provided to contractors was appropriate, given ETA’s  oversight role, and noted that contractors are responsible for internal  personnel decisions such as paying benefits and terminating or laying off  staff. Officials also noted that they negotiated the terms and conditions of  the partial stop-work order separately with each contractor, so it would not  have been appropriate for ETA to issue more detailed instructions to all  contractors.
While ETA is subject to regulatory requirements regarding contract- related communications, it also has internal guidance on the minimum  content of the internal notices it uses to inform contractors about program  changes. Specifically, ETA has templates requiring these notices to  include information such as the purpose of the notice, an explanation of  the program change, the effective or expiration date for the change,  actions that contractors are required to take, and time frames for  completing these actions. However, these templates do not specify the  amount of notice that contractors should receive before program changes  are expected to be implemented. According to federal internal control  standards, federal agencies should ensure that pertinent information is  distributed to the right people in sufficient detail and at the appropriate  time to enable them to carry out their duties and responsibilities efficiently  and effectively. Given the challenges contractors identified, ETA’s  internal guidance may not ensure that contractors receive sufficiently  detailed information at the appropriate time to effectively communicate  and implement program changes.
Similarly, while DOL met legal requirements for notifying the House and  Senate Committees on Appropriations of funding transfers within certain  time frames, some members of Congress expressed dissatisfaction with  the timing and completeness of DOL’s communications. For example, our  review of letters exchanged between DOL and Congress in program  years 2011 and 2012 found that some members of the Senate Committee  on Appropriations asked why DOL had not notified them as soon as the  first projected funding gap was identified in April 2012. DOL explained  that because information was evolving, it delayed notification until it had  complete and accurate information. In addition, in a June 2012 report, the  Senate Committee on Appropriations stated that it needed to understand  the circumstances that led to the projected funding gap in order to  conduct proper oversight, and requested that DOL submit a detailed  report, including the impact of the projected funding gap on Job Corps’  program year 2012 budget. DOL subsequently provided the report in  July 2012. Further, in a January 2013 letter to DOL, more than 70  members of Congress expressed concerns about DOL’s plans to  implement a third enrollment suspension, and noted that DOL had not  responded to a previous request for the projected amount of savings  associated with this suspension. When the congressional members did  not receive a response in the time frame they requested, they sent a letter  to the Administration, expressing frustration with DOL’s lack of attention  and responsiveness. DOL subsequently provided a response in February  2013. DOL officials said that they try to be as timely as possible in  responding to congressional requests, and noted that the formal  communications we reviewed were only part of their communications with  Congress. According to DOL officials, during the last 2 months of program  year 2011 and in program year 2012, they also held at least 13 informal  briefings and teleconferences with congressional staff about the projected  funding gaps and actions to address them.
The Workforce Innovation and Opportunity Act, which was enacted in  2014, requires DOL to provide more frequent and detailed reports to  several congressional committees and subcommittees on Job Corps’  financial position. Specifically, beginning in January 2015, the Act  requires DOL to report every 6 months on: (1) the status of the  implementation of the DOL inspector general’s recommendations to  improve internal controls over Job Corps’ funds and expenditures, (2) a  description of any budgetary shortfalls and the reasons for them, and (3)  a description and explanation of any contract expenditures that exceed  the amount of the contract. After 3 years, the Act requires DOL to submit  these reports on an annual basis for 2 additional years, unless Job Corps  experiences a budgetary shortfall, which triggers additional reporting  requirements.
section_title: ETA’s Spending Cuts Adversely Affected Applicants and Students, and Had Other Wide-Ranging Effects
subsections: section_title: Enrollment Suspensions Reduced the Number of Applicants and New Enrollees, and Had Other Effects
paragraphs: The three enrollment suspensions ETA implemented in program years  2011 and 2012 restricted access to Job Corps for all but a few types of  applicants, which reduced the number of students who applied to and  entered the program (new enrollees) in those program years.  Specifically, in program year 2012, Job Corps had nearly a third fewer  applicants and more than a quarter fewer new enrollees than it did in  program year 2010. During the same time period, Job Corps’ average  total enrollment dropped 12 percent (see fig. 2).
The enrollment suspension implemented from January to April 2013 also  restricted access for other groups, including approved applicants who had  not yet started in Job Corps and enrolled students who were on medical  or administrative leave. For example, some youth who had been  approved for the program were unable to enroll until after the suspension  was lifted. Students at two centers who were in this group told us that  they had to wait 4 to 6 months to enroll in Job Corps, and in some cases  took temporary jobs while they waited. One outreach and admissions  contractor we interviewed told us that they had about 130 applicants  ready to enroll before the enrollment suspension, but only 30 enrolled  once the suspension ended. In addition, the 2013 enrollment suspension  restricted some students who were already enrolled but were on medical  or administrative leave from returning to the program until the suspension  was lifted.
While ETA allowed applicants who were homeless, runaways, or in foster  care to enroll in Job Corps during the 2013 enrollment suspension, fewer  were enrolled relative to previous years. According to ETA data, 40  percent fewer youth who were homeless, runaways, or in foster care  entered the program during January to April 2013 compared to the same  time period of the prior year. ETA officials said that fewer of these  applicants applied during the enrollment suspension but stated that the  acceptance rate for these applicants did not change. However, two  outreach and admissions contractors told us that the restrictions imposed  on them through the partial stop-work order made it difficult to enroll these  applicants. For example, they said that the travel restrictions made it  difficult to assist and maintain contact with homeless, runaway, or foster  care applicants throughout the application and enrollment process.  Additionally, these outreach and admissions contractors said that ETA  established a new rule that required verifications of homelessness to be  submitted to and approved by the national Office of Job Corps.
The 2013 enrollment suspension also had subsequent effects on student  recruitment and enrollment. While outreach and admissions contractors  were allowed to begin operating again shortly before the end of the  enrollment suspension, ETA did not allow them to immediately return to  full staffing levels. Three outreach and admissions contractors told us  that most of their former staff did not return so they had to recruit, hire,  and train new staff. Besides staffing challenges, four outreach and  admissions contractors told us that they had to reestablish partnerships  with community organizations and build a new applicant pool since they  were not allowed to collect applications during the suspension. Outreach  and admissions contractors also told us that because of the smaller  applicant pool and the push from ETA to fill centers quickly with limited  staffing levels, they have had difficulties meeting enrollment goals.  Although ETA lowered its planned enrollment goals for Job Corps after  the enrollment suspension was lifted, it did not come within 10 percent of  its enrollment goal until December 2013—8 months after the 2013  enrollment suspension was lifted (see fig. 3).
section_title: Students Enrolled in Job Corps Were Adversely Affected by Cuts to Training and Program Benefits
paragraphs: Although ETA tried to minimize adverse effects on students who were  already enrolled in Job Corps, some of the spending cuts reduced  students’ benefits and temporarily limited their training options. Because  much of Job Corps’ budget is dedicated to student-related costs, ETA  officials said that they had to make cuts that would affect new and current  students to address the program’s financial challenges. While some of the  cuts affected only newly enrolled students, others affected both new and  current students. ETA temporarily restricted some training options that  would have given students the opportunity to stay in Job Corps longer  and earn additional credentials. All students participate in training for at  least one trade, but some take an additional trade, participate in  advanced training, or take college courses. Students at two centers told  us that they anticipated taking a second trade because they were unable  to take their preferred trade when they first enrolled. In an effort to  reduce overall enrollment during the 2013 suspension, however, ETA  prohibited students from participating in advanced training or entering the  college program from January through April 2013. In addition, ETA  officials told us that they limited the number of students who could pursue  a second trade. According to ETA data, there has generally been a  decline in the number of students who have completed additional training  over the last 3 program years (see fig. 4). The number of students who  completed the college program declined 40 percent from program year  2012 to program year 2013.
In addition, ETA reduced financial assistance available to students,  making it more difficult for them to support themselves while in Job Corps  and after they complete the program. Biweekly stipends for newly  enrolled students were reduced from a maximum of $50 to $35, and the  maximum clothing allowances for all students were cut by more than a  third. Staff at four centers and four groups of students we interviewed  said that these reductions made it more difficult for students to purchase  necessities such as toiletries and clothing. One staff member noted that  students come into Job Corps with very little and, while the amount they  receive is small, the financial resources that Job Corps provides makes a  big difference in the students’ lives. Additionally, ETA reduced the amount  that newly enrolled students receive in transition pay upon graduation.  The purpose of this funding is to provide students with an incentive to  complete the program, and also provide them with the resources they  need to live independently after they graduate from Job Corps. Center  staff, regional officials, and students told us that reduced transition pay  would not be enough for students to live independently after Job Corps.  For example, students at one center told us that the reduced transition  pay would not be sufficient for a deposit on an apartment.
ETA also limited students’ access to health and wellness services by  reducing the number of hours of most health professionals at each center.  Some students we spoke with at four centers said they had difficulty  getting appointments to see a doctor or dentist. Staff at one center told us  that if a doctor was not available when emergency situations arose,  students were taken to the hospital and the related expenses were paid  for by the center contractor. Students in need of drug and alcohol  counseling faced similar issues with access to services. At one center we  visited, a drug and alcohol counselor noted that due to such cuts, the  center is now less capable of providing for the needs of students who  have substance abuse issues.
Further, ETA implemented a hiring freeze, increased the student-teacher  ratio, and cut funding for student recreation, which affected students’  experiences while in Job Corps. Cuts to center staff created a sense of  instability within the program, according to students we spoke with.  Students at four centers said they faced overcrowded classrooms, and  some noted other negative impacts that staff layoffs had on the program  such as the loss of experienced staff that built strong relationships with  students and helped set their goals. Students at one center also told us  that of all the cuts, those to recreational activities had the most significant  impact on them. Recreational activities provide students with  opportunities for social development when they are not in the classroom,  according to officials in one region.
section_title: ETA Has Several Initiatives Underway to Improve Financial Management
paragraphs: ETA has undertaken several initiatives to improve Job Corps’ financial  management. In response to the DOL inspector general’s  recommendations, ETA has implemented several initiatives to improve  the tracking and reporting of Job Corps’ financial information. According  to ETA officials, they have developed guidelines to identify potential  financial risks related to contractors’ spending levels. Specifically, officials  now use monthly financial reports to identify and investigate instances  where contractors’ expenses are 5 percent higher than their monthly  budgets or 1 percent higher than their program year budgets. Also, ETA  officials said that they have formalized their monthly reporting on the  status of Job Corps’ contract obligations and funds to Job Corps, ETA,  and DOL management, and have developed reports to reconcile their  financial data recorded in various systems. ETA officials have also  developed standard operating procedures to reflect current financial  processes and systems, and defined staff roles and responsibilities.
Beyond these steps to address the DOL inspector general’s  recommendations, ETA has initiatives underway to better align Job  Corps’ costs with its appropriations. Specifically, ETA is currently making  limited increases to the number of students who can be served by certain  Job Corps centers, while seeking to ensure that planned enrollment levels  align with Job Corps’ appropriations. As part of this initiative, officials told  us they are using a phased approach to increase student enrollment. ETA  has assessed enrollment levels at the 65 highest-performing Job Corps  centers to determine whether they can serve additional students without  significantly increasing costs. ETA officials also said that they have begun  assessing enrollment levels at the next 32 highest-performing centers to  determine whether increases can be made, but did not provide any  specific time frames for when this would be completed. In another  initiative to improve financial management of the Job Corps program,  ETA is monitoring the total value of Job Corps’ contracts in an effort to  ensure they align with the program’s appropriations. Additionally, in  February 2014, ETA created the Job Corps Financial Management  Workgroup to facilitate communication about financial management  challenges between national officials and contractors. Specifically, the  workgroup is examining challenges and potential solutions related to  tracking Job Corps funding across the program year and contract year,  among other issues.
Furthermore, ETA officials told us that they are assessing the financial  implications associated with current and future program changes. For  example, officials said that as they have made limited increases to  centers’ enrollment levels, they have modified contracts—and contractors  have modified their budgets—accordingly. Moving forward, ETA officials  said that they will use monthly reports to identify and investigate  instances where contractors’ expenses are higher than their revised  budgets, as described above. In addition, ETA officials acknowledged that  closing low performing centers could potentially increase costs in the  short-term. The officials added that they have already begun to identify  potential costs such as those associated with breaking leases or  transferring current students to other Job Corps centers. Officials noted  that they plan to take an incremental approach to spending any savings  generated by closing centers in an effort to help ensure that they only  spend savings as they are realized. While these initiatives address  important financial management challenges for the Job Corps program, it  is not yet known the extent to which they will help ETA to improve its  financial management of the program in the future.
section_title: Conclusions
paragraphs: While the financial challenges ETA faced in program years 2011 and  2012 were difficult for the Job Corps program, ETA’s response to them  revealed issues that may have relevance for any similar situations in the  future. As the program moves forward, it will be important for ETA to  ensure that contractors, including center staff, receive the information  they need at the appropriate time to effectively communicate and  implement program changes. Given the challenges contractors identified,  ETA’s current guidance for its internal notices may not be sufficient to  ensure that they receive information that is timely and of sufficient detail.  Without such information, contractors may continue to face challenges  effectively communicating and implementing program changes, such as  ongoing changes to center enrollment levels and future closures of low- performing centers.
It will also be important for ETA to continue its efforts to improve Job  Corps’ financial management. The internal controls deficiencies identified  by the DOL inspector general were significant and wide-ranging. In  addition, the spending cuts implemented in program years 2011 and 2012  had adverse effects on students and others. While ETA is working to  close the inspector general’s recommendations, it is too early to  determine the extent to which the steps ETA has taken will help improve  its financial management of the program in the future.
section_title: Recommendation for Executive Action
paragraphs: To enhance communication with contractors about Job Corps program  changes, we recommend that the Secretary of Labor direct the Assistant  Secretary for Employment and Training to review the sufficiency of ETA’s  guidance for internal notices—including Program Instruction Notices,  Policy and Requirements Handbook Change Notices, and Information  Notices—to ensure that contractors are provided with adequate  notification of program changes before they are expected to be  implemented, and an adequate level of information to assist them in  carrying out their responsibilities.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to DOL for review and comment. We  received written comments from DOL, which are reproduced in appendix  IV. In addition, DOL provided technical comments that we have  incorporated in the report as appropriate. DOL concurred with our  recommendation for ETA to review the sufficiency of its guidance for  internal notices provided to contractors. Specifically, DOL acknowledged  the importance of ensuring that Job Corps contractors are provided  adequate notification of program changes before their expected  implementation. To address this, DOL stated that it would review the  sufficiency of Job Corps guidance for internal notices, and execute and  distribute any contractual actions, such as modifications, in a timely  manner.
We are sending copies of this report to appropriate congressional  committees, the Department of Labor, and other interested parties. In  addition, the report is available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-7215 or sherrilla@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix V.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: The objectives of this report were to examine (1) how ETA selected the  measures it implemented to address Job Corps’ financial challenges in  program years 2011 and 2012, (2) the timeliness and completeness of  ETA’s communications to contractors, including center staff, and  Congress, (3) the effects ETA’s spending cuts had on applicants and  students, and (4) the steps ETA has taken since to improve Job Corps’  financial management.
To address our objectives, we used a variety of methodologies.  Specifically, we reviewed agency documentation and interviewed ETA  and Job Corps officials to identify the measures ETA implemented to  address Job Corps’ financial challenges in program years 2011 and 2012,  and how they were selected. We also reviewed summary-level financial  data from DOL’s New Core Financial Management System to identify the  dollar amount associated with ETA’s spending cuts. Through our  interviews with knowledgeable agency officials and our review of system  documentation, we determined these data to be sufficiently reliable for  our purposes.
To provide information on ETA’s communications, we reviewed the  agency’s internal notices about program changes sent to Job Corps  contractors’ corporate office and center staff, and outreach and  admissions contractors, as well as DOL’s communications with  Congress. We also assessed ETA’s internal communications guidance  using GAO’s standards for internal control in the federal government. In  addition, we interviewed staff from all six Job Corps regional offices, and  conducted site visits to eight Job Corps centers, which were selected to  reflect a mix of center operators, geographic diversity, and variations in  center size. Table 3 provides more information on our site visit selections.
During our visits, we interviewed select Job Corps contractors’ corporate  office and center staff, and outreach and admissions contractors to  understand their involvement in ETA’s process for selecting the spending  cuts implemented. In total, we interviewed 10 corporate office staff, 86  center staff, and 19 outreach and admissions staff. We also interviewed  46 students at six of eight Job Corps centers we visited to identify how  they were affected by the spending cuts. We generally interviewed those  students who were enrolled in Job Corps in program year 2012 because  that is the time period in which ETA implemented its longest enrollment  freeze and most of the spending cuts.
Furthermore, we reviewed Job Corps’ applicant, enrollment, and student  outcome data generated by the Job Corps Data Center from program  years 2010 through 2013 to identify how ETA’s spending cuts affected  applicants and students. We began our analysis with program year 2010  because it preceded the program years in which Job Corps faced its  financial challenges—program years 2011 and 2012. We assessed the  reliability of the data by reviewing existing documentation and  interviewing knowledgeable agency officials. Based on these efforts, we  found the data to be sufficiently reliable for our purposes.
To identify the steps ETA has taken to improve Job Corps’ financial  management, we reviewed relevant agency documentation and  interviewed national and regional ETA and Job Corps officials, as well as  contractors and center staff. We also interviewed DOL’s inspector general  to identify ETA’s progress in implementing its May 2013  recommendations. In addition, we reviewed standards for internal control,  as well as relevant federal laws and regulations.
section_title: Appendix II: Job Corps Spending Cuts by Program Year
paragraphs: Of the 24 Job Corps spending cuts ETA implemented in program years  2011 and 2012, 18 were suggested by ETA management and 6 were  suggested by internal workgroups and other stakeholders (see table 4).  These 6 spending cuts originated from 14 individual recommendations  that ETA received from internal workgroups and other stakeholders.
section_title: Appendix III: Stakeholder Recommendations Not Implemented by ETA
paragraphs: Appendix III: Stakeholder Recommendations  Not Implemented by ETA Job Corps Cost-Effectiveness Workgroup   Participate in Defense Logistics Agency nationwide direct supply natural gas program.
Eliminate the requirement for the provision of on-site dental services at Job Corps centers.
The national office should encourage and approve waivers for certain staffing requirements if an operator’s proposed approach is  likely to be more cost-effective without jeopardizing performance or services.
Disallow regional offices from imposing additional staffing requirements on Job Corps centers beyond national guidelines.
Conduct a new Job Corps staff compensation survey.
Develop model staffing plans that would identify appropriate staff/student ratios for all Job Corps centers.
Modify the goals under which outreach and admissions contracts are rewarded for performance to reflect actual center needs.
Eliminate requirements for the provision of post-placement career transition services in order to focus resources on initial placements.
Track college program slots and off-center training slots for accountability purposes.
Switch Job Corps operations contracts to a 2-year base with five option years without precluding incumbents from bidding on  contracts per year and requiring strict standards for the award of option years.  Job Corps Staffing Cost-Efficiency Workgroup   Evaluate overall staffing levels at centers with higher than average staff to student ratios (e.g., over 35 percent).
Compare current staffing levels and positions to those of 10 years ago to determine if the gradual increase in overall staffing is  justified by an increase in program requirements. Conduct an annual slot utilization study at each center to identify the extent to which  student slot utilization supports staffing.
Evaluate the need for the off-center training and the college program coordinator position on a case by case basis. Consider the  extent of program slot utilization compared to the number of staff assigned. Eliminate positions, or assign responsibilities as collateral  duties where caseloads do not support dedicated staffing.
Review the need for and function of deputy director positions at centers with a contracted enrollment of less than 500 students.  Consider changing the deputy director position to a program director, or eliminating deputy positions that are designated as  developmental positions to prepare staff for center director positions.
Evaluate the work-based learning program to determine if current staffing levels could be reduced in light of a continual shortage of  work-based learning sites and new stringent program (safety) requirements.
Redesign the work-based learning program so that paid work-based learning students can provide some routine functions that have  typically been provided by staff (e.g., food service helper, maintenance helper, custodian, groundskeeper, utility worker). Reduce  staffing levels for those functions by attrition.  Center Contractor   Consider the immediate transfer of the allowable $15 million from the Construction, Rehabilitation, and Acquisition (CRA)  account to the Operations account to avoid more deleterious effects of the proposed center reductions.
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
paragraphs: Andrew Sherrill, (202) 512-7215 or sherrilla@gao.gov.
section_title: Staff Acknowledgments
paragraphs: In addition to the contact listed above, individuals making key  contributions to this report were Mary Crenshaw (Assistant Director),  Ashanta Williams (Analyst-in-Charge), Jessica Botsford, Caitlin Croake,  Helen Desaulniers, Danielle Giese, Carol Henn, John Hocker, Paul  Kinney, Kathy Leslie, Julia Matta, Jean McSween, Sheila McCoy, Megan  Mumford, Mimi Nguyen, Jerome Sandau, Kathleen van Gelder, and Bill  Woods.