GOVERNOR'S COUNCIL ON WORKFORCE INVESTMENT July 26, 2012 OUTAGAMIE COUNTY BOARD RE-DESIGNATION REQUEST
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1 GOVERNOR'S COUNCIL ON WORKFORCE INVESTMENT July 26, 2012 OUTAGAMIE COUNTY BOARD RE-DESIGNATION REQUEST
2 Executive Summary Background On April 13, 2012, the Outagamie County Executive notified the Governor that the Outagamie County Board voted 32-0 in favor of re-designation from the Fox Valley Workforce Development Area to the Bay Area Workforce Development Area. The Workforce Investment Act (WIA) requires the Governor, after consultation with the State Board [Governor's Council on Workforce Investment (CWI)], to determine designation and subsequent designations of local workforce investment areas. WIA lists specific considerations for the Governor's decision: Geographic areas served by local educational agencies, intermediate educational agencies, post-secondary education institutions and area vocational education schools; The extent to which such local areas are consistent with labor market areas; The distance that individuals will need to travel to receive services provided in such local areas; The resources of such local areas that are available, and successful performance, to effectively administer the activities in WIA Title 1b (Job Center direct services and workforce infrastructure); Sustained fiscal integrity and financial liability; Input from the CWI, Chief Elected Officials and the general public; and, The Governor may initiate a re-designation when the Governor determines a local area has substantially violated any provision of WIA title 1. Brief Analyses Findings Department of Workforce Development (DWD) staff conducted substantial analyses to meet the provisions summarized above, as well as other potential ramifications from this re-designation. DWD also garnered input and published public notices in both workforce development areas. The following is a summary of findings based on DWD's analysis: Continuity of services to WIA participants, other job seekers and employees will be maintained at current levels in both areas; Resources and distance for services will effectively remain the same in both areas; Performance of WIA participants can meet or exceed current levels in both areas; DWD cannot fully attest to the financial viability of a re-designated Fox Valley Workforce Development Area; DWD has determined that Fox Valley Workforce Development Board faces fiscal issues due to questioned costs from the U.S. Department of Labor's Comprehensive Review of Workforce Programs and the DWD Fiscal Monitoring; and The Bay Area Workforce Development Area would be sound fiscally and administratively for a re-designation with the inclusion of Outagamie County.
3 INDEX Federal Law Required Steps for Re-Designation and Implementation Page 1 Map of Workforce Development Areas by County Page 3 Map of Education Entities in Fox Valley and Bay Area Page 4 Summary Analyses Service Delivery Impacts Page 5 Fiscal Impacts Page 7 Supporting Documentation Page 9 Summary of Public Input Page 11 Outagamie County Board Letter and Resolutions Page 12
4 High-Level Process for Decision Federal Law Required Steps for Re-designation Requests The process for re-designation of a workforce development area(s) (WDA) as required by the Workforce Investment Act (WIA) includes these major steps: April 13, 2012: Notification to the Governor requesting re-designation with supporting rationale The Governor notifies the Department of Workforce Development (DWD) and the Council on Workforce Investment (CWI), and transparent activities commence including May 2012: o Public input compliance with the WIA public review and comment provisions o DWD full disclosure of options, legislative rights and impact on the local delivery system for both workforce development areas o Notify Region V., U.S. Department of Labor (DOL) July 26, 2012: The CWI includes the re-designation request on their agenda for public input July 26, 2012: The CWI makes a recommendation(s) to the Governor (1) Through consultation with the CWI, (2) after consultation with chief elected officials, and (3) after consideration of comments received through the public comment process, the Governor makes a decision Within 30 days: A unit of government or grant recipient not granted designation may appeal to the CWI Within 90 days: If the appeal sustains the decision, a further appeal may be made to the DOL Secretary High-Level Post Re-designation Activities for Implementation (three months to one year) Substantial implementation activities would be required including, but not limited to: Recalculate and publish new WIA Title 1b local allocations; Renegotiate local performance levels; Modify all state and local reporting systems also requiring readjustment at the federal level; Modify all state and local financial systems; Modify all state labor market data sets including occupational data and wages recalculations; Develop policy and implement reports on historical WDA data/documentation; Develop/modify all state and local grants/contracts/subcontracts from all funding sources (beyond WIA Title 1b); State certify revised Workforce Development Boards; Modify all state and local websites including jobcenterofwi.org; and, Local Plans for both workforce development areas must be modified: Ensure that service provision is not compromised from the boundary change by: Identifying the new service provider(s) for the area requiring appropriate procurement processes. Determining what clients are to be served in each area and strategies to ensure that early exiting of clients does not occur. Modifying all data records/systems. 1
5 High-level implementation continued All governing agreements must be reviewed and modified when appropriate (and either included in the modified local plan(s) or submitted separately for DWD review and approval): WIA/DWD signed assurances Chief Elected Official/Chief Local Elected Official (CEO/CLEO) agrees to one-stop operator selection by the WDB CEO agrees to WDB selection of one-stop operator & WDB and one-stop operator Memoranda of Understanding (MOU) between the WDB and one-stop partners WDB and one-stop operator WDB serving as one-stop operator agreed to by CLEO and Governor CEOs from multiple local governmental units on their respective roles o and responsibilities (including who will be the CEO for the entire local area, how the o governmental units will share liability) Identify WDB and CEO respective roles and responsibilities (may have an agreement) WDB budget approved by CEO WDB performance measures agreed to by CEO and Governor WDB and/or its staff serving as service provider or one-stop operator CEO agrees to WDB s MOU with one-stop partners Evidence of CEO partnership, consultation, cooperation with WDB actions: Develop WDB policies in partnership with CEO Develop WDB local plan and conduct oversight in partnership with CEO WDB appointment of Youth Council in cooperation with CEO WDB oversight of youth programs in consultation with CEO Evidence of designation/selection by CEO: Fiscal agent and WIA partner (the entity that is the grant recipient, administrative entity, or organization responsible for administering the funds for WIA, the local CEO is the grant recipient and therefore is authorized to designate the fiscal agent and WIA partner) Selection of WDB members &.325 2
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8 Summary Analysis Service Delivery Impacts Research and documentation has been conducted by DWD staff to ensure that: Continuity of services to WIA and other funding for participants, other job seekers and employers will be maintained at current levels in all 17 counties of the two WDAs. Resources and distances for services will effectively remain the same in both WDAs. Performance of WIA participants can meet or exceed the current levels in both WDAs. Local policies in both WDAs are quite similar so minimal adjustments would need to occur with the participants transitioning into Bay Area WDA. Industry sector priorities for training are the same, and also not in conflict for continuing participants. At this time, the Fox Valley Workforce Development Board does not meet WIA with eight business members shy of the private sector majority requirement. Direct Services and Facilities Currently, Fox Valley Workforce Development participants living in Outagamie County are typically served through the Job Center in Menasha, Winnebago County, as there is not a job center in Outagamie County. Therefore, there would be no impact to the participants who would be served by staff and partners by the re-designated Bay Area. A memorandum of understanding (MOU) would need to be developed and signed by Fox Valley and Bay Area on coordinating, sharing of resources and other service delivery details. Fox Valley Workforce Development Board (FVWDB) would continue operating their comprehensive and affiliated sites in Menasha, Waupaca, Fond du Lac, Berlin, Oshkosh and Wautoma. Bay Area WDB would continue operating their comprehensive and affiliated sites in Green Bay, Manitowoc, Marinette, Sheboygan, Shawano, Sturgeon Bay, Niagara and Oconto. Wagner-Peyser services, an integral part of the service delivery system particularly for the job center resource rooms, would not change due to a re-designation. Again, MOUs and/or other cooperative agreements between the two WDAs would need to be completed for continuity and coordination of services. Other workforce partners would also need to participate in discussions and resolution of the cost contributions, staffing levels, equipment, etcetera to maintain the current level of services. The re-designation would also have no impact on the other major workforce programs administered through DWD including Rapid Response, Re-employment Services, Trade Adjustment Act and the National Emergency Grants. The leases for the job center facilities were examined to determine any negative impacts on service delivery or extraordinary costs. There would be no complications given the current lease agreements to continue the current level of services. Again, both areas would need to negotiate any space and service contract agreements as part of the re-designation implementation. A comparative analysis was done of the two WDA s major WIA local service delivery policies including training, follow-up services, supportive services, needs related payments and self-sufficiency definitions. While there are some differences in policies between the two WDBs, there are no impediments for a smooth service delivery transition in either WDA. Both areas have identified the top industry sector priorities for training in Advanced Manufacturing and Health Care services. 5
9 Extensive analyses were conducted of the socioeconomic picture of both WDAs, and any prospective ramifications from a re-designation. Population subsets, median income, numbers in poverty, commuter patterns, unemployment rates by education attainment, labor force participation rates by education attainment, and K-12/postsecondary school locations were compiled. There was nothing disconcerting in the data that would be of concern for a re-designation. Funding, Performance and Reporting WIA Title 1b formula funds (distributed to each WDA based on federal formulae and state policy) for services to adults, youth and dislocated workers was recalculated assuming Outagamie County would merge with the Bay Area. [Summary chart page 9] A three-year historical analysis on the WDB s performance measures was captured to determine any anomalies, or variances between the two WDAs in order to determine projected impacts on meeting or exceeding the performance levels. Both areas were provided technical assistance from DWD staff this program year due to their respective performance failures. The expectation is that WDBs will improve their performance levels for program year [Performance summary page 10] Finally, an exercise was conducted of all of the implementation steps and implications on the state and local reports, data systems, websites, etcetera. The required changes would have a significant impact on budgets and dedicated staff for reprogramming, modifications, ensuring historical data, and other details to meet the federal and state reporting and monitoring requirements. Estimated costs are $164,000 to implement those changes needed by October 1, An estimate of additional longer term data base changes may cost as much as $385,000. 6
10 Summary Analysis Fiscal Impacts Background The U.S. Department of Labor, Employment and Training Administration (ETA) conducted a Comprehensive Review of Workforce Programs in Wisconsin and issued its report on May 4, The report identified 18 findings at the FVWDB with related questioned costs of $4,326,502 for the period from June 2005 to June After review of the FVWDB documentation and consideration of the initial response by the FVWDB to the findings, the DWD affirmed the ETA report findings. DWD notified the Fox Valley Local Elected Officials on June 29, 2011 that DWD believed there had been a consistent pattern of financial mismanagement. DWD completed an extensive review of the ETA findings related to the FVWDB, and submitted a response with supporting documentation to ETA on October 11, In the response, DWD agreed with the following ETA findings: Lack of appropriate governance agreements Lack of disclosure of a conflict of interest by the Executive Board Chair Improper building usage charges Failure to conduct financial monitoring of sub-grantees Material internal control deficiencies Lack of administrative controls Undocumented transactions Inappropriate use of credit cards Improper vacation payouts Inappropriate travel charges and inadequate travel documentation Failure to comply with procurement regulations Inadequate accountability for fee for service activities Further activity ensued including the FVWDB Administrator's, Ms. Cheryl Welch, resignation effective February 29, 2012 and a DWD on-site fiscal review. From this required fiscal monitoring of the FVWDB operations in April 2012, DWD affirmed that the financial issues persisted up to the time of the Administrator's resignation. The fiscal review identified issues with overspending of administrative funds, improper assignment of administrative costs, improper vacation payouts, and inadequately documented travel costs. DWD questioned costs of $126,588 for the period July 1, 2010 to April The ETA provided a response to the DWD assessment submitted October 11, 2011 on June 11, At this time, ETA continues to question $4,326,502 in costs and has requested additional documentation in order to make a final determination. Analyses Summary DWD cannot fully attest to the financial viability of a re-designated Fox Valley Workforce Development Area; DWD has determined that FVWDB faces fiscal issues due to questioned costs from the ETA review and the DWD fiscal monitoring; and The Bay Area Workforce Development Area would be sound fiscally and administratively for a re-designation with the inclusion of Outagamie County. 7
11 DWD cannot fully attest to the financial viability of a re-designated FVWDB. DWD finds that the scale of the remaining six-county Workforce Development Area will be diminished by the action (approximately 27%). The proposed Fox Valley Workforce Development Area would be the 4th smallest workforce area in terms of population of the current 11 area structure. DWD believes that the reduced funding levels may constrain the Board s ability to effectively administer activities funded under federal workforce programs. POP WDA 2010 Total Milwaukee 947,735 Total Bay Area 800,023 Total South Central 794,731 Total WOW 608,173 Total Southeast 464,062 Total West Central 462,606 Total North Central 415,158 Total Fox Valley 413,555 Total Southwest 306,925 Total Western 295,244 Total Northwest 178,774 Further, DWD also finds that the FVWDB faces issues due to questioned costs from the ETA review and the DWD fiscal monitoring. While final determinations have yet to be made, DWD finds the potential liability presents a significant financial risk. DWD believes that the final determination for disallowed costs for the FVWDB will be approximately $300,000 - $500,000. DWD believes that much of this will be able to be corrected with stand-in costs. However, any potential liability to the federal government due to the questioned costs would fall on the seven counties of the existing Fox Valley Workforce Development Area, including Outagamie County. The State would be responsible for enforcement of the federal final determination. Lastly, the FVWDB is upside down on the mortgage for the organization s office building on McMahon Drive in Neenah. The mortgage payments exceed the federal allowable rent for the property by approximately $1800 per month. The FVWDB must pay this difference from a non-federal grant source. In addition, the property is secured with a balloon mortgage that will require a payment of approximately $591,000 or refinancing in January Given the commercial real estate market in Neenah, DWD believes the outstanding loan value exceeds the realizable value for the property. While DWD is not able to attest to the financial viability of the redesignated Fox Valley Workforce Development Area, this does not mean that the area would not be able to overcome the steep challenges they face. By engaging in stricter oversight of the program, by continuing to work with DWD on questioned costs and by re-establishing the Workforce Development Board, the Local Elected Officials could make the workforce area work. 8
12 Summary Changes of Local Allocations if Outagamie County Moves from Fox Valley to Bay Area Current WDA Configuration Allocation (Percentage) Allocation Adult Youth DW Adult Youth DW Total Outagamie 2.29% 2.25% 2.43% $ 229,958 $ 264,150 $ 259,587 $ 753,695 Before Change (PY12 Allocations as published) Fox Valley (includes Outagamie) 8.23% 8.27% 8.92% $ 828,031 $ 969,340 $ 954,304 $ 2,751,675 Bay Area 10.27% 10.06% 13.90% $1,032,648 $1,179,318 $1,487,343 $ 3,699,309 Re-designation Approval 6 Counties Remaining in Fox Valley 5.94% 6.01% 6.49% $ 598,073 $ 705,190 $ 694,717 $ 1,997,980 Bay Area with Outagamie 12.56% 12.31% 16.33% $1,262,606 $1,443,468 $1,746,930 $ 4,453,004 Notes: Assumptions: For the transition year, no other WDA's budgets would be impacted. 9
13 Program Year 2010 WIA Title 1b Local Performance Summary Fox Valley Workforce Development Area # 4 Bay Area Workforce Development Area # 5 TOTALS Exceeded Three Performance Goals Exceeded Six Performance Goals Met Five Performance Goals Met Two Performance Goals Did Not Meet One Performance Goal Did Not Meet One Performance Goal DETAIL Exceeded Exceeded Adult: Adult: Average Earnings Average Earnings Retention Rates Dislocated Worker: Dislocated Worker: Average Earnings Average Earnings Retention Rates Entered Employment Rates Youth: Youth: Literacy or Numeracy Gains Attainment of Degree or Certificate Met Met Adult: Adult: Entered Employment Rates Entered Employment Rates Retention Rates Dislocated Worker: Entered Employment Rates Retention Rates Youth: Youth: Attainment of Degree or Certificate Placement in Employment or Education Failed Failed Youth: Youth: Placement in Employment or Education Literacy and Numeracy Gains 10
14 Summary of Public Input On May 1, 2012, the Department of Workforce Development Secretary, Reggie Newson, notified the Fox Valley and Bay Area Workforce Development Board's Directors, Chief Elected Officials and Board Chairs of the Outagamie County Board request for workforce area re-designation. On May 18, 2012, public notices in both areas newspapers were issued with the following paragraph: "On April 13, 2012, the Outagamie County Executive notified the Governor that the Outagamie County Board voted 32-0 in favor of re-designation from the Fox Valley Workforce Development Area to the Bay Area Workforce Development Area. This is the notice for federal compliance to garner input from the public on the implications to participants, employers and the workforce system in general. Comments will be compiled verbatim, and then summarized for review by the Governor's Council on Workforce Investment for a recommendation to the Governor. Please or send your comments by June 14, 2012, to: kristy.budde@dwd.wisconsin.gov or Department of Workforce Development, 201 East Washington Avenue, Room E 100, Madison, WI For more information: On May 17, 2012, an was also sent with the above information to the Workforce Development Directors, and other workforce partners for public input. In addition, an was sent on May 16, 2012 to the 17 County Chief Local Elected Officials that constitute both workforce development areas. Public Notices of the Outagamie County Board request were posted in the following papers: Door County Advocate Eagle Herald Publishing Florence Mining News Green Bay Press Gazette Manitowoc Gannett Menominee Nation News Oconto County Reporter Shawano Leader Sheboygan Press Post Crescent: Oshkosh Northwestern Fond du Lac Reporter The following comment was received: June, 4, 2012 Jeanette Bomberg Florence County Board Chair "I would like to go on the record as Florence County does have concerns about the re-designations. We have voiced them and have concerns about the service the residents of our county will receive. Will our small county be swallowed up?" Finally, the Department of Workforce Development Deputy Secretary, Jonathan Barry, staff and the two Board's Administrators met with the Chief Local Elected Officials of the Fox Valley Workforce Development Area on June 29, 2012 and the Bay Area on July 13, 2012 for discussions on issues and possible resolutions. The following Local Elected Officials participated in these meetings: Tom Nelson, Outagamie County Craig Moeser, Outagamie County Al Buechel, Fond du Lac Mark Harris, Winnebago County Jack Meyers, Green Lake County Debra Behringer, Waushara County Richard Virlee, Door County James Barlow, Kewaunee County Jeanette Bomberg, Florence County Helen Wahlstrom Stratton, Florence County Cheryl Wruk, Marinette County Elmer Roger, Oconto County Fran Damp, Sheboygan County Randy Young, Shawano County Kristin Hooker, Brown County Bob Hermes, Menominee County Mark Rahmlow, Representative Reid Ribble's Office 11
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