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Auditor Logo Tom Schweich

Report No. 2011-16
April 2011

Complete Report
Findings in the audit of the Department of Economic Development, Division of Workforce Development


Contract Monitoring
The Division of Workforce Development (DWD) did not adequately monitor the status of a software development contract and paid $3.8 million to a vendor for two computer systems it could not use. The DWD salvaged the project by paying another vendor $570,000 to complete the project and implement the systems. If the DWD had paid the first vendor only as the agreed upon milestones were met, the DWD should have realized early on that the project was not being completed as stipulated in the contract.

Since this contract was procured, the state's process has changed and information technology contracts are monitored by the Office of Administration Information Technology Services Division and are paid only upon completion of defined milestones.

Payment of Operating Costs of the Governor's Office
The DWD paid over $1,630 in travel costs for the Governor and a Department of Labor and Industrial Relations official for air travel to promote an information technology training program to be administered by the DWD. It does not seem appropriate for the DWD to pay for flights that include no DWD employees. Shifting costs among departments circumvents the appropriations process and distorts the actual costs of operating the DWD, the Department of Labor and Industrial Relations, and the Governor's office.

In the areas audited, the overall performance of this entity was Good.*

American Recovery and Reinvestment Act of 2009 (Federal Stimulus)
The DWD was awarded approximately $98.8 million in federal stimulus funds ($32,706,284 in 2009 and $66,265,250 in 2010) and spent approximately $3.9 million in FY2009 and $52.8 million in FY2010. Appropriations to the DWD from the Federal Stimulus-DED Fund were expended on: personal service ($3,483,625 in 2010); expense and equipment ($22,056 in 2009 and $2,093,447 in 2010); job training (3,890,786 in 2009 and $46,057,513 in 2010); dislocated workers assistance ($818,425 in 2010); emerging industry grants ($74,124 in 2010); and temporary assistance for needy families summer youth program ($295,000 in 2010).

While most of the DWD federal stimulus funds went to fund existing programs and fill budget gaps, according to the DWD, federal stimulus funding helped create or retain an average of 813.5 full-time equivalent jobs in FY2010. These positions were related primarily to temporary jobs in the Workforce Investment Act Summer Youth program intended to provide work experience for youth to prepare them for the workforce.

*The rating(s) cover only audited areas and do not reflect an opinion on the overall operation of the entity. Within that context, the rating scale indicates the following:

Excellent:
The audit results indicate this entity is very well managed. The report contains no findings. In addition, if applicable, prior recommendations have been implemented.

Good:
The audit results indicate this entity is well managed. The report contains few findings, and the entity has indicated most or all recommendations have already been, or will be, implemented. In addition, if applicable, many of the prior recommendations have been implemented.

Fair:
The audit results indicate this entity needs to improve operations in several areas. The report contains several findings, or one or more findings that require management's immediate attention, and/or the entity has indicated several recommendations will not be implemented. In addition, if applicable, several prior recommendations have not been implemented.

Poor:
The audit results indicate this entity needs to significantly improve operations. The report contains numerous findings that require management's immediate attention, and/or the entity has indicated most recommendations will not be implemented. In addition, if applicable, most prior recommendations have not been implemented.

Complete Audit Report
Missouri State Auditor's Office
moaudit@auditor.mo.gov