720-913-5000 auditor@denvergov.org

Audit Report

Office of Economic Development: Workforce Development

The objective of this audit was to review the effectiveness and efficiency of the Office of Economic Development’s (OED) policies and procedures for administering workforce development services and programs for the City and County of Denver. Specifically, this audit examined the extent to which OED’s efforts align with applicable legal requirements, internal control standards, and leading practices for delivering workforce development services and programs.

Watch the Audit Committee presentation here when it is available online.

The Office of Economic Development’s Workforce Development Services Division is responsible for coordinating and supporting local workforce development activities for Denver—including managing approximately $10.6 million in federal grants in 2018. Consistent with regulatory changes enacted under the federal Workforce Innovation and Opportunity Act (WIOA), OED recently shifted from a direct service provider to a contract-based service model in 2016.

Workforce development support is an important facet to the economic growth of Denver and ensuring that OED’s management of it is streamlined ensures it’s continued success.

Workforce development involves a range of activities intended to create, sustain, and retain a viable workforce to support businesses and industries. OED’s Workforce Development Services Division is responsible for coordinating and supporting local workforce development activities for Denver—including managing approximately $10.6 million in federal grants in 2018. Consistent with regulatory changes enacted under the federal Workforce Innovation and Opportunity Act (WIOA), OED recently shifted from a direct service provider to a contract-based service model in 2016.

In response to WIOA, OED developed a local workforce development plan and privatized the City’s workforce development programs and services. OED estimated that this shift would displace more than 100 City employees who had previously delivered programs and services to job seekers and employers in Denver. Ultimately, OED laid off more than 30 employees. OED stated that others transitioned into different positions within OED or found work outside of the organization. Our assessment of the local workforce development plan affirmed that it incorporates almost all the elements required by federal law. Similarly, OED’s workforce development programs and services reflect all but one of nearly 70 requirements established in the local plan. With a few minor additions, the City’s framework for delivering these federally funded programs will comprehensively reflect these new legal and programmatic requirements.

However, the audit identified multiple concerns with the City’s workforce development privatization effort, both regarding the decision to privatize and monitoring of the resulting contract. First, OED did not thoroughly determine the full costs and benefits that would result from its decision to privatize. Further, in the year since privatization, OED has not methodically analyzed all contract costs and the quality of all services provided. Although different OED functions gather relevant information on workforce development activities, it is not being synthesized in a manner that would allow management to make sound decisions about future contracts. Finally, OED could be relying on faulty data to make workforce development management decisions.

Regarding contract monitoring activities, OED has established multiple strategies for monitoring ResCare’s contract performance. However, the audit revealed that those activities are not sufficient to ensure that ResCare is delivering everything agreed to in the contract in three primary areas: quality control planning, policies and procedures used to guide monitoring strategies, and staff training.

1.1 Aligning the Local Plan with the Law—The Executive Director of Economic Development should work with the Denver Workforce Development Board to update the Denver Workforce Development Board Local Plan to include statewide rapid response coordination strategies, integrated case management information system strategies, and up-to-date performance measures.
Auditee Response: Agree, Implementation Date – 12/31/18

1.2 Performance Reporting—The Executive Director of Economic Development should coordinate with its one-stop and other service providers to ensure that monthly and quarterly reporting requirements reflect the performance measures required by WIOA, as contained in the updated Denver Workforce Development Board Local Plan.
Auditee Response: Agree, Implementation Date – 12/31/18

1.3 Evaluating Cost and Quality—The Executive Director of Economic Development should develop a formal, systematic, and comprehensive approach for evaluating the City’s privatization of workforce development programs and services, including an analysis of the full cost of the different services provided, transition costs, and costs associated with monitoring and oversight resulting from a change in provider services.
Auditee Response: Agree, Implementation Date – 12/31/18

1.4 Ensuring Data Reliability—The Executive Director of Economic Development should develop policies and procedures to ensure that the data used to support workforce development program operations and performance is complete, accurate, and valid.
Auditee Response: Agree, Implementation Date – 9/30/18

1.5 Contract Monitoring Policies and Procedures—The Executive Director of Economic Development should develop detailed, contract-specific policies and procedures to guide its contract monitoring activities related to the provision of the City’s workforce development programs and services. The policies and procedures should identify the precise contract provisions to be monitored and the evidence required to demonstrate that all terms have been met.
Auditee Response: Agree, Implementation Date – 9/30/18

1.6 Contract Monitoring Reporting—After developing detailed, contract-specific policies and procedures to guide contract monitoring activities related to the provision of the City’s workforce development programs and services, the Executive Director of Economic Development should establish deadlines for reporting that will enable timely identification and resolution of compliance and performance issues.
Auditee Response: Agree, Implementation Date – 9/30/18

1.7 Contract Monitoring Training—The Executive Director of Economic Development should establish and require participation in a formal training or certification program for staff engaged in contract monitoring for workforce development program and services contracts.
Auditee Response: Agree, Implementation Date – 11/30/18

Other related reports
None at this time.
In the news
None at this time.

Audit Team: Dawn Wiseman, LaKeshia Allen Horner, Brad Harwell, Maria Durant, Shaun Wysong, Daniel Summers