Audit finds gaps in DEED grant oversight; lawmakers press agency on performance goals

The House Workforce, Labor and Economic Development Finance and Policy Committee heard an Office of Legislative Auditor review on April 8 that found the Department of Employment and Economic Development (DEED) did not always comply with state grants management requirements and has not completed a statutorily required net impact analysis of its workforce programs.

The legislative auditors presented data showing mixed outcomes across DEED-funded workforce grants and more consistent contract performance for broadband projects, and recommended the legislature direct DEED to establish measurable performance goals for workforce grants. "My name is Jody Munson Rodriguez. I'm the deputy legislative auditor for OLA's program evaluation division," OLA's lead witness told the committee as she introduced the evaluation.

The nut graf: The report identified two main problems the committee focused on: (1) DEED's oversight and reporting practices during the active and closeout stages of grants sometimes fell short of Office of Grants Management (OGM) policy, and (2) workforce grant performance measures required by statute are not useful without concrete, measurable goals. The auditors recommended DEED complete the required net impact analysis and adopt measurable goals that reflect the populations and services served.

DEED officials told the committee the agency has strengthened monitoring since the early COVID-era grant awards that the auditors reviewed. "We take our responsibilities very seriously about being good stewards of the taxpayer dollars," Deputy Commissioner Mark Majors said, outlining DEED's grant processes including pre-award risk assessments, conflict-of-interest disclosures and quarterly progress reporting.

Key factual findings presented by OLA included: a sample analysis of Pathways to Prosperity participants (about 2,600 people for FY 2022–23) showed roughly 63% had what auditors classified as successful outcomes at exit (including training completion or new/better employment); a separate sample of more than 3,000 participants in certain legislatively named workforce grants showed about 42% successful outcomes at exit. The auditors cautioned those percentages cannot be interpreted as program success without measurable goals and a net impact analysis.

On statutory requirements, the OLA reported DEED last published the required net impact analysis in 2017 and did not complete the next report due in 2021. The auditors recommended that DEED complete that analysis and that the legislature direct DEED to set measurable performance goals. "For the workforce grants we reviewed ... the legislature has not directed DEED to establish measurable goals for these programs and DEED has not done so," program manager Mariam Nada told members.

Separately, auditors reviewed border-to-border broadband grants and found grantees generally met contract goals for locations and state speed thresholds; DEED uses third‑party validation for the infrastructure built. However, OLA found several OGM compliance gaps in DEED's file sample: only about half of required progress reports were collected; DEED paid at least $5 million to grantees despite past-due progress reports (an OGM policy violation); DEED did not perform required first-year monitoring of 11 broadband grants over $250,000; and many grant closeout evaluations were incomplete or missing.

Lawmakers pressed DEED officials on specifics: Representative Mueller asked whether high‑risk grantees receive remediation steps and early financial reconciliation; Majors said DEED performs a checklist-based pre-award risk assessment and gives applicants opportunities to provide documentation, and that new providers often are treated as higher risk and monitored earlier. Representative Wayne Johnson asked how conflicts of interest are defined and who determines them; DEED said staff review disclosure forms and may consult internet searches or general counsel when questions arise.

Several members urged clearer performance measures. Representative Schultz and Representative Greenman emphasized that workforce programs serve diverse populations and that goals should reflect differing service types and barriers to employment. DEED said it is willing to work with the legislature and community partners to develop measurable goals and that the agency has increased monitoring staff and moved to quarterly reporting since the pandemic-era gaps noted in the audit.

Committee co-chair Pinto and Chair Baker said they will continue oversight and requested more information and follow-up from DEED, including whether letters or notifications were sent when monitoring or reporting fell short. DEED agreed to provide additional details on past terminations, monitoring coverage, and plans to complete the net impact analysis. The committee also received a short procedural motion at the start of the meeting: Representative Mecklen moved to approve the April 3 minutes; the committee carried the motion by voice vote.

The auditors recommended statutory and administrative changes that would (1) require DEED to use existing participant data to set measurable goals for workforce grants, (2) ensure DEED completes the required net impact analysis, and (3) require consistent compliance with OGM monitoring and reporting rules. DEED responded that it has increased monitoring capacity since the period under review and is committed to working with the legislature and stakeholders to set goals that reflect program differences and populations served.

Ending: The committee did not adopt any new statutory changes at the April 8 hearing. Members asked DEED and OLA for follow-up information on monitoring timetables, the $5 million payments cited by auditors, and a timeline for completing the workforce net impact analysis; DEED agreed to return with additional documentation and proposals for measurable performance goals.