Audit: DEED workforce grants report metrics but lack measurable goals; net-impact analysis overdue

The Office of the Legislative Auditor told the Legislative Audit Commission that the Minnesota Department of Employment and Economic Development has not established measurable performance goals for several workforce grant programs, limiting the usefulness of statutorily required reporting metrics.

Deputy Legislative Auditor Jody Munson Rodriguez said the audit reviewed workforce grants including the Pathways to Prosperity competitive grants and several legislatively named workforce grants. The auditors analyzed administrative data and participant feedback and found the statistics state law requires DEED to collect cannot, by themselves, determine whether programs are successful without specific performance goals.

The auditors reviewed outcomes for program participants. For about 2,600 participants enrolled in Pathways to Prosperity during the 2021–22 to 2022–23 grant period, the report found about 63 percent had a “successful outcome” at the time enrollment ended: roughly 29 percent completed training and earned a certificate or otherwise completed a training objective, and about 27 percent obtained new or better employment. For more than 3,000 adults in legislatively named workforce grants in that same period, auditors found about 42 percent had successful outcomes, including about 21 percent who completed training objectives and about 23 percent who had new or better employment outcomes.

The auditors cautioned these figures are difficult to interpret without goals. “Without measurable goals, the metrics that state law requires DEED to report are not useful for measuring program success,” Mariam Nada, the evaluation manager, told the commission. The report recommends that the Legislature direct DEED to establish measurable performance goals for the reviewed workforce grant programs and that DEED use the program data it already collects to set those goals.

The audit also found DEED has not complied with a statutory requirement to publish a net impact analysis for workforce programs. According to the report, DEED last published the required net impact analysis in 2017; the next report was due in 2021 and was not completed. The auditors explained a net impact analysis compares participants to nonparticipants to estimate whether the program caused observed outcomes, independent of broader economic conditions.

Commissioner Matt Verlick, representing DEED, acknowledged the agency had not completed the mandated net impact analysis and said DEED is taking steps to complete it. Verlick also pointed to the agency’s compliance with 2024 Minnesota Statute section 116L.098 (the commissioner referenced this statutory provision regarding the uniform report card) and said DEED would collaborate with the Legislature on any statutory changes that would add more specific measurable goals.

Legislators on the committee pressed DEED staff about what the department will do to improve outcomes and oversight. Representative Fue Lee Quam (referred to in the transcript as Representative Quam) said the report’s outcomes were “disappointing” and asked for a clearer plan to improve success rates and to feed performance findings back to grantees. Senator Pratt said the findings align with a bill (Senate File 2465) that would enhance reporting requirements and said the report may inform future amendments.

The auditors recommended DEED complete the overdue net impact analysis, develop measurable performance goals for the workforce grants reviewed, and use grantee data to set goals that account for the communities served and economic context. DEED told the commission it is implementing improvements in grant monitoring and reporting and will work with the Legislature on statutory changes.

The hearing included questions from multiple commissioners and legislators and closed with the auditor and DEED staff acknowledging follow-up work to address the recommendations.