|We've got NEWS|
|Tuesday, February 23, 1999 |
Tommy G. Thompson
News Media Contact
DWD News Office
DWD Responds to LAB Study
The following statement was issued today by Linda Stewart, Secretary of the Wisconsin Department of Workforce Development, following the release earlier today of a study of the W-2 programs first year by the Legislative Audit Bureau:
"We are pleased with the results of the audit. The reported caseload decline of 55.2 per cent in the first year shows W-2 agencies should be commended for their performance.
"The report points out that the 59.7 per cent expenditure rates are primarily because of lower-than-expected caseloads.
"A major focus of the LAB report is potential profits based on preliminary data from the first 12 months of the 28-month W-2 contracts.
"Actual profits drawn down to date by W-2 agencies for moving people from welfare to work are 5.0 per cent ($16.3 million) -- 50 percent less than the projected figure of 10.4 per cent ($33.0 million) in the LAB report.
"Rather than drawing down these funds, W-2 agencies are continuing to use them in their contracts to serve people who need help.
"Unlike the failed AFDC system, W-2 contracts required the agencies to assume the risk of moving families from dependency to self-sufficiency. As the LAB report states:
Because contracts currently in force require counties, private agencies, and tribes to assume financial responsibility for any program costs that exceed contract values, they include provisions for contractors to profit if some program funds are expended.
"W-2 contracts allowed agencies to earn a profit only to the extent they succeeded in helping people move from welfare to work. W-2 agencies received a portion of welfare savings because they achieved an extraordinary reduction in welfare caseload.
"Additional savings from W-2s caseload reduction constitute a success dividend which is being reinvested in communities across the state to help low-income families. Governor Thompsons proposed budget uses the savings to expand child care, educational opportunities and wage-paying jobs for Wisconsins low-income families."
For additional information, see the below letter from Secretary Stewart to the LAB, which was included in their report.