Department of Workforce Development

Friday, February 16, 2001 Governor Scott McCallum Secretary Jennifer Reinert

News Media Contact Rachel Biittner 608/266-8710 e-mail: news@dwd.state.wi.us fax: 608/266-1784

MADISON – Department of Workforce Development Secretary Jennifer Reinert announced today Employment Solutions, Inc., a non-profit agency that runs the Wisconsin Works (W-2) program in Milwaukee, has reimbursed the department $301,015 in unallowable or questionable costs charged to the W-2 program. This amount represents a substantial portion of $367,401 in unallowable or questionable costs identified by the Legislative Audit Bureau in a report released today. The remaining $66,386 is being disputed by ESI and will be evaluated by the department as part of its audit reconciliation process.

"The department had been working with Employment Solutions to resolve outstanding questions regarding expenses that had been inappropriately charged to the W-2 program. The Legislative Audit Bureau’s report has allowed us to bring closure to issues that ESI had previously acknowledged regarding past practices," said Secretary Reinert.

Secretary Reinert stated that it is important to recognize that the costs identified in the Legislative Audit Bureau’s report occurred under previous W-2 contracts, the last of which expired in December 1999. Since that time, the department has taken significant steps to improve its financial monitoring and more clearly define financial expectations for the W-2 agencies. This includes a notice to all W-2 agencies as a directive from the Secretary during her first week at the department, that "sloppy bookkeeping would not be tolerated" and that agencies must take steps to improve their fiscal management.

"We are confident these new financial standards will help prevent this from happening in the future," said Secretary Reinert.

The steps the department has taken include:

• conducting a comprehensive review of all financial policies and procedures for W-2 agencies, to ensure expectations of prudent fiscal management are clearly outlined;
• hosting fiscal roundtables across the state to ensure all W-2 agencies know what expenditures are appropriate and to clarify expectations;
• developing additional requirements for certain expenditures that would need prior approval by the department;
• updating audit guidelines to include specific requirements on sample size and scope, with expanded sampling required when unallowable costs are identified; and
• requiring attendance at a County Financial Managers Conference in May of 2001.

"In addition, in order to ensure that the processes are in place to ensure such costs are not charged to the current W-2 contract, Employment Solutions will be required to submit a Corrective Action Plan to the department," Secretary Reinert said. "Any W-2 agency that is under a Corrective Action Plan, or has had one in the past, must provide us with information to ensure that they have taken all appropriate and necessary steps to address previously identified concerns."

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