St. Louis County maintains comprehensive and detailed payroll records documenting the activities of all employees assigned to JTPA grant programs. The primary original documents which distribute employee work hours are their individual time sheets. Employees complete these records by detailing the number of hours they devoted to each activity category on a daily basis. JTPA activities are broken down into between twenty-five and forty payroll codes, depending on plan year activities. Employees are required to sign each time sheet, which includes a certification that they have accurately recorded the actual distribution of their hours worked. The employee's immediate supervisor also signs the record, signifying his or her concurrence with the entries.
There is no question that these County payroll documents are sufficient to comply with federal and State of Missouri guidelines which require "properly supported reliable documentation", assuming that the individual employees follow authorized County procedures and record their actual hours, as they certify. The OIG is not actually questioning the adequacy of County payroll documentation or our general procedures. Instead, they are questioning whether our Division of Work Connections employees were, in fact, recording the actual time they devoted to each JTPA activity.
Interviews disclosed that Work Connections supervisors had prepared spreadsheets detailing the projected hours they anticipated each employee would spend in the various JTPA activity categories on a weekly basis. This was done as part of the budget process involving JTPA grants. These spreadsheets were apparently distributed to individual employees for their reference.
The preparation and distribution of such budget-based spreadsheets is not inappropriate. In fact, such a system can be a valuable management tool, as long as it is used to evaluate how actual hours are tracking with the budget projections. The crux of this OIG audit was whether employees were choosing or being encouraged to record budgeted time rather than their actual hours.
The OIG has concluded that all DHS Work Connections time sheets related to Title III were unreliable, during the audit period, based on a review of the time sheets and their interviews with present and former employees. We believe the OIG analysis involves generalizations and extensions from limited samples that are inconsistent with known objective data.
The OIG has also concluded that County workers performed virtually no activities at all relating to Title 111. This conclusion is based almost entirely on the OIG analysis of computer summaries from the State of Missouri's JTIS system. However, the State has detailed in correspondence that the reports involved were never designed or intended as a case management system. The State's letter makes it clear that these computer reports were unreliable for the purposes they were used by the OIG. We have provided a copy of that letter as an appendix to this response and have previously supplied it to the OIG.
The current findings and recommendations are inconsistent with statements
made to us in April, 1997 by the field audit team. At that time, we were
told that the field auditors believed their review was complete and that
no significant questioned costs were anticipated. We have been
We are concerned with this and other indications that the OIG has taken an adversarial role in this audit, rather than their mandated objective one. Our concern is based on the above matters, the OIG making accrual adjustments only when they increased questioned costs, the calculation of indirect costs using clearly inapplicable ratios and the inclusion of inappropriate comments or references in OIG documents.
Of particular concern is the reference, in an earlier OIG draft, to correspondence from the former ETA Regional Director for Region VII. This letter, which was not known to us prior to the draft, was written only twelve days (including two weekends) following the start of the audit. Yet, at that time, the Regional Director suggested that potentially dire consequences would unfold as a result of the audit. The OIG felt this letter of sufficient importance to include a specific reference to it in the previous draft, along with its attribution as having been written by the Regional Director. Following County objections, the reference to this letter has been removed from the audit report. However, it is not possible to excise the intent or opinions about the letter which caused it to be included in the first place.
Finding 1 (introduction) ... Page 1
The OIG premises its questioned costs on two findings. They conclude that all time and attendance reports (time sheets), prepared by DHS Work Connections staff, were unreliable. The OIG also finds that, "up to 98 percent of the Title III participant services were performed by the St. Louis Community College" (SLCC). We believe neither of these findings is accurate.
The OIG states that Title III time sheets are questioned based on interviews with present and former employees. The OIG concludes all the time sheets from all employees are unreliable. Yet, they reach this conclusion irrespective of whether the individual involved was interviewed at all and regardless of whether their assumption about this employee's use of predetermined formulas seemed to track in their limited test.
The County agrees with the OIG that most Title III services were performed by the SLCC. However, the data cited by the OIG does not support its conclusion that up to 98 percent of Title III services were provided by the SLCC. Further, the same interview results offered by the OIG to question employee time sheets are inconsistent with this finding.
Finding 1 (point A) ... Pages 2-4
St. Louis County uses employee time sheets which allow the entry of
payroll codes and corresponding hours or parts of hours for each day in
the work week. An employee signature is required which follows a certification
by the individual that the hours they have recorded are accurate. Their
immediate supervisor must also countersign the form and is trained to review
the entries for internal accuracy and to monitor any unusual or other than
customary distribution. The
entries from the physical time sheets are transferred to the County's automated labor collection system by a payroll clerk. A supervisor must again review and approve the electronic submissions. The supervisor providing the electronic approval is not necessarily the same as the one countersigning the original time sheet.
DHS Work Connections employees have no default assigm-nents for their grant duties. If they do not affirmatively record an amount of hours and a specific JTPA payroll code, their time will not automatically be charged to a grant.
The OIG states that County employees used predetermined formulas to complete their individual time sheets, rather than recording the actual hours they spent on each JTPA activity. St. Louis County has repeatedly notified the OIG that the employee time sheets themselves contradict this finding. We have noted that, when we compared individual time sheets with the budget-based spreadsheets said by the OIG to be the source of the hours entered, they did not generally match. Most employee time sheets, while showing a roughly similar distribution of hours to those suggested by the budget-based spreadsheets, exhibited routine deviations from the spreadsheet entries, recording an hour or two more or less than projected in the various JTPA categories. Further, these variations changed from week to week and formed no distinct pattern. Some employee time sheets did track almost identically with the spreadsheet forecasts. Others showed little correlation, at all. This observation is consistent with what would be expected, assuming employees were recording their actual allocation of time and the projections made during preparation of the budget were reasonably accurate for most employees. Of course, this distribution does not preclude the possibility that more than chance accounted for the employees whose recorded time did match almost identically with the budgeted amounts. However, it is totally irreconcilable with the concept that all County employees were recording budgeted hours instead of their actual time. Had that been the case, we should have seen a consistent match between all or nearly all the employee time sheets and the corresponding spreadsheet entries.
In this report, the OIG states they conducted a comparison of "one spreadsheet" and the hours charged by employees listed on that spreadsheet. The report does not detail the specific parameters of this comparison. It does not indicate whether the spreadsheet was compared directly to individual time sheets as opposed to summaries of the hours or dollars charged over longer periods of time. The duration of the comparison is not stated, although, we have been told the comparison was made over a "three month period."
Spot checking or other sampling of data must be representative of the
data set, as a whole, in order to be considered reliable. No sample drawn
from a consecutive three month period should be considered representative
of a thirty-three month audit period. In this instance, the limited test
was further compounded by the known turnover in employees which occurred
during the audit period. The County has requested a copy of the spreadsheet
used in this OIG test. We were first told it would be provided but were
later informed it now bore notations of the OIG staff which could not be
shared with us. Without the OIG spreadsheet, we cannot be certain which
employees or former employees had time sheets tested. However, over half
the individuals whose charges are questioned
by the OIG are no longer County employees. Therefore, it is a virtual certainty that the OIG made findings relating to some employees without a single one of their time sheets being tested.
The OIG states their comparison disclosed that "in most cases," the hours charged during the test period "were consistent with the guidance provided in the spreadsheet." We do not know what this means. We have asked for ftirther clarification, but have not been given an answer. This is a significant question.
The budget-based spreadsheets hold no complex or ambiguous formulas. They simply contain, for each employee, a listing of payroll codes and the associated number of hours projected, in each category, for that employee's anticipated activities. If the employee were using the spreadsheet in lieu of their actual hours, he or she needs only copy each payroll code and the corresponding number of hours from the spreadsheet to their individual time sheets. If a time sheet does not match with the spreadsheet codes and hours listed for that employee, then there must be some different or additional explanation. If an employee was using the spreadsheet instead of actual time, we should see universal adherence to the projected amounts, barring a deliberate attempt to disguise the spreadsheet use or a copying error. There has never been any claim that employees used the spreadsheet projections but then disguised that use.
The OIG has not specified the criteria they used in declaring a match. We do not know if they examined individual time sheets as part of their comparison. The fact the report uses the phase "consistent with the guidance provided by the spreadsheet," coupled with explanations offered by the OIG for time sheets which did not match, suggests that the comparison disclosed only a similar relative distribution of hours over the test period, taken as a whole. If this was the case, the OIG test results may have been totally consistent with what the County observed. Yet, that finding would directly conflict with the wholesale use of the spreadsheets postulated by the OIG. Again, at the time sheet level, use of the spreadsheet formula should produce a uniform, consistent and unmistakable pattern. The OIG language does not suggest an exact match.
However, even if we assume that "most" time sheets matched exactly with the budget-based spreadsheets, there is still a problem regarding what could be nearly half the employee time sheets which, the OIG concedes, did not. The audit report attempts to explain this discrepancy in a single sentence. They suggest that employee time sheets may not have matched the formula because "someone (employee or management) may have subsequently altered the time, some employees failed to follow the system," or "newly revised spreadsheets may have been provided to employees." There is no factual basis for any of these suggestions. The OIG is not offering even subjective support in the form of a single interview alluding to any one of these proposed explanations.
Initially, the OIG suggests that the employees themselves or management
may have altered time sheets after they were prepared using the formula.
There is no suggestion of any group of time sheets showing substantial
alterations or changes. Logically, the notion makes little sense. If anyone
wanted to disguise the fact that time sheets were prepared using predetermined
formulas, altering hundreds of time sheets after the fact would be most
cumbersome and ineffective. Such an explanation would almost certainly
require multiple conspirators. Raw time sheet data is quickly
The second explanation is simplistic. The whole purpose for this "test" was to determine whether the objective data supported the inference that a system was in place whereby employees were recording budgeted, rather than actual time. The "test" results suggested there was no such system in place, at least not with respect to all employees. Yet, the OIG has recast this conclusion by finding that there was a universal system in place; it's just that a significant number of people weren't following it.
Still, this simplistic re-characterization cannot avoid the issue of why the OIG would question the reliability of non-conforming times sheets. For example, employee number one had died prior to the audit. He could not have questioned the accuracy of his time sheets nor suggested he lacked knowledge or training in JTPA payroll codes. His time sheets do not track with the budget-based spreadsheets. He signed his time sheets certifying the hours he recorded were actual hours. Still, his time sheets were not accepted as reliable by the OIG. The OIG concedes that a significant number of the "tested" employees "failed to follov' the incorrect methodology of recording predetermined budget amounts. These time sheets should not be in question. Yet, the OIG has refused to accept any employee time sheets as reliable, regardless of whether they "passed", "failed" or were even included in this test.
The final explanation assumes more than one spreadsheet applied to the test period. The OIG offers no reasons to suspect this. If interviews had disclosed such a likelihood, the OIG certainly would have designated a different test period. There is no indication of any contemporaneous budget or program changes that might have caused such a shift. More importantly, such a change should have been patently obvious, if the OIG actually reviewed individual time sheets. If an employee were using one budget-based spreadsheet and then switched to a second, we would see one consistent pattern of hours charged by the employee in every pay period followed by a second different, but equally consistent, pattern. Random changes or inconsistent variations would totally refute this premise. In fact, there could be no stronger indication that budgeted hours were recorded than observing an immediate shift from the formula recorded on one spreadsheet to that on a second. The fact the OIG postulates this explanation for non-conforming data suggests that their comparison did not include an examination of individual time sheets.
The OIG conclusions in this report have not been modified from the previous OIG draft. However, much greater reliance is now being placed on interviews. This reliance presents several practical problems to our offering a complete response. The OIG has indicated to the County that these interviews are confidential and we will not be given any further specifics about what was said than what is presented in the audit report. The report summarizes, only in the most cursory fashion, what a nwnber of employees stated. The OIG has offered no context for any of the statements.
Though these factors limit our ability to respond, a few general remarks
can be made. The OIG interview pool included a number of people who had
been terminated or laid off by the County. This has not been documented
in the audit report. A previous OIG draft identified, by an asterisk,
The absence of specifics from these interviews is troubling. The report states "83 percent" of interviewed employees told the OIG that their time sheets did not describe their actual hours. The previous OIG draft made reference to interviews but no percent figures were quoted nor was any general consensus of the interviews noted. The language used in this report can describe two very different scenarios and many variations in between. An employee could have s tated that his or her actual distribution of hours was nowhere close to those recorded on time sheets. Alternatively, an employee, confronted with an OIG prepared spreadsheet summarizing all the hours they reported in every payroll category over a thirty-three month period, could have simply stated they were not at all certain that every one of the entries were accurate. We have no way of knowing the specifics of the individual interview statements.
The suggestion that employees were not knowledgeable about payroll codes is also of concern. This statement is new to the audit report. It did not appear at all in the prior draft. The OIG has not indicated how many past employees were part of their interview pool. However, it is certainly relevant to note that former employees had little reason to recall County payroll codes and even less reason to engage in a detailed discussion about them. A very common device for interview subjects who wish to avoid detailed discussion is to suggest they lack knowledge or involvement in the subject area. Our then current employees had just completed periodic training on JTPA payroll codes about two weeks prior to the OIG interviews.
A final representation about the interviews is deeply concerning. The OIG states that they were informed that budget - based spreadsheets were initially prepared using a time distribution formula that matched with the expected contributions of each employee to the various title programs. However, they were told that as time went on and funding for some programs changed, this correlation was lost. The OIG states that, over time, DHS Work Connections increased time charged to Title III without increasing its staff responsibilities and services to that program.
In fact, payroll documents obtained by the OIG show that the hours charged
to Title III by the Work Connections staff decreased markedly from
plan year 1994 to plan year 1995. The Title III hours charged in the first
nine months of plan year 1996 suggest an increase, when projected over
a full year, from plan year 1995. However, they are still substantially
below the levels of plan year 1994. These OIG statements suggesting the
correlation between projected and actual Title III hours deteriorated as
internal Title III hours were increased are either inaccurate or they must
relate to a totally different time from the audit period. The implication
that in-house Title III hours were continually increasing during the audit
period is not true. If these statements were intended to apply to the audit
period, either the interview subject(s) who made the comments were unreliable
or the OIG characterization of their statement(s) is unsound.
The County agrees that most Title III services were performed by the SLCC. However, the OIG has presented a misleading picture of the distribution of activities under the contract. The contracts between the County and the SLCC did not delegate any class of duties exclusively to the SLCC. The County retained the right to and did provide some parallel services to those the SLCC provided. Moreover, the audit report fails to accurately identify the body of Title III services retained exclusively by the County.
In reaching its conclusions, the OIG audit report relies almost exclusively on "counselor activity reports" from the State of Missouri's JTIS system. However, the JTIS system is not a case management system and these reports do not provide an accurate reflection of case worker involvement. The State of Missouri has verified this, unequivocally, in correspondence we supplied to the OIG and which is appended to this response. Yet, the OIG continues to maintain the system is a "viable indication of staff involvement with Title III participants." Some qualifying language has been offered by the OIG recognizing that these reports were not designed to accumulate cost reporting data and that they do not report all case worker activities. However, that qualification is inadequate and the OIG misrepresents that these reports "showed that DHS Work Connections performed less than 2 percent of the total reported activities," or that "up to 98 percent of the Title III participant services were performed by the St. Louis Community College."
The OIG qualifying language is insufficient. No one ever claimed these reports contained any cost data. Though, at one point, the audit report concedes these summaries "do not capture every contact with participants" it also states that they "track much of the services performed under Title III grants". This latter statement is simply not true. The nature of the data captured by the JTIS system is crystal clear. The data elements entered into the system come from MOJT-1, MOJT-2 and/or MOJT-3 forms. These forms record demographics and status information about JTPA participants. The forms do not document any individual contacts with program case workers aside from the fact that someone had to obtain the demographic data from the participant. The nature of the forms is related to the capture of participant information at intake, assignment to a particular JTPA program and termination from assigned programs. The participant's actual progress through the assigned program and their routine interaction with case workers is expressly not recorded or entered. There is a field on the form and in the electronic database for a case worker identification number. This field is not a required one and only the first number entered is retained in the electronic system for each participant. The State does not use the contents of this field as a source of management information for their oversight of the program. Though the availability of this field and the sorting capability of the system could be used by an SDA to record assignments of individual case workers to specific participants and to monitor their assigned case loads, neither the SLCC nor the County uses the field in this manner. Normally, participants are served by multiple case workers.
We have been informed orally by the OIG that they recognize the serious
limitations of this data but, nonetheless, feel it is "one indication"
that County case workers provided few Title III services. Unfortunately,
the wording of the audit report does not reflect these oral reservations
nor
The Clerk of the Missouri Supreme Court maintains a data base of lawyers who are members of the Missouri Bar and licensed to practice in Missouri courts. Attorneys are asked to designate a mailing address for all official notices which may be either their residence or their place of business. Many lawyers choose their business address for a mailing address while others select their residence. This field of the database certainly contains some indication about the relative distribution of attorney residences throughout Missouri. However, we doubt seriously that this data would be characterized as a "viable" indicator of the location of lawyer homes. Certainly, no one would suggest that the reported percentage of mailing addresses in Clayton (the county seat and highest concentration of attorney business addresses in St. Louis County) "showed" the percentage of Missouri lawyers who lived there. Yet, this is exactly analogous to what the OIG has done in this audit report.
The OIG doesn't simply refer to JTIS activity reports as one indication of caseworker involvement in Title III programs. The audit report states that these statistics "show" a specific percentage distribution between County and SLCC workers. Yet, they "show" nothing of the kind. This is not a question of semantics. Government Auditing Standards (I994 Revision) establishes the minimum requirements. When the reliability or sufficiency of data is in doubt, it should either not be used or the report must clearly indicate the data's limitations and refrain from making unwarranted conclusions or recommendations based on it.
There is a reliable and readily available alternative source for case worker activity information. Participant files include case worker entries reflecting individualized activities with each participant. The files have a some limitations in common with the JTIS summaries. The file notations do not include any specific reference to hours worked. Therefore, the files only reflect the number and type of activities undertaken by various case workers and not the actual hours spent. Still, these files represent a competent source of objective data and were intended as the mechanism to record individual case worker activities.
The OIG knew of the availability and value of these files. County employees had offered some participant files to the OIG as evidence of their Title III activities. However, the OIG did not examine participant files, even by sampling a portion of them, to assess the level of Title III services provided by County workers. We recognize such a process may have been time consuming and cumbersome. Yet, the OIG was on site for this audit on an irregular basis from March through October, 1 997. Greater convenience cannot justify the use of inherently unreliable data.
Also of concern to us, is the fact that the employee interviews, referenced
as one basis for questioning time sheet reliability, were inconsistent
with the "counselor activity reports." Again, the County has incomplete
knowledge of the entirety of these interviews. However, we have been assured
by the OIG, in response to our specific questions, that the content of
these interviews was "not substantially different" from the written summaries
we asked our employees to prepare and which we submitted to the OIG.
Finding 1 (indirect costs) ... Pages 6-7
The OIG conclusions about indirect costs are incorrect. For St. Louis County's Department of Human Services, indirect costs consist of expenditures for the Financial Services and Information Systems (FSIS) staff, Administrative Services support, the Director's Office, and the DHS respective portion of the County's overall central service charges in support of DHS programs.
These indirect costs are distributed to the various programs administered by DHS utilizing two methods. One method allocates costs to various programs based on the number of checks issued in support of those programs. A second method allocates the remaining costs to those same programs using total direct expenditures of all programs as the base for cost allocation.
The first method analyzes those costs included in the County's central service charge allocation plan that can be most appropriately distributed based on actual checks issued for each program. The second method allocates the costs of the Director's office, FSIS, Administrative Services support and the remaining central service charge on a pro rata basis using total direct expenditures.
Included in this base of direct expenditures are all program costs, less any indirect costs included in those expenditures.
The indirect costs charged to the JTPA grants include many items that are in direct support of the contracts that are administered by the Division of Work Connections. Services provided by the Financial Services and Information Systems division include subcontract monitoring, payment of subcontractor invoices, preparation of grant financial reports, resolution of sub-recipient audits and general accounting support of the JTPA grants. The Director of DHS represents St. Louis County at all Private Industry Council meetings and provides general oversight to the JTPA programs.
The JTPA regulations require that costs be allocated based on the benefit received. Therefore, it would be inappropriate to allocate these indirect costs based solely on the level of staffing in the Division of Work Connections. If this was done, in-house programs would bear a disproportionate share of the indirect costs.
In other SDAs in Missouri, these functions and positions are fully funded
directly within the JTPA program rather than in a separate cost pool which
benefits both JTPA and non-JTPA activity.
This methodology has been described in the JTPA annual operating plan as submitted by the County and approved by JDT.
St. Louis County presented and explained this indirect cost methodology to the OIG field audit team during their on-site presence. We have also responded to some later inquiries from the OIG. However, to date, we have not been offered any rationale that questions the applicability of this County formulation to the specific operational circumstances involved at DHS.
The County first became aware of an issue in this regard when a previous draft from the OIG postulated an alternate method of calculating indirect costs. The audit report makes reference to a 1992 agreement between the U.S. Department of Health and Human Services (HHS) and St. Louis County relating to indirect cost ratios for many County departments. In its schedule of indirect costs, the OIG has used an indirect cost ratio for "general departments" that was referenced in the 1992 agreement. Unfortunately, that agreement never involved the County Department of Human Services. The "general department" rate used by the OIG also did not include any cost data or supporting documentation from DHS. DHS has always determined its indirect costs separately from other County departments. Its cognizant federal agency is the U.S. Department of Housing and Urban Development (HUD), not HHS. Put simply, the use of this indirect cost ratio is no more germaine to calculating indirect costs for this audit than had the OIG used the County's Police Department or Health Department rates.
After this mistake became apparent, we asked the OIG why they had offered an alternative formulation, rather than evaluating the County methodology. We have been advised the OIG is skeptical about our use of contract and sub-recipient grant amounts as part of the direct cost basis for the allocation of indirect costs. Though conceding such a formulation is not prohibited by statute or regulations, the OIG suggested that such a basis is rarely acceptable to federal agencies. They observed that this was due to the general perception that in-house services tend to be co-located with the administrative offices that generate indirect costs while contract or sub-recipient services are typically located off-site. This often results in the on-site components receiving a disproportional share of the service items reflected by indirect costs (copying machine use, etc.). The audit report also includes some reference to this off-site, in-house dichotomy. VAiile the County does not necessarily disagree with these statements as such, they have no applicability to DHS. The program staff for the Division of Work Connections are located remotely from the DHS administrative offices. The other major direct service arms of DHS are also located "off-site". The County has no opportunity to discriminate between internal and external providers in rendering "indirect" type services.
More importantly, our methodology does not prejudice the JTPA
grant program. Though we multiply our indirect cost ratio by a larger basis
amount, the ratio is correspondingly lower. For
The audit report should reflect this fact. To the extent the report suggests that County methodology resulted in increased claims for indirect costs, independent of those direct costs questioned in the audit, this is untrue. The only material impact on the calculation of OIG allowable indirect costs are the questioned direct costs.
This fact raises the most serious question about the OIG use of clearly inapplicable indirect cost ratios. The County could not have chosen its indirect cost methodology based on the impact of this audit. We had no way of knowing the OIG would audit or, if it did, whether and which costs would be questioned. It was statistically likely that, if an audit were preformed which questioned direct costs, most of the costs would be attributable to contract or sub-recipient amounts. The lion's share of DHS grant money has been used in this fashion. Yet, the County employed an indirect cost methodology that would be least advantageous to it in such a situation.
The OIG chose its indirect cost methodology after it had already determined that direct costs would be questioned and that they were all in-house costs. They have offered an alternate methodology that produces nearly three times the amount of questioned indirect costs for each dollar of direct costs.
Finding 1 (conclusion and recommendations) ... Pages 7-8
The statements of current and former employees may raise legitimate concerns about the reliability of some time sheets. However, there is insufficient competent and relevant evidence to support the OIG questioning time sheets which did not match exactly, or nearly so, with the corresponding amounts and codes in the budget-based spreadsheet. Even for employees that did match, this three month test should not have been extrapolated to presume they acted the same throughout the audit period, unless the employee confirmed this fact in their interview.
It is also possible that individual employee statements may be sufficient
to call into question the reliability of their own time sheets. However,
the limited characterization of these statements in the audit report does
not support such a conclusion. Typically, if a person questions the accuracy
of a whole series of documents that were completed and certified by them
contemporaneously with the events they recorded, such a statement would
not be given great weight absent a reasonable explanation for their systematic
departure from the norm. Certainly, time sheets in general tend to provoke
a notion that employees should record their actual hours. These time sheets
said so, on their face. The systematic use of predetermined budget formulas
in lieu of actual hours could offer such an explanation. However, the OIG
test failed to validate this as a comprehensive justification. Other individual
statements like; I didn't know the codes or I don't think these hours are
right, cannot be generalized beyond the employee who made them. The audit
report talks of the cumulative effect
The OIG has offered no cogent suggestion for how employees who were uncertain about payroll codes or unsure whether they had recorded actual time arrived at their own unique distribution of hours which was generally close to that projected by their supervisors but varied somewhat from week to week.
The State of Missouri activity reports indicate that nearly all the case worker identifications that were first entered into the JTIS system were those of SLCC employees. Since this data entry was also an SLCC contract item, this would not appear to be unexpected. The types of data associated with the input forms have little relationship with core case worker activities. It is possible the data gives us some ideas about the intake process. That, itself, is fairly speculative because neither the SLCC nor the County uses or directs the collection of this data for such purposes. Other conclusions are total speculation.
The County formulation of indirect costs is appropriate, given the specific circumstances of DHS operations. Of course, any questioned direct costs could also give rise to some questioned indirect costs, despite the fact County methodology was appropriate.
Finding 2 (strengthened internal controls) ... Page 9
St. Louis County agrees with the OIG emphasis on the importance of sound internal control policies. We also believe that ongoing evaluation and follow-up is essential to the effectiveness of these control policies and procedures. Staff training on the usage of appropriate time sheet codes was provided in December, 1996 for the Work Connections staff. This was three months prior to the start of this audit in March, 1997. Training was provided by the DHS Fiscal Services staff and described the codes available for charging time to various JTPA programs as well as the specific sub-categories within individual programs. Handouts of all available program and activity codes, including JDT manual examples of the distinctions between administration, training and support activities were distributed to the staff. Group training was also instituted in May, 1997. Additional employee responsibilities were reinforced on an individual basis as staff met with Fiscal Services trainers and the Director of Work Connections.
As stated in the audit report, the County has approved procedures in
place for allocating staff time to various activities and programs. These
procedures require documentation by appropriate time distribution records.
We believe our county wide computerized labor collection system, as used
by DHS, conforms to JTPA guidelines, described in the JDT manual as properly
supported reliable documentation. Our time sheets reflect a daily and weekly
distribution of activity prepared by each employee, including a certification
that the record reflects the correct time and attendance for which the
employee is to be compensated. Each time sheet requires the signature of
the employee, the immediate supervisor and approval (initials) of the Division
Director of Work Connections.
Finding 2 (the budget process) ... Pages 9-10
St. Louis County has always striven to keep the PIC informed of the status of JTPA programs. Historically, the PIC has defmed the format for presentation of financial and budgetary infon-nation they required. The County will continue to work with the PIC to clarify any further or enhanced needs they may have for information reporting. We consider that the PIC has been, and will always be, an active partner in exercising our joint oversight responsibilities.
The example used in the audit report to illustrate the value of PIC budget oversight presents some continuing concerns. We agree that it is instructive to compare the balance between budget funding levels and service responsibilities. However, the comparison must be of like funding levels and corresponding service responsibilities. Unfortunately, the OIG has specified inapplicable numbers to compare. The DHS staff and mileage allocation taken from the 1995 program year budget provides services that are more comprehensive than the portion of the SLCC Metropolitan Reemployment Project selected by the OIG. The Work Connections funding includes in-house salaries for a number of Title III activities, not just those related to this single SLCC contract. The OIG's figure of $598,846 in Community College costs does not include significant amounts for other SLCC contract programs. It also omits other contract amounts for OJT that are supported by the inhouse components of Work Connections.
If the Work Connections salary and mileage amounts are included with all external contracts, they comprise 19 percent of the these total services, rather than the 30 percent suggested by the OIG. The County is not at all certain that 19 percent is the most representative ratio. However, it is no less meaningful than the OIG number. The audit report then matches the OIG funding distributions against service distributions based on the JTIS reports. We have already described the inherent unreliability of JTIS percentages. Yet, in this instance, the comparison is even less applicable because the JTIS reports were suggested by the OIG as a source of case worker involvement. Here they are being used to hypothesize levels of overall Title III services of which case worker activity is only a part.
We agree that PIC review of the budget is both appropriate and essential
to proper program operation. However, presentation by the OIG of "worst
case" County scenarios is misleading and of no practical use.
St. Louis County objects strenuously to references by the OIG to lack of cooperation between the PIC and local government. This is said to be premised on allegations made by PIC members against the County and, in return, by County officials against some PIC members. Yet, when we inquired about the factual basis for asserting that County officials made such allegations, it was said that this was also based on the claims of PIC members. Thus, it appears that two of seventeen PIC members made allegations to the OIG of an uncooperative atmosphere and further alleged that County officials had also impugned them. The OIG says that the PIC Chair was interviewed as part of this audit but either she was not asked about this issue or the OIG has chosen not to report her comments. Her views on this subject are well known to the County and to other PIC members. It is also evident that the OIG chose not to talk to any other PIC members aside from the two who sought them out.
The OIG had no particular reason to make an exhaustive inquiry into the relative cooperativeness of PIC relationships. Certainly, neither the accountability of the County nor the PIC is effected by whether and how much tension is in the air. However, given the context and the nature of the input being evaluated or considered by the OIG, these comments are prejudicial, improper and lack any objective support or relevance to the OIG findings.
The County has expressed its desire that, if the OIG chose to make mention of any allegations by these PIC members, they would include at least a summary of the scores of other claims made by these men. At least in that context, a reader would understand that nearly all had been found to be trivial, unfounded or not susceptible to the audit process. We were told that the OIG did not routinely report negative findings. Still, the current presentation is very unfair to the County.
This section of the audit report was also the location, in a previous draft, of a particularly troublesome reference which raises grave questions about the required independence of this audit. As the result of the prior draft, St. Louis County became aware of correspondence written by the former ETA Regional Administrator for Region VII. We discovered the document because it was referenced in the draft statement of facts concerning a rather obscure and innocuous point. We requested a copy of the letter. The County was unaware that such a letter existed and we wondered at its being mentioned in the draft. To our surprise, we found that the letter, which was written only twelve days after the start of our audit, suggested that potentially dire consequences would unfold as a result of the audit being undertaken.
Naturally, we objected to the letter being referenced in the draft.
The reference has been removed from the audit report. Unfortunately, its
omission does little to address our obvious concern. We have been told
by the OIG that it is inevitable that all manner of material, even items
that are prejudicial, will become a part of OIG audit work papers. It was
further observed that this tended especially to be the case in an audit
triggered by congressional request and punctuated with a litany of harsh
allegations by program critics.
Even more importantly, the document did not remain just one of thousands within the OIG audit work papers. It was specifically referenced, quoted and the quote attributed as originating from the Regional Director in the OIG's draft statement of facts.
If it had never been referenced, the fact it became part of the audit
work papers may not have been significant. Practically, the County might
never have known of the document's existence. Unfortunately, during our
audit, someone found this letter to be of sufficient significance and importance
to merit specific mention and attribution in the draft findings of facts.
Though we have not been advised as to who made this decision and why, they
obviously participated in recommending and/or formulating findings adverse
to St. Louis County. Though the reference has been removed, it would appear
that the same person or persons who were involved in its inclusion continued
to participate in the preparation of this audit report. The only difference
now is that they are also privy to our strongly worded criticism concerning
the use of this letter. Such a circumstance cannot be resolved by merely
omitting the offending reference.
Appendix I (Background) ... Page 13
The City of St. Louis is not a part of St. Louis County. The jurisdictions have been independent since 1876 when voters in the City elected to separate themselves from the County. SDA 13 encompasses all of St. Louis County.
Appendix I (objectives, scope and methodology) ... Page 15
This audit was conducted in two phases. Initially, St. Louis County received notice of an OIG intent to perform "a limited review" of JTPA programs covering the period between July 1, 1995 and December 31, 1996. This review began with an entrance conference on March 12, 1997. At the close of this initial inquiry in late April, 1997, another conference was held and we were briefed by the field audit team about their preliminary findings. The OIG representative was careful to qualify his comments by noting that further reviews of the field work would be necessary prior to any final decisions being reached. However, he indicated clearly that, from his perspective, the audit was completed and he did not anticipate any significant questioned costs. This representation is reflected in contemporaneous notes by representatives of the County's external auditors, who were present at the meeting. It is also the recollection of County and State of Missouri employees who were in attendance. We have more recently been told by the OIG that, if such comments were made, they were premature. Still, we do not understand the OIG to be denying that this, in fact, is what we were told at the meeting.
A short time later, the County was informed that the OIG was returning to undertake a second phase of the audit. We were also told that the audit period would be extended to July 1, 1994 through March 31, 1997. No explanation has ever been offered for the return of the field auditors, the extension of the audit time frame or this dramatic change in audit conclusions. It is clear the return was not due to any new audit plan or a significantly different approach to data gathering. The activities of the field audit team were comparable during both phases of the audit. No new matters of significance were discussed with the County during the audit's second phase. No finding in this audit report touches on an area that had not been addressed during the audit's initial phase. Perhaps most importantly, nineteen of the twenty-three individuals whose charges to Title III were ultimately questioned by the OIG involve significant questioned costs during the original audit period. Broadening the audit time frame expanded the amount of questioned costs for most of these employees but resulted in only four new individuals being "discovered." It is evident that the current audit report reflects a fundamentally different view of the same basic data accumulated during the initial phase of the audit. The current findings are not due to the impact of new information discovered in the audit's second phase.
Unfortunately, the lack of congruence between statements of the field auditors and subsequent OIG actions has continued to be a problem. During the second on-site phase, and beyond, we have been told at varying times that "special" Title III programs like the flood, A l2 and GM programs were not in issue. We were also advised that our indirect costs did not appear to be a problem and that new internal controls were not indicated. Though we realize each of these statements was offered in response to our questions as a "best guess" of the field auditors at the time they were made, it is discomforting to see the almost universal inaccuracy of everything we were initially told.
As we have previously communicated, it is our distinct impression that
our concerns with the OIG audit report are a direct result of the OIG home
office attempting to extend the audit findings far beyond the contemplated
vision of the field audit team, at the time they were collecting their
data. We believe the audit report departs significantly from the requirements
cited as mandatory minimum standards by the Comptroller General of the
United States in Government Auditing Standards (1994 revision)
. Specifically, at some point during the audit process, the OIG clearly
determined they would take an adversarial role. In any number of instances,
the OIG has made assumptions and chosen methodology that consistently maximizes
questioned costs, with little or no apparent regard for the accuracy or
applicability of these measures. Examples of this lack of OIG objectivity
are illustrated throughout the County's response. They include:
Exhibit A-1 (narratives regarding questioned costs) ... Pages 18-25
The audit report states that the OIG had to make certain judgements
relating to questionable costs. In applying these judgements, the OIG accepted
Title III charges by the directors of the JTPA program and for other workers,
during periods of time they were directly involved in OJT activities, and
for employees who had responsibilities for awarding and monitoring subcontracts.
However,
It is not possible for us to assess the content of this employee's interview with the OIG. At the time of the interview, the employee was under suspension from his County job. Consequently, we are submitting a description of duties provided by this employee, contemporaneously with the time of his questioned costs.
Employee number eight was another supervisior who had similar responsibilities to and worked for employee number five. We have also included a description of her duties which would appear to satisfy this OIG judgement about allowable costs.
Employee number ten also appears to be treated inconsistently with this
stated OIG judgement. During the audit period, she functioned as the secretary
to the Director of Work Connections. At the time of the audit, she was
located at the our St. Ann site and also provided clerical support to case
workers and other JITA personnel. The narrative for this employee suggests
her costs were questioned based on her duties at the time of the interview
portion of the audit rather than those she held during the period under
review.
Exhibit A-2 (individual schedule of questioned costs) ... Pages 26-85
St Louis County's payroll periods and methodology did not match precisely with the audit period chosen by the OIG. Adjustments for accruals were necessary for the raw payroll data to accurately reflect the time frame of the audit. At the stage of the previous OIG draft, these accrual adjustments had not been made. This was not of great concern to us. It involved only a relatively small dollar amount. In addition, adjustments at one end of the period should tend to balance those at the other. We did not object or even note this problem, previously.
Adjustments are now reflected in the audit report. They indicate the OIG has increased questioned costs to reflect the amounts accrued but not yet paid at the end of the audit period. However, no corresponding adjustments were made at the beginning of the audit period which would have decreased questioned costs. The dollar amount of the adjustments are small but making them when they increase questioned costs and neglecting to make them if questioned costs would be decreased is not acceptable.
Exhibit B (schedule of questioned indirect costs) ... Page 86
St. Louis County has provided a new schedule of questioned indirect
costs. This schedule reflects the application of the OIG proposed indirect
cost ratios to the original OIG basis amounts,
(Name Deleted), Manager
Manages-supervises the Employment and Training Operation section. This
includes all JTPA contracts (JPC, SSD, Productive Futures, CYP,
CDCA, SLARC, Life Skills, Project Jess, MERS, SLCC WRP, SLCC MDC, SLCC
GM, SLCC Rapid Response, MISI, Mayflower, SLCC Assessment Program); MIS
section; OJT program; Experienced Worker program; JTPA planning and budgeting;
bid package preparation, release, evaluation, negotiation, implementation,
and invoicing; program monitoring, developing and monitoring corrective
action plans, lead person on outside monitoring visits; development and
implementation of client and employer marketing plans; checking client
participation and approve support payments; customer satisfaction surveys;
new program and/or vendor search or development; labor market review; and
assists in staffing for the PIC and its committees.
(Name Deleted),Coordinator
(SEE BARB'S HANDOUT)
(Name Deleted), Specialist III
Responsible for contracts with adult program vendors and other miscellaneous
contracts. This entails contract compliance as well as developing processes
and procedures to integrate into our operation. This includes the following
JTPA contracts: JPC, CDCA, SLARC, Life Skills, Project Jess, MERS, SLCC
WRP, SLCC MDC, SLCC GM, SLCC Rapid Response, MISI, Mayflower, St. Louis
Community College Assessment Program. She assists in bid package preparation,
release, evaluation, negotiation, implementation, and invoicing; new program
and/or vendor search or development; labor market review. She conducts
program monitoring; development and monitoring of corrective action plans;
and checking client participation and approve support payments. She is
also representing E&T on the DHS Info Share Committee.
(Name Deleted), Specialist III
Responsible for contracts with youth program vendors. This entails contract
compliance as well as developing processes and procedures to integrate
into our operation. This includes the following JTPA contracts: SSD, Productive
Futures, CYP, and all summer financial (approximately 12) and non-financial
(approximately 60) agreements. He assists in bid package preparation, release,
evaluation, negotiation, implementation. and invoicing; new program and/or
vendor search or development; labor market review. He conducts program
monitoring; development and monitoring of corrective action plans; and
checking client participation and approve support payments. He also represents
E&T on the DHS Personnel Manual Committee and the Castle Point Committee.
(Name Deleted), Specialist III
He is responsible for all JTPA marketing material development. This includes the development and implementation of client and employer marketing plans; advertisements; brochures; hand outs; presentation aides; articles; PSA'S; develop sites and make recruitment presentations; and customer satisfaction surveys. He also represents E&T on the DHS Communication Committee and will assist in staffing the PIC Marketing Committee.
Supervises 5 staff, 2 housed in Clayton, 3 at St. Ann. Supervise EWP,
OJT, Resource Center, MISI/JTIS, Interpret laws, regulations, issuances,
Scopes of Work, as they apply to E&T. Work with other staff in
areas of marketing, recruitment, monitoring, program development, and compliance.
Validate files,
monitoring eligibility, monitoring ISS comments. Troubleshoot for both
computer systems; making changes, making corrections, answering questions,
running reports, verifying information, making sure both systems are compatible
and cover all regulations and issuances. Attend technical meetings. Provide
training and support to staff. Serves on Strategic Planning Committee and
Resource Center Committee.
(NAME DELETED),. EWP SPECIALIST
Attends CHOICES and CMS to address any issues that deal with older individuals. Works with other staff for marketing, recruitment, program development. Casemanager for the EWP clients. Performs quarterly validation on all EWP files. Submits monthly EWP report for JDT. Works with Title V agencies as required by the scope of Work. Attends Golden Opportunity meetings. Assists marketing rep in writing job orders, completing invoices, and monitoring OJT contracts. Assists in Resource Center as needed. Completes all appropriate paperwork, such as MOJT's, ISS comments, monitoring reports, etc. Serves on Strategic Planning Committee. Responsible for issuances, laws, and scopes of work as they apply to the EWP program.
(NAME DELETED), RESOURCE CENTER SPECIALIST
Provides support to the rest of the unit, by performing one-on-one instruction to clients in the Resource Center. These support/duties include: resumes, cover letters, thank you letters, career research, testing, education research, transportation, child care direct placements, motivational, application completion, interviewing skills, company research, WP tutorial, community service referrals, and telephone techniques. Responsible for making contacts in the community. Supervises Title V staff working in the Center. Making appropriate ISS comments. Tracking all client activity in MISI. ADA rep for Department. Serves on DART Board and Resource Center Committee. Responsible for Gifts in Kind, Food Pantry, Clothing Pantry. Assists in writing job orders, invoices, OJT monitoring.
(NAME DELETED) MARKETING REP
Coordinates the MJDF program with JDT and the Title III OJT program.
Writes contracts, training outlines, job orders, completes invoices, monitoring
reports, modifications. Responsible for Non-financial agreement with ES
for MJDF
(NAME DELETED), MARKETING REP
Coordinates the OJT program for IIA, EWP, and IVC. Writes contracts, training outlines, job orders, completes invoices, monitoring reports, modifications. Responsible for writing the Buy-In-Agreements with SDA 6 and 14. Responsible for interpreting issuances, laws, and scopes of work as they apply to OJT. Enters all appropriate information into the MISI system, such as contracts, job orders, invoices, MOJT forms, and ISS comments. Fills in for MJDF and Title III OJT. Serves on the communication Committee. Works with other staff on marketing, recruitment, and program development.
(NAME DELETED), JTIS DATA ENTRY CLERK
Responsible for entering all the MOJT forms for Titles IIA, IIC, IIB, EWP, MJDF, and IVC. Troubleshoots any problems or error messages. Maintains all files and records. Distributes the JTIS manual and updates to appropriate staff. Communicates with JDT for clarification. Develops reports in Foxpro. Downloads JTIS system weekly. Weekly checks the CHOICES register against the state AFDC/Food Stamp system and provides staff with information. Types OJT contracts. Fills in at lunch time every day at the switch board. Attends JTIS technical assistance meetings.
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