What Juan Manigault Cost You (WIBFP-4)

Juan Manigualt, Republican mayoral candidate waved his "you're doin' a heckuva job Brownie" letter for the benefit of the South Bend Tribune in August 2007. I have a copy of that letter. It's dated October 6, 2004 and it's from Indiana Workforce Development Oversight Director Gus Linde. The phrase Mr. Manigault wants us to pay careful attention to is: "It appears your agency has satisfactorily addressed all of the issues identified in the audits." (FY 2000, 2001, 2002)

On the same day, the Commisioner of the Indiana Workforce Development, Alan Degner (Mr. Linde's boss) wrote a letter to South Bend Mayor Steve Luecke outlining the commission's understanding of the fiscal conduct of the Northern Indiana Workforce Investment Board, headed by Juan Manigault. Here it is in its entirety.


Dear Mayor Luecke:

I apologize for the delay in responding to your email regarding the decision made by you and the other local elected officials of the Northern Indiana Workforce Investment Board (NIWIB) to reimburse our agency for $26,389.01 in grant contract over-expenditures. While I certainly understand the sentiment of your email, I would like to take this opportunity to clarify our position and demonstrate the lengths that the Indiana Department of Workforce Development has take to ensure NIWIB's financial solvency.

Issues surrounding the integrity of NIWIB's financial records began to surface in a June 2001 monitoring report issued by DWD, which reviewed the year ending June 30, 2000. This report documented serious deficiencies in the necessary records needed to reconcile NIWIB's books against the the Department's records. As a result, members of both staffs met and it was decided that DWD would contract with Cole and Dutton to assess the Board's financial records, report their findings and make recommendations to DWD and NIWIB.

In September 2001, Cole and Dunton's submitted a report that supported the findings of DWD monitoring reports that indicated serious deficiencies in record keeping, which included:

* fraudulant checks totaling $60,000
* more than $77,000 that could not be reconciled between NIWIB and the St. Joseph County Auditor's records
* the financial system could not produce a balance sheet
* travel expenses charged to NIWIB credit cards that were lacking appropriate documentation under IRS standards
* procurement of $24,000 in business equipment that was charged to two funding pools
* accounting software that could not generate financial statements for each fund or entity; and
* no documentation presented or available to close out records that supported the reconciliation of the case receipts
recorded by NIWIB to the summary of cash draws from the grantor.

As a result, Cole and Dunton recommended that NIWIB reconstruct their financial records so that an audit could be performed. The following items are a sampling of the reconstruction requests for both NIWIB and WDS, Inc:

* an accounting for cash receipts, cash disbursements and cash balances between NIWIB and the St. Joseph County
Auditor's office
* a cost allocation plan
* payroll time sheets and job descriptions
* travel and expense reimbursements
* a list of all leases
* a fixed asset inventory list
* annual financial statementss; and
* annual settlements and grant closeouts

The Department then consulted with the U.S. Department of Labor regarding the recommendations of this report. The USDOL requested that NIWIB reconstruct their books for Progran Years ending June 30, 2000 (PY99), June 30,
2001) (PY00) and June 30, 2002 (PY01) and prepare them for audit. In December 2001, NIWIB hired BKD to reconstruct their books for PY99, PY00 and PY01. DWD fully expected that, as a result of the reconstruction, the audits would be "clean".

But, throughout the reconstruction, BKD experienced difficulties, which delayed the total reconstruction. These issues included the following:

* a chart of accounts included 65,000 separate accounts for allocating expenses
* NIWIB staff changed the agreed upon chart of accounts in the middle of a project
* payroll taxes and other payroll related withholdings were not part of the original payroll check listing
* continual adjustments throughout the process by NIWIB to the cost allocation paln and;
* a dispute over the reported participant numbers that NIWIB originally submitted to DWD

Beginning October 2002, Crowe Chizek reported their findings for PY99 and PY00 and in February, the PY01 findings were released. A summary of their findings and questionable costs is as follows:

* In February 1998, three fraudulant checks totaling $60,000 were drawn on NIWIB's bank account.
* Internal control over financial reporting and its operation were considered to be significantly deficient and could
adversely affect NIWIB's ability to record, process, summarize and report financial data.
* NIWIB had not established a monitoring plan for verifying the adequacy of their sub-recipients' internal control
and financial mangement structure.
* The auditor's report on compliance for the major federal award program for NIWIB expressed a qualified opinion.
* NIWIB was not determined to be a low risk auditee.
* NIWIB was experiencing difficulties in preparing monthly financial statements.
* NIWIB did not adhere to its cost allocation plan.
* Grants were not being properly administered.
* Approximately $134,000 of funds disbursed to a sub-recipient was not adequately documented as allowable
under the terms of the various source grants.
* Federal awards were disbursed to a sub-recipient in excess of the supportable expenditures of the subrecipient.

In early 2003 after the audits, our agency received the final grant close-outs for these program years. After carefully reviewing the financial records, Mr. Chuck Martindale, the agency's former Controller, sent a letter to Mr. Juan Manigualt that outlined several discrepancies, including over-expenditures that exceeded $1.1 Million. This over-expenditure was created when two formula awards (WIA903 and WIA003) were reported by the Auditor (Crowe, Chizek) as being a combined $4,245,03.00 as compared to the closeout submitted by NIWIB of $3,136,948. In addition, only 4 out of 23 grants could be reconciled with the Auditor report's "Schedule of Expenditure of Federal Awards" to NIWIB closeouts submitted. Based on these findings, the Department recommended the selection of a new fiscal agent to be effecticve on or befor July 1, 2003. As chief elected official, you later selected Crowe Chizek to act as fiscal agent effective July 1, 2003.

Because NIWIB had accumulated $1,108,082.00 in over-expenditures in these two grants, you and the other local elected officials had two options. You could either repay this amount to the State of Indiana through your local government funds or NIWIB could request to apply the over-expenditures to future WIA formula allocations, if approved by the local elected officials. However, DWD could not waive $26,389.01 in over expenditures, which included:

* $12,350.02 in WIA003 youth expenditures in excess of the contract
* $8,983.55 in WIA003 dislocated worker expenditures in excess of the contract; and
* $5,055.44 in RRS003 Rapid Response expenditures in excess of the contract.

The Department could not waive these three over-expenditures accepted by the NIWIB because the grants had already been closed out and reconciled. If the Department were to do so, every grant received in PY99, PY00, and PY01 would need to be reopened. Therefore, in a letter dated June 30, 2004, the Department requested these monies be paid in full. Please be advised that the Department has received the reimbursement for $26,289.01 and this amount has been repaid to the USDOL for the over expenditures. Reflecting this repayment of monies, NIWIB still had to address the above $1.1 million in outstanding debt.

As you are aware, the Department has applied this $1.1 million repayment against future WIA formula allocations in order to eliminate the outstanding balance. We must insist that NIWIB meet their obligations and performance measures for upcoming program years on the current WIA three-year grant that has been reduced by this amount. Our agency will continue to provide technical support regarding these matters and will closely monitor your financial records. I would suggest that individual Board members do the same.

If you or any Board member would like copy of any of the reports outlined in this letter, please do not hesitate to contact our office and we will be happy to provide those documents for you. Thank you again for your diligence in resolvint these issues and I look forward to a lasting partnership between these oeganizations.

Sincerely,

Alan D. Degner
Commisisoner



**********************************



So... What did Juan Manigualt cost you?

Based on what we've seen here in terms of direct costs, incompetence, and forfeited opportunities -- two million dollars is a conservative figure. And what's perplexing to me is that in the private sector, no one who was this bad at doing his/her job would have have kept it. Why did he?

What really stinks is that over a million dollars targeted to people who needed training or opportunity to find gainful employment - a chance to make their families work again, perhaps - didn't get the opportunity. Because Juan Manigault is so bad at his job, that money went away.

Again, what did Juan Manigualt cost you?

Democracy is not a spectator sport.

Don Wheeler