Audit Validates Lompoc Workers
Federal welfare reform legislation opened the door for privatization of job training programs previously performed by county GAIN employees. Claiming that private contractors are more cost efficient than county employees, counties are contracting out programs to private contractors, such as Curtis and Associates. But do they really save the county money?
In the July 1997 issue of the Dragon we reported that GAIN workers at the Lompoc office in Santa Barbara County challenged the claims made by Curtis and the county that the private employer was doing a better job than county employees. The workers claimed the criteria used to evaluate the two programs were biased toward the private contractor. Their claims and the Dragon’s investigation raised the concern that department administrators were becoming politically invested in the success of the private contractor.
Lompoc workers Don Thompson and Carlos Campos and SEIU Local 535 union representative Greg Cross were successful in forcing the county to perform an internal audit on the program. The audit found the concerns of the Lompoc workers to be justified. The Santa Barbara Department of Social Services justified its continuing contract with Curtis and Associates based on an evaluation that used a different set of criteria to evaluate the performance of county workers than was used to evaluate the performance of Curtis and Associates, and those differences favored Curtis and Associates. However, the auditor placed the blame not on Curtis and Associates or the county, but on state regulations for evaluation of the program, and went so far as to question whether the California rules are in compliance with federal regulations.
The audit conducted by the Santa Barbara County Auditor-Controller found “no instances or evidence of intentional falsification of any data.” It blamed the problem on the lack of clarity of state regulations: “The State definition of what constitutes a ‘placement’ lends itself to an interpretation that serves to inflate program results . . . We noted several instances where individuals had several (sometimes up to three) placements in a single day. For example, three baby-sitting jobs in a single day count as three placements for program reporting purposes. These placement criteria result in the accumulation and reporting of program statistics which may be misleading and open the program up to criticism of manipulation and ineffectiveness. Finally, GAIN job placement criteria do not measure the quality of jobs in which participants are placed, serving to further obscure true program effectiveness.”
In addition, the report noted that in assessing the cost effectiveness of the program, county overhead costs were not included in private contractor costs but were included in public employee costs. The report stated, “DSS, based on claiming Instructions from the California DSS, does not assign overhead costs to contractor service program costs (such as the GAIN contract). If, however, GAIN program services were delivered by County employees, overhead costs would be assigned to the GAIN program for cost allocation purposes by DSS.” (Italics are the auditor’s.)
The report went on to confirm that different rules are used not only to assess the cost per placement of GAIN recipients but even what counts as a placement. The audit found that the private contractor was able to count as a placement “those individuals who have been sent an invitation to attend a GAIN orientation,” if a program participant obtains unsubsidized employment any time after the invitation is sent. In contrast, county employees do not count a placement unless the client actually attends an orientation and then gets a job. Many clients get jobs on their own between the time they apply for aid and the time they actually start the program. Curtis and Associates was able to claim these applicants.
Even though the county’s evaluation of the program was shown to be flawed, a contract was awarded to Curtis for three more years at a cost of nearly $2 million per year. According to union rep Cross, this was in part because the Department of Social Services director Charlene Chase, a strong advocate of Curtis, manipulated the board of supervisors into a position where they felt they had no choice but to renew Curtis’ contract. However, upon the insistence of the union, this time the contract has provisions to hold Curtis accountable to performance standards allowing the county to terminate the contract if Curtis fails to live up to those standards. According to Campos, because of the union’s effort the board’s honeymoon with Curtis is over, and although they renewed the contract, they put Curtis on probation.