Atlanta short —- by a lot

In November, the U.S. Labor Department issued a blistering audit that accused Atlanta of improperly spending $11.3 million intended to help people find jobs. The feds have said they either want the money back or a justification for the spending.

The city’s reaction? Silence.

The city received the audit in January but has never responded to it, according to an April 10 letter from the Labor Department. The letter indicated that the Labor Department will want the money back. But the department has given the city another 60 days to respond, which includes an extension requested by Atlanta on April 6.

The Atlanta Workforce Development Agency spent the money issuing contracts without competitive bids, making questionable expenditures and supplying services to ineligible recipients, according to the audit by the Labor Department’s Office of the Inspector General. The money came from Welfare-to-Work and Workforce Investment Act funds.

Having to repay the grants “would be a terrible blow to that program,” said Atlanta Councilman Jim Maddox, who said his Community Development and Human Resources Committee will hold a hearing on the matter. “We certainly plan to have them before the committee to give us the status on what is going on.”

Findings disputed

Deborah Lum , executive director of the Workforce Development Agency, declined to comment for this article. Before finishing its audit, the Inspector General last October sent findings to the city for a response; Lum’s response at the time was a five-page memo saying she strongly disagreed with the findings.

In February, she issued a statement to the AJC saying city officials were confident they had “sufficient financial controls and systems to plan, measure, implement and evaluate federal grant-funded programs.”

The city job agency operates under the office of Mayor Shirley Franklin. Franklin said she has referred the matter to the city’s Law Department.

Jeffrey Norman , the Law Department’s compliance manager, issued a two-sentence statement last week saying the city is working with the Labor Department to resolve its concerns. The statement doesn’t offer details.

The Workforce Development Agency operates out of an office building near Turner Field on Pollard Boulevard, where it offers job training and help finding work, including help writing resumes and access to a telephone, fax machine and e-mail. The agency’s Web site says it has helped more than 74,000 customers get training and find work. It had a $21.1 million budget last year; its largest source of funding is federal grant money.

The Labor Department’s action comes amid a city budget crisis. Atlanta has laid off more than 680 employees, eliminated more than 1,100 positions, announced furloughs for about 4,600 city workers and instituted a hiring freeze, while struggling with multimillion-dollar budget shortfalls. The mayor is expected to propose her budget for fiscal year 2010 this week.

The federal audit covered the city job agency’s spending from 1998 to 2004. Lum said all the federal grant funds at issue had been spent by the time Franklin appointed her to become executive director of the city agency in March 2003.

Attempts to reach the agency’s previous director, Pat Sermon, were unsuccessful.

State could dun city

Of the $11.3 million at issue, $10.1 million went directly from the federal government to the city. The rest, $1.2 million, was issued to the state, which sent the money to the city. So the federal Labor Department could bill the state for that amount, and the state could turn around and ask the city to pay.

Federal officials have already asked the Georgia Labor Department to review how the city spent its Workforce Investment Act money. A spokesman for the state agency said it “takes its role seriously in resolving this matter” and will work with the city “to address the issues identified in the report.”