Atlanta jobs agency survives despite decades of scandal

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Now, it is once again under fire. An Atlanta Journal-Constitution investigation has found AWDA paid hundreds of thousands of dollars to companies that billed for phantom workers or token or non-existent training. And once again, federal officials are investigating.

How does the agency survive? It’s politics, experts say. AWDA brings in millions of dollars in grant money that the city can use to help elected officials get jobs for constituents and subsidies for favored businesses.

And when things go wrong — as they often do at AWDA — there’s little for mayors to worry about. When it comes to federal job-training grants, it was never local tax dollars to begin with, said Gordon Lafer, a labor and employment policy expert at the University of Oregon.

City officials don’t want to talk about the latest revelations, though they are quick to praise what they see as a record of success in helping people find jobs.

In a written statement, Mayor Kasim Reed said AWDA’s problems involve a management issue that is being addressed by a consulting firm.

Shuffling the deck

Each time the city’s jobs agency has come under fire, the city’s playbook has been to call for change and shuffle the deck.

During the mid-1990s, the predecessor agency was chaired by Dan DeBardelaben, a golfing buddy of then-Mayor Bill Campbell who later testified in federal court that he delivered cash bribes to Campbell. In 1998, as the agency faced accusations of mismanagement and political cronyism, Campbell hired New Jersey administrator Howard Atkins to clean it up.

Among the accusations were that two job agency employees had campaigned for Campbell on city time, that former employees were fired for reporting wrongdoing and that a $100,000 contract was steered to a Campbell supporter. The state Labor Department demanded Atlanta return hundreds of thousands of dollars in unjustified expenses.

But less than a year after taking over, Atkins declared the agency “first rate.” He ignored City Council recommendations to hold wrongdoers accountable and recover grant money that may have been used improperly.

Atkins’s second-in-command Pat Sermon took over after he retired in 2001, and within a year the jobs agency was the target of complaints about mismanagement and theft of funds dating back to her former boss’ tenure. After City Auditor Leslie Ward began a probe in 2003, then-Mayor Shirley Franklin dismissed Sermon and asked the entire board to resign.

To straighten out the agency, Franklin hired Deborah Lum, who had been Southeast director of the National Alliance of Business and had ties to local civil rights heroes and the city’s elite.

Lum promised an overhaul, but criticism continued to rain down. In 2008, federal Labor Department auditors said the agency should forfeit $11.3 million for unjustified spending from 1998 to 2004. In addition, a 2009 state review found the agency failed to balance its books or track expensive equipment.

Lum said the agency had sufficient controls in place, and the city launched a legal battle against the Labor Department’s findings, paying $243,260 to an outside law firm.

After a five-year battle, the federal government folded. A Labor Department spokesman declined to make anyone available to the AJC to explain why.

Meanwhile, another state review in 2011 had concluded that AWDA's inability to fix long-standing problems represented "a fundamental, ongoing, and systemic failure on the part of management staff." The city's much-touted youth program provided "low quality" services and ignored those who were the most desperate for help.

The review also singled out the case of a $2,400 Apple laptop reported stolen from the Statesboro apartment of Lum’s son. A police report said he told an officer it belonged to him, but it was actually Atlanta city property.

Last year, City Auditor Ward recommended the agency be shut down, saying it made token fixes, rather than addressing the agency's real problems.

Money was poured into the agency when it could not account for its spending, she reported.

Ward could not figure out how effective the agency was in finding jobs because the database was a mess. It even spelled “McDonald’s” in 15 different ways. AWDA paid to train workers whom auditors could not find in the agency’s records. Lum blamed the missing records in part on the theft of more than a dozen file cabinets, even though the agency had gone paperless in 2006.

“When you have a program for $11 million and there were about 5,000 people enrolled, I would assume documents would be missing,” Lum told city council members during a committee hearing.

‘Accountability problem’

Instead of criticizing the agency, Mayor Kasim Reed’s staff attacked Ward for suggesting it be disbanded.

Although the audit found the agency couldn’t prove that it helped as many clients as it said, then-Atlanta Chief Operating Officer Duriya Farooqui found it “perplexing” that the auditor would recommend closing an agency that helped so many people.

A jobs program can be among the few initiatives popular across across partisan lines, despite being fraught with favoritism and misuse of funds, said experts who have studied federal grants.

“It becomes more like a family foundation: Uncle Louie gets that grant, Aunt Betty gets that amount,” said Anthony Carnevale, director of the Georgetown University Center on Education and Workforce.

“The people at the state and local level do not have any stake in the game. Your shouldn’t run programs that way. There is a real accountability problem here that’s profound,” he said.

Lum wouldn’t comment on the latest criticisms of her agency but has said it deserves the public’s trust.

She gave a rambling defense of AWDA at a 2013 council meeting. “I just want you to know what my background is: It’s based on good management, accurate reporting and integrity,” she said, and ended with an urgent plea.

“I’m asking the city council members to please support us in what we do and how we do it,” she told the council.