jurisdiction: US

text: b'Office of Inspector General\nU.S. Department of Labor\nOffice of Audit\n\n\n\n\n Audit of Stillman College\xe2\x80\x99s\n Competitive Welfare-to-Work Grant\n\n\n\n\n Report Number: 04-01-002-03-386\n Date Issued:\n\x0c TABLE OF CONTENTS\n\n\nACRONYMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv\n\nEXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1\n\nINTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4\n\nOBJECTIVE, SCOPE AND METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6\n\nRESULTS OF AUDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8\n\n Expenditure Reports Were Improperly Prepared and\n Not in Agreement with The College\xe2\x80\x99s Accounting System . . . . . . . . . . . . . . . . . . . . 8\n\n Improper Grant Charges of $194,936 Were Identified . . . . . . . . . . . . . . . . . . . . . . . 9\n\n Adequate Procedures Were Not in Place\n for Tracking Funds Spent on Target Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13\n\n Program Performance Goals Have Not Been Met . . . . . . . . . . . . . . . . . . . . . . . . . . 13\n\n Placement Costs Have Increased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15\n\n Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16\n\nRECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16\n\nSTILLMAN COLLEGE\xe2\x80\x99S COMMENTS ON THE DRAFT REPORT . . . . . . . . . . . . . . . . . 17\n\nANALYSIS OF STILLMAN COLLEGE\xe2\x80\x99S COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 19\n\nEXHIBITS\n\nEXHIBIT 1: COMPILATION OF WtW GRANT EXPENDITURES IN STILLMAN\n COLLEGE\xe2\x80\x99S GENERAL LEDGER\n\nEXHIBIT 2: BUDGETED EXPENDITURES FOR VARIOUS GRANTS STILLMAN\n COLLEGE ADMINISTERED JULY 1999 THROUGH JUNE 2000\n\n\n\n ii\n\x0c TABLE OF CONTENTS (Cont.)\n\n\nEXHIBIT 3: SCHEDULE OF REIMBURSEMENTS TO THE EAST TUSCALOOSA\n FAMILY RESOURCE CENTER\n\nEXHIBIT 4: TEXT OF STILLMAN COLLEGE\xe2\x80\x99S RESPONSE TO THE DRAFT AUDIT\n REPORT\n\n\n\n\n iii\n\x0c ACRONYMS\n\n\nCFR \xe2\x80\x93 Code of Federal Regulations\nDHR \xe2\x80\x93 Department of Human Resources\nDOL \xe2\x80\x93 U.S. Department of Labor\nETA \xe2\x80\x93 Employment and Training Administration\nFY \xe2\x80\x93 Fiscal Year\nETFRC \xe2\x80\x93 East Tuscaloosa Family Resource Center\nFSR \xe2\x80\x93 Financial Status Report\nOIG \xe2\x80\x93 Office of Inspector General\nOMB \xe2\x80\x93 Office of Management and Budget\nTANF \xe2\x80\x93 Temporary Assistance for Needy Families\nWtW \xe2\x80\x93 Welfare-to-Work\n\n\n\n\n iv\n\x0cAudit of Stillman College\xe2\x80\x99s Competitive Welfare-to-Work Grant\n\n\n\n EXECUTIVE SUMMARY\n\n\nOn January 4, 1999, Stillman College received a competitively procured Welfare-to-Work (WtW)\ngrant from the U.S. Department of Labor (DOL) Employment and Training Administration (ETA). The\npurpose of the grant was to place 850 hard-to-serve individuals in unsubsidized employment, over a 2-\nyear period.\n\nIn September 1999, an ETA technical assistance team identified issues regarding the College\xe2\x80\x99s\ncompliance with Federal requirements. In June 2000, the Office of Inspector General (OIG) received\na complaint that indicated the technical assistance team\xe2\x80\x99s concerns were not being adequately\naddressed and questioned Stillman\xe2\x80\x99s capability of meeting performance goals in the grant. In response\nto the complaint, we audited financial and program activities related to Stillman\xe2\x80\x99s WtW grant for the\nperiod January 4, 1999 through June 30, 2000.\n\n We identified a variety of fiscal and program management issues which have\n Our Findings\n caused us to question whether the grant should be continued.\n\nWe found that financial accountability over the grant was poor. Program expenditures Stillman\nreported to ETA at June 30, 2000, could not be reconciled with grant expenditures recorded in the\nCollege\xe2\x80\x99s general ledger. Further, the report was not prepared on an accrual basis, as required by\nETA, and was not completed in accordance with other reporting instructions.\n\nWe identified $194,936 of questionable expenditures included in the College\xe2\x80\x99s general ledger.\nSpecifically:\n\n ! salaries and fringe benefits were overcharged by $48,075;\n\n ! equipment totaling $133,988 was overcharged to the grant; and\n\n ! other goods and services costing $12,873 were overcharged to the grant.\n\nSeveral performance issues were also identified. WtW requirements emphasize that certain welfare\nrecipients deemed \xe2\x80\x9chard-to-serve,\xe2\x80\x9d have priority in getting assistance. Requirements provide that no\nmore than 30 percent of grant funds may be spent assisting \xe2\x80\x9cother eligible\xe2\x80\x9d persons. However, the\nCollege did not have a system for tracking expenditures spent in assisting \xe2\x80\x9chard-to-serve participants\xe2\x80\x9d\nand those who are designated as \xe2\x80\x9cother eligibles.\xe2\x80\x9d\n\n\n\nU.S. Department of Labor - Office of Inspector General\n\x0cAudit of Stillman College\xe2\x80\x99s Competitive Welfare-to-Work Grant\n\n\n\nWe also found participants were not being placed in unsubsidized employment at a rate consistent with\nthe grant\xe2\x80\x99s terms. As of June 30, 2000, three-fourths of the way through the initial 2-year grant period,\nStillman reported it had placed only 76 participants in jobs, or about 9 percent of the 850 persons it\nproposed serving in the original grant. Consequently, the average cost for each placement had risen to\nover $9,600, instead of $4,400 that was anticipated when ETA awarded the competitive grant.\n\nWe found indications that Stillman may have substantially overestimated in its proposal the number of\neligible welfare recipients who were available to be served. Finally, the files of participants reported as\nplaced often did not contain documentation of Stillman\xe2\x80\x99s efforts to find them jobs. Consequently,\nStillman\xe2\x80\x99s role in finding them jobs is uncertain.\n\nETA recently extended the grant period until January 2, 2002, and reduced placement goals from 850\nto 200, and the total grant was reduced by about $841,000. The changes resulted in an anticipated\naverage cost for each placement of $14,400.\n\n Reduced estimates of the need for the program and the variety of problems\n Recommendations\n we identified caused us to question the program\xe2\x80\x99s viability. We are also\n concerned that the significant reduction in performance expectations\nallowed by the modification calls the competitive grant process into question, as the award was based\non representations that a much larger population of welfare recipients would be served, at significantly\nlower average costs.\n\nConsequently, we recommend the Assistant Secretary for Employment and Training reconsider the\ndecision to extend the grant. If reevaluation leads to the conclusion that modification of the grant was\nnot advisable, provisions should be made for assisting participants who are currently enrolled in the\nprogram and the grant should be terminated.\n\nIf the Assistant Secretary decides the grant should be continued, the \xe2\x80\x9cRecommendations\xe2\x80\x9d section of this\nreport provides a summary of several changes we believe must occur in order for Stillman to\nresponsibly administer an effective program. We also recommend ETA ensure $194,936 in grant\nexpenditures we have questioned are not claimed or paid.\n\n Stillman\xe2\x80\x99s Response Stillman did not disagree with our finding that reported expenditures\n were inconsistent with the College\xe2\x80\x99s accounting records. Stillman\n offered explanations for some of the costs we\n\n\n\n\nU.S. Department of Labor - Office of Inspector General 2\n\x0cAudit of Stillman College\xe2\x80\x99s Competitive Welfare-to-Work Grant\n\n\n\nquestioned but did not provide adequate justification for charging the questioned costs to the grant.\nAlso, Stillman stated that since placement goals had been reduced from 850 to 200, they would meet, if\nnot exceed, the revised goals.\n\n The response did not provide additional information\n OurAnalysis of Stillman\xe2\x80\x99s Response that caused us to alter findings, conclusions or\n recommendations in our draft report.\n\n\n\n\nU.S. Department of Labor - Office of Inspector General 3\n\x0cAudit of Stillman College\xe2\x80\x99s Competitive Welfare-to-Work Grant\n\n\n\n\n INTRODUCTION\n\n\n Provisions of the Balanced Budget Act of 1997 (Act), authorized\nObjectives of DOL to make $3 billion available for WtW grants. WtW grants\nWelfare-to-Work Grants intend to help Temporary Assistance for Needy Families (TANF)\n program recipients, and certain non-custodial parents find\n employment.\n\nDuring FYs 1998 and 1999, $711 million of the $3 billion in WtW funds was designated for award\nthrough competitive WtW grants. ETA solicited grant applicants from private and public organizations,\nto administer transitional assistance programs and help hard-to-employ welfare recipients find lasting\njobs that offer good prospects of self-sufficiency. ETA judged the applications it received on a variety\nof published criteria that included the need for funds in the area served by the applicant, the viability of\nthe proposed service delivery strategy, and likelihood of a proposed project\xe2\x80\x99s success.\n\nTo date, ETA has made three rounds of competitive WTW grant awards. While the periods of\nperformance for the projects vary, grant funds may be available for up to 5 years beyond the initial date\nof the grant award.\n\n WtW competitive grants have a \xe2\x80\x9cwork-first\xe2\x80\x9d emphasis. The grants\nPrincipal Grant are meant to provide welfare recipients with transitional assistance that\nRequirements and moves them into unsubsidized employment with good career potential\nCriteria for economic self-sufficiency. Transitional assistance may be\n provided to participants through a strategy that first engages them in\n employment-based activities. Basic or vocational skills training may\nbe provided for a period of up to 6 months pre-employment, or as a post-employment activity, in\nconjunction with either subsidized or unsubsidized employment.\n\nIn addition to provisions of the Act, nonprofit grantees are required to follow general fiscal and\nadministrative rules contained in Office of Management and Budget (OMB) Circular A-110, which is\ncodified in DOL regulations at 29 CFR 95. Also, provisions of OMB Circular A-21, which include\nrequirements for determining the allowability of costs, must be followed by educational institutions.\nProgram regulations specific to WtW grants, found at 20 CFR 645, apply to the competitive grants.\n\n\n\n\nU.S. Department of Labor - Office of Inspector General 4\n\x0cAudit of Stillman College\xe2\x80\x99s Competitive Welfare-to-Work Grant\n\n\n\nProvisions of 20 CFR 645.235 identify allowable administrative costs. The provisions also limit\nadministrative costs charged to the competitive grants to no more than 15 percent of the grant award.\n\n On January 4, 1999, Stillman College, located in Tuscaloosa, Alabama,\nStillman College\xe2\x80\x99s received a 2-year WtW grant in the amount of $3,723,620. The period\nCompetitive Grant of performance for Stillman\xe2\x80\x99s Work-First Program was January 4, 1999\n through January 3, 2001.\n\nThe purpose of the initial grant was for Stillman to place 850 hard-to-serve individuals in unsubsidized\nemployment over a 2-year period. Stillman\xe2\x80\x99s grant application stated its objective was to place\nrecipients in jobs and provide support necessary for lasting employment. Stillman was to provide\nindividual assessment, job readiness, job search and placement assistance to welfare recipients, non-\ncustodial parents and public housing residents.\n\nOn December 1, 2000, ETA modified the grant, reducing the number of expected placements from\n850 to 200. The grant period was also extended an additional year, until January 2, 2002, and the\ngrant amount was reduced by $841,390, from $3,723,620 to $2,882,230.\n\n In September 1999, an ETA technical assistance team identified serious\nOIG\xe2\x80\x99s Involvement grant administrative, compliance and performance issues. In June 2000,\n the OIG received a complaint that indicated problems with Stillman\xe2\x80\x99s\n stewardship of the grant identified were not being addressed. Issues cited\nin the complaint included a variety of poor financial management practices and spending abuses.\nAdditionally, the complaint indicated it was unlikely Stillman would be able to meet performance goals\nestablished in the grant.\n\nWe reviewed financial and performance data related to Stillman\xe2\x80\x99s WtW grant operations as of June 30,\n2000. Our initial work suggested that several concerns expressed in the complaint had merit.\nConsequently, we began a limited scope audit of grant activities that occurred from January 4, 1999\nthrough June 30, 2000.\n\n\n\n\nU.S. Department of Labor - Office of Inspector General 5\n\x0cAudit of Stillman College\xe2\x80\x99s Competitive Welfare-to-Work Grant\n\n\n\n OBJECTIVE, SCOPE AND METHODOLOGY\n\n\n We audited the WtW-funded competitive grant awarded to Stillman College to\n Objective determine if WtW funds were spent in accordance with applicable laws and\n regulations.\n\n\n Our audit included Stillman WtW program activities that occurred from January 4,\n Scope 1999 through June 30, 2000.\n\n\n To obtain an understanding of the WtW program, we reviewed legislation,\n Methodology regulations, grant and grant proposal material prepared by Stillman. We\n interviewed ETA national and regional office staff responsible for oversight of the\nWtW grants, and Stillman\xe2\x80\x99s staff who was responsible for accounting and administrative controls over\ngrant expenditures and program operations.\n\nWe reviewed Stillman\xe2\x80\x99s financial and program records that related to issues identified in the complaint.\nAdditionally, to evaluate grant performance, we randomly selected a sample of 30 participants from\nthe 76 participants who had obtained unsubsidized employment as of June 30, 2000. Participant files\nwere reviewed to determine if participants were eligible for, and had been adequately served by,\nStillman\xe2\x80\x99s WtW program. Our sample was designed to provide review results at a confidence level of\n90 percent.\n\nIt was not an objective of our audit to issue an opinion on whether the WtW grant expenditures\nincluded on the June 30, 2000, Financial Statement Report (FSR) Stillman submitted to ETA were\naccurate, complete or reported in accordance with instructions. However, in completing our tests, it\ncame to our attention that a material unreconciled difference existed between expenditures reported in\nthe College\xe2\x80\x99s general ledger, which was represented as the accounting system used for preparing\nFSRs, and expenditures reported to ETA. We also found accrued expenditures were not reported on\nthe FSR, as required, and that other reporting requirements were not followed. (See the \xe2\x80\x9cResults of\nAudit\xe2\x80\x9d section of this report for a discussion of the issues.) Consequently, we concluded the June 30,\n2000, FSR was not prepared in accordance with ETA\xe2\x80\x99s reporting instructions and should not be relied\nupon.\n\n\n\n\nU.S. Department of Labor - Office of Inspector General 6\n\x0cAudit of Stillman College\xe2\x80\x99s Competitive Welfare-to-Work Grant\n\n\nTherefore, the financial portion of our audit consisted of a review of accounting data and supporting\ndocumentation maintained in Stillman College\xe2\x80\x99s general ledger system. We did not evaluate the\ncollege\xe2\x80\x99s general operations internal controls. Our examination was limited to the administrative and\naccounting controls applicable to Stillman College\xe2\x80\x99s WtW grant.\n\nOur audit was conducted in accordance with Government Auditing Standards, issued by the\nComptroller General of the United States and included such tests as we considered necessary to satisfy\nthe objectives of our audit. Our field work began in August 2000 and continued intermittently through\nSeptember 2000.\n\n\n\n\nU.S. Department of Labor - Office of Inspector General 7\n\x0cAudit of Stillman College\xe2\x80\x99s Competitive Welfare-to-Work Grant\n\n\n RESULTS OF AUDIT\n\n\nWe found that concerns regarding Stillman\xe2\x80\x99s stewardship of grant funds and its ability to meet\nperformance goals had merit. Financial reports were inaccurate and unsupported, rendering them\nunreliable. Unallowable costs had been charged to the grant. Expenditure requirements had not been\nobserved and performance goals which were the basis on which the grant was awarded to Stillman,\nhad not been met.\n\n Grant recipients must provide ETA with\n Expenditure Reports Were Improperly quarterly FSR that indicate cumulative\n Prepared and Not in Agreement with accrued grant expenditures. However,\n The College\xe2\x80\x99s Accounting System expenditures reported on the June 30, 2000,\n FSR did not agree with amounts reported in\n the College\xe2\x80\x99s accounting system. Also, the\nFSR was not prepared in accordance with the reporting instructions and contained inaccuracies.\n\nCosts reported on the FSR did not agree with Stillman\xe2\x80\x99s General Ledger. We were told by\nStillman\xe2\x80\x99s grants manager that the College\xe2\x80\x99s accounting system was the means used to accumulate grant\nexpenditures and to prepare FSR that were submitted to ETA. However, expenditures reported on the\nJune 30, 2000, FSR did not agree with the College\xe2\x80\x99s general ledger. Stillman reported cumulative\ngrant expenditures of $716,734 on its June 30, 2000 FSR (lines 2 and 3 combined); however, our\ncompilation of expenditures coded as WtW grant expenditures in the College\xe2\x80\x99s general ledger totaled\n$930,261. Stillman did not provide us with a reconciliation of the differences between the general\nledger and FSR. 1\n\nGrant expenditures were not reported on an accrual basis. We also found that Stillman had not\nfollowed reporting instructions in preparing the FSR. ETA\xe2\x80\x99s instructions require that accrued\nexpenditures be reported on the FSR. Under the accrual basis of accounting, expenditures are\nrecognized when they are incurred. However, the College did not prepare the June 30, 2000 FSR on\nan accrual basis. Rather, the College maintains a cash-based accounting system. Consequently, an\nitem\xe2\x80\x99s cost is recorded only after cash has been paid out. We found many instances where grant-\n\n\n 1\n The difference of $213,527 may be explained, in part, by exclusion from the FSR of two buses,\npurchased for $108,620, that ETA had previously advised Stillman were unallowable grant expenditures. (See the\ndiscussion of this item that follows under questioned costs.) Also, several year-end adjustments totaling $7,709\nthat involved WtW funds were made by Stillman\xe2\x80\x99s accounting department. However, even allowing for these\nadjustments, expenditures on the FSR differed from those in the general ledger by nearly $100,000.\n\n\n\nU.S. Department of Labor - Office of Inspector General 8\n\x0cAudit of Stillman College\xe2\x80\x99s Competitive Welfare-to-Work Grant\n\n\nrelated costs had been incurred months prior to the end of the quarter, but had not been properly\nrecognized because Stillman did not report them as expenditures until they were paid.\n\nThe FSR was improperly completed. We also noted that the FSR had been improperly completed.\nInstructions for preparing the FSR require that total grant expenditures be reported on line 2 of the\nform. However, the College omitted administrative expenditures from costs reported on line 2 of the\nFSR. As a result, total grant expenditures reported on the FSR were understated.\n\n\n Because Stillman did not provide support for\n Improper Grant Charges of expenditures of $716,734 reported on the\n $194,936 Were Identified June 30, 2000 FSR, we examined expenditures\n included in the College\xe2\x80\x99s June 30, 2000 general\n ledger that were coded as WtW grant costs.\n\n\n Figure 1\n\n\n\n\nU.S. Department of Labor - Office of Inspector General 9\n\x0cAudit of Stillman College\xe2\x80\x99s Competitive Welfare-to-Work Grant\n\n\nOMB Circular A-21, Section C.2.(d) provides that for costs to be allowable, they must conform to\nlimitations set forth in the agreement. Also, Section C.4.(a) provides that goods or services are\nchargeable relative to benefits received by the grant.\n\nOf the $930,261 in total expenditures posted to Stillman\xe2\x80\x99s general ledger for the WtW account, we\nidentified $194,936 that did not satisfy the Circular\xe2\x80\x99s criteria. For purposes of discussion, we have\nclassified the charges into the categories of personnel, equipment and other costs, as illustrated in Figure\n1.\n\nPersonnel Costs of $48,075 were improperly charged to the grant. The general ledger contained\npersonnel costs of $48,075 that should not have been charged to the WtW grant. Improper charges\ninclude:\n\n \xe2\x80\xa2 $26,935 in excessive salary and fringe benefit costs that were allocated to the WtW\n grant; and\n\n \xe2\x80\xa2 $21,140 of personnel costs that exceeded amounts authorized in the grant.\n\nThe WtW grant was charged more than its fair share of the Grants Manager\xe2\x80\x99s salary and fringe benefit\ncosts. We estimate the excess charges were $26,935. Stillman charged 100 percent of its Grants\nManager\xe2\x80\x99s payroll costs to the WtW grant. However, the Grants Manager did not dedicate 100\npercent of his time to administering WtW grant activities. Rather, the Grants Manager was responsible\nfor administering at least 12 other public and private grants, in addition to the WtW grant.\n\nStillman did not maintain information that would have allowed us to determine the amount of time the\nGrants Manager devoted to administering each grant. Lacking better information, we estimated the\nvarious grants\xe2\x80\x99 share of the costs based upon the proportion of each grant\xe2\x80\x99s budgeted expenses to the\ntotal. Total budgeted costs for the 13 grants, which included $876,389 for the WtW grant, was\n$3,268,207 for the year ended June 30, 2000. (See Exhibit 2.) Using this methodology, only about 27\npercent of the Grants Manager\xe2\x80\x99s costs should have been charged to the WtW grant. The overcharge\namounted to $23,725 in salary and $3,210 in related fringe benefit expenses.\n\nWe also found the WtW grant was charged $21,140 for personnel costs in excess of amounts\nauthorized in the grant. The grant stipulated the costs that could be charged to the grant for certain staff\nwho administered the WtW grant program. Grant provisions required that\n\xe2\x80\x9c . . . any changes in wages, salaries, and fringe benefits must receive prior written approval from\nETA\xe2\x80\x99s Grant Officer.\xe2\x80\x9d Six employees received $21,140 in salaries and related fringe benefits that\n\n\n\n\nU.S. Department of Labor - Office of Inspector General 10\n\x0cAudit of Stillman College\xe2\x80\x99s Competitive Welfare-to-Work Grant\n\n\nexceeded rates authorized by the grant agreement. Prior approval from the Grant Officer was not\nreceived for the overages.\n\nEquipment Purchases Totaling $133,988 should not have been charged to the grant. We\nidentified $133,988 of improper equipment purchases that were charged to the WtW grant in the\nCollege\xe2\x80\x99s general ledger. The charges involve:\n\n \xe2\x80\xa2 $108,620 for the unauthorized purchase of buses; and\n\n \xe2\x80\xa2 $25,368 of computer equipment that was not being used for the WtW grant program.\n\nIn a monitoring visit made prior to our audit, an ETA technical assistance team identified two buses\nwhose costs were improperly charged to the grant. The buses were purchased before the start date of\nthe grant and without required ETA approval. Further, ETA determined they were not necessary for\ngrant operations. The team recommended that the costs be disallowed. In an August 12, 2000\n\xe2\x80\x9cResponse and Corrective Action\xe2\x80\x9d addressed to ETA, the College indicated it had \xe2\x80\x9c. . . made the\nnecessary adjustment,\xe2\x80\x9d for the cost of the buses.\n\nAccording to the Grant\xe2\x80\x99s Manager, the cost of the two buses had been removed from expenditures\nreported on the FSR, for June 30, 2000. We could not confirm the adjustment had been made to the\nFSR. However, we did find that $108,620 coded as a WtW grant charge in the College\xe2\x80\x99s general\nledger had not been removed. Therefore, it is necessary that Stillman demonstrate that both the\nCollege\xe2\x80\x99s general ledger and subsequent FSRs have been properly adjusted.\n\nWe also noted that Stillman was considering the purchase of three vans to transport program\nparticipants. At the time of our review, Stillman had a fare reimbursement agreement with a local taxi\ncompany to transport participants to their work and return them to their homes. OMB Circular A-21,\nSection C.2.(a), \xe2\x80\x9cCost Principles for Educational Institutions\xe2\x80\x9d provides that for cost to be allowable, \xe2\x80\x9c. .\n. they must be reasonable.\xe2\x80\x9d We do not believe that the costs of purchasing and operating the vans are\nreasonable.\n\nWe selected a sample of vouchers covering program operations from May 13, 2000 to\nJune 18, 2000, and analyzed the costs of transporting participants. The average number of riders each\nday during this period was 3.7, and the highest number of riders on any day was 7, which occurred\nonly once. At least 1 participant accessed the service each day we sampled and the average number of\nriders on weekends was 2.2 participants per day. The average daily taxi cost was $45.43 per day, or\na monthly cost of $1,362.\n\n\n\n\nU.S. Department of Labor - Office of Inspector General 11\n\x0cAudit of Stillman College\xe2\x80\x99s Competitive Welfare-to-Work Grant\n\n\nAssuming a 5-year life, the allowable monthly use charge to the WtW grant would be about $1,375 per\nmonth ($82,500 estimated cost of the vans divided by 60 months). The use charge for the vans is\nexclusive of other operating cost, such as insurance, fuel, repairs, maintenance, and drivers.\nConsequently, the cost of purchasing, operating and maintaining the vans would easily exceed this\namount.\n\nWe also found that the grant was overcharged $25,368, for the purchase of 21 computers. Stillman\xe2\x80\x99s\ninventory of computers indicated 26 computers were being used in various locations in the WtW\nprogram. However, the grant was charged for the costs of purchasing 47 computers. Consequently,\n21 computers should not have been charged to the WtW grant. Records indicate 8 of the computers\nwere purchased on September 23, 1999, for a total of $7,961. The remaining 13 computers were\npurchased on October 12, 1999, for a total of $17,407.\n\nOther costs totaling $12,873 should not have been charged to the grant. We identified a variety\nof additional costs that should not have been charged to the WtW grant. The items are discussed in\ngreater detail in sections of this report that follow, and include:\n\n ! $9,633 paid another provider for services to program participants;\n\n ! $2,220 involving inadequately supported telecommunications billings;\n\n ! $540 of childcare expenses for program participants who were not enrolled in work-\n related activities at the time services were rendered; and\n\n ! $480 for breakfast and lunch services to the College\xe2\x80\x99s staff.\n\nStillman paid the East Tuscaloosa Family Resource Center (ETFRC) $9,633 for costs that were not\nallocable to the WtW grant. ETFRC was a nonprofit community-based organization that was\nestablished in 1998 to help TANF recipients obtain self sufficiency, provide training to youth entering\nemployment, and act as an advocate for children. The Center participated as a subcontractor in the\nCollege\xe2\x80\x99s Work First program. The College agreed to reimburse ETFRC for all costs directly related\nto serving eligible WtW participants. In addition, general operating costs of the ETFRC were to be\nshared equally between the Center and Stillman.\n\nWe believe the arrangement was equitable, since staffing levels and space occupancy used for WtW\nand other activities are about evenly distributed. However, the agreement was not followed. Some\nexpenses, such as lease, maintenance, equipment and installation costs were charged entirely to the\nWtW grant, and not distributed as was agreed. (See Exhibit 3.)\n\n\n\nU.S. Department of Labor - Office of Inspector General 12\n\x0cAudit of Stillman College\xe2\x80\x99s Competitive Welfare-to-Work Grant\n\n\n\nWe also found that the grant had been charged $540 for childcare services relating to participants who\nwere not involved in work-related activities at the time childcare services were rendered.\n\nAdditionally, the grant was charged $480 for breakfast and lunch services provided at staff meetings, to\nStillman employees associated with the WtW grant. Refreshments are not allowable entertainment\nexpenses according OMB Circular A-21, Section J.15, Cost Principles for Educational Institutions.\n\nFinally, the grant was charged a total of $2,220, in two separate entries of $1,110 each, for\ntelecommunications expenses. The charges were supported by one invoice for $1,110 that did not\nidentify the nature of the costs or the location of the telecommunications services that were billed.\nConsequently, we were unable to determine if the charges related to the grant. Also, we believe the\nsecond charge is a duplicate of the first. Therefore, we question both charges.\n\n Program criteria require that a majority of WtW\n Adequate Procedures Were grant funds be spent assisting certain\n Not in Place for Tracking \xe2\x80\x9chard-to-serve\xe2\x80\x9d individuals. However, the\n Funds Spent on Target Groups College did not have an adequate system for\n tracking costs spent on eligible target groups.\n\nGrantees are instructed to report amounts spent on hard-to-serve and other eligibles separately on lines\n5.a. and 5.b. of the FSR. The instructions are necessary to help ensure compliance with regulations\nthat allow no more than 30 percent of grant funds to be spent on other eligible participants. However,\nthe College was unable to support expenditures it reported for the two categories of participant costs\non its June 30, 2000, FSR.\n\nWe reviewed Stillman\xe2\x80\x99s system for accumulating and reporting grant costs, and did not find a\nmechanism to assign participant-related costs to the two categories. However, we did find that as early\nas April 2000, Stillman had begun to break out costs on \xe2\x80\x9cRequest for Funds\xe2\x80\x9d forms. Although we\nfound this to be an improvement over having no tracking system, we believe Stillman should modify\ntheir automated system to track these participant costs.\n\n Stillman has not met performance goals\n Program Performance stipulated in the initial grant agreement. We\n found program files often did not contain\n Goals Have Not Been Met\n evidence of the assistance provided to\n participants who the College reported it had\n placed in unsubsidized employment.\n\n\n\nU.S. Department of Labor - Office of Inspector General 13\n\x0cAudit of Stillman College\xe2\x80\x99s Competitive Welfare-to-Work Grant\n\n\n\nStillman received $3,723,620 to place 850 participants in unsubsidized employment during the 2-year\nperiod that began January 4, 1999. After 18 months of operation (January 1999 through June 2000),\nonly 184 recipients had been served by Stillman\xe2\x80\x99s Work-First Program, and only 76 of the participants\nserved (31"primary\xe2\x80\x9d eligible participants and 45 \xe2\x80\x9cother eligibles\xe2\x80\x9d) had been placed in unsubsidized\nemployment.\n\nAssuming a consistent placement rate throughout the original grant period, about 75 percent, (637) of\nthe total 850 anticipated placements should have occurred by June 30, 2000. However, the 76\nparticipants Stillman reported it had helped find jobs represented less than 9 percent of the 850\nparticipants Stillman indicated it would place.\n\nThere are several reasons for the low level of performance. The client base of eligible TANF recipients\nStillman had agreed to serve did not materialize. Stillman\xe2\x80\x99s grant proposal indicated 540 local area\nTANF families classified as \xe2\x80\x9clong-term having received assistance for 30 months or more [and] were\nwithin 12 months of losing eligibility.\xe2\x80\x9d However, we were told by an official of the Tuscaloosa County,\nAlabama, Department of Human Resources (DHR) that during 1999, the total \xe2\x80\x9clong-term\xe2\x80\x9d TANF case\nload of 36 clients was divided among Stillman and two other WtW grantees, and only 15 clients had\nbeen referred to Stillman. TANF reforms had apparently reduced the number of potential participants\nfrom 540 families at the time Stillman\xe2\x80\x99s grant proposal was formulated to only 36 recipients when\nStillman began program operations.\n\nWtW eligibility criteria were modified in January 2000, to allow assistance provided to noncustodial\nparents to be included in the \xe2\x80\x9cprimary\xe2\x80\x9d (70 percent) eligible category. However, our work indicates\nthis change did not produce any significant increase in the number of WtW clients available to be served\nunder the \xe2\x80\x9cprimary\xe2\x80\x9d eligibility criteria.\n\nDHR\xe2\x80\x99s records indicate that by August 2000, there were only 32 long-term TANF recipients in\nTuscaloosa County, 6 in Greene County, where Stillman had opened an additional WtW office, and 1\nin Hale County, where Stillman was considering opening another office.\n\nAlso, Stillman\xe2\x80\x99s primary source of client referrals had evaporated. By July 2000, DHR had concerns\nabout the effectiveness of Stillman\xe2\x80\x99s WtW program. Consequently, Tuscaloosa County DHR had not\nreferred any of the 32 TANF recipients who were eligible for assistance as hard-to-serve clients, at that\ntime. Also, DHR withdrew 4 of the original 15 referrals to Stillman \xe2\x80\x9c. . . due to the lack of sufficient\ninvolvement on the part of Stillman College Work First staff.\xe2\x80\x9d\n\n\n\n\nU.S. Department of Labor - Office of Inspector General 14\n\x0cAudit of Stillman College\xe2\x80\x99s Competitive Welfare-to-Work Grant\n\n\nOur work also resulted in concerns about the sufficiency of placement assistance the Work First\nprogram provided clients. We randomly selected a sample of 30 participants from among the 76 who\nStillman reported as having placed in unsubsidized employment, by June 30, 2000. We reviewed\nparticipant files to determine if Stillman\xe2\x80\x99s efforts on behalf of the participants were documented and if\neligibility determinations were properly completed. Available documentation did not provide evidence\nthat Stillman had helped 8 of the 30 participants (27 percent) find jobs.\n\n According to review notes ETA prepared when evaluating the\n Placement Costs proposal, the College\xe2\x80\x99s plan to place 850 individuals in unsubsidized\n Have Increased employment, at an average cost of about $4,380 ($3,723,620 divided\n by 850), was considered a \xe2\x80\x9creasonable investment.\xe2\x80\x9d\n\nHowever, by the end of our audit period, Stillman had placed less than 9 percent of the individuals\noriginally proposed and the average cost per placement was double the estimate\n\n\n Figure 2\n\n\n\n\nU.S. Department of Labor - Office of Inspector General 15\n\x0cAudit of Stillman College\xe2\x80\x99s Competitive Welfare-to-Work Grant\n\n\n\nETA had deemed reasonable. Based on allowable expenses charged to the grant, the average cost for\neach of the 76 reported placements, as of June 30, 2000, had risen to $9,675 ($735,325 divided by\n76 placements). (See Figure 2.)\n\nPlacement cost will further increase, under recent modifications to the grant\xe2\x80\x99s performance goals. On\nDecember 1, 2000, ETA extended the grant\xe2\x80\x99s period of performance an additional year. Total funding\nwas reduced from $3,723,620 to $2,882,230. However, goals for the number of expected placements\nwere reduced from 850 to 200, or less than one-quarter of the number in the initial grant. If Stillman is\nable to achieve its modified goal of placing 200 participants, the average cost per placement will climb\nto $14,411, or triple the average cost Stillman had initially proposed. The cost per placement could\nincrease even further, if the modified goal is not achieved.\n\n\n The variety of problems identified with fiscal and program administration\n Conclusions of the grant cause us to question Stillman\xe2\x80\x99s capability to operate an\n effective program and the advisability of the grant\xe2\x80\x99s extension. Even if\n Stillman were to quickly initiate corrective action and improve its\nstewardship of the grant, the average cost per placement will escalate.\n\nAlso, such dramatic reductions in performance expectations and increased costs call the competitive\naward process into question. The College received a grant based on representations in its grant\nproposal that: a local program was needed; it had the capacity to administer an effective program; a\nmuch larger number of welfare recipients would be served; and average costs would be substantially\nlower. It is uncertain that this grantee would have competed successfully for the award if the current\nperformance goals were presented in the original grant proposal.\n\n\nRECOMMENDATIONS\n\nWe recommend the Assistant Secretary for Employment and Training reevaluate whether continuation\nof the grant is warranted. If reevaluation leads to the conclusion that modifying the grant was not\nadvisable, provisions should be made for assisting participants currently enrolled in the program and the\ngrant should be terminated.\n\nIf it is the Assistant Secretary\xe2\x80\x99s decision to continue the grant, ETA should require that Stillman institute\neffective accounting and administrative controls over program operations and monitor Stillman\xe2\x80\x99s\nactivities to ensure:\n\n\n\nU.S. Department of Labor - Office of Inspector General 16\n\x0cAudit of Stillman College\xe2\x80\x99s Competitive Welfare-to-Work Grant\n\n\n \xe2\x80\xa2 grant expenditures claimed by the College are supported and allowable;\n\n \xe2\x80\xa2 fiscal and performance reports are properly prepared and contain accurate data;\n\n \xe2\x80\xa2 costs are properly allocated to the various grant programs;\n\n \xe2\x80\xa2 administrative cost limitations are observed;\n\n \xe2\x80\xa2 spending limitations relating to the non-primarily-eligible participants are not exceeded;\n and\n\n \xe2\x80\xa2 participant files contain evidence of assistance provided to participants reported as\n placed in jobs.\n\nWe also recommend ETA ensure $194,936 in grant expenditures we have questioned are not claimed\nor paid.\n\nSTILLMAN COLLEGE\xe2\x80\x99S COMMENTS ON THE DRAFT REPORT\n\nStillman disagreed with many of the findings, conclusions and recommendations contained in our draft\nreport. (See Exhibit 4 for the text of Stillman College\xe2\x80\x99s response.)\n\nStillman acknowledged that the FSR did not agree with WtW grant expenditures identified in the\nCollege\xe2\x80\x99s general ledger, at June 30, 2000. According to the response, \xe2\x80\x9cDue to the utilization of dual\naccounting systems, disparities occurred prior to 6/30/00 because the College\xe2\x80\x99s accounting books\nwere not closed monthly.\xe2\x80\x9d The response also indicated expenditures were not reported on an accrual\nbasis, because of outdated accounting software. According to the response, new financial software has\nbeen implemented that includes improved methodology for tabulating cumulative accrued expenditures.\nA reconciliation, said to be of amounts reported on the June 30, 2000 FSR and the College\xe2\x80\x99s general\nledger, was attached to Stillman\xe2\x80\x99s response.\n\nHowever, Stillman did not agree with our finding that personnel costs were charged in excess of rates\nauthorized in the grant agreement. Rather, the response argues we have failed to consider amounts\nbudgeted for fringe benefits. The grant agreement allows a fringe benefit allowance of up to 25 percent\nof budgeted salaries. The salary amounts we have questioned, the response contends, are the WtW\ngrant\xe2\x80\x99s share of fringe benefit costs. Concerning staff salaries we questioned that were in excess of\nWtW grant\xe2\x80\x99s fair share, the response indicates retroactive adjustments have been made \xe2\x80\x9c. . . to reflect\nthe dedicated amount of time spend on WtW grant activities.\xe2\x80\x9d\n\n\n\nU.S. Department of Labor - Office of Inspector General 17\n\x0cAudit of Stillman College\xe2\x80\x99s Competitive Welfare-to-Work Grant\n\n\nRegarding $108,620 in grant costs we questioned that involved the unauthorized purchase of two\nbuses, Stillman commented that only $105,000 of the cost was charged to the WtW grant and that the\nCollege paid $3,620 of the purchase price. The response indicates the College is willing to bear the\nentire cost of the buses; however, \xe2\x80\x9c . . . since they have been in fact used to transport WtW clients, an\nequitable, pro-rated allotment should be allocated (60%-College share 40%-Grant share).\xe2\x80\x9d\n\nThe response also indicates we erred in questioning the costs of 21 computers charged to the WtW\ngrant that were not used in the WtW program. Stillman commented:\n\n OIG mistakenly construed that check #89034 amounting to $43,657 . . . was for\n purchases . . . of computers solely for the WtW program. In fact, the grant was\n only charged for 23 computers at a cost of $23,002, the balance of the check to\n Dell Computers was for the distribution of computers assigned to and paid for by\n other College departments. The pertinent supporting documents affixed to check\n #89034 clearly illustrates that the check total was disbursed for 3 different\n general ledger account numbers.\xe2\x80\x9d\n\nConcerning $9,633 of questioned costs Stillman paid another service provider, the response indicates,\n\xe2\x80\x9cAs of April 15, 2000, ETFRC (the other provider) no longer participates in the WtW program. The\namount of $9,633 was a liability consisting of retroactive monthly salaries and costs to run that Center\nfor WtW activities.\xe2\x80\x9d\n\nThe response also indicates the telecommunications charges we questioned as unsupported were for\ntelephones, installation and wiring of a new WtW program center. Stillman also argued that $540 of\nquestioned childcare charges were legitimate grant costs, but did agree that $480 spent on staff meals\nand refreshments is an unallowable cost.\n\nIn response to concerns over its performance, Stillman points to an increase in the number of clients\nserved and placed in unsubsidized jobs, since July 2000. Stillman argued that their potential client base\nhas not evaporated, as indicated by a total of 273 participants served and 147 placed in unsubsidized\nemployment, as of December 30, 2000. According to Stillman, the Tuscaloosa County DHR was not\ntheir only source of eligible clients. The response cites \xe2\x80\x9cbroad-based research\xe2\x80\x9d that indicates more than\n75 eligible clients in Hale and Pickens Counties satisfy current WtW program eligibility criteria.\nHowever, Stillman commented it will not open offices in those Counties.\n\nFinally, Stillman disagreed with our finding that there was no evidence on file to indicate Stillman\xe2\x80\x99s\ninvolvement in helping 8 of the 30 participants we sampled find jobs. According to the response, \xe2\x80\x9c . . .\nevidence will show that a twenty-five step process is used to place each eligible client on jobs.\xe2\x80\x9d\n\n\n\nU.S. Department of Labor - Office of Inspector General 18\n\x0cAudit of Stillman College\xe2\x80\x99s Competitive Welfare-to-Work Grant\n\n\n\nANALYSIS OF STILLMAN COLLEGE\xe2\x80\x99S COMMENTS\n\nAlthough Stillman\xe2\x80\x99s response indicates inaccurate reporting was the result of confusion caused by the\nuse of dual accounting systems, we were told by Stillman\xe2\x80\x99s management that the College\xe2\x80\x99s accounting\nsystem was the sole source from which the FSRs were prepared. We are not aware that Stillman used\na dual accounting system. We were not provided access to any other financial accounting system other\nthan that which supported the College\xe2\x80\x99s general ledger. Consequently, we are unable to comment on\nStillman\xe2\x80\x99s explanation for discrepancies between the general ledger and the FSR, or the accuracy of the\nreconciliation Stillman provided. Stillman should submit a corrected FSR to ETA that is based on the\nCollege\xe2\x80\x99s general ledger.\n\nStillman commented that steps have been taken to adjust and to properly allocate costs that benefit\nmore than one grant. The response does not provide the amount of the adjustments. However, the\nframework of a cost allocation plan is attached to the response. However, the plan does not address\nprocedures that will be used in capturing information required to equitably distribute joint administrative\ncosts, such as time devoted to administering various programs by the Grants Manager.\n\nWe do not agree with Stillman\xe2\x80\x99s comments that the salary overages we questioned constitute allowable\nfringe benefit charges. Stillman is allowed to charge fringe benefits to the grant of up to 25 percent of\nthe budgeted salaries. The general ledger contained numerous direct charges for fringe benefit costs of\nstaff involved in administering the grants. We did not question any fringe benefit charges, because they\ndid not exceed the 25 percent of authorized salary amounts. However, Stillman cannot treat salaries\npaid in excess of authorized amounts as allowable fringe benefit costs. Changes to budgeted wages,\nsalaries or fringe benefits requires the Grant Officer\xe2\x80\x99s prior written approval.\n\nWe also disagree with Stillman\xe2\x80\x99s response that part of the buses\xe2\x80\x99 purchase price should be considered\nallowable charges to the grant. The buses were not an approved expenditure, were unnecessary, were\npurchased before the grant was effective, and their full purchase price of $108,620 was recorded in the\ngeneral ledger as a WtW grant expenditure. Further, the grant agreement allows for the purchase of 3\nvans at a total cost of $105,000. According to Stillman, they have now purchased the vans.\nConsequently, the entire cost of the buses should be borne by Stillman.\n\nConcerning the charges for 21 computers we questioned, the College\xe2\x80\x99s general ledger indicated that\nStillman charged a total of 47 computers to the WtW grant. Of the total, 11 computers were\npurchased in July 1999 for use by the ETFRC at a total cost of $14,155. The remaining 36 computers\nwere posted to the general ledger using two separate entries (23 computers for $23,002, and 13\ncomputers for $17,602) with a transaction date of November 30, 1999. The WtW program\xe2\x80\x99s\n\n\n\nU.S. Department of Labor - Office of Inspector General 19\n\x0cAudit of Stillman College\xe2\x80\x99s Competitive Welfare-to-Work Grant\n\n\ninventory of computers listed only 26 computers, and in a written statement by Stillman, they confirmed\nthat only 26 computers had been purchased for use in the WtW program. We question the 21\ncomputers that were not included in the WtW program\xe2\x80\x99s inventory, which includes all 13 computers\npurchased for $17,602, and 8 of the 23 computers included in the $23,002 purchase (3 at a unit price\nof $1,047, and 5 at a unit price of $964).\n\nStillman\xe2\x80\x99s response argues that the 36 computers purchased with a transaction date of November 30,\n1999 were charged to 3 different departments, as a document attached to the invoice indicates. We\nagree that the invoice does break out the computer-related costs as Stillman claims. However, we\nfound that 13 computers, purchased for $17,602, that should have been charged to another\ndepartment, were actually charged to the WtW grant, according to the College\xe2\x80\x99s general ledger. As\nstated above, these computers were not included in the WtW program\xe2\x80\x99s inventory, and should not have\nbeen charged to the grant.\n\nOur position has not changed concerning ETFRC\xe2\x80\x99s costs that were improperly allocated between the\nWtW grant and other Center functions. Because Stillman is the grant recipient, it retains responsibility\nfor ensuring that all costs, including those of its subcontractors, are equitably allocated among funding\nsources.\n\nWe continue to question unsupported telephone charges, because Stillman did not provide acceptable\ndocumentation that the charges were allowable. Acceptable documentation would include a\ndescription of the services or products provided and the location that received them. Also, the\nresponse does not provide rationale or additional documentation that supports Stillman\xe2\x80\x99s comments that\nthe childcare expenses we questioned were legitimate. Consequently, we are unable to comment\nfurther on this item.\n\nWhile Stillman claims to have substantially increased placements since our audit field work ended, they\ndid not indicate how many of the placements claimed were hard-to-employ TANF recipients, who are\nthe primary group the WtW program intends to help.\n\nStillman\xe2\x80\x99s response does indicate that 192 participants, who represent 70 percent of the entire 273\nparticipants served as of December 31, 2000, were not hard-to-serve TANF recipients. While\nStillman may have increased the number of placements they have made since July 2000, less than one-\nthird of the program participants served, as of December 31, 2000, were hard-to-serve clients. We\nnote that the majority of clients being served by Stillman are eligible for assistance under other existing\nFederal programs, such as the Workforce Investment Act.\n\n\n\n\nU.S. Department of Labor - Office of Inspector General 20\n\x0cAudit of Stillman College\xe2\x80\x99s Competitive Welfare-to-Work Grant\n\n\nStillman disagreed with our statement that its client base of hard-to-serve TANF recipients had nearly\nevaporated. The response provides that clients from Hale and Pickens Counties can compensate for\nthe loss of Tuscaloosa County as a source of participant referrals. However, data Stillman attached to\nits response indicates otherwise. According to Stillman\xe2\x80\x99s data, as of March 6, 2001, there were only\n24 long-term TANF participants in both counties (4 in Hale and 20 in Pickens County). Stillman\ncommented that \xe2\x80\x9cmore than 75 eligible clients fit the current [WtW grant\xe2\x80\x99s] eligibility criteria to be\nserved.\xe2\x80\x9d\n\nIf there are 75 potential clients in Hale and Pickens counties, at least 51 (75 minus 24) or 68 percent,\nare not hard-to-serve TANF recipients. Consequently, it is very unlikely Stillman will satisfy grant\nrequirements that no more than 30 percent of grant funds be spent on participants who are not among\nthe hard-to-serve target group.\n\nFinally, Stillman responded that \xe2\x80\x9ca twenty-five step process is used to place each eligible client on\njobs.\xe2\x80\x9d However, the statement was the only evidence we identified in the response that supported\nStillman\xe2\x80\x99s involvement in helping 8 of the 30 participants we sampled find employment.\n\nStillman\xe2\x80\x99s response to our draft report has not caused us to alter our findings, conclusions or\nrecommendations. Most significantly, the response does not diminish our concern over the escalating\ncost of serving fewer participants. As we discussed, even if revised placement goals are met, the\naverage cost per placement will rise from $4,400 initially proposed to over $14,400.\n\n\n\n\nU.S. Department of Labor - Office of Inspector General 21\n\x0c EXHIBIT 1\n\n COMPILATION OF WtW GRANT EXPENDITURES\n IN STILLMAN COLLEGE\xe2\x80\x99S GENERAL LEDGER\n\n Adjusted\n G/L Auditor Balance\n Account Title 06/30/00 Adjustment 06/30/00\n\n Administrative Costs:\n\n Administrative Salaries $125,315 $31,443 $93,872\n Fringe Benefits 25,522 3,800 21,722\n Total Admin. Costs $150,837 $35,243 $115,594\n\n\n Other Costs:\n Non-Administrative Salaries $386,412 $11,920 $374,492\n Fringe Benefits 72,700 912 71,788\n Participant Subsidized 1,702 1,702\n Travel 14,494 14,494\n In-House Training Exp. 974 974\n Office Supplies 10,112 10,112\n Maintenance & Fuel 863 863\n Inventory Supplies 325 325\n Postage 74 74\n Instructional Supplies 1,316 1,316\n Utilities (includes phone) 8,147 8,147\n Professional Services 41,587 10,653 30,934\n Printing 3,133 3,133\n Facilities Rental 6,899 6,899\n Computer Systems 63,184 25,368 37,816\n Telecommunications 20,847 2,220 18,627\n Copiers 10,045 10,045\n Furniture 25,359 25,359\n Automobiles/Machinery 108,620 108,620 0\n Instructional Equipment 631 631\n Miscellaneous 2,002 2,002\n\n Total Other Costs $779,424 $159,693 $619,731\n\n\n\n\n Total Charges to Grant $930,261 $194,936 $735,325\n\n\n\nNote: This listing is an unaudited compilation of expenditures coded as WtW grant costs in\n Stillman College\xe2\x80\x99s general ledger. Small discrepancies in totals are the result of rounding\n\x0c EXHIBIT 2\n\n BUDGETED EXPENDITURES FOR\n VARIOUS GRANTS STILLMAN COLLEGE ADMINISTERED\n JULY 1999 THROUGH JUNE 2000\n\n individual amounts.\n\n Budgeted Costs\n for Percentage to the\n Grant Title 07/99 - 06/00 Total\n\n\n\nWelfare-to-Work $876,389 26.8%\n\n\nDBE 35,870\n\n\nMARC Biomedical Research 154,213\n\n\nMBRS 437,718\n\n\nConstruction - Health & Wellness 500,000\n\n\nNational Youth Sports Program 72,300\n\n\nMinority Graduate Program 32,342\n\n\nCorporate Affairs - Mellon 100,000\n\n\nJames Graham Brown Foundation 42,000\n\n\nLilly HBCU 950,000\n\n\nGreen Beverage 5,000\n\n\nUNCF Ford Service Learning Network Grant 6,000\n\n\nHumanities Endowment Mellon 56,375\n\n\n\nTotal Budgeted Expenditures $3,268,207\n\x0c EXHIBIT 3\n SCHEDULE OF REIMBURSEMENTS TO THE\n EAST TUSCALOOSA FAMILY RESOURCE CENTER\n\n Outstandin Billings Payments\n Pmt. Stillma g Allowable Allowable ETFRC\nRef. Description Billed Rec\xe2\x80\x99d n Amount Per Audit Per Audit Receipts\n Date Check From Paid\n Numbe Invoices\n r\n 1 Security - $650.00 06/04/99 87068 $0.00 $0.00\n st\n 2 Rent - 1 650.00 06/04/99 87068 0.00 325.00\n\n 3 Repair/Improv. 800.00 06/04/99 87068 400.00 400.00\n 4 Supplies 339.53 09/29/99 88063 169.77 169.77\n\n 5 Monitoring 72.00 08/26/99 87617 72.00 72.00\n 6 Ut. - Phone Bill 192.18 08/26/99 87617 192.18 192.18\n 7 Repair/Improv. 304.00 08/26/99 87617 152.00 152.00\n 8 Supplies 36.72 08/26/99 87617 36.72 36.72\n 9 Ut. - Water 57.15 08/26/99 87617 57.15 57.15\n 10 Supplies 120.00 08/26/99 87617 60.00 60.00\n 11 Supplies 206.61 08/26/99 87617 103.31 103.31\n 12 Rent - 2nd 650.00 08/26/99 87617 325.00 325.00\n 13 Terminex 95.99 08/26/99 87617 48.00 48.00\n 14 Ut. - Electric 89.42 08/26/99 87617 89.42 89.42\n 15 Maintenance 350.00 08/26/99 87617 175.00 175.00\n 16 Ut. - Phone Bill 97.20 08/26/99 87617 97.20 97.20\n 17 Supplies 131.61 08/26/99 87617 131.61 131.61\n 18 Equipt. - t.v. 349.94 08/26/99 87617 188.97 188.97\n 19 Repair/Improv. 212.03 08/26/99 87617 106.02 106.02\n 20 Payroll 06/30/99 1,274.18 09/29/99 88063 1,274.18 1,274.18\n 21 Payroll 7/15/99 1,834.08 09/29/99 88063 1,834.08 1,834.08\n 22 Payroll 7/30/99 4,442.35 09/29/99 88063 4,442.35 4,442.35\n 25 Supplies 182.44 08/26/99 87617 98.52 98.52\n 26 Repair/Improv. 385.00 08/26/99 87617 385.00 385.00\n 27 Ut - Electric 209.95 08/26/99 87617 209.95 209.95\n 28 Ut - Phone Bill 100.61 08/26/99 87617 100.61 100.61\n 29 Maintenance 350.00 08/26/99 87617 175.00 175.00\n 30 Rent - 3rd 650.00 08/26/99 87617 325.00 325.00\n 31 Payroll 08/13/99 3,037.19 08/26/99 87617 3,037.19 3,037.19\n 32 Maintenance 350.00 09/29/99 88063 175.00 175.00\n 33 Rent - 4th 650.00 09/29/99 88063 325.00 325.00\n 34 Equipt. - b/u 440.00 03/15/00 440.00 440.00\n 35 Equipt. - Table 49.99 09/29/99 88063 26.99 26.99\n 36 Supplies 60.39 09/29/99 88063 30.20 30.20\n 37 Payroll - 3,037.19 09/29/99 88063 3,037.19 3,037.19\n 38 Ut. - Water 43.33 09/29/99 88063 43.33 43.33\n 39 Monitoring 72.00 09/29/99 88063 72.00 72.00\n 40 Repair/Improv. 158.88 11/10/99 88852 79.44 79.44\n 41 Ut. - Electric 183.63 11/10/99 88852 183.63 183.63\n 42 Equipt. - 2 fldg. 99.98 11/10/99 88852 53.99 53.99\n 43 Child Abuse 280.00 11/10/99 88852 0.00 0.00\n 44 Ut. - Phone Bill 92.00 11/10/99 88852 92.00 92.00\n 45 Ut. - Phone Bill 39.90 11/10/99 88852 39.90 39.90\n 46 Ut. - Electric 62.58 11/10/99 88852 0.00 0.00\n 47 Payroll 9/05/99 3,383.46 11/10/99 88852 3,383.46 3,383.46\n\n Exh. 3 1 of 3\n\x0c EXHIBIT 3\n SCHEDULE OF REIMBURSEMENTS TO THE\n EAST TUSCALOOSA FAMILY RESOURCE CENTER\n\n Pmt. Stillma Outstandin Billings Payments\n Rec\xe2\x80\x99d. n g Allowable Allowable ETFRC\nRef. Description Billed Date Check Amount Per Audit Per Audit Receipts\n Numbe From Paid\n r Invoices\n 48 Maintenance $350.00 11/10/99 88852 $175.00 $175.00\n 49 Rent - 5th 650.00 11/10/99 88852 325.00 325.00\n 50 Payroll 9/26/99 6,633.48 11/10/99 88852 6,633.48 6,633.48\n 51 Ut. - Water 23.47 11/10/99 88852 23.47 23.47\n 52 Supplies 445.34 11/10/99 88852 240.49 240.49\n 53 Equipt. - 637.50 03/15/00 637.50 637.50\n 54 News ads 138.84 11/10/99 88852 138.84 138.84\n 55 Ut. - Electric 96.01 01/25/00 190 96.01 96.01\n55.5 Travel 209.50 11/20/00 88852 209.50 209.50\n 56 Supplies 28.53 1/25/00 190 28.53 28.53\n 57 Ut. - Phone Bill 89.62 1/25/00 190 89.62 89.62\n 58 Turner & Schoel 88.75 1/25/00 190 88.75 88.75\n 59 Ut. - Water 87.67 1/25/00 190 87.67 87.67\n 60 West Bldg. 16.11 1/25/00 190 8.06 8.06\n 62 Payroll 10/1/99 4,191.44 1/25/00 188 4,191.44 4,191.44\n 63 Payroll 10/23/99 4,191.44 3/28/00 4,191.44 4,191.44\n 64 Maintenance 350.00 1/25/00 190 175.00 175.00\n 65 Rent - 6th 650.00 1/25/00 190 325.00 325.00\n 66 Ut. - Electric 74.13 1/25/00 190 74.13 74.13\n 67 Ut. - Electric 40.62 1/25/00 190 0.00 0.00\n 68 Ut. - Phone Bill 87.18 1/25/00 190 87.18 87.18\n 69 Statewide 50.00 1/25/00 190 50.00 50.00\n 70 Payroll 11/07/99 4,191.44 1/25/00 188 4,191.44 4,191.44\n 71 Supplies 281.59 1/25/00 190 140.80 140.80\n 72 Ut. - Gas 21.94 2/14/00 21.94 21.94\n 73 Monitoring 72.00 2/14/00 72.00 72.00\n 74 Ut. - Phone Bill 11.84 2/14/00 11.84 11.84\n 75 Travel 134.50 2/14/00 134.50 134.50\n 76 Maintenance 350.00 2/14/00 175.00 175.00\n 77 Ut. - Water 44.16 2/14/00 44.16 44.16\n 78 Travel 84.50 84.50 84.50\n 79 Rent - 7th 650.00 2/14/00 325.00 325.00\n 80 Payroll 11/22/99 3,614.33 2/14/00 3,614.33 3,614.33\n 81 Ut. - Electric 20.16 12/07/99 8.03 20.16 12.13\n 83 Ut. - Phone Bill 76.13 3/15/00 76.13 76.13\n 84 Supplies 23.40 3/15/00 23.40 23.40\n 85 Ut. - Phone Bill 67.30 3/28/00 26.92 67.30 40.38\n 86 Payroll 12/12/99 5,421.50 3/28/00 5,421.50 5,421.50\n 88 Rent 8th 650.00 3/28/00 260.00 325.00 325.00\n 89 Supplies 106.47 3/15/00 114.98 114.98\n 94 Maintenance 350.00 3/28/00 140.00 175.00 175.00\n 95 Payroll 3,614.33 3/28//00 3,614.33 3,614.33\n 96 Supplies 44.35 3/28/00 17.74 47.12 29.38\n 97 Supplies 169.08 3/15/00 182.60 182.60\n 98 Ut. - Phone Bill 78.99 3/15/00 78.99 78.99\n\n\n\n Exh. 3 2 of 3\n\x0c EXHIBIT 3\n SCHEDULE OF REIMBURSEMENTS TO THE\n EAST TUSCALOOSA FAMILY RESOURCE CENTER\n\n Pmt. Outstandin Billings Payments\n Rec\xe2\x80\x99d Stillma g Allowable Allowable ETFRC\nRef. Description Billed Date n Amount Per Audit Per Audit Receipts\n Check From Paid\n Numbe Invoices\n r\n 99 Ut. - Electric $55.19 3/28/00 $22.08 $55.19 $33.11\n101 Payroll 3,767.90 3/28/00 3,767.90 3,767.90\n103 Supplies 44.58 3/15/00 44.58 44.58\n104 Supplies 124.35 3/15/00 158.45 158.45\n105 Supplies 282.00 3/15/00 298.92 298.92\n106 Ut. - Gas 91.68 3/28/00 36.67 91.68 55.01\n107 Ut. - Water 23.18 3/28/00 9.27 23.18 13.91\n\n108 Rent - 9th 650.00 3/28/00 260.00 325.00 325.00\n110 Supplies 21.12 2/09/00 21.12 21.12\n111 Ut. - Electric 66.34 3/28/00 26.54 66.34 39.80\n112 Payroll 3,903.19 3/28/00 3,903.19 3,903.19\n113 Ut. - Phone Bill 82.25 3/28/00 32.90 82.25 49.35\n114 Supplies 122.35 3/28/00 48.94 132.14 83.20\n115 Payroll 3,352.98 3/28/00 3,352.98 3,352.98\n116 Ut. - Phone Bill 20.22 2/17/00 8.09 20.22 12.13\n117 Ut. - Water 24.50 3/28/00 9.80 24.50 14.70\n118 Ut. - Gas 114.84 3/28/00 45.94 114.84 68.90\n119 Monitoring 72.00 3/28/00 28.80 72.00 43.20\n120 Payroll 3,939.27 3/28/00 3,939.27 3,939.27\n 6/08/99 87068 2,100.00\n 8/24/99 87617 7,880.04\n 10/01/99 88065 15,540.23\n 11/15/99 88852 12,751.06\n 1/25/00 188 4,191.44\n 1/25/00 189 4,191.44\n 1/25/00 190 1,940.21\n 2/14/00 1099 3,614.33\n 2/14/00 1100 72.00\n 2/14/00 1101 84.50\n 2/14/00 1102 44.16\n 2/14/00 1103 1,168.28\n 3/15/00 1751 2,007.62\n 3/28/00 1900 28,190.61\n 3/28/00 1828 1,460.51\n\n\n\n $ 82,839.09 $981.72 $75,925.24 $75,603.52 $85,236.43\n\n\n\n\n Total Cash $85,236.43\n\n Allowable $75,603.52\n\n Amount $9,632.91\n\n\n\n Note: Overpayments include duplicate payments by Stillman College (Item #32 for $350 and item #37\n for $3,037.19)\n\n Exh. 3 3 of 3\n\x0c EXHIBIT 4\n\n\n TEXT OF STILLMAN COLLEGE\xe2\x80\x99S RESPONSE\n TO THE DRAFT AUDIT REPORT\n\n\nThe complete text of Stillman College\xe2\x80\x99s response to the draft audit report follows this title page.\n\x0c'