Kentucky

WIOA requires the local board (LWDBs) for a local area to enter into MOUs with all one-stop partners.  The management of the American Job Center network is the shared responsibility of States, LWDBs, elected officials, the six WIOA core program partners, required one-stop partners and other additional one-stop partners, American Job Center operators, and service providers.  The MOU is an agreement developed and executed by the LWDB and the one-stop partners, with the agreement of the chief elected official(s) and the one-stop partners, relating to the operation of the one-stop delivery system.  Additionally, the MOU must contain the signatures of the LWDB, one-stop partners, the chief elected official(s), and the time period in which the MOU is effective.  The IFA, which supports the one-stop delivery system, is a component of the MOU.

Kentucky has established 10 local workforce areas across the State.  During the visit, the team reviewed each of the ten MOUs and found that the local MOUs followed a standard MOU/IFA template.  All agreements had a 12-month duration and expired on June 30, 2022.  Only two of the ten local workforce areas, Eastern Kentucky Concentrated Employment Program Workforce Development Board and Northern Kentucky Workforce Development Board, had fully executed agreements in place.  The review team was informed during the interviews that the State Education and Workforce cabinet merged with the Labor cabinet effective July 2022.  As a result of the merger, the fully executed remaining MOUs have been delayed.  The State must execute MOUs, including IFAs, with the eight remaining LWDBs in the State.

State agencies are required to report annually on the percentage of title II participants who received services under more than one WIOA core program as part of the SPR.  KYAE has not reported co-enrolled participants in the previous three WIOA reporting years (PY 2018 through PY 2020).  In discussions with local providers, the review team learned that information is collected from participants that includes enrollment in other WIOA core programs. KYAE must develop a process so co-enrollment can be captured and reported by local providers or a process to verify co-enrollment with State partners.  In turn, KYAE must report those totals on its annual SPR.

The Uniform Guidance requires that each State expend and account for the federal award in accordance with State laws and procedures for expending and accounting for the State's own funds.  In addition, the State's and the other non-federal entity's financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions.  These financial management systems must also permit the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award.  Through review of documentation submitted by KYAE and follow-up discussions with State staff, the review team was unable to verify that KYAE tracks actual federal and State (“recipient share”) expenditures for instruction and local administrative costs. 

During the monitoring visit, the federal team observed that KYAE could not sufficiently document their reporting of actual expenditures for the distance education portion of “Programs of Instruction” in columns C and D on the PY 2019 Federal Financial Report (FFR).  KYAE calculates and reports actual costs for instruction as a function of face-to-face contact hours.  However, State staff could not document their accounting, by NRS level, of instructional costs for distance education in the amounts reported for instruction across columns C and D on the FFR.  The federal team also noted that KYAE’s monthly expenditure reports did not track local administrative costs separately for the current federal grant year, federal carryover funds, and State funds.  Thus, the State could not document the monitoring of local compliance with established administrative cost limits using federal funds.

KYAE must update its financial management system and fiscal practices to comply with applicable federal statutes, regulations, and the terms and conditions of their federal award.

States are required to monitor the activities of subrecipients to ensure that the subawards are used for authorized purposes, in compliance with federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved.  This includes monitoring data quality, performance, financial management, and all aspects of program implementation.  Monitoring also includes following-up and ensuring that the subrecipients take timely and appropriate actions on all deficiencies pertaining to the federal award.  Finally, monitoring includes documentation of the status of actions planned or taken to address findings related to the particular subawards.

Based on the review of documents and discussions with both the State office staff and local providers, the review team determined that KYAE is not adequately addressing the monitoring requirement.  KYAE tracks enrollment, performance, timely data submission, and professional development activities; however, it is not fully monitoring to ensure compliance with data, financial, and performance requirements.  Specifically, KYAE does not have a formalized process to review how subrecipients perform intake, enter and track data, manage grant funds, and address all WIOA program requirements, including each component of the Integrated Education and Training program and the Workplace Learning program. 

Furthermore, there is no formalized process for communicating the deficiencies found in monitoring reviews, identifying corrective actions, and ensuring those actions have been addressed.  All steps of the monitoring process, including the corrective actions, must be documented. 

KYAE must develop a process, including procedures and tools, for a monitoring program that is adequate to ensure subrecipient compliance with all applicable requirements.  These policies and procedures must include investigating subrecipient practices, reporting each monitoring review and any deficiencies identified, ensuring subrecipients take timely and appropriate actions on all deficiencies, and closing out the monitoring action.