Feds fault Indiana unemployment actions

By Keith Benman, Times of Northwest Indiana
keith.benman@nwi.com

The Indiana Department of Workforce Development broke federal laws and rules in writing and awarding contracts, including a rushed $7 million deal with Ivy Tech Community College in June that should be canceled immediately, the U.S. Department of Labor's Employment and Training Administration said in a scathing report.

The turmoil at the Department of Workforce Development should not affect training programs for workers in Northwest Indiana, said Tammy Stump, of the Center for Workforce Innovations.

The Center of Workforce Innovations oversees WorkOne facilities and retraining programs in Northwest Indiana under a contract with the Indiana Department of Workforce Development.

Ivy Tech also has contracts for retraining workers in Northwest Indiana, but the head of that program could not be reached Wednesday evening.

Indiana's unemployment agency also miscalculated jobless benefits at a rate five times the national average and may be contributing to the insolvency of the state's unemployment insurance trust fund by ignoring a federal mandate to check a national database for newly hired workers, the federal report said.

The March 9 report, obtained this week by The Associated Press, found 41 instances in which Workforce Development did not comply with federal regulations for activities such as delivering services and managing grants and programs. It identified 31 other areas of concern over how the agency administers federal employment and training programs.

The unemployment rate in Northwest Indiana hit 10 percent last month, according to the U.S. Bureau of Labor Statistics.

A Workforce Development spokesman said Wednesday the agency was reviewing the report and had made some changes, including canceling the Ivy Tech contract.

The Indiana Youth Institute also came under severe criticism in the federal report, including potential conflicts of interest for its president, who is also a member of the state's Workforce Innovation Council.

The report comes at a pivotal time for Indiana. Workforce Development distributes jobless benefits and coordinates retraining for unemployed Hoosiers, who numbered 324,000 in February, giving the state a 9.4 percent unemployment rate -- the highest in 25 years.

At the same time, the state's unemployment fund is paying out millions of dollars more in benefits than the employer taxes it takes in. So far, the state has borrowed about $535 million from the federal government to keep the fund solvent, and fixing the fund has become a key issue in the General Assembly.

Democratic Rep. Terri Austin, whose constituents include laid-off auto industry workers in the Anderson area, said she and other legislators are reviewing the report.

"I think the findings are very interesting," she said.

The Associated Press contributed to this report.