Ten areas of concern are keeping some federal grants awarded to the V.I. Department of Labor designated as “high risk” by the department’s federal counterpart, Labor officials told senators Tuesday.
Labor Commissioner Catherine Hendry and members of the department’s senior management testified on the issue of federal grants before the 32nd Legislature’s Committee on Workforce Development, Consumer Affairs and Culture, although some committee members expressed dissatisfaction with the testifiers’ level of preparedness.
Senate President Myron Jackson and Sen. Positive Nelson both admonished the testifiers for not providing the committee with a written list of compliance issues found by the U.S. Department Labor. They also criticized the absence of a written copy of Labor’s mandated monthly corrective action plan.
Hendry and Labor’s director of business and administration, Chivonne Romney-Lee, both said they had copies of that information on hand but these copies had their personal notes on them. Hendry said clean copies of the material could be e-mailed to senators after the hearing.
“If the hearing’s about federal programs and you know [compliance] findings are going to be a big issue, that should have been something that was readily available to us,” Nelson said.
When asked by senators to list the specific areas of concern identified by federal monitors, Romney-Lee said they included Labor’s “material weakness in internal controls, failure to follow procurement policies and procedures, a lack of effective financial management and insufficient reporting.”
The department’s federal grants manager, Cindy Richardson, was called to the chamber’s well to take questions by Jackson.
Richardson said, “One of the main issues that is very clear throughout our compliance reviews is a breakdown of internal controls and the policies and procedures. So it’s just a matter of having those actually written out and having a manual for the staff.”
When asked who was responsible for doing that, Romney-Lee identified herself and her business office. She said that matching local procedures to federal standards is an ongoing process, and that three or four amendments have been made to Labor’s policies since she began working in her position in 2015.
According to Hendry’s testimony, compiling a procedural manual, which must be federally approved, “has been a longstanding concern and cause for unresolved findings.” She said Labor’s goal is to have a manual completed before the end of Fiscal Year 2017 at the end of September.
Hendry said that some of her department’s grant management problems date back to an unresolved 2008 audit. The “high risk” designation of some of these grants, however, developed out of a 2015 monitoring visit whose findings were announced on Dec. 20, 2016.
The 2008 audit identified 21 areas of noncompliance in Labor’s grant management, 20 of which were later addressed to federal satisfaction. But the latest monitoring report identified nine more. The grants deemed high risk amount to $23,429,309 of funding to the department.
Hendry said that under her management, Labor has implemented a grant compliance task force that is making progress. She said the department is meeting the deadlines of its reports to the federal government and participates in monthly technical assistance calls with its regional office.
The department has also begun to draft a request for proposals for an independent fiscal agent, one of its mandates. It has also begun the process of procuring an independent accounting firm that has already been hired by the V.I. government for a separate audit. Labor hopes that audit can be expanded to include its high risk grants.
Romney-Lee identified one of the most immediate concerns of federal monitors as the implementation of a labor distribution system, which the department plans to roll out by April. A labor distribution system, she said, is the means by which employees dependent on grant funding are tracked to ensure accurate allocations.
Although monies from the federal grants classified as high risk are not currently being withheld from Labor, loss of such funds would significantly impact the department’s programs, officials said.
Hendry said Labor is already facing substantial cuts not related to its grant management. Donald Trump has proposed a 21 percent cut in federal spending for the U.S. Department of Labor. Meanwhile the V.I. Labor Department has already submitted a plan to comply with local austerity measures.
That plan includes “limiting electrical consumption, reducing long distance calls, reducing inter/intra-island travel, consolidating office supplies, efficient use of printers, limiting the use of government vehicles, and consolidating storage units.”
Also on Tuesday, the Committee on Workforce Development, Consumer Affairs and Culture heard testimony from Licensing and Consumer Affairs Commissioner Devin Carrington regarding unfinished and unreleased studies his department has commissioned on food and gas prices in the territory.
The committee also heard from Halvor E. Hart III, executive director of the V.I. Carnival Committee, regarding planning for Carnival 2017, which will be the first local carnival to charge an entrance fee for an enclosed Carnival Village. That $5 per person fee will be used to fund security, Hart said.
The committee also invited members of the V.I. Transfer Centennial Commission to testify on its progress towards planning its parades, receptions and gala ball at the end of March and early April. A letter from Commission Chairwoman Pamela Richards indicated that commission members were too busy with planning sessions and meetings to attend the hearing.
Senators present at the hearing were Sens. Jackson, Nelson, Marvin Blyden, Brian Smith, Alicia “Chucky” Hansen, and Nereida “Nelly” Rivera-O’Reilly.. No votes were taken at the information gathering session.