Business and Economic Development
An Audit Report on the Texas Department of Economic Development's Contracting Practices for the Smart Jobs Program
August 2000
Report Number 00-042
Overall Conclusion
Smart Jobs funds awarded by the Texas Department of Economic Development (Department) between September 1995 and August 1998 were not consistently used to successfully upgrade the skills and thereby enhance the employment opportunities of the Texas workforce. The Smart Jobs program has not achieved its objectives because the Department's primary focus was on awarding and distributing funds, with less regard for the outcomes of the services provided. As a result, participants often did not receive the type and quantity of training needed to prepare them for new or better jobs and to provide Texas employers with a more highly skilled workforce.
This audit was performed to determine the impact of weak contract management practices used in the Smart Jobs program, as previously reported in An Audit Report on the Department of Economic Development (SAO Report No. 00-008, January 2000). The Department is implementing a corrective action plan to improve its contract administration practices for the Smart Jobs program.
Key Facts and Findings
- Between September 1995 and August 1998, employers who were awarded Smart
Jobs contracts created significantly fewer jobs and trained significantly
fewer employees than required in their contracts. For contracts reviewed,
employers created only 36 percent of jobs and trained only 33 percent of
workers.
- The State paid a significantly higher cost than anticipated for employees
who did receive the training needed to upgrade their skills and competencies.
The average actual cost to train an employee was $2,401, 86 percent higher
than the average contracted cost of $1,290 per trainee.
- The Department also paid approximately $5 million to contractors for training that did not meet the requirements of the contracts and for trainees who never participated in the Smart Jobs program. The overpayments resulted from ineffective contract management practices and do not appear to be the result of any fraudulent acts.
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