The elected representatives of the six counties involved in the Northwest Pennsylvania Workforce Investment Board have hired legal aid as they pursue recovery of funds from the board's former management agency.
On Wednesday, the six members of the chief local elected officials (CLEOs) now managing the workforce investment board (WIB) voted unanimously to hire the Dale Woodard Gent firm of Franklin to negotiate with former WIB management agency the Regional Center for Workforce Excellence (RCWE) in an effort to recover WIB funds, which state regulators deemed to be misused.
"We would like to get some of the funds that were used inappropriately back," Commissioner Stephen Vanco, Warren County's representative to the CLEOs, said.
A Pennsylvania Department of Labor and Industry Workforce Investment Act audit of the RCWE's expenditures between July 1, 2009 and July 30, 2013, conducted by the Pennsylvania Congressional Budget Office, brought into question expenditures of workforce investment funds totaling more than $5.9 million.
One of the expenditures investigated was a $517,279 loan of WIB funds RCWE made to RCWE Holding Co. in 2012. A portion of the money loaned $221,000 consisted of industrial partnership job training funds with restrictions on usage.
The loan money was used by RCWE Holding Co. to buy an office building in Erie. RCWE moved the offices of Erie County CareerLink into the building, where the CareerLink, which is also funded through the WIB, paid more than allowable rent for the space.
Approximately $457,279 is still outstanding on the loan and the CLEOs are hoping to recover it from RCWE.
To do so, the group could file suit against RCWE, but has not made the decision to do so yet. The group could also recover the funds through negotiation with RCWE.
At present, they are not sure what, if any, assets RCWE actually has.
"I'm not sure which direction we'll take," Vanco said, but he expressed optimism at a positive resolution. "This law firm has a good reputation for getting results."
The CLEOs took over management of the WIB as part of agency reorganization following the state audit. In July, when the audit was released, the state had given the WIB 90 days, followed by a 60 day extension, to reorganize with new, non-RCWE, management.
The CLEOs have been managing the WIB through reorganization.
The CLEOs appointed themselves as the board overseeing programming, which will be managed by Partners for Performance in place of RCWE, in January. The CLEOs also voted to remove the RCWE as financial manager and appointed Venango County in its place.
The reorganization will also put into place new bylaws and an entirely new WIB board.
Originally, the WIB's bylaws allowed for representation based on population. Under that system, Erie County controlled the majority of the membership. The new bylaws give Erie the most representation of any member county, but not more than half of the entire board.
The total number of WIB board representatives will be reduced, but Warren County's representation will actually increase. There will be three Warren County members on the board, compared to two under the old bylaws.
Board members will serve four-year terms. If the county does not fill its available seats, other counties can apply to appoint replacements.
Beyond the reorganization, the WIB still must repay funds the audit found to have been used for unallowable expenses. The state eventually found $227,476.29 to be unallowable expenses. Repayment has been formulated by county according to the same formula that had been used to determine representation to the WIB. Warren County's share under this system is $18,198.10.
The recovered RCWE funds could help cover the required repayment to the state.