Democratic Club Wants Answers to How City Lost $600,000 for the Unemployed

Deanna Santana
Larry Reid

By Ken A. Epstein

In an email exchange with city officials, the head of an Oakland Democratic club demanded “an immediate investigation” of why the city lost over $600,000 in federal funds to help laid off workers and called on the City Council “to get to the bottom of this as quickly as possible.”
“Oakland taxpayers and residents are entitled to know exactly what happened, when it happened, and why it happened,” said Gretchen White, president of the Metropolitan-Greater Oakland Democratic Club (MG0) in an email addressed Feb. 19 to City Council members.
“This appears to be due to incompetence,” she wrote.
“Oaklanders expect you to begin to restore trust that city personnel who cause losses of this magnitude will not escape scrutiny of their actions,” she continued. “If this malfeasance occurred during a previous administration, it is still important to provide full disclosure in order to prevent similar lapses in the future.”
Responding the following day, City Administrator Deanna Santana put the blame for the loss of funds on the Ron Dellums administration, which received the grant in the months before Dellums left office at the end of December 2010.
“This administration inherited this problem, (but) when we discovered the errors, despite significant effort, the problems could not be fully sorted out before the grant funds expired,” she wrote.
Santana said that city has already fixed the issues that led to the loss of money.
“Rest assured the current workforce investment staff and this city administration put corrective actions in place to address this and other issues and to enhance the transparency and accountability of this important process.”
In a follow-up email to Santana dated Feb. 25, White wanted to know what the city had done to fix the issues.
“What specific corrective actions were taken and when were they taken?” she asked.
Santana said in an interview with the Post that she has nothing to add in regard to the loss of the $600,000. “Our position is well documented,” she said.
As reported earlier in the Post, the grant as written by the Dellums administration, proposed to train first-time workers, such as the formerly incarcerated, rather than placing laid-off workers in on-the-job training positions, as required by the Department of Labor.
The plan also proposed to utilize Volunteers of America and the Youth Employment Partnership to implement the program, though they had no on-the-job training background or were they part of an open bidding process, as required by the state.
According to the state Employment Development Department (EDD), which was responsible for overseeing the federal money, Oakland had received support and warnings with enough time to spend the money to help the unemployed.
“During the initial phase of this project, the state hosted periodic conference calls with all 20 of this grant’s project operators (grantees),” said Dan Stephens, of the Communications Office, EDD Public Affairs Branch.
“The city was periodically reminded of the need to develop a corrective action plan that would get their project implemented quickly,” Stephens said.
“Warnings were issued … primarily through the conference calls … with all the grantees,” he said.
“The city’s current Workforce Investment Act (WIA) administrator John Bailey and his staff were first notified in late October 2011, that the City needed to deobligate (send back) funding from this project or present a written justification substantiating why they should be allowed to retain this funding as the availability of this funding to the state was scheduled to end on June 30, 2012,” Stephens said.
In an interview with the Post, White said that she and her fellow Democratic club were still looking for answers.
“ We would like to know who did this. Are they still there? What happened? Why was it done wrong in the very beginning?” asked White.
She said she believed the problem began with the previous administration, and it is understandable that the current administration was unable to find agencies to place unemployed workers in on-the-job training positions between January 2011 and the end of June 30, 2012 when the grant expired.
However, according to Pedro Toledo, a former member of the city’s workforce staff, the city had more than enough time to repair the errors of the previous administration and use the money to create positions for unemployed workers.
Under the Quan administration, he said, “Nothing was done … for almost a year until the state, pressured by the U.S. Department of Labor, took action to recapture most of the funds.”
A public discussion on the loss of funds is scheduled for Tuesday, March 12, 2 p.m. at the meeting of the City Council’s Community and Economic Development Committee. Vice Mayor Larry Reid had asked for the hearing.
William “Bill” Patterson, a leader of the Oakland branch of the NAACP and longtime member of the Oakland Workforce Investment Board, said he was pleased Councilmember Reid is holding a hearing on the lost funds. But he said he was concerned that neither the city administrator nor any other city official responded to the letters he has written over the past two years to the city on the lost funds and other job development problems.
“I´ve never received an official communiqué from anybody on the issues,” he said.