Lawmakers investigate $100M shortfall in Job Corps program

House and Senate lawmakers are investigating a nearly $100 million shortfall at the federal Job Corps program that has prompted the Labor Department to freeze enrollment at all 125 job centers around the country.

Sen. Bob Casey, D-Pa., has called on the agency's inspector general to investigate what he called "serious questions about the management by the department" that will prevent 30,000 disadvantaged and at-risk youth from getting job training this year.

Last month, the Job Corps announced it would stop accepting any new enrollees from Jan. 28 until at least June 30. Some exceptions are being made for applicants who are homeless, runaways or in the foster care system.

"If there were mistakes made that led to this problem, the ones losing out here are going to be young people at risk," Casey said in an interview. "Apparently, Labor Department officials were admitting that they made some kind of mistake with the budget" to people working at the Job Corps centers.

Labor Department spokesman Stephen Barr did not immediately respond to a request for comment.

The Job Corps, which began as part of President Lyndon Johnson's "Great Society" program in the 1960s, offers free education and vocational job training for students ages 16 to 24. It serves about 60,000 students each year with an annual budget of $1.7 billion.

The goal is to help steer young people away from poverty and crime into productive careers through a program that includes supervised dormitory housing, meals, medical care and counseling. Those enrolled usually complete training within a few months to two years and receive help making the transition to new careers or getting further education. The government pays private contractors to run the job centers.

In 2011, the Labor Department announced a $39 million funding shortfall in the Job Corps program. The agency then took emergency steps to fill the gap, such as transferring funds from other employment and training programs.

But the shortfall continued and increased to an additional $60 million in 2012. As a result, the Job Corps announced on January 18 that it was suspending all new enrollments at centers nationwide.

A total freeze on accepting new students is virtually unprecedented in the nearly 50-year history of the program, said LaVera Leonard, president of the National Job Corps Association, a group that includes private contractors and labor and community groups that support the Job Corps' goals.

Leonard said she made a number of cost-cutting recommendations in the past year -- to no avail -- to Jane Oates, who heads the Labor Department's Employment and Training Administration, which oversees Job Corps.

"We were trying to be proactive and the cost savings that we recommended would not have hurt students, would not have meant staff layoffs," Leonard said. "We got no response and were totally caught off guard when the announcement of a nationwide enrollment suspension occurred on Jan. 18."

In a letter last June to Sens. Tom Harkin, D-Iowa, and Richard Shelby, R-Ala., the Labor Department said the 2011 shortfall happened in part because of a lack of "program monitoring tools and internal controls to sufficiently analyze" spending trends by operators and contractors.

The freeze on new enrolment has caused alarm in congressional offices around the country, with lawmakers concerned about the loss of hundreds of jobs among those working at the centers and the loss of opportunity for young people looking for work.

"It's clear the management and oversight of the Job Corps program has been deficient, and it's unfortunate and disappointing that our nation's disadvantaged youth will suffer the consequences of this failure," Sen. Chuck Grassley, R-Iowa, said in a Feb. 6 letter to acting Labor Secretary Seth Harris.

Minnesota Rep. John Kline, chairman of the House Committee on Education and the Workforce, launched an investigation of the program earlier this month. He asked for an explanation of why the shortfall happened, saying his committee is growing "increasingly concerned with the ability of the department and its contractors to manage the program's budget in the short and long term."

The Labor Department had not yet responded to Kline's request as of late Friday.

Casey, who heads a panel of the Senate Health, Education, Labor and Pensions Committee, pledged to hold a hearing on the matter within the next two months.