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The Honolulu Advertiser
Posted on: Thursday, April 19, 2001

State audit critical of training fund

By Lynda Arakawa
Advertiser Capitol Bureau

The state program that helps businesses improve their employees' skills lacks meaningful data to show whether it has been effective, according to the state auditor, and some grants it awarded have been "questionable."

The state Employment and Training Fund was created in 1992 to assist Hawai'i businesses in providing their workers training. Since its inception, the program — financed through employer assessments based on unemployment insurance contributions — has subsidized classes and training for tens of thousands of employees.

The audit report released last Thursday called the program's monitoring oversight of its grants "inadequate," and found that it does not require evaluations or reports from the University of Hawai'i or other state community colleges and schools, which received about 60 percent, or $2.4 million, of the fund's training money in the 1999-2000 fiscal year.

Requirements for other contractors providing employee training are also "neither substantial nor rigorously enforced," the audit reported.

"The result of this laxity is that the fund spends a majority of its moneys on courses whose program quality is not monitored," it stated.

However, the audit did find — through participant evaluations, testimony to the Legislature and a survey of more than 600 employers — that most employers and workers who have used the fund have been satisfied.

But "these instruments provide a limited picture of the fund's efficacy," the report said.

The audit also called some training grants "questionable" because of their high costs and few participants. For example, the Roman Catholic Church sponsored a Big Island cosmetology school that received $100,000 from the training program.

The project — which ran from September 1999 to December 2000 — trained nine people as of November 2000.

The fund also awarded a grant to the University of Hawai'i Community Colleges "Motorola Quality of Service project," which trained 43 people over two years for a cost of $8,140 per individual.

The program's process for awarding year-long, innovative grants is also slow, averaging about 11 months from when the application was submitted until the contract began.

That could be a reason why the demand has fallen for such grants, the audit said.

In a written response to the audit, the director of the state Department of Labor and Industrial Relations, Leonard Agor, disagreed that some grants were questionable.

"For any new, innovative, experimental project it involves risk," he said.

He added the program has financed several projects that have won national recognition.

Agor also said experience has shown that the training fund has been effective and that its short-term training course program has been expanded.

Agor said that many of the deficiencies cited in the audit may be attributed to the increased workload on its offices and that the program has already begun to address the problems.

He also said the program is implementing procedures to conduct ongoing reviews of all training providers and grantees.