When the economy tanked in 2008 and thousands of jobless people came calling, Pikes Peak Workforce Center employees had to find ways to reshape the agency — in more ways than one.
To become more visionary, efficient, energized and conditioned for the growing workload, they turned to a consultant, a motivational speaker and a personal-fitness trainer for on-the-clock workouts.
Now, the center's director, Charlie Whelan, is taking heat from state auditors and county commissioners for the nearly $300,000 he spent getting his team in fine fettle.
"I think we definitely have to take a much closer, detailed view of how those dollars are being spent," Commissioner Sallie Clark says, "and be sure not only the taxpayers are being well-served, but that the folks who need jobs get what they need out of the Workforce Center."
Whelan says the spending was justified and that the personal trainer issue has been settled by repaying federal funds used with money from a state jobs program.
"I think the Workforce Center is a wonderful asset for this region, and the staff there is incredibly dedicated and caring, and they do a fantastic job for those they serve," says Whelan, who's served as director since 2008 for the organization that according to records exceeds government performance standards in nearly every category. "I'm proud of how we've been able to adapt to the changes of these difficult times."
'A misuse of funds'
Funded with about $6 million in state and federal money, the Workforce Center is separate from the county. Oversight of the agency's operations is provided by a board of business people from El Paso and Teller counties, though member Dave Csintyan says it is "very much a strategic board," and doesn't monitor operational expenditures.
The center has to follow county purchasing rules, under an intergovernmental agreement. That means going to commissioners for approval of expenses exceeding $25,000. One-time expenditures under $25,000, Clark says, are reviewed by the county procurement department to make sure it meets purchasing guidelines before payment is authorized. But, she adds, the Workforce Center situation "does bring up questions about whether there are gaps we need to take care of."
In April, an anonymous tipster sent a letter to Ellen Golombek, state Department of Labor executive director, citing instances of what the tipster labeled "mismanagement of federal funds."
One allegation stated that in early 2011, after commissioners rejected a $38,520 expense for a computer camp and free computers for 20 at-risk youth, Whelan hosted the camp anyway. In June 2011, he spent about $17,000, including $12,895 to purchase 15 computers, records show, which were given to the kids.
"Since it seems that the cost of the computer program was below the $25,000 threshold for BOCC approval," Commissioner Peggy Littleton writes in an e-mail to the Indy, "I am not sure who approved of the expenditure, but I can assure you that it was not with my approval." In an interview, she says, "I think it was a misuse of funds."
Clark says most commissioners didn't oppose the idea of the camp, but wanted Whelan to pare the cost by using staff instead of a consultant. Whelan obliged.
The state Labor Department found the complaint to be "unsubstantiated," and noted in a Jan. 27 audit report that the expense is allowed under the Workforce Investment Act.
The tipster also alleged that Whelan hired three consultants without competitive bidding.
The first was Insight Systems Consulting. Whelan says he sought advice from local businessmen, other Workforce Centers and the Labor Department before hiring Insight for four contracts totaling $249,877 that spanned May 2009 through Jan. 31, 2012. (A partner in the firm, Elaine Gagne, lives in Colorado Springs, and there's a Greater Colorado Springs Chamber of Commerce testimonial on Insight's website.)
Two of the four contracts exceeded $25,000; both received commission approval.
Whelan says he needed Insight to help "retool and reposition" his agency as it downsized by about 24 percent, to 54 positions, and its budget by 12 percent, to $6 million, even as customer traffic surged by nearly 50 percent from 2008 to 2009.
He says Insight helped flatten management and cross-train employees. Gagne was hired to reshape the agency's mission, vision, values and behavioral standards; "identify and create charters for key projects"; implement key projects; "create [a] monthly five-point staff survey"; and "initiate leadership development," according to contract documents.
Whelan also hired Career TEAM Plus, LLC, of Connecticut, for a $13,925 no-bid contract in April 2010. Career TEAM's services were provided by Mike Fazio, a nationally known motivational speaker. He was hired to provide sales training for employees charged with drumming up jobs from employers; to find ways of "leveraging technology" for efficiency; to establish "a strong and memorable public brand"; and to help the center by "energizing and motivating workforce development professionals in a difficult job market," the center wrote in a memo to county procurement, justifying the sole-source selection.
Whelan defends the expense in an interview, saying workforce employees had "no formal training at all in terms of case work" before Fazio came. After he and Insight finished, Whelan says, employees increased their capability from 50 cases a year to 80.
The tipster complained the contracts hadn't yielded "any discernable return on investment" and diverted funds away from serving the jobless.
But the Labor Department ruled the complaint unsubstantiated and, in a memo to the Indy in response to questions, said, "The scope of the audit was not to determine if the Pikes Peak Workforce Center obtained value for the money. The State's role is simply to determine if these contracts met the requirements set forth by the local board and were allowable. Yes, the contracts followed procedures and were determined allowable."
From at least 2008 through last month, Workforce Center workers used a federally funded personal trainer while getting paid to exercise at the Workforce Center's previous location on East Pikes Peak Avenue. During 2010, it paid $28,341 for the personal trainer.
State Labor Department auditors substantiated the complaint and ruled the expense was "excessive" and improperly covered with federal funds. The state ordered Whelan to repay it, which he did by tapping state job money, which is allowed.
Whelan, who's spent most of his career in the private sector, explains the expense by saying the state Labor Department audited the Workforce Center annually and never disallowed it. Labor Department spokesman Bill Thoennes says routine audits in 2009, 2010 and 2011 didn't examine the fitness center because it's not within the normal scope of audit procedures. The later examination of 2010 was done because it was cited in the tipster complaint.
Regardless, Whelan says employees can no longer exercise during work time at the new Citizens Service Center fitness room.
County spokesman Dave Rose says that space, fully equipped when the county bought the former Intel site, is run under the county's wellness program, which strives to reduce sick time and health care costs and increase worker productivity. It's staffed with an attendant and an intern to assure proper use of the equipment.
In an interview, Littleton calls the personal trainer expense "an irresponsible use of taxpayer funds," and adds, "I never saw something like that approved [by commissioners], because the answer would be 'no.'"
For Clark, the audit suggests commissioners should exert more oversight of Whelan's operation.
"I do think we need a report back from Charlie about what those consultants did and how they impacted the Workforce Center," Clark says. "The audit report we got from the state says it's unsubstantiated, but it doesn't mean we wouldn't question the value of that consulting contract. I think it's important we follow up and get the answers to those questions."
Whelan says he doesn't plan to hire any more consultants.
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