Orlando Sentinel (Florida) - by Jim Stratton

As investigators dig into the finances of the region's workforce development board, federal law indicates that Central Florida taxpayers might have to repay any money that is ultimately determined to have been misspent.

Workforce Central Florida leaders insist that's not likely, and Orange County's attorney says local governments have "no legal liability." But the federal law that created the agency suggests otherwise.

"The chief elected official in a local area shall serve as the local grant recipient," the law says, "and shall be liable for any misuse of the grants funds."

That could put taxpayers in the agency's five-county service area on the hook for some of the $739,000 that the state recently ordered Workforce Central Florida to repay. The state determined Workforce had misused federal job-training money to settle a lawsuit with SunTrust Bank.

The state told Workforce to repay the money within 60 days and prohibited the agency from dipping into other federal funds to do so. But the agency has no other significant source of money, so it has few places to turn.

Nevertheless, Workforce Board Chairman Lawrence Haber said it is "very, very unlikely" that county governments — and local taxpayers — will have to foot the bill.

Workforce could reverse the state's ruling on appeal or negotiate a settlement. If that failed, it could try to repay the money using an agency insurance policy, he said.

Haber, however, said the counties are the ultimate backstop.

That's "the last option," said Haber, a Workforce board member for 12 years. "When all else fails," the counties are "ultimately responsible."

In 2003, the counties — Lake, Orange, Osceola, Seminole and Sumter — formed a consortium through which federal workforce grant funds flow. It consists of four county commission chairmen and one county mayor. They are the chief elected officials identified in the federal law.

If Workforce Central Florida can't repay money it misused, it could fall to the consortium — and the counties its members represent.

Though Workforce has been ordered to pay $739,000, agency Vice President Larry Strickler said local governments, even in a worst-case scenario, would be liable for only a portion of that. The consortium, he said, is responsible only for grants coming to Workforce Central Florida through the federal Workforce Investment Act.

Of the $739,000 paid to SunTrust, about 25 percent — or $177,000 — came from that pot of money.

But the full exposure of local governments is unclear — both here and around the state.

In addition to the SunTrust case, Workforce Central Florida was recently told to repay almost $40,000 it spent adding cars to its fleet. A state inspector general determined those expenses — also funded by the Workforce Investment Act — were unapproved and "unreasonable."

A bigger issue is a Labor Department probe into the contracting practices of Workforce Central Florida and its 23 sister agencies around the state.

That investigation is trying to determine if regional workforce boards violated any regulations when they awarded contracts to companies tied to or controlled by workforce board members.

Statewide, the agencies handed out at least $7.5 million in such contracts from 2008 to 2010. Workforce Central Florida paid companies tied to its board members more than $1 million over the past six years. The state board overseeing the regional agencies voted this month to forbid the practice.

If the Labor Department determines Workforce Investment Act money was spent improperly, it could demand that the regional agencies to repay it. If the agencies can't, local elected officials might have to kick in.

"The money has to come from somebody," said state Sen. Mike Fasano, R-New Port Richey. "And if county commissioners don't know that, they better learn it quick."

The county governments are in play because federal grant money flows through their chief elected officials to the regional workforce agencies. The agencies, however, enjoy broad autonomy and independence.

Workforce Central Florida, for example, is governed by a 31-member board that currently includes no county commissioners from the region it serves. The five-member consortium, meanwhile, exists largely as a legal entity and plays little role in the agency's operation.

It is required to meet just once annually, though this year, Strickler said, it will meet at least twice.

The local agreement creating the consortium says nothing about how costs would be apportioned should the counties ultimately be held liable for Workforce misspending.

Orange County Mayor Teresa Jacobs said she was unaware of any potential exposure until recently. Jacobs said she would be seeking more information from County Attorney Jeff Newton.

Newton said he is confident the local governments are protected. He said language in the local agreement makes it "crystal clear" that the counties have "no legal liability." Asked about the federal law that indicates otherwise, he said, "That's why there are courts."

Hillsborough County has taken a similar stance.

Its workforce agency was recently ordered to repay $55,000 — money spent on food and entertainment — and county commissioners have said the agency must find the funds. Tampa Bay Workforce officials declined this week to say how they would do that.