The Oshkosh Northwestern (Wisconsin) - by Michael King

A U.S. Department of Labor audit of federal funds used by Wisconsin Department Workforce Development agencies has revealed irregularities and a lack of accountability at the local agency whose top official recently resigned.

Cheryl Welch, CEO/executive director of the Fox Valley Workforce Development Board since 1998, submitted her resignation earlier this month.

Welch defended her job performance Tuesday and denied that she is leaving because of the federal monitoring report findings issued in May 2011 for the period covering July 1, 2008, to June 30, 2010.

"Our biggest issue is they didn't like the fact we used some federal money to pay for our building," said Welch, whose resignation is effective today but has agreed to stay on as a consultant for three months to continue working through the 17 findings included in the audit.

Joe Guidote, Outagamie County's attorney, categorized the findings in the 67-page monitoring report as "irregularities." He also said the report on the agency that provides job services, training and employment assistance in the Fox Valley was preliminary.

"The final findings have not yet been issued," Guidote said.

County Executive Tom Nelson said the monitoring report by the Chicago regional office of the Department of Labor's employment and training administration "points to numerous concerns that evoke a lack of managerial control over allocation of funds, procurement processes, cash control, travel and training reimbursement, etc."

"It's a terrible audit," said Supv. Helen Nagler, who heads the Outagamie County Board. Asked if there was any criminal wrongdoing, she replied, "Not wrongdoing; it's just poor management."

Welch was critical of Outagamie County for releasing documents related to the federal review, which is continuing. The Post-Crescent obtained a copy of the documents provided to members of the county's Property/Airport Committee for review.

Nagler said the audit has prompted Outagamie County to explore joining a different workforce development region. The Fox Valley Workforce Development Board serves Calumet, Fond du Lac, Green Lake, Outagamie, Waupaca, Waushara and Winnebago counties.

"If you have poor management, then you're not using your funds in the most efficient manner possible," Nagler said. "And that means that your clients are not getting the services that they deserve."

Guidote said Outagamie County has asked the Fox Valley board what its outstanding liabilities and costs of termination would be, if any, if it chose to terminate its relationship and "realign with another area workforce development board, perhaps Bay Area."

Welch said neither she nor the Fox Valley board did anything wrong.

"Now we just have to show that, and we're (working) on that," she said.

Welch said much of what was questioned has been taken off the table by the state.

"I really don't want to take a bad rap for something that has not been resolved yet," she said.

Nelson said the audit covered the entire state but noted that about "two-thirds of the findings" were from the Fox Valley board.

As a consultant, Welch will focus on resolution of the audit findings, a DWD audit in March and disposition of the agency's Town of Menasha building at 1401 McMahon Road.

She will be paid $50 an hour for March, April and May, not to exceed $4,500, according to an email released by Outagamie County officials from Brad Grant, the Fox Valley board's executive committee chairman.

On Tuesday, Nelson issued a letter to Grant objecting to the consulting contract the Fox Valley board's executive committee has offered to Welch and urged the board to take her resignation "as an opportunity to obtain new leadership, not just for the long term, but also for the interim period." Welch said the report is "more about our building, the fact that we own our building. We have resolved those questions." The board plans to sell the building, Welch said.

She said the federal Labor monitoring report is not its final report, but a step in the process.

"Anyone can come in and monitor anyone and say they don't like something," Welch said. "They have to prove you did something wrong. The work we're doing with DWD, these things are being resolved."

"So right now, we're in the resolving stage with DWD," she said. "So there's no (final) findings for the disallowed costs. Things are not totally resolved but they will be."

Welch said her departure is unrelated to recent events.

"I resigned. I chose to take another position that gave me the opportunity to help with new (workforce) regionalization efforts in the Upper Peninsula, which includes two counties in Wisconsin, Marinette and Florence."

Welch said her title will be regionalization liaison, working with multiple counties in Michigan's Upper Peninsula. It will receive funding from the state of Michigan.

Welch said she was approached about the new job in the fall and reached an agreement to take the position last month. "I was excited when they made the offer," she said. "I chose to leave, no one asked me to leave."

Welch said the issues questioned will be resolved and defended the nonprofit agency's work.

"We serve 30,000 customers a year in the Fox Cities and we have done well in putting people through retraining and helping them find jobs," she said.

Al Hesse, Fox Valley Workforce Development Board chief operating officer, was named interim executive director.