HD4 - Follow-Up Review of Community Action in Virginia

  • Published: 1996
  • Author: Joint Legislative Audit and Review Commission
  • Enabling Authority: Appropriation Act - Item 15 C. (Special Session I, 1994)

Executive Summary:
Community action programs are designed to help low-income people become self-sufficient. Most community action programs are administered by community action agencies (CAAs). CAAs are locally operated agencies, which are either non-profit incorporated entities, agencies of local government, or quasi-public agencies. There are 26 local CAAs and three community action statewide organizations operating in Virginia.

CAAs have been providing services to the low-income population in the Common-wealth for nearly 30 years. During that time the mission of community action has not changed significantly. Continued emphasis has been placed on programs which "promote and support the development, coordination, and delivery of services and activities having a measurable and potentially major impact on the causes of poverty."

In 1989, JLARC conducted a review of the programs and activities of CAAs in Virginia. The study reported that the performance of CAAs was mixed. Although most CAAs were able to describe case examples of successful performance, system-wide deficiencies were identified in CAA accountability and in the Department of Social Services' oversight of CAA activities. Twenty recommendations were made for addressing specific problems at both the CAA and State levels.

In 1994, the General Assembly requested that JLARC evaluate actions that CAAs and the Department of Social Services (DSS) have taken in response to recommendations made in the previous report, particularly those concerning financial and program accountability of the CAAs and State oversight of CAA activities.

This follow-up review found that both funding and staffing of CAAs have increased appreciably since 1989. Over 500 full-time positions have been added to CAAs since the last JLARC report. In addition, total CAA funding increased substantially between fiscal year (FY) 1988 and FY 1994, due primarily to increases in federal and State program-designated funds. Federal and State Community Services Block Grant (CSBG) funding that is not program-designated has been relatively level over that period. Chart:

The review also found that progress has been made in implementing a number of recommendations made in the previous report. For example, CAAs are better able to account for numbers of clients served in various programs and are complying with statutory requirements concerning board membership. In addition, DSS is administering funds on a more systematic basis and has increased oversight capacity and activities relative to CAAs.

However, there is a substantial need for additional improvements. Specifically, CAAs need to develop and use better program performance measures and strengthen client record management and reporting practices. Further, some CAAs need to address internal financial control problems more proactively and better monitor their administrative costs. In addition, DSS needs to streamline its on-site monitoring process, better document its monitoring activities, and more effectively use information it collects from community action agencies and statewide programs.

Performance Measures to Determine Program Effectiveness Are Lacking

To ensure adequate accountability for the programs they provide, CAAs should be able to demonstrate that they are successfully addressing the goals of the State CSBG program. The 1989 JLARC report found that the effectiveness of many CAA programs in achieving these goals could not be determined because much of the data necessary to indicate program performance were not available or were not of sufficient quality to support adequate assessment. As in the 1989 study, the present study found that all CAAs can cite many individual cases where programs have been successful in achieving their objectives. However, CAAs remain unable to demonstrate achievement of long-term goals, such as decreasing the number of dependent persons in a given locality over time, on an agency- or system-wide basis.

Adequate performance assessment is not possible in large part because specific performance indicators have not been developed for many CAA programs. In addition, absence of client data and uneven record-keeping practices preclude a formal assessment of CAA performance. It is impossible to support performance-based outcome measures without accurate, complete client information, such as income, education, and employment status. This information is necessary for CAAs to document that they are serving the appropriate target populations and that the services are meeting the objectives of the CAA system to reduce poverty and increase self-sufficiency.

CAAs need to work with the Office of Community Services (OCS) within the Department of Social Services to develop outcome-based indicators of program and agency performance. In addition, CAAs need to develop client record-keeping systems which will support accurate measurement of the identified performance indicators.

CAAs Differ Substantially Across Various Program Characteristics

In the absence of adequate outcome indicators to measure the performance of CAAs, JLARC staff relied on more general indicators of performance. In particular, the appropriateness of program offerings and general program-related considerations, such as the average cost per client and number of clients served, were examined. JLARC staff found that the programs and client bases served by CAAs generally appear appropriate and in compliance with federal and State law. As in the 1989 study, however, marked variability in some CAA operational areas was again observed. Two agencies - Sussex/Surry/Greensville and Skyline - exhibited potential limitations in several program characteristics, indicating the need for in-depth review of their operations by the Office of Community Services.

Financial Accountability Has Increased But Requires Further Attention

Overall funding for community action agencies and statewide organizations has increased from $49 million in FY 1988 to almost $67 million in FY 1994. All CAAs and statewide programs showed gains in their funding over this time period. As funding to CAAs increases, the need for fiscal accountability becomes more imperative.

Due to a strengthening of reporting requirements by OCS, CAAs and statewide organizations are currently more accountable for their finances than they were in 1988. However, the need for additional improvements in financial accountability is clear. Many CAAs reported inconsistent financial information to OCS and JLARC staff. This brings into question the credibility of other financial information provided by the CAAs. In addition, while several CAAs have implemented cost-savings initiatives, they have not adequately attempted to monitor their administrative costs.

The need for improved financial accountability is also demonstrated by the fact that a few CAAs experienced serious financial problems during the last few years and were in jeopardy of losing their major funding sources. Further, a review of FY 1994 audits of CAAs indicated that some CAAs are currently having financial problems.

To successfully leverage funds from many sources, CAAs need to be financially accountable for the funds they receive. Therefore, CAAs need to improve their fiscal management and reporting practices, more effectively monitor their administrative costs, and use the technical assistance provided by OCS to better address financial problems that may arise.

OCS Needs to Operate More Efficiently and Effectively

The 1989 JLARC review indicated that OCS oversight of community action agencies was very limited. On-site monitoring with written feedback to the agencies was almost non-existent, and documents submitted by the CAAs received only a cursory review by OCS. The JLARC review indicated that it was essential for OCS to have a clearly-defined oversight strategy to make the best use of its resources; and this oversight strategy needed to provide for a more objective and systematic approach.

With increased staffing since 1989, OCS has enhanced its capacity for, and involvement with, oversight activity. OCS has: (1) developed CSBG policy and procedures guidelines; (2) conducted regular reviews of CAA financial reports, funding applications, and contracts; (3) provided ongoing technical assistance to the community action agencies; (4) provided training for CAA board members; and (5) set up a framework for conducting formal on-site monitoring of CAA finances and programs. On-site monitoring activity also increased substantially in 1993 and 1994.

Although OCS has made progress, the need to develop an effective oversight strategy still exists. For example, OCS has not met its goal for on-site monitoring of CAAs, and few of the reviews it conducts are designed to assess program effectiveness. OCS visits primarily focus on conducting detailed financial monitoring or audit-type reviews of CAAs, and are largely duplicative of annually-required independent audits that are performed on CAA records. Further, the few program reviews conducted have not adequately evaluated CAA programs. OCS needs to shift its on-site monitoring focus from conducting detailed but unnecessary financial reviews to performing comprehensive reviews of CAA program effectiveness.

OCS also needs to better collect and use CAA financial and program information to enhance its ability to provide in- house oversight of the CAAs. Currently, CAAs do not provide all the required information to OCS, and OCS staff do not sufficiently use most of the information that is submitted.

OCS staff should focus on on-site monitoring of CAA program effectiveness, in-house review and analysis of CAA financial and programmatic information, and provision of technical assistance. By reorganizing its priorities and staff assignments, OCS could operate more efficiently and effectively.

Future Funding Uncertain

Although total funding for CAAs has increased substantially in the last several years, CAAs' success in obtaining funding in the future is uncertain. Generally, CAAs rely on the federal CSBG and State general appropriation as core funding, using the funds to administer their agencies and to leverage other funds for operation of specific programs. However, these sources of funding are not guaranteed.

In particular, proposals to reduce the federal deficit by cutting social welfare programs at the federal level may potentially affect CAA operations. Initial budget proposals called for the reduction of federal CSBG funds, though both House and Senate budget resolutions have since expressed the intent to maintain the funds in the proposed federal budget. Federal- level negotiations and discussions are ongoing. With the increasing scrutiny of government programs and the uncertainty of federal funds, CAAs may face an increasing demand that they demonstrate their programs are significantly impacting poverty.