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FINDING REFERENCE NUMBER 2025-001 FEDERAL PROGRAM (ALN 17.258, 17.259 AND 17.278) WORKFORCE INNOVATION AND OPPORTUNITY ACT (WIOA) (CLUSTER) PASS-THROUGH – ECONOMIC DEVELOPMENT AND COMMERCE DEPARTMENT OF THE COMMONWEALTH OF PUERTO RICO U.S. DEPARTMENT OF LABOR AWARD NUMBER 2022-0000114 (FISCAL YEAR 2021-2022) COMPLIANCE REQUIREMENT MATCHING, LEVEL OF EFFORT, EARMARKING TYPE OF FINDING NONCOMPLIANCE AND SIGNIFICANT DEFICIENCY CRITERIA WIOA Youth Activities required that not less than 20 percent of Youth Activity funds allocated to the local area, except for the local area expenditures for administration, must be used to provide paid and unpaid work experiences (Section 129(c)(4)), WIOA, 128 Stat. 1510). Also, a minimum of 75 percent of the Youth Activity funds allocated to States and local areas, except for the local area expenditures for administration, must be used to provide services to Out-of-School Youth (Section 129(a)(4)(A), WIOA, 128 Stat. 1506). The DOL's Employment and Training Administration (ETA) approved a waiver for PY 2022 and PY 2023, which includes the entire time period for which states are authorized to spend those funds, the Puerto Rico Commonwealth's request to waive the requirement that local areas expend 75 percent of local youth formula funds on OSY. Puerto Rico may lower the local youth funds expenditure requirement to 50 percent for OSY. STATEMENT OF CONDITION During our audits test of the earmarking compliance requirement for the Youth Program funds of the program year 2023-2024, we noted that the Local Area only expended 14% of the funds allocated to programmatic activities on paid and unpaid work experiences at the end of the two years of funds availability which ended June 30, 2024. Also, the Local Area only expended 38% of the Youth Program funds allocated for program year 2023-2024 on services for Out-of-School. QUESTIONED COSTS None PERSPECTIVE INFORMATION This is a repeated finding and includes two earmarking requirements. This represents a systematic problem in our evaluation. STATEMENT OF CAUSE The Local Area failed to timely identify the lack of compliance with the earmarking requirement for the Youth Program and failed to planned activities for participants related to paid and unpaid work experience and activities for Out-of-School Youth during the two years of funds availability. POSSIBLE ASSERTED EFFECT The Local Area failed to comply with a programmatic requirement of the Youth Program. IDENTIFICATION OF REPEAT FINDING This is a Repeat Finding – Prior Year Finding Number 2024-001. RECOMMENDATIONS We recommend that a formal monitoring of the earmark requirements for the Youth Program, as well as other earmark requirements, takes place at least on a quarterly basis during the funds period of performance. Staff that should participate in the monitoring include finance, planning, youth program staff and executive staff. If deviations or failure to meet the earmark are noted, communications must be generated to the youth program staff in order to take corrective actions before the elapse of the funding period.