The Labor Department, faced with a congressional revolt that could jeopardize its massive public jobs program, yesterday announced creation of a 200-member investigative team to purge the department's program's of fraud and mismanagement.
The department also said it is preparing legislative proposals to strengthen antifraud provisions in the Comprehensive Education and Training Act (CETA), which finances an $11.8 billion program that includes 725,000 public services jobs for unemployed people.
Marshall said the proposals include making it a criminal offense to destroy CETA records to thwart an investigation. Other sources said "very serious consideration" is also being given to cutting off all department funds for up to three years to municipalities or other sponsors who violate CETA rules.
More than 200 allegations of mismanagement of wrongdoing were lodged over the past year against the CETA program, a cornerstone of the administration's job-expansion effort, and a dozen or more cities and states - including New York City, Los Angeles, Texas, Baltimore and the District of Columbia - are under investigation. Chicago was forced last year to return abour $1 million in CETA funds that have been spent to hire ineligible and politically favored workers.
The program has also been bombarded with congressional criticism that funds are being used to finance existing jobs rather than to create new ones. The program barely survived at least one budget-cutting assault in Congress recently and faces more, with some CETA supporters threatening to bail out unless forceful steps are taken to correct abuses.
"It's a move in the right direction, but they aren't out of the soup yet," said one congressional source after learning of the department's announced crackdown.
In disclosing the department's new moves, Labor Secretary Ray Marshall said fraud and mismanagement account for "only a tiny percentage" of Labor's $25.4 billion annual expenditures. He said he could not pinpoint the exact amount, but added that it was less than $1 billion. Some cases might involve "a million or more," but most involve relatively small amounts, he said.
"Today's actions are largely designed to be preventive," Marshall told reporters. "Our programs are generally successful and well administered."
Marshall said the department was also serving notice on all CETA prime sponsors, mainly state and local governments, that "improper actions will not be tolerated in any shape or form."