The federal government has given the District a vote of confidence for what it called the city's success in enrolling more residents in job-training programs and improving handling of federal workforce grants.
The U.S. Department of Labor formally ended the District's designation as a "high risk" partner in job training and employment programs, a rarely used label the city has had since 2012, according to a letter the city received Thursday.
The change means the District will no longer be under increased federal oversight and at risk of suffering a slowdown in $24 million of federal workforce grants that it receives each year.
The administration of Mayor Muriel E. Bowser (D) was eager to publicize the accomplishment as evidence that it has improved training opportunities for unemployed residents.
The mayor, who is widely expected to run for reelection to a second term, announced the decision by the Labor Department at a jobs event in Georgetown on Friday.
"It's a big deal," Bowser said afterward. "We think we have our house in order, and we can now try even bigger programs to get people working."
Deputy Mayor Courtney Snowden, who oversees the Department of Employment Services, or DOES, called the removal of the high-risk designation "an important validator that we are getting it right" for D.C. residents.
"I'm doing cartwheels in my office," she added.
In the two-page letter addressed to Bowser, Labor officials said the District "had four consecutive quarters of improved enrollments and performance in [federal training] programs beginning in the quarter ending March 31, 2016."
It said the city had resolved all outstanding program shortcomings identified in reports in December 2015 and July 2016.
"As a result, [Labor] has determined the District has taken the necessary and sufficient action to resolve its identified program and performance issues and is withdrawing the District's designation as a high risk grantee," the letter said.
The "high risk" designation was especially embarrassing for the city because in 2015, it was the only jurisdiction in the nation to be labeled that way.
The Labor Department declined to comment Thursday, except to refer to the letter to the city.
The city's difficulties with Labor reflected a history of bureaucratic obstacles and other dysfunction in its workforce agencies that delayed spending of federal dollars to provide job training that could have helped some of the approximately 25,000 unemployed D.C. residents to find work.
The city blamed much of the slow spending on a shortage of people qualified to train residents for jobs — while conceding that many contractors stopped doing such work for the city because the District failed to pay them on time.
One result was the District's failure to meet annual federal targets for placing unemployed youths in jobs or in employment readiness classes.
Labor Department officials wrote to the city in September 2015 complaining that "low enrollments, under-expenditures and poor performance have been endemic in the [federally] funded youth program."
Such shortcomings led the Labor Department to impose token penalties in 2015 and 2016, in which it withheld a total of about $43,000 from annual grants of $2 million.
Apart from that, however, the slow spending did not cost the District any money, according to DOES Director Odie Donald.
"None of those [federal] funds has expired," Donald said.
City officials said youth programs were underenrolled for multiple reasons, including a misguided effort in 2014 to tighten academic requirements for youths to be eligible for job training. Not enough young people met the standard they set, the officials said.
But the District has shown progress on that front. At the start of 2015, Snowden said, the District had only eight out-of-school youth enrolled in federally funding workforce programs. Now, she said, the figure is over 1,000.
Snowden said the Labor Department's action also recognized the city's progress in meeting federal standards for its Workforce Investment Council, a body that helps oversee use of federal job training money.
The council is appointed by the mayor but led by the private sector. In late 2015, Bowser named Andy Shallal, owner of the Busboys and Poets restaurants, to fill a long-vacant position as council chair.
The city also made other appointments to ensure that a majority of members were from the business sector, as the Labor Department requires.
The Labor Department had complained the District was failing to make initial payments in a timely way to people who became eligible to receive unemployment insurance. Now, Snowden said, such payments are made on time in 91 percent of cases, compared to the federal standard of 90 percent.
"We have gone from probably the worst workforce system in the country to maybe one of the best," Snowden said.
Partly because of the improvement, she said, the city has just received a $150,000 grant from the Labor Department for its apprenticeship program.
However, the Labor Department letter warned against backsliding.
The department "reminds the District of its responsibility to maintain the performance it has achieved . . . and to operate its programs following [Labor's] grant requirements," the letter said.
The letter from the Labor Department outlined some of the steps that have been taken. In March 2016, it said, the city created a "corrective action plan" with 36 strategies and a fiscal analysis tool to address the problems that the federal department had identified.
The city also held monthly phone calls to discuss the city's progress. It hired an outside vendor to do an analysis of the underlying problems.
This story has been updated.