Company gets bigger state contract even as unemployment rate falls
03/29/2013 1:18 PM
03/29/2013 8:45 PM
As Gov. Rick Scott was touting the state’s drop in unemployment last summer, his top jobs agency made a curious prediction: the number of people applying for jobless benefits would increase sharply over the next year.
The prediction — which was not made publicly — found its way onto a quietly amended contract with a private company. Though it belied the state’s economic trends, it was worth hundreds of thousands of dollars for Worldwide Interactive Networks.
Also known as WIN, the Tennessee-based firm has a state contract to run the online skills assessment that critics say has acted as a barrier to thousands of people seeking jobless benefits.
The company, a major contributor to Florida politicians, saw its annual contract increase from $2 million to $2.7 million last June, even as the number of people it was serving was plummeting.
The Department of Economic Opportunity, which was responsible for amending the contract, estimated that 1 million people seeking jobless benefits would take WIN’s 45-question assessment in fiscal year 2012. It was the same estimate the agency made a year earlier, when the unemployment rate was higher and far more people were applying for jobless benefits. Economic figures from DEO show that the 1 million estimate was far off the mark in 2011, and even more inflated by 2012.
There are currently about 740,000 unemployed people in Florida, and most are not eligible for benefits.
DEO claims that it actually achieved significant savings on the contract, agreeing to pay $2.70 per assessment rather than $10. The agency did not say how it calculated the estimate of 1 million participants, only stating that the contract had a fixed price.
“Nowhere in the contract does it say [WIN] must serve a minimum of 1 million participants,” DEO spokeswoman Monica Russell said in a statement. “So as long as [WIN] served 200,000 participants, additional participants served is just icing on the cake.”
While WIN was cashing in on a larger government contract, the testing system it designed was making it harder for thousands of Floridians to get government aid after losing their jobs.
In 2011, Scott and the Florida Legislature mandated that all people seeking unemployment benefits take an “Initial Skills Review,” a test-like assessment only available on the Internet. The Legislature also discontinued the option of applying for benefits by phone or in person and reduced the number of weeks of available benefits.
“I think the DEO likes to confuse the unemployed,” said Miami resident Deborah Lazar, who had trouble getting jobless benefits last year because of WIN’s online assessment. “I truly believe people give up on trying to get into the system.”
The U.S. Department of Labor is investigating complaints that Florida’s new requirements for unemployment compensation are discriminatory.
Those new requirements helped WIN ink a three-year, multimillion-dollar contract with the state. WIN has five registered lobbyists in Florida and has contributed more than $170,000 to the Republican Party of Florida in recent years, according to state lobbying and campaign finance records. The company did not return calls seeking comment.
As Florida raised barriers to its unemployment compensation system, and as the economy improved, fewer people needed WIN’s services. The number of people taking the skills review dropped from 58,000 in September 2011 to 38,000 in September 2012.
By the time the contract was amended in mid-2012, it was clear that the estimate of 1 million participants was too high. Only about 40,000 people were taking the test per month — about half the expected amount. But rather than decreasing the contract amount, DEO upped the cost by 35 percent to $2.7 million, standing by the estimate of 1 million participants per year.
Florida continues to pay WIN $225,000 each month, though the Tennessee company is only serving a fraction of the people originally envisioned by the contract. Unemployment compensation pays about $230 per week — up to 23 weeks — to people who lost jobs.
DEO claims that the contract is part of a larger budget allocation, which is set by lawmakers, that includes funding for other services provided by WIN (the company also provides career readiness training to students). According to DEO, the overall budget allocation for WIN — about $5 million — did not increase between 2011 and 2012.
For the coming year, DEO has decreased its budget request for the online assessment from $2.7 million back down to $2 million. That amount — the same as the original 2011 contract — does not reflect the fact that unemployment has declined sharply in the last two years. Statewide, unemployment dropped to 7.7 percent in February. It was above 11 percent in January 2010.
State lawmakers have agreed to continue funding the contract, part of a $74 billion budget being crafted over the next month in Tallahassee. Most of the money in the state budget ultimately goes to private contractors like WIN, and Chief Financial Atwater Jeff Atwater has called for increased transparency in government contracts.
For its part, DEO acknowledged that the unemployment situation has changed since 2011, and the original contract with WIN may need to be adjusted.
“We’re planning to renegotiate the contract,” Russell said.
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