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Hillsborough taxpayers will be asked to front $2.48 million for CareerSource repayment

Taxpayers on the hook for debt if insurance claims don’t cover agency misspending.
The Hillsborough County Commission will be asked Thursday to authorize payment of $2.48 million for disallowed expenses by CareerSource Tampa Bay that were uncovered by auditors. The county will try to recoup the allocation from CareerSource’s insurance carrier. The audit followed an investigation by the Tampa Bay Times.
The Hillsborough County Commission will be asked Thursday to authorize payment of $2.48 million for disallowed expenses by CareerSource Tampa Bay that were uncovered by auditors. The county will try to recoup the allocation from CareerSource’s insurance carrier. The audit followed an investigation by the Tampa Bay Times. [ CLIFFORD, DOUGLAS R. | Tampa Bay Times ]
Published May 31|Updated May 31

TAMPA — Hillsborough County taxpayers will be asked to front the $2.48 million CareerSource Tampa Bay must repay the federal government for misspending that occurred under its former CEO.

The Hillsborough County Commission will be asked to authorize the payment Thursday and the county will try to recoup the allocation from CareerSource’s insurance carrier.

The U.S. Department of Labor demanded CareerSource Pinellas and CareerSource Tampa Bay repay $4.3 million in audits released in March.

CareerSource centers use federal money to train workers and help them find jobs. Labor Department officials found that CareerSource Pinellas and CareerSource Tampa Bay (which operates in Hillsborough) falsified records and logged phony hiring reports, according to a letter sent March 11 to Dane Eagle, executive director of the Florida Department of Economic Opportunity.

The Labor Department’s review followed a 2018 Tampa Bay Times investigation that revealed the job placement centers took credit for finding work for people who never sought CareerSource’s help. Staffers under then-CEO Edward Peachey earned bonuses for posting high placement numbers. The agencies also handed out millions of dollars in gift cards without following up on how the money was spent, including by people who did not use CareerSource to find jobs.

CareerSource Pinellas and CareerSource Tampa Bay once operated as sister centers but severed ties after Peachey was fired.

When the audit findings became public, CareerSource Tampa Bay said in a statement that it would work with its insurance carrier “to see if (it) can mitigate the cost to the taxpayers.”

John Flanagan, president and CEO of CareerSource Tampa Bay, said Friday that the agency had filed a claim, but it could “take several months to work itself out.” Flanagan said he presumed the county wanted to pay the debt to avoid interest accumulating.

The proposed county authorization totals $2.536 million, which includes a $50,000 contingency for interest.

Flanagan declined to speculate on the possible outcome of the claim.

“I can’t speak to that. I don’t work for the insurance company,” he said. A successful outcome “is certainly our intention, that’s why we have insurance.”

Flanagan previously wrote to Hillsborough County saying the county commission could be responsible for outstanding costs if the job placement center did not get enough from its insurance claim.

A memorandum to county commissioners included in their agenda for Thursday’s meeting repeated the warning.

“If CareerSource Tampa Bay is not able to secure payment for all or part of identified disallowed cost, Hillsborough Board of County Commissioners, as fiduciary, would then assume responsibility for any cost deemed to be disallowed under audit,” according to the memo from the county’s economic development staff.

“That’s our first priority, is to file a claim against the insurance company … and hope that we will be reimbursed,” said Commissioner Gwen Myers, a member of the CareerSource Tampa Bay board of directors.

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Across the bay, CareerSource Pinellas’ board of directors agreed April 8 to use its reserves to pay its portion of the debt — about $1.9 million. The agency previously said it would use reserves from the sale of a science center building.

Steve Meier, interim CEO of CareerSource Pinellas, said his agency was fortunate to have dollars in reserve “otherwise, our county would have been on the hook for money, too.”

CareerSource Pinellas also is seeking reimbursement from its insurance company.

“You never know with insurance carriers,” Meier said. “They never want to pay out.”

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