A state audit of a $400,000 federal grant managed by Chattanooga Endeavors found problems with goals and purchases and recommended the state Department of Correction discontinue the program with the organization.
"The basic premise for the grant is not being accomplished and has very little hope of success," the July audit by a Tennessee Department of Correction compliance officer states. "I cannot recommend continuing the contractual relationship with Chattanooga Endeavors/Nashville Works," the auditor wrote.
The purpose of the grant was for Endeavors, which helps former inmates find new jobs and connects them with local resources, to set up and operate a Nashville office - called Nashville Works - that also would connect prison inmates with area employers.
Endeavors CEO Tim Dempsey said problems with the prison inmate-employment grant are a result of the down economy, which has made it difficult for former inmates to find jobs. The worst outcome, he said, is money already spent by the nonprofit organization may not be reimbursed by the federal government.
The grant, given by the U.S. Department of Justice and administered by Tennessee, totals $404,000 over 21/2 years and began in November 2008, said Dorinda Carter, a Correction Department spokeswoman. With an extension, it is scheduled to end in August 2011, she said.
An estimated $190,000 of the grant already had been awarded to the local nonprofit and, after that initial payment, expenses are reimbursed once reviewed by the department.
Dempsey faces no criminal or civil penalties, Carter said, but some services and equipment purchases may not be reimbursed.
Dempsey said many of the expenses were paid for by him and any loss of funding should not affect Chattanooga Endeavors.
One hurdle in Nashville was that most of the inmates still were incarcerated and on work release, Dempsey said.
"We've run into many employers that either hesitate or just flat out will not work with people who are on work release," he said.
He emphasized that the grant was a "demonstration grant" and was intended to show if Endeavors could work in Nashville.
The local Endeavors project has run in the Chattanooga area for more than a decade but works with inmates released either on parole, probation or having completed their sentences and returning to the area.
Officers from the state Department of Correction reviewed Endeavor's records last week and will determine if the organization will continue to run the program or if the state department will take over managing the remaining time for the Nashville site, Carter said.
There are four employees at Nashville, two with the state and two employed under the grant, Carter said. They will not be affected by any changes to grant management.
A nearly double-digit unemployment climate has worked against the project from the start, Dempsey said.
"I don't doubt that, given time, we would be able to build up the market," he said.
The audit also questioned equipment purchases, fees and insufficient evaluations submitted by Endeavors for the Nashville program.
Dempsey said that computers, servers and a multilocation phone system were purchased to link the Chattanooga and Nashville offices.