State Inspector Laura Chick's report analyzed the use of $3.1 million of American Recovery and Reinvestment Act money by the Oakland Workforce Investment Board, which is a city agency, and the nonprofit Oakland Private Industry Council, which received all of the stimulus funding in question.
The Recovery Act helps provide funding for local workforce investment boards for summer youth, adult and dislocated worker programs.
The report, which was sent to Gov. Schwarzenegger on Tuesday, said one problem is that the Private Industry Council used Recovery Act money when its regular funding wasn't available.
Chick told Schwarzenegger, "Some of the mistakes we found can be traced directly to the fact that the city of Oakland did not receive its regular Workforce Investment dollars in a timely way. They received their Recovery dollars first and began to spend these funds on non-Recovery activities."
Chick said, "From this initial misstep flowed several of the other problems which included: inflated job numbers, lack of transparency, and accounting mistakes."
The report also found that reimbursement requests were inadequately reviewed.
In one example, it said the Spanish Speaking Citizens Foundation was reimbursed $2,806 for field trips to the Santa Cruz Beach Boardwalk, Waterworld USA and Washington Park.
The report says stimulus-funding guidelines specifically state that costs for entertainment are unallowable.
Chick pointed out her review of San Francisco's Workforce Investment Board found no reportable issues.
In a lengthy written response to the state audit, Earl Johnson, interim executive director of the Oakland Workforce Investment Board, said the city had already acted on many of the report's recommendations before it was released.
Johnson also said he thinks some of the report's findings are "inaccurate."
He said, "We take our duties to administer and monitor the use of all public funds, especially ARRA (Recovery Act) funds, very seriously. The city and our partners have and continue to engage in required oversight and monitoring to ensure public accountability and transparency."