Gross Mismanagement of WI Job Creation Programs

New Audit Shows Gross Mismanagement of WI Job Creation Programs

Walker jobs agency so badly run it is not possible to assess effectiveness of programs

Madison: A scathing new report released this morning by the Legislative Audit Bureau gives the Wisconsin Economic Development Corporation (WEDC), the state’s lead job creation organization, a failing grade on every basic measure of program administration and accountability. According to the report, the organization’s reporting and management are so shoddy that it is not possible to “assess the effectiveness of WEDC’s economic development programs.”

The partially privatized organization was created in 2011 by the Walker Administration over the protests of Citizen Action of Wisconsin and coalition partners who warned it would lack accountability and transparency.

“It is scandalous that scarce job creation dollars are being squandered, especially at a time when so many Wisconsin families are struggling to find good jobs,” said Robert Kraig, Executive Director of Citizen Action of Wisconsin.  “The Legislature has a moral obligation to immediately overhaul WEDC to assure that there are clear goals for creating family supporting jobs, full public accountability for every business receiving state loans, grants, and tax credits, and full public transparency so citizens can know how their money is being used.”

Among the shocking findings in the Legislative Audit Bureau Report:

• WEDC is required by law to establish goals and anticipated results for financial awards, to monitor performance, and report results to the public. WEDC failed to establish goals and expected results for 30% of awards. In addition, recipients submitted only 45% of the contractually required reports to WEDC on progress and outcomes.

• WEDC is required to report annually to the Legislature on its economic development programs, but failed to include legally required information, included inaccurate information, and did not clearly present information on outcomes such as the number of jobs that were actually created.

• WEDC lacks policies to effectively administer its programs, and has no policy for managing delinquent loans to businesses

• WEDC often does not follow legal requirements when making awards, including making awards to ineligible recipients, ineligible projects, or above legal limits.  WEDC also inappropriately allocated job creation and training tax credits of $906,000 for programs that began prior to the execution of contracts.

• WEDC failed to get required financial statements from 12 of 14 recipients of grants and loans of more than $100,000

• WEDC did not monitor the amounts spent on each program because it was unfamiliar with accounting practices and did not develop policies and procedures.

• WEDC lacks policies for staff purchase of goods and services, including any safeguards on price.  WEDC also lacks sufficient credit card policies. As a result 56% of card transactions had no specified purpose.

• WEDC lacks transparency on staff compensation and fringe benefits, and lacks a policy on gifts from businesses and other organizations with a financial interest in WEDC programs.

The Joint Legislative Audit Committee has scheduled a public hearing on the audit findings on Thursday, May 9. Citizen Action calls on the audit committee to fulfill its duty to take prompt legislative action to restore accountability at WEDC.

State Representative Jon Richards is expected to introduce reforms which will assure accountability and transparency for all of WIsconsin’s jobs creation programs.

“Hard Working Wisconsinites have a right to expect that government expenditures for job creation are used to expand opportunity for all residents,” said Jennifer Epps-Addison, Economic Justice Director for Citizen Action of Wisconsin. “The WEDC audit clearly demonstrates that the quasi-public agency has failed to protect taxpayers when doling out millions of public dollars to private businesses. To ensure that scarce public resources are utilized to their highest and most useful purpose, we must attach strong accountability and transparency legislation to all public expenditures.”