Wisconsin’s Legislative Audit Bureau is out with a negative evaluation of WEDC – Scott Walker’s by now infamous public-private job makin’ agency.
Conclusion? WEDC is as SLOPPY as a hog in mud.
They have more people waving magic wands over there than they do accountants wielding calculators – that is IF THEY EVEN *HAVE* CALCULATORS.
We already knew WEDC handled $517 million dollars 2011 – 2012 (most of it from the taxpayers) and as of February 2013 they had lost track of $56 million of that. * Now we also know that businesses commonly wheel ‘n’ deal over contracts with WEDC and in several cases they didn’t even make actual jobs (nevermind the state statute that says WEDC has to make jobs come out of those contracts). We learn there’s no worry about conflict of interest at WEDC and we learn that there was no real enforcement of wage requirements despite contract provisions that guaranteed %150 of federal minimum wage minimum. We also learn that employees got to use their WEDC cards to buy questionable stuff like $1,789 in Badger football tickets and we find out that not so much as a notebook was used to track millions in loans. To top it off, we learn that you don’t even have to ask and WEDC’ll give you a $100K or more extra.
How many jobs came out of this circus? L.A.B. concludes, “..it is difficult to assess the accuracy and completeness of the number of jobs that WEDC reported having been created or retained”.
Meaning, we really don’t know.
A more conspiracy-minded person would say they aren’t loaning out money at WEDC. They’re laundering it.
All ye political geeks will want to read the audit in full HERE.
The audit is quite thorough, letting us know details such as,
“We found that WEDC did not incorporate its iPhone policies into
either its employee handbook or personnel administration and
So I’ll pull a few highlights for your convenience:
WEDC did not have
sufficient policies to
administer its grant, loan,
and tax credit programs
effectively, including some
statutorily required policies.
There are several instances mentioned but here’s a WOW one. This is what I mean when I mention “wand waving”. Keep in mind that the very mission of WEDC is to create jobs:
“One $2.5 million contract executed through the Jobs Tax Credit program did not require a
business to create any jobs, as is statutorily required in order to be allocated refundable tax
credits through the program.
“Instead, the contract required the business to make a $10.0 million capital investment and provide $2.5 million in training to its employees. After the business subsequently decided not to make the capital investment, WEDC amended the contract to no longer require the capital investment and reduced the tax credit allocation. It did not declare the business to be in default of the contract and recover any of the $1.5 million in tax credits that had been awarded.”
See that? No jobs made? No capital investment? No problem! You get to keep your $1.5 million and screw the state’s statutes! THAT business owner has to be a VERY SPECIAL friend of Governor Scott Walker.
Speaking of conflict of interest, the IT firm WEDC hired was the only one who competed for the bid and it was a firm that had business with 7 entities that WEDC was giving awards to – and that meant the IT firm was getting inside information on its clients that maybe it wasn’t supposed to have.
Before contracting with Baker Tilly in May 2012 to
help improve its IT systems, WEDC did not solicit
proposals from other firms. Because WEDC did
not solicit proposals, it did not require Baker Tilly
to disclose any potential conflicts of interest.
While under contract, Baker Tilly had access to
information on WEDC’s financial awards and
recipients. We identified seven instances in which
Baker Tilly had potential conflicts of interest
because it represented and provided consulting
services to firms that applied for and negotiated
awards with WEDC before, during, and after it
was under contract with WEDC. In one instance
that occurred while Baker Tilly was under
contract, WEDC offered a $750,000 loan to a firm
that Baker Tilly represented. After the firm
rejected the offer and indicated Illinois had
offered it an amount of assistance that the firm
declined to reveal to WEDC, WEDC increased its
offer to a $1.0 million forgivable loan that would
not need to be repaid if the firm fulfilled its
contractual obligations. WEDC had not executed
the contract as of March 2013
This next one’s a little less galling but at the same time, it sticks in my craw since it looks like a business got to bilk its workers out of wages (greedy). If you make good green, then a guaranteed 150% of federal minimum wage will sound paltry but consider if you will that in some fields and in some of our poor counties, that is a jump (I’m thinking retail – food service – nursing assistants).
L.A.B. figured out that in the WEDC Business Retention
and Expansion Grants and Loans program the recipients were agreed “contractually” to get awards according to the wages paid to employees, and the wages “needed to be at least 150.0 percent of the federal minimum wage. Contracts for seven FY 2011-12 awards that we reviewed based the award
amount on the average wages paid to employees“.
So there was no guarantee there that the employees actually got the 150% they should have. On the 8th contract they looked at, there was no wage requirement at all.
Gee. That violates the law.
You probably already knew about the “statutorily” naughtiness WEDC committed against both HUD and our state:
From the L.A.B. report:
“In May 2012, the federal Department of Housing
and Urban Development (HUD) indicated to
DOA that WEDC had spent $9.6 million in federal
Community Development Block Grant program
funds without the legal authority to do so.
WEDC’s governing board was not informed
about HUD’s concerns until September 2012”
But it’s good to see this information circulated again. Not everybody catches news the 1st time.
I think Scott Wittkopf got the scoop on that one first.
Some awards were made
to ineligible recipients, for
ineligible projects, and for
amounts that exceeded
There is much from the audit I could list here that perhaps WEDC staff might weasel out of saying, “Whoops. Didn’t know that person was ineligible”.
But how would they explain the inflated loans?:
“In October 2011, WEDC
awarded a business a loan for $100,000 more than
the maximum allowed. In November 2011, WEDC
awarded another business a loan for $360,000
more than the maximum allowed.”
In FY 2011-12, WEDC did
not monitor expenditures
incurred by each of
Sometimes it’s the little things that get under your skin:
$1,789 for six season tickets to UW-Madison
$208 in long-distance telephone calls made over
two days by a WEDC staff member from a hotel in
$120 for four iTunes gift cards
Those were some unbecoming transactions found on WEDC “Cardholders” cards. I’d like to know who exactly held the cards – wouldn’t you?
Additional efforts are
needed to help ensure
that WEDC administers
I found this a little appalling:
“Not until October 2012 did WEDC begin to
monitor repayment of loans that it and Commerce had awarded.
As of December 2012, recipients of 60 loans were delinquent on
$3.5 million in repayments of loans with a total outstanding balance
of $11.3 million. As noted, WEDC had no policies for determining
whether delinquent amounts should be amended, forgiven, referred
to DOJ for collection proceedings, or written off. Continued scrutiny
of WEDC’s efforts to monitor repayment of taxpayer-funded loans is
That just sounds very ODD doesn’t it?
I mean really. They had not even a spiral-bound notebook with some notes in it?
Not even some post-it notes on the wall? Nothing to track loans?
Jesus. If that’s true, then my meager household keeps better track of what it put in a garden last year than WEDC does over millions of taxpayer dollars.
Can’t say how many jobs were really created
Sloppy accounting means nobody can tell what the hell you’re doing:
“As noted, information provided by WEDC indicates that WEDC
received only 45.0 percent of the contractually required progress
reports that specify the numbers of jobs created and retained, some
files did not document that the claimed numbers of jobs were
actually created or retained, and WEDC did not verify any of the
performance measure information submitted by grant and loan
recipients. As a result, it is difficult to assess the accuracy and
completeness of the number of jobs that WEDC reported having
been created or retained.”
I suppose there’s more investigation that can be done on at least the small governments that got WEDC money.
There are 30 types of programs that WEDC has used to dispense money ostensibly for job creation. Of those, the “Enterprise Zones” program has received the greatest allocation: $61 million. The $61 million went to only 7 businesses and of those, only 3 businesses completed all the “verifications” according to this audit.
I wish I knew which businesses these 7 were – the L.A.B. audit doesn’t say.
For the Enterprise Zones program, “In 2011, three businesses completed verifications; 1,653 jobs created; $83.3 million in capital
investments; $1.1 billion in supply chain investments over a ten-year period; $1.9 million in
training expenditures. In FY 2011-12, $61.0 million in tax credits allocated to three businesses.”
It would be neat-o to know that those 1,653 people are at least making 150% of the federal minimum wage – to know that they are holding down good jobs that take care of themselves – of their communities.
But given how sloppy WEDC’s been, who knows.
I was about to cyncially tack on “and who cares”.
The answer is I do and you probably do too. If we knew thousands of workers got a decent job out of this at least all the arrogant cronyism would have led to some amount of wealth leaked out of Scott Walker’s thin brown bag of government down to the little workers below.
*Ironically the amount WEDC lost is comparable to the amount the UW System saved for a rainy day – when you consider the sums as a percentage of the total budgets. WEDC lost 10.8%. UW System socked away 12%.