Legislative Audit Bureau Report on Wisconsin Economic Development Corporation: The "Cliff Notes" Version

There's a lot to make you see red in this audit.

Legislative Audit Bureau

Report highlights  (or lowlights, as it appears)

• WEDC did not have sufficient policies to administer its grant, loan, and tax credit programs effectively, including some statutorily required policies. 
• Some awards were made to ineligible recipients, for ineligible projects, and for amounts that exceeded specified limits. 
• In FY 2011-12, WEDC did not monitor expenditures incurred by each of its programs. 
• Additional efforts are needed to help ensure that WEDC administers its taxpayer-funded economic development programs effectively.

Highlights from "Introduction"

• Economic development includes programs that provide financial and other assistance to businesses, local governments, and other organizations
• WEDC is governed by a 15-member unpaid board.  (Governor serves as chairperson.)
• A number of concerns have been raised about WEDC.  (Accompanied by 4 bullet-point explanations.)
• WEDC had filled 86.0 FTE positions as of July 1, 2012.
• In FY 2011-12, WEDC administered 30 economic development programs, including 14 required by statutes.

Highlights from "Financial Assistance Programs"

• In FY 2011-12, WEDC 
• administered 19 economic development programs that provided financial assistance.
• authorized $346.4 million in economic development bonds.
• awarded 166 economic development grants totaling $41.3 million. 
• awarded 33 economic development loans totaling $20.5 million

• WEDC did not have sufficient policies to administer its grant and loan programs effectively.

• WEDC did not always perform the analysis necessary to determine if an applicant’s proposed project was eligible for a grant or loan.

• Information provided by WEDC indicated that grant and loan recipients did not submit 12 of 14 statutorily required verified financial statements.

• Additional efforts are needed to help ensure that WEDC administers its taxpayer-funded grant and loan programs effectively.

Highlights from "Tax Credit Programs"

• In FY 2011-12, WEDC 
• administered eight economic development programs that provided tax credits. 
• allocated $62.9 million in tax credits through two development zone programs.
• allocated $36.7 million in tax credits through two other tax credit programs. 

• In 2011, investors were awarded $11.2 million in tax credits through two investment tax credit programs. 

• WEDC did not establish all statutorily required policies for its tax credit programs.

• WEDC did not always perform the analysis necessary to determine if an applicant’s proposed project was eligible for tax credits. 

• WEDC allocated some tax credits in ways that did not comply with statutes or its program policies.

• WEDC sometimes allocated tax credits for projects that had occurred before the contracts were executed.

• Additional efforts are needed to help ensure that WEDC administers its taxpayer-funded tax credit programs effectively.

Highlights from "Program Results and Accountability"

• Statutes require WEDC’s governing board to establish clear and measurable goals for each economic development program.

• WEDC’s governing board did not establish expected results for 10 of 30 economic development programs in FY 2011-12. 

• Recipients of 59 awards submitted 45.0 percent of the contractually required progress reports from July 2011 through December 2012.

• WEDC did not comply with statutes by independently verifying the performance information reported by recipients of a sample of grants and loans. 

• WEDC’s governing board is statutorily required to report annually on each of its economic development programs. 

• Program results presented in the economic development program report sometimes differed from program results in other WEDC information. 

• WEDC’s information indicates that its awards resulted in the creation of 3,383 actual jobs and the retention of 2,006 actual jobs in FY 2011-12.

• It is difficult to assess the accuracy and completeness of the number of jobs that WEDC reported having been created or retained. 

• Additional efforts are needed to help ensure compliance with statutory requirements.

Highlights from "Financial Management"

• In FY 2011-12, WEDC’s expenditures totaled an estimated $80.1 million.

• In FY 2011-12, WEDC did not monitor the amounts spent on \each of its economic development programs. 

• To help with its financial management, WEDC contracted with four firms.   (Perhaps this has something to do with the job retention mentioned above.)

• To more effectively manage taxpayer funds appropriated to it, WEDC should improve its financial management practices.

Highlights from "Vendor Selection"

• WEDC has considerable flexibility when procuring goods and services. 

• WEDC did not have policies for staff to use to purchase goods and services. 

• WEDC contracted for management services without conducting open and competitive procurement processes. 

• Developing procurement policies could help prevent inefficient and ineffective use of taxpayer funds. (More and more, I'm seeing this faux outrage over the UW System reserves as a smokescreen to obscure the damning assessment of this audit.)

• WEDC did not have sufficient policies governing staff use of purchasing cards. 

• In FY 2011-12, WEDC’s purchasing card transactions totaled $348,400.

• WEDC cardholders did not indicate the purpose for 79 transactions totaling $46,100, or 56.0 percent of the 141 purchasing card transactions we reviewed.

• We question whether several purchasing card transactions we reviewed are allowable. 

• Additional efforts are needed to improve WEDC’s management of its purchasing cards. 

Highlights from "Personnel Management"

• WEDC did not have its own personnel policies until December 2011. 
• WEDC established salary ranges for each of its staff positions.
• In December 2012, 17 WEDC staff received merit awards totaling $59,500. (Head in hands.)
• As of October 2012, WEDC had compensated four staff for relocation expenses in moving to Wisconsin.
• WEDC reimbursed staff for their purchase and use of personally owned iPhones.
• To help ensure that taxpayer funds are spent effectively, the governing board needs additional information about WEDC’s personnel policies. 

Highlights from "Governance"

• WEDC’s chief executive officer and all governing board members filed the statutorily required statement of economic interests for 2011. 
• Statutes authorize WEDC’s governing board to accept gifts, grants, loans, and contributions from private or public sources.
• WEDC had no policies for tracking and handling gifts received by its staff.
• WEDC and its governing board have not filed all statutorily required reports on time, and some reports did not contain all required information.  (Funny, with all this accumulated evidence, how muted the Republicans response  has been.  Some might ask, "Where the outrage?")
• In March 2013, WEDC’s governing board passed a resolution authorizing WEDC to create nonprofit foundation to solicit donations to promote economic development. 

Related posts:
"Tales of woe never end at WEDC."  (4/25/2013)
Enterprise Florida and Wisconsin Economic Development Corporation share a lack of transparency.  (2/28/2013)
Work to do, words yet to live by.  (12/27/2012)