Scathing audit cites failures of accountability for WEDC

A new audit by the nonpartisan Legislative Audit Bureau cites the Wisconsin Economic Development Corp.’s failure to comply with basic accounting requirements and accountability for the state’s job creation resources.

The audit determined that the WEDC did not verify or require performance information or financial statements from companies receiving financial incentives from the state.

“WEDC did not have sufficient policies, including some that are statutorily required, to administer its programs effectively. We found that WEDC awarded some grants, loans and tax credits to ineligible recipients, for ineligible projects, and for amounts that exceeded specified limits. In addition, WEDC did not consistently perform statutorily required program oversight duties, such as monitoring the contractually specified performance of award recipients, and could report more clearly on the number of jobs created and retained as a result of its programs,” state auditor Joe Chrisman wrote in a cover letter to Sen. Robert Cowles (R-Green Bay) and Rep. Samantha Kerkman (R-Randall), co-chairpersons of the Joint Legislative Audit Committee.

The report drew bipartisan rebukes from legislators about the failures of oversights by the WEDC.

“This audit shows there is a significant disconnect between our expectations of WEDC and the reality of their performance with regard to transparency and accountability,” Cowles said.”WEDC needs to take this audit seriously and correct these deficiencies immediately. There is no excuse for breaking state statutes.”

“The results of this audit undeniably show that there is much more work to be done at WEDC to ensure that taxpayer funds are spent in accordance with statutory requirements and that the state realizes the returns of its investments to grow Wisconsin’s economy,” Kerkman said.

“This is exactly what we warned would happen when Gov. Walker and legislative Republicans – over Democratic objections – approved the creation of WEDC without a business plan. A lack of stable, consistent leadership at WEDC – including the resignation of its third CFO in less than two years last week – has only compounded the problem,” said Assembly Minority Leader Rep. Peter Barca (D-Kenosha).

“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.”

The Joint Legislative Audit Committee has scheduled a public hearing on the audit findings on Thursday, May 9, at 9:30 a.m. at the State Capitol.

To view the full report, click here.

In a letter to the Joint Audit Committee, WEDC chief executive officer Reed Hall said, “LAB’s evaluation of WEDC’s first year of operations provides a valuable, third-party perspective on the challenges faced by WEDC inFY20l2. We respect the findings of the audit with the recognition that WEDC has made significant progress in addressing operational shortcomings. The vast majority of issues raised by LAB have already been identified by WEDC and other parties, and substantive solutions are already in place or are in the process of being implemented.”

To view Hall’s full response, click here.

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