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The Wisconsin Economic Development Corp. is still not following its policies for ensuring companies that receive millions in taxpayer-backed awards are creating promised jobs, agency officials acknowledged Thursday.

But rather than comply with existing policy, officials at the troubled job-creation agency are recommending changing policy to reflect current practice.

A recent Legislative Audit Bureau report noted that the agency wasn’t following its own policies, and the WEDC board will discuss it for the first time on Monday in Oshkosh.

The audit recommended that the board “ensure that its staff comply with all policies it establishes.”

WEDC staff proposed two changes to help bring the agency into compliance: Remove a policy that staff “view the capital investment and/or review the underlying financial records, e.g. invoices, payroll data, etc.” during site visits, and an annual requirement to “verify the performance of all Enterprise Zone Tax Credit awards,” which are the agency’s largest and most coveted economic development tools.

The agency isn’t reviewing any of its 20 enterprise zone awards this year, Jake Kuester, WEDC’s vice president of credit and risk, told the WEDC board’s policy committee on Thursday.

That’s because the agency doesn’t have the resources to review them all, Kuester said.

Instead, in compliance with a separate policy, the agency randomly selects 25 awards out of a total of nearly 1,500 to conduct a review based on the terms of the company’s award contract.

The agency’s awards range from $5,000 training grants to $67 million enterprise zones, but this year none of the 25 selected for review was an enterprise zone.

Also, employees aren’t reviewing financial records during site visits because they aren’t qualified to do so, though Kuester said the agency disputes the LAB’s interpretation of that particular require-ment.

“By LAB’s definition, we’re violating this policy,” Kuester said. “By not making this change today, we’re going to continue to violate this policy.”

Kuester said contracts with companies would still reference reviews of financial records, but Sen. Julie Lassa, D-Stevens Point, a WEDC board member and policy committee member, objected to removing the only reference to such a review from agencypolicy.

“You have to have some sort of verification,” Lassa said. “I don’t feel comfortable stripping that out of our policy totally.”

Other committee members agreed with Lassa and deferred the discussion to the full WEDC board on Monday without recommending approval. The committee advised Kuester to delay any site visits until the board settles on new policy language.

WEDC spokesman Mark Maley said Monday’s meeting will include a “healthy discussion” about the audit and other recently revealed problems at the agency, such the State Journal’s investigation into a $500,000 loan to a struggling Milwaukee construction company in 2011 that hasn’t been repaid.

However, Lassa raised concerns Thursday that the discussion will be limited because audit bureau staff won’t be on hand to discuss the audit and answer questions.

The nonpartisan agency typically doesn’t present information to other agencies until after the Joint Legislative Audit Committee meets to discuss an audit, she said.

That committee, led by Sen. Rob Cowles, R-Green Bay, and Rep. Samantha Kerkman, R-Powers Lake, has yet to schedule a meeting.

The WEDC board also plans to elect new leadership on Monday.

The recently adopted state budget removes Gov. Scott Walker from the chairman role. His office didn’t respond to a question about whether he would attend Monday’s meeting.


Matthew DeFour covers state government and politics for the Wisconsin State Journal.