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Editorial: Agency must be accountable for taxpayer funds

7:58 PM, May 1, 2013  |  Comments
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The Legislative Audit Bureau on Wednesday released its report on the Wisconsin Economic Development Corp., the public-private economic development agency set up by Gov. Scott Walker to replace the Department of Commerce.

The results show a lack of oversight and accountability for the public-private agency responsible for economic development, business growth and job creation. For example, in fiscal year 2011-12, the WEDC spent $80.1 million but didn't keep track of what it spent on each of its programs.

Blame the problem on growing pains of a new department or the decision to cut the workforce from 300 to 50 or a CEO who left after 16 months or the inability to keep a chief financial officer on the job, the fact remains that a lot of money is at stake here.

That financial assistance part is key, not only because the grants, loans and tax credits can help attract businesses as well as keep existing ones here, but because almost all of the money is taxpayer-funded.

Wisconsin residents have a right to know how their money is being managed and whether it is being managed correctly.

Based on the audit, the WEDC has not done a good job of that since it became operational in July 2011 under its former CEO, Paul Jadin. The former Green Bay Area Chamber of Commerce president left the position after 16 months amid reports of a lack of oversight of $56 million in loans.

Reed Hall was lured out of retirement from the Marshfield Clinic to head up the WEDC. He has been officially on the job since January, but he has been aware of the agency's mistakes since he was named interim CEO in November.

In reaction to the report on Wednesday, Hall said the WEDC had already identified many of the issues raised in the Legislative Audit Bureau audit.

That's true. In a February meeting with the Press-Gazette Media editorial board, Hall outlined changes the WEDC was making to correct some of the missteps, including creating a new loan-related position, establishing a credit committee for large loans, hiring a new chief financial officer (who just resigned last month - the third to do so), and purchasing a new computer system to better keep track of loans and tax credits.

WEDC even ordered audits by Financial Institutions Products Corp. and Schenck SC last year.

However, the audit by the nonpartisan LAB provides recommendations on how to proceed from here. It's a good starting point for correcting those mistakes.

There are bound to be some missteps when you replace a department, slash the workforce and give the new public-private organization six months to get up and running and administering 30 economic development programs.

Now that those mistakes have been identified, it's up to Hall and the Legislature to get the right personnel in place, provide them with the right tools to do their job and ensure they follow the law.

The audit said: "WEDC must ensure accountability for, and effective management of, its taxpayer funds."

That, plainly and simply, is the issue here - accountability of taxpayer funds. The WEDC is on notice.

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