Audit: WEDC didn’t meet job goals, waited years to recover money from businesses not meeting requirements

Wisconsin’s top economic development agency isn’t meeting job creation goals, had incorrect data posted on its website and didn’t give out all of its available funding, according to a report from the nonpartisan Legislative Audit Bureau.

The audit report states that online data showing “the numbers of contractually required jobs created and retained” from grants issued by the WEDC in fiscal years 2020-21 and 2021-22 were incorrect.

“The online data indicated 142 award recipients had created 11,521 jobs and that 212 award recipients retained 36,720 jobs, but WEDC’s files indicated these recipients actually had created 11,340 jobs and retained 35,174 jobs that met contractual requirements,” the report says.

Auditors said they raised similar concerns about jobs data accuracy in the agency’s three prior reports on the WEDC.

The WEDC was created after former Gov. Scott Walker dissolved the state’s Department of Commerce in 2011. Since then, the report states, the agency has only created an estimated 67 percent of the 26,124 jobs it planned to help spur.

The report found WEDC failed to allocate all available funding for job creation during the 2021-22 fiscal year. At the end of June 2020, the agency had a total of $69.7 million on hand for economic development grants, but $13 million was left unspent.

Auditors also found the WEDC took too long to revoke tax credits awarded to businesses that didn’t meet job creation goals. In particular, the agency did not revoke $2.6 million in tax credits from 20 awards closed out between May 2022 and May 2023 “even though these recipients did not meet their contractual obligations.”

“WEDC waited an average of 3.6 years to close these awards,” the report said.

The audit includes 26 recommendations for the public-private agency. Auditors recommend WEDC modify policies to require board meeting materials be posted online, provide more accurate data in its reports, determine the total amount of past-due loans within six-month periods, and create policies requiring it to revoke tax credits sooner when businesses don’t meet job goals.

WEDC Secretary Missy Hughes, who was appointed to lead the agency by Gov. Tony Evers, responded to the audit in a letter dated Aug 25. Hughes said the agency will provide a plan addressing the recommendations to the Legislature’s Joint Legislative Audit Committee by Dec. 6.

Hughes said WEDC financial reporting and controls “continue to be strong” and pointed to an independent audit in 2022, which “found no internal control deficiencies in our financial reporting.”

State Rep. Robert Wittke, R-Racine, is a co-chair of the audit committee. He said there’s a lack of transparency and the WEDC is lax in its requirements for proper documentation to support the loans, grants and tax credit it gives out. He said he’s also concerned the agency isn’t being transparent about actions its board takes.

“They have a situation where they’re not even going along with statutory requirements to post information about their meetings and documentation and so on,” Witke said.

He said the committee will be following up.

“We’re going to keep after that until I see the (WEDC’s) plan, until the Audit Bureau can review the plan and say, ‘Yes, it meets what we want,’” Witke said.

In Jan. 2021, Assembly Speaker Robin Vos, R-Rochester, appointed himself to the WEDC board, but stepped down the following year. Last December, Vos called the agency an “abject failure” that isn’t competing with other states to attract large employers.