Saturday, December 1, 2012

WEDC = Logisticare- the more we know, the worse it looks

I've written several times about the failures of the Wisconsin Economic Development Corportation (WEDC) in the 21 months since the Walker Administration and the WisGOP Legislature signed off on it in 2011. For a refresher, you can go back here to see how they lost millions in state loans as well as here to see how they illegally used HUD funds and funneled money to favored companies.

The big news from yesterday is that it turns out that corporate welfare was failing even more than we already knew, as more than $12.2 million in state loans are past due, not the $9 million that was first reported, and Page 4 of the WEDC report says 70 of 187 loans intended to "support business start-up, job retention, and business expansion" are past due (just under 37.5%).

So why did this data get lost and all of these taxpayer-funded loans be allowed to slip away? Check these quotes from new WEDC CEO Reed Hall and 30-year-old lifetime GOP hack and WEDC No. 2 Ryan Murray.
"I think when you go from 300 staff in the (former) Department of Commerce down to approximately 50, there's inherent staffing issues in that," Hall said in the interview. "Honestly, I don't think enough attention was probably paid to this part of WEDC's function. It seems clear now ... there's certain fundamental loan officer functions that probably got neglected for a while."

Murray said the sudden drop in staffing was partly due to about 200 workers transferring to other agencies that took over the former commerce department's environmental and building and safety regulatory functions. And he said that of the 100 staffers remaining, about half retired or transferred to other agencies that would allow them to retain their state benefit packages.

Staffing at WEDC, which was created in July 2011, is now at about 90 employees, Murray said.
So cutting the staff by more than 80%, throwing new duties and workers to other places without a transition plan in place, and replacing civil servants with years of experience with hacks and other crony newbies didn't work out for ya? As this guy might say,

"Oh, you think so, Doctor?"

Wonderboy Murray goes on to say "Simply put, WEDC did not appropriately prioritize its time or the personnel needed to document certain financial processes," and says discussing the software to track the loans were "put on the back burner." Priorities, you know. Like promising $11.7 million in WEDC tax breaks to companies before they won bids that were allegedly open to competition, for example.

In a classic Friday afternoon news dump, WEDC threw out a report detailing WEDC's attempts to account for the missing state loans and the number of loans that are now past-due. As part of these "corrective" measures, WEDC is going to again use taxpayer dollars to get a third-party to do its oversight work, and I say again, because WEDC's first contractor didn't quite work out.
Consulting firm Titus, who was hired to help WEDC create the systems and processes necessary to ensure reliable financial reporting, was not properly managed, resulting in unclear project definitions and confusion among stakeholders....

Titus’ contract has been cancelled, and the company’s work product is being reviewed.
So much like with Logisticare, when something fails in Walker World, try the same thing again with someone else.
Underscoring the seriousness with which we take our responsibility to address these outlined matters and any others requiring attention and action, we have engaged Financial Institution Products Corporation (FIPCO), a wholly-owned subsidiary of the Wisconsin Bankers Association, and accounting firm Schenck SC to conduct independent, third-party reviews of our financial systems and processes.

Schenck’s audit of WEDC’s financials for the 2012 fiscal year is scheduled to be complete by WEDC’s December board meeting. FIPCO will review our loan portfolio and recommend risk control policies and procedures appropriate for an organization such as ours. This review is also scheduled for completion by the board meeting.
Well first, that's assuming that the WEDC board is told of the results, unlike what happened in late September, when WEDC Chair Walker said possible HUD sanctions against WEDC was a "need to know" situation, and that the Board didn't need to know. And with these guys, you know that's a big IF. But maybe the Walker boys have learned lessons from Logisticare and the 21 months of WEDC, and are going to change course in the next couple of years.

Oh wait, Page 54 of the recent State Budget Requests shows WEDC is asking for nearly $63 million in state tax dollars for the next 2 years, not much different than what they get now. And the WEDC document confirms that that the Walker Administration doesn't think having an unaccountable organization handing out tax dollars is an issue.
First, let us state unequivocally that WEDC’s mission of supporting economic development and job creation through bold initiatives aimed at propelling Wisconsin’s economy forward remains intact. Moreover, we have uncovered no irregularities that signal misconduct of any type. (nooo, of course not. These failures are all accidental and not a natural byproduct of a failed setup.)

The lapses we’ve identified are isolated to the documentation and reporting processes within WEDC’s financial operations, and there is no evidence that they affect the functional aspects of WEDC’s programs. While serious, these problems are fixable, and they should not discredit the many successes WEDC has achieved. WEDC has successfully created a nimble, efficient, customer-focused organization—one that is better positioned to meet the needs of businesses operating in an intensely competitive global economy than the old Wisconsin Department of Commerce.
Riiiight, because falling behind all of our neighbors in the Midwest is a record worth hanging your hat on, and it's not like you didn't know the WEDC model had the same kind of fails when it was put in place by Mitch Daniels in Indiana.

Yep, they're doubling down on this just like they're doubling down on the Logisticare model, and the crony capitalists and their puppet legislators will keep on plucking the WEDC chicken until we boot them out and put a stop to it. And I have little doubt that this will be the last time I discuss WEDC's epic fails on this page.

1 comment:

  1. Reed Hall is a big time tea party advocate. He was the former head of the Marshfield Clinic as well. Funny how he was okay with government subsidizing the growth of the clinic and helping to put money in his pocket, but now all of a sudden, it's a bad thing.