Monday, September 29, 2014

What Wisconsin media chooses to miss- more WEDC failure

With all the recent GOP-aganda about Mary Burke’s campaign lifting job ideas from other candidates (that the same campaign consultant wrote about earlier), may I remind you of an example of Scott Walker and WisGOP copy-catting when it came to jobs strategies? That would be the train wreck known as the Wisconsin Economic Development Corporation (WEDC).

As a former resident of the Hoosier State, I called out WEDC from the start, because I recognized that it was a carbon copy of Mitch Daniels’ IEDC in Indiana (the “EDC” even stands for the same words). IEDC was set up in 2005 and has been rife with cronyism, taxpayer dollars flying out the door without accountability, and “overpromising and underdelivering” when it came to job creation.

Then you look at Wisconsin in 2014, and WEDC has the exact same issues, except if anything, it’s worse here. Here’s a WEDC scandal that WKOW’s Greg Neumann has been on top of for the past few weeks, but one that is strangely being ignored by many state media outlets. It’s the continuing saga of the Scott Walker donors - WEDC aid recipients at Plexus Corporation and their sketchy descriptions as to why they cut Wisconsin jobs. This was also the company that had a Walker appearance to describe alleged “job expansions” and WEDC awards during the 2012 recall election campaign (raise your hand if that sounds familiar), and then cut jobs within a few months of that event.
In the past week both Politifact Wisconsin and Gov. Scott Walker have stated that Plexus Corporation never outsourced jobs after receiving WEDC tax credits, but simply lost business to a competitor that replaced their jobs overseas.

All of the evidence suggests that fact is indeed fiction, but despite that, the U.S. Department of Labor is reopening its investigation into whether or not 116 workers should have received Trade Adjustment Assistance (TAA) benefits after Plexus replaced their jobs overseas….

Late Friday afternoon, a U.S. Department of Labor spokesperson told me the investigation was reopened due to an email from a reporter at the Milwaukee Journal-Sentinel (who runs Wisconsin Politi-“fact”) . The newspaper reporter sent the Department of Labor some questions for a story, along with a copy of the Plexus Commitment To Wisconsin press release.

The press release ultimately prompted TAA officials to take another look at the case.

Ironically, the latest entry includes an explanation of the TAA’s original findings that is even more detailed than before, stating: “During the investigation, the Department received information from the subject firm (Plexus) confirming a shift of production by the subject firm of an article like or directly competitive with the printed circuit boards produced by the workers from Neenah, Wisconsin to a foreign country.”
Neumann mentions that Gov Walker, as Chairman of the WEDC Board, was repeating Plexus’s line about how they first lost a customer, and then the customer outsourced, so it really wasn’t their fault that the outsourcing happened (I’m sure the donations Plexus executives have made to the Friends of Scott Walker has nothing to do with his stance). Regardless, the WEDC Board still passed a rule change last week requiring new regulations on companies that get taxpayer dollars through WEDC, in light of Plexus’ outsourcing job cuts.
Companies that outsource would also have to disclose that information in their annual reports to WEDC, while new companies seeking funds would have to sign a document stating no WEDC money will be used to outsource Wisconsin jobs.

The measure also states that companies who accept awards, then later reduce their net number of jobs in Wisconsin, cannot get any more actual money until they get their workforce back to where it was when the award was originally given out.

Plexus was awarded a $15 million tax credit in 2012 and has already received $4.7 million. But since that time, the company has dropped its Wisconsin workforce by over 300 employees. Plexus won't get any more money until the company returns its workforce returns to its original level.
Also discussed in that WEDC Board meeting was the agency upcoming job creation goals. Assembly Dem leader Peter Barca serves on that Board, and described the goals for WEDC’s “number of jobs to be impacted,” which basically admitted that WEDC is ineffective at creating jobs.

And you gotta love the Walker Administration using the word “impacted” for jobs and WEDC- a vague term that could be used in a variety of ways to describe certain activity. There’s a real vote of confidence isn’t it?

The WEDC Board meeting followed a report released earlier this month on WEDC from the Legislative Audit Bureau.Among the findings was that WEDC had “made progress” in reducing the amount of taxpayer-funded loans to corporations that it couldn’t track. But not necessarily because they had improved oversight.
As of June 30, 2013, the outstanding loan balance for which WEDC was responsible totaled $60.5 million. From June 30, 2013, through December 31, 2013, the total potentially uncollectible loan balance decreased by $7.7 million, including $6.6 million because WEDC wrote off loans it turned over to the Department of Administration, amended loan contracts, and forgave loans that had been considered delinquent as of June 30, 2013, because WEDC staff did not complete forgiveness reviews.
In other words, WEDC just sent the information off to the DOA to be “written off”, with those millions in taxpayer dollars thrown down the drain. Oops, guess that gamble just didn’t pay off.

Also worth noting in the report was this passage,
Administrative expenditures increased from $11.2 million in FY 2011-12 to $15.1 million in FY 2012-13 primarily due to increases in expenditures for staff salaries and fringe benefits and marketing. Grant expenditures decreased from $15.2 million in FY 2011-12 to $14.7 million in FY 2012-13. The amount of grant funds WEDC expends in any year may vary and is related to when costs are incurred by grant recipients. WEDC indicated that 62 grants were awarded in FY 2011-12 and 81 grants were awarded in FY 2012-13.

In FY 2012-13, 24 WEDC employees received merit awards totaling $77,700. Merit awards, which ranged from $1,000 to $5,000 per award, were given to employees across multiple WEDC divisions. In addition, merit awards totaling $7,500 for three employees were approved in FY 2012-13 but were paid in FY 2013-14. We note that the approval of merit awards for these three employees was not documented in accordance with WEDC’s procedures.

In addition to merit awards, WEDC managers may give their employees recognition awards of either one or two $25 gift cards. Employees select the desired gift card(s) from a predetermined list of entities. Employees are eligible to receive multiple recognition awards during the year. In December 2012 and January 2013, WEDC staff purchased 87 gift cards totaling $2,175 from six entities. In FY 2012-13, 12 WEDC employees received 21 gift cards, with a total value of $525, as recognition awards. WEDC staff indicated that they performed a review, implemented physical controls, and separated duties related to gift cards in early 2014.
We will further review WEDC’s procedures related to gift cards in our next biennial audit.
Given that a former WEDC employee accused the organization of being more concerned with propping up Gov Walker than creating jobs, sure makes you wonder what actions led to the merit awards and gift cards, eh?

And what have we gotten with this strategy of funneling job incentives to this crony-laden, sketchy organization? The worst job growth in the Midwest, and more money being paid on WEDC staff salaries than going to actual companies.

So what the hell’s going on out there, and what the REAL goal of WEDC is? You’d think a few more journalists other than Greg Neumann would want to find out. Strangely, “No Quarter Journal-Sentinel Watchdog” Dan Bice refuses to go after WEDC’s copy-catting, double-talk and underperformance. Is it because Danny hasn’t gotten the order from JournalComm management and hasn’t gotten the tips from his right-wing sources, so he won’t report on it? Inquiring minds such as me and Mike Plaisted want to know.

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