Here & Now

Reed Hall Responds to WEDC Audit

Frederica Freyberg:

Ouch. That might be a response to a scathing state audit of the Wisconsin Economic Development Corporation released this week. That corporation was created by Governor Scott Walker, and was up and running in July of 2011. It replaced the former Commerce Department. WEDC is not a state agency, but is funded with taxpayer money. It’s designed to be more like an economic development business, designed to attract and keep jobs in Wisconsin. But this week, the Wisconsin Legislative Audit Bureau found it’s not a very tight ship. For reference, WEDC awarded more than $517 million in 2011 and 2012 in tax credits, grants, loans and bonding authorization, but the audit bureau reported that some awards were made to ineligible recipients, and that WEDC did not monitor expenditures. It also found that the actual tracking of jobs created or retained is difficult to assess, because required reports on progress and performance on the part of recipients was lacking. What’s more, staff members didn’t specify what they were buying with WEDC bank purchasing cards more than half of the time. The Audit Bureau reported that among the transactions that lacked the description for their purpose were $1,789 for six season tickets to UW-Madison football games, and $120 for iTunes gift cards. Reed Hall stepped in as CEO of the Wisconsin Economic Development Board late last year. He joins us tonight. And thanks very much for joining us.

Reed Hall:

It’s my pleasure to be here. Thank you for inviting me.

Frederica Freyberg:

I’m sorry to preface your appearance with highlights of that audit, but what is your reaction to this?

Reed Hall:

This is the fourth audit we’ve had now of our organization, and I think the Legislative Audit Bureau findings add to our blueprint of the road map that we need to make WEDC better. The Legislative Audit Bureau uncovered many of the same things that the Shank Audit did, the State Bankers Association did, and our own internal audit found. We agree with many of the findings of the Legislative Audit Bureau. Perhaps they interpret the statutes and some of our policies differently than we do, but we’re committed to make our organization a better organization, and to comply with what is necessary in the state of Wisconsin statutes.

Frederica Freyberg:

As CEO, how difficult are you finding it to work on each of these pieces that the audit addresses?

Reed Hall:

Well, there’s a challenge there, but I think what we’re seeing is the challenge arose primarily from the early days of our organization, July of ’11 to June of ’12 was our first year of operation. We’re just about done with our second year of operation. So we’re still in our infancy. We’ve always admitted that that first year had some stumbling blocks there. All of the things that we wanted to have detail for financing were not there. The Legislative Audit Bureau brought out many things that we have answers to, like the football tickets. Those have been held by the governor’s office for the last 50 years. This governor did not wish to have those tickets personally. He sent them over to us. We used those for economic development when we have out of town investors for economic development purposes. But it’s been a tradition of 50 years that the state government had those for economic development. I know other governors have use those tickets. So, that’s one of the things that we take issue with. There’s an issue raised, but our answer isn’t necessarily there. We have good reason for all of those things in documentation.

Frederica Freyberg:

While you were able to give that reason, so thank you. Given the Audit Bureau’s findings that WEDC received only 45% of the contractually required progress reports that specify the numbers of jobs created and retained, can you tell me tonight how many jobs have been created or retained since WEDC went into place?

Reed Hall:

Our numbers from last year, the calendar year, were 24,000 jobs impacted by operations, just from our operations. I mean, there were many more jobs created across the state of Wisconsin, but we touched programs that brought 24,000 jobs impacted.

Frederica Freyberg:

In that year?

Reed Hall:

That’s correct. That’s calendar year ’12.

Frederica Freyberg:

What is the board’s responsibility in all of this?

Reed Hall:

Well, a board is always responsible for the business and affairs of the corporation under the Wisconsin law. I think they rely on us to give us current, accurate information, which we’re committed to. I’m not sure that always happened, and part of that was because our computer programs were not sufficient to provide that accurate information on our finances, et cetera, last year. We’re committed to changing that with a new computer system. We hope to hire a new CFO very soon, and we just added our vice president risk administration person, which is a banking position. We’re converting our organization to look more like a bank, and will be run more like a bank going forward.

Frederica Freyberg:

Do you think going forward that it will be even more successful in generating jobs in Wisconsin, once you iron out all of these issues?

Reed Hall:

Absolutely. Now, our financial issues, the lack of documentation, I don’t think has truly impacted lack of creation of jobs. Our programs are solid. We’re doing that. We haven’t documented everything that we need to internally. I can’t say that that has led to less job creation. I think our programs are still creating jobs. As I see the Wisconsin economy, housing starts are up, new houses are up, sales are up, auto sales are up, truck sales are up. I think Wisconsin is on the edge of something very positive here in our state. I’m looking forward to helping Wisconsin move forward.

Frederica Freyberg:

Reed Hall, thanks very much.

Reed Hall:

Nice to be here, thank you.