MADISON, WI (SPECTRUM NEWS) – A recently released audit of the state's economic development agency found problems with how it tracks job creation and awards given to companies.

The Wisconsin Economic Development Corporation (WEDC) isn't a state agency, but it is heavily funded by the state.

The quasi-private agency is probably best known for negotiating the state's deal with Foxconn.

WEDC, which was created in 2011 under former Republican Governor Scott Walker, offered more than $3.1 billion in tax credits, grants, loans and bonds in an effort to spur job creation during the fiscal year 2018.

The audit was done by the Legislative Audit Bureau (LAB) from July 2017 through December 2018, before Governor Tony Evers took office.

The LAB found only about 35 percent of the required jobs had actually been created by 68 recipients of tax credits and loans from WEDC through the fiscal year ending in June 2018.

The report also shows WEDC did not comply with statutes and its contracts by giving tax credits to companies that created or retained jobs filled by people who did not perform services in Wisconsin or were not residents of the state.

In one case, WEDC gave nearly $61,000 dollars in tax credits for creating 261 jobs filled by people living in 36 states not boarding Wisconsin.

In a letter responding to the audit, WEDC says it interpreted the law to allow for credits to be awarded to companies creating jobs out of state based on a difference of statutory interpretation. The CEO told the Associated Press that gives the agency flexibility to attract companies, especially with more people working from home.

“No agency likes it when we come in and tell them how to do something,” State Representative Melissa Sargent (D-Madison) said. “It doesn't matter what agency it is.”

Sargent is a ranking Democrat on the Joint Legislative Audit Committee.

“These are hard earned tax dollars that ordinary people across the state of Wisconsin are giving back to us and expected us to invest in good ways for them and their families,” Rep. Sargent said. 

WEDC provided the following statement from CEO and Secretary Mark Hogan to Spectrum News:

“WEDC thanks the Legislative Audit Bureau for its thorough review of our program and financial operations, and for acknowledging the many improvements WEDC has made over the past two years. WEDC is committed to the highest levels of transparency, accountability, and operational excellence, and these goals are now embedded in our culture and have made us a stronger organization. We look forward to reviewing LAB’s recommendations with the Audit Committee of our Board of Directors and establishing an action plan that addresses each of them.”

However, the legislature could also take advice from the audit bureau, which offered several ways statutes could be modified.

“With the new governor, with the makeup of the legislature the way it is, with people on different sides of the aisle having similar sentiments and feelings, I am hopeful we can make some corrections here,” Rep. Sargent said.

In an interview with the Associated Press, Republican State Senator Rob Cowles, who co-chairs the legislature's audit committee, said it was disappointing that “new emerging issues” continue to be uncovered by audits. 

Spectrum News reached out to Senator Cowles but did not hear back.

According to the audit, WEDC could have also required loan repayment of $4 million and revoked nearly $414,000 in previously awarded tax credits.

The agency says there was a time lag from when the award ended and when the revocation process began, acknowledging the delay.

WEDC was also found to have given $462,000 in tax credits to one company that actually lost 17 jobs.

The analysis says WEDC can't know how many jobs were created or retained because the agency did not collect enough information from award recipients.

In his response letter to the audit bureau, Hogan noted there have been fewer recommendations (24 in the May 2015 report, 19 in the May 2017 report, and now 10 in the current report) from the bureau upon each audit.

In their analysis, the audit bureau did acknowledge WEDC's improvement since the last audit and their compliance with many recommendations.

During his campaign, Democratic Governor Tony Evers was critical of the agency. The Republican-controlled legislature would go on to pass a law during last year's lame-duck session, before Evers took office, that prevented the governor from replacing WEDC's CEO until September.

Spectrum News reached out to the governor's office for comment. A spokesperson said a statement had not been drafted.

As for WEDC, Hogan said in his letter to the LAB that WEDC will work with the Audit Committee of its Board of Directors to go over the audit bureau's recommendations and come up with a timeline for implementation.

Hogan expects changes to be “substantially implemented” by the end of the year.