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State Working Harder to Claw Back Funds Intended for Job Creation When Companies Fail to Hit Targets

Eugene DePasquale
Eugene DePasquale / Twitter
• December 26, 2018 4:55 am

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Pennsylvania Auditor General Eugene DePasquale seemed to relish the fact that, for once, he was approaching a lectern to praise rather than criticize a governmental entity.

"As the Auditor General, I know, most of the times, I am having a press conference about some problem that we have found somewhere in Pennsylvania," he said Tuesday. "But today, it's much better news – that one of our audits, along with good work at [the Department of Community & Economic Development] and the governor's office, I think, has led to tremendous progress for the people of Pennsylvania. And I want to personally commend them for it."

DePasquale was following up on an audit report from 2014 in which his department had faulted DCED’s oversight of job-creation programs in the state. At the time, he and his team had issued a number of suggestions for the department to implement to ensure that taxpayer dollars were not being wasted, and on Tuesday, he was happy to report that his recommendations were being followed.

"Pennsylvania taxpayers want to know if they're getting an honest return on the money they invest when the state makes it a point of investing in job creation programs," he said. "And that is because every dollar invested should be doing what taxpayers expect, which is getting the biggest bang for the buck."

According to DePasquale, DCED in 2014 was overseeing five programs that combined to dole out $50 million a year in incentives to businesses to spark job creation. What his department found was that DCED was not sufficiently ensuring that the money was leading directly to new jobs, and it wasn't doing enough to recover money from companies that weren’t complying with the terms of the incentives.

Since then, legislative action has changed the landscape to just two programs doling out $15 million a year, and there are five employees within DCED devoted just to compliance.

The original five programs have "been combined into two main programs, Pennsylvania First, which provides grants and loans to increase business investment and job creation in the Commonwealth, and two, the Pennsylvania Industrial Development Authority, which provides low interest loans and lines of credit for eligible businesses that commit to creating and retaining full-time family-sustaining jobs in certain fields," DePasquale said.

Scott Dunkelberger, the executive deputy secretary for DCED, accompanied DePasquale to talk about what his department had been doing to improve oversight.

"For those companies that received grant funds that don't meet their job projections, we recapture funds that were invested," he said. "And for those companies that receive loan funds and don't meet their job projections, but they pay back their loans, we limit their access to future loans until they meet their job projections. In short, we're not going to pay for jobs that aren't created."

In the past couple of years, the department recovered grants of $150,000 to CEVA Logistics and $200,000 to Kraft Food Group after each company had closed the operations those grants applied to.

DePasquale credited both the administration of former Republican Gov. Tom Corbett and that of current Democratic Gov. Tom Wolf for taking his audit seriously and moving quickly to address the concerns his staff had found.

The job of auditor general is "not just about pointing to problems, but trying to find realistic solutions, and working with, whether it be a state agency or some school district down the line, to try to fix those problems," DePasquale said.