Audit: Pa. grant management was lax

Audit: Pa. grant management was lax

	Published : Wed, 31 Oct 2007 21:59 By : Agencies Print this Story

HARRISBURG, Pa. (AP) - State officials gave tens of millions of dollars to businesses without adequately checking whether the companies kept their job-creation promises and without recovering the money from failed deals, state Auditor General Jack Wagner said Wednesday.

Wagner's audit period spans the administrations of three governors -- Tom Ridge, Mark Schweiker and Ed Rendell -- all of whom distributed money under the state's Opportunity Grant program as a way to help companies expand in Pennsylvania or lure them to the state.

About 60 percent of the 360 companies that received more than $117 million in grants between 2000 and 2003 did not meet their job promises, Wagner said.

The results are similar to the findings of an Associated Press analysis of Pennsylvania's job-creation deals in 2003-04. The AP's review found that 55 percent of the companies that made some of the biggest job creation promises in exchange for $44 million in grants, loans and tax credits did not meet their part of the bargain.

The auditor general's office looked at the performance of companies that received one slice of the incentive money available under the state's job creation deals -- Opportunity Grants -- and how state officials managed the program.

That report said state officials typically let years go by before checking in with the companies to monitor their progress. By then, some had gone out of business, it said.

State officials also passed on numerous opportunities to get money back when companies fell short of their commitments, Wagner said. From 2000 to 2005, state officials waived more than $49 million in repayments they could have pursued against 187 companies that had received grants dating back to 1996, when the program began. They collected only $3.4 million.

State officials never put a limit on the amount of any single Opportunity Grant that could be awarded, as was required under the law that authorized the grants, he said. And state officials relied on the companies to report their job numbers without independently verifying them, he said.

The Rendell administration embraced most of Wagner's recommendations, but the governor's economic development secretary, Dennis Yablonsky, repeatedly emphasized data that he said showed improvement in the grant program under Rendell.

Yablonsky said his department will put a ceiling on an individual grant amounts and will more actively monitor the performance of grant recipients. He also said the department has pursued repayments more aggressively, collecting more than $10 million, and granted waivers less often to companies that fall short.

Still, he said, the risk inherent in giving incentives to companies means that some will fail. He also pointed out that some companies exceed their job creation commitments.

Under that scenario, nearly all the jobs promised have been created by the companies that received grants and completed their expansions since Rendell's term began in 2003, he said.

'Some are going to overachieve, some are going to underachieve,' Yablonsky said. 'If, overall, the taxpayers are getting close to what's committed, I think that's a good accomplishment for a program of this nature.'