Additional Changes Proposed for WEDC

The Wisconsin Economic Development Corporation has been the focus of much legislative attention since the Audit Bureau’s report on mismanagement at WEDC came out last month. In addition to items included in the JFC proposed 2013-15 budget, numerous bills have been introduced to make changes at the pseudo-agency.

In the height of finance action, companion bills SB 205 and AB 228 were introduced, heard, and passed by the Joint Audit Committee. The bills are now available for both houses to take floor votes on.

Video of the hearing from WisconsinEye.

The bipartisan bills would make the following changes to WEDC policies and procedures:

1. The bill requires WEDC to include all of the following additional information in its annual report:

a. Quantifiable performance measures directly related to the purpose of each economic development program, including an accounting of the location and industry classification, by municipality, of each job created or retained in the state in the previous fiscal year as a result of the program.
b. The amount of tax benefits that WEDC allocated, or verified to the Department of Revenue (DOR), under each program in the previous fiscal year.
c. An identification of each recipient of a tax benefit that WEDC allocated, or verified to DOR, during the previous fiscal year.
d. The total number of recipients of a grant, loan, or tax benefit that satisfied the certain reporting obligations to WEDA and a list identifying each recipient of a grant, loan, or tax benefit that failed to satisfy those obligations.

2. Under the bill, the members of the board nominated by the governor no longer serve at the pleasure of the governor but serve six−year, staggered terms. In addition, the members of the board employed in the private sector and appointed by the speaker of the assembly and senate majority leader no longer serve at the pleasure of the speaker or majority leader but serve six−year terms.

3. Under current law, the governor serves as the chairperson of WEDC’s board. Under the bill, the board must also elect one of its public members to serve as the board’s lead director for a two−year term. The lead director must have significant corporate management experience. Under the bill, the lead director is to chair meetings of the board in the chairperson’s absence, chair the governance committee, described below, serve as a liaison between the chairperson and the other board members, work with the chairperson to ensure adequate committee structure for any committees the board establishes, and carry out other duties as assigned by the
board or the governance committee.

4. The bill further requires WEDC’s board to establish a governance committee. In addition to the lead director, who serves as chair of the governance committee, the governance committee must include two of the board’s public members. The bill directs the governance committee to develop principles for the board’s oversight of WEDC, oversee the board’s operations, recommend membership for committees the board establishes, assist the chairperson to identify qualified candidates to fill vacancies on the board, and facilitate communication between the members of the board and the chief executive officer of WEDC.

5. The bill requires that the financial audit be conducted annually until June 30, 2019, after which point, the financial audit reverts to being conducted every two years.

6. In addition to other powers specifically enumerated in the statutes, current law grants WEDC all the powers necessary or convenient to carry out its purposes. The bill limits WEDC’s power to establish a nonprofit organization by requiring WEDC to submit any plan to establish a nonprofit organization to the Joint Committee on Finance under passive review.

7. Under current law, with certain exceptions, the Department of Administration (DOA) must purchase, or may delegate the authority to purchase, all necessary materials, supplies, equipment, all other permanent personal property and miscellaneous capital, and contractual services for all agencies. DOA, or its delegated agents, may contract for services that can be performed more economically or efficiently by contract. With exceptions, DOA must award orders and contracts to the lowest responsible bidders or most competitive proposal. If the estimated cost of an expenditure exceeds $50,000, DOA must solicit bids or competitive sealed proposals. This bill adds WEDC to the definition of agency for purposes of state procurement so that WEDC is subject to the same laws regulating agency purchasing.

This last item is expected to be amended to something similar to the language included in the JFC’s budget proposal: “WEDC will adopt procurement policies and procedures that specify all of the following: (a) when the Corporation is required to publicly solicit proposals from multiple vendors of goods or services; (b) how WEDC is to evaluate proposals from multiple vendors; (c) how the Corporation is to assess any potential conflicts of interest a vendor may have if the vendor sells good or services to WEDC.”