Wisconsin Economic Development Corporation to Undergo Changes

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 budget action, companion bills SB 205 and AB 228 were introduced, heard, and passed by the Joint Audit Committee. SB 205 passed the Senate unanimously on June 18 and may be taken up by the Assembly at any time.

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

  • Reporting Requirements: The bill requires WEDC and seven other agencies that have economic development programs to include all of the following additional information in their annual reports:
    • Quantifiable performance measures directly related to the purpose of the program including, when applicable, an accounting of the location, by municipality, of each job created or retained in the state in the previous fiscal year as a result of the program and an accounting of the industry classification, by municipality, of each job created or retained in the state in the previous fiscal year as a result of the program.
    • The amount of tax benefits allocated and verified under the program in the previous fiscal year.
    • An identification of each recipient of a tax benefit allocated and verified during the previous fiscal year.
    • The number of businesses receiving grants, loans, or tax credits that satisfied their reporting requirements, and a list identifying each recipient of a grant, loan, or tax benefit that failed to satisfy the reporting requirements.
    • The results of the annual and independent verifications of the accuracy of information submitted by recipients of grants, loans, and tax credits.
  • Annual Audits: 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.
  • Board Membership: Under the bill, the members of the board nominated by the governor, the speaker of the assembly, and senate majority leader no longer serve at the pleasure of those officials, but serve six−year, staggered terms. All other board members will also serve staggered, six-year terms under the bill, with the exception of Assembly and Senate members on the board who serve six years or their term in office, whichever is shorter. In addition, one of the public members must be a certified public accountant.
  • Lead Director: 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.
  • Executive Officer Qualifications: The bill requires that WEDC’s CEO and any other executive officer of the corporation must have financial management experience, municipal or regional economic development experience, or private sector business experience.
  • Governance Committee: 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, 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.
  • WEDC’s Creation of Other Entities: 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 any private foundation or any other entity, whether operated for profit or not for profit, by requiring the WEDC Board to submit any plan to establish any entity to the Joint Committee on Finance under passive review.
  • Procurement: The bill requires the WEDC Board adopt procurement policies and procedures that specify all of the following:
    • When WEDC is required to publicly solicit proposals from multiple vendors.
    • How WEDC will evaluate proposals from multiple vendors.
    • How WEDC will assess potential conflicts of interest a vendor may have if the vendor sells goods or services to WEDC.

The bill also requires seven other agencies to verify information relating to their economic development programs – grants, loans, and tax credits.