The secretary of Gov. Scott Walker’s economic development agency assured the Legislature’s budget committee Wednesday the agency has accounted for recent mismanagement of funds and increased transparency measures would continue moving forward.
Last year, the Wisconsin Economic Development Corporation lost track of roughly $50 million in loans to businesses, some of which were overdue. WEDC Secretary and CEO Reed Hall, who was appointed after the problems were revealed, said his agency has taken action to stop and prevent similar problems from happening again.
“All of our loans are being followed aggressively,” Hall said. “There’s nothing that’s being left on the wayside.”
Interviews for a new chief financial officer are finishing this week, and Hall said he hopes to have someone on board in about two weeks. WEDC is also recruiting for a new vice president position that would manage credit risks, he said.
Walker announced earlier this year Hall would stay on permanently, after filling in as interim secretary when the former WEDC Secretary and CEO Paul Jadin left for the private sector shortly after news on the loan problems broke.
Among the major changes at WEDC, Hall presented the corporation’s transition to a new computer system in about nine months. The system, which would replace one more than 20 years old, would help make WEDC more “transparent and attentive,” he said.
Lawmakers from both parties thanked Hall for taking responsibility on problems that came up before he joined the agency.
Rep. Jon Richards, D-Milwaukee, however, said WEDC has traditionally not been transparent. Richards asked for further reporting requirements from the agency, which he said were not included in the budget.
“You’ll have to forgive me if I’m a little skeptical about what you’re saying and what you’re doing because I think your agency has been marked by secrecy and mismanagement,” Richards said.
Hall said he did not disagree with Richards’ suggestions and assured him that nothing he said offended the agency.
But WEDC Deputy Secretary and Chief Operating Officer Ryan Murray said the agency already has numerous reporting and audit requirements other agencies do not have, such as a complete audit every two years.
“We are, I think, easily the most scrutinized and the most heavily reported agency in state government,” Murray said.
Sen. Luther Olsen, R-Ripon, asked where WEDC sees itself in the world of credit, as its loan portfolio is smaller than other banks. Hall said WEDC has a focus on startup businesses, which banks do not, as well as giving tax credits.
As of right now, Olsen said their acceptable 5 percent current loss ratio is higher than banks, where he said auditors “are there in a heartbeat” if their ratio touches 1 percent.
Two other Democrats asked whether funding to WEDC is the best investment for the state. Rep. Cory Mason, D-Racine, also asked whether some of that money would be more productive in education and workforce development.
“We wrestle with the same thing,” Hall said. “Every time we think maybe we don’t need that to create jobs in Wisconsin, we look at Texas and see what they have to lure Wisconsin businesses away. Part of what we’re doing is not creating jobs but retaining jobs in our state.”