Friday, January 21, 2011

IEDC Jobs Audit Findings Confirm Segal's Reporting

WTHR's Bob Segal continues his excellent investigative reporting on the Indiana Economic Development Corporation's grossly inflated job creation claims under Gov. Mitch Daniels. His continuing series of reports has poked many holes in the IEDC's often-cited 100,000 jobs-created claim. Now he has an audit conducted for the agency that confirms the findings of his investigation, although the Crowe Horwath audit performs hat tricks to try to convince you the numbers don't really mean what they otherwise indicate. Segal reports on the tricky audit numbers:

Only a fraction of job commitments announced by the Indiana Economic Development Corporation have resulted in actual Indiana jobs, according to an independent IEDC program review obtained by Eyewitness News.

The review, presented to the IEDC audit committee earlier this month, is part of an audit that examines how state job numbers are collected, tracked and announced by IEDC. The numbers presented in the audit offer a stark contrast between the job realization figures cited by Governor Mitch Daniels and his job creation agency and those reported by auditors and WTHR. It also presents statistics in a manner that allows state leaders to still cite high levels of job creation, even though the realization figures suggest otherwise.
The "Summary of Incentive Program Review" prepared by audit firm Crowe Horwath examined 597 job-creation projects outlined in IEDC annual reports from 2005 to 2009. The projects were listed as "Indiana Economic Successes" that would bring new jobs to Indiana.
According to the report, those projects were expected to create 44,208 jobs by late 2010 and, based on the most recent information available to auditors, have so far resulted in 37,640 actual jobs – a realization rate of 85%.
But the state's job realization rate is actually much lower than 85%, according to additional data reviewed by WTHR.
The numbers cited above are based solely on data for "reporting companies," and they do not include job data for 200 other projects also listed as "Indiana Economic Successes" in IEDC annual reports. Including those projects, as well, the number of newly-created jobs the agency had anticipated to materialize by the end of 2010 is 57,088 (not 44,208), according to the report. Using that figure, IEDC's job realization rate is 66%.
And nowhere does the audit report mention the 98,683 total new job commitments announced by IEDC from 2005 to 2009. Using that number – which IEDC and the governor have repeatedly promoted in their press releases, speeches and annual reports – the audit data suggests, so far, only 38% of jobs announced by IEDC have resulted in actual jobs. While that percentage is expected to increase in coming years (some of the companies are not expected to fulfill all of their job commitments for several more years), the overall numbers show IEDC's real job realization statistics are much lower than the agency portrays to the public by citing far more limited data.
Did you catch that? Crowe Horwath tries to bolster the IEDC job claims by suggesting an "85% realization rate" using  44,208 jobs-created as the benchmark, but as Segal notes, the audit conveniently omitted job data for 200 job-creation projects identified in IEDC's annual reports during the reporting period as successes. Throw in those numbers, the number jumps to 57,088 and the realization rate drops to 66%. And if you use the 98,683-jobs number often touted by IEDC, the realization rate is only 38%. Unbelievably, the Crowe Horwath audit summary states "there is no evidence that IEDC has inflated job projection or job project figures." Instead, the audit summary claims "concerns with job creation figures are the result of inconsistent use of terminology." It recommends IEDC "clarify terminology internally and externally by developing a glossary of standard terms and definitions used by IEDC staff to evaluate and report job creation figures." How could any reputable audit firm expect us to take their work seriously when they engage in this kind of deceptive audit reporting? I dare to think how much of our taxpayer money was spent on this contrived audit to whitewash the actual deception taking place.

The fact IEDC chose Crowe Horwath to perform the audit should come as no surprise. IEDC's Chairman Mitch Roob has very close ties to Crowe Horwath's Ann Lathrop. The two both worked in the administration of former Mayor Steve Goldsmith and they all worked together at ACS. Roob, while serving as Secretary of FSSA, steered the massive welfare privatization at the agency to a team of companies that included ACS. While the state eventually canned the leader of that team, IBM, after the privatization effort failed miserably, resulting in protracted and costly litigation, FSSA continued to use the services of ACS and even hired the law firm that lobbies for ACS, Barnes & Thornburg, to represent the state's interest in that litigation. Later, Lathrop's husband, Mike Gargano, a former consultant for ACS, was installed as FSSA's new Secretary. So you can see how they have the wagons pretty much circled with their incestuous relationships. If the IEDC wanted to bolster public confidence in its work, Crowe Horwath should have been the last firm it used in an attempt to redeem itself with this suspect audit because of the Roob-Lathrop connection. Roob and other IEDC officials are refusing to discuss the audit findings with Segal, and he has still not been given access to the actual audit Crowe Horwath conducted; only its findings. Instead, Roob sent a letter to Segal accusing him of "blatantly misrepresenting the information and intentionally creating an incomplete picture of Indiana's economic development successes." Unbelievable.


varangianguard said...

Don't fret too much.

"Circle the wagons!" seems to be the order of the day in professions other than "career politco-bureaucrat".

You forgot to mention that Mitch Roob promised to address these questions to a reporter, then sent out a flack instead to state that Roob "had called it a day".

Lordy, but senior management in the Daniels administration must be strenuous labor? Nah. Just more non-accountability.

Bradley said...

At the Unemployment Insurance Board meeting two Wednesdays ago, an IEDC staffer was stating IEDC's website address to the board and said "". He was corrected that it is ".gov", and politely said "We're quasi, but not that much." The DWD deputy commissioner (1 of the 7! DCs they now have) over the WorkOnes laughingly said, with a big smile on his face, "Not yet!" It was heart-warming that well-paid member of DWD is hoping IEDC becomes completely private (much as they have made the "WorkOne partners" of DWD private entities with little accountability and few performance measures that have to be met and little accountability of how money is spent).

If we give them too much time and power, the IEDC could have tons of taxpayer dollars and yet be a completely unaccounted-for private agency so they would not have to worry about the pesky Bob Segalls of the world who dare challenge their party-line stories of grandiose accomplishments to boost their political standing. If only all of our public agencies could be private so the governor could do as he pleases with no one to watch over him!

Unknown said...

Something has to give here. On one hand you have Mitch Roob accusing WTHR’s report of “blatantly misrepresenting” IEDC job creation statistics and on the other Bob Segall’s WTHR team won a prestigious Alfred I. DuPont Columbia University Award for this same investigation last month. I have to go with WTHR on this one and congratulate them on a fine job of investigative reporting and for bringing the issue of questionable local government statistics to the forefront.

As was reported in several local blogs, Mayor Ballard recently released the City’s own glowing version of the IEDC job creation report. In it, the City announced that Develop Indy had 8,700 job commitments in 2010. Former Deputy Mayor Robert Vane spun the numbers recently on Fox 59 and stated the Ballard “created” 8.700 jobs last year. As pointed out by Kip Tew in that same Fox 59 Faceoff debate, the City has lost over 35,000 jobs since Ballard took office. Again, something has to give here. Perhaps WTHR needs to investigate Ballard’s job creation numbers as well.

Citizen Kane said...

Now, when is someone going to blow apart the false claims (lies) about economic impact bandied about by the likes of the ICVA, IDI, the CIB, the mayor and all their sycophants?