- Associated Press - Wednesday, December 10, 2014

HARRISBURG, Pa. (AP) - More accountability is needed in programs that provide state grants and low-interest loans to companies that promise to create jobs, Pennsylvania’s top auditor said Wednesday

Auditor General Eugene DePasquale released a special performance audit of $213 million in grants and loans awarded to 582 employers between 2007 and 2010. The audit examined Department of Community and Economic Development records to judge how well those companies complied with their contracts since then.

DePasquale said his auditors found that 56 percent of the businesses created or retained all the jobs they promised in exchange for state assistance.

“That means that nearly half of the businesses we reviewed failed to create or retain the jobs as promised,” he said.

He said it is “nearly impossible” to gauge the effectiveness of the five programs in question because the department has not set performance goals for each program.

The department claimed a nearly 97 percent success rate, based on data showing businesses created or retained 133,329 jobs of the nearly 138,000 promised.

The audit report “provides constructive recommendations; however, the report also contains a number of generalized statements rather than facts consistent with a typical audit,” C. Alan Walker, the department’s secretary, said in a written response.

For 46 businesses that received loans but failed to deliver all the promised jobs, the department imposed interest rate increases. For 72 companies that received grants but did not keep their promises, the department assessed $10.9 million in penalties. It had collected $4.5 million of that amount as of June.

DePasquale also recommended requiring businesses to provide payroll records to verify their job numbers and making the department’s annual financing strategy report more thorough and transparent.

Companies are generally given three years to create or retain the promised jobs, although under certain circumstances deadlines may be extended or penalties waived, according to the audit report.

The debate over how to measure the success of economic-development programs has not changed much over the years.

In 2007, The Associated Press reviewed Community and Economic Development department records for 56 businesses that were awarded a total of $44 million in incentives in 2003-04 and subjected to state compliance audits. Although only 25 - less than half - of those companies hired the number of workers they promised, state officials pointed out that those few had greatly exceeded their commitments. That pushed the total number of jobs added by all 56 companies to 9,654, or 90 percent of the total 10,917 promised, state figures showed.

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