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State Auditor General Eugene DePasquale
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Job creation programs fall short of predictions, audit finds

Darrell Sapp/Post-Gazette

Job creation programs fall short of predictions, audit finds

HARRISBURG -- The state auditor general said Wednesday that a review by his office found a need for greater oversight of taxpayer-funded job creation programs.

Auditor General Eugene DePasquale said that only 56 percent of contracts associated with the audited programs had created or retained as many jobs as they said they would.

The programs as a whole did create nearly as many jobs as promised, as businesses could miss the mark by a small number of jobs or, conversely, beat expectations.

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The Department of Community and Economic Development, which runs the programs, noted that the businesses whose contracts were examined in the audit created or retained a total of 133,329 jobs, 96.7 percent of the 137,749 jobs they had pledged to create or retain.

“The overall number looks good,” Mr. DePasquale said during a Capitol press conference. “What that can make it difficult to determine is the effectiveness of each individual grant award and what you may need to improve moving forward.”

The audit involved examining DCED records for 600 businesses that received $212.9 million in grants and loans from 2007 through 2010.

Five job creation programs were included in the review, though three of those -- Customized Job Training, Opportunity Grant Program and Infrastructure Development Program -- were consolidated by the Corbett administration in 2011 into the Pennsylvania First program. The other two, the Small Business First program and the PA Industrial Development Authority, will become one program under a 2014 law.

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“DCED will continue strengthening its efforts to support private sector job growth and ensuring transparency and accountability in the expenditure of public funds,” Secretary C. Alan Walker said in a statement.

Of the $212.9 million awarded, $134.6 million was in loans through the PA Industrial Development Authority and Small Business First programs, said Steve Kratz, a DCED spokesman. The other three programs offer grants.

DCED during the audit period imposed interest rate increases on 46 businesses that failed to create or retain all the jobs pledged, according to Mr. DePasquale’s office. DCED also assessed $10.9 million in penalties against 72 businesses awarded grants. As of June 2014, the agency had collected $4.5 million of those penalties, the auditor general’s office said.

First Published: December 11, 2014, 5:05 a.m.

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State Auditor General Eugene DePasquale  (Darrell Sapp/Post-Gazette)
Darrell Sapp/Post-Gazette
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