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They paid how much? A closer look at WEDC compensation

By   /   May 2, 2013  /   5 Comments

By Ryan Ekvall | Wisconsin Reporter

MADISON – The Wisconsin Economic Development Corp. was created, in part, to shed the encumbrances of the public sector in its mission to help Wisconsin businesses develop and create jobs. The public-private partnership, its creators assured, would be nimble and responsive to business needs, while shedding the skin of government regulations and bureaucracy.

An audit released Wednesday shined blinding light on operational and financial mismanagement at WEDC. You won’t find words like “nimble” and “responsive” in describing WEDC in the Legislative Audit Bureau report.

In one area in particular, the economic development agency hasn’t relinquished the accoutrements of the public sector: Its claim to government pensions.

WEDC employees, although not considered state workers, earn taxpayer-funded retirement through the Wisconsin Retirement System and all the fringe health benefits offered to state employees.

How do the other benefits stack up on the quasi-public side of the fence?

An audit finds the Wisconsin Economic Development Corp. handed out merit pay and other perks even as the agency was plagued by mismanagement and accountability problems.

An audit finds the Wisconsin Economic Development Corp. handed out merit pay and other perks even as the agency was plagued by mismanagement and accountability problems.

WEDC employees receive 11 vacation days compared to the nine offered by state agencies. WEDC employees don’t get as much paid time off as state workers, the audit found. First year workers receive about 240 hours of leave time, 46 hours less than first year state employees.

A spokesman for WEDC said he could not discuss personnel policy or details. Wisconsin Reporter on Thursday filed multiple open records requests for the personnel documents.

The Legislative Audit Bureau found that as of November 2012, eight WEDC officials received salaries of more than $100,000, with a ninth at $98,500. The audit notes that several top level position holders at WEDC are paid less than their industry peers.

By comparison, at the former Wisconsin Department of Commerce, the state agency that Gov. Scott Walker and the Republican majority replaced with WEDC in 2011, just two employees topped $100,000 in 2010, according to payroll data collected by Wisconsin Reporter through an open records request.

WEDC CEO Reed Hall, reportedly was set to make $120,000 when he took the full-time position in January 2013. In February, he received a $65,000 raise.

The agency has around 90 employees, including regional account managers through the state.

About a fifth of WEDC employees received “merit awards” from management, the audit notes. Board members at WEDC may not have even been aware of the policy.

“We found that WEDC’s full governing board has not always been informed about certain personnel policies and practices, including the amounts and types of compensation and fringe benefits provided to WEDC staff,” the audit states.

In December 2012, 17 staff members received merit awards totaling $59,500. Six of those awards were for $5,000 each.

Melanie Conklin, a spokeswoman for Assembly Minority leader Peter Barca, a board member at WEDC, told Wisconsin Reporter the Kenosha Democrat was unaware of the merit award policy at WEDC.

Several Democratic lawmakers have called for Walker to step down as chairman of WEDC.

“The governor either needs to put his presidential aspirations aside and deal with the problems at WEDC or he should step down as WEDC’s chair,” said Sen. Dave Hansen, D-Green Bay, in a statement. “If that requires a change in the law then the Legislature should step in and make the necessary change.”

The audit found WEDC did not have its own personnel policies until six months after it was fully operational and “did not develop detailed personnel policies until almost 15 months after it was fully operational.”

WEDC’s Compensation and Benefits Committee approved a manual including policies for staff bonuses and performance-based pay, the amount of paid time off, use of WEDC-owned vehicles and reimbursement for relocation expenses. But that was not presented to the full board before implementation, according to the audit.

The audit also notes, “As of October 2012, WEDC indicated that four staff had been compensated for relocation expenses in moving to Wisconsin, including:

  • one individual who was offered up to $7,000 to cover the costs of moving, storage, and one month of this individual’s lease payment on a residence in Alabama  
  • one individual who was offered up to $10,000 to cover the cost of packing and transporting household items, as well as a $5,000 performance bonus to support transition expenses incurred during the transition from Portland, Oregon, to Eau Claire, payable after a 90-day probationary period
  • one individual who was offered up to $7,500 to cover the cost of packing and transporting household items, as well as $5,000 to support transition expenses incurred during the move from Missoula, Montana, to southwest Wisconsin, payable after a 90-day probationary period; and
  • one individual who was offered up to $5,500 to cover the cost of packing and transporting household items from Iowa

Unlike state agencies headhunting for out-of-state employees, “This is an instance where as a corporate body politic we weren’t required to have a competitive bidding process,” said John Gillespie, spokesman for WEDC.

At WEDC, many employees receive company iPads and quasi-personal iPhones.

The audit found employees “purchased iPhones, paid the monthly service charges, used the iPhones for personal use, and retained the iPhones after terminating employment.”

WEDC reimbursed 46 employees as of November up to $150 each to break existing cell phone contracts, up to $210 to purchase an iPhone, up to $35 to activate the iPhone and $89 a month to cover 70 percent of the cell phone bill.

WEDC figured employees would use the phones about 30 percent of the time for personal use.

Even with the iPhones, auditors found that one WEDC staff member made $208 worth of long-distance calls over a two-day period at a hotel in Texas.

Among other notes, the audit found $1,109 spent from three transactions for rooms rented in Madison for unspecified meetings. Taxpayers also picked up the $1,789 tab for six season tickets to UW-Madison football games.

Contact Ekvall at rekvall@wisconsinreporter.com

Click here to LEARN HOW TO STEAL OUR STUFF!

M.D. Kittle is national First Amendment reporter at Watchdog.org. Contact him at mkittle@watchdog.org.

  • http://www.facebook.com/richard.linehart Richard Linehart

    We need to pay these types of salaries and offer these perks to get and retain the kind of talent that knows how to lose money on this kind of scale this quickly. Given the way corporate america usually works I expect top leadership will see bonuses based on this performance.

  • http://www.facebook.com/people/Mary-Putman/1440910269 Mary Putman

    !st year state employees get 2 weeks vacation that is 80 hours. How is that more than WDEC? 240 hours is 6 weeks. Unless of course they are comparing to say physicians or lawyers.

  • http://www.facebook.com/patrick.r.schuppe Patrick R. Schuppe

    WEDC is important for the growth of Wis. and getting industry to Wis. As well as the Counties version of WEDC.

  • http://www.facebook.com/dennis.bednarek Dennis Bednarek

    Looks like they have a big mess here. Nut then again it is run like the top management of many private corporations The managers are unquestionable on the way they want to spend money and give themselves bonus. And why are all these people coming from out of state. Does Scotty think everyone in Wisconsin is too dumb to handle these jobs? What is the track record of this out out of state crew? How many good paying jobs did they bring to Wisconsin outside of Walmart and Target jobs.

  • kenvandoren

    As I stated from the beginning:
    1. public private partnerships almost always mean that some bureaucrat, some politician and/or some businessman wants the contents of my wallet.
    2. Government involvement is an invitation to waste, fraud and corruption. At a minimum. there is the appearance of same in all this.
    3. Business is not the business of government. Want to stimulate business? Better to greatly reduce the size and cost of government, reduce the myriad of regulations that stifle businesses to the point that many are driven away.

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