Auditor: Programs fall short

HARRISBURG - 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 performance audit of $213 million in grants and loans 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.

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 was "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 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.