Gov. Wolf took a good first step last week when he tightened up grant rules in the wake of former Gov. Ed Rendell’s over-the-top largesse with Democratic National Convention workers.
Rendell, who was chairman of the 2016 convention’s host committee, helped raise $86 million for the hosting of the convention; $10 million was from state grants. At the convention’s end, he handed out $1 million in bonuses, using unspent funds and claiming that the bonus recipients had worked hard for low salaries. Former Director Kevin Washo who was earning $13,000 a month, got $310,000; other staffers got less.
The former governor argues that none of the bonus money came from a $10 million state grant or other public funds. A recent investigation by the Auditor General concurs. But that doesn’t mean he didn’t give out money that was never his to give.
Wolf’s changes to grant rules include a ban covering bonuses for employees and volunteers of groups that receive grants from the Department of Community and Economic Development — no matter which pot of money is used for them. If a group awards bonuses, it has to pay back the state grant.
That’s good –but Wolf’s reform falls short because it only covers one of the many state agencies that award grants. He should build on this ban to create much stronger reforms. As governor, he has worked to protect taxpayer money by streamlining agencies and raising the administration’s ethical standards.
Wolf should follow the good advice of Auditor General Eugene DePasquale who has long recommended state grant and other contract rules be upgraded to protect the public interest.
He says all state grant contracts from all state departments need to be rewritten so that any surplus funds are explicitly returned to the state. If an organization gets state and private funds, it should use excess private funds to pay back the state funds.
DePasquale has found problems with a wide range of grantees and vendors. In September, he reported that an anti-abortion group called Real Alternatives used an elaborate scheme to divert almost $500,000 in Pennsylvania taxpayer money to prop up its out-of-state operations between 2013 and 2015. Additionally, he’s found that the state doesn’t have consistent standards for opioid treatment grants, and that jobs programs haven’t produced the promised jobs.
In the past, Wolf has upgraded terms for job incentives, which include requiring companies to keep the jobs no less than five years after receiving a grant.
There’s plenty of room for more improvements. The state doles out millions to corporations. Last year, it gave away over $870 million in inducements and gives out more corporate welfare than any other state, according to the conservative Commonwealth Foundation.
Surely, the governor can better protect the public interest by raising standards for aid to non-profits as well as corporations which receive grants, low-interest loans and tax breaks.
The state should insist that non-profits put a cap on executive compensation as a condition for receiving our money. When the state helps companies, it should negotiate a reasonable profit point after which it claws back the state’s investment.
Shareholders get returns on their investments. Why shouldn’t Pennsylvania’s taxpayers?