Inflated job-creation numbers come from state strategic fund

Sep 24, 2013

Sometimes we all do it. We over-promise on what we can actually get done.

That is especially true for some people seeking money or investments. And it appears to be the case with some companies that received state money designed to create jobs in Michigan.

But some legislators in Michigan were left in the dark about that lack of performance, according to an audit by the Michigan Office of the Auditor General.

One of the goals of the Michigan Strategic Fund is to diversify the state's economy by giving out grants to companies, research groups, or start-ups. The goal is to support entities that can create jobs in the state. Job creation numbers can be part of the evaluation of a given grant's effectiveness.

Grant recipients included Ann Arbor SPARK, Michigan State University, Tech Town, Van Andel Research Institute, the University of Michigan, and A123 Systems (a battery company that later went bankrupt) -- among many others.

In its report to the state last April, the Michigan Strategic Fund left in jobs numbers that were not accurate.

From the audit (COEE are companies grouped under the umbrella of "Centers for Energy Excellence."):

The [grant] recipient reported total jobs that were 12% higher than what was projected in the recipient's original proposal. This job total contributed to MSF reporting to the Legislature that all COEE recipients met 75% of the COEE projected job totals for the 8 completed grants. However, we determined that the completed grants, excluding the bankrupt company, met only 19% of the original jobs projection.

In his report this morning, Paul Egan of the Detroit Free Press reported that the Michigan Economic Development Corporation, the group that oversees the grant program, said they need to do a better job:

The MEDC “is committed to transparency and takes very seriously our responsibility to keep citizens informed about programs and incentives supported by their tax dollars,” CEO Mike Finney said in a statement released to the Free Press this morning...

It will “take steps to consistently report accurate program information,” it said in its response to the audit.

Finney said they support proposals that would consolidate the number of reports going to the Legislature, saying it would "greatly assist the MEDC in producing a more complete and understandable legislative report on these programs."