LANSING – Michigan Economic Development Corporation CEO Michael Finney told a skeptical House Commerce Committee on Wednesday that last month’s audit on the Michigan Strategic Fund wasn’t reported correctly by the media and did not take into account a bankrupted company when calculating jobs.
An audit released in September said the Michigan Strategic Fund, which Finney oversees, did not report accurate data about the number of jobs created through the 21st Century Jobs Trust Fund programs to the Legislature and failed to adequately monitor the progress companies assisted through the funds were making in meeting their employment goals.
Finney said media reports missed the bigger picture, which was that the audit gave the MEDC its best rating with three areas for improvement. He also said many of the programs audited were from former Governor Jennifer Granholm’s administration.
“Despite headlines and accusations, I am here today to tell you we did not overstate any job numbers,” he said. “We provided accurate information at the time the reports were submitted to the Legislature.”
Democrats, including presumptive gubernatorial nominee Mark Schauer, have seized on the audit as evidence the economy is not nearly as strong as Governor Rick Snyder claims.
Finney said one company had gone through bankruptcy, and in the report to the Legislature it was not footnoted that this might happen. He said the audit cited only 19 percent of promised jobs were created, when the MEDC reported 75 percent. Mr. Finney said when the jobs from the bankrupt company were taken out, the 19 percent figure is correct. Still, he said, the report given to the Legislature also was correct at the time.
He also told the House committee that a few of the programs audited have been given a sunset date because they are not working.
“I don’t want to point fingers, but I do want to be clear. The audit released last month was of programs operating years ago,” he said. “These are not programs that represent the MEDC of today.”
But committee members did not go easy on Mr. Finney or accept that the problems cited in the audit simply were based on the previous administration’s operating of the funds.
“I was in the last committee when you came in and said there is a new sheriff in town, things are going to change. This audit report, although it does encompass five years of the previous administration, it also covers two years from this administration,” Rep. Jeff Farrington (R-Utica) said. “I didn’t see any finding in the audit report saying things were improving, that things have changed.”
Rep. Jon Switalski (D-Warren) asked Finney if the money given to the bankrupt company was retrieved after it didn’t create the jobs it said it would. Finney said no, and that the negotiated milestones with the company did not require job creation.
“It strikes me as curious and odd that you didn’t take responsibility for a single one of these failures in this audit. Not one,” Switalski said. “And I find it extremely hard to believe that not a single thing slipped through or that there was a mistake or a processing failure under your leadership. And in fact I would point to the fact that under two different instances that nothing has changed, and there is still lack of reporting from the October 2010 audits until current time. So if everything is going completely great, and there is a new sheriff in town … why are these issues still lingering? And are you responsible for those?”
Finney said there is certainly room for improvement under the current handling of the funds.
“The auditors cited three areas: our reporting requirements; our monitoring and our evaluating effectiveness were insufficient,” he said. “Those were the areas we are in fact very focused on and that we acknowledge we still need improvement. We take this very seriously. And our team takes it very seriously. We’re not ignoring any of it.”
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