WEDC didn't track $69M in state loans

MADISON, Wis. (AP) - The state's quasi-public economic development agency lost track of $69 million in loans to businesses because no one was in charge of keeping tabs on that money, members of the board that oversees the agency were told Friday.
    
Somehow, when the Wisconsin Economic Development Corp. was created last year, no one was put in charge of keeping track of the loans that had been issued by its predecessor agency the Commerce Department, said WEDC's second-in-command Ryan Murray.
    
"We're still trying to get to the bottom of how that was possible," Murray said in a blunt assessment of the new agency's failings. Murray, who was made aware of the issue last week, said he expected an ongoing state audit to be released in the spring will reveal additional trouble areas that will need to be fixed.
    
The news is the latest embarrassment to WEDC, the public-private hybrid created by Gov. Scott Walker and the Republican-controlled Legislature to help drive job creation in Wisconsin. Creating the new agency was one of Walker's top priorities when he took office amid a campaign promise to create 250,000 private sector jobs in four years.
    
The stunning news about the loans - $9 million of which is past due or in default - set off a new round of recriminations from Democratic state Rep. Peter Barca. Barca is a member of WEDC's board who had said Walker and Republicans moved too quickly in creating WEDC.
    
It's hard to imagine that the duties of tracking tens of millions in dollars in taxpayer money handed out to businesses as loans was somehow lost in the transition, Barca said.
    
"This was a huge, huge mistake," he said.
    
Barca pushed for taking immediate steps to oversee the loans, saying the agency has suffered a black eye through the incident.
    
"We're kind of in a state of chaos here," Barca said.
    
Federal officials recently raised concerns that for eight months WEDC spent nearly $10 million without legal authority. This summer the state had to suspend and then restart bidding on a state contract after WEDC offered one bidder, Skyward of Stevens Point, tax credits if it won the contract.
    
And the agency has seen dramatic turnover in leadership.
    
Its first chief executive officer, Paul Jadin, is leaving in November after just 16 months on the job. Chief financial officer Mike Klosinski, who had just moved into the position over the summer after his predecessor left for the private sector, resigned on Friday.
    
Walker moved Murray, his former deputy chief of staff, into the second-highest spot in the agency over the summer and charged him with rooting out problems and increasing communication.
    
Walker said he contemplated giving Murray additional responsibilities while the search for a new CEO is under way. But he backed away from that plan on Friday, and instead the board hired Reed Hall, former executive director of the Marshfield Clinic, as its temporary leader.
    
"I think we need to let Ryan continue to work in that area identifying some of the challenges," Walker told the board.
    
Murray is keeping plenty busy.
    
He told the board that of the 267 loans totaling $69 million in WEDC's portfolio, 48 are past due more than 30 days and another 49 have been referred to the Department of Justice for collection or are in default. All told the problem loans amount to about $9 million.
    
Of the 48 past-due loans, changes to the original terms are being worked out with 23 recipients, Murray said. Those total $7.8 million. In two cases the recipient is making partial payments monthly and in the remaining 23 the state is attempting to collect or initiate new terms, Murray said.