Indiana lawmakers to state job agency: "Tell the truth"

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Some Indiana lawmakers say new legislation is needed to prevent the state from hiding and distorting its real job numbers.

"We just need to tell the truth," said House Minority Leader Scott Pelath (D-Michigan City). "Based on what I've seen, we've got a problem."

His comments came after watching an Eyewitness News investigation that reveals questionable statistics and reporting practices by the Indiana Economic Development Corporation.

WTHR's latest "Where are the jobs?" report shows IEDC is reporting a job realization rate and other statistics based upon limited data that reflects only the state's successful job creation projects. Failed or underperforming economic development deals are eliminated from the agency's calculations.  And those same projects – there are hundreds of them – have been omitted from the agency's new online transparency portal.

"That definitely gives a skewed picture of the state's track record," said Greg LeRoy, executive director of Washington D.C.-based Good Jobs First. The non-partisan, non-profit watchdog organization tracks economic development policy and transparency, and LeRoy believes IEDC's current methods and calculations are "cooking the books."    

"To hide so-called inactive deals is to re-write history. It's to act like they never happened. That's gaming the system," he explained. "It's really misleading for your lawmakers and your taxpayers."

Bi-partisan concern

Pelath shares those concerns, and the House of Representative's top Democrat wants IEDC to show the state's whole economic development picture – not just a limited view of its most successful projects.

"Here at the statehouse, we have to make good decisions," he said. "If we're doing well, we need to know why we're doing well. If we're doing poorly, we have to understand what we can do better. What we really need in Indiana is IEDC or some entity that gives us an accurate picture. It's clear we're not going to be able to rely on IEDC to do that because they're just about PR. They're not about giving us the information we need to make tough decisions."

Pelath says IEDC's new transparency website does not go far enough to ensure transparency because IEDC is still holding back basic information – and lots of it.

So is it time for lawmakers to demand more openness?

"I think it's fair to raise the question," said Senate Majority Floor Leader Brandt Hershman (R – Buck Creek). He believes IEDC transparency is improving, thanks to the agency's new online portal and an economic development transparency law enacted in 2013.

"I do know a great deal more information is being put online and made available to the public today than there was just two years ago," Hershman said.

But the senator also expressed concern after learning IEDC has repeatedly changed the way it calculates its statistics, allowing the agency to report favorable results at its quarterly meetings and in its annual reports.

"That would be a problem because if we can't compare apples to apples over a period of time, then it doesn't give us a statistically valid measurement," he said.

Hershman, who chairs the Senate's Tax and Fiscal Policy Committee, said state lawmakers are interested in IEDC oversight because "we want to evaluate what's working and what isn't."  Asked if more transparency is needed in light of findings from WTHR's recent investigation, the longtime legislator paused to contemplate before responding:

"Can more progress be made? I think so, and if we need to make additional changes to the law, then that's fair for us to do," Hershman said.

Other lawmakers, like Sen. Mike Delph (R – Carmel), expressed a similar position.

Delph, who championed economic development transparency legislation in 2013, expressed disappointment with IEDC's decision to withhold hundreds of projects from its job realization calculations and from the agency's web portal.

"Taxpayers deserve to see the truth," he said, adding that more legislation may be necessary to ensure greater transparency. But because the portal and transparency law are relatively new, the senator is willing to give IEDC time to first make adjustments.

"After your report, I think the IEDC and the governor should have a chance to regroup and re-evaluate what they want to do and how they are doing things," Delph told WTHR.  "I want to give them a chance to reflect and to resolve some of these issues. I look forward to working with the governor and IEDC over the coming months to further the cause of transparency, and I stand ready to re-introduce a legislative initiative."

Because the Indiana General Assembly is in a short session and the deadline for new legislation has passed, any bills addressing added IEDC transparency will not be introduced until early 2015.

Defending the numbers

During a recent interview, IEDC president Eric Doden told WTHR his agency is not trying to hide anything.

"I am pleased with our efforts in terms of being transparent, and we have a desire to be transparent," Doden said.

He said IEDC withholds failed projects from its transparency portal and from its statistical reporting because the projects are considered "inactive" and that those companies are no longer eligible to receive tax breaks and training grants from the state. Many of the projects, however, did receive financial incentives and subsidies from IEDC totaling millions of dollars in tax-payer dollars before they were classified as inactive.

While state law requires IEDC to report on all "active" projects in its annual Economic Incentives and Compliance Report, the law not does address what information should be included on IEDC's transparency portal, nor does it prohibit IEDC from including all projects – both active and inactive – in its public reporting and statistical calculations.

Eliminating inactive projects (which include hundreds of failed economic development deals previously announced by IEDC) from its reporting allows the state's job attraction agency to claim a job realization rate of 92%  If all projects were included in IEDC's calculations, the number of anticipated jobs that have actually materialized is much lower -- approximately 64%.  The 28% difference between the two calculations represents a difference of approximately 53,000 jobs for Hoosiers (based upon the roughly 190,000 jobs announced by IEDC since 2005).

Confidential note to lawmakers

Twelve hours before WTHR aired its "Where are the jobs?" investigation, IEDC spokeswoman Katelyn Hancock sent an e-mail titled "Talking Points: WTHR Segall Story" to the offices of House Speaker Brian Bosma (R – Indianapolis) and Governor Mike Pence.  The e-mail was marked "confidential," and it provides more insight into how IEDC wants to publicly defend its decision to withhold information related to hundreds of failed economic development projects. 

The e-mail was also distributed to Senate President Pro Tempore David Long (R – Ft. Wayne) and all other members of the Senate Republican caucus.  Several lawmakers then forwarded the e-mail and attached talking points to WTHR.

"They [IEDC] wanted us to respond to your questions in a certain way and they obviously want us to come to their defense," said one lawmaker, who requested anonymity because he does not want to anger GOP leadership or the governor's office. "I think they realize it's difficult to defend their position, but they want us to present a unified front, and I also think they – and a lot of people in this [Statehouse] building – are more interested in talking about transparency and less interested in actually being transparent."

WTHR has requested to inspect more than 400 contracts that IEDC has classified as "inactive" and which it has chosen to withhold or erase from the online transparency portal. All of the requested contracts were signed and executed by IEDC and companies seeking state tax breaks and/or training grants, and they involve a promise of state-funded financial incentives in exchange for jobs.  

IEDC refused WTHR's request to see those documents. Eyewitness News has filed a formal complaint with the Indiana Public Access Counselor because WTHR believes the agency's denial is a violation of state law under the Indiana Access to Public Records Act.  The Public Access Counselor is expected to release a decision on the complaint next week.