Every penny counts
Following the (payback) money in state grants
Astate that was all but scrounging the couch cushions for change last budget season should do its best to ensure businesses and organizations pay back any grant money that goes unused or has been used improperly. Gov. Tom Wolf has started to do that.
The Democratic National Convention Host Committee received a $10 million state grant last year to help cover the cost of staging the presidential convention in Philadelphia. The event ended with a surplus, and organizers gave some $1 million in bonuses to staffers. On the heels of state Auditor General Eugene DePasquale’s Nov. 20 report raising questions about the bonuses and structure of the grant agreement, Mr. Wolf has implemented commonsense rules for organizations that get state money for special events.
From now on, state dollars may be used only after other funds have been exhausted, and recipients will be required to seek bids for certain work, such as construction, that they intend to contract to third parties. If they have money left over, even privately raised money, recipients must pay back the state under new “clawback” language to be written into grant agreements. In addition, no bonuses may be paid to staffers if the event gets state money, and violation of this rule will require repayment of the grant.
It also would help if the state placed greater controls on how money is used. Of the 26-page grant agreement with the DNC, Mr. DePasquale said, “There’s 24 pages of boilerplate legal language, then a three-paragraph appendix that says at the end, ‘Oh, by the way, here are some vague ways you can spend taxpayer dollars.’”
He complained that the state Department of Community and Economic Development had a long history of excluding payback and lastdollar-in language from grant agreements. An incredulous Mr. DePasquale asked, “Nobody has ever thought to say, ‘Hey, use all the private money first, and then use the taxpayers’ money’? Nobody? Ever?”
The requirements for special event grants, which Mr. Wolf announced Dec. 4, follow restrictions he placed earlier this year on other kinds of awards from the Department of Community and Economic Development. Under those changes, companies that get grants and then leave the state will have to repay the money, plus a 10 percent penalty. Also, companies that receive grants to spur job creation will have to repay the money if the jobs fail to materialize or disappear after just a few years. Money that is clawed back will be funneled into grants for apprenticeship programs, a great way to fund and highlight the importance of workforce development initiatives.
The state’s 2017-18 budget was delayed for four months while legislators and Mr. Wolf wrestled with how to raise revenue and plug a huge deficit. Every penny counts, and the state needs to ensure grant money is allocated as wisely as possible. The new rules will bring needed accountability to the grant process and help to ensure that taxpayers get their dollar’s worth.