JobsOhio has operated as a privatized, independent economic development agency for the State of Ohio since 2011. In all that time, a few concerned officials have tried to peel back the curtain obscuring its inner workings, but to little success.
The Ohio Star on Monday revisited the early days of JobsOhio and the efforts by then-newly minted Gov. John Kasich to strip away the economic development functions of the Ohio Department of Development.
Kasich got his way.
The Star reported in November that even as Ohio’s unemployment rate in October hit 4.2 percent, higher than the national rate of 3.6 percent, JobsOhio was on a roll of sorts. The organization increased its operating expenses from $115,133,000 in FY 2018 to $157,847,000 in FY 2019, working on its core mission, while Ohio gained only 3,600 jobs during much of the last half of FY 2019 (January-June).
Just as Kasich dreamed, the organization is controlled by a board of directors appointed by the governor.
Despite holding a monopoly on the state’s liquor tax revenues as a funding mechanism and its leaders being appointed by the governor, JobsOhio is “specifically removed from the definition of a public office under certain laws,” according to the Ohio Attorney General’s Office’s Ohio Economic Development Manual 2017.
“Today, JobsOhio is wholly funded by proceeds from the spirituous liquor enterprise formerly owned by the State. This enterprise, per authorizing law, was purchased from the State by JobsOhio, through its nonprofit affiliate the JobsOhio Beverage System, as an exclusive franchise in 2013.”
The manual also says, “The Ohio legislature requires JobsOhio to undergo an annual financial audit by an independent certified public accounting firm (that is selected in consultation with the Ohio Auditor of State) and a supplemental compliance and control review by that independent accounting firm and the Ohio Auditor of State.”
But how good is that audit?
The current Auditor of State is Keith Faber, the former State Senate president who in 2013 supported efforts to shield JobsOhio from scrutiny by the Auditor’s office — helping make the organization not “a public office.”
In March 2018, the Ohio Democratic Party took note of former Senate President Faber’s work to shield JobsOhio from full scrutiny.
Ohio Democratic Party Chairman David Pepper said, “Ohioans deserve to know if Keith Faber still believes it’s appropriate that billions in taxpayer money should be kept away from public scrutiny, as is the case with JobsOhio.”
When the bill to establish JobsOhio was passed, Faber went so far as to claim it included “a great deal of transparency.”
Faber’s predecessor as Auditor was Dave Yost (now the Ohio Attorney General), who as Auditor was a critic of JobsOhio’s perceived lack of openness, as The Star has reported.
JobsOhio has drawn national attention for questions over its transparency.
Good Jobs First is a “resource center for grassroots groups and public officials, promoting corporate and government accountability in economic development.”
In 2013, Good Jobs First published a report titled, Creating Scandals Instead of Jobs: The Failures of Privatized State Economic Development Agencies. The report is available here. It details concerns about JobsOhio:
JobsOhio, created in 2011 at the urging of newly elected Gov. John Kasich,has been plagued by accountability and transparency problems since the start. There have also been numerous political controversies, which is not surprising given that it is often difficult to distinguish between the agency and the governor’s office. JobsOhio’s first annual report featured Gov. Kasich prominently, and statements regarding the agency are as likely to be issued from his office as they are from JobsOhio itself.
Many of the transparency problems stem from the convoluted mix of public and private funding on which JobsOhio operates and the resulting confusion over the public’s right to know how its funds are used. JobsOhio has also been embroiled in legal battles over the constitutionality of its structure.
Three months after taking office, Gov. Kasich held a press conference to reveal some details about the new agency. He outlined a transparency plan in which the agency would issue annual reports and hold quarterly public meetings, although it would be exempt from public records and open meetings laws. Staff salaries would be made public and annual financial audits of JobsOhio’s public funds would be performed by a certified public accountant. A chief investment officer, nominated by the board and approved by Gov. Kasich, would execute contracts, hire workers and spend private funds. After the initial $1 million state appropriation for set-up and launch of the agency, the governor called for JobsOhio to eventually transition entirely to private funding.
The Cleveland Plain Dealer in March 2013 reported on the efforts of Yost, then the Auditor, to open JobsOhio’s books. The organization complied with a subpoena for records, but then-President and Chief Investment Officer John F. Minor Jr. said he would ask the General Assembly to place it above the auditor’s reach. Kasich said he supported that.
“The General Assembly must act quickly to prevent a chilling effect on job creation caused by a mistaken, overly-intrusive interpretation of the auditor’s duties,” governor’s spokesman Rob Nichols said Tuesday.
Kasich has said he agrees with fellow Republican Yost that public money should be subject to state audit. The question is what does that include.
Kasich staked his second term on JobsOhio’s record.
WBNS reported in February 2014 that one of Kasich’s perceived weaknesses was a “stagnant economy,” and JobsOhio was one potential weak spot.
The controversial agency has been plagued with questions about its transparency, with some of the criticism coming from Republican state auditor Dave Yost.
(Lt Gov. Mary) Taylor says the campaign won’t shy away from JobsOhio and, in fact, will talk about it in positive terms.
As late as 2018, Yost was working at cross purposes from Kasich and Faber.
In February 2018, The Columbus Dispatch said Yost and Sen. Larry Obhof (Faber’s successor as Senate president) were working on a bill to demand a one-time performance audit.
The Senate approved the measure in the summer of 2018, Statehouse News Bureau reported. Approval came in a surprise amendment to a different bill.
The Auditor’s office in June 2018 said the measure would have improved transparency of JobsOhio by “authorizing the Auditor’s office to serve as an independent third party during performance audits contracted out to private accounting firms.”
“JobsOhio is a quasi-public agency that exists to serve a public purpose for Ohioans,” Auditor Yost said. “The people of Ohio deserve a seat at the table. This amendment ensures that any performance audit of JobsOhio is completely independent.”
Under the proposal, JobsOhio would collaborate with the Auditor of State when determining the scope of the audit. The amendment also would grant state auditors access to the performance audit work papers. The performance audits would occur every four years starting in fiscal year 2021.
Performance audits are data-driven assessments of the costs and efficiency of operations. They are useful not only in improving efficiency and saving money but in providing external, third-party evaluations.
The Ohio House was also working on the legislation, State Rep. Kent Smith (D-Euclid) said in a press release in September 2018.
The legislation died in the House, according to that chamber’s bill tracking information. It was referred to the Economic Development, Commerce, and Labor Committee in November 2018.
That left the Auditor’s office with limited insight into JobsOhio — in other words, Faber.
Not only did Faber help to create the Auditor’s limited authority over JobsOhio, but as a senator, he was involved with creating and designing the organization, the Plain Dealer said in March.
While running for the Auditor’s office, Faber said he supported greater transparency.
Faber told reporters that JobsOhio officials agreed to completely disclose their employee compensation — including any potential deferred compensation, instead of just what they are paid in a given year — and also disclose what they’re paid in a more timely fashion.
However, state law requires JobsOhio to annually disclose its employee pay, although it only shares employee titles and pay, but not their names. Last week, the state released records that showed in 2018, the average JobsOhio employee received more than $100,000 in compensation — including salary and benefits — and that outgoing Chief Investment Officer John Minor received compensation totaling about $621,300, 16 percent more than the previous year.
JobsOhio continues to concern those care about open access to information.
The Toledo Blade ran an editorial in March calling for more transparency.
According to the economic development agency’s recently released annual report, JobsOhio created more than 27,000 new jobs in Ohio last year and helped the state retain nearly 70,000 other jobs that pay more than $4 billion.
Of course, we mostly have to take JobsOhio’s word for that. The privatized economic development entity that replaced the Ohio Department of Development under former Gov. John Kasich is not subject to Ohio’s public-records laws or other scrutiny that applies to other state agencies.
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