Auditor: Little evidence of returns on Minnesota business aid fund
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The office of the Minnesota Legislative Auditor Wednesday faulted the Minnesota Department of Employment and Economic Development for not ensuring that businesses actually need financial help or pay wages they promise to when they receive taxpayer money from the Minnesota Investment Fund.
The fund, which has received $51 million in taxpayer funds the past three years, provides financial assistance to non-retail businesses planning to create or retain jobs. Funding is limited to $1 million per project, and the money must ordinarily be matched with funding from other sources. DEED has wide latitude to administer the program, the auditor noted in a report to the Legislature.
DEED typically grants money for the program to local governments, which then loans it to businesses.
Businesses seeking MIF funding do not have to demonstrate that they truly need state subsidies, raising questions about the impact of those subsidies, the report found.
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"The Minnesota Investment Fund has not created the level of investment DEED has claimed, and its impact on jobs is unclear," the report said.
It also found that DEED allowed some businesses to meet their MIF commitments by counting hiring and expenditures that occurred before they received their MIF award approvals.
Among the report's recommendations: The Legislature should require stronger assurances that businesses need the money and clarify the law to require businesses that receive aid from MIF to pay a minimum level of compensation.
In a response to the auditor's findings, DEED Commissioner Shawntera Hardy wrote that the program could always be improved but added that DEED has sound internal controls and that she was disappointed the report did not highlight improvements the department has made to tighten program administration and improve transparency.
"Hundreds of communities and businesses are strong supporters of the program — yet the report minimizes these perspectives and highlights views from a small number of interviews," Hardy wrote.
