Audit: EDC’s job-creation numbers overstated

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An audit of the Colorado Springs Economic Development Corp. found that the organization overstated the number of jobs it created during the last 19 years by 11 percent.

The EDC hired the independent accounting firm,  Summit Economics, to summarize its  economic and fiscal impact of the group’s job-creating efforts from 1990 to 2009.

Summit made the counting error and the EDC has been reporting it.

Summit used data from six companies twice, accounting for a job difference of more than 2,500 jobs. The actual number of jobs created in the 10 year period was 21,525 jobs, and Summit told the EDC that the number was 24,057.

For its part, the EDC said that it “partially agreed” with the findings.

“As this error was made by an outside agency and our current staffing levels make it very difficult to review in detail the work we contract others to do,” it said in response to the report. “That said, future analysis produced by outside agencies will be reviewed in more detail in an effort to identify and correct these types of errors.”

Mike Kazmierski, CEO of the EDC, pointed out that the audit showed the organization was doing what it said it was doing: creating primary jobs.

“Overall, this was a very positive audit,” he said. “The numbers from Summit were off, they double counted some companies. But the audit shows we gave the correct information to Summit.”

The city’s auditor performed the audit, based on the amount of money it gives to the EDC. The city of Colorado Springs gives the EDC $70,000 a year, while Colorado Springs Utilities – owned by the city – gives the agency $240,000. The EDC’s budget is $1.4 million. The city set aside about $20,000 in staff hours to perform the audit, Kazmierski said. The EDC staff spent about 30 hours gathering documents.

“We’re pleased with the results of the audit,” he said. “But I’m not sure it was the best use of our time – or the city auditor’s time.”

The city gives the EDC money because budget cuts have reduced the city’s economic development office to a single person, focused on retail enhancement. The EDC focuses on developing primary jobs in the region.

The request for an audit of the EDC came from former Colorado Springs council member Sean Paige.  This wasn’t a financial audit, Kamierski said, instead it was a look at the EDC’s job performance. The EDC is audited annually by an outside auditor for its finances, and the city sees that audit.

“This is the first time we’ve been audited by the city – and the first time the city’s audited a nonprofit it gives money to,” he said.  “But we should focus on the overall positive results of the audit, we are creating jobs. The EDC’s had a tremendous impact on the region. ”

For his part, Paige said he believed the audit process was necessary for the city – and he wished it had been more in-depth.

“It certainly wasn’t as in-depth as I thought it should be,” he said. “It’s not what I envisioned, but it’s a start.”

The point of auditing outside agencies wasn’t to play a “game of gotcha” or to uncover scandal, Paige said, but to make sure the groups were good stewards of public money.

“We need to let people know that recipients of public money are going to be scrutinized,” he said. “We’re going to hold them accountable for doing what they say they are doing with public money.”

The 11 percent discrepency is significant, he said.

“That’s not just 11 percent overstatement of jobs,” he said. “It’s an 11 percent overstatement of economic benefits and impacts.”

The city plans to continue the audits of nonprofit agencies that receive public funds, Paige said. The Humane Society of the Pikes Peak Region will be audited in 2011, he said.

3 Responses to Audit: EDC’s job-creation numbers overstated

  1. 11%? Hardly enough to worry about.If the rest of the city and county government could take credit for counting the increase in population, car trips per day (thus claim for bigger road budget) within 11% we would be cheering.

    Dave Hughes
    June 7, 2011 at 10:26 am

  2. I agree with the first comment…so what’s the big deal? There are far more important isues to pursue like real sustainable job creation rather than small arithmatic errors.

    m laune
    June 7, 2011 at 12:08 pm

  3. The audit was quite extensive and on the City Auditor’s web site – The findings were, “We conclude that overall, the EDC was allocating the City and Colorado Springs Utilities’ contributions to
    programs that support job attraction and retention efforts, as stated in the annual funding requests.” As for the miscount error – the audit included the follwing statement at the bottom of page two. “Hence, the data supplied to Summit Economics, LLC by EDC appeared to be accurate.” A bit more positive than the headlines would make you think.

    Mike Kazmierski
    June 7, 2011 at 1:02 pm