May 28, 2014

CLEVELAND – JobsOhio, Gov. Kasich’s public/private economic development agency, has been plagued by ethical lapses at the highest levels and has not delivered the promised jobs, according to ProgressOhio Executive Director Brian Rothenberg.

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Rothenberg released a new study that examined the track record of the agency that Gov. Kasich launched in 2011.

“The secrecy engulfing JobsOhio makes it impossible to do a comprehensive analysis of the agency’s performance.  Still, government records, news reports, business filings and audits show it exaggerated its impact, funneled state money to companies that did not create or retain the promised jobs, and has a pattern of helping companies with ties to its politically potent governing board,” the study concluded. “The bottom line: After 3 ½ years of JobsOhio, Ohio’s economic rebound remains anemic and lags the nation as a whole in both employment gains and in reducing the ranks of the unemployed.”

 

Rothenberg discussed his findings during a panel discussion, “Is JobsOhio Constitutional?”, sponsored by the American Constitution Society. His progressive organization joined with conservative groups to sue JobsOhio on the grounds that it violates a constitutional ban on direct state investments in private companies. The case is pending.

With help from legislative allies, Kasich replaced Ohio’s public economic development agency with JobsOhio, a private one exempted from ethics and open government laws.  But this private agency operates with public money.

“We’re beginning to clearly understand why our Constitutional framers did not want public money with private entities,” Rothenberg told the audience. “JobsOhio is secret because it is private. But we still get glimpses of the toxic mix of public money and private gain.”

Among the study’s findings:

  • The much ballyhooed ethics pledges required of JobsOhio board members and employees are worthless.

Mark Kvamme, the Silicon Valley venture capitalist Kasich  hired to lead JobsOhio, signed a pledge agreeing he would not “obtain, or seek to obtain, a personal advantage or benefit due to relationships established by my position with JobsOhio….” Yet in 2012, while still working as Ohio’s jobs czar, Kvamme began work on DriveCapital, his new venture capital firm that would eventually net him millions .  Among his main allies in getting the firm off the ground: then-Ohio State University President E. Gordon Gee – a relationship Kvamme nurtured when Gee served with him on the JobsOhio board.

While it appears that Kvamme did seek “a personal advantage or benefit’’ from a relationship established by his position at JobsOhio, the maximum penalty for violating the ethics pledge is losing your job. Kvamme quit first.  Kasich has yet to comment on Kvamme’s apparent violation of his ethics pledge.

Kvamme’s actions followed an Ohio Ethics Commission report that found potential conflicts of interest for nine of the 22 JobsOhio officials required to file financial disclosure statements.

  • Amid constant reports that JobsOhio was not generating the promised jobs, the agency began using creative accounting techniques to boost its job numbers.

In 2012, a whopping 24 percent of the job commitments it claimed involved no incentives.  In 2013, the pattern is more stark. According to records generated by JobsOhio, 38 percent of its 2013 projects and 56 percent of capital investment came from projects in which JobsOhio offered no incentives at all.

“Does this trend show a level of incentives is not needed,” Rothenberg asked. “These facts indicate that Ohio’s economic development system is more about rewarding friends than creating good jobs for Ohioans.”

The accounting switch does not affect the number of jobs added or retained in Ohio, but does change how the state’s leading economic development organization reports its performance in helping to grow the economy.

  • Among the highest-paying jobs the agency has created are those working for JobsOhio.

In its most recent report, JobsOhio said it spent $4.9 million from July 1, 2013, through December 31, 2013. Of that, 92 percent went to salaries and other administrative costs, with just 8 percent going to economic development programs. Of the 37 jobs listed in the report, 19 are paid more than $115,000 anually.

Who got those jobs? We don’t know. Kvamme promised a legislative panel he would disclose the names and compensation of all JobsOhio staffers. Instead, the agency has omitted employee names and only provides a salary list with generic job titles.

“According to the New York Times, Ohio spent $3.24 billion dollars on programs designed to promote job growth in 2012,” Rothenberg said. “Gov. Kasich claims JobsOhio brought 21,099 jobs to the state that same year. It doesn’t take a math genius to know that average Ohioans are not getting the proper Return on Investment. It’s also clear that some of the governor’s friends keep getting richer.’’

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