Detecting bloat in job claims

Journalists at The Syracuse Post-Standard used Freedom of Information requests and Excel spreadsheets to investigate New York state economic development grants, discovering that 47 percent of companies failed to create the jobs they promised, despite receiving $195 million in taxpayer funding. The investigation revealed that the Empire State Development Corp. rarely imposed penalties on underperforming grant recipients and sometimes provided additional aid instead.

By Mike McAndrew and Michelle Breidenbach, The (Syracuse, N.Y.) Post-Standard

Politicians sometimes sweep into town to announce they will create or save jobs by giving an economic development grant to a local business.

It's usually a surefire way for elected officials to get good publicity.

That's because journalists often report those rosy predictions without going back to see if they come true.

In New York, 47 percent of the companies awarded $195 million in state grants or loans by a state public authority failed to employ as many workers in 2004 as they promised they would, The Post-Standard discovered.

Companies had to promise to create or retain specific numbers of jobs to get the taxpayer-funded grants.

Gov. George Pataki's top economic development arm, the Empire State Development Corp. (ESD), can impose penalties on grant recipients that miss their job targets. But more often than not, ESD waived penalties. Sometimes the authority offered even more aid to businesses that had not delivered the required jobs.

To get this story, we used a Microsoft Excel spreadsheet to bolster some old-fashioned digging.

As a public authority, ESD operates under a governor-appointed board of directors in New York City, outside the normal scrutiny of the state legislature and comptroller.

We heard that several years ago a state senator had filed a Freedom of Information Law request, just as an ordinary citizen would, for a copy of the authority's annual report. She discovered that, unlike many other state authorities, ESD does not produce one. Instead, ESD provided the senator with a jobs report - one that showed in clear terms that many companies receiving economic development grants were not creating jobs.

We filed our own Freedom of Information request for the ESD's 2004 jobs report in electronic format.

The Excel file the ESD sent by e-mail identified nearly 500 economic development grants or loans it made across the state. It included the date the grant was approved, each recipient's starting employment total, the number of workers each company promised to hire or retain, and the businesses' total jobs in the spring of 2003 and 2004.

An accompanying summary prepared by the ESD staff for the authority's directors noted that ESD had required some companies that missed job targets to repay some of the grants. But the summary didn't identify which companies were penalized or which got waivers. The database also included no addresses for the businesses.

So we filed a second FOI request with ESD, asking for fields that provided the location of each grant recipient and details about penalties imposed on the nearly 200 companies that had failed to comply.

We received an Excel spreadsheet with addresses quickly. But when it came to providing details about penalties and waivers, ESD dragged its feet. It took months of telephone calls and a letter hand-delivered to ESD's chairman before we received that information.

Once we had it, we asked our Excel spreadsheet some questions. Which companies missed their job target by the largest number? What businesses had fewer workers in 2004 than they did when they got their grant? Who eliminated the most jobs, but escaped without a penalty? What companies got ESD to reduce their jobs obligation for 2005?

We mined the list for potential anecdotes. For instance, why was an aerospace museum in Niagara Falls given $750,000 to create only two jobs?

We wrote formulas in Excel subtracting current employment from employment at the time of the grant to show layoffs, and subtracting current employment from target employment to show businesses failing to live up to promises. Then we sorted the data.

Computer-assisted reporting enabled us to identify faster the grant recipients who were likely to become the best examples to shine a spotlight on in our story.

The same calculations pointed out success stories, too. Then we read published reports, corporate Web sites and grant documents, and conducted interviews with officials at companies, to check the accuracy of some job totals that ESD provided. We discovered the state was overstating some of its successes in its report.

For instance, ESD claimed General Motors had hired 2,000 new workers since it received a $5 million grant. In reality, we learned that GM's Buffalo area engine plant was employing about 1,000 fewer workers than it did before it got the state aid. When we asked ESD about that, the authority admitted it made an error.

We found the state also was taking credit in its jobs report for helping to retain jobs that had been around for more than a century at one firm. The owner of another business admitted he would have expanded and hired more workers with or without the state's money.

ESD declined to allow us to interview anyone but its spokesman. But, in minutes of meetings of the ESD board of directors - a document we had obtained in electronic format via a FOI request - we discovered one nugget. A director had questioned in 2002 whether ESD would be criticized by the press because 27 percent of the economic development grant recipients had missed their job targets that year. Two years later, ESD could only dream of the days when it had a 27 percent failure rate.

By using CAR tools to take a deeper look at the numbers, The Post-Standard discovered the results of ESD's economic development program were sometimes gloomy - certainly in sharp contrast to the happy talk of politicians announcing they are going to save jobs by giving away a grant.

Contact Mike McAndrew by e-mail at mmcandrew@syracuse.com.

Contact Michelle Breidenbach by e-mail at mbreidenbach@syracuse.com.