What is JobsOhio?
JobsOhio is a non-profit created by Ohio Gov. John Kasich and the state legislature to replace the government agency that promoted economic development in Ohio. It does so by marketing the state, and by helping arrange grants and loans to give to companies who agree to create jobs. It is exempt from public records law and other government rules that the company says help it operate faster and more confidentially.
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We have three reporters working full-time in Columbus to bring you the latest news you need on politics, government spending and the current debate over the state budget. Follow us on Twitter at @Ohio_Politics
With an estimated $100 million a year in new funding for economic development, 2013 in some ways marks the actual launch of JobsOhio, the semi-private nonprofit that Gov. John Kasich considers a signature achievement of his first three years in office.
But JobsOhio will likely operate amidst continued questions from both sides of the political aisle over transparency and accountability issues, and scrutiny over how the money is spent.
With next year’s election approaching, the controversial program will need more clear wins to serve as a positive in the 2014 campaign. Ed FitzGerald, Kasich’s likely Democratic opponent, told the Dayton Daily News he has serious concerns about the way the nonprofit operates.
“The big issue is the organization is just so new,” said David Robinson, a former Republican state lawmaker and economic development consultant who supports the concept for JobsOhio but acknowledges the jury is still out. “It’s difficult to evaluate whether or not it’s been successful.”
After spending its first two years largely lining up companies with state government awards, JobsOhio will soon begin awarding grants and loans of its own.
Officials hope the new money, which is funded by profits on state liquor sales, will reverse what has so far been a lackluster 2013.
The nonprofit’s reported job creation for the first quarter of 2013 was down 20 percent compared to the previous year.
“We’re excited to think of whatever dip we went through is hopefully dipping on behind us,” said Mark Patton, a senior managing director at JobsOhio.
Renewed criticism
Democrats have hammered away at JobsOhio since its inception, and renewed their criticisms earlier this year after a fight between Republican state Auditor Dave Yost and Kasich led the Republican-controlled state legislature to block any future state audits of JobsOhio.
The argument is largely over to what extent JobsOhio should be treated like a government agency. Kasich and others argue JobsOhio is a private corporation, and the liquor proceeds were made private after they were used to issue bonds, so JobsOhio shouldn’t be subject to state audits or public records laws.
But critics say JobsOhio, which is staffed mostly by former government employees and created by Kasich and the state legislature, deserves scrutiny on par with other public entities.
“I’m deeply troubled that conservatives would vote for less transparency rather than more,” said Matt Mayer, president of Opportunity Ohio, a conservative think tank.
The nonprofit also faces an ongoing lawsuit pursued by an unlikely partnership between a liberal and a conservative group that challenges the legality of the organization’s structure.
State Rep. John Carney, D-Columbus, a likely candidate for state auditor, has emerged as a prominent critic. “At the end of the day, taxpayers should receive a benefit for the use of their money, and they should be able to know how it’s being spent,” Carney said.
FitzGerald, the Cuyahoga County Executive who recently announced he would run against Kasich in 2014, said JobsOhio is “deeply flawed” and a “scandal waiting to happen.”
FitzGerald said he would likely make changes if elected.
“Maybe there are some elements that could survive, but this whole theory that government works best when in secret, I am in total philosophical opposition to that,” he said.
Kasich spokesman Rob Nichols dismissed much of the criticism as partisan, saying the nonprofit has played a key role in helping turn the state’s economy around.
“There’s a feeling among some political opponents out there that they have to kill JobsOhio in the cradle, because a successful JobsOhio that’s running up and down the court scoring points is an impossible metric thing for them to deal with,” he said.
‘Nimble and flexible’
Legislators in February 2011 created JobsOhio as a a private corporation to replace the Ohio Department of Development. Kasich said the ODOD was ineffective and had become bloated with divisions that had nothing to do with job creation.
The idea was that a private JobsOhio, led by people with private sector backgrounds, would be more flexible and quicker to respond to the needs of businesses.
JobsOhio is charged with promoting economic development in Ohio, including marketing the state and putting together grants and loans to encourage companies to create jobs here. The nonprofit was established as central hub that sends funding to and coordinates with six existing regional economic development nonprofits, which were made official JobsOhio partners.
Working through the regional network has decentralized economic development and made it more effective, said Jeff Hoagland, president of the Dayton Development Coalition. The DDC’s territory includes Champaign, Clark, Greene, Miami, Montgomery counties, as well as parts of Butler and Warren counties.
“For us it’s been a good and quick process, because we know the regional players and they know us,” Hoagland said. “I think there’s a buildup of trust from when it got started in the beginning, and in my opinion, decentralizing the economic development has made it easier, quicker, smoother, and it’s being done in a much more efficient way.”
Among JobsOhio’s major projects in the Miami Valley is an expansion of CareSource, one of Dayton’s biggest employers. In exchange for a promise from the managed healthcare company to create 150 jobs and retain 980 more, JobsOhio last year lined up a seven-year, 40 percent state income tax credit that will save the company an estimated $609,800.
CareSource CEO Pam Morris, who is also a member of the Dayton Development Coalition board, said the incentive helped support the company’s decision to expand. She said JobsOhio has made an active effort to be visible within the business community.
“As a smaller organization, I always see an advantage to the fact that they (JobsOhio) appear to be nimble and flexible, along with being attuned to needs of attracting business and supporting business-friendly environment in the State of Ohio,” Morris said.
JobsOhio also claims a $270 million project by Abbott Laboratories to build a nutritional plant in Tipp City. At an April 2012 groundbreaking, CEO Miles White heaped praises upon Ohio’s government leaders for the assistance, which included an estimated $14 million in grants and loans to create 241 new jobs.
JobsOhio also takes credit Koch Foods’ planned 179,000 square-foot expansion in Fairfield. In that deal, JobsOhio negotiated a tax credit worth an estimated $717,000 for the poultry-processing and packaging company in exchange for a promise from Koch to create 390 jobs and retain 730 more.
Now that it has its own funding, JobsOhio will be able to carry out some of its own projects without state involvement, Patton said. Among its priorities: to create a sizable, independent loan fund.
“We would much prefer to loan money out and companies be successful, and when that money it goes back in the pot,” he said. “Our real vision is you get 10 years in the future at this program we could easily have a $1 billion loan fund.”
JobsOhio will spend up to $43 million a year through grants and loans to help to clean up and redevelop former industrial sites, officials said. The non-profit also aims to spend around $20 million on grants to companies to train employees, as well as ramp up marketing efforts to promote the state.
Although technically independent of the governor’s office, JobsOhio is closely aligned with Kasich, who touted such a structure during his successful 2010 campaign. The governor’s picture appears no less than 10 times in the non-profit’s 58-page annual report, and former members of Kasich’s campaign staff are among JobsOhio’s employees. President John Minor, a former investment banker, and former CIO Mark Kvamme, a venture capitalist, are both personal friends of Kasich’s.
Big issues
Much of the debate over JobsOhio surrounds the question of transparency: how will the public know if the money is spent wisely or even honestly?
Since it is exempt from public records law, critics say it’s impossible to determine how the agency verifies or reaches its job totals.
“How would we really know anything about what they’re doing with this money, and whether it’s productive or not productive? That’s the real problem with this,” said Brian Rothenberg, executive director of the left-leaning ProgressOhio.
Reporting questions have surfaced in other states that have privatized their economic development, including in Wisconsin, where Republican Gov. Scott Walker created his program around the same time Kasich created JobsOhio. A recently released state audit of the Wisconsin Economic Development Corporation found that it had failed to adequately track spending, and that funds were used for football season tickets and iTunes gift cards.
JobsOhio has also been criticized for not disclosing its donors. Tax filings show it has received at least $6.9 million in private donations, but the identity of only one — AEP Ohio, which gave $2.45 million — is known after the Columbus Dispatch reported the company disclosed it in a federal filing.
Jeff Finkle, president of the International Economic Development Council, said organizations like JobsOhio tend to run into the same problems.
“Some of the big issues that are kind of consistent, particularly among the newbies, is transparency,” Finkle said.
Although more states are turning to private nonprofits to spearhead economic development, Finkle said there is no evidence they perform any better than state-run programs.
Minor, the president and chief investment officer, said JobsOhio has greater public disclosure requirements than any other nonprofit in the state.
“It’s not that we don’t have controls in place, because we do, and we’ve got the accountability, we’ve got controls in places,” he said. “They’re just different than what they were in the past.”
For Kasich, the controversy over JobsOhio won’t matter if voters think the state is headed in the right direction, and polls of late have shown Ohioans generally approve of how he is handling the economy.
“The details of government don’t matter for a lot of people as much as the product does,” John C. Green, director of the Ray C. Bliss Institute of Applied Politics at the University of Akron. “And if the product is good job growth, then they tend to be very tolerant. And if job growth is not happening they tend to be very critical.”
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