EDC Carries $2.9 Million Payroll
Monday, June 11, 2012
The quasi-public agency tasked with overseeing economic development in the Ocean State pays its 42 employees more than 2.9 million, GoLocalProv has learned.
The Economic Development Corporation (EDC) has a total payroll of $2,938,451 and eight employees make at least $90,000, according to figures released following a public records request. The compensation totals do not include benefits or bonuses.
The highest paid employee is Deputy Director William Parsons, who collects $119,030.
The agency has come under fire in recent weeks after the collapse of Curt Schilling’s 38 Studios, which filed for bankruptcy last week less than two years after the EDC’s board voted 8-1 to award the pre-revenue video game company a $75 million loan guarantee.
The fallout led to the resignation of the agency’s former executive director, Keith Stokes. Governor Lincoln Chafee also encouraged every member of the volunteer board who voted in favor of the deal with 38 Studios to resign. He has since nominated six new members, all of whom have yet to be confirmed by the Senate.
But while some have questioned whether a lack of oversight led the state to be blindsided by the video game company’s failure, Chafee has been hesitant to direct blame at the EDC. Instead the Governor has pointed to Schilling’s inability to secure private investments and has labeled its first game, “Kingdom of Amalur: Reckoning,” a flop.
Chafee, who campaigned against the deal in 2010, maintains that companies like Schilling’s can crumble overnight and has continuously noted that the video game industry has a tendency to “punish those who don’t know what they’re doing.”
Lawmaker: I Want Them Gone
Still, lawmakers aren’t convinced the state did its due diligence when it came to monitoring the company. State Representative Charlene Lima said the 38 Studios collapse is just the latest project that has faltered under the EDC’s watch.
“I want them gone,” Lima said. “I think people have lost trust and confidence in the EDC. When the car is totaled, you can’t fix it.”
In recent weeks, Lima has been among the loudest critics of the EDC and the deal that led the state to essentially co-sign on the 38 Studios loan. In order to bring the company to Rhode Island, House leadership quickly passed legislation that expanded the EDC’s Job Creation Guaranty Program from $50 million to $125 million, the exact amount awarded to Schilling’s business.
Last week, Lima introduced a budget amendment that would have defunded the agency, but it overwhelmingly failed. She said she believes the Lieutenant Governor’s office should oversee economic development in the state so that voters have the ability to hold someone accountable when situations like the 38 Studios deal arise.
“I don’t want to study it, I don’t want to look at, I want to get rid of it,” she said.
Republican State Representative, who said she also considered introducing an amendment to the budget that would have defunded EDC, called the agency a “waste of taxpayer money.”
“The EDC should be abolished. Unemployment is still above 11 percent, so if you ask me, what have they done to create jobs and help the business? The only thing I see is the taxpayers are on the hook for millions.”
Block: Not Certain EDC has a Plan
More than 40 percent of EDC’s employees are collecting at least $80,000, including Communications Director Judy Chong ($100,000), Chief Financial Officer Susan Morgan ($97,388), Director of Broadband Stuart Friedman ($96,560) and Managing Director of Finance Programs Earl Queenan ($95,000).
According to businessman and Moderate Party founder Ken Block, a roughly $3 million payroll for an agency charged with handling the state’s economic development opportunities wouldn’t normally be all that surprising, but given the agency’s recent results, he said the amount seems overblown.
“I am not certain that the EDC has a plan for economic development,” Block said. “What is their roadmap for how to guide RI out of recession? What guiding principles are they following as they evaluate businesses who come looking for assistance? I know a great many small businesses who were told they were too small for the EDC. Certainly in the past the EDC has been guilty of looking at larger deals at the expense of viable small deals.”
Block said one of the main problems with the EDC is the idea of a volunteer board and how that board is chosen.
“The board of the EDC is a political organism, chosen by the governor and needing the blessing of the Senate to serve,” Block said. “What the taxpayer should not want is a compliant board that accedes to a governor’s every whim. That is how we got 38 Studios, and we cannot afford to make this kind of mistake again.”
RIPEC to Study EDC
Ensuring mistakes of the past are not repeated is one of the reasons Chafee has tasked the Rhode Island Public Expenditure Council (RIPEC) with examining the agency’s structure, programs and role in economic development in the state.
Chafee has indicated he is unlikely to name a successor to Stokes until RIPEC completes its analysis in September.
The RIPEC report is will come less approximately three years after former Hasbro CEO Al Verrecchia issued a critical analysis that led to an overhaul of the board under former Governor Don Carcieri. A short time later, the board approved the 38 Studios deal.
Last month, Chafee said he will do whatever it takes to improve the efficiency of the agency.
“We’re not going to stop until we get it right,” Chafee said.
Dan McGowan can be reached at firstname.lastname@example.org.
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