State officials have one year to fix problems in the TNInvestco program, which was the subject of a sharply critical audit this week.
Auditors cited the Department of Economic and Community Development, which administers the state-funded $200 million TNInvestco program, for a range of problems.
The audit, released Tuesday, by the state comptroller’s office found “pervasive noncompliance with program requirements,” which increased the “risk of fraud, waste and abuse,” as well as “increasing the risk that the state may be liable for unauthorized services.”
On Wednesday, ECD officials addressed problems in the program before a legislative government operations committee hearing in Nashville, and pledged to correct areas of concern. Among the steps that will be taken: Strengthening safeguards to avoid conflicts of interest in the administration of TNInvestco funding and ensuring that only eligible startups receive investments.
Based on those assurances, lawmakers recommended a four-year extension of ECD, through 2017, but directed the department to appear before the committee in a year to show that the TNInvestco issues have been resolved.
Clint Brewer, assistant commissioner of communications and creative services for the ECD, said he is confident that all concerns raised by the audit will be satisfactorily resolved.
“Our conversations with the Comptroller’s office have been very productive and we’re confident that we’re moving in the right direction. I think we cleared things up today,” Brewer said. “The management of the TNInvestco program is evolving and we’ve made significant steps to get staffing controls in place and we’ll continue to improve the program.”
Deborah Loveless, assistant director of state audits in the Comptroller’s office, said the department should have ample time to prove that its efforts are working.
“Next year they’ll need to show that they’ve implemented the recommendations in the audit or come up with another solution to address those concerns,” Loveless said. “We raised the issues, they’ve said they’re getting plans in place and now it will be up to them to show specific examples of actions taken.”
During the hearing Wednesday, ECD Commissioner Bill Hagerty outlined steps he’s taken to make the department more efficient and productive.
“What we’ve seen is a real transformation in terms of the model of economic development that we’re deploying,” he said.
Hagerty said a number of changes have been made in the department since his team came on board, including reducing staff by 42 percent.
Includes information from the Chattanooga Times Free Press.