Check the fine print in job stimulus programs contracts

Photo by Flickr user The Consumerist

Many states offer financial incentives to companies to reduce unemployment rolls. But the question always remains: Do they work?

Michael Sasso of the Tampa Tribune found one Florida program called the Quick Action Closing Fund gave companies money up front for promised jobs that weren’t materializing. His story notes that at least four in every 10 companies failed to meet their obligations.

While getting contracts from the state proved to be the biggest challenge, the contracts themselves gave Michael a benefit he hadn’t expected: Each contained a provision that required companies to answer questions from the public.

“I had seen a few contracts and when I read through them, I found information about turning information over to the public,” he says. “I decided to take advantage of it.”  Michael says he informed companies of that provision when they blew him off. When some didn’t comply, he reported them to the state.

Once he had the data, Michael found some information was unreliable. For instance, one report said Burger King created 600 jobs in Miami in exchange for an incentive package. However, the company says it didn’t start the project and refunded the money to the state, he says.

In addition to using contracts to find information, Michael also suggests reporters look into how much interest income states lose by having money set aside in low-interest bearing accounts. In a sidebar, Michael writes that $12.4 million set aside for a project earned about $112,000 over three years with compound interest. “Invested elsewhere, such as the Florida state treasury trust fund, $12.4 million would have earned interest at a rate of 2.4 percent — $917,200 over three years,” his story says.