Questions Raised By Flawed Stimulus Job Figures

Pelican Institute reporter Steve Beatty has a new story demonstrating that hundreds of jobs allegedly “saved or created” in Louisiana may be incorrect or exaggerated:

The issue of phantom Congressional districts listed in the national stimulus database recently created a stir. But the tally of Louisiana jobs allegedly created or saved by President Obama’s signature domestic policy program raises more serious questions about this database.

A review of the self-reported information may inspire a chuckle or a sneer, particularly when less-than-savvy recipients of federal money don’t know what Congressional district they’re in, or that the state only has seven such districts. That unsophisticated approach made headlines when money was listed as being spent in various districts that just didn’t exist. In the end, though, those reports are likely to be modified and will land in the appropriate district.

A greater concern is the 475 jobs listed as created or saved in Louisiana, even though the related projects aren’t started. And the 171 jobs chalked up when small raises were given to Head Start workers. And the over 100 low-paying work-study jobs on college campuses that count just as much as, say, a full-time architect for a major building program. Other entries indicate what could be an under-reporting of jobs.

These are just some examples of questionable figures in the statewide data analyzed by The Pelican Institute for Public Policy.

Figures aren’t certified

Even as federal recovery officials acknowledge problems in the start of such reporting, they’re standing by their numbers. Nationwide, more than 640,000 jobs were reported saved or created by $47 billion in spending, though the reports don’t distinguish between those two categories. The report covers February through September 30.

“We warned everyone there would be mistakes, and there are mistakes,” said Ed Pound, spokesman for the independent Recovery Accountability and Transparency Board, which runs the federal reporting Web site recovery.gov. “If we just go in and start changing people’s numbers, we’d have some credibility issues.”

He said the goal is to be transparent about the numbers reported, and if there are problems, they’re at the recipient level. He said the board is considering a change that would let recipients correct mistakes when they’re found, not just every three months, as is the policy now.

“We do not certify the accuracy of the figures,” Pound said.

Of the $787 billion in stimulus money, only about one third will show up in this database, with the rest taking the form of direct assistance to individuals or tax breaks.

Louisiana recipients of American Recovery and Reinvestment Act money reported that they created or saved 9,136 jobs. Just over $555 million had been received by government, non-profit and private entities in Louisiana at the end of the first reporting period.

The first period of collecting information on stimulus spending is a massive undertaking, with more than 130,000 recipients across the country each filling out a form online. Government agencies were expected to check the filings before they were released to the public.

The Government Accountability Office declared that the effort was a good first step, but “there are a range of significant reporting and quality issues that need to be addressed.”

74 jobs not here yet

The city of Lake Charles is a case in point. An official reported that 34 jobs were created or saved by a sidewalk repair program that has not yet started – and hasn’t received a dime of the promised $230,000. Likewise, a rehab of the city bus station is expected to generate 40 jobs, but has not done so yet. Still, those 40 made it into the national database.

Esther Vincent, the director of community development and services, said she reported estimates from the grant application for the whole sidewalk project, which won’t start until next year. She said she didn’t realize that the online form was supposed to cover activity through Sept. 30.

“If I put 34 in that area, then I’m incorrect,” she said. “We have not done any building. Zero.”

And Public Works Director Mister Edwards said the 40 jobs, most of them retained not created, will be realized in the coming months but none has been financed yet. He said he reported the jobs on the advice of the Federal Transit Administration.

A ripple effect

The GAO report points out that the database should report only jobs created directly by the recipient, but not the second-tier jobs that might be created when the money spent keeps suppliers afloat.

But among the top 10 for jobs creation in the state is Mike Hooks, Inc, a dredging company that specifically included those related jobs. Hooks reported creating or saving 125 jobs through two contracts through the Army Corps of Engineers, worth a total of $9.3 million.

“Those aren’t strictly limited to our organization,” said Mike Kerns, a dredging superintendent with the company. “That’s the way it’s supposed to be done according to the government Web site. It’s very much a trickle effect or ripple effect.”

Ashley McMahon, an executive with the company, said a dredging trade organization gave the same advice to other companies, encouraging the broader reporting.

She said the company likely created 3 or 4 jobs and retained about 50 employees as a result of the work. She said the money let them avoid annual layoffs for the months when work slows, and it gave them money to buy new equipment.

Most figures tough to track

Because the state itself was the biggest recipient of money and reported its figures in bulk, it’s difficult to check the accuracy of the figures it reported. Two grants alone – stabilization money for the state budget – are worth $516 million, or 93 percent of the stimulus money sent to Louisiana. The state reported that 3,669 jobs were created or saved with that money.

Though the subrecipients of the money are listed, those reports don’t say how many jobs were created by each.

A spokesman with the state’s Division of Administration did not respond to a request for clarification on how the jobs were counted.

Each recipient was required to say how much work had been done with the money received. More than 325 recipients declared getting $277 million – but hadn’t started work yet. Still, they said 475 jobs were created or saved.

Others hadn’t gotten any money, but said they’d created jobs. The state itself said it created or saved 3,452 jobs even though it hadn’t gotten any of the $388 million it’s expecting for one budget stabilization grant. Still, the state reported spending $13 million in that area.

More than 550 other jobs were reported by entities that hadn’t yet received money.

Raises count as jobs

Nationwide, the Head Start early childhood education program has been under attack for overzealous reporting. In general, the stimulus money has been used to grant 1 percent to 2 percent raises to employees, though it has created some new jobs. Still, all employees getting a raise were totaled in the “jobs saved or created” category. That’s as many as 10,000 jobs nationwide, according to The Boston Globe. The online figures show at least 171 in Louisiana.

Federal officials with Health and Human Services, which oversees the program, have said their reporting requirements are being reviewed.

The federal program to give aid to students who work on campus is also a source of possible job inflation. At Xavier University alone, 91 jobs were reported with a $181,000 grant. That works out to just under $2,000 per student.

Xavier representatives did not return calls seeking an explanation.

Louisiana State University, Delgado Community College, and Southern University also reported jobs created or saved through work-study jobs.

At the low end of the spectrum, some recipients diligently reported fractions of jobs saved or created.

For instance, LSU reports that a full time research assistant spends 10 percent of the workday examining the possible social effect of lowering the drinking age on campuses nationwide, part of a $115,000 grant.

And that’s worth .1 jobs, according to recovery.gov.

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Tags: American Recovery and Reinvestment Act, Head Start, Louisiana, LSU, Pelican Institute, recovery.gov, stimulus
Posted Dec 4th 2009 at 1:23 pm in Economics, News, Uncategorized | 4097020 Commentshttp://biggovernment.com/kkane/2009/12/04/questions-raised-by-flawed-stimulus-job-figures/Questions+Raised+By+Flawed+Stimulus+Job+Figures2009-12-04+20%3A23%3A18Kevin+Kane