Wisconsin Legislative Audit Bureau, Report 22-21: We're All In and Wisconsin Tomorrow Programs (November 2022)
Summary
Report 22-21 of the Wisconsin Legislative Audit Bureau, dated November 2022, on the We're All In and Wisconsin Tomorrow Programs, with a letter of transmittal dated November 29, 2022 to Senator Robert Cowles, Co-chairperson of the Joint Legislative Audit Committee. It is a limited-scope review of how the Department of Revenue (DOR) administered the two programs. The letter states that through June 2022 DOR awarded $220.7 million through 38,116 grants under We're All In and $375.3 million through 61,637 grants under Wisconsin Tomorrow. It states that a review of 172 program grants totaling $4.1 million found DOR did not follow the written eligibility requirements for 45 grants totaling $475,000, and it recommends that DOR report to the committee on the results of its recovery efforts.
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“Wisconsin Legislative Audit Bureau, Report 22-21: We're All In and Wisconsin Tomorrow Programs (November 2022).”
Original at legis.wisconsin.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/wisconsin-legislative-audit-bureau-report-22-21-we-re-all-in-and-wisco-7485121d0b/
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STATE OF WISCONSIN
Report 22-21
Legislative Audit Bureau November 2022
NONPA RTISA N • INDEPENDEN T • ACCUR ATE
We’re All In and Wisconsin Tomorrow Programs
Joint Legislative Audit Committee Members
Senate Members: Assembly Members:
Robert Cowles, Co-chairperson Vacant, Co-chairperson
Dale Kooyenga John Macco
Howard Marklein Mark Born
Melissa Agard Dianne Hesselbein
Tim Carpenter Francesca Hong
We’re All In and Wisconsin Tomorrow Programs
STATE OF WISCONSIN
Report 22-21
Legislative Audit Bureau November 2022
NONPA RTISA N • INDEPENDEN T • ACCUR ATE
Report 22-21
November 2022 Legislative Audit Bureau
State Auditor The Legislative Audit Bureau supports the Legislature in its oversight of
Joe Chrisman
Wisconsin government and its promotion of efficient and effective state
Deputy State Auditor operations by providing nonpartisan, independent, accurate, and
for Performance timely audits and evaluations of public finances and the management
Evaluation of public programs. Bureau reports typically contain reviews of
Dean Swenson financial transactions, analyses of agency performance or public policy
issues, conclusions regarding the causes of problems found, and
Team Leader
Sam Rebenstorf recommendations for improvement.
Evaluators Reports are submitted to the Joint Legislative Audit Committee
Emily Gams and made available to other committees of the Legislature and to
Jonathan Sandoval the public. The Audit Committee may arrange public hearings on
Oindrila VanMeter the issues identified in a report and may introduce legislation in
response to the audit recommendations. However, the findings,
Publications Designer conclusions, and recommendations in the report are those of the
and Editor
Legislative Audit Bureau.
Susan Skowronski
The Bureau accepts confidential tips about fraud, waste, and
mismanagement in any Wisconsin state agency or program
through its hotline at 1-877-FRAUD-17.
For more information, visit www.legis.wisconsin.gov/lab.
Contact the Bureau at 22 East Mifflin Street, Suite 500, Madison, Wisconsin 53703; AskLAB@legis.wisconsin.gov;
or (608) 266-2818.
Contents
Letter of Transmittal 1
Introduction 3
We’re All In Program 7
Program Expenditures 7
Program Administration 10
Small Business Grants 12
Restaurant Grants 13
Program Integrity 15
Recovery of Grants Awarded in Error 15
Wisconsin Tomorrow Program 17
Program Expenditures 17
Program Administration 20
Small Business Grants 22
Lodging Establishment Grants 24
Program Integrity 24
Recovery of Grants Awarded in Error 25
Responses
From the Secretary of the Department of Revenue
From the Legislative Audit Bureau
STATE OF WISCONSIN
Joe Chrisman
Legislative Audit Bureau State Auditor
22 East Mifflin Street, Suite 500 Main: (608) 266-2818 www.legis.wisconsin.gov/lab
Madison, Wisconsin 53703 Hotline: 1-877-FRAUD-17 AskLAB@legis.wisconsin.gov
November 29, 2022
Senator Robert Cowles, Co-chairperson
Joint Legislative Audit Committee
State Capitol
Madison, Wisconsin 53702
Dear Senator Cowles:
In response to the Joint Legislative Audit Committee’s request that we evaluate how state agencies spent
supplemental federal funds the State received because of the public health emergency, we have completed
a limited-scope review of how the Department of Revenue (DOR) administered two programs. Through
June 2022, DOR awarded $220.7 million through 38,116 grants through its We’re All In program to small
businesses and restaurants, and it awarded $375.3 million through 61,637 grants through its Wisconsin
Tomorrow program to small businesses and to lodging establishments. DOR, which typically does not
administer grant programs, administered the two grant programs with its existing staff.
Supplemental federal funding agreements with the Department of Administration (DOA) specified
eligibility requirements that businesses needed to meet in order to be awarded program grants, and
DOR developed additional written eligibility requirements. At times, DOR awarded grants to additional
businesses that had experienced economic damages as a result of the public health emergency. However,
DOR did not modify its agreements with DOA or modify the written eligibility requirements it developed
in order to reflect the adjustments it made to the eligibility requirements. Our review of 172 program
grants totaling $4.1 million found that DOR did not follow the written eligibility requirements for 45 grants
totaling $475,000.
We also assessed a report made to our Fraud, Waste, and Mismanagement Hotline that raised concerns
about DOR’s administration of its grant programs, and that we determined were consistent with our
findings.
While our limited-scope review was ongoing, DOR indicated that it had begun to identify and recover
program grants it had made in error and that it planned to undertake certain additional efforts to identify
and recover such grants. We recommend that DOR report to the Joint Legislative Audit Committee on the
results of its efforts.
We appreciate the courtesy and cooperation extended to us by DOR. A response from DOR’s secretary
follows the report.
Respectfully submitted,
Joe Chrisman
State Auditor
JC/DS/ss
Introduction
DOR awarded grants to The Department of Revenue (DOR) awarded grants to businesses
businesses statewide statewide through its We’re All In and Wisconsin Tomorrow programs.
through its We’re All In Both programs were intended to assist Wisconsin businesses that
experienced economic damages during the public health emergency.
and Wisconsin Tomorrow
Both programs were supported by supplemental federal funds the State
programs. received as a result of the public health emergency. Federal legislation
did not require the State to establish either program. Instead, the
Department of Administration (DOA) allocated discretionary federal
funds to DOR, which then established the programs.
Wisconsin received supplemental federal funds through multiple
federal acts. The Coronavirus Aid, Relief, and Economic Security
(CARES) Act provided funds to support K-12 and higher education,
unemployment benefits, and transit, including $2.0 billion provided
through the Coronavirus Relief Fund. The American Rescue Plan
Act (ARPA) provided funds to support education, health, and
transportation, including $2.5 billion provided through the
Coronavirus State and Local Fiscal Recovery Funds program.
These federal acts provide flexibility in administering a portion of
the supplemental federal funds. In some instances, DOA allocated
the funds for particular programs.
From December 2020 As shown in Table 1, DOA allocated $599.2 million in supplemental
through June 2022, DOA federal funds to support DOR’s two programs from December 2020
allocated $599.2 million in through June 2022. For the We’re All In program, DOA allocated
supplemental federal separate amounts to support small businesses and restaurants and
funds to support DOR’s
similar entities, such as brewpubs and businesses in the amusement
and recreation industries. For the Wisconsin Tomorrow program, DOA
two programs.
similarly allocated separate amounts to support small businesses and
lodging establishments.
3
4 ❱ INTRODUCTION
Table 1
Supplemental Federal Funds that DOA Allocated for DOR’s Programs
December 2020 through June 2022
(in millions)
Program Amount
We’re All In
Small Businesses $180.4
Restaurants 40.2
Wisconsin Tomorrow
Small Businesses 303.5
Lodging Establishments 75.1
Total $599.2
DOA and DOR signed three agreements pertaining to the
$599.2 million in supplemental federal funds, including:
A December 2020 agreement, which was subsequently
amended, allocated $220.6 million in CARES Act funds
for the We’re All In program. The agreement required
DOR to use the funds to award grants to certain small
businesses and restaurants and similar entities, and
it allowed DOR to incur expenditures for program
administration.
A July 2021 agreement, which was subsequently
amended, allocated $303.5 million in ARPA
funds for the Wisconsin Tomorrow program. The
agreement required DOR to use the funds to award
grants to certain small businesses. In July 2022 and
August 2022, DOA and DOR executed amendments
that modified the source of $17.1 million in funding
from ARPA to the CARES Act and provided $869,000
for program administration.
A November 2021 agreement allocated $75.1 million
in ARPA funds for the Wisconsin Tomorrow program.
The agreement required DOR to use the funds to
award grants to certain lodging establishments.
INTRODUCTION ❰ 5
The July 2021 agreement provided the Wisconsin Economic
Development Corporation (WEDC) with $215,000 to publicize the
Wisconsin Tomorrow program. WEDC indicated that it did so through
social media campaigns, digital advertisements, and regional economic
development organizations. Before DOR awarded grants through its
We’re All In program, WEDC awarded an initial round of grants
through its We’re All In program. As we reported in our most recent
statutorily required evaluation of WEDC (report 21-7), WEDC awarded
26,122 businesses a total of $65.3 million in We’re All In grants through
September 2020.
DOR indicated that administering the We’re All In and Wisconsin
Tomorrow programs presented challenges, including awarding grants
with little preparation time and responding to a large number of
questions about the grants from small businesses, restaurants, and
lodging establishments. In 2021, DOR also administered the Wisconsin
Farm Support program, through which it awarded two rounds of
grants. DOR, which typically does not administer grant programs,
administered the We’re All In and Wisconsin Tomorrow programs with
its existing staff.
To complete this limited-scope review, we interviewed DOR, including
its Division of Income, Sales and Excise Tax, which administered both
programs. We also interviewed WEDC and three organizations that
represent Wisconsin businesses, including the Wisconsin Small
Business Association, the Wisconsin Restaurant Association, and the
Wisconsin Hotel and Lodging Association. We reviewed DOR’s
agreements with DOA, analyzed DOR’s program expenditures from
December 2020 through June 2022, and examined DOR’s policies and
procedures for awarding grants through the two programs. In addition,
we performed a detailed review of certain data in DOR’s sales and
income tax system, including the grant applications and the tax return
information of the small businesses, restaurants, and lodging
establishments that were awarded a total of 172 grants, including
87 grants awarded through the We’re All In program and 85 grants
awarded through the Wisconsin Tomorrow program.
We also assessed a report made to our Fraud, Waste, and
Mismanagement Hotline that raised concerns about DOR’s
administration of its grant programs, and that we determined
were consistent with our findings.
Program Expenditures
Program Administration
We’re All In Program
We analyzed DOR’s We analyzed DOR’s administration of its We’re All In program. DOR
administration of its We’re awarded two rounds of grants through the program, including grants
to small businesses and grants to restaurants and similar entities,
All In program, which
such as brewpubs and businesses in the amusement and recreation
awarded $220.7 million in industries. Through June 2022, DOR awarded $220.7 million through
program grants to small 38,116 program grants. Supplemental federal funding agreements with
businesses and restaurants DOA specified eligibility requirements that businesses needed to meet
and similar entities in order to be awarded program grants, and DOR developed additional
through June 2022. written eligibility requirements. We performed a detailed review of
87 program grants totaling $805,000, including 61 small business grants
and 26 restaurant grants. Our detailed review found that DOR did not
follow the written eligibility requirements for 25 program grants totaling
$375,000, including for 7 small business grants totaling $35,000 and for
18 restaurant grants totaling $340,000. While our limited-scope review
was ongoing, DOR indicated that it had begun to identify and recover
program grants it had made in error and that it planned to undertake
additional efforts to identify and recover such grants. We recommend
DOR report to the Joint Legislative Audit Committee on the results of
its efforts.
Program Expenditures
DOR awarded two rounds of program grants:
From December 2020 through April 2021, DOR
awarded $5,000 grants to 36,093 small businesses.
Each small business received one grant.
From December 2020 through January 2021, DOR
awarded grants to 2,023 restaurants and similar
7
8 ❱ WE’RE ALL IN PROGRAM
entities. Most grants were $20,000. However, DOR
reduced a grant by an amount equal to the total
amount of the grants that a given restaurant or
similar entity had previously been awarded, such
as a small business grant through its We’re All In
program or a grant through WEDC’s We’re All In
program. Each restaurant and similar entity
received one grant.
Program expenditures As shown in Table 2, program expenditures totaled $220.9 million
totaled $220.9 million from December 2020 through June 2022, including $220.7 million in
from December 2020 program grants and $0.2 million in program administration, almost all
through June 2022. of which was for staffing costs.
Table 2
We’re All In Program Expenditures, by Type1
December 2020 through June 2022
(in millions)
Type Amount
Small Business Grants $180.52
Restaurant Grants 40.2
Subtotal 220.7
Program Administration3 0.2
Total $220.9
1
CARES Act funds supported program expenditures.
2
DOR spent $45,000 more than the amount DOA
had allocated.
3
Includes staffing, software maintenance, and supplies.
Small business grants Small business grants awarded in a given county ranged from 14 grants
awarded in a given county totaling $70,000 in Menominee County to 5,556 grants totaling
ranged from 14 grants $27.8 million in Milwaukee County. Figure 1 shows the amount
totaling $70,000 in awarded in each county.
Menominee County to
5,556 grants totaling
$27.8 million in
Milwaukee County.
WE’RE ALL IN PROGRAM ❰ 9
Figure 1
We’re All In Program: Small Business Grants, by County1
December 2020 through June 2022
1
According to data provided by DOR. Excludes 504 grants for which recipients did not indicate their
Wisconsin locations.
Restaurant grants Restaurant grants awarded in a given county ranged from 1 grant
awarded in a given county totaling $20,000 in Vernon, Taylor, Marquette, Iron, and Florence
ranged from 1 grant counties to 357 grants totaling $7.1 million in Milwaukee County.
totaling $20,000 in each of Figure 2 shows the amount awarded in each county. No restaurant
five counties to 357 grants
grants were awarded in Clark, Forest, Jackson, Kewaunee, Menominee,
Price, Richland, and Rusk counties.
totaling $7.1 million in
Milwaukee County.
10 ❱ WE’RE ALL IN PROGRAM
Figure 2
We’re All In Program: Restaurant Grants, by County1
December 2020 through June 2022
1
According to data provided by DOR. Excludes 108 grants for which recipients did not indicate their
Wisconsin locations.
Program Administration
Under the agreements with DOA, DOR was required to award program
grants to small businesses and restaurants that had experienced
economic damages because of the public health emergency. In addition,
DOR required the small businesses and restaurants not to be on its list of
delinquent taxpayers, the Department of Transportation’s (DOT’s) list
of debarred contractors, or DOA’s list of ineligible vendors. To assess the
WE’RE ALL IN PROGRAM ❰ 11
eligibility of the small businesses and restaurants for the grants, DOR
relied on:
its tax system to verify certain information, such as
annual revenue and sales; and
small businesses and restaurants to attest to
information not in its tax system, such as the extent
to which their employees worked in Wisconsin or
whether they were operational when they applied
for the grants.
DOR used the data in its tax system, as well as information that small
businesses and restaurants had provided in their grant applications
and attestations, in order to determine whether to award individual
program grants. Determining whether to award grants typically
occurred automatically, according to parameters DOR established,
and without the need for DOR to consider the merits of individual
grant applications. However, DOR manually reviewed some grant
applications and other information because, for example, small
businesses and restaurants contacted DOR to ask why they did
not receive grants. After completing such manual reviews, DOR at
times adjusted the eligibility requirements and awarded grants to small
businesses and restaurants that met these adjusted requirements. DOR
indicated it adjusted the eligibility requirements in order to meet the
needs of small businesses and restaurants that had experienced
economic damages as a result of the public health emergency.
However, DOR did not modify its agreements with DOA or modify the
written eligibility requirements it developed in order to reflect the
adjustments to the eligibility requirements that it made.
After awarding the program grants, DOR did not require small
businesses and restaurants to report on how they spent their grants.
Under the agreements with DOA, small businesses and restaurants
were not required to submit such reports.
To assess DOR’s administration of the program, we examined:
how DOR determined whether small businesses
were eligible to receive program grants;
how DOR determined whether restaurants and
similar entities were eligible to receive program
grants; and
DOR’s efforts to ensure program integrity.
We assessed DOR’s administration of the program, in part, by
performing a detailed review of DOR’s available information for
87 grants. These grants included 20 grants we randomly selected and
67 grants we selected because, for example, information provided by
small businesses and restaurants in their grant applications or DOR’s
tax system indicated that the businesses may have been ineligible for
grants. We determined whether DOR awarded grants based on the
12 ❱ WE’RE ALL IN PROGRAM
eligibility requirements in the agreements with DOA and the written
eligibility requirements it developed. Because our review is not based
on a randomly selected and statistically valid sample of grants, it is not
appropriate to extrapolate the results of our review to all grants that
DOR awarded.
We found that DOR did not As shown in Table 3, our review of 87 program grants totaling $805,000
follow the written eligibility found that DOR did not follow the written eligibility requirements for
requirements for 25 grants 25 grants totaling $375,000. Our review found that DOR did not follow
totaling $375,000. multiple written eligibility requirements for two restaurant grants.
Table 3
Results of Our Review of Selected We’re All In Program Grants, by Type1
Grants for Which DOR
Grants We Did Not Follow Written
Reviewed Eligibility Requirements
Type of Grant Number Amount Number Amount
Small Business 61 $305,000 7 $ 35,000
Restaurant 26 500,000 18 340,000
Total 87 $805,000 25 $375,000
1
Because our review is not based on a randomly selected and statistically valid sample of grants,
it is not appropriate to extrapolate the results of our review to all grants that DOR awarded.
Small Business Grants
Under the agreement with DOA, small businesses were eligible for
program grants if they had less than $1.0 million in annual revenue and
no more than 50 employees. On its website, DOR specified additional
written eligibility requirements, including requiring small businesses to
have:
filed their 2019 federal and Wisconsin income or
franchise tax returns;
had at least 75.0 percent of the total value of their
property owned or rented and used for business
purposes located in Wisconsin in 2019; and
had at least 75.0 percent of their total labor costs
incurred by individuals who performed services in
Wisconsin in 2019.
WE’RE ALL IN PROGRAM ❰ 13
DOR required small businesses to apply for the program grants. DOR
indicated that it awarded grants to all small businesses that applied for
them and met the requirements in its agreement with DOA and the
additional written eligibility requirements specified on its website.
DOR awarded program Our detailed review of 61 small business grants found that:
grants to small businesses
that were ineligible for a DOR awarded a total of $20,000 in four grants to
variety of reasons. four small businesses that reported annual revenue
in 2019 that ranged from $1,005,500 to $1,039,600,
which exceeded the $1.0 million maximum
specified in DOR’s agreement with DOA. DOR
indicated it awarded grants to small businesses that
reported annual revenue up to $1.1 million.
DOR awarded a total of $15,000 in three grants to
three small businesses that did not have 2019 tax
returns with the required schedules in its tax
system. DOR indicated it awarded these grants in
error.
After we had identified the $15,000 awarded to 3 small businesses that
did not have 2019 tax returns with the required schedules in the tax
system, DOR indicated it may have awarded 193 program grants in
error to 193 small businesses that did not have 2019 tax returns with the
required schedules in its tax system. In August 2022, DOR indicated it
was reviewing these grants and planning to seek repayment from any
small businesses that were ineligible for the grants.
Restaurant Grants
Under the agreement with DOA, restaurants and similar entities were
eligible for program grants if their total sales in 2019 were between
$1.0 million and $7.0 million. The agreement also required the
restaurants and similar entities to attest to having suffered economic
damages because of the public health emergency. DOR used its tax
system to identify restaurants and similar entities that met the total
sales requirement in 2019 and invited them to accept the program
grants. DOR indicated it awarded grants to all restaurants and similar
entities that met the eligibility requirements.
Our detailed review of 26 restaurant grants found that DOR awarded a
total of $260,000 in 14 grants to 14 restaurants that reported total sales
in 2019 that ranged from $845,500 to $996,400, which was less than the
$1.0 million minimum specified in the agreement. The 14 restaurants
included:
11 restaurants that reported more than $1.0 million in
annual revenue and, as a result, had been ineligible
for $5,000 small business grants. DOR indicated it
awarded the restaurant grants in order to help
offset the economic damages of the public health
14 ❱ WE’RE ALL IN PROGRAM
emergency. DOR provided us with information
indicating it awarded a total of $720,000 in grants
to a total of 37 restaurants that reported total sales in
2019 that ranged from $845,000 to $1.0 million.
3 restaurants that were each awarded $15,000
grants, rather than the $20,000 that was typically
awarded, because DOR had previously awarded
them $5,000 small business grants.
DOR awarded a program Our detailed review found that DOR awarded a $20,000 program grant
grant to a restaurant that in December 2020 to a restaurant that was closed for business because
was closed for business of a fire at its premises one month earlier. DOR required restaurants to
because of a fire and attest that they were open and operating in order to be awarded a grant.
reported no sales after
DOR’s information indicated that the restaurant asked DOR in
December 2020 if it was eligible for a grant, and that DOR instructed the
November 2020.
restaurant to attest that it was open and operating. DOR indicated it
awarded the grant because the restaurant planned to reopen and
continued to file tax returns. As of July 2022, DOR’s tax system
indicated the restaurant had reported no sales after November 2020.
Our detailed review found that DOR awarded a $20,000 program grant
to a restaurant that was identified in its tax system as being delinquent
in paying Wisconsin taxes. DOR indicated it awarded the grant in error.
Under the agreement with DOA, restaurants awarded program grants
were required to have suffered economic damages because of the
public health emergency and to have substantially less taxable sales
revenue for the period from April 2020 through October 2020,
compared to same period in 2019. However, the agreement also
allowed DOR to award grants to restaurants that had increased sales
from 2019 to 2020, as long as such an increase was lower than a
percentage that DOR was to identify. DOR indicated that it recognized
these provisions conflicted and decided to award grants to restaurants
with sales that had increased by up to 25.0 percent from 2019 to 2020.
However, a December 2020 DOR policy required sales to have
decreased from 2019 to 2020 in order for a restaurant to be eligible
for a grant.
DOR awarded program Our detailed review found that DOR awarded a total of $80,000 in four
grants to restaurants that program grants to four restaurants that reported sales increases that
reported sales increases ranged from 0.8 percent to 18.2 percent for the period from April 2020
from 2019 to 2020. through October 2020, compared to the same period in 2019. DOR
indicated it awarded these grants because the restaurants reported that
their sales had increased by less than 25.0 percent, restaurant operating
costs increased because of the public health emergency, and sufficient
funds were available to cover the grants. None of these four grants
complied with the December 2020 DOR policy.
WE’RE ALL IN PROGRAM ❰ 15
Program Integrity
After DOR awarded the program grants and through August 2022, it
identified 12 grant applications that it determined were fraudulent
because, for example, the applicants did not own the businesses or
were not located at the addresses listed on the applications. DOR
identified these 12 grant applications based on its own investigations
and information financial institutions provided to it. Through
August 2022, DOR had recovered $26,100 of the $60,000 in grants it
had awarded based on these 12 grant applications.
Recovery of Grants Awarded in Error
As noted, our detailed review found that DOR awarded program grants
in error, and DOR indicated it was determining the extent to which it
may have awarded certain grants in error. In August 2022, DOR
indicated it had identified 193 small businesses that did not have
2019 tax returns with the required schedules in its tax system and was
reviewing these grants and planning to collect repayment from any
small businesses that were ineligible for the grants.
In September 2022, DOR indicated it plans to take additional efforts to
identify and recover grants it had awarded in error. For example, DOR
indicated it may review information in its tax system to determine
whether small businesses were operating when they applied for grants,
whether they had 75.0 percent of their business property in Wisconsin
in 2019, and whether they had 75.0 percent of their labor costs incurred
by individuals in Wisconsin in 2019.
DOR should undertake DOR should undertake additional efforts to identify and recover We’re
additional efforts to identify All In grants it awarded in error. Such efforts will help to ensure that
and recover We’re All In only eligible small businesses and restaurants were awarded grants.
grants it awarded in error.
Recommendation
We recommend the Department of Revenue:
undertake additional efforts to identify and recover
We’re All In grants it awarded in error; and
report to the Joint Legislative Audit Committee by
February 15, 2023, on the status of its efforts to
implement this recommendation.
Program Expenditures
Program Administration
Wisconsin Tomorrow Program
We analyzed DOR’s We analyzed DOR’s administration of its Wisconsin Tomorrow
administration of its program. DOR awarded two rounds of grants through the program,
including grants to small businesses and grants to lodging
Wisconsin Tomorrow
establishments. Through June 2022, DOR awarded $375.3 million
program, which awarded through 61,637 program grants. Supplemental federal funding
$375.3 million in program agreements with DOA specified eligibility requirements that businesses
grants to small businesses and needed to meet in order to be awarded program grants, and DOR
lodging establishments developed additional written eligibility requirements. We performed a
through June 2022. detailed review of 85 program grants totaling $3.3 million, including
71 small business grants and 14 lodging establishment grants. Our
detailed review found that DOR did not follow the written eligibility
requirements for 20 small business grants totaling $100,000. While our
limited-scope review was ongoing, DOR indicated it planned to
undertake efforts to identify and recover program grants it had made in
error. We recommend DOR report to the Joint Legislative Audit
Committee on the results of its efforts.
Program Expenditures
DOR awarded two rounds of program grants:
From June 2021 through September 2021, DOR
awarded $5,000 grants to 60,667 small businesses.
Each small business received one grant.
From August 2021 through October 2021, DOR
awarded grants of up to $2.0 million each to
970 lodging establishments. Grants equaled
8.5 percent of the decrease in a given lodging
17
18 ❱ WISCONSIN TOMORROW PROGRAM
establishment’s taxable sales from 2019 to 2020.
DOR reduced a grant by $5,000 if it had previously
awarded a given lodging establishment a small
business program grant. Each lodging
establishment received one grant.
Program expenditures As shown in Table 4, program expenditures totaled $376.0 million from
totaled $376.0 million June 2021 through June 2022, including $375.3 million for program
from June 2021 through grants. The $0.7 million in program administration expenditures
June 2022. included $0.5 million for staffing costs and $0.2 million for other costs,
such as software maintenance.
Table 4
Wisconsin Tomorrow Program Expenditures, by Type1
June 2021 through June 2022
(in millions)
Type Amount
Small Business Grants $303.0
Lodging Establishment Grants 72.2
Subtotal 375.3
Program Administration2 0.7
Total $376.0
1
ARPA and CARES Act funds supported program expenditures.
2
Includes staffing, software maintenance, and supplies.
Small business grants Small business grants awarded in a given county ranged from 10 grants
awarded in a given county totaling $50,000 in Menominee County to 9,090 grants totaling
ranged from 10 grants $45.5 million in Milwaukee County. Figure 3 shows the amount awarded
totaling $50,000 in in each county.
Menominee County to
9,090 grants totaling
$45.5 million in
Milwaukee County.
WISCONSIN TOMORROW PROGRAM ❰ 19
Figure 3
Wisconsin Tomorrow Program: Small Business Grants, by County1
June 2021 through June 2022
1
According to data provided by DOR. Excludes 720 grants for which recipients did not indicate their
Wisconsin locations.
Lodging establishment Lodging establishment grants awarded in a given county ranged from
grants awarded in a 1 grant totaling $5,000 in Pierce County to 99 grants totaling
given county ranged from $13.3 million in Dane County. No lodging establishment grants were
1 grant totaling $5,000 in awarded in Menominee County. Figure 4 shows the amount awarded
Pierce County to 99 grants
in each county.
totaling $13.3 million in
Dane County.
20 ❱ WISCONSIN TOMORROW PROGRAM
Figure 4
Wisconsin Tomorrow Program: Lodging Establishment Grants, by County1
August 2021 through June 2022
1
According to data provided by DOR. Excludes 97 grants for which recipients did not indicate their
Wisconsin locations.
Program Administration
Under the agreements with DOA, DOR was required to award program
grants to small businesses and lodging establishments that had
experienced economic damages because of the public health
emergency, had been operating in 2021, and had filed all required tax
returns. In addition, DOR required the small businesses and lodging
establishments not to be on DOT’s list of debarred contractors or
WISCONSIN TOMORROW PROGRAM ❰ 21
DOA’s list of ineligible vendors, and the business owners not to be
on the Department of Correction’s sex offender registry. To assess the
eligibility of the small businesses and lodging establishments for the
grants, DOR relied on:
its tax system to verify certain information, such as
annual revenue and sales; and
small businesses and lodging establishments to
attest to information not in its tax system, such as
the extent to which their employees worked in
Wisconsin and whether they were operational.
DOR used the data in its tax system, as well as information that small
businesses and lodging establishments had provided in their grant
applications and attestations, in order to determine whether to award
individual program grants. Determining whether to award grants typically
occurred automatically, according to parameters that DOR established,
and without the need for DOR to consider the merits of individual
grant applications. However, DOR manually reviewed some grant
applications and other information because, for example, small
businesses and lodging establishments contacted DOR to ask why they
did not receive grants. After completing such manual reviews, DOR at
times adjusted the eligibility requirements and awarded grants to small
businesses and lodging establishments that met these adjusted
requirements. DOR indicated it adjusted the eligibility requirements in
order to meet the needs of small businesses and lodging establishments
that had experienced economic damages as a result of the public health
emergency. However, DOR did not modify its agreements with DOA or
modify the written eligibility requirements it developed in order to reflect
the adjustments to the eligibility requirements that it made.
After awarding the program grants, DOR did not require small
businesses and lodging establishments to report on how they spent their
grants. Under the agreements with DOA, small businesses and
restaurants were not required to submit such reports.
To assess DOR’s administration of the program, we examined:
how DOR determined whether small businesses
were eligible to receive program grants;
how DOR determined whether lodging establishments
were eligible to receive program grants; and
DOR’s efforts to ensure program integrity.
We assessed DOR’s administration of the program, in part, by
performing a detailed review of DOR’s available information for
85 grants. These grants included 20 grants we randomly selected and
65 grants we selected because, for example, information provided by
small businesses in their grant applications or DOR’s tax system
indicated that the businesses may have been ineligible for grants. We
22 ❱ WISCONSIN TOMORROW PROGRAM
determined whether DOR awarded grants based on the eligibility
requirements in the agreements with DOA and the written eligibility
requirements it developed. Because our review is not based on a
randomly selected and statistically valid sample of grants, it is not
appropriate to extrapolate the results of our review to all grants that
DOR awarded.
We found that DOR did not As shown in Table 5, our review of 85 program grants totaling
follow the written eligibility $3.3 million found that DOR did not follow the written eligibility
requirements for 20 grants requirements for 20 grants totaling $100,000. Our review found that
totaling $100,000. DOR did not follow multiple written eligibility requirements for one
small business grant.
Table 5
Results of Our Review of Selected Wisconsin Tomorrow Program Grants, by Type1
Grants for Which DOR
Grants Did Not Follow Written
We Reviewed Eligibility Requirements
Type of Grant Number Amount Number Amount
Small Business 71 $ 355,000 20 $100,000
Lodging Establishment 14 2,900,000 0 0
Total 85 $3,255,000 20 $100,000
1
Because our review is not based on a randomly selected and statistically valid sample of grants,
it is not appropriate to extrapolate the results of our review to all grants that DOR awarded.
Small Business Grants
Under the agreement with DOA, small businesses were eligible for
program grants if they were not nonprofit organizations and were not
primarily engaged in crop production, animal production, aquaculture,
or leasing real estate. The agreement required small businesses to have:
begun operating on or before December 31, 2020;
filed 2019 federal and Wisconsin income or
franchise tax returns, or reported 2020 information
in their grant applications if the small businesses
began operating in 2020; and
annual revenue in 2019 that was more than $10,000
but less than $7.0 million, or reported 2020 annual
revenue in that range if a small business was not
operating in 2019.
WISCONSIN TOMORROW PROGRAM ❰ 23
Under the agreement, small businesses were required to meet three
additional requirements. DOR required small businesses to attest that:
at least 75.0 percent of the total value of their
property owned or rented and used for business
purposes was located in Wisconsin in 2019;
at least 75.0 percent of their total labor costs was
incurred by individuals who performed services in
Wisconsin in 2019; and
they were operational.
DOR required small businesses to apply for the program grants. DOR
indicated that it awarded grants to all small businesses that applied for
them and met the eligibility requirements.
DOR awarded program Our detailed review found that DOR awarded a total of $30,000 in six
grants to small businesses program grants to six small businesses that reported annual revenue in
that reported annual 2019 that ranged from $1,100 to $9,800, which was less than the $10,000
revenue less than the minimum specified in the agreement. DOR indicated that it:
specified minimum
based its eligibility determination for three small
amount.
businesses on 2020 annual revenue because the
small businesses had more than $10,000 in annual
revenue in 2020;
awarded a grant to one small business because its
annual revenue in 2019 was less than 10.0 percent
under $10,000;
relied on 2020 annual revenue for one small
business that began operating late in 2019 and that
had annual revenue more than $10,000 in 2020,
but not in 2019; and
awarded a grant in error to one small business, from
which it planned to seek repayment.
Our detailed review found that DOR awarded a total of $15,000 in
three program grants to three small businesses that began operating in
2020 and had annual revenue that ranged from $1,200 to $4,200, which
was less than the $10,000 minimum specified in the agreement. DOR
indicated it:
allowed one small business to keep its grant
because it had awarded the grant in error; and
decided not to apply the minimum annual revenue
requirement for two small businesses that began
operating in 2020.
24 ❱ WISCONSIN TOMORROW PROGRAM
DOR awarded program Our detailed review found that DOR awarded a total of $10,000 in
grants to small businesses two program grants to two small businesses that reported annual
that reported annual revenue revenue in 2019 of $7.7 million and $8.4 million, which exceeded the
more than the specified $7.0 million maximum specified in the agreement. Both small
maximum amount.
businesses reported less than $7.0 million in annual revenue in 2020.
DOR indicated it based its eligibility determinations for these two small
businesses on 2020 annual revenue, instead of 2019 annual revenue,
because both small businesses experienced an annual revenue
decrease in 2020.
DOR awarded program Our detailed review found that DOR awarded a total of $50,000 in
grants to small businesses 10 program grants to 10 small businesses that attested in their grant
that attested in their grant applications that they did not meet one or more written eligibility
applications that they did requirements that required them to be operational, have 75.0 percent
not meet one or more
of their business property in Wisconsin, and have 75.0 percent of their
labor costs incurred by individuals in Wisconsin. DOR indicated it
written eligibility
awarded the 10 grants in error and planned to seek repayment.
requirements.
Separate from our review, DOR determined it had awarded 333 program
grants in error. It indicated it had intended not to award these grants but
had inadvertently made the grant payments. Through June 2022, DOR
had resolved issues with 147 of the 333 grants, including by collecting
repayment of 96 grants and determining after further review that small
businesses were eligible for 51 grants. DOR had not resolved issues
with the remaining 186 grants totaling $930,000. DOR was pursuing
repayment but indicated some small businesses were unable to
repay because, for example, they were bankrupt or their owners
were deceased.
Lodging Establishment Grants
Under the agreement with DOA, recipients of program grants must be
engaged primarily in providing lodging to travelers. The agreement also
required lodging establishments to have taxable lodging sales that were
lower in 2020 than in 2019. DOR developed additional written grant
eligibility requirements, including requiring lodging establishments to
attest that they suffered economic damages as a result of the public
health emergency.
Our detailed review of DOR used its tax system to identify lodging establishments that met the
14 program grants totaling taxable sales requirement and invited them to accept the program grants.
$2.9 million found that DOR DOR indicated that it awarded grants to all lodging establishments that
consistently adhered to the met eligibility requirements. Our detailed review of 14 program grants
totaling $2.9 million found that DOR consistently adhered to the written
written eligibility
eligibility requirements.
requirements.
Program Integrity
DOR indicated it detected significantly more attempts to inappropriately
obtain Wisconsin Tomorrow grants for small businesses, compared to
such attempts to obtain We’re All In grants for small businesses. As
WISCONSIN TOMORROW PROGRAM ❰ 25
noted, DOR required small businesses to apply for grants through both
programs.
DOR developed procedures DOR developed procedures to identify and prevent individuals from
to identify and prevent inappropriately obtaining small business grants through the Wisconsin
individuals from Tomorrow program. DOR analyzed grant applications for indications
inappropriately obtaining of potential fraud before awarding grants and mailed letters to
49,564 grant applicants. These letters either asked the applicants to
small business grants.
verify their identities or informed them that their applications were
denied because of ineligibility or suspected identity theft. As a result
of these letters, the available information indicated that DOR:
denied grants to 41,341 applicants, including
28,605 applicants for grants that totaled
$143.0 million and that DOR suspected were
involved in identity theft or other types of fraud;
awarded grants to 8,207 applicants;
identified 11 duplicate applicants; and
had not taken action regarding 5 applicants as of
September 2022.
Recovery of Grants Awarded in Error
As noted, our detailed review found that DOR awarded program grants
in error. In September 2022, DOR indicated it plans to identify and
recover program grants it had awarded in error. For example, DOR
indicated it may review information in its tax system to determine
whether small businesses were operating when they applied for grants,
whether they had 75.0 percent of their business property in Wisconsin
in 2019, and whether they had 75.0 percent of their labor costs incurred
by individuals in Wisconsin in 2019.
DOR should undertake DOR should undertake efforts to identify and recover Wisconsin
efforts to identify and Tomorrow grants it awarded in error. Such efforts will help to ensure
recover Wisconsin that only eligible small businesses and lodging establishments were
Tomorrow grants it awarded grants.
awarded in error.
Recommendation
We recommend the Department of Revenue:
undertake efforts to identify and recover Wisconsin
Tomorrow grants it awarded in error; and
report to the Joint Legislative Audit Committee by
February 15, 2023, on the status of its efforts to
implement this recommendation.
26 ❱ WISCONSIN TOMORROW PROGRAM
As noted, our detailed review found that DOR did not consistently
award grants according to the eligibility requirements specified in its
agreements with DOA, and that DOR did not consistently award grants
according to the written eligibility requirements it developed. If DOR
receives additional supplemental federal funds to administer grant
programs, it will be important for DOR to consistently comply with the
written eligibility requirements of its programs.
Responses
State of Wisconsin DEPARTMENT OF REVENUE
2135 RIMROCK ROAD Mail Stop 624A P.O. BOX 8933 MADISON, WISCONSIN 53708-8933 608-266-6466 FAX (608) 266-5718
http://www.revenue.wi.gov
Tony Evers Peter W. Barca
Governor Secretary of Revenue
November 16, 2022
Mr. Joe Chrisman, State Auditor
Legislative Audit Bureau
22 East Mifflin Street, Suite 500
Madison, WI 53703
Dear Mr. Chrisman,
Thank you for your limited-scope review of how the Department of Revenue (DOR) administered federally funded
COVID-19 relief grant programs for small businesses, and for affording the DOR an opportunity to respond to your
report and recommendations.
Executive Summary
DOR’s mission was to help as many Wisconsin businesses as quickly as possible to survive the
coronavirus pandemic and help the state avoid economic collapse.
Our goal in administering the grant programs at issue, as well as others, was to provide as much
relief to businesses as possible within the guidelines set by DOA, and consistent with state and
federal law. Also to do so with transparency for and accountability to Wisconsin taxpayers.
During a pandemic without modern precedent, DOR, for the first time and without a roadmap,
having never been called upon to do so previously administered grant programs to help
Wisconsin businesses struggling with the costs of this economic disaster, distributing almost $700
million to Wisconsin businesses.
o As a share of American Rescue Plan Act funds received by states, Wisconsin was the top
state the nation in directing aid to businesses in need during the pandemic.
o Hundreds of businesses have told us they would not have survived if not for these grant
programs.
o DOR exercised flexibility in administering grants, as we learned of situations that
warranted adjustments in eligibility criteria. We did so to avoid denying grants for
bureaucratic reasons. We accept that we could have don a better job of properly
documenting those adjustments.
Not only did DOR aim to assist as many businesses as possible as quickly as possible, we worked
to do so while navigating massive fraud attempts by scammers in order to deliver this relief.
DOR took on not just the four programs reviewed by LAB, but six grant programs, and screening
over 200,000 grant applications while issuing over 135,000 grants worth nearly $700 million.
DOR successfully stopped 28,605 fraudulent grants from going out, saving taxpayers over $143
million and ensuring federal aid went to Wisconsinites who needed help.
LAB reviewed 172 grants of the over 135,000 grants, a total that represents less than 0.2% of
those issued, and are not a representative sample, as acknowledged in the report.
As LAB correctly points out, the sample size of randomly selected grants was not statistically
valid for extrapolating conclusions regarding the overall success rate of administration of these
grant programs.
DOR's comprehensive internal review is ongoing. Thus far, DOR has already confirmed that
well over 92 percent of the grants in the We're All In Phase 2 and over 94 percent in the
Wisconsin Tomorrow Small Business grant program went to eligible recipients. DOR is
Page 2
continuing to manually review certain businesses for eligibility, as many of the remaining grants
to be reviewed have complicated business structures.
Response
I begin our response with a message of high praise for all DOR employees who worked on these grant programs.
Our entire senior leadership team are extremely proud of them. This was a massive, coordinated effort involving
expertise from multiple divisions. Each deserves recognition for their hard work and contribution.
To our knowledge, DOR has never administered a grant program. However, given the pandemic and the need for
speedy payments to small businesses at risk of closing, we volunteered to use our staff and information systems to
process and distribute grants to businesses - quickly infusing funds into our local economy and avoiding economic
collapse.
Even under these extreme circumstances, we accomplished all of this with little time to prepare, no additional staff,
no reduction of existing responsibilities, and a very modest budget. Administrative costs of about $900,000 (0.13%)
were spent in distributing almost $700 Million in grants, which includes the two Farm Support programs not
reviewed in this limited scope review.
DOR-Administered Grant Program Total Award Total Approximate Dates
Grants
Farm Support 2020 $50M 15,247 June, 2020 – Oct. 2020
We're All In – Phase 2 $180.5M 36,093 Oct. 2020 – April 2021
We're All In – Restaurants $40.2M 2,023 Dec. 2020 – Jan. 2021
Wisconsin Tomorrow Small Business $303.2M 60,643 May 2021 – Sept. 2021
Wisconsin Tomorrow Lodging $72.2 970 July 2021-Oct. 2021
Farm Support 2021 $50M 20,054 Nov. 2021 – March 2022
Total $696.2M 135,030
Source: WI ARPA/CARES Grant Recipients dated 11/15/2022
The Evers administration and the state of Wisconsin were recognized by the Center on Budget and Policy as the top
state for investing ARPA relief money into economic development, effectuated through DOR's direct payment
programs. Further, there has been exceptional transparency with these grant awards as DOR set up a searchable
database on its website, in addition to posting the grants on the interactive website by the Department of
Administration.
The processing of grants stretched our resources; we were continuously administering grants from June of 2020
through March of 2022. We answered over 60,000 additional calls and over 20,000 additional emails – of note is
that this effort is in addition to and not to the detriment of our standard day-to-day customer contacts for tax related
assistance, which the DOR also simultaneously managed. It was a herculean effort to effectively and carefully
administer all six grant programs while processing 3.1 million yearly tax returns, tens of thousands of monthly
business tax returns, and maintaining each of our other essential responsibilities – over three tax seasons.
Our employees worked around the clock because it was critical for the health of our economy to get funds into the
hands of small businesses desperately in need. Appreciative calls from business owners strengthened staff resolve to
diligently and fairly administer these grant programs. Your review affirms the meticulous standards and integrity
we applied to administering these grant programs. Your report documented that grant were delivered statewide to
businesses that applied and met the eligibility criteria. We accept that in administering these grants quickly, human
error did occur, and a miniscule number of grants were awarded incorrectly. Your report details our efforts to
conduct post-grant reviews and recover grants awarded incorrectly.
DOR’s adjustments to eligibility criteria were necessary and were consistent with the direction given by DOA to
administer these grant programs. In all cases, the rationale for adjusting the criteria resulted in more businesses
qualifying for the grants. Most grant reviews for eligibility were conducted by DOR automatically based on the
written criteria DOR staff designed. However, when business owners contacted us to ask why their business was
ineligible for a grant, DOR conducted a manual review. Based on the specific nature of their business, we would
review our decision, sometimes approving and sometimes denying the grant. We tracked these unusual
Page 3
circumstances so we could apply the decision uniformly amongst applicants. These decisions were prudent to avoid
results that would have adversely affected businesses in ways we believed were unintended and unjustified.
DOR was in regular communication with the DOA regarding the implementation of the grant programs.
We agree with your recommendation to report back to the Joint Legislative Audit Committee by February 15, 2023.
As you mention, our staff identified grants that, due to human error, were inadvertently issued. This compelled us to
fully review the grant programs we've administered. For example, in the Wisconsin Tomorrow small business
program we are still working to finish verifying grants. We have already confirmed that more than 94 percent of the
grants were correctly issued. In the We're All in Phase 2 grant program, we have confirmed more than 92 percent.
We believe strongly that we'll find very few ineligible grantees when our review concludes. Other grant program
reviews have uncovered limited numbers of ineligible grants that were awarded. We are in the process of recovering
them.
We appreciate the opportunity to provide additional context to assist the public in understanding how the department
made decisions about these grant programs.
Battling Fraud
The report does not fully describe the massive amount of fraud attempts that we encountered during the
administration of the Wisconsin Tomorrow Small Business grants, nor the tension that resulted in trying to quickly
make grant payments while at the same time guarding against the fraud identified. We expected approximately
84,000 applicants based on aggregate tax information but received over 106,000 applications. This was the first sign
that something was wrong. Our skilled fraud team reviewed the data and discovered we were dealing with
significant, coordinated fraud. Because some genuine applicants incorrectly answered questions, we could not
simply address fraud by automatically denying applicants with incorrect information, as that would have ruled out
many small businesses that would have otherwise qualified.
This created a significant tension as our team was forced to slow down the grant payments in order to ensure that
fraudulent applications were not paid out. We fielded phone calls from many business owners that needed those
funds immediately, but we had to first create safeguards against the fraud, which took a bit of time.
Our team worked extra hours to create algorithms that would grant genuine claims and reject payments on
fraudulent applications. This required several layers of review, which resulted in payments being slightly delayed.
We believe this significant fraud-prevention strategy was successful and merits further recognition in your report.
As your report points out, 41,341 applications were weeded out and denied as suspicious, which included 28,605
that were identified as fraudulent. DOR's fraud specialists stopped $143 million in fraudulent applications.
Analysis of Results / Explanation of Adjustments
1. We're All In (WAI-P2) – Phase 2 (small business)
LAB reviewed 61 WAI Phase 2 grants out of over 36,000 that were awarded. Of those 61 reviewed, seven were
found to be ineligible based on DOR's initial eligibility criteria. We informed LAB that we adjusted the eligibility
criteria to include a 10% margin on the annual revenue criteria. This was a business decision applied to all grant
applicants that allowed more small businesses to be eligible for much needed assistance.
Of the seven grants LAB identifies as ineligible; DOR recognizes only four as ineligible and will take steps to
recover these grants. Three are eligible because they fall within the 10% margin.
We note that of the grants that were randomly sampled, 100% of those were found to be eligible according to the
initial criteria.
Total Grants LAB Reviewed LAB finds ineligible DOR concurs with ineligibility
WAI – Phase 2
36,093 61 (10 random/51 targeted) 7 (from the targeted dataset) 4
2. We're All In (WAI-R) – Restaurants
Page 4
LAB reviewed 26 grants from the WAI-R program, of which 18 were identified as not meeting the initial eligibility
guidelines. DOR agrees that one of these grants was incorrectly issued and should not have been eligible based on
the initial criteria. Of the remaining 17, all were deemed eligible because of DOR adjustments to eligibility based
on the "Gap List", the "25% change", and the "operational rule." Each are described in more detail below. Keep in
mind that the Memorandum Of Understanding (MOU) with DOA was developed prior to DOR’s in-depth analysis
of eligible restaurants.
Note these grants were very different in that they were closed grants administered by invitation only. DOR's ability
to review tax information made it unnecessary for businesses to apply for these grants. Instead, DOR identified all
businesses that fit the eligibility criteria and invited them to complete an attestation to qualify. Because the adjusted
criteria was universally applied, all businesses were treated fairly and the adjusted criteria served to ensure that we
didn't disqualify the very businesses we were seeking to assist.
Total Grants LAB Reviewed LAB finds ineligible DOR concurs with ineligibility
WAI – R
2,023 26 (10 random/16 targeted) 18 (from the targeted dataset) 1
Gap List
When creating the WAI P2 program, DOR used a "gross revenue" standard to set the $1 million maximum threshold
for small businesses. However, when creating the WAI–R program, DOR used sales tax revenue to set the $1
million minimum threshold. Sales tax revenue was used because it is most indicative of a restaurant’s performance,
and all restaurants have taxable sales.
Using two different methods for determining eligibility created a “gap” in which a restaurant did not qualify for the
WAI P2 program because gross revenue was above the eligibility cap and did not qualify for the WAI-R program
because sales revenue was below the eligibility floor. This issue was brought to our attention by several restaurants.
Upon a closer review of our tax data, we learned that there were 42 restaurants that fell into this gap, and all 42
restaurants were invited to participate in the program.
Doing better in 2020 – the 25% list
The restaurant grant was a closed grant program which meant that DOR, using sales information, developed the
criteria to invite owners to accept the grant. As we explored the data, DOR expanded eligibility to include any
restaurant (and other entertainment industries) with taxable sales up to 25% more in 2020 when compared to 2019.
The reason is that while some businesses had higher sales in 2020, these businesses also had higher expenses for
their new pandemic business model.
Operational Rule issue
The report discusses a restaurant grant issued to a restaurant that had suffered a fire in the month earlier. The
restaurant reported to DOR staff that they intended to reopen notwithstanding the fire. Our criteria written in the
MOU with DOA stated that to be eligible, among the other criteria, businesses had to have a sales tax account which
was not ceased. In other words, the business had to keep their sales tax account active and current. When we
translated that requirement into an attestation by the business, we reworded the criteria to render it more user-
friendly. The attestation read, in part, that the business "was open and operating." We decided to award the grant, as
the business met the requirement in the MOU for an active sales tax account.
3. Wisconsin Tomorrow Small Business (WT-SB)
According to the report, 71 WT-SB were reviewed in detail. Of those, 10 were randomly selected, and the
remainder were selected from a targeted list of problematic grants, provided by DOR where applicants may have
answered eligibility questions incorrectly. Of the 71 that were reviewed, LAB determined 20 did not meet the initial
eligibility criteria. We consider three from this list to have been eligible based on adjustments to eligibility criteria.
The three were businesses that started in 2019, so their 2020 revenue was utilized to qualify for the $10,000
minimum revenue threshold. DOR acknowledges that the remaining applicants were awarded grants in error and is
in the process of recovering those grants.
We note that of the grants that were randomly sampled, 100% of those were found to be eligible according to the
initial criteria.
Page 5
Total Grants LAB Reviewed LAB finds ineligible DOR concurs with ineligibility
WT SB
60,643 71 (10 random/61 targeted) 20 (from the targeted list) 17
4. Wisconsin Tomorrow Lodging
According to the report, 14 Wisconsin Tomorrow Lodging grants were reviewed in detail. Of those, all were
eligible. We believe that because this was a closed program (pre-selected based on tax records), and because it was
one of the last grants we were tasked with administering. By then, we learned a tremendous amount about
administering grants and were able to apply lessons learned. It was also a much smaller program. Therefore, we
agree with your report that no ineligible grants were awarded under the Wisconsin Tomorrow Lodging program.
Total Grants LAB Reviewed LAB finds ineligible DOR concurs with ineligibility
WT Lodging
968 14 (10 random/4 targeted) 0 0
Methodology Limitations
1) LAB's limited scope review only looked at four of our six programs, yet frames DOR's grant administration
as two programs when in fact there were four programs with distinct eligibility criteria and administration
processes. There are important distinctions in which the grants were administered that are helpful in
assessing the program integrity of each grant. The approach adopted by LAB creates a scenario where
results are easily comingled across grant programs, and it is difficult to assess the success of each grant
program individually. It perhaps would have been more edifying to the reader if each grant was reviewed
separately.
DOR-Administered Grant Program Application DOR-Administered Grant Program Application
We're All In – Phase 2 Open Wisconsin Tomorrow Small Business Open
We're All In – Restaurants Closed Wisconsin Tomorrow Lodging Closed
2) LAB selected only 10 random grants to review in each program, and the remainder selected from a list of
targeted grants that were flagged as potentially having eligibility issues. This created a situation where you
had ineligible grants overrepresented in the review. Reminding the reader that the sample was not
statistically significant to extrapolate conclusions is helpful, but we remain concerned about people
reviewing this report and having misimpressions.
Conclusion
We agree with the recommendations in the report although we reserve the right to use the adjusted criteria for grant
awards. We understand why this limited scope review was obliged to use the initial written criteria in the MOUs to
review our programs, but we believe the adjustments made were consistent with the intent of the program and the
DOA's direction. If improvements are warranted, they are in our documentation of such adjustments, which we will
seek to do in the future.
The department will continue its work reviewing the grants and will report to the Joint Legislative Audit Committee
on the status of the grant review. Because of space constraints, we created a separate Addendum which has been
provided to LAB and is available upon request and will soon be on our website that addresses the points highlighted
in your report.
Sincerely,
Peter Barca
Secretary
STATE OF WISCONSIN
Joe Chrisman
Legislative Audit Bureau State Auditor
22 East Mifflin Street, Suite 500 Main: (608) 266-2818 www.legis.wisconsin.gov/lab
Madison, Wisconsin 53703 Hotline: 1-877-FRAUD-17 AskLAB@legis.wisconsin.gov
November 29, 2022
Senator Robert Cowles, Co-chairperson
Joint Legislative Audit Committee
State Capitol
Madison, Wisconsin 53702
Dear Senator Cowles:
To help the Joint Legislative Audit Committee evaluate the Department of Revenue’s (DOR’s)
written response to our audit report, we offer several clarifying comments.
First, DOR disagrees with our audit report’s conclusion that it made a total of 45 We’re All In and
Wisconsin Tomorrow program grants to ineligible recipients because it adjusted the eligibility
requirements for the grants.
Auditors assess state agency performance based on relevant written criteria, such as statutes, contracts,
agreements, and policies. Accordingly, we assessed DOR’s administration of the two programs based
on the written eligibility criteria established for the programs, including the written supplemental
funding agreements signed by DOR and the Department of Administration (DOA). These agreements
specified written eligibility requirements that DOR was required to follow when awarding grants with
the supplemental federal funds provided by DOA. Such written eligibility requirements make eligibility
criteria clear to all, including those small businesses choosing whether to apply for certain grants. Our
audit report accurately identified 45 instances when DOR did not award grants in compliance with
either the written eligibility requirements specified in these agreements or the additional written
eligibility requirements DOR developed.
Second, DOR’s written response indicates our review overrepresented grants that we “targeted,” based
on DOR’s information that indicated the businesses may have been ineligible to receive these grants.
Auditors assess how state agencies award grants using a variety of methodologies, including targeted
reviews of grants that the available information indicates state agencies may have awarded inappropriately.
Accordingly, we chose to focus a portion of our review of 172 grants on areas of identified risk. Given our
chosen methodology, our audit report accurately states that it is not appropriate to extrapolate the results
of our review to all grants that DOR awarded through the two programs.
We hope these comments help you to assess DOR’s written response to our audit report.
Sincerely,
Joe Chrisman
State Auditor
JC/ss
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