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Companies cash in Oklahoma job creation incentives even after layoffs

Oklahoma's Quality Jobs program has paid out more than $877 million in payroll rebates in past 20 years.
by Brianna Bailey Modified: September 29, 2013 at 3:00 pm •  Published: September 29, 2013
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Companies that have laid off hundreds of workers in Oklahoma have collected millions of dollars in job creation incentives through the state's Quality Jobs Program.

Since 2010, six companies in the state have had mass layoffs while enrolled in the Quality Jobs Program — sometimes receiving incentive payments from the state weeks before laying workers off, or continuing to receive payments after layoffs.

The Quality Jobs Program has been one of the state's banner economic development programs for the past two decades. However, there is no “clawback” provision in the program that would require companies to repay incentives to the state if they lay off workers after receiving Quality Jobs money.

Since its inception in 1993, the program has paid out more than $877 million in payroll rebates. Companies enrolled in the program can get up to a 5 percent rebate on their payroll taxes for up to 10 years in exchange for creating new jobs in the state.

Participating companies have to create a minimum $2.5 million in new payroll within three years to qualify for the payments. Businesses enrolled in the program also must meet minimum wage and benefit requirements.

As long as companies maintain a baseline number of employees, there are no consequences for laying off workers while enrolled in the Quality Jobs Program. The law also contains no provision to require companies to repay the money if they lay off workers, go out of business or move out of state.

Job cuts don't change deal

Houston-based Halliburton Co. has accepted Quality Jobs money in 2013. It also laid off 130 manufacturing workers in Duncan. The company has accepted $1.29 million in Quality Jobs payments from Oklahoma in 2013 through August, and $16 million since 1996.

Because Halliburton keeps a presence in Oklahoma above the baseline of 2,666 jobs outlined in its Quality Jobs deal with the state, Halliburton remains eligible to receive state payments.

“The program pays companies based on employee number increases above that base number each quarter,” company spokeswoman Susie McMichael said. “If the number falls to the baseline or lower, we get no payment.”

Halliburton enrolled in the Quality Jobs program in 1996, and entered into a new contract with the state for another 10 years in 2006 to create 631 new jobs in the state over the next decade. The company plans to continue to participate in the Quality Jobs program until at least 2016, when its second contract with the state expires, McMichael said.

Wichita-based Spirit AeroSystems has accepted Quality Jobs money in 2013, during which time it also said it would layoff a combined 360 people in Wichita, Kan., and Tulsa. The company would not disclose how many Tulsa workers it has laid off this year, but Spirit said in August that it would sell its Tulsa plant, which employs about 2,800 people.

The company has accepted more than $2.5 million in Quality Jobs payments from Oklahoma in 2013, and $18.8 million in Quality Jobs payments since 2007.

“Spirit AeroSystems has a contract with the Oklahoma Department of Commerce and participates within the guidelines of the program,” the company said in a statement.

The company, which has a deal with the state to create 1,832 jobs over 10 years in Oklahoma, is above the baseline employment as spelled out by its contract with the state of 1,215 employees, and will continue to participate as long as it is eligible, Spirit said.

Chesapeake Energy Corp. has received more than $28.8 million from the state Quality Jobs program since 2007. With $8.27 million in the most recent fiscal year, Chesapeake received more Quality Jobs money than any other company. The company said it laid off 86 workers last week, after cutting an undisclosed number earlier in September. The company is expected to layoff additional workers by Nov. 1. Chesapeake, which had about 4,700 employees in Oklahoma City at the end of January, also remains well above its baseline of 2,493 jobs.

The company declined to comment about its participation in the Quality Jobs Program.

“In the case of Chesapeake, they have thousands of employees, many of them considered ‘new' jobs and therefore, although the recent layoffs are unfortunate, the overall job count remains well above the baseline at which Quality Job payments would otherwise stop,” State Commerce Department Deputy Director Don Hackler said in a statement. The Oklahoma Department of Commerce administers the Quality Jobs Program.

SandRidge Energy Inc. has accepted $27.3 million in Quality Jobs payments from the state since 2007. In 2013, the company has collected $2.48 million in Quality Jobs incentive money. In January, the company laid off an undisclosed number of workers in Oklahoma City after selling off its Permian Basin Assets.

SandRidge employed about 2,500 people at the end of 2012, according to its most recent annual report. The company exited Quality Jobs in the first quarter of 2013, after reaching the maximum dollar amount it could receive from the program.

“Quality Jobs establishes a baseline for companies upon entering the program,” Leslie Weiher, a spokeswoman for SandRidge said in a statement. “Benefits are based on payroll only for jobs created above baseline employment on or after the projected start date for the duration of the agreement. If a position was eliminated due to layoff, the company would no longer receive a credit for that job.”

Weiher declined to say how many people SandRidge laid off in January, but said the company reassigned many of the workers to jobs focusing on SandRidge's assets in the northern Oklahoma and southern Kansas' Mississippi Lime play.

A few companies that have accepted Quality Jobs money since 2010 have shut down their operations entirely in Oklahoma while participating in the program. The Tulsa-based glass manufacturer Zeledyne closed its plant in 2011 after business for auto glass from its primary customer, Ford Motor Co., dried up.

Between 2008 and 2010, Zeledyne accepted more than $2.26 million in Quality Jobs Program payments from the state. At one time, Zeledyne issued layoff notices to 206 Oklahoma workers in 2010 and another 325 workers in 2011, according to state records.

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by Brianna Bailey
Business Writer
Brianna Bailey has lived in Idaho, Germany and Southern California, but Oklahoma is her adopted home. She has a bachelor's degree in Journalism from the Univerisity of Oklahoma and has worked at several newspapers in Oklahoma and Southern...
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The program pays companies based on employee number increases above that base number each quarter. If the number falls to the baseline or lower, we get no payment.”

Susie McMichael,
Halliburton Co. spokeswoman

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