UPDATE: WEDC official resigns, leaders vow better practices - WKOW 27: Madison, WI Breaking News, Weather and Sports

MADISON (WKOW) -- The chief financial officer of the state's flagship jobs agency resigned, as state leaders vowed better accounting practices, after the agency lost track of more than $7 million in unpaid loans.

Governor Scott Walker says Wisconsin Economic Development Corporation CFO Mike Klonsinski submitted his resignation Thursday. Walker is also chairman of WEDC's board of directors, and appeared via teleconference during a Friday board meeting.

"It's not lost on board members, why this change occurred," Walker told other board members.

Klonsinski, whose salary is listed as $113,000, will leave WEDC November 2.

WEDC official Ryan Murray says while repayment on some of the unpaid loans is being made, the loans were listed simply "current," or "late," for more than a year. Murray says he discovered the lack of complete status on the loans one week ago.

Murray says the more than $7 million in loans involved 99 businesses, with $4 million loaned to Flambeau River Papers. Murray says WEDC's total loan portfolio is $69 million, with nearly 100 of the business loans either 30 days late in payment, or in collection with the state Department of Justice.

Murray says WEDC's predecessor, the state Department of Commerce, had a division to service loans, but that unit did not carry forward to the quasi-public-private WEDC when it succeeded Commerce last year.

With Klonsinski resigned and WEDC CEO Paul Jadin leaving for another economic development job, board member and Democratic lawmaker Peter Barca (D-Kenosha) said the WEDC was in a "state of chaos." Barca and Walker agreed an offer of expertise from the Wisconsin Bankers Association should be accepted to ensure sound financial practices at the agency.

Murray also says a corrective action plan is being implemented, to include centralized loan tracking, and a review of all WEDC contracts and financial transactions.

Walker named Reed Hall of Tomah Friday as an interim replacement for Jadin. A statement said Hall is the former executive director of the Marshfield Clinic.

Murray says more than 50 applicants already exist to permanently succeed Jadin, and another 50 are expected in the pool with the help of an outside executive recruitment firm.

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MADISON (WKOW) -- Gov. Scott Walker says he wants to hire a temporary leader for the state's troubled economic development agency.

Paul Jadin is the current head of Wisconsin Economic Development Corp. His last day is Friday. A search is currently under way to replace him.

At a meeting of the WEDC board on Friday, Walker said that he wants to bring in someone from outside the agency to lead it for the next two to three months.

Walker also announced that WEDC's chief financial officer Mike Klonsinski has resigned. Klonsinski took that position when Walker aide Ryan Murray became WEDC's second in command this summer.

Tony Galli will have more on this developing story tonight on 27 News at 5 and 6.

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MADISON (WKOW) -- A top official with the state's flagship jobs agency says some portion of loans to 99 businesses are now being repaid, after revelations this week the agency failed to track the loans.

Ryan Murray of the Wisconsin Economic Development Corporation says $5 million of the $8 million of the total, outstanding loan portfolio involves one company, Flambeau River Papers, and several, separate loans.

Murray was assigned by Governor Walker to WEDC after the agency's chief executive officer, Paul Jadin, announced he was leaving for another job. Jadin's last day is Friday.

Following a committee meeting on finding Jadin's successor, Murray says Walker directed him to do a "deep dive" into WEDC's operation, and as a result, it was discovered, for more than a year, the loans to the nearly 100 state businesses were not being tracked.

Murray says while formal tracking has not taken place, WEDC staff members have been communicating with some of the creditor businesses and some payments have been made.

Murray will address the WEDC's Board of Directors on the failure of loan-tracking later Friday. Murray declines to comment on what Walker said Thursday would be "dramatic moves" to address the lack of accountability with the loans.

Murray told search committee members more than 50 applicants vying to become Jadin's successor have already submitted materials, and through an executive search firm, an estimated 50 additional applicants are expected to join the pool. Murray says the use of the firm will broaden the scope of the search.

Murray says he's not a candidate for the job.

In addition to the situation over the largely unpaid, untracked loans, federal officials determined WEDC was making loans to businesses without adequate vetting, and dispersed funds improperly after failing to follow all necessary steps in converting the former state Department of Commerce into the public-private, successor corporation. WEDC officials also offered a tax incentive to a firm bidding for a $15 million educational information technology contract, leading to a temporary halt in the bidding procedure.

Some board members have expressed reservations about Murray continuing to lead WEDC in the absence of a new CEO until at least January 2013. Murray's role will be discussed Friday by board members.

Murray says his track record, including the discovery of the loan collection issues after his installation at the agency, speaks for itself.

Murray declined comment on whether the failure to keep track of loans at WEDC resulted in any personnel actions.

Tony Galli will have more on this developing story tonight on 27 News at 5 and 6.