Vermont May Have Paid Keurig Millions Of Dollars. Where Did That Money Go?

Oct 3, 2018

Over the last 20 years, the state of Vermont has authorized more than $10 million in payments to Keurig Green Mountain, Inc.

The company, known for its K-Cup pods, is just one of many Vermont businesses that have used state incentive programs aimed at creating jobs. But exactly how much money Keurig received and what the company did with it is shrouded in secrecy.

Green Mountain Coffee Roasters started out as a small coffee company in Vermont. In 1998, it started selling its coffee for the Keurig system, and took a minority stake in the company. In 2006, it acquired Keurig, and a few years later, Keurig beverage machines and K-Cups took off in popularity. That meant big profits and major growth. By 2014, the company was known as Keurig Green Mountain.

Along the way, the company received money from the state of Vermont, mostly through a program designed to create jobs called the Vermont Employment Growth Incentive, or VEGI.

Here’s how VEGI is supposed to work: A company like Keurig applies for state funds. If the application is accepted, the state promises to pay the company back over several years for specific investments the company can prove created new jobs.

VPR News: Can You Prove Vermont's Main Business Incentive Creates Jobs? It's Debatable

Keurig has been approved for the most money of all companies that have become eligible for these payments. But exactly how much they actually received and what they did with it?

It turns out this is confidential.

PROPRIETARY INFORMATION

In March, Casey Mock told VPR that a state law prevents him from telling VPR how much money the state gave to Keurig or what Keurig did with the funds. At the time, Mock was the head of the Vermont Economic Progress Council, the board which decides which companies receive money from the VEGI program. Mock said the law is designed to protect a company’s proprietary information, such as a prospective contract or product.

Mock’s advice for finding out how many taxpayer dollars the state paid Keurig was simply to ask Keurig.

“Whatever Keurig tells you that they're happy to disclose, you know, it's not like we’re going to stop that either,” Mock said.

VPR asked Keurig for documentation of the payments they received from the state, and of the number and types of jobs created with that money. Three weeks later, a spokesperson for Keurig sent over the following statement:

The Vermont Economic Progress Council (VEPC) and its VEGI incentive program have encouraged us to invest heavily in Vermont over the last 10 years. The program has made it possible for Keurig Green Mountain to maintain a strong physical presence in Vermont, creating over 2000 new jobs and capital investment exceeding $450 million.

The statement did not say whether those jobs would have been created without the incentives. It also did not say how much money the company has received from the state.

A Keurig spokesperson did not respond to VPR's requests for a tour of the company's Waterbury headquarters, seen here.
Credit Henry Epp / VPR

A Keurig spokesperson would not provide an interview or a tour of their headquarters in Waterbury.

Businesses often keep their information private, but taxpayer dollars are usually subject to public scrutiny. State Auditor Doug Hoffer is bothered by this lack of transparency. He said the number of jobs created by these awards should be public – at the very least.

“I think the people of the state have a right to know,” Hoffer said. “I don’t think employment data would compromise the integrity of the firm.”

INTERNAL ANALYSIS

Even though it’s not out in the open, there is a cost-benefit analysis built in to the VEGI program.

When a company comes to the state with a proposal, state employees run the proposal through a model to figure out how much the state would benefit from the investment.

The model weighs economic benefits, like the amount of money new employees will pay in taxes, and what they’ll spend on lunch or jewelry.

“As well as, you know, wear and tear on the roads that kind of stuff,” explained Casey Mock, referring to the costs of new employees for the state, which the model also takes into account. Mock would only provide a redacted version of the model, and would not explain how the analysis played out for Keurig.

Casey Mock is the former executive director of the Vermont Economic Progress Council, which oversees the VEGI program.
Credit Henry Epp / VPR

As far as the actual payments from the state to Keurig, the Agency of Commerce and Community Development considers those to be tax returns, so they too are confidential.

Meeting minutes from the board that oversees VEGI are public. During one meeting in 2007, the company told the board it might expand outside Vermont, and called public funds "critical" to staying here. Yet every time the board actually discussed whether to approve Keurig for a VEGI award, that appears to have happened in executive session. There’s no public documentation of what was said.

WHAT’S IN IT FOR VERMONTERS

VEGI awards are supposed to create jobs, and therefore money for the state. But while Keurig clearly grew in Vermont, not all the jobs it added stuck around.

Since 2015, Keurig has laid off at least 455 workers in Vermont, according to records from the state Department of Labor. That includes 35 layoffs this past May.

VPR sought to compare the number of people Keurig has employed over time, to try to track the impact of the state funds that way. But Dirk Anderson, the general counsel for the state’s Labor Department, said even that’s not possible.

“That information is considered confidential,” he said.

In January, Keurig announced a merger with Dr. Pepper. In June, the state stopped paying out installments of one of the company’s VEGI awards because the company’s workforce dropped so significantly, according to a state report.

But the company, now known as Keurig Dr. Pepper, is apparently not done using the VEGI program. Last year a company called Bedford Systems applied for a $1.2 million VEGI award. That business is attempting to create a home beverage-making system for alcoholic drinks. It’s a joint venture of Anheuser-Busch and Keurig.