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Redesigning State Economic Development Agencies. Erin Sparks CSG-West Annual Meeting July 31, 2013. States Experimenting with New Models. At least 12 states have reorganized their approach to economic development over past two years – others are currently in the process of doing so.
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Redesigning State Economic Development Agencies Erin Sparks CSG-West Annual Meeting July 31, 2013
States Experimenting with New Models • At least 12 states have reorganized their approach to economic development over past two years – others are currently in the process of doing so. • Responding to three pressing challenges: • Rise of intense global competition; • Structural inefficiencies in economic development agencies; • State fiscal crunch.
Engage and Sustain Private Sector Involvement • Public-Private Partnerships • Michigan Economic Development Corporation • Iowa Economic Development Partnership • Semi-State Agency • Arizona Commerce Authority
Michigan Economic Development Corporation (MEDC) • Michigan’s lead economic development agency; created in 1999. • Under Governor Rick Snyder’s direction, focused on four statewide goals: • Unemployment rate ranked with the ten lowest states • GDP growth ranked with the top ten states • Real personal income per capita ranked with the top ten states • Population increase of people aged 25 to 34 • Most of funding comes from public sources, through a combination of state general fund appropriations and dedicated funding sources, such as tobacco settlement funds and casino revenue.
Michigan Economic Development Corporation (MEDC) • Private sector involvement includes: • Participation in 20-member executive committee appointed and chaired by governor. • An additional oversight and performance board, that consists of nearly 90 private sector leaders. • Regional mechanisms for interacting with businesses. • Corporate employee category allows MEDC to attract and retain highly-qualified employees who have extensive experience in the private sector.
Iowa Economic Development Partnership • Created in 2011 to replace Iowa Department of Economic Development. • Chaired by Governor with 11 member board (appointed by governor) composed of private sector and economic development experts. • Charged with developing comprehensive economic development strategy. • Consists of a partnership between the Iowa Economic Development Authority and the Iowa Economic Development Corporation.
Iowa Innovation Corporation • Operating arm of Iowa Innovation Council. • Created in 2010 as advisory body. Absorbed three innovation councils: Bioscience Alliance, Advanced Manufacturing Council, and Information Technology Council. • Goal to provide the infrastructure for an innovation ecosystem. • Developing an innovation roadmap, including an Iowa Innovation Index. • Legislative priorities include seed fund tax credits, SBIR/STTR funding, DEMO fund.
Arizona Commerce Authority (ACA) • Eight-month transition from Arizona Commerce Department to ACA started in June 2010. • ACA’s operations are publicly funded with one exception– marketing operations, which will be financed by the private sector. • Unlike traditional commerce departments, ACA is devoted exclusively to economic development; any unrelated programs were shifted to other agencies. • Private sector involvement through board of directors chaired by governor and comprised of chief executive officer-level business, education, and community leaders.
Create Mechanisms for Collaboration • Across State Agencies, Industry, and Universities • Between States and Regions • New York Regional Councils
New York’s Regional Councils • In 2011, New York established 10 regional public-private partnerships (regional development councils). • Composed of stakeholders from business, academia, local government, and nongovernmental organizations. • Tasked with developing strategic plans that emphasize each region’s strengths and unique assets. • Regional Councils access state funding through the new Consolidated Funding Application. • Regional councils complete one application, based on their economic development strategy, to access grant funding and tax credits from multiple state funding sources. • All regions receive some support, but winning regions receive additional support.
Institute a Qualitative Evaluation System • Web-based Monitoring System • Virginia Performs • MI Dashboard • Benchmark Indicators
System for monitoring effectiveness of state agencies. • Includes information about agency mission, strategic plan, and performance against a set of evaluation measures. • Designed to align specific outcomes achieved with larger statewide goals for the economy identified through consensus process led by the Council on Virginia’s Future.
Dashboard: Provides a quick assessment of the state’s performance in key areas including: economic strength; health and education; value for money government; quality of life; and public safety. • Agency scorecards: Provide transparency and accountability to Michigan taxpayers, serve as an internal management tool for decision-makers and a compass for all State of Michigan employees.
Lessons Learned • Moving to public private partnership may better leverage private sector expertise, but probably won’t leverage large amounts of private sector funding. • Keep accountability mechanisms in place, even when shifting to public private partnerships. • What matters more than organizational structure: • Nimble agency that leverages private sector’s experience and perspective. • Core mission of economic development agency informed by new understanding of economic growth. • Governor has an active role in economic development process – from designing strategy to promoting agency collaboration to being the deal closer.