Erin Sparks CSG-West Annual Meeting July 31, 2013 Redesigning State Economic Development Agencies

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. 2

Structural Inefficiencies in Economic Development Agencies 3 Having a cohesive, coordinated state economic development strategy depends on creative a more nimble and effective entity. Cumbersome Agency Design Institutional knowledge is key to supporting business development and to aiding the growth of new business clusters. Limited Professional Experience Absence of qualitative evaluation system limits credibility and transparency. Lack of a Quantitative Evaluation System

Strategies for Successful Agencies Public-Private Partnerships Semi-State Agency Independent Business Association Engage and Sustain Private Sector Involvement Across State Agencies, Industries, and Universities Between States and Regions Create Mechanisms to Encourage Collaboration Web-based Monitoring System Benchmark Indicators Institute a Quantitative Evaluation System 4

Engage and Sustain Private Sector Involvement 5 Public-Private Partnerships –Michigan Economic Development Corporation –Iowa Economic Development Partnership Semi-State Agency –Arizona Commerce Authority

Public-Private Partnerships 6

Michigan Economic Development Corporation (MEDC) 7 Michigan’s lead economic development agency; created in 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) 8 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 9 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.

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Iowa Innovation Corporation 11 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.

Semi-State Agency 12

Arizona Commerce Authority (ACA) 13 Eight-month transition from Arizona Commerce Department to ACA started in June 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 14 Across State Agencies, Industry, and Universities Between States and Regions –New York Regional Councils

Collaboration between States and Regions 15

New York’s Regional Councils 16 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 17 Web-based Monitoring System –Virginia Performs –MI Dashboard Benchmark Indicators

Web-based Monitoring Systems 18

19 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.

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23 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.

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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. 26