Evaluation of Washington’s Economic Development System WEDA Winter Conference February 12, 2013 Spencer Cohen Senior Policy Advisor Washington Economic Development Commission 1

Legislation (SB 5741) Establish standards for data collection and maintenance for providers in the economic development system, including core data to be collected by each entity. Establish minimum common standards and metrics for program evaluation. Periodically administer scientifically based outcome evaluations of the state economic development system. 2

Overview 1)Review of Washington’s economic performance. 2)Benchmarking 3)Economic development budget. 4)Evaluation practices. 5)Survey of businesses innovation practices. 3

4 Data source: U.S. Bureau of Labor Statistics Jobs Recovery Seasonally adjusted non-farm employment, based on 3mma

5 Data source: U.S. Bureau of Labor Statistics, Current Employment Statistics. Change in Non-Farm Employment by Metro Area November 2012 year-over-year, based on 3mma, seasonally adjusted

6 Data source: U.S. Bureau of Labor Statistics, Census of Employment and Wages; author’s calculations. Largest Manufacturing Sectors, 2011 By employment, based on 4-digit NAICS

Benchmarking Assessments based on state-by-state comparisons PillarStrengthsWeaknesses I. Talent & Human CapitalAbove average education attainment among resident population, particularly STEM. Constrained educational and talent production capacity. II. Investment in Entrepreneurship and Small Business High patent production; large share of federal funding support. Decline in venture capital (though 2012 uptick) III. InfrastructureReliability.No data for state-by-state comparisons of long-term economic impacts. IV. International BusinessExports continue to be strong; 6.4% increase in non-aerospace, non- agriculture exports. Only 4.0% of state covered employment in FDI firms. V. Regulatory EnvironmentNo reliable data for state- by-state comparisons. State Auditor’s Office found highly fragmented and incomplete system for information dissemination. 7

11/17/20158 Dept of Commerce 18 Programs Dept of Commerce 18 Programs Governor’s Office Strategic Reserve Account Governor’s Office Strategic Reserve Account Employment Security Department 15 Programs Employment Security Department 15 Programs Dept. of Agriculture 5 Programs Dept. of Agriculture 5 Programs Dept. of Social & Health Service 3 Programs Dept. of Social & Health Service 3 Programs WSDOT 2 Programs WSDOT 2 Programs Associate Development Organizations OSPI /Early Learning 3Programs OSPI /Early Learning 3Programs WA SBCTC 10 Programs WA SBCTC 10 Programs Workforce Training Board 2 Programs Workforce Training Board 2 Programs Washington State University 5 Programs Washington State University 5 Programs University of WA 6 Programs University of WA 6 Programs 36 other state economic programs Recreation & Conservation Office 14 Programs Recreation & Conservation Office 14 Programs Innovate WA 8 Programs Innovate WA 8 Programs Trade Associations Economic Development Councils Innovation Partnership Zones City & County Government Federal Labs SBA Dept. of Agriculture SBIR/STTR Dept. of Defense Business and Local Economic Development Organizations Federal Programs Federal Programs Dept of Commerce Economic Development System Inventory

II. Budget—State Economic Development Program Expenditures by Activity 9

Distribution of State Economic Development Program Expenditures by Targeted Demographic 10

III. Evaluation Practices—Key Findings Lack of resources for economic development evaluation. Outdated, unsophisticated systems for tracking client data. Lack of standardized and robust methods for validating data. 11

Evaluation Practices—Recommendations Data Standards and Guiding Principles Market failure your program is designed to address? Primary outcome(s) associated your program? Is the outcome measurable? If “no,” what is the intermediate output you directly impact? How do you measure this impact? How do you validate the data being tracked to measure impact? Is it standardized to allow for year-over-year comparisons? Average amount of time it takes from program intervention to observable outcome? Are you metrics aligned with this timeframe? To what extent do you collaborate with other state, federal, and non-profit programs? [Qualitative response.] 12

Evaluation Practices—Recommendations Implement a unified statewide client relations management system Require programs to use administrative 3 rd party data whenever possible Redefine Government Management, Accountability, and Performance (GMAP) Invest in rigorous analysis of long-term net impacts of transportation investments 13

IV. Survey of Businesses Innovation Practices Key Findings, Program Awareness % Innovation-based activities within firms tend towards productivity improvements and marketing. Major sources of innovation are from customers, followed by internally from employees and industry. Based on our sample, most important areas of state improvement are: 1) tax system; 2) access to capital for small businesses and start-ups; 3) regulatory environment; and 4) K-12 system. Among the programs reviewed, general awareness tends to be low. 14

Survey of Businesses Recommendations Evaluate agency methods in implementing marketing programs and effectiveness in reaching target clients. Assess awareness among program managers of other programs that focus on the same business demographic. Direct agency directors to implement joint marketing and coordination of service delivery (e.g. concierge service) Assess feasibility to expand customer relations management system (CRM) to manage delivery of state services (e.g. Commerce Salesforce CRM) 15

V. Plan Going Forward Apply “guiding principles” to develop a rigorous data collection process [Winter and Spring 2013]. – Develop of program-specific logic models. – Sign MOUs with ESD, DOR, and L&I for data-sharing system. Implement better system for inter-program service delivery. – Propose shared CRM system [Spring 2013] – Convene sector- and activity-focused meetings among ALL programs [Summer 2013] Work with Commerce and Economic and Revenue Forecast Council for collaborative data analysis and reporting [Summer 2013]. 16

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WEDC Data source: Washington State Employment Security Department. Largest Absolute Changes in Employment October 2012 year-over-year, based on 3 month moving average