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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 Jobs Recovery Seasonally adjusted non-farm employment, based on 3mma 4 Data source: U.S. Bureau of Labor Statistics Change in Non-Farm Employment by Metro Area November 2012 year-over-year, based on 3mma, seasonally adjusted 5 Data source: U.S. Bureau of Labor Statistics, Current Employment Statistics. Largest Manufacturing Sectors, 2011 By employment, based on 4-digit NAICS Data source: U.S. Bureau of Labor Statistics, Census of Employment and Wages; author’s calculations. 6 Benchmarking Assessments based on state-by-state comparisons Pillar Strengths Weaknesses I. Talent & Human Capital Above 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. Infrastructure Reliability. No data for state-by-state comparisons of long-term economic impacts. IV. International Business Exports continue to be strong; 6.4% increase in non-aerospace, nonagriculture exports. Only 4.0% of state covered employment in FDI firms. V. Regulatory Environment No reliable data for stateby-state comparisons. State Auditor’s Office found highly fragmented and incomplete system for information dissemination. 7 Economic Development System Inventory Governor’s Office Strategic Reserve Account Federal Programs Dept of Commerce 18 Programs WSDOT 2 Programs Dept. of Social & Health Service 3 Programs Dept. of Agriculture 5 Programs Dept. of Defense OSPI /Early Learning 3Programs Employment Security Department 15 Programs WA SBCTC 10 Programs Workforce Training Board 2 Programs Federal Labs University of WA 6 Programs Washington State University 5 Programs Innovate WA 8 Programs Recreation & Conservation Office 14 Programs 36 other state economic programs 7/17/2015 Economic Development Councils Trade Associations Innovation Partnership Zones Dept. of Agriculture SBIR/STTR Business and Local Economic Development Organizations Associate Development Organizations SBA City & County Government Dept of Commerce 8 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, 12 and non-profit programs? [Qualitative response.] Evaluation Practices—Recommendations • Implement a unified statewide client relations management system • Require programs to use administrative 3rd 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 APPENDIX 17 Largest Absolute Changes in Employment October 2012 year-over-year, based on 3 month moving average WEDC 2.0 Data source: Washington State Employment Security Department. 18