REMARKS AS PREPARED FOR DELIVERY SANDY K. BARUAH ASSISTANT SECRETARY OF COMMERCE FOR ECONOMIC DEVELOPMENT - SOUTHWEST REGION EXECUTIVE DIRECTOR’S ASSOCIATION CONFERENCE - LITTLE ROCK, ARKANSAS

TUESDAY, OCTOBER 23, 2007

AS PREPARED FOR DELIVERY

Introduction by: Ken Jones, Executive Director, Lower Rio Grande Valley Development Council

INTRODUCTION

Thank you Ken Jones for the introduction. Today we we have quite the little gathering of economic development celebrities:

1. NARC, NADO, IECD

2. Herburt Cintania

3. Barbara Deaux

4. Sam Spearman

I'd like to recognize Pedro Garza for 2007 “RAZA” Award from the Mexican American Cultural Center in Austin – a tribute to Pedro’s continued commitment to community service above and beyond the important role he plays for EDA. I also appreciate the Executive Directors in the audience for your continued hard work on the “front lines” of economic development and your demonstrated commitment to advancing the art and science of economic development – evidenced by your participation here today.

Often, when I address a group of economic development professionals, I tend to focus on some of the “big picture” issues such as our current and future economic context and how I see the environment in which economic development occurs changing in the 21st Century.

Today, however, given that our environment consists of a looming presidential election, the pending reauthorization of EDA, continued discretionary budget pressures – and that you all represent the Partnership Planning segment of the EDA family, I thought I’d spend the time you’ve allotted me to discuss three things:

1. The Partnership Planning Program.

2. How the Partnership Planning Program relates to EDA’s other programs.

3. The future of EDA.

THE PARTNERSHIP PLANNING PROGRAM

Many of you – over the years – have come to believe that EDA in Washington, folks like me, don’t like planning. If that’s what you think, I understand that. There has been a steady drumbeat from some quarters telling you exactly that. As compelling as this message may be, and while it serves the purpose of driving memberships and other political support, it’s simply not true.

Any person who claims to be an advocate for good economic development who does not support sound and robust planning is not much of an economic development professional. Planning is critical. You can’t have good economic development without good planning – it’s as simple as that. At EDA, I’m pleased that we’ve supported the planning program in several important ways:

1. Level of Planning Funding.

The Partnership Planning program is funded at the highest level in EDA’s history. At $27 million dollars, at no time has the number of EDA dollars devoted to the Planning program ever been higher. And to give credit where credit is due, while EDA is comfortable with this level of Planning funding, this amount is the result of the work of districts such as yourself and the various membership organizations associated with EDA’s planning program.

2. The Percentage of EDA’s Budget for Planning.

Not only is the dollar figure for Planning higher than it’s ever been, the percentage of EDA’s budget that is devoted to planning is more than twice as much as it was when I first joined the Commerce Department in 2001. The percentage of EDA’s budget committed to the Planning program has gone from 5.5% in 2001 to about 12% this year – more than a doubling.

3. The Number of Funded Districts.

Currently, there are more recognized and funded EDA Planning District then ever before – we are at an all time high. We have recognized and funded 25 new districts just since 2005, bringing the grand total of EDA districts to an all-time high of 369. In addition, for the first time in a generation or more, virtually every recognized EDA Planning District is a funded EDA Planning District.

4. EDA Research Initiatives to Support Planning.

In addition to our increased level of financial support directly to the Districts, EDA has devoted scarce research program dollars to support the planning function and the EDA Planning Districts.

EDA recently completed a groundbreaking research project led by the University of Illinois, Western Carolina University, and the research arm of the Chamber of Commerce, to create a training curriculum geared specifically to Planning Districts and local economic development professionals. This curriculum, created using scarce EDA research dollars, will be rolled out over the next year at little or no cost to you.

In addition, in a separate research effort with Purdue University and Indiana University, we have unlocked the mystery of regional industry cluster theory. This work provides you instant access to the performance of industry clusters in your region, up-to-date economic and demographic data on a county-by-county basis, and tools to begin adopting cluster theory to your region. This takes the high-level, smart research of folks like Michael Porter, and puts it into a very user-friendly format.

Our goal in making this type of research available to you is to help your regions in the important work of developing better collaborative regional partnerships, and allow you to do your job better.

5. Regional Conferences.

We heard that the Districts missed the EDA regional conferences – so we’ve brought them back. We just completed the 2007 fiscal year, where we conducted five regional EDA conferences which were a blend of policy and training. Many of you attended the conference for this region, held in San Antonio earlier this year.

Next year, we plan to hold three regional conferences, with two EDA regions teaming up together for each conference. This will allow us to hold larger regional conferences with better presentations and will allow you to network with more EDA districts.

6. Better Communications with Planning Districts.

Finally, I am proud to say that over the past year-and-a-half, EDA leadership has made a concerted effort to build open lines of communications with EDA’s Planning Districts. The Planning Districts are part of the broader EDA family, but I’m not sure we’ve always treated you as such.

Over the past 18 months, EDA’s principal Deputy Assistant Secretary Ben Erulkar and I have conducted town hall sessions with the executive directors of EDA Planning Districts from 30+ states. Ben just met with three more states yesterday, and just last week I met with all the executive directors of the Michigan EDDs in Lansing.

Many of you have attended these town hall sessions and I hope you found them as valuable as I have. During these town hall sessions, we have an open dialog and discuss anything and everything on your mind and relevant to EDA. I believe that no previous head of EDA has made the type of serious effort to communicate with the districts as I have – and I’m proud of that.

We still have a few more states to hit, but we’ve made great progress and I am pleased that the lines of communication between EDA in Washington and our Planning family have greatly improved.

EDA AND PLANNING PROGRAM

So, that’s the good news, but I know that many of you are concerned about the level of your annual Partnership Planning support from EDA. I understand that $50 - $60,000 does not go far these days. So let’s talk about this funding.

When folks ask me about more support for the Planning Program, I first tell them all the things I just mentioned about how we are supporting planning. Then I tell them, yes, under certain circumstances – if I could – I would like to see additional support for some Planning Districts. This is what I’d like to see:

First, I’d like to see more support for districts that are newly recognized. Let’s prioritize scarce Federal dollars to support those just starting out.

Second, I believe that we shouldn’t treat all districts the same – which is the way the Planning Program is currently structured – you all get roughly the same amount. I’d prefer to see additional support to those districts experiencing a significant sudden and severe economic dislocation – or those districts with severe chronic distress levels. Treating all of you the same to me doesn’t make sense – kind of a Soviet-style approach to things – and avoids making the tough choices that need to be made when there are limited dollars available.

Now, most folks in Washington would stop there, with where they want to spend more money. Since I don’t have to earn your vote or convince you to write a membership check, I’m going to do what others won’t – I’m going to tell you where I’d spend less money – because if my wish list is to spend more money on districts that are new, or have greater levels of economic distress, I would need to make some tough choices.

If I could, I’d spend less money on districts with lower levels of distress and districts that have been around a very long time but have demonstrated lower levels of results – I’d prioritize those who need it more and those who use what they have in a more impactful way.

If we lived in an environment of unlimited resources, these types of choices would not need to be made. But if we lived in an environment of unlimited resources, there would be no need for agencies like EDA. The Federal funds available for discretionary programs is getting more intense – not less intense – and this trend is likely to continue into the future, regardless who is elected in the upcoming Presidential and Congressional elections.

The Federal budget is no different from your family budget. While it is large, it too is finite. Just like your family budget, it’s easy to justify spending more money on something if that analysis is done in vacuum. You can justify purchasing a new car by citing all the things wrong with your current car: how much it costs to maintain, how it lacks the most up-to-date safety features, how the rattles annoy you, how it looks so un-cool in the driveway next to your neighbor’s new Cadillac.

But just like our household budgets, I need to look at the EDA budget in context. The new car maybe a good idea, but compared to fixing the leaky roof and paying for junior’s college education, the old car in the driveway begins to look better and better. That’s what I mean by context.

It will come as no surprise to you that I get hit up for more money frequently. More money for planning. More money for research. More money for the University Center program. More money for BRAC impacted communities. More money for infrastructure. More money for economic adjustment. These are all worthy causes, but it all comes from the same finite pot. For every dollar more allocated to one EDA program, it’s one less dollar available for all the others. It’s about making choices, and I make those choices not by myself, but as part of the broader Federal budget and with the close involvement of Congress – who controls the pursestrings.

In my six years in the Federal Government, the Planning Program is the only EDA program that has increased. Every other part of EDA’s program budget has gone down – remember, the percentage of EDA’s budget devoted to planning has more than doubled since 2001.

Even the amount of real dollars I have to spend on staff has gone down – EDA’s headquarters in Washington has 40% fewer staff today then when I started, and our regional offices have 27% fewer staff. And let me remind you, that between 2001 and 2007, President Bush requested more money for EDA then the Congress allocated five of those seven years – so President Bush has supported EDA.

So, you may be asking, if the EDA budget is a “zero sum game,” why don’t we simply devote an even greater percentage of the budget to Planning? It’s a litigimate question. Because as valuable as the Planning Program is, EDA’s other programs are valuable too.

In fact, EDA gets our biggest bang for our buck – the greatest return on investment – from our infrastructure and economic adjustment investments. That’s where we can show OMB, GAO, the Congress, and anybody else, how many jobs we created, and how many private sector dollars we’ve leveraged.

Our focus on these performance metrics have taken EDA’s reputation in Washington from that of a pork-barrel agency, to one that is high-performance and forward leaning that now has the second highest performance ranking from the OMB – and is firmly at the table when domestic economic matters are discussed at the White House. I’m proud of that.

The Planning Program, while important to overall economic development, simply does not generate the type of quantifiable performance metrics as some of EDA’s other programs – for the simple fact that results from planning are inherently more difficult to quantify. The greater the percentage of EDA’s budget devoted to planning means a smaller percentage of the rest of EDA’s budget I can use to demonstrate quantifiable return on investment – jobs created and private sector leverage – which keeps us in the good graces with the folks at OMB and others who are concerned with how Federal dollars are spent.

This is not a critique of the Planning Program, but the simple reality of the context I operate as the head of EDA. And if you judge me, or EDA as a whole, simply by the number of planning dollars going to your district – without considering the broader context of EDA’s overall budget and the overall Federal budget situation – then it is likely that we will have different perspectives. My job is to keep EDA – all of EDA’s programs – healthy into the future given the resources I’ve been provided.

THE FUTURE OF EDA

As we look forward, I am optimistic about EDA’s future and the work we do. I am proud that EDA has earned the reputation as a result-oriented agency and is helping to drive a national economic development agenda that is focused on preparing our economic regions for the 21st Century marketplace by focusing on regional collaboration, high-growth entrepreneurship, and innovation and competitiveness.

I think it is EDA’s reputation for providing maximum value for the taxpayer is what will keep EDA around for a long time. Yes, Federal budgets will ebb and flow, but as long as EDA can continue to demonstrate that it is the most effective economic development program in the Federal portfolio, and can continue to lead the Federal policy agenda for leading edge economic development, EDA has a future – regardless who is in the White House, or who controls the Congress.

The trick is, however, keeping the focus on results. For the last generation, the focus on results at the Federal level has increased with every new Administration and every new Congress – regardless of political party.

For example, the Clinton Administration implemented GPRA – and the Bush Administration not only embraced it, but improved it. We implemented the Balanced Scorecard at EDA to better quantify our results, I am more than confident that the next Administration will improve upon it in order to continue to quantify EDA’s results – and use those quantifiable metrics to justify future support for the agency.

This focus on results is why I previously laid out the challenge to the Planning community to develop a set of performance measures you can all agree upon that best captures – in a quantifiable manner – the important role you play. It’s difficult work, but it needs to be done and it needs to be done in a grass-roots driven process, not a Washington-driven process.

It won’t be easy because there are not two Planning Districts that are alike. A proposed set of measures may work for one district, but not the other. Some have suggested that districts simply use the jobs created from the economic development projects in their region as the Planning program’s performance metric.

That sounds good, but unfortunately, those who suggest that metric simply don’t understand how Federal accountability works. Jobs created by an infrastructure project funded by EDA, or Transportation, or other Federal program, can’t be counted twice. I can’t take credit for the 100 jobs created from a business incubator both in the EDA infrastructure program and the Planning program – no double counted allowed.

We need to find a better way to quantify the important work you do. And I say this not for me, but for you. I’ll be leaving office in about year. You’ll be around a lot longer than I will. I want the Planning Program to be able to demonstrate to anyone who asks; Member of Congress, OMB, or the new head of EDA… their value on a quantifiable basis. Again, especially in a shrinking Federal budget environment, the ability to quantify your results using real numbers, will only work to your long-term benefit.

It is this focus on results that will keep EDA healthy overall as well. That’s why I’m working so hard to better EDA’s performance metrics and I spend so much time telling the EDA story. This focus on results touches every part of EDA’s program – even down to our personnel evaluations.

That’s why we changed the 10% district bonus program into a performance-based bonus program that rewards successful EDA projects with real bonus money that they can use to; improve their project, save for a future project, or apply towards the matching share of another Federal project. This is an example of how EDA is making choices that help us drive results – and it’s these types of quantifiable results that are the key to EDA’s long-term success.

The EDA budget, be it $200 million or $400 million is a small percentage of the overall Federal portfolio in the economic development and community development space. The Federal Government spends about $15 billion on economic and community development. EDA is a small portion of that portfolio. I believe that in order for EDA to be successful in the long-term, we must demonstrate superior results – we must do economic development better than anybody else and be able to prove it using real numbers.

This means we need to respond to changes in our economy, changes in economic development practices, and changes in how the Federal Government prioritizes expenditures. It means we need to find new ways of doing business, new ways of working together, and it also means that we will sometimes need to learn to say “no.”

EDA is important to me. I wouldn’t still be here after six years if it weren’t. I want EDA to be around long after my service to President Bush comes to a close. Given that, I realize that I haven’t told you everything you may want to hear, but I wanted you to know where I stand. Hopefully, by discussing matters of mutual importance in an open and honest manner, we can find ways to work together – and when we do disagree, we understand exactly what we are disagreeing about – not what some third party tells us – and we can disagree without being disagreeable.

With that, I’ll close with my sincere thanks for your kind attention and for your ongoing service to the economic regions we serve together.

# # # # # #