REMARKS AS PREPARED FOR DELIVERY - SANDY K. BARUAH, ASSISTANT SECRETARY OF COMMERCE FOR ECONOMIC DEVELOPMENT - EDA PHILADELPHIA REGIONAL SYMPOSIUM

Tuesday, March 13, 2007

AS PREPARED FOR DELIVERY

Introduction by Phil Saputo, Acting Director, EDA Philadelphia Regional Office

INTRODUCTION

SLIDE 1 – Logo

Thank you, Phil, for that kind introduction, and thank you for your service as the Acting Director of EDA’s Philadelphia Office. I appreciate your leadership and the fine efforts of the entire Philadelphia Regional Office team to bring this event together.

It’s a pleasure to be here this morning in the historic city of Philadelphia – the city of brotherly love. Thank you all for being here today, and thank you for your ongoing commitment to advancing the art and science of economic development. This symposium will be an opportunity to hear from some of the best minds regarding “what’s next” in economic development, a chance to re-connect with EDA Philadelphia staff, and a forum to share best practices with each other.

I would also like to acknowledge Cameron Moore of the National Association of Regional Councils and Jeff Finkle of the International Economic Development Council and their teams for all of their hard work in developing this symposium. I’m grateful for their partnership with EDA in hosting 5 such symposia across the nation this year.

SLIDE 2 – Innovation

The theme of today’s symposium is innovation, and we’ve chosen this theme because, at the end of the day, the ability to innovate is our country’s – and any other country’s – only possible sustainable competitive advantage in the 21st Century. It’s not location. It’s not cost of doing business. Factors such as these will continually shift in a dynamic worldwide economy. But if a nation can maintain its edge in innovation, it will grow and prosper.

America is clearly the world’s leader in innovation. The spirit of discovery is one of our national strengths. From Edison's light bulb to Jarvik’s artificial heart to Ledley's CAT scan machine, to the frozen pizza to the I-Pod, we have brought more technological breakthroughs to the marketplace than any other nation – and this has made not just America, but the world, safer, healthier, more productive and more prosperous.

We are the world leader in venture capital, and we are home to many of the finest research facilities and universities. We possess one of the most open economies for trade and investment; a stable government, and a culture uniquely supportive of risk-taking, which must not be underestimated.

While the U.S. has led the global marketplace in fostering new ideas and bringing them to fruition, we must not allow our leadership today to make us complacent. International competitors are rapidly commercializing technological advances, educating skilled workforces, and offering world-class venues.

The 20th Century undoubtedly belonged to the United States. The question now is how to continue that preeminence in the 21st Century. To stay competitive we must maintain a business environment that encourages innovation. And it’s not just businesses that need to innovate, it is also government and other public institutions, and the Economic Development Administration is no exception.

Innovation is not easy. I’ve been watching the CNBC specials that have been running on Sunday nights, “The Business of Innovation,” and I heard the most compelling definition of innovation I’ve ever heard: innovation requires you to have 100 people tell you that your idea is stupid, and still go to the 101st.

No, innovation is not easy. And it’s especially not easy in the worlds of non-profits and government. In our worlds, all the pressures that bear down on us encourage us to maintain the status quo – the status quo albeit with fewer dollars. Our stakeholders; be it elected officials, our business partners, perhaps even the public, all are pressuring us not to change, yet become more effective. Instituting change in the public arena is exceptionally difficult because there are very few rewards for attempting it, too many potential pitfalls in the process, and too many people and organizations that are not only waiting, but wishing for those of us in the public sector to stub our toe on some new way of doing things.

However, as economic development professionals we must be forward leaning. Innovation and competitiveness drive our economy, and if we – as economic development professionals are not innovative and competitive ourselves, we are not going to be as effective as we can or should be.

Let me describe for you an innovation that we are promoting for EDA. This innovation to the storied EDA program honors our past, reflects our values of being customer-friendly and flexible, and maintains all the things you have come to know and love about your Economic Development Administration.

For 2008, EDA is proposing the Regional Development Account – the “RDA.” I’d like to outline this proposal by doing two things:

1. First, outlining what the RDA is, and, since at the end of the day, any change to EDA’s program is worthless unless it is a direct benefit to the people we serve, I’ll outline what it means to you;

2. And, second, I’ll discuss what the RDA is not, since too often the economic development community is exposed to inaccurate information about this – and other – proposals.

WHAT THE RDA IS

SLIDE 3 – EDA Today: Multiple Program “Silos”

What you see here are the “buckets” of EDA program funding:

• Public Works.

• Economic Adjustment.

• Technical Assistance.

• Partnership Planning.

• Trade Adjustment Assistance.

The first 3 – the ones highlighted in blue – are the competitive programs administered by EDA’s regional offices. The other 2, Partnership Planning and TAA for Firms are separate, non-competitive programs that are administered in a completely separate manner.

What this funding structure does is severely limit EDA’s flexibility. What has happened for generations now is that folks inside the Beltway, tell you and EDA’s regional offices exactly what your Public Works needs are…exactly what your Economic Adjustment needs are…exactly what your Technical Assistance needs are. I think those decisions should be made at a more local level.

SLIDE 4 – EDA Proposed: Consolidation of Primary Investment Funds

Here’s what the RDA would do that would allow EDA to be more flexible. The RDA would simply consolidate EDA’s three primary competitive investment programs – Public Works, Economic Adjustment, and Technical Assistance – into a unified, holistic, and flexible program account.

What that means is that every EDA program dollar would have attached to it, Public Works authority, Economic Adjustment authority, and Technical Assistance authority. Our Regional Offices would no longer have to worry about how much money is left in any particular bucket. If EDA has money left, we could use it for what ever the pressing economic development need is – and not make decisions regarding what we fund or don’t fund based on how much money is left in a particular funding bucket.

That’s it, pretty simple I think. And here’s what it means to you:

SLIDE 5 – Multiple Uses – 1 Grant

First: It makes it easier for you to access EDA programs. Under the RDA, you will be able to apply for multiple activities in a single EDA grant.

One investment application. One approval. One set of reporting requirements. Yet you can use your EDA funds for both Public Works and Technical Assistance.

I think this is important, because successful economic development today is holistic in nature. Under the RDA, you as an EDA investment recipient could finally use EDA funds in a holistic manner.

Here’s an example of how this would work: You would apply to EDA as you usually do for, let’s say a Public Works investment to support an inter-modal facility. But in the same grant, you could also ask for some technical assistance funds to help build the relationship infrastructure – with the private sector, with neighboring political jurisdictions, with other non-profits such as workforce development boards, with local community colleges, and other economic players in your region, to ensure that once you are done constructing your inter-modal facility, your project will be as successful as it can be.

SLIDE 6 – Administrative Savings for You – and EDA

The beauty of being able to do multiple things with a single EDA grant is that is means less paperwork for you! Instead of applying for two grants, which means two applications, two approvals, two sets of reporting requirements, two set of EDA staff to keep informed, you’d only have one grant and associated requirements to keep on top of.

This also means that EDA would have fewer grants to process, approve, and monitor – and that’s a meaningful administrative savings to the agency at time when we are scrambling for resources.

SLIDE 7 – Local Control

The RDA puts regional people, not Washington officials, in a better position to respond to regional economic development needs. Under our current system, we are effectively telling each of the six EDA regions, this is your level of resource need for public works and infrastructure…this is your level of resource need for technical assistance. The Regional Development Account would allow our EDA regional offices to make the determination, based on the economic needs of their region, how much to spend in infrastructure projects, how much to spend in technical assistance projects and the like. Why make these decisions in Washington when we have economic development professionals across the country who are in a better position to evaluate local conditions.

This is especially important as EDA’s budget continues to shrink, and it gets harder and harder for us to manage these shrinking multiple streams of funding. Our budget has shrunk so much that the allocation for Technical Assistance for our Regional Offices is only between $1 and $2 million per year. That doesn’t go far.

With the RDA, our regional offices will have greater discretion to allocate their precious EDA dollars in the manner that best suits the needs of their region.

SLIDE 8 – RDA Based on a Proven Concept

If you are thinking that the RDA does not sound like a new concept – you’re right. The RDA is built upon EDA’s proven and most popular program account. Today, EDA’s Economic Adjustment Account has the flexibility to do both Public Works and Economic Adjustment, but the Economic Adjustment Account is only able to be accessed in response to a “sudden and severe” economic dislocation.

The RDA turns all the competitive program funds administered by EDA’s regional offices into a large Economic Adjustment Account, without the requirement of sudden and severe economic distress.

WHAT THE RDA IS NOT

SLIDE 9 – What the RDA is Not
So, that’s an overview of what the EDA is. Let’s spend a moment talking about what the RDA is not.

First: The RDA is not a mechanism to cut EDA funding. EDA’s funding will not change based on the implementation of the RDA. In fact, the RDA was first introduced last year when President Bush proposed a $47 million increase for EDA. And for the record, let me remind you, that in 4 of the last 5 years, President Bush has proposed more funds for EDA than the Congress has appropriated.

Second: The RDA would not impact in any way the funding allocation to EDA’s regional offices. The funding allocation to EDA’s regional offices is a carefully crafted formula approved by Congress several years ago and that formula and methodology would be untouched by the RDA.

Third: The RDA is not going to reduce EDA’s investments in small or rural communities. EDA never had a set-aside for rural communities, yet we make over half of our investments in rural areas – and that will continue under the RDA. Trust me, no person who works for George W. Bush, as I do, would ever do anything that would disadvantage rural America’s ability to benefit from Federal assistance.

Some folks have told me that they think that the RDA would force rural communities like Blair County, Pennsylvania to compete with urban centers like Philadelphia. Let me be clear – that doesn’t happen now, and it won’t under the RDA. I am making a personal pledge that the Bush Administration will always support rural communities.

Fourth: The RDA will not alter EDA’s investment selection criteria, investment processes, or focus on economic distress. The RDA would in no way impact how EDA makes a grant, where EDA makes a grant, or the processes used to determine who gets an EDA grant. All of EDA’s eligibility requirements would remain as is and our process, funding priorities, and investment policy guidelines all would remain as they do today.

Fifth: The RDA will not put some states at an advantage over others. There will be no change in EDA’s longstanding commitment to safeguard to ensure that no state can receive more than 10% of EDA’s total funding per year.

Sixth: The RDA will in no way impact the agency’s commitment to Public Works projects. Public Works infrastructure is where EDA gets our “bang for our buck” – job creation and private sector investment. We need these infrastructure projects in order to keep our performance results high, because that’s how we are judged by OMB and many folks on Capitol Hill.

And Seventh: The RDA does not touch the Partnership Planning Program, which will remain as a separate, stand-alone program focused on supporting the Economic Development Districts.

CLOSING

SLIDE 10 – Logo

So that’s a brief overview of what the Regional Development Account is, and what it’s not. RDA would be good for you, EDA’s customers, and that’s why we will continue to make the case for the RDA. It’s an innovative strategy for helping to utilize our resources in a more efficient manner, but most importantly, it helps EDA’s investment partners and acknowledges that economic development today is holistic. It’s more than just building something, it’s about answer the “what’s next” question.

We, as economic development professionals need to be innovative and we need to do everything in our power to encourage the competitiveness of the economic regions we serve. We need to advance the art and science of economic development by promoting a holistic approach. And finally, we need to work together because as they used to say in the old West, we either hang together, or we’ll all hang separately.

I hope EDA will have your support for the RDA. If you think this is a good idea, tell someone. Tell your fellow economic development professional. Tell us. If you have questions, please do not hesitate to talk to me or other members of the senior EDA team who are here today: Ben Erulkar and Matt Crow.

I thank you for your kind attention today. Thanks again for being here. I look forward to visiting with you as the symposium continues, and I look forward to welcoming the honorable Edward Rendell, Governor of the Commonwealth of Pennsylvania to this stage at 4:30. Enjoy the day.

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