Oregon Economic

1
Oregon Economic Community Development Department

• 2003 General Session Presentation to the
• Joint Legislative Ways Means Subcommittee on
  Transportation and Economic Development

2
Agency Overview

• Marty Brantley Director
• Jack Isselmann Commission Chair
• April 15, 2003

3
Oregons Economy State Revenues

• Income tax is the main source of revenue for the
  state
• We have an urgent need to increase the amount of
  available revenue in order to adequately fund
  state programs
• The best way to accomplish this is to create more
  jobs, generating more income tax revenues for the
  state.

Income to State
Income Tax Revenues
JOBS
4
Oregons Economy Economic Development

• Global competition for businesses and jobs
• Essential role for state economic development

5
Oregon Economic Community Development
Department Refocus
Mission
Structure
People
Money
Accountability
6
Oregon Economic Community Development
Department Mission

• Old Mission
• OECDD assists Oregon businesses and governments
  in creating economic opportunities and building
  strong communities throughout the state
• Refocused Mission
• Sustained, quality jobs for all Oregonians at
  least cost.

7
OECDD Structure

• Consolidating 14 teams into three functional
  groups business development, community
  development and administration
• Shifting more staff and more staff time
  toward business development duties, which means
  the retention, expansion and recruitment of good
  jobs.
• Currently revising structure to flatten the
  organization and streamline processes

8
OECDD People

• Knowledgeable, professional staff
• Lacking the tools to be competitive
• Industrial land supply
• Strategic Reserve Fund for business deals and
  workforce training
• 03-05 proposal reduces staffing by 24 FTE from
  beginning of 2001

9
OECDD Money

• 03-05 agency budget proposal is below Governors
  Balanced Budget
• Economic Development is 14 of proposed budget
• Community Development is 79
• Pass-Throughs are 7
• Proposal increases funds for core operations

10
OECDD Accountability

• Improve performance tracking and reporting system
  (based on National Association of State
  Development Agencies report)
• Improve staff accountability by tying to job
  creation/retention results

11
Refocused Budget

• Proposed budget is lower than the Governors
  Balanced Budget. Total requested is 13 million
  less, staffing at 18 lower than 01-03.
• Revised proposal was built based on desired
  results then we determined the resources needed
  to achieve those results

12
Refocused Budget (cont.)

• Governors Balance Budget
• Community Development
• 290.7M
• Program Services
• 29.1M
• 116.25 FTE
• Lottery Bond Debt Service
• 50.7M

• Agency Refocused Budget
• Community Development
• 281.03M
• Program Services
• 25.7M
• 109.38 FTE
• Lottery Bond Debt Service
• 50.7M

13
Refocus

• Reassessed priority and options for refocus
  toward economic development and job creation, a
  priority of the Governor and the Legislature
• Mission sustained, quality jobs for all
  Oregonians and the least cost
• Structure Focus on business development, people
  in the field deliver services to businesses and
  communities, central operation support service
  delivery
• People determined staffing needs to deliver
  results in jobs and financing
• Money requesting 100 million in Lottery Funds
  and 2 million in General Funds for 03-05
• Refocus directs more staff time toward business
  development and job creation, increases Strategic
  Reserve Fund (by 3 million) and provides funding
  for technology transfer (2 million). It also
  focuses infrastructure investment to support more
  projects with immediate economic benefit.

14
Program Areas

• OECDD budget presentation will focus on three
  categories business development, community
  development and administration
• Business Development
• Business retention and expansion
• Small, Women and Minority-owned Business
• Finance
• Marketing, Business Recruiting
• International Trade
• Community Development
• Community Assistance
• Infrastructure
• Administration

15
Additional Program Areas

• Oregon Tourism Commission
• Effectively market Oregon as a travel destination
  to help strengthen the tourism-based industries
  throughout the state. Provides resources and
  marketing expertise for the local/regional
  partner organizations. These partners benefit
  from assistance such as research and matching
  grants to rural development assistance and
  cooperative marketing programs. A nine-member
  commission, appointed by the governor, oversees
  the budget and workplan.
• Oregon Arts Commission
• Provides leadership, funding and arts programs
  through grants, special initiatives and services
  to Oregon communities. Nine commissioners,
  appointed by the governor, determine needs and
  establish policies for public support of the
  arts.

16
Additional Program Areas (cont.)

• Oregon Film and Video Office
• A semi-independent state agency that promotes the
  statewide development of the film, video and
  multimedia industry, the office works to enhance
  the industrys revenues, profile and reputation
  within the state and among the industry
  internationally. Also helps prepare Oregon for
  significant employment opportunities with digital
  media and telecommunications.
• Pass Through and Debt Service
• Pass through is used to account for lottery
  resources that are direct legislative
  appropriations to programs outside of the agency
  and for debt service costs on lottery revenue
  bonds.

17
Affiliated Boards and Commissions

• OECDD works directly with the following boards
  and commissions in carrying out its program
  initiatives

• Oregon Economic and Community Development
  Commission
• Oregon International Trade Commission
• Ports Advisory Committee
• Governors Small Business Council
• Finance Committee for the Oregon Economic and
  Community Development Department
• Connecting Oregon Communities Advisory Board
• Regional Boards and Partnerships
• Council on Knowledge and Economic Development
• Statutory bodies

In addition, OECDD works closely with Department
of Consumer and Business Services, Department of
Administrative Services, Oregon Department of
Transportation, Oregon Department of Agriculture,
Oregon Economic Development Association,
Community Solutions Team and the Governors
office.
18
Budget

• More than 79 of OECDDs proposed budget is
  restricted to infrastructure projects such as
  water and sewer plants, industrial park
  development, port facilities, etc.
• 7 of our budget is simply passed through to
  others such as the Tourism Commission, Arts
  Commission, Film Video Office and
  Regional/Rural Investment Funds
• Approximately 14 of the budget funds OECDDs
  core operations business development
  (retention, expansion and recruitment), business
  finance, assistance to small and emerging
  businesses and OECDD staffing

19
Refocused Budget Proposal
20
OECDD Budget by fund type

• About 27 of OECDD budget request is for lottery
  funds
• Other funds (61) include proceeds and debt
  services associated with the Oregon Bond Bank,
  loan repayments from previously financed projects
  and Business Finance funds from revolving loan
  funds to operate business finance programs

21
2003-05 Core Operations budget

• Core operations include business development,
  program funding and staffing support
• Infrastructure (a form of Other Fund) and Federal
  Funds pay for 37 of staffing, and business
  finance funds (a form of Other Fund) pay for 100
  of business finance programs and staffing

22
OECDD Lottery Fund Use

• 51 of Lottery Funds will go toward debt service
  for lottery bonds sold to finance infrastructure
  projects this includes 5.7 million as
  pass-through for the Port of Portland Columbia
  River channel deepening project.
• 16 of Lottery Funds represents pass-through to
  sister agencies and the Regional/Rural Investment
  Funds other entities determine uses for these
  funds

23
OECDD Infrastructure Budget Proposal

• Infrastructure investments use lottery funds,
  lottery bonds, loan repayments and other funds
• Lottery Funds Previously sold lottery bonds
  require 45 million for debt service Columbia
  River channel deepening, a pass-through to the
  Port of Portland, requires 5.7 million for debt
  service about 57 million of the May 2003 sale
  of lottery bonds will be carried forward to
  03-05, therefore shown as expenditure for 03-05
• Federal Funds Community Development Block
  Grant, at 32.4 million, targets low,
  moderate-income communities Safe Drinking Water
  Loan Fund, at 22.5 million, targets loans to
  communities for water treatment plants (OECDD
  administers federal block grant for
  non-entitlement communities. Cities such as
  Portland, Eugene, etc. receive their share
  directly)

24
OECDD Infrastructure Budget Proposal
25
Legislative Budget Options
26
Agency Accountability

• Contribute to Oregon Benchmarks
• Line of Sight Framework
• Improve performance tracking reporting

27
Links to Oregon Benchmarks

• OECDD contributed to the following Benchmarks and
  development benchmark 2002
• Percent of Oregonians employed outside the
  Willamette Valley and the Portland tri-county
  area
• Oregons national rank in traded sector strength
• Oregons national rank in new companies
• Net job growth
• Per capita personal income as a percent of the US
  per capita income (US100)
• Exports to non-primary partners as a percentage
  of total exports
• Percent of Oregonians who use a computer or
  related electronic device to access the internet
• Percent of Oregonians served by public drinking
  water systems that meet health-based standards
• BM 2002 Percent of cities desiring industrial
  development that have marketable industrial
  sites.

The agency also has 22 measures to represent its
scope of responsibility to external reviewers.
The Progress Board believes these numbers are
appropriate and that the agency is in line with
all requirements.
28
Strategic PlanActions to make Oregon a great
place to do business

• In order to really focus on short- and long-term
  job growth OECDD must realign the staff, service
  delivery system and structure of the department.
  We must have a measurable job-development/creation
  outcome tied to the actions we take. The
  department has been successful during some very
  difficult economic times and we must be more
  efficient, innovative and direct with the limited
  resources we have.
• The first step in this metamorphosis is a
  structural overhaul. By looking at our structure,
  we have developed a line-of-sight approach to
  our organization that will better serve our
  customer base and will help change the business
  climate of the state. The line-of-sight flow
  charts for each of the three core functions
  follow

29
Line of Sight Framework
30
Agency Structure

• OECDD 2001-03 existing organizational structure
• Accountability rests with each of 14 teams
• Staffing for the department, excluding Arts and
  Tourism, was 134 FTE at the beginning of 01-03.
  The 03-05 refocused budget proposal reduces that
  to 109.38 FTE

31
Agency Structure
32
Organizational Accountability

• OECDD 2003-05 Proposed Organizational
  Accountability
• Business Development
• Accountability is distributed among 5 functional
  groups
• More senior staff (regional development officers)
  will be refocused toward business development and
  job creation
• Community Development
• Accountability is distributed among 2 functional
  groups
• Both infrastructure investments and community
  assistance will be refocused toward possible
  economic development and job creation
• Administration
• Strengthen partnerships to increase leverage of
  state funds and staff
• Streamline processes to improve accountability
  with fewer staff

33
Organizational Accountability (cont.)

• Overall Agency Goals
• Assist in the creation/retention of 17,580 jobs
• 75 business expansion/recruitment projects
• Finance 115 million in business projects
• Assist with 48 million in export sales growth

34
Proposed 2003-05 Functional Accountability
35
Proposed 2003-05 Functional Accountability
(cont.)
36
Proposed 2003-05 Functional Accountability
(cont.)
37
Summary of Refocus

• Total requested budget is 13 million less than
  Governors Balanced Budget
• With an 18 reduction in staff as compared to
  01-03
• While maintaining a high level of infrastructure
  financing services to local communities
• Our goal is to take our refocused agency and
  provide/retain over 17,000 jobs, reduce the
  unemployment rate and provide more income tax
  revenues for the state budget.
• OECDD - Creating sustained, quality jobs for
  all Oregonians at the least cost.

38
OECDD

• Other required information

39
Agency Historical Overview

• The department has its roots in the Economic
  Development Commission established in 1953. From
  the beginning, the department activities have
  included policy development and services related
  to industrial investment and trade promotion. It
  was established as a separate agency in 1973. In
  1975, Ports joined the agency, followed by the
  Tourism Commission and the Film and Video Office
  in 1983. The department began offering financial
  services to business in 1976. The first trade
  office opened in Tokyo in 1984. That same year
  the state lottery was authorized, with revenues
  dedicated to economic development. In 1987,
  foreign offices opened in Taipei and Korea, and
  the department was restructured giving it
  responsibility for the Job Training Partnership
  Act, Small Business Development Center Network,
  Community Development Block Grant and the Special
  Public Works Fund. Also, the Regional Strategies
  Program was established.

• 1973 Economic Development Department becomes a
  separate agency
• 1984 Oregon State Lottery established by
  voters, dedicated to job creation and economic
  development
• 1985 Enterprise Zone Program created (ORS
  285B.650-.728)
• 1987 Department restructured
• 1987 17 department programs or funds
  established by legislature
• 1993 Department reorganized by statute
  Economic Development Commission given policy
  control (ORS 285A.040-.060)
• 1997 Interim Work Group on Economic and
  Community development appointed to recommend
  changes to implement New Directions
• 1997 Department Reorganized
• 1999 Interim Task Force on Performance
  appointed to recommend changes to department
  performance measures (budget note assignment
  included in HB 5015 budget report 6/18/99)
• 2001 Long-term financing of department
  infrastructure resources via lottery bonds
  approved (Chpt 637, OR Laws 2001)

40
Administrative Costs

• Activities included in administrative costs
• Directors office (policy direction, liaison with
  business community/other stakeholders, agency
  accountability), centralized agency-wide support
  functions such as budgeting, payroll, information
  technology, employee recruitment and human
  resources, lease contracts, web site design,
  public information, and reception.
• Using this definition, administrative cost is1.2
  of proposed 2003-2005 budget.

41
Cost Control Measures

• Steps taken to control costs, with emphasis on
  efficiency gains
• Reduce office space and rent
• Eliminate lease for office equipment
• Reduce travel via use of tele- and
  video-conference
• Streamline process for funding decisions to
  reduce staff time required
• Modified communications to stakeholders and the
  public via use of email, web sites, etc.
•  
• Steps taken to coordinate with related
  programs/other agencies to reduce duplications
• Use a shared list of projects to initiate funding
  decisions (Needs and Issues).
• Collectively strategize annually on approach to
  community priorities (Lead Agency meeting).
• Meet once a month with communities addressing
  difficult projects to brain-storm solutions (One
  Stop Meetings.)
• Participate regularly with other state agencies
  to strategize coordinated solutions to community
  problems (Community Solutions Team).

42
Legislative Agenda

• HB 2300--Department omnibus bill to improve and
  streamline public infrastructure and small
  business service programs eliminates redundant
  statutory references regarding assessment of
  small business programs provides for
  verification of jobs data with Employment
  Department records provide a jobs focus with
  Regional and Rural Investment programs vehicle
  to provide for authority to support industrial
  lands mitigation costs
• SB 467--Establishes an industrial lands
  certification process for project ready sites,
  working with state economic and community
  development agencies, community solutions office,
  local governments and the private sector. Issue
  Will require maintaining adequate lottery bond
  authority to jump-start assessment, mitigation
  and infrastructure costs for preparing industrial
  lands throughout the state.
• SB 890--authorizes issuance of lottery bonds and
  use of proceeds to finance Columbia River channel
  deepening in the biennium beginning July 1, 2003.
  Issue Will require providing for change of
  debt service requirements in next biennium and
  future biennia.
• SB 363--Sponsored by the Council on Knowledge and
  Economic Development to allocate lottery funding
  for the Higher Education Technology Transfer Fund
  and to the department for technology transfer
  assistance to traditional businesses throughout
  Oregon. Issue Some of this funding has been
  provided for in the Department's readjusted
  Governor's budget.

43
Legislative Agenda (cont.)

• Other relevant bills that may impact operations
  and budget needs of the department
• HB 2969--Establishes Office of Small Business in
  the department establishes Small Business
  Council in statute.
• SB 869--Establishes an Electronic Products
  Stewardship Advisory Committee, appointed by the
  Department, to develop recycling methods, create
  business opportunities, working with other state
  agencies and high technology industry
  representatives.
• SB 441--Establishes Oregon Quality Jobs Board,
  chaired by department appointment to provide for
  natural resource demonstration projects, an
  extension of Jobs in the Woods work of previous
  biennia requires economic analyses, development
  of employment quality benchmarks and biennial
  reporting to the legislature.
• Budget Issues of Sister Agencies
• Tourism CommissionHB 2267 increases lodging tax
  by 1 and dedicates proceeds to tourism
  promotion.If enacted, what are effects on use of
  Lottery Fund and requirements for performance
  tracking and reporting.
• Oregon Arts CommissionHB 5548 ceased General Fund
  distribution to the Arts Commission for the rest
  of 01-03. If General Fund reductions continue
  into 03-05 Oregon will likely lose grant funding
  from federal government and private foundations
  for arts.
• Oregon Film and Video OfficeSB 79 creates and
  funds a Production Incentive Fund to attract film
  and video projects to Oregon. HB 5548 ceased
  Lottery Fund distribution to the Film and Video
  Office for the rest of 01-03. If such reductions
  continue into 03-05, operations of the Film and
  Video Office will curtail severely.

44
IT Strategy

• Provide the technical tools and environment
  required by the department to respond to the
  challenges posed by changing economic conditions
• Develop and enhance the departments Information
  Systems to handle increased connectivity and
  rising demands for data and tracking reporting
  performance as adopted by the OECDC. Ensure
  integration of all department program databases
• Continued expansion of information available on
  the departments website including profiles of
  every Oregon community, specific information
  about industrial sites throughout Oregon, trade
  statistics and other commonly sought information
• Development of databases and applications with
  the ability to link with those of other agencies
  on community needs and investments
• Improve electronic tracking of business and
  industry outreach activities, including the
  distribution of responses and investment leads.
•  
• Key enterprise-wide technology issues that need
  to be addressed in the new statewide Strategic
  Technology Plan
• There are difficulties in sharing documents and
  information with other departments and locales
  due to varying software products and standards
• Retention of IS and other technologically
  proficient staff
• Need for a central, statewide clearinghouse for
  Internet commerce and web hosting
• Cross-agency reporting system Integrated
  database system with other community solution
  departments to track investments, future issues
  and needs

45
Affirmative Action Report

• The focus of the Oregon Economic and Community
  Development Department affirmative action plan
  for the 2001-2003 biennium was to improve
  representation of women, people of color and
  people with disabilities in upper and middle
  management positions, and in job categories with
  few employees, and with lower job turnover or
  promotional opportunities.
• The plan to achieve a more diverse workforce
  included setting goals to hire one woman and one
  person of color in the Official and Administrator
  EEO job group one woman, or person of color, in
  the Professional Accounting/Finance job group,
  and two people with disabilities. Success in
  meeting the goals were

• the goal to hire one woman in the Official and
  Administrator job groups was met, but the goal to
  hire one person of color in the job group was not
  met,
• although the goal to hire one woman, or person of
  color, in the Professional Accounting/Finance
  jobs was not met, the number of women and people
  of color increased in the Professional jobs in
  general,
• the goal to hire two people with disabilities was
  met,
• a voluntary survey of employees to determine the
  accuracy of the number of employees with
  disabilities represented in the current workforce
  resulted in an increase in the representation of
  employees with disabilities, which exceeded the
  goal of 6 set by the Governors Affirmative
  Action Office and
• overall, the representation of women and people
  of color remained steady, and the representation
  of people of color and people with disabilities
  increased as shown below