Effective Public Policy: New York State’s Investment of VLT Revenue in the Thoroughbred Racing Industry

by Dan Stevens 11. March 2015 14:41

Whether purposefully or serendipitously, New York State’s investment of gaming revenue from Resorts World Casino New York City in the state’s thoroughbred horse racing industry has not only turned around an industry in decline, but has also boosted other industries including the state’s agriculture and tourism industries.

 

Gaming revenue from Video Lottery Terminals (VLTs) at the Casino began flowing in 2011 with the bulk of revenue going to New York State Education. A smaller portion (though a still significant sum) was reserved for the thoroughbred racing industry. The 16% annual share that New York State funneled to thoroughbred racing totaled over $120 million in 2013. That is further divided into operating and capital expenditures at thoroughbred tracks operated by the New York Racing Association (NYRA), purses (awards) for race winners, and a special New York State Thoroughbred Breeding & Development Fund that distributes awards to owners and breeders of Thoroughbreds bred in New York State.

 

The impact was immediately significant. The on-track handle (amount wagered at tracks) grew 16% between 2010 and 2013 while in the U.S. it declined by 1% during the same period – a strong indication of an industry rebound. Licensing of thoroughbred race participants, a general proxy for jobs in the industry, increased 8% during that timeframe. Purses are another indicator of the strength of the industry with higher purses corresponding to more competitive racing, more race participants, higher numbers of spectators, and greater wagering on races.  Pursues in the U.S. racing industry overall were stagnant between 2011 and 2013 while those offered by NYRA at New York thoroughbred tracks increased more than 53%.

 

The policy of New York to divert a portion of VLT revenues to horse racing has supported the state’s agriculture industry. VLT revenues increased purses restricted to New York bred horses and the awards given directly to owners and breeders of winning horses. This generated a significant spike in demand for quality New York-bred race horses. The number of New York-bred yearlings sold at auction increased 49% between 2011 and 2013 while the average sale price jumped from about $38,000 per horse to $52,000, a 39% increase in just three years.

 

That created a tremendous incentive for horse farm owners in New York to invest in their operations through hiring workers, purchasing new land, and making other improvements. It is also attracting breeding operations from out-of state accounting for a new infusion of spending to the state economy. For example, the number of horse farm properties in Saratoga County grew 14% between 2010 and 2013. The increase in breeding activity is significant given the high cost of breeding and raising thoroughbreds. Many of those costs include spending at local businesses such as agriculture supply business and veterinary offices. In fact, the recent upswing in the breeding industry drew a new branch of an out-of-state world-class veterinary hospital to the Saratoga area.

 

VLT revenue invested in horse racing has also supported the state’s tourism industry. The revenues not only increase the quality of races, but also have implications on the length of the racing season and thus the number of visitors that spend money at local businesses near tracks. Furthermore, revenues are used to improve the visitor experience at NYRA’s thoroughbred tracks through major capital improvements. Visitor attraction is significant given the economic impact of that tourism activity. Take for instance that a 2014 visitor survey conducted at the Saratoga Race Course found that 39% of visitors come from outside of New York State. That visitor spending (about $227 per-person per-day) represents new money coming into the state. The recent analysis conducted by Camoin Associates found that visitors represent the most significant economic impact associated with the Saratoga Race Course accounting for a total annual regional economic impact of $123 million and 1,000 jobs.

 

The “spillover” impacts of the VLT support for thoroughbred racing into the agriculture and tourism industries represent a robust return on investment. The evidence has proven this public policy to be a highly effective tool for catalyzing economic growth beyond the racing industry.

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What’s All the Broadband Buzz About?

by Guest Author 11. March 2015 11:31

The following article is a collaborative effort between Tilson Technology (www.tilsontech.com) and Camoin Associates (www.camoinassociates.com).

 

Broadband, or high-speed internet access, has been getting a lot of media attention lately. Recently President Obama stated that “high speed internet is a not a luxury, it is a necessity.” Governor Cuomo proposed a $1 billion “New NY Broadband Program.” Tom Wheeler, Chair of the Federal Communications Commission (FCC) and a former cable lobbyist, has advocated striking down laws that protect incumbent broadband providers’ markets.

 

Why all the buzz? Better broadband—defined here as faster speeds, higher adoption rates, lower prices, and more reliability than the status quo for the roughly 45% of Americans called out by Obama—is a powerful economic development tool. It is linked to business growth, improved educational opportunities, better consumer welfare, improved healthcare access, improved government services, innovation, entrepreneurship, and more!

 

If you’re reading this article from a broadband connection, you’ve likely experienced the benefits of broadband that are not available to many rural Americans. Perhaps you’ve shared a file with a co-worker, taken an online course, Skyped with a family member, looked at the results of your recent bloodwork at the doctor’s office, or registered your motor vehicle online. The possibilities are growing exponentially, and are virtually endless. For some. The digital divide is splitting the broadband haves and have-nots along geographic lines that are shaping the course of economic development and—more importantly—quality of life.

 

Key findings from the FCC’s 2015 Broadband Progress Report include a new broadband benchmark of 25 megabits per second (Mbps) for downloads, and 3 Mbps for uploads. Speeds meeting the 25 Mbps/3 Mbps benchmark are available to 92% of urban Americans, but only 47% of rural Americans. Nonetheless, Americans living in rural and urban areas adopt the new benchmark broadband speeds, when available, at similar rates (see below).

 

 

The FCC, members of Congress, the President, and the Governor of New York have a common theme to their broadband message: they want to stimulate competition in broadband, and they are looking for innovative ways to enable coverage in rural areas that have to date been underserved by the Universal Service Fund program. In 2014, the FCC announced $100 million of funding for Rural Broadband Experiments as part of its Connect America initiative. More recently, the agency is considering a draft decision to intervene against state Laws in Tennessee and North Carolina that limit internet access operated and sold by cities. In New York, Andrew Cuomo is proposing to use $500 million from the state’s bank settlements to provide a one-to-one match for providers improving service in underserved areas on the state. The current method of expanding broadband service—whereby incumbent providers of regulated phone and TV provide add-on internet access service—is on the cusp of change.

 

In Maine, the municipalities of Islesboro, Ellsworth, Sanford, and Rockport are developing solutions that employ public-private partnerships to expand broadband in their underserved markets. Their solutions range from issuing a bond to fund a fiber-to-the-home network to using grant money to build key infrastructure that will enable future private broadband investment.

 

Because of the critical role of broadband on the economy as well as on community and individual well-being, it is imperative that economic and community developers understand these recent trends and begin taking action. Now is the time to begin actively working with partners to prepare and implement strategies that support the continued development of infrastructure, policies, and practices that will increase broadband access and adoption. Actions community leaders can take include:

  • Develop a Plan: Develop broadband plans, within or related to economic and community development plans, that address issues around infrastructure, organization, supply, demand, and adoption.

     

  • Build an Implementation Network: Develop and support learning and implementing networks, partnerships, or collaboratives for "strategic doing" among economic and community development, education, business, social services and healthcare, and cultural communities.

     

  • Initiate Cultural Change: Focus not only on technical, infrastructure, and funding issues but also around fostering a digital culture that supports innovation, entrepreneurship, and improved quality of life.

Our own interdisciplinary collaborative of Camoin Associates, Tilson Technology, and others will be digging deeper into these issues in the coming months and reporting on our findings. If this topic is pertinent to your community, we invite you to join the discussion by checking for updates on Camoin’s blog, joining our mailing list specific to this topic (click here), or reaching out to one of us directly with questions or suggestions for future articles:

 

Jim Damicis, Senior Vice President
Camoin Associates
Phone: (207) 831-1061
Email:
jim@camoinassociates.com

 

Aaron Paul, Director Energy and Broadband Consulting
Tilson Technology
Phone: (207) 837-2571
Email:
apaul@tilsontech.com

 

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5 Tips for Acing the CEcD Exam

by Rob Camoin 11. March 2015 10:55

Looking to broaden, or sharpen, your economic development skills? Then you should strongly consider fulfilling the requirements of, and sitting for, IEDC’s CEcD exam. If you’ve fulfilled the requirements and are now ready to take the exam, past results indicate you will need to prepare. The pass rate on the exam last year was a meager 35%.

 

Here are 5 suggestions on how you can be prepared to pass the exam the first time out:

  1. Study!! You need to be ready to devote a considerable amount of time studying and preparing for the exam. I have mentored a number of people preparing for the exam. Those that spent the time studying passed and those that didn’t failed.

  2. Find a CEcD mentor that is willing to work with you. Even if it is accomplished by phone, a mentor can cover various exam topics with you, ask and answer questions and help you assess how prepared you are leading up to the exam.

  3. Take IEDC’s prep course. IEDC wants you to pass and they have offered preparation assistance through their prep class. Take them up on it!

  4. All the exam answers are in the manuals, so read them. Sitting for the required classes isn’t usually enough. There is lots of material. Don’t assume that everything on the exam will have been covered by instructors and is thus in your notes. Most material is, but you will get a lot more detail from the manuals than can possibly be covered in a class. Plus, you will need to read the manuals of the classes you haven’t taken if you want a shot at answering questions in those subject areas correctly.

  5. Lastly, practice writing essays. I have graded the exam at least 6 times. When I speak with other graders they all make the same assessment—an overwhelming majority of individuals taking the exam are not able to articulate their responses in a clear and concise manner. As a result they run out of time and don’t earn all the possible points.

Click here to register for IEDC’s upcoming training courses.

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Can We Still Make a Buck? Case Study: The Former Newburgh City Landfill

by Tom Dworetsky 11. March 2015 10:37

We’ve all heard this story time and time again in post-industrial cities around the country. A large, contaminated brownfield site has sat vacant for years, maybe decades. No one knows the full extent of the contamination, or what they’ll find if they start digging. Oftentimes it’s in a conspicuous location, or perhaps it’s one of the few large developable sites left in the city, and it’s been off the tax rolls since anyone can remember. It’s usually in a city that was once a center for manufacturing and commerce, but has since been all but abandoned for greener pastures where taxes are lower, barriers to development are fewer, and social ills are easier to ignore.

 

This is the case in the City of Newburgh, New York, population 28,480. Once an industrial powerhouse on the Hudson River, soon after World War II Newburgh underwent a series of unfortunate events that would seal its fate as a city plagued by disinvestment and economic distress. Manufacturers of products ranging from textiles and bricks to lawnmowers and boats abandoned the city to take advantage of cheaper wages in the South, leaving behind a social services-reliant workforce with limited options for employment. The opening of the New York Thruway in 1954, together with the construction of the Newburgh-Beacon Bridge and concomitant closure of the Newburgh Ferry, diverted traffic away from the city center and discouraged potential customers from patronizing the city’s businesses. Newburgh’s downtown took another hit with the opening of the regional Mid-Valley Mall in 1964, just outside the city limits. The city began to deteriorate, and anyone with money fled to the suburbs.

 

This brings us to the site that is the subject of this case study: Newburgh’s former city landfill. Beginning in the 1940s, the site was operated as an unregulated landfill for municipal waste until its closure in 1976. Hazardous waste from the adjacent state Superfund site—formerly occupied by DuPont and the Stauffer Chemical Company—was buried in the landfill, and investigations of the site over the years have uncovered drums containing toxic waste as well as released material and associated contaminated soil.

It goes without saying that developers were not lining up to invest in a site like this one, especially given the history of the City.

 

Fortunately, Hudson Valley Lighting, a local employer with a need to expand and a desire to remain committed to the Newburgh community, expressed interest in redeveloping a 15-acre, IDA-owned portion of the site, largely because it was the only sizeable parcel left for development in the city. The project would consist of a new company headquarters with a research, design, and distribution facility that would employ existing and new workers, the bulk of which would be city residents. The developer proposed a public-private partnership in which the City would assist with remediation and provide water, sewer, and stormwater that would serve the project as well as potential future adjacent development.   

 

Even with the project being eligible for a number of incentives, including grants from the US EDA and NYS Empire State Development, NYS Brownfield Cleanup Program tax credits, and NYS Excelsior tax credits, the risk that comes with redeveloping a landfill obliged the developer to request a property tax abatement from the City. This would afford the developer a greater level of certainty going forward.

 

The City of Newburgh IDA hired Camoin Associates to determine whether the PILOT (payment-in-lieu-of-taxes) agreement proposed by the developer would ensure the financial feasibility of the project, while at the same time, not providing the developer with an excessive return. We developed a real estate pro forma that calculated the IRR for the project from the perspective of a developer leasing the project to a tenant. In creating the pro forma we used construction costs, financing terms, and anticipated incentive receipts provided by the developer and IDA. Our key assumption was regarding industrial triple net lease rates, which we determined from researching rates for comparable properties in the Newburgh region. We then were able to modify the pro forma to calculate IRR under different property tax abatement scenarios to help arrive at a PILOT schedule that was fair to both the developer and the City.

 

Despite so many of the pieces falling into place to turn this forlorn landfill into a driver of economic development in the city, the imminent expiration of the state’s brownfield program meant that HVL had to have tax-credit eligible work, including groundwork and tree clearing, done by the end of the year. This was a deadline that HVL felt it would be unable to meet, given repeated delays in getting the project off the ground. As a result, the project was scrapped—yet another tough break for Newburgh.

 

The lesson from this case is that, at the end of the day, no matter how much in government subsidy is provided to make a project happen, the developer still needs to be able to make a buck commensurate with the risks of the project. As in this case, if the terms of the subsidies are tentative or ambiguous, the developer may not be able to bear the risk. Private investment in the form of a committed developer is a city’s best bet to spur economic revitalization, and the public sector should do all that it can to minimize any uncertainty that is likely to arise. Now it’s back to square one, as Newburgh waits for another interested developer to come along.

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Featured Indicator: Brain Drain! Where are the Educated Moving?

by Tom Dworetsky 9. March 2015 13:21

When regions talk about attracting and retaining jobs, not all jobs are created equally. It’s the high-paying jobs that require highly skilled, highly educated employees that are most coveted. But in order to attract these kinds of jobs, a region needs a workforce that can meet employers’ needs. This is a challenge for many regions who are experiencing a “brain drain” (or more formally, “human capital flight”) problem. Brain drain refers to the large-scale emigration of highly trained and educated people from a certain place, due to a lack of opportunities, low wages, and quality of life concerns. While the term is more commonly used to refer to this phenomenon at the national level, it is applicable sub-nationally, as well. For this month’s indicator, we take a look at Brain Drain at the state level and find out where America’s educated are moving.

 

According to 2013 ACS 1-year estimates data, about 4.2 million U.S. residents aged 25+ moved from one state to another within the previous year. This amounts to about 2.0% of the total 25+ population. Of those movers, about 42% held a bachelor’s degree or higher. (As a side note, only about 30% of the 25+ population holds at least a bachelor’s degree, indicating the educated are more likely to move.) There were 26 states (plus D.C.) that showed a net loss of bachelor’s degree holders over this period, compared to 24 that showed a net gain. New York was the biggest net loser in absolute terms, down 40,728 degree-holders between 2012 and 2013, followed by Illinois with 18,683 and Massachusetts with 14,147. The biggest net gainers were Texas and Florida, each netting about 27,000 degree-holders.

 

To adjust for overall population size, we’ll express these migration figures as rates per 1,000 population. Alaska had the highest out-migration rate by far, with a net loss of 61 degree-holders per 1,000 population. D.C. was second with a loss of 21 per 1,000, followed by New Mexico with 18 per 1,000. At the other end of the spectrum were Nevada, South Carolina, and Oregon, netting 17, 15, and 14 degree-holders per 1,000 population, respectively.

 

Displayed spatially, the data reveals a clear geographic pattern. The Rust Belt states of the Mid-Atlantic and Midwest (stretching from New York to Iowa) are losing their educated residents to states in the Southeast and West.

 

Hover over individual states on the map above for details on net migration totals and rates for the degree-holding population and population overall. Generally, states that were net losers of degree-holders were also net losers of population overall (and vice versa). A notable exception was Wyoming, which showed a net gain of 13 degree-holders per 1,000, but lost 5 people per 1,000 overall.

 

Note that this data includes only state-to-state migration; it does not include people who emigrated to the U.S. from another country.

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Snowpocalypse! The Economic Tyranny of Snowstorms

by Dan Stevens 17. February 2015 11:32

After a series of especially inconvenient snow storms here in the northeast, it’s worth taking a look at how such events impact the economy—for better and for worse. The (economic) forecasts are typically dire with predictions totaling into the billions of dollars for major storms that ravage the major metro areas of the northeast. Consider one recent prediction that a two-day shutdown in the region would do $16 billion in economic damage. Yet most of these predictions assume that economic activity lost during the storm is forever wiped away. A more nuanced look shows that much activity is simply delayed, while in fact, some economic activity really is lost for good.

Stores are generally empty during blizzards. That’s a fair assumption, but that sales that would have occurred are lost off the year’s balance sheet is not. Consumer purchases are typically just put on hold until reasonable conditions return. If a snow storm hits on the day you were planning to buy a microwave, chances are you’ll still be buying that microwave in the near future. The same principle holds true for purchases made by businesses. Taking a one day or one week look at the impact simply ignores the fact that spending is “made up” later on.

 

It’s also important to consider that people work from home during major snow events. As one TIME article put it, “just because people don’t make it to work doesn’t mean work doesn’t get done.”1 In the digital era it’s easy to telecommute from home, especially for white collar professionals. Economic cost estimates of snowstorms also fail to account for the fact that workers can make up for lost time in other ways like working longer hours.

 

Yet it’s important to note that some economic activity is lost. Restaurants are typically hit hard because would-be patrons substitute meals out for food at home. The impact to retailers and restaurants is also dependent on the timing of storms. Purchases are not made uniformly throughout the week and an early week snowstorm will do less damage than one that shows up on Friday.

 

Storms can also reduce wages and earnings. While salaried workers receive their full paycheck regardless of Mother Nature, hourly workers forced to stay home lose those wages, which then cannot be spent in the economy. One study found that snow-related shutdowns hurt hourly workers the worst, “accounting for almost two thirds of direct economic losses.”2 Some workers have the opportunity to make up hours, others do not.

 

A big enough snowstorm can also cause enough logistical difficulties for the movement of goods that an impact to GDP (economic output) can be measured. Consider this example in a recent article about the winter of 2013-2014 “when a series of severe snowstorms across America helped the economy shrink by 2.1% in the first quarter of 2014." In that instance, the bad weather was persistent enough to mess with supply chains. Trucks and air freight couldn’t get to their destinations, mucking up inventory management. That led not only to fewer consumer purchases, but also to companies buying less than they otherwise would.”3

 

Now what about those massive municipal costs associated with snow storms? They are typically expressed as an economic loss, but there is a flip side. For example, snow removal costs are often cited, but consider where that money is going: into the pockets of snow removal crews, not buried in a snowbank. That money will circulate through the economy as those workers make purchases that support businesses and their employees. To consider the net economic impact of spending on snow removal it’s necessary to compare that benefit (dubbed “the snow stimulus” by one writer4) to the cost.

 

So what is the bottom line when it comes to measuring the economic impact of snowstorms? Summed up aptly by an economist in a recent Fortune article, “it’s more an art than a science.”5

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Maximizing the Return on Incentives

by Camoin Associates 13. February 2015 17:51

Incentives are a prevalent tool in economic development practice, yet two central questions remain: how can the return of these investments be calculated, and how can the return be increased?

 

Our own Jim Damicis contributed to an IEDC report on maximizing communities’ return on incentives. The report, entitled “Seeding Growth: Maximizing the Return on Incentives” presents practitioners with four models of return that can be implemented, and then describes in detail the methods of undertaking the calculations that are critical to accurate results. The report also offers practitioners guidelines that can be used to increase the return of incentives, including clearly defining objectives, setting criteria for achieving objectives, and rewarding companies that meet and exceed their commitments.

                                                           

The report is available here to IEDC members.

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Featured Indicator: Why Are Young Men More Likely to Live at Home?

by Tom Dworetsky 13. February 2015 16:54

New data issued by the Census shows a continued upward trend in the share of older Millennials who are living at home with their parents. The percentage of Americans aged 25 to 34 who lived at home reached 14.7% last year, up from a low of 10.2% in 2003. For younger Millennials, the upward trend seems to have reversed slightly, with the share of those between 18 and 24 living at home having fallen to 54.9%, down slightly for the second consecutive year after peaking in 2012 at 56.1%.

 

Given the state of the economy in the last several years, this trend is no surprise. What’s striking about this data is the difference between men and women. In 2014, almost 18% of men between 25 and 34 lived at home, compared to just 12% of women. That means that men were 1.5 times more likely than their female counterparts to live with their parents. This gap has remained fairly consistent for at least the last 20 years, so this is nothing new, but why is this the case?

 

 
Could economic factors explain the difference?

Are young men more likely to live at home because they are more likely to be unemployed? The 2014 seasonally-adjusted average quarterly unemployment rate for men ages 25–34 was 6.4%, while for women it was slightly higher, at 6.6% (Source: BLS). So that doesn’t explain it.

 

Moreover, the labor force participation rate (see last month’s indicator) for men in this age group was 88.7%, while for women it was quite a bit lower, at 73.9% (Source: BLS). With women LESS likely to be part of the labor force, we might expect that they would be MORE likely than men to live at home, but this is not the case.

 

So, if this gap can’t be explained fully by economics, there must be social factors at play. One potential explanation is the difference in marrying age (and by extension, cohabitation age, and age of forming intimate partnerships in general) between men and women. According to 2013 ACS data, the median age at first marriage was 29.4 for men, compared to 27.4 for women. Women get married earlier, so it follows that they would leave their parents’ homes earlier to form their own households, as well. Forty-two percent (42%) of women between 25 and 34 were married with their spouse present in the household, compared to 34% of men.

 

How does the U.S. stack up to other countries?

While the number of American Millennials living at home is on the rise, the U.S. is still on the low end of the spectrum when compared to European countries. Data from Eurostat shows that, for the 31 European countries for which 2013 data was available, the average share of European young adults aged 25 to 34 living at home was 30.2%. This is more than double the 2013 U.S. rate (13.9%)!

 

Seven countries had rates below that of the U.S., with the Scandinavian countries boasting the lowest rates. Denmark had the bottommost rate—only 1.4% of Danish young adults live with their parents. At the other end of the spectrum were the countries of Eastern Europe and the Balkans, with Croatia, Slovakia, Serbia, Greece, and Bulgaria all with rates between 50% and 60%.

 

Despite this broad range across countries in the share of young adults living at home, all 31 European countries had one thing in common: Men were more likely than women to live with their parents. Across countries, men were at least 1.3 times more likely to live with their parents, and in some countries, the gap was substantially higher. In general, the difference was most pronounced in Northern Europe. In the Netherlands, for example, 10.5% of young adults overall lived with their parents, but men were 3.3 times more likely than women to do so. In Germany, men were 2.2 times more likely to live at home. The 31-country average was 2.0. Recall that the ratio in the U.S. is 1.5.

 

I came across a few anecdotal reasons in my research that could explain why Millennial men are more likely to live at home. It may be true that parents tend to give their sons more freedom than their daughters, so it’s easier for a young man to live at home and still feel independent. In addition, in certain households, adherence to traditional gender roles might mean that sons are expected to do less housework than daughters, and so are more likely to stay at home.

What other factors do you think might be contributing to this phenomenon in the U.S. or globally? Post your thoughts in the comments!

 

U.S. Data is from the Census Bureau’s Current Population Survey – Annual Social Economic Supplements. It is important to note that unmarried college students living in dormitories are counted as living in their parental home in CPS data.

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The “secret” to a good economic impact analysis

by Christa Franzi 13. February 2015 16:35

Economic impact analysis looks at the effect of a project or event on the economy of a specified geography. We measure this effect in jobs, sales, and earnings created or lost. What we are really measuring is “change in final demand,” which is essentially money coming in from somewhere outside of your community.

 

Some may debate over which economic impact model is the best, but I’ll let you in on a little secret: the most important component of any good economic impact analysis has nothing to do with which model you use. The single biggest pitfall of many impact studies is failing to correctly calculate “net newwhen thinking about change in final demand. Net new is the change in final demand once you have eliminated and accounted for all other changes. In other words, you have estimated which jobs would occur in your community regardless of the project.

 

Last week, Tom Dworetsky and I had a blast chatting about this topic with a group of Siena College students taking part in an Economics of Travel and Tourism Course. Check out our presentation slides for a step-by-step guide to economic impact analysis.


 

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The Disconnect between Education and Workforce Development, Part III: The Workforce Innovation and Opportunity Act of 2014 (WIOA)

by Colleen LaRose 13. February 2015 16:33

So far we’ve covered the history of workforce development up through the Workforce Investment Act. Click for Part I and Part II of the series. This brings us to the most recent piece of workforce legislation, the Workforce Innovation and Opportunity Act (WIOA), passed into law in 2014.

 

Unlike most legislation that goes through Congress in a painful and controversial way, WIOA was instead passed with huge bipartisan support. It was pretty clear what needed to be fixed from WIA and how to fix it (but that is not to say that the fixes will be easy).

 

Without getting too deep into the weeds about this legislation, suffice it to say that WIOA:

  • Strategically aligns and promotes coordination of key programs in employment, education, and training at fed, state, regional and local levels through American Job Centers (former One Stop Career Centers), These programs, Wagner Peyser, adult education and vocational rehabilitation and former WIA programs (adult, dislocated worker and youth programs) are now required to co-locate, share resources, utilize integrated intake and reporting systems, and all of these programs will now be subject to reporting outcome measures (such as credential attainment, entered employment, employment retention and wage gains).

  • All training providers must report on outcomes of students, promoting accountability and transparency of training programs and those seeking training are not forced into “work first” before training is considered as an option.

  • Builds on proven best practices such as sector strategies, career pathways, regional economic development approaches, and work-based learning (such as apprenticeships and on-the-job training) and incumbent worker training.

  • It requires four-year state plans be submitted to the Federal Department of Labor with two-year updates (first report due March 2016). Local plans must align with state plans and must include: strategic planning elements, operational planning elements, operating systems and policies, program specific requirements, implementation strategy, and assurances

  • There will now be enhanced employer services, employer satisfaction surveys, and benchmarks of performance (yet to be determined) in how well employer needs are being met by the American Job Centers

  • And, last but not least, my favorite part of the legislation, WIOA fosters collaboration of regional economic development with workforce development initiatives, which has been my mantra for these many years! In fact, the Obama administration has put out a report called: “Ready to Work: Job Driven Training and Opportunity” that clearly outlines seven principles under which both workforce development and economic development must now operate…cooperatively. Briefly, these principles are:

ENGAGING EMPLOYERS – Work up-front with employers to determine local hiring needs, design training programs that are responsive to those needs – from which employers will hire.

 

EARN AND LEARN – Offer work-based learning opportunities with employers – including on-the-job training, internships, pre-apprenticeships and Registered Apprenticeships – as training paths to employment.

 

SMART CHOICES – Make better use of data to drive accountability, inform what programs are offered and what is taught, and offer user-friendly information for job seekers to choose programs and pathways that work for them and are likely to result in jobs.

 

MEASUREMENT MATTERS – Measure and evaluate employment and earnings outcomes. Knowing the outcomes of individual job-driven training programs – how many people become and stay employed and what they earn – is important both to help job seekers decide what training to pursue and to help programs continuously adjust to improve outcomes.

STEPPING STONES – Promote a seamless progression from one educational stepping stone to another, and across work-based training and education, so individuals’ efforts result in progress. Individuals should have the opportunity to progress in their careers by obtaining new training and credentials.

 

OPENING DOORS – Break down barriers to accessing job-driven training and hiring for any American who is willing to work, including access to supportive services and relevant guidance. In order for training programs to work, they need to be accessible for the people who need them most.

 

REGIONAL PARTNERSHIPS – Coordinate American Job Centers, local employers, education and training providers, economic development agencies, and other public and private entities to make the most of limited resources.

 

In fact, the report says: “EDA will include job-driven training principles in its new CEDS content guidelines, which provide recommendations and tools to help regions develop strong CEDS. These new content guidelines will be released in fall of 2014 and will be available to the over 380 current regional planning organizations as they implement and update their CEDS as well as to any community looking to develop an impactful economic development strategy for its region.”

 

Translation: every Comprehensive Economic Development Strategic plan (CEDS) is going to have to include these job driven principles.  So economic development is now going to have to include workforce development in planning goals and strategies for their region if they are going to utilize CEDS funding from the EDA. This is BIG STUFF!

 

Now, is this WIOA legislation a panacea? No, of course not…in fact there are many concerns about how to accomplish the goals of this legislation…how to get the parties to work together collaboratively (like economic development and workforce development), how to make sure there is enough funding to assure that the goals established in a local region have a prayer of being accomplished, how to get other organizations, such as higher education, aligned to the goals established by the local region when it does not represent a large financial stake for them, how to get the “mandated partners” of the American job Centers to co-locate and share resources….and lots of other concerns. BUT, that all being said, this legislation is definitely another leap forward in the evolution of workforce development programming and we will undoubtedly be revisiting this in a few years with another needed update. However, in the meantime, let’s make the most of this opportunity and take that bipartisan spirit to heart in each of our local regions and make every effort to embrace this new opportunity to work together to improve the workforce of the USA.


 

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About Camoin Associates

Camoin Associates is a professional service firm that utilizes its understanding of the public and private sector investment process to assist businesses and developers in capitalizing on funding, financing and tax programs established to encourage private investment. We also specialize in advising economic development organizations and municipalities in creating strategies, policies and programs that support investment and job creation.   [Click Here for More]

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