BROC Budgetary Responsibility Oversight Committee 1999 ANNUAL REPORT http://www2.state.ga.us/broc/99annl.html THE GENERAL ASSEMBLY STATE OF GEORGIA Budgetary Responsibility Oversight Committee The Budget Accountability and Planning Act of 1993 established the Budgetary Responsibility Oversight Committee in Code Section 28-5-5: (a) There is created the Budgetary Responsibility Oversight Committee which shall be composed of six members of the House of Representatives appointed by the Speaker of the House of Representatives and six members of the Senate appointed by the President of the Senate. The members of such committee shall be selected within ten days after the convening of the General Assembly in each odd-numbered year and shall serve until their successors are appointed. (b) The Speaker of the House of Representatives shall appoint a member of the committee to serve as chairperson and the President of the Senate shall appoint members of the committee to serve as vice chairperson and secretary during each even-numbered year. The President of the Senate shall appoint a member of the committee to serve as chairperson and the Speaker of the House of Representatives shall appoint members to serve as vice chairperson and secretary during each odd-numbered year. Such committee shall meet at least six times each year and, upon the call of the chairperson, at such additional times as deemed necessary by the chairperson. (c) It shall be the duty of such committee to consult with the Governor and the Office of Planning and Budget concerning the development and implementation of the strategic planning process, the development of outcome measures for program evaluation, and the implementation of related actions. (d) It shall be the duty of such committee to review and evaluate the following: (1) Information on new programs submitted in accordance with Code Section 45-12-88; (2) The continuation budget report submitted in accordance with Code Section 45-12-75.1; (3) The strategic plans for the state and individual departments submitted by the Office of Planning and Budget; (4) Program evaluation reports submitted in accordance with Code Section 45-12-178; (5) Information or reports to be submitted by the Office of Planning and Budget identifying moneys received and purposes for which moneys are expended in any case in which the receipt or expenditure is not contemplated by an appropriations Act; and (6) Such other information or reports as deemed necessary by such committee. (e) The Office of Planning and Budget and the head of each budget unit shall cooperate with such committee and provide such information or reports as requested by the committee for the performance of its functions. (f) The committee shall make an annual report of its activities and findings to the membership of the General Assembly and the Governor within one week of the convening of each regular session of the General Assembly. The chairperson of the committee shall deliver written executive summaries of such report to the members of the General Assembly prior to the adoption of the General Appropriations Act each year. (g) The members of the committee shall receive the allowances authorized for legislative members of legislative committees. The funds necessary to pay such allowances shall come from funds appropriated to the House of Representatives and the Senate. (h) The committee shall be authorized to request that a performance audit be conducted for any department which the committee deems necessary. 1999 Members of the Budgetary Responsibility Oversight Committee Senator George Hooks, Co-Chair and Chair of Senate Appropriations Committee Senator Nathan Dean, Chair of Senate Finance and Public Utilities Committee Senator Jack Hill, Chair of Higher Education Committee Senator Terrell Starr, President Pro Tempore Senator David Scott, Chair of Senate Rules Committee Senator Charles W. Walker, Majority Leader Representative Terry L. Coleman, Co-Chair and Chair of House Appropriations Committee Representative Tom Buck, Chair of House Ways and Means Committee Representative Calvin Smyre, Chair of House Rules Committee Representative Butch Parrish, Chair of House Banks & Banking Committee Representative Ralph Twiggs, Chair of House Public Safety Committee Representative Larry Walker, Majority Leader BROC Research Office Staff Kimball L. Peed, M.A., M.B.A., Director Kevin Fillion, M.P.A., Deputy Director Glynnell Lewis, Office Manager Phone: 404.657.4600 Fax: 404.657.4606 Email: glewis@legis.state.ga.us Internet Address: http://www.broc.state.ga.us TABLE OF CONTENTS The BROC Process..................................................................................... 1-2 1999 Program Evaluation List..................................................................... 3-5 Access to Primary Care Services ................................................................... 6-7 Air Quality and Emission/Commuter Reduction Strategies .............................. 8-10 Indigent and Uncompensated Care............................................................. 11-12 Sufficiency of the Hazardous Waste Trust Fund........................................... 13-14 1998 Program Evaluation List................................................................. 15-17 Advanced Technology Development Center................................................ 18-20 Regional Economic Business Assistance Grant Program ............................... 21-23 State Economic Development Efforts: An Overview .................................... 24-30 Employment Incentive Program ................................................................ 31-34 Tourism Program .................................................................................... 35-36 1997 Program Evaluation List................................................................. 37-39 University System of Georgia: Continuing Education's Role in Economic Development.......................................................................................... 40-46 Continuing Education and Customized Training Programs ............................ 47-51 New Connections to Work Program.................................................................52 1999 Annual Report BROC The BROC Process: Responsive Government through Responsible Budgeting Responsive Government through Responsible Budgeting is a mechanism to enhance the legislature's ability to hold state government more accountable to its public policy objectives. The focus is on public policy-making; not administrative policy-making. Recognizing that the legislature has a long history of enforcing administrative compliance, this process helps the legislature establish political accountability for itself. Ultimately, the legislature will increase its oversight of state dollars by linking outcome measures, evaluations, and budgets so that state agencies can act strategically to solve public policy issues. The Budget Accountability and Planning Act of 1993 provides a framework in which the Governor's Office of Planning and Budget (OPB), the Department of Audits and Accounts, and the BROC Research Office work cooperatively to provide the Budgetary Responsibility Oversight Committee (BROC) with evaluative information on state programs. This section describes some of the products these offices make available to the Committee. Program Evaluation Reports Program evaluations judge a program's efficiency, effectiveness, and overall value compared to legislative intent. Such evaluations aid BROC and all legislators in their decisions whether to continue, expand, or eliminate particular programs. The Committee focuses the state's evaluative resources on a policy theme that is of particular interest to its members. For the 19971998 legislative term, the theme was "Economic Development." For the 1999-2000 legislative term, the theme has been "Public Well-Being." Policy Profiles There are roughly 50 policy profiles identified for all of state government. A Policy Profile is a short narrative that includes the goal(s), the outcome measure(s), and all the programs identified by BROC Research as being associated with a particular policy. A profile provides a uniquely legislative perspective on the public policy issues by disregarding the executive branch's administrative organization of state government. Many policy issues cross agency lines; in fact, rarely does any agency have total responsibility for a public policy issue. A profile will fulfill part of the requirement of O.C.G.A. 28-5-5. Policy Bulletins A Policy Bulletin is a short report that provides evaluation information on how well the state is meeting its goals (as identified in a Policy Profile). Such research, which involves collecting outcome measures for a policy goal, analyzing those measures, and reporting the results to BROC, provides a yardstick by which committee members can determine the merit, worth, or significance of a policy. The key feature of a bulletin is an oversight calendar that establishes performance benchmarks. BROC Research 1 1999 Annual Report BROC Strategic Planning The BROC Research Office works cooperatively with the Strategic Planning Division of the Governor's Office of Planning and Budget to review agency strategic plans. The Budgetary Responsibility Oversight Committee's primary interest in overseeing this important process is to promote consistent and compatible strategic directions among state agencies. Realizing that strategic planning is an ongoing process, BROC, on behalf of the General Assembly, sponsors an annual strategic planning conference each January to highlight some of the strategic directions of the state. At this conference, the Governor's Office of Planning and Budget presents an update of the state's strategic plan. Information on New Programs The BROC code directs agencies to submit proposals for new programs to BROC by September 1 of each year. After receiving agency proposals, the BROC Research Office compiles the information and makes it available to the Committee. This process allows BROC Members to compare the potential costs and benefits of all programs--both new and existing. The following pages highlight the work completed in calendar year 1999. Some work was carried over from prior years. 2 BROC Research 1999 Annual Report BROC 1999 Program Evaluation List BROC Research 3 1999 Annual Report BROC Public Health and Pollution Reduction The Budgetary Responsibility Oversight Committee (BROC) of the Georgia General Assembly selected Public Well-Being as its policy focus for the 1999-2000 Legislative Term. The policy focus is divided into two parts to coincide with the two-year term: 1.) Public Health and Pollution Reduction (1999); 2.) Human Growth and Development (2000). Public Health and Pollution Reduction was the theme for calendar year 1999. This theme encompassed all those activities and services fitting and proper for state government involvement. These are activities and services that relate--or should relate--to public health. Pollution reduction should be viewed, for current purposes, as it relates to human health, and not be regarded strictly from a natural resource preservation perspective. The committee's approach was to identify those indicators of well-being that are related to health and for which state government has a responsibility. Examples include the following: Medical Care for Underserved People Substance Abuse Rates Disease Rates Birth Issues Mental Health Pollution Reduction Indicators The committee also evaluated existing state programs that claim to affect public health. The committee ordered evaluations of as many of these programs as could be provided by the Governor's Office of Planning and Budget and by the Department of Audits and Accounts. The BROC Research Office has classified existing programs according to each program administrators' submitted statements about primary missions. Part of the evaluation process has been to determine program effectiveness and to describe how any single program fits in the mosaic of state services related to public health. The members of the Budgetary Responsibility Oversight Committee will expend their considerable energies toward framing legislative branch deliberations in effort to enhance the General Assembly's role as a vital force in policy determination. The committee will consider which outcome measures ought to be the indicators of progress in public health and for which the executive branch can be held accountable. In sum, the Budgetary Responsibility Oversight Committee is primarily interested in state policy formation and analysis, with special emphasis on how these relate to budgeting. Program evaluations will provide insight into current state government involvement and effectiveness. It will be up to BROC to develop outcome measures for program evaluation. [See O.C.G.A. 28-5-5(c).] 4 BROC Research 1999 Annual Report BROC Status Report for the 1999 Program Evaluation List Title Access to Primary Care Services Assigned to Audits Status of Report A summary follows this page. Air Quality and Emission/Commuter Reduction Strategies Audits A summary follows this page. Indigent and Uncompensated Care (Medical College of Georgia Hospital and Clinics) Audits A summary follows this page. Sufficiency of the Hazardous Waste Trust Fund Audits A summary follows this page. Public Well-Being through Public Health and Pollution Reduction Operations of the Community Based Mental Health, Mental Retardation, and Substance Abuse Programs (DHR) and Community Mental Health Services Programs (DMA) BROC Research Audits Annual Strategic Planning Conference held at the GWCC on 1/07/99 See the BROC Research Office for a copy of this audit report. Childhood Care & Education Joint Study Committee of Appropriations and BROC BROC Research House Research Senate Research See the BROC Research Office for a copy of this committee report. Commuter Rail Fiber Optic Telecommunications Access in Rural Georgia Veterans Memorial State Park Conference Center and Retreat Information Requested A Requested Review of Specific Business Practice within the Division of Administration and Finance (Georgia Tech.) Safe Drinking Water BROC Research BROC Research BROC Research See the BROC Research Office for a copy of this letter. See the BROC Research Office for a copy of this letter. See the BROC Research Office for a copy of this letter. Audits See the BROC Research Office for a copy of this performance audit report. Audits The final report is pending. Grant-in-Aid OPB This report was cancelled by OPB. BROC Research 5 1999 Annual Report BROC Access to Primary Care Services Evaluated: December 1999 by the Department of Audits and Accounts The overall purpose of the State Office of Primary Care [Department of Community Health] is to improve the availability and accessibility of primary care services in rural and medically underserved areas in Georgia. Summary of Findings: Agency Response: u The Office has not been effective in achieving its overall purpose of increasing the accessibility and availability of primary care services in rural underserved areas of the state. While the total number of physicians has increased in Georgia, the growth has not been evenly distributed throughout the state, with some counties actually experiencing a decrease in the number of primary care physicians. Only 14 (36%) of the 39 counties targeted by the Office had an increase in the number of primary care physicians from 1994 through 1998, with 15 (38%) experiencing a decrease. The Office selected these counties for targeted assistance because they have higher rates of infant mortality, death from cancer and cardiovascular disease, low birth weight babies, and percentage of population above age 65 and below 200% of the federal poverty level. Response due May 7, 2000. u The Office should be held accountable for meeting specific objectives that are in line with its overall purpose. Although objectives have been established for the Office, little or no action has been taken to demonstrate progress in meeting the Office's objectives. Response due May 7, 2000. u The Office should take steps to more effectively assist rural and medically underserved communities with their primary care access problems. Currently, the Office does not conduct individual need assessments to understand the scope of the access problems in the communities it identifies for intervention. As a result, the Office does not have a way to effectively match available resources with the specific kinds of access problems that exist. Response due May 7, 2000. u The state does not have a coordinated and targeted approach to effectively address the maldistribution of primary care physicians. Although the state has established six state initiatives designed to locate physicians in rural and underserved areas, the number of counties identified as rural or underserved is too large to have a significant impact. Response due May 7, 2000. 6 BROC Research 1999 Annual Report BROC Access to Primary Care Services (continued) Evaluated: December 1999 by the Department of Audits and Accounts u Action should be taken to promote mid-level health Response due May 7, 2000. care professionals as an effective alternative for improving primary care access in rural and underserved areas. Although the purpose of the 1972 Physician's Assistant Act was to alleviate the growing shortage and geographic distribution of health care services in the state, only 23% of physician's assistants are located in the state's rural counties. Similarly only 28% of nurse practitioners and nurse midwives are located in the state's rural counties. u The Office should revise its methodology for Response due May 7, 2000. identifying priority counties for intervention. Specifically, the Office should consider a regional approach to assessing primary care needs and targeting efforts. In addition, it should consider primary care resources in its process of identifying need, and set benchmarks for identifying counties that fall below an acceptable level. u The Office should review its allocation of funds to Response due May 7, 2000. state Primary Care Centers. As discussed in a 1992 Performance Audit, the Office continues to fund four of five of the original centers with no justification for their location or need. In addition, state funds are not equitably distributed among the centers. u Consideration should be given to alternative Response due May 7, 2000. strategies that have been implemented in other states to improve primary care access. BROC Research 7 1999 Annual Report BROC Air Quality and Emission/Commuter Reduction Strategies Evaluated: May 1999 by the Department of Audits and Accounts Under the Clean Air Act, the U.S. Environmental Protection Agency (EPA) has established National Ambient Air Quality Standards (NAAQS) for six airborne pollutants which have proven to be harmful to public health. To ensure Georgia's compliance with the NAAQS, the Environmental Protection Division (EPD) of the Georgia Department of Natural Resources has established a state-wide sampling network to measure ambient air quality. Air quality data from 1987 to 1997 indicate that Georgia is in attainment with NAAQS for five of the six airborne pollutants. However, 13 counties (Cherokee, Clayton, Cobb, Coweta, DeKalb, Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Paulding, and Rockdale) in metro Atlanta have been designated as a "serious" nonattainment area for ground-level ozone. Ground-level ozone is created when other pollutants, known as ozone precursors nitrogen oxides (NOx) and volatile organic compounds (VOC), chemically react in the presence of heat and sunlight. In nonattainment areas, emission reduction strategies are mandated by the Clean Air Act to place the area in compliance with NAAQS. In Georgia, EPD is responsible for developing plans to correct the groundlevel ozone problem and for monitoring and enforcing emission reduction strategies. The EPD and the Department of Transportation supplied agency responses. General EPD Response: In light of a recent federal court ruling, the "Regional Nitrogen Oxides (NOx) SIP" section beginning on page 14 should be amended to indicate that the Regional NOx SIPs were due to EPA by September 30, but that the submittal requirement has been stayed, pending further court action. The "Transportation Plans" section on page 15 should be corrected to note that mobile budgets for both NOx and VOC must be set. Summary of Findings: Agency Response: u Based on EPA trend data taken from 1988 to 1997, EPD Response: In the third full paragraph on page Atlanta's ozone problem has not significantly 21, reference is made to an emissions credit improved. Metro Atlanta will not be able to banking and trading program being implemented in demonstrate attainment of the existing ozone the 1999 ozone season. This program will not be standard by the November 1999 federal deadline implemented until the Fall of 1999. and may be subjected to stricter emission controls in DOT Response: Finally, we suggest an update to the future. Although metro Atlanta will not be able the third full paragraph on page 21, to reflect the to demonstrate attainment of the ozone standard by the required deadline, some progress has been made in reductions of ozone precursors. success of the state's Partnership for a Smog-Free Georgia (PSG) campaign. The campaign kicked off the 1999 smog season on May 1, with the involvement and support of many local businesses, as well as federal and state agencies. At GDOT, employee efforts to use alternative commute methods and give up their Single Occupancy Vehicle (SOV) commutes have been very successful. As a daily average, employee drive-alone commutes into GDOT offices have been reduced 28% or approximately 460 SOVs per day since May. Furthermore, announcements of smog alert days on the changeable message signs along metro area interstates have contributed to raising citizen awareness of air quality issues. 8 BROC Research 1999 Annual Report BROC Air Quality and Emission/Commuter Reduction Strategies (continued) Evaluated: May 1999 by the Department of Audits and Accounts u Under EPA's Regional NOx Transport Rule, Georgia is required to reduce statewide NOx emissions by 26% by 2007. EPD Response: The "Regional NOx Transport Rule" section which ends at the top of page 23 should be amended to reflect the recent federal court ruling which has stayed the September 30 deadline for submitting the Regional NOx SIP. u Under a new more stringent eight-hour ozone EPD Response: In the first paragraph on page 24, standard additional areas in Georgia, such as reference is made that areas classified as Augusta, Columbus, and Macon may be designated Transitional do not require submittal of a SIP. This as non-attainment areas and it will be more difficult should be corrected to indicate that Transitional for Atlanta to achieve attainment of ozone SIPs must still be submitted, but that the planning standards. requirements of such SIPs are simpler. DOT Response: Please note on page 23 where the report identifies additional areas in Georgia that may be identified as non-attainment areas, that EPD recently issued an expanded list of potential non-attainment areas. In accordance with the requirements of S. B. 57, the legislation that created the Georgia Regional Transportation Authority, EPD is preparing a report of all Georgia counties that could be identified as non-attainment areas within the next seven years. BROC Research 9 1999 Annual Report BROC Air Quality and Emission/Commuter Reduction Strategies (continued) Evaluated: May 1999 by the Department of Audits and Accounts u Currently, Georgia does not have an approved one- hour attainment demonstration for metro Atlanta. EPD has been directed by EPA to submit a new plan by October 1999. Additionally, metro Atlanta does not have a Regional Transportation Plan (RTP) or a Transportation Improvement Program (TIP) that conform to air quality requirements. Consequently, federal transportation funds for metro Atlanta are restricted to projects exempt from transportation conformity requirements and transportation control measures approved in the State Implementation Plan to improve air quality. Furthermore, recent judicial rulings place even more restrictions on Atlanta's transportation projects and preclude transportation projects approved under the last conforming RTP from moving forward. DOT Response: There is one area where developments have occurred that requires an update to your information. We suggest changes in the findings on pages 26 and 27, where the content of the Interim Atlanta Transportation Improvement Program (ITIP) is discussed. As the report mentions, a March 1999 federal appeals court ruling struck the Clean Air Act regulations that allowed transportation projects to be grandfathered in the event of a conformity lapse. On June 18, 1999, the Federal Highway Administration issued final guidance regarding projects already grandfathered like those in Atlanta. The final guidance stated that no more federal funds could be spent to continue the grandfathered projects, but those already under construction could proceed to completion. The parties to the lawsuit mentioned at the bottom of page 27 reached settlement following the FHWA guidance and other prospective plaintiffs did not file suit. Therefore, the Atlanta ITIP was amended to delete grandfathered projects from the three-year plan, and both the Atlanta Regional Commission and the Georgia Regional Transportation Authority have approved the Atlanta ITIP for Fiscal Years 2000-2002. u The Metropolitan Atlanta Transportation Initiative (MATI) study indicated that Atlanta's inability to devise a conforming transportation plan is largely the result of a lack of regional coordination. Steps are currently being taken by the State to rectify this problem. No Response. 10 BROC Research 1999 Annual Report BROC Indigent and Uncompensated Care Evaluated: December 1999 by the Department of Audits and Accounts The Medical College of Georgia (MCG) Hospital and Clinics (the Hospital) was established to serve as an auxiliary of the Medical College of Georgia in the development of medical knowledge and skills through organized programs and teaching. Summary of Findings: Agency Response: u Action should be taken to clarify the Hospital's Response due April 13, 2000. responsibility for providing care to uninsured Georgians. Given the recent change in health care, the Hospital can no longer afford to shift the cost of uncompensated care from uninsured patients onto insured patients. Reductions in the Hospital's usual sources of revenue have made it increasingly difficult to continue to absorb approximately $42.1 million in uncompensated care costs generated by uninsured patients each year. u The Hospital should establish a more manageable Response due April 13, 2000. patient acceptance policy. Although several departments try to manage the amount of uncompensated care they provide, it is the Hospital's overall policy as a state-funded teaching hospital to serve all Georgians regardless of their ability to pay. As a result, physicians from around the state refer their uninsured patients to MCG for free or discounted care as well as for specialty care. This results in a large amount of uncompensated care for the Hospital, which, like other teaching hospitals, has a higher cost of providing care than nonteaching hospitals. According to the 1998 Comparative Performance of U.S. Hospitals, the median expense per admission in a non-teaching hospital is $4,000, compared to $4,600 for teaching hospitals and $5,200 for teaching hospitals with more than 400 beds like MCG. An analysis of fiscal year 1998 patient data revealed that approximately 37% of all cases from 101-150 and 151-200 miles from Augusta were uninsured, while only 17% from the 50-mile Augusta area were uninsured. It is estimated that approximately $7.6 million in uninsured charges associated with treating a greater percentage of uninsured patients was shifted from local communities (outside a 50-mile radius) to the Hospital in fiscal year 1998. This was calculated by applying the percentage of uninsured cases from the Augusta area to the other areas of the state. BROC Research 11 1999 Annual Report BROC Indigent and Uncompensated Care (continued) Evaluated: December 1999 by the Department of Audits and Accounts u Action should be taken to develop a basis for the $34 million in state appropriations given to the Hospital. Although the Hospital has received state appropriations since it began operating in 1956, the basis for the amount has not been specified. As a result, the Hospital has felt obligated to treat all Georgians regardless of their ability to pay. The amount of state appropriation, however, is insufficient to cover the cost of the $42.1 million in uncompensated care it provides to uninsured Georgians. Response due April 13, 2000. u The Hospital should be commended for identifying strategies to reduce its costs and increase its revenues. Although the Hospital originally projected a budget deficit of $22.5 million for fiscal year 2000 (due to increasing personnel costs and reduced revenues), it has implemented or plans to implement a variety of stabilization initiatives that will allow it to balance its budget. Response due April 13, 2000. u The Hospital should review the effectiveness of its current policy for admitting out-of-state patients. Based on recent data available regarding South Carolina patients, the Hospital does not appear to be fully compensated for the care it provides to out-ofstate patients. Approximately 70% ($9.9 million) of charges generated by uninsured and Medicaid patients from South Carolina were uncollected in fiscal year 1997. Response due April 13, 2000. u MCG should better monitor its faculty affiliations with community hospitals and health centers to ensure that they are meeting their intended objectives. Currently, data regarding physician affiliations is decentralized among individual clinical departments at MCG, community hospitals and health centers, and the Physicians Practice group. As a result, complete information could not be obtained to evaluate whether these affiliations strengthen the financial base of the institution, broaden the experience of students, or provide services to a broad group of citizens, including those who are not medically indigent. Response due April 13, 2000. 12 BROC Research 1999 Annual Report BROC Sufficiency of the Hazardous Waste Trust Fund Evaluated: December 1999 by the Department of Audits and Accounts The purpose of the Hazardous Waste Trust Fund (HWTF) is to finance the investigation and cleanup of hazardous waste sites where corrective action is needed to protect human health and the environment from the potentially serious threat posed by the release of hazardous substances. The Environmental Protections Division of the Department of Natural Resources administers the Fund. The HWTF was created by the Georgia Hazardous Waste Management Act of 1979 and expanded by the Hazardous Sites Response Act of 1992. Its financing is used primarily to fund the cleanup of abandoned sites, local government or state owned landfills, as well as the state's share of costs for sites cleaned up by the U.S. Environmental Protection Agency. As of December 31, 1998, 411 sites were listed on Georgia's Hazardous Sites Inventory, with 103 (65%) of Georgia's 159 counties having at least one hazardous waste site. Since its inception, the Fund has expended $39.2 million cleaning up hazardous waste sites, with $38.2 million spent at 66 Hazardous Site Inventory locations and another $981,000 expended on 31 emergency removals and investigations. Summary of Findings: Agency Response: u As a result of this evaluation, the Hazardous Sites In general we [DNR] are satisfied with the findings Response Program revised its 1998 estimate of the of the report, particularly the finding that we do not amount needed to clean up sites for which the state have enough money to clean up all hazardous sites could be financially responsible from a $25.6 that threaten human health and continue to pollute million shortfall projection to a shortfall projection the environment. We believe the report accurately of more than $213.6 million. The sufficiency of the and thoroughly characterized the shortfall in funding HWTF to meet its intended obligations is dependent that we are facing if additional and substantiated upon future revenues and expenditures. Changes to funding cannot be obtained. We have already both have impacted the Program's estimated initiated actions to address all the recommendations shortfall. In order to provide decision-makers with in the report. These actions will be fully credible and current management information, the implemented by the end of calendar year 2000. Program should annually update its cleanup cost estimates for all sites for which it is potentially responsible. Given the HWTF's large shortfall, the General Assembly should consider the reauthorization of hazardous waste, solid waste, and hazardous substance reporting fees, as well as developing other funding mechanisms. u Future cleanups of city and county landfills will No additional response. have a significant financial impact on local governments given that the total cleanup costs to local governments are currently estimated to be approximately $54 million. Given the cleanup costs associated with city and county landfills, the Program should work with the local governments and the Solid Waste Management Program to determine the best method for addressing the cleanup of local government landfills in order to minimize the potential financial strain on local governments. BROC Research 13 1999 Annual Report BROC Sufficiency of the Hazardous Waste Trust Fund (continued) Evaluated: December 1999 by the Department of Audits and Accounts u Given the cost to local governments and to the HWTF (as indicated in the previous finding) and the joint responsibility for landfills within EPD, the Program and the Solid Waste Program should improve their communication and better coordinate their landfill cleanup efforts. No additional response. u Given that state agencies are projected to expend between $5.9 and $22.1 million in cleaning up their hazardous waste sites, the Program should consider providing technical assistance and access to its preapproved cleanup contractors to state agencies. No additional response. u The Program uses and should continue to use a prioritization model that takes into account the seriousness of site contamination and the threat to human health, as well as other mitigating factors to plan clean up activities. No additional response. u The Program's current performance measures do not provide meaningful management information about the progress being made in cleaning up the state's hazardous waste sites. After discussions with the evaluation team, Program officials started to develop new performance measures that will better allow progress to be measured. To completely clean up a site may require the completion of several discrete cleanups at that site, including first removing the source of contamination, then digging up contaminated soil, followed by cleaning up the contaminated groundwater. Program personnel intend to identify the number of cleanups required to completely clean up each site on the Hazardous Sites Inventory. This new information will allow progress to be measured on the entire list of Hazardous Sites Inventory sites and on an individual site. No additional response. u Due to the potential health effects caused by exposure to hazardous substances, the sites on the Hazardous Sites Inventory pose a threat to human health; however, it is difficult to attribute an individual case of an illness to a hazardous waste site or to any other single factor. No additional response. 14 BROC Research 1999 Annual Report BROC 1998 Program Evaluation List BROC Research 15 1999 Annual Report BROC Economic Development through Job Creation and Retention The Budgetary Responsibility Oversight Committee (BROC) of the Georgia General Assembly established the 1998 theme of "Economic Development through Job Creation and Retention" to encompass state administered or funded programs having goals related to jobs. Being focused on improving the effectiveness of state government, the committee strongly advocates the measurement of program outcomes. The relevant outcome for the 1998 theme was jobs. BROC evaluated the contribution of state programs that purport to enhance the ability or capacity for Georgia's economy to create or retain jobs. The classification of programs falling under the job creation and retention theme should be generously made--meaning that a program should be included even though its main impetus might not be directly job-related. For example, the Georgia Department of Transportation's Airport Development Program is included under the theme because it can reasonably be expected to have an economic impact, ultimately measurable in jobs. The same is true for the State Forestry Commission's Forest Products and Research Program. In all cases, program documentation or program personnel statements will have linked the program, in some way, to jobs. BROC's aim is to analyze state policy. State programs define state policy. The analysis of economic policy examines the defining programs and assesses their outcomes, costs, coherence, and comparability. BROC wants to make a judgment about how well Georgia is doing regarding economic policy in the jobs area and indicate improvements that can be made. BROC is interested in examining and expressing the "quality" dimension of employment and wants to include measurements of the quality of jobs to distinguish between jobs that make possible economic self-sufficiency and those that do not. There are five policy areas for this theme: Transportation Development Community Development Business Development Tourism Sustainable Development 16 BROC Research 1999 Annual Report BROC Status Report for the 1998 Program Evaluation List Title Advanced Technology Development Center Employment Incentive Program Regional Economic Business Assistance Grant Program State Economic Development Efforts: An Overview Tourism Program Economic Development through Job Creation and Retention Economic Development and Job Creation By Advertising State Parks and Historic Sites Economic Impact of Georgia Tech Research Institute Incentive Loans for Industry Program and Loans for Rural Industry Program Capital Outlay and Construction Study Committee of House Appropriations Outsourcing and RFP Study Committee of House Appropriations Length of Time to Deposit Individual Income Tax Payments Computer Charges and Other States' Information Technology Centers DOAS Contracted Computer Personnel State Computer Systems; Year 2000 Compliance State Government Offices Located Overseas State of Maine Budgeting Selection Process and Effect of the Mental Health Services Contract Economic Development Policy Marketing and Promotion of Agriculture Georgia Job Tax Credit Program Airport Development Business Recruitment and Retention Economic Development Institute (excluding the ATDC) Forest Products and Research Economic Benefits of Public Roads Assigned to Audits Status of Report A summary follows this page. Audits Audits A summary follows this page. A summary follows this page. Audits A summary follows this page. Audits BROC Research Audits A summary follows this page. Annual Strategic Planning Conference held on 1/08/98 See the 1998 BROC Annual Report. Audits See the 1998 BROC Annual Report. Audits See the 1998 BROC Annual Report. BROC Research BROC Research Audits BROC Research BROC Research BROC Research BROC Research BROC Research Audits Georgia State Univ. Audits OPB OPB OPB See the BROC Research Office for a copy of this committee report. See the BROC Research Office for a copy of this committee report. See the BROC Research Office for a copy of this letter. See the BROC Research Office for a copy of this letter. See the BROC Research Office for a copy of this letter. See the BROC Research Office for a copy of this letter. See the BROC Research Office for a copy of this letter. See the BROC Research Office for a copy of this letter. See the BROC Research Office for a copy of this performance audit report. See the BROC Research Office for a copy of this special report. This report was cancelled by Audits. This report was cancelled by BROC. Georgia State University (GSU) released a report on this program. This report was cancelled by OPB. This report was cancelled by OPB. This report was cancelled by OPB. OPB Audits This report was cancelled by OPB. This report was cancelled. BROC Research 17 1999 Annual Report BROC Advanced Technology Development Center Evaluated: January 1999 by the Department of Audits and Accounts The purpose of the Advanced Technology Development Center (ATDC) is to support the increase of Georgia's technology job base, form and grow new technology companies in Georgia, commercialize university technologies, and attract new technology companies to Georgia. ATDC fosters the growth of technology companies in the early stages of formation when business failure rate is the highest. The Board of Regents of the University System of Georgia administers this program. Summary of Findings: Agency Response: u The 63 companies affiliated with ATDC's Entrepreneurial Services and Landing Party Programs during the five-year period from 1993 through 1997 generated at least $161.5 million in revenues, paid $54.8 million in wages, and created 991 jobs in Georgia. ATDC spent $5.6 million in state funds in providing services to these 63 companies from 1993 through 1997. Based on the above information, it appears that the state expended approximately $5,696 in support of ATDC for each job created by an ATDC company. Since the state incurs a one-time cost to create the jobs associated with ATDC companies the long-term benefit of ATDC companies to the state will outweigh the cost to administer the Entrepreneurial Services and Landing Party Programs if the ATDC companies continue to be viable and successful businesses and remain in Georgia after their affiliation with ATDC ends. To better capture the economic impact that their companies have on the state, ATDC expanded its report card to include payroll information on graduate and member companies as well as landing party companies. They have implemented two procedural changes with regards to their annual report card. First, the annual questionnaire distributed to all companies was revised to capture additional information including payroll. Secondly, they changed their procedure for contacting graduate and member companies during the process of compiling report and data. In the past, ATDC support staff called companies who did not respond to the questionnaire. This method may not have been effective in that company representatives were not always familiar with their support staff. Beginning in FY2000, senior staff will contact every graduate and member company to notify them about the annual questionnaire before the mailing occurs. Those staff members will also make all follow-up calls. ATDC tries to maintain strong relationships with their companies, and this change can only enhance their relationships. They believe this will be important as they ask companies to provide additional financial information. Their past experience indicates that some companies consider this information to be somewhat sensitive. 18 BROC Research 1999 Annual Report BROC Advanced Technology Development Center (continued) Evaluated: January 1999 by the Department of Audits and Accounts u Faculty Research Commercialization Program (FRCP) issued grants that resulted in (a) the formation of seven companies with revenues of more than $14.6 million, (b) 13 patents, and (c) 10 licensing agreements producing $770,000 in revenues for the respective universities. The fiveyear cost of the FRCP was $360,000 in personnel costs and $1.4 million in grants. Since the state incurs no additional cost after the FRCP grant is awarded the long-term benefit of the FRCP to the state will outweigh the cost to administer the program if the companies and licensing agreements resulting from the FRCP grant should continue to produce revenues for the state. To better assess the economic impact of the economic impact of the Faculty Research Commercialization Program (FRCP), the ATDC has modified its measuring system. They have already compiled a list of start-up companies formed as a result of FRCP and have implemented a system to track their revenues and payroll data. During FY2000, they will also develop a database of FRCP recipients to facilitate capturing revenues generated by licensing agreements. As this data becomes available, ATDC's report card will be revised to include this new information. u Of the 63 companies that were affiliated with ATDC's Entrepreneurial Services and Landing Party Programs during the five-year period of 1993 through 1997, five have gone out of business. We determined that all of the remaining 58 companies were located in Georgia. Eighty-seven percent (50 of 58) of the companies were located in metro Atlanta. All of the companies, with the exception of one, were located at or within close proximity to the Atlanta or Warner Robins incubation sites. No Agency response. u The average annual wage paid by the more mature companies affiliated with the Entrepreneurial Services Program was $35,967, which was higher than Georgia's overall average wage of $28,587 but lower than the average wage of $51,069 paid by high technology companies in Georgia. ATDC indicated that many technology start-up companies offer employees equity ownership in the company in lieu of salary. This type of salary package might account for why ATDC companies had lower average annual wages than high technology companies in Georgia. The average annual wage for companies affiliated with ATDC's Landing Party was $69,189, substantially higher than Georgia's overall state wage and the average annual wage paid by high technology companies in Georgia. No Agency response. BROC Research 19 1999 Annual Report BROC Advanced Technology Development Center (continued) Evaluated: January 1999 by the Department of Audits and Accounts u The survival rate of companies in ATDC's Entrepreneurial Services Program is high and compares favorably to the survival rate of businesses in other technology incubators. Thirtythree companies have met ATDC's graduation criteria since ATDC's inception to 1996. Of these companies, 94% (31 of 33) were still in business after one year and 92% (12 of 13) were in business after five years. No Agency Response 20 BROC Research 1999 Annual Report BROC Regional Economic Business Assistance Grant Program Evaluated: March 1999 by the Department of Audits and Accounts The Regional Economic Business Assistance (REBA) Grant Program is a state funded grant program administered by the Department of Community Affairs' Office of Economic Development. The purpose of the Program is to assist local governments with economic development projects. The Program is comprised of two components: Community or Economic Development Assistance projects (known as direct projects), and Regional or Multi-County Economic Development Implementation projects (known as regional projects). Through direct projects, REBA provides grant funds to local governments to be used to help close business relocation and expansion deals. Grants for regional projects are used for community or economic development projects or for projects that promote regional or multi-county cooperation. Summary of Findings: Agency Response: u The Program has provided funds to local The Department agrees that the program appears to communities which, in combination with other be achieving its goals. incentives, have served as inducements for companies to locate or expand in the area, resulting in increased private investment and additional jobs for Georgia citizens. Since 1994, the Program has awarded 65 direct grants in 41 counties. Companies receiving the benefits of these projects were projected to create 20,135 jobs. Additional reviews of fiscal year 1997 and 1998 awards indicated that the companies anticipated making a total capital investment of approximately $738 million. While the Department does not have information for determining the actual number of jobs created/retained, data indicate that companies are locating and expanding as anticipated. u To better assess the economic impact of the REBA While the Department agrees that it might be Grant Program, the Department should collect more desirable to collect and verify more outcome information on project outcomes. Although the information, the following should be noted: Department requires grant applicants to provide information on companies' location/expansion plans (a) The Department has never been provided either and the projected number of jobs to be funds or positions to administer this program created/retained, it does not follow up with grant and our resources are already severely recipients to determine whether the projected stretched; benefits actually occurred. By requiring grant recipients to report on actual outcomes, the Department could verify that funds are being used as intended and that the Program goal of getting companies to locate in Georgia (thereby resulting in an economic benefit to communities) is being achieved. BROC Research 21 1999 Annual Report BROC Regional Economic Business Assistance Grant Program (continued) Evaluated: March 1999 by the Department of Audits and Accounts (b) As the audit points out, when DCA took over administration of the "forgivable loan" program, it did so after extensive consultation with various agencies and with the Attorney General's Office in particular. It was that Office's advice that these grants could be legally (i.e., constitutionally) made by a state agency only if they were approached as assistance to public entities such as Development Authorities. They, in turn, could use the assistance to carry out their legal mandate. In other words, REBA could not be approached as assistance from the state to businesses and our rules could not include business related outcome-based standards. While we have in fact required a great deal of outcome data, we have been careful (perhaps in an overabundance of caution) not to become the repository of more outcome-based information than is necessary for accountability purposes. (c) Independent analysis of the program's effectiveness by Georgia Tech or any other similarly qualified organization would be extremely useful to the Department, the Governor, and to the General Assembly. (d) We have attempted to limit our requests for data and certifications at all stages of our process (application, award, fund dispersal and close-out) to what we believe constitutes the minimum necessary to administer the program in a legal, responsible and accountable manner. However, these requirements have been criticized by the Department of Industry, Trade and Tourism (DIT&T) as damaging to REBA's ability to perform as a "closing" fund. In fact, DIT&T claims that REBA should not even be subject to the Fair and Open Grants law because its requirements do "not allow the speed and flexibility necessary to be competitive for bringing business and jobs to Georgia." Whether the criticism is valid or not, requests for more data and information will only increase it. It should be noted that no direct REBA project recommended by the DIT&T has ever been denied for lack of funding or for any other reason. Although it has often required a great deal of staff time and effort, we have always been able to help structure applications so as to make them eligible for award. 22 BROC Research 1999 Annual Report BROC Regional Economic Business Assistance Grant Program Evaluated: March 1999 by the Department of Audits and Accounts (e) To date, neither the Governor, the General Assembly (individually or collectively) nor the press have ever requested any information that we were unable to provide. u Action should be taken to discontinue using REBA (a) The "forgivable loan" funds were originally funds for regional projects. Using REBA funds for added to the existing appropriation of REBA regional projects duplicates another state program funds and the General Assembly has never and allows the Program to avoid having to return prohibited the earlier uses of REBA nor has it any unused funds to the State Treasury. In 1998, the taken exception to the REBA rules promulgated REBA Program provided $1.42 million for regional by the Department under the Fair and Open projects; during the same year, the Regional Grant Act's requirements. Assistance Program (RAP), also administered by the (b) As the Audit Report points out, the 1998 Department, provided $1.25 million in grants for Budget Report states that the [REBA] Program regional economic development programs. will be focused "primarily" not solely or exclusively-- on economic development Consideration should also be given to changing the incentives for prospect driven projects; Program's name to more accurately reflect its (c) The state has used REBA's ability to assist primary purpose. Although it is still known as the regional projects as a convenient mechanism to Regional Economic Business Assistance Grant fund Georgia Tech's Facilitech Program; Program, the Program's primary purpose is to assist (d) The Regional Assistance Program (RAP) is in communities in attracting new business by funding fact somewhat similar to REBA but does not direct projects. duplicate it. RAP seeks to encourage projects that have more than obvious regional impact (as any REBA project, whether regional or direct usually does). Rather, RAP attempts to encourage local governments to undertake the more difficult regional projects. These projects usually require complex and politically sensitive multi-county inter-governmental agreements to deal with such issues as joint ownership, administration and marketing of industrial parks and other assets, and revenue sharing from jointly owned facilities, etc.; (e) Limiting grants to direct projects will not assist in better identifying needed changes in funding. Our records clearly indicate which projects were funded under what category and the elimination of one will not provide any further information or insight into the other. BROC Research 23 1999 Annual Report BROC State Economic Development Efforts: An Overview Evaluated: June 1999 by the Department of Audits and Accounts The overall purpose of the state's economic development efforts is to improve the standard of living of Georgia citizens by having a balanced and growing economy throughout the state. The primary focus of these efforts is to create new jobs and retain existing jobs by attracting new businesses to the state and encouraging the expansion of existing businesses. The Department of Industry, Trade and Tourism and the Department of Community Affairs administer most of these efforts. Additional support comes from the University System of Georgia and the Departments of Labor, Revenue, Transportation, and Technical and Adult Education Summary of Findings: Agency Response: u Action should be taken to formally monitor the total cost and the resulting benefits of the financial incentives provided companies as an inducement to locate or expand their operations in the state. Currently, firms may receive loans, tax incentives, technical assistance, employee training, and other inducements to locate/expand their operations in Georgia. Aggregate data is not compiled, however, for readily computing the total amount of assistance provided each firm or the total cost per job created (or retained) by each company that receives assistance. While a public benefit analysis is prepared for each project, the analysis may not include all of the costs and is not followed up to determine the resulting benefits. DITT response: Agree. As you know, Georgia Tech currently conducts the public benefit cost analysis for all GDITT recommended economic development projects receiving state funds from the Regional Economic Business Assistance Fund (REBA) administered by DCA. GDITT is participating in the review and study of the state's business incentives with the Governor's office and Georgia State University. Part of this review includes the examination of cost benefit models and best practices. We will see the results of this work in the next few months. DCA response: DCA has never been provided with any resources to administer REBA, much less to conduct extensive monitoring of outcomes, (a long term proposition as the discussion below indicates). The report's estimated overall cost of total assistance provided for each firm per job created and/or retained (as shown in Exhibit 6) is misleading because it assumes that each REBA recipient also receives an EIP, claims state tax credits, as well as receives technical training and road construction assistance. While it may be the case on occasion, that is certainly not the norm. 24 BROC Research 1999 Annual Report BROC State Economic Development Efforts: An Overview (continued) Evaluated: June 1999 by the Department of Audits and Accounts As far as REBA and EIP are concerned, the percentage of direct projects receiving both forms of assistance to date is 22% (18 out of 81 direct projects) and our approval of any EIP includes a formal analysis to establish that the amount of EIP assistance provided is both necessary and appropriate. Unlike REBA, EIP funds can only be awarded if they can be shown to be necessary (either to the community or to the business) for the project to succeed. REBA funds, on the other hand, impose no such burden on either the applicant or the business since their only purpose is to induce a business to decide to locate in Georgia rather than outside of Georgia. It should be noted that an REBA project also receiving EIP assistance is coincidentally subject to the intensive monitoring of outcomes (primarily compliance with federal laws and job creation and private investment) that is routinely performed with EIP grants. An additional 30 direct projects not involving an EIP were also site monitored for financial management and public benefit (jobs and investment) for an overall monitoring rate of 59%. Such a rate of on-site monitoring of outcomes is quite respectable by generally accepted government monitoring/auditing standards, particularly when supplemented by 100% desk monitoring. BROC Research 25 1999 Annual Report BROC State Economic Development Efforts: An Overview (continued) Evaluated: June 1999 by the Department of Audits and Accounts DCA cannot speak definitively about tax credits since there is a lag time of several years between the time a REBA is reviewed by DCA and a business (if eligible) actually claims a tax credit against its state income tax liability. Furthermore, for obvious reasons, the Revenue Department reports only aggregate data and not taxpayer specific information. It is worth noting that according to a January 1999 report issued by Georgia State University's School of Policy Studies, entitled Economic Development Policy, "recent evidence suggests that the JTC has little, if any, effect on job expansion or job location within the state" . . . "on average, among the firms that took the JTC, the savings in labor costs were less than 1 percent" . . . "the JTC program is highly underutilized". . ."If credits are too small to cause eligible firms to participate, they are likely to be too small to affect business location and expansion decisions" and finally, "among the firms that are eligible for the JTC but do not bother to take it, approximately 65 percent have little or no tax liability. Also, among all taxable corporations in Georgia more than 75 percent have no tax liability in any given year. The combination of small labor cost savings and the postponement and therefore discounting of these savings causes Georgia's JTC program to be of little value to most firms." DCA is often not aware of commitments made by the Department of Adult and Technical Education or the Department of Transportation (or the Board of Regents or Georgia Tech or the Department of Labor for that matter) because the commitments have either not been made and/or have not been quantified at the time of our review. Delaying approval while the other commitments are being negotiated, while ideal, will weaken REBA's usefulness as a deal closer. If an efficient mechanism for coordination is developed, however, it will be crucial to ensure that it is not organizationally placed where it will create a builtin conflict of interest. 26 BROC Research 1999 Annual Report BROC State Economic Development Efforts: An Overview (continued) Evaluated: June 1999 by the Department of Audits and Accounts A public benefit analysis is completed for each REBA application and the LOCI analysis performed by Georgia Tech has been the only fiscal model readily available to date. As the report points out, it measures local, not state, costs and benefits. We understand that Georgia Tech has been working for the last year on development of an analytical tool to measure state fiscal impact and we hope that it will help answer some of the questions raised by the finding. It is important to note, however, that businesses are often very reluctant to provide certain information and that many assumptions have to be made in the process of doing the LOCI. Such a situation will no doubt persist with any other model. We were pleased, albeit surprised, to read the Department of Industry, Trade and Tourism (DITT)'s wholeheartedly supportive response to this finding's recommendation because in a memo (from DIT&T to Vice-Chairman Coleman, Senator Madden and Representative Parrish, dated January 11, 1999) that proposed more state incentives, DIT&T argued that REBA should not even be subject to the minimum standards of the Fair and Open Grants Law because it "does not allow the speed and flexibility necessary to be competitive for bringing business and jobs to Georgia." u As part of an overall strategy for continuing its economic growth over the long term, the state should continue to address such factors as public education and health care. Although Georgia has received high marks for its economic performance and business vitality, it needs to address those human and social factors that could potentially impact its future economic growth. In the 1998 Development Report Card for the States prepared by the Corporation for Enterprise Development (CFED), Georgia received A's in both economic performance and business vitality but received a C in development capacity, indicating a reduced capacity for future growth and for recovery from economic adversity. Of particular concern to CFED was the state's high school graduation rate. DITT response: Agree. Our educational system and workforce development programs in Georgia and nationwide are critical not only to new development, but to sustaining our current level of economic prosperity. Access to healthcare continues to be a challenge, particularly in some our rural areas. The state should take necessary steps to see that every Georgian has adequate health care services. DCA response: We can only add that our extensive experience helping local governments in their community and economic development efforts leads us to believe that the importance of human and social factors cannot be overstated. BROC Research 27 1999 Annual Report BROC State Economic Development Efforts: An Overview (continued) Evaluated: June 1999 by the Department of Audits and Accounts u Consideration should be given to making one organization legislatively responsible for developing and overseeing a coordinated economic development approach that includes formal goals and performance objectives. Although several pieces of legislation mandate planning for economic development, the responsibility for developing and overseeing a coordinated economic development approach has not been clearly specified. Consideration should also be given to developing additional goals and objectives concerning economic development, especially for the states underdeveloped (mostly rural) counties. DITT response: This is an important issue, and we agree that the legislature should consider how the state can have a more coordinated approach to economic development. We should continually reexamine how the state can most effectively leverage and coordinate its activities to ensure maximum return for its investment. The Governor has begun an unprecedented effort to examine this issue through a performance audit of the state's economic development activities. We are participating fully in this effort, and look forward to the findings of this audit. DCA response: The re-establishment of the long dormant Governor's Development Council under Senate Bill 57 (GRTA), provides the legislative mechanism for the development and the implementation of a state-wide comprehensive development strategy, including specific performance objectives and benchmarks, which will guide all state agency investment and program activities. In addition, to meet the specific needs of rural Georgia, we are pleased to report that Governor Barnes will appoint members to the new State Advisory Committee on Rural Development on August 18th, 1999. That committee, to be chaired by Lieutenant-Governor Taylor, will address comprehensively the issues of coordination, planning and implementation in the rural areas of the state. We would also make the following observations: As the report acknowledges in several places, the need to stimulate economic development is primarily found in our rural areas. It is abundantly clear that the metro areas are more in need of growth management initiatives than of access to more incentives. Yet, the only state incentives which take this fact into account are the tax credits, and only half-heartedly at that. 28 BROC Research 1999 Annual Report BROC State Economic Development Efforts: An Overview (continued) Evaluated: June 1999 by the Department of Audits and Accounts Although the report identifies the need to address human and social factors that could impact future economic growth, it criticizes DCA's Office of Rural Development for focusing "primarily on community development instead of economic development." The report apparently fails to appreciate that economic development is a component of (as well as a by-product) of community development. The exceptions are those few communities fortunate enough to have one or more scarce assets such as access to a major water resource necessary to a certain type of industry, proximity to an economic engine of some kind, etc. . . . u Action should also be taken to monitor and facilitate economic growth in Georgia's underdeveloped counties. Although the state as a whole has experienced significant economic growth during the 1990's many (mostly rural) counties continue to lag behind the rest of the state. Of Georgia's 159 counties, 46 (29%) have experienced an increase in their unemployment rates since 1990, have lowerthan-average weekly wages, and have lower-thanaverage per capita incomes. DCA response: If there is anything of which we are certain after more than twenty years of working with rural local governments, it is that the communities that are succeeding economically are those that have pursued community development in its broadest sense. Addressing community development needs necessitates infrastructure development crucial to both social and economic development (water, sewer, solid waste, roads, drainage, schools, public health facilities, parks and recreation, industrial parks etc....) and the preservation and enhancement of the quality of life. The ability of a community to do so effectively and consistently is a function of the quality of its governance. In today's competitive climate, effective governance (i.e., professionalism of local staff; existence and enforcement of codes and zoning ordinances; financially and environmentally sound operation of public utilities; equitability of ad valorem tax burden, etc . . .) has become more important than ever. Often, before any progress can be made towards developing or acquiring any of the items mentioned above, a broad leadership base must be developed and educated to develop goals, identify obstacles and develop solutions. We believe that any rural economic development strategy that does not acknowledge the fundamental importance of community development is unlikely to succeed. To suppose that any state financial inducements would be sufficient to overcome the challenges facing the 46 underdeveloped counties identified in the report is unrealistic. BROC Research 29 1999 Annual Report BROC State Economic Development Efforts: An Overview (continued) Evaluated: June 1999 by the Department of Audits and Accounts As communities work on developing broad based leadership and identifying goals, it is not uncommon for them to realize that they do not want growth or economic development in the traditional "smoke-stack chasing" sense, if at all. That realization, if made early enough, can help the community direct its efforts to its true goals while they are still achievable, saving or at least appropriately redirecting local and state resource in the process. Examples include communities that have put a premium on preservation of their downtown's economic viability and/or its historic character, or on preservation and enhancement of their natural resources in order to maintain or expand their tourism potential. Tearing down a historic old hotel to build a parking lot or bulldozing a mountain top in order to build one more industrial park (with state assistance, of course) are irreversible and wasteful mistakes. Only good community development planning can help forestall these kinds of scenarios and state programs that can assist communities with more than "smoke-stack" chasing are sorely needed. DITT response: Agree. In the last two years the state has invested in staff and resources in all of the state development regions outside of metro Atlanta. This new regional development effort as been very successful in assisting communities, businesses and economic development entities maximize their community and economic development potential. The GDITT Board has also appointed a Rural Development Committee to deal with economic development issues specific to rural Georgia and to advise the Board and Governor of policies that would be beneficial economically to the rural areas of this state. Our rural Development Committee members also serve on the Governor's new Rural Development Council headed by Lieutenant Governor Mark Taylor. Our members are giving significant amounts of time and leadership towards issues affecting our underdeveloped counties. 30 BROC Research 1999 Annual Report BROC Employment Incentive Program Evaluated: January 1999 by the Department of Audits and Accounts The Employment Incentive Program (EIP) is a federally funded economic development program administered by the Department of Community Affairs' Office of Economic Development. The purpose of the Program is to benefit low and moderate income people by facilitating and enhancing job creation and retention through grants made to local governments. The Department has defined the role of EIP as a method of providing financing for the creation of employment opportunities for low and moderate income people; assisting businesses which cannot meet all of their financing needs through conventional private sources; and providing infrastructure financing to local governments which do not have sufficient financing to complete projects that would result in job creation. Summary of Findings: Agency Response: u The Employment Incentive Program is achieving its The Department appreciates the Department of purpose of providing financing to local governments Audits' finding regarding the success and popularity for projects resulting in job creation for low and of the EIP program. We have striven to make the moderate income people. The Program is exceeding program achieve its goal while making it as "user the federal requirement that 51% of the jobs created friendly" as possible under federal law and be filled by low and moderate income people. From regulation. We have also installed procedures that fiscal year 1995 through fiscal year 1998, 69% make it easier for local officials to collaborate with (3,776) of the jobs were filled by, or targeted for, other state development and labor-force programs. low and moderate income people. In addition, the Finally, we would like to point out that the most average cost-per-job was $2,106 which is recent review of the EIP program (including the substantially lower than the $50,000 allowed by RLFs which constitute program income under the federal regulations. The average wage for jobs EIP program) by our funding agency, the U.S. created in 1997 and 1998 was approximately $6-$7 Department of Housing and Urban Development per hour, ranging from about $5 per hour to more (HUD) stated in a letter dated July 7, 1998: "There than $12 per hour. It should be noted that wage are no Findings as a result of our review." information was not available for seven of the 32 projects funded during this period. BROC Research 31 1999 Annual Report BROC Employment Incentive Program (continued) Evaluated: January 1999 by the Department of Audits and Accounts u Action should be taken to require the local governments which have established Revolving Loan Funds (RLFs) to use their funds to make additional loans or return the money to the Department. As of June 1998, a total of $5.6 million was being held in cash and not being used by 32 of the 55 RLFs. Thirteen of the RLFs have had cash balances exceeding the limit set by DCA since 1994. The Department monitors the activity level of local governments and conducts site-visits to assess operations and accountability. To date, the Department has recaptured $1,074,078.94 and closed 15 local RLF's chiefly because of nonperformance. Those closures represent 21% of the overall local RLF inventory that would otherwise exist. Currently, two RLFs with non-performance problems are being considered for recapture of assets. At present, we are aware of significant potential activity for fully half of the local RLFs whose case balances exceed 30% and generally do not undertake recapture actions under these circumstances. DCA, as the state agency primarily charged with providing assistance to local governments, believes that it is incumbent upon us to make every effort to strengthen local capacity and broaden local opportunities as well as to be sensitive to the sporadic nature of economic development at the local level. The Department is, however, considering certain revisions to the list of eligible activities included in the "sample RLF policy" that we provide to local governments in order to encourage faster turnover of RLF assets. 32 BROC Research 1999 Annual Report BROC Employment Incentive Program (continued) Evaluated: January 1999 by the Department of Audits and Accounts u The Department should monitor of the cost-per-job figures for projects funded by local governments' Revolving Loan Funds. The RLFs establish operating policies (which include cost-per-job limits) that must be approved by the Department. For example, an RLF may elect to require that a company create or retain one job for every $15,000 loaned. However, the Department is not monitoring the RLF's compliance with their policies. The Department is adding a section to its review instrument to specifically address the cost-per-job figures for RLF funded projects. However, while the review process in the past has only included an informal look at cost-per-job, the issue has not been one of major concern because we were aware that the types of projects funded by many local RLFs include smaller commercial and service businesses. While these smaller businesses are usually more costly on a "per job" basis as well as more time consuming to initiate, they are often the only opportunities for economic development in the smaller communities that desperately need such investments. They also usually provide substantial public benefits. As a result, the Department has operated on the basis of not imposing sanctions on local governments so long as the local RLFs are operating within the maximums laid out in federal regulations. The Department will consider including language in its next revision of the Sample RLF Policy to address situations where local RLF projects exceed the locally adopted cost-per-job target yet fall within federal guidelines. However, the best approach may be the current one of informal consultation and approval so long as the project meets federal standards. BROC Research 33 1999 Annual Report BROC Employment Incentive Program (continued) Evaluated: January 1999 by the Department of Audits and Accounts u The Department should update its rules and regulations, as well as the guidelines for the Revolving Loan Funds, to reflect changes to the federal regulations governing the Program. Before responding to the three comments included in the finding, it should be noted that EIP Regulations have always been up to date. However, 1. It is correct that the EIP rules and regulations that were on file at the Secretary of State's Office at the time of the review were out of date and that situation has not been rectified. However, the regulations themselves were not out of date and prospective applicants have always been provided with up-dated materials. We did, however, fail to send an updated copy to the Secretary of State's Office. 2. The RLF Guidelines (which are provided as guidance in addition to the Regulations and the technical assistance workshops) do contain various references to "gap financing" but they clearly do not restrict potential RLF projects to gap financing. We firmly believe that encouraging local RLF managers to be conservative is desirable and should be continued. 3. Finally, the Annual Action Plan submitted to HUD is correct and has always been correct. It does not need to be amended. We are enclosing a copy of the latest Annual Action Plan for your information. 34 BROC Research 1999 Annual Report BROC Tourism Program Evaluated: December 1998 by the Department of Audits and Accounts The overall purpose of the Tourism Program administered by the Tourism Division within the Department of Industry, Trade and Tourism is to promote Georgia as a vacation destination. As noted in the Division's Mission Statement, increasing the number of persons who vacation in Georgia will create a need for more travel-related businesses, more employment opportunities for Georgians, and higher wages for Georgians employed in the travel industry. Summary of Findings: Agency Response: u Action should be taken to establish a more results- The Tourism Division identified this as a need prior oriented approach to developing and promoting to the completion of the audit. In October 1998, the tourism in Georgia. Currently, the Tourism Tourism Division restructured the position of Program does not have a systematic procedure for Marketing Director to Director of Program determining the cost effectiveness of its overall Evaluation and recruited accordingly. A number of marketing efforts or its individual marketing methods of measuring results have been established, strategies. As a result, the dollar amount budgeted including a comprehensive visitor center survey for tourism marketing each year is determined more which is conducted four times a day at the 11 visitor by intuition than by return-on-investment figures. centers, monthly testing of the advertising fulfillment, cost benefit analysis of surveys conducted at consumer and trade shows and travel guide reader surveys. u Consideration should be given to clarifying the The Tourism Division would welcome an opportunity overall purpose and utilization of the approximately to expand co-op advertising resources. House $78.0 million in lodging taxes that is collected every Resolution 442 authorizes a Tourism Advertising year by county and municipal governments Study Committee to examine ways to increase throughout the state. Although this tax was tourism Advertising funding. The Tourism Division established in 1975 to enable local governments to has volunteered to assist the Committee as it attract and promote tourism and conventions, some conducts its study. The Senate Economic local governments do not use any of their lodging Development Committee will appoint a sub tax revenue to attract or promote tourism. committee to work with the House Committee. Consideration should also be given to having the Tourism Program work more closely with the local governments that levy the tax to develop additional cooperative advertising agreements. The overall effectiveness of the state's tourism promotion efforts could be improved through increased cooperation between the Tourism Program (funded at about $7.0 million per year) and the local governments that collect lodging taxes (about $78.0 million per year). BROC Research 35 1999 Annual Report BROC Tourism Program Evaluated: December 1998 by the Department of Audits and Accounts u The Department should take a more proactive At the recommendation of the 1998 Tourism Baseline approach to increasing the level of tourism (and the Marketing Study, the Tourism Business Recruitment resultant economic impact) in the state's less- Program was transferred to the Economic developed areas. As noted by a federal task force, Development Division in an effort to make it more tourism offers a way to revitalize rural areas; proactive and to give it the expertise of professional generates jobs, income, and tax revenue; and turns economic development project managers. The natural resources into income-producing assets. Department has also completed a Rural Economic While tourism (on average) accounts for $2,586 in Development Study. The tourism implications of this expenditures per capita and for 8.4% of the total study are currently under advisement. Opportunities employment in the state's 53 wealthiest counties, it for tourism development as an alternative to accounts for only $1,104 in expenditures per capita traditional industrial based economic development and for only 5.2% of the total employment in the in rural areas are also being considered as the 12 state's 53 poorest counties. In 21 of these 53 Economic Service Regions develop strategic plans. counties, tourism accounts for less than $750 in expenditures per capita and for less than 5% of the total employment. u A review of Georgia's Tourism Program by a private A tourism request for $4 million in additional consulting firm indicates that the Program has done advertising, as recommended by the study, was not a good job even though it spends substantially less funded by the 1999 General Assembly. The Tourism on advertising than other southeastern states. In Private Sector is developing a strategy to develop fiscal year 1998, for example, Georgia's advertising support for the additional funding among members budget totaled $1.02 million, or $3.6 million less of the General Assembly for the 2000 session. than the average advertising budget of nine other southeastern states. As noted by the private consulting firm, however, Georgia has done well given the small amount of money for tourism administrations and marketing in the past few years. The study specifically commended the state for its Travel Guide, for its marketing theme, and for the quality of the state's visitor information centers. u The Tourism Program should work with its regional The Regional Representatives conducted a two-day representatives to develop annual goals and strategic planning session in October of 1998 during objectives and should take steps to ensure that they which they established goals and priorities. These have the resources necessary to achieve these goals goals and the methodology for implementation will and objectives. be included in the Tourism Division FY2000 Marketing Plan now being developed. Efforts to secure additional funding for the Regional Representatives during the 1999 General Assembly were unsuccessful. However, an internal swap of $15,000 between the Marketing and Tourism Divisions (Tourism gave Marketing $15,000 in Marketing and Marketing gave Tourism $15,000 in Travel) increased the travel budgets of the Regional Representatives and enabled each of them to attend tourism marketing courses at New York University. 36 BROC Research 1999 Annual Report BROC 1997 Program Evaluation List BROC Research 37 1999 Annual Report BROC Economic Development through Workforce Preparedness The Budgetary Responsibility Oversight Committee (BROC) of the Georgia General Assembly established the 1997 theme of "Economic Development through Workforce Preparedness" to encompass state administered or funded programs having goals related to the preparation of people for employment. Being focused on improving the effectiveness of state government, the committee strongly advocates the measurement of program outcomes. The relevant outcome for the 1997 theme was employability as evidenced by job placement rates. BROC evaluated the contribution of state programs that purport to enhance the ability or capacity for people in Georgia to prepare themselves for employment and to become gainfully employed. The classification of programs falling under the workforce preparedness theme should be generously made--meaning that a program should be included even though its main impetus might not be directly related to vocational preparation. For example, workers' compensation and unemployment insurance programs are included under the theme because these have an indirect impact on workforce preparedness, measurable by job placement rates. In all cases, program documentation or program personnel statements will have linked the program, in some way, to job placement rates. BROC's aim is to analyze state policy. State programs define state policy. The analysis of economic policy examines the defining programs and assesses their outcomes, costs, coherence, and comparability. BROC wants to make a judgment about how well Georgia is doing regarding state policy for workforce preparedness and indicate improvements that can be made. There are six policy areas for this theme: Economically Disadvantaged Job Seekers Physically and/or Mentally Disabled Job Seekers Released Prisoners and/or Paroled Inmates Students (16 and older) Childhood Care & Education Other Employment Services 38 BROC Research 1999 Annual Report BROC Status Report for the 1997 Program Evaluation List Title University System of Georgia: Continuing Education's Role in Economic Development Continuing Education and Customized Training (DTAE) New Connections to Work Economic Development through Workforce Preparedness Georgia Occupational Information Coordinating Committee State Administration of the Georgia Job Training Partnership Act Childhood Care and Education Policy Child Fatality Review Academic Programming Career Information and Education Services, Grade 6-12 Dropout Prevention Efforts Educational Incentive Programs Addressing Workforce Needs Office of Adult Literacy Post-Secondary Career Guidance Services Secondary School Vocational Education State Funded Post-Secondary Tuition Assistance Growth in State Funding Allotted to K12 Education Jobs for Georgia's Graduates Trade Adjustment Assistance Program and the North American Free Trade Agreement Transitional Adjustment Assistance Program Comparison of State Expenditures General Assembly Members' Computers; Pythia Corporation Status Update and Overview: NET Broker System Certificate, Diploma, and Associate Degree Career Programs Techniquip Assigned to Audits OPB OPB BROC Research Audits Audits BROC Research Emory University & GA. State Univ. Audits Audits Audits Audits Audits Audits Audits Audits BROC Research OPB OPB BROC Research BROC Research Department of Community Health OPB OPB Status of Report A summary follows this page. A summary follows this page. A summary follows this page. Annual Strategic Planning Conference held on 1/9/97 See the 1997 BROC Annual Report. See the 1997 BROC Annual Report. See the 1997 BROC Annual Report. See the 1997 BROC Annual Report. See the 1998 BROC Annual Report. See the 1998 BROC Annual Report. See the 1998 BROC Annual Report. See the 1998 BROC Annual Report. See the 1998 BROC Annual Report. See the 1998 BROC Annual Report. See the 1998 BROC Annual Report. See the 1998 BROC Annual Report. See the 1998 BROC Annual Report. See the 1998 BROC Annual Report. See the 1998 BROC Annual Report. See the BROC Research Office for a copy of this letter. See the BROC Research Office for a copy of this letter. See the BROC Research Office for a copy of this letter. This report was cancelled by OPB. This report was cancelled by OPB. BROC Research 39 1999 Annual Report BROC University System of Georgia: Continuing Education's Role in Economic Development Evaluated: April 1999 by the Department of Audits and Accounts The role of the University System is divided into three broad categories: instruction, research, and public service. The Continuing Education function falls within the public service category. In its policy manual, the Board of Regents describes continuing education as non-credit instruction offered by each institution which includes "a variety of conferences, institutes, short courses, workshops, seminars, and special training programs." In the University System's 1997 report, continuing education is described as "the process of providing educational opportunities to individuals and organizations to increase their knowledge for the purposes of career enhancement, adaptation to changing work environments, and personal development." General Agency Response: The University System of Georgia takes exception to the report's overall conclusions and most of the specific findings. In the University System of Georgia's opinion the audit team does not understand the management of Continuing Education or the management philosophy of the University System's Office. The primary point of disagreement is the theory of centralization versus decentralization. The Board of Regents has empowered the Chancellor and the Central Office to manage the campuses in a manner consistent with that of other large university systems. The principal management philosophy employed by most systems is empowerment of local Presidents to manage their campuses in a manner which best addresses the needs of their local constituents. It is not the position of the Regents Central Office to manage specific functions on any campus; this is especially true of Continuing Education, which needs to be particularly responsive to local and regional needs. Nor do we measure the success of individual education units. Specifically, we do not tell President[s] how to manage their Continuing Education units. On an overall basis we believe that Continuing Education is well managed on most of our campuses although there are some areas where they can improve. We have an advisory group made up of Continuing Education personnel from each campus. Sometimes they would like to see more central control in order to bring a higher level of attention to a specific initiative or because they aren't satisfied with the directives from their local President. Nonetheless, we (and most other university systems) have determined that the constituents of Continuing Education and the citizens of Georgia as a whole are best served when local management prevails in serving their needs. As a matter of principal this response will not address those recommendations that we [the University System of Georgia] don't have at least partial concurrence. 40 BROC Research 1999 Annual Report BROC University System of Georgia: Continuing Education's Role in Economic Development (continued) Evaluated: April 1999 by the Department of Audits and Accounts Summary of Findings: Agency Response: u The Board of Regents and its institutions need to continue their efforts to establish a clear direction for the Continuing Education function and to define this function's purpose, goals, and desired results within the content of its institutions various missions. This will provide focus and accountability for the function and enable the Board and its institutions to clearly identify and communicate the value and impact of continuing education. No response. u As part of establishing a clear direction for the No response. Continuing Education function, the Board and its institutions need to continue their efforts to define this function's role in the state's economic development efforts and develop related performance measures. Absent these, the Board is unable to assess the impact of the function on the state's economic development. BROC Research 41 1999 Annual Report BROC University System of Georgia: Continuing Education's Role in Economic Development (continued) Evaluated: April 1999 by the Department of Audits and Accounts u Efforts should be continued to develop a reporting system which would provide the Board's Central Office with programmatic information to assess the extent to which each institution and the Continuing Education function as a whole is accomplishing its purpose, goals, and desired results. Absent such information, the Board cannot accomplish its role of ensuring full accountability and stewardship of the function and cannot analyze system wide operations or facilitate improvements. The Board of Regents indicated in their response that local Continuing Education units are expanding the type of information to be collected and shared with the Board's Central Office. However, it is not the intent of the Board to analyze the data and evaluate or redirect Continuing Education activities. At the March 1999 meeting of the Regents Administrative Committee, the committee reviewed a draft of a document known internally as "Form B." This form outlines information to be collected in several areas: 1) Subject areas categories; 2) Delivery systems used; and 3) Number of programs providing CEU's for certification or relicensure. It was generally agreed that should the Regents Central Office approve adoption of this form, that the continuing education units would be able, within a reasonable amount of time, to implement systems in order to gather this data and submit it along with the periodic submissions of CEU reports on the Web (known as Form A). In anticipation of its adoption, several units have already begun to collect the data. One unit has suggested that another area be added to the form to collect information on all the meetings, events and other activities that are coordinated by CE offices, but not counted as part of the CEU system. u National publications emphasize the economic development significance of colleges meeting employer's education and training needs and stress the importance of colleges interacting with employers to be aware of employer's needs. The Board recognizes this economic development significance and, overall, institutions' methods to identify employers' education and training needs reflect the methods suggested in these national publications. No response. u A substantial portion (68%) of most institutions' continuing education courses could be categorized as business-related. The portion of business-related courses varies among the types of institutions and among the various individual institutions. No response. 42 BROC Research 1999 Annual Report BROC University System of Georgia: Continuing Education's Role in Economic Development (continued) Evaluated: April 1999 by the Department of Audits and Accounts u Various survey results show that businesses and industries are utilizing the University System's Continuing Education function and that they are generally satisfied with the continuing education courses they have taken. There may be, however, opportunity for this function to meet more of the continuing education needs of Georgia's employers, particularly since survey results indicate that a substantial portion of employers go outside the University System to obtain continuing education they need. The Board of Regents agreed that attention should be given to determining if processes and procedures impede responsiveness and flexibility in providing Continuing Education programs. They indicated that this was a finding of their Economic Development Strategies Subgroup in 1998 and also indicated that this type of review must be done at the institution level. The campuses have been encouraged to evaluate their processes and procedures to most effectively meet the education needs of Georgia's employers. u University System institutions use various methods The Board of Regents indicated that the to market their continuing education services to institutional level Continuing Education units are business and industry. Based upon information aware of the need for marketing and will continue from national associations and other states, however, to make strides in this area. it may be beneficial to enhance marketing efforts associated with this function through implementing Every Continuing Education program lives by its innovative marketing techniques, conducting marketing and service abilities and is keenly aware marketing research, and developing marketing of the constant need to use every marketing plans. technique available to recruit and retain contracts and students. This effort must also be balanced against the ever-present concern about public, private, technical schools or whoever considers University System schools as competition to their continuing education efforts. In the spring of 1999, Kennesaw State University conducted a pilot marketing research study to track their marketing efforts and student recruitment. This study was shared with the other system schools at the March 1999 meeting and is available for adoption by any Continuing Education program. BROC Research 43 1999 Annual Report BROC University System of Georgia: Continuing Education's Role in Economic Development (continued) Evaluated: April 1999 by the Department of Audits and Accounts u The Board has no established policy or expectations regarding the extent to which the cost of continuing education operations should be covered by course participant fees or supported by state funds. This, instead, is left up to the discretion of each institution. Our analysis disclosed that, overall, course participant fees covered 67% ($34 million) of the function's total reported annual cost of $51 million, while state funds covered 27% ($13.7 million). Among individual institutions, however, the percentage of the function's cost covered by course participant fees varies widely, ranging from 5% to 100%. No response. u Currently, most University System institutions are not considering indirect costs in identifying the total cost of their respective Continuing Education function or in setting the fee amount to charge course participants. As a result, the full cost of institutions' Continuing Education functions (as reported in the prior finding) is probably understated and the portion of the function's cost paid by state funds or course participant fees cannot be accurately determined. No response 44 BROC Research 1999 Annual Report BROC University System of Georgia: Continuing Education's Role in Economic Development (continued) Evaluated: April 1999 by the Department of Audits and Accounts u The University System needs to implement a The Board of Regents agreed with the mechanism to ensure that institutions' continuing recommendation in this finding and stated that the education unit (CEU) data which are reported to the finding reinforces its awareness of the need to Central Office are complete and accurate. Ensuring improve data collection and reporting. They the completeness and accuracy of these data is indicated that steps are underway to improve the especially important since they are used in the CEU reporting process by their Continuing University System's funding formula to appropriate Education organizations. The Board believes much nearly $19 million of state funds each year to the of the under-reporting of CEU's comes from University System. (Page 32) departments other than Continuing Education and that local institutions must improve their campus- wide reporting. The submission of CEU reports by each institution has been transferred to a Web-based system. This has been very well received at the institution level. The Web report automatically calculates totals and CEU's base on the raw data submitted. It also automatically totals the year-end report thereby creating an "annual report" for each institution and the System as a whole. Both these factors help to eliminate errors. This system was demonstrated to the state auditors and they expressed satisfaction with its performance. A final draft of the document "Utilization of the Continuing Education Unit (CEU) Within the University System of Georgia" has been prepared and is awaiting adoption by the Regents Central Office. This updated version of this document provides more detail about the CEU, what qualifies and what doesn't qualify, and how to calculate CEU hours. With constant turnover in staff that many units experience, these guidelines should help orient new staff to the System and reporting functions. u The Board's Central Office should be more diligent The Board of Regents indicated in its response that to ensure that it reports current and accurate the inaccurate reporting of CEU's was a staff error continuing education unit (CEU) numbers to the and that they have taken steps to ensure these Governor's Office of Planning and Budget (OPB). reporting errors do not occur again. See above OPB uses these CEU numbers in the University information regarding Web-based systems for System's funding formula to calculate the total reports. amount of state appropriations needed to fund overall University System operations. Errors in the CEU numbers have caused the amount of state funds needed to be misstated by as much as $3.5 million. BROC Research 45 1999 Annual Report BROC University System of Georgia: Continuing Education's Role in Economic Development (continued) Evaluated: April 1999 by the Department of Audits and Accounts u The Board has demonstrated through its strategic planning documents and collaborative agreement with the Department of Technical and Adult Education (DTAE) that it recognizes the need for coordination and collaboration between the two agencies and among their respective institutions. Institutions of these two agencies, however, could more fully coordinate and collaborate their efforts to meet the education and training needs of Georgia's employers. Currently, there is little practical evidence that collaboration is occurring to any great extent regarding these agencies' Continuing Education functions. National associations, other states, and the Governor's recently created Georgia Workforce Policy and Planning Council strongly advocate coordination. The Board of Regents agrees that optimum coordination may not be taking place but believes that coordination of effort with DTAE is also difficult to evaluate. The Board has already asked its joint committee with DTAE to include this issue on its agenda. The Georgia Postsecondary Education Collaborative Council (GPECC) has appointed a Continuing Education GPECC Sub-Committee composed of representatives from DTAE and System schools. The committee is charged with assisting GPECC in identifying the issues within each focus area and recommending strategies, processes and procedures for addressing those issues. The committee has already met and is reviewing the 1995 GPECC Progress Report Section titled "Student-Centered Collaboration for Public PostSecondary Education in Georgia." The committee members will also report the need for maximum collaboration to its respective colleagues and will likely recommend an annual joint meeting of the two groups to facilitate coordination of effort. 46 BROC Research 1999 Annual Report BROC Continuing Education and Customized Training Programs Evaluated: April 1999 by the Office of Planning and Budget The purpose of these Programs is to provide training to Georgians through a network of technical institutes. The Continuing Education Program typically serves individuals, while the Customized Training Program serves businesses and industry. The Department of Technical and Adult Education administers these programs. General Agency Response: The Department is in disagreement with many of the findings stated in the report. In addition to the Department's disagreement with the study findings, the Department has a concern with the fundamental assumption of the study that a significant amount of state funds are used for the operation of these programs. This Agency does not allocate funds for continuing education. Technical Institute Presidents have been informed that if facilities are available they may support their communities with continuing education as long as courses are self-supporting. Even the initial audit findings indicated funds expended on continuing education to be 0.2% of the Agency's budget. The Agency doesn't agree with even this small estimate of expenditure for continuing education. The Agency maintains that these programs actually return funds to the institution which can be used to support general operating costs and cost of credit programs. At the same time, these programs are very highly rated by the Department's customers, even as measured by this audit report. The Department asserted that the timeliness of this study is also an issue. Although the report is dated April 1, 1999, the audit was actually conducted in May of 1997. Due to the length of time since it was initiated [the Department stated], it is of dubious value and should not be relied upon as accurate information for decision making or policy formulation. Summary of Findings: Agency Response: u The majority of employers in Georgia who No response. participated in a statewide survey for the program evaluation was very or mostly satisfied with the quality of the continuing education and customized training services provided by the technical institutes. No companies indicated dissatisfaction with services received. u Continuing education participants surveyed by the No response. evaluation team expressed overall satisfaction with the content and quality of instruction they receive at the technical institutes. BROC Research 47 1999 Annual Report BROC Continuing Education and Customized Training Programs (continued) Evaluated: April 1999 by the Office of Planning and Budget u In general, the technical institutes offer continuing education and customized training services that address the needs expressed by business and industry. However, the technical institutes should determine if more continuing education courses are needed in areas frequently cited by business and industry as weaknesses in the job preparation of applicants and new employees, such as work ethics and basic writing skills. DTAE offers work ethics courses in customized training and credit classes. DTAE does not feel the need to offer them in continuing education as well. An individual would sign up for courses like this in the realm of credit programs or company-sponsored courses, where DTAE offers these courses. The finding would indicate that DTAE does not meet company needs. OPB states that "the technical institutes should periodically survey companies and continue to offer courses in the areas where companies express that they have immediate training needs." In fact, DTAE is very responsive to both companies and the community and provides courses based on their needs. The DTAE opinion is found in the body of the OPB text, but the finding is still stated as above. u There are a large number of public and private entities that provide similar training services in Georgia, and most companies use two or more providers to meet their training needs. It would seem that OPB is commenting that DTAE is involved in a duplication of effort. OPB states that "Consideration should be given to determining how DTAE, along with colleges and universities, as well as other public providers, can add value in meeting the needs of the citizens and businesses of the state, without engaging in unnecessary competition with other public and private providers." The surveys completed by OPB illustrate that DTAE is doing an excellent job of meeting the needs of businesses and communities. Competition is healthy, and DTAE will continue to provide its customers with the high quality programs they request. Not to do so would deprive companies of services they rely on. The DTAE sees no instances of "unnecessary competition." 48 BROC Research 1999 Annual Report BROC Continuing Education and Customized Training Programs (continued) Evaluated: April 1999 by the Office of Planning and Budget u The customized training offered by the technical institutes is within the scope of DTAE's mission of workforce development; however, a small percentage of the continuing education courses seems to be more within the scope of the Board of Regents' mission than DTAE's mission. This finding would suggest that DTAE is not offering appropriate courses. In fact, if the courses offered by DTAE were not needed by businesses or the community, no one would take them. A course could not be offered if support were lacking. OPB states "DTAE should continue to focus the large majority of its continuing education efforts on courses consistent with its workforce development mission." In fact, OPB's own research says that only 6% of the continuing education courses offered were not consistent with our mission and, in OPB's opinion, were personal enrichment with very limited occupational application. This would indicate that DTAE is focusing the large majority of its courses appropriately. OPB's response to this is that "DTAE should continue to do this . . ." In other words, OPB agrees that DTAE is offering courses appropriately. u Lack of adequate financial information at the central This finding would indicate that DTAE does not office prevents the Department from monitoring the monitor these programs. Each technical institute Continuing Education Program and Customized where the courses are held does the monitoring. It Training Programs. would be cost and time prohibitive for the central office to monitor the financial information of these programs which, when combined and without considering any revenue they produce comprise only .002 of the total DTAE budget (according to OPB's Sept. 1998 report). DTAE's response is in the body of the text, but the finding stands. It is not correct in its assumption that the agency does not have adequate financial information on these programs. BROC Research 49 1999 Annual Report BROC Continuing Education and Customized Training Programs (continued) Evaluated: April 1999 by the Office of Planning and Budget u Because of inaccurate information maintained by the institutes regarding the programs' expenditures and revenues, the Department cannot determine if the programs are operating on a "cost recovery" basis as required by State Board Policy. The technical institutes do not offer inaccurate information. The questions from surveyors may not have been explained correctly or perhaps the queries were not directed to the appropriate people. The budgets for the technical institutes are very tight. There are not extra dollars to, as stated in the text, "subsidize training to private companies." The fact that DTAE spends so little on these programs, which generate revenue to at least match expenditures and that the programs are so well received speaks for itself. The text of the OPB report states, "the situation is exacerbated because, while some of the institutes may be recouping direct costs through their fee revenue, ...less than half are including indirect costs." In the report OPB requires that costs, such as facilities and administrative overhead, be allocated to the programs. This is an OPB opinion. There are many ways of budgeting; the technical institutes would be hard pressed to allocate such a tiny amount of their budgets in such a way. u The Department and technical institutes should continue to improve the Continuing Education and Customized Training Programs' goals, objectives, and performance measures. The Department should establish overall goals for the Continuing Education Program and link Results-Based Budgeting, the Institutional Effectiveness System, and course evaluations to more adequately monitor performance and effectiveness of both Programs. Again, OPB should consider the cost/benefit analysis of putting all these quality measures in place, especially in light of the high ratings these programs have been getting from their customers. It would not be efficient for DTAE to initiate a goal to raise the percent of customers recommending these courses from 98% to 99%, or raise the percent of companies very or mostly satisfied with content from 90% to 94%. It would be prohibitive for DTAE to have planning meetings and institute cumbersome centralized tracking mechanisms for such high-performing programs, particularly since they represent such a miniscule portion of services delivered. DTAE will consistently strive toward continuing improvement but this finding does not give credit to the Department for its phenomenal successes to date. DTAE's view is in the body of the OPB report, but the finding still reads as above 50 BROC Research 1999 Annual Report BROC Continuing Education and Customized Training Programs (continued) Evaluated: April 1999 by the Office of Planning and Budget u DTAE should replace or redesign its student This finding indicates that the student information information system for non-credit programs in order system is inadequate. DTAE put continuing to improve management of the Continuing education reporting on a Banner reporting system Education and Customized Training Programs. in 1994 and customized training has been reported through the Vice Presidents of Economic Development to the Central Office since July 1, 1993. The report states that continuing education is combined with other courses, but continuing education has its own columns on the report, and enrollment numbers are clear. None of the OPB text's examples apply. u DTAE should improve data accuracy and Data is accurate for both continuing education and consistency. customized training. Continuing education is reported in the Banner reporting system, and customized training is reported to the central office. The reports are done in the same manner for every technical institute across the state. u Although DTAE and the University System of The Department collaborates with the University Georgia have taken steps to encourage collaboration System where appropriate. The OPB report states between the technical institutes and the Regents' the DTAE position in the text, yet the finding stands institutions, little collaboration has actually unaltered. occurred. BROC Research 51 1999 Annual Report BROC New Connections to Work Program Evaluated: November 1998 by the Office of Planning and Budget The New Connections to Work Program is an employment and skills training program administered by the Department of Technical and Adult Education (DTAE). The Program offers single parents, displaced homemakers, single pregnant women, and recipients of public assistance occupational and life skills training through workshops conducted by institute faculty, staff, or contracted staff. In addition, the Program provides access to technical education at each technical institute and College technical division. New Connections to Work is funded almost entirely by federal funds under the provisions of the Carl D. Perkins Vocational and Applied Technology Act. The state of Georgia appropriates a small amount each year toward administration of the Program and DTAE generally provides office space and administrative support to the Program. The Program also receives some local funds from institutes and grants from other state agencies. Summary of Findings: Agency Response: u Although the Program has stated goals and objectives, these goals and objectives do not reflect an outcome-based performance-oriented approach. The Program should continue to improve its goals and objectives through the Results-based Budgeting process and the Department's strategic plan. The New Connections to Work Program continues to improve its goals and objectives in an annual proposal to the Department of Human Resources, Division of Family and Children Services, for funds to serve TANF participants. This proposal reflects outcome-based performance-oriented deliverables, which are reported to DFACS on a quarterly basis. u Historically, there has been insufficient information to adequately measure the Program's effectiveness. The Program has recently established a system to capture additional data that can be used to better determine and evaluate performance. However, improvements are needed in the follow-up process to ensure that data are meaningful and consistent. Subsequent to this finding, the New Connections to Work Website has been updated by GeorgiaNet, the system's host. Updates include the improvements needed to more effectively measure the participants' program experiences and the follow-up process and to ensure meaningful and consistent data. u Each institute program is providing a basic level of services or activities consistent with DTAE guidelines. Many institutes indicated that they also offer additional support services either directly or through referral to other agencies. The Department concurs with this finding. u The Program has historically offered services that have also been offered by other programs and agencies. However, the Program is taking steps to reduce duplication of services. The Program is continuing its efforts to reduce duplication of services among agencies. u The Department should improve its administrative oversight and management of the technical institute programs. The Division of Special Services has developed and implemented a budgeting mechanism to provide a detailed monthly accounting of DHR contract expenditures from the program level. 52 BROC Research The joint Budgetary Responsibility Oversight Committee evaluates itself in light of its own Vision, Mission, and Beliefs: Vision Mission The Budgetary Responsibility Oversight Committee shall be the principal state policy/program review arm of the Georgia General Assembly, measuring policy/program performance against commonsense standards of efficiency while comparing policy/program goals with legislative intent. The mission of the Budgetary Responsibility Oversight Committee is to follow the intent of the General Assembly that taxpayer dollars be spent in the most effective and efficient manner possible. We will recommend that the General Assembly deny resources to unworthy or redundant programs. We will recommend improvements for worthy programs to allow them to become effective and efficient. We will, further, advise the General Assembly whether the strategic plans of individual agencies are consistent with the intent of the legislature and with the state strategic plan. Beliefs The members of the Budgetary Responsibility Oversight Committee believe that . . . 1. The General Assembly has the responsibility to decide which, out of the many needs and wants of human existence, are the appropriate public policy issues to be addressed by legislation and the expenditure of tax dollars. 2. Legislative responsibility properly pertains to the recognition of a social problem to be addressed by state action. Such legislative responsibility is not discharged merely by funding well-intentioned programs, but includes oversight of the programs themselves through evaluations of their functions and performance. 3. Public policies recognized as properly in the domain of government intervention should be addressed in a coordinated manner by relevant state agencies. 4. The people of Georgia deserve assurance that their elected representatives are engaged in an ongoing review of expenditures by state agencies. 5. A vigilant effort to determine if tax money is actually being put to use according to legislative intent is the proper duty of the Budgetary Responsibility Oversight Committee. 6. Sound advice based on objective and impartial research is the product we are constituted to give to the General Assembly of the State of Georgia.