80 economic development programs in four agencies; why?

Introduction

The federal government has never been a model of efficiency. But why are there 80 economic development programs in four agencies at a cost of $6.2 billion?

The Departments of Commerce, Agriculture, Housing and Urban Development, and the Small Business Administration were criticized for duplication in the Government Accountability Office’s “high-risk” report earlier this year.

An updated GAO analysis says agencies are starting to increase collaboration, but overall most agencies have not taken concrete steps to increase program efficiency.

Economic development programs include activities aimed at job creation, creating new markets for existing products and adding infrastructure to attract businesses to undeveloped areas. Sixty percent of the programs reviewed, 46 out of 80, have a limited focus and can only fund one or two activities, like entrepreneurial efforts in specific geographic areas. In order to prevent overlap and duplication, GAO recommends agencies identify common outcomes, make program standards compatible, pool resources, and evaluate collaboration to make programs more efficient.

In response to GAO recommendations, the SBA and USDA agreed to provide small businesses in rural areas with loan guarantees and technical assistance. In addition, HUD, SBA, USDA and Commerce formed an agreement to focus on services in the Appalachian region.

But despite recent progress, GAO noted that collaboration appears to occur on a case-by-case basis, not a systematic, agency-wide effort.

“Agencies have not developed mechanisms to consistently and effectively monitor, evaluate, and report on the results of collaborative efforts,” the GAO report said.

The lack of program outcomes continues to plague economic development programs and make them a target of budget cuts. For example, USDA does not collect data to measure the results of its business and industry loan program, one of the largest rural development programs. SBA has not developed outcome measures for its HUB Zone program, which assists small businesses in rural and urban communities.

“Better information on program outcomes is needed to determine whether this potential overlap and fragmentation are resulting in ineffective or inefficient programs,” the GAO said.

FAST FACT: HUD’s Community Development Block Grant Program, which funds affordable housing and infrastructure, received the most funding, at $2.7 billion.