Worcester Business Journal: You Can’t Manage What You Can’t Measure

By Sen. Jamie Eldridge
Special to the Worcester Business Journal
May 9, 2011

The announcement earlier this year that Evergreen Solar would be closing its plant at Devens, laying off 800 workers, raised a lot of eyebrows. In a high-profile deal made a few years back, the company received a package of $58 million in state aid, including $21 million in direct cash grants, to create the jobs at Devens.

Now the company is saying — and the state seems to agree — that the company is only required to pay $3 to $4 million of that money back to the state.

The situation with Evergreen Solar has attracted a lot of attention, but it may not be an isolated incident. Every year, Massachusetts spends hundreds of millions of dollars on economic development subsidies — and yet we have no idea what return we’re getting on our investment because the state doesn’t have the information we’d need to properly evaluate the end results.

Tighter Controls

You can’t manage what you can’t measure. How much are we spending? Where is the money going? How many jobs are being created with those subsidies? How much are we paying for each job? These should be simple questions, but the answers are usually very hard to find, if you can find them at all.

This session, I’ve proposed legislation with Rep. Carl Sciortino (D-Medford) to change that. Our bill, An Act Promoting Transparency & Efficiency in Economic Development Spending, would require companies receiving discretionary state subsidies to make firm job-creation promises, increase reporting and tracking to make sure those commitments are being met, cap the amount the state will give out for the creation of one full-time equivalent job at $35,000, and require the state to recapture (“clawback”) a pro-rated portion of the subsidy if a company doesn’t meet its job-creation commitment.

Although some in the business community have traditionally opposed measures like these, I would suggest that is short-sighted — particularly for small-business owners who aren’t typically on the receiving end of these large state subsidies.

The state has a limited pool of money to spend on economic development each year. We can spend it on things that help all businesses — like education, workforce development, transportation and other infrastructure improvements — or we can spend it on large subsidies to help individual corporations.

Any business that made substantial investments like the one made in Evergreen without tracking the results and adjusting accordingly wouldn’t be in business for very long.

It’s often said the government should operate more like a business, and in this case that adage is right: it’s time the commonwealth starts collecting the performance management information about our economic development spending that we need to make informed decisions and ensure that our economic development dollars are being spent as efficiently as possible.

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