NYS Office of the Comptroller DiNapoli: ESD Falls Short in Evaluation of Nearly $2 Billion of Economic Development Programs

 

 Empire State Development (ESD), the public authority responsible for administering many of New York state’s economic development programs, has failed to fully evaluate most of its programs to determine if they are boosting the state’s economy and promoting promised job and business growth, according to an audit released today by State Comptroller Thomas P. DiNapoli.

ESD spends about $1.8 billion a year in taxpayer money for loans, grants, tax credits and other financial assistance to companies and projects.

“Empire State Development has an important role in helping New York’s economy grow and create jobs, especially now as we work to recover from the COVID-19 pandemic. However, the authority has not fully evaluated which programs work and which don’t,” DiNapoli said. “ESD does not use the data it collects to assess the effectiveness of its programs and see if the billions of dollars spent are creating opportunities across the state. The agency must do a better job of analyzing whether these programs are achieving their goals and share this information with the public.”   

ESD administers 57 programs with over 5,000 associated projects. State laws and regulations require ESD to perform certain program evaluations every two or four years.

DiNapoli’s auditors found that, with few exceptions, ESD does not monitor or evaluate its economic assistance programs to determine whether goals are met, identify program successes and failures, or apply successful strategies to other programs. This creates uncertainty about program effectiveness.

For example, ESD officials said they have reviewed data for their Excelsior Jobs Program and START-UP NY Program that showed positive results and led to some changes in those programs. However, when auditors asked for supporting documentation showing how data was analyzed, ESD was unable to provide it.

Auditors also found that while ESD has migrated, or plans to migrate, many of its programs to a central database (Dynamics), others remain tracked elsewhere, and only 37 of its 57 programs were fully tracked in the Dynamics system. Having its programs and all associated projects in a centralized project tracking system would allow for greater efficiencies in compiling and reporting on relevant data.

DiNapoli recommended ESD:

• Conduct and document evaluations of economic assistance programs to assess performance and ensure they are meeting desired outcomes.
• Identify additional economic assistance programs that would benefit from migration to Dynamics.

In response to DiNapoli’s auditors, ESD officials said they use a multi-level process to evaluate their programs. According to ESD officials, they issue more than 50 quarterly and annual reports each year, which are posted on their website. However, most of these reports do not clearly measure program results, track back to project agreements or examine where jobs were or what they paid. ESD disagreed with the auditor’s first recommendation but agreed with the second recommendation. The agency’s full response is included in the audit.

Audit

Empire State Development: Project Tracking Systems and Economic Assistance Program Evaluations