The Economic Development Connection

Steven E. DanielsUtah State University Extension

435-797-1255steve.daniels@usu.edu

Presented at Utah State Council of Workforce Services Conference 12 October 2006

Today’s objectives

• Provide some information• Start a relationship• Begin a conversation

The Plan: Three “FYI” items to spur further conversation

1) Research bulletin on rural small business success

2) Latest legislative recommendations from the Governor’s Rural Partnership Board

3) Policy report linking IDAs and WIA/ITAs

FYI #1: Factors affecting rural small business success

National study prepared by a consulting firm under contract to the Small Business Administration

Studied factors correlated with rural business births and deaths; used appropriate statistical methods

Had access to firm-level data not generally availableLooked at two different economic periods:

Expansion (1997-99)Downturn (2000-02)

Also looked at six state-level case studies, with Utah being one of them

So what matters, nationally?

• Educational attainment matters: # high school graduates increases the number of businesses

• Amenities/attractiveness matters• Rural areas constrained by educated

labor force and necessary infrastructure• Policy and assistance have an impact• The focus is on entrepreneurship

How does Utah compare to the Nation?

• Growing rural income gap (more closely resemble nation)

• Rural wages flat over the past 15 years• Rate of business replacement substantially above

national averages• Unclear why the rate is so high; it might be policy

or might be personal preference• Educational attainment and quality are both

predictive of business formation at county level

Questions regarding this FYI?

FYI #2: GRPBGovernor’s Rural Partnership

Board established 2004 Mission is to make legislative

recommendations regarding rural issues, and co-ordination among rural programs

GRPB 2006-07 Legislative Recommendations

• Include broadband internet in telephone universal services fund

• Modify Industrial Assistance Funding authority to require a minimum rural exposure

• Push for a rural education initiative

Questions regarding this FYI?

FYI #3: Linking IDA and WIA/ITA

Caveat: I am probably the least knowledgeable in the room

Intrigued by a policy brief from Center for Social Development (inventors of the IDA concept)

Overview of Individual Development Accounts

• Have some broad similarity to IRA; assets that a person holds for specific purposes

• Targets low income/wealth families• Family contributions are matched• Funds may be spent on first home,

education/training, or starting a small business

WIA/Individual Training Accounts

• Training assistance is the highest “tier” WIA-related service

• Voucher based funding of training for qualified participants at approved training providers

Potential Benefits of Linking IDA and ITA

• Leverage multiple sources of funding to provide higher level of education than might otherwise be available (both IDA and ITA typically have caps)

• WIA-related counseling services assist efficient expenditure of IDA assets

• WIA funds provide the match to IDA contributions

Policy Recommendations

• DOL clarify IDA status as a personal asset

• DOL clarify ability to use WIA funds to match IDA contributions

• Modify WIA performance measures to remove disincentive to serving low income employed individuals

Policy Recommendations, cont.

• Allow WIA funds to provide support services to an individual with IDA-funded education IF an employment plan in place

• Include financial education as an intensive service funded by WIA (Senate WIA-reauth. S1021)

• Increase WIA appropriations

Questions regarding this FYI?

http://gwbweb.wustl.edu/csd/Publications/2006/RP06-09.pdf

Were today’s objectives met?

• Provide some information• Start a relationship• Begin a conversation