Purpose

To determine whether Empire State Development (ESD) meets legal and regulatory requirements to report on the outcomes of its programs and initiatives, and whether the resulting reports are complete and timely. The audit covers from April 1, 2012 through September 30, 2016.

Background

ESD serves as the State’s chief economic development agency. ESD seeks to promote a vigorous and growing economy, prevent economic stagnation, encourage the creation of new job opportunities, increase revenues to the State and its municipalities, and achieve stable and diversified local economies. ESD administers the allocation of hundreds of millions of dollars in grants, loans, and other incentives to private companies, non-profit organizations, and other entities throughout the State. Various State laws and regulations contain outcome reporting requirements for ESD. Under these laws and regulations, ESD is required to report to various levels of State government and/or the public regarding the outcomes of numerous programs it supervises. Reporting requirements for specific programs vary, often with many of the requirements specified in the legislation that established the program.

Key Findings

• ESD failed to meet more than half of the statutorily mandated outcome reporting requirements for the programs that it managed during the period April 1, 2012 through September 30, 2016. As a result, the level of transparency and accountability in these publicly funded initiatives is diminished and policy makers have less information upon which to gauge effectiveness or identify needed changes and improvements. In most cases, ESD officials did not provide any explanation about why they had not prepared the required reports.
• The outcome reports that ESD did prepare contained all the required data elements. However, the required general summary reports, which are supposed to account for all of ESD’s active economic development programs that provide financial assistance to participants, actually accounted for less than half of them. In addition, 12 programs with appropriations during the period totaling over $500 million were not reported on at all.
• ESD had annual reports for only 15 of 173 subsidiaries linked with ESD per the State’s Public Authority Reporting Information System (otherwise known as PARIS).
• For the reports ESD prepared, we often could not determine whether they were done timely because there was no evidence of when they were published. For 27 reports with such evidence, we found that generally ESD submitted them late, although the majority (17) were submitted within two weeks after their due dates. The most overdue report we identified, the 2015 STARTUP NY annual report, was issued 91 days past its due date.

Key Recommendations

• Develop and adhere to procedures for meeting statutory program and subsidiary reporting requirements in a timely manner.
• Review information contained in summary outcome reports to ensure all active programs are included.

Other Related Audits/Reports of Interest

Empire State Development: Performance of the Excelsior Jobs Program (2015-S-15)
Empire State Development: Marketing Service Performance Monitoring (2014-S-10)
Empire State Development Corporation: Oversight of Subsidiary Operations (2005-S-6)