A performance audit of Arizona Office of Economic Planning and Development

              STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
A PERFORMANCE AUDIT
OF THE
ARIZONA OFFICE OF ECONOMIC
PLANNING AND DEVELOPMENT
FEBRUARY 1981
A REPORT TO THE
ARIZONA STATE LEGISLATURE
REPORT 81 - 3
DOUGLAS R. NORTON. CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
February 13, 1981
Members of the Arizona L e g i s l a t u r e
The Honorable Bruce Babbitt, Governor
M r . Lawrence D. Landry, Executive D i r e c t o r ,
Office of Economic Planning and Development
Transmitted herewith is the second of two r e p o r t s of the Auditor General
concerning A Performance Audit of the Office of Economic Planning and
Development. This report is i n response t o the June 19, 1979, r e s o l u t i o n
of the J o i n t L e g i s l a t i v e Budget Committee.
The blue pages present a summary of t h e r e p o r t ; a response from the
Executive Director is found on the yellow pages preceding the appendices.
My s t a f f and I w i l l be pleased t o discuss or c l a r i f y items i n the report.
Respectfully submitted,
~ o u ~ l ; sR . Norton
Auditor General
S t a f f : Gerald A. S i l v a
Coni Rae Good
Steve H. Thacker
Randolph D. Gross
Karen C. Holloway
Brent L. Nelson
Enclosure
LEGISLATIVE SERVICES WING SUITE 200 STATE CAPITOL PHOENIX, ARIZONA 85007 255- 4385
OFFICE OF THE AUDITOR GENERAL
A PERFORMANCE AUDIT OF THE
ARIZONA OFFICE OF ECONOMIC
PLANNING AND DEVELOPPIENT
A REPORT TO THE
ARIZONA STATE LEGISLATURE
REPORT 81- 3
TABLE OF CONTENTS
Page
INTRODUCTION AND BACKGROUND
FINDINGS
FINDING I
The Office of Economic Planning and Development
( OEPAD) needs c l a r i f i c a t i o n of its economic
planning r e s p o n s i b i l i t i e s .
CONCLUSION
RECOMMENDATIONS
FIPJDING I1
OEPAD has not f u l f i l l e d its s t a t u t o r y r e s p o n s i b i l i t y
completely regarding research and data- gathering
a c t i v i t i e s . A s a r e s u l t , OEPAD s t i l l is working t o
accomplish research and data- gathering objectives
i d e n t i f i e d o r i g i n a l l y i n 1967.
CONCLUSION
RECOMMENDATIONS
FINDING I11
OEPAD has been i n e f f e c t i v e i n meeting its s t a t u t o r y
r e s p o n s i b i l i t y t o conduct s c i e n t i f i c and technological
planning.
CONCLUSI OM
RECOMMENDATIONS
FINDING I V
Improvements a r e needed i n t h e o p e r a t i o n of the
State Clearinghouse.
CONCLUSION
RECOMNENDATIONS
FINDING V
Page
8 5
OEPAD is responsible f o r supporting and d i r e c t i n g
councils f o r planning coordination among S t a t e
agencies. However, the o p e r a t i o n o f these planning
councils is c h a r a c t e r i z e d by overlapping o r
i l l - d e f i n e d purposes, sporadic a c t i v i t y and lack
of leadership.
CONCLUSION
RECOMMENDATIONS
FINDING V I
Arizona's p a r t i c i p a t i o n i n the Federal J o i n t Funding
S i m p l i f i c a t i o n Act should be reassessed.
CONCLUSION
FINDING V I I
OEPAD payroll- claims documentation is inadequate
a s a management t o o l and does not provide
reasonable assurance of equitable usage of S t a t e
and Federal funds. Some funds have been
misused and present p r a c t i c e s provide the
opportunity f o r large- scale misuse of funds. In
a d d i t i o n , S t a t e in- kind match of Federal monies
cannot be v e r i f i e d because of inadequate
payroll- claims documentation.
CONCLUSION
RECOMMENDATIONS
FINDING V I I I
OEPAD c o n t r a c t a d m i n i s t r a t i o n and record keeping
is i n s u f f i c i e n t l y c o n t r o l l e d , r e s u l t i n g i n c o n t r a c t s
executed t h a t a r e not i n compliance with S t a t e law.
CONCLUSION
RECOMMENDATIONS
FINDING I X
Inappropriate expenditures.
CONCLUSION
RECOMMENDATIONS
OTHER PERTINENT INFORl'IATION
Community Assistance Planning
Survey responses were mixed regarding need for
economic planning
Commemorative Items
Page
147
APPENDICES
APPENDIX I Arizona Revised. S t a t u t e s r e l a t e d t o OEPAD
APPENDIX I I
APPENDIX I11
APPENDIX I V
APPENDIX V
APPENDIX V I
APPENDIX V I I
APPENDIX V I I I
APPENDIX I X
APPENDIX X
APPENDIX X I
APPENDIX X I 1
APPENDIX X I 1 1
APPENDIX XIV
APPENDIX XV
APPENDIX XVI
APPENDIX X V I I
APPENDIX X V I I I
APPENDIX XIX
APPENDIX XX
L e t t e r from former Senate Pla j o r i t y Leader
A statement of economic development by the
Arizona Economic Planning and Development
Advisory Board to the Governor of Arizona
OEPAD a c t i v i t i e s and r e p o r t s r e l a t e d t o economic
planning
Record of i n t e r v i e w w i t h OEPAD Executive
Director - February 4, 1980
L e t t e r from OEPAD Executive Director -
February 29, 1980
Survey of planning agencies i n western and
southestern s t a t e s
AJEDC list of information u s e f u l f o r p l a n t
l o c a t i o n decisions
AJEDC o u t l i n e f o r t a r g e t i n d u s t r y r e s e a r c h
Arizona Community P r o f i l e - Mesa, Arizona
S t a t e information handbook sample pages
C h a r a c t e r i s t i c s o f e f f e c t i v e information
s e r v i c e s and research a s defined by the Council
of S t a t e Planning Agencies
Survey of S t a t e agencies
Survey of Councils of Governments
Survey of Arizona c i t i e s and towns
Survey of chambers of commerce
Executive Order 75- 7 r e l a t i n g to S t a t e
Clearinghouse
Federal A- 95 Handbook d e s c r i p t i o n of t h e S t a t e
Clearinghouse review process
Federal Form 424 used i n clearinghouse operations
Executive Order 75- 6 r e l a t i n g t o the S t a t e
Planning and Coordinating Committee
APPENDIX XXI
APPENDIX X X I I
APPENDIX X X I I I
APPENDIX XXIV
APPENDIX XXV
APPENDIX XXVI
APPENDIX X X V I I
APPENDIX X X V I I I
APPENDIX XXIX
APPENDIX XXX
APPENDIX XXXI
APPENDIX X X X I I
L e g i s l a t i v e Council memorandum regarding the
continuing a u t h o r i t y of executive orders -
April 24, 1980
L e g i s l a t i v e Council memorandum, February 25, a
1980 - r e l a t i n g to l e g i s l a t i v e oversight of
Federal funds
National Conference of S t a t e L e g i s l a t u r e s 15
recommendations on c o n t r o l l i n g Federal funds d
Auditor Gennrsl l - e t t ? r of r e c ~ a ~ e n ~ . ? . t ~ ~ r s ,
January 9, 1980, r e s u l t i n g from f i n a n c i a l audit
of OEPAD
Employee a c t i o n form used f o r documenting OEPAD
payroll fund t r a n s f e r s a
L e t t e r from OEPAD Executive D i r e c t o r ,
January 15, 1980, i n response to the Auditor
General l e t t e r of recommendations
OEPAD form used f o r a d d i t i o n a l documentation of
payroll fund t r a n s f e r s
OEPAD time record sheet and i n s t r u c t i o n s
L e g i s l a t i v e Council memorandum, April 25, 1980,
regarding t h e l e g a l d e f i n i t i o n of two- week notice 4
L e g i s l a t i v e Council memorandum, February 15,
1980, regarding the v a l i d i t y of c o n t r a c t s not
executed according t o S t a t e law
Survey of i n d u s t r i a l developers ( I
L e g i s l a t i v e Council memorandum, January 27,
1981, regarding payment of S t a t e employee t r a v e l
expenses
LIST OF TABLES
TABLE 1 - Actual f u l l - t i m e equivalent employees, source
of funds and expenditures from f i s c a l year
1975- 76 through f i s c a l year 1978- 79, and
estimated f u l l - t i m e equivalent employees,
source of funds and expenditures f o r f i s c a l
years 1979- 80 and 1980- 81
TABLE 2 - Summary of 26 western and southeastern s t a t e s '
claimed e f f o r t s i n economic development
planning a s of May 31, 1980
TABLE 3 - Bajor OEPAD research p r o j e c t s and information
s e r v i c e s , 1969- 1980, r e l a t e d to AJEDC
recommendations
TABLE 4 - Number of grant proposals received by t h e S t a t e
Clearinghouse by category during calendar year 1979
TABLE 5 - A sampling of Federal grant a p p l i c a t i o n s
submitted t o the Clearinghouse during calendar
year 1979
TABLE 6 - S t a t e Clearinghouse workload by proposal category
i n calendar years 1974- 79
TABLE 7 -
TABLE 8 -
TABLE 9 -
TABLE 10 -
TABLE 11 -
TABLE 12 -
TABLE 17 -
TABLE 14 -
Summary of the number and percentage of OEPAD
f i l e s analyzed and incidence of s u b s t a n t i v e
programmatic comments during calendar year 1979
D o l l a r v a l u e of proposals analyzed - other A- 95s
category
JFP p a r t i c i p a n t s and estimated funds d i s t r i b u t e d
through t h e p r o j e c t i n f i s c a l year 1979- 80
Summary of OEPAD p a y r o l l t r a n s f e r s from July 1,
1978, to December 31, 1979
Summary of the r e s u l t s of the review of OEPAD
s t a f f time record s h e e t s from October through
December 1979
Percentage of OEPAD's 40.5 State- funded p o s i t i o n s
pledged as in- kind match to obtain Federal funds,
October 1, 1979, through January 30, 1980
OEPAD c o n t r a c t s found to be not i n compliance
with S t a t e law regarding a d v e r t i s i n g
Number and appraised value of s i l v e r and bronze
items discovered i n OEPAD storage
Page
14
SUMMARY
The Department of Economic Planning and Development ( DEPAD) was created by
S t a t e law i n 1968. The forerunner of DEPAD was the Arizona Development
Board, which was e s t a b l i s h e d i n 1954. The 1968 l e g i s l a t i o n : 1) created
DEPAD, and 2) replaced the Arizona Development Board with the advisory
Economic Planning and Development Board. A s a r e s u l t of 1972 amendments,
DEPAD was designated a s the Office of Economic Planning and Development
( OEPAD) within the Office of the Governor.
S t a t e law defines two d i v i s i o n s , Planning and Development, within OEPAD.
The functions of these d i v i s i o n s a r e broadly defined i n s t a t u t e t o include
economic planning, economic research, s c i e n t i f i c and technological
planning, i n d u s t r i a l development, a d v e r t i s i n g , p u b l i c a t i o n s and low- income
housing development. Additional r e s p o n s i b i l i t i e s f o r energy programs and
manpower planning coordination were e s t a b l i s h e d through g u b e r n a t o r i a l
a c t i o n .
OEPAD a c t i v i t i e s are funded through S t a t e General Fund a p p r o p r i a t i o n s and
v a r i o u s F e d e r a l funds.
The r e s u l t s of our review a r e presented i n two r e p o r t s . The f i r s t r e p o r t ,
issued Octobr 9, 1980, concerns the a c t i v i t i e s of:
- I n d u s t r i a l development,
- Personnel administration,
- I n t e r n a t i o n a l t r a d e , and
- Motion p i c t u r e development.
This second report includes:
- Economic planning,
- Data and research,
- S c i e n t i f i c and technological planning,
- The S t a t e Clearinghouse,
- Planning c o u n c i l s ,
- J o i n t Funding P r o j e c t ,
- Accounting f u n c t i o n s ,
- Contracting procedures,
- I n a p p r o p r i a t e expenditures,
- Commu. nity planning a s s i s t a n c e ,
- Economic planning survey responses, and
- Commemorative items.
Our review of the Office of Economic Planning and Development revealed
t h a t since 1968 OEPADts e f f o r t s t o develop a n o v e r a l l economic plan or
growth s t r a t e g y have been characterized by unfinished or abandoned
p r o j e c t s and frequent a d m i n i s t r a t i v e r e d i r e c t i o n s . Local governments
surveyed expressed s a t i s f a c t i o n with OEPADts numerous planning r e p o r t s and
analyses. A s a r e s u l t , OEPAD has f u l f i l l e d only p a r t i a l l y its
r e s p o n s i b i l i t y f o r economic planning and the agency has not developed an
o v e r a l l economic growth s t r a t e g y f o r the S t a t e . ( page 17)
Our review a l s o disclosed t h a t , since its inception i n 1968, OEPAD has not
f u l f i l l e d c o n s i s t e n t l y its intended s t a t u t o r y r o l e of providing research
and information s e r v i c e s . OEPAD s t a f f resources have been applied to
experimental research p r o j e c t s and short- term analyses a t the expense of
s t a t u t o r i l y mandated basic research f o r planning and development use. A s
a r e s u l t , research e f f o r t s frequently have been diverted from those areas
apparently intended by the L e g i s l a t u r e . OEPAD research and data e f f o r t s
were r e d i r e c t e d i n 1979 and 1980 toward achieving research o b j e c t i v e s
i d e n t i f i e d o r i g i n a l l y i n 1967. ( page 39)
In addition, our review revealed that OEPAD has not met its statutory
responsibility for s c i e n t i f i c and technological planning. A related
advisory Council has not met since 1970. Several OEPAD a c t i v i t i e s have
been indirectly related to s c i e n t i f i c and technological planning, and
members for a r e a c t i ~ a t e d council were appointed in April 1980. However,
the o v e r a l l d i r e c t i o n f o r OEPAD's s c i e n t i f i c and technological planning
remains unresolved. ( page 53)
Our review disclosed that the effectiveness of the OEPAD State
Clearinghouse has been significantly impaired because: 1) grant
applicants frequently do not submit information i n a timely manner,
2 ) S t a t e agencies do not comply with an Executive Order requiring
Clearinghouse review of a l l , not just Federally mandated, grant proposals,
and 3) representatives of programs that may be impacted by or duplicative
of requests for Federal funds provide only cursory, i f any, reviews of
grant proposals. A s a r e s u l t , the Clearinghouse's overall effect is
impaired and the Governor and the Legislature cannot monitor accurately
the Federal aid requested or received by Arizona agencies. ( page 63)
Our review revealed that OEPAD is responsible for supporting and directing
councils for planning coordination among s t a t e agencies. However, the
operation of these planning councils is characterized by overlapping or
ill- defined purposes, sporadic a c t i v i t y and lack of leadership. ( page 85)
In addition, our review disclosed that the Arizona Joint Funding Project
( JFP), begun by OEPAD as an experiment in 1975 to attempt to streamline
the administration of selected Federal grants- in- aid, has, according to
participants, failed to reduce administrative time and costs associated
with Federal grants. Therefore, the f i r s t Project objective,
administrative simplification, has not been realized. Furthermore,
participants disagree as to progress made towards the second goal,
improved planning coordination. ( page 95)
Our review a l s o revealed OEPAD payroll- claims documentation is inadequate
a s a management t o o l and does not provide reasonable assurance of
equitable usage of S t a t e and Federal funds. Some funds have been misused
and present p r a c t i c e s provide the opportunity f o r large- scale misuse of
funds. I n a d d i t i o n , S t a t e in- kind match of Federal monies cannot be
v e r i f i e d because of inadequate payroll- claims documentation. ( page 103)
Our review revealed OEPAD does not maintain s u f f i c i e n t c o n t r o l over i t s
c o n t r a c t i n g process. Although OEPAD has e s t a b l i s h e d some contracting
procedures, they have not been followed c o n s i s t e n t l y , r e s u l t i n g i n
noncompliance with S t a t e law, poor managerial c o n t r o l over c o n t r a c t s ,
inadequate c o n t r a c t records and nonadherence to contract terms. ( page 129)
Our review a l s o revealed s e v e r a l inappropriate OEPAD expenditures.
( page 143)
Our review a l s o revealed t h a t OEPAD has been a c t i v e i n providing planning
s e r v i c e s and other t e c h n i c a l a s s i s t a n c e t o many l o c a l governments. In a
survey of Arizona's incorporated c i t i e s and towns, most communities a
indicated t h a t such a s s i s t a n c e was u s e f u l . However, more than h a l f t h e
survey respondents claimed t h e i r communities were not knowledgeable or
aware of the range of services OEPAD can provide. ( page 147)
In a d d i t i o n , as p a r t of our review, we surveyed regional Councils of
Government, i n d u s t r i a l developers, c i t i e s and towns and chambers of
commerce regarding the need f o r S t a t e goals and o b j e c t i v e s f o r growth
and/ or land- use planning. I n d u s t r i a l developers and Councils of
Government supported planning g u i d e l i n e s ; c i t i e s and towns and chambers of
commerce did not i n d i c a t e s i g n i f i c a n t needs i n t h i s a r e a ; and S t a t e agency
responses were mixed. ( page 149)
F i n a l l y , during the course of our a u d i t we a l s o discovered s e v e r a l hundred
s i l v e r and bronze commemorative items with appraised v a l u e o f $ 6,304 t h a t
were not safeguarded o r inventoried properly. ( page 156)
RECONRENDATIONS
It is recommended t h a t c o n s i d e r a t i o n be given t o the following:
The Governor and the L e g i s l a t u r e , i n conjunction with g e n e r a l p u b l i c and
s p e c i a l i n t e r e s t groups, determine:
A. I f w r i t t e n guidelines a r e needed f o r S t a t e development and, i f
so, what kind. Consideration should be given to documenting:
1. A l t e r n a t i v e economic f u t u r e s f o r Arizona,
2. Appropriate S t a t e government goals, p o l i c i e s and s t r a t e g i e s ,
3. Future problem a r e a s and what can be done by the general
public and S t a t e government to resolve them,
4. Current governmental development programs and t h e i r expected
r e s u l t s ,
B. I f economic planning should be on a Statewide or r e g i o n a l b a s i s
o r both, and
C. Which group o r agency should be responsible f o r developing such
g u i d e l i n e s .
The L e g i s l a t u r e e s t a b l i s h l e g i s l a t i v e i n t e n t regarding economic planning
formally
A. E s t a b l i s h i n g i n s t a t u t e s p e c i f i c economic planning
r e s p o n s i b i l i t i e s ,
B. I d e n t i f y i n g resources f o r economic planning and assigning
planning p a r t i e s responsible f o r t h i s , and
C. Providing f o r :
1. Adequate funding,
2. Broad c i t i z e n awareness and p a r t i c i p a t i o n ,
3. Development of s p e c i f i c implementation s t r a t e g i e s ,
4. Wide dissemination of planning r e s u l t s , and
5. Regular reviews and updates of planning guidelines.
The Legislature r e v i s e A. R. S. $ 41- 503.~ regarding OEPAD's research/ data
r o l e i n o r d e r t o :
A. C l a r i f y the meaning of " c e n t r a l r e p o s i t o r y , " " clearinghouse" and
" inventory of resources."
B. Express e x p l i c i t l y its i n t e n t concerning the primary
r e s p o n s i b i l i t y f o r , and balance between: 1) basic research to
support economic planning and development and 2) special- issue
analyses.
OEPAD pursue the objectives of the S t a t e Data Coordination Network.
Consideration should be given to combining the e f f o r t with those of a
continuing interagency planning council.
The Legislature consider separate budget l i n e items f o r OEPAD research and
its data r e s p o n s i b i l i t i e s to ensure t h a t s u f f i c i e n t s t a f f is devoted to
b a s i c r e s e a r c h e f f o r t s to meet l e g i s l a t i v e i n t e n t .
OEPAD expand its current e f f o r t to inventory and catalog data sources by
including data produced by l o c a l governments, p r i v a t e agencies and other
non- State sources.
OEPAD update and r e f i n e d a t a c a t a l o g s r e f e r r e d to i n the recommendation
above a t regular i n t e r v a l s and increase t h e i r usefulness by including
d e f i n i t i o n s of d a t a c o l l e c t e d and such c h a r a c t e r i s t i c s as frequency of
data c o l l e c t i o n manner i n which collected and s t a t i s t i c a l computations
used.
OEPAD develop t h e c a p a b i l i t y t o r e f e r outsiders to a p p r o p r i a t e d a t a
sources quickly. Consideration should be given to e s t a b l i s h i n g and
s t a f f i n g a telephone inquiry service f o r the purpose.
OEPAD exert more e f f o r t to inform S t a t e agencies, l o c a l governments and
a p p r o p r i a t e p r i v a t e - s e c t o r agencies of its research and information
s e r v i c e s .
L e g i s l a t i v e review of the appropriateness and f e a s i b i l i t y of a s t a t u t o r y
r o l e f o r OEPAD t o use s c i e n t i f i c and technological planning i n solving
development problems or to a t t r a c t new growth areas of industry.
I f the L e g i s l a t u r e determines s c i e n t i f i c and technological planning is
appropriate and f e a s i b l e , A. R . S 541- 501 . B should be amended t o o u t l i n e
more s p e c i f i c a l l y OEPAD's r o l e i n s c i e n t i f i c and technological planning.
The OEPAD Clearinghouse s t a f f -
A. Educate S t a t e agency personnel who s e e k F e d e r a l aid on the
requirements and procedures of the review and monitoring
processes,
B. Regularly compare Federal g r a n t a p p l i c a t i o n and award information
i n order to i d e n t i f y instances of noncompliance.
C. Regularly analyze grant a p p l i c a t i o r l s submitted t o the
Clearinghouse t o i d e n t i f y agencies t h a t a r e l a t e h a b i t u a l l y .
SPCC be r e a c t i v a t e d and d i r e c t e d t o r e p o r t t o the Governor and the
L e g i s l a t u r e by June 30, 1981, regarding the following:
A. Neans t o reduce the volume of proposals t h a t require Statewide
review. SPCC should determine s p e c i f i c a l l y t h e l e v e l of review
d e s i r a b l e f o r each category and type of g r a n t a p p l i c a t i o n .
B. Means t o enforce compliance with Executive Orders regarding the
Clearinghouse.
C. The r o l e of SPCC, i f any, on a continuing b a s i s .
The L e g i s l a t u r e , a f t e r review of the SPCC report -
A. Consider a l t e r n a t i v e s f o r monitoring, c o n t r o l and/ or review
of Federal funds.
B. E s t a b l i s h by law the Clearinghouse or o t h e r mechanism t o
coordinate the review of Federal funding proposals.
C. E s t a b l i s h by law the membership and d u t i e s of coordinative
c o u n c i l s , i f any.
D. E s t a b l i s h enforcement and p e n a l t y p r o v i s i o n s t o encourage
S t a t e agencies to submit appropriate information to the
Clearinghouse promptly.
A. R. S. $ 41- 505 be amended t o s p e c i f y t h e r o l e of an interagency planning
council. Consideration should be given to including t a s k s such as:
A. provision of g u b e r n a t o r i a l advice and a n a l y s i s on a d m i n i s t r a t i v e
matters i n S t a t e government ( e . g., personnel, government,
t r a n s p o r t a t i o n ) ,
B. assessment of the impact of S t a t e governmental programs and
a c t i o n s on the economy, its growth and development, and
C. review of plans and programs i n connection with the economic
development s t r a t e g y of OEPAD.
2. The Governor provide leadership and d i r e c t i o n t o such council.
3. Based on a review of Finding I V of t h i s r e p o r t , t h e r o l e for
SPCC, i f any, and its r e l a t i o n s h i p with IAECC should be defined
and distinguished c l e a r l y i n s t a t u t e t o prevent d u p l i c a t i o n and
confusion. Memberships of both councils should be determined
c a r e f u l l y so t h a t appropriate numbers and l e v e l s of agency
a d m i n i s t r a t o r s a r e involved.
OEPAD a s s e s s c a r e f u l l y JFP's t o t a l b e n e f i t s and c o s t s t o OEPAD, other
S t a t e agencies and l o c a l governmental u n i t s , and make a recommendation to
the Governor and t h e J o i n t L e g i s l a t i v e Budget Committee by October 1,
1981, regarding JFP's continuation i n Federal f i s c a l year 1982- 83.
The Governor and the L e g i s l a t u r e consider whether or not t o continue the
JFP a f t e r Federal f i s c a l year 1981- 82, based on OEPAD's assessment of
b e n e f i t s and c o s t s .
OEPAD implement and pay s a l a r i e s based on a r e v i s e d , adequate time
record- keeping system.
OEPAD implement the multifund source p a y r o l l system s t a r t e d by the
Department of Administration f o r appropriate employees.
OEPAD adopt a cost a l l o c a t i o n plan f o r persons r e g u l a r l y doing work
a t t r i b u t a b l e to s e v e r a l Federal and S t a t e fund sources.
OEPAD review present and past personnel payments and r e a l l o c a t e monies t o
Federal and S t a t e accounts as necessary t o r e - e s t a b l i s h equity.
OEPAD improve its budget- forecasting techniques f o r personal s e r v i c e s
monies to attempt t o avoid f u t u r e shortages i n budget amounts.
In cases of shortages i n personal s e r v i c e s monies of S t a t e accounts, OEPAD
request t h e J o i n t L e g i s l a t i v e Budget Committee to t r a n s f e r S t a t e monies
among budgeted amounts to a l l e v i a t e the deficiency.
OEPAD follow its c o n t r a c t i n g procedures and comply with S t a t e laws
regarding: a) p r o f e s s i o n a l and outside s e r v i c e s costing more than $ 5,000,
and b) intergovernmental agreements.
OEPAD procedures be amended t o i d e n t i f y s p e c i f i c a l l y persons assigned t o
manage each contract and the fund source f o r each c o n t r a c t .
OEPAD s t a f f review c o n t r a c t s a t l e a s t q u a r t e r l y t o v e r i f y : a ) t h a t
contract managers a r e current s t a f f and s t i l l appropriate f o r assignments,
and b) t h a t contract terms are met.
OEPAD c o n t r a c t i n g procedure be amended t o include guidelines f o r valuating
and s e l e c t i n g bidders, monitoring contract programs f o r compliance to
contract terms and authorizing payment.
OEPAD i n s t i t u t e necessary changes to prevent f u t u r e i n a p p r o p r i a t e uses of
funds.
OEPAD consult with the Accounts and Controls Section of the Division of
Finance when questions a r i s e regarding the propriety of expenditures to
ensure t h a t these expenditures a r e appropriate.
INTRODUCTION AND BACKGROUND
The Office of the Auditor General has conducted a performance a u d i t of t h e
Office of Economic Planning and Development ( OEPAD) , i n accordance with
Arizona Revised S t a t u t e s ( A. R. S.) $ 41- 1279, and i n response to a June 19,
1379, r e s o l u t i o n of the J o i n t L e g i s l a t i v e Budget Committee. This is the
second half of a two- part r e p o r t on the performance a u d i t .
OEPAD's forerunner, the Arizona Development Board, was created i n 1954.
The primary purpose of the Board was t o a t t r a c t t o u r i s t s , new r e s i d e n t s
and new i n d u s t r i e s t o Arizona and t o explore and publicize Arizona's
f a c i l i t i e s and resources i n order to a t t r a c t new c a p i t a l and industry t o
t h e S t a t e . The Board had limited funding t o perform these functions.
In April 1967 the Governor appointed the Arizona J o i n t Econonic
Development Committee ( AJEDC). The Governor declared by Executive Order
67- 7 t h a t the Committee was t o "... produce a preliminary a n a l y s i s of
Arizona's s p e c i f i c r o l e i n the economic development process ..." and to
make recommendations " . . . f o r the means through which the S t a t e should
conduct its a c t i v i t y i n the f i e l d of economic development." The Committee
submitted i t s a n a l y s i s and recommendations to the Governor on December 4,
1967. AJEDC acknowledged t h a t the Development Board was underbudgeted and
understaffed and recommended the Board be reorganized a s a S t a t e agency
and its functions expanded. A b i l l based on the Committee's
recommendations was passed by t h e Arizona L e g i s l a t u r e i n 1968, which:
1) replaced the Arizona Development Board with the Economic Planning and
Development Board, and 2) created the Department of Economic Planning and
Development ( DEPAD) as of July 1, 1968.
I n i t i a l l y , the Economic Planning and Development ( EPAD) Board e s t a b l i s h e d
policy f o r DEPAD and selected an Executive Director with the approval of
the Governor. The Board relinquished its policy- making and appointive
powers and became a n a d v i s o r y board to the Governor on June 30, 1971.*
* The Office of the Auditor General issued a performance a u d i t of the
Economic Planning and Development Board on September 12, 1979, i n
accordance with the Sunset Law, A. R. S. 5541- 2351 through 41- 2374.
In 1972, as a r e s u l t of l e g i s l a t i o n , DEPAD was designated as the Office
of Economic Planning and Development ( OEPAD) within the O f f i c e o f the
Governor.
S t a t e law* defines two d i v i s i o n s , Planning and Development, within
OEPAD. Generally an a d m i n i s t r a t i v e u n i t o r d i v i s i o n has a l s o e x i s t e d .
The functions of the planning and development d i v i s i o n s a r e broadly
defined i n A. R. S. $ 41- 501. B:
" The planning d i v i s i o n s h a l l , i n a d d i t i o n t o other
functions assigned by the executive d i r e c t o r , be
responsible f o r economic planning, economic research
and s c i e n t i f i c and technological planning. The
development d i v i s i o n s h a l l , i n addition to other
functions assigned by the executive d i r e c t o r , be
responsible f o r i n d u s t r i a l development, a d v e r t i s i n g and
publications".** ( ~ m ~ h a saidsd ed)
Since its i n c e p t i o n , OEPAD has had numerous reorganizations and major
changes i n r e s p o n s i b i l i t i e s . Four examples a r e t h e a r e a s of: energy,
tourism, manpower coordination and low- income housing development
a s s i s t a n c e .
I n January 1974 the Governor issued an Executive Order c r e a t i n g t h e
Arizona S t a t e Fuel and Energy Office. The Governor a t t a c h e d t h e Fuel and
Energy Office to OEPAD f o r a d m i n i s t r a t i v e and t e c h n i c a l support. I n July
1979 the Fuel and Energy Office was i n t e g r a t e d i n t o the development
d i v i s i o n , b u t a g a i n was separated as a d i v i s i o n ( ~ n e r w~ i~ th) in OEPAD i n
September 1979.
During 1975, the Governor issued Executive Order 75- 3 e s t a b l i s h i n g the
Arizona S t a t e Office of Tourism. A l l OEPAD tourism programs were
t r a n s f e r r e d t o the new o f f i c e . However, OEPAD performed a d m i n i s t r a t i v e
d u t i e s f o r the Office of Tourism u n t i l 1978, when l e g i s l a t i o n established
and s t a t u t o r i l y recognized a s e p a r a t e Office of Tourism.
* Appendix I contains the t e x t of applicable S t a t e laws.
*" The 1968 version of t h i s s t a t u t e included r e s p o n s i b i l i t y f o r tourism
development.
In the f a l l of 1976, the Governor transferred Comprehensive Employment
and Training Act ( CETA) manpower- planning coordination from the
Department of Economic Security to OEPAD.
In the 1980 L e g i s l a t i v e s e s s i o n , OEPAD was designated as responsible f o r
providing advice, consultation, planning, t r a i n i n g and educational
assistance for development of low and moderate income housing.
OEPAD has changed dramatically from its i n i t i a l 1968- 1969 budget of
$ 550,000 to a 1980- 81 f i s c a l year budget of nearly $ 7 million, including
both State and Federal funding.
Table 1 summarizes the a c t u a l and estimated expenditures f o r OEPAD from
f i s c a l years 1975- 76 through 1980- 81.
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It should be noted t h a t t o t a l Federal funds and s t a f f t r a d i t i o n a l l y a r e
understated i n OEPAD's budget prepared f o r the Executive Budget Office.
For example, OEPAD estimated i n its 1978- 79 budget request t h a t 1.3
m i l l i o n Federal d o l l a r s would be received i n 1978- 79, whereas a c t u a l
Federal r e c e i p t s f o r t h a t year were $ 2.3 m i l l i o n ( a 74 percent
i n c r e a s e ) . OEPAD estimated 77 f u l l - t i m e equivalent ( FTE) employees i n
its 1979- 80 budget r e q u e s t , whereas the revised estimate shown i n
Table 1, as of December 1979, was 109 FTEs. The a d d i t i o n a l FTEs were
supported by s u b s t a n t i a l increases ( 386 percent) i n Federal monies not
included i n the o r i g i n a l 1979- 80 estimate.
A l l major OEPAD a c t i v i t i e s were examined i n t h i s a u d i t with the exception
of two areas - CETA manpower planning and energy programs. CETA
a c t i v i t i e s are funded e n t i r e l y by Federal CETA g r a n t s . Energy programs
a l s o a r e l a r g e l y Federally funded. During preliminary review, no
s u b s t a n t i a l problems with the CETA area were revealed. A l l energy
programs and s t a f f within OEPAD, other than f u e l a l l o c a t i o n a c t i v i t i e s ,
a r e r e l a t i v e l y recent a d d i t i o n s , thus making trend and comparative
a n a l y s i s d i f f i c u l t .
This is the second of two Auditor General r e p o r t s on OEPAD and i n c l u d e s :
- Economic planning,
- Data and research,
- Science and technology planning,
- The S t a t e Clearinghouse,
- Planning c o u n c i l s ,
- J o i n t Funding P r o j e c t ,
- Accounting f u n c t i o n s ,
- Contracting procedures,
- Inappropriate expenditures,
- Community planning a s s i s t a n c e ,
- Economic planning survey responses, and
- Commemorative items.
The f i r s t report on OEPAD, Auditor General Renqrt 80. SO- 4.1, whtch was
issued on October 9, 1980, included t h e a r e a s o f :
- I n d u s t r i a l development,
- Personnel administration,
- I n t e r n a t i o n a l t r a d e , and
- Motion p i c t u r e development.
The Office of the Auditor General expresses g r a t i t u d e t o present and
former employees of OEPAD, o f f i c i a l s of p a r t i c i p a t i n g S t a t e agencies,
regional Councils of Governments, Arizona c i t i e s and counties and
numerous survey respondents i n t h e p r i v a t e s e c t o r f o r t h e i r cooperation,
a s s i s t a n c e and c o n s i d e r a t i o n d u r i n g the course of our a u d i t .
FINDING I
OEPAD NEEDS CLARIFICATION OF ITS ECONOPIIC PLANNING RESPONSIBILITIES.
Since 1960 the Office of Economic Planning and Development ( OEPAD) has had
s t a t i l t o r y r e s p o n s i b i l i t y f o r economic planning. Our review of OEPAD's
economic planning a c t i v i t y revealed t h a t numerous planning r e p o r t s ,
analyses and instances of planning a s s i s t a n c e by OEPAD have been useful t o
governmental e n t i t i e s . However, e f f o r t s t o develop an o v e r a l l growth
economic s t r a t e g y have been c h a r a c t e r i z e d w i t h u n f i n i s h e d or abandoned
p r o j e c t s and a d m i n i s t r a t i v e r e d i r e c t i o n s . A s a r e s u l t , OEPAD has not
developed an o v e r a l l economic growth s t r a t e g y f o r t h e S t a t e , and OEPAD's
economic planning e f f o r t s i n t h i s area: 1) appear to be below average i n
c o n t r a s t t o those of 26 other western and southeastern s t a t e s , and 2) a r e
d e f i c i e n t when compared to e f f e c t i v e n e s s c h a r a c t e r i s t i c s developed by the
Council of S t a t e Planning Agencies.
Arizona Revised S t a t u t e s ( A. R. S. ) 541- 501 s t a t e s , i n p a r t , t h a t OEPAD
s h a l l conduct " economic planning."
According t o the Senate Majority Leader a t the time A. R. S. 541- 501 was
enacted, the absence of economic planning by the S t a t e was a concern to
the L e g i s l a t u r e a t the time OEPAD ( formerly DEPAD) was created.%.
" The basic f e e l i n g of the l e g i s l a t u r e a t t h a t time
r e a l l y f e l l i n t o s i x c a t e g o r i e s of concern, those being:
" 5. t h a t very l i t t l e planning existed a s a b a s i s f o r
an Arizona economic development policy;
" 6. t h a t a s t a t e policy i n the f i e l d of economic
development was v i r t u a l l y nonexistent.
11 . . . and a f a r improved planning e f f o r t should be
developed a s a base f o r establishment of policy
f o r the s t a t e , with strong emphasis toward an
economic development s t r a t e g y t o carry out such
policy." ( Emphasis added)
* Appendix I1 i s the f u l l t e x t of t h i s statement.
17
A 1967 Arizona J o i n t Economic Development Committee ( AJEDC) r e p o r t a l s o
s t r e s s e d the need f o r economic planning.
"... Arizona s t a t e government a s a whole does not have a
c l e a r , e a s i l y understood sense of the d i r e c t i o n s i n
which it is moving.. . Arizona lacks a continuing formal
process of determining and making public t h e d i r e c t i o n s
i n which -~ tovernmental a c t i o n s a r e leadin- g develoament
of the s t a t e . . . S t a t e economic planning is simply a
formalized process of c l a r i f y i n g t h e d i r e c t i o n s i n
which s t a t e government is moving so t h a t :
" 1. These d i r e c t i o n s can be more e a s i l y a l t e r e d by t h e
Governor and L e g i s l a t u r e i f they d e s i r e t o do so,
" 2. Ongoing and proposed s t a t e programs can be
evaluated i n terms of how well they promote s t a t e
progress i n the approved d i r e c t i o n s , and
" 3. The e l e c t o r a t e can more e a s i l y i d e n t i f y and
approve or disapprove of the d i r e c t i o n s i n which s t a t e
government is moving and evaluate the major
departmental programs ..." ( ~ m ~ h a saidsd ed)
The AJEDC r e p o r t included a d e f i n i t i o n of a planning process:
" The planning process.. . c o n s i s t s of the following
elements :
" 1. Evaluation o f p r e s e n t conditions and p r e d i c t i o n s
of f u t u r e c o n d i t i o n s ,
" 2. The determination of goals or d i r e c t i o n s i n which
t o move. . .
" 7. The determination of o b j e c t i v e s ... and decision on
programs to a t t a i n t h e o b j e c t i v e s ,
" 4. ~ x e c u t i ( o n ) of programs ( and)
" 5. A feedback system permitting modification of
g o a l s , o b j e c t i v e s and programs."
The AJEDC report i d e n t i f i e d the p a r t i c i p a n t s involved i n determining
o v e r a l l S t a t e goals and d i r e c t i o n as the Governor and the L e g i s l a t u r e
with, perhaps, a j o i n t r e s o l u t i o n a s a v e h i c l e .
The techniques i d e n t i f i e d i n the r e p o r t to formalize planning goals and
o b j e c t i v e s were :
" 1) preparation and periodic r e v i s i o n of a long range
s t a t e economic plan
" 2) preparation and annual r e v i s i o n of a s i x year
s t a t e program budget
" 3 ) annual preparation of the s t a t e budget.. . "
The report recommended t h a t p r i o r i t i e s should be developed f o r p o t e n t i a l
growth:
"... the economic planning and development organization
w i l l have t o develop a long- range program p l a n . This
plan must be based on a comprehensive a n a l y s i s of
Arizona's economic development p o t e n t i a l . P r i o r i t y
economic t a r g e t s must be i d e n t i f i e d from these f i e l d s
of development t h a t o f f e r the g r e a t e s t p o t e n t i a l ... to
the s t a t e . These p r i o r i t i e s must then be attached
through an ordered development program with s p e c i f i c
o b j e c t i v e s s p e l l e d o u t on a t e n year, f i v e year, and
annual basis."
Lastly, the AJEDC r e p o r t s p e c i f i c a l l y recommended OEPAD use Federal funds
r e l a t e d to economic planning and development to f a c i l i t a t e economic
planning.
" The committee recommends t h a t the urban planning
program authorized by s e c t i o n 701 of the Housing a c t of
1954,. . . the programs authorized by the Public Works and
Economic Development Act of 1965,. . . and the Programs
authorized by the S t a t e Technical Services Act of
1965, ... be coordinated i n Arizona through
the ... responsible s t a t e agency ... f o r the a d m i n i s t r a t i o n
and coordination of these and other programs r e l a t e d to
economic development."
Of p a r t i c u l a r note is the A3EDC r e p o r t ' s mention of $ 701 of the Housing
Act of 1954' s use of monies f o r S t a t e comprehensive economic planning:
" Over 40 s t a t e s have received matching g r a n t s f o r s t a t e
comprehensive planning under the same Act. These
g r a n t s t y p i c a l l y support a phased program of i n i t i a l
g r a n t s f o r program design, ( i n v e n t o r i e s of resources,
basic population and economic p r o j e c t i o n s , and
i d e n t i f i c a t i o n of problems o r o p p o r t u n i t i e s ) followed
by a long range program of i d e n t i f i c a t i o n of goals and
o b j e c t i v e s by e x i s t i n g r e s p o n s i b l e a g e n c i e s , and
t r a n s l a t i o n of these i n t o o u e r a t i o n a l ulans and
organizations throughout the various agencies of s t a t e
government. With the leadership of the Department of
Economic Planning and Development and the Inter- agency
Economic Coordinating Council, such comprehensive
economic planning could be i n s t i t u t e d i n Arizona."
( Emphasis added)
Therefore, t h e o r i g i n a l l e g i s l a t i v e i n t e n t f o r economic planning was:
1) t h e c r e a t i o n of a planning process to guide S t a t e government i n its
economic dev?! ovment e f f o r t s , 2) a n a l y s i s of the S t a t e ' s economy and
i d e n t i f i c a t i o n of economic development p r i o r i t i e s , and 3) use of Federal
funds t o support planning and development.
However, OEPAD's e f f o r t s to develop and implement an economic planning
process have been fraught with incomplete p r o j e c t s , confusion and frequent
a d m i n i s t r a t i v e r e d i r e c t i o n s . A s a r e s u l t , Arizona does not have a formal
economic development plan or s t r a t e g y .
OEPAD Often Reaffirms Its R e s u o n s i b i l i t i e s
f o r Economic Planning and Guided Development
From 1970 through 1980 OEPAD has s t a t e d repeatedly it is the agency
responsible f o r economic planning of S t a t e governmental programs and
economic development of the S t a t e .
I n 1971 OEPAD issued a r e p o r t e n t i t l e d Goals and Objectives of S t a t e
Governm~ nt, which was described i n OEPAD's 1970- 71 annual report a s :
". .. a f i r s t attempt i n Arizona to assemble, i n a
comprehensive fashion, the goals and o b j e c t i v e s of
major s t a t e agencies. The primary purpose was to
develop a frame- c~ ork upon which s t a t e government
p o l i c i e s and goals could be b u i l t . .." ( Emphasis added)
OEPAD's 1971- 72 annual report promised OEPAD e f f o r t s t o develop a
State- growth policy would be expanded:
" An extensive r e v i s i o n and expansion of t h i s work
element has been designed i n response t o demonstrated
need and a d i r e c t i v e from the Governor to conduct a
planning program f o r t h e o r d e r l y growth of Arizona.
The ~ r o i e c t is designed t o d e s c r i b e t h e i s s u e s of
growth i n the s t a t e , analyze the elements of the growth
process, i d e n t i f y s t a t e growth o b j e c t i v e s , and suggest
a l t e r n a t i v e ways of implementing growth p o l i c i e s . "
( Emphasis added)
I n 1972 the Economic Planning and Development Board ( an advisory board t o
the Governor and OEPAD) endorsed* planned growth f o r t h e S t a t e a s follows:
1. Concentrate on a r e a s i n which needs a r e most severe and a s s e s s
b e n e f i t s of growth versus r i s k s .
2. Encourage l o c a t i o n i n less- congested areas.
3. Stimulate d e s i r a b l e growth to h a l t environmental d e t e r i o r a t i o n of
congested areas.
4. Direct development of the S t a t e by design, not accident.
* Appendix I11 contains the f u l l t e x t of these statements.
2 1
OEPAD's 1972- 77 annual report summarized the 12- month period.
"... a milestone year with respect to laying the
foundation f o r a s t a t e growth policy. The Arizona
Trade- Off Model ( ATOM) was completed and put i n t o
operation .... A p r e l i m i n a r y s t u d y of l a r g e s c a l e remote
subdivisions was completed.. . . The f i r s t phase of a
n a t u r a l areas study ( and) ... a study of e x i s t i n g l e g a l
c o n t r o l s of p r i v a t e land use ( were) completed.. ."
It should be noted t h a t ATOM is the acronym f o r Arizona Trade- Off Model, a
computer model designed to a s s e s s and evaluate the impact of economic
growth on the S t a t e ' s environment. ATOM was abandoned i n 1975 as
unworkable and a l e s s ambitious p r o j e c t c a l l e d Economic Demographic
Projection Model ( EDPM) , which p r o j e c t s S t a t e population, replaced it .*
Annual r e p o r t s from 1975 t o 1978 v a c i l l a t e d i n s t a t i n g t h a t e i t h e r an
economic development planning process or a S t a t e growth s t r a t e g y was ( I
forthcoming.
1975 " Objective is t o begin d e f i n i t i o n of a
coordinated state- wide economic growth policy
f o r Arizona and t o e s t a b l i s h the process f o r
defining such a p o l i c y
" New policy d i r e c t i o n s and d i f f e r e n t p r i o r i t i e s
e s t a b l i s h e d . During 1976 the o f f i c e w i l l bring
a l l of its resources to bear upon a s i n g l e over
arching objective - the c r e a t i o n and
implementation of an Economic Development
Strategy f o r the S t a t e of Arizona."
1976 " The purpose of an economic development
~ l a n n- i nD~ ro cess is t o ~ r o v i d ea mechanism f o r L L
the formulation of a statewide economic growth
policy f o r Arizona.
" During 1977, s t a t e w i d e p u b l i c meetings w i l l
culminate i n a policy statement f o r the
Governor's consideration."
* See page 46 f o r a f u r t h e r discussion of ATOM.
" S t r a t e g i e s t o i d e n t i f y and implement l o c a l
development plans w i l l be provided and such
~ l a n ss h a l l become Dart of the statewide plan."
1977 " The objective f o r the coming year is to
prepare a synthesis of e x i s t i n g s t a t e p o l i c i e s
which i m ~ a c t g- rowth and development. t o
i d e n t i f y i n c o n s i s t e n c i e s and other needs
r e l a t e d to these p o l i c i e s , and to propose
needed a c t i o n s . The r e s u l t should include
o v e r a l l g o a l s , o b j e c t i v e s and p o l i c i e s f o r
development, implementation measures, and a
coordina. tion svstem."
1978 " The purpose of the growth and development
s t r a t e g y planning i s to provide decision- makers
information and a l t e r n a t i v e p o l i c i e s on the
f u t u r e growth and development of the s t a t e .
" Work on an o v e r a l l g- rowth and development A
s t r a t e g y f o r Arizona has b u i l t upon the
products of l a s t y e a r ' s program which
i d e n t i f i e d t h e r o l e s and r e s p o n s i b i l i t i e s of
s t a t e and f e d e r a l agencies.
" The objective f o r the coming year is t o
( r e f i n e ) . . . goals and o b j e c t i v e s , provide f o r
( t h e i r ) public discussion. . . formulate and
r e f i n e implementation measures, and provide f o r
( t h e i r ) use... in the decision- making process."
( ~ m p h a s i s added)
Since 1978, the Governor and OEPAD s t a f f have issued a number of
statements regarding a " balanced growth s t r a t e g y w and maintaining q u a l i t y
of Arizona l i f e :
January 5, 1979, Gubernatorial Address
" Beyond r e s t o r i n g the c r e d i b i l i t y of government, we
must a l s o begin to plan s e r i o u s l y f o r the f u t u r e . A s
Arizonans we must develop a c l e a r v i s i o n of who we a r e ,
of what we ought to be, and how we want to grow.
" Arizona's destiny is i n e x t r i c a b l y mixed w i t h q u e s t i o n s
of growth. not whether we grow - a s we must - but how
we grow.. .
" The basic challenge is to accommodate more people,
a t t r a c t new industry, and build new c i t i e s , without
destroying the values t h a t drew us here i n the f i r s t
place. Arizona is especially favored with both n a t u r a l
values and human values. .. We must s t r i v e to l i v e i n
balance with our environment.
" F i r s t , I believe we must formulate our proposals with
the objective of stimulating balanced growth f o r
Arizona. For t h i r t y years, Arizona's growth has been
lopsided pouring 80% of our population into two
metropolitan areas, making Arizona one of the most
urbanized s t a t e s i n America. We must channel growth
throughout the s t a t e . " (~ mphasis added)
January 8, 1979, Opening Message to Thirty- fourth Legislature, F i r s t a
Regular Session:
" Economic Development. Between now and the year 2000
we w i l l need to create almost 800,000 jobs to keep pace
with the S t a t e ' s projected growing population. We w i l l
have to pursue an ambitious strategy to absorb t h i s
a n t i c i ~ a t e d r a t e of - g rowth and the ex~ anded needs f o r a
services that w i l l accompany i t . . . i t is c r i t i c a l t h a t
we recommit to t h e o v e r a l l economic development of the
~ t ~. I' t e
" It is e s s e n t i a l t h a t we take steps to insure t h a t
adeauate em~ lovment o ~ ~ o r t u n i t i easls o are available i n
r u r a l areas. People i n small towns should share i n the
prosperity which w i l l come to the S t a t e as a whole. A
balanced g- rowth s t r a t e m means t h a t the S t a t e w i l i U"
encourage the r i g h t kind of growth to those
locations." ( ~ m ~ h a s ai dsd ed)
F a l l 1979 OEPAD Goals and Objectives
" Develop a s t a t e balanced growth strategy
" Prepare s t a t e economic development process and
policies plan which w i l l include:
- overall s t a t e development goals and s t r a t e g i e s
- c r i t e r i a f o r targeting s t a t e and federal
resources to areas of greatest need or
p o t e n t i a l
- development of incentives f o r private s e c t o r
investment i n r u r a l areas
- development of a project s e l e c t i o n process to
i d e n t i f y the most desirable and fundable
projects drawn from s t a t e and l o c a l
development plans."
24
January 14, 1980, Opening Message t o the Thirty- fourth L e g i s l a t u r e , Second
Regular Session:
" Rapid change and sustained economic and population
growth a r e the norm; Arizona has r e g i s t e r e d a 70
percent increase i n population i n t h i s l a s t decade.
" This growth w i l l continue unabated i n the coming
decade a s Arizona continues t o a t t r a c t thousands who
each week move here seeking t o escape both the weather
and the urban problems of other s t a t e s
" In the coming years we must begin t o deal with the
orsbiems a s s c c i a t e d with our ramid growth and plan
accordingly. The challenge is t o accommodate growth
without destroying the environmental values t h a t
a t t r a c t e d people here i n the f i r s t place.
" The S t a t e must have an ambitious s t r a t e g v t o continue
i n s u r e t h a t industry l o c a t e s not only i n Phoenix and
Tucson but i n the smaller communities of t h e s t a t e . "
( Emphasis added)
OEPAD Statements and Results Of E f f o r t s
to Develom a Growth Plan Do Not Coincide
Since its inception OEPAD has i n i t i a t e d a s i z a b l e number of economic
planning e f f o r t s . While numerous r e p o r t s and analyses have been produced
and instances of planning a s s i s t a n c e t o l o c a l communities have been
documented t h a t have been u s e f u l t o S t a t e and l o c a l governmental
agencies,* OEPAD has not produced a coordinated o r comprehensive plan f o r
economic growth i n Arizona.*"
" Appendices X I I I , X I V , XV and XVI contain survey responses regarding
the value of OEPAD's a s s i s t a n c e . Comments and survey r e s u l t s a r e
discussed on pages 147 and 148.
"* Appendix I11 catalogs major a c t i v i t i e s and r e p o r t s r e l a t e d t o o v e r a l l
economic planning.
According to OEPAD s t a f f , e a r l y attempts to coordinate economic planning
a t a l l l e v e l s of Arizona government were overly ambitious and unfeasible
and gradually were abandoned.
An OEPAD r e p o r t on growth s t r a t e g y , issued i n 1978, noted confusion i n
defining its own r o l e i n economic planning:
" By 1970 it became apparent t h a t the agency's
r e s p o n s i b i l i t i e s f o r preparing and implementing growth
and development plans lacked focus, l a r g e l y because the
s t a t u t e c r e a t i n g t h e agency d i d n o t provide a c l e a r
d e f i n i t i o n of r o l e s , or adequate means f o r dealing with
the complex i s s u e s involved." ( ~ m ~ h a saidsd ed)
A c t i v i t i e s o r plans r e l a t e d to planning f o r economic development announced
by OEPAD between 1968 and 1974 but not implemented on a continuing b a s i s
included:
1. Examination and c o r r e l a t i o n of e x i s t i n g s t a t e agency goals and
t r a n s l a t i o n i n t o p o l i c y o b j e c t i v e s ;
2. Orderly development of plans f o r t r a n s l a t i o n i n t o a c t i o n a
proposals;
3. Issuance of an OEPAD planning concept paper and work program; and
4. Design of a study completed f o r a S t a t e planning process.
During the mid- 1970s, t h e L e g i s l a t u r e considered numerous approaches to
address the proper S t a t e r o l e i n land- use planning. Considerable OEPAD
s t a f f resources were devoted, d i r e c t l y and i n d i r e c t l y , t o developing
land- use plans. However, no land- use l e g i s l a t i o n has been enacted.
According to a 1978 OEPAD r e p o r t , the repeated l e g i s l a t i v e defeat of
land- use planning, and a change i n governors and OEPAD executive
d i r e c t o r s , p r e c i p i t a t e d a r e d i r e c t i o n of OEPAD planning e f f o r t s :
" Because of successive f a i l u r e s over an extended period
of time t o l e g i s l a t e land- use planning, it became
apparent t h a t no such statewide planning program would
succeed i n the immediate f u t u r e . E f f o r t s have
t h e r e f o r e been r e d i r e c t e d t o develop c o n s i s t e n t
p o l i c i e s to guide the operation of s t a t e programs t h a t
impact on land use, growth and development, and t o
improve e x i s t i n g programs."
From 1975 through 1979 OEPAD e f f o r t s i n economic planning" concentrated
on: 1) a n a l y s i s of S t a t e p o l i c i e s and i s s u e s , 2) s t a f f support to
committees, commissions and t a s k f o r c e s , and 7) t e c h n i c a l a s s i s t a n c e t o
or preparing plans to obtain Federal funds and a l l o c a t e them.
Annual r e p o r t s of OEPAD claim p r o v i s i o n o f s t a f f a s s i s t a n c e t o such
commissions and committees as the Governor's Commission on the Arizona
Environment; S t a t e Multiple Use Advisory Board, Bureau of Land Management;
Urban Lands Task Force ( state- owned l a n d s ) ; and Power Plant and
Transmission Line S i t i n g Committee.
" OEPAD s t a f f members have twice attempted t o p a r t i c i p a t e d i r e c t l y i n
S t a t e budgeting. The f i r s t attempt, to define S t a t e agency programs,
goals and s e r v i c e measurements, was abandoned i n f i s c a l year 1975- 76.
The second attempt, i n 1979, consisted of policy a n a l y s i s by
planner/ budget a n a l y s t teams, an e f f o r t ceased a f t e r the 1979
l e g i s l a t i v e session.
I n a d d i t i o n , OEPAD has obtained Federal funds f o r required S t a t e planning
a c t i v i t i e s and/ or t o a l l o c a t e monies. A c t i v i t i e s and t h e i r fund sources
include:
A c t i v i t y / ~ r o j e c t Federal Fund Source
Arizona p o r t i o n of Four Corners Four Corners Regional Commission
Regional Plan
Overall Economic Development Economic Development Adminis-
Plan ( OEDP)* committees and process t r a t i o n ( EDA) 302 and 304
f o r a l l o c a t i n g funds to counties
Housing s t u d i e s Housing and Urban Development
( HUD) 701 Program
Copper community impact a n a l y s i s T i t l e I X - EDA
Local community planning a s s i s t a n c e HUD 701 Program
Indian planning HUD 701 Program
Southern Arizona public investment T i t l e V - EDA through Southwest
and development Border Regional Commission
Water q u a l i t y management planning Environmental P r o t e c t i o n Agency
( EPA) 208
Financed, i n p a r t , by HUD 701 funds, OEPAD produced a s e r i e s of
p u b l i c a t i o n s i n 1977 and 1978 r e l a t e d t o the development of a proposed
S t a t e growth policy. T i t l e s include:
Roles and R e s p o n s i b i l i t i e s of S t a t e and Federal
Agencies Involved In Growth Policy Elements,
Existing Arizona P o l i c i e s Related To Growth and
Develo~ ment.
Toward a S t a t e Growth Policy: Existing Conditions,
Toward a S t a t e Growth S t r a t e g y : I s s u e s and P o l i c i e s ,
and
Sunmarv of Selected I s s u e s . Goals and P o l i c i e s .
* See page 147 f o r a discussion of community planning a s s i s t a n c e by
OEPAD s t a f f .
Four years of e f f o r t culminated i n t h i s d e t a i l e d f i v e - p u b l i c a t i o n proposal
f o r developing a S t a t e growth s t r a t e g y . However, a change i n OEPAD
a d m i n i s t r a t i o n i n May 1979 r e s u l t e d i n abandonment of the p r o j e c t .
According to OEPAD's Executive Director on February 4, 1980:"
" The s t a t e growth s t r a t e ~ v . a s o r i a i n a l l v a d o ~ t e d , is
not being pursued because of a change i n p o l i t i c a l
philosophy. The Governor has a l s o made a conscious
choice not t o have p u b l i c h e a r i n g s on t h i s subject.
Instead of a formal, o v e r a l l growth s t r a t e g y , OEPAD has
a number of s t r a t e g i e s r e l a t i n g to growth which, when
taken as a whole. define a statewide growth s t r a t e g y .
" These s e v e r a l s t r a t e g i e s are:
" 1. i n c e n t i v e s f o r ( metro and) non- metro area growth
" 2. environmental oversight
" 3. coordinating responses t o i s s u e s f o r t h e Governor,
( f o r the S t a t e L e g i s l a t u r e and other S t a t e
agencies)
" 4. using Federal and S t a t e money t o ' l e v e r a g e ' a s
many economic development p r o j e c t s a s possible
throughout the s t a t e
" 5. t r a n s p o r t a t i o n a l t e r n a t i v e s task force
" 6. ( energy s t r a t e g i e s . )
" The Governor has decided t h a t OEPAD w i l l not have a
regulatory focus**, but i n s t e a d w i l l r e l y on incentive
to encourage growth.
" Output of OEPAD work i n the growth area w i l l be a
s e r i e s of ' i n t e r v e n t i o n s t r a t e g i e s ' . " ( ~ m ~ h a saidsd ed)
* Appendix V contains the f u l l t e x t .
"* Examination of formerly proposed S t a t e growth s t r a t e g y does not
include l e g a l provisions f o r OEPAD r e g u l a t i o n of any agency o r
government. The i n t e n t of the s t r a t e g y was " d i r e c t e d towards using
e x i s t i n g mechanisms, with an i n t e n t to develop c o n s i s t e n t p o l i c i e s t o
guide the operation of s t a t e programs t h a t impact on land- use growth
and development. These influences occur i n the planning and operation
of the v a r i o u s f u n c t i o n a l programs of s t a t e agencies."
The Executive Director elaborated i n a l e t t e r dated February 29, 1980:*
" The important point being made t h e r e is t h a t t h e
change i n p o l i t i c a l philosophy was not a change i n what
we need, i . e . , o v e r a l l q u a l i t y growth of the s t a t e , but
r a t h e r , a philosophy of how it is to be done. This
philosophy means working with communities more
~ e r s o n a l l v on h e l ~ i n g them h e l ~ themselves. Public A -
hearings were judged, i n t h i s case, t o be a l e s s
e f f e c t i v e way to make r e s u l t s occur."
" Several s t r a t e g i e s a r e mentioned... The caveat is t h a t
we are n o t l i m i t e d t o the s t r a t e g i e s l i s t e d . There a r e
o t h e r s ( . ) I did not take the time to list them a l l , but
r a t h e r highlighted a few. ( ~ m p h a s i s added)
On February 14, 1980, the Executive Director responded to the question,
" How does OEPAD determine which p r o j e c t s w i l l receive funds and which w i l l
not?" ( regarding Federal g r a n t s ) :
" OEPAD uses s e v e r a l general c r i t e r i a t o judge the
p r i o r i t y of p r o j e c t s o r s e l e c t grantees. Such c r i t e r i a
are:
How well does t h e p r o j e c t conform t o t h e o v e r a l l
s t r a t e g y ? How much leverage can OEPAD get out of
a p a r t i c u l a r grant? What is the p r o b a b i l i t y o f
success? That is, how well thought out is the
p r o j e c t , what is the community's a t t i t u d e and
commitment?
" However, a w r i t t e n o v e r a l l s t r a t e g y t h a t includes such
c r i t e r i a w i l l not be forth- coming. The components w i l l
always be changing, some dropping out while others a r e - - - - -
added a s economic conditions change. A ' very macro
s t r a t e g y ' leading to balanced s t a t e growth w i l l be
used. ''
* Appendix V I contains f u l l t e x t .
Paradoxically, the Executive Director c l a r i f i e d t h i s by saying on
February 29, 1980, t h a t some documents are needed t o t i e multiple elements
together:
" There w i l l be a b l u e p r i n t p r i n c i p a l l y coming from the
302 w r i t t e n plan which has c r i t e r i a on how we award
g r a n t s , and we do have c r i t e r i a now on what we use i n
judging the 304 process. What is meant is t h a t t h e r e
w i l l be no b l u e p r i n t t h a t w i l l forever c a s t i n
c o n c r e t e ( , ) t h a t w i l l d e f i n i t e l y map out something t h a t
should be r i g i d l y adhered t o . However, it is c r i t i c a l
t h a t t h e r e be some w r i t t e n documents t h a t attempt to
t i e the manv f a c e t s and f o r c e s tog- ether." (- Emphasis
added)
Arizona Economic Planning Is Substandard
Compared t o Other Western and Southeastern S t a t e s
In May 1980, a u d i t s t a f f surveyed 26 western* and southeastern s t a t e s t o
determine t h e s t a t u s of economic planning e f f o r t s . The survey was limited
t o western and southeastern s t a t e s because these s t a t e s a r e s i m i l a r t o
Arizona i n topography and/ or growth p o t e n t i a l and problems. Based on the
surveys, telephone conversations and examination o f t h e s e s t a t e s ' planning
documents, four general economic planning s t a t u s c a t e g o r i e s were
i d e n t i f i e d : 1 ) Major economic development planning was attempted but
stopped, 2) Economic development planning is r e s t r i c t e d t o t h a t required
to obtain Federal funds, 3) Major economic development planning is
s t a r t i n g or being r e s t a r t e d , and 4) An ongoing economic development
planning process is used.
Table 2 summarizes responses*" within each category f o r the 26 western and
southeastern s t a t e s and explains b r i e f l y the type of planning e f f o r t
involved, if any.
* Includes Alaska and Hawaii. ** Appendix V I I contains a d e t a i l e d d e s c r i p t i o n of each s t a t e ' s response.
TABLE 2
I Major economic development=
planning attempted but stopped
I1 Economic development planning
is r e s t r i c t e d to that required
to obtain Federal funds
I11 Major econcmic planning i s
s t a r t e d o r being r e s t a r t e d
SUMMARY* OF 26 WESTERN AND SOUTHEASTERN
STATES' CLAIMED EFFORTS I N ECONOMIC
DEVELOPNENT PLANNING AS OF MAY 31, 1980
Number
of
S t a t e s S t a t e s Type of Economic Development Planning
7 Georgia, Kansas, Not applicable
Montana, Nebraska,
Oklahoma, South Carolina
and Washington
I V An Ongoing Economic Development 10
Planning Process Is Being Used
2 Alabama and New Mexico Minimum to obtain Federal funds
Arkansas
Idaho
Mississippi
North Carolina
South Dakota
Texas
Utah
Alaska
California
Colorado
Florida
Hawaii
Louisiana
Nevada
North Dakota
Oregon
Wyoming
S t a t e development plan
S t a t e comprehensive economic development
s t r a t e g y
Coordinated planning and policy statement
Balanced growth policy
S t a t e comprehensive development plan
Texas 2000 Project
Growth management s t r a t e g y
Growth goals
Environmental goals f o r urban land- use plans
Land- use and housing plan; defining
preferable future f o r " Front Range Colorado" 4
S t a t e comprehensive plan
Integrated state/ county comprehensive plan
P r i o r i t i e s f o r the Future*""
S t a t e comprehensive plan and growth
management plan a
Economic development investment plan
Land- use goals
S t a t e land- use plan
-
Total
* Appendix VII contains a d e t a i l e d summary of each s t a t e ' s
experiences, including reasons for stopping or Federal minimum
approach, type of products developed, types of c i t i z e n p a r t i c i p a t i o n
used and u t i l i z a t i o n of r e s u l t s .
** Although the s t a t e s i n t h i s category did not c l a s s i f y t h e i r e f f o r t s
a s the Federal minimum l e v e l , no inference should be made that
s t a t e s do not meet the Federal minimum.
*** In 1978, the Louisiana governor and l e g i s l a t u r e sponsored t h i s
p r o j e c t t h a t addressed the development o f goals i n s i x a r e a s . The
project report recomnended l e g i s l a t i v e and administrative changes.
As demonstrated in Table2, 17 ( 65 percent) of the western and
southeastern states appear to have implemented or are beginning to
implement a form of statewide economic development planning. Efforts have
included 1) state government goal and objective identifications,
2) compilations of state government policy statements concerning economic
development, 3) documents zxamining alternative futures for the state,
4) land- use planning and 5) economic development goal and objective
setting for the state and/ or its regions.
It should be noted that the two states claiming only to meet the Federal
minimum in economic development planning cited the lack of sufficient
state monies or state initiative as reasons for the lack of more than the
minimum effort needed to obtain Federal funds.
As of July 1, 1980, OEPAD's efforts in economic development planning did
not appear to measure up to the claimed efforts of 26 other western and
southeastern states. According to the states' responses, most of these
states have or are implementing some form of overall economic development
planning, and all claim to use some type of citizen participation in doing
so. Some of the characteristics of the economic planning process of these
other states include:
1. Directly addressing economic development planning in a
generally comprehensive manner,
2. Presenting a finished project of these efforts for use by
the general public, developers and government; a product
that includes one or more of the following:
a. state goals and objectives,
b. policy statements,
c. " futures" analysis, or
d. a comprehensive development plan.
3 Using citizen participation rather than that of governmental
officials only.
Council of State Planning Agencies
Defines Effective Economic Planning
The Council of State Planning Agencies ( CSPA)" in 1977 published a report
entitled Evaluation of State Planning. The CSPA report categorizes state
planning office efforts and lists characteristics of effective
operations. Two CSPA categories - comprehensive development planning and
economic resource planning - appear to be most closely related to OEPAD's
efforts in planning for orderly growth.
The following summarizes the comprehensive development planning and
economic resource planning characteristics identified by CSPA and \ a
indicates which of those characteristics OEPAD meets:
OEPAD Meets
Characteristics
- Yes - N o I
Com~ rehensive Develo~ ment Planning Characteristics
1. The state planning agency maintains a statewide
agenda of goals and objectives based upon a
continuous or periodic process of citizen
participation.
2. There exists a document or set of documents that
is officially recognized as the state development
plan.
7. The state development plan contains a set of
recommended priorities for public action that
should be undertaken in order to achieve state
goals.
4. The state development plan is actively used
by the planning agency, the Governor and
department heads to guide and coordinate the
activities of state government.
5. The state development plan is used as a criterion
for evaluating projects proposed by state, local
and federal agencies.
" Affiliate of the National Governors Association.
34
OEPAD Meets
Characteristics
- Yes - No
Comprehensive Development Planning Characteristics (~ onc'l d )
6. The state planning agency regularly surveys current
social and economic conditions or trends and
updates the development plan to accommodate
emerging issues.
7. The state planning agency takes affirmative action
to insure that interested legislators are involved
in the formation and revision of the development
plan and that the legislature is acquainted with
its contents and its purpose.
Economic Resource Planning Characteristics
1. The state planning director is a principal advisor
to the Governor on matters of economic policy.
2. The state planning agency maintains and periodically
updates a document or set of documents or policies
which are designated as the state plan for economic
development.
7. The state planning agency participates in selection
of economic development actions designed to implement
the economic development plan or policy.
4. The state planning agency maintains a comprehensive
economic data base that is used to monitor trends
and new developments.
5. The state planning agency generates periodic forecasts
of economic activity.
6. State planning personnel regularly assist local
communities that are interested in planning for
economic growth and development.
7. The state economic development plan or policy is
used as a criterion for the conduct of state and
federal programs, such as manpower or public works,
that affect economic performance.
8. The state planning agency frequently initiates
research and analysis dealing with special economic
problems and is assured that such special studies
will receive serious consideration by the Governor,
the legislature or heads of appropriate departments." x
As demonstrated above, OEPAD's economic planning efforts are deficient
when compared to effectiveness characteristics developed by the Council of
State Planning Agencies.
Ceasons for OEPAD's Below- average
Economic Development Planning
The reasons for OEPAD's below- average performance in overall economic
planning are numerous and include: 1) an undefined and unspecified role
in econoalc plan~ ing, 2) frequznt adninis: rative TGG,~~,:- GL; LJ of SYE~ Z
efforts, 7) increased availability of Federal funds during OEPAD'S
existence and consequent concentration on Federal requirements,
4) possible adverse political reactions from developing economic plans.
Recent OEPAD Efforts Might Be
A Basis for State Guidelines
Recent OEPAD planning activity could, if expanded and coordinated,
establish a basis for developing state goals and policy towards economic
development.
One is a response to the Carter Administration's Small Community and ~ ural
Development Policy*. In February 1980 OEPAD staff informed the
reactivated Interagency Economic Coordinating Council ( IAECC) ,** an
organization of State agency representatives, of the Administration policy
to " translate generalized concerns about rural problems into a set of
specific goals, principles, programs and mechanisms for effective
implementation." The policy, aimed primarily at Federal agencies,
included an invitation to governors to establish state rural development
councils to help ensure Federal- state cooperation. OEPAD advised IAECC
that the President was pressing agencies to develop rural investment plans
according to states' priorities, and requested the Council to:
1. Review the policy and action items related to their
departments' responsibilities,
2. Identify high- priority items and opportunities to cooperate
in Federal initiatives, and
3 Describe high priorities not involved with the policy but
which require Federal- state cooperation.
* Since the November 1980 election results, status of this policy may be
subject to change. ** See page 85 for a discussion of sporadically active planning councils.
An OEPAD memorandum dated February 5, 1980, comments that agencies'
responses would be a step towards preparing a " State economic development
guide. "
A second effort concerns the Governor's Rural Development Advisory
Council. Staffed by OEPAD, the council was formed in 1979 with a Farmer's
Home Administration grant. The council issued a report in March 1980 that
examined some problems of economic development, housing and community
facilities in nonmetropolitan Arizona and which listed strategy options
for resolving them. The council is comprised of 24 members, more than
half of whom are government officials, and is chaired by a gubernatorial
assistant.
Both of these efforts could be expanded to approximate the average
economic planning level of other western and southeastern states' economic
planning if:
1. There is opportunity for general public input and reaction
towards results,
2. Specific implementation strategies are developed,
3 Both the urban and rural considerations of the public and
private sectors are included.
CONCLUSION
Since 1968 OEPAD's efforts to develop an overall economic plan or growth
strategy have been characterized by unfinished or abandoned projects and
frequent administrative redirections. Local governments surveyed
expressed satisfaction with OEPAD's allocation of Federal funds and
provision of planning assistance to communities. As a result, OEPAD has
fulfilled only partially its responsibility for economic planning.
OEPAD's efforts to provide an overall State economic growth strategy
appear to be below average in contrast to those of most other western and
southeastern states.
RECOm~ ENDATIONS
It is recommended that consideration be given to the following;
I. The Governor and the Legislature, in conjunction with the general
public and special interest groups, determine:
A. If written guidelines are needed for State development and,
if so, what kind. Consideration should be given to
documenting:
1. Alternative economic futures for Arizona,
2. Appropriate State government goals, policies and
strategies,
3. Future problem areas and what can be done by the
general public and State government to resolve them,
4. Current governmental development programs and their ( I
expected results,
B. If economic planning should be on a Statewide or regional
basis or both, and
C. Which group or agency should be responsible for developing
such guidelines.
11. The Legislature establish legislative intent regarding economic
planning formally
A. Establishing in statute specific economic planning
responsibilities,
B. Identifying resources for economic planning and assigning
planning parties responsible for this, and
C. Providing for:
1. Adequate funding,
2. Broad citizen awareness and participation,
3. Development of specific implementation strategies,
4. Wide dissemination of planning results, and
5. Regular reviews and updates of planning guidelines.
FINDING I1
OEPAD HAS NOT FULFILLED ITS STATUTORY RESPONSIBILITY COMPLETELY REGARDING
RESEARCH AND DATA- GATHERING ACTIVITIES. AS A RESULT, OEPAD STILL IS
WORKING TO ACCOMPLISH RESEARCH AND DATA- GATHERING OBJECTIVES IDENTIFIED
ORIGINALLY I N 1967.
Since i t s inception i n 1968 OEPAD h a s n o t f u l f i l l e d c o n s i s t e n t l y its
intended s t a t u t o r y r o l e of providing research and information s e r v i c e s .
OEPAD s t a f f resources have been applied t o experimental research p r o j e c t s
and short- term analyses a t the expense of s t a t u t o r i l y mandated basic
research f o r planning and development use. A s a r e s u l t , research e f f o r t s
frequently have been diverted from those areas apparently intended by the
Legislature. OEPAD research and data e f f o r t s were r e d i r e c t e d i n 1979 and
1980 toward achieving research o b j e c t i v e s i d e n t i f i e d o r i g i n a l l y i n 1967.
S t a t e Law Defines
OEPAD Research Duties
OEPAD d u t i e s regarding r e s e a r c h d e f i n e d i n Arizona Revised S t a t u t e s
( A. R. s.) $ 41- 503. B a r e the most d e t a i l e d of a l l s t a t u t o r y d e f i n i t i o n s of
OEPAD r e s p o n s i b i l i t i e s . According to A. R. S. $ 41- 503. B OEPAD s h a l l :
" 3. Conduct research on its own i n i t i a t i v e or at
the request o f t h e governor, the l e g i s l a t u r e or s t a t e
or l o c a l agencies, p e r t a i n i n g to any of its o b j e c t i v e s .
" 4. Provide information and advice on request by
l o c a l , s t a t e and f e d e r a l agencies and by p r i v a t e
c i t i z e n s and business e n t e r p r i s e s on m a t t e r s w i t h i n t h e
scope of its a c t i v i t i e s .
" 7. Undertake a comprehensive research program
designed to:
" ( a ) E s t a b l i s h the o f f i c e a s t h e c e n t r a l
r e p o s i t o r y and c l e a r i n g house f o r a l l data r e l a t i n g to
Arizona's economy and resources a s they r e l a t e t o
economic planning and development.
"( b) Maintain a current inventory of the resources
of the s t a t e .
" ( c ) I n v e s t i g a t e p o t e n t i a l o p p o r t u n i t i e s f o r the
development of industry and other commerce throughout
the s t a t e . . . "
Therefore, OEPAD by law is required, on r e q u e s t , t o i n i t i a t e o r conduct
research r e l a t e d to economic planning and development; provide data and
advice on such matters; maintain a d a t a r e p o s i t o r y and an inventory of
S t a t e resources; function as a S t a t e clearinghouse and analyze p o t e n t i a l
development o p p o r t u n i t i e s .
II
I n a d d i t i o n , A. R. S. $ 41- 504 r e q u i r e s S t a t e agencies t o
"... make a v a i l a b l e d a t a p e r t a i n i n g to economic planning
and development as requested by the o f f i c e of economic
planning and development."
The laws a r e derived d i r e c t l y from recommendations by the Arizona J o i n t
Economic Development Committee ( AJEDC) i n its 1967 r e p o r t . That report
was the b l u e p r i n t f o r the l e g i s l a t i o n t h a t created OEPAD and outlined the
research r o l e t h a t should be played by OEPAD i n supporting economic
planning and economic development e f f o r t s of the agency.
Research t o Be Conducted
f o r S t a t e Economic Planning
According t o the AJEDC r e p o r t , research to support S t a t e planning would
include: 1) c o o r d i n a t i n g r e s e a r c h and data e f f o r t s of S t a t e agencies;
2) improving the general usefulness of data generated by S t a t e agencies;
and 3 ) on c e r t a i n occasions, conducting primary research.
OEPAD would, a s proposed i n the AJEDC r e p o r t , i n v e n t o r y r e s e a r c h and data
p r e d i c t i o n e f f o r t s as follows: ( I
"... the economic research s e c t i o n should devote
considerable e f f o r t t o coordinating the research done
by the p r e s e n t l y operating S t a t e
denartments... inventorv the data c o l l e c t i o n and
p r e d i c t i o n e f f o r t s p r e s e n t l y being made by the various
s t a t e departments ... i d e n t i f y research d u p l i c a t i o n
between departments ... bringing the d u p l i c a t i o n t o the
a t t e n t i o n of the departments ( and). . . r e v e a l areas where
a d d i t i o n a l research could be of value ( and). . . encourage
the appropriate departments to assume t h i s a d d i t i o n a l
research." ( ~ m ~ h a s~ i sd d e d )
According t o the AJEDC r e p o r t , areas i n which data and p r e d i c t i o n s i n a
useable form were needed include, but a r e not limited to:
1) Population and demography,
2) Personal and family income,
3) Transportation - a l l modes,
4) Health l e v e l s of the population and a v a i l a b l e h e a l t h f a c i l i t i e s ,
5) Crime r a t e s , crime prevention and c o r r e c t i o n a l f a c i l i t i e s
a v a i l a b l e ,
6) N a t u r a l r e s o u r c e s and the f e a s i b i l i t y of t h e i r development,
7) E n t e r p r i s e s ,
8) Employment,
9) Recreational f a c i l i t i e s , and
10) Land use.
In a d d i t i o n , OEPAD would improve the general u s e f u l n e s s o f data generated
and p r e d i c t i o n s made by: 1) e s t a b l i s h i n g standard frameworks f o r data
e f f o r t s , and 2) developing a c e n t r a l r e p o s i t o r y f o r r e s u l t s of research
and p r e d i c t i v e work concerning Arizona's economy:
"... economic research s e c t i o n could a l s o a i d i n
determining standard time horizons t o be used i n doing
p r e d i c t i v e work. By the provision of standard
frameworks f o r research, the information produced by
the various departments and agencies could be e a s i l y
compared and combined t o build as complete a p i c t u r e of
the conditions of the s t a t e or a portion of the s t a t e
a s d e s i r e d .
" . . . the research s e c t i o n can i n c r e a s e t h e usefulness of
research e f f o r t s being made by the departments of s t a t e
government ... develop a c e n t r a l r e p o s i t o r y f o r the
r e s u l t s of a l l research and p r e d i c t i v e work concering
Arizona's economy... sources of information t h i s l i b r a r y
might draw on would n o t n e c e s s a r i l y be limited t o the
r e s u l t s of economic research done within s t a t e
government... A research l i b r a r y as described above need
not l i m i t i t s e l f to a passive r o l e of responding to
requests ... It should a l s o develop a clearinghouse r o l e ,
bringing the r e s u l t s of r e c e n t l y completed s t u d i e s t o
those agencies which could conceivablv use them..."
Lastly, the research function f o r S t a t e planning would, on c e r t a i n
occasions, include primary research i n cases t h a t the OEPAD research Q
section was the best- equipped agency t o do it. Two examples were c i t e d :
1) i d e n t i f y i n g goals of S t a t e agencies f o r submission to the Governor and
Legislature f o r approval," and 2) evaluating bases f o r dividing Arizona
i n t o a d m i n i s t r a t i v e regions. ""
Research to Be Conducted f o r
S t a t e Economic Development
Research f o r S t a t e economic development e f f o r t s were divided i n t o two
c a t e g o r i e s i n the AJEDC r e p o r t : 1 ) g e n e r a l r e s e a r c h to accumulate data on
the S t a t e ' s economy to answer i n q u i r i e s and prepare promotional m a t e r i a l s ,
and 2) directed research aimed a t p a r t i c u l a r a r e a s or i n d u s t r i e s with
s p e c i f i c p r o s p e c t s ' or communities' needs i n mind.
" See page 17 f o r a discussion of the lack of S t a t e goals.
*" In 1970 OEPAD produced a p u b l i c a t i o n regarding the d e l i n i a t i o n of s i x
planning d i s t r i c t s f o r the S t a t e .
The AJEDC report recommended t h a t OEPAD, as other s t a t e development
agencies did a t t h a t time, develop general research f i l e s supported by
resource inventory systems to: 1) furnish unbiased information p e r t i n e n t
to l o c a t i n g p l a n t s , * 2) conduct a n a l y t i c a l s t u d i e s f o r prospects, and
3) provide summaries of p e r t i n e n t data.
In a d d i t i o n , OEPAD would conduct d i r e c t e d research, by request o r on i t s
own i n i t i a t i v e , to: 1) i d e n t i f y t a r g e t i n d u s t r i e s , and 2) d e t a i l l o c a l
community needs and a s s e t s .
Target industry research would i n v e s t i g a t e poten. tia1 expansion of e x i s t i n g
growth i n d u s t r i e s , i d e n t i f y new growth- potential i n d u s t r i e s among
n a t u r a l l y linked customers and s u p p l i e r s of e x i s t i n g i n d u s t r y and study
t h e o v e r a l l b e n e f i t s of new i n d u s t r i e s compared to t h e i r c o s t s . However,
d e t a i l e d study of i n d i v i d u a l i n d u s t r i e s would be done only f o r s e r i o u s
prospects.**
Community research, a s envisoned i n the AJEDC r e p o r t , would blend general
promotional research with t a r g e t i n d u s t r y research e f f o r t s . I n a d d i t i o n ,
every e f f o r t would be made t o ensure t h a t communities could accommodate
i n d u s t r i a l prospects. Community resource a u d i t s were suggested as a
possible avenue f o r such e f f o r t s .
Therefore, a s OEPAD began its i n i t i a l economic research e f f o r t s i n 1969, a
number of s p e c i f i c guidelines outlined an economic research function f o r
the agency.
* Appendix V I I I contains an AJEDC example list of f a c t s u s e f u l f o r plant
location decisions.
** Appendix I X c o n t a i n s a n o u t l i n e of proposed t a r g e t i n d u s t r y research
from AJEDC.
OEPAD Research A c t i v i t i e s Are Traced
I n 1969 OEPAD developed an o r i g i n a l five- year workplan* t h a t included
s p e c i f i c o b j e c t i v e s to f u l f i l l the research r e s p o n s i b i l i t i e s outlined i n
the AJEDC r e p o r t . I n i t i a l research e f f o r t s included attempts t o inventory
and automate economic data c o l l e c t e d by S t a t e agencies and to e s t a b l i s h a
standard s e t of population estimates and p r o j e c t i o n s f o r use by a l l of
S t a t e government. The i n i t i a l research e f f o r t s began t o lose momentum
a f t e r a few years a. nd OPEAD research e f f o r t s were s h i f t e d t o other
a c t i v i t i e s . The change i n research emphasis is summarized i n Table 3.
It should be noted a u d i t s t a f f members ;? ere hanpered i n producing the
information i n Table 3 because of: 1) no cataloging of OEPAD publications
since 1974, 2) no OEPAD research l i b r a r i a n since 1976 and research
materials uncataloged and i n a s t a t e of general d i s a r r a y , 3 ) general
correspondence not organized c o n s i s t e n t l y or kept f o r past years,
4) management r e p o r t s n o t compiled c o n s i s t e n t l y or r e t a i n e d , and 5) many
employees during OEPAD's e a r l y years no longer t h e r e .
In order to produce Table 3, the a u d i t s t a f f categorized each a v a i l a b l e or
annotated OEPAD p u b l i c a t i o n , examined copies of published OEPAD r e p o r t s ,
cataloged each research e f f o r t or p u b l i c a t i o n s i g n i f i c a n t enough t o be
mentioned i n OEPAD annual r e p o r t s , compiled lists of a c t i v i t i e s from 1979
management reports and requested t h e i r amplification by OEPAD management,
and interviewed long- term and former OEPAD employees.
* The workplan received a n a t i o n a l award and recognition i n f i s c a l
1972- 73 by the Housing and Urban Development Administration, who c i t e d
it as a model f o r nationwide d i s t r i b u t i o n .
3Y L O 0,
no,.. Dl
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% , - Y " c 0 E hl^ * c 11 ., " W c., T 2 : L ,$ 2 ; 53 B t 8 L+., 2-* i m -( % 5 -( - - 7 - .. w .. - 0 . 3 I ' " LIC d0
", 17 Y m O C * 9 A , L " 0 i a L a 3 m O L c
m., r * * , n . L e 2 - . 2 , e 0 o r m Y -. I Y
L C L N Di O U L Yi I
0 C 0 " 11 0 - 0 I n.. C I a m a " ", L
& . a -, rr: : h e 7 od m . a- 0
A * . , u w a m d < >
L L = a O . C " " - L ,"' e . c - 2" - 2" : u:; ;:: 5 , s; n :., 22
E 7 2:. F U U C I r 4
a m . > L O eL:, s z s s z , ' r n., 2 ; : " 3": :: i,,- 5
I n - e m 3 " 6 , 0 L , . . i . G i C 3 C * * L C , - m , F L C
8 , , , , a
Table 3 shows t h a t during the e a r l y 1970s OEPAD research s e c t i o n s t a f f
members were devoted to experimental modeling p r o j e c t s , the most notable
of which was the Arizona Trade- Off Model ( ATOM), an attempt t o t r a d e off
environmental c o s t s against t h e b e n e f i t s of economic development via a
computerized econometric model. It is notable t h a t ATOM, a s o r i g i n a l l y
designed, now is c i t e d i n the Council of S t a t e Planning Agencies, Planning
S e r i e s , a s an example of improper computer modeling. The exact c o s t s and
b e n e f i t s of ATOX cannot be c a l c u l a t e d , but it does appear t h a t : 1) ATOM
was not workable, e s p e c i a l l y i n t h e a r e a of environmental t r a d e - o f f s ,
2) a vendor was paid an estimated $ 250,000* f o r its work on t h e model,
7) ATOM was developed i n a computer language t h a t was useable only by the
vendor's s t a f f , and 4) extensive work was done by OEPAD i n 1975 and 1976
t o redesign a p o r t i o n o f ATOM t o transform it i n t o the
Economic- Demographic Projection Model ( EDPM), used by the Department of
Economic S e c u r i t y t o p r o j e c t S t a t e population, a much l e s s ambitious
purpose than the o r i g i n a l ATON concept.
In a d d i t i o n , s p e c i a l requests from the Governor, occasionally the
L e g i s l a t u r e , and communities i n the S t a t e f o r short- term analyses
increased i n frequency during the 1970s. This r e s u l t e d i n establishment
of an Issue Analysis Section i n the F a l l of 1975 to provide such
analyses. Thus, OEPAD basic research was f u r t h e r deemphasized.
The apparent reason f o r increased g u b e r n a t o r i a l r e q u e s t s f o r research
a s s i s t a n c e was t h a t OEPAD became a d i s t i n c t e n t i t y i n the Governor's
Office i n 1972. Since then, OEPAD s t a f f members have devoted increasing
amounts of time t o preparing analyses f o r the Governor, a s OEPAD has
become i n c r e a s i n g l y i n t e g r a t e d i n t o the Governor's Office. I n 1977, f o r
example, OEPAD responded to more than 100 g u b e r n a t o r i a l r e q u e s t s f o r
research a s s i s t a n c e .
* Amount is the lowest of a l l estimates obtained.
F i n a l l y , OEPAD undertook two o t h e r experimental research p r o j e c t s during
the 1970s t h a t diverted s t a f f resources from b a s i c r e s e a r c h a c t i v i t i e s .
The two p r o j e c t s were: 1) the Environmental Planning Commission created
i n 1973, and 2) the J o i n t Funding P r o j e c t , which has required the
equivalent o f s e v e r a l State- funded p o s i t i o n s s i n c e 1975.*
Special research s t u d i e s and a n a l y s i s a r e c l e a r l y within OEPAD's s t a t u t o r y
research mandates, but such a c t i v i t i e s a r e engaged i n a t the expense of
primary OEPAD research o b j e c t i v e s . For example, during the period OEPAD
devoted c o n s i d e r a b l e r e s e a r c h r e s o u r c e s t o s p e c i a l s t u d i e s and
experimental models, the following conditions e x i s t e d :
- OEPAD d i d n o t inventory extensively or r e g u l a r l y economic data
produced by other S t a t e agencies or other sources, a s required by
s t a t u t e ,
- OEPAD d i d n o t develop a clearinghouse f o r economic data t h a t
could be used to a s s i s t S t a t e agency r e s e a r c h , as required by
s t a t u t e ,
- OEPAD gave only sporadic a t t e n t i o n t o data coordination** u n t i l
1979, and
- Because of n e g l e c t , the OEPAD l i b r a r y became unuseable.
It should be noted, however, t h a t OEPAD did not completely abandon primary
research o b j e c t i v e s during t h e e a r l y and mid- 1970s. S t a f f c o l l e c t e d and
published s e l e c t e d community- specific s t a t i s t i c s i n a continuing s e r i e s of
Community P r ~ f i l e s * ~ . Community P r o f i l e s contain data on the general
economy, population, employment, c l i m a t e , t a x e s , r e c r e a t i o n a l a t t r a c t i o n s ,
medical f a c i l i t i e s , t r a n s p o r t a t i o n and i n d u s t r i a l parks i n a community.
Further, economic base analyses of Arizona's communities, c o n s i s t i n g of
information on communities' employment and economic s t r u c t u r e s , have been
prepared since 1975.
* See page 95 f o r a discussion of t h e J o i n t Funding P r o j e c t .
*% The Interagency Economic Coordinating Council was intended t o a c t a s
a v e h i c l e f o r c o o r d i n a t i o n o f data and research. However, the
Council was r a r e l y a c t i v e . See page 85 f o r discussion of i n a c t i v e
and s p o r a d i c a l l y a c t i v e planning councils.
*** There were, as of January 1980, 96 published or planned Community
P r o f i l e s for communities throughout the S t a t e . Appendix X contains a
sample P r o f i l e .
In a d d i t i o n , OEPAD organized e f f o r t s repeatedly t o adopt uniform S t a t e
population p r o j e c t i o n s . The e f f o r t s bore f r u i t i n 1977 with the
recognition of the OEPAD- developed EDPM as the o f f i c i a l source f o r S t a t e
population p r o j e c t i o n s . Because the Department of Economic S e c u r i t y ( DES)
already was responsible f o r c u r r e n t population e s t i m a t e s , Executive Order
77- 5 t r a n s f e r r e d t h e continuing duty of S t a t e population p r o j e c t i o n s from
OEPAD to DES.
Further, a s demonstrated i n Table 3, OEPAD's recent research and data
a c t i v i t i e s l a r g e l y a l i g n with those i d e n t i f i e d i n the AJEDC r e p o r t . For
example, i n August of 1979, OEPAD e s t a b l i s h e d a Data Coordination Network
t o bring producers and users of s i m i l a r information together t o discuss
p e r s i s t e n t problems of data d u p l i c a t i o n , nonuniformity and o t h e r i s s u e s .
OEPAD a l s o conducted a survey i n November of 1979 to determine the data
produced and used by other S t a t e agencies, with the i n t e n t t o publish a
rudimentary reference catalog t o help d a t a u s e r s l o c a t e information."
OEPAD a l s o r e e s t a b l i s h e d a resesrch s e c t l o n Fn July 1979 as a separate
o r g a n i z a t i o n a l u n i t and, i n February of 1980, hired a l i b r a r i a n t o s o r t
and catalog l i b r a r y m a t e r i a l s and provide a s s i s t a n c e t o users.
The OEPAD research workplan as of May 1980 s u b s t a n t i a l l y a l i g n s with
selected c h a r a c t e r i s t i c s and a c t i v i t i e s t h a t , according to the Council of
S t a t e Planning Agencies, a r e t y p i c a l of s t a t e planning agencies t h a t
provide research and data s e r v i c e s effectively**.
* Appendix X I contains pages from the c a t a l o g , which was d i s t r i b u t e d i n
September 1980 t o S t a t e data users. However, not a l l n a t u r a l
resources data was included because of no response from two S t a t e
agencies.
** Appendix X I 1 is a list of t h e c h a r a c t e r i s t i c s .
F i n a l l y , a u d i t s t a f f sent a s e r i e s of survey q u e s t i o n n a i r e s i n January
1980 t o p o t e n t i a l users of OEPAD's information and r e s e a r c h s e r v i c e s .
They included S t a t e agencies, Councils of Governments, incorporated c i t i e s
and towns and chambers of commerce i n Arizona. A majority of survey
respondents" indicated t h a t OEPAD had provided u s e f u l information, such a s
the Community P r o f i l e s and population p r o j e c t i o n s . However, many
respondents a l s o indicated a lack of information or awareness of OEPAD's
research r e s p o n s i b i l i t i e s and s e r v i c e s .
Although OEPAD's research and d a t a r e s p o n s i b i l i t i e s a r e defined more
s p e c i f i c a l l y i n s t a t u t e than other OEPAD planning r e s p o n s i b i l i t i e s ,
s u f f i c i e n t ambiguity i n S t a t e law allows s i g n i f i c a n t a d m i n i s t r a t i v e
d i s c r e t i o n regarding t h e a r e a s i n t o which OEPAD r e s e a r c h r e s o u r c e s w i l l be
channeled. A s a r e s u l t , OEPAD has been i n c o n s i s t e n t i n its research
e f f o r t s .
Questions which need t o be addressed s t a t u t o r i a l l y include:
- Is OEPAD's primary research r o l e t o provide data and research as
outlined i n the AJEDC r e p o r t , t o provide short- term analyses o r
to provide a balance of both?
- Should a l l economic data be maintained on s i t e a t OEPAD,
cataloged with reference t o its l o c a t i o n a t other s i t e s or a
combination of each approach?
- What does " an inventory of a l l S t a t e resources r e l a t e d t o the
economy" include?
" Results of the survey responses a r e tabulated i n Appendices X I I I , X I V ,
XV and XVI.
CONCLUSION
OEPAD h a s n o t f u l f i l l e d s t a t u t o r y i n t e n t regarding research
r e s p o n s i b i l i t i e s c o n s i s t e n t l y . Research e f f o r t s have been d i s j o i n t e d and
fragmentary and, a t times, have been devoted l a r g e l y t o short- term
analyses and experimental p r o j e c t s . However, current OEPAD research
e f f o r t s a r e r e d i r e c t e d toward accomplishing o b j e c t i v e s i d e n t i f i e d
i n i t i a l l y i n 1967.
RECObZENDATI ONS
It is recommended t h a t c o n s i d e r a t i o n be given to the following:
1. The L e g i s l a t u r e r e v i s e A. R. S. $ 41- 503. B regarding OEPAD's
research/ data r o l e i n order to:
a. C l a r i f y the meaning of " c e n t r a l r e p o s i t o r y , " " clearinghouse"
and " inventory of resources. "
b. Express e x p l i c i t l y i t s i n t e n t concerning the primary
r e s p o n s i b i l i t y f o r , and balance between: 1) b a s i c r e s e a r c h
to support economic planning and development and 2 )
s p e c i a l - i s s u e analyses.
2. OEPAD pursue the o b j e c t i v e s of t h e S t a t e Data Coordination
Network. Consideration should be given to combining t h e e f f o r t
with those of a c o n t i n u i n g i n t e r a g e n c y planning council. ( s e e
Finding V)
7. The L e g i s l a t u r e consider separate budget l i n e items f o r OEPAD
research and its data r e s p o n s i b i l i t i e s to ensure t h a t s u f f i c i e n t
s t a f f is devoted to basic research e f f o r t s t o meet l e g i s l a t i v e
i n t e n t .
4. OEPAD expand its current e f f o r t t o inventory and c a t a l o g d a t a
sources by including data produced by l o c a l governments, p r i v a t e
agencies and other non- State sources.
5. OEPAD update and r e f i n e data catalogs r e f e r r e d t o i n
Recommendation 4 a t regular i n t e r v a l s and increase t h e i r
usefulness by including d e f i n i t i o n s of data c o l l e c t e d and such
c h a r a c t e r i s t i c s as frequency of d a t a c o l l e c t i o n , manner i n which
c o l l e c t e d and s t a t i s t i c a l computations used.
6. OEPAD develop t h e c a p a b i l i t y to r e f e r o u t s i d e r s to appropriate
data sources quickly. Consideration should be given t o
e s t a b l i s h i n g and s t a f f i n g a telephone inquiry s e r v i c e f o r the
purpose.
7. OEPAD e x e r t more e f f o r t t o inform S t a t e agencies, l o c a l
governments and a p p r o p r i a t e p r i v a t e - s e c t o r agencies of its
research and information s e r v i c e s .
FINDING I11
OEPAD HAS BEEN INEFFECTIVE I N MEETING ITS STATUTORY RESPONSIBILITY TO
CONDUCT SCIENTIFIC AND TECHNOLOGICAL PLANNING.
The Office of Economic Planning and Development is responsible s t a t u t o r i l y
f o r s c i e n t i f i c and technological planning. However, from its inception i n
1968 t o April 1980, OEPAD has engaged i n a c t i v i t i e s t h a t f o r the most p a r t
a r e r e l a t e d only i n d i r e c t l y t o s c i e n t i f i c and technological planning. I n
a d d i t i o n , a s t a t u t o r i l y created advisory council t o OEPAD on s c i e n t i f i c
a n d t e c h n o l o g i c a l planning did not meet from 1970 to 1980, the
recommendations of a 1972 Governor's t a s k f o r c e regarding a systematic
approach t o dissiminating s c i e n t i f i c and technological information within
S t a t e government were not implemented, and i n 1976 f a c u l t y from the
University of Arizona discontinued preparing b r i e f i n g papers on s c i e n t i f i c
and technological t o p i c s f o r the Governor because the papers were not used.
OEPAD's S t a t u t o r v R e s ~ o n s i b i l i t sf o r
S c i e n t i f i c and Technological Planning
I n 1967 the Arizona J o i n t Economic Development Committee ( AJEDC) expressed
a need f o r i n t e g r a t i n g science and technology i n t o the economic
development a c t i v i t i e s of S t a t e government:
" The J o i n t Economic Development Committee has received
convincing evidence from i n d i v i d u a l s i n the s t a t e and
from developments i n other s t a t e s t h a t economic growth
is becoming i n c r e a s i n g l y dependent on the s t a t e ' s
a b i l i t y t o c a p z t a l i z e on a p p l i c a t i o n s of technology and
on its a b i l i t v t o ~ r o v i d e a continuing t r a i n e d manDower
resource. An economic development e f f o r t t h a t f a i l s t o
give important c o n s i d e r a t i o n to programs t h a t w i l l
capture t h e b e n e f i t s of new technology and i n s u r e a
maximum development of labor resources w i l l s u f f e r i n
competition with dynamic and progressive e f f o r t s of
other s t a t e s . " ( Emphasis added)
The AJEDC r e p o r t recommended t h a t OEPAD organize a s c i e n t i f i c and
technological planning s e c t i o n , although exact d u t i e s were n o t s p e c i f i e d .
Based on the AJEDC's recommendations, r e s p o n s i b i l i t y f o r " . . . s c i e n t i f i c
and technological placning ..." was given t o the OEPAD Planning Division i n
A. R. S. $ 41- 501. B., which s t a t e s :
" The o f f i c e s h a l l include a planning d i v i s i o n and a
development d i v i s i o n . The planning d i v i s i o n s h a l l , i n
a d d i t i o n t o other functions assigned by the executive
d i r e c t o r , be responsible f o r economic planning,
economic research and s c i e n t i f i c and technological
planning. The development d i v i s i o n s h a l l , i n a d d i t i o n
t o other functions assigned by the executive d i r e c t o r ,
be responsible f o r i n d u s t r i a l development, a d v e r t i s i n g
and publications." ( ~ r n ~ h a s ai ds d ed)
In s p i t e of the l e g i s l a t i v e charge to OEPAD, s c i e n t i f i c and technological
planning i n S t a t e government has been, f o r a l l i n t e n t s and purposes,
nonexistent.
Various approaches t o i n t e g r a t i n g science and technology i n t o S t a t e
government formally have been attempted since 1970 without s i g n i f i c a n t d
success. The approaches generally emphasized the use of s c i e n t i f i c and
technological e x p e r t i s e to a s s i s t the Governor i n solving S t a t e
development problems r a t h e r than encouraging the growth or a p p l i c a t i o n of
science t o a t t r a c t i n g or f a c i l i t a t i n g high- technological i n d u s t r y f o r the
S t a t e ' s development. An exception was s o l a r energy research.
According to a 1978 OEPAD report prepared through a National Science
Foundation g r a n t , there had been no permanent, formal means of r e l a t i n g
science and technology t o the a c t i v i t i e s of S t a t e government. Instead,
Arizona has r e l i e d on ad hoc committees and advice from i n d i v i d u a l s
( within and o u t s i d e S t a t e to respond to c r i s e s . A s a r e s u l t ,
the OEPAD r e p o r t concluded "... science and technology have probably
exerted a s u b t l e , r e l a t i v e l y unorganized influence on the policy process
t h a t is almost impossible t o measure or document."
Thus, f o r the most p a r t , OEPAD has engaged i n some a c t i v i t i e s since its
inception t h a t can be considered only i n d i r e c t l y r e l a t e d t o its s t a t u t o r y
r e s p o n s i b i l i t y of " s c i e n t i f i c and technological planning."
For example, i n the e a r l y 1970s, an attempt was made to develop a
computerized econometric model to evaluate the environmental impacts
against the economic b e n e f i t s of economic development. However, the
environmental impact portion of the model was notably unsuccessful.* I n
the l a t t e r 1970s OEPAD organized the Federally mandated S t a t e water
q u a l i t y plan, began energy conservation programs a s a r e s u l t of the 1974
energy c r i s i s and the a v a i l a b i l i t y of Federal funds and conducted
environmental impact i s s u e a n a l y s i s , primarily f o r the Governor, i n such
areas as Environmental Protection Agency ( EPA) p e s t i c i d e and a i r q u a l i t y
r e g u l a t i o n s , groundwater law and geologic hazards.
It is notable t h a t i n 1979 OEPAD defined the purpose and basic a c t i v i t i e s
f o r the environmental a n a l y s i s f u n c t i o n as coordination among S t a t e
agencies and environmental impact i s s u e a n a l y s i s r a t h e r t h a n m o b i l i z a t i o n
of the s c i e n t i f i c community or use of technology t o s t i m u l a t e economic
development.
It is a l s o notable t h a t one of the major new S t a t e e f f o r t s i n science and
technology during the 1970s, s o l a r energy r e s e a r c h , w a s under the Arizona
Solar Energy Research Commission, an agency which was created i n May 1975
and is not p a r t of OEPAD.
The Arizona S c e n t i f i c and Technological
Planning and Advisory Council
In order to a s s i s t OEPAD i n its s c i e n t i f i c and technological planning, the
L e g i s l a t u r e enacted A. R. S. $ 41- 506, which created the Arizona S c i e n t i f i c
and Technological Planning and Advisory Council and which s t a t e s :
" A. There s h a l l be an Arizona s c i e n t i f i c and
technological planning and a d v i s o r y c o u n c i l .
" See page 46 f o r a discussion.
" B. Members s h a l l be appointed by the governor and
s h a l l include appropriate research personnel from the
s t a t e u n i v e r s i t i e s and research personnel from Arizona
industry and s c i e n t i f i c research i n s t i t u t i o n s .
" C. The council s h a l l a c t i n an a d v i s o r j capacity to
the planning d i v i s i o n of the o f f i c e of economic
planning and development i n formulating p o l i c i e s and
programs t o s t i m u l a t e the impact of s c i e n t i f i c research
and a p p l i c a t i o n s of technology upon economic
development. " ( ~ m ~ h a saidsd ed)
According to the AJEDC r e p o r t , which was the b a s i s f o r the l e g i s l a t i o n
t h a t created OEPAD, the r o l e of the a d v i s o r y c o u n c i l was p a r t of an
o v e r a l l s t r a t e g y t o d i r e c t science and technology towards influencing
S t a t e development:
" In considering an o v e r a l l s t r a t e g y t o mobilze the
f o r c e s of science and technology toward s t a t e economic
development, t h i s Council should:
" 1. Act as a c a t a l y s t i n seeing t h a t segments of the
public and p r i v a t e s e c t o r s address t h e i r resources t o
s i g n i f i c a n t development problems and opportunities.
" 2. I d e n t i f y problems and opportunities. The Council
should encourage
" a. Analysis of the s t a t e ' s s t r e n g t h and
weaknesses i n terms of material and human resources
" b. I d e n t i f i c a t i o n of those new areas of science
and technology emerging n a t i o n a l l y which a r e e s p e c i a l l y
s u i t e d to Arizona's m a t e r i a l and human resources.
" 7. I d e n t i f y those elements i n t h e p r i v a t e s e c t o r , t h e
public s e c t o r , t h e academic, and the research community
with p a r t i c u l a r competences i n science and technology,
and e n l i s t t h e i r c o o ~ e r a t i o n and s u ~ ~ o ritn s t a t e
science and technological development.
" 4. Create an increased awareness among the public of
the r e l a t i o n of s c i e n t i f i c a c t i v i t i e s to economic
development of the s t a t e . " ( ~ m p h a s i s added)
In a d d i t i o n , the AJEDC r e p o r t mentioned the Council's r o l e t o f u r t h e r :
1) g e n e r a l s c i e n c e education, 2) S t a t e government competence i n science,
and 3) improved s c i e n t i f i c - a r e a r e l a t i o n s h i p s with the Federal government:
" Among the more r e a l i s t i c r o l e s t h a t the science
advisory council might undertake a r e ;
" 1. A s an agency to f a c i l i t a t e the g e t t i n g of f e d e r a l
planning funds f o r science education o r f o r the
planning of science education. This could include
policy formulation f o r selected strengthening of
areas of excellence o r of p r i o r i t y development a t
the s t a t e u n i v e r s i t i e s as has been done by the New
York S t a t e Science and Technology Foundation.
" 2. A s a c r i t i c a l agency i n looking a t s t a t e programs
with s c i e n t i f i c content, i . e . h e a l t h , medical
s e r v i c e s , e t c . and a c t i n g as a force to r a i s e the
l e v e l of competence i n t h e s e a r e a s . I n these
s t u d i e s the council might p r o f i t a b l y make use of
c o n f i d e n t i a l r e p o r t s t o t h e c h i e f executive r a t h e r
than public r e p o r t s , a device t h a t has had good
r e s u l t s within t h e f e d e r a l government.
" 3. A s a device f o r improving t h e r e l a t i o n s h i p of the
s t a t e with the f e d e r a l government i n
s c i e n c e - r e l a t e d a r e a s . Men of s t a t u r e within the
s t a t e i n f e d e r a l science a c t i v i t i e s should be
placed on the council." ( ~ m ~ h a saidsd ed)
The f i r s t science and technology council members were appointed i n July
1970, approximately one and a h a l f years a f t e r DEPAD began operations.
The council met once or twice, and asked f o r d i r e c t i o n from the DEPAD
Executive Director and the EPAD Board. However, t h e r e is no evidence t h a t
advice was provided. The Council was not assigned s p e c i f i c i s s u e s or
tasks. A s t a f f s e c t i o n was not organized or s p e c i f i c a l l y funded. Without
d i r e c t i o n or support from DEPAD, the Council stopped meeting.
Research and Information Exchange System
In June 1972, personnel from t h e t h r e e u n i v e r s i t i e s and s e l e c t e d S t a t e
governmental u n i t s , a t the Governor's request, formed a t a s k force t o
address the " Governor's perception of the need f o r a systems approach i n
analyzing complex s o c i e t a l i s s u e s . " The t a s k f o r c e recommended c r e a t i o n
of a Research and Information Exchange System ( RIES) f o r Arizona. RIES
was envisioned a s a means to communicate s c i e n t i f i c and technological
knowledge between: 1) the s c i e n t i f i c community, p a r t i c u l a r l y t h e
u n i v e r s i t i e s , and 2) S t a t e government policy makers. Supported by RIES,
DEPAD s t a f f could provide timely a n a l y s i s of environmental i s s u e s
requiring s w i f t a c t i o n by the Governor and the L e g i s l a t u r e . The t a s k
force a l s o recommended the Arizona S c i e n t i f i c and Technological Planning
and Advisory Council be r e a c t i v a t e d to advise the Governor and OEPAD a f t e r
the RIES system became usable.
The t a s k force recommendations were not followed. No research and
information exchange system involving the u n i v e r s i t i e s was e s t a b l i s h e d ,
and the Arizona S c i e n t i f i c and Technological Planning and Advisory Council
was not r e a c t i v a t e d .
( I
Technical Briefing Notes
In June 1975 the University of Arizona offered to have f a c u l t y members
prepare b r i e f i n g papers on a v a r i e t y of s c i e n t i f i c and technological a
topics t h a t the Governor addressed r e g u l a r l y . I n the subsequent 18
months, f a c u l t y members prepared a number of s h o r t papers c a l l e d " Arizona
Executive Office - Technical Briefing Notes." According t o the OEPAD
National Science Foundation r e p o r t , however, by the end of 1976 the
University ceased preparing the papers because the information was not
used.
Reasons f o r I n e f f e c t i v e n e s s i n
S c i e n t i f i c and Technological Planning
OEPAD's f a i l u r e t o meet its s t a t u t o r y r e s p o n s i b i l i t i e s of s c i e n t i f i c and
technological plannizg is due p r i n a r i l y to:
1. a lack of a d m i n i s t r a t i v e d i r e c t i o n ,
2. a lack of funds s p e c i f i c a l l y devoted to such planning, and
3. vagueness of the s t a t u t e regarding s c i e n t i f i c and technological
planning.
The demise of the Arizona S c i e n t i f i c and Technological Planning and
Advisory Council was due to:
1. lack of s p e c i f i c t a s k s o r d u t i e s ,
2. lack of leadership from the EPAD Board or DEPAD s t a f f , and
3. no access d i r e c t l y and r e g u l a r l y to the Governor.
According to a spokesman f o r the National Science Foundation ( NSF),
s i m i l a r councils i n other s t a t e s a l s o have been i n e f f e c t i v e f o r the same
reasons.
Councils i n other s t a t e s have been unable to provide the breadth and depth
of knowledge necessary t o advise governors i n s c i e n t i f i c , technological
and environmental areas. According t o NSF, a science and technology
council needs s c i e n t i f i c r e p r e s e n t a t i v e s with diverse knowledge who can
obtain indepth advice on s p e c i f i c s u b j e c t s . Michigan was c i t e d by NSF a s
achieving t h i s by u t i l i z i n g its Council a s a " head huntingw group. The
council is not expected t o provide answers but t o l o c a t e t h e persons who
can. I n a d d i t i o n , Michigan's Council has d i r e c t access t o the governor's
off i c e through a g u b e r n a t o r i a l a i d e .
A t t e m ~ t Is Made to Reactivate the
Council, but Its Role Remains Unclear
In April 1980, the Governor appointed a new science and technology
council, o f f i c i a l l y c a l l e d the Science and Technology Advisory Board. The
r e a c t i v a t e d council w i l l attempt t o provide s c i e n t i f i c and technological
advice to the Governor regarding important policy i s s u e s . However,
whether or not the e f f o r t w i l l r e s u l t i n a n o v e r a l l s t r a t e g y f o r impacting
or influencing the development of science- related industry is unclear.
According t o OEPAD's o u t l i n e of the system, the nine- member advisory board
w i l l serve as a " broker" between the executive policy process and the
s c i e n t i f i c community. Membership c o n s i s t s of s e n i o r - l e v e l S t a t e
government o f f i c i a l s ( executive branch) and u n i v e r s i t y r e p r e s e n t a t i v e s and
the OEPAD Executive Director serving a s chairperson. The OEPAD Executive
D i r e c t o r , as chairperson, w i l l meet r e g u l a r l y w i t h t h e Governor's CabinetX
to survey current i s s u e s of s c i e n t i f i c concern and t o s o l i c i t feedback on
the policy relevance of i s s u e s previously undertaken by the advisory
board. The board a l s o w i l l meet r e g u l a r l y to determine what research w i l l
be undertaken and to report on the progress of current p r o j e c t s . Board
members w i l l i d e n t i f y experts i n the s c i e n t i f i c community t o conduct
research on s p e c i f i c i s s u e s . Each p r o j e c t w i l l carry completion deadlines
to ensure t h a t the information feeds i n t o decision- making. A three- year
NSF g r a n t , beginning September 1980, enabled OEPAD to h i r e a f u l l - t i m e
s t a f f coordinator t o a s s i s t the board.
While the system a d d r e s s e s t h e problems o f a c c e s s t o the Governor,
leadership from OEPAD and i d e n t i f y i n g t a s k s , a r e a s l e f t unaddressed or
unresolved a r e :
1. S u f f i c i e n t funding dedicated to the system beyond t h e l i f e of the
g r a n t ,
* The Cabinet c o n s i s t s of t h e d i r e c t o r s of t e n major S t a t e agencies
( chaired by the Director of the Department of ~ d m i n i s t r a t i o n ) and
meets monthly t o d i s c u s s a wide range of t o p i c s .
2. Unclear mission or purpose in the law to provide parameters or
priorities for such a board, and
3. If the Council will be part of a general science and technology
planning approach for economic planning and development as
originally envisioned.
CONCLUSION
OEPAD has not met its statutory responsibility for scientific and
technological planning. A related advisory council has not met since 1970.
Several OEPAD activities have been indirectly related to scientific and
technological planning, and members for a reactivated council were
appointed in April 1980. However, the overall direction for OEPADrs
scientific and 5eclicologizal planning remains unresolved.
RECOIQTEBDATIONS
It is recommended that consideration be given to the following:
1. Legislative review of the appropriateness and feasibility of a
statutory role for OEPAD to use scientific and technological
planning in solving development problems or to attract new growth
areas of industry.
2. If the Legislature determines scientific and technological
planning is appropriate and feasible, A. R. S $ 41- 501.~ should be
amended to outline more specifically OEPADrs role in scientific
and technological planning.
FINDING I V
IMPROVEMENTS ARE NEEDED I N THE OPERATION OF THE STATE CLEARINGHOUSE.
The S t a t e Clearinghouse f o r Federal grant review* was e s t a b l i s h e d i n 1969
t o provide f o r timely review of proposed Federal g r a n t s i n Arizona. Under
the Clearinghouse concept, prospective g r a n t s r e c i p i e n t s send t h e i r
requests f o r Federal funds to the Clearinghouse, which forwards the
proposals to p o t e n t i a l l y impacted or d u p l i c a t i v e programs f o r review and
comment. The o b j e c t i v e s of the Clearinghouse a r e t o avoid problems or
d u p l i c a t i o n s and t o provide accurate information on a l l g r a n t s t o the
Governor and the L e g i s l a t u r e . However, the e f f e c t i v e n e s s of the S t a t e
Clearinghouse has been s i g n i f i c a n t l y impaired because : 1) grant
a p p l i c a n t s f r e q u e n t l y do not submit information i n a timely manner,
2) S t a t e agencies do not comply with an Executive Order requiring
Clearinghouse review of a l l , not j u s t Federally mandated, grant proposals,
and 7) r e p r e s e n t a t i v e s of programs t h a t may be impacted by or d u p l i c a t i v e
of proposed requests f o r Federal funds provide only cursory, if any,
reviews of grant proposals. A s a r e s u l t , t h e Clearinghouse's o v e r a l l
e f f e c t is impaired and the Governor and t h e L e g i s l a t u r e cannot monitor
a c c u r a t e l y t h e Federal aid requested or received by Arizona agencies.
* Commonly c a l l e d A- 95 Review, a f t e r the name of the Federal c i r c u l a r
o r i g i n a l l y e s t a b l i s h i n g such reviews.
6 3 A
Establishment and Operations
of the S t a t e Clearinghouse
In 1969, t h e O f f i c e of Management and Budget i s s u e d F e d e r a l C i r c u l a r A- 95,
which requires t h a t Federal agencies and non- Federal a p p l i c a n t s f o r
Federal funds give S t a t e and l o c a l government o f f i c i a l s a n o p p o r t u n i t y t o
review g r a n t a p p l i c a t i o n s and a s s e s s t h e impact such a p p l i c a t i o n s might
have upon e x i s t i n g plans and programs. Because of Federal C i r c u l a r A- 95,
selected* grant a p p l i c a t i o n s must be reviewed. I n response t o Federal
C i r c u l a r A- 95, the Governor designated OEPAD responsible f o r Arizona's
Clearinghouse i n 1969. The purpose of the S t a t e Clearinghouse is:
"... to insure access by the Governor, t h e L e g i s l a t u r e ,
s t a t e agencies and l o c a l o f f i c i a l s t o information
concerning f e d e r a l programs and a c t i v i t i e s within
Arizona i n order t o eliminate program gaps, overlaps
and duplications."**
I n 1975, the Governor issued Executive Order 75- 7*** which required:
1) - a l l S t a t e agencies, boards and commissions to submit a l l proposals f o r
Federal funding t o the S t a t e Clearinghouse, and 2) t h a t - no S t a t e agency
s h a l l apply f o r - any Federal funds without f i l i n g the proposal with the
Clearinghouse f i r s t . The expansion of Clearinghouse r e s p o n s i b i l i t i e s from
the review of those a p p l i c a t i o n s s p e c i f i e d i n Federal C i r c u l a r A- 95 only
to a l l S t a t e a p p l i c a t i o n s f o r Federal monies was ordered because the
Governor recognized a need "... for the review and coordination of a l l
Federally a s s i s t e d programs of S t a t e agencies."
According t o Federal guidelines**** and OEPAD Clearinghouse procedures,
the review of grant proposals should include the following s t e p s :
* Not a l l Federal programs a r e s u b j e c t t o these review requirements.
Since 1969, however, r e v i s i o n s t o t h e f i r s t C i r c u l a r have expanded
the number of programs t h a t must p a r t i c i p a t e .
** Source: The 1978 OEPAD Annual Report.
*** Appendix X V I I contains the t e x t of t h i s Executive Order.
**** Appendix X V I I I c o n t a i n s t h e F e d e r a l A- 95 handbook d e s c r i p t i o n of the
review process.
- S t a t e and l o c a l agencies submit proposals f o r Federal funds t o
the Clearinghouse a t l e a s t 60 days p r i o r t o submittal t o the
a p p r o p r i a t e F e d e r a l agency. Federal Form 424" is used f o r the
Clearinghouse submission. The Fnformation on the forn i d e n t i f i e s
and d e s c r i b e s t h e proposal b r i e f l y .
- Upon r e c e i p t of the form, the Clearinghouse dates it, assigns an
i d e n t i f i c a t i o n number, c l a s s i f i e s the proposal as " major" or
" minor" and determines which agencies w i l l receive copies f o r
review and comment.
- The Clearinghouse sends completed Form 424 and appropriate
a d d i t i o n a l proposal information to t h e s e l e c t e d reviewing
agencies.
- Reviewing agencies a r e required to r e t u r n comments t o the
Clearinghouse within 17 working days.
- I f reviewers contact the Clearinghouse during the review period
with problems or questions, the Clearinghouse may arrange a
conference between the reviewers and the g r a n t a p p l i c a n t t o
discuss the proposal.
- A t the end of the review period, the Clearinghouse signs Form
424, i n d i c a t i n g t h a t the required review has been made and sends
the form, together with a l l comments received, t o the grant
a p p l i c a n t .
- The applicant sends the form and comments t o the appropri