THE MISSISSIPPI LEGISLATURE

The Joint Committee on
Performance Evaluation and Expenditure Review

Report # 372

A Description of Mississippi's Planning and Development Districts, an Assessment of Their Oversight, and a Review of Their Fairness in Administering Loan Programs

January 5, 1997

PEER reviewed Mississippi's planning and development districts (PDDs) and sought to answer the following questions:

• What are planning and development districts?
• Is there adequate oversight of the PDDs to ensure that they are effective in accomplishing their primary public purpose and that they consistently maintain programmatic and fiscal integrity?
• Do PDDs ensure fairness in their loan programs by establishing clear and open procedures for the application process and for making potential applicants aware of the programs?

Overview

PDDs are private, nonprofit, nonshare corporations created to promote regional economic development, having close ties to state and local governing authorities. PDDs' status as governmental service providers chartered for a public purpose warrants legislative interest in their accountability for the use of public funds. As regional organizations, the PDDs can offer potential benefits to state and local government. For example, PDDs can serve as a mechanism for coordinating program delivery and providing program information to the public and private sectors. PDDs also provide technical assistance to communities in obtaining federal and state funding for economic development projects.

However, oversight of PDDs could be improved to ensure program efficiency and effectiveness. Because PDDs are private, nonprofit corporations, federal and state agencies review specific programs, but no agency routinely oversees their programs or finances on a comprehensive basis. (The exhibit on page viii illustrates federal and state oversight of Mississippi's PDDs.)

In reviewing the adequacy of oversight of PDDs and the fairness of the PDD loan application process, PEER identified varying levels of oversight and administrative procedures. PEER found that:

• oversight of PDDs' effectiveness in improving the economy of individual districts and of the state as a whole is inadequate because no performance indicators have been developed at the state or regional levels to be used in assessing PDDs' economic development impact;
• oversight of PDDs' fiscal compliance is fragmented, consisting of federally mandated independent audits, legislative reviews of selected program activities at specific PDDs, and state agencies' monitoring of PDDs' compliance with state and federal regulations;
• the quality of PDD monitoring by state agencies (such as the Department of Human Services and the Department of Economic and Community Development) varies; and,
• although PDDs have developed some procedures for avoiding conflicts of interest, ensuring program promotion to a wide audience, and establishing a clear and open application process, no PDD had established all of the procedures that PEER considers necessary for fairness in loan program administration.

Summary of Recommendations

(See page 57 of the report for a detailed list of recommendations.)

Concerning oversight of PDDs' effectiveness in accomplishing their mission, the Bureau of Long Range Economic Development Planning and Special Task Force for Economic Development Planning should:

• fulfill their statutory responsibilities pursuant to the Statewide Economic Development and Planning Act of 1987 by developing a coordinated, up-to-date, statewide economic development plan with prioritized goals and performance measures for monitoring progress toward goal achievement by economic development entities, including PDDs; and,
• by January 2000, and annually thereafter, report to the Legislature on their progress in coordinating economic development planning and implementation.

If the Legislature determines that insufficient progress has been made in coordinating economic development planning and implementation, the Legislature should consider relieving the bureau and task force of their authority and placing that authority with a Planning and Development Council to be chaired by the Executive Director of the Department of Economic and Community Development and staffed by DECD's employees.

Also, concerning oversight of PDDs' effectiveness in accomplishing their mission:

• the Office of the State Auditor should review annually PDDs' independent auditors' reports and report the results of the review to the Legislature, Governor, and Bureau of Long Range Economic Development Planning;
• the Department of Human Services and the Department of Economic and Community Development should report annually to the Bureau of Long Range Economic Development Planning the types of information reported to the federal funding agencies (i.e., input and output measures) on the efficiency of their human service programs delivered by and through the PDDs. DECD and DHS should report efficiency information on each PDD in the agencies' annual budget requests to the Legislature;
• the Department of Economic and Community Development should report to the Bureau of Long Range Economic Development Planning on the efficiency of the two state loan programs delivered by and through the PDDs.

The Legislature should require that state agencies entering into agreements with private contractors, including PDDs, incorporate accountability provisions into those agreements.

Concerning DECD's oversight of loan programs, the Legislature should keep in place the primary loan oversight provisions related to DECD by deleting a repealer in MISS. CODE ANN. Section 57-10-511. The department should:

• resume monitoring the semi-annual Small Business Assistance loan program reports to determine compliance with administrative cost requirements, losses, delinquencies and other portfolio characteristics;
• develop a plan for periodic on-site monitoring of entities which administer Minority Business Enterprise and Small Business Assistance loans;
• develop a system for tracking the types of loan program complaints by district and for resolving those complaints; and,
• incorporate provisions for requiring and monitoring fairness in the loan application process into its system of loan program oversight.

Concerning its administration of loan programs, the PDDs should:

• broadly advertise their loan programs by conducting at least one promotional activity each year in the majority of their counties or in each major populated county in their districts to open the process for all citizens;
• send written denial letters listing the reasons for loan denial;
• require that each borrower sign a conflict of interest statement that acknowledges that the borrower has read the conflict of interest regulations and has no conflict of interest under the loan program regulations and statutes or any other constitutional or statutory provision that relates to conflict of interest;
• provide comprehensive and written eligibility criteria to applicants for each loan program for which they apply or are being evaluated for assistance;
• inform applicants in writing of the general steps in the application process; and,
• disclose the identity of the state or federal agencies funding the loan programs they administer.

Also, Southern Mississippi PDD should review its policy of charging application fees for loan programs and consider reducing or eliminating the fee.

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