State job recruiting could shift to private sector
Posted March 28, 2013
Raleigh, N.C. — The task of recruiting jobs to North Carolina, including dolling out publicly funded incentives, could be put in the hands of public-private partnerships, Commerce Secretary Sharon Decker said Thursday.
Decker told WRAL News that she plans to have a restructuring plan for her department ready by middle to late May, adding that she hopes lawmakers would take up the plan before leaving town this summer.
"We really can't afford not to (restructure)," Decker said. "We have to be able to move faster, primarily in terms of job recruiting."
Roughly a dozen divisions and programs make up the Commerce Department. Some are tiny in government terms, such as the effort to promote North Carolina's wine industry, while others are sprawling programs, such as the state's job recruitment efforts.
The only piece of the Commerce apparatus that will absolutely not move to a public-private mode, Decker said, is the Division of Employment Security, which handles paying unemployment claims.
However, she said Dale Folwell, a former Republican legislator who now heads the division, will be looking at changes in that agency as well.
William B. Elmore, vice chairman of Coca-Cola Bottling Co. Consolidated, has volunteered to lead the department's restructuring review, Decker said.
Revisions in the works
Gov. Pat McCrory, a Republican, did not specify a Commerce Department restructure in his budget, which set aside funding for the agency to continue as it currently operates. But he did say, in a memo accompanying the budget, that he wanted to restructure the agency.
"While the recommended budget funds the Department of Commerce and economic development as presently organized, the department will, though separate legislation, submit to the General Assembly a proposal for a fundamental reorganization and creation of a public-private partnership for economic development and prosperity," McCrory wrote.
He added, "The benefits of transforming into this type of structure include future savings to the state, engaging volunteer and private sector resources, hiring top talent and establishing a strong culture of performance."
Decker echoed much of this and other oft-used McCrory phrases during a 24-minute phone conversation Thursday. She talked about the need to establish a brand for North Carolina, something that McCrory has referred to during several recent public appearances.
"The ultimate goal is job creation," Decker said, adding that a new brand – perhaps complete with a slogan and logo – would help cut through the clutter of today's modern communications environment. The re-branding could help lure tourists and industry alike she said.
But the most eye-catching part of pitch is the possibility that certain functions carried out by the Commerce Department could be put in the hands of agencies that are a partnership between state government and private business.
"I would tell you that our primary focus right now is on the sales and marketing aspect of Commerce, but not exclusively on that," Decker said.
Key lawmakers say they have been kept in the loop and like what they hear about Decker's plans.
"It's something that appeals to me," said Rep. Tom Murry, R-Wake, chairman of the House Commerce Committee. Murry filed legislation two years ago to study public-private partnerships in the Commerce Department.
"I'm glad to see our governor trying to innovate," Murry said. He pointed to Indiana, where state government has used a similar commerce system, as a potential model for success.
As for the May time table, Murry said that lawmakers would try to accommodate any schedule, but the sooner the legislature had a plan to work with, the better it would be. The General Assembly will likely adjourn sometime in June this year.
State would gain 'nimbleness'
Asked what the state would gain from moving to a heavier reliance of public-private models, Decker answered "nimbleness." North Carolina, she said, needs to move more quickly and aggressively to recruit businesses that are looking to expand or relocate.
Among the advantages, she said, is that job recruiters could be compensated based on how successful they are at landing companies.
"Every organization that I've been a part of that's been selling anything – and we're selling North Carolina – pay was at risk in the process," Decker said. Essentially, recruiters would earn more when they do their job well, less when fewer companies are moving to the state.
"Working with partners would also be very helpful," she said. "There's nobody here in this state more interested in this state's success than the people who are already here successfully."
The Commerce Department already works with The Friends of North Carolina, a nonprofit group that provides extra funding and support for North Carolina's job recruitment efforts. The nonprofit, for example, has helped pay to entertain executives looking to do business here both in North Carolina and around the country.
As Decker described it, a public-private partnership would go further. Private-sector partners could help target incentive grants and create venture capital funds to help businesses grow.
"We are better together than we are operating totally independently ... or going in two different directions," Decker said. "There is value in the private sector being engaged in this process."
Even a part of the Commerce Department that helps distribute federal Community Development Block Grants could benefit from private-sector input, she said. Private businesses, she said, might help better direct those grants, which help build low-income communities.
Allowing private businesses to help direct the flow of public dollars could raise the hackles of skeptics who might wonder if government money is going to line the pockets of friends of the administration.
Decker said that whatever partnerships are formed would need to keep provisions that allow for administrative and legislative oversight of spending, as well as public records requirements.
Decisions made a local level
There are already seven regional public-private economic development agencies in the state, including the Research Triangle Regional Partnership, that play a role in job recruitment. Each of them gets state funding and each could be in for big changes depending on how the Commerce Department reorganization shakes out.
"I don't know what's going to happen with them," Decker said. "What we're doing is putting all of that on the table."
But she, added, everyone should expect change.
"We've been in negative job growth now for more years that you or I want to count," Decker said. "I don't think anyone is questioning that things are working as we need them to."
While Decker could not say exactly what a restructured Commerce Department might look like, she did say broadly that local governments and economic developers that specialize in certain regions of the state would have to be involved.
"It's clear to me that much of the economic development decisions has to be made at the local level," she said. Better coordination at the state level could avoid situations where different regions of the state are competing for the same company. Meanwhile, local input would ensure the needs of a particular area are taken into account.
"If you look at northeastern North Carolina, we've got multiple counties with double-digit unemployment," Decker said. "Obviously, what we're doing isn't moving the needle."
But the industry the state targets for more rural areas with high numbers of lower-skilled workers is going to be different than the jobs targeted for the Triangle.
Asked what she might say to Commerce Department workers or others who partner with the agency who might be worried, Decker acknowledged they may have concerns.
"I would say embrace the change," she said. "We are now facing what the private partner we work with every day have been dealing with for the past eight years. That is a tremendous amount of uncertainty.
"All of us are looking to come out on the other side of this much more effectively, able to grow the economy of North Carolina," she said. "If we do that, we're going to look back and say, as painful as that was, it was worth it."