Just as the collapse of 38 Studios LLC illustrated the importance of keeping close tabs on taxpayer-backed loans, the bankruptcy also marked the demise of a two-year effort to improve how all R.I. Economic Development Corporation investments are monitored and analyzed.
Soon after taking the helm of the EDC in January 2010 amid concerns over how little up-to-date information the agency had about companies it financed, former Executive Director Keith W. Stokes promised to create a new and more rigorous performance-tracking system.
The primary focus was jobs and whether companies that had received EDC job-creation investments through the years had hired and were still employing the number of people they were expected to when the investments were made.
So Stokes put together a group to work on a new system, led by EDC Senior Strategy and Research Manager Timothy Cole, that included academics, economists and representatives from the state department of revenue.
Progress was slow, but toward the end of 2011 there were signs that something was happening.
Last December, the distribution of a $9 million federal grant that the EDC had helped secure for the Slater Technology Fund was held up over disagreements about what data Slater and the companies it invests in would have to report to the state.
Neither side would discuss the specifics of the impasse, but Stokes said it was an example of the greater accountability the state was asking of firms that benefit from public programs.
“Everything we are trying to do at the EDC, any public dollars either as loans or guarantees, there has to be a level of performance and there has to be measurement and accountability,” Stokes said in December. “This is not private equity, this is public equity.”
On Dec. 16, the task force working on performance measurement met and discussed the next steps for improved analysis of tax-credit programs, according to participants.
But the group – which included Stokes, Chief of the R.I. Office of Revenue Analysis Paul Dion, Bryant University assistant professor of economics Edinaldo Tebaldi, Rhode Island Public Expenditure Council Executive Director John Simmons and University of Rhode Island business school Dean Mark Higgins – has not met since.