Order Code IB95100
Issue Brief for Congress
Received through the CRS Web
Economic Development Administration:
Overview and Issues
Updated June 12, 2002
Bruce K. Mulock
Government and Finance Division
Congressional Research Service ˜ The Library of Congress

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CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
EDA’s Creation and History
EDA’s Creation
EDA’s History
Agency Structure
Major EDA Programs
Difficulties in Measuring Performance: Does EDA Work?
GAO Report: Results Are Hard to Prove
Rutgers Study: EDA Program Said to Produce Positive Results, But Questions Remain
105th Congress: Major Reauthorization
106th Congress: Funding Issues Predominate
Appropriations for FY2000
Appropriations for FY2001
Activity in the 107th Congress
Appropriations for FY2002
Appropriations for FY2003
EDA and the Terrorist Attacks
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS
FOR ADDITIONAL READING

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Economic Development Administration: Overview and Issues
SUMMARY
The Economic Development Administra-
of important provisions, and it endorsed nu-
tion (EDA), targeted for elimination or major
merous administrative reforms recently under-
“reinvention” early in the 104th Congress,
taken by EDA, such as efforts to target assis-
gained a new lease on life in the waning days
tance to the most distressed areas and encour-
of the 105th. Having been kept alive via
age greater regional cooperation in economic
appropriations bills since its last authorizing
development.
legislation expired in 1982, the EDA was
reauthorized for 5 years by P.L. 105-393.
On the appropriations front, EDA has
experienced a tumultuous appropriations his-
While EDA’s organizational structure,
tory over the past decade. Last year was
strategies, and programs have undergone
typical. For FY2002, the Administration
substantial changes during its 37-year history,
requested a substantial reduction ($76 million,
its overall mission remains much the same as
or 17%) in EDA’s overall funding. The
originally envisioned: to provide grants for
House set funding for FY2002 at the Adminis-
infrastructure development, business incen-
tration’s requested level, i.e., $30.6 million for
tives, and other forms of assistance to help
Salaries and Expenses (S&E) and $335 mil-
communities alleviate conditions of substan-
lion for Economic Development Assistance
tial and persistent unemployment in economi-
Programs (EDAP), for a total EDA appropria-
cally distressed areas and regions.
tion of $365.6 million. The Senate Appropria-
tions Committee recommended slightly more
Roundly and widely criticized during
— $371.6 million. The conference agreement
much of its existence by taxpayer groups and
provides $30.6 million for S&E and $335
others for putting public money into question-
million for EDAP, for a total FY2002 appro-
able projects, this small agency — by Washing-
priation of $365.6 million.
ton’s standards — appears to have “trans-
formed” itself in the past few years. Although
For FY2003, the Administration is re-
critics remain, EDA convinced a growing
questing total appropriation of $349.9 million
number of Members and others that it has
for EDA. More specifically, it is requesting
rectified a number of shortcomings and is
$317.2 million for EDAP, which represents a
serving an important economic development
net $17.8 million decrease from FY2002.
role in an efficient and effective manner.
In light of the September 11th terrorist
The Economic Development Administra-
attack on New York City, it is worth noting
tion and Appalachian Regional Development
that the EDA has provided grants and other
Act of 1998 (P.L. 105-393) included a number
assistance to the stricken area.

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MOST RECENT DEVELOPMENTS
For FY2002, the Administration had requested a substantial reduction in EDA’s overall
funding. While the request included a small increase for Salaries and Expenses (S&E), it
called for significant reductions in Economic Development Assistance Programs (EDAP).
Specifically, EDA’s request of $335 million for EDAP represented a $76 million decrease
from the FY2001 EDAP adjusted appropriation of $411 million.
The House bill (H.R. 2500) set funding for FY2002 at the Administration’s requested
level, i.e., $30.6 million for S&E and $335 million for EDAP, for a total EDA appropriation
of $365.6 million. The Senate-passed bill recommended slightly more — $371.6 million.
The conference agreement, reached on November 9, 2001, provides $30.6 million for
S&E and $335 million for EDAP, for a total FY2002 appropriation of $365.6 million. The
bill was signed into law (P.L. 107-77) on November 28th.
For FY2003, the Administration is requesting a total appropriation of $349.9 million
for EDA. More specifically, it is requesting $317.2 million for EDAP, which represents a
net $17.8 million decrease from FY2002. Program decreases are requested for: Public
Works, $17.9 million; Planning, $1.7 million; and Technical Assistance, $.665 million.
Additional funding in the amount of $2.5 million is requested for the Trade Adjustment
Assistance Program (TAA). The request of $32.7 million for S&E represents a $2.1 million
increase over the FY2002 appropriation.
BACKGROUND AND ANALYSIS
Following a review of EDA’s creation, history, and performance, this issue brief
provides an overview of the agency’s major programs, examines its structure and budget,
summarizes the important legislative changes fashioned by the 105th Congress, provides an
appropriations history for the 106th Congress, and discusses prospects for the 107th Congress.
EDA’s Creation and History
EDA’s Creation
Often referred to as a prime example of one of President Lyndon Johnson’s Great
Society programs, the Economic Development Administration (EDA) — an agency within
the Department of Commerce — was created by the Public Works and Economic
Development Act of 1965 (PWEDA). The Act (P.L. 89-136), had three antecedents worth
noting.
First, and foremost, there was a sustained effort by Senator Paul H. Douglas (a former
economics professor) and others for special federal aid to economically depressed areas,
which reached fruition in 1961. Congress, with the endorsement of the Kennedy
Administration, enacted the Area Redevelopment Act (ARA), authorizing $394 million over
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the 4-year period 1961-65 for federal aid to areas suffering chronic unemployment. The
emphasis in the program was on assisting depressed communities with economic projects
having long-term growth potential that would help combat unemployment.
Second, in 1962, Congress authorized $900 million for the Accelerated Public Works
program. The emphasis was on creating jobs through federal public works spending aid to
combat the effects of the 1960-61 recession in areas continuing to experience relatively high
unemployment. The program was criticized by many as a pump-priming measure that was
slow to start and that yielded relatively few benefits for the cost involved.
The third antecedent of the PWEDA was the Appalachian Regional Commission
(ARC). The Appalachia-aid bill (P.L. 89-4), passed in March 1965, authorized $1.1 billion
for aid to the depressed 12-state Appalachian region. The bill stressed a regional approach
to economic development and provided federal aid for construction of “infrastructure”
(roads, health facilities, related basic public facilities) needed as the basis for economic
growth.
During the debate on the ARC, some Members of Congress made it clear that they
wanted for their own districts the same type of program as was being approved for
Appalachia. By the end of August 1965, PWEDA was signed into law.
The Act provided $3.25 billion over the 5 fiscal years 1966-70 for grants and loans for
public works, development and technical assistance, and other projects to stimulate
long-term and lasting economic growth in areas suffering chronic unemployment. PWEDA
relied on three basic approaches:
! Encourage economically depressed communities to draft and carry out
economic development plans that would help them produce healthy rates of
economic growth. Wherever possible, such plans were to be on a regional
or multi-county basis.
! Assist depressed communities to finance construction of the basic public
facilities (such as harbors, sewage plants, access roads, industrial parks) that
would make the community attractive to private investment.
! Provide special financial aid to private firms to encourage them to build
plants and businesses in depressed areas.
EDA’s History
Over the past 3 decades, two different sources have given rise to a series of legislative
battles over EDA: efforts by Republican Presidents to abolish the agency and its programs,
and by congressional Democrats to make it a vehicle for broader anti-recession programs.
Twice during the Nixon Administration, Congress passed legislation to transform the
EDA program into a counter-cyclical program to combat joblessness. President Nixon
successfully vetoed the bills. Then, in 1973, President Nixon sought to abolish EDA,
proposing that its functions be distributed to other agencies. Congress did not go along with
the idea, however, and continued reauthorizing the agency.
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In 1976 and 1977, Congress approved the Local Public Works program, which received
a total of $6 billion for counter-cyclical public works projects to be spent by EDA. The first
year, the aid was approved over a veto by President Ford; the second year, it was approved
with President Carter’s support. Carter later sought to expand EDA’s lending power as part
of his urban policy. The proposal died in Congress following the election of Ronald Reagan.
Following a period of rejuvenation and increased funding during President Carter’s
term, both the Reagan and Bush Administrations proposed abolishing the agency, arguing
that it was limited in scope, its initiatives — if justified — should be funded by state or local
governments, and it financial assistance too often based on political clout rather than on
need. EDA’s choice of projects seemed to sometimes be at odds with its stated goals of
helping distressed areas. As recently as 1994, it awarded a $500,000 grant to Wofford
College in Spartanburg, SC, for an athletic stadium that was used for training by the Carolina
Panthers football team.

Prior to enactment of the Economic Development Administration and Appalachian
Regional Development Act of 1998, the EDA’s programs had last been authorized by
Congress in 1980: that authorization expired at the end of FY1982. Both the Reagan and the
Bush Administrations proposed abolishing the agency, arguing that it was limited in scope
and that its initiatives should be funded by state or local governments, but Congress kept
EDA alive through appropriations bills. The Clinton Administration, in contrast, sought to
revitalize the agency.
Since 1965, according to EDA, the agency has funded more than 43,000 projects,
investing over $17 billion in more than 8,000 communities. It is estimated that EDA
assistance has helped create 4,340,000 jobs, and leveraged more than $130 billion in private-
sector investment.1
Agency Structure
The EDA, an agency within the Department of Commerce, is headed by the Assistant
Secretary of Commerce for Economic Development. The agency has six regional directors
who are responsible for coordinating with local communities about economic planning and
development. EDA has economic development representatives, primarily located away from
the regional offices, who are responsible for providing information about the agency’s
programs and activities. They also assist prospective grantees and borrowers in preparing
applications for financial, planning, and technical assistance.
Major EDA Programs
EDA administers programs and provides grants for infrastructure development, business
incentives, and other forms of assistance designed to help communities alleviate conditions
of substantial and persistent unemployment in economically distressed areas and regions.
1 U.S. Dept. of Commerce, Economic Development Administration, Economic Development in the
21st Century: FY2001 Congressional Request.
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The agency provides assistance to local and state governments as well as to businesses.
Major EDA programs include:
Public Works — The Public Works and Economic Development program has
traditionally been EDA’s largest program. Grants are provided to help distressed
communities attract new industry, encourage business expansion, diversify local economies,
and generate long-term private jobs. Among the types of projects funded are water and sewer
facilities primarily serving industry and commerce; access roads to industrial parks or sites;
port improvements; and business incubator facilities. For FY2002, the Administration
requested and the conference agreement provided $250 million, a program reduction of more
than $36 million from FY2001. For FY2003, the Administration is requesting $232 million,
a decrease of nearly $18 million.
Economic Adjustment — The Economic Adjustment Assistance program assists states
and local areas design and implement strategies for facilitating adjustment to changes in their
economic situation that cause or threaten to cause serious structural damage to the underlying
economic base. Such changes may occur suddenly (Sudden and Severe Economic
Dislocation) or over time (Long-Term Economic Deterioration), and result from industrial
or corporate restructuring, new federal laws or requirements, reductions in defense
expenditures, depletion of natural resources, or natural disasters. The Economic Adjustment
Program receives annual appropriations for its Regular Economic Adjustment Programs and
Defense Adjustment activities. The funding level requested by the Administration and
provided in the conference agreement was $40.9 million for FY2002. The Administration’s
request for FY2003 remains unchanged at $40.9 million.
Defense Economic Adjustment — For Defense Economic Adjustment activities
(sometimes referred to as Defense Conversion), the agency received $77.3 million for
FY2000. EDA requested and received $31.5 million for FY2001. This decrease, according
to EDA, reflected the continued phase down of defense adjustment activity, particularly base
closures. Funding for this program was neither requested by the Administration nor provided
in the conference agreement for FY2002. According to the EDA’s FY2002 budget
submission, the proposed elimination of funding for Defense Adjustment was consistent with
the continued phase down of defense adjustment activity, particularly base closures. For
FY2003, the Administration is again requesting no funding for this program.
Planning — The Planning Program for Economic Development Districts, Indian
Tribes, and Redevelopment Areas provides grants to support the formulation and
implementation of economic development programs designed to create or retain full-time
permanent jobs and income for the unemployed and underemployed in areas of economic
distress. The program supports 320 Economic Development Districts (EDD) and 65 Indian
tribes or representative organizations that focus on long-term economic challenges. EDDs
are the coordinating entities for a number of other federal and state programs. EDA’s
Planning, Technical Assistance and Research and Demonstration programs are designed to
build the local capacity for comprehensive and collaborative economic development
activities. The request for FY2002 was $24 million. This was the amount provided in the
conference agreement. The request for FY2003 is slightly lower, at $22.3 million.
Revolving Loan Fund (RLF) — The RLF program is designed to assist areas to
overcome specific capital market gaps and to encourage greater private sector participation
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in economic development. In concert with private lenders, RLF grantees make fixed asset
and/or working capital loans to area businesses. Since the program’s inception in 1976, the
agency has provided initial capital for more than 480 local RLFs. These locally administered
funds have made more than 7,200 loans to private businesses and have leveraged over $1.9
billion in private capital, according to EDA. Upon repayment, principal and interest stay in
the community for re-lending and further economic development activity.
Research and Evaluation — Under the Research and Evaluation program, grants and
cooperative agreements are awarded (1) to undertake studies that will increase knowledge
about emerging economic development issues, the causes of economic distress, and ways to
alleviate barriers to economic development; and (2) to measure the performance and
effectiveness of economic development programs. For FY2002 the funding level requested
and received for the program was $500,000. The Administration is again seeking $500,000
for the program for FY2003.
Technical Assistance — Grants awarded under the Local Technical Assistance
Program are designed to assist in solving specific economic development problems, respond
to developmental opportunities, and build and expand local organizational capacity in
distressed areas. The majority of local technical assistance projects focus on technical or
market feasibility studies of economic development projects or programs. For FY2002, the
conference agreement provided an appropriation of $9.1 million, the same level as requested
by the Administration. For FY2003, the request is for a slightly smaller amount: $8.4
million.
Trade Adjustment Assistance — EDA funds a network of twelve Trade Adjustment
Assistance Centers (TAAC) through cooperative agreements. TAACs aid firms in applying
for benefits under Chapter 3 of Title II of the Trade Act of 1974, as amended. Firms affected
by import competition may petition for certification of impact. If a firm submits a petition
and is certified it may apply for technical assistance in diagnosing its problems and assessing
its opportunities. TAAC then helps the firm develop and adjustment proposal which outlines
the firm’s recovery strategy and any need for implementation technical assistance. The
FY2000 appropriation for the program was $10.5 million. This was the same amount
requested by EDA for FY2001, and identical to the amount provided by H.R. 4690. The
Senate Appropriations Committee recommended $24 million for trade adjustment assistance.
P.L. 106-553 provided $10.5 million for FY2001. The agency requested $10.5 million for
FY2002; this was the amount provided in the conference agreement. For FY2003, the
Administration has requested $13 million, an increase of $2.5 million from the current level.
Disaster Mitigation and Economic Recovery — EDA provides post-disaster
economic assistance for communities affected by declared natural disasters. The agency’s
assistance is separate from, yet intended to be a complement to, the disaster relief efforts of
Federal Emergency Management Agency and other agencies. The Economic Development
Administration (EDA) and Federal Emergency Management Agency (FEMA) have forged
a partnership to coordinate hazard mitigation programs and disaster preparedness activities
designed to help communities become more resistant to natural disasters.
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Difficulties in Measuring Performance:
Does EDA Work?
EDA has been working to support economic development and growth for more than 30
years. Through its various programs, the agency has attempted to achieve one principle goal:
alleviate the conditions of substantial and persistent unemployment and underemployment
in economically distressed areas and regions by providing assistance to local and state
governments as well as to businesses. Has it worked? Are taxpayers getting their money’s
worth? Is it deserving of continued funding? Until recently, there did not appear to be any
clear-cut answers to these questions. A May 1997 performance evaluation prepared for EDA
by a research team headed by Rutgers University gave the agency’s Public Works Program
high marks.
GAO Report: Results Are Hard to Prove
In 1996, responding to a congressional request, the General Accounting Office
published a report (GAO/RCED-96-103, April 1996) about the impact of economic
development assistance provided by EDA, the Tennessee Valley Authority (TVA) and the
Appalachian Regional Commission (ARC), and on the “performance ratios” they calculate.
Only the first issue is discussed here. Specifically, GAO was asked to review studies that
evaluate the impact on economic development of these agencies’ programs.
GAO — despite reviewing the available literature, and requesting that the agencies
provide any internal or external studies or other documentation — was unable to find any
study that established a strong causal linkage between a positive economic effect and an
agency’s economic development assistance.
As GAO made clear in its report, successfully completing studies of this nature would
be difficult.
A persuasive study of a program’s impact would require three elements. First, it would
have to document that there had been some improvement in the targeted area. Second,
it would have to link specific elements in the program to the economic changes. Finally,
it would have to measure the growth stemming from other influences on the region’s
economy in order to isolate the impact that could be attributed to the economic
development program.
Thus, the absence of studies documenting the effectiveness of EDA’s programs does
not mean they do not work or are not effective. The lack of evidence, however, underscores
an important point to keep in mind regarding virtually all economic development efforts: It
is difficult to know what works.
Rutgers Study: EDA Program Said to Produce Positive Results,
But Questions Remain
With a grant provided by EDA, a research team led by Rutgers University (prime
contractor) evaluated 205 EDA Public Works Program projects that received their lat
payment in FY1990. Thus, at the time of the research — 6 years later — the projects had
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been sufficiently established to make their evaluation possible. The evaluation was
undertaken using performance measures developed by EDA specifically to evaluate these
types of projects. Performance measures primarily involved numbers of various types of jobs
created or retained and amounts of private- and public-sector funds leveraged.
The report showed that EDA assistance helped distressed communities create jobs (at
a cost of $3,058 per job), expanded the local tax base (an increase of $10 for every $1 of
EDA investment), and leveraged private investment ($10 for every $1 of EDA investment).
Among the report’s major conclusions:
! Most of EDA’s public works projects achieved EDA’s objectives of
providing communities with the necessary infrastructure to expand their
economic base.
! Jobs and private investment have occurred in many areas that would not
have experienced this without EDA presence.
! EDA public-sector economic stimuli create private-sector jobs at high levels
of success and low levels of cost.
! EDA offices, as an instrument of government, and EDA field representatives
who interact with grantees, are well-regarded by the constituencies.
The Rutgers study’s estimated effects on growth and job creation are conceptually quite
straightforward: it endeavors to examine the direct jobs created by the projects, and also
attempts to measure any related businesses that are deemed to have developed. Thus, as
noted above, the study satisfies the first of the three elements identified by GAO that are
required for a persuasive study of a program’s impact., i.e., it documents improvement in the
targeted areas. However, the other two elements are absent. And, their absence would tend,
other things equal, to overstate the effects of the EDA grants on the projects in question.
To restate and elaborate on the missing elements: First, no account can be taken of the
growth that would otherwise have occurred because there is no way to observe what would
have happened in an alternative world. Second, by and large the growth is likely to have
been at the expense of growth in some other areas — quite likely, ones that are also poor and
underdeveloped, and ones that are in near proximity. (It is not necessary to believe, as some
do, that virtually all economic development is essentially a zero-sum game, to recognize that
something akin to this phenomenon is generally occurring. Also, from a federal policy
perspective, it is useful to note there are usually reasons why businesses do not choose to
locate in particular places. Normally, one would think that location choices are the result of
a reasonably efficient market allocation. To interfere with this allocation, it may be argued,
is to obtain a suboptimal allocation of resources.
105th Congress: Major Reauthorization
As part of the Administration’s on-going efforts, EDA has recently implemented various
management reforms, according to agency officials. Results include: streamlined staffing
levels and an agency reorganization for more efficient program delivery; a re-engineering of
the grants process that delegated decision making authority to field staff and simplified
application forms; focusing resources to areas of highest economic distress; the
implementation of a program performance evaluation system in accordance with the
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provisions of the Government Performance and Results Act of 1996; and, an accelerated
audit resolution process with the office of the Inspector General. Agency spokespersons say
reauthorization of EDA will continue the transformation process by reducing burdens on
local communities, preserving valuable program tools, strengthening the focus of resources,
achieving programmatic consistency, eliminating obsolete authorities and encouraging
cooperation among federal agencies.
Legislation (H.R. 1430) entitled “The Economic Development Partnership Act of 1997
(EDPA)” was introduced on April 24, 1997. Pursuant to the Administration’s Fiscal Year
1998 Budget, it seeks a 5-year reauthorization for EDA, retaining a number of provisions
contained in legislation considered in the 104th Congress (H.R. 300). It was referred to the
Committee on Transportation and Infrastructure (and, in addition, to the Committee on
Banking and Financial Services). The subcommittee on Public Buildings and Economic
Development held hearings on July 10, 1997.
In the Senate, nearly identical legislation (S. 1647) was introduced on February 12,
1998. The Senate Environment and Public Works Subcommittee on Transportation and
Infrastructure held a hearing on July 14, 1998. During the hearing, Senator Chafee testified:
As Chairman of the full Committee, I should be up-front about my stance on EDA: I
historically have not been a big fan of the EDA. In fact, in 1985 I sponsored an
amendment to eliminate the agency. But in recent years, I have taken notice of the
changes at the agency and its efforts to streamline its operations and target its efforts to
truly distressed communities. I have come to believe that we should move forward with
a reauthorization bill that locks in some the changes that the agency has undertaken.
Therefore, over the past few weeks I have been review S. 1647 (the legislation before us
today), and my staff has been working intensively with the EDA staff to develop a
bipartisan, common-sense substitute that can pass the Senate. I hope to circulate that
draft to all members this week. It will not be easy to enact an EDA reauthorization bill
this year, but I will do what I can to get it done.
On July 24, the House Transportation and Infrastructure Committee approved by voice
vote a 5-year reauthorization bill (H.R. 4275) for EDA and the Appalachian Regional
Commission (ARC). The new legislation, introduced by Representatives Bud Shuster, James
Oberstar, Jay Kim, and James Traficant, was reported to the House on August 6 (H.Rept.
105-684, Part I). The committee report endorsed EDA’s reauthorization and stresses the
value of the planning and technical assistance provided by Economic Development Districts
(EDDs). Specifically, the report asserts:
! Funding of EDDs has been and remains an integral element of successful
economic development grants awarded under this Act. Economic
Development Districts also are the coordinating entities for a number of
other federal and state programs.
! Funding levels for EDDs have actually decreased from their original levels
in addition to not being adjusted for inflation in over 30 years. Currently,
the average planning grant to districts is approximately $54,000, the same
amount as in 1966 at the start of the program. Adjusted for inflation, the
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value of a 1998 planning grant is only $10,800, or about 20% on the dollar,
when compared to its original purchasing power.
! For the past 30 years, EDDs have leveraged and stretched these small but
significant planning grants to help thousands of America’s small
metropolitan and rural communities forge ahead and create jobs and
opportunities for their citizens.
! EDA’s planning assistance program is an excellent tool for fostering local
economic development efforts through EDDs, particularly in rural areas
where resources are limited and regional cooperation in achieving common
economic goals is difficult.
! EDA is encouraged to allow EDDs to provide funds to purchase geographic
information systems and global positioning systems. By using the latest
technology, EDDs can dramatically enhance their ability to map out
industrial sites; local sewer lines, access roads and other infrastructure;
develop enhanced overall economic development plans; and analyze local
economic development trends. The agency is encouraged to provide training
for EDDs that addresses the potential for the systems.
On July 29, the Senate Environment and Public Works Committee reported out a 5-year
reauthorization bill (S. 2364) for EDA. The legislation was introduced by Chairman John
Chafee and the committee’s ranking minority member, Max Baucus. (Unlike the House
version, the new Senate bill, as introduced, contained no reauthorization language regarding
the ARC; a 3-year reauthorization for ARC was added during conference.)
The Economic Development Administration and Appalachian Regional Development
Act of 1998 (S. 2364) passed the Senate by unanimous consent on October 12th and passed
the House under suspension of the rules on October 13th. The new Act, signed into law by
President Clinton on November 13th , is the first major rewrite of the authorization statutes
for the EDA and for the ARC since the 1970s. The following is a summary of the major
changes made by the new reauthorization legislation to existing law and current practices:
! Establishes an economic development information clearinghouse on the
economic development, economic adjustment, disaster, defense conversion
and trade adjustment assistance activities of federal, state and local
governments. The clearinghouse is also intended to help potential
applicants identify potential resources and receive technical information on
how to alleviate unemployment.
! Consolidates nine separate criteria for public works and economic
adjustment grants into three basic distress factors — high unemployment,
low income and special need
! Limits EDA’s share of all grants to 50% (with supplements that may bring
the federal share to 80%), with recipients allowed to use cash and in-kind
contributions to reach the cost sharing requirements. (Previously, match
rates varied by program. The committees argued that this change was made
to reflect the importance of local participation and investment in economic
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development activities.) Grant recipients are also required to submit regular
evaluation reports on all projects for up to 10 years.
! Continues previous legislative language that requires approved projects to
be part of an overall investment strategy. The new term “comprehensive
economic development strategy” serves the purpose of an “overall economic
development program” or an “economic adjustment plan” in the Public
Works and Economic Development Act. The agency may accept
comprehensive plans developed under another federally supported program.
! Requires EDA to conduct regular performance evaluations of university
centers and economic development districts. University centers will be
evaluated to determine which are performing well and deserve continued
assistance whereas the district evaluation will focus on management
standards, financial accountability and program performance.
! Incorporates language regularly used in the agency’s annual appropriations
which allows the agency to fund projects on a military or Department of
Energy (DOE) installation even if the applicant does not have title to the
property or a leasehold interest in the property.
! Authorizes appropriation for defense conversion and disaster economic
recovery activities including pilot projects for privatization and economic
development activities for closed or realigned military or DOE installations.
The bill allows the federal share of disaster activities to be up to 100%.
106th Congress: Funding Issues Predominate
Appropriations for FY2000
The Economic Development Administration (EDA) has experienced a tumultuous
appropriations history over the past few years. Its funding level was sharply reduced by the
104th Congress, but the cuts in funding were partially restored by the 105th. Funding for its
programs was again under the knife during the 1st session of the 106th Congress; the Senate-
passed version of the Commerce, Justice, State Appropriations bill for FY2000 would have
reduced EDA’s funding for its Economic Development Assistance Programs (EDAP) by
45%.
More specifically, the Senate Appropriations Committee completed action on its version
of the CJS (Commerce, Justice, and State, the Judiciary, and other related agencies)
appropriations bill (S. 1217, S.Rept. 106-76)) on June 10, 1999.2 The Committee approved
only $203.4 million for EDAP and $24.9 million for S&E — which would have provided
EDA a total FY2000 appropriations of $228.3 million.
On August 5, 1999, the House, following the recommendation of its Appropriations
Committee, approved (H.R. 2670, H.Rept. 106-283) $364.4 million for EDAP and $24
million for S&E, for a total FY2000 appropriation of $388.4 million.
2 The full committee filed its CJS report (S.Rept. 106-76) on June 14, 1999.
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On November 22, 1999, the Consolidated Appropriations Act for FY2000 (H.R. 3194,
H.Rept. 106-479) was presented to the President. The Act (P.L. 106-113) provided EDA
with a total FY2000 appropriation of $388.4 million ($361.8 million for Economic
Development Assistance Programs and $26.5 million for Salaries and Expenses. This
amount is approximately $4 million less than the agency’s FY1999 funding level.
Appropriations for FY2001
For FY2001, the Administration requested $27.7 million for S&E and $409.3 million
for EDAP, for a total appropriation of $436.9 million. On June 19, the House Appropriations
committee recommended $26.5 million for S&E and $361.9 million for EDAP, for a total
CJS appropriation of $388.4 million for FY2001, or $48.5 million less than requested. The
CJS bill (H.R. 4690, H.Rept. 106-680) was passed by the House on June 26, by a vote of 214
- 195, 1 present.
On July 18, 2000, the Senate Appropriations Committee approved its version of the
Commerce, Justice, State (CJS) appropriations bill (H.R. 4690) that provides EDA’s funding.
The bill is awaiting floor action in the Senate. The Senate’s version (S.Rept. 106-404) would
significantly reduce the agency’s funding for its Economic Development Assistance
Programs (EDAP) Specifically, it would provide $31.5 million for Salaries and Expenses
(S&E) and $218 million for EDAP, for a total appropriation of $249.5 million for FY2001,
or $187.5 million less than requested and $138.9 less than the total approved by the House.
This recommendation is also $138.9 million less than the level appropriated for FY2000.
On October 27, 2000, Congress approved the Commerce, Justice, State (CJS)
appropriations bill (H.R. 4690).3 The President threatened to veto the measure.
Subsequently, on December 21, 2000, the President signed into law (P.L. 106-553) a bill
(H.R. 4942) which included funding for the Economic Development Administration.
Previously, Congress had approved the Commerce, Justice, State (CJS) appropriations bill
(H.R. 4690). H.R. 4690 was included in a Conference Report approved by Congress (H.R.
4942; H.Rept. 106-1005).4 The bill included $286.7 million for EDAP and $28 million for
S&E, for a total FY2001 appropriation of $411.9 million for EDA. Of the amounts provided,
$286.7 million is for Public Works and Economic Development, $49.6 million is for
Economic Adjustment Assistance, $31.5 million is for Defense Conversion, $24 million is
for Planning, $9.1 million is for Technical Assistance (including University Centers), $10.5
million is for Trade Adjustment Assistance, and $.5 million is for Research.
3 For detailed information, see CRS Report RL30509, Appropriations for FY2001: Commerce,
Justice, and State, the Judiciary, and Related Agencies.
4 The measure passed the House by 206 yeas to 198 nays and the Senate by 49 yeas to 42 nays. The
floor debate in the House and Senate is contained in the Congressional Record, Vol. 146, October
27, 2000, pp. H11265-97: S11230-41.
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Activity in the 107th Congress
Appropriations for FY2002
For FY2002, the Administration requested a substantial reduction in EDA’s overall
funding. While the request included a small increase for S&E, it called for significant
reductions in EDAP. Specifically, EDA’s request of $335 million for EDAP represented a
$76 million decrease from the FY2001 EDAP adjusted appropriation of $411 million. The
agency did not request any funding for the Defense Economic Adjustment program, which
received $31.4 million in FY2001. The proposed elimination of funding for this program
was consistent with the continued phase-down of defense adjustment activity, particularly
base closures, according to EDA’s budget submission. The requested funding level for the
Public Works Program was $250 million, which represented a program reduction of $36
million from the FY2001 appropriation. The amount requested for the Economic
Adjustment Program was $40.9 million, or $8.6 million less than it received in FY2001.
The agency’s FY2002 request for funding its other programs reflected only minor
changes. EDA requested $24 million for Planning, $9.1 million for Technical Assistance,
$500,000 for Research and Evaluation, and $10.5 million for Trade Adjustment Assistance.
On June 27, 2001, the House CJS Subcommittee marked up and passed by voice vote
its CJS appropriation (H.R. 2500), which mirrored the Administration’s request, i.e., $30.6
million for S&E and $335 million for EDAP, for a total EDA appropriation of $365.6
million. The full House Appropriations Committee agreed with the subcommittee’s totals
and passed the bill on July 10, 2001. The Senate Appropriations Committee recommended
slightly more — $371.6 million.5
Prior to the release of the Administration’s FY2002 budget proposal, which reduced
funding for EDA, the Council for Urban Economic Development (CUED) and associated
national and regional economic development organizations called for an increased
appropriation, noting “EDA remains the main (federal) agency devoted to enabling local
economic development and has a proven ability to leverage private investment to meet
development goals.”6
CUED praised the agency, stating “EDA has proven to be an effective agency with its
impact limited predominately by underfunding,” and further noting:7
EDA is the main discretionary source for infrastructure development and strategic
planning for economic development purposes, and leads other federal agencies in its
adherence to the Government Performance Review Act, regulatory reform and leveraging
of private sector dollars. EDA funds also have been an important source of local
5 The Senate Appropriations Committee also recommended $30.6 million for S&E, but
recommended $341 million for EDAP, $6 million above both the budget request and the House
recommendation.
6 National Council on Economic Development, Partnership for Prosperity: A Federal Economic
Development Agenda, February 2001, p. 18.
7 Ibid., p. 17.
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creativity, and the agency, through national technical assistance, has ensured that these
innovations and best practices have been disseminated nationwide. The local reputation
of regional EDA offices is one of flexibility and good government. As infrastructure
remains a critical component of competitive places, a strong EDA is critical to the long-
term strength of the U.S. economy.
The conference agreement, reached on November 9, 2001, provided $30.6 million for
S&E and $335 million for EDAP, for a total FY2002 appropriation of $365.6 million. The
bill was signed into law (P.L. 107-77) on November 28th.
Appropriations for FY2003
For FY2003, the Administration is requesting total appropriation of $349.9 million for
EDA. More specifically, it is requesting $317.2 million for EDAP, which represents a net
$17.8 million decrease from FY2002. Program decreases are requested for: Public Works,
$17.9 million; Planning, $1.7 million; and Technical Assistance, $.665 million. Additional
funding in the amount of $2.5 million is requested for the Trade Adjustment Assistance
Program (TAA). The request of $32.7 million for S&E represents a $2.1 million increase
over the FY2002 appropriation. According to the agency’s FY2003 congressional request,
the S&E increase reflects only adjustment to base increases that included the full cost of the
Administration’s pension and health benefits proposal.
EDA and the Terrorist Attacks
The Economic Development Administration will most certainly have a role to play in
the recovery and rebuilding of the World Trade Center site devastated by the September 11th
terrorist attacks. Under existing statutory authority, EDA administers disaster program funds
through targeted grants to disaster-impacted communities designed to achieve long-term
economic recovery.
It appears that several EDA programs fall within the funding purposes enumerated in
the emergency supplemental appropriations bill (H.R. 2888) passed by Congress in response
to the terrorist attacks of September 11, 2001. And it appears likely that additional funding
will be made available as recovery plans are developed and refined. What exact role EDA
will play, however, is currently under active consideration by the Administration and
Congress.
In the past, the agency has contributed to disaster response efforts, and it has the
statutory authority to assist communities in long-term economic recovery efforts. EDA has
participated in over 20 major disaster adjustment efforts since Hurricane Camille in 1969,
and has received in excess of $600 million in supplemental appropriations to deal with
disasters since 1992.
Some guidance regarding EDA’s role in the economic revitalization of New York City
was provided by the recent testimony of David A. Sampson, Assistant Secretary of Economic
Development for the Department of Commerce. The following are excerpts of his testimony
on November 1, 2001, before the Senate Committee on Environment and Public Works:
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! Under existing statutory authority, EDA administers disaster program funds
through targeted grants to disaster-impacted communities designed to achieve
long-term economic recovery.
! When asked to participate with disaster recovery, EDA has a comprehensive and
flexible set of program tools, including: (1) targeted economic recovery planning
and technical assistance; (2) revolving loan fund grants to address unmet business
financing needs where other financing is insufficient or not available; and (3)
infrastructure construction grants to rebuild an environment attractive to private
investment for the re-creation of job opportunities.
! While [the agency’s] program tools are flexible, EDA has a clearly defined target
group of those eligible to receive EDA investment dollars. Those eligible include
state and local governments, public and private nonprofit organizations, and
regional economic development districts. Businesses are not eligible for direct
assistance under EDA’s major programs.
! Were EDA to be assigned a responsibility for a portion of New York economic
revitalization and recovery efforts, [the agency] would, as [it] has in past disasters,
assemble a special disaster response team comprised of existing headquarters
personnel as well as existing personnel from the six regional economic
development offices around the country.
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS
U.S. Congress. House. Committee on Appropriations. Subcommittee on the Departments
of Commerce, Justice, and State, the Judiciary, and Related Agencies. Departments of
Commerce, Justice, and State, the Judiciary and Related Agencies Appropriations for
FY2000. Part 1: Justification of the Budget Estimates. Hearings, 106thCongress, 1st
session. Economic Development Administration (p. 75-159). Washington, U. S Govt.
Print. Off., 1999. 1878 pp.
U.S. Congress. House. Committee on Transportation and Infrastructure. Economic
Development Partnership Act of 1998. Report to Accompany H.R. 4275. H.Rept. 105-
684, Part 1, 105th Congress, 2nd session. August 6, 1998. Washington, U.S. Govt. Print.
Off., 1998. 128 pp.
U.S. Congress. House. Committee on Transportation and Infrastructure. Subcommittee on
Public Building and Economic Development. Reauthorization of the Economic
Development Administration and the Appalachian Regional Commission. Hearings,
105th Congress, 1st session. July 10 and 17, 1997. Washington, U.S. Govt. Print. Off.,
1998. 258 pp.
U.S. General Accounting Office. Economic Development: Limited Information Exists on
the Impact of Assistance Provided by Three Agencies. April 1996. GAO/RCED-96-103
[Washington]. 32 pp.
U.S. General Accounting Office. Economic Development: Multiple Federal Programs Fund
Similar Economic Development Activities. September 2000. GAO/RCED/GGD-00-
220 [Washington]. 79 pp.
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FOR ADDITIONAL READING
A Path to Smarter Economic Development: Reassessing the Federal Role. National
Academy of Public Administration, Washington, 1996. 70 p.
Chintz, Ben. What Role for the Economic Development Administration in the New
Economy? Economic Development Quarterly, v. 9, no. 3, August 1995: 203-206.
Ellen, Ingrid Gould and Amy Ellen Schwartz. Cautionary Notes for Competitive Cities. The
Brookings Review, v. 18, no. 3, Summer 2000: 44-47.
Hill, Edward W. Principles for Rethinking the Federal Government’s Role in Economic
Development. Economic Development Quarterly, v. 12, no. 4, November 1998: 299-
312.
Ota, Alan K. Assailed Development Agency Retains Enough Hill Support to Win a Five-
Year Reprieve. CQ Weekly, October 17, 1998. p. 2821.
The Effects of State and Local Public Policies on Economic Development. New England
Economic Review, Federal Reserve Bank of Boston (whole issue) March/April 1997.
Thornburgh, Dick. A Path to Smarter Federal Leadership in Economic Development:
Learning, Leveraging, and Linking. Economic Development Quarterly, v. 12, no. 4,
November 1998: 291-298.
Wirtz, Ronald A. Local Economic Development: A Recipe for Stone Soup. Fedgazette,
Federal Reserve Bank of Minneapolis, v. 12, no. 2, April 2000: 9-10.
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