Recommendations and Conclusion

Lawmakers should be skeptical of spending on a program for the purpose of “economic development” when the program cannot or does not demonstrate that it creates jobs or improves the economic outcomes of the state. Ultimately, based on this review of the program, the most prudent move would be to discontinue the 21st Century Jobs Fund’s programs and eliminate the 21st Century Jobs Fund as a revenue source.

This would have a few impacts. The current contractual arrangements between the state and the program’s recipients will need to be honored, but no new agreements should be made. The state will need to continue managing its loan portfolio. It can continue its partnerships with investment entities but should seek to liquidate its stakes as soon as feasible. Its “permanent fund” balance should be sent back to the state’s general fund. State balances at banks for loan guarantees can continue, but the state should not reinvest when those balances are used up.

The state should eliminate the earmark of $75 million from tobacco settlement money towards the fund. This money can instead be transferred to the general fund and spent on whatever lawmakers deem appropriate.

If the current programs funded by the 21st Century Jobs Fund — the Pure Michigan campaign, the Michigan Business Development Program and the Community Revitalization Program — are economically beneficial, the state could still continue to fund them via different means. But the state should apply skepticism to those programs’ efficacy as well.

If lawmakers choose not to eliminate the 21st Century Jobs Fund, they should at least require the program to be fully transparent. As noted in Graphic 1, the program fails to provide even a basic level of transparency. The statutes controlling the 21st Century Jobs Fund already require a number of disclosures to be made, but the 21st Century Jobs Fund program has not met those requirements. The state should hold hearings to ask the program’s administrators why they have not complied with those requirements, and if improvements are not made, suspend or discontinue the program.

Beyond this noncompliance, the 21st Century Jobs Fund has earned dissolution. It was a program that was intended to improve the economy, but its design and constant manipulation have made its economic outcomes only hypothetical and made it impossible to measure the effectiveness of the program empirically. It has been inconsistent in its approach to economic development and inconsistent in its reporting. Its funds have been leeched for other causes. And it has been noncompliant with state requirements. All this adds up to a failed government experiment.