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(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates/Conflicts with/Companion to/Relates to

SOURCES OF INFORMATION

LFC Files

Bureau of Business and Economic Research, University of New Mexico

Economic Development Department

SUMMARY

Synopsis of Bill

The bill would transfer the Bureau of Business and Economic Research (BBER) from the University of New Mexico (UNM) to the Economic Development Department (EDD). The bill includes temporary provisions to transfer all appropriations, records, equipment, furniture, supplies and other property belonging to BBER from UNM to EDD. It also transfers all existing contracts and other obligations from UNM to EDD.

Significant Issues

The bill would attempt to combine agencies with related missions, both of which include aspects of state economic development. BBER is primarily responsible for studying the New Mexico economy and forecasting economic trends. BBER also has developed cost-benefit models for considering industrial revenue bond proposals and has served as an economic consultant on individual economic development projects. EDD's mission focuses on promotion of economic development in New Mexico.

There are important differences in the missions of these two agencies, such that combination of the two could negatively impact both of them. BBER's focus in on economics research. EDD is oriented toward promotion and has no economists or research staff. BBER's research agenda also extends beyond economic development topics. For example, the Human Services Department contracts with BBER to study the characteristics of program clients and the impact of welfare reform programs on client success. EDD has no background in there fields.

The bill would damage BBER's research autonomy. To sustain the credibility of its research, BBER must remain independent of its clients. Under the proposed bill, BBER's findings might be influenced by political considerations especially if the BBER director is appointed by the governor or Secretary of EDD. Given BBER's size, this bill would force EDD to place an emphasis on research which might distract EDD from its primary promotional mission.

According to EDD, the BBER has always been part of the university system. Its program is closely tied to resources on the UNM campus such as the library, students and other university departments. It serves as a repository for an enormous amount of historical information from the U.S. Census Bureau, other state agencies and private agencies. It houses a forecasting service that has several full-time employees who monitor the state economy. Also because of the volume of work performed by BBER, many students are employed part-time to update massive volumes of information. Hiring of these students is tied to the university. EDD was also concerned that the bill does not include an appropriation for staff necessary to administer BBER.

BBER highlighted the following concerns with the proposed bill:

• Removing BBER from UNM and placing BBER within EDD would threaten the objectivity, independence and credibility of BBER research. Located now within an academic institution, BBER is isolated from political pressures.



• BBER now supports the consensus revenue forecasting process in Santa Fe and provides its state economic forecasts to both the executive (Department of Finance and Administration, Taxation and Revenue Department, State Highway and Transportation Department) and legislative agencies (Legislative Finance Committee and Legislative Council Service). Placing BBER in an executive branch agency would undermine the consensus revenue forecasting process which has served New Mexico well in the past.



• BBER plays a vital role in UNM's mission of public service to the State of New Mexico. BBER has been at UNM since 1945-over 50 years. There should be a compelling public policy purpose to alter this historical relationship.



• BBER's budget comes from several sources: A UNM allocation of university overhead, two line item appropriations from the General Appropriations Act, income from sales and publications and information services, and contract research. EDD might have to subsidize BBER for $217.4 (UNM's overhead contribution) or more in order to complete this transfer.



• BBER has a permanent staff of a dozen professional economists, demographers and computer programmers. In addition, BBER hires and funds work study students and graduate assistants/ research assistants at UNM. If BBER were moved to Santa Fe, it would be difficult tor BBER to recruit and use students on research projects-a valuable source of temporary, skilled workers. If BBER were moved to Santa Fe, the state would have to pay for office space, utilities, etc. Office and utilities are now provided cost free to BBER by UNM. If BBER stayed at its present location, it is likely that UNM would seek reimbursement from the state for office space and utilities.

FISCAL IMPLICATIONS

EDD estimates the total cost to that agency of administering this bill, in addition to funds which would be transferred with BBER, is about $310.0.

BBER anticipates a cost of $217.4 to replace UNM's overhead contribution and additional funds for utilities and office space.

ADMINISTRATIVE IMPLICATIONS

This bill would blend fundamentally different institutions into a single agency. As such, either EDD would maintain two separate administrative operations or EDD administrative staff would be required to master the nuances of grant and research administration. EDD projects a need for additional employees to administer BBER.

If BBER were separated from UNM, it would lose access to resources important to its operations, including graduate and work study students and library resources.

DH/njw