Monday, June 7, 2010

Economic development group's performance and budgeting being questioned

Melissa Domsic

LANSING -- Three years after its founding, the Lansing Economic Area Partnership Inc. regional economic development group seems to be at a crossroads.

LEAP has been involved in several efforts to boost business and the economy in general since its formation, from helping draw IBM to Michigan State University to compiling the Greater Lansing Next: A Plan for Regional Prosperity that outlines ways for the area to grow.

But some local officials are raising questions about the organization's overall performance and budgeting, including transparency. And some LEAP board members are taking another look at their financial commitments.

"Some of us believe the initial three-year (financial) commitment was to help the organization get off the ground," said Ted Staton, East Lansing city manager. "Now that it has a plan and is working on that plan, they need to move to the next phase of the organization's existence."

Nonprofit group LEAP was formed in 2007 to unite public and private organizations to boost the region's economic development.

Of the 36 organizations listed as board members, 15 said they intend to continue financially supporting LEAP. Eight said they were unsure of their plans for next year, including three companies that recently had management changes. Six municipalities will consider lowering their contributions. Four board members did not respond to requests for information.

Three board members exchange services instead of paying a fee, including the Lansing State Journal.

While the organization has support from many business and community leaders, it also has been catching flak for what some local officials describe as a lack of transparency and measurable results.

Delhi Township Trustee Derek Bajema recently questioned whether the township's $35,000 annual investment in LEAP was paying off.

"I understand that the economy has been down, it's tough to attract business in this kind of environment," he said. "At the very least, I think just more transparency needs to be there."

Bajema requested a copy of LEAP's budget and received a seven-line budget that didn't break down components, such as the $750,843 in personnel costs.

"At the heart of it all really is: These are taxpayer dollars, and if nothing else, let's see how you're spending taxpayer dollars," Bajema said.

LEAP is funded by contributions from more than 60 businesses, local governments and other community organizations. About half of the members serve on the board of directors.

The organization provides the same seven-line budget to its board members.

Board member and Delta Township Supervisor Ken Fletcher said he thinks LEAP needs to better account for the money it spends.

"I think LEAP does do great work in the community and they should be willing to go out there and show the funders exactly how they're using that money and how they're accomplishing their goals," he said.

This year's $1.2 million budget provided to the Lansing State Journal by LEAP included a $750,843 personnel budget for eight employees.

President and CEO Denyse Ferguson would not disclose details beyond the seven-line budget.

However, LEAP files financial reports with the Internal Revenue Service. A report filed in September 2009 shows former President and CEO Matthew Dugener was paid a $144,845 salary plus benefits in 2008. Ferguson made $120,791 plus benefits. She served as executive vice president until October 2008, when Dugener resigned and Ferguson took over as interim president and CEO. Justin Himebaugh, former chief operating and financial officer, made $104,710 plus benefits.

Ferguson has noticed people have focused on the amount spent on wages and benefits and are asking why the business development budget isn't larger. But, she said, service organizations such as LEAP hire professionals to carry out business development activities and pay them accordingly.

The business development budget accounts for incidental costs that arise as the employees carry out their jobs, Ferguson said.

For more on this story, read Friday's Lansing State Journal.

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