The nonprofit responsible for improving the local business climate deserves greater recognition and taxpayer investment, but it also needs to end a governance practice that appears to violate state rules, the Kern County grand jury concluded in a report released Feb. 12.
The grand jury's eight-page report credited Kern County Economic Development Corp. with projecting a "positive, business-friendly image." It asserted that the "organized, professional and very efficient" organization may be underplaying its role in creating jobs and supporting local employers.
But in addition to suggesting county government increase its annual contribution to KEDC, the grand jury recommended that the organization quit allowing county supervisors to appoint members of their staff to take actions including voting at KEDC's Executive Committee.
In making these suggestions, the grand jury was less critical of KEDC staff than it was of board leadership and county government, which as the report noted, has given the nonprofit an increasingly vital, quasi-governmental mission.
Even at its most critical, however, the report did not fault board actions so much as it took issue with the way decisions have been made.
Founded by public- and private-sector leaders during the oil industry downturn of the late 1980s, KEDC was conceived as an independent partnership that would promote the county's economic development and encourage retention of employees.
About a decade later, the county Board of Supervisors tasked KEDC with implementing Kern's economic strategy and, specifically, working to diversify the local economy beyond the pillars of agriculture and oil production.
Its roughly $1.1 million annual budget, which covers expenses including the salaries of six full-time employees, is funded through a mix of contributions, with only $175,000 coming from the county. The rest comes from other public sources ($50,000), private membership fees ($415,000) and event revenues and other money ($473,800).
The grand jury's report notes that the county's funding commitment is tied to performance measures that, in fiscal 2018-2019 at least, KEDC met early in the year. It says this arrangement "has the potential to hinder performance-based initiative."
The report recommended that the county lift the $175,000 funding cap so that KEDC "is appropriately compensated for creating a strong and diverse economy for Kern County."
County spokeswoman Megan Person said by email that Kern's Board of Supervisors is always interested in activity that increases local jobs and advances the economy.
"This (KEDC) contract, like all contracts, can be amended at any time and would be approved by the Board of Supervisors, ensuring we are fiscally responsible with every taxpayer dollar we spend," she wrote.
The report also suggested most county residents are unaware of the county's collaboration with KEDC. It said workers may not understand that economic development and jobs "are not created from thin air," adding that "KEDC continues to fulfill its role with little fanfare."
The grand jury recommended that KEDC promote its name beyond the local business community, possibly by adding the words "Brought to you by KEDC" to written materials.
The report's most critical passages regarded KEDC's seven-member Executive Committee, two members of which are county supervisors elected by the public.
It said committee meetings are often cancelled because members fail to respond to messages confirming they plan to attend. Between August 2017 and September 2019, the report said, about a third of the 22 meetings scheduled were cancelled.
During the same period, two Executive Committee meetings took place with no county supervisor or designee present, according to the report.
The report also pointed out that, at 12 committee meetings, a staff designee attended in lieu of a county supervisor and that this person "acted as a proxy." The grand jury said such actions have included making and seconding motions and casting votes.
Such activity is an apparent violation of a California Corporation Code requiring that "no director may vote by proxy," the report stated.
The report concluded by recommending that at least one county supervisor — not a staff designee — attend each monthly Executive Committee meeting. It said each county supervisor on the committee should attend at least four of the group's 10 meetings per year.
It said the practice of allowing county supervisor designees to take formal actions at Executive Committee meetings "should be discontinued immediately."
KEDC's executive leadership declined to take questions about the report. CEO Richard Chapman referred questions instead to Chairman David Womack, who works as senior vice president and area manager for Kaiser Permanente in Kern County.
Womack said by email he was delighted by the grand jury's "overwhelmingly positive report" and its recognition KEDC is doing a remarkable job growing new jobs in Kern.
"It reflects the strong leadership of our CEO, Richard Chapman, and the mature guidance of our board," he wrote.
"I personally agree with the grand jury’s recommendation for the county to raise or eliminate the cap on KEDC’s incentive to grow jobs," he added. "New jobs are good for everyone and they return way more to the county in tax revenue than the incentive costs. Everyone wins."
As for county supervisors' proxy voting, Womack wrote that the Executive Committee will address the matter at its regularly scheduled meeting at 8:30 a.m. Feb. 20 at KEDC's offices, 2700 M St., Suite 200.
Person, the county spokeswoman, wrote that the grand jury's report is under review by Kern's compliance and accountability officer. That person will work with county counsel to determine whether adjustments need to be made, she added.