TERO – Return on Investment - PowerPoint Presentation

Slide1

TERO – Return on Investment

Nicholas Kedrowski, Great Lakes Region TERO Vice-ChairmanSlide2

Traditional Benefits of TERO

The answer to the question, “How does TERO benefit the tribe?” has traditionally been answered by pointing to the “success stories” of the clients.

The truth of the matter is that TERO does help, and success stories are one of the primary reasons that TERO exists. TEROs provide the help and training that give tribal members the skills, knowledge and the tools they need to have the best chance of success, but more importantly, TERO gives them HOPE.

Unfortunately, this answer does not always answer the question of “Is TERO worth it?”Slide3

Traditional Benefits of TERO (cont.)

Tribal Sovereignty

Another benefit of TERO is that it is an exercise in Sovereignty. TERO governs the actions of businesses and employers operating on tribal lands.

When TERO is both supported and enforcement upheld, TERO enhances tribal sovereignty by making a definitive distinction between a sovereign government upholding its own laws and a business that has a “policy”. TERO is one law that a tribe can adopt that is supported by and recognized by the federal government. The Federal Highways Administration references TERO by name and agrees* to the individual tribal provisions contained therein on the projects funded in whole or in part with federal funds.

*The agreement to abide with TERO regulations, including fees, is contingent upon TERO being administered equitably and does not single out those projects in the application of the law. If your TERO is treated has provisions that provide waivers or is not administered equitably, the Federal Highways Administration can take an automatic exemption on all of their projects as well. This could potentially result in a loss of significant training and operational funding for your TERO.Slide4

Traditional Benefits of TERO (cont.)

Financial Benefits

In addition to the “Traditional” non-financial benefits of TERO we have discussed, there are also “Traditional” financial benefit.

These are generally reported as wages. When we get a tribal member hired on a job, we count the wages they will then receive as a “benefit of TERO”. We also count the supportive services we provide as a “benefit of TERO”.

The funding for these “benefits” can come from fees that TERO collects but can also be provided by grants and sometimes program funds provided by the Tribe directly. Not all TEROs collect fees and those receive the majority of their funds as allocations from tribal dollars. Slide5

Return on Investment

Regardless of where a TERO gets it funding, at some point, someone will questions if TERO is worth having. Several “hot button” issues with TERO come up and are nearly universal to all tribes. These include:

TERO Fees are just passed back on us in the contracts.

The unemployment rate hasn’t changed in years so TERO must not be doing anything.

Contractors can’t do as good of a job if they have to hire TERO referrals, or the job will take longer if they have to hire TERO referrals.

Contractors won’t work on our projects if they have to pay TERO Fees or hire our referrals or register with TERO

These are just a few of the standard arguments but no matter what arguments are brought forward, they all lead ultimately to on question.

“Is TERO worth it”?Slide6

TERO – Return on Investment

When I was asked the question and the traditional answers weren’t enough, I looked to outside resources to see if there were answers there. What I found was that there have been numerous studies done over the last several years that looked at the impact the “Big Box Stores” had on communities and if that impact was indeed the cause of the closing of their local counterparts. These studies indicate that beyond the direct return each dollar spent in the local economy has, there is additional or collateral affects that must be considered. These studies have shown that the return itself does vary, but all agreed that every dollar kept local, resulted in the creation of additional money being brought into the local economy.

For Example, if you spent One

D

ollar ($1.00) at your locally owned business, that One

D

ollar would result in an additional $.45 being introduced into the economy from the outside. One Hundred Dollars ($100.00) spent locally will actually boost the local economy by One Hundred and Forty Five dollars ($145.00). Slide7

The Yakima Tribe in Washington did a study specifically related to the issue of Tribal spending within their local tribal economy and found a significantly higher return. Lee Adolph reported this to me and indicated this study was conducted in the late 1990’s or early 2000’s while he was working for TERO. Their study found that there was a much larger return of 7:1 for each dollar spent.

When you factor

in reductions of other supportive type services that occurred when their members were able to afford things for themselves as well as other savings and reductions that resulted from that

reinvestment, you can see how tribal reinvestment can really lead to significant returns.

TERO – Return on InvestmentSlide8

TERO – Return on Investment

I had asked our regional TERO members if they had looked at this issue on a more local level. This figure was supported by Darrel Winter from the White Earth Band who had this to say:

“When I was a very active leader in the Local Callaway Jaycees (on the

Reservation)

& the MN State Jaycees, we visited over 30 local communities, in a 9

County,

including the White Earth Reservation, where we started 4 separate Jaycee Chapters, in small towns. Our point was; for every $1 Dollar invested in their Individual Communities, A Seven Fold (ex: 7 x $1 invested) = $7.00 return, circulating in the local businesses…”While this information is valuable and does help support why preference in contract awarding should be enforced it doesn’t go directly to placing a financial valuation on the good TERO provides to the

membership.Slide9

TERO – Return on

Investment

In an effort to find a way to determine and report a strictly financial view of the TERO landscape, I reviewed the data collected and reported over the past several years with the Ho-Chunk Nation’s TERO. I was eventually able to come up with the following formula:

T=

(ab-(E-c)/E

).

The Formula T= (ab-(E-c)/E) can best be described like this:Where “T” is TERO’s Return on Investment, “ab” is Actual Benefit, “E” is Expense and “c” is Collections

.

On

it’s own, it doesn’t really mean much, but when you insert the appropriate data into the formula, you finally have a logical means of calculating and reporting TERO’s fiscal worth.Slide10

TERO – Return on Investment

Actual Benefits are known expenditures on clients such as supportive services and assistance and the actual wages earned if we were able to help them find work.

Expense

is the annual cost of

having a TERO and does not

include the money spent on

clients. That money is the

investment we are

tracking and is part of the Actual Benefit

.

The rest of the expenses are to keep the doors open, lights on and staff the program so it all must be taken into account.

Collections

are just that, the fees we collect, plus any interest or other revenue TERO brings in such as our EEOC

contract. This also includes

any outside revenue streams and

contributions. If a TERO does not collect fees, simply use zero “0” for “c”. If your fees do not go to fund your TERO but go back into a “general fund” of your Tribe, you would still count those fees in this formula. They are still providing benefit in some way.Slide11

TERO – Return on Investment

The screenshot above is the blank excel spreadsheet I put together to simplify the calculation of the actual return on the investment in TERO.Slide12

TERO – Return on Investment

The Formula tracks actual benefits provided to tribal members. Without using projections but actual, the formula will help you to demonstrate that there is a genuine financial return in addition to the personal benefits of TERO.

Because it is actual year-to-date figures that are used, the formula can also be used to help evaluate changes that you make in your program by following any changes in the calculated return helping to determine whether the changes were positive or negative.

When individual figures are used, it can also calculate the effectiveness of specific staff. For example, if staff are responsible for the collection or administration of fees or fines you can run the calculations using only their numbers. This also applies to supportive services issued.

Of course, this should not be the only factors considered when evaluating your program or staff but it is another tool in your kit to help support your program.Slide13

Wainiginapsana

Thank You for you kind attention

Nicholas Kedrowski

TERO – Return on Investment