Kansas Gov Puts TBED Programs in Jeopardy with Budget Request

Tech entrepreneurs in Kansas would lose a long-time independent friend and ally in their efforts to expand the state's economy if the FY10 budget proposed by Gov. Kathleen Sebelius passed the state legislature. The governor has proposed many of the functions of KTEC, a program spanning more than two decades as a quasi-public agency developing Kansas' technology-based economic development efforts, would be cut substantially and absorbed by the state Department of Commerce (DOC).

In addition, the proposal advanced by Gov. Sebelius eliminates or cuts funding in most other tech-based economic development initiatives funded by the state. Gov. Sebelius unveiled last week her FY10 budget recommendations and revised budget for FY09 based on the most recent revenue estimates that report a gap of more than $900 million. Citing a goal of reducing overhead expenses, the governor recommends eliminating KTEC and Kansas, Inc. as separate agencies and moving select KTEC business development programs to DOC.

For FY10, the governor recommends $25.9 million for the DOC from the Economic Development Initiatives Fund (EDIF), which includes $7.5 million for KTEC programs. This is a reduction of $4.5 million approved for KTEC in FY09. No funding (a reduction of $415,363 approved last year) is included for Kansas, Inc., which conducts economic development policy research and strategic planning for the state.

Under the governor's proposal, the DOC would administer some of KTEC's grant programs including the EPSCoR program, the Mid-America Manufacturing Technology Center, and the Strategic Technology and Research Fund, which provides matching dollars for programs aimed at funding basic science research in science and engineering at state universities. Budget documents note that the DOC also would provide operational support for seven business assistance incubators and five university-based Centers of Excellence. Additionally, KTEC's board of directors would continue to function as part of the DOC to make recommendations on grant awards.

However, with key support services to high-tech entrepreneurs suspended under the proposal, KTEC argues that the governor's recommendation does not fold KTEC into the DOC, rather it eliminates main sources of support for the state's innovation economy.

"By eliminating the key, nationally recognized programs, Kansas will lose the tremendous momentum and reputation the state has earned for being technology friendly as well as the traction required to build a dynamic new economy," said Tracy Taylor, KTEC CEO, in a press release. This includes elimination or defunding for the following programs:

• Direct equity investment in promising technology companies;
• KTEC Pipeline, an entrepreneurial fellowship program;
• Management and facilitation of the Kansas Angel Tax Credit Program and the Angel Networks across the state;
• Proof of concept funding; and
• All KTEC staff expertise.

Additional executive budget recommendations include limiting the Kansas Bioscience Authority transfer to $35 million in FY09 and $40 million in FY10 for a cost savings of $12 million and $20 million, respectively. In November, it was estimated that the transfer of income tax withholdings to the Kansas Bioscience Authority would be $47 million.

Recommendations involving the EDIF include $4.9 million for Wichita State University aviation research and $2.5 million for aviation classroom training equipment for a total $7.4 million (down from $7.5 million approved in FY09). This funding would build on previous state investments to help ensure aviation infrastructure and secure additional federal resources, according to the governor's office (see the May 21, 2008 issue of the Digest).

For the purpose of providing economic benefits to a wind energy manufacturer for job growth opportunities in the state, the governor proposes an additional $2 million transfer from the EDIF to the Kansas Economic Opportunities Initiatives Fund.

Within the Board of Regents budget, the governor recommends $180,500 for a Technology Innovation and Internship grant for community colleges and technical schools that requires a one-to-one match by the receiving institution. The grant allows instructors to intern for private industry and provides funding for innovative equipment for students. However, funding for the Kansas Academy for Mathematics and Science would be eliminated in FY09 and FY10 under the governor's proposal. This two-year residential program for high school students earning college credits was established by the legislature in 2006 with a planning grant of $295,000 approved in FY09.

Gov. Kathleen Sebelius' FY10 budget recommendation is available at: http://budget.ks.gov/gbr.htm.