A Kansas agency that distributes millions of state tax dollars to emerging bioscience companies is promoting its contributions to the economy as it waits for results from a financial audit and a prosecutor’s review of its operations.
The Kansas Bioscience Authority calculates that its investments over the past seven years have created more than 1,300 jobs that on average paid more than $68,700 during the state fiscal year that ended with June. It also says those investments have attracted tens of millions of dollars in additional research funds and private dollars and spurred spending on buildings and equipment.
But earlier this year, Gov. Sam Brownback said publicly he was concerned about the authority after a legislative committee’s hearings focused on questions about the agency’s spending and whether the authority focused enough on jobs in Kansas. One chief executive stepped down in April, and, with Brownback pushing for an external review, the authority initiated an outside audit.
Meanwhile, Johnson County District Attorney Steve Howe said last week that an investigation of the authority’s operations by his office is “still pending.” The authority’s offices are in Olathe, the county’s seat.
Howe said he expects his office to wrap up its investigation within a month, and authority officials expect the audit to be completed after the start of the new year.
“We need to get the audit issue behind us, the Johnson County prosecutor issue behind us,” said former state Rep. Kenny Wilk, of Lansing, a member of both the Bioscience Authority board and the governing board for the state’s higher education system, who was instrumental in the authority’s creation. “I suspect there will be some issues out of that.”
The state created the authority in 2004 hoping to nurture fledgling companies and make biosciences a major industry in Kansas. The authority is governed by an 11-member board appointed by legislative leaders, the governor and other officials, and the state sets aside tax dollars on the payrolls of existing companies for grants.
From its inception through June, the authority has invested nearly $88 million to create jobs with more than 40 companies, according to a report it released last week. The total investments included almost $8 million during the most recent fiscal year.
The authority said the new jobs have resulted in the companies paying $354 million in wages since 2004, attracting $105 million in additional research dollars and $79 million in private funds. Companies have spent $279 million on buildings and equipment, the report said.
Furthermore, the average pay for the bioscience jobs compares to a statewide average of about $39,000, according to federal statistics.
“We’re creating good, high-paying jobs,” said Sherlyn Manson, the authority’s marketing and communication director.
Brownback spokeswoman Sherriene Jones-Sontag said the governor agrees that the Bioscience Authority is an important part of the state’s strategy for creating new jobs.
“But with taxpayer funds at stake, we need the results of the forensic audit to determine if Kansans are getting full value for their dollars,” she said.
The governor publicly expressed concerns during the spring, when the Senate Commerce Committee had hearings to examine its operations and allegations that the authority spent lavishly on salaries, bonuses and entertaining, criticism the authority said was unwarranted. The authority also came under fire for spending nearly $11 million on its Olathe headquarters.
Then-CEO Tom Thornton also faced criticism over a presentation he made to a business group in Wisconsin in October 2010 after a video was posted on YouTube. In the video, Thornton discussed a plan for attracting venture capital firms, saying those companies wouldn’t be required to invest in Kansas businesses.
Thornton, who’d joined the authority in 2006 after working in Illinois, resigned from his Kansas position in mid-April, taking a job in Cleveland, leading efforts by a nonprofit medical clinic there to create commercial products from new drugs and health treatments.
Howe declined to discuss the Johnson County district attorney office’s investigation of the authority’s operations, and Manson said authority officials have no information about it. Previously, they’ve presumed it stemmed from allegations aired during the Senate Commerce Committee’s hearings and have expressed no concerns about its outcomes.
Despite the criticism aired before legislators, the disclosure of Howe’s investigation and Brownback’s public statements, the authority and Thornton retained bipartisan support among legislators. Senate President Steve Morris, a Hugoton Republican, said the numbers released by the authority last week show it continued to do an excellent job in building a biosciences industry.
“I was very pleased that throughout all the turmoil, they were able to do the job they were assigned to do,” Morris said.