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Archive for Monday, October 15, 2012

KBA offers glimpse at investment outcomes

October 15, 2012

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The number of jobs created by Kansas Bioscience Authority investments more than doubled during the 2012 fiscal year compared with the year before, KBA staff members told the group’s board of directors Monday.

The board also elected Lawrence attorney Dan Watkins to remain its chairman for the coming year during Monday’s meeting.

KBA staff reported on several outcomes of the group’s investments. Financial analyst Ryan White told board members that while the figures hardly told the whole story when it comes to the KBA’s goal to establish a thriving bioscience sector in the state over the long term, they did indicate good progress.

“In some ways, the most important outcomes of the KBA investments and the other efforts in the bioscience sector won’t be known for years,” White said. “But we feel like these numbers, they demonstrate that the KBA investments and the grants are succeeding, and we’re helping the state move forward in a good direction.”

KBA investments led directly to 332 new full-time bioscience jobs in Kansas during the 2012 fiscal year, which ended June 30. That brings the total number of jobs created by those investments to 1,664 since the KBA was created in 2004.

Those 1,664 new jobs accounted for $122.8 million in wages in 2012 —an average wage of about $73,800, compared with the overall state average annual wage of about $40,000. Since the creation of the KBA, those workers have earned about $480 million.

The KBA has invested a total of about $120 million since it was created, while it has committed to a total of about $272 million, the staff reported. During that time, those investments have also led to:

• $133 million in research funding awarded to researchers at universities or businesses in the state, including $41.1 million in grants awarded to the Kansas University Cancer Center during its successful pursuit of National Cancer Center designation. The KBA’s eminent scholars program, through which it has committed about $25 million to recruit top researchers to the state’s universities, has led to $39.6 million in grants, White said.

• $294.7 million in capital expenditures, including the purchase of buildings, equipment and land, by companies that have received KBA funding.

• $119.1 million in equity investments from private investors in Kansas bioscience companies.

Brad Kemp, director of commercialization and university investments for the KBA, said the group measured only the direct results of its investments, because broader economic effects are difficult to measure accurately. But board member S.J. Schaub of Lawrence said other members should consider that the KBA’s impact goes beyond those numbers.

“There’s a ripple effect, very difficult to get to and measure,” Schaub said. “I think we need to remind ourselves.”

Donna Ginther, a professor of economics at KU, shared with the board an assessment on how well the KBA measures the return on its investment. Her research found that it was doing a better job keeping score than similar organizations in other states, she said.

“Compared to what your peers are doing, we find that this is a very good job at trying to measure what is going on,” Ginther said.

She noted, though, that many investments made by the KBA could take a decade or more to yield the intended results — and some smart investments may ultimately fail despite good intentions.

For those and other reasons, she said, it can be difficult to make the case for state funds to inject into the bioscience sector.

Kansas Board of Regents member Kenny Wilk, a nonvoting member of the board, said he believed the KBA’s cultivation of research and development would mean more to its ultimate success in strengthening the state’s economy than the number of jobs and income it has created so far.

“We’ve got to keep thinking longer-term,” Wilk said.

Earlier in the board’s meeting, it voted to install officers for the coming year. Watkins will serve as the chairman for a second year.

Kansas Secretary of Agriculture Dale Rodman was named vice chairman. Gov. Sam Brownback appointed Rodman to the board in April after he led the administration’s oversight of an audit that raised questions about the activities of former KBA CEO Tom Thornton.

Rodman replaced Bill Sanford, who Watkins said Monday has resigned from the board.

Ken Buchele, an executive for ESB Financial, was voted the board’s secretary-treasurer.

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