Innovation campus: Big plans, big costs – and big gains?

08/16/2014 6:06 PM

08/17/2014 8:50 AM

Part of John Bardo’s job is to act the salesman.

The president of Wichita State University spent much of the past week laying out a detailed case about why the 20 or so new buildings for an innovation project he wants to create on what is now the campus golf course are worth the effort and money.

He’s proposing that the state, businesses, industries and students join in a new partnership that, if accomplished, would increase the size of the campus by about 50 percent.

It would raise student fees and cost potentially hundreds of millions of dollars, much of that from the private sector or from donations. He plans to start with a $43 million “Experiential Building,” built partly with tax money. Plans call for spending another $70 million (including $12 million in state money) for a new business school alongside a new innovation building. During the next 20 years, if things work out as Bardo hopes, WSU and its partners will build business buildings, residence halls for students and graduate students, apartments for retirees wanting to live on a college campus, a 600-space parking garage, a hotel, ponds, fountains, walking paths, another student center and more, all constructed on the university golf course, which borders Oliver from 17th to 21st streets.

“The money thing is interesting because it scares some people to death – everybody but me,” Bardo said. “But it really is doable. And I am not naive. I have been dealing with these kinds for things for a long time.”

He said he can’t say yet what the total price tag is – or the expected cost to individual students in increased student fees.

Several key area legislators say they like what they call his bold ideas to grow jobs and the state economy.

But that doesn’t guarantee state support, for example, for the $12 million he’s now seeking to help build a business school.

In two years, according to the state’s own projections, the state budget will be at least $283 million in the red unless trends change. Republicans who voted for tax cuts that helped lead to that shortfall say those cuts will turn the state economy around. But Democrats like Anthony Hensley, D-Topeka, the state Senate minority leader, disagree.

“I’ve been in office for 40 years,” he said. “But I have never seen a doomsday scenario like this.”

Funding sources

Bardo on Wednesday outlined more specifics to the Kansas Board of Regents. Behind the scenes, he said in an interview last week, he has talked at length with state legislators, business leaders from Wichita and around the country, the Wichita Chamber of Commerce and top city and county development officials who are working on their own plans to grow jobs and plug into what WSU is doing.

On Friday he met with faculty and staff members on the WSU campus.

Two of the first and biggest things he hopes to accomplish involve some heavy lifting by both state taxpayers and WSU students.

Bardo wants to break ground in January on a new “experiential engineering” building: 180,000 square feet, costing an estimated $43 million and built next to 17th Street where the now-closed Wheatshocker Hall is.

It would create a new way of doing business in Wichita, Bardo said: no classrooms, only labs and offices filled with entrepreneurs, students and researchers. The idea would connect business partners with WSU students and researchers – and with high-tech 3-D printers, plasma cutters, high-tech lathes and lasers. If you’ve got an idea, you can go in there and use the expensive tools and get advice and help from everyone from scientists to patent attorneys.

That building would be paid for in part with $18 million from the engineering expansion grant, money the Legislature allocates to WSU to grow engineering in the state, said John Tomblin, WSU’s vice president for research and tech transfer.

The rest of the money would come from a variety of sources, including the WSU Foundation, incubator/private company rent from within the building and money borrowed through bonds made possible through the Wichita/Sedgwick County mill levy given to WSU. The $1,000-a-year scholarships for Sedgwick County residents will continue.

The other big item: a new business school (140,000 square feet), replacing the current Barton Business School. Next to the new business school would be a third new building called an Innovation Center, at 20,000 square feet.

The cost: $70 million – $35 million raised by the WSU Foundation, $23 million collected over 30 years from new fees paid by WSU students and $12 million that WSU would need from the state.

Everything after that would involve private investment, donations and other sources not involving tax money, Tomblin said.

Potential big gains

Bardo acknowledged that’s a big request in a state still suffering from the recession and where state revenue projections look dire.

But he says the proposed investment will work and that the cost of not doing something like this could be high.

Wichita’s aerospace companies are either leaving, such as Boeing, or cutting back, he said. Wichita has lost 15,000 – more than a third – of its aviation jobs during the past six years. The state needs to diversify, he says.

“I am asked sometimes if this is pie in the sky,” he said. “It’s not. Everything I am proposing will be new to Wichita. And yet none of it is really new; other places are already doing it successfully.”

North Carolina State University has pioneered a similar overall plan and is already seeing benefits, Bardo said. Much of his proposals are based on what that school did, but, he said, he has also studied similar university-business partnership plans that are now unfolding in Omaha; Boulder, Colo.; Salt Lake City; New York City; Boston; and elsewhere.

One advantage Wichita would have: “We have a lot of engineers – and a lot of skilled blue-collar people who know how to make things.”

“If you read ... what’s going on with the structure of business today, they understand that innovation is going to drive their bottom line,” he said. “So many businesses now, instead of doing research and development in-house, are finding that partnerships are more cost effective with universities and sometimes even with other companies.”

In partnerships like that, companies can groom their own employees, using the students they help train. It usually takes a company two years to train and develop a new employee, but that would be sped up if the company’s already working with potential new employees at the university.

“From a business perspective, it’s all wins, no losses,” he said.

Successful partnerships

The two legislative committees that shape state spending are the Appropriations Committee in the House and the Ways and Means Committee in the Senate. Both are chaired by Wichita-area legislators: Gene Suellentrop, R-Wichita, in the House and Ty Masterson, R-Andover, in the Senate.

Both favored the significant tax cuts passed by the Legislature in the past two years.

Both concede that those tax cuts have cut revenue, though they say we should give them time to to work.

“We put a lot more money in the pockets of state taxpayers, where it belongs,” Masterson said.

And both say they are eager to hear what Bardo is proposing, even though he’s asking for a lot of state money.

They don’t know yet whether the state will soon give Bardo the help he’s asking for. But they say he’s proposing bold and thoughtful new initiatives that could grow business.

“Money is going to be real tight with the state,” Suellentrop said. “But the model Dr. Bardo is talking about has worked well elsewhere.”

Partnerships between universities and companies tend to minimize risk, he said. Universities in these partnerships leverage their equipment, technology and students to create benefits for all, he said. Students get a better education from working directly with professionals.

“There are many companies out there looking for partnerships like that,” Suellentrop said.

In crisis

Two years ago, Suellentrop said, relations were not good between legislators and university leaders across the state. Suellentrop said legislators began asking for more efficiency and more accountability, and universities seemed reluctant at first to do that. But relations have improved since then. And legislators looking for ways to boost the economy seem eager to listen to proposals like Bardo’s, he said.

“He’s doing just what he should be doing,” Masterson said. “The real root of growth now is innovation. We are much more likely to grow now by creating something new rather than woo the next big company.”

But another Wichita legislator who likes the boldness of Bardo’s plan says the Republican-supported tax cuts will not only make it difficult to support WSU but will also make it difficult to meet the state’s most basic obligations.

“There is no one looking at our state budget right now who does not think that we are not going to have a massive budget crisis starting in January,” said Jim Ward, D-Wichita. “We’re in a crisis. And it is going to be an education crisis.”

Budget worries

By late June 2016, analysts say, the Kansas budget will be $238 million in the hole unless legislators cut more expenses or the state sees economic growth. Problems like that have often led to more budget cuts for universities rather than more spending.

Masterson dismissed the criticism and said that revenue growth will come. “I’m not as scared as others seem to be,” he said.

Ward had one other objection to how the tax cuts – and resulting budget cuts to universities – put a burden on people. Bardo and other university chiefs raised tuition, meaning students and their families made up for the legislative cuts.

WSU tuition and fees for a full-time undergraduate student from Kansas have increased by 33 percent during the past five years, from $2,733 a semester to $3,633 a semester. That’s a $900 increase per semester. During that same time period, money the state gives WSU from its general fund decreased by $1.7 million, or 2.6 percent, although the state has increased the amount of money given to WSU for economic development programs by $5.5 million in that time frame.

“I’m glad he (Bardo) is being aggressive about finding alternative ways to finance the university,” Ward said. “But who is picking up the tab?”

Given the economic circumstances, Suellentrop wants to give Bardo’s proposals careful study.

“We simply have got to figure out finally how to diversify our economy,” he said.

“I know money is tight,” Bardo said. “But I know also that if they (legislators) do have any flexibility, then we have a shot to get them to help us. Maybe they could issue bonds over 10 years and help us while not breaking the bank. Or let’s say things are so tight they can’t help us this year ... but next year might not be that way.

“The case for doing this does not go away.”

Contributing: Bryan Lowry of The Eagle

Reach Roy Wenzl at 316-268-6219 or rwenzl@wichitaeagle.com. Follow him on Twitter: @roywenzl.

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