TOPEKA — Members of the Senate Commerce Committee got their first look at the spending records of the Kansas Bioscience Authority and did not like what they saw.
By the end of Tuesday's meeting, they had called for a Legislative Post Audit and sent a bill to the Senate floor to install the secretaries of commerce and revenue as the chair and treasurer of the authority's board.
Some committee members said they were appalled by salaries and bonuses paid to executives and staff of the agency, especially the $265,000 salary and $100,000 bonus paid to the authority's chief executive officer, Tom Thornton.
The documents showed that 12 of the agency's 21 employees have salaries of more than $100,000.
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In addition to the CEO's bonus, 12 additional employees received a total of $106,000 in bonus money, the records showed.
"They're very exorbitant for Kansas salaries," said committee Chairwoman Susan Wagle, R-Wichita, adding that Thornton's compensation is "four times the governor's salary."
Sen. Jean Schodorf, R-Wichita, said she understands that the authority has private-sector participation and the expectation is that it should be run somewhat like business.
But, she added, "This is a government agency, government money, taxpayer money. To be handing out bonuses like this... it's just shocking to me."
Thornton was supposed to appear before the committee Tuesday. His staff said he had a death in his family and could not attend.
In his place was authority chief financial officer Janice Katterhenry. She said executive compensation was decided by the authority board with guidance from Buck Consultants. The company is a subsidiary of Xerox Corp. specializing in human resources.
Katterhenry was the authority's second-highest-paid employee in 2010, with a salary of $175,000 and a $24,000 bonus.
The authority's mission is to encourage businesses in the biotechnology field to locate labs and other facilities in Kansas. It does that through a combination of promoting the state's business climate and providing direct capital investment to emerging companies in the field.
The authority's finances have come under scrutiny by Wichita-area legislators after complaints from scientists at the Wichita State University Center of Innovation for Biomaterials in Orthopaedic Research, or CIBOR.
The scientists have claimed that they are being shortchanged on a five-year, $20 million grant that they say they were supposed to receive from the authority.
CIBOR is attempting to use aerospace composite materials to develop new medical devices, such as hip and knee replacements, battlefield splints and stretchers.
Thornton has denied that the authority committed to any funding for CIBOR beyond an initial $4 million investment.
However, lawmakers say the authority made presentations to them indicating that the funding would be forthcoming.
Some senators urged a cautious approach on the agency's spending, to avoid compromising efforts to land high-paying jobs in a growing field.
"I'd hate to see their mission damaged by peripheral concerns," Sen. Tom Holland, D-Baldwin City, said after the hearing. "Let's let the board defend their actions before jumping to any conclusions.
Sen. Jeff Longbine, R-Emporia, also urged caution, saying he's been involved in economic development for 15 years and undue controversy could discourage private-sector investors.
"If they thought they were going to be questioned every step of the way and they were going to be exposed and were given a feeling of (being) unwanted, they have the ability and will take advantage of the ability to locate somewhere else," Longbine said.
Several senators also questioned the agency's spending on entertainment and promotion, including $21,197 for a magazine-style annual report, $20,750 for advertising to a trade magazine that praised the authority in print and $6,270 for a legislative reception in January.
Sen. Chris Steineger, R-Kansas City, said the agency's spending is "the worst thing I've seen in 15 years of public office."
"We're paying them... to manage and invest our money wisely," he said. "I think it's obvious to everybody here that this money is not being spent wisely, it's being spent to aggrandize and to have one hell of a lifestyle on the public dollar."
Steineger and Wagle also questioned ratings by Business Facilities magazine, which ranked Kansas No. 5 in the nation for biotechnology and gushed about the authority.
"We continue to be impressed with the work of the Kansas Bioscience Authority (KBA), the key driver in the Sunflower State's remarkable progress up the national biotech ladder," the magazine wrote. "KBA's stewardship of a $581-million biotech investment fund is a uniquely focused and highly successful campaign that brings together industry, higher education and government in a coordinated effort that has made Kansas a national center for animal health research, a leader in pharmaceuticals and an emerging player in bioenergy."
Thornton, the Department of Commerce and others have frequently cited that ranking as evidence the system is working as it should. It appears prominently in an animated bubble on the authority's website.
Steineger said he noticed that the No. 2 expenditure in the authority's advertising budget, $20,750, went to Group C Media Inc., a New Jersey-based company that publishes Business Facilities magazine.
"What you're saying is that Group C Media is paid $20,750 in advertising and that is the same magazine that ranked us fifth in the nation?" Wagle said.
"Right ... essentially you're buying a ranking," Steineger answered.
Jack Rogers, the editor-in-chief of Business Facilities, who was contacted after the hearing, said that is untrue.
He said like most trade magazines, Business Facilities publishes "advertorial" sections where advertisers can buy space to tout themselves in print, but that the rankings are completely separate and uninfluenced by ad dollars.
He said the biotechnology ratings are compiled from about two dozen data sources, both governmental and private, including investment, number of facilities, state support and other factors.
Kansas rose substantially in the rankings because of the increased potential for biotech business after the federal government selected Manhattan as the site of the National Bio and Agro-Defense Facility, he said.
"The states and municipalities that are ranked in our magazine are not involved in the preparation or evaluation of our rankings and are not informed of our rankings decisions until these rankings are finalized and announced," he wrote in an e-mail. "The fact that a growing number of our top-ranked locations are eager to promote their standing in our annual rankings report indicates to us that we have succeeded in establishing this report as a credible and respected benchmark for the economic development and site selection communities."