Gov. Sam Brownback and legislative leaders voted Friday to sell the Kansas Bioscience Authority’s investment portfolio for $14 million to a Chicago-based firm.
The state has spent $232 million on the Bioscience Authority since it formed in 2004 under Democratic Gov. Kathleen Sebelius with the goal of spurring growth in the biotech sector. Lawmakers voted to sell off its assets last session as part of a budget fix for an estimated $25 million, a little more than a tenth of the state’s overall investment in the authority.
Senate President Susan Wagle, R-Wichita, who was a fierce critic of the idea during Sebelius’ governorship, noted the stark difference between the state’s 12-year investment and its final return. She said that the state should learn a lesson about spending taxpayer money on projects like this.
"I think what happens is when you give taxpayer money to a group of people with no oversight oftentimes that group can get carried away because there’s no accountability,” Wagle said. “And in this situation there was no accountability.
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"It’s a tremendous loss for the state," Wagle said, referring to the overall expense. "I’m glad we’ve finally resolved it and we’ve gotten out of the business of using taxpayer dollars to independently invest in businesses without oversight."
A 2012 audit found that a former head of the Bioscience Authority had misspent funds.
Supporters of the Bioscience Authority, on the other hand, credit it with helping the state land the federal National Bio and Agro-defense Facility in Manhattan and blame funding cuts under Brownback for the project’s demise.
Senate Minority Leader Anthony Hensley, D-Topeka, said that the Bioscience Authority had set up the state to be “a real leader” in the biotech industry. “And basically, between the Legislature and the Brownback administration they just drove it into the ground,” Hensley said.
The stock portfolio will go to Origami Capital Partners, a Chicago-based investment firm.
Commerce Secretary Antonio Soave said that the state went with Origami as the buyer because the firm was willing to buy up the Bioscience Authority’s entire portfolio.
The State Finance Council, a committee that includes the governor and legislative leaders from both parties, voted unanimously to approve the sale Friday. The $14 million sale will officially happen on Jan. 3.
The state is still in the process of selling the Bioscience Authority’s building and land. The sale of the land is complicated by the fact that the state still owes the city of Olathe money for improvements that were made to the area around the Bioscience Authority’s campus.
Soave said that the state was working on the agreement with Olathe.
The Legislature passed a school finance plan in late June that would have steered dollars from the Bioscience Authority sale toward a school finance fix if the sale of its assets exceeded $25 million.
The money would be used to replenish the state’s K-12 extraordinary needs fund, a pool of money that’s used to help school districts cope with unexpected costs or dips in revenue.
Rep. Ron Ryckman, R-Olathe, one of the main architects of that bill who will be sworn as speaker of the Kansas House in January, said that "based on the information today it doesn’t sound like it was going to be practical."
Mark Tallman, the lobbyist for the Kansas Association of School Boards, said that this should not impact the increased equity aid that the state has to provide to poor school districts as part of a Kansas Supreme Court order, but that it likely means that districts expecting to receive money from the extraordinary needs fund won’t be able to get it unless the building and land sales exceed expectations.