Politics & Government

Bill would close Kansas bioscience agency, allow for liquidating assets

Members of the Senate's budget committee, including Sens. Jim Denning, left, R-Overland Park, left, Sen. Ty Masterson, R-Andover, committee chairman, and Sen. Laura Kelly, D-Topeka, held a hearing Monday , May, 18, 2015, on a bill apparently drafted by the administration of Gov. Sam Brownback to eliminate the Kansas Bioscience Authority, the state's leading venture capital organization.
Members of the Senate's budget committee, including Sens. Jim Denning, left, R-Overland Park, left, Sen. Ty Masterson, R-Andover, committee chairman, and Sen. Laura Kelly, D-Topeka, held a hearing Monday , May, 18, 2015, on a bill apparently drafted by the administration of Gov. Sam Brownback to eliminate the Kansas Bioscience Authority, the state's leading venture capital organization. Associated Press

TOPEKA – The Kansas Bioscience Authority would be dissolved under a bill introduced anonymously in a state Senate committee.

SB 305 would place the authority, a public-private partnership that invests state dollars in bioscience companies, under the control of the Kansas Department of Commerce and allow for its assets to be liquidated. The agency was created under former Gov. Kathleen Sebelius.

Officials in Gov. Sam Brownback’s administration refused to say Monday whether the administration helped craft the bill.

Sen. Ty Masterson, R-Andover, chairman of the Senate Ways and Means Committee, said he had no role in writing the bill and was not sure where it had originated.

During a hearing before the committee on Monday, Dale Rodman, the bioscience authority’s chairman and Brownback’s former secretary of agriculture, charged that the administration was seeking to liquidate the agency in the face of the state’s revenue woes.

Officials from the Department of Commerce and Brownback’s chief of state, Jon Hummel, would not say whether the department helped craft the legislation.

A 2012 audit of the bioscience authority showed that its former president had misspent funds. The Brownback administration made reforms, which Senate President Susan Wagle, R-Wichita, a former critic of the quasi-public agency, touted as one of the biggest accomplishments of Brownback’s first term.

However, Rodman said, the state’s budget problems have changed that. “We went from the penthouse to the outhouse very quickly.”

The agency has not yet received its $24 million transfer from the state’s general fund for the fiscal year ending in June. Halting that and liquefying the agency’s assets could boost state coffers while the administration and lawmakers search for ways to plug a $400 million budget hole.

“It’s all about the money,” Rodman said. “The KBA has about $16 million in liquid assets at this present time. … We have about $34 million in investments, which could well be sold in May under this bill.”

Several business leaders testified that the bioscience authority provides Kansas businesses with necessary start-up capital in industries that are otherwise dominated by markets on the coasts.

“While venture capital is plentiful for companies like ours, it is exceptionally difficult to find outside of Silicon Valley and pockets along the East Coast,” testified Matt Wilson, president of Overland Park-based Health Outcome Sciences, a company that produces software that helps physicians assess patient risk. “The opportunity to build these types of companies (high wage/high tech) inside Kansas is challenging without local funding.”

Wilson testified that his company had hired eight Kansas residents in the past year, each at a salary of more than $100,000. He said the loss of the authority could force the company to move to another state with more investment opportunities.

The only person to testify in favor of the legislation was Steve Anderson, the governor’s former budget director, who now is an analyst for the Kansas Policy Institute. Anderson said taxpayer money should not be used for private-sector investments.

“When government gets in competition with the private sector, it very seldom ends well for the money for the taxpayer. … A lot of money gets poured in, not a lot of money gets poured out,” he said.

Masterson said he was interested in moving forward with the bill.

“We’re talking about trimming budgets. Is this something we need to be looking at?” he said, noting that the authority has had a troubled history.

Masterson said that if the authority were to be placed under commerce, it should probably be liquidated.

Reach Bryan Lowry at 785-296-3006 or blowry@wichitaeagle.com. Follow him on Twitter: @BryanLowry3.

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