KSTC: $21 Million well spent?
Tuesday, June 30, 2009 at 9:58AM Yesterday we discussed that ongoing "belt tightening" will be required from state government for the foreseeable future. We offered that it is time to move beyond simply imposing across the board reductions in agency expenses and begin looking at wholesale elimination of programs either within or funded by state government. One that we believe deserves further evaluation is the Kentucky Science and Technology Corporation. (www.kstc.com)
According to a report posted on their website, KSTC has awarded over $21 million in seed grants since program inception. It claims that there has been over $119 million in follow-on funding. Of that - nearly half is from other public sources. This information does raise the question of whether KSTC is funding companies that actually have potential to turn into sustainable private sector firms or are they simply creating wards of additional government largess.
The report also indicates that their programs have created 448 firms & 2,724 jobs in Kentucky, paying an average wage of $48,000. While job creation is generally welcome, it's not quite clear as to how much it costs Kentucky's taxpayers to create jobs through KSTC.
Do we determine it by the amount of funds spent divided by the number of jobs created? If so - that works out to be about $7,709 per job. Perhaps it is money well spent but we'd need more data to make that judgment.
How many of those jobs are still in existence?
What is the economic impact of those jobs?
How many firms went from creating jobs from government funding to creating jobs from private sector success?
The list could be long. Ultimately - even after the data is determined, policy makers would still need to weigh the return on investment (ROI) from KSTC programs versus the ROI of, say, early childhood immunizations. Or drug courts. Or debt service to rehabilitate "deteriorated" schools. If the ROI from other services is higher, than the allocation of these funds to KSTC is questionable.
We don't claim to fully understand KSTC's data. We're working from what we can find on their website. We do think that what is publicly available is sufficient to pose these questions. We'd ask our policy makers to do the same.
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