SC, TX and WV budgets retain some innovation funding

The state budget process is winding down across the country and SSTI continues to review the final budgets for funding for innovation-based programs. This week, we found level funding for South Carolina programs including MEP and regional-based economic development efforts, while university programs in Texas are taking a hit, and in West Virginia Gov. Jim Justice refused to sign the state budget although he will allow the legislatively approved measure to become law. Unless otherwise noted, the figures below represent level funding from the previous budgets.

South Carolina

South Carolina Gov. Henry McMaster signed the state’s 2018 budget (HB 3720) that would support several tech-based economic development programs that are funded through the Department of Commerce including:

• $1.3 million for the South Carolina Manufacturing Extension Partnership;
• $500,000 (up from $100,000 in FY 2016-2017 actual funding levels) for the South Carolina Small Business Development Centers;
• $250,000 for the South Carolina Council on Competitiveness – a nonpartisan, business-led non-profit organization committed to advance the long-term economic competitiveness of South Carolina through industry cluster development efforts and education/workforce development initiatives; and,
• $219,000 for economic development activities related to Innovation & Emerging Industries that will support tech startups, attract out-of-state investors, and advocate for/market the state’s tech industry.

The Commission on Higher Education will be appropriated $885,284 in continued support for the SmartState program to support SmartState Centers and endowed chairs at institutions of higher education. The SmartState centers are grouped in six industry-focused Smart Clusters to make it easier for businesses, students, potential faculty, and the public to engage with the SmartState Program. Each SmartState Center includes one or more endowed chairs, research infrastructure, technical staff, and sustainable funding sources including a 1:1 match from a non-state-government source.

Launched in 2002, the state legislature committed more than $30 million in lottery funds over six years to support the SmartState program. Until the remaining funds of the initial state investment is exhausted, the Commission on Higher Education is authorized to use $885,284 per year to support SmartState activities including SmartState centers and endowed chairs. Once those funds are exhausted, the program would cease unless other funding is provided through the legislative budget process.

Texas

Texas Gov. Greg Abbot signed the state's next two-year budget (SB 1) for FY 2018-2019. While the governor vetoed nearly $120 million in spending, the cuts will impact several efforts to grow the state’s innovation economy including:

• $5.6 million (an 86 percent decrease from FY 2016-2017 funding levels) for the Governor's University Research Initiative to recruit “transformative researchers” to the state;
• $640,000 (level funding) in both fiscal years for the Small Business Incubator Fund; and,
• $445,670 (a 10.9 percent decrease) in both fiscal years for the McAllen Advanced Manufacturing Research and Education Park.

To support research capacity and university-led economic growth at the University of Texas at Austin and Texas A&M University, the state will commit $125.2 million (a 14.8 percent decrease from FY 2016-2017) via the Texas Research University Fund (TRUF) with $62.6 million appropriated in both FY 2018 and FY 2019. The TRUF provides financial support for faculty to help ensure excellence in instruction and research. The University of Texas at Austin will receive $27.5 million in both years. Texas A&M University will receive $35.1 million for both years.

The remaining 25 state-funded institutions of higher education eligible for the Comprehensive Research Fund will receive $6.4 million (a 9.2 percent decrease) in both FY 2018 and FY 2019. The eight institutions designated as emerging research universities also will receive funding via two programs:

• $52.7 million (a 9.9 percent decrease) in both fiscal years via the Core Research Support Program; and,
• $17.5 million (87.3 percent decrease) in both fiscal years via the Texas Research Incentive Program that provides matching funds for the enhancement of research productivity.

West Virginia 

While West Virginia Gov. Jim Justice will not sign the state’s budget due to an impasse over tax changes, Justice will allow the legislatively approved budget for the FY 2018 (SB 1013) to become law.  Justice called the budget a “travesty” and criticized lawmakers for not approving tax increases he proposed to avoid cuts to programs.

As part of a budget consolidation effort undertaken by the previous governor, the state does not provide line item appropriation numbers for several tech-based economic development efforts including the Robert C. Byrd Institute for Advanced Manufacturing, TechConnectWV, and the West Virginia Manufacturing Extension Partnership. Instead, these and other economic development efforts are funded via a competitive process that is overseen by the West Virginia Development Office.

In FY 2018, the budget appropriation for the West Virginia Development Office includes $3.9 million for “current expenses” to support the competitive funding process of economic development efforts, a decrease from $4 million (5 percent decrease) for "current expenses" in FY 2017.

The West Virginia Research Challenge Fund will receive $2 million (level funding from FY 2017) to support research and development projects at West Virginia institutions of higher education. Activities supported include:

• Supporting research that builds on the state’s existing research strengths in emerging science, technology, engineering and mathematics (STEM) fields;
• Developing students and faculty;
• Promoting collaboration between grades K-12 and higher education;
• Recruiting eminent scholars to strengthen research capacity and competitiveness; and,
• Cultivating economic development projects that have significant potential to attract industrial, federal, and foundation partners and funding.

The fund is managed by the Higher Education Policy Commission’s Division of Science and Research.

Included in the appropriation for the West Virginia Advance Workforce Development program, the state will provide $200,000 to be used exclusively for advanced manufacturing and energy industry specific training programs.

The budget also appropriates $452,831 for the West Virginia Engineering, Science and Technology Scholarship Program – a student financial aid program designed to enable and encourage academically talented individuals to pursue careers in the fields of engineering, science and technology.