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Emerging Technology Fund

Another look at Perry’s slush fund

Like everything with Rick Perry, there’s less to it than meets the eye.

Corndogs make bad news go down easier

Even corndogs don’t taste better than corporate subsidies

Texas Gov. Rick Perry has distributed $205 million in taxpayer money to scores of technology startups using a pet program designed to bring high-paying jobs and innovation to the nation’s second most-populous state.

But a closer look at the Texas Emerging Technology Fund, one of Perry’s signature initiatives in his 14 years as governor, reveals that some of the businesses that received money are not all they seem. One actually operates in California. Some have stagnated trying to find more capital. Others have listed out-of-state employees and short-term hires as being among the jobs they created.

A few have forfeited their right to do business in Texas by not filing tax reports.

An Associated Press review of the program found that some of the same companies credited with creating a share of the program’s 1,600 new jobs have actually stalled and in some cases blamed Perry’s office for their struggles.


The tech fund works like this: In exchange for money, startups give the state an equity position in their businesses. If the companies are successful, the state recoups its investment or even makes a profit. If they go bankrupt or shut down – and at least 16 have so far – the dollars are lost.

Those failures represent only a fraction of the fund’s full portfolio of more than 130 companies, some of which are clearly thriving. Venture capital funds are risky by nature and often endure losses. About 1 in 4 venture-backed startups fail, according to industry groups. Some studies put the rate of flops much higher.

But questionable job-creation figures and undisclosed business struggles in the fund’s annual report heap fresh doubts about transparency onto the fund, which has long been criticized as too opaque, including in a scathing 2011 report by state auditors.

Julia Sass Rubin, a venture capital expert at Rutgers University who studies economic development, said the lack of transparency runs counter to the private sector, where investors get more detailed information about performance.

“If this were a traditional venture capital fund, this would never fly,” Rubin said.

Funny how the private sector is so much better at doing everything, except giving money to the private sector. The lack of transparency with the Emerging Technology Fund, as well as the Texas Enterprise Fund, is a feature, not a bug.

Targazyme Inc. is one example of a problematic startup. On paper, the San Antonio-based startup is developing stem-cell breakthroughs with 14 employees and the help of $1.25 million in state funds. But the rural address listed for its Texas headquarters is actually a weedy horse pasture. During a recent visit by a reporter, the ex-husband of the CEO was warning his guest to watch for rattlesnakes.

Targazyme founder Lynnet Koh said her company is moving forward but that she left Texas because Perry’s office withheld additional funding, a complaint echoed by other recipients. She now lives in California and said many of the jobs created by the company were short-term hires outside Texas, none of which is mentioned in the fund’s 2013 annual report.

“If you ask me on a scale of 1-to-10 satisfaction with the state, I give it a zero,” Koh said. “Never, ever. Not for any money in the world would I do business with ETF.”

So I guess these are some jobs Rick Perry didn’t manage to steal from California, despite his best efforts. It’s like noting makes any sense anymore. Scott Braddock has more on a tangential subject.

One place where a little austerity would do some good

Rick Perry’s slush funds get no love in the opening budgets.

The House and Senate’s initial two-year budgets would force Perry’s deal-closing Texas Enterprise Fund to exhaust its last $7 million and throttle back on state film incentives and subsidies for major sporting events.

The Emerging Technology Fund, which subsidizes high-tech commercial ventures, would face slightly less dire prospects. The 8-year-old effort, which a Dallas Morning News investigation in 2010 found had awarded more than $16 million to firms with investors or officers who are large Perry campaign donors, has an estimated $120 million of existing money.

Lawmakers’ initial budgets would let it spend down that sum in the next two years.

“The Legislature is tired of seeing some of these programs being used the way they’re being used — or the appearance that they’re being used for that,” said House Appropriations Committee Chairman Jim Pitts, R-Waxahachie. “By zeroing those things out, the Legislature will have a way to look at these programs.”

In the past, Perry generally has succeeded in defending the programs, except in 2011’s budget-cutting session, when the Enterprise Fund and tech fund received no new money.

This year, though, Perry isn’t facing criticism only from Democrats, who say education and social services should get the first call on limited state dollars.

The Republican governor also is dodging charges of crony capitalism that were bandied about in his failed run for president last year and recently aired by Rep. David Simpson, R-Longview, in his failed bid to become Texas House speaker.

Last spring, Texans for a Conservative Budget, a coalition of a half-dozen groups, urged lawmakers to consider eliminating dozens of programs, including the Enterprise Fund and tech fund.

Of course, as we know, these budgets are “just a starting point”, so Perry isn’t going to have to beg for loose change on the streets for his pet projects just yet. I could live with the continued existence of these funds if there were some actual oversight on them, and more stringent rules and sanctions for the job creation requirements of the grants. But just not giving them any more money works for me, too.

From the “If pigs had wings” department

It’s never a bad time to construct a counterfactual.

How could you not take this guy seriously?

What if Rick Perry had never said, “Oops”? What if he could have, for Christ’s sake, just remembered that he had wanted to gut the Department of Energy? What if he hadn’t climbed into a tan coat and Brett Favre jeans and released that abominable Youtube video — you know, the gay one.

In other words, what if Rick Perry hadn’t been Rick Perry? If Rick Perry wasn’t Rick Perry, then Rick Perry would have been a pretty strong Republican presidential nominee. Way stronger than Mitt Romney.
Here’s why: Texas — and Houston in particular — is dominating right now. Americans at their core care about few things. The economy, jobs, and the housing market. It’s that simple. They don’t want to lose their jobs, or their home’s price to dissolve into the mist.

And if that’s the barometer, Perry would have had some staggering statistics to brandish. Texas added 12,500 non-farm jobs in May, the Texas Workforce Commission reported last week. It was the 22nd straight month of growth. What’s more, the state has added nearly 290,000 private sector jobs. This, while the U.S. unemployment rate languishes at 8.2 percent. Texas’ rate, meanwhile, hovers in the mid-6s.


So what does all that mean? It means that Perry — for all his failings — is in possession of one formidable record of enabling job growth during a time of malaise and tepid economic recovery.

It also means: Thank Allah Rick Perry is Rick Perry. And he’s not in this race.

No question, Texas’ unemployment rate and record of job growth is what made Rick Perry look like a formidable candidate on paper a year ago. You know how it went from there – insert your favorite sports cliche about why they play the games instead of deciding the winner subjectively. As much fun as it is to write alternate histories, there are two things to keep in mind here.

1. Sure, Perry was a knucklehead who stuck his foot in his mouth with regularity, but his “Oops” moment didn’t kill his campaign by itself. Perry had come under vicious attack in the primary for his HPV directive – one of the very few decent things he has done as Governor, though of course it was done for the purpose of enriching a crony – and for his 2001 signing of a state level DREAM Act, which granted in state tuition rates to public universities to the children of undocumented immigrants. In fact, it was his “have a heart” comment in response to criticism of this law that was the start of Perry’s downward spiral. Point being, even candidates who look strong on paper have vulnerabilities that will be exploited, and their strength in one area may not help them against attacks in another.

2. One result of Perry’s swift, gaffe-abetted implosion is that the job creation record that was the centerpiece of his candidacy never really got poked and prodded by his Republican rivals, and it was light years away from being addressed by President Obama’s campaign. There’s plenty to attack about his ecenomic record – many of the jobs that were created are low wage/low skill; much of Texas’ growth has been fueled by immigration; the tools Perry has had at his disposal to lure businesses to Texas – the Texas Enterprise Fund and Texas Emerging Technology Fund – are rife with cronyism and unmet job creation metrics, and even if they weren’t it’s not like this kind of zero-sum strategy translates to the national level; Texas’ consistently low levels of educational achievement portend future economic disaster, and Perry’s response to this was to push for historic cuts in public education funding. And so on and so forth; I’m sure there would be more, probably including some things we’re not familiar with.

Now maybe these things would resonate with a general election audience, and maybe they wouldn’t. Maybe Perry would have a strong counter-argument to them, or would be able to divert attention from them by making successful attacks of his own. We’ll never know. My point here is that everyone looks good on paper until the other side gets to have a say about it. Perry was gone from the race long before Team Obama ever got to ask the rest of the country if they wanted to be more like Texas or not, much as they’ve been framing Mitt Romney’s time at Bain Capital as something less than desirable. If it had become clear that Perry would have been the contender, Obama would have had a strategy for dealing with him and for turning his strengths into weaknesses. Again, maybe it would work and maybe it wouldn’t. We’re choosing our own adventure here, so there is no “right” or “wrong” answer. It’s just that saying the strengths Rick Perry had as a candidate going into the Presidential race would still be serving him as well as they did before he announced his candidacy is leaving the analysis short and ignoring what has happened with the guy who did survive the primary.

Hey, remember Perry’s Emerging Technology Fund?

It’s still a mess, and a cookie jar for his cronies.

The founders of Convergen LifeSciences Inc. had invested only $1,000 of their own money when they asked the State of Texas in 2009 to give them $4.5 million to help develop a new lung cancer-fighting drug using nanotechnology, according to documents the Austin American-Statesman obtained Wednesday under the Texas Public Information Act.

But the documents raised as many questions as they answered about Convergen, which was founded two years ago by David Nance, an Austin biotech executive and political contributor to Gov. Rick Perry, and Dr. Jack Roth, a researcher at the MD Anderson Cancer Center in Houston.

The company’s application listed three members of its board of directors, including Nance. The other two said Wednesday they had never served on the board.


The state paid Convergen half of the $4.5 million last August, when Perry, Lt. Gov. David Dewhurst and Speaker Joe Straus approved the grant, the second largest ever from the Emerging Technology Fund. The state cut a check for the rest of the money Tuesday.

Perry and Straus defended the Convergen award Wednesday. “We supported the grant based on the potential the technology offered in fighting cancer,” said Tracy Young, Straus’ communications director.


Convergen applied for the technology fund grant in July 2009. A regional panel that reviews fund applications turned Nance down. Convergen then bypassed a special state panel that reviews life-sciences applications.

Nance took his case to a 17-member statewide advisory committee that makes final recommendations on grants.

Among its reasons for recommending the $4.5 million award, the state board noted: “Finally, the committee knows and respects Convergen’s founding management team, having successfully launched other biotechnology companies in the past.”

Indeed, two members of the board knew Nance well. Max Talbott, now a consultant, was part of Introgen’s executive team. Bob Pearson, who has had business dealings with Nance, recused himself from voting on Convergen’s application.

Nance also has long ties to Perry, who has called him a close friend. Nance has contributed $100,000 to Perry campaigns since 2000.

Your tax dollars at work, folks. Maybe at some point during Perry’s victory lap around America the national media will ask him about this.

Auditor criticizes Emerging Technology Fund

The State Auditor has issued a report saying that the Texas Emerging Technology Fund needs more transparency. I know, I’m as shocked as you are.

The report recommended that the state’s 17-member advisory board — volunteers from the technology community who advise Perry and legislative leaders on the grant applications — should be more transparent about its dealings.

The committee should meet in public, record votes and keep minutes of its meetings, the report recommended. The committee members also should be required to file annual financial statements and be prohibited from investing with or being paid by grant recipients, it said.

The technology fund’s investments in startups have attracted controversy.

The report was ordered after months of news stories detailed a secretive grant process that could have benefited Perry allies.

And Perry has had to bolster the ethics policy for his staff and the advisory committee to discourage improper business dealings.

The report is here. See here and read the rest of the story for some background. Of course, no one paid much attention to the various media reports of questionable behavior by the ETF before, so I doubt anyone will pay much attention to this one now, least of all Rick Perry. But at least it’s on the record. Burka has more.

House votes to spend some Rainy Day funds

From the Trib:

House lawmakers preliminarily passed two bills Thursday that together will balance the state’s budget for the remaining months of the fiscal year through a mix of spending cuts and use of the Rainy Day Fund. The cuts were in the first bill, HB 4, which passed by a party-line vote of 100-46. The second bill, HB 275, authorizes the use of $3.1 billion from the state’s Rainy Day Fund. (See our liveblog of the debate here.) The latter measure generated more support from Democrats, with a final vote of 142-2.

Most of the reductions outlined in HB4 have already been implemented by state agencies. (See the list of agency fund reductions here.)

The votes came after nearly ten hours of intense debate. In all, lawmakers filed 65 amendments to HB 4. Democrats attempted to restore funding for public education, higher education, and health services. Some amendments were contingency-based; others targeted the governor’s various funds, including the mansion restoration account.

With very few exceptions, Democratic amendments went down on party line or near-party line votes. An amendment by Rep. Mark Strama limited one of Rick Perry’s slush funds, the Emerging Technology Fund, to only spend monies it had already allocated through August. A few other Democratic amendments drew a handful of Republican votes and some fine whining but still got tabled. Beyond that, nothing terribly exciting happened. The big show is tomorrow when HB1 gets debated and approximately one million amendments get voted on.

Sacrifice is for the little people

You almost have to admire the gall.

Milton Rister, director of administration in Gov. Rick Perry’s office, just asked Senate budget writers for a net increase of $81.5 million in state funds for the next two years.

If I took accurate notes — and Finance Committee Vice Chairman Chuy Hinojosa, D-McAllen, chided Rister for not submitting his requests in writing — Perry wants:

* $50 million restored to the Enterprise Fund, not raked off for Lt. Gov. David Dewhurst’s and Committee Chairman Steve Ogden’s favorite jobs programs at the Texas Workforce Commission and another one at Comptroller Susan Combs’ shop.

* $15 million more for the Emerging Technology Fund, which helps high-tech start ups but has been criticized because award recipients have been stalwarts of Perry’s political fundraising operation.

* $20 million more for film, TV and video game incentives.

* Authority to spend $10.2 million from court fees for criminal-justice grants.

*Ability to spend $11.3 million of hotel-occupancy tax on economic development efforts.

That adds up to $106.5 million but Rister said Perry’s willing to give up half of the $50 million the Senate budget gives him to assist local governments during disasters. Rister also asked for the same authority the Legislature has to transfer unspent money between two year budget cycles.

Apparently, the idea is that these little slush funds Perry controls are good for job growth. How you can believe that while pushing budgets that would result in the firing of 100,000 teachers, among other things, is a special talent on loan to our Governor. Here’s more about this, with Sen. John Whitmire playing the “you’ve gotta be kidding me” role.

[Whitmire] elicited testimony from Rister that the governor’s office has $265 million in unspent money in the Enterprise Fund, Emerging Technology Fund and other programs that it would like to carry over to the next two year cycle — and maintain as a sort of emergency account.

“How would that be different from a rainy day fund?” Whitmire asked. “Would that be kind of your rainy day fund that you want us to allow you to use?”

Whitmire: We’re going to be spending millions of dollars on tourism and movie production, but we’re going to be cutting back on Medicaid, letting teachers go, [cutting the Texas] School for the Deaf and autistic children? … Help me understand how you sit there and ask for those kinds of feel-good programs that might create some jobs but at the same time, we’re letting medical students go, residential residents go, state employees.

Rister: The priorities that the governor has outlined to us are job creation.

Whitmire: Even though … we’re letting teachers go, TxDOT is going to let engineers go, medical professors are going to be going? So how do you balance the two?

Rister: It’s a tough balance. … The governor has put a priority on bringing jobs to Texas. … Growing our economy is the way we get out of the recession. …

Whitmire: But UT Southwestern Medical [Center] yesterday told us that in the Dallas area, with the cuts under Senate Bill 1, they’ll lose over 1,000 employees, over 1,000 jobs … in Dallas. So we’ve got to take money from them to allow you to try to increase movie production and tourism. I don’t think the people of Texas that I represent would understand that.

In a just world, this would be the beginning of the end for Rick Perry. In the world we actually inhabit, I’ll be happy if the Senate simply thumbs its nose at him. Abby Rapoport has more.

The state of the state

Is strong, according to Rick Perry. So strong, in fact, that we’re going to kick the legs out of social services, because clearly we don’t need them.

When the state faced a budget crisis in 2003, Gov. Rick Perry’s office released a budget proposal that was full of zeros, stating that each agency would have to justify every dollar they spent. In 2011, the Governor has taken a different approach, releasing a budget with numbers.

Perry’s budget proposal slashes spending on the Health and Human Services Commission (providing about half of what the agency requested), the Texas Commission on Environmental Quality (providing only two-thirds of what the agency requested) and the Public Utilities Commission (only giving the PUC about 10% of what the agency requested).

Health and Human Services provides the state funding for Medicaid and Children’s Health Insurance Program. TCEQ regulates polluters, such as coal power plants and oil refineries. The TCEQ has been engaged in a long running battle with the EPA, which has long held that the TCEQ is far too lax when it comes to enforcing environmental law. The Public Utilities Commission regulates the state’s utilities and power grid. The state’s grid suffered from rolling blackouts during one of the coldest weeks in recent memory in Texas.

What’s a few blackouts among rugged individuals? Naturally, Perry doesn’t share in the sacrifice he’s calling on others to make, as his budget (a copy of which you can see here) calls for more money for his slush funds the Texas Enterprise Fund and the Emerging Technology Fund. He also extracts some revenge on the Historical Commission for not giving his wife what she wanted in the reconstruction of the Governor’s Mansion. Classy.

You can read the full text of Perry’s remarks here if you really want to. My reaction is that the Lege is already working on budget proposals, and they’ve already heard a lot of testimony from people who would be directly harmed by them, about which the Governor might know something if he weren’t off traipsing around the country. He still wouldn’t care, of course, but at least he might know. Other reactions of which I’m aware:

Texas Liberal

Texas Watch

BOR, which has a few more reactions from others here

State Sen. Kirk Watson

Texas Forward

Various other legislative Democrats

The Texas State Teachers’ Association

State Rep. Armando Walle

State Rep. Garnet Coleman

State Rep. Mike Villarreal

Paul Burka and Patricia Kilday Hart, who notes that Perry essentially refuted the idea of tuition deregulation in this speech

State Sen. Jose Rodriguez

State Rep. Lon Burnam

In the Pink


State Rep. Ana Hernandez Luna

State Rep. Carol Alvarado

Abby Rapoport

Nick Anderson

State auditor to look at Emerging Technology Fund

State Auditor John Keel will perform an audit on the state’s Emerging Technology Fund to see if the money is being used and distributed properly.

State Auditor John Keel said Wednesday that his office will review the monitoring of the funds, compliance of the companies and universities receiving the taxpayer money, and internal controls over awards.

“It is a significant amount of money. The state has a lot invested in this and in the outcomes,” Keel said.

Most of the decision-making behind the technology fund’s awards, as well as the names of investors in chosen companies, has been shrouded in secrecy.


Keel said Wednesday that his office will start an audit Dec. 1, and he hopes to have it completed by June.

“There’s been a lot of focus and attention on this in the press; all of those things brought us to the conclusion that we need to initiate an audit of the Emerging Technology Fund,” Keel said.

The fund has not been independently evaluated since its inception. The law creating the fund did not provide for audits, but Keel has broad discretion to evaluate state government programs.

Reports of the state auditor are public and outline weaknesses and failures of state programs in adhering to state law or accountability standards. Lawmakers study the results closely as they shape legislation and decide how much money to allocate to programs.

In a memo dated Tuesday and sent to key lawmakers who serve on the state audit committee, Keel said the audit will determine whether the governor’s office disperses the technology fund grants in accordance with the law, monitors recipients “to help ensure that they comply with terms of the grant,” and determine whether the companies and the governor’s office “have controls to help ensure accountability for the use” of the funds.

What do you suppose are the odds of that? It sure would have been nice for all of this to have been done six months ago, but I suppose it’s better than nothing. See various posts here for some background.

More on Perry’s self-appropriation of Emerging Tech funds

The Statesman moves the ball forward on the Emerging Technology Fund story and Governor Perry’s self-appropriation of its funds. Two points from the story stand out to me.

Gov. Rick Perry and the state’s legislative leaders awarded a $4.5 million grant to a cancer treatment company launched by David Nance, a close Perry friend and campaign donor, after the company sidestepped two review committees, including a statewide board created specifically to evaluate and make recommendations on life-science companies.

In August, Perry, Lt. Gov. David Dewhurst and House Speaker Joe Straus gave Nance’s company the second-largest grant ever from the Texas Emerging Technology Fund.

Perry has yet to announce the award or explain what the company, Convergen LifeSciences Inc., will be doing, although it has started drawing down the money. By comparison, Perry has announced four other awards in the recent days as he campaigned across the state.

The award was given in August, yet the biggest glory hound in the state had nothing to say about it? I’m sure that if you could get your hands on a copy of Perry’s super secret calendar, you would see the announcement scheduled for some time after the election, because somewhere deep down, he knows what he did was wrong. Well, he knows that some annoying voters might think it was wrong, so naturally he didn’t want them to know about it until after he’d been safely re-elected. That’s as close to an admission of guilt as you’ll ever get from him on anything.

Dewhurst and Straus said their offices begin considering applications only after they have been recommended by Perry and the state board.

Dewhurst said he’s not sure that he knew that Nance’s application didn’t clear all the lower review boards but that he relies only on the state board’s recommendations.

“I never met or laid eyes on Nance,” Dewhurst added.

That’s David Dewhurst, slowly backing away. You think he recognizes this for what it is?

This video from the White campaign could use a little editing, but it captures the basic outline of the story:

Cut that down to 30 seconds and run it on TV, I say.

Perry appropriates Emerging Tech funds on his own

Procedures? Advisory boards? Who needs ’em?

Gov. Rick Perry approved a $4.5 million award from the state’s technology fund to a company founded by a major campaign donor despite the company’s failure to win the endorsement of a regional screening board, The Dallas Morning News has learned.

The money was awarded in August to Convergen Lifesciences Inc., founded by Perry contributor David G. Nance. Convergen was allowed to bypass a key part of the Texas Emerging Technology Fund’s extensive process for vetting applications, and to proceed for approval to a statewide advisory board appointed by Perry.

A spokeswoman for Perry said Tuesday that the money was properly awarded to Convergen because the law establishing the tech fund allows applicants to appeal decisions by regional reviewers.

However, the law makes no mention of such appeals.

The chairman of the regional board in Houston, one of the state’s largest, told The News he had never heard of an appeals process. Walter Ulrich, also a former member of the tech fund’s statewide advisory committee, said approval by regional boards is mandatory.

“It cannot go to the state without our board’s approval,” he said. “I’ve never seen that happen.”

Walt Trybula, a nanotechnology expert at Texas State University who reviews tech fund applications for the Austin regional board, said the ability to appeal would undermine the process.

“If you’ve got a way to go around a review committee,” he said, “why do you have a review committee?”

And the chairman of the state House committee that oversees the tech fund said the “extraordinary” process that awarded the money to Nance’s firm shows that reforms are needed. “This is the most troubling case that I’ve seen come through” on the fund, said Rep. Mark Strama, D-Austin.

Perry rewards his cronies. It’s what he does. Give him access to money, and he’ll find a way to steer it to his buddies. Procedures and oversight are no impediments. The only remedy is at the ballot box. See here and here for some background, and see BOR, EoW, and Juanita for more.

Disclosure for thee, but not for me

You don’t need to know.

Gov. Rick Perry said [Monday] that he wouldn’t release documents revealing investors in recipients of Texas Emerging Technology Fund recipients.


The governor’s office is told of investors in the tech fund applicants, a staffer has said. But Perry’s office has refused to release those documents — a stance he reiterated on Tuesday.

“The issue is there are private sector monies and private sector projects and things that are not to be made public because they’re proprietary information,” Perry said. “Or there’s private information that a private sector company is not going to make public because they want to protect that information.”

The issue of Bill White’s tax returns from the 1990s when he wasn’t an elected official is such a matter of principle for Rick Perry that he’ll chicken out of boycott debates. But information about public funds that he’s been dishing out to his cronies is totally off limits. Sure thing.

If you’re just tuning in to this, here is a great summary of the issue, while BOR has a roundup of coverage links and a statement by defense attorney Dick DeGuerin suggesting that it’s time for the Public Integrity Unit of the Travis County District Attorney’s office to get involved.

It’s cronies all the way down

Is there anything Rick Perry does that isn’t for the benefit of himself and his cronies?

When Gov. Rick Perry announces that a company will get money from the Texas Emerging Technology Fund, he often describes it as an important investment in the state’s future.

Behind the scenes, some of the governor’s biggest political supporters have been making investments of their own – in Perry and in companies getting money from the tech fund.

An investigation by The Dallas Morning News found that more than $16 million from the Emerging Technology Fund has been awarded to companies with investors or officers who are large campaign donors to Perry.


The governor’s office administers the tech fund, and the governor must approve each award – a system that most other states with tech funds avoid to guard against political influence.

That’s the key bit right there. This process is done out of sight of the public, and in a way that just about guarantees at least the appearance of conflicts of interest. Other states keep the Governor out of it precisely to avoid these problems. But of course our Emerging Technology Fund, which was created through Perry’s influence in 2005, doesn’t work that way. And so his buddies get the benefit of your tax dollars, with no oversight and no review to see if we’re getting any value for our investment. As long as Rick Perry is in office, that’s the way things will be.

Perry meddles again

All of his shenanigans with the Texas Forensic Science Commission have kept Governor Perry busy lately, but not so busy that he can’t mess with other things, too.

Gov. Rick Perry plans to reshuffle the board leadership of the state’s $88 billion teacher retirement system, an unexpected move that has reignited concerns among the members that Perry is meddling with their pension fund.

Linus Wright, a retired school superintendent who was appointed in January to lead the Board of Trustees of the Teacher Retirement System of Texas, said he has been notified by the governor’s office that he will soon be replaced as chairman. Wright said he was given no reason for the change.

He will be succeeded by Dallas real estate investor R. David Kelly, a board trustee since 2007, Perry spokeswoman Allison Castle said.

Kelly is also a member of the finance team for Perry’s re-election campaign, according to a June news release.

In the past, Perry has looked to the teachers’ fund as a potential source of investment dollars for state transportation infrastructure and the Emerging Technology Fund, which invests in startup companies in fields such as biotechnology. The board, which sets the investment strategy for one of the country’s largest public pension funds, has not yet backed an investment policy to do so.


[T]he change comes on the heels of Perry’s veto in June of a bill that would have added another retiree voice to the nine-member board. The governor appoints all of the members of the board, which is made up of five financial professionals and four retired or active Teacher Retirement System members who are nominated by the membership.

Together, these moves have retirees worried that politics is the real motivation, said Tim Lee of the Texas Retired Teachers Association.

“It’s a concern to us that the governor is developing a pattern that really is minimizing the voice of retirees in their own pension fund,” Lee said.

There may well be nothing to be concerned about here. The story does note that nobody has any particular issue with David Kelly. It’s the timing of the move, and the removal of the first former teacher to lead the Board in 15 years, that has people anxious. But if people see politics every time Rick Perry does something, it’s because politics plays a role in just about everything he does, especially lately. Who can blame the retirees for having a bad feeling about this? Burka sounds the alarm as well.

A&M and the Emerging Technology fund

Loren Steffy tells us about politics infecting research at Texas A&M. And Rick Perry is involved. Shocking, I know.

In January, the state awarded A&M $50 million from the Emerging Technology Fund, which purports to benefit private-sector technology startups, for the National Center for Therapeutics Manufacturing, which plans to develop new vaccines.

Unfortunately, the infusion of taxpayer money is showing some disturbing symptoms that have been found in other state economic development deals: a web of political relationships and arrangements with financially shaky companies with ties to key decision makers in the process.

Funding for the therapeutics center is drawing scrutiny because of a power struggle between the university’s main campus in College Station and the A&M System, which oversees 10 other campuses statewide. Chancellor Mike McKinney, who runs the system, ousted A&M president Elsa Murano in June, partly because of a dispute over who should control research budgets. Provost Jeffrey Vitter quit last week.

As I wrote a few weeks ago, the NCTM project was the biggest grant ever for the tech fund, which is overseen by Gov. Rick Perry, an A&M alum.

About the time the governor’s office and the A&M System began discussing the grant, the fund’s director, Mark Ellison, quit to become A&M’s associate chancellor for economic development. Ellison told state lawmakers investigating the grant earlier this year that he wasn’t involved in the discussions.

The grant given to A&M caused a stir in the Lege because it was done by Governor Perry with essentially no oversight. An amendment was added to the budget bill that would require such grants to be approved by the 10-member Legislative Budget Board, but offhand I don’t know if it survived into the final bill. There was also an attempt to zero out the Emerging Technology and Texas Enterprise funds in the event Perry vetoed the bill to accept stimulus funds for unemployment insurance, but as that bill never made it to his desk it became a moot point. So as far as I know the underlying political issue still exists. As for A&M, they have plenty of other problems to deal with right now, many of which are related to the Governor’s office. Funny how that’s so often the common thread in these stories, isn’t it?

Senate panel approves budget

As you know, the Lege has one task they absolutely must do every biennium, and that’s pass a budget. The Senate Finance Committee has taken its first step towards doing that.

A two-year state budget that accepts federal stimulus money and increases spending by 7.3 percent, but hoards cash reserves, was approved by Senate budget writers today.

Counting federal funds, the Senate Finance Committee’s budget would spend $182.2 billion, up $12.5 billion over the current two year cycle.

“It’s a fairly significant increase in the overall budget,” said Finance Committee Chairman Steve Ogden, R-Bryan. “The committee worked hard to try and address many, many legitimate needs in state government, and we wouldn’t have been able to do it without the federal stimulus money.”

The panel approved the budget, 14-0. The full Senate is expected to act on it later this week.

A key goal of Senate budget writers was to protect the state’s “rainy day fund,” so that 2 1/2 -year old school property tax cuts won’t vanish after 2011. The committee left untouched some $9.1 billion expected in the rainy day fund by September 2011.

The reserve is expected to be used next session, when lawmakers will confront a yawning gap between the 2006 property tax cuts and offsetting new revenues from a revamped business tax and higher taxes on cigarettes and private transfers of used cars.

A 24-percent increase in federal funds helped the Senate panel balance the budget for 2010-2011.

So, thanks to stimulus funding, we can keep those irresponsible property tax cuts and not only not dip into the Rainy Day Fund, but also put aside enough money to pay for a further continuation of those cuts in the next session, when the piper was fixing to hand us a sizable bill for his services. My head is spinning.

In a brief discussion by the Finance Committee, Sens. Judith Zaffirini, D-Laredo, and Eddie Lucio, D-Brownsville, said they were voting for the budget with reservations.

Zaffirini said the panel should have heard testimony from experts before adopting a last-minute provision that would bar using any funds in the budget for embryonic stem cell research.

There’s a longer story on that here. Most of the arguments are familiar to people, since it’s basically the abortion issue one step removed, so I’ll just note this bit and move on:

Proponents of using embryos, who say they are obtained from fertility clinics and would be discarded anyway, said Texas stands to lose billions from a burgeoning biotech industry if it continues to create a hostile legal and regulatory climate.

A recent study by University of North Texas economists Bernard Weinstein and Terry Clower said the state could lose out on as many as 100,000 new jobs in the next five years if the state restricts embryonic research.

Yeah, no one’s ever really explained to me what’s supposed to happen to all those unused embryos at fertility clinics. Stay in the freezer forever, I guess. The Chron has a story on this as well, noting that researchers from Baylor College of Medicine, three University of Texas Health System academic health institutions and Rice University, including Norbel laureates Robert Curl and Ferid Murad, signed a letter to the Senate asking them to remove the Ogden rider. Anyway, moving on as noted to the House, where the Appropriations Committee was dealing with a different kind of kerfuffle.

House budget writers, spurred by a chairman angered by how Gov. Rick Perry helped steer a $50 million grant to the Texas A&M University System, voted Friday to strip Perry of one of the powers he used to make the grant happen.

The House Appropriations Committee put language in its proposed budget saying any transfers between the Texas Enterprise Fund and the Emerging Technology Fund must be approved by the 10-member Legislative Budget Board. The panel also said the budget board, made up of the lieutenant governor, House speaker and members of the House and Senate, must approve any grants from the two funds.

Perry uses the Enterprise Fund to attract businesses to the state and the Emerging Technology Fund to launch tech projects at universities working with the private sector. Current law says grants from those accounts must be approved by the governor, lieutenant governor and House speaker.

Friday’s move was a response to Perry’s announcement this week that he had transferred $50 million from the Enterprise Fund to the Emerging Technology Fund to pay for a grant to the Texas A&M University System for a new pharmaceutical manufacturing center.

But House Appropriations Committee Chairman Jim Pitts, R-Waxahachie , says that’s not how the state usually pays for buildings at universities.

Several members of the Appropriations Committee, including Pitts, praised the Texas A&M center, saying they were more concerned with the process than the result.

“We have a legitimate concern that funds (that) were dedicated for one purpose were moved to a fund with a completely different purpose with little or no input from the Legislature,” Pitts said.

There’s a reason a lot of us have called this a slush fund for the Governor. I suppose I should thank him for making that a little more obvious to some folks. This may well be a fine use of that money, but it sure would be nice to have something other than just Rick Perry’s say so.

One more thing:

The Appropriations panel also proposed putting $136 million into the Enterprise Fund and $77 million into the Emerging Technology Fund over the next two years — combined, more than $200 million less than Perry requested.

“Now is not the time to cut back on job creation programs,” Perry spokeswoman Allison Castle said.

Because Rick Perry’s priorities are sacrosanct. Other priorities can go hang, but what Rick Perry wants is untouchable. Got it.