Measuring Return on New Economy Investment

The recent proposal by Governor Manchin to essentially mimic Kentucky's "Bucks for Brains" program on a smaller scale is an encouraging sign that our state is ready to think beyond traditional economic development boundaries. While it would be great if West Virginia were someday on the leading edge of creative initiatives like Bucks for Brains, we should at least be very encouraged that we're following Kentucky's lead based on tangible results demonstrated from their program.

Kentucky invested $350 million in their original Bucks for Brains program, which takes public money with research universities to create an endowment. The endowment provides seed money used to attract cutting-edge researchers in promising areas of science and technology. The research breakthroughs fuel new startup companies, which produce more jobs, which produce more state and local taxes. Does the formula work? So far the University of Kentucky has tracked 44 startup companies employing 870 people at an average salary of $61,000. Not a bad return on investment.

Marshall University's President Stephen Kopp is wasting no time in planning for how to use their $15 million share of the Governor's proposal. These funds must be matched by the university, so in effect its a $30 million endowment. Marshall will use the funds to establish the Marshall Institute for Interdisciplinary Research (MIIR). The "interdisciplinary" part is important, because many of today's innovations come from researchers across different disciplines working together. 

There may be "soft" benefits beyond the hard benefits as well. Kentucky's program, along with visionary events such as the Idea Festival, helps re-position Kentucky in the minds of the broader global business community. While Kentucky may have been known for racehorses, bluegrass music and, to some extent, coal, it's now known as an innovative 21st Century region of the world. West Virginia's $50 million investment is not enough to change our image, but it is a practical decision which we hope leads to even more aggressive investments.

Measuring the impact of another new economy-relevant program, the Promise Scholarship, is a little more difficult, at least for now. According to university leaders, it has clearly helped increase the number and quality of students entering into West Virginia colleges and universities from within the state. But will West Virginia enjoy the return on investment? In other words, will the educated students stick around West Virginia and re-invest their skills back into the state?

Fears that they won't is fueling a current debate on the nature of the program. If the students leave the state, should the grant become a loan? Should we try and "guarantee" a return on investment by forcing students to stay or else pay back their scholarship? What affect will that have on the willingness of the best students to accept the "scholarship"? What if there aren't any significant jobs for these students to take in WV upon graduation? Is it fair to expect them to stick around?

There are valid questions from those on both sides of the issue. One item that we would like to include into the conversation is this: We hope the ultimate decision isn't based on the notion that it's a bad thing for a West Virginia native student to leave the state. Some of West Virginia's best and brightest leaders in business, government and education are who they are because they left West Virginia, gained significant skills and experiences elsewhere, and brought those skills back to the state. Let's not be afraid that just because a student needs to pursue their chosen field elsewhere right after graduation that it's a lost investment.

But is it a good investment overall for West Virginia? Only time and measurement will tell. If enough of them stay in the state, or return to the state over time, it will pay off. We suggest that the best way for these sharp students to deliver return on investment back to the state is for all of us to make West Virginia an attractive place to create a life and include them in that process instead of a place where they have to be forced to stay.

Comments

[Justin Seibert]

Jeff - great point about not being afraid of folks leaving (okay - you and I are biased). We do definitely need to create an environment where talented folks feel like they have a choice to stay (right now, many do not). However, there's nothing wrong with getting out to new places until it's 'time to come home.'

[Larry Malone]

Maybe instead of trying to stop our young from leaving, our state, we should focus more on putting in place incentives that will help lure back "native" West Virginians....such as public dollar investment support to help create "advanced" (fiber or WiMax) broadband clusters in our state, tax incentives or rebates for natives who return and create or locate a professional services business in West Virginia, first year exemption from payment of the state's sales tax requirement for non-professional services (many of which include consulting, high-tech, advanced services, etc.) that set up business in West Virginia, etc., etc. Heck, maybe even a state tax deduction for moving expenses...as long as you are moving in the state.

[Deana Keener]

There are many schools of thought with which to approach the Promise Scholarship revision - all are valid. I would just like to add one comment: When did a college education become an entitlement? With this initiative, it is a complimentary benefit used as a tool to raise education levels of our workforce. Many employers have the same expectation of loyalty if they reimburse tuition to an employee.