Jim Pitts Sylvester Turner Chairman Vice-Chair Texas House of Representatives
Committee on Appropriations
AGENDA
CHAIRMAN JIM PITTS FRIDAY, MARCH 8, 2013 8:30 A.M. CAPITOL EXTENSION, ROOM E1.030
I. CALL TO ORDER
II. CHAIRMAN’S OPENING REMARKS
III. MEDICAID FUNDING - EXPANSION AND AFFORDABLE CARE ACT
• LEGISLATIVE BUDGET BOARD
• HEALTH AND HUMAN SERVICES COMMISSION
• OTHER INVITED TESTIMONY
IV. STATE ECONOMIC DEVELOPMENT PROGRAMS • LEGISLATIVE BUDGET BOARD
• MAJOR EVENTS TRUST FUND
• ENTERPRISE FUND
• EMERGING TECHNOLOGY FUND
• FILM INCENTIVE COMMISSION
• OTHER ECONOMIC DEVELOPMENT TOPICS
V. ADJOURN LEGISLATIVE BUDGET BOARD STAFF ESTIMATE AFFORDABLE CARE ACT (ACA) OPTIONAL MEDICAID EXPANSION: FISCAL IMPACT ESTIMATE FOR TEXAS, STATE FISCAL YEARS (SFYs) 2014 – 2023
--- Biennia --- 5 Years 10 Years Net Add’l Cost ($ in millions) SFYs 2014-2015 SFYs 2016-2017 SFYs 2018-2019 SFYs 2020-2021 SFYs 2022-2023 SFYs 2014-2018 SFYs 2014-2023 All Funds (AF) $4,049 $10,831 $11,188 $11,439 $11,695 $20,443 $49,202 Federal Funds (FF) $3,998 $10,399 $10,296 $10,142 $10,355 $19,544 $45,190 General Revenue (GR) $50 $432 $892 $1,297 $1,341 $899 $4,012 Add’l Average Monthly Caseload 522,000 (SFY 2015) 873,000 (SFY 2017) 892,000 (SFY 2019) 912,000 (SFY 2021) 932,000 (SFY 2023) 883,000 (SFY 2018) 932,000 (SFY 2023)
Eligibility: Optional Medicaid Expansion would extend Medicaid to adults living at or below 133% of the Federal Poverty Level (FPL). This FPL eligibility threshold will effectively increase an additional five percentage points due to conversion of income standards to Modified Adjusted Gross Income (MAGI), elimination of the Medicaid assets test, and the establishment of a five percent income disregard. The estimate assumes an expansion in Texas would include: childless adults ages 19-64 (0-138% FPL) and parents ages 19-64 above TANF eligibility level (17-138% FPL). Also included in the cost estimate are a group of non-citizens expected to become covered under Emergency Medicaid. The estimate does not include clients eligible but not enrolled in the current Medicaid program since the fiscal impact of this group of clients is not expected to be significant.
Caseload: Expansion adult caseload numbers are based on the U.S. Census Bureau’s Current Population Survey (CPS) Annual Social and Economic Supplement (March 2012), which includes 2011 data for Texas. The Emergency Medicaid caseload projection is calculated from CPS data and Emergency Medicaid claims data for 2011. Caseload growth is based on Texas State Data Center population projections. An uptake rate of 65% is assumed, based on a literature review and analysis of current household public benefit participation (SNAP or household member receiving Medicaid) among newly eligible clients. The estimate assumes that Optional Medicaid Expansion would experience a phase-in period during the first 24 months of implementation, reaching full caseload in December 2015 (SFY 2016).
Cost: The estimate assumes the Enhanced Federal Medical Assistance Percentage (FMAP) for clients newly eligible under Optional Medicaid Expansion, beginning with 100% federal funds for 2014-2016 and gradually decreasing to 90% by 2020. The estimate assumes that Optional Medicaid Expansion will continue to be covered by 90% federal funding through 2023. Per member per month (PMPM) costs are based on comparable existing Medicaid populations. The estimate only assumes cost growth through 2015. With cost growth included through 2018, the estimate is $21,597 million (AF), $974 million (GR). Cost growth has not been calculated beyond 2018. Administrative costs are estimated based on HHSC Legislative Appropriations Request (LAR) Medicaid items related to administrative functions.
Time Frame: The estimate assumes a January 1, 2014 start date, continuing through SFY 2023. However, states are permitted to begin or terminate Optional Medicaid Expansion anytime after January 1, 2014.
Potential Offsets/Larger Fiscal Impact: The estimate includes an offsetting savings due to a portion of Medicaid Breast and Cervical Cancer Program clients who would likely be eligible for a higher FMAP under Optional Medicaid Expansion. Disproportionate Share Hospital (DSH) funds are expected to diminish under ACA whether or not Texas participates in Optional Medicaid Expansion, potentially leaving a funding gap for uncompensated care if the state does not participate. The estimate does not model resulting cost to local hospitals and other entities. Potential savings to the Department of State Health Services (DSHS) as a result of fewer uninsured Texans are not included in the model. The estimate does not consider Optional Medicaid Expansion’s potential impact on state revenue or the broader state economy, including increased rebate and other revenue from the newly insured.
House Appropriations Committee The Case Against Medicaid Expansion March 8, 2013
John Davidson Texas Public Policy Foundation
www.TexasPolicy.com
1 A Worsening Problem
Medicaid Expenditure & State Revenue 30% 170 28% 150
130 26% 110 24% 90 In billions 22% 70 20% 50
Percent of Medicaid Expenditures in Texas State Budget TX Direct Revenue Source: Texas Health and Human Services Commission, Texas Medicaid and CHIP in Perspective, 8th Ed., Jan 2011
Texas is experiencing a steady long-term rise in Medicaid as percent of state resources, including during dry periods of slow or negative revenue growth.
Copyright or TPPF statement 2 A Worsening Problem (cont.)
Average Annual Growth in Medicaid Spending, FY 1990 ‒ Texas Portion of Medicaid FY2010 Spending, FY2004 – FY2013 44% 42% 18% 42% 41% 17% 40% 39% 39% 39% 39% 39% 16% 38% 37% 15% 36% 14% 34% 13% 32% 12% 30% 11% 30% 29% 10% 28% FY 1990- FY 2001- FY 2004- FY 2007- '04 '05 '06 '07 '08 '09* '10* '11 '12 '13 2001 2004 2007 2010 *TX received an enhanced FMAP payment resulting from ARRA Texas U.S. Source: Kaiser Health Facts Source: Kaiser Health Facts A double hit: The Federal government portion of Texas Medicaid has been steadily declining even while state spending growth is outpacing the nation as a whole.
Copyright or TPPF statement 3 4 5 Medicaid Spending Projections
6 Projected GR Expenditures
7 Initial Projections: • Reduce uninsured • Reduce charity care • Save general fund money • Have low, predictable enrollment & costs
Actual Outcomes: • High costs • Huge enrollment spikes • Massive new GF costs to state ARIZONA • Program capped and patients thrown off • No reduction in charity care & “hidden tax” scheme Foundation for Government Accountability 8 Arizona – Proposition 204 in 2000 Use “Free” Tobacco Settlement $ for Medicaid Expansion
Prop 204 expanded Medicaid for parents to 100% FPL (from 36%) and started covering childless adults up to 100% FPL, beginning July 2001.
(Childless adults)
Foundation for Government Accountability 9 Arizona’s Prop 204 Promises
• “Save” General Fund about $30 million a year
• Reduce the number of uninsured
• Reduce charity care
• Reduce “hidden tax” on private insurance from uninsured and uncompensated care
Foundation for Government Accountability 10 Arizona – Prop 204 Parents Expansion 160,000 149,797 139,140 140,000
120,000
100,000 86,607 89,987 77,595 80,000
60,000 38,658 40,000 50,381 41,350 20,000 17,329 - 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Parent - Projected Enrollment Parents - Projected Eligible Parents - Actual Enrollment
Source: Arizona Legislature's Joint Legislative Budget Committee (2001 actual and 2001-2013 projected) & Arizona Health Care Cost Containment System (2001-2013 actual, based on January enrollment).
Foundation for Government Accountability 11 Arizona’s Cost Increases from Medicaid Expansion – 2001-2010
Per Member True Cost in 2010: Childless Adults – 2.5x projection Parents - 19% above projection $7,361 2001 Actual/Projected
2010 Projected
2010 Actual $3,417 $2,878 $2,878 $1,903 $1,903
Parents - PMPY Childless Adults - PMPY Source: Arizona Legislature's Joint Legislative Budget Committee (2001 actual, 2010 projected) & Arizona Health Care Cost Containment System (2010 actual). Childless adults not covered until 2001.
Foundation for Government Accountability 12 Arizona’s Medicaid Expansion Spending (in millions)
Projected vs. Actual $1,800 $1,623 $1,600 Millions Projected Spending $1,416 $1,403 $1,400 Actual Spending $1,326
$1,200 $1,108
$1,000 $863 $800 $655 $600 $389 $400 $338 $363 $279 $315 $216 $200 $135
$- 2002 2003 2004 2005 2006 2007 2008
Source: Arizona Legislature's Joint Legislative Budget Committee (2002-2008 projected) & Arizona Health Care Cost Containment System (2002-2008 actual).
Foundation for Government Accountability 13 The Woodwork Effect Parents Already Eligible – 2001-2003 260,000 250,229 8%
240,000 7%
6.1% 5.9% 5.9% 5.9% 220,000 210,193 6% 5.3%
200,000 4.6% 5%
4.0% Dec 2012 – 343,910 180,000 4% 170,782 Non-Expansion Parents Parents
160,000 157,582 3% Unemployment Rate 137,733 140,000 2% 127,097 130,380 120,000 129,443 1%
100,000 0% Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04
Non-Expansion Parents - Total Projected Eligible Projected Woodwork from Parents Non-Expansion Parent Enrollment Unemployment Rate Source: Arizona Legislature's Joint Legislative Budget Committee (2002-2004 projected) & Arizona Health Care Cost Containment System (2002-2004 actual). Bureau of Labor Statistics (unemployment rate in AZ). Foundation for Government Accountability 14 What’s Driving the High Costs? 2009 Actual Spending (in millions)
$1,600 $1,407
Millions $1,400
$1,200
$1,000
$800 $659
$600 Total Annual Spending
$349 $400 $300 $230 $200 $147 $151 $103 $67 $48 $40 $11 $0 Hospital Practitioner Pharmacy Transportation Other Total
Prop 204 - Parents (105k) Prop 204 - Childless Adults (130k)
Source: Arizona Health Care Cost Containment System (2009 actual).
Foundation for Government Accountability 15 Impact on Arizona’s Hospital Charity Care/Uncompensated Care • Projection: – Prop 204 would dramatically reduce charity care • Actual Outcome: – “The Arizona Hospital and Healthcare Association reports that hospital uncompensated care has increased an average of about 9 percent per year since 2000 reaching $364 million in 2007.” • The Lewin Group, March 6, 2009 The Medicaid Expansion went into effect July 2001.
Foundation for Government Accountability 16 “Hidden Tax” to Private Insurance Worsened
In 2007 Arizona Hospitals had • Medicaid cost shift of $407 M • Uncompensated care cost shift of $390 M
Foundation for Government Accountability 17 Effect of Prop 204 on Arizona’s Uninsured Rate Arizona Health Coverage - 1999-2011 - Non-Elderly
100%
18 19 19 19 19 22 22 23 20 21 21 21 19 Uninsured
80% 10 11 9 13 14 16 17 19 17 17 19 22 20 Medicaid 7 8 7 8 9 60% 10 6 6 5 7 6 10 7
40% Other Public - Medicare/Military
61 64 63 59 58 58 57 56 58 56 54 52 52 20% Private - Individual
0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Private - Employer
Source: U.S. Census Bureau
Foundation for Government Accountability 18 Why is Arizona Expanding Medicaid? No Real Choice. • Recent federal guidance provides that expansion states like Arizona that already provide Medicaid coverage for Childless Adults up to 100% FPL, are not eligible for enhanced federal funding unless the State expands Medicaid to cover individuals up to 133% FPL
• Arizona’s two options: 1. Do nothing, hope the feds extend the waiver, run the risk the feds don’t extend the waiver letting it expire on January 1, 2014, leaving 86,000 Arizonans uninsured 2. Restore coverage of Childless Adults up to 100% FPL, open enrollment, and expand Medicaid to cover all adults from 100% to 133% FPL to secure enhanced federal matching funds
Foundation for Government Accountability 19 Initial Projections: • Reduce uninsured • Reduce charity care • Have low, predictable enrollment & costs
Actual Outcomes: • High costs • Huge enrollment spikes • Program capped and patients thrown off MAINE • No reduction in charity care & “hidden tax” scheme
Foundation for Government Accountability 20 2002 Childless Adult Expansion
• Covered childless adults up to 100% of FPL • Used 1115 Wavier and federal DSH funds with annual expenditure cap (state & federal) • Same promises as Arizona: lower charity care, fewer uninsured, less “hidden tax” on private insurance, and low enrollment and per person costs
Foundation for Government Accountability 21 Maine’s Childless Adult Expansion and the Impact on Charity Care (in millions)
$250 25,000 20,901 20,852 16,629
Millions $200 20,000
14,800 15,007
$150 15,000 People $100 10,000
Chartity Care Chartity 11,000
$50 5,000
$41 $61 $67 $61 $62 $75 $100 $111 $122 $152 $186 $215 $- 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Charity Care Projected Childless Adult Enrollment (<100% FPL) Total Projected Uninsured (<100% FPL) Childless Adult Medicaid Enrollment (June)
Source: Maine Legislature’s Fiscal Office (projections, enrollment), Maine Hospital Association (charity care)
Foundation for Government Accountability 22 Effect of Medicaid Expansion in Maine on Uninsured Rate
Maine Health Coverage - 1999-2011 - Non-Elderly
100% 10 12 12 12 11 11 11 10 10 12 12 11 12 Uninsured 10 11 14 16 19 19 20 80% 21 20 20 24 23 23 8 6 6 8 Medicaid 8 6 7 7 7 6 5 7 6 60%
40% Other Public - Medicare/Military 71 69 70 66 65 65 65 63 65 62 60 62 61
20% Private - Individual
0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Private - Employer
Source: U.S. Census Bureau
Foundation for Government Accountability 23 • Projections are historically way off • Expect costs to dramatically increase • Too often patients thrown off Medicaid within a few years
LESSONS FOR TEXAS
24 Projected v. Actual Key Lessons from Arizona & Maine • Cost of childless adults dramatically under- projected • Enrollment rates dramatically under-projected • Many more people enroll, often more than entire projected uninsured population • Costs and enrollments skyrocket • Charity care continues to grow • Uninsured rate virtually unchanged
Foundation for Government Accountability 25 Urban Institute Study – August 2012
• Uninsured adults newly eligible with TX Medicaid Expansion – 1,747,000 – 67.5% - Childless Adults (1,180,000) – 32.5% - Parents (568,000)
• Currently eligible adults but un-enrolled in TX (potential woodwork) – 289,000
26 Census Bureau’s Uninsured Statistics
Texas Total Number Uninsured Percent Uninsured Subject Estimate Estimate Estimate Total civilian non-institutionalized population 25,197,453 5,789,846 23.0%
PLACE OF BIRTH AND U.S. CITIZENSHIP STATUS Native born 21,050,877 3,730,916 17.7% Foreign born 4,146,576 2,058,930 49.7% Naturalized 1,384,229 365,431 26.4% Not a citizen 2,762,347 1,693,499 61.3%
HOUSEHOLD INCOME (IN 2011 INFLATION ADJUSTED
DOLLARS) Civilian household population 25,026,957 5,757,613 23.0% Under $25,000 5,261,267 1,780,895 33.8% $25,000 to $49,999 6,104,219 1,911,469 31.3% $50,000 to $74,999 4,645,769 1,094,120 23.6% $75,000 to $99,999 3,162,355 492,026 15.6% $100,000 and over 5,853,347 479,103 8.2%
Source: U.S. Census Bureau, American Community Survey, 2011 27 Who are the uninsured?
CIVILIAN HOUSEHOLD PERCENTAGE UNINSURED HOUSEHOLD INCOME POPULATION (ESTIMATE) (2011 INFLATION (UNINSURED) ADJUSTED DOLLARS)
1,780,895 30.9 % Under $25,000
1,911,469 33.2 % $25,000 - $49,999
1,094,120 19.0 % $50,000 - $74,999
492,026 8.5 % $75,000 - $99,999
479,103 8.3 % $100,000 and above
28 Who are the uninsured?
• More than one-third (35.8 % or 2,065,249) of the uninsured in Texas earn $50,000 per year or more.
• Of those, 16.8% (971,129) earn more than $75,000 per year or more
• Many in this group can afford to buy health insurance but choose not to.
29 WA ME*
MT* ND* VT MN NH MA OR NY RI ID SD WI CT MI* WY PA IA NJ NE DE NV OH* IL IN MD UT WV VA CA CO KS MO* KY NC TN OK SC AZ* NM AR* GA MS AL TX LA Alaska FL*
Hawaii Not Implementing PPACA’s Medicaid Expansion (13) Leaning Against PPACA’s Medicaid Expansion (5) Implementing PPACA’s Medicaid Expansion (15) Leaning For PPACA’s Medicaid Expansion (5) Undecided (* = Governor/Legislature Split) (12)30 Presentation to the House Appropriations Committee The Honorable Jim Pitts, Chair
March 8, 2013
Presented by: Robert Wood, Director Economic Development and Analysis Texas Comptroller of Public Accounts Major Event Trust Fund
• Texas law authorizes trust funds to attract sporting and other events that could, without a competitive edge, go to other states.
• The state estimates tax gains that result from local cities or counties hosting events and returns a portion of those gains to the locality to offset the expense of hosting the event.
2 Major Events Trust Fund
Eligible Events – specified in statute • NFL Super Bowl • NCAA Final Four tournament • MLB All-Star game • NBA All-Star game • NHL All-Star game • NCAA BCS Game • World Cup Soccer Game • The World Games • Breeders Cup • Formula One Auto Race • NCAA Championship of an Olympic Sport • National Political Convention • Academy of Country Music Awards • National Cutting Horse Association Triple Crown • An Olympic activity, including a Junior or Senior activity, training program, or feeder program sanctioned by the United States Olympic Committee's Community Olympic Development Program
3 Major Events Trust Fund
Local Review/Approval A city, county, or local organizing committee acting on behalf of one or more city/county, applies to host an event and provides eligibility and economic information to the comptroller to establish a trust fund.
State Review/Approval The comptroller estimates the amount of incremental tax gains resulting from the event, which is the basis of expense reimbursement.
Economic Impact “Window” • 12 months
4 Major Events Trust Fund
Taxes Eligible for Reimbursement • General Sales and Use (Tax Code, Ch. 151) • Motor Vehicle Rental (Tax Code, Ch. 152) • Hotel Tax (Tax Code, Ch. 156) • Mixed Beverage Tax (Tax Code, Ch. 183) • Title 5 Alcoholic Beverage Code State Maximum Contribution – lesser of: • 6.25 times the local contribution • Maximum incremental tax impact to the state Allowable Expenses • Payment of costs relating to the preparations necessary or desirable for the conduct of the game and the payment of costs of conducting the game, including improvements or renovations to facilities • Principal and interest on notes issued by an endorsing city or county that are used to improve, construct, renovate, or acquire facilities or to acquire equipment for the event 5
Questions?
Robert Wood, Director Economic Development and Analysis Texas Comptroller of Public Accounts ______
[email protected] (512) 463-3973
6 Overview of the State’s Major Economic Development Programs
HOUSE APPROPRIATIONS COMMITTEE PREPARED BY THE LEGISLATIVE BUDGET BOARD MARCH 8, 2013
Legislative Budget Board - ID 837 March 8, 2013 Major Economic Development Programs
ó I. Texas Enterprise Fund
ó II. Texas Emerging Technology Fund
ó III. Moving Image Industry Incentive Program
ó IV. Major Events Trust Fund
Legislative Budget Board - ID 837 March 8, 2013 Page 2 ó I. Texas Enterprise Fund
Legislative Budget Board - ID 837 March 8, 2013 Page 3 Establishment of the Texas Enterprise Fund
ó The Texas Enterprise Fund (TEF), General Revenue- Dedicated Account No. 5107, was established by Senate Bill 1771, Seventy-eighth Legislature, Regular Session, 2003;
ó TEF is statutorily administered by the Governor;
ó Funds are utilized for economic development, infrastructure development, community development, job training programs, and business incentives to attract new jobs and business investment to the state.
Legislative Budget Board - ID 837 March 8, 2013 Page 4 Funding for the TEF
ó No dedicated funding source, except for: ô Interest earnings on balances held within the State treasury; ô Gifts; ô Grants; ô Donations; and ô Transfers from the Employment and Training Investment Assessment (ETIA) Holding Fund when the Unemployment Insurance (UI) Trust Fund is above 2.0 percent of taxable wages ˜ Funding source removed by House Bill 2457, Eighty-second Legislature, Regular Session, 2011;
ó $285.0 million out of Economic Stabilization Funds were appropriated to provide initial grant funding in the 2004-05 biennium.
Legislative Budget Board - ID 837 March 8, 2013 Page 5 Funding for the TEF (continued)
ó In fiscal year 2008, approximately $120.0 million was transferred from the ETIA Holding Account to the TEF;
ó In subsequent biennia, General Revenue, unexpended balances, and interest earnings have been appropriated by the legislature to continue the program;
ó Unexpended balances in the TEF do not count toward certification of the General Appropriations Act.
Legislative Budget Board - ID 837 March 8, 2013 Page 6 History of Appropriations
Unexpended Projects Biennium Appropriation Total Amount Awarded* Balances Funded $285,000,000 2004-05 $5,336,000 22 $279,664,000 ESF ($285.0 million) $182,250,000 2006-07 GR ($140.8 million) $110,392,478 15 $75,036,000 ETIA ($41.5 million) $225,349,000 ETIA ($120.0 million) 2008 -09 $193,619,642 18 $36,484,196 Estimated UB ($84.0 million) Estimated Interest ($21.4 million) $67,576,000 GR ($20.0 million) 2010-11 $174,408,862 34 $47,649,000 Estimated UB ($41.3 million) Estimated Interest ($6.3 million) $149,998,000 2012-13 Estimated UB ($146.4 million) $118,744,786** 17† $48,576,500 Estimated Interest ($3.6 million) $119,955,983†† 2014-15 Estimated UB ($118.7 million) n/a n/a n/a Estimated Interest ($1.2 million) Total Projects Funded and Amounts Awarded 106 $487,409,696 * Awarded amount does not always reflect encumbered amounts **LBB Estimate †As of January 1, 2013 ††As introduced in HB1 Legislative Budget Board - ID 837 March 8, 2013 Page 7 ó II. Emerging Technology Fund
Legislative Budget Board - ID 837 March 8, 2013 Page 8 Establishment of the Emerging Technology Fund
ó The Emerging Technology Fund (ETF), General Revenue-Dedicated Account No. 5124, was established by House Bill 1765, Seventy-ninth Legislature, Regular Session, 2005;
ó ETF is statutorily administered by the Governor;
ó Funds are meant to facilitate commercialization, increase the number of high-quality jobs in Texas, and expand higher education technology research capabilities.
Legislative Budget Board - ID 837 March 8, 2013 Page 9 ETF Programs
ó The ETF provides grants for three programs: ô Commercialization Program ˜ Awards finance early stage ventures focused on bringing high technology products or processes to market; ô Research Matching Program Grants ˜ Institutions of higher education and companies receive state funding to acquire federal research and commercialization grants; ô Research Superiority Program ˜ Grants are awarded that allow higher education-private sector partnerships to develop research centers and attract prominent scientists.
ó The statutory allocation of ETF is as follows: ô Commercialization Program: 50.0 percent ô Research Matching Grants: 16.67 percent ô Research Superiority Program: 33.33 percent
Legislative Budget Board - ID 837 March 8, 2013 Page 10 Funding for the ETF
ó No dedicated funding source, except for: ô Interest earnings on balances held within the State treasury; ô Gifts; ô Grants; ô Donations; and ô Any benefits realized from a project undertaken with money from the fund, such as royalties or revenue realized from the commercialization of intellectual or real property developed from any ETF award;
ó Approximately $100.0 million out of Economic Stabilization Funds and $100.0 million out of General Revenue were appropriated to provide initial grant funding in the 2006-07 biennium.
Legislative Budget Board - ID 837 March 8, 2013 Page 11 Funding for the ETF (continued)
ó In subsequent biennia, General Revenue, unexpended balances, and interest earnings have been appropriated by the legislature to continue the program;
ó Unexpended balances in the ETF do not count toward certification of the General Appropriations Act.
Legislative Budget Board - ID 837 March 8, 2013 Page 12 History of Appropriations
Biennium Appropriation Unexpended Balances
$200,000,000 2006-07 ESF ($100.0 million) $105,328,178 GR ($100.0 million) $117,321,000 2008-09 GR ($75.0 million) $80,031,965 Estimated UB ($25.0 million) Estimated Interest ($16.3 million) $203,038,327 GR ($24.0 million) 2010-11 FEMA Reimbursement ($70.0 million) $89,322,206 Estimated UB ($97.1 million) Estimated Interest ($12.0 million) $140,510,000 2012-13 Estimated UB ($138.3 million) $7,152,774* Estimated Interest ($2.3 million) $7,225,732 2014-15** Estimated UB ($7,152,774) n/a Estimated Interest ($72,958)
* LBB Estimate **As introduced in HB 1
Legislative Budget Board - ID 837 March 8, 2013 Page 13 Awards Granted
Program Total Awards Granted Total Amount Awarded
Commercialization Program 137 $194,810,349
Research Matching Grants 13 $84,659,068
Research Superiority Program 21 $91,604,650
Total 171 $371,074,067
Source: Texas Emerging Technology Fund Fiscal Year 2012 Legislative Report, January 2012
Legislative Budget Board - ID 837 March 8, 2013 Page 14 ó III. Moving Image Industry Incentive Program
Legislative Budget Board - ID 837 March 8, 2013 Page 15 Establishment of the Moving Image Industry Incentive Program
ó The Moving Image Industry Incentive Program (MIIIP) was established by Senate Bill 1142, Seventy-ninth Legislature, Regular Session, 2005 ô Originally known as the Film Industry Incentive Program; ô Provides grants for production companies that filmed in Texas in order to increase local employment, tax revenues, and private spending within the state;
ó MIIIP is administered by the Texas Film Commission (TFC) within the Music, Film, Television, and Multimedia Office at the Trusteed Programs within the Office of the Governor;
ó House Bill 1634, Eightieth Legislature, Regular Session, 2007, amended the program to include the production of other types of multimedia, including video games ô The program was renamed the Moving Image Industry Incentive Program.
Legislative Budget Board - ID 837 March 8, 2013 Page 16 History of MIIIP Appropriations
Biennium Appropriation $22,000,000 in General Revenue 2008-09 (Contingent on the Comptroller’s certification that sufficient revenue is generated from the moving image industry in Texas to offset the cost of the appropriation) $62,000,000 in General Revenue 2010-11 ($22.0 million contingent on the Comptroller’s certification that sufficient revenue is generated from the moving image industry in Texas to offset the cost of the appropriation) $22,000,000 in General Revenue 2012-13 (Contingent on the Comptroller’s certification that sufficient revenue is generated from the moving image industry in Texas to offset the cost of the appropriation)
Legislative Budget Board - ID 837 March 8, 2013 Page 17 Awards Granted (September 1, 2009 to May 31, 2012)
In-State Total Grants Grant Spending by Production Category Spending by Awarded TFC Productions
Film 39 $119,105,892 $18,399,726
Television 35 $144,999,370 $28,803,301
Commercials 206 $40,918,753 $2,590,241
Video Games 74 $176,737,841 $11,945,223
Total 354 $481,761,856 $61,738,491
Source: Texas Film Commission
Legislative Budget Board - ID 837 March 8, 2013 Page 18 ó IV. Major Events Trust Fund
Legislative Budget Board - ID 837 March 8, 2013 Page 19 Overview of Major Events Trust Fund
ó Mechanism to draw certain events to the state and to fund the events through the incremental increase in revenue attributed to the events. ô Example of eligible events include: ˜ Super Bowl ˜ NBA All Star Game ˜ Formula One automobile races ô Revenue sources used to fund an event include: ˜ State: sales and use tax, motor vehicle rental tax, hotel occupancy tax, and alcoholic beverage taxes. ˜ Local: sales and use tax, hotel occupancy tax, and local allocation of the mixed beverage tax.
ó Fund is outside the treasury and events funding does not require an appropriation by the legislature.
Legislative Budget Board - ID 837 March 8, 2013 Page 20 Establishment of Major Events Trust Fund
ó Senate Bill 275 (Seventy-eighth Legislature, Regular Session, 2003) established the Other Events Trust Fund as a trust fund outside the treasury.
ó Senate Bill 1515 (Eighty-first Legislature, Regular Session, 2009): ô Renamed the Other Events Trust Fund the Major Events Trust Fund; and ô Included a provision to allow for state appropriations to provide an initial payment for an eligible event ahead of the event. The revenue generated from the event may be held in the Trust Fund and made available to pay the cost of securing the event in future years, for up to 10 years. After the last event, the original appropriation is repaid.
Legislative Budget Board - ID 837 March 8, 2013 Page 21 Appropriations for the Major Events Trust Fund
ó House Bill 7 supplemental bill (Seventy-eighth Legislature, Regular Session, 2003) provided $10 million from the Economic Stabilization Fund to the Other Events Trust Fund. ô Amounts were not expended and per House Bill 4 supplemental bill (Eighty -second Legislature, Regular Session, 2011) the funds were transferred to the treasury and deposited to the General Revenue Fund. ó 2010-11 General Appropriations Act (Eighty-first Legislature, Regular Session, 2009) appropriated $25 million out of General Revenue for transfer to the Major Events Trust Fund.
Legislative Budget Board - ID 837 March 8, 2013 Page 22 Appropriations for the Major Events Trust Fund
ó 2012-13 General Appropriations Act authorized unexpended and unobligated balances to be carried forward from the 2010-11 biennium to the 2012-13 biennium. ô To date, the funds have not been transferred to the Major Events Trust Fund but are available for an eligible event, contingent on the following requirements in Rider 15, Unexpended Balances: Major Events Trust Fund, within the bill pattern of Fiscal Programs – Comptroller of Public Accounts, being met: ˜ A written statement confirming the state's interest in the event that is signed by both the Governor and the Comptroller of Public Accounts; ˜ Certification by the Comptroller that sufficient revenues will be generated by eligible events to offset the amounts appropriated; ˜ An agreement with one or more endorsing municipalities or counties entered into pursuant to Article 5190.14, Section 5A(r), Vernon's Texas Civil Statutes; and ˜ The receipt of local funds from the endorsing entity(s) pursuant to Article 5190.14, Section 5A(r), Vernon's Texas Civil Statutes.
ó House Bill 1, as Introduced, does not include funding for the 2014-15 biennium for transfer to the Major Events Trust Fund.
Legislative Budget Board - ID 837 March 8, 2013 Page 23 Expenditures of the Major Events Trust Fund
Number Approved Approved of Events State Share Local Share Total Approved Major Events 15 $102,982,586 $16,477,221 $119,459,806 Trust Fund
Other Events 5 $27,841,250 $3,062,600 $31,443,050 Trust Fund
Total 20 $130,823,836 $19,539,821 $150,902,856
Figures are current through February 1, 2013 and includes events that have been approved but not yet funded. Source: Comptroller of Public Accounts
Note: None of the amounts shown above include appropriated funds.
Legislative Budget Board - ID 837 March 8, 2013 Page 24 House Committee on Appropriations
March 8, 2013 Testimony by Aaron Demerson Executive Director, Office of the Governor, Economic Development & Tourism
Good morning Chairman Pitts and members of the committee. My name is Aaron Demerson, and I serve as Executive Director for the Economic Development and Tourism Division in the Office of the Governor.
I appreciate the opportunity to visit with you today and look forward to providing you with a high-level overview of the economic development and tourism division and updates on the Texas Enterprise Fund and Emerging Technology Program. I have included a number of documents that I will refer to in your packet related to the division and the two programs.
Our mission is to market Texas and promote opportunities within the Lone Star State. The division showcases Texas’ unlimited opportunities, whether you’re exploring corporate expansion or planning a family vacation.
The program areas (under the EDT Org tab) within the economic development and tourism division that allow us to carry out our objectives include the following:
A Small Business team who is responsible for assisting small business and promoting the importance of manufacturing in our state.
Aerospace, Aviation and Defense-which also includes the Texas Military Preparedness Commission-Responsible for assisting and recruiting companies involved in the aerospace, aviation and defense industry as well as working with communities impacted by BRAC initiatives.
A Texas Business Development team-Responsible for assisting local communities with bringing jobs to Texas from domestic and international locations. In addition we have an office in Mexico City that assists with export and foreign direct investment opportunities. The analysis for the Texas Enterprise Fund program is performed in this area.
Economic Development Bank-A self supporting team that is responsible for programs that include a number of finance programs that are available to communities and businesses such as the Texas Product Business Fund (asset based program) , Texas Leverage Fund, and the Texas Enterprise Zone program.
Emerging Technology-Develop and diversify the economy of the state by expediting innovation and commercialization of research; attracting, creating, or expanding private sector entities that will promote a substantial increase in high-quality jobs; and increasing higher education applied technology research capabilities.
And a Tourism team-Responsible for marketing Texas as a premiere destination for both tourist and conventions via media, and print forms of advertisement.
We have been very successful in our efforts and much of this success is a result of the leadership of Governor Perry and legislative action taken by you and your colleagues over the years to ensure Texas remains competitive as it relates to economic development and tourism.
Governor Perry has made job creation and economic development a cornerstone of his administration. At the governor's request, and with the support of Lieutenant Governor Dewhurst and then Speaker Craddick, the 78th Texas Legislature established the Texas Enterprise Fund (TEF) to allow the state to respond quickly and aggressively to opportunities to bring jobs and employers to Texas.
The Texas Enterprise Fund provides the state's leaders with a "deal closing fund" that has the flexibility and financial resources to help strengthen the state's economy. Before funds can be awarded, the Governor, Lieutenant Governor and Speaker must unanimously agree to support the use of the Texas Enterprise Fund for each specific project. Funds will be used primarily to attract new business to the state or assist with the substantial expansion of an existing business as part of a competitive recruitment situation. State leadership is able to use Enterprise funds to leverage other resources for an economic development project. The Governor's Office works closely with local leaders to tailor incentive packages that best meet the needs of local communities and businesses. General guidelines have been implemented to ensure that core objectives of the Texas Enterprise Fund are achieved, but flexibility is an integral part of allocating Texas Enterprise Fund assets. To be eligible for Texas Enterprise Fund support, a project must demonstrate a significant return on the state's investment and have strong local support. An “11 Step Due Diligence Process” document that details this is included in your information package. The review process will consider a variety of factors associated with each project, including job creation and wages, capital investment, the financial strength of the applicant, the applicant's business history, analysis of the relevant business sector, and public and private sector financial support. When someone has a project that can benefit from the Texas Enterprise Fund, an application must be submitted to the Office of the Governor, Economic Development & Tourism division. The application requires information on how funds are to be utilized and how the proposed project meets the criteria of the program. If a project receives Texas Enterprise Funds, a performance contract will be adopted which will include default/claw-back provisions based on agreed terms. As of January 31, 2013 (monthly public report) and since the inception of the program in 2003-The Texas Enterprise Fund has awarded over $487MM which has resulted in the announcement of close to 66,000 direct jobs and a combined capital investment of over $17.3 billion.
Out of the 66,000 jobs announced over 47,000 have currently been created and are in place, and our compliance team continues to ensure milestones and obligations are met before and after funds are disbursed. The program continues to meet the measures and goals that are set bi-annually by the Legislative Budget Board and our internal auditor continues to perform periodic reviews and risk-assessments of the economic development programs that reside in our division.
The details associated with the Texas Enterprise Fund continue to be very transparent as evidenced in the detailed monthly public report and the TEF annual report (both are provided in your packet) which identify the projects that have received awards to date and any action or updates on the project. In addition I have included the various projects/companies that have been announced and are creating jobs in your respective districts as well as the contact information for the economic development professional in your city/community.
The Texas Emerging Technology Fund-created by the Texas Legislature in 2005 continues to bring new ideas to the marketplace and expand applied research capabilities. This innovation and commercialization will undoubtedly have a long-term profound impact on Texas as this program is not only creating companies but also changing lives.
The Texas Emerging Technology Fund (TETF) represents a major source of funding for start-up companies seeking to commercialize their products and Universities seeking to expand translational research in Texas. The TETF is integral to the development and diversification of the State’s economy by expediting innovation and commercialization of research, attracting, creating, or expanding private sector entities that will promote substantial increase in high- quality jobs, and increasing higher education applied technology research capabilities. The program works through the partnership between the state, institutions of higher education and private industry. Regional Centers of Innovation and Commercialization assist the program by both providing needed services in their communities and stewarding applicants through the TETF process. An advisory committee made up of 17 high-tech leaders, entrepreneurs and research experts reviews all applicants to the program and recommends funding to the trustees. Commercialization awards also must pass a 10 step due diligence process conducted by the Economic Development and Tourism division, which includes federal and state criminal background checks on all principles. To date, the TETF has allocated more than $200 million in funds to 140 early stage companies, and nearly $216 million in grant matching and research superiority awards. By the end of Fiscal Year 2012 these awards attracted close to $1.7 billion in follow-on capital and funding, or about 4.5 times as much as the State’s investment.
Similar to the transparent nature of the Texas Enterprise Fund, the Texas Emerging Technology Fund also has a detailed public report of projects that have received awards and that information is included in your packet. I have also included a copy of the TETF Fiscal Year 2012 Report to the Legislature as well as our response, action, and updates on the State Auditor Office report that was performed in 2011.
Our office continues to work with both large and small communities across the state to inform them of the availability of the Funds and how they work. Specifically, we have worked with the Association of Rural Communities in Texas (ARCIT), and Carlton Schwab who heads up the Texas Economic Development Council to provide detailed briefing on the programs and our regional team continues to be available to communities throughout our state. In addition we continue to work collaboratively with all state agencies that could have an impact on economic development and tourism projects in our state.
Chairman Pitts and committee members that concludes my remarks. I would be pleased to answer any questions that you may have. Office of the Governor Economic Development & Tourism
Executive Director Aaron Demerson
Small Business Aerospace, Aviation Texas Business Texas Economic Texas Emerging Texas Development Defense / TMPC Development Development Bank Technology Fund Tourism Amir Mirabi Keith Graf Clint Harp Lee Deviney Patrick Boswell Brad Smyth
Domestic Expansion Texas Enterprise Zone & Recruitment Program Advertising Larry McManus Tim Fennell
International Business Texas Leverage Fund & Recruitment Tourism Research Jose Romano Nate Gieryn
Product/Business Business Research Funds Eric Clennon Public Relations Diana Stevie
Texas Enterprise Fund Analysis Scott Smith
Business Marketing & TexasOne Program Matthew Jensen
State of Texas NAFTA Office Mexico Monica Sanchez 03/05/2013
R ICK P ERRY G OVERNOR
DIVISION OVERVIEW
The Office of the Governor, Economic Development & Tourism division consists of six programs. These programs include Texas Business Development, Texas Tourism, the Small Business Advocacy Program, the Office of Aerospace, Aviation and Defense, the Texas Military Preparedness Commission, and the Economic Development Bank.
Texas Business Development is charged with domestic and international business recruitment and corporate expansion efforts for the state by marketing Texas as a premiere business location utilizing the “Texas Wide Open for Business” campaign.
Domestic Expansion and Recruitment (DER) serves as the primary point of contact for companies looking to expand existing operations in Texas or relocate a business from out of state. DER has achieved great success adding jobs and capital investment to Texas, working on nationally recognized expansion and relocation projects with companies like Apple; eBay; The Home Depot; Caterpillar; Facebook; EA Sports; Raytheon; PETCO; and Lockheed Martin.
International Business and Recruitment continues to assist Texas companies seeking to expand into foreign markets and encourage foreign investment in Texas. Texas remains the nation’s largest exporting state for the 11th year in a row with 2012 exports valued at $265.4 billion.
Business Research provides support by providing economic and demographic data, analyses and information on industries and communities. The extensive databases and research tools provide accurate and timely information on doing business in Texas – strengthening the state’s ability to recruit and attract businesses.
Business Marketing shares the message that Texas is Wide Open for Business. The Wide Open for Business brand is built on the state’s unprecedented momentum and economic growth while highlighting the successes of the Texas business climate. Business Marketing targets businesses, site selectors, and key media influencers through a mix of direct marketing, targeted media, business missions, events, business forums, and the state’s economic development website www.TexasWideOpenForBusiness.com. Funding for marketing activities is raised through a public/private partnership of the Texas Economic Development Corporation.
Texas Tourism promotes Texas both domestically and internationally as a premier tourist destination to generate tourism revenue and jobs for Texas communities. Texas Tourism consists of Advertising, Public Relations, and Travel Research.
Advertising oversees the award‐winning tourism ad campaigns, including national cable television commercials, domestic and international print ads in consumer and trade publications, radio and newspaper campaigns, and interactive media such as www.TravelTex.com.
Public Relations works with the travel trade industry and media throughout the United States and top international markets including Mexico, Canada, the United Kingdom, Germany and Japan.
Travel Research provides and analyzes information about domestic and international travel trends. Travel research also provides tourism outreach services to assist Texas communities with tourism economic development. A detailed look at the Texas Tourism Marketing Plan is available at www.travel.state.tx.us. The Small Business Advocacy Program’s mission is to establish the State of Texas as the place to start and grow small businesses by identifying and isolating legal and financial barriers for small, medium, and historically underutilized businesses (HUBs); assisting small and medium enterprises with expansion programs, policies and directives; and developing strategies and outlooks for small business development.
The Office of Aerospace, Aviation and Defense focuses on maintaining Texas' leadership position by developing business strategies to promote the retention, development, and expansion of aerospace, aviation, and defense businesses in Texas. The office places special emphasis on identifying and working with domestic and international companies looking to expand in or relocate to the state. The office also collaborates with higher education institutions on research efforts and with community colleges and local workforce boards to insure Texas has a well‐trained workforce.
Texas Military Preparedness Commission works to preserve, promote, and advance the military mission within Texas while protecting vital military installations within its borders and encouraging defense‐related businesses to expand or relocate to Texas.
The Economic Development Bank provides globally competitive, cost‐effective financial incentives to expanding businesses operating in this state and businesses relocating to this state. The Bank is also charged with ensuring that communities and businesses in Texas have access to capital for economic development purposes. The Bank administers the following financial incentives: Texas Product Business Fund, Texas Leverage Fund, Texas Industry Development Loan Program, Texas Enterprise Zone Program, and Industrial Revenue Bonds.
TRUSTEED PROGRAMS
Texas Enterprise Fund The Texas Enterprise Fund, a trusteed program and the largest “deal‐closing” fund of its kind in the nation, continues to attract businesses and jobs to Texas. Since its inception in September 2003 through the end of January 2013, the fund has awarded more than $487 million to companies with a commitment to create capital investment of over $17.38 billion and 66,000 new jobs.
Texas Emerging Technology Fund The Texas Emerging Technology Fund (TETF) has awarded more than $200 million in funds for 140 early‐stage companies and nearly $216 million in grant matching and research superiority funds to Texas universities. TETF helps Texas create jobs and grow the economy over the long‐term by expediting the development and commercialization of new technologies and by attracting and creating jobs in technology fields that will form the backbone of our economy.
The program works through partnerships between the state, higher education institutions, and private industry to focus greater attention on the research, development and commercialization of emerging technology through the following three areas: . Research Superiority Acquisition ‐‐ funds for Texas higher education institutions to recruit the best research talent in the world. . Commercialization Awards ‐‐ provide selected, early‐stage investments in new, technology‐based, private entrepreneurial entities that collaborate with public or private institutions of higher education in Texas, and which, if successful, may provide significant economic benefit to the state. . Matching Awards ‐‐ funds create public‐private partnerships which leverage the unique strengths of universities, federal government grant programs, and industry. Matching awards enable Texas to secure additional research funds from outside the state in key technical and scientific areas that contribute to the growth of our emerging‐ technology economy.
P.O. B OX 12428 | A USTIN, TX 78711 | 512‐463‐2000 |DIAL 7 ‐1 ‐1 FOR R ELAY S ERVICES
WWW.GOVERNOR. STATE. TX. US TEXAS ENTERPRISE FUND (TEF) OFFICE OF THE GOVERNOR AS OF JANUARY 31, 2013 Direct State Liquidated Direct Capital Est. Total Date Disbursements Other Company Location Industry TEF Award** Return (Tax Damages Jobs Investment* Jobs*** Announced Repayments Rev./TEF) Amount Date (Clawbacks) FY2004 - FY2005 TEF PROJECTS UNDER CONTRACT >> 29,604 $ 6,480,281,413 $ 279,664,000 101,751 $ 279,664,000 $ 5,512,862 $ 8,725,961 TX Inst. for Genomic Med. Houston & College Station Biotechnology 5,000 $ 45,700,000 $ 50,000,000 31,152 100% 07/05 $ 50,000,000 08/05 $ 16,905 JPMorganChase (formerly $ 10,000,000 10/05 San Antonio Financial Services 4,200 $ 50,000,000 $ 15,000,000 9,082 237% 05/05 Washington Mutual) $ 5,000,000 05/07 $ 27,000,000 04/04 $ 9,000,000 06/04 Sematech Austin Semiconductor Consortium 4,000 $ 190,000,000 $ 40,000,000 4,623 194% 03/04 $ 3,000,000 08/04 $ 1,000,000 10/04 $ 10,000,000 01/05 Bank of America (formerly Richardson Financial Services 3,876 $ 200,000,000 $ 20,000,000 12/04 $ 8,450,351 Countrywide Financial) $ 10,000,000 03/06
Triumph Aerostructures (formerly Dallas Aerospace Manufacturing 3,000 $ 598,000,000 $ 35,000,000 29,377 368% 02/04 $ 35,000,000 04/04 $ 4,845,000 Vought) UT Health Science Center/ $ 15,000,000 09/05 Houston Biomedical 2,252 $ 55,000,000 $ 25,000,000 4,840 103% 05/04 MD Anderson $ 10,000,000 05/07 $ 3,500,000 05/05 Tyson Foods Sherman Food Processing 1,600 $ 97,150,000 $ 7,000,000 4,648 159% 01/05 $ 326,423 $ 3,500,000 12/06 $ 1,600,000 03/04 Texas Energy Center Sugarland Energy Cluster 1,500 $ 3,600,000 2,500 571% 03/04 $ 500,000 12/05 $ 1,500,000 7/06 $ 21,500,000 05/04 Texas Instruments/University of $ 3,500,000 03/05 Richardson Semiconductors $ 3,000,000,000 $ 50,000,000 4,035 264% 06/03 Texas at Dallas $ 12,500,000 06/06 $ 12,500,000 07/07 $ 5,000,000 05/05 Home Depot Inc. Austin & New Braunfels IT & Distribution 843 $ 809,170,000 $ 8,500,000 1,074 270% 07/04 $ 3,500,000 08/05 CITGO Petroleum Houston & Corpus Christi HQ & Refinery 820 $ 828,000,000 $ 5,000,000 3,611 216% 04/04 $ 5,000,000 12/04 Cabela's Buda & Fort Worth Destination Retail 600 $ 120,000,000 $ 400,000 1,002 2778% 05/04 $ 400,000 11/04 $ 177,288 Maxim Integrated Products San Antonio Semiconductors 500 $ 90,000,000 $ 1,500,000 1,456 1258% 12/03 $ 1,500,000 01/05 Ruiz Foods Denison Food Processing 423 $ 48,880,413 $ 1,500,000 1,652 270% 05/05 $ 1,500,000 06/05 Huntsman Corp. Woodlands Chemicals 285 $ 226,725,000 $ 2,750,000 1,221 2212% 10/04 $ 2,750,000 08/05 $ 106,811
JTEKT Automotive (formerly Koyo) Ennis Automotive Parts 200 $ 30,000,000 $ 333,000 562 1742% 08/04 $ 333,000 03/05
$ 500,000 10/05 Raytheon McKinney Aerospace & Defense 200 $ 21,700,000 $ 1,000,000 338 409% 11/05 $ 500,000 03/06 $ 250,000 06/05 Ineos USA League City Petrochemicals 150 $ 5,720,000 $ 750,000 228 531% 01/05 $ 500,000 08/06 Lee Container Nacogdoches Manufacturing 105 $ 5,636,000 $ 300,000 242 178% 10/04 $ 300,000 05/05 $ 38,188 Superior Essex Communication Brownwood Telecom Equipment Mfg. 50 $ 7,600,000 $ 250,000 108 604% 08/04 $ 250,000 07/05 $ 2,247 $ 1,000,000 03/04 Baylor College of Medicine Houston Genetics $ 51,000,000 $ 2,000,000 $ 1,000,000 06/04 $ 6,000,000 04/05 LEARN & TIGRE Statewide Higher Education $ 9,781,000 09/04 $ 500,000 05/05 $ 275,610 $ 3,281,000 06/05
Projects are grouped by fiscal year of contract execution, not by time of funding encumbrance Notes: (*) Company commitment at date of award (**) Amount awarded per the contract. Final disbursement depends upon recipient performance and any enforcement of liquidated damages based on performance. (***) Includes direct, Indirect, and induced jobs forecast by third-party economic impact analysis
1 Direct State Liquidated Direct Capital Est. Total Date Disbursements Other Company Location Industry TEF Award** Return (Tax Damages Jobs Investment* Jobs*** Announced Repayments Rev./TEF) Amount Date (Clawbacks) FY2006 - FY2007 TEF PROJECTS UNDER CONTRACT >> 12,448 $ 6,755,838,000 $ 75,036,000 35,198 $ 50,550,000 $ 2,181,616 $ 9,361,812 Rackspace Windcrest/San Antonio Web Hosting 4,000 $ 111,380,000 $ 22,000,000 10,360 267% 08/07 $ 5,000,000 08/07 $ 4,000,000 12/05 Hilmar Cheese Dalhart Dairy Product Mfg. 1,962 $ 190,000,000 $ 7,500,000 3,208 222% 11/05 $ 1,359,984 $ 3,500,000 04/09 $ 4,500,000 03/07 Fidelity Global Brokerage Town of Westlake Financial Services 850 $ 200,000,000 $ 8,500,000 3,408 493% 02/07 $ 484,068 $ 4,000,000 $ 4,000,000 07/08 Sanderson Farms McLennan County Poultry Processing 1,312 $ 73,000,000 $ 500,000 4,467 3577% 01/06 $ 500,000 04/06 $ 81,891 $ 1,181,907 03/07 ADP El Paso Payroll Services 1,028 $ 23,900,000 $ 3,000,000 1,619 277% 02/06 $ 1,818,093 02/08 Maxim Integrated Products Irving Semiconductors $ 5,000,000 $ 2,000,000 $ 2,107,149 $ 8,000,000 05/06 Samsung Austin Semiconductors 900 $ 2,500,000,000 $ 10,800,000 3,356 712% 04/06 $ 2,800,000 10/07 $ 1,500,000 03/06 T-Mobile Frisco Wireless Communications 855 $ 20,700,000 $ 2,150,000 2,062 317% 11/05 $ 650,000 09/07 Lockheed Martin Houston Aerospace Mfg. 550 $ 58,000,000 $ 5,480,000 2,043 339% 09/06 $ 4,000,000 05/07 $ 1,500,000 04/06 Torchmark McKinney Insurance 500 $ 26,600,000 $ 2,000,000 1,150 392% 03/06 $ 500,000 03/08 Hewlett-Packard Austin / Houston Data Center $ 5,000,000 $ 3,000,000 $ 3,210,847 Motiva Port Arthur Oil & Gas Refining 300 $ 3,500,000,000 $ 2,000,000 2,760 5704% $ 1,300,000 06/06 $ 250,000 03/06 Newly Weds Foods Mount Pleasant Food Products 115 $ 27,000,000 $ 450,000 292 681% 04/06 $ 200,000 12/08 Trace Engines Midland Aerospace Mfg. 24 $ 9,658,000 $ 456,000 338 294% 09/06 $ 250,000 09/06 $ 245,641 Alloy Polymers Houston County Plastics Compounding 52 $ 15,600,000 $ 200,000 135 811% 10/06 $ 100,000 10/06 $ 10,032 $ 43,816
FY2008 - FY2009 TEF PROJECTS UNDER CONTRACT >> 7,105 $ 770,169,839 $ 36,484,196 18,759 $ 23,639,196 $ 1,060,011 $ 1,103,164 Caterpillar Seguin Engine/Machinery Mfg 1,714 $ 176,800,000 $ 8,500,000 3,178 415% 12/08 $ 2,250,000 09/09 $ 69,099 $ 3,000,000 11/07 Scott & White Memorial Temple Health Care Research 1,485 $ 63,000,000 $ 7,500,000 3,783 472% 11/07 $ 2,500,000 03/09 $ 2,000,000 04/11 $ 1,500,000 10/09 Medtronic San Antonio Medical Technology 1,384 $ 23,226,000 $ 6,000,000 3,426 166% 05/09 $ 2,000,000 7/11 Santana Textiles Edinburg Textile Mfg 800 $ 171,000,000 $ 1,650,000 1,232 1010% 07/08 $ 800,000 08/08 $ 86,807 Albany Engineered Composites Boerne Aerospace Mfg 55 $ 41,635,000 $ 300,000 2,043 364% 01/08 $ 300,000 03/08 $ 29,716 $ 200,841 Rockwell Collins Richardson Aerospace Mfg 105 $ 6,782,500 $ 839,196 01/08 $ 839,196 12/07 $ 109,296 KLN Steel Products San Antonio Furniture Mfg 156 $ 25,000,000 $ 450,000 867 321% 06/08 $ 450,000 08/08 $ 47,744 Hirschfeld Energy (formerly Martifer) San Angelo Wind Tower Mfg 225 $ 40,000,000 $ 845,000 679 331% 09/08 $ 500,000 10/08 $ 145,180 McLane Advanced Technologies Temple IT & Logistics $ 1,000,000 $ 500,000 11/09 $ 522,374 Comerica Dallas Financial Services 200 $ 16,250,000 $ 3,500,000 668 199% 03/07 $ 3,500,000 09/07 $ 400,000 10/07 Allied Production Solutions Gainesville Oil & Gas Production 200 $ 16,325,000 $ 800,000 200 472% 09/07 $ 26,688 $ 400,000 10/09 US Bowling Congress Arlington Athletic Association 198 $ 13,000,000 $ 610,000 364 602% 03/08 $ 305,000 06/09 $ 90,132 Grifols San Marcos Biological Products 190 $ 76,623,300 $ 500,000 857 1611% 07/09 $ 250,000 11/09 $ 55,428 HelioVolt Corp. Austin Solar Panel Mfg. 158 $ 62,900,000 $ 1,000,000 785 866% 04/08 $ 500,000 01/09 $ 149,741 Gulfstream Dallas Aerospace Mfg $ 750,000 $ 375,000 04/08 $ 379,949 FlightSafety International Irving Aviation $ 720,000 10/08 Authentix Addison Security Technology 120 $ 6,550,000 $ 1,000,000 315 293% 08/07 $ 750,000 11/07 $ 250,180 $ 225,000 01/09 Associated Hygienic Products Waco Paper Products Mfg 115 $ 31,078,039 $ 520,000 362 790% 01/09 $ 295,000 05/11
2 TEXAS ENTERPRISE FUND (TEF) OFFICE OF THE GOVERNOR AS OF JANUARY 31, 2013 Direct State Liquidated Direct Capital Est. Total Date Disbursements Other Company Location Industry TEF Award** Return (Tax Damages Jobs Investment* Jobs*** Announced Repayments Rev./TEF) Amount Date (Clawbacks)
FY2010 - FY2011 TEF PROJECTS UNDER CONTRACT >> 8,065 $ 640,491,164 $ 47,649,000 30,797 $ 22,219,000 $ 865,073 $ 3,510,648 eBay Austin E-Commerce 1,050 $ 5,180,000 $ 2,800,000 2,376 612% 04/11 $ 1,400,000 04/11 GE Transportation Fort Worth Locomotive Mfg. 775 $ 96,000,000 $ 4,200,000 2,978 486% 05/11 $ 1,300,000 06/11 $ 60,451 Klein Tools Mansfield Hand Tool Mfg. 585 $ 18,000,000 $ 2,800,000 1,589 520% 12/10 $ 1,000,000 1/11 Nationwide Mutual Insurance San Antonio Insurance $ 2,500,000 10/09 $ 1,200,000 12/10 $ 1,209,219 TDAmeritrade Fort Worth Financial Services 490 $ 11,000,000 $ 1,200,000 1,207 545% 04/11 $ 600,000 04/11 $ 32,955 LegalZoom Austin Legal Documents 465 $ 11,750,000 $ 1,000,000 1,377 584% 02/10 $ 500,000 05/10 $ 48,545 SunPower Corp. Austin Solar Panels $ 2,500,000 11/10 $ 1,000,000 12/10 $ 1,035,698 VCE Richardson Computer Systems/IT 130 $ 40,000,000 $ 2,450,000 1,000 744% 03/11 $ 1,000,000 03/11 $ 436,926 $ 208,558 G-Con Bryan Pharmaceutical Mfg. 408 $ 86,000,000 $ 3,000,000 4,463 332% 05/10 $ 3,000,000 05/10 $ 19,332 Lorimer (Natura World) Wichita Falls Mattress Mfg. $ 1,500,000 02/10 $ 750,000 11/10 $ 40,757 $ 720,902 Petco Animal Supplies Inc. San Antonio Mgmt. of Retail Trade 400 $ 17,000,000 $ 3,100,000 852 219% 11/10 $ 1,050,000 02/11 Nationstar Mortgage Lewisville Mortgage Lending 400 $ 2,000,000 $ 560,000 2,900 679% 10/10 $ 300,000 11/10 Health Management Systems Irving Health Care Data Services 350 $ 17,687,439 $ 1,600,000 1,004 455% 10/10 $ 600,000 10/10 (HMS) Vendor Resource Mgmt. Carrollton Financial Services 275 $ 4,600,000 $ 750,000 684 689% 05/10 $ 375,000 05/10 $ 60,944 Becton, Dickinson & Co. San Antonio Medical Devices 296 $ 6,350,000 $ 1,560,000 570 184% 08/10 $ 400,000 09/10 Caterpillar Victoria Construction Machinery Mfg. 238 $ 122,725,000 $ 1,175,000 1,943 1479% 08/10 $ 450,000 03/11 $ 750,000 03/10 Hanger Orthopedic Austin Medical Devices 236 $ 4,700,000 $ 1,500,000 354 338% 01/10 $ 750,000 10/11 Office Depot Inc. Austin Office Supply Sales 203 $ 6,900,000 $ 300,000 399 923% 07/11 $ 150,000 8/11 Allstate Insurance San Antonio Insurance 200 $ 11,607,475 $ 1,100,000 429 328% 02/10 $ 550,000 03/10 $ 58,865 Facebook Austin Social Media 200 $ 3,150,000 $ 1,400,000 366 167% 02/10 $ 500,000 06/10 Latex Foam International Wichita Falls Bedding Products Mfg. $ 1,060,000 10/10 $ 350,000 11/10 $ 167,000 Jyoti Americas Conroe Electrical Transmission Equip. 157 $ 27,610,250 $ 865,000 419 786% 12/10 Kohl's Department Stores Inc. San Antonio Mgmt. of Retail Trade 150 $ 18,000,000 $ 750,000 2,197 568% 04/10 $ 300,000 05/10 Information Technology for $ 750,000 06/10 Frito-Lay Plano 125 $ 4,500,000 $ 1,125,000 426 278% 06/10 Food Mfg. $ 375,000 12/10 iDx Corp. Cuero Retail Fixture Mfg. 125 $ 5,100,000 $ 360,000 204 331% 03/11 $ 125,000 03/11 CK Technologies Brownsville Truck Component Mfg. 121 $ 18,200,000 $ 425,000 156 572% 12/10 $ 150,000 12/10 Consolidated Electrical Distributors Electrical Components Irving 120 $ 3,300,000 $ 1,200,000 274 242% 10/10 $ 450,000 01/11 (CED) Wholesale Green Star Products Boerne Light Fixture Mfg. $ 350,000 10/10 $ 175,000 10/10 $ 15,180 $ 169,271 Coll Materials Waco Plastics Recycling 111 $ 5,900,000 $ 550,000 408 296% 04/11 $ 200,000 04/11 $ 22,950 Golden Living (GGNSC) Plano Health Care Facilities 100 $ 8,400,000 $ 2,100,000 184 189% 03/11 $ 700,000 03/11 $ 3,522 Tapco International Baytown Refinery Components Mfg. 100 $ 26,000,000 $ 675,000 390 690% 08/10 $ 325,000 10/10 Cardiovascular Systems (CSI) Pearland Medical Technology 100 $ 25,500,000 $ 600,000 925 638% 10/09 $ 400,000 06/10 $ 21,660 Zarges Aluminum Systems Amarillo Wind Tower Parts Mfg. 100 $ 12,131,000 $ 400,000 380 568% 11/09 $ 200,000 02/10 $ 36,518 3M Company Angleton Powder Coatings Mfg. 55 $ 21,200,000 $ 194,000 343 1511% 04/11 $ 94,000 01/11 $ 6,468
Projects are grouped by fiscal year of contract execution, not by time of funding encumbrance Notes: (*) Company commitment at date of award (**) Amount awarded per the contract. Final disbursement depends upon recipient performance and any enforcement of liquidated damages based on performance. (***) Includes direct, Indirect, and induced jobs forecasted by third-party economic impact analysis
3 Direct State Liquidated Direct Capital Est. Total Date Disbursements Other Company Location Industry TEF Award** Return (Tax Damages Jobs Investment* Jobs*** Announced Repayments Rev./TEF) Amount Date (Clawbacks) FY2012 - FY2013 TEF PROJECTS UNDER CONTRACT >> 8,478 $ 2,737,355,000 $ 48,576,500 24,732 $ 8,170,000 $ 2,420 $ - Apple Austin Computer Hardware/Software 3,635 $ 304,000,000 $ 21,000,000 10,685 204% 03/12 $ 5,250,000 09/12 Visa Austin Financial Services 794 $ 27,240,000 $ 7,900,000 2,835 242% 11/12 ADP El Paso Payroll Services 585 $ 22,000,000 $ 2,400,000 1,032 361% 12/12 TEKsystems Global Services Irving IT Outsourcing Services 500 $ 4,865,000 $ 1,100,000 874 764% 12/12 James Skinner Company Paris Baked Goods Mfg. 393 $ 25,000,000 $ 1,800,000 961 399% 12/12 CGI Technologies Belton IT Consulting Services 350 $ 7,000,000 $ 1,800,000 760 224% 10/11 $ 600,000 11/11 Continental Automotive Seguin Automotive Parts Mfg. 300 $ 113,000,000 $ 1,200,000 522 993% 01/12 Centene Corp. Tyler Insurance Claims 300 $ 15,000,000 $ 1,381,500 856 316% 05/12 CH2M Hill Houston Engineering 285 $ 5,250,000 $ 2,300,000 752 250% 08/12 $ 1,150,000 05/12 HID Global Austin Electronic ID Systems Mfg. 239 $ 35,250,000 $ 1,900,000 836 504% 09/12 Layne Christensen Company The Woodlands Heavy Construction HQ 210 $ 10,350,000 $ 1,300,000 847 503% 12/12 The Advisory Board Corp. Austin IT Consulting Services 200 $ 8,100,000 $ 500,000 694 1109% 01/12 $ 250,000 12/11 Pactiv Corsicana Plastic Product Mfg. 200 $ 58,000,000 $ 930,000 515 1434% 09/12 Dow Chemical Freeport Chemical Mfg. 150 $ 1,700,000,000 $ 1,000,000 631 8287% 04/12 Flexsteel Pipeline Technologies Baytown Steel & Plastic Pipe Mfg. 130 $ 94,800,000 $ 650,000 472 3108% 11/11 $ 350,000 11/11 $ 2,420 Kuraray Americas Pasadena Chemical Mfg. 107 $ 302,000,000 $ 965,000 1,099 3550% 06/12 $ 320,000 07/12 Ferris Manufacturing Fort Worth Medical Equipment Mfg. 100 $ 5,500,000 $ 450,000 361 535% 12/11 $ 250,000 11/11
TOTAL TEF PROJECTS ALLOCATED >> 65,700 $ 17,384,135,416 $ 487,409,696 $ 9,621,982 $ 22,701,585 Total Funds Disbursed $ 384,242,196 Total Disbursed Funds Returned $ 32,323,567
Amount Allocated to Special Events Funds $ 10,000,000 AVAILABLE TEF BALANCE FOR FISCAL YEARS 2012 - 2013 >> $ 141,046,770
Projects are grouped by fiscal year of contract execution, not by time of funding encumbrance Notes: (*) Company commitment at date of award
(**) Amount awarded per the contract. Final disbursement depends upon recipient performance and any enforcement of liquidated damages based on performance.
(***) Includes direct, Indirect, and induced jobs forecasted by third-party economic impact analysis
4 OFFICE OF THE GOVERNOR Economic Development and Tourism
TEXAS ENTERPRISE FUND ³67(3352&(66´ Due Diligence and Project Analysis
STEP
1. TEF Program Application
2. Project Executive Summary
3. Applicant Management and Current News Research
4. Current Corporate Tax Status Verification
5. Business Climate Evaluation and Comparison
6. Economic Impact Assessment based on Third-Party Report
7. Applicant Corporate Financial Analysis
8. Applicant Credit Assessment
9. Review of Local and State Economic Incentive Package
10. Project Cost-Benefit Analysis & Return on Investment
11. Project Clawback Analysis & Calculation
TEXAS ENTERPRISE FUND (TEF)
COMPLIANCE AND OVERSIGHT DIVISION (COD)
COMPLIANCE MONITORING PROCESS
Every TEF Agreement requires an Annual Compliance Verification be submitted to the Office of the Governor (OOG), including due dates for reporting, Job Targets required for each annual period, and the definition for such Employment Positions, including required compensation, reported toward the Job Target.
The Annual Compliance Verification must be:
Submitted annually to OOG, with a copy to the Office of the Lieutenant Governor and the Office of the Speaker of the House; Signed by a duly authorized representative of the company; Certify the number of and generally describe the Employment Positions existing as of December 31st of the year preceding; Provide median and/or average wage for all Employment Positions; and, In a form reasonably satisfactory to OOG and provide appropriate back-up for the Employment Positions required.
All Annual Compliance Verification reviews are conducted by a Compliance Specialist in the COD. As a part of that process, COD requests from the Texas Workforce Commission (TWC) a report to verify that the Employment Positions reported to OOG are consistent with those required to be reported by the company to TWC.
If the Annual Compliance Verification determines that the required number of Employment Positions to be counted toward the Job Target has not been achieved for the reporting year, the COD notifies the company as to the liquidated damages owed, based on a per job shortage, as set out in the Agreement. The company then has thirty (30) days in which to pay such damages. No TEF company has failed to pay the requested liquidated damages.
The Agreements also require that the company provide periodic briefings as reasonably requested by Office of the Governor on the general activities, economic impact and progress of the new project development and business operations in Texas, as well as annually providing information regarding the general business status, market and general summary financial updates regarding the company.
Finally, in addition to the Annual Compliance Verification, the Compliance and Oversight Division does an annual risk assessment of the projects to determine appropriate site visits for audit purposes. Site visits are also conducted as “close out” prior to terminations. Texas Enterprise Fund
The Texas Enterprise Fund (TEF), the largest "deal-closing" fund of its kind in the nation, gives Texas a competitive edge in attracting new businesses to the state and assisting with the expansion of existing businesses that might otherwise opt to expand in another state. The fund is a cash grant used as a financial incentive tool for projects that offer significant projected job creation and capital investment and where a single Texas site is competing with another viable out-of-state option.
Award amounts are determined using an analytical model applied uniformly to each applicant. This model assures the state will see a full return on its investment within the project contract period due to the resulting increase in estimated sales tax revenues. Variations in award amounts are influenced by the number of jobs to be created, the expected time frame for hiring, and the average wages to be paid. In the past, awards have ranged from $194,000 to $50 million. The TEF Award Listing to date is available at www.governor.state.tx.us/files/ecodev/TEF_Listing.pdf.
The Legislature created the TEF in 2003 and has re-appropriated funding in every legislative session since then to help ensure the growth of Texas businesses and create more jobs throughout the state. TEF projects must be approved by the governor, lieutenant governor and speaker of the House. The fund has since become one of the state's most competitive tools to recruit and bolster business. To date, the TEF has invested more than $487 million and closed the deal on projects generating more than 66,000 new jobs and more than $17.38 billion in capital investment in the state.
How Do I Apply? There are several primary measures that every TEF project must meet in order to be considered for an award. Those include but are not limited to the following: ÕÕ Competitionwith another state for the project must exist and the business must not have already made a location decision. ÕÕ Projected new job creation must be significant – past recipients have typically created more than 75 jobs in urban areas or more than 25 in rural areas. ÕÕ The new positions must be high-paying jobs – above the average wage of the county where the project would be located. ÕÕ Capital investment by the company must be significant. ÕÕ A significant rate of return on the public dollars being invested in the project must be demonstrated. ÕÕ The project must have community involvement from the city, county, and/or school district, primarily in the form of local economic incentive offers. ÕÕ The applicant must be a well-established, financially sound business. ÕÕ The applicant's business sector must be an advanced industry that could potentially locate in another state or country. ÕÕ The Governor, Lieutenant Governor, and the Speaker of the House must unanimously agree to support the use of the TEF for each specific project.
Each applicant undergoes a thorough 11-step due diligence process. Corporate activity, financial standing, tax status, legal issues, credit ratings, and estimated economic impacts, as well asthe business climates of competition locations are assessed for each project and taken into consideration for all award decisions.
For more information visit TexasWideOpenForBusiness.com
02 13
™ Office of the Governor Economic Development & Tourism Division P.O. Box 12428 Austin, Texas 78711 Texas Emerging Technology Fund
Incentives for Commercialization Activities (D)
Award Recipient University Collaboration Industry Award Amount * Region Award Date Xeris Pharmaceuticals, Inc. University off Texas at Austin Biotechnology &&fS Life Science $ 1,900,000 CCentral Texas 20-Dec-12 Procyrion, Inc. University of Houston and Texas Heart Institute Biotechnology & Life Science $ 1,500,000 Gulf Coast 6-Dec-12 Admittance Technologies, Inc. University of Texas Health Science Center at San Antonio Biotechnology & Life Science $ 1,990,000 South Texas 11-Oct-12 Cirasys, Inc. University of Texas at Dallas Computer & Information Technology$ 1,000,000 North Texas 16-Jul-12 Rebellion Photonics, Inc. Rice University Advanced Technology & Manufacturing$ 1,000,000 Gulf Coast 21-Jun-12 Vapogenix, Inc. University of Texas M. D. Anderson Cancer Center Biotechnology & Life Science $ 2,000,000 Gulf Coast 15-Jun-12 Awards by Region (D) VUV Analytics, Inc. University of Texas at Austin Biotechnology & Life Science $ 1,000,000 Central Texas 15-Jun-12 Vital Arts and Sciences, Inc. University of Texas Southwestern Medical Center Biotechnology & Life Science $ 1,000,000 North Texas 7-Jun-11 SpeerSpeer MedicalMedical DevicesDevices, IncInc. UniversityUniversity ofof TexasTexas HealthHealth ScienceScience CenterCenter atat HoustonHouston BiotechnologyBiotechnology & LifeLife ScienceScience $ 2,500 , 000 SouthSouth TexasTexas 31- MarMar- 11 AuricX Pharmaceuticals, Inc. University of Texas M. D. Anderson Cancer Center Biotechnology & Life Science $ 1,000,000 Gulf Coast 3-Dec-10 KLD Electronics Texas, Inc. University of Texas at Austin Energy $ 2,800,000 Central Texas 3-Dec-10 RadioMedix, Inc. University of Texas M. D. Anderson Cancer Center Biotechnology & Life Science $ 2,800,000 Central Texas 23-Nov-10 FireFly LED, Inc. University of Texas at Austin Energy $ 3,000,000 Central Texas 23-Nov-10 4% Biometric Signature ID University of Texas at Austin Computer & Information Technology $ 550,000 North Texas 6-Oct-10 4% Oncolix, Inc. University of Texas M. D. Anderson Cancer Center Biotechnology & Life Science $ 2,400,000 Gulf Coast 1-Oct-10 24% Corythm, Inc. University of Texas Health Science Center at San Antonio Biotechnology & Life Science $ 3,113,000 South Texas 1-Oct-10 17% Fe3 Medical Medical,, Inc.Inc. University of Texas Health Science Center at San Antonio Biotechnology & Life Science $ 2,841,0002,841,000 South Texas 11-Oct-10-Oct-10 Neurolink, Inc. University of Texas Health Science Center at San Antonio Biotechnology & Life Science $ 3,234,000 South Texas 1-Oct-10 ViroXis Corporation University of Texas Health Science Center at San Antonio Biotechnology & Life Science $ 2,500,000 South Texas 1-Oct-10 Ideal Power Converters, Inc. University of Texas at Austin Energy $ 1,000,000 Central Texas 1-Oct-10 FibeRio Technology Corporation University of Texas Pan American Advanced Technology & Manufacturing$ 1,500,000 Tropical Texas 24-Aug-10 20% InView Technology Corp. Rice University Computer & Information Technology$ 1,500,000 Central Texas 24-Aug-10 Genprex, Inc. Convergen Life Sciences University of Texas M. D. Anderson Cancer Center Biotechnology & Life Science $ 4,500,000 Central Texas 13-Aug-10 29% Blue Box Health, Inc. University of Houston Biotechnology & Life Science $ 1,000,000 Gulf Coast 13-Aug-10 ZSS Pharma, a a, Inc. c UniversitU e s y oof North o Texas e as Health ea ScScience e ce CeCenter e Biotechnoloo ec o ogygy & Life e ScScience e ce $ 2,000,000,000,000 Northoeas Texas 13-Au3ug0g-10 Iridescent Networks, Inc. University of Texas at Dallas Computer & Information Technology$ 1,000,000 North Texas 19-Jul-10 DataInfoCom USA Inc. University of Texas at Austin Computer & Information Technology$ 1,600,000 North Texas 12-Jul-10 Terrabon, Inc. Texas A&M University Energy $ 2,750,000 Tropical Texas 12-Jul-10 North Texas Gulf Coast Central Texas Neuro Resource Group, Inc. University of Texas at Arlington Biotechnology & Life Science $ 1,500,000 North Texas 1-Jul-10 Veros Systems, Inc. Texas A&M University Computer & Information Technology$ 1,500,000 Gulf Coast 14-Jun-10 South Texas West Texas Trans Pecos Savara, Inc. University of Texas at Austin Biotechnology & Life Science $ 1,900,000 Central Texas 1-Jun-10 Ensysce Biosciences Inc. Rice University Biotechnology & Life Science $ 1,500,000 Gulf Coast 1-Jun-10 Tropical Texas AgileMesh, Inc. University of Texas at Dallas Aerospace & Defense $ 2,000,000 North Texas 25-May-10 Nano3D Biosciences, Inc. Rice University Biotechnology & Life Science $ 1,000,000 Gulf Coast 20-May-10 MicroZAP, Inc. Texas Tech Biotechnology & Life Science $ 1,500,000 West Texas 30-Apr-10 Leonardo Biosystems, Inc. University of Texas Health Science Center at Houston Biotechnology & Life Science $ 2,500,000 Gulf Coast 15-Apr-10 Palmaz Scientific Inc. University of Texas Health Science Center at San Antonio Biotechnology & Life Science $ 3,000,000 South Texas 15-Apr-10 1st Detect, Inc. University of North Texas Aerospace & Defense $ 1,800,000 Central Texas 30-Mar-10 NanoTailor, Inc. Texas State University Advanced Technology & Manufacturing$ 250,000 Central Texas 16-Mar-10 SmartField, Inc. Texas Tech Biotechnology & Life Science $ 1,000,000 West Texas 6-Jan-10 SolarBridge Technologies, Inc. University of Texas at Austin Energy $ 1,500,000 Central Texas 30-Dec-09 SSalient li t PhPharmaceuticals,Inc. ti l I UniversityUi it of fT Texas M. MDAd D. Anderson Cancer C Center C t BiotechnologyBi t h l & Life Lif Science S i $ 2,000,0002 000 000 GlfCGulf Coast t 14 14-Dec-09 D 09 Photon8, Inc. University of Texas at Brownsville Energy $ 1,000,000 Tropical Texas 13-Nov-09 Mirna Therapeutics, Inc. University of Texas M. D. Anderson Cancer Center Biotechnology & Life Science $ 5,000,000 Central Texas 11-Nov-09 Qcue, Inc. University of Texas at Austin Computer & Information Technology$ 1,000,000 Gulf Coast 20-Oct-09 OnTrack Imaging, Inc. Texas A&M University Biotechnology & Life Science $ 1,000,000 North Texas 7-Oct-09 Device Fidelity, Inc. University of Texas at Dallas Computer & Information Technology$ 3,000,000 North Texas 7-Oct-09
1 Texas Emerging Technology Fund
Incentives for Commercialization Activities (D) ‐ Continued
Award Recipient University Collaboration Industry Award Amount * Region Award Date ActaCell, Inc. University of Texas at Austin Energy $ 1,000,000 Central Texas 5-Oct-09 AdAdvanced dRi Receiver Technologies, Thli Inc. I UniversityU i it of fT Texas at tD Dallas ll ComputerCt&IftiThl & Information Technology $ 250,000250 000 NthTNorth Texas2O 2-Oct-09 t09 Awards by Region LaserGen, Inc. Baylor University Biotechnology & Life Science $ 1,000,000 Gulf Coast 16-Sep-09 (E) & (F) Patton Surgical Corp. University of Texas at Austin Biotechnology & Life Science $ 3,000,000 Central Texas 4-Sep-09 Turbo Trac USA, Inc. University of Texas Permian Basin Energy $ 2,000,000 West Texas 24-Aug-09 Varaha, inc. University of Texas at Arlington Computer & Information Technology$ 1,500,000 North Texas 14-Aug-09 iLearning Gateway, Inc. University of Texas at Arlington Computer & Information Technology$ 1,000,000 North Texas 7-Aug-09 2% DEP Shape Memory Therapeutics, Inc. Texas A&M University Biotechnology & Life Science $ 1,000,000 Gulf Coast 3-Aug-09 0% Net.Orange, Inc. University of Texas Southwestern Medical Center Computer & Information Technology$ 1,900,000 North Texas 30-Jul-09 AzayaAzaya TherapeuticsTherapeutics, Inc. UniversityUniversity of TexasTexas Health Science Center at San Antonio BiotechnologyBiotechnology & Life Science $ 1,045 , 000 SouthSouth TexasTexas 28- JulJul- 09 6% 10% ScanTech Sciences, Inc. Texas A&M University Advanced Technology & Manufacturing$ 2,000,000 Tropical Texas 9-Jul-09 5% Interoperate.biz, Inc. University of Texas at Dallas Computer & Information Technology$ 1,000,000 North Texas 9-Jul-09 Calxeda, Inc. University of Texas at Austin Advanced Technology & Manufacturing$ 1,000,000 Central Texas 1-Jul-09 Apaxis Medical, Inc. Texas Heart Institute Biotechnology & Life Science $ 600,000 Gulf Coast 8-Jun-09 15% Pulmotect, Inc. University of Texas M. D. Anderson Cancer Center Biotechnology & Life Science $ 1,000,000 Gulf Coast 8-Jun-09 Bynari, Inc. University of Texas at Arlington Computer & Information Technology$ 1,500,000 North Texas 2-Jun-09 2Cimple, Inc. University of Texas at Dallas Computer & Information Technology$ 1,500,000 North Texas 1-Jun-09 America Stem Cell,Cell, Inc.Inc. University of Texas M.M. D D.. Anderson Cancer Center Biotechnology & Life Science $ 1,250,0001,250,000 South Texas 2727-May-09-May-09 Ortho Kinematics, Inc. University of Texas at Austin Biotechnology & Life Science $ 1,500,000 North Texas 8-May-09 62% Mystic Pharmaceuticals, Inc. University of Texas Medical Branch Biotechnology & Life Science $ 1,568,000 Central Texas 21-Apr-09 MacuCLEAR, Inc. Texas A&M University Biotechnology & Life Science $ 1,700,000 North Texas 20-Apr-09 Noninvasix, Inc. University of Texas Medical Branch Biotechnology & Life Science $ 250,000 Gulf Coast 8-Apr-09 Agile Planet, Inc. University of Texas at Austin Advanced Technology & Manufacturing$ 1,000,000 Central Texas 2-Apr-09 Advitech, Inc. University of Texas M. D. Anderson Cancer Center Aerospace & Defense $ 2,500,000 South Texas 24-Mar-09 Castle Biosciences, Inc. University of Texas M. D. Anderson Cancer Center Biotechnology & Life Science $ 1,000,000 Gulf Coast 11-Mar-09 Solarno,, Inc. Universityy of Texas at Dallas Energygy $ 250,000 , North Texas 1-Mar-09 Biscotti fka Wham!, Inc. University of Texas at Dallas Computer & Information Technology$ 1,000,000 North Texas 25-Feb-09 Awards ‐ Industry Syndiant, Inc. University of Texas at Dallas Advanced Technology & Manufacturing$ 3,500,000 North Texas 20-Feb-09 Gradalis, Inc. Texas A&M University Biotechnology & Life Science$ 1,750,000 North Texas 19-Feb-09 Cluster (D) Pronucleotein Biotechnologies, Inc. University of Texas Pan American Biotechnology & Life Science$ 1,000,000 South Texas 18-Feb-09 Enthuze, Inc. University of Texas at Austin Computer & Information Technology$ 1,650,000 South Texas 18-Feb-09 SeprOx, Inc. University of Houston Biotechnology & Life Science$ 750,000 Gulf Coast 17-Feb-09 Chipotle Business Group, Inc. University of Texas at Arlington Biotechnology & Life Science$ 1,000,000 North Texas 2-Feb-09 21-Century Silicon, Inc. University of Texas at Dallas Energy$ 3,500,000 North Texas 30-Jan-09 12% 13% Smart Imaging Technology Co. TAMU Computer & Information Technology$ 1,000,000 Gulf Coast 31-Dec-08 Analogix Development Corporation University of Texas at Austin Computer & Information Technology $ 250,000 Central Texas 19-Dec-08 16% DNAtrix, Inc. University of Texas M. D. Anderson Cancer Center Biotechnology & Life Science $ 500,000 Gulf Coast 1-Dec-08 Modria, Inc. University of Texas at Dallas Computer & Information Technology $ 500,000 North Texas 1-Dec-08 BiO2 Medical, Inc. University of Texas Health Science Center at San Antonio Biotechnology & Life Science $ 1,000,000 South Texas 12-Nov-08 4% Animal Innovations, Inc. Texas A&M University Biotechnology & Life Science $ 1,000,000 West Texas 12-Nov-08 55% Merkatum, Inc. University of Texas at Austin Computer & Information Technology$ 1,000,000 Central Texas 10-Nov-08 HeatGenie, Inc. University of Texas at Austin Advanced Technology & Manufacturing$ 1,000,000 Central Texas 5-Nov-08 EQMAEQMA, IInc. BlUiBaylor Universit ity EEnergy $ 250,000250 000 NthTNorth Texas4N 4-Nov-08 08 Advanced Technology & Faradox Energy Storage, Inc. Texas State University Advanced Technology & Manufacturing$ 1,000,000 Central Texas 30-Oct-08 Manufacturing Nano Medical Systems, Inc. University of Texas Health Science Center at Houston Biotechnology & Life Science $ 3,500,000 Central Texas 30-Sep-08 Biotechnology & Life Science Cormedics Corp. Texas Heart Institute Biotechnology & Life Science $ 750,000 Gulf Coast 18-Sep-08 CryoPen, Inc. University of Texas Health Science Center at Houston Biotechnology & Life Science $ 2,000,000 South Texas 6-Aug-08 Aerospace & Defense Mayan Pigments, Inc. University of Texas at El Paso Advanced Technology & Manufacturing$ 750,000 Trans Pecos 25-Jul-08 Sunrise Ridge Algae, Inc. University of Texas at Austin Energy $ 250,000 Central Texas 24-Jul-08 Terapio, Inc. University of Texas at Arlington Biotechnology & Life Science $ 1,700,000 Central Texas 21-Jul-08
2 Texas Emerging Technology Fund
Incentives for Commercialization Activities (D) ‐continued
Stellarray, Inc. Texas A&M University Advanced Technology & Manufacturing$ 750,000 Central Texas 17-Jul-08 Awards by Industry Dentlight,g Inc. Universityy of Texas Health Science Center at San Antonio Biotechnologygy & Life Science $ 250,000 North Texas 7-Jul-08 Codekko, Inc. University of Texas at Dallas Computer & Information Technology$ 1,500,000 North Texas 3-Jul-08 ClCluster t (E) & (F) BetaBatt, Inc. Rice University Energy$ 500,000 Gulf Coast 20-Jun-08 Receptor Logic, Inc. Texas Tech Biotechnology & Life Science$ 2,000,000 West Texas 16-Jun-08 Advanced Tech & Manufacturing RFMicron, Inc. University of Texas at Austin Advanced Technology & Manufacturing$ 925,000 Central Texas 22-May-08 Biotechnology & Life Science Image Trends, Inc. University of Texas at Austin Computer & Information Technology$ 1,000,000 Central Texas 15-May-08 Aerospace & Defense Net Watch Solutions, Inc. University of Texas at Dallas Computer & Information Technology$ 500,000 North Texas 25-Mar-08 Computer & Information Technology MicroTransponder, Inc. University of Texas at Dallas Biotechnology & Life Science$ 1,380,000 North Texas 19-Feb-08 Xitronix, Inc. University of Texas at Austin Advanced Technology & Manufacturing$ 500,000 Central Texas 17-Feb-08 Energy Texas MicroPower, Inc. University of Texas at Arlington Energy $ 750,000 North Texas 15-Feb-08 TXL Group, Inc. University of Texas at El Paso Energy $ 500,000 Trans Pecos 4-Feb-08 Halsa Pharmaceuticals, Inc. Texas A&M University Biotechnology & Life Science $ 1,000,000 Gulf Coast 19-Dec-07 7% 16% StarVision, Inc. Texas A&M University Aerospace & Defense $ 750,000 Gulf Coast 30-Oct-07 OrthoAccel Technologies, Inc. University of Texas at Dallas Biotechnology & Life Science $ 750,000 Gulf Coast 26-Oct-07 10% Falcon International, Inc. University of Texas Permian Basin Aerospace & Defense $ 850,000 West Texas 23-Oct-07 1% Bellicum Pharmaceuticals, Inc. Rice University Biotechnology & Life Science $ 1,450,000 Gulf Coast 27-Sep-07 SNRLabs Corporation University of Texas at Dallas Computer & Information Technology $ 750,000 North Texas 26-Sep-07 66% VisualeseVisualese, IncInc. UniversityUniversity ofof TexasTexas M. D . A Andersonnderson CancerCancer CenterCenter BiotechnologyBiotechnology & LifeLife ScienceScience $ 750, 000 GulfGulf C Coastoast 9- AugAug- 07 Laser Tissue Welding, Inc. University of Texas M. D. Anderson Cancer Center Biotechnology & Life Science $ 160,000 Gulf Coast 31-Jul-07 Seno Medical, Inc. University of Texas Health Science Center at San Antonio Biotechnology & Life Science $ 2,000,000 South Texas 19-Jul-07 Thrombo Vision, Inc. Texas A&M University Commerce Biotechnology & Life Science $ 1,500,000 Gulf Coast 5-Jul-07 Secure Origins, Inc. University of Texas at El Paso Computer & Information Technology$ 2,000,000 Trans Pecos 5-Jul-07 PrincipleSoft, Inc. University of Texas at Dallas Computer & Information Technology $ 750,000 North Texas 13-Jun-07 Resonant Sensors, Inc. University of Texas at Arlington Biotechnology & Life Science $ 600,000 North Texas 18-May-07 Photodigm, Inc. University of Texas at Dallas Advanced Technology & Manufacturing$ 749,829 North Texas 26-Apr-07 Quantum Logic Devices, Inc. University of Texas at Austin Advanced Technology & Manufacturing $ 600, 000 Central Texas 27-Mar-07 PLx Pharma, Inc. University of Texas Health Science Center at Houston Biotechnology & Life Science $ 2,000,000 Gulf Coast 27-Mar-07 Xtreme Power, Inc. University of Texas at Austin Energy $ 2,000,000 Central Texas 27-Mar-07 Molecular Logix, Inc. University of Texas Health Science Center at San Antonio Biotechnology & Life Science $ 794,520 Gulf Coast 20-Mar-07 Nanocoolers, Inc. University of Texas at Austin Advanced Technology & Manufacturing$ 3,000,000 Central Texas 5-Mar-07 OptiSense, Inc. University of Texas at Arlington Energy $ 1,500,000 North Texas 5-Mar-07 Monebo, Inc. University of Texas at Austin Biotechnology & Life Science $ 500,000 Central Texas 23-Oct-06 Hanson Robotics, Inc. University of Texas at Arlington Advanced Technology & Manufacturing$ 1,500,000 North Texas 18-Oct-06 NanoComNanoComposites,posites, Inc. Rice UniversitUniversityy Advanced TechnoloTechnologygy & ManufacturingManufacturing $ 1,500,000 Gulf Coast 20 20-Se Sepp-06 06 Endothelix, Inc. University of Texas Health Science Center at Houston Biotechnology & Life Science $ 1,000,000 Gulf Coast 18-Jul-06 itRobotics, Inc. Rice University Advanced Technology & Manufacturing$ 750,000 Gulf Coast 5-Jul-06 Bauhaus Software, Inc. University of Texas at San Antonio Computer & Information Technology $ 500,000 South Texas 5-Jul-06 NanoSpectra, Inc. Texas A&M University Biotechnology & Life Science $ 1,250,000 Gulf Coast 12-Jun-06 CorInnova, Inc. Texas A&M University Biotechnology & Life Science $ 500,000 Gulf Coast 31-May-06 Molecular Imprints, Inc. University of Texas at Austin Advanced Technology & Manufacturing$ 3,000,000 Central Texas 30-May-06 CardioSpectra, Inc. University of Texas Health Science Center at San Antonio Biotechnology & Life Science $ 1,350,000 South Texas 25-May-06 Diabetica Solutions, Inc. University of Texas at San Antonio Biotechnology & Life Science $ 1,000,000 South Texas 25-May-06 Total: $ 200,200,349
3 Texas Emerging Technology Fund Incentives for Commercialization Activities (D) ‐continued
Awardsd ‐ By Industry d Cluster l (D)() AdAwards ‐ BBy RegionRi (D) Awards Sector Award Amount Number of Awards Region Award Amount
Advanced Technology & North Texas Manufacturing 20 $ 26,274,829 38 $ 48,479,829
Biotechnology & Life Gulf Coast Science 70 $ 109,275,520 37 $ 40,904,520
Aerospace & Defense Central Texas 5 $ 7,900,000 34 $ 57,493,000
Computer & Information South Texas Technology
28 $ 3232,200,000 200 000 18 $ 3434,473,000 473 000 17 Energy $ 24,550,000 6 West Texas $ 8,350,000 140 Total $ 200,200,349.00 3 Trans Pecos $ 3,250,000 4 Tropical Texas $ 7,250,000 140 Total $ 200,200,349.00 * Represent total dollar amount encumbered; investment is based on successful accomplishment of milestones. 1-Feb-13
4 Texas Emerging Technology Fund
Acquisition of Research Superiority (F) Award Recipient Industry Cluster Industry Collaboration Award Amount Region Award Date UTHSC - Houston Biotechnology & Life Science Memorial Hermann Hospital$ 3,150,000 Gulf Coast 28-Jul-11 Texas Tech Energy Vestas & Alstom$ 8,400,000 West Texas 20-Aug-10 UT - El Paso Advanced Tech & Manufacturing Lockheed Martin$ 3,150,000 Trans Pecos 21-Jul-10 UTHSC - Houston Biotechnology & Life Science Siemens, Genentech, & Astra Zeneca$ 6,300,000 Gulf Coast 12-Jul-10 University of Houston Energy Superpower$ 3,675,000 Gulf Coast 17-Nov-09 UT - Dallas Computer & Information Technology Texas Instruments & SRC$ 4,725,000 North Texas 1-Sep-09 Texas State Energy Freescale, Motorola, & Sematech$ 4,200,000 Central Texas 9-Feb-09 University of Houston Biotechnology & Life Science Methodist Hospital Research Institute$ 5,775,000 Gulf Coast 5-Feb-09 UT - El P Pasoaso EnergyEnergy DOD & citycity o off El P Pasoaso $ 2,100 , 000 TransTrans PecosPecos 20- OctOct-08 UTHSC - Houston Biotechnology & Life Science Memorial Hermann Hospital$ 4,200,000 Gulf Coast 6-Oct-08 TAMU HSC - Temple Biotechnology & Life Science Scott & White$ 5,250,000 Gulf Coast 19-Sep-08 Texas Tech Computer & Information Technology GE & Honeywell$ 2,100,000 West Texas 12-Feb-08 UT - Austin Biotechnology & Life Science Pre-Industry Match$ 3,675,000 Central Texas 10-Dec-07 TAMU Energy Pre-Industry Match$ 3,412,500 Gulf Coast 26-Jul-07 TAMU Biotechnology & Life Science Research Valley Partnership$ 6,300,000 Gulf Coast 20-Jul-07 UT - Tyler Energy Siemens-Trane$ 3,937,500 North Texas 14-Jul-07 UT - San Antonio Computer & Information Technology Pre-Industry Match$ 3,694,950 South Texas 5-Apr-07 UT System Computer & Information Technology Texas Instruments & NERC$ 10,500,000 Central Texas 15-Mar-07 UNTHSC Biotechnology & Life Science Pre-Industry Match$ 2,393,465 North Texas 13-Mar-07 UTHSC - Houston Biotechnology & Life Science Pre-Industry Match$ 2,625,000 Gulf Coast 23-Aug-06 Texas Tech Biotechnology & Life Science Bayer CropScience$ 2,045,950 West Texas 1-May-06 Total: $ 91,609,365
Research Award Matching (E) Award Recipient Industry Cluster Collaboration Award Amount Award Date TAMU CIADM BiotechnologyBiotechnology & Life Science TAMU $ 40,000,000 Gulf Coast 1212-Dec-12 Dec 12 TAMU Biotechnology & Life Science DARPA & G-Con$ 50,000,000 Gulf Coast 27-Jan-09 UT - Dallas Energy COSAR$ 5,000,000 North Texas 6-Oct-08 Alliance for Higher Education Advanced Tech & Manufacturing UT - Austin, Dallas, & UNT$ 4,700,000 North Texas 7‐Mar‐08 National Trauma Institute Biotechnology & Life Science UTHSC - San Antonio UTMB & TAMU$ 3,800,000 South Texas 28-Jan-08 Texas Agriculrure Experiment Station Biotechnology & Life Science TAMU$ 4,025,000 Gulf Coast 29-Nov-07 Ctr. for Comm. Of Electric Technologies Energy UT - Austin & TAMU$ 500,000 Central Texas 9-Oct-07 Lynntech, Inc. Energy TAMU$ 595,084 Central Texas 19-Apr-07 Global Contours Aerospace & Defense UNT$ 950,000 Central Texas 5-Apr-07 UTHSC - SanSan AntonioAntonio BiotechnologyBiotechnology & LifeLife ScienceScience DARPA, NIH $ 4,099 , 973 SouthSouth TexasTexas 22- FebFeb- 07 UT System Advanced Tech & Manufacturing UT - Dallas$ 1,750,000 Central Texas 9-Jan-07 Carbon Nanotechnologies, inc. Advanced Tech & Manufacturing Rice$ 975,000 Central Texas 1-Sep-06 Texas Railroad Commision Energy TAMU$ 3,259,095 Central Texas 31-Aug-06 Sematech Advanced Tech & Manufacturing MD Anderson, Rice, Texas Tech & UT - Austin$ 5,000,000 Central Texas 22-May-06 Total: $ 124,654,152
Awards ‐ By Industry Cluster (E) & (F) Awards ‐ By Region (E) & (F) Awards Sector Award Amount Number of Awards Award Amount 5 Advanced Tech & Manufacturing $ 15,575,000 5 $ 20,755,965 15 Biotechnology & Life Science $ 143,639,388 12 $ 134,712,500 1 Aerospace & Defense $ 950,000 10 $ 31,404,179 4 Computer & Information Technology $ 21,019,950 3 $ 11,594,923 10 Energy $ 35,079,179 3 $ 12,545,950 35 Total $ 216,263,517.00 2 $ 5,250,000 0 $ - 35 Total $ 216,263,517.00
5 OFFICE OF THE GOVERNOR TEXAS EMERGING TECHNOLOGY FUND
PROJECT ANALYSIS “10 STEP” PROCESS
STEP #0 TETF Application (SUBCHAPTER “D”)
#1 Assessment by Advisory Committee (relevant comments)
#2 Technology Analysis – Technology, Marketplace & Competition
#3 Company Management Assessment
#4 Collaborative IHE Relationships, IP Rights & Licenses
#5 Ownership Structure & Capitalization
#6 Financial Sources & Uses of Funds
#7 Debt & Equity Rights & Agreement Terms
#8 Business Strategy & Key Milestone Analysis
#9 Investment Synopsis
#10 Background Check
TEXAS EMERGING TECHNOLOGY FUND TRUSTEE CONSIDERATION OF RCIC COMMERCIALIZATION PROJECTS
TTETF 10 Step Due Diligence Process Emerging Technology Fund (ETF)
COMPLIANCE AND OVERSIGHT DIVISION (COD)
COMPLAINCE MONITORING PROCESS
The Compliance and Oversight Division (COD) is a separate division from the Texas Emerging Technology Fund (TETF) within the Office of the Governor. COD handles several grant projects, including TETF grants and awards. COD serves a different function from the TETF Division and the General Counsel Division, both of which also work with TETF projects. Specifically, COD is responsible for compliance monitoring of the TETF contracts after they have been executed. In addition to contract management, we also perform compliance reviews to ensure that the obligations of the agreements are observed and that taxpayer dollars are appropriately spent by the grantees.
Texas Emerging Technology Fund Subchapter E and F grantees are contractually required to report annually on the progress of TETF funded projects. The annual compliance certification is a certification letter, signed by a duly authorized representative of the grantee, attesting to compliance with the terms, conditions, and covenants of the TETF contract.
Grantees are required to report how TETF funds have been used in the past state fiscal year and cumulatively beginning from the effective date of the agreement. We also request that grantees provide general ledgers from their accounting system and copies of invoices for purchases over $100,000 to show transaction details.
Each TETF agreement contains project milestones, and for subchapter F grants, researcher milestones. These milestones are the grantees’ contractual obligations. During annual reporting, grantees report the status of the milestones with supporting documentation to demonstrate progress or completion of the milestones. Upon completion of a milestone, a grantee shall report as such in its annual compliance verification report together with evidence of completion.
Some subchapter E or F grants require grantees to secure matching funds internally or from third parties, such as industry partners or the federal government. In order to obtain updated information on how much additional investment the TETF funds leveraged, COD ask grantees to provide information on matching funds received.
If securing matching funds is a contractual obligation of the grantee, COD asks that universities provide evidence of actual receipt. For example, for cash matching, copies of federal draw-down confirmations, wire transfers, and cash deposits can all be used as evidence of receipt. For in-kind matching such as expenses incurred by an industry partner, a grantee can use the industry partner’s financial records and a signed affidavit to demonstrate expenses to date.
Subchapter F grants are used to attract top research talents to Texas. During annual reporting, grantees are to supply to COD a HR certification that these TETF funded and approved top researchers are still employed. TETF grantees shall immediately notify TETF of any departure or anticipated departure of these top talents during the term of the agreement.
One of the goals of the TETF grants is to help grantees commercialize technologies resulting from research projects. Some TETF agreements may have specific contractual milestones that call for licensing agreements or formation of “spin-out” companies. COD asks that grantees provide a summarization and a list of these commercialization efforts. For those which are contractually required in a milestone, grantee shall provide copies of the applicable licensing agreements, invention disclosures, etc. together with the annual report or make them available to review at a location and time as specified by the OOG.
COD reviews the number of individuals affiliated with the project into three categories for a subchapter F grant:
ETF funded top research talents, which are ETF approved top researchers with specific milestones. Other project employees, who work for or with these ETF funded top research talents on their research projects. Additional /other individuals, who, as a direct result of the ETF funded researchers or research projects, are employed in the State of Texas. These employees may include those who work for a “spin-off” company or an industry partner.
Since the contract does not specify top research talents for a subchapter E grant, grantees are required to report the number of employees working on the ETF funded project as well as other jobs created or maintained as a direct result of the ETF investment.
There are two types of ETF reviews conducted by the COD: annual compliance reviews and disbursement reviews. Annual compliance reports are received from D awardees on a rolling basis, by effective date of the contract. E and F awardees report to the OOG on batch dates that are contractually determined. Disbursement reports are received in conjunction with the request for disbursement.
Recipients are required to report (at least) annually to the OOG.
Some contracts require more frequent reporting, example: quarterly.
Disbursement reviews receive priority, upon receipt of the disbursement request forwarded by ETF.
The ETF Division receives the disbursement request and collects the information required by the contract under the section titled, Conditions for Disbursement. COD then receives this packet, requests any missing information, and conducts a review.
The entire review process, from receipt of the report from the company/university to compliance determination takes the analyst approximately 3 weeks to complete.
COD spends approximately 5 business days conducting a cursory review of the report and any compliance history. The analyst then requests any missing information from the recipient and reviews this information. The awardee has 7 business days to respond to the request for additional information. The analyst generates a report worksheet over the next 8 business days, summarizing all of this information and concluding the compliance status of the awardee.
“Active” means that the awardee is compliant as of the date of the most recent review.
“Non-compliant” means that there is a compliance issue.
3 weeks to complete a review is required generally because recipients rarely provide all of the contractually-required information on the first attempt.
The review includes the information provided in the report, information collected in prior years’ reports, and a legal research report provided by the Senior Research Advisor. Site visits provide additional opportunities to collect information and verify compliance.
Specific information considered in the review includes: standing with the CPA, milestone progress, Texas principal place of business, reporting compliance, use of Texas vendors, and use of award proceeds.
Any non-compliance issues are reported to the ETF Division for a determination.
Texas Emerging Technology Fund
“In Texas, we understand that high-tech companies don't just happen overnight but are a product of forethought, sound vision and planning, and strategic investments by both the public and private sectors. Through our Emerging Technology Fund, we are bringing the best scientists and researchers to Texas, attracting high-tech jobs and helping start-up companies get off the ground faster.” – Gov. Rick Perry
In 2005, the Texas Emerging Technology Fund (TETF) was created by the Texas Legislature with the goal of creating more innovative ideas in Texas and keeping them here, from the laboratory to the marketplace.
In the years since, the TETF has been instrumental in shaping the high-tech sectors of the Texas economy, and helped strengthen our state’s position as a national leader in business climate and job creation.
With TETF projects selected by unanimous approval from the governor, lieutenant governor, and speaker of the Texas House, the future has been put in motion in Texas. The TETF has drawn researchers to our state, helped secure more matching grant money from outside sources, and shepherd promising companies through the early stages of development between discovery and demonstrable product, when traditional sources of financing are few and far between.
A 17-member advisory committee of high-tech leaders, entrepreneurs and research experts reviews potential projects and recommends funding allocations to the governor, lieutenant governor and speaker of the House. To date, the TETF has allocated more than $200 million in funds to 140 early-stage companies, and over $216 million in grant matching and research superiority funds to Texas universities.
Key Components of the TETF TETF Commercialization Awards The goal of the TETF Commercialization Awards is to grow new small businesses and existing businesses to accelerate new products and services to the marketplace. Through these investments, the goal is to ensure a vibrant economy for Texas and a global leadership position. Commercialization awards provide selected, early-stage investments in new, technology-based, private entrepreneurial entities that collaborate with public or private institutions of higher education in Texas, and which, if successful, may provide significant economic benefit to the state.
Examples of TETF Commercialization Awards include the $1 million dollar awards into Austin’s Calxeda Technology and Amarillo’s Animal Innovations. Calxeda’s technology provides a solution for companies that operate energy consuming computer servers and data centers by increasing the density of computer resources while significantly conserving energy and saving money. The surge in reliance on computers for daily business has led to an unprecedented use of energy by data centers, and Calxeda’s technology provides an energy saving solution without sacrificing productivity.
Animal Innovations’ technology allows the safe and efficient administration of drugs to animals through its patented, back filling syringe. The system’s accurate measuring system can fill a syringe up to 10 milliliters in 10 seconds, ensuring that animals are not over or under medicated. The system also protects the quality of the medication by shielding it from heat and other external elements. The technology focuses on feedlots and preconditioning lots, to eventually add cattle ranches as well. The technology also has significant implications for defending livestock and other animals against agro-terrorism.
Since the inception of the TETF, over $761 million in additional investment from other sources following on to the TETF investment have come to these Texas companies. That means that TETF funds have been tripled by other non state sources, providing much needed funding for small, innovative companies in difficult financial times.
(Continued)
™ www.TexasWideOpenForBusiness.com Research Grant Matching Awards The goal of the TETF Research Grant Matching program is to create public-private partnerships to leverage the unique strength of universities, federal government grant programs and industry. This enables Texas to secure additional research funds from outside the state in key technical and scientific areas that contribute to the growth of our emerging-technology economy.
An example of a TETF Research Grant Matching recipient is the National Trauma Institute. TETF funding of $3.8 million dollars into NTI has developed the Wireless Vital Signs Monitor. The WVSM is a highly mobile, patient-worn medical monitoring system utilizing wireless Wi-Fi technology and standard off-the-shelf Windows OS based software and hardware. The WVSM allows medical personnel to be in touch with remote or on-site patient monitoring and is about half the size and weight of other remote monitors. The WVSM System can be engaged in both battlefield and civilian medical environments and integrated seamlessly into existing communications devices and protocols. The WVSM has been fully produced and is being tested by DoD now for use on the battlefield later in 2011.
The WVSM project collaborates with the Department of Defense, University of Texas Medical Branch Galveston, Athena Inc., the Institute for Surgical Research, and Texas A&M University. To date, the project has gathered an additional $3.8 million dollars in federal funding to Texas.
TETF Research Superiority Acquisition of Talent Awards The TETF Research Superiority Acquisition of Talent Award’s goal is to bring the best and brightest researchers in the world to Texas. This enables our Texas academic institutions to continue to build expertise in key research areas, attract and inspire students to pursue advanced degrees in math, sciences, and engineering, and provide an invaluable resource to the community by fostering innovation and commercialization in our companies.
This groundbreaking program has recruited 52 world class researchers with commercialization experience and an additional 263 staff members to Texas Institutions of Higher Education.
An example of a TETF Research Superiority award is the Texas A&M Health Science Center at Temple’s Institute for Regenerative Medicine Investments from the TETF, Texas A&M and Scott and White helped recruit Dr. Darwin Prockop and his team of more than 70 researchers from Tulane University. The TETF award helped recruit additional members to the research team, who work to commercialize 20 existing patent applications and five issued patents for regenerative technology and identify new commercialization opportunities.
Regenerative medicine focuses on the functional restoration of damaged organs and tissues rather than treatment to decrease or moderate symptoms. Research has shown that regenerative medicine has the ability to improve quality of treatment and decrease healthcare costs by replacing or repairing the malfunctioning tissues rather than treating them with therapies such as dialysis, implanting replacement devices, or transplanting organs.
The $5 million TETF investment into the Institute for Regenerative Medicine leveraged an additional $43 million of funding into the program, primarily from federal research dollars.
Together, Research Grant Matching and Research Superiority programs have leveraged well over $762 million dollars in additional non-state funding to Texas universities and nonprofit consortiums. This is a greater than 4-to-1 return on TETF dollars.
For more information visit TexasWideOpenForBusiness.com
02.13 Office of the Governor Economic Development & Tourism Division P.O. Box 12428 Austin, Texas 78711 Texas Emerging Technology Fund Audit Response
SAO Recommendation OOG Ma Res OOG Su uent Action Status Date Chapter 1-A Establish a contractual requirement The OOG agrees to contractuallY The OOG implemented all that the RCICs and the Texas Life require each RCIC to maintain board recommendations agreed to in the Science Center: Maintain minutes from meeting minutes that document Management Response to SAO board meetings. At a minimum, the which applicants the RCIC decides to recommendations in subsequent minutes should document which recommend to the Advisory contracts with the RClCs. Which applicants were recommended to the Committee for funding, the individual includes: meeting minutes that Advisory Committee for funding. ln board members'votes on those document which applicants the RCIC addition, the minutes should be decisions and any board member decides to recommend; the individual published on the RCICs' and Texas Life recusals, and to require the RCICs to Regional Board member's votes on Science Center's Web sites and submit these minutes to the TETF. those decisions; any Regional Board submitted to the ETF. Maintain records OOG does not agree to require member recusals and the reasons for that document how individual board documentation of how application those recusals; any Regional Board members and application review review committee members vote on member abstentions; the names of the committee members vote on each each application. OOG does not Regional Board Members, RCIC Staff, application, including their recusals and agree to contractually require the and Selection Committee Members the reasons for the recusals. RCICs to post their minutes on their present during a meeting; the results of websites. any Regional Board elections; any hiring decisions made by the Regional Board; and any other decision that requires a vote by the Regional Board during the meeting. The minutes must be submitted to OOG quarterly or upon L-A ooG's est Februa L2 Clarify with RCICs and the Texas Life The OOG agrees to provide such OOG provided clarification within 30 Science Center that the contractually clarification. days of the audit report. OOG required conflict of interest disclosure implemented language in all subsequent policy applies to both ETF applicants RCIC contracts requiring the policy be and recipients. provided to applicants and posted on 1-A the RCIC website. M LI
L Office of the Governor Texas Emerging Technology Fund 1100 San Jacinto, Austin, Texas 78701 Texas Emerging Technology Fund Audit Response
SAO Recommendation OOG Management Response OOG Subsequent Action Status Date Contractually require RCIC board The OOG agrees with this OOG included appropriate language in members and Texas Life Science Center recommendation. the Conflict of lnterest Policy signed by board members to report any RCIC board members and attached the investments they make in or policy as an exhibit to subsequent compensation they receive from ETF contracts. recipients after the conflict of interest disclosure policy allows them to make such investments or receive 1-A (3) such compensation. February-12 Contractually require RCIC staff, Texas The OOG agrees with this OOG implemented language in Life Science Center staff, and RCIC recommendation. subsequent contracts with the RCICs application review committee members that explicitly require RCIC staff and to sign conflict of interest disclosure review committee members to sign L-A (4) statements. conflict of interest policy. February-12 Contractually require the RCICs and the The OOG agrees with this OOG implemented language in Texas Life Science Center to recommendation. subsequent contracts with the RCICs immediately report in writing to the ETF that explicitly require the RCIC to any disclosed conflicts of interest and immediately report in writing to the ETF how those conflicts were resolved. any disclosed conflicts of interest and 1-A (s) how those conflicts were resolved. February-12 Make its conflict of interest escalation The OOG agrees with this OOG posted the conflict of interest and resolution policy available to recommendation. policy to the TETF website within 30 applicants on the RCIG' Web sites, the days of the repoft. Subsequent contracts Texas Life Science Center's Web site, with the RCICs explicitly require RCIC and the ETF's Web site. staff and review committee members to 1-A (5) sign conflict of interest policy. May-11-
2 Office of the Governor Texas Emerging Technology Fund 1-100 San Jacinto, Austin, Texas 78701 Texas Emerging Technology Fund Audit Response
SAO Recommendation OOG Management Response OOG Subsequent Action Status Date Develop substantive criteria for all OOG agrees in part with this OOG revised criteria for each of the RCICs and the Texas Life Science Center recommendation because, in fact, programs and posted the criteria on the to follow when evaluating applications the TETF has already developed TETF website. Criteria are meant as a and make those criteria available to the appropriate criteria, which were guide for applicants to understand public. already published on the TETF and expectations when they are being RCIC websites. OOG does not agree reviewed by RCICs and the Advisory that RCICs should be required to Committee, not strict standardized utilize detailed standardized criteria, requirements. because the RCICs' ability to tailor their processes to their unique customers and to adapt their models to their local business climate is a key asset for successful economic development th roughout Texas. 1-A (7) March-12
Chapter 1-B The Legislature should consider amending Texas Government Code, Section 490
Require the Advisory Committee to The OOG disagrees with this follow the Open Meetings Act or recommendation because it ignores the selected provisions of the Open natu re a nd statutory role of the Meetings Act, such as posting agendas Advisory Committee. The Advisory and notices of meetings and recording Committee is not a governmental body, o meeting minutes. and it does not receive, encumber, appropriate, or distribute state funds, or 1-B decide how state funds should be (1) appropriated or distributed.
3 Office of the Governor Texas Emerging Technology Fund 1100 San Jacinto, Austin, Texas 7870L Texas Emerging Technology Fund Audit Response
SAO Recommendation OOG Management Response OOG Subsequent Action Status Date Require the Advisory Committee and its The OOG agrees that the Advisory Advisory Committee Chair provides a subcommittees to document and retain Committee should document and letter on recommendations to Trustees. a record of each membe/s votes, retain a record of each member's TETF Director provides a letter on the recusals, and the specific nature of any vote when deciding whether to vote counts and conditions for disclosed conflicts of interest and the recommend that the TETF Trustees recommendations of the Advisory resolution to those conflicts of interest. fund an applicant. OOG does not committee. Advisory Committee Code of agree that Subcommittees should be Ethics requires a full and fair written required to do the same, unless the disclosure to the Committee of any subcommittee is acting on behalf of conflicts of interest. the Committee to submit recommendations directly to the TETF Trustees. OOG already requires the Advisory Committee to maintain a record of any member's recusal, the specific nature of any disclosed conflicts of interest, and how those conflicts were resolved. 1-B (2) September-10 Change the composition of the Advisory The OOG has no objection to these H.B. No. 2457 ,82nd Leg. provided the Committee to include two senators and recom mendations. Lieutenant Governor and Speaker of the two representatives appointed by the House of Representatives two Lieutenant Governor and the Speaker of appointments each to the Advisory the House of Representatives, Committee. Did not specify that they be 1-B (3) respectively. senators or representatives. September-1-1 Require Advisory Committee members The OOG disagrees with this H.B. No.2457,82nd Leg. added to file annual financial disclosure recommendation. provisions to the statute required statements with the ETF. Advisory Committee members to file annual financial disclosure statements 1-B (4) with the OOG. September-L1 Chapter 1-B Work with the Advisory Committee to The OOG agrees with this The OOG prepared and posted to the 1-B develop written policies and procedures recommendation and has been doing program website detailed Operational February-12 4 Office of the Governor Texas Emerging Technology Fund 1-100 San Jacinto, Austin, Texas 78701 Texas Emerging Technology Fund Audit Response
SAO Recommendation OOG Management Response OOG Subsequent Action Status Date for accepting, valuating, and this since the TETF was formed. Procedure Charts covering: Application recommending applications for the ETF. Process, Contracting & lnitial The policies and procedures should Disbursement, Reporting, Compliance & ensure that the Advisory Committee Additional Disbursements, and votes on all applications before Purchasing & Exiting. applications are sent to the trustees for consideration for funding. Revise the Advisory Committee code of The OOG agrees with this The OOG revised the Advisory ethics policy to: Prohibit Advisory recommendation. Committee Code of Ethics. Advisory Committee members from investing in Committee members were newly or receiving compensation from ETF appointed or reappointed after the end recipients. Require that all Advisory of Fiscal Year 2OLL and required to Committee members sign required provide both financial disclosures and conflict of interest statements pr¡or to sign the Code of Ethics. The prior Code participating in Advisory Committee of Ethics expressly provided that "Ib]y deliberations and voting on serving or continuing to serue as a applications. Committee Member, as applicable, each Committee Member accepts this code and agrees to comply with its 1_-B (6) provisions." September-11 Require Advisory Committee members The OOG agrees with this The OOG implemented language to to disclose conflicts of interest in recommendation. revise and clarify the existing writing, and require the Advisory requirements to disclose, resolve, and Committee to record any disclosures record conflicts and associated resolutions in the 1-B (7) meeting minutes. September-11
5 Office of the Governor Texas Emerging Technology Fund 1100 San Jacinto, Austin, Texas 78701 Texas Emerging Technology Fund Audit Response
SAO Recommendation OOG Management Response OOG Subsequent Action Status Date Require Advisory Committee members The OOG agrees with this The OOG implemented language to to disclose whether they have a recommendation. clarify the requirement to make financial interest in an applicant priorto disclosures of conflicts of interest as the voting on an application. member becomes of aware of any conflict, any member with a disclosed conflict of interest is prohibited from participation in discussions or votes on 1-B (8) associated projects, until full resolution. September-1L Require Advisory Committee members The OOG agrees in part with this The OOG implemented language to the to receive training on conflicts of recommendation. The Advisory Code of Ethics requiring appropriate interest, open meetings requirements, Committee members should not be ethics training within six months of and open records requirements. required to receive training in open appointment and annually thereafter. meetings and open records requirements, because the Texas Open Meetings Act and the Texas Public lnformation Act do not apply to the Advisory Committee. 1-B (e) September-11- Chapter 1--C Develop written policies and The OOG Agrees in part with this Policy statements are signed by the procedures for the ETF. recommendation. The TETF has Director of the program and the OOG already developed written policies continues to explore and update policies and procedures, but has not adopted and procedures as necessary. the format or organization that the SAO prefers. L-c (1) Ongoing
6 Office of the Governor Texas Emerging Technology Fund 1100 San Jacinto, Austin, Texas 78701 Texas Emerging Technology Fund Audit Response
SAO Recommendation OOG Management Response OOG Subsequent Action Status Date Provide consistent and complete The OOG agrees to continue No additional action necessary documentation to the trustees, providing consistent and complete including the amount of matching funds documentation to the TETF Trustees, recipients must provide. and to include the amount of matching funds that the Advisory Committee recommends the l-C (2) recipient must provide. Ongoing Clarify the amount of matching funds The OOG agrees to recommend to The OOG implements appropriate recipients must provide in both (1) the TETF Trustees that they include language, with the agreement of trustee commitment letters and (2) specific matching funds amounts in Trustees, in Commitment Letters to contracts for research matching grants commitment letters, and to include research award matching and and research superiority grants. such amounts in contracts for acquisition of research superiority research award matching and awards. acquisition of research superiority L-C (3) awards. Ongoing Ensure that all ETF staff sign a The OOG agrees with this The OOG requires all TETF staff to sign statement of compliance with the ethics recommendation. appropriate ethics policy and outside and fraud policy and complete outside employment forms in accordance with employment forms when required. the Agency's employment rules. 1_-C (4) Ongoing
7 Office of the Governor Texas Emerging Technology Fund 1L00 San Jacinto, Austin, Texas 78701 Texas Emerging Technology Fund Audit Response
SAO Recommendation OOG Management Response OOG Subsequent Action Status Date Prior to submitting applications to the The OOG agrees with these H.B. No.2457,82nd Leg. added ETF trustees: Require applicants to recommendations. provisions to the statute that require all obtain federal and state criminal history applicants to provide the OOG with background checks on their officers and federal and state criminal history investors and send the results ofthose background checks, credit reports, checks to the ETF Office. Conduct credit photo identification and a statement checks on applicants' officers and from the applicant regarding any U. S. investors. Obtain photo identification Securities and Exchange Commission for commercialization award applicants' penalties levied against the principles of officers and investors, and research any the applicant. U. S. Securities and Exchange Commission penalties levied against commercialization award applicants, L-C (s) their officers, and their investors. September-11 Send a list of commercialization award The OOG agrees with this The OOG provides a list of applicants' applicants' officers and investors to the recommendation. officers to the Trustees and maintains a ETF trustees. list of all investors that can be reviewed at the discretion ofthe Trustees and L-C (6) their representatives. Ongoing Announce all ETF grants and awards in a The OOG agrees with this The OOG coordinates the publication of timely manner. recommendation. an award with the award recipient, often announcements are delayed until after the initial disbursement of funds, if funds are not disbursed within a designated timeframe the agreement is 1-C (7) nullified and the award is terminated. Ongoing Chapter 2
8 Office of the Governor Texas Emerging Technology Fund L100 San Jacinto, Austin, Texas 78701 Texas Emerging Technology Fund Audit Response
SAO Recommendation OOG Management Response OOG Subsequent Action Status Date Ensure that recipients submit all The OOG agrees with this The OOG established the Compliance required reports in a timely manner recommendation. and Oversight Division within the OOG and developed procedures and tracking to ensure companies provide the contractually obligated reports.OOG will not award or disburse funds to any recipient that is not in compliant with 2(rl co ntractua I obligations. Ongoing Review recipients' reports in a timely The OOG agrees with this The OOG through the Compliance and manner recommendation. Oversight Division conducts annual 2 (21 review of allTETF recipients. Ongoing Track when recipients' reports are due The OOG agrees with this The OOG through the Compliance and and received so that it can promptly recommendation, and already tracks Oversight Division implemented a new follow up on reports not submitted and when recipients' reports are due and database that enhanced the tracing and review in a timely manner the reports received. generation of reminder notices. 2 (31 that are submitted. Ongoing Evaluate the resources it needs to The OOG agrees with this The OOG established the Compliance review recipients' reports. recommendation and has already and Oversight Division to monitor all conducted such an evaluation, which TETF recipients for compliance to the resulted in part in the creation of the award agreement and related contracts. new Compliance and Oversight 2(41 Division. Ongoing Conduct on-site visits at recipients. The OOG agrees with this The OOG through the Compliance and recommendation and already Oversight Division conducts visits to conducts on-site recipient visits. TETF recipients in conjunction with the receipt of recipient's annual compliance reports. Site visits are scheduled based on a risk assessment and the OOG tries to visit each recipient on a biannual 2 (s) cycle as resources permit. Ongoing
9 Office of the Governor Texas Emerging Technology Fund 1100 San Jacinto, Austin, Texas 78701 Texas Emerging Technology Fund Audit Response
SAO Recommendation OOG Management Response OOG Subsequent Action Status Date lnclude in recipients' contracts a The OOG agrees in part with this The OOG has implemented a policy and standard format for reports that recommendation. through execution of award agreements recipients must submit. At a minimum, implemented the policy to include a the contracts should specify the specific reporting form for each detailed supporting documentation that recipient to use. A standardized form for recipients must submit to (1) all recipients is not practical due to the demonstrate that they achieved diverse nature of recipients and required milestones, (2) report their contractual requirements for specific financial status, and (3) support their entities. 2 (61 expenditures of state funds. Ongoing Retain the documentation it uses to The OOG agrees with this The OOG retains all documentation verify recipients' achievement of recommendation, but it already submitted by recipients in accordance milestones before making second retains such documents. with the OOG retention schedule. disbursements of funds to recipients. 2 (71 Ongoing Ensure that RCICs and the Texas Life The OOG agrees with this The OOG established the Compliance Science Center submit reports required recommendation. and Oversight Division within the OOG by their contracts in a timely manner. and developed procedures and tracking to ensure RCICs provide the contractually obligated reports. OOG will not award or disbirrse funds to any recipient that is not in compliant with 2 (8) contractual obligations. Ongoing Review in a timely manner the reports The OOG agrees with this The OOG through the Compliance and
that the RCICs and the Texas Life recommendation. Oversight Division conducts annua I Science Center submit. review of allTETF recipients. 2 (e) Ongoing Chapter 3
10 Office of the Governor Texas Emerging Technology Fund L100 San Jacinto, Austin, Texas 78701 Texas Emerging Technology Fund Audit Response
SAO Recommendation OOG Management Response OOG Subsequent Action Status Date Determine the appropriate value The OOG disagrees with this H.B. No.2457,82nd Leg. added calculation methodology for the recommendation based on its provisions to the statute requiring the investments held by the ETF and report conclusion that the value of the OOG to, the maximum extent those investments correctly on its state's investments in the privately- practicable, perform annually a reports to the Legislature and on its held recipients is not realistically valuation of the equity positions taken annua I fina ncial reports. determinable, and thus reporting an and include the valuation in the annual estimated value would be misleading. report. The OOG also provides the However, the OOG agrees to confer valuation in the Annual Financial Report. with the SAO and the Office of the The methodology was developed in Comptroller to further explore this consultation with the Office of the issue. Comptroller and conforms to GASB. 3 (1) September-11 Record encumbrances in a consistent The OOG agrees with this The OOG has always recorded manner in its internal accounting recommendation but believes that it encumbrances as required by APS 018 system by following the Office of the already records encumbrances as and continues to do so. Comptroller of Public Accounts' APS 018 required by APS 018. 3 (2) and accou nting standards. Ongoing Comply with statutory and General The OOG agrees with this The OOG through the Financial Services Appropriations Act requirements to recommendation. division ensures the continued transfer ETF appropriations into a compliance with legal requirements to dedicated account. transfer appropriations into a dedicated 3 (3) account. Ongoing Chapter 4 Obtain signatures on its contracts with The OOG agrees with this The OOG has always sought prompt RCICs and Texas Life Science Center in a recommendation. responses from award recipients in timely manner. executing contracts and will continue to 4 (1) do so. Oneoing
tt Office of the Governor Texas Emerging Technology Fund 1L00 San Jacinto, Austin, Texas 78701 Texas Emerging Technology Fund Audit Response
SAO Recommendation OOG Management Response OOG Subsequent Action Status Date Pay RCICs and the Texas Life Science The OOG agrees in part with this The OOG implemented language in Center only for expenditures they incur recommendation. The TETF does not subsequent contracts with RCICs during the contract period. pay RCICs for expenditures, but requiring them to spend award funds instead contractually authorizes within the contractual period. Funds not RCICs to use funds only for certain used in the contractual period must be described purposes. As a general returned to the OOG. rule, we agree that those purposes should relate to activities during the cóntract period, but we do not agree that there should never be 4 (2\ exceptions to this general rule. February-12 Re-evaluate the responsibilities The OOG agrees with this The OOG has always contractually specified in its contracts with RCICs and recommendation. required RCIC to perform duties as the Texas Life Science Center. defined by the TETF Statute. The statutory objectives remain the primary responsibilities of the RCICs and the 4 (3) TETF and continue to be. Ongoing Clarify and enforce the record retention The OOG agrees with this The OOG provided clarification to the requirements in its contracts with RCICs recommendation. RCICs regarding their record retention and the Texas Life Science Center. requirements as defined in the contracts. The Compliance and Oversight Division continues to monitor 4 (41 RCIC compliance with contractual terms. Ongoing Clearly define allowable expenditures in The OOG agrees with this The OOG implemented appropriate its contracts with RCICs and the Texas recommendation. language in subsequent contracts with RCICs defining allowable expenditures. 4 (s) Life Science Center. FebruarV-12 Require RCICs and the Texas Life The OOG agrees with this The OOG implemented appropriate Science Centerto have separate recommendation. language in subsequent contracts with accounts for expenditures related to RCICs requiring the RCICs to maintain a the ETF. separate account for expenditures 4 (6) related to the contract. February-12
L2 Office of the Governor Texas Emerging Technology Fund 1100 San Jacinto, Austin, Texas 78701 Texas Emerging Technology Fund Audit Response
SAO Recommendation OOG Management Response OOG Subsequent Action Status Date Sign contracts with ETF recipients on or The OOG agrees that signing the The OOG implemented appropriate before the contract effective date. contracts on or before the effective language in subsequent contracts with date is often the preferred practice. lt recipients that establishes the effective does not agree that it should be a date of a contract on the date the OOG requirement, or that there should signs. never be exceptions to this practice. 4 (71 Ongoing
13 Office of the Governor Texas Emerging Technology Fund 1100 San Jacinto, Austin, Texas 78701 Incentives & Financing
Texas takes the initiative to invest in its future by offering competitive incentives to companies who are creating jobs and driving innovation in Texas. The following incentives are a summary of the most commonly utilized state offerings, for more details on any of the following programs/funds, visit www.TexasWideOpenForBusiness.com/incentives-financing.
Texas Enterprise Fund The Texas Enterprise Fund (TEF) is the largest “deal-closing” fund of its kind in the nation. The fund is used as a final incentive tool for projects that offer significant projected job creation and capital investment and where a single Texas site is competing with another viable out-of-state option.
Texas Emerging Technology Fund The Texas Emerging Technology Fund (TETF) provides Texas with an unparalleled advantage in the research, development, and commercialization of emerging technologies by offering grants to recruit the best research talent in the world and to help companies take ideas from concept to development to ready for the marketplace.
Workforce Development Workforce training programs provided through the Texas Workforce Commission.
Skills Development Fund: Financing for customized job training.
Self-Sufficiency Fund: Financing to provide training for employment opportunities primarily for individuals dependent on public assistance.
Grants From public infrastructure projects in non-entitlement communities to cancer research and laboratory facility construction, several types of grants are available to Texas communities and businesses.
Texas Capital Fund Infrastructure Program: Provides financial resources to non-entitlement communities for public infrastructure projects needed to assist businesses.
Texas Capital Fund Real Estate Development Program: Loans provide capital to Texas communities at favorable market rates.
Cancer Prevention and Research General Obligation Bonds: Funding opportunities for promising cancer research and prevention programs
Defense Economic Adjustment Assistance Grant Program: A job creation grant program designed to assist adversely and positively impacted defense communities.
Moving Image Industry Incentive Program: Cash production grants between 5 and 29.25 percent of qualified in-state spending for film, television, commercial, and video game projects. Tax Incentives Texas and local communities offer a variety of tax incentives and innovative solutions for businesses expanding in or relocating to Texas. Programs include Enterprise Zone sales tax refunds, manufacturing sales tax exemptions, property tax value limitation, and freeport exemptions.
Texas Enterprise Zone Program: State sales and use tax refunds for businesses in economically distressed areas of the state.
Manufacturing Exemptions: State sales and use tax exemptions for manufacturers on tangible property, natural gas, and electricity.
Value Limitation and Tax Credits (Texas Economic Development Act): An appraised eight-year limitation to the local school district maintenance and operations tax portion of the property tax and a tax credit.
Freeport Exemptions: Tax exemption for certain goods that enter and leave Texas within 175 days.
Pollution Control Equipment Incentive: Tax exemption for property that is for pollution control purposes.
Renewable Energy Incentives:Tax exemptions and deductions for solar, wind, ethanol, and biodiesel energy.
Defense Economic Readjustment Zone Program: A tax refund program for business recruitment and job creation in adversely impacted defense-dependent communities.
Financing Texas is committed to providing and facilitating funding for companies and communities with expansion and relocation projects in the Lone Star State. Asset-based loans for companies, leveraged loans to communities, and tax-exempt bond financing are just a few means of obtaining the capital necessary for a successful project.
Texas Product/Business Fund: Asset-backed financing for companies in Texas to promote job retention and creation.
Texas Leverage Fund: Financing that allows communities to leverage future sales tax revenues to support job retention or creation.
Texas Industry Development Loan Program: Loans provide capital to Texas communities at favorable market rates.
Industrial Revenue Bond Program: Bonds provide tax-exempt or taxable financing for eligible industrial or manufacturing projects.
Texas Military Value Revolving Loan Fund: Financing provided to defense communities for job creation and infrastructure projects.
CAPCO: Providing alternative sources of venture capital to Texas entrepreneurs.
TexasWideOpenforBusiness.com/incentives-financing State to State Comparison February 2013 Post-Recession Recovery No state has added more jobs over the past 3 years than Texas.
Texas Job Growth Sets The Pace Over the past 12 months (December 2011—December 2012), Texas employment grew the fastest of the 15 largest states.
Data sources: US Bureau of Labor Statistics State to State Comparison
Unemployment In December 2012, Texas had the lowest unemployment rate among the ten largest states.
Data source: US Bureau of Labor Statistics Natural Gas Prices Texas is the largest consumer of natural gas in the U.S. and boasts the second-lowest prices for end users (Industrial, Residential, Commercial, and Electric Power Generation).
Data source: US Energy Information Administration “Texas is a state where a dream can be put to work.” - Governor Rick Perry
“Best State “America’s Top State “2012 State of the Year” for Business” for Business 2012”
“Top State for “2012 Governor’s Cup Winner” Texas dominates “Best Fortune 1000 HQs” Cities for Good Jobs”
Texas is the winner of Site Selection’s 2012 Governor’s Cup. Texas’ had 761 projects in 2012, a 65 percent increase over it’s 464-project, second-place finish in 2011. Site Selection, March 2013
Texas dominates Forbes’ “Best Cities for Good Jobs” list. Dallas topped the list, followed by Houston (#2), Austin (#3), Fort Worth (#4), and San Antonio (#6). Cities were ranked according to recent and expected job growth, current unemployment rate, and current and expected per-capita income, with an increased weight to areas with high and growing per-capita incomes, to avoid steering people to cities that are adding lots of low-wage jobs. Forbes, February 2013
“Texas is our 2012 State of the Year because it without a doubt has the most dynamic economy of any state in the nation,” Business Facilities Editor in Chief Jack Rogers said. “The job-producing engine in the Lone Star State barely sputtered during the Great Recession, bouncing back over pre-Recession levels faster than anywhere else in the U.S.” Business Facilities, January 2013
Texas tops NerdWallet.com’s list of “Top Ten Cities for Job Seekers”. Austin topped the list, which was based on population growth, median income, unemployment rate, and cost of living index, followed by Houston (#5), Fort Worth (#6), Dallas (#7), and San Antonio (#9). NerdWallet.com, January 2013
Texas tops Allied Van Lines’ Magnet States list for the 8th year in a row with a net relocation gain of 1,585 families in 2012. SIRVA/Allied Van Lines, December 2012
TexasWideOpenForBusiness.com