The four CEOs of Ben Franklin Technology Partners’ statewide network testified today before the state Senate Appropriations Committee and cautioned that the 2019-20 draft budget plan that keeps funding at historic lows represents a disinvestment in Pennsylvania’s economic growth at a time when other states are stepping up investments. View testimony HERE.
Since 2007-08, “Challenge Grant” funding for Ben Franklin has dropped approximately 50 percent, from $28 million to $14.5 million per year. The proposed state budget for the 2019-20 fiscal year would perpetuate that reduced level. Because of diminished funding, Ben Franklin has been unable to invest in some deserving start-up firms and established manufacturers and has seriously short-funded others, creating missed opportunities.
“Reduced funding for Ben Franklin Technology Partners means reduced returns for Pennsylvania,” said RoseAnn B. Rosenthal, President and CEO of Ben Franklin Technology Partners of Southeastern Pennsylvania. “The result is lost opportunity for Pennsylvania. Less funding means fewer highly paid, sustainable jobs now and in the future.”
The reduced levels have put Pennsylvania at a competitive disadvantage with other states that are investing heavily in innovation and high-tech economic development. A recent analysis of state funding support for technology-led economic development programs in 13 comparable and competitive states found that Pennsylvania’s per capita spending of $1.37 was second to lowest. The average state spending of $5.67 per capita was more than four times Pennsylvania’s level.
“Innovation is happening all around us,” said Richard R. Lunak, President and CEO of Innovation Works. “States that harness that innovation and the subsequent start-ups associated with it are capturing a disproportionate share of economic growth. Pennsylvania must invest appropriately in innovation to compete and excel.”
Also at risk are many of the support services that clients cite as being key factors in their eventual success. Ben Franklin surrounds entrepreneurs with internal and external experts in accounting, finance, marketing, intellectual property protection, supply chain management and countless other disciplines. This high-value support does not typically generate revenue for Ben Franklin, but it is a critical piece of Ben Franklin’s work that helps to enable client success.
“Ben Franklin’s portfolio management work is highly engaged, requiring significant staff time and resources. It’s the ‘secret sauce’ that helps drive success,” said R. Chadwick Paul, Jr., President and CEO of the Ben Franklin Technology Partners of Northeastern Pennsylvania. “Our work begins with the investment but does not stop there. We often work with companies for many years to help them grow and thrive.”
Since its inception, Ben Franklin has invested in more than 4,500 technology-based companies and boosted the state economy by more than $25 billion, helping to generate 148,000 jobs through investments in client firms and spinoff companies in Pennsylvania.
The most recent independent economic analysis shows that every dollar invested by the state into Ben Franklin generates $3.90 in additional state taxes.
Between 2012 and 2016, according to the analysis, Ben Franklin helped to create 11,407 high-paying jobs, generated $386 million in tax receipts for the state, and boosted the commonwealth’s overall economy by $4.1 billion. Jobs created by Ben Franklin’s client industries pay an average of $79,364 annually, which is 52 percent more than the average non-farm wage in Pennsylvania.
But all of this recent success is fragile and depends on adequate state resources. As a recognized leader in economic development, the Pennsylvania Department of Community and Economic Development has been a strong advocate for Ben Franklin Technology Partners and remains incredibly supportive of its mission to grow Pennsylvania.
Ben Franklin Technology Partners serves all 67 counties through four regionally based centers in Pittsburgh, State College, Bethlehem and Philadelphia, with several satellite offices spread across the commonwealth. What sets Ben Franklin Technology Partners apart from other economic development organizations is its focus on investing in early-stage innovation-led firms and established manufacturers to help them apply technology to be more internationally competitive. That includes efforts in the state’s rural areas to foster innovation and create economic opportunities.
“What we lose by underfunding Ben Franklin now will be lost permanently,” said Stephen Brawley, President and CEO of Ben Franklin Technology Partners of Central & Northern Pennsylvania. “At stake here is the continued growth of vibrant technology sectors and our manufacturing base, led by Ben Franklin Technology Partners, as well as the future prosperity of the Pennsylvania economy.”