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Gov. Dave Heineman has kicked off his second term in office with a series of initiatives to advance business innovation and workforce recruitment efforts in the Cornhusker State.
When the Battelle Technology Partnership Practice recently conducted a Competitive Advantage Assessment for Nebraska, it identified a troubling anomaly: the state is doing a great job of producing graduates with advanced degrees in engineering, computer science, life sciences, business and finance—but the number of graduates is “well above the level of job openings found in Nebraska.”
Gov. Dave Heineman intends to do something about that. Recently elected to a second term as governor, he has introduced a series of initiatives to advance business innovation and workforce recruitment efforts in the Cornhusker State.
“My focus has been on creating higher paying jobs in the state,” Heineman told Business Facilities in a recent interview. “I don’t want to lose a single engineer or architect or scientist. We are going to do a much better job of connecting higher education to the businesses in the state.”
Gov. Heineman has made job creation for Nebraska graduates a hallmark of his new Talent and Innovation Initiative, which he recently presented to the state legislature.
“The Talent and Innovation Initiative is about enhancing the level of business specialization and attracting new, advanced companies to Nebraska,” Heineman says. “We want to help the private sector grow. This is about job opportunities. The idea for this initiative came from the Department of Economic Development, Nebraska business leaders and a series of recommendations in the Battelle study. We’ve taken the suggestions and evaluated them in the context of our existing economic development programs.”
Four new programs make up the Talent and Innovation Initiative:
The Nebraska Internship Program aims to increase the number of college and university students interning with Nebraska businesses. Funded with $1.5 million annually in redirected job training funds and a 100-percent match from companies creating new internships, the program will provide job experience for juniors and seniors at the state’s four-year institutions or students in their second year at a Nebraska community college.
If enacted, grants of up to $3,500 in metro areas or $5,000 in rural areas will be awarded under the program on a first-come, first-serve basis to companies creating new internship opportunities, with no more than five grant-qualified interns each year at any one business. Internships would pay at least minimum wage and could range from 12 weeks to year-long programs.
“Everybody understands how valuable this is,” Gov. Heineman says. “Obviously, the business gets an extra person working for them or can identify a potential employee for a later date. For the intern, it’s an opportunity to find out if this is the right field and a chance to get hired long-term.”
The Business Innovation Act proposed by Gov. Heineman would provide competitive grants for private-sector research at Nebraska institutions, technical assistance in new product development and testing, and help expand small business and entrepreneurship outreach efforts. The effort will be paid for with $1.5 million in redirected funds and $5.5 million in new funding.
This proposal would expand Small Business Innovation Research programs, including offering grants for application development, and providing funding to help with prototype development, commercialization and applied research at Nebraska institutions. Additionally, it would provide assistance for microenterprise projects.
“This is all about developing business from an academic/research stage to a commercially viable product,” Gov. Heineman notes.
Turning the Model Upside Down
According to Richard Baier, Nebraska Department of Economic Development director, the Business Innovation Act “takes the academic model and flips it upside down.”
“We’re really excited about this,” Baier says. “We see a lot of universities—ours included—in which academics drive the research agenda. What we’re looking at is providing matching grants to companies to do applied research and development. We’re going to allow the companies to identify their research needs and then we’ll go match them up with the university tech transfer offices and the faculties.”
Nebraska’s universities already are gearing up to support the state’s effort to generate business-oriented R&D. The University of Nebraska is developing the 233-acre Nebraska Innovation Campus in Lincoln, planned as a premier private/public sustainable research campus that capitalizes on research growth and the expertise of UNL faculty to strengthen the economic growth potential of the state and the university.
The third element of the governor’s Talent and Innovation Initiative is the Site & Building Development Fund. The fund would increase the number of industrial and commercial sites available and ready for business development using $3 million in redirected resources and at least a one-to-one match from communities. An estimated $1.5 million in annual funding would come from directing a portion of the Real Estate Document Stamp fee paid for projects other than housing development.
Funding for this program could be distributed as grants, loans and credit enhancements to help with demolition, new construction and rehabilitation. State funding would be focused on land and infrastructure costs with 40 percent of funding going to non-metro areas.
“The Site & Building Development Fund focuses on attracting businesses that need sites right now. We’ve got to be ready for someone who comes in and doesn’t want to wait six months,” says Heineman.
The fourth program in the Talent and Innovation Initiative is the Angel Investment Tax Credit, which would encourage investment in high-tech and other startup enterprises in Nebraska by providing refundable state income tax credits to qualified investors who fund early-stage companies. The program would be capped at $5 million annually, with $3 million coming from redirected funds and $2 million in new funding.
The minimum investment in the tax credit program would be $25,000 per year for individuals and $50,000 for investment funds. Eligible small businesses would have fewer than 25 employees, the majority of whom must live and work in the state.
“We’ve got some catching up to do,” Gov. Heineman concedes. “We want to be very bold here, and we hope these [credits] will incentivize small business startups.”
Gallup Mentors Nebraska Entrepreneurs
To help strengthen Nebraska small businesses and startup enterprises, Gov. Heineman recently unveiled a new Small Business Mentoring Initiative. The initiative is organized as a partnership which includes The Gallup Organization, the Nebraska Department of Economic Development, the Greater Omaha Chamber and the University of Nebraska-Lincoln’s Institute of Agriculture and Natural Resources.
The Small Business Mentoring Initiative will combine business-to-business mentors and a Gallup entrepreneur consulting program to provide business development assistance to early-stage entrepreneurs and established firms with high-growth potential. It is aimed at creating a new generation of homegrown business success stories in Nebraska.
“We want to be an ally for small businesses, particularly those invested in innovation,” Gov. Heineman explains. “We want to develop a more coordinated, intensive partnership to provide the guidance and expertise that small businesses need to be successful. This is an outstanding example of the partnerships that exist in Nebraska, and the ways we are willing to work together to move Nebraska forward.”
Gallup’s Entrepreneur Acceleration System will be used to support and track the progress of participating businesses. The effort aims to help up to 400 businesses statewide during the next two years. Gov. Heineman says Gallup has trained 27 mentors to work across the state.
“These mentors are going to go out and help our young entrepreneurs and our small-business startups,” Heineman says. “They will show them how you get from that great idea to a great product in the marketplace. It will cover all of the elements of successful business startup, including how to access capital and create business plans.”
“We need to focus on the entrepreneur and understand the individual differences that cause successful entrepreneurship,” says Jim Krieger, Gallup vice chairman and chief financial officer. “Many times the biggest hurdle to an enterprise’s growth is the individual’s own self-limiting view of his or her strengths and capabilities. Gallup’s approach to mentorship is unique in that it measures and then develops the entrepreneurial abilities of the individual at the helm of the firm to ensure the best chances of sustained growth.”
Gallup research indicates that despite high interest in starting their own business in Nebraska, gaps in education, training and skills hamper firm-creation in Nebraska. The 2010 Battelle study found that Nebraska has strong economic fundamentals that support business development, including diverse industry clusters, a solid research and development base, and a strong talent pipeline.
However, the report also indicated a weak commercialization of new knowledge. Battelle recommended the creation of a program to match certified business mentors with small business leaders to help accelerate growth and create a greater likelihood of long-term success in high-growth industries.
Gallup will help track participating firms for up to two years after the program to gauge the value of the mentorship effort. Potential benefits cited by Gallup include connecting entrepreneurs and small business leaders with tools for building effective teams, workplaces and customer strategies; helping facilitate relationships with other high-growth companies in Nebraska; and creating jobs and new opportunities for collaboration.
To cope with deficits and streamline bureaucracy, many states are phasing out state economic development agencies and/or state commerce departments and replacing these with public-private partnerships. Gov. Heineman says he is not inclined to follow this trend, and not just because Nebraska’s fiscal house is in much better shape than some of its neighbors.
“Our department of economic development has been very successful. We coordinate very closely with our local economic development officials and our private sector partners,” he says. “It’s a model that has worked for us. When you’re successful, why change?”
Each of his recently introduced innovation initiatives is tailored to meet Gov. Heineman’s strict pay-as-you-go credo and preference for performance-based incentives that don’t require an infusion of taxpayer funding. Heineman says he will continue to steer clear of direct financial grants for relocations and other development projects.
“We stay away from that, and here’s why: as a smaller state, we think that performance-based incentives make sense,” Heineman says. “That way, we can tell a company if you invest this amount of money and create this amount of jobs, you’re going to qualify. But if it gets into who’s going to offer the biggest check, well that’s going to be the big state.”
Heineman adds, “We think we can be more competitive and more attractive with a performance-based incentive, and I think our track record proves it. We’ve got the second-lowest unemployment rate in America right now at 4.2 percent.”
Gov. Heineman is confident that his common-sense approach will continue to yield dividends of future growth. “We’re doing it the Nebraska way, a way that makes sense for a small state like Nebraska,” he declares.
Pooling Comes to Energy Markets/Transmission
Nebraska Public Power District (NPPD) owns and operates the most high-voltage transmission lines (4,300 miles) in the state. Some of the grid was built in the 1930s, while other parts are new and additional lines are planned for construction to relieve congestion.
NPPD invests millions to enhance its service and reliability, and the new lines can deliver power out-of-state with revenues returning to Nebraska to help pay NPPD’s operating costs. However, the market for selling energy to other utilities is changing and becoming extremely complex.
The energy markets are in a “split-market structure.” Utilities used to sell power to one another in a bilateral market, but today’s markets are moving to a centralized pool concept where generators and load-serving entities simultaneously offer their energy and project their needs. The cheapest generators then serve the load depending upon transmission availability.