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2007 KS Economic Development Strategic Plan - - ,;iJ rIfij ,Jj ~ -- ~ rifI a rill rill . . .1fi a a rIiI ~ .a a .. .. ritf ". ". .. .. .. ... ... ... ... ... ... ... ... ... .. .. I ~ ~ ~ i~ i~ ~ - ---;:-~;~ . Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance The 2007 Kansas Economic Development Strategic Plan Co-Chairs Gene Argo Governor Kathleen Sebelius Prepared by ,Kan:~~: January 2008 . Paid for with taxes or public funds 1.___..--......--.. -----.---- "__________.._~__.___~.~_~~~-_,,~~===.,._.,._-_".=="c.-:'=..--."'"_c-::~"...,_,,~~=..,,_..._.-"'",=o_:"''''~'''- ~ ~ ~ _."~~'"~ .~M .....=_.. "..:; --_".~-- -- -- ._..___~_.._ ....~-_c.c_..._-.._.. -~.,...- .0,___""_ "''',0 ---.----.------'" -, --- -- ,---- ...--.... --.. - -',----'------.-. ---- . ...... -' '-',,'-..-.. '--~-'-'~",_.-.- --.. ifI riiI rill .;; rill a ,fiI riIfj ,;,if riIfj riIfj iii iii iii iii iii .a .. .. a .. .. .a .a .a .a .a .. .. .. .. .. .. .. .. . .. . .. . .. .. .. The Vision . Kansans will notably increase personal and business wealth and improve our quality of life by focusing on our . inherent and emerging strengths. The Missions Manufacturing - Aerospace and General- Promote the ongoing competitiveness and growth of the manufacturing industry in Kansas. . Rural Development and Agriculture - Enhance the prosperity of rural Kansas by developing innovative solutions that recognize local and regional strengths to ensure the quality of life in rural areas. Professional, Scientific, and Technical Services - Recognize and support the role of services as a core industry in growing the Kansas economy. Energy and Natural Resources - Energy - Implement a State Energy Plan that emphasizes growth value to producers and consumers, promotes energy efficiency and conservation, and promotes research and development for alternative energy technology. Water- Implement a State Water Plan that coordinates the management, conservation and development of water resources by providing recommendations on how the state can best achieve the proper use and control of water resources. Bioscience - Make Kansas the most desirable state to conduct, facilitate, support, fund and perform bioscience research, development and commercialization, to make Kansas a national leader in bioscience, create new jobs, foster economic growth, advance scientific knowledge and improve the quality of /ife for the citizens of the State of Kansas.. Business and Tax Climate - Create a tax and regulatory structure that is competitive and conducive for the growth of existing and new businesses of all sizes. Workforce Development - Create a demand-driven workforce development system that meets the needs of the business community. Technology and Innovation - Utilize science and technology to leverage and support existing and new economic opportunities. . State Image/Branding - Enhance the marketing/branding of Kansas. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance .~ ':'......' The Strategies Strategy 1 - Remain competitive in aerospace and general manufacturing through trained talent. Strategy 2 - Continue commitment to aviation research. Strategy 3 - Compete for aerospace and general manufacturing expansion projects. Strategy 4 - Develop incentives for attracting capital investment, job growth, and diversification within the manufacturing sector. Strategy 5 - Understand the needs and issues of the manufacturing sector in regards to workforce, infrastructure, research and development, and the attraction and retention of manufacturers of all sizes. Strategy 6 - Create a rural development model that provides a holistic, integrated approach based on four key pillars (capital, access, leadership, and benchmarking). The model should use incentives as the engine that driv~s integration. Strategy 7 - Address technology infrastructure needs in rural Kansas, including broadband, , Internet access and wireless voice access. Strategy 8 - Grow existing businesses and encourage the creation of new businesses in rural Kansas. Strategy 9 - Kansas should remain a leading agricultural state. , Strategy 10 - Ensure all graduates are informed and prepared for professional, scientific, and technical service jobs in Kansas, particularly in STEM (Science, Technology, Engineering, and Math) fields. Strategy 11 - Differentiate Kansas as an entrepreneurial state and improve capital formation for the service industry. ' Strategy 12 - Support and develop tourism in both urban and rural areas. Strategy 13 - Address the needs of both the military and government services in general. Strategy 14 - AdC!pt recommendations specific to economic development brought forth in both the State Energy Plan and the State Water Plan. ' Strategy 15 - Kansas will become an energy processor (value-added) in a balanced manner. Strategy 16 - Recognize the importance of the oil and gas industry to the Kansas economy and continue to support and promote its development. Strategy 17 - Encourage policies for investment in both traditional and emerging energies that optimize our energy strengths, in the areas of development, conservation, efficiency and renewable energies. ' Strategy 18 - Address reservoir and aquifer management and rel;,toration in Kansas. Strategy 19 -Increase the quantity of high quality bioscience research that has commercial relevance for Kansas. Strategy 20 - Foster'the formation and growth of bioscience startups. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance a.. =:' Strategy 21 - Facilitate bioscience corporate expansion and attract new-to-Kansas bioscience corporate activity that grows and strengthens the function of specific clusters of excellence. (~ 'W'" ,W- ,W- I"" '. r. Strategy 22 - Develop and enhance partnerships for the growth of biosciences throughout the state. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance i"" ,. i. IW- i. i. '. '. '. i. '. '. '. '.- '.- '.- '.- ,., '.. .. '.- .. .. ... .. ... ... ... '"" ... .. ... .. ... .. .... (I Strategy 23 _ Develop and achieve recognizabfe measures of success in the biosciences. Strategy 24 - Remove barriers and be competitive for capital as it relates to business climate. Strategy 25 - Create the opportunity for more efficient government. Strategy 26 - Reduce state and local regulatory barriers to business. Strategy 27 - Develop a tax structure, incentives, and regulations that are business'friend/y and competitive on a local, state, national, and international level. Strategy 28 - Attract and retain national corporate headquarters in Kansas. Strategy 29 - Enhance the structure ,of the customized training system to meet the immediate specialized needs of businesses. Strategy 30 - Align the education system with the needs of industry through funding incentives and the tangible partnering of state educational institutions with industry opportunities. Strategy 31 - Build capacity by retaining and attracting a skilled and educated workforce. Strategy 32 - Encourage and provide lifelong learning opportunities. Strategy 33 - Address capital formation and access to capital markets on a local, state, and federal level. Strategy 34 - Build a stronger research and development base in Kansas. Strategy 35 - Address technology infrastructure needs throughout the state. . Strategy 36 - Establish and maintain a technically-skilled workforce to fulfill the present and future needs of a vital, technology-driven economy. Strategy 37 - Create an enhanced entrepreneurial culture in Kansas. Strategy 38 - Develop a nationa/leadership role in Information Security and Information Assurance. Strategy 39 ~ Enhance the'Kansas Business Center (KBC). Strategy 40 - Support a public/private partnership to brand the State of Kansas incorporating: continuity, measurability, funding, partnerships, and focus, Strategy 41 - Examine the fundamental structure, methodology and level of expenditures spent on economic development from the state level. Strategy 42 - Benchmark economic development information in Kansas. Strategy 43 - Support the core recommendations within Kansas Comprehensive Transportation Plan and their role in economic development efforts. 1:1 . " 8 . . . 8 . . . ~ . . . . . . . . ~ i!t ~ i!t ~ ,- ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ t ~ . ~ " Table of Contents Kansas, Inc. Board of Director'?... ...................... ................ ................ ..................... ................ .... 1 List of Participants (Steering Committee, Statewide Cell Chairs, Academic and Policy Resource Team, Statewide Ceil Participants, Student Cell Participants, Other Participants, Self-Help Network of Kansas, Kansas, Inc. Staff)....... ................ ............. ............ ................. ................ ..................... ...............2 Executive Summary.. ................ .............. ................... .............. ....... 7 introduction \0 the 2007 Strategic Plan. ............ ............. ................. .............. ..... 17 Preface ............ ......................... ................ ................. ............. ........... 17 A Brief History of Strategic Planning in Kansas .............................. ............ ... 18 The Importance of Strategic Planning........................ ................ ..................... ....18 Kansas, Inc. Five-Year Cycie........ ............... .................. ............. ....................................... ..19 Overview of the 2007 Strategic Planning Process .....................................................................:... ... 20 The People........ ...................... .............. ........................................ ............. .... 20 The Process ........................................... ........................ ................ ...21 The Places .............. ........................... ............. ........... 22 Research ...... .. ......... ............. ................... .................... .............. ........... 23 Evaluation...................... ....................... ............... .......................... ....................23 Priorities. .............. .................................................................. ...................... ..... 24 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance.. ......... 25 Introduction........ ................ ..................... .................................. .25 Overview.............. ............ ..................... .................. .................... ............. .25 Economy of our Past.. .................. .................. .................... ............ ........26 Present Economy........ ............ .......................... ................... ........................ ........26 Industry Integration.. ................. ............................... .................................. ..........................28 Transitioning into the Integrated Global Economy - Sustainability........................................ ............. 29 Environment for Opportunity ............... .................. .................................. .............30 Strength Through Aligned Resources.. ................ ................................... ...31 Defining the Vision.......... ........................... ................ ................. .................. .32 Manufacturing - Aerospace and General(Strategies 1 through 5) ....... ................... ........ 33 Rural Development and Agriculture (Strategies 6 through 9).......... ................... ..................37 Professional, Scientific, and Technical Services (Strategies 10 through 13) ........... .................. ........43 Energy and Natural Resources (Strategies 14 thrOUgh 18)... ................. - ...47 Bioscience (Strategies 19 through 23)........ ............... ............ ............... ..51 Business and Tax Climate (Strategies 24 through 28) ..................................... ................... 53 Workforce Development (Strategies 29 through 32) ............. ............. ................ 59 Technology and Innovation (Strategies 33 through 39).. ............... ................. .....67 State Image/Branding (Strategy 40) ............ ........ ................... .................. .....73 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance List of Figures and Tables ~ .,. .,. 'Ill' 'Ill' 'Ill' .",. """ """ """ """ WI WI WI WI WI WI WI .. W W .. .. .. .. .. .. .. .. .. .. ... ... ... Economic Development Funding and Benchmarking (Strategies 41 through 42) ......................... 75 Transportation Infrastructure (Strategy 43). ............. ....................... ......................... .....77 Conclusion ............. ........... ....... ................... .......79 Appendix A. Economic Overview ............ .................................................... ..........81 Trends in the Kansas Economy .................... . .........81 Issues and Trends Identification in Kansas ............ .......... ......82 Indicators of the Kansas Economy (IKE) .......................... ................ ........ ......85 Appendix B. Executive Summary of Statewide Cell Information ............ ............... .............................89 Figure 1. Kansas, Inc. Five-Year Cycle ......................................................... ......... .................... .... 19 Figure 2.2007 Strategic Planning Process .............................. ............ ............21 Figure 3. Strategic Planning Participation/Grassroots Ownership......... ....... ..... ...... 22 Table 1. Kansas, Inc. Strategic Planning Research ............ ................. ...................... ........23 Table 2. Kansas, Inc. Current Evaluations...... .......................... .....23 Figure 4. Strategic Planning Priorities............... .................. ........................... .......24 Figure 5. Economy of our Past.... ................ ............. ........................................ ............. .. 26 Figure 6. Present Economy.. ............ .................. ............. ............. ..................26 Figure 7. Industry Integration .............. ............................. ............... ................. ..28 Figure 8. Industry Integration (with Bioscience)... . ........................ ..................... ............ .............28 Figure 9. Transitioning into the Integrated Global Economy..................................................................... 29 Figure 10. Transitioni~g into the Integrated Global Economy (with examples). ............. ................ ..30 Figure 11. Environment for Opportunity .......................................................... ..................... .....30 Figure 12. Strength Through Aligned Resources ................... .................................... ............ ........ 31 Table 3. Population, 1996-2006...................... ..................... ....................................... ............ .. ..85 Figure 13. Population Growth, 1996 - 2006 ................ .. .................... ............ .............. ................. 85 Figure 14. Total Nonfarm Employment (by sector), 2006........................................... .............. .. 85 Figure 15. Employment Growth by Sector in Kansas, 1996 - 2006.................................................... 86 Table 4. Total Nonfarm Employment (all employees, thousands), 1996 - 2006......... .............. ........86 Figure 16. Total Nonfarm Employment Growth, 1996 - 2006 .............. ............... .........86 Table 5 Unemployment Rate (%),1996 - 2006................................. .................... .87 Figure 17. Unemployment Rate, 1996 - 2006.......... ............................ .................87 Table 6. Average Annual Wages (by industry), 2005 - 2006 ................ .87 Table 7. Gross Domestic Product by State (millions of current dollars), 1996 - 2006 ...... .................. .. 88 Figure 18. Growth in Gross Domestic Product by State, 1996 - 2006.. .................. 88 Table 8. Per Capita Personal Income (PCPI), 1996 - 2006 ........................ .. 88 Figure 19. Per Capita Personal Income (dollars), 1996 - 2006............................. 88 .. V' '.,. '.,. '.,. '. '. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance '.. '. Ie tt ~ ~ 8 8 " 8 " " " " 8 8 8 .. .. .. .. 8 8 8 8 8 8 8 " l' 8 ~ , ~ , ~ it !.t . it It it it it it It '(\ ,I.;'i Kansas, Inc. Board of Directors Created by the Legislature in 1986, Kansas, Inc. is an independent, objective, and non-partisan organization designed to conduct economic development research and analysis with the goal of crafting policies and recommendations to ensure the state's ongoing competitiveness for economic growth. To attain our mission, Kansas, Inc. undertakes these primary activities: 1.) Identifying, building, and promoting a Strategic Plan for economic development efforts in the State of Kansas; 2) To complement the Strategic Plan, Kansas, Inc. develops and implements a proactive and aggressive research agenda, which is used to identify and promote sound economic development strategies and policies; 3) Through collaboration and outreach with economic development entities and other potential partners, Kansas, Inc. conducts evaluation reviews and provides oversight of economic development programs to benchmark development efforts in the State of Kansas. Co-Chaired by the Governor, Kansas, Inc. is governed by a 17-member Board of Directors. Board members, as mandated by legislation, include four members of Legislative leadership, a representative from the Board of Regents, the Secretary of Commerce, the Commanding General of the Kansas Cavalry, a representative from labor, and eight other members from the private sector representing key Kansas industrial sectors. Private sector members are appointed by the Governor and confirmed by the Kilnsas Senate. Through analysis and open dialogue, Kansas, Inc. identifies policy options and builds the consensus essential for concerted action on vital economic issues. Kansas, Inc. is designed to be a public-private partnership with expectations that state investments are leveraged with other funds to maintain a strong research portfolio. Co-Chairs Governor Kathleen Sebelius. Topeka Gene Argo American Rodeo Company, Hays Members Patti Bossert Key Staffing, Topeka . Secretary Howard Fricke Kansas Department of Commerce, Topeka Donna Johnson Pinnacle Technology, Lawrence .. Secretary David Kerr Kansas Department of Commerce, Topeka Wil Leiker AFL-CIO, Topeka . Sen. Stephen Morris. . Senate President, Hugoton Reginald Robinson Kansas Board of Regents, Topeka . Stephen L. Waite Kansas Cavalry, EI Dorado Rep. Tom Burroughs State Representative, Kansas City Rep. Lana Gordon State Representative, Topeka Sen. Laura Kelly State Senator, Topeka .. Don landoll Kansas Cavalry, Marysville Lawrence L. McCants First National Bank, Goodland John Pilla Spirit AeroSystems, Wichita Donald P. Schnacke P.A. , Topeka .. Sen. David Wysong State Senator, Mission Hills denotes members who left the Board during the Strategic Planning process. ** denotes members who were appointed to the Board during the Strategic Planning process. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 1 (ji \iiI' \iiI' '" List of Participants Alicia Salisbury Former State Senator, Topeka Rodger Smith, President, Enterprise Management Solutions, Black & Veatch, Overland Park Pack Sl Clair, Chairman &. CEO, Cobalt Boats, Neodesha Jeff Turner, President & CEO, Spirit AeroSystems, Inc., Wichita Rep. Kenny Wilk State Representative, Lansing Michael Wilds Magnetar Capital, LLC Evanston, Illinois ~ ~ ~ .. ~ .. .. ... ... .. .. .. .. .. .. .. .. "" "" '"' '"' .. '"' '"' '" '"' ... ... ... ... ... ;.= ... .. ... ... .... .... ... CJ Strategic Planning Steering Committee Gene Argo, Owner, Mid- America Rodeo Company, LLC, Hays John Armbrust, Executive Director, Governor's Military Council, Manhattan Sen. Jim Barone State Senator, Frontenac Patti Bossert, Owner & President, Key Staffing, Topeka Sen. Karin Brownlee State Senator, Olathe Chuck Comeau, CEO, Dessin Fournir, Plainville Edward Cross, Executive Vice President, Kansas Independent Oil & Gas Association, Topeka Ken Daniel, CEO, Midway Wholesale, Topeka Bryan Derreberry, President & CEO, Wichita Metro Chamber of Commerce Dr. Jerry Farley, President, Washburn University, Topeka Sheila Frahm, Executive Director, Kansas Association of Community College Trustees, Topeka Joe Harkins, Commissioner, Kansas Corporation Commission, Topeka Steve Irsik, President & CEO, Steve Irsik & Sons, Inc., Ingalls David Kerr, Secretary, Kansas Department of Commerce, Topeka Chuck Krider, Ph.D, Academic Director of MBA Program, School of Business, University of Kansas, Lawrence Richard Miller, CEO, Miller's Professional Imaging, Pittsburg Joerg Ohle, President & General Manager, North America Animal Health Division, Bayer HealthCare LLC, Shawnee Mission Joe Reardon, Mayor & CEO, Unified Government of Wyandotte County, Kansas City Rep. Valdenia Winn State Representative, Kansas City Terry Woodbury, President, Kansas Communities, LLC, Kansas City Dan Yunk, Executive Director & CEO, Kansas Farm Bureau, Manhattan Strategic Planning Statewide Cell Chairs S. Lucky DeFries Coffman DeFries & Nothern P.A., Topeka Craig Duncan, President, Winfield Iron & Metal, Winfield Eddie Estes, President & CEO, Western Kansas Manufacturers Association, Dodge City Bennett Griffin, President & CEO, Griffin Technologies, L.L.C., Lawrence Jerry Karr Former Kansas Senator, Emporia Dave Kerr, President & CEO, Hutchinson!Reno County Chamber of Commerce, Hutchinson Mark Mingenback, President & Executive Director, CKMC Foundation, Inc., Great Bend Rod Olsen Morrison, Frost, Olsen & Irvine, LLP, Manhattan Mark Parker, Co-Publisher! Editor, Farm Talk Newspaper, Parsons Lon Pishny, Certified Financial Planner, Pishny Financial .Services, LC, Garden City Tom Robinett, Jr., General Counsel, American Academy of Family Physicians, Leawood Ladd Seaberg, Chairman & CEO, MGP Ingredients, Inc., Atchison Harry Smith, Sr. Director of Manufacturing, Schwan's Global Supply Chain, Inc., Salina Alan Townsend Townsend Farms, Goodland Mark Utech, President, Commerce Bank, EI Dorado Lyndon Wells, Executive Vice President, INTRUST Bank, Wichita Jeff Wick, Chief Operating Officer, Nex- Tech, Hays 2 Leveraging our Foundations and Designing the .Future: A Kansas Economic Renaissance ,....,-,,, ........~-.. . . . . . . - t t ~ ~ . - . . . . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ,. ~- ,. .,,- ,. ~ e e ~ ~ .. ~ e . ~ ~ iillt (::- ~ >. >II I I Strategic Planning Academic and Policy Resource Team Vincent Amanor-Boadu, Ph.D., Department of Agricultural Economics, Kansas State University, Manhattan Mark Bannister, Chair, Department of Information Networking and Telecommunications, Fort Hays State University, Hays Keith Chauvin, Ph.D., Associate Dean of Academic Affairs, School of Business, University of Kansas, Lawrence Alan Conroy, Director, Kansas Legislative Research Department, Topeka Bienvenido Cortes, Ph.D., Professor of Economics, Kelce College of Business, Pittsburg State University, Pittsburg Blake Flanders, Ph.D., Director of Workforce Training and Education Services, Kansas Department of Commerce, Topeka Duane Goossen, Director, Division of the Budget, Kansas Department of Administration, Topeka Art Hall, Ph.D., Executive Director, 'The Center for Applied Economics, University of Kansas, Lawrence Janet Harrah, Director, Center for Economic Development and- Business Research, Wichita State University, Wichita Steve Kelly, Deputy Secretary, Kansas Department of Commerce, Topeka Tracy Taylor, President & CEO: Kansas Technology Enterprise Corporation, Topeka Thomas V. Thornton, President & CEO, Kansas Bioscience Authority, Olathe Strategic Planning Statewide Cell Participants (Atchison, Dodge City, EI Dorado, Emporia, Garden City, Goodland, Great Bend, Hays, Hutchinson, Lawrence, Manhattan, Overland Park, Parsons, Salina, Topeka, Wichita, Winfield) Suzie Ahlstrand, Wichita Metro Chamber of Commerce Deborah Amend, Butler County History Center Shelly Angelos, USD 352. Goodland Kerri Baker, KBSD TV (CBS) Don Ball, Bank of Atchison Phil Baniewicz, Benedictine College Dorothy Barnett, Reno County 2020 Growth Coalition Martha Bartlett Piland, MB Piland Advertising & Marketing Jack Beery, Big L Rentals Mary Birch, Lathrop & Gage LC Joe Bogner, Western Beverage Brent Bowman, Bowman, Bowman & Novick Jo Brunner, Manhattan/Junction City Workforce Centers Ann Bush Mike Campbell Cindy Cash, Kansas City Kansas Area Chamber of Commerce Todd Caudle, Caudle Financial Mel Chapman, Cook, Flatt & Strobel Jim Circle Jim Coffin, JAG Inc. Jessica Cole Ray Connell, Connell and Connell Marty Cornejo, Concrete Materials Company Kent Cornish, Fox Kansas/KSAS- TV Travis Daise, Goodland Family Health Center Dale Davis, Sauder Custom Fabrication Joshua Dechant, Bankwest of Kansas Jeff Deeds, JADE Farms, Inc. Robert Dema, CPI Qualified Plan Consultants Kelly DeMeritt, City of Atchison Dan Demo, Demo Distributors Inc. Les Depperschmidt, A T& T Randy Deutsch Kevin Doel, The Business Center, Inc. Tom Dondlinger, Dondlinger & Sons Construction Company Inc. Toby Dougherty, City of Hays Bruce Douglas, Sterling College Molly Edwards, Wichita Metro Chamber of Commerce Ed Elam, Ford County Morris Engle, First National Bank and Trust Bob Evenson, R.W Evenson, Inc. Allen Fee, Fee Insurance Group Sandy Foust, S & Y Industries 3 :.;\1 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance Patrick French Steve Funk, GTrust Jason Gage, City of Salina Webb Garlinghouse, National Electronic Type Michael Germann, Spirit AeroSystems, Inc. Lisa Gleason Michael Grant, Rubbermaid Mark Gregory, Gregory, Inc. Brady Gras, CPAC-Fuller Company Bill Hanna, (former Koch Industries Executive) Kelli Hansen, Oessin Fournir Brian Harrison, Farmers Bank and Trust Dorine Harter, Harter Financial Services KayLene Haug Tammie Hawkins, Hawkins Heating & Air Neil Hawley, American Family Insurance Kent Heermann, Regional Development Association Linda Hoeffner, Office of the Garrison Commander, Fort Riley Gerald Holman, Wichita Metro Chamber of Commerce Ed Honesty, Best Harvest Bakeries Gennifer House Harlan House Roger Hrabe, Rooks County Economic Development Von Hunn, Garden True Value John Jacobson, Atchison Hospital John Jeter, 'Hays Medical Center Joe Johnson, Schaefer Johnson Cox Frey Architecture Paul Karkiainen, Tyson Mike Kelley, Airplains Joann Knight, Dodge City Area Chamber of Commerce, Dodge City/Ford County Development Corp. Bernie Koch, Wichita Metro Chamber of Commerce Ron Koelsch, Farmer John Kujawa, Atchison Castings Bob Lagarde, Lagarde, Inc. Phyllis LaShell, Hays Workforce Center Dennis Lauver, Salina Chamber of Commerce Earnie Lehman, Midwest Energy Jeff Levin, Varneys Brian Linin Jill Long, Long & Neises Neil Martin, Farmer Don Marvin, IdentiGEN, Inc. Gary Mason, iSi (integrated solutions inc.) Michelle Mayo, The Corner On Main MeHssa McCoy, Dodge City Community College Center for Business & Industry Matt McClorey, Lawrence. Regional Technology Center Mike Michaelis, Ellis County Coalition for Economic Development Bob Miller, Busboom & Rauh Construction Company Steve Mona, GCSAA Michael Monteferrante, Occidental Management, Inc. Bill Moore, Westar Energy .Ji!" Moore, Farmers State Bank Dana Morse, Blue Beacon Truck Washes Robert Mueller, USD 409, Atchison Andrew Murphy, Innovative Livestock Services Greg Musil, Shughart Thomson & Kilroy, PC- Fred S. Neuer, M.D. Steve O'Brate, Palmer Manufacturing Pat Parke, Midwest Energy Jeff Pedersen, Dodge City Manager Mike Pesek, Kansas Farmers Service Association Gordon Pfannenstiel, Russell County Economic Development Bill Pickert, BKD, LLP Tony Poore, Rural Telephone Richard Porter, Porter Cattle Company Todd Powell, Fort Hays State University Jacque Pregont, Atchison Area Chamber of Commerce Mark Preut, USD 377, Atchison Emily Randall, Atchison Globe Lee Reeve, Reeve Cattle Company, Inc. Shawn Reniker Kara Renz, Golden Belt T eh;phone Assn. Debbie Reynolds, Mosaic Gina Riedel, Hays Area Chamber of Commerce Larry Robbins (former Goodyear Executive) Quintin Robert, KanBuild Inc. Jon Rolph, Sasnak Management Bob Roth Chuck Sack, Impact, Inc. Vicky Scheve, Dodge City Workforce Center Karen Seaberg, Travel Center of Atchison Dave Seaton, Winfield Daily Courier ~ ,. ~ fI' fI' fI' ri- ri- ff' fI- fI- if' fI- fi- . ... . ... f!' f!' ... r ... ... p r r r r l- I- t!' t!' t!' t!' p- t- t- ,.." ,.. "., ,. ... (I Doug Sederstrom, Goodland Energy Center 4 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance ~ It !t . . . . . . . . ~ . ~ ~ ~ 8 ~ ~ ~ ~ ~ ~ ~ ~ '" ~.., ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ . . It . :~ Kimberly Shank, Wichita Clinic, PA Dale Short, Butler REC Lynne Smith, Above & Beyond Corporate Gifts Harvey Sorensen, Foulston Sietkin LLP Alan States, First National Bank Craig Stephenson, Saline County Commissioner Jim Stinehelfer, HiPer Technology, Inc. Scott Stuckey, Cardinal Insurance Agency Dick Strandmark, Plymell Dairy David Sundgren, Sundgren Realty Montie Taylor, Teambank Ben Tenpenny, Capital City Bank Jeff Thompson, Salina Vortex Mike Tovar, Lyon County State Bank Robert Tyler, Winfield Consumer Products, Inc. Jill Ulrich, Kansas Cosmosphere and Space Center Beth Unger, Kansas State University Dick Vaught, William Newton Memorial Hospital Ron Viguery Wendy Wells, US Bank Bob Wetmore, Dodge City Area Chamber of Commerce, Dodge City/Ford County Development Corp. Cheryl White, Lawrence Workforce Center Aneta Willson, Salina Workforce Center Sam Williams, Sullivan Higdon & Sink Inc. ,Gary Wilson, Reliable Power Products Group Jim Wilson, SusanB. Allen Hospital Joe Wilson, Barton County Commissioner Becky Wolfe, Leadership Butler Bob Wood, Wood-Dulohery Insurance Joe Woodard, ADM Milling Company Deryl Wynn, McAnany, Van Cleave & Phillips. PA Bryce Young, Hays Medical Center Kim Young, Greater Wichita Economic Development ' Coalition Dennis Zimmerman, St. Cornelius Episcopal Church Other Participants Ed Berger, Hutchinson Community College Amy Blankenbiller, Kansas Chamber of Commerce and Industry Edward Burghard, Ohio Business Development Coalition Terry Calaway, Johnson County Community College Dick Carter, Travel Industry Association of Kansas Bill Cole, Black & Veatch Rae Anne Davis, Workforce Development Division, Kansas Department of Commerce John Dieker, Bombardier Aerospace Dan Dymarkowski, Hawker Beechcraft Ed Flentje, Wichita State University, Hugo Wall School of Urban & Public Affairs Ken Frahm, Kansas Energy Council John Frederick, The Boeing Company. Joe Glassman, Glassman Corporation Jeff Glendening, Kansas Chamber of Commerce and Industry Peter Gustaf, Kansas Technical Training Initiative Ray Hammarlund, Agriculture Marketing Division, Kansas Department of Commerce Jim Hollingsworth, Information Network of Kansas Carole Jordan, Kansas Department of Agriculture Nick Jordan, Kansas Senator Wally Kearns, Kansas Small Business Development Centers Angela .Kreps, Kansas Bio Earl Lewis, Kansas Water Office Derek McLuckey, Boeing Integrated Defense Systems Don Moler, League of Kansas Municipalities John Moore, National Institute of Aviation Research Ll. Governor Mark Parkinson Erik Pederson, Network Kansas Adrian Polansky, Karisas Department of Agriculture Kevin Polian, Bombardier Aerospace Steve Radley, Network Kansas Sharon Schwartz, Kansas Representative Tracy Streeter, Kansas Water Office John Tomblin, Nationallnstltute for Aviation Research Jim Walters, Cessna Aircraft Company John Wong, Wichita State University, Hugo Wall School of Urban & Public Affairs - Wichita. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 5 Greg Meissen, Ph.D., Director, Self-Help Network Steve Williams, Self-Help Network Seth Bate, Community and Organizational Specialist, Self-Help Network Amy Delamaide, Community and Organizational Specialist, Self-Help Network Emily sebelius, Self-Help Network f' ~ -- ~ .- .- -- '" '" ... ... ... .. ... .. i'" .. i'" i'" i'" i'" i'" i'" ... ... "'" ... ... .... .... .... .... .... .... .... t:= .... .... .... .... ... ... .... ( Student Cell Participants (Washburn Universityand!!ansas City Kansas Community College) Ryan Bishop Alice Hughes Morgan Rockhold Vincent Bowhay Elizabeth Hinton Angel Romero Shawn Bryant Sarah Hamilton Amanda Repp Lyn-Lee Beall Henry Johnson Eduardo Ramirez Joshua Brown Kaitlin Jones Elise Short Chelsea Chaney Lacey Keller Thomas Simms Ashley Cheffen Tyresha Lee Nicole Turner Mike Ditch, Jr. Racio Luna Kyle Volle Victoria Fort Leslie McConico Robert Van Trump Noah Fuyate Whitney Philippi Nick Woolery Tyler Goetz Alicia Phillips John Patrick Warren Libby Graham Caleb Reid Self-Help Network of Kansas Kansas, Inc. Staff Stan Ahlerich President Debby Fitzhugh Director of Operations Jacquelyn Koehler Policy Analyst Daniel Korber Sr. Research Analyst 6 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance _.,,;;.':.j.;..J~L5-~. ~ - ."~'" - ~ . . . . . . ~ ~ ~ ~ ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 8 t ~ ~ . ~ ~ ~ (!..\ Executive Summary K. S.A. 74-8002 - Kansas, 'Inc. shall oversee the formulation of economic development polley and strategic planning for the state. In accordance with K.S.A. 74-8002, the 2007 Economic Development Strategic Plan, entitled Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance provides 43 strategies accomplished through 98 recommendations intended to strategically position Kansas for long-term economic growth. 1 The Strategic Plan is the result of a yearlong process, driven by sound, fundamental research and tested with business input throughout the state. The Executive Summary provides an outline of the vision, missions, strategies, and recommendations. The Vision Kansans will notably increase personal and business wealth and improve our quality of life by focusing on our inherent and emerging strengths. Manufacturing - Aerospace and General Mission - Promote the ongoing competitiveness and growth of the manufacturing industry in Kansas. Strateqy 1 - Remain competitive in aerospace and Qeneral manufacturinq throuQh trained talent. 1-1 Provide funding and resources to support the state-of-the-art training center currently being constructed (Jabara/National Center for Aviation Training) and its training programs for jobs in Kansas. Recommend the state invest at least $5.5 million per year for the next six years ($33.0 million total) in infrastructure, equipment, and curriculum support. 1-2 Develop and provide funding for original equipment manufacturers (OEM) and their local suppliers training and retraining efforts. Target a portion of economic development dollars for aviation and manufacturing talent development through a streamlined training fund program geared for today's companies and economy. Through business input, develop a program that assists manufacturing . companies train workers through quick state approval and responsive systems. Strateqy 2 -'- Continue commitment to aviation research. 2-1 Continue to support advanced research and development through ongoing funding of $5.0 million per year to further develop the National Institute for Aviation Research (NIAR) at Wichita State University (WSU) and its proven expertise in existing and new products in aviation technology. StrateQY 3 - Compete for aerospace and !Ieneral manufacturinQ expansion proiects. 3-1 . Develop a long-term economic development funding strategy for manufacturing projects. Create a competitive state policy to address major state incentives for jobs and/or facilities for aerospace and manufacturers bringing high-wage jobs and infrastructure to Kansas. I Strategies and recommendations are specifically listed by section and number for the reader's convenience. This order does not imply specific priorities within the plan, as all strategies and recommendations must be evaluated on their own merits. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 7 8 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance r r r .. iP" W- iP" W- iP" iP" W- tIP" W- i'" .. ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ~ ... ... f"" .. .... ... .... fiJ StrateQV 4 - Develop incentives for attractinQ capital investment. iob Qrowth. and diversification within the manufacturinQ sector. 4-1 Develop a business and taxslimate, workforce development system, and technology infrastructure to address the needs of both small- and broad-based manufacturers throughout the state. StrateQV 5 - Understand the needs and issues of the manufacturinQ sector in reQards to workforce. infrastructure, research and development. and the attraction and retention of manufacturers of all sizes. 5-1 Explore the development of an interactive, electronic portal with the Information Network of Kansas (INK) designed to capture and provide access to information pertinent to the manufacturing sector, in particular allowing both small and large manufacturers, as well as the state, to monitor.the sector vitality and better anticipate the needs and issues associated with the sector. Rural Development and Agriculture Mission - Enhance the prosperity of rural Kansas by developing innovative solutions recognizing local and regional strengths to ensure the quality of life in rural areas. StrateQV 6 - Create a rural development model that provides a holistic. inteQrated approach based on four key pillars (capital. access. leadership. and benchmarkinQl. The model should use incentives as the enQine that drives inteqration. 6-1 The Office of Rural Opportunity should be restructured and positioned at the highest possible level to become the centerpiece of a new integrated rural development structure. The Office will be recognized as the lead agency for rural development in Kansas with a mission to provide an integrated, coordinated and seamless approach for all rural development initiatives. The Office will develop a transparent, clearly understood methodology built around incentives to drive integration of the key pillars (capital, access, leadership, and benchmarking). Enhanced funding should be provided in the state budget for the administrative requirements of the Office. 6-2 Create a Division of Leadership within the Kansas Department of Agriculture, as capacity building or leadership must be a key component of rural development. Funding should be provided in the state budget for the administrative requirements of the Division. 6-3 Develop a coordinated incentive structure to reward communities, businesses and individuals for using the new integrated structure. The Office of Rural Opportunity would develop the framework surrounding the incentive structure. 6-4 Benchmark our efforts and progress in rural Kansas. Through marketing and awareness, rural areas will increase the visibility of successes and increase the awareness of their business atmosphere and lifestyle. 6-5 Enhance funding to $1.0 million per year for the agricultural loan portfolio ,within the Department of Commerce. 6-6 Utilize and support the potential of Rural Opportunity Zones to playa key role in incentives that would help communities investin their own future with the state as a partner. . 8 ~ ~ ~ " t ~ ~ '" ~ ll' '" ~ !l' ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~. ~ !} ~ ~ ~ ~ !!b , ~ ~ , , , 8 18 i ~ Ct\ .., Strateqy 7 - Address technoloqy infrastructure needs in rural Kansas, iACludinq broadband. Internet access and wireless voice access. 7-1 Study, map and enhance the broadband infrastructure of the state. Increase broadband Internet access and the capacity to move large amounts of data securely. Urge the private sector to respond to broadband service gaps as they are identified. 7'2 Assure through regulator mechanisms such as eligible telecommunications carrier designation and a tax structure that rewards investment, that wireless coverage is available throughout Kansas. Strateqy 8 - Grow existinq businesses and encouraqe the creation of new businesses in rural Kansas. 8-1 Encourage the ongoing use and support of Network Kansas to facilitate entrepreneurship, promote rural outsourcing rather than traditional outsourcing, develop value-added industries based on agricultural commodities, utilize regional strengths and cooperation, and develop proactive business succession efforts. Strateqy 9 - Kansas should remain a leadinq aqricultural state. 9-1 Policymakers can encourage state officials, agencies, farm organizations, and commodity groups to continue overseas market development and trade promotion programs. . . 9-2 The state can assist local government in the development of bioterrorism contingency plans that strategize around anticipated disruptions by providing guidance, technical assistance, needed financial resources, and overall coordination between the multiple jurisdictions likely to be involved. 9-3 Ensure university research is aligned with ongoing and future opportunities in the application of strategic technologies such as genetic engineering, environmental solutions, and conservation technologies, with the intention to apply or commercialize these opportunities. Professiona~ Scientific, and Technical Services Mission - Recognize and support the role of services as a core industry in growing the Kansas economy. Strateqy 10- Ensure all qraduates are informed and prepared for professional. scientific. and technical service jobs in Kansas. particularly in STEM (Science. Technoloqy. Enqineerinq. and Math) fields. 10-1 Develop partnerships between businesses and secondary educational institutions to design curriculum that prepares students for jobs in Kansas. Utilize successful career curriculum alignment programs, such as the Olathe 21" Century High Schools program and design a template for statewide application. 10-2 Promote the statewide use and business involvement with the Kansas Career Pipeline to . encGurage student exploration into careers and educational paths in Kansas. Encourage contact with Kansas businesses through internships and job shadowing. 10-3 Incorporate entrepreneurship, leadership, .innovation and customer service training into our education system. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 9 StrateclY 11 - Differentiate Kansas as an entrepreneurial state and improve capital formation for the service industry. 11-1 Embrace technology and inQovation to develop entrepreneurial and startup business opportunities in the service industry. Strateqy 12 - Support and develop tourism in both urban and rural areas. 12-1 Focus tourism initiatives through an aggressive marketing/branding plan based on both destination tourism and business input. 12-2 Devise a dedicated funding stream to assist in developing tourism initiatives on a statewide basis through the collaboration of the state, associations and private industry organizations. Strateqy 13 - Address the needs of both the military and qovernment services in qeneral. 13-1 Fund the Governor's Military Councii within the state budget at a level of $500,000 per year. The Council is charged with accommodating all military grow1h in the state and fostering additional military grow1h. 13-2 Align government employment and compensation to be flexible and competitive with private labor markets. Energy and Natural Resources Missions - Energy - Implement a State Energy Plan that emphasizes growth value to producers and consumers; promotes energy efficiency and conservation; and promotes research and development for alternative energy technology. . Water - Implement a State Water Plan that coordinates the management, conservation, and development of water resources by providing recommendations on how the state can best achieve the proper use and control of water resources. Strateqy 14 - Adopt recommendations specific to economic development brouqht forth in both the State Enerqy Plan and the State Water Plan. 14-1 Foster coordination between the State Energy Plan and the State Water Plan. Strateqy 15 - Kansas will become an enerqy processor (value-added) in a balanced manner. 15-1 Production, distribution and wholesale/retail sales must be a key component of our energy portfolio. 15-2 While conservation is a key component, we must use current energy assets to build a bridge to future energy opportunities. 15-3 Kansas must add value in a collaborative manner in the areas of energy generation, refinery, transmission and storage, specifically addressing oil and natural gas, bio-fuels, wind and nuclear energy. Strateqy 16 - Recoqnize the importance of the oil and qas industry to the Kansas economy and continue to support and promote its development. 16-1 Recommend studying and realigning the property tax credit offset on the severance tax with the goal of maintaining and attracting capital into the oil and gas industry, while maintaining or increasing state revenues. 10 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance . r .e if" .. .. .. .. .. .,. .,. .,. .,. .. .,. .. .,. .. ... ... ... ... ... ... ... ... ... ... .- .- ... ... ... .. ... ... ~ "I ~ C9 - ~ .~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ , ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ .1') !l) ~. e e ~ f) ~ ~ ~ t ~ ~ ~ ~ ~ ~ ~ it . t\ Strateqv 17 - Encouraqe policies for investment in both traditional and emerqinq enerqies that optimize our enerqv strenqths, in the areas of development, conservation, efficiency and renewable enerqies. 17-1 Develop and coordinate an E.85 distribution structure that would attain a presence throughout Kansas. . 17-2 Design incentives and policies to encourage research and development for energy and enhanced access to capital for energy development. Strateqy 18 - Address reservoir and aquifer manaqement and. restoration in Kansas. 18-1 Recognize and develop strategies to address the management and restoration of the state's reservoirs. 18-2 Recognize and develop strategies to address the management and restoration of the state's aquifers. . Bioscience Mission - Make Kansas the most desirable state in which to conduct, facilitate, support, fund and perform bioscience research, development and commercialization, to make Kansas a national leader in bioscience, to create new jobs, foster economic growth, advance the scientific knowledge and improve the quality of life for the citizens of the state of Kansas. Strateqv 19 - Increase the quantity of hiqh qualitv bioscience research that has commercial relevance for Kansas. 19-1 A key role for the Kansas Bioscience Authority (KBA) is to bridge the gap in translating innovation between pure bioscience basic research and the more applied and development-focused technology needs of the state's bioscience industry. Strateqy 20 - Foster the formation and qrowth of bioscience startups. 20-1 The KBA will partner with other economic development organizations to provide one-on-one consulting services to high potential early-stage bioscience companies with the goal of preparing them to raise capital and go to market. Strateqv 21 - Facilitate bioscience corporate expansion and attract new-to-Kansas bioscience corporate activity that qrows and strenqthens the function of specific clusters of excellence. 21-1 Workingwith its state and local partners, the KBA will facilitate the retention and attraction of bioscience companies in the state. Strateqy 22 - Develop and enhance partnerships for the qrowth of biosciences throuqhout the !l,tate. 22-1 The KBA's motto recognizes that its public, private and academic partners are often at the forefront of efforts to expand bioscience research and development, foster the formation and growth of startups, and lead local corporate expansion and attraction efforts. Strateqy 23 -Develop and achieve recognizable measures of success in the biosciences. 23-1 The KBA will orient its Investments and measure Its success based upon achieving a handful of outcome metrics by 2019 that denote national leadership in the biosciences. 11 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance _.~---~---.---~_._~.~--- . . -.~-..-_..,.,--- "'~-'"-----~' -, r.. Business and Tax Climate Mission - Create a tax and regulatory structure that is competitive and conducive for the growth of existing and new businesses of all sizes. Strateqv 24 - Remove barriers and be competitive for capital as it relates to business climate. 24-1 Consider implementing a form of universal expensing or 100 percent accelerated depreciation of all capital investment in Kansas, similar to the High Performance Incentive Program (HPIP), but applied to all businesses without regulatory barriers. 24-2 Study the effect of a reduction or elimination of the corporation income tax and the income taxation of capital gains. 24-3 Study the .erosion of the property tax base and our property tax valuation methods. Strateqv 25 - Create the opportunity for more efficient qovernment. 25-1 Provide incentives and remove barriers to allow for cooperation between local government, state government, and other entities. Examine and apply best practices when addressing the opportunity for more efficient government. Collaboration efforts must be initiated froni the local level and not forced upon locals by the state. Hold cities and counties harmless. 25-2 Encourage the increased participation with the Information Network of Kansas by all state and local government entities to improve government efficiency and provide access to government' information and services at all levels. Strateqv 26 - Reduce state and local requlatorv barriers to business. 26-1 Develop and promote methods to reduce local and state barriers to a quality business atmosphere, such as reducing multiple licensing within and across communities, cities, counties, and the state. 26-2 Develop a statewide network of task forces to improve the business and regulatory climate at the city, county and state levels. 26-3 Move towards using technology from the state to provide electronic services to meet local government needs per their request. Strateqv 27 - Develop a tax structure. incentives, and requlations that are business-friend Iv and competitive on a local, state, national, and international level. 27-1 Create a contingency fund of $40 million to be used at the discretion of the Department of Commerce to provide flexibility and funding above and beyond the current range of incentive programs to compete with other states and countries that provide large incentives for existing and new businesses and projects. .. . 27-2 Create.a cross-agency team comprised of the Kansas Department of Commerce, Kansas Technology Enterprise Corporation, Kansas, Inc., Kansas Bioscience Authority, and Network Kansas to review existing and proposed regulations to ensure that they are not unnecessariiy impeding economic development. 27-3 Routinely study and benchmark parameters regarding our tax and regulatory structure and report recommendations to the Governor and Legislature. 12 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance "" ~ .,. ~ ~ "" ~ . . If" . '" t" lP' ti" .- .- .- ~ .- ~ .... .... .... .... .... .... .... .... .,.. .,.. .,.. .,.. ... ...,. .... .... .... .... .... .... .... . .....11;:!!1'.:"'~"..__:."'.._'" !8 !II ~ ll' ... !8 !8 !8 !8 !8 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e ~ ~ ~ e ~ ~ ~ e e e e i . ,. P.I Strateqy 28 - Attract and retain national corporate headquarters in Kansas. 28-1 Formalize what Kansas i13. doing right by targeting national headquarters and continuing to equalize state incentives. 28-2 Prioritize relevant elements of the existing strategic plan, including improving air travel connections, supporting local enterprise development, and assisting local firms in becoming multi-state firms. 28-3 Consider new initiatives targeted to headquarters by preparing targeted place marketing materials and outreach campaigns. 28-4 Consider new initiatives of broader significance, including strengthening benefit recapture or claw back rules, efforts toward developing a cooperative policy on border competition, and providing for agency disclosure by site selection consultants operating in Kansas. WorkTorce Development Mission - Create a demand-driven workforce development system that meets the needs of the business community. Strateqy 29 - Enhance the structure of the customized traininq system to meet the immediate specialized needs of businesses. . 29-1 Use state resources to design and implement customized training programs that deliver skilled employees to qualified requesting companies in a timely and cost effective manner. 29-2 Establish an executive management position with administrative and oversight responsibilities to oversee specialized workforce training programs. Employment will be shared between the Department of Commerce and Board of Regents. 29-3 Approval for all viable workforce projects will come from the Secretary of Commerce and the President & CEO of the Board of Regents. 29-4 Create an executive management position over workforce development at each postsecondary technical education institution that reports directly to the President of the respective institution to design and implement customized workforce training. 29-5 Create an infrastructure that establishes a seamless partnership between the Regional Directors of Workforce Services (Commerce) and the executive management positions over workforce development at each postsecondary technical education institution. 29-6 Designate $12-15 million in funding that supports the customized training for this strategy. Strateqy 30 - Aliqn the education system with the needs of industry throuqh fundinq incentives and the tanqible partnerinq of state educational institutions with industry opportunities. 30.-1 Support the Postsecondary Technical Education Authority in aligning community and technical college programs with the demands of businesses. 30-2 Encourage a structural funding change that provides incentives for colleges to offer high-demand, high-cost courses and special funds allowed for expensive equipment purchases. 30-3 Support the Kansas Technical College and Vocational School Commission. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 13 . ,,'-,..' ~ ..- .,. 4e W!" .".. -- ... ... ... .,.. .. .. ... ... ... .,.. .,.. .,.. .,.. .,.. .,.. ... ... ... ... t;'" t;'" tJ1'" ~ fi\!'" r r' 41!3'" 41!3'" .~ 41!3'" 41!3'" ~ ~ ~ ~ 30-4 Routinely study and benchmark the alignment of all levels of the educational system with the demands of businesses. Strateqy 31 - Build capacity by retaininq and attractinQ a skilled and educated workforce. 31-1 Ensure the state equips primary and secondary students with the skills necessary to pursue education and employment opportunities, with the focus being on STEM (Science, Technology, Engineering, and Math) fields. 31-2 Support and facilitate business interaction with postsecondary students through scholarships, internships, and job shadowing. Businesses should be an active partner with educational institutions in regards to career curriculum, guidance, and opportunities and could be awarded with potential tax incentives or credits. 31-3 Provide incentives that encourage students to remain in Kansas for postsecondary education'and careers. 31-4 Design a Leadership Kansas-type program that incorporates entrepreneurial and leadership experience into our educational system. 31-5 Market business and career opportunities in K~nsas to all prospective individuals. 31-6 Market postsecondary technical education opportunities and careers by targeting students, parents, educators and counselors. 31-7 Study and develop workforce solutions for the aging population and immigrants. Strateqy 32 - Encouraqe and provide lifelonq learninq opportunities. 32-1 Provide an educational continuum that allows students of all ages to seamlessly transition through all levels of education and training. Technology and Innovation Mission - Utilize science and technology to leverage and support existing and new economic opportunities. Strateqy 33 - Address capital formation and access to capital markets on a local. state. and federal level. 33-1 Attract venture capital to Kansas through Heartland BioVentures, a partnership between KBA (Kansas Bioscience Authority) and KTEC (Kansas Technology Enterprise Corporation). 33-2 Support regional Angel investor networks by attracting and providing incentives for Angel investors. StrateQY 34 - Build a stronqer research and development base in Kansas. 34-1 Recruit, support, and retain eminent scholars in key areas of research strategically linked to science and technology-based economic advancement. 34-2 Improve competitiveness in pursuit of federal funding to support strategic research and development initiatives, similar to the efforts for the National Bio and Agro-Defense Facility (NBAF) and University of Kansas' cancer center designation. 14 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 34-3 Enhance and facilitate the commercialization of research by linking business and university systems in a variety of technologies. . StrateQY 35 - Address technoloQY .infrastructure needs throuQhout the state. 35-1 Develop and maintain maps of strategic technology assets in the state and identify those accessible through regional, national, and global networks. ... ... ... ... ..- ..- ... ... .. .. .. .. .. .. ... ... ... .- .- ... .. .. ~ ... ~ .- ~ ~ ~ ~ .It .It ,;/j ~ 35-2 Identify and address infrastructure gaps through collaborative cross~boundary relationships. 35-3 Increase industry access to public research infrastructure by developing an environment conducive to institution-industry interactions and addressing policy impediments. StrateQY 36 - Establish and maintain a technically-skilled workforce to fulfill the present and future needs of a vital, technoloQy-driven economy. 36-1 . Support policies and initiatives designed to advance the economic impact of research institutions on the state's economy, including a highly qualified workforce to support economic growth 36-2 Engage stakeholders including educational institutions, private sector representatives, subject matter experts and state leaders in forecasting opportunities, needs, and proactively aligning programs. StrateQY 37 - Create an enhanced entrepreneurial culture in Kansas. 37-1 Enhance or expand business assistance efforts for growing businesses between the start-up phase and early stage of business evolution. 37-2 Support and promote activities and educational initiatives at all levels to improve the understanding of innovation and to stimulate and advance leadership and entrepreneurial values, skills, and accomplishments. StrateQY 38 - Develop a national leadership role in Information Security and Information Assurance. 38-1 Support the Kansas National Guard's unique information security mission and the mission the legislature has given Fort Hays ~tate University in Information Assurance. 38-2 Use the developing Kansas military and higher education critical mass across the state to spin off businesses and enhance current businesses dependent on information assurance. StrateQY 39 - Enhance the Kansas Business Center (KBCI. 39-1 Expand cross-agency application development efforts and communication with the Information Network of Kansas to create a single online location for new and existing businesses to utilize for acquiring region-specific state and local resources and contacts; federal, state, and local regulatory compliance; and provide for an online environment designed to enhance the ability for Kansas businesses to thrive. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 15 Transportation Infrastructure ~ te' ~ ~ ~ ~ ~ if!" if!" if!" if!" ..- .". i"" .". ..... ~ If.:- If.:- If.:- If.:- ... ... W'" W'" W'" W'" W'" "'" ~ -- "'" ~ ~ ~ ~ ell'" ~ State Image/Branding Mission - Enhance the marketing/branding of Kansas. Strateqy 40 - Support a public/private partnership to brand the State of Kansas incorporatin!j: continuity, measurability, fundinq, partnerships, and focus. 40-1 To ensure the continuity of imaging/branding the state, create an Imaging/Branding Advisory Board with a public/private partnership to assist in the branding of the State of Kansas. The Board, comprised of cross-industry representation, would report to the Secretary of Commerce and assist in the development and execution of a targeted, proactive marketing and saies strategy that positions Kansas for aggressive competition in business investment, expansion opportunities and potential tourism opportunities, with appropriate balance and effective segmentation of the specific targets. 40-2 Devise a dedicated funding stream in concert with private investment to assist in the development of an aggressive statewide imaging/branding strategy and campaign. 40-3 The Secretary of Commerce and Kansas, Inc. President shall provide an annual assessment and review of the state's imaging/branding efforts and deliverables to the Kansas, Inc. Board of Directors. Economic Development Funding and Benchmarking Strateqy 41 - Examine the fundamental structure, methodoloqy and level of expenditures spent on economic development from the state level. . 41-1 Conduct a study examining what Kansas and surrounding states spend on economic development efforts. 41-2 Examine the level of economic development expenditures and consider increasing expenditures at least by the level of inflation. Strateqy 42 - Benchmark economic development information in Kansas. 42-1 Track, compile, and make available information pertaining to economic development efforts on an' agency, city, community, county, and statewide basis in Kansas. A master file should be maintained in an electronic format for public use. . Strateqy 43 - Support the core recommendations within Kansas Comprehensive Transportation Plan and their role in economic development efforts. 43-1 Preserve existing transportation infrastructure. 43-2 Align transportation to better support the Kansas economy. 43-3 Provide leadership and strategic investment for all modes of transportation. ~ 16 Leveraging our Foundations and Designing. the Future: A Kansas Economic Renaissance ~ .. .- """ ... @t 43-4 Ensure safety is a priority within the state's long-range transportation plan. '8 ~ .. . '" !(It !8 !8 .. '8 '8 '8 '8 . '8 '8 -8 . -8 1(8 1(8 1(8 1(8 . ~ ~ 1(8 @ @ @ @ @ @ (it @ e @ @ . !8 .. {e .. . Introduction to the 2007 Strategic Plan Preface Strategic thinking prepares you today for an uncertain tomorrow." Peter Drucker, the father of modern management explains the importance of strategic thinking: "Strategic planning is necessary precisely because we cannot forecast. Strategic planning does not deal with future decisions; it deals with the futurity of present decisions. Decisions exist only in the present, the question that faces the strategic decision maker is not what the organization should do tomorrow, it's what we have to do today to be ready for an uncertain tomorrow. Strategic thinking is the bridge that links where you are to where you want to be, it gives direction and credibility today and increases your potential for success tomorrow. . - John C. Maxwell, Thinking for a Change: 11 Ways Highly Successful People Approach Life and Work The mid-1980's were a period of harsh economic realities, and the state required sound strategy and action to recover and strategically build for the future. In recognition of these significant developments, the 1985 Kansas Legislature appropriated funding for a research study of economic deveiopment, which became known as the Redwood-Krider Report. Forty-six of. 50 recommendations were passed . addressing the totality of Kansas' economic development programs, including' capital formation, labor force, public infrastructure, arts programs, secondary education; tourism, debt financing, international trade, and a myriad of additional policy modifications intended to reverse downward economic trends: The number ot recommendations passed from the report spoke to the importance and urgency of strategically positioning the Kansas economy. The Redwood-Krider Report would become the basis for Kansas' current economic development strategic planning efforts. One of the recommendations from the Redwood-Krider report was the creation of Kansas, Inc., an independent, objective, and non-partisan agency designed to conduct economic development research and analysis with the goal of crafting policies and recommendations to ensure the state's ongoing strategic competitiveness for economic growth. Essentially, the creation of Kansas, Inc. formalized the economic development strategic planning process. Through strategic planning, research and analysis, and evaluation and assessment, Kansas, Inc. identifies policy options and builds consensus essential for concerted action on vital economic issues. Since its inception, Kansas, Inc. has formulated three statewide economic development strategic plans. Today, the Kansas economy looks much different than the 1980's, we have seen growth and expansion in several areas, and while there is more diversification, the economy is still vulnerable to the cyclical downturns that we will surely face in the future. Recognizing the importance of strategically addressing potential issues now, during a period of relatively good economic conditions, the Kansas, Inc. Board of Directors recommended once again formulating a strategic plan to better prepare for future economic conditions. The main elements of this report include: 1) An introduction and overview of the strategic planning process in Kansas. 2) An overview of our economies of the past, present, and future, as determined by the fundamental research and the business input provided throughout the process. 3) An overview and analysis of the vision, missions, strategies and recommendations brought forth during the Strategic Planning process. 4) An overview and analysis of trends and issues in the Kansas economy. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 17 In accordance with K.SA 74-8002, the 2007 Economic Development Strategic Plan, entitled Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance provides 43 strategies accomplished through 98 recommendations intended to strategically position Kansas for long-term economic growth. The Strategic.,plan is the result of a yearlong process, driven by sound, fundamental research and tested with business input throughout the state. Kansas, Inc. would like to gratefully acknowledge the many individuals and organizations that participated in the strategic planning process, inCluding members of the Board of Directors, Steering Committee, Statewide Cells, Academic and Policy Resource Team, and. the numerous stakeholders and other individuals who provided the input and expertise to build the vision, missions, strategies, and recommendations in this plan. This is truly a plan built and tested by Kansans, whose insight and expertise will help guide Kansas' economic development efforts into the future. .,. ~ .,. .,. WIllI WIllI WIllI WIllI WIllI WIllI .... "'" ~ ~ ~ .... ~ .... !If:II !If:II !If:II !If:II .... .. .. "'" .. .. "'" .. "'" A Brief History of Strategic Planning in Kansas The strategic planning process has been an important part of economic development efforts in Kansas over the past several years, beginning in 1986 with the Redwood-Krider Report. The process has produced several economic development initiatives during the past 20 years. The 1986 Redwood-Krider Report was seen by many as Kansas' first .economic development Strategic Plan. The Kansas economy was in a state of transition, and there was serious concern that Kansas could be losing its competitive edge in attracting economic development. The objective of this plan was to infiuence the direction of change toward a future economic structure more favorable to Kansans. The 1993 Strategic Plan, A Kansas Vision was designed to guide Kansas into a new economy, one characterized by a steadily increased standard of living and quality of life. While many goals from the Redwood-Krider Report had been met, th.e Kansas, Inc. Board recognized economic challenges were changing. The fundamental objectives of this plan were to enable Kansans to enjoy a higher standard of living and quality of life, and to ensure economic opportunities for all Kansans statewide. The 1997 Strategic Plan, A Kansas Vision for the 21" Century was designed to enable all Kansans to achieve a higher quality of life and standard of living, by fostering economic vitality statewide and by competing in the global economy. This plan maintained the overall mission and goals of its predecessor, with some revisions and greater focus and selectivity. . The 2001 Strategic Plan, Making the Knowledge Economy Work for All Kansans was designed to help stimulate a higher level of wage and employment growth in Kansas' rural, small town, suburban and urban areas for the long-run. This plan acknowledged market forces drive the economic growth of any region, and sound public policy playa vital role in supporting entrepreneurship and innovation by encouraging and fostering business development. The mission of the plan was to ensure the highest possible quality of life and standard of living by: fostering innovation and cooperation; creating a healthy economic environment; investing strategically in our people, comm.unities, and business; educating people for high skills jobs, and; competing successfully in the global economy. fIJIII ~ ... The Importance of Strategic Planning The State of Kansas has made a long:\erm commitment to the strategic planning process. The creation of Kansas, Inc. essentially institutionalized Redwood-Krider's efforts by formalizing the economic development strategic planning process. As an independent, objective, and non-partisan agency Kansas, Inc. is positioned to conduct economic development research and analysis with the goal of crafting policies and recommendations to ensure the state's ongoing strategic competitiveness for economic growth. .~ 18 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance ~ --- fipI .... QilII ~ ,.. ~ ~ ~ ~ ~ - ~ l8 .., ~ .., .., .., .., ~ ~ ~ ~ .~ ~ ~ ~ ~ e e e e e e e e e ~ ~ e e e e e e e e e e e e The popularity and use of strategic planning both in the corporate and government sectors is based upon several well grounded principles. First, the discipline of goal-setting requires an analytical approach that identifies strengths and weaknesses while clarifying how various programs and expenditures are linked to the achievement of objectives. Second, it provides an overall perspective that assists policymakers in understanding how individual pr.(l.9rams contribute to overall goals. Third, within economic development, a strategy helps define the activities that are included, which initiatives are central, and the clients who . 2 will be served. . A strategic approach to problem-solving will dictate choices, demand selectivity, and require clear priorities. The state's economic development programs cannot serve all interests and attempt to address every need articulated. Limited state resources for investment in economic development agencies and programs require choices and trade-oils. Leverage, return on investment, maximizing outcomes and targeted expenditures are among the characteristics that must-guide funding decisions.3 Finally, a Strategic Plan contributes to the evaluation process by providing the context for measuring performance. This allows policyrnakers and the public to understand the distinction between the means and ends' Kansas, Inc. Five-Year Cycle As depicted in Figure 1, Kansas, Inc. attempts to formulate the Strategic Plan approximately every five years. While Strategic Planning is our core mission, both the research and evaluation roles are equally as important to the process. Figure 1. Kansas, Inc. Five-Year Cycle .. " ~ III Strategic Planning jlJ R "h Strategic esearc PI' anmng ~ , Evaluation -~~- - -"- 2007 Strategic Planning 2 A Kansas Vision/or the 2r Century, The Strategic Plan/or Economic Development, Kansas, Inc., Janu~ 1997. J Ibid. 4 Ibid. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 19 . The process must be grounded in sound, fundamental research leading into the plan; fiil If.!I' ., '., ~ ., ~ ~ i!" i!" .. ~ ~ i:i" i:i" i:i" ... .. lie" ~' .-.. " 4P" .. 4ii" 4ii" ~ ~ ~ 4iIII 4iIII ti!'" ~ {I!JII {I!JII Kansas, Inc. is charged with identifying, building, and promoting a Strategic Plan for economic development efforts ,in the State of Kansas. To complement the Strategic Plan, Kansas, Inc. develops and implements a proactive and aggressive research agenda, which is used to identify and promote sound economic development st[.ategies and policies. This research provides the foundation for the Strategic Planning process. Through collaboration and outreach, with economic development entities and other potential partners, Kansas, Inc. conducts evaluation reviews and provides oversight of economic development programs to benchmark economic development efforts in Kansas. The evaluation and benchmarking stage usually begins following the completion and implementation of the Strategic Plan. As illustrated in Figure.1, many circumstances can cause these roles to overlap. Kansas was designed as a public-private instrumentality of state government, and is well-equipped with the flexibility and expertise to adapt to these situations and provide economic development strategic planning, research and analysis, and evaluation and benchmarking at any time during this cycle. Overview of the 2007 Strategic Planning Process Recognizing the importance of strategically addressing potential'economic issues in the present, during a period of relatively positive economic conditions, during FY 2006, the Kansas, Inc. Board of Directors recommended formulating a Strategic Plan to better prepare the State for future economic conditions. By design, this plan would be a grassroots effort, with creation and ownership by the citizens and leaders of Kansas, grounded in sound, fundamental research, and followed up with effective implementation and objective, unbiased evaluation and benchmarking. This would be the agency's fourth statewide economic development Strategic Plan. The Board developed the Strategic Planning process with several key principles in mind, realizing: . The plan must be guided by sound economic principles and concepts throughout the process; . The plan must be tested with business input throughout the state; . The plan must be analyzed by educational and economic policy expertise throughout the state; . Most importantly, the plan must be brought forth as a collaborative effort by the citizens of the State of Kansas. The People During December 2006, the Board kicked off the yearlong Strategic Planning process, an effort highlighted by the leadership and expertise of three primary groups of individuals, including: . The Statewide Steering Committee, a group consisting of business and industry leaders representing a balanced mix of small, intermediate, and large-scale enterprises; legislative members and other policymakers; and other stakeholders representing various statewide organizations. The Steering Gommittee represented a geographic mix of individuals from throughout the state and was charged with developing the vision and overall focus of the 2007 Strategic Planning process. ~ 20 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance i!'" ~ ... .. ... ... I ... I I .~ ;J -I . The Statewide Cell Chairs, a group consisting of business and industry leaders from 17 predetermined Geographic Cells throughout the state, was charged to organize and lead a group of individuals representing the diversity of their respective areas, The Statewide Cells provided .. - . .. !tt ,. -, . .. . .. . ~ .. .. .. .. . . . .. .. .. (I " It It 8 8 8 8 8 8 8 8 8 ~ .8 ~ ~ ~ ~ It It ( the grassroots business input and expertise throughout the state for the Strategic Planning process. . The Academic and' Policy Resource Team, a group' consisting of industry experts from various educational institutions and economic policy organizations throughout the state, was charged to provide the intellectual insight and expert analysis regarding the concepts produced from the Strategic Planning process. The Process The Strategic Planning process was designed as a yearlong process, highlighted by several meetin'gs consisting of working discussions. Figure 2 outlines the Strategic Planning process. Figure 2. 2007 Strategic Planning Process ~ 18+ Months of Research prior to the process," ~ Academic & Policy Resource Team - Provide insight throughout process Dee Jan 2006 Feb Strategic -+ Tactical I Apr May Jun JlIl Aug 2007 Mar Sep Oct Nov Dee Jan 2008 m k.3i~,,*,. ~ ....... During the initial meeting of the Steering Committee and Academic & Policy Resource Team, the overall direction and framework for the 'Strategic Planning process was set Following this meeting, participants were basically given a "blank sheet" at each Statewide Cell meeting, and the discussion centered on their input regarding the Kansas economy, within the initial fram'ework the Steering Committee .had provided. The Statewide Cell meetings provided a means to get business input regarding the initial concepts and overall direction of the Strategic Plan. Twenty-six meetings were held throughout the state, and the insight and expertise provided by participants at these meetings was critical to the development of the Strategic Plan. The business and industry leaders throughout the state provided input and a real-world test regarding the concepts and direction of the Strategic Plan. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 21 Throughout the Strategic Plann;ng process, the discussion and concepts brought forth during each meeting was continually refined, until the vision, missions, strategies, and recommendations were developed to address several potential economic development factors identified in the process. A year iater, the input and expertise of se1(.erai hundred Kansans have been captured and brought forth with the 2007 Strategic Plan. The Strategic Plan was approved by the Kansas, Inc. Board of Directors during November 2007 and presented to the Governor and Legislature during January 2008. The Places Seventeen individuals were identified from specific Geographic Cells throughout the state to organize and lead a group of individuals representing the diversity of their respective areas. Statewide Cell Chairs sourced individuals from around their area to provide representation from several communities, cities and counties. The Statewide Cells provided the grassroots business input for the Strategic Plan. The long- term vision of the Cells will be to continue growing and providing further input and expertise regarding economic development efforts in Kansas. Figure 3 depicts statewide participation in the Strategic Planning process. Figure 3. Strategic Planning Participation/Grassroots Ownership @ @ @ @ @ @ @ @ @ @@ @ @ ~ m @ @@ @ @ @@~L @ @ ~~~ @@ @ @ @ @ @@ @ @ l Manhattan @@@ @,. @ @ @ @ @@@ @@ @ @ @ T_.l ~~ @@@. - @@ .., Overland Park @ ...... @ @ @@ @@ @ @ @ @@ @ @ @ @ ..... ..... Emporia @ @ @ @ @ I@ @ @ @ @ @@ @ 11 @@ @ @@ lianIenCity @ @ @ @ @ _00 @@@ @@ @@ @@@ B""'.... ._City @ @ WIdOt. @ @ @ @ @@ @ @@ @ . @@ @ @@ @@ @ @ @ @ @ @ @@ @ WIn..... @ Parsons @ ~ @Geographicjst_eyHdeCells ~5teerinOCommRtee @Kansa5.Inc.8oardofOlrecl:ors @GrMSrootsDwnermlp The following locations were selected as Geographic Cells' Atchison, Dodge City, EI Dorado, Emporia, Garden City, Goodland, Great Bend, Hiiis, Hutchinson, Lawrence, Manhattan, Overland Park, Parsons, Saiina, Topeka, Wichita, and Winfield. 22 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance ~ ~ lie lie .... "lIIr":" W! le 'I?' ~ ~ 'I?' ~ .,.. ~ ~ .,.. .,.. \!1-" \!1-" @' ~ @' ~ @" ... @" @" 4ie' 4ie' """ """ ~ ~ .,.. .,.. ~ ~ ~ ~ ~ ~ .. .. , .. .. . . *- . .. .. . .. . .. .. .. .. .. .. .. . .. .. (t (t 8 8 8 , 8 8 8 (9 (8 (9 (9 i8 (8 e ~ . . . . 8 8 . Research Nearly two years prior to and throughout the Strategic Planning process, Kansas, Inc. embarked on an aggressive research agenda .tQ provide the groundwork for the Strategic Plan. The Board recognized that we must understand our current economic dynamics before we could begin to position ourselves for the future. Kansas, Inc. completed research on several topics pertinent to the Strategic Planning process, as illustrated in Table 1. Table 1. Kansas, Inc. Strategic Planning Research Evaluation A major component of Kansas, Inc.'s statutory requirements is periodically assessing the effectiveness of various economic development initiatives and entities throughout Kansas. On both sides of the 2007 Strategic Planning process, Kansas, Inc. will be evaluating and benchmarking economic development efforts in Kansas, including evaluations of the entities listed in Table 2. Table 2. Kansas, Inc. Evaluations' 5 The Kansas Department of Commerce and Network Kansas evaluations were completed during 2007. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 23 Priorities . Manufacturing - Aerospace and General . Professional, Scientific, and Technical Services . Rural Development and Agriculture . Bioscience . Energy and Natural Resources . Business and Tax Climate . Workforce Development . Technology and Innovation . State Image/Branding ... ..." ~ ~ e e t#' i" ~ ~ ~ ~ ~ "" ~ ~ ~ ~ f!" -- ~ f!" f!" 4P' ... ... ... ... W'" W'" .. W'" ... "'" .... .... t>" .... .... .... .... .... .... The Strategic Planning process was designed in part to bring forth several potential concepts and initiatives, which provided for insigl1lful discussion throughout the process. However, as with any statewide process of this magnitude, priorities must be set. Priorities were set where research and analysis lined up with the business input that was provided throughout the state. While many of these priorities are intertwined and inter-related, they generally fall into nine basic categories: Manufacturing; Professional, Scientific, and Technical Services; Rural Development and Agriculture; Bioscience; Energy and Natural Resources; Business and Tax Climate; Workforce Development; Technology and Innovation; and State Image/Branding. Figure 4 illustrates the Strategic Planning priorities. The Strategies and Recommendations provided in this Strategic Plan primarily address these nine priority areas. Figure 4. Strategic Planning Priorities 24 Leveraging our Foundations and Designing the Future: A Kansas Economic RenaisS8.nce .... .... ~ . . ~ . . . . . " " ~ ~ 8 " ~" ~ " ~ ~ ~ ~ !t !t " ~ ~ ~ ~ ~ ~ ~ ~ it ~ ~ ~ , , , ~ , ~ ~ ~ Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance Introduction Ren'ais'sance - a renewal of life, vigor, interest; rebirth; revival True to its definition, a renaissance brings to mind captivating thoughts of renewal, rebirth and revival. These words capture new ideas and opportunities as far as our imaginations can take us" We don't only think about what is, but we think about what could be - where we could go, what could be. . . the possibilities are endless." Applied to an economic setting, it challenges us to think beyond what we are currently doing, which is the status quo" What could we be doing, how could we do it better. . . A renaissance in economic.terms will challenge the status quo with. changes that may be difficult, but they can bring opportunities to the states that embrace them. Making these decisions during harsh economic conditions can be considerably easier than making them during periods of relatively good economic conditions, because during harsh times we are forced to make the difficult decisions. What if we could strategically position ourselves during a period of relatively good economic conditions to better prepare ourselves for future economic downturns? Why not proactively address the potential economic downturns of tomorrow with the strategic decisions of today? The economy as a whole is performing relatively well today; however, the future economic downturns of tomorrow are inevitable. We must decide if we want to address the issues brought forth in this Strategic Plan with the strategies of today or the reactions of tomorrow. Overview A basic understanding of our economies of the past, present and future, as determined by the fundamental research and business input provided throughout the process can provide perspective on the major trends and issues affecting the economy.' This analysis is essential to the Strategic Planning process. When we refer to how economic trends are affecting the Kansas economy, our main concern is how they are impacting individuals and businesses in Kansas.6 Knowing where we have been, where we are, and where we are going will assist our public and private leaders in making decisions that will notably increase business and personal wealth and improve our quality of life by focusing on our inherent and emerging strengths. The following section illustrates our economies of the past, present and future with Figures 5 through 12. .6 Krider, Charles, Hurd, Genna, and Dane Hanson. Trends in the Kansas Economy 1985 - 2006, Iilstitute for Policy and Socia! Research, University afKansas for Kansas, Inc., August 2006. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 25 Economy of our Past ~ e e e e . Historically, Kansas was built on three primary industries that drove the state's economy - agriculture, oil and gas, and the aerospace ind1J.stry, as depicted in Figure 5. These industries built the foundation of the Kansas economy, and while they remain inherent strengths, they are changing as we transition into an integrated global economy. These industries are also market sensitive in nature, and therefore economically cyclical, which means they are vulnerable to the forces of supply and demand. . 26 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance . !f,'" t- Ie' t- <<P' t- .. .. ... .. .. t'" ... t'" ... t'" t'" t'" '" '" '" .. ... ... ... .,.. .,.. ~ .. .. .. .. .. -- \pi i.-- Throughout the years, these industries provided diversification for the Kansas economy, functioning mostly independent from each other - where a downturn in one industry would not necessarily impact the others, but a downturn of all would be devastating to our economy. In many ways, today's integrated global economy has changed these characteristics. Figure 5. Economy of our Past Present Economy Our present economy has evolved.from our three primary industries of the past - agriculture, oil and gas, and manufacturing - into a handful of inherent and emerging strengths that can position the Kansas economy to compete in a global marketplace. These strengths include: rural development and agriculture; energy and natural resources; manufacturing - aerospace and general; professional, scientific, and technical services, and bioscience. Figure 6 depicts our present economy. Figure 6. Present Economy ~ . " . " . " 8 . . " ~ 8 8 8 ~ ~ ~ !& ~ ~ ~ ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ t & Rural Development and Agriculture - While the agriculture industry has drastically changed over the years, it continues to maintain an important role in the Kansas economy. The application of new technology has increased productivity while eliminating the need foradditionallaborers. New opportunities continue to arise due to the application of information, technology, biotechnology, alternative energy and other resources. Agricultural policy is primarily set on a federal level, and increased global competition will continue to influence producers to adapt more than ever to changing global conditions. Realistically, it is unlikely that we going to repopulate and grow rural Kansas with the agriculture industry alone; and state-level efforts must be focused on rural development to help rebuild rural Kansas. Even with these efforts, we wiil not save every community. Rural areas will continue to deal with a variety of issues, such as capital, access, leadership, workforce shortages, out-migration, and available services and jobs; however, rural areas do have several opportunities in regards to quality of life, community partnerships, and wealth transfer potential. Energy and Natural Resources - Though global economic forces continue to influence the oil and gas industry, it has maintained an important role in the Kansas economy. In recent years, market forces have increased prices, production and employment in this industry. We must use our current energy assets to build a bridge to future energy opportunities, while factoring in global economic forces, alternative and renewable energies, conservation, environmental concerns, societal factors and other issues that continue to shape our energy needs. Kansas also possesses several inherent natural resources besides oil and gas. Both surface water in reservoirs and ground water in the Ogallala Aquifer are important resources in the Kansas economy. In many areas the depletion of water resources is becoming an issue, and we must preserve and maintain these important resources. Manufacturing - Aerospace and General - Global competition and other changing factors continue to influence the manufacturing industry, but it remains an important part of the Kansas economy. Kansas has inherent strengths in aerospace manufacturing throughout the state, including training, research, and industry cluster dynamics. Expertise in composites and avionics are also major strengths for the state. Aerospace is becoming an increasingly global industry and Kansas is well-positioned for these opportunities. Kansas also has inherent strengths in general manufacturing throughout the state. Small, medium, and large scale manufacturers are located throughout the state in both rural and urban areas. While the U.S. as a whole has seen a decline in manufacturing employment, Kansas has remained relatively stable. Kansas may not be able to compete on a global wage basis, so we must find other ways to compete, such as through technology and higher-skilled occupations. . Professional, Scientific, and Technical Services - The service sector consists of two distinct types of services. Traditional support or rooftop entities provide services such as hospitality, food service, mechanics and health care. While rooftop entities are important to the economy and follow economic growth, they are not in themselves considered a core competency. Stand-alone entities provide services such as engineering, communication's, technology and financial services. These entities in the professional, scientific and technical services are inherent and emerging strengths, and considered one of the primary drivers of the Kansas economy. Large concentrations of service entities are located in metropolitan areas throughout the state and will continue to drive the economy. Bioscience - Bioscience continues to emerge as an important industry in the Kansas economy. Opportunities in biosciences span several industries with inherent strengths in Kansas. The state has recognized opportunities in the bioscience industry with the creation of the Kansas Bioscience Authority (KBA) to gUide the state's investment of over $580 million in these industries. Several inherent strengths already exist in the biosciences, including: animal health, human health, crop science and bio-fuels. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 27 Industry Integration Historically, while agriculture, oil and gas, and manufacturing have provided diversification within the Kansas economy, they functioned mostly independent from each other with little integration - where a downturn in one industry would not necessarily impact the others, but a downturn of all would be devastating to our economy. Current and past Administrations and Legislatures have recognized the potential opportunities that exist if the state begins to integrate its inherent and emerging strengths. Both the state and businesses have taken steps to begin this process to help position the Kansas economy to compete in a global marketplace. The overlap in Figures 7 and 8 illustrates various levels of industry integration. Figure 7. Industry Integration Figure 8. Industry Integration (with Bioscience) There are many examples where inherent and emerging strengths have been integrated across industries. Professional, Scientific, and Technical Services are integrating with opportunities in Bioscience, Rural Development, and Manufacturing; Bioscience is integrating with opportunities in Agriculture and Energy, and so forth. Areas of potential integration are illustrated in the figures as overlap. . Figure 8 illustrates potential industry integration with the Bioscience industry. This industry is relatively new, and opportunities for integration within the biosciences will continue to grow as the industry becomes more established in Kansas. Though not illustrated by these figures, all industries, inherent strengths and opportunities have the potential for integration, depending onJ~.e business and application. Ultimately, complete integration will help achieve the transformation into the global economy. ' 28 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance ~ ""'" 'lr i1" .. ~ ~ ~ iiI' ~ "" "" "" i- i- ... W- ... W- i'" W- i- i'" i- i'" i- .i- ir"' ir"' ~ir"' .... ... ir"' ... ... ... ~ ... ... ... ... ... ... ... ~.... ~ . . . . . . ~ ~ ~ ~ ~ \I ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ t i ~ ~ ~ ~ ~ ~ ~ . ~ ~ . . . t ~ ~ ~ Transitioning into the Integrated Global Economy - SustainabiJity The objective of integrating inherent strengths and industries is sustainability. Sustainability allows us to transcend economic cycles. . b;ansas must strategically position our inherent strengths to achieve complete integration and enhance our diversified economy. Achieving a fully integrated, differentiated economy will position our inherent strengths such that they will leverage each other. Utilizing entrepreneurship and innovation will increase productivity and leveraging. These characteristics of businesses and individuals can bring together our inherent strengths and be used to create synergy within the economy. Transitioning into the integrated global economy is illustrated in Figure 9. Figure 9. Transitioning into the Integrated Global Economy Rural Devel Agricul Natural, urces One of the objectives of achieving a diversified economy is to have several businesses with various levels of integration across industries to maximize the success of their businesses. This is how the Kansas economy must be strategically positioned. i " i if I I il While some businesses have taken steps to integrate two, three, four, or even five of our inherent strengths, overall Kansas has much work to do as a state to achieve this goal. Figure 10 illustrates various Kansas businesses and where they may fit into the integrated global economy. Companies in the overlapping areas have already integrated some of Kansas' strengths. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 29 i i I I II Rural De & Agri ... fE'I "'" "'" "'" W- W- -- ~ W- ~ ~ .... Wi .... 4i!"" .... "'" Ii"" .... -- .... .... .... .... ""' .... ""' .... .... ""' ~ ~ ~ ~ ~ """ ~ "'" ... ..... .... ... .].... Figure 10. Transitioning into the Integrated Global Economy (with examples) Profe~ipg~J~~"jerlific ~': ~...,...';f~,-,,>1I\i.~ ti:'~f.1lI:~ Environment for Opportunity Kansas must develop an environment to encourage entrepreneurship and innovation to support our inherent strengths. This environment must support ali aspects of the business environment and the overali Kansas economy. Supporting factors include workforce development. business and tax climate, image, education, infrastructure, technology and innovation, and the entrepreneurship initiative. While we have these aspects in our current environment, there lacks a framework to efficiently coordinate these resources. We must provide a framework that focuses these supporting fields into a coordinated environment that wili foster economic growth. A focused and weli-pianned framework will provide the environment for opportunity to assist in growing the Kansas economy, particularly with limited resources. Figure 11 illustrates the framework for the Environment for Opportunity. Figure 11. Environment for Opportunity 30 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 'lI . . . . . . . . . " ~ . " . " ~ " ~ . it it ~ ~ ~ ~ ft ~ , fe , I ~ I I ~ ~ ~ ~ it ~ ~ ~ it Strength Through Aligned Resources To foster economic growth, Kansas must focus its inherent strengths to achieve complete integration of its diversified industries and,~sources within a well-planned environment for opportunity. This is illustrated"in Figure 12. The ultimate goal of this model is to foster and create businesses that integrate several of Kansas' inherent strengths. These businesses would be iocated in the center of this figure _ representing Kansas' Strength Through Aligned Resources. When this has been successfully achieved on a broad scale, Kansas will have taken hold of our competitive advantages and truly be positioned to compete for capital and talent while providing a quality of life that all Kansans hold dear. Figure 12. Strength Through Aligned Resources Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 31 32 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance f?' WJ' WJ' ., ., t?' t?' t1 @'" @'" @'" tJ!'" tl'" "" tl'" t:" "" t'1" t'1" t'1" "" t'" t'1" ... .. ... ... .. ... t!'" ... t;"" t!'" t!'" t'" ~ ~ tJ'" ~ ~ ~ ~ .".. ~ Defining the Vision Kansans will notably increase business and personal wealth and improve our quality of life by focusing on our inherent and emerging strengths. Every morning in Africa, a gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed. Every morning a lion wakes up. It knows it must outrun the slowest gazelle or it will starve to death. It doesn't matter whether you are a lion or a gazelle. When the sun comes up, you better start running. - African proverb from Thomas Friedman's The World is Flat, A Brief History of the 21" Century Simple, yet true words relevant to developing the vision for economic development strategy - essentially the only thing that matters is that we start running if we want to survive. A vision statement establishes the focal point and draws the parameters within an economic development strategy. It must be guided by the aspirations of an area's citizens and leaders, accurately reflecting the community's strengths and weaknesses, values, future needs, and changing economic and social conditions. These elements - considered individually and as a whole, are unique to each community and the state. Consequently the strategies and recommendations must be developed to reflect these fundamentally different characteristics. If this relationship is truly understood and appreciated, the likelihood that appropriate initiatives are developed is greatly enhanced. 7 "Kansans will notably increase business and personal wealth and improve our quality of life by focusing on our inherent and emerging strengths" was articulated from the discussion and concepts presented throughout the Strategic Planning process. The combined efforts of many Kansans, including Steering Committee members, Statewide Cell Chairs and members and Academic and Policy Resource Team members provided the input and expertise necessary to develop a statewide vision for economic development Culminating with the mid-term Strategic Planning meeting, the discussion and concepts from stakeholders provided the foundation to mold the vision statement During the discussions several pertinent topics were suggested, including: creating a business and educational environment that embraces change through innovation and entrepreneurship; leveraging science and technology to build and enhance our traditional and emerging strengths; developing a diversified economy where individuals aspire to live, work, and learn; maintaining and promoting a viable, energetic and sustainable quality of life; developing a diversified, sustainable, and dynamic economy; focusing and supporting state initiatives which understand and partner with rural and urban stakeholders; business friendly; economic growth; self image; people; entrepreneurial; invest in Kansas; partnerships; don't forget what got us here; and many more. A key point noted during the process of defining the vision statement was that it is clearly difficult to agree on how to word such a statement, given the number of stakeholders involved in the process and its importance to overall economic development efforts. However, 'through the discussion, it is also clear that regardless of how the vision statement is worded, the group agreed on the overall focus and direction of the 2007 Strategic Plan -in other wor<!s, it doesn't matter whether you are the lion or gazelle, let's start running. This was a grass roots effort to bring forth an economic development vision for Kansas by its citizens, business and industry leaders, legislative members, policy makers, and stakeholders from state agencies, institutions and organizations for the betterment of all Kansans. The missions, strategies, and recommendations outlined in this plan provide the means to accomplish this vision. 7 A Kansas Vision, The 1993 Kansas Economic Development Strategy, Kansas, Inc., February 1993. . . . '- ,. .. .. .. . . !I . (t (t !8 (t ., ., ., ., . !t , , , ~ ... '1'!1 ~ (t . ~ [t [t [t [t it t t t ~ t . . . . Manufacturing - Aerospace and General Mission - Promote the ongoing competitiveness and growth of the manufacturing industry in Kansas. Introduction Kansas has many manufacturers located throughout the state, including small-, medium-, and large- sized firms; these businesses employ from a few to several hundred workers. Many are multi- generational businesses who have been here and want to stay The state must provide an environment for us to thrive and prosper - every business matters. - Statewide Cell members, 2007 Strategic Planning process Manufacturing has historically been one of the dominant sectors of the Kansas economy; however, in the' new integrated global economy technological advances are changing the face of many industries. Improvements in transportation and communications are allowing jobs in fields such as manufacturing to be relocated to cut costs, scientific innovations have led to higher productivity in many areas, and industries are becoming more or less important based on consumers' preferences. The rapid productivity gains made in U.S. manufacturing have greatly reduced the need for existing and new manufacturing firms to hire large numbers of additional employees. While manufacturing employment has declined significantly in Kansas since 2000, it saw a net increase from 1990 to 2005. Manufacturing remains an important part of the Kansas economy. 8 Aerospace is an important part of the manufacturing industry in Kansas. Historically, training and research have been connected through a natural partnership between the research organization and the technical school. They are interdependent of each other, provided the research andlor new technology are applied to the production process. Aerospace is a cyclical industry, and while there is currently a strong world market, the industry's outlook can change quickly. A robust technical training and retraining initiative during a down cycle may provide businesses with the highly-skilled workforce they need when the industry's outlook improves. . Strateav 1 - Remain competitive in aerospace and general manufacturina through trained talent. 1-1 Provide funding and resources to support the state-of-the-art training center currently being constructed (Jabara/National Center for Aviation Training) and its training programs for jobs in Kansas. Recommend the state invest at least $5.5 million per year for the next six years ($33.0 million total) in infrastructure, equipment, and curriculum support. (addressed under 1-2) . 1-2 Develop and provide funding for original equipment manufacturers (OEM) and their local suppliers training and retraining efforts. Target a portion of economic development dollars for aviation and manufacturing talent development through a streamlined training fund program geared for today's companies and economy. Through business input, develop a program that assists manufacturing companies train workers through quick state approval and responsive systems. . The training and retraining of the current and future aerospace workforce is an important issue facing Kansas aerospace companies and their suppliers. The Kansas technical education system currently may not be equipped to meet this critical demand. Just as aerospace companies rely on public universities to ~ See Krider, p. 25. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 33 34 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance f'J' ff' fII' fII' ... ... .. ... ... .. ... ... ... r r r r r r r r r r r r r p p 1ft' P ". ". ,. ,. fP' #' fP' p ,. t- IP (II' (Ii' ~ provide engineering education, they must rely on public technical colleges to recruit and train their current and future workforce. The competitive national and global landscape of the industry will force aerospace companies to go elsewhere if Kansas cannot provide a technically-trained and highly-skilled workforce. The National Center for Aviation Training (NCA T) has been nearly 10 years in development and aerospace companies need the Center to provide them with the technologically-skilled workforce they need to remain competitive. . Aerospace payroll in Kansas is forecast to increase 8.9 percent annually. 9 According to the Final Report of the Commission on the Future of the U.S. Aerospace Industry, published in 2002, the five largest aerospace companies located in Wichita had a combined payroll of $2.3 billion. Aerospace employment is .forecast to generate approximately $223 million in tax revenues in 2007 as a result of direct employment and $1 billion in tax revenues in 2007 as a result of total employment. 10 Recruiting and training the workforce of the future is essential. Kansas aerospace companies have projected the need for thousands of new skilled workers in 2008 and beyond, with an additional 1 ,000 workers needed each year for the next five years. The current aerospace workforce is also rapidly a~ing, and retirement projections suggest we will need an additional 12,000 workers to replace the retirees. 1 To ensure we keep aerospace jobs, the additional jobs each aerospace job generates, and the ensuing tax revenues, Kansas must address the training and retraining of the aerospace workforce. The time is now to build upon and promote our inherent talents and synergies within the aerospace industry. StrateQV 2 - Continue commitment to aviation research. 2-1 Continue to support advanced research and development through ongoing funding of $5.0 million per year to further develop the National Institute for Aviation Research (NIAR) at Wichita State University (WSU) and its proven expertise in existing and new products in aviation technology. A strong aerospace research infrastructure is critical to the short- and long-term competitiveness of the aerospace industry in Kansas. The state has recognized this competitive advantage through prior funding of the National Institute of Aviation Research at Wichita State University since 2002. NIAR's research projects have helped the Kansas aerospace industry reduce cycle time-to-market, reduce costs, enhance quality and safety for improved competitiveness, develop new products and services, and retain and create jobs. . The state's commitment to funding NIAR has also helped leverage federal funding. NIAR is a Federal Aviation Administration (FAA) Center of Excellence for Advanced Materials, A National Aeronautics and Space Administration (NASA) National Center for Advance Materials Performance, and a Department of Defense Center of Excellence for Aging Aircraft. NIAR is currently providing the FAA with approximately 70 percent of the research in the area of composites and advanced materials. 12 . The aerospace industry cluster in Kansas has the unique opportunity to be a world leader in transferring NIAR's cutting-edge aerospace research into technical training programming for the Kansas aerospace industry: This uniqueness can help Kansas capture the value of the aerospace industry through applied research, commercialization, and workforce training. . 9 Harrah, Janet, Miller, Steven, and Anne Gallagher. Kansas Aerospace Industry Forecast, Center for Economic Development and Business Research, W. Frank Barton School of Business , Wichita State University for Kansas, Inc., May 2006. 10 These totals include indirect business taxes, and state sales tax and personal income tax generated by employee payroll. 11 KansasTechnical Training Initiative. I: National Institute of Aviation Research, Wichita State University. 'l\I . " ~ ~ ~. .~ " ~ . . ~ . ~ ~ ~ ~ " ~ ~ ~ " . " !& " ~ ~ ~ ~ ~ ~ .~ ~ ~ ~ ~ ~ ~ ~ .~ ~ 8 8 it it Strate~v 3 - Compete for aerospace and ~eneral manufacturinq expansion . proiects. 3-1 Develop a long-term economic development funding strategy for manufacturing projects.' Create a competitive state policy to address major state incentives for jobs and/or facilities for aerospace and manufacturers bringing high-wage jobs and infrastructure to Kansas. Kansas is at a disadvantage when competing for larger new projects and expansions. Other states, including Alabama, Florida, Georgia, Mississippi, New Mexico, North Carolina, Oklahoma, South Carolina, and Texas, as well as other countries including Brazil, Canada, China, Japan, Malaysia, Mexico, and United Kingdom are providing large incentives for new manufacturing projects and jobs, specifically in the aerospace industry. Even with a competitive business climate and certain inherent strengths in Kansas, companies are increasingly expecting up front incentives to show quicker facility profit and imp,roved return on investment The competition is real for these prime jobs, and it is intensifying. 3 The aerospace industry is an important part of the Kansas economy, and the state must continue to invest as a partner with aerospace companies as their growth continues to put pressure on facilities and infrastructure. While recruiting new businesses to the state is important to growing the Kansas economy, we must not ignore the aerospace industry and other manufacturers currently located in the state. K~nsas must have a strategy to compete with other states and countries offering large incentives. Strateav 4 - Develop incentives for attractina capital investment, iob qrowth, and diversification within the manufacturina sector. 4-1 Develop a business and tax climate, workforce development system, and technology infrastructure to address the needs of both small- and broad-based manufacturers throughout the state. Beyond specific initiatives for the manufacturing industry, the state must provide an overall business climate that is competitive and conducive for the growth of all businesses, a workforce development system that is responsive to business demands, and a technology infrastructure that supports and leverages economic opportunities. Retaining and attracting businesses is important for the growth and sustainability of the Kansas economy. State,initiatives must address the needs of both small- and broad-based businesses throughout the state. The state has several incentive programs designed t6 retain and attract firms, but the primary beneficiaries of these programs tend to be larger companies. Job creation in small businesses likely do not occur if incentives are not available, due to the lack of access to traditional capital markets and the absence of specialized managerial skills necessary to facilitate capital creation. Incentives directed at small businesses would encourage investment and job growth. The Kansas economic development strategy must recognize all types of businesses and their importance to the economy. 1.1 Greater Wichita Economic Development Coalition. Leveraging our Foundations and Designing the Future: A ~ansas EconomicRenaissance 35 Strateqy 5 - Understand the needs and issues of the manufacturinq sector in reqards to workforce, infrastructure. research and development. and the attraction and retention of manufacturers of all sizes. t!f" ~ ~ ~ ~ .. .. (pi .. (pi (pi ~ .. .. ... .. ... ... ... ... ... ... .. .. .. .. ... ... (pi ..... ... ... .... .... .... 5-1 Explore the development of an interactive, electronic portal with the Information Network of Kansas (INK) 14 designed to capture and provide access to information pertinent to the manufacturing sector, in particular allowing both small and large manufacturers, as well as the state, to monitor the sector vitality and better anticipate the needs and issues associated with the sector. The availability of information is critical to the manufacturing sector as technological advances are quickly changing the landscape of many industries. Since 1990', the U.S. manufacturing sector as a whole has seen a drastic decrease in employment - nearly 2.5 million jobs have disappeared; while Kansas manufacturing employment has actually increased by several thousand during the same time period. 15 Several factors including global competition, trade policies, technology, financing, communication and transportation have made it increasingly difficult for domestic manufacturers to compete in a world economy. The state partnering with the manufacturing sector could provide a means of better communication, market data, and other information pertinent to the sector. While larger businesses may have access to these types of resources, smaller businesses may benefit from the synergies developed through this partnership. Creating a task force consisting of both public and private sector representatives could explore the potential opportunities within this strategy. The Indicators of the Kansas Economy (IKE) ,. may also provide expansion opportunities to address this strategy. ~ 36 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance ... ... .... .... .... ..... ... tal- 14 The Infonnation Network afKansas was created'to provide Kansans equal electronic enterprise access to state, county, local, and other public information, as a government service administered for the good of the public, while benefiting from the entrepreneurial spirit and efficiencies found in private industry. IS See Krider, p. 25.- IG The IKE project concept is the result of a perceived need for a single source of objective and consistent information that allows public and private leadership, as well as all interested Kansans to better understand the economy and enhance decision~making capacity. The advancement of IKE has created the potential for an online IKE database, which will provide interactive access to economic tools used to analyze the Kansas economy. Kansas, Inc. is currently pursing these opportunities. !W ~ .,. ~ . . . . .. .. . .. .. . .. .. .. .. .. ~ .. . .. . . - ~ ~ ~ ~ ~ ~ e ~ it e ~ e ~ e e ~ ~ . '- . Rural Development and Agriculture Mission - Enhance the-prosperity of rural Kansas by developing innovative solutions recognizing local and regional strengths to ensure the quality of life in rural areas. Introduction Rural development is not a one size fits all solution - some areas are going to be successful and some are not. The attitude and actions of the community members will determine their success - We cannot legislate this. ' , - Statewide Cell members, 2007 Strategic Planning process Entrepreneurship is the new focal point for rural dev~lopment For much of the past half century, rural development has been driven by twin incentives aimed at business recruitment and retention. This strategy is no longer working so well, however, for one simple reason- globalization. 17 Farmers and ranchers generate revenues of nearly $10 billion per year from grain production and livestock operations. While this is substantial, as the Kansas economy grows, the portion of gross domestic product by state attributed to agriculture continues to decline in percentage. In rural counties with little other industry, agriculture remains the primary generator of economic activity. The total impact of agriculture on the state's economy depends upon how one defines it If the term agribusiness is used, encompassing the entire range of related food and fiber industries using input supply, agricultural production, commodity processing, food manufacturing and food distribution, the.impact of agriculture on the Kansas economy gains in importance to as much as 20 percent of the state's total annual economy. 16 Over time, the agriculture industry has continued to see increased productivity through the application of new technologies and innovative solutions. Increased productivity has contributed to the out-migration of actual producers, and while there are now fewer producers, the value of farm production has continued to trend upwards. During the past 40 years, the number of farms in Kansas has declined from approximately 95,000 to 64,000. This phenomenon is not specific to Kansas only, it is occurring on a national level. The depopulation of the agriculture sector will continue and to suggest otherwise may be counter to the economic realities faced in this sector. It is unlikely that we will repopulate and grow rural Kansas with the agriculture industry, and state-level efforts must be focused on rural development to help rebuild rural Kansas. Even with these efforts, we will not save every community. Rural areas will continue to deal with a variety of issues, such as capital, access, leadership, workforce shortages, out-migration, and available services and jobs; however, rural areas do have several opportunities in regards to quality of life, community partnerships, and wealth . transfer potential. We must focus our efforts on rural development and entrepreneurship to assist rural areas. Strate~y 6 - Create a rural development model that provides a holistic, inte~rated approach based on four key pillars (capital, access, leadership, and -'benchmarkinQl. The model should use incentives as the enQine that drives inte~ration. 17 Mark Drabenslott, Center for the Study of Rural America, Federal Reserve Bank afKansas City. I~ Mintert, James, Woolverton, Michael, Kastens, Terry, and John Leatherman. Agriculture Commodities Future: Assess Competitive Th,:eats to the Kansas Economy, Department of Agricultural Economics, Kansas State University for Kansas, fuc., January 2006. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 37 38 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance r .~ tIl tIl tIl fJI fJI fJI fJI fJI fJI .. .. .. .. .. .. ... ~ ~ ~ ... ... (l!II ... ... ... ... .. (l!II .. .... .... .... ... t- .... .... .... ... ... pi! """ .~ Since moving the Agricultural Marketing Division from the Department of Agriculture to the Department of Commerce (Commerce) in the mid-1990's, Kansas has tried several innovative means to enhance both agriculture and rural economies. The basic concept behind the move was designed to capture the inherent strengths and synergies hQlJsed at Commerce. This arrangement has worked fairly well at times, and at times the coordination or leveraging effect has not been o~twardly visible. Since the move, both the Legislature and ensuing Administrations have worked to identify and provide new initiatives addressing rural development issues. Strategy 6 outlines a rural development model based on capital, access, leadership and benchmarking, using incentives as the engine that drives integration to address rural development issues in Kansas. 6-1 The Office of Rural Opportunity should be restructured and positioned at the highest possible level to become the centerpiece of a new integrated rural development structure. The Office will be recognized as the lead agency for rural development in Kansas with a mission to provide an integrated, coordinated and seamless approach for all rural development initiatives. The Office will develop a transparent, clearly understood methodology built around incentives to drive integration of the key pillars (capital, access, leadership, and benchmarking). Enhanced funding should be provided in the state budget for the administrative requirements of the Office. The Office of Rural Opportunity would be positioned at the highest possible level to denote the prominence of the Office as the centerpiece of Kansas' rural development structure. This would help facilitate visibility and,access to rural development initiatives. The Office would provide field staff to rural communities, cities, businesses or individuals for the purpose of more efficient and streamlined accessibility to state initiatives, such as community development, business development, housing and capacity building. Field staff would become experts with programs at all levels, including federal programs. The Office would provide continued communication during the start-up and maintenance phase of programs to sustain the communities, cities, businesses or individual momentum and activities. There.would be at least one field representative for each of Commerce's seven business development regions. While certain programs, grants and initiatives would not fall directly under the Office of Rural Opportunity's authority, its charge would be to develop a seamless structure that encourages and demands collaboration between all associated agencies and organizations. They would devise the. means and methods for navigating through all rural development opportunities. The Office of Rural Opportunity would be responsible for both follow-up and follow-through on all subsequent rural development initiatives. 6-2 Create a Division of Leadership within the Kansas Department of Agriculture, as capacity building or leadership must be a key component of rural development. Funding should be 'provided in the state budget for the administrative requirements of the Division. Any rural development structure that does not address the leadership component is destined to fail. The Department of Agriculture must also have an inherent role in rural development efforts in Kansas. The Division of Leadership 19 would provide that role. Its mission would be to identify and understand the necessary components of capacity building for local, regional, and state rural development efforts. While it would have the capacity to provide some training, in most cases it would not directly provide training, but rather it would provide assistance and develop a certified menu of training providers that meet their predetermined standards and the needs of communities and businesses looking to enhance their rural development opportunities. The menu of resources would include training such as Kansas 19 The Georgia Academy for Economic Development is a similar initiative that assists the State of Georgia's leaders in their economic development efforts by providing an understanding of the critical processes, strategies and components involved in improving their local and regional economies and achieving economic success in taday's global economy. accessed at: htto://www.e:eonliaacademv.ore: "19 - .. .. " .. .. .. .. . .. .. .. '8 ~ .. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e e e e ~ ~ e .~ ~ ~ ~ ~ ~ ~ ~ . . Communitie~20, Hometown Competitiveness Training", and others that could be recommended to regions, communities, cities, businesses or individuals. The Division would essentially facilitate interactions between the public and training entities to ensure the leadership and capacity building efforts were being delivered in an int]Ograted, coordinated and seamless approach. . 6-3 Develop a coordinated incentive structure to reward communities, businesses and individuals for using the new integrated structure. The Office of Rural Opportunity would develop the framework surrounding the incentive structure. A coordinated incentive structure developed to capture thresholds and assist in setting priorities for state grants and loans would be a powerful reinforcement for federal grants and loans. For Kansas, during FY 2006, the USDA awarded approximately $94 million in housing programs, $9 million in business programs, and $143 million in utilities programs." Given the potential federal funds available for rural development initiatives, any reinforcement from a state-level incentive structure could be beneficial to Kansas applicants. Kansas must become more competitive for federal dollars. Potential examples within the coordinated incentive structure include: completing a dedicated leadership process or some other capacity building program certified through the leadership component of the Department of Agriculture; completing a designated process with a field representative from the Office of ' Rural Opportunity; creating a community foundation that has actively worked to capture local wealth transfer; utilizing Network Kansas to measure and benchmark progress; and utilizing Rural Opportunity Zones. Ultimately, rural areas must be able to help themselves, and this incentive structure helps prioritize rural development efforts and gives rural areas access to the tools they need for revitalization. 6-4 Benchmark our efforts and progress in rural Kansas. Through marketing and awareness, rural areas will increase the visibility of successes and increase the awareness of their business atmosphere and lifestyle. Measuring the results of rural development efforts will help communities learn about the local and regional impacts of their efforts. Benchmarks provide a means to tell their story - a way to increase the visibility of their successes and the awareness of their business atmosphere and lifestyle. Rural development efforts are a product of those communities, and how they define success in areas such as capacity building, leadership, resources, and overall results provide a direct measure of the type of community the residents want it to become. The Office of Rural Opportunity could devise both the means for navigating through rural development opportunities and' design the benchmarks to assist communities in tracking their efforts. 6-5 Enhance funding to $1.0 million per year for the agricultural loan' portfolio within the Department of Commerce. The agricultural value-added loan portfolio, administered by the Department of Commerce, Agriculture Marketing Division is currently funded at a level of approximately $500,000 per year to assist agricultural producers and develop and expand agriculture in Kansas. Based on the direct and indirect contributions of Kansas agricultural producers and related agribusinesses, the overall economic impact of agriculture . on the state's economy was approximately $30.5 billion in 2003.23 While we can debate the overall financial impact of agriculture on the state, there is little doubt regarding its importance to the economy of I i i I I' I I " , 2U Founded in 2004 to build and fe-build community across Kansas by rebuilding the Public Square. one community at a time. The Public Square is the intersection offour sectors': business, education, healthlhuman service and government. Accessed at: htto://www.kscomm.net 2] HTC is a comprehensive approach to long-term rural community sustainability. This approach goes beyond the traditional tunnel vision of economic development. HTC helps the community to focus on four interrelated strategies that depend on each other for ultimate success _ . developing leaderShip; energizing entrepreneurs; engaging youth; and charitable giving. Accessed at: htto:l/www.htccommunitv.ofl! 22 USDA Rural Development has an $86 billion d.ollar portfolio of loans and they will administer nearly $16 billion in program loans, loan guarantees and grants through their programs. Accessed at httD://www.rurdev_usda.Qov . 23 See Mintert, p. 37. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 39 40 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance ff' fr fr ~ ~ .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ... ... ... ... ... ... ... ... .... .... .... .. ".. ".. ".. fit'" .... -- ",.. tr- IJti- fi'" ... -- fi"'II ....- Kansas. Therefore we recommend the agricultural loan portfolio be enhanced to $1.0 million per year to provide further assistance with these efforts. 6-6 Utilize and support the pote~ial of Rural Opportunity Zones to playa key role in incentives that would help communities invest in their own future with the state as a partner. Rural Opportunity Zones would essentially provide tax incentives to businesses that create jobs in rural . communities. The creation of Rural Opportunity Zones would accomplish two primary objectives: 1) The elimination of the previous Enterprise Zone Program; and 2) The creation of Opportunity Zone Tax Credits to provide incentives for job creation and capital investment in rural communities and counties. Currently, small businesses in rural areas cannot access the High Performance Incentive Program (HPIP) tax incentives because they cannot create enough jobs or capital investment. This is a disincentive for the growth of existing businesses and the recruitment of new businesses to rural Kansas. There are many facets to the concept of Rural Opportunity Zones: . Providing new tax incentives to communities and businesses to encourage investment in rural areas, instea'd of just providing incentives to larger commurities and businesses. . Establishing an application process and delivery methodology for the tax credits that allows communities, counties and regions to establish the boundaries of the Rural Opportunity Zones, rather than the prescriptive approach of the state establishing the boundaries. . Tax incentives that reward businesses and communities who exercised leadership, planning, cooperation, collaboration, and potentially the coordination of services. . Communities that clearly demonstrate deliberate and purposeful development planning efforts and actions would be eligible for the designation as a Rural Opportunity Zone. These zones could reinforce the need for benchmarking rural development efforts. StrateQV 7 - Address technoloQV infrastructure needs in rural Kansas. includinQ broadband, Internet access and wireless voice access. 7-1 Study, map and enhance the broadband infrastructure of the state. Increase broadband Internet access and the capacity to move large amounts of data securely. Urge the private sector to respond to broadband service gaps as they are identified. (addressed under 7-2) 7-2 Assure through regulator mechanisms such as eligible telecommunications carrier designation and a tax structure that rewards investment, that wireless coverage is available throughout Kansas. Whether rural communities flourish or become increasingly isolated may depend on how they exploit technology infrastructure such as broadband, Internet access, and wireless voice access. Today's business environment demands access to these technologies. Research has shown a link between infrastructure investments and economic growth, such as investments in highways and telecommunications acceleratin~ economic growth, or investments in information technology contributing to increased labor productivity. 2 . A major obstacle to development in rural communities is distance and connectivity, and technology provides a way to minimize these barriers. Without these amenities, large parts of rural Kansas will lose out on economic development, jobs and population. Technology such as broadband and wireless voice access must be considered as essential as traditional utility services. Through open access, competition 24 Orazem, Peter. The impact of High-Speed Internet Access on Local Economic Growth, The Center fOf Applied Economics, School of Business, University afKansas, August 2005. ~ . ~ .. .. !tt .. .,.) .. .. !8 .. .. . . .' .. .. .. . .. .. .. .. . !t e ~. .. . . . . . te . . ~ . . ~ ~ . ~ ~ and innovation at the federal and state level, rural communities and businesses can partner to develop these technologies. Understanding and mapping existing broadband infrastructure will assist both the public and private sectors in addressing the needs of rural Kansas. Regulator mechanisms and tax incentives could reward investment and facilitate further wireless coverage throughout the state. Strateqy 8 - Grow existinQ businesses and encouraqe the creation of new businesses in rural Kansas. 8-1 Encourage the ongoing use and support of Network Kansas to facilitate entrepreneurship, promote rural outsourcing rather than traditional outsourcing, develop value-added industries based on agricultural commodities, utilize regional strengths and cooperation, and develop proactive business succession efforts. The Kansas Center for Entrepreneurship (Network Kansas) was established in the Kansas Economic Growth Act (KEGA)25 of 2004. Network Kansas promotes an entrepreneurial environment throughout Kansas by connecting entrepreneurs and small business owners with resources. Rural policies built around entrepreneurship offer the greatest chance of helping rural regions. The key to adopting such policies; however, will be a concerted effort to better understand the links between entrepreneurship and regional economies, to inform policymakers of these benefits, and to develop a more systematic approach to supporting the unique needs of rural entrepreneurs'>6 As Network Kansas continues to facilitate entrepreneurship throughout Kansas, the Legislature should examine increasing the cap of $2.0 million per year on the Center for Entrepreneurship tax credit. Strateqy 9 - Kansas should remain a leadinq aqricultural state. 9-1 Policymakers can encourage state officials, agencies, farm organizations, and commodity groups to continue overseas market development and trade promotion programs. A key to any successful production operation, whether agriculture or otherwise, is effective marketing. Policymakers must assist producers with both the domestic and worldwide promotion and development of markets for agricultural products and services. Within the Department of Commerce, the Agriculture Marketing Division works to provide a range of financial and technical assistance to agricultural businesses, and the Trade Development Division works directly with Kansas companies to increase sales of products and services in international markets. Efforts to increase the profitability of producers and the agricultural goods they produce can be further facilitated through domestic and international sale's, coordinated marketing efforts, and professional services. Marketing to strengthen and expand current markets while attempting to create new markets is important to the agriculture industry in Kansas. 9-2 The state can assist local government in the development of bioterrorism contingency plans that strategize around anticipated disruptions by' providing guidance, technical assistance, needed financial resources, and overall coordination between the multiple jurisdictions likely to be involved. The potential seriousness of a bioterrorist attack on agriculture is an eminent threat to the Kansas economy. The dispersed nature of agriculture in Kansas would make total prevention prohibitively expensive and the severity of such an impact would primarily come from the widespread disruption of agricultural systems. State and local government snould be strongly encouraged to complete bioterrorist contingency plans that strategize around anticipated disruptions. The state can lead this effort by 2S KEGA was a comprehensive economic development act designed to meet the needs of the changing Kansas economy and introduce bold strategies to strengthen and stimulate the state's economy. 26 Drabenstott, Mark, Novak, Nancy, and Bridget Abraham. Main Streets of TomOTrow: Growing and Financing Rural Entrepreneurs _ A Conference Summary, Center for the Study of Rural America, Federal ReselVe Bank of Kansas City, Economic Review, 3rd Quarter 2003. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 41 42 Leveraging our Foundafjons and Designing the Future: A Kansas Economic Renaissance r ~ .- .- flII ... ... f'" f'" .. .. .. .. .. ... .. .. .. ... ... ... .. ... ... .... ... .... ... ... .... .... ... ... ... ..... , lJ'I'. ... ... ... .... ..... ~ ..... .... providing guidance, technical assistance, financial resources and overall coordination between the multiple jurisdictions likely to be involved. In many cases, local government units are the most likely to be affected - rural communities and low-population counties are the least likely to have the wherewithal to complete this task without consid,\1rable state involvement. 27 J 9-3 Ensure university research is aligned with ongoing and future opportunities in the application of strategic technologies such as genetic engineering, environmental solutions, and conservation technologies, with the intention to apply or commercialize these opportunities. University research and extension contribute to the continual productivity gains that have kept producers competitive while increasing their awareness and education levels. Universities must continue to create value with research and extension educational outreach programs while effectively communicating the benefits received from those activities. Future opportunities are well beyond production agriculture, aswe continually advance in areas such as biotechnology, genetic engineering, environmental solutions and conservation technologies. Our research institutions must be positioned to successfully develop and commercialize these opportunities to adapt to the changing social factors and demographics demanding these new strategic technologies. Examining best practices, aligning research with our state's core competencies, and the application of research through commercialization are all examples that must have economic development in mind as part of the end goal. Best practices include the North CaroHna Research Triangle Park, a model of innovation, education and economic development that has been applied throughout the world. 28 Our research institutions offer tremendous potential with their inherent strengths and capacity. We must take whatever steps necessary to ensure they can successfully capitalize on these opportunities. 21 See Mintert, p.37. 28 One of the oldest and largest science parks in North America, The Research Triangle Park (RTP) is a 7,000 acre development that is currently home to 157 companies employing over 39,000 full-time high-tech workers and an estimated 10,000 contract employees. Located at the core of the Raleigh.Ourham.Cary CSA (Combined Statistical Area), the Park is a globally prominent high-tech research and development center that serves as an economic driver for the region. Accessed at: htto://www.rtn.OTQ: . ~ .. . .. .. .. !18 .. .. .. \'8 1ft .. .. .. .. . .. .. .. .. .. .. . . .. . . . .. .. . ,. . .. .. .. .. (8 (8 . . . Professionat Scientific, and Technical Services Mission - Recognize and'support the role of services as a core industry in growing the Kansas economy. Introduction Our metropolitan areas are major economic drivers of this state - professional, scientific and technical services are leading the way in these areas - we must ensure that what they are doing right continues to be done right. - Statewide Cell Members, 2007 Strategic Planning process The service sector consists of two distinct types of services. Traditional support or rooftop entities provide services such as hospitality, food service and mechanics. While these entities are important to the economy and follow economic growth, they are not in themselves considered a core competency in the Kansas economy. Stand-alone entities provide services such as engineering, communications, technology and financial services. These entities in the professional, scientific and technical services are inherent and emerging strengths, and considered one of the primary drivers of the Kansas economy. Large concentrations of service entities are located in metropolitan areas throughout the state and will continue to drive the economy. The relative growth of sectors such as financial activities, health care and social assistance, and business services demonstrates that much of the state's growth in employment will come from service-providing industries.29 Kansas should mold its economic development initiatives around the stand-alone service entities including engineering firms, communications, technology, financial services and others. Traditional rooftop services such as hospitality, food service, mechanics and others will follow economic growth, but are not in and of themselves drivers of economic growth. The term "professional, scientific and technical services" is used to capture the breadth and depth of these services as proven economic drivers. Kansas has systematically lagged both the United States and the Plains region in key economic performance measures for at least the past quarter century... a few of the Kansas counties that comprise the Kansas City area - particularly Johnson County - ?re the economic engines helping to keep Kansas competitive with. the Plains region.3o The tourism industry is also addressed in this section. The tourism industry is an important sector of the Kansas economy, through both direct and indirect contributions. During 2004, core tourism31 directly contributed $4.2 billion in goods and services to customers, and non-core tourism contributed $1.4 billion in goods and services to the core tourism providers. 32 The military and government sectors are also important to the Kansas economy and addressed in this section. The military presence in Kansas contributes over $2 billion per year and several thousand jobs to the Kansas economy. While this section encompasses a broad range of service-related entities, each area contributes to the Kansas economy. and has specific needs that must be addressed. 29 See Krider, p. 25. 30 HaJJ, Art and Peter Orazem. A Brief Economic History of Kansas, 1969-2003: An Executive Summary for a Series of Reports. The Center for Applied Economics, School of BU.:iiness, University of Kansas, August 2005. 3\ Core tourism measures the size of the industry directly providing goods and services to the visitor, therefore, all indirect effects are excluded- these are part of other supplier industries such as wholesalers. The impact of capital investment is also excluded. J2 Global Insight. How important is Tourism in Kansas? The Tourism Satellite Account Perspective, Kansas Tourism in 2004. For the Kansas Department of Commerce. October 2006. - Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 43 44 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance .ft - fI fI fI fI " .. .. .. .. .. .. .. .. .. .. ... t1" t1" ... .. f1" ff f1'" f1" f1" fi'" fi'" fi'" f!" fi'" f!" f!'" ... t-' ~ ~ ~ ~ t!-' @ill' ti" ~ Strateqy 10 - Ensure all graduates are informed and prepared for professional, scientific, and technical service iobs in Kansas, particularly in STEM (Science, Technoloqy, Enq;neering, and Math) fields. 10-1 Develop partnerships between businesses and secondary educational institutions to design curriculum that prepares students for jobs in Kansas. Utilize successful career curriculum alignment programs, such as the Olathe 21" Century High Schools program and design a template for statewide application. Partnerships between businesses and secondary educational institutions can ensure students are prepared and informed regarding educational and career opportunities in Kansas. Programs that engrain businesses within the educational process ensure students are better prepared for the workforce. This also provides a connection between. students and businesses, creating a relevancy between their educational curriculum and their real-world opportunities. The Olathe 21" Century High Schools program33 was designed to provide educational programs with business involvement and partnerships. Programs are centered around the following criteria: making classroom learning relevant to the outside world, focusing on the global workplace, recognizing the broad- based role of technology, promoting the importance of citizenship and character, and providing fleXibility of schedule and interactive instructional methodology. Program examples include: aerospace and engineering, biotechnology/life sciences, computer systems networking, health career sciences, culinary arts, e-communication and many others. With this program students have opportunities to complete internships with businesses and work with college professors on various projects. These types of programs should be further developed as a template for statewide application. 10-2 Promote the statewide use and business involvement with the Kansas Career Pipeline to encourage student exploration into careers and educational paths in Kansas. Encourage contact with Kansas businesses through internships 'and job shadowing. The Kansas Career Pipeline (KCP)34 is an online assessment tool intended to match aptitudes and interests with in-demand careers and postsecondary institutions providing the relevant curriculum. Students can also be matched with businesses through e-mentors, summer.jobs, apprenticeships, job training, scholarships and eventual employment During the 2007 Legislative Session, $420,120 was appropriated for funding the KCP, contingent on a dollar-for-dollar match from business and industry partners. The sustainability of this program will depend on the long-term commitment of private industry and the state. Businesses must be encouraged to meet the match requirements. There must be . widespread involvement from the private sector to highlight career opportunities throughout Kansas and match students with the needs of businesses. STEM fields are visible in the KCP, as it focuses on careers in healthcare, biotechnology, technology, energy and manufacturing. Beyond the KCP, businesses should be encouraged to interact with students in Kansas through various other internship and job shadowing programs, orchestrated through educational institutions or other programs. Business interaction with students is critical to building our future workforce. JJ Olathe 21 ,I Century High Schools Program was developed out of necessity to attract and provide incentives for students to attend the new Olathe High School in early 2000. The program was designed based on community input, national research and student interest. Students began enrolling in the spring of2003. 34 Accessed at: httu://www.careemioeline.org ~ . . "" '" . . . . . '8 '8 . '8 '8 '8 (9 (9 (9 (9 (9 (9 (t (t (t ~ 8 8 8 . 8 8 8 8 ... 8 It 8 8 e 8 @ . ,. 10-3 Incorporate entrepreneurship, leadership, innovation and customer service training into our education system. The service sector is.a vital part of the Kansas economy. To be successful in this sector, the workforce must possess specific skills and competencies that are non-disciplinary and important to business opportunities. Entrepreneurship, leadership, innovation and customer service are skills that should be emphasized in our education system. Students must be exposed to their use and relevance in the workplace. Strateqy 11 - Differentiate Kansas as an entrepreneurial state and improve capital formation for the service industry. 11-1 Embrace technology and innovation to develop entrepreneurial and startup business opportunities in the service industry. Embracing technology and innovation can assist entrepreneurs with startup business opportunities in several ways. The state can embrace technology and innovation to provide services in a more efficient manner, by utilizing tools such as Network Kansas to provide entrepreneurs with the needed resources for the startup and growth of their businesses. This can improve information, minimize overhead costs and contribute to the long-term competitiveness of businesses. Streamlining resources will assist in the growth and creation of entrepreneurial and startup business opportunities in the service sector and other industries. Strateqy 12 - Support and develop tourism in both urban and rural areas. 12-1 Focus tourism initiatives through an aggressive marketing/branding plan based on both destination tourism and business input. Given our limited resources, tourism initiatives demand focus with an aggressive marketing/branding plan. The Kansas economy, its components, sectors and geographical regions could benefit from the potential of the tourism industry. Education regarding these potential opportunities will assist in gaining support of businesses, elected officials and citizens on the benefits of a successful tourism industry. While tourism and business initiatives may have different messages and target audiences for their products, the benefit of working together on some level can provide important synergies and cooperation that will provide a better overall marketing/branding plan. Business and tourism must work together to provide leadership and focus for a state marketing/branding plan. 12-2 Devise a dedicated funding stream to assist in developing tourism initiatives on a statewide basis through ~he collaboration of the state, associations and private industry organizations. More than $3 billion'S is spent each year by visitors to Kansas. The Kansas Department of Commerce, Travel and Tourism Division is charged with encouraging the traveling public to visit and travel within Kansas by promoting recreational, historic, and natural advantages of the state and its facilities. The Division's efforts include promotion to the travel media, group tour market, leisure travelers, and the international travel community. Travel and tourism initiatives are important to the Kansas economy. Kansas is not competitive in developing this industry and state spending has not kept pace with other . st8tes. Kansas must make this a priority and provide additional funding for marketing Kansas attractions, development of state parks and other attractions, and research on travel and tourism. Funding should be enhanced through a dedicated funding stream based on the collaboration of the state, associations and private industry organizations. 35 Kansas Department of Commerce, Division of Travel and Tourism. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 45 46 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance .- .. .. .. .. ... ... ... ... ... .- ... .. ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... .... .... .... .... .... .... .... .... .... .... .... .... ti'" ti'" ti'" (iIII StrateQY 13 - Address the needs of both the military and Qovernment services in Qeneral. 13-1 Fund the Governor's Military Council within the state budget at a level of $500,000 per year. The Council is charged with accommodating all military growth in the state and fostering additional military growth. A source of economic development often overlooked is the contribution of the military to the Kansas economy. Several military installations foster growth of the state's economy by increasing private sector jobs and overall economic well being, including: Forbes Field, Fort Leavenworth, Fort Riley, Kansas Army Ammunition Plant, McConnell Air Force Base, and Smokey Hills Weapons Range. The 2005 Base Realignment and Closure (BRAC)3. decisions, combined with decisions made by the Department of Defense regarding transformation, modularity and the global repositioning of military personnel and missions, the economic contribution of the military to the state is expected to be approximately $2.5 to $3.0 billion per year by 2012. While these figures are direct contributions, assuming a factor 2.5 for indirect impact, the total direct and indirect impact by 2012 is expected to be $8.75 to $10.5 billion per year.37 . The expected growth on Fort Riley by 2012 is an example of how growth of a military installation fosters private sector growth. On-Post growth of nearly 9,000 soldiers and 2,000 civilian positions is expected to generate 6,500 private sector jobs in the Fort Riley region, a 22 percent increase in Gross Regional Product, a 16 percent increase in disposable income in the region, and the requirement for an additional 400,000 square feet of retail space. In addition, the communities around Fort Riley are slated to build nearly 9,000 new housing units in a five-year span, experience an additional 16,000 automobiles on the roads, and increase the region's K-12 enrollment by 3,000 to 4,000 students.3. The military fosters growth of the state's economy by increasing private sector jobs and overall economic well-being. Ongoing funding for the ~overnor's Military Council must be addressed to accommodate and foster future military growth in the state. Previously, the Council has been funded by the state at a level of $500,000 per year, and in recent years funding has decreased. The Council has temporarily addressed budget shortfalls through a combination of local, state and federal funds. Given the success of the Council's initiatives and their impact on the state's economy, we must ensure adequate, ongoing state funding for this initiative. 13-2 Align government employment and compensation to be flexible and competitive with private labor markets. Government employment must be flexible and competitive )^lith private labor markets. The state has acknowledged these issues through the creation of the State Employee Pay Philosophy Task Force and the State Employee Compensation Oversight Commission.39 The Commission will present a new pay plan to the 2008 Legislature. The state must align employment and compensation with the private sector, and maintain funding to remain competitive for capable talent over the long-term. Within the bounds of the current state civil service system, a formal succession planning system should be established to ensure successful hand-off of all Commerce activities, in particular the business assistance function. Economic development is a relationship business, and any attempt to institutionalize Commerce's current relationships will promote its present and future success. 36 Congress established the 2005 BRAe Commission to ensure the integrity of the base closure and realignment process. While giving prioritY to the criteria of military value, the Commission took into account the human impact of the base closures and considered the possible economic, environmental, and other effects on the surrounding communities. . J7 Governor's Military Council. 381bid. 3V The State Employee Pay Philosophy Task Force was created by the 2007 Legislature and charged with tile development of a compensation philosophy for the State of Kansas. The Task Force developed the philosophical framework for the State Employee Compensation Oversight. Commission as the Commission works toward the development of a new pay plan for State employees. The State Employee Compensation Oversight Commission was created by the 2007 Legislature and charged with the development of a new pay plan for State employees to be presented to the 2008 Legislature. ~ ~ ~ . . ~ . - .. .. .. .. .. .. .. .. !(it .. .. .. . .. .. .. .. .. . .. .. .. .. .- .. .. .. >8- .. .. '8 '8 .. @ . /ij Energy and Natural Resources Missions - Energy - Implement a State Energy Plan that emphasizes growth value to producers and consumers; promotes energy efficiency and conservation; and promotes research and development for alternative energy technology. Water-Implement a State Water Plan that coordinates the management, conservation, and development of water resources by providing recommendations on how the state can best achieve the proper use and control of water resources. Introduction Kansas is rich with natural resources - we must be responsible stewards of these resources - without water and energy, we won't have economic development - Statewide Cell Members, 2007 Strategic Planning process The economy relies on a sustainable supply of energy and water for economic growth. Global forces continue to influence the oil and ga? industry, and it has maintained an important role in the Kansas economy. In recent years, market forces have increased prices, production and employment in this industry. We must use our current energy assets to build a bridge to future energy opportunities, while factoring in global economic forces, alternative and renewable energies, conservation, environmental concerns, societal factors and other issues that continue to shape our energy needs. We also possess several inherent natural resources besides oil and gas - both surface water in reservoirs and ground water in the Ogallala Aquifer are important resources in the Kansas economy. In many areas the depletion of water resources is becoming an issue, and we must preserve and maintain these important resources. Within the 2007 Strategic Planning process, many individuals provided input regarding energy and natural resources. The State understands the importance of energy and natural resources, and has charged specific entities with the strategic planning process for both energy and water. Several key individuals from those ,entities were included in the economic development Strategic Planning process, highlighting the importance of these resources to the Kansas economy. The state has charged the Kansas Energy Council (KEC) with the development of a comprehensive state energy plan that includes information about the state's energy resources and recommendations regarding long-term energy policy to the Governor, Legislature, and the Kansas Corporation Commission. The state has charged the Kansas Water Office with developing the Kansas Water Plan, and the Kansas Water Authority (KWA) approves the Plan. Implementation may be through legislation, funding or focus of existing agencies' programs. The Kansas Water Plan (KWP) is used by the State of Kansas to coordinate the management, conservation and development of the water resources of the state. Strateav 14- Adopt recommendations specific to economic development brouaht forth in both the State Enerqv Plan and the State Water Plan. . 14-1 Foster coordination between the State Energy Plan and the State Water Plan, A sustainable supply of energy and water is necessary for economic growth. These resources are inter- related, as we basically need one to produce the other, and sustainability through management, conservation and other efforts will significantly impact our economy. Many parts of Kansas are already dealing with these issues, and they will be an ongoing part of economic development efforts. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 47 48 Leveraging our Foundatio~s and Designing the Future: A Kansas Economic Renaissance C" f' f' f' .. ... '" .. '" ... '" ... '" -- "" ... ... ... .. ... ... ... tpo ... ... .. """ "'" .. """ """ """ """ """ """ ~ "-' "-' "-' ~ ..... ..... ~ tiIi' The State Energy Plan and State Water Plan must coordinate on some level to address and be aware of issues pertinent to both energy and water. Potential coordination at the Board member level could ensure both energy and water issugs were represented through the KEG and KWA. We must have an understanding of the relationship between energy and water, as the sustainability of these resources is critical to our future economic growth. StrateQY 15 - Kansas will become an energy processor (value-added) in a balanced manner. 15-1 Production, distribution and wholesale/retail sales must be a key component of our energy portfolio. (addressed under 15-3) 15-2 While conservation is a key component, we must use current energy assets to build a bridge to future energy opportunities. (addressed under 15-3) . 15-3 Kansas must add value in a collaborative manner in the areas of energy generation, refinery, transmission and storage, specifically addressing oil and natural gas, bio-fuels, wind and nuclear energy. ' Strategy 15 strategically addresses several aspects of the energy industry as discussed throughout the Strategic Planning process. Economically, there are many challenges associated with an evolving energy industry. We must become a value-added energy processor in a balanced manner. Oil and natural gas, nuclear energy and renewable energies are all changing our energy landscape as we move forward in a global economy. We can use our current energy assets to build a bridge to future energy opportunities, but we must have understanding and perspective regarding how long that bridge actually is. Regulations, competition and technology have created many opportunities and risks in the energy industry, and we must continue to adapt to these changes to remain competitive. Extensive lessons have been and will continue to be learned within electric, natural gas, oil and coal markets regarding issues related to electric generation, electric and natural gas transmission, electric and natural gas distribution, wholesale trading, retail sales, oil and gas production, crude oil and refined product pipelines, and oil refining and marketing. How we address and embrace these issues will determine whether Kansas will remain a leader in the energy industry. StrateQY 16 - RecoQnize the importance of the oil and Qas industry to the Kansas economy and continue to support and promote its development. 16-1 Recommend studying and realigning the property tax credit offset on the severance tax with the goal of maintaining and attracting capital into the oil and gas industry, while maintaining or increasing state revenues. Kansas is one of.the only states that impose an excise tax upon the severance and production of oil and gas. This tax totals 8 percent of the gross value; however, Kansas allows a credit of 3.67 percent for the ad valorem taxes, and as a result collects the difference of 4.33 percent. Throughout the years, cyclical price declines have caused the oil and gas industry to lose infrastructure and human resources. Kansas is ranked in the top ten largest oil and gas producing states in the U.S. and the current structure of these taxes are a disincentive to capital attraction. We must study and realign this part of our tax structure to maintain and attract capital into the oil and gas industry. ~ . ~ . ..- .,. .. .. .. .. .. .. .. . .. .. .. .. .. . (I (t (t (I 8 8 (I 8 8 ~ 8 8 8 8 8 8 lit it it it it 8 it . StrateclV 17 - EncouraQe policies for investment in both traditional and emerqinQ enerqies that optimize our enerQV strenQths. in the areas of development. conservation. efficiency and renewable enerqies. 17-1 Develop and coordinate an E-8S distribution structure that would attain a presence throughout Kansas. The demand for alternative fuels such as ethanol is growing, driven by increased use, higher energy prices, and regulations. Ethanol is sold into the gasoline blending market where it competes with other oxygenates, octane components and gasoline. Historically, ethanol prices have been highly correlated with the price of gasoline and gasoline blending components; however, in 2005 the prices of ethanol and gasoline began a significant divergence at the wholesale level, with ethanol selling for much less than gasoline. Developing a distribution infrastructure for ethanol is important for continued ethanol production in Kansas. On the federal level, the E-85 infrastructure tax credit established in the Energy Policy Act of 2005 created a credit that permits taxpayers to claim a 30 percent credit up to $30,000 for the cost of installing clean-fuel vehicle refueling properties. Similar initiatives on the state level should be pursued to make E-85 available throughout the state. This would enhance the emerging market for E-85 in the state. 17-2 Design incentives and policies to encourage research and development for energy and enhanced access to capital for energy development. Energy research and development will impact the cost and reliability of our energy resources in the future. Creating incentives and policies to provide research regarding the state's inherent energy strengths and public interests will contribute to future economic growth: Research and development will lead to new ideas and technology, which will lead to commercialization, new jobs and industries. Energy research and development and efficiency programs provide financial and technical assistance to eligible public and private entities to use or demonstrate energy technologies and reduce their costs. A reliable, cost- effective and environmentally acceptable energy supply for consumers is important. Analyzing future energy needs stresses the ongoing importance of energy information collection and analysis when identifying the most cost-effective energy options. Public/private partnerships can help support energy-related projects. Kansas should assess, advocate and act through public/private partnerships to improve energy systems that promote a strong economy and a healthy environment. StrateQY 18 - Address reservoir and aquifer manaqement and restoration in Kansas. 18-1 Recognize and develop strategies to address the management and restoration of the state's reservoirs. Surface water supplies in Kansas must be sufficient to meet anticipated future demands for water supply and other benefits provided by reservoirs. Water is an important issue for all Kansans, as economic growth depends on the availability of water, but cannot come at the expense of water resources. Reservoirs provide flood control, municipal and industrial water supply, irrigation, navigation, water quality and recreation. Watershed protection and restoration are critical to protecting and flreserving the federal reservoirs which 'provide water storage for more than half of the state's population.'o Population growth, sedimentation, increased demand for water and funding are all issues that must be addressed to ensure water supplies will be sufficient to meet anticipated future demands for water supply and other benefits provided by reservoirs. Federal reservoirs were built with a specific lifetime and steps must be taken to maximize their useful life. This can be accomplished by securing available storage, developing more sophisticated operations, including all beneficiaries in operations and funding, acquiring better supply and 40 Kansas Water Authority Annual Report to the Governor and Legislature, Kansas Water Office, 2007. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 49 demand information, identifying storage and restoration opportunities and providing increased funding for surface water issues. . r: ~ r r .. ., ., ....1 Federal reservoirs are a vital resoY[ce for public watersuppliers in Kansas, providing regional sources of stored untreated water to surrounding communities and industries. Communities either draw water directly from reservoirs or from rivers where the flow can be supplemented by releases from the reservoirs. The Kansas Water Office works with other federal, state and local agencies to extend the usable life of these reservoirs through the development and implementation of watershed and reservoir restoration and protection strategies. Over time the transport and deposition of sediment from rivers and streams that drain into a reservoir reduces the amount of storage space available to store water. Pollutants and nutrients carried by these rivers and streams also degrade the quality of the water stored in these reservoirs. The Kansas Water Office administers the State's Water Marketing and Water Assurance Programs, which utilize federal reservoirs to help meet the water supply needs of municipalities and industries in Kansas. 18-2 Recognize and develop strategies to address the management and restoration of the state's aquifers. We must conserve and extend the life of the O~allala Aquifer and achieve sustainable yield management in areas outside the Ogallala Aquifer by 20104 Several issues are presented when addressing the management and restoration of the state's aquifers. Reducing water use without unduly harming the economy is difficult through voluntary programs, which are promoted with mixed support. Management and identification of aquifer sub-units can help identify targeted areas. The Ogallala Aquifer has been intensely managed for several years with the passage of several key acts, namely, the Water Appropriation Act, the Groundwater Management District Act, and the Kansas Water Planning Act. These efforts in combination with other management activities have all worked towards slowing the rate of ground water decline and conserving and extending the usable life of the Ogallala. However, as a whole, the amount of water that has been legally appropriated in the Ogallala is well above the amount of water that is recharged to the aquifer system each year. As such, it can only be expected that the Ogallala Aquifer will continue to be stressed and continue to" decline at varying levels. With a continued decline in the amount of water in storage, it can be only assumed there will be some point in time when the aquifer will not be able to support all water demands placed upon it. 42 To help address the management and restoration of our state's aquifers, we should maintain a regulatory structure, implement and expand programs aimed at permanent water right retirement, and ensure continued research on these issues. ...., ..-j .-: ..-: ..-j ., ~ 50 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 41 Kansas Water Office Presentation, Kansas Water Authority and Kansas Water Office, 2007. 42 Assessment of Water Level Decline Rates within the Ogallala Aquifer, Kansas Water Office, 1999. .. . . . .. .. .. .. .. . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. (t (t .. .. .. . . ,. ,. " " .. .. Bioscience Mission,.... Make Kansas.the most desirable state in. which to conduct, facilitate, support, fund and perform bioscience research, development and commercialization, to make Kansas a national leader in bioscience, to create new jobs, foster economic growth, advance the scientific knowledge and improve the quality of life for the citizens of the state of Kansas. Introduction Out of necessity, bioscience has focused on the northeast corridor of the state - we need to use these efforts as a bridge to bring bioscience opportunities to the rest of the state. - Statewide Cell Members, 2007 Strategic Plannin!) process The Kansas Economic Growth Act (KEGA) of 2004 was a comprehensive economic development act designed to meet the needs of the changing Kansas economy. KEGA introduced bold strategies to strengthen and stimulate the state's economy. One of the components of KEGA was the statewide Bioscience Initiative. Legislation created the Kansas Bioscience Authority (KBA) to guide the state in its investment in the biosciences and provided an innovative funding mechanism based on the growth of state income tax with holdings from employees of bioscience-related companies. This mechanism makes it unnecessary to raise taxes or reallocate amounts from other state budgets. Revenues that accrue belong exclusively to the KBA and are not part of the State Treasury. Funding is estimated to reach more than $580 million generated over the next 15 years. . As defined by the legislation that created the KBA, bioscience means the use of compositions, methods and organisms in cellular and molecular research, development and manufacturing processes for such diverse areas as pharmaceuticals, medical therapeutics, medical diagnostics, medical devices, medical instruments, biochemistry, microbiology, veterinary medicine, plant biology, agriculture and industrial, environmental, and homeland security applications of bioscience, and future developments in the biosciences. Bioscience includes biotechnology and life sciences. 43 Within the 2007 Strategic Planning process, many individuals provided input regarding the bioscience industry. Several inherent strengths already exist in the biosciences, including: animal health, human health, crop science and bio-fuels. The State recdgni~es. the importance of the industry, and has charged the KBA with strategically guiding the state in its investment in the biosciences. StrateQV 19 -Increase the Quantity of high Quality bioscience research that has commercial relevance for Kansas. 19-1 A key role for the Kansas Bioscience Authority (KBA) is to bridge the gap in translating innovation between pure bioscience basic research and the more applied and development- focused technology needs of the state's bioscience industry. Kansas must focus on matching use-inspired basic research to the product-driven needs of industry to advance market-driven approaches to product development. The KBA will undertake a wide array of activities to strengthen the health and vitality of the state's bioscience research infrastructure, including facilitating academic/industry collaboration, attracting eminent scholars, recogni~ing and encouraging up- and-coming scholars, and leading the state's efforts to identify and pursue large-scale federal research and development investment such as the National Bio and Agro-Defense Facility. 4] Kansas Biosdence Authority. accessed at httv:/lwww.kansasbioauthoritv.org Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 51 52 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance r ~ ..... i" W" W" W" ... ... W" .. .. .. .. .. .. .. .. .. .... .. .... .... .... ... ... ... ... ... ... ... ... ... ... ... t"" ... .- .- ... ... ... ... ... Strateqy 20 - Foster the formation and qrowth of bioscience startups. , 20-1 The KBA will partner with other economic development organizations to provide one-on-one consulting services to high potential early-stage bioscience companies with the goal of preparing them to raise ca.pital and go to market. The KBA's business assistance must build value by working with technology entrepreneurs to mold concepts, vision, intellectual property, sweat and passion into breakthrough, high-growth technology companies. The KBA's hands-on coaching approach, access to a network of resources, and early-stage capital must give clients a jump start. Additionally, the KBA will help fill the need for seed and early-stage capital through the establishment of professionally managed investment funds. Strateqy 21 - Facilitate bioscience corporate expansion and attract new-to- Kansas bioscience corporate activity that qrows and strenqthens the function of specific clusters of excellence. . 21-1 Working with its state and local partners, the KBA will facilitate the retention and attraction of bioscience companies in the state. The KBA offers companies direct financial assistance in the form of low-interest loans, grants, bonds, and works through its partners to facilitate state and local tax incentives. From new entrepreneurs starting small businesses to large corporations, the KBA can provide business owners and executives with the information and support they need to make informed decisions on location, infrastructure, training and financial assistance. During 2008, the KBA expects to expand its regional partnerships to develop specialized infrastructure to facilitate the growth and expansion of bioscience companies. Strateqy 22 - Develop and enhance partnerships for the arowth of biosciences throuahout the state. 22-1 The KBA's motto recognizes that its public, private and academic partners are often at the forefront of efforts to expand bioscience research and development, foster the formation and growth of startups, and lead local corporate expansion and attraction efforts. The KBA must continue to work with partners statewide to pursue specific bioscience growth opportunities and implement scalable programs developed for use by a broad range of constituents. Two distinct measures of entrepreneurial activity may set critical benchmarks for expanding the bioscience industry and the KBA's efforts throughout the state. First, assessing the quantity, or breadth of activity . across a region would reflect the size and variety of businesses in the state, and second, assessing the quality, or depth of activity in a region would represent the value these businesses generate for themselves and the state. Strateqy 23 - Develop and achieve recoqnizable measures of success in the biosciences. . 23-1 The KBA will orient its investments and measure its success based upon achieving a handful of outcome metrics by 2019 that denote national leadership in the biosciences. The KBA is focused on four areas, success in generating a return on investment; efforts to enhance bioscience research at our academic institutions; fostering the formation and growth of bioscience startups; and commitment to making Kansas a world leader in sectors where we are already strong. The KBA must also provide assistance to smaller businesses within the bioscience industry. While these businesses may not necessarily be the headline/home-run successes, smaller businesses are important to the Kansas economy. Through bold leadership, progressive policymaking and strategic partnerships, Kansas can continue to build this industry. , . . {I . . . .. .. .. (I (I (I 8) 8) . (I (I .. lit @) @) @) (t @) ~ ~ ~ ~ (I (I . . . . 8 It It 8 8 It It it i Business and Tax Climate Mission - Create a tax "lfnd regulatory structure that is competitive and conducive for the growth of existing and new businesses of all sizes. Introduction . We have to recognize what we can and can't do, and focus on the areas where we can make an impact. Remember who and what got us here - every business matters. - Statewide Cell members, 2007 Strategic Planning process From 1990 to 2004, only 3.2 percent of new jobs created in Kansas'were created by companies moving into Kansas from outside the state. Expansions of existing Kansas businesses accounted for 39.8 percent of the new jobs, while new start-up businesses accounted for 57.0 percent. 44 Kansas must have a competitive business and tax climate to nurture Kansas business of all sizes and in all stages. Throughout the state it was heard that every business matters, whether large or small, a start- up or multi-generational operation. Businesses must have a level playing field regarding state incentives. Kansas should not forget the businesses that grew our economy into what it is today. The focus should not be on just attracting companies to locate in Kansas as start-ups and expansions are important to the economy. Kansas must focus its efforts on a few specific issues instead of offering a vast array of complex incentives and other options. A focused business tax climate can provide the foundation for our future business. We need a capital friendly business climate that holds cities and counties harmless. StrateQV 24 - Remove barriers and be competitive for capital as it relates to business climate. 24-1 Consider implementing aJorm of universal expensing or 100 percent accelerated depreciation of all capital investment in Kansas, similar to the High Performance Incentive Program (HPIP), but applied to all businesses without regulatory barriers. Expensing would provide an immediate income tax deduction for new capital investments for any business. This would be a pro-investment tax policy with no subsidies, which treats all businesses _ small and large, equally. Expensing would complement the recent competitive reforms related to property and franchise taxation and further distinguish Kansas as a destination for capital investment. Expensing would also make taxes more equitable, because it results in equal tax treatment among businesses of all types and sizes. The existence of an income tax makes the Kansas government a de facto silent partner in every Kansas business. Because it operates as an extension of U.S. income tax law, Kansas income tax law does not act as an investment-driven partner, and expensing wouid reverse the situation and turn the government into an iiwestment-driven partner for the economic benefit of all Kansans. The state would become a true partner with businesses, with the only cost to the state being the time value of money when compared to depreciation. This recommendation would allow every business an election to expense capital investments and research and development investments in Kansas. It would allow unlimited carry-forward of unused expense, replace specific tax credits and allow businesses to keep tax credits already. earned45 . . . Expensing is a little used depreciation procedure that removes tax bias and greatly simplifies income tax administration for both the taxpayer and tax authorities. 44 The Center for Applied Economics, School of Business, University afKansas, 2006, 45 Hall, Arthur. Expensing: A Competitive Leap/or Kansas Tax Policy. The Center for Applied Economics, School of Business, University of Kansas, September 2007. . Leveraging our Foundations and, Designing the Future: A Kansas Economic Renaissance 53 Ii:.! ill Ii Ii! . I" I~ ri il i'.! U Ii Ii II Ii. lH Ii! li I;, i'i i 1 ~ Ii, iii iii Iii II! I_ii fI n Iii ~: 'il i!l ,', Iii ,Iii HI JII ii' ,I ,'I 11' Iii I'i ,1,;\,. I; ii 11 ii ii \i l' 'il ., i! Ii :i n II iil ii !,Ii :j ti! ~ Ii r'i; ,,'1: !'il ~' .d r;;1 1il T\j liP ~, :1 1;'r) "" 1',1 ",.-1 ~ J: 24-2 Study the effect of a reduction or elimination of the corporation income tax and the income taxation of capital gains. The information for this recommendation is primarily sourced from the Kansas Department of Revenue's Analysis of Corporate Income Tax46 for the years 2000 - 2003 with historical information regarding the corporate income tax and the four largest business incentive tax credit programs (business and job development, high performance incentive program, research and development, and business machinery and equipment property tax credit). The study also examined where the corporate income tax burden fell by industry sector, and made limited comparisons of the employment performance of corporations claiming the largest amounts of tax credits to the employment performance of similar sectors of the Kansas economy as a whole in recent years, The updated conclusions for tax year 2003 remained similar to previous tax years: Manufacturers continue to utilize the business tax credit incentive programs heavily and have claimed the largest amounts of the credits; because tax credits are used to lower tax burden, the effective tax rates continue to vary greatly within industry groups of all types; and generally, the manufacturing sector bears a smaller share of the corporate income tax burden than other sectors of the economy, compared to the taxable income generated by those sectors, The tax year 2003 data sample revealed one im'portant change - the retail sector, instead of the manufacturing sector, has now become the most dominant portion of the corporate income tax base, generating the largest amount of Kansas taxable income and contributing the largest portion of the corporate income tax receipts,47 These and similar studies must continue to be part of the decision-making process regarding our business and tax climate, 24-3 StUdy the erosion of the property tax base and our property tax valuation methods. The information for this recommendation is primarily sourced from the Kansas Department of Revenue's Erosion of our Property Tax Base,48 Threats to the financing of local governmental services are looming on the horizon throughout the nation, State and local policymakers in Kansas have largely avoided . draconian measures concerning the property tax, but the property tax base in Kansas has steadily narrowed over the past century and been reduced substantially in the last twenty years. The property tax . began as a simple tax on all wealth, Since it was adopted in Kansas in the mid-1800s, statutory and constitutional changes have transformed it into a tax that is largely a real estate tax supplemented by a tax on utility property and motor vehicles, both of which are declining in relative importance, In view of the importance of the property tax as a source of local government revenue, Kansas faces painful choices, Among the possible policies are the following: . Continue on the current path, This choice will undoubtedly make financing local government more difficult and will raise the burden on residential property, ~- . . Clean up the property tax laws and develop rational policy for exemptions and then examine all present and proposed exemptions in light of the policy, . Return towards uniform and equal. Drafting and passing such an amendment would require the agreement of major interest groups and might require a commission or some kind of mini constitutional convention, . Repeal all taxes on personal property and reconfigure local government and government functions so that local governments finance only property-related services from the property tax . Authorize local government broader access to sales and income taxes, This choice might be done by consolidating small governments or by creatingrnore effective taxing districts, These and similar studies must continue to be part of the decision-making process regarding our business and tax climate, 46 Analysis afCorporate Income Tax 2000-2002 Executive Summary October J 5, 2004. Kansas Department of Revenue, October 2004. 47 Update to Analysis of Kansas Corporate Income Tax To Reflect Tax Year 2003, Kansas Department of Revenue, February. 2006. 4~ Fisher, Glenn, and Crystal Gile. Erosion of the Property T(U Base, Hugo Wall School of Urban and Public Affairs, Wichita State University for the Kansas Department of Revenue, December 2006. 54 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance ~ ~ " ~ " " " " " " (II !J (II !J tt ~ " " 8 8 @t 1) @t 8 8 8 8 8 8 8 8 8 8 8 8 8 it ~ i9 i9 ~ ~ . i > Strateqy 25 - Create the opportunity for more efficient qovernment. 25-1 Provide incentives and remove barriers to allow for cooperation between local government, state government, and<other entities. Examine and apply best practices when addressing the opportunity for more efficient government. Collaboration efforts must be initiated from the local level and not forced upon locals by the state. Hold cities and counties harmless. Technology presents several opportunities for local and state government, as well as businesses to increase their efficiency and expand their services. Whether state officials are improving government performance, recruiting businesses, examining the business climate or regulating industries, they must be aware of the latest technological trends to provide for the opportunity for efficient government interaction and collaboration. These efforts must be initiated from the local level and not forced from the state level. Given common issues and opportunities that span beyond individual cities, counties, regions and even states, cooperation through formal agreements or informal collaborative mechanisms may provide the means to address economic development, homeland security, environmental protection, natural resources management, health care and other issues from a more regional scale. Bringing opportunities to the local level on a statewide basis can be accomplished through these efforts, while holding the cities and counties harmless. 25-2 Encourage the increased participation with the Information Network of Kansas by all state and local government entities to improve government efficiency and provide access to government inform!ltion and services at all levels. The Information Network of Kansas was created to provide Kansans equal electronic enterprise access to state, county, local, and other public information, as a government service administered for the good of the public, while benefiting from the entrepreneurial spirit and efficiencies found in private industry. Underpinning the overall strategy of INK is a unique partnership model that leverages the enormous wealth of knowledge and resources in all parts of the state sector. This model goes well beyond a simple aggregation approach to add significant value to the users through a rich offering of state and local , government informational products and services and access to a committed and dedicated web development community. The INK Strategic e-Government plan focuses on collaborating with state and local entities to create . applications, which are enterprise in scope, highly integrated and transformational. The plan includes the following broad development themes organized around portal perspectives: Kansas Business Center, Legislative (e-Demcicracy), Transportation, Medical Services, Agriculture, Public Safety, and Education. The success of INK will ultimately depend on the added value that it can offer to its broad array of users. Using a variety of measurement tools, including surveys, customer service communication and feedback channels, site monitoring, focus groups and in-depth interviews involving both end users and partners, INK will generate detailed analysis.to measure the value created by its offerings and how to better meet the needs of its users and partners. ' Strateqy 26 - Reduce state and. local requlatorv barriers to business. 26-1 Develop and promote methods to reduce local and state barriers to a quality business _ atmo,sphere, such as reducing,multiple licensing within and across communities, cities,. counties, and the state. (addressed under 26-3) 26-2 Develop a statewide network of task forces to improve the business and regulatory climate at the city, county and state levels. (addressed under 26-3) 26-3 Move towards using technology from the state to provide electronic services to meet local government needs per their request. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 55 56 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance r f#' ,., ,., (!' (!' (!' (!' (!' (!' (!' ..... ..... ..... ..... P' P' ... ... ... P' .. .. .. .. .. .. .. fP' .... .... .... .... .... .... ..... .... .... .... ... .... .... .... .... Many methods could be utilized on a routine basis by the state to access current information regarding state and local barriers to business. This information could be provided as it relates to industry clusters, sectors, regions, businesses and CJ.\'r core strengths. Developing applications in partnership with INK could provide an online source of statewide information. Creating an ongoing statewide network of task forces, similar to the Kansas, Inc. Strategic Planning process, could provide the state with the necessary information to improve the business and regulatory climate at the city, county and state levels. Recommending the Secretary of Commerce be appointed to the Information Network of Kansas Board could also provide continuity and insight regarding this strategy. As the State's lead economic agency, the Kansas Department of Commerce (Commerce) has a clear mission: to empower individuals, businesses, and communities to realize prosperity in Kansas. The inherent synergies between the mission of the Kansas Department of Commerce and INK suggest the head of the state's lead economic agency should be appointed by the Governor as one of the two Executive Branch chief executive officers as representatives to the INK Board, based on K.S.A. 74-9303. Currently the Secretary of Transportation and the Secretary of Revenue are on the Board as the Governor's appointments. StrateQY 27 - Develop a tax structure, incentives, and reQulations that are business-friendly and competitive on a local. state. national. and international level. 27-1 Create a contingency fund of $40 million to be used at the discretion of the Department of Commerce to provide flexibility and funding above and beyond the current range of incentive programs to compete with other states and countries that provide large incentives for existing and new businesses and projects. Retaining existing businesses is important for the Kansas economy. Kansas needs an overall strategy to compete with other states and countries that offer. large incentives to attract and retain businesses. This strategy should support the state's overall economic development strategy. While Kansas' current incentives are competitive, in many cases these may not be the most important factor when businesses decide to locate. Every year states are confronted with hundreds if not thousands of offers and threats by businesses to move in or move out, taking or bringing with them tens of thousands of jobs. Businesses know all the information about the state, but the state doesn't now if the business is bluffing in its decision to move, or what the bottom line figure is that will influence its decision. 49 We must maintain our current incentive package and look for additional ways to attract and retain businesses in Kansas. A contingency fund would assist the Department of Commerce in achieving its mission to empower individuals, businesses, and communities to realize prosperity in Kansas. 27-2 Create a cross-agency team comprised of.the Kansas Department of Commerce, Kansas Technology Enterprise Corporation, Kans~s, Inc., Kansas Bioscien~e Authority, and Network Kansas to review existing and proposed regulations to ensure that they are not unnecessarily impeding economic development. The impact of state regulatory policies on economic development must be considered when. agencies carry out their responsibilities. Individual policies designed to stimulate economic development sometimes work at cross-purposes, suggesting a need for greater coordination in development strategy 492002 State New Economy Index, Economic Development Strale~iesfor the New Economy, Progressive Policy Institute, 2002, ~ . - . . . , !8 -8 i8 '8) '8) 8 . 8 8 8 8 8 8 8 8 8 It !\it !\it ~ ~ ~ ~ , ~ ~ ~ ~. ~ ~ ~ ~ ~ ~ ~ ~ & . ..~ -'""'......._""-"'...;"'-~.,..,...",.-'."_.-: . -~--\- \ , \ \ \ and tactics. Studies of the impact of state regulation on economic development are every bit as controversial and difficult to interpret as those evaluating the impact of tax and spending policies. 50 The impact of regulatory policies on economic development should be explicitly weighed against other priorities by state agencies. Regulations that impose significant costs on business should not be enacted unless the expected benefits more than offset the costs and can be substantiated. Unnecessary regulations can discourage firms from locating or expanding in Kansas and should be eliminated to the . extent possible. 51 . _ . The cross-agency team should be given an opportunity to provide an evaluation or recommendation on proposed regulations that affect economic development. 27 -3 Routinely study and benchmark parameters regarding our tax and regulatory structure and report recommendations' to the Governor and Legislature. The Consensus Revenue Estimating Group is comprised of representatives from the Division of the Budget. Department of Revenue, Legislative Research Department and a consulting economist from the University of Kansas. Kansas State University. and Wichita State University. The group meets in the spring and fall of each year to make initial estimates for the budget year and revise estimates for the current year. The Group was organized to eliminate controversies between the Executive and Legislative branches over general fund revenue estimates and to establish a procedure whereby revised estimates . for the current fiscal year would be made available to both the Governor and Legislature in December of each year so estimates could be used for planning purposes. The Executive and Legislative staffs also jointly review estimates periodically to determine whether more recent economic information or revenue trends warrant revisions of the estimates. Due to the statutory strategic planning and benchmarking missions of Kansas, Inc.. the agency should be involved at some capacity with this group. As an outgrowth of the 2007 Strategic Planning process, a group similar to the Academic and Policy Resource Team, consisting of individuals from several Regents institutions and state agencies should meet on a routine basis to discuss the overall economic landscape of Kansas beyond the scope of the Consensus Revenue Estimating Group. StrateQV 28 - Attract and retain national corporate headquarters in Kansas. Research has shown: national headquarters constitute only a small share of all business establishments; provide a small share of the economic base; are not very likely to move between regions; when they do move, the causes are typically outside the reach of state policy; and when they move for reasons that can be affected by state policy, the appropriate policies typically are ones that should not be targeted to headquarters as such. However, there are good reasons to develop a concrete strategy and policy on headquarters, as from time to time the legislature has considered or taken action to attract or retain establishments in Kansas. 52 28-1 Formalize what Kansas is doing right by targeting national headquarters and continuing to equalize state incentives. - Kansas performs well at attracting and retaining national headquarters of medium-sized and multi-state corporations. We should build upon that success by recognizing headquarters as a desirable target in our economic development strategy. Recognizing that most headquarters in Kansas will collocate with operational units, attracting operational units is the key to attracting their attached headquarters. Of the remaining stand-alone headquarters, nearly all will locate in the largest metropolitan areas, and they 50 Tannenwald, Robert. State Regulatory Policy and Economic Development, New England Economic Review, Federal Reserve Bank of Boston, March/April1997. 51 Redwood. Anthony, and,Charles Krider. Kansas Economic Development Study: Findings. Strategy, and Recommendations, Institute for Public Policy and Business Research, University afKansas, June 1986. 52 Burress, David. Attracting and. Retaining National Corporate Headquarters in Kansas, Ad Astra Institute afKansas for Kansas, Inc., November 2006. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 57 I " :1 " , II I I 'I I ! ., ,~ 58 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance .-- .- .- .- .. .. ... ... ... ... r r r r r fI ... ... ... fI ... ... ... ... t' t' " e e e e e e e e ~ t' ii! ti' il ~ .,. ~ ~ ~ require a concentration of professional business services, good airline connections, and a high quality of life. Headquarters will be contributing elements rather than major drivers of the Kansas economy. Particularly important in Kansas is the emphasis on startup support, K-12 education, quality of life, skilled workforce, technology developm~t, and-research universities. Kansas should endorse the existing practice of making national headquarters eligible for all relevant state-level incentives. 28-2 Prioritize relevant elements of the existing strategic plan, including im'proving air travel connections, supporting local enterprise development, and assisting local firms in becoming multi-state firms. Limited air connections have posed an impediment to some headquarters' location in Wichita and to some extent in Greater Kansas City. Limited air connections affect many other establishments as well. Efforts to subsidize improved air travel have been expensive, but given their broad benefits they may be cost effective. Policymakers should monitor the impact of the 2006 Affordable Airfare Fund53 on airline service in Wichita and consider cooperating with Missouri to secure an airline hub at Kansas City International Airport. . Homegrown startups, including low-tech, may have the potential to expand into national corporations. Enterprise development may be a tool that can assist startups, even though it is mainly targeted for different objectives. Also, some homegrown firms may start out as local to Kansas and expand into multi- state or international firms. Assistance from lo.cal and state government could help them with their expansion efforts. 28-3 Consider new initiatives targeted to headquarters by preparing targeted place marketing materials and outreach campaigns. Many key factors affecting the location of existing corporate headquarters are either outside the control of state government, such as mergers, acquisitions, current location of owners; or else not easily targeted specifically to headquarters, such as airline. service, quality of life, and startups. Incentives can be targeted to headquarters, but there is little data supporting narrowly targeted incentive programs. Based on this, we recommend only one fully targeted policy option - preparing targeted "place marketing" materials and outreach campaigns. Kansas must explain succinctly, with clear evidence, why Kansas is an attractive location for national corporate headquarters. it would be helpful if the campaign had a broader target, such as including branch headquarters and back offices as 'well. Working cooperatively with local governments would also be effective. 28-4 Consider new initiatives of broader significance, including strengthening benefit recapture or claw back rules, efforts toward developing a cooperative policy on border competition, and providing for agency disclosure by site selection consultants operating in Kansas. Several policy options, while relevant to headquarters, would have much more general impacts. Existing recapture rules differ greatly between programs and in many cases are absent. Economic development contracts could provide for repayment of assistance in all instances where private profits materialize, and yet the intended public benefits to Kansas don't materialize due to relocation or other circumstances. Kansas should review the implications of border competition with Missouri and border cities. There could be real benefits from convening a body of interested governmental units to see if a basis of common' interest could be established. Site selection consultants may lobby a city or landholder on behalf of a firm, or may try to sell a city location to a firm. In some cases, it is unclear whose inierests the consultant is acting. on, and incentives, outside interests, and other factors may send distorted signals likely to cause economically inefficient outcomes. Potential laws requiring full disclosure of agency agreements, similar to those covering real estate agents, could address this issue. 532006 House sub. for Senate Bill 475 created the $5 million Affordable Airfare Fund to be administered by the Department of Commerce and used to fund the program to provide more air flight options, more competition for air travel and affordable air fares fOf Kansas, including a regional airport in western Kansas. '\JIt . . .. .. . .. . . . .. . . . . . . . ~ . ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ . . ~ I ) --~~~""^''''"'''''"--"''~'.".~".."".><.~,~.""''''',,,:,,,==~" Workforce Development Mission - Create a demand-driven workforce development system that meets the needs of the business community. Introduction There is a mismatch between what is coming out of our educational institutions and what is needed by the business community- there is also a systematic problem with individuals being educated in Kansas and then leaving the state. Business and industry will follow the talent _ we must communicate with students and parents so they are aware of opportunities in Kansas. - Statewide Cell Members, 2007 Strategic Planning process Workforce development issues were heard in nearly every Cell meeting across the state. There appears to be a misalignment between supply and demand of educated workers. Forecasts predict a shortfall of workers in the coming years. Kansas must ensure a skilled pipeline of workers to fulfill employer needs, but people felt as though Kansas was losing its college graduates and educated workforce. It was repeatedly heard that we need to' retain what we have and attract people to our state. Three common themes and areas of focus were identified: training, attraction and retention, and lifelong learning and portability of education. Training issues encompass the secondary educational system, postsecondary educational system (community colleges, technical colleges, and universities), and customized business training (non-credit training provided by state, federal, or business funded programs). A focus is placed on technical education as the undersupply of workers is more often related to technical occupations requiring less than four years of postsecondary education. 54 The state funded portion of customized training is specifically addressed in this plan. Though the federally funded Workforce Investment Act brings over $20 million into the state each year, these programs are compliance driven and lack the flexibility to differentiate our state. Alignment of the postsecondary education system with the demands of businesses is emphasized. Efforts to make seamless transitioning possible between secondary and postsecondary education and from institution to institution are supported. Nationwide low unemployment indicates Kansas needs to attract and retain college graduates and workers. There should be a focus on potential non-traditional or alternative populations including military, immigrants, the aging population, and disabled citizens. Kansas exports workers, we need to be more creative and have the tools necessary to keep individuals here. An increased focus on lifelong learning and portability of credits was also emphasized as workers require skills upgrades or pursue continued education or professional and advanced degrees. Students should be able to seamlessly transition through all levels of education to build upon their capacity: The goal should not be to simply prepare people for the job openings of today and the next four to five years. The goals should be to: ensure everyone has the foundation skills to'enable them to engage in lifelong learning; prepare all learners and workers to be agile in the economy; focus on certifying skill and knowledge sets. 5 S4 Positioning Kansasfor Competitive Advantage. AligningKey industry Clusters and Occupations with Postsecondary Education and Workforce Development, Corporation for a Skilled Workforce (CSW) for the Kansas Department of Commerce, Kansas, Inc., and the Kansas Boar'd of Regents, September 2007. 5S Ibid. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 59 60 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance r .- .- ,- ,- r ". ". r ,. ,. ,. r ~ r fr- fr- fr- f!- f!- t!' t!' t!' r f? r r e- e- ft- ~ ~ ~ ~ ~ f!- ~ ~ ~ ~ ~ ~ ~ iP StrateClY 29 - Enhance the structure of the customized traininCl system to meet the immediate specialized needs of businesses. Several states have repeatedly been recognized for having exceptional workforce development programs. Alabama, Georgia and North Carolina are among the states that have been recognized.'6 A common component in each of these systems is the practice of taking the burden of sourcing employee training off a business. Though program structures may vary, one commonality is the business simply contacts a central clearinghouse, their training needs are assessed, and customized training is designed and implemented with oversight provided by the state clearinghouse. Trained and capable workers are then delivered to the business without the worry of training details - they know the state system has delivered qualified, quality workers within the desired timeframe. Based on best practice models seen in other states and utilizing the existing infrastructure and tools in Kansas, the following customized training system outlined in Strategy 29 was designed to enhance the structure of the current workforce training system to better meet the specialized needs of businesses while efficiently and cost effectively achieving the desired outcomes for the Kansas workforce. 29-1 Use state resources to design and implement customized training programs that deliver skilled employees to qualified requesting companies in a timely and cost effective manner. Simplified, this system would take business input regarding training needs and the number of desired employees and utilize state resources to design and implement a training program. This would save the business from having to utilize valuable resources to investigate training options. The system would deliver the desired number of qualified employees to the business in a timely, cost effective manner. A highly visible clearinghouse or point of entrance into the customized training system should be established separate from the Department of Commerce Workforce Development Division. A new entity, referred to in this report as the Workforce Aligned with Industry Demands (Workforce AID Office), headed by an Executive Director is recommended. The Workforce AID Office would refer businesses to the Regional Directors of Workforce Services (existing Commerce positions) serving each of the five local areas. The Regional Directors would still be under the direct supervision of the Deputy Secretary of Workforce Development, however, in the new system would work closely with the Executive Director of the Workforce AID Office to administer workforce training programs. Regional Directors would work in concert with training partners to ensure businesses receive the quality and quantity of workers requested, Training would be provided where available, on the open market with emphasis on partnerships with Kansas postsecondary technical education institutions. Similar to current programs, there would be prerequisites for businesses qualifying to use the programs, but qualifications would be broadened for certain workforce development programs to ensure more companies could be served. 56 Expansion lVfanagement, a monthly business magazine that covers economic development, site selection, business climate, and business relocation and expansion, annually has site location experts rank the states with the best workforce training incentive programs. The magazine has routinely ranked these states in the top ten in the U.S. . .. . .. . . .. .. .. .. .. . . . (I (I . . . . ~ ~ ~ it [8 ~ ~ ~ ~ !t It It It it it t it t t ~ ~ , . J ~ .~ --"-~-___"__'._~""~__c_.,~._ _."~__""""""""'_'___ 29-2 Establish an executive management position with administrative and oversight responsibilities to oversee specialized workforce training programs. Employment will be shared between the Department of Commerce and Board of Regents. For coordination of the customized training system there must be an executive management position with administrative and oversight responsibilities regarding specialized workforce training programs. The Executive Director will oversee all Workforce AID Office training programs to ensure businesses workforce demands are being met. The Executive Director will ensure coordination between the existing Regional Directors of Workforce Services (Commerce) and the college liaison (community and technical colleges). The Executive Director will have oversight and authority of programs within the customized training system and will possess the skills necessary to assist in identifying the needs throughout the state. The system will foster coordination and cooperation between the Department of Commerce and the Board of Regents, aligning business demands with workforce training. The position should be funded jointly and report directly to both agencies. The Executive Director of the Workforce AID Office could be . created as a new position between Commerce and Regents or the responsibilities of the current liaisonS? between the two agencies could be modified to accommodate this position. The Secretary of Commerce and the President & CEO of the Board of Regents will have direct oversight of the Executive Director of the Workforce AID Office. 29-3 Approval for all viable workforce projects will come from the Secretary of Commerce and the President & CEO of the Board of Regents. Training can be offered through community colleges, technical colleges, in-house company training or third party vendors, so it is imperative both the Department of Commerce and Board of Regents agree regarding the training program design that most efficiently and effectively meets the needs of the business. Once a program has been designed by the Regional Director and college liaison and approved by the Executive Director of the Workforce AID Office, it should then be subject to approval by the Secretary of Commerce and the President & CEO of the Board of Regents. 29-4 Create an executive management position over workforce development at each postsecondary technical education institution that reports directly to the President of the respective institution to design and implement customized workforce training. This position, referred to as the college liaison position could be created as a new position or could be accommodated by modifying the responsibilities of an existing position 58 Regardless, it is paramount this liaison is positioned at the highest possible level to which they report directly to the President of the respective institution. . The college liaison will have two primary responsibilities: 1) work with the Regional Directors of Workforce Services to design and implement workforce training programs for businesses with the assistance of the Workforce AID Office and funds; and 2) ensure local industry training demands are being met. The college liaison would have knowledge and expertise regarding all programs currently offered by the institution, including the institution's capacity to alter programs to meet the specific needs of businesses. The college liaison would also be familiar with training options outside the institution if private industry offered a better alternative. The college liaison would also work with the Vice President of Workforce Development (Executive Director of the Postsecondary Technical Education Authority) to align each institution to meet the ongoing needs of businesses. . 57 The Director of Workforce Training and Education Services currently serves as a liaison jointly funded by Commerce and Regents. 58 In many institutions there may already exist a senior institutional official whose responsibilitY is focused on economic/workforce development. Lever~ging our Foundations and Designing the Future: A Kansas Economic Renaissance 61 r r ~ ~ ". ". ". ". ". ". ". ~ ~ ,. ~ ".. ".. ".. f" ".. 29-5 Create an infrastructure that establishes a seamless partnership between the Regional Directors of Workforce Services (Commerce) and the executive management positions over workforce development at each postsecondary technical education institution. Once the Regional Director of Workforce Services assesses the training needs of a business, they will determine the appropriate community or technical college that can most effectively provide the training. The Regional Director and subsequent college liaison will then provide a thorough assessment of the business's training needs and design a workforce training program that meets the needs of the business to achieve the desired outcomes. Once the program has been approved by the Executive Director of the Workforce AID Office, the Secretary of Commerce and President & CEO of the Board of Regents, the Regional Director and college liaison will implement the training program and ensure the business receives the quantity. and quality of trained workers in a timely, cost effective manner. 29-6 Designate $12-15 million in funding that supports the customized training for this strategy. A consistent funding stream must be present to ensure the system's success. A budget of approximately $12-15 million is recommended, with a portion of funds designated specifically for state-implemented training programs. Administrative costs would be minimal, as several key personnels9 already exist in the current structure. A portion of funding would be dedicated tei marketing the programs to prospective businesses and potential trainees when the programs were being implemented. Workforce development programs are not new to Kansas. This model is a modification of the service delivery model, and it would be possible to use current workforce development funds. 60 . StrateQY 30 - AliQn the education system with the needs of industry throuQh fundinQ incentives and the tanQible partnerinQ of state educational institutions with industry opportunities. ".. 62 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance f" f" f!" r f!" 'f!" ,. r f!!" f!!" f!!" tJ!' - "-""" ~ ~ ". -t- t- ,. t- ". ,. ,. ~ 30-1 Support the Postsecondary Technical Education Authority in aligning community and technical college programs with the demands of businesses. The Postsecondary Technical Education Authority was created by recommendation of the Kansas Technical College and Vocational School Commission by the 2007 Senate sub. for House Bill 2556. The Authority is charged to provide accountability for the postsecondary technical education system and improve alignment between secondary and postsecondary educational institutions. Comprised of 12 members, the Authority will: coordinate statewide planning for" existing and new postsecondary technical education programs and contract training; review existing and proposed postsecondary technical education programs; review requests of state funding for postsecondary technical education and make recommendations to the State Board of Regents for funding amounts and distribution; develop benchmarks and accountability indicators for the program; develop and advocate annually a policy agenda for postsecondary technical education; and conduct studies of ways to maximize resources to best meet the needs of business and industry, making recommendations to the State Board of Regents. 59 Including Regional Directors and some college liaisons. The Executive Director of Workforce AID could potentially be created by adding responsibilities to the current liaison position funded jointly by Commerce and Regents. 60 Current programs include KiT, KIR and IMPACT; however, not all IMPACT funds are used for training as it is recognized that the MPI (lnvestments in Major Project) portion is important for business development and a dedicated portion of total IMPACT funds should be available for these purposes. .. . . .. . .. . . . . . . . ~ ~ II It . ~ ~ ~ ~ ~ ~ f8 ~ it !t ~ ~ ~ ~ !t !t ~ ~ ~ ~ ~ , t t . , 30-2 Encourage a structural funding change that provides incentives for colleges to offer high- demand, high-cost courses and special funds allowed for expensive equipment purchases. Many technical occupations experiencing skill gaps require expensive equipment and small student/instructor ratios. Currently Kansas may provide limited, but not broad-based incentives for high- cost training in high-demand occupations. Adjusting the funding formulas for various programs and coursework, depending on the supplyldemand ratios and restricting certain funds and scholarships to training for occupations in high demand occupations may address these shortages61 The Kansas Technical College and Vocational School Commission studied this issue and recommended the addition of $38.5 to $41.5 million for technical education in FY 2008.62 The full amount was not appropriated by the Legislature; however, the 2007 appropriations bill designated $4.0 million to be used for new technical equipment grants. The Authority will review and make recommendations on grant awards" subject to final approval from the Kansas Board of Regents. Despite the allocation for equipment funds, there is still a structural funding issue in Kansas for high-cost technical education. The Commission and Authority should continue to pursue these issues and work to develop and implement develop a plan that will provide incentives to institutions to provide high-cost training for high-demand occupations. 30-3 Support the Kansas Technical College and Vocational School Commission. The Kansas Technical College and Vocational School Commission (Commission) was formed by the 2006 Legislature to study the mission,governance and funding of Kansas technical colleges and vocational education schools. The Commission recommended the mission for each postsecondary technical education institution should provide opportunities for students to attain their educational goals; provide an educated workforce to meet the demands of the Kansas economy; be responsive to the education and training needs of business and industry; provide quality technical training, customized industry trairiing, and continuing education; and provide a totally integrated educational opportunity for students who matriculate from high school through certificate, associate, and baccalaureate programs. The Commission will serve as an oversight body to the Postsecondary Technical Education Authority. 30-4 Routinely study and benchmark the alignment of all levels of the educational system with the demands of businesses. To align the education system with the needs of industry, it is necessary to first identify the needs of business and industry. The Kansas Department of Commerce, Kansas, Inc., Kansas Board of Regents, and the State WIA Board commissioned the report Positioning Kansas for Competitive Advantage: Aligning Key Industry Clusters and Occupations with Postsecondary Education and Workforce Development during 2007 to identify these needs. - The report identifies possible misalignments between the postsecondary system and business needs. According to the report, states that succeed in aligning supply with demand will be the most competitive in attracting, retaining and growing their competitive advantage nationally and globally. The dynamics of the Kansas job market are fiuid and are continually changing, as supply and demand are not static in nature. These dynamics must be routinely studied and bench marked to ensure the workforce demands of., businesses can be' met through the supply of workers provided by the Kansas educational system. 61 See Positioning Kansas, p. 59, _ 62 The Commission recommended that $16.5 million be added to support a new funding methodology to align rates with program delivery costs, $5.0 to $8.0 million be added for additional enrollments in technical education. $8,0 million be added for technology and equipment funding for technical education, $5.0 million for a start. up pool to create a new mechanism to fund new statewide priorities and initiatives as they emerge, $3.0 million be added for a business and industry training poot for short.term (non-credit) training, and adding $1.0 million to strengthen state support for technical education. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 63 ..... ~ ~ .- .- t" t" t" t" f!" t" f!" f!" t" .. .. .. ... ... ... ... ... ... ... .. .. .. ... f!' ~ ~ ~ f- ... ... ff' f"" .. ~ Strateqy 31 - Build capacity by retaininq and attractinq a skilled and educated workforce. 31-1 Ensure the state equips primary and secondary students with the skills necessary to pursue education and employment opportunities, with the focus being on STEM (Science, Technology, Engineering, and Math) fields. To ensure a supply of educated workers in Kansas, our primary and secondary educational institutions must sufficiently prepare students for postsecondary education and career opportunities in Kansas. Educators must begin this process at a younger age. The focus of this process should be on future career opportunities and the best path to attain that goal. Student aptitudes and interests should be matched with business demands to ensure student success. Potential tools to assist this process include the Kansas Career Pipeline (KCP) and the Olathe 21" Century High Schools Program. STEM (Science, Technology, 'Engineering and Math) fields are visible in the KCP and Olathe 21" High Schools Century Programs, and are major drivers for the Kansas economy. Another example program is the Kansas Academy of Mathematics and Science (KAMS)63: a new way of preparing students in STEM fields, designed for high school juniors and seniors talented in science and math to enroll in a two-year program of study culminating in both a high school diploma and college credits equivalent to an associate's degree. 31-2 Support and facilitate business interaction with postsecondary students through scholarships, internships, and job shadowing. Businesses should be an active partner with educational institutions in regards to career curriculum, guidance, and opportunities and could be awarded with potential tax incentives or credits. Interaction between students and businesses must occur at the postsecondary level. To retain Kansas graduates they must have interaction with businesses to inform them of career opportunities. Businesses should parther with postsecondary educational institutions to ensure career curriculum alignment, guidance and opportunities are made available to' students. Scholarships, internships and job shadowing are ways for businesses to interact with students. Programs such as the Kansas Career Pipeline can be used to connect postsecondary students with businesses using tools such as e-mentors, summer jobs, apprenticeships, job training, scholarship, and eventual employment. 31-3 Provide incentives that encourage students to remain in Kansas for postsecondary . education and careers. Being an importer of postsecondary students, Kansas has the opportunity to build incentives into its education structure to retain a larger percentage of graduates in the state if we can match them up with the desirable career opportunities. To build a qualified workforce, Kansas must continue to attract and retain postsecondary graduates.' Offering scholarships, loan repayment, in-state tuition, etc. may help retain more graduates. Offering in- state tuition to students from surrounding state's or former residents could provide some incentive to come to and potentially stay in Kansas. Research could provide further insight into incentives and other methods of attracting and retaining a larger percentage of Kansas graduates. 64 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance ... f" t- IfII ftt- ... 63 An RFP was issued to Kansas public postsecondary educational institutions during 2007 and a final decision will be made during 2008. Responding institutions will describe the specifics of the operation ofKAMS and provide a detailed budget. The recipient of the award will receive $100,000 to finalize plans for the Academy. The Board of Regents 2007 legislative agenda includes implementation of the Kansas Academy of Mathematics and Science. ~ ':t' .~ " " " ~ " ~ ~ . ~ . ~ ~ (8 .~ ~ ~ e e e . ~ . . .~ ~ . e e e e e e (8 e ~ e e e e e e e 31-4 Design a Leadership Kansas-type program that incorporates entrepreneurial and leadership experience into our educational system. Entrepreneurship and leadershiQ are a few of the characteristics our youth should be exposed to at a younger age, and these types o(opportunities should be built into our educational system. Programs that selVe as catalysts for the continued development of entrepreneurship and leadersh!p should be created to target Kansas.youth. Existing program models, such as the Leadership Kansas' Program could be utilized to target students. 31-5 Market business and career opportunities in Kansas to all prospective individuals. Many opportunities exist to market business and career opportunities in Kansas to specific groups including: graduates, older citizens, military, immigrants, and disabled citizens. Targeted marketing campaigns and programs, such as the Helmets.to Hardhats65 program may make these populations aware of the opportunities. Kansas should actively encourage participation in these types of programs. Innovative concepts will help equip our students with the skills they need to succeed during their careers. Kansas exports workers; we need to be more creative and have the tools necessary to keep individuals here. 31-6 Market postsecondary technical education opportunities and careers by targeting students, parents, educators and counselors. In March of 2007, the Kansas Technical College and Vocational School Commission submitted a report to the state legislature, stating that only 20 percent of current jobs require a four-year degree and there is an increased demand for skilled workers. 66 There is a shortage of workers for jobs requiring only a technical degree. . The focus of high-school counselors seems to be on enrollment into four-year institutions. Students, parents, educators and counselors must be aware of the potential opportunities that exist with careers requiring technical. degrees. We must market and educate these opportunities to help address our . workforce shortages by developing a message campaign that highlights the importance of postsecondary technical education and specific skill sets. 31-7 Study and develop workforce solutions for the aging population and immigrants. Workforce shortages are becoming an issue not only in Kansas, but throughout the U.S. Opportunities for recruiting alternative or non-traditional workers, such as the older population and immigrants may provide a solution to this issue. Workforce solutions must remain flexible enough to accommodate these workers. Further study of these issues may produce innovative ways to recruit and accommodate a non- traditional workforce in Kansas. 64 Leadership Kansas is a statewide pro'gram designed to enhance and motivate current and future leaders from various communities. Participants engage in educational and informational training sessions in six Kansas communities'over the course of a year, with discussion surrounding various topics including business, education, agriculture, public policy, societal health and development, economics, and government 65 Helmets to Hardhats is a national program that connects National Guard, Reserve and transitioning actiYe~duty military members with quality career training and employment opportunities within the construction industry. The program is administered by the Center for Military Recruitment, Assessment, and Veterans Employment and headquartered in Washington, D.C, Direction for management of the center comes from a board of trustees comprised of equal numbers of employer and labor trustees. (>6 See Positioning Kansas, p. 59. 65 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 66 Leveraging our Foundations and Designing -the Future: A Kansas Economic Renaissance r .. .. ~ ~ .. .. .. .. ... ... ... ... ... .. .. ... .. ... ... ... ... ... ... ... r r r r ... ... ... .. .. ... t'" flII flII f- ... @:JIll flIIl t- ... Strateqy 32 - Encouraqe and provide Iifelonq learninq opportunities. 32-1 Provide an educational continuum that allows students of all ages to seamlessly transition through all levels of educ:.ationand training. A goal of the education system should be to ensure all individuals have the foundation skills to enable them to engage in lifelong learning. Aligning postsecondary education with K-12 education and workforce development helps address the disconnect among different levels and players to build a learning continuum.67 An important talent development strategy for Kansas should be to focus on an educational continuum that promotes seamlessness as an individual enters, transfers through and exits the educational system to encourage lifelong learning for all Kansans. Individuals should be able to progress through the education system, entering and exiting as desired . without substantial penalty, from K-12 to advanced degrees. High school graduates should be able to transition into postsecondary education (technical colleges, communit~ colleges, universities) without the loss of any advanced or training credits earned. Customized training6 should transfer into various certificate credits. Certificate credits should easily be transferable into associate's degrees, associate's degrees into four-year institutions, and on to advanced degrees. Credits should be easily transferable from institution to institution, which could be facilitated through a common course numbering system. 67 See Positioning Kansas, p. 59. 61\ Customized training is defined as traditionally non~credit short-term training to fulfill a specified need. This would include company training and specific programs offered by the state to companies to fulfill workforce demands. ':'~ ~ " J , , , , , " ~ !} ~ ~ ~ ~ , ~ ~ ~ ~ , , , ~ ~ I I I I I ) ,',.," Technology and Innovation Mission - Utilize science and technology to leverage and support existing and new economic opportunities. Introduction Technology is no longer an enterprise in and of itself, it is the thread that must be woven through the entire economy with innovation - where is the best place to put technology to make it a driver for the state? - Statewide Cell Members, 2007 Strategic Planning process Innovation and technology arecrucial to Kansas' economic development. Technological change continues to occur very rapidly, particularly in computing, software, telecommunications, and life sciences and biosciences. This presents Kansas with two challenges: 1) existing firms require access to new technology to remain competitive, and 2) new technology-based industries and businesses present opportunities for the state. Since companies that do not keep pace with technological change will be at a competitive disadvantage, Kansas must invest in 'new technologies. 69 . Public investments in technology, particularly through the state's research universities remain important. They playa critical role in attracting research-based companies that wish to locate near a university to have access to research and skilled employees. Kansas Technology Enterprise Corporation (KTEC) also has a critical role, along with regional technology centers in adapting technology to Kansas companies and creating new businesses. Commercialization remains a priority and it is imperative that it reaches all parts of the state and all scales of business endeavors. Research and development is a critical part olthe commercializatio'n process. Access to financial capital also remains critical for Kansas' economic growth. To foster the growth of new firms, the state must support the financial needs of entrepreneurs and existing firms must have access to financial capital to fund expansions7o StrateQV 33 - Address capital formation and access to capital markets on a local, state, and federal level. 33-1 Attract venture capital to Kansas through Heartland BioVentures, a partnership between KBA (Kansas Bioscience Authority) and KTEC (Kansas Technology Enterprise Corporation). Capital formation is critically important to all technology-based companies, particularly for start-ups and early-stage firms working to transform discoveries into consumer goods. There must be an aggressive development of capital programs to ensure' companies have the funding they need to stay and expand in Kansas, For example, since the passage bf the Kansas Economic Growth Act of 2004, Kansas bioscience companies have raised millions of dollars in capital investment, including $73 million 71 in 2006 alone, through a variety of private and public funding sources. Heartland BioVentures was designed as a regional collaboration between the KBA, KTEC and the Kansas City Area Life Sciences Institute to foster the formation and growth of bioscience startups that are commercializing innovations for Kansas and the Kansas City area. Heartland BioVentures' will provide assistance and funding to early-stage bioscience firms; help early-stage firms address business, ii_ I: i 69 See -Krider, p. 25. 70 Ibid. 71 Bioscience Kansas, Capital Formation in the Heart/ani Spring/Summer 2007. I I,' , ' Leveraging our Foundations and DeSigning the Future: A Kansas Economic Renaissance 67 68 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance f f , f fI fI .. f,l fI f,l f,' f,' f,' f,' f,' f' f' f' f' f' f' ~ f' t" t" ~ ~ ~ ~ f!" P P f!" f!" f!" f!'" f"" e- f!" e- t- t- ... .... technology, management and strategic issues; and help firms access capital. The success of Heartland BioVentures will be measured by the amount of private capital raised by its client companies. Additional outcomes of success will include: job creation revenue generation, government grant acquisition, wealth creation and the .expansion of capital availability. 33-2 Support regional Angel investor networks by attracting and providing incentives for Angel investors. The Angel Investor Tax Credit facilitates the availability of equity investment in businesses in the early stages of commercial development and assists in the creation and expansion of Kansas businesses that are job and wealth creating enterprises. Under the Kansas Angel Investor Tax Act, as codified at K.S.A. 74-8131 through K.S.A. 74-8137, effective January 1, 2005 as amended, an accredited investor is allowed a 50% tax credit on their cash investment of up to $50,000, in a certified Kansas business. Additionally, for each tax year, an Angel Investor shall not be entitled to claim tax credits under this Act for more than $250,000. The Kansas Angel Tax Credit is limited to a $4,000,000 Annual Allocation cap in 2007, and a $6,000,000 Annual Allocation cap each calendar year through 2016. Supporting regional Angel investor networks will enhance the level of venture capital in Kansas by attracting and providing incentives for investors. StrateQV 34 - Build a stronQer research and development base in Kansas. 34-1 Recruit, support, and retain eminent scholars in key areas of research strategically linked to science and technology-based economic advancement. Through its mission, KTEC is a leader in the state with initiatives such as the KTEC Pipeline, eminent scholars, and entrepreneurs in residence, which are designed to recruit, support and retain science and technology-based expertise in Kansas. . Support of strategic research and development, business assistance, and investments in early-stage companies can bring economic growth to Kansas. These types of initiatives should be expanded upon and utilized to build capacity in Kansas. 34-2 Improve competitiveness in pursuitof federal funding to support strategic research and development initiatives, similar to the efforts for the National Bio and Agro-Defense Facility (NBAF) and University of Kansas' cancer center designation. . Kansas must be competitive and coordinated in its pursuit of federal funding to support strategic research . and development initiatives. The Kansas NBAF Task Force is an excellent example of a coordinated statewide effort. The Task Force is charged with developing a compelling case for federal officials to locate the facility in Kansas and also charged with educating and coordinating community outreach and advocacy for the project. These' efforts should be replicated for future initiatives. 34-3 Enhance. and facilitate the commercialization of research by linking business and university systems in a variety of technologies. Enhancing technology transfer infrastructure supports technology-based economic development and commercialization. Linking business and university systems helps facilitate the transfer of technology- based research to the pi'ivate sector. Encouraging entrepreneurship within a university setting may also help provide incentives for university systems to facilitate research and development interaction via partnerships with the private sector and overall commercialization will be improved through these partnerships. . .,. !It .. .. .. .. .. .. .. .. .. .. . ... 'I!'!l' .. .. .. .. .. .. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e e ~ ~ ~ ~ ~ ~ ~ t t . It a Strate~v 35 - Address technoloQY infrastructure needs throu~hout the state. 35-1 Develop and maintain maps of strategic technology assets inthe state and identify those accessible through regional, national, and global networks. (addressed under 35-3) 35-2 Identify and address infrastructure gaps through collaborative cross-boundary relationships. (addressed under 35-3) 35-3 Increase industry access to public research infrastructure by developing an environment conducive to institution-industry interactions and addressing policy impediments. Kansas must study, map and enhance strategic technology assets in the state while identifying and addressing infrastructure gaps through collaborative cross-boundary relationships. Technology. infrastructure such as broadband, Internet access and wireless voice access is crucial for today's business environment. Research has shown a link between infrastructure investments and economic growth, such as investments in highways and telecommunications accelerating economic growth, or investments in information technology contributing to increased labor productivity.72 Technology such as broadband and wireless voice access must be considered as essential as traditional utility.services. Through open access, competition and innovation at the federal and state level, communities and businesses can partner to develop these technologies. Best practices of state initiatives, such as ConnectKentucky"', should be monitored and potentially modeled if appropriate for Kansas. Understanding and mapping existing technology infrastructure will assist both the public and private sectors in addressing the needs of Kansas. Strate~v 36 - Establish and maintain a technical/v-skilled workforce to fulfil/the present and future needs of a vital, technolo~v-driven economy. 36-1 Support policies and initiatives designed to advance the economic impact of research institutions on the state's economy, including a highly qualified workforce to support economic growth. . Kansas has a strong track record regarding higher education. In 2003, Kansas was ranked third in the nation for the number of science and engineering graduate students in doctorate-granting institutions, per one million population. During 2002, Kansas was ranked 10'h in the percent of heads of households with at least four years of college. During 2006, Kansas was 15'h in state tax fund appropriations efforts for higher education. 74 Kansas must continue to educate its population, but ensure it focuses education in a way that will complement and support the Kansas economy and maximize the economic impact of its institutions. Preparing and retaining a highly educated workforce will support continued economic growth. Kansas students must be educated in a way that supports the state's economy, beginning with primary and secondary schools and continuing through the postsecondary level. An area of focus is the STEM (Science, Technology, Engineering and Math) fields, since bioscience, technology and service sector jobs are major drivers for the Kansas economy. 72 Orazem, Peter. The Impact of High-Speed Internet Access on Loca! Economic Growth, The Center for Applied Economics, School of Business, University afKansas, August 2005. 7J The mission of ConnectKentucky is to accelerate the growth of technology in support of community and economic development, improved healthcare, enhanced education, and more effective government By leveraging the latest in technology and networking, ConnectKentucky helps ensure Kentucky remains the place of choice to live, work, and raise a family. 74 See Positioning Kansas, p. 59. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 69 it " M 70 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 4 " " " , , t t . , . , . . . Ii Ii 11 11 .. - fe .. t9 t9 " " " ~ ~ ~ .. ~ f'" f'" tP' '" .. .. ... @II .. .. flIIl j I Beyond education, retaining graduates ensures a highly qualified workforce to support economic growth. We must provide incentives that encourage students to remain in Kansas for postsecondary education and careers. Students must have interaction with businesses to inform them of career opportunities in Kansas. Scholarships, internship-s and job shadowing are ways of doing this. Businesses can partner with educational institutions to ensure career curriculum alignment, guidance and opportunities are made available to students. These initiatives can help our youth align their education and skills with business demands for workers. To optimize the impact of our research institutions on the state's economy, policies and initiatives must be well coordinated and designed to complement and support the Kansas economy. 36-2 Engage stakeholders including educational institutions, private sector representatives, subject matter experts and state leaders in forecasting opportunities, needs, and proactively aligning programs. The Positioning Kansas for Competitive Advanfage Report provided key information regarding aligning industry clusters and occupations with postsecondary education and workforce development. This type of research provides information ascertaining the demands of businesses in relation to what the state is providing in regards to workforcedevelopment. States that succeed in aligning supply with demand will be most competitive in attracting, retaining, and growing their competitive advantage nationally and globally. Kansas is already actively pursuing alignment of its postsecondary technical education institutions (including technical colleges and community colleges.) The Kansas Postsecondary Technical Education Authority was formed in 2007 to serve as accountability for the postsecondary technical education and improve alignment between secondary and postsecondary technical education institutions and also to ensure that schools are meeting the demands of the business community. Strateqv 37- Create an enhanced entrepreneurial culture in Kansas. 37-1 Enhance or expand business assistance efforts for growing businesses between the start- up phase and early stage of business evolution. Existing and expanding businesses are important to the Kansas economy. There may be a gap between the business assistance available for start-ups and major expansions. Start-ups can receive assistance from several sources, including Kansas Technology Enterprise Corporation, Kansas Bioscience Authority, Network Kansas, and others. Businesses seeking assistance for major expansions also have several sources of assistance from the Department of Commerce programs. Once businesses have started, they may need additional capital or assistance to take the next step, which may be adding only 4 or 5 jobs. While this is a small step, it may significantly improve the prOfitability and success of the business. These steps are important for every business and our business assistance efforts must be flexible and address these needs. 37-2 Support and promote activities and educational initiatives at all levels to improve the understanding of innovation and to stimulate and advance leadership and entrepreneurial values, skills, and accomplishments. Educational institutions must provide graduates with specific skill sets and competencies, including certain intangible skills which are non-disciplinary, but critically important to their career success. Entrepreneurship and leadership are a few of the characteristics students should be exposed to at a younger age, and these opportunities should be built into our educational system. Programs that serve as catalysts for the continued development of entrepreneurship and leadership could be created to target Kansas youth. Existing program models, such as Leadership Kansas could be utilized to target youth. Our youth will determine the future of our state and we must provide them with the necessary experiences that will engage them as change agents. . . . . . . . , t t .t ~ ~ . . ~ , ~ ~ ~ ~ l l I I I. I Strateqy 38 - Develop a national leadership role in Information Security and Information Assurance. 38-1 Support the Kansas National Guard's unique information security mission and the mission . the legislature has given Fort Hays State University in Information Assurance. Kansas businesses, governmental units, hospitals, law enforcement agencies, public safety agencies, the state's growing military sector, the bioscience sector, and even consumers are highly dependent upon secure digital networks and data storage. E-commerce and routine commercial function.s such as accounting, sales and banking are conducted electronically by businesses. The 184" Intelligence Wing in Wichita operates the largest Network and Intelligence Centerin the Air National Guard which actively serves as a critical node in the War on Terror. Fort Hays State University (FHSU) would like to implement a program on information assurance and security creating a Bachelor's program with an Information Security emphasis and expand the Information Assurance concentration at the Master's level. The program will help FHSU achieve the mission of integration of computer and telecommunications with the environment and the work place. FHSU will seek certification from NSA (National Security Agency) IT standards. The program was developed from an $821,000 federal grant to purchase hardware. The Legislature appropriated $500,000 in FY 2008 mostly to be used for faculty salaries to fully implement the program. The FHSU program is the sole program approved by the Fedeial Bureau of Investigation to offer academic credit for its elite Computer Analysis Response Team (CART) certification program. This program will support many Kansans, businesses and government as it will provide a highly educated workforce for anyone needing expertise in Information Assurance. 75 . . 38-2 Use the developing Kansas military and higher education critical mass across the state to spin off businesses and enhance current businesses dependent on information assurance. With the implementation of the Fort Hays State University (FHSU) Information Assurance programs, Kansas will be providing an educated workforce to support the demand for those educated on information security. A technically skilled workforce in the area of infonmation security will be able to develop and address many information assurance issues, thus enhancing businesses dependent upon it Continued efforts to partner with stakeholders such as the Kansas Bankers Association, Kansas Association of Counties and others are encouraged. Strateqy 39 - Enhance the Kansas Business Center (KBC). 39-1 Expand cross-agency application development.efforts and communication with the Information Network of Kansas to create a single online location for new and existing businesses to utilize for acquiring region-specific state and local resources and contacts; federal, state, and local regulatory compliance; and provide for an online environment designed to enhance the ability for Kansas businesses to thrive. The Kansas Business Center (KBC) was designed to enable Kansas business owners to interact with Kansas government online from the convenience of their homes or offices. This was a multi-agency effort to develop a centralized resource.for Kansas businesses. The availability and speed of information continues to be a critical aspect of conducting business, and state-level efforts to enhance and utilize technology to deliver services will improve the overall business climate in Kansas. Enhancing the utilization of the KBC can expand potential business opportunities. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 71 ! I : I 75 FHSU Legislative proposal. This page is intentionally left blank :1 ~ .- .- .- t"'" f'" f'" t"" f'" t"" t"" t"" ... ... ... ... ... ... ... ... ... ... .... .... .... .... .... ..,. ..... ... ... ... ... $l'!' .... ... ..., ... ... ... ... .- 72 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance ~ ~ ~ ,'"' . '8 '" ~ '" '" . 8 . ~ ~ 8 ~ e ~ ~ e ~ It ~ ~ ~ ~ !t ~ e ~ !t ~ e e e ~ ~ = e e ~ It' e ~ ill' State Image/Branding Mission - Enhance the marketing/branding of Kansas. Introduction' Kansas is a good place, but perception is everything, We need to market our state better - figure out what needs to be done and do it. - Statewide Cell Members, 2007 Strategic Planning process Unless you've lived in a particular state or city, or have good reason to know a lot about it, chances are that you think about it in terms of a handful of qualities or attributes, a promise or a story. Most of the things you think about it are probably well-worn cliches, and many of them may be untrue, unfair, or out of date. Yet, that simple brand narrative can have a major impact on your decision to visit the place, to buy the products or services that originate from there, to do business there, or even to relocate there.,,?6 The Kansas image (brand) and how we portray ourselves has been a pertinent topic for several years. Likewise, the impact of branding on Kansas economic development efforts has not been ignored, as time and resources have been spent on initiatives designed to specifically address marketing, tourism, business development, brand image and other related efforts. Historically, the state, specifically the Department of Commerce has taken the lead role in marketing the state for these efforts. Based on research and business input throughout the state, it has been suggested these initiatives have not'met their potential expectations for a variety of reasons. . From the research, five'basic overarching and intertwined tenets regarding brand initiatives seem to be present throughout several successful initiatives, including: measurability, funding, continuity, partnerships, and focus.77 While general tenets don't provide the specific means to implement and carry out a successful brand initiative, an understanding of them can provide the framework for building and implementing specific recommendations to'achieve our IQng-term vision. Strategy 40 - Support a public/private partnership to brand the State of Kansas incorporatinQ: continuity, measurability, fundinQ, partnerships, and focus. 40-1 To ensure the continuity of imaging/branding the state, create an Imaging/Branding Advisory Board with a public/private partnership to assist in the branding of the State of Kansas. The Board, comprised of cross-industry representation, would report to the Secretary of Commerce and assist in the development and execution of a targeted, proactive marketing and sales strategy that positions Kansas for aggressive competition in business investment, expansion opportunities and potential tourism opportunities, with appropriate balance and effective segmentation of the specific targets. The board would represent various stakeholders of government, business, and travel and tourism sectors. Potential board representation might include (but not limited to): Governor, Legislature, manufacturing, service, energy and natural resources, rural development and agriculture, bioscience, destination tourism, event tourism, hotel and convention, professional marketing, fine arts, county, city, etc. The size of the board should not be too large so as to remain functional and relevant, perhaps 15-17 members. . 76 Anhalt, Simon. The Anhalt Slate Brands Index Executive Summary, How (Ae world sees The Slales, 2006. accessed at: htto:!/www.statebrandsindex.com. 77 The Kansas Image: Overview an'! Analysis, Kansas, Inc., June 2007. accessed at: httD://www.kansasinc.orl!. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 73 74 Leveraging our Foundations and D~signing the Future: A Kansas Economic Renaissance r e e .. .. .. .. .. r r ... ... ... ... ... ... f" ,f" f" ... f" ... ... ... ... ... ... ... ... .. ... ... ... ... .... ~ .... .... .... ... .... .... ... ... The board would assist with developing a coherent, well-planned marketing/branding program, grounded in our state's inherent and emerging strengths and refiective of our vision for the future. This program would be inclusive, in that it would convey a broad state brand while providing the latitude and flexibility to market our state's key business clusters, as well as from a travel and tourism perspective. In short, it would assist in guiding the marketing for our state. 40-2 Devise a dedicated funding stream in concert with private investment to assist in the development of an aggressive statewide imaging/branding strategy and campaign. During the 2004 Legislative Session $700,000 was appropriated to develop and introduce a state brand image that could be used for both business recruitment and tourism marketing. In addition, Commerce contributed $700,000 of its own marketing budget and $300,000 from the Kansas Department of Transportation's Blue-Sign project, for a total of $1.7 million. Since the expenditure of the one-time funding, no enhanced resources have been provided by the Legislature for implementation. Based on research, if marketing and state image is a priority, then funding issues regarding these types of initiatives should be addressed on an ongoing, long-term basis through a combination of state, local and private industry partnerships. Currently, the state, through the Department of Commerce has taken the lead in regards to state branding/image, and given this approach, the state should be committed to providing an ongoing source of funding for these initiatives to enhance their effectiveness and potentially attract private industry interest and investments. 40-3 The Secretary of Commerce and Kansas, Inc. President shall provide an annual assessment and review of the state's imaging/branding efforts and deliverables to the Kansas, Inc. Board of Directors. While an image may be abstract and intangible, it can be a crucial part of marketing our state for fostering business recruitment and retention, travel and tourism, population growth, and a host of other initiatives that are important to the development and growth of the Kansas economy. The better we understand, monitor and work to improve our image, the more benefits we could see from its presence. Given the relative importance of imaging/branding on economic development efforts in Kansas, the Secretary of Commerce and Kansas, Inc. President must be aware of its status and provide an annual assessment and review of the state's imaging/branding efforts and deliverables to the Kansas, Inc. Board of Directors, including potential recommendations. . . . . '. . .. .. .. .. . . . ., . . . . . . . e e e e e e e e e e ~ ~ ~ ~ ~ ~ e e e e e Ii ti Economic Development Funding and Benchmarking Introduction Value can be created and measuredin several ways - tell us how to measure it and we will tell you how to perform. We must recognize and identify what Kansas needs to be successful, - Statewide Cell Members, 2007 Strategic Planning process The ,State of Kansas spends millions of dollars each year on economic development efforts. Beyond the state's spending, counties, cities and communities also spend millions of dollars through their local economic development agencies and organizations to support local efforts. There is demand for information regarding economic development expenditures, for items such as dollars spent, results, individuals served and total economic impact. Historically, there have been three primary state agencies charged with economic development efforts - Kansas Department of Commerce, Kansas Technology Enterprise Corporation and Kansas, Inc. Numerous other agencies, organizations and groups at the state, county, city and community levels also provide economic development services. With the number of agencies, organizations and programs involved with economic development in the state, it is necessary to compile and understand the aggregate funding amounts and results. Strateqy 41 - Examine the fundamental structure. methodoloQY and level of expenditures spent on economic development from the state level. 41-1 Conduct a study examining what Kansas and surrounding states spend on economic development efforts, According to the study Strategic Analysis of Economic Development Expenditures by Kansas State Government and Five Surrounding State Governments: FY 1989 - FY 2007, economic development funding averaged $128.3 million during FY 2007 for the six state region. Kansas'was below average with . funding at $98.7 million.78 . All states in the study have developed comprehensive plans for economic development, indicating the significance of the strategic planning process in policy formation. Generally, states in the study have shifted away from business attraction and business retention policies toward developing a state industrial policy. States have also tended to shift away from direct.subsidies toward foregone tax revenues or tax expenditures as a means of funding economic development. The following concepts should be kept in mind: . Expenditures are a necessary, but not sufficient condition of economic development. Funding does not provide a direct measure of the success or failure of an economic development program. . Tracking expenditures may provide an indication of the relative priorities of the various strategic foundations. . The lack of consistent reporting and budgeting makes it very difficult to assess the actual performance of economic development programs. . Large fiuctuations in funding may be an indication that economic development expenditures are not necessarily deemed by the legislature as being essential. As such, expenditures may be ,g States included in the study were; Kansas, Colorado, Iowa, Missouri, Nebraska, and Oklahoma. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 75 76 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance tr ., .. .. .. ~ ~ .. ~ .. .. .. f'" f'" .. f'" ... ... .. .. ... .. .. ... ... ... ... ... ... ... ... f- f- f- f- er- r fD' ". ". ". ,.. ,., ... subject to changes in the business cycle, the evolving global economy, and the ever-changing . political landscape. However, further study of the legi~.lative histories and performance assessments of the respective states is needed to establish the linkage between economic development expenditures and economic growth. The assumption underlying state funding of economic development programs is that government programs can be used to change the nature of the marketplace. Because government cannot do it alone, the best economic development strategy involves a partnership between the public sectors and the private sector and requires a dynamic process. 41-2 Examine the level of economic development expenditures and consider increasing expenditures at least by the level of inflation. . State-level economic development efforts are funded by three primary sources, including the State General Fund (SGF), Economic Development Initiatives Fund (EDIF), and Federal funds. The EDIF fund is designed to support the economic, technical, and workforce development needs of the state. The EDIF . is capitalized through transfers from the State Gaming Revenues Fund. Currently, 85 percent of the receipts deposited in the State Gaming Revenues Fund, after the statutory transfer of $80,000 is made to the Problem Gambling Grant Fund, are transferred to the EDIF. The Gaming Revenues Fund is limited to $50.0 million each year, and transfers to the EDIF can reach $42.4 million in a fiscal year. For the most part, revenues to the EDIF fund are stable; its share of gaming revenues is predictable and facilitates planning for expenditures in the affected agencies. For several years, the maximum amount allowable has been transferred to the EDIF fund. Inflation and other uses for EDIF funds has decreased the purchasing power of the fund, and the cap on EDIF funds does not allow adjustments to be made for changing economic conditions. When using the Consumer Price Index (CPI) to calculate inflation, the $50.0 million in 1987 would have the same buying power as approximately $92.0 million in 2007. Removing or adjusting the cap for inflation and other measures should be reviewed to help make economic development expenditures in Kansas competitive with other states. StrateQV 42 - Benchmark economic development information in Kansas. 42-1 Track, compile, and make available information pertaining to economic development efforts on an agency, city, community, county, and statewide basis in Kansas. A master file should be maintained in an electronic format for public use. The long-term success of a strategic plan depends on two elements: 1) Decision-makers must be able to make objective judgments on the success or failure of the strategies, and if necessary, appropriate adjustments, and 2) Broad public consensus on the economic development priorities and targets must be developed.79 . . . Benchmarking is a critical role that Kansas, Inc. must fulfill to complement its central mission of strategic planning. This will provide insight regarding the progress towards our overall economic vision. Compiling basic information on economic development efforts, as well as initiatives such as the Indicators of the Kansas Economy (IKE) project can be used to benchmark the Kansas economy and economic development efforts. 79 See A Kansas Vision, p. 19. . ~ ~ ~ .. ~ ~ e .. >-, .. ~,..' lIIl ~ lIIl ~....... ~ ! II ,;./ II .,...., ~ ~ .. >/ .. V .. ,/ Transportation Infrastructure Introduction Kansas has beachfront property as it relates to transportation and distribution. - Kansas Long Range Transportation Planning Process, 2007 Intormation in this section is primarily sourced from the Kansas Department of Transportation (KDOT) Annual Report.8D Transportation is a key factor in generating and sustaining economic growth. A good transportation system encourages private investment in the economy arid provides efficient access to materials, labor, equipment and markets. Kansas isat the hub of a network of interstate highways that cross the nation, and the state is close to major markets so travel times and shipping rates are competitive with the rest of the nation. Projects that enhance the transportation system also create economic benefits in several ways. ~ ~ . / Since 1990, tnuck travel in Kansas has increased 76 percent and is expected to reach 12.5 million miles of daily travel by 2020. KDOT and its local partners have made important infrastructure improvements under the Comprehensive Transportation Plan (CTP) to improve the efficiency and fiow of commercial traffic through the state. Kansas' complex transportation needs require more than just good highways. The state depends on the integration of other modes - rail, aviation, public transit, and bicycle/pedestrian trails - into the transportation system to meet the health, economic and recreational needs of Kansans. ~ ~ ~ ~ ~ ~ ~ ~ ~ , , l l l l l l Kansas airports carried 1.5 million passengers and more than 150,000 tons of freight in 2005. Kansas ranks in the top 10 of all states in railroad mileage with 4,917 miles of track, more than 2 percent of all U.S. miles. Public transit is a vital lifeline, especially in rural areas, providing access to health care, employment, education, shopping, and other services. . The Kansas Comprehensive Transportation Program comes to an end in 2009, and KDOT is working to establish an effective, successful vision for our transportation future. KDOT will update.the state's long range transportation plan with the intent of improving the Kansas transportation network and strengthening the economic future of the state. StrateQV 43 - Support the core recommendations within Kansas Comprehensive Transportation Plan and their role in economic development efforts. 43-1 Preserve existing transportation infrastructure. Keeping roads, transit, rail and aviation infrastructure in good shape throughout the state is a top priority for Kansas. The strong condition of today's transportation infrastructure is a product of many years of prudent transportation investments and it must be preserved. The challenge to protect these investments is growing, and a dollar spent on preserving transportation infrastructure doesn't go as far as it once did. 43-2 Align transportation to better support the Kansas economy. Throughout Kansa.s, economic opportunities are emerging. The state may need a more flexible approach for quickly guiding transportation dollars where they can most effectively support statewide economic prosperity. Recommendations to establish a category of opportunities projects expressly focused on meeting the state's economic needs have been made. Recommendations include: expanding the Local Consult process so communities have a greater voice in addressing transportation needs; and creating a Kansas Transportation Advisory Panel (K-TAP), which can help KDOT better incorporate regional, W Kansas Making Progress: Our Transportation Performance 2007 Annual Report, Kansas Department of Transportation, 2007. Leveraging.our Foundations and Designing the Future: A Kansas Economic Renaissance 77 78 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance r ~ ~ ,- ,- ,- ,.. .(1' ,.. ,.. ,.. ,.. ,.. ,.. ,. ,. ,. ,. ,. ,. .- .- .- .- .- .- .- .- .- ,. ,.. ,- ,- ,- ,- p .. ... ... .... ... .. .,. ... multimodal and economic development perspectives into its decision-making processes while providing broad-based input to the Secretary of Transportation. 43-3 Provide leadership and str:tegic investment for all modes of transportation. Kansas business'es and residents benefit from investments in all modes of transportation, including state highways, local roads and other modes of transportation such as aviation, bicycle and pedestrian facilities, rail and transit While more funds are needed to realize the potential of multimodal transportation in Kansas, there will never be enough funds to meet all of our transportation needs. Therefore recommendations have been made that the state become very intentional in the way transportation investments are made and KDOT provide better statewide, strategic leadership to make the most of limited funds. 43-4 Ensure safety is a priority within the state's long-range transportation plan. Safety is an integral part of every activity KDOT undertakes, from how roadways are designed, built and maintained to efforts to educate the public on the importance of wearing seat belts and the dangers of drinking and driving. While much of the attention given to traffic crashes centers on the number of fatalities, the number of motorists injured in vehicle crashes is also of epidemic proportions. These crashes have an emotional cost as well as an economic cost Each year, vehicle crashes cost Kansans more than $2 billion, and the share borne by taxpayers is huge. National averages indicate the public pays 13 percent of the cost of crash injuries treated in an emergency department; 26 percent of the cost of injuries requiring hospitalization; and 48 percent of the cost of injuries treated in a rehabilitation hospital. . .' .' .. 1\8' ,." ,., . " " " e " . . " e " e " e e e e e e e e e e e e e e e ~ !l) e e . . . it It .. Conclusion Kansans will notably increase../Jusiness and personal wealth and improve our quality of life by focusing on our inherent and emerging strengths During the Strategic Planning process, six guiding principles were articulated by individuals throughout the state regarding economic development efforts: . Pay attention to existing businesses, as they are already here and will continue to be an important part of the current and future Kansas economy. . From a local perspective, hold the cities and counties harmless in regards to state economic development initiatives. State initiatives must not unwillingly shift the burden to local government, unless this shift has been requested. . The state must be business and capital friendly to encourage growth and investment in Kansas. . Every business matters in Kansas, whether small or large, the economic development strategy must recognize and assist all types 'of businesses. . Limited economic development resources require focused efforts with measurable results. . With limited resources, focus on the high-value targets through prioritization and addressing the most important issues first. Kansas has five core industries that currently provide both inherent and emerging economic strengths within today's integrated global economy. However, as identified through this process, we must continue moving forward. These strengths, set in a focused environment, can contribute to the sustainability of our economy and allow us to transcend economic cycles. Transitioning into the integrated global economy with our inherent and emerging strengths aligned in a focused environment for opportunity will result in strength through aligned resources. The vision of this plan seeks to move us toward this concept; however, we must continue to benchmark and revisit economic development.strategy on a periodic basis to address future economic goals and challenges. This plan suggests an overall strategy to take us in that direction. It doesn't matter whether we are the lion or gazelle, let's just start running. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 79 This page is intentionally left blank ..... .- .- .- .- f"" f"" f"" .- ... .... ... .... ... ... ... ... ... ... ... ... ... ... ... ... ... P.'" ... P.'" ..... ..... ..... ..... ..... ..... ~ .... .... ~ ~ t1 ~ I .~ t!1 80 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance .~ . . . . ~. ~ .~ ~ ~ ... ~ t ~ ~ ..~ ~. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e e e ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ . Appendix A. Economic Overview Trends in the Kansas Economv 1985 - 2006 An understanding of the major trends that are affecting the economy is essential to the Strategic Planning efforts undertaken by Kansas, Inc. While economic changes and challenges disturb the status quo, they can bring opportunities to states that embrace them, and when we refer to how economic trends are affecting the Kansas economy, our real concern is how the trends are impacting Kansas individuals and businesses. From the Trends in the Kansas Economy ReportS1, several major economic trends are changing the way businesses ~perate, and how we address these trends will be important for future economic development efforts. Today, we are operating in a global economy, involving more than simply importing and exporting. The new integrated global economy is allowing firms to increasingly integrate their operations across national boundaries, resulting in increased competition, outsourcing, new markets, and potential sources for new capital.investment. There is enormous potential for Kansas in the integrated global economy. Innovation and technology continue to be crucial to Kansas' economic development. Existing firms require access to new technology and new technology-based industries and businesses present unique opportunities for the state. Kansas must invest in new technologies to remain competitive. Access to financial capital remains critical for Kansas' economic growth. To foster the growth of new firms, the state must support the financial needs of entrepreneurs and existing firms must have access to . financial capital to fund expansions: Three demographic trends affecting Kansas include: 1) population growth in urban areas versus population decline in most rural areas; 2) over two-thirds of the state's population growth coming from Hispanics and Latinos; and 3) the aging of the state's population. Manufacturing, agriculture, and the oil and gas industry have historically been the cornerstones of the Kansas economy, and these industries may change as we transition into a new integrated global economy. Among others,jobs, workforce, productivity, regulations, resources, and cyclical markets are all issues that will continue to inftuence these industries. The relative growth of the service sector demonstrates that mu.ch of the state's future employment growth will come from service-providing industries, such as financial activities, health care, social assistance, and other businesses services. The growing importance of a well-educated and skilled workforce is crucial, as a major trend is for firms to move lower-skilled work to places such as China, Mexico, and India, where wages are lower. In the long- run, it will be difficult for Kansas to compete for low-skill jobs, and as a result the state must focus on . developing a workforce that can compete for higher-skilled, higher-wage jobs. Kansas workers will only be attractive to employers if they have the education and skill training to justify their higher wages. 81 See Krider, p. 25. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 81 . A reduced labor force participation rate: As the baby boomers age and drop out of the labor force, the labor force participation rate will drop due to the size of this cohort group. r" r" ~ (ill (ill fIl .. .. if- '" if- '" '" '" .. .. .. .. '" '" '" .. .. .. .. .. .. .. " '" '" '" '" '" '" Issues and Trends Identification in Kansas In preparation for the Strategic Planning process, the Center for Economic Development and Business Research (CEDBR) at 'Mchita State University identified. major issues and trends that could affect the . Kansas economy over the next oecade. Several of these trends and issues are ongoing, such as aging popuiation, shortage of workers, and continuing environmental issues, and several have occurred in recent years, such as terrorist attacks and the continuing depletion of natural resources. The following trends are outlined from the Issues and Trends Identification Report" Four trends emerge from the examination of Kansas demographic data: A declining labor force: The labor force age group, ages 16-64, is expected to grow by 6:3 percent through 2010, then decline by 5 percent through 2030. Fewer school-aged children: Although there will be fewer children aged 5-17 in 2030 than there were in 2000, educational costs fOr those children will more than double. Fewer children and growing educational costs could result in further school consolidation in rural areas. . More people aged 65 and older: From 2005 through 2030, the number of people aged 65 and older is expected to increase by 235,022, bringing the total number of seniors to 593,091, representing 20.2 percent of the total expected population in Kansas in 2030. The additional elderly population, over and above the 2003 population level, could conservatively cost the state an additional $258.1 million in Medicaid payments over the 25-year period from 2006 through 2030. A larger Hispanic population: The Hispanic population comprises a larger percentage of the total population (8.4 percent), than any other minority group. In addition, those of Hispanic or Latinoorigin comprise a larger percentage of foreign born in Kansas and have a higher proportion of people living below the poverty level. Because it costs more to educate students living in poverty, in the year 2030 it could cost $134.1 million more to bring the Hispanic children in poverty up to performance standards, than it would if those same children did not live in poverty. From the work force and industry data and information gathered, these trends emerge: A slower job growth rate than the nation: The Kansas Department of Labor and the Bureau of Labor Statistics projected an annual growth rate of 1.5 percent for Kansas from 2002-2012, while the growth rate for the United States is expected to be 1.6 percent for that same time period. An expected shortfall of workers through 2012: The Center for Economic Development and Business Research forecasts a shortage of 124,301 to 194,935 workers by 2012. . A need for skilled workers for high-paying jobs: "In Kansas, projected job growth lags the nation in all but the lowest paying quintile of jobs (less than $20,730 annually). The largest shortfall in growth is for the highest paying jobs (more than $47,610 annually)." . A need to reverse net outfow of workers to other states and increase infiow of foreign-born . workers: The state continues to'have a net out-migration of workers even though net losses oi workers to other states are declining. This is due to the decline of international migration into the state. ... .... 82 Leveraging our F9.undations and Designing the Future: A Kansas Economic Renaissance tlI '" tlI $I eo e.. e.. fJI ~2 Harrah, Janet, Gallagher, Anne, Franklin, Debra, and Mary Jane Townsend. Issues and Trends Identification in Kansas. Center for Economic Development and Business Research, W. Frank Barton S~hool of Business, Wichita State University for Kansas, Inc. December 2006. '!!II> ';i~ ~ , ~ ~ ~ ~ ~ '1t ~ ~ ~ ~ ~ ~ ~J ~ ~ ~ ~ ~, e e ~ ~ ~ ~ e ~ ~ ~ ~ ~ ~ l ~ .. .".~=7cCY'._"=;-_=_'=~'"~""~~""'-"~-=~'~~.~...= '==___"""n_ _..........,-___.=== -~--~.~._. A current industry structure unlikely ta maximize emplayment grawth ~hraugh 2012: Campared ta the natian as a whale, Kansas has a large presence .of aerospace product and parts manufacturing, agricultural praducts and telecammunicatians, except cable, all .of which are expected ta reduce jabs .or add jabs slawly; and a small presence afemplayment and private educatianal services, which are expected ta add jabs rapidly. . Cantinuing unequal pay and emplayment appartunities far wamen: Wamen wha were full-time wage and salary warkers in 2005 had median weekly earnings .of $585, .or 81 percent .of the $722 median far men. Belaw are the trends and issues surrounding Kansas trade and glabalizatian: Kansas exparts are grawing: Kansas exparts tataled $6.72 billian in 2005, an increase .of 36 percent aver 2004, and Kansas is an track ta break expart recards again in 2006. The value .of aircraft industry exparts reached an all-time high in 2005, increasing 87 percent fram the mast recent law in 2003. The U.S. trade deficit is grawing: The U.S. trade deficit nearly daubled from 2001 ta 2005, reaching $717 billian and indicating that America cantinues ta be attractive ta internatianal investars. Outsaurcing is expected to graw: As Kansas campanies are farced ta became glabally integrated, they may use autsaurcing as a means ta remain mare campetitive and profitable. Yet, research has shawn that through 2015, autsaurcing will prabably affect .only 0.2 percent .of em played Americans annually. Mare internatianal educatian is needed: Besides the specific skills and knawledge that are necessary ta manage the mechanics .of trade, there alsa needs ta be a glabal mindset and understanding. Mare educatian .of the general public cauld help create a mare pasitive, less fearful attitude taward world trade and globalizatian. The fallawing trends emerge regarding technalagy infrastructure in Kansas: The Farm Security and Rural Investment Act .of 2002: This act facuses an rural develapment and autharizes $100 millian far grants, laans, and laan guarantees far the purpase .of improving access ta braadband telecammunicatians services in rural areas. . Technalagy infrastructure and ecanamic grawth: The carrelatian caefficient between incame growth, 1993-2003, and infrastructure is 0.22. Similarly, the carrelatian between emplayment growth, 1993-2003, and infrastructure is 0.19 per BEA-REIS. These carrelatians are law, but significant. Increasing Internet use: Purchasing, selling and infarmation gathering over the Internet are increasing far all business sectars, placing greater demands an existing services and .offering appartunities far expansian. Farmers and ranchers are increasingly adapting the Internet as a business taal. Legislative issues: Kansas needs ta assure that its regulatian, taxing and fee palicies regarding Internet and ather technalagy develapment and usage suppart ecanamic develapment thraughaut the state. If nat currently available, a camparative study .of Kansas and ather state regulatians and fees wauld clarify appartunities far improvement .or far promatian .of the state as a favarable lacatian far technalagy-based businesses. .Technolagy security: Security praCtices are still immature and patentially risky. Security taals are available, but nat widely used. Five trends emerged in the discussian .of the enviranment: Declining water supply: The amaunt .of water being used from the Ogallala Aquifer is nat being replenished and will same day be unable ta suppart the demands put upan it. Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 83 84 Leveraging our Fou.ndations and Designing the Future: A Kansas Economic R~naissance r r r r .- r r r ~ ~ r ,. ,. ,. ,. ,. ,. r ,. r ,. ,. ,. f!- f!- f!- f!- f!- P f!- ... .. .. .. .. fP P .. .. .. .. .. .. .. Polluted streams and lakes: Thirty-nin(O percent of the state's assessed stream mileage is impaired for one or more uses, and 76 percent of assessed lake acreage is impaired for one or more designated uses. Loss of wetlands: From the 178..9s to 1980, Kansas lost more than 40 percent of its wetlands. Of the publicly owned acres of wetlands, 84 percent are impaired for one or more uses. Continuing issues regarding solid waste: In 2005, the average Kansan land filled 6.1 pounds of municipal solid waste per day, yet we recycle only about 20 percent of this waste, compared to the national average of 30 percent. There are currently gas energy projects at four Kansas landfills, but much more could be done to turn landfill gases into renewable energy. Increasing development of alternative sources of energy: Kansas continued to be a net energy importer in 2005, consuming 432 trillion BTUs (British Thermal Units) more than it produced. However,. wind energy has the potential to meet roughly 10 percent of Kansas electric power needs in the next decade, and ethanol production is increasing in the state. Five trends emerge from the rural development data: Depopulation in rural areas: The Kansas rural population as a percentage of total population decreased from 77.6 percent in 1900 to 28.6 percent in 2000. Continuing environmental issues: Urban expansion into the watersheds is a major concern due to problems that come from human activities that increase the amount of nutrients (phosphorus and nitrogen) in reservoirs. Environmental restoration of real property to remove hazardous substance increases the efficient use of urban and rural land. Rural health care needs: Access to local pharmacies may be at risk in rural communities if prescription drug plans rely too heavily on mail-order companies to distribute drugs. Immediate planning and adoption of health information technology is required due to limited infrastructure and availability of capital in rural areas. Support for family caregivers and long-term care services are deficient in rural areas. Changing rural economics: Home-shoring or rural-sourcing, a new trend, is dependent on the rural employee possessing the correct combination of occupational skills that are demanded by the global economy. Economic development strategies must be driven by a region's distinct economic assets and its unique market opportunities or indigenous strengths. Agricultural prosperity that could be dampened by lowered productivity: The rural economy appears positioned to reap another year of prosperity. Soil conservation needs to be a priority to maintain .the productivity level of existing farmland. The issues below emerged in the discussion of agriculture and homeland security: Threat of foot-and-mouth disease: FMD is the single greatest threat to our agricultural economy, in part because Kansas was ranked second in the nation for its total cattle inventory in 2004. Crop vulnerabilities related to terrorism: Obtaining plant pathogens and exposing them to crops would be relatively easy and would require little expertise. Because crops are openly exposed, they are quite vulnerable to attack. A water supply dependent on the vigilance of day-to-day ma'nagement: The Kansas Department of Health and Environment believes that terrorist attacks on our water systems could occur, but because of past experience, there is not a high probability of that happening. The safety of local water systems is dependent upon accurate vulnerability assessments, appropriate deterrents and vigilant system operators. "W .. .. . . . . (9 (9 \8 \8 l8 . . . 8 " ~. ~ " " . . " ~ . . . . ~ ~ ~ ~ !!l e !!l _. ~ ~ ~ ~ ~ . . II) ,~.C~ Indicators of the Kansas Economv (lKE) The following section, based on information from the Indicators of the Kansas Economy Report, provides a brief overview of several economic indicators, compared on a one-, five-, and ten-year basis to capture trends 'over each specific period. Kansas is compared to both the U.S. and the 6-State Region surrounding Kansas, consisting of: Arkansas, Colorade;-.Iowa, Missouri, Nebraska, and Oklahoma. A brief comparison depicts that Kansas trends similar to both the 6-State Region and the U.S. in several indicators; however, there are slight differences in percent growth, which over the long-term, can have a substantial effect on the Kansas economy. Population Table 3. Population, 1996 - 2006 Kansas 6-State Region U.S. Jul-06 2,764,075 21,736,590 299,398,484 Jul-05 2.748,172 21,503,835 296,507.061 Jul-01 2.702,446 20,881,612 285,226.284 Jul-96 2,614,554 19,817,503 269,394,284 0.6% 1.1% 1.0% 2.3% 4.1% 5.0% 5.7% 9.7% 11.1% During 2006 the U.S. Census Bureau estimated the Kansas population to be 2,764,075, an increase of 0.6 percent over 2005 and an increase of 5.7 percent over 1996. During the ten-year period, Kansas has lagged both the 6- State Region and the U.S. in population growth. While the. population of Kansas has increased overall since 1996, several rural counties have experienced a population decrease while more urban counties have experienced a population . increase. During 2006 there were 34 counties that gained population when compared to 2005. Of these counties, 12 were Metropolitan, 11 were Micropolitan, and 11 were Rural. Figure 13. Population Growth, 1996 - 2006 12.0% 11.1% 8.0% 5.7% 10.0% 9,]'010 6.0'% 4.0% 2.0",1, 0.0% ,4' ,# ,4' ,# .I' #" #,"v #' #' i' #' #' I-+- Kansas -. 6-state ~ion -m-- us. I Source: US. Census BUTeau - www.census.oov Industry Composition Figure 14. Total Nonfarm Employment (by sector), 2006 Local Governrrenl, Total nonfanm employment represents 13 175.000.12.9% major nonfarm sectors measured by the State Goverm"'"'. Bureau of labor Statistics. This section 53.100.3.9% provides an overview of those sectors and their Federal Govemrrent, share of total employment within the Kansas 26.100.1.9% economy. Other Servk:es, 52,200.3.9% During 2006, the largest sector was Trade, Transportation, and Utilities, comprising 19.3 percent of the total. Other major sectors comprising more than 10 percent of total nonfarm employment included: Manufacturing (13.5 percent), local Government (12.9 percent), Educational and Health Services (12.2 percent), and Professional and Business Services (10.2 percent). Leisure & J-bspitality, . 114,800,8.5% Trade, Transportation, & Utilities, 261,400, 19.3% Educational & I-ealth Services; 165,800, 12.2% Inforrm.tion, 39,200,2.9% Professional & Business Services, 138,300,10.2% Financial Activities, 71,800,5.3% Source: Bureau of Labor Statistics - www.bls.aov Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 85 ',"""",~-'--..,....,......_.., Within total nonfarm employment, several sectors within Kansas have experienced growth over a 1-year period, with Natural Resources and Mining experiencing the highest increase at 13.2 percent. Over a 1- year period, only the Information Sector (-1.0 percent) and the Other Services Sector (-0.6 percent) have experienced a decline in growth. Over a 1 O-year period, ail sectors except Manufacturing (-1.6 percent) have experienced growth. Over a 10-year period, the highest growth has occurred within the Educational & Health Services Sector (27.4 percent) Employment Figure 15. Employment Growth by Sector in Kansas, 1996 - 2006 30.0% 27.4% -. . 22.9% 22.7% -10.0% -6.4% .20.0% -22.5% ~<f ..... Q ~~ f+# /'# ..'" <f' /' ,~ ",. ,<> 0/.1' .. o .' ." 0J /<f' ",-l' -a-" c/'a>"> #~ ,~ ...,It,/I" .,l' .,i' x./ ~p 'It ,<Ii' ~ , $ # # 1_1-yrCllg.5-yrCllgc10-yrChg! <1>. 01!Y "," Source: Bureau of Labor Statistics - www.bfs.aov Table 4. Total Nonfarm Employment (all employees, thousands), 1996 - 2006 Kansas 6-State Region U.S. 2006 1,353.6 10,254.4 136,174.0 2005 1,333.1 10,067.1 133,703.0 Totai nonfarm employment represents thirteen major nonfarm sectors measured by the Bureau of Labor Statistics. These sectors'include: Natural Resources & Mining; Construction; Manufacturing; Trade, Transportation & Utilities; Information; Financial Activities; Professional & Business Services; Educational & Health Services; Leisure & Hospitality; Other Services; and Federal, State, & Local Government. During 2006 Kansas reported total nonfarm employment at 1,353.6 thousand, an increase of 1.5 percent compared to 2005 and a 10.2 percent increase compared to 1996. Overa 10- year period, Kansas total nonfarm employment has trended similar to both the 6-State Region and the U.S.; however, since the 2001 recession Kansas has lagged both the 6-State Region and the U.S. in total nonfarm employment growth. 2001 1996 1,348.8 1,228.3 1.5% 0.4% 10.2% 10,003.1 9,135.8 1.9% 2.5% 12.2% 131,826.0 119,708.0 1.8% 3.3% 13.8% Figure 16. Total Nonfarm Employment Growth, 1996 - 2006 20.0% 15.0% 13.8% 12.2% 10.0% 10.2% 5.0% 0.0% '" ~ ","-'>~ ""-~'-~'). ~ ~ ~ ~ ~ ~ f 1___ Kansas ---6-6-$tate Region -.:.-us.1 Source: Bureau of Labor Statistics - www.bls.aov ').~~'" ').# ').<5''' ~ ~ ,,~ ,,<5' 86 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance !I'" If!'" If!'" '.... IW- IW- '... 1,,- r,,- r,,- r,,- I.- i... rW" rW" '... :. ... .. ... ... ... ... ... ... ... .. ... ... ... ... ... ... ... ... ~ ... ... ... ... ... ... -- '*'- .. . . . . " \It! . .. ~ . .. . ,-"'- ~ ~ . ~ ~ ~ . ~ ~ . . ~ . . 8 \~" e ~ . 8 '-~ ~ e @I' ",..;;;J ~ - ~/ ~ ~ A ~' ~ " ..,.~-/ .. ,~ . ~ Unemployment. Table 5. Unemployment Rate (%), 1996 - 2006 2006 -2005 Kansas 4.5% 5.1% 6-State Region 4.3% 4.8% U.S. 4.6% 5.1% The unemployment rate represents the number of unemployed individuals as a percent of the labor force. The three factors that determine the unemployment rate are: the number of individuals employed, unemployed, and the size of the labor force. Therefore, a shift in any of these factors may infiuence the unemployment rate. During 2006 Kansas reported an annual unemployment rate of 4.5 percent, a decrease of 0.6 percent compared to 2005 and an increase of 0.1 percent compared to 1996. Over a 10-year period, Kansas unemployment . levels have trended similar to both the 6-State Region and the U.S., however, Kansas levels have been slightly higher than the 6-State Region average. Wages The average level of wages within major industry sedors may illustrate the impact industries can have on the economy. The level of employment and wages can also provide insight into how each sector is performing within the overall economy. During 2006 the average annual wage for all industries was $35,699 2001 1996 4.3% 4.4% -0.6% 0.2% 0.1% 3.9% 4.2% -0.5% 0.4% 0.1% 4.7% 5.4% -0.5% -0.1% -0.8% Figure 17. Unemployment Rate, 1996 - 2006 7.0% 6.0% 5.0010 "JC'.~"'~"'..... ,~ ~ '" .?1. ~-- ~~/ ,-,'4'# 4.6% -~&, 4.5% 4.3% 4.0010 3.0%. 2.0"'{' 1.0% 0.0% ~# ~# ~# ~# 0,# ~~ ~o, ~'" #' ~., #' # I-+- Kansas -+- 6-State Region -w-- u.s. [ Source: Bureau of Labor Statistics - www.bls.aov Industry . Agriculture, Forestry, Fishing, Hunting Mining Utilities Construction Manufacturing Wholesale Trade Retail Trade Transportation and Warehousing Information Finance and Insurance Real Estate and Rental and leasing Professional and Technical Services Management of Companies and Enterprises Administrative and Waste Services Educational Services Health Care and Social Assistance Arts, Entertainment and Reaeation Accommodation and Food Services Other Services, except Public Administration Govemment Table 6. Average Annual Wages (by industry), 2005 - 2006 2006 Average Wages 2005 Average Wages Percent Change $ 29,690 $ 28,432 4.4% $ 47,486 $ 44,219 7.4% $ 66,709 $ 64,721 3.1% $ 39,216 $ 37,187 5.5% $ 47,504 $ 44,085 7.8% $ SO,969 $ 48,565 5.0% $ 22,310 $ 21,277 4.9% $ 35,900 $ 35,015 2.5% $ 60,282 $ 56,627 6.5% $ 50,345 $ 48,568 3.7% $ 30,512 $ 29,143 4.7% $ 50,029 $ 47,992 4.2% $ 73,472 $ 64,395 14.1% $ 28,984 $ 26,531 9.2% $ 28,219 $ 27,099 4.1% $ 33,745 $ 32,504 3.8% $ 13,605 $ 13,736 -1.0% $ 12,230 $ 11.805 3.6% $ 23,856 $ 22,688 5.1% $ 33,409 $ 32,067 4.2% $ 35,699 $ 33,844 5.5% State Average Source: Kansas Labor Market Information - www.dol.ks.aov Leveraging our Foundations and Designing the Future: A Kansas Economic R~naissance 87 Gross Domestic Productby State (GSP) Table 7. Gross Domestic Product by State (millions of current dollars), 1996 - 2006 2006 2005 2001 1996 Kansas 111,699 105,228 _. 86,430 67,965 6.1% 29.2% 64.3% 6-State Region 882,512 827,849 673,054 518,041 6.6% 31.1% 70.4% U.S. 13,149,033 12,372,850 10,058,168 7,659,651 6.3% 30.7% 71.7% GSP captures state economic growth, providing an overall analysis of the performance of the economy. GSP is the value added in production by the labor and property located in the state. All GSP data is displayed in current dollars and are not adjusted for inflation. During 2006 Kansas reported GSP at $111,699 million, an increase of 6.1 percent over 2005 and an increase of 64.3 percent over 1996. Over a 1- and 1 O-year period, Kansas has lagged both the 6-State Region and the US. in'GSP growth. 80.0% 60.0% 40.0"10 20.0% 0.0% Per Capita Personal Income (PCPI) Figure 18. Growth in Gross Domestic Product by State, 1996 - 2006 71.7% ~70.4% /ff'" ~ v#' ,~." ,# ,# ,# ,#' #' #" #''' #' ,,# #' ,,# J' 1--... Kansas --- 6-State Region -&- u.s. I Source: Bureau of Economic Analysis - www.bea.aov Table 8. Per Capita Personal Income (PCPI), 1996 - 2006 2006 2005 2001 1996 Kansas 34,744 32,666 28,701 22,845 6.4% 21.1% 52.1% 6-State Region 33,437 31,734 27,849 22,140 5.4% 20.1% 51.0% U.S. 36,629 34,685 30,562 24,175 5.6% 19.9% 51.5% The income received by all persons from all sources, divided by the population. Personal income is the sum of net earnings by place of residence, rental income of persons, personal dividend income, personal interest income, and personal current . transfer receipts. Personal income is measured before the deduction .of personal. income taxes and other personal taxes. Personal income is reported in current dollars. During 2006 Kansas reported pePI at $34,744, an increase of 6,4 percent over 2005 and an increase of 52.1 percent over 1996. Over a 1- and 1 O-year period, Kansas has outpaced both the 6-State Region and the U.S. in pePI growth. When comparing actual levels of PCPI, Kansas has lagged the U.S. and outpaced the 6-State Region. Figure 19. Per Capita Personal Income (dollars), 1996 - 2006 $40,000 $35,000 $36,629 $34,744 $33,437 $30,000 $25,000 $20,000 ,# ,# ,# ,#' #' #" #''' #'", #' #''' #' #'~ I-+-Kansas ___6-S1ateRJagion ~u.s.1 Source: Bureau of Economic Analysis - www.bea.oov 88 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance i,p 'iP ';e ';e ';e ;e ..,. 'lil" .... ... lil" .. ... .. .. ... ... ... ... WI' WI' .. ... W" W" .. .. .. .. -- .. WI WI ~ ~ ~ -- -- ~ ~ ~ tjIlI ... ~ - ? 'P ~ ~ ,. ~ . "''- ,. .~.... !P "! . ~ e ~ e if e if if I!ll &.r' - ':>.:" I!ll ~~ I!ll '::0,- ~ ~ w ~ ~ y ~ :,..-' , ~ ~ ,,?, ~ ~ 11\ y 11\ '.7' ~ ;.... 11\ " ~ II .~ ~ ~ ~ ~ . Appendix B. Executive Summary of Statewide Cell Information Overview This Executive Summary highlights.several main points brought forth during the discussions at the Strategic Planning Cell meetings. These and several other concepts were discussed in-depth during the Cell meetings. Manufacturing - Aerospace and General . Kansas has a strong manufacturing industry consisting of small-, medium-, and large-sized firms . The manufacturing industry needs more workers The aviation industry is important to Kansas . New technology and manufacturing techniques may help spur growth in rural areas Rural Development and Agriculture Rural development issues are not unique to Kansas, other states are dealing with these issues also Rural communities need access to medical facilities Employee~owned businesses may be an opportunity in rural areas . The biggest complaint is there is nothing to do . Must continue the entrepreneurial spirit . Local control of business is critical to economic development . Recognize what we can and can't do . Address asset transfer to the next generation . State guidance on succession planning for businesses . Wealth transfer from aging population could be a source of investment . Transfer of local business assets out of the area is a big issue . Some young, talented individuals are starting to look to tlie area for quality of life . Some small communities have tuition forgiveness if you move there . The opportunity to prosper, quality of life must be known . Need better jobs to lure young people . Mobile population, there is no longer a "hometown" . As the population ages, they move closer to services . Rural growth has been slow . Use economic development to stabilize communities Idea of attracting telecommuters has some potential Immigration is an opportunity in rural areas . Promote community involvement with immigrants . Individuals move to where the jobs are . The state needs comprehensive training program to take to the field Rural areas are missing skilled development professionals at leadership levels . Identify needs and build from within Service Industry . The service industry drives the economy, must ensure what that what they are doing right continues to be done right Information seNices is a new industry It may be less costly to move individuals to areas where services such as healthcare are already provided The northeast area doesn't depend on oil and gas, agriculture or aviation, but is the economic engine of the state Need the raw materials, markets, and human resources to survive . Need incentives to produce something different or something that can't be outsourced . Difficult to compete against foreign labor costs Incentives leveraged towards manufacturing are important Industrialization has not always been a popular issue . Need a long-term rural development state plan that doesn't change . Communities need to communicate bette'r . Community and regional collaboration . Smaller communities cannot afford economic development specialists _ . Community foundations could keep wealth in rural areas . Extension agents know what,is going on in the area . Need a vehicle for aging population to invest in their communities . Connectivity would help rural hubs grow . Rural development is difficult unless you are a regional node There is little focus on a long-term entrepreneurship planning We need coordination on a state level . Community strategic planning is important Different perceptions/strategies could be used from eastemlwestern Kansas regarding rural development . USDA grants difficult because of definitions and population requirements . The state could provide ways to reinvest in our communities . Neighborhood revitalization, Main Street program have worked well . Why should we fix older buildings when property taxes will increase . Rural communities rely on their schools Individuals like local control and use . Consolidation at the administrative level Take pride in your community . Decisions for western Kansas made from eastern Kansas . Urban areas don't understand agriculture . Perception that northeast Kansas growing at the expense of rural communities . Rural development is not one size fits all . Important that agriculture s.urvives . Separate agriculture from rural development issues . Trying to build a cluster around the KU Medical Center (Wichita) has been difficult . Agri-tourism is an opportunity through 1-70 corridor Tourism opportunities in the Flint Hills . The military is important to the Kansas economy . Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 89 Energy and Natural Resources . Continue support for energy research and development . "More state support for competing in industry . Concern about losing oil and gas revenues to outside interests . Funding the community energy complex was challenging . State energy plan and state water plan must work together . Incentives through tax credits . Regulations are an obstacle . Incentives for recycling water Water quality is an asset . Water conservation must be addressed - must preserve our water supply . Water is a major issue, could be a limiting factor for economic growth . Electric utility infrastructure needs to expand/upgrade . Additional power plants could stimulate economic growth . Cheap utilities help communities develop and grow Bioscience . Focus on agriculture with an bie-terrorism program Bioscience could be a means to break into the.new economy Need to attract more bioscience endeavors Expand bioscience initiative across the state Kansas is doing well in biotechnology . Business and Tax Climate . Limits our competitiveness in attracting new business, retaining existing . Must learn to adapt to international business trends . Deficit spending getting worse . Friendly competition is needed, but focus on the big picture Many immigrants don't file returns, sales tax must be more prominent . Some legislative actions (gambling) may have negative lon9- term impact on business . Determine what we value the most in eastern/western Kansas and clear away obstacles . Tax changes may shift.the burden, hold cities and counties harmless . Small victories in tax law help small businesses . We need an effective way of comparing tax burdens . Kansas is a good place to start a business, but not to continue it . As individuals get older, tax structure becomes more important . Can make many decisions or use one vision to get to a strategy . Create a stronger economic engine out of Kansas Tax what we don't want . Legislature missed the point on condemnation, eminent domain , .,~." M~ny individuals don't know ,about all of the programs that. are available Marketing tax credits could be an opportunity . Simplify and customize our current programs . Kansas in the middle regarding taxes . High number of local taxing entities . Tax issues at the local level Haven't done a good job of marketing business climate compared to other states . High property taxes discourage prospective businesses . Between healthcare and tax environment,'many businesses unable to survive . Alternative energy potential with wind energy and bio~fuels . Provide incentives for additional alternative energies . Seed dollars are hardest part of ethanol industry . Sustain ability of ethanol subsidies Wind energy opportunities . Ethanol and bio~fuels may help rural areas . Wind energy, nuclear power, diversifying our energy portfolio is important . Alternative energy such as wind may be an opportunity . Eliminate roadblocks and encourage positive behavior . Educate and alter mindsets on conservation and proper use . Conservation, green buildings, mass transit are opportunities . Promote energy and water conservation, provide incentives . Conservation, education, pollution control, incentives part of the package . Green building technology will probably require government mandating . . Emerging needs include bioscience opportunities . Connection between animaf health and food safety needs to be linked with agriculture . Need to import individuals for these jobs . Entrepreneurial programs are good ways to start new businesses . There is emphasis on growing existing businesses here . Organize locally and focus on tax issues . Commitment, resources, and cooperation for starting businesses seems to be there . State doesn't do much to help or assist existing businesses, they focus on new businesses . State could playa role in emerging markets . When core competencies change, businesses may need state assistance . May not be possible to get businesses into rural areas, unless incentives like Cheap power or a workforce . State purchases many things outside Kansas, address with sliding scale preferential treatment . Cut spending to deal with taxes . Workers compensation and injury laws are an issue . Border state tax structure differences make it hard to compete . The tax structure in Kansas should' be more conducive to business Need business incentives to stay in Kansas . Property tax is an issue compared to other states . More flexibility in workers compensation program . Current tax level burdensome, excessive . ',Reducing.taxes overall would help . Lower the marginal tax rate and let e'ntrepreneurs figure it out . Need fair and balanced tax structure to support businesses . There is an imbalance in current tax system . An indifferent tax code would do enough to keep individuals here . We need a more favorable tax code High number of taxing units throughout the state . Recent tax exemptions (M&E, franchise) not enough . Industrial revenue bonds have worked 90 Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance r' ... ... ... ... i" W- i" i" i'" i'" i'" i- i'" ... i'" i'" i'" i'" .. i'" .. .. .. .. .. .. t=J" t1' t=J" ... . ... i!'" i!'" ~- .,. ~ i!iI .. i!'" ... .. ... . It ~ " " " ~ ',.. ~ ~ ~ ~ " ~ ~ ~ ~ ~ ~ - ~,~, M & E exemption will help businesses and possibly increase tax base, still room for improvement . Corporate income tax an issue . Government must provide incentives or assistance when businesses bring in employees Government should encourage positive behavior through incentives and credits . We do a lot of tweaking to our tax system, maybe focus on 3 , or 4 specific issues instead . New and existing businesses utilize different programs, and this line needs to be clear . Commerce programs are friendly, but time consuming and inefficient . Some states aggressive with incentives," need to be able to finance incentives, . Tax incentives.may provide opportunities . State could possibly take an equity position in projects . We need to evaluate our current incentives Tax credits are confusing, deal with both Commerce and Revenue . Guarantee incentives on the front end . State incentives focus on new businesses, not existing businesses . Health insurance a huge issue Workforce Development . New plants aren't built because of incentives, but because of a qualified workforce . Need to be thinking and positioning our state for the next 25 years . Creating jobs and finding a dependable workforce needs to be addressed proactively . Competing with neighboring states is just rearranging the chairs . Individuals come back 2-3 years before retirement becayse of living costs elsewhere NIAR a good example of what can be done when we are focused . Industries and businesses will follow the taJent . Competition between industry sectors is an issue Unemployment too low, shortage of workers . Concern about aging workforce and decline in pool of qualified workers Low unemployment and an aging population an issue Aging workforce is an issue Global workforce shortage is coming . We need all levels of the workforce . Streamline education and meet business needs . Mismatch between supply and demand . Education must be business driven . Finding employees is a short- and long-term issue . Business has a vested interest in filling jobs, could subsidize education Need trained talent with a good work ethic . Workforce development must be demand driven . System should identify and match workforce with opportunities and react to business cycles .." Need demand. driven workforce development, restructure the system for the best education . Businesses need qualified individuals to get the job done . Technical education needs equitable funding . More emphasis on technical training at younger ages, helps retain young people . Technical education is a high priority for rural areas . Educate youth on technical careers . Increase leadership and training . Technical colleges are a lifeline for businesses, we need to target technical colleges ~ ~ ~ ~ ~ ~ ~ ~ ~. ~ ~ ~ I!Il ~;" I!Il ~~ ~ ~ - ~. -- ~: .. ""-'. ~ -" .. ~ e iII!J '=' 8 ~ . Taxes are an issue and not an incentive for business . Commercial property taxes are an issue Need cap on property valuation . . Incubators can 'grow businesses, state matches for local funds . Not much seed money available, banking is not venture capital . Need sources of business investment . Support local businesses . Cheaper places than Kansas to start a business . Current regulatory environment and processes discourage businesses . Need more education of all stakeholders, including business and government . Kansas must be more business friendly, remove barriers . Mentor youth and small business . .Grow business from within . Business friendly state, better than the coasts, but not a major business decision factor . Passing business ownership to future generations an issue . Remember who and what got us here - every business matters Funding issues with educational institutions Need to address education system failures . Best teachers leaving education . . Education must prepare students for the workplace . Challenge Federal rules and regulations that are detrimental to high quality public education . Effective communication with post secondary institutions . Education must guide individuals to careers . Is there a way to shift the responsibility and risk to the universities . Open jobs but individuals don't have the necessary skills . Develop a delivery system for retraining . Institutions don't accept each other's credit hours . KDOE and Commerce need to work together at a state level . Promote an attitude of lifelong learning Combine community colleges and technical schools . Entrepreneurial education laws at the K-12 and post- secondary level . Workforce needs training, but maybe not a 4-year degree . We spend substantial dollars on education, why not try to keep the employees here . K-12 based on college preparation, not businesslworkforce preparation Some improvements have been made locally by working with the technical school . Make K.12 more interactive with business . Partnership between business and educational resources . Fundamentals must be learned in school, not at work, training starts in elementary school . Kansas doesn't have the ability to respond to what is needed in the workforce . Need 'all skill levels of.workers . Allow local areas to put together a model for technical education . School counselors recommend 4-year schools, not technical schools . Get youth thinking about opportunities sooner . We need to graduate more engineers, emphasize math and science . 'There is a generation of technical workers retiring and no pipeline . No Child Left Behind has been detrimental Leveraging our Foundations and Designing the Future: A Kansas Economic Renaissance 91 Business and education need to partner . Tie K-12 to the needs of the business community . Should be a way to partner business and educational institutions . In primary and secondary schools youth don't have ownership of their education Missing a huge opportunity with smaller sCMols . Parents/students need understanding of existing opportunities < . Market vocational education and opportunities 10 to 15 years ago decided a better way to make a living than working with hands, now see effects . Character issues/values, quality of workforce . Worker character, values, basic skills issues . Younger workers have a different mentality, need to understand younger workers . Soft skills are equally as important as educational competence . Need critical examination of how much is going into essential education . Younger generation is mobile . Youth have the technical skills, but don't want to work - . Worker attitude and soft skills are an issue . Younger generation possesses different skill sets, mind sets, work ethic . Workers for the most part have a good work ethic . Exporting graduates, retain what we have . Our workforce is aging and demographics are changing . Target workers at a younger age Guest worker problems . Make it the employers responsibility to retain workers . Workforce shortages may require ~grow your own>> Technology and Innovation . We need to think in the 21st Century, embrace technology . We need to be looking ahead to see what will work in the future . A means that must be utilized to achieve our desired ends . Expand KTEC across the state . <~ Technology will be a key part of helping Kansas pursue opportunities in a global economy . Provide an incentive to pursue technology . Determine best place to put technology to make it a driver for the state , . Today's careers require more high-tech training . Financial capital is available, but high interest rates are detrimental . . Attract venture capital to energize entrepreneurial spirit, successes will bring venture.capital . Kansas doesn't attract significant amounts of venture capital Image . Kansas has a self-image issue . Issues are more image than reality . Problems in Kansas are not unique . . Difficult to change the Kansas image . Find a theme and stick with it, each administration changes it . A campaign that promotes Kansas in a more positive light, market trust and values, create perception of opportunity . Need more mileage on image from major businesses . Need to figure out what our brand is . Attracting significant businesses would help . Need to market Kansas to youth also We are not marketing our good climate to grow businesses . Utilize community involvement as a way conveying a positive image . Rural Kansas wages may not be high enough . Advertising to employees at a local level helps . Rural Kansas doesn't have attractions for youth, cost of living is not enough . Immigrants are under-trained but hungry for work . Attracting white collar workers is an issue . Difficult to recruit nationally Military retirees are looking for opportunities . Provide immigrants with. a paCkage of what they will get if they locate and work here . . Work study programs help capture Kansas talent Immigrants can address some workforce issues, but there are language barriers . For worker longevity need to recruit from within and the surrounding area . Cost of hiring is high, must retain what we have, provide . incentives . State is losing its more highly qualified individuals . Some businesses transport in workers from other states . Need to tune into potential workers at a younger age . Immigration may address some workforce issues . Educate immigrants . If you provide training, employees leave for better opportunities . Sign~on bonuses may be needed . Working remotely may be a solution . Challenge to bring highly-skilled individuals into this area . Department of Commerce has some good programs, but excessive paperwork . KIT/KIR programs have limitations and timing issues . Consider programs that link education to a job commitment . Clustering around universities would help with commercialization of technology and innovation . Need to improve the commercialization of our research, the state must partner . Better Internet infrastructure needed, poor connectivity is an issue . Distance learning may be improved as technology becomes more cost efficient . Internet provides opportunity to attract professionals to Kansas . . Technology is part of infrastructure, must fund Communication technology doesn't seem to be a limiting factor . Much of rural Kansas doesn't have high speed Internet access . Need better communication throughout the state, fiber optics, broadband, Wi-Fi . On an international level, the Midwest is not differentiated . Live here and vacation elsewhere, Kansas is about work, your halfway there . Kansas was a model when work ethic was referenced . Enhanced quality of life and recreational opportunities will assist Kansas . We have a strong work ethic . Quality of life, limited commuting time, communities are all assets . Kansas is a good place to retire . Kansas has clean air, open space, and other things that are appealing . Lack of arts, entertainment, and cultural growth . Figure out what needs to be done and do it 92 Leveraging our Foundations and Designing the Future: A Kansas Economi~ Renaissance t' .~ ~ ~ ~ fp fp fp fp W- i'" i'" .. .. W- i'" ... .. .. .. ... ... .. ... ... ... ... ... .. ... .. iP' iP' .. .. .- I "'1 ~ ~ 632 SWVan Buren, Suite 100 . Topeka, KS 66603 (785) 296-1460 (785) 296-1463 (fax) www.kansasinc.org ksinc@ink.org (ti ti ,r! I~ I 1f'1 .~ I ., 'if'i ~ ~ ..- W- i'- ... ... ... .... ... ... ... ... ... ... ... ... ... ... ... .. ... ... ... ... .. .. .r ... ... ... i!II .. ... e- .. Jl~Kansas, cID Inc.