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Granger schools create model that deserves attention

 The search for education innovations that represent steps toward excellence is a challenging process at best, and one that seldom includes schools in underprivileged areas or those with large minority enrollment. 
 
Thus the dramatic turnaround in absenteeism for the schools in the Yakima Valley community of Granger to achieve the lowest incidence of chronic absenteeism in the state merits the attention of those seeking to bring change and educational enhancement to schools. After all, this is a district where nearly 85 percent of the students are Hispanic and a third of the families live below the poverty level.
 
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© 2016 Mike Flynn

LSDF may metamorphose into life science, cancer research administrator

Recrimination and agitation over the Republican-led legislative defunding of the Life Science Discovery Fund Authority (LSDF) has given way to cautious enthusiasm about the possibility its staff and board may be tapped to administer and oversee funding activity for the state's new Cancer Research and Endowment Fund (CREA).

It's not yet certain that LSDF, created a decade ago out of the state's share of Tobacco Settlement millions to promote growth of the life science industry in this state, will take over administration of what would be a Center of Excellence for Life Science and Cancer Research. But bringing that about could amount to creating some vision out of what has been legislative confusion.

The Legislature's 2015 final budget compromise funded the cancer-research entity in a head-scratching manner while killing future funding for LSDF. But the lawmakers did not put the organization itself out of business because LSDF must function well into the next biennium to oversee fulfillment of the 46 grants already awarded from the fund. It just can't make any more life-science grants.

The quixotic aspect of the Legislature's creation of CREA was that the lawmakers gave specific detail to its board makeup and duties and required that it contract with "a program administrator" to oversee grant solicitation and distribution and fund management.
 
But lawmakers didn't designate who would manage the $10 million annual state-fund grant that would have to be matched from the private sector before it could be spent, so there has been speculation since then that LSDF would be a logical entity to oversee CREA.
 
Rep. Jeff Morris 

The proposal to turn cancer-fund administration over to LSDF has been up in the air since it was approved by the state House and passed out of committee in the Senate, but stalled in the Senate Ways & Means committee when the regular session ended.

Democratic Rep. Jeff Morris, a member of the LSDF board and sponsor of the proposal, said he hopes the legislation paving the way for a new role for LSDF will be part of final budget negotiations. He explained that Sen. Andy Hill, chair of the Ways & Means Committee and the key Republican in the negotiations, "asked if we would object to a 6 percent administrative-cost cap and I indicated we would not."

John DesRosier 
eanwhile, as a future role for LSDF remains unclear, its board of trustees, staff members and a number of recipients of its grants will gather March 25 to celebrate the contributions of John DesRosier, who served first as director of programs when LSDF was established in 2005, and through most of the Authority's existence as executive director. DesRosier, who has retired, had spent almost a quarter century in research and technology commercialization before joining LSDF as it was forming.

Among those who will be on hand to thank Des Rosier is Lee Huntsman, the first executive director, who was appointed by then-Gov. Christine Gregoire after LSDF was established in 2005 by Gregoire and the Legislature.

I asked Gregoire for a comment on the decade of LSDF's existence and on DesRosier's role and she said: "LSDF has accomplished more than I could have hoped. I believe it has helped save lives and I believe it will continue doing so and there is no greater accomplishment. We were fortunate to have John DesRosier as the leader to make it happen."

Commenting on DesRosier's role guiding LSDF, Morris said "John was one of the best strategic hires I've seen by our state in my years of public service. He made our grant-selection process world class and many other states have looked to our process to improve their own performance"

Part of what the cancer-fund legislation envisions is a board that better reflects an understanding of cancer, but by coincidence that comes somewhat with the current board, whose chair is Carol Dahl, executive director of the Portland-based Lemelson Fund. 

Dahl's research while a faculty member at the University of Pittsburgh was cancer focused and she also spent nearly six years at the National Cancer Institute and built the Office of Technology and Industrial Relations and multiple programs there during that period. 

Asked about her view of DesRosier's role, she said he"has truly been an amazing advocate for the life sciences in Washington and an outstanding steward of the state's investment in LSDF."

"The substantial impact of the LSDF funding resulting in over $60 million in health-care saving, more than a half billion in follow-on funding, and hundreds of lives saved ,is a credit to John's leadership and the dedication of the entire staff that has supported  LSDF since its inception," Dahl said.

One of the largest grants from LSDF was $5 million to Omeros Corp., which related to a $20 million partnership with Vulcan to advance the company's leading-edge G protein-coupled receptor program. GPCRs, which mediate key physiological processes in the body, are one of the most valuable families of drug targets.

Omeros chairman and CEO, Dr. Gregory Demopulos, described LSDF as "an important catalyst for innovation in Washington State's life sciences. And through investments like the one for Omeros has left a legacy of creating jobs and improving health and will have a sustained impact on the people of the state."

DesRosier described LSDF as having been a "critical resource" in helping early stage companies survive so they could gain traction for new sources of funding, including attracting traditional investors.
 
One such beneficiary of LSDF grants is M3 Biotechnology, a young Seattle biotech company focused on commercializing a drug that would reverse neurodegenerative diseases like Alzheimer's and Parkinson's by re-growing brain cells.
 
"LSDF funding allowed us to cross the start-up 'valley of death' until we could gain funding traction," said Leen Kawas, the 30-year-old CEO and president of M3 who recently announced completion of an over-subscribed A-Round that brought in nearly $10 million.

Because I was assisting Kawas with marketing and introductions while she was awaiting key grants from LSDF, I bit my lip for being unable to write about LSDF or its challenges with the legislature until her grants had been approved and there was no longer a conflict of interest.

I asked DesRosier if there was anything he wished LSDF had accomplished before the lawmakers struck it from future funding.

"I wish we had been able to create a more diversified revenue stream and not be dependent solely on state funding," he said.

Dr. Bruce Montgomery, perhaps the Northwest's most prominent biotech entrepreneur as well as the longest-term member of the LSDF board, may have best summed up the feeling of lost opportunity that the end of LSDF's life-science mission embodied for many.

"The best quote I can offer is the line from Joni Mitchell's 'Big Yellow Taxi': 'don't it always seem to go that you don't know what you got 'til it's gone,'" Montgomery replied to my request for a quote.
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Concerns about Internet advertising may make crowdfunding tool difficult for entrepreneurs

It was born with great flourish in the spring of 2012, passed by Congress and signed by the president and hailed as the wellspring of new companies and jobs as the nation sought to emerge from the Great Recession. In fact, with a marketer's touch in a presidential election year, it was even called the JOBs Act.

Now after a nearly four-year wait for a recalcitrant Securities and Exchange Commission to adopt the rules required to implement the intent of the Jumpstart Our Business Startups Act to allow businesses to raise up to $1 million a year from a large number of small-equity investors, the rules are set to go into effect May 16.


Meanwhile, more than half of the states, tired of waiting for the SEC to act, have adopted their own versions of what is known as crowdfunding, which is largely expected to be Internet outreach to large numbers of potential investors by entrepreneurs seeking capital.

Because of SEC rules in effect under the Securities Act of 1933, the states' legislation limits fund-raising to residents in the state where the business is located.


And with the arrival of federal crowdfunding comes a growing concern that the crowdfunding laws of the various states may be rendered "impractical" since those who use the Internet or social media, the logical tools to reach a "crowd" of prospects, must ensure no one in another state can see the offering.

Washington was one of the first states to enact legislation to permit crowdfunding, with many of those testifying during the Washington Department of Financial Institutions' rule-making process suggesting entrepreneurs would be queuing up to look to crowdfunding to raise money.

But despite that expectation, in the 15 months since DFI enacted the rules and the law went into effect, only two businesses have filed to raise money in this state via crowdfunding. In fact, according to DFI Director Scott Jarvis, only 100 companies around the country have used intrastate crowdfunding to raise capital.

 
Joe Wallin 
Thus given that there is no line of entrepreneurs forming to seize the crowdfunding opportunity, there is no certainty how much demand there will be for the opportunity to raise money through crowdfunding once entrepreneurs have a choice between federal and state rules. The federal will allow businesses to raise money from investors anywhere in the country rather just in their home state. Using state law requires entrepreneurs to only raise money intrastate. 

One reason for slower-than-anticipated interest could be that the resurgent economy has made it easier to raise money through traditional funding sources, suggests Joe Wallin, a Seattle attorney with Carney Badley Spellman, who basically wrote the state legislation that was passed two years ago.

"The ebb and flow of the economy may impact the ability of entrepreneurs to tap traditional sources of capital so at some point, if not right away, the crowdfunding approach may become more popular," he said.

And now comes the likely additional deterrent to intrastate crowdfunding with the warnings about Internet use to advertise the offering, since the advertising may only be to residents of the state in which the offering is made.

Faith Anderson 

According to the SEC's directive, if someone in another state sees the information on the offering, it is no longer intrastate, which would basically nullify the fund-raising effort.

In one of the most thorough examinations of the new role of states in the crowdfunding phenomenon, Faith L. Anderson of the state DFI's Securities Division, describes as "draconian" the fact that rules "do not provide any relief for insignificant deviations" from the advertising limitations.

"A single out-of-state sale will void the exemption (for the entrepreneur raising money via intrastate crowdfunding) and result in an unlawful offer or sale of securities in the absence of another available exemption," she wrote.

Anderson's comments are part of a report she produced for securities departments of all 50 states as chair of the Small Business/Limited Offerings Project Group of the National Securities Administrators Association.

Anderson's document to her peers is designed to explain the strengths and weaknesses of both federal and intrastate crowdfunding options. But her focus on the challenges the SEC rules pose to intrastate offerings includes the comment that the combined effect of federal rules "is to severely restrict an issuer's ability to take advantage of state crowdfunding provisions that are premised on these federal provisions."

But the SEC staff has said the agency is considering amendments that could make Internet use possible.

"There is no timeframe by which the SEC may finalize the proposed amendments to Rule 147 (the rule that has raised a number of concerns for intrastate crowdfunding)," Anderson said in an email exchange with me. " In fact, they may never as they do not have a Congressional duty to act in this regard."

And Wallin added: "Unless it makes the changes being suggested for use of the internet in intrastate crowdfunding, the SEC is tamping down a nascent but important opportunity to cultivate local funding and entrepreneurship ecosystems before they even have an opportunity to develop."
 
But Wallin notes he is "optimistic that whatever the SEC finally decides, the state can figure out...maybe through new rules or amendments."
 
And Anderson closes her briefing to peers with: "As we learn what works and what doesn't from the viewpoint of entrepreneurs and small business owners, states and the SEC may make further adjustments to their crowdfunding rules."
 

Thus there seems to be optimism that what Congress launched with the right intent, but watched while the SEC dithered for almost four years, may still produce an opportunity for entrepreneurs to create jobs rather than being jobbed by thoughtless regulations.

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Longtime elected official Lloyd Hara retires, leaving legacy of property-data innovation

Lloyd Hara, who has held more local elective offices over a longer period of time than perhaps anyone in the history of the state, departs at the end of this month from the King County Assessor's office he has occupied for the past six years, likely bringing an end to a career in elective office dating back to 1969.

Lloyd Hara 
But as he turns the keys to the office over to John Arthur Wilson, the one-time aide who defeated him in the November General Election and will be sworn in January 3, he leaves a first-in-the-nation data legacy that will benefit residents, government and non-profits well into the future.

That data file, named LocalScape, was launched last March by Hara's office. He refers to the innovation, which amounts to a property data portal, as a "dynamic m apping tool designed to unleash the power of community data and redefine civic engagement" by layering local property tax value, tax data and census information.

Hara's 76th birthday was December 8 so, appropriately, King County Executive Dow Constantine and the King County Council proclaimed that day Lloyd Hara Day in the county.

And in a last holiday greeting to members of his staff, Hara thanked them for their role in the "nine national awards for innovation, customer service and leadership" that the office won from the national organization of assessors and other groups.

One of his innovations that he had to press for approval from the county's executive and council, was selling advertising on his department's website, which he viewed as adding a logical source of revenue, suggesting that every agency should be open to that idea.

Throughout his career, Hara was an official who genuinely enjoyed meeting his constituents, and thus established a tough standard for his successor.

He has logged more than 200 speaking engagements per year to service organization, real estate gatherings and town hall meetings, in addition to regular meetings with all 39 cities in the county and traveling to Olympia to meet with lawmakers on not only his department's issues, but also issues impacting the county.

As port commissioner, Hara chuckled at the sense that he had so many meetings out and around the county that he sometimes encountered people who didn't even know they were in the Seattle Port District.

Hara, then finishing his first term as a commissioner for the Poet of Seattle, was elected in 2009 to fill the unexpired term of King County Assessor Scott Noble, who resigned. He was subsequently elected, in 2011, to a full four-year term.

He thus undertook a role that made him, in essence, the "tax man" in the county since notices of taxes came from his office, although his office merely served to take the budget approved by the County Council and turn it into the tax per property parcel.

But throughout his years as assessor, Hara seemed always in quest of ways to lower property taxes, sometime stirring discussions with other elected officials, some of whom he sought to put out of business for taxpayer benefit.

One of his controversial suggestions sprang from his sense that regionalization that would involve consolidating functions of various elective offices may be a way that taxpayers in smaller counties may be better served, less expensively.

And he wondered aloud in one of our interviews a couple of years ago "how many jurisdictions should there be that taxpayers are helping support? Could some services be merged into regional units? Can some be privatized?"
It's out of the echo of such discussion Hara started that new ways of doing things at the local-government level may emerge as lawmakers and policymakers cope with new funding realities.

Hara told me that a family challenge, when his son, Todd, learned in August that he had a cancerous tumor in his kidney, put his 2015 re-election campaign in perspective. He said Todd's surgery a week before the election and his doctor's assessment that he was cancer free far outweighed the outcome of a political campaign.
Todd turned 42 on his birthday last week, three days after Lloyd's birthday. 

In fact, it was the second time that a family challenge came during a tight campaign, ironically, he says, in that they were during the two elections he lost.

The first was during his only run for statewide office, 1988, when his race for state treasurer was dimmed in importance by the death of his father.

The start of his career in elective office came for Hara, a graduate of Roosevelt High School and the University of Washington, in 1969 when he was appointed to the office of King County auditor, the youngest person to hold that office.

He was elected Seattle Treasurer in 1980 and served in that role until 1992, winning accolades from the Government Financial Officers Association, the Association of Government Accounts and the Municipal Treasurers Association of the U.S. and Canada, an organization he served as president for a term.

In addition to his elective offices, Hara founded the Asian Pacific American Municipal Officials, the Seattle International District Rotary, the North Seattle Community College Foundation and is past president of the Japanese American Citizens League, Seattle Chapter.

Hara is taking a few days vacation with his wife, Liz, and told me in an email that while he has not made any future commitments, he has "too much energy to simply retire," adding "life is good and there is life after politics."
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A rural economic development strategy focused on entrepreneurs

 

If Global Entrepreneurship Week, the annual worldwide celebration of innovators and job creators, had been a competition among nations, states and regions, Washington State could have laid claim to being the hands-down winner. And that would be appropriate recognition for the man who has guided much of this state's effort to advance entrepreneurship, particularly in rural areas and particularly with young people, for 25 years.

 

 

 

 

Maury Forman, senior manager for the Washington State Department of Commerce, is proud of the fact that in this state, GEW 2015 was actually Global Entrepreneurship Month and extended to every corner of the state with activities in all 39 counties. Four years ago, when Forman plugged the state into GEW activities, three counties participated.Forman says "we are changing the way communities look at economic development." That's an outgrowth of his effort, over much of his quarter century overseeing key economic-development sectors, to develop a culture of entrepreneurism in rural areas.

Global Entrepreneurship week was founded in 2008 by the Kauffman Foundation, the Kansas City-based 501c3 that is the nation's pre-eminent entrepreneur-focused organization, to create an annual celebration of innovators and job creators who launch the start-ups that drive economic growth.

 

Forman, who joined what was then the Department of Trade and Economic Development in 1991 in a career transition from healthcare at the age of 40, says "No other state can claim that every part of the state had at least one event that celebrated entrepreneurship."

 

 

"One of the exciting aspects of this year's celebration of entrepreneurship was the number of high school programs being held throughout the state," Forman said. "In many cases, college isn't the natural next step it was once for high school students so these programs expose them to the idea of starting their own business once they graduate. Or if they do go on to college, they can focus their education on skills that will allow them to start a business in the years to come."

 

 

Forman says he has kept his primary focus on rural economies because "they need the assistance much more than urban communities," as well as because he has become convinced that the strategies for growth of many rural areas that has been focused on recruiting companies from out of state is outdated.

 

 

"That has to change if rural communities are to survive," Forman said. "Communities have to be shingle ready and not just shovel ready."  

 

 

In a recent article in Governing, a national magazine covering state and local government news, Forman wrote about Washington's three-year-old program called Startup Washington that focuses on building local economies "organically" by serving the needs of local startups and entrepreneurs.  

 

 

Forman is likely among the national leaders in the conviction that programs to enhance local economic development "must nurture the belief that young people who grow up in rural communities can be guided to start businesses in their own community rather than moving to urban centers."

 

 

"Just as young people are looking at new ways to enter the work force other than working for someone else, so too are communities looking for ways other than recruitment of businesses from elsewhere to grow their economies," Forman said.

 

 

One of the ways he is seeking to do that "is by matching those students that are serious about being entrepreneurs with mentors, especially in rural communities."

 

 

Indeed matching students who hope to be entrepreneurs with mentors is becoming the model for successful communities, particularly rural ones, to pursue.

 

 

Some communities have long been employing that model, as chronicled in the oft-quoted book written by Jack Schultz, founder and CEO of Agracel, a firm based in Effingham, IL, that specializes in industrial development in small towns.

 

 

It was in pondering why some small towns succeed where others fail that Schultz set out on the backroads to rural America to find out as he became the nation's guru of rural economic development and wrote of his travels in Boomtown USA: the 7 ½ keys to Big Success in Small Towns.

 

 

I emailed Schultz about entrepreneurism's role in small town success and a possibly emerging role for mentor programs.

 

 

"Embracing entrepreneurism in communities has been a key factor that differentiated great communities from also-rans," he emailed back. "Increasingly, we are seeing those great communities taking it a step up by tying their local entrepreneurs up with their young people, educating them on both entrepreneurship and also the great things happening in the private sector of their towns."

 

 

Schultz' successes in believing in small-town entrepreneurs and small-business lending is partly responsible for the fact the Effingham-based bank he helped found and now chairs the board, has grown eight fold to $2.9 billion in assets and gone public.

 

 

"At Midland States Bank, we have very much focused on small business lending and it has been a major factor in our growth over the last several years," Schultz said.

 

 

In an unusual and innovative commitment to the dozens of communities it serves, the bank has funded a not-for-profit institute to expand an entrepreneurship class that was started in Effingham eight years ago and has now expanded to 27 other towns.

 

 

Forman seemed intrigued by the details Schultz provided:  The class meets each day during the school year from 7:30 to 9 am; meets in local businesses; is totally funded by local businesses with a maximum contribution of $1,000 per business or individual.  Each class has a business and each student must also start a business.  

 

 

Meanwhile, Forman approaches his 25th anniversary with the department on January 1 having collected numerous regional and national awards for his work and successes. Those include last year winning the international Economic Development Leadership Award and recognitionby the Teens in Public Service Foundation with the Unsung Hero Award for his work with at risk kids.   

 

 

He has authored 14 books related to economic development, and has also designed and developed creative "game show' learning tools, including Economic Development Jeopardy, Economic Development Feud and two board games for the profession.

 

 

Forman credits the directors who have guided the department over his time there for allowing him "to be intrapreneurial," meaning behaving like an entrepreneur while working in a large organization, noting "not many government agencies allow the freedom to take risks in an effort to solve a given problem."

 

 

 

 

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Reflecting on the memories of daughter's route from college to Court of Appeals judge

The Oregon Court of Appeals building in Salem is just across the street from the Willamette University Campus. But 29 years of memories separate the two for Betsy and me, from that day we left Meagan standing on the curb, both she and we a little uncertain as we drove away from the young lady about to begin her college career, to the day last week when she was sworn in as Oregon's newest appellate court judge.

Most of these weekly Flynn's Harp missives, over the six and a half years I have been writing and emailing them to more than 1,400 friends and acquaintances, have been about people and issues I think readers in business, politics and academia, should know about.

But occasionally recollections of the personal have seemed important enough to share, ranging from the day Betsy and I moved from our home of 40 years, taking with us the four decades of memories, to fond recollections of my '55 T-Bird, my mom and my 100-meter medal at the World Senior Games four months after my successful colon-cancer surgery.

And so it is with this personal reflection on the young lady who now wears the judge's robe.

The first-born child inevitably holds a special place in the emotions of parents, even though it always turns out there is enough love to share with subsequent children. And thus it was when Meagan arrived in July of 1967.

In fact Meagan always occupied a special place for not just her parents, but for many who have had occasion to get to know her. That included the fifth-grade teacher in Kalispell, MT, where Betsy and the three kids settled in while I spent six months as editor of a daily newspaper in my home state.

"A teacher spends their life waiting for the perfect student, and she was it," her teacher told me, with fondness and sadness, making me sad as well as I took Meagan to say goodbye to her classmates as we all headed back to Seattle where I was returning to work at UPI.

Meagan always had a competitive bent, which she usually did a good job of hiding, except as a seventh grader in Piedmont, CA, when she found that a male student was challenging her for top student. Her jaw always locked a bit when the male student came up in conversations. The two of them ran for 8th grade class president (except the title was commissioner general) in a hotly contested race that she won, expressing smug pleasure at coming out on top.

She had a goal of being an attorney from early on because her role model was her cousin, Sheila, who was a very successful Seattle attorney.

As she prepared to graduate from Holy Names Academy in Seattle, where she was salutatorian of her class, I urged her to apply to Stanford because her friend, who was valedictorian, was applying there.

"Be cool if you could say you were accepted to Stanford," I told her, even though I knew she had already decided she wanted to attend Willamette.

To my surprise, though likely not her's, she was accepted to Stanford and I feared she would decide she wanted to go there since it would have been a financial challenge for us at that time.

But the ducks on the pond at Willamette, which were the initial attraction the day she first visited the school (although its academic reputation and its law school had roles in the final decision), had already drawn her interest to Willamette.

Good thing, since that's where she met her husband to be, who was also intent on become an attorney, though eventually Gonzaga law school won out for both of them and after graduating they built partner-role practices at separate small firms in Portland. They also provided us two of our granddaughters.

Meagan's practice focus was as a specialist in doing appeals and I once asked her if it was difficult to get the judges to take her case.

Once we learned Oregon Gov. John Kitzhaber had appointed her to the court, the potential downside of a daughter who was a judge started to emerge, as when Betsy advised me one day as I was driving up I-5: "You had better not get a ticket! That could be very embarrassing to your daughter!"

So last week she was sworn in as Oregon's newest judge on the court of appeals by the same judge whom she went to work for as a clerk 20 years ago, soon after he had taken his oath as a then-new appeals court judge himself. He brought to her swearing-session last week a picture of that first clerk-judge meeting in 1994.

Now they are both among the 13 judges serving on the Court of Appeals.

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Voters, rather than the High Court or lawmakers, should decide school funding

What the Washington State Supreme Court seems to have done, with its ruling last week that charter schools violate the state constitution, is to reinforce its message to the governor and the legislature: "you are not in charge in this state. We are."

And anyone who agrees with the assessment that the state highest court's two education-funding cases amount to unsettling steps into the separation-of-powers arena could also agree that the constitutional question the court is thus raising is one that merits a focused public discussion.

The question of whether the Supreme Court has embarked on an undesirable drift away from the principal of three equal branches of government can be put into discussion by conversation on social media and analysis and commentary from traditional media.

But closure to that question in the form of "a ruling" by the state's citizens, the ultimate court to which all three branches of government answer, can only come in a meaningful way with the kind of debate that occurs during election season when the judges actually have to face public scrutiny.

Meaning the three Supreme Court judges up for re-election a year from now, three of whom were in the majority in the 6-3 ruling, including Chief Justice Barbara Madsen who wrote the majority opinion, should face opponents who feel the court has encroached inappropriately on the essential separation of powers.

The value of competition in next year's election for those three justices, Charles Wiggins and James Johnson in addition to Madsen, isn't to seek to punish them for their views but rather to ensure a sufficient airing of public attitudes on the issue of whether they are endangering the proper separation of powers.

Certainly the role of the Supreme Court is to have the last word, passing judgement on laws passed by the legislature and signed by the governor. But what troubles concerned legal observers is that in the two education-funding decisions, the court has assumed for itself the first word, telling the governor and the legislature what they WILL do rather than passing judgment on what they did.

If the sitting judges are voted out, it will amount to an affirmation of the view that the court has gone too far and the remaining six judges can then ignore that at their peril.

Now for a review of the court decisions that lead to the questions about limitation of the powers of the court and the possible abandonment of the tradition that the high court imposes those constraints on itself.

The court's most recent ruling held that charter schools are unconstitutional, ultimately because they are governed by appointed rather than elected boards and that the constitution requires that the boards that oversee common schools must be elected.

The state constitution merely requires adequate support for common schools. So in decreeing that elected boards must govern common schools, the court has basically usurped the legislative and gubernatorial right to decide in the future the manner in which the constitutional funding requirement can be best carried out. That means the lawmakers might want to decide whether funding oversight is best served by elected or appointed boards, perhaps at the state level.

Budget leaders in both houses and both parties have suggested that the state take a larger role in oversight, as in setting pay, for example. And some lawmakers are even convinced that they have to do that, since the lawmakers, just as they are answerable to students to provide a good education, are answerable to state taxpayers to ensure that those school dollars the court has ordered them to increase are being spent as wisely as possible.

They realize they need to step into the management role in ways that could elude locally elected school boards.

In the first education-funding decision, known as the "McCleary decision," the court ordered the legislature to spend more money on education, then followed up by holding the lawmakers in contempt for failing to provide enough additional funding. And in the past few weeks the court actually imposed a $100,000-a-day fine on the lawmakers to failing to "sufficiently" fund education.

In that McCleary ruling, the court said common schools funding needed to be 'ample" but also "uniform" and "stable."

Now the court's sole position is spend more money, focusing only on "ample" while saying it has "no opinion" on the "stable" or "uniform" points.

Some court observers have described as curious the fact that the high court backed off from two of the three central points on education funding, leaving only the edict of spend more money.

And since in the constitution, common schools specifically excluded high schools and "normal schools," (which became the state's Eastern, Central and Western state universities) the court may have cast doubt on the constitutionality other programs not overseen by elected boards, like Running Start, a program by which high school students can gain college credit.

All represent more than enough reason for deliberation beyond the legislators, governor and the courts to include the public in decisions about where the state should go with education funding and the process by which that should occur. 
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Rural economic development and young people

 

If Global Entrepreneurship Week, the annual worldwide celebration of innovators and job creators, had been a competition among nations, states and regions, Washington State could have laid claim to being the hands-down winner. And that would be appropriate recognition for the man who has guided much of this state's effort to advance entrepreneurship, particularly in rural areas and particularly with young people, for 25 years.

https://mlsvc01-prod.s3.amazonaws.com/f9d31d49001/30a3ef8d-4001-4795-971c-0da1ede61b9e.jpg

Maury Forman

Maury Forman, senior manager for the Washington State Department of Commerce, is proud of the fact that in this state, GEW 2015 was actually Global Entrepreneurship Month and extended to every corner of the state with activities in all 39 counties. Four years ago, when Forman plugged the state into GEW activities, three counties participated.

Forman says "we are changing the way communities look at economic development." That's an outgrowth of his effort, over much of his quarter century overseeing key economic-development sectors, to develop a culture of entrepreneurism in rural areas.

Global Entrepreneurship week was founded in 2008 by the Kauffman Foundation, the Kansas City-based 501c3 that is the nation's pre-eminent entrepreneur-focused organization, to create an annual celebration of innovators and job creators who launch the start-ups that drive economic growth.

Forman, who joined what was then the Department of Trade and Economic Development in 1991 in a career transition from healthcare at the age of 40, says "No other state can claim that every part of the state had at least one event that celebrated entrepreneurship."

"One of the exciting aspects of this year's celebration of entrepreneurship was the number of high school programs being held throughout the state," Forman said. "In many cases, college isn't the natural next step it was once for high school students so these programs expose them to the idea of starting their own business once they graduate. Or if they do go on to college, they can focus their education on skills that will allow them to start a business in the years to come."

Forman says he has kept his primary focus on rural economies because "they need the assistance much more than urban communities," as well as because he has become convinced that the strategies for growth of many rural areas that has been focused on recruiting companies from out of state is outdated.

"That has to change if rural communities are to survive," Forman said. "Communities have to be shingle ready and not just shovel ready."  

In a recent article in Governing, a national magazine covering state and local government news, Forman wrote about Washington's three-year-old program called Startup Washington that focuses on building local economies "organically" by serving the needs of local startups and entrepreneurs.  

Forman is likely among the national leaders in the conviction that programs to enhance local economic development "must nurture the belief that young people who grow up in rural communities can be guided to start businesses in their own community rather than moving to urban centers."

"Just as young people are looking at new ways to enter the work force other than working for someone else, so too are communities looking for ways other than recruitment of businesses from elsewhere to grow their economies," Forman said.

One of the ways he is seeking to do that "is by matching those students that are serious about being entrepreneurs with mentors, especially in rural communities."

Indeed matching students who hope to be entrepreneurs with mentors is becoming the model for successful communities, particularly rural ones, to pursue.

Some communities have long been employing that model, as chronicled in the oft-quoted book written by Jack Schultz, founder and CEO of Agracel, a firm based in Effingham, IL, that specializes in industrial development in small towns.

It was in pondering why some small towns succeed where others fail that Schultz set out on the backroads to rural America to find out as he became the nation's guru of rural economic development and wrote of his travels in Boomtown USA: the 7 ½ keys to Big Success in Small Towns.

I emailed Schultz about entrepreneurism's role in small town success and a possibly emerging role for mentor programs.

"Embracing entrepreneurism in communities has been a key factor that differentiated great communities from also-rans," he emailed back. "Increasingly, we are seeing those great communities taking it a step up by tying their local entrepreneurs up with their young people, educating them on both entrepreneurship and also the great things happening in the private sector of their towns."

Schultz' successes in believing in small-town entrepreneurs and small-business lending is partly responsible for the fact the Effingham-based bank he helped found and now chairs the board, has grown eight fold to $2.9 billion in assets and gone public.

"At Midland States Bank, we have very much focused on small business lending and it has been a major factor in our growth over the last several years," Schultz said.

In an unusual and innovative commitment to the dozens of communities it serves, the bank has funded a not-for-profit institute to expand an entrepreneurship class that was started in Effingham eight years ago and has now expanded to 27 other towns.

Forman seemed intrigued by the details Schultz provided:  The class meets each day during the school year from 7:30 to 9 am; meets in local businesses; is totally funded by local businesses with a maximum contribution of $1,000 per business or individual.  Each class has a business and each student must also start a business.  

Meanwhile, Forman approaches his 25th anniversary with the department on January 1 having collected numerous regional and national awards for his work and successes. Those include last year winning the international Economic Development Leadership Award and recognitionby the Teens in Public Service Foundation with the Unsung Hero Award for his work with at risk kids.   

He has authored 14 books related to economic development, and has also designed and developed creative "game show' learning tools, including Economic Development Jeopardy, Economic Development Feud and two board games for the profession.

Forman credits the directors who have guided the department over his time there for allowing him "to be intrapreneurial," meaning behaving like an entrepreneur while working in a large organization, noting "not many government agencies allow the freedom to take risks in an effort to solve a given problem."

 

 

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Rural economic development and young people

 

If Global Entrepreneurship Week, the annual worldwide celebration of innovators and job creators, had been a competition among nations, states and regions, Washington State could have laid claim to being the hands-down winner. And that would be appropriate recognition for the man who has guided much of this state's effort to advance entrepreneurship, particularly in rural areas and particularly with young people, for 25 years.


Maury Forman 

Maury Forman, senior manager for the Washington State Department of Commerce, is proud of the fact that in this state, GEW 2015 was actually Global Entrepreneurship Month and extended to every corner of the state with activities in all 39 counties. Four years ago, when Forman plugged the state into GEW activities, three counties participated.

Forman says "we are changing the way communities look at economic development." That's an outgrowth of his effort, over much of his quarter century overseeing key economic-development sectors, to develop a culture of entrepreneurism in rural areas.

Global Entrepreneurship week was founded in 2008 by the Kauffman Foundation, the Kansas City-based 501c3 that is the nation's pre-eminent entrepreneur-focused organization, to create an annual celebration of innovators and job creators who launch the start-ups that drive economic growth.

Forman, who joined what was then the Department of Trade and Economic Development in 1991 in a career transition from healthcare at the age of 40, says "No other state can claim that every part of the state had at least one event that celebrated entrepreneurship."

"One of the exciting aspects of this year's celebration of entrepreneurship was the number of high school programs being held throughout the state," Forman said. "In many cases, college isn't the natural next step it was once for high school students so these programs expose them to the idea of starting their own business once they graduate. Or if they do go on to college, they can focus their education on skills that will allow them to start a business in the years to come."

Forman says he has kept his primary focus on rural economies because "they need the assistance much more than urban communities," as well as because he has become convinced that the strategies for growth of many rural areas that has been focused on recruiting companies from out of state is outdated.

"That has to change if rural communities are to survive," Forman said. "Communities have to be shingle ready and not just shovel ready."  

In a recent article in Governing, a national magazine covering state and local government news, Forman wrote about Washington's three-year-old program called Startup Washington that focuses on building local economies "organically" by serving the needs of local startups and entrepreneurs.  

Forman is likely among the national leaders in the conviction that programs to enhance local economic development "must nurture the belief that young people who grow up in rural communities can be guided to start businesses in their own community rather than moving to urban centers."

"Just as young people are looking at new ways to enter the work force other than working for someone else, so too are communities looking for ways other than recruitment of businesses from elsewhere to grow their economies," Forman said.

One of the ways he is seeking to do that "is by matching those students that are serious about being entrepreneurs with mentors, especially in rural communities."

Indeed matching students who hope to be entrepreneurs with mentors is becoming the model for successful communities, particularly rural ones, to pursue.

Some communities have long been employing that model, as chronicled in the oft-quoted book written by Jack Schultz, founder and CEO of Agracel, a firm based in Effingham, IL, that specializes in industrial development in small towns.

It was in pondering why some small towns succeed where others fail that Schultz set out on the backroads to rural America to find out as he became the nation's guru of rural economic development and wrote of his travels in Boomtown USA: the 7 ½ keys to Big Success in Small Towns.

 

I emailed Schultz about entrepreneurism's role in small town success and a possibly emerging role for mentor programs.

"Embracing entrepreneurism in communities has been a key factor that differentiated great communities from also-rans," he emailed back. "Increasingly, we are seeing those great communities taking it a step up by tying their local entrepreneurs up with their young people, educating them on both entrepreneurship and also the great things happening in the private sector of their towns."

Schultz' successes in believing in small-town entrepreneurs and small-business lending is partly responsible for the fact the Effingham-based bank he helped found and now chairs the board, has grown eight fold to $2.9 billion in assets and gone public.

"At Midland States Bank, we have very much focused on small business lending and it has been a major factor in our growth over the last several years," Schultz said.

In an unusual and innovative commitment to the dozens of communities it serves, the bank has funded a not-for-profit institute to expand an entrepreneurship class that was started in Effingham eight years ago and has now expanded to 27 other towns.

Forman seemed intrigued by the details Schultz provided:  The class meets each day during the school year from 7:30 to 9 am; meets in local businesses; is totally funded by local businesses with a maximum contribution of $1,000 per business or individual.  Each class has a business and each student must also start a business.  

Meanwhile, Forman approaches his 25th anniversary with the department on January 1 having collected numerous regional and national awards for his work and successes. Those include last year winning the international Economic Development Leadership Award and recognitionby the Teens in Public Service Foundation with the Unsung Hero Award for his work with at risk kids.   

 

He has authored 14 books related to economic development, and has also designed and developed creative "game show' learning tools, including Economic Development Jeopardy, Economic Development Feud and two board games for the profession.

Forman credits the directors who have guided the department over his time there for allowing him "to be intrapreneurial," meaning behaving like an entrepreneur while working in a large organization, noting "not many government agencies allow the freedom to take risks in an effort to solve a given problem."

 

 

 

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Supreme Court's school-funding fine brings collective confusion to the issue

 

Washington isn't the only state where the struggle over education funding has reached the courts. But it's the only state in which the threat of punishment for legislative failure to act has actually become "a bomb" that was dropped, meaning the court's threat of punitive action for its finding that the Legislature was in contempt became action in the form of $100,000 per day fine for legislative failure to sufficiently fund basic education.

Additionally intriguing is the fact the court's six women and three men, each of whose civic and legal credentials make them an extremely impressive collection of jurists, would wind up, in their unanimous agreement, producing not collective wisdom but collective confusion.

The court stirred concern about violating separation of powers for stepping into the legislature's funding role when it first told the lawmakers they were not meeting the state constitution's requirement for adequate funding of basic education. But there has also been the suggestion that if the court was going to step into the legislature's constitutional territory by ordering them to spend more money, it should logically have told them take control of how the money was spent.

Some court observers this week used the word "curiously" to describe the fact that the high court backed off from two of its original decision's central points on education funding, what has become known as the "McCleary decision."

In the original ruling, the court said K-12 funding needed to be 'ample" but also "uniform" and "stable."

Now the court's sole position is spend more money, focusing only on "ample" while saying it has "no opinion" on the "stable" or "uniform" points.

And though the court told the legislators they should go into special session immediately to begin arriving at the solution to the funding problem, the lawmakers basically replied, in so many words, that they'd decide to go back into session when they felt like their discussions had brought them to a decision.

Could be they decided, now that the court has dropped its punishment "bomb," that the penalty isn't that big a deal since if they are going to increase education funding, the $100,000 daily tab will take more than three months to equal $10 million, all of which will go into a special education fund anyway.

Anyone who thinks the court's decision last September holding the Legislature in contempt for failing to make progress on "full funding" of public education, and imposition of that $100,000 fine was a decision devoid of political considerations will draw an amused smile from those more attuned to political realities.

In its original ruling in 2012 that the state was failing to fully fund basic education and thus violating the state constitution, the court was careful to try to sidestep the full brunt of a constitutional conflict. The court said it didn't intend to "dictate the means by which the Legislature carries out its constitutional responsibility or otherwise directly involve itself in the choices and tradeoffs that are uniquely within the legislature's purview."

There is at least a suspicion that political considerations would account for the fact that, while the high court told the legislature it had to put more money into basic education, it failed to take, or even suggest, the logical accompanying step of telling the legislature to take control of how the money for schools is raised and spent.

Though it's possible the state taking total control of education might have been what the court had in mind when it included "uniform" and "stable" in its original decision, before eliminating them from the latest decision.

Teacher salaries and how they are arrived at around the state, through local negotiations with sometimes friendly or fearful school boards, is a major cost factor. The Washington Education Association likes it that way and the court would have set off an outcry from teachers' union members and their supporters across the state if the legislature had been told to not just provide more money, but to take control so it could create spending efficiencies.

Budget leaders in both houses and both parties have suggested that the state take a larger role in setting pay. And some even realize that they have to do that, since the lawmakers, just as they are answerable to students to provide a good education, are answerable to state taxpayers to ensure that those school dollars are being spent as wisely as possible. They can't delegate that task.

It will be much harder for Democrats in the legislature to confront irate teachers' union members than for Republicans. Thus, perhaps, Republicans who control the state Senate should be allowed to take the lead on funding reform that puts the state in the management role.

As Dick Davis, president of the Washington Research Council, wrote in a column after the court's 2012 decision holding the legislature in contempt for its education funding failure, "As the primary funder and constitutionally responsible party, the state needs to step into the management role. That preserves collective bargaining, but changes the dynamic. And, negotiations could include provisions recognizing regional cost-of-living variation throughout the state."

As indicated earlier, adequate funding for education has reached higher courts in a number of states for a variety of reasons.
Thus the debate about separation of powers and limitation of the powers of the court that the Supreme Court decision set off in this state is a discussion now going on in an array of states.

One is Texas, where that state's Supreme Court will hear oral arguments September 1 on a lower-court ruling sought by dozens of independent school districts in the state.

The Texas case has far more sex appeal than Washington's, since the all-Republican Supreme Court is considered likely to overturn a ruling by District Judge John Dietz, who is identified as "Austin Democrat and State District Court Judge," that the state's 'Robinhood style' funding mechanism is unconstitutional."

That system requires districts with high property tax values or large amounts of tax revenue from oil and natural gas interests to turn over part of their property tax collections to poorer districts.

To bring things full circle from one state to another, one of the things being talked about in Washington to correct the funding disparity among districts more reliant on special levies is a property tax swap whereby some richer districts would send money to poorer districts.

I'm not sure how that would come about legislatively, but it has an amusing ring of "Robinhood style" funding.
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Life Science Discovery Fund, defunded by Legislature, will exit with last hurrah

 

The Life Science Discovery Fund (LSDF), created a decade ago from the state's share of tobacco-settlement millions to promote the growth and competitiveness of the life science industry in Washington but defunded by the 2015 Legislature, has found a way to go out in style after all.

In what amounts to an unusual but fitting last hurrah, LSDF announced today that it is launching a six-month competition for what might be described as a "legacy" or "ecosystem" grant of almost $2 million to one or more organizations that can stimulate momentum within the life sciences commercialization sector.

The LSDF was established by then-Gov. Christine Gregoire and the legislature with the vision of using Washington's multi-million-dollar share of the Tobacco funds from the 1998 settlement to promote life sciences competitiveness, improve health and healthcare and help shape that industry's future.

But perhaps proving that vision can't be passed on, the 2015 Legislature defunded LSDF, with Democrats in the House and the Statehouse eventually acquiescing to the demand of Senate Republicans that funding for LSDF end.

In writing about that final legislative action, I said that LSDF went out "not with a bang but a whimper," given that strong support for the organization from Gov. Jay Inslee and House Democrats evaporated in the final days of legislative give and take on what would be included in the budget.

Wrong about going out with a whimper! LSDF will be going out with a bang after all, but not one the Legislature intended, or knew was possible.

In defunding LSDF. the Legislature specified that the $11 million in the organization's treasury balance be shifted to the state general fund.  

Except that in Addition to the $11 million that was to be LSDF's operating funds for the next year, and the nearly $12 million in the LSDF treasury to manage the stable of 46 grants already awarded by the fund, there was almost $2 million left in the treasury. Unallocated and not ordered sent to the general fund.

So the LSDF board last week approved the idea of turning that nearly $2 million remainder into what Executive Director John DesRosier refers to as " a life science ecosystem grant" and LSDF took the first step today by announcing the request for proposals with a pre-proposal deadline of September 21.

Full proposals will be due by January 6 with awards (possibly more than one) to be announced February 8 as an appropriate denouement for LSDF, which since it first began making grants in 2007 has awarded nearly $106 million to non-profit and for-profit life science businesses.

DesRosier said the grant o grants could be awarded to either a non-profit or for-profit entity that might already exist or come into existence "to stimulate momentum within the life science commercialization sector."

DesRosier views LSDF's eight years of funding activity, largely to startups for whom the grants often served to allow entrepreneurs to bridge the early funding challenges referred to as "the valley of death" for startups, as "creating a momentum for the life science industry's emerging companies.

And for all the lamenting from those focused on how this state stacks up against competing states and the message they fear that LSDF's demise sends to entrepreneurs in other states, it needs to be remembered that LSDF's legacy is in the life science startups it funded and that are now growing and creating jobs.

"So now the question is how do we keep this momentum going," he asked. "We think one way is to create programs that support entrepreneurs in their endeavors, not with individual grants but in a less prescriptive way."

It's clear that the LSDF board wants to be flexible in determining what type of organization or groups might best contribute to the life sciences ecosystem they seek to foster. "We want to keep as much flexibility as possible, depending on the scope of the proposals we receive," DesRosier said.

LSDF will be downsizing its staff by the time the board awards the grant, or grants. But DesRosier avoids referring to the end of the organization, saying "we're not using words like dissolving."

It's worth remembering that the legislature only denied LSDF future funding, it didn't strike the organization from existence.

"We're actually downsizing the staff by the end of February and we may or may not be in or current physicial space (LADF has been housed in the headquarters of the Washington Biotech & Biomedical Association)," he said. "But whether or not the organization continues to exists still up in the air, as well as the question of whether we will continue to oversee the existing grants."

"We're still quite flexible if something interesting comes up between now and then," said DesRosier.

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Lawmakers bring Life Science Discovery Fund to an end, not with a bang but a whimper

The fund established a decade ago by then-Gov. Christine Gregoire and the legislature with the lofty goal of supporting innovative research in this state to promote life sciences competitiveness, enhance economic vitality and improve health and health care has been terminated by the Legislature. And an oft-quoted line of poetry may best sum up the outcome: "not with a bang but a whimper."

The Life Science Discovery Fund (LSDF) was defunded by the Legislature at the insistence of the Republican Senate and at the eventual acquiescence of both the Democratic House and Democratic governor who had touted its importance to the state's future. In the rush to final budget passage, the fate of LSDF drew little attention except from the disappointingly few who understood its to the future of the state's economy.

Those who recognize the quote in the lead paragraph above as from T.S. Eliot's "The Hollow Men" should be forgiven for a quick sense of how appropriate the description "Hollow men" might be for the members of the Legislature.

And how appropriate also for that body might be the poem's line, "headpiece filled with straw."

The "whimper" is in the still unexplained rollover by both Democrats in the House and the governor himself after they had fought fiercely for LSDF funding and owned the vision space as it related to the importance of biotech and biopharma start-ups to the state's future.

The final budget was passed by the Legislature and signed by Gov. Jay Inslee last week after a conference committee had hammered out the details of issues in conflict, including the future of LSDF.  

In the end, House Democrats gave in and allowed a GOP-demanded shift of LSDF's treasury balance of $11 million to the state general fund and the stripping it of any revenue from any source over the coming biennium.  

I confidently (and obviously misguidedly) told friends and business associates the governor would use his line-item veto power to eliminate those LSDF death-knell provisions and turn GOP opposition to state support of entrepreneurs and biotech startups into campaign issues for Democrats next year.

Didn't happen. For reasons yet unexplained, the governor failed last week to employ the veto power he used a year ago to save the fund and thus become the political darling of those who saw LSDF as this state's message to the life sciences world about Washington's commitment to its future role in economic development in this state.

But for all the lamenting from those focused on how this state stacks up against competing states and the message LSDF's demise sends to entrepreneurs in other states, it needs to be remembered that LSDF's legacy is in the life science startups it funded and that are now growing and creating jobs.

And appropriately, one of the grant recipients, Seattle-based Omeros Corp., could possibly become a springboard for biopharma startups in the future because of its unusual program funded with a $5 million LSDF grant and, in an leading-edge partnership, $20 million from Paul Allen's Vulcan Capital in 2010.

Those potential spinouts could come from Omeros' G-protein coupled receptor (GPCR) program, a potentially lucrative focus in what is viewed as one of the most valuable families of drug targets.

GPCR's relate to key physiological processes in the body in which molecules bind to the receptors. GPCR relates to drugs that act on brain-cell receptors, unlocking them to drug development with such drugs representing 30 to 40 percent of marketed pharmaceuticals. Examples of the wide range of GPCR-drugs are antihistamines, opioids, alpha and beta blockers, serotonergics and dopaminergics.

 

The Omeros focus is on what are known as orphan GPCRs, those whose brain-cell receptors lack a certain DNA factor. There is a broad range of indications linked to orphan GPCRs, including cardiovascular disease, asthma, diabetes, pain, obesity, Alzheimer's disease, Parkinson's disease, multiple sclerosis, schizophrenia, learning and cognitive disorders, autism, osteoporosis, osteoarthritis and several forms of cancer.

 

A key Vulcan executive said at the time of the partnership announcement that the Omeros GPCR focus could accelerate new pipeline development across a broad range of highly attractive drug targets and can make a significant impact on the pharmaceutical industry.

 

Dr. Greg Demopulos, CEO of publicly traded Omeros, says the GPCR focus of his company is designed to promote the life science industry in this state in a way that is provided by other states that are spending millions to move life science to the fore in their economic development focuses.

 

But if the Omeros effort is successful in turning out startups to focus on various diseases that could relate to and be impacted by the GPCR research, the result would be a private-sector successor to, or funder of life science discovery since Vulcan Capital and LSDF have a right to receive a percentage of net proceeds generated by the GPCR program.

 

Meanwhile, the legislature, in head scratching fashion, didn't strike the Life Science Discovery Fund from existence, merely left it without resources to survivc.

 

But as a friend who has surveyed the legislative process for decades, and been closely involved with the lawmakers, explained: "This is how the legislature operates. They don't outright kill things.  They just turn off the money spigot because that's the way it's handled in the secretive budget process, which is gutless."

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A small example of government caring can do much to alleviate broad public cynicism

At a time when cynicism about government, and elected officials in particular, is at its zenith, there's some satisfaction in encountering those occasions when government has a more caring demeanor.

Seattle City Councilman Tim Burgess' announcement that he is seeking re-election reminded me of one of those occasions because he was a player in what to most people would be a minor incident but was one that had a larger import for me because it grew out of a column I had done.

The point of the column, which I think has increasing relevance, was that "elected officials need to weigh the implications of anger that constituents feel toward government in certain situations and consider how to bring private-sector principles of customer-friendliness into their thinking."

To many friends and those who read the column, there was an amusing, and some said typical, overreaction on my part to two traffic-related citations, one for $42 for parking wrong against a building and the other a $124 ticket for rolling through a stop sign in my neighborhood at 6:46 one morning.

The point of the column was that it may be at government's peril when citizens, particularly in tough economic times, find serious financial impact from traffic-related brushes with the law and are angered out of a sense that the penalty exceeded what was just or even moral.

 

I wrote that I would go to court on the two tickets and make the point to the magistrate that the cost of the minor moving violation had come during Christmas season and for some in Seattle, that $124 could have a serious financial impact on their holiday.

 

I said I would suggest to the magistrate that since "customer friendliness" was important to government's relations with its "constituents," I was going to ask permission to make a donation equal to the ticket amount to charity rather than pay it to the city. That would make me feel better about the citations, I said.

 

A number of those who received the column urged a follow-up column once I had met with the magistrate.

 

When I arrived in court and handed Seattle Municipal Court Magistrate Lisa M. Leone the column and explained why I was in front of her to discuss the tickets, she said "there is certainly a lot controversy about this issue, and a lot of angry people," then added: "And a lot of poor people are involved."

 

I could perceive that she cared about that fact and was sensitive to my suggestion that since charitable organizations are squeezed as never before, I'd write a check for the amount owed to any charity she designated. But she noted she lacked the power to issue that sort of order.

 

I explained my point about it being in her hands and the hands of her peers to be the instruments of customer friendliness that so often seems lacking, especially in cases where merely the law and not a moral issue is involved, though admittedly some might debate me over a beer about breaking the law basically being a moral issue.

 

To my surprise, she said she was going to change the parking ticket to a warning, then offered me the opportunity to do community service from a list of approved non-profits, for a number of hours equal to the $124 citation amount.

 

She said she lacked the authority to tell me to make a check out to the charity for that amount but was accepting of my statement that I felt compelled to do that.

 

It was clear that while she logically wouldn't share the information with me, there obviously were a number of citizens for whom the traffic-incident costs would pose a serious hardship who found themselves fortunate enough to be in the hands of a magistrate who fit the image of "justice."

 

So I wrote a follow-on column about what happened, with the lead: "It turns out that Justice does have a smile on her face, even when challenged to defend the workings of government against accusations of possible heavy-handedness."

Councilman Burgess comes into the picture because perhaps a year later, following a parking-ticket incident (I always go to court if I think I was treated unfairly) I went to court again and wound up again before the same Magistrate Leone.

 

I asked her if she remembered we had met earlier and that I had done a column on our encounter and she said she did. And she told me that after the column came out, Burgess, who had also seen the column, spent the bulk of a couple of days sitting in her office as those seeking relief from their traffic-infraction costs appeared before her.

 

"I think he genuinely wanted to get an understanding of those who came to appeal their tickets," she told me.

 

Now any politician seeking re-election wants to have good things said about them. But even Burgess might chuckle at the idea that relating this court incident could help his re-election.

 

But I've carried a respect for him since then because little things that are unpublicized tell much about the person.

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LSDF's comparatively tiny budget should be easy to fund, given its role in the state's future

Don Brunell, retired president of the Association of Washington Business, summed it up best as we were discussing the perilous state of the fund whose purpose has for a decade been to promote the state's life sciences competitiveness.

"A $19 million expenditure in a $40 billion biennial budget is too small a percentage to even try to calculate," said Brunell, who as longtime president of the state's largest business association guided business's side of negotiations through four governors and two dozen legislatures.

"If it's a really important issue, as it seems the Life Sciences Discovery Fund (LSDF) should be viewed, you just take the $20 million out of a major-funded item," Brunell said, "particularly at a time when the state is experiencing an unexpected surge in revenue. It's not that difficult."

Brunell's comment, borne of years of playing the game of helping lawmakers reach budget goals while finding a way to save the most important business items in the final budget, is an important comment, since it's a thought that may still occur to the small group of legislators deliberating the final form of the state budget for the coming biennium.  

To be sure, there are a lot of smaller programs whose supporters are seeking to pressure lawmakers to safeguard in the final budget."Molehills vs. the 'mountain' of holding off new taxes," as one prominent business friend of mine, whom I respect but disagree with on this, put it in referring to those various programs.

That current LSDF funding of $19 million a biennium is the small remainder of the $400 million tobacco-settlement money from which LSDF was established in 2005 by the Governor and Washington's Legislature. The goal of the fund was to support innovative research in this state to promote life sciences competitiveness, enhance economic vitality, and improve health and health care.

The challenge for LSDF at this point is that while the money to sustain its funding for another biennium is in the House (Democrat) budget, and strongly supported by the governor, there is nothing for the agency in the Senate (GOP) budget, and there apparently is even Senate talk of taking back some of the money already granted.

Word leaked out earlier this week that the four budget negotiators (a Democrat and a Republican from each house) had reached a tentative deal on the total size of the budget. That's the first step before lawmakers begin tinkering with details, hammering out individual items (like the funding for LSDF's survival) and, of course, reaching some compromises before the hard deadline at the end this month when the biennium itself ends.

There is some belated talk, but probably not nearly enough of it, from business leaders about hammering the Senate with the reality that Republicans can't abdicate the image of supporters of entrepreneurs and innovation to a Democratic governor and Democratic House members.

Brunell was one of a half dozen major business-community figures I had talked within the past week to get a sense of the depth of understanding of and interest in the LSDF and its purpose. And Brunell admitted, as others have, that he was only vaguely aware of LSDF's role (which is visible mainly to the biotech industry and its supporters) or that it was in danger of disappearing, assuming that if it was an important business issue, Republicans would be watching out for it.

 

Brunell, who in his retirement now produces a regular column that appears in several dozen newspapers, seemed struck by the lack of visibility on what he agreed seemed vital to future of an emerging industry in this state.

Noting that there are a number of issues whose backers are bombarding supporters to press their legislators, Brunell said "I am pummeled with emails and contacts from wildlife and recreation and the folks wanting a carbon tax, but besides you I am not hearing from LSDF advocates. But supporting LSDF seems like a no-brainer."

It's important to share that my belief in the importance of LSDF comes, as is usually the case, from personal involvement and commitment. I had only been generally aware, as a journalist, of LSDF and its background and role.

Then I became involved in actively supporting an emerging biopharma company named M3 Biotechnology, believing in its potential dramatic impact if it gains FDA approval for a drug that would reverse neurodegenerative diseases, and in the CEO, Leen Kawas, who has been guiding the company's successful growth.  

As one whose wife suffers from Parkinson's Disease and with a father who died of it, and relatives and friends who have Alzheimer's, the company was a natural one.

It was as a result of involvement with the company that I learned the importance of LSDF, since the then just-launching M3 received grants from LSDF that allowed it to bridge what's referred to as the funding "Valley of Death," the financially challenging period from birth of a company to the successful initial funding round.

 

I also researched what states are doing to attract biotech, which this state's sound and fund has largely substituted for commitment, and learned that others are spending millions of dollars to attract and grow what they realize will be a key economic pillar in the future.

"M3 isn't the only company that needed the LSDF funding to survive until finding conventional funding," said Chris Rivera, CEO and President of the Washington Biotechnology and biomedical Association.

"Legislators tell me 'if we give LSDF $19 million, we'll have to take it away from somewhere else," Rivera said. "And I reply, 'if LSDF goes away, and the industry begins fading and the economy is being impacted in this state a result, you'll be doing a lot more looking somewhere else to make the cuts that will be necessary.'"

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Could proposed capital-gains tax be vehicle for Supreme Court re-look at income tax?

The proposed capital gains tax that the Democratic controlled House of Representatives insists must be a part of the final legislative budget package likely stirs the inevitable liberal hopes and conservative fears about it being the vehicle to bring the issue of state income tax before the state Supreme Court.

Democrats are routinely hopeful of finding an opportunity to pass a tax measure that would cause the state's highest court to re-look at the constitutionality of a Washington income tax while Republicans are pretty much always on guard against that happening.

Thus the seemingly illogical positions of Democrats wanting a tax measure the Legislature passed over GOP opposition to be challenged to the Supreme Court and Republicans not wanting a measure they opposed to be appealed.  

Hugh Spitzer 

But the real logic is in understanding realities. Proponents of adding some sort of a tax on income to the tax structure in Washington have become convinced that the state Supreme Court, given the opportunity, would reverse the longstanding precedent that an income tax is unconstitutional in this state. And many opponents of an income tax apprehensively agree with that analysis.

  

It's been 82 years since Washington's Supreme Court, in a 5-to-4 decision, held that a graduated net income tax would violate the state constitution's uniformity provision because 'income' was 'property' and property was to be taxed uniformly.

Washington is one of only seven states with no income tax, but by almost any measure, it is the most progressive of the states with no tax on either personal or corporate income.  

The 1933 ruling on the unconstitutionality of an income tax has meant that it would require a two- thirds vote of the legislature and the voters to amend the constitution to impose an income tax. And despite repeated efforts to get the voters, since that supreme court ruling, to approve an income tax, no proposal has come close to approval.

But Seattle attorney Hugh Spitzer, an expert on the state constitution and long an advocate of a state income tax, agrees that the state high court, given the opportunity, would overturn the precedent case. But he says the proposed capital-gains tax, which Gov. Jay Inslee and Democrats pitch as targeting the investment income of the super wealthy, isn't likely to be the vehicle to get the issue before the court.

"Although I wish that this legislation, if enacted, would provide an opportunity to re-look at the constitutionality of a Washington income tax, I'm not sure that it would necessarily provide that opportunity," Spitzer emailed me when I posed the question to him this week.

"The state capital gains tax proposal has been carefully drafted to stay comfortably within the definitional parameters of an excise tax," Spitzer said, adding "I helped with the drafting of early versions of the proposed capital gains tax, and the language I worked with is still there."

"It's a one-time tax on a transaction rather than a periodic (i.e., yearly) tax on property.  The tax can be easily avoided by not selling the asset giving rise to the capital gains tax-this is an indicator of an excise tax rather than a property tax," he explained. "Property taxes can't be avoided by means of a voluntary action (like refraining from a purchase or a sale)." 

But likely stirring the emotions of liberal hope and conservative fear about a new supreme court decision, Spitzer, now acting professor at the University of Washington Law School, argues that the current State Supreme Court would accept an income tax as constitutional.  

"Fundamentally, the cases they relied on in 1933 all tied back to three United States Supreme Court cases which have been reversed or, in one case, wiped out by a U.S. Constitutional amendment. The background law no longer exists." Not to mention that this Supreme Court is dramatically more liberal in its makeup than the court in 1933.

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Legislative disinterest in funding assist for life science industry troubling to many

(Editor's noteThis is the first of a two-part series on the state's life science/biopharmaceutical industry with this first article dealing with the challenges of getting the state to provide the financial tools necessary to grow the industry. The second article will deal with a couple of newly emerging companies that will help carry the hopes for the future of the sector in Washington.)

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The apparent legislative disinterest in the state having a financial role in the future of Washington's life science industry isn't a fatal flaw for what has become the nation's sixth largest biopharma cluster. But it will send the wrong signal to biotech entrepreneurs and investors elsewhere in the country and will inevitably mean some startups won't make it across the early-funding challenge that's known as "the valley of death."

 

"Legislative disinterest" means the very real possibility that the 2015 Legislature may turn its back on key funding for startups, who represent the seeds that grow into players and job creators in the industry, by declining to keep the innovative Life Science Discovery Fund (LSDF) alive.

 

If LSDF, created to foster growth of the state's life science sector, went out of existence on its 10th anniversary because the Legislature decided not to fund it anymore, It would represent an ironic measure of the legislature's lack of commitment to the future of that industry in Washington.

 

Key states around the country are going to great financial lengths in their funding commitments to life science, both to foster growth of that industry within those states and also to send "come join us" messages to biotech innovators and investors elsewhere in the country.

 

LSDF was established in 2005 by then-Gov. Christine Gregoire and the state Legislature to guide investment dollars from the Master Tobacco Settlement Agreement into research and development grants to entities that demonstrate the strongest potential for delivering health and economic returns to the state.

 

It was only the intervention of Gov. Jay Inslee, a key proponent of a strong life-sciences sector, that saved LSDF at the end of the 2014 legislative session, but he couldn't prevent the demise of the research & development credit against the state sales and business & occupation taxes.

 

The R&D credit expired at the end of 2014. More than 2,000 companies had used the credit against the B&O tax since it was instituted in 1994, and about 400 have used the sales tax credit. The lost revenues through 2012 totaled about $950 million, but the investment the credits generated came to about $8 billion, and repaid the state several times over in overall tax collections, according to industry sources.

Chris Rivera
WBBA president.

Washington is now is on a short list of companies that don't offer R&D tax credits, and perhaps the only state on that short list that actually hopes to see its life sciences fortunes be an important component of economic success.

 

The budget Inslee has submitted to the Legislature would make a $20 million investment for LSDF and re-establish a $70 million Research and Development Tax Credit program with the governor telling the life sciences industry he is "a strong supporter of the R&D tax credit and sales tax deferral."

 

To be sure, the industry, guided by the Washington Biotech and Biomedical Association and its president, Chris Rivera, himself a former biotech CEO, have friends in Olympia in addition to the governor.

 

But the myopic among lawmakers will point to this region's sixth-largest life sciences ranking and say "well, things are obviously going pretty well for us."

 

The fact that the Seattle area ranks third among cluster-cities in the total of NIH dollars, at $142 million for the most recent year calculated, is viewed as reflecting the fact the region is anchored more by academic and independent research institutions than by local companies.

 

In fact, those academic-independent institutions, like the Gates Foundation, Fred Hutchinson Cancer Research Center, PATH, Institute for Systems Biology and the University of Washington may well be the most prestigious collection of industry research players in the country.

 

But the startups spun out of those institutions need conventional financial support to become full-blown businesses and that has been a challenge for companies in this state.

 

And from a competitive-clusters standpoint, the fact that two of the cluster cities above Seattle on the list are in California, with San Diego third and the Bay Area a far-ahead number one, is something that the lawmakers and policy makers need to be continually focused on.

 

Indeed nothing points up the importance of competitive awareness than the experience of Chris Rivera himself.

 

Rivera recalls that when he sought advice on launching a biotech firm in Seattle that would focus on orphan diseases "I told a key industry leader I needed space, talent and money. The response was 'you won't find those here.'

"

So having been involved with firms in Boston and the Bay Area before moving to Seattle in the mid-80s, he headed for California where, in 2005 in South San Francisco, he launched Hyperion Therapeutics, a specialty biopharmaceutical company focused on the development and commercialization of therapies for gastroenterology and hepatology diseases.  

 

Rivera guided his company through the usual ebbs and flows of early growth challenges, including downsizing when the IPO market dried up. He stepped down in 2008 as the company prepared for what turned out to be successful Phase II trials and a $69 million funding in June of 2009 in one of the largest VC raises that year. Hyperion went public in 2012. He remains an investor in the company, but it is a growing Bay Area firm, not the Seattle-area firm it might have been.

 

Thus it wasn't surprising that when the WBBA executive committee went looking for a new president in late 2008, they lured Rivera back to Seattle with one of his goals being to create a strategy to help keep companies in Washington.  

 

"I think we've done a pretty good job of achieving that," he says.

 

Success for Washington's life science industry often seems a matter of two steps forward and two steps back, despite the best efforts of WBBA, whose strategies include a successful mentor program for entrepreneurs.

 

There was some of both forward and back in 2014. The steps back were the departure Amgen, taking with it the jobs of more than 600 biotech employees, and the demise of once-high-flying Dendreon, which had more than 700 employees, leaving perhaps the largest number of jobless biotech employees ever in this area.

 

But the steps forward were the emergence of Juno Therapeutics, a company less than two years old that surged into an IPO in late 2014, and the surge in interest for Omeros Corp., whose CEO Greg Demopulos jokes that it has taken his company 20 years to become an overnight success.

 

Ironically, the hiring mode for Juno, which develops immunotherapy treatments for cancer and has had remarkable results in small clinical trials, has benefitted from the availability of former Amgen and Dendreon employees.

 

Omeros, a Seattle-based biopharmaceutical company focused on developing and commercializing small-molecule and protein therapeutics for large-market as well as a variety of orphan indications, has become the best biotech story of 2015 and we will take a look next week at the company that celebrated its 20th anniversary last June.

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Abe Bergman has mixed pediatrics, 'political medicine,' to benefit kids for half a century

Abraham (Abe) Bergman, M.D., a respected pediatrician and pediatrics professor in Seattle for more than 50 years, had a second practice over all those years that he refers to as "political medicine," which frequently found him twisting arms of state and national lawmakers for kids-related issues. Now he has a new cause that is painfully close to him: to build new community facilities to house the mentally ill.

Bergman, who retired as chief of pediatrics at Seattle's Harborview Medical Center in 2002, is seeking to have the 2015 Legislature clear the way to include construction of facilities for mentally ill housing in the capital construction budget the lawmakers pass each biennium.

Dr. Abraham (Abe) Bergman 

Bergman, who practiced pediatrics at Children's Hospital for 20 years and Harborview for 30 in addition to teaching at the UW Medical School, thinks the time is right for his proposal for several reasons.

An obvious one is a State Supreme Court ruling last year making the practice of warehousing mentally ill patients in hospital emergency rooms due to a lack of available treatment space illegal.

That ruling dramatically complicated the processes in place in the state mental health system and forces the Legislature to confront the question of how to deal with the longstanding dilemma of the impact budget cuts have had on the availability of mental-health treatment space.

But a decision immediately after the ruling by the Medicare and Medicaid Services to allow Washington State to use Medicaid dollars to pay for services in what are officially called Institutes for Mental Diseases may be another boost to Bergman's campaign. That decision would allow qualified non-profits to provide services in the facilities that he would like to see built with state capital construction bonds.

He candidly admits his interest "has been piqued" by having a 19 year old, one of three children from the Russian Far East that he and his wife adopted in the late '90s and early 2000s, "who has been at the intersection of the criminal justice and mental health systems for the past two years."

"The problem is visible everywhere in society," Bergman said. "People who are psychotic are walking around on the streets. Jails are full of people with mental illness and there is no place, no supportive housing, where these people who are a danger to themselves and others can go."

 

Bergman points as a possible model to a long-standing program in Maryland that provides for capital grants to non-profits or county or municipal corporations for from $100,000 to $2 million per project to construct buildings to provide services to individuals with development disabilities, mental illness or addiction.

"I feel there's a glimmer of hope now for the Legislature to consider this because, after talking with several legislators, it seems possible partisan swords will be sheathed, partly because there are certain issues, like child welfare, that have always been exempt from partisanship and this may well be one," Bergman said.

"The neat thing about my proposal is that most construction costs can be covered by the sale of bonds (in the capital budget) and funds to operate the programs can come mostly from Medicaid," he added. "So it's not a budget breaker."

Bergman notes that his plan, now being considered by the House budget committee, doesn't necessarily need passage of a bill to implement, but rather could merely be inserted directly into the capital budget itself.

I've been watching Bergman, now 82, practice his "political medicine" for more than 40 years, since we first connected in 1973 after the death of our infant, Sarah, who was a victim of Sudden Infant Death Syndrome.

Bergman and another young physician, Bruce Beckwith, were, for nearly a decade, the first contacts for Seattle-area parents whose infants had died unexpectedly and unexplainedly from what was long referred to as "crib death."

It was on behalf of those lost infants and their grieving parents that Bergman had already successfully guided a national campaign that led to research efforts to explain the sudden deaths and changed thoughtless and heartless medical and law enforcement practices. And their national efforts gave what had merely been "crib death" an actual medical name.

It was about the same time, in the mid-'60s, that Bergman also provided a key assist to Washington's Sen. Warren Magnuson in getting Congress to amend the Flammable Fabrics Act to expand its coverage to include foam and other materials used in children's clothing.

But Bergman's activities on behalf of kids extend way beyond mere political activism. He has been engaged for more than a decade leading efforts to improve healthcare for foster children, a campaign that he says is beginning to bring results.

He's been an outspoken advocate of adoptions by retirees, particularly of special-needs children. He became an advocate of retiree adoptions after he and his wife adopted their three youngsters from the Russian Far East.

And another successful campaign of Bergman's on behalf of children with special needs was creation of the Seattle Children's PlayGarden, which he proudly points to as "the only facility of its kind in the country located in a public park."

Bergman was the founding board chair and a key advocate for the PlayGarden when it became a 501c3 in 2003 and the Seattle Parks Department offered the south end of Coleman Playfield as the site for a public-private development. He calls it "the most gratifying project I have ever been involved with."

The annual luncheon on behalf of the PlayGarden, which is described as "improving the lives of chldren with physical or mental disabilities by providing them with full access to a safe indoor/outdoor recreation space and offering programs that improve their potential," is March 27 at the Four Seasons at 12p. 

Bergman once described the rewards of his half century as a pediatrician as satisfying "the passions of my bleeding heart by practicing 'political medicine' on behalf of underserved kids." It's a passion that hasn't abated in his retirement years.  

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State's Business & Occupation tax could get a look from Legislature as new-revenue source

The fact that it will take a two-thirds vote to get any new-tax measure through the state Senate this year could prompt lawmakers to take their first serious look in years at potential new dollars from the business and occupation (B&O) tax, the state's primary source of revenue from business.  

And if that happens, not only might some lawmakers be surprised at the disparity scattered among the nearly 30 categories of the B&O Tax -- Washington's unusual tax on gross receipts -- but it would also emphasize how out of sync the imposition of that tax is with the current-session's legislative mantra of "fairness."

After all, we have House Democratic Leader Ross Hunter, D-Medina, on the record with "when we are done, our tax system should move toward fairness." So lawmakers could decide there's some logical opportunity for new revenue from some of these categories while getting credit for looking to create fairness

Seeking revenue-producing changes in the B&O could be an attraction because

apparently the GOP Senate rule on two-thirds for any new tax allowed continuation of a simple majority for tinkering with existing taxes. 

 

This column's focus on the B&O tax is a topic that came to mind for me as a consultant who, with attorneys and accountants, pays a B&O tax under the "services" category, of .015 percent, basically $15,000 on $1 million of gross revenue, while our clients pay a tax of maybe $2,500, as the manufacturers' .00275 percent rate would impose. As publisher of Puget Sound Business Journal, I paid $3,500 for each $1 million of revenue.

An honest look at a tax structure where an attorney, accountant or consultant could pay a rate two or three times as high as a client they are advising might well provide additional tax revenue as part of creating tax fairness for all businesses.

But across the state tax spectrum, the fairness issue should also be weighed against the reality of why some tax breaks legitimately came about. Thus lawmakers need to evaluate, and perhaps restore at least some of the 20-year-old high-tech B&O tax credit, a tax break for five categories of tech business that expired as of January 1 this year.

It would be a mistake for the lawmakers to succumb to the temptation to merely pocket the nearly $50 million in revenue that the tax break cost the state, rather than seek to evaluate the changing value of the tax break to some of the five tech sectors to which it applied.

The challenge for legislators in evaluating either the B&O tax disparity or the tax break for high tech is in being able to understand the difference between tax breaks important to the economy and tax breaks that are merely the result of good lobbying.

And the manner in which the tax credit came about for high-tech research and development for advanced computing, advanced materials, biotechnology, electronic device technology, and environmental technology is an example of what was once viewed as an important-to-the-economy tax break.

The tax breaks for high-tech companies, both B&O and sales tax credits, were created by a Democratic legislature responding to the goal of creating jobs that came from a Democratic governor, Mike Lowry.

 

 "We were coming out of what was, at that time, the state's worst recession and we needed to attract industries that would produce good-paying jobs," Lowry recalled of the proposal he came up with and pressed through the 1994 Legislature as a way to lure new business to Washington.

 

And for Democratic lawmakers who have since sometimes come to refer to such tax breaks as "tax loopholes," Lowry still responds with his view that they are "incentives" that have permitted high-tech companies to avoid paying state sales tax on new facilities, including equipment.

 

"We were absolutely correct to come up with policies to lure companies to the state that would create high-paying jobs that were basically the jobs of the future," Lowry said.

 

And among those "jobs of the future" that still deserve nurturing is the biotech category, an industry that by all rights should be a third-leg of this state's economic stalwarts but that has lagged for several reasons. Removing the tax incentives on new facilities and equipment would be one more reason.

 

So back to the B&O tax, which actually came into existence in 1933 after the state Supreme Court threw out the income tax that lawmakers had passed in an effort to find new sources of revenue for a financially struggling state. The '33 Legislature adopted the gross receipts tax as a temporary, stop-gap move to balance the state budget.  

But the temporary, as in most legislative "temporary" moves, became permanent, though the rationale for creating B&O special treatment for one industry over another is lost in the antiquity of legislative deal making. But once that bridge was crossed, crafted from some handshake deal between one or more lawmakers and a lobbyist or two, the following special deals were somewhat like kisses: once the first one is bestowed in a relationship, the rest come much more easily.

Now, in a sense, some lawmakers are toying with what would likely be considered a form of tax on income with Democrats expressing an interest in taxing capital gains, saying it would make the state's tax system less regressive, and more fair (that word again).

Sen. Andy Hill, the Republican who chairs the Senate Ways and Means Committee as is thus the upper chamber's chief budget writer, has put down the capital gains idea, branding the phrase "regressive tax code" as a code-word for getting an income tax.

 

Voters have consistently rejected the idea of a state income tax, but it doesn't take too clever a legislative mind to realize that, even though any tax increase would almost certainly be sent to the voters, there might be a significantly different view of state residents about taxing capital gains than for taxing their own income.

 

And savvy lawmakers have a sense that a far more liberal State Supreme Court faced today with the question of whether a state income tax was unconstitutional or not, might well have a different answer than the one 82 years ago.

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Businessman, education activist Don Nielsen's call for ed overhaul drawing national attention

As the 2015 Legislature looks down the double barrels of a pair of multi-million dollar education-funding challenges, one ordered by the court and the other by the voters, a new book by former Seattle school board president Don Nielsen calling for a major overhaul of the basic structure of education is attracting increasing attention.

Don Nielsen 

Nielsen, a successful businessman who turned his attention to education and began a 20-year role as education activist, including two years traveling the country in search of good ideas and a decade on the Seattle school board, says funding isn't the issue. "It is the system and the people who populate it that need to change."

But the Washington State Supreme Court, in a January 2011 ruling that ordered the legislature to fully fund basic education and last fall held the lawmakers in contempt for failing to comply with that order, says funding IS the answer. Then voters, by a bare majority, in November approved Initiative 1351 to limit class sizes. That brought an additional multi-million-dollar reality to legislative deliberations.

And as the issues relating to education funding come under increasing scrutiny, there is increasing visibility for Nielsen, who seems to be at the epicenter of discussion about the future of basic education in this state, and elsewhere. His book, Every School: One Citizen's Guide to Transforming Education, has become a national focal point in discussions about the future of public education.

The book has led to speeches before a long list of Rotary clubs and other organizations, beginning late last year before the Seattle Rotary Club. Another five rotary talks are scheduled for next month, and radio interviews are occurring on talk shows across the country.  

"Most of what we're hearing is that we need more money and lower class sizes, but we have tried that and it hasn't worked," said Nielsen. "We now spend three times as much per child in inflation-adjusted dollars as we did in 1970 and we also have four times as many adults in our schools with only eight percent more children."  

While Nielsen confides he has little hope that his ideas will ever pass muster before a legislature in this state because of the power of the forces opposed to dramatic change in the public education system, a legislature closely divided politically may decide that a dramatic education-funding change should be accompanied by other dramatic changes.

It's logical that Nielsen would take a businesslike view of analyzing what changes are needed for basic education to work since dramatic success as an entrepreneur over nearly a quarter century preceded his personal commitment to learn about education's needs, and then seek to bring those about.

His business success involved co-founding in 1969 a start-up biological and chemical testing company that he helped grow into the world's largest company in its industry by the time he had taken it public. He then helped guide its acquisition in 1987 by Corning, which kept him on as CEO of the firm, Hazelton Corp., and over the following five years he doubled the company's annual revenue to $165 million.

Newspaper editorialists, policymakers and lawmakers from both parties have begun to suggest that if more money must be spent on education, then perhaps dramatic change in the system itself should be considered.

And the fact that Nielsen is reaching audiences on talk shows in cities across the country suggests that what he describes as an "obsolete" system is facing serious scrutiny in states other than just Washington.

"Basically, my premise is that the system is obsolete and needs radical change," he told me in one of several phone conversations  in recent days. "However, like a failing business, you don't embark on radical change with the people who created the problem in the first place.  So, to fix our schools, we must first fix the people and we must do so at all levels; teaching, leadership and governance."

As a frank and to-the-point kind of a guy who has brought an entrepreneur's focus, innovation and zeal to his pursuit of improving education, Nielsen has stirred critics who were protective of the status quo while attracting respect and support from those who shared his view that the structure of education needed to change.

Interestingly, the latest Elway Poll shows that for the first time in seven years, economic issues are not at the top of the public's wish list for legislative action. Rather it is education.

Stuart Elway, president of Elway Research, says his poll shows that 65 percent of those polled think the Legislature should do as much as possible without cutting other programs or raising taxes, 51 percent think education funding is the first priority and 48 percent says it will be necessary to raise taxes to meet education's funding needs.

Nielsen, a 1960 graduate of the University of Washington, where he was student body president in his senior year, seeks to have education reform seen as an issue that transcends politics.

"Fixing our schools, so they effectively educate every child should not be a partisan issue," he told me.  "I am hopeful that the Republican Party will soon recognize that and take on education as their primary issue.   The Democrats have claimed schools as their issue for the last three decades and our schools have not improved. Time for a change."

The changes that Nielsen espouses boil down to three key steps.

"First, we have to improve the quality of teachers," suggested Nielsen, who says a key first step is eliminating certification laws, which he refers to as "the culprit" because they give "education schools a monopoly over the supply of human capital that can work in our schools."

"Next we must improve leadership," he said. "A quality principal will give you a quality school but certification laws again hinder our ability to hire top leaders for our schools."

We also must address governance, not just leadership. We need high quality, competent people governing our schools.   In urban systems, I would recommend going to appointed school boards or even eliminating them altogether and have the superintendent become part of the mayor's cabinet.  

Nielsen decided, after his decade of schools leadership at the local level, that the necessary changes couldn't be achieved locally. And he suggests the fact No Child Left Behind Act has produced disappointing results, and may be dramatically altered in this Congress, suggests Washington, D.C., isn't the place to drive necessary changes.

"To improve America's schools, we need to do so at the Statehouse," said Nielsen.

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NIelsen calls for major education overhaul

As the 2015 Legislature looks down the double barrels of a pair of multi-million dollar education-funding challenges, one ordered by the court and the other by the voters, a new book by former Seattle school board president Don Nielsen calling for a major overhaul of the basic structure of education is attracting increasing attention.

Don Nielsen 

Nielsen, a successful businessman who turned his attention to education and began a 20-year role as education activist, including two years traveling the country in search of good ideas and a decade on the Seattle school board, says funding isn't the issue. "It is the system and the people who populate it that need to change."

But the Washington State Supreme Court, in a January 2011 ruling that ordered the legislature to fully fund basic education and last fall held the lawmakers in contempt for failing to comply with that order, says funding IS the answer. Then voters, by a bare majority, in November approved Initiative 1351 to limit class sizes. That brought an additional multi-million-dollar reality to legislative deliberations.

And as the issues relating to education funding come under increasing scrutiny, there is increasing visibility for Nielsen, who seems to be at the epicenter of discussion about the future of basic education in this state, and elsewhere. His book, Every School: One Citizen's Guide to Transforming Education, has become a national focal point in discussions about the future of public education.

The book has led to speeches before a long list of Rotary clubs and other organizations, beginning late last year before the Seattle Rotary Club. Another five rotary talks are scheduled for next month, and radio interviews are occurring on talk shows across the country.  

"Most of what we're hearing is that we need more money and lower class sizes, but we have tried that and it hasn't worked," said Nielsen. "We now spend three times as much per child in inflation-adjusted dollars as we did in 1970 and we also have four times as many adults in our schools with only eight percent more children."  

While Nielsen confides he has little hope that his ideas will ever pass muster before a legislature in this state because of the power of the forces opposed to dramatic change in the public education system, a legislature closely divided politically may decide that a dramatic education-funding change should be accompanied by other dramatic changes.

It's logical that Nielsen would take a businesslike view of analyzing what changes are needed for basic education to work since dramatic success as an entrepreneur over nearly a quarter century preceded his personal commitment to learn about education's needs, and then seek to bring those about.

His business success involved co-founding in 1969 a start-up biological and chemical testing company that he helped grow into the world's largest company in its industry by the time he had taken it public. He then helped guide its acquisition in 1987 by Corning, which kept him on as CEO of the firm, Hazelton Corp., and over the following five years he doubled the company's annual revenue to $165 million.

Newspaper editorialists, policymakers and lawmakers from both parties have begun to suggest that if more money must be spent on education, then perhaps dramatic change in the system itself should be considered.

And the fact that Nielsen is reaching audiences on talk shows in cities across the country suggests that what he describes as an "obsolete" system is facing serious scrutiny in states other than just Washington.

"Basically, my premise is that the system is obsolete and needs radical change," he told me in one of several phone conversations  in recent days. "However, like a failing business, you don't embark on radical change with the people who created the problem in the first place.  So, to fix our schools, we must first fix the people and we must do so at all levels; teaching, leadership and governance."

As a frank and to-the-point kind of a guy who has brought an entrepreneur's focus, innovation and zeal to his pursuit of improving education, Nielsen has stirred critics who were protective of the status quo while attracting respect and support from those who shared his view that the structure of education needed to change.

Interestingly, the latest Elway Poll shows that for the first time in seven years, economic issues are not at the top of the public's wish list for legislative action. Rather it is education.

Stuart Elway, president of Elway Research, says his poll shows that 65 percent of those polled think the Legislature should do as much as possible without cutting other programs or raising taxes, 51 percent think education funding is the first priority and 48 percent says it will be necessary to raise taxes to meet education's funding needs.

Nielsen, a 1960 graduate of the University of Washington, where he was student body president in his senior year, seeks to have education reform seen as an issue that transcends politics.

"Fixing our schools, so they effectively educate every child should not be a partisan issue," he told me.  "I am hopeful that the Republican Party will soon recognize that and take on education as their primary issue.   The Democrats have claimed schools as their issue for the last three decades and our schools have not improved. Time for a change."

The changes that Nielsen espouses boil down to three key steps.

"First, we have to improve the quality of teachers," suggested Nielsen, who says a key first step is eliminating certification laws, which he refers to as "the culprit" because they give "education schools a monopoly over the supply of human capital that can work in our schools."

"Next we must improve leadership," he said. "A quality principal will give you a quality school but certification laws again hinder our ability to hire top leaders for our schools."

We also must address governance, not just leadership. We need high quality, competent people governing our schools.   In urban systems, I would recommend going to appointed school boards or even eliminating them altogether and have the superintendent become part of the mayor's cabinet.  

Nielsen decided, after his decade of schools leadership at the local level, that the necessary changes couldn't be achieved locally. And he suggests the fact No Child Left Behind Act has produced disappointing results, and may be dramatically altered in this Congress, suggests Washington, D.C., isn't the place to drive necessary changes.

"To improve America's schools, we need to do so at the Statehouse," said Nielsen.

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