SMART Business Act: A new twist on an old concept

Delbert Hosemann

Delbert Hosemann

One of the cornerstones of Secretary of State Delbert Hosemann’s 2013 legislative agenda is an old bill with some new features.

The Strengthening Mississippi Academic Research Through (SMART) Business Act is similar to legislation Hosemann has supported the past two sessions. It offers incentives to businesses that contract with a Mississippi university for private research.

“It came to my mind that we weren’t getting as many federal grants (for university-based research) as we used to after 2010,” Hosemann said.

The numbers bear that out. According to the Institution of Higher Learning’s Research Catalog, Mississippi universities received in fiscal year 2010 about $586 million in research funds.

In fiscal year 2012, which ended last June 30, that figure had fallen to $408 million.

Starting to close that $178-million gap is the focus of the SMART Act, Hosemann said.

“That’s a huge number. In my way of thinking, we cannot maintain world-class research universities — which we have, in acoustics, agriculture, aerospace to name a few — and take a hit that big in funding. Clearly, we have to have the private research done in the university system, to tie businesses to universities. From my old business days, they will do that if it can be done less expensively. That’s the first critical component.

“The second one is it keeps our universities on the cutting edge of research. They’re getting paid to do this, so it could help keep the cost of tuition down, which we desperately need in this state. And, it gives students the practical work experience. When they get out of there, they have a sellable skill.”

The latest version is different than the bill that has failed the past two years. The most noticeable change is that the bill offers a direct 25 percent rebate, instead of a 7 percent tax credit. The rebate is capped at $1 million per investor per fiscal year. The overall amount that can be refunded in one fiscal year is capped at $5 million. Those two clauses are also new.

“There was some concern last year about how much this was going to cost, so this addresses that,” Hosemann said.

Hosemann said the bill could serve another purpose. He said there’s a lot of intellectual property that belongs to universities that could be beneficial to the private sector. “We’re hopeful that this will get that intellectual property out there,” he said. “At the Golden Triangle, and particularly at Aurora Flight Sciences, you’ve seen some of that happen. That’s a perfect example of that this bill would accomplish.

“The monetization of intellectual property is something you’ll see becoming more and more important to the university system. It also changes the culture of the university system a little bit. Their primary goal is to educate their students, and always will be. At the same time, this should make them realize the value of some of the things they do and have that accrue to the universities. In the old days, if they wanted to do research, they’d apply for a grant. That process will continue, and will be competitive, but right now we’ve got a big hole.”

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