MISSOULA -- Dozens of research grants that are funded every year by a little-known state agency have produced significant economic benefits for Montana, according to a study conducted by the University of Montana Bureau of Business and Economic Research.
The operations of the Montana Board of Research and Commercialization Technology have produced significant impacts on Montana’s economy, including more jobs, higher household incomes and larger tax revenues, according to the report.
Based in Helena, the board is administered by the Montana Department of Commerce. The agency hands out research grants every year to projects that have the potential to make Montana more competitive in the global marketplace.
Since 2001, the board has funded approximately 200 research projects totaling nearly $40 million. Money for the grants comes from the $1.27 million allocated annually from the state’s coal tax trust fund earnings.
The economic impact study was produced and authored by Patrick Barkey, director of the BBER, in order to gauge the effects of the board since it was established by the Legislature in 1999 to encourage economic development through investment in Montana-based research projects with a clear path to commercialization.
For example, earlier this year the board awarded $144,607 to UM researcher Michael DeGrandpre for his novel, low-cost system for automated chemical analysis. The grant was to help DeGrandpre design, fabricate and test an analyzer in collaboration with Sunburst Sensors, a Missoula instrument manufacturing company.
In 2015, the MBRCT will fund two projects in Missoula. Clifford Bradley of Montana BioAgriculture Inc. won $57,400 for developing fungal bioinsecticides for controlling multiple bark beetles in forestry.
And Sarjubhai Patel of the University of Montana won $60,000 for the development and validation of micro-RNA biomarkers in single and repeated mild traumatic brain injuries.
In the 14 years since it was created, the Board of Research and Commercialization has supported research projects in agriculture, biotech, medicine, software, bioreactors, carbon dioxide sensors, photonics, optics, energy, mining and biomimetic floating islands.
The study conducted by BBER found that MBRCT operations have created 459 jobs, increased statewide household incomes by $315 million ($229 million after taxes), increased gross sales that were realized by Montana-based businesses by $718 million and increased tax and non-tax revenues by $66 million, not including property taxes.
“Our basic finding is that MBRCT’s operations have had an outsized impact on the state economy,” Barkey said. “By almost any measure, the program’s impacts have been substantial, and it clearly has been a good investment in Montana’s economy.”
The board has produced a larger, more prosperous and more populous state economy than would have existed in its absence, he wrote in the report.
For the study, Barkey used a state-of-the-art policy analysis model and publicly available data on program spending and associated impacts. He produced a detailed assessment of the ultimate impact of the operations of the program on employment, income, output and population in Montana's economy.
The analysis measured changes in the economy that are due to MBRCT operations for the entire state and described how the state economy would have evolved since 2000 if MBRCT did not exist compared to the state’s actual economic performance.
The study did not take into account the productivity and wealth-enhancing aspects of the innovations themselves.
“The thing about that particular study that is interesting, in my mind, is we didn’t look at the market value of products that have been commercialized or their footprints, and ultimately what effect they have on employment and income,” Barkey explained.
The study was focused on the actions of the board, he explained, and studying the effects of every single product that was made would have been an overwhelming endeavor.
“The sizable benefits of the scientific and technical advances for the economy these MBRCT-supported projects create are not taken into account here, so the economic impact estimates we present undoubtedly understate the actual contribution of MBRCT operations,” Barkey wrote in the report.
Barkey said few people are aware of the MBRCT and what it does, but the results of the study speak to its importance.
“The whole point of the study was to show that keeping these ideas alive, and funding them in the critical stages when they are not commercial yet or they don’t have access to commercial capital because they don’t have anything proven or don’t have any assets that the bank can use as collateral, is very important,” Barkey said. “Governments have been doing this, for better or worse, for a long time. Montana, for various reasons, has to be a lot more selective."
Dave Desch, the executive director of the MBRCT, said that his office commissioned the study to get a validation by a third party. The board's budget has been cut from $3.65 million annually to $1.27 million in the last few years by the state Legislature.
“It’s something we would have liked to have known anyway, but it may be the basis for our arguments to increase funding,” he said of the report’s findings.
The agency used to average about 50 proposals every year, but last year only 23 were submitted, with 11 awarded grants. Desch said that people are less inclined to apply for the grants when they know they will be competing for less money.
“Submissions have decreased dramatically after our funding was cut in the last couple sessions,” he explained. “The number of proposals is directly impacted by how much money we have.”
The deadline for proposals is March 1 every year, and the staff usually makes a decision on who gets an award by June.
“Some projects are pretty focused and relatively short-term, other projects are more research infrastructure-type,” Desch said. “We may not see results for 15 years, but it builds infrastructure in the state. In the last few years, half the awards have gone to companies. Companies are usually better at explaining how they are going to commercialize their products. The other half has gone to projects in the university system, but they are often connected to companies.”