Time to kill the Oregon Growth Board (OPINION)

February 17, 2016 – OregonLive by Jeff Gudman

Like most Oregonians, I’ve had enough of Salem’s crony-capitalist politicians using your money to help well-connected private companies benefit from legislative generosity.

In the Legislature’s first week, one such program — the Oregon Growth Board — received a committee vote for a rules change via House Bill 4020A. This is a program that should be abolished, not adjusted.

Very few people know that our state’s School Stability Fund is being used to bankroll angel investor conferences and give away grants and loans to risky startups through venture funds.

Oregon’s School Stability Fund has been used to funnel more than $100 million into the riskiest categories of venture capital investment. And it’s not just going to Oregon companies, but to Canada, Utah, Washington and California.

Big risks are supposed to mean big rewards, right? Not in this case. The Oregon Growth Board’s co-chair, Gerry Langeler, testified on Feb. 1 that the return on investment has been 2.5 percent over the entire life of the fund. In the same amount of time, the Dow Jones industrial average, the Nasdaq composite and Standard & Poor’s 500 index have increased more than the fund with a much lower risk.

Big risk and a small return. Not the right combination.

Only the Oregon Legislature could produce a result that both initiated and inherited the highest amount of risk and provided a financial equivalent to stuffing a mattress with cash.

Other education funds have provided a much higher return without such reckless wagering. Cascade Policy Institute reports that in the last three years the Common School Fund has returned 15.98 percent and the Higher Education Pooled Endowment Fund has returned 11.06 percent.

The Legislature’s answer has been a number of bills tinkering with oversight and consolidation. In 2012, the program was renamed the “Oregon Growth Board” and the statutory requirements for board service were changed to those experienced in banking, credit unions, investments and small business development. It also included positions for the state treasurer and two members of the Legislature.

The bill made a horrible program bad — which is a minor improvement — but was the only option for lawmakers since abolishing it was never put to a vote.

It’s no wonder: The 2012 bill’s architect, Rep. Tobias Read, D-Beaverton, sits on the Oregon Growth Board and was chair of the legislative policy committee that created it. In recorded testimony on Feb.1, he described it as “one of the best things we’re doing.”

The board funds angel investor conferences statewide, seeking to connect startup companies with private investors. It is unclear how this has any direct return on investment for the School Stability Fund. It has issued loans and grants targeting “underrepresented entrepreneurs,” who apparently are unable to obtain loans elsewhere — likely for good reason. And to cap it off they pay high consulting fees to private wealth management companies, all with money intended to stabilize K-12 schools in Oregon.

We have a state agency to cultivate economic development: Business Oregon. If these private equity firms and startups need state assistance to connect at conferences, it should come from Business Oregon’s economic development programs, not lottery funds constitutionally mandated to go toward education.

It’s time to pull the plug on this dangerous investment mechanism. There is sufficient private capital to fund startup ventures in Oregon without asking public schools to foot the bill.