An Audit Report on
The Emerging Technology Fund
SAO Report No. 11-029April 2011
This audit was conducted in accordance with Texas Government Code, Section 321.0132.For more information regarding this report, please contact John Young, Audit Manager, or John Keel, State Auditor, at (512) 936-9500.
The Emerging Technology Fund (ETF) should makesignificant improvements to promote greatertransparency and accountability.Issues in a number of areas impair the ability toadminister the ETF in the best interests of theState. It is important to hold recipients of fundsaccountable. Auditors identified the followingweaknesses:
Decision making related to the ETF andrecipients of funds is not open to the public.
The ETF conducts limited monitoring ofrecipients’ performance and expenditures offunds.
The Office of the Governor does not report thevalue of the State’s investments through theETF on its financial statements.
The ETF does not administer its contracts withthe seven Regional Centers for Innovation andCommercialization (RCICs) and the Texas LifeScience Center for Innovation andCommercialization (Texas Life Science Center)in a consistent manner. Both the RCICs and theTexas Life Science Center evaluate and make recommendations to the ETF’sAdvisory Committee regarding applications for funds. The Advisory Committeethen makes its recommendations to the ETF’s trustees. Trustees make the finalapprovals on ETF grants and awards.The Office of the Governor, which administers the ETF, was cooperative andprovided all of the information the State Auditor’s Office requested during thisaudit.
The Legislature established the EmergingTechnology Fund (ETF) in 2005 and initiallyfunded it with:
$100 million from the General RevenueFund.
$100 million from the EconomicStabilization Fund (Rainy Day Fund).As of August 31, 2010, a total of 153 grantsand awards totaling $342,336,567 had beenawarded to recipients.Recipients can receive funds in three ways:
areinvestments that help companies takeideas from concept to the marketplace.
Research matching grants
create public-private partnerships with highereducation institutions, federalgovernment grant programs, andindustry.
Research superiority grants
are awardedto higher education institutions to recruitresearch talent.The Governor, Lieutenant Governor, andSpeaker of the House of Representatives arethe trustees for the ETF. After receivingrecommendations from an AdvisoryCommittee, the trustees make the finaldecision about which applicants will receivefunds.