Creation of the State of Wisconsin Next Generation Reserve Board and Wisconsin next generation reserve fund, authorizing the State of Wisconsin Investment Board to provide certain advice, services, and facilities to state agencies and others, requiring the exercise of rule-making authority, and making appropriations. (FE)

1. One member, appointed by the governor for a four-year term, who has expertise in agriculture and is recognized for outstanding knowledge and leadership in bioscience or bioscience research.

2. Three members, appointed by the governor for four-year terms, who serve in senior management positions at Wisconsin bioscience companies and have responsibilities related to the financing of their respective companies, two of whom are from companies that employ less than 50 employees, and one of whom is from a company that employs 50 or more employees.

3. Two members, appointed by the governor for four-year terms, who serve in senior management positions at Wisconsin companies that develop or manufacture medical devices and have responsibilities related to the financing of their respective companies, one of whom is from a company that employs less than 50 employees, and one of whom is from a company that employs 50 or more employees.

4. One member, appointed by the governor for a four-year term, who either has at least five years of experience directly investing in bioscience companies in Wisconsin, or represents a group of investors that has that experience.

5. One member, appointed by the governor for a four-year term, who has at least three years of experience in the merger and acquisition of bioscience companies.

6. One member who is appointed by BioForward, Inc., a private bioscience association in Wisconsin, for a four-year term.

7. Two nonvoting members who have expertise in bioscience or bioscience research, one of whom is appointed by the Board of Regents of the University of Wisconsin System and serves at the pleasure of the Board of Regents, and one of whom is appointed by the Wisconsin Association of Independent Colleges and Universities and serves at the pleasure of the association.

8. The executive director of the State of Wisconsin Investment Board (Investment Board), or his or her designee, who also serves as a nonvoting member.

The bill requires that the Reserve Board hire an executive director who has expertise in private equity investment.

Wisconsin Next Generation Reserve Fund The bill creates a nonlapsible fund to be known as the "Wisconsin next generation reserve fund" (fund). From the fund, the Reserve Board may make grants, loans, and investments, as set forth below. For short-term management, the fund is included in the state investment fund managed by the Investment Board.

In addition to moneys from other sources, the fund consists of moneys generated from tax revenue collected from "qualifying companies" in the bioscience industry. Under the bill, a qualifying company is identified by the company's principal business activity code under the North American Industry Classification System (NAICS). The bill directs the Department of Revenue (DOR) to determine in July 2016 the total amount of withholding taxes due and payable from qualifying companies for 2015. Then, beginning on July 1, 2017, and ending on July 1, 2031, DOR must deposit in the fund an amount equal to 95 percent of the withholding taxes due and payable from qualifying companies the previous year that exceeds the total amount for 2015, except that DOR may not deposit more than $15,000,000 into the fund on July 1, 2017, or more than $50,000,000 on any July 1 thereafter. DOR may not deposit more than a total of $350,000,000 into the fund. However, the Joint Committee on Finance (JCF), under its passive review process, may approve deposits of up to an additional $150,000,000.

Grants, loans, and investments From the fund, the bill authorizes the Reserve Board to make grants and loans to, and direct investments in, bioscience companies certified by the Reserve Board.

The Reserve Board may certify a bioscience company if the Reserve Board determines that the company is headquartered and employs at least 75 percent of its employees in Wisconsin and meets certain other conditions, including that the company is developing biotechnology or bioscience or bioscience research methods and demonstrates the potential to generate high levels of successful investment performance and increase employment in Wisconsin.

Before providing any moneys from the fund to a certified bioscience company, the Reserve Board must enter into a contract with the company that includes all of the following requirements:

1. The company must use a grant, loan, or investment from the fund for research and development related to biotechnology or bioscience or bioscience research methods.

2. The company must match the amount of any grant, loan, or investment from the fund with moneys the company has raised from other sources.

3. During the term of the contract, the company may not relocate its headquarters outside of Wisconsin without the Reserve Board's approval.

Contracting authority In addition to its general contracting authority, the bill authorizes the Reserve Board to execute a contract with the Investment Board for the Investment Board's advice and services related to the Reserve Board's grants, loans, and investments and for facilities provided by the Investment Board. Under the bill, the Investment Board may also make a loan to the Reserve Board for the Reserve Board's initial operations and administrative expenses.

The bill further authorizes the Investment Board to provide advice, services, and facilities to any state agency or authority or a business entity owned by an agency or authority. Under the bill, the Investment Board may provide advice or services related to the management or administration, for any purpose, including economic development, of money or property that an agency, authority, or eligible business entity controls. The agency, authority, or eligible business entity must contract with the Investment Board and pay the Investment Board for any advice, services, or facilities the Investment Board provides.

Reporting and review The bill requires the Reserve Board to file a detailed annual report with the legislature that includes all of the following:

1. An accounting of the revenue deposited in the fund by DOR.

2. An accounting of all expenditures from the fund by the Reserve Board for any purpose.

3. Information concerning each grant or loan to, or investment in, a certified bioscience company, including a description of the purposes for which the certified bioscience company used or is using the grant, loan, or investment and a statement of the number of employees the certified bioscience company employed on January 1 of the preceding year and the number of employees the company employed on December 31 of that year.

4. An accounting of the internal rate of return realized by the Reserve Board on its total loans to, and investments in, certified bioscience companies.

5. An accounting of the internal rate of return realized by the Reserve Board on each loan to or investment in each certified bioscience company.

Finally, the bill requires the Reserve Board to submit a plan to JCF at the close of each fiscal biennium that shows the grants, loans, and investments the Reserve Board intends to make during the next fiscal biennium. The joint committee on finance may approve, disapprove, or modify and approve the Reserve Board's plan under JCF's passive review process.