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Biotech industry wants to tap state pension fund

Associated Press

MINNEAPOLIS -- The Minnesota Bioscience Council wants to use $200 million in public pension money to energize the state's fledgling biotech companies.

The money from the State Board of Investment, which would be matched by private investors, was part of a broader slate of public policy recommendations passed Tuesday that will be sent to Gov. Tim Pawlenty by the end of the month.

Among the recommendations is that the Mayo Clinic-University of Minnesota biotech and genomic research partnership be fully funded. The Minnesota Partnership for Biotechnology and Human Genomics has requested $70 million.

The pension fund investment idea could run out of steam once it reaches the governor's desk.

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Pawlenty has long been enthused about the state's potential for bioscience development, and he previously stumped for this type of pension investment in Minnesota companies.

But he's since quietly backed away from that idea. Pawlenty now says, and financial experts agree, that the state's duty to maximize profits on investments trump those of various social goals, including creating jobs.

Still, it may be possible to do both.

Buzz Benson, managing director of the venture capital arm of U.S. Bancorp Piper Jaffray, said the state wouldn't be risking pension profits by investing in homegrown biotech. He said a 10 percent return is typical for a state pension fund.

"The average return for these types of funds has exceeded 10 percent," he said. "The state would not be at risk."

The council's recommendation specifies that the Legislature provide a minimum return guarantee to the state pension funds invested in the effort, although the amount of that guarantee wasn't quantified.

And members of the council pointed out that $200 million is a small slice of the state pension fund's $40 billion portfolio. The risk of loss would be borne by the Legislature and state taxpayers -- and not pensioners.

Howard Bicker, executive director of the Minnesota State Board of Investment, said Tuesday he couldn't comment on the council's proposal because he hasn't seen it yet.

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