Video: Indiana Chamber’s 2018 Legislative Priorities

Indiana Chamber President and CEO Kevin Brinegar gives a two-minute look at the Chamber’s 2018 legislative priorities for the Indiana General Assembly session. Read more about the nine priorities, along with other key areas of focus here.

Short Session Starts With a Flurry of Activity

The Governor and General Assembly have continually heard from Hoosier employers on the need for a skilled workforce – and better aligning state programs with job demand. The good news is bills are being introduced to address those concerns. While only a handful of measures have been released to date, we are seeing legislation related to training tax credits and grants, as well as efforts to streamline current workforce programs. We anticipate a comprehensive workforce bill (1002) will be introduced in the House later next week.

The Governor’s computer science bill (SB 172) requires all public schools to offer a one-semester elective computer science course at least once each school year to high school students. We expect a hearing on this measure in the next two weeks. Both this and the workforce efforts are 2018 Indiana Chamber legislative priorities.

Senate Bill 257 has been introduced by Sen. Travis Holdman (R-Markle) to serve as the beginning of discussions on clarifying the exempt status of computer software sold as a service (SaaS) – a Chamber priority. Holdman is also authoring another major piece of tax legislation, SB 242, which contains a variety of tax matters. The House bills are coming in too, with a good number already filed addressing local tax issues.

Speaking of local matters, the Chamber is very pleased to see that the House Republican agenda includes a bill that will make township government more effective and efficient by the merging of townships (approximately 300) where less than 1,200 people reside. Such local government reform has been a longstanding Chamber goal.

In addition to SB 257, other technology-related bills include Rep. Ed Soliday’s (R-Valparaiso) autonomous vehicle (AV) proposal to position Indiana to safely test and implement AV technology with automobiles. The bill also will address truck platooning, which uses GPS and WiFi technology to allow trucks to more closely follow each other for greater efficiency, on Indiana roads.

Rural broadband, high-speed internet and small cell wireless structures technology all will be topics for the Legislature to debate. Certified technology parks also will be discussed with the idea to have an additional capture of sales and income tax revenue for those complexes that perform well.

In health care, enabling employers to ask prospective employees if they are smokers not only heads the Chamber’s wish list but also appears to be gaining traction this go-round. Eliminating the special protections (currently in state statute) for smokers is found in SB 23 and will be guided by Sen. Liz Brown (R-Fort Wayne). The bill has a pretty good chance of getting a hearing in the Senate – which would be a first. Previously, a measure was taken up in a joint hearing in the House.

Increasing the tobacco tax and raising the legal age for smokers to 21 are policies that likely will be included in a bill to be introduced by Rep. Charlie Brown (D-Gary). The Indiana Chamber is supportive of both.

Nine utility-related bills are on our radar screen at this point. They range from tweaks of last year’s big legislation (like SB 309, which addressed rising energy costs and a long-standing struggle between the investor-owned electric utilities and larger consumers of energy) to compulsory sewer connection, excavation for infrastructure, regulation of solar energy systems in homeowners’ associations and new water legislation. Separately, Sen. David Niezgodski (D-South Bend) has a proposed ban on coal tar pavement sealer, which we oppose.

There are also a number of bills proposing changes to Indiana’s alcohol laws including: Sunday sales, cold beer sales by grocery and convenience stores, and increases in fees and penalties.

The Chamber will be providing more details on all of these bills as the session progresses.

For anyone who wants a refresher about how legislation becomes law, the Chamber has a handy guide free of charge. It includes a diagram of the bill process, a glossary of often-used terms and a look at where bills commonly get tripped up.

Additionally, the Chamber will be providing updates and issuing pertinent documents throughout the session at www.indianachamber.com/legislative.

Ten Cybersecurity Predictions for 2018

In looking back at 2017, one of the enduring outcomes is that cybersecurity cemented its place in the national conversation.

cyberattack under scrutiny

Though there were a number of major cyber breaches or hacks in the past year, the most far-reaching and potentially devastating was from Equifax. Yahoo Finance reports that over 145 million people were impacted, with stolen data ranging from contact information to Social Security numbers.

The breaches impact consumers as well as businesses, which can face dire consequences if not adequately prepared for such attacks. BizVoice magazine looked at cybersecurity concerns and efforts in two recent editions (find those stories here and here). We interviewed Nathan Stallings of Matrix Integration for one of those stories; the technology infrastructure and advisory company assists its clients in preparing for and preventing such attacks.

Stallings shares his “Top 10” cybersecurity predictions for 2018:

  1. Resources (people and money) for preventative and proactive measures will continue to shift from the network perimeter to within the network. Network Access Control (NAC), network segmentation, and Security Information and Event Management (SIEM) products and/or services will be the top three solutions for most organizations.
  2. Cloud security will become even more important as workloads transition to the cloud, whether public, private, or hybrid. The challenge will continue to be defining the security responsibilities of the cloud provider versus the organization.
  3. Companies will begin to shift their cybersecurity strategy from “prevent and protect” to “detect and recover”. I believe that there is a risk of moving too far away from “prevent and protect” which, in turn, will make “detect and respond” exponentially more difficult. The best strategy is a well-designed combination of the two approaches.
  4. Ransomware will be significantly worse. Variations of WannaCry and NotPetya along with Ransomware as a Service (RaaS) will result in at least a doubling of the number of ransomware incidents from 2017. The cost of ransomware damages globally will likely exceed $5 billion in 2017 and will be substantially higher in 2018. There were approximately 4 million ransomware attacks in 2015, 638 million in 2016, and the estimate for 2017 is a 250% increase. The number for 2018 will be well over 2 billion attacks. Organizations should focus on prevention methods like security awareness training, detection methods like managed security services, and recovery. Recovery may well be the most important and relies heavily on the ability to fully eradicate the ransomware and having a sound data back-up strategy.  
  5. Security awareness training of staff and contractors will become increasingly important as hackers turn away from direct attacks on network infrastructure and web applications and target the end-users with sophisticated “phishing” techniques.
  6. Significant attacks on Internet of Things and personal assistant/artificial intelligence will increase dramatically.
  7. The National Institute of Standards and Technology (NIST) Cybersecurity Framework (CSF) will continue to gain widespread acceptance and adoption because it is designed to complement, not replace, an institution’s risk management process and cybersecurity programs.
  8. More PCI compliance audits for credit card transactions as the PCI DSS compliance requirements become even more stringent.
  9. Additional high-profile breaches as large organizations continue to fail at the fundamentals of cybersecurity.
  10. Large healthcare organizations will continue to struggle to balance patient care, the needs of physicians and other medical personnel to quickly access critical information, and patient privacy with cybersecurity fundamentals. 

If your company isn’t prepared to stop a cyberattack, is it prepared to recover from one? An old saying seems applicable for this new challenge: “An ounce of prevention is worth a pound of cure.”

Tech Talk: Life After Unicorns

Editor’s note: Author Christian Beck is principal design partner at Innovatemap. This is excerpted from a more extensive post on “5 Trends Transforming the World of Venture Capital.” 

As a designer with no formal business training, I could be the last person qualified to write about the world of venture capital (VC). However, over the last several years of working with dozens of start-ups seeking seed funding and scale-ups pitching for Series A, I’ve taken it upon myself to learn the language.

To learn more about investing, I highly recommend Neil Murray’s newsletter, Series F. But for those start-ups trying to get a handle on macro-level trends in the world of VC, I am going to share how I see it from an outsider’s perspective.

One helpful piece of context is that my VC education is driven largely by witnessing first-hand how these firms work in the Midwest, contrasting with what I read from the SF-area firms. As with most things tech, Silicon Valley is the most mature market and often provides a glimpse of the future for other emerging markets. It’s also true that emerging markets can learn from the missteps of those pioneers and chart different paths.

I’ve been following a few trends in venture capital that I think are exciting and possibly transformative. One of those is zebras.

“Zebra” is a term created to contrast the unicorn, which has typically referred to companies valued at $1 billion or more. Zebras represent companies that are profitable, sustainable, and beneficial to society. As I’ve been digging into this trend, I can see the need to insert a new metaphor in the start-up world.

zebra

Unicorns are being chased at all costs, and it’s had a negative effect on entrepreneurs. What may start as an idealistic passion to change the world can easily get bastardized into chasing user acquisition, monthly recurring revenue (MRR) and hockey stick growth … at any cost.

At the heart of this is the notion that VC firms are chasing 10x returns. I’m no financial analyst, but that seems a bit like overkill. You might want to be Lebron, but if you could settle with playing in the NBA, you’d probably be just as happy.

And that’s what is really behind the Zebra trend: a reality check that every start-up doesn’t need to be a unicorn. Indie.vc proves this with a long list of companies they fund and other companies that have scaled based on revenue rather than funding (also note how simple their own web site is: the zebra mentality is carried through top to bottom).

It’s not that becoming a unicorn is inherently bad, but the mentality to get there can create a series of bad decisions that lead to failed products like the Juicero – a SaaS-based juice start-up – when simply making a better juicer would’ve been sufficient.

What it means for the Midwest

The Zebra trend is particularly relatable to Midwest tech hubs that are trying to evolve older industries like agriculture and manufacturing. Creating unicorns is less attractive than creating strong companies with the goal of establishing a healthy local economy. Pumping start-ups with cash in hopes of a 10x return may be fun in the short-term, but it doesn’t provide long-term stability and healthy growth.

Ultimately, tech products should solve problems, but businesses should help local economies. Nowhere is this more pronounced than the Rust Belt. Here, it’s less important to roll the dice on unicorns and more important to establish strong companies that strengthen local economies. As the Rust Belt continues to emerge as a key player in the tech industry, this trend will become the norm.

Takeaways for start-ups

Focus on jobs over profits: Maybe it’s just the Heartland in me, but I tend to believe that while tech companies can service customers around the world, they can still have a local impact. The Fortune 500 is full of companies that grew slowly, created long-term value for investors and provided amazing places to work. Tech doesn’t need to be different. SaaS products can still grow by focusing on employees as much as they do their profits.

Set realistic revenue targets: The path to healthy growth starts with realistic targets. Given enough time and creativity, every start-up can plot a path to unicorn-land and often VC’s may feel the same way. But setting realistic expectations early on will lead to better product decisions down the road. Ultimately, you may find that early on you might have more revenue-based growth opportunity than you realize and wait to take on more investment (if at all).

Tuition Strategy Lacking

(Information excerpted from Inside Higher Ed)

Setting tuition at public colleges and universities is no simple task.

Governors and lawmakers approve different levels of state funding to subsidize higher education from year to year. Those same politicians are frequently unhappy with rising college costs, and they sometimes move to freeze tuition or cap its rate of increase.

tuition strategy

But flat tuition, if not accompanied by an increase in appropriations, can result in fewer sections and longer times to graduation, which is expensive for students and families. And because of the way many state aid programs are structured, public tuition rates can directly affect the amount of financial aid students receive.

In other words, setting public tuition is an exceedingly complex process involving numerous power centers. It’s a process with numerous possible unintended consequences for students’ ability to pay for college. Yet it’s a process that’s not even close to being standardized from state to state.

Most states don’t even have a single strategy for addressing affordability, according to a new report (http://www.sheeo.org/projects/state-tuition-fees-and-financial-assistance/2017-report) from the State Higher Education Executive Officers Association. SHEEO found that 68 percent of higher education agencies it surveyed had no unified affordability strategy taking tuition, fees and financial aid into account.

That lack of strategy comes even as four out of five states have put in place attainment goals for increasing the percentage of their residents with postsecondary credentials. As a result, SHEEO is calling for states to bring together governors, lawmakers, higher ed governing boards and college presidents in order to set tuition and fees in ways that line up with attainment goals.

Although SHEEO is pushing broadly for a balance to be found between the cost students pay and colleges’ revenue needs, it didn’t issue its new report to examine actual tuition costs in depth. Instead, it looked at the different ways states set tuition, fees and student aid by conducting a survey that received responses from 54 higher education agencies in 49 states.

Specifically, SHEEO is calling for policy makers to incorporate tuition policy into broader affordability and attainment strategies. Institutional revenue sources like state appropriations, financial aid and tuition should be coordinated, and more transparency should be established around institutional expenditures, the organization says. It also called for a multiyear approach to tuition policy – one that would not necessarily lock in specific tuition rates over a set number of years but would create a range of allowable increases over three to five years, allowing institutions, students and families to plan better.

There are still skeptics about the effectiveness of those strategies. Andrew Gillen, an independent higher education analyst, said increased coordination between policy makers could be worthwhile for some reasons. But he doesn’t think it will lead to a lower cost of delivering education or encourage third parties to shoulder more of the cost.

“The bottom line is that increased coordination doesn’t have much potential to reduce or reallocate costs,” he said. “And even if it did, it is unlikely students would see any of the benefit.”

There is also no guarantee that bringing different parties together would result in better coordination. Many players with power would be hesitant to give up the ability to set tuition, said Joseph Rallo, Louisiana’s commissioner of higher education. Different institutions also face vastly different situations.

Good Progress Being Made on Chamber’s ‘Repeal’ List

At the start of 2017, the Indiana Chamber sought input from its members on the federal rules, regulations and executive orders that were affecting the bottom line for Hoosier businesses and hampering expansion and job growth. These onerous policies, for the most part, circumvented Congress and amounted to attacks on business, industry and, ultimately, the workforce.

The finalized list was submitted to Vice President Mike Pence and the Indiana congressional delegation in late January. We are pleased to report that much progress has been made on many of the items and encourage you to review the updated document.

White House

Military Members Seek School Choice

School choice

(David Boyle is board chair of the Alaska Policy Forum. He and his wife have 45 years of Air Force experience. His words follow).

“We got orders, and we’re moving this summer.”

As a veteran, I can tell you these can be some of the most challenging words a military member can utter to their family.

Reactions can range from, “Not again. We just got here,” to, “Great news! I hate this place.” Relocating to an unfamiliar place is daunting in itself. Choosing a place to live with schools in mind is even more so.

We face a lot. The movers come and pack things – some of which we might never see again. Likewise, our kids pack up their lives to probably never see their friends and classmates again. Our children feel like their friendships and social lives may never be the same. On top of that, our kids also must adapt and survive in new classrooms.

In many cases, some spouses remain in their current location, so their children can complete a school year after receiving relocation orders. Some spouses even stay put until their kids finish high school, which can take years. Uncertainty of the quality of education in the next place is enough for some families to feel they have no better option than to brave the hardships that such a distance can bring.

The challenge often begins with new neighborhood schools that may have a different curriculum, different sports programs, no advanced placement classes or fewer course options than families’ previous schools. Military kids lose the continuity of a curriculum.

Our children could use much more stability, and many schooling alternatives, including distance learning, charter networks, virtual learning and even home schools could provide that as kids move from place to place.

Those alternatives are not available everywhere – a problem for families that move frequently from state to state. It’s a problem that could be solved, however, with education savings accounts (ESAs) – a flexible type of school choice – provided at the federal level. And why not? These parents are actually federal employees. In this way, military families would have more opportunities to ensure continuity in their children’s education. After all, our kids need that stability in what, to most, would be a disruptive life.

ESAs allow parents to access the public funds already set aside for their children’s education. Those funds – often distributed to families via a restricted-use debit card – can cover private school tuition and fees, online learning programs, educational therapies, private tutoring, community college costs, higher education expenses and other approved customized learning services and materials. ESAs could even allow families to use their funds to pay for a combination of public school courses and private services, depending on their children’s needs.

A 2017 Surveying the Military (https://www.edchoice.org/blog/new-2017-survey-finds-military-veteran-families-want-americas-k-12-education-system/) report by EdChoice found young military/veteran parents and especially active-duty military parents are more likely than their counterparts to have already sought schooling options beyond a neighborhood public school for their kids. Not only that, but the vast majority of military-connected families said they support programs like ESAs and for good reasons. Mostly, they want access to better academic environments, more flexibility as parents and more individual attention for their kids.

While serving, my wife and I relocated our kids to five different state school districts in a 10-year period. I can say that finding that “good neighborhood with good schools” in which to rent or buy a home is a formidable task.

I remember arriving in a new location. I asked a friend who was already stationed there, “Is X school a good school?” She said it was. Later on, my son told me, “Dad, I was sure glad to see you pick me up every day after school.” I came to find that his school was a dismal failure, and my son actually feared for his safety every day! What an eye opener that was. (But, hey, he got straight As.)

How does a military family get current, valid, reliable data on a local school system?

The military base or post does not provide any information on the performance of local schools. The real estate industry provides some, although it’s dated and inaccurate. Most military families get their information from friends and by word of mouth. In my experience, that was not a very good source to determine my child’s future.

This information vacuum needs to be filled to help military families find the best fit for their children’s educational needs.

Tech Talk: Innovation Policy Takes Center Stage

Fact: Indiana is enjoying success in attracting and growing technology and innovation businesses.

Next step: What public policies can help continue that momentum?

Find out during the Indiana Technology and Innovation Policy Summit on December 1 at the Conrad Indianapolis.

tech summit

Influential industry, government and legislative leaders will highlight policy priorities during morning sessions. Micah Vincent, director of the Indiana Office of Management and Budget, will deliver the luncheon keynote.

This year’s summit builds on the successful 2017 legislative session when a number of key issues supported by the Indiana Chamber became law.

Among the legislative priorities to be featured during this year’s summit:

  • Autonomous Vehicles – Find out about the opportunity for Indiana to engage in and capitalize on the growing interest and work done in autonomous vehicle research and programs. State Rep. Ed Soliday will lead the discussion.
  • Software-as-a-Service (SaaS) and tax implications – Indiana ranks second in software job growth. It’s important to clarify the tax situation for SaaS companies so Indiana remains competitive with other states.
  • Data Centers – With the economy increasingly dependent on data, hosting data centers is an economic growth opportunity for Indiana. Rich Carlton, president and COO of Data Realty in South Bend, will talk about fundamental changes the state needs to make to attract data center facilities.

Fisher Mayor Scott Fadness will discuss Smart Cities, Smart State initiatives and the future of certified technology parks will be analyzed. Ted Baker of the Muncie Innovation Center and Karl LaPan of the Northeast Indiana Innovation Center are presenting.

Registration and a continental breakfast start at 8 a.m. The summit begins at 8:30 a.m. and concludes at 1:30 p.m. View the complete agenda.

Registration is $95 for Indiana Chamber members and $125 for non-members. For more information, visit the event page.

Event sponsors are Smithville, the Digital Policy Institute and Purdue University. Additional sponsorship opportunities are available by contacting Jim Wagner.

Tennessee to Offer Skills ‘Warranty’

Tennessee has drawn its share of higher education attention with its Promise program gaining national recognition. A new initiative seeks to further address workforce skills challenges.

The Times Free Press in Chattanooga has the details.

Beginning next fall, new graduates of the Tennessee College of Applied Technology (TCAT) or similar technical programs offering certificates and degrees from state community colleges will come with an eye-catching “warranty” for prospective employers.

If companies can demonstrate the graduates they hire aren’t up to snuff, “we’ll take them back and train them for free,” Tennessee Board of Regents Chancellor Flora Tydings told Gov. Bill Haslam.

Replied Haslam: “I love the idea. … That’s accountability at its finest.”

“It’s exactly what it sounds like,” Tydings told reporters. “If you do not have the skill set for which we say we have trained you, we’ll take you back and retrain you for free – if an employer documents that you do not have those skill sets within a year of graduation.”

Tydings said she doesn’t expect community colleges and TCAT to have to do much graduate retraining because of the job the institutions do.

promise

House and Senate Get Started on Tax Reform; Where Does Donnelly Stand?

Late last week, the House Ways and Means Committee concluded its markup of the GOP tax reform bill (the Tax Cuts and Jobs Act) and voted along party lines to move the measure, 24-16. The core of the House bill reduces the number of individual tax rates, slashes the corporate tax rate and eliminates many deductions and credits.

The bill now will be taken up by the full House of Representatives for debate and vote – likely before the Thanksgiving recess. What are some sensitive issues being discussed in the tax reform bill? Pass-throughs, adoption tax credits, deductibility of state and local taxes (SALT), excise tax and more.

The GOP can only lose 22 votes in the House and whip counts are being held very close to the vest – only five or six Republicans have publicly stated that they are against the bill in the current form (all due to SALT).

Meanwhile, the Senate decided on Thursday to release its own tax reform plan. From the business perspective, the differences largely are about adjusting the dollar dials and creating negotiation items. In other words, politics. The Senate option does delay some positive economic effects, but if that’s what it takes to get a permanent tax reduction in the books so be it! We do want to point out that there are some notable differences between the two versions, particularly on the individual side – including with the estate tax and mortgage deduction, which, again, serve to set up further negotiations.

Senator Todd Young welcomed the effort from the Senate Finance Committee.

“I’m encouraged by the Senate’s proposal to create a tax code that is simpler, fairer and allows hardworking Hoosiers to keep more of what they earn. I’m also glad that this proposal maintains the adoption tax credit that is important to so many Indiana families. As we continue to debate a final tax relief package, I will keep working to ensure Hoosier voices are heard.”

Meanwhile, Sen. Joe Donnelly, didn’t give away his stance: “As I have said, tax reform should create jobs, protect jobs, invest in American workers and benefit middle class families. I will carefully review the Senate proposal and continue to engage with my colleagues and the White House on behalf of Hoosiers as the Senate works on tax reform.”

Donnelly also met on Thursday with the White House Director of the National Economic Council Gary Cohn to discuss his tax reform priorities. Earlier last week, Donnelly participated in another such meeting with White House Director of Legislative Affairs Marc Short and Cohn. President Donald Trump called in for a portion of the event. In that meeting, Donnelly discussed his tax reform priorities and shared a letter that he also sent to Vice President Mike Pence on Tuesday emphasizing that the tax policies should align with the interests of American workers and support companies that invest in the U.S.

Donnelly’s priorities are consistent with his End Outsourcing Act, which would support companies that invest in American workers and penalize companies that ship American jobs to foreign countries.

The Hill reported late last week that “Blue Dog Democrats are lining up in firm opposition to the Republicans’ tax code overhaul, hoping that Tuesday’s election results (particularly in Virginia) will force GOP leaders to reach across the aisle for a bipartisan alternative.”

Donnelly, a Blue Dog Democrat, has not said anything of the kind publicly and has been heavily courted by the Trump administration for his vote.