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HB 5651

State management: funds; 21st century jobs trust fund; modify. Amends secs. 7 & 8 of 2000 PA 489 (MCL 12.257 & 12.258).

2023-2024 Regular Session Introduced by Alabas Farhat and 3 co-sponsors

The Michigan Innovation Fund will grant money from the 21st Century Jobs Trust Fund to support evergreen venture funds, venture capital funds, and start‑up services in Michigan.

assigned PA 188'24
#economicdevelopment:other #statemanagement:funds
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Bill Summary · HB 5651

Summary — HB 5651 (Michigan Innovation Fund; PA 188 of 2024)

Main purpose

HB 5651 is part of a three‑bill package (HB 5651–5653, enacted as Public Acts 188–190 of 2024) that establishes the Michigan Innovation Fund program to expand early‑stage capital in Michigan. The package redirects certain realized returns from the state’s Michigan Early Stage Venture Investment program (the “Venture Michigan Fund”/MESVIC) into a new state‑administered grant program run by the Michigan Strategic Fund (MSF) to support evergreen venture funds, venture capital funds, and nonprofit start‑up supports.

Key provisions

  • Creates the Michigan Innovation Fund program (through amendments to the Michigan Strategic Fund Act) to provide grants to:
    • Qualified evergreen venture funds (university/nonprofit rolling funds),
    • Qualified emerging evergreen funds,
    • Qualified venture capital funds, and
    • Qualified start‑up support services (nonprofit activities that grow founders, regional hubs, or venture talent).
  • Designates money deposited into the 21st Century Jobs Trust Fund (21CJTF) from the Michigan Early Stage Venture Investment Act as funding that must be spent by the MSF for the Michigan Innovation Fund program.
  • Requires MSF to operate/administer the program (including use of MEDC staff and agents).
  • Prescribes how 21CJTF deposits for the program are to be spent each fiscal year through the fiscal year ending September 30, 2054 (allocations in the package: 5% to an investment fund, 80% to evergreen funds, 8% to emerging evergreen funds, 7% to nonprofits for start‑up supports).
  • Sets conditions for grant agreements with evergreen/emerging evergreen funds, including:
    • Grant commitments must be made within 5 years of receipt,
    • Up to 15% of a grant may be used for administration/technical assistance,
    • At least 5% of invested grant money must be directed to geographically disadvantaged business enterprises,
    • Annual reporting obligations (published), and notification requirements for leadership changes.
  • Includes a clawback/taxing‑back provision in some bill versions: if a recipient’s investment return from a grant exceeds $8.0 million within 15 years, the excess amount (in that scenario) would be deposited to the General Fund.
  • Requires the MSF to formally review the program and report to legislative budget/policy offices by January 1, 2030.

Funding and fiscal impact

  • The enacted package requires MESVIC to transfer $60.0 million of realized earned returns to the 21st Century Jobs Trust Fund for the Michigan Innovation Fund program (one‑time injection).
  • Remaining realized returns from MESVIC are routed to the General Fund per the enacted framework; MESVIC/fund expiration and future distributions are adjusted relative to prior law.
  • The bills make earlier use of realized returns than would have occurred under prior law; fiscal analysts estimated net shifts in timing of General Fund receipts (estimated realized earnings ~$125M; result: changes in GF deposits in FY 2024–25 vs. prior law).
  • The MSF receives no separate administrative appropriation for program administration; it must use existing resources unless the Legislature appropriates funds.

Who is affected

  • Michigan Strategic Fund (MSF) / Michigan Economic Development Corporation (MEDC): program administration, awarding, reporting.
  • Michigan Early Stage Venture Investment Corporation (MESVIC) / Venture Michigan Fund: required distribution of $60M realized returns and changes to dissolution/expiration handling.
  • Eligible recipients: qualifying evergreen funds (university/nonprofit sponsored), venture capital funds, and nonprofits providing start‑up supports — and ultimately Michigan early‑stage startups and geographically disadvantaged business enterprises that receive investment or services.
  • State budget/General Fund: timing and amount of transfers from MESVIC and potential clawbacks affect state receipts.

Timeline & procedural notes

  • The three bills were tie‑barred (must be enacted together). HB 5651 was enacted as Public Act 188 of 2024; the package’s effective date for HB 5651 was April 2, 2025.
  • Program funds from the 21CJTF may be spent through the fiscal year ending September 30, 2054.
  • MSF must complete a formal program review and report by January 1, 2030.

Additional points

  • The legislation emphasizes awarding grants to all eligible applicants and sets diversity/geographic targets in grant agreements.
  • The bills shift the timing and destination of MESVIC investment returns, accelerating some availability for innovation grants and changing prior allocation rules for MESVIC dissolution/expiration.

Compiled from official sources — confirm details with the bill’s official record.

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