The Bluegrass and Beyond

Improving Kentucky’s economy will require more capital. Finding that capital, both human and financial, is likely to involve more small steps than big leaps.

Two groups are taking steps worth noting. They are the Young Professionals of Eastern Kentucky and the Lexington Venture Club.

The Young Professionals of Eastern Kentucky is a new organization that hopes to help talented young people stay in — or return to — Eastern Kentucky’s mountains. It is having its kickoff event Monday night in Hazard.

“We really want to combat the brain drain,” said Bradley Parke, 24, of Knott County, the group’s vice president. “There are a lot of people who leave and want to come back, but there’s just not the opportunities for them.”

The free event, which begins with a 6:30 p.m. reception at First Federal Center on the campus of Hazard Community and Technical College, will include speeches by U.S. Rep. Hal Rogers and former Gov. Paul Patton.

Kevin Smith, 26, a Laurel County native who lives in Inez, was inspired to start Young Professionals of Kentucky after reading Visioning Kentucky’s Future, a 2008 report by the Kentucky Long-Term Policy Research Center.

“There was a need for young professionals to come together,” he said, not only to create new economic opportunities for themselves and their communities, but to be more aware of opportunities already in the region.

“Many of us have a passion for this region,” he said. “We want to live and work here.”

Smith, Parke and others formed a steering committee and then a board of young professionals from across Kentucky’s 32 Appalachian counties. They applied for non-profit status and organized small get-togethers in London, Hazard, Prestonsburg, Somerset, Whitesburg and Pikeville.

“We’re pretty spread out, so we’re trying to reach every part of the region so everyone feels like they’re included,” said Parke, adding that online networking tools will be key. The organization has created a Web site (www.ypek.org) and a Facebook group with nearly 1,200 members.

In addition to networking, Smith and Parke said the group plans to form working groups to study and undertake projects around six themes: economic development; energy and environment; education; health care; technology; and civic engagement. That work will get started at the group’s next regional meeting, tentatively scheduled for early April.

They said the organization’s board includes Republicans and Democrats, and they’re being careful to avoid political associations that could limit their effectiveness in the region.

“We’re trying to say, no matter what your background or ideology is, we’re here to make a difference,” Smith said.

Meanwhile, the Lexington Venture Club gathered last week to discuss the state of venture capital funding in Kentucky.

The club reported that entrepreneurial companies in Central Kentucky attracted $47.5 million in venture funding last year for a two-year total of $116 million — not a bad showing considering the overall economic climate.

The 88 companies surveyed by the club said they hired 386 people last year, up from 230 in 2008 and 162 in 2007. The average salary for full-time jobs at those companies was $69,800, up from $61,000 two years ago.

Venture funding comes from a variety of non-traditional sources outside bank lending, such as venture capital funds, private investors and entrepreneurs and their friends and families.

It is a vital source of capital for young companies in fields such as technology and bio-sciences. Innovation is often a risky investment, but it can pay off big, both for investors in those companies and for their communities.

The gathering at Lansdowne’s Signature Club attracted nearly 200 people, prompting UK President Lee Todd to remark that Lexington’s venture capital and entrepreneur community “could not have filled a closet 10 or 15 years ago.”

The keynote speaker was David Jones Jr., chairman and managing director of Chrysalis Ventures in Louisville, the region’s oldest and largest venture capital firm with about $400 million under management. He also is non-executive chairman of Humana Inc., which his father helped found.

Jones said Kentucky is behind many neighboring states in creating the kind of innovative companies that can attract venture funding. A key to improvement, he said, will be for Kentucky to emphasize and invest more in education at all levels.

HAZARD — The keynote speaker at the 22nd annual East Kentucky Leadership Conference was Ron Eller, a leading authority on the history of modern Appalachia.

The University of Kentucky history professor also was given the East Kentucky Leadership Foundation’s annual “private individual” award, which comes with a beautiful, handmade wooden chair.

By the time Eller finished speaking Thursday evening, I suspect many in the audience of 250 were ready to break the chair over his head.

Eller, an eighth-generation Appalachian who was the first member of his family to go to college, said the region will never catch up with the rest of the nation economically as long as it is defined by industries that abusively extract natural resources, especially the dwindling supply of coal.

“We must begin, I think, by abolishing surface mining, including the radically destructive practice of mountaintop removal,” Eller said. “Mountaintop removal isn’t necessary to the region or to the national economy. It’s just cheaper.

“We can continue to mine coal, gas and other mineral resources. But the impact of extraction on the land, on our water resources, on our forest resources and other sensitive ecosystems must be strictly regulated and enforced. In the long run, we will have to move away from an extractive economy, especially one based upon coal.”

The final speaker of the two-day conference at Hazard Community and Technical College was House Speaker Greg Stumbo, a Prestonsburg Democrat who serves on the board of a coal company. He revised his planned remarks to respond to Eller.

Some of what Stumbo said was defensive: Why do people who no longer live in the mountains think they know what’s best for them? Subdivisions built on Lexington farmland are just as bad for the environment as surface mining in the mountains.

Some of it was matter of fact: We must move beyond coal, which will eventually be gone. We also must understand that coal produces half the nation’s electricity — and more than 90 percent of Kentucky’s electricity — and nothing can change that anytime soon.

And some of what Stumbo said was new and interesting: Rather than abolish surface mining, which he said isn’t economically practical, leaders in Eastern Kentucky must become more creative and demanding about how mined land is reclaimed and reused.

Stumbo cited several examples where mined land has been turned into airports, subdivisions, parks, golf courses and commercial development. But he also acknowledge that much other mined land has been poorly reclaimed as useless “pasture.”

Stumbo said he has begun talking with Gov. Steve Beshear about creating a state master plan for engaging landowners, regulators and community leaders to require better plans for post-mining use before land can be mined. If done properly, he said, more mined land could become an asset for the region instead of a liability.

I’ve been attending the East Kentucky Leadership Conference off and on since 1998, and it gets more interesting every year. That’s because the people who come seem more willing to discuss controversial subjects, question the way things have always been done and embrace new ideas.

A growing theme of the conference has been entrepreneurship and how digital technology could be harnessed to reduce the region’s economic isolation. More leaders in Eastern Kentucky now understand that their economy won’t be fixed by attracting big, outside employers so much as by educating and enabling creative, hard-working locals.

Jerry Rickett of the Kentucky Highlands Investment Corp., one of the oldest and most successful organizations working to develop home-grown businesses, noted that there are more than 82,000 “micro enterprises” in Kentucky’s Appalachian counties. Imagine, he said, how many jobs could be created if some of those businesses could grow enough to hire just one more person?

Entrepreneurship and a more diverse economy are vital to Eastern Kentucky’s future. But another key will be the willingness of the region’s people to better manage their bittersweet, century-old relationship with the coal industry.

Kentuckians must find ways to make the coal industry a better environmental steward, community partner and contributor to the quality of life in the mountains — either by Eller’s way, Stumbo’s way or intelligent combinations of both.