In the July 26, 2002 Issue:

Copyright State Science & Technology Institute 2003. Information in this issue of the SSTI Weekly Digest was prepared under a cooperative agreement with the U.S. Department of Commerce, Economic Development Administration. Redistribution to all others interested in tech-based economic development is strongly encouraged — please cite the State Science & Technology Institute whenever portions are reproduced or redirected. Any opinions expressed in the Digest do not necessarily reflect the official position of the U.S. Department of Commerce.

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States' Combined FY 2003 Budget Shortfall Forecast: $58 Billion
State fiscal conditions continue to deteriorate dramatically, according to a report released Wednesday at the 2002 Annual Meeting of the National Conference of State Legislatures (NCSL).

In April, 43 states reported budget gaps totaling $27.3 billion collectively. By June 30, the end of the fiscal year for 46 states, the gap had risen to $35.9  billion. Budget gap estimates for FY 2003 show an increase to $57.9 billion. However, because of balanced budget requirements, gaps have been or will be resolved by the time states officially close their books.

2002 State Budget and Tax Actions showed widespread fiscal problems, according to NCSL:

Estimates for FY 2003 show that the aggregate budget gap will continue to widen to $57.9 billion. California's budget gap of $23.7 billion accounts for more than 40 percent. Thirteen states are reporting gaps in excess of 10 percent of their state general fund budgets. Twenty-five states expect their general fund ending balances to fall from FY 2002 levels, while only 11 expect an improvement.

More information will be available at: http://www.ncsl.org

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Vermont Passes Tax Credits, Examines High Tech Impact
Vermont’s high-tech businesses now can take advantage of new tax credits with Governor Howard Dean, M.D.’s signature on H. 239. The bill creates a set of five incentives for high-tech businesses in industries including computer hardware or software, information and communications, microelectronics, semiconductors, digital communications, medical devices, energy technologies and electric vehicles.

The high tech credits are applied to investments in machinery and equipment, renovations to provide cable, fiber or telecommunications access, workforce development, and a sales and use tax exemption for personal computers and software. Applying to investments made on or after July 1, 2002, the High Tech Tax Credit effects taxable years beginning on or after January 1, 2002.

All of the incentives will be administered by the Vermont Economic Progress Council (VEPC) and are subject to the same approval process, cost/benefit model and guidelines as current law provides for tax credits.

High Tech Important for State
The Vermont Department of Economic Development also recently completed an in-depth profile of the state's high-tech industry, revealing rather vividly the importance of high-tech on Vermont's economy. Using the AEA's definition of "high tech," the Department found high tech firms employ almost 15,000 people in the state, have a combined payroll of $722 million, and pay workers an average of $21,000 more per year than other private sector employees.

Additional highlights of the report include:

The report also examined new business start-ups, research, patent activity and venture capital investment, educational attainment and overall use of computers and the Internet, finding:

Of particular note, agency staff had been skeptical of the state's poor performances in large quarterly venture capital surveys, such as Moneytree™, since the national findings did not mesh with their own empirical notes. As a result, the project included primary data collection directly from the funded businesses, firms handling the investment transaction, angel investors, and venture fund managers. The Department found over $100 million of private equity capital was invested in Vermont from venture capital, angel investment, and equity investment from friends and family from 1996 to 2001. Half of the total, or $50 million, was in the form of venture capital. (Moneytree™ reported a total venture capital of only $1.3 million for the period.)

In 2001, the Department reported Vermont businesses received $15.5 million in venture capital.

More information on the report is available at: http://www.thinkvermont.com/technology/technews.cfm

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NSF Finds R&D Concentration Continues in Top States
The 20 states with the least total R&D expenditures increased their share of the total pot in 1999 to 5 percent, according to the National Science Foundation's (NSF) latest InfoBrief. In 1998, NSF found the lowest 20 states captured only 4 percent of the nation's R&D investment.

To those who argue the nation's R&D investment should be more evenly distributed across the country — particularly expenditures made by the federal government — the finding may suggest progress has been made.

Or has it?

NSF also reported, and titled the InfoBrief accordingly, that the 1999 data revealed half of the nation's total R&D investment occurred in only six states, up half a percent from 1998. The share captured by the top 10 states grew from 85 percent in 1998 to 86 percent in 1999, according to the InfoBrief.

At $10.695 billion, Pennsylvania joined the six other "10 billion plus" states for total R&D expenditures in 1999: California ($47.965B), Michigan ($18.799B), New York ($14.110B), Texas ($12.429B), Massachusetts ($12.190B), and New Jersey ($10.536B). Pennsylvania's total jumped 22.1 percent between 1998 and 1999.

Michigan showed the greatest growth of the top 10 states, enjoying a 37.7 percent increase between 1998 and 1999. Massachusetts, New Jersey and Washington experienced drops in total R&D expenditures.

The full InfoBrief, NSF02-322, can be found online at: http://www.nsf.gov/cgi-bin/getpub?nsf02322

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A 30-year Look At Support for Academic R&D
The importance of strong academic R&D capabilities in building state and regional tech-based economies cannot be overstated. Subsequently most states, either independently or in partnership with federal EPSCoR programs, are making investments toward strengthening their academic research enterprises. Some also have invested in programs to attract, leverage or match federal R&D investments.

One of the latest InfoBriefs from the National Science Foundation outlines trends over 30 years in federal and non-federal support for academic R&D. While federal spending for academic R&D grew by an inflation adjusted 180 percent between 1972 and 2000, the findings reveal federal support played a diminishing role compared to non-federal sources, which grew by nearly 350 percent during the period. Federal R&D expenditures represented only 58.2 percent of total academic R&D support in 2000.

Institutionally financed R&D continued its 30 year climb to represent a record 19.7 percent of the total in 2000. State and local support declined during the period from a high of 10.2 percent in 1972-1975 to a new low of 7.3 percent in 2000. Industrial R&D, comprising 7.3 percent of total academic R&D support in 2000, more than tripled during the three decades from only 2.8 percent in 1972.

The InfoBrief also presents the distribution of funding for academic R&D support across 11 fields of science and engineering. InfoBrief NSF 02-323 can be found at: http://www.nsf.gov/cgi-bin/getpub?nsf02323

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Upstate NY Coalition Promotes TBED
While Albany securing Sematech North has captured national attention in the TBED community for the past week, area leaders have been working for more than a year to forge a partnership toward regional technology-based economic development. That effort came to fruition in June when leaders of the Albany-Colonie Regional, Rensselaer County Regional and Schenectady County Chambers of Commerce announced the formation of the Tech Valley Chamber Coalition. Combined, the three chambers have nearly 5,000 members employing more than 174,000 individuals in the region.

The Coalition will focus its efforts in three areas: promotion of the region as Tech Valley; development of programs that will enhance the business climate for members of all three chambers; and advocacy on issues of importance to each organization, as well as the greater business community. Each of the chambers is taking the lead on one of the three focus areas.

The promotion of the region as Tech Valley will involve a number of initiatives, all of which revolve around marketing the 17-county region as a location with prime business opportunities and a superior quality of life. The effort will begin immediately with each chamber agreeing to use the Tech Valley logo and the positioning statement "Serving New York's Tech Valley" on its collateral materials.

The marketing effort also includes a promotional campaign and supporting materials explaining the advantages and opportunities available in the Tech Valley region; support of complementary regional events, such as the Summit in Tech Valley; and website links between each chamber and related Tech Valley websites, among others. The Albany-Colonie Chamber will spearhead this portion of the collaborative effort.

The development of programs designed to promote increased cooperation and networking between the three chambers – in the process, boosting the region's business climate – was kicked off with a first-ever luncheon bringing together the boards of directors of each chamber. In addition, the Coalition announced plans for a joint conference for January 2003. The Rensselaer County Chamber will coordinate the program portion of the initiative.

The joint advocacy effort, to be led by the Schenectady County Chamber, will allow the three chambers to speak in a unified voice on issues of importance to the business community. It is expected to entertain concerns over the rising cost of health care and health insurance will be the first issue to be addressed by the Coalition.

For more information, visit: http://www.techvalley.org/

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Useful Stats: USDA and DOD 02.1 SBIR Phase I Awards/Proposals
The Department of Agriculture (USDA) and the Department of Defense (DOD) recently posted the abstracts for award selections from the FY 2002 Small Business Innovation Research (SBIR) Phase I solicitations. For DOD, abstracts are for 02.1, the first solicitation of the fiscal year.

With information provided by the agencies and their websites, SSTI has prepared a table presenting the number of proposals submitted, the number of firms involved, the number of awards, and the proposal-to-award conversion percentage. For USDA, the total award amounts were also available by state. The table is available at: http://www.ssti.org/Digest/Tables/072602t.htm

The USDA award information and FY 2003 solicitation are available online at: http://www.reeusda.gov/sbir/
The DOD abstracts are posted on: http://www.sbirsttr.com

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CATI Groundbreaking Held in Racine, WI
The Center for Advanced Technology and Innovation (CATI) Partnership Board and the Gateway Technical College Board of Directors recently held a groundbreaking to begin construction of the new 40,000-square-foot facility located in Sturtevant’s Renaissance Park.

The Center for Advanced Technology and Innovation (CATI) of Racine County was formed to promote business development, workforce development, and technology innovation in southeastern Wisconsin. CATI is a partnership among more than a dozen local and regional educational institutions, business development  organizations, and local industries. The effort is spearheaded by the Racine County Economic Development Corp.

Once completed, the new facility will allow CATI to offer students and entrepreneurs:

More information is available by contacting Matthew Wagner, CATI Director, at (262) 635-2433 or mwagner@racinecountyedc.org

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Howard Hughes Medical Institute Distributes $80M for Bio Ed
Forty-four research universities in 28 states and the District of Columbia will receive $80 million from Howard Hughes Medical Institute (HHMI) to help address the challenges of the rapidly changing and increasingly interdisciplinary nature of undergraduate biology education. The grants will support programs that encourage graduate students and postdoctoral fellows to hone their teaching skills in undergraduate courses.

Other programs will bring emerging scientific disciplines such as genomics and computational biology into the undergraduate curriculum and encourage minorities to pursue careers in science.

The four-year grants range in size from $1.2 million to $2.2 million each. A panel of scientists and educators reviewed proposals from 189 institutions.

The new grants support programs that can become models for bringing undergraduate teaching and research closer together, as well as exposing undergraduates to emerging fields in biology and to the increasingly interdisciplinary nature of the life sciences. They also support efforts to attract minorities to science and to encourage them to choose scientific careers.

Programs include interdisciplinary laboratory courses in areas such as bioinformatics, proteomics and tissue engineering, as well as new faculty, laboratory equipment, curriculum development and student research opportunities.

A list of schools selected for the awards is available at: http://www.hhmi.org/news/070902.html

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TBED People

Anne Armstrong, president of Virginia's Center for Innovative Technology since 1999, has resigned from the position effective the end of this month. Virginia Secretary of Technology George C. Newstrom will serve as Interim President during a search for a new president.

Michael Anastasio is the new director of the Lawrence Livermore National Laboratory, effective July 1. He was serving as deputy director of strategic operations for the lab.

Ken Berlack, formerly communications director for the National Commission on Entrepreneurship, has joined KCCatalyst, a regional organization dedicated to encouraging technological innovation and entrepreneurship in the Greater Kansas City area.

John Dixon, director of the University of Michigan's Life Sciences Institute, a cornerstone in the state's life sciences initiative, has resigned to join the School of Medicine at the University of California at San Diego.

Michael Douglas is the new associate vice chancellor for technology management at the University of Washington. Douglas comes to the position from a St. Louis biotech firm.

SSTI is excited to announce the addition of two new policy analysts to its staff. Rich Healy is an economic geographer formerly with the Columbus-based engineering and architecture firm Burgess & Niple. Heidi Findley served as press secretary to former Ohio Governor Richard Celeste for several years and, prior to that, as assistant deputy director for the Ohio Department of Development's Division of Technological Innovation.

The Greater Flagstaff Economic Council has announced Lewis Humphreys is its new vice president. Humphreys was with the Greater Tucson Economic Council.

Ruth Lange, with the USDA's SBIR Program Office and one of the most helpful federal employees for state and local SBIR outreach efforts, is taking a new position as Peer Review Director for USDA CREES.

Barbara Schilberg and Gary Kurtzman have been named co-managing directors of the Biotechnology Greenhouse Corp. in Philadelphia. The organization is one of three "greenhouses" established as part of Pennsylvania's $100 million biotech initiative.

Jacque Shaia, director of the Economic Development Partnership of Alabama, is leaving to pursue a doctorate degree at the University of Alabama.

Louis Soares, project manager for workforce development at the Rhode Island Technology Council (RITEC), is leaving to accept a fellowship at the JFK School of Government at Harvard University.

Gary Stark has resigned his position as executive director of the Indiana Information Technology Association Foundation to relocate to Connecticut. Stark raised $1 million during the past year to start an endowment for the foundation, which plans to award grants from the interest earned to combat the Digital Divide in the state.

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