In the September 26, 2003 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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FY04 DHS Budget Moves Out of Conference
Appropriations for the Department of Homeland Security (DHS) have emerged out of the conference committee for consideration and final approval by Congress — one of three budget bills likely to be passed before the fiscal year ends next Tuesday.

Demonstrating anything can happen during the conference between the two chambers, the final budget for the Science and Technology Directorate came out higher than either the Senate or House had approved in separate versions of the DHS appropriations bill. The Directorate, responsible for DHS research activities, is poised to receive $918 million, $7 million above the House level and $52 million above the Senate budget. The majority of the change, however, is relocating nearly $40 million in administration and management expenses to fall within the Directorate.

The University Program and Homeland Security Fellowships Program received $70 million, $60 million more than the Administration requested. The Association of American Universities (AAU) reports the amount is $15 million above the House level and $35 million above the Senate's. [Editor's Note: Given the academic pork article in this issue of the Digest, it is worth noting that none of the $70 million for the university program is earmarked. In fact, the conferees go so far as to write: "The conferees encourage the Department to consider all colleges and universities that meet the requirements of 6.U.S.C 188 in the selection of university-based centers, including historically black colleges and universities, tribal colleges, Hispanic-serving institutions, and Alaskan Native-serving institutions." ]

On a related note, AAU also reports the second round of competition for the university centers will begin this fall. Future centers are expected to focus on "behavioral research on terrorism and countermeasures, public health and safety technology transfer, agro-bioterrorism countermeasures, and response technologies and operations," AAU writes.

Other highlights of the $874 million science and R&D portion of the Science and Technology Directorate Budget include:

Additionally, the conference report provides:

The full 132-page, marked-up DHS conference report (#108-280) is available on the House Committee on Rules website: http://www.house.gov/rules/homeland.pdf

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State Legislatures, Communities and Universities Take Economy Into Own Hands
The President wants $87 billion for the war in Iraq. Congress is looking at a month-long continuing resolution for the budget since final approval on most appropriation bills is at least that far in the future. Meanwhile, the persistence of the recession, the restructuring of U.S. manufacturing due in part to globalization, and the continued hemorrhaging of tax revenues has led several governors, state legislatures and community leaders to begin rethinking their economic development strategies. The past few months have seen a spate of state and local news on summits, plans and new groups for reorganizing, revamping, recreating or re-energizing public-private economic development efforts.  Below are examples of some of the approaches.

E.D. Getting Higher Priority from North Carolina Legislature
The North Carolina legislature has established a bi-partisan Joint Select Committee on Economic Growth and Development to reinvigorate the state's economic development activities. According to The Raleigh News & Observer, the 20-member committee will consider proposals such as an extended research and development tax credit, more money for business recruitment and a reduction in the state’s corporate income tax. The committee leaders anticipate convening the group regularly before the next legislative session begins next May.

Regional Collaboration Encouraged in Northeast Ohio
Two separate efforts with similar goals were launched this month to try to unite the economic development efforts of the numerous communities and interests of northeast Ohio. The new, business-led Team North East Ohio (Team NEO) received a $1.5 million grant last week from the John S. and James L. Knight Foundation to help develop and sustain a cooperative economic development strategy for the region. The group is led by the chairman of Akron-based FirstEnergy. Meanwhile, the Cleveland Foundation, in conjunction with five collaborating partners – Business Volunteers Unlimited, Cleveland Bridge Builders, Council Of Smaller Enterprises (COSE), Leadership Cleveland and the President’s Council – started the Civic Innovation Lab to provide support, including mentorship, networks, visibility and funding to individuals with ideas for fostering economic development in Greater Cleveland. The lab's website points out it is not an "incubator for private business, but a vehicle to connect great civic ideas with the right place in the community."

Public Universities Taking Initiative
Further south in Ohio, the Columbus Dispatch reports that Ohio State University Medical Center is feeling a sense of urgency in elevating its competitive position in the biotech race. The public university is planning to sell bonds to pay for a new $151 million biomedical research facility instead of going through the process of getting on the state's biennial bill for capital improvements. The paper quotes a school official, "If we waited 10 years [the anticipated time it would take to get on the capital bill], we'd be so far behind the rest of the country." Access to premium lab and office space in the new facility will be based largely on the amount of research funding faculty can generate.

With the state's leaders focused on the recall, four California research universities and SRI International have joined forces to move more of the schools' medical research into clinical trials and commercialization. The new initiative is called PharmaSTART and offers drug development and consultation services, business consulting services, and access to equity capital. A major goal of PharmaSTART is to promote collaborations between the member organizations, which include Stanford University, the University of California at San Diego, the University of California at San Francisco (UCSF), and the UCSF campus of the California Institute for Quantitative Biomedical Research. The consortium will seek private and public funding, including from the State of California and federal funding agencies.

Tulsa Voters Willing to Pay the Price
Earlier this month, voters in Tulsa approved the Vision 2025 initiative, which is expected to generate $885 million through a one-cent sales tax increase for economic development initiatives. Each element of the four-part package was supported by more than 60 percent of the voters, according to the Tulsa World. Proposition 1 will generate a total of $350 million for the city's bid to attract the Boeing 7E7. Boeing would receive $100 million to conduct research and development and $250 million as part of a no-interest loan, the newspaper reported. More than $100 million of proposition 3 will go toward new facility construction at Tulsa's five public university and community college campuses. To address the quality of life issues required for a competitive economy, Vision 2025 also directs $157.4 million to upgrades for community cultural amenities, including the Oklahoma Aquarium, the Oklahoma Jazz Hall of Fame and the Tulsa Air and Space Museum. The package's passage also triggers $29 million in matching contributions from private sources to the University of Oklahoma-Tulsa.

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Ties that Bind: Residual Spillovers When an Inventor Moves
Study Hints at Why TBED Is Good National Investment
Much can be made about the spillover benefits of having a strong research university or cluster of similar technology companies locally. As a result many research institutions and technology-based economic development (TBED) professionals support the creation of endowed chairs and centers of excellence to lure top researchers, hoping for long-term economic benefits from the investment. The heightened interest that most states and universities have placed on becoming a biotech leader, for example, has many policy analysts expecting the end result will simply be to increase the asking price of the top life science researchers.

But does this TBED strategy result in the same net loss or zero gain on the macro level that is encountered from the traditional economic development recruitment approach commonly referred to as smokestack chasing? Put another way, is all lost when a key researcher or inventor moves outside the local community?

New research published through the National Bureau of Economic Research (NBER) suggests not. In fact, Gone But Not Forgotten: Labor Flows, Knowledge Spillovers, and Enduring Social Capital reports patent citations occur disproportionately more often in locations where an inventor was living prior to being issued the patent.

The result is that while the new home of the inventor will accrue the expected benefits of proximity, there are additional "residual" benefits for the originating community so that not all is lost. Residual spillovers arise from local familiarity with the inventors' research and the social and professional relationships maintained after the inventor moves on.

Statistical evidence based on patent citations is presented within the study that is consistent with the idea that investments in social capital help to facilitate communication between individuals, who were previously situated in the same location but are now geographically separated. The authors find evidence of what they term a “prior location premium.” As a result, the prior location may retain some degree of favored access to the knowledge generated by the departed inventor.

The authors also find the proportionate increase in knowledge spillovers attributed to co-location is greater for spillovers across technology fields than for spillovers within technology fields. Researchers who are interested in related problem areas are likely to correspond with each other via means such as conferences, publications and trade shows such that being located in the same area is less important for assisting in knowledge spillovers. The report posits that both current and prior co-location increase the likelihood of cross-field spillovers, proportionately, than within-field spillovers.

While additional research is warranted, the policy implications for local TBED groups might suggest encouraging greater social and professional interaction among the local research and technical communities.

Gone But Not Forgotten: Labor Flows, Knowledge Spillovers, and Enduring Social Capital can be purchased at: http://papers.nber.org/papers/W9950

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Chronicle Reports 2003 Academic Earmarks Surpass $2B
More than 700 of America's institutions of higher education couldn't claim to be vegetarian based on the record amount of pork they ate from the 2003 federal budget, according to the cover story of this week's Chronicle of Higher Education. The dollar value of college earmarks reached a record $2.013 billion in the current fiscal year's budget, 10 percent more than the previous high mark of $1.837 billion captured in FY 2002. The Chronicle reports the siphoned wealth was spread to 7 percent more schools in FY 2003 through 19 percent more earmarks.

Earmarks for Congress's pet projects have exploded over the past three years — at the same time the federal budget has faced expanding deficits and Congress has called for universities to control spending. Academic pork has doubled since the $1.04 billion posted in FY 2000, while the number of individual earmarks has grown 2.5 times higher from 777 to 1,964.

The research component of the FY 2003 academic earmarks totaled $1.445 billion, the Chronicle found, equaling 8 percent of the total FY 2001 federal obligations for academic research (the latest year for which statistics are available). Forty-six of the current research-related earmarks were for $5 million or more.

Three agencies account for slightly more than half of the total in FY 2003, with the Department of Defense (DoD) most prone to attack. Earmarks from DoD comprise 31 percent of the $2.01 billion total. The share taken from Health and Human Services fell to 10 percent in FY 2003, down from 13 percent in FY 2002 and 14 percent in FY 2001. The Department of Agriculture accounted for 10 percent of the total in FY 2003.

On the state level, Florida secured the greatest chunk of pork with $130.6 million, followed closely by Texas at $118.8 million. The balance of the top 10 for FY 2003 were: California, Pennsylvania, Mississippi, Alabama, New York, New Mexico, West Virginia and New Hampshire. On the other end of the spectrum, six states and the District of Columbia received less than $10 million each from the FY 2003 budget.

The Sept. 26 issue of the Chronicle of Higher Education also presents a state-by-state list of each earmark.

More information is available at: http://www.chronicle.com

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Does the U.S. Face A Shortage of Scientists?
Sloan Foundation exec says no
At several intervals during the past 50 years, various reports have argued that the U.S. was or would soon be confronted with a shortage of scientists and engineers in various fields. If a crisis did arise, it could play havoc on local and state technology-based economic development efforts dependent on a technologically skilled workforce for innovation and growth. But is there a real risk?

Michael Teitelbaum, program director at the Alfred P. Sloan Foundation, says no. He believes that this perception is mistaken for a multitude of reasons and suggests even policy solutions aimed to correct the alleged problem are misguided. Do We Need More Scientists?, an article in the Fall 2003 issue of Public Interest, summarizes Teitelbaum's conclusions and recommendations on what he perceives are more appropriate policies for encouraging scientific discovery and innovation.

Teiltelbaum draws on a 1998 study by the US General Accounting Office and an early 2003 report from the RAND Institute to support his position. The GAO issued a critical assessment of a mid-1980s National Science Foundation report that received wide circulation, citing weak methodologies and low response rates. In early 2003, a RAND study assembled data from previous studies regarding the professed shortage and concluded that data concerning earnings and unemployment did not support the shortage assertion.

The current economic climate, with the number of laid off information technology workers and the restructuring of the U.S. manufacturing base, would suggest a shortage of engineers is not likely in the near future.

Teitelbaum also suggests that even though forecasts of an impending shortage of scientists and engineers may be flawed, proposed solutions to the perceived problem have been misdirected. Most policies and programs address the supply side of the equation, trying to entice more K-12 students into studying math and science or encouraging undergraduates to major in science or engineering fields. Still other supply side approaches include drawing more foreign engineers and scientists into the country to counterbalance the "low" number of American workers available.

If the demand isn't present for the increased number of scientists and engineers, the result of these efforts will be to drive down the wages of these occupations, making them less attractive to many future students choosing promising career paths.

The key, Teitelbaum asserts, is to make careers in science more attractive. Educational requirements for scientists usually require a Ph.D. and some amount of postdoctoral work — the direct financial cost of earning such a degree can serve as a strong deterrent or barrier for many prospective students. Many bright individuals, instead, choose to pursue a career in law, business or some other field in which they can begin to accumulate their lifetime earnings relatively quickly. The “opportunity cost” of becoming a scientist it too great for many of today’s best students, particularly those not planning to enter the medical profession.

In addition, the educational requirements mean many cannot began their career in earnest until their early thirties, which can then pose a conflict with any marriage or family life goals. The best and brightest that might be attracted to careers in science, Teitelbaum holds, are understandably apprehensive that such a professional choice may present too high an individual price.

The article concludes by suggesting that those concerned about the future of science and engineering in the U.S. should encourage students interested in a potential career path in science to objectively appraise the situation, weighing both the advantages and disadvantages, instead of raising false flags concerning shortages. The essential goal must be making careers in science and engineering attractive relative to the alternative career paths. This type of effort is necessary to ensure a supply of scientists and engineers proportionate with the science and engineering needs of the country.

The complete text of Do We Need More Scientists can be found at: http://www.thepublicinterest.com/current/article2.html

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Saving Money: An SSTI Conference Update
SSTI's 7th Annual Conference, to be held in Seattle on Oct. 21-22, is now less than one month away. If you are planning to join 300 of your colleagues from more than 40 states at Building Tech-based Economies: From Policy to Practice, here are a few tips to save your organization a little money:

If you need a full color PDF version of the brochure or want to learn more about SSTI's annual conference online, visit: http://www.ssti.org/conference03.htm [expired]

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AAU Federal Relations Directorship Open
The Association of American Universities (AAU) seeks qualified candidates to fill the position of director of federal relations. Reporting to the AAU president, the position supervises the federal relations activities of the association staff, including AAU's efforts to promote investments in basic research and graduate education in NIH, NSF, NASA, the Departments of Defense, Education, Energy, and Homeland Security, as well as student aid in the Department of Education and humanities investments made by NEH.

The director is specifically responsible for AAU’s NIH advocacy, including engaging with Congress and the Executive Branch on the NIH budget and on biomedical research policy issues. He or she will work closely with biomedical research advocacy partners, appropriations subcommittee staff, and university officials to accomplish biomedical research funding and policy objectives. In addition, the position shares responsibility for indirect cost and other research policy issues, including merit review, technology transfer and misconduct in science.

Supervising federal relations activities of a team of professional and administrative staff members, the director also is responsible for staff support for groups of AAU presidents and chancellors as necessary, including the AAU Costs of Research Committee, and for groups of campus research, federal relations and technology transfer officers.

Applications should be submitted to Barry Toiv, AAU Director of Communications and Public Affairs and Search Committee Chair, by Oct. 15, 2003. More information is available at: http://www.aau.edu

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People

Scott Doron has been promoted to director for the Southern Technology Council, the advisory council on innovation and technology policy issues for the Southern Growth Policies Board.

Tony Jeff is the new executive director of the Manufacturing Extension Partnership of Mississippi.

Robert McMahan has been named North Carolina's Science Advisor. In addition to advising the Governor on science and technology matters, McMahan will oversee the support staff for the North Carolina Board of Science and Technology. The advisor position will report to the secretary of the Department of Commerce.

The Biotechnology Industry Organization (BIO) promoted Michael Werner to the new position as chief of policy. Formerly, Werner served as BIO's vice president for bioethics.

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