In the March 5, 2004 Issue:

Copyright State Science & Technology Institute 2004. 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.

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NSB Sounds Warning Bell for S&E Workforce
The lack of encouraging news in the culminating report from the National Science Board’s (NSB) three-year study of America’s science and engineering (S&E) workforce is offset only by the urgent call to recognize and counter increased global competition and disturbing demographic trends and projections.

The Science and Engineering Workforce: Realizing America’s Potential concludes:

The challenges are daunting, as the facts lay bare. Science and technology are widely recognized to provide the cornerstone of economic growth in the U.S and will continue to do so. The long-term projected growth rate for S&E occupations is four times that of non-S&E occupations, according to the National Science Foundation’s Science & Engineering Indicators – 2002.

Despite these projections, the number of natural S&E degrees awarded in the U.S. has declined 1.1 percent since 1985. If biological sciences are excluded, the number of natural S&E baccalaureates awarded has dropped an alarming 18.6 percent.

The country has been dependent on an injection of foreign-born scientists and engineers to make up the shortfall. The U.S. economy grew increasingly dependent of foreign-born scientists and engineers during the 1990s, according to the NSB report. “For all degree levels, the share of U.S. S&E occupations filled by scientists and engineers who were born abroad increased from 14 to 22 percent” between 1990 and 2000, the report states. For doctoral degrees, the increase was even greater, from 24 percent in 1990 to 38 percent 10 years later.

As the economies flourish in nations that traditionally have exported many of their brightest minds to the U.S. for schooling and careers, and as American corporate outsourcing expands into research and development activities, the prospect of foreign S&E graduates coming to school here or remaining after graduation diminishes.

A telling statistic for the increased international demand for S&E graduates is the ratio of natural S&E first university degrees to the 24-year-old population in a country. The report points out that, in 1975, the U.S. was third behind Japan and Finland for the number of natural S&E degrees per 100 24-year-olds. By 1999, the U.S. had fallen to 14th.

The U.S. S&E workforce also is aging. More than half are over the age of 40 and could be retiring within the next 25 years. The number of workers between the ages of 40-44 is four times that of the 60-64 age group.

If the prospect of replacing those aging S&E workers with international S&E graduates is getting more difficult based on mounting global competition, then the nation must turn increasingly to domestic graduates.

It is in the domestic S&E graduation rates that the picture becomes even more bleak – if current trends continue. Whites presently account for more than two-thirds of all natural S&E degrees among 24-year-olds. Within the next two decades, however, whites as a percentage of the 18- to 24-year-old population are projected by the Census Bureau to decline from 66 percent to 55 percent.  Population groups currently underrepresented in the S&E workforce – Blacks, Hispanics and Native Americans – are projected to collectively account for 38 percent of the population by 2025. Hispanics, expected to see the greatest increase in numbers, have the lowest ratio of natural S&E degrees per 100 24-year-olds.

The NSB issues an imperative calling for the federal government and its agencies to “step forward to ensure the adequacy of the U.S. science and engineering workforce. All stakeholders must mobilize and initiate efforts that increase the number of U.S. citizens pursuing science and engineering studies and careers.” Several specific recommendations are outlined under the following statements:

The Science and Engineering Workforce: Realizing America’s Potential is available at: http://www.nsf.gov/nsb/documents/2003/nsb0369/start.htm

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Indiana Higher Ed Institutions to Receive $100M from Lilly Endowment
A $100 million initiative announced last week by the Lilly Endowment Inc. will help Indiana's colleges and universities attract and retain more faculty and students. The Lilly Endowment, a private philanthropic foundation based in Indianapolis, supports community, educational and religious causes.

A total of 37 institutions among Indiana's two- and four-year public and private schools will be encouraged to submit proposals for funding under the initiative. Purdue University and Ivy Tech State College are eligible for a combined $30 million of the $100 million pot. Another $26 million is allocated for Indiana University. Other schools such as Ball State University, Indiana Wesleyan University and the University of Notre Dame are eligible for $5 million or less.

To lure the best and brightest talent to Indiana, institutions could suggest ways to upgrade research facilities or draw more full-time and part-time faculty to their campuses. Proposals also might consider other aspects of intellectual capital.

Statistics in the 2003-2004 Almanac Issue of The Chronicle of Higher Education reveal the public university salary for full-time faculty in Indiana is almost 7 percent less than the national average. Indiana colleges and universities generally do not rank highly in the number of National Merit Scholars they attract or in the amount of licensing revenues and patent activity. Similarly, no Indiana college or university is among the top 50 higher education institutions, with respect to federal research and development expenditures.

The Lilly Endowment is allowing the selected colleges and universities until September to craft proposals. More information on the Lilly Endowment initiative is available at: http://www.lillyendowment.org/

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Rhode Island Gov. Lays Foundation for TBED
Addressing a joint session of Rhode Island's General Assembly, Gov. Don Carcieri unveiled last week a fiscal year 2005 budget that includes funding for several technology-based economic development (TBED) initiatives.

Gov. Carcieri's budget attempts to navigate around a projected $240 million budget gap for FY 2004 and FY 2005. Despite proposing $92 million in spending reductions, the governor would direct $50 million toward a new Center for Biotechnology to be built at the University of Rhode Island. The center would serve as both a world-class research facility for students and a stimulus for the state's growing biotech economy.

Other highlights of the governor's budget include:

The research funding would come partly by virtue of a nearly $200,000 planning grant awarded to Rhode Island through NSF's Experimental Program to Stimulate Competitive Research. The Providence Journal reports the state hopes to receive $9 million over the next three years from NSF. A proposal for the initial $3 million will be presented to NSF in July, the newspaper states.

Another initiative of note, Gov. Carcieri's tax incentive program, is being introduced through RIEDC-sponsored legislation known as the Creative Companies Act. Under the legislative proposal, Rhode Island companies that can generate within five years $25 million in annual revenue and at least 200 "high quality jobs," or a $10 million annual payroll, would be eligible for tax breaks. Stocks, bonds and other assets sold or exercised by these companies and their investors would be free from the state's capital gains tax. High quality jobs, as defined by the Act, are full-time positions earning at least 150 percent of Rhode Island's minimum wage.

Businesses or entrepreneurs that start a company in Rhode Island are eligible to receive certification as creative companies, provided they meet the above conditions. These companies would not begin to receive tax breaks until three years following receipt of creative company status from RIEDC. Their exemption amount would start at 25 percent in the fourth year and increase proportionally each year thereafter, so long as the companies stay in-state, continue to add employees and increase sales.

Applications for two existing tax exemptions in Rhode Island, one benefiting software companies and the other for venture capitalists, would be blocked with passage of the Creative Companies Act, according to the Providence Journal. Additionally, only 20 companies per year may be granted preferred tax status.

Gov. Carcieri's budget address is available in its entirety at: http://www.governor.state.ri.us/

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More Cities Report Worse Economic, Fiscal Conditions than Improved Ones, NLC Finds
Preliminary findings from an annual survey conducted by the National League of Cities (NLC) reveal economic and fiscal conditions are worsening in many of America's cities and towns. A large segment of those surveyed by NLC also reported improvements in areas such as the vitality of their downtowns, increased efficiency in service delivery, and preparedness for emergencies and homeland security. The 345 respondents in the survey, State of America's Cities, reflect a nationally representative sample.

Responses from the surveyed cities and towns indicate that both overall economic and fiscal conditions have worsened over the past year more than they have improved, according to NLC data. Overall economic conditions worsened in 40 percent of cities, compared to 26 percent that said conditions improved. Roughly one-third of those sampled reported no change in their economic conditions. Forty-four percent said fiscal conditions have worsened, compared to 22 percent that reported improvement. Nearly one-third said they experienced no change in their fiscal conditions.

Worsening unemployment also was reported by many cities and towns. Of those surveyed, 45 percent reported unemployment conditions were worsening, while 18 percent said they were improving. Thirty-two percent said no change.

Two other issues emerged as problems among more than half the cities surveyed by NLC:

Not all was gloomy in the NLC survey, however. Improvements in the vitality of downtowns and main streets were reported by 49 percent of the cities, while 16 percent cited worse conditions. Homeland security and emergency preparedness improved in 42 percent of responding cities, compared to 9 percent reporting declines. The efficiency of municipal service delivery rose among 42 percent of respondents, as 8 percent reported declines.

The findings of the 2004 survey amplify the problems that surfaced in last year's NLC survey of city fiscal conditions, which found cities and towns are struggling with the most serious fiscal problems in at least two decades. More than half of the cities were said to be raising user fees for services, drawing down reserves, and cutting investment in infrastructure and maintenance, in response to their fiscal struggles. Others reported laying off city staff, including police and firefighters. (See the May 30, 2003, issue of the Digest for complete coverage of the 2003 survey.)

More than 3,000 delegates from cities and towns across the U.S. are expected to convene at NLC's Congressional City Conference in Washington, D.C. on March 7-9. NLC serves as a resource and advocate for 18,000 cities, towns and villages that collectively serve 225 million people. To access the NLC survey, visit http://www.nlc.org.

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Minnesota Report Spotlights Concerns of State's Manufacturers
The need for tax cuts, reduced and simplified regulations, a well-trained workforce, lower employee health care costs, and a state-sponsored industry advocate are among the top concerns shared by a core group of Minnesota manufacturers.

Those concerns and others are summarized in Positively Minnesota Manufacturing: Making It Great, a report released earlier this year by the state's Department of Employment and Economic Development (DEED). The report is a synopsis of feedback obtained during a series of roundtable meetings convened by Gov. Tim Pawlenty in October 2003. To help manufacturers, DEED identified several key areas that could warrant further consideration:

State manufacturing proponents call for continued support for Minnesota Technology Inc. (MTI), the state's technology-based economic development organization. Since its inception in 1991, the nonprofit has assisted more than 4,500 companies and helped Minnesota's economy realize gains of more than $800 million. Funding for MTI was eliminated in the state's fiscal year 2004 budget.

One of DEED's recommendations, to create a business one-stop service, already is in place. Positively Minnesota BizNice was launched in January 2004 to help Minnesota businesses navigate state permitting, licensing and regulatory requirements. The service features a toll-free number, being jointly staffed by DEED and the state's pollution control agency. Other recommendations may serve as the basis for policy initiatives advanced by Gov. Pawlenty during the 2004 legislative session, which began last month.

As the primary promotional agency for Minnesota businesses, DEED encourages the creation and retention of high quality jobs through business growth, expansion and retention. Positively Minnesota Manufacturing: Making It Great is available at: http://www.dted.state.mn.us/Rndtbl-f.asp

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Useful Stats: Number of High School Graduates to Peak in 2008-09
When this year's high school freshmen receive their diplomas in four years, it will mark the largest and most competitive graduating class ever, according to a new study. Released by the Western Interstate Commission for Higher Education (WICHE), ACT Inc. and the College Board, the study projects the number of high school graduates will peak in 2008-09 at 3.2 million. A slow but steady decline in the number of enrollments and graduates is expected to occur in most parts of the U.S., following the peak year.

Among regions, the West is projected to see highest percentage of growth, with elementary and secondary enrollments climbing by 9 percent between 2001-02 and 2007-08. The South will experience a 5 percent increase, the study observes, while the Midwest and Northeast will drop by 9 percent and 2 percent, respectively. Nationally, annual increases in the number of graduates are projected to range from about 6,300 (0.2 percent increase) to 79,000 (2.5 percent increase) between 2001-02 and 2017-18.

The size of graduating classes across individual states will vary, according to the data. Arizona, for example, is projected to experience 55 percent growth between 2001-02 and 2017-18. Other states such as Massachusetts - expected to see a 2 percent decline over the same period - would experience overall decreases.

It is worth noting that 13 of 20 states projected to experience a decline in high school graduates are Experimental Program to Stimulate Competitive Research (EPSCoR) states. A program of the National Science Foundation, EPSCoR promotes economic growth through states' science and technology resources and partnerships involving universities, industry and government. Nine of the bottom 10 places in the WICHE study are held by EPSCoR states. Four EPSCoR states are expected to see only a 2 percent increase.

Of the 10 states likely to see the greatest increase in high school graduates, eight are in areas expected to grow significantly in total population (e.g., the South and Southwest). A notable exception is Indiana, which based on the report's projections could see a 25.7 percent climb. Efforts in Indiana like those supported by the Lilly Endowment to increase the number of college graduates and the number of students in math and science (see article in this week's Digest) could be particularly beneficial given the dour projections of the National Science Board's workforce report (also covered in this issue of the Digest).

SSTI has prepared a table showing the number of each state's high school graduates in 2001-02 and those projected for 2017-18, as well as U.S. totals for the target years. The table is arranged by percentage change between the two columns, from largest (positive growth) to smallest (negative growth), and is available at: http://www.ssti.org/Digest/Tables/030504t.htm

Fifteen western states comprise WICHE, a regional organization dedicated to improving higher education systems. Copies of the study, Knocking at the College Door: Projections of High School Graduates by State, Income and Race/Ethnicity, are available for purchase from WICHE. For ordering information, visit: http://www.wiche.edu/pubs/cart_subj.asp?pub_id=269

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