In the June 14, 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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Ohio Injects Another $100M into Third Frontier Programs for FY05
Includes $24M for Biomedical Research, $50M for Wright Centers
Ohio has a biennial budget process so the fiscal year 2005 budget for technology-based economic development (TBED) activities could have been set in stone back in June 2003. With the passage of three bills this spring, however, the state legislature has committed an additional $103 million for its Third Frontier Project for the fiscal year beginning July 1, 2004. The new funds are a staple to the FY 2005 appropriations for other TBED programs such as Ohio's Thomas Edison Program, its SBIR efforts and coal research office.

The state's Third Frontier portfolio includes the Biomedical Research and Technology Transfer, the Wright Centers of Innovation, Wright Projects, and the Third Frontier Action Fund.

The Biomedical Research and Technology Transfer Trust Fund received $24.1 million for FY 2005 and an additional $23.9 million in FY 2006 from the state's share of the tobacco settlement funds. Since 2002, BRTT has distributed nearly $80 million to several multi-million-dollar collaborative biomedical and biotechnology research projects that could lead to commercialization.

The Wright Centers of Innovation support large-scale research and technology development platforms designed to accelerate the pace of Ohio commercialization. Wright Centers are to be collaborations among Ohio higher education institutions, nonprofit research organizations, and Ohio companies in the areas of advanced materials, bioscience, power and propulsion, information technology and instruments, controls and electronics. The state's financial commitment to the centers originally focused on fixed assets and capital expenditures; however, with Gov. Bob Taft signing HB 427 last week, $10 million will be available to provide operating grants to the existing non-bioscience related centers. For FY 2005, an additional $40 million from the state's capital budget will be available to support the new Wright Centers of Innovation.

The capital bill also included $13.6 million for new Wright Projects, which support specifically defined near-term commercialization projects requiring major capital acquisitions and improvements at Ohio higher education institutions and nonprofit research organizations. Projects must involve at least one Ohio company and be in selected technology areas.

A $13 million appropriation for the Third Frontier Action Fund will be distributed across several focused programs, including:

The Ohio Department of Development, which administers the Third Frontier Project, will be releasing within the next two months several FY 2005 requests for proposals for the new funds. More information is available at: http://www.thirdfrontier.com/

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Florida Slowly Discovering Truer Costs of Landing Scripps
When Florida Gov. Jeb Bush surprised the world last October by announcing the state had landed an East Coast campus for the Scripps Research Institute, the draw from the public coffers cost was pegged at $510 million. The state was contributing $310 million and the county's share was up to $200 million for land acquisition and building construction.

Scripps promised to create 545 jobs within the first eight years on its new 100-acre campus. That works out to $935,780 of public investment per job. Pricey, yes, but civic leaders are counting on Scripps to serve as a strong magnet to attract even more high wage, high tech businesses at no or lower cost to the state. Gov. Bush projected an additional 50,000 jobs resulting from the research center's presence in the West Palm Beach area within 15 years.

On the basis of these much larger job projections, the county is acquiring more than 6,000 acres to accommodate the office, housing, retail and service needs of this future high tech community. The tax revenues from that growth are supposed to more than offset this initial record public outlay for a tech-based economic development project.

Florida news reports last week reveal the estimated cost to the public already has grown as much as $200 million. The 40 percent jump is due to infrastructure costs related to the location Scripps selected for the campus: 12 miles from the nearest interstate and in an area slated for environmental protection. The estimated cost for the first round of retention ponds, lakes and drainage in the area once part of the Everglades is $17 million alone.

The New Times Broward-Palm Beach, an alternative weekly newspaper for the area to be impacted by the Scripps development, ran last week an engaging 5,200-word, behind-the-hype expose on the process used by both Florida and Scripps to negotiate the deal. The New Times cites independent assessments of the potential spinoff job creation figures and full construction costs. Those reports suggest a more conservative total job creation figure of 20,000 over 30 years -- 40 percent of the jobs in twice the time period than the 50,545 originally projected in 15 years.

Road and infrastructure improvements to deal with the housing needs of the new workers, even at the much smaller figure and over a longer time span, could be as high as $1.6 billion, according to studies cited by the New Times: http://www.newtimesbpb.com/issues/2004-06-03/feature.html

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Michigan Legislature Frees Fed R&D Grants from State Taxes
Michigan small businesses receiving state and federal grants for research and development will be able to put more of those funds into their work, with legislation unanimously passing the state Senate last week.

A key component of the Senate Republicans' JOBS II action plan, Senate Bill 1116 now moves to Democratic Gov. Jennifer Granholm. A recent Associated Press article reports Gov. Granholm has not decided whether or not to sign the bill.

SB 1116 amends the Single Business Tax Act (SBT) to allow SBT payers to deduct state and federal research grants from their tax base income. The bill's proponents suggest the measure will be a lure to attract high tech businesses to the state and will aid emerging tech firms, many of whom receive much of their start up revenues through federal grants such as the Small Business Innovation Research program.

Legislative analysis of the fiscal impact for the bill suggests the cost to the state's general revenue funds will be $500,000 per year.

SB 1116 is available through the Michigan Legislature at: http://www.michiganlegislature.org/mileg.asp?page=getObject&objName=2004-SB-1116

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House Appropriations Smiles on DHS University Research Centers
The House Appropriations Committee passed on June 9 its version of the fiscal year 2005 Homeland Security bill, approving $70 million for university programs in the Department of Homeland Security (DHS). The funding level is $40 million above the President's FY 2005 request. The additional $40 million is allocated specifically for university-based centers of excellence.

The Association of American Universities quotes the committee report as saying: "Through the Homeland Security Centers of Excellence (HS-Centers) S&T is encouraging universities to become centers of multidisciplinary research. In fiscal year 2004, S&T awarded three HS-Centers in the areas of: Risk and Economic Analysis of Terrorism Events, Foreign Animal and Zoonotic Disease Defense, and Post-Harvest Food Protection and Defense. The future of homeland security science is also being advanced by the development of the next generation of scientists in the Scholars and Fellows Program. There continues to be intense interest from universities with proposals to perform homeland security activities. This additional funding will allow S&T to evaluate and support additional university proposals in fiscal year 2005."

Funding for the university programs is part of the $1.1 billion approved for DHS Science and Technology Research, Development, Acquisition, and Operations.

The Homeland Security Bill is one of only two appropriations bills most Congress watchers expect will actually be voted out of Congress before the fiscal year ends Sept. 30. The other is the Defense bill.

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Analysis Useful for Assessing University Federal R&D Funding
A new report assessing 2002 federal research and development (R&D) funding in U.S. universities and colleges finds 45 percent of all federal R&D funds went directly to the nation’s 126 medical schools. This striking discovery, the authors contend, raises the question of whether other areas having substantial R&D funding needs such as environment, energy, homeland security and education are receiving the attention they require.

The federal government's investment in university R&D has grown considerably in recent years, according to the report, and represents a pivotal part of the U.S. innovation system. The analysis from the Science and Technology Institute for the National Science Foundation, is the first of its kind to assess state-by-state trends in R&D funding for institutions of higher education. Vital Assets: Federal Investment in Research and Development at the Nation’s Universities and Colleges, draws upon FY 1996-02 data from the Research and Development in the U.S. (RaDiUS) database. Highlights from the report include:

Universities and colleges have always lacked long-term, consistent data to enable them to measure their success at acquiring R&D funding, according to the report, and this analysis will allow them access to accurate information on various funding issues. For example, all universities and colleges with federal R&D activity will be able to know where they stand relative to others in ability to obtain funding. Also, having access to information on funding mechanisms the federal government uses to transmit R&D funds to them, universities and colleges can better assess intellectual property issues that arise from R&D.

Other questions arise from the findings of the analysis regarding where funding is being distributed and why. According to the authors, the report is also intended to stimulate and enable further research of state trends, priorities, and resource allocations of federal R&D funding in order to answer these questions.

Vital Assets: Federal Investment in Research and Development at the Nation’s Universities and Colleges is available from the RAND Corp. at: http://www.rand.org/publications/MR/MR1824/

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Positive Signs Remain for Women-led Companies, Despite Funding Disadvantage
Although a significant gap still exists between women-led companies and their male counterparts, in terms of venture funding, some promising news may suggest a change in fortune for the former, a study released today by Growthink Research of Los Angeles and Chicago-based re:invention Inc. shows.

The 400-page study, Venture Funding for Women Entrepreneurs, provides a detailed profile of women-led, venture capital (VC)-funded, privately-held business enterprises and companies with women executives. The report is based on a comprehensive analysis of 1,860 companies that raised more than $19 billion of venture capital in 2003.

Among major findings, 84 women-led companies in the U.S. received $783.8 million in VC -- 4.5 percent of all funded firms and 4.2 percent of all venture dollars. Thirty-seven of the 84 companies (44 percent) were in the healthcare sector, which accounted for more than half ($427.7 million) of the total funding raised by women. Additionally, 25 companies (30 percent) in the business software and services sector raised $165.3 million, followed by 12 women-led companies (14 percent) in the connectivity sector raising a total of $130.1 million.

In comparison, 60 percent of all male-led funded firms fell into the connectivity and business software and services sectors, with only 24 percent categorized as healthcare firms. The biggest gap between male-led and women-led funded companies occurred within the connectivity and healthcare sectors.

"The disparity in funding between ventures led by males and females continues, but there are several areas of note in which women-led companies are performing better than others," said author Corey Lavinsky of Growthink Research, a leading VC research firm. "Leading the pack are women-led biotechnology and pharmaceutical companies which collectively raised $289 million. Further, women-led companies in the fields of HR software, e-mail/messaging software, and imaging technologies all raised more than 10 percent of the total dollars invested in their particular fields."

Other findings include:

Venture Funding for Women Entrepreneurs is the first comprehensive report to explore the women-led business share of deals and dollars in four years. The Wells Fargo-sponsored Women Entrepreneurs in the Equity Capital Markets: The New Frontier study conducted in 2000 estimated that women-owned firms represented 9 percent of investment deals and 2.3 percent of dollars.

More recently, a March 2004 study funded by the Kauffman Foundation found the VC industry was dominated by males and attributed the lack of women decision-makers and limited network connections to fueling the female entrepreneur funding gap. The research was based on data from 1995 to 2000.

"Instead of bemoaning findings in this new report as yet another blow to women, we should be asking what can we do and where do we go from here?" said Kirsten Osolind, chief executive officer of re:invention, a marketing consulting company dedicated to women-led businesses and study sponsor. "We need to cultivate programs that help venture capitalists scale their business models and identify new high potential women entrepreneurs, as well as encourage, support, and promote visibility of women entrepreneurs in their attempts to stand out when raising startup capital."

Venture Funding for Women Entrepreneurs is available for purchase from Growthink Research at http://www.growthinkresearch.com.

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Useful Stats: Federal R&D Loads for Students, Faculty by State
Most states recognize the importance university research plays in building a strong knowledge economy; it is a prominent component of the strongest regional technology clusters. Many states are increasingly focused on expanding their university research capacity and increasing the number of students in key science and engineering fields.

To help policymakers assess their relative position regarding university R&D, SSTI has through its Useful Stats column in the SSTI Weekly Digest produced or reproduced several tables standardizing relevant data across states using other commonly available data. An example includes federal research obligations or industrial R&D expenditures at institutions of higher education.

"R&D intensity" measures some data set relative to the gross state product; "per capita" simply means the  data set was characterized by a population set or subset, such as total state population or number of science and engineering doctorates. Other ratios and averages are used to standardize useful academic research data as well.

SSTI reminds readers of the above points because we are not aware of a catchy or simplified name for the statistics in this week's Useful Stats. Using data presented in Vital Assets: Federal Investment in Research and Development at the Nation’s Universities and Colleges (see related article in this issue), SSTI has produced a table presenting 2002 federal R&D obligations received by each state's higher education institutions as a function of the size of the faculty and as a function of the number of graduate and first professional degree students. States are ranked by each result.

To differentiate the measures from other academic R&D indicators, SSTI labeled them "R&D Load." For example, the U.S. average federal R&D Load per university faculty member in 2002 is $28,691. Per graduate student, the U.S. average federal R&D Load is $9,944.

Alaska captures the top spot for Federal R&D Load per graduate student at $33,030, yet ranks 25th for the faculty R&D load indicator. Maryland is first overall for faculty R&D load at $79,345 and only slips to second for grad student R&D load. Massachusetts ranks third for faculty R&D load, but falls to 14th for student R&D load.

The table is available at: http://www.ssti.org/Digest/Tables/061404t.htm

What's it all mean? We think these might serve as another set of interesting measures for assessing a state's position relative to other states regarding university research, research infrastructure or knowledge economy inputs.

How the figures are interpreted and how they could or should affect tech-based economic development policy and programs, however, is open to much discussion. Schools building "speculative research facilities" counting on overhead from increased federal and industrial research grants to pay off the buildings could find the measure helpful in determining the validity of those approaches. Or, for example, would excluding students pursuing MBAs, law degrees or Masters of Education significantly alter the results? Would it matter if it did?

We look forward to your comments and suggestions. Please send them to usefulstats@ssti.org.

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People

Joe James, director of the South Carolina Council on Competitiveness, has resigned his position with the S.C. Department of Commerce.

The new deputy undersecretary for the Technology Administration in the U.S. Department of Commerce is Michelle O'Neill. O'Neill formerly served as deputy assistant secretary for the International Trade Agency.

SSTI congratulates Tom Persons, president and CEO of the South Carolina Technology Alliance, for receiving the Individual Achievement Award from the Greater Columbia Chamber of Commerce.

Former NASA Administrator Richard Truly, now head of the National Renewable Energy Laboratory, announced his plans to retire in November.

Janet Yancey-Wrona, director of the Maine Technology Institute (MTI), has been named the Governor's Science and Technology Advisor and the first Director of Innovation for the Maine Department of Economic and Community Development. In her new position, Dr. Yancey-Wrona will oversee the state's research and TBED activities, including MTI, the business incubator program and Maine EPSCoR initiative.

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