In the February 21, 2005 Issue:

Copyright State Science & Technology Institute 2005. 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.

Subscription to the SSTI Weekly Digest is free. If you are reading a forwarded copy of this issue and would like to receive your own copy each week directly, please subscribe at http://www.ssti.org/Digest/digform.htm. Requests to unsubscribe also may be completed at http://www.ssti.org/Digest/digform.htm.

Tech Talkin' Govs 2005, Part Six
The latest in SSTI's annual "Tech Talkin' Govs" series. Five earlier installments of this 2005 review of governors' legislative priorities concerning tech-based economic development are available through the Digest online: http://www.ssti.org/Digest/digest.htm

Michigan
Gov. Jennifer Granholm, State-of-the-State Address, Feb. 8, 2005
"This Jobs Today, Jobs Tomorrow plan takes dead aim at the challenge we now face...It begins with an unprecedented investment in the future of Michigan – an investment to create 72,000 new jobs by making our state a world-wide center of research and innovation. This year, I will ask Michigan voters to support the 21st Century Jobs Initiative by amending the state Constitution to allow the state to invest $2 billion in bond money to create 21st century jobs – without raising taxes.

"...This investment in Michigan’s future will allow us to transform the state that put the nation on wheels into the state that makes those wheels run on pollution-free fuel cells or bio-diesel technology; the state where the research into alternative energies is done; the state where the clean technology is developed, and where the clean cars, products, and businesses are built.

"And, Michigan, the Great Lakes State, could be the state that finally makes these United States independent of foreign oil. We will build the best laboratories and bring and grow the best scientists and researchers in Michigan.

"We’ll create new sources of start-up funding to make sure the new businesses and entrepreneurs of tomorrow take root in Michigan today. We’ll give our universities and research and development companies the ability to unlock hundreds of millions of dollars in federal research funds. And, we’ll turn those ground-breaking ideas into world-beating products, spinning off jobs from sales to construction, from engineering to transportation, workers wearing everything from blue collars to lab coats to white collars and suit coats.

"I am asking the Michigan Legislature to put this 21st Century Jobs Initiative before the voters this fall. Michigan’s future cannot wait.

"Tonight, I am announcing a new MERIT scholarship that will ensure that every child in Michigan will have the opportunity to attend at least two years of study beyond high school.

"We are – in essence – extending the promise of public education in Michigan...With this new MERIT scholarship, we are extending that promise into the college years. Beginning with the class of 2007 – today’s high school sophomores – Michigan will ensure $4,000 for every student who completes two years of college – whether they earn an associate degree from a community college, achieve junior status at a four-year institution, or complete a technical program off-campus."

New Hampshire
Gov. John Lynch, Budget Address, Feb. 15, 2005
"We know that business, not state government, creates jobs. But we also know that when the state partners wisely with the private sector we can grow our economy and attract good-paying jobs for our citizens...This budget continues support for the Small Business Development Centers and the Industrial Research Center.

"...And later this week, I will be announcing a new public-private partnership to help attract and create new jobs in New Hampshire."

Ohio
Gov. Bob Taft, State-of-the-State Address, Feb. 8, 2005
"If we are to create tomorrow’s jobs, we can’t remain frozen in time in yesterday’s tax system. Unless we change it, our progress will be slow, our people will suffer, and Ohio will not grow...To bring Ohio in line with the rest of the nation and help small companies grow and create more jobs, we’ll slash personal income tax rates by 21 percent across the board.

"...But there are two more things we need to do to create a better future for Ohioans: promote emerging sectors of our economy and educate all our children for success in a high skills world. We must invest to create more good jobs through applied research, product development and innovation. Our Third Frontier Project is already getting results...So I ask for your support to go to the ballot in November to accelerate our progress under the Third Frontier Project.

"With college costs rising and the state budget under pressure, we must act to make sure no Ohioan is denied a college education because they cannot afford it. To increase enrollment by 30 percent in the next 10 years, we’ll expand the Ohio College Access Network so that more young people and their families have access to college information and financing options...And today, we’re launching a new program to provide more than $100 million in low-interest student loans to Ohio students."

Pennsylvania
Gov. Edward Rendell, Executive Budget Address, Feb. 9, 2005
"...This budget includes $100 million in new funds (to launch) Job Ready Pennsylvania, and we intend to use it to improve the effectiveness of the more than $2 billion in state and federal workforce, high school and vocational education funds that we currently invest in Pennsylvania’s workers. The goal of Job Ready Pennsylvania is nothing less than re-making Pennsylvania’s workforce as the best in the nation – educated, trained and ready for the challenges of the 21st Century economy.

"...Today, I propose to invest in our adult workforce. This budget includes an additional $15 million on top of the $36 million that we currently spend for our customized job training and other programs targeted to increase the skills of those currently employed. These funds will be allocated by the Department of Labor and Industry to partnerships of employers who have common training needs for their current workers. Through strategic use of these funds we expect that thousands of currently employed workers will upgrade their skills and in turn improve the competitiveness of Pennsylvania companies.

"Pennsylvania’s economic growth is hampered by a shortage of skilled workers in fields ranging from nursing to high-tech research and development. In this budget, I propose two strategies to fill the demand for these jobs – jobs that will help thousands of our fellow citizens reach new levels of economic success.

"First, this budget includes the largest increase in community college funding in 15 years. It includes a $21 million increase in the state share of tuition costs and targets these funds to courses that make a real difference in the workforce. We also have included almost $2 million to support the debt service on $20 million in capital funding to augment our current support of community college capital needs. Second, Pennsylvania will make an historic increase in funding for student grants."

West Virginia
Gov. Joe Manchin III, State-of-the-State Address, Feb. 9, 2005
"I propose to remove the shackles from higher education and give them the flexibility to compete and succeed. We cannot stifle productivity and efficiency and then expect our colleges and universities to meet the challenges of the 21st century. Working with the Legislature, I want to give higher education the capacity to meet these challenges.

"Our two largest universities, Marshall and West Virginia University, are keys to this competitiveness. Alone, each can accomplish much. Together, they can accomplish much more. At my direction, West Virginia University and Marshall University will be working in a new spirit of collaboration to promote the state’s economic interests.

"I want my legacy as Governor to include making West Virginia the No. 1 state for small business growth. Therefore, I will require our new Secretary of Commerce to devise an action plan specifically for growing our small business community, complete with defined outcomes that can easily be measured and tracked to show how the state will use all of its resources to save our existing small businesses and promote the creation of new ones."

return to the top of the page

Will Michigan S&T Emerge Winner in Political Battle?
As the only state to have a net job loss in 2004, Michigan's political leadership recognizes something must change. The state's shifting economy, from one defined principally by its manufacturing sector to one that derives growth equally from knowledge-based industries, is at the center of the matter. Michigan policymakers are challenged to create innovative proposals that preserve one facet of the economy while broadening the other.

Recent proposals put forth by the state's Democratic governor and the Republican-controlled legislature appear to be working toward that end. Gov. Jennifer Granholm has made a $2 billion investment to finance R&D in Michigan's research institutions the centerpiece of her Jobs Today, Jobs Tomorrow plan. The Senate GOP has touted its own legislation to promote research commercialization and increases angel investing. Both proposals are aimed at cultivating a climate for tech-based economic development (TBED).

Gov. Granholm's 21st Century Jobs Initiative, announced during her State of the State address, figures to be the largest component of her plan to boost high tech. The $2 billion investment would be issued in bonds over a 10-year period for the purpose of growing the state's alternative energy research enterprise and increasing biotech and homeland security R&D. Other specifics have not yet been made publicly available; however, the governor's administration has indicated it expects the initiative to yield 72,000 jobs.

Some critics, in response, have said the governor's proposal "sends up some major red flags" that could create legal issues. For their part, Senate Republicans want legislation that would establish a network of state-financed tech-based companies. The Senate GOP has packaged a plan that would establish a $50 million investment fund through the sale of bonds.

Under the Senate proposal, the state could invest in start-up companies and form public-private partnerships, the end result being a drug and life sciences product pipeline in Michigan. The state then would take a share of the profits to repay the fund, in those instances when a company does well. Another part of the plan would afford tech start-up investors a tax credit of up to $5,000 for monetary losses.

Both Republican legislators in Michigan and Gov. Granholm also have detailed proposals involving the state's Single Business Tax (SBT). Legislation proposed last week would continue for companies an SBT exemption on goods sold to their former parent companies. Since being passed in 1999, the SBT has led to capital investments totaling about $1.8 billion, the Associated Press reports.

The governor's proposal would drop the SBT from 1.9 percent to 1.2 percent. Such restructuring would enable 72,000 businesses to pay less but cause 22,000 to pay more, according to the AP. If approved by the Michigan legislature, it would be the lowest rate in the tax's 30-year history.

Restructuring of the tax would be targeted mostly for manufacturers, who would be entitled to a 35 percent personal property tax credit, the AP states. R&D property and labor costs associated with R&D also would receive a credit.

Gov. Granholm's plan includes at least one other major component dedicated to fostering TBED in Michigan -- a $4,000 new Merit Award program to reward students who complete two years of postsecondary education or apprenticeship training. The new scholarship would replace the state's existing $2,500 Merit scholarship, beginning in 2007. Students receiving Pell grants or other federal financial aid would have such federal assistance deducted from their $4,000 Merit awards.

Michigan voters will be asked to approve a ballot measure this November that would authorize Gov. Granholm's 21st Century Jobs Initiative. Further details regarding the governor's 2006 Executive Budget are available at http://www.michigan.gov/gov. For more information on the Senate GOP proposals, visit http://www.senate.michigan.gov/gop/.

return to the top of the page

States Finding Innovative Approaches to Stem 'Brain Drain'
A recent proposal by Senate Republicans in Iowa to eliminate the state income tax for residents under the age of thirty has brought the issue of the out-migration of young, educated adults once again to the forefront. In recognizing that brain drain leads to the loss of necessary skills for global competitiveness and economic development, policymakers across the nation are responding with innovative ideas.  While the Iowa Senate Republicans have dropped their proposal, a number of other states are pursuing new approaches.

Iowa ranks second in states reporting the most brain drain, only ahead of North Dakota, according to U.S. Census Bureau data from 1995-2000 (see the Nov. 7, 2003 issue of the Digest). Current efforts in North Dakota include a tuition reimbursement of up to $5,000 for students in technology and teaching fields who work in the state after graduating from a North Dakota university. Another approach is the state's internship program, Operation: Intern, North Dakota's Future at Work, which matches college students with North Dakota employers.

Clemson University also is offering increased scholarship and grant money to prevent brain drain through a new proposal that would guarantee all freshmen from South Carolina a scholarship or grant that does not have to be repaid. The Clemson Palmetto Pact would award graduates of the Governor's School for Math and Science, along with all students majoring in math or science education, a scholarship of up to $1,000 per year. The idea is to increase the pipeline of technology-oriented graduates, according to the university. However, all freshmen would be eligible for some form of assistance regardless of their major.

In Maine, Democratic Majority Leader Glenn Cummings recently introduced a legislative measure that would include a $50 million bond proposal to help repay student loans in return for joining Maine's workforce. Under the plan, recent graduates would be responsible for paying loans while working in Maine, but after the four-year period they would be eligible for up to $20,000 in repayment. Students who have a two-year degree would have to complete another two years to be eligible, and all qualified students must have graduated from either a Maine high school or college and remain employed in the state for a minimum of four years.

What is different about this proposal, Cummings said, is that bond proposals are usually used to pay for brick and mortar projects. The shift to a knowledge-based economy requires a new approach, he added.

State leaders in Maine have been tracking the growing brain drain phenomenon as the state continues to trail other New England states. A 1998 study of Maine college graduates, Where They Go and Why: Finding Maine’s Future Workforce (see the March 28, 2003 issue of the Digest), revealed that three out of four of Maine's best and brightest students ultimately choose to live and work outside of Maine. In response to the increasing trend, a 13-member legislative task force was appointed in 2003 to come up with ways to keep graduating seniors from leaving the state.

More information on Iowa's Economic Development proposal is available at: http://www.iowasenaterepublicans.org/
For more information regarding the Maine bond proposal, please visit: http://www.maine.gov/legis/housedems/

return to the top of the page

New TBED Efforts to Make Ontario Leader in Innovation
To spur job creation in Ontario, the provincial government recently announced two initiatives focusing on innovation and regional economic growth -- the new Fuel Cell Innovation Program and the newly refocused Northern Ontario Heritage Fund Corporation (NOHFC).

By investing $3 million annually through 2008 into hydrogen fuel cell R&D, the Ontario Fuel Cell Innovation Program will strive to make alternative energy technologies that can be fully commercialized in Ontario and marketed globally. The program's approach will be two-pronged: linking small and medium-sized businesses in Ontario with researchers, business expertise and venture capital; and, encouraging the development, deployment and adoption of fuel cell technologies for new and existing manufacturing and commercial application.

NOHFC launched six programs to implement its new mandate of fostering sustainable jobs and economic development while increasing economic opportunity for the province's northern communities. New initiatives include:

More information on the Fuel Cell Innovation Program is available at www.fuelcells.2ontario.com. NOHFC program details and application guidelines are available at www.nohfc.com.

return to the top of the page

Is Public Higher Ed Threatened by Competition and Privatization?
Statewide efforts addressing all of higher education's public purposes are needed to combat the increasing competition and privatization sweeping the nation's public colleges and universities, says a new report from the Futures Project, Correcting Course: How We Can Restore the Ideals of Public Higher Education in a Market-Driven Era.

State policies have come to favor an open market with the potential to create unhealthy competition that strays from the traditional goals of public institutions, such as increased access, better instruction, lower costs and greater efficiency, the authors contend. As higher education becomes more competition-driven, they argue, academic leaders feel compelled to chase revenues and rankings rather than to focus on providing a high quality education.

The Virginia General Assembly recently passed legislation offering the University of Virginia, the College of William and Mary and 16 other public institutions status as independent entities or chartered universities. By accepting lower state appropriations in return for freedom from state regulations, these institutions could enhance competitiveness in an aggressive market, while maintaining higher education's commitment to serving the public and lightening the burden on taxpayers. States such as Florida, Oregon, South Carolina, Washington and Wisconsin also have engaged in conversations involving talks of public corporations, charters and contracts, the report adds.

However, the authors maintain that steps in the direction of privatization indicate a greater crisis. When colleges and universities are under pressure to cut costs, measure performance and compete for students, grants and funding, the changing climate often leads to campuses operating more as a market-oriented institutions, rather than remaining dedicated to their core functions -- namely conducting valuable services that advance the well-being of individuals and the community. The report outlines four areas leading to this crisis, including:

Recommendations are offered for state policymakers and higher education leaders to forge a compact between higher education and the public. The authors also outline steps for lawmakers, colleges and universities, and the public to take in order to effectively serve students and the public. The report states it will take the combined efforts of these groups to ensure that the public purposes of higher education are defined and upheld.

The Futures Project is a five-year effort examining the impact of market forces in higher education. The 15-page report, Correcting Course: How We Can Restore the Ideals of Public Higher Education in a Market-Driven Era, is derived in part from the project's final report and is available at: http://www.futuresproject.org/

return to the top of the page

Recent Research
Nurturing Creative Cities
Creativity and curiosity are key ingredients for innovation, so it is not too surprising that many communities are looking for ways to increase the creative spirit among their residents and businesses. The how-to of nurturing creativity does not follow a simple recipe for easy replication across the country, but a recent World Bank working paper provides a broad platform of key ingredients.

In Dynamic Cities and Creative Clusters, Weiping Wu examines seven American cities as well as Dublin, Bangalore and Hong Kong to identify common factors and public policies that have built these cities into urban hubs of creative industries. Wu, professor of urban studies at the School of World Studies at the Virginia Commonwealth University, defines these cities as having a concentration of creative industries that generate products protected by intellectual property (IP) laws and that house the creative workers for those industries. Wu notes the “creative class” includes occupations in architecture, design, engineering, entertainment and science.

According to Wu, several factors appear to form an important role in boosting the creativity quotient of an urban area, including:

Many creative clusters emerge because they have successfully leveraged a “locational advantage.” Wu cites a number of locational factors, including successful anchor firms, mediating organizations, an appropriate base of knowledge and skill, and diversity and quality of place. He also cites recent research that indicates high levels of R&D spending, effective IP protection, openness to competition, and focus on higher education spending positively influence innovative input.

In the U.S., cities with leading research institutions and a highly educated workforce can focus on ways to leverage these elements because public policies supporting innovation already exist. Wu cautions that the surrounding community needs to absorb the innovation generated by the research universities and provide the lifestyle sought by creative firms and workers. He notes the local culture also needs to encourage experimentation, accept failure and promote recovery – key elements in entrepreneurship and the creative process.

Wu cautions that creative cities must continue to innovate as other countries and cities seek to replicate their success. For instance, San Diego has been hampered by the limited flights, especially direct flights of its municipal airport. Meanwhile, Hong Kong has poor R&D investment and an indifferent research university.

Dynamic Cities and Creative Clusters is available at: http://d.repec.org/n?u=RePEc:wbk:wbrwps:3509&r=all

return to the top of the page

West Virginia Economic Development Reorganized
West Virginia Gov. Joe Manchin signed last week legislation establishing the Department of Commerce and streamlining the support operations for the state’s economic development efforts. Senate Bill 1002, approved during the recent special session of the West Virginia Legislature, renamed the Bureau of Commerce the Department of Commerce. The bill encompasses all of the divisions, offices, boards and commissions under the former Bureau, with the exception of the Water Development Authority and Economic Development Authority – two agencies that become independent.

S.B. 1002 also establishes the governor as chairman and board member for seven agencies: the Economic Development Authority, the Public Energy Authority, the Water Development Authority, the Jobs Investment Trust, the Infrastructure Council, the Housing Development Authority and the School Building Authority.

With the reorganization, the Council for Community and Economic Development, which provided oversight for the West Virginia Development Office, becomes an advisory board. The executive director of the Development Office, appointed by the governor, assumes the oversight duties formerly exercised by the Council.

In a related move, the council named Steve Spence to serve as interim director of the West Virginia Development Office, following the resignation of David Satterfield.

return to the top of the page

People

Galynn Beer succeeds Johnny Roy as the new chairman of the board of the Oklahoma Center for the Advancement of Science and Technology.

Jeff Brancato has been named Associate Vice President for Economic Development of University of Massachusetts.

Victor Budnick, executive director of Connecticut Innovations, has announced his retirement effective April 1.

Chris Capelli, currently director of the technology transfer office at University of Pittsburgh, is leaving to become vice president for technology transfer at the M.D. Anderson Cancer Center in Houston.

The University of Cincinnati has appointed Anne Chasser to serve as associate vice president for technology transfer and commercialization in the school's Office of Research.

Ladd Christensen and Martin Frey are the new co-directors of the Utah Department of Community and Economic Development.

Oleg Kagonovich has been promoted to the position of CEO of the Sacramento Area Regional Technology Alliance. He formerly served as Chief Operating Officer.

Mike Koop, deputy commissioner of the Tennessee Department of Community & Economic Development, is resigning effective March 1 to return to the private sector.

Richard Lunak is the new CEO of Innovation Works and Ron Bianchini has been named chairman of the organization.

Envision Utah appointed Alan Matheson as executive director of the Coalition for Utah's Future, the sponsor of Envision Utah.

Johns Hopkins University has named Jill Tarzian Sorenson to serve as associate provost and director of the Office of Licensing and Technology Development.

West Virginia Gov. Joe Manchin has appointed Nancy Sturm and Jay Cole to serve, respectively, as the state’s education technology coordinator and governor's liaison for education policy, both new policy positions.

Jason Williamson is leaving his position as vice president of community development for the South Carolina Technology Alliance to become a founding partner in a new start-up tech firm.

return to the top of the page

Useful Stats
SSTI Federal Budget Review Available as PDF
The Special Federal Budget Issue of SSTI's Weekly Digest, published electronically in three parts on Feb. 10, is now available for download as a 25-page PDF. As readers are aware, the Administration's budget request proposes significant changes to the federal government's role in supporting economic development, research, investment and community development.

SSTI's budget summary has received considerable praise from many in the nation's tech-based economic development community for its concise descriptions of the proposed impact for more than 225 different programs, initiatives and line items across 19 agencies and departments. It also includes an SSTI editorial and active links to most of the individual federal programs for more information.

The PDF is available from a link on our homepage, www.ssti.org, or directly at: http://www.ssti.org/Digest/2005/FY06_Federal_Budget.pdf

return to the top of the page

State Science & Technology Institute
5015 Pine Creek Drive
Westerville, OH  43081
(614) 901-1690

© 2005 State Science and Technology Institute. All rights reserved.