In the July 18, 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.

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Administration Outlines R&D Budget Priorities for 2007
Homeland security R&D, high-end computing, the National Nanotechnology Initiative, and the President's Hydrogen Fuel Initiative are among the interagency R&D priorities that will receive a special focus in agency budget requests, according to a memorandum outlining the Administration's R&D budget priorities for 2007.

Released earlier this month, the memo from John Marburger, director of the Office of Science and Technology Policy and Joshua Bolten, director of the Office of Management and Budget, provides general guidance for setting priorities among R&D programs and an overview of R&D investment criteria for agencies.

Under the general R&D program guidance section, the memo states that agencies must "vigorously evaluate existing programs and, wherever possible, consider them for modification, redirection, reduction or termination, in keeping with national needs and priorities." Two areas requiring special agency attention and focus through the National Science and Technology Council are federal scientific collections and R&D assets, the memo states.

Interagency R&D priorities that, according to the memo, should receive special focus in agency budget requests include:

The memo also reiterates the three primary criteria of relevance, quality and performance that apply under the President's Management Agenda, which directs agencies to use the R&D investment criteria to improve investment decisions for, and management of, their R&D programs. Industry-relevant applied R&D must meet additional criteria, the memo states, which are described in a previous memorandum available at: http://www.whitehouse.gov/omb/memoranda/m03-15.pdf

The 2007 R&D Budget Priorities are available at: http://www.ostp.gov/html/budget/2007/ostp_omb_guidancememo_FY07.pdf

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Publisher's Note
Stickley, Sheets Join SSTI
SSTI is proud to announce the addition of two new staff members to its team. Sheri Stickely will join SSTI on Aug. 15 as a Vice President. Sheri is leaving the Oklahoma Center for the Advancement of Technology (OCAST) to join SSTI. She has served most recently as Interim Executive Director and has been with OCAST since its inception in 1987.

Sheri has established a track record as one of the nation's most creative and effective leaders in the tech-based economic development community. We're excited that she'll be joining the team. Sheri's experience, respect from her peers, energy, and creativity will allow SSTI to broaden and deepen the services which will have an impact across the country.

"SSTI is a respected resource for local, state and federal decision makers in matters of technology-based economic development policy," Stickley said. "I am enthusiastic about this opportunity to move up to the national level and employ the experience I've gained in Oklahoma to benefit tech-based economic development practitioners across the country."

While Sheri will be based in Oklahoma City, Noelle Sheets has joined the Westerville office in the newly created position of Director of Membership Services. Noelle is responsible for enhancing SSTI's Affiliate program and ensuring that SSTI sponsors and affiliates receive the best professional support and access to services possible. Expect more news soon on an expanded membership program and services. Noelle previously worked with the Girl Scouts as a field executive in the Southern Ohio region and has a bachelor of arts in public relations from Capital University.

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Illinois Uses Executive Order to Fund Stem Cell Research
While some state legislatures debate banning public funds for some or all stem cell research, others are using whatever funding tools they have available to advance the controversial science. Some states use tobacco settlement money, others use revenue bonds, and still others use direct appropriations. Some states use voter referenda while most stay within the traditional state legislative process. The newest twist comes from Illinois, where Illinois Gov. Rod Blagojevich is using an executive order to commit $10 million toward stem cell research.

Announcing the initiative in concert with Illinois Comptroller Dan Hynes, Gov. Blagojevich says the new Illinois Regenerative Medicine Institute (IRMI) will award grants to medical research facilities for the development of treatments and cures. The program will be administered by the Illinois Department of Public Health and is expected to be operational by the end of the year.

The governor’s Executive Order directs that the IRMI program will provide funding for stem cell research that involves adult, cord blood and embryonic stem cells. Gov. Blagojevich's Executive Order also mandates that no funding be authorized for research involving human cloning, nor be awarded to anyone who purchases or sells embryonic or fetal tissue for research purposes. Time limits also will be set for extracting cells from blastocysts.

More information is available at: http://www.illinois.gov/news/newsgov.cfm

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Oregon Legislature Passes University Venture Development Funds Bill
The Oregon Legislature overwhelmingly passed S.B. 853 last week, creating venture development funds to facilitate technology commercialization for students and faculty at the state's seven public universities.

Under the legislation, revenue for the newly created funds will come from donors who, in turn, receive credit on their state income tax returns. The development funds will use capital raised through university foundations to bridge the gap between an idea and the point where private investors become interested.

Bill sponsor Frank Morse (R-Albany) said the program will have minimal impact on state revenue and will not cost the state money that would be spent on vital state services. Universities that license the inventions are required to return 20 percent of the royalty and licensing fees to the state treasury until the tax credit is recaptured. Proponents say the program has the potential to return millions as companies reimburse the state to cover the cost of credits and create jobs.

Purposes of the fund are to provide:

The legislation also stipulates that grant applicants must remain within the state for at least five years following receipt of the grant, or repay the grant plus interest. Gov. Ted Kulongoski is expected to sign the bill.

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Fed Issues Sobering Look at Current Economic Recovery
For many practitioners, the quickest summary of a recent 16-page analysis from the Federal Reserve Bank of New York might be "something has to change." Looking at job creation since the recovery began three years ago, Richard Freeman and William Rogers III state in The Weak Jobs Recovery: Whatever Happened to "The Great American Jobs Machine"? that this is the worst recovery in all post-World War II recoveries.

The analysis states 17 months of job growth since August 2003 has barely kept pace with increases in population. As a result, "It would take employment growth of some 300,000 per month over the next year and a half to bring the employment-population rate to the 64.4 level it held during 2000." The monthly average since August 2003 has been less than half that at 146,000. And that figure is even underwhelming in that other research, the authors point out, indicates as much of 30 percent of all job growth since 2001 has been temporary-help services.

The negative news keeps coming in other key findings of the report:

So what unplugged the great American jobs machine? Freeman and Rogers raise questions for six possible factors before positing that the fundamental relationship of the labor market to the U.S. economy is changing in ways yet unexplained: U.S. performance in the international economy (the trade deficit); the impact of health care costs; weak reactions to fiscal stimuli such as tax cuts and increased government discretionary spending (mostly defense and security related); structural change to the economy; and greater uncertainty.

The Weak Jobs Recovery: Whatever Happened to "The Great American Jobs Machine"? is available at: http://www.newyorkfed.org/research/epr/forthcoming/freeman.pdf

SSTI Annual Conference plug:  For most readers, this article probably is a bit of a bummer. Sorry. But it represents the real challenges facing states and communities attempting to improve the standard of living and economic well-being of their residents through tech-based economic development (TBED). The economy we find ourselves in today is radically different than that in place when most state economic development strategies were adopted. The hype and impact of information technology and the Internet in the late 1990s may have been called "the new economy," but this current economy is unlike anything this nation has ever seen before.

As this article led off, something must change. Perhaps everything. SSTI's annual conference, to be held in Atlanta on Oct. 19-21, will provide the first and greatest opportunity for TBED practitioners from across the country to convene to discuss what is happening and the best strategies for capitalizing on the new globalization. We've titled the conference appropriately, Investing in a Brighter Future: Building Tech-based Economies. The brightest minds in the field will be there. Will you?

More information is available at: http://www.ssti.org/conference05.htm

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GAO Report Highlights Economic Performance Measures
The quality of the economic performance assessment of federal programs has improved, but gaps still remain in the application of the measures used, according to the latest report by the U.S. Government Accountability Office (GAO).

Released this week, the GAO report highlights the findings and recommendations of a panel it convened in December 2004 to discuss economic performance measures. The panel of government and academe participants sought to discuss the use of economic analysis, such as benefit cost or cost effectiveness, for helping to assess federal programs' performance. Participants were selected based on various qualifications related to the subject matter. Their findings, as expressed in the report, include:

The GAO report notes that the Office of Management and Budget assesses the economic performance of some federal actions, prospectively, through a review of proposed capital investments and regulations. However, these assessments "are often incomplete and inconsistent with general economic principles" and often are not useful for government-wide comparisons, being based on different assumptions for a core of economic variables.

To expand the use of measures, panelists suggested evaluating existing programs retrospectively and applying the measures to homeland security issues. Panelists also outlined a number of recommendations toward improving the general economic principles and guidance that economic performance analysis is based upon: developing a minimum set of principles and abbreviated guidelines for economic performance analysis; developing one-page summaries and scorecards of analysis results; standardizing some key values for assumptions; and, creating an independent and flexible organization to provide guidance and develop standards.

Highlights of a Workshop on Economic Performance Measures is available as a PDF at: http://www.gao.gov/cgi-bin/getrpt?GAO-05-796SP

TBEDResourceCenter.org Reminder:  The above report and more than 2,500 others are available through the Tech-based Economic Development (TBED) Resource Center, a joint project of the U.S. Department of Commerce's Office of Technology Policy and SSTI. Reports spanning a full range of topics such as best practices and entrepreneurship are searchable by field (geography, topic or type), keyword, author, and date entered into the database. The TBED Resource Center is available at http://www.tbedresourcecenter.org.

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EPI Book Explores Discrepancies in Business Indices
A new resource published by the Economic Policy Institute (EPI) argues that indices claiming to measure the same thing - namely, the capacity or potential for economic growth - often vary widely in their results and are not effective yardsticks of economic potential.

In Grading Places, the nonprofit research institute EPI critiques five major business ranking indices, examining their methodology and validity. EPI observes that the rankings used in each index are based on each organization's own version of an index. Such indices are designed to show which states or cities have the best business climate, for example, yet share only one thing in common -- the agreement that places with lower taxes and fewer government regulations are better.

Reports based on the rankings in these indices then go on to draw explicit policy recommendations such as cutting taxes and reducing regulations, leading states and cities to believe they will experience more business investment, more job creation, or more small business development, EPI states. The recommendations only hold true if the indices are valid measures of the growth climate in question, however. EPI attempts to answer three questions pertaining to these issues:

The indices described in detail are the Small Business Survival Index, the State Business Tax Climate Index, the Metro Area and State Competitiveness Report, the Fiscal Policy Report Card on America’s Governors, and the Economic Freedom Index.

In addition, the author analyzes the 50 largest metropolitan areas as ranked by Forbes: Best Places, Economy.com: Cost of Doing Business, Expansion Management: High Value Labor Quotient, and BHI: Metro Area Competitiveness.

Grading Places is available as a PDF at: http://www.epi.org/content.cfm/books_grading_places

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People

Rebecca Bagley is the new Deputy Secretary for Technology Investment in the PA Dept. of Community and Economic Development.

Former University of Washington President Lee Huntsman is the first director of Washington's Life Sciences Discovery Fund.

John Shields, president of the Alabama Technology Network since 1996, stepped down June 30. Mike Bailey is the new president.

Maurice Swinton recently announced he has accepted the position of Program Manager for the Advanced Technology Office (ATO) of the Department of Homeland Security. Among its responsibilities, the ATO oversees the agency's SBIR/STTR programs.

Citing a reorganizing, the Delaware Economic Development Office fired 20 percent of its staff (10 positions) last Thursday. According to the Associated Press and local news sources, among those relieved of their duties were Janet Wurtzel, chief operating officer, and Rob Propes, entrepreneurial and small business support director.

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