In the April 24, 2006 Issue:

Copyright State Science & Technology Institute 2006. 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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New Metric Model for Economic Development Unveiled
120 Other Metro Areas included in Analysis for Northeast Ohio
A study of the Northeast Ohio economy provides a different way of analyzing and tracking the impact of economic development initiatives by mathematically analyzing economic data and determining there are eight key factors of regional economic growth. Dashboard Indicators for the Northeast Ohio Economy, released by the Fund for Our Economic Future, establishes statistical correlations between economic growth in jobs, output, worker productivity and per capita income, and the eight key factors (skilled workforce, urban assimilation, racial inclusion, legacy of place, income equality, locational amenities, business dynamics, and urbanization/metro structure).

The study demonstrates that when regional economies chart strong growth, they tend to score well in most or many of the eight categories, and when regional economies chart weak growth, they tend to score poorly in the eight categories.

The study provides a different perspective than most indicator reports for measuring the impact of economic development activities. The press release accompanying the Dashboard Indicators release puts it this way:

"While other regions in the country have developed sets of factors to measure economic performance, frequently they are based on what seems interesting or useful. By contrast, The Dashboard Indicators for the Northeast Ohio Economy is based on statistical analysis, not on anyone’s agenda or preconceived ideas. The study allows public policy makers, business people, civic organizations and the general public for the first time to see beneath the surface of an economy and to understand the full range of factors figuring in a region’s economic performance. The study will be used to guide policy makers when developing targeted programs for addressing specific factors of the economy and to track the effect of such programming. For organizations working together toward economic development across the region, the Dashboard provides a common point of reference."

The study concludes there is no silver bullet for economic growth but that, nevertheless, some factors correlate more strongly with economic growth measures than others. For example:

“Perhaps the most interesting finding is that racial inclusion, income equality and ethnic diversity – measures of equity and fairness – correlate positively to economic growth. These factors are not normally called out in regional economic measurement tools, but in this study they are shown to be important to the economic picture. Arguably, as we improve opportunity for all people, there is inherent economic benefit to the region as a whole,” said Robert Jaquay, associate director of the George Gund Foundation and a member of the Fund for Our Economic Future’s volunteer staff.

While many technology-based economic development professionals around the country are increasingly looking at "wealth generation" as a measure of success, Dashboard would seem to indicate that if that wealth is increasingly concentrated in a smaller percentage of an area's population or business community, the overall health of the regional economy is likely to suffer.

The Fund for Our Economic Future is a multi-year collaboration of organized philanthropy in Northeast Ohio formed to encourage and advance a common and highly focused regional economic development agenda that can lead to long-term economic transformation. In 2004, more than a dozen philanthropic organizations committed $22 million to support a coordinated regional economic development strategy for Northeast Ohio (see Feb. 27, 2004 issue of the Digest). Since then, membership in the resulting organization, Fund for Our Economic Future, has swelled to 78 foundations and charities. The fund's budget has grown to $28 million, only $2 million short of its $30 million goal before 2007.

The fund worked with W.E. Upjohn Institute for Employment Research, Kleinhenz and Associates, the Universities Collaborative and the Federal Reserve Bank of Cleveland to develop Dashboard Indicators for the Northeast Ohio Economy.

Dashboard Indicators for Northeast Ohio is available at: http://www.futurefundneo.org/page10474.cfm

Links to this report and nearly 4,000 additional TBED-related research reports, strategic plans and other papers can be found at the Tech-based Economic Development (TBED) Resource Center, jointly developed by the Technology Administration and SSTI, at http://www.tbedresourcecenter.org/.

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Stem Cell Research Update: Legal Woes, New Legislation Within States
As competition for leadership in stem cell research heats up across the nation, legal battles and the introduction of new legislation are becoming commonplace among many states. Following is a round-up of recent news on stem cell research legalities and legislation in several states.

Legal Challenges in California, Illinois
Last Friday, an Alameda County, Calif., Superior Court judge ruled the Stem Cell Research and Cures Act, or Proposition 71, to be constitutional in its entirety. The California Institute for Regenerative Medicine (CIRM) decided to move forward with its first round of grants earlier this month, despite the legal challenges. CIRM announced 16 awards totaling $12.1 million to train the next generation of stem cell researchers using funding from the sale of $14 million in bond anticipation notes. According to a New York Times article, the challenge tied up the $3 billion in bonds approved by voters in 2004 (see the June 7, 2004 issue of the Digest), and officials instead sold $14 million in bond anticipation notes.

The judge's ruling did not immediately free up the bonds, however. The Chronicle of Higher Education reports that bond sales cannot take place unless the judge's ruling still stands after all appeals are exhausted, a point that could be reached sometime next year. CIRM currently is processing another $32 million of commitments with foundations to "lift the institute beyond the reach of the current litigation and to begin an additional round of funding for scientific and medical research."

An Illinois Circuit Court judge recently ruled that Gov. Rod Blagojevich was within his rights to designate $10 million in grants toward stem cell research in the fiscal year 2007 budget, reports the Chicago Daily Herald. According to the article, the governor inserted $10 million in the public health department's budget toward "scientific research" and once the legislature passed the budget, he issued an executive order directing that money be spent on stem cell research. A lawsuit was then filed challenging the constitutionality of the governor's designation of money toward such a vague category. Following the judge's ruling, the Department of Public Health announced it will grant awards to several institutions within the coming weeks.

Maryland, Georgia Approve New Legislation
Gov. Robert Erlich signed into law the Maryland Stem Cell Research Act of 2006, authorizing $15 million for research in FY07 (see the April 17 issue of the Digest). The legislature cut $5 million from the governor's recommendation of $20 million and eliminated funding to construct a research center at the University of Maryland-Baltimore.

In Georgia, Gov. Sonny Perdue signed an executive order creating the Governor's Commission for Newborn Umbilical Cord Blood Research and Medical Treatment. The commission will establish a network of postnatal tissue and fluid banks in partnership with universities, hospitals, nonprofit organizations and private firms for collecting and storing postnatal tissue and fluid. One of the primary duties of the commission is to encourage cord blood stem cell donation and promote awareness of options available to expectant mothers, according to the governor's office.

The governor's order accomplishes many of the same objectives as SB 596, introduced earlier in the legislative session by Sen. David Shafer (R-Duluth). The first version of the bill included a ban on embryonic stem cell research and failed to draw universal approval. The final version dropped any mention of embryonic stem cells. A rival bill also was introduced by Sen. David Adelman (D-Atlanta) that encouraged all forms of stem cell research, but failed to draw support as well. The governor's executive order does not assign any money to the commission.

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Foundation Endows TBED-related Faculty Positions in Tulsa
One of the latest examples of the important role a foundation can play in tech-based economic development strategies comes from a recent $15 million donation to Tulsa University. The Chapman Trust, established after the deaths of Oklahoma oilman James Chapman and his wife Leta Chapman, made the donation to perpetually endow nine new junior faculty positions at the university.

University President Steadman Upham announced the creation of the nine Wellspring Professorships in his Spring 2006 letter to the campus, saying the positions were all related closely to "the goals of the strategic plans of the collegiate deans." All nine tenure-track positions also mirror the globalization, entrepreneurship and diversity issues raised by many in the tech-based economic development community and popular business press of late:

A private institution, Tulsa University has a student body of more than 4,000 served by 300 full-time faculty members. The school offers 10 doctoral degree-granting programs. The search to fill the professorships will begin in August, Upham wrote. His spring letter is available at http://www.utulsa.edu/news/.

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Recent Research
GAO Report Examines SBIR Awards Made by NIH and DoD
The notion that, since a 2003 ruling, small businesses that are majority-owned by venture capital (VC) funds are being unfairly excluded from participating in the Small Business Innovation Research (SBIR) program is inaccurate, according to a recent study from the Government Accountability Office (GAO).

Controversy has risen over the last several years over whether SBIR awards can be made to small businesses whose majority owners are venture capital firms. To receive an SBIR award, firms must meet ownership criteria, and in 2002, the Small Business Administration (SBA) clarified that majority owners of firms that receive awards must be individuals rather than corporations. Subsequently, in 2003, an SBA administrative law judge issued a decision stating that VC firms could not be considered "individuals" for the purpose of satisfying the ownership criteria for the program.

During fiscal years 2001-04, the National Institutes of Health (NIH) and Department of Defense (DoD) made 16,019 SBIR awards valued at $5.3 billion. Since the SBA clarified SBIR ownership eligibility criteria in 2002, an increasing number of awards have been made to small business firms that received VC investments, the report finds. For example, the number of firms that received VC investment and SBIR awards from NIH increased from 106 in FY 01 to 150 in FY 04. These firms attracted a greater percentage of NIH's total SBIR dollars each year - about 21 percent on average in FY 2003-04, compared to an average of 14 percent in FY 2001-02. According to the GAO report, similar trends were found at DoD, but to a lesser extent.

Overall, from FY 2001-04, about half of NIH awards and 12 percent of DoD awards exceeded the guidelines. The report identifies the following key characteristics:

In response to the report, DoD did not find the results surprising in light of differences in markets for research supported by NIH and DoD. SBA noted that while the information may be useful, it could be misconstrued as suggesting a link between the presence of VC investment and SBIR ownership criteria when no such link exists, the report states.

To determine the total number and characteristics of SBIR awards, GAO obtained data from NIH and DoD and combined that with data from private sector sources to identify firms that received VC investment anytime before they received an SBIR award in the time frame. In addition, GAO interviewed officials at NIH, DoD and SBA about their procedures and reviewed agency documentation on awards, award selection and funding, eligibility determinations, and the data elements collected during the eligibility process. The report, Small Business Innovation Research: Information on Awards Made by NIH and DoD in Fiscal Years 2001 through 2004, is available at: http://www.gao.gov/new.items/d06565.pdf

Links to this report and nearly 4,000 additional TBED-related research reports, strategic plans and other papers can be found at the Tech-based Economic Development (TBED) Resource Center, jointly developed by the Technology Administration and SSTI, at: http://www.tbedresourcecenter.org/.

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TBED Tidbits

$10M Donation Funds Johns Hopkins Biomed Facility, Research Park
The Institute for Basic Biomedical Sciences at the Johns Hopkins University received a commitment of $10 million from the John G. Rangos Sr. Family Charitable Foundation. The institute - intended to provide space for interdisciplinary biological and medical research - will be housed in the first building constructed in the new life sciences park in East Baltimore, an $800 million urban redevelopment project. Groundbreaking for the building was held April 17 in the 80-acre park managed by East Baltimore Development Inc.

Kauffman Extends Entrepreneurship Support Across the Pond
The Ewing Marion Kauffman Foundation is joining forces with the United Kingdom's National Council for Graduate Entrepreneurship (NCGE) to create a scholarship program for 15-20 of Britain's most promising young entrepreneurs in a move backed by the UK's Department for Education and Skills and its Small Business Service. Beginning in September, the NCGE-Kauffman Entrepreneurship Fellows will develop their entrepreneurial skills and ideas for starting a business by spending six months in the U.S. with some of America's most innovative entrepreneurial thinkers, experts and business leaders. The students, selected by the NCGE, will spend the first three months in the UK in preparation for their period in the U.S. where, hosted by the Kauffman Foundation, they will spend time both in an entrepreneurial university setting and at entrepreneurial companies.

Effort to Create Colorado Institute of Technology Abandoned
The Colorado Institute of Technology, a first-term initiative of Gov. Bill Owens, is closing its doors after six years. The publicly established tech school was conceived to be entirely privately supported to the tune of $250 million. When originally founded, CIT received $41 million in funding by a few large organizations from the telecommunications and information technology fields. CIT activities focused on providing grants to support the development of new programs and curriculum opportunities for engineering, science and technology students in Colorado colleges and universities. Continuation funding never materialized, due in part, proponents say, to the restructuring of Colorado's IT community after the dot-com crash. With more than 10,000 students trained, CIT operations will cease at the end of April.

Texas Manufacturers Organize
Twenty-five Texas manufacturers signed on as founding members for the new Texas Association of Manufacturers (TAM) last month. With membership already spanning 12 industry sectors, the association is focusing its initial efforts on the special session of the state legislature and specifically on tax reform. Within weeks of forming, TAM joined 22 other associations in endorsing Gov. Perry's tax reform plan: http://www.governor.state.tx.us/divisions/press/pressreleases/PressRelease.2006-04-06.2542

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Useful Stats
Domestic Net Migration, 2000-2004
Regional migration patterns between 2000 and 2004 revealed a continuing net average annual in-migration in the South and the West and a net average annual out-migration in the Midwest and the Northeast, according to the Census Bureau’s latest report. Domestic Net Migration in the United States: 2000 to 2004 details recent patterns of population redistribution throughout the U.S. and provides migration data from 1990-2000 to show a historical perspective in migration patterns.

On a state level ­ and consistent with regional data ­ states in the South and the West experienced the highest net in-migration (Table 2 of the report). Florida had the largest in-migration of 190,894, followed by Arizona (66,344) Nevada (50,803), Georgia (41,298), North Carolina (39,137) and Texas (36,566).

Although Nevada did not incur the largest numerical change in net migration, it experienced the highest net in-migration rate of 23.3. Net migration rate is calculated by dividing total net domestic migration by the average population living in that area over the period and multiplying the resulting figure by 1,000. Arizona and Florida held the second- and third-highest net in-migration rates at 12.2 and 11.4, respectively.

Conversely, New York (-182,886), California (-99,039), Illinois (-71,854), Massachusetts (-42,402), New Jersey (-32,147), and Ohio (-31,613) experienced the greatest net out-migration over the four-year period. The District of Columbia experienced the largest net out-migration rate in the nation at -18.1 per 1,000 residents (an annual net migration of -10,176). New York and Massachusetts held the second- and third-greatest out-migration rates at -9.6 and -6.6, respectively.

Compared with the 1990s, five states reversed migration patterns from a net in-migration to a net out-migration: Indiana, Minnesota, Mississippi, Oklahoma and Utah. In contrast, four states experienced a net in-migration over the last four years compared to a net out-migration in the previous decade: Maine, Maryland, Rhode Island and Wyoming.

The census bureau also reported on the migration patterns of the nation’s 25 largest metropolitan statistical areas (see Table 3 of the report). Eighteen of the metropolitan statistical areas experienced a net out-migration, including New York-Northern New Jersey-Long Island (-211,014) and Los Angeles-Long Beach-Santa Ana (-117,780). However, San Francisco-Oakland-Fremont had the largest average annual rate of net out-migration (-14.7 per 1,000 residents) of the 25 largest metropolitan statistical areas ­- an annual net out-migration of -60,984.

All of the seven metropolitan statistical areas that experienced a net in-migration from 2000-2004 were located in the West or the South. Riverside-San Bernardino-Ontario had the largest numerical change in population with a net in-migration of 81,460 per year. Phoenix-Mesa-Scottsdale, Tampa-St. Petersburg-Clearwater and Atlanta-Sandy Springs-Marietta followed with a net in-migration of more than 30,000.

The Census Bureau’s report is available at: http://www.census.gov/prod/2006pubs/p25-1135.pdf

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People

Carolina Cruz is the first director of the Louisiana Immersive Technologies Enterprise, a $20 million research facility developed jointly by the University of Louisiana at Lafayette and the Louisiana Economic Development Authority.

Past SSTI conference sponsor ANGLE Technology Group named Mark DeSantis to serve as managing director of consulting and management and Lisa Smith to become vice president of marketing.

Lenzie Harcum, former program director at the University of North Carolina SBTDC, is now assistant vice president of biosciences at the NYC Economic Development Corporation.

After seven months on the job, Connecticut Innovations President and CEO Chandler Howard is leaving to pursue an opportunity to establish a community bank in New Haven.

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