In the March 19, 2007 Issue:

Copyright State Science & Technology Institute 2007. 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 Governor Wants $1B for Energy Tech
Coming a little late in the year to be included among our Tech Talkin’ Govs series (see Digest issues for Jan. 8, 15 and 29 and Feb. 19), Ohio Gov. Ted Strickland delivered his first State of the State Address on Mar. 14. Below are excerpts from his address calling for a $1 billion investment in alternative and renewable energy technologies over four years.
 
“Ohio has everything it takes to become a center of advanced energy technology. ... Next-generation energies biofuels, fuel cells, clean coal, and renewable sources such as wind offer us the opportunity to create jobs, support our farmers, reduce our dependence on foreign oil producers, and be responsible stewards of our environment.
 
“That's why my administration will coordinate an almost $1 billion investment in energy programs, to ensure energy will be an economic development leader in Ohio.
 
“Over the next four years we will target $250 million per year in tax exempt bond cap allocation to leverage billions of additional investment dollars in energy projects. We will broaden our Third Frontier investment. We will develop energy projects across technologies and across the state, and in doing so attract new investments and new jobs for Ohio.”
 
Gov. Strickland’s address is available at: http://governor.ohio.gov/Default.aspx?tabid=216

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Angel Investments Top $25B in 2006
More than 51,000 early-stage ventures took in $25.6 billion of angel investment in 2006, according to the 2006 Angel Market Analysis released Mar. 19 by the Center for Venture Research at the University of New Hampshire. The dollar figure reflects a 10.8 percent increase from the 2005 findings. The number of deals made in 2006 only rose 3 percent over the previous year. As a result, average deal size grew 7.5 percent.
 
As in 2005, healthcare services and medical devices and equipment accounted for the largest share of angel investments, with 21 percent of total angel investments in 2006, followed by software (18 percent) and biotech (18 percent). The remaining investments were approximately equally weighted across retail, financial/business products and industrial/energy sectors.
 
The center found the 51,000 angel investments made in 2006 helped support the creation of 201,400 new jobs in the U.S. during the year, or four jobs per angel investment. These figures, the center notes, only refer to employment at the time of investment and do not reflect anticipated growth as the ventures grow.
 
Angels continue to be the single-largest source of seed and start-up capital, with 46 percent of 2006 angel investments in the seed and start-up stage. This preference for seed and start-up investing is followed closely by post-seed/start-up investments of 40 percent. Given the four-year trend, angel seed and start-up stage investments in the 45 percent-to-55 percent range appears to be the reasonable range for the foreseeable future, the center predicts.
 
In 2006, women angels represented 13.8 percent of the angel market. Women-owned ventures accounted for 12.9 percent of entrepreneurs seeking angel capital, and 21.5 percent of these women entrepreneurs received angel investment in 2006. Minority angels accounted for 3.4 percent of the angel population, and minority-owned firms represented 6.9 percent of entrepreneurs who presented their business concept to angels. Compounding this low participation rate, the center notes, the yield rate for minority-owned firms was 7.1 percent -- close to two-thirds below the general yield rate.
 
The three-page 2006 Angel Market Analysis is available at: http://unhinfo.unh.edu/news/docs/2006angelmarketanalysis.pdf

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South Dakota Changes Tactics in the Battle for High-Tech Jobs
South Dakota recently announced it is reorganizing its programs to support entrepreneurs and high-tech start-ups. Instead of offering assistance to new firms through small, targeted programs, the state will reallocate the funding for these smaller programs into a larger fund with fewer restrictions on how that money can be spent. The change will allow the state greater leeway to assist expanding businesses, many of which were not eligible for the existing support programs. Mike Youngberg, finance manager of the Governor's Office of Economic Development, believes the change in tactics will help the state target higher-paying, high-tech jobs through its support programs and help retain its high-tech businesses.

Earlier this month, the South Dakota state legislature voted to end two smaller programs that offered funding to start-ups and their investors. The programs were created in 2004 and 2005 as sub-funds of the state's Revolving Economic Development and Initiative (REDI) Fund. South Dakota's Entrepreneur Support Program provided loans of up to $50,000 to help entrepreneurs begin building their business and seeking other forms of capital. This program targeted start-ups at the earliest stages of business formation and focused the state's efforts toward new, rather than expanding, businesses. The other cancelled sub-fund, the state's Capital Investment Entity Program, encouraged investors to increase their investment in South Dakota companies by offering a four-to-one match up to $1 million. This approach, however, required the participation of angels and venture capital investors, which can be scarce -- not only in South Dakota, but in most areas outside of Silicon Valley, Route 128, and a few other select metropolitan areas.

Funding for the eliminated programs will be reserved for the larger REDI Fund, which has fewer restrictions on the nature and amount of loans that can be offered to attract and retain new businesses. The fund and its sub-funds resulted in 22 loans in 2006, totaling more than $10 million. The South Dakota Office of Economic Development's most recent annual report says the REDI Fund, along with its sub-funds, have helped companies create more than 33,178 jobs in South Dakota over the program's 20-year lifetime.

Find out more about the South Dakota REDI Fund at: http://www.sdreadytowork.com/business/financing/REDI.asp

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Technology CEOs Urge U.S. to Double Funding for Basic Energy Research, Create New Energy Innovation Agency
Over the next few years, public policies that support innovation in alternative energy will determine whether or not the United States will successfully make the transition to clean and renewable energy, TechNet reports. The pro-innovation group, whose membership includes top executives from more than 115 tech firms, believes the move away from nonrenewable sources of electricity and fuel will require timely, active support from federal and state government. TechNet issued an agenda last week that would focus national attention on expanding policies that encourage the development and adoption of sustainable technologies. TechNet argues that the race for practical alternative energy solutions represents a unique opportunity for U.S. competitiveness. By supporting new energy technologies, the U.S. could not only improve its competitive standing, but also create a solution to growing energy consumption, reduce the country's energy dependence on the Middle East, and slow the pace of global warming.
 
The TechNet agenda calls for doubling federal funding for basic energy research to keep pace with the rate of private investment in late-stage development and commercialization. In 2006, North American private venture investment in the clean technology sector reached $2.9 billion, an 80 percent increase over the previous year. Federal funding for basic and applied energy R&D, however, fell 60 percent in real dollars between 1978 and 2004, according to TechNet and the National Commission on Energy Policy. This level of funding may not be sufficient to produce a steady stream of promising technologies for the marketplace. The agenda recommends a stronger federal focus on basic research, as well as technology demonstration and commercialization initiatives. This funding should be spread out across a portfolio of renewable energy possibilities, including both near- and longer-term technologies.
 
The agenda also recommends the federal government create a National Institute of Energy, as a lead organization for energy research based on the structures of other federal agencies, such as the National Institutes of Health and the Defense Advanced Research Projects Agency. This agency would identify and fund a wide range of basic energy research projects, and encourage the commercialization of promising technologies. Having a single agency in charge of these activities would focus federal spending on energy research and help to ensure that federal R&D complements private sector investments. Such an agency could help to promote partnerships and consortia among universities, industry and federal laboratories that carry out alternative energy research.
 
Other recommendations from the agenda include:

Read Green Technologies: An Innovation Agenda for America at: http://www.technet.org/resources/GreenTechReport.pdf

Links to this report and more than 4,500 additional TBED-related research reports, strategic plans and other papers also 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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Recent Research
Framing the Problem of Student Out-migration from States
Every year, some graduating high school students make the transition to college, many of them choosing to move to another state in order to continue their education. In some states, the number of students leaving the state is greater than the number entering, resulting in a “brain drain.” This net out-migration of students, many of which never to return to the state of their high school graduation, may impact a state’s skilled and competitive workforce, tax revenues, productivity gains, and appreciation of diversity.
 
Data collected during the fall of 2004 by the National Center for Education Statistics revealed Pennsylvania and Florida led the nation with a net gain of 12,540 students and 11,194 students, respectively. On the other end were New Jersey and Illinois, which lost 22,443 and 10,511 college-bound freshmen, respectively.
 
A recent report by the Center for the Study of Education Policy at Illinois State University concentrates on why students are leaving Illinois, where the students are moving, and what strategies can be employed to retain more students. The report, Committing to Keep Illinois Students In-State: Understanding College Choice, Student Migration Patterns, and Retention Strategies, concludes student migration is a statewide problem affecting Illinois' rural, urban and suburban districts. The authors cite other research showing students who plan to leave Illinois have, on average, a three-point higher ACT score than students attending college in-state (Illinois Board of Higher Education, 1999) and while 80 percent of high school graduates who attend an in-state college remain in the state after receiving their diplomas, only 50 percent of high school grads who attend school out-of-state return to their state of origin (Adelman, 2004; Perry, 2001).
 
Analyzing data from the fall of 2004, the Center for the Study of Education Policy found that 24 percent of Illinois high school graduates enrolled as freshmen across the country were enrolled outside of the state. Collectively, these students who chose to leave the state enrolled at 1,107 institutions across the country, but 49 percent of them concentrated at only 33 schools – schools having a high research focus. From their analysis, the authors find that Illinois students who migrate to other states concentrate in nationally ranked institutions relatively close to home are equally willing to move to large and mid-sized cities and not smaller ones, are not deterred by price, and gravitate to places that provide large amounts of financial aid.
 
The report offers a number of recommendations to keep students within the state and attract others to Illinois, including:

A table of the Integrated Postsecondary Education Data System from the U.S. Department of Education, which lists migration trends for every state, can be found at:
http://nces.ed.gov/das/library/tables_listings/show_nedrc.asp?rt=p&tableID=3138

Committing to Keep Illinois Students In-State can be downloaded at:
http://www.coe.ilstu.edu/eafdept/centerforedpolicy/initiatives/saelpdownloads/HECA%20Report%20-%20Final%20Draft_USE%20THIS.pdf
 
Links to this report and more than 4,500 additional TBED-related research reports, strategic plans and other papers also 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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Aligning Degrees with Needs: Are There Too Many Education Majors?
The Digest story above details the push to keep high school graduates in-state for their university experience, with the expectation that upon graduation they will positively impact the economy of the state. An essential part of keeping an educated workforce local, however, is the ability for individuals to find gainful employment upon graduation. In certain fields, where local demand is low and the supply is high, individuals often choose to move elsewhere or change careers – often an exhaustive process to the job seeker and a loss of investment for whoever paid for tuition, especially for a state that supports public education.
 
Most of the reports calling for national innovation strategies include recommendations of increasing the number of college graduates and the need to increase STEM education opportunities, but few have focused on the imbalance arising regionally in some college degree programs.
 
A few articles appeared in the press last week lamenting this problem, specifically for recent graduates of education degree programs. For example, a story in The Detroit News titled “75 percent of ed grads can’t get jobs here” states that top teacher-producing states, such as New York, Pennsylvania, Ohio, Illinois and Michigan, graduate thousands of more teachers than those states need, with graduates often relocating to states with teacher shortages such as Arizona, Florida, and the Carolinas. Cited is the state superintendent of public instruction in Michigan, Mike Flannigan, who believes “while the colleges keep producing elementary teachers, Michigan schools need teachers of special education, secondary math and science and language arts.” When graduates move to other states to pursue careers in their chosen education specialization, Michigan is not benefiting from the average public investment per student of $5,800 per year student at the state’s public universities – yet Michigan’s demand for math and science teachers remains high.
 
This problem is not just limited to the U.S., but also is arising in Canada, according to a story in the Toronto Star. “Teacher colleges face glut” cites that within the province of Ontario, the number of applicants to enter institutions that produce teachers has increased 113 percent over the last decade, with less than half to be admitted into these schools. Furthermore, according to the brief Transition to Teaching 2006, on average, only 51 percent of education graduates will find employment as full-time teachers one year after graduation. Comparatively, the employment rate increases to 64 percent for graduates qualified to teach physics, math or other technical fields.
 
In the U.S., there also exists a nationwide discrepancy between teacher certification in certain subjects and active teaching in those subjects. Data released by the National Center for Education Statistics reveal 67 percent of physics high school courses are taught by teachers who are uncertified in physics. Even though those numbers decrease to 61 percent uncertified for chemistry, 45 for the biological sciences, and 31 percent for mathematics at the high school level, these numbers may illustrate the possible demand across the nation for individuals with a mathematics or science background.
 
As these stories demonstrate, not all knowledge is created equal in a knowledge-based economy and states may be shortchanging their TBED workforce strategies by not aligning college degree programs with future employment opportunities and critical needed career paths.
 
Transition to Teaching 2006 is available at:
http://www.oct.ca/publications/professionally_speaking/december_2006/transition_01.asp
 
Qualifications of the Public School Teacher Workforce: Prevalence of Out-of-Field Teaching 1987-88 to 1999-2000 is available at: http://nces.ed.gov/pubs2002/2002603.pdf

Links to these reports and more than 4,500 additional TBED-related research reports, strategic plans and other papers also 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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Participate in Southern Growth's 2007 Online Survey
Southern Growth Policies Board is polling citizens on their attitudes and ideas about building a competitive Southern Workforce. Visit http://www.southern.org/surveyintro.shtml and share your ideas on how to build a competitive, entrepreneurial workforce to support the southern region's economic development initiatives in high-growth industries. The 16-question survey only takes a few minutes to complete and your feedback will be included in Southern Growth's 2007 Report on the Future of the South and in presentations at the Southern Workforce Summit conference on June 3-5, 2007. To learn more about the Southern Workforce Summit conference, visit http://www.southern.org/conf.asp.

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SSTI: Working to Provide You with the Information You Need to Succeed
SSTI serves as the TBED community’s go-to resource and strategic partner when dealing with TBED issues. SSTI’s unique ability to address the information needs of its members comes from the fact that SSTI’s staff and board have been “in the trenches” of technology-based economic development. SSTI’s president, vice president and board members, including former Governors John Engler of Michigan and Michael Dukakis of Massachusetts, have more than two decades’ of direct policy development and service delivery experience.

"SSTI is my security blanket, assuring me that I am never more than a few clicks or a phone call from the latest news, information, and data in technology-based economic development issues," said Angie Godwin, president of the Area Development Partnership. "SSTI has earned its place as THE 'top of mind' clearinghouse for TBED professionals."

As a service to the S&T community, SSTI maintains a listing of science and technology (S&T) resources and adds links as they become available. SSTI's resources for S&T are arranged by eight groups: TBED-, Academic- and Government -related associations, Congress, White House, Federal Programs, and other Funding and Information resources.

Another useful online tool is SSTI's State and Local Story Index, which gives you access to stories on all 50 states, the District of Columbia and Puerto Rico covered in the SSTI Weekly Digest.

Our members also receive the SSTI Funding Supplement. This electronic publication provides members with application information, eligibility criteria and submission deadlines for hundreds of funding opportunities offered by the federal government and others. Members can redistribute the Funding Supplement to their constituents.

If you have any questions or are interested in learning more about SSTI, please contact Noelle Sheets, director of membership services, at 614.901.1690 or visit http://www.ssti.org/benefits.htm.

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