In the June 20, 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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Congress, President Bush Debate Federal R&D, STEM Support
Over the past few months, Congress has been at work on a package of measures to address the competitiveness of the U.S. economy. Two similar, yet distinct, competitiveness bills are currently being reconciled in conference between the House and the Senate. President Bush has voiced several objections to both the Senate and House bills and may even be prepared to veto the legislation if a compromise cannot be reached. Limiting that option for the president is the overwhelming bipartisan support both measures received in both chambers of Congress.
 
The Senate version of the legislation, also known as the America COMPETES Act (S 761), passed overwhelmingly by an 88-8 margin earlier this year (see the May 23, 2007 issue of the Digest). A few weeks later, the House passed its own measure, HR 2272 by voice vote, which combined five separate bills that were previously approved. Titled the 21st Century Competitiveness Act of 2007, HR 2272 packaged together the bills as a necessary step in order to move to conference with the Senate.
 
The unified House bill prescribes a major increase in federal funding for R&D and STEM education, including doubling the funding for NSF, the DOE Office of Science, and NIST over the next three years. A separate House bill, HR 364 which has not yet passed, calls for the creation of ARPA-E, an experimental research agency at DOE modeled on the half-a-century-old DARPA program at the Department of Defense. The Senate legislation includes the creation of this agency within the main bill.

SSTI has prepared a brief comparison of the House and Senate legislation:
  Senate Bill (S 761) House Resolution (HR 2272)
NSF $33.6B authorized over four years $21B authorized over three years
NSF EPSCoR $125M in FY2008  
NIST $3.27B authorized over four years $2.42B authorized over three years
MEP $501M authorized over four years $367M authorized over three years
EPSCoT Reestablishes program  
TIP   Creates the Technology Innovation Program (TIP) as a replacement for ATP
ARPA-E Creates DARPA-like program for energy research  


In response to both the Senate and House versions, the Administration has prepared a critique to components of these bills. Concerning the Senate version, while the Administration agrees with the final goals of enabling future economic competitiveness, it “believes that the bill does not prioritize basic research, authorizes excessive and inappropriate spending, and creates unnecessary bureaucracy and education programs.”
 
For example, the Administration “strongly objects” to the creation of the ARPA-E because it believes the program would drain resources from basic research priorities within DOE. Additionally, it asserts it is unknown if DARPA, as created for the military sector, could be replicated within the energy sector. In another example, the Administration objects to science and math education programs through EPSCoR or DOE, as they may replicate efforts in other parts of the government, in addition to being too costly. The Administration claims that the president’s proposals though the American Competitiveness Initiative (ACI) (see the Feb. 13, 2006 issue of the Digest) would cost $9 billion less over time than the Senate’s proposal – pegged at $61 billion over the next four years.
 
The entire text, the schedule of passage, and additional information about the bills sent to conference can be found through the Library of Congress. The Senate’s version (S 761) can be accessed at http://thomas.loc.gov/cgi-bin/bdquery/z?d110:s.00761: and the combined House version (HB 2272) can be accessed at http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR02272:.
 
The reaction of the Administration to these bills is availale through the Office of Management and Budget at http://www.whitehouse.gov/omb/legislative/sap/110-1/index-date.html. Critiques of S 761 and three House bills that are components of the larger House bill in conference, which are HB 362, HB 363, and HB1868, are available.

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Lawmakers Approve Funding for TBED Initiatives in Tennessee, Maine
As July 1 approaches, the beginning of the 2008 fiscal year for most states, several state legislatures are still working to wrap up their appropriation bills. Maine and Tennessee are two of the most recent to close their books on next year’s budgets, and each has included increased funds to support TBED initiatives. Highlights for both states are provided below.
 
Maine
In light of the $50 million R&D bond referendum passed by the legislature earlier this year, additional funds were included in the FY 2008-09 biennial budget for the Maine Technology Institute (MTI). MTI will receive $750,000 each year of the biennium to administer the bond that will be voted on in November (see the April 9, 2007 issue of the Digest). In addition, $2.5 million was appropriated for a new Cluster Enhancement Fund.
 
Lawmakers cut $55,000 from MTI’s Applied Technology Development Centers, and no new funds were included for the Maine Economic Improvement Fund, which supports university research. The much-larger bond, if passed, will provide competitive awards to continue to fund university R&D activities.
 
Manufacturing businesses that currently are not included in the designated geographic Pine Tree Development Zones will be eligible for the benefits, as requested by Gov. John Baldacci during his Inaugural Address (see the Jan. 8, 2007 issue of the Digest). The legislation expands the benefits to businesses that make a commitment to increase jobs by at least 20 and that have a minimum investment of $2 million.
 
The biennial budget also includes other new investments in higher education within the university system and community colleges. The University of Maine System will receive a $5 million increase to ease the need for pending tuition increases, and $3 million is allocated to the Maine Community College System for a proposed 500-student expansion.
 
Lawmakers did not include the governor’s proposed 50 percent tuition reimbursement for community college students, or a proposal for expanding the middle-school laptop program into high schools. 
 
Tennessee
Tennessee lawmakers approved several key legislative priorities championed by Gov. Phil Bredesen, including a $73 million alternative fuels strategy, a $45 million jobs package, and historic investments in education. 
 
The FY 2007-08 budget includes $41 million for a pilot switchgrass ethanol plant - the centerpiece of Gov. Bredesen’s alternative fuels strategy designed to position the state as a leader in the production of biomass ethanol and related research (see the March 12, 2007 issue of the Digest). The plant will be operated by the University of Tennessee and Oak Ridge National Laboratory, with the goal of producing ethanol in large volumes at a price that is competitive with gasoline.
 
Included in the Economic and Community Development budget is $45 million for the governor’s “Next Step Jobs” strategy to support high-tech industries across the state. The budget also allocates $4.2 million for the state’s broadband initiative and $1.2 million for the Rural Opportunity Fund to provide loans to targeted start-up businesses in rural communities. 
 
Several education-related measures aimed at improving the state’s graduation rates and increasing accountability also were approved during the legislative session. The budget appropriates $295 million to fully fund the state’s portion of the costs associated with at-risk students, expand funding for English language learning, and increase teacher salaries. In addition, the budget allocates $1.3 million for the Governor’s Institute for Science and Math and $2 million for Teach Tennessee to address teacher recruitment in specific shortage areas such as math and science. The budget takes effect July 1, pending the governor’s anticipated signature.

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New Jersey Plans $450M Stem Cell Referendum
State Also Begins Work on $150M Stem Cell Research Center
An agreement between Gov. Jon Corzine and state legislative leaders will result in a $450 million bond referendum being put before New Jersey voters this fall. If approved, the money will be used to augment support for the state’s stem cell research initiative over the next 10 years. New Jersey already has committed to spending $270 million on stem cell research (see the Jan 8, 2007 issue of the Digest)
 
On the same day the bond issue agreement was announced, the New Jersey Economic Development Authority (NJ EDA) approved $9.2 million in preconstruction costs for the planned Stem Cell Institute facilities in New Brunswick. The New Brunswick Development Corporation will oversee the development of the new research facilities. Major construction is slated to begin next year and is expected to conclude sometime in 2011.
 
In the meantime, the University of Medicine and Dentistry of New Jersey at the Robert Wood Johnson Medical School and Rutgers, The State University of New Jersey will continue their collaboration through the institute, a portion of which is currently housed at the Stem Cell Research Center on the Rutgers Busch campus.
 
The new Stem Cell Institute will use $150 million of the initial $270 million state investment and is the centerpiece of the state’s plan to become a national leader in stem cell and biotech research.
 
The remaining $120 million from the NJ EDA bonds will be used to fund stem cell-related research across the state, including:

A report issued in 2005 from Joseph Seneca and Will Irving at the Edward J. Bloustein School of Planning and Public Policy at Rutgers predicted that a statewide stem cell initiative in New Jersey could have far-reaching advantages, both in financial returns to the state and quality of life. The plan then under consideration called for a $380 million investment in a similar research facility, associated equipments, and peer-reviewed research grants. Seneca and Irving’s model estimated that the state could expect $1.4 billion in new economic activity, close to 20,000 new jobs, and $71.9 million in new state revenues during the initiative's first 20 years. An additional $1.9 billion in savings may be possible as an indirect result of the investment, including savings in health care costs, increased productivity, and the value of preventing premature deaths.
 
Read the NJEDA announcement at: http://www.njeda.com/pr_061207.asp

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North Carolina to Start Statewide Micro Angel Fund
North Carolina does not, at first glance, seem to be a venture capital underperformer. In 2006, venture capitalists invested close to $510 million in North Carolina, almost $60 million of which was invested in seed and early-stage businesses, according to the Pricewaterhouse Coopers Moneytree Survey of VC investment. However, while the state ranks 12th in seed/early-stage investment, many in the state perceive the lack of seed funding to be a major obstacle to economic growth. Earlier this year, a survey conducted by the Wilmington-based Council on Entrepreneurial Development (CED) revealed that access to capital, particularly to seed-stage equity investment, was one of the top concerns of entrepreneurs in the state.
 
Last week, the North Carolina Small Business and Technology Development Center (SBTDC) announced a new plan to make capital available to entrepreneurs and begin building a stronger early-stage investment industry. In 2003, SBTDC launched the Inception Micro Angel Fund (IMAF) in the Piedmont Triad area of North Carolina, with an investment zone that included Greater North Carolina and selected areas of South Carolina and Virginia. SBTDC now plans to build on the success of IMAF-Triad by creating a statewide network of six angel funds that will provide capital to new businesses in every part of the state. The new funds will be able to provide local support for nascent businesses and improve the stream of promising mid-to-late-stage companies for venture capital investment. This family of seed-stage funds will target technology-based companies and will provide mentoring, counseling, and networking opportunities to their investees.
 
Each of the six funds will use a similar, member-managed structure and will seek investments from larger angel funds, venture funds and individual angel investors. The IMAF-Triad fund is now in the process of raising $2 million for its second round and primarily engages with investors from the medical and dental fields. Individual angels can buy into the fund with a minimum investment of $15,000; the level is $30,000 for angel groups and VC firms. Typical investments will range between $25,000 and $100,000. The IMAF Source Capital Fund will provide the capital for each local fund and will follow up on successful local investments with additional financial and advisory support.
 
One of the new funds (ITAF-RTP) will focus on investments in the Research Triangle Park region, including spin out companies from Duke University, UNC Chapel Hill, the associated medical schools from both of those universities, North Carolina Central University, and NC State University. In 2005, CED reported that the Research Triangle region raised 81 percent of all venture investment in the state, including seven of the top 10 deals that year.
 
The areas of the state outside of the Research Triangle and Piedmont Triad regions, which will be served by the other four new funds (IMAF-West, IMAF-East, IMAF-Coastal, and IMAF-Kannapolis), received only 18.5 percent of venture capital investment that year. SBTDC officials hope that the new family of funds will provide a more even distribution of capital and other business resources across the state.
 
One of North Carolina's previous efforts to build a strong statewide angel marketplace is now up for extension at the state assembly. The Qualified Business Venture Tax Credit (QBV) is estimated to have raised $1.7 billion in equity financing from when its creation in 1999 through last year, according to data from the North Carolina Biosciences Organization and the North Carolina Entrepreneurial Association. The credit is scheduled to expire at the end of this year.
 
Under the current legislation, angel investors may receive a 25 percent personal income tax credit for individual investments in businesses with less than $5 million in annual revenue. The QBV credit encourages investment in new businesses engaged primarily in manufacturing, processing, warehousing, wholesaling, or R&D. State Representative Bill Daughtridge recently introduced a bill extending the credit through 2010, noting that before it existed the state frequently lost entrepreneurs and small businesses to other states. Though angel investment fell dramatically in North Carolina following the tech bust in the early part of the decade, investment in QBV-eligible companies has grown more than 60 percent since 2004.
 
Read more about the new angel network at: http://www.inceptionmicroangelfund.com

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Where are the Emerging Hotspots for Nanotechnology?
The field of nanotechnology is progressing in terms of size and maturity. The federal investment, alone, as proposed by the Administration in the 2008 Budget under the National Nanotechnology Initiative, was $1.45 billion. As public and private sector investments are pumped into this field, distinct concentrations of nanotech activity are being created in regions across the country.

One might think these emerging hotspots are located in close proximity to the leading nanotechnology research institutions. The May/June 2007 edition of Small Times magazine lists the top universities in the micro and nano fields, in categories such as research, education, facilities, and commercialization leadership. Two versions of these top 10 lists are provided, one for the universities that completed the Small Times survey and one version developed from opinions of peers in the field. Besides these rankings, the magazine provides a profile of many of these research-intensive universities where nanotechnology clusters may develop.

A simple, yet novel, tool to view these concentrations recently was unveiled by the Project on Emerging Nanotechnologies, a partnership formed in April 2005 between The Pew Charitable Trusts and the Woodrow Wilson Center for International Scholars. Named the "NanoMetro Mashup", the tool is an interactive map that illustrates the location of nanotechnology-related companies, universities, research laboratories, and organizations throughout the U.S. Each location is labeled with a marker and color-coded by sector, indicating expertise in materials, medicine and health, and tools and instruments for example. At certain levels of scale, the map aggregates the number of markers and displays a circle representing the size of the nanotechnology presence in each metropolitan area.

By this methodology of counting nanotech institutions, the Project on Emerging Nanotechnologies puts the top four nanotechnology states as California, Massachusetts, New York and Texas. They determine the top 12 metro areas to be: San Jose; Boston; San Francisco; Oakland; Middlesex-Essex, Mass.; San Diego; Austin; Denver; Houston; Chicago; Santa-Ana, Calif.; and Seattle.
 
How does your state or region fare?

You can see the map at http://www.penmedia.org/maps/mappage.html. At this same site, you can submit information about nanotechnology institutions, which are absent from the data.

The website for the Project on Emerging Nanotechnologies, which contains a variety of information such as the incorporation of nanotechnology in everyday products and reports on future nanotech trends and health and environmental considerations, can be found at: http://www.nanotechproject.org/

The May/June 2007 issue of Small Times is available at: http://www.smalltimes.com/articles/print_toc.cfm?p=109

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Report Urges Stakeholders to Address STEM Teaching Shortage
With a projected national shortage of more than 280,000 math and science teachers by 2015, key stakeholders must begin initiating strategies to recruit, retain and renew the nation’s teaching workforce, says a new report by The Business-Higher Education Forum (BHEF).
 
The report provides a comprehensive action plan to transform the quality of the teaching workforce and address the growing shortfall of math and science teachers. According to the authors, the annual turnover rate for math teachers is the highest of all subject areas at 16.4 percent, followed by science teachers at 15.6 percent. In addition, U.S. students are losing ground to their international counterparts in math and science performance - areas imperative to American economic competitiveness.
 
Recommendations fall under three key factors of recruitment, retention and renewal, recognizing the need to align and coordinate contributions from federal government, state government, school districts, higher education and business and foundations. Key recommendations include:

The report dedicates a section to promising strategies that summarize current practices and programs focused on teacher recruitment and retention. For example, the New York City Teaching Fellows program recruits mid-career professionals, recent college graduates, and retirees into the teaching profession and provides them with alternative routes to licensure.
 
An industry-education partnership in San Francisco seeks to transform teaching and learning by providing teachers with industry and research-based professional development opportunities. The program is designed to help teachers understand the skills and knowledge their students need in the workforce.
 
BHEF hopes to emulate the success of past influential reports that have spurred Congress to introduce legislation to support improved teacher preparation, professional development and recruitment incentives.
 
An American Imperative: Transforming the Recruitment, Retention, and Renewal of Our Nation’s Mathematics and Science Teaching Workforce is available from BHEF at: http://www.bhef.com/

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Useful Stats
GDP by State, Per Capita 2003-2006
The Bureau of Economic Analysis (BEA) has published its latest update on the real gross domestic product (GDP) growth of each state. The update includes advance estimates for 2006 data, as well as revisions to data from 2003-2005.
 
SSTI has prepared a table showing every state’s real GDP per capita from 2003 to 2006. Besides these values, the table also includes:

With a per capita real GDP of $59,288, Delaware ranked first among the states in 2006, with a value 57 percent higher than the country’s average. Connecticut, Massachusetts, New York, and New Jersey rounded out the top five.
 
Over the period from 2003 to 2006, Idaho witnessed the largest per capita GDP growth from $26,673 to $30,896 – a rise of 15.8 percent. Oregon, ranked second, had a 13.6 percent increase. This was followed by Louisiana, New Mexico, Hawaii, New York, and then California. Michigan was the only state to have a decrease in per capita GDP over this period, falling by 1.2 percent from 2003 to 2006.
 
SSTI's table is available at: http://www.ssti.org/Digest/Tables/062007t.htm

The BEA update, which includes all data and explains how the GDP by state is calculated, can be found at: http://www.bea.gov/newsreleases/regional/gdp_state/2007/pdf/gsp0607.pdf

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SSTI Board Approves New Mission Statement
The field of tech-based economic development has changed dramatically since the creation of SSTI in 1996 and continues to change almost daily. With these changes in mind, SSTI is releasing a new mission statement that better defines the organization's current direction.

SSTI's new mission is to lead, support, and strengthen efforts to improve state and regional economies through science, technology, and innovation.

SSTI has many ongoing mission driven initiatives, including:

To find out more about how SSTI can enhance the future of your organization, please visit our website at www.ssti.org or contact Noelle Sheets, director of membership services at sheets @ ssti.org.

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