In the February 13, 2008 Issue:

Copyright State Science & Technology Institute 2008. 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 Counters Recession with $1.7B Economic Stimulus Proposal
Responding to a statewide economic downturn, Gov. Ted Strickland announced two major TBED initiatives, injecting more than $1 billion into job creation and offering a free year of tuition at Ohio public universities for high school seniors.
 
During his State of the State Address last week, Gov. Strickland outlined his Building Ohio Jobs proposal, a $1.7 billion stimulus package focusing on the creation of high-quality jobs in the fields of renewable energy and biomedicine. The plan would be financed through bonds, which requires legislative approval. Gov. Strickland asked lawmakers to put the initiative on the ballot for a fall vote, and if approved, funds would be allocated starting next year across the following sectors:

Another $800 million would be distributed to Ohio Public Works Commission and the Ohio Clean Fund.
 
The governor’s Seniors to Sophomores proposal takes aim at high school seniors who meet certain academic requirements, providing them the option to spend their last year of high school taking college courses at a public university, tuition-free. Details of the proposal – including a funding source – have yet to be released.
 
Last month, Gov. Strickland unveiled his fiscal year 2008-09 Budget Reduction plan, which was designed to curtail a projected deficit ranging from $733 million to $1.9 billion. While the plan calls for reductions across many state programs, the Science, Technology, Engineering and Mathematics (STEM) initiatives announced in June are exempt from the cuts. This is especially good news for the Ohio Department of Education, which is slated to receive $12.5 million to create STEM-focused schools and follows a recent announcement that more than $12 million in private funds will be pooled with the state’s money to create the Ohio STEM Learning Network (OSLN).
 
The OSLN is an initiative to launch five regional math and science-based schools, particularly in low-income areas, with the goal of doubling the number of college graduates with degrees in STEM fields and preparing more than 100,000 students over the next 10 years for high-tech jobs. The program will be managed by Battelle, which also will support science and technology programs in other schools across the state.
 
A press release outlining the new proposals is available from the governor’s press office at: http://governor.ohio.gov/News/PressReleases/2008/February2008/News2608/tabid/835/Default.aspx
 
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Proposed Michigan Budget Offers New Incentives for Job Creation
Gov. Jennifer Granholm unveiled her fiscal year 2009 budget last week, proposing to refinance a portion of the state’s general obligation and taxable tobacco bonds and reduce spending across nearly all state departments in order to finance new proposals without raising taxes.
 
In addition to the proposed use of $150 million in pension funds for Invest Michigan! (see related article in this issue), Gov. Granholm outlined several other TBED-focused initiatives during her State of the State Address (see the Jan. 30, 2008 issue of the Digest). One of those initiatives – the Michigan Job Creation Incentive – would be paid for by capitalizing on the sale of state bonds. Under the proposal, new businesses in the top 50 growing sectors are not required to pay any taxes the first year of the tax cut, and existing top 50 growth-sector businesses will get a triple tax credit on their Michigan Business tax.
 
To support the alternative energy industry throughout the state, Gov. Granholm recommends:

Gov. Granholm urged lawmakers to allocate $40 million for the No Worker Left Behind Initiative, which was left out of the approved budget last year (see the Nov. 7, 2007 issue of the Digest). The program, which was originally funded by federal grants, offers training for displaced workers in high-demand areas. The governor is proposing a two-year, $1.8 billion stimulus package aimed at creating more than 28,000 new jobs, primarily in the construction field. This proposal accompanies the stimulus package for the current fiscal year, which includes $1.4 billion for projects at universities, community colleges and state parks.
 
Overall funding for the Michigan Strategic Fund would be reduced by $5.6 million from last year for a total of $160.8 million. The governor recommends $29.5 million from General Funds – a slight increase over last year. Of the total funds, $75 million is allocated from the 21st Century Jobs Fund. The governor recommends $7.4 million for economic development job training grants, focusing on skills that businesses need to compete in the 21st century.
 
In addition to an overall 3 percent increase for state-funded universities, the governor is proposing a three-part incentive based formula rewarding universities for returns on research and technology transfer, graduating students, and promoting greater participation among low-income students. Based on the funding formula, the state’s three research universities would receive the largest increases.
 
The budget recommendation also includes a 3 percent increase for the Michigan Agricultural Experiment Station (MAES) for a total of $35 million. The MAES encompasses the work of more than 300 scientists in five colleges at Michigan State University: Agriculture and Natural Resources, Natural Science, Engineering, Social Science, and Veterinary Medicine. 
 
The FY 2009 Executive Budget is available at: http://www.michigan.gov/budget/

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Tech Talkin’ Govs, Part V
The fifth installment of the Tech Talkin’ Gov’s series includes highlights from State of the State Addresses delivered in Alabama, Connecticut, Minnesota and Wyoming.
 
Alabama
Gov. Bob Riley, State of the State Address, Feb. 6, 2008
“We can and must accelerate the growth of broadband service, especially to the rural areas of our state. And so tonight I am announcing the Alabama Internet Initiative with a goal of ensuring that every home and every business in our state has high-speed Internet access and will have it within the next four years.”
 
Connecticut
Gov. Jodi Rell, State of the State Address, Feb. 6, 2008
“The creation of jobs is always one of our top priorities. And at a time like this, with economic storm clouds on the horizon, it’s more important than ever that we focus on economic development. For that reason, I am recommending $500,000 in operating funds and $5 million in capital funds to support the field of nanotechnology. Nanotechnology draws upon our strengths in the fields of biology and chemistry and is an economic driver in manufacturing and biotechnology. I want Connecticut to be a national leader in nanotechnology. …
 
“… Right now small businesses are responsible for creating the vast majority of new and replacement jobs in our state. To help these entrepreneurs, my budget provides for the outright repeal of the business entity tax. 

“Connecticut’s economy will need quality skilled nurses and engineers to fill its current and future labor needs. …
 
“… I am also recommending $300,000 for an engineering loan reimbursement program to engineers who work in our State.”
 
Minnesota
Gov. Tim Pawlenty, State of the State Address, Feb. 13, 2008
“We need to reduce taxes and regulations that discourage job growth, income generation, investment, entrepreneurial activity, research, and exports. We’ll need to do that in a manner that also leaves us with a stable budget.
 
“Our current tax system reflects the economy and demographics of the 1960s. It’s outdated and needs to be fixed. So I’m announcing that I will create the 21st Century Tax Reform Commission that will recommend tax reforms for our 21st century economy. ... This commission will specifically focus on improving our job climate by reforming Minnesota’s tax laws. Job providers, entrepreneurs, private sector employees, investors, and others who actually have direct experience in creating private sector jobs will be members of this commission. …
 
“… We also need to support entrepreneurs and small businesses because they are so vitally important to our economy. They create the vast majority of new jobs. That is why I’m asking the Legislature to approve my Strategic Entrepreneurial Economic Development, or 'SEED' initiative. …
 
“… I’m grateful that last year the Legislature included funding for our regional math and science academies. However, we did not receive the amount needed or requested. … I am asking that the funding for these academies be increased by 50 percent over the current budget level. I am also proposing that we design and deploy a world-leading summer training institute for Minnesota’s math and science teachers.”
 
Wyoming
Gov. Dave Freudenthal, State of the State Address, Feb. 11, 2008
“I would encourage you to favorably consider two bills being offered by the Judiciary Committee with regard to carbon capture and carbon sequestration. …
 
“… We are asking for a significant contribution out of the Abandoned Mine Land money account ... to be allocated to carbon capture, carbon sequestration efforts, development of clean coal and advancement of the School of Energy Resources.
 
“Most prominent among those is an agreement which we have -- tentative agreement which we have struck with General Electric which is for them to be a partner with the University of Wyoming and with the State of Wyoming in the development of coal conversion technologies and in the development of carbon capture and in the development of sequestration. These are significant efforts and ones that I hope you will support. …
 
“… I hope that you will look on the $20 million request for what it is, which is it is a down payment on the future of this state and a down payment on the future of the coal industry in Wyoming.”

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Recent Impact Reports Offer Varied Approaches to TBED Assessment
One of the continuing challenges for TBED organizations is successfully documenting how their investments and activities influence the economic landscape of their states and regions. SSTI has selected a few recent state reports as examples of impact assessment, each identifying and utilizing certain measurements to help them tell their story. Their approaches may be of interest to other TBED organizations looking to gauge and share their impact with others.

A starting point for many organizations going down the road of impact analysis is determining what they should measure and why they should measure it. The Pennsylvania Department of Community and Economic Development is an example of an organization looking into new ways to evaluate their TBED efforts, to complement the traditional economic development metrics they have used in the past. Measuring Up: Enhanced Metrics for a New Economy steps through Pennsylvania’s four focus areas of TBED activity (research and technology commercialization, company financing, business and technical assistance, workforce development and education) and identifies the metrics associated with the inputs, activities, population outcomes and economic outcomes for each. While this specific report does not provide any raw numbers or measurements over time, it uses a systematic approach to develop a foundation of metrics related to the state’s economic development priorities.
 
Some states take a portfolio-based approach to describing the efforts, as demonstrated by OCAST’s (the Oklahoma Center for the Advancement of Science and Technology) 2008 Impact Report. For all of their individual initiatives, from the Oklahoma Nanotechnology Application Project to the Small Business Research Assistance and R&D Intern Partnerships programs, information is provided about the number of jobs created or clients served, the amount of non-state funding and economic impact on Oklahoma, and the average salary of those supported by OCAST programs. These values are then presented in aggregate, including measures of the numbers of patents filed and research papers published. In fiscal year 2007 for example, the average salary reported by OSCAT awardees was $46,329, about 44 percent higher than the state’s per capita income.
 
Other analyses examine one particular aspect of a state’s TBED efforts. Such is the case with Maryland Incubator Impact Analysis and Evaluation of Additional Incubator Capacity, a report conducted by the Maryland Technology Development Corporation (TEDCO) to explore the impact of the state’s existing 18 technology incubators and the potential for creating four new incubators. The analysis found there were 5,374 direct employees of the incubators’ tenants and graduates spread throughout 359 firms in 2006. This compares to between 2,900 and 3,700 employees and 125 firms in the state’s six incubators in 2001.
 
The research surveyed both incubator clients and graduates to determine the most important services offered by the incubators. Topping the list by a large margin was having affordable, functional space available. This was followed by access to mentors and guidance, individual business consulting, and connections to funding sources. Interestingly, the report also revealed skepticism from stakeholders associated with the incubators for creating “niche” incubators in the state, structured around areas such as alternative energy and regenerative medicine. Modeling software, used to calculate the number of jobs created in other sectors of the state’s economy because of the incubators, allowed estimates for aggregate salaries, contributions to the gross state product, and contributions to state and local taxes to be computed.
 
Measuring Up: Enhanced Metrics for a New Economy is available from the Pennsylvania Department of Community and Economic Development at: http://www.newpa.com/default.aspx?id=55
 
OCAST’s 2008 Impact Report is available at: http://www.ocast.state.ok.us/Portals/0/docs/brochures/2008-ImpactReport.pdf
 
The executive summary of the Maryland Incubator Impact Analysis and Evaluation of Additional Incubator Capacity can be found at TEDCO’s website: http://www.marylandtedco.com/news/documents/ExecutiveSummary2_000.pdf

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Increasing Local Investment of Public Pension Funds
State venture capital programs are an integral part of many state’s technology-based economic development portfolio. These programs can strategically target state investments towards promising high-tech companies at the critical early stages of business development and in areas where private capital is scarce. Venture programs, however, are not always easy to implement. By definition, they require a large fund of investment capital and sufficient manpower to assist and monitor their portfolio companies. Facing these difficulties, some states have turned to other methods of making state investment capital available to entrepreneurs. 
 
One option is to target a portion of public pension fund investments toward in-state businesses. Most retirement systems already dedicate some of their investments to venture capital. Placing geographic restrictions or considerations on investments occurs less frequently, however, in respect for “prudent person” rules for investment (e.g., finding the greatest return at least level of exposure) and the monies belong to future and existing retirees, rather than the public sector.
 
Few pensions contribute to separate funds that invest only in in-state businesses. The more common approach is to invest in other venture funds, which focus on regional investments. Indiana Investment Fund I, funded by the Indiana Public Employees Retirement Fund, is a $105 million fund managed by Credit Suisse, which invests in venture funds focusing on Indiana businesses. The fund targets its funds toward strategic industries, including manufacturing, distribution and logistics, information technology, business services and alternative energy.
 
Other public pension funds, including the California Public Employees Retirement System (CalPERS), do not have separate funds for this purpose, but frequently invest in local venture firms that specialize in regional investments. In 2005, CalPERS agreed to invest a total of $500 million in environmental technology and clean energy, industries seen as strategically valuable to the state.
 
Pension managers and policymakers frequently bristle at the idea of using pension funds for economic development purposes, since their primary goal must be profitable returns. In a recent review of in-state pension investment plans, SSTI found that all of these plans require in-state investments to meet the same standards as other investments.
 
Nevertheless, state leaders continue to look for opportunities to have pension fund investments work in tangent with state economic development goals. The governors of Michigan and Texas provide two recent examples of proposals to use public pension funds to help support companies in their state. Both the Michigan and Texas plans stipulate that any in-state investments would have to offer returns on the same level as the pensions’ other venture investments.
 
Michigan
In her State of the State address, Michigan Gov. Jennifer Granholm announced her plan to commit $300 million in capital from the Michigan Retirement system to the Invest Michigan! Fund, which will invest in in-state entrepreneurs. An initial investment of $150 million would be made this year, with the remaining $150 million to come over the next three years. The governor expects other state institutions, including universities, foundations and local governments to contribute to the fund as well. Invest Michigan! would be managed and underwritten by an outside investment manager, and additional support for its portfolio companies would be provided by an advisory board. This would include entrepreneurial mentoring and matchmaking with other sources of capital.
 
Eighty percent of the fund will be dedicated to co-investments in in-state companies, while the remaining 20 percent will be invested in venture firms that support Michigan firms. The governor believes that the fund will help close the investment capital gap between Michigan and coastal hotbeds of venture capital activity.
 
Read more about Governor Granhom’s plan at: http://www.michigan.gov/documents/gov/Invest_Michigan_223205_7.pdf

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Useful Stats
Ratio of Total R&D Expenditures to Gross State Product by State, 2000-2004
Included within the NSF’s National Patterns of R&D Resources series is data detailing the amount of each state’s total R&D expenditures and gross state product (GSP). Total R&D is calculated by combining a state’s R&D expenditures from federal sources, colleges and universities, federally funded research and development centers, industry and other nonprofit institutions.
 
SSTI has prepared a table showing the total R&D expenditures divided by the GSP, the percentage of which is often called the R&D intensity, for each state and the District of Columbia from 2000 to 2004. Additionally, the chart illustrates the rank of each state’s 2004 R&D intensity, the percent change of R&D intensity over the five-year period, and the ranking of this percent change.
 
Leading the pack in 2004 was New Mexico, whose R&D intensity was 8.04 percent. This was followed by Maryland (6.22 percent), Massachusetts (5.11 percent), Michigan (4.56 percent) and Rhode Island (4.4 percent). For the U.S. as a whole, the percentage was 2.56 in 2004.
 
However, the U.S. R&D intensity decreased from 2.73 percent in 2000, showing the U.S. GDP grew at a larger rate than the growth of total R&D expenditures over that period. Among states, North Dakota experienced the largest climb in intensity from 2000 to 2004, as it moved from 0.8 to 2.46 over the five years -- a relative increase of 209 percent. Other states experiencing a large jump were New Hampshire (from 1.62 to 3.2, an increase of 97 percent), Oregon (from 1.78 to 2.72, an increase of 52 percent), Hawaii (0.69 to 0.98, an increase of 42 percent) and New Mexico (5.68 to 8.04, an increase of 42 percent).
 
To see where each state ranks, visit SSTI's table at: http://www.ssti.org/Digest/Tables/021308t.htm.
 
Links to each year’s NSF data are contained within the SSTI table. To access the general page for NSF’s National Patterns of R&D Resources visit: http://www.nsf.gov/statistics/natlpatterns/
 
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Save the Date!
KTEC to Host SSTI's 2009 Conference
It only seems natural that SSTI celebrate the premiere professional development event for the nation's tech-based economic development community in 2009 in a state that, for 20 years, has pioneered innovative approaches to transform regional economies -­ Kansas. SSTI's 13th annual conference and pre-conference workshops will be held at the Sheraton Overland Park Hotel on Oct. 20-22, 2009.

Overland Park provides the perfect backdrop for SSTI's 13th annual conference for many reasons. Kansas has a vibrant technology and bioscience community that boasts innovative programs, such as KTEC, KTEC PIPELEINE, Kansas Bioscience Authority, and Heartland BioVentures. KTEC is in the midst of celebrating 20 years as the state’s leading technology economic development organization and has positive relationships with both the state’s universities and private sector. KTEC brings $13 million in technology entrepreneurship to the region, in addition to the $40 million in funding from the Kansas Bioscience Authority.

"We are thrilled that SSTI selected Overland Park as the host site for the 2009 conference," said Tracy Taylor, president and CEO of KTEC. "We look forward to showcasing Kansas and the innovative approaches to tech-based economic development that KTEC has led and implemented."

Plan to join us in Overland Park Oct. 21-23, 2009, at SSTI's 13th Annual Conference to experience it for yourself. In addition, we hope to see you at SSTI's 2008 annual conference in Cleveland this Oct. 14-16. More information is available at: http://www.ssti.org/conference08.htm

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SSTI Job Corner
A complete description of this opportunity and others is available at http://www.ssti.org/posting.htm.

South Dakota State University is creating a new office of technology transfer and is hiring a director to lead this new office. Some of the responsibilities for this position include working with inventors to file invention disclosures and to determine commercial potential; marketing intellectual property and managing the intellectual property protection process; developing training programs; ensuring compliance with policies and procedures relative to technology transfer and commercialization; and drafting and reviewing agreements to advance research opportunities. An MBA, MS, MA or PSM degree in an appropriate field is required.

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