In the May 21, 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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 $300B Farm Bill Includes Boost in Funding for Biofuel and Agricultural Research
Last week, Congress approved the $300 billion "farm bill" with large bipartisan majorities in both the House and Senate (318-to-106 and 81-to-15, respectively). The wide margins belie that fact that the bill remains somewhat controversial outside of Congress for its lack of reform of farm and crop subsidies. President Bush vetoed the bill today, citing concerns about its continued support of large subsidies for agricultural producers despite record profits for the farming industry. With veto-proof majorities in both houses, however, the bill is likely to survive.
 
Despite being dubbed the farm bill, farm programs only account for 12 percent of spending in the bill. Many TBED-related programs are expected to receive funding increases if the bill becomes law.
 
Under the new legislation, the U.S. Department of Agriculture's (USDA's) Cooperative State Research, Education and Extension Service would be replaced with a National Institute for Food and Agriculture. This institute would assume oversight over the department's research, extension and education programs and help to promote USDA's science programs. The House Committee on Agriculture has said that this new body would finally give the department a grant-making agency with the same kind of visibility as the National Institutes of Health.
 
Six new program offices within the institute would design USDA programs, establish research priorities and coordinate and track developments in agricultural research. These specialized offices would include:

The USDA's National Research Initiative would be rechristened as the Agriculture and Food Research Initiative (AFRI), which would award grants to address critical issues in U.S. agriculture. Its grants would be used to provide competitive grants to colleges and universities, agriculture experiment stations and other organizations conducting research in high-priority fields. The farm bill would authorize funding for the initiative at $700 million per year, with 60 percent of appropriated funds dedicated to basic research and the remaining 40 percent for applied research programs. AFRI also would be charged with stimulating entrepreneurship, supporting business development, expanding access to capital, and building rural entrepreneurial networks.
 
The farm bill would also invest an additional $1 billion in renewable energy research, development and production, according to a press release from the House Committee. That amount includes $320 million in loan guarantees for biorefineries producing advanced biofuels and $250 million for a new program to assist businesses and agricultural producers transition to renewable energy systems. The Bioenergy Program would receive $300 million to provide incentives for expanding the production of biofuel crops, and a new Biomass Crop Assistance Program would encourage the production of feedstocks and support systems for renewable energy production. Tax credits for corn ethanol production would be reduced and redirected toward incentives for cellulosic ethanol.
 
Other parts of the bill would fund infrastructure improvements in rural communities, support rural entrepreneurship programs and extend broadband access in underserved regions. More information about H.R. 2419 is available at: http://thomas.loc.gov/cgi-bin/bdquery/z?d110:h.r.02419:

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British Government Wants Innovation Nation
As readers know, the United Kingdom is no slouch in the world’s economy. A steady rise in productivity since 1997, the pound trading at nearly twice the dollar, and the home of some of the world’s top research universities and a global financial center for centuries all attest to the United Kingdom’s strong economic position.
 
How it is preparing to sustain and expand its competitive position through strategies like those enumerated in the April release of Innovation Nation stands in sharp contrast to U.S. policies and investments to support science and technology-based growth.
 
For evidence, one needs look no further than the unit of the British government that released the strategy – the UK Department for Innovation, Universities and Skills (DIUS). DIUS has no U.S. counterpart working to coordinate advanced research investments, workforce preparedness, and tech-based economic development initiatives. U.S. efforts in these areas are scattered across several agencies and have been perennial targets and often victims for budget.
 
Innovation Nation outlines nearly four dozen specific action items to encourage the permeation of innovation throughout the United Kingdom. Virtually no element of society is left untouched by the agenda. Highlights of items not being discussed loudly in the U.S.:

Innovation Nation is available at: http://www.dius.gov.uk/publications/ScienceInnovation.pdf

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Enacted Kansas Budget Invests in Workforce, Innovation Economy 
Several key proposals championed by Gov. Kathleen Seblius to prepare the state for an innovation-based economy were adopted by the legislature in the approved fiscal year 2009 budget signed into law by the governor earlier this month.
 
In February, Gov. Sebelius signed an executive order forming the Kansas Innovation Consortium announced during her State of the State Address (see the Jan. 23, 2008 issue of the Digest). The initiative brings together key industry clusters within the state, including animal, plant and life sciences, health, manufacturing, agriculture, logistics and energy, and is charged with attracting new investments in R&D and ensuring the state has a prepared workforce. Lawmakers did not, however, include the governor’s recommendation of $150,000 in the FY09 budget for related start-up costs.
 
The FY09 budget allocates $5 million each for aviation training and aviation research at Wichita State University (WSU). The governor originally recommended $4 million to WSU for a National Institute for Aviation Research Grant and $2.5 million for the institute.
 
In support of Kansas’ bid for the National Bio- and Agro-defense Facility, the legislature passed a bill authorizing infrastructure improvements needed to secure the project. Kansas is one of six finalists in the nation vying for the facility. HB 2001 authorizes the issuance of revenue bonds to support capital improvements for the proposed site, which is located at Kansas State University near the Bioscience Research Institute.
 
Not all of the governor’s proposals survived the legislative session. Among those not passing was a recommendation of $2 million from the Expanded Lottery Act Revenues Fund for a new Bioenergy Research Program through the Department of Commerce.
 
Lawmakers also did not approve the governor’s recommendation of $1 million for a new teaching scholarship program in Science, Technology, Engineering and Mathematics (STEM) fields – the STEM Teachers Service Program. However, the enacted budget includes $295,000 ($45,000 more than the governor’s recommendation) for the Kansas Academy for Mathematics and Science, a two-year residential program established by the legislature in 2006.
 
The FY 2009 enacted budget (Mega Budget Bill) is available at: http://www.kslegislature.org/bills/2008/534.pdf

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Hawaii Supplemental Budget Supports Energy Initiatives
Legislative approval of several measures to support the state’s energy initiatives were accompanied with lawmakers’ rejection of Gov. Linda Lingle’s proposals to fund Science, Technology, Engineering, and Mathematics (STEM) programs and expand TBED initiatives at the conclusion of the 2008 legislative session earlier this month.
 
Lawmakers allocated $8.7 million ($2.8 million above the governor’s recommendation) in fiscal year 2008-09 for the Hawaii Renewable Hydrogen Program, a key component of the governor’s Energy for Tomorrow package. The legislation stipulates that the Hawaii Strategic Development Corporation submit a report before the 2009 legislative session convenes on the measures of effectiveness of the program, details of expenditures, and a master plan for the renewable hydrogen program detailing planned expenditures.
 
The legislature also adopted Gov. Lingle’s proposal to expedite permitting of renewable energy facilities and created an energy facilitator position to assist with the permitting process in support the Hawaii Clean Energy Initiative.
 
The Hawaii High Technology Development Corporation will receive $100,000, half of the governor’s recommendation, to expand the Small Business Innovation Research and Small Business Technology Transfer assistance programs. An additional $100,000 to provide Hawaii firms with training workshops and one-on-one grant proposal assistance was not included in the final budget.
 
The approved FY 2008-09 supplemental budget does not include funding of $2 million for a second year of the Hawaii Excellence through Science and Technology Academy Program and Robotics Programs within the Department of Business, Economic Development and Tourism. Despite the setbacks, the governor’s administration will continue to partner with private sector and federal organizations to fund the STEM programs established last legislative session, according to a press release issued by governor’s office (see the May 14, 2008 issue of the Digest).
 
Lawmakers did not fund the governor’s proposal to appropriate $2 million to the University of Hawaii to establish endowed chairs in STEM and Energy. Additionally, lawmakers rejected HB 3073, authorizing the Employees Retirement System to invest $100 million in one or more venture capital funds that support innovative Hawaii companies. The proposal to create a new state-owned technology park, HB 3358, was stalled in committee at the close of the session. Gov. Lingle has until July 8 to act on the budget bills.

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Recent Research
Israeli Model Provides Framework for Use of Research and Venture Capital Initiatives
During the 1990s, especially the mid- to late-part of the decade, many countries experienced booms in their high-tech and venture capital industries. Few, however, grew at the same pace as Israel.
 
Israeli entrepreneurs created eight times as many high-tech companies during the 1990s than in the previous decade and equity investment in Israeli start-ups grew from $50 million to $6.65 billion. The number of venture capital companies in the country jumped from two in 1990 to about 100 in 2000.
 
In "From Direct Support of Business Sector R&D/Innovation to Targeting Venture Capital/Private Equity: A Catching-Up Innovation and Technology Policy Life Cycle Perspective," Gil Avnimelech and Morris Teubal explore this phenomenal growth and how the Israeli government effectively intervened and bolstered the venture capital economy.
 
The paper draws on earlier work by the authors in which they found that Israel's high-tech economy and Innovation and Technologies Policies (ITP) could be divided into a three-phase model. During the first phase, from 1969 to 1984, the nation's government provided horizontal grants to the business sector for R&D in order to build research capacity and spur the initial creation of high-tech companies. Then, between 1985 and 1992, the country significantly increased its R&D grants to leverage the companies that had sprung up in the preceding decades. It also began to expand its science and technology infrastructure and form its first entrepreneurial support programs, such as incubators and research partnerships. By 1993, Israel had built a substantial amount of high-tech activity, but found itself with a surplus of trained but unemployed engineers, due to an influx of Russian immigrants. At that point the government began its targeted development of the venture capital sector.
 
Avnimelech and Teubal use the Israeli experience as a framework to create a three-phase general model of ITP and venture capital development, complete with strategies for each phase and conditions for transition to the next phase. In the first stage, direct government support for business sector research is used to stimulate R&D and create innovative start-ups. In the final phase, the government targets its financial support toward building clusters and venture investment in strategic industries. The second stage is an intermediate phase in which elements of the other phases both exist, but funding is increased considerably over the previous period as high-tech industries begin to emerge.
 
The authors contend certain conditions should be met to begin the transition to phase three policies, which include intervention in the venture capital industry. The conditions include:

Only after these conditions have been met should government begin larger programs to increase the availability of capital. Before reaching that point, high-tech economic policies and strategies should address the need for a research infrastructure and R&D within existing businesses. These efforts should continue throughout the third and second phases while adding programs to target specific needs and industries.
 
"From Direct Support of Business Sector R&D/Innovation to Targeting Venture Capital/Private Equity: A Catching-Up Innovation and Technology Policy Life Cycle Perspective" by Avnimelech and Teubal is available for purchase at: http://www.informaworld.com/smpp/content~db=all~content=a789454689~tab=linking

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Reports Detail Metrics of States’ Community Colleges, Collaborations with One-Stop Centers
The network of community colleges throughout the U.S. has an integral and increasing role in preparing the nation’s workforce for career and technical training. According to the National Center for Education Statistics, 6.2 million full-time and part-time students attended public two-year colleges in 2005 – about 41 percent of the nation’s total undergraduate population. Two reports released earlier this month provide a deeper look into U.S. community colleges, one highlighting metrics for community colleges within each state and another exploring community colleges’ relationships with one-stop centers for workforce needs.
 
In The States and Their Community Colleges, David Shaffer of The Nelson A. Rockefeller Institute of Government finds great differences in the enrollment and affordability of community colleges between states. The report illustrates a variety of measures to compare states, including:

In the second report, the U.S. Government Accountability Office (GAO) estimates 11 percent of one-stop centers are operated solely or jointly by a community college, with 34 percent of one-stop centers housing staff of a local community college. One-stop centers, the product of federal legislation, bring together various training programs offered by the Departments of Labor, Education, Health and Human Services, and Housing and Urban Development. Some community colleges have teamed with the centers to improve their ability to assist regional employers and industries.

Through interview and survey work, the GAO further explores the circumstances by which community colleges’ integration with one-stop centers is promoted or impeded, examining the potential for other collaborations such as the Department of Labor’s WIRED program. Challenges identified by the GAO that may inhibit successful joint workforce development efforts between community colleges and the centers include:

The GAO report, Community Colleges and One-Stop Centers Collaborate to Meet 21st Century Workforce Needs, can be accessed at: http://www.gao.gov/new.items/d08547.pdf
 
The state-by-state comparisons within The States and Their Community Colleges can be found at: http://www.rockinst.org/WorkArea/showcontent.aspx?id=14870
 
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Opportunity to Join TBED Movers & Shakers
Excitement for SSTI's 12th annual conference is growing. Sponsorship opportunities are available to help build awareness of your TBED program and build beneficial relationships with the nation's top state and regional TBED decision makers at this year's event. Last year’s conference included more than 350 representatives from 48 states and four countries.

Your organization can join with our current sponsors to take advantage of this powerful networking and outreach opportunity by contacting Noelle Sheets, SSTI director of membership services, at sheets [at] ssti [dot] org or 614.901.1690. Please contact SSTI as soon as possible to request the 2008 sponsorship benefit information, as all national sponsorship opportunities are on a first-come, first-served basis.

Encouraging Regional Innovation will be held Oct. 14-16 in Cleveland. More information is available at http://www.ssticonference.org/.

SSTI would like to thank our current 2008 Conference National Sponsors:

Innovation Sponsor: Reception


Underwriter of "Trends: What's Next for TBED?"
Wii Room Sponsor
Premium Sponsor
Exhibiting Sponsors


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People & TBED Organizations

Dr. Michel Bitritto was named director of the new business incubator being run by the New Jersey Meadowlands Commission.

Dr. Peter Reczek was appointed executive director of the New Jersey Commission on Science and Technology.

Don Siegel, president of the Technology Transfer Society, will be dean of the School of Business at the University of Albany, SUNY, beginning in fall 2008.

Michael Skaggs, former president and CEO of Next Generation Economy Inc., was named executive director of the Nevada Commission on Economic Development.

Paul Wetenhall stepped down as executive director of High Tech Rochester (HTR) to become president of the Ben Craig Center in Charlotte. David Hessler, an HTR entrepreneur-in-residence, was appointed interim president in Wetenhall's stead.

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