In the June 4, 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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 Florida Pension Fund to Invest $1.95B in 'Technology and Growth' Industries
Florida Gov. Charlie Crist paid a visit to Wall Street last week to celebrate the signing of a new law that will increase the state retirement fund's investment in high-tech industries. Under the new legislation, the Florida State Retirement System will dedicate up to 1.5 percent of the system's trust fund to technology and growth investments. The Miami Herald estimates that this could provide nearly $2 billion for high-tech industries in the state.
 
The new legislation also will double the number the number of non-pension state dollars that may be used for alternative investments in venture capital firms, hedge funds and direct investments in portfolio companies. This will make $18.4 billion available for initiatives like the Florida Opportunity Fund, which was approved last year.
 
Florida's $130 billion retirement system is one of the largest public pension systems in the country. State Senate Commerce Committee documents cite the largest system, the California Public Employees Retirement System (CalPERS), as a model of a pension fund that has successfully employed economically targeted investments as a part of the state's economic development strategy. In 2002, CalPERS dedicated 17 percent of its funds into economically targeted private equity investment, according to the document.
 
In Florida, these economically targeted investments will have to offer similar returns to other pension activities, but also offer economic benefits such as job creation or new tax revenues. The bill specifically defines technology and growth industries in this case to mean alternative investments in business sectors, including space technology, aerospace and aviation engineering, computer technology, renewable energy, and medical and life sciences. Alternative investments will be limited to 10 percent of overall investments.
 
The bill also sets aside $20 million in state funds for a competition based on the Ansari X PRIZE program. That program offered a $10 million award to the team that could design the best reusable spacecraft capable of safe and affordable commercial flights. The state of Florida will award $40 million, half from the state and half from private sources, to the company or individuals who produce the most significant advancement toward designing and building a reusable space vehicle between 2009 and 2014. Florida's lieutenant governor will chair the programs, which is intended to spur competition on entrepreneurial investment in the space industry following the close of NASA's space shuttle program.
 
Read the governor's press release on the new pension strategy at: http://www.flgov.com/release/10027

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Southern States Advance Several TBED Initiatives into 2009
Legislators in Alabama, South Carolina and Tennessee recently approved spending plans for the upcoming fiscal year. Highlights of appropriations supporting TBED are included below.
 
Alabama
Alabama legislators wrapped up a special session over the weekend resulting in the passage of a $6.4 billion education budget. Lawmakers agreed to a $5 million increase ($40.8 million total) for the Alabama Math, Science, and Technology Initiative. The appropriation is $5 million less than Gov. Bob Riley’s recommendation of $45.8 million. The initiative, which received a substantial boost during the last legislative session (see the June 13, 2007 issue of the Digest), was created in 2002 to improve math and science education throughout the state.
 
South Carolina
Legislators supported the governor’s recommendation to fund the Endowed Chairs program, providing $10 million in FY09. The endowment program was created in 2002 to receive $30 million per year from lottery profits through 2010. A bill to extend the matching endowment program indefinitely by allowing interest earnings from the fund to be used for programmatic support, H. 4494, did not make it out of conference committee, however.
 
Lawmakers did, however, pass S.1252, a bill allowing the interest earnings from the Centers of Excellence Matching Endowment Fund to be used at the Research Centers of Excellence Review Board’s discretion for additional state awards.
 
Gov. Sanford vetoed a major priority of the state’s three research universities -- $4.5 million to implement SC LightRail, a high speed data network connecting the universities and three partner hospitals. The governor reduced funding for the project by $2.1 million from the General Appropriations bill and $2.4 million from the Capital Reserve Fund Appropriations bill. In his veto message, Gov. Sanford stated that the research universities have other ways to complete the project, specifically through their carry-forward and reserve accounts.
 
Hydrogen research grants were cut by $2.5 million for FY09. Gov. Sanford relayed the same veto message as last year when the grants were also cut, stating that while he is supportive of hydrogen research, tangible results are first needed for the investments already made. Additionally, the governor held his position stating, “We don’t believe the role of the government is to lead the private sector.”

These vetoes were part of the 69 vetoes Gov. Mark Sanford issued, trimming $72 million from the FY 2008-09 state spending plan approved by legislators last month.
 
Earlier this year, University of South Carolina officials announced a new scholarship program covering the difference between tuition costs and LIFE scholarships for in-state freshmen majoring in engineering and computing. The Engineering and Computing Expanded Life Scholarship is funded with an initial $500,000 from individual donors, businesses and industries and the College of Engineering and Computing. Additional funds will be necessary to maintain or expand the program. South Carolina’s 2008 regular session is scheduled to end June 5.
 
The FY 2008-09 General Appropriations bill is available at: http://www.scstatehouse.net/sess117_2007-2008/appropriations2008/gab4800.htm
 
Tennessee
Just weeks before the Tennessee General Assembly was scheduled to conclude the 2008 session, Gov. Phil Bredesen submitted a revised budget proposal for FY 2008-09, trimming $468 million from the budget he unveiled in January. Legislators recently approved the FY 2008-09 budget, agreeing to most of the governor’s revised recommendations, including funding for new and ongoing research projects.
 
Despite an overall $56 million reduction to higher education, lawmakers allocated funding for several University of Tennessee (UT) initiatives championed by Gov. Bredesen (see the Jan. 30, 2008 issue of the Digest), including:

Lawmakers also approved the governor’s proposal to change the GPA requirement for HOPE scholarships from 3.0 to 2.75, allowing more recipients to retain their scholarships. 
 
Within the Department Economic and Community Development, lawmakers approved $9.3 million for the Tennessee Job Skills Program (the same level recommended by the governor), and the FastTrack Infrastructure and Job Training Assistance program is slated to receive $328,900 in FY 2008-09. Gov. Bredesen’s revised budget proposal also included a $10 million reduction from the Jobs Package.
 
The budget agreement, SB 4213, is available from the Tennessee General Assembly at: http://www.legislature.state.tn.us/
 
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Foundation Commits $600M for ‘Ambitious and Risky’ Research
To encourage innovation in research, the Howard Hughes Medical Institute (HHMI) recently awarded $600 million to 56 biomedical scientists who will investigate and pursue scientific discoveries ranging from microbiology and immunology to bioengineering and synthetic biology.
 
The awards are provided at an opportune time for the U.S., as federal funding for basic research is declining and concerns regarding the nation’s competitiveness are increasing among the scientific community. HHMI appoints scientists as investigators rather than awarding research grants for a particular project, enabling scientists to explore and change the direction of their research and follow through on projects over many years. This allows for riskier research that may not be as easily supported by federal agencies.
 
Recipients were selected through a competitive process among 1,070 applications submitted nationwide. This year marked the first direct application process in which HHMI assembled a review panel to evaluate the applications rather than requiring institutional approval.
 
A press release outlining the HHMI Awards is available at: http://www.hhmi.org/news/20080527.html
 
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Raising Personal Income through Focused Efforts in Emerging Workforce Areas
In the midst of a national economic downturn, coupled with stagnant to little growth in wages for even college-educated individuals, state efforts to build a qualified workforce and attract industries in emerging fields that pay above-average wages are crucial to ensuring economic growth.
 
A recent report on income trends issued jointly by the Center on Budget and Policy Priorities and the Economic Policy Institute finds that one in five U.S. families has a lower income today than they did at the start of the decade. Analyzing state-by-state income trends over the past 20 years, the report also finds a long-standing trend of growing inequality between families in the wealthiest income bracket and those in the middle- to lower-income brackets. In fact, while incomes have declined by 2.5 percent among the bottom fifth of U.S. families since the late 1990s, the data indicates that incomes have increased by 9.1 percent among the top fifth.

Wage inequality is listed as the top contributing factor to the income disparity. An examination of income trends since the late 1980s through mid 2000s reveals that in 36 states, the income gap has widened significantly between the average middle-income family and the average family in the richest fifth. No state has seen a significant decline in inequality during this period.
 
This can be attributed to several factors, including long periods of high unemployment, globalization, and the shrinkage of manufacturing jobs, along with the expansion of low wage service jobs and lower real value of the minimum wage, the report states.
 
State and Local Efforts to Mitigate the Problem
The trend described above, while detrimental to the American way of life, is also bad news for states that generate revenue through income tax and taxes paid from companies. Recognizing that states are competing against each other for qualified workers and the recruitment of advanced industries, several partnerships have formed within states and local governments to help put into place measures to sustain a workforce reflective of the new economy.
 
Ohio
A $1 million grant from the National Science Foundation awarded to the Ohio Supercomputer Center (OSC), the Ohio State University (OSU), the University of Akron, and the Ohio Learning Network will help prepare a workforce capable of handling the future needs of Ohio’s advanced industries, according to the Ohio Business Development Coalition (OBDC).
 
OBDC recently announced a consortium of Ohio colleges and universities that will develop virtual, undergraduate programs through OSC’s Ralph Regula School of Computational Science and expand industry-driven certificate programs in computational science. The idea is that by linking to an emerging master’s degree program in the College of Engineering at OSU, the certificate programs will directly serve the needs of Ohio’s polymer industries and advanced materials production.
 
The grant also will be used to invest in state-of-the-art computing portals to increase productivity and accelerate product development for Ohio businesses.
 
The polymer industry in Ohio generates $49 billion in annual sales revenue and pays $5.6 billion in wages to more than 140,000 workers, according to OBDC.
 
Oklahoma
Lawmakers passed a bill last week to attract more engineers into the aerospace industry by providing incentives to both individuals and the companies that employ them. HB 3239, the Engineer Work Force Bill, grants a tax credit of up to $5,000 per year to engineers hired after Jan. 1, 2009, for up to five years and allows aerospace companies to claim a tax credit of 10 percent for compensation paid to a qualified graduate during the first five years of employment. The amount is reduced to 5 percent if an engineering employee graduated from an out-of-state college or university.
 
Aerospace companies can also receive a tax credit of 50 percent of the tuition reimbursed to a new engineering graduate for the first four years of employment under the legislation. The tax credit would be based on the average annual tuition at a public college or university in Oklahoma.
 
The average salary for an employee in the aerospace industry is nearly $55,000, compared to the overall state average of $29,000, according to the Oklahoma Aeronautics Commission. The bill is headed to Gov. Brad Henry for final approval.
 
Pennsylvania
A new effort to increase life science workers in order to help fill the needs of the local industries in emerging technology sectors is underway in Philadelphia. The Philadelphia Biotechnology and Life Sciences Institute was launched last week to develop strategies to bolster the supply of workers for the region’s growing number of life science companies. The initiative is a collaborative effort of the Philadelphia School District, area universities, nonprofits and the local life science industry. The institute will promote Philadelphia and its surrounding areas as an important location for bioscience workers and emerging firms, according to the Philadelphia Business Journal.
 
South Dakota
A partnership led by the South Dakota Department of Labor in collaboration with the Department of Tourism and State Development, the Department of Education, and the Board of Regents, Workforce 2025 is a group of initiatives focusing on individual sectors of workforce needs throughout the state.
 
The five programs that make up the Workforce 2025 initiative are a representation of combined best practices from around the state and include:

A workforce subcabinet, consisting of members of each department involved in the collaboration, has been identified and charged with setting specific goals and strategies of the initiative. More information on Workforce 2025 can be found at: http://workforce2025.com/

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Two Reports Highlight Opportunities for State Broadband Policies
Although the U.S. broadband infrastructure has expanded rapidly over the past decade, 45 percent of rural areas still lack access to high-speed Internet services. A recent issue brief from the National Governors Association (NGA) Center for Best Practices provides a number of strategies that have proven effective in expanding broadband access, particularly in underserved rural areas.
 
The brief highlights a number of state efforts that have been successful in expanding and improving service in recent years. These include the California Broadband Initiative, ConnectKentucky, Maine's ConnectME Authority and the New York State Council for Universal Broadband. Together, these profiles offer an overview of how states are approaching the digital divide.
 
NGA also presents a number of specific strategies that can be implemented in states with high-speed Internet gaps to create a comprehensive broadband access initiative. For example, the report provides a guide to 14 state tax credit programs that have been used to increase demand for broadband services or to encourage the development of new broadband infrastructure.
 
Other strategies discussed in the brief include:

Read "State Efforts to Expand Broadband Access" at: http://www.nga.org/Files/pdf/0805BROADBANDACCESS.PDF
 
Mapping Broadband Accessibility
Despite many attempts in the U.S., mapping broadband access with any degree of accuracy has proven difficult. Studies typically rely on information from Internet service providers to determine which consumers have access to high-speed services, and this has proven problematic (see the Feb. 8, 2008 issue of the Digest). A new report provides a different perspective on measuring high-speed access while shedding some light on Internet usage in the U.S.
 
Akamai Technologies, which offers support services for websites, has begun publishing a quarterly report on Web usage from a server-side perspective. This approach helps to avoid many of the problems encountered by studies based on information from Internet providers. In the first of these reports, the company finds that the U.S. ranks eighth globally in household penetration. That rank roughly matches recent rankings compiled by the Information Technology & Innovation Foundation.
 
Akamai also finds that 20 percent of all connections in the U.S. came from high-speed consumers, with connections faster than or equal to 5 Mbps. The report breaks down this data by state. Delaware, Rhode Island and New York had the highest percentages of high-speed connections, with 60 percent, 42 percent and 36 percent, respectively. Other top states included Nevada, Oklahoma, Connecticut, New Hampshire, Massachusetts, Maryland and the District of Columbia. This ranking stands in contrast to the State Broadband Index prepared by TechNet in 2003, which put larger states such as Florida, Michigan and Texas in the top ranks for broadband deployment and demand.
 
Read the report at: http://www.akamai.com/stateoftheinternet/

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State Auditor General Assesses Tech Transfer Programs at Arizona’s Public Universities
To speed the commercialization of technologies developed within the state's three public research universities, the Arizona state auditor general has made several recommendations that also may be of value to tech transfer efforts and academic institutions across the country. 

Commissioned by the state legislature to conduct the assessment, the Office of the Auditor General analyzed the structure and performance of the individual technology transfer strategies adopted by the University of Arizona (UA), Arizona State University (ASU) and Northern Arizona University (NAU). The final report, released in mid-May, also benchmarks each school against at least 15 of its peers.
 
The auditor’s recommendations could be applied to institutions with any size of research portfolios. The three Arizona institutions vary greatly in the amount of R&D conducted – UA had $535 million in research expenditures in 2006, ranking 13th nationally, ASU $132 million and NAU had $21 million.
 
The three institutions also vary in their approach to management of their tech transfer efforts. The University of Arizona’s commercialization operations are performed in-house by its technology transfer office under the vice president of research. Alternatively, tech transfer activities at the other two schools are both managed by a single and separate external legal entity, Arizona Technology Enterprises (AzTE).
 
The report divides its analysis and recommendations for Arizona’s public universities into three areas: increasing commercially viable invention disclosures, improving marketing and negotiations processes, and managing conflicts of interest.
 
Suggestions to improve each university’s overall performance, which may be of interest to other universities, include:

Metrics tracked from year to year within the report for comparative purposes include:

The Arizona State Auditor’s report, which also tracks the revenues, expenses, distributions and repayments for each university’s tech transfer operations, is available at:
http://www.auditorgen.state.az.us/Reports/Universities/UniversitySystemWide/Performance/08-02/08-02.pdf
 
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Recent Research
Do State Merit-Based Scholarship Initiatives Decrease Enrollment in the STEM Fields?
Since the inception of the HOPE scholarship program in Georgia 15 years ago, the number of state-sponsored merit-based scholarship initiatives to increase the number of students attending in-state colleges and universities has increased throughout the country. One such statewide initiative, Florida’s Bright Futures Program, was established in 1997 and has since become the second largest merit-based scholarship program in the U.S. At the recent annual forum of the Association of Institutional Research held in Seattle, Dr. Shouping Hu of Florida State University presented a paper examining the possible unintended consequences for student bachelor degree enrollment in the STEM fields before and after the implementation of Florida’s program.
 
The research finds in the two years before Bright Futures was introduced, enrollment in the STEM degree programs was at 48.0 percent of total baccalaureate enrollment in 1995 and 47 percent in 1996. In the two years after the program was started, STEM enrollment dropped to 39.2 percent in 1998, then to 37.7 percent in 1999. This represents a nine percentage point decline when comparing the two-year intervals, even though the total number of students in the STEM fields were “essentially stable” over the entire period.
 
Additionally, students receiving Bright Futures scholarships from the state were more likely to be enrolled in a STEM degree field than non-recipients, especially for the students that were provided the highest level of the Bright Futures Scholarships, according to the paper. For example, in 1999, the research found 45 percent of Bright Futures’ full-tuition scholarship recipients were enrolled in the STEM fields, compared to 34.2 percent STEM enrollment for partial-tuition scholarships and 29.3 percent STEM enrollment for students who did not receive any scholarship. When controlled for factors such as gender, race and participation in free and reduced lunch programs, this pattern of STEM enrollment between scholarship recipients continued.
 
Even though this research found participants in Bright Futures were more likely to choose STEM degrees than non-recipients, there was a “substantial and significant” decline in the overall STEM enrollment rates before and after Florida began the scholarship initiative. Hu contends one plausible explanation for the decrease in STEM enrollment rates is the need for students to maintain or ameliorate their class grades in order to continue receiving funds or to increase their eligibility for a larger award. Fields perceived to be more difficult to attain higher grades may be avoided.
 
The paper, Merit-Based Financial Aid and Student Enrollment in Baccalaureate Degree Programs in Science and Engineering: What Can Florida’s Bright Futures Program Tell Us?, is not yet available online, but the author can be contacted via: shu (at) coe.fsu.edu.

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People & TBED Organizations

The U.S. Department of Commerce's Economic Development Administration (EDA) recently announced Ben Franklin Technology Partners (BFTP) as the winner of the "Excellence in Technology-led Economic Development" award, as part of EDA's Excellence in Economic Development Awards 2008. BFTP, created in 1983, has regional offices in Lehigh Valley, Philadelphia, Pittsburgh and State College.

Janet Harrah was named the director of a new center being started at Northern Kentucky University that is similar to Wichita State University's Center for Economic Development and Business Research, where Harrah will remain director until July 25.

Peter Hermann resigned as president of the North Carolina Technology Association.

Robert McGrath, currently senior vice president for research at Ohio State University, will help lead global laboratory operations at Battelle, starting in August 2008. No official title has been developed for McGrath's new position, which will emphasize development in energy policy and sources of renewable energy.

J.D. Stack was selected to replace Oleg Kaganovich as chief executive of the Sacramento Area Regional Technology Alliance (SARTA).

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