In the July 16, 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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Effects of Budget Deficits Begin to Emerge for Some State, Local TBED Efforts
In perusing SSTI Weekly Digest articles related to approved and enacted budgets over the last several months, it is evident a majority of governors and legislators are supporting TBED initiatives through increased or maintained funds despite a bleak fiscal outlook in the coming years. However, state spending is expected to decrease over the next fiscal year and beyond. Combined with declines in state revenue and a weakening national economy, few state-supported programs and initiatives can be presumed safe from the possibility of budget cuts.

Last month, the Spring 2008 Fiscal Survey of States revealed projections of further declines in state revenue for a significant number of states, indicating that more than a quarter of states were forced to reduce their enacted budgets for fiscal year 2008, and 18 states assume negative budget growth for FY09. By comparison, only three states had to reduce their enacted budgets in FY07, the report states. Last month alone, governors in Connecticut, Florida, Hawaii, New Hampshire and New York ordered across-the-board cuts to state agencies’ current operating budgets.
 
Absorbing across-the-board cuts early in a fiscal year gives agencies a chance to reorganize priorities and, in some cases, delay new initiatives. Cuts made late in the fiscal year, however, often are painful for programs to withstand.
 
In response to New York Gov. David Patterson’s recent order to all state agencies to cut spending by 10 percent in the current fiscal year, the New York State Foundation for Science, Technology and Innovation (NYSTAR) announced a reduction in Faculty Development grants from $750,000 to $500,000. The grants are used to recruit and retain world-class scientists to New York’s academic research centers.
 
The spending plan states, “Programmatically, savings will be achieved through a combination of fewer awards and decreasing the dollar value to more succinctly target investments.” A similar approach is expected for NYSTAR’s technology transfer program. NYSTAR’s revised spending plan warns that operational reductions will decrease the state’s investment in commercialization efforts at universities and may reduce the ability to actively support collaboration through opportunities across the state.
 
In a news article published by BioRegion News, Jannette Rondo, NYSTAR communications director, said the spending cuts will not deter NYSTAR from funding key programs toward promoting science and tech development statewide.
 
NYSTAR plans to cut some administrative and operational expenses in the meantime and will pursue funding from other sources to make up some of the difference.
 
Not all cuts are felt only at the state level. In California, the University of California (UC) Davis recently announced the elimination of the InnovationAccess program – a move directly related to budget cuts, the school reports. The program, which is part of the Office of Research, was created to help researchers form technology-related companies. Services are focused on technology transfer through evaluation of patent inventions from UC Davis faculty and researchers and business development through strategic research alliances with industry and commercialization support for early-stage UC Davis technologies.
 
The program was eliminated as part of the 43 full-time and 92 vacant jobs being cut to balance the university’s budget, according to a Sacramento Business Journal article. The InnovationAccess cutback saves UC Davis a total of $428,956, the article states.

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Pennsylvania Supports STEM Investments, Expands Keystone Opportunity Zones
Several bills from the 2008 legislative session were signed into law by Gov. Ed Rendell during the past two weeks, including the fiscal year 2008-09 budget, providing enhancements to K-12 programs encouraging science, technology, engineering and mathematics (STEM) and a measure to significantly expand the Keystone Opportunity Zone (KOZ) tax incentive program.
 
Last week, Gov. Rendell signed SB 1412 into law enabling the Pennsylvania Department of Community and Economic Development (DCED) to designate up to 15 new zones, allow for expansion of existing zones, and extend the expiration dates of existing unoccupied parcels. The KOZ program was created in 1999 and provides state and local tax incentives to businesses that develop old industrial sites and underused areas. DCED also will receive $50.7 million in general funds from the FY 2008-09 budget for the Ben Franklin Technology Development Authority Fund -- $1 million less than last fiscal year and $15.1 million for the Manufacturing Extension Partnerships Industrial Resource Centers, down from $15.2 million in FY08.
 
Lawmakers supported several of Gov. Rendell’s STEM proposal’s aimed at building a highly-qualified workforce. The following K-12 initiatives are slated to receive funding in the upcoming fiscal year:

The State System of Higher Education and community colleges will both receive a 3 percent boost for operating expenses in the coming fiscal year.
 
Despite appeals to legislators over the past months to seed the Jonas Salk Legacy Fund, no funding was included in the approved budget for the initiative. First proposed in 2006, the Jonas Salk Legacy Fund would have used $500 million from the state’s Tobacco Settlement Fund to provide dollar-for-dollar matching grants to the state’s leading biosciences research in academia and industry (see the Feb. 6, 2006 issue of the Digest).
 
The enacted budget is $545 million less than the spending plan unveiled by the governor in February and 3.8 percent more than the FY 2007-08 budget. As of June 30, the state’s projected surplus has dropped to $159 million from the $427 million projected in February, according to the Pittsburgh Post Gazette.
 
The FY 2008-09 enacted budget is Act No. 38A and is available at: http://www.legis.state.pa.us

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University Initiatives Benefit from North Carolina Surplus
North Carolina legislators approved last week the fiscal year 2008-09 budget adjustment, providing additional funds for several TBED initiatives within the higher education system. Earlier this year, Gov. Mike Easley unveiled recommendations to use surplus funds to expand university projects aimed at supporting TBED (see the May 14, 2008 issue of the Digest).
 
Additional operating funds within the University of North Carolina (UNC) System appropriated in the budget agreement include:

The approved budget also provides additional funds to continue university programs initiated over the last two fiscal years, including $3 million for the Faculty Recruiting and Retention Fund and $1 million for the Research Competitiveness Fund. The latter invests in research projects critical to the economic competitiveness of the state, such as biofuels and nanotechnology.
 
Within the K-12 system, lawmakers approved $1.5 million in additional funds for the North Carolina 1:1 Learning Project, a pilot program in eight high schools that provides laptop computers for teachers and students. The project received a nonrecurring appropriation of $3 million last fiscal year. The approved budget also provides $10 million ($4 million above the governor’s recommendation) to implement broadband in the public school system.
 
Funding for initiatives aimed at building a nationally ranked bioengineering program – a major priority of the administration – is also prominent in the budget agreement. The North Carolina Biotechnology Center will receive $4 million in FY 2008-09, including $2.5 million for building expansion and $1.5 million to expand the loan program for pre-venture start-up companies. Community colleges will receive $1 million for operating expenses related to community college programs focusing on biotechnology at the North Carolina Research Campus in Kannapolis. These funds are in addition to the $2.3 million in the base budget for this program.
 
Within the Department of Commerce, lawmakers appropriated $3.5 million to provide grants for Small Business Innovation Research and Small Business Technology Transfer assistance ($1.3 million less than last fiscal year). The department also will receive $1 million in additional funds for the NC Green Business Fund, which provides grants to private businesses with fewer than 100 employees to encourage the growth of a green economy in the state. The first 13 awards for the Green Business Fund were announced late last month by Lt. Gov. Bev Perdue.

The FY 2008-09 approved budget is available at: http://www.ncga.state.nc.us/Sessions/2007/Bills/House/PDF/H2436v8.pdf

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Ohio Now Offering In-state Tuition Rates to All U.S. Veterans
Last week, Ohio Gov. Ted Strickland signed an executive order that immediately allows all U.S. veterans eligible for the Montgomery GI Bill, their spouses, and their dependents to enroll at in-state tuition rates at Ohio’s public colleges and universities. Titled the Ohio GI Promise, the policy effectively allows all U.S. veterans to attend college for free in Ohio, once the new federal GI bill goes into effect on Aug. 1, 2009.

Ohio law gives the Chancellor of the state’s system of higher education the ability to determine which students can be deemed residents of Ohio. As outlined in Gov. Strickland’s executive order, all veterans along with their spouses and children who decide to live in Ohio to attend the state’s public colleges and universities will effectively be considered Ohio residents eligible for the reduced tuition rates. Other components of the executive order include:

The Ohio GI Promise program aligns its initiatives with the federal “post 9/11” GI Bill signed by President Bush on June 30, 2008. Under the new federal GI bill, depending on the length of each veteran’s active duty service, a scalable percentage of the following will be paid by the U.S. government: tuition and fees not to exceed the most expensive in-state public college or university; a monthly housing allowance; book and supplies up to $1,000; and, a one-time relocation payment from rural areas of $500.

The website for the Ohio GI Promise, which includes Gov. Strickland’s executive order, can be found at: http://universitysystem.ohio.gov/veterans/overview.htm

A factsheet on the benefits of the new GI bill, produced by the Department of Veterans Affairs, can be accessed at: http://www.gibill.va.gov/S22/Post_911_Factsheet.pdf

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Study Says Florida Needs Skilled Workers and Early-stage Support for High-Tech Growth
Though the state of Florida has aggressively pursued research investment over the past few years, particularly in the life science, a new report finds the state is still struggling to build a sufficient pool of highly-skilled workers for its high-tech companies. The study, which was conducted at the behest of 19 local economic development organizations, finds the state has not yet made a complete transition from an agriculture- and real estate-based economy to one built on high-tech industry and innovation. Interviews with statewide stakeholders also confirmed there is a continuing need in the state to support innovations-based entrepreneurs through economic development organizations.

The study was conducted at the request of the Florida High Tech Corridor Council, the Metro Orlando Economic Development Commission, Space Florida and several other local economic development organizations and companies. After a series of interviews, research into the state's programs and a benchmark analysis, they found that the most glaring obstacle facing the state was its weaknesses in human capital and talent development. The state’s K-12 educational system was perceived as inadequate to the task of producing a stream of high-quality college students and workers in high-tech fields. Although the state has done well in attracting talent, the available pool of highly-skilled workers remains low enough to discourage relocating companies.

The report also identified several other perceived gaps in the state’s innovation continuum. Entrepreneurs in the state lacked access to start-up and early-stage capital, which several interviewees suggested could be remedied by additional state assistance. One state program, the Florida Opportunity Fund, has been created to address this capital gap but has not yet been fully implemented. Lack of consistent legislative support for innovation programs also was seen as a persistent problem for development.

Not all of the news was bad. Despite problems with the K-12 educational system, many interviewees cited university accessibility, partnerships and collaborations as key advantages for Florida. The state’s community college system also is viewed as beneficial to the high-tech economy, particularly for its focused curriculum and alignment with business needs. Many STEM graduates for Florida educational institutions, however, seem to leave after graduation despite Florida’s high rating for overall quality of life.

The recent state effort to recruit major life science research institutions also was seen as a boon to the economy. As reported in the May 7, 2008 issue of the SSTI Weekly Digest, the State of Florida has invested almost $1 billion to lure life science research and development centers to the state through its Innovation Incentive Fund (IIF). Although the IIF is currently empty and will not receive any new funding this year, many of the interviewees involved in the study cited the fund as a positive development. The fund has demonstrated the state’s potential to attract West Coast and international life science centers. Still, many remain concerned about the state’s lack of support for smaller projects and for innovation in communities that cannot afford the fund-matching commitment required by the IIF. Others see the lack of funding for FY2008 as another indicator of the state’s government’s inconsistency in support for TBED initiatives.

Read the complete study at: http://www.floridahightech.com/resources/benchmark.htm

Join us in Cleveland this year for a panel discussion on building a high-tech workforce at SSTI’s 12th Annual Conference, Encouraging Regional Innovation. Our panelists will lead the audience in a discussion of successful strategies being employed by states and regions to attract and retain highly-skilled workers. Find out more about the conference at http://www.ssticonference.org/.

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Recent Research
Understanding the Evolving Role of the Federal Government in U.S. Innovation
Collaborative research, particularly federally funded R&D, is playing an increasingly significant role in producing the top innovations each year, according to a new analysis released by the Information Technology and Innovation Foundation (ITIF). Where Do Innovations Come From? Transformations in U.S. National Innovation System, 1970-2006 shows a dramatically diminishing role for the largest firms acting independently to fuel future technological advances.
 
Fred Block and Matthew Keller examined a random sample of 1,200 of the nation’s top commercialized innovations over the past four decades – as identified by R&D Magazine for its annual R&D 100 Awards – to determine the type of entity or entities that were responsible.
 
The total number of the top 100 innovations each year that include Fortune 500 firms either working independently or collaboratively with others has fallen from the mid-40s during the 1970s to only six in 2006.
 
Conversely, projects involving federal labs working either alone or collaboratively has risen from four in 1971 to 42 in 2006. Interorganizational collaborations of all types were nearly four times more numerous in the 2006 award list than in 1971, now representing almost 70 percent of the nation’s top innovations.
 
Projects funded through the federal SBIR program also account for a growing number of the R&D 100 Awardees, attesting to the importance of the federal program on the continued competitiveness of the country, the authors argue.  Those projects involving innovations resulting from SBIR funding conservatively account for 21 percent to 25 percent of the awards since 1997, based on the sample. The caution on the figure, the authors explain, is because the commercialized innovations in the R&D 100 may involve dozens of patents or technologies that could involve multiple SBIR awards. Funding sources for an innovation, not provided in the R&D Magazine award nomination requirements, had to be independently researched and identified by the authors for the analysis.
 
The authors conclude from their findings that the U.S. innovation system benefits from the decentralized nature of how innovation is supported by the federal government, particularly through policy interventions such as the SBIR program and federal lab system.
 
At the same time, Block and Keller point out the inefficiencies inherent in federal research support being too decentralized. The federal system “carries decentralization to an unproductive extreme,” they caution. “Under the current arrangements, it is entirely possible that five different government agencies might be supporting 30 different teams of technologists working on an identical problem without a full awareness of the duplication of efforts.”
 
More funding for collaborative research is also recommended. Federal support for R&D has been declining in real terms since 2003.
 
Where Do Innovations Come From? Transformations in U.S. National Innovation System, 1970-2006 is available at: http://www.itif.org/index.php?id=158

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SSTI Member in Michigan Receives Presidential Export Award
A delegation of Automation Alley representatives recently traveled to the White House to receive the 2008 "E" Award for exporting. The Presidential 'E' Award was created by President John F. Kennedy in 1961 to recognize persons, firms or organizations which contribute significantly to increase U.S. exports.
 
Since 2001, Automation Alley, a Michigan technology business association and SSTI affiliate member, has conducted eight trade missions and plans a mission to Brazil later this year. The missions focus on small and mid-sized companies in the automotive, electronic equipment, machinery, alternative energy, environmental, biotechnology, information technology and medical fields. Automation Alley directly attributes the trade missions to generating more than $130 million in new business and economic development for company participants in the region, in addition to creating nearly 100 new jobs in Southeast Michigan.
 
Of the 16 “E” awards made in 2008, Automation Alley is one of only three service organizations recognized and the only one exclusively serving the extensive tech community of its service area. The other service providers recognized with this year’s “E” awards were the Massachusetts Export Center in Boston and the Global Business Edge Program of the Albers School of Business & Economics at Seattle University. The remaining 12 E award recipients were private companies.
 
In addition to the “E” Awards, the U.S. Department of Commerce program used the “E Star” award to recognize three organizations and businesses for continued superior performance in exporting. 
 
More information about the E award is available at: http://www.commerce.gov/NewsRoom/PressReleases_FactSheets/PROD01_006046

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People & TBED Organizations

Steve Bazinet has been hired as executive director of the Maine Center for Enterprise Development.

Rahindra Bose is Ohio University's new vice president for research and creative activity and dean of the graduate college.

David Fouts was selected as the next president and chief executive of MAGNET, the Manufacturing Advocacy & Growth Network. Fouts replaces Fatima Weathers, who served for a year as acting president.

Denichiro Otsuga was named the first director of technology transfer at South Dakota State University.

Harris Pastides was selected to replace Andrew Sorensen as University of South Carolina system president. Sorenson retired after six years at the helm.

Linden Rhoads was appointed as vice provost of the University of Washington's TechTransfer unit. Rhoads starts her new position Aug. 14.

Hunter Roberts, South Dakota's interim state energy director, was appointed to the post of energy policy director.

Brent Tolman is the new executive director of the Workforce Development Alliance in Idaho.

Sterling Wharton was hired as program director for Georgia's Centers of Innovation program.

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