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NY
Governor Proposes TBED, Economic Development Agency Consolidation
Aiming
to close a $1.7 billion budget shortfall in the current fiscal year and
address a projected $13.7 billion deficit in FY10, New York Gov. David
Paterson yesterday unveiled a deficit reduction plan as part of his FY
2009-10 executive budget request. The combined executive budget and
deficit reduction plan propose consolidating the state’s three economic
development agencies and redirecting funds to support a new grant and
loan program for targeted investments in select industries.
As part of the proposed restructuring plan, the New York State
Foundation for Science, Technology, and Innovation (NYSTAR)
and the Department of Economic Development will be consolidated within
the Empire State Development Corporation (ESDC). The executive budget
includes $31.6 million to support the university-based matching grants
and high technology and research development programs administered by
NYSTAR. Programs slated for elimination include the Centers for Applied
Research and Technology and Syracuse University’s Sensing, Analyzing,
Interpreting and Deciding Center. Reduction of funding is recommended
for the Centers for Advanced Technology for a total savings of $10.4
million across the three programs.
Gov. Paterson outlined proposals for reforming the state’s Empire Zone
Program based on increased performance measures. The proposal requires
all current program participants to reapply for certification and
demonstrate a 20:1 benefit/cost standard in order to retain the tax
credits. This requirement is an increase over the previous standard of
15:1 for companies certified between 2005 and 2008. Part of the reform
proposal calls for reinvesting savings from the program across the
following initiatives:
- $50
million for a proposed New York Growth, Achievement and Investment
Strategy Fund targeted to job creation in manufacturing, financial
sectors, agri-business, and high-technology and biotechnology fields;
- A
new R&D tax credit totaling $20 million allocated in 2009
through ESDC that allows credits based upon incremental business grants
made to colleges and universities for research; and
- Expansion
of the existing R&D tax credit for qualified emerging companies
in 2010 to eliminate the penalty for businesses creating more than 100
jobs and allowing businesses with fewer than 100 employees in New York
state but more than 100 worldwide to participate.
Additional
key provisions included in the ESDC budget for FY09-10 include:
- $3.8
billion in reappropriations to support regional initiatives approved by
the legislature last year, including city-by-city investments and
downstate regional projects (see the April
16, 2008 issue of the Digest) and for economic development,
cultural facilities, university development and energy projects
administered by the Corporation and Dormitory Authority of the State of
New York.
- $275
million from a total $375 million in projected savings from reduction
of “non-essential” projects re-directed for economic development
initiatives including: $200 million for strategic new investments by
ESDC; $50 million for development of IBM’s semiconductor packaging
center in upstate New York; and $25 million for the Albany Nanotech
initiative.
- $50
million for continued investment within the Empire State Economic
Development Fund, the Entrepreneurial Assistance Program, the operation
and development of the Centers of Excellence and other high technology
research centers.
As part
of his budget reduction plan for the State Education Department in
FY09-10, Gov. Paterson recommends eliminating funding for various math
and science initiatives. This includes $7 million for a program that
provides supplemental math and science summer programs at colleges and
universities for students and teachers and $4 million for the
Collegiate Science and Technology Entry Program, which provides
mentoring programs for college students pursuing degrees in
mathematics, science, technology, and health-related fields. Another $3
million for grants to Math and Science High Schools is also slated for
elimination.
Following recent approval of a tuition hike from the State University
of New York (SUNY) and the City University of New York (CUNY) Boards of
Trustees, the governor included in his budget an increase in resident
undergraduate tuition of 14 percent annually for SUNY and 15 percent
annually for CUNY. Budget documents note the tuition increases would be
tied to an investment plan in which SUNY would retain 10 percent of the
fiscal benefit from the 2008-09 spring semester increase, and both
institutions would retain 20 percent of the 2009-10 full annual
increase.
Based on recommendations from the New York State Commission on Higher
Education, the governor’s budget includes $50 million to help
capitalize a default reserve fund for a proposed New York Higher
Education Loan Program. The student loan program is expected to provide
$350 million annually in loans to 45,000 students pursuing technical,
undergraduate and graduate degrees, reports the governor’s press
office.
The executive budget recommends $29.7 million in all funds for the
Energy Research and Development Authority, with $16.2 million earmarked
for energy, research and development programs – down from $18.3 million
approved by lawmakers last fiscal year.
Gov. Paterson’s FY09-10 Deficit Reduction Plan includes many of the
same proposals from his earlier budget reduction plan rejected by
lawmakers during a special emergency session last month. The executive
budget increases state operating funds by a total $400 million or 0.5
percent over last year, with no percent change in the General Fund.
Corresponding executive budget documents are available at: http://publications.budget.state.ny.us/eBudget0910/ExecutiveBudget.html.
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Angel Investing Down 10%
Percent in 2008, But Some Investors Remain Optimistic
Investment
by angel groups declined at least ten percent this year, according to
the Angel Capital Association’s (ACA) annual survey of angel group
leaders. In January and February, about 55 percent of these leaders
predicted that both their number of deals and total invested dollars
would increase in 2008. Half of them now admit that their predictions
for the year were overly optimistic. Still, many investors reported
healthy activity during the year and many expect better results next
year.
ACA estimates average angel group investment in 2008 to be $1.72
million,
down from $1.94 million last year. The average number of closed deals
shrunk 16 percent from 2007 to 6.1 per group. Meanwhile the average
deal size grew to $280,936, up six percent. The change mimics the
increasing preference for fewer and larger deals among venture capital
firms.
Among respondents who reported fewer deals this year, a slight majority
(53 percent) cited uncertain market conditions as a reason for this
decline. Forty-four percent noted that the current economic downturn
had decreased their group’s appetite for new deals. Other explanations
for reduced activity include: a loss of member wealth led to a reduced
appetite for investment (43.5 percent), a change in the perceived
viability of investments during the due diligence process (33.9
percent), a need to reserve additional follow-on capital for portfolio
companies (32.3 percent), receiving fewer investment-quality
opportunities than expected (29 percent), and dealing with an
entrepreneur who was unable to fill out the round from other investors
(19.4 percent).
Only 28 percent believe that their number of deals and total dollars
invested will increase in 2009. Many investors, however, see a growing
role for angel groups as company valuations decrease and early-stage
investments become more attractive. Forty percent believe that both the
quantity and quality of the deals they review will be of higher quality
in the coming year.
Group leaders were also asked about changes they planned to make in
their group’s structure or investment process in 2009. Almost half
(47.3 percent) said that they planned to increase their co-investment
activities with other angel groups. One-third of respondents planned to
increase cooperation with other groups like venture firms and
individual angel investors.
Read the survey results at: http://www.angelcapitalassociation.org/dir_about/news_detail.aspx?id=179.
Michigan State
University Wins $550 Million Nuclear Physics Facility
It won’t
have smokestacks or be pushing automobiles or computer chips off an
assembly line, but the $550 million plum that landed in East Lansing,
MI last week is similar in size to many industrial
recruitment/retention deals sought by conventional economic development
efforts. This one, though, could have a longer lasting and higher
quality economic impact compared to conventional
recruitment/retention deals.
The Department of Energy announced it has chosen Michigan State
University (MSU) as the future home of the next big thing in nuclear
physics, a $550 million Facility for Rare Isotope Beams (FRIB). FRIB
research will involve experimentation with intense beams of rare
isotopes—short-lived nuclei not normally found on earth. That research
is expected to advance critical applications in the areas of materials
science, medicine, and stockpile stewardship.
The economic payoff to the Lansing region could be tremendous. The
research opportunities alone are expected to draw an international
community of approximately 1,000 university and laboratory scientists,
postdoctoral associates, and graduate students. Most of those high
paying, high-skilled jobs are several years away, however.
In the near term, the mostly underground facility will take many years
to build, providing a steady demand for design, engineering, planning,
and related construction and facility supply jobs.
The Lansing
State Journal reports, “Estimates say the project
will bring $1 billion in new economic activity and $187 million in tax
revenue over 20 years; 300 jobs for scientists and facility staff;
5,800 one-year construction jobs; 220 spinoff jobs.”
MSU already hosts the
National Superconducting Cyclotron Laboratory, which will
continue operations and rare isotope research during FRIB construction.
According to the DOE press release, MSU’s application for FRIB was
judged to be superior to other contenders. In addition, MSU was selected based on the merit review
criteria and the program policy factor contained in MSU’s bid,
including provision of a proposed budget that is reasonable and
realistic, giving substantial confidence that MSU can establish the
FRIB within the cost limitations set by DOE.
But the competition was not completely unlike the traditional
smokestack chasing of conventional economic development: MSU also
offered a direct cost share to the federal project, counting on
recovering its investments in the economic development spinoffs,
increased federal grants, and related tax revenues returning to the
school and community.
More information is available at: http://www.energy.gov/news/6794.htm.
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University of Texas System
Combines Support for Teaching and Commercialization Excellence with $15
Million Initiative
The
University of Texas System Board of Regents recently approved $15
million in funding for three programs that will support innovation and
extraordinary effort among its faculty. Two of these programs will make
awards for teaching excellence, one for faculty at the University of
Texas at Austin (UT Austin) and the other for teaching at the system’s
other eight universities. The third program will support a Center for
Technology Commercialization at UT Austin to accelerate technology
transfer and new venture creation. Each of these programs will receive
$1 million annually for the next five years for awards and operations.
The two awards programs will recognize faculty for outstanding
contributions to undergraduate education and will serve as an incentive
compensation program to improve instruction. These one-time awards will
range from $15,000 to $30,000. The Board plans to recognize at least 30
faculty members each year.
The UT Austin Center for Technology Commercialization will help
coordinate the activities of the existing Office of Technology
Commercialization and the Austin Technology Incubator. Specialists will
be available to advise faculty and researchers on the commercialization
process and on the resources available for new technology ventures. The
center is intended to increase the number of successful start-up
companies and shorten the time to market for university discoveries.
The new center’s funding comes just a year after the UT System’s Office
of Research and Technology Transfer introduced a grant program for
commercialization projects. Last December the office launched the $2
million Texas Ignition Program (TIP), to serve as a complement to the
state’s Emerging Technology Fund and the Texas Enterprise Fund. TIP
offers grants of up to $50,000 for the creation of ventures based on
university technology and may be used for personnel, equipment,
supplies, business plans, and, in some cases, faculty support and
patent costs. The third round of awards was made earlier this month and
approximately $880,000 remains in the fund.
In February, Texas Gov. Rick Perry stepped up his calls for the
University of Texas system to follow the lead of the Texas A&M
system and make commercialization of research part of the consideration
in tenure decisions. Texas A&M has included the
commercialization of faculty research in tenure decision-making since
2006, when the Board of Regents voted unanimously for the change. The
University of Texas system has not yet followed suit.
Read the latest announcement from the University of Texas Board of
Regents at: http://www.utsystem.edu/news/2008/UTS-RegentsAwards-11-13-08.html.
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Scotland
Universities to Direct Nearly 11 Percent of Funding on Pursuing
Innovation
The
Scottish Government announced last month a funding plan for the
university system that directs more than 10 percent of current funding
into a new Horizon Fund created to make targeted investments in
research, technology transfer, and entrepreneurial development.
The funding proposal is part of an overall plan to expand the role of
universities in helping the country recover from the current economic
downturn. The plan was based on recommendations from a joint university
taskforce established last year by the Cabinet Secretary for Education
and Lifelong Learning. The Future Thinking Taskforce set
forth challenges for both the Scottish Government and Universities
Scotland, which represents the country’s 20 institutions of higher
education.
Specifically, universities must demonstrate the funds they receive from
the government support activities that are aligned with the Scottish
Government’s goals for sustainable economic growth. In return,
Universities Scotland challenges the government to move into the top
quartile of OECD countries for percentage of GDP invested in
universities for national investment in R&D and innovation by
2028.
The plan does not include new funds for innovation. Instead, it
redirects existing allocations, creating a funding arrangement that
reflects the new roles of the government and university system,
according to a report released by the taskforce. Based on the Scottish
Funding Council’s 2008-09 budget, the General Fund for Universities
would consist of GBP 965m (approximately $1.4 billion U.S.) and GBP
122m (approximately $182.2 million U.S.) for the Horizon Fund for
Universities. Priorities outlined by the Scottish Government for the
Horizon Fund include:
- Working
with employers to develop an entrepreneurial capacity in which the
skills of graduates are best aligned with workforce needs;
- Providing
the necessary resources to develop world class research institutions;
- Increasing
knowledge transfer and innovation to promote additional wealth for
Scotland’s economy; and
- Diversifying
and specializing university strategies.
The
Scottish Government additionally accepted the recommendation of the
taskforce to add universities as the seventh sector of the Scottish
economy. This group of sectors is recognized by the Scottish Government
as key to economic prosperity and includes creative industries, energy,
life sciences, financial and business services, tourism, and food and
drink.
All documents relating to the Joint Future Thinking Taskforce on
Universities are available at: http://www.scotland.gov.uk/Topics/Education/UniversitiesColleges/16640/hetaskforce.
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Corrections
In the
"TBED People and Organizations" column of the Dec. 10 Digest, Oklahoma
Gov. Brad Henry was incorrectly identified as the new chairman for the
Southern Growth Policies Board. Mississippi Gov. Haley
Barbour serves as chairman for the organization and will host the 2009
annual meeting June 7-9 in Biloxi, MS. More information is available
at: http://southern.org/conference/conf.shtml. SSTI apologizes for the
error.
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