SSTI Weekly Digest for January 28, 2009

In the January 28, 2009 Issue:

Inside ARRA – More on the Opportunity for TBED
Budget Proposals Produce Mixed Bag for TBED Programs
Tech Talkin’ Govs, Part IV
Maryland Budget Proposal Increases Support for State’s Bio 2020 Initiative
Studies Find NIH Funding Is Beneficial For State Economies, But Also Politicized
TBED People and Organizations
SSTI Job Corner

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Inside ARRA – More on the Opportunity for TBED

A party-line vote may be all the President can get as the House of Representatives is poised to vote on the American Recovery and Reinvestment Bill of 2009 (ARRA). That vote would be enough, though, to advance the $825 billion plan into the Senate, which is considering its own version of the bill this week.

While some changes are being proposed to the House version of the bill to accommodate interests of some Republicans, those measures directly affecting economic development goals of local and state TBED practitioners appear secure.

There has been considerable debate as to how fast ARRA funds can move through the federal, state and local bureaucracies before it is transformed into real projects and programs, but most agree the funding has to be approved by Congress before the clock even starts ticking on how quickly the economy feels its impact.

ARRA is enormous but here are some of the TBED-supporting measures included in the 647-page legislation as passed by the House Appropriations Committee (the full text is available at: http://www.rules.house.gov/111/LegText/111_hr1_text.pdf).

Department of Agriculture

Rural Community Facilities Program –$100 million
Rural Business Program –$100 million, including $13 million for the Rural Business Enterprise Grant program to “encourage the development of small and emerging private business enterprises” and $87 million for business and industry guaranteed loans.
Rural Broadband Infrastructure Development – $2.825 billion. Funding will be “strongly oriented towards grants to provide the maximum incentive for providing broadband in unserved areas.”

Department of Commerce

Economic Development Administration – additional $250 million (more than doubling the amount of funding available in FY09 for local and regional economic development projects, which have included research park infrastructure and incubator/accelerator facilities, as well as community improvement projects.
Manufacturing Extension Partnership – $30 million
Technology Innovation Program – $70 million for new grants
State Broadband Data and Development Grants – $350 million for competitive grants to develop and implement statewide initiatives to identify and track the adoption and availability of broadband services.
Wireless Broadband Development for Unserved and Underserved Areas –$2.825 billion for the National Telecommunications and Information Administration to subsidize deployment of broadband and wireless. Grantees must “adhere to open access principles.”

NASA

Science funding – $400 million for earth science/climate research missions, total solar irradiance sensor, and a thermal infrared sensor for the Landsat Continuing Mapper.
Aeronautics – $150 million for investments in environmentally-friendly or green aviation, supersonic testbeds, and development of aerospace systems and technologies.

National Science Foundation

Research and Related Activities – $2.5 billion to restore the NSF funding rate for proposals to pre-2000 levels. Includes $300 million for the Major Research Instrumentation program and $200 million to restart its facilities program that supports physical and other sciences and engineering.
Education and Human Resources – $100 million, including $60 million for the Robert Noyce Teacher Scholarships to encourage more STEM majors to pursue K-12 teaching careers and $40 million for the Math & Science Partnerships, also targeted to K-12 STEM education.

Department of Defense

Defense Energy Research – $350 million for research, development, test and evaluation projects for improvements in energy generation, transmission, regulation, storage and use on military installations from alternative and renewable energy sources.

Department of Energy

Energy Efficiency and Renewable Energy Research, Development, Demonstration and Deployment – $2 billion including $800 million for biomass projects, $400 million for geothermal activities and projects and $800 million for base program activities.
Industrial Energy Efficiency – $500 million for a waste energy recovery incentive program.
Grants to Institutional Entities for Energy Sustainability and Efficiency – $1 billion to identify, design and implement sustainable energy infrastructure projects and grants for energy efficiency innovative technologies. Institutions include higher education, public schools, local governments and municipal utilities. An additional $500 million would be available for loan guarantees.
Energy Efficiency & Conservation Block Grants – $3.5 billion for state and local governments to implement strategies to reduce fossil fuel emissions and reduce total energy use.
State Energy Program – $3.4 billion as grants to states and direct funding to state energy offices to address energy priorities and adopt emerging renewable energy technologies.
Alternative Fueled Pilot Grant Program – $400 million to establish a grant program to encourage, through 30 projects, the use of plug-in electric vehicles or other emerging electric vehicle technologies.
Advanced Battery Manufacturing – $1 billion in grants for facility funding to support U.S. manufacturing of advanced vehicle batteries. An additional $1 billion would be available for the Advanced Battery Loan Guarantee program.
Renewable Energy and Transmission Loan Guarantee – $8 billion for a new, temporary loan program to provide loan guarantees for proven renewable energy technologies and transmission technologies. Available through Sep. 30, 2011.
Smart Grid Investment Program – $4.5 billion for R&D, pilot projects and matching funds for the program.
Fossil Energy – $2.4 billion for demonstration of carbon capture and sequestration technology demonstration projects.
Science – $2 billion, including $400 million for ARPA-E, the new Advanced Research Projects Agency – Energy to support high-risk, high-payoff research.

Small Business Administration

Small Business Capital Availability – $430 million for credit subsidy costs and administration of new loan guarantee and direct lending authorities, including guarantees of up to 95 percent of small business loans and refinancing community development loans, and simplifies maximum leverage limits of Small Business Investment Companies (SBICs).

Environmental Protection Agency

Brownfields – $100 million to capitalize revolving loan funds and provide low-interest loans, job training grants, and technical assistance to local governments and non-profit organizations.

Department of Health and Human Services

University Research Facilities – $1.5 billion for competitive grants by the National Institutes of Health, limited to renovations and repair rather than new construction.
NIH Research – $1.5 billion for both competitive grants and intramural research within the Institutes.
Comparative Effectiveness Research – $1.1 billion for the Agency for Healthcare Research and Quality.
Health Information Technology – $2 billion to jumpstart investment in health information technology through the National Coordinator for Health Information Technology in the HHS Secretary’s Office.
Pandemic Flu, Biomedical Advanced Research & Development, and Cyber Security – $900 million for preparation and research and advanced development of major threats to public health.

Department of Education

Education Technology – $1.0 billion through the Enhancing Education through Technology program that supports state, district and school efforts to integrate technology into curricula.
Pell Grants – $15.636 billion to increase the discretionary maximum Pell grant by $500.
K-12 Repair and Modernization – $14 billion for school modernization, renovation and repair based on FY08 Title 1 Education allocations.
Higher Education Repair and Modernization – $6 billion for university/college modernization, renovation and repair based on a formula in proportion to the State’s share of full-time equivalent undergraduate students.

Department of Housing and Urban Development

Community Development Block Grants – $1 billion to be distributed through existing formula.

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Budget Proposals Produce Mixed Bag for TBED Programs
As governors across the nation seek to fill record deficits, many new and longstanding TBED initiatives are facing challenging cuts or elimination. At the same time, governors are shoring up support for critical, targeted investments in the economy that they say are needed now more than ever. Using the platform of the state of the state, budget and inaugural addresses, several governors have announced new or increased investments in workforce innovation, bioscience, and alternative energy (see the Jan. 7, 14, and 21 issues of the Digest). Summarized below are executive recommendations from budget proposals in Georgia, Idaho and Vermont outlining new plans and proposed cuts to ongoing TBED efforts.

Georgia
Gov. Sonny Perdue unveiled his fiscal year 2010 budget earlier this month alongside a $1.2 billion bond proposal focusing on infrastructure projects to boost the state’s economy. The governor is seeking to fill a projected $1.2 billion deficit in the current fiscal year.

Within the Board of Regents, the Research Consortium would be reduced by $9.2 million in FY10. This includes elimination of funding for the Traditional Industries Program ($3.1 million), reduced funding for Vaccine Initiative Collaboration grants ($1 million) and Technology Partnership Grants ($710,413) in the Georgia Research Alliance program. Another $400,000 would be eliminated for the bio-refinery.

The governor’s budget also reduces by $498,910 funding for Innovation and Technology within the Department of Economic Development, which provides leadership for the recruitment, growth and marketing of the bioscience and technology industry.

Gov. Perdue is requesting $2.9 million for the Math and Science Mentor subprogram and the Teacher Success/CLASS Keys program, which provide salary bonuses to teachers in exchange for mentoring other teachers in science and math. However, two programs aimed at increasing student interest in science, technology, engineering and mathematics (STEM) are slated for elimination within the Department of Education. This includes $750,000 for the National Science Center and Foundation and $250,000 for the Georgia Youth and Science Technology Center, a program that seeks to generate interest in STEM fields for elementary and middle school students and teachers.

The capital budget includes a $10 million proposal for science-based economic development equipment and infrastructure.

Gov. Sonny Perdue’s FY10 executive budget is available at: http://www.opb.state.ga.us/media/9848/2009-01-26_web_fy2010_state%20of%20georgia%20budget.pdf.

Idaho
To grow the state’s Gross Domestic Production from $51 billion to $60 billion over the next six years, Gov. Butch Otter is asking lawmakers to support a new initiative that targets growth in the areas of energy, high technology, medical technologies, agribusiness and the food industry. The project seeks to establish a highly skilled workforce and capitalize on technology transfer activity at the state’s institutions of higher education.

The governor’s FY10 proposed budget includes $850,000 for the initiative, called Project 60, within the Department of Commerce. Other TBED initiatives, however, do not fare so well within the executive budget. Gov. Otter recommends eliminating $150,000 for the TechConnect Centers, which support entrepreneurship, university-industry collaboration and technology commercialization. No new funding is recommended for Business and Jobs Development, which received $600,000 last year; budget documents note spending authority to use the interest generated from FY09, which equals $120,000. The governor’s proposal also eliminates funding for Small Business Assistance Grants, which received $100,000 last year.

Within the Colleges and Universities budget, the governor recommends $1.6 million for the Center for Advanced Energy Studies. Last year, lawmakers restored funding of $1.6 million for the Center at University Place in Idaho Falls after the governor recommended eliminating the funds (see the March 26, 2008 issue of the Digest). This is a partnership between Idaho universities and the federal government through the Department of Energy and the Idaho National Laboratory. The governor’s recommendation includes $1.3 million in ongoing general funds plus $312,000 for operating expenses.

The governor recommends $26.25 million in total funds (down from $28.3 million approved in FY09) for the Agriculture Research and Extension Service, which supports agricultural research and extension programming at 13 university centers throughout the state.

Gov. Butch Otter’s FY10 executive budget is available at: http://dfm.idaho.gov/cdfy2010/Index2010.htm.

Vermont
During his inaugural address earlier this month, Gov. Jim Douglas urged lawmakers to pass a proposed multi-part strategy for economic development that focuses on encouraging emerging industries to locate or expand in the state. The Economic Growth Plan unveiled in September consists of seven strategies, including R&D tax credits for Vermont businesses that mirror the federal R&D tax credits, a Vermont Innovation Challenge to facilitate the development of new ideas and products by companies and entrepreneurs, and creation of Green Growth Zones. Within these zones, a renewable energy source will serve as the hub around which businesses can locate and create jobs with special incentives such as financing, expedited permitting and lower electric rates, according to the governor’s office. The entire zone will be considered a 10-year tax-increment financing zone under the proposal.

To meet the needs of the changing economy, Gov. Jim Douglas is asking lawmakers to approve $7.3 million in FY10 for the Next Generation Initiative, which funds scholarships, loan forgiveness and workforce initiatives linked to higher education. Lawmakers approved $8 million for the initiative in FY09. The governor’s budget recommends $3.2 million for workforce development programs, including $237,500 for acquiring patents and commercializing technology created at the University of Vermont.

The FY10 budget includes $760,000 to the Vermont Telecommunications Authority for operating expenses related to the e-State initiative, the governor’s plan to provide universal access to broadband and wireless technology anywhere within the state’s borders (see the Jan. 8, 2007 issue of the Digest). Another $1 million is included in the capital budget for continuation of the broadband grant program. This partnership between the state’s electric utilities will provide high-capacity broadband and support Smart Grid energy technologies, according to budget documents.

Within the Department of Agriculture, Gov. Douglas is proposing $300,000 for renewable energy grants to accelerate development and deployment of renewable energy technologies.

Gov. Jim Douglas’s FY10 executive budget is available at: http://finance.vermont.gov/sites/finance/files/pdf/state%20budget/FY2010ExecBudRec.pdf.

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Tech Talkin’ Govs, Part IV
The fourth installment of the Tech Talkin’ Govs series includes highlights from state of the state, budget and inaugural addresses from governors in Hawai‘i and Texas.

Hawai‘i
Gov. Linda Lingle, State of the State Address, Jan. 26, 2009
“Last year we entered into a unique partnership with the federal Department of Energy called the Hawai‘i Clean Energy Initiative or HCEI. It established the goal of a 70 percent clean energy economy by 2030.

“HCEI experts from government, national labs, our military, utilities, universities and the private sector have recommended specific actions to achieve the 70 percent clean energy goal through indigenous renewable resources and energy conservation.

“My administration and legislators will introduce several bills based on these HCEI recommendations. … When adopted, these proposals will form the basis for Hawai‘i’s transformation to one of the world’s first economies based primarily on clean energy.”

Texas
Gov. Rick Perry, State of the State Address, Jan. 27, 2009
“We should start by replenishing the Emerging Technology Fund … and the Enterprise Fund, to keep drawing ideas, investment and jobs to Texas. …

“… (L)et’s keep improving our math and science education, and continue preparing our young people, especially low-income and minority students, for a productive life after high school. …

“… I also propose freezing a student’s college tuition rates for four years at the level they pay as an entering freshman. …

“… I agree with Comptroller Combs that we should significantly increase our investment in community colleges. … I suggest we tackle this challenge with an expansion of the Workforce Commission’s Skills Development Fund and its training partnerships. …

“…Texans … approved the Cancer Prevention and Research Institute of Texas in a statewide vote. Now it’s time to take the next step by covering the Institute’s startup costs so researchers can get to work, move us closer to a cure, and accelerate our state’s ascendance as a leader in biotechnology. …

“… Let’s get Texas in on the ground floor and invest in adult stem cell research, the one area of that field that is actually proven to expedite cures.”

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Maryland Budget Proposal Increases Support for State’s Bio 2020 Initiative

In support of the state’s goal to attract and grow biotechnology companies, Gov. Martin O’Malley’s executive budget recommends increasing by $400,000 the state’s investment in stem cell research, while maintaining current funding for biotechnology tax credits and slightly increasing the appropriation for the Nanotech Biotechnology Initiative Fund.

Announced last summer, Maryland’s Bio 2020 Initiative is the state’s plan to invest up to $1.3 billion over the next 10 years in Maryland’s biotechnology industry (see the June 18, 2008 issue of the Digest). Gov. O’Malley recommends $18.4 million in FY10 for the Maryland Stem Cell Research Fund, which is administered by the Maryland Technology Development Corporation (TEDCO). Although lawmakers approved $19 million for the fund in FY09, budget documents reflect $18 million in total funds were available. The program has funded a total 82 projects at Maryland research universities and private sector corporations since 2006. TEDCO would also receive $3.7 million ($600,000 less than last year) for technology development, transfer and commercialization through its University Development Transfer Fund and the Maryland Technology Transfer Fund.

Additional executive budget recommendations in support of the Bio 2020 Initiative include:

$6 million (the same as last fiscal year) for the Maryland Biotechnology Investment Tax Credit Reserve Fund, which provides tax credits to encourage investment in biotech firms;
$5 million for the Maryland Biotechnology Center within the Department of Business and Economic Development (DBED) to showcase and support biotechnology innovation and entrepreneurship for the state; and
$1.6 million for the Nanotech Biotechnology Initiative Fund, up from $1.5 million in special funds available last year.

The capital budget includes $32.2 million for the Germantown Bioscience Center and $5 million for the East Baltimore Technology Park.

Gov. O’Malley recommends $58 million for DBED in FY10, down $11.5 million from FY09. Within the department, the governor proposes $2 million (the same as last year) for the Maryland Enterprise Investment Fund and Challenge Programs. No funding is included for the rural broadband assistance fund, which received $3.4 million in federal funds last year after lawmakers removed a $2 million general fund appropriation within the Division of Financing (see the April 23, 2008 issue of the Digest).

The governor’s budget includes $16.9 million to continue a tuition freeze for a fourth consecutive year for in-state undergraduates at Maryland’s four-year higher education institutions. Gov. O’Malley is expected to introduce legislation this session to reauthorize the Higher Education Investment Fund (HEIF), which expires at the end of FY09, according to budget documents. Created as a dedicated revenue stream for higher education in 2007, the HEIF dedicates a portion of the increase in corporate tax revenues to the fund.

Gov. Martin O’Malley’s FY10 budget is available at: http://www.dbm.maryland.gov.

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Studies Find NIH Funding Is Beneficial For State Economies, But Also Politicized
In the 2007 fiscal year, funding from the National Institutes of Health (NIH) generated about $2.21 in new business activity for every $1 invested, according to a report from Families USA. The group, which advocates for increased healthcare spending in the U.S., argues that NIH investment can be a powerful driver of economic growth. Just in 2007, NIH funding generated 350,000 new jobs, more than $18 billion in new wages and $50 billion in business activity. Another report, however, finds that despite the good done by NIH investment, the political influence of federal legislators has a strong impact on the awards process and skews the geographic distribution of NIH awards. This interference by key political figures exacerbates the inequality in funding levels and limits the benefits from NIH funding in states with less legislative influence.

The Families USA study, titled “In Your Own Backyard”, argues that the recent plateau in NIH funding is detrimental to economic development in the states. To make their argument, they examine NIH grants in 2007 to each state and the business activity generated by those grants based on data from the Bureau of Economic Analysis (BEA). States generated between $2.49 (Texas) and $1.66 (South Dakota) for each dollar invested that year. Jobs created from NIH funding pay an average of $52,000 a year.

The report concluded that the NIH is an important driver of high-tech economic development in the states and that the loss of NIH funding can have a profound impact on a state’s economy.

Download Families USA’s “In Your Own Backyard: How NIH Funding Helps Your State’s Economy” at: http://www.familiesusa.org/assets/pdfs/global-health/in-your-own-backyard.pdf.

In the December 19, 2008 issue of Science, doctoral student Deepak Hegde and Professor David Mowery of UC Berkeley’s Haas School of Business present evidence that these state economic benefits are influenced by the makeup of the Labor, Health and Human Services, Education and Related Agencies (LHHE) subcommittee of the House Appropriations Committee. Their study, “Politics and Funding in the U.S. Public Biomedical R&D System”, finds that despite the peer-review process used by NIH to make merit-based awards, congressional appropriators are able to support additional spending in their states and districts. They do this by championing funding for specific biomedical fields that have a link to research institutions in their constituencies.

By analyzing NIH funding data and the members of the LHHE subcommittee between 1984 and 2003, Hegde and Mowery find that having a representative on the subcommittee is associated with a 5.9 percent increase in NIH funding for research institutions. The figure is higher for state universities, which receive 8.8 percent more funding when they have a representative on the subcommittee, and small businesses, which receive 10.3 percent more funding. Between 1984 and 2003, subcommittee representation accounted for 5.3 percent of total funding allocations on average.

Hegde and Mowery conclude that the NIH awards process is influenced by appropriators, but stop short of claiming that political interference causes inefficiency. Their findings, however, present a challenge for TBED professionals and research institutions seeking to tap into NIH funding to support research projects and build their biomedical industry. As the Families USA report demonstrates, many states rely on NIH funding to drive biomedical business activity. Since institutional capabilities and promising research are not themselves sufficient to secure appropriate funding, grant-seekers must create longer-term plans to gain access to influential legislators.

Read Hegde and Mowery’s “Politics and Funding in the U.S. Public Biomedical R&D System” at: http://www.sciencemag.org/cgi/content/full/322/5909/1797.

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TBED People and Organizations
Pennsylvania Gov. Ed Rendell named George Cornelius, the immediate past president and CEO of Arkema Inc., as secretary of the Department of Community and Economic Development.

Mark Crowell, head of economic development and technology transfer at the University of North Carolina at Chapel Hill, has been appointed vice president for business and technology development at the Scripps Research Institute.

Robert De Wit, a former Pfizer Inc. executive, has been appointed president and chief executive officer of the business incubator of Western Michigan University’s Parkview Campus.

Michael Dockter has been hired as the new associate vice chancellor for research and technology transfer and chief research officer at Arkansas State University.

David Edgerly, who for the last two years has headed Maryland’s Department of Business and Economic Development, will resign from his post.

Jim Fram, the president and chief executive of the Bartlesville Regional Chamber of Commerce and the Bartlesville Development Corporation, is resigning. He will leave Feb. 2 to become the senior vice president of economic development for the Tulsa Metro Chamber.

Nate Feltman, the outgoing State Secretary of Commerce and Chief Executive Director of the Indiana Economic Development Corporation, is joining the law firm of Baker & Daniels LLP.

Indiana Gov. Mitch Daniels announced the resignation of Mitch Roob as secretary of the Family and Social Services Administration to become Indiana’s secretary of commerce and chief executive of the Indiana Economic Development Corporation.

Saul Kaplan resigned as executive director of the Rhode Island Economic Development Corp. to work full-time at the nonprofit Business Innovation Factory as the founder and Chief Catalyst.

Missouri Gov. Jay Nixon named Linda Martinez his economic development director.

Sharell Mikesell has been named associate vice president directing the newly opened Industrial Liaison Office at the Ohio State University.

The Piedmont Triad Entrepreneurial Network suspended operations at the end of 2008.

James Smith, vice president for economic development at Bowling Green State University, will become the president of Northern State University.

Sharon Quisenberry has accepted the position of vice president for research and economic development at Iowa State University.

Pramod Vershney has been named director of the Center for Advanced Systems and Engineering at Syracuse University. Varshney succeeds Gina Lee-Glauser, who has returned to her role as the university’s associate vice president for research.

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

The Virginia Economic Development Partnership (VEDP) Research Division is seeking a Senior Economist to manage a team providing research and analysis on the Virginia and U.S. economy, VEDPs target industries, ways to increase Virginia’s competitive stature, and conducting marketing research in support of our mission to generate new capital investment and job creation opportunities. The successful applicant must have a comprehensive knowledge of economic principles, data sources and research techniques; demonstrated experience in planning, developing and writing economic research studies, reports and business proposals including the ability to analyze available data to draw supportable conclusions. Experience in collaboratively leading economic research project teams to successful outcomes is required.

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