National Science Foundation (NSF)
In the FY10 budget request, the Administration seeks $7.05 billion for NSF (8.5% increase above the FY09 enacted budget). Just over 81% of the request would be directed to research and related activities. These amounts are separate from the $3 billion NSF received in the Recovery Act.

In FY10, each research division in the NSF would be asked to set aside a minimum of $2 million ($92 million total) for high-risk, high-reward transformational research.

The NSF request for Major Research Equipment and Facilities Construction is $117.3 million, a decrease of $34.7 million (down 22.8%).

The FY10 budget contains requests for some initiatives crossing several NSF directorates including:

• Networking and Information Technology R&D Program – $1.1 billion (10.6% increase) to coordinate networking and IT investments across agencies, especially in the areas of high-end computing research, human computer interaction, and large-scale networking projects;
• National Nanotechnology Initiative – $423 million (6.5% increase) to lead research in nanotechnology. The Environmental, Health, and Safety area requested a $2 million increase to support decision analysis research;
• Climate Change Science Program – $299.9 million (36.6% increase) towards basic research, comprehensive observations, integrative modeling, and development of products for decision makers on the topic of climate change. This multi-agency activity is coordinated through the National Science and Technology Council;
• Faculty Career Development Program – $203.8 million (11.6% increase) to support junior faculty integrating education and research;
• Climate Research Program – a new focus of the NSF with $197.3 million in proposed funding. This push builds upon the Climate Change Science Program and other NSF efforts for additional multidisciplinary research on climate research and modeling;
• Cyber-Enabled Discovery and Innovation Initiative – $102.6 million (44.7% increase) to support the intersection of computational concepts, models, algorithms, and tools with multidisciplinary science and engineering research; and,
• Science and Engineering Beyond Moore’s Law – $46.7 million (198% increase) to push transformation research in computing power, and create partnerships with the private sector and the national laboratories to advance the field.

NSF Centers Programs
Funding for NSF’s Centers Programs, supported by many tech-based economic development initiatives as well as the NSF, fosters interdisciplinary research. The FY10 budget request for these centers is $305.0 million (11.2% increase).

• Material Research Science & Engineering Centers (MRSEC) – $66.0 million (3.6% decrease) to support multi-year multidisciplinary material research at academic institutions, with 27 to be supported in FY10;
• Engineering Research Centers (ERC) – $63.2 million (18.0% increase) for partnerships involving academia, industry, and the NSF for the development of next-generation engineered systems. Three new centers are to be added in FY10, bringing the total to 16;
• Science and Technology Centers (STC) – $57.9 million (6.2% decrease) to support partnerships involving academia, industry, government laboratories, and other public and private organizations to explore research problems that require interdisciplinary expertise. Up to five new STCs are intended to be funded in FY10, bringing the total to 17;
• Nanoscale Science and Engineering Centers – $45.2 million (no change) for multidisciplinary research to advance the development of nanoscale technologies in electronics, medicine, materials, environmental science and other fields. Same as last year, 19 of these centers are to be funded;
• Science of Learning Centers (SLC) – $25.8 million (106.4% increase) for multidisciplinary, multi-institutional centers to advance the understanding of learning and its societal implications;
• Centers for Chemical Innovation (CCI) – $24.0 million (54.8% increase) to support research on strategic, transformative “big questions” in basic chemical research; and,
• Centers for Analysis and Synthesis – $23.0 million (32.1% increase) to develop new tools and standards for management of biological information and meta-information, in addition to supporting data analysis capabilities across the biological sciences.

Engineering Directorate
The FY10 budget request for the Engineering Directorate is $764.5 million (10.3% increase), which represents about 45% of the total federal support for university-based, fundamental engineering research. Highlights include:

• SBIR/STTR programs – $135.5 million (11.2% increase) to support innovation research conducted by small technology firms;
• Office of Emerging Frontiers in Research and Innovation (EFRI) – $29.0 million (9.6% increase) to recommend, prioritize, and fund interdisciplinary initiatives at the emerging frontier of engineering research and education;
• Partnerships for Innovation (PFI) – $9.2 million (no change) to support partnerships among academe, the private sector, and state/local/ federal government that will explore new approaches to support and sustain innovation;
• Industry/University Cooperative Research Centers (I/UCRC) - $7.9 million (10.6% increase) to further develop long-term partnerships between industry, academe, and government. Funded primarily by industry, eight additional centers will be supported in FY10; and,
• Grant Opportunities for Academic Liaison with Industry (GOALI) – $6.4 million (12.4% increase) to enable partnerships between industry and academe where there is a common intellectual and educational agenda.

Integrated Activates
The FY10 proposed budget for the Experimental Program to Stimulate Competitive Research (EPSCoR) is $147.1 million (10.6% increase). EPSCoR promotes the development of eligible states’ science and technology resources through partnerships involving a state’s universities, industry, government and the federal R&D enterprise.

Education and Human Resources Directorate
The budget request for the EHR Directorate is $857.8 million (1.5% increase). Highlights include:

• Graduate Research Fellowships – $122.0 million (6.0% increase) to support graduate students in the science, mathematics, and engineering disciplines. The funding would support 1,654 new fellowships in FY10, with the goal of tripling the number of new fellowships awarded annually by FY13;
• Discovery Research K-12 – $108.5 million (no change) to enable significant advances in pre-K through 12 student and teacher learning of the STEM disciplines through the development, implementation, and study of resources, models, and technologies;
• Integrative Graduate Education and Research Training (IGERT) – $68.9 million (9% increase) to prepare doctoral students to integrate education and research;
• Advanced Technological Education (ATE) – $64.0 million (24% increase) to support partnerships between two-year colleges and employers to improve the education of science and engineering technicians, with the goal of reaching $100 million for this program in FY13;
• The Math and Science Partnership (MSP) – $58.2 million (4.6% decrease) to improve student outcomes in math and science for students in grades K-12 by forming partnerships between teachers and their colleagues in higher education;
• Robert Noyce Teacher Scholarship Program – $55.0 million (no change) to encourage talented STEM undergraduate students and postgraduate professionals to become K-12 mathematics and science teachers;
• STEM Talent Expansion Program (STEP) – 32.5 million (10.4% increase) to increase the number of U.S. citizens and permanent residents receiving associate or baccalaureate degrees in established or emerging STEM fields. The increase will allow two additional centers to be established in FY10;
• Center of Research Excellence in Science and Technology (CREST) – $30.5 million (no change) to fund centers with the goal of strengthening research and education in minority-serving institutions and increasing matriculation in STEM disciplines; and,
• Climate Change Education Program – $10 million (no change) to increase public understanding and engagement of climate change issues, prepare a climate science professional workforce and influence STEM education policy.

Colorado
Gov. Bill Ritter signed the budget bill (SB 09-259) earlier this month providing $19.2 billion in FY10, including $4.5 million for continued investment in the state’s bioscience industry. Although the appropriation for the Bioscience Discovery Evaluation Grant Program is $1 million less than last fiscal year, it is the second installment approved by lawmakers for the five-year, $26.5 million initiative (see the May 14, 2008 issue of the Digest). Funding for this initiative is distributed for proof-of-concept grants, support for early-stage companies and infrastructure.

Additional economic development appropriations include $2.7 million for Colorado First customized job training, $1.4 million for new jobs incentives, and $1.3 million for small business development centers.

Gov. Ritter signed into law two bills touted as job-creation legislation to help companies create new jobs and strengthen community college job training programs to better meet the workforce needs of emerging industries.

HB 1001 allows qualified companies to apply for a state income tax credit based on the payroll tax cost they incur from new job creation. To qualify, businesses must create at least 20 new jobs in urban areas or five new jobs in rural areas that pay above average wages.

The other bill, SB 171, creates a programmatic change within the existing Colorado First program to allow community colleges and other training providers to partner with businesses to create industry cluster-based training programs for all workers. Current training programs are restricted to individuals who are currently employed, according to the governor’s office. The bill is targeted toward the New Energy Economy industries, which include aerospace, tourism, new energy, bioscience and information technology.

Approved by the legislature but awaiting the signature of Gov. Ritter, HB 1105 would establish a one-year pilot program granting a 30 percent state income tax break for angel investment in startup companies, reports Coloradoan.com. The cost is estimated at $750,000 and would be provided by the Office of Economic Development.

Gov. Ritter announced in April the state will use federal stimulus funds to maintain level funding ($706 million) for higher education for the next two fiscal years.

Idaho
The FY10 appropriations bill for the Department of Commerce was signed into law earlier this month following a tumultuous session centered on a transportation funding plan addressing infrastructure needs.

The Commerce budget includes $30.3 million for the department in FY10, 14.4 percent less than the FY09 appropriation. Lawmakers approved $132,600 in spending authority for Project 60, only a fraction of the governor’s recommendation. The initiative aims to grow the state’s Gross Domestic Product from $51 billion to $60 billion over the next six years. Although the appropriation is $717,400 less than the governor’s request, another $320,000 from the business and jobs development fund and any interest earned from the fund could go toward the initiative in the coming year, according to department officials.

No funding is included for Idaho TechConnect, a $150,000 decrease, which supports entrepreneurship, university-industry collaboration and technology commercialization.  Additionally, no funding is allocated for Small Business Assistance Grants, which received $100,000 last year.

Within the Colleges and Universities budget, $1.6 million is included for the Center for Advanced Energy Studies at Idaho Falls, the same amount as last year. Budget documents note the funding source for the center comes from the American Recovery and Reinvestment Act state fiscal stabilization fund.

Washington
Washington’s Life Sciences Discovery Fund was spared from a massive reduction proposed by the House and instead, will be cut 41 percent in the next biennium under the budget agreement approved by lawmakers. While the $39 million appropriation from the state’s tobacco settlement account is a significant reduction from the last two years, it is far less sweeping than the House’s proposed cut, which would have left only $5 million for the fund. The House wanted to transfer the remaining balance to the general fund to fill budget gaps, reports Xconomy. When created in 2005, lawmakers envisioned the fund would reach $1 billion in ten years (see the May 16, 2005 issue of the Digest).

Within the Department of Community, Trade and Economic Development, lawmakers allocated $51.2 million in general funds for FY10 and $51.9 million in general funds for FY11. This includes $246,000 for Manufacturing and Modernization, down $60,000 from the approved FY09 budget. The budget agreement also includes $2.5 million each fiscal year for the Washington Technology Center, down approximately 10% from the approved level last biennium.

Many of the Gov. Christine Gregoire’s recommendations for Science, Technology, Engineering, and Mathematics (STEM) programs are funded during the biennium from the Education Legacy Trust, including:

• $3.85 million for a math and science instructional coaches program;
• $3.2 million of for three additional professional development days for middle and high school math and science teachers;
• $1.6 million each fiscal year for the Washington state leadership and assistance for science education reform (LASER) regional partnership activities; and,
• $139,000 each fiscal year for staff at the office of the superintendent of public instruction to coordinate and promote efforts to develop integrated math, science, technology, and engineering programs in school districts across the state. Grants of $2,500 will provide 20 middle and high school teachers each year with professional development training for implementing integrated STEM programs.

The legislature also approved the governor’s request to allow four-year colleges and universities to raise tuition by 14 percent and community colleges by 7 percent in each of the next two years.

Gov. Gregoire may call a special session to deal with budget savings measures, school levies and offender sentencing measures, according to a press release. The budget approved by legislators for the upcoming biennium addresses a $9 billion deficit and is available at: http://apps.leg.wa.gov/billinfo/summary.aspx?bill=1244&year=2009.

To allow for more Innovation Partnership Zones to be located in rural parts of the state that do not house a university, the governor signed HB 1128, which waives a requirement that a research institution be located within the zone. The program was created in 2007 to stimulate the growth of industry clusters and to build regional economies by bringing together research, workforce training and globally-competitive companies in close geographic proximity (see the Oct. 10, 2007 issue of the Digest).

Another measure signed by the governor (HB 1007) creates a sustainable energy trust to promote the development of renewable energy technologies and the application of energy efficiency measures by authorizing the issuance of revenue bonds to finance renewable energy and energy efficiency improvement costs.

The governor’s proposal to develop a Washington Council on Aerospace was not approved by the legislature. The bill was intended to maintain the state’s competitive edge in the aerospace industry by coordinating worker training programs at community and technical colleges and universities.

Hosted by SSTI president and CEO Dan Berglund, the discussion provides a brief overview of the program’s goals and objectives, philosophy and tips from past judges for writing an outstanding application.

Applications are due June 16, 2009. For more information, please visit: www.sstiawards.org.

Download the recording: http://www.ssti.org/media/call.mp3.

The report, which was released to coincide with the start of this year’s BIO convention, argues that state education systems across the country must improve to make the U.S. competitive in biotechnology. On average, only 28 percent of students taking the ACT obtained a score indicating readiness for college-level biology. Only 52 percent of 12th graders were at or about a basic level of achievement in the sciences. Science achievement among twelfth graders actually declined between 1995 and 2005 nationwide, though this was not true for all states.

Several states are singled out in the report for their leadership in incorporating bioscience into their standards and improving student performance. The high-achieving states, in alphabetical order, include Connecticut, Massachusetts, Minnesota, New Hampshire, New Jersey, Ohio, Vermont and Wisconsin. Even in these states, however, gaps exist between science achievement for lower-income and higher-income students.

The report provides several recommendations for states seeking to improve their bioscience education systems, including:

• Incorporating biotechnology as they revise science standards and bringing in biotech research scientists when developing these standards;
• Committing to improve student achievement in biology and life sciences and ensuring that high school graduates are prepared for college coursework;
• Improving the collection and dissemination of student participation and performance in the life sciences; and,
• Taking a more systematic approach to bioscience-related teacher development and training.

“Taking the Pulse of Bioscience Education in America: A State by State Analysis” is available at: http://www.bio.org/local/battelle2009

• Expanding the scope of regulation and disclosure interests;
• Refining the definition of a “significant financial interest”;
• Determining how institutions can identify and manage conflicts;
• Assuring institutional compliance;
• Providing additional information to the Public Health Service (PHS); and,
• Broadening regulations to address institutional conflicts of interest.

The comment period is open until July 7, 2009 and opinions may be submitted online, by fax, or by mail.

The NIH announcement, which contains a link to a PDF with specific questions for each topic and submission instructions, is available at: http://www.nih.gov/news/health/may2009/od-12.htm.

The dominance of Silicon Valley and Massachusetts also are reflected in the number of deals and dollars invested in local companies (see the April 18, 2008 issue of the Digest). When companies in other regions are able to obtain venture capital, the source of that funding is often a VC firm in Silicon Valley, Massachusetts or one of the few other select venture hotspots. A new study, however, suggests that although it may be more difficult for companies outside of those regions to obtain VC, proximity to venture firms has little to do with the overall amount of capital a company obtains from an individual firm.

In “Geography and the Structure of Venture Capital Financing”, Xuan Tian of the Kelley School of Business at the Indiana University suggests that while proximity to investors affects the structure of venture financing, it does not affect the total amount of dollars invested. Funding, however, is often structured differently depending on distance. Companies located farther from their venture investors receive more frequent rounds of financing with lower cash amounts per round. According to the study, this difference is attributable to the higher cost of monitoring companies that are farther away.

Tian uses proximity as a proxy for monitoring costs. Investee companies that are located near their investors are able to meet with them regularly, minimizing the risk to the investor and the cost of gathering information.

Tian argues that monitoring and the staging of funding rounds are substitutes for each other. With the low-cost monitoring that is possible with nearby firms, venture firms can afford the larger risks associated with large, infrequent cash infusions. The cost of monitoring more distant companies means that venture firms are less willing to take those risks. More frequent funding rounds give investors the option of dropping a company that is not meeting its goals, with fewer losses.

These findings have several implications for entrepreneurs seeking capital from firms in other states. First, entrepreneurs may have to adjust their expectations for the size of capital infusions during individual rounds of financing, but not the overall capital infusion from an out-of-state firm. Second, entrepreneurs must be prepared to endure more rounds of financing for smaller amounts of capital than their in-state counterparts.

For states and regions trying to connect local entrepreneurs with capital, the findings suggest that more time should be spent preparing companies for the reality of frequent, but small, infusions of cash and the difficulties of constantly preparing for rounds of financing. This often means preparing in-depth documentation of a company’s health, while an in-state firm might be able to assure its investors with less intense face-to-face meetings. Local entrepreneurial-assistance organization can play a vital role in supporting company efforts to prepare for these reviews.

“Geography and the Structure of Venture Capital Financing” is available: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=965803