Science Foundation Arizona Improves Tracking of Impact and Statewide Innovation

In 2006, three Arizona CEO groups joined forces to create Science Foundation Arizona (SFAz), a nonprofit public-private partnership charged with making strategic investments to support university research, new high-tech businesses, K-12 STEM education and to leverage outside investment. The state provided public support for these efforts through the 21st Century Fund, which in its first year included $35 million for SFAz's grant programs.

Recently, however, Arizona has begun cutting back their TBED investments through SFAz. Originally, the state had planned to allocate $25 million a year to the 21st Century Fund through FY10, but reduced the allocation in its second year and eliminated funding for FY09 (see the February 4, 2009 issue). Legislators are now considering omitting SFAz funding from the FY10 budget.

To demonstrate the value of the organization, SFAz has released a new report detailing the contribution the state's investments have made and the additional work needed to build a competitive high-tech economy. SFAz's new report is being promoted as the first in a series of annual report cards measuring the state's progress in building an innovative economy and SFAz's effectiveness in boosting high-tech performance. The report tracks Arizona's performance in five key areas against several benchmark states, including Colorado, Georgia, Minnesota, North Carolina, Oregon, Virginia, Washington and Wisconsin.

The performance-based index allows state leaders to measure SFAz's effectiveness in terms of performance, instead of process metrics. In its first two years SFAz has invested $39.1 million in STEM education initiatives, research collaborations and small business grants. As of September 2008, those investments have leveraged $1.18 in non-state funds for every dollar from SFAz, according to the report. This figure exceeds the one-to one match required by the state for grants from the 21st Century Fund. The report also touts SFAz's record of generating a patent for every $2.6 million invested in university research, compared to a university-wide average of one patent per $27 million invested.

The report found mixed results in the state's innovation indicators, lagging behind its benchmark states in many areas. The state ranks near the bottom in seed and early-stage venture investment, though it has made progress in recent years. Arizona universities exceeded their counterparts in other states in terms of new startups, but underperformed in technology licensing. Average wages for technology workers were below the national average and the state's number of tech jobs declined last year. Arizona also lagged behind its competitors in patenting, university research growth and post-secondary educational achievement.

The study concluded that Arizona is a significant technology state, but is declining in competitiveness relative to its benchmarked counterparts. Although the state's investments through the 21st Century Fund and SFAz have helped, the report draws attention to the discrepancy between the progress that must be made to remain competitive and the scale of the state's efforts.

"Winning in the Global Knowledge-based Economy: Tracking the Performance of Arizona's Technology Sector and the Investments of Science Foundation Arizona" is available at: http://www.sfaz.org/our-investments/returnoninvestment.aspx