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State TBED Investments Pay Benefits, According to Program Assessments

March 05, 2009

In a period of tightening budgets, it is important for stakeholders to know that the investments they are making in tech-based economic development are yielding positive economic results - and returning revenue to the state. Recent impact assessments to examine comprehensive TBED programs in three states show how smart these investments have been. More telling, different evaluation models were used in all three states and they each reached similar conclusions: strategic TBED investments can stimulate economic growth.

A review of the initiatives of Pennsylvania's Ben Franklin Technology Partners (BFTP) program from the period of 2002 to 2006 concluded the state's investment of $140 million, dispersed to more than 500 companies and institutions, has yielded $517 million in state tax receipts - roughly a return 3.5 times greater than the amount spent from state coffers. The values in the assessment by the Pennsylvania Economic League are based on an economic model that includes direct spending by BFTP client firms, indirect spending as a result of BFTP, and induced spending of goods and services by affected employees.

Along with using data directly reported by the participating companies, the study compares the performance of companies receiving BFTP funding to a control group of Pennsylvania companies similar in size and industry type. With this method, the review finds funding by BFTP increased the state's GDP by an additional $9.3 billion and 32,800 "job-years" over the five-year period. Additionally, employees at BFTP-funded firms have, on average, a salary 33 percent higher than the average salary in Pennsylvania.

Benchmarking employees' salaries at companies that have received state TBED assistance is a tactic also utilized by the annual impact report of the Oklahoma Center for the Advancement of Science and Technology (OCAST). In this study as well, employees at participating companies experienced 33 percent higher salary than the average in Oklahoma. For each of OCAST's initiatives, the amount leveraged in FY 2008 is provided, as well as the cumulative leveraging over the lifetime of the initiative. In this case, leveraged funds are a combination of downstream private funds, funding from federal sources, and business financials. For all of OSCAT's initiatives, some spanning 21 years, the ratio of leveraged funds to state funds is 18 to 1. Within the most recent fiscal year, OCAST awarded $15.3 million.

An assessment of Maine's performance on the TBED front takes a more holistic approach, examining not only the impact of the state's programs, but other S&T indicators including research performed, degrees attained, and patents received. For many of these metrics, Maine is compared over time not only to the New England states, but to the U.S. as a whole and the other EPSCoR states. In the five years from 2004 to 2008, Maine also invested $9.7 million in grants to 172 companies, resulting in 79 direct jobs and 233 indirect jobs. In terms of revenues produced, the state found a return on its investments of approximately 8 to 1.

According to the report, Maine experienced a marked rise in its R&D capacity and smaller increases in other metrics over this period. The study recognizes that varied investment strategies produce results in different ways, but points to a need to have a balanced portfolio of investments to yield the greatest impact.

For instance, for many years Maine has focused a significant majority of its resources on increasing the amount and quality of research conducted in the state. The report's findings encourage the state to blend in policies that both improve the pace of commercialization and the economic impact value of the research. With this in mind, the report recommends the following policies for Maine, among others:

  • Focus on strengthening the tech transfer capacity of the state by supporting intellectual property training for management and research staff, creating rewards for completing entrepreneurial activities, and engaging faculty;
  • Create a statewide patent fund to invest in ideas developed at Maine institutions;
  • Establish more intensive commercialization and entrepreneurship services beyond incubators;
  • Develop SBIR matching funds to assist those attaining Phase I and Phase II awards; and,
  • Actively connect Maine's entrepreneurs to the expertise and funding in the Boston metro area.

A Continuing Record of Achievement: The Economic Impact of Ben Franklin Technology Partners 2002-2006 is available at: http://www.benfranklin.org/our_impact/economic_impact.asp.

The 2009 OCAST Impact Report is available at: http://www.ok.gov/ocast/documents/final.pdf.

The Maine Comprehensive Research and Development Evaluation 2008 is available at: http://www.maineinnovation.com/r&e/pdfs/Maine_R&D_Evaluation_08_FINAL.pdf.

Maine, Oklahoma, Pennsylvania