SSTI Digest

Lawmakers last month approved a $19.3 billion state budget for FY13, which includes funding for many of the recommendations from a task force convened by Gov. Nathan Deal to enhance the state's innovation economy. Specifically, the budget boosts funding for the Georgia Research Alliance (GRA) to recruit researchers and allocates $5 million for cancer-related research. The legislature also passed a measure expanding the Georgia Jobs tax credits and R&D tax credit.

“Disinvestment in public education and increasing costs are pricing low-income students out of an education,” according to a new report from Demos.org — The Great Cost Shift: How Higher Education Cuts Undermine the Future Middle Class. Over the last two decades, the authors highlight a trend of state disinvestment has shifted the cost education from state governments to students and their families. The result of this trend is students and their families are paying and/or borrowing a significantly more for a college.

According to the report, this long-term trend may threaten the economic health of states due to an insufficient supply of college-educated workers need to thrive in the 21st economy. The authors contend that the insufficient financial support for students will contribute to low rates of college completion depriving states of an educated workforce.  They also contend that other long-term social costs include decreased social mobility by low- and middle-income students and a diminished middle-class.

Key Highlights include:

Prize competitions have played a prominent role in the Obama administration's innovation policy since the launch of the federal challenge.gov site in 2010. By announcing national Grand Challenges and allowing federal agencies to create their own prize competitions to encourage work in strategic areas, the administration has been able to generate interest and valuable contributions from a wide variety of untapped sources of innovation.

A new report from the Office of Science and Technology Policy (OSTP) examines the use of prizes to achieve ambitious national goals over the past few years, and presents a number of ways this approach could be improved. The report may be of use to states and regions interested in implementing their own prize-based innovation competitions.

Following the passage of the JOBS Act (see the March 28 Digest), the Securities and Exchange Commission posted answers to some frequently asked questions regarding the confidential submission process for emerging growth companies. Under the JOBS Act regulations, an emerging growth company may submit a draft registration statement for confidential review prior to public filing. The FAQ provides some insight into how this process will work and the revised timeline for public filing. Read the FAQ...

An increase in tax receipts driven mostly by sales and income tax has improved the fiscal outlook for state and local governments in the near term. However, a new report from the Government Accountability Office warns of a widening gap between revenue and spending that is expected to grow significantly over time due to projected increases in health-related costs. Substantial policy changes at the state and local level are needed to maintain fiscal balance over the long term, the report finds. Read the report...

Amid the great debate over which metrics matter, most practitioners agree that consistently measuring and evaluating the effectiveness of economic development programs is critical for success and sustainability. A new report by the Pew Center on the States found that half of the states with tax incentive programs do not take the basic steps needed to know whether or not they are effective. The study identified 13 states with good assessments, 12 with mixed results, and 26 not meeting any criteria for scope or quality of evaluation.

The Ohio State University and Ohio University announced a new $35 million venture capital fund to address the lack of critical, early stage funding for innovative technology ventures in the state. Ohio State will contribute $20 million and Ohio University will provide the remaining $15 million. The universities also committed to leveraging their resources and assets to support entrepreneurial activity and venture creation in Ohio. Read the press release...

Angel investment increased by 12.1 percent in 2011, according to the latest release from the University of New Hampshire's Center for Venture Research. Much of this investment came from new investors and investors who had not been active in 2010. Last year, the number of active angel investors grew 20 percent, leading to increases in investment dollars, deals and average deal size. Seed and startup stage businesses were the target of 42 percent of angel deals, up from 31 percent in 2010. Read the release...

The National Science Foundation (NSF) National Center for Science and Engineering Statistics (NSCES) has released a series of InfoBriefs that track U.S. R&D spending from 2009-10, as the country endured and began to recover from the recession. In 2009, U.S. R&D spending suffered its first decline since the 1950s, though that decline was minimal (0.6 percent) and much smaller than the drop in U.S. GDP (2.5 percent). After adjusting for inflation, the $400.5 billion spent on R&D in 2009 represents a slightly larger decrease (1.7 percent) than in current dollars.

The U.S. remains the world's leading performer of R&D, accounting for 31 percent of global R&D spending in 2009. China is the second largest performer (12 percent of global spending), followed by Japan (11 percent). R&D intensity, the ratio of R&D spending to GDP, is used by many sources to compare the focus of international economies on research. The U.S. ranks eighth in R&D intensity among countries tracked by the Organization for Economic Co-operation and Development. Israel, Finland, Sweden, Japan, South Korea, Switzerland and Taiwan all lead the U.S. in the rankings.

With a new approach to supporting innovation by pursing business-led initiatives focused on better meeting private sector needs, Minister of Finance Jim Flaherty presented Canada’s Economic Action Plan 2012, providing $1.1 billion CAD ($1.1 billion USD) over five years for direct R&D support. The budget also includes $500 million CAD ($502 million USD) to increase private sector investments in early stage risk capital and support the creation of large-scale venture capital funds led by the private sector.

The 2012 budget builds on key recommendations from a report submitted by an expert panel in October 2011 titled Innovation Canada: A Call to Action. The new approach supports high-growth companies, research collaborations, procurement opportunities, applied research, and risk financing, according to budget documents.

Life sciences advocates in Arizona are celebrating the passage of HB 2272, a measure to tighten open records laws that require details of intellectual property be disclosed. Passage of the legislation will protect against the loss of current research contracts or the possibility of missed opportunities due to concerns over the state's previous law, according to a statement by the Arizona Bioscience Industry Association (AZBio).

The previous Open Records Act required details of intellectual property, such as results of clinical trials, be disclosed when a private company was engaged with a public entity, such as a university, to anyone who requested it. The Arizona Technology Council, another supporter of the new law, said lucrative projects were being halted because companies were concerned about having to reveal competitive information. The new law protects the university's ability to push academic conclusions from public-private research and allows Arizona to compete for public-private contracts against other states with tighter open records laws, according to AZBio.

Since the Great Recession, Government agencies in partnership with universities, for-profit and nonprofit other organizations have undertaken new efforts and developed new initiative to increase the number of small businesses in their region or state that are exporting and increase the value of exports for those small businesses that are currently exporting. The Small Business Administration announced the second round of funding for its State Trade and Export Promotion Grant (STEP) Pilot Grant Initiative. The Development Corporation announced Pure Michigan Export Now pilot program. The Brookings Institute announced Metropolitan Export Initiative in four metropolitan areas.

Small Business Administration