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SSTI continues its reporting on actions taken by state legislatures to invest in economic growth through science, technology, innovation and entrepreneurship. This week, we look at the budgets passed and signed by governors in Iowa, New York and North Dakota, finding mostly level and some increased funding for innovation programs in Iowa and New York – including free tuition at in-state colleges for qualifying residents – while North Dakota is looking at decreased funding for programs.

In a market economy, what people are willing to pay determines something’s value. Airline tickets are a good example. For most of the major airlines, the price to purchase a seat the day of a flight seems to be some multiple of how much the airline thinks they can get away charging versus any drive to actually see the seat used. This supply-demand principle falls apart though with valuations set for startup companies funded by equity investors, such as angels or venture capitalists. In the risk capital business, a number of possible factors influences a startup company’s value – most tied to future markets, comparables, or dreams of big exits. Recent research from the University of British Columbia and Stanford University suggests just how surprisingly risky – and overly optimistic – this approach is.

In an unexpected twist, the FY 2017 budget passed earlier this month by Congress has more dislikes than likes for evidence-based program and policy design, despite being embraced strongly by both Presidents Donald Trump and Barack Obama. Masked under a variety of different nomenclatures – performance contracting, social impact bonds, pay for success, for example – evidence-based programming incorporates rigorous metrics to assess the effectiveness of public policy toward meeting its goals and basing expenditures accordingly.

Adults in Tennessee seeking to return to the classroom will have a new option for free tuition at community colleges, part of an expansion of the Tennessee Promise scholarship program. The newly passed and expanded Tennessee Reconnect legislation extends eligibility for free tuition to persons who have been out of school for longer periods of time or who may have never attended college. It is part of Gov. Bill Haslam’s “Drive to 55” focus, where he hopes to increase the percentage of the state’s adults equipped with a college degree or certificate to 55 percent; it is currently closer to 30 percent in Tennessee.

On May 16 of last year, the Securities and Exchange Commission (SEC) finally allowed both accredited and non-accredited investors to engage in regulation crowdfunding. Under the new SEC rules, startups and other private companies could offer equity in return for capital to help support business growth. As of May 2017, total contributions under the regulation crowdfunding into startups and small businesses are over the $40 million mark with an average investment of $833 per investor.

In part one of two, SSTI will examine NIH’s proposed changes that will place limits on individual researcher funding.

On May 2, the National Institutes of Health (NIH) announced that it intends to implement a new approach to grant funding with the purpose of increasing the number of researchers receiving grants. These proposed changes are due to a highly skewed distribution of NIH funding with 10 percent of NIH-funded investigators receiving over 40 percent of funding. NIH intends to roll out specific policies and procedures as part of the new approach – titled the Grant Support Index (GSI) – that will assess effectiveness of NIH research investments. During this time, NIH also will seek feedback from on how best to implement the individual grant funding limits.

The 2017 SSTI Creating a Better Future Award provides the perfect opportunity to show other practitioners, as well as policymakers, the success you have achieved at creating a better future for your region through science, technology, innovation and entrepreneurship. To be eligible, submit a brief application that highlights one of your organization’s most successful initiatives. Award categories encompass research; entrepreneurship and capital; competitive industries and economic opportunity; and, recognition for the most promising initiative. Check out the categories and more information at sstiawards.org.

Visit our SSTI awards resources page for the call for applications, writing samples, and to listen to the information call.

Don’t delay – deadline for applications is May 26.

SSTI continues its reporting on actions taken by state legislatures to invest in economic growth through science, technology, innovation and entrepreneurship. This week, we look at the budgets passed and signed by governors in Arizona, where R&D infrastructure will get a boost at the state’s public universities, Montana, which will see an increase in funding for some higher education research facilities, and Nebraska, where the state maintained the amount authorized for funding to small businesses for commercialization activities.

Arizona

The administration’s FY 2018 budget would eliminate several programs providing support to entrepreneurs and small businesses, including FAST, a grant program that targets improved participation in SBIR/STTR, particularly for women and minorities, and the Regional Innovation Clusters and Growth Accelerators programs. SBA’s Entrepreneurial Development Programs would be cut by $52.6 million to $192.5 million (21.5 percent decrease), while Business Loan Programs would hold nearly steady at $156.2 million ($1.5 million, 1.0 percent decrease).

Interior includes several bureaus and offices that fund R&D and conduct tech transfer activities, all of which would receive less funding under the FY 2018 budget proposal. The majority of R&D funding within Interior is provided to the U.S. Geological Survey’s Surveys, Investigations and Research initiatives, which would be funded at $922.2 million in FY 2018, a decrease of $163.0 million (15.0 percent).

Notably, the president’s proposed FY 2018 budget would eliminate funding for Community Development Block Grants. These grants received $3.0 billion in the FY 2017 budget. The proposed FY 2018 budget would provide $85.0 million for research and technology at the Department of Housing and Urban Development, a $4.0 million (4.5 percent) decrease from FY 2017.

Research and development activities in the Department of Transportation’s (DOT) would face a considerable decrease under the president’s proposed FY 2018 budget.

The president’s proposed FY 2018 budget would provide $976.9 million in total funding for Career and Technical Education (CTE) within the U.S. Department of Education, a $148.1 million (13.2 percent) decrease. National CTE programs would receive $27.4 million in the proposed budget, a $20 million (270.3 percent) increase. State grant-based CTE programs would receive $949.5 million in FY 2018, a $168.1 million (15 percent) decrease.

The Science Mission Directorate within the National Aeronautics and Space Administration (NASA) would receive $5.7 billion in the president’s proposed FY 2018 budget, a $53.1 million (0.9 percent) decrease from FY 2017.

The president’s FY 2018 budget proposal includes requests for four regional commissions with the funds appropriated only for the purposes of closure of these commissions, including: $31 million for the Appalachian Regional Commission (ARC); $7.3 million for the Denali Commission; $2.5 million for the Delta Regional Authority (DRA); and, $850,000 for the Northern Border Regional Commission.

The Department of Justice (DOJ) would receive $27.7 billion in FY 2018 discretionary funding under the president’s budget request, a $1.2 billion (4.2 percent) decrease.

The administration’s FY 2018 budget request for the Department of Homeland Security (DHS) is $44.1 billion, a $5.2 billion (10.5 percent) decrease in non-disaster, net discretionary funding, excluding disaster-relief funding. The proposed budget would include $975.8 million in new funding for “high-priority tactical infrastructure and border security technology improvements to provide a layered defense at the border and effective surveillance technology and equipment.”

The president’s FY 2018 budget request would provide $28.0 billion in total funding for the Department of Energy, a $2.7 billion (8.9 percent) decrease from the FY 2017 omnibus. Notably, the proposed budget would eliminate the ARPA-E program, which received $306 million as part of the FY 2017 omnibus. The proposed budget “refocuses the Department’s energy and science programs on early-stage research and development (R&D) at the national laboratories to advance American primacy in scientific and energy research in an efficient and cost effective manner,” according to the DOE.

The FY 2018 budget request for the Department of Defense (DOD) would provide $574.5 billion in discretionary base funding. Research, Development, Test, and Evaluation (RDT&E) would receive a total $83.3 billion – an $11 billion (15.2 percent) increase. This includes $13.2 billion for Science and Technology, a $0.6 billion (4.8 percent) increase, which is comprised of Basic Research, Applied Research and Advanced Technology Development. DoD Basic Research would receive $2.2 billion ($0.2 billion; 4.8 percent increase), Applied Research $5 billion ($0.2 billion; 3.3 percent increase), and Advanced Technology Development $6 billion ($0.4 billion; 6.4 percent increase).

The administration’s FY 2018 budget request for the Department of Health and Human Services (HHS) is $69.8 billion in discretionary spending, reflecting a $14.6 billion (17.3 percent) decrease from FY 2017 estimated funding levels. Discretionary spending accounts for approximately 7 percent of the total proposed HHS budget. Mandatory spending for programs like Medicare, Medicaid and the Children’s Health Insurance Program account for the balance. Total FY 2018 budget authority for HHS would be $1.1 trillion (0.03 percent increase over FY 2017 estimates).

The president’s FY 2018 budget proposal for the National Science Foundation (NSF) would provide $6.7 billion – a $840.9 million (11.2 percent) decrease in funding.

The FY 2018 budget proposal would terminate much of Treasury’s support for capital access. The Administration would not provide additional funding for the State Small Business Credit Initiative (SSBCI), allowing the program office to close at the end of FY 2017. The Community Development Finance Institutions (CDFI) Fund would experience dramatic changes under the budget.

The Department of Commerce houses a variety of science- and innovation-relevant agencies, most of which receive substantial cuts in the administration’s FY 2018 budget. Collectively, Commerce would lose many of its initiatives targeted to entrepreneurs, most notably the Regional Innovation Strategies (RIS) program and the Manufacturing Extension Partnership (MEP).

The administration’s budget proposal would dramatically reduce funding throughout the EPA. The Office of Science and Technology, which houses the Agency’s R&D and tech transfer initiatives, would be reduced by $263 million to $450.8 million (36.8 percent decrease).

One complication for the FY 2018 budget process is that discretionary spending is scheduled to decrease by billions from FY 2017 levels. The reason for this decrease is Congress’ solution to previous spending impasses: the Budget Control Act of 2011 (BCA). This act set limits on how much can be spent on defense and non-defense discretionary spending for future years. While Congress frequently authorizes additional spending beyond the caps the act sets, if they fail to alter the FY 2018 spending level, it would reduce the discretionary budget by $110 billion.