Trailing the IT revolution; Colorado's decline to ninth in new economy index laid to inadequate higher-education funding

BYLINE: Roger Fillion, Rocky Mountain News

Colorado remains one of the top 10 states adapting to the "new economy," but it has slipped several notches, a new study shows.

The report issued by the Ewing Marion Kauffman Foundation and the Information Technology and Innovation Foundation showed Colorado falling to No. 9 from No. 3 over the past five years.

The study noted the new economy is based on global economic activity, knowledge gleaned via a college education and innovation - unlike the mass production corporate economy of the 1940s and 1950s.

The main author of the report - the 2007 state new economy index - blamed Colorado's slippage on a lack of support for higher-education funding.

The information technology revolution is the key driver of the new economy, according to the report. States that adapt can benefit from higher living standards.

Massachusetts, New Jersey, Maryland, Washington and California grabbed the top five spots in the index. Maryland replaced Colorado in the No. 3 post.

Colorado had been No. 3 in the past two rankings, compiled in 1999 and 2002.

"Other states have made major investments in expanding higher education, particularly research centers related to their state economies and specialties," Robert Atkinson, president of the Information Technology and Innovation Foundation, told reporters in a teleconference.

"My sense is that Colorado didn't do that as much in the last decade."

Atkinson also linked Colorado's drop to the slump in the telecom industry at the turn of the century.

Larry Penley, president of Colorado State University, agreed with Atkinson on higher-ed spending here, telling the Rocky Mountain News: "We don't invest in higher education very well."

He added that spending should focus on research and having "the very, very best faculty in the nation."

The 2007 state new economy index is based on 26 indicators.

They include, for example, the share of IT jobs, work force education and venture capital investment.

The index crunches these and ranks each state's economy on how it can compete regionally and globally.

"The most distinctive feature of the new economy is its relentless levels of structural economic change," Carl Schramm, CEO of the Ewing Marion Kauffman Foundation, said in a statement.

"States that have adapted to these new realities will be in the best position to see strong growth in the standard of living for their residents."

The report said the top 10 states, including Colorado, tend to have a high concentration of managers, professionals and college-educated residents working in "knowledge jobs" that require at least a two-year degree. All show "above-average levels of entrepreneurship."

Those at the bottom usually rely on natural resources or mass production manufacturing, the study noted. It also cited a reliance on low costs vs. innovation.

Colorado ranked among the top three in:

* Education level of the work force.

* Companies selling stock to the public for the first time.

* High-tech jobs.

* Patents.

Atkinson, of the Information Technology and Innovation Foundation, said he spoke to Gov. Bill Ritter at the National Governors' Association conference in Washington, D.C., this week. Atkinson said he told the governor Colorado has an "envious advantage in one sense."

"It has such a great quality of life, and it's a wonderful place to live. It's this mecca for college-educated workers. And it has a lot of high-tech firms."

But Atkinson said he also noted Colorado has failed to combine these with a policy that spurs innovation - one, for example, that boosts the role of colleges and universities in promoting innovation and growth.

"I think if they could be doing that they'd be going up," Atkinson said.

Evan Dreyer, a spokesman for the governor, said Ritter was not available for comment because he was in transit from the governors' conference.

He added Ritter "certainly agrees that we need to do more to support our institutions of higher education. Investing in higher education is one of his priorities."