NEW RETURNS ON INVESTMENT IN THE KNOWLEDGE ECONOMY
P R O P O S I T I O N 301 AT ARIZONA STATE UNIVERSITY, FY 2003
SCHOOL OF PUBLIC AFFAIRS / COLLEGE OF PUBLIC PROGRAMS
T h i s publication updates a portion of the April 2003 s t u d y , S e e d s of Prosperity: Public Investment in Science a n d Technology Research.
N E W RETURNS ON INVESTMENT IN THE KNOWLEDGE ECONOMY : P R O P O S I T I O N 301 AT ARIZONA STATE UNIVERSITY, FY 2003
M orrison Institute for Public Policy has analyzed returns from Arizona's Proposition 301-supported public investments in science and technology research at Arizona State University since 2001.
N E W RETURNS 2003 :
� Presents a new way of looking at ASU's results from the second year of Proposition 301-supported research � Analyzes data from the August 2003 ASU report to the Arizona Board of Regents and interviews with key Proposition 301 managers and observers � Complements Morrison Institute's ongoing development of the CAT measures, a new model of assessment for public investment in science and technology research (see page 10)
M o r r i s o n Institute for Public Policy will periodically p u b l i s h new material to k e e p you informed of the s t a t u s of Proposition 301 i n v e s t m e n t s at Arizona S t a t e University.
B y Rick Heffernon with Nancy Welch and Walter Valdivia M o r r i s o n Institute for Public Policy
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A R I Z O N A ' S ONGOING INVESTMENT : P R O P O S I T I O N 301 AND TRIF
A r i z o n a voters set in motion a substantial new public investment in university science and technology research when they passed Proposition 301 in November 2000. � Proposition 301 established a 20-year-long 0.6% increase in state s a l e s taxes primarily to support K-12 education, p u b l i c university science and technology research, and community college workforce d e ve l o p m e n t programs. � The public university share of FY 2003 Proposition 301 revenue was $46 million -- to be split among Arizona's three public universities. I t is anticipated to cumulatively total $1 billion by FY 2021. � Revenue from Proposition 301 for the state's three public universities f l ows through TRIF, t h e state's Technology and Research Initiative Fu n d, w h i c h is administered by the Arizona Board of Regents as p a r t of an economic development strategy for the state. � Th e goal of the Proposition 301 investment in Arizona's public universities is to build the state's science and technology portfolio to provide both a foundation for and stimulus to a competitive k nowledge economy in Arizona.
G E N E R A L DISTRIBUTION OF PROPOSITION 301 REVENUE
P R O P O S I T I O N 301 S A L E S TAX
K - 1 2 EDUCATION
TRIF*
COMMUNITY COLLEGES
* Technology and Research Initiative Fund.
A R I Z O N A STATE UNIVERSITY
U N I V E R S I T Y OF ARIZONA
N O R T H E R N ARIZONA UNIVERSITY
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A N N U A L FUNDING : A S U ' S PROPOSITION 301 ALLOCATIONS AND EXPENDITURES
ASU's Proposition 301 revenue totaled $25.2 million in FY 2003. � $14.8 million in FY 2003 revenue and $10.4 million carried forward from FY 2002 allocations ASU's expenditures totaled $20.7 million. � $17.9 million for operating expenses and $2.8 million for capital expenses related to Proposition 301 projects FY 2003 Proposition 301 revenue was lower than in FY 2002 due to reduced s a l e s tax collections; h oweve r, e x p e n d i t u re s were higher because: � FY 2002 startup status for TRIF-supported projects prevented expenditure of all FY 2002 funds by June 30, 2002 � Unspent FY 2002 funds were carried forward to FY 2003
A S U PROPOSITION 301 REVENUE AND EXPENDITURES
F Y 2002 (millions) Total Revenue New Carry-forward Total Expenditures Operating Ca p i t a l $15.2 (n/a) (n/a) $7.7* $5.0 $2.7 F Y 2003 (millions) $25.2 $14.8 $10.4* $20.7 $17.9 $2.8
30
$25.2 million
25 20
$10.4 million C a r r y - f o r w a rd
$20.7 million
$15.2 million
15 10 5
$14.8 million New
$7.7 million
Source: Morrison Institute for Public Policy, 2004. Data: Technology and Research Initiative Fund (TRIF) Annual Report, Arizona Board of Regents, S eptember 1, 2003. * Includes FY 2002 encumbrances paid in FY 2003. 0
FY 2002 REVENUE
FY 2003
FY 2002
FY 2003
EXPENDITURES
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U N I V E R S I T Y ACCOUNTABILITY : R E P O R T S AND ANALYSIS OF PROPOSITION 301 RESEARCH
T h e Arizona Board of Regents requires Arizona's three public universities to collect data on specific performance measures for Proposition 301-supported research. � The universities' per formance results are reported annually to the Arizona Board of Regents, the Governor of Arizona, and the Arizona Legislature. � FY 2002 and 2003 Technology and Research Initiative Fund annual r e p o r t s can be found at the Arizona Board of Regents web site (see page 11 for links). M orrison Institute for Public Policy provides ongoing, value-added analysis of ASU's performance. � The Institute's first report, S eeds of Prosperity: Public Investment in Science and Technology Research: � D escribed ASU's FY 2002 Proposition 301-supported activities � Presented ASU's Proposition 301 results in light of current thinking on the knowledge economy � Explained the economic and industrial context for ASU's high tech research � Introduced the CAT measures -- a new model for determining public return from state investment in university-based high tech research -- that analyzes the value of Connections, Attention, and Talent � S eeds of Prosperity can be obtained at Morrison Institute's web site (see page 11 for links).
Accountabilit y is not isolated to o n e sector, o n e i n d u s t r y, o r one t y p e of program. T h e public sector is o n e area in which accountabilit y i s just beginning to grow -- but is g r o w i n g rapidly.
Patricia Pulliam Phillips, Editor of Measuring ROI in the Public Sector
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A S U RESEARCH IMPACTS : R E S U L T S FOR THE KNOWLEDGE ECONOMY
ASU's Proposition 301-supported research activities in FY 2003 produced numerous impacts directly relevant to the knowledge economy, including: � $9.1 million collectively in new external funding, new products, and company startups � 17 new patents, 3 new startup companies, and 13 new research collaborations with industry and national labs � 19 ASU post-doctoral fellows and 33 graduate students added to the workforce � 227 high school students trained in software design � An internationally recognized R&D and business leader hired to direct Arizona Biodesign Institute � 5 new senior faculty, 22 research faculty, and 24 post-doc researchers successfully recruited, and 4 visiting scientists appointed
F Y 2003 IMPACTS FROM ASU PROPOSITION 301-FUNDED RESEARCH
NEW MONEY $7.3 million in federal awards $1.3 million in industrial contracts and donations $400,000 in new products to ASU $92,000 in value of new startups to ASU NEW PROGRAMS 6 new courses in Bio, IT, and Nano A manufacturing research road map in collaboration with industry 6 proof-of-concept grants to faculty 13 technology transfer portal inquiries from industry NEW VENTURES 13 new research collaborations with industry and national labs 1 new nationwide industry-university research consortium under development 6 new software packages distributed 3 new products in marketplace 3 new companies started 20 licenses/options signed 17 patents approved and 106 patent applications filed 91 inventions disclosed 6 business plans written NEW SKILLS 48 new post-doctoral students in pipeline 19 new post-doctoral students entering workforce 120 new graduate students in pipeline 33 graduate students earning degrees and entering workforce 84 undergraduate students with research experience 10 more graduates in Computer Science and Engineering 227 high school students completing software design material 88 internships in industry or Software Factory NEW TALENT Internationally renowned research scientist and business executive hired to lead AzBiodesign 5 new senior tenured faculty successfully recruited 22 research faculty hired 24 post-doctoral research associates hired 4 visiting scientists appointed
Source: Morrison Institute for Public Policy, 2004. Data: Technology and Research Initiative Fund (TRIF) Annual Report, Arizona Board of Regents, S eptember 1, 2003.
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N E W DIRECTIONS IN FY 2003 : C O N S O L I D A T I O N OF RESEARCH UNDER ARIZONA BIODESIGN INSTITUTE
First-year (FY 2002) Proposition 301 projects at ASU were concentrated in 6 separate areas: � 4 emerging research fields -- biosciences, information technology, advanced materials, and manufacturing � 2 support areas -- access/workforce development and technology transfer For FY 2003, most research efforts were refocused on larger, more encompassing interdisciplinary research projects that were consolidated under an expansion of the Arizona Biodesign Institute.
A R I Z O N A BIODESIGN INSTITUTE IN FY 2003 :
� O versaw 8 research centers comprised of interdisciplinary teams representing bioscience, nanotechnology, and information technology � Linked ASU with TGen (Translational Genomics Research Institute � a biomedical research institute in Phoenix) through affiliated faculty, joint faculty appointments, and supercomputing facilities
G O A L S OF ARIZONA BIODESIGN INSTITUTE'S 8 RESEARCH CENTERS, FY 2003
NAME OF RESEARCH CENTER Infectious Diseases and Vaccinology (IDV) Protein and Peptide Pharmaceuticals (CP3) Bio-Optical Nanotechnologies (BON) Single Molecule Biophysics (SMB) Applied NanoBioscience (ANBC) Neural Interface Engineering (NIE)
Formerly Neural Interface and Brain Control (NIBC)
RESEARCH GOALS Study selective pathogens, identify vaccine antigens, and use transgenic plants as low-cost, efficient systems for producing oral vaccines Identify, characterize, and optimize biologically active protein derivatives for use as pharmaceuticals Integrate biomolecular sciences with materials engineering and solid-state electronics to develop the next generation of biosensors, implants, pharmaceuticals, biomaterials, and nanoscale power sources Examine the physical processes of life at the molecular level to develop new health care tools Apply advances in nanoscience, molecular biology, and genomics to understand disease at the molecular level Develop neural interface and brain control technologies to rehabilitate motor function disorders caused by central nervous system disease or injury Design and develop technologies to mitigate the effects of neurological disorders, and therapeutics and devices for improved health, fitness, and assistance with daily activities Understand how genes, gene families, and genomes change over time and clarify the gene interaction networks responsible for development of a single fertilized egg cell
Rehabilitation Neuroscience & Rehabilitation Engineering (RNRE) Evolutionary Functional Genomics (EFG)
Source: Morrison Institute for Public Policy, 2004. Data: Arizona Biodesign Institute and Technology and Research Initiative Fund (TRIF) Annual Report, Arizona Board of Regents, S eptember 1, 2003.
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N E W DIRECTIONS IN FY 2003 : B U I L D I N G CAPACITY FOR THE FUTURE
Pro p o s i t i o n 301-related lines of research that did not become part of Arizona Biodesign Institute were reorganized as "Capacity Building Projects" i n information science, a d va n ce d materials, a n d manufacturing. Th e goal of this reorganization is to increase focus, i n te rd i s c i p l i n a r y connectivity, a n d economic impact. � Information science links affiliated research centers and research consortia, and has created InCISE -- the Institute for Computer Information Science and Engineering -- as the focal point for interdisciplinary collaboration and entrepreneurial activity in IT. � Advanced materials builds on strengths in nanoelectronics, nanoscience, and technology to develop new technologies in areas including wireless nanosensing and communications. � M anufac turing focuses on streamlining high tech manufacturing supply networks using current technologies, and investigating potential increases in efficiency that will be made possible by new generations of wireless and embedded systems being developed at ASU.
R E S E A R C H FOCUS OF CAPACITY BUILDING PROJECTS, FY 2003
C A PAC I T Y BUILDING PROJECTS Information Science C E N T E R OR RESEARCH AREA Institute for Computer Information Science and Engineering (InCise) Center for Research in Arts, Media, and Engineering (AME) Center for Advancing Business through Information Technology (CABIT) Consortium for Embedded and Internetworking Technologies (CEINT) ASU Software Factory Advanced Materials Integrated Micro/Nanosystems Wireless Nanotechnologies (WINTECH) FOCUS Provide core research capability and supporting infrastructure for multidisciplinary research projects and enhance interdisciplinary and entrepreneurial activity Integrate communications and multimedia technologies and ideas with the arts to enable new ways of expression Partner with industry in the emerging E-economy business management arena by providing leadership research and education Partner with high tech industry to expand capacity in embedded systems through an integrated program of short and long-term research, curriculum development and delivery, for-credit internships and scholarships, and local, regional and national marketing Provide a hands-on learning experience in software engineering for student interns; and offer software development services to projects across campus, including in AzBio Create new applications in sensing and communications technologies Work with Connection ONE -- a new National Science Foundation/University Cooperative Research Center at ASU with 12 member companies and 2 academic partners -- to identify and develop new technologies that enable fully autonomous nano-integrated circuit communication devices, such as wireless biomonitoring and wireless environmental sensing Collaborate with academic and industry partners to conduct basic research in semiconductor manufacturing operations, develop curriculum and internships for undergrad and grad students in manufacturing, and develop a roadmap to guide further research activities in high tech manufacturing supply networks
Manufac turing
High Tech Manufacturing Supply Networks
Source: Morrison Institute for Public Policy, 2004. Data: Technology and Research Initiative Fund (TRIF) Annual Report, Arizona Board of Regents, S eptember 1, 2003.
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N E W DIRECTIONS IN FY 2003 : R E D E S I G N OF TECHNOLOGY TRANSFER
Proposition 301 monies allowed the university's tech transfer office to begin a series of creative initiatives that culminated in FY 2003 with the establishment of Arizona Technology Enterprises (AzTE), a new limited liability corporation affiliated with ASU. I t replaces ASU's former technology transfer unit. As a limited liability corporation, A zTE can be more flexible in structuring licensing and partnership deals with companies, and is able t o act more quickly to fit the time-sensitive development demands of the technology industry. A z T E 's business friendly model of " t e c h n o l o g y venturing" should provide faster licensing and commercialization of new inventions than the more passive and protective handling of university intellec tual property that has been practiced by traditional university tech transfer offices.
A R I Z O N A TECHNOLOGY ENTERPRISES :
� Ac tively assesses and markets ASU inventions through entrepreneurial partnerships, relationships with investors, and business development ser vices for new startup companies � Will receive no TRIF monies for operations starting in FY 2004,* but will remain an outlet for TRIF-supported research at ASU and NAU
N E W VERSUS OLD APPROACH TO COMMERCIALIZING UNIVERSITY INVENTIONS
P R O P O S I T I O N 301 TECH VENTURING Actively assesses new technologies for commercial value and marketability Bundles related inventions together as a portfolio to simplify and speed licensing Offers business development services and risk-sharing through partnerships with entrepreneurs Provides entrepreneurial assistance for promising faculty startups Run by individuals with business experience including venture capital and product and business development
Source: Morrison Institute for Public Policy, 2004. Data: Arizona Technology Enterprises and ASU Office of the Vice President for Research and Economic Affairs.
T R A D I T I O N A L TECH TRANSFER Provides passive protection of new technologies Licenses new inventions individually Does not assist companies after inventions are licensed Follows a "hands off" policy regarding faculty involved with startups Staffed with university personnel
*Proof-of-concept grants for faculty inventors will continue to be funded by TRIF.
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F O R POLICYMAKERS : C A T MEASURES TO ASSESS "EN ROUTE" RETURN ON INVESTMENT
As a complement to ASU's annual reporting to the Arizona Board of Regents, M orrison Institute for Public Policy is refining a new assessment tool called the CAT measures. The initial description of this new measurement technology -- presented in Seeds of Prosperity -- gained substantial national attention.
T H E CAT MEASURES :
� Assess CONNECTIONS, AT TENTION, and TALENT generated by science and technology research and the role they play in enabling and stimulating knowledge economy growth and development � Provide ongoing feedback on the lasting value of research activities to inform policy decisions on public investments � Will be field tested in early 2004
S A M P L E CAT INDICATORS
CO N N E C T I O N S Par tnerships and joint ventures with industry Public and private grants for university research Licenses and joint ventures inspired by research Research consortia with other universities Interactions between university researchers and peers
Source: Morrison Institute for Public Policy, 2004.
ATTENTION University exposure in print and broadcast media Presentations by university researchers Ar ticles published by university researchers Awards and recognition won by university researchers Industry recruitment of science and technology students
TALENT Successful hiring and retention of top research faculty Top science and technology grad students attracted and retained Private sector individuals trained through university research projects Visiting faculty associated with university research projects K-12 outreach by university research projects
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FOR ADDITIONAL INFORMATION : R E L A T E D LINKS ON PROPOSITION 301, TRIF, AND CAT
TO P I C W E B SITE Arizona Biodesign Institute. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.azbio.org/ Arizona Technology Enterprises (AzTE). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . http://techtransfer.asu.edu FY 2002 TRIF report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.abor.asu.edu/1_the_regents/TRIF/TRIF_FY2002.pdf FY 2003 TRIF report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.abor.asu.edu/1_the_regents/TRIF/1TRIF%20FY2003.pdf "It Pays When Investment Foresight Is 20-20" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.asu.edu/copp/morrison/investmentoped.htm Proposition 301 funding and projects at ASU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . http://researchnet.asu.edu/prop301/ Science and technology reports at Morrison Institute for Public Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . www.asu.edu/copp/morrison/public/public2s.htm Seeds of Prosperity: Public Investment in Science and Technology Research; A Study of the Economic Potential of Proposition 301 at Arizona State University and a New Model for Assessing its Long-Term Value . . . www.asu.edu/copp/morrison/Prop301.pdf TRIF enabling legislation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . http://researchnet.asu.edu/prop301/ars15-1648.html
M o r r i s o n Institute for Public Policy c o n d u c t s research that informs, a d v i s e s , a n d assists Arizonans. A part of the School of Public Affairs ( C o l l e g e of Public Programs) at A r i z o n a State University, t h e Institute i s a bridge between the university a n d the community. T h r o u g h a variety of publications and forums, M o r r i s o n Institute shares research r e s u l t s with and provides services to p u b l i c officials, p r i v a t e sector leaders, a n d community members who shape p u b l i c policy. A nonpartisan advisory
ACKNOWLEDGEMENTS
b o a r d of leading Arizona business p e o p l e , s c h o l a r s , p u b l i c officials, a n d
Special thanks to the following people for their insights: M ik e Mobley, A rizona Biodesign Institute; Jay Murphy, ASU Budget Planning and Management; Julia Rosen, ASU Office of the Vice President for Research and Economic Affairs; Peter Slate, A rizona Technology Enterprises We gratefully acknowledge the assistance of: K aren Leland, Rob Melnick, Cher ylene Schick, Morrison Institute for Public Policy; K aren Heard, Chalk Design Finally, we thank the many reviewers who certified the accuracy of data and analyses or provided other important feedback.
p u b l i c policy experts assists Morrison I n s t i t u t e with its work. M o r r i s o n I n s t i t u t e was established in 1982 t h r o u g h a grant from Marvin and J u n e Morrison of Gilbert, A r i z o n a and is supported by private and
C o p y r i g h t �2004 by the Arizona Board of Regents for and on behalf of Arizona State University and its Morrison Institute for Public Policy.
public funds and contract research.
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School of Public Affairs / College of Public Programs / Arizona State University
J A N U A R Y 2004
P O B o x 8 7 4 4 0 5 , T e m p e , A r i z o n a 8 5 2 8 7 - 4 4 0 5 / ( 4 8 0 ) 9 6 5 - 4 5 2 5 vo i c e / ( 4 8 0 ) 9 6 5 - 9 2 1 9 f a x / w w w . m o r r i s o n i n s t i t u t e . o r g o r w w w . a s u . e d u / c o p p / m o r r i s o n
