New perspective: Universities seen more now as economic engines

The Arizona Universities get it. Arizona Gov. Janet Napolitano gets it. So does the Arizona business community.

Eileen Brill Wagner
The Business Journal

And with the recent allocation of $440 million for university research facilities — at a time when the state is grappling with a huge budget deficit — it appears that the Legislature finally gets it, too.

Most agree the economic health of Arizona is inextricably tied to its centers of higher education.

"There seems to be a recognition that we’re in a global economy, and education, in general, is what separates success from lack of excellence," said Jack Jewett, immediate past president of the Arizona Board of Regents, which oversees Arizona’s three state universities.

"What all of us have tried to do is shift the perception from universities being a huge drain on the annual budgets to looking at them as irreplaceable state assets," said Jewett, who is senior vice president of public policy for Tucson Medical Center, and spent 10 years at the Legislature. "I think the Legislature, along with the governor, was absolutely relentless in making sure that university and other vital state assets were protected."

Even the way in which schools are looked at as contributors to the economy is changing, as the business concept of "return on investment" gets increased emphasis. And that investment no longer is measured solely by job count, nor by the sum of universities’ payroll and non-payroll expenditures.

The more complicated formula takes into consideration that university-based initiatives — whether technology transfer, world-class research facilities, or creating a vibrant intellectual atmosphere that attracts knowledge workers — have an impact that ripples through the entire economy. In addition, there is a profound realization that the more educated the work force, the better chance the region has of attracting firms from outside the state and throughout the world.

"It’s clear that if you buy the philosophy that innovation will create wealth at the fastest rate, then it is axiomatic that universities will be part of the equation," said Rob Melnick, who heads Arizona State University’s newly instituted Office of Economic Affairs. "It’s the very nature of universities to be innovative.

"We now have very fertile ground for the growth of the economy," he said. "People have been asking in an order of magnitude more questions about what the university is doing in economic affairs and research.

"There is a sense that the university has reached a milestone in maturity and there’s the expectation it will be part of pulling the economy out of the tank," he said.

Part of the office’s mission is to identify resources across the campus that are either impacting the economy or have the potential to, and then connect and coordinate those resources for strategic deployment, said Melnick, associate vice president for economic affairs and public policy. Some 150 to 200 people on campus already have been identified as showing a demonstrated capacity and interest to impact the economy.

"Not only will we be contributors by instituting linkages and analysis, but there will be new ways, such as attracting companies and spinning off companies," ASU President Michael Crow said.

"We are defining a significant role for the university as an economic agent."

Dick Powell, vice president for research, graduate studies and economic development at the University of Arizona agreed "that society has an enhanced expectation of universities as a driver for economic development."

Such expectations have been reinforced by a closer look at the tie between universities’ research capacities and regional development, such as what exists with Stanford University and Silicon Valley; Cambridge, Mass.-based schools, such as MIT and Harvard, and the Route 128 corridor; and Research Triangle Park, supported by Duke, the University of North Carolina and North Carolina State University.

Those economy benefits can be measured directly at university-related research and development parks. For example, the University of Arizona Science and Technology Park, which was founded in 1995 and is one of the country’s newest university R&D facilities, had 31 tenants in 2000-2001, providing almost 6,000 jobs with a $341.7 million in annual payroll. Total direct sales came to more than $1 billion.

The growing need to quantity the university’s economic impact has promoted Northern Arizona University to undertake its first economic impact study since 1994-1995. The results are expected to be available by the fall, according to Wayne Fox, assistant dean and director of NAU’s Bank One Center for Business Outreach in Flagstaff.

"In difficult budget years, it makes more sense to get the message across," he said. "You can’t disassociate economic development from education."

Powell believes that funding from Proposition 301 was a major impetus for universities supporting local economic development and strengthening the ties with industry. And, because it was a voter referendum, it underlined the public’s support for this direction.

"The mindset was there in the business and academic community, but there had not been a lot of support in the political community," Powell said. He noted that the Governor’s Council on Innovation and Technology will be preparing recommendations to the Legislature on statewide economic plans that link universities, private industries and government.

The state already has a lead on what strengths to exploit, based on the Battelle study, commissioned by The Flinn Foundation, that outlined a 10-year road map designed to put Arizona on a fast track to achieving a diversified economy.

"There’s been a tradition among universities of providing the public with some glorious report on how dollars spent on the university have a multiplier effect on the economy," said Melnick. "That’s not to suggest that isn’t incredibly valuable, but it’s not enough to rest on those laurels.

"We need to continually make sure we are not out of step with the economy, both leading and supporting the leaders," he said.
Get connected

Arizona Board of Regents: http://www.abor.asu.edu.

Arizona State University: http://www.asu.edu.

Northern Arizona University: http://www.nau.edu.

University of Arizona: http://www.arizona.edu.

Flinn Foundation: http://www.flinn.org.

© 2003 American City Business Journals Inc.

http://www.bizjournals.com/phoenix/stories/2003/08/11/focus1.html

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Big payoff in education

Eileen Brill Wagner
The Business Journal

There could be a big payoff down the road for university-based research efforts, particularly in areas such as biodesign, nanotechnology, embedded systems and virtual manufacturing, according to a recent report by the Morrison Institute for Public Policy at Arizona State University.

Entitled, "Seeds of Prosperity: Public Investment in Science and Technology," the report takes a look at research projects at ASU that were initiated with Prop. 301 funds. Prop. 301, passed by voters in November 2000, approved a 0.6 percent increase in state sales tax, with funds earmarked for K-12 education and university research.

The report notes Prop. 301’s approval represented a significant step for Arizona’s future by "providing a long-term funding stream for science and technology investments."

ASU used Prop. 301 money in some $15 million worth of projects in areas such as biosciences/biotech, information science, advanced materials, manufacturing, work-force development and technology transfer.

These all are areas that, according to Morrison Institute Director Rob Melnick, have major economic potential. For example, biotech research already is a $39 billion industry, and nanotechnology is expected to grow to a $1 trillion market by 2015.

Jeffrey Trent, president and scientific director of the Translational Genomics Research Institute in Phoenix, said Prop. 301 "is unquestionably enabling Arizona’s universities to significantly increase their competitiveness in scientific research and innovation."

He also emphasized the importance of forging public-private partnerships in research.

According to the report, ASU’s projects have attracted an additional $14 million in outside grants, nearly doubling the original investment. The institute recommends that projects be assessed systematically, based on what it calls "CAT" measures — the connections, attention and talent they produce for the state.

Get connected

Morrison Institute for Public Policy: 480-965-4525; http://www.morrisoninstitute.org

© 2003 American City Business Journals Inc.

http://www.bizjournals.com/phoenix/stories/2003/08/11/focus2.html