Machine and Bottle A Special Report from the
NYS Assembly Task Force on

Sheldon Silver, Speaker • William B. Magnarelli, Chair • August 2005
Message from the Chair
Assemblyman William B. Magnarelli

William B. Magnarelli

Task Force on University-Industry Cooperation

NYS Seal

Dear Friends,

It is with great pleasure that I write to you at the end of our 2005 legislative session. Not only have we had a very productive session, but it was an efficient one as well, ending on schedule. Most significantly, as you all know, is the fact that this year, for the first time in 20 years, we passed a budget on time.

The emphasis of the Task Force this year continued to be on oversight. For the past several months we have been reviewing the policies and activities of many of the State-funded research and development (R&D) programs. New York has made a huge investment in these activities, spread among many of the State’s premier research institutions. In some cases accountability measures are simply not in place to document that these funds are utilized effectively. I am extremely proud to report that significant progress was made this Session regarding this issue and am very hopeful that more will be made next year.

The Task Force has also focused on the need for the development of alternative energy sources to heat and cool our homes, power our cars and help us conduct the myriad activities of our lives. To this end, I have introduced legislation that will encourage the development of alternative energy sources, such as biofuels, wind and solar, and I will continue exploring the issue in the coming months.

I offer this newsletter to all of you as a way to highlight the Task Force’s activities during the 2005 legislative session. As always, if you have any questions or particular concerns, please do not hesitate to contact me. My goal is always to be as responsive to your needs as possible. I look forward to hearing from you regarding any suggestions you may have for directions the Task Force may take in the future.

William B. Magnarelli
Chair, New York State Assembly
Task Force on University-Industry Cooperation

Task Force Chair William Magnarelli and Assemblywoman Adele Cohen hear testimony from participants at the Assessment and Accountability Roundtable held in June (click here to read story).

2005 Legislation

The Task Force had a very successful legislative agenda this year and some important steps were taken to improve accountability in State R&D expenditures, encourage commercialization of new technologies, expand markets for supplier networks, improve university-industry linkages, and promote the development of the alternative energy industry.

SFY 2005-06 Budget
The New York State Office of Science, Technology and Academic Research is replaced by the New York State Foundation for Science, Technology and Innovation. This new Foundation will administer many of the State’s R&D programs. The Foundation will be governed by a newly formed board including representation from the private sector, government and higher education. With the new administrative structure, funds will also be distributed to regional partnerships comprised of local economic development organizations, and academic research institutions. These new partnerships may allocate funds to help commercialize innovative products and processes for emerging technology sectors, including biotechnology, nanotechnology, bioinformatics, software design, innovative energy efficiencies and environmental technologies, as well as other related purposes to spur regional economic growth.

This new structure provides greater transparency through new reporting requirements at the State and the regional level. The reporting requirements are fully spelled out in budget language and will include information on how public dollars are being spent, as well as important information on the outcomes of this investment, including the number of full-time public, private, and nonprofit sector New York jobs created as a direct result; the number of new businesses created; the number of patents awarded to the college or university as a direct result of State-supported research; and the income derived from the sale or license of intellectual property.

Another item created in the budget is the Capital Investment Loan Fund for the purpose of providing loans, grants, or a combination through the regional partnerships for economic development projects that facilitate job growth and business expansion. Funds can be used to develop industrial facilities and parks, manufacturing facilities, business parks and incubators, warehouses and distribution facilities, and high-technology and biotechnology R&D and related commercialization facilities. As part of the Capital Investment Loan Fund, the Innovation Investment Program provides financing to early-stage facilities or companies that demonstrate a high potential for growth and innovation. In addition, the Emerging Investment Program provides grants, equity investments, or loans to businesses in the stage of product development. Finally, the Business Acceleration Program provides grants, equity investments, or loans to revenue-generating technology-intensive or otherwise innovative businesses to accelerate their expansion towards profitability.

Also created in the budget is the Community Colleges/Academic Research Institutions Curriculum Alignment Program. This program is established to provide assistance for alignment of SUNY and CUNY community colleges with high-technology industry clusters and academic research institutions through the development of specialized curricula which meet the needs of emerging businesses for technical and other skilled workers.

2005 Task Force Legislation
In addition to the above, I am proud to have sponsored many Task Force bills this year relating to the Assembly’s ongoing high tech agenda. Two significant pieces of legislation passed the Assembly this year:
photos Top Photo: Assemblyman Robin Schimminger, Task Force Chair William Magnarelli and Assemblywoman Adele Cohen at the Assessment and Accountability Roundtable.

Bottom Photo: The Assessment and Accountability Roundtable discussion.

A.6431 would provide grants to small businesses and research institutions to translate discoveries and inventions into commercially viable products in New York State to enhance the economy.

A.6633-A would create the Research and Development Fiscal Accountability Act of 2005 that provides reporting requirements for the State’s Centers of Excellence to measure their viability in advancing the economic development goals of New York State.

These bills passed the Assembly and were sent to the Senate where they remained on the calendar at the end of session. The Task Force will continue its efforts to enact this important legislation next year.

The Task Force has also advanced the following measures for which we will continue to seek passage:

A.5597 would require entities applying for or receiving certain State economic development grants to commit to first considering New York companies as primary suppliers. The bill remained in committee.

A.5662 would create the university technology commercialization tax credit, providing tax credits to individuals and other legal entities for investing in the commercialization of technologies developed from universities within New York State. The bill remained in committee.

A.5759 would provide grants to colleges and universities to work with small manufacturers in developing or designing new, or improving existing products, materials, prototypes or processes to improve productivity and competitiveness. The bill remained in committee.

A.6432 would create the Community College High-Technology Investment Program (C-CHIP) to award grants of up to $100,000 to community colleges to upgrade their educational, occupational, and training services including their facilities, labs, and high technology equipment. The bill remained in committee.

A.8205 would provide tax credits for the production and storage of biofuel. The bill remained in committee.

Looking Ahead
In addition to sponsoring a roundtable on Alternative Energy under consideration for the fall of this year in Syracuse, there are several projects on the Task Force’s agenda. I am committed to continuing our efforts to ensure that the R&D investments we make on behalf of the taxpayers of New York State are done wisely and appropriately. To this end, I will re-introduce the Research and Development Fiscal Accountability Act, and work with my counterparts in the Senate to get this measure passed and signed by the governor. Also, the Task Force will be working diligently to gather information on how R&D expenditures are being utilized. I anticipate that we will sponsor more roundtables regarding R&D accountability, and possibly a hearing on this very important issue. Further, the issue of varying patent policies among the State’s research institutions needs to be explored so that we may be assured that the mechanisms are in place for the State to reap the maximum benefits arising out of its R&D investments.

2005 Task Force Events

This year the Task Force focused on two fronts: accountability in State R&D expenditures and development of alternative energy technologies. Our efforts were placed in budget negotiations to fund critical measures, and in drafting and negotiating legislation to ensure fiscal accountability. In addition, there were three events that I am proud to have participated in as chair of the Task Force.

Alternative Energy Roundtable
The first event was held in Brooklyn and was a roundtable discussion on Alternative Energy. This event, chaired by Assemblywoman Adele Cohen, was held in March at Kingsborough Community College. A similar event will be held in Syracuse in the fall so that we may have an upstate focus to complement the downstate one. At Kingsborough, researchers, economic development officials, utility personnel, and private sector representatives met to discuss the importance of encouraging and supporting the development of alternative energy technologies in New York State.

Discussion focused on the importance of connecting energy policy with economic development policy, and ways of further encouraging the use of alternative energy. All the participants felt that New York had much to offer as a center for the development of alternative energy in terms of research, manufacturing and use. Office of the State Comptroller staff attending the roundtable noted that their just-released report, “Energizing the Future,” projects over 43,000 new jobs in New York State in the renewable energy industry by 2013.

It was noted at the roundtable that primary support for the State’s renewable or alternative energy programs comes from a Systems Benefit Charge (SBC) levied on investor-owned utility companies and administered by the New York State Energy Research and Development Authority (NYSERDA). NYSERDA’s programs are intended to develop both the wholesale and retail markets for alternative energy through support for research and development, demonstration projects, wind power plants, distributed generation, and green power marketing. Most participants agreed that more of an effort should be made to better publicize programs in the State. Many consumers and businesses may be unaware of what programs exist and how they can be accessed.

All of the participants agreed that the State could assist the developing industry by encouraging more research in renewable energy technologies. It was recommended that the State provide additional R&D funds to support alternative energy research projects, and make funds available to match federal awards. As noted, a second roundtable will be held in the coming months to showcase the very exciting developments in alternative energy being made by cutting-edge research institutions and continue this vital discussion.

Assessment and Accountability Roundtable
The second major focus of the Task Force this year has been on assessment of the effectiveness of State-sponsored R&D expenditures. Our work on this front took two approaches – a roundtable discussion and legislative initiatives. In Albany on June 14, I chaired the Roundtable on State Research and Development Investments: The Issue of Assessment. The event was co-sponsored by my colleagues Adele Cohen, chair of the Legislative Commission on Science and Technology; Ron Canestrari, chair of the Assembly Standing Committee on Higher Education; Robin Schimminger, chair of the Assembly Standing Committee on Economic Development, Job Creation, Commerce and Industry; and Joseph Morelle, chair of the Assembly Subcommittee on Manufacturing. Attendees represented New York State public and private institutions of higher education, private industry, and nonprofit research entities.

New York State has invested hundreds of millions of dollars in R&D at its colleges and universities in an effort to stimulate economic growth, ensure global competitiveness, and spur crucial discoveries that lead to new technologies. Much of the State’s investment has focused on institutions engaging in cooperative agreements with public and private entities to foster the development and eventual commercialization of new products and processes. Assessment of the effectiveness of public investments in R&D has not been routinely incorporated in State policy tied to these investments, nor has a standard set of metrics been identified to evaluate their effectiveness.

The Roundtable fostered discussion on the significant questions related to evaluating how investment choices are made as well as how the results of those investments are measured. In a very spirited and provocative exchange, participants discussed a wide range of issues relating to accountability, including the complexity and difficulty of measuring the economic impact of R&D investments, the importance from the public perspective of emphasizing social returns on investments, and the need to incorporate evaluation/planning in initial project selection. Conversation focused on process issues, what sorts of measures should be used, the impact of current State investments, and how they are/should be assessed.

Several participants observed that evaluation criteria and expectations should be designated at the initiation of R&D investments. External third party evaluators might be the most effective, albeit expensive, approach. Many participants agreed that while measures can be identified, deciding which measures to use is difficult. For example, while there may be a desire to try to make a direct connection between investment and jobs created, the number of new jobs created may not be the best indicator. Participants noted that R&D investment that leads to the creation/expansion of a company will generate jobs and economic activity outside of the company. Therefore, one should look at the number of new enterprises formed, or other impacts. One observation was that a great difficulty in looking at the impact of public R&D investment comes from the tension between the frequently conflicting goals of encouraging high-tech industry and providing a stimulus to economically depressed regions.

The Roundtable concluded with our pledge to continue the dialogue on R&D funding assessment and to move forward on this important issue of accountability. (See “2005 Legislation”)

Groundbreaking Ceremony at Syracuse Center of Excellence
I was very pleased to attend the June 6 groundbreaking ceremony for the headquarters of the Syracuse Center of Excellence in Environmental and Energy Systems. This structure will be located in downtown Syracuse on a three-acre site at the corner of Washington and Almond streets. In the early 1900s, the site was the location of the L.C. Smith & Bros. Typewriter Co. factory. The site was most recently the Midtown Plaza commercial complex. The Plaza building was demolished in 1999 as one of the first projects to receive funding under the State’s Environmental Restoration (Brownfields) program.

The State has committed approximately $44 million to the Syracuse Center of Excellence for investments in facilities and equipment. From that total, $25.5 million will be spent at the headquarters campus project, including construction of a Total Indoor Environmental Quality (TIEQ) laboratory on the site. As I noted at the event, moving forward on the construction means we can continue to build a bridge between the university and industry that will provide job opportunities to our citizens.

Photos: Task Force Chair William Magnarelli participates in the Syracuse Center of Excellence groundbreaking. Top: Addressing the audience. Middle: With State Senator John DeFrancisco (left). Bottom: Breaking ground for the new structure.

Assemblyman William B. Magnarelli
Chair, Assembly Task Force on University-Industry Cooperation
Room 519 LOB • Albany, New York 12248 • 518.455.4826
333 East Washington St., Room 840 • Syracuse, New York 13202 • 315.428.9651

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