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NY State Budget Shortfall May Shrink $3 Billion SUNY-Improvement Initiative

New York state’s projected budget shortfall for fiscal 2009 would likely lower the amount of money lawmakers are willing to spend for a 10-year research grant program proposed last month by a panel charged with improving the state’s public university system, the chairs of the state’s Senate and Assembly education committees told BioRegion News last week.
Acing on recommendations by a peer review process, the New York State Commission on Higher Education Commission, created by Gov. Eliot Spitzer, recommended the state launch a $3 billion, 10-year program that would fund research at the State University of New York.
The proposed Empire State Innovation Fund was one of several suggestions contained in an 85-page report released by the commission last month. The report, which can be read here, also recommended strengthening SUNY’s academic research effort by spending an unspecified amount of money to recruit 250 “eminent scholars” among 2,000 new full-time faculty members in a variety of disciplines; recruiting “a minimum of” 4,000 doctoral candidates; and restructuring the state agency charged with promoting science by increasing academic-industry collaborations.
The chair of the Assembly’s education committee, Deborah Glick (D-Manhattan), told BRN her panel will await Spitzer’s proposed FY 2008 budget to see how much of the commission’s recommendations are incorporated before deciding how to proceed. Spitzer is expected this week to include the proposal for 2,000 new full-time SUNY faculty members in his State of the State address, to be delivered on Jan. 9.
Glick said she foresaw Assembly members balancing conflicting desires to cut costs sparked by the budget crunch, yet spend more for SUNY. The pursuit of that balance will likely shrink the research grant-funding program, but leave intact the scholar and faculty recruitment effort, she said.
“A $3 billion-over-10-year commitment could, in a tough budget year, be a much smaller number to get started,” Glick said in an interview. “But I think the commitment to hiring is going to be quite dramatic. The hiring of not just eminent scholars but full-time faculty for SUNY and [City University of New York] will be of critical importance going forward.
“From my perspective, it is decidedly more important because it is also possible that in hiring certain critical faculty, they themselves might attract certain grant money,” Glick added.
State Sen. Kenneth LaValle (R-Port Jefferson), who has chaired the Senate’s education committee for 30 years, said that while he supported both recommendations, his chamber was also likely to shrink the size of the proposed innovation fund below the $3 billion proposed by the commission.
“It’s a $3 billion proposal, but it may end up being $2 billion. It may be $1.5 billion over five years, or 10 years. I believe the legislature will set this as a priority,” LaValle said. “It’s a long-term project, but I see a good prospect for this being started in ’08.”
LaValle predicted that the Senate would give high priority to the innovation fund: “As far as I’m concerned, it is an imperative for New York to move ahead and do this.”

John Reid, the commission’s executive director, stressed in an interview that the panel’s recommendations could be tweaked or changed altogether when his panel completes a final report set for release in June.
The commission did not recommend any timing for submitting legislation to enact its recommendations, Reid said, leaving that task up to Spitzer.
“The whole intent to doing it the way we’ve done it is to give the governor the option of doing whatever he chooses to do in ’08,” Reid told BRN. “From a commission standpoint, we’re trying to be silent on the question of what is done in ’08. The spirit of the commission, to begin with, is to strike a long-term vision, and not to get into budgetary implications for a given year or a given month.
“If the governor chooses not to implement a given recommendation this year, that in no way compromises the viability of the report long-term,” Reid added.

The timing of the Higher Education Commission’s proposal could also hurt its chances of becoming law: The Democratic governor and state legislative bodies, held by Republicans, are also scrambling to fill the $4.3 billion budget shortfall projected for the fiscal year starting April 1 by Spitzer’s division of the budget. The shortfall, $651 million bigger than the $3.6 billion gap projected in July 2007, is projected to rise to $6.2 billion in fiscal 2009 and $7.9 billion in fiscal 2010.
State Budget Director Laura Anglin, who took office last month, and her predecessor, Paul Francis, who was promoted to state operations director in December, have both blamed anticipating declines in mortgage taxes, real estate transfer taxes, and income taxes following the meltdown of the nationwide sub-prime home-mortgage market.
In addition, “reduced opportunities for borrowing because of the current credit crunch have limited the amount of mega real estate transactions that have, at times, provided the state with almost [$1] billion in revenue per year,” the state Division of the Budget wrote in its “Fiscal and Revenue Outlook for 2007-08 and 2008-09,” released Oct. 30 by Francis.
‘Commitment to Science’
In “A Preliminary Report of Findings and Recommendations,” the commission said the $3 billion Innovation Fund could award grants to faculty members whose research “holds significant promise for economic development, cementing New York's long-term commitment to science.”
The report did not define “significant promise.” Traditionally, the state has oriented its economic-development effort toward creating the largest possible number of jobs.
But jobs alone aren’t the only measures of economic activity from future SUNY spinoffs, said Walter Plosila, vice president in the technology partnership practice of the Battelle Memorial Institute. In addition to counting the jobs, he said, the state should measure economic progress other ways — such as the number of companies created, the number of products introduced, the income generated through royalties from intellectual property, and the value of equity in startups spun off from SUNY.
“It’s really more wealth generation you probably want to measure more than jobs in this day and age,” Plosila said in an interview.
Even the 10-year timeframe envisioned by the commission may be too narrow, he added. “It could take 10 to 20 years or longer for investment in research to pay off in the economy.”
Plosila said grants for academic research alone were less likely to generate economic growth. A better approach, Plosila said, has been carried out by Ben Franklin Technology Partners, which has separate groups for Southeastern Pennsylvania and Central/Northern Pennsylvania.
Since 1982, Ben Franklin has provided more than $130 million in capital as well as talent to more than 1,600 early-stage companies in the life sciences, information-technology, and physical sciences spaces.
Over time, Ben Franklin changed from funding projects within startups to investing in the startups themselves. “That tends to have more impact on the economy because you have a company there. It doesn’t assume that just the research by itself translates into creating the technology and creating the company.
Falling Behind
Reid said the commission’s recommendations are designed to catapult the State University of New York into one of the nation’s top academic centers following years of lagging behind other states’ public university systems.
While New York state trails only California and Massachusetts in National Institutes of Health funding — the Empire State won $1.9 billion in the federal government’s fiscal year ending Sept. 30, 2006, compared with $3.1 billion for California and $2.2 billion for Massachusetts — it doesn’t fare as well in academic research funding from the National Science Foundation.
Of the nation’s top 150 public academic institutions in R&D funding during the 2006 academic year, the highest ranking SUNY school was SUNY’s University at Buffalo, which landed at 39th place with a combined $297.9 million in R&D funding, compared with $831.9 million for the top school, the University of Wisconsin.
SUNY schools received $928 million in NSF funding in 2006, said Cathy Kaszluga, a spokeswoman for the Research Foundation of SUNY. That is 8.8 percent above the $853 million for 2005 cited in the commission’s report.
Now SUNY and the foundation are aiming higher. Kaszluga said the research foundation was poised to announce a new position that would serve as a senior vice president to the foundation as well as a senior vice provost for research.
“This newly created position spanning the RF and SUNY will provide vision, energy, and leadership for research and innovation at the State University of New York,” the foundation said in a statement to BRN. “Promoting synergistic research opportunities among SUNY campuses, the senior leader will also coordinate SUNY’s Empire Innovation Program to recruit research faculty; lead the research, development and technology programs of the Research Foundation; and serve as primary liaison to the university centers and medical campuses.
“As NYS implements the recommendations of the CHE, the Research Foundation is preparing to go beyond its current role as effective administrator to stimulate, facilitate, support, and promote research at SUNY,” the statement said in part.
The commission concluded that SUNY’s R&D ranking would also rise if the state university system were to launch a new program to recruit 250 eminent scholars, as well as “a minimum of” 4,000 doctoral students over the next five years.
“Because the goal of this program is to strengthen New York state's position in the knowledge economy, every effort should be made to ensure a net increase in intellectual capital by recruiting hires from out-of-state, to the extent possible,” the commission stated in its report.
The report did not project a cost for the recruitment program, but did say that the cost of attracting faculty members to US public research universities ranged from about $300,000 for an assistant professor in biology, to nearly $1 million for a senior chemistry professor. Multiplied by the 250 scholars sought under the program, the projected cost of recruitment would range between $75 million and $250 million — but the report did not specify whether that was the cost of a complete recruitment package including salary, or just “endowments” such as specialized facilities.
Plosila and Dan Berglund, president and CEO of the State Science and Technology Institute, said New York is among other states looking to borrow ideas from the nation’s most successful research faculty recruitment program, the Eminent Scholars program of the Georgia Research Alliance.

“A $3 billion-over-10-year commitment could, in a tough budget year, be a much smaller number to get started, [yet] the commitment to hiring is going to be quite dramatic. The hiring of not just eminent scholars but full-time faculty for SUNY and [City University of New York] will be of critical importance going forward.”

The public-private GRA credits its eminent scholar program with creating a total 59 “chairs” or commitments to create positions now filled by 56 scholars in six universities statewide — the University of Georgia, Medical College of Georgia, Emory University, Clark Atlanta University, the Georgia Institute of Technology, and Georgia State University.
Between 1991 and 2006, the GRA spent a total $135 million to recruit scholars — half from the state of Georgia, the other half from private sources such as university foundations and individual donors attracted through those foundations. Researchers must demonstrate a commitment to entrepreneurship, by creating companies based on their research and/or establishing centers of excellence. Researchers have obtained more than $352 million in foundation, corporate, NIH, and other federal grants, according to GRA’s 2007 Annual Report, which can be read here.
GRA teams up with universities to fund lab facilities, though the schools must fund other costs, like pay for research teams as large as 20 members until government grants are secured. Kathie Robichaud, a spokeswoman for the alliance, told BRN the GRA’s share of facility endowments alone has ranged from $300,000 to $1 million.
“We don’t fund research at all. We recruit the scholars, and we buy equipment, and we have some commercialization programs to translate research,” Robichaud said. “The success of the program is based on the level of excellence of the scholars that we recruit, and their ability to tap into huge amounts of federal funds.”
GRA said its commercialization programs generated $145 million in cash and venture funding for researchers between 1999 and 2006, on $16 million of investment — $9 million in industry partnerships and $7 million for the VentureLab program aimed at spinning out companies from universities.
Created to boost Georgia’s IT and corporate telecom sectors, the GRA has evolved over the past decade and now invests 70 percent of its funds in life sciences people and programs.
“Much of the technology company growth in Atlanta can be traced to the investments that the state has made in that eminent scholars program,” Berglund said.
Georgia’s success, Berglund said, has also inspired researcher recruitment programs in other states — from Kentucky’s $300 million Research Challenge Trust Fund, commonly called “Bucks for Brains,” to a series of R&D bond issues in Maine. Last November, voters narrowly approved bonding $50 million for R&D and commercialization in the life sciences and other targeted technology sectors, as well as $5 million in loans and grant funds for those sectors.
Looking Beyond Facilities
By joining those states in seeking more funding for research and researchers, New York under Spitzer, who took office last year, is reflecting a policy shift on how to boost academic research.
Under Spitzer’s predecessor, George Pataki, New York took a facilities-based approach to strengthening academic research. Pataki and legislative leaders agreed to establish six Centers of Excellence statewide, including the Center for Bioinformatics and Life Sciences at Buffalo; and Gen*NY*sis, a program whose acronym name stands for “Generating Employment through New York Science.”
Over five years, the state spent $283 million to develop the Buffalo center as well as centers of excellence in Albany (nanotechnology), Binghamton (small scale systems integration and packaging, or “S3IP”), Canandaigua (infotonics technology), Stony Brook University (wireless and information technology), and Syracuse (environmental and energy systems). The centers have leveraged more than $700 million in combined federal, university, and private funds, according to the Commission on Independent Colleges and Universities, a group representing 1,100 private colleges across New York state.
Gen*NY*sis is a $500 million program championed by state Senate Majority Leader Joseph Bruno (R-Brunswick) and approved in 2002 at $500 million — $25 million in state grants and loans, $45 million in targeted tax relief, and $225 million in academic, federal, or industry matching grants. The funding was divided among 17 current and proposed facilities statewide.
“New York has had some significant investments in the past couple of years, so it’s not that New York has been standing still,” Berglund said.
With California spending $3 billion on stem-cell research, and Texas voters last November approving $3 billion for cancer research [BioRegion News, Nov. 12, 2007], “it’s not surprising to me to hear that recommendations are coming out for a significant upgrade in SUNY’s capabilities,” Berglund said.
Even budget shortfalls, he said, are unlikely to dampen support for research funding programs in New York and elsewhere: “In order to really be globally competitive in [tech-based] industries, you have to have a strong research infrastructure, including strong research universities. So even when budget times are tight, we’ve been seeing states make major investments, because that’s where the jobs of tomorrow are really coming from.”
Bruno and his Assembly counterpart, Speaker Sheldon Silver (D-Lower Manhattan), are the state’s most powerful lawmakers, and typically craft each of the past decade’s annual state budget in weeks of closed-door talks with the governor.
While Spitzer, Silver, and Bruno came to terms on a budget just in time for the fiscal year that started April 1, 2007, this year’s talks are unlikely to go as smoothly. Relations between Spitzer and Bruno are severely strained following the governor’s alleged attempt to discredit Bruno by using state police to investigate his travel records for possible improprieties. The case, called Troopergate, ultimately cost the governor, not Bruno, political points. In an interview with the New York Sun last week, Silver warned Spitzer not to use the budget crunch to backtrack on increases in education funding promised last year.
The budget situation hasn’t stopped both legislative leaders from introducing a pair of pricey bills, none of which included cash for SUNY or life science projects. Silver on Jan. 3 announced a measure to distribute $150 million to homeowners in default on their mortgage payments, plus spend $30 million in related debt counseling and legal services, and tighten regulations on mortgage lenders and brokers.
That same day, Bruno announced a plan to double the size of state rebate checks for homeowners by 2010, the year Spitzer is up for re-election — from the $1.5 billion earlier agreed to for that year to $3.6 billion — as well as begin eliminating residential property taxes for primary homes but not apartments, second homes, or commercial properties.

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