Transcript Rochester Higher Education Steering Committee

Rochester Higher Education
Steering Committee
Evaluating Higher Education
Institutional Impacts
Background
• Simon J. Tripp
– Principal - Impact
Economics, LP
– Director of Research &
Planning and Special
Consultant – Battelle
Memorial Institute
Technology Partnership
Practice
– Co-founder of Tripp,
Umbach & Associates, Inc.
and Tripp Umbach
Healthcare Consulting.
• Specialist in
– Economic and social
impact analysis
– Regional economics
– Technology-based
economic development
planning and strategy
– University and R&D driven
economic development and
commercialization
– R&D core competency
assessment
Some project examples
• Economic Impact
– Academic medical
centers
– Colleges and
universities
– Hospitals and health
systems
– Development projects
– Research and
development
• Economic
Development
– Regional development
plans
– Technology-based
economic strategy
• Biosciences
• Advanced
Manufacturing
• Information Technology
– Program development
and evaluation
Current Projects
• Technology-based economic development strategy (State of Ohio)
• Technology-based economic development strategy (Pittsburgh)
• Bioscience technology park planning and assessment (University of
Southern California)
• Statewide economic impact assessment (University of Nebraska
Institute of Agriculture and Natural Resources)
• Planning and R&D commercialization study (Iowa State University
College of Agriculture and Center for Crops Utilization Research)
• Economic impact assessment of US-AID funded crop-development
programs for Africa and Central America
• Bioscience and healthcare development strategy (South Dakota)
• Civic design program evaluation (The Heinz Endowments)
Rochester Experience
• Mayo Clinic/Mayo Health System economic impact
• Regional economic analysis (Olmsted County)
• Advisor to Tripp Umbach on Minnesota Partnership impact project
Economic Impact Analysis
The Basic Structure of
University Impacts
Multiplier Effect (Local Re-spending)
Business
Formation
Business
Growth/Retention
Labor
R&D
Supplies
Local
Spending
Utilities
Backward
Effects
Business
Attraction
Forward
Effects
Education
Private returns
Social returns
Building
Extension
Outreach
& Service
Volunteerism
Consulting
Total Impact
(Backward Linkage)
Q of L Events
Image
Multiplier Effect (Local Re-spending)
Business
Formation
Business
Growth/Retention
Labor
R&D
Supplies
Local
Spending
Mayo
Clinic Economic
Utilities
Impact Study
Backward
Effects
Forward
Effects
Business
Attraction
Minnesota Partnership for
Private
Biotechnology
andreturns
Education
Medical Genomics
Social returns
Impact Projections
Building
Extension
Outreach
& Service
Volunteerism
Consulting
Total Impact
(Backward Linkage)
Q of L Events
Image
Function
OSU - OARDC
Spending and
Functional
Economic and
Social Impacts
External
research funds
attracted to
Ohio
Commercial
research
funding from
external
industry
OARDC
Research
and
Development
Commercial
research
funding from
Ohio industry
State of Ohio
research funds
New
products,
discoveries
and
solutions to
problems
Benefits
Impacts
Licensing of
intellectual
property
Ohio-based licensees. Open new
markets, generate new revenue
streams, enhance competitiveness.
Jobs, output,
income and
gov’t revenue
Incubation and
generation of
new
businesses
New Ohio business enterprises.
Open new markets, generate new
revenue streams, enhance
competitiveness.
Jobs, output,
income and
gov’t revenue
New crops and
products for
Ohio producers
Enhanced income streams, product
lines, productivity and income for
Ohio’s agriculture/agribusiness
Jobs, output,
income and
gov’t revenue
Improved crops
and products
for Ohio
producers
Enhanced income streams, product
lines, productivity and income for
Ohio’s agriculture/agribusiness
Jobs, output,
income and
gov’t revenue
Improved
production
technologies
Enhanced income streams, product
lines, productivity and income for
Ohio’s agriculture/agribusiness
Jobs, output,
income and
gov’t revenue
New bio-based
products/
biotechnology
Enhanced position of Ohio in rapidly
emerging biotechnology sector. New
products, companies and associated
potential.
Jobs, output,
income and
gov’t revenue
Environmental
protection and
remediation
Enhanced environment, reduced
remediation costs, marketable
technologies and processes
Jobs, output,
income, gov’t
revenue,
reduced costs
Enhanced rural
and urban
quality of life
Maintain social fabric, reduce rural
poverty, maintain rural quality of life
and traditions
Reduced
negative costs
Function
OSU Extension
Spending and
Functional Economic
and Social Impacts
Federal funds
to OSU
Extension
Functional
impacts
Agriculture
and Natural
Resources
Community
Development
OSU
Extension
Ohio County
support funds
Direct
extension
spending
impact
Spending impacts
State of Ohio
support funds
Family and
Consumer
Sciences
Indirect
impact
4H-Youth
Development
Total
Spending
impact
Benefits
Emerging trends &
needs
Intelligence to drive applied OSU research to
meet emerging Ohio ag./env. needs.
Technology education
and introduction
Enhanced productivity and income streams,
for Ohio’s ag./env. producers and processors
Techniques and skills
education
Enhanced productivity and income streams,
for Ohio’s ag./env. producers and processors
New crops and
products/diversification
Open new markets, generate new revenue
streams, enhance competitiveness.
Marketing and business
development
Open new markets, generate new revenue
streams, enhance competitiveness.
Marketing and business
development
Attract and develop new economic
development engines for communities
Business retention and
expansion
Maintain and enhance community economic
base and economic development
Job training
Enhanced employment opps and productivity
Leadership
development/visioning
Economic/community development strategy
and sustainable development leadership
Public policy and issues
assessment
Analysis, solutions, advocacy to improve
communities
Family life
Improved social conditions and economics
Nutrition & food safety
Enhanced public health
Health & Wellness
Enhanced public health
Family budgeting
Improved economic sustainability
Youth-at-risk programs
Reduced social and economic problems
Character and selfesteem building
Youth motivation, enhanced educational
attainment and reduced social problems
Skills development
Improved personal conditions and economics
Future practitioners
development
Maintain ag. and env. sector sustainability
through multiple generations
Impacts
Jobs, economic
output, income
and government
revenue
Jobs, economic
output, income
and government
revenue
Enhanced Ohio
community
sustainability
Enhanced Ohio
community
sustainability
Reduced
negative costs
Jobs, economic
output, income
and government
revenue
The Impact on Business Growth
and the Economy
Rochester Key Impacts to Examine
• Business retention and expansion
– Advanced workforce (education impacts)
– Product development/R&D (R&D impacts)
• New business formation
– Advanced Workforce
– Licensing and entrepreneurship
• Business attraction
– Advanced Workforce
– R&D partnerships
– Clustering
Must design not only a campus, but a system for
knowledge transfer and value-added capture
High-protein
soybean
cultivar
developed at
the OARDC
High-protein
soybean
cultivar
developed at
the OARDC
Best result = licensing
revenues back to OSU.
Negligible employment generation
Ex
pa
nd
in
g
+
High-protein
soybean
cultivar
grown on
Ohio farms
Best result = licensing
revenues back to OSU, and
farm revenues. Farm
and farm supplier employment supported.
ec
on
o
m
ic
de
ve
lo
p
m
en
t
va
lu
e
High-protein
soybean
cultivar
developed at
the OARDC
High-protein
soybean
cultivar
developed at
the OARDC
+
High-protein
soybean
cultivar
grown on
Ohio farms
+
High-protein
soybean
cultivar
grown on
Ohio farms
+
High-protein
soybean
processed
by Cargill in
Ohio
+
High-protein
soybean
processed
by Cargill in
Ohio
Best result = licensing
revenues back to OSU, farm revenues,
value-added processing revenues.
Significant employment generated.
+
Branded soy
protein products
produced
and marketed
fo
r
O
hi
o
Best result = licensing revenues back
to OSU, farm revenues, value-added
processing revenues, value-added end
product revenues.
High levels of employment generated.
OARDC Soybean
Improvement
Platform
generates a highoil content soybean
OARDC Tomato
Improvement
Platform
generates a highlycopene content
tomato
High-oil content
soybean produced
on Ohio farms
High-lycopene
content
tomatoes produced
on Ohio farms
Lycopene extraction
technology developed
by OSU/OARDC
scientists and
engineers
Soy oil extraction
by an Ohio
processing plant
Lycopene
extracted from
tomatoes
OARDC Food
Safety Platform
invents rapid
microbe detection
system
Ohio producer
manufacturers
microbe detection
system
Ohio producer
manufactures
consumables used
within detection
system
OARDC Animal
Improvement
Platform
identifies beef
marbling genetic
marker
Ohio start-up
company formed
to provide
genetic testing
service
Ohio company spinoff created to
produce field
diagnostic kits
Ohio biorefinery
produces biodiesel
from soybean oil
and methanol
Lycopene integrated as
ingredient in
Ohio-produced
functional food
Lycopene
manufactured into
nutraceutical
product
Ohio producer
manufactures
consumables used
within diagnostic
kits
OSU Extension provides introduction to technologies and new crop
introductions, facilitates production on farms and in processing plants, assists in
industrial process improvement, workforce development and in business
development and marketing services
Why a research university?
• “The empirical evidence consistently supports the
notion that knowledge spills over from university
research laboratories and from industry R&D
laboratories as well. Location and proximity
clearly matter in exploiting these knowledge
spillovers”
David Audretsch
The key is building from tacit or “sticky” knowledge.
Specialized knowledge versus information.
Some baseline numbers to consider
•
•
•
•
•
•
•
•
Rule of thumb in university technology transfer is that for every 100 invention
disclosures, ten patents and one commercially successful product result.
Sponsored university research is big business at $30 billion in 2000. 58% of
this is Federal Government funded University-based research sponsored by
industry stood at $2 billion in 2000.
Physical sciences get 10% of the $30 billion, engineering disciplines
(including computing) get just under 20%. Life sciences get the big share,
with well over 50%.
More than 70% of all industry patents cite publicly funded papers.
AUTM (1999) reports that 82% of firms formed around university licenses
operate in the same state as the university that provided the license.
Circa 5% of venture capital backed firms are very successful, and another
30% are moderately successful.
Most university technology transfer operations do not break even. Their
licensing revenues are not sufficient to cover administrative costs and the
costs of filing and maintaining patents.
Between 40-60% of biotech companies are initially formed by academic
scientists.
Top US Corporate Patent Classes
• Surgical instruments
• Biology of multi-cellular organisms
• Surgery: light, thermal and electrical
apps
• Surgery: application, storage and
collection
• Prostheses
• Computer and digital processing
• Data processing
• Special receptacle or package
• Telephone communications
• Communications: directive radio wave
• Chemistry: molecular biology and
microbiology
The primary
innovation areas
in the US are a
good match to the
intended
technological
focus of the new
University in
Rochester.
Entrepreneurial Environment
• Entrepreneurship is distinguished by novelty
and dynamism
• Innovation-driven development expands the
potential output of the economy, rather than
moving output from one business to another
• US competitive advantage lies in the creation
and rapid exploitation of new ideas
• Public policy and governance are critical
shapers of an entrepreneurial environment
The Impact of Education
The Impact of Education
• Private Returns to Education
– The IRR on private investment in an undergraduate
degree is 11.8% to 13.4%
– 7.2% Masters and 6.6% PhD
–
(gets lower as go higher because IRR’s are cost based and individuals are putting off current
income as they pursue higher degrees)
• Social (Public) Returns to Education
– The rate of public return on investment in
undergraduate education is circa 11.6% to 12.1%
– Expect this is very conservative because of many
non-calculated societal benefits.
The Impact of Education
• Estimates show 25-40% of national income
growth is attributable to higher education –
mostly through the application of
knowledge/R&D.
• Quality of institution can add 10-15% to private
returns
• Returns vary greatly by field of study – ranging
from 20%+ for professional fields such as
medicine, to negative (for clergy).
• Good discussion in – “The Economic Value of
Higher Education” by Larry Leslie and Paul
Brinkman, published by the American Council on
Education.
Median Earnings and Tax Payments by Level of Education, 2003.
$95,700
Professional Degree
$79,400
Doctorate Degree
$59,500
Master's Degree
$49,900
Bachelor's Degree
$37,600
Associate Degree
$35,700
Some College, No Degree
$30,800
High School Diploma
$21,600
Less Than HS Diploma
$0
Source: US Census Bureau, 2004
$20,000
$40,000
$60,000
$80,000 $100,000 $120,000
After-Tax Income
Taxes
Expected Lifetime Earnings Relative to High School Graduates,
by Education Level
4
3.36
3.5
Earnings Ratio
3
2.65
2.5
1.98
2
1.73
1.5
1
1
1.17
1.23
Some
College, No
Degree
Associate
Degree
0.74
0.5
0
Less Than HS High School
Diploma
Diploma
Bachelor's
Degree
Master's
Degree
Doctorate
Degree
Professional
Degree
What it takes to realize universitydriven technology-based economic
development
Technology and R&D infrastructure.
Technology
Three elements
work together to
achieve R&D-based
business and economic
development
Talent
Innovators, skilled technical workforce,
business development professionals,
entrepreneurs
Capital
Pre-seed, seed, angel and VC
“In general, two factors are associated with early
institutionalization of technology transfer: the
presence of a medical school and the status of the
university as a land grant institution.”
Maryann Feldman
American Research Universities and Technology Transfer
Most commercially valuable university intellectual
property arises from biomedical research.
Mowery et al, 1999
Feller et al, 2002
Mechanisms of Industry/University
Interaction
• Formal
– Sponsored research agreements
– Licensing of university intellectual property
– Formation of spin-off companies
• Informal
– Faculty consulting
– Industry hiring of students
– Knowledge trading among friendship
networks
The Questions
• Will a university campus dedicated to
advanced education and R&D stimulate
business growth and investment in
Rochester?
– Yes
• What will the ROI be?
– Depends on many factors (research mix,
commercialization imperative and incentives,
entrepreneurial environment, skilled
workforce, capital availability, etc.)
• Where will the skilled talent come from?
– Major start-up packages attracting “stars”
– Top student talent attracted to prestige people
and institutions
– State-of-the-art facilities and equipment
– Funding support and subsidies
– Attracting scarce domestic students
– Rochester Q of L
– Multiple clustered employers
– Entrepreneurial culture
– Capital
• Risks of not making the investment?
– Innovation economy needs innovation
engines (so risk is not participating in the part
of the economy generating growth)
– Technology, talent and capital are mobile;
must anchor with tacit, “sticky” knowledge. (so
the risk is not attracting and retaining talent.
– Spin-off enterprises largely locate close to
source of knowledge (so risk is not being the
source of knowledge)
– Mayo and IBM are multi-location
organizations (the risk is they grow elsewhere
instead of Rochester).
• What will be the drivers of a high ROI?
– Funding sufficient to attract the best R&D talent
(human capital)
– Highly competitive R&D facilities
– Domestic students
– Favorable entrepreneurial policies and
procedures
– Creation of celebratory and supportive
entrepreneurial culture
– Very early stage pre-seed funding through venture
capital availability
– Business spin-offs, licenses and technology
captured and transferred locally
– Branding and image
Conducting your impact study
• Be conservative (the numbers will be
large, keep them easily defensible)
• Present multiple scenarios
• Outline all assumptions and data sources
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