Higher Education & Economic Development Transcript

Participants:
Jeanette Grasselli Brown
Ohio Board of Regents
Roy Church
Lorain County Community College
Joe Frolik
The Plain Dealer (Moderator)
Sally Conway Kilbane
State Rep. Dist. 16
Brit Kirwan
The Ohio State University
Luis Proenza
University of Akron
James Wagner
Case Western Reserve University

MR. FROLIK: Jenny Brown, let's start with you. You're with the Ohio Board of Regents. You were also research director of BP America and sat on the board of numerous Fortune 1000 corporations.

You told me recently that we're under-educated in Ohio. Tell me what you meant by that, and particularly from an economic standpoint, what does that mean to the State of Ohio?

MS. BROWN: Well, it's a very serious issue and it's one that I don't think is well enough appreciated by the citizens of our state, all the way from the business community to the students and parents who are going to be attending our universities in order to change the statistic.

What it means is that on - compared to national averages - Ohio has about 408,000 citizens that they would need to educate with at least some college in order to get to the national average, just to get to the national average.

We have only 17% of the citizens in Ohio who have a Bachelor's degree or higher. We have something like 39% who have an Associate's degree or any kind of college. What does this mean? And, incidentally, we want to get much higher than the national average. Ohio can and should aspire to a much higher, I think, goal than just becoming average in this world. What does this mean? Research across the country, and it has been demonstrated in state after state, shows that the average income of Ohioans and their level of educational attainment clearly go together. That's a given. If you earn a Bachelor's degree, your income is going to be almost twice as much as a high school graduate. But they've also found that an area's economic development, it directly parallels an area's educational level. Businesses will go to where there is an educated work force. So this is, for Ohio, a very critical problem. We are under the national average and, in fact, we are not gaining on it. We are not turning this situation around like other states have done.

And so, as I say, this issue is one that we are truly concerned about and that we must correct as quickly as possible or we will never be able to realize the kinds of quality of life issues, the kinds of personal income growth that we would like to see for every Ohioan in this new knowledge economy, this new century that we are in and find ourselves in at the moment.

MR. FROLIK: I was struck by a chart that the Board of Regents generated that in 1940, Ohio had actually about 110% of the national average in per capita income.

MS. BROWN: Exactly.

MR. FROLIK: And we were right about at the national average, I think a tad below in terms of percentage of the population with a Baccalaureate degree, and the two of them in parallel lines go downhill in the 60 years since. Anyone, what's your sense, why did that happen? Why did we let that happen in Ohio?

MR. KIRWAN: You know, I'm a relatively newcomer to the State of Ohio, so I'm far from an expert on this subject, but my sense is that for so much of the 20th century, Ohio's economy was humming based on production line manufacturing businesses and it was an economy that was not particularly dependent upon large numbers of college graduates coming out of our colleges and universities, and so I think higher education just wasn't the priority that it was in other states whose economy were dependent upon larger numbers of college graduates.

And I think Jenny made such an important point, that economy of the 20th century is - has completely been transformed as we enter the 21st century and it's now a knowledge economy. The most important raw material we have to support this economy are well-educated people. That's what's going to differentiate regions and states in terms of their economic success.

One of the statistics that - coming out of what Jenny was saying is that the average income in Ohio is - has continued to drop to where it's almost 5% below the national average. It's not like we've leveled off. It's on a downward trajectory. If we don't do something and do something pretty dramatic in the near future, you know, I really do worry about the future of Ohio in the 21st century

MR. PROENZA: Just a case in point to add to Brit's and Jenny's comments, the educational deficit that Jenny talked about, this 400,000 additional college experience or college graduates means that Ohio today is foregoing in excess of a billion dollars of revenue that it could have if these young people had that much educational attainment. If this continues, that revenue gap will continue to grow and the Board of Regents has very amply calculated that by 2003, I believe, we will be foregoing as much revenue as we are anticipating we need to fix the K through 12 DeRolph decision.

If this continues, we will continue to not only forego that kind of ability to address K through 12, but obviously we will not be able to get to the point where we can increase our higher education delivery system as well as we should.

MS. BROWN: Joe, let me add to what Brit said because I think this issue of why this happened in Ohio is really something we need to understand. Peter Drucker, someone I admire greatly, has dubbed this "the age of social transformation" and has clearly pointed out in his many wonderful writings that at the turn of the last century, Ohio was an agricultural state and 64% of the jobs were in agriculture and a small percentage were in industrial-type things.

And then we had the Industrial Revolution, and by the end of World War II, we had been fully immersed into the industrial economy but young people could come off the farm and go onto the factory floor and have good, unskilled blue collar jobs that paid a very fine standard of living for them, paid well and had a good standard of living as a result.

But what's happened since World War II is we have moved into this new knowledge economy, and particularly we saw this in the booming '90s. There was no question about the fact that we see new businesses starting, we see a high tech economy. We're moving away from making things and moving them around to a time when we need to have the knowledge that's in people's heads, begin to generate innovations which become commodities and businesses and new entities that, in turn, pay higher jobs. That's what has happened is that we've moved from about 80% of our workers in blue collar unskilled jobs to today only 20% of the jobs being in that area. 80% are now and are projected to even grow to maybe 90% in the next ten years.

MR. KIRWAN: Joe, and there's a really important point here that obviously the technology sector is something that we need to grow in Ohio. I mean, we are woefully behind many other states in this regard, but this new economy is just not about high tech companies. It's about globally competitive innovative companies.

So what's at stake here, this sort of this knowledge economy is important to all areas of business. I mean, there isn't a business out there that doesn't have to re-invent itself every 12 or 18 months because that's the nature of competition in this day. People need new ideas, good ideas to stay at the leading edge no matter what they're doing, the insurance business, the banking business or making computer chips. So this is important for the entire state and the economy of all of our businesses, not just the high tech area.

MR. FROLIK: Roy, what are some of the things that we need to do as a state to close the education gap and get back in the race?

MR. CHURCH: One of the things we need to do is to get a much larger percentage of our students coming directly out of high school taking advantage of the higher education opportunities. You know, we still lag the region as well as the nation in the percentage of students who matriculate immediately after high school into higher education, public, private, two or four-year institutions. so that's a major initiative that we need to undertake.

We also need to really work with those folks that already are in the work force, the people that we call the incumbent workers, people that have already begun to earn a living, because the reality is that without further education, they're not going to be able to retain the competitiveness in the jobs that they have to be successful in this 21st century environment. We really need to up-skill our entire current work force if we're just going to be able to compete and to enable our companies to be successful.

So we've got a challenge on both ends of the continuum, on those coming out of the traditional education pipeline, if you will, and those folks that are incumbent adults. So we need to work across the entire spectrum to try to address the challenge.

MS. BROWN: Roy, what about retraining the workers such as our LTV workers who are maybe being downsized? That's part of the issue today is that people are finding that they need during a lifetime when we're changing jobs now something like six or seven times during one professional career. I worked my whole lifetime in one company. That is definitely not the experience today.

And as you move from job to job, it may well require upgrading your skills and so - or moving into an entirely new area where you have no skills at all, but we want to make these opportunities available certainly to northern Ohioans and to the whole state.

MR. CHURCH: And, Jenny, I think that really addresses another fundamental impact of the transformation that is taking place. Not only are we seeing individuals having to address other types of job skills, what we're seeing is that the number of jobs in that traditional manufacturing sector are diminishing and diminishing rapidly. So that individuals that are attempting to become competitive in a new environment many times are having to change fields, having to start building another whole skill set that they haven't had to use in the manufacturing sector and that doubles the challenge that we face.

MR. FROLIK: Do any of you have a ballpark figure of dollars of what it's going to take in terms of an investment to do the sort of things you're talking about?

MS. BROWN: $250 million right now if we were going to try to educate these 400,000 that have not had sufficient education. It would take about $250 million - that kind of a budget input right at this very time to start approaching the problem, and then, of course, this is just this year's number, so we have to continue to move with it.

MR. PROENZA: Joe, you asked what do we need to do and I think Roy is very correct and Jenny has approximated the investment that is necessary. From a public policy perspective, without question, people need to understand what the new jobs of the knowledge economy require and indeed the retraining portion of it, but from the perspective of the State, creating the appropriate incentives for people to find higher education affordable is very important as is the case in many other states where Georgia, for example, has the Hope Scholarship Program that enables any student that finishes high school with a 3.0 average to get their first year of college education tuition free with an allowance for books.

This places simultaneously a massive amount of pressure on the schools, K through 12, to perform well as well as an incentive of the students themselves to move forward. Ironically, however, Ohio is a high-tuition, low state-support state, and you find as the Board of Regents observed in their Amicus Brief with the DeRolph case that it already is investing near the top of states in K through 12 but quite nearly at the bottom of states in terms of higher education. So a lot of students find the accessibility to college not there for a variety of reasons including the cost of higher education.

MS. BROWN: And that's just at the time when they most need an education. We find ourselves 40th out of 50 states in state support to higher education and that makes it all the more difficult when personal incomes are not keeping up with the national average in their growth and tuitions are rising.

We are now the tenth highest, I believe, in four-year publics and the eighth highest even in community college, tuitions across the United States. So, you see, things are working against each other to help Ohioans begin to achieve more in the way of an education in order to find those jobs. And remember, it's the work force, a skilled work force that will bring in these additional kinds of jobs that we are looking for to try to change Ohio's state of mind as the Board of Regents has been saying.

MR. WAGNER: Don't you feel, also, we have talked a little about the obligations of the business community and the obligations of the state. Aren't there certain obligations on us, as well?

We have mentioned the importance of innovation. You mentioned that, I think, Jenny, and, Brit, you talked about re-invention and we talked about mid-career continuing education. I think these talk to a different kind of education, as well. It troubles me a little bit. I know what you mean to talk about an educated work force or a skilled work force. It's the past tense there that bothers me. What we need is an educating, a learning work force. That's an attitude of education.

MS. BROWN: Good point, Jim.

MR. WAGNER: And also to expect to have a learning business community and a learning state legislature for that matter.

I think if we were providing these things, and we're... all our institutions are working in those directions to have life-long, career-long and life-long learners. I think if we were doing that better, however, we would find our institutions also more attractive to the economies that are booming. That's a difficult pill to swallow, but I know that we should be seeing a greater influx, it seems to me, of out-of-state students seeking the kind of education that we provide even if they can't ply that here. Of course, the notion is, if we... as we, not if, as we begin to provide this sort of drive toward an educating populous which includes skilled workers and educated workers, that we'll be attractive not only to students within the state but students coming from out of state.

MS. KILBANE: When we go back to the high tuition issue in the State of Ohio - and I think we all agree that we have a very high tuition here - but it works really in two ways: When we are an essentially relatively low-income state or low-wage state, what that says to workers in terms of investing in their own education, the rate of return is not there for individuals investing in education, so on one hand, the economy works against people's willingness to do so, but I think secondly, then, having a higher tuition state, I'll tell you personally, I send my son to the University of Idaho and I pay as much to send him there than I would to send him to Ohio State University.

And that's not critical of Ohio State University. That job does fall on the legislature, and I think the problem that you have is that when you are trying to induce people to invest in themselves in higher education when they have to see a greater rate of return and especially if they want to stay in their local economy or a greater chance for their families to prosper here, but I think on the other hand, with higher tuition rates it's to teach a case. And I used to ask the kids that came from like New York state and Massachusetts like, you know, why did you come here, because they have so many universities, especially in the Boston area, and every single time the question was the same. It was the financial package that Case offered.

So I think from the point of view public policy, one of the things that's really - it's important not only to look at the programs you offer, how they fit into your, you know, what you are trying to achieve and technology. Those are two sides of the same coin, but also how you can make it affordable for students, and unfortunately, that falls on the State legislature to do that.

MR. WAGNER: I accept, in fact, what you have said to be absolutely true, that we have far too many students that come to a place like Case Western Reserve University because it's one of the better financial packages that they get. I don't mean there are too many students coming. What I mean to say is that for that reason is that we need to be working toward and we are distinctiveness in programs that we offer that make it worth the premium that they pay in addition to lowering the costs and making the education more accessible.

MR. KIRWAN: Joe, just I want to pick up on something that both Sally and Jim said, and that is this issue of attracting students from out of state and keeping the talent that we have here in Ohio. Obviously in a knowledge economy, this has got to be of interest to our state, to see our universities as magnets for talented young people, not only in Ohio but from other states. We're in a competitive situation. This is not, you know, they're trying to recruit our students away and, you know, the sad fact of the underinvestment in higher education over a significant number of years is that higher education in Ohio unbalanced is not perceived as excellent around the country and this hurts us in terms of both keeping the talent in the state and attracting talent from out of state.

We're a net exporter of our most talented students. The more national merit and national achievement scholars leave the state than we bring into the state because of our universities. Now, in a knowledge era of premium on smart people and knowledge economy, this is not a good trend for our state to be facing and it's something we have got to address. We have got to build quality across the board in our higher education, appeals nationally and internationally.

MS. BROWN: In addition to that, we have states around us raiding our best students with a, you know, $3,000 scholarship for math/science majors, GI bill, since that is starting in Pennsylvania. Very innovative thinking, very, I think, important from the standpoint of - but there's another point you made, Jim, that I think I would love to see us get to and this is the importance of research universities for attracting businesses to the area again and keeping people in the area to Brit's point.

And that is, research findings again over and over have shown that people tend to work in the area where they have gone to school. And you mentioned, Joe, in your first of these series how unfortunate it is if we all have to visit grandchildren halfway across the country because that's where they got their jobs and they went to school. We would like to keep them closer to home. And that's an issue for all of us.

But more importantly, let's look at the examples of Research Triangle Park, of Huntsville, Alabama, Nebraska, I think you were mentioning, Sally. All over we are seeing focuses of places where great research universities are putting together initiatives with the help of both the higher education community, the business community and government to attract those new kinds of industries that are part of this knowledge economy and to do much more to help the current existing industries. Like you say, manufacturing is important to Ohio, but we all know you can't get a job in manufacturing without at least an Associate's degree because you have to run computer-aided equipment.

You have to be able to read and write and communicate very adequately, and so these are important issues. The importance of using our research strengths, using our universities, and right here we have three of the best represented, to be the catalyst, to be the incubator for the start of this kind of new mentally in Northeastern Ohio particularly where we can generate clusters, from Michael Porter's wonderful report "Competitiveness In 2001," and we have identified in Ohio strengths of nanotechnology, biotechnology and information technology.

How many people know we have 2,000 information tech firms right here in Ohio? How many people recognize that nanotechnology, there's an eminent scholar in a new position down at Ohio State. Polymers. Luis, let me hand it to you. I'm sure you want to comment on that one.

MR. PROENZA: The point has obviously been made beautifully by "Newsweek" just recently that recognized Akron as one of the new technology cities in the process and he indicated the role that the University of Akron has played in northeast Ohio and transforming that economy into a more diversified polymer base. 1,400 companies just in northeast Ohio alone and several others throughout the state.

Tim Ferguson put it very well in "Fortune" magazine two years ago when he said in Cleveland's heyday, it was proximity to water and rail that mattered a lot, but today it's proximity to a major research university that matters a lot and we have not focused on that. Ohio State has great strengths. Cincinnati is emerging, but in the state, the only other university that has a major science and engineering program ranked in the top five among the public universities is the University of Akron, and we enjoy great collaboration in the polymer area with our colleagues at Case Western.

MR. WAGNER: You said a very important thing that you said, as well, the universities with the help of and then you ran a list. I must say, one of the things that struck me coming to Ohio only about three and a half years ago now was this enormous potential of puzzle pieces on the table that just hadn't been snapped and linked together. In fact, I discovered some resistance to snapping and linking together, but these partnerships, I think we will - I shouldn't have said think. It will be through making important partnerships between universities, between universities and the business community, the political government sector, as well. It will be by making these with the same attitude of enthusiasm for innovation rather than risk aversion that we're all talking about here today that I think we have seen the beginnings of already and I'm excited about it.

MR. FROLIK: The Board of Regents had a pretty ambitious program that they proposed to the governor and the legislature for investment in research in terms of support for the state universities that didn't go very far in the legislature.

Sally, can you talk a little bit about the session that just ended or the budget process that just ended and what happened to higher education, if you will, and...

MS. KILBANE: I think there were three converging factors. You had the DeRolph decision which required an enormous expenditure ending up about $1.4 billion. You had unexpected increases in the Medicaid budget. I think that was in the area of $250 million, and then you had an unanticipated short fall in revenue from projected revenue around $800 million and all of those kind of converged together to make it a very, very tight budget session.

And so as a result, there were areas in which the State did not, you know - Medicaid clearly is off the table. It's an entitlement program. We have to fund it because of the federal government and that's literally billions of dollars in terms of health care costs for the poor. We had mental health and mental retardation areas which were again for those most in need and so those were kind of off the table, so that really it came down to those areas that were unfortunately, and I think higher education was the big one, that were not off the tables and there was a reluctance on the part of the legislature to raise revenue in terms of this particular budget cycle.

So I think all those things kind of converged together and I think unfortunately higher education really was the one that lost about 25%, 26% in the projected growth that you would have anticipated, and it's extremely problematic. Again, we have all said here, the failure to make this strategic investment, and I think the investment has to be strategic in terms of, again, what the strengths are, how you capture those strengths within Ohio, how you build on it. But failure to do that will continue the downward slide that we have experienced.

I tried to say to my colleagues the most important page in the Governor's budget is the page on economic projections. It's backward looking and it's forward looking and it shows, one, that our income, again as we've all said here, is below the national average and it's projected to be so going forward. The other part of it that's very frightening to me is that we are essentially at full employment. When some of these budget projections in terms of income and we are looking forward, again, we are almost at full employment. So that says to us we have a lot of low paying jobs and the potential of growth is not there.

And the only way in which Ohio turns this around - you know, it's a lack of what economists would call productivity, and how you are going to change productivity in a knowledge economy is in two ways. It's your labor force, an educated labor force and it's technology or the businesses that employ them and the people that come up with the people that make these new ideas work. And at this particular point I think we have to begin to look at our budget in terms of how we can come up with the type investment that I believe we must make in Ohio.

MR. KIRWAN: Joe, could I comment on the legislative session which, of course, was a disappointment to everyone, and when I say "everyone," I think the members of the general assembly, as well, and the governor, I think. Nobody felt good about the way things ended up. It's sort of, looking back on it now, I think it's sort of two silver linings, if you will. That might be too strong a word to use but two things I take heart from. One is I spent a lot of time walking the halls of the State house and talking to Sally and her colleagues and I think there was a genuine sense that, an understanding that something needs to be done for higher education and a real sense of regret that it ended up the way it did. So I think that's something to build on going forward.

I think the other thing is, I just cannot say enough positive words about the Board of Regents and this Ohio Plan that they put together. This was a very well-thought through document that got a lot of input from our universities, from the private sector. The private sector embraced it. I know the Chamber of Commerce in Columbus endorsed it as did chambers across the State. The Ohio Business Roundtable was supportive of this document. It was very focused. It identified these three areas. It was not an entitlement where there was going to be a competition for funds to build real centers of excellence in our state and important areas of technology.

And I think we just cannot let this plan die, even though it wasn't funded. There was a real desire within the legislature even today to try to do something about it and I'm hoping that the private sector and higher education, government, political leaders can rally around something like the Ohio Plan even next year in a supplemental budget and get it funded and get it helping to move the state forward.

MS. BROWN: That brings us, Brit, I think to exactly one of the important issues. I think we cannot, of course, afford to, for our citizens, for our state, for our quality of life, we can't afford to drop our thinking long term. We have seen the state's continual decline in the percentage of revenues that are allocated from the state budget to higher education.

We have heard Luis make the comment if we educated more citizens and they had the higher paying jobs we would like to attract here, we would in turn have billions of dollars more in tax revenues. This is a longer term look, but that is exactly what one must do. You must begin to plan and look for the future and the only way to do that is to educate people in our state, attract the high paying jobs, get those tax revenues and soon we will be out of this terrible spiral of never having enough money to move ahead and that's where, again, if I may quote Peter Drucker, he always says, you learn from success, not failures. Don't waste your time studying the failures. Study the successful entities.

So if you go around and you look at the North Carolinas or you look at the other states, Maryland has done a superb job of course of building biotechnology, so Maryland is number one in the nation, more NIH funding than any other, jobs have been created. You know, it's a given fact that if you get technology transfer from universities into new businesses, you create new businesses, you create revenues and you create jobs.

Most of the growth in the '90s, according to Michael Porter's, you know, wonderful report again, "U.S. Competitiveness 2001," one-third of those jobs were from new firms, 5 million new firms that were started up, and this is... this is the result of the university research, the university professors, their inventions turning into innovations and on we go, so that's exactly what we need and we have to begin to convince the legislators and that's the whole issue. We need to engage that business community to be much stronger champions. I think they know we need an educated work force. They know they would like to attract critical masses of businesses and the clusters that, again, we hear about that are so important and our state has strengths in. It isn't if we're starting this from new.

MR. CHURCH: Part of the irony here is that 100 years ago, Ohio was a hotbed of innovation at the beginning of the Industrial Revolution. I mean, we had the mind-set in Ohio that we could do anything, that we could create jobs and companies in all kinds of new applications and new arenas, and so across our state we had people starting businesses in their garages and basements and second bedrooms and we saw an environment that supported that. The financial institutions were ready to provide the capital and the support.

You know, Jim used the language of risk aversion. Over that 100-year period, we have become somewhat complacent with the success of manufacturing and the notion that manufacturing will sustain the foundation of this economy, and consequently, we have focused more on people working for large manufacturing companies instead of working for themselves. We know that the job growth has come in small companies. We know that the innovation and the wealth creation has come from those small companies, and so what we have to do in shifting the mind-set of Ohio is to bring it full circle to where it was 100 years ago and to rekindle that spirit right here. And certainly universities and colleges have a great role to play.

You know, I'm excited about what I see in northeast Ohio with the Greater Cleveland Growth Association and its focus on its new strategic vision, the whole idea of trying to establish northeast Ohio as an innovation center and what are all of the factors that need to come to play to create that mind-set of the innovation to rekindle that entrepreneurial spirit. It certainly has something to do with the business support services that we have, the technology transfer, the capital availability and the governmental support.

But my sense, it almost requires the kind of community wide initiative that we saw happen in the United States after Sputnik took off and we saw an entire nation realize that it had to draw on all the possible resources, it had to refocus. Northeast Ohio, Ohio in general, has to refocus on innovation as the coin of the realm bringing together the benefits of education. Innovation and technology transfer all coming together to create those new jobs of the 21st century. We have to grow our way out of this descending spiral that Jenny has been talking about.

MS. KILBANE: People are aware and, you know, I think that's true and this testimony uses the wonderful kind of metaphor of a frog in the boiling of the water. You know, it sits there and before it knows, it's cooked because he's not dropped in. It starts out slowly. But in a sense, I think that's what part of this conversation does, but I am not certain that there is a widespread understanding of the problems that we face in the State of Ohio and northern Ohio, as well. I mean, I think we look at the full employment issue and there are plentiful jobs.

We are like the frog that is slowly boiling and before we know it, we're cooked because we really are not aware of the issues. I think people that are involved in universities and in businesses and that are involved in some of these civic groups are very much aware of this issue, but I am not sure that it's broadly shared. And I think even in terms of looking at it from the point of view of the legislature and the governor, that in a sense you need a broader, you need a fairly broad support base from people in your community that understand that Ohio faces some extremely difficult periods and the failure to say so I think is one of the things that makes people unaware of it.

You know, all of us as politicians want to go and spread the good news. That's the nature of us, but I think we have to begin to say that, you know, if Ohio does not make these major investments that we have to make in our own young people, and I know there's a debate, should you buy or should you make, you know, can you buy people, can you attract people from someplace else. But to me, I think we have a fundamental moral obligation to those people in our community, their children, those people that are making transitions to other careers to provide that here and I think it will be a great catastrophe if we don't.

MR. WAGNER: I appreciate the way you concluded your remarks, but I must say the problem with the frog in the heating water, warming water, ultimately boiling water is that you want to make the frog aware of what its problems are and its pretty much in better shape if it jumps in any direction. That's not really true here. It is important perhaps - it is important, forget the perhaps - in motivating to know that the temperature is rising in our pot. But as important, if not more important, is some leadership to help direct the frog of where to jump.

The Ohio Plan you mentioned is an example of that sort of thing and there are other examples at all different levels. I think we need to bring, you know, to Roy's point, looking on history at a time when there seemed to be more eagerness to start new businesses and more investment. I also remember at the turn of the century our nation's technical education was less than a half a century old, really most of it happening after, with a few exceptions, most of it happening after the Civil War. I think we should consider also as institutions of higher education what it is new that we want to bring and can bring to this.

Jenny mentioned, several have mentioned technology transfer and research universities. Understanding the technology transfer is an appropriate part of the continuum between fundamental research and service to society through commercialization of technology is an important mind-shift. It's going to take a little help to make that happen. It is not that the research universities are talking about downplaying fundamental research in order that they can to tech transfer bit it's a continuum. It's an addition.

MS. BROWN: And Virginia has just made that part of the mission of its universities, its public universities, has required something in the mission statement about tech transfers.

MR. WAGNER: About transferring technology. That's wonderful. Of course, we would look, we need to look to the private/public sectors to receive that technology, as well, again getting back to the partnership, the stick and stay component.

But also, and this may seem a little esoteric, re-appreciating the notion of the intrinsic value of education, period. Remember, we are focusing right now or we are focusing right now on technology and technology transfer and its opportunities for the State of Ohio and universities and higher education in general have to that. But remember, also, there are - higher education sort of has this responsibility for the political and social conscience, you know, raising that, haven't impact on that. It has to be committed, as I said before, to educating an enabled populous, not just this training work force, and I think raising again the appreciation of education broadly is something that is a university responsibility or higher education responsibility we haven't done especially well.

So my point is I think there is more, that there is much that the higher education sector can bring that's new to the situation so that we're not ever accused of saying help us do what we have done for 100 years.

MR. CHURCH: Part of the reason, though, Jim, that we haven't been as successful in bringing those issues to the broader public as we could be is that we haven't forged an effective partnership with the business community to recognize the common interest that business has with higher education and the importance of articulating the benefits for these communities and this state.

You know, one of the things we heard from Sally and her colleagues over and over during this legislative session is that we didn't have the corporate community coming forward and lamenting the current financial conditions the legislature was dealing with, and the reality is the corporate community has perhaps the most to gain in the short term of any sector, and if we haven't been able to forge a partnership with them where they're willing to come off the sidelines and to work with us to articulate the legislature, we're certainly not going to get to the broader public.

MR. KIRWAN: Roy has hit on a really important point, and I'm sure Sally can confirm this, if he and I or Luis and other university presidents come in and make our case, it's not nearly as effective as if several people who seemingly are disinterested, CEOs of major corporations come in and say you've got to fund higher education better, it has a greater impact, does it not, and if anything, I think if we have not done all that we can, it is in the absence of these, this stronger alliance with the private sector, getting them to join us in expressing this need, I think it would have...

MS. BROWN: I think in every state where we've seen a turnaround, it was because of this strong coalition between business and higher education that actually accomplished it with the government then as an equal third party.

MR. KIRWAN: I was just rereading for maybe the third or fourth time the story of Austin Texas, 1985, it's a sleepy town in Texas with sort of a stagnant economy and who came together, the university leaders, the corporate leaders and the government leaders to decide they were going to turn this around and they did. It can happen.

MS. BROWN: Can happen; right.

MR. KIRWAN: That's the thing we have to keep focused on. If we do this right as a state, as universities, as the private sector, the government, I mean, we can make a transformation in Ohio, but it isn't going to be easy and it isn't going to happen unless we can bring people together and get behind a common agenda.

MR. FROLIK: Sally, we have talked a little about the term risk aversion that's been tossed out on the table. The Ohio legislature, certainly the Republican caucus, has been tax aversive. A lot of the things again that we're talking about is going to be costly and that may mean raising State revenues in the short term, if you look at it as an investment, as we've described it here.

Can the case be made to the majorities in the general assembly and to the governor that that's a necessity to the State? Can they be sold on that idea?

MS. KILBANE: I think, in fact, that was the point I was trying to make before, I think before you can begin to change how your legislature perceives it, you have to have some broad political support and I think that is the point Brit is making and Jim is making. You know, you need the coalitions between businesses, but I think you need a broader public support, you know, a broader understanding in terms of the public that this is something that is to their general benefit so that, you know, if their legislator or if the governor comes back and begins to, you know, talk to people about would you support - you know, I had mentioned we had a, you know, like a $20 state tax credit that would raise $185 million annually. That's $360 million. That goes to every single taxpayer in Ohio. you know, to go back and saw to your constituents, can you make this case, are you willing to invest $20 in our higher education that will benefit your children, our economy as a whole.

You know, I think the other thing from a policy point of view, and the point has been raised here a couple of times, the failure of Ohio to grow also means our tax base is not growing. You know, Case has done some wonderful work, the Regional Economic Institute, and they look back I think 20 years before 1994 in which they showed a loss in our gross state product of about $30 million which at that point was about 13 percent. Of that, state and local governments take about 10 percent of that. That's $3 billion.

Now we're looking at trying to fund K through 12, try to help people that are mentally ill and mentally retarded and do this so that I think even from a public policy point of view, Ohio will continue to limp along and grow but at a much slower rate and that means the tax revenues also and we will not be able to do those things that people expect us to do.

But I think in answer to your question, I think you have to have, I think you have to have people broadly understand on a much broader level, your constituents that you talk to every day, business leaders are extremely important but also the voters in your district are very important, you know, to say this is something that is going to benefit all of us in the State of Ohio, but particularly it might benefit your children, your grandchildren and are we willing to invest even if we took the simple tax credit, and I think politically to me that makes some sense because it's a very small thing. You know, it's probably $1.50 a month or something of that nature. It's something you can put in simple terms to people, are we willing to make that kind of investment in our state, and to me that is something that, you know, we have to go back and talk to our constituents if we feel strongly about it.

On the other hand, if you can get people in districts to understand these problems and they can begin to come to their state legislature and say this is something I believe you should begin to address and we are willing to make these kinds of sacrifices that will benefit us all, and to me that's - but it needs to be a broader conversation. All of you here understand this and there are lots of people in higher education - you know, the Cleveland Growth Association understands this, some of the local public officials understand it, but this conversation has to be much broader.

MR. PROENZA: Sally has now twice I think asked us to be honest with ourselves in defining the condition of our state because, indeed, as you have indicated, it's not well enough recognized, and I think, Brit, as you talked about Austin and as many of you talked about other places, there have been two conditions that lead a state to turn around. One in a real perception of crisis. Clearly we're still inching along, so nobody feels that boiling water.

MS. BROWN: The quiet crisis.

MR. PROENZA: The quiet crisis. The other condition has generally been indeed the civic entrepreneurship that was characteristic of George Kozmetsky in Austin or Zell Miller and others in Georgia or Governor Hunt and Bill Friday in North Carolina. Folks, you know, we have got some serious issues, you know, and to quote Derek Bach who used to quip, if you think education is expensive, try ignorance. I would suggest we have because over the last 30 years, this state has lost its focus.

Remember, Jenny, the 30 years ago the State Board of Regents together with Governor Hunt promised that no Ohio student would have to pay more than 30% of the cost of a public higher education. That was already above the national average. We have lost the focus. We have lost that renewal to really acknowledge what we are doing is dooming our state to a condition of self-imposed economic mediocrity, and I think we have to be willing to state it candidly and begin to turn those things around that we can.

MR. FROLIK: You mentioned mediocrity. One thing I have heard from parents of children who are college bound is a concern of quality of higher education in Ohio. You can quibble about "U.S. News and World Report's" rankings but there's not a public university in Ohio in the top 50. Jim's Case Western is 38th. Ohio State is I believe 20th among the public universities.

Brit, what do we do - how important is it for a state to have a great public university and how do we both improve the quality and the perception of our major public universities in Ohio?

MR. KIRWAN: I think it's terribly important. It's always been obviously an asset to have a great university, a great public or private universities in your state, several of them if possible, but now it's become an absolute necessity. It's just hard to imagine a region's or state's being successful in a knowledge economy if there aren't some great talent in a state generating new ideas and wonderful students, attracting students, great talent at our universities.

You know, I think the formula is not all that complicated but it takes a certain amount of will both on the part of the state and on the part of the universities. I think universities for their part have got to be willing to say, okay, we can't be great in everything. You know, there are certain areas because for historical reasons we have a chance to really shine and state if you're willing to make an investment, we're willing to put the money there so we can build programs of true eminence and that will serve as a magnet to attract business and students and, you know, as a university begins to develop truly top ranked programs in certain areas, it has a halo effect.

I mean, there are all sorts of stories about Harvard being rated in the top five in areas where they don't even have a degree program, so I think it's a combination of the tough-mindedness of the university to do the planning and to make the commitments to use new funds very appropriately and in a very targeted way and then it does need those new funds, the investment from the state to make it happen.

MR. FROLIK: You had a very interesting scenario in terms of what the researcher can do. Tell us a little bit about the person you hired from Berkeley who started iMEDD.

MR. KIRWAN: In a way, if we could multiply this story over and over again around the state, we wouldn't be sitting around this table having this conversation. But the gentleman you mentioned is named Mauro Ferrari who was a faculty member, a young professor at Berkeley working in one of the hottest new areas of science called nanotechnology which has been mentioned several times around the table where I think Ohio, if you want to pick an area where we have a chance to maybe make a move and get some fame, this seems to be a very appropriate area.

In any case, we recruited him to come to Ohio State and he right after he was recruited here, he won a prize, the Coulter prize, given annually for the best invention in biomedical engineering in the world. This was given to him. It's a new prize given by Georgia Tech University. Well, we knew he was good when we recruited him. This sort of was a level of international recognition that was wonderful to hear, but he already had - there was a company in California that was using his patent to create implantable biomedical devices and the company's name is iMEDD. And, well, Mauro moves to Columbus, iMEDD needs to be near Mauro, so iMEDD moves to Columbus, Ohio and they have set up their operation right there in Columbus.

So talk about a man-bites-dog story. We got a company moving from the Silicon Valley to Columbus, Ohio and the reason they did was very clear because of the talent of the faculty member that we recruited. Just the other day we noticed that NIH gave iMEDD, I think it was a $3 million award, to work on this technology, so here, you know, the recruitment of the faculty member led to a company coming here leads to a major investment from NIH. So, as I say, we need to replicate that story over and over and over again. Not just at Ohio State but at Case Western and Akron and universities around the State.

MS. BROWN: There's a great story at Case Western and that's, of course, you have many, many, but Hunt Wilbert coming in being an enthusiast, a company now who has 100 employees, is a driving force for the biomedical type cluster here and bringing in dollars, both NIA...

MR. WAGNER: Clark just came, as well. These are wonderful. I'm pleased to hear us talking about this. And, Luis, you helped us with the transition and Sally talking about understanding clearly what the problems we have and saying we lost focus.

Hearing now what sort of focus we could have or what - going beyond the troubles, I guess, is what I'm trying to get us to do as a community to say if we did have the $20 per taxpayer, what is it we would do, what are the measurables, what are the quid pro quos for that. I think there are many things. We have talked about new start-ups. We talked about how universities can respond by having greater out of state and national, international draw, about the greater amount of technology, transfer technology that's licensed new company formations. I think there are some very specific things we could point to and we could offer the taxpayer and we should be asked to do this.

MS. KILBANE: Jim, it has to be strategic. The thing is we have to go back to the work that has been done at Case, the Regional Economic Institute has done some, I think, phenomenal things. You know, Mike Fogarty is the author of several of their studies has made the point that unless we invest strategically and unless we invest with the idea that it is going to benefit people in Ohio, although we can't be essentially non-global or non-national because that's an important part. We have to be able to draw on technology. But it has to be a strategic type of investment and we cannot, you know, just say that we're going to invest in general in education. It has to have a focus, you know, in the types of things and the areas in which we think, as you point out, that Ohio, Brit, that has this potential to grow.

And so I think coming back to the legislature, again, I think, one, you have to convince people there's a real issue and a problem here that we must address. And I think, two, when you come back and you begin to say, and there's a general understanding of this, that how are we going to go about this, and I think it has to be done in a very strategic way in terms of it focuses on undergraduate and graduate...

MS. BROWN: Sally, I suggested that's what the Ohio Plan was.

MS. KILBANE: And I talked the other day -- let me just offer one thing about the Ohio Plan that I think might help in terms of the legislature. I had asked twice from the Board of Regents to get backup documents on the Ohio Plan, and to be perfectly blunt about it, I got about seven pages, one that was what was on the Web site, stuff that was -- you know, there was no meat there. So I think when, you know, when you are looking at a strategic long-term plan in terms of how you can convince people to say this is an important thing for us, you have to have something extremely substantive here.

My concern in some ways is that, you know, when you are asking the taxpayers - and that's what we're asking - to place bets on their future, they have to have some reasonable probability that those bets are going to pay off. And there's a lot of discussion today in terms of economics. You know, occasionally you get a statewide cluster, like in Ohio it's been long known for automobiles with Jeep and GM and Honda and that sort of thing, but a lot of economic growth and development is really regional. You know, you look -- and we have six major regions in Ohio.

And, you know, when you have a general state plan, my one concern is we have a general state plan and nanotechnology may very well benefit the Columbus region and I'm assuming it will done right, but I think our approach has to be a little more subtle and it has to have a bit of a regional focus and that also has political benefits in it. You can come back and you can say to people in the legislature and the constituents in the area, you know, this is an area of, like here in northern Ohio, the biomeds or some of the stuff that I don't understand like the MEMS technology and all those rather sophisticated things, you know, you come back to the constituents and say, these are very specific things that we think we can do in this area with this additional help.

To me that's much more appealing because then you can begin to say to workers in your area, parents in your area, you know, these are things that, you know, I think we're going to make a sacrifice but in the long run it's going to make your life better.

MR. FROLIK: We're going to have to break here folks. We're coming to the end of the tape. Let's pick it up when we come back. We'll talk about eminent scholars and that sort of stuff, very specific stuff.

(Thereupon, a recess was taken.)

MR. FROLIK: Roy, just before we broke we were talking about the Ohio plan, you were going interject about information technology.

MR. CHURCH: Well, I wanted to because I think it represents a way to connect the strength of Ohio's traditional economy with the new an emerging economy. Information technology is really, obviously, started on the coasts and I call that the first wave. And we all know that with dot-coms blowing up in the last year-and-a-half here that there's been a bit of a fizzle in peoples view of the impact of information technology, but the reality is the second wave of impact really ought to be in the Midwest because the Midwest is where we have strength in making things. And if we're able to apply information technologies creatively and effectively, we ought to be able to improve productivity and to create wealth right here in the Midwest. So we really, I believe, we could be posed if we learned to utilize information technology as effectively to leap frog the competition in productivity gain and, therefore, wealth production because we have that strength in manufacturing.

I'll give you an example in our county where through our Great Lakes Incubator, for developing enterprises, working with a company that creates software applications for circuit boards that are imbedded in manufacturing machines that allow each manufacturing machine that through the Internet, talk with other manufacturing machines or other parts of the production cycle in the continuum to enhance productivity. Wonderfully creative ways to buildup on a strength that we already have, but to move us forward. The other real benefit of that is, if you look at Ohio as six major regions, all of them have significant strength and manufacturing. Information technology is one part of the Ohio plan that is applicable to our entire state not localized to anyone of the six regions in general. So I think we didn't good of job of articulating what the information technology component of the Ohio plan might do for the economic base that we might already have in place, but I think it has a significant potential that we need not under estimate and we need to build on as we go to the next cycle.

MR. FROLIK: Roy, there is one thing I'd like to pick up, also, go to you on. Sally was talking - perhaps one way come to the legislature is to show people very specific benefits in their communities as a way toperhaps to get by that tax aversion we talked about or to think perhaps in sort of different strategic ways. It seems to be back in 1995, in Lorain County, there was a lot of concern about the economy, perhaps strengthen the economy at that point. You managed to sell the voters on a tax increase for something for a university that might have been considered a gamble. Can you talk about that and how that fits into convincing the broader community the voters out there about the importance of higher education?

MR. CHURCH: Well, we really didn't sell the voters on a new tax. What we sold them on was the importance and criticality of enhancing educational opportunities for Lorain County. You know we discovered in (the) 1990 census was (that) Lorain County had highest percentage of adults with Associate's degrees of any other counties of Northeast Ohio but at the... level we were dead last and dead last by a lot. At the graduate and professional level we were dead last by more and so we started exploring what were some of the reasons for that and one of the conclusions was that Lorain County was the largest county in Ohio without a public university or public university branch, so certainly access was one of the issues.

We also were the county that had the most intense manufacturing base. 31% of the employment base in Lorain County employs employment directly in manufacturing - highest percentage in the state. We had a disproportionate of that mind set that said there were good jobs in assembly line manufacturing that didn't require education beyond high school.

So we said how can we community college as way to bridge that gap. So we initiated conversation about this idea called the University Partnership Program, where we would partner with universities to bring programs into Lorain County and make them accessible to all those folks that already had Associate degrees and allowed them to go to the next level. We took that idea to the community in over 150 forums across the community and exposed people to the idea, Sally, the notion of giving people further information about opportunities and the people came back to us and said this is something our community needs. Come up with a plan and help us figure out how to do that.

So the community helped us develop the University Partnership Program concept and we explained that in fact to do that, we needed some infrastructure support and that would require a local tax commitment. So we brought that issue forward in November of '95 and the people in Lorain County taxed themselves with a new tax to support a new idea to provide new opportunity and has produced a wonderful result. We have 8 university partners, 17 Bachelor degree programs, 7 Master's degrees and a Doctrine program delivered right there at Lorain Community College through the University Partners in our community and that's the notion of trying to be responsive to the needs that people feel and try to translate those into definitive action. You know, it's my sense that the support will come if people understand what the vision is, what the opportunity is, what the aspiration is and could see a way to get there.

MS. BROWN: Roy, I'm really compelled to give you a kudo because it was your work on the articulation committee that help to put in place the ability of universities to transfer credits almost seamlessly from one area of the state to another. The same kind of thing that distance learning will be doing and is doing on this, but Roy chaired the committee on articulation and this is a very important step in order to help this kind of development occur.

MR. CHURCH: You know, I really believe that we can partner along the institutions of higher education on the technology transfer and research agenda as well. One of the things that we know is that the largest amount of commercializable research that's done in the United States today is done by corporations. Many of our research universities work very closely with those institutions. Now, Jim and I have had some discussions about working with corporations in Lorain County who have research agendas connecting those to some of the foundational research being done at the university as a way to stimulate the defusion and dispersion of that technology transfer across our state. The sense that I have that we need to be able to show citizens in all parts of our state the benefits that are accruing to them through this collective effort. And that's why that notion of partnership is so critical. We don't have the resources today for any of our institutions to be able to accomplish everything that needs to be done by and in themselves. We have to be able to create synergy among and between so that Ohio State, the University of Akron, Case Western is a private institution, Cuyahoga County Community College, all are working together to try to develop benefits for the larger whole.

MS. BROWN: Joe, may I?

MR. FROLIK: Sure.

MS. BROWN: I have a little antidote because it is so relevant to what you said and what Sally was asking about, specific examples of how elements of the Ohio plan might impact and areas the Board of Regents a few months ago was to visit Proctor and Gamble pharmaceutical locations outside of Cincinnati and Mark Kolar, the CEO there pointed out the reason why this $3 billion company was located there was not because P&G's headquarters there at all, but it was because there was research on obesity, which is their main focus of research and product development. There is excellence in research at the University of Cincinnati. They went there because they needed the professors who were in that research institution as consultants and as continual idea generators for their research laboratory.

As we know, much of industries' research that had been so strongly supported during the years right after the world, the second world war has transferred actually to university via contract researching because industry had to cutback they had to down size and they could not afford these giant research labs that were the standard during the years right after World War II. The Government... all cutback including my own, but we took advantage then of the Government labs like NASA and Roy Patterson and the universities that were around us to complement the work going on in our own activities or the areas of research that we wish to continue to expand in and so this is, I think, another example of the biotechnology aspect of the Ohio plan right there as an example in Cincinnati where there is already this cluster, if you want to again look at the clusters which is being generated because of that location.

MR. PROENZA: Of course, we see that very much in polymers.

MR. FROLIK: I was going to ask you about the polymers and that sort of relationship between the university, the research facilities university and the region, the industries that are there. You helped them, you're very instrumental in the acronym in terms of making the transition from the rubber based economy to the polymer.

MR. PROENZA: It's been a huge success story for Ohio. It makes Ohio number one typically in the world in polymers and that inter-relationship with the University of Akron, with Case which has a very strong program as well has been a constant give and take. At Akron we have about 40% of the research in polymers supported by industry which goes to your point of really engaging with industry. We are focusing on developing programs increasingly on what we refer to as a strategic partnership basis and in varying different disciplines, the science and engineering with the business entrepreneurship, global business, sales and marketing, law and intellectual property, that provides us a focus of being able to provide a very broad service indeed development, protection, marketing, management and commercialization of new technologies. We've held a series of forums on technology transfer and the role of science and technology in economic development and this fall we'll be focusing on just that issue because indeed more research is still being done in industry then in universities and a great deal of that research never sees the light of day it's parked in the warehouse and so we're looking on how to "mine," how to extract some of this intellectual property into our laboratories for further development or how to assist companies in taking this intellectual property off line and creating new opportunities for new business start ups or for themselves in other product lines. Some companies have gone into the point of providing some gifts of intellectual property. Your own company has done some of that. Eaton has done some of that and we are talking with Shell and several others about gifts that can then be brought forward. But there's quite a bit. In a partnership with the Betel Memorial Institute, which I know working with you as well Brit, Betel is focused on innovative ways of getting technology commercialized and we're going to continue that special focus that we have on polymers and help and work omit the further innovation of our industry because every industry evolves through innovation as Michael Porter has just told.

MR. KIRWAN: And Luis' example triggered in my mind the relationship that Ohio State has with Honda. Honda you may know has the... is largest operation outside of Japan and in Marysville, Ohio and I don't know how many of you had a chance to visit it, but it's not like the automobile manufacturing plant that we remember from our youth. This is a really high-tech facility. They don't hire production line employees because they don't need them. It's all done robotically - (they'll) hire engineers and Ohio State is their number one source of workers and we just developed a wonderful relationship with them over the years and which is lead to research partnerships, gifts from Honda that have supported our college of engineering. We managed their transportation research center which is their track where they test cars and this is lead to an endowment of our college engineering of about $30 million which supports ongoing research, supports students and it's these kinds of relationships the ones Luis was describing and the relationship we had with Honda an others that I really think are the future for our state and four our universities.

MS. KILBANE: Can I go back just a minute?

MR. FROLIK: Sure.

MS. KILBANE: I think Luis has described the perfect cluster development and how it occurred, but you look at liquid crystal display research that was done at Kent State and yet that technology has gone virtually every place else in the world but here. And then I think Jenny mentioned the idea of, you know, we found in Northern Ohio all these information technology companies.

You know, I think, again, that's where the strategy comes in. It's identifying where your strengths are. It's looking how to incorporate that into your local businesses and you're not going to capture all this technology and you're hoping to capture somebody's technology but that's why I think the strategy is really important. You can have a wonderful thing turnout like this or you can have these wonderful relationships.

MR. PROENZA: Right.

MS. KILBANE: But unless there is some way in which we can identify our strengths whether they're underground like the IT people in Cleveland or whether there at our universities that we just don't notice. That's why I think we need kind of a better way to look at some of these things than we have in the past.

MS. BROWN: I agree entirely and I would suggest here in Northeastern Ohio we have the opportunity sitting there with us right now to look at biotechnology in this area. How can we fail to do this with the 3 great institutions: Case Western, UH, the Cleveland Clinic, Metro General. There is an opportunity here with these wonderful facilities to do much more in the way of job generation and attracting businesses to the area that wish to be associated and generating jobs. And I think we're seeing that initiative start we're certainly seeing the Biopark which was funded by the state with a very nice grant matched by the technology action fund from the Governor. Not quite matched, in kind total dollars, but added to and it's going to become reality very, very shortly.

MR. WAGNER: As an example - I'm sorry.

MS. BROWN: No. Go ahead.

MR. WAGNER: It's an example of what's just been said here, a partnership, coming in early. It's coming in at the planning stage and presumably that it will grow when we get into the more commercialization stage as well. But it is something that's going forward strategically. Trying to identify the region. What are the gaps? Why is it still the case that one plus one equals one, when it should be much higher and some of those gaps that have been identified have to do with the need for Incubator Appropriate... Incubator Space Appropriate in several dimensions and we don't need to elaborate here, also specialized facilities and equipment that can be used to spawn and anchor. All sorts of businesses that would come out of this. So there's been a very, you know, to your point, Sally, and there has been strategizing about how to make this go forward and Biopark is one. They'll be other places and other ways to do this, but that is one example where that strategy has happened among the partners initially. I am very encouraged about the likelihood that we're going to see continuing.

MR. KIRWAN: One problem that we continue to face here in Ohio and quite frankly in the Midwest is the absence of venture capital funds and early seed funding for new start-ups for innovations.

MS. BROWN: Particularly early seed.

MR. KIRWAN: Early seed.

MS. BROWN: Milkon pointed this out, Milkon study, that Ohio is dreadful. 45th or something like that out of the 50 States.

MR. KIRWAN: 45th. Who could feel good about that?

MR. WAGNER: And all that goes along with that, that is not just the initial funds for that, but also the initial business smarts we are a little short on CEOs.

MR. KIRWAN: And one of the things - a good step that the state took was create the technology action fund. Much of which has been used to help get some early seed funds started around the state and different regions around the state, but what happens this year, it gets cut. The technology action fund budget...

MS. BROWN: A money problem.

MR. KIRWAN: So the very thing we need at this moment, one of the many things we need, I guess, but one of the most important is this seed funding where we are clearly deficient and it is a place where the state can help in the future.

MR. FROLIK: You're investing some university funds and I think you guys are as well?

MR. KIRWAN: Absolutely.

MR. FROLIK: When you got on track become university president. I'm not quite sure how it went.

MR. KIRWAN: What a mistake that was.

MR. FROLIK: Did you ever imagined that you'd be in the economic development business?

MR. KIRWAN: No. Absolutely not.

MR. FROLIK: You had these extensive relationships with local industry. You have a Tech campus. You're the first piece of Biopark that's going to be right adjacent to campus. You all have incubators on campus.

MR. PROENZA: I did simply because that's been my career and because I happened to had been in Georgia when we very much were advising the Governor that these were the things that they needed to do. So first I found it a little ironic to come to Ohio and tell Bob Taft that he needs emulate Georgia, because 20 years ago I was telling Georgia to emulate Ohio because you just replaced that wonderful Edison program that needs revitalizing, but indeed the linkage between higher education and economic development has never been clear because of this knowledge economy that we've been talking about and it happens in 3 ways and I think it is very important that we communicate. That one, is obviously through the training of people.

Today the knowledge economy requires intellect. It's the knowledge and ideas that these people take forward and 95% of all technology transferred occurs when people move from one place to another either from the universities to a new workplace or from one workplace to another. 95%. The balances - what's left over.

Secondly, universities leverage resources into the economy that would not be there except for the marvelous talented faculties that we have who leverage sometimes ten times the amount of money we spend on them. Some of Brit's and my scientist and yours, you know, we'll bring annually a million or more dollars in research grants from the industry and from the Federal Government and that adds tremendously to the amount of money that's circulating in the environment. And the third way, of course, is what we've been talking about, that new knowledge when it is then commercialized and it's valued in this market environment, adds new jobs, surpluses for reinvestment and economy grows. New wealth is created.

MS. BROWN: Absolutely. Let's say it one more time. Higher education is the engine for economic development.

MR. FROLIK: I'm at tech transfer and the spin-off, the licensing. What if... walk me through it. If I'm laboring in the lab at Case. I think I've got a neat idea. What do I do, call up Jim Wagner and say I've got a neat idea?

MR. WAGNER: Some have done that. And the better way, and every school has, ever university, I'm sure, or institution has its own infrastructure but the better way is to approach the agencies and we have a structure for technology management.

And the first step, of course, is a formal disclosure, okay, and there are several options there for protection. The first question is how do I want to protect this. Do I want to patent it or not. Increasingly I think universities are being a little bit smarter about that process. It used to be, see, there's a problem. Since you're the smart researcher that comes to me, without me maligning anyone's researchers, often it's the case that there are some misunderstandings about you and your invention.

Very often the inventor comes and says this invention is ready for the market. That's often the statement, just shrink wrap it and sell it. Mistake number 2 is often, not only that, it's worth a zillion dollars, perhaps 2 zillion. In other words, they overvalue - it tends to get overvalued at the investigative level. And the third common problem when you come forward is your assumption that you're a good business person. And so what we need to do actually is the next step. It's called market assessment.

One looks at what is the potential for this widget or concept. It doesn't necessarily have to be anything mechanical. And assuming that it's one that we feel has potential and has value, we would help pursue a patent for that and then market that. in fact, different institutions have different strategies. Our own strategy is to be very selective now. We hadn't in the past. And the idea now is to be much more selective based on the potential for it to have an impact, an economic impact, than to patent that, and since we have been selective, we can pay more attention to those few that get patented and try to market them.

They get marketed in a couple different arenas. One is to existing companies with whom we would enter into a licensing negotiation and set up a licensing agreement and royalty structure and all that sort of thing. Another alternative, of course, is to try to do a new start-up, a new business start-up. And some of the infrastructures Brit points out isn't necessarily here. In fact, around the country, there have been very entrepreneurial people who have been entrepreneurial about entrepreneurism. By that I mean there are groups that have established what's been called enterprise factories and we don't have one of those in Ohio just yet.

But an enterprise factory is one where I can take this patented idea and this is a group that understands all the three things that I told you before and particularly the third, the business aspect of how to get this thing off the ground and going. I mentioned before Biopark and its headquarters will have some of that capability, as well.

So it starts with an idea that has to be disclosed then is evaluated then is protected and then is marketed. And I think to a greater or lesser degree, all of us go through those things.

MR. KIRWAN: One of the things we have done at the university to help the start-ups is to create something that Jim referred to we call the technology commercialization corporation. It's sort of a one-stop shop where an entrepreneur can go, a service we provide to them, helps the entrepreneur do a business plan, helps the entrepreneur look for, if they're going to start a company, who would be on the board, who would manage the company, because the kind of expertise needed to start a company up isn't very abundant in Ohio. It's abundant on the East Coast. It's abundant on the West Coast, maybe in Austin, Texas, a few other spots around the country.

So we need to be there to provide some infrastructure support to people who, entrepreneurs who can get a company started, and that's why Case and Ohio State independently have made an investment in early seed funds to help support technologies growing out of our universities.

MS. KILBANE: I guess, you know, we had mentioned, I think Roy had mentioned that you have the knowledge piece, you have the technology piece and the missing piece in Ohio really in a sense - you do have the education piece, but another missing piece is the entrepreneurship piece. And I was going to ask Jim a question. I see Case building that wonderful new building in the business school and I know Case has emphasized entrepreneurship emphasis in their business school.

MR. WAGNER: That's right.

MS. KILBANE: That's almost saying to me, you know, are we beginning to look at that third piece of the puzzle in terms of what is that creative genius that some people have and most of us don't that lets us see and then envision an opportunity and how to go about doing it.

MR. WAGNER: We're looking at it in two ways. One is, and I mean the "we" is the whole higher education group, creating a demand for it, also, by changing the attitudes within the research university. I mentioned before helping researchers understand that commercialization is not a four-letter word and that it is, you know, seriously, that it does not in any way necessarily, doesn't have to, let's put it this way, damage what we do in our fundamental research. In fact, toward that, and we have brought speakers on campus - David Morganthal locally has sponsored them - who are academics who have had an entrepreneurial activity that has expanded their career, not necessarily diverted it.

We have also had a little bit of support locally from Covington Foundation to set up - not a little bit, nice support to set up a little internal fund so that when a basic researcher is progressing along towards their very focused fundamental goals, when they get to a pointed where there is something that they developed that should be spun off, we have a little bit of money actually to do the development to get it to the point where it can then be disclosed. So it's out of a concept even to proof of concept. The whole idea is to try to help our faculty researchers expand what they do with their research and to make meaningful our commitment to service to society.

MS. KILBANE: You know, I was thinking of something I've been reading about, sometimes the spark is the new building, like in Nebraska, thinking about the Peter B. Lewis Business School in which they are - I know Case in the last couple of years has gotten into the business school, the enterprise idea, and I was wondering how one can have an impact on the rest of us in Ohio and in particular northern Ohio.

MR. WAGNER: I hope it has a big impact. We, of course, have a fine reputation, in fact, one of the strongest reputations within the Weatherhead School of Management is in the entrepreneurship area. We do intend that the new building is symbolic of thinking outside of the box. As I started to say, through our researchers developing a demand for this sort of thing, we then want to link our schools together. We have done a lot of linking.

We have a new program, an institute that links our engineering school with our management school for the, for the purposes of seeing a transition from the laboratory to business development. We would hope, therefore, that as this plays out regionally or locally, that we will actually be setting a pattern that could be replicated around the country for a more effective and efficient transition of technology. Yeah. I hope it would benefit all of us.

MS. KILBANE: I guess Roy has mentioned that in a sense that wonderful entrepreneurial spirit that kind of brought perhaps many of our own parents here to this country for opportunity and people to take risks and start to do business. In a way, we don't see that vitality that you see in other places and, you know, our, again, in looking at almost this third part of the puzzle, you know, can schools like Case and others kind of help us identify those things that in our communities, in state government, in local government, you know, kind of our barriers maybe even to do that type of thing or barriers to the way people think about it.

MR. PROENZA: The very encouraging point is we see it in our students. We have an entrepreneurship center that was endowed by Bill Fitzgerald, the CEO of Cooper Tire, that retired and the linkages that Jim outlined at Case are there plus the linkage to intellectual property law which is so critical to the appropriate protection. But the students themselves are the most encouraging point, and we run annually a competition and the kids just recently went and won the top two prizes in the regional competition and that's just very exciting to see that in the students.

MR. WAGNER: What's a little ironic in the research universities is that researchers are very entrepreneurial people about their own research. They run their own little companies and yet making this connection to the commercial world. It has been a little difficult.

However, we ran for the first year a business launch competition where we put together a nice jury of external folks to evaluate business plans, and we made a little bit of money available for the winner to help do pre-seed. That's really all the money we could find at the time, but the seed money that Brit is speaking about. And there's a lot of speculation, how many would we get. These folks had to have some connection with the University and they could be alumnus, also. And we thought, if we could get into the double digits for this, we would be happy.

We had something in excess of 17 applications for it. It was almost as though when the institution said, you know, it's okay to be entrepreneurial, it's all right, that folks said, all right, I'll play, and some flood gates began to open.

MR. FROLIK: That's interesting because we spent some time at the first discussion here talking about culture shift in northeast Ohio, that we have not been a very entrepreneurial culture. Universities have long had a reputation of places that are politically quite liberal but pretty conservative when it came to changing the way things work in my department.

Roy, how do you go about changing that mind-set within an institution like a college or university?

MR. CHURCH: Well, that certainly is a challenge, but I think one of the ways is to get people more connected to the opportunities and to the larger environment. You know, one of the things that we have seen really spawn the development of the entrepreneurial programs and the spirit in our community is not research. We're not a research institution, but our faculty and staff have gotten much more deeply connected to the changing nature of our community and its aspirations.

And what they have concluded is that, in fact, we have a responsibility as one of the public resources in our community to help the community change, and so faculty members have been saying, you know, what is it we can contribute to that process. Now, we, too, have tried