BILL ANALYSIS Ó
AB 2664
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Date of Hearing: April 12, 2016
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Jose Medina, Chair
AB 2664
(Irwin) - As Amended March 17, 2016
[Note: This bill is double referred to the Assembly Jobs,
Economic Development, and the Economy Committee and will be
heard as it relates to issues under its jurisdiction.]
SUBJECT: University of California: innovation and
entrepreneurship expansion
SUMMARY: Provides funding to the University of California (UC)
to expand the infrastructure necessary to increase innovation
and entrepreneurship for the purpose of creating economic
development for the State of California. Specifically, this
bill:
1)Finds and declares the following of the Legislature, with
respect to innovation and entrepreneurship expansion at the
UC:
a) The State of California is well-positioned to harness
the power of the expertise of the UC to spur economic
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development;
b) The UC contributed to the foundational research
breakthroughs that launched some of California's strongest
industries, including aerospace, agriculture,
biotechnology, computers and semiconductors,
telecommunications, and digital media;
c) Research at the UC continues to create new inventions
that will be the genesis of tomorrow's industries,
companies, and commercial successes;
d) Innovation and entrepreneurship at the UC create
equitable economic development throughout California; and,
e) It is therefore the intent of the Legislature to provide
funds to establish or expand the infrastructure at each
campus and the Lawrence Berkeley National Laboratory (LBNL)
to expand infrastructure necessary to build a network of
innovators, entrepreneurs, startups, investors, and
industry and community partners to spur innovation and
economic development in communities surrounding UC
campuses, the LBNL, and across California.
2)Specifies that monies appropriate, as specified, shall be used
by the UC to expand the infrastructure necessary to increase
innovation and entrepreneurship for the purpose of creating
economic development.
3)Stipulates that specified funds shall be used to fund
innovation and entrepreneurship programs at each campus of the
UC and the LBNL.
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4)Requires that the manner in which the specified funds may be
used, shall be determined by the UC; and, authorizes the funds
may be used, but shall not necessarily be limited to, the
establishment of programs or projects to facilitate economic
development in communities surrounding the 10 campuses of the
UC, the LBNL, and other locations across California for
purposes such as any of the following:
a) Providing business training and resources to reduce
common barriers to success for entrepreneurs and startup
companies;
b) Offering subsidized work and laboratory space to
startups for prototype development, proof-of-concept
research, or both;
c) Providing proof-of-concept funding to increase the
likelihood that entrepreneurs and startup companies will
attract venture or corporate capital backing;
d) Providing mentorship to the underrepresented interested
in entrepreneurial pursuits; and,
e) Coordinating and aligning innovation functions at a
campus of the university or at the LBNL, and building
relationships between the university environment and
successful, independent enterprises to facilitate the
rollout of products to the market and the public.
5)Requires the UC to report to the Department of Finance and the
Legislature annually on the use of the funding, as specified.
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6)Allocates $66 million from the General Fund (GF) to the UC
Regents for allocation, as specified, in accordance with the
following schedule:
a) $22 million for expenditure for the 2017-18 fiscal year
(FY);
b) $22 million for expenditure for the 2018-19 FY; and,
c) $22 million for expenditure for the 2019-20 FY.
EXISTING LAW:
1)Establishes the Donahoe Higher Education, setting forth the
mission of the UC (Education Code (EC) Section 66010, et
seq.).
2)Grants the UC Regents regulatory authority over the UC (EC
Section 92440, et seq.).
FISCAL EFFECT: $66 million from the GF over three years.
COMMENTS: Background. As the research arm of the state, the UC
has driven innovation and economic growth. According to the UC,
it is now the world's academic leader in the number or research
inventions, with 1,700 reported in 2014. The UC continues to be
the launching platform for a numerous startup companies that
stimulate the economic and job growth in California.
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The state, in 2000, created the California Institutes for
Science and Innovation (Cal-ISIs) through the budget and
legislation (AB 2883, Villaraigosa, Chapter 79) to speed up
business growth in the state, develop research and innovations
to meet California's needs, and train future scientists.
The state provided start-up funds of $400 million for the
Cal-ISIs and the UC provide a 2-to-1 match from a combination of
business and federal sources. The state continues to reap the
benefits of its original investment.
What is needed for continued growth? According to the UC,
specific investments are needed so that the pace can be
maintained to keep up with the demand for innovation and
entrepreneurial infrastructure, resources, and support programs.
The UC contends that the investments will leverage UC research
in two ways: a) provide researchers with the necessary tools to
turn their ideas into job-providing companies; and, b) organize
research systemwide in order to address the various challenges
facing California.
Expanding the infrastructure for UC innovation and
entrepreneurship to create innovation and economic development
in the surrounding communities of UC campuses and across
California will not happen overnight. The UC has a three-year
investment of $2 million per year for each of the 10 UC campuses
and the Lawrence Berkeley National Laboratory.
This measure calls for the appropriation of $22 million for FYs
2017-18, 2018-19 and 2019-20 inclusive, to be used by the UC in
order for the UC to expand the infrastructure necessary to
increase innovation and entrepreneurship for the purpose of
creating economic development for California.
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Purpose of this measure. According to the author, in 2014,
active UC startups based in California employed over 19,000
Californians and brought in more than $14 billion in revenue.
The author contends that in order to maximize the transformative
power of UC's research engine, the UC innovation ecosystem needs
to expand throughout the State. The author states, "The UC's
ability to provide entrepreneurial services is at capacity. The
demand for startup seed funding is rising, and workspace demand
consistently exceeds capacity. While UC-fostered
entrepreneurship is increasing, entrepreneurship in the state of
California is declining. The number of new adults becoming
entrepreneurs per month slipped from a high of 440 out of every
100,000 Californian adults in 2012, to 390 in 2015; a troubling
trend as young companies are the primary source for all net new
jobs created annually."
This measure seeks to build upon the successful model that the
state created in 2000.
REGISTERED SUPPORT / OPPOSITION:
Support
23andMe
Aduro Biotech
Bayer
Breakout Labs
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California Chamber of Commerce
California Manufacturers and Technology Association
City of Santa Cruz
Computing Technology Industry Association
Data Collective
Foley & Lardner, LLP
Gerson Bakar Foundation
Inevitable Ventures
InterPacific
Manitou Ventures
Monterey County Business Council
Pfizer, Inc.
San Francisco Chamber of Commerce
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San Francisco Global Trade Council
Synergenics
TechNet
University of California
Velocity Venture Capital
4 Individuals
Opposition
None on file.
Analysis Prepared by:Jeanice Warden / HIGHER ED. / (916)
319-3960
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