BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                       AB 2664|
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                                   THIRD READING 


          Bill No:  AB 2664
          Author:   Irwin (D) 
          Amended:  6/22/16 in Senate
          Vote:     21 

           SENATE EDUCATION COMMITTEE:  9-0, 6/29/16
           AYES:  Liu, Block, Hancock, Huff, Leyva, Mendoza, Monning, Pan,  
            Vidak

           SENATE APPROPRIATIONS COMMITTEE:  7-0, 8/11/16
           AYES:  Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen

           ASSEMBLY FLOOR:  80-0, 5/31/16 - See last page for vote

           SUBJECT:   University of California:  innovation and  
                     entrepreneurship expansion


          SOURCE:    Author


          DIGEST:  This bill requires the University of California (UC) to  
          make one-time expenditures, with funds appropriated in Budget  
          Act of 2016, for activities to expand or accelerate economic  
          development in the state in ways that are aligned with efforts  
          to support innovation and entrepreneurship.


          ANALYSIS:  

          Existing law:

          1)Establishes the UC, a public trust to be administered by the  








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            Regents of the UC and grants the Regents full powers of  
            organization and government, subject only to such legislative  
            control as may be necessary to insure security of its funds,  
            compliance with the terms of its endowments, statutory  
            requirements around competitive bidding and contracts, sales  
            of property and the purchase of materials, goods and services.  
             (Article IX, Section (9)(a) of the California Constitution)

          2)Establishes the Donahoe Higher Education, setting forth the  
            mission and function of the UC designates, among other things,  
            UC as the primary state-supported academic agency for  
            research.  (EC § 66010.4) 


          This bill requires the UC to make one-time expenditures, with  
          funds appropriated in the Budget Act of 2016, for activities to  
          expand or accelerate economic development in the state in ways  
          that are aligned with efforts to support innovation and  
          entrepreneurship. Specifically, it:

          1)Identifies a specific funding source in the Budget Act of 2016  
            and allocates $2 million from that source to each of the 10  
            campuses of the UC.

          2)Requires the Regents of the UC to designate an external  
            advisory body, whose members have demonstrated expertise  
            innovation and entrepreneurship, to encourage the effective  
            use of specified funds through planning and oversight. The  
            external advisory body must notify the Director of Finance and  
            the Legislature of its intent to certify, no fewer than 10  
            days before providing certification.

          3)Prohibits a campus from expending funds until the external  
            advisory body has certified that the chancellor of the campus  
            has demonstrated all of the following:

             a)   That the funds will be used only for the costs of  
               activities that support the expansion or acceleration of  
               economic development in the state benefitting  
               entrepreneurs, such as any of the following:

               i)     Business training. 
               ii)    Mentorship.
               iii)   Proof-of-concept grants.







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               iv)    Work space. 
               v)     Laboratory space.
               vi)    Equipment.

             b)   That funds will be spent only after the uses and  
               beneficiaries have been determined through a transparent,  
               inclusive and fair process. 

             c)   That private funds will also be used for the specified  
               activities, with the  intent that the amount of private  
               funds will be at least equal to the amount of state funds.

             d)   That any financial benefit that results from the use of  
               these funds be accounted for and also used on the specified  
               activities, as described. 

             e)   That a credible plan has been developed to support any  
               ongoing activities beyond the one-time expenditures of  
               these funds.

          4)Requires the UC to report to the Department of Finance and the  
            Legislature on or before November 30, 2017, on the specific  
            activities at each campus, as specified. 

          5)Makes various findings and declarations relative to the UC's  
            position in addressing challenges faced by entrepreneurs that  
            are particularly acute for underrepresented groups and the  
            state's ability to harness the power of the UC's expertise in  
            this field to spur economic development.

          6)States that it is the intent of the Legislature to:

             a)   Provide one-time funds for new infrastructure at each  
               campus.

             b)   Enhance the state's network of programs and services  
               that support innovators, entrepreneurs, startups,  
               investors, and industry and community partners that are  
               locally based and committed to serving in communities  
               across California.

             c)   Generate commitments of private funds for these  
               activities in the amount at least equal to the amount of  
               state funds. 







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          Comments
          
          1)Need for the bill. The Budget bill, SB 826 (Leno, Budget Act  
            of 2016), provides $22 million for innovation and  
            entrepreneurship efforts at the UC. This bill provides  
            implementation language for that purpose. According to the  
            author, "the goal of the funding is to aid researchers who  
            have innovations that can be taken to market by providing the  
            institutional resources and expertise needed to get it to the  
            next level." The author contends that entrepreneurship in  
            California is declining and investments are needed in order to  
            keep pace with the demand for innovation and entrepreneurial  
            infrastructure, resources and support programs. This bill  
            seeks to leverage UC research to spur economic development in  
            the state by laying a foundation for innovation and  
            entrepreneurship at each UC campus. 

          2)Related activities at the UC. The UC system, as the research  
            arm of the state, has historically played a significant and  
            foundational role within California's innovation-based  
            industries.   In 2000, the state through AB 2883  
            (Villaraigosa, Chapter 79, Statutes of 2000)  established the  
            California Institutes for Science and Innovation (Cal-ISIs) at  
            the UC for the purpose of accelerating  business growth in the  
            state, developing research and innovations to meet  
            California's needs and training future scientist. At that  
            time, the state provided start-up funds of $400 million for  
            the Cal-ISIs with the UC providing a 2-to-1 match from a  
            combination of business and federal sources.  Four centers  
            were established as a result of this investment, which include  
            the following:

             a)   Center for Information Technology Research in the  
               Interests of Society (CITRIS) which is headquartered at UC,  
               Berkeley with partnerships and collaborations to  
               researchers at UC, Santa Cruz, UC, Davis, UC, Merced and  
               over 60 corporations. It creates information technology  
               solutions for pressing social, environmental and healthcare  
               problems. Research at CITRIS focuses on four core  
               initiatives: Energy, Health Care, Intelligent  
               Infrastructure, and Data and Democracy. 








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             b)   California Nanosystems Institute at UC, Los Angeles and  
               UC, Berkeley seeks technological breakthroughs by  
               understanding of how to manipulate, control and manufacture  
               at the nanometer scale. Control of material at this scale  
               allows for compact, complex and multifunctional systems at  
               the macro-scale that can dramatically improve present-day  
               communications, computation, medical therapies and  
               environmental remediation. 

             c)   California Institute for Telecom and Information  
               Technology at UC, San Diego and UC, Irvine focuses its  
               research on Enabling Technologies (Wireless, Photonics,  
               Cyber infrastructure, Nanotechnology/MEMS) to realize the  
               goals of its socially relevant Application Thrusts  
               (Culture, Energy, Environment, Health). 

             d)   California Institute for Quantitative Biosciences (QB3)  
               at UC, Berkeley, UC, San Francisco, UC, Santa Cruz and UC,  
               Davis covers the "quantitative biosciences," meeting  
               challenges in molecular biology using the techniques of  
               physics, chemistry, and computer sciences. This enables UC  
               to convert life science research into solutions for better  
               health, a sustainable environment, and a dynamic economy.  
               QB3 has built a matrix of support for entrepreneurs that  
               include a renowned incubator network and a venture capital  
               fund.

            The state continues to reap the benefits of this original  
            investment. For example the QB3 program has helped to  
            incorporated over 250 companies, provided work space for over  
            100 companies and raised $36 million in seed venture funds. In  
            2014, active UC startups based in California employed over  
            19,000 Californians and brought in more than $14 million in  
            revenue. 

            In addition to using state funds for similar activities, this  
            bill requires UC to generate commitments of private monies and  
            encourages that the amount of private funds match the amount  
            of state funds. 

          1)Related budget activity. The Budget Act of 2016 includes $22  
            million on a one-time basis for innovation and  
            entrepreneurship. As noted, this bill provides implementation  
            language for those funds. 







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          Related/Prior Legislation
          
          SB 826 (Leno, Budget Act of 2016) provides $22 million in a  
          one-time basis for innovation and entrepreneurship programs  
          pursuant to legislation enacted in the 2015-16 legislative  
          session.

          AB 2883 (Villaraigosa, Chapter 79, Statutes of 2000) authorized  
          the UC and established three, competitively bid, Cal-ISIs, which  
          would be devoted to basic and applied cross-disciplinary  
          research, focusing on problems of significant scale and on  
          scientific advances that may provide the underpinnings of future  
          economic activity in California.  


          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          According to the Senate Appropriations Committee, the Budget Act  
          of 2016 provides $22 million one-time General Fund for  
          innovation and entrepreneurship programs.  This bill provides  
          implementation language for those funds. There is potential  
          campus-level cost pressure to the extent the advisory body  
          overseeing the use of funds is unable to certify that a  
          chancellor of a campus has demonstrated that private funds will  
          be used for these activities, with the intent that the amount of  
          private funds will be at least $2.2 million.  It is unclear  
          whether expenditure of the campus' state allocation is  
          permissible without certification of this level of private  
          funds. 




          SUPPORT:   (Verified 8/11/16)


          California Chamber of Commerce
          California Manufacturers and Technology Association 
          Computing Technology Industry Association 
          Lake Tahoe South Shore Chamber of Commerce 
          TechNet







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          University of California


          OPPOSITION:   (Verified8/11/16)


          None received

          ASSEMBLY FLOOR:  80-0, 5/31/16
          AYES:  Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,  
            Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,  
            Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley,  
            Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth  
            Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto,  
            Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper,  
            Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim,  
            Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis,  
            Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte,  
            O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez,  
            Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,  
            Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon

          Prepared by:Olgalilia Ramirez / ED. / (916) 651-4105
          8/15/16 20:22:29


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