BILL ANALYSIS Ó
AB 2664
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB
2664 (Irwin)
As Amended June 22, 2016
Majority vote
--------------------------------------------------------------------
|ASSEMBLY: | 80-0 |(May 31, 2016) |SENATE: |38-0 |(August 18, |
| | | | | |2016) |
| | | | | | |
| | | | | | |
--------------------------------------------------------------------
Original Committee Reference: HIGHER ED.
SUMMARY: Requires the University of California (UC) to make
one-time expenditures on activities, using the $22 million
General Fund provided in the Budget Act of 2016, to expand or
accelerate economic development in the state in ways that
support innovation and entrepreneurship.
The Senate amendments do all of the following:
1)Identify 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)Require the UC Regents to designate an external advisory body,
whose members have demonstrated expertise innovation and
entrepreneurship, to encourage the effective use of specified
AB 2664
Page 2
funds through planning and oversight; and specify that 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)Prohibit 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;
iv) Work space;
v) Laboratory space; and,
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;
AB 2664
Page 3
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; and,
e) That a credible plan has been developed to support any
ongoing activities beyond the one-time expenditures of
these funds.
4)Require 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.
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: According to the Senate Appropriations
Committee:
1)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.
2)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
AB 2664
Page 4
is unclear whether expenditure of the campus' state allocation
is permissible without certification of this level of private
funds.
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.
The state, in 2000, created the California Institutes for
Science and Innovation (Cal-ISIs) through the budget and
legislation (AB 2883, (Villaraigosa), Chapter 79, Statutes of
2000) 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: 1) provide researchers with the necessary tools to
turn their ideas into job-providing companies; and, 2) 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
AB 2664
Page 5
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
fiscal years 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.
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.
Analysis Prepared by:
Jeanice Warden / HIGHER ED. / (916) 319-3960
FN: 0004238
AB 2664
Page 6