BILL ANALYSIS Ó
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Date of Hearing: August 24, 2016
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT, AND THE ECONOMY
Eduardo Garcia, Chair
SCR
161 (De León) - As Introduced August 2, 2016
SENATE VOTE: 38-0
SUBJECT: Los Angeles Basin: bioscience hub
SUMMARY: Memorializes the California Legislature's support for
promoting the Los Angeles Basin as a bioscience hub and to leverage
these activities in a manner that provides educational and economic
opportunities for underserved areas, as specified. Specifically, this
bill:
1)Makes findings and declarations, which include, but are not limited
to:
a) The 21st Century is often referred to as the "Bio Century"
because biosciences are at the forefront of both creativity and
innovation, representing a convergence point for engineering,
information technology, nanosciences, communication, and media;
b) California has been and will continue to be at the forefront
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of developing an innovative economy. The Los Angeles bioscience
industry has been a consistent growth industry even during the
recession and recovery years. In bioscience industries,
employment in Los Angeles County rose from 37,759 jobs in 2001 to
42,211 in 2010, an 11.8% increase;
c) The Los Angeles Unified School District (LAUSD) offers 81
science, technology, engineering, and math (STEM) programs to its
1,100 elementary, middle, and high school students. There is,
however, still a need to expand access to STEM programs to the
thousands of students attending public and private K-12
institutions within the region;
d) There are over 415,000 students within LAUSD that come from
low-income households. Students who attend schools in the lowest
socio-economic neighborhoods are being overlooked for their
potential to enter and succeed in highly technical fields,
including bioscience. To address these challenges, there is a
need for California's public school system and the state's public
and private universities to collaborate to establish a pipeline
that provides concrete opportunities for low-income,
underrepresented students to pursue higher education in
scientific fields of study;
e) Addressing the needs of Los Angeles' underserved areas is
important to meet the growing demand for STEM-skilled workforce.
The Public Policy Institute of California (PPIC) reports the
state will be short 1.1 million bachelor degrees short by 2030.
Currently, California ranks near the bottom of all states, 47th,
in the share of recent high school graduates who enroll in
four-year colleges or universities;
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f) For the majority of low-income, underrepresented students,
their access to a higher education remains their passport to
economic security. If these students earn a STEM degree and are
able to work in the bioscience industry, they can break the cycle
of income inequality. According to PPIC, workers with
engineering degrees earn a median annual wage of $96,000, which
is almost three times the salary of an individual with only a
high school diploma;
g) The Los Angeles region has many unique resources and
opportunities to support a bioscience hub, including, but not
limited to, the ability of its academic medical centers to
attract nearly $1 billion in National Institutes of Health
funding; the skills of the 42,000 current biotech employees; the
ability of major research universities to spur 1,118 invention
disclosures and 43 startups in 2010; a proposed biotech park,
sponsored by the University of California and supported by its
surrounding communities, that is estimated to create up to 3,000
new construction jobs and nearly 4,000 permanent jobs; and the
potential plans at the Harbor-UCLA Medical Center, Olive
View-UCLA Medical Center, and Rancho Los Amigos National
Rehabilitation Center to support other new economic, educational,
and training opportunities;
h) There is a need to address the fact that college graduates are
leaving the Los Angeles area to pursue biotechnology job
opportunities elsewhere. Annually, universities in the Los
Angeles Basin produce over 5,000 college graduates in science,
technology, and engineering. Yet, the Los Angeles Basin ranks
14th nationwide in biotech investment because many of these
graduates leave to pursue jobs in other cities, such as San
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Francisco and San Diego, and in other states where biotech
infrastructure has already been developed; and
i) There is a need for the state and local governments to move
beyond the planning stages if the Los Angeles Basin is to emerge
as a bioscience hub. It is critical that concrete actions be
taken to promote and invest in biosciences in order to improve
the economic opportunity for the Los Angeles Basin residents and
businesses.
2)Resolves that the California Legislature agrees that promoting the
Los Angeles Basin as a bioscience hub will provide a new economic
engine for California and in particular for people in underserved
areas.
3)Resolves that it is the intent of the Legislature to develop and
encourage proposals that focus on this large, fast-growing, and
diverse industry; and to establish manufacturing and research
activities for the purpose of providing high-quality jobs, while
advancing public health.
4)Provides that the Secretary of the Senate will transmit copies of
this resolution to the author for appropriate distribution.
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FISCAL EFFECT: None
POLICY ISSUE FRAME: Los Angeles is in the process of developing their
region into the next big biotech hub. Civic and business leaders are
collaborating on a number of initiatives that build on the region's
world class research institutions, healthy business climate, and
growing bioscience businesses. As the alignment of interests
deepens, questions arise as to what this innovation hub will mean to
Los Angeles' historically underserved populations. Without a focused
effort on creating an inclusive prosperity model, the economic
benefits of a biotech hub could be limited to a few.
SCR 161 supports Los Angeles' efforts to form a regional biotechnology
hub, while simultaneously calling on local governments, academia, and
the private sector to aggressively take actions that result in greater
economic opportunity for all the residents and businesses.
The comment section of the analysis includes a discussion of
bioscience industry, challenges facing the bioscience industry in Los
Angeles, and current STEM career pathway programs offered through the
LAUSD.
COMMENTS:
1)What is Bioscience? Bioscience businesses or biotechnology refer to
biology-based businesses that develop technologies and products that
help to improve public health through cellular and biomolecular
processes. Modern bioscience technology companies develop products
and services across a range of industries, including medical,
environmental, energy, agriculture, and manufacturing processes, to
name but a few.
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2)California's Innovation Economy: California is home to over 39
million people, providing the state with one of the most diverse
populations in the world, often comprising the single largest
concentration of nationals outside their native country. In 2015,
this diverse group of business owners and workers produced $2.4
trillion in goods and services; $174.1 billion of which were
exported to over 220 countries around the world. If California were
a country, its 2015 GDP would place it 6th among nations.
Many policy makers and economists describe California as having not
a single economy, but having a highly integrated network of a dozen
or so regional economies. While biotech has a comparative advantage
in some regions, information technology drives growth in others.
Chart 1 displays information from the U.S. Census Bureau on
California's private industry sectors based on its contribution to
the state's GDP. In 2015, the finance and insurance sector provided
the largest economic contribution to the state's overall GDP, $525
billion of the $2.4 trillion. Firms in this industry sector include
entities that raise funds, pool risk, and facilitate financial
transactions. The dominance of California's finance and insurance
sector, which includes venture capital, is one of the foundational
drivers of the state's high level of competency and global
competitiveness in the technology-related sectors. One estimate
suggests that it takes over a year of work and costs an average of
$1.2 billion to bring a new biotechnology therapy to market.
Without patient capital, like that available through venture funds,
these types of advances cannot occur.
Another important dimension of the California economy is workforce.
Chart 2 (on the following page) displays employment information for
the same industry sectors as above, plus those individuals employed
in government. Based on employment, the trade, transportation, and
utilities sector is largest, employing 2.9 million people in
California, which is 15.5% of all jobs. While the U.S. is a large
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economic market, more than 80% of the world's purchasing power is
located outside the U.S. The export and important of bio-based
products, as well as research practices and other commercialization
issues, are key areas covered in modern trade agreements.
Jobs in this sector also support employment in other high paying
industry sectors including Manufacturing (8.1%), Professional
Services (13.1%), and Financial Activities (4.1%).
Manufacturing is considered the "gold standard" for jobs because of
its high wages, inclusion of small businesses within its global
supply chains, and having a high multiplier effect on related jobs.
The Milken Institute estimates that for every job created in
manufacturing, 2.5 jobs are created in other sectors. In some
industry sectors, such as electronic computer manufacturing, the
multiplier effect is 16:1. A PPIC study noted in SCR 161 that
workers with "engineering degrees earn a median annual wage of
$96,000, which is almost three time more than an individual earns
with only a high school diploma."
While California remains the largest manufacturing state, over the
past few decades employment, new facilities, and expansions of
existing facilities have lagged behind most other states. Expanding
the biotech sector in Los Angeles to include more manufacturing will
also require addressing broader economic challenges. The reward for
bringing in new manufacturing, however, would be more high paying
jobs and economic benefits across multiple industry sectors.
3)Biotechnology and the California Economy: California has the
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largest bioscience industry employment in the U.S., with more than
235,000 jobs (15% of the national sector). The state's concentration
of bioscience jobs is 28% greater than the national average. Three
specialized areas (medical devices and equipment, research, testing
and medical labs, and drugs and pharmaceuticals) contributed 5% of
all job growth within state's bioscience-related industries between
2007 and 2012.
Moreover, bioscience businesses have a positive correlation to
overall employment impact, with a direct-effect employment
multiplier of 5.4. Chart 3 displays information on firms,
employment, and wages in California bioscience-related industries in
2012. Applying the 5.4 multiplier to total 2012 employment (235,864
jobs) is estimated to have supported the creation of 1,282,795
across all industry sectors.
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| Chart 3 - California Bioscience Profile |
| |
| |
--------------------------------------------------------------------
|-------------------------+----------+----------+----------+----------|
| Bioscience Industry | Firms | Total | Average | % Wage |
| Subsector | | Employed | Wage | vs. US |
| | | | | Average |
| | | | | |
| | | | | |
|-------------------------+----------+----------+----------+----------|
|Agricultural Feedstock | 117 | 2954 | $74,806 | 98.6 % |
|and Chemicals | | | | |
| | | | | |
| | | | | |
|-------------------------+----------+----------+----------+----------|
|Bioscience-Related | 3,092 | 47,470 | $90,147 | 106% |
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|Distribution | | | | |
| | | | | |
| | | | | |
|-------------------------+----------+----------+----------+----------|
|Drugs and | 500 | 44,229 | $135,190 | 127% |
|Pharmaceuticals | | | | |
| | | | | |
| | | | | |
|-------------------------+----------+----------+----------+----------|
|Medical Devices and | 1,039 | 61,698 | $92,088 | 122% |
|Equipment | | | | |
| | | | | |
| | | | | |
|-------------------------+----------+----------+----------+----------|
|Research, Testing and | 3,271 | 79,514 | $115,140 | 126% |
|Medical Labs | | | | |
| | | | | |
| | | | | |
|-------------------------+----------+----------+----------+----------|
|Total Bioscience | 8,019 | 235,864 | $107,335 | 122% |
| | | | | |
| | | | | |
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| Source: State Bioscience Jobs, Investment and Innovation 2014 |
| Battelle (2014)|
| |
| |
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California's robust bioscience industry also has a positive impact
on the state's share of bioscience venture capital. From 2009-2013,
California-based firms captured $19.2 billion of the $49.4 billion
invested nationally in biosciences for just over 38% of all venture
investment dollars. Firms specializing in medical therapeutic and
human ailment-focused products and services received the largest
majority of funding (approximately $12.0 billion of the $19.2
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billion).
The most current data shows that California receives the greatest
economic benefit from the bioscience clusters in San Francisco and
San Diego. By comparison to these nationally dominant regions, Los
Angeles lags, significantly. In 2013, the San Francisco bay area
received $1.15 billion in venture capital, while Los Angeles County
received just $45.0 billion. One of the contributing factors is the
lack of opportunity for post-graduate employment in the region,
which some have suggested has resulted in a brain drain. While the
region produces over 5,000 graduates annually, as compared 2,800 in
the San Francisco bay area, a majority of those graduates must leave
the Los Angeles area to seek work.
4)Biotechnology Career Pathways in Underserved Communities:
Typically, the focus of career pathways to biotechnology jobs lead
to Bachelor and higher level degrees in STEM-related fields. While
appropriate for some individuals, this approach fails to recognize
the overall workforce needs of the bioscience industry. For a
strong biotechnology hub, STEM workers are needed at all education
levels. Developing and implementing bioscience career pathways that
have multiple end points deepens the region's comparative advantage
while creating new employment opportunities for underserved
communities and populations.
A 2013 Brookings study, The Hidden STEM Economy, reported that over
26 million jobs exist in the U.S. that require STEM expertise
developed through a high school or two-year technical training
certificate/degree. These workers are sometimes referred to as the
"technical" STEM workforce. Advanced degree STEM employment is
referred to as the "professional" STEM workforce. The technical
STEM workforce, as compared to the professional STEM workforce is
much more diverse. Key features include:
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Over 92% of the technical STEM workers are native born;
Blacks and Hispanics comprised a significant percentage of
the technical STEM workforce; and,
Employment in the technical STEM areas is more
geographically dispersed than the professional STEM workforce
opportunities, which are focused around tech-heavy regions.
LAUSD recognizes these opportunities and currently offers a range of
linked learning career pathways in 11 industry sectors, including
those related to Health Science and Medical Technology; Energy,
Environmental and Utilities; and Engineering. Through these
programs, the LAUSD supports career pathway programs at 15 middle
and high school campuses with curriculum focused on STEM subject
matter.
SCR 161 calls on public and private sector stakeholders to leverage
these programs and address further gaps in linking underserved
communities and populations with bioscience employment
opportunities.
1)Economic Advantages of a Biotechnology Hub: Research shows that
workers within metro areas with high concentrations of STEM
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businesses receive 11% higher wages than workers employed in the
same field and doing the same work in metro areas with low
concentrations. This means that as Los Angeles continues to develop
its bioscience hub, workers across the board will benefit.
Businesses will also benefit from re-gaining access to the
significant number of highly qualified professional STEM workers who
are now working in other regions, as well as hiring from an
increasing number of technical STEM works who are graduating from
well articulated bioscience career pathways with certificates,
licenses, and two- degrees.
2)Related Legislation: Below is a list of related legislation:
a) AB 80 (Campos) Interagency Task Force on the Status of Boys
and Men of Color: This bill would have established a 20-member
Interagency Task Force on the Status of Boys and Men of Color.
Issues to be addressed by the Task Force would include, but not
be limited to, employment and wealth creation, health and safety,
education, and juvenile justice. Status: Vetoed by the
Governor, 2015. Governor's Veto Message: How state policy can be
tailored to promote the well-being of boys and men of color is
profoundly important. These issues, however, are best addressed
through concrete actions, not another non-binding commission.
The Legislature and the Administration are working on the
critical issues raised by this bill, such as the Local Control
Funding Formula, healthcare expansion and criminal justice
reform. Much more can be done, and I am committed to advancing
this work.
b) AB 288 (Holden) College and Career Pathways: This bill
authorizes the governing board of a community college district to
enter into a College and Career Access Pathways (CCAP)
partnership with the governing board of a school district within
its immediate service area, as specified, to offer or expand dual
enrollment opportunities for students who may not already be
college bound or who are underrepresented in higher education.
The goal of the agreements is to develop seamless pathways for
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students from high school to community college for
career-technical education or preparation for transfer, improve
high school graduation rates, or help high school pupils achieve
college and career readiness. The bill includes specific
conditions which must be met prior to the adoption of such an
agreement. The authority in this measure sunsets on January 1,
2022. Status: Signed by the Governor, Chapter 618, Statutes of
2015.
c) AB 2642 (E. Garcia, C. Garcia, Eggman, Gomez) Barriers to
Employment: This bill would have established the Breaking
Barriers to Employment Initiative for the purpose of assisting
individuals who have multiple barriers to employment to receive
the remedial education and work readiness skills that will help
them to successfully participate in training, apprenticeship, or
employment opportunities that will lead to self-sufficiency and
economic stability. Status: Held in the Assembly Committee on
Appropriations, 2016.
d) AB 2719 (E. Garcia) Out-of-School Youth and Workforce
Preparation: This bill highlights the need for planning,
monitoring, and serving the needs of out-of-school youth and
individuals with employment barriers within the framework of the
state's implementation of programs and use of funding received
through the federal Workforce Investment and Opportunity Act.
Status: Pending on the Senate Floor.
e) SB 1050 (de Leon) Pipeline for Higher Education: This bill
establishes a stronger pipeline from K-12 high schools,
particularly those that enroll 75% or more low-income, English
learner, and foster youth, to the University of California and
other postsecondary educational institutions. More specifically,
the bill:
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i) Establishes the College Readiness Subject Matter Project
at UC to provide K-12 public school
staff professional development to improve "A-G" course
completion rates, college-going rates,
and the college readiness of students.
ii) Establishes the K-12 College Readiness Block Grant to
better prepare low-income high school
students for admission to postsecondary institutions.
iii) Requires UC, as a condition of receiving any enrollment
funding in the 2016 State Budget, to do the following:
(1) Increase the admission to UC of students from high
schools that enroll 75% or more low-income, English learner,
and/or foster youth students (i.e., Local Control Funding
Formula Plus Students).
(2) Provide additional support to first generation
college students to help them succeed in college.
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Status: Provisions included within the 2016-17 Budget Trailer
bill for education.
REGISTERED SUPPORT / OPPOSITION:
Support
Eric Garcetti, Mayor of the City of Los Angeles
Los Angeles County Economic Development Corporation
Los Angeles Unified School District
University of California Office of the President
University of Southern California
Opposition
None Received
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Analysis Prepared by:Toni Symonds and Peter Ansel / J., E.D., & E. /
(916) 319-2090