This publication updates the January 2004 study, New Returns on Investment in the Knowledge Economy: Proposition 301 at Arizona State University, FY 2003. Both works were launched by the report, Seeds of Prosperity: Public Investment in Science and Technology Research (2003), by Morrison Institute for Public Policy. Morrison Institute will periodically publish new material to keep you informed of the status of Proposition 301 investments at Arizona State University.

Arizona has grown rapidly over the years and our education system has grown in step with the population. But increasing the total budget for education doesn't mean that we have directed more resources to each student. The numbers show that Arizona has one of the lowest per-pupil funding rates in the country. Parties of one faction or another argue endlessly about which numbers to use in comparing Arizona to other states, or even whether such comparisons are possible. What is indisputable is that Arizona ranks in the bottom tier of states in both education spending and in student achievement and that we have made substantial cuts in our funding of both K-12 and higher education since the beginning of the Great Recession.

Almost every state hopes to capitalize on the tremendous wealth and job creation that can be generated by high tech science research-and billions of public dollars are being spent. But everyone is just speculating about the lasting value of these investments. While traditional assessments of return on public investment in science and technology tend to track short-term impacts, such as salaries, patents, and licensing revenues, the main foundations for long-term development of a knowledge economy appear to rely on a number of less tangible accomplishments. For example: Connections - the networks that develop between researchers, entrepreneurs, and venture capitalists; Attention - the publicity generated by the research and its networks that attract businesses and talent to locate in a region; and Talent - the highly skilled workers that such research attracts and trains.

These three indicators of economic success-henceforth called the CAT measures-have yet to be quantified and applied in a useful manner. That is the purpose of this study. It will be conducted in three parts, each with a culminating report. The first part will analyze the FY03 science and technology research activities and results for ASU's Proposition 301 initiatives. The second will develop a methodology for quantifying and utilizing the Institute's CAT measures. The third will field test the CAT methodology on a selected aspect of ASU's Proposition 301-funded research, and analyze results to provide Arizona decision-makers with recommendations to guide future policy.

The purpose of this brief report is to provide information about the past, present, and future of a very significant education reform program and tax increase, commonly known as Proposition 301. Coverage includes the history leading up to the ballot measure approved by Arizona voters in November 2000, its status approximately one year after it went into effect, and its prospects over a 20-year life span.