St. Luke's Health Initiatives and the Flinn Foundation strive to make Arizona a better place to live for all of its residents. Despite our state's assets, Arizona has many issues to address, with health and poverty among the most important. Our organizations have been pleased to sponsor the state capacity research that provided the background and impetus for "More Promises to Keep: Sustaining Arizona's Capacity for Welfare and Health Reform." St. Luke's Health Initiatives and the Flinn Foundation view the information and analysis provided in this report as a good way to stimulate discussion of health and welfare policy options and community actions. Research and dialogue are essential steps in the process of constructive change, as is communication with the public. We urge readers to consider the ideas presented in this paper and to continue to work together to improve the health and welfare of all Arizonans.

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.

Despite all of the spending reductions, fund transfers, and other techniques used to balance the budget in the preceding few years, Arizona’s general fund faces a massive deficit. This issue of Policy Points poses an important question: Are you content with the historically low expenditures being made from the general fund and satisfied that the current low level of public services will be permanent?

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.