Science Foundation Arizona's boost to the state's tech sector is still rippling out into the economy, even as it has turned its focus to technology education, according to the most recent annual report card on the nonprofit tech foundation.

SFAz hasn't awarded any research grants since the Legislature dropped state funding in 2010.

But a report by the Battelle Technology Partnership Practice shows that SFAz grant awardees are still attracting new investment, filing for patents and hiring workers.

According to Battelle, for each dollar invested in mainly state-funded research grants, an additional $4.83 was raised in support of grant-related work, up from an estimate of $4.40 last year.

The report said the cumulative economic impact of the grant-supported work since 2007 has reached nearly $600 million.

In other findings, the report said SFAz grants have resulted in:

• 1,865 jobs directly related to cumulative grant activities (up 89 from fiscal year 2012);

• 207 patents filed and/or issued (up 28 from 2012);

• 24 technology companies formed in Arizona (up two from 2012);

• 23 technology licenses (up seven from 2012).

Southern Arizona has been a major beneficiary of SFAz grants, with major grants including some $4 million for University of Arizona solar research and some $13 million in support of the Tucson-based Critical Path Institute, which is working with federal regulators and drug companies to boost drug development.

Among the local SFAz grant projects that are still attracting investments is REhnu Inc., which is developing new utility-scale photovoltaic energy technology based on the work of UA astronomer Roger Angel.

REhnu, which was formed by Angel with the help of a SFAz grant to the UA, has attracted more than $500,000 in new capital from individual, angel investors since January, according to documents filed with the U.S. Securities and Exchange Commission.

The investments were made as part of a bridge note that can be converted to equity as part of REhnu's next major round of financing, REhnu CEO Justin Elliott said.

Boosting STEM program

The Legislature cut back on funding to SFAz beginning in 2009 as the state faced the recession and a fiscal crisis.

Since losing most of its state funding, SFAz has focused on boosting so-called STEM (Science, Technology, Engineering and Math) education and workforce development.

Since 2007, SFAz's STEM education programs have reached nearly 385,000 students and 10,656 teachers at the K-12 and community college levels across 61 grant awards.

The nonprofit also has supported 263 graduate research fellowships for Ph.D. students in STEM fields at Arizona universities, with 38 percent of the graduates working in post-doctoral positions still in-state and 50 percent of the graduates with permanent jobs remaining in Arizona.

SFAz President and CEO William Harris said SFAz "continues to provide a strong return on investment for Arizona's economic future."

Concerns remain

But familiar, critical concerns remain, the Battelle report said:

• Nonexistent venture capital in Arizona in the critical seed and early stages for technology companies, while the nation saw continued gains;

• Lower-than-average concentrations of technology industry employment and growth, and R&D expenditures that lag behind the nation across both university and industry;

• "Achievement deficits" in middle-school math and science and fewer post-secondary degrees in key science and engineering fields.

legislation dies

While Harris and other SFAz supporters have argued that such state-funded grants represent investments, critics including the conservative Goldwater Institute have opposed them as costly taxpayer giveaways with dubious returns.

And such proposals remain a tough sell at the Capitol.

Two bills designed to boost high-tech development attracted bipartisan support at the Legislature this year - only to die short of the finish line.

Legislation that would have created a new, dollar-for-dollar credit on premium taxes paid by insurers who contribute to a proposed state-supervised, high-tech investment fund passed the House but died in the Senate amid budget talks.

A bill to increase the state research and development tax credit was passed by the Legislature, but was vetoed by Gov. Jan Brewer in late June.

In her veto message, Brewer cited the need to scrutinize the refundable credit - which draws from general state funds when a company has no excess tax liability - in the context of other tax and spending changes in the budget she signed the week before.

Contact Assistant Business Editor David Wichner at or 573-4181.