In an effort to prepare students for tech-focused careers, Arizona’s main technology industry group is asking lawmakers to spend $3 million annually on a new initiative to boost science and technology education across the state.
The Arizona Technology Council also is looking to the Legislature to extend two state tax-credit programs it says have been critical to boosting tech companies and jobs in the state.
The proposal to fund STEM (science, technology, engineering and math) programs would be Arizona’s first state-funded program of its kind, Tech Council President and CEO Steve Zylstra said.
The proposal would allocate $3 million annually over five years, to be distributed through the Arizona Commerce Authority in the form of grants to STEM-related networks, schools and colleges, out-of-school STEM programs and other qualified STEM entities, with priority given to rural areas.
Zylstra said such programs are essential to ensure that students are prepared for today’s tech-focused careers and that the council’s members — which include major Arizona employers like Raytheon Missile Systems and Intel —can get the talent they need.
“It’s all about building a pipeline of talent, the next generation of employees for our tech council members,” he said. “It’s essential to the future of our industry here that we build this pipeline because the postsecondary institutions can provide all kinds of opportunities for tech careers, but if you don’t have the feedstock, the basic talent to go into those fields, it’s not going to matter.”
Over the past decade or so, groups including the Science Foundation Arizona and the Arizona Tech Council through its charitable foundation, the Arizona Sci-Tech Institute, have worked with schools to develop a network of STEM education events and resources and helped local communities set up their own STEM centers.
In the Tucson area, the nonprofit Southern Arizona Research, Science and Engineering Foundation, or SARSEF, has evolved from shoestring high-school science fair programs led by University of Arizona faculty members in the mid-1950s.
With a budget of about $1 million supported mainly by foundation grants and corporate donations, SARSEF now runs regional science fairs, workshops for parents, teachers and students, science camps and mentorship programs from pre-kindergarten through high school grades, with a focus on serving lower-income communities.
Partnering with more than 150 organizations, SARSEF served more than 12,000 students last year at 178 Southern Arizona schools.
Major SARSEF sponsors include Tucson Electric Power Co., the Wallace Research Foundation, the Arizona Public Service Foundation, Raytheon, Caterpillar and the University of Arizona.
The state supports STEM initiatives indirectly through school programs and various agency work.
But direct state support for STEM centers would be a leap forward, SARSEF CEO Liz Baker-Bowman said.
“Funding at the state level for STEM education and workforce readiness is absolutely critical — it’s something other states have and other states support at a very high level, so Arizona taking this step is kind of starting us on a path we’ve been behind on for many years,” Baker-Bowman said.
“It’s a step in the right direction, but it’s going to take a lot more direct investment in education as a whole in order for us to catch up with the rest of the nation and the world.”
Zylstra said the idea behind the STEM funding bill is to help especially rural communities set up “regional STEM hubs” that bring together the resources of schools and colleges, nonprofit groups and government agencies to reach as many students as possible.
“We hope to be able to put funding into these regions, and we’ll act as the glue, if you will, to help hold these regional hubs together and help them build some institutional capacity,” he said.
Creating regional STEM hubs was a key recommendation of a five-year federal STEM plan that resulted from a 2018 national STEM summit at the White House and at the National Science Foundation, following up on an initial plan launched in 2013.
Zylstra attended the summit along with Arizona Commerce Authority President and CEO Sandra Watson as Arizona’s representatives, and he came away convinced direct state funding is crucial.
“They like to leverage state funding, and you see that even in conservative states,” he said.
Zylstra said Indiana has allocated $10 million annually in STEM funding, Utah has earmarked $7 million and Idaho has devoted $3 million to the cause.
A bill to appropriate the first year of the STEM funding has been proposed by Rep. Michelle Udall, a Mesa Republican, and Rep. Becky Nutt, R-Clifton, and the Tech Council has found wide support after meeting with about 30 legislators on the issue, Zylstra said.
Zylstra noted that the Tech Council supports Gov. Doug Ducey’s proposed $12.5 billion state budget, which includes $76 million in STEM- and technology-related spending, including $11 million to support STEM and workforce-development programs in Maricopa, Pima and Pinal counties.
Education and STEM in particular has strong support from major employers including Raytheon Missile Systems, Southern Arizona’s biggest employer, which sponsors programs like MathMovesU for middle schools to boost students’ interest in math and science.
“Raytheon is a strong supporter of K-12 education, and actively partners with Arizona’s colleges and universities,” Raytheon spokesman John Patterson said. “The company sponsors numerous statewide programs to spark student interest in math and science. Excellent schools help us attract and retain top talent.”
TAX CREDIT EXTENSIONS
Meanwhile, the Tech Council is looking to convince the Legislature to extend a state tax credit for “angel investors” — individuals who by their high net worth or income are qualified under federal law to make private-equity investments in companies.
The tax credit is worth up to $500,000 annually for eligible investors, with an annual cap of $2.5 million.
Zylstra said the credit is invaluable to small tech startups that need angel investment to perfect their products and build management teams in their early stages.
Tucson is home to one of the region’s most active angel investor groups, the Desert Angels, whose members in the past 10 years have invested more than $46 million in 92 startup companies.
The Tech Council and other supporters convinced lawmakers to recapitalize the angel investment program in 2017 after $20 million allocated to the program ran out in 2015.
But the law that establishes the tax credit is due to expire in 2021 if action isn’t taken to renew it.
The council is proposing to extend the program by 10 years, through 2031.
Rep. Regina Cobb, a Kingman Republican, has filed a bill to extend the credit program, and Zylstra said the group has the support of some key leaders in the Republican majority in both legislative houses, but its prospects for passage are unclear.
“It’s a heavy lift because a lot of conservative legislators don’t like tax credits of any kind, and then the education lobby doesn’t want anything to go to tax credits, they prefer that everything go to education,” he said.
The Tech Council also is advocating to extend the state’s research and development tax credit at current levels.
The current R&D tax credit law allows companies to get a credit of 24% of their R&D spending up to $2.5 million and 15% for spending beyond that level, under an enhanced credit approved in 2008.
If the Legislature doesn’t act, the credit would drop to 20% and 11%, respectively, in 2022.
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