Legislation proposed to foster technology enterprise

By this time next year, changes to Ohio law could ease the way for university faculty, staff and students statewide to participate in moving the fruits of their research into the marketplace. And if a proposed amendment passes, they'll have Ohio State officials who led the legislative effort -- among others -- to thank for it.

The proposal ultimately is intended to increase the chances that research conducted at public universities will benefit Ohio citizens by enabling laboratory research results to make a quick and effective transition into the business world and eventual use by the public.

Director of State Relations Colleen O'Brien said a top priority for her office is to see the Ohio Revised Code amended in a way that eventually will provide clarity and ease restrictions on how much faculty and staff research scientists can participate in contracts concerning commercialization of their discoveries.

"Faculty who are involved in any scholarly arena want to have impact. Traditionally, that was defined by publication," said David Allen, assistant vice president for technology partnerships. "Today, impact has expanded to include researchers' ideas and technologies moving into the marketplace.

Increasingly, researchers want to be involved in that transfer in an active manner, including hands-on involvement in commercializing their technology through a start-up company."

Ohio's ethics laws, providing a mechanism to reduce conflicts of interest for public officials, limit the amount of equity that faculty or research scientists at public institutions may own in a technology start-up to no more than 5 percent. But venture capitalists and others who form new technology companies are looking for more participation on the part of faculty and staff inventors of the technologies behind entrepreneurial companies. It is not uncommon for venture capitalists to create an initial ownership incentive of up to 20 percent, or occasionally higher, for key faculty, staff or student researchers involved in transferring the technology from the lab to the company.

The current limits to that participation ultimately threaten Ohio's competitiveness in the high-tech business and research environment, which in turn can impede faculty recruitment and economic development, Allen and O'Brien argue.

"People have been grappling with this issue for a long time," Allen said. "The ambiguity and apparent conflicts between different statutory elements present a dampening effect overall, and particularly with investors. Venture capitalists look at Ohio as stuck in the past. Whenever they see uncertainty where, ideally, it shouldn't exist, they go to the next opportunity."

Under the proposed revisions, university boards of trustees in Ohio would be responsible for developing policies to oversee activities concerning employees holding equity interests and participating in commercialization of their inventions. The law already grants universities ownership of intellectual property, and delegates authority to trustees to direct and control the rights to inventions developed at their respective institutions.

"State law will provide the guidelines, and the governing boards will promulgate the rules guiding the universities," O'Brien said. "An enforcement mechanism would be built into the policies."

Faculty/staff/student participation in new ventures is seen as critical for a number of reasons: They can communicate the science to technology and investment communities, lend their vast know-how to the "hands-on" transfer of knowledge to a laboratory scaled up at a new company, and expand on and refine the initial research findings.

Ohio State has prepared a white paper to argue the case to legislators and other educational leaders in which it spells out the ramifications of not improving the entrepreneurial business environment in the technology arena.

"If the status quo performance of Ohio's universities in technology commercialization is permitted to continue, Ohio's universities will become less competitive in the quest for top faculty and graduate students, will forego significant federal and industrial research opportunities, will not provide as great a return to Ohio on its higher education investments, and will contribute to the state's inadequate performance at generating new high technology companies, jobs and wealth," according to the white paper.

The white paper also cites Texas, Oklahoma and Massachusetts for their efforts to foster university commercialization efforts, and specifically for granting university employees ownership interests in start-up companies commercializing research.

"Most other states are either neutral or supportive," O'Brien said. "Up until now, most universities in Ohio have been participating in this start-up activity, but greater empowerment and clarity is needed in the law."

A broad coalition, which includes Gov. Bob Taft and Board of Regents Chancellor Roderick Chu among state officials, has expressed support for the initiative. At other universities, offices of the president, research, legal counsel and technology licensing have assisted. The Inter-University Council of Ohio, the State Technology Action Board, the Northeast Ohio Regional Technology Council and the Columbus Technology Leadership Council have endorsed this legislation.

State Sen. Robert A. Gardner of Madison will sponsor the legislation, and state Rep. Priscilla Mead of Upper Arlington will carry the bill in the Ohio House. O'Brien said language will be finalized this month and the bill is expected to be introduced in March. She said she's hopeful the bill could move through both chambers by May, but noted a summer recess and the election could influence the time frame for the bill's consideration in the General Assembly.

Kirwan addresses staff issues at forum

Dialogue with staff was President Kirwan's objective when he took the stage of Drinko Hall's auditorium Feb. 16 for the second town meeting of his Ohio State tenure.

"The value of these sessions is interchange, having you ask questions and make comments," Kirwan said. "Last year went extremely well. I was asked some difficult questions, but it was a wonderful exchange and certainly helped me to understand some of the issues you are facing."

The University Staff Advisory Committee sponsored the town meeting, which gave Kirwan the opportunity to touch base with staff on a variety of issues, including University governance, diversity, salary levels, dependent fee waivers and paternity leave.

By Kevin Fitzsimons

Larry Lewellen, associate vice president for human resources, clarifies a point during the Feb. 16 staff town meeting.

He began by praising the role of staff in an academic environment. "We recognize well that the quality of the University is in large part due to the quality and satisfaction of our staff," he said.

He outlined for the audience several steps the administration is taking to meet staff needs. He noted that USAC and the Office of Human Resources are working together to develop a Staff Development and Work/Life survey, providing information on staff needs and focus for future initiatives, and that Human Resources is in the process of exploring improved procedures for resolving individual staff issues.

Kirwan also informed staff of the recent opening of the University Health Connection clinic on campus, of efforts to improve internal communications at the University, and that Human Resources is looking again at broadbanding after a break to focus on ARMS.

He then took nearly an hour to field questions from the audience, deferring occasionally to Associate Vice President for Human Resources Larry Lewellen for details.

In response to a question about University governance, Kirwan said he has appointed a task force, chaired by Caroline Whitacre, chair of medical microbiology and immunology, to look at the issue of shared governance.

"We're looking especially at the Senate. Do we have the right structure? Should staff seek to be a more active part of Senate?" he said. "I am looking for guidance to address this matter. I also know that USAC is looking into this issue."

When a staff member shared his frustrations about the number of minorities on campus and his belief that not enough effort has been taken to change the status quo, Kirwan took the opportunity to discuss the draft Diversity Action Plan. The draft outlines strategies to increase diversity on campus, and was released in November to provide an opportunity for feedback before the final plan is completed during winter quarter.

"The truth is, we've never had an action plan. I feel very strongly that we need a plan that has teeth in it, a plan with accountability, a plan with goals," Kirwan said. He said the draft calls for measuring progress, so the University can see where both positive and negative changes are occurring, and can act accordingly.

He expressed optimism that this plan will make a difference. "If it becomes a public document and it has accountability in it, it will change behavior and actions," he said.

In response to a second question regarding diversity, Kirwan said a timetable for implementation of the plan's recommendations will be developed after the draft's feedback has been analyzed. He said he'd like to see the diversity plan serve as a blueprint, with specific recommendations feeding into the University's Academic Plan, which will be updated regularly and could reflect current concerns. The draft Academic Plan 2000-2005 is circulating for comment and review by the University community, with a final version planned for this spring.

Compensation was the subject of several questions. Kirwan was asked to respond to the need for some staff to department-hop in order to receive raises and advance their careers; the occurrence of newly hired staff members earning more than their established counterparts; and the desire for University staff salaries to compare more favorably with the local job market.

The small size of many of the University's departments can sometimes make promotion difficult, Kirwan said, but he thinks that Human Resources efforts to introduce broadbanding for salaries could provide more flexibility in some situations.

He said the high salaries for new employees is a result of a competitive marketplace. "Unless we went to a rigid structure for pay allotment, I don't think there is any way totally around that situation," he said. He suggested the University provide more training for administrators, so they could be better equipped to handle employment issues.

On the subject of matching the local job market, Kirwan said, "In some categories, we are woefully out of line, while in others we are at the top of the scale. What I am hopeful of for the future is that we will be more strategic in targeting who we allocate our resources to. If we have areas way below, then we put extra money in those areas. I hope we take a serious look at such a strategy."

The issue of whether the University is considering raising the dependent fee waiver from 50 percent to 100 percent was raised by one audience member. Kirwan said discussion is taking place and that the Staff Compensation and Benefits Committee and Faculty Compensation and Benefits Committee are currently looking at benefits packages.

"This is one of those issues that involves a difficult balancing act," he said. "The increase in this benefit -- while we agree it is a good thing in principle -- does have an impact on revenue. Can we afford to increase this benefit?"

He turned to Lewellen to provide comment from Human Resources. Lewellen responded that "the full impact of a 100 percent tuition remission for dependents equals the amount of money for a one-half to three-quarters percent raise each year for all staff."

Kirwan deferred again to Lewellen on the status of the University's consideration of paternity and maternity leave.

Lewellen said his office is evaluating several aspects of parental leave. "The policies that already exist are fairly unknown to people," he said. "It can be a maze to figure out what you are entitled to. We're working on a guide to assist employees through the process."

Human Resources is examining how the time off is structured, as well as seeking approval from the University's executive administration to make paternity leave available.

Another USAC-sponsored town meeting will take place April 25.

Medical Center task forces to examine pending deficit

The Ohio State Medical Center's review of its operations to identify ways to reduce costs will not affect budgeting decisions related to the University's central academic mission, administrators are emphasizing.

"Because we function as an auxiliary at the University, the operating loss we're experiencing this fiscal year cannot be repaired through use of general funds or undergraduate and graduate student tuition and fees," said R. Reed Fraley, vice president for health services. "The hospitals are responsible for their own revenues and expenditures."

The Medical Center informed employees on Feb. 14 of the pending operating loss and establishment of task forces to identify ways to reduce the losses.

"A number of staff, physicians and board members are working with a sense of urgency to help determine definitive actions to address this situation. Helping us understand how we refocus our programs and services is their top priority," Fraley said.

The losses affect University Hospitals, the James Cancer Hospital and Solove Research Institute, University Hospitals East, and OSU & Harding Behavioral Healthcare and Medicine.

The Medical Center predicted the budget deficit may be approximately $35 million this fiscal year out of a $600 million-plus budget.

The deficit is attributed to a number of factors, including the national climate concerning declines in governmental and private reimbursement for services and a tight labor market that has forced the hospitals to recruit more vigorously and offer bonuses. In addition, patients are staying longer and are sicker.

With an understanding of the changing environment during the past two years, Fraley said the Medical Center took a hard look at how it provides services and has reduced the employee count by 500 and reduced supply and services expenses by almost $8 million.

National-scale changes occurred more quickly than anticipated -- for example, officials estimate that as a result of the Balanced Budget Act, the hospitals will lose $60 million in reimbursement between 1998 and 2003.

The Medical Center will use some of its reserves to offset losses, but the use of reserves is primarily intended for financing technology, construction, renovation and new programs.

Employees have been informed that the Medical Center's strategy is three-fold: Investment in programs and facilities that support the mission and have a positive financial return; consolidation of programs and services to save money while maintaining efficiency and delivery of quality care; and closure of programs and services that don't meet expectations in terms of the academic and patient care mission or financial bottom line.

No broad-based organizational layoff is planned, though changes to programs could affect staffing. An early retirement incentive is not expected. No salary or hiring freeze has been put in place.

A comprehensive action plan is expected to be presented to the University Board of Trustees in March.

"Quality care and the fulfillment of our three-part mission of patient care, teaching and research are our top priorities as we make whatever decisions are necessary to address this situation," Fraley said. "The scope of services we offer is likely to change. We can no longer continue to be all things to all people. We must balance our academic and patient care missions with the economic realities of today's environment."

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