Area's Education Called Tech Industry Drawback.

Local government regulations and weak primary and secondary schools are threatening the vitality of Southern California's diverse technology sector, according to a report to be released this week.

The study, prepared by Larta, a regional technology trade group, also found that efforts to improve schools by heavily investing in computers -- thereby bridging the so-called "digital divide" -- may not be paying off, with the money perhaps better spent on such basics such as improved texts and teacher training.

In Larta's initial report last year, the technology alliance offered an overview of the region's technology sector, comparing it to three other tech centers -- the Bay Area, Massachusetts and Austin, Texas. (This year, New York was added to the list.)

It concluded that while the Southern California's technology industry was among the nation's leaders -- by virtue of such benchmarks as the number of companies and employees, as well as research funding and investment -- its sprawling size caused clusters of distinct development that hindered growth.

This year, The Southern California Technology Innovation Index 2002 marks an effort by the group to move into public policy, focusing on education.

The report found that while the region is second only to New York in the number of four-year and two-year institutions of higher learning, producing nearly 28,000 science and education graduate students in 1999, it had the lowest level of all the regions in overall educational attainment.

Just 8 percent of the region's residents have a graduate degree and 22 percent have bachelor's degrees. The vast majority -- 73 percent -- has only attained a high school degree. By contrast, the Bay Area has the highest degree of educational attainment, with 11 percent of residents with graduate degrees.

Test scores reviewed

While the study did not include a rigorous comparison of primary and secondary schooling with other areas, it did review standardized test scores within the region from 1998 to 2000, comparing it to technology-related spending at schools.

The study failed to find any conclusive evidence that such spending resulted in higher test scores, and questioned whether there was adequate training for an educated technology workforce.

"Where is the spending on teacher training?" said Rohit Shukla, Larta's chief executive. "We are not preparing a workforce that can actually handle multifarious challenges. If you don't strengthen the primary or secondary school, students come to (higher education) not exactly prepared."

The report cites the technology sector for being a vital part of Southern California's growth the past few years. Among the strengths cited are the region's bioscience and medical technology industries. This is reflected in the number of notifications made by companies to the Food and Drug Administration of their intent to market new devices, a legal requirement.

Southern California companies made nearly half as many more notifications as companies in the New York area, the region with the second-highest number.

The report also noted that a key strength in Southern California is diversity, with strong clusters in aerospace, new media, telecommunications, computing, engineering, bio-sciences and manufacturing technologies.

That was reflected in the area receiving more diversified venture capital investment from 1998 through 2000, compared with other technology centers nationwide. At the same time, the region ranked only above Austin in aggregate and per capita venture capital investment during the period.

The report concludes that lack of coordination among local governments and paltry efforts by industry to share "best practices" and resources amid the region's sprawling size was causing companies to be neglected.

Jim Jonassen, founder of Riviera Partners, a venture talent management firm, agreed that the region's vast size makes it difficult for companies. But technology clusters along the 101 Freeway and elsewhere are helping to compensate for that.

"I don't think it's a job for government, and I don't think that government is slowing things down in any way," he said. "City regulations mean zero to entrepreneurs."

Shukla said Larta in its next annual report planned to study the matter, along with such issues as housing and congestion.

Indeed, while a primary purpose of the report is to develop a perspective on the relative changes between the various technology centers, Shukla said the group also wants to focus on one key area each year.

Among other findings of the report based on 1999 data:

Southern California ranked third nationwide in the number of tech firms with 10,799, behind No. 1 New York with 19,919 firms and No. 2 Bay Area with 12,203

The region also ranked third in the number of tech employees with 372,746, a category led by the Bay Area -- home to many tech powerhouses -- with 435,092 employees and followed by New York with 408,067

Again the region ranked behind the Bay Area and New York in the number of utility patents issued to companies, with 4,712. The No. 1 Bay Area had nearly double that with 9,405.

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