Tech facility closing

Colorado Institute of Technology folding due to lack of funds

Roger Fillion, Rocky Mountain News

Thursday, April 20, 2006

The Colorado Institute of Technology is quietly closing its doors, six years after it was created amid hopes of someday rivaling Caltech and MIT as an educational powerhouse churning out digital-age engineers.

The nonprofit - first announced with much fanfare by Gov. Bill Owens and other leaders - fell victim to the bursting of the tech bubble, which led to an eventual lack of funding from businesses and others.

"There simply wasn't adequate support from our sponsors or our prospective sponsors," said Bruce Donaldson, CIT's interim president and CEO.

He said the board of trustees, appointed by Owens, voted in March to close CIT - once slated to graduate more than 1,000 students a year who could land jobs at Colorado tech companies eager to hire skilled workers during the Internet boom.

The decision came after board members weighed various options over a period of months, including keeping CIT's doors open under "business-as-usual" circumstances, said Donaldson, who took over the helm in November on an interim basis.

CIT is set to close at the end of April.

"The governor is proud of what CIT has accomplished and that many institutions have benefited from CIT's efforts over the years," said Owens' spokesman Dan Hopkins. "However, he understands the board's decision given the challenges involved in finding sustained funding in a changed economic environment."

On its Web site, CIT notes that more than 10,000 students completed CIT-funded courses and programs and that the institute provided seed funding for projects such as the University of Colorado's Center for Computational Biology.

CIT was launched formally in 2000 near the height of the Internet bubble after Owens signed into law legislation creating the institute.

Initially, Owens and his former technology secretary, millionaire investment banker Marc Holtzman, had publicly hoped to raise $250 million in private funds to bankroll CIT. The duo had trumpeted CIT's potential for churning out legions of skilled students who could enter Colorado's booming tech economy.

"The governor is fully committed to putting the entire weight of his office toward creating an institute on par with MIT, Georgia Tech and Caltech," Holtzman, then head of the governor's office of innovation and technology, said in May 1999.

Holtzman is now running to become the Republican candidate for governor. Once a close friend of Owens, he fell out politically with the governor over last year's statewide Referendums C and D.

Like Colorado's political landscape, the state's tech sector has changed markedly. When CIT was launched, Colorado's tech, cable- TV and telecom sectors were ablaze. Sun Microsystems had broken ground on a big campus in Broomfield. Level 3 Communications had picked Broomfield to set up its headquarters. The aerospace and biotech industries looked promising.

What's more, tech companies in Colorado and across the nation were starved for skilled workers. CIT was envisioned to help fill that gap. It was expected to boast 6,000 students and graduate 1,200 a year. CIT also would dole out 1,000 scholarships.

High-tech students would continue to earn degrees from the colleges of their choice but also could earn CIT certification for cutting-edge programs in Internet science, software development, robotics, artificial intelligence and laser-based systems.

Holtzman predicted in February 2000 that within five years the CIT certification "will be much more prominent than the degree itself because it will be such meaningful currency in the workplace."

But just as CIT was getting launched in early 2000, the Internet bubble burst. The fallout walloped Colorado. According to the American Electronics Association, Colorado's high-tech work force peaked at a little more 204,000 in 2001. By 2004, it had plunged to less than 160,000.

CIT was forced to accept a slimmed-down budget. Despite the initial calls for $250 million, Owens and Holtzman eventually secured commitments of some $42 million from U S West, Level 3 Communications, Sun Microsystems, Hitachi Data Systems and others.

But collecting that amount proved difficult. In total, about $16 million in funding eventually came through the door, according to one former CIT official. Initial plans for a brick-and-mortar institute were scrapped. CIT morphed into a "virtual" entity that made grants to existing campuses in exchange for teaching courses that matched the needs of high-tech companies.

According to its latest audited financial statements, CIT had negative operating cash flow of $2.4 million in 2004. That cut its cash on hand by two-thirds, to a little more than $1.1 million.

CIT doled out $8.1 million in grants in 2004. By comparison, however, the institute took in $6.8 million in contributions, grants and other money.

In 2002, CIT was forced to switch its focus to the quality of workers it helped train rather than the quantity - given that tech companies were firing people.

CIT also branched into other areas such as homeland security and developing policy-oriented "white papers."

"When the work force environment in Colorado began to change, CIT expanded its efforts to include initiatives in work force development, homeland security and policy," reads a draft announcement of CIT's impending closure obtained by the Rocky Mountain News.

"Unfortunately, this expanded strategy proved to be financially unsustainable. This led to the decision by the Board of Trustees."

Interim CEO Donaldson said recent legal difficulties faced by Margaret Cozzens, CIT's former CEO, "played no role in the decision."

Cozzens - a former vice chancellor for the University of Colorado at Denver - was sentenced Tuesday to six months of unsupervised probation for improperly giving $40,000 in severance pay to two former employees in 2003.

Cozzens was one of two women who pleaded guilty to a misdemeanor charge of second-degree official misconduct and received sentences of probation. Cozzens went on leave from CIT last fall after being indicted.

CIT presidents

Name Previous post CIT service

John Buechner Former CU president March 2000 - Nov. 2000

John J.Hansen Entrepreneur, former CEO of Longmont-based Solant Nov. 2000 - March 2003

Margaret Cozzens Vice chancellor, UCD April 2003 - Nov. 2005

Bruce Donaldson Entrepreneur, former CEO of WITI Corp. Nov. 2005 - present (interim)

Looking back at CIT

• Lewis O. Wilks, president of Internet and multimedia markets for Qwest Communications, on Sept. 30, 1999, as Gov. Bill Owens launches his new Science and Technology Commission: "There is an absolutely consistent awareness across the world today that Denver is becoming the next Silicon Valley."

• Gov. Bill Owens, in a telephone interview from Seattle after meeting with Microsoft founder Bill Gates on Dec. 14, 1999. Owens touted his vision for the Colorado Institute of Technology during the meeting: "I walked him through a sales pitch so that when he or his company starts to look for a new campus or research facility, they'll consider Colorado."

• John Hansen, then-CIT president, on Aug. 9, 2001, discussing a lack of funding for the institute as the high-tech bubble burst: "If your stock is down 80 percent, you're not inclined to spend on this right now . . . it's hard to go in and raise funds from a company that just laid off 500 people."

• Margaret Cozzens, during her time as CEO at CIT, discussing lack of funding: "Collecting on the pledges (from companies) was nothing short of impossible."

fillionr@RockyMountainNews.com or 303-892-2467.