At the Board of Regents meeting Tuesday, Stephen Forrest, vice president for research, announced the University’s combined research budget for the fiscal year ending June 30 reached a record $1.33 billion — a $54.7-million increase over last year’s budget of $1.27 billion. Forrest also announced his intention to leave his current position to return to a normal faculty position.

As in previous years, federal funding from a variety of agencies and departments makes up the majority of the research budget, contributing a combined 62 percent of the $1.33 billion. The National Institutes of Health, the single largest benefactor at $509.7 million, reduced its funding by $9.3 million from last year — but other agencies, including the National Science Foundation, NASA, the Air Force and the Federal Highway Administration, more than made up that difference.

Another bright spot in the portfolio is blossoming research partnerships with private industry, which grew 14 percent since last year to $73 million. Although partnerships remain a small part of the overall portfolio, their share has consistently grown over the last few years and will be increasingly important as federal support stagnates or declines. According to the National Science Foundation, the average institution derives five percent of its external research from industry — less than the University’s eight percent from such partnerships.

Support for research from the state of Michigan increased sixfold over the past year, but still amounts to only $3.5 million.

“The faculty are getting much more rewarded from the culture by working with industries,” Forrest said in an interview after the meeting. “That’s part of diversifying the portfolio as research funding becomes more difficult from funding from the federal government — we have to broaden our base.”

However, Forrest added he’s concerned about the effects that federal sequestration — an across-the-board, 5.1-percent cut to all discretionary spending — which will be evident in 2014’s research report. However, the University is already experiencing “shortfalls” in funding because of the cuts.

“The research is about economic growth,” Forrest said. “Innovation has long been the source of economic power of this country really since the post-war era. This is very much going to hurt our prospects in the future being able to compete on an international level.”

Forrest, who will step down from his current role in January, has served as vice president for research since 2006. His tenure has been marked by significant growth in the University’s research budget despite economic challenges — growing from a little more than $800 million in 2008 to $1.33 billion currently.

Forrest received his doctorate in physics in from the University in 1979 and went on to work at Bell Labs — a storied basic research laboratory owned at the time by AT&T — and assumed his first teaching position at Princeton University in 1992. His biography states that he has written around 465 journal articles and holds 203 patents.

He will rejoin the College of Engineering as a faculty member while also working on growing some of the companies he has helped found. Forrest will also devote time to working on his research project — one of the largest in the College of Engineering’s portfolio.

“What I’m really looking forward to is being able to focus on one set of problems, rather than focusing on administration of a giant University — which has been exciting in all dimensions — but I also had to maintain a really excellent and robust research program,” Forrest said.

Forrest added that during his eight years in Ann Arbor, the University has actively worked to engage both large and small business and foster economic growth in the region.

“When you walked through the city of Ann Arbor (in 2006 or 2007), you wouldn’t see small business activity,” Forrest said. “Now, if you walk around, walk down Liberty, walk in any number of directions, you’ll see small high-tech startups listed everywhere.

“It’s definitely helping our economy in many, many ways — not just for start-up companies, but also with our engagement with big companies like GM, Toyota and Dow.”

University President Mary Sue Coleman will soon appoint an interim vice president of research while the search for a permanent successor is underway.

Daily Staff Reporter Jennifer Calfas contributed reporting.

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