USM regents give initial OK to $5.3B budget, startup fund

A University System of Maryland Regents committee gave preliminary approval Thursday to a $5.3 billion operating budget for the coming fiscal year, as well as a new startup investment fund and a multi-use building near the University of Maryland, College Park that could house a variety of growing businesses.

The budget includes about $1.3 billion in state funds and a 1 percent tuition buy-down that allowed the system to make a smaller tuition increase — no more than 2 percent for undergraduate state residents — than officials previously anticipated. The tuition hike was approved by the Board of Regents in April.

USM Chancellor Robert L. Caret praised the level of support the state was able to provide for the coming fiscal year.

“It really does show that this governor and this legislature, and previous governors and previous legislatures, have put money into higher education,” Caret said.

The fiscal 2017 spending plan is 3.2 percent higher than the previous year’s; the full Board of Regents is scheduled to take a final vote on the budget Friday morning.

Members of the board’s finance committee also gave their approval to a pair of initiatives intended to supporting businesses linked to the university system.

The first is a $25 million fund to provide early-stage financing to startup companies that grow out of the system’s institutions; $10 million will be put up by the system over the next four years, and the remainder will be raised from venture funds, state funds and other sources, according to the system.

That fund is intended to offer investments between $50,000 and $500,000, some of which may require matching outside investment.

While the university system was excellent at producing research and ideas for companies, it hasn’t been as good at commercializing those ideas, said Robert L. Pevenstein, who chairs the finance committee. The fund, which will be overseen by professional investment manager who will evaluate which startups represent the best investment, is a step toward addressing that need, he said.

“We have created — both at College Park and throughout the system — a really great culture of innovation and entrepreneurship,” Ken Ulman, the former Howard County executive who is now UMD’s chief strategy officer for economic development and the revitalization of College Park, told The Daily Record.

But a lack of access to capital has been one of two factors driving university graduates and professors to other areas of the country to develop their businesses. The other is lack of real estate that meets the needs of these companies, Ulman said.

To address the second need, UMD officials are planning 111,000 square feet of “flex” research and development space in Riverdale Park, a town just south of College Park.

The two buildings would include high ceilings, loading bays and the ability to be configured in different ways depending on how much space different tenants need. As little as 1,200 square feet could be rented, or as much as an entire building, according to the university system.

The project will be able to accommodate companies who need space for both their offices and for light manufacturing, Ulman told the committee. One UMD startup, the “superfood” company Javazen, is lined up to be the first tenant should the project – which will be a joint venture with St. John Properties Inc. – move forward, he said.

Javazen, which markets a special, nutrient-rich coffee, won an $80,000 investment prize at Under Armour founder Kevin Plank’s Cupid’s Cup entrepreneurship competition in April.

A third building in the proposed Riverdale Park development would be the new home of the College Park Academy public charter school, of which UMD is a co-sponsor.

Both the Riverdale Park development and the early-stage investment fund are also scheduled to go before the full Board of Regents for a vote Friday.