From the Chronicle of Higher Education. Read the full article here.

By PAUL FAIN

Dateline: Orlando

You can't lose what you never had. Or so goes the response at the University of Central Florida to the state's financial straits.

Officials here say they have long been forced to run lean, even more so than the better-established University of Florida and Florida State, which they say were lawmakers' golden children during flush times. So Central Florida has turned to private money to fuel its rapid growth. It made much of corporate partnerships and fund raising while seeking to align itself with the interests of metropolitan Orlando, which is referred to here as a "city state."

The result is a nimble, business-friendly university with little risky debt. And the entrepreneurial approach may be a glimpse of the future for the rest of Florida's public universities.

"We were able to treat this as a big business where we were protecting shareholders," says Richard J. Walsh, chairman of the Board of Trustees. "We're in really good shape.

The city-state strategy does not mean that the university avoids working lawmakers for money. They do, sometimes successfully. A "medical city" that the university is building has been partially paid for by the state, drawing grumbles from elsewhere in the system.

Furthermore, higher-education observers in Florida say, UCF and Florida State have avoided some of the acrimony that has stung the University of Florida, because, unlike the flagship, they have yet to start layoffs and program cuts.

But the university's fixation on Orlando rather than Tallahassee looks smart now, with the state budget in ruins.

Business in this city is more than the shell-shocked tourism and real-estate industries. High tech has long thrived here, and UCF was created to tap into that strength. It was built in 1968, at the end of a dirt road about 15 miles east of downtown Orlando, with a goal of splitting the distance between the Space Coast — anchored by NASA's Kennedy Space Center — and military compounds in Orlando.

These days academic researchers work closely with industry, government, and the military, and 115 companies pay for space on the university's 1,027-acre research park.

The partnership push accelerated in 1992, the beginning of the tenure of John C. Hitt as president. Mr. Hitt, who is among the nation's longest-serving public-university chiefs, announced that Central Florida was to become "America's leading partnership university."

To the surprise of many in the state and beyond, that is a claim UCF can now make seriously. For example, a consortium of the university and five community colleges, including Valencia Community College, has drawn national attention. At the university's Center for Emerging Media, in which the gaming giant Electronic Arts is a partner, students work on video games in a remodeled former showplace for livestock. Down the hall is a motion-capture room where Tiger Woods recently filmed a television commercial.

The university, however, has not escaped budget pain. Its margins are tight, and a $38-million reduction in state support this year will probably lead to cuts. The tight times come as the university is beginning to slow its growth.

"This campus will only handle 50,000 students," Mr. Hitt says. "We will be built out within the next 10 years."

A next step for the university is to enhance its national profile.

"We're the biggest place that you never heard of," says Randall P. Shumaker, executive director of the university's Institute for Simulation and Training, a computer-modeling and virtual-reality center.

Being a lesser-known quantity has its advantages. Unlike its neighbor up the highway in Gainesville, UCF lacks long-held traditions that can make change difficult.

In fact, this is a campus that is still fiddling with its brand. While Central Florida plays with the big boys in Division I athletics, it settled on a name for its teams only two years ago, dropping "Golden" from "Golden Knights."

Its mascot, Knightro, might not be a household name. But Knightro is a decided improvement from a predecessor, the Citronaut, which featured an astronaut's head with an orange for a body.

The university has just built a full set of expensive sports facilities, including a 10,000-seat arena and 45,000-seat football stadium. The private sector covered the entire $300-million price tag for that development, with retail deals, naming rights, and rental fees taking the place of state money and student fees.

Mr. Walsh, the board chairman, says the construction would have run longer and cost more with public financing, and might have left the university holding more debt.

The building at UCF continues, most notably on the medical campus near Orlando International Airport. As the centerpiece of a 7,000-acre development that features housing and schools, the campus will include a medical school, children's and veterans' hospitals, and research centers.

Critics have argued that the cash-strapped state can ill afford the money for new medical centers, including $21-million allocated this year to Central Florida and a complex at Florida International University.

Charles B. Reed, chancellor of California State University, who led Florida's public-university system from 1985 to 1998, calls the Legislature's financing of those projects "insane." He says a stronger Board of Governors of the university system could prevent campuses from competing unwisely for state money.

"They don't govern anything out there," Mr. Reed says. "It is a politicized free-for-all among 11 institutions."

Central Florida officials defend the ambitious development, saying Orlando is the largest U.S. metropolitan area without a medical school.

During a tour of the site, where bulldozers work the sandy turf and former pastureland, Mr. Hickey, the provost, says the medical city has pulled in more than its share of private money, although giving has slowed.

In a rainstorm, Mr. Hickey points through a car window at a classic example of Florida development: palm trees trucked in fully grown and planted beside gleaming new buildings. He says most of the new programs and high-tech facilities pay for themselves. Given the state's budget mess, he predicts, all of Florida's universities will need to earn their own keep.

"There's got to be a good return on our investment," he says, because money from the state "just isn't going to return."

But Mr. Hickey believes that Florida will bounce back eventually, with real estate and a boost from high tech, and that the universities that tap into student demand and the needs of local businesses will make it through the dark days.

"We'll recover," he says. "Florida will go back to being a growth economy."

For the state's universities, any other outcome is unthinkable.