State cutbacks could hurt small business center at U.

A state-wide program to help small businesses, managed by the University since 1979, may have financial troubles ahead because of state cutbacks. But although program directors say the center has had success in helping small Pennsylvania companies, it could fall victim to large-scale cuts in the Pennsylvania budget. Governor Robert Casey has proposed cutting the program's state funding in half. "We've found that the firms we deal with outperform other small businesses," said Gregory Higgins, the program's state director. "Their increases in sales is 50 percent higher than other small businesses and their employment rate is three times as high." The center provides 90,000 hours of consulting time to small firms and organizes 300 workshops on management. The entire state-wide organization receives about $3.3 million each year from the state, and an additional $6.7 million from federal and university funding. The University receives a total of $1.4 million for its three programs which include free general consultation for small businesses, free legal consultation and help with exporting products. In addition, the state office for the program, which is located at Wharton's Entrepreneurial Center, receives an annual budget of $356,200. The effects of cuts in state funding are compounded because the state dollars are matched by federal and university dollars. If the program loses state money, it will also lose corresponding federal and university money. The 50-percent reduction would result in an $850,000 loss from state funding and a total reduction of $3,400,000. "Reduce our program by half and we'll see half as many businesses -- instead of 8,000 businesses we'll see 4,000 businesses" said Higgins. "In smaller universities the program will close entirely." The center has been operating at Wharton since 1979. Although 16 colleges in Pennsylvania participate in the program, the University manages it and receives the most funding. Other local schools involved in the program include LaSalle and Temple universities. Besides the small businesses that would be refused consultations and the universities that would have to eliminate their programs, some Wharton MBA students would also be affected. According to the organizer of the center's Wharton's MBA consultant program, 23 Wharton students act as business consultants. The cuts could reduce the amount of MBA students receiving valuable experience in the workplace. "We would be much more limited in the services we could offer," organizer David Thornburgh said. The University and Lehigh University are the only schools in the Small Business Development Center that exclusively use students as consultants. According to Thornburg, the consultants, most of whom are graduate students, are well qualified. For every consultant hired, 15 more are turned away, he said. To qualify for the position, most students need extensive business experience as entrepreneurs, consultants, accountants, or need to have worked in medium to large size companies. "They are the best . . . students at Wharton," said Thornburgh.

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