Gary Balas, a professor of aeronautical engineering at the University of Minnesota who researches flight control systems, said he had counted on a three-year, $450,000 grant from the Air Force. The grant had two years left but the contract was canceled in June after Republicans and Democrats in Congress failed to reach a budget deal and the automatic cuts went into effect this spring. MPR Photo/Brett Neely

Seven months since automatic across-the-board federal budget cuts took effect, two of Minnesota's best-known research institutions are already feeling the squeeze.

Scientists at the University of Minnesota and Mayo Clinic increasingly are turning their attention away from their research to fundraising to make up for a drop in federal grants that occurred after the federal government cut the National Institutes of Health budget by $1.7 billion.

Among them is Gary Balas, a professor of aeronautical engineering at the University of Minnesota who researches flight control systems. One of many U of M faculty members with research grants and contracts from the federal government, Balas had counted on a three-year, $450,000 grant from the Air Force with two years left.

But when Republicans and Democrats in Congress failed to reach a budget deal and the automatic cuts went into effect this spring, research programs like his were targeted for cuts.

"We found out in June, basically two weeks before the end of the fiscal year that our contract was going to be canceled," Balas said.

Dr. John Wagner, director of the University of Minnesota's blood and marrow transplantation program, said he learned in June that the Stem Cell Institute would have to take a 40 percent cut, or about $300,000. MPR Photo/Brett Neely

So far, the university has made up some of the gaps in funding, but instead of spending his time in the wind tunnel or testing flight control software Balas has had to shift his priorities.

"You end up spending much more of your time chasing money and less time doing the research," he said.

The university's Stem Cell Institute received similar news.

"We just learned back in June that we were going to take a 40 percent cut for the next six months," said Dr. John Wagner, director of the university's blood and marrow transplantation program.

That worked out to about a $300,000 cut from Wagner's research on creating novel new cell therapies to treat illnesses including leukemia, heart disease and diabetes.

"What's the impact?" Wagner asked. "Well, we've actually had to remove people or they're working but not getting paid. We've had to cut the projects we're working on."

The federal budget cuts also hit the research budget of Mayo Clinic in Rochester, where Dr. Ronald Peterson studies aging and Alzheimer's disease.

One of Peterson's projects is a large study of residents of the surrounding Olmsted County as they age. Typically, his researchers have met with participants every year. But they will no longer be able to thanks to reduced funding from the NIH.

"You know it's not death for the study, but we're lacking some precise time points now," said Peterson, director of Mayo Clinic's Alzheimer's Disease Research Center. "So over the course of say, three or four years, instead of seeing people three or four times, we may see them twice."

"We're going to pay for it as a society by spending more money to care for people when you would have been better off spending money on research to prevent the problem in the first case."

Officials at Mayo Clinic, which receives about $240 million a year from NIH, expect see that figure drop by as much as $20 million this year. The University of Minnesota expects to lose as much as $50 million this year because of the federal budget cuts -- more than 5 percent of the university's $750 million research budget.

Brian Herman, the university's vice president for research, said the cuts could also do long-term damage to American science by reducing the future supply of PhDs.

"If the number and size and length of those grants are diminished that will mean that we'll have fewer students that we can train and fewer students that we can support," Herman said.

Peterson also said current students are receiving the wrong signals about the world of research.

"They're seeing their mentors, the old guys like me, having trouble getting funding or worrying about funding," Peterson said. "And they're saying, 'gee if he's having trouble getting funding, what are the odds I'm going to get funded as a new researcher?'"

Ultimately, Peterson said, the cuts are penny-wise and pound foolish, especially when it comes to illnesses such as Alzheimer's, the costs of which are expected to strain health care budgets as the population ages.

"We're going to pay for it as a society by spending more money to care for people when you would have been better off spending money on research to prevent the problem in the first case," he said.

Researchers in Minnesota say they need to become more politically savvy and better advocates for their causes. Wagner said he's frustrated that even though most members of Congress already agree that the sequestration cuts are badly designed, the cuts were made anyway.

Although Congress returns from its summer recess next month, there's little sign that there's been any movement to close that political divide and restore the funding.

"If this is not the highest priority so be it," Wagner said. "But I would rather people make a decision saying this is not the highest priority then somehow letting it occur because of some political divide."