FARGO – An institution often touted as a big piece of North Dakota State University's research potential, the Center for Nanoscale Science and Engineering, has been dissolved due to a lack of funding.

The university announced this internally in April, and the last employee's last day was Sept. 30, said Kelly Rusch, NDSU vice president for research and creative activity.

Of the center's 30 employees, 27 found other positions on campus, including 11 who report directly to Rusch's office. Three former employees found jobs in private industry, university spokeswoman Sadie Rudolph said in an email.

As recently as May 2014, a higher education consultant wrote in a report for NDSU that sustaining CNSE was "extremely important to the university's research future."

But Rusch said she doesn't see the closure as a step backward "at all."

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"We're not losing by the CNSE not being here," Rusch said in a recent interview. "We're moving into another stage or phase of the university's growth."

Much of the research will continue, and the clean room, a highlight of the center located in NDSU's Research and Technology Park, will be used in at least four classes, Rusch said. Clean rooms maintain a dust-free environment, so that research is not contaminated. At CNSE, that research focused on nanotechnology and microelectronics, such as the development of radio frequency identification technology, or "smart tags."

Founded in 2002, CNSE developed coatings for Navy ships and ground sensors that were deployed in Iraq, among other projects. In an open house for the new research facilities, then-NDSU President Joseph Chapman pointed to the center as a sign that "development on this campus is virtually unlimited."

The center had 78 benefited employees at its peak, and employed more than 120 people including full-time staff, faculty researchers and part-time students in 2009.

Funding for the center began declining in early 2011, when Congress banned earmarks. After that, researchers had to apply for competitive grants, which tend to be smaller because they're designed for professors and students, said Bret Chisholm, a senior research scientist at NDSU.

The center stopped filling open positions and started laying off workers in 2012. Ultimately, the "competitive level of funding was not able to replace the earmark dollars," Rusch said.

Rusch noted that's not representative of NDSU as a whole. The university's total sponsored funding awards have increased by 15 percent over the past two fiscal years, she said.

But this doesn't feel like growth to Chisholm, who used to have 35 people reporting to him and now has the equivalent of 6½ workers.

"It's a lot more difficult," he said. "We're all working on multiple projects. I think I've probably got eight to 10 projects right now and 6½ people working on them."

At its peak, Chisholm's group was publishing 10 to 12 articles a year. Now, it's six to seven.

Chisholm is now working under Rusch's office with a salary paid by research grants, but his position will likely move to the department of coatings and polymeric materials, he said.

He's mostly worried about what all of this means for the equipment.

"Right now, we're down to a situation where if a few key people leave, then we lose the capability to utilize some of the tools," he said.

And it's especially important that those tools stay operational as grant revenue lags. While the center was receiving earmark funding, the smallest amount Chisholm would receive from the Navy was $800,000. Now, his grants run about $200,000 each.

"There's not enough money there to buy the equipment," he said. "It's just money to pay for students or researchers and then supplies."

Chisholm thinks the center might have stayed afloat longer if NDSU's contract agreements were more favorable to industry, a concern that echoes consultant Eva Klein's report from last year.

A tiny sliver of NDSU's research and development expenditures, just 0.43 percent, were funded by industry sources in 2011, the assessment report said, compared to about 4 percent in peer universities.

"NDSU clearly underperforms in acquiring private sector R&D funding," Klein wrote.

When asked about this via email, Rusch said the center's closing was part of a "natural evolution."

"When a research program or center is unable to secure competitive funding, it unfortunately ceases to exist," she wrote.