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MEMPHIS — A $16 million Eye Institute here received approval Thursday from the University of Tennessee’s Board of Trustees.

The 80,000-square-foot facility, to be built on Pauline Street, will be funded through grant and gift funds, UT President J. Wade Gilley said. No state tax dollars will be used.

“The University of Tennessee, at its Memphis campus, has a goal to become a premier resource for medical education and biomedical research,” Emerson Fly, UT executive vice president, said.

“One of the areas of expansion is the Eye Institute which will provide high quality eye care, medical education and basic and clinical research.”

The institute will have clinical space for adult and pediatric care, laboratories and offices. Target date for opening of the institute is 2005.

The UT board, meeting at the Health Science Center, also approved reducing the class size at the College of Medicine from 165 to 150 students.

Bill Rice, HSC chancellor, said the action was necessary because the college no longer has the budget or faculty to support the higher enrollment. The state has never recognized a class size of 165, he said in a letter to the board.

“THEC (Tennessee Higher Education Commission) has historically used a class size of 150 in calculating their budget recommendations,” Rice said.

“The requested reduction will not reduce state funding for the college. We will, however, lose the income generated by tuition and fees paid by the students.”

The trustees were told the economic impact of UT in the Memphis area totals $1.7 billion annually. The findings come from a just-completed economic impact study.