Oct. 10 (Bloomberg) -- Politicians in Texas are trying to save the state's oldest medical school after Hurricane Ike left it flooded and battered last month.

The University of Texas Medical Branch, founded in 1891 and known as UTMB, could deplete its cash reserves as early as January or February, said State Representative Craig Eiland, a Democrat. Eiland is leading efforts to create a rescue plan with state, federal and university funding to save the Galveston Island institution.

The medical school, Galveston County's biggest employer and a regional hospital, faces $710 million in damage costs and lost revenue, said spokeswoman Marsha Canright. The damage surpasses that inflicted on Tulane University in August 2005 when levees in New Orleans burst in the wake of Hurricane Katrina and the city and campus were flooded.

``That is a catastrophic blow for any institution,'' Canright said. ``We have 88 buildings and they all were flooded, so it is a substantial amount of damage.''

Eiland, along with Republican U.S. Senator Kay Bailey Hutchison, 65, is lobbying the Federal Emergency Management Agency, the U.S. Department of Health and Human Services, and the University of Texas regents to provide immediate reconstruction funds and to boost the school's operating budget. A task force of politicians will meet next week to plan for obtaining emergency and long-term funding, Eiland said.

``We're trying to get that money flowing now, and not wait three years'' for FEMA reimbursement, said Eiland, 46. He also hopes to tap the state's ``rainy day'' emergency fund for cash to keep the facility operating in the short term.

`Bill Us'

``UTMB has some cash, but how long it lasts depends on how much they have to spend on repairs,'' he said. ``They're trying to get people back to work so they can have some revenue coming in. But they don't have enough cash to go for very long.''

FEMA spokeswoman Barb Sturner said the agency dispatched a six-person team to the medical school to speed up paperwork processing for reimbursement of clean-up and salvage costs. However, there are limits to what the agency can pay for, she said.

``As a public assistance program, we cannot pay lost revenues and we don't pay operating payroll,'' Sturner said. FEMA typically reimburses only 75 percent of a facility's reconstruction costs, after its private insurance has paid out.

``It's a reimbursement program,'' she said. ``To a large part, they're going to have to spend that money and then bill us.''

Lay Offs

Galveston Mayor Lyda Ann Thomas, a Democrat, said she's worried about the future of the school.

``The hospital is not operating at full capacity and probably won't be operating at full capacity for years,'' Thomas said. ``That is certainly going to hurt our ability to receive medical care, not only in this county, but several other counties.''

Thomas said the threat of job cuts facing the school and hospital may also hurt Galveston's ability to recover from Ike. Thomas contacted the island's political representatives Oct. 5, when she learned the school was considering laying off 25 percent of its 12,000 workers.

``It is going to affect our economy,'' said Thomas, 70.

The school provided 500 beds for in-patient care and was the area's only high-level trauma center before Ike, with a storm surge of up to 12 feet, wiped out 700,000 square feet of ground-floor facilities, including the hospital's pharmacy and most kitchen operations.

Limited Operations

The hospital's pediatric urgent-care unit resumed operations yesterday, augmenting the limited emergency care and clinic services the hospital has offered since the storm. Some classes, for first- and second-year medical students, are scheduled to resume on Oct. 20. Canright said third- and fourth- year medical students have been placed in other medical schools around the country.

The school is also set to open a second Level-4 biosafety lab, which does research on some of the world's most deadly diseases, in November. The existing infectious disease lab wasn't damaged by Ike.

``We have a $50 million-plus payroll to meet every month and the great majority of these people can't work because there is nothing for them to do,'' Canright said.

``I understand UTMB can save $25 million a month by firing those workers, but that is not the answer,'' Eiland said. ``Whether we can get these people two more paychecks or six more paychecks, it's worth the effort.''

`Number of Scenarios'

Eiland said telling potentially 4,200 workers who, in many cases, are still cleaning out storm-damaged homes and wrangling with their own insurance adjusters, ``to come pick up your last paycheck, is not a good start'' to helping Galveston or the school recover.

``Right now, our future is in the hands of the legislators and the UT system, and they are working hard to put together a financial solution that will bring back a great institution,'' Canright said. ``There are a number of scenarios on how this will turn out, but none of them involve the end of UTMB.''

To contact the reporters on this story: Brian K. Sullivan in Boston at bsullivan10@bloomberg.net; Laurel Brubaker Calkins in Houston at laurel@calkins.us.com.

Last Updated: October 10, 2008 11:37 EDT