Losing an arm or hand can be a devastating experience, but a new artificial limb developed through federal research grants at the University of Utah can help ease the pain.

The Utah Arm was one of the first myo-electric limbs developed in the United States. The limb is activated by brain signals to the severed nerves in the arm, so its movements are like those of an actual arm.The U.'s College of Engineering received a federal grant for the proj-ect because of its excellent national reputation - but if federal research grants are eliminated, the project could suffer.

Hundreds of projects like the Utah Arm are started at Utah's two research universities, the U. and Utah State University. A good portion of the programs are funded through federal research grants and donations.

Although the universities generate millions of dollars each year through such programs, administrators say additional state funds are essential if revenue-producing programs are to continue.

The University of Utah and Utah State University suffer from a lack of state funding. Last year, a significant portion of both universities' budgets were composed of federal and private funds, generated through research grants and extensive fund raising. The U. and USU attract federal grants because they are the only research universities in Utah. But a number of the programs are non-transferable and need state support to survive.

"If you erode state support, you erode the whole foundation on which the economic engine runs," said Ronald Pugmire, U. associate vice president for research.

U. faculty members conducted more than $100 million worth of externally funded, non-state research in 1986-87, $69 million in federal government grants alone. The federal allocation was the 33rd largest to a university and the 16th largest to a public institution. USU received $51.1 million in federal and private research grants in 1986-87, a 15 percent increase over the previous fiscal year.

Research grants support programs the school could not afford on its own, including additional faculty salaries, courses and new equipment. Grants also allow professors to teach from first-hand experience, rather than relying on textbooks.

"But the outside money would not come in if it wasn't for the seed money provided with in-state funding to start them," said J R Allred, USU director for information services.

In 1986-87, both the U. and USU funneled more money back to the state than they received in taxes, officials said. The U.'s total revenue in 1986-87 was $444 million, with $110 million coming from taxes. The school received about $66 dollars from each person in the state in taxes and brought in more than $200 per person.

USU's 1986-87 budget was $148 million, with about 60 percent derived from taxes. The rest comes from grants and tuition.

"Any amount of money invested in the University of Utah will multiply by a factor of five. If you took away that $110 million, all of it would collapse. It's seed money to get the programs started," Pugmire said. He added that many federal research programs require matching state funds.

Allred said for every tax dollar USU receives, it generates 2.1 dollars into the state's economy. He said the assumption that USU brings in fewer research funds than the U. is false. He said a large portion of the U.'s research grants are specifically for the U. Health Sciences Center.

The universities also generate money for the state through their research parks. USU's research park is still developing, but Allred expects it to mature quickly. The U.'s research park corporations employ about 3,800 people, with a payroll of about $108 million. These firms pay more than $1.5 million dollars every year in state property taxes.

The U. and USU also rely heavily on fund raising. The U. brought in $50 million in donations and pledges in 1986-87, its second largest gift year in its history. About $35 million in donations came from corporations and foundations. USU raised $7.4 million in 1986-87, the largest amount of money ever raised by the university. USU also increased its pledges from 5,400 in 1982-83 to more than 11,400 in 1986-87.

"Last year was an exceptional year. The tax law changes made it more advantageous to donate and we had a significant gift of $15.5 million. This year, we expect to raise about $25 to $26 million," said Mike Mattsson, U. vice president for development. The U. Development Office conducts all fund-raising campaigns.

Between 1983 and 1988, the U. spent $139 million on capital construction. About $3 million was provided by state taxes, the rest was raised by the university development programs.

"We've increased the amount of money raised and the number of pledges have more than doubled. We are working toward long-term support goals," said William Lye, USU vice president for university relations and development.

Unlike many university programs, development projects are more dependent on public support than state taxes. Donations tend to fluctuate with Utah's economic situation, but both Mattsson and Lye said Utahns are very generous.

A large portion of the money raised through development projects is earmarked for specific programs and cannot be used to support general university programs.

"It's essential that the state provide a base for the university to operate. State money can enrich programs - that's why the U. has achieved the eminence it receives," Mattsson said.

Lye said other state colleges receive less state support than USU and the U., but the universities have more programs to fund. He said research universities have the faculty and programs that attract federal research grants, but these types of programs are more expensive to support.