COLUMBIA - A bill calling for the state to borrow about $500 million for college research and economic development projects cleared the Senate Wednesday.

The bill sets up a state-run venture-capital operation to encourage startup business. It also expands college programs and protects two-year colleges from being shut down.

"For the research schools, it sends a clear signal that the state and the General Assembly understand the importance of the role that research universities can play in generating jobs," Clemson University President James Barker said. "We're very happy."

So was Sen. Phil Leventis, D-Sumter, who argued for and won approval for the University of South Carolina's Sumter campus to move into the ranks of the state's four-year colleges.

The legislation calls for:

• Up to $250 million in borrowing, mostly for the state's three research universities: Clemson, the Medical University of South Carolina and the University of South Carolina. The schools would split about $220 million and "have to match dollar for dollar whatever money they get," said Senate Finance Committee Chairman Hugh Leatherman, R-Florence. The funds are supposed to be used for research projects aimed at creating jobs.

• $30 million from that borrowing would go to the state's other 30 colleges and technical schools based on enrollment and the amount of work their existing buildings need.

• Pharmaceutical companies would become eligible for the same economic development incentives that manufacturers already get. Their investments now would qualify for borrowing of around $250 million to buy and prepare land, build training facilities and teach workers.

• The state would set up a venture-capital fund using money from banks, insurers and others in the private sector. A state-run board would hire an investment manager to decide what companies would receive investments. If that portfolio of companies makes money, the investors get a dividend, and money goes back into the venture-capital fund. If they lose money, they write off losses over several years on state income taxes.

• Colleges get more flexibility to buy land, give bonuses and do other things to reduce reliance on state funding, Barker said.

• Senators agreed to keep colleges from shutting down USC regional campuses without their approval. Gov. Mark Sanford wants USC's two-year Salkehatchie and Union campuses closed and favors USC Sumter cutting expenses through more cooperation with a neighboring technical college.