Editor’s note: This story was updated July 30 at 3:53 p.m. with comments from CSU and CSUCI representatives.

Cal Poly San Luis Obispo has abandoned its plans for a master’s of business administration program in Santa Barbara, university officials said July 30.

The move came at the request of the office of California State University Chancellor Charles Reed, according to a Cal Poly news release.

“The CSU instead will look to its Channel Islands campus to serve the Santa Barbara market for an MBA program, given its closer proximity to Santa Barbara,” the university’s statement said.

CSUCI, which is based near Camarillo, plans to launch its MBA program in the fall of 2011. Cal Poly was ready to go a year earlier, but on July 21 the top officials at Cal Poly’s Orfalea College of Business said they were delaying the launch by at least a semester, at the request of the chancellor’s office.

“We were hoping we could work things out,” said Brian Tietje, the dean for continuing education programs at the Orfalea College of Business. “We thought we could still have some discussions with our counterparts at Channel Islands to get some compromise.”

The CSU chancellor’s office notified Cal Poly on July 28 that it would have to cancel the program, Tietje said.

“It’s hugely disappointing,” he said. “I’ve invested the last year and a half. My top priority has been to move this program forward.”

CSU spokesman Mike Uhlenkamp said the chancellor’s office didn’t want both Cal Poly and CSUCI to start programs in Santa Barbara because, given all the budget cuts in the system, “it wouldn’t be fiscally prudent to have two campuses conducting similar programs in the same area.”

Typically, CSU campuses are left to work out such territorial issues on their own, Uhlenkamp said. But in this case, the conversations between the two campuses were not “at a high enough level” to reach a formal agreement, he said.

Cal Poly had recruited instructors, started accepting applications, put together a schedule of classes and reserved space at the Canary Hotel in downtown Santa Barbara. An informational meeting about the program on July 21 drew 72 potential students, Tietje said.

At that meeting, Tietje and other Cal Poly representatives told the group the program wouldn’t launch until January at the earliest, rather than September.

Now that the program is cancelled, anyone who paid an application fee will have it refunded, according to the university’s news release.

With Cal Poly out of the picture, CSUCI will likely open the first university MBA program in the Santa Barbara area. UC Santa Barbara does not offer an MBA.

“We consider South Santa Barbara County to be our area,” said William Cordeiro, the director of CSUCI’s Martin V. Smith School of Business and Economics. In addition to the planned MBA program, CSUCI recently announced a partnership with Cottage Health System to offer a bachelor’s degree in nursing based in Goleta.

The MBA program will also be in Goleta. CSUCI is accepting applications now, Cordeiro said, and will start pre-MBA courses this fall for some students who don’t have bachelor’s degrees. The full program will start in 2011.

Cal Poly’s Tietje said there’s definitely a market for an MBA program in Santa Barbara. Whether there’s enough demand for two wasn’t clear.

“You start with one, and then you see,” Tietje said. “Just like you want to give consumers choice in the marketplace, you want to give potential students choice in the marketplace. We’re business people, we like how the marketplace operates when people have choices.”