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Spring 2003
The Price of Excellence
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The overall level of support from federal, philanthropic and state resources has undergone a dramatic decline in recent years. Excluding the national laboratories and medical centers, support from federal grants and contracts has dipped as a percentage of the UC’s budget from a high of 26 percent in 1969-’70 to 17 percent today, and will likely drop further as the U.S. budget heads toward an annual deficit expected to exceed $300 billion over the next several years. While UCLA has enjoyed record levels of philanthropic giving in recent years, private gifts and endowments to the UC overall have been hit hard by the stock market decline as many foundations, as well as private and corporate sources, have, as a consequence, reduced their grants to universities.

And the state is suffering from its most serious financial crisis in recent history. Among 33 states that, according to the National Conference of State Legislatures, are currently running a combined deficit of at least $26 billion, California is in the lead with a budget gap of $8.5 billion, and the state’s shortfall for the 18 months between January 1, 2003 to June 30, 2004 is expected to hit roughly $34 billion unless expenditures are cut and/or taxes are raised. For the UC, this means dramatic decreases in state funding — the level of state support in 2002-’03 was down 5.3 percent from the preceding year and the governor’s proposed 2003-’04 budget reduces it a further 4.4 percent, $299 million. While the state’s financial support stands at about $3 billion for 2003-’04, that is $1 billion less than what was anticipated under current partnership agreements that guarantee a minimum level of funding.

THE UC CAN DO NOTHING about the federal deficit, the stock market or the state’s economy. Fees, on the other hand, may be a different matter and it could be useful in this economic environment to look at what some other institutions have done when faced with similar circumstances.

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