Goals The University of California seeks to develop reliable and growing sources of revenues, including a strong investment from the state, and to utilize these resources in a strategic and cost-effective manner to sustain its tripartite mission of teaching, research and public service.
Funding trends Totaling $22.5 billion in 2010-11, the University's operating budget funds its core mission activities, as well as a wide range of support activities, including teaching hospitals, the Lawrence Berkeley National Laboratory, UC Extension, housing and dining services, and other functions.
State funding has been, until this year, the largest single source of support for the education function at the University. However, over the past ten years state educational appropriations have fallen over $1 billion in inflation-adjusted dollars. As a consequence, state educational appropriations constituted only 12 percent of UC's operating budget in 2010-11 compared to 23 percent in 2001-02. In 2011-12, the state cut UC's budget an additional $750 million.
To help mitigate declines in state funding, the University has sought to increase revenues from other sources, such as student tuition and fees, federal indirect cost recovery, and private giving. The University has also moved aggressively to reduce operating costs. Chapter 13 identifies some of the cost savings the University has achieved through its energy efficiency program. Yet even under the most optimistic assumptions, efficiency improvements and alternative revenue generation are sufficient to address only a portion of the budget shortfalls projected over the next few years.
This chapter summarizes the financial challenges that the University has faced up through the 2010-11 fiscal year. Revenue and expenditure data show changes in both the amounts generated (or expended) over time and their distribution across various areas. Development data cover trends in private support, donor restrictions on private giving, alumni donations and endowment per student. Other chapters in this report describe the impacts of budget cuts on the University's core mission activities and on its ability to balance its objectives of academic quality, access and affordability.
Looking forward The long-term downward trend in state funding has seriously challenged the University's ability to meet its budgetary and financial objectives. In addition to reducing operating costs and identifying alternative sources of revenues, the University is making comprehensive changes in the way funds flow within the University.
Historically, certain revenues have been collected centrally by the UC Office of the President and redistributed across campuses to promote systemwide priorities. Following lengthy consultation with campus leadership, beginning in 2011-12 all campus-generated funds — tuition and fees, research indirect cost recovery, and patent and investment income — will be retained by or returned to the source campus. In order to support central operations, the University has established a broad-based flat assessment on campus funds. The University anticipates that these changes — referred to as its Funding Streams Initiative — will simplify University financial activity, improve transparency and motivate campuses to maximize revenue.
For more information For more information on UC's budget, refer to budget.ucop.edu/pubs.html.
More information about private support is available in the Annual Reports on University Private Support, at www.ucop.edu/instadv/reports.html.