Monday, January 26, 1998
UCLA relying more on private funds as state sources dwindle
FUNDRAISING Money from donors placed into diversified
investments
By Michael LaFemina
Daily Bruin Contributor
As a private institution, Harvard University does not receive
the kind of state support that UCLA does.
However, Harvard makes up the difference in the ample returns it
gets from its endowment each year, which recently surpassed $11
billion.
UCLA, as a public institution, receives significant state
funding. However, due to the increasing costs of maintaining and
expanding a research university, this state support is not enough
to satisfy UCLA’s current $2.1 billion budget.
So increasingly, UCLA is coping with the rising costs of higher
education through investment in an endowment of its own.
"Basically, the endowment is money invested on behalf of the
university," said Karen Mack, publicist for the development
office.
"The UCLA endowment is held by two different entities," said
Michael Trentalange, executive director of gift policy and
information systems.
One of these entities is the regents of the University of
California. The regents pool part of UCLA’s endowment with those of
the other UC schools and place them in various investments.
The second entity is the UCLA Foundation, a non-profit
organization which invests the remainder of the UCLA endowment
separately.
He added that investments are very diversified, and range from
regular stocks and bonds of varying risk to government
certificates.
As of June 30, 1997, the UCLA endowment totaled approximately
$800 million.
However, it is incorrect to perceive this as one lump sum which
is uniformly invested as principal to gain interest.
"It is actually many, many separate endowments that are
collectively referred to as the endowment," Mack said.
At UCLA, the endowments are spread over a variety of functions,
as designated by the donor who provides the funds. For example, at
present, $160 million of the endowment is allocated for ‘chair
support’ (which aids in the recruitment and retention of the
highest faculty).
In addition, $68 million is used for program support, $206
million for unrestricted uses and campus improvements, and $241
million for student support. This student support involves money
designated for scholarships and fellowships.
"There is a big chunk of money donated and invested and
specifically reserved for students," Mack said.
In each of these endowments, much of the money earned from
interest each year is reinvested to increase the principal of the
fund.
UCLA plans to substantially increase its endowment through
Campaign UCLA, which aims to solicit $1.2 billion from donors by
the year 2002. Approximately $300 million will go toward increasing
the endowment.
Like UCLA, UC Berkeley is also part of an expanding movement by
public institutions to rely more heavily on a school’s endowment to
counter dwindling state support. Berkeley’s current endowment
totals $1.36 billion.
UCLA and other public institutions are turning more toward the
use of endowments because they provide a growing income that is not
affected by decreasing school funds.
"It is a perpetual source of income," Mack said. "It is a
cushion against whatever happens to the budget due to external
forces."
Also, since UCLA’s state support compensates for the extra
funding which private schools (like Harvard) receive from their
immense endowments, both schools face many of the same dilemmas and
costs associated with maintaining a research university.
"UCLA receives 22 percent of its budget from the state; Harvard
receives 22 percent of its budget from the endowment," said
Chancellor Carnesale.
"After that, our budgets are similar," he continued.