September 7, 2010

UCLA's Anderson School of Management Gives Up on Public Funding

The business school will look to private donors and higher tuition to fill funding gap

The Anderson School of Management at the University of California at Los Angeles is preparing to forgo public funding in the face of California's budget crisis and grave doubts about the state's ability to pay for higher education, according to a report in the Financial Times on Monday, September 6.

The FT reported that the business school plans to look to private donors to fill the funding gap. Anderson's decision to opt out of public funding awaits approval by Mark Yudof, president of the UC system.

California faces a budget deficit of some $20 billion for 2010-11. The University of California system itself is staring at a funding shortfall of $800 million, with UCLA's coffers accounting for $200 million of that amount. That shortfall, which represents 20% of UCLA's core revenues, reflects a $117 million cut in state funds as well as $84 million in unfunded costs such as utility cost increases, benefits, retirement contributions and faculty merits--costs that the campus will have to pay--according to an June 10 article in UCLAToday. Because of this, the article said, the university's operating units would have to make $33 million in budget cuts and pay $40 million for unfunded cost increases.

According to the FT, 18% of UCLA Anderson's $90 million budget, which includes tuition, currently comes from the state. The article quoted the school's deal Judy Olian as saying that the decision to opt out of public funding was a "creative solution" that would allow the money to go to UCLA's underfunded undergraduate programs. She told the FT that tuition fees at UCLA Anderson--currently $41,000 a year for California residents and $49,000 for nonresidents--will rise, starting in summer 2011.

The FT noted that public funding for California's public education has been increasingly constrained in recent years, dropping from 10% of the state's general budget 30 years ago to 7.5% currently.

Michael S. Fischer (msf7@columbia.edu) is a New York-based financial writer and editor and a frequent contributor to WealthManagerWeb.com.

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