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The University of Virginia (UVA) may become the first public institution to derive a majority of its annual funding from private sources. The university projects using $134 million in private funds in FY04 compared to $131 million in state support. The significant funding shift is an example of greatly reduced recent state support for higher education coupled with major capital campaigns at public universities.

The situation in Virginia is indicative of the situation in other states. The portion of state support making up UVA’s annual operating budget has dwindled from 28 percent in 1985 to 8.1 percent next year. As state support has declined, fundraising has risen significantly. In 1990, UVA collected $51 million in donations, compared to $255 million in 2002. While private funding has increased, it does not serve as a direct replacement for state appropriations because gifts and endowment earnings are usually earmarked for a specific purpose. State funding tends to have fewer restrictions.

While the situation at UVA is a significant shift in funding trends, public and private funding only make up about 17 percent of the university’s total operating budget. The vast majority of funding derives from patent income, research grants, tuition, and related fees charged to students. Like many public colleges, UVA has had to significantly raise tuition in recent years to make up for lost income from the state.

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