SUBJECT:  Gift and Private Grant Funds - Earnings Return Changes

A top priority for this growing campus has been to build UCSD's endowment and gift funds. Such private support represents the best opportunity for UCSD to augment its limited State revenues, and buffer the effects of cyclical State budget cuts.

In 1998, after consultation with Academic Senate, a 4% earnings cap on current gift and grant funds held by The Regents and the UC San Diego Foundation was implemented. Earnings over the cap are allocated to the Development Office for staff and infrastructure expenses needed to increase private support.

The UCSD Budget Committee, composed of the Vice Chancellors and representatives of the Academic Senate, students and staff, have determined that beginning July 1, 2002, no earnings on current gift and grant funds will accrue to these funds. This action was dictated by two factors: The expenses associated with UCSD's five-year, one-billion dollar capital campaign, and the State budget shortfall which will reduce needed general fund support for next year and quite possibly the next few years as well. Effective July 1, 2002, the first 2% of earnings on current gift and private grant funds held by The Regents and the UC San Diego Foundation will be allocated to the Vice Chancellor units associated with the individual funds for use as needed to support the academic mission. Current gift and private grant fund investment earnings in excess of 2% will be transferred to the Vice Chancellor- External Relations to assist in funding the capital campaign.

Questions regarding the effects of this policy revision should be referred to the Vice Chancellor of your division.

                                                John A. Woods
                                                Vice Chancellor
                                                Resource Management and Planning