narative

OVERVIEW

FINANCIAL STATEMENTS
UCLA’s financial statements seek to provide a clear understanding of the scope of financial operations of the campus. In addition to campuswide financial highlights, sections reflecting key statistical and financial information for each of the academic units and the teaching hospital, and the core entities that deliver services to meet the academic, research and public-service missions have been included in this report. Also described are the numerous UCLA business and support functions. Each of these academic and administrative activities plays an important role in contributing to making UCLA a world-class organization.

It is of note that record receipts of $2.3 billion were received in the 1997-'98 year. With only 20.6 percent of this sum delivered from the State of California, UCLA now relies on tuition, fees, grants, contracts, private donations and sales and service activities to play an increasingly important role in funding operating expense.

ADMINISTRATIVE STRATEGIC INITIATIVES
During 1997-'98 several initiatives in the administrative arena sought further to strengthen campus financial management practices, to deploy technology in support of the University’s mission, to continue improvement of business processes and to improve the quality of life for members of the campus community. Financial data was made more fully available by way of on-line reports accessed through the Web. Standardized on-line reports and other financial-inquiry tools have heightened the ability to deploy up-to-date data for decision-making and financial-management purposes. The use of electronic means to process various financial transactions has been expanded, and a major project to assure that financial and administrative systems will be fully operational for the year 2000 has continued implementation. The initiative to reinforce the need for appropriate financial controls to ensure that the campus will continue to effectively manage public funds in a changing technical and regulatory environment has retained ongoing focus. These activities have been undertaken with heightened emphasis on streamlining processes, improving management-information tools and meeting increased compliance requirements.

Further, the campus has continued the aggressive effort to improve and retrofit physical plant, a program which, approaching $2 billion in project value under management, is among the largest and most complex of its type in the country. Significant construction efforts continue to effect seismic improvement of core campus buildings. Progress toward full realization of the Housing Master Plan, including completion of additional undergraduate on-campus housing and graduate family housing off-campus housing, serves to enhance the UCLA living environment for UCLA students. And as the new millennium approaches, planning is in place for a comprehensive new hospital facility and for the retrofit of major portions of the existing Center for Health Sciences. The key component of funding for this activity has been committed by the Federal Emergency Management Agency (FEMA) and the State of California; significant gift monies are in place and additional funds will be sought as part of the campaign now in progress. This project, which will seek to reposition the medical enterprise for the future cycle, will entail the deployment of over $1.2 billion across the upcoming decade.

THE REPORT
This is the third year of publication of a restructured UCLA annual financial report. The intent has been to create a document which conveys necessary financial and related information in a manner that readily communicates the overall nature of UCLA from a financial-operations point of view. The following pages should provide a sense of the financial health of the institution, retained through emphasis on strong management of the public trust and fostered through significant contributions from its dedicated faculty, staff, students and supporters.

MISSION
The tripartite mission of the University of California is teaching, research and public service. The accompanying annual financial report reflects the resources and expenditures of the Los Angeles campus which allow UCLA to fulfill this mission.

POSITION IN THE UNIVERSITY OF CALIFORNIA SYSTEM
UCLA is financially the largest campus in the ten-campus University of California system. The majority of financial activity of the campus is reflected within UCLA’s accompanying financial statements. Investments, the campus’ portion of pooled debt, and the retirement system are accounted for on a University-wide basis through the Office of the President and are therefore not reflected in UCLA’s stand-alone financial statements.

Click on arrow to view chart for Current Funds, All UC Campuses

The above chart reflects the respective revenues and expenditures of the various campuses, along with systemwide programs and administration for the 1997-'98 fiscal year.

FUNDS FOR CURRENT OPERATIONS
UCLA receives its funding through a complex structure of governmental appropriations, grants, tuition and fees, gifts, and revenue generated from business activities and interest earnings. For the 1997-'98 fiscal year, total receipts exceeded two billion dollars ($2,306,274,000), whereas the expenditures from these sources reached $2,229,543,000.

Receipts	Click on arrow to view Sources of Funds pie chart
(dollars in thousands)

SOURCES	1997-'98 GRAND TOTAL	PERCENT OF TOTAL	PRIOR YEAR GRAND TOTAL	PERCENT OF TOTAL	CHANGE OVER PRIOR YEAR

Tuition and Fees	$ 222,738	9.7%	$ 208,183	9.6%	7.0%
Federal Government	287,931	12.4%	282,274	13.0%	2.0%
State Government	474,342	20.6%	444,409	20.5%	6.7%
Local Government	21,102	0.9%	20,280	0.9%	4.1%
Private Gifts, Grants & Contracts	151,648	6.6%	128,698	5.9%	17.8%
Sales & Services-Educational Activities	244,226	10.6%	221,537	10.2%	10.2%
Sales & Services-Auxiliary Enterprises	193,965	8.4%	206,339	9.5%	-6.0%
Sales & Services-Teaching Hospitals	678,174	29.4%	624,169	28.7%	8.7%
Other Sources	32,148	1.4%	37,446	1.7%	-14.1%
TOTAL RECEIPTS	$ 2,306,274	100.0%	$ 2,173,335	100.0%	6.1%

Expenditures	Click on arrow to view Uses of Funds pie chart
(dollars in thousands)

USES	1997-'98 Grand Total	Percent of Total	Prior Year Grand Total	Percent of Total	Change Over Prior Year

Instruction	$ 580,413	26.0%	$ 528,009	25.9%	9.9%
Research	320,045	14.4%	288,008	14.1%	11.1%
Public Service	23,324	1.0%	23,420	1.1%	-0.4%
Academic Support	173,043	7.8%	173,940	8.5%	-0.5%
Teaching Hospitals	670,537	30.1%	578,736	28.3%	15.9%
Student Services	42,425	1.9%	37,976	1.9%	11.7%
Institutional Support	101,210	4.5%	85,058	4.2%	19.0%
Operation and Maintenance of Plant	50,876	2.3%	50,591	2.5%	0.6%
Student Financial Aid	102,740	4.6%	99,167	4.8%	3.6%
Auxiliary Enterprises	164,930	7.4%	177,409	8.7%	-7.0%
TOTAL EXPENDITURES	$ 2,229,543	100.0%	$ 2,042,314	100.0%	9.2%

CURRENT FUNDS:

State Government   Tuition and Fees   Federal Government    Local Government
Private Gifts and Contracts   Gifts and Endowments    The UCLA Foundation
Sales and Services - Educational Department   Sales and Services - Auxiliary Enterprises
Sales and Services - Teaching Hospital   Other Sources

STATE GOVERNMENT
The University of California is chartered as an instrumentality of the State of California and 90% of students enrolled in the academic programs of the campus are considered residents of the state for tuition purposes. UCLA continues to rely heavily on state appropriations amounting to $426,835,000 in the 1997-'98 fiscal year to maintain its basic academic programs. In addition, the state, including Lottery funds, contributed $39,611,000 toward special programs in such areas as Financial Aid, Tobacco Related Diseases , Breast Cancer, and AIDS research. Contract funds from state agencies total $7,365,000.

Click on arrow to view chart showing Funds Received From the State Over the Last 10 Years

TUITION AND FEES
Educational and student service costs (recreational programs, social services, student union and financial assistance programs) are funded in part through the assessment of fees to students.

Enrollment Fall Quarter:
undergraduates	23,925
graduates	9,301
interns and residents	1,666

Annual fees for the 1997-'98 year per student were assessed as follows:
undergraduate students	$4,050.00
graduate students	$4,501.50
non-residents of California (additional assessment)	$8,984.00
students enrolled in professional schools (additional assessment)	$2,000.00-$6,376.00

FEDERAL GOVERNMENT
The Federal Government funded a significant portion of UCLA’s total research and training through grants totaling $249,906,000 in the 1997-'98 fiscal year and further contracted with the campus for an additional $38,025,000 in services. Research efforts of UCLA are focused on finding solutions to complex problems in areas such as human health, the environment, energy, water and food supply, technology and global quality of life.

Click on arrow to view chart showing Major Federal Funding Sources

LOCAL GOVERNMENT
Local government funds are received mainly to support educational assistance through Los Angeles county and city government programs.

During 1997-'98 funds were received from the local government for the following programs:

	County Health Care	$ 17,025,000
	County Child Care	1,716,000
	Primary Education Development	1,369,000
	Other Programs	992,000
	Total	$ 21,102,000

PRIVATE GRANTS AND CONTRACT
Private funds totaling $76,331,000 were received during 1997-'98 from private industry, philanthropic organizations and others. About 77% of these funds are used for research projects and the remaining amounts fund instruction, financial aid and academic support.

GIFTS AND ENDOWMENTS
Over time, UCLA has become more reliant on individuals, foundations and corporations to contribute much-needed funding in support of the campus’ mission. Gifts from these groups come both by way of endowment and expendable donations. Endowment funds are administered either centrally by the Office of the President for the ten University of California campuses or by the UCLA Foundation. The investments are reflected on the books of the Office of the President and the Foundation. Gifts received directly at the campus and gift and income from endowment funds transferred from the Foundation are reflected as revenue and totaled $75,317,000 for 1997-'98. The endowment interest income transferred from the Office of the President is recorded as part of the non-mandatory transfers and totaled $21,826,000 for 1997-'98.

THE UCLA FOUNDATION
The UCLA Foundation is a nonprofit, public-benefit corporation organized for the purpose of accepting and administering the full range of private contributions for the campus. From its inception, the aim of the Foundation has been to link the professional and business worlds with the academic needs that cannot be met through state and other funding sources. The Foundation is empowered by its charter to receive gifts of all kinds as a fully qualified charitable trust. One of the fundamental goals of the Foundation is to identify sources of unrestricted funds that can be applied according to the special needs of the campus. Among the projects at UCLA supported by Foundation funds are student scholarships and fellowships, departmental projects and research. The financial activities of the separately incorporated Foundation are not reflected within the campus’ records until such time as gifts are transferred from the Foundation to the campus. The Foundation issues a separate annual report detailing its financial activity.

The carrying and market values of endowment funds by investment category as of June 30, 1998 reflected by the Office of the President (on behalf of UCLA) and The UCLA Foundation are as follows:

	Endowments
	Office of the President (The Regents)		Foundation
(dollars in thousands)
Investment Breakdown	Book Value	Market Value	Book Value	Market Value

General Endowment Pool	$ 225,299	$ 706,850	$ -	$ -
High Investment Pool	2,172	3,552	-	-
Long Term Investment Pool	-	-	279,876	320,531
Short Term Investment Pool	5,506	5,506	16,170	16,170
Mortgage	900	900	-	-
Separate/Other Investment	429	492	4,189	5,935
Total	$ 234,306	$ 717,322	$ 300,235	$ 342,636
Prior Year Totals	$ 220,811	$ 606,283	$ 244,365	$ 278,377

The Foundation also held investments of other gift money with a market value of $ 160 million at June 30, 1998.

SALES AND SERVICES BY EDUCATIONAL DEPARTMENTS
Revenue is earned from the sale of scholarly materials and through the provision of expertise and services to outside entities. These include computing, publications, laboratory research, tests and testing, assays, conferences and seminars, a wide range of clinics, faculty medical practice providing patient care, interlibrary loans and many other activities. All goods and services are billed to outside users at rates approved by the campus recharge committee. Not recorded as revenue are the services internally recharged to the campus community.

SALES AND SERVICES BY AUXILIARY ENTERPRISES
In 1997-'98, the majority of Auxiliary Enterprises' self-supporting funds were spent on the ongoing activities of and enhancements to the UCLA living and business environment.

ASUCLA’s student union and bookstore, with revenues of $70,003 million, continues to offer a diverse array of books, computers, gifts, general goods and restaurants to the UCLA community.

Business Enterprises during 1997-'98 produced revenues of $100 million. Business Enterprises supports six on-campus residence halls with 6,231 beds; off-campus apartments accommodating 2,000 residents; two facilities for campus and hospital visitors; faculty apartments; vending services, conference and events management; and, the Lake Arrowhead Conference Center and Bruinwood Family Resort. Parking and Commuter Services manages more than 22,000 parking spaces within 15 structures and 28 surface lots, as well as a ride-sharing program.

Intercollegiate Athletics’ revenues in 1997-'98 reached $24 million. Intercollegiate Athletics sponsored approximately 175 events during 1997-'98. This year UCLA won championships in men's soccer, men's volleyball and women’s water polo. UCLA competes in 21 sports at the intercollegiate level.

SALES AND SERVICES BY TEACHING HOSPITAL
The UCLA Medical Center is one of the most well known and technologically advanced medical care facilities in the country and is the primary teaching hospital for the UCLA School of Medicine. For 1997-'98 the largest portion, 29.4%, of campus revenue came from the teaching hospital totaling $678,174,000. The Westwood Medical Center and the Santa Monica Hospital operate on a non-profit, self-supporting basis. Their financial activities are incorporated within the accompanying UCLA financial statements. Additioanlly a separately audited financial statement is prepared by the hospital detailing specific revenue and expenditure activities, as well as assets and related liabilities.

OTHER SOURCES
"Other sources" identifies campus units whose main business is to service the UCLA campus departments, but which also earn revenue from the surrounding community. Among those departments are Community Safety, Transportation Services, Communication Technology Services and Mail Services, Document Services, Center for the Performance Arts, Office of Instructional Development, and the off-campus work-study program.

PROPERTY, PLANT AND EQUIPMENT FUNDS

	419 acres
	13 libraries
	220 buildings
	14 parking structures
	21 surface parking lots
	Assets at cost or donated value	$ 3,405,365,000
	Major projects capitalized	$ 127,695,000	*
	Major construction projects	$ 316,686,000	**
	Locally held long term indebtedness	$ 383,101,000	*******
* Major projects capitalized during 1997-'98 are listed in the notes to the financial statement (note 4).
** Major construction projects for 1997-'98 are listed in the notes to the financial statement (note 5).
*** Locally held long term indebtedness for 1997-'98 is listed in the notes to the financial statement (note 6).

Plant funds consist of monies designated for expansion and improvement of all physical facilities belonging to UCLA, including capital equipment, real estate and the libraries’ collections. Assets at cost or donated value at the time of gift amounted to $3.4 billion as of June 30, 1998. The most significant components -- land, buildings, and improvements -- represent approximately $1.9 billion and equipment represents $620 million of total plant assets. In an ongoing effort to continue to maintain and improve the Los Angeles campus, construction projects with cumulative expenditures of $317 million were in progress on June 30, 1998.

The UCLA Campus is continuing its recovery effort to repair and perform seismic retrofits of buildings damaged during the January 17, 1994 Northridge earthquake. The major financial impact of these efforts relates to the structural damage to a group of buildings, including Royce Hall, Kerkhoff Hall and buildings in the Center for Health Sciences. Recovery of a relevant portion of necessary funds is being sought through submission of claims to the Federal Emergency Management Agency (FEMA) and through claims to the State of California. As of June 30,1998, significant reimbursements for architectural studies and repairs had been received from FEMA and additional damage survey reports are either being prepared or are in active discussion with FEMA No adjustments have been deemed necessary to the historic carrying value of these buildings.

The UCLA Library comprises a campuswide network of libraries serving programs of study and research in many fields. Its principal components are the University Research Library and the College Library and 11 subject libraries, along with other specialized and unaffiliated libraries including William Andrews Clark Memorial Library. In addition, the libraries hold important collections of manuscripts, oral history transcripts, archives, technical reports, government publications, photographs, maps, microfilms, audiovisual materials, corporate reports and other scholarly resources. More than 94,000 serial titles are received regularly. The total collections of the UCLA Library, at June 30, 1998, numbers more than 7.2 million volumes valued at $393 million.

LOAN FUNDS

Loans Notes Receivable $ 72,344,000

Loan notes receivable are listed in the footnotes to the financial statement (note 3).

Loan funds consist of monies designated for loans to students, faculty and staff. Student loan funds are provided from federal student loan programs, university funds and private donations. Long-term loans to students are a significant part of the financial aid package, where repayment usually begins upon graduation. Also available are 30-day emergency student loans, employee loans, and short-term faculty housing loans.

Home	Financial Highlights	Letter from Chancellor Carnesale	Overview	Campaign UCLA	College, Schools and Hospital	Financial Statements	Credits
Email \| Site Map \| General Accounting