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A w o r l d o f p o s s i b i l i t i e s

Th e University of California, founded in 1868, is a system of 10 campuses with a mission of teaching,

research and public service. With 209,000 graduate and undergraduate students, UC is the world’s premier

public university. UC has three law schools, fi ve medical schools and the nation’s largest continuing education

program. Th e University, on behalf of the U.S. Department of Energy, also is involved in the management of

three national laboratories that are engaged in energy and environmental research. Its Natural Reserve System

manages approximately 130,000 acres of natural habitats for research, teaching and outreach activities.

CAMPUSES

1 Berkeley

2 Davis

3 Irvine

4 Los Angeles

5 Merced

6 Riverside

7 San Diego

8 San Francisco

9 Santa Barbara

10 Santa Cruz

NATIONAL LABORATORIES

A E.O. Lawrence Berkeley National Laboratory

B Lawrence Livermore National Laboratory

C Los Alamos (N.M.) National Laboratory

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Californians have always been forward looking. In 1849, a year before California was admitted to the union, there was talk of a public university at the fi rst

state Constitutional Convention convened in Monterey. But without the funds to support a government or education, it would be almost another 20 years before the University of California became reality.

Still, it was a visionary idea that the promise of California required a comprehensive public university that would not only educate and prepare Californians for the challenges and opportunities in the fl edgling state, but, equally important, conduct and promote research for the good of the state and its residents. And befi tting its roots as California’s land-grant institution, the university would engage in public service programs benefi ting communities throughout the state.

Th ose pioneering Californians who envisioned a public university would be truly amazed at what the University of California has become. Over the course of the last century, UC has gone from a regional university to a world center of learning, known for generating a steady stream of talent, knowledge and social benefi ts.

Th e University continues to look forward and to seek better ways of serving Californians. To that end, in 2005 I asked an advisory group to consider the issues facing California over the next 20 years and recommend ways in which the University should begin preparing for those challenges. Th is group’s report will be the launchpad for a series of discussions in the coming months with the UC community, and with Californians more broadly, about how we can position UC to make its maximum contribution to California both today and in the year 2025.

In this report, you will read about some of the ways in which the University is addressing the California needs of both today and tomorrow. It’s an exciting time, to be sure. As we continue deepening our contribution to California, we’ll be working with California students and their parents to ensure the accessibility of a University of California education. We’ll be looking to prepare the doctors, nurses and other health professionals who will treat our state’s residents in urban and rural communities. We’ll be working with our partners in industry and government to prepare our state’s work force and to provide the research that will keep California competitive in the global economy. We’ll be teaming up with our colleagues in K-12 and the other education segments to prepare our young people for the opportunities that lie ahead. And we’ll continue to work closely with our communities up and down the state to enhance California’s quality of life.

I am certain that our collaborations will not only sustain the California promise envisioned in the mid-1800s, but position the University of California to contribute to California, the nation and the world for decades to come.

Th ank you for your continued support.

Robert C. Dynes

P R E S I D E N T ’ S L E T T E R

4

A W O R L D O F P O S S I B I L I T I E S serving the n 10 campuses, one university, an engine of opportunity and ch

The University of California “seems to me more and more to be California’s highest, most articulate idea of itself, the most coherent – perhaps the only coherent – expression of the California possibility.”

— Joan Didionauthor and UC alumna

5

With its roots firmly established by its land-grant mission, the University of California is

dedicated to serving the needs of the public. At the heart of this mission of education, research and public service is nurturing the talents of California’s residents, pushing the boundaries of knowledge and innovation, and creating solutions for the health, social and economic challenges facing the state.

The University and the state have evolved together – the vitality of the one is inextricably linked to the other. Over the past century, almost every industry and field in California has been touched, and in some cases revolutionized, by UC research, UC alumni and UC public service. Now, as we look to the future, the University is set to play an important role that it is uniquely positioned to play because of the intellectual and organizational resources of its campuses, research institutes, medical centers and national laboratories.

The University of California brings together the promise and power of its 10 campuses, each with its particular strengths and interests. Moreover, our campuses are increasingly focused on collaboration, cross-disciplinary approaches and partnerships with private industry and public agencies to tackle the state’s toughest challenges.

The success of the University is the result of a public-private partnership. UC will continue to build on this partnership as we prepare for the challenges and opportunities ahead. With our superb faculty, promising students and tradition of excellence in every endeavor, we are positioned to anticipate and meet the diverse needs of a rapidly changing world.

needs of Californiansange

6A UC study reports that returning California greenhouse gas emissions to 1990 levels by 2020 can boost the annual Gross State Product by $60 billion.

UC scientists and colleagues are studying the impact of global warming at high attitudes as part of an international effort.

UC research changes the world.

7

UC is preparing future leaders for the opportunities and challenges ahead.

The University is seeking to meet California’s dynamic and shifting work force demands by emphasizing critical thinking skills, experience in working across disciplines and lifelong learning.

8

ENERGY EFFICIENCIES California has made signifi cant gains in the past 40 years in energy productivity, as laws have encouraged more energy effi cient lighting,

air conditioners, refrigerators, water heaters and other appliances. In that period, those energy-effi ciency standards have reduced electricity use by the equivalent of the output of more than 20 average power plants, according to the state Energy Commission.But as the state’s population continues to grow and business demand for energy climbs, more will have to be done to meet the state’s long-term energy needs, while at the same time protecting the environment. Leading these eff orts is the University of California, whose campuses and national laboratories have been working for decades in this crucial area, producing gains in more effi cient lighting and other energy effi ciencies, pursuing sustainable energy sources and exploring the development of alternative fuels.In April, the nation’s fi rst center of excellence in energy effi ciency was created, the Energy Effi ciency Center at UC Davis, a refl ection of California’s position as a national and international leader in energy effi cient practices that benefi t the environment and the state’s economy. Established with a $1 million grant from the California Clean Energy Fund, the center aims to develop energy-saving products and services and then quickly move them into the marketplace. UC Davis will match the fund’s grant with $1.3 million in operating and research funds and PG&E Corp. has pledged $500,000.“We want this center to bring together the people who devise new ways to save energy, those who fi nance their development, the manufacturers who make the products, and the industries and consumers who buy and benefi t from them,” says its director, Andrew Hargadon, an associate professor at the UC Davis Graduate School of Management and expert on innovation in business and technology transfer.Th e Energy Effi ciency Center, whose research will center on the three key areas of transportation, homes and buildings; agriculture; and food processing – joins the Institute of Transportation Studies, the Biomass Collaborative and the Wind Collaborative, and the California Lighting Technology Center as prime examples of UC Davis-led public-private partnerships geared toward solving California’s core energy challenges.

C A L I F O R N I A ’ S F U T U R E Energy represents one of the most important connections between the things people do and the environment they live in. UC researchers are studying the environmental impacts of our energy use – to light our homes, operate our workplaces and run our cars – and ways to conserve and use it more effi ciently.

Th e Bourns College of Engineering’s Center for Environmental Research & Technology at UC Riverside and Viresco Energy LLC announced in September plans to build a $15 million plant that would convert wood, “green” waste, sewer sludge, municipal trash and other waste into diesel fuel.Th e pilot plant will use a new process developed by the center, which takes wood from a dead forest or any material containing carbon and converts it into a gas that, in turn, is made into high-quality diesel. It’s a hydro-gasifi cation process that uses high-temperature steam and hydrogen.

“Th e innovation in our technology is that it appears than the combination of steam and hydrogen greatly enhances the reaction rate for the conversion of carbon to methane and synthetic gases for production of liquid fuels,” says Joseph Norbeck, the Yeager Families Professor of Engineering and head of UCR’s Environmental Research Institute.

Th e new model off ers a host of advantages:

• Lower costs. It would cost about $1 to produce a gallon of diesel.

• Faster production. Th e UC Riverside process is about 10-times faster that older methods of turning solids into gas.

• Fewer environmental problems such as waste products. Th e new process converts up to 85 percent of the waste material into diesel.

BIOFUEL

9

CLIMATE RESEARCH Scientists, including those at the University of California, have been warning that a looming

environmental issue, global warming, could seriously undermine the state’s economy if left unaddressed. With the deleterious effects that climate change would have on California’s future, UC researchers have suggested the need to address reducing emissions from carbon dioxide (the main global warming gas) and other greenhouse gases.The stakes are enormous. Over the course of the last couple of decades, California’s economy has grown to become one of the most vibrant in the world. One of the primary reasons: it’s broadly based among various sectors including agriculture, biosciences, computers and semiconductors, information technology, telecommunications, media/entertainment, and aerospace. In the case of California’s agriculture industry and vaunted wine industry, both would face serious disruption without sufficient water supplies, which would be affected by the projected climate global warming.In August, the California Climate Change Center, with core research from UC San Diego’s Scripps Institution of Oceanography (which has been at the forefront of climate change research since the 1950s), UC Berkeley and contributions from more than 70 respected scientists from universities, public agencies and nonprofit organizations, issued a sweeping report that predicted the state would become significantly hotter and drier by the end of the century, leading to severe air pollution and a drop in the water supply.The findings in “Our Changing Climate: Assessing the Risks to California” are based on 17 scientific studies that used different models to determine how global warming could affect the state.“Our Changing Climate” presents scenarios, not forecasts, notes Dan Cayan, a Scripps researcher and one of the report’s contributing authors. “We actually do have a choice in determining which trajectory we go on,” he says.

With this backdrop, the governor and California Legislature agreed on landmark global warming legislation to reduce

industrial carbon dioxide 25 percent by 2020. The New York Times editorialized: “Taken together with other state actions – including an important agreement among several Northeastern states to limit carbon dioxide emissions from power plants – California’s assertiveness has suggested to some people that the country may be at a transformational moment on climate change …”

Roger Revelle, a professor of oceanography at Scripps Institute of Oceanography, co-authored a paper with Hans Suess in 1957 that is considered to be the opening salvo in the global warming debate. They demonstrated that carbon dioxide had increased in the air as a result of the use of fossil fuels.A few years after the now-famous Revelle-Suess article, Charles David Keeling, recruited to Scripps by Revelle, became the first to confirm the rise of atmospheric carbon dioxide by very precise measurements producing a data set now known widely as the “Keeling Curve.” He would go on to become the world’s leading authority on atmospheric greenhouse gas accumulation and a pioneer in climate science.

F. Sherwood Rowland (left), a UC Irvine chemistry professor and post doctorial researcher Mario J. Molina (who joined the UC San Diego

faculty from MIT in 2004) in the early 1970s discovered that the release of

chlorofluorocarbons, then widely used in refrigerators, spray cans and cleaning solvents, could destroy the ozone layer in the stratosphere, allowing more ultraviolet light to get through to Earth. For this research, they shared the Nobel Prize in chemistry in 1995.

UC has pioneered climate change research

10

TRAINING TEACHERS Monica Smith attributes her love of math to the engaging teachers she had as a middle- and high-school student. Now, the UC Riverside junior has decided to follow in their footsteps, motivated by an

initiative that encourages UC students interested in science, math or engineering to consider teaching as a career – and creates courses to help them become great teachers. “If you don’t have teachers who help explain the subject and make it interesting, you get pushed away at an early age,” says Smith. “I want to excite students while they’re still young, so that they can go to college knowing that this is something that is valuable and worth pursuing.”

The University of California developed California Teach through extensive consultations involving more than 700 faculty members, intersegmental education partners, industry leaders, foundations and a variety of state and national organizations involved in science, mathematics, engineering, technology and teaching. At Riverside, one of seven UC campuses with California Teach programs, Smith is gaining valuable experience in K-12 classrooms even as an undergraduate. “By the time I’m teaching on my own, I will have had four years of exposure to different teaching styles,” she says. “I’m learning strategies for tailoring instruction to students’ interests and strengths. This is giving me the confidence I will need to succeed from the beginning.”

California Teach aims to place 1,000 new science and math teachers annually into the state’s public-school classrooms from the ranks of UC’s student pool, meeting a dire need for talented K-12 instructors like those who inspired Smith.

An educated work force – particularly one with the knowledge and skills required by an economy increasingly reliant on science, engineering and mathematics – is essential for all California businesses and industries to remain competitive. In 2002-03, nearly 1,500 mathematics and 800 science classes in California high schools were taught by individuals with no teaching credential. Even more classes were taught by teachers with a credential in an unrelated subject area. Given those numbers, it’s not surprising that only 4 percent of ninth-graders in California schools go on to complete a bachelor’s degree in science, mathematics or engineering, providing only about 50 percent of the work force needs for California’s science- and technology-based industries.

C A L I F O R N I A ’ S F U T U R E For California to remain competitive,especially in the industries that drive our state’s economic growth, its educational institutions – from K-12 through graduate studies – need to work together to prepare a work force with the knowledge and critical skills required by an economy becoming increasingly reliant on science, engineering and mathematics.

Monica Smith

11

ACADEMIC PREPARATION As she has risen to a leadership position in one of the nation’s most prominent corporations,

Cynthia Marshall has never forgotten about MESA (Mathematics, Engineering, Science Achievement), the academic enrichment program that, Marshall says, “changed my life forever.”Marshall, a senior vice president and one of the highest-ranking African American women at AT&T, says her MESA experience as a high school junior gave her the skills and confidence to begin a trajectory that took her from UC Berkeley to a successful career at the utility, where she is now responsible for regulatory and constituency relations for SBC California, while also serving as vice chair of the California Utilities Diversity Council, a committee of the California Public Utilities Commission.As a low-income, inner-city youth in the mid-1970s who “traveled across the tracks” – literally and figuratively – to get to John F. Kennedy High School in Richmond, CA, Marshall was simply unaware of the world of possibilities that MESA revealed. “When you’ve never been to UC Berkeley or the Lawrence Berkeley lab, you’ve never met an engineer, and no one has talked to you about the technology field and getting into college, you don’t know what to dream,” she says. “MESA showed us what was out there, and created an atmosphere in which aspiring to those things was expected.”Marshall is just one of countless success stories. Jose Poveda, a teacher of advanced math courses at Costa Mesa High School, is not alone when he says that without MESA, “I would not have gone to college at all.” The same is likely true of many of the students who have turned tiny Santa Paula High – once designated by the California Department of Education as an underperforming school – into one of the top feeder high schools for the UC Santa Barbara College of Engineering. Marshall has become a tireless advocate for the program. “MESA saw something in me,” she says, “and I haven’t slowed down since.”

Since 1970, MESA has supported educationally disadvantaged students through a variety of programs and

counseling that help them excel in math and science and graduate with university degrees in engineering, science and technology. MESA programs support middle- and senior high school students, community college students, and educationally disadvantaged undergraduates at four-year institutions who are pursuing engineering or computer science degrees. The program is administered by UC in partnership with California State University, the California Community Colleges and independent colleges, with funding from the state Legislature and corporate and private philanthropy.

Some 200 companies provide MESA with equipment, technical resources, internships and volunteers, recognizing the importance of increasing the future supply of skilled math, engineering, science and technology professionals. The utility companies have been among the strongest industry partners over the years, and it’s no wonder with an advocate like Marshall, who most recently was instrumental in the awarding of two major grants to increase the number of educationally disadvantaged students supported by MESA. The awards, one from the California Utilities Diversity Council and one from the AT&T Foundation, total nearly $3 million.

Approximately 75 percent of MESA high school seniors go directly to college, compared with 49 percent of all high school seniors statewide. Among underrepresented student groups, 29 percent of MESA seniors are eligible to attend UC, vs. 6 percent of

underrepresented seniors statewide. MESA graduates make up 75 percent of all engineering baccalaureates awarded to underrepresented students in the state.

Cynthia Marshall

12

The University serves society as a driver of innovation.

Research in nanotechnology at UC will improve the nation’s ability to make rapid and critically important decisions to save lives in the event of bioterror attacks or infectious disease outbreaks. (This is an artist’s rendition, in 3D, of a cell with a mechanical claw attached to it.)

13

UC’s clinical research leads to better health care, improved treatment, discoveries of new drugs and medical breakthroughs.

UC ranked first for the number of U.S. biotech patents issued, 723 patents between 2000 and 2004, according to an international study released in Sept. 2006.

14

TRAINING HEALTH PROFESSIONALSThe nursing shortage has grabbed the headlines, but in

California, the R.N. crisis tells only part of the story.After a three-year study of California’s current and future health work force needs, a 14-member Universitywide Health Sciences Committee concluded that statewide shortages of providers currently exist in several major health professions, while shortages loom in others. The concerns are particularly great in rural and other underserved areas. The committee also found that California’s health work force does not reflect the ethnic diversity of its citizens, and that the demand for culturally and linguistically competent health providers in the most diverse state in the nation is growing.California’s nursing shortage is among the nation’s worst – the state ranks 49th in number of nurses per capita, with forecasts of a shortfall of 60,000 registered nurses by 2020. But the state is also expected to be 17,000 physicians in the red within a decade. California is expected to grow at nearly twice the rate of the national average between now and 2025, with its elderly population increasing at more than twice the rate of the state’s total population within the same period. The committee also warned of significant shortfalls in public health, pharmacy and veterinary medicine – shortages projected to become more severe by the year.“The need for trained health professionals is certain to grow significantly,” says Cathryn L. Nation, executive director of academic health sciences for the UC Office of Health Affairs and a member of the committee. “Utilization of health services increases among older patients, and people are living longer with chronic illnesses that require medical management, such as diabetes, arthritis and hypertension.” Compounding matters, she notes, is the impending retirement of the disproportionately large number of physicians who are between 55 and 65 – just as their baby-boomer peers are approaching their period of greatest medical need.In response to the committee’s report, UC President Robert C. Dynes commissioned the Advisory Council on Future Growth in the Health Professions to use the findings to draft a blueprint for systemwide enrollment increases in the health professions through the year 2020.Already, UC has taken steps to address some of the most acute concerns. New nursing programs have been launched at UC Irvine and UCLA that will help to generate a significant number of bachelor’s-level nursing graduates, as well as master’s- and doctorally prepared nurses; an expansion of entry-level master’s programs is also planned at UC San Francisco and UCLA.“UC plays a critically important role in training future health professionals, and by addressing these shortage areas we can make a significant impact on the health of the state’s population,” Nation says.

Several UC campuses are following the example of

UC Irvine’s Program in Medical Education-Latino Community(PRIME-LC). PRIME trains cadres of clinician leaders to address underserved communities in the state. In addition to UCI’s program, which aims to increase the pool of Latino physicians, UC Davis is focusing on rural health and telemedicine; UC San Diego is addressing health disparities; and UC San Francisco is addressing urban health and homelessness. UCLA is also planning a PRIME program.

C A L I F O R N I A ’ S F U T U R E The state will need a healthy population,with quality health-care available to all residents.

15

Alzheimer’s Disease As the first baby boomers enter their 60s, California’s ability to

take care of its elderly population is already showing signs of strain. What will happen if, as predicted, the number of Californians with Alzheimer’s disease more than triples by the middle of the century? The emotional, physical and financial costs to family members caring for a loved one with dementia is enormous – and the alternative, nursing-home care, runs up a hefty tab of its own, estimated at $50,000 a year. Nearly half a million Californians have been diagnosed with Alzheimer’s disease, and simple math dictates that, without strategies to prevent or treat dementia, the future burden of the disease will be staggering. The chance of developing Alzheimer’s between the ages of 60 and 70 is 2-4 percent. Between 70 and 80, it is 8-16 percent. Between 80 and 90, it is 40-50 percent.“If we don’t figure out something that will stem the tide of this disease, our health care system will be in serious trouble,” says Mary Sundsmo, program director of the Shiley-Marcos Alzheimer’s Disease Research Center at UC San Diego.Recognizing the urgency of finding answers to this terrible disease, the National Institute on Aging funds 32 Alzheimer’s Disease Centers (ADCs) at major medical institutions throughout the country, including five within the UC system. (In addition to UC San Diego’s, ADCs are located at UC Davis, UC Irvine, UCLA, and UC San Francisco.) The ADCs are charged with identifying people at the greatest risk for the development of the disease and conducting basic and clinical research aimed at finding better ways to treat and, ultimately, prevent Alzheimer’s from occurring. “Given the aging population, if we don’t invest in finding answers, this disease will bankrupt our health system,” says Sundsmo.

The UC centers include some of the world’s leading investigators contributing to the understanding of the cause, prevention and treatment of Alzheimer’s disease. At UC San Diego, Dr. Leon Thal heads not only the ADC but also the Alzheimer’s Disease Cooperative Study (ADCS), the national research consortium developed in 1991 to promote clinical trials of promising Alzheimer’s drugs through partnerships with pharmaceutical companies. Among other things, the ADCS is actively searching for Alzheimer’s biomarkers – clues that might be found in the way cells change over time from pre-clinical to full-blown disease. “If we could pick up markers people have at 55 that would predispose them to Alzheimer’s disease at 75,” explains Sundsmo, “we might be able to intervene with new treatments before it’s too late.”

“With increasing longevity among the population, the incidence of (Alzheimer’s disease) is expected to rise rapidly, creating a great burden not only for patients and their families, but also for society,” says Min-Ying Su, associate professor at the Tu and Yuen Center for Functional Onco-Imaging at UC Irvine. “Our methods may enable earlier diagnosis of AD, allowing earlier intervention to slow down disease progression.”

16

CALIFORNIA DIGITAL LIBRARY Having the world’s largest research/academic library is impressive, but not suffi cient

in the digital age, when fi nding innovative ways to preserve, organize and disseminate the vast collection that constitutes the UC library system can have implications extending far beyond the confi nes of the 10 UC campuses. Th e California Digital Library (CDL), UC’s 11th university library, was established in 1997 to support the digital assembly and creative use of the university’s holdings – harnessing technology and leveraging UC resources to better serve the campuses and the state. And two major partnerships forged in 2005-06 are going a long way toward fulfi lling that mission.Th rough a collaboration with Google, several million volumes of books from the UC libraries’ collections will be scanned and made searchable online. Th e UC libraries are a recent partner in the Google Books Library Project, which was launched in December 2004 to digitize books drawn from the libraries of the University of Michigan, Harvard University, Stanford University, Oxford University, and the New York Public Library. Using Google Book Search, anyone will be able to freely view, browse and read UC’s public-domain books, including many of the treasures in the libraries’ historic and special collections. For books protected by copyright, users will be able to view basic background (such as the book’s title and the author’s name), a few lines of text related to their search, and information about where they can borrow or buy the book. Last fall, CDL joined the Open Content Alliance (OCA), a group of cultural, technology, nonprofi t and governmental organizations that is building a permanent archive of multilingual digitized text and multimedia content. Th rough the OCA, the UC libraries are working in partnership with Yahoo!, other universities, cultural and nonprofi t organizations, and private industry to scan select out-of-copyright works and make them freely available online. Th e Google project and the Open Content Alliance provide UC and other cultural and educational institutions an opportunity to work with commercial partners to design a world-class digital library and educational resource that will benefi t students and researchers, as well as the public. “Th e academic enterprise is fundamentally about discovery,” says John Oakley, chair of UC’s systemwide Academic Senate and a UC Davis law professor. “We contribute to it immeasurably by unlocking the wealth of information maintained within our libraries and exposing it to the latest that search technologies have to off er.”

C A L I F O R N I A ’ S F U T U R E UC research is crucial in this knowledge-based economy in which competitiveness depends on discovery, innovation and a highly educated work force.

Th e CDL provides access to hundreds of thousands of books, journals, images, reference databases and other works including 25,000 research journals. Th ey are used more than 30 million times annually by UC students and faculty.

17

STEM CELL RESEARCH UC is at the forefront of bringing entirely new medical

treatments to patients with cancer, spinal cord injuries, Parkinson’s disease and other crippling illnesses. Our campuses are conducting leading-edge stem cell research that shows much promise. When Candace Coffee speaks about her dream of returning to the life she once knew, stem cell research becomes personal. The 27-year-old former Miss Bakersfield and recent graduate of the UCLA School of Public Health was diagnosed with Devic’s disease in 2003. The rare and potentially fatal autoimmune condition left her temporarily paralyzed, permanently blind in one eye, and struggling with constant pain and nausea from her regimen of 10 daily pills. Coffee and others with similarly moving stories served as the public faces behind Proposition 71, the initiative passed by 59 percent of California voters in 2004, providing $3 billion in bond funding to create the California Institute for Regenerative Medicine. The new state agency was designed to regulate human embryonic stem cell research and provide funding through grants and loans for stem cell science at institutions across the state. Stem cells are the source of all we become – these unspecialized cells give rise to all of the body’s tissues: lungs, liver, brain, hair, heart. They are also the source of considerable excitement among scientists. Armed with ever more powerful tools, researchers are exploiting the power of stem cells to reveal vital information about human development. Their investigations could open new avenues for treating numerous conditions, from HIV, cancer and stroke to spinal cord injury and musculoskeletal disease. They could lead to a renewable source of replacement cells and tissue to treat metabolic disorders such as diabetes, or degenerative conditions as rare as Devic’s or as common as Parkinson’s, multiple sclerosis and heart disease.The passage of Prop. 71 enhanced UC’s position in the forefront of a research frontier whose promise is attracting substantial private support on top of the unprecedented public funding granted by California voters – a development that is luring some of the nation’s leading stem cell scientists to UC campuses. “I have never seen in my career a biological tool as powerful as the stem cells,” UC Irvine biologist Hans Keirstead told 60 Minutes. “It addresses every single human disease.” Keirstead, a member of the Sue and Bill Gross Stem Cell Research Center at UCI, has restored paralyzed rats’ ability to walk through the injection of human stem cells, and is now seeking FDA approval to test the therapy in humans.

At UC San Francisco, which produced two of the human embryonic stem cell

lines now being studied in laboratories around the world, the California Institute for Regeneration Medicine provides a framework for close collaboration among scientists studying everything from how brain cells develop to what causes reproductive failure. In March, UCLA established the Institute for Stem Cell Biology and Medicine, a campus-wide effort bringing together geneticists, engineers, ethicists, chemists, policy experts, pathologists, immunologists, oncologists, hematologists and scientists from other disciplines to unravel the mysteries of the growth and development of adult and embryonic stem cells.

18

Sustainability is good stewardship.

UC is “greening” its electricity. Certified renewable energy constitutes 16 percent of UC’s direct access portfolio.

Calisphere, an online service of the UC Libraries and powered by the California Digital Library, provides access to over 170,000 digital images and 50,000 pages of documents about California.

19

Efficient energy use is central to the University of California, the state and the nation.

UC faculty and students are engaged in all aspects of transportation—from technological advances in transportation to its social and environmental consequences.

20

NANOTECHNOLOGY Big things are happening in the study of the very small. Nanoscience – a new frontier for creating machines and materials by measuring, modifying and manipulating the very building blocks of our world: atoms and molecules – is expected to drive future progress in medicine, information technology, energy and manufacturing, among others. It is among the most potent tools employed at the four California Institutes for Science and Innovation(CISIs), where UC researchers, in an unprecedented partnership with hundreds of the state’s leading-edge businesses, are laying the foundation for the advances that will fuel the state’s future economic growth and ensure California’s position as a leader in the global marketplace.

At the UCLA- and UC Santa Barbara-based California

NanoSystems Institute (CNSI), research teams are making headway with advances that could generate billions of dollars for the state’s economy while dramatically improving quality of life. These include nano-scale biosensors for early cancer detection; nano-composite reverse osmosis membranes to address critical water sustainability needs; and the use of hydrogen and natural gas storage as alternatives for automobile fueling and carbon dioxide capture from power plants and cars.

Researchers at the Center for Information Technology Research in the Interest of Society (CITRIS) are using nano-electronics to develop the tiny wires and devices that will serve as the foundation of tomorrow’s microchips, sensors and solar cells. By developing semiconductor, metallic and insulating nano-particles for use in printable inks, researchers on the four CITRIS campuses – UC Berkeley, UC Davis, UC Merced and UC Santa Cruz – hope to create the next generation of electronic gas sensors that will find applications in such fields as environmental monitoring and homeland security.

The biomedical applications of nanoscience are being exploited on the UC Berkeley, UC San Francisco and UC Santa Cruz campuses of the California Institute for Quantitative Biomedical Research (QB3). One of many exciting ongoing efforts is at Berkeley, where a nanomedicine initiative will soon make it possible to monitor cell signaling activity in real time and modulate the behavior of these cells, opening up new avenues for treating neural disease and injury.

Meanwhile, nano-scale devices are being built at the newly christened Nano3 (nano-science, nano-engineering and nano-medicine) clean-room facilities on the UC San Diego campus of the California Institute for Telecommunications and Information Technology (Calit2). The new facilities will also be used by the new Center of Nanotechnology for Treatment, Understanding, and Monitoring of Cancer, a National Cancer Institute-funded initiative focusing on a smart, multifunctional, all-in-one platform capable of targeting tumors and delivering therapeutics.

At UC Irvine, Calit2’s other campus, researchers are

making headway in their efforts to integrate nanomaterial functional elements such as quantum dots, nanotubes and nanowires with other functional elements in a manufacturing environment – an advance that could revolutionize biological, chemical, medical and environmental sensing, along with information processing, transmission, storage and display.

C A L I F O R N I A ’ S F U T U R E UC will continue to forge new industries,new jobs and new wealth, creating and using knowledge that has yet to be imagined.

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DISCOVERY AND INNOVATIONWhen UC Santa Barbara engineering professor Shuji

Nakamura was awarded the world’s biggest technology award this year, it underscored the importance of real-world applications of university research. He received the Millennium Technology Prize (which came with a cash prize of one million Euros, or $1.3 million) for inventing a revolutionary new source of light – bright-blue, green and white LEDs and the blue laser diode.“Professor Nakamura has achieved the ‘holy grail’ of semiconductor research by developing blue, green and white light-emitting diodes and the blue laser diode,” says Pekka Tarjanne, chairman of the International Award Selection Committee of Finland’s Millennium Prize Foundation, the group that selects the prize-winner. “His technological innovations in the field of semiconductor materials and devices are groundbreaking.”The biennial Millennium prize, “for a technological innovation that significantly improves the quality of human life,” was first given in 2004, to the inventor of the World Wide Web, Tim Berners-Lee. Nakamura was cited for developing the blue light-emitting diode, or LED, which is widely used in traffic signals, mobile phones and illumination, as well as for packing information onto disks, such as DVDs. LED lights have long lives, consume far less energy than normal incandescent lamps and can be used to provide clean drinking water. “We have only just begun to realize the great potential of blue LEDs and laser diodes to improve the human quality of life,” Nakamura said at the award presentation in Helsinki in September.

This brand of innovation is important to the economy and quality of life of California. The University of California provides a research base that fuels innovation

in every field of scholarship. Through technology transfer, UC licenses patented technologies to firms that commercialize them, creating new products and services with the potential to give a competitive market edge and lead to company growth and job creation. UC also boosts competitiveness by educating a continuous stream of next-generation innovators.

For the past 12 years, the University of California has led the nation’s universities in developing new patents, according to an

annual survey by the U.S. Patent and Trademark Office. In fiscal year 2004-05, UC scientists reported over 1,300 new inventions. Collectively, the UC system’s invention portfolio is comprised of nearly 7,400active inventions. Total licensing revenues – income received from UC agreements with industry – totaled $109.6 million in FY 2004-05. A portion of the revenue is plowed back into teaching and research on our campuses.

Shuji Nakamura

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CLEAN WATER California’s future depends on safe, clean water. Th e state’s economy, quality of life and future growth

require steady and reliable sources of water. “Th e need for an adequate supply of aff ordable, accessible, clean water is a key priority,” notes Vijay K. Dhir, dean of UCLA’s Henry Samueli School of Engineering and Applied Science.

Continuing on breakthrough research more than 50 years ago, UCLA engineering professors in 2005 created the Water Technology Research Center – popularly known as the WaTeR Center – to address escalating water scarcity in the state, especially Southern California. Th e engineering school is the birthplace of the fi rst viable reverse-osmosis membrane in the 1960s.“We must innovate our way to clean, aff ordable water independence…,” says Yoram Cohen, a chemical engineering professor and desalination expert who is director of the WaTeR Center. “Our goal is to help make California a world leader in water desalination research and technology while training the next generation of desalination experts.”Cohen and his colleagues are working to develop technologies to turn brackish or seawater into fresh water. Th ey are also looking at methods to minimize environmental impacts associated with desalination, removing salt and pollutants from water, and to lower the cost of desalination by integrating it with innovative energy generation.Th e research is enlisting multidisciplinary project teams of researchers from UCLA, UC Davis, UC Riverside, the University of Southern California and Spain’s Universitat Rovira i Virgili. Th e WaTeR Center was launched with $1 million from Prop. 50, the California clean water act, and $1.6 million from private industry and other donors.Developing next-generation desalination technologies is critical because saline and brackish waters constitute more than 97 percent of the water in the world. Desalination embraces several technologies that are based on thermal or non-thermal membrane-based separation methods. Reverse osmosis desalting – the removal of salt and pollutants from water by using a membrane through which these particles cannot pass – is the most common. Th e problem is that these membranes are susceptible to fouling by bacteria, natural organic matter and scaling by mineral salts. So the life of the membrane is shortened and desalination plants are forced to operate at lower water recovery levels. Additionally, there are issues and costs in dealing with the waste left over from cleaning the water.Cohen says that the nation’s water infrastructure continues to degrade due to age and increasing salinity. With the California’s increasing population, the infrastructure and salinity challenges will escalate.“Water independence for California will require practical and economical production of new water sources in addition to water conservation and reclamation technologies that will reduce energy consumption,” says Cohen.

C A L I F O R N I A ’ S F U T U R E California’s vitality is closely linked to its natural resources. Water is key to California’s future. Breakthroughs and innovation are percolating in UC laboratories and research centers.

A partnership program with the investor-owned utilities and the California State University provided $16 million toward energy effi ciency projects at UC and California State University in 2004-05, and will provide another $38 million from 2006-2008. From energy retrofi ts and commissioning projects on UC campuses, the program is expected to save UC a projected $7.6 million in annual cost savings by 2008.

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SUSTAINABILITY On University of California campuses in the 1960s, the buzzword was ecology. Now, it’s sustainability. The

UC system has been at the forefront in promoting environmental sustainability policies among U.S. universities and colleges since adopting a “green” building design and clean energy standards policy in 2003. It has since been expanded to include sustainable transportation and climate change protection efforts. Sustainability not only promotes the intelligent and integrated use of resources across the UC system, but saves money by advancing operating efficiencies and other ways of reducing costs.Perhaps UC Merced is the most visible example of the impact of the University’s commitment to sustainability, which describes a process of conducting business in a resource-conservative and resource-efficient manner that can meet current needs while enhancing the environment and the ability of future generations to meet their own needs.Beginning when it was on the drawing board, UC Merced was envisioned as a completely “green” campus, a challenge because temperatures in the San Joaquin Valley fluctuate between 100 degrees during the summer and below-freezing in the winter. Buildings are constructed with recycled materials, energy-efficient windows and oriented on the site to minimize the heat gain and take advantage of the wind. UC Merced is the only campus in the country where 100 percent of the on-campus housing is in “green” dorms. The dorms boast high standards of environmental design features that include energy-efficient lighting, toilets with low-flow flushing mechanisms and shower heads that are also low-flow.The campus library, classroom and office buildings exceed California’s minimum energy efficiency requirements by more than 40 percent. Additionally, the central plant uses energy at off-peak hours to cool its chilled water and stores it in a thermal energy storage tank for distribution to the buildings, which reduces the amount of energy the buildings have to use during the day at peak hours.“We’re a role model, a living laboratory of sustainability, and we can teach and educate the community as well as the entire San Joaquin Valley about how to be sustainable,” says UC Merced’s Mark Maxwell.

At UC Santa Cruz, the food service is purchasing almost 20 percent of all its

produce from local, socially responsible organic farmers who use sustainable

farming techniques. They have connected this operational practice to academic

research and education, using the participating farms for faculty and student

research projects, and organizing a 100 percent local and organic food special event

once a quarter to educate the campus community about sustainable agricultural

issues. The Berkeley campus was selected as one of three recipients in the “best

overall” category of the 2005 Flex Your Power Awards for energy efficiency in the

state of California. The Los Angeles campus was also given honorable mention for

its demand response program and the San Diego campus given honorable mention

for “education and leadership” in energy efficiency.

The “green” campus: UC Merced

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FACTS IN BRIEF2006 2005 2004 2003 2002

STUDENTSUndergraduate fall enrollment 159,066 158,431 159,486 154,979 148,024Graduate fall enrollment 50,014 49,478 48,905 46,318 43,879Total fall enrollment 209,080 207,909 208,391 201,297 191,903University Extension enrollment 302,388 332,842 338,084 353,843 389,361FACULTY AND STAFF (full-time equivalents) 123,997 121,726 120,786 118,533 114,282

SUMMARY FINANCIAL INFORMATION (IN THOUSANDS OF DOLLARS, EXCEPT RETIREMENT PLAN PARTICIPATION)

UNIVERSITY OF CALIFORNIAPRIMARY REVENUE SOURCESStudent tuition and fees, net 1 $ 1,662,948 $ 1,557,828 $ 1,377,923 $ 1,096,609 $ 1,014,124Grants and contracts, net 4,144,576 3,976,549 3,826,641 3,531,343 3,209,669Medical centers, educational activities and auxiliary enterprises, net 6,221,648 5,742,695 5,274,553 5,010,040 4,520,033State educational, financing and capital appropriations 2,939,539 2,773,037 2,972,879 3,247,831 3,438,417Private gifts, net 624,052 536,995 544,853 485,242 358,315Capital gifts and grants, net 166,502 217,218 319,852 389,852 249,166Department of Energy laboratories 4,231,922 4,146,261 4,115,635 4,173,017 3,595,374

OPERATING EXPENSES BY FUNCTIONInstruction 3,212,552 3,046,225 2,873,614 2,752,994 2,604,866Research 3,035,949 2,916,534 2,791,777 2,623,300 2,418,040Public service 400,844 371,209 394,066 426,696 444,923Academic support 1,139,201 1,014,002 1,050,099 1,042,932 986,728Student services 470,283 436,050 415,218 406,380 392,502Institutional support 764,165 652,646 603,220 649,290 624,082Operation and maintenance of plant 451,882 415,096 393,765 367,181 385,273Student financial aid 2 363,635 369,424 358,048 358,711 317,888Medical centers 3,675,271 3,423,315 3,176,373 3,070,140 2,749,942Auxiliary enterprises 719,551 695,310 646,458 610,794 573,087Depreciation and amortization 997,023 954,878 899,811 837,520 754,042Department of Energy laboratories 4,197,685 4,112,077 4,082,089 4,139,681 3,563,157Other 88,662 72,644 61,315 45,011 25,299FINANCIAL POSITIONInvestments, at fair value 13,244,165 12,074,900 11,557,368 11,031,876 10,324,370Capital assets, at net book value 16,665,001 15,530,305 14,167,202 12,653,546 11,362,053Outstanding debt, including capital leases 8,876,248 7,945,285 6,912,989 6,354,193 5,492,118Net assets 20,400,023 18,977,617 17,794,394 16,447,893 15,251,124

UNIVERSITY OF CALIFORNIA CAMPUS FOUNDATIONSPRIMARY REVENUE SOURCESPrivate gifts, net 387,814 332,474 407,661 280,364 PRIMARY EXPENSESGrants to campuses 416,248 343,388 390,254 293,009 FINANCIAL POSITIONInvestments, at fair value 3,363,998 2,950,090 2,597,250 2,223,046 Pledges receivable, net 429,534 426,650 452,543 402,681 Net assets 3,674,869 3,249,942 2,930,352 2,507,231

UNIVERSITY OF CALIFORNIA RETIREMENT SYSTEMPLAN PARTICIPATIONPlan membership 193,329 188,790 184,783 179,636 173,343Retirees and beneficiaries currently receiving payments 45,442 41,477 39,738 37,867 36,165PRIMARY REVENUE SOURCESContributions $ 1,024,262 $ 923,788 $ 809,433 $ 698,904 $ 643,404Investment income, net 1,718,593 1,505,731 1,298,036 1,189,429 1,341,867Net appreciation (depreciation) in the fair value of investments 2,140,449 3,180,646 4,564,427 1,067,838 (5,382,805)PRIMARY EXPENSESBenefit payments 1,446,048 1,300,129 1,127,476 993,644 949,355Participant withdrawals 720,181 392,473 332,567 228,266 271,291FINANCIAL POSITIONInvestments, at fair value 53,866,319 51,372,279 47,003,436 42,324,557 41,006,288Members’ defined pension plan benefits 43,440,054 41,935,273 39,263,399 35,398,263 34,514,561Participants’ defined contribution plan benefits 12,472,520 11,295,257 10,076,614 8,757,931 7,937,243Actuarial value of assets 41,972,000 41,085,000 41,293,000 41,429,000 41,649,000Actuarial accrued liability 40,302,000 37,252,000 35,034,000 32,955,000 30,100,000

Certain revisions in classifications, or restatements, have been made to prior year information in order to conform to current year presentation. 1 Scholarship allowances, including both financial aid and fee waivers that are not paid directly to students, are recorded primarily as a reduction of student tuition and fees in the statement of revenues, expenses and changes in net assets.2 Includes only student aid paid directly to students. The state-administered California grant awards are not included as expenses since the government determines grantees. College work study expenses are shown in the

programs in which the student worked.