Carnesale arrived at UCLA when the UC system was facing soaring costs and sharp budget cuts. He said the university must remain affordable for all Californians. While chancellor, he wrote and spoke about the "public-private gap in higher education," presenting funding models that could potentially enable public institutions to "remain true to the basic values on which they were founded: excellence and access for qualified students, regardless of ability to pay." Throughout his tenure, Carnesale concentrated on attracting research funding and private gifts to sustain UCLA's trajectory toward the top tier of research universities in the face of declining state support. From 1997-2005, UCLA'a annual operating budget grew from $2.2 billion to $3.5 billion, while the state's portion shrank from 20.7 percent to 15 percent.