The University of Virginia will pass a milestone next year when it expects to draw more of its operating budget from private gifts than from state funds -- a scenario once unimaginable for a public college.

University officials said yesterday that public funds will provide almost $131 million next year, based on projections, compared with $134 million that will come from private gifts or interest income generated by the school's endowment. The officials described it as a "good news-bad news" situation, reflecting the booming success of U-Va.'s private fundraising and a sharp decline in state support.

Though no definitive national figures were available yesterday, some higher-education analysts said the elite university founded by Thomas Jefferson may be the nation's first public institution to pass such a threshold.

"There's a note of sad irony that it's the first out there to announce it's really a privately funded institution," said Travis Reindl, a policy analyst for the American Association of State Colleges and Universities, who said he expects other schools to follow U-Va.'s lead.

Over the past two decades, Virginia has been one of several states to gradually reduce its share of public higher-education funding, a trend that has become more pronounced during the recent recession. In 1985, the state provided 28 percent of U-Va.'s total budget. It fell to 13 percent in 2000 and 9.6 percent for the current academic year.

U-Va. and several other public institutions have turned to private fundraising to compensate for some of the reduction of tax dollars. In 2001, the university wrapped up a seven-year campaign, collecting more than $1.4 billion. The next year, it collected $255 million in gifts, up from $51.3 million in 1990.

Still, as a report from the State Council of Higher Education in Virginia noted last week, universities have also made up for the reduction of state funding by increasing tuition and mandatory fees. Since a five-year tuition freeze ended last year, U-Va. -- like most other institutions -- has increased tuition three times. Next year's price tag of $5,964 for in-state undergraduates will be about 40 percent more than what students paid for the 2001-02 school year.

Next year's state appropriations will account for roughly 8.1 percent of U-Va.'s $1.6 billion operating budget for all divisions, which includes the university hospital and a satellite campus in Wise. Private funds will account for 8.3 percent. The bulk of the university's revenue is derived from research grants, patient billing, and tuition and fees.

The news was disclosed at a briefing for members of U-Va.'s Board of Visitors. Reindl saw a larger significance to the announcement. "There's an implicit message to the General Assembly . . . that 'You don't hold the purse strings anymore,' " he said. "That's a message I think a number of large institutions are starting to frame for their legislators and governors -- that there has to be some relationship between the amount of control and the amount of funding."

Indeed, some faculty and students have floated the idea that U-Va. should sever ties with the state. The university's law and business schools, as of last fall, operate independently of state funding, allowing them to increase tuition significantly.

University spokeswoman Carol Wood dismissed the idea that privatization is a goal. "We'd never walk away from our commitment as a state university," she said.

Wood added that although state financial support has dwindled, the university has little interest in losing the remaining $131 million in appropriations. "Any university would be hard-pressed to do without that."

John Lippincott, a vice president of the Council for the Advancement and Support of Education, said that U-Va.'s funding situation is a testament to the strong donor support the university has built over the years. Still, he said, it would be unwise for state policymakers to expect private support to replace public subsidies for higher education.

He noted that most private gifts are earmarked for specific programs and purposes, such as scholarships, endowed chairs and construction projects, and "are not readily available to cover the operating costs of an institution."