(FORTUNE Magazine) – Funding cutbacks at state universities are forcing deans of public business schools to become just as enterprising as their private peers. They are raising endowments, boosting tuition, and hiking fees for executive education. Course quality is improving apace. Result: It's getting harder to tell Haas (the public UC-Berkeley's school of business) from Harvard.

Haas has just opened a new $55 million campus, paid for entirely with private funds. Says dean William Hasler: "In a project this size, public money almost always gets spent. We spent none. "

UCLA's Anderson School of Management will dedicate $75 million worth of new I.M. Pei-designed facilities this month. Anderson raised nearly half of that from private donors.

At many public graduate schools of business, students now pay "differential tuition," graduate tuition plus a premium --$2,000 last year for UC students. Says Hasler: "The theory is, These people can afford to pay more; they're going on to much more lucrative careers than they would in journalism or forestry."

The University of Michigan Business School gets zero state funding. It thrives through aggressive fundraising, by charging $4,000 a week for executive programs, and levying tuition just shy of Harvard's--$20,800 for out-of-staters. Applications are up. Says dean Joseph White: "Obviously, the product has to be comparable."

- ALAN FARNHAM