The Council of Ontario Universities Committee on Operating Grants prepared in brief on the operating support of the system. The areas discussed include the background of funding, especially the funding level for 1977-78 and interprovincial comparisons of funding; the system requirements for 1978-79 making provision for inflation, existing service level costs, productivity, predicted enrollment costs, and excess capacity; and other funding considerations, particularly other sources of revenue and the recurrent question of supplementary grants. Specific funding recommendations are made to provide funds to meet expected inflation; maintain the present levels of quality and service; and to accommodate an undergraduate enrollment increase of two percent. (JMF)