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Ahead of the Curve
MESSAGE FROM THE CHAIRMAN AND THE PRESIDENT
18 Outreach
22 Staff
24 Pardee RAND Graduate School
26 Donors
34 Advisory Boards
43 Clients and Grantors
46 Financial Report
What It Takes to Stay
Ahead of the Curve
MESSAGE FROM THE CHAIRMAN AND THE PRESIDENT
conditions cannot be reliably identified or agreed upon,
our recent work on issues of climate change and terrorism
risk suggests we can build upon RAND’s more traditional
methodologies to give policymakers options even in
uncertain times.
To celebrate the 60th anniversary of the RAND
Corporation, we train the spotlight on several ways in
which RAND has worked to explore ideas and challenges
that place us “ahead of the curve.” At the same time, we
look ahead to how RAND will continue in that tradition.
The world does not proceed directly from Point A to
Point B to Point C—which makes research on social,
national, or global progress more challenging and
interesting for RAND. For us, staying ahead of the curve
means deepening and broadening our knowledge of
progressively more complex problems around the world
so that we can help leaders of all kinds rise to their own
unforeseen and shifting challenges.
In the pages that follow, we highlight several of our
research activities of 2007 and take a glimpse of RAND’s
earlier work shaping the debate in these same fields.
RAND is at the center of a proud analytical tradition
of recommending policy options based on the most
probable future conditions. Over the past year, we have
begun using new tools to offer options even in the face
of indeterminate future conditions. Although future
RAND researchers spent 2007 helping global health
officials confront the threat of a human influenza
pandemic in the Mekong Basin. Building upon work for
local and state agencies within the United States, RAND
researchers created exercises to stimulate cooperation
among six nations in the Mekong region who together
face a heightened risk of pandemic—an important step
toward exposing and addressing the weaknesses of
existing global surveillance and response systems.
And in the United States—where we have created the
most professional military services in the history of the
world and RAND researchers have contributed expertise
on manpower issues for decades—RAND’s latest work
takes on whether and how we should be reorganizing
those services for a world where instability anywhere has
become a potential global security threat.
As we reflect upon the latest in our 60 years as a
nonprofit organization helping to improve policy and
decisionmaking, we also rededicate ourselves to staying
ahead of the curve. We intend to do that by sticking with
what’s worked so well over the past six decades. Asking
the important questions. Looking to data and evidence
for answers. Rejecting partisan ideologies. Developing
innovative methodologies and tools. Applying the lessons
of the past. Strengthening our grasp of the present. And
facing the new challenges of the future.
To do this, we rely upon the trust and support
of those who value what RAND offers to
policymakers and decisionmakers. We thank you
for helping us stay “Ahead of the Curve.”
Ann McLaughlin Korologos
Chairman, RAND Board of Trustees
James A. Thomson
President and Chief Executive Officer
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Focusing on Quality
in Children’s Health Care
In recent years, the policy debate over children’s health
care has focused on expanding access to insurance coverage, either through government-sponsored programs or
other mechanisms. After undertaking previous research
that showed U.S. adults receive recommended medical
care only about half of the time, a group of RAND Health
researchers led by RAND Health Associate Director Elizabeth McGlynn set out to determine whether the quality of
pediatric care in the United States was as good as it should
be. No large-scale study evaluating the quality of medical
services delivered to children had ever been conducted in
the United States.
AHEAD OF THE CURVE
Defining Health Quality
The RAND Health Insurance Experiment (HIE),
conducted in the 1970s, remains the largest
health policy study in U.S. history and the only
experimental study of how various cost-sharing
arrangements affected people’s use of health
services, the quality of care they received, and
their health status. More than any other study,
the HIE shaped the evolution of health services
research in the United States and influenced
policies for health care financing. In conducting
the HIE, RAND developed basic measures of
health care quality that are used around the
world to determine whether adequate medical
care is actually being delivered.
To address this information gap, RAND researchers
collaborated with pediatricians from the Seattle
Children’s Hospital Research Institute and researchers
at the University of Washington School of Medicine to
conduct a comprehensive examination of the quality of
pediatric care, based on medical records of more than
1,500 children randomly selected from 12 metropolitan
areas. The results, released in 2007, shocked the medical
community. Finding that U.S. children fare even worse
than adults when it comes to getting quality care, the
study revealed that, on average, children receive care
consistent with recommended guidelines only 46 percent
of the time. The study also found that quality varied
widely according to type of care. Children received 68
percent of recommended care for acute medical problems,
but only 53 percent of recommended care for chronic
medical conditions, and 41 percent of recommended
preventive care. This means children are not receiving
recommended preventive care and screening services, such
as regular weight and measurement checks to ensure that
they are growing properly and are not at risk for obesity;
nor are they receiving standard care for prevalent, serious
conditions, such as asthma and diarrhea. Moreover, most
of the children studied had insurance—suggesting that the
results may be even worse if data included the legions of
uninsured and underinsured American children.
RAND’s earlier study illustrating the poor state of adult care
provided a wake-up call to improve health care quality for
individuals over age 18. Study author McGlynn says this
latest study is similarly refocusing attention on the quality of services delivered to children: “Up until now, most
people in the medical community assumed that quality
medical treatment was not a problem for children. Our
study tells us that’s not true. We need to get health care
right for children—and we need to do it now.” Poor quality
care is also likely to impose even greater financial burden
on an already overburdened system. Chronic conditions
such as diabetes and hypertension are on the rise in children, in part due to an increase in obesity levels. Failure to
effectively intervene in childhood results in poorer adult
health and increased medical spending to address the wideranging health problems caused by unmanaged conditions.
But why does such a gap exist between the care medical
care professionals know is needed for children and that
which is actually provided to young patients? Researchers
posit that systemic barriers such as insurance compensation
systems, which effectively limit the amount of time doctors spend with child patients, likely play a role, but more
research is needed to clarify specific causes and craft effective solutions. In the meantime, study authors note that
a critical first step to closing the quality gap is addressing
the information gap. With the problem now illuminated,
researchers recommend that next steps include a greater
investment in health information technology systems, as
well as increased attention to documenting and measuring
quality of care for children.
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A New Division of Labor for
Meeting New Security Challenges
For six decades, RAND has helped the Department of Defense (DoD) better understand and respond to a wide range
of threats and adversaries. Since the commencement of
Operation Iraqi Freedom in 2003, much RAND analysis has
focused on helping DoD meet the current demands of war.
Still another set of projects has drawn on RAND’s unique
analytical strength in taking the long view and looks
beyond Iraq to ensure that the United States is prepared
to handle a range of additional, emerging security threats
posed by terrorist groups, nuclear-armed adversaries, and
enemy forces equipped to conduct sophisticated anti-access
operations.
In 2007, a team of RAND researchers led by Andrew R.
Hoehn, a RAND vice president and director of RAND Project
AIR FORCE, proposed that the divergent nature of new security challenges faced by the United States will require all
four military services to rethink the way they are manned,
equipped, and deployed. Hoehn, a former Deputy Assistant
Secretary of Defense for Strategy who has participated in all
major reviews of defense policy and strategy since the end
of the Cold War, says, “Today’s global security landscape
presents a new paradigm. U.S. forces are being called upon
to perform new missions far outside their normal repertoire,
from confronting terrorism spawned by radical Islam to the
possibility of fighting new nuclear powers.”
The RAND report contends that U.S. strategy for sizing
military forces must (a) account for long-term, day-to-day
demands of countering terrorism and insurgency and (b)
preserve the ability to project sizeable military forces to
more than one geographic region at a time. Both requirements are necessary to support long-term U.S. national security goals, but distinctly different patterns of cooperation
among the military services must be developed. The report
goes on to note that U.S. military forces will need to remain
engaged in remote areas of the world, particularly along the
periphery of Asia. “The era is gone when strategists could
divide the planet into regions where the nation has important interests at stake . . . and where it does not,” the report
notes. “In terms of classic geopolitics, Afghanistan and Sudan were beyond the strategic purview of the United States,
yet they were the breeding grounds of al Qaeda.”
The report recommends recasting U.S. defense strategy to
bring America’s defense capabilities into better alignment
with the nation’s broader goals. This includes significantly
increasing the emphasis on helping to create or enhance
stability in key areas abroad. To do this, DoD should
consider focusing a much larger proportion of U.S. ground
forces on direct and indirect stability operations and accept
the risk of shifting some of the burden for deterring and
defeating large-scale aggression to air and naval forces.
This decision would permit the Army and Marine Corps,
in conjunction with Special Operations Forces, to improve
AHEAD OF THE CURVE
Military Manpower
In the 1960s, RAND
recommended that the U.S. Department of Defense end the
draft and move to an all-volunteer force (AVF) in order to improve
morale, retention, and fighting strength. The proposal was
contentious and raised concerns about relying on volunteers to
maintain a professional military at required quality levels. However,
consistent with RAND’s initial analysis, the quality of the force has
dramatically improved in the three decades since establishment of
the AVF: IQ scores are higher, the percentage of new recruits with
high school diplomas has increased, and there are more career
personnel, bringing increased proficiency and professionalism to
the force. Moreover, the AVF is more broadly representative of the
American public, minimizing concerns of prior generations that
conscription was implemented unfairly and the burden of military
service fell disproportionately on underprivileged groups.
their stability-operations capabilities by relieving them
of the requirement to provide forces for more than one
major “conventional” war. The Navy and Air Force would
retain their primary focus on large-scale power-projection
operations and would continue to provide essential
enabling capabilities for direct and indirect stability
operations.
Finally, the report cautions that while striving to fix what
is broken, DoD should be careful not to break what is fixed.
Continued, selective investment in areas in which the
United States currently excels will be needed alongside the
new initiatives required to address the nation’s emerging
security problems.
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Smart Rebuilding for a New,
Better Gulf Coast
In the two years since Hurricane Katrina devastated the
Gulf States region of the United States, recovery efforts
have proceeded along multiple dimensions: restoring
infrastructure, reviving economies, treating emotional
trauma. The RAND Gulf States Policy Institute has been
a valuable partner in the recovery process, conducting careful analyses of these issues and many others to
provide regional decisionmakers with evidence-based
strategies for rebuilding communities in ways that will
satisfy current and future needs.
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Affordable Housing
RAND’s Housing Assistance
Supply Experiment, conducted in the early 1970s and one of the
largest single social experiments ever undertaken, contributed
to changes in the U.S. housing code that made cash subsidies
available to low-income groups. It showed that cash housing
allowances benefit the most needy families more and cost less
than constructing housing projects. It also debunked concerns
that cash allowances would inflate housing costs and showed
instead that allowances improve housing quality for recipients
while also putting pressure on the overall market to raise quality
more generally.
A central challenge at the core of broader recovery plans
has been restoration of the region’s badly damaged housing stock. Businesses can return, and school and government institutions can reopen, but the impact will be
minimal unless workers, customers, and students have a
safe and affordable place to live. A 2007 report by Kevin
McCarthy and Mark Hanson examined the status of
residential rebuilding efforts in Mississippi’s three coastal
counties of Hancock, Harrison, and Jackson. These
areas were the hardest hit by Katrina, with 60 percent of
residences damaged or destroyed. The report provides a
comprehensive quantitative assessment of the extent and
nature of the damage as well as the progress made toward
recovery, and makes recommendations to refocus strategies on specific policy levers likely to have the broadest
beneficial effects.
“What we found,” notes McCarthy, “is that while a fair
amount of residential rebuilding is occurring across the
region, construction of affordable housing is seriously lagging.” The study contends that failure to replenish affordable housing has likely slowed the overall pace of regional
economic recovery, as it makes it difficult to attract the
construction laborers and other workers needed to make
infrastructure improvements. While findings indicate that
replacement of all housing types is expected to take at
least three more years at a cost of more than $4 billion, the
study notes the near-term imperative of implementing a
balanced growth plan that provides housing for people at
every income level.
Access to financing appears to be the single biggest
obstacle to the residential rebuilding effort. Despite the
availability of numerous financial resources—including
insurance proceeds, Mississippi Homeowner Assistance
Grants, and government loans—gaps in financing remain.
These gaps are experienced most prominently by landlords
of multifamily rental properties as well as uninsured and
underinsured households that suffered major damage.
Filling these gaps, the study reveals, would do more to
expedite recovery than any other policy action.
The report has been well-received and is focusing needed
attention on developing policies to ensure that housing is
rebuilt both quickly and equitably. But the study’s authors
also caution that additional steps are needed to mitigate
against damage from future storms. “Rebuilding efforts
following the damage caused by Hurricane Camille in 1969
put speed over mitigation measures,” McCarthy notes.
“The legacy of that decision can be seen in much of the
widespread destruction wrought by Katrina.” Acknowledging that Hurricane Katrina is not the first hurricane to
devastate the region, nor is it likely to be the last, the report
recommends that reconstruction policies be balanced with
stricter zoning regulations and other “smart growth” principles to protect against damage from future storms. Some
progress has been made in this regard, and the study points
to the Mississippi Homeowners Grant Program, which
requires grant recipients to comply with new and stricter
building codes, including elevation requirements, and
the purchase of floodplain insurance. But such mitigation
measures tend to increase the cost of rebuilding, which
increases political pressure to dispense with such measures
in favor of more rapid and inexpensive construction.
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Confronting an Uncertain Future
Tackling exceptionally complex problems requires new
ways of thinking. Since the 1950s, RAND has led the way
in developing many now-famous analytical methods such
as dynamic programming, assumption-based planning,
and multiple applications of game theory, now used by
public and private decisionmakers worldwide.
In 2007, RAND researchers used a new analytical method
called robust decisionmaking (RDM) to help decisionmakers address a range of complex and uncertain issues, from
climate change to terrorism, and craft current policies
that are likely to hold up against a wide range of plausible
futures. RDM works by using computer simulations to create thousands of possible future scenarios for a given issue,
and then using search algorithms, interactive visualization,
and statistical analyses to identify current policy options
that will be the most “robust” in addressing a problem over
the long term—that is, those options that achieve their
objectives regardless of whether future conditions turn out
as expected.
For issues involving deep uncertainty, the approach
represents a significant advance over traditional decision
analytics typically relied on by policy analysts. Notes
RAND researcher Rob Lempert, who has been involved in
numerous applications of RDM in recent years, “Traditional
decision analytics involve developing policy options based
on the most probable future conditions. But when decisions
involve deep uncertainty, the most likely future scenario
can’t be reliably identified or agreed upon. In such cases,
traditional approaches can cause decisionmakers to severely
underestimate problems or face surprises down the road.”
RDM, on the other hand, embraces uncertainty and allows
policymakers to make better decisions by answering a
fundamentally different question: “What actions today can
best usher in desirable outcomes regardless of what future
we face?”
In 2007, RAND researchers used RDM to help water
resource managers in Southern California tailor their
long-range investment plans to better address the potential
impacts of climate change. These decisionmakers have to
confront the possibility that in coming decades Southern
California may face more and more lengthy droughts. But
even the best scientific projections about the impacts of
climate change and the probability, length, and frequency
of droughts contain many uncertainties. RAND’s application of RDM to demonstrate the impact of various management strategies taken today across large numbers of
potential computer-generated future scenarios is helping
these managers make better decisions to ensure a reliable
and high-quality water supply for the future.
RDM was also used to help federal lawmakers evaluate the
implications of renewing and/or revising the Terrorism Risk
Insurance Act (TRIA), the law passed after 9/11 to provide
a temporary federal backstop for property and casualty
claims resulting from the massive damages incurred in the
attacks. The challenge Congress faced was how to effectively and fairly allocate financial risk for terrorist events
which, by their nature, are fraught with deep uncertainties.
For example, there are uncertainties about the frequency
and types of terrorist attack—conventional, nuclear, biological, chemical, or radiological—and there are uncertainties about the rate at which businesses would “take up”
insurance coverage for policy losses under different government interventions in the terrorism market. There is also
uncertainty about whether and how much the government
will compensate businesses without insurance after any
terrorist attack. Using an RDM approach, RAND researchers
were able to show how different legislative strategies would
perform under thousands of possible futures. The results
showed benefits to leaving TRIA intact, but suggested additional consideration be given to planning for unconventional terrorist attacks.
AHEAD OF THE CURVE
Better Decisionmaking
In the 1950s
and ’60s, RAND developed the Delphi method, a systematic
interactive method for eliciting the intuitive judgments of
experts and for building a group consensus. The technique has
proven useful in extrapolating informed opinion in the absence
of exact knowledge. Its aim initially was to assess the direction
of long-range trends, with special emphasis on science
and technology, and their probable effects
on society.
“RDM can help prevent policymakers from preparing
for a ‘best guess’ scenario that ends up being a bad
guess,” concludes Lempert. “When the future is most
ill-defined and unpredictable, an RDM approach
can help policymakers take actions today that can
positively shape our long-term future.”
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Strengthening Surveillance
and Response
The threat of a human influenza pandemic is a top concern
for global health officials. During the last five years, more
than 300 human cases of an avian flu virus known as H5N1
have been confirmed in 14 countries. Should the virus mutate
to permit easy human-to-human transmission, the implications would be grave: In the United States alone, it is estimated that as much as 30 percent of the population could become infected, at a cost between $71 billion and $167 billion.
AHEAD OF THE CURVE
Public Health Preparedness
For more than
a decade, RAND has provided technical assistance to the U.S.
Department of Health and Human Services to improve the readiness
of local and state health departments to respond to public health
emergencies, developing proficiency benchmarks, performance
measurement tools, and preparedness exercises that have helped
shape Centers for Disease Control and Prevention guidance for
enhancing state preparedness plans. In July 2005, RAND conducted
a series of public health exercises for the state of Georgia to
help officials from a range of agencies refine and strengthen
collaborative processes for responding to a public health
emergency. Weeks later, Hurricanes Katrina and Rita hit the Gulf
States region of the United States, causing thousands of fleeing
victims to seek safety within Georgia’s borders. Georgia
health officials cited the RAND-led exercises as a significant
contributor to successful management and care of 70,000
evacuees who fled to Georgia for safety.
In response to this threat, a substantial body of RAND
research has focused on strategies for strengthening public
health response systems both at home and abroad to prepare
for a possible human influenza pandemic. In 2007, RAND
researchers published a practical framework for improving the
United States’ global influenza surveillance system, a key first
line of defense against a pandemic, and conducted simulation exercises for a consortium of six Asian nations uniquely
vulnerable to an outbreak and another consortium of three
Middle Eastern countries (Israel, Jordan, and Palestine) to test
the effectiveness of their existing detection, monitoring, and
containment plans.
Effective pandemic preparedness requires a comprehensive
and reliable early detection system. The U.S. Department
of Health and Human Services (HHS) plays an important
role in human influenza surveillance both domestically and
worldwide. To strengthen HHS surveillance policy and better manage resource allocation, a multidisciplinary RAND
team conducted a yearlong investigation into best methods
for detecting early cases of influenza illness that have the
propensity to become pandemic. The study examined disease
surveillance in a much broader and more systematic way than
has been done before, with particular emphasis on identifying new strategies for surveillance that are unconstrained by
traditional public health approaches. The findings set forth 16
specific strategies for improving surveillance that range from
using new sources of disease information (e.g., the community, the electronic media, and nongovernmental organizations) to seeking new surveillance signals (e.g., disease events
among persons who do not or cannot seek clinical services).
The study also recommends the formation of strategic partnerships—with other U.S. government agencies, international
organizations, foreign laboratory networks, foreign development agencies, and a range of nongovernmental organizations—as a key approach to improving global surveillance.
Through strategic partnerships, HHS can extend its reach,
potentially at little or no additional cost, and thus optimally
direct its own resources while leveraging partners to help produce even greater improvements in surveillance globally. The
RAND team combined these findings into a unique interactive
tool to be used by surveillance agencies in evaluating which
combination of strategies will help to improve the chances
that a case of disease is accurately detected and confirmed by
a reference laboratory, and to reduce the time it takes to do so.
Benefits of the interactive tool include more effective policymaking and also more efficient resource allocation.
In 2007, RAND researchers also contributed to non-U.S. pandemic preparedness efforts by conducting a series of simulation exercises for members of the Mekong Basin Disease Surveillance Network (MBDS)—the Kingdom of Cambodia, the
People’s Republic of China, Lao People’s Democratic Republic,
the Union of Myanmar, the Socialist Republic of Vietnam,
and the Kingdom of Thailand. With large numbers of people
and animals crossing shared borders each day, these countries
face heightened risks of an outbreak. The RAND-developed
tabletop exercise, the first of its kind, tested MBDS systems
for responding to a plausible pandemic threat. The exercise
helped to expose gaps and weaknesses in existing surveillance
and response systems and helped foster collaboration among
health officials in each nation.
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The Impact and Promise of
No Child Left Behind
Under the No Child Left Behind Act of 2001 (NCLB),
schools are held accountable for ensuring that all students
reach proficiency on state assessments by 2013–14. In
2007, RAND released a series of studies evaluating various
aspects of NCLB including implementation of its many
requirements, effects on student achievement and teacher
quality, and the impact of options afforded parents of
children attending low-performing schools. The results
give NCLB mixed reviews and are helping educators and
federal policymakers better understand NCLB’s impact and
limitations and chart a course for revision and improvement of the law.
In one study, researchers looked at schools’ progress in
implementing NCLB’s accountability provisions. They
found that most states, districts, and schools had met accountability requirements and 75 percent of schools were
making adequate yearly progress toward proficiency in
math and reading. However, because NCLB allows states
to define “proficiency” differently, a student deemed to be
proficient in one state might be considered not proficient
in another. The same is true for schools and districts.
Without national proficiency standards, children in states
that have lower standards are at risk of being left behind,
even as NCLB’s provisions are being implemented and adhered to. Moreover, many schools report needing greater
assistance in fulfilling NCLB’s requirements when it comes
to serving students with special needs, such as those with
disabilities and limited English proficiency.
Researchers also aimed to identify factors that enhance
the implementation of its standards-based accountability
systems, encourage positive changes in teaching practices,
and improve student achievement. Researchers learned
that educators found implementation of the law difficult:
Superintendents cited inadequate funding; principals
cited insufficient staff time to meet administrative
responsibilities; teachers reported insufficient time
for instruction and planning. And large majorities of
teachers reported being hindered by the wide range of
student abilities in their classes, students’ lack of basic
skills, inadequate parental support, and absenteeism and
tardiness. NCLB implicitly challenges teachers to promote
high achievement despite these conditions, but most
teachers considered the expectation unrealistic. Teachers
also cite as unfair the fact that “adequate yearly progress”
in test scores is defined in terms of grade-level proficiency
rates rather than individual-level progress over time,
thus failing to give credit for learning gains promoted
by teachers at all points along the scoring spectrum. To
address such concerns, researchers recommend improving
alignment among standards, tests, and curriculum;
providing educators with professional development
assistance; and exploring more accurate ways to measure
performance. They also recommend the federal government
explore different types of metrics that take improvement
into account across the distribution of achievement.
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Gauging Educational Reform
RAND Education
innovated the practice of rigorous, independent evaluations
of school reform programs. In one early study in the 1970s,
RAND examined nearly 300 reform efforts in 18 states and
found that most reform programs had no lasting effect. Lasting
change depended not so much on a program’s content but on its
implementation, particularly on the active commitment of district
leaders, including the superintendent and school principals.
The Change Agent study, as it came to be called, is credited
with introducing the “implementation perspective” into the
public policy debate on education.
RAND also evaluated whether NCLB’s two options for
parents whose children attend schools making inadequate
progress work to improve achievement. Option 1 is the
opportunity to transfer a child to a higher-performing
school. Option 2 is the opportunity for low-income
parents to enroll the child in supplemental educational
services, such as tutoring, remediation, or other academic
instruction. Researchers found that Option 2 did have a
significant positive effect on reading and math achievement scores in the district studied, and they recommend
ways to support this option and make it more available to
students. They did not find an achievement effect associated with Option 1, but the number of participants
in most districts was quite small, making it difficult to
conclusively assess its effects.
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Counterinsurgency for a New Era
For five decades, RAND analysts have studied insurgencies
and counterinsurgency (COIN) operations to create
a detailed body of expert knowledge on the patterns
and techniques of counterinsurgency, the effective
organizational and operational approaches for successful
campaigns, and the unique political and psychological
tactics involved in COIN operations. As insurgent threats
evolve and assume new forms, the United States must
also evolve in its ability to counter potentially prolonged
threats in several parts of the world. New RAND analyses
on COIN published in 2007 are helping policymakers at
the highest level of government better understand and
craft responses to the insurgencies currently faced by the
United States in Iraq and Afghanistan, as well as those it
is likely to face in the future.
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Countering Insurgencies
In 1962, RAND
convened the Symposium on Counterinsurgency in Washington, D.C.,
to bring together those with firsthand experience of guerrilla and
counterguerrilla warfare to build a comprehensive body of expert
knowledge. The subjects discussed included patterns and techniques
of counterinsurgency, effective organizational and operational
approaches, political action, psychological warfare, intelligence and
counterintelligence, and requirements for victory. One year later,
RAND consultant David Galula published his groundbreaking treatise,
Pacification in Algeria, which reconstructs the French response to
Algeria’s nationalist uprising. Galula’s theories on counterinsurgency
and pacification, and his observations on the political, psychological,
and military aspects of the Algerian war, challenged conventional
COIN theories of the day and present approaches for predicting,
managing, and resolving insurgent conflict that bear especial
relevance for present-day COIN operations.
In one report, researchers examine six historical COIN
campaigns from the 19th and 20th centuries and draw
lessons learned to help current and future leaders avoid
repeating prior mistakes and to build a foundation
for developing contemporary COIN strategy. The
historical operations studied were selected for their
varied characteristics relating to geography, historical
era, outcome, type of insurgency, and the level of U.S.
or foreign involvement, and include the Philippines
(1899–1902), Algeria (1954–1962), Vietnam (1959–1972),
El Salvador (1980–1992), Jammu and Kashmir (1947–
present), and Colombia (1963–present). Within each case
study, researchers focused on specific issues such as the
counterinsurgents’ ability to innovate and adapt, the
need to develop an approach for recognizing threats, and
the tactics employed for confronting the insurgencies.
From this, they identify which tactics, techniques, and
procedures led to success and which to failure.
In another comparative analysis, RAND takes a closer
look at the recently successful stability operations led
by Australia in the Solomon Islands. When crime,
corruption, and escalating militia violence in the small
island nation threatened to topple government control,
Australia organized the Regional Assistance Mission
to Solomon Islands (RAMSI) to provide support in
reestablishing order and to help rebuild the violencetorn civil society. With only several weeks to prepare,
RAMSI personnel arrived to the Solomon Islands armed
for conflict but equally ready to restore peace without
using force. The RAND study reviews the successes,
and the shortcomings, of RAMSI operations through
the lens of broader application to current and future
counterinsurgency efforts. It highlights as the primary
hallmarks of RAMSI’s success the effective orchestrating
of intragency capabilities, the ability to capitalize on
multinational resources, and gaining the moral and
operational high ground in the conflict.
A third study looks at current U.S. COIN strategy,
which relies heavily on the employment of American
military force to deal with radical Islamic insurgents,
and recommends an alternative approach that places
cognitive abilities and indigenous capabilities at the
center of U.S. efforts. The author argues that traditional
COIN tactics used by the United States and its allies
today are, and will continue to be, ineffective against
modern insurgencies that are increasingly decentralized,
geographically dispersed, and located within an urban
landscape that includes innocent civilians as well as
militants. Gaining the upper hand against globalized
insurgencies calls for greater investment in brain power,
decisionmaking, and better utilization of the tools of the
information age. With a two-part plan that focuses on
developing institutional conditions conducive to smarter
COIN and implementing measures designed to develop
key cognitive abilities in soldiers, police, diplomats,
aid providers, and others engaged in COIN, the author
proposes a future where COIN and stability operations
succeed with brains, not just brawn.
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OUTREACH
Improving the Quality of the Policy Debate
RAND’s commitment to making a difference means that the scholarly objectives of expanding
knowledge, illuminating issues, and developing new ideas are important means rather than ends.
Communicating our research findings to decisionmakers who can use them is an essential part
of RAND’s mission. In 2007, our dissemination activities were impressively broad, yet effectively
targeted to influential decisionmakers capable of using our findings to inform their decisions
and influence positive change.
Advising Senior Executive Branch Officials. RAND
researchers conducted numerous briefings for top military
and civilian leadership on issues of geopolitics and global
security; intelligence policy; military force structure;
logistics and infrastructure; personnel, training, and
health; and acquisitions and technology. In addition,
RAND researchers
•
briefed White House leadership on findings from a study
on counterinsurgency efforts in Afghanistan;
•
helped senior staff from the State Department, the Joint
Chiefs of Staff, and other offices and agencies assess the
strategic and operational challenges posed by Iran and
evaluate options for meeting those challenges;
•
briefed senior officials in the Department of Homeland
Security on issues including passenger rail security;
•
briefed Department of Veterans Affairs officials on issues
related to post-traumatic stress disorder;
•
made presentations to the Secretary of Education, other
U.S. Department of Education officials, and numerous state
education officials on the impacts of No Child Left Behind.
1946
The First Satellite Design > More than
11 years before Sputnik, RAND released its
first report while still at Douglas Aircraft,
Preliminary Design of an Experimental WorldCircling Spaceship. At the time, it was the most
comprehensive engineering study of the nutsand-bolts realities of a satellite spacecraft.
Informing Congress. RAND delivers research findings
and lends analytical expertise to Congress to help
legislators make better-informed decisions about the
nation’s many challenges.
•
RAND researchers testified before Congress on
28 occasions, contributing objective analysis
to debates on issues such as the federal role
in supporting alternative energy investment,
renewal of the Terrorism Risk Insurance Act,
and understanding terrorist ideology.
•
RAND convened dozens of bipartisan briefings to
discuss findings on issues at the top of the legislative
agenda, including challenges facing the global
supply chain, the impact of the State Children’s
Health Insurance Program on children’s quality
of life, and challenges for U.S.–China relations.
•
Electronic newsletters customized for a congressional audience are delivered monthly to present
research findings relevant to timely policy
debates on Capitol Hill.
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Supporting State and Local Decisionmaking. RAND
research was also presented to a significant number of
senior officials at state and local levels.
•
•
•
•
Research from the RAND Gulf States Policy
Institute on Hurricane Katrina’s impact on school
attendance and test scores was briefed to Louisiana
state officials, as were findings from a separate
analysis of Louisiana’s hurricane protection and
coastal restoration planning. Findings that exposed
the lagging pace at which affordable housing
is being rebuilt in the most damaged coastal
counties in Mississippi were also briefed widely
among regional public and private stakeholders in
Mississippi.
In California, researchers briefed lawmakers and
other senior state officials on a range of top issues,
including improving the seismic safety of hospitals
and the adequacy and efficiency of preschool
education.
In Pennsylvania, researchers provided senior state
and county officials with the first data available
about the fiscal impact and cost savings of an
innovative mental health courts program. Findings
about the impact on academic performance of afterschool tutoring programs in Pittsburgh’s public
school system reached the district superintendent,
local foundations, and supplemental services
providers.
Findings from several 2007 RAND Health studies
were requested by a number of state legislatures
and state and local public health agencies to help
inform policy debate about enhancing vaccination
coverage among adults and promoting evidencebased falls prevention strategies.
Briefing International Decisionmakers. In addition
to the outreach conducted by RAND Europe and the
RAND-Qatar Policy Institute to brief their respective
policy communities on issues of regional importance,
RAND staff regularly engage with senior policymakers
outside the United States to lend insights on matters
of international interest.
1948
The JOHNNIAC > When the need for
solutions to complex analytic studies
outstripped the computing power of
the time, RAND decided to build its own
computer. Named after mathematician
John von Neumann, the JOHNNIAC was
one of the first mainframe computers with
stored memory.
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•
RAND’s acclaimed research on strategies to help
a Palestinian state succeed once a final status
accord is reached was briefed to former U.K.
Prime Minister Tony Blair, now Special Envoy for
the Quartet on the Middle East.
•
Findings from The Beginner’s Guide to NationBuilding were briefed to the World Bank and the
entire staff of the United Nations’ Department of
Peacekeeping Operations, and NATO distributed
copies of the report to 50 top staff members on
the ground in Afghanistan.
•
RAND Europe’s research on detecting fraud and
error in the U.K. social security system formed
the basis of a World Bank distance-learning
module that is being used to train Bank clients
and staff worldwide on social security fraud
issues.
Reaching Private-Sector Decisionmakers. Increasingly,
RAND findings are being discussed with senior
executives in the corporate world. Notable examples in
2007 include
•
numerous briefings by researchers to senior
insurance industry leaders on matters related to
public–private risk allocation for catastrophes;
•
presentations to major shopping mall owners
on strategies for safeguarding their properties
against terrorism;
•
a conference for commercial logistics
professionals to discuss issues confronting the
global supply chain;
•
a meeting among Silicon Valley information
technology executives to explore the impact of
cyber crime on U.S. businesses;
•
recent work by the RAND Gulf States Policy
Institute on economic revitalization and
organizing public–private partnerships, which
was briefed extensively to business interests in
New Orleans.
1950
Seminal Study of the Soviet Union >
RAND pioneered the field of Soviet studies,
beginning in 1950 with The Operational
Code of the Politburo by Nathan Leites,
which probed the political strategy of
Bolshevism and aided the United Nations’
armistice-negotiating team in Korea.
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OUTREACH
Enriching the Public Debate
An important part of RAND’s public service mission is to enrich the quality of public debate on top policy
issues. We strive to disseminate the findings from our objective, high-quality analyses to as broad an
audience as possible through coverage by news outlets around the world; through commentary by RAND
researchers; and via our Web site, which provides a portal for exploring RAND’s library of knowledge.
A Public Resource
Sharing Findings Through Media
In 2007, findings from RAND research were made
publicly available in more than 1,000 published reports
and documents. The majority of these materials, along
with over 10,000 other RAND documents published
since 1946, are available on RAND’s Web site for free
download. Altogether, more than four million copies of
RAND publications were downloaded from www.rand.
org in 2007. RAND also introduced 67 RSS feeds to deliver
RAND content from across five categories—featured
research, featured projects, news and events, hot topics,
and bookstore releases—to policy observers desiring the
latest updates on RAND findings. This expands RAND’s
current offerings of subscription services, which include
the RAND News Bulletin, a monthly electronic newsletter of
broad public interest that delivers news of the latest RAND
findings and analyses, and the quarterly RAND Review,
RAND’s flagship periodical, which covers big policy issues
with an eye for the important details.
In 2007, more than 2,700 individual media reports
featuring RAND research or researchers were published
or broadcast by newspapers, magazines, news services,
and television and radio networks around the world.
Studies published in 2007 that received the heaviest
news coverage included analyses of (1) the poor quality
of pediatric health care; (2) the safety risks posed by
senior drivers; (3) racial patterns among pedestrian
stops made by New York City police officers; (4) the
academic achievement of students enrolled in privately
run public schools in Philadelphia; and (5) the ability
of California hospitals to meet deadlines for new
seismic safety standards.
1952
Cost Analysis and Logistics >
RAND produced the first
program-based budget for the
Air Force and developed the
basic concepts of total force
cost analysis.
RAND researchers also inform public debate via
published op-ed commentaries. In 2007, more than
70 op-eds were published in influential media outlets
including the New York Times, Washington Post, Wall
Street Journal, Los Angeles Times, Financial Times, The
Guardian, and the International Herald Tribune.
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These commentaries provided timely, reasoned
assessments of issues ranging from mounting ethnic
tensions in Turkey’s and Afghanistan’s increasing civil
strife to strategies for easing urban traffic congestion and
planning for the consequences of our aging population.
Providing a Forum for Public Engagement
RAND hosted a variety of events in 2007 to inform
the public debate on a broad spectrum of top policy
problems. Policy Forums in Los Angeles, Washington,
D.C., and Pittsburgh brought together RAND experts
with prominent local policymakers and preeminent
thinkers to discuss and debate nation-building in Iraq
and beyond; the impact and promise of the No Child
Left Behind Act; strategies for helping youth exposed to
violence; America’s obesity epidemic; efforts to sustain
the nonprofit arts sector in U.S. urban centers; new
responses to homelessness; challenges in funding public
transportation; and more. RAND also hosted lectures by
visiting dignitaries including Admiral Thad W. Allen,
Commandant of the U.S. Coast Guard, who addressed
concerns regarding port security and how the service is
preparing to deliver effective emergency response in the
wake of natural disasters like Hurricane Katrina.
1954
Selection and Use of Strategic Air Bases > The
report by a team led by Albert Wohlstetter shook the
foundation of nuclear deterrence policy by shifting
the United States from a first-strike to a secondstrike posture. It suggested placing air bases closer
to the United States and relying on long-range
bombers and aerial refueling aircraft, eventually
saving the Air Force billions of dollars.
73735
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1955
A Million Random Digits with
100,000 Normal Deviates >
The book is still the largest
source of random digits and
normal deviates used by
statisticians, physicists, poll
takers, lottery administrators,
and quality control engineers.
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RAND Staff
Approximately 1,600 people from more than 45 countries
work at RAND, representing diversity in work experience;
political and ideological outlook; race, gender, and
ethnicity; and academic training. This diversity reinforces
RAND’s core values of quality and objectivity by promoting
creativity, deepening understanding of the practical
effects of policy, and ensuring multiple viewpoints and
perspectives.
Most staff work at RAND’s three principal U.S. locations:
Santa Monica, California; Arlington, Virginia; and
Pittsburgh, Pennsylvania. Others operate from the RAND
Gulf States Policy Institute located in Jackson, Mississippi
and New Orleans, Louisiana; RAND Europe in Cambridge,
UK; and the RAND-Qatar Policy Institute in Doha, Qatar.
To provide the comprehensive expertise needed to fully
address public policy issues, RAND hires staff from a
variety of disciplines. Our researchers represent nearly
every academic field and profession, from engineering and
behavioral science to medicine and economics.
Management
March 2008
James A. Thomson
President and Chief Executive Officer
Michael D. Rich
Executive Vice President
Vivian J. Arterbery
Corporate Secretary
Barry Balmat
Director, Pittsburgh Office
Susan Bodilly
Director, RAND Education
Robert H. Brook
Vice President and Director, RAND Health
Lynn Davis
Director, Washington Office
Richard Fallon
Vice President and Chief Financial Officer
Jonathan Grant
President, RAND Europe
Eugene C. Gritton
Vice President, RAND National Security Research Division
Director, RAND National Defense Research Institute
Political science and
international relations
13%
Social sciences
7%
Andrew Hoehn
Arts and letters
5%
Vice President and Director, RAND Project AIR FORCE
Patrick Horrigan
Policy analysis
7%
Behavioral
sciences
11%
Physical sciences
4%
No degree
1%
Vice President and Director, Office of Services
Jeff Isaacson
Vice President, Army Research Division
Director, RAND Arroyo Center
Arie Kapteyn
Director, RAND Labor and Population
Law and
business
11%
Math operations
research,
and statistics
9%
Fred Kipperman
Acting Director, RAND Institute for Civil Justice
Debra Knopman
Computer
sciences
3%
Life sciences
7%
Vice President and Director, RAND Infrastructure, Safety,
and Environment
Lindsey C. Kozberg
Vice President for External Affairs
Engineering
10%
Economics
12%
Adele R. Palmer
Vice President, Staff Development and Management Office
Chair, Research Staff Management Department
Karen Treverton
Special Assistant to the President
1957
Artificial Intelligence > The first
successful Artificial Intelligence program
that used Information Processing
Languages (IPLs) was developed in
RAND’s Systems Research Laboratory.
IPLs were the precursors of popular
contemporary languages such as LISP.
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President’s Awards
President’s Awards recognize individuals whose work exemplifies RAND’s two core values of quality and objectivity and
who have also recently made exemplary contributions to the RAND community, through new business development
or fund-raising initiatives, outstanding outreach and dissemination efforts, or effective participation in internal
activities aimed at improving the efficiency of our research environment. Made possible by the generosity of donors to
the RAND Policy Circle, the awards provide staff with research time and support to pursue activities related to career
development or exploratory research.
ALLISON ELDER, director of Human Resources,
for her excellent general leadership of the Human
Resources department, which has facilitated
the growth and diversification of RAND, and in
particular her contributions to the design and
execution of the yearlong review of RAND’s
benefits program.
GEOFFREY JOYCE, senior economist and
Pardee RAND Graduate School Professor of
Economics, for his broad and influential
research on such issues as prescription drug
coverage design and the cost and management
of chronic diseases, as well as his effectiveness
in disseminating the findings of his research.
SUSAN GATES, senior economist, quality assurance
coordinator for the RAND Institute for Civil Justice,
and Pardee RAND Graduate School Professor
of Economics, for her creative leadership of the
Kauffman-RAND Institute for Entrepreneurship Public
Policy, her numerous contributions to the Pardee
RAND Graduate School, and her notable efforts to
strengthen quality assurance at RAND.
SHERRILL LINGEL, engineer, for her multiple
analytical contributions on a wide range of
defense issues, ranging from strengthening
intelligence, surveillance, and reconnaissance
capabilities to improving aircraft survivability;
and for her research on the role of homeland
security in protecting U.S. coastal waters.
JENNIFER GOULD, director of Outreach, for
designing and implementing strategies to increase
RAND’s visibility as a nonprofit organization,
and expanding the reach of RAND’s research and
expertise to philanthropic and other important
audiences by reconceiving and making substantial
strategic improvements to the RAND Policy Forum
and Distinguished Speaker event series.
MARK LORELL, senior political scientist,
for his significant collection of research on
strategies and processes for acquiring complex
defense systems, both in the United States
and other countries; and for his production
of numerous reports that are now standard
military-history reference sources.
STIJN HOORENS, senior analyst, for his serial
entrepreneurship in attracting new clients to
RAND; for his wide-ranging and insightful
research, notably on the effect of low fertility
rates and population aging in Europe; and for
stimulating collaborations between RAND Europe
and other parts of RAND.
FRANCISCO (PACO) MARTORELL, associate
economist and Pardee RAND Graduate School
Professor of Econometrics, for his outstanding
service to PRGS as an instructor and a mentor,
as well as for his broad research portfolio, which
has addressed a variety of education-policy issues
in the United States, postsecondary education in
Qatar, and military manpower policies.
SETH JONES, political scientist, for his
internationally recognized research on
counterinsurgency operations, especially in
Afghanistan; his commitment to extensive
fieldwork; and his effectiveness in conveying
the findings and recommendations of his
research to senior policymakers and in
the media.
STUART OLMSTED, natural scientist and
group manager for the Policy Sciences Group,
for his efforts to expand and strengthen
the Pittsburgh Office, his research on topics
ranging from military health care to regional
development, and his role in developing the
skills and capabilities of a diverse mix of
policy analysts.
1958
Reconnaissance Satellite Systems > Mert Davies and Amrom Katz
designed components of the first successful U.S. satellite imagery
reconnaissance system. At their recommendation, CORONA satellites
took pictures of military targets and returned the exposed film back to
Earth in reinforced capsules. By eliminating the guesswork regarding
military arsenals of nations around the world, the CORONA satellite
program served as a deterrent against the outbreak of war.
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The Frederick S. Pardee RAND Graduate School
Since 1970, RAND has operated an innovative and
respected graduate school specializing in public policy
analysis. In 2003, the school received a generous $10
million pledge from RAND alumnus Frederick S. Pardee
and was renamed the Pardee RAND Graduate School
(PRGS). Today, PRGS is the world’s leading producer of
Ph.D.’s in public policy analysis.
PRGS takes advantage of its unique location at RAND’s
headquarters campus in Santa Monica, California,
by combining advanced course work in economics,
quantitative methods, and social science methods,
including fields RAND helped pioneer (such as operations
research and cost-benefit analysis), with on-the-job
training that provides students an opportunity to work
with RAND researchers and clients on interdisciplinary
teams. The program is designed to train creative
1961
thinkers to play important roles in solving major
problems facing the nation and the world. In addition
to engaging in rigorous course work, students work
alongside top RAND researchers on a broad range of
projects as part of their training. This powerful synergy
of theory and practice is unique in American education.
PRGS currently enrolls approximately 100 Ph.D.
students from more than 20 countries around the
world: Almost 30 percent are from outside the United
States. Our students’ prior fields of study represent a
broad range of disciplines, including economics, social
science, physical and natural science, engineering, law,
and medicine.
The following select student profiles and their 2007
research projects provide a snapshot of the graduate
school’s diversity and global perspective.
The RAND Tablet > The tablet was one of the
first devices permitting the input of handwritten
text and freehand drawings into a computer.
While limited in its capabilities and far too
expensive for commercial use, the RAND Tablet
nonetheless showed the way for the PalmPilots
and Tablet PCs of today.
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Before coming to PRGS, Brooke Stearns
was a program officer with Relief
International and completed a master’s
degree at the Institut d’Études Politiques de
Paris (Sciences Po), where she was a Rotary
World Peace Scholar. Two of her recent
projects include developing and conducting a simulation
exercise on failed states for the World Bank and doing a
cost analysis on providing antiretroviral therapy treatment
in Uganda and South Africa. Brooke coauthored the 2007
RAND monograph Making Liberia Safe: Transformation
of the National Security Sector.
Sara Hajiamiri completed an M.Sc. in
engineering and policy analysis at Delft
University of Technology, where her thesis
dealt with integrated water management.
Her projects at RAND are wide-ranging,
including U.S. fuel economy standards and
automobile pricing, water efficiency in Colorado, Iran’s
energy sector, Mexican immigration and assimilation,
and economic development in the areas affected by
Hurricane Katrina. She coauthored the 2008 technical
report Estimating the Value of Water-Use Efficiency in the
Intermountain West.
Arkadipta Ghosh is a fifth-year PRGS
fellow from India. He recently completed
an M.Phil. in economics from the Centre
for Economic Studies and Planning at
Jawaharlal Nehru University, where he also
received his M.A. in economics. One of his
recent RAND projects examines the consequences of India’s
extensive land reforms. Arka is looking at the impact of
land reforms on women’s height, a long-term measurement
of health, and also on women’s schooling in rural India.
He has learned that land reforms lead to significant
improvements in health and well-being for those who
experience the benefits of such reforms during childhood
and adolescence.
Jianhui Hu completed her M.P.P. at Pepperdine University while working full-time
as program research coordinator in a health
care center for the elderly. She worked for
five years in the tax bureau for Yunnan
Province in China, where she was named
an advanced public servant in the field of policy research.
On one of her recent RAND projects, Jianhui helped develop pandemic influenza tabletop exercises in Southeast
Asia. She coauthored the 2007 Health Affairs article “The
Risk-Benefit Balance in the United States: Who Decides?”
Emre Erkut’s interest in the economics
and governance of organizations is fed
by his decade-long career in investment
banking, securities research, and
management consulting, and formalized
by master’s-level training in business
administration at Purdue. Emre is a graduate of Bogazici
University in Turkey. One of his recent projects is on mass
litigation. The project analyzes dozens of mass litigation
episodes in the United States using economics and social
science perspectives and methods. The goal is to develop
an empirically grounded scholarly understanding of how
mass litigations arise, develop, and conclude. The project
not only covers personal injury litigations (mass tort)
but also emphasizes the concept of “mass litigation” to
include environmental, securities, and other litigations
of mass nature.
1962
Packet Switching: Seed of the Internet >
Paul Baran developed a plan for a
communication network that would
withstand a nuclear attack. This notion
of distributed communications, or
packet switching, eventually became the
foundation of the Internet.
Stephen (Jamie) Gayton earned his M.B.A.
from the MIT Sloan School of Management.
He is a lieutenant colonel in the United
States Army. Jamie recently completed a
12-month tour of duty in Iraq, where he
served as a battalion commander in the 3rd
Infantry Division, which is responsible for reconstruction
and essential services operations. Jamie and his battalion
oversaw $300 million in reconstruction activities
including sewer, water, electricity, sanitation, security,
health, and education projects. Jamie also pioneered a
media engagement strategy and an information campaign
for neighborhood and district leaders. His innovations
significantly improved the life for millions of Iraqis and
helped increase security within eastern Baghdad.
To learn more about RAND’s other educational
opportunities and fellowships, please visit http://
www.rand.org/about/edu_op/
1964
NATO Force Planning > RAND research
starting in the 1960s led to formation of the
NATO Defense Planning Working Group, the
first NATO contingency studies, the preparation
of NATO Planning Guidance, and the NATO
Flexible Response defense strategy.
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Donor Support Helps
RAND Stay Ahead of the Curve
For 60 years, the RAND Corporation has helped shape sound public policy by
staying ahead of the curve—identifying emerging policy challenges early on and
formulating effective, practical solutions of enduring value.
Philanthropic support is vital to RAND’s ability to best serve the public interest.
Through generous contributions of financial resources and the volunteer leadership
of distinguished advisors, RAND is able to
•
support research inquiries into critical policy issues that are
too complex, too controversial, or too little understood for
conventional client-sponsored research; and
•
compete in the bustling marketplace for talent to attract the
world’s top minds and emerging stars to help us address
complex matters for the public good.
RAND is grateful to the many individuals, corporations, and foundations that
make gifts of financial support and lend us their time, wisdom, and expertise as
members of RAND advisory boards and the RAND Policy Circle. The confidence
and generosity of philanthropic supporters affords RAND invaluable flexibility as we
pursue our mission to make a difference and stay ahead of the curve on the
most pressing issues of our time and beyond.
1966
Viet Cong Motivation and Morale > In the mid-1960s,
RAND research teams studied the “motivation and
morale” among cadres of Viet Cong, the force opposed to
the South Vietnam government. Some 2,000 interviews
were conducted with Viet Cong prisoners and defectors. The resulting studies identified repression as a vital
part of the overall enemy effort to erode South Vietnam
government strength.
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1969
The Future of Cable Television > A RAND study
concluded that prospects were bright for the cable
television industry under liberalized FCC rules and
would not have a detrimental effect on the markets
for commercial and noncommercial broadcasting.
The work had an important effect on subsequent
FCC rulings and permitted the expansion of the cable
industry as we know it today.
R A N D
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1970
R E P O R T
Mapping the Planets > Mert Davies became
part of the Imaging Science Experimenter Team
that specified the image-making equipment and
strategies used on the Mars-Orbiter, VenusMercury, and Jupiter-Saturn-Uranus-Neptune
space missions.
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Contributions at Work
Supporting Talent
President’s Awards. Philanthropic support funds exploratory research and professional development
activities of outstanding RAND staff who have made important sustained contributions to RAND and have
gone beyond the call of duty in their efforts. (See page 23 for the list of 2007 President’s Award recipients.)
Distinguished Chairs. Chairs are held by outstanding researchers recognized as world-class among peers.
The research and leadership activities of chair holders are made possible by philanthropic support.
Center for Asia Pacific Policy
Chair in Asia Policy Research
Bill Overholt
Distinguished Chair in
Health Economics
Dana Goldman
Center for Russia and
Eurasia Chair
Jeremy Azrael
Distinguished Chair in
Health Quality
Elizabeth McGlynn
Distinguished Chair in
European Security
Steve Larrabee
Distinguished Chair in
International Economics
Charles Wolf, Jr.
Distinguished Chair in
Health Care Services
Robert H. Brook
Distinguished Chair in
Labor Markets and
Demographic Studies
James P. Smith
Paul O’Neill Alcoa
Professorship
in Policy Analysis
Nicole Lurie
PNC Chair in Policy Analysis
Dan McCaffrey
Distinguished Chair in
Policy Analysis
John Graham
Investing in Innovation
RAND President’s Fund. Unrestricted donations to RAND, combined with fees earned from project
work, provide seed money for promising areas of policy research that are often too complex or too little
understood to garner support from conventional clients. Some of RAND’s most visionary research has
been made possible as a result of private donations supporting the RAND President’s Fund. In 2007,
donor-supported research
•
helped state and local officials in post-Katrina Louisiana and Mississippi
plan for the return of evacuees, in areas such as housing and education;
•
informed decisionmakers about choices affecting America’s volunteer armed forces;
•
supported the development of innovative research methods, and the
application of those methods to health care markets; and
•
improved the ability of responders to protect the public against terrorist
threats, and helped the public better understand those threats.
1972
Pioneering Work on Terrorism > After the massacres at
the Munich Olympics and Lydda Airport, RAND proposed
a research agenda on international terrorism that
placed RAND at the forefront of a new and increasingly
important area of research. RAND led the creation of an
international network of scholars and government officials
responsible for dealing with terrorism.
2 0 0 7
R A N D
A N N U A L
R E P O R T
Major Gifts in 2007
Improving U.S.-China Relations. In 2007, RAND
established the Tang Institute for U.S.-China Relations with a
$2 million gift from the Cyrus Chung Ying Tang Foundation
matched by RAND to create a permanently endowed fund for
excellence. The aim of the Tang Institute is to improve policy
discussions that shape relations between the United States and
China; it will support research and intellectual exchange on a
range of critical issues such as currency, labor and trade, direct
foreign investment, and the perceptions that each national
holds about the other. Cyrus Tang was born in China and came
to America in 1950, where he founded and currently leads
an international manufacturing and distribution company.
Tang has served on the board of advisors of the RAND Center
for Asia Pacific Policy for nearly a decade and has contributed
significant philanthropic support to RAND, culminating in the
most recent 2007 gift.
Exploring the Benefits of Alternative Medicine.
A $2 million gift from the Samueli Institute will help RAND
deepen the policy community’s understanding of alternative
medicine’s benefits. The gift—together with a match by
RAND—will create a permanently endowed fund for excellence
to support independent policy research regarding integrative
medicine and complementary and alternative medicine (CAM).
The Samueli Institute Fund for Policy Studies in Integrative
Medicine will support RAND’s capacity to deliver empirical
research that can shape the health care system by identifying
and evaluating CAM and integrative medicine programs and
policies and their contribution to health and healing.
Investing in Ideas. In 2007, Anne and James F. Rothenberg
donated more than $2 million to the President’s Fund and in
support of scholarships to the Pardee RAND Graduate School.
Mr. Rothenberg, Chairman and Principal Executive Officer
of Capital Research and Management Company, is a RAND
trustee, former member of the PRGS Board of Governors, and
a leading figure in the investment world. The Rothenbergs’
generous support will foster innovative research inquiries
into pressing policy challenges and help graduate fellows in
their research pursuits. Mr. Rothenberg asserts, “I support
RAND because I believe the institution is situated to address
the long-term challenges we face as a nation and in the global
community.”
1973
Getting Firefighters to Emergencies Faster > To help New
York City firefighters make the most of their limited resources,
RAND developed a groundbreaking computer simulation model
that showed how to improve fire coverage. The method has
subsequently been used around the world for locating critical facilities and led to the development of standards in use
internationally regarding appropriate response times for fire
incidents.
1974
Improving Computer Security > RAND’s expertise in
defense-related computer security issues was extended to
the private sector during the 1970s. Willis Ware chaired
a government committee that studied the problems arising
from the application of computer technology to record
keeping about people. This work guided the DoD computer
configurations and eventually became the foundation of the
Federal Privacy Act of 1974.
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A N N U A L
R E P O R T
Policy Circle
RAND gratefully acknowledges gifts made by the following donors during calendar year 2007.
RAND CORPORATE POLICY CIRCLE
Leadership Circle
$100,000+
Alcoa Inc.
Allstate Insurance Company
American International Group, Inc.
BlueCross BlueShield of
Massachusetts
The Dow Chemical Company
ExxonMobil Corporation
Risk Management Solutions, Inc.
Electric Power Research Institute
Samueli Institute
Farmers Insurance Group/Zurich U.S.
State Farm Insurance
The Goldman Sachs Foundation
Swiss Re America Holding
Corporation
Hartford Financial Services Group
Chung Ying Tang Foundation
International Council of Shopping
Centers, Inc.
United Health Foundation
LRN
Westfield Corporation, Inc.
MassMutual Financial Group
Zenith Insurance Company
Merck & Co., Inc.
The NAREIT Foundation
ExxonMobil Foundation
Breakthrough Circle
$50,000–$99,999
General Motors Corporation
AARP
GMAC Insurance
ACE USA
Johnson & Johnson Family
of Companies
Association of Trial Lawyers of
America
Liberty Mutual Insurance
Companies
BP
Nationwide Mutual Insurance
Company
Port of Los Angeles
Munich Re America
Building Owners and Managers
Association International
National Association of Realtors
The Chubb Corporation
Pfizer, Inc
The Doctors Company
The Real Estate Roundtable
The SahanDaywi Foundation
TAP Pharmaceutical Products Inc.
U.S. Chamber of Commerce
Union Pacific Corporation
Wal-Mart Stores, Inc.
Edison Electric Institute
1975
Racial Difference in Income > In a series of studies starting in the
mid-1970s, James P. Smith and Finis Welch examined the main drivers
of the changing economic status of black Americans from the end of the
American Civil War to contemporary America. They report a slowing
and unevenly narrowing of the racial gap in incomes. The principal factor
that produced the periods of advancement were linked to periods where
the schooling gaps between black and white Americans closed and the
relative quality of black schools improved. These remain among the
most cited references on the economics of race in America.
2 0 0 7
R A N D
A N N U A L
Frontier Circle
$25,000–$49,999
Capital Research and
Management Company
Hasan Shirazi
Alcan, Inc.
CERA
Patrick Soon-Shiong
Chevron Corporation
Civil Justice Reform Group
James A. Thomas
The Family Connection
Partnership, Inc.
Cooley Godward LLP
Daniel Yun
Fortum Corporation
Hilb Rogal and Hobbs
Freehills
Leonie Industries LLC
GE Fund
Los Angeles Times
General Motors Corporation
Mortgage Bankers Association
Goldman Sachs
Horizon Initiative
National Association of Industrial
and Office Properties
John B. Collins Associates, Inc.
Piper Jaffray
Kansas Action for Children
Property Casualty Insurers
Association of America
KidsOhio.org
Lazare Kaplan International, Inc.
Liz Claiborne, Inc.
Locke Lord Bissell & Liddell LLP
New York State Office of Children
and Family Services
OTEKO (United Transport and
Forwarding Company)
Thomas Epley and Linnae Anderson
Paul and Evelyn Baran
Donna C. Boehme
The Harold and Colene Brown Family
Foundation
John M. Cazier
Robert A. Clifford
Janet Crown
Irvin Stern Foundation
Mary Kay and James D. Farley
Verizon
Robert Ferguson
Rob Deutschman
Arnie Fishman
RAND POLICY CIRCLE
Rockefeller Brothers Fund
Anonymous
Siguler Guff & Company
William F. Benter
State of Missouri Department of
Social Services
Peter S. Bing
Mong Joon Chung
Jacques E. Dubois
Charles M. and Mary D. Grant
Foundation
Kip and Mary Ann Hagopian
Karen Elliott House
Ming Hsieh
Jen-Hsun and Lori Huang
Susan Hullin
Karen L. Katen
Spencer H. Kim
Discovery Circle
$10,000–$24,999
Joseph and Mirit Konowiecki
American Chemistry Council
The Martin Foundation
Bank of Japan
Younes Nazarian
Burlington Northern Santa Fe
Corporation
Anthony N. Pritzker
California Hospital
Association
Tom and Laura Rockwell
Californians Allied for Patient
Protection
Anne and James F. Rothenberg
CAP-MPT
Explorer
$30,000–$99,999
Sonnenschein Nath & Rosenthal
LLP
Visionary
$100,000+
Warburg Pincus LLC
Douglas J. Smith
DuPont
Pacific Business Group on Health
Vital Projects Fund Inc.
R E P O R T
N. Jay Liang
Donald B. and Susan F. Rice
Maxine and Eugene S. Rosenfeld
Leonard Sands
Leonard D. Schaeffer
1976
Family Life in Developing Countries > Beginning with
the Malaysian Family Life Survey, RAND designed,
fielded, and analyzed a series of household surveys
in developing countries: in Malaysia, Indonesia,
Guatemala, and Bangladesh. Unique for developing
countries, the rich databases—which are placed in
the public domain—track demographic, social, health,
and economic information at the individual, household,
and community levels.
1978
The World’s Largest Permeable Dam >
A five-year joint effort between RAND
and the Dutch government led to the
creation of the world’s largest permeable
dam—a storm-surge barrier with large
movable gates—which balanced the
environmental, economic, and safety
concerns of the Netherlands.
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A N N U A L
R E P O R T
Policy Circle
Paul O’Neill, Jr.
Paul M. Pohl
Paul D. Rheingold
James E. and Sharon C. Rohr
John J. Rydzewski
David Singer
Enzo Viscusi
The Gail and Lois Warden Fund
Jason Weiss
David C. Wright
Groundbreaker
$5,000–$9,999
Anonymous
Odeh F. Aburdene
Neal Baer
Louis L. Borick
Gregory Keever
Lynn and Douglas A. Brengel
Margery A. Colloff
Nelly and Jim Kilroy
Brad Brian
Robert and Patricia H. Curvin
Bud Knapp
Joseph C. Canizaro
Palmer G. Jackson
Ann and Tom Korologos
Frank C. Carlucci
Lindsey C. Kozberg
Arthur and Marylin Levitt
George N. Chammas
John H. O. La Gatta
James B. Lovelace
Kelly Day
Marie-Anne and Malcolm A. Palmatier
Santiago Morales
Frederick and Linda Gluck
Michael K. Powell
Hassan Nemazee
The Golden Family Foundation
Carl Pridonoff
Patricia Salas Pineda
James A. Greer
Jack Riley and Karen Yuhas
Lawrence J. Ramer
The Hauser Foundation
Stanley M. Rumbough
Michael J. Shockro
Ken Senjong Hsui
Gerald J. Sullivan
Lucille Ellis Simon Foundation
Benny T. Hu
Donald Tang
Kenin M. Spivak
Fred C. Ikle
James Q. Wilson
Joseph P. and Carol Z. Sullivan
Ray R. Irani
Charles J. Zwick
Suzanne S. and Michael E.
Tennenbaum
The Robert and Ardis James
Foundation
Lawrence Zicklin
Suzanne Nora Johnson
Innovator
$1,000–$4,999
Paul G. Kaminski
Anonymous
Michael B. Kim
Mark and Kathe Albrecht
Arnold Kopelson
Phyllis and David Armstrong
Sherry Lansing
Charles L. Bennett
Woong-Yeul Lee
Maurine Bernstein
Paul S. Miller
Sheila L. Birnbaum
Trailblazer
$10,000–$29,999
Anonymous
Richard A. Abdoo
Gale and Jane Bensussen
Linda and Brent D. Bradley
Jane and Ronald L. Olson
1979
Determining Characteristics of Career Criminals >
Multiple RAND studies changed the way people think
about “career criminals.” Researchers confirmed
that a small proportion of offenders commit a large
percentage of crime, making career criminals
a national priority, fostering new legislation and
focusing resources.
2 0 0 7
R A N D
A N N U A L
R E P O R T
Robert H. Brandow
John Lu
Thomas R. Brown
Raymond E. Mabus, Jr.
J. Kevin and Kathleen Buchi
Sue Mallett
Waldo and Jean Burnside
Joseph D. and Jean W. Mandel
California Casualty Management Co.
Andrew and Jacqueline Caster
McCrory & McDowell
Louis M. and Jane Castruccio
G. G. Michelson
The Capital Group Companies
Charitable Foundation
Mrs. Fred W. Catterall III
Joel R. Mogy
Alan and Laura Charles
Lloyd and Mary Morrisett
Gordon B. Crary
Tom Murrin
Richard J. and Mildred M. Cross
Ms. Noël M. Newell
Rich and Carole DiClaudio
John Edward Porter
Jim and Mary Jane Digby
Mr. and Mrs. C. J. Queenan
Alison and Geoffrey Edelstein
William J. Recker
Helen and Bill Elliott
Vicki Reynolds Pepper and
Murray Pepper
Eugene J. Ellis
Glenn and Jack Ellis
Sigo Falk
Kenneth R. Feinberg
Paul G. Flynn
James C. Gaither
Lucille M. Goldsen
Janet Green
Gene and Gwen Gritton
John Handy
Doris and Ralph E. Hansmann
George H. Heilborn
Philip and Katie Holthouse
Rory Hume
Richard Hundley
Vicki Huth
Elizabeth and Jeffrey Isaacson
Stephen A. Kanter, M.D.
Tamara Turoff Keough
Ann Zwicker Kerr
Fred Kipperman and Hien Nguyen
Susan Fiske Koehler
David M. Konheim
Kenneth Krug and Andrea Scharf
Philip Lader
1982
Ballistic Missile Basing Alternatives >
Project AIR FORCE research on the
comparative utility of active defenses and
various basing options for the proposed
MX ballistic missile provided major
input to the President’s Commission
on Strategic Force Modernization (the
Scowcroft Commission).
Debra Granfield and
Michael D. Rich
RAND would like to acknowledge
the following companies for providing
matching gifts
Greater Kansas City Community
Foundation & Affiliated Trusts
Hullin Metz & Co. LLC
Thomas Lord Charitable Trust
Munger, Tolles & Olson LLP
Philip Morris Companies, Inc./Altria
Siguler Guff & Company
State Farm Companies Foundation
Voices for Children, Inc.
Daniel Rose
Gifts were given in memory
of the following
Louis N. Rowell
Jan Butler
Henry and Beverly Rowen
Irv Cohen
Charles A. Schliebs
Jim Digby
Margaret Schumacher
Rosalie Fonoroff
Dorothy R. Sherwood
Robert Kalaba
The Sikand Foundation, Inc.
John E. Koehler
The H. Russell Smith Foundation
Charles Lachlan McKinnon
Lucile W. Smith
Nancy Nimitz
Elizabeth S. Stacey
Robert Perry
Curtis S. Tamkin, Jr.
Hy Shulman
Roger S. Taylor
Eleanor Wainstein
Robert and Marjorie Templeton
Susan Way-Smith
Darlene and James A. Thomson
Albert P. Williams
Michael Traynor
John K. and Andrea Van de Kamp
Helen and Martin Wachs
Tracy and Hui Wang
Willis H. Ware
Faye Wattleton
Barbara and Milton G. Weiner
Theresa and Charles Wolf, Jr.
Gifts were given in honor
of the following
Karen Jenkins
Ray and Lynne Mabus
Louise Martin
Charles Wolf
Linda Tsao Yang
1984
Strategic Defense and Deterrence >
Shortly after President Reagan announced the Strategic Defense Initiative,
RAND was asked to provide the first
comprehensive assessment of how a
technically successful defense against
ballistic missiles would affect deterrence
and strategic ability, the security interests of our allies, and arms control.
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R A N D
A N N U A L
R E P O R T
Advisory Boards
Members of advisory boards provide important philanthropic contributions for cutting-edge research and to support
and nurture top research talent. The volunteer leadership of advisory board members helps RAND research centers
and units frame the research agenda and disseminate findings to influential decisionmakers. Boards include leaders
in the public and private sectors who have demonstrated personal distinction, practical experience, leadership,
and a commitment to transcending partisan conflicts and political ideologies.
LRN-RAND Center for Corporate
Ethics, Law, and Governance
Advisory Board
Robert Deutschman
Mary Schapiro
President, Cappello Partners, LLC
Chairman and Chief Executive Officer,
NASD Regulation Inc.
Stuart Reese (Chair)
General Counsel and Executive Vice President
of Corporate Reputation and Governance,
Capital One Financial Corporation
Chairman, President, and Chief Executive
Officer, MassMutual Financial Group
Steve Kerr
Larry Zicklin (Vice Chair)
Clinical Professor of Business Ethics, New York
University Leonard N. Stern School of Business
Principal, Compliance Strategists LLC
Kim M. Brunner
Executive Vice President and General Counsel,
State Farm Insurance
Vice President of Corporate People
Administration, Wal-Mart Stores, Inc.
Managing Director and Chief Learning Officer,
Goldman Sachs
Eric Landau
Donna Boehme
Ann Cato
John Finneran
Dov L. Seidman
Chairman and Chief Executive Officer, LRN
Margaret Sperry
Senior Vice President and Chief Compliance
Officer, MassMutual Financial Group
Kenin Spivak
Partner, McDermott Will & Emery
Chairman, President, and Chief Executive
Officer, Telemac Corporation
Arthur Levitt
Richard Thornburgh
Former Chairman, U.S. Securities and
Exchange Commission
Former Attorney General and Governor,
State of Pennsylvania; General
Counsel, Kirkpatrick & Lockhart LLP
John Lynch
Group Compliance & Ethics, BP plc
L. Stephan Vincze
John Reed
Vice President, Ethics and Compliance,
TAP Pharmaceutical Products Inc.
Retired Chair, New York Stock Exchange;
Retired Chair and Co-CEO, Citigroup, Inc.
Allen Waxman
Senior Vice President and General Counsel,
Pfizer Inc
1985
Costs of Asbestos Litigation > RAND published
findings from the first-ever study to examine the
costs and compensation paid for asbestos personal
injury claims. The study showed that claimants
received only 37 cents of every dollar spent on
asbestos litigation, with the rest going to defense
and plaintiff attorneys’ fees and other expenses.
2 0 0 7
Pardee RAND Graduate School
Board of Governors
Donald B. Rice (Chair)
President, Chairman, and Chief Executive
Officer, Agensys, Inc.; Former Secretary of the
U.S. Air Force; Trustee, RAND Corporation
A N N U A L
R E P O R T
Robert Spinrad
Stephanie McGencey-Washington
Retired Vice President, Technology Strategy,
Xerox Corporation
Executive Director, Grantmakers for Children,
Youth and Families
James A. Thomson
Susan Mitchell-Herzfeld
President and Chief Executive Officer,
RAND Corporation
Director, Bureau of Evaluation and Research,
New York State Office of Children and Family
Services (OCFS)
Gurminder S. Bedi
Marta Tienda
Vice President (Retired), Ford North
America Truck
Maurice P. During ’22 Professor in Demographic
Studies and Professor of Sociology and Public
Affairs, Princeton University; Trustee, RAND
Corporation
Don R. Conlan
R A N D
Mark Real
President and Chief Executive Officer,
KidsOhio.org
Ken Seeley
Retired President, The Capital Group Companies
Paul A. Volcker
Thomas E. Epley
Former Chairman, Federal Reserve System
President and Chief Executive Officer, The
Colorado Foundation for Families and Children
Operating Partner, Francisco Partners
David I. J. Wang
Gaye Morris Smith
Francis Fukuyama
Senior Operating Partner, Atlas Holdings, LLC
Bernard L. Schwartz Professor of International
Political Economy, Paul H. Nitze School of
Advanced International Studies, Johns Hopkins
University
Faye Wattleton
Executive Director, Family Connection
Partnership
John Gage
James Q. Wilson
Chief Researcher, Sun Microsystems
Ronald Reagan Professor of Public Policy,
Pepperdine University
Dominic Chan
Promising Practices Network on
Children, Families and Communities
Board of Advisors
Mong-Joon Chung
James A. Thomson (Chair)
Roy Doumani
President, Center for the Advancement
of Women
RAND Center for Asia Pacific Policy
Advisory Board
Chief Executive Officer, Univessence Digital
Studios
Russell Goldsmith
Chairman and Chief Executive Officer,
City National Bank
Robert E. Grady
Managing Director, The Carlyle Group; Member,
Board of Directors, AuthenTec, Inc.
Pedro José Greer, Jr.
Assistant Dean of Academic Affairs, Florida
International University, College of Medicine
Member of the National Assembly,
Republic of Korea
Professor of Molecular and Medical
Pharmacology, University of California,
Los Angeles
President and Chief Executive Officer,
RAND Corporation
Douglas A. Brengel
Robert Ferguson
Managing Director, Apple Oaks Partners, LLC
Chairman and Managing Director,
Citigroup Global Markets’ Global
Technology Group
Lydia H. Kennard
Gary Brunk
Former Executive Director, Los Angeles
World Airports; Trustee, RAND Corporation
President and Chief Executive Officer,
Kansas Action for Children
Chair, ICICI Venture Funds Management
Co. Ltd.
James B. Lovelace, Sr.
Shannon Cotsoradis
Ming Hsieh
Vice President and Director, Capital Research
and Management
Executive Vice President and Chief Operating
Officer, Kansas Action for Children
Chairman, President, and Chief Executive
Officer, Cogent, Inc.
Santiago Morales
Bill Dent
Ken Senjong Hsui
President, Maxiforce Inc.
Manager, Missouri Community Partnerships;
Staff Director, The Family and Community Trust
President and Chief Executive Officer,
Prince Motors Group
Chairman, Mapleton Investments
William H. Isler
Benny T. Hu
Frederick S. Pardee
Executive Director, Fred Rogers Center for
Early Learning and Children’s Media
Chairman, CDIB BioScience Venture
Management, Inc.
Nancy Martinez
Wyatt R. Hume
B. Kipling Hagopian
Marc Nathanson
Investor
Eugene S. Rosenfeld
President, ForestLane Group
Director, Strategic Planning and Policy
Development, New York State Office of Children
and Family Services (OCFS)
Deputy Chairman, The Sydney Institute;
Chairman, IMF Australia Limited
Lalita D. Gupte
Provost and Executive Vice President,
University of California
Greg Keever
Partner, Akin Gump Strauss Hauer & Feld LLP
1987
Chlorofluorocarbons > RAND performed the economic
analysis that, when coupled with a National Oceanic and
Atmospheric Administration (NOAA) chemical model of the
atmosphere, ultimately provided the policy-analytic basis
for the global ban on the production of substances that
deplete stratospheric ozone—mainly chlorofluorocarbons
(CFCs) and Halons.
1988
Preventing Teenage Smoking and Drug Use > The most
widely used science-based drug prevention program
in the country, reaching more than 1.5 million middle
school children a year, was developed at RAND. Project
ALERT (Adolescent Experiences in Resistance Training)
is a nationally recognized substance abuse program that
gives students insight, understanding, and actual skills for
resisting substance abuse.
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Advisory Boards
Spencer H. Kim
Donald Tang
Henry A. Kissinger
Chairman, CBOL Corporation
Vice Chairman, Bear, Stearns & Company,
Inc.; Chairman and President, Bear, Stearns
International; Trustee, RAND Corporation
Former Secretary of State
Peter Kwok
Chairman, CITIC Resources Holdings Limited
Woong-Yeul Lee
Chairman, Kolon Group
N. Jay Liang
President and Chief Executive Officer, Etech
Securities, Inc.
Robert Oehler
President and Chief Executive Officer, Pacific
Alliance Bank
Michael Tang
Cleon “Bud” T. Knapp
Chief Executive Officer and President,
Talwood Corporation
Chief Executive Officer, National Material L.P.
Michael Tennenbaum
Senior Managing Partner, Tennenbaum
Capital Partners, LLC
Linda Tsao Yang
Chairman, Asian Corporate Governance
Association
Marsha Vande Berg
Anthony N. Pritzker
Chief Executive Officer, Pacific Pension Institute
President and Chief Executive Officer,
The Pritzker Company
Daniel Yun
Managing Partner & Founder, Belstar Group
RAND Center for Middle East
Public Policy Advisory Board
Zbigniew Brzezinski (Chair)
Counselor, Center for Strategic & International
Studies
Frank C. Carlucci (Vice Chair)
Chairman Emeritus, The Carlyle Group;
Former U.S. Secretary of Defense; Trustee,
RAND Corporation
Richard A. Abdoo
President, R. A. Abdoo & Co., LLC
Ex Officio
James A. Thomson
President and Chief Executive Officer,
RAND Corporation
Susan Everingham
Director, International Programs,
RAND Corporation
William H. Overholt
Director, RAND Center for Asia Pacific Policy
Nicholas Rockefeller
International Attorney and Advisor to the
RockVest Group of Investors & Rockefeller Pacific
Ventures
RAND Center for Global Risk and
Security Advisory Board
Odeh F. Aburdene
President, OAI Advisors
William F. Benter
Chairman and International Chief Executive
Officer, Acusis
L. Paul Bremer
Former Presidential Envoy to Iraq
Alexander L. Cappello
Chairman and Chief Executive Officer,
Cappello Group Inc.
George N. Chammas
Co-President and Chief Financial Officer,
NavLink Inc.
Harold Brown (Chair)
Kelly Day
Counselor, Center for Strategic & International
Studies; Former U.S. Secretary of Defense;
Trustee Emeritus, RAND Corporation
Chairman, The Kelly Day Foundation
Founding Partner and Chairman, Alchemy
Worldwide
Elliott Broidy
Chairman and Managing Director, Voltaix, Inc.
Chairman, Markstone Capital Group LLC
Arnie Fishman
Michael J. Shockro
Carl Covitz
Partner, Latham & Watkins LLP
President and Chief Executive Officer,
Landmark Capital
Chairman and Founder, Lieberman
Research Worldwide
Eugene S. Rosenfeld
President, ForestLane Group
Leonard Sands
George Siguler
Managing Director, Siguler Guff & Company
Jacques Dubois
Patrick Soon-Shiong
Former Chairman, Swiss Re America Holding
Corporation
Founder, Chairman, and Chief Executive Officer,
Abraxis BioScience, Inc.
Peter B. DeNeufville
Guilford Glazer
Chairman, Guilford Glazer Associated
Companies
Tone N. Grant
Private Investor
Ray R. Irani
Chairman and Chief Executive Officer,
Occidental Petroleum Corporation
1989
Monitoring the Results of Medical Care >
The Medical Outcomes Study (MOS) was the
first large-scale attempt to measure medical
outcomes in terms of how patients feel, function,
and perform in their natural environment. In
conducting the study, RAND developed a number
of brief screening instruments, including the
RAND 36-Item Health Survey.
2 0 0 7
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A N N U A L
R E P O R T
37
Ann Kerr
Fulbright Coordinator, UCLA International
Institute
Arnold Kopelson
Chairperson and Producer, Kopelson
Entertainment
Ray Mabus
Former U.S. Ambassador to Saudi Arabia
Paul S. Miller
Special Counsel, Kaye Scholer
Younes Nazarian
President, The Nazarian Companies
Hassan Nemazee
Chairman and Chief Executive Officer,
Nemazee Capital Corporation
Edward R. Pope
Chairman and Chief Executive Officer,
DexM Corporation
Lawrence J. Ramer
Chairman, Ramer Equities, Inc.
David K. Richards
RAND Center for Terrorism Risk
Management Policy Advisory Board
Private Investor
Hasan Shirazi
Director, Citi Private Bank
Jeffrey DeBoer (Cochair)
Donald Ellis Simon
President and Chief Executive Officer,
Real Estate Roundtable
President, The Lucille Ellis Simon Foundation
Enzo Viscusi
Group Senior Vice President, ENI Americas
Ex Officio
James A. Thomson
President and Chief Executive Officer,
RAND Corporation
Susan Everingham
Director, International Programs,
RAND Corporation
David L. Aaron
Director, RAND Center for Middle East
Public Policy
Kathleen Nelson
Immediate Past Chair, International Council
of Shopping Centers (ICSC)
Art Raschbaum
President, GMAC RE
Pierre L. Ozendo (Cochair)
Kevin Scroggin
Member of the Executive Board, Head of
Americas Property & Casualty, Swiss Re America
Holding Corporation
General Director, Corporate Risk Management
and Insurance, General Motors
Jack Armstrong
President and Chief Executive Officer,
Risk Management Solutions, Inc.
Assistant Vice President and Senior Regulatory
Counsel, Liberty Mutual Insurance Company
Brian Boyden
Hemant H. Shah
Cosette Simon
Executive Vice President, State Farm Insurance
Senior Vice President, Swiss Re Life & Health
America Inc.
Andrew Coburn
Richard Thomas
Vice President of Catastrophe Research
and Director of Terrorism Research, Risk
Management Solutions, Inc.
Senior Vice President and Chief Underwriting
Officer, American International Group
Kenneth R. Feinberg
President and Chief Executive Officer,
NAREIT
Managing Partner, The Feinberg Group, LLP
Steven Wechsler
Ken Jenkins
Senior Vice President and Chief Underwriting
Officer, Munich Re America
Peter Lowy
Chief Executive Officer, Westfield, LLC;
Trustee, RAND Corporation
1993
Sex
Sexual
Orientation and U.S. Military Policy >
At the request of the Secretary of Defense,
RAND conducted research to help formulate
an executive order ending the ban on military
service of homosexuals. The study found
that a policy that ends discrimination based
on sexual orientation could be implemented
in a practical and realistic manner.
1994
Controlling Cocaine > The RAND
study on controlling cocaine
provided a powerful argument for
increasing U.S. drug treatment
programs. It is often cited in the
debate on the effectiveness of
the “drug war”.
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R A N D
A N N U A L
R E P O R T
Advisory Boards
Donna Saurage
Civic Leader, Baton Rouge, Louisiana
Vera B. Triplett
Assistant Professor, Clinical Director,
Our Lady of Holy Cross College
Ex Officio
James A. Thomson
President and Chief Executive Officer,
RAND Corporation
George Penick
Director, RAND Gulf States Policy Institute
RAND Health Board of Advisors
Joseph P. Sullivan (Chair)
Private Investor
RAND Europe Board of Trustees
James A. Thomson (Chairman)
President and Chief Executive Officer,
RAND Corporation
United States
Sir John Boyd
Retired Master, Churchill College,
University of Cambridge
United Kingdom
RAND Gulf States Policy Institute
Advisory Board
Neal A. Baer, MD
Kim M. Boyle
Robert H. Brook, MD, ScD, FACP
Partner, Phelps Dunbar LLP
Vice President, RAND Corporation;
Director, RAND Health
Joseph C. Canizaro
Executive Producer, Law & Order:
Special Victims Unit
Chairman of the Board, First Bank and Trust
and First Trust Corporation
Ronald I. Dozoretz, MD
Chairman, ValueOptions
Oliver H. Delchamps, Jr.
Mary Kay Farley
Professor Sir Lawrence Freedman
Retired Chairman Emeritus, Delchamps, Inc.
Professor of War Studies and Vice Principal
(Research), King’s College London
United Kingdom
James A. Joseph
Trustee, Hospital for Special Surgery, New York;
Northern Michigan Hospital Foundation
Jonathan Grant
President, RAND Europe
United Kingdom
Philip Lader
Chairman, The WPP Group; Former U.S.
Ambassador to the Court of St. James;
Trustee, RAND Corporation
United Kingdom
Lord Renwick of Clifton
Vice Chairman, Investment
Banking, JP Morgan Europe
United Kingdom
Chairman of the Board, Louisiana Disaster
Recovery Foundation
John J. Kallenborn
President New Orleans Region,
JP Morgan Chase Bank, NA
Diana Lewis
Robert G. Funari
Chairman and Chief Executive Officer,
Crescent Healthcare
Frederick W. Gluck
Former Managing Director, McKinsey &
Company, Inc.
Civic Leader, New Orleans, Louisiana
Pedro José Greer, Jr., MD
Ricky Mathews
President and Publisher, The Sun Herald
Assistant Dean of Academic Affairs,
Florida International University, College
of Medicine
Alden J. McDonald, Jr.
Karen Hein, MD
President and Chief Executive Officer,
Liberty Bank and Trust Company
Immediate Past President, William T. Grant
Foundation
R. King Milling
Vice Chairman, Whitney National Bank
John N. Palmer
Chairman, GulfSouth Capital, Inc.
1995
The Number of Troops Needed to Stabilize a Country >
The most well-known study on the arithmetic of stability
operations is the RAND paper Force Requirements in
Stability Operations. RAND calculated the troop levels
required to stabilize both entire countries and individual
cities, and explored the implications of those numbers for
deployment, rotation, readiness, and personnel retention.
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R A N D
A N N U A L
R E P O R T
Susan Hullin
Leonard D. Schaeffer
Frank Holder
Managing Partner, Hullin Metz & Co. LLC
Senior Advisor, TPG Capital, LP
President, Ferrell Schultz International
Suzanne Nora Johnson
Sir Maurice Shock
Patricia Salas Pineda
Senior Director/Former Vice Chairman,
Goldman Sachs Group, Inc.
Retired Chairman, The Nuffield Trust
Group Vice President, Corporate
Communications and General Counsel,
Toyota Motor North America, Inc.
Karen L. Katen
Chair, Pfizer Foundation
Cleon “Bud” T. Knapp
Chief Executive Officer and President,
Talwood Corporation
Paul Koegel, PhD
David B. Singer
Principal, Maverick Capital, Ltd.
Vice President, Liz Claiborne, Inc.
Founder, Chairman, and Chief Executive
Officer, Abraxis BioScience, Inc.
Rodney E. Slater
James A. Thomson, PhD
Associate Director, RAND Health
President and Chief Executive Officer,
RAND Corporation
Joseph S. Konowiecki
Gail L. Warden
Managing Partners, Moriah Partners, LLC
President Emeritus, Henry Ford Health System
Sherry Lansing
RAND Infrastructure, Safety, and
Environment Advisory Board
David M. Lawrence, MD
Gerald Greenwald (Chair)
Steven Lazarus
Managing Director Emeritus, ARCH Venture
Partners
Frank Litvack, MD, FACC
Interventional Cardiologist, Cedars-Sinai
Heart Center
Sir Michael Marmot, MD, PhD
Director, International Institute for Society
and Health, University College London
James A. Thomas
Chairman and Chief Executive Officer,
Thomas Properties Group
John K. Van de Kamp
Jason Weiss
Partner, Terrapin Partners, LLC
Managing Partner, Greenbriar Equity Group LLC
Harold Brown
Counselor, Center for Strategic & International
Studies; Former U.S. Secretary of Defense;
Trustee Emeritus, RAND Corporation
Lovida H. Coleman, Jr.
Partner, Sutherland, Asbill & Brennan LLP;
Trustee, RAND Corporation
Margery Colloff
Counsel, White and Case LLP
Janet Crown
Charles N. Martin, Jr.
Managing Partner, JMK Productions
Chairman and Chief Executive Officer,
Vanguard Health Systems
William R. Colvin
Elizabeth A. McGlynn, PhD
Partner, Patton Boggs, LLP
Former Attorney General, State of California;
Of Counsel, Dewey Ballantine LLP
Founder–Chief Executive Officer, The Sherry
Lansing Foundation
Retired Chairman and Chief Executive
Officer, Kaiser Foundation Health Plan, Inc.
and Kaiser Foundation Hospitals
Jane Randel
Patrick Soon-Shiong, MD
President and Chief Executive Officer,
Core Realty Holdings
RAND Institute for Civil Justice
Board of Overseers
Kenneth R. Feinberg (Chair)
Associate Director, RAND Health
Robert Curvin
Managing Partner, The Feinberg Group, LLP
Paul H. O’Neill
Retired President, Greentree Foundation;
Visiting Scholar, Rutgers University
Richard E. Anderson
Former U.S. Secretary of the Treasury;
Trustee, RAND Corporation
Ian C. Read
President, WW Pharmaceutical
Operations, Pfizer Inc
David K. Richards
Private Investor
John J. Rydzewski
Managing Director, Christofferson,
Robb & Company, LLC
1996
Diverting Children from a Life of Crime > This
study measures for the first time the costeffectiveness of intervention strategies for youth
at risk of pursuing criminal careers. Three types
of interventions—cash and other graduation
incentives, parent training, and supervision of
delinquent teens—appear more cost-effective in
reducing crime than California’s “three-strikes” law.
Scott M. Gordon
Superior Court Commissioner,
Los Angeles County Superior Court
Janet Green
Investment Advisor
Chairman and Chief Executive Officer,
The Doctors Company
Sheila L. Birnbaum
Partner, Skadden, Arps, Slate, Meagher & Flom
Brad D. Brian
Partner, Munger, Tolles & Olson LLP
James L. Brown
Director, Center for Consumer Affairs,
University of Wisconsin-Milwaukee
1997
Immigration > James P. Smith led the National
Academy of Sciences panel, whose report,
The New Americans, remains the most cited
source in the immigration debate. That report
showed the impact of immigration over the next
50 years on the demographic, economic, and
fiscal well-being of the United States.
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A N N U A L
R E P O R T
Advisory Boards
Kim M. Brunner
Michael J. McCabe
Executive Vice President and General Counsel,
State Farm Insurance
Vice President and General Counsel,
The Allstate Corporation
Robert A. Clifford
M. Margaret McKeown
Partner, Clifford Law Offices, P.C.
Circuit Judge, U.S. Court of Appeals,
Ninth Circuit
John J. Degnan
Vice Chairman and Chief Administrative
Officer, The Chubb Corporation
Michael G. Mills
Partner, Freehills
Markus U. Diethelm
Robert S. Peck
Member of the Executive Board, Group Chief
Legal Officer, Swiss Reinsurance Company
President, Center for Constitutional
Litigation, AAJ
James A. Greer II
Kathleen Flynn Peterson
Partner, Robins, Kaplan, Miller & Ciresi LLP
Patricia R. Hatler
Executive Vice President, General Counsel
and Secretary, Nationwide Mutual Insurance
Company
Sandra L. Phillips
Vice President, Assistant General Counsel and
Section Leader for Products Litigation, Pfizer, Inc
Terry J. Hatter Jr.
Paul M. Pohl
Chief U.S. District Judge, United States
Courthouse
Partner, Jones Day
Patricia A. Henry
Executive Vice President, Government Affairs
and Legal, ACE INA
Deborah R. Hensler
Judge John W. Ford Professor of Dispute
Resolution, Stanford Law School
Patrick E. Higginbotham
Executive Vice President and General Counsel,
Farmers Insurance Group of Companies
Bruce N. Kuhlik
Executive Vice President, RAND Corporation
Paul D. Rheingold
Director, RAND Center for Middle East
Public Policy
Partner, Rheingold, Valet, Rheingold,
Shkolnik, & McCartney LLP
Hamad Abdulaziz Al-Kawari
Lee H. Rosenthal
Member of the Consultative Authority for the
High Council of GCC; Member of the National
Council for Culture, Arts, and Heritage
Senior Vice President-Worldwide,
American International Group, Inc.
Dan I. Schlessinger
Partner, Locke Lord Bissell & Liddell LLP
Senior Vice President and General Counsel,
Merck & Co., Inc.
Michael Rich (Cochair)
David L. Aaron
Charles R. Schader
Jason L. Katz
Her Highness Sheikha Mozah Bint
Nasser Al Missned (Cochair)
Retired President, California Labor Federation,
AFL-CIO
United States District Judge, Southern District
of Texas, Houston Division
Circuit Judge, U.S. Court of Appeals,
Fifth Circuit
Dov L. Seidman
Sheikh Hamad Bin Faisal Bin
Thani Al-Thani
Deputy Chairman, Qatar National Bank
Karen Elliott House
Former Publisher, The Wall Street Journal;
Former Senior Vice President, Dow Jones and
Company, Inc.; Trustee, RAND Corporation
Chairman and Chief Executive Officer, LRN
Christian Lahnstein
Head of the Department, Risk, Liability &
Insurance, Munich Re
Joseph D. Mandel
Vice Chancellor, Legal Affairs (retired),
University of California, Los Angeles
Christopher C. Mansfield
Senior Vice President and General Counsel,
Liberty Mutual Insurance Company
Charles W. Matthews, Jr.
Thomas E. Rankin
RAND-Qatar Policy Institute Board
of Overseers
Hemant H. Shah
Independent Member
President and Chief Executive Officer,
Risk Management Solutions, Inc.
Farouk El-Baz
Georgene M. Vairo
Director, Center for Remote Sensing,
Boston University
Professor of Law and William M. Rains Fellow,
Loyola Law School
Neal S. Wolin
Ex Officio
President and Chief Operating Officer,
Property and Casualty Operations,
The Hartford Financial Services Group, Inc.
Rashid Al Naimi
Vice President and General Counsel,
ExxonMobil Corporation
Vice President for Administration,
Qatar Foundation
Richard E. Darilek
Director, RAND-Qatar Policy Institute
1998
NATO Expansion > RAND experts on Europe and the Soviet Union
recommended expanding NATO to include, initially, Poland, the
Czech Republic, Slovakia, and Hungary. Their strategy involved a
gradual expansion, in addition to confidence-building measures and
assurances for Russia and other Eastern European countries who
were not initial members. RAND’s ideas and analyses were taken
up within the State Department and became the foundation for the
decision to move ahead with NATO expansion.
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R A N D
A N N U A L
R E P O R T
These are the advisory boards for RAND’s federally funded research and development centers (FFRDCs).
Air Force Steering Group
Arroyo Center Policy Committee
Gen Duncan J. McNabb
(Chairman)
GEN Richard A. Cody (Cochair)
Vice Chief of Staff
Lt Gen David A. Deptula
Deputy Chief of Staff for Intelligence,
Surveillance, and Reconnaissance
Lt Gen Frank G. Klotz
Assistant Vice Chief of Staff and Director,
Air Force Staff
Lt Gen Donald J. Hoffman
Military Deputy, Office of the Assistant
Secretary of the Air Force for Acquisition
Lt Gen Michael W. Peterson
Chief of Warfighting Integration and Chief
Information Officer
RAND National Defense Research
Institute Advisory Board
Vice Chief of Staff, U.S. Army
Ken Krieg (Chair)
Claude M. Bolton, Jr. (Cochair)
Under Secretary of Defense for Acquisition,
Technology, and Logistics
Assistant Secretary of the Army
(Acquisition, Logistics, and Technology)
John Grimes
Daniel Denning
Assistant Secretary of Defense for Networks
and Information Integration
(Acting) Assistant Secretary of the Army
(Manpower and Reserve Affairs)
Art “Trip” Barber
GEN William S. Wallace
Director, Assessment Division, Office of the
Deputy Chief of Naval Operations
Commanding General, U.S. Army Training
and Doctrine Command
Thomas Behling
GEN Benjamin S. Griffin
Commanding General, U.S. Army Materiel
Command
GEN Charles C. Campbell
Deputy Under Secretary of Defense for
Preparation and Warning, Office of the Under
Secretary of Defense for Intelligence
Jeanne Fites
Surgeon General of the Air Force
Commanding General, U.S. Army
Forces Command
Deputy Under Secretary of Defense for
Program Integration, Office of the Under Secretary
of Defense for Personnel and Readiness
Lt Gen Raymond E. Johns Jr.
Lt Gen James G. Roudebush
LTG Robert W. Wagner
Ryan Henry
Deputy Chief of Staff for Strategic
Plans and Programs
Commanding General, U.S. Army Special
Operations Command
Principal Deputy Under Secretary of
Defense for Policy
Lt Gen Kevin J. Sullivan
MG Gale S. Pollock
MG Michael Vane, USA
Deputy, Surgeon General for Force
Management/Chief United States Army
Nurse Corps, U.S. Army
Vice Director, Force Structure, Resources
and Assessment Directorate (J-8), Joint Staff
Deputy Chief of Staff for Logistics,
Installations, and Mission Support
Lt Gen Daniel J. Darnell
Deputy Chief of Staff for Operations,
Plans and Requirements
LTG Michael D. Rochelle
Brad Berkson
Deputy Chief of Staff, G-1, U.S. Army
Director, Program Analysis and Evaluation,
Office of the Secretary of Defense
LTG James J. Lovelace
Mark Schaeffer
Deputy Chief of Staff, Personnel
Deputy Chief of Staff, G-3, U.S. Army
Maj Gen Paul J. Selva
(Executive Agent)
LTG Ann E. Dunwoody
Director, Systems and Software Engineering,
Office of the Under Secretary of Defense for
Acquisition, Technology, and Logistics
Director, Air Force Strategic Planning;
Deputy Chief of Staff for Strategic Plans
and Programs
LTG Jeffrey A. Sorenson
Jacqueline R. Henningsen
LTG Stephen M. Speakes
Lt Gen Richard Y. Newton III
Director for Studies and Analyses,
Assessments and Lessons Learned
Deputy Chief of Staff, G-4, U.S. Army
Chief Information Officer, G-6, U.S. Army
Deputy Chief of Staff, G-8, U.S. Army
LTG Robert Wilson
Assistant Chief of Staff for Installation
Management, U.S. Army
LTG John F. Kimmons
Deputy Chief of Staff, G-2, U.S. Army
MG William T. Grisoli
(Executive Agent)
Director, Program Analysis and Evaluation,
G-8, U.S. Army
Benjamin Riley
Director, Rapid Reaction Technology Office,
Office of the Director for Defense Research and
Engineering
Nancy Spruill (Executive Agent)
Director, Acquisition Resources and Analysis,
Office of the Under Secretary of Defense
for Acquisition, Technology, and Logistics
Anthony Tether
Director, Defense Advanced Research
Projects Agency
Philip Rodgers
Principal Deputy Director, Acquisition Resources
and Analysis, Office of the Under Secretary of
Defense for Acquisition, Technology, and Logistics
Gary Bliss
Deputy Director, OSD Studies and
FFRDC Programs, Office of the Under Secretary
of Defense for Acquisition, Technology,
and Logistics
1999
HIV Cost and Services Utilization Study
(HCSUS) > HCSUS is the first comprehensive
U.S. survey of health care use among a nationally representative sample of persons in care
for HIV. The study provided unique information
on the costs of HIV care, barriers to access,
and effects of HIV on quality of life, productivity, and family life.
2000
The Societal Promise of Improving Care for Depression > RAND
evaluated how two modest, practical programs in typical managed
care settings could improve the quality of depression care that
patients received and increase the amount of time that patients
worked. No other quality-improvement program for any health
condition in primary care has shown that kind of positive effect on
employment. The programs also reduced ethnic disparities in health
outcomes, even five years after the programs ended.
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R A N D
A N N U A L
R E P O R T
Advisory Trustees
Peter S. Bing
Walter E. Massey
Patricia Salas Pineda
Gustave H. Shubert
1988–1998; 1999–2002*
1983–1991; 1993
1995–2005
1973–1989
Lewis M. Branscomb
Michael M. May
John Edward Porter
Dennis Stanfill
1972–1982
1972–1982; 1983–1993
2001–2006
1978–1988
William T. Coleman, Jr.
G. G. Michelson
John S. Reed
Charles H. Townes
1972–1975; 1977–1987
1984–1994; 1995–1998
1987–1997; 2001–2006
1965–1970
Michael Collins
Newton N. Minow
Paul G. Rogers
George H. Weyerhaeuser
1979–1989
1965–1975; 1976–1986;
1987–1997
1979–1989
1975–1985
Walter F. Mondale
Henry S. Rowen
John White
1967–1972
1973–1977
Brent Scowcroft
James Q. Wilson
1984–1988; 1993–1997
1994–2004
Donald W. Seldin, M.D.
Charles Zwick
1975–1985; 1986–1993
1969–1979; 1980–1990;
1991–1999
Richard P. Cooley
1971–1981; 1982–1992
1991–1993
Harold J. Haynes
1988–1989
Lloyd N. Morrisett
Walter Humann
1973–1984; 1985–1995;
1997–2007
1979–1989; 1990–2000
J. Richard Munro
Arthur Levitt
1984–1994
2002–2007
Eleanor B. Sheldon
1972–1982
Former Trustees
Frederick L. Anderson ‡
Sam Ginn
Alfred L. Loomis ‡
Donald H. Rumsfeld
1959–1969 *
1997–1999
1948–1957
1977–1987; 1988–1998; 1999–2000
J. Paul Austin ‡
T. Keith Glennan ‡
Edwin M. McMillan ‡
David A. Shephard ‡
1971–1981
1963–1974
1959–1969
1959–1963; 1965–1973
Robert F. Bacher ‡
J. Richard Goldstein ‡
Soia Mentschikoff ‡
Kenneth I. Shine
1950–1960
1951–1973
1972–1982
1993–2002
Carl Bildt
W. Richard Goodwin ‡
Philip M. Morse ‡
Frank Stanton ‡
2002–2006
1972–1982
1948–1949; 1950–1962
1957–1967; 1968–1978
Solomon J. Buchsbaum ‡
Philip L. Graham ‡
Philip E. Mosely ‡
Frederick F. Stephan ‡
1982–1992
1961–1963
1951–1961; 1963–1972
1948–1961
Frank R. Collbohm ‡
Alan Greenspan
Harvey S. Mudd ‡
George D. Stoddard ‡
1948–1967
1986–1987
1949–1955
1948–1963
Mark W. Cresap, Jr.
Caryl P. Haskins ‡
Lauris A. Norstad ‡
Julius A. Stratton ‡
1960–1963
1955–1965; 1966–1976
1963–1973
1955–1965
Robert Curvin
Lawrence J. Henderson, Jr. ‡
Amy B. Pascal
George K. Tanham ‡
2001–2006
1948–1971
2000–2005
1971–1982
Charles Dollard ‡
William R. Hewlett ‡
James A. Perkins ‡
Ratan N. Tata
1948–1961
1962–1972
1961–1971
2006–2007
Lee A. DuBridge ‡
Carla A. Hills
Samuel R. Pierce, Jr. ‡
Charles Allen Thomas ‡
1948–1961
1983–1987
1976–1981
1959–1969
Michael Ference, Jr. ‡
Edwin E. Huddleson, Jr. ‡
Thomas P. Pike ‡
Paul A. Volcker
1963–1973
1955–1965; 1966–1976;
1977–1984
1971–1976
1993–2000
John A. Hutcheson ‡
Kenneth S. Pitzer ‡
William Webster ‡
1962–1972
1950–1960; 1961–1971
Ann F. Friedlaender ‡
1988–1992
H. Rowan Gaither, Jr.
‡
1948–1959; 1960–1961
James C. Gaither
1984–1994; 1995–2000
Christopher B. Galvin
1994–2000
1948–1959
Bruce Karatz
1995–2005; 2006
Charles F. Knight
1981–1986
Ernest O. Lawrence ‡
Wesley W. Posvar
‡
John F. Welch, Jr.
1973–1983
1991–1992
Don K. Price ‡
Albert D. Wheelon
1961–1971
1993-2001
Condoleezza Rice
Clyde E. Williams ‡
1991–1997
1948–1963
1956–1958
Walter B. Wriston ‡
1973–1983
* dates indicate service as a RAND trustee
‡
deceased
2001
Education Vouchers and Charter Schools >
Researchers in RAND Education conducted the most
comprehensive analysis of the effects of vouchers and
charter schools on academic achievement, school
choice, access, integration, and civic socialization.
Their report, Rhetoric Versus Reality: What We Know
and What We Need to Know About Vouchers and
Charter Schools, earned respect from all sides of the
debate.
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R E P O R T
Clients and Grantors
U.S. Government
Department of Agriculture
Agricultural Research Service
Economic Research Service
Department of Defense
Counterdrug Technology
Development Program
Department of the Air Force
Department of the Army
Biometrics Management
Office
Department of the Navy
Marine Corps
Joint Staff
Office of the Secretary of
Defense
Assistant Secretary of
Defense (Networks and
Information Integration)
Deputy Secretary of Defense
Under Secretary of Defense
for Acquisition, Technology,
and Logistics
Department of Health and
Human Services
Administration for Children
and Families
Executive Office for U.S.
Trustees
Agency for Healthcare
Research and Quality
Federal Emergency
Management Agency
Assistant Secretary for
Planning and Evaluation
U.S. Coast Guard
Centers for Medicare and
Medicaid Services
Centers for Disease Control
and Prevention
National Institute for
Occupational Safety and
Health
Under Secretary of Defense
for Policy
Director, Net Assessment
Unified Commands
Department of Education
Department of Energy
National Energy Technology
Laboratory
National Renewable Energy
Laboratory
Oak Ridge National Laboratory
Pacific Northwest National
Laboratory
2003
India, Ministry of Defence
Defence Research &
Development Organisation
National Institute of Justice
Office of Justice Programs
Department of Labor
Italian Ministry of Defense
Department of State
Mexico
Secretary of Public Education
Department of the Treasury
National Institutes of Health
Intelligence Community
Medicare Payment Advisory
Commission
Environmental Assessment
Agency (MNP)
National Aeronautics and Space
Administration
Ministry of Defence
National Cancer Institute
National Center for
Complementary and
Alternative Medicine
National Institute on Aging
TRICARE Management
Activity
Federal Bureau of Investigation
Adviesdienst Verkeer
& Vervoer (Ministry of
Transport, Public Works and
Water Management)
Defense Threat Reduction
Agency
Under Secretary of Defense
for Personnel and Readiness
German Ministry of Defense
Department of Justice
Director of National Intelligence
National Heart, Lung, and
Blood Institute
Director, Program
Analysis and Evaluation
Régie autnome des transports
parisiens
Maternal and Child Health
Bureau
Defense Research and
Engineering
Defense Finance and
Accounting Service
France
Department of Veterans Affairs
Defense Advanced
Research Projects Agency
Under Secretary of Defense
(Comptroller)
Directorate-General for
Transport
Health Resources and Services
Administration
National Center on
Minority Health and Health
Disparities
Missile Defense Agency
Directorate-General for Justice,
Freedom, and Security
Department of Homeland
Security
National Institute on
Alcohol Abuse and
Alcoholism
National Institute of Allergy
and Infectious Diseases
National Institute of
Child Health and Human
Development
National Institute for Dental
and Craniofacial Research
National Institute of
Diabetes and Digestive and
Kidney Disease
National Institute on Drug
Abuse
National Institute of
Environmental Health
Sciences
National Institute of Mental
Health
National Institute of
Nursing Research
National Library of
Medicine
Substance Abuse and
Mental Health Services
Administration
Nation-Building in Iraq > As Operation Iraqi Freedom
transitioned into the U.S. occupation of Iraq, RAND
began a new line of inquiry on lessons learned from
previous nation-building experiences. The first volume
in the series, America’s Role in Nation-Building,
informed the Senate debate in September during
the discussion on President Bush’s emergency
supplemental request for Iraq, though few of the
book’s recommendations were heeded.
Netherlands
Sepulveda VA Medical Center
Ministry of Education,
Culture, and Science
National Institute for Literacy
Ministry of the Interior and
Kingdom Relations (BZK)
National Reconnaissance Office
National Science Foundation
Office of Science and Technology
Policy
Securities and Exchange
Commission
National Library of the
Netherlands
Small Business Administration
United Kingdom
Social Security Administration
Buckingham County Council
United States Senate
Cornwall County Council
United States Treasury
Crown Agents
Department of Health
Foreign
Governments,
Agencies,
and Ministries
National Coordinating
Centre for NHS Service
Delivery and Organisation
R&D, UK National Health
Service
Department for International
Development
Australian Government
Royal Australian Air Force
Department for Transport
European Commission
Health Foundation
Directorate-General for
Employment, Social Affairs,
and Equal Opportunities
Home Office
Directorate-General for Health
and Consumer Protection
Directorate-General for
Information Society and
Media
Ministry of Transport,
Public Works, and Water
Management
House of Commons Science &
Technology Committee
Ministry of Defence
National Audit Office
National Infrastructure
Security Coordination Centre
2004
Workers’ Compensation > The RAND Institute
for Civil Justice’s body of work on workers’ compensation provided a new understanding of the
relationship between benefits and wage loss that
permits better assessments of the adequacy and
equity of compensation systems. The research led
to significant changes in the California workers’
compensation system that were adopted with
specific reference to ICJ in the legislation.
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R A N D
A N N U A L
R E P O R T
Clients and Grantors
National Lottery
Commission
National Museum Directors’
Conference
State and Local
Governments
State of Massachusetts
Federal Reserve Bank of Boston
State of New York
State of California
University of California, Davis
University of California,
Los Angeles
Royal Mail
Air Resources Board
Federal Reserve Bank of New
York
University of California,
San Diego
Transport of London
California Children & Families
Commission
New York City
University College, Dublin
UK Clinical Research
Collaboration
Republic of Korea Army
State of Qatar
Armed Forces
Kahramaa (Qatar General
Electricity and Water
Corporation)
National Health Authority
Qatar Petroleum
Qatar PWA Road Affairs
Supreme Council for Family
Affairs
Supreme Education Council
International
Organizations
Andrew T. Huang Medical
Education Promotion Fund
Center for European and
International Studies
California Commission on the
Fair Administration of Justice
California Legislative Analyst’s
Office
California Policy Research
Center
Commission on Health
and Safety and Worker’s
Compensation
Department of Industrial
Relations
Department of Social Services
Welfare Policy Research
Projects
California City and County
Offices
City of Los Angeles
Los Angeles City Council
Los Angeles County
Los Angeles County
Probation Department
Department of Education
State of North Carolina
Board of Education, CharlotteMecklenburg Schools
State of Tennessee
Advisory Committee on
Intergovernmental Relations
State of Texas
Department of Transportation
University of Florida
University of Illinois at Chicago
University of Manchester, UK
University of Maryland
University of Medicine and
Dentistry of New Jersey
University of Michigan
University of North Carolina
University of Pennsylvania
University of Pittsburgh
Colleges and
Universities
American College of Physicians
Brandeis University
Brunel University
Health Economics Research
Group
University of Rochester
University of Singapore
University of Southern
California
University of Texas System
University of Washington
Vanderbilt University
California Policy Research
Center, University of California
Foundations
Carnegie Mellon University
Amgen Foundation
College Voor Zorgbervekeringen
Annenberg Foundation
Columbia University Medical
Center
Arthritis Research Campaign
China Foundation for
International and Strategic
Studies
Los Angeles Unified School
District
Information Assurance
Advisory Council
City of San Diego
Dana Farber Cancer Institute
County of San Mateo, Aging
and Adult Services
Drew University
California Community
Foundation
Santa Barbara High School
District
Georgetown University
Korean Institute of Science and
Technology Evaluation and
Planning (KISTEP)
California Endowment
Harvard University
California HealthCare
Foundation
Medical Research Council
Western Riverside County
Regional Conservation
Authority
King’s Fund
National Centre for Social
Research
Mental Health Services
Ventura County
National Projects Holding Co.
City of Cincinnati
SIKA (Swedish Institute
for Transport and
Communications Analysis)
Commonwealth of Pennsylvania
STIF (Syndicat des Transports
d’Ile-de-France)
Tatweer Dubai, LLC
Vienna International Airport
ZonMw—Netherlands
Organisation for Health
Research and Development
Allegheny County Department
of Human Services
Allegheny Intermediate Unit
Carnegie Library of Pittsburgh
Pittsburgh Public Schools
District of Columbia
Department of Health
Executive Office of the Mayor
State of Louisiana
Louisiana Recovery Authority
The Johns Hopkins University
BEST Foundation
Louisiana State University
Agricultural and Mechanical
College
Carnegie Corporation of New
York
Makene University, Uganda
Casey Family Programs
National University of Singapore
Commonwealth Fund
Northwestern University
Ohio State University
Communities Foundation of
Texas
Oregon Health and Science
University
Community Foundation,
National Capital Region
Peking University
Dartmouth Institute for Security
Technology Studies
Pennsylvania State Education
Association
Annie E. Casey Foundation
Nelson B. Delavan Foundation
Pennsylvania State University
John E. Fetzer Institute, Inc.
Rutgers, The State University of
New Jersey
Flora Family Foundation
Tilburg University, CentERdata
University of California, Berkeley
2005
Cost and Quality Effects of Computerizing Medical
Records > RAND conducted the first comprehensive
study to quantify the costs and potential health
and cost benefits of health information technology.
The analysis identified dramatic efficiency savings,
greatly increased safety, and identified health
benefits. Findings from the study have been cited in
congressional legislation and are playing a prominent
role in national health care reform proposals.
The Ford Foundation
2 0 0 7
R A N D
A N N U A L
R E P O R T
Foundation of Research and
Education of AHIMA
Industry
Bill and Melinda Gates
Foundation
Accent
The Grable Foundation
AFEAS Consortium
Hartford Foundation
Amgen
Science Applications
International Corporation
Howard Heinz Endowment
Analytical Services, Inc.
Sepulveda Research Corporation
District of Columbia Primary
Care Association
Vira I. Heinz Endowment
Bell Canada
Stichting Pensioenfonds ABP
Energy Future Coalition
The William and Flora Hewlett
Foundation
Berkeley Policy Associates
STRATEC
Growth & Justice
Stratus Consulting, Inc.
Highmark, Inc.
Conrad N. Hilton Foundation
BioReliance Invitrogen
Bioservices
Jewish Healthcare Foundation of
Pittsburgh
Blue Cross & Blue Shield of
Rhode Island
Telomer Consortium
Tetraplan A/S
Institute for Health Policy
Solutions
The Robert Wood Johnson
Foundation
Blue Cross Blue Shield Plus of
Minnesota
Joyce Foundation
Blue Cross of California
Aetna
Kaiser Foundation Health Plan
of Georgia
British Telecom
Ewing Marion Kauffman
Foundation
CSSI, Inc.
W. K. Kellogg Foundation
Los Alamos National Laboratory
Foundation
Cerner Corporation
Deloitte & Touche LLP
Edison Schools, Inc.
Ferring, Inc.
PNC Financial Services Group
Center for Health Care Strategies
Risk Management Solutions
College Board
Sanofi Pharmaceuticals, Inc.
Council for Aid to Education
Save the World Air, Inc.
District of Columbia Asthma
Coalition
Transportation Economics &
Management Systems
Institute of Medicine
Japan Marine Sciences Inc.
U MAP Consortium
Jet Propulsion Laboratory
United Health Group
Kaiser Permanente
United Healthcare Services, Inc.
League of Women Voters
Wellpoint Health Networks, Inc.
Learning Point Associates
Westfield Corporation
Magee–Women’s Research
Institute
Zenith Insurance
Memorial Sloan-Kettering
Cancer Center
Henry Luce Foundation
FMQAI
The John D. and Catherine T.
MacArthur Foundation
Genentech, Inc.
Professional
Associations
General Electric Company
American Fertility Association
Richard King Mellon Foundation
GlaxoSmithKline
American Medical Association
Nellie Mae Education
Foundation
Halcrow Group Ltd.
Hallmark, Inc.
Blue Cross and Blue Shield
Association
Health Services Advisory Group
Council of State Governments
Honda R&D North America, Inc.
Gas Technology Institute
National Institute for Early
Education Research
Hugh Gunn Associates, LTD
Integrated Healthcare
Association
National Military Family
Association
National Electrical
Manufacturers Association
National Products Holding
Company
Ohio Association of Chiefs of
Police
New England Medical Center
Hospitals
New York City Police Foundation
Open Society Institute
Oxfam America
David and Lucile Packard
Foundation
Pew Charitable Trusts
Pew Memorial Trust
Humana, Inc.
Industrial Economics,
Incorporated (IEc)
Pittsburgh Foundation
Institute for Healthcare
Improvement
William Penn Foundation
Intel
Qatar Foundation
International Business Machines
Rockefeller Foundation
Johnson & Johnson
Eugene and Maxine Rosenfeld
Family Foundation
Ethicon Endo-Surgery Inc.
Spencer Foundation
Kaiser Permanente Health Plan
Ohio
Stone Foundation
Stranahan Foundation
Merck Childhood Asthma
Network, Inc.
Motion Picture Association
National Bureau of Economic
Research
National Hospice and Palliative
Care Organization
New Leaders for New Schools
Other Nonprofit
Organizations
Nuclear Threat Initiative
AED National Institute for Work
and Learning
Oklahoma City National
Memorial Institute for the
Prevention of Terrorism
Altarum
Primary Care Coalition of
Montgomery County
KRA Corporation
American Institutes for Research
Qualistar Early Learning
American Society of Clinical
Oncology
Research Triangle Institute
Stupski Foundation
Mathematica Policy Research,
Inc.
Surdna Foundation
Mott MacDonald Group
United Way of America
National Pharmaceutical Council
Arkansas Tobacco Settlement
Commission
Wallace Foundation
Native American Industrial
Distributors
Walton Family Foundation, Inc.
World Bank
2006
Arts Education Collaborative
Shelter Partnership, Inc.
Society for Assisted Reproductive
Technology
Bipartisan Policy Center
Technical Assistance
Collaborative, Inc.
Organon
Brookings Institution
UPMC for You
Pepsi Bottling Group, Inc.
California Children and Families
Commission
Urban Institute
Pfizer Inc
Replacing Aerial Refueling Tankers: An Analysis
of Alternatives (AoA) > Aerial refueling tankers
(so-called “gas stations in the sky”) play a critical
role in U.S. military and national security strategy,
enabling the United States to effectively deploy
air power in worldwide operations, such as over
Iraq and Afghanistan, and to operate effective
homeland defense air patrols.
45
2007
Crafting a Complex Relationship with China > Several
publications added new insights to inform policymakers’
understanding of the evolving superpower. One study examined
broad historical trends in Asian geopolitics focused on seizing
opportunities offered by China’s growing economy, and warned
against taking a Cold War–era approach that overemphasizes
military competition. Several other studies examined the most
probable flashpoint for conflict between the U.S. and China—the
relationship between mainland China and Taiwan.
46
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R A N D
A N N U A L
Financial Report
R E P O R T
2 0 0 7
R A N D
A N N U A L
R E P O R T
The RAND Corporation
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
with summarized financial information for the year ended September 24, 2006
(in thousands)
ASSETS
Current assets
Cash and cash equivalents
Receivables, net
Billed and unbilled costs and fees
Other receivables
September 30, 2007
September 24, 2006
$
$
37,555
4,424
Prepaid expenses and other current assets
Total current assets
Property and equipment
Land
Buildings and improvements
Leasehold improvements
Equipment
Construction in progress
Less: Accumulated depreciation and amortization
Net property and equipment
Long-term investments
Building project fund investments
Other assets
Total assets
LIABILITIES AND NET ASSETS
Current liabilities
Accounts payable and other liabilities
Unexpended portion of grants and contracts received
Accrued compensation and vacation
Current portion of long-term debt
36,174
27,080
40,968
5,755
4,387
4,729
82,540
78,532
1,334
106,655
15,007
1,334
105,965
14,592
44,626
2,077
169,699
(38,514)
42,982
1,143
166,016
(31,887)
131,185
134,129
205,621
3,600
186,261
5,759
7,475
6,215
$
430,421
$
410,896
$
20,892
20,152
14,352
1,870
$
27,839
14,724
14,574
1,785
57,266
58,922
Deferred rent
Accrued postretirement benefit liability
Other long-term liabilities
Long-term debt, less current portion
12,776
13,541
3,625
127,105
12,951
12,736
—
125,971
Total liabilities
Commitments and contingencies (Note 8)
Net assets
Unrestricted
Operations
Designated for investment
Designated for special use
214,313
210,580
—
142,893
11,411
—
134,079
9,375
154,304
143,454
23,638
38,166
21,670
35,192
216,108
200,316
Total current liabilities
Total unrestricted
Temporarily restricted
Permanently restricted
Total net assets
Total liabilities and net assets
$
430,421
$
The accompanying notes are an integral part of these consolidated financial statements.
410,896
47
48
The RAND Corporation
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CONSOLIDATED STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS
with summarized financial information for the year ended September 24, 2006
(in thousands)
For the Years Ended
September 24, 2006
Unrestricted Net Assets
Total
Unrestricted
Designated
Temporarily
Restricted
Permanently
Restricted
Total
Total
REVENUE, GAINS, AND OTHER SUPPORT
Contracts and grants
$
223,290
$
—
$
223,290
$
—
$
—
$
223,290
$
215,528
8,414
—
8,414
—
—
8,414
11,187
Income on investments, net
—
6,086
6,086
1,316
—
7,402
5,210
Net realized gains on investments
—
6,194
6,194
1,315
—
7,509
8,219
Net unrealized gains on investments
—
6,788
6,788
634
810
8,232
2,329
Contributions
7,816
—
7,816
5,687
2,164
15,667
14,683
Other investment income
320
—
—
320
486
320
—
Transfer of designated net assets
to operations
5,820
(5,820)
—
—
—
—
—
Net assets released from restrictions
6,984
—
6,984
(6,984)
—
—
—
Total revenues, gains, and other support
252,644
13,248
265,892
1,968
2,974
270,834
257,642
194,605
—
194,605
—
—
194,605
185,520
Management and general
56,432
—
56,432
—
—
56,432
57,398
Total expenses
251,037
—
251,037
—
—
251,037
242,918
Change in net assets before other items
1,607
13,248
14,855
1,968
2,974
19,797
14,724
(3,625)
—
(3,625)
—
—
(3,625)
—
—
EXPENSES
Research
Other items:
Change in fair value of derivative instruments
(Note 7)
Adjustment to Postretirement Benefit Liability
(other than net periodic postretirement
benefit cost) (Note 6)
(380)
—
(380)
—
—
(380)
Noncash net asset transfer (Note 2)
2,398
(2,398)
—
—
—
—
—
Remediation related to land sale (Note 8)
—
—
—
—
—
—
(5,551)
Change in net assets
Net assets at beginning of year
Adjustment to beginning net assets (Note 2)
Net assets at end of year
—
10,850
10,850
1,968
2,974
15,792
9,173
—
143,454
143,454
21,670
35,192
200,316
196,599
—
$
—
—
$
154,304
—
$
154,304
—
$
23,638
—
$
The accompanying notes are an integral part of these consolidated financial statements.
38,166
—
$
216,108
(5,456)
$
200,316
R E P O R T
Fees
A N N U A L
Operations
R A N D
September 30, 2007
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A N N U A L
R E P O R T
The RAND Corporation
CONSOLID ATED STATEMENTS OF CASH FLOWS
with summarized financial information for the year ended September 24, 2006
(in thousands)
For the Year Ended
September 30, 2007
For the Year Ended
September 24, 2006
$
$
Cash flows from operating activities:
Change in net assets
15,792
9,173
Adjustments to reconcile change in net assets to net cash
provided by operating activities:
Depreciation and amortization
7,327
Loss on debt extinguishment
2,077
—
—
1,536
Noncash termination benefits
Foreign exchange gain
Loss on disposition of property and equipment
Permanently restricted contribution revenue
8,237
(249)
(188)
136
268
(2,164)
(1,629)
(15,741)
(10,548)
3,413
(1,898)
Decrease (increase) in other receivables
923
(2,342)
Decrease (increase) in prepaid and other current assets
342
(824)
Net realized/unrealized gains
Changes in assets and liabilities:
Decrease (increase) in billed and unbilled costs and fees
(Increase) decrease in other long-term assets
(1,148)
3,686
Decrease in accounts payable and other liabilities
(6,486)
(4,031)
5,428
(3,312)
Increase (decrease) in unexpended portion of grants and
contracts received
(Decrease) increase in accrued compensation and vacation
(222)
1,287
(Decrease) increase in deferred rent
(175)
3,057
Increase in postretirement benefit liability
Increase in other long-term liabilities
Net cash provided by operating activities
805
623
3,625
—
13,683
3,095
Cash flows from investing activities:
Purchases of investments
Sales of investments
Proceeds from sales of project fund investments
(54,835)
(40,570)
51,192
37,790
2,159
16,485
Purchases of property and equipment
(4,892)
(17,313)
Net cash used in investing activities
(6,376)
(3,608)
(33,241)
—
34,975
—
Cash flows from financing activities:
Deposits to bond escrow
Proceeds from bond issuance
Payments of bond issuance costs
Principal payments on long-term debt
Contributions restricted for purchase of property and equipment
Permanently restricted contributions received in cash
Net cash provided by financing activities
Effect of currency exchange rate changes on cash
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
$
(826)
—
(1,785)
(2,415)
50
73
2,522
3,629
1,695
1,287
92
116
9,094
890
27,080
26,190
36,174
$
The accompanying notes are an integral part of these consolidated financial statements.
27,080
49
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R E P O R T
The RAND Corporation
NOTES TO CONSOLIDATED FINANC IAL STATEMENTS
1. Corporate Organization:
RAND Corporation (RAND) is a nonprofit, tax-exempt corporation performing research and analysis funded by
contracts, grants, and contributions. In addition, RAND conducts educational programs that provide graduate
training.
The consolidated financial statements of RAND include the accounts of a controlled affiliate: RAND Europe, a
foundation domiciled in The Netherlands (see also Note 11). All intercompany balances and transactions have
been eliminated in consolidation.
2. Summary of Significant Accounting Policies:
Fiscal Year. RAND’s fiscal reporting for both financial statement and tax purposes is based on a 52- or 53-week
year ending on the Sunday closest to September 30. The fiscal years include operations for a 53-week period in
2007 and a 52-week period in 2006.
Basis of Presentation. The accompanying financial statements have been prepared on the accrual basis of
accounting in accordance with accounting principles generally accepted in the United States of America and in
accordance with the American Institute of Certified Public Accountants Audit and Accounting Guide, “Not-forProfit Organizations.”
Net assets are classified into three categories according to donor-imposed restrictions, as follows:
Permanently restricted—Net assets subject to donor-imposed stipulations that neither expire by passage of time
nor can be fulfilled or otherwise removed by actions of RAND. Generally, the donors of these assets permit RAND
to use all or part of the investment return on these assets.
Temporarily restricted—Net assets whose use by RAND is subject to donor-imposed stipulations that either
expire by passage of time or can be fulfilled and removed by actions of RAND.
Unrestricted—Net assets that are not subject to donor-imposed stipulations. Unrestricted assets may be
designated for specific purposes by action of the Board of Trustees.
The financial statements include certain prior-year summarized comparative information in total but not by
net asset category. Such prior-year information does not include sufficient detail to constitute a presentation
in conformity with accounting principles generally accepted in the United States of America. Accordingly, such
information should be read in conjunction with RAND’s financial statements for the year ended September 24,
2006, from which the summarized financial information was derived.
Use of Estimates. The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements. Estimates also affect the reported amount of revenues, expenses, or other changes in
net assets during the reporting period. Actual results could differ from these estimates.
Revenue and Expense Recognition. Contract and grant revenues are recognized as the related services are
performed in accordance with the terms of the contract or grant or using the percentage of completion
method.
Contributions, including unconditional promises to give, are recognized as revenue in the period received and
are reported as increases in the appropriate category of net assets. Donor-restricted contributions that are
received and either spent or deemed spent within the same fiscal year are reported as unrestricted revenue.
Expenses are generally reported as decreases in unrestricted net assets. Expirations of donor-imposed stipulations
or of board designations that simultaneously increase one class of net assets and decrease another are reported
as transfers between the applicable classes of net assets.
Concentrations of Risk. Cash and cash equivalents are maintained with several financial institutions. Deposits
held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may
be redeemed upon demand and are maintained with financial institutions of reputable credit and therefore
bear minimal credit risk.
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RAND derived 77 percent and 79 percent of its research revenues in fiscal years 2007 and 2006, respectively,
from contracts, grants, and fees with agencies of the federal government.
Cash and Cash Equivalents. RAND considers all highly liquid instruments purchased with a maturity of three
months or less, whose purpose is not restricted, to be cash equivalents.
Property and Equipment. Property and equipment is stated at cost. Depreciation is computed by the straightline method over the following estimated useful lives of the assets: 5 to 40 years for building and improvements
and 3 to 20 years for equipment. Leasehold improvements are amortized by the straight-line method over
the shorter of the estimated useful lives of the assets or the term of the lease. Construction in progress will
be amortized over the estimated useful lives of the respective assets when they are ready for their intended
use. Certain computer systems and software are internally developed. Costs associated with the application
development stage are capitalized and depreciated over the useful life of the system or software. All other
costs are expensed as incurred. Included in Equipment on the Consolidated Statements of Financial Position
was $7,000,000 and $6,800,000 of computer systems and software at September 30, 2007, and September 24,
2006, respectively.
When assets are retired, the assets and related allowances for depreciation and amortization are eliminated
from the accounts and any resulting gain or loss is reflected in operations. As of September 30, 2007, and
September 24, 2006, approximately $14,154,000 and $11,593,000, respectively, of fully depreciated assets were
in use.
Investments. All investments of permanently restricted net assets and unrestricted net assets board designated
for investment are pooled in a long-term investment fund. Income on pooled investments is allocated to the
general use or individual special use funds based on the average balance for each fund (see Note 9).
The percentage of board-designated funds distributed for unrestricted use was 4.5 percent and 4.0 percent
in fiscal years 2007 and 2006, respectively, based on the average of the trailing twelve-quarter market values
of the unrestricted funds. The total distribution was $5,820,000 and $4,754,000 for fiscal years 2007 and 2006,
respectively.
Gains and losses on investments and investment income are reported as increases or decreases in unrestricted
net assets unless their use is restricted by explicit donor stipulation.
Noncash Net Asset Transfers. Primarily due to RAND’s adoption of SAB 108 (see New Accounting Pronouncements
in Note 2), a transfer of board-designated net assets (noncash) to operations totaling $3,500,000 was required
for fiscal year 2006 to bring ending unrestricted net assets from operations to zero. An additional noncash
transfer of $2,398,000 was required in fiscal year 2007 due to the change in value of derivative instruments (see
Note 7) and the adoption of FASB 158 (see New Accounting Pronouncements in Note 2). These transfers will be
reversed in future years as unrestricted net assets from operations become available.
Building Project Fund Investments. The net proceeds from the tax-exempt bond issuance (see Note 7) were
invested under a collateralized flexible draw investment agent that expired on October 1, 2005. The balance
has since been invested in short-term AAA-rated 30-day commercial paper and/or a money market fund.
These proceeds are subject to arbitrage rebate and yield restriction rules under the Internal Revenue Code in
which excess earnings on tax-exempt bond proceeds must be rebated to the federal government if the yield on
the investments exceeds the effective yield on the related tax-exempt bonds. The liability, if any, is accrued on
an annual basis and must be remitted to the Internal Revenue Service after the end of every fifth bond year and
upon full retirement of the bonds. A yield reduction liability of $37,000 and $115,000 was included in Accounts
payable and other liabilities in the Consolidated Statements of Financial Position as of September 30, 2007, and
September 24, 2006, respectively.
Other investment income includes interest earned on these investments, including the change in the yield
restriction liability, totaling $320,000 and $472,000 for fiscal years ended September 30, 2007, and September
24, 2006, respectively.
51
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Bond Issuance Costs. Bond issue costs represent expenses incurred in connection with issuing RAND’s revenue
bonds (see Note 7) and are amortized over the term of the related bond issue on a straight-line basis, which
approximates the effective interest method. Unamortized costs were $3,149,000 and $3,088,000 at September
30, 2007, and September 24, 2006, respectively, and are included in Other assets on the Consolidated Statements
of Financial Position.
Income Tax Status. RAND is exempt from income tax under Section 501(c)(3) of the U.S. Internal Revenue Code
and corresponding California provisions and has qualified for the 50 percent charitable contributions limitation.
RAND has been classified as an organization that is not a private foundation under Section 509(a)(1) and has
been designated a “publicly supported” organization under Section 170(b)(1)(A)(vi) of the Internal Revenue
Code.
Foreign Currency Translation. The assets and liabilities of RAND Europe are translated at year-end exchange
rates; transactions are translated at the average exchange rates during the year. The effects from the translation
of foreign currencies in the current and prior year are cumulatively immaterial to the consolidated financial
statements.
Supplemental Cash Flow Information. Cash paid for interest was $5,805,000 in fiscal year 2007 and $4,211,000
in fiscal year 2006.
New Accounting Pronouncements. In September 2006, the Financial Accounting Standards Board (FASB) issued
FASB Statement No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans,
an amendment of FASB Statements No. 87, 88, 106, and 132(R) (FASB 158). For not-for-profit employers, FASB
158 requires an entity to (i) recognize a defined benefit postretirement plan’s funded status—measured as
the difference between the fair value of plan assets and the benefit obligation—in its statement of financial
position and (ii) recognize as a separate line item within changes in unrestricted net assets—apart from
expenses—prior service costs or credits and actuarial gains and losses that arise during the period but are not
recognized as components of net periodic benefit cost pursuant to FASB Statement Nos. 87 and 106. In addition,
as FASB 158 does not permit retrospective application, the cumulative unrecognized prior service costs or credits
and actuarial gains and losses as of the end of the year are recognized as a transition adjustment in the year of
adoption. RAND adopted FASB 158 as of its fiscal year ended 2007. See also Note 6.
In September 2006, the U.S. Securities and Exchange Commission staff issued Staff Accounting Bulletin (SAB)
No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year
Financial Statements (SAB 108), which provides interpretative guidance on the consideration of the effects of
prior-year misstatements in quantifying current-year misstatements for the purpose of a materiality assessment.
SAB 108 requires companies to apply its provisions either by (i) restating prior financial statements or (ii)
recording the cumulative effect as adjustments to the carrying values of assets and liabilities as of the beginning
of the year of adoption with an offsetting adjustment recorded to the opening balance of Unrestricted Net
Assets. The cumulative effect method of initially applying SAB 108 is permitted if the amount of the adjustment
would have been material to the annual financial statements for the year preceding the adoption of SAB
108 or if the effect of recording the adjustment in the year of adoption would be material to those financial
statements.
RAND had misstatements in periods prior to fiscal year 2006 related to lease accounting and deferred
compensation. These misstatements were not material to any individual prior period, but the correction of
such errors during fiscal year 2006 on a cumulative basis would have been material to the RAND fiscal year
2006 consolidated financial statements. As such, RAND adopted SAB 108 during fiscal year 2006 in accordance
with (ii) above using the cumulative effect method and adjusted the carrying values of its assets and liabilities
with an offsetting adjustment to Unrestricted Net Assets as of September 26, 2005. Rent, depreciation, and
compensation expenses were understated by $5,456,000 (cumulatively) in years prior to fiscal year 2006 so,
as of September 26, 2005, RAND recorded a $6,962,000 increase in leasehold improvements, a $2,024,000
increase in accumulated depreciation, a $9,894,000 increase in deferred rent, a $500,000 increase in deferred
compensation, and a $5,456,000 decrease to unrestricted net assets to correct these misstatements.
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3. Billed and Unbilled Costs and Fees:
The following table summarizes the components of billed and unbilled contract and grant costs and fees
(in thousands):
September 30, 2007
U.S. government agencies
Billed
Unbilled
$
State, local, and private sponsors
Billed
Unbilled
Allowance for bad debt
10,607
15,509
26,116
September 24, 2006
$
7,592
4,348
6,816
5,771
11,940
12,587
(501)
$
13,977
14,905
28,882
37,555
(501)
$
40,968
Unbilled amounts principally represent recoverable costs and accrued fees billed in the first quarter of fiscal
year 2008 and fiscal year 2007, respectively.
No significant contract terminations are anticipated at present, and past contract terminations have not
resulted in significant unreimbursed costs.
4. Contributions Receivable:
Unconditional promises to give were $7,109,000 and $7,242,000 at September 30, 2007, and September 24,
2006, respectively. The receivables are recorded net of the discount for future cash flows, using the riskfree rate of return appropriate for the expected term of the promise to give determined at the time the
unconditional promise to give is initially recognized (5%). Receivables expected in one year or less are included
in Other receivables and receivables expected after one year are included in Other assets on the Consolidated
Statements of Financial Position. The carrying amount of Contributions Receivable is deemed a reasonable
estimate of their fair value.
Realization of the pledges is expected in the following periods (in thousands):
In one year or less
Between one year and five years
September 30, 2007
September 24, 2006
$
$
4,424
2,939
7,363
Less discount
7,405
(254)
$
7,109
5,173
2,232
(163)
$
7,242
As more fully described in Note 9, contributions receivable are primarily intended for the following uses
(in thousands):
Temporarily restricted
Permanently restricted
September 30, 2007
September 24, 2006
$
6,854
255
$
6,637
605
$
7,109
$
7,242
During the fiscal year ended September 30, 2007, RAND received payments of prior-year pledges in the
amount of $4,217,000. No allowance for uncollectible pledges was deemed necessary at September 30, 2007,
or September 24, 2006.
Donors have made conditional promises to give of $2,896,000 and $2,999,000 as of September 30, 2007, and
September 24, 2006, respectively. These conditional pledges, which include revocable deferred gifts, are not
recorded in these consolidated financial statements.
53
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5. Long-Term Investments:
Cash and cash equivalents included in long-term investments consist of commercial paper, money market funds,
and other short-term investments and are carried at cost, which approximates fair value.
Long-term investments are presented at fair value and all related transactions are recorded on the trade date.
The investments consist of funds in both domestic and foreign equity securities and bonds. Approximately 34
percent of the long-term assets consist of foreign stocks and bonds. Bond funds and equity funds include funds
that are traded in public markets or that are available exclusively to institutional investors. For funds that are
available exclusively to institutional investors, the underlying assets of the funds are traded in public markets.
Alternative investments include RAND’s share of private equity funds and limited partnership arrangements for
which there is no readily available market value. Alternative investments are carried at RAND’s net contribution
and allocated share of undistributed profits and losses. The underlying value of the alternative investments
may include assets for which the fair value is provided by the investment manager in good faith. Some of these
investments have restrictions that limit RAND’s ability to withdraw funds as specified in the arrangements.
RAND believes the carrying amount of these investments is a reasonable estimate of fair value. For those
investments that are not traded on a ready market, the estimates of their fair value may differ from the value
that would have been used had a ready market for those investments existed. The cost of securities sold is
determined by the specific identification method.
As of September 30, 2007, RAND had commitments outstanding to purchase alternative investments of
$4,838,000; of these commitments, approximately $1,048,000 is due within one year.
Investment income is shown net of related expenses of $455,000 and $208,000, for the fiscal years ended
September 30, 2007, and September 24, 2006, respectively.
Long-term investments consist of the following (in thousands):
September 30, 2007
Cash and cash equivalents
$
4,045
September 24, 2006
$
8,836
Shares of bond funds, at fair value
(cost, 2007—$77,031, and 2006—$74,095)
75,260
72,384
Shares of equity funds, at fair value
(cost, 2007—$52,750, and 2006—$46,943)
81,049
71,263
Alternative investments
(cost, 2006—$30,696, and 2006—$23,520)
45,267
$
205,621
33,778
$
186,261
6. Postretirement Benefits Other Than Pensions:
In addition to providing certain retirement benefits, RAND provides health care benefits to certain employees
who retire having met the required age and years of service with RAND. This coverage also applies to their
dependents. Retirees may elect coverage under the Preferred Provider Organization, various HMOs, or
reimbursement of individually purchased Medigap policies. Medicare becomes the primary coverage for
retirees when they reach age 65. Retirees and dependents share substantially in the cost of coverage. RAND
retains the right, subject to existing agreements, to change or eliminate these benefits.
During 2003, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (the “Act”) was
signed into law. The Act expanded Medicare to include, for the first time, coverage for prescription drugs
(Medicare Part D). This new coverage was generally effective January 1, 2006. Medicare Part D subsidies are
reflected with respect to RAND’s postretirement benefit liabilities.
RAND’s retiree medical program already provides prescription drug coverage for retirees over age 65 that
equals or exceeds the benefit to be provided under Medicare. As long as the retirees remain in the Company
medical plan rather than enrolling in the new Medicare prescription drug coverage, Medicare will share the
cost of the plan with the Company and the employees. This legislation has therefore reduced RAND’s share of
the obligations for future retiree medical benefits.
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The following table sets forth the plan’s funded status reconciled with the amount shown in the Consolidated
Statements of Financial Position (in thousands):
September 30, 2007
September 24, 2006
$
$
Change in benefit obligation
Benefit obligation at beginning of year
Service cost
20,169
20,292
664
655
Increase due to passage of time
1,189
1,146
Plan participants’ contributions
480
386
Actuarial gain
(793)
(1,422)
Benefits paid
(1,017)
(888)
Benefit obligation at end of year
20,692
20,169
6,090
5,365
Actual return on plan assets
684
285
Employer contributions
914
942
Change in plan assets
Fair value of plan assets at beginning of year
Plan participants’ contributions
480
Benefits paid
386
(1,017)
Fair value of plan assets at end of year
Unfunded obligation
(888)
7,151
6,090
13,541
14,079
Unrecognized net actuarial loss
—
(1,338)
Unrecognized prior service cost
—
(5)
Net amount recognized
$
13,541
$
12,736
The following table provides the relevant weighted-average assumptions used:
September 30, 2007
September 24, 2006
Discount rate used to determine benefit
obligation
6.50%
6.00%
Discount rate used to determine net periodic
postretirement benefit cost
6.00%
5.75%
Long-term rate of return on plan assets
8.00%
8.00%
Assumed health care cost trend rates are as follows:
September 30, 2007
September 24, 2006
Health care cost trend rate assumed for next year
9.50%
9.50%
Rate to which the cost trend rate is assumed
to decline
5.00%
5.00%
2014
2013
Year that the rate reaches the ultimate trend rate
The health care cost trend rate assumption has a significant effect on the amounts reported. Increasing the
assumed health care cost trend rates by one percentage point in each year would increase the service cost and
increase due to passage-of-time components of the fiscal year 2007 expense by $350,000 and the accumulated
postretirement benefit obligation as of September 30, 2007, by $2,948,000. Decreasing the assumed health
care cost trend rates by one percentage point in each year would decrease the service cost and decrease due to
passage-of-time components of the fiscal year 2007 expense by $281,000 and the accumulated postretirement
benefit obligation as of September 30, 2007, by $2,443,000.
55
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The net periodic postretirement benefit cost for fiscal years ended September 30, 2007, and September 24,
2006, included the following components (in thousands):
2007
Service cost-benefits attributed to service during the
period
$
Increase in the accumulated postretirement benefit
obligation to recognize the effects of the passage
of time
2006
664
$
1,189
Expected return on plan assets
655
1,146
(489)
Recognition of loss
Recognition of prior service cost
Net periodic postretirement benefit cost
$
(333)
—
190
(26)
(93)
1,338
$
1,565
The following benefit payments, which reflect expected future service and Medicare Part D subsidies, as
appropriate, are expected to be paid (in thousands):
2008
Gross Benefit
Payments
Medicare Part
D Subsidies
$
$
839
55
Net Benefit
Payments
$
784
2009
975
66
909
2010
1,083
79
1,004
2011
1,183
92
1,091
2012
1,252
106
1,146
Next five years
7,609
772
6,837
Asset allocations at September 30, 2007, and September 24, 2006, by asset category are as follows:
2007
2006
Cash and short term
10%
27%
Shares of bond funds, at fair value
34
29
Shares of equity funds, at fair value
36
26
Alternative investments
20
18
100%
100%
Adjustment to Postretirement Benefit Liability (other than net periodic postretirement benefit cost) on the
Consolidated Statements of Activities and Changes in Net Assets for the period ended September 30, 2007, is
the required FASB 158 transition adjustment comprised of an actuarial loss of $349,000 and prior service costs
of $31,000 and represents the cumulative amounts previously unrecognized in net periodic benefit cost as of
September 30, 2007.
Estimated prior service costs and actuarial net losses that are expected to be recognized in net periodic
postretirement benefit cost during fiscal year 2008 are $7,600 and $0, respectively.
RAND contributes to a Voluntary Employee Benefit Association irrevocable trust that is used to partially fund
health care benefits for future retirees. In general, retiree health benefits are paid as covered expenses are
incurred.
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7. Borrowing Arrangements:
Revenue Bonds. In 2002, RAND issued $130,000,000 of tax-exempt revenue bonds to finance the construction
of its new Santa Monica headquarters facility ($32,500,000 Series 2002A fixed rate and $97,500,000 Series 2002B
variable rate). During fiscal year 2007, RAND initiated an allowed-for one-time advanced refunding of its 2002A
fixed rate bonds resulting in the issuance of $34,975,000 Series 2007 additional variable rate tax-exempt revenue
bonds and the defeasance of the original Series 2002A as part of a plan of refinancing. The proceeds from
the Series 2007 bonds, net of issuance costs of $1,006,000, were irrevocably deposited into an escrow fund and
invested in U.S. Treasury Securities in an amount sufficient to service the principal and interest payments on
the Series 2002A bonds through the redemption date of April 1, 2012. Included in management and general
expenses on the Consolidated Statements of Activities and Changes in Net Assets is $2,077,000, recognized as a
loss on the extinguishment of the Series 2002A fixed rate bonds.
In anticipation of the issuance of the Series 2007 variable rate bonds, RAND entered into an interest swap
agreement with a counterparty (the 2007 Swap) whereby RAND agrees to pay the counterparty a fixed rate of
interest of 3.955% and the counterparty agrees to pay RAND the Series 2007 variable rate until April 1, 2012,
and 67% of one-month LIBOR thereafter. The 2007 Swap terminates on April 1, 2042, the maturity date of
the Series 2007 variable rate bonds. In addition, RAND entered into an interest rate swap agreement with a
counterparty for $42,350,000 of its existing Series 2002B variable rate bonds (the 2002 Swap) whereby RAND
agrees to pay the counterparty a fixed rate of interest of 3.955% and the counterparty agrees to pay RAND 67%
of one-month LIBOR. The 2002 Swap terminates on April 1, 2042, the maturity date of the Series 2002B variable
rate bonds. Included in Other items on the Consolidated Statements of Activities and Changes in Net Assets and
in Other long-term liabilities on the Consolidated Statements of Financial Position is $3,625,000, recognized as
the change in fair value of these derivative instruments.
The payment of principal and interest on the bonds is insured by a third party. Long-term debt is as follows (in
thousands):
September 30,
2007
California Infrastructure and Economic Development Bank Variable Rate Revenue
Bonds, Series 2007, issued in the original principal amount of $34,975,000,
in connection with an advanced refunding of the Series 2002A bonds, in
September 2007; average interest rate of 3.65% for the fiscal year ending
September 30, 2007; annual principal payments ranging from $400,000 to
$1,825,000, beginning April 1, 2008, and ending April 1, 2042
$
34,975
September 24,
2006
$
—
California Infrastructure and Economic Development Bank Fixed Rate Revenue
Bonds, Series 2002A, issued in the original principal amount of $32,500,000, in
connection with the construction of a new facility in Santa Monica, California,
in July 2002; interest rates ranging from 3.50% to 5.50%; defeased in
September 2007; balance as of September 24, 2006, includes unamortized
bond premium of $171,000
—
32,326
California Infrastructure and Economic Development Bank Variable Rate Revenue
Bonds, Series 2002B, issued in the original principal amount of $97,500,000, in
connection with the construction of a new facility in Santa Monica, California,
in July 2002; average interest rate of 3.5% and 3.1% for fiscal years ending
September 30, 2007, and September 24, 2006, respectively; annual principal
payments ranging from $1,470,000 to $4,400,000, beginning April 1, 2008,
and ending April 1, 2042
94,000
95,430
128,975
(1,870)
127,756
(1,785)
Less current portion
$
127,105
Annual bond principal payments are required in the following fiscal years (in thousands):
2008
2009
2010
2011
2012
Thereafter
$
1,870
1,980
2,050
2,130
2,200
118,745
$
128,975
$
125,971
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Accrued interest payable relating to the bonds was $298,000 and $1,035,000 as of September 30, 2007, and
September 24, 2006, respectively. The estimated fair value of RAND’s revenue bonds, including the current
portion, was $128,975,000 and $129,139,000 as of September 30, 2007, and September 24, 2006, respectively.
Line of Credit. RAND has an uncollateralized line of credit in the principal amount of $18,000,000 at September
30, 2007, which expires in May 2008. The line of credit contains covenants that require RAND to maintain a
minimum amount of liquid assets and tangible net worth. There were no amounts outstanding at September
30, 2007, and September 24, 2006. Under the terms of the credit agreement, interest is payable monthly at
either the prime rate less .75 percent or the LIBOR rate plus 1.5 percent, as selected by RAND. No amounts were
drawn on the line of credit agreement in fiscal years 2007 or 2006.
RAND’s total interest expense was $5,093,000 and $4,718,000 for the fiscal years ended September 30, 2007,
and September 24, 2006, respectively.
8. Commitments and Contingencies:
Lease Commitments. Operating lease commitments, net of $4,836,000 representing subleases, are as follows
(in thousands):
2008
2009
2010
2011
2012
Thereafter
$
7,850
8,701
8,836
9,000
8,912
24,303
$
67,602
Future minimum rentals are primarily comprised of office, equipment, and warehouse space leases. Certain
of RAND’s office leases contain rent escalation clauses and fair-market renewal options. All property leases
generally require RAND to pay for utilities, insurance, taxes, and maintenance. RAND’s net rental expense
was $7,440,000 and $8,285,000 for the fiscal years ended September 30, 2007, and September 24, 2006,
respectively.
Other Commitments. Contract costs billed to government clients are subject to audit by the Defense Contract
Audit Agency (“DCAA”). Resulting indirect cost adjustments, if any, are prorated to all contracts. Contract costs
billed prior to September 24, 2006, have been audited and accepted. To date, there have been no significant
cost disallowances. In the opinion of management, contract costs billed subsequent to September 24, 2006,
are allowable, and any potential cost disallowance would not materially affect RAND’s consolidated financial
position, results of operations, or cash flows.
RAND has certain contingent liabilities with respect to claims arising from the ordinary course of business. In
the opinion of management, such contingent liabilities will not result in any loss that would materially affect
RAND’s financial position, results of operations, or cash flows.
Environmental Remediation. Under the terms of an agreement with the City of Santa Monica (the “City”) for
the sale of land owned by RAND, RAND is responsible for the demolition of existing buildings on the site and
environmental remediation with respect to the underlying land.
During 2006, RAND reevaluated its estimate of costs related to the demolition and remediation. Based on the
most current information available, RAND accrued an additional $5,551,000, which is included in Remediation
related to land sale on the Consolidated Statements of Activities and Changes in Net Assets for fiscal year 2006.
The estimated outstanding liability associated with the demolition and environmental remediation is $0 and
$3,497,000 as of September 30, 2007, and September 24, 2006, respectively. In accordance with the terms of
the agreement, an escrow account has been established to ensure performance of these matters. Also, under
the terms of the agreement with the City, RAND must indemnify the City for claims related to the presence
of hazardous materials at the site for a period until ten years after the demolition of the old buildings and
completion of soil and groundwater remediation. There can be no assurance that future claims for indemnity
will not have a material adverse effect on RAND’s consolidated results of operations or cash flows.
In December 2006, the City advised RAND that all demolition and remediation requirements under the terms
of the agreement had been fulfilled and authorized release of the remaining funds from the escrow account.
RAND received $1,058,000 in January 2007.
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9. Net Assets:
Board-Designated Net Assets. Board-designated net assets are available for the following purposes
(in thousands):
September 30, 2007
Designated for investment
$
142,893
September 24, 2006
$
134,079
Designated for special use:
RAND Education
3,640
3,150
National Security Research and Training
2,879
2,350
RAND Institute for Civil Justice
2,673
2,355
President’s Fund
747
514
Bing Center for Health Economics
390
369
Pardee RAND Graduate School
385
207
Other
697
430
11,411
$
154,304
9,375
$
143,454
Temporarily Restricted Net Assets. Temporarily restricted net assets are available for the following purposes
(in thousands):
September 30, 2007
Pardee RAND Graduate School
$
3,697
September 24, 2006
$
3,326
RAND Center for Middle East Public Policy
2,720
2,756
National Security Research and Training
2,092
1,809
Bing Center for Health Economics
1,670
1,818
President’s Fund
1,626
101
RAND Health
1,591
2,180
1,372
1,391
117
228
RAND Institute for Civil Justice
1,225
1,209
RAND Center for Asia Pacific Policy
1,118
766
RAND Headquarters
RAND Center for Russia and Eurasia
RAND Business Leaders Forum
General support
1,005
900
RAND Pardee Center for Longer Range Global Policy
954
671
Paul O’Neill Alcoa Professorship in Policy Analysis
817
617
RAND Infrastructure, Safety, and Environment
631
307
RAND Center for Domestic and International Health Security
511
815
RAND Child Policy
458
483
LRN-RAND Center for Corporate Ethics, Law, and Governance
443
911
1,591
1,382
Other
$
23,638
$
21,670
59
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Permanently Restricted Net Assets. Permanently restricted assets are shown below by the purpose designated
by the donor. The assets are invested in perpetuity and the income is available to support the restricted activities
(in thousands):
September 30, 2007
September 24, 2006
Pardee RAND Graduate School
General support
$
Awards and scholarships
12,427
$
11,711
3,120
2,862
National Security Research and Training
4,500
4,500
RAND Institute for Civil Justice
4,134
4,134
RAND Pardee Center for Longer Range Global Policy
3,670
3,670
RAND—general support
3,565
3,565
Paul O’Neill Alcoa Professorship in Policy Analysis
2,479
2,479
Tang Institute for U.S.–China Relations
2,000
—
Research Position Endowment
1,500
1,500
771
771
Other
$
38,166
$
35,192
10. Employee Retirement Plans:
RAND has four defined contribution employee plans: a Qualified Retirement Plan (“QRP”), a Supplemental
Retirement Annuity Plan (“SRAP”), a Nonqualified Deferred Compensation Plan (“NDCP”), and a Nonqualified
Supplementary Plan (“NSP”). Most full-time, regular employees are eligible to participate in the QRP and SRAP.
Certain employees are eligible to participate in the NSP and NDCP. RAND has reserved the right to terminate
the plans at any time, but in such an event, the benefits already purchased by the participant and contributions
already made by RAND would not be affected. The QRP and the NSP are entirely RAND-financed. RAND’s
contributions to the Plans for eligible employees range from 5 percent to 14 percent of salaries, depending on
the level of wages and age of the participating employee. RAND’s contributions to the QRP vest at the earlier
of retirement or four years of service. Vesting begins after two years of service and increases weekly to 100
percent at the end of four years of service. The NSP and NDCP vest under various conditions specified in the
plan. All contributions made by RAND are charged to operations. RAND’s contributions were $10,081,000 and
$9,490,000 for the fiscal years ended September 30, 2007, and September 24, 2006, respectively. The SRAP and
NDCP only require employee contributions and RAND does not contribute to these plans.
11. Termination Benefits:
FASB Statement No. 146, Accounting for Costs Associated with Exit or Disposal Activities (FAS 146), includes a
provision that a liability for one-time termination benefits provided to current employees that are involuntarily
terminated under the terms of a benefit arrangement must be recognized in the period(s) in which the liability
is incurred. During fiscal year 2006, RAND initiated the centralization of the operations of RAND Europe to
its Cambridge office. This centralization includes closure of its offices in Berlin, Germany (completed in fiscal
year 2006) and Leiden, The Netherlands (completed in fiscal year 2007) and wind down of the associated
legal entities (to be completed in fiscal year 2008). For fiscal year 2006, included in management and general
expenses on the Consolidated Statements of Activities and Changes in Net Assets and in Accounts payable and
other liabilities on the Consolidated Statements of Financial Position is $1,536,000 in one-time termination
benefits for certain employees of RAND Europe who were involuntarily terminated. These benefits were paid
during fiscal year 2007. An additional $491,000 of benefits were incurred during fiscal year 2007 and paid prior
to September 30, 2007. No additional payments are expected during fiscal year 2008.
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Photo Credits
COVER IMAGES
GETTY IMAGES: John-Francis Bourke, schoolgirl (5–7) balancing books
on head, portrait; Anthony Correia (two images), attack on New York
City; Derek Croucher, traffic on street, elevated view; Ed Darack, a CH-47
chinook roars through cold mountain air; Ed Darack, driving an M1A1
Abrams Tank; Bill Gallery–Doctor Stock, the power of touch; Justin
Guariglia, Ijen plateau, Bali, Indonesia; Justin Guariglia, Shaolin, Henan
Province, People’s Republic of China, students at the Ta Gou Academy
hold up copies of World magazine; Karen Kamauski, banana plantation;
Karen Kasmauski (two images), measles initiative launches its largest
mass vaccination campaign in Kenya; John Lee, a statue of Chairman
Mao among advertisements in Zhengzhou, China; Ryan McVay, boy
and girl writing on blackboard in school classroom; Michael Melford,
nuclear submarine in ocean, dawn; Kevin R. Morris, U.S. Navy nuclear
submarine resurfacing, Alaska, USA; Paul Nicklen, Canada Basin, Arctic
Ocean, global explorer, an ROV capable of diving 9,400 feet, works off
ship; Charles Ommanney, U.S. military personnel depart for overseas
operations; Panoramic Images, pedestrians in front of tram, Hong Kong,
China; Christopher Pillitz, Mexico, Mexico City, women and children in
slum next to train tracks; Richard Ross, USA, California, Santa Barbara,
dry lake bed at Gibraltar Dam; Phil Schermeister, U.S., young girl dresses
up in her mother’s glasses; Frank Schwere, steel skeleton of building north
of Ground Zero, sunset; Frank Schwere, truck and dozer moving debris at
Ground Zero, night; Uriel Sinai/stringer, Israeli tanks prepare to roll into
Gaza for continued offensive; Hugh Sitton, China, Beijing, Tiananmen
Square, gateway to the Forbidden City; Keren Su, China, Gansu Province,
Dunhuang, woman with camel in desert; Mario Tama, evacuees begin to
return to New Orleans’ devastated Lower 9th Ward; Pete Turner, road in
barren landscape, dusk; Erik Von Weber, cement bridge over river leading
to mountain range; Steve Winter, near Pyay, Irrawaddy River Delta,
Myanmar, a man harvests rice in the Irrawaddy River Delta. AP IMAGES:
Girl listening to her own heart; Iraq; Kansas Schools Bilingual; Katrina
New Orleans; teaching to the test; Petar Petrov, Bulgaria, U.S. Army
exercise; John Stanmeyer/VII, bird flu Indonesia. U.S. NAVY PHOTO:
Photographer’s Mate 3rd Class Jordon R. Beesley, Stealth Bomber.
TIMELINE PHOTOS
RAND archives: pages 16, 17, 18, 20, 21, 22, 23, 24; AP IMAGES, briefmarken
(page 25); AP IMAGES/Horst Faas, Vietnam War, captured Viet Cong
(page 26); AP IMAGES, Mars face (page 27); AP IMAGES/Kurt Strumpf,
Munich Terrorism 1972; GETTY IMAGES, Flying Colours Ltd. (page 28);
GETTY IMAGES/Retrofile, family watching television (page 30); Permeable
dam, public domain (page 31); Media Bakery, handcuffed person (page 32);
DoD, MX intercontinental ballistic missile reentry vehicle, Kwajalein
missile range, Marshall Islands (page 33); AP IMAGES, Ronald Reagan
(page 33); AP IMAGES, xray (page 34); AP IMAGES, ozone layer (page 34);
GETTY IMAGES/Roy McMahon, boy rolling joints outside (page 35);
AP IMAGES/Jeff Chiu, nurse (page 36); DoD/LcPl Justin Mason, USMC,
oath of reenlistment (page 36); AP IMAGES/Eugene Richards, cocaine
true, cocaine blue (page 37); AP IMAGES/Karsten Thielker, Hungary NATO
(page 38); AP IMAGES/Las Vegas Sun, Steve Marcus, 311 Boyz (page 38);
AP IMAGES, GOP Convention, immigration (page 39); AP IMAGES, NATO
expansion (page 40); AP IMAGES, AIDS failure (page 40); AP IMAGES,
report on depression (page 41); AP IMAGES/Nam Y. Huh, social studies
shutout (page 42); AP IMAGES/Jerome Delay, Iraq anniversary (p. 42);
AP IMAGES, workers’ comp (page 43); GETTY IMAGES/Thomas Barwick
(page 44); AP IMAGES, war aerial refueling (page 44); AP IMAGES,
China Asia Paulson (page 45)
The RAND research referred to in the opening essays
is listed below
“The Quality of Ambulatory Care Delivered to Children in the United
States,” R. Mangione-Smith, A. H. DeCristofaro, C. M. Setodji, J. Keesey,
D. J. Klein, J. L. Adams, M. A. Schuster, E. A. McGlynn, The New England
Journal of Medicine, Vol. 357, No. 15, October 2007
A New Division of Labor: Meeting America’s Security Challenges Beyond Iraq,
Andrew R. Hoehn, Adam Grissom, David A. Ochmanek, David A. Shlapak,
Alan J. Vick, MG-499-AF
Post-Katrina Recovery of the Housing Market Along the Mississippi Gulf Coast,
Kevin F. McCarthy, Mark Hanson, TR-511-OA/MAR/NAR
INTERIOR IMAGES
AP IMAGES, IS651-064 (page 4); AP IMAGES, girl listening to her own heart
(page 5); AP IMAGES/Petar Petrov, Bulgaria, U.S. Army exercise (page 6);
AP IMAGES, U.S. antiwar demonstration (page 7); AP IMAGES/Levittown
Public Library, looking for Levittown (page 8); AP IMAGES, Katrina
New Orleans (page 9); GETTY IMAGES/Richard Ross, USA, California,
Santa Barbara, dry lake bed at Gibraltar Dam (page 10); GETTY IMAGES/
PhotosIndia, interiors of an empty conference room (page 11); FEMA/Win
Henderson, volunteer workers help homeless (page 12); AP IMAGES/John
Stanmeyer/VII, bird flu Indonesia (page 13); GETTY IMAGES/Ryan McVay,
boy and girl writing on blackboard in school classroom (page 14);
AP IMAGES/Charles E. Knoblock, first-graders publish book (page 15);
AP IMAGES, Morocco–Algeria border conflict (page 16); AP IMAGES, Iraq
(page 17); GETTY IMAGES/Mario Tama, NY police increase vigilance after
possible terror threat (Page 27); GETTY IMAGES/Mario Tama, evacuees
begin to return to New Orleans’ devastated Lower 9th Ward (page 27);
GETTY IMAGES/Charles Ommanney, U.S. military personnel depart for
overseas operations (page 27); GETTY IMAGES/Teh Eng Koon, a worker
climbs up a ladder (page 29); GETTY IMAGES/William A. Plowman,
hospital gives patient pet therapy (page 29); GETTY IMAGES/Christopher
Pillitz, Mexico, Mexico City, women and children in slum next to train
tracks (page 29). DIANE BALDWIN: Jim Thomson and Ann McLaughlin
Korologos (page 2); Iao Katagiri (page 18); Policy Forum (page 20); Brian
Stecher and Ramon Cortines (page 21); Beth McGlynn (page 21); Paul
Koegel (page 21); President’s Award winners (page 23); Richard Bowman
(page 24); PRGS students (page 25); Fred Pardee and others (page 30);
Donald Tang and Michael Tennenbaum (page 31); Malcolm Palmatier and
Jim Thomson (page 32); Sherry Lansing, J. Q. Wilson, Santiago Morales,
Robert Spinrad, James Lovelace (page 34); Don Rice and Jim Thomson
(page 36); Sheikha Mozah Bint Nassar Al Missned (page 37); Robert H.
Brook, Jeffrey Wasserman, Leonard Schaffer, Gail Warden (page 38);
Sharon Baradaran, Elizabeth Stacey, Lalita Gupta (page 39); RAND board
meeting (page 40)
“A New Analytic Method for Finding Policy-Relevant Scenarios,”
David G. Groves, Robert J. Lempert, Global Environmental Change, Vol. 17,
No. 1, February 2007
The Federal Role in Terrorism Insurance: Evaluating Alternatives in an Uncertain
World, Lloyd Dixon, Robert J. Lempert, Tom LaTourrette, Robert T. Reville,
MG-679-CTRMP
Improving Global Influenza Surveillance: Strategies for the U. S. Government,
Melinda Moore, Edward W. Chan, Nicole Lurie, Agnes Gereben Schaefer,
Danielle M. Vogenbeck, John A. Zambrano, WR-470-DHHS
Heads We Win: The Cognitive Side of Counterinsurgency (COIN),
David C. Gompert, OP-168-OSD
Money in the Bank: Lessons Learned from Past Counterinsurgency (COIN)
Operations, Angel Rabasa, Lesley Anne Warner, Peter Chalk, Ivan Khilko,
Paraag Shukla, OP-185-OSD
Counterinsurgency in a Test Tube: Analyzing the Success of the Regional Assistance
Mission to Solomon Islands (RAMSI), Russell W. Glenn, MG-551-JFCOM
Standards-Based Accountability Under No Child Left Behind: Experiences of
Teachers and Administrators in Three States, Laura S. Hamilton, Brian M.
Stecher, Julie A. Marsh, Jennifer Sloan McCombs, Abby Eisenshtat Robyn,
Jennifer Lin Russell, Scott Naftel, Heather Barney, MG-589-NSF
State and Local Implementation of the No Child Left Behind Act:
Volume I—Title I School Choice, Supplemental Educational Services, and Student
Achievement, Ron Zimmer, Brian Gill, Paula Razquin, Kevin Booker,
J.R. Lockwood III, et al., RP-1265
State and Local Implementation of the No Child Left Behind Act:
Volume II—Teacher Quality Under NCLB: Interim Report, U.S. Department
of Education, RP-1283
61
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