2010–2011
ANNUAL REPORT
ABOUT THE COVER
The McKinley Building, named after President William McKinley,
is the second oldest building on AU’s campus. It will soon
be remodeled as the future home for the School of Communication.
2
From the Chairman of the Board of Trustees
3
From the President 4
Know AU 34
University Administration
34
Board of Trustees
35
Financial Statements 2010–2011
37
From the CFO, VIce President and Treasurer
38
Report of Independent Auditors
39
Balance Sheets
40
Statements of Activities
42
Statements of Cash Flows
43
Notes to Financial Statements
American University’s impressive run has continued.
While other schools have retrenched in this tough economy, AU has moved forward with strategic planning and sound financial management—hiring top faculty, recruiting the best students, and inviting an increasingly diverse group to be part of our academic community. Last year we finished a $214 million capital campaign to provide faculty support and student scholarships, endow research and policy centers, improve our facilities, and boost the endowment.
We entered the second year of our strategic plan implementation and designed the blueprint for AU’s 10-year facilities plan. Pending local government approval, the plan will be transformational—adding some 845,000 square feet of new space for academic, student life, and university amenities to support our educational mission and create two new campuses on existing university land.
While building a better university, we are cognizant of our environmental impact. In both teaching and practice, AU has become a national leader in sustainability. Both locally and globally, our students and faculty engage as active citizens who use their knowledge to serve their communities and create meaningful change.
American university has a 118-year educational commitment to our city, region, and beyond, as we aspire to our rightful place on the national and international stage. Sincerely,
Jeffrey A. Sine
2 AMERICAN UNIVERSITY
Do you know AU?
Last year we launched a bold campaign to promote the distinctiveness of an American University education—based on learning from leaders, active citizenship, and our Washington home as a powerful lab for learning. We added a touch of whimsy with the KNOW/WONK word reversal hitting notes both memorable and pertinent.
The pages that follow demonstrate this.
From astrophysics to public policy, anthropology to international cyberlearning, our diverse faculty experts instill intellectual curiosity and educational passion in our students, prompting them to create change and build a better society.
Our students continue to excel at the highest levels of achievement. Last year AU was
ranked second nationally in the number of Boren awards for international study, our two Udall scholars made a total of 10 winners in the past five years, and AU students again ranked first in the nation as the most politically active.
Our staff also includes award-winning leaders in their fields. The top honoree for Women in Technology’s Leadership Award in Education IT was one of our information
technology officers, a woman who works tirelessly to help our university embrace change while also encouraging young women to seek careers in technology.
Learning from leaders with applied expertise and commitment to ideals—AU knows it does this well.
Enjoy our report.
Sincerely,
Cornelius M. Kerwin
AMERICAN UNIVERSITY 3
Who is American University? An astrophysicist who studies space dust. Students who
are among the nation’s most politically engaged. A concert pianist who completed an
ambitious, four-year-long odyssey to perform all of Beethoven’s piano sonatas.
At American University, professors routinely testify on Capitol Hill. A technology leader
receives recognition from a national organization. An education professor helps turn
around a failing public school with an award-winning nutrition program.
Consider these snapshots of American University and a broader picture starts to
emerge of a place even some alumni might not recognize. Which is why we launched
a marketing campaign to make people aware of the often astonishing ways that the
institution has evolved and grown. To tell them who we are now and what we stand for.
4 AMERICAN UNIVERSITY
Despite tough economic times, we’ve also wrapped up an ambitious capital campaign,
raising more than $214 million—a testament to the generosity and vision of our
donors. These funds will help AU attract and retain the finest faculty, increase
scholarship support, create and endow research and policy centers, finance stateof-the-art resources, expand global programs, and solidify the university’s long-term
financial health by boosting its endowment.
It’s an exciting time to be part of a university that’s on the move—and to get to know a
place that values its relationship with its neighbors as much as its mission to become
a major institution of research and higher education.
We invite you to learn about what’s happening here every day. We invite you to know AU.
AMERICAN UNIVERSITY 5
How does a university growing
in international stature balance
the need to expand its facilities
to reach the goals of its strategic
plan while addressing the concerns
of its neighbors?
Answer: It listens.
“We have a 118-year commitment to our Northwest Washington
neighborhood, and our current campus buildings, design, landscaping,
and future facilities are testament to that,” AU president Neil Kerwin
told the university community.
The proposed campus plan, almost two years in the making, will add
845,000 square feet to existing facilities while preserving historic sites
and addressing critically important strategic priorities.
Countless hours of work involving urban planners, architects, traffic
engineers, land-use experts, finance and investment strategists, and
community relations staff went into AU’s 2011 Campus Plan, filed
in March 2011 with the D.C. Zoning Commission. AU has also
met dozens of times with community members and the Advisory
Neighborhood Commissions, and those meetings yielded significant
changes to the plan reflecting neighbors’ concerns.
Key objectives of the proposed plan:
• Improve student housing to offer more modern accommodations
and encourage more students to live on campus. An addition to
Nebraska Hall is proposed, along with new residence halls behind
the president’s office and on a new East Campus, at the site of the
parking lot on Nebraska Avenue.
• Build a new home for the Washington College of Law on the
Tenley campus, near the Tenleytown Metro station. WCL, one
of the nation’s top law schools, has been at 4801 Massachusetts
Avenue since 1996, and it has far outgrown the current 195,000
square feet at that address and an additional 16,000 square feet of
rented nearby space. WCL’s move will certainly help revitalize the
Tenleytown area.
In addition, the university wants to provide more on-campus
recreational, dining, and activity space and to build offices that will
attract and keep top-notch faculty. Also planned are more athletic
facilities, an admissions welcome center, and an alumni center.
Proposed new home for
the Washington College of Law
at Tenley Campus
“We value our neighborhood location and will work to ensure
that our impacts are manageable and that American University
will continue to be a valuable educational, cultural, and aesthetic
amenity,” Kerwin said.
AMERICAN UNIVERSITY 7
Why do some diseases kill or
sicken at least as many people as other maladies but attract far
less attention and funding for treatment?
That’s what Jeremy Shiffman, a professor of public administration
and policy in AU’s School of Public Affairs and a well-known global
health scholar, wants to find out.
Shiffman is the principal investigator of a $1.1 million Gates
Foundation grant taking the unusual tack of investigating six global
health networks—on alcohol, tobacco, pneumonia, tuberculosis,
maternal survival, and newborn survival. Shiffman and his colleagues
want to figure out why some networks effectively generate attention
and resources, promote policy, and facilitate implementation of
interventions, and some don’t.
A look at the attention and money devoted to AIDS is instructive.
“AIDS is a terrible humanitarian tragedy to be sure, but as of about
2007 it received nearly half of all resources for major donors for global
health,” Shiffman said. “Nearly half went to AIDS, but it represents
5 percent of the mortality burden in low-income countries.
“Meanwhile, other conditions—for instance, pneumonia,
malnutrition, diarrheal diseases, newborn deaths—keep causing
huge numbers of deaths globally and get virtually nothing. So clearly
burden—in terms of mortality, morbidity, illness—is not an adequate
explanation for this difference.”
Shiffman added that AIDS research and treatment need more
funding, not less, but so do other health problems.
Saving newborn children has also been a longtime focus for
Shiffman, who also received a $365,000 Gates Foundation grant
to help understand the politics of supporting newborn survival in
low-income countries.
Globally, about 3.5 million babies, the vast majority in poor countries,
die annually before reaching the age of one month. That’s more than
the number of people who die from AIDS each year and represents
more than 40 percent of deaths for all children under five years.
A positive sign: During the past decade the issue has seen a big growth
in both funding and attention from policy makers.
JEREMY SHIFFMAN
Associate Professor of
Public Administration and Policy
School of Public Affairs
8 AMERICAN UNIVERSITY
ALEX PRIEST AND CASSANDRA RICKETTS
2011 President’s Award Winners
For the second year in a row, AU’s
prestigious President’s Award has
gone to two students.
And for good reason. Alex Priest graduated with two bachelor’s
degrees (from the Kogod School of Business and the School
of Communication), two study abroad trips, five internships,
four scholarships, and seven extracurricular activities—all while
maintaining a 3.96 grade point average.
Cassandra Ricketts, a star on AU’s volleyball team for four years and
a student in the College of Arts and Sciences, was named to the AllPatriot League first team and won the conference’s Scholar-Athlete of
the Year, capping a career in which she was a four-time member of the
Patriot League’s Academic Honor Roll. She majored in biochemistry,
earning a 3.95 GPA.
Despite his numerous academic achievements, Priest names as his
proudest moment founding the AU Social Media Club, the first
student-led organization of its kind in the country.
“We have a plethora of tools for engaging and interacting and only
a select few are being leveraged as effectively as they could be in
higher education,” said Priest. “We believe that it’s time to look at
Facebook as less of a distraction and more of an educational resource.
It’s important to see Twitter as more than just ‘what people had for
breakfast,’ and instead as a tool for learning and networking as a
young professional.”
To promote digital literacy, Priest and the club’s 30 members organized
the Social Learning Summit last spring. The conference, held at
the School of Communication, drew 300 students, academics, and
media professionals for 14 workshops on everything from blogging
and Tweeting to social activism and job hunting via social media.
As for Ricketts, “I don’t think I’ll be able to live without athletics,”
she said. “So I’d like to incorporate my sports background into
my career.”
After a summer spent doing clinical research, she plans to attend
medical school.
AMERICAN UNIVERSITY 11
WRITING
Creative writing teacher Danielle Evans (left), author of the
critically acclaimed short-story collection Before You Suffocate
Your Own Fool Self, was named one of Washingtonian.com’s
40 D.C. attention-getters who shaped 2010.
“Evans’s greatest talent is her ability to create poignant
moments of crisis in the lives of transient people who
can’t seem to connect with those they love.” Ron Charles,
Washington Post fiction editor
ACTIVISM
In 2010, the Princeton Review ranked AU students
as the nation’s most politically active. Again. It was
the third time in the past five years that AU was tops
in the category.
“If you have a passion for politics, there’s no better
city than Washington, and no better university than
AU. Many of our faculty have worked in government
and continue to be actively involved in the great
public policy issues of the day. They open doors
for our students all over the city—on Capitol Hill,
in the executive branch, in the nonprofit advocacy
community, and beyond.” William LeoGrande, dean
of the School of Public Affairs
CHEMISTRY
AU chemistry professor Douglas Fox (right) is using cellulose, the planet’s most
abundant organic molecule, in the quest for a greener fire retardant for plastic. The Air
Force has awarded him a $300,000 grant because in a crash, a plane’s burning plastic
foams are extremely dangerous.
“Every plastic that you have has to have a flame retardant in it. They removed flame
retardants from TVs in Europe for a while, and the TVs started catching on fire. The
best flame retardants they have right now are often very toxic.” Douglas Fox
12 AMERICAN UNIVERSITY
MEDIA MYTHS
Three of the biggest myths most people believe about the media: the Washington Post’s
investigative reporting brought down Richard Nixon’s presidency, Edward R. Murrow’s
See It Now TV program ended Joe McCarthy’s commies-lurking-in-the-government witch
hunt, and William Randolph Hearst helped start the Spanish-American War. So reports
School of Communication professor W. Joseph Campbell (right) in his book Getting It
Wrong: Ten of the Greatest Misreported Stories in American Journalism, which has been
recognized with a Sigma Delta Chi Award from the Society of Professional Journalists.
“Media-driven myths aren’t trivial. They aren’t innocuous. They can distort the
understanding about the role and function of journalism in American society.”
W. Joseph Campbell
DEMOGRAPHICS
Patchwork Nation is a reporting project that explores what’s happening in the United
States by dividing America’s 3,141 counties into 12 community types based on
demographic characteristics, such as income level, racial composition, employment,
and religion. Information on its Web site is updated frequently using U.S. Census data
and myriad other statistics.
“Unemployment numbers come out monthly. It’s interesting to map it when you sort
it by the types of communities we’ve identified. Everyone knows the unemployment
rate is 10 percent, but in tractor country it’s well below 6 percent. The point is,
those national numbers you get are just an abstraction. No one really lives in that
environment; you live in the community you live in.” Dante Chinni (left), School of
Public Affairs adjunct professor and Patchwork Nation co-creator
INTERNATIONAL AID
Twenty thousand students applied to win the Pearson Prize for Higher
Education’s top prize of $10,000, an award that recognizes students who
demonstrate leadership in community service. Only 20 won, and Leah
Simoncelli (right), SOC/CAS/BA ’11, was one of them. Simoncelli helped with
disaster relief in Chile following an earthquake and tsunami that destroyed at
least 45,000 families’ homes and crippled the nation’s infrastructure. She’s still
raising funds for disaster relief, even after returning home.
“I probably can’t get back to Chile to help anytime soon, but I can raise
money and awareness to help the people who lost their homes and sources of
livelihood.” Leah Simoncelli
AMERICAN UNIVERSITY 13
YULIYA GORENMAN
Musician in Residence
College of Arts and Sciences
Of all the musical mountains to
scale, performing every one of
Beethoven’s 32 piano sonatas is a peak few musicians have even
attempted to summit.
But internationally recognized pianist and AU musician in residence
Yuliya Gorenman has done just that, in eight concerts spanning four
years. She finished the cycle in March 2011.
“Before my very first public performance when I was seven years old,
my dad gave me a music score as a gift,” she said. “And guess what it
was? One of Beethoven’s piano sonatas.”
Reviewing one of her sonata performances, a Washington Post reviewer
said, “Pianist Yuliya Gorenman doesn’t have to make the impossible
sound easy. She merely makes it happen. . . . In short, to hear Gorenman
is to hear Beethoven for the first time.”
Reaching that transcendent level involves much more than talent and
practice. It takes what Gorenman calls “musical forensics,” delving
into Beethoven’s life and times. “It’s not possible to understand
Beethoven’s music without understanding the French Revolution,
for example,” she said.
Born in Odessa, Ukraine, and raised in Kazakhstan, she studied at
the St. Petersburg, San Francisco, and Peabody conservatories. She
has won international acclaim and prizes and performed around the
world. With the Bavarian Chamber Orchestra, she has recorded all of
Beethoven’s piano concerti, and now she has added recordings of the
piano sonatas from her AU appearances.
“I don’t think there is a project that is as dear to my heart as this one,”
she said. “It’s something I wanted to do all my life. It’s about being
able to touch the life of a composer and trace it from the beginning,
all the way through the time of maturity. That’s an amazing thing.”
AMERICAN UNIVERSITY 15
RHONDA ZAHARNA
Associate Professor of Communication
School of Communication
When it comes to testifying before movers and shakers in
Congress, AU professors are no strangers to the Hill.
Just ask Washington College of Law professor Stephen Vladeck, who
testified before the U.S. House of Representatives Committee on the
Judiciary on the controversial issue of using the Espionage Act to
go after WikiLeaks founder Julian Asange. WikiLeaks had released
hundreds of classified cables from U.S. diplomats around the world.
“Academics, especially academics who are in Washington, have an
obligation to do what they can to [assist] all branches of government,”
said Vladeck, who has appeared before committees three times.
School of Public Affairs professor James Thurber has testified before
at least five congressional committees. As director of SPA’s Center for
Congressional and Presidential Studies, he has a close relationship
with many staffers and legislators on the Hill.
“The last time I appeared before the rules committee, David Dreier
was chair,” Thurber says. “He’s an old friend. His staff director, Hugh
Halpern (SPA/BA ’91, MA ’92), is a former student of mine. [Rep.]
Jim McGovern (CAS/BA ’81, SPA/MPA ’84) was on the panel from
AU. In that room there were seven other students that I’ve had.”
In Vladeck’s case, the committee treated him cordially. But things
don’t always go so smoothly.
School of Communication professor Rhonda Zaharna recalled
testifying before the Senate Committee on Foreign Relations on
February 27, 2003—an emotionally charged time just before the
U.S. invasion of Iraq.
“I got grilled because I came up with this radical notion, it was radical
at the time, that if the American soldiers are not trained in culture
they’re going to be walking into a cultural landmine,” Zaharna says.
“I was hearing all of these things that the American soldiers would be
greeted as liberators.”
Said Vladeck: “To the extent that having people like me get up there
helps the members stir the pot, then we’re doing our job.”
16 AMERICAN UNIVERSITY
JAMES THURBER
University Distinguished Professor of Government
School of Public Affairs
STEPHEN VLADECK
Professor of Law
Washington College of Law
Solar panels on the
roof of the SIS building
If you’re looking for a truly green university, look no further
than AU.
American University was awarded a gold rating in 2011 from STARS
(the Sustainability Tracking, Assessment, and Rating System),
developed by representatives of colleges and universities, as well as
business, higher education associations, and other groups.
A charter participant in the group, AU was the top-scoring university
in the nation.
That’s hardly surprising at an institution that has pledged to be
carbon neutral by 2020 and buys wind-generated renewal energy
credits equivalent to 100 percent of its 53 million kilowatt hours
of annual electricity usage. Indeed, we’re on the Environmental
Protection Agency’s list of top 20 colleges and universities that
purchase green energy.
In ways big and small, from establishment of Washington’s only
interdisciplinary master of science in sustainability management
degree, offered through the Kogod School of Business, to being
the first school in the country to use a Vegawatt, a machine that
converts waste vegetable oil into electricity and hot water, AU is
committed to sustainability.
A few more examples of being green:
• More than 2,150 solar voltaic panels have been installed on six
campus buildings, creating the largest solar power system in the
District of Columbia.
• An additional 174 solar thermal panels provide hot showers to
more than 2,000 students living on campus and hot water to the
university’s largest dining hall.
• The new School of International Service building has earned
Leadership in Energy and Environmental Design (LEED) gold
designation, certifying its top status in categories such as energy
savings, water efficiency, and CO2 emissions reduction.
Whether it’s a top-three finish in a national recycling competition
or a senior class gift of a wind turbine to provide the university a
clean source of energy, the message is clear: AU is committed to being
green in ways few other universities can match.
AMERICAN UNIVERSITY 19
Health and nutrition researcher
Stacey Snelling knows that
“healthier students make better learners” and achievers.
That’s certainly true at an institution like Ward 7’s Kelly Miller
Middle School, classified as a failing school by the D.C. public
school system. In the AU designed and led Community Voices for
Health: Kids Take Action project, the AU professor asked sixth-grade
students at Kelly Miller to photograph barriers in their community
to healthy living—yielding photos of unsafe crosswalks, basketball
hoops without nets, and areas without sidewalks.
What things promote healthy living? That produced snapshots of
tennis courts, safe playgrounds, and fruit and vegetable stands.
That led to lessons on how to write letters persuading politicians to
improve community health (some wrote President Obama with their
concerns), how to understand nutrition basics, and how to analyze a
potato chip commercial for misleading advertising.
Snelling received a $20,000 grant from General Mills and United
Way to design and deliver a program of nutrition and fitness lessons
for Kelly Miller Middle School teachers.
And in October 2010, Kelly Miller became the first D.C. school
to receive the U.S. Department of Agriculture’s Silver Award for
participating in the HealthierUS School Challenge, a key part of
Michelle Obama’s Let’s Move campaign to end childhood obesity
within a generation.
Kelly Miller is also the first middle school in the country to receive
the award.
“This project demonstrates that in order to make real and lasting
change in children’s lives, we need to offer a full deployment of
academic and social programs—soup to nuts,” said Sarah Irvine
Belson, dean of AU’s School of Education, Teaching, and Health.
Said Snelling, “Helping [students] improve their personal health can
help them improve academic achievement, which will then improve
their potential to go on to college at a productive, higher-income, and
higher-education level.” STACEY SNELLING
Associate Professor of Health and Fitness
College of Arts and Sciences
20 AMERICAN UNIVERSITY
ANTHROPOLOGY
Maroons—African Americans who escaped enslavement to live in the forbidding
and densely wooded Great Dismal Swamp of southeast Virginia and northeast
North Carolina—have been the subject of four summer research efforts by AU
students at the site (right). Led by AU anthropology professor Dan Sayers, they have
been photographing, mapping, conducting soil sampling, and doing excavation in
the swamp, whose inhabitants included maroons, Native Americans, enslaved canal
laborers, free African Americans, and outcast Europeans.
“These groups are very inspirational. As details unfold, we are increasingly able to
show how people have the ability, as individuals and communities, to take control
of their lives, even under oppressive conditions.” Dan Sayers
PEACE
A new School of International Service graduate
degree combines course work with overseas
service with the Peace Corps. Since 1961 there
have been about 780 AU alumni in the Peace
Corps, and about 55 are now working around
the globe. Indeed, in the Peace Corps’ 2011
rankings of volunteers, AU was ranked fourth
among medium-sized colleges and universities.
“AU is one of our highest producers of
volunteers.” Peace Corps director Aaron Williams
SCHOLARSHIP
A sample of prestigious scholarships in 2011 shows that AU students
continue to compete at the top levels of academe. AU was second in the
nation in the number of 2011 Boren awards for international study, for
example, with nine undergraduates and nine graduate students.
AU also had two Udall Scholarship winners (Jennifer Jones, CAS/BA ’12,
and Stephen Bronskill, CAS/SPA/BA ’13, left), for sophomores and juniors
committed to careers related to the environment, tribal public policy,
or Native American health. In the past five years, 10 AU students have
been named Udall recipients. And three AU students won 2011 Killam
Fellowships for study at Canadian universities. No surprise there: AU has
had Killam winners every year since 2005.
22 AMERICAN UNIVERSITY
ENVIRONMENT
AU film students continued their award-winning ways, earning an Emmy
for a School of Communication student documentary about the Chesapeake
Bay. The documentary, EcoViews: Life on the Bay, won in the category
of Outstanding Achievement in Student (Non-News) Production. Steve
Erdman (right) was one of several students on the winning team.
This was the fourth episode SOC students have produced for Maryland
Public Television. Previous SOC-MPT partnership awards include a 2010
CINE Golden Eagle Award, a 2009 TIVA-DC Peer Silver Award, and a
Regional Student Academy Award, as well as a 2010 National Student
Academy Award finalist.
INTERACTIVITY
AU School of Communication professor Maggie Burnette Stogner (left)
is a pioneer in the realm of narrative immersion for museum displays,
using technology such as high-definition videos, archival imagery, 3D
computer animation, and digital audio. A case in point is her work on
Indiana Jones and the Adventure of Archaeology, an interactive exhibit
at the Montreal Science Center presented by the National Geographic
Society and Lucasfilm Ltd.
“Younger generations learn in very different styles than the
traditional approach offered by many cultural museums. They are
growing up in a media-rich, networked society and have different
expectations.” Maggie Burnette Stogner
CYBERLEARNING
The world’s first virtual master’s degree program focused on disability
and public policy for the Southeast Asia region is being offered through
AU’s School of International Service. Funded by a five-year, $10 million
grant from the Nippon Foundation and supported by several partner
institutions, the program is administered by the joint SIS-Syracuse
University Center for Research on Collaboratories and Technology
Enhanced Learning Communities (COTELCO) and the Institute on
Disability and Public Policy (IDPP).
“Our vision is to build a network of outstanding universities from all
10 ASEAN countries which uses accessible cyberlearning approaches to
enable blind, deaf, and physically impaired students to become leaders
in the public, private, and NGO sectors.” Derrick Cogburn, AU professor
and COTELCO director (right)
AMERICAN UNIVERSITY 23
MATTHEW NISBET
Associate Professor of Communication
School of Communication
AU’s School of Communication
has become a hotbed of research
around communication related
to global climate change and climate change policy.
The SOC Climate Shift Project’s mission: “Climate change and
energy insecurity are much more than physical threats requiring
scientific expertise to understand and public will to solve, they are
the dominant social challenges of our time. Progress in dealing with
these pressing problems requires a shift in how we participate in
politics, think about government, define policy action, communicate
with others, and invest in media and communities.”
Project partners include George Mason University’s Center for
Climate Change Communication, the Yale Project for Climate Change
Communication, and SOC’s doctoral program in communication.
Led by director Matthew C. Nisbet—named one of only 21 Google
science communication fellows—and supported by SOC scholars and
professionals Caty Borum Chattoo, Declan Fahy, Lauren Feldman,
and Sol Hart, the group is taking on projects vital to understanding
and addressing this key issue.
Two of those projects:
• Climate Shift: Clear Vision for the Next Decade of Public Debate.
Nisbet’s study is the first to analyze the environmental movement’s
“financial resources, strategies, communication activities, and
impacts . . . drawing comparisons to its opponents among
conservative groups and industry.”
• The Science Journalist Online: Shifting Roles and Emerging Practices.
Nisbet and Fahy, in a multiyear project, are interviewing journalists,
organizational leaders, and bloggers in the United States, Canada,
Australia, the United Kingdom, and Europe to understand the
changing media environment.
AMERICAN UNIVERSITY 25
When most astronomers and
astrophysicists think of space
dust—tiny interstellar particles
that distort their view of the
cosmos—they no doubt wish it
could somehow be swept away.
But not U. J. Sofia, an astrophysicist and chair of American University’s
physics department. He’s one of only 200 people in the world studying
the stuff.
“We get all of our information from light,” Sofia said. “What
interstellar dust does is distort light from a very distant object. If
that light is distorted, it gives us a distorted view of the star. The
reason NASA gives me money is because everyone else cares about
the distortion. I care about the dust.”
Most of Sofia’s data come from the Hubble Space Telescope, which
captures highly detailed images of light from stars.
“There will be some colors of light, some energies, that are missing,”
he said. “From that we can tell what gases are composing the cloud.
If we have an idea of what the cloud’s composition is as a whole, if we
see less than that in the gas, we know that stuff that’s missing from
the gas must be clumped together to form dust.”
Sofia is also teaming up with his father, Yale University astrophysicist
Sabatino Sofia, for a new project that will try to measure the sun’s size
and energy variation over time.
“The bottom line, and this is years off, is how much is carbon dioxide
actually changing the temperature on the surface of the planet,” Sofia
said. “Right now the models that are out there use a model of the sun
that is not very precise. We’re trying to get a more precise model of
the sun so we better understand what the carbon dioxide is doing.”
U. J. SOFIA
Professor of Physics
College of Arts and Sciences
26 AMERICAN UNIVERSITY
Kamalika Sandell knows technology leadership.
That’s no surprise, given her background: Before joining AU’s Office
of Information Technology, she was business information officer and
director for IT risk and information security at Capital One, a global
Fortune 500 financial services company. She also holds a degree in
computer science and engineering from Jadavpur University in India.
What is unusual, even after the fall of so many workplace barriers, is
her leadership role in the male-dominated field of technology.
Sandell is associate chief information officer, managing the university’s
more than 110 systems, large and small, from registration to financial
aid to payroll. She leads large-scale technology implementations, such
as AU’s content management system, which powers the university’s
award-winning Web site.
But she knows that just as important as her technology expertise are
people skills, the part of IT that deals with business development.
Changing the university culture to embrace an open, more organized
way of choosing and implementing technology is just as important as
making sure e-mail and BlackBerrys are operating.
As a woman, Sandell also feels a special obligation to encourage girls
and young women to consider pursuing technology careers, to stop
thinking of themselves as tech-challenged.
Her professional excellence and commitment to attracting women to
the field are reasons she was honored with Women in Technology’s
2011 Leadership Award in Education IT.
Technology, she observed, pervades all aspects of our lives, another
reason she hopes more women will enter the field.
“It is not only the engineers and scientists who are making an impact
on technology,” Nanci Schimizzi, president of Women in Technology,
said in announcing the group’s 2011 awards. “It is also the enablers
of technology—healthcare providers, law enforcement, universities,
government organizations, and more.”
Sandell couldn’t have said it better herself.
KAMALIKA SANDELL
Associate Chief Information Officer
Office of Information Technology
AMERICAN UNIVERSITY 29
It’s hard to imagine a person who
embodied American University
better than Jack Child.
Scholar, alumnus, devoted teacher who pioneered the use of technology
in the classroom, soldier who completed two tours in Vietnam—the
late university professor, who died this summer of complications from
open-heart surgery, leaves behind a legacy that lives on in the memory
of his students and colleagues.
Acknowledging a lasting relationship with American University,
Child paid tribute to the university’s mission of academic and civic
excellence through extensive lifetime and estate donations. His
generosity included endowments to benefit student scholarships,
faculty development, and academic program enhancement as well
as significant capital project support. To honor his benevolence, the
university dedicated the building which houses the Department of
Language and Foreign Studies as Jack Child Hall, bringing to fruition
Child’s desire to encourage ongoing camaraderie in the department
in which he taught.
“He had a wonderful sense of humor,” said SIS dean emeritus Louis
Goodman, a longtime associate of Child’s. “He would dress up
like a penguin and walk around campus. He would dress up like
Fidel Castro.”
Indeed, the Latin American specialist, who focused on the
geopolitics of Antarctica and South America, had an eclectic
list of passions. Right up there was penguins. He was the guest
lecturer and guide on 14 expedition cruises to Antarctica and the
surrounding regions, and his boundless enthusiasm for penguins
was one of his endearing characteristics.
Child first came to American University as a graduate student, earning
master’s and doctorate degrees from the School of International
Service. He joined SIS as an assistant dean in 1980 and later moved
to the College of Arts and Sciences, where he was a faculty member
in the Department of Language and Foreign Studies.
He had a fascinating history: Born in Buenos Aires, he lived with his
American parents in South America for 18 years. After graduating
from Yale with a degree in communications engineering, he joined the
U.S. Army, where he had a 25-year career as a Latin America specialist.
“His tireless efforts toward Latin American studies and American
University have greatly improved both,” said Amy Oliver, chair of the
Department of Philosophy and Religion and associate professor of
Spanish and Latin American studies.
30 AMERICAN UNIVERSITY
JACK CHILD
Former University Professor of
Language and Foreign Studies
College of Arts and Sciences
AMERICAN UNIVERSITY 31
CRIME FIGHTING
Nationwide, 190 Bureau of Alcohol, Tobacco, Firearms, and
Explosives (ATF) terminals have access to 1.6 million pieces of
information in crime labs and police stations. But how useful
is the ballistics information in ATF’s network? School of Public
Affairs professor Ed Maguire (right) is part of a team evaluating
just that.
“We plan to hang out in the shadows, observing how crime
scene techs process evidence and interact with officers. We’re
going to follow the journey of ballistics evidence from crime
scene to courtroom.” Ed Maguire
CURRICULUM
The first class to enroll in the School of
International Service’s new three-year BA program
began studies this fall. The 25 students admitted
also have the opportunity to complete a combined
BA/MA degree in four years.
“This new program has been specially designed
for the fast-paced twenty-first century, while
providing an exceptional opportunity for indepth world knowledge and experience built
upon a broad liberal arts foundation.” SIS dean
emeritus Louis W. Goodman
TAX POLICY
With the launch of the Kogod Tax Center, the Kogod School
of Business will promote balanced, nonpartisan research while
expanding knowledge with respect to tax policy, planning, and
compliance for small and mid-sized businesses, entrepreneurs,
and middle-income taxpayers.
“In time, I think this center will play an important role in
facilitating tax enactments for small business.” David Kautter,
Kogod Tax Center managing director (second from right)
32 AMERICAN UNIVERSITY
INNOVATION
In 1997 former AU roommates Matthew
Pittinsky ’94 and Michael Chasen ’93
founded Blackboard Inc., the District-based
company purchased in 2011 for $1.64 billion
by Providence Equity Partners. Blackboard’s
e-learning software is now used by more than
3,700 educational institutions in 60 countries.
“I’d always been interested in how schools are
organized and the way instruction is delivered.”
Matthew Pittinsky
BRANDING
With AU’s attention-grabbing wonk campaign entering phase two—signaled
first by the opening of the university’s multimedia welcome center (above) with
its 60-seat theatre and 192-inch screen, and then by a display of posters and
dioramas both inside Reagan National Airport and across its Metro stop—
American University has found the perfect solution to its branding challenge.
The campaign, formed after extensive consultations that included surveys
of thousands of students, faculty, staff, and alumni, aims to raise AU’s profile
while helping public perception catch up with the university’s transformation
into a top research and educational institution.
Communicating what AU’s all about boiled down to three main messages:
active citizenship, learning from leaders, and Washington as a powerful lab for
learning. And what we are—an exciting, engaged community of scholars—
boiled down to one word: wonk.
So what’s a wonk?
• an intellectually curious person; an expert in a field: for example, physics
wonk, literature wonk
• a knowledgeable Washington insider: policy wonk
• an expert who’s passionate about creating meaningful change: financial
reform wonk, human rights wonk, sustainability wonk
• an American University person in the know “The term can apply to anyone because it’s a smart person who is incredibly
passionate about what they do.” Nate Beeler, SOC/BA ’02, cartoonist for the
Washington Examiner, whose drawings helped inspire the wonk idea
INSIGHT
SOC film professor Brigid Maher’s documentary
on Muslim women who challenge the status
quo within their religion has won critical
acclaim for its insight into how Muslim women
are promoting Islam as a powerful force for
positive transformation in the world. The film
was screened at the Al Jazeera International
Documentary Festival and the Los Angeles
International Women’s Film Festival. Al Jazeera
acquired rights to show the documentary on
its networks in Middle Eastern and North
African markets.
“The gulf of misunderstanding is growing.
My hope is that by making films like Veiled
Voices, I can help to bridge that gulf.”
Brigid Maher (above)
AMERICAN UNIVERSITY 33
UNIVERSITY ADMINISTRATION
Cornelius M. Kerwin, President
Scott A. Bass, Provost
Donald L. Myers, Chief Financial Officer, Vice President and Treasurer
Mary E. Kennard, Vice President and General Counsel
Thomas J. Minar, Vice President of Development and Alumni Relations
Gail S. Hanson, Vice President of Campus Life
Teresa Flannery, Vice President of Communication
David E. Taylor, Chief of Staff
Phyllis A. Peres, Senior Vice Provost and Dean of Academic Affairs
Michael J. Ginzberg, Dean, Kogod School of Business
James Goldgeier, Dean, School of International Service
Claudio M. Grossman, Dean, Washington College of Law
Larry Kirkman, Dean, School of Communication
William M. LeoGrande, Dean, School of Public Affairs
Peter Starr, Dean, College of Arts and Sciences
William A. Mayer, University Librarian
BOARD OF TRUSTEES
Gary M. Abramson,* Chair Emeritus
Jeffrey A. Sine,* Chair
Patrick Butler,* Vice Chair
Gina F. Adams*
Stephanie M. Bennett-Smith
Kim Cape
Jack C. Cassell* Gary D. Cohn*
Pamela M. Deese*
David R. Drobis*
Marc N. Duber*
Hani M. S. Farsi*
C. A. Daniel Gasby
Chazmon Q. Gates*
James E. Girard
Thomas A. Gottschalk
Gisela B. Huberman*
C. Nicholas Keating Jr.*
Cornelius M. Kerwin*
Margery Kraus*
Gerald Bruce Lee*
Charles H. Lydecker*
Robyn Rafferty Mathias*
Alan L. Meltzer*
Regina L. Muehlhauser*
Leigh A. Riddick
Arthur J. Rothkopf
Peter L. Scher*
Mark L. Schneider
John R. Schol Neal A. Sharma*
* alumna or alumnus of American University
34 AMERICAN UNIVERSITY
36 FINANCIAL STATEMENTS
The past year has seen American University transition successfully from planning and
developing our goals for the next decade to beginning the process of setting them in motion.
As a result of our long history of thoughtful financial stewardship, the university was able to
begin to realize many of the goals contained in our strategic plan.
As in previous years, AU completed another strong fiscal year. Despite a persistent weakened
economy, Standard & Poor’s reaffirmed our A+ rating with a stable outlook, citing the
university’s “consistently positive operating performance.” Net assets increased by $97 million
to $793 million, and total assets now stand at $1.2 billion. As of April 30, the total value of
our endowment was $455 million, and we continued to diversify our endowment portfolio
by completing the rollout of our direct investment hedge fund program. Additionally, we
provided initial funding for a renewed private equity strategy. In February, the Board of
Trustees approved a two-year operating budget for FY2012 and FY2013, together with a
five-year capital budget of approximately $400 million. The integration of the operating
and capital budgets allows us to ensure that all of the priorities in the strategic plan are
appropriately supported, including the beginning of our next 10-year facilities plan.
We took a significant step towards realizing our facilities priorities as we filed our 2011 Campus
Plan with the D.C. Zoning Commission. The plan—the largest and most ambitious ever
proposed by the university—calls for 845,000 square feet of new facilities over the next 10
years to accommodate additional housing and academic and student services. Projects include
additions to Nebraska Hall and Mary Graydon Center, the construction of the East Campus
and North Hall student residences, and a new location for the Washington College of Law on
Tenley Campus. Pending Zoning Commission approval, groundbreaking on a number of these
projects could begin as early as next year. We have finalized a comprehensive construction plan
to renovate McKinley as the new home for the School of Communication, including relocation
plans for current McKinley occupants. Construction is slated to begin in March 2012 and be
completed in March 2014. To provide further relief to the university’s housing crunch, the
Roper and Clark buildings were renovated and converted to accommodate 116 beds.
The university garnered national sustainability accolades this year, earning a Princeton Review
green rating of 99 out of 100, along with only 15 other schools in the nation. We also earned
a gold rating in the Sustainability Tracking Assessment and Rating System (STARS), with
the third highest overall score of the more than 200 reporting schools. With our purchase
of renewable energy credits for 100 percent of our electricity, we also have cut our carbon
footprint in half, taking a significant stride towards our goal of climate neutrality by 2020.
Helping to address our strategic goal of innovation, AU was selected as a grant recipient
by the National Association of College and University Business Officers (NACUBO) to
apply concepts from the Malcolm Baldrige National Quality Program to higher education.
The goal of the grant-funded pilot project is to achieve leadership in budget and financial
management best practices through innovation and high-performing partnerships across
divisions and schools.
As more of our strategic goals come to fruition in the year ahead, we are positioned to
embrace exciting challenges, possibilities, and opportunities with the knowledge and security
of continued financial stability.
Sincerely,
Donald L. Myers
AMERICAN UNIVERSITY 37
REPORT OF INDEPENDENT AUDITORS
To Board of Trustees of American University:
In our opinion, the accompanying balance sheets and the related statements of activities and cash flows present
fairly, in all material respects, the financial position of American University (the University) at April 30, 2011 and
2010, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America. These financial statements are the responsibility of
the University’s management. Our responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
August 29, 2011
38 FINANCIAL STATEMENTS
BALANCE SHEETS
(In thousands)
2011
APRIL 30, 2011 AND 2010
2010
ASSETS
1 Cash and cash equivalents
$ 41,360 $ 180,335
2 Accounts and University loans receivable, net 26,673 24,512
3 Contributions receivable, net
8,576 10,016
4 Prepaid expenses and inventory
1,729 1,971
5 Investments 626,798 407,128
6 Deposits with trustees/others
43 54
7 Deposits for collateralized swaps
4,907 2,180
8 Property, plant, and equipment, net 434,090 427,884
9 Deferred financing costs
2,568 2,682
10 Interest in perpetual trust 14,683 12,866
11 Total assets
$1,161,427 $1,069,628
LIABILITIES AND NET ASSETS
Liabilities:
12 Accounts payable and accrued liabilities
$ 43,356 $ 44,498
13 Deferred revenue and deposits 18,980 23,196
14 Indebtedness 255,875 255,875
15 Swap agreements 37,135 37,269
16 Assets retirement obligations
4,404 4,205
17 Refundable advances from the U.S. government
8,380 8,246
18 Total liabilities 368,130 373,289
Net assets:
Unrestricted
19 General operations
7,667 7,141
20 Internally designated 171,424 154,142
Capital
21 Designated funds functioning as endowments 309,476 256,371
22 Designated for plant 132,075 125,329
23 Total unrestricted 620,642 542,983
24 Temporarily restricted 87,930 72,126
25 Permanently restricted 84,725 81,230
26 Total net assets 793,297 696,339
27 Total liabilities and net assets
$1,161,427 $1,069,628
See accompanying notes to financial statements
AMERICAN UNIVERSITY 39
STATEMENTS OF ACTIVITIES
YEAR ENDED APRIL 30, 2011
General
Operations
(In thousands)
Unrestricted Net Assets
Internally
Designated
Capital
Total
Operating revenues and support
1 Tuition and fees
$423,039 $ 1,107 $
2 Less scholarship allowances(83,268) (8,931)
3 Net tuition and fees339,771 (7,824)
Temporarily Permanently
Restricted
Restricted
Net Assets
Net Assets
- $424,146 $
- (92,199)
- 331,947 - $
- - 4 Federal grants and contracts 733 18,129 - 18,862 - 5 Private grants and contracts 8,491 8,672 - 17,163 - 6 Indirect cost recovery 1,426 - - 1,426 - 7 Contributions 9,880 4,013 1,333 15,226 1,926 8 Endowment income 763 6,922 64 7,749 5,438 9 Investment income 4,075 319 32 4,426 145 10 Auxiliary enterprises 61,937 94 7,965 69,996 - 11 Other sources 2,093 1,411 6 3,510 - 12 Net asset release 215 5,018 1,606 6,839 (6,839)
13 Total operating
revenues and support429,384 36,754 11,006 477,144 670 Operating expenses
14 Instruction124,834 4,298 12,786 141,918 15 Research 20,420 16,859 - 37,279 16 Public service 16,951 604 710 18,265 17 Academic support 38,138 4,897 5,683 48,718 18 Student services 34,983 374 5,683 41,040 19 Institutional support 61,694 3,972 7,105 72,771 20 Auxiliary enterprises 30,571 21 39,072 69,664 21 Facilities operations and
maintenance 38,986 - (38,986)
- 22 Interest expense 10,287 - (10,287)
- 23 Total operating expenses376,864 31,025 21,766 429,655 24 Total operating activities 52,520 5,729 (10,760) 47,489 25 Transfer among funds(51,881) 20,334 31,547 - Total
- $424,146
- (92,199)
- 331,947
- 18,862
- 17,163
- 1,426
621 17,773
173 13,360
- 4,571
- 69,996
- 3,510
- 794 478,608
- - - - - - - - 141,918
- 37,279
- 18,265
- 48,718
- 41,040
- 72,771
- 69,664
- - - - - - 429,655
670 794 48,953
- - -
Nonoperating items
26 Investment income- - - - - 35 35
27 Other revenue and transfers- (675)
78 (597) 1,006 534 943
28 Realized and unrealized
net capital gains (113) (8,106) 38,986 30,767 14,128 2,132 47,027
29 Total nonoperating
activities
(113) (8,781) 39,064 30,170 15,134 2,701 48,005
30 Change in net assets
526 17,282 59,851 77,659 15,804 3,495 96,958
31 Net assets at beginning of year 7,141 154,142 381,700 542,983 72,126 81,230 696,339
32 Net assets at end of year
$ 7,667 $171,424 $441,551 $620,642 $ 87,930 $ 84,725 $793,297
See accompanying notes to financial statements
40 FINANCIAL STATEMENTS
STATEMENTS OF ACTIVITIES
General
(In thousands)
Operations
Unrestricted Net Assets
Internally
Designated
Capital
Total
YEAR ENDED APRIL 30, 2010
Temporarily Permanently
Restricted
Restricted
Net Assets
Net Assets
Total
Operating revenues and support
1 Tuition and fees
$392,327 $
976 $
- $393,303 $
- $
- $393,303
2 Less scholarship allowances(79,578) (7,564)
- (87,142)
- - (87,142)
3 Net tuition and fees312,749 (6,588)
- 306,161 - - 306,161
4 Federal grants and contracts 611 16,674 - 17,285 - - 17,285
5 Private grants and contracts 9,518 7,441 - 16,959 - - 16,959
6 Indirect cost recovery 1,451 - - 1,451 - - 1,451
7 Contributions 8,800 2,876 4,035 15,711 3,837 897 20,445
8 Endowment income 748 7,013 - 7,761 5,665 182 13,608
9 Investment income 2,103 278 155 2,536 191 - 2,727
10 Auxiliary enterprises 61,187 101 9,143 70,431 - - 70,431
11 Other sources 2,208 947 - 3,155 - - 3,155
12 Net asset release 215 5,632 2,733 8,580 (8,580) - 13 Total operating
revenues and support399,590 34,374 16,066 450,030 1,113 1,079 452,222
Operating expenses
14 Instruction108,972 3,869 12,379 125,220 - - 125,220
15 Research 21,336 15,700 - 37,036 - - 37,036
16 Public service 14,805 572 688 16,065 - - 16,065
17 Academic support 35,913 4,912 5,503 46,328 - - 46,328
18 Student services 33,387 342 5,503 39,232 - - 39,232
19 Institutional support 58,161 10,014 6,877 75,052 - - 75,052
20 Auxiliary enterprises 29,890 68 37,826 67,784 - - 67,784
21 Facilities operations and
maintenance 38,048 - (38,048)
- - - 22 Interest expense 9,919 - (9,919)
- - - 23 Total operating expenses350,431 35,477 20,809 406,717 - - 406,717
24 Total operating activities 49,159 (1,103) (4,743) 43,313 1,113 1,079 45,505
25 Transfer among funds(50,274) 19,937 30,337 - - - -
Nonoperating items
26 Investment income
- - - - - 31 31
27 Other revenue and transfers
- (34) (134) (168) 2,521 (260) 2,093
28 Realized and unrealized
net capital gains 1,868 (400) 68,699 70,167 25,562 3,470 99,199
29 Total nonoperating
activities 1,868 (434) 68,565 69,999 28,083 3,241 101,323
30 Change in net assets
753 18,400 94,159 113,312 29,196 4,320 146,828
31 Net assets at beginning of year 6,388 135,742 287,541 429,671 42,930 76,910 549,511
32 Net assets at end of year
$ 7,141 $154,142 $381,700 $542,983 $ 72,126 $ 81,230 $696,339
See accompanying notes to financial statements
AMERICAN UNIVERSITY 41
STATEMENTS OF CASH FLOWS
YEARS ENDED APRIL 30, 2011 AND 2010
(In thousands)
2011
2010
CASH FLOWS FROM OPERATING ACTIVITIES
1 Increase in net assets
$
Adjustments to reconcile increase in net assets to net cash
provided by operating activities:
2 Contributed art
3 Net realized and unrealized capital gains
4 Change in fair value of interest rate swaps
5 Depreciation, amortization, and accretion
Changes in assets and liabilities
6 (Increase) decrease in accounts and university loans receivable, net
7 Decrease in contributions receivable, net
8 Increase in prepaid expenses
9 Decrease in accounts payable and accrued liabilities
10 (Decrease) increase in deferred revenue, deposits, and other refundable advances
11 Decrease in asset retirement obligation
12 Contributions collected and revenues restricted for long-term investment
13 Net cash provided by operating activities
96,958 $ 146,828
(153)
(56,622)
(134)
22,584 (3,132)
(96,062)
(11,827)
21,453
(2,183)
1,440 242 (1,223)
(4,082)
- (2,625)
54,202 1,136
267
82
(1,636)
4,735
(193)
(8,079)
53,572
CASH FLOWS FROM INVESTING ACTIVITIES
14 Purchases of investments(305,587) (307,993)
15 Proceeds from sales and maturities of investments 140,803 366,590
16 Purchases of property, plant, and equipment(28,324) (43,507)
17 Capitalized interest- (1,237)
18 Decrease in deposits with trustees/other, net (2,716) 18,272
19 Net cash (used in) provided by investing activities(195,824) 32,125
CASH FLOWS FROM FINANCING ACTIVITIES
20 Student loans issued (1,600)
(1,327)
21 Student loans repaid 1,622 520
Proceeds from contributions restricted for
22 Investment in plant
1,599 255
23 Investment in endowment 1,026 7,824
24 Net cash provided by financing activities 2,647 7,272
25 Net (decrease) increase in cash and cash equivalents(138,975) 92,969
26 Cash and cash equivalents at beginning of year 180,335 87,366
27 Cash and cash equivalents at end of year
$ 41,360 $ 180,335
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
28 Cash paid during year for interest
$ 11,241 $
29 Donated art
153 30 Donated building- See accompanying notes to financial statements
42 FINANCIAL STATEMENTS
11,106
3,132
12,000
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2011 AND 2010
1. AMERICAN UNIVERSITY
American University (the University) is an independent, coeducational university located on an 85-acre campus in
northwest Washington, D.C. It was chartered by an Act of Congress in 1893 (the Act). The Act empowered the
establishment and maintenance of a university for the promotion of education under the auspices of the Methodist
Church. While still maintaining its Methodist connection, the University is nonsectarian in all of its policies.
American University offers a wide range of graduate and undergraduate degree programs, as well as non-degree study.
There are approximately 750 full-time faculty members in six academic divisions, and approximately 12,000 students,
of which 6,700 are undergraduate students and 5,300 are graduate students. The University attracts students from all
50 states, the District of Columbia, Puerto Rico, and nearly 150 foreign countries.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements of the University have been reported on the accrual basis of accounting in accordance with
accounting principles generally accepted in the United States of America.
Classification of Net Assets
Net assets, revenues, gains, and losses are classified based on the existence or absence of donor-imposed restrictions.
Accordingly, net assets of the University and changes therein are classified and reported as follows:
Unrestricted—Net assets not subject to donor-imposed stipulations.
Temporarily Restricted —Net assets subject to donor-imposed stipulations that either expire by passage
of time or can be fulfilled by actions of the University pursuant to those stipulations.
Permanently Restricted —Net assets subject to donor-imposed stipulations that they be maintained
permanently by the University.
Revenues are reported as increases in unrestricted net assets unless use of the related assets is limited by donor-imposed
restrictions. Contributions are reported as increases in the appropriate category of net assets. Expenses are reported as
decreases in unrestricted net assets. Gains and losses on investments are reported as increases or decreases in unrestricted
net assets unless their use is restricted by explicit donor stipulations or by law. Expirations of temporary restrictions
recognized on net assets (i.e., the donor-stipulated purpose has been fulfilled and/or the stipulated time period has elapsed)
are reported as reclassifications from temporarily restricted net assets to unrestricted net assets. Temporary restrictions on
gifts to acquire long-lived assets are considered met in the period in which the assets are acquired or placed in service.
Contributions, including unconditional promises to give, are recognized as revenues in the period received. Conditional
promises to give are not recognized until the conditions on which they depend are substantially met. Contributions of
assets other than cash are recorded at their estimated fair value at the date of gift. Contributions to be received after one
year are discounted at a rate commensurate with the risk involved. Amortization of the discount is recorded as additional
contribution revenue and used in accordance with donor-imposed restrictions, if any, on the contributions. Allowance
is made for uncollectible contributions based upon management’s judgment and analysis of the creditworthiness of the
donors, past collection experience, and other relevant factors.
The University follows a practice of classifying its unrestricted net asset class of revenues and expenses as general
operations, internally designated, or capital. Items classified as general operations include those revenues and expenses
included in the University’s annual operating budget. Items classified as capital include accounts and transactions
related to endowment funds and plant facilities and allocation of facilities operations and maintenance, depreciation,
and interest expense. All other accounts and transactions are classified as internally designated.
Transfers consist primarily of funding designations for specific purposes and for future plant acquisitions and improvements.
Non-operating activities represent transactions relating to the University’s long-term investments and plant activities,
including contributions to be invested by the University to generate a return that will support future operations,
contributions to be received in the future or to be used for facilities and equipment, and investment gains or losses.
AMERICAN UNIVERSITY 43
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2011 AND 2010
Cash and Cash Equivalents
All highly liquid cash investments with maturities at date of purchase of three months or less are considered to be cash
equivalents. Cash equivalents consist primarily of money market funds.
Receivables
Receivables consist of tuition and fee charges to students and auxiliary enterprises’ sales and services. Receivables also
include amounts due from the federal government, state and local governments, or private sources, in connection
with reimbursement of allowable expenditures made pursuant to grants and contracts. Receivables are recorded net of
estimated uncollectible amounts. The University reviews the individual receivables as well as the history of collectability
to determine the collectible amount as of the balance sheet date.
Loans Receivable
Loans receivable are primarily related to donor-structured loans and federal student financial aid programs. The loans
have stated interest rates and repayment terms. Loans receivable are evaluated annually by looking at both unsecured
and secured loans.
Deposits with Trustees/Others
Deposits with trustees consist of debt service funds and the unexpended proceeds of certain bonds payable. These funds
are invested in short-term, highly liquid securities and will be used for construction of, or payment of debt service on,
certain facilities.
Investments
Equity securities with readily determinable fair values and all debt securities are recorded at fair value in the balance
sheet. See Note 6 for an explanation as to methodology for determining fair value. Endowment income included in
operating revenues consists of annual amounts allocated for spending of endowment funds in accordance with the
University’s spending policy. All realized and unrealized gains and losses from investments of endowment funds are
reported as non-operating revenues. Investment income included in operating revenues consists primarily of interest
and dividends from investments of working capital funds and unexpended plant funds.
The University has interests in alternative investments consisting of limited partnerships. Alternative investments are
less liquid than the University’s other investments. Furthermore, the investments in these limited partnerships, as well
as certain mutual funds classified as equity securities, may include derivatives and certain private investments which do
not trade on public markets and therefore may be subject to greater liquidity risk.
Investment income is reported net of management fees and rental real estate property expenses.
Property, Plant, and Equipment, Net
Property, plant, and equipment are stated at cost on the date of acquisition or at estimated fair value if acquired by gift,
including interest capitalized on related borrowings during the period of construction, less accumulated depreciation.
Certain costs associated with the financing of plant assets are deferred and amortized over the terms of the financing.
Depreciation of the University’s plant assets is computed using the straight-line method over asset’s estimated useful
life, generally over 50 years for buildings, 20 years for land improvements, 5 years for equipment, 10 years for library
collections, and 50 years for art collections. The University’s capitalization policy is to capitalize all fixed assets and
collection items that have a cost of $5,000 or more per unit and a useful life of two years or more.
Refundable Advances from the U.S. Government
Funds provided by the United States Government under the Federal Perkins Loan Program are loaned to qualified
students and may be reloaned after collections. Such funds are ultimately refundable to the government. Approximately
50% and 46% of net tuition and fees revenue for the years ended April 30, 2011 and 2010, respectively, was funded by
federal student financial aid programs (including loan, grant, and work-study programs).
Asset Retirement Obligations
The University records asset retirement obligations in accordance with the accounting standard for the Accounting
for Conditional Asset Retirement Obligations. This standard requires the fair value of the liability for the asset
retirement obligations (ARO) be recognized in the period in which it is incurred and the settlement date is estimable,
even if the exact timing or method of settlement is unknown. The ARO is capitalized as part of the carrying amount
44 FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2011 AND 2010
of the long-lived asset retroactively to the time at which legal or contractual regulations created the obligation. The
University’s ARO is primarily associated with the cost of removal and disposal of asbestos, lead paint, and asset
decommissioning. For the years ended April 30, 2011 and 2010, the accretion expenses were $199,000 and $196,000,
respectively. Additionally, for the year ended April 30, 2010, the University settled $193,000 of the outstanding
obligation. No obligations were settled during the fiscal year ended April 30, 2011.
Income Taxes
The University has been recognized by the Internal Revenue Service as exempt from federal income tax under
Section 501(c)(3) of the U.S. Internal Revenue Code, except for taxes on income from activities unrelated to its exempt
purpose. Such activities resulted in no net taxable income in fiscal years 2011 and 2010.
Functional Expenses
The University has developed and implemented a system of allocating expenses related to more than one function.
These expenses are depreciation, interest, and operations and maintenance of plant. Depreciation is allocated by
individual fixed assets to the function utilizing that asset. Interest is allocated based on the use of borrowed money in
the individual functional category.
The operations and maintenance of plant is divided into expenses used for the total institution not charged back to the
operating units, and those expenses charged to some units but not all units. Allocation was determined through a study
of departmental uses of the operations and maintenance budget within each category.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect: (1) the reported amounts of assets and liabilities; (2)
disclosure of contingent assets and liabilities at the date of the financial statements; and (3) the reported amounts of
revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions are the
value of alternative investments, the asset retirement obligations, the postretirement benefit plan, and swap agreements.
Actual results could differ materially, in the near term, from the amounts reported.
Reclassifications
Certain prior year balances have been reclassified to conform to the current year presentation.
3. ACCOUNTS AND UNIVERSITY LOANS RECEIVABLE, NET
Accounts and loans receivable, net, at April 30, 2011 and 2010, are as follows (in thousands):
2011
2010
Accounts receivable
1
Student
$
2
Grants, contracts, and other
3
7,418 $
8,712 5,554
9,189
Accrued interest
452 424
Student loans
11,191 10,722
5
27,773 25,889
6
(1,100)
(1,377)
4
Less allowance for uncollectible accounts and loans
7
$ 26,673 $ 24,512 At April 30, 2011 and 2010, the University had an outstanding student loans receivable balance in the amount of
$11.2 million and $10.7 million, respectively. Management does not believe it has significant exposure to credit risk
related to the federal student financial aid programs as these accounts receivable amounts are primarily due from the U.S.
Government. Additionally, management has considered the credit and market risk associated with all other outstanding
balances and believes the recorded cost of these loans approximates fair market value at April 30, 2011 and 2010.
AMERICAN UNIVERSITY 45
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2011 AND 2010
4. CONTRIBUTIONS RECEIVABLE, NET
As of April 30, 2011 and 2010, unconditional promises to give were as follows (in thousands):
Amounts due in:
1 Less than one year
$
2 One year to five years
3 Over five years
4
5 Less unamortized discount
6 Less allowance for doubtful accounts
7
$
2011
2010
11,330 $
3,885 540 15,755 (741)
(6,438)
8,576 $
11,286
4,996
961
17,243
(1,005)
(6,222)
10,016
Contributions receivable over more than one year are discounted at rates ranging from 3% to 6.5%. New contributions
received during fiscal years 2011 and 2010 were assigned a discount rate which is commensurate with the market and
credit risk involved.
As of April 30, 2011 and 2010, the University had also received bequest intentions and conditional promises to give
of $24.1 million and $20.1 million, respectively. These intentions to give are not recognized as assets. If the bequests
are received, they will generally be restricted for specific purposes stipulated by the donors, primarily endowments for
faculty support, scholarships, or general operating support of a particular department of the University. Conditional
promises to give are recognized as contributions when the donor-imposed conditions are substantially met.
Amortization of the discount is recorded as additional contribution revenue and is used in accordance with the
donor-imposed restrictions, if any, on the contributions. An allowance is made for uncollectible pledges based upon
management’s judgment and analysis of the creditworthiness of the donors, past collection experience, and other
relevant factors.
5. PROPERTY, PLANT, AND EQUIPMENT, NET
Property, plant, and equipment and related accumulated depreciation and amortization at April 30, 2011 and 2010,
are as follows (in thousands):
2011
2010
$ 50,809 $ 50,283
8
Land and improvements
9
Buildings 530,089 467,253
10
Equipment
95,627 86,527
11
Construction in progress
11,866 62,134
12
Library and art collections
84,013 77,730
13 772,404 743,927
14
Less accumulated depreciation and amortization (338,314) (316,043)
15
$ 434,090 $ 427,884
Construction in progress at April 30, 2011 and 2010, relates to building improvements and renovations.
For the years ended April 30, 2011 and 2010, depreciation expense was approximately $22.3 million and
$21.1 million, respectively.
46 FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2011 AND 2010
6. FAIR VALUE MEASUREMENTS
The University determines fair value in accordance with fair value measurement accounting standards. These standards
establish a framework for measuring fair value, a fair value hierarchy based on the observability of inputs used to
measure fair value, and disclosure requirements for fair value measurements. Financial assets and liabilities are classified
and disclosed in one of the following three categories based on the lowest level input that is significant to the fair value
measurement in its entirety:
Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities.
Level 2: Inputs other than Level 1, that are observable either directly or indirectly, such as quoted prices for similar
assets or liabilities; quoted prices in markets that are not active; or inputs that are observable or can be corroborated
by observable market data for substantially the same term of the assets or liabilities.
Level 3: Unobservable inputs that are supported by little or no market activity and are significant to the fair value
of the assets or liabilities.
Assets and Liabilities Measured at Fair Value
The following table displays the carrying value and estimated fair value of the University’s financial instruments as
of April 30, 2011 (in thousands):
Quoted Prices
in Active
Markets for
Identical Assets (Level 1)
Significant
Other
Significant
Observable
Unobservable
Inputs
Inputs
(Level 2)
(Level 3)
Total
Fair Value
as of
April 30, 2011
Assets
Investments
1 Cash and cash equivalents $ 43,295 $
2 Equity—corporate stocks
72,417 -
$
-
$ 43,295
- - 72,417
89,579 - 89,579
3 Equity—domestic funds
-
4 Equity—international funds
- 123,511
5 Equity—hedge funds
- 61,874 14,637 76,511
6 Equity—real asset funds
- 24,184
- 24,184
7 Equity—private equity funds
- -
3,650 3,650
8 Fixed income—corporate bonds
- 19,637
- 19,637
9 Fixed income—government agency bonds
-
36,900
- 36,900
10 Fixed income—international bonds
-
2,786
- 2,786
11 Fixed income—domestic bond funds
- 134,328
12 Deposits with trustees
43
13 Interest in perpetual trust
-
14 Total assets at fair value
- - 123,511
- 134,328
- 43
- 14,683 14,683
$ 115,755 $492,799 $ 32,970 $641,524
15 Swap agreements
$
-
$ 37,135 $
-
$ 37,135
16 $
-
$ 37,135 $
-
$ 37,135
Liabilities
AMERICAN UNIVERSITY 47
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2011 AND 2010
The following table displays the carrying value and estimated fair value of the University’s financial instruments as
of April 30, 2010 (in thousands):
Quoted Prices
in Active
Markets for
Identical Assets (Level 1)
Significant
Other
Significant
Observable
Unobservable
Inputs
Inputs
(Level 2)
(Level 3)
Total
Fair Value
as of
April 30, 2010
Assets
Investments
1 Cash and cash equivalents
$ 24,012 $
150 $
- $ 24,162
2 Equity—corporate stocks
59,979 - - 59,979
3 Equity—domestic funds
- 66,976 - 66,976
4 Equity—international funds
- 97,489 - 97,489
5 Equity—hedge funds
- 22,436 8,050 30,486
6 Equity—real asset funds
- 32,167 - 32,167
7 Equity—private equity funds
- - 1,135 1,135
8 Fixed income—corporate bonds
- 12,963 - 12,963
9 Fixed income—government agency bonds
- 10,451 - 10,451
10 Fixed income—international bonds
- 2,627 - 2,627
4,100 - - 4,100
12 Fixed Income—domestic bond funds
- - 64,593
13 Deposits with trustees
54 - - 54
14 Interest in perpetual trust
- - 12,866 12,866
11
Fixed income—treasury notes
64,593 15 Total assets at fair value
$ 88,145 $309,852 $ 22,051 Liabilities
$420,048
16 Swap agreements
$ 37,269
$
- $ 37,269 $
- 17
$
- $ 37,269 $
- $ 37,269
The University determines a valuation estimate based on techniques and processes which have been reviewed for propriety
and consistency with consideration given to asset type and investment strategy. In addition, the funds and fund custodians
may also use established procedures for determining the fair value of securities which reflect their own assumptions.
Management makes best estimates based on information available. The following estimates and assumptions were used to
determine the fair value of the financial instruments listed above:
• Cash Equivalents—Cash equivalents primarily consist of deposits in money market funds and short-term
investments. These are priced using quoted prices in active markets and are classified as Level 1.
•
Equity Investments—Equity investments consist of, but are not limited to, separate accounts, common trust funds
and hedge funds. These assets consist of both publicly traded and privately held funds.
Publicly Traded Securities—These investments consist of domestic and foreign equity holdings. Securities
traded on active exchanges are priced using unadjusted market quotes for identical assets and are classified as
Level 1. Securities that are traded infrequently or that have comparable traded assets are priced using available
quotes and other market data that are observable and are classified as Level 2.
Privately Held Funds—These investments consist of domestic, international, hedge, real asset, and private
equity funds which are privately held. The valuations of the funds are calculated by the investment managers
based on valuation techniques that take into account the market value of the underlying assets to arrive at a net
48 FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2011 AND 2010
asset value or interest in the fund shares. The funds are commingled funds and limited partnerships, and shares
may not be readily redeemable. If an active market exists for the fund and shares are redeemable at net asset
value, these investments are classified as Level 2. If no active market exists for these investments and/or there
are significant redemption restrictions, they are classified Level 3.
•
Fixed Income Investments—Fixed income securities include, but are not limited to, U.S. Treasury issues, U.S.
Government Agency issues, corporate debt, and domestic and international bond funds. Fixed income securities
assets are valued using quoted prices in active markets for similar securities and are classified as Level 2. If an active
market exists for fixed income funds and shares are redeemable at net asset value, these investments are classified as
Level 2. If no active market exists for these investments and/or there are significant redemption restrictions, they
are classified Level 3.
•
Deposits with Trustees—Deposits with trustees consist of debt service funds and the unexpended proceeds
of certain bonds payable. These funds are invested in short-term, highly liquid securities and will be used for
construction of, or payment of debt service on, certain facilities.
•
Interest in Perpetual Trust—Beneficial and perpetual trusts held by third parties are valued at the present value of
the future distributions expected to be received over the term of the agreement.
•
Swap Agreements—Interest rate swaps are valued using both observable and unobservable inputs, such as quotations
received from the counterparty, dealers, or brokers, whenever available and considered reliable. In instances where
models are used, the value of the interest rate swap depends upon the contractual terms of, and specific risks
inherent in, the instrument as well as the availability and reliability of observable inputs. Such inputs include market
prices for reference securities, yield curves, credit curves, measures of volatility, prepayment rates, assumptions for
nonperformance risk, and correlations of such inputs. Certain of the interest rate swap arrangements have inputs
which can generally be corroborated by market data and are therefore classified within Level 2.
The methods described above may produce a fair value calculation that may not be indicative of net realizable value
or reflective of future fair values. Furthermore, while the University believes its valuation methods are appropriate and
consistent with other market participants, the use of different methodologies or assumptions to determine the fair value
of certain financial instruments could result in a different estimate of fair value at the reporting date.
Changes in Level 3 Assets
The following table is a roll-forward of the statement of financial position amounts for financial instruments classified
by the University within Level 3 of the fair value hierarchy defined above for the years ended April 30, 2011 and
2010 (in thousands):
Investments
Investments
Equity—Hedge Equity—Private
Funds
Equity Funds
1 Beginning balance at May 1, 2010
$ 8,050 2 Total gains or losses (realized/unrealized)
included in earnings
4 Transfers out of Level 3
6
Total gains or losses for the period included
in earnings attributable to the change in
unrealized gains or losses relating to assets
still held at period end
1,135 254 1,711 3 Purchases, issuances, and settlements
5 Ending balance at April 30, 2011
$
9,000 (4,124)
Interest
Prepetual
Trust
Total
$ 12,866 $ 22,051 1,817 3,782 2,261 - 11,261 - - (4,124)
$ 14,637 $ 3,650 $ 14,683 $ 32,970 $ 1,601 $
$ 1,817 $
251 3,669 AMERICAN UNIVERSITY 49
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2011 AND 2010
Investments
Investments
Equity—Hedge Equity—Private
Funds
Equity Funds
1 Beginning balance at May 1, 2009
$ 32,736 2 Total gains or losses (realized/unrealized)
included in earnings
$
136 779 Interest
Prepetual
Trust
Total
$ 10,064 $ 42,936 (101)
3 Purchases, issuances, and settlements (13,154)
2,802 3,480 1,100 - (12,054)
- - (12,311)
4
Transfers out of Level 3
(12,311)
5
6
Ending balance at April 30, 2010
$ 8,050 $
1,135 $ 12,866 $ 22,051 Total gains or losses for the period included
in earnings attributable to the change in
unrealized gains or losses relating to assets
still held at period end
$ 5,043 $
- $ 2,802 $
Transfers into and out of Level 3 are typically the result of a change in the availability and the ability to observe market
data which is considered a significant valuation input required by various models. Generally, as markets evolve, the data
required to support valuations becomes more widely available and observable.
There were no significant transfers between Levels 1 and 2 for the year ended April 30, 2011.
Investments that Calculate Net Asset Value
Investments in certain entities that calculate net asset values at April 30, 2011 and 2010, are as follows (in thousands):
7 Domestic equity funds
Fair Value
$ 89,579 April 30, 2011
Unfunded
Redemption
Commitments
Frequency
Redemption
Notice Period
-
daily
same day
8 International equity funds 123,511 - daily, biweekly
same day–5 days
9 Domestic bond funds 134,328 - daily
same day
10 Real asset funds 24,184 - daily, monthly
1–10 days
11 Hedge funds
- monthly, annually 30–90 days
76,511 12 Private equity funds
13 Total 3,650 16,615 $451,763 Fair Value
14 Domestic equity funds
$
7,845 N/A
N/A
$16,615 April 30, 2010
Unfunded
Redemption
Commitments
Frequency
$ 66,976 $
Redemption
Notice Period
- daily
same day
15 International equity funds 97,489 - daily, biweekly
same day, 5 days
16 Domestic bond funds 64,593 - daily
same day
17 Real asset funds 32,167 - daily, monthly
1 day, 10 days
18 Hedge funds 30,486 20,000 monthly, annually 30–90 days
19 Private equity funds
N/A
20 Total 50 FINANCIAL STATEMENTS
1,135 $292,846 2,900 N/A
$ 22,900 NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2011 AND 2010
At April 30, 2011 and 2010, the assets of endowments and funds functioning as endowments were approximately
$455 million and $385 million, respectively.
Investments in debt securities and equity securities consist primarily of investments in funds managed by external
investment managers.
For the years ended April 30, 2011 and 2010, the University’s investment management fees were approximately
$1.3 million and $1.4 million, respectively.
Investment Income
Total net investment income for the years ended April 30, 2011 and 2010, consists of the following (in thousands):
2011
Temporarily
Permanently
Unrestricted
Restricted
Restricted
Total
1 Endowment income
$ 7,749 $ 5,438 2 Investment income
4,426 3 Realized and unrealized net capital gains
30,767 4 Total
$ 42,942 $
145 14,128 $ 19,711 173 $ 13,360
- 4,571
2,132 47,027
$ 2,305 $ 64,958
Operating
5 Investment income
$ 4,426 6 Endowment income
824 $
7 Allocated from non-operating
6,925 145 $
2,634 - $
4,571
173 3,631
2,804 - 9,729
56,756
Non-operating
8 Realized and unrealized net capital gains
37,692 16,932 2,132 9 Allocation to operations
(2,804)
- 10 Total
$ 42,942 11 Endowment income
(6,925)
Unrestricted
$
7,761 $ 19,711 $ 2,305 (9,729)
$ 64,958
2010
Temporarily
Permanently
Restricted
Restricted
Total
$
5,665 $
182 $ 13,608
12 Investment income
2,536 191 - 2,727
13 Realized and unrealized net capital gains
70,167 25,562 3,470 99,199
14 Total $ 80,464 $ 31,418 $ 3,652 $115,534
Operating
15 Investment income
$ 2,536 $
191 $
- $
2,727
16 Endowment income
1,691 3,044 182 4,917
17 Allocated from non-operating
6,070 2,621 - 8,691
Non-operating
18 Realized and unrealized net capital gains
76,237 28,183 19 Allocation to operations
(6,070)
(2,621)
10 Total $ 80,464 $ 31,418
3,470 107,890
- $ 3,652 (8,691)
$115,534
AMERICAN UNIVERSITY 51
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2011 AND 2010
7. INDEBTEDNESS
The University classifies its debt into two categories: core debt and special purpose debt. Core debt represents debt
that will be repaid from the general operations of the University and includes borrowings for educational and auxiliary
purposes. Special purpose debt represents debt that is repaid from sources outside of general operations and includes
borrowings for buildings, which house some administrative offices, along with rental space.
Indebtedness at April 30, 2011 and 2010, consists of the following (in thousands):
2011
2010
Core debt
1 District of Columbia University Revenue Bonds, American University
Issue Series 1999 maturing in 2028
$ 21,000 $ 21,000
2 District of Columbia University Revenue Bonds, American University
Issue Series 2003 maturing 2033
37,000 37,000
3 District of Columbia University Revenue Bonds, American University
Issue Series 2006 maturing 2036
99,975 99,975
4 District of Columbia University Revenue Bonds, American University
Issue Series 2008 maturing 2038
60,900 60,900
5 Total core debt 218,875 218,875
Special purpose debt
6 Note payable due in full in 2021
22,000 22,000
7 Note payable due in full in 2020
15,000 15,000
8 Total special purpose debt
37,000 37,000
9 Total indebtedness
$ 255,875 $ 255,875
The principal balance of bonds and notes payable outstanding as of April 30, 2011, is due as follows (in thousands):
Year ending April 30:
10 2012
$
-
11 2013
-
12 2014
-
13 2015
-
14 2016
-
15 Thereafter 255,875
16
$ 255,875
Due to the nature of certain variable rate bond agreements, the University may receive notice of an optional tender on
its variable rate bonds. In that event, the University would have an obligation to purchase the tendered bonds if they
were unable to be remarketed. The University has entered into a letter of credit and standby bond purchase agreements
with various financial institutions to support the $218.9 million of variable rate demand obligations all of which
expire in fiscal year 2014. Under these agreements, the financial institutions have agreed to purchase the bonds if the
bonds are unable to be remarketed. Should that occur, payment would be accelerated and ultimately differ from the
dates stated above. In accordance with the terms of the agreements, $21.0 million would convert to a term loan with
principal and interest payable over five years and $198.0 million would be payable in fiscal year 2013.
The estimated fair value of the University’s indebtedness at April 30, 2011 and 2010, was $255.9 million and was
determined using quoted market prices.
52 FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2011 AND 2010
District of Columbia Bonds Payable
In October 2008, the University refunded and reissued the Series 1985 and Series 1985A bonds as Series 2008 variable
rate demand bonds with interest payable weekly. These bonds are general unsecured obligations of the University. The
interest rate at April 30, 2011, was 0.24%.
The Series 1999 bonds are general unsecured obligations of the University and bear interest at a variable rate, payable
weekly. The proceeds from the bonds were used to repay a mortgage note prior to its scheduled maturity. The interest
rate at April 30, 2011, was 0.24%.
The Series 2003 bonds are general unsecured obligations of the University and bear interest at a variable rate, payable
weekly. The proceeds were used to fund construction and renovation projects relating to the Katzen Arts Center and
Greenburg Theatre. The interest rate at April 30, 2011, was 0.23%.
The Series 2006 bonds are general unsecured obligations of the University and bear interest at a variable rate,
payable weekly. The proceeds were used to advance refund the Series 1996 bond issue, thus reducing the University’s
overall interest costs, and to fund construction and renovation projects, including Nebraska Hall and the School of
International Service building. The interest rate at April 30, 2011, was 0.23%.
Notes Payable
In 2003, the University issued a $15.0 million note payable to replace a 1998 note incurred for the purchase of a
building. The note is payable in full in April 2020 and bears an interest rate of LIBOR plus 0.45%, payable monthly.
The interest rate at April 30, 2011, was 0.6938%.
In 2001, the University issued a $22.0 million note for the purchase of a building. The note is payable in full in
September 2021 and bears an interest rate of LIBOR plus 0.45%, payable monthly. The interest rate at April 30, 2011,
was 0.6938%.
8. INTEREST RATE SWAPS
The University has entered into interest rate swap agreements to reduce the impact of changes in interest rates on
its floating rate long-term debt. The interest rate swap agreements were not entered into for trading or speculative
purposes. At April 30, 2011, the University had outstanding interest rate swap agreements with Bank of America and
Morgan Stanley Capital Services. The interest rate swap agreement with Bank of America effectively changes the interest
rate to a 4.31% fixed rate for the Series 2008 bonds and replaces an interest rate swap agreement with Ambac Assurance
Corporation for the refunded and reissued Series 1985 and Series A bonds. Five interest rate swap agreements are in
place with Morgan Stanley with a total notional principal amount of approximately $156 million. These agreements
effectively change the University’s interest rate to a 4.10% fixed rate for the Series 1999 bonds, a 5.54% fixed rate for
the 2001 note payable, fixed rates of 5.26% and 4.37% on portions of the Series 2006 bonds, and a fixed rate of 4.46%
on a portion of the Series 2003 bonds. The interest rate swap agreements mature at the time the related notes mature,
except for the swap related to the 2001 note payable, which expires in September 2011.
The interest rate swap agreements contain provisions that require the University’s debt to maintain an investment grade
credit rating from each of the major credit rating agencies. If the University’s debt were to fall below investment grade, it
would be in violation of these provisions, and the counterparties to the derivative instruments could request immediate
payment or demand immediate and ongoing full overnight collateralization on derivative instruments in net liability
positions. The University is currently in compliance with these provisions.
The aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a liability
position on April 30, 2011, is $37 million, for which the University has posted collateral of $5 million in the normal
course of business. If the credit-risk-related contingent features underlying these agreements were triggered on April
30, 2011, the University would be required to post an additional $32 million of collateral to its counterparties. The
University is also exposed to credit loss in the event of nonperformance by the other parties to the interest rate swap
agreements. However, the University does not anticipate nonperformance by the counter parties.
AMERICAN UNIVERSITY 53
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2011 AND 2010
Derivatives at April 30, 2011 and 2010, are as follows (in thousands):
Liability Derivatives
2011
2010
Balance Sheet Fair
Balance Sheet
Location
Value
Location
Derivatives not designated as hedging instruments:
1 Interest rate contracts
Swap agreements
$ 37,135
Location of Gain (Loss) Recognized in Statement of Activities
Swap
agreements
Fair
Value
$ 37,269
Amount of Gain (Loss) Recognized in
Statement of Activities
2011
2010
Derivatives not designated as hedging instruments:
2 Interest rate contracts
Realized and unrealized net
capital gains $
134 $ 11,827 9. ENDOWMENTS
The University’s endowment consists of approximately 400 individual funds established for scholarships and related
academic activities. Its endowment includes both donor-restricted endowment funds and funds designated by the Board
of Trustees to function as endowments. As required by generally accepted accounting principles, net assets associated
with endowment funds, including funds designated by the Board of Trustees to function as endowments, are classified and
reported based on the existence or absence of donor-imposed restrictions.
Permanently Restricted Net Assets—Interpretation of Relevant Law
The Board of Trustees has interpreted the District of Columbia enacted version of Uniform Prudent Management
of Institutional Funds Act (UPMIFA) as requiring the preservation of the fair value of the original gift as of the
gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of
this interpretation, the University classifies as permanently restricted net assets (a) the original value of gifts to the
permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations
to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time
the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund not classified
in permanently restricted net assets is classified as temporarily restricted net assets until purpose and timing restrictions
are met and amounts are appropriated for expenditure by the Board of Trustees of the University in a manner consistent
with the standard of prudence prescribed by UPMIFA.
In accordance with UPMIFA, the University considers the following factors in making a determination to appropriate
or accumulate donor-restricted endowment funds:
(1) The duration and preservation of the fund
(2) The purposes of the University and the donor-restricted endowment fund
(3) General economic conditions
(4) The possible effect of inflation and deflation
(5) The expected total return from income and the appreciation of investments
(6) Other resources of the University
(7) The investment policies of the University
54 FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2011 AND 2010
The endowment net assets composition by type of fund at April 30, 2011, is as follows (in thousands):
Temporarily
Permanently
Unrestricted
Restricted Restricted Total
1 Donor-restricted endowment funds
$
(18)
$ 66,641 2 Board-designated endowment funds 280,776 3 Total endowment funds
$ 280,758 $ 74,437 - $ 141,060
$ 66,641 - 280,776
$ 74,437 $ 421,836
The changes in endowment net assets for the year ended April 30, 2011, are as follows (in thousands):
Unrestricted
4 Endowment net assets, May 1, 2010
$ 236,929 Temporarily
Restricted Permanently
Restricted Total
$ 52,575 $ 71,131 $ 360,635
Investment return:
5 Net appreciation on investments
36,433 16,940 1,810 6 Interest, dividends, and capital distributions
893 2,813 -
7 Total investment return
37,326 19,753 1,810 8 Contributions to endowment
- - 1,496 9 Appropriation of endowment assets
for expenditure
(7,750)
(5,687)
55,183
3,706
58,889
1,496 - (13,437)
Other changes:
10 Transfers to create board-designated
endowment funds
11 Endowment net assets, April 30, 2011
14,253 $ 280,758 - - 14,253
$ 66,641 $ 74,437 $ 421,836 The endowment net assets composition by type of fund at April 30, 2010, is as follows (in thousands):
Unrestricted
12 Donor-restricted endowment funds
$
Temporarily
Restricted Permanently
Restricted Total
$ 52,575 $ 71,131 $ 123,624
(82)
13 Board-designated endowment funds 237,011 14 Total endowment funds
$ 236,929 - $ 52,575 - 237,011
$ 71,131 $ 360,635
AMERICAN UNIVERSITY 55
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2011 AND 2010
The changes in endowment net assets for the year ended April 30, 2010, are as follows (in thousands):
Unrestricted
1 Endowment net assets, May 1, 2009
$ 184,383 Temporarily
Restricted Permanently
Restricted Total
$ 26,920 $ 59,514 $ 270,817
Investment return:
2 Net appreciation on investments
60,607 28,176 2,802 91,585
3 Interest, dividends, and capital distributions
1,755 3,393 - 5,148
4 Total investment return
62,362 5 Contributions to endowment
- - 6 Appropriation of endowment assets
for expenditure
(7,760)
(5,914)
31,569 2,802 96,733
8,815 8,815
- (13,674)
Other changes:
7 Transfers to create board-designated
endowment funds
9,944 - - 8 Transfers to remove board-designated
endowment funds (12,000)
- - (12,000)
9 Endowment net assets, April 30, 2010
$ 236,929 $ 52,575 $ 71,131 9,944
$ 360,635
Funds with Deficiencies
From time to time, the fair value of the assets associated with individual restricted endowments may fall below the level
the donor or UPMIFA requires the University to retain as a fund of perpetual duration. In accordance with generally
accepted accounting principles, deficiencies of this nature reported in unrestricted net assets were $18,000 and $82,000
at April 30, 2011 and 2010, respectively. These deficiencies resulted from market fluctuations that occurred shortly after
the investment of new permanently restricted contributions and continued appropriation for certain programs deemed
prudent by the Board of Trustees.
Return Objectives, Risk Parameters, and Strategies
The University’s objective is to earn a respectable, long-term, risk-adjusted total rate of return to support the designated
programs. The University recognizes and accepts that pursuing a respectable rate of return involves risk and potential
volatility. The generation of current income will be a secondary consideration. The University has established a policy
portfolio, or normal asset allocation. The University targets a diversified asset allocation that places a greater emphasis
on equity-based investments to achieve its long-term return objectives within prudent risk constraints. While the
policy portfolio can be adjusted from time to time, it is designed to serve for long-time horizons based upon long-term
expected returns.
Spending Policy and How the Investment Objectives Relate to Spending Policy
The University has a policy of appropriating for distribution each year 5% of the endowment fund’s average fair value
calculated on an annual basis over the preceding three fiscal years. In establishing this policy, the University considered
the long-term expected return on its endowment. Accordingly, over the long term, the University expects the current
spending policy to allow its endowment to grow at an average of 3% annually. This is consistent with the University’s
objective to provide additional real growth through new gifts and investment return.
56 FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2011 AND 2010
10. EMPLOYEE BENEFIT PLANS
Eligible employees of the University may participate in two contributory pension and retirement plans, one administered
by the Teachers Insurance and Annuity Association and College Retirement Equities Fund and the other administered
by Fidelity Investments. Under these plans, contributions are fully vested and are transferable by the employees to other
covered employer plans. Participating employees contribute a minimum of 1% up to a maximum of 5% of their base
salary. The University contributes an amount equal to twice the employee’s contribution.
The University’s contribution to these plans was approximately $13.4 million and $12.2 million for the years ended
April 30, 2011 and 2010, respectively.
Postretirement Healthcare Plan
The University provides certain healthcare benefits for retired employees. The plan is contributory and requires
payment of deductibles. The University’s policy is to fund the cost of medical benefits on the pay-as-you-go basis. The
plan’s measurement dates are April 30, 2011, and April 30, 2010, respectively.
Net periodic postretirement benefit cost for the years ended April 30, 2011 and 2010, includes the following
components (in thousands):
1 Service cost
2011
$
2010
611 $
394
2 Interest cost
1,037 1,135
3 Amortization of transition obligation over 20 years
667 667
4 Amortization of net loss
100 -
5 Net periodic postretirement benefit cost
$
2,415 $
2,196
The following table sets forth the postretirement benefit plan’s funded status and the amount of accumulated postretirement
benefit plan costs for the years ended April 30, 2011 and 2010, using a measurement date of April 30 (in thousands):
2011
2010
$ 19,801 $ 16,883
Change in accumulated postretirement benefit obligation:
6 Accumulated postretirement benefit obligation at beginning of year
7 Service cost
611 394
8 Interest cost
1,037 1,135
9 Net actuarial loss
1,348 2,649
10 Plan participants’ contributions
465 424
11 Benefits paid
(1,828)
12 Accumulated postretirement benefit obligation at end of year
(1,684)
$ 21,434 $ 19,801
$
$
Change in fair value of plan assets:
13 Fair value of plan assets at beginning of year
14 Plan participants’ contributions
- 465 424
15 Employer contributions
1,363 1,260 16 Benefits paid
(1,828)
(1,684)
17 Fair value of plan assets at end of year
$
- $
- Reconciliation of funded status:
18 Funded status (21,434) (19,801)
19 Postretirement benefit liability
$ (21,434) $(19,801)
AMERICAN UNIVERSITY 57
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2011 AND 2010
The following table sets forth the amounts not recognized in the net periodic benefit cost for the years ended
April 30, 2011 and 2010 (in thousands):
2011
2010
Amounts not recognized in net periodic benefit cost:
1 Net actuarial loss
$ 4,739 2 Transition obligation
3,490
1,170 3 Amounts included in unrestricted net assets
$
$ 5,909 1,837
$ 5,327
The amounts expected to be amortized from unrestricted net assets into net periodic benefit cost for the year ended
April 30, 2012, are as follows (in thousands):
4 Net actuarial loss
$
174
5 Transition obligation
667
6 Total
841
$
Other changes in benefit obligations recognized in unrestricted net assets are as follows (in thousands):
7 Actuarial loss
$ (1,348)
8 Amortization of transition obligation
667 9 Total other changes in benefit obligations recognized
in unrestricted net assets
$
(681)
The weighted discount rate used in the actuarial valuation at the April 30, 2011, and April 30, 2010, measurement
dates is as follows:
2011
2010
10 End of year benefit obligation 5.00% 5.40%
11 Net periodic postretirement benefit cost 5.40% 7.00%
An 8% healthcare cost trend rate was assumed for fiscal 2010, with the rate decreasing 1% each year to an ultimate
rate of 5% in fiscal year 2016, and thereafter. An increase in the assumed healthcare cost trend rate of 1% would
increase the aggregate of the service and interest cost by approximately $149,000 and $122,000 for 2011 and 2010,
respectively, and the accumulated postretirement benefit obligation at April 30, 2011 and 2010, by approximately
$1,117,000 and $970,000, respectively. A decrease in the assumed healthcare cost trend rate of 1% would decrease the
net periodic postretirement benefit cost by approximately $126,000 and $104,000 for 2011 and 2010, respectively,
and the accumulated postretirement benefit obligations at April 30, 2011 and 2010, by approximately $983,000 and
$843,000, respectively.
The expected contributions by the University to the plan are as follows:
Year ending April 30
Payment with
Medicare
Part D
Subsidy
Payment without Medicare
Part D
Subsidy
12 2012
$ 1,236,453 $ 1,386,665 Medicare
Part D
Subsidy
Receipts
$
150,212
13 2013
1,380,224 1,553,658 173,434
14 2014
1,479,117 1,668,790 189,673
15 2015
1,535,449 1,739,890 204,441
16 2016
1,525,456 1,747,081 221,625
17 2017–2021
8,399,956 8,984,325 584,369
58 FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2011 AND 2010
11. EXPENSES
For the years ended April 30, 2011 and 2010, the University’s program services and supporting services were as
follows (in thousands):
Program services
1 Instruction
2011
2010
$ 141,918 $ 125,220
2 Research
37,279 37,036
3 Public service
18,265 16,065
4 Academic support
48,718 46,328
5 Student services
41,040 39,232
6 Total program services 287,220 263,881
Supporting service
7 Institutional support
72,771 75,052
8 Auxiliary enterprises
69,664 67,784
9
$ 429,655 $ 406,717
For the years ended April 30, 2011 and 2010, the University’s fundraising expenses totaled approximately $14.6
million and $13.0 million, respectively. The expenses are included in institutional support in the accompanying
statements of activities.
12. NET ASSETS
Temporarily restricted net assets consist of the following at April 30, 2011 and 2010 (in thousands):
10 Unspent contributions and related investment income
for instruction and faculty support
2011
2010
$ 78,153 $ 61,566
11 Term endowment
1,200 1,200
12 Gifts received for construction of facilities
8,577 9,360
13
$ 87,930 $ 72,126
Permanently restricted net assets were held, the income of which will benefit the following at April 30, 2011 and 2010
(in thousands):
14 Permanent endowment funds, for scholarships
and related academic activity
2011
2010
$ 64,201 $ 63,030
15 Interest in trust assets
16 Student loans
17
14,683 12,867
5,841 $ 84,725 5,333
$ 81,230
AMERICAN UNIVERSITY 59
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2011 AND 2010
13. OPERATING LEASE
The University leases office space and buildings used for student housing with terms ranging from three to ten years.
The leases for student housing will expire at various times throughout 2013 and 2014. The office space lease does not
expire until 2018. Minimum lease payments under these agreements are as follows (in thousands):
Year ending April 30:
1 2012
$
11,633
2 2013
4,891
3 2014
2,475
4 2015
236
5 2016
242
6 Thereafter
416
7
$
19,893
Rent expense in 2011 and 2010 was approximately $10.0 million and $8.7 million, respectively.
14. COMMITMENTS AND CONTINGENCIES
At April 30, 2011 and 2010, commitments of the University under contracts for construction of plant facilities
amounted to approximately $13.2 million and $7.7 million, respectively. Subsequent to April 30, 2011, the University
entered into commitments with various investment fund managers totaling $16.6 million.
Amounts received and expended by the University under various federal programs are subject to audit by governmental
agencies. In the opinion of the University’s administration, audit adjustments, if any, will not have a significant effect on
the financial position, changes in net assets, or cash flows of the University.
The University is a party to various litigations, arising out of the normal conduct of its operations. In the opinion of
the University’s administration, the ultimate resolution of these matters will not have a materially adverse effect on the
University’s financial position, changes in net assets, or cash flows.
15. RELATED PARTIES
Members of the University’s Board of Trustees and their related entities contributed approximately $1.2 million and
$412,000 during the years ended April 30, 2011 and 2010, respectively, which is included in contribution revenue in
the accompanying statements of operations. Of this amount, approximately $560,000 and $1.1 million were included
in contributions receivable at April 30, 2011 and 2010, respectively, in the accompanying balance sheets.
16. SUBSEQUENT EVENTS
On June 14, 2011, the University entered into a $75 million term loan with JPMorgan Chase Bank, N.A., to fund its
facilities development projects. The term loan has a fixed 4.19% interest rate, payable monthly, and is due in full in
June 2021.
The University has performed an evaluation of subsequent events through August 29, 2011, which is the date the
financial statements were issued. No events were noted which affect the financial statements as of April 30, 2011.
60 FINANCIAL STATEMENTS
NONDISCRIMINATION NOTICE
American University does not discriminate on the basis of race, color, religion, national
origin, sex, age, marital status, personal appearance, sexual orientation, gender identity and
expression, family responsibilities, political affiliation, disability, source of income, place of
residence or business, and certain veteran status in its programs and activities. The following
persons, located at 4400 Massachusetts Avenue, NW, Washington, DC 20016, have been
designated to handle inquiries regarding the university’s nondiscrimination policies:
Dean of Students, 202-885-3300
Executive Director for Human Resources, 202-885-2451
Provost, 202-885-2127
Produced by University Publications, American University
Assistant Vice President for Creative Services
Kevin Grasty
Editor
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Graphic Designer
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Writer
Charles Spencer
Photographer
Jeff Watts
Contributers
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p. 13, middle, Nancy Anderson Cordell
p. 13, bottom, Sydney Neuschel
p. 14, Vanessa Robertson
p. 22, top, courtesy of Dan Sayers
p. 23, top, Aditi Desai
p. 23, bottom, courtesy of the Institute on Disability and Public Policy
p. 27, courtesy of U. J. Sofia
p. 31, courtesy of Jack Child
p. 33, right, Rami Chehab
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