American University
Year in review
2008–2009
framing
our
future
table of contents
2
from the chairman of the board of trustees
3
from the president
4
introduction
7
laboratory for learning
Framing AU’s vision for scholastic excellence
19
Active Citizenship
Framing AU’s contribution to society
29
A Sound foundation
Framing AU’s position in higher education
40
40
university administration
board of trustees
>>>
from the chairman of the board of trustees
American University has long claimed to be “distinctive”—in its academic
offerings, faculty and staff commitment, student achievement, and ethos
of service applied locally, nationally, and internationally. Despite the nation’s recent economic challenges, the story of how AU has thrived is both
unusual and incredible—and lends credence to how distinctive AU really
is. For example:
• Finances are solid because of prudent planning and
intelligent resources management.
• Enrollments are strong, record-setting in some categories,
and are bringing students of the highest caliber ever to
campus to matriculate.
• Faculty are distinguishing themselves through research,
publishing, performances, and hands-on teaching to inspire
our students toward even higher achievement.
• L eadership is demonstrating the ability and energy to
transform AU into an eminent position among the nation’s
private colleges and universities.
• Governance is open, inclusive, and transparent to an extent
never before seen at AU or many other institutions.
• Institutional plans, from our strategic direction to facilities
development, are compass points for the future that will help
AU become ever stronger and more distinctive.
This annual report and the financials included suggest a story that is atypical and unusually promising for American
higher education in this day and age. I have been involved with AU for almost 45 years as a student, trustee, and now
board chair. Never has our future been brighter than it is at this moment.
Gary M. Abramson
Chairman, Board of Trustees
2
from the PRESIDENT
It’s ironic that as institutions nationwide rethink their current abilities and future priorities because of the current economy, American
University is at a fortuitous moment in time. Our financial foundation
is solid, our strategic direction is clear, and our commitment is strong
as we position AU for the next 10 years.
The guide star is our strategic plan, Leadership for a Changing World:
American University in the Next Decade, approved unanimously by the
Board of Trustees in November 2008 and providing 10 transformational
and 6 enabling goals to chart our direction.
Although ambitious, the plan will enable AU to provide an unsurpassed educational experience; epitomize the scholar ideal; win
recognition and distinction; act on our values of social responsibility
and service; and pursue the ideals that best define what American
University truly is.
The stories in this annual report suggest the significant efforts underway and achievements already realized to bring the plan to life. Our
students are earning prestige as Truman and Udall scholars, Pickering fellows, and Student Academy Award winners. Our faculty are researching religious diversity in contemporary
America, the best paths for women into political power, and, with support from a prestigious NIH grant, the influence
of environmental conditions on drug addiction. And our entire campus community is demonstrating a commitment to
become increasingly green through our daily life and practices.
The next decade can truly become transformational for American University. We welcome the challenge.
Cornelius M. Kerwin
President
3
Fram
Our
Futu
Framing
our
future
AU has excelled in challenging times, and our
commitment to academic achievement, cultural and
intellectual diversity, social responsibility, service,
high performance, and innovation is unwavering.
4 | FRAMING OUR FUTURE
ming
AU is poised for prominence in the higher education community, Washington,
and the world.
Over the last two decades we’ve built a sound financial foundation, growing our
endowment from $18 million to more than $300 million and adopting a conservative
strategy that helped us thrive in the midst of the worst economic crisis in 75 years.
Now, during unprecedented global challenges, AU is in an enviable position.
Anchored by our strong financial footing and guided by an expert faculty of
scholars, innovators, activists, and leaders, we are on the cusp of greatness.
In December 2008, AU president Neil Kerwin presented, and the Board of Trustees
adopted, a strategic plan that will guide the university’s vision and planning over
the next decade. Ten strategic initiatives—to which we will commit $40 million
during the next two-year budget cycle—will align our efforts to achieve academic
greatness and underscore our mission:
» epitomize the scholar-teacher ideal
» provide an unsurpassed education and experience
» demonstrate distinction in graduate, professional, and legal studies
» engage the great ideas and issues of our time
» reflect and value diversity
» bring the world to AU and AU to the world
»a
ct on our values through social responsibility and service
» engage alumni in the life of the university
» encourage innovation and high performance
» win recognition and distinction
ure
The stories in this 2008–2009 report of scholastic, ethical, and civic leadership on
our campus, in our city, and around the world set the framework for AU’s exciting
future. From these examples of people whose passion is to learn and lead the
world to a better place, we draw the confidence that the future of this university
is ours to frame.
>>>
American University 2008–2009 Year in Review | 5
eas are sparked,
e hatched, quess are posed, and
At AU, ideas are sparked, plans are hatched,
questions are posed, and dreams are realized.
,
d
LABORATORY
FOR
LEARNING
Framing AU’s vision for scholastic excellence
Our students come to Washington from
every corner of the globe with
different aspirations and passions, yet they share one important quality:
a thirst for knowledge and change. Our faculty experts inspire these
inquisitive students to engage the great ideas and issues of our time.
>>>
American University 2008–2009 Year in Review | 7
Four strategic initiatives serve as a framework for faculty to help students focus their ideas and gain
a broader understanding of the world:
Putting Scholarship to Work Today and in the Future
epitomize the
Chemistry professor Monika Konaklieva and her team of student
scholar-teacher
scientists are working to combat drug-resistant bacteria in
ideal
partnership with some of the area’s top research institutes,
including the Children’s National Medical Center and Walter
Reed Army Institute of Research. Using AU’s state-of-the-art
equipment, Konaklieva’s students are gaining valuable, hands-on
experience, while also striving toward a healthier world.
provide an
unsurpassed
education and
experience
The Kogod School of Business has extended its reach across
campus, launching several interdisciplinary offerings, including
a bachelor’s degree in business, language, and culture studies
and a graduate certificate in business and health professional
management. These innovative programs help students acquire
skills across disciplines that will mold them into nimble, savvy,
twenty-first-century professionals.
demonstrate
distinction
in graduate,
professional,
and legal studies
School of Public Affairs doctoral candidate Carmen Apaza,
a former customs inspector in Peru, is working to rein in corruption
around the world. Through her research on corruption control
and prevention mechanisms, she’s engaging scholars and
practitioners around the world, including the Organization of
American States, to promote transparency and good governance.
engage the great
Pat Aufderheide, documentary film and media arts professor and
ideas and issues
director of the Center for Social Media, has emerged as one of our
of our time
generation’s important media minds. Her groundbreaking work on
copyright issues and fair use received a career achievement award
in 2008 from the International Digital Media and Arts Association.
8 | LABORATORY FOR LEARNING
Through their intellectual curiosity, innovation,
and scholastic achievement, our world-class
faculty and talented student body have established the benchmark on which we base our
future success.
Grad
Student
Shines Light
on a Cancer
Whose
Incidence Is
Increasing
“Thyroid
cancer is
the fastest
growing
cancer
among
women, and
no one’s
reporting it.”
Caroline Stetler was
16 when she was diagnosed with thyroid
cancer and underwent
two successful surgeries
to remove the threecentimeter tumor and
her thyroid. Healthy and
happy in the ensuing
dozen years, she rarely
thought about the disease until last fall, when
she was sitting in Professor Charles Lewis’s
journalism class.
Lewis, executive editor
of the School of Communication’s groundbreaking Investigative
Reporting Workshop
(IRW), asked his
students to each
ponder an unanswered
question that intrigued
them. Stetler’s mind
raced straight to thyroid cancer.
“I wondered about the
cause,” she said. “The
first place I went was
the National Cancer Institute, and when I saw
the data, I almost fell off
my chair. Thyroid cancer
is the fastest growing
cancer among women,
and no one’s reporting
it.” Until now.
Stetler’s work morphed
into a full-blown
investigative project
for the IRW, where she
is a graduate fellow.
She wrote four stories,
conducted video interviews with survivors,
and compiled a fact
sheet—completing the
first student project the
workshop has published.
“The mission of journalism is to shine light
in dark places,” said
Wendell Cochran,
the workshop’s senior
editor. “I hope [Caroline’s work] brings
attention to a medical
issue that has largely
gone unreported.”
American University 2008–2009 Year in Review | 9
Sophomores
Land State
Department’s
Pickering
Fellowship
In the past
five years
AU has had
12 finalists
and 6
fellowship
recipients.
Their dreams to work
for the Foreign Service
are one step closer to
reality for sophomores
Joely Hildebrand and
Garret Harkins, both
students in the School
of International Service.
They were among 20 fellows nationwide selected
for the U.S. Department
of State’s prestigious
Thomas R. Pickering
10 | LABORATORY FOR LEARNING
Undergraduate Foreign
Affairs Fellowship.
In the past five years AU
has had 12 finalists and
6 fellowship recipients.
An international relations major, Hildebrand, who is proficient
in French, German,
and Russian, will hone
her language skills during a semester abroad
in Russia.
Harkins, a double
major in business and
international relations,
is interested in the Foreign Service and will
65%
of physical and natural
science majors are women.
spend the year studying
at Korean University.
Pickering fellows
receive tuition, fees,
and a stipend for their
junior and senior years
of college and first year
of graduate study. The
fellowship also funds
participation in a junioryear summer institute
and domestic and
overseas internships
with the U.S. Department of State.
Student
Named to
USA Today
Academic
All-Star
Team
“I’ve had
tremendous
support
from the
faculty and
the staff
here that
has allowed
me to reach
my potential.”
Since coming to
American University
four years ago, School
of Public Affairs senior
Carrie Johnson has
been named a 2008
Morris K. Udall Scholar,
a 2009 South Dakota
Senate Fellow, a Truman scholarship finalist, and an American
University Honors
Program Outstanding Leader.
But Johnson saved
perhaps her greatest
recognition for last.
She was one of 20 college students in the
United States named
to the 20th annual USA
Today All-USA College
Academic First Team.
The $2,500 cash prize
is given to undergraduate students who
display outstanding
intellectual achievement and leadership
and apply those talents
beyond the classroom
to benefit society.
“I know that this is
a recognition of what
I’ve done academically
and my work here
on campus and in
the city,” said Johnson.
“But I think it’s more
a reflection of the investment that AU has
made in me. I’ve had
tremendous support
from the faculty and
the staff here that has
allowed me to reach
my potential.”
The School of Public
Affairs is no. 14 on U.S.
News & World Report’s
2009 list of top public
affairs programs.
This year, the
Washington College
of Law digitized 3,300
pages of its historical
collection, including
scrapbooks, letters, and
old student newspapers.
American University 2008–2009 Year in Review | 11
“I believe
if we can
remind
Americans
of the
visions of
the founding
fathers,
there’s
nothing
more
powerful.”
What is the American
identity?
Akbar Ahmed, AU
professor, renowned
Islamic scholar, and
award-winning author,
poses that seemingly
simple, yet complex
question at the beginning of Journey into
America, a new documentary film chronicling his 9-month,
75-city tour of the
United States.
Supported by a team
of his former students,
Ahmed set out to learn
how Muslims fit into
contemporary American society. The group’s
voyage of discovery
took them from St.
Louis to the coast of
55%
of AU students
study abroad prior
to graduation.
12 | LABORATORY FOR LEARNING
Georgia, from Cedar
Rapids, Iowa, to Los
Angeles, with every
stop along the way
producing illuminating anthropological
information.
“My aim is simple,”
Ahmed said. “It is to
improve understanding
and increase dialogue
between different people, different cultures,
different religions. I
believe if we can remind Americans of the
visions of the founding
fathers, there’s nothing
more powerful.”
The film, which was
shot, edited, and written by the AU team on
a shoestring budget,
premiered at the Islamic
Society of North America convention at the
Washington Convention
Center and has been
screened in cities across
the nation and world.
1,575
students major
in international
studies—the largest
undergraduate
program.
Photos courtesy of Akbar Ahmed
Documentary
Chronicles
Muslim
Professor’s
Journey
into America
iStockphoto
Psychologist
Lauded for
Curveball
Research,
Brings Vision
Science
Studies to AU
“Nothing
about the
curveball
says it
should
break so
dramatically.”
Curveballs curve.
Arthur Shapiro wants
to be absolutely clear
about that. They just
don’t curve as much as
we think they do, and
he created a computer
illustration to prove it.
“There’s good physics
to show why curveballs
break,” said Shapiro.
“The problem is there’s
nothing about the
curveball that says it
should break so dramatically. For someone
standing at the plate,
it has to do with the
transition between
looking at it directly
and looking at it in
the periphery.”
Shapiro, a vision science
expert in the psychology department, won
80%
the Neural Correlate
Society’s Best Visual
Illusion of the Year in
May. The winning entry,
created with researchers from the University
of Southern California,
Dartmouth, and SUNY
Optometry, is a computergenerated graphic that
shows how the eye
tricks the brain.
of undergraduates participated
in a co-op or internship prior
to graduation.
American University 2008–2009 Year in Review | 13
Photo by Sophi Tranchell
Marketing
Students
Craft
Winning
Plan for
Fair Trade
Chocolate
Company
Victory is sweet for
a team of six business undergrads,
who placed third in a
national marketing
competition sponsored
by Divine Chocolate.
The students in Kogod
professor Sonya Grier’s
marketing class created
an innovative campaign
to introduce Divine’s
fair-trade chocolate
bars to college students
across the country.
The team wrote an
executive summary,
conducted market
research, and drafted a
14 | LABORATORY FOR LEARNING
budget aimed at boosting long-term sales and
educating consumers
about Divine’s efforts
to alleviate poverty in
Africa through fair-trade
business practices.
The Kogod School
of Business made
Business Week’s annual
undergraduate rankings
this year for the first time
ever, landing at no. 28.
Melander’s
invention
will herald
a new age
of searching
the Internet.
A Patent
that Could
Change the
Face of the
Internet
As an executive in
residence at the Kogod
School of Business,
Nicole Melander is
not only shaping the
next generation of
business minds, she’s
changing how people
use the Internet.
Melander and her
research partner
invented a way for
computers to analyze
the meaning of text on
the Internet, not just
the text itself. It’s part
of Web 3.0, or the socalled “semantic Web”
of the future.
Internet search engines
rely on keywords, a
“rudimentary” tool for
conducting searches.
For example, if you
Google “turkey,” the
computer doesn’t
know whether you
want information on
a country or a bird.
Melander’s method—
for which she received
a patent in March—
will herald a new age of
searching the Internet.
Now, she explains,
While the patent is
owned by Oracle, for
whom Melander worked
when she completed
the research 10 years
ago—so Melander won’t
be getting rich from
her invention—she
said simply “receiving
the patent was exciting because the process
took so long, and also
it was a validation of
the research.” Knowing
that her research will
change the way people
use the Internet and
her students’ understanding of the hightech industry is plenty
enriching, she said.
The School of International Service’s international relations
track ranked no. 8 among master’s programs
and landed at no. 17 on Foreign Policy magazine’s list
of top undergraduate programs.
AU
Celebrates
Ninth
Truman
Winner in
Nine Years
A stellar 3.86 GPA
and an unwavering
commitment to victims
of domestic violence
helped junior Kyrie
Bannar land the prestigious Harry S. Truman
Scholarship this year.
A double major in the
School of Public Affairs
and the College of Arts
and Science, Bannar
is AU’s 16th Truman
scholar and the 9th
winner in as many years.
Bannar serves as director of AU’s Take Back
the Night and Domestic Violence Awareness
Programming. She also
works as a court watch
volunteer and on-call
advocate for Survivors
and Advocates for Empowerment, taking on
late-night shifts with
the Metropolitan Police
Department in Southeast Washington.
Bannar will receive
$30,000 for graduate
training in law and
public policy.
16 AU students have won
Truman scholarships.
American University 2008–2009 Year in Review | 15
SPA
Researcher
Suggests
Breastfed
Children
Have
Academic
Advantage
School of Public Affairs
professor Joseph Sabia
has found a likely connection between breastfeeding and academic
achievement.
Published in the
Journal of Human
Capital, and noted in
a Business Week story,
the study compared
the academic achievement of siblings—one
of whom was breastfed
as an infant and one of
whom was not. It also
examined siblings who
were breastfed for different durations. Sabia
found that breastfeeding was consistently
associated with higher
high school GPAs and
a greater likelihood of
college attendance.
This five-year agreement signed in January by the National
Archives and Records
Administration ensures
the archives and AU
will cooperate on teaching and research proj-
This research, the first
of its kind to use sibling
data, was conducted by
Sabia and University of
Colorado Denver professor Daniel Rees.
“Our study suggests
that the cognitive
and health benefits of
breastfeeding may lead
to important long-run
educational benefits for
children,” said Sabia, a
public policy professor.
“Our study suggests
that the cognitive
and health benefits
of breastfeeding may
lead to important longrun educational benefits
for children.”
iStockphoto
AU, National
Archives
Partner for
Research
AU students and faculty know the National
Archives is one of
the richest resources
in Washington, D.C.
It’s “a treasure trove
of information for
original research,” said
Provost Scott Bass.
“People from all over
the world fly in to have
that access.”
A new formal agreement between the
National Archives and
AU will encourage significant collaboration
between the organizations—it’s a partnership that provides
remarkable opportunities for AU, said Bass.
16 | LABORATORY FOR LEARNING
ects, internships, field
studies, exhibitions,
and other programs.
New
Director
to Guide
Women and
Politics
Institute
“Student
government
is an important part of
the profile
of female
holders
of higher
office.”
Political scientist and
author Jennifer Lawless has assumed the
top position at AU’s
Women and Politics
Institute (WPI). The
former Brown University professor and
author of It Takes a Candidate: Why Women Don’t
Run for Office fills the
shoes of WPI founder
and director Karen
O’Connor, herself a
renowned political
scientist.
Since its founding in
2000, WPI has helped
train hundreds of
future woman leaders and produces
important research
on women’s political leadership. This
year, for example, its
researchers identified
involvement in student
government as a key
“pathway to power” for
women in Congress.
According to a study of
women currently serving in the U.S. Congress, 53.7 percent of
respondents served in
some form of student
government, in high
school, college, or both.
“These statistics are
significant to our
understanding of the
women entering the
‘political pipeline.’ Most
pipeline research starts
with state legislatures,
but our original data
indicate that student
government is an
important part of the
profile of female holders of higher office,”
said WPI researcher
Barbara Palmer.
Several students participated in the study. The
findings were released
in May.
About 47% of women
in the Senate and 63%
of women in the House
responded to the survey.
AU students are the most
politically active in the
nation, according to the
Princeton Review’s 2009
guide to “The Best 368
Colleges.” AU was also
named one of the country’s
best institutions for
undergraduate education.
American University 2008–2009 Year in Review | 17
oday’s students
e toWashington
ping to make the
world a better
Today’s students come to Washington hoping
to make the world a better place and leave AU
with the tools and skills to do so.
s
n
e
r
Active
Citizenship
Framing AU’s contribution to society
When John Fletcher Hurst founded AU
in 1893, he envisioned a university that
would foster a passion for public service; AU has always seen that mandate as the
core of its mission.
Hurst built AU on the spirit of service and, a century later, the university continues to
turn out good neighbors, motivated volunteers, fiery activists, and thoughtful change
agents who are leaving their mark in Washington and beyond. They are our legacy.
>>>
American University 2008–2009 Year in Review | 19
Three strategic initiatives guide AU as we continue to shape active citizens—men and women who wield
the tools of social justice and civic engagement on behalf of a better world:
Putting Values to Work Today and in the Future
reflect and
value diversity
Even as the economy sputtered in 2008 and 2009, AU enrolled a
strikingly diverse and talented group of freshmen. This year, we
awarded more than $50 million in need-based grants to our racially,
ethnically, and socio-economically diverse student body, which
hails from all 50 states, the District of Columbia, and 144 countries.
bring the world
to AU and AU to
the world
In the spring, Department of Performing Arts professor Gail
Humphries Mardirosian traveled to Prague on a Fulbright
scholarship to direct a long-lost play written by prisoners at the
Terezin concentration camp. She also taught acting at Prague’s
Academy of the Performing Arts, bringing to life an important
piece of world history for students from across Europe as well as
for our own AU actors.
act on our
values
through social
responsibility
and service
During the 2008–2009 academic year, 1,876 students
volunteered 83,422 hours of service at 169 sites across the
Washington area in partnership with the National Park Service,
D.C. Reads, Habitat for Humanity, Locks of Love, and other
community organizations. And AU’s spirit of service extends far
beyond our backyard: this year, for example, students conceived
a project that sent 500 boxes of Girl Scout cookies to troops in
Iraq, including several AU alumni.
20 | ACTIVE CITIZENSHIP
Through the classes, internships, and projects
they took on during the 2008–2009 academic
year, our students have demonstrated that they
are capable of reaching—and exceeding—our
ambitious goals.
Psychology
Student
Gives Voice
to Homeless
to AU classes and enlisted volunteers to
fan out to soup kitchens and shelters with
the questions.
The Washington Post
and Time don’t often
quote interns. But Tony
Taylor, CAS/BA ’09,
isn’t a typical intern.
The findings: one in
four homeless people
in D.C. had been a
victim of violent crime
by the non-homeless.
The psychology major
with “a passion for
poverty issues” began
interning last summer
at the National Coalition for the Homeless,
which is supporting legislation that will make
crimes against the
homeless hate crimes.
Meanwhile, Penny
Pagano, SOC/BA ’65,
director of AU’s Office
of Community and
Local Government
Relations and a veteran
D.C. political insider,
connected Taylor with
some of the city’s
key players.
To bolster the case,
Taylor enlisted sociology professor Andrea
Brenner as a mentor
and designed a survey
to research incidents
of violence against
homeless men and
women. Then he spoke
He has since testified
before the D.C. City
Council, found a supporter in Rep. Eleanor
Holmes Norton, and
earned his wings as a
media spokesman for
the homeless.
Taylor regularly spent
24 hours a week at his
unpaid job, far more
than the internship
requirement—all while
maintaining an honorslevel GPA.
141
AU students volunteered
several hours a week at
seven sites across the city
for D.C. Reads.
American University 2008–2009 Year in Review | 21
Photo by Bill Gentile
Students
Head to
Galapagos
for fresh
look at
global
problems
The students and
professors who spent
10 days in May in the
Galapagos Islands may
be the next step in
AU’s evolution.
Certainly they’re on
the cutting edge of
change. Shortly after
the spring semester
ended, a team-taught
class, Practice of Environmentalism, flew to
22 | ACTIVE CITIZENSHIP
the Galapagos Islands,
where they traveled
from island to island,
filming and interviewing in teams to create
real-world messages
for policy makers and
the public.
Mark Petruniak, SIS/
BA ’09, hoped to end
up with a film he can
enter in film festivals.
“What we end up with
isn’t just going to be
for a grade,” he said.
“I want to get it seen.”
Students prepared for
their island adventure
all semester by studying
the natural history, biology, and ecology of
island environments;
the global policy issues
that affect how scientific
issues can be addressed
politically; and how
those complex matters
can be captured in ways
that will encourage the
public to listen.
“The Galapagos is a
place where people
and nature are coming
together in new ways
for the first time,” said
School of International
Service (SIS) professor Simon Nicholson,
who led the class with
faculty from the School
of Communication
and College of Arts
and Sciences. “It’s been
an isolated place. The
The
Galapagos
is a place
where
people and
nature are
coming
together
in new
ways for
the first
time.
islands are known for
being pristine. But now,
there’s been such an incredible tourist influx.”
Nicholson said the
trip enabled students
to take a fresh look at
global problems and
help contribute to
the solution.
AU’s alternative breaks program
was named the 2008 excellence
award gold medal winner by NASPA—
Student Affairs Administrators in Higher
Education for its service-learning and
community service programs.
The
workshop
raised more
than $2,000
for the
Foundation for the
People of
Burma—
enough to
purchase
15 boats.
Photo by Hilary Schwab
Dancer
Stages
Benefit for
Burmese
Cyclone
Victims
Arts management student Simone Jacobson
had just returned from
her first visit to her
mother’s homeland
in May 2008 when a
cyclone roared into
Burma, leaving 100,000
dead and missing.
Jacobson wanted to
help, so she did what
she does best: dance.
Last September, she
organized a benefit
master class series with
Washington’s top modern dance company,
CityDance Ensemble
at the Strathmore in
Bethesda, Maryland.
Some 150 dancers came
to the workshop, which
raised more than $2,000
for the Foundation for
the People of Burma—
enough to purchase 15
boats to replace those
lost by village fishermen.
“What she’s doing is
complicated, ambitious,
and very necessary—not
only for the people we’re
helping, but for those
who need to understand
there is a need,” said
CityDance artistic director Paul Emerson.
150
students participated
in 11 alternative break trips
around the world.
1,876 students volunteered
83,422 hours at 169 sites
across Washington; had they
been paid, they would
have earned $1,689,295.
American University 2008–2009 Year in Review | 23
Research on
a Little
Litter Goes
a Long Way
to Aid
Science
Eighty
percent of
what ends
up in the
oceans comes
from land.
24 | ACTIVE CITIZENSHIP
Each bottle, bag, and
fishing line picked up
by 30 students on the
banks of the Potomac
one Saturday was
one less threat to sea
turtles, birds, and
other wildlife.
It also advanced
important research
being undertaken by
AU’s Kiho Kim and the
Ocean Conservancy.
Kim sits on the Ocean
Studies Board, part of
the National Research
Council, whose most
recent report concluded that current
measures to prevent
and reduce marine
debris are inadequate.
The report, released to
Congress last summer, relied in part on
a study by the Ocean
Conservancy, using
data from volunteers
doing beach cleanups
between 1996 and
2006. Their findings:
80 percent of what ends
up in the oceans comes
from land, said Kim, a
marine biologist.
To drive that point
home, last fall Kim’s
biology students
combed the water’s
edge by Fletcher’s
Boat House, a popular
recreation area near
Georgetown, as part
of the 23rd annual
International Coastal
Cleanup. They gathered 60 bags of trash
and inventoried their
findings for the Ocean
Conservancy.
The Corporation for National and
Community Service named AU to the
2009 President’s Higher Education
Community Service Honor Roll.
Photo courtesy of Krissa Lum, Joe Sidari, and Fadel Kane
MBA Students
Study
Agribusiness
in Senegal
Applying
skills in the
real world
is very
attractive.
In August 2008, three
MBA candidates from
the Kogod School of
Business traveled half
a world away to undertake a project that
could better the lives
of scores of West African farmers.
Krissa Lum, Joe Sidari,
and Fadel Kane spent
10 days in Senegal,
analyzing the tomato
industry and its players.
“We wanted to tackle
a current problem and
apply what we were
learning in business
school,” said Lum.
“School is great because it’s a controlled
environment, but to do
something in the real
world and apply the
skills we’ve learned was
very attractive.”
In April, the team
presented their findings to AU faculty and
students. They recom-
mended the farmers
utilize a local aid group
to share best practices
and work together to
demand more money
for their product from
the tomato company.
But most importantly,
the students shared
their experience. They
chronicled the unforeseen costs, the hard
work, and ultimately, the
reward of getting out
of the classroom and
using their business
knowledge to improve
someone else’s situation.
Sidari called the project the highlight of his
grad school experience.
“In 10 or 15 years, we
may remember a few
people or a few professors, but this project
is something we will
always remember.”
665 students performed 12,000 hours
of volunteer work at 49 sites throughout
the D.C. area during the 2008 Freshman
Service Experience.
American University 2008–2009 Year in Review | 25
Peppers, Peas
Sprout in
Community
Garden
A cornucopia of fruits
and veggies sprouted in
AU’s first community
garden, a 100-squarefoot swath of soil behind Nebraska Hall.
“It’s important to eat locally
as much as possible.”
Tended by a group of
green thumbs from
EcoSense, a student environmental club, the
plot featured lettuce,
tomatoes, peppers,
peas, carrots, basil,
Lacrosse
Players,
Coaches
Part with
Hair for
A Cause
Five
students
and coaches
each cut off
at least
10 inches
of hair.
26 | ACTIVE CITIZENSHIP
In May, three AU lacrosse players and two
of their coaches parted
with their hair for
Locks of Love, an organization that provides
hairpieces to children
suffering from medical
hair loss.
Juniors Amanda Makoid and Lisa Schaaf,
sophomore Erin McDevitt, head coach Katie
Woods, and assistant
coach Courtney Farrell
each cut off at least 10
inches of hair for the
organization, which
has helped more than
2,000 financially disadvantaged youngsters
since 1997.
watermelon, and eggplant. The perimeter
was lined with marigolds to fend off bugs.
“It’s important to eat
locally as much as
possible,” said Kate
Pinkerton, one of the
students who managed
the project. “Knowing
that you produced your
own food and that you
reduced your carbon
footprint in the process
is even better.”
Students
Develop
Death
Penalty
Curriculum
for High
Schoolers
Amanda Fulton and
Molly Kenney’s senior
honors project turned
into so much more.
The pair, both 2009
graduates of the School
of Public Affairs, used
their research project
to create a high school
curriculum on the
death penalty, which
explores the history of
capital punishment,
methods of execution,
and issues surrounding
race, gender, and socioeconomic status.
“Our goal in doing
this was to help others
articulate an educated
view of the issue,”
said Fulton.
Their goal is playing out
this fall, since their curriculum was adopted by
the Washington College
of Law’s Marshall-Brennan Constitutional Literacy Project and is now
being taught in a dozen
high schools across the
District of Columbia
and Maryland.
The curriculum was
incorporated into the
constitutional law
and juvenile justice
course taught by
Marshall-Brennan
fellows, 45 second- and
third-year law students.
Founded in 1999 by
WCL professor Jamin
Raskin, the program
recently expanded to
10 law schools across
the country.
132
students participated
in the 2009 Martin Luther
King Jr. Day of Service.
Hoops Coach
Spends
Week with
America’s
Team in Iraq
“It really
wasn’t about
basketball,
it was our
attempt to
show our
appreciation
to the men
and women
there.”
The “American” written
across the jerseys of Jeff
Jones’s players never
meant so much.
For five days in August, AU’s head men’s
basketball coach led a
squad that played not in
Bender Arena but in a
sweltering gym at Camp
Victory, a U.S. military
base near Baghdad
International Airport.
His athletes: men and
women of the armed
forces fighting in Iraq.
Jones and seven other
collegiate basketball
coaches directed teams
of service men and
women in a hoops
tournament as part of
Operation Hardwood,
a USO-sponsored
goodwill tour of the
Middle East. Through
coaching, meeting,
and greeting military
personnel and handing out T-shirts and
hats, Jones and his
colleagues provided a
much needed diversion
to troops fighting on
the front lines.
“It was a remarkable
experience,” Jones said.
“It really wasn’t about
basketball, it was our
attempt to say thankyou and show our appreciation to the men and
women there.”
American University 2008–2009 Year in Review | 27
atness is within
r grasp—and we
want the world
o know about it.
Greatness is our next step—and we want the
world to know about it.
n
e
d
.
A Sound
foundation
Framing AU’s position in higher education
AU is on the verge of greatness. Years
of sound financial stewardship have
strengthened our foundation and our reputation, enabling us to attract the resources
and faculty to help shape the next generation of leaders, thinkers, and doers.
From our world-class faculty to our dedicated alumni to our talented students,
AU is poised for prominence. And the physical structures, virtual presence, and
financial safeguards put in place this year are the building blocks for the future.
>>>
American University 2008–2009 Year in Review | 29
Three strategic initiatives will enable AU to win recognition and distinction for excellence that has been
building for decades:
Putting Excellence to Work Today and in the Future
engage alumni
Dean Factor, Kogod ’87, inherited more than a famous name from
in the life of
his great-grandfather, makeup legend Max Factor. The SmashBox
the university
CEO also acquired an entrepreneurial spirit that helped his cosmetics
company blossom into a $200 million per year business. In November,
Factor, a member of the Kogod Advisory Council, shared his secrets
to success with students as part of the Alan Meltzer CEO Leadership
Series, sponsored by another AU alum, insurance mogul Alan Meltzer,
SPA ’73.
encourage
innovation
and high
performance
Sensing deteriorating conditions in the credit markets at the end of
2007, AU’s Office of Finance and Treasurer launched an overhaul of
outstanding debt in an effort to reduce our market exposure. This
debt restructuring will enable us to weather this period of global
economic uncertainty better than many of our peer institutions.
win recognition
and distinction
In March, AU launched our award-winning Web site, featuring a
virtual tour of the campus, a wiki, a real-time newswire, and other
Web 2.0 features to share news about academics, athletics, the
arts, and more. The site garnered top honors at July’s eduWeb
conference, an annual gathering of IT specialists from around
the world.
30 | A SOUND FOUNDATION
Grants won by faculty, awards garnered by
students, and accomplishments of alumni signify
others’ recognition of the abilities and talents
that abound at AU.
Psychologists Land
NIH Grant
to Study
Drug
Addiction
A five-year renewal of
a prestigious grant from
the National Institutes
of Health will enable
AU psychologists Stan
Weiss and David Kearns
to continue their research on environmental stimuli that elicit
cravings in drug users.
Weiss and Kearns,
CAS/PhD ’05, who
have been working on
the research for more
than a decade, saw a
60 percent increase in
funding with the renewal of the R01 grant,
NIH’s largest and most
competitive award.
“In a sense, we’re the
100:1 long shot in
the Kentucky Derby,”
said Kearns of the
$300,000 grant, which
is frequently awarded
to Ivy League universities and large research
institutions. “We’re the
stable with two horses,
competing against all
the big players.”
cocaine addiction.
They’ve also examined
how environmental
conditions can influence the degree to
which the rats will
crave the drugs.
Up to this point, the
pair has studied drugseeking behaviors in
rats and tested treatments to curb their
Now the researchers
will focus on “deepening
the extinction” of these
environmental cues,
thereby eliminating
cravings. They also hope
to partner with clinicians and translate their
research for human use.
“There’s no effective
treatment for cocaine—
that says a lot about
the power of addiction,” said Kearns.
“Finding a treatment is
sort of like the search
for the Holy Grail.”
“In a sense,
we’re the
100:1 long
shot in the
Kentucky
Derby.”
American University 2008–2009 Year in Review | 31
New Web
Site Is Front
Door of AU
The site took
home two
prestigious
eduStyle
Higher-ed
Web Awards
for Best
Overall Web
Site and
Best Use of
Interactive
Media.
Virtual tours. Web
2.0. The language of
today’s high school and
college students has
a technological twang
that could leave all but
the most tech savvy a
step behind.
But AU now speaks the
students’ language.
On March 30, the
university launched a
redesigned Web site
that features a virtual
tour of the campus, a
master events calendar,
and other Web 2.0 features. The site serves
as the university’s virtual town square where
people can share news,
applaud successes, or
gather in a crisis.
In July, the site took
home two prestigious
eduStyle Higher-ed
Web Awards for Best
Overall Web Site and
Best Use of Interactive
Media for its Discover
AU virtual tour.
Snagging the people’s
choice and judges’
awards in both categories at the annual
eduWeb Conference in
Chicago was confirmation that AU’s new Web
strategy is a winning one.
32 | A SOUND FOUNDATION
More than 5,000 pages
were created or redesigned and migrated
for the March launch.
The project required
well over 25,000 hours
of work by more than
125 AU staff members
in 20 departments
across the university.
More than 5,000
pages were created
or redesigned for the
March 2009 launch of
AU’s new Web site.
125 staff members in
20 departments worked
more than 25,000 hours
on the new Web site.
Photo by Matt Petit
And the
Oscar Goes
to . . .
DeAngelis
is the
second AU
filmmaker
in two years
to win a
Student
Academy
Award.
In June, Lauren
DeAngelis, SOC/MFA
’08, became the second
AU filmmaker in two
years to win a Student
Academy Award for her
documentary, A Place
to Land.
DeAngelis, an online
writer and editor at
U.S. News & World
Report, won a bronze
medal and $2,000 at
the June 13 ceremony
in Los Angeles. Her
30-minute thesis film
chronicles the complications and challenges
of caring for parrots
in captivity.
Last year, Laura Waters Hinson, MFA ’07,
also a graduate of the
School of Communication, won a student
Oscar for As We Forgive,
a documentary about
reconciliation efforts
in Rwanda.
95%
of the 2008
graduates are
proud to be AU alums.
American University 2008–2009 Year in Review | 33
TV Executive
and Alumnus
Helps
Students
Make Mark
on Film
“It’s
amazing
to me how
many people
in major
decisionmaking
positions
come
from AU.”
Washington is a media
town, and AU is in the
center of it.
The District “has
become the capital of
nonfiction production
in the country,” said
Michael Cascio, SOC/
MA ’73. In the future,
AU will play an even
bigger role in the
world of groundbreaking, award-winning
documentary films.
Cascio knows the
industry well. A senior
vice president at the
National Geographic
Channel, he was a top
executive at Animal
Planet, created major
shows for A&E, and
helped launch the
History Channel. In
September, he also
picked up an Emmy for
Outstanding Science,
Technology, and Nature Programming for
National Geographic’s
Five Years on Mars.
And now, he’s sharing
his expertise with students from the School
of Communication.
Cascio speaks regularly
at a class taught by
two-time Oscar winner
Russell Williams, SOC/
BA ’74, and at Center
for Environmental
Filmmaking events.
On the School of Com-
munication Dean’s
Advisory Counsel, his
insider’s view of this
fast-changing field
helps keep the school
on the cutting edge.
He also mentors a
student each semester,
meeting one-on-one,
looking at film footage,
and helping each one
make contacts.
AU’s endowment has grown
from $18 million to $300 million in the
last 20 years.
34 | A SOUND FOUNDATION
“AU is the best-kept
secret in the industry,”
he says. “It’s amazing
to me how many people in major decisionmaking positions
come from AU.”
Eagles Soar
to Second
Patriot
League
Championship
National
commentators
praised AU’s
efforts and
the character
of its players.
This year saw AU’s second consecutive Patriot
League championship
and the men’s basketball team’s return to
the Big Dance, where
it once again scared
the daylights out of a
national powerhouse,
earning admiration
from basketball fans
around the country.
AU defeated Holy
Cross before a standing-room-only crowd
of 3,123 fans in March,
earning a spot in the
NCAA Tournament for
the second time in a
row. Just like its 2008
trip to Birmingham,
Alabama, AU was a
major story in Philadelphia, where its
presence opened the
eyes of even casual basketball fans who might
not have known much
about the school prior
to its visit.
Although the 14thseeded Eagles fell to
Villanova, 80-67, in
the first round of the
tourney, the entire
campus community rallied around the league
champs, staging a pep
rally in Bender Arena
6 scholar-athletes earned
a perfect 4.0 GPA in the
fall 2008 semester.
to see them off. Some
Eagles fans, sleeping bags and snacks
in hand, even waited
for up to 10 hours for
tickets to the East
Regional matchup at
the Wachovia Center
in Philadelphia. After
the game, national
commentators praised
AU’s efforts and the
character of its players.
did exactly that,” said
head coach Jeff Jones.
The whole nation took
notice of their play—
and of the school they
represented.
“I’m proud of their
effort . . . our kids came
to compete and they
American University 2008–2009 Year in Review | 35
Kogod
Expansion
Open for
Business
This spring, a $14 million Kogod expansion
opened its doors, more
than doubling the size
of AU’s business school.
The state-of-the-art
facility is the first
structure built entirely
with philanthropic
dollars, including a sizable gift from Robert
and Arlene Kogod, for
whom AU’s business
school is named. More
than 25 donors funded
the expansion.
The building includes
the Financial Services and Information Technology Lab,
which will help prepare
students for the rigors
of Wall Street.
More than 25 donors
funded the new $14 million
Kogod School of
Business expansion.
36 | A SOUND FOUNDATION
Equipped with a trading wall that features
a stock ticker and news
feed, the lab boasts 37
workstations loaded
with 13 software packages, including a suite
donated by Thomson
Financial that delivers
real-time financial and
banking data.
The oversized screens
make lighter work of
spreadsheet data on
programs like Excel
and SPSS and ease the
chore of building Web
pages on Macromedia
Dreamweaver.
Jill Klein, information
technology executive
in residence, expects
students who master
the tools packed into
the virtual trading floor
will gain the skills and
confidence that will
land them their first
jobs and internships.
Klein says having an
in-house lab is also a
boon to productivity
and student-teacher
relationships, “I know
my students are down
there, so it gives me
the opportunity to
work with them more
outside of class.”
The Kogod
expansion
is the first
campus
structure
built entirely
with philanthropic
dollars.
Arbor Day
Foundation
lauds au
AU is doing its part to
improve Washington’s
tree canopy and bolster
the city’s environmental efforts.
In April, AU was designated a 2009 Tree Campus
USA University by the
Arbor Day Foundation
for its dedication to
campus forestry management and environmental stewardship. AU
is the first educational
institution in Washington to earn the honor.
AU’s sustainability
initiatives garnered
another “green” honor
this year: the EPA’s
2008–2009 College and
University Green Power
Challenge award.
The challenge tracks
and recognizes collegiate athletic conferences in the U.S. with
the highest combined
green power purchases
in the nation. AU was
among only 22 universities nationwide—and
two in the D.C. area—
to earn the recognition.
AU boasts the only
university arboretum in
the District of Columbia.
American University 2008–2009 Year in Review | 37
ScholarAthletes
excel in
academics
Discipline
and teamwork help
scholarathletes win
big in the
classroom.
38 | A SOUND FOUNDATION
At AU, the discipline
and teamwork that
student-athletes exhibit on the field help
them win big in the
classroom. Our Eagles
constantly strive for
excellence, as both
scholars and athletes.
This year, the men’s
swimming and diving
team posted a 3.54 GPA
in the spring semester, the highest team
grade-point average of
all Division I programs.
The women’s program
placed 14th in the nation with a 3.44 GPA.
Based on their academic accomplishments,
both teams were named
Collegiate Swim Coaches
Association of America’s Scholar-Athlete
Teams for the 29th
consecutive semester.
And, for the second
year in a row, AU’s
wrestling squad attained the highest
GPA of all Division I
wrestling programs and
has been crowned the
National Wrestling As-
70 scholar-athletes were
named to the 2009 winterspring Patriot League
Academic Honor Roll,
earning a 3.2 GPA or higher.
sociation’s Champions
of the Classroom. AU
achieved a combined
GPA of 3.28, besting
Harvard, Stanford,
and Duke, which finished second through
fourth, respectively.
“It is a testament to
the hard work and
dedication that our
student-athletes put
into their studies and
the sport year-round,”
said wrestling head
coach Mark Cody.
Historian’s
Book among
Finalists for
Prestigious
Literary
Award
History professor Allan
Lichtman’s 2008 book,
White Protestant Nation,
was among five finalists for the prestigious
National Book Critics
Circle Award. Dubbed
“deeply researched yet
. . . spiritedly written,”
the book details the
origins, evolution, and
triumph of modern
conservatism.
Lichtman always has
been enthralled by the
history of politics, and
he wrote the book to fill
what he considered a
“hole” in the research
on the topic.
“Most historians tend
to be liberal, and
they’ve written exten-
sively about liberals
and even radicals, but
there had been very
little written about conservatives,” he said. “I
felt that by writing the
history of the last 100
years of conservatism,
you almost are writing
all of American political history because
conservative ideas and
policies and programs
and politics touch upon
everything.”
94%
of AU faculty have
the highest degree in
their field.
AU Snags
$2.4m Knight
Foundation
Grant
form journalism for
today and reinvent it
for tomorrow,” said Jan
Schaffer, J-Lab’s executive director.
J-Lab: The Institute for
Interactive Journalism moved last year
from the University of
Maryland to its new
home at AU’s School of
Communication. Here,
it will expand its operations thanks to a $2.4
million grant from the
John S. and James L.
Knight Foundation.
At AU, J-Lab will use
the Knight grant to
fund 16 “New Voices”
citizen-media projects;
build a community
media toolkit to help
foundations fund, vet,
support, and measure
local media projects;
and create 8–10 Knight
Citizen News Network
learning modules.
“Our new affiliation is
a good fit for J-Lab’s
mission, to help trans-
These innovative projects are geared to train
journalists, new media
entrepreneurs, and
citizens to use digital
technologies to develop
new ways of participating in public life.
“Our new affiliation is a
good fit for J-Lab to help
transform journalism for
today and reinvent it for
tomorrow.”
American University 2008–2009 Year in Review | 39
University Administration
Cornelius M. Kerwin, President
Scott A. Bass, Provost
Teresa Flannery, Executive Director, University Communications and Marketing
Gail S. Hanson, Vice President of Campus Life
Mary E. Kennard, Vice President and General Counsel
Thomas J. Minar, Vice President of Development and Alumni Relations
Donald L. Myers, Vice President of Finance and Treasurer
David E. Taylor, Chief of Staff
Kay J. Mussell, Interim Senior Vice Provost and Dean of Academic Affairs
Richard M. Durand, Dean, Kogod School of Business
Louis W. Goodman, 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
Linda Bolden-Pitcher, University Registrar
William A. Mayer, University Librarian
Board of Trustees
Gary M. Abramson,* Chairman
Jeffrey A. Sine,* Vice Chair
Gina F. Adams*
Stephanie M. Bennett-Smith
Richard Beyer
Patrick Butler*
Edward R. Carr*
Jack C. Cassell*
Gary D. Cohn*
Seth D. Cutter*
Pamela M. Deese*
Jerome King Del Pino
David R. Drobis*
Marc N. Duber*
Fuad El-Hibri
Hani M. S. Farsi*
C. A. Daniel Gasby
Thomas A. Gottschalk
Gisela B. Huberman*
C. Nicholas Keating Jr.*
Cornelius M. Kerwin*
Margery Kraus*
Charles H. Lydecker*
Robyn Rafferty Mathias*
Alan L. Meltzer*
Regina L. Muehlhauser*
Arthur J. Rothkopf
Mark L. Schneider
John R. Schol
Neal A. Sharma*
Stephen Silvia
Virginia Stallings
* alumna or alumnus of American University
40 | UNIVERSITY ADMINISTRATION AND BOARD OF TRUSTEES
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
Suzanne Bechamps, Editor
Adrienne Frank, Sally Acharya, Mike Unger, Writers
Juana Merlo, Designer
Jeff Watts, Photographer
UP10-005
4400 Massachusetts Avenue, NW
Washington, DC 20016
financials
American University
financial statements
2008–2009
framing
our
future
from the Vice President of Finance and Treasurer
During the past year, virtually every segment of society was affected by the challenging global economic environment. Institutions of higher education were certainly
not immune to the effects of the economy, and American University was no exception.
However, I am pleased to report that despite these difficult times, the university
fared very well as a result of our long-standing cautious and prudent approach to
our finances and our efforts to limit exposure to market volatility wherever possible.
Our early, and successful, restructuring of the university’s entire $220 million
tax-exempt bond portfolio proved to be particularly effective in minimizing our
exposure to fluctuations in the credit markets. Equally important, 90 percent of
that debt is now supported by long-term letters of credit. While the value of our
endowment declined, less than 1 percent of our operating budget is dependent on
endowment income, resulting in only minor impact on operations. We also continue
to build financial safeguards into our operating budget, a practice begun many years ago. As a result of these and
other measures, our consistently strong operating results, continued enrollment growth, and low debt service burden,
Standard & Poor’s recently upgraded our long-term and underlying bond ratings from A to A+. Only one other private
higher education institution received such an upgrade thus far in 2009. Moody’s also reaffirmed our A2 credit rating
(positive outlook) and attributed it to our proactive financial management style.
While maintaining vigilance over the financial health of the university, we moved ahead with many other important
initiatives. The Kogod School of Business expansion was completed and opened at the beginning of the spring 2009
semester. The university’s new School of International Service (SIS) building is well underway and is on track to open in
May 2010. This 75,000-square-foot Leadership in Energy and Environmental Design (LEED) Gold building will house
one of AU’s premier schools and provide a new home for some of its most popular and well-respected programs.
I am pleased with the significant contributions we were able to make toward the award-winning redesigned American
University Web site, the OneStop Student Financial Service Center, and support of the President’s Climate Commitment
by establishing an Office of Sustainability. These all represent extremely important initiatives undertaken by the
university during this past year.
Our enduring commitment to sound fiscal management and stability served us well through the economic turmoil of
the past year. It also places us on sound footing as we look forward to meeting the challenges of the future and achieving the goals set forth in the university’s new strategic plan.
Sincerely,
Donald L. Myers
American University 2008–2009 | 1
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 of cash flows present
fairly, in all material respects, the financial position of American University (the University) at April 30, 2009 and
2008, 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.
As discussed in Note 8 to the financial statements, in fiscal year 2008 the University adopted Financial Accounting
Standards Board Statement (FASB) No. 158, Employer’s Accounting for Defined Benefit Pension and Other Postretirement
Plans, an amendment of FASB Statements No. 87, 88, 106, and 132R.
In fiscal year 2009, as discussed in Note 8, the University also adopted FASB Statement No. 157, Fair Value
Measurements. As discussed in Note 12, in fiscal year 2009, the University also adopted FASB Staff Position No. FAS 117-1,
Endowments of Not-for-Profit Organizations: Net Asset Classification of Funds Subject to an Enacted Version of the Uniform Prudent
Management of Institutional Funds Act, and Enhanced Disclosures for All Endowment Funds.
July 31, 2009
2 | financial statements
BALANCE SHEETS | April 30, 2009 and 2008
(In thousands)
2009
2008
assets
1
Cash and cash equivalents
$ 87,366
$ 31,430
2
Accounts and loans receivable, net
24,841
25,159
3
Contributions receivable, net
22,283)
23,350
4
Prepaid expenses and inventory
5
Investments
6
Deposits with trustees/others
7
Deposits for collateralized swaps
8
Property, plant, and equipment, net
9
Deferred financing costs
10
Interest in perpetual trust
11
Total assets
2,053
239
372,465
465,163
7,240
23,227)
13,266
-
389,151
359,968
2,796
3,284
10,064
14,593
$ 931,525
$ 946,413
$ 46,134
$ 48,596
liabilities and net assets
Liabilities:
12
Accounts payable and accrued liabilities
13
Repurchase of Series 2006 Bonds
14
Deferred revenue and deposits
15
Indebtedness
16
Swap agreements
17
Assets retirement obligations
18
Refundable advances from the U.S. government
19
Total liabilities
-
(74,525)
18,610
18,331
255,875
255,875
49,096
27,890
4,202
4,000
8,097
7,992
382,014
288,159
6,388
5,932
135,742
125,283
Net assets:
Unrestricted
20
General operations
21
Internally designated
Capital
22
Designated funds functioning as endowments
197,179
262,104
23
Designated for plant
90,362
105,236
24
Total unrestricted
429,671
498,555
25
Temporarily restricted
42,930
80,862
26
Permanently restricted
76,910
78,837
27
Total net assets
28
Total liabilities and net assets
549,511
658,254
$ 931,525
$ 946,413
See accompanying notes to financial statements.
American University 2008–2009 | 3
STATEMENT OF ACTIVITIES | Year ended April 30, 2009
Unrestricted net assets
(In thousands)
General
operations
designated
Permanently
Temporarily
Internally
Capital
Total
restricted
restricted
net assets
net assets
Total
-
$357,802
Operating revenues and support
1
2
3
Tuition and fees
Less scholarship allowances
Net tuition and fees
$ 356,821
$
981)
$
-
$ 357,802
$
-
$
(66,408)
(5,509)
-
(71,917)
-
-
(71,917)
290,413
(4,528)
-
285,885
-
-
285,885
4
Federal grants and contracts
558
14,182
-
14,740
-
-
14,740
5
Private grants and contracts
8,228
7,650
-
15,878
-
-
15,878
6
Indirect cost recovery
1,568
-
-
1,568
-
-
1,568
7
Contributions
7,454
3,450
2,171
13,075
2,192
1,290
16,557
8
Endowment income
802
7,133
-
7,935
5,891
164
13,990
9
Investment income
2,674
265)
696
3,635
-
-
3,635
10
Auxiliary enterprises
58,699
115
10,495
69,309
-
-
69,309
11
Other sources
-
-
1,938
12
Net assets released
-
-
13
Total operating
revenues and support
1,484
450
4
1,938
233
4,988
854
6,075
372,113
33,705
14,220
420,038
2,008
1,454
423,500
118,992
1,065
12,006
132,063
-
-
132,063
160
14,899
-
15,059
-
-
15,059
(6,075)
Operating expenses
14
Instruction
15
Research
16
Public service
11,191
497
668
12,356
-
-
12,356
17
Academic support
34,555
4,846
5,335
44,736
-
-
44,736
18
Student services
30,747
313
5,335
36,395
-
-
36,395
19
Institutional support
53,383
2,222
6,669
62,274
-
-
62,274
20
Auxiliary enterprises
29,653
48
36,684
63,385
-
-
66,385
21
Facilities operations
and maintenance
32,379
-
-
-
-
-
22
Interest expense
23
24
25
Total operating expenses
Total operating activities
Transfer among funds
9,253
-
323,313
23,890
(35,379)
-
-
-
-
22,065
(9,253)
369,268
-
-
369,268
48,800
9,815
(7,845)
50,770
2,008
1,454
54,232
(48,344)
14,691
33,653
-
-
-
-
-
211
39
250
-
1,468
533
Nonoperating items
26
Investment income
-
-
-
27
Other revenue
-
(935)
-
28
Realized and unrealized net
capital gains
-
(13,112)
(105,070)
(118,182)
(40,151)
(4,888)
(163,221)
29
Total nonoperating
activities
-
(14,047)
(105,070)
(119,117)
(39,940)
(3,381)
(162,438)
30
Change before effect on
refunding of long-term debt
10,459
(79,262)
(68,347)
(37,932)
(1,927)
(108,206)
31
Effect on refunding
of long-term debt
(537)
(537)
32
Change in net assets
33
Net assets at beginning of year
34
Net assets at end of year
456
-
-
-
(537)
456
10,459
(79,799)
(68,884)
(37,932)
(1,927)
5,932
125,283
367,340
498,555
80,862
78,837
658,254
$ 6,388
$135,742
$ 287,541
$ 429,671
$ 42,930
76,910
$549,511
See accompanying notes to financial statements.
4 | financial statements
-
(935)
$
(108,743)
STATEMENT OF ACTIVITIES | Year ended April 30, 2008
Unrestricted net assets
(In thousands)
General
operations
Temporarily
Internally
designated
Capital
Total
-
$ 331,970
Permanently
restricted
restricted
net assets
net assets
Total
-
$331,970
Operating revenues
and support
1
2
3
Tuition and fees
$ 331,090
Less scholarship allowances
Net tuition and fees
$
880
$
$
-
$
(63,080)
(6,370)
-
(69,450)
-
-
(69,450)
268,010
(5,490)
-
262,520
-
-
262,520
4
Federal grants and contracts
507
12,846
-
13,353
-
-
13,353
5
Private grants and contracts
7,336
9,384
1,200
17,920
-
-
17,920
6
Indirect cost recovery
2,553
-
-
2,553
-
-
2,553
7
Contributions
6,455
3,640
783
10,878
7,822
887
19,587
12,245
8
Endowment income
725
6,198
-
6,923
5,182
140
9
Investment income
4,522
2,868
2,277
9,667
-
-
9,667
10
Auxiliary enterprises
54,417
100
9,838
64,355
-
-
64,355
11
Other sources
1,109
750
27
1,886
-
-
1,886
12
Net assets released
from restrictions
234
9,999
1,381
11,614
(11,614)
-
-
345,868
40,295
15,506
401,669
1,390
1,027
404,086
113,629
1,127
11,793
126,549
-
-
126,549
13
Total operating
revenues and support
Operating expenses
14
Instruction
15
Research
187
14,152
-
14,339
-
-
14,339
16
Public service
10,060
418
655
11,133
-
-
11,133
17
Academic support
31,648
7,923
5,241
44,812
-
-
44,812
18
Student services
29,550
245
5,241
35,036
-
-
35,036
19
Institutional support
53,468
2,080
6,552
62,100
-
-
62,100
20
Auxiliary enterprises
27,015
28
36,033
63,076
-
-
63,076
21
Facilities operations
and maintenance
32,965
-
(32,965)
-
-
-
-
22
Interest expense
(10,511)
10,511
-
-
-
-
-
23
Total operating expenses
309,033
25,973
22,039
357,045
-
-
357,045
24
Total operating expenses
(36,835)
14,322
(6,533)
44,624
1,390
1,027
47,041
(36,489)
8,496
27,993
-
-
-
-
25
Transfer among funds
Nonoperating items
26
Investment income
-
-
-
-
334
87
421
27
Other revenue and transfers
-
-
-
-
-
626
626
28
Realized and unrealized
net capital gains
-
(5,822)
(11,801)
(17,623)
(944)
(619)
(19,186)
(5,822)
(11,801)
(17,623)
(610)
94
(18,139)
16,996
9,659
27,001
780
29
Total nonoperating activities
-
30
Change before effect of
SFAS No. 158 and FSP 117-1
346
31
Effect of adoption
of SFAS NO. 158
32
Effect of adoption
of FSP 117-1
33
Change in net assets
34
Net assets at beginning of year
35
Net assets at end of year
(5,102)
$
1,121
(5,102)
28,902
(5,102)
-
1,935
(68,819)
(66,884)
66,884
-
-
346
13,829
(59,160)
(44,985)
67,664
1,121
23,800
5,586
111,454
426,500
543,540
13,198
5,932
$125,283
$ 367,340
$ 498,555
$ 80,862
$
77,716
634,454
78,837
$658,254
See accompanying notes to financial statements.
American University 2008–2009 | 5
statements of cash flows | Years ended April 30, 2009 and 2008
(In thousands)
2009
2008
cash flows from operating activities
1
Increase in net assets
$
(108,743)
$
23,800
Adjustments to reconcile increase in net assets to net cash provided by operating activities:
2
Cumulative effect of change in accounting principle
-
5,102
1,269
1,130
133,622
6,393
3
Effect of repurchase of long-term debt
4
Net realized and unrealized capital losses (gains)
5
Change in fair value of interest rate swaps
21,206
6,979
6
Depreciation, amortization, and accretion
20,877
19,929
Changes in assets and liabilities
7
Increase in accounts and university loans receivable, net
1,073
(818)
1,067
(1,580)
8
Decrease (increase) in contributions receivable, net
9
Decrease in prepaid expenses
(1,814)
676
10
Increase in accounts payable and accrued liabilities
(2,462)
6,106
11
Increase in deferred revenue, deposits, and other refundable advances
12
Decrease in asset retirement obligation
13
Contributions collected and revenues restricted for long-term investment
14
384
258
-
Net cash provided by operating activities
(167)
(1,307)
(3,211)
65,172
64,597
(370,880)
(234,190)
cash flows from investing activities
15
Purchases of investments
16
Proceeds from sales and maturities of investments
334,485
213,963
17
Purchases of property, plant, and equipment
(48,648)
(29,611)
18
Capitalized interest
(1,079)
(1,277)
19
Decrease (increase) in deposits with trustees/other, net
2,721
6,000
(83,401)
(45,115)
(1,510)
(1,769)
20
Net cash used in investing activities
cash flows from financing activities
21
Student loans issued
22
Student loans repaid
755
1,073
74,525
-
Payments on indebtedness
23
Issuance of debt
24
Debt issuance cost
25
Repurchase of Series 2006 Bonds
(912)
(74,525)
Proceeds from contributions restricted for
26
Investment in plant
27
Investment in endowment
28
29
1,544
469
1,667
Net cash provided by financing activities
74,165
(72,010)
Net (decrease) increase in cash and cash equivalents
55,936
(52,528)
31,430
83,958
30
Cash and cash equivalents at beginning of year
31
Cash and cash equivalents at end of year
32
Supplemental disclosure of cash flow information
33
838
Cash paid during year for interest
6 | financial statements
$
87,366
$
31,430
$
10,947
$
12,374
notes to financial statements | April 30, 2009 and 2008
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 nondegree
study. There are approximately 575 full-time faculty members in six academic divisions, and approximately 11,500
students, of which 6,300 are undergraduate students and 5,200 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.
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 that are not subject to donor-imposed stipulations.
Temporarily Restricted—Net assets subject to donor-imposed stipulations that either expire by passage
of time or that 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 donorimposed 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.
American University 2008–2009 | 7
notes to financial statements | April 30, 2009 and 2008
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.
Nonoperating 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.
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.
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 8 for an explanation as to methodology for determining fair value. Endowment income included in
operating revenues consists of annual amounts allocated for spending to 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 nonoperating 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.
8 | financial statements
notes to financial statements | April 30, 2009 and 2008
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
33% and 32% of net tuition and fees revenue for the years ended April 30, 2009 and 2008, 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 Financial Accounting Standards Board (FASB)
Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143,
Accounting for Asset Retirement Obligations (FIN 47). FIN 47 requires that 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 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.
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 2009 and 2008.
In 2008, the University implemented the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes. The University concluded there were no open positions that result in material unrecognized tax benefits.
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 that are 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 nontraditional investments, the asset retirement obligations, and the postretirement
benefit plan. Actual results could differ materially, in the near term, from the amounts reported.
American University 2008–2009 | 9
notes to financial statements | April 30, 2009 and 2008
3. Accounts and Loans Receivable, Net
Accounts and loans receivable, net, at April 30, 2009 and 2008, are as follows (in thousands):
2009
2008
Accounts receivable
1
Student
2
Grants, contracts, and other
3
Accrued interest
4
$
Student loans
5
6
Less allowance for uncollectible accounts and loans
$
3,159
11,709
10,349
513
641
9,721
12,224
26,148
26,373
(1,307)
$
7
4,205
24,841
(1,214)
$
25,159
At April 30, 2009, the University had an outstanding student loans receivable balance in the amount of $9,721,000.
Management believes the recorded cost of these loans approximate the fair market at April 30, 2009.
4. Contributions Receivable, Net
As of April 30, 2009 and 2008, unconditional promises to give were as follows (in thousands):
2009
2008
Amounts due in:
8
Less than one year
$
9
One year to five years
5,167
17,334
10
Over five years
1,453
997
25,676
25,792
11
12
Less unamortized discount
13
Less allowance for doubtful accounts
14
$
19,056
$
7,461
(831)
(771)
(2,562)
(1,671)
22,283
$
23,350
Contributions receivable over more than one year are discounted at rates ranging from 3% to 6.5%. For 2008 and prior
fiscal years, the rate used approximated the risk-free rate of return on investments. New contributions received during
fiscal year 2009 were assigned a discount rate which is commensurate with the market and credit risk involved.
As of April 30, 2009 and 2008, the University had also received bequest intentions and conditional promises to give
of $18.7 million and $18.0 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.
10 | financial statements
notes to financial statements | April 30, 2009 and 2008
5. Investments
Investments by type at April 30, 2009 and 2008, are as follows (in thousands):
Cost
2009
1
Money market
2
U.S. government obligations
3
Fixed income funds
4
Corporate stocks
$
14,601
Fair Value
2009
$
14,601
Cost
2008
$
5,800
Fair Value
2008
$
5,800
886
896
858
872
160,406
153,875
129,222
128,033
98,249
82,377
123,481
137,642
5
Equity mutual funds
6,107
4,125
5,992
6,382
6
International equity funds
63,048
47,438
61,875
80,713
7
Alternative asset funds
51,892
58,793
51,239
86,438
8
Real estate funds
21,632
9,639
21,554
18,535
9
Real estate and other
721
$
10
417,542
721
$
372,465
748
$
400,769
748
$
465,163
At April 30, 2009 and 2008, the assets of endowments and funds functioning as endowments were approximately
$297 million and $405 million, respectively.
Investments in debt securities and equity securities consist primarily of investments in funds managed by external
investment managers.
6. Property, Plant, and Equipment, Net
Property, plant, and equipment and related accumulated depreciation and amortization at April 30, 2009
and 2008, are as follows (in thousands):
2009
11
Land and improvements
$
46,373
2008
$
46,263
12
Buildings
442,340
410,268
13
Equipment
83,196
80,635
14
Construction in progress
43,274
33,826
15
Library and art collections
68,868
63,332
16
17
18
Accumulated depreciation and amortization
$
684,051
634,324
(294,900)
(274,356)
389,151
$
359,968
Construction in progress at April 30, 2009 and 2008, relates to building improvements and renovations.
Prior to fiscal 2008, the University recorded approximately $18,905,000 of real estate properties as investments
in the balance sheet on a cost basis. At May 1, 2007, management performed additional analysis and reclassified
these properties to property, plant, and equipment in the accompanying balance sheet to reflect the intended use
of the assets. If these reclassifications were made as of April 30, 2007, then the effect would have been as follows
(in thousands):
American University 2008–2009 | 11
notes to financial statements | April 30, 2009 and 2008
As Previously
Reported
After Change
in Accounting
Principle
Reclassification
1
Investments
$
469,616
$
(18,905)
$
450,711
2
Property, plant, and equipment, net
$
329,102
$
18,905
$
348,007
For the years ended April 30, 2009 and 2008, depreciation expense was approximately $20.6 and $19.5
million, respectively.
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, 2009 and 2008, consists of the following (in thousands):
2008
2007
Core Debt
3
District of Columbia variable rate weekly demand revenue bonds,
The American University Issue Series 1985, maturing in 2015
4
District of Columbia variable rate weekly demand revenue bonds,
The American University Issue Series 1985A, maturing in 2015
5
District of Columbia University Revenue Bonds, American University
Issue Series 1999, maturing in 2028
21,000
21,000
6
District of Columbia University Revenue Bonds, American University
Issue Series 2003, maturing in 2033
37,000
37,000
7
District of Columbia University Revenue Bonds, American University
Issue Series 2006, maturing 2036
99,975
99,975
8
District of Columbia University Revenue Bonds, American University
Issue Series 2008, maturing 2038
60,900
9
$
-
$
-
Total core debt
48,900
12,000
-
218,875
218,875
Special Purpose Debt
10
Note payable, variable rate, due in full in 2021
22,000
22,000
11
Note payable, variable rate, due in full in 2020
15,000
15,000
12
Total special purpose debt
13
Total indebtedness, excluding treasury bonds
14
15
Treasury bonds—temporary holding of District of Columbia University
Revenue Bonds, American University Issue Series 2006
Total indebtedness
37,000
37,000
255,875
255,875
$
255,875
(74,525)
$
181,350
In February 2008, the Board of Trustees authorized management to proceed with the negotiation of terms and financing
for the conversion of the Series 2003 and Series 2006 insured auction-rate bonds to letter of credit-backed variable rate
demand bonds. This was necessitated by the poor market performance of the Series 2003 and Series 2006 auction
rate bonds. While the University was in the process of converting the bonds, market conditions continued to deteriorate.
On March 14, 2008, the SEC issued a statement allowing issuers of auction rate securities to bid on their own auction
rate securities. Between April 9, 2008, and May 21, 2008, the University participated in six auctions for the Series 2006A
12 | financial statements
notes to financial statements | April 30, 2009 and 2008
bonds, purchasing a total of $38,625,000 of the bonds, and seven auctions for the Series 2006B bonds, purchasing a total
of $41,150,000 of the bonds, sharply reducing interest rates to SIFMA-like levels. As of April 30, 2008, the University had
purchased $74,525,000 of the Series 2006A and Series 2006B bonds, which was recorded as a reduction to indebtedness
in the accompanying statement of financial position.
In May 2008, the University converted $37,000,000 of the Series 2003 bonds to variable rate demand bonds, and on
May 29, 2008, the University converted $99,975,000 of the Series 2006 bonds to variable rate demand bonds. Both
series were supported by a letter of credit from Bank of America.
The principal balance of bonds and notes payable outstanding as of April 30, 2009, are due as follows (in thousands):
Year ending April 30:
1
2020
$
15,000
2
2021
22,000
3
2028
21,000
4
2033
37,000
5
2036
99,975
6
2038
7
60,900
$
255,875
The fair market value of the indebtedness at April 30, 2009 and 2008, was $255,875,000 and was determined using
quoted market prices.
District of Columbia Bonds Payable
The Series 1985 and Series 1985A bonds were secured by deeds of trust on certain of the University’s real property
and by bond insurance policies. The bond insurance policies allowed the bond trustee to pay the principal and interest
on the bonds and to pay the purchase price of the bonds, which were not remarketed to the extent that monies were
not available from other sources. Interest on both of these bond issues was at a variable rate. The variable rate was
effectively changed to a 4.6% fixed rate by the University entering into an interest rate swap agreement with Ambac
Assurance Corporation.
In October 2008, the University refunded and reissued the Series 1985 and Series 1985A bonds as Series 2008 variable
rate demand bonds. These bonds are general unsecured obligations of the University. The variable rate was effectively
changed to a 4.31% fixed rate by the University entering into an interest rate swap agreement with Bank of America.
The Series 1999 bonds bear interest at a variable rate and are general unsecured obligations of the University.
The variable rate was effectively changed to a 4.1% fixed rate by the University entering into an interest rate swap
agreement with Morgan Stanley Capital Services. The proceeds from the bonds were used to repay a mortgage note
prior to its scheduled maturity.
The Series 2003 bonds are general unsecured obligations of the University. The proceeds were used to fund construction
and renovation projects relating to the Katzen Arts Center and Greenburg Theatre.
The Series 2006 bonds are general unsecured obligations of the University. 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.
American University 2008–2009 | 13
notes to financial statements | April 30, 2009 and 2008
Notes Payable
In 2003, the University issued a $15 million note payable to replace a 1998 note incurred for the purchase of a building.
The note is payable in full in April 2020. The interest rate is LIBOR plus 0.45%, payable monthly.
In 2001, the University issued a $22 million note for the purchase of a building. The note payable bears interest at a
variable rate, payable monthly. The note is payable in full in September 2021. The variable rate was effectively changed
to a 5.54% fixed rate by the University entering into an interest rate swap agreement with Morgan Stanley Capital
Services through 2010.
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, 2009, 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 4.1% 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. The University is 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.
At April 30, 2009, the Morgan Stanley swap arrangements were collateralized by cash in the amount of $13,266,000.
The cash collateral for these swap arrangements is reported as an asset in the University’s statement of financial
position at April 30, 2009.
The accumulated unrealized losses that were recognized for these swaps as of April 30, 2009 and 2008, were
$21,206,000 and $6,979,000, respectively, and are included in realized and unrealized net capital gains in the
accompanying statements of activities.
8. Fair Value Measurement
Effective May 1, 2008, the University adopted Statement of Financial Accounting Standards No. 157 (SFAS 157),
Fair Value Measurements, which provides a framework for measuring fair value under GAAP, as well as expanded
information about assets and liabilities measured at fair value, including the effect of fair value measurements
on earnings. There was no impact of adopting SFAS 157 to the beginning balance of net assets as of May 1, 2008.
The provisions of Statement of Financial Accounting Standards No. 159 (SFAS 159), The Fair Value Option for Financial
Assets and Financial Liabilities, were effective May 1, 2008. SFAS No. 159 gives entities the option, at specific election
dates, to measure certain financial assets and liabilities at fair value. The election may be applied to financial assets
and liabilities on an instrument by instrument basis, is irrevocable, and may only be applied to entire instruments.
Unrealized gains and losses on instruments for which the fair value option has been elected are reported in earnings
at each subsequent reporting date. The University did not elect fair value accounting for any assets or liabilities that
are not currently required to be measured at fair value.
SFAS 157 establishes a hierarchy of valuation inputs based on the extent to which the inputs are observable in the
marketplace. Observable inputs reflect market data obtained from sources independent of the reporting entity and
unobservable inputs reflect the entities’ own assumptions about how market participants would value an asset or liability
14 | financial statements
notes to financial statements | April 30, 2009 and 2008
based on the best information available. The University uses valuation techniques that maximize the use of observable
inputs and minimize the use of unobservable inputs. The fair value hierarchy ranks the quality and reliability of the
information used to determine fair values. The University performed a detailed analysis of the assets and liabilities
that are subject to SFAS 157 to determine the appropriate level based on the inputs used in the valuation methodology.
The following describes the hierarchy of inputs used to measure fair value and the primary valuation methodologies
used by the University for financial assets and liabilities carried at fair value. 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 that are significant
to the fair value of the assets or liabilities.
The following tables display the carrying value and estimated fair value of our financial instruments as of April 30,
2009 (in thousands):
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total Fair
Value as of
April 30, 2009
Assets
1
Investments
2
Deposits with trustees
3
Interest in perpetual trust
4
$
87,743
$
7,240
$
-
-
Total assets at fair value
251,803
$
-
-
94,983
32,919
251,803
372,465
7,240
10,064
10,064
42,983
389.769
Liabilities
5
6
Swap agreements
$
-
49,096
$
49,096
$
-
49,096
$
49,096
Following is a description of the University’s valuation methodologies for assets and liabilities measured at fair value.
Level 1 consists of instruments whose value is based on quoted market prices in active markets, such as U.S.
Treasuries or publicly traded stocks.
Level 2 includes instruments that are primarily valued using valuation techniques that use observable market-based inputs
or unobservable inputs that are corroborated by market data. These inputs consider various assumptions, including time
value, yields, volatility, default rates, current market conditions, contractual obligations, as well as other relevant economic
measures. Substantially all of these assumptions are observable in the marketplace, can be derived from observable market
data, or are supported by observable levels at which transactions are executed in the marketplace. This category may also
include instruments whose values are based on quoted market prices provided by a single dealer that is corroborated by a
recent transaction.
American University 2008–2009 | 15
notes to financial statements | April 30, 2009 and 2008
Level 3 is composed of instruments whose fair value is estimated based on a market approach using alternative
techniques or internally developed models using significant inputs that are generally less readily observable because
of limited market activity or little or no price transparency. The University also takes into consideration the net asset
values at the reporting date. The University includes instruments whose value is based on a single source such as a
dealer, broker, or pricing service which cannot be corroborated by recent market transactions. The University has
performed significant due diligence around these investments to ensure NAV is an appropriate measure of fair value
as of April 30, 2009.
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.
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.
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.
The following table is a rollforward of the statement of financial position amounts for financial instruments
classified by the University within Level 3 of the fair value hierarchy defined above (in thousands):
Interest in
Perpetual Trust
Investments
1
Begining Balance at May 1, 2008
2
Total gains or losses (realized/unrealized)
included in assets
$
38,735
$
14,593
(5,816)
(4,529)
3
Purchases, issuances, and settlements
-
-
4
Transfers in and/or (out) of level 3
-
-
5
Ending Balance at April 30, 2009
$
32,919
Total
$
$
10,064
53,328
(10,345)
-
$
42,983
Total gains and losses, realized and unrealized, related to Level 3 financial instruments are recognized in realized
and unrealized net capital gains in the statement of activities. Unrealized losses for Level 3 instruments still held
at April 30, 2009, are $10,345,000.
At April 30, 2009, the University partially adopted SFAS 157 as there is a one year deferral for Asset Retirement
Obligations initially measured at fair value under FASB Statement No. 143, Accounting for Asset Retirement Obligations.
9. 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.
16 | financial statements
notes to financial statements | April 30, 2009 and 2008
The University’s contribution to these plans was approximately $11.1 million and $10.5 million for the years ended
April 30, 2009 and 2008, 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, 2009, and April 30, 2008, respectively.
Net periodic postretirement benefit cost for the years ended April 30, 2009 and 2008, includes the following components
(in thousands):
2009
1
Service cost
2
Interest cost
3
Amortization of transition obligation over 20 years
4
Amortization of net loss
5
Net periodic postretirement benefit cost
$
444
2008
$
1,082
1,196
667
667
12
$
430
2,205
224
$
2,517
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, 2009 and 2008 (using a measurement date of April 30):
2009
2008
Change in Accumulated Postretirement Benefit Obligation:
6
Accumulated postretirement benefit obligation at beginning of year
7
Service cost
8
Interest cost
9
Net actuarial (gain)/loss
10
Plan participants’ contributions
11
Effect of change in measurement date
12
13
$
$
444
Benefits paid
Accumulated postretirement benefit obligation at end of year
17,548
20,691
430
1,082
1,196
(1,077)
(3,429)
418
532
-
407
(1,532)
(2,279)
$
16,883
$
17,548
$
-
$
-
Change in Fair Value of Plan Assets:
14
Fair value of plan assets at beginning of year
15
Plan participants’ contributions
16
Employer contributions
17
18
Benefits paid
Fair value of plan assets at end of year
418
532
1,114
1,747
(1,532)
$
-
(2,279)
$
-
Reconciliation of Funded Status:
19
Funded status
$
(16,883)
$
(17,548)
20
Postretirement benefit liability
$
(16,883)
$
(17,548)
$
1,931
Amounts Not Recognized in Net Periodic Benefit Cost:
21
Net actuarial (gain)/loss
22
Transition (asset)/obligation
23
Amounts included in unrestricted net assets
$
842
2,504
$
3,346
3,171
$
5,102
American University 2008–2009 | 17
notes to financial statements | April 30, 2009 and 2008
The change in unrestricted net assets for the years ended April 30, 2009 and 2008, is as follows (in thousands):
1
2009
2008
-
(5,731)
Effect of adoption of recognition and measurement
date provisions of FASB Statement No. 158
The amounts expected to be amortized from unrestricted net assets into net periodic benefit cost for the year
ended April 30, 2010, are as follows (in thousands):
2
Net actuarial (gain)/loss
3
Transition (asset)/obligation
4
Total
$
667
$
667
Other changes in benefit obligations recognized in unrestricted net assets are as follows (in thousands):
5
Actuarial (gain)/loss
$
6
Amortization of transition obligation
7
Total Other Changes in Benefit Obligations Recognized in Unrestricted
Net Assets
1,089
667
$
1,756
The weighted discount rate used in the actuarial valuation at the April 30, 2009, and April 30, 2008, measurement
dates is as follows:
2009
2008
8
End of year benefit obligation
7.00%
6.40%
9
Net periodic postretirement benefit cost
6.40%
6.00%
An 8% healthcare cost trend rate was assumed for fiscal 2009, with the rate decreasing 1% each year to an ultimate
rate of 5% in fiscal year 2012, and thereafter. An increase in the assumed healthcare cost trend rate of 1% would
increase the net periodic postretirement benefit cost by approximately $119,000 and $142,000 for 2009 and 2008,
respectively, and the accumulated postretirement benefit obligation at April 30, 2009 and 2008, by approximately
$860,000 and $815,000, respectively. A decrease in the assumed healthcare cost trend rate of 1% would decrease
the net periodic postretirement benefit cost by approximately $102,000 and $147,000 for 2009 and 2008, respectively,
and the accumulated postretirement benefit obligations at April 30, 2009 and 2008, by approximately $758,000
and $719,000, respectively.
The expected benefit payments by the University to the plan are as follows:
Net of Medicare
Part D Subsidy
Without Medicare
Part D Subsidy
Medicare Part D
Subsidy Receipts
Year ending April 30
10
2010
$ 1,347,238
$ 1,561,844
$ 214,606
11
2011
1,422,025
1,654,858
232,833
12
2012
1,446,229
1,696,371
250,142
13
2013
1,476,985
1,740,938
263,953
14
2014
1,514,916
1,792,596
277,680
15
2015-2019
7,473,166
8,283,710
1,350,544
18 | financial statements
notes to financial statements | April 30, 2009 and 2008
In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 158, Employer’s Accounting
for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132R. SFAS
No.158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement
plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in the
year in which the changes occur through changes in unrestricted net assets. SFAS No. 158 also requires an employer
to measure the plan’s funded status as of the same date as the employer’s fiscal year end. The 2008 adoption of SFAS
No. 158 resulted in the University recording a cumulative effect of change in accounting principle of $5,102,000, which
had the following incremental effects on the University’s balance sheet as of April 30, 2008 (in thousands):
Before Application
of SFAS No. 158
$
12,446
Incremental Effect
$
5,102
After Application of
SFAS No. 158
1
Postretirement liability
2
Total liabilities
283,057
5,102
$
288,159
17,548
3
Unrestricted net assets
571,758
(5,102)
566,656
4
Total net assets
663,356
(5,102)
658,254
5
Total liabilities and net assets
946,413
-
946,413
10. Expenses
For the years ended April 30, 2009 and 2008, the University’s program services and supporting services were as follows
(in thousands):
2009
2008
Program services
6
Instruction
$
132,063
$
126,549
7
Research
15,059
14,339
8
Public service
12,356
11,133
9
Academic support
44,736
44,812
10
Student services
36,395
35,036
240,609
231,869
11
Total program services
Supporting services
12
Institutional support
62,274
62,100
13
Auxiliary enterprises
66,385
63,076
14
$
369,268
$
357,045
For the years ended April 30, 2009 and 2008, the University’s fundraising expenses totaled approximately $11,381,000
and $10,217,000, respectively, and are included in institutional support in the accompanying statements of activities.
American University 2008–2009 | 19
notes to financial statements | April 30, 2009 and 2008
11. Net Assets
Temporarily restricted net assets consist of the following at April 30, 2009 and 2008 (in thousands):
2009
1
Unspent contributions and related investment income
for instruction and faculty support
2
Gifts received for construction of facilities
$
34,562
$
73,146
8,368
$
3
2008
42,930
7,716
$
80,862
Permanently restricted net assets were held, the income of which will benefit the following at April 30, 2009
and 2008 (in thousands):
2009
4
Permanent endowment funds, for scholarships
and related academic activity
5
Interest in trust assets
6
Student loans
$
$
10,190
76,910
59,697
14,485
4,498
$
7
62,222
2008
4,655
$
78,837
12. Endowments
Endowment
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 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 that is 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
20 | financial statements
notes to financial statements | April 30, 2009 and 2008
The endowment net assets composition by type of fund at April 30, 2009, is as follows (in thousands):
Temporarily)
Unrestricted)
1
Donor-restricted endowment funds
2
Board-designated endowment funds
3
Total funds
$
(1,447)
$
26,920)
$
26,920)
185,830)
$
184,383)
Permanently)
Restricted)
Restricted)
$
59,514)
$
59,514)
-
Total)
$
-
84,987)
185,830)
$
270,817)
The changes in endowment net assets for the year ended April 30, 2009, are as follows (in thousands):
Temporarily)
Unrestricted)
4
Endowment net assets, May 1, 2008
$
258,050)
Permanently)
Restricted)
$
67,129)
Restricted)
$
61,307)
Total
$
386,486)
Investment return:
5
Net depreciation on investments
6
Interest, dividends, and capital distributions
7
Total investment return
8
Contributions to endowment
9
Appropriation of endowment assets
for expenditure
(81,087)
(37,545)
2,352)
3,495)
(78,735)
(34,050)
111)
(4,528)
-
(7,904)
(123,160)
-
(6,159)
5,847)
(4,528)
(117,313)
2,735)
2,846)
-
(14,063)
-
12,861)
Other changes:
10
11
Transfer to create board-designated
endowment funds
Endowment net assets April 30, 2009
12,861)
$
184,383)
$
26,920)
$
59,514)
$
270,817)
The endowment net assets composition by type of fund at April 30, 2008, is as follows (in thousands):
Temporarily)
Unrestricted)
12
Donor-restricted endowment funds
13
Board-designated endowment funds
14
Total funds
$
(8)
Restricted)
$
67,129)
$
67,129)
258,058)
$
258,050)
Permanently)
Restricted)
$
61,307)
$
61,307)
-
Total)
$
128,428)
$
386,486)
-
258,058)
American University 2008–2009 | 21
notes to financial statements | April 30, 2009 and 2008
The changes in endowment net assets for the year ended April 30, 2008, are as follows (in thousands):
Temporarily)
Unrestricted)
1
2
3
Endowment net assets, May 1, 2007
$
Net asset reclassification
Endowment net asset after reclassification
Permanently)
Restricted)
313,532)
$
Restricted)
-
$
58,843)
Total)
$
372,375)
(66,884)
66,884)
246,648)
66,884)
58,843)
-
372,375)
-
(99)
2,617)
Investment return:
4
Net appreciation (depreciation)
on investments
1,792(
924)
5
Interest, dividends, and capital
distributions
3,069)
3,559)
-
6,628)
6
Total investment return
4,861)
4,483)
(99)
9,245)
7
Contributions to endowment
1,427)
1,200)
2,563)
5,190)
8
Appropriation of endowment assets
for expenditure
(6,894)
(5,438)
-
(12,332)
-
12,008)
Other changes:
9
10
Transfer to create board-designated
endowment funds
Endowment net assets April 30, 2008
12,008)
$
258,050)
$
67,129)
$
61,307)
$
386,486)
The description of amounts classified as permanently restricted net assets and temporarily restricted net assets
at April 30 (in thousands):
2009)
2008)
Permanently Restricted Net Assets:
11
The portion of donor-restricted endowment funds to be held in perpetuity that are
required to be mantained either by explicit donor stipulation or by UPMIFA
$
59,514)
$
61,307)
Temporary Restricted Net Assets:
12
Term endowment funds
13
The portion of donor-restricted endowment funds to be held in perpetuity subject
to a time restriction under UPMIFA
14
With purpose restrictions
$
1,200)
$
25,720)
$
26,920)
1,200)
65,929)
$
67,129)
Funds with Deficiencies
From time to time, the fair value of the assets associated with individual restricted endowments may fall below the
level that 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 that are reported in unrestricted net assets were
$1,447,000 and $8,000 at April 30, 2009 and 2008, respectively. These deficiencies resulted from market fluctuations
that occurred shortly after the investment of new permanently restricted contributions and continued appropriation
for certain programs that was deemed prudent by the Board of Trustees.
22 | financial statements
notes to financial statements | April 30, 2009 and 2008
Return Objectives and Risk Parameters
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 has a preference for simple investment structures which will have
lower cost, easier oversight, and less complexity for internal financial management and auditing.
Strategies Employed for Achieving Objectives
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.
13. Operating Lease
The University has two leases for buildings that are used for student housing and office space. The lease for the building
used for student housing expires in 2013. The lease for the building used for office space expires in 2010 and lease
payments are at below market rates. The minimum lease payments under these agreements are as follows (in thousands):
Year ending April 30:
1
2010
$
8,800
2
2011
8,607
3
2012
8,951
4
2013
5
2,260
$
28,618
Rent expense in 2009 and 2008 was approximately $8.7 and $8.4 million, respectively.
14. Commitments
At April 30, 2009 and 2008, commitments of the University under contracts for construction of plant facilities
amounted to approximately $22.7 and $41.0 million, respectively.
Contingencies
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 litigation 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.
American University 2008–2009 | 23
notes to financial statements | April 30, 2009 and 2008
During 2002, the University was named as a defendant in several lawsuits related to claims arising from ongoing
investigation into environmental matters. These matters date back to military activities conducted on and around the
University’s campus during World War I. As of June 2007, all of the lawsuits related to this issue have been successfully
resolved, either through settlement or dismissal actions. The remediation and investigative work of the Department
of Defense is anticipated to continue through 2011.
15. Related Parties
Members of the University’s Board of Trustees and their related entities contributed approximately $2.3 million
and $3.6 million during the years ended April 30, 2009 and 2008, respectively, which is included in contribution
revenue in the accompanying statements of operations. Of this amount, approximately $1.5 million and $2.1 million
were included in pledges receivable at April 30, 2009 and 2008, respectively, in the accompanying balance sheets.
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
notes to financial statements | April 30, 2009 and 2008
University Administration
Cornelius M. Kerwin, President
Scott A. Bass, Provost
Teresa Flannery, Executive Director, University Communications and Marketing
Gail S. Hanson, Vice President of Campus Life
Mary E. Kennard, Vice President and General Counsel
Thomas J. Minar, Vice President of Development and Alumni Relations
Donald L. Myers, Vice President of Finance and Treasurer
David E. Taylor, Chief of Staff
Kay J. Mussell, Interim Senior Vice Provost and Dean of Academic Affairs
Richard M. Durand, Dean, Kogod School of Business
Louis W. Goodman, 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
Linda Bolden-Pitcher, University Registrar
William A. Mayer, University Librarian
Board of Trustees
Gary M. Abramson,* Chairman
Jeffrey A. Sine,* Vice Chair
Gina F. Adams*
Stephanie M. Bennett-Smith
Richard Beyer
Patrick Butler*
Edward R. Carr*
Jack C. Cassell*
Gary D. Cohn*
Seth D. Cutter*
Pamela M. Deese*
Jerome King Del Pino
David R. Drobis*
Marc N. Duber*
Fuad El-Hibri
Hani M. S. Farsi*
C. A. Daniel Gasby
Thomas A. Gottschalk
Gisela B. Huberman*
C. Nicholas Keating Jr.*
Cornelius M. Kerwin*
Margery Kraus*
Charles H. Lydecker*
Robyn Rafferty Mathias*
Alan L. Meltzer*
Regina L. Muehlhauser*
Arthur J. Rothkopf
Mark L. Schneider
John R. Schol
Neal A. Sharma*
Stephen Silvia
Virginia Stallings
* alumna or alumnus of American University
Produced by University Publications, American University
Suzanne Bechamps, Editor
Adrienne Frank, Sally Acharya, Mike Unger, Writers
Juana Merlo, Designer
Jeff Watts, Photographer
UP10-005
4400 Massachusetts Avenue, NW
Washington, DC 20016