ANNUAL REPORT 2011
THE MISSION OF PEPPERDINE UNIVERSITY Pepperdine is a Christian University committed to the highest standards of academic excellence and Christian values, where students are strengthened for lives of purpose, service, and leadership.
I
n a broad view, large principles, a good heart, high aims, a firm faith,
we may find some charts and a compass for our voyage. Still, as we lean over the stern of the ship and watch the swirling eddies in our wake, the most rigid and resolute of us must feel how many currents are playing their part in the movement of the vessel that bears us onwards.
—Winston Churchill
Message from the chair
T
hough many things inspire me about Pepperdine University, the students and the alumni top the
list. Bright and energetic people come to Pepperdine thoughtful, hopeful, and eager to engage the world. Through rigorous courses taught by world-class scholars and mentors and through cocurricular activities that challenge the mind, body,
By Edwin L. Biggers
and soul, students encounter a wondrous moment when they become something greater than they ever imagined. Their lives have been changed. When someone asks, “What is Pepperdine? What does it do? Why does it matter?” I respond simply and with conviction: “Pepperdine changes lives.” That may seem like a soft answer to some, but the deep and profound changes that are made in the lives of students are greatly multiplied as each student engages a competitive world filled with almost overwhelming challenges. Some emerge from Pepperdine ready to take on high-profile leadership roles while others serve quietly and behind the scenes. Either way, they serve, support, create value, and otherwise make wonderful and consequential contributions to society with conviction and integrity. Pepperdine changes the lives
of its students and, through them, the lives of many more. This mission to bring positive change to the world through waves upon waves of alumni is worthy of our support. I commend President Benton, his leadership team, and the campaign chairs of the recently launched Campaign for Pepperdine: Changing Lives, for their vision and courage to launch a bold and positive campaign in such difficult times. They could have easily chosen to defer the campaign until the return of a temperate economy; but this work could not wait for the storm clouds to clear. Pepperdine is an emerging university outperforming many older and financially stronger universities. It must continue to build momentum. That is why I am personally committed to this effort. Through this campaign, the largest in Pepperdine’s history, the University intends to complete the work of the pioneering generation that came before and to set the stage for the emerging generation of students and faculty to come. Through this campaign, Pepperdine will secure its mission and strengthen the foundation for changing the lives of tens of thousands of future Waves. The year 2011 was a milestone as we launched this historic effort to win the future for our students and the countless thousands they will serve. I am grateful to you for joining us on this journey. ď Ž
Message from the president
By Andrew K. Benton
T
here are many currents that flow through the emerging Pepperdine story. Some propel us, some hinder, some are invited, and others are not, but each shapes the journey. As I consider the first 75 years of our history, I see that it has always been so. Challenges and opportunities almost always accompany one another.
Only a generation ago George Pepperdine College was struggling to keep its doors open. With the loss of Mr. Pepperdine’s personal fortune, which had sustained operations during its early years, many doubted the college could remain open. Crisis turned to triumph as Pepperdine leaders found new currents to propel the college through uncharted waters, which resulted in university status and the move to Malibu. Thankfully, we do not face a crisis as our predecessors did, but we do live in challenging times. It has never been more important for Pepperdine to enter its future having effectively prepared for many possibilities. To start the process, in 2010, I reaffirmed five foundational goals for Pepperdine’s future in a document called Boundless Horizons. These five
goals, which we revisit in this annual report, became the basis of lively discussion and strategic planning and eventually gave rise to an exciting vision that positions Pepperdine as a preeminent, global, Christian university. Designed to meet the challenges presented in the strategic plan, the Campaign for Pepperdine was launched last May. It is my hope that this vision of our future, based on our mission, made functional through the strategic plan, and energized by the Campaign for Pepperdine, will provide the Pepperdine community all that it needs to reach new heights in the next stage of its journey. The challenge is especially great given the unyielding nature of global problems, but opportunities to meet the challenge are presenting themselves every day. Many currents propel us forward, but none more powerfully than your friendship. Thank you for your support and encouragement in the year now ending. I invite you to continue with us along this marvelous journey as Pepperdine seeks to fulfill its mission. ď Ž
Behold also the ships, which though they be so great, and are driven of fierce winds, yet are they turned about with a very small helm, whithersoever the governor listeth. — James 3:4
The Campaign for Pepperdine Beyond a worthy cause…changing lives. What an awesome time for Pepperdine University, and what an auspicious season for you to be a part of the Pepperdine family. Consider our historic milestones over the past 12 months: The academic year 2011–2012 signals 75 years since George Pepperdine opened his college at 79th and Vermont Avenue in Los Angeles. I would have loved to have been among the 2,000 gathered in the central quad of those 34 acres to witness the birth of his dream—beneath the lingering clouds of the Great Depression. The 40th year of our Malibu campus. Like the Los Angeles campus, it opened with unfinished buildings and still-wet sidewalks in 1972, but with hope and optimism for a bright and By S. Keith Hinkle Senior Vice President for Advancement and Public Affairs
bountiful future. The start of President Andrew Benton’s second decade as Pepperdine’s chief executive. Throughout his 27 years at the University—and as president since 2000—he has pursued his strategic vision for the build-out of our 830-acre Malibu campus, with the needs of students always at the heart of our efforts. The launch of the Campaign for Pepperdine, our third such initiative and largest to date, with $450 million in studentcentered priorities to change the lives of students who in turn will change the world. We are well on our way—six months into the campaign’s public phase—with more than $270 million raised and pledged to date.
Campaign Goal
These are big-picture milestones at Pepperdine, for certain. As I consider the larger landscape of higher education, our 90,000 graduates around the globe, our permanent presence on four continents, and our universe of supportive friends and potential students, I find myself contemplating Pepperdine’s place in the world and just as critically, the value—the worthiness—of our work.
$450,000,000 Raised to Date
$273,359,728 as of 11.30.11
Clearly, when we approach you and others for allegiance and support, we want to be sure that without a doubt, you understand and embrace our cause. Several years ago in the Chronicle of Higher Education, public opinion analyst Daniel Yankelovich suggested in his article, “Ferment and Change: Higher Education in 2015,” that higher education has “too many constituencies to satisfy, too many traditions, too many constraints weighing on it to lend it the flexibility—or the political will—to adapt rapidly to the outside world.”
Initiative
Goal
Raised to Date
Annual Support $48,000,000 $32,625,633
Campus Facilities $150,000,000 $70,963,613
Faculty Support and Academic Programs $170,000,000 $92,336,331
Student Support $82,000,000 $56,833,360
Challenged by that observation, I believe that Futures and Expectancies $20,600,791 Pepperdine University—at this extraordinary moment in history and with its distinctive Christian character faithfully and authentically heart of all we do; where reason and faith, and where expressed through our daily work and through the academic excellence and Christian values, reside and lives of our students and graduates—is indeed a cause thrive. Higher education remains one of the greatest worthy of your confidence. enablers of a productive and upwardly moving citizenry, Admittedly, there are times when I am a bit fearful that higher education is no longer considered a worthy cause. At Pepperdine, we strive each day to demonstrate otherwise: that ours is a university where the student, as a person of infinite dignity, is at the
especially in a languishing economy. If our will be done, we will ensure that every student—undergraduate, graduate, credential seeker, or doctoral candidate—is being prepared to pursue a purposeful life as servantminded leaders throughout the world.
The Campaign Enabling the Future
A
little more than six months ago we went live with the Campaign for Pepperdine. Nearly 1,000 of Pepperdine’s family united at LA Live to launch our grand quest to change lives, and to sustain, in the words of President Benton, “our trajectory of growth.” We set our sights on four aspirations, four guideposts, if you will, that would keep us fixed squarely on our goals. In the ensuing six months, we have been supremely encouraged by so many of you who have accepted our invitation to change lives. Let me share some of the good news that has come to Pepperdine as a result of those aspirations during the second half of 2011.
Advance Learning, Knowledge, and Scholarship
Honor God and Our Heritage of Faith
I am especially excited about the recent gifts of graduates that are helping us advance knowledge and enrich the classroom experiences of our students. Laure Sudreau-Rippe (JD ’97) is the first alumna to endow a chair at the Pepperdine School of Law. Other alumni have stepped forward in recent months to endow a chair in finance; new student scholarships in fine arts, business, and public policy; and student-serving internship programs.
From support for our Pat and Shirley Boone Center for the Family, to enabling gifts for the University’s Center for Faith and Learning and our annual Bible Lectures that bring thousands to Malibu each spring, Pepperdine has welcomed support that is helping to extend our Christian mission within and beyond our campuses.
Two sets of Pepperdine parents saw opportunities to enrich the theatre arts experience of undergraduates through scholarships and enhancements to our art studio spaces. Other generous donors have contributed to the dean’s excellence funds at our undergraduate and graduate schools.
The dedicated work of the Pepperdine Volunteer Center, Project Serve, Step Forward Day, and a host of service-learning events embraced by our students, extends Mr. Pepperdine’s ideal of “a great Christian institution of higher learning in Los Angeles that would serve the world from this cosmopolitan crossroads.”
Build Community Terry and Sharon Mullin are the namesakes of our Mullin Town Square at the center of the Malibu campus. Their dedication to building community has been realized in Phase I of this two-phase project, integrating social and academic venues that converge on the main plaza at the heart of Seaver College. Comfortable and inviting niches to sit, read, relax, study, and socialize—surrounding the iconic fountain in Joslyn Plaza—are enhanced by a shaded courtyard and a picturesque plaza classrooms terrace. Others have stepped forward to help build community through our future University events center at the top of the campus. We are heartened by early, pacesetting gifts toward the long-planned arena, destined to become the home of the Waves and major sports events, but also the venue for conferences, concerts, and commencement ceremonies. We are also thankful to donors who have begun to step forward to help us renovate and create our 21stcentury “Library of the Future,” accomplish a dramatic revitalization of our Odell McConnell Law Center, and support our intercollegiate athletic teams.
Respect Diversity and Promote Global Understanding Herbert and the late Elinor Nootbaar are among our greatest enablers of this campaign aspiration. As benefactors of the Nootbaar Institute on Law, Religion, and Ethics, their continuing gifts are transforming the lives of “the least of these” in third world countries through the work of Pepperdine law students and faculty. We are also gratified by the gifts of alumni in support of our global Waves of Service initiative, which honors Mr. Pepperdine’s mandate “to continue the widening waves of good citizenship and Christian influence” through the connected service projects of our graduates locally, nationally, and around the world.
Giving from the Inside Out
The Act of Being Generous
A wonderful testament to our mission to change lives has been demonstrated by our own Pepperdine family. Months before the campaign’s May 2011 public launch, more than 1,100 of our employees made contributions to the University.
And so, with you, we face the challenge of meeting our ambitious campaign goals, of increasing our margin of excellence, to make possible an incomparable environment for learning, living, and personal growth for our students.
The faculty/staff campaign, led by staff and faculty, encouraged outright or payroll-deduction gifts, even estate planning opportunities, and employees were permitted to donate to the University as a whole or to favorite schools, programs, or scholarships. All told, 73 percent of our own family—responsible for impacting student lives on a daily basis—has invested in the University’s future and the students we serve.
In his book, Being Generous, Theodore Malloch asks the provocative question, “How should we live?” Malloch suggests that the concept of giving selflessly to others lies at the heart of what it means to be a thoughtful and moral human being. Pepperdine has its own compass point to answer Malloch’s question. It is found in the motto in scripture, chosen by our founder, to define his hopes for all who would study and teach at his college. In “Freely ye receive, freely give,” we find our calling, our worthiness, to positively change the life of each student in ways that are deep, wide, and everlasting. All of us at Pepperdine are grateful for your partnership—and your enabling gifts—toward our worthy cause.
Volunteer Chairs
Campaign Leadership Team
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.
S. Keith Hinkle Louis Drobnick John Miller Claudia Arnold Preston Stephanie Buckley Ronald Phillips Sara Jackson Michael Warder Thomas Caldwell Cynthia Ware Deirdre Shipstead Christine Bishop Sheila King Giuseppe Nespoli Nicole Ashby Heidi Bernard Karin Taylor Kimberly Barkis Curt Portzel Dawn Pettersen Mathew MacDonell Kay Rosen Greg Cornell Samuel Lagana Wesley Patterson Not pictured: Kelly Herman and Stacy Taylor
Marylyn M. Warren (’58)
Glen Holden
Senior Vice President, Retired eHarmony.com Member, Board of Regents
Former Ambassador to Jamaica Member, Board of Regents
21
20
19
16
15
9
25
24
23
10
11
22 17
18
12
2 3
8
4 1
14
13
5
6
7
Darryl L. Tippens Provost and Chief Academic Officer ippens has been a literary scholar, instructor, and T professor for over 30 years. As chief academic officer, he provides overall direction and leadership to the academic programs in each of the University’s five schools. During his 11 years as provost, Tippens has been a steady voice for the essential and historic link between scholarship and faith. Under his guidance, Pepperdine’s commitment to teaching and research, as well as the formation of new programs and centers, have increased significantly.
Senior Administration The senior administration and deans of Pepperdine humbly serve the University with knowledge, skill, and dedication to its mission. Pepperdine’s many longstanding leaders hold the institution to a sure and steady course, while new faces infuse the school with fresh energy and perspective.
Gary A. Hanson Executive Vice President and Chief Operating Officer Hanson’s responsibilities encompass broad operational, financial, budgeting, legal, regulatory, governmental, human resources, construction and campus physical planning, physical plant, administrative, and related duties. He also serves as the University’s assistant corporate secretary and as a director of its U.K. Charity Corporation and Argentine Foundation. A magna cum laude graduate of the University of Utah, Hanson received his JD from Pepperdine University School of Law in 1980.
Charles J. (Jeff) Pippin Senior Vice President for Investments and Chief Investment Officer
Andrew K. Benton President and Chief Executive Officer Benton has served Pepperdine as the chief executive officer since 2000. Prior to this role, he held the position of executive vice president for over nine years. Benton teaches courses within the University on a regular basis and is deeply involved in the lives of students. He is active in many legal, educational, athletic, and community organizations, including the National Association of Independent Colleges and Universities, and the American Council on Education, for which he chaired the board of directors 2008–2009.
Pippin, who focuses his full attention on Pepperdine’s investments, is responsible for the management of the University’s endowment, general reserves, treasury, trust and annuities, and real estate. His work with the investment committee within the Board of Regents offers a unique opportunity for the growth and strengthening of Pepperdine’s financial future. A CPA (license currently inactive) with extensive experience in finance, Pippin came to Pepperdine in 1981, was appointed chief financial officer in 1991, and named vice president in 2000.
S. Keith Hinkle Senior Vice President for Advancement and Public Affairs and Chief Development Officer
s a CPA (license currently inactive) and A attorney, Hinkle spent several years in public accounting and practicing law. He is a 1997 alumnus of the School of Law and returned to Pepperdine in 2000 as director for the Center for Estate and Gift Planning. Hinkle oversees fundraising, alumni affairs, and public affairs. He also serves on the board of the Los Angeles Chamber of Commerce and the Ventura County Economic Development Association.
academic deans This year Pepperdine was excited to welcome a new dean to the School of Law: distinguished jurist Deanell Reece Tacha, who served for more than 25 years as a circuit judge on the United States Court of Appeals for the 10th Circuit. Also reaching an important milestone was School of Public Policy dean James R. Wilburn, who celebrated 40 remarkable years at Pepperdine this spring. Linda A. Livingstone
Deanell Reece Tacha
Dean, Graziadio School of Business and Management
Dean, School of Law
Livingstone has served as dean of the Graziadio School of Business and Management since 2002. During her tenure the school has increased international partnerships to over 35 worldwide; established the E2B (Education to Business) Live Case Program; launched the Dean’s Executive Leadership Series; added degree programs in applied finance, entrepreneurship, global business, and management and leadership; and added a certificate in Social, Environmental, and Ethical Responsibility (SEER).
acha was named the Duane and Kelly T Roberts Dean of the School of Law in 2011. She has been a circuit judge, U.S. Court of Appeals for the 10th Circuit, since January 1986. She served as chief judge from January 2001 through 2007. Tacha previously served in numerous academic capacities at the University of Kansas and practiced law in Washington, D.C. She has represented the judiciary of the United States internationally on several occasions.
Rick R. Marrs
Margaret J. Weber
Dean, Seaver College of Letters, Arts, and Sciences
Dean, Graduate School of Education and Psychology
A member of the Pepperdine Religion Division faculty since 1987, Marrs was named dean of Seaver College in 2008. He served as the Blanche E. Seaver Professor of Religion from 2001 to 2006. Marrs is regarded as an exceptional scholar of the Old Testament and the literature of the ancient Near East with knowledge of Hebrew, Aramaic, Syriac, Phoenician, and Ugaritic, and in the study of the Dead Sea Scrolls.
Dean of GSEP for 10 years, Weber has published work on the socialization of graduate students and faculty development. Under her leadership, GSEP launched its Urban Initiative program in 2006. She serves as director for GSEP’s newest master’s program, the master of arts in social entrepreneurship and change, which responds to leading with purpose through service. Weber’s current research focuses on The Women’s Project: Work-Life Balance, which takes a global view of women and leadership.
Mark S. Roosa
James R. Wilburn
Dean of Libraries
Dean, School of Public Policy
Dean of Pepperdine’s libraries since 2004, Roosa directs libraries on the Malibu campus and throughout the Los Angeles area, leading their efforts to provide seamless access to both print and digital resources essential for learning, teaching, and research. Prior to joining Pepperdine, Roosa served as director for preservation at the Library of Congress in Washington, D.C., and chief conservation officer at the Huntington Library, Art Collections, and Botanical Gardens in San Marino, California.
Wilburn is the founding dean of the School of Public Policy, which was launched in 1996. He is the author of several books on American history, business management, and leadership. Having served as cochair of the U.S. Committee to Assist Russian Reform, he is widely considered an expert on the subject. Throughout his four decades at Pepperdine, Wilburn has served in several leadership roles including provost, dean of the business school, and vice president for University Affairs.
I find the great thing in this world is not so much where we stand, as in what direction we are moving: To reach the port of heaven, we must sail sometimes with the wind and sometimes against it—but we must sail, and not drift, nor lie at anchor. —Oliver Wendell Holmes
Message from the Chief Financial Officer
I
f I had to sum up the feelings I have when I review the financial results of fiscal 2011 in one word—that word would be “hopeful.”
Following two very challenging years in the history of Pepperdine University, I am breathing a small sigh of relief. In the wake of the financial crisis, and now the California state budget crisis, many of my colleagues at other universities—especially those at publicly funded institutions—have not resumed breathing at all.
By Paul B. Lasiter, CPA Vice President and Chief Financial Officer
Whereas we took decisive action two years ago to internally reallocate funds to improve operating efficiency and institutional liquidity, many others have only recently begun to take such actions, by either dramatically reducing operating budgets or significantly increasing costs to their students. While I can certainly empathize with those who are currently grappling with these challenges, I must say that I am pleased that Pepperdine University decisively dealt with those same challenges two years ago and is now uniquely positioned to make significant improvements in the quality of service we afford our students. The financial position of the University has gained strength from a year ago, with net assets and unrestricted net assets increasing to $1 billion and $576 million, respectively. The primary driver of
PEPPERDINE UNIVERSITY Consolidated Statements of Financial Position At July 31, 2011 and 2010 (in thousands) ASSETS 2011 Cash and cash equivalents......................................................
$ 50,172
2010 $ 54,479
Student receivables, less allowance for doubtful accounts of $1,374 and $1,418, respectively........ 1,838 2,997 Other accounts receivable...................................................... 4,822 7,660 Student loans, less allowance for loan losses of $1,697 and $1,632, respectively................... 24,513 25,960 Contributions receivable, net.................................................. 27,752 37,644 Prepaid expenses, inventories, and other assets....................... 5,459 5,905 Investments........................................................................... 779,682 691,075 Assets held as trustee or agent................................................ 121,656 111,185 Property, facilities, and equipment, net...................................
346,678
345,898
Total assets........................................................................
$1,362,572
$1,282,803
$ 23,801
$ 28,934
LIABILITIES AND NET ASSETS
Liabilities: Accounts payable and accrued liabilities.............................
Accrued salaries and wages................................................ 3,216 3,099 Student deposits, advance payments, and deferred revenue........................................................... 8,613 9,916 U.S. government-funded student loans............................... 14,685 14,393 Trust and agency obligations.............................................. 72,198 70,771 Long-term obligations........................................................
226,978
227,172
Total liabilities...............................................................
349,491
354,285
Net assets: Unrestricted....................................................................... 575,703 521,281 Temporarily restricted........................................................ 132,378 119,064 Permanently restricted.......................................................
305,000
288,173
Total net assets..............................................................
$1,013,081
928,518
Total liabilities and net assets.........................................
$1,362,572
$1,282,803
For the year ended July 31, 2011 membership development
Net student tuition sales and services and fees other revenue government grants
fundraising
endowment support
private gifts and grants
management and general net student tuition and fees
auxiliary enterprises
public service
room and board
REVENUES
the growth in net assets came from both improved investment results, principally from endowment funds, as well as positive operating performance. During fiscal 2011, the University’s endowment funds increased $58 million, or 10 percent from one year ago, to total $623 million. It is important to note that this is the increase after accounting for appropriations of endowment support totaling nearly $32 million to fund operating costs and student aid. Many financial analysts look to endowment value as one of the key measures of a university’s financial strength. Generally, I am not concerned about the value of our endowment at any single point in time, but more concerned with the ability of our endowment to
instruction and research
student services
academic support
EXPENSES
meet the payout requirement we’ve budgeted in any given year. With that in mind, the liquidity position of our endowment is very good and has never caused me to question the receipt of our budgeted annual endowment support. The investment policy of our endowment allows management to achieve superior long-term returns with a reduced risk profile while at the same time allowing for tactical asset shifts to adapt to changing market conditions. At the present time, we are expecting endowment support to remain relatively constant in the short term since the University distributes endowment support based on a five-year moving average of endowment value multiplied by a five percent payout rate. As mentioned before, endowment support totaled
PEPPERDINE UNIVERSITY Consolidated Statement of Financial Position For the year ended July 31, 2011 (in thousands) Unrestricted
Temporarily Restricted
Permanently Restricted
Total
REVENUES Student tuition and fees................................................... $ 264,767 $ Less student aid..............................................................
– $
– $ 264,767
$ (80,214) $ – $ – $ (80,214)
Net student tuition and fees............................................ 184,553
– 184,553
Room and board.............................................................. 31,821
– 31,821
Private gifts and grants.................................................... 13,622 5,519 8,644 27,785 Endowment support........................................................ 31,377
197
263 31,837
Government grants......................................................... 3,602
6 3,608
Sales and services............................................................ 6,800
– 6,800
Other revenue................................................................ 3,953 956 409 5,318 Net assets released from restriction.........................
$ 3,529 $ (3,184) $ (345) $ –
Total revenues........................................................
$ 279,257 $ 3,494 $ 8,971 $ 291,722
EXPENSES Instruction and research.................................................. 82,314
–
– 82,314
Academic support........................................................... 48,055
–
– 48,055
Student services.............................................................. 46,590
–
– 46,590
Public service.................................................................. 14,895
–
– 14,895
Auxiliary enterprises........................................................ 19,802
–
– 19,802
Management and general................................................ 48,637
–
– 48,637
Membership development............................................... 1,989
–
– 1,989
Fundraising.....................................................................
$ 7,699 $ – $ – $ 7,699
Total expenses........................................................
$ 269,981 $ – $ – $ 269,981
Change in net assets before non-operating revenues and expenses........................................... 9,276 3,494 8,971 21,741
NON-OPERATING REVENUES AND EXPENSES
Adjustment of actuarial liability.......................................
–
3,113
1,386
4,499
Investment income: Dividends................................................................... 7,602 2,306
17 9,925
Interest....................................................................... 1,206
4
85 1,295
Other......................................................................... 6,956
56
– 7,012
Investment expenses....................................................... (2,991) (932)
– (3,923)
Net realized and unrealized investment gains.................. 32,367 9,253 9,528 51,148 Other.............................................................................. Total non-operating revenues and expenses.................
$
6 $ (3,980) $ (3,160) $ (7,134)
$ 45,146 $ 9,820 $ 7,856 $ 62,822
Change in net assets........................................................ 54,422 13,314 16,827 84,563 Net assets at beginning of year................................
$ 521,281 $ 119,064 $ 288,173 $ 928,518
Net assets at end of year.........................................
$ 575,703 $ 132,378 $ 305,000 $ 1,013,081
$1,000,000 $800,000 $600,000 (in thousands)
(in thousands)
$1,500,000 $400,000
$800,000 $700,000
$200,000 $1,200,000 $600,000
2006
$500,000
$900,000
2007
2008
2009
2010
2011
0
Net Assets
$400,000 $600,000
$300,000 $200,000
$300,000
$100,000 2006
2007
2008
2009
2010
2006
2011
2007
2008
2009
2010
2011
0
0
Endowment Assets
$32 million in fiscal 2011, or approximately 12 percent of total expenses. The relatively low level of support for operations provided by our endowment has been advantageous in the midst of the challenging investment environment we have faced recently since we are less dependent on endowment support to fund operations than many other universities. The University’s liquidity position remains strong and continues to improve through positive operating results, and increases in investment values. Investments in property, facilities, and equipment have moderated over the past year, although we are keenly aware of the ongoing needs to improve the places that our students live, study, and work. To that end, future investments in facilities will continue, and are expected to be funded through the use of existing reserve funds and gifts from friends and alumni. The operating leverage of the University remains conservative with our long-term debt-to-total capitalization ratio standing at 18 percent at the
(in th
Total Assets
end of fiscal 2011. The University’s debt structure consists entirely of fixed-rate debt, with the majority of maturities scheduled to occur in more than 23 years. The only sizeable exception to that general statement (in thousands) relates to the scheduled maturity of $50 million in $800,000 taxable bonds due in 2019. The current level of $700,000 asset reserves is sufficient to make all scheduled general principal payments through 2033. $600,000 The University’s results from operations remained $500,000 strong in fiscal 2011, primarily as a result of our $400,000 students’ support and the generosity of our alumni $300,000 and friends, as well as to significant returns from our investment portfolio. $200,000 $100,000 Net tuition revenues increased four percent or 2006 2007 2008 2009 2010 2011 $7 million to total $185 million in fiscal 2011. 0 From a student’s perspective, net tuition and fee Endowment Assets revenues amounted to $30,100 per full-time-equivalent student in fiscal 2011, while at the same time, expenses that directly affect each student’s experience, such as instruction, research, academic support, and
$1,2
$1,0
$8
$6
$4
$2
(in thousands)
$1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 2006
2007
2008
2009
2010
2011
0
Net Assets
student services, amounted to $28,865 per full-timeequivalent student, or approximately 96 percent of each net tuition and fee dollar paid. Net tuition and fees combined with room and board revenues totaled $216 million in fiscal 2011, or approximately 74 percent of total revenues. Strong demand for the vast majority of our academic offerings, in light of this relatively high level of student-related revenues has provided the University with a stable source of cash to fund operations. Private gift and grant revenues remained strong, but decreased 26 percent to $28 million due to a larger balance of gifts received through deferred-giving arrangements. It is vitally important to the future of the University that we maintain and sustain a high level of private gift and grant revenues to both increase the value of our endowment and support current operations. We continue to need the support of our alumni and friends, since the need for additional student financial aid continues to be a key concern.
During the course of the past two fiscal years, we took decisive steps to reallocate operating costs to help fund increased levels of student aid. In fiscal 2011, growth in student aid stabilized, and we dedicated increased resources to support other operating activities. As a result, student aid increased one percent and total operating expenses increased by six percent. Despite the recent growth in expenses, we continue to retain annual operating reserves that can be used to shore up any declines in future endowment support, fund more student aid should that need arise, make strategic investments in research and instruction, or to improve the quality of the student learning experience through reduced enrollment requirements. Despite the inevitable financial challenges we face each day, I feel incredibly blessed to be working here at Pepperdine University. God has certainly kept his face shining upon this special place in the midst of very turbulent times. I pray that He continues to give us all peace, and that each of us who serves here passes on His grace to our students through all that we do. ď Ž
Board of Regents The 40-member Board of Regents is the legal governing body and chief policy board of the University. Life Regents are recognized and honored for their extraordinary service as past regents. The University administration, working in tandem with the governing and advisory boards, shapes the direction of the University. The guidance provided by these distinguished and committed men and women is greatly valued.
Edwin L. Biggers C hair President (Retired), Hughes Missile Group
ice Chair James R. Porter V Principal, Porter Capital Partners Secretary Susan F. Rice Principal Consultant, SFR Consulting
Frederick L. Ricker Assistant Secretary Vice President and Deputy General Manager Advanced Programs and Technology Northrop Grumman Aerospace Systems William S. Banowsky President Emeritus, Pepperdine University
Andrew K. Benton President, Pepperdine University Sheila K. Bost Individual, Marital, and Child Psychotherapist Charles L. Branch Professor of Neurosurgery Wake Forest University Health Center Dale A. Brown Principal, Moriah Group Petroleum Strategies Janice R. Brown Circuit Court Judge, United States Court of Appeals for the D.C. Circuit Jose A. Collazo Vice Chair and President, Form I-9 Compliance, LLC Jerry S. Cox President, Cox & Perkins Exploration, Inc.
W. L. Fletcher III Co-Owner, Park Centre Properties, LLC
Terry M. Giles President and Owner, Giles Enterprises
Michelle R. Hiepler Partner, Law Offices of Hiepler & Hiepler
Glen A. Holden United States Ambassador (Retired) Managing Partner, The Holden Company
Gail E. Hopkins Orthopaedic Surgeon, Hinsdale Orthopaedic Associates
John D. Katch District Manager (Retired), Southern California Edison Company
Mark A. Kirk Partner (Retired), Linsalata Capital Partners Dennis S. Lewis President and Owner, WorldTravelService Eff W. Martin Managing Director (Retired), Goldman Sachs & Company
Life Regents
Michael T. Okabayashi Partner, Ernst & Young
Joe R. Barnett
Lodwrick M. Cook
Danny Phillips Investments/Ranching
Timothy C. Phillips Chief Executive Officer, Phillips and Company
Russell L. Ray, Jr. Airline and Aerospace Companies Executive (Retired) Carol Richards B. Joseph Rokus Vice Chair, Consolidated Container Company P. Bui Simon President, Angels Wings Foundation International
Robert R. Dockson Hari N. Harilela Jerry E. Hudson Jerve M. Jones Rosemary Raitt Charles B. Runnels Richard M. Scaife
Harold R. Smethills Managing Director, Sterling Ranch, LLC
William R. Waugh
Rosa Mercado Spivey Physician, Medical Director, LAUSD
J. McDonald Williams
William W. Stevens Chair of the Board (Retired), Triad Systems Corporation Stephen M. Stewart President, Stewart Brothers Drilling Company Augustus Tagliaferri Chair and President Financial Structures, Inc.
Marta B. Tooma Dentist Thomas J. Trimble Senior Vice President/General Counsel and Corporate Secretary (Retired), Southwest Gas Corporation Robert L. Walker Senior Executive for Development Texas A&M University
Marylyn M. Warren Senior Vice President (Retired), eHarmony.com
Edward V. Yang Chair and President, U.S. Business Group iSoftstone, Inc.
Helen M. Young
Annual Report 2011 University Board The University Board is a national advisory group that provides additional guidance and leadership. Pat Boone Chair William Ahmanson, Jr. Robert Barbera Thomas J. Barrack, Jr. Nabil Barsoum William W. Beazley
Ian R. Linde Seiji Masuda Takuji Masuda Gregory R. McClintock Warren R. Merrill E. Chadwick Mooney
Paul F. Bennett
Velma V. Morrison
Andrew K. Benton
William S. Mortensen
A. Ronald Berryman
Kenneth Mosbey
Viggo Butler
Aaron Norris
Rod Campbell
Stephen E. Olson
Peter Chung
John D. Ratzenberger
Manuel Del Arroz
Kelly Roberts
K. Duane Denney
Charles B. Runnels
Robert E. “Bob” Dudley
Paul Saber
Maureen Duffy-Lewis
Margaret Sheppard
Mark W. Dundee
Eric Small
David G. Elmore
Lisa Smith
Alex Fortunati
Richard L. Stack
Hank Frazee
William G. Stephens
G. Louis Graziadio III
Dorothy B. Straus
Bart M. Hackley, Jr.
Terralynn Walters Swift
Michael A. Hammer
George Thomas
Mary Heckmann
Robert A. Virtue
Bruce Herschensohn
Ellen Weitman
Robert W. P. Holstrom
Jay Welker
Peter James Johnson
Larry L. Westfall
M. Lawrence Lallande
Jeremy N. White
Carl J. Lambert
Gary L. Wilcox
Stephen Lehman
Griffith J. Williams
Deanne Lewis
Judy Zierick
Statement of Affirmation Pepperdine University Affirms
That God is That God is revealed uniquely in Christ Th at the educational process may not, with impunity, be divorced from the divine process Th at the student, as a person of infinite dignity, is the heart of the educational enterprise Th at the quality of student life is a valid concern of the University Th at truth, having nothing to fear from investigation, should be pursued relentlessly in every discipline Th at spiritual commitment, tolerating no excuse for mediocrity, demands the highest standards of academic excellence Th at freedom, whether spiritual, intellectual, or economic, is indivisible
PA1107023
That knowledge calls, ultimately, for a life of service.
www.pepperdine.edu