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The University Foundation

California State University, Chico

Annual Update, 2011–2012

The University FoundationCalifornia State University, ChicoAnnual Update, 2011–2012

TABLE OF CONTENTS

Introduction 1

Letter From the Secretary 2

Changing Lives 3

Philanthropic Overview 6

Investments 7

Endowed Investment Allocation 8

Independent Auditor’s Report 9

Statement of Financial Position 10

Summary of Revenues 11

Summary of Expenses 12

The University Foundation Annual Update 2011-2012

Robert Kittredge, Chair Retired Managing Partner, PricewaterhouseCooper

Doug Guerrero, Vice Chair Retired Regional Vice President West Region, CEMEX

Richard Ellison, Secretary Vice President for University Advancement

Lori Hoffman, Treasurer Vice President for Business and Finance

Richard Matson, Past Chair Richard Matson Law Office

Robert Alber Senior Associate Vice President for University Advancement

Drew Calandrella Vice President for Student Affairs

Sandra Flake Provost and Vice President for Academic Affairs

Mark Francis President and CEO, Golden Valley Bank

Evelyn Jacobs Regional President, U.S. Bank

Gregory Kelly Chief Executive Officer, California Olive Ranch

Tod Kimmelshue Regional Vice President, Northern California Farm Credit

JoAnn Morgan Past President, Turner Print Museum Board

James O’Bannon Faculty Representative

Michael Prime Retired Founder, Option Care

Paul Zingg President

Board of GovernorsJuly 1, 2011—June 30, 2012

The University Foundation Annual Update 2011-2012 1

Founded in 1940, The University Foundation is dedicated to supporting California State University, Chico’s mission as a comprehensive, regional university principally serving Northern California by leveraging private support for excellence in instruction, research, and public service.

CSU, Chico is renowned for its “Chico Experience” that provides a wonderful college-town atmosphere, a friendly campus, a strong sense of community, distinctive and innovative programs, superior academic technologies, exceptional levels of student support, and contributions to the community and the environment. These enhance student learning and student success. Supporting The Chico Experience for students, faculty, and staff is at the forefront of every initiative, decision, and activity undertaken by The University Foundation’s Board of Governors.

The University Foundation supports the University’s mission by providing oversight of the following activities:

• Engaging private support for academic programs, faculty and students, equipment, and other capitalneeds.

• StewardingtheresourcesentrustedtoTheUniversityFoundationtomaximizeimpactonpeopleand programs.

• Partnering with University Advancement to support our alumni, friends, and community memberswhoare prospective donors; to ensure proper recognition and stewardship for all donors; andtoserveasambassadorstoallexternalconstituents,representingTheChicoExperienceandtelling thestoryofChicoState’simpact.

Through the partnership of the University Foundation’s Board of Governors and University Advancement, as of June 30, 2012, The Foundation’s net assets were nearly $60 million. This is a testament to the loyalty, generosity, and dedication of our many supporters.

Introduction


Greetings from CSU, Chico, where 2012 represented a milestone in Chico State’s history—our 125th anniversary! It was a spectacular year as we reflected on our past and considered our future as an institution of distinction serving the North State. This year’s Foundation annual update provides our alumni and friends with a snapshot of Chico State’s philanthropic support and the impact these gifts make in continuing to transform our university and students. This is also an opportunity to share with you the financial stewardship of these gifts on behalf of the campus.

The University Foundation is an essential partner in the advancement of Chico State and our commitment to learning, sustainability, and service to the region. In 2011–2012, The Foundation distributed more than $4 million in funding for student grants, scholarships, instruction, research, and public service. This would not have been possible without the generous support of more than 14,000 individual alumni, parents, and friends, whose gifts and pledges exceeded $7.5 million. Our ability to leverage this support represents the strong connection our alumni and friends have with this institution. Together, we enrich the lives of our students, and as partners, we will continue building a solid foundation for the generations to come.

In celebration of our 125th anniversary, Chico State sought to highlight the interconnectedness of our campus, community, and alumni; enhance our tradition of service; and affirm the legacy from where we began. Many of you helped plan and coordinate events in honor of this milestone. These events included the Chico State 125 Expo in April, attended by over 2,000 alumni, friends, and community members; the My Service Counts yearlong service challenge resulting in over 170,000 hours of community service; and the recognition ceremony of more than 30 years of student achievement through the Lt. Robert Merton Rawlins Merit Awards. I invite you to visit our 125th anniversary website at www.csuchico.edu/125 to see how our traditions are shaping our students.

Thank you for all you do to support Chico State–together, we are changing lives.

Richard E. Ellison, Secretary The University Foundation California State University, Chico

Letter From The Secretary


ENRICHING THE STUDENT EXPERIENCEPrivatesupporthasallowedourcampustorecruitandrewardexemplarystudentsandprovidesupporttohelpretainstudentscommittedtolearning,bothinandoutoftheclassroom.

Campus ScholarshipsNearly 900 students received Chico State scholarships in 2011–2012, totaling more than $2 million. These scholarships provide opportunities for students to focus on academics and more fully participate in campus life. Individual scholarship awards range from $100 to $10,000 per academic year.

Recognizing Student Achievement and ServiceEighteen students with major achievements in the classroom and community were recognized at the 31st annual Lt. Robert Merton Rawlins Merit Award Reception in October 2012. This year marked a milestone as the award has given approximately $1 million in scholarships to more than 900 Chico State students.

Kelli Wildman is one of this year’s recipients, nominated by mechanical and mechatronic engineering professor Ramesh Varahamurti. Wildman is a mechatronic engineering student and a member of Phi Theta Kappa honor society and Society of Women Engineers, and she has served as president of the American Institute of Mechatronic Engineers at CSU, Chico. “Kelli is an extremely driven student who is able to manage school, work, and extracurricular club activities while maintaining over a 3.7 GPA,” said Varahamurti.

The Lt. Robert Merton Rawlins Merit Award is one of the largest, oldest, and most prestigious scholarship programs in the history of the University. It is named in honor of Lt. Robert Merton Rawlins, who died piloting a B-29 over Tokyo Bay during World War II. Mrs. Fern Rawlins had three sons who served in World War II and one, Robert, who did not return. Wishing to leave a legacy in the name of her son, she established the Lt. Robert Merton Rawlins Merit Award endowment in 1981 to honor him.

Faculty members nominate students, and recipients are selected on the basis of scholarship, involvement in extracurricular activities, and professionally related and academic accomplishments. Those selected receive $3,000 to support their education.

Creating Today’s Scientists for TomorrowNow in its 17th year, the Floyd L. English Natural Sciences Scholarship has awarded $850,000 in scholarships to math and science majors who show great promise in their chosen field of study. Dr. English, the first phys-ics major to graduate from Chico State as well as The College of Natural Sciences’ first distinguished alumnus, founded the scholarship in collaboration with former dean Roger Lederer.

Triple major Sam Mish (mechatronic engineering, mathematics, and physics) received a $5,000 Floyd L. Eng-lish Scholarship for 2011–2012 and is the first CSU student to be selected for a summer internship at Sandia National Laboratories, working with the Computer Science Research Institute faculty and writing software for computer simulations. Mish also won third place in the Institute of Electrical and Electronic Engineers Micromouse Competition in 2011 and a Provost’s Undergraduate Award for Research and Creativity in 2010.

Changing Lives – PhilanthropicSupporttoOurCampusandCommunity


Hall of Famer Honors Former Soccer CoachAs a member of Coach Don Batie’s 1972–1975 soccer teams, Matt O’Sullivan helped the Chico State Wildcats reach their first-ever Final Four Division II Championship. As a “Soccercat,” O’Sullivan was voted MVP his senior year and selected All-Tournament to the prestigious Chico Invitational in every year that he played. He also earned All-Conference three years, as well as All-Region and All-American his junior and senior years. O’Sullivan represented the United States on the Olympic soccer team in 1974 and 1975. After graduating from Chico State, O’Sullivan went on to a very successful, nine-year professional soccer career, playing for the Seattle Sounders, the Houston Hurricane, and the Memphis Americans.

This year, O’Sullivan became another kind of MVP—an alumnus who is giving back. To honor his former coach, he made a gift of $50,000 to the Don and Merle Batie Soccer Scholarship, an endowed scholarship benefiting student athletes on the soccer team, as well as giving $50,000 to support the soccer program.

FACULTY INNOVATION, CREATIVITY, AND TEACHING Engaging the support of individuals, foundations, and corporations provides our University the additionalsupporttochallengetheboundariesofconventionalinstruction,addressthefutureneedsofourregion,andrecruitandretainhighlyspecializedfaculty.

Student Wellness: Exercising the Brain and the BodyFunded by an anonymous donor in the amount of nearly $55,000, The Harlem Project is a research-based program aimed at helping schools boost students’ academic performance with quality physical education classes and activity breaks throughout the day. While on sabbatical during fall 2011, Dr. Cathrine Himberg, professor of kinesiology, worked with teachers and administrators at The Children’s Storefront School in Harlem, New York, to transform physical education and implement a comprehensive school wellness program. All of the students are from under-represented groups and live at or below the poverty line. The head of school, Wendy Reynoso, read the book SPARK:TheRevolutionaryNewScienceofExerciseandtheBrain(2008) and agreed to allow her school to serve as the site for this model, scalable program. Utilizing new equipment and additional staff, Dr. Himberg led the school in implementing physical activity throughout the school day. Students were offered lots of choices of physical activities before, during, and after school, and they took energizing “brain-breaks” every 20 to 30 minutes in their classrooms. Staff participated in wellness training, and the school’s nutrition program, which was already good, was examined and improved. The students’ families also were included in a variety of creative ways. Most importantly, the school now has its first high-quality, standards- and research-based physical education program. Dr. John Roussell, professor in communication design, created a documentary of the project.

Manufacturing: Good for People, Good for the EnvironmentTool Technology Distributors made a gift of over $50,000 in equipment and funds to support laboratory research in sustainable manufacturing. Under the direction of program coordinator Daren Otten, sustainable manufacturing is an integrated field of study that combines technical feasibility with environmental responsibility and economic viability. It is a practical, applications-oriented, hands-on program that prepares students for a variety of manufacturing careers ranging from management of manufacturing facilities to research and development to technical sales. Students gain real-world experience in evaluating options in a global context that minimizes the impact of manufacturing activities on people, the environment, and resources while understanding the underlying economics of producing goods.


Living Laboratory Along the Sacramento RiverKristina Schierenbeck, professor in biological sciences, received $24,226 from the Nature Conservancy for the first year of a two-year project to look at historical and contemporary gene flow between a cultivated hybrid and native Platanus species (sycamore) along the Sacramento River. Dr. Schierenbeck’s research interests are in the areas of plant hybridization, plant evolution, and invasive species. She teaches courses in Evolution, Plant Systematics, and Advanced Systematics.

CREATING CULTURAL AND EDUCATIONAL OPPORTUNITIES FOR OUR COMMUNITY ChicoStatehasa long traditionof enriching the livesofNorthState residents. Servinga region roughly thesizeofthestateofOhio,wepartnerwithindividualsfromtheOregonbordertoYubaCitytohelpusprovidearts,entertainment,andeducationalprogramsthatextendfarbeyondourcampus.Thispartnershipprovidesour regionwithapublic radiostation,world-class liveperformances forallages,andanoutdooreducationprogram,tonameafew.

Giving Voice to the North StateServing Chico and the Northern California area, Northstate Public Radio, known locally as KCHO (FM 91.7) and KFPR (FM 88.9), is an affiliate of National Public Radio, Public Radio International, and California Public Radio. A diverse cross section of nationally, regionally, and locally produced programs supported by station listeners is broadcast daily. Programs such as AllThingsConsidered,MorningEdition,FreshAir,CarTalk,PrairieHomeCompanion,andI-5Live, plusTheShastaSerenade, and classical, jazz, and folk music can be heard throughout the station’s coverage area. Over 3,200 donors provided support of nearly $400,000 this year for Northstate Public Radio and its programming.

Showing and Telling Stories of HumankindA hands-on laboratory for the Museum Studies Program, the Valene L. Smith Museum of Anthropology trains students to become museum professionals. Each semester, students plan, build, and install a museum exhibit that is featured during the spring semester. This year’s exhibit, “Coming Home: Ishi’s Long Journey,” coincided with the 100th anniversary of Ishi’s journey out of the Yahi wilderness into modern civilization. Each year, the museum welcomes 4,000 school-age children to view its exhibits and experience its unique programs. Funded in perpetuity through a legacy gift of almost $3 million by Professor Emerita Valene L. Smith, the museum attracted valuable gifts to its collection this year, including a gift of Native American basketry from the estate of Dorothy Hill and a collection of Panamanian, pre-Columbian pots from Nancy Green. Ongoing special events include Night at the Museum for children ages 5–11, World Explorations Lectures on Sunday afternoons, and summer camp during the month of July.

Taking the Class Out of the ClassroomThe Outdoor Classroom Program at the 4,000-acre Big Chico Creek Ecological Reserve is a collaborative project involving its staff, Chico State students, Altacal Audubon Society, and numerous volunteers. Interns and graduate students from the University assist with teaching, curriculum development, pre-field trip classroom teaching, and post-field trip assessments. Students learn lessons ranging from bird banding to turtle ecology to native grass restoration while surrounded by the many unique ecosystems that comprise the reserve. This year, in addition to attracting almost $40,000 in support from local individuals and corporations, the reserve also attracted an anonymous testamentary commitment of $600,000.


Philanthropic Overview

We have our alumni, parents, and friends to thank for investing in the future of Chico State. These individuals understood the challenges our campus faced with state budget cuts and the economic hardship our students and their families were experiencing. Together, their gifts and pledges provided $7.5 million in support to our campus—an increase of 14 percent.

In 2011–12, more than 14,000 individuals, corporations, and foundations made nearly 25,000 gifts to our campus. Thanks in part to the 7,199 alumni donors, giving remained stable during these challenging times. Chico State’s alumni and parents were among the most generous in the CSU system.

Sources of Support$7.5 Million

Alumni 24%

Parents 4%Other Organizations 6%

Foundations 10%

Corporations 33%

Friends 23%

Donors

15

12

9

6

2009-10 2010-11 2011-12

Thousands

Philanthropic Highlights

Donor Gifts and Pledges $7,564,497

Total Individual Donors 14,075

Total Endowment $42,174,342

Total Net Assets $59,890,686

2010-112009-102008-09

Pledges

Current Gifts

Gifts and Pledges

2009-10 2010-11 2011-12

$8

$6

$4

$2

Millions


Total Endowment ValuationThe University Foundation’s assets include pooled and external endowment funds totaling $42.2 million as of June 30, 2012. The pooled endowment valued at $34 million is managed by The University Foundation’s Board of Governors through its Finance and Investment Committee and under the advisement of Arnerich Massena, Inc. The balance of the endowment’s assets are held externally; they include commercial real estate, government bonds, and other investments.

The Foundation’s investment portfolio is designed to deliver a long-term rate of return to support student scholarships, academic instruction, program support, research, and public service projects. The assets are invested in a well-diversified investment portfolio that balances risk and return while limiting volatility. Over the past 10 years, the endowment value has doubled due to generous donor support and prudent investing practices.

Arnerich Massena, Inc. is a West Coast-based independent investment advisory firm that offers services to corporations, institutions, state and local governments, charitable organizations, trusts and estates, corporate pension and profit sharing plans, and private clients. Arnerich Massena, Inc. advises to approximately $17 billion in assets.

$45

$40

$35

$30

$25

$20

$15

$10

$5

$0

Endowment Market Value10–YEAR PERIOD

Millions

2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12

Investments


Endowment Investment AllocationThe Foundation’s Investment Policy Statement requires diversification of the endowment’s investment assets. The chart below shows the University’s allocation for both pooled and external endowment funds as of June 30, 2012.

Pooled Endowment Investment PerformanceUnder the authority of the Board of Governors, the Finance and Investment Committee meets regularly to review endowment performance and allocation relative to the policy benchmarks. They strive to maximize return, limit risk, and reduce volatility of the endowment. In addition to reviewing policy benchmarks, the committee also uses peer comparisons from the National Association of College and University Business Officers (NACUBO) to evaluate performance.

1 Year 3 Year 5 Year 10 Year

Endowment Peer Group Comparison 6/30/12

-0.5% 10.1% 1.0% 5.8%

University Foundation -0.8% 8.3% 0.6% 6.9%

NACUBO*

*Median Performance of Foundations & Endowments <$25-50 million (128 institutions)

Total Endowment AllocationAssets Class Amount %

Art/Collections $ 693,092 2%

Mutual Funds $ 1,211,608 3%

Real Estate $ 5,993,676 14%

Fixed Income $ 7,776,138 18%

Cash & Treasuries $ 1,657,033 4%

Core Equities $ 13,118,379 31%

Private Equity $ 4,226,897 10%

Foreign $ 6,790,351 16%

Commodities $ 707,168 2%

Source: The University Foundation Financial Statement June 30, 2012

Endowment by Purpose$42 Million

Faculty / 7%

Academic &Program Support / 44%

Scholarships / 49%


ASSETS

Cash and Cash Equivalents $ 571,395

Net Accounts and Other Receivables $ 564,089

Prepaid Expenses $ 257,014

Investments $ 61,607,217

Contributions Receivable - Net $ 841,772

Notes Receivable $ 125,000

Buildings and Equipment - Net of Accumulated Depreciation $ 306,712

Total Assets $ 64,273,199

LIABILITIES

Accounts Payable $ 974,986

Accrued Expenses $ 8,532

Deferred Revenue $ 9,019

Liability Under Trust Agreements $ 1,695,420

Liability for Amounts Held for Others $ 1,694,556

Total Liabilities $ 4,382,513

NET ASSETS $ 59,890,686

Statement of Financial Position Summary of Audited Financial StatementFiscalyearendingJune30,2012


Summary of Revenue (2011–12)The financial statement presents contributions of current gifts, interest payments, dividends, and other income at $7.1 million. The majority of Chico State donors designate their gifts to specific purposes such as academic support; student grants, scholarships, and services; or instruction, research, and public services. They may also designate whether their gifts are available to be spent immediately for the intended purpose or given to endowments that provide a stable source of ongoing funding. The Foundation can hold endowed funds in perpetuity and make annual distributions according to the spending policy.

Donations and Contributions$ 4,640,588

University Programs$ 893,697

Interest and Dividend Income$620,501

Receipts and other income$ 938,354

Revenue and Support$7.1 Million

Restricted94%

Unrestricted6%

Donations and Contributions by Designation$4.6 Million


Summary of Expenses (2011–12)Throughout the year, the University requests disbursements based on current needs and the availability of funds, either from immediately spendable new gifts or distributions from endowment funds. The Foundation ensures that the expense is consistent with the donor’s designated purpose.

The Foundation’s prudent investing and spending policy provides stable endowment income that allows students and programs to plan for the future. Using a rolling average of up to three consecutive years of an account’s fund balance history, a distribution is calculated. The spending policy results in a “smoothing” of the annual distributions. The majority of distributions come from restricted endowment funds to provide direct support to students and academic programs.

Foundation Expenses and Distributions$7 Million

Facilities and other

Development andFundraising

Academic SupportInstruction, Research,

and Public Service

Student Grants, Scholarships,and Services

Student Grants, Scholarships, and Services $3,319,898 47.5%

Academic Support $2,125,687 30%

Development and Fundraising $819,799 12%

Instruction, Research, and Public Service $712,685 10%

Facilities and other $32,319 .5%

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