university of southern californiausc’s 2009 entering class is the most academically talented in...

University of Southern CaliforniaFINANCIAL REPORT 2009

Highlights of USC’s 2009 Academic Year

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Report of Independent Auditors

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2009 Financial Summary

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Budget 2009-2010

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Board of Trustees

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Officers, Executives and Academic Deans

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Role and Mission of the University

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Facing page, clockwise:USC University Hospital; Heather Macdonald, M.D.,breast cancer surgeon; USC Norris Cancer Hospital;

Fred Weaver, M.D., chief of vascular surgery

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A new era inUSC medical care begins.

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financial report 2009. . . . . . . . . . . . . . . . .

A new era in medical care

a tremendous victory: This spring, theTrojan Family grew by two. In a $275 million deal(excluding transaction-related costs), USC acquiredUSC University Hospital and USC Norris CancerHospital from Tenet Healthcare Corp., makingUSC one of only two Los Angeles area uni-versities owning hospitals. USC President

Steven B. Sample hailed the acquisition as a“tremendous victory” for the university. Whileacknowledging that the purchase was a complexand expensive undertaking, he said the greater riskwould be not to invest in such an important oppor-tunity to advance clinical programs and research.

innovation and growth: The 21stcentury will be an era in which medicine and biolo-gy and the interdisciplinary connections between

Highlights of USC’s 2oo9 Academic Year

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these sciences and other disciplines will become thefocus of innovation and growth. The strategic hospitalsacquisition will ensure the position of USC Medicine –comprising USC University Hospital, USC NorrisCancer Hospital, the Keck School of Medicine of USC,and the Doctors of USC – among the nation’s top-ranked integrated academic medical centers.With this acquisition, USC’s faculty physicians will

care for private patients at two hospitals owned and man-aged by the university; this will allow greater physiciandirection of clinical programs and also permit the accel-eration of innovative therapies and surgical tech-niques for cardiovascular and thoracic diseases, uro-logic disorders, neurological issues, musculoskeletaldisorders, organ transplantation, cancer treatment,disease prevention and other health concerns.

people who care: “A medical cen-ter is much more than just new equip-ment and new information systems,”said Mitchell R. Creem, newlyappointed CEO of the two hospitals.“It is about creating a sense of hope –

hope that miracles can happen and that theycan happen here with our new treatmentsand our new cures. It’s about giving ourpatients a feeling that, no matter how des-perate things feel at times, you have a placeto go with people who care.”The best physicians, he added, want to

practice at a university where they can seepatients while still pursuing advancedresearch to improve patient care. The quality ofmedical school and residency education isexpected to see a great improvement, accordingto Vaughn Starnes, chair of the Department ofSurgery at the Keck School and surgeon-in-chief

for the two hospitals. “I think faculty will beeven more engaged in the mission of teach-ing and education,” he said.

A medical center is much morethan new equipment and new information systems. It is about creating a sense of hope – hope that miracles can happen and that they can happen here.

Vaughn Starnes, M.D.

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usc norris cancer hospital: One of onlya few facilities in Southern California built exclusivelyfor cancer research and patient care, USCNorris CancerHospital is a 60-bed inpatient facility providing acuteand critical care. The hospital features a designatedbone marrow transplantation unit and a surgical unitwith specially trained staff who strive to meet theunique needs of cancer patients and their loved ones.Outpatients seeking diagnostic testing, chemotherapy,radiation treatment and second opinions are treated on-site with state-of-the-art technology.

the doctors of usc: The Doctors of USC aremore than 500 physicians and specialists who are full-timefaculty members of the Keck School ofMedicine of USC.These physicians treat some of the region’s most complexand difficult cases and engage in groundbreaking medicalresearch while educating and mentoring the next genera-tion of world-class medical professionals. Patients andtheir loved ones are always partners in the treatmentprocess, and it is this relationship that forms the founda-tion of theDoctors of USC’s approach to health care. USCphysicians practice at USC University Hospital, USCNorris Cancer Hospital, Doheny Eye Institute, healthcare centers on the Health Sciences campus and in down-town Los Angeles, and at Los Angeles County+USCMedical Center and Childrens Hospital Los Angeles.

usc physiciansoutpatients seen annually at hospitals

and ambulatory care centers

25o,ooousc university hospital: A private, 411-bed acute care hospital, USC University Hospitalserves 7,700 inpatients per year. Opened in 1991, thismodern facility offers some of the most sophisticatedtechnology available. Among the hospital’s advancedservices are neurointerventional radiology, minimallyinvasive cardiothoracic surgery, robotic surgery andinterventional cardiology. Surgical specialties includeorgan transplantation and neurosurgery, as well as uro-logic, bariatric, esophageal, orthopaedic, and plasticand reconstructive surgeries.

The hospitals acquisition will ensurethat USC Medicine – USC UniversityHospital, USC Norris Cancer Hospital,the Keck School of Medicine of USC,and the Doctors of USC – is amongthe nation’s top-ranked integratedacademic medical centers.


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A record of accomplishment

major economic engineA new independent economic impact study on USCshows that the university – which is the City of LosAngeles’ largest private-sector employer – is also one ofCalifornia’s major economic engines. USC’s academicspending alone (excluding the impacts of the hospitals)generates $4.9 billion annually in economic activity inthe Los Angeles region and beyond, including about$2.1 billion in total direct spending, $503 million in stu-dent spending on goods and services, and about $12million spent by campus visitors. The university alsoprovides jobs for nearly 27,000 Angelenos and createsthousands of non-university job opportunities, includ-ing construction jobs on projects such as the newRonald Tutor Campus Center (shown at right), which is scheduled to open in the fall of 2010.

high marks for freshman classUSC’s 2009 entering class is the most academically talented in the university’s 129-year history. Despite a difficult economic environment, demand remainedhigh, with 35,753 applications for 2,869 places in theclass. Students’ average standardized test scores are inthe 94th percentile as compared to all students in theUnited States, and their average grade point average is 3.7. USC offers admission without regard to ability to pay, and the university meets 100 percent of thedemonstrated need of on-time financial aid applicants.USC has the largest university-funded financial aidbudget of any university in the country, providingmore than $180 million each year of university funds to undergraduates. Almost 60 percent of USC’s under-graduate students receive some sort of university aid.This represents more than 9,000 students – more thanthe total undergraduate population of most highlyselective private research universities.

national medal trifectaWhen USC trustee, alumnus and faculty memberAndrew J. Viterbi was awarded a National Medal of Science by President George W. Bush in 2008, itmarked the third year in a row that a USC scholar hadbeen honored in this way. In 2006, USC UniversityProfessor and California historian Kevin Starr receivedthe National Humanities Medal, and in 2007 USCDistinguished Professor and celebrated composerMorten Lauridsen became the first USC faculty member to receive the National Medal of Arts.

$4.9Bannual economic activity

in the Los Angeles region generated by USC

applications for 2,869 placesin the 2009 entering freshman class

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the “art” of the universityThe USC Fisher Museum of Art has been accreditedby the American Association of Museums, puttingit among the 10 percent of university museums sorecognized. Founded in 1939, it was the first museumestablished in Los Angeles devoted exclusively to theexhibition and collection of fine art; and its permanentcollection consists of some 1,800 objects spanningfive centuries (including Asher B. Durand’s 1850“Kaaterskill Clove” at right).

asian presenceWith the opening of a new international office inShanghai this fall, USC has increased its number ofAsia offices to four – Shanghai, Hong Kong, Taipei andTokyo – with two others set to open later this year.USC is the nation’s leader in international education,with over 7,000 international students, more than anyother U.S. university. Academically, USC’s ties toShanghai include partnerships with Shanghai JiaoTong University and the College of Civil Engineeringat Shanghai-based Tongji University.

research funding upFrom March 2008 to February 2009, USC received $510million in new research awards that can generate invaluablenew knowledge – a striking 17 percent increase over theprevious record, during a period when nationwide fundinghad stagnated. In addition, the university has been awardedmore than $100 million in stimulus grants under theAmerican Recovery and Reinvestment Act. Much of thecredit goes to USC’s Washington, D.C.-based Officeof Research Advancement, the only office of its kindmaintained by any university in the country.

good neighborsFifteen years ago, USC President Steven B. Samplehad a vision. He wanted the staff and faculty ofthe university to join him in taking responsibilityfor improving the neighborhoods surrounding theUniversity Park and Health Sciences campuses.Over the years, employees have donated more than$10 million to the Good Neighbors Campaign, whichhas given more than 350 new and continuing grantsto community organizations partnering with USC.



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Highlights from academic units

usc leventhal school of accounting:During 2009, the USC Leventhal School of Accountingwitnessed record enrollment numbers in its undergrad-uate, graduate and working professional programs. Atthe beginning of the decade, the Leventhal School edu-cated about 300 undergraduates; in 2009 that numberhad doubled to 600. Similarly, the school’s graduate pro-gram has seen dramatic increases, growing to 150 stu-dents, and the Master of Business Taxation Program isthriving. “During these challenging economic times, weare attracting and retaining excellent students,” saidDean Randolph Beatty. “This reflects the superb qual-ity of our programs and our faculty.”

usc school of architecture: The Schoolof Architecture established the USC American Academyin China (AAC) in 2008, with the objective of becomingthe leading platform for critical research in art, architec-ture and the humanities in China. China’s ever-increas-ing scale of urbanism and economic clout has focusedthe world’s lenses on the country, said Dean QingyunMa, and the new academy offers summer programs inarchitecture and urbanism to USC students as well asstudents from other universities, including Columbiaand Tsinghua. In the summer of 2009, a first-of-its-kind exhibition in Beijing showcased the China studiowork of 15 of the top architecture schools in the U.S.and Europe.

usc marshall school of business: In2009, USC Marshall achieved significant progress in itsThought Leadership Initiative through the hiring of 21new faculty members. This impressive cadre of facultyrepresents the largest number of Marshall hires in manyyears. From assistant professors to full professors totwo new Provost Professors, these teacher-scholars willdrive the engines of thought leadership and enhance

Marshall’s already impressive reputation. The new fac-ulty are committed to engaging in the marketplace ofideas and sharing their expertise with students. USCMarshall’s mission remains ambitious: to attract the bestscholars and students who together will create a vibrantintellectual community that is an incubator for ideasthat change the world.

usc school of cinematic arts: TheUSC School of Cinematic Arts was proud to both cele-brate its 80th anniversary, and open the doors on thefirst two buildings in its new Cinematic Arts complex,which pays homage to the cinematic history of SouthernCalifornia and USC. “It has been such a joy to see thestudents transforming the buildings into their home,”said Dean Elizabeth M. Daley. “We’re continuing towork toward creating the optimal educational environ-ment for all our young filmmakers and scholars.”Scheduled for completion on June 1, 2010, the rest ofthe complex will include an animation building, sound-stages, and a production center.

usc college of letters, arts andsciences: USC College has experienced recordlevels of federal, state and foundation support for facul-ty research (increasing 21 percent in three years to$71 million in 2009), and is providing more than 500undergraduates with opportunities to work with faculty

It has been such a joy to see thestudents transforming the buildingsinto their home. We’re continuing towork toward creating the optimaleducational environment for all ouryoung filmmakers and scholars.



researchers. Faculty accolades include the election ofProfessor of Chemistry Arieh Warshel into the NationalAcademy of Sciences and the induction of DistinguishedProfessor of English T.C. Boyle into the AmericanAcademy of Arts and Letters. Developments in scienceinfrastructure include a gift from Dana and DavidDornsife to create a building that will house the pio-neering work of Antonio and Hanna Damasio’s Brainand Creativity Institute.

usc annenberg school for communi-cation & journalism: In 2009, USC reinforcedits strong commitment to the future of journalism when President Sample and USC trustee WallisAnnenberg unveiled the newly renamedAnnenberg School for Communication &Journalism. Placing equal weight on the profes-sional and academic resources of the two disci-plines, USC Annenberg integrates the best ofthe journalistic tradition with cutting-edge,rigorous communication studies. The schoolhas expanded its expertise in digital mediaand multi-platform storytelling and hasinvested in new teaching programs thatrecognize the growing need for informa-tion in the public interest.

usc school of dentistry: TheSchool of Dentistry welcomed a new dean,Avishai Sadan, in August 2009. He joinedUSC from the Case Western ReserveUniversity School of Dental Medicine, where he was dean of clinical affairs and pro-fessor and chairman of the Department ofComprehensive Care. He is working to upholdthe School of Dentistry’s reputation for excel-lent clinical education by making advances inthe school’s learner-centered curricula, facultyrecruitment and infrastructure; and he is assess-ing the school’s strengths in dental and cranio-facial research and community dental care out-reach in Southern California in the pursuit ofnew support opportunities.

usc rossier school of education: TheUSC Rossier School of Education launched its ground-breaking MAT@USC – the first Master of Arts inTeaching to be delivered online from a major researchuniversity. Taught by full-time USC faculty, it combinesa robust online learning management system with care-fully selected hands-on experiences in classrooms ineach student’s own community. The school’s provencurriculum was customized for the e-learning environ-ment, including the integration of interactive lecturesusing streaming video, animation and Web 2.0 tech-nologies. With an initial cohort of 144 students, the pro-gram has since grown at such a rate that Rossier ispoised to double the size of its student body by 2010.

usc viterbi school of engineering:The Viterbi School’s initiative to create and use engi-neering tools for medical research and clinical treatmentgained momentum with a series of key hires and majorgrants totaling nearly $40 million. These includedAbraxis BioScience founder Patrick Soon-Shiong andthe National Institutes of Health support for parallelmedical informatics efforts; Applied Minds co-chair-

man W. Daniel Hillis, who, with David Agusfrom the Keck School of Medicine, will lead a new physical-science/engineering cancerresearch center; and cerebral palsy physicianengineer Terence Sanger, named a ProvostAssociate Professor at USC, who is moving hislab and practice from Stanford to Viterbi and

Childrens Hospital Los Angeles.

usc roski school of fine arts:The pervasive use of sophisticated technology,which is crucial to the Roski School of FineArts’ competitiveness, is a constantly risingexpense. In February 2009, the school created aspecial Fund for Technology and sponsored abenefit, “Envisioning the Future: Prototypes &Processes,” in which technological interventionwas the essential ingredient. This student-cen-tered event presented 10 exhibits, in which thestudent ambassadors and faculty gave a com-pelling picture of their ideas and the school’smission. The event was well attended andnetted $90,000 of specific resources foreach subject area, along with providing a“feel good” experience for attendees.


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usc college faculty research 2oo9federal, state & foundation research support

$71M

T.C. Boyle, USC College




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usc davis school of gerontology: Astudy by professor Mara Mather and Ph.D. studentNicole Lighthall found that men under stress may bemore likely to take risks on a decision task that corre-lates with such real-life behavior as gambling, smoking,unsafe sex and illegal drug use. In contrast, stressedwomen moderate their behavior and may be less likelyto make risky choices. “Men seem to enter more riskyfinancial situations than women, which was part of theimpetus for our study,” Lighthall said. “But only in thestressed condition did we see any statistical differencesin risky behavior between men and women.”

usc gould school of law: USC Lawannounced the launch of a new degree program – theLL.M. in taxation. One of the most complex areas ofthe law, tax invites advanced study; and USC’s rigor-ous curriculum offers students a deep understandingof tax law and its guiding policies. Some of thenation’s leading tax scholars teach at USC, includingElizabeth Garrett, a member of the 2005 President’sAdvisory Panel on Federal Tax Reform; EdwardMcCaffery, a fellow at the American College of TaxCounsel; Edward Kleinbard, former chief of staff ofthe Joint Committee on Taxation; and ThomasGriffith, winner of the William A. Rutter ’55Distinguished Teaching Award.

usc libraries: The newly established USCDigital Library comprises more than a quarter milliondigital objects, provides global access to primary-sourceresearch materials, and creates a platform for digital-scholarship collaborations between the libraries andUSC faculty. The collections are multidisciplinary andinternational in scope; in many cases – such as the BaselMission archive of 30,000 photographs documentingEuropeanmissionary history – they are a unique researchdestination. The West Bank and East JerusalemSearchable Map of archaeology sites, hosted in partner-ship with USC College, won the 2009 ASOR OpenArchaeology Prize and exemplifies the tremendouspotential of the Digital Library to support the discovery,preservation, and creation of knowledge.

keck school of medicine of usc: TheKeck School’s research program is in the midst of a signif-icant growth surge. During the two-year period betweenJuly 1, 2007 and June 30, 2009 (FY08 andFY09), theKeckSchool recognized a 12 percent increase in sponsored pro-gram funding awarded directly to the school. The annualaward total for FY09 was $195.5 million. Two thirds (66percent) came from federal sources, primarily theNational Institutes of Health. A number of Keck Schoolfaculty members were awarded additional grants throughthree affiliated specialty institutions: Childrens HospitalLos Angeles, Doheny Eye Institute and House EarInstitute. Including grants to these affiliates boosted theFY09 total for sponsored programs to $240.1 million.

usc thornton school of music: TheUSC Thornton School of Music celebrated its 125thanniversary with an unprecedented 125 days of special

USC Law announced the launch of anew degree program – the LL.M. Intaxation. One of the most complexareas of the law, tax invites advancedstudy; and some of the nation’sleading tax scholars teach at USC.

usc librariesnumber of objects in newly established

USC Digital Library, over

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events and concerts, including appearances byacclaimed Thornton alumnus Michael Tilson Thomas,renowned Bach scholar Helmuth Rilling, and rock leg-end Steve Miller. Solidifying its designation as the old-est continually operating cultural institution in LosAngeles, the school celebrated the milestone by intro-ducing several new undergraduate majors and graduateprograms, including a high-profile popular music per-formance program, the first at any university in thecountry, which focuses on live performance and song-writing as well as the business side of music.

usc school of pharmacy: The USC Schoolof Pharmacy won the 2008-09 American Associationof Colleges of Pharmacy Inaugural Award forTransformative Community Service. “The key word inselecting the recipient of this new award is ‘transforma-tive,’ ” said Lucinda L. Maine, executive vice presidentand CEO of the association. Addressing urgent societalneeds through work in seven safety-net clinics, theschool’s faculty, residents and students have shown thatpharmacist intervention improves health outcomes andquality of life while saving precious health-care dollars.The school’s unrivaled commitment to addressingunmet community needs, especially among the mostvulnerable, through education, practice and researchserves as a model for pharmacy schools nationwide.

usc school of policy, planning, anddevelopment: The World Bank signed a memo-randum of understanding with the USC School of Policy,Planning, and Development (SPPD) in February 2009to address sustainable development challenges in East

Asia and the Pacific Region. Merging scholarly researchwith on-the-ground initiatives addresses the commit-ment of both institutions to create and apply knowledgefor the benefit of society. At an international conferencein China’s Guangdong province – attended by morethan 600 participants from the U.S., China, Japan, Korea,Singapore, the Netherlands, France, Vietnam, and theUnited Kingdom – attendees explored how Foshan,China, a municipality of 5.8 million people in the PearlRiver Delta, could best deal with its polluted urban river.

usc school of social work: The School ofSocial Work launched a new initiative in military socialwork – the first in a major civilian research institution.The Center for Research and Innovation on Veteransand Military Families was established in cooperationwith the USC Institute for Creative Technologies and issupported by the Department of Defense and the LosAngeles-based Lincy Foundation. A new graduate spe-cialization in military social work was created, facultywith previous military experience were hired, and a newacademic center in San Diego was opened, generatingnational excitement about the potential for improvingresponsiveness and quality of treatment to returningsoldiers from Afghanistan and Iraq.

usc school of theatre: Under the leader-ship of a nationally acclaimed faculty and in a greaturban center of arts and entertainment, the School ofTheatre’s new master’s degrees in acting, dramatic writ-ing and applied theatre arts are intensive training pro-grams that recognize the uniqueness of each studentartist and the important role that dramatic arts play insociety. The school is extremely proud of these rigorousgraduate programs as each one provides students withthe necessary skills and knowledge to develop theircraft. Recently graduated actors and writers are current-ly working in professional theatre and film productions,both locally and nationally.

The School of Social Work launcheda new initiative in military social work –the first in a major civilian researchinstitution – generating national excite-ment about the potential for returningsoldiers from Afghanistan and Iraq.

The World Bank signed a memorandumof understanding with the USC Schoolof Policy, Planning, and Development(SPPD) in February 2009 to addresssustainable development challenges inEast Asia and the Pacific Region.



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Report of Independent Auditors

The Board of Trusteesof the University of Southern California

In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of activities, expenses, and cash flows, which appear on pages 12 through 27 of thisfinancial report, present fairly, in all material respects, the consolidated financial position of theUniversity of Southern California and its subsidiaries (the “university”) at June 30, 2009, and thechanges in their consolidated net assets and their cash flows for the year then ended in conformi-ty with accounting principles generally accepted in the United States of America. These financialstatements are the responsibility of the university’s management. Our responsibility is to expressan opinion on these financial statements based on our audit. The prior year summarized compar-ative information has been derived from the university’s 2008 financial statements, and in ourreport dated September 17, 2008, we expressed an unqualified opinion on those financial state-ments. We conducted our audit of these statements in accordance with auditing standards gener-ally accepted in the United States of America. Those standards require that we plan and performthe audit to obtain reasonable assurance about whether the financial statements are free of mate-rial misstatement. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements, assessing the accounting principles used and signifi-cant estimates made by management, and evaluating the overall financial statement presenta-tion. We believe that our audit provides a reasonable basis for our opinion.

As discussed in Note 1, the university adopted FASB Staff Position (FSP) No. 117-1“Endowment of Not-For-Profit Organizations: Net Asset Classification of Funds Subject to anEnacted Version of the Uniform Prudent Management of Institutional Funds Act, and EnhancedDisclosures for All Endowment Funds,” in the year ended June 30, 2009.

Los Angeles, CaliforniaSeptember 30, 2009

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June 30, 2009 June 30, 2008

Financial (in thousands)

Total revenues $1,321,283 $1,902,376

Total cash gifts and equipment gifts $399,973 $391,002

Capital expenditures $521,354 $199,583

Total assets at year end $5,933,398 $6,363,326

Total debt at year end $913,267 $502,228

Decrease in net assets ($870,386) ($31,153

Market value of endowment $2,671,426 $3,589,225

Executed contracts, grants, subcontracts and cooperative agreements $718,975 $823,941

Property, plant and equipment, net $1,935,231 $1,546,663

Net Asset Balances:

Unrestricted $2,016,713 $3,643,369

Temporarily restricted $945,644 $214,957

Permanently restricted $1,343,700 $1,318,117

Students

Enrollment (head count, autumn):

Undergraduate students 16,608 16,384

Graduate and professional students 17,139 17,024

Degrees conferred:

Bachelor degrees 4,295 4,528

Advanced 6,158 5,978

Certificates 240 218

Annual tuition rate $37,114 $35,212

Faculty and Staff

Faculty 4,292 4,293

Staff 8,531 8,205

Highlights

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June 30, 2009 June 30, 2008

Assets A B

Cash and cash equivalents $682,399 $442,807

Accounts receivable, [see Note 3] 151,157 61,072

Notes receivable, net of allowance for doubtful accounts, $9,849 (2009), $9,863 (2008) 86,589 85,016

Pledges receivable, [see Note 9] 193,813 201,490

Investments, [see Note 4] 2,776,476 3,936,797

Inventories, prepaid expenses and other assets 107,733 89,481

Property, plant and equipment, net, [see Note 5] 1,935,231 1,546,663TOTAL ASSETS $5,933,398 $6,363,326

Liabilities

Accounts payable $101,039 $76,305

Accrued liabilities 157,478 117,745

Refundable advances 43,866 43,475

Current portion of long-term debt 3,690 6,430

Deposits and deferred revenue 111,869 107,357

Actuarial liability for annuities payable 132,330 176,503

Federal student loan funds 67,658 66,854

Asset retirement obligations 89,527 86,107

Long-term debt, [see Note 6] 909,577 495,798

Other liabilities 10,307 10,309TOTAL LIABILITIES 1,627,341 1,186,883

Net Assets

Unrestricted 2,016,713 3,643,369

Temporarily restricted 945,644 214,957

Permanently restricted 1,343,700 1,318,117TOTAL NET ASSETS 4,306,057 5,176,443

TOTAL LIABILITIES AND NET ASSETS $5,933,398 $6,363,326

The accompanying notes are an integral part of this statement.

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Consolidated Balance Sheetin thousands | with summarized financial information as of June 30, 2008



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Consolidated Statement of Activitiesin thousands | with summarized financial information for the year ended June 30, 2008

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Year Ended Year EndedJune 30, 2009 June 30, 2008

Total Temporarily PermanentlyUnrestricted Restricted Restricted Total TotalNet Assets Net Assets Net Assets Net Assets Net Assets

Revenues A B C D E

Student tuition and fees $1,065,342 $1,065,342 $1,000,289Less financial aid (320,161) (320,161) (294,308)Net student tuition and fees 745,181 745,181 705,981Endowment income 61,977 $420 62,397 72,973Investment and other income 7,264 $440 10 7,714 25,251Net appreciation (depreciation)in fair value of investments (923,016) 34,786 (14,859) (903,089) (159,455)Government contracts and grants 255,864 255,864 240,061Recovery of indirect costs 111,588 111,588 103,956Gifts and pledges 305,315 63,121 24,462 392,898 410,105Sales and service 32,513 32,513 32,057Auxiliary enterprises 226,972 226,972 223,125Net patient service revenues 101,559 101,559Professional Services Agreements 102,983 102,983 81,201Clinical practices 80,427 80,427 75,251(Loss) gain on the disposal/sale of plant assets (6,558) (6,558) 35Other 87,626 87,626 86,487Present value adjustment to annuities payable 7,651 15,557 23,208 5,348Net assets released from restrictions / redesignations 50,488 (50,481) (7)TOTAL REVENUES 1,240,183 55,517 25,583 1,321,283 1,902,376

ExpensesEducational and general activities 1,766,739 1,766,739 1,658,013Health care services 273,526 273,526 149,402Depreciation 120,044 120,044 103,629Interest on indebtedness 31,360 31,360 22,485TOTAL EXPENSES 2,191,669 2,191,669 1,933,529

Increase (Decrease) in Net Assets (951,486) 55,517 25,583 (870,386) (31,153)

Effect of change in accounting principle, [see Note 1] (675,170) 675,170Beginning Net Assets 3,643,369 214,957 1,318,117 5,176,443 5,207,596

ENDING NET ASSETS $2,016,713 $945,644 $1,343,700 $4,306,057 $5,176,443

Nature of specific net assets:

Internally designated $4,883 $4,883 $10,489Gift and departmental 372,942 372,942 425,385Externally restricted $37,963 $33,414 71,377 50,391Pledges 142,504 51,309 193,813 201,490University Hospitals (6,804) (6,804)Kenneth Norris Jr. Cancer Hospital –USC/Norris Cancer Center Foundation 102 102 3,516Unexpended endowment income 152,098 152,098 149,659Annuity and living trusts 36,703 72,966 109,669 133,269True endowment and net appreciation 728,474 1,186,011 1,914,485 1,147,924Funds functioning as endowment 756,941 756,941 2,441,301Debt service funds 69,886 69,886 70,500Invested in plant 666,665 666,665 542,519

$2,016,713 $945,644 $1,343,700 $4,306,057 $5,176,443




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Consolidated Statement of Expensesin thousands | with summarized financial information for the year ended June 30, 2008

Academic, Health Care and Student Services

Instruction,Departmental Libraries

Research Sponsored and Health Care Studentand Activities Research Art Galleries Services Services

A B C D E F

Compensation $500,285 $156,211 $14,618 $139,539 $25,981

Fringe benefits 160,319 42,025 4,465 44,701 7,796

Materials and supplies 88,534 88,574 6,830 68,468 8,757

Cost of goods sold 9,463 11,811 55

Utilities 1,378

Travel 23,002 7,956 87 98 1,066

Telephone 676

Other 32,964 2 6,946 930

USC Care purchased services 8,494814,567 306,579 26,000 270,300 44,585

Allocations:

Depreciation 43,477 20,608 7,823 5,287 5,408

Interest 16,204 1,075

Plant operations and maintenance 62,817 26,121 9,201 8,978TOTAL EXPENSES $937,065 $353,308 $43,024 $276,662 $58,971


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Support Services

Plant AuxiliaryOperations and General Fund Raising Enterprises Year Ended Year EndedMaintenance Administration Institutional Activities Operations June 30, 2009 June 30, 2008

F G H I J K L

$38,274 $62,668 $42,503 $13,333 $60,089 $1,053,501 $956,455

12,239 19,713 13,920 4,214 17,501 326,893 266,564

64,705 51,697 10,254 6,651 60,697 455,167 382,201

416 3,638 47,505 72,888 77,291

27,971 29,349 25,382

71 1,324 311 503 4,455 38,873 38,668

7,080 7,756 8,236

157 333 6,012 47,344 43,662

8,494 8,956150,756 135,402 70,783 25,034 196,259 2,040,265 1,807,415

3,828 4,456 165 28,992 120,044 103,629

238 13,480 363 31,360 22,485

(150,994) 2,562 7,165 196 33,954$141,792 $95,884 $25,395 $259,568 $2,191,669 $1,933,529



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Year Ended Year EndedJune 30, 2009 June 30, 2008

Cash Flows from Operating Activities A B

Change in Net Assets ($870,386) ($31,153

Adjustments to reconcile change in net assets to net cash provided byoperating activities:

Depreciation and amortization 120,044 103,629

Loss on the disposal/sale of plant assets 6,558 877

Gifts-in-kind (15,766) (25,011

Present value adjustment to annuities payable (22,839) (5,187

(Increase) decrease in accounts receivable (90,085) 8,427

Decrease (increase) in pledges receivable 2,235 (2,534

Decrease (increase) in inventories, prepaid expenses and other assets 22,466 (19,809

Increase (decrease) in accounts payable 26,356 (49,387

Increase in accrued liabilities 36,335 21,005

Increase (decrease) in refundable advances 391 (1,088

Increase in deferred revenue 4,512 1,266

(Decrease) increase in other liabilities (2) 1,117

Contributions restricted for permanent investment and property, plant and equipment (95,321) (105,401

Net realized loss (gain) on sale of investments 321,963 (167,064

Net unrealized depreciation in investments 581,126 326,840

Net cash provided by operating activities 27,587 56,527

Cash Flows from Investing Activities

Proceeds from note collections 11,362 12,046

Notes issued (12,935) (12,259

Proceeds from sale and maturity of investments 2,178,906 2,729,820

Purchase of investments (1,935,246) (2,692,486

Purchase of property, plant and equipment, net (233,554) (199,583

Acquisition of Hospitals, [see Note 2] (287,800)

Net cash used in investing activities (279,267) (162,462

Cash Flows from Financing Activities

Contributions restricted for permanent investment:

Endowment 28,988 35,029

Plant 70,802 76,045

Trusts and other 973 7,518

Repayment of long-term debt (4,466) (3,669

Proceeds from issuance of long-term debt 415,505

Increase in federal student loan funds 804 2,136

Investment (losses) income on annuities payable (11,022) 3,678

Payments on annuities payable (13,445) (16,794

Increase to annuities payable resulting from new gifts 3,133 13,824

Net cash provided by financing activities 491,272 117,767

Net increase in cash and cash equivalents 239,592 11,832

Cash and cash equivalents at beginning of year 442,807 430,975

Cash and cash equivalents at end of year $682,399 $442,807


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Consolidated Statement of Cash Flowsin thousands | with summarized financial information for the year ended June 30, 2008

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Notes to Consolidated Financial Statements

Note 1

Significant accounting policies followed by the Universityof Southern California are set forth below:

The University of Southern California is a not-for-prof-it, major private research university. The consolidatedfinancial statements have been prepared on the accrualbasis of accounting, in accordance with accountingprinciples generally accepted in the United States ofAmerica and with the provisions of the AmericanInstitute of Certified Public Accountants’ Audit andAccounting Guide, “Not-for-Profit Entities,” whichrequires the university to classify its net assets intothree categories according to donor-imposed restrictionsor provisions of law: unrestricted, temporarily restricted,or permanently restricted. All material transactionsbetween the university and its subsidiaries have beeneliminated.

The university is generally exempt from federal incometaxes under the provisions of Internal Revenue CodeSection 501 (c) (3). The university is also generallyexempt from payment of California state income, gift,estate and inheritance taxes.

Unrestricted net assets:

Education and general: Education and general includethe revenues and expenses associated with the princi-pal educational mission of the university.

Health care services: Health care services are reflectiveof the revenues and expenses associated with USCUniversity Hospital, USC Norris Cancer Hospital,(See Note 2) the Health Care Consultation Center,the Professional Services Agreement with Los AngelesCounty and USC Care Medical Group, Inc., a contract-ing entity for the independent private practices and theprofessional services provided to affiliated hospitals.

Sponsored research and departmental activities: Sponsoredresearch agreements recognize revenue as it is earnedthrough expenditure in accordance with the agreement.Any funding received in advance of expenditure isrecorded as refundable advances. Departmental netassets include gifts to the university and its variousschools and departments. The university has deter-mined that any donor-imposed restrictions of gifts forcurrent or developing programs and activities are gener-ally met within the operating cycle of the universityand, therefore, the university’s policy is to record thesenet assets as unrestricted. Internally designated netassets are those which have been appropriated by theBoard of Trustees or designated by management.

Unexpended plant and debt service funds: Unexpendedplant and debt service net assets include gifts andincome earned on unexpended balances for capitalprojects which are currently under construction andtransfers from the operating budget to fund the debtservice requirements for outstanding bonds, notes andmortgages payable. The university follows the policy oflifting the restrictions on contributions of cash or otherassets received for the acquisition of long-lived assetswhen the restrictions are fulfilled or the assets areplaced in service.

Invested in plant: Invested in plant assets, includingcollections of works of art and historical treasures, arestated at cost or fair value at the date of gift, plus theestimated value of any associated legal retirementobligations, less accumulated depreciation, computedon a straight-line basis over the estimated useful orcomponent lives of the assets (equipment and librarybooks useful lives ranging from 4 to 10 years andbuildings component lives ranging from 5 to 50 years).Equipment is removed from the records at the time ofdisposal. The university follows the policy of recordingcontributions of long-lived assets directly in invested inplant assets instead of recognizing the gift over theuseful life of the asset.

Long-term investment: Long-term investments includegifts and Board of Trustee designations to funds func-tioning as endowment, realized and unrealized gainsand reinvested income (income earned in excess ofthe spending rule) on all endowment funds.

Student loan: Student loan net assets include lendingactivity to students utilizing university resourcesdesignated for that purpose.

Temporarily restricted net assets:

Gifts for which donor imposed restrictions have notbeen met (primarily future capital projects), charitableremainder unitrusts, pooled income funds, gift annu-ities, net appreciation on true endowment and pledgesreceivable for which the ultimate purpose of the pro-ceeds is not permanently restricted are included intemporarily restricted net assets.



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Note 1 (continued)

Permanently restricted net assets:

Gifts, charitable remainder unitrusts, pooled incomefunds, gift annuities and pledges receivable whichrequire by donor restriction the investment of the cor-pus in perpetuity, net appreciation on true endowmentand only the income be made available for programoperations in accordance with donor restrictions andgifts which have been donor stipulated to provide loansto students are included in permanently restrictednet assets.

Other accounting policies:

The financial statements present expenses by function-al classification in accordance with the overall servicemission of the university. Each functional classificationdisplays all expenses related to the underlying opera-tions by natural classification. Depreciation expense isallocated based on square footage occupancy. Interestexpense on external debt is allocated to the functionalcategories which have benefited from the proceeds ofthe external debt. Plant operations and maintenancerepresents space related costs which are allocated tothe functional categories directly and/or based on thesquare footage occupancy.

Cash equivalents consist of resources invested inmoney market funds and certificates of deposit,maturing within 30 days.

Investments are stated at fair value. Net appreciation(depreciation) in the fair value of investments, whichconsists of the realized gains or losses and the unreal-ized appreciation (depreciation) on those investments,is shown in the Consolidated Statement of Activities.Realized gains and losses upon the sale of investmentsare calculated using the specific identification methodand trade date.

Alternative investment holdings and certain otherlimited partnership interests are invested in bothpublicly traded and privately owned securities. The fairvalues of private investments are based on estimatesand assumptions of the general partners or partnershipvaluation committees in the absence of readily determin-able market values. Such valuations generally reflectdiscounts for illiquidity and consider variables such asfinancial performance of investments, recent salesprices of investments and other pertinent information.

Inventories are valued at the lower of cost (first in,first out) or market.

The university receives federal reimbursement for aportion of the costs of its facilities and equipment usedin organized sponsored research. The Office ofManagement and Budget, Circular A-21, establishesprinciples for determining such reimbursable costs,requires conformity of the lives and methods used forfederal cost reimbursement accounting and financialreporting purposes. The university’s policies and proce-dures are in conformity with these principles.

Student tuition and fees are recorded as revenues dur-ing the year the related academic services are rendered.Student tuition and fees received in advance of servicesto be rendered are recorded as deferred revenue.

The actuarial liability for annuities payable includegift annuities, unitrusts, pooled income funds and lifeestates which are based on the present value of futurepayments using discount rates ranging from 3.3% to9.5% and Retired Pensioners 2000 Mortality Tableissued on or before December 31, 2004 and Annuity2000 Mortality Table for annuities issued on or afterJanuary 1, 2005.

The university has recorded conditional asset retire-ment obligations associated with the legally requiredremoval and disposal of certain hazardous materials,primarily asbestos, present in our facilities. When anasset retirement obligation is identified, the universityrecords the fair value of the obligation as a liability. Thefair value of the obligation is also capitalized as proper-ty, plant and equipment and then amortized over theestimated remaining useful life of the associated asset.The fair value of the conditional asset retirementobligations was estimated using a probability weighted,discounted cash flow model. The present value offuture estimated cash flows was calculated using thecredit adjusted, interest rate applicable to the universityin order to determine the fair value of the conditionalasset retirement obligations. For the year ended June30, 2009, the university recognized accretion expenserelated to the conditional asset retirement obligation ofapproximately $4,481,000. For the year ended June 30,2009, the university settled asset retirement obligationsof approximately $1,061,000. As of June 30, 2009,included in the Consolidated Balance Sheet is an assetretirement obligation of $89,527,000.




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Note 1 (continued)

Gifts from donors, including contributions receivable(unconditional promises to give), are recorded asrevenues in the year received. Gifts are valued usingquoted market prices, market prices for similar assets,independent appraisals, or by university management.Contributions receivable are reported at their discount-ed present values, and an allowance for amounts esti-mated to be uncollectible is provided. Donor-restrictedgifts, which are received and either spent, or deemedspent, within the same year, are reported as unrestrict-ed revenue. Gifts of long-lived assets with no donor-imposed time restrictions are reported as unrestrictedrevenue in the year received. Gifts restricted to theacquisition or construction of long-lived assets or sub-ject to other time or purpose restrictions are reported astemporarily restricted revenue. The temporarilyrestricted net assets resulting from these gifts arereleased to unrestricted net assets when the donor-imposed restrictions are fulfilled or the assets are placedin service. Gifts received for endowment investmentare held in perpetuity and recorded as permanentlyrestricted revenue.

In accordance with the university’s Revenue CenterManagement (RCM) policy, educational and generalactivities are reflective of the performance of a balancedoperating budget for the year and any surplus at theend of the year is transferred to internally designateddepartmental assets. In accordance with RCM policy,operating units with educational and general activitieswhich result in deficit balances are required at the endof the year to transfer departmentally designated assetssufficient to fund the deficit balance.

The preparation of financial statements in conformitywith accounting principles generally accepted in theUnited States of America requires management tomake estimates and assumptions that affect the report-ed amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the finan-cial statements and the reported amounts of revenuesand expenses during the reporting period. Actualresults could differ from these estimates.

The financial statements include certain prior-yearsummarized comparative information in total but notby net asset category. Such information does not includesufficient detail to constitute a presentation in conform-ity with accounting principles generally accepted in the

United States of America. Accordingly, such informationshould be read in conjunction with the university’s finan-cial statements for the year ended June 30, 2008 fromwhich the summarized financial information was derived.Certain reclassifications have been made to summarizedfinancial information for comparative purposes.

In August 2008, the Financial Accounting StandardsBoard issued Staff Position (FSP) No. 117-1“Endowments of Not-for-Profit Organizations: NetAsset Classification of Funds Subject to an EnactedVersion of the Uniform Prudent Management ofInstitutional Funds Act, and Enhanced Disclosuresfor All Endowment Funds” (FSP 117-1). FSP 117-1provides guidance for not-for-profit organizations con-cerning the net asset classifications of donor-restrictedendowment funds subject to an enacted version of theUniform Prudent Management of Institutional FundsAct of 2006 (UPMIFA). In addition, FSP 117-1 requiresenhanced disclosures for all endowment funds. Theuniversity adopted the accounting standard for the yearended June 30, 2009. The impact of the adoptionresulted in an adjustment of $675,170,000. (See Note 8)

Effective July 1, 2008, the university adoptedStatement of Financial Accounting Standards No. 157,“Fair Value Measurements” (SFAS 157). SFAS 157defines fair value, establishes a framework for measur-ing fair value under generally accepted accountingprinciples and enhances disclosures about fair valuemeasurements. Fair value is defined under SFAS 157as the exchange price that would be received for anasset or paid to transfer a liability (an exit price) in theprincipal or most advantageous market for the assetor liability in an orderly transaction between marketparticipants on the measurement data.

SFAS 157 establishes a hierarchy of valuation inputsbased on the extent to which the inputs are observablein the marketplace. Observable inputs reflect marketdata obtained from sources independent of the report-ing entity and unobservable inputs reflect the entity’sown assumptions about how market participants wouldvalue an asset or liability based on the best informationavailable. Valuation techniques used to measure fairvalue under SFAS 157 should maximize the use ofobservable inputs and minimize the use of unobserv-able inputs. The standard describes a fair value hierar-chy based on three levels of inputs, of which the firsttwo are considered observable and the last unobserv-able, that may be used to measure fair value.




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Note 1 (continued)

The following describes the hierarchy of inputs used tomeasure fair value and the primary valuation method-ologies used by the university for financial instrumentsmeasured at fair value on a recurring basis. The threelevels of inputs are as follows:

• Level I - Quoted prices in active markets foridentical assets or liabilities.

• Level II - Inputs other than Level I that are observ-able, either directly or indirectly, such as quoted pricesfor similar assets or liabilities; quoted prices in marketsthat are not active; or other inputs that are observableor can be corroborated by observable market data forsubstantially the same term of the assets or liabilities.

• Level III - Unobservable inputs that are supportedby little or no market activity and that are significantto the fair value of the assets or liabilities.

A financial instrument’s categorization within thevaluation hierarchy is based upon the lowest level ofinput that is significant to the fair value measurement.(See Note 4)

In September 2009, the Financial AccountingStandards Board issued Accounting Standards Update2009-12, which allows the university to measure the fairvalue of its investments in certain entities, as definedby the standard, at net asset value (NAV). The universi-ty has chosen to early adopt the standard for the yearended June 30, 2009. As the university has historicallyused NAV as a basis for determining the fair value ofthese investments the adoption had no impact on thefinancial statements.

Note 2

Effective March 31, 2009, the university acquiredUSC University Hospital and USC Norris CancerHospital (the hospitals) under the terms of an assetpurchase agreement for approximately $287,800,000.The university accounted for the acquisition under thepurchase method under Accounting Practice Bulletin16. The university allocated the purchase price to theinventory, buildings and equipment of the hospitals.All non-assumed liabilities existing as of March 31, 2009,including medical malpractice liabilities, were retainedby the seller. The university’s consolidated financialstatements include the activity of the hospitals for thethree month period ended June 30, 2009. The acquiredhospitals had approximately $102,000,000 in net patientservice revenues for the three months ended June 30,2009. The results of operations of the hospitals for thethree month period ending June 30, 2009, did not havea material impact on the consolidated statement ofactivities for the year ended June 30, 2009.

Note 3

Accounts receivable (in thousands):

U.S. Government, net of allowance

for doubtful accounts of $1,215 $22,559

Student and other, net of allowancefor doubtful accounts of $7,888 46,524

Patient care and practice plans, net ofallowance for doubtful accounts andcontractual adjustments of $23,442 82,074

$151,157




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Note 4

Investments (in thousands):

Cost Fair Value

Equities $1,091,054 $932,307

Fixed income securities 536,214 476,475

Alternative investments:

Hedge funds 329,336 360,587

Private capital 818,956 653,058

Real estate and other 199,219 142,890

Assets held by other trustees 209,154 211,159TOTAL $3,183,933 $2,776,476

The following table summarizes the financial instruments carried at fair value as of June 30, 2009, by the SFAS 157valuation hierarchy defined above:

Level I Level II Level III Total

Investments:

Equities $639,882 $257,833 $34,592 $932,307

Fixed income securities 128,581 347,894 476,475

Hedge funds 360,587 360,587

Private capital 653,058 653,058

Real estate and other 142,890 142,890

Assets held by other trustees 110,539 39,585 61,035 211,159TOTAL INVESTMENTS $879,002 $645,312 $1,252,162 $2,776,476

The university has classified all cash and cash equivalents as Level I financial instruments.

The following table summarizes the university’s Level III reconciliation for investments for the year endedJune 30, 2009:

Balance at July 1, 2008 $1,632,901

Net realized gains/(losses) 86,496

Net unrealized gains/(losses) (398,960

Net purchases, sales and settlements (68,275

Balance at June 30, 2009 $1,252,162

Note 5

Property, plant and equipment (in thousands):

Land and improvements $121,325

Building and improvements 2,210,298

Equipment 441,729

Library books and collections 215,744

Construction-in-progress 159,609

3,148,705

Less: Accumulated depreciation 1,213,474

$1,935,231


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Note 6

Bonds, notes and mortgages payable (in thousands):

Interest % Maturity

California Educational Facilities Authority(CEFA) Revenue Bonds and Notes:

Series 1997A 5.60 2010 $1,260

Discount (4

Series 1998A 5.00 2029 30,360

Series 1999 5.50 2028 60,000

Premium 817

Series 2003A 4.75 2024 50,000

Premium 1,196

Series 2003B 5.00 2010-2016 7,620

Premium 632

Series 2005 4.00-5.00 2012-2029 66,545

Premium 2,530

Series 2007A 4.00-4.75 2010-2038 263,395

Premium 2,466

Series 2009A 5.00-5.25 2039-2040 217,605

Discount (964

Series 2009B 5.00-5.25 2039-2040 197,900

Premium 3,351

University of Southern California Bonds

Series 1998 5.87-6.26 2014-2019 8,585

Discount (27

913,267

Less current portion of long-term debt 3,690

$909,577

Principal payment requirements relating to bonds and notes payable, after giving effect to refunding, for the next fivefiscal years are approximately: 2010 $3,690,000; 2011 $3,885,000; 2012 $4,140,000; 2013 $4,330,000; 2014 $8,535,000.

Interest payments for fiscal year 2009 were $25,974,000.

The bond agreements contain certain restrictive covenants including the requirement to maintain a designatedamount of available assets, as defined in the agreements.

On January 15, 2009, the university issued $217,605,000 of CEFA Series 2009A bonds and on February 25, 2009,the university issued $197,900,000 of CEFA Series 2009B bonds. Certain of these proceeds were used to acquirethe hospitals (See Note 2). The net proceeds of these bond issues are included in cash and cash equivalents on theconsolidated balance sheet and will be used for future projects.

On November 15, 2005 the university entered into an interest rate swap transaction with a counterparty for anotional amount of $62,250,000. Under the terms of this agreement, the effect date of the swap was July 8, 2009.On May 28, 2009, this swap was terminated at a net cost of $1,325,000.

On April 6, 2009, a $100,000,000 revolving line of credit agreement was implemented with a bank. This line ofcredit, which matures on April 6, 2012, accrues interest equal to LIBOR plus eighty-five basis points per annumon any outstanding balance and a fee equal to twenty-five basis points per annum on the unused portion of the lineof credit. During the year ended June 30, 2009, the university did not draw down on the line of credit. The line ofcredit contains certain restrictive covenants required in the agreement.


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Note 7

Financial aid is awarded to students based on need and merit. Financial aid does not include payments made to stu-dents for services rendered to the university.

Financial aid for the year ended June 30, 2009 consists of the following (in thousands):

Undergraduate Graduate Total

Institutional scholarships $177,411 $77,571 $254,982

Endowed scholarships 25,126 10,986 36,112

External financial aid 20,224 8,843 29,067

$222,761 $97,400 $320,161

Note 8

Endowment net assets are subject to the restrictions of gift instruments requiring that the principal be invested inperpetuity and only the income and realized gains be utilized for current and future needs. Long-term investmentnet assets (funds functioning as endowment and departmentally designated funds) have been established fromrestricted gifts whose restrictions have been met and unrestricted gifts which have been designated by the Board ofTrustees or management for the same purpose as endowment. The university also has a beneficial interest in the netincome earned from assets which are held and managed by other trustees.

Endowment and long-term investment net assets functioning as endowment are summarized as follows (in thousands):

Funds functioning DepartmentallyEndowment as endowment designated funds Total

Pooled $1,806,460 $639,488 $7,209 $2,453,157

Non-pooled 108,025 110,244 218,269

$1,914,485 $749,732 $7,209 $2,671,426

Pooled investments represent endowment and long-term investment net assets which have been commingled in aunitized pool (unit market value basis) for purposes of investment. The pool is comprised of cash and cash equiva-lents (9%), equities (32%), fixed income securities (15%), alternative investments (40%) and real estate and otherinvestments (4%). Access to or liquidation from the pool is on the basis of the market value per unit on the preced-ing monthly valuation date. The unit market value at June 30, 2009 was $451.61.

The Board of Trustees has interpreted the “Uniform Prudent Management of Institutional Funds Act” (UPMIFA)as requiring the preservation of the original gift as of the gift date of the donor-restricted endowment funds absentexplicit donor stipulations to the contrary. As a result of this interpretation, the university classifies as permanentlyrestricted net assets, (a) the original value of gifts donated to the permanent endowment, (b) the original value ofsubsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accor-dance 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 netassets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure in amanner consistent with the standard of prudence prescribed by UPMIFA. In accordance with UPMIFA, the univer-sity considers various factors in making a determination to appropriate or accumulate endowment funds including:duration and preservation of the fund, economic conditions, effects of inflation or deflation, expected return on thefunds and other economic resources of the university.




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Note 8 (continued)

Endowment net asset composition by type of fund as of June 30, 2009 (in thousands):

Temporarily PermanentlyUnrestricted Restricted Restricted Total

Donor-restricted endowment funds $728,474 $1,186,011 $1,914,485

Board-designated endowment funds $756,941 756,941

Total endowment funds $756,941 $728,474 $1,186,011 $2,671,426

Changes in endowment net assets for the year ended June 30, 2009 (in thousands):

Temporarily PermanentlyUnrestricted Restricted Restricted Total

Endowment net assets, beginning of year $2,441,301 $44 $1,147,880 $3,589,225

Effect of adoption of FSP 117-1 (675,170) 675,170

Investment return:

Investment income 61,977 420 62,397

Net depreciation (919,624) 53,260 (866,364TOTAL INVESTMENT RETURN (857,647) 53,260 420 (803,967

Gifts and transfers (5,094) 37,711 32,617

Appropriation of endowment assets for expenditure (146,449) (146,449ENDOWMENT NET ASSETS AS OF JUNE 30, 2009 $756,941 $728,474 $1,186,011 $2,671,426

Endowments classified as permanently restricted netassets and temporarily restricted net assets are to beutilized for the following purposes:

Permanently restricted net assets:

The portion of perpetual endowment funds that isrequired to be retained permanently either by explicitdonor stipulation or by UPMIFA:

Restricted for scholarship support $291,567

Restricted for faculty support 321,050

Restricted for program support 573,394

Total endowment assets classifiedas permanently restricted net assets $1,186,011

Temporarily restricted net assets:

The portion of permanent endowment funds subject toa time restriction under UPMIFA:

Restricted for scholarship support $188,378

Restricted for faculty support 272,464

Restricted for program support 267,632

Total endowment assets classifiedas temporarily restricted net assets $728,474

From time to time, the fair value of assets associatedwith individual donor-restricted endowment funds mayfall below the value of the initial and subsequent donorgift amounts (deficit). When donor endowment deficitsexist, they are classified as a reduction of unrestricted netassets. Deficits of this nature reported in unrestrictednet assets were $74,097,000 as of June 30, 2009. Thesedeficits resulted from unfavorable market fluctuationsthat occurred shortly after the investment of newlyestablished endowments, and authorized appropriationthat was deemed prudent.



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Note 8 (continued)

The university has adopted endowment investmentand spending policies that attempt to provide a pre-dictable stream of funding to programs supported by itsendowment while seeking to maintain the purchasingpower of endowment assets. Under these policies, thereturn objective for the endowment assets, measuredover a full market cycle, shall be to maximize the returnagainst a blended index, based on the endowment’starget allocation applied to the appropriate individualbenchmarks. The university expects its endowmentfunds over time, to provide an average rate of returnof approximately 8.0 % annually. Actual returns in anygiven year may vary from this amount.

To achieve its long-term rate of return objectives, theuniversity relies on a total return strategy in whichinvestment returns are achieved through both capitalappreciation (realized and unrealized gains) and currentyield (interest and dividends). The university targets adiversified asset allocation that places greater emphasison equity-based investments to achieve its long-termobjectives within prudent risk constraints.

The university utilizes a spending rule for its pooledendowment in order to maximize the current and longterm investments of the endowment pool. The spendingrule determines the endowment income and realizedgains to be distributed currently for spending with theprovision that any amounts remaining after the distribu-tion be transferred and reinvested in the endowmentpool as funds functioning as endowment.

For the 2009 fiscal year, the Board of Trustees approvedcurrent distribution of 100% of the prior year’s payout,within a minimum of 4% and a maximum of 6% of theaverage market value for the previous 12 calendar quar-ters. Under the provisions of the spending rule, $25.42was distributed to each time-weighted unit for a totalspending rule allocation of $139,514,000. Investmentincome amounting to $10.03 per time-weighted unitwas earned, totaling $55,043,000, and $84,471,000 wasappropriated for current operations from cumulativegains of pooled investments. Endowment pool earningsallocated for spending in fiscal year 2009 represent5.7% of the market value of the endowment pool atJune 30, 2009. Total earnings allocated for spending infiscal year 2009 represent 5.5% of the market value oftotal endowment at June 30, 2009.

Approximately $4,892,000 of the university’s unrestrictedlong-term investments have been designated to supportstudent loans.

Note 9

Unconditional promises are included in the consolidatedfinancial statements as pledges receivable and revenueof the appropriate net asset category. Pledges arerecorded after discounting using rates ranging from4% to 6% to the present value of the future cash flows.

Unconditional promises are expected to be realized inthe following periods (in thousands):

In one year or less $33,121

Between one year and five years 113,997

More than five years 96,647

Less: discount of $38,579and allowance of $11,373 (49,952)

$193,813

Pledges receivable at June 30, 2009 have the followingrestrictions (in thousands):

Endowment for departmentalprograms and activities $48,400

Endowment for scholarship 4,011

Building construction 40,816

Departmental programs and activities 100,586

$193,813

Note 10

Executed contracts, grants, subcontracts and coopera-tive agreements for future sponsored research activitywhich are not reflected in the consolidated financialstatements at June 30, 2009 are summarized as follows(in thousands):

Current sponsored awards $378,624

Executed grants and contractsfor future periods 340,351

$718,975




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Note 11

At June 30, 2009, the university had remaining commit-ments of approximately $767,000,000 with alternativeinvestment managers and/or limited partnerships.

Contractual commitments for educational plantamounted to approximately $159,122,000 at June 30,2009. It is expected that the resources to satisfy thesecommitments will be provided from certain unexpendedplant net assets, anticipated gifts and/or debt proceeds.

During the year ended June 30, 2001, the universityentered into an agreement with the County of LosAngeles to provide professional services at LAC+USCMedical Center. Under the terms of the agreement thecontract automatically renews on an annual basis unlesseither party gives four years’ notice of the termination.No such notice has been provided by either party.

Note 12

Retirement benefits for employees are providedthrough the Teachers Insurance and AnnuityAssociation and the College Retirement Equities Fund,The Vanguard Group, AIG SunAmerica, FidelityInvestments and Prudential Financial. Under thesedefined contribution plans, the university and planparticipants make contributions to purchase individual,fixed or variable annuities equivalent to retirementbenefits earned or to participate in a variety of mutualfunds or a fixed income fund. Benefits commence upontermination or retirement and pre-retirement survivordeath benefits are also provided. Charges to educationand general activities expenses for the university’s shareof costs were approximately $81,733,000 during theyear ended June 30, 2009.

Retirement benefits for non-exempt employees areprovided through a noncontributory defined benefitpension plan. The following table sets forth the plan’sfunded status at June 30, 2009 (in thousands):

Benefit income ($1,839

Employer contribution $0

Benefits paid $5,218

Accumulated benefit obligation at end of year $140,938

Projected benefit obligation ($142,592

Fair value of plan assets 128,921

Funded status ($13,671

Items recognized in the consolidated balance sheet:

Accrued benefit liability ($13,671

Changes in the net reduction to unrestricted net assets:

Net loss $38,737

The estimated net loss/(gain) and prior service costfor the USC Support Staff Retirement Plan that willbe recognized as components of net periodic benefitcost over the next fiscal year are $3,134,074 and $0,respectively.

Weighted-average assumptions:

Discount rate 7.00%

Expected return on plan assets 8.00%

Rate of compensation increase 5.00%

The overall expected rate of return on assets of 8%is based on historical returns of the plan, as well aslong-term return assumptions given the plan’s assetallocation.

The pension plan’s asset allocations, by asset category,are as follows:

TargetAsset Category June 30, 2009 at June 30, 2009

Equity securities 50.2% 50.0%

Debt securities 49.8% 50.0%

TOTAL 100.0% 100.0%

)

)

)

)



27



Note 12 (continued)

No contribution to the pension plan was required duringthe fiscal year ending June 30, 2009. The universitymay make discretionary contributions to its pensionplan during the next fiscal year. This will be reassessedduring the year.

The following benefit payments, which reflect expect-ed future service, as appropriate, are expected to bepaid (in thousands):

Fiscal Year Ending June 30,2010 $5,772

2011 $6,311

2012 $6,820

2013 $7,369

2014 $7,963

2015 – 2019 $47,441

The plan was amended effective June 30, 2007 tofreeze benefit accruals for all non-union participants andLibrary union participants and to provide full vestingfor active participants whose benefits are frozen. Theseparticipants began to participate in the university’sdefined contribution plan effective July 1, 2007.

Note 13

The university is contingently liable as guarantor oncertain obligations relating to equipment loans, studentand parent loans, and various campus organizations.The university receives funding or reimbursement fromgovernmental agencies for various activities, which aresubject to audit. In addition, certain litigation has beenfiled against the university and in the opinion of universitymanagement, after consultation with legal counsel, theliability, if any, for the aforementioned matters will nothave a material effect on the university’s financial position.

Note 14

The estimated fair value of the university’s bonds,notes and mortgages payable was $912,462,000 atJune 30, 2009. This fair value was estimated basedupon the discounted amount of future cash outflowsusing the rates offered to the university for debt of thesame remaining maturities.

Determination of the fair value of notes receivable,which are primarily federally sponsored student loanswith U.S. Government mandated interest rates andrepayment terms and subject to significant restrictionsas to their transfer or disposition, could not be madewithout incurring excessive costs.

Note 15

Members of the Board of Trustees and senior manage-ment may, from time to time, be associated, eitherdirectly or indirectly, with companies doing businesswith the university. For senior management, the univer-sity requires annual disclosure of significant financialinterest in entities doing business with the university.These annual disclosures cover both senior manage-ment and their immediate family members. When suchrelationships exist, measures are taken to appropriatelymanage the actual or perceived conflict in the bestinterests of the university. The university has a writtenconflict of interest policy that requires, among otherthings, that no member of the Board of Trustees canparticipate in any decision in which he or she or animmediate family member has a material financialinterest. Each trustee is required to certify compliancewith the conflict of interest policy on an annual basisand indicate whether the university does business withan entity in which a trustee has a material financialinterest. When such relationships exist, measures aretaken to mitigate any actual or perceived conflict,including requiring the recusal of the conflicted trusteeand that such transactions be conducted at arm’s length,for good and sufficient consideration, based on termsthat are fair and reasonable to and for the benefit of theuniversity, and in accordance with applicable conflict ofinterest laws. No such associations are considered to besignificant.

Note 16

The university has performed an evaluation of subse-quent events through September 30, 2009, which is thedate the financial statements were available to be issued.Effective July 1, 2009, in connection with certain assettransfer agreements seventeen separate 501 (c) (3)Medical Faculty Practice Plans transferred certainassets and liabilities to USC Care Medical Group, Inc.

On July 9, 2009, the university issued $82,305,000 ofCEFA Series 2009C bonds. The proceeds of this bondissue were deposited into a refunding escrow account topay interest, principal and redemption premiums forthe CEFA Series 1998A and CEFA Series 1999 out-standing bonds. The CEFA Series 1998A bonds wereretired on August 10, 2009 and the CEFA Series 1999bonds are scheduled to be retired on October 1, 2009.


Undesignated BudgetEducation and General Health Care Services

2008-09 2009-10 Percent 2008-09 2009-10 PercentBudget Budget Change Budget Budget Change

Revenues

Tuition and fees $1,052,060 $1,105,996 5.13%

Less student aid (257,258) (282,868) 9.95%

Net tuition and fees 794,802 823,128 3.56%

Endowment income 58,749 58,422 (0.56%)

Investment income 7,515 640 (91.48%)

Gifts 36,726 40,565 10.45%

Contracts and grants – direct

Recovery of indirect costs:

Contracts and grants 98,548 107,599 9.18%

Endowments/Gifts 11,623 11,787 1.41%

Auxiliary enterprises 239,139 234,500 (1.94%)

Sales and service and other sources 107,175 103,085 (3.82%) $144,619 $767,167 +100%TOTAL REVENUES $1,354,277 $1,379,726 1.88% $144,619 $767,167 +100%

Expenses

Compensation:

Faculty salaries $262,903 $273,785 4.14% $62,002 $134,412 +100%

Other salaries and wages 416,120 424,141 1.93% 33,750 183,327 +100%

Employee benefits 196,161 209,698 6.90% 31,311 86,955 +100%TOTAL COMPENSATION 875,184 907,624 3.71% 127,063 404,694 +100%

Current expense 271,056 247,989 (8.51%) 7,113 250,252 +100%

Capital financing 61,657 71,002 15.16% 4,806 35,527 +100%

Professional services 33,790 41,691 23.38% 5,181 52,694 +100%

Equipment/Library 21,192 20,353 (3.96%) 2,826 100%

Utilities/Telephone 38,537 40,037 3.89% 5,032 100%

Off-campus facilities 19,943 19,730 (1.07%) 399 1,641 +100%

Travel 19,355 20,103 3.86% 57 1,323 +100%

Rentals and leases 13,563 11,197 (17.44%) 13,178 100%TOTAL EXPENSES $1,354,277 $1,379,726 1.88% $144,619 $767,167 +100%


28


2010 Summary of Budgeted Operating Revenues and Expenses2009-10 Budget | in thousands


Designated Budget Total Budget2008-09 2009-10 Percent 2008-09 2009-10 PercentBudget Budget Change Budget Budget Change

$1,052,060 $1,105,996 5.13%

($55,196) ($60,526) 9.66% (312,454) (343,394) 9.90%

(55,196) (60,526) 9.66% 739,606 762,602 3.11%

62,957 56,920 (9.59%) 121,706 115,342 (5.23%

7,515 640 (91.48%

194,546 184,812 (5.00%) 231,272 225,377 (2.55%

322,330 357,648 10.96% 322,330 357,648 10.96%

98,548 107,599 9.18%

11,623 11,787 1.41%

239,139 234,500 (1.94%

251,794 870,252 +100%

$524,637 $538,854 2.71% $2,023,533 $2,685,747 32.73%

$71,670 $76,152 6.25% $396,575 $484,349 22.13%

136,995 148,283 8.24% 586,865 755,751 28.78%

54,540 58,947 8.08% 282,012 355,600 26.09%

263,205 283,382 7.67% 1,265,452 1,595,700 26.10%

183,804 177,188 (3.60%) 461,973 675,429 46.21%

2,114 116 (94.51%) 68,577 106,645 55.51%

17,183 19,225 11.88% 56,154 113,610 +100%

20,929 20,738 (0.91%) 42,121 43,917 4.26%

38,537 45,069 16.95%

18,909 18,291 (3.27%) 39,251 39,662 1.05%

17,892 19,700 10.11% 37,304 41,126 10.25%

601 214 (64.39%) 14,164 24,589 73.60%

$524,637 $538,854 2.71% $2,023,533 $2,685,747 32.73%


29


)

)

)

)



30


2010 Colleges, Schools, Centers and InstitutesIndividual Revenue Center Summary | 2009-10 Budget | in thousands

Annenberg School for School of Centers for CreativeCommunication & Journalism School of Architecture Cinematic Arts Technologies

Undesignated Designated Undesignated Designated Undesignated Designated Undesignated DesignatedRevenuesDirect $40,911 $11,896 $15,250 $2,043 $38,778 $10,443 $5,151 $34,307Center 51,805 11,896 20,298 2,043 49,474 10,443 5,151 34,307UG Student Aid Fund (9,495) (4,357) (9,186)Facilities Improvement Fund (1,399) (691) (1,510)

Indirect (1,266) (1,310) (1,604) (340)Participation (3,076) (1,478) (3,330) (340)Academic Initiatives 415Provost’s Initiatives 39 53 216Graduate Programs 1,771 115 1,095

TOTAL REVENUES $39,645 $11,896 $13,940 $2,043 $37,174 $10,443 $4,811 $34,307

ExpensesDirect $31,776 $11,896 $9,938 $2,043 $24,985 $10,443 $4,126 $34,307Indirect 7,869 4,002 12,189 685Allocated Central Costs 6,691 3,377 10,798 685Facilities Based 1,178 625 1,391

TOTAL EXPENSES $39,645 $11,896 $13,940 $2,043 $37,174 $10,443 $4,811 $34,307

Davis School College of Letters,of Gerontology Gould School of Law Graduate Programs Arts and Sciences

Undesignated Designated Undesignated Designated Undesignated Designated Undesignated DesignatedRevenuesDirect $5,551 $7,374 $36,508 $3,986 $48,092 $222,144 $65,822Center 6,083 7,374 37,983 3,986 48,092 319,588 65,822UG Student Aid Fund (425) (298) (88,065)Facilities Improvement Fund (107) (1,177) (9,379)

Indirect 3,804 2,825 (43,529) 10,192Participation (296) (2,310) (22,265)Academic Initiatives 3,500 2,000 20,700 252Provost’s Initiatives 3,135 871Graduate Programs 600 (64,229) 31,334

TOTAL REVENUES $9,355 $7,374 $39,333 $3,986 $4,563 $232,336 $65,822

ExpensesDirect $4,986 $7,374 $29,580 $3,986 $4,563 $146,942 $65,822Indirect 4,369 9,753 85,394Allocated Central Costs 3,808 8,318 72,789Facilities Based 561 1,435 12,605

TOTAL EXPENSES $9,355 $7,374 $39,333 $3,986 $4,563 $232,336 $65,822

Marshall School School of Policy, Planning,of Business and Development Roski School of Fine Arts Rossier School of Education

Undesignated Designated Undesignated Designated Undesignated Designated Undesignated DesignatedRevenuesDirect $136,012 $17,169 $26,946 $9,886 $8,225 $637 $26,133 $6,637Center 170,573 17,169 31,409 9,886 11,642 637 27,692 6,637UG Student Aid Fund (29,195) (3,358) (3,078) (765)Facilities Improvement Fund (5,366) (1,105) (339) (794)

Indirect (9,702) (426) (559) (838)Participation (11,415) (2,288) (770) (1,822)Academic Initiatives 500 200 296Provost’s Initiatives 13 76 11 40Graduate Programs 1,700 1,286 648

TOTAL REVENUES $126,310 $17,169 $26,520 $9,886 $7,666 $637 $25,295 $6,637

ExpensesDirect $90,279 $17,169 $17,705 $9,886 $5,591 $637 $18,812 $6,637Indirect 36,031 8,815 2,075 6,483Allocated Central Costs 33,343 8,109 1,790 5,839Facilities Based 2,688 706 285 644

TOTAL EXPENSES $126,310 $17,169 $26,520 $9,886 $7,666 $637 $25,295 $6,637



31


Definitions:Direct Revenues and Direct Expenses in Revenue Centers includeall categories displayed in the Summary of Budgeted OperatingRevenues and Expenses.

Center Revenues are directly generated by the center less anyfinancial aid paid from center funds.

The Undergraduate Student Aid is centrally administered andcharged to academic centers on a pre-determined percent ofundergraduate tuition. For fiscal year 2009-2010, the rate is 29%.

Indirect Revenues are the sumof Participation, Academic Initiatives,Provost’s Initiatives, and Graduate Programs.

Participation is a tax on gross tuition revenue, recovery of indirectcosts, sales and service and other sources. For fiscal year 2009-2010,the rate is 6.6%.

Academic Initiatives funding is for specific activities for a limitedtime period.

Provost’s Initiatives funding is allocated from centrally controlledfunds to support university priorities.

Graduate Programs funding is provided to schools in support ofgraduate education. All PhD tuition is centralized and allocatedto various schools based on academic priorities.

Indirect Expenses are the sum of Allocated Central Costsand Facilities Based Indirects and equal the net budgets ofadministrative centers (see Individual Administrative Centers2009-2010 Budget by Presidential and Senior Vice PresidentialResponsibility Area).

Allocated Central Costs are central administrative costs that benefitthe university as a whole and are allocated to revenue centers.

Facilities Based Indirects are space related costs that can be linkeddirectly to a center’s occupancy.

Summer andSchool of Social Work Special Programs School of Theatre Thornton School of Music

Undesignated Designated Undesignated Designated Undesignated Designated Undesignated DesignatedRevenuesDirect $25,263 $4,841 $3,004 $10,737 $1,279 $22,381 $1,006Center 26,353 4,841 3,058 15,423 1,279 29,791 1,006UG Student Aid Fund (87) (4,224) (6,517)Facilities Improvement Fund (1,003) (54) (462) (893)

Indirect (1,093) (473) 2,832Participation (1,980) (1,047) (2,021)Academic Initiatives 300 400 4,500Provost’s Initiatives 65 121 118Graduate Programs 522 53 235

TOTAL REVENUES $24,170 $4,841 $3,004 $10,264 $1,279 $25,213 $1,006

ExpensesDirect $19,111 $4,841 $3,004 $7,180 $1,279 $16,482 $1,006Indirect 5,059 3,084 8,731Allocated Central Costs 4,708 2,434 7,644Facilities Based 351 650 1,087

TOTAL EXPENSES $24,170 $4,841 $3,004 $10,264 $1,279 $25,213 $1,006

TToottaall CCoolllleeggeess,, SScchhoooollss,,Academic Programs Information Sciences Institute CCeenntteerrss aanndd IInnssttiittuutteess

Undesignated Designated Undesignated Designated Undesignated DesignatedRevenues Direct $92,708 $49,063 $7,488 $61,833 $771,282 $288,222Center 107,498 49,063 7,488 61,833 969,401 288,222UG Student Aid Fund (11,656) (170,706)Facilities Improvement Fund (3,134) (27,413)

Indirect 17,784 (23,703)Participation (7,558) (505) (62,501)Academic Initiatives 8,000 505 41,568Provost’s Initiatives 4,758Graduate Programs 17,342 (7,528)

TOTAL REVENUES $110,492 $49,063 $7,488 $61,833 $747,579 $288,222

Expenses Direct $69,892 $49,063 $4,919 $61,833 $509,871 $288,222Indirect 40,600 2,569 237,708Allocated Central Costs 33,916 2,569 206,818Facilities Based 6,684 30,890

TOTAL EXPENSES $110,492 $49,063 $7,488 $61,833 $747,579 $288,222

Viterbi School of Engineering



32


2010 Health Sciences Schools and Health Care ServicesIndividual Revenue Center Summary | 2009-10 Budget | in thousands

School of Dentistry Keck School of Medicine School of Pharmacy TToottaall HHeeaalltthh SScciieenncceess SScchhoooollss

Undesignated Designated Undesignated Designated Undesignated Designated Undesignated Designated Revenues Direct $87,737 $10,039 $141,271 $191,988 $43,626 $9,214 $272,634 $211,241Center 92,148 10,039 144,741 191,988 44,764 9,214 281,653 211,241UG Student Aid Fund (1,827) (1,759) (3,586)Facilities Improvement Fund (2,584) (1,711) (1,138) (5,433)

Indirect (4,469) 12,964 (1,923) 6,572Participation (5,744) (6,266) (3,068) (15,078)Academic Initiatives 13,900 13,900Provost’s Initiatives 186 36 222Graduate Programs 1,089 5,294 1,145 7,528

TOTAL REVENUES $83,268 $10,039 $154,235 $191,988 $41,703 $9,214 $279,206 $211,241

Expenses Direct $62,496 $10,039 $105,081 $191,988 $31,866 $9,214 $199,443 $211,241Indirect 20,772 49,154 9,837 79,763Allocated Central Costs 17,015 38,575 8,504 64,094Facilities Based 3,757 10,579 1,333 15,669

TOTAL EXPENSES $83,268 $10,039 $154,235 $191,988 $41,703 $9,214 $279,206 $211,241

Dentistry Health Care Medical Enterprise Pharmacy Health Care TToottaall HHeeaalltthh CCaarree SSeerrvviicceess

Undesignated Designated Undesignated Designated Undesignated Designated Undesignated Designated Revenues Direct $1,999 $760,840 $4,328 $767,167Center 1,999 760,840 4,328 767,167UG Student Aid FundFacilities Improvement Fund

Indirect Participation Academic Initiatives Provost’s Initiatives Graduate Programs

TOTAL REVENUES $1,999 $760,840 $4,328 $767,167

Expenses Direct $1,967 $756,650 $4,271 $762,888Indirect 32 4,190 57 4,279Allocated Central Costs 32 4,190 57 4,279Facilities Based

TOTAL EXPENSES $1,999 $760,840 $4,328 $767,167



33


2010 Auxiliaries and AthleticsIndividual Revenue Center Summary | 2009-10 Budget | in thousands

Housing andAnimal Resources Hospitality Services Residence Halls Intercollegiate Athletics

Undesignated Designated Undesignated Designated Undesignated Designated Undesignated DesignatedRevenuesDirect $418 $36,976 $50,452 $56,049 $4,800Center 418 36,976 50,452 56,049 4,800UG Student Aid FundFacilities Improvement Fund

IndirectParticipationAcademic InitiativesProvost’s InitiativesGraduate Programs

TOTAL REVENUES $418 $36,976 $50,452 $56,049 $4,800

ExpensesDirect ($1,199) $33,498 $40,761 $47,680 $4,800Indirect 1,617 3,478 9,691 8,369Allocated Central Costs 688 2,397 5,862 6,062Facilities Based 929 1,081 3,829 2,307

TOTAL EXPENSES $418 $36,976 $50,452 $56,049 $4,800

Student Health andKUSC Counseling Services Transportation Services University Bookstores

Undesignated Designated Undesignated Designated Undesignated Designated Undesignated DesignatedRevenuesDirect $6,220 $447 $35,977 $18,133 $43,293Center 6,220 447 35,977 18,133 43,293UG Student Aid FundFacilities Improvement Fund


TOTAL REVENUES $6,220 $447 $35,977 $18,133 $43,293

ExpensesDirect $5,550 $447 $33,645 $11,705 $39,284Indirect 670 2,332 6,428 4,009Allocated Central Costs 670 1,956 5,196 3,119Facilities Based 376 1,232 890

TOTAL EXPENSES $6,220 $447 $35,977 $18,133 $43,293

Total AuxiliariesUniversity Club University Radisson Hotel University Village and Athletics

Undesignated Designated Undesignated Designated Undesignated Designated Undesignated DesignatedRevenuesDirect $434 $6,906 $2,521 $257,379 $5,247Center 434 6,906 2,521 257,379 5,247UG Student Aid FundFacilities Improvement Fund


TOTAL REVENUES $434 $6,906 $2,521 $257,379 $5,247

ExpensesDirect $51 $6,906 $2,004 $219,885 $5,247Indirect 383 517 37,494Allocated Central Costs 256 517 26,723Facilities Based 127 10,771

TOTAL EXPENSES $434 $6,906 $2,521 $257,379 $5,247



34


2010 Classification by Center2009-10 Budget | in thousands

Colleges, Schools,Centers and Institutes Health Sciences Schools Health Care Services

Undesignated Designated Undesignated Designated Undesignated DesignatedRevenuesDirect $771,282 $288,222 $272,634 $211,241 $767,167Center 969,401 288,222 281,653 211,241 767,167UG Student Aid Fund (170,706) (3,586)Facilities Improvement Fund (27,413) (5,433)

Indirect (23,703) 6,572Participation (62,501) (15,078)Academic Initiatives 41,568 13,900Provost’s Initiatives 4,758 222Graduate Programs (7,528) 7,528

TOTAL REVENUES $747,579 $288,222 $279,206 $211,241 $767,167

ExpensesDirect $509,871 $288,222 $199,443 $211,241 $762,888Indirect 237,708 79,763 4,279Allocated Central Costs 206,818 64,094 4,279Facilities Based 30,890 15,669

TOTAL EXPENSES $747,579 $288,222 $279,206 $211,241 $767,167

Auxiliaries and Athletics TToottaall RReevveennuuee CCeenntteerrss Administrative Centers

Undesignated Designated Undesignated Designated Undesignated DesignatedRevenuesDirect $257,379 $5,247 $2,068,462 $504,710 $68,245 $34,144Center 257,379 5,247 2,275,600 504,710 (138,893) 34,144UG Student Aid Fund (174,292) 174,292Facilities Improvement Fund (32,846) 32,846

Indirect (17,131) 42Participation (77,579)Academic Initiatives 55,468Provost’s Initiatives 4,980 42Graduate Programs

TOTAL REVENUES $257,379 $5,247 $2,051,331 $504,710 $68,287 $34,144

Expenses Direct $219,885 $5,247 $1,692,087 $504,710 $427,531 $34,144Indirect 37,494 359,244 (359,244)Allocated Central Costs 26,723 301,914 (301,914)Facilities Based 10,771 57,330 (57,330)

TOTAL EXPENSES $257,379 $5,247 $2,051,331 $504,710 $68,287 $34,144

Provost Funding Total University

Undesignated Designated Undesignated DesignatedRevenues Direct $10,186 $2,146,893 $538,854Center 10,186 2,146,893 538,854UG Student Aid FundFacilities Improvement Fund

Indirect 17,089Participation 77,579Academic Initiatives (55,468)Provost’s Initiatives (5,022)Graduate Programs

TOTAL REVENUES $27,275 $2,146,893 $538,854

Expenses Direct $27,275 $2,146,893 $538,854Indirect Allocated Central CostsFacilities Based

TOTAL EXPENSES $27,275 $2,146,893 $538,854



35


2010 Individual Administrative Centers by Presidentialand Senior Vice Presidential Responsibility Area2009-10 Budget | in thousands

Net EmployeeOperating BenefitsBudget Budget

President:President’s Office $3,691 —

Executive Vice President and Provost:Academic Senate $187

Academic Services 1,683

Enrollment Services 19,179

Emeriti Center 579

Evaluation Services 103

Faculty Sabbaticals $10,883

Graduate School/Programs 3,107

Information Technology Services 31,995

Provost’s Office 14,749

Student Affairs 10,822 375

University Art Galleries 535

University Libraries 37,863

USC Stevens Institute 4,403

TOTAL $125,205 $11,258

Senior Vice President, Administration:Administrative Operations $2,433 $3,935

Audit Services 1,654

Campus Development 1,986

Career and Protective Services 32,962 12,318

Center for Work and Family Life 745

Compliance 2,383

Contracts and Grants 3,774

Facilities Management Services 71,556

General Counsel 8,589

Major Maintenance and Renovation 2,057

Senior Vice President’s Office 2,524

Tram, Campus Cruiser and Rideshare 4,186 1,121

University Real Estate 4,235

TOTAL $138,339 $18,119

Net EmployeeOperating BenefitsBudget Budget

Senior Vice President, Finance and CFO:Administrative Information Systems $12,437

Budget and Planning 2,033 $733

Comptroller 7,287 301,650

Corporate Expense 31,745

Financial and Business Services 13,870

Off Campus Facilities 486

Senior Vice President’s Office 2,799

Treasurer 1,035

TOTAL $71,692 $302,383

Senior Vice President, University Advancement:Senior Vice President’s Office $7,990 –

Senior Vice President, University Relations:University Relations $11,064

USC Alumni Association 1,263 –

TOTAL $12,327

Employee Benefit Recoveries ($331,760

TOTAL ADMINISTRATIVE CENTERS $359,244

Undergraduate Student Aid Fund $174,292

Facilities Improvement Fund 32,846

GRAND TOTAL $566,382 —

)



36


Board of Trustees

Wallis Annenberg

Joseph M. Boskovich, Sr.

Gregory P. Brakovich

Alexander L. Cappello

Rick J. Caruso

Alan I. Casden

Ronnie C. Chan

Yang Ho Cho

Frank H. Cruz

Richard DeBeikes, Jr.

David H. Dornsife

Michele Dedeaux Engemann

Daniel J. Epstein

Stanley P. Gold

Patrick C. Haden

Ming Hsieh

Ray R. Irani

Suzanne Nora Johnson

Lydia H. Kennard

Kenneth R. Klein

John Kusmiersky

Daniel D. Lane

David L. Lee

Mónica C. Lozano

Kathleen L. McCarthy

Jamie McCourt

John Mork

Jerry W. Neely

Joan A. Payden

Jane Hoffman Popovich

Blake Quinn

Lorna Y. Reed

Linda Johnson Rice

Edward P. Roski, Jr., Chairman

Barbara J. Rossier

Steven B. Sample, President

William J. Schoen

William E. B. Siart

Robert H. Smith

Jeffrey H. Smulyan

Steven Spielberg

Mark A. Stevens

Ronald D. Sugar

Ratan N. Tata

Ronald N. Tutor

Andrew J. Viterbi

Willis B. Wood, Jr.

Life Trustees

Malcolm R. Currie

Gavin S. Herbert

B. Wayne Hughes, Sr.

William M. Keck II

John F. King

Kenneth Leventhal

William Lyon

Alfred E. Mann

Gordon S. Marshall

Harlyne Norris

Toshiaki Ogasawara

J. Douglas Pardee

Frank Price

Allen E. Puckett

Bruce M. Ramer

Carl E. Reichardt

Forrest N. Shumway

Richard J. Stegemeier

David S. Tappan, Jr.

Peter V. Ueberroth

Gin D. Wong

Trustee Emeritus

John R. Hubbard

Honorary Trustees

Verna B. Dauterive

Helene Galen

Merwyn C. Gill

Flora Laney Thornton

Carmen H. Warschaw

Board of Trustees, Life Trustees,Trustee Emeritus and Honorary Trustees



37


Officers, Administrative Executives and Academic Deans

Officers and Executives

Steven B. Sample

President

C. L. Max Nikias

Executive Vice President and Provost

Robert Abeles

Interim Senior Vice President and Chief Financial Officer

Todd R. Dickey

Senior Vice President, Administration

Martha Harris

Senior Vice President, University Relations

Carol Mauch Amir

General Counsel and Secretary of the University

Erik D. Brink

Associate Senior Vice President and University Comptroller

Elizabeth Garrett

Vice President, Academic Planning and Budget

Michael L. Jackson

Vice President, Student Affairs

Ilee Rhimes

Chief Information Officer

Thomas S. Sayles

Vice President, Government and Community Relations

Margo Steurbaut

Vice President, Finance

Courtney Surls

Vice President, Development

Ruth Wernig

Associate Senior Vice President and Treasurer

Curtis D. Williams

Vice President, Campus Development and

Facilities Management Services

Academic Deans

Robert A. Cutietta

Thornton School of Music

Elizabeth M. Daley

Cinematic Arts

Gerald C. Davison

Davis School of Gerontology

James G. Ellis

USC Marshall School of Business and

USC Leventhal School of Accounting

Marilyn L. Flynn

Social Work

Karen Symms Gallagher

Rossier School of Education

Howard A. Gillman

College of Letters, Arts and Sciences

Jack H. Knott

Policy, Planning, and Development

Qingyun Ma

Architecture

Madeline Puzo

Theatre

Carmen A. Puliafito

Keck School of Medicine

Robert K. Rasmussen

Gould School of Law

Avishai Sadan

Dentistry

R. Pete Vanderveen

Pharmacy

Ruth E. Weisberg

Roski School of Fine Arts

Ernest J. Wilson III

Annenberg School for Communication & Journalism

Yannis Yortsos

Viterbi School of Engineering



38


The Role and Mission of theUniversity of Southern California

The central mission of the University of Southern California is the development of humanbeings and society as a whole through the cultivation and enrichment of the human mindand spirit. The principal means by which our mission is accomplished are teaching, research,artistic creation, professional practice and selected forms of public service.

Our first priority as faculty and staff is the education of our students, from freshmen to postdoctor-als, through a broad array of academic, professional, extracurricular and athletic programs of thefirst rank. The integration of liberal and professional learning is one of USC’s special strengths. Westrive constantly for excellence in teaching knowledge and skills to our students, while at the sametime helping them to acquire wisdom and insight, love of truth and beauty, moral discernment,understanding of self, and respect and appreciation for others.

Research of the highest quality by our faculty and students is fundamental to our mission. USCis one of a very small number of premier academic institutions in which research and teaching areinextricably intertwined, and on which the nation depends for a steady stream of new knowledge,art and technology. Our faculty are not simply teachers of the works of others, but active contrib-utors to what is taught, thought and practiced throughout the world.

USC is pluralistic, welcoming outstanding men and women of every race, creed and background.We are a global institution in a global center, attracting more international students over the yearsthan any other American university. And we are private, unfettered by political control, stronglycommitted to academic freedom, and proud of our entrepreneurial heritage.

An extraordinary closeness and willingness to help one another are evident among USC students,alumni, faculty, and staff; indeed, for those within its compass the Trojan Family is a genuinelysupportive community. Alumni, trustees, volunteers and friends of USC are essential to thisfamily tradition, providing generous financial support, participating in university governance, andassisting students at every turn.

In our surrounding neighborhoods and around the globe, USC provides public leadershipand public service in such diverse fields as health care, economic development, social welfare,scientific research, public policy and the arts. We also serve the public interest by being thelargest private employer in the city of Los Angeles, as well as the city’s largest export industryin the private sector.

USC has played a major role in the development of Southern California for more than a century,and plays an increasingly important role in the development of the nation and the world. We expectto continue to play these roles for many centuries to come. Thus our planning, commitments andfiscal policies are directed toward building quality and excellence in the long term.

Adopted by the USC Board of Trustees, February 3, 1993



Produced by the Office of the University Comptrollerand published by the Office of University Publications,

Division of Student Affairs, 2009


University of Southern CaliforniaUniversity Park, UGB 2o5, Los Angeles, CA 9oo89-8oo3

email: [email protected], telephone: (213) 821-19oowww.usc.edu


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