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U N I V E R S I T Y o f N O T R E DA M E Annual Report 2 0 0 6

U N I V E R S I T Y o f N O T R E DA M E Annual Report 2 0 0 62A Letter from the President6Jordan Hall of Science38Statements of Changes inUnrestricted Net Assets10Provost’s Note39Statements of Changes in Net Assets14Financial Overview40Statements of Cash Flows18University Highlights41Notes to Financial Statements22Development Update54University Administration26Investment Review56University Trustees36Report of Independent Auditors37Statements of Financial Position

A L ET T E R F ROM T H E PR E S I DE N TThe Role of a Catholic Universityin the 21st CenturyThroughout my first year as President I have thought often aboutmy undergraduate days at Notre Dame. It was here—in classrooms and hallways, by the lakes, on the quads and in the residence halls—that I was initiated into the scholarly life, the life ofthe mind, the vigorous give and take of intellectual questioning. Asa philosophy major, I enjoyed the thoughtful sparring, the precisionessential to persuasion, the hunt for truth down crooked lanes. I soenjoyed the conversations and found them so rewarding that I chosethis course for my life’s work.As this path has taken me from South Bend to Oxford, fromstudent to teacher, from scholar to president, the desire toengage the ultimate questions has remained the central current inmy life, bringing coherence and continuity at every turn andevery level. I am at home in such a quest, confident of thoseeternal truths and immutable ideals that bring definiteanchors—amid life’s complexities—to matters of faith andreason, and to the various truths or doubts about God or thesoul or immortality. Philosophy, I tell my students, raisesquestions and challenges assumptions, leads us to wonderabout what we thought was obvious. My purpose, whenteaching, is to invite them to wonder and to encourage morecareful thought than they have been accustomed to, or perhaps,comfortable with.This method of teaching and my role in theclassroom have acquired new meaning as I lookback on my first year as President of this University. I am glad I am so familiar with theeducational enterprise here, with the studentsand their concerns, and with the scholarlylife, which, after all, is at the core of all we do.Additionally, though, as President, I have2

T H E ROL E OF A C AT HOL IC U N I V E R S I T Ycome to appreciate such discussions in new and meaningful ways.The many tasks that have come with this office have immersed me in acontinuing conversation that has been enriching, engaging, and vitalto the lifeblood of this institution. This discourse has only affirmedin me the importance of living the questions, the excitement of theintellectual journey, the invaluable benefits of pursuing the rigorouslyexamined life.The role of a Catholic university is toIn the process I may have discovered (as havebring to the life of the Church, throughmy students) that I knew less about certain cornerssustained and serious thought andof institutional life than when I started, but I havediscussion, the integration of reasonalso gleaned new insights, gained a more profoundunderstanding, and arrived at more settled convic- and faith.tions about matters of great importance in life. Iam also comfortable in the knowledge—as we pursue understanding,wisdom, and truth—that answers beget even more questions. This is afundamental premise of higher education, and those of us engaged insuch an undertaking must relish the chase.Of course, our conversations here at Notre Dame demand a muchfuller, more vigorous examination because ours is a Catholic university and our dialogue is inspired by the truths of the Gospel. It is aplace where faith seeks understanding, where a deeper understandingof the truths of faith is achieved by pondering questions, puzzles, evenobjections. The role of a Catholic university is to bring to the life of theChurch, through sustained and serious thought and discussion, the integration of reason and faith. It must identify and formulate the critical questions that arise in an age when faith and reason may appear inconflict. And there is no doubt that in our time, with the expansion ofknowledge and communication around the globe, the questions aremore numerous and challenging than ever before.3

A L ET T E R F ROM T H E PR E S I DE N TThe Catholic intellectual tradition is grounded in the Gospel ofJesus Christ, and yet it has developed over centuries through engagement,interaction, and dialogue with the surrounding culture, whether speaking on emerging social questions or applying Gospel truths to the complex situations wrought by advances in science. HowWe strive to produce leaders forour ancient but evolving Catholic tradition expressestomorrow’s world who not only haveitself in the future depends, to a large extent, uponthe requisite intellectual powers but the work of this and other Catholic universities.also the moral, spiritual, and ethicalsensitivities essential to navigate theuncharted waters of environmentalhealth, reproductive biology, epidemicdisease, and the very nature of theuniverse, to name just a few.This interplay between Notre Dame and thewider world is essential in all areas of our academiclife as well as in our many service components andinitiatives. But today, it is most tangibly apparent inthe recently completed Jordan Hall of Science. This201,782-square-foot, 70 million facility will house40 teaching-focused laboratories, two 250-seat lecture halls, a greenhouse, herbarium, observatory, and a state-of-the-artmultimedia theater, as well as faculty offices and an impressive arrayof cutting-edge equipment. While the building is dramatic evidenceof Notre Dame’s spirited commitment to science education, it is alsoa clear indication of the necessary integration of reason and faith atthis University.Certainly our world demands scholars, scientists, teachers,researchers, and doctors of the very highest professional expertise, people who can venture capably into the frontiers we today can only imagine—as well as those horizons we cannot now foresee. But the worldalso needs people infused with those qualities of the mind and soulnecessary to direct those unknown and unforeseen changes toward thebetterment of life on earth. That is the kind of education, training, and4

T H E ROL E OF A C AT HOL IC U N I V E R S I T YAcademic Year Ended June 30, 2006development we hope to nurture here. Westrive to produce leaders for tomorrow’sworld who not only have the requisite intellectual powers but also the moral, spiritual,and ethical sensitivities essential to navigatethe uncharted waters of environmental health,reproductive biology, epidemic disease, andthe very nature of the universe, to name justa few.N O T R E DA M E AT A G L A N C ESTUDENTSUndergraduateGraduate and professionalTotal fall enrollmentU N D E R G R A D UAT E A D M I S S I O N SApplicationsThis new facility will surely elevate theOffers of admissionquality of science education here. To whatEnrolledextent that improvement will be realized,Selectivity ratiohowever, is largely up to the faculty, to theMatriculation ratiopeople who will serve and lead those educatedwithin its walls and far beyond this campus.DEGREES CONFERREDFortunately, Notre Dame has always beenBaccalaureateblessed by good people—whether faculty orMaster’sstaff, alumni or benefactor, Holy Cross priestFirst professionalor University Trustee. I knew this long ago,Doctoralas a Notre Dame undergraduate in the earlyTotal degrees conferred1970s, as a graduate student, a teacher andprofessor, and as a member of the University’sUndergraduate Tuition Rateleadership team prior to assuming the presiPercent increase over prior yeardency. But this past year has deeply impressedupon me the depth of feeling people have forthis place, and not simply the love and affection, but also the expectations, the reverence, the dreams and aspirations.The very passion that animates the discussion of things Notre Dame—itscharacter, traditions, legacy, and future—is perhaps the most gratifyinglesson of this past year. Members of the Notre Dame family care deeplyabout this place, what it is, what it is becoming, what it symbolizes.Th is passion is also the institution’s most essential and encouraging asset. As I move into my second year as President and as the University moves forward into the future, we are emboldened by the dreamsthat have been realized, by our unique melding of faith and reason, ourCatholic nature and our academic ambitions, and by all those who havegiven so much to Notre Dame. A year ago I was surely inspired by thepromise of this place. Today I am more enthusiastic and more confidentthan ever about what lies ahead.Rev. John I. Jenkins, .6%55.7%2,0728481821603,262 31,1007.0%

6

JOR DA N H A L L OF S C I E N C ENew Facility Underscores Notre Dame’sCommitment to Science EducationAt 201,782 square feet, the Jordan Hall of Science becomes NotreDame’s newest and most technologically advanced facility dedicatedsolely to undergraduate science instruction. With the completion ofthis 70 million facility, the square footage of laboratory space on campusincreases significantly in each of these areas: from 14,600 square feet tonearly 34,000 square feet for biology; from 14,000 square feet to 39,000square feet for chemistry and biochemistry; and from less than 7,000 squarefeet to about 20,000 square feet for physics.Not only does this new facility increase the space dedicated to scienceinstruction on campus, its layout also fosters an interdisciplinary styleof learning by bringing physics, biology, and chemistry students togetherunder one roof. State-of-the-art equipment, labs, lecture halls, and classrooms can be shared as needed by all students.Jordan Hall will dramatically improve the way science is taught by taking full advantage of the talents and ingenuity of Notre Dame’s world-classfaculty. For the first time, College of Science faculty will be able to teachtheir courses without constraints or compromises. Our students can nowexperience a truly integrated, creative learning environment that betterprepares them for their futures as independent thinkers and leaders.7

At a GlanceJ O R DA N H A L L O F S C I E N C E4 -bay greenhouse22 administrative offices40 undergraduate laboratories136 -seat Digital Visualization Theatre223 fume hoods distributedamong labs, enough for eachstudent in class“Unquestionably, Jordan Hallenhances my science-relatedexperience here at NotreDame by providing concentrated learning resourcesin a state-of-the-art facility.”Two 250 -seat lecture halls3,000 and 4,000 students:projected enrollment of studentsin science lecture and laboratorycourses, respectively, per semester201,782 square feetApproximately 500,000 bricksTristan VanVoorhis ’08Preprofessional

Notable Sponsored Research Awards / Fiscal 2006ProjectSponsorAmountPreventing Child Neglect inHigh-risk MothersNational Institutes of Health 1,662,590Ionic Liquids for Utilizationof Waste Heat from DistributedPower SystemsDepartment of Energy 1,431,931Radiation and Photochemistryin the Condensed PhaseDepartment of Energy 3,220,000Pathophysiologies InvolvingHemostasis-Related GenesNational Institutes of Health 1,760,503Wind Tunnel for AirbournePlatform Laser andFlight ControlDepartment of the Air Force 2,838,276NIRT: Extremely MismatchedMaterials for AdvancedNanodevicesNational Science Foundation 1,300,000Environmental MolecularScience Institute: Actinidesand Heavy Metals in theEnvironment: The Formation,Stability, and Impact of Nanoand Micro-ParticlesNational Science Foundation 1,000,000NIRT: Spatial and IntensityModulation of Light Emissionin Fluorescent Molecules,Nanocrystals, and NanowiresNational Science Foundation 1,199,544Anti-Sand Fly Saliva VaccineDevelopmentARMY/ DARPA 2,703,000Nuclear Structure and NuclearAstrophysics (Joint Institutefor Nuclear Astrophysics)National Science Foundation 2,000,000Nuclear Structure and NuclearAstrophysicsNational Science Foundation 1,400,000VectorBase: A BioinformaticsResource Center for InvertebrateVectors of Human PathogensNational Institutes of Health 1,526,840“I’ve had such brilliant andengaging professors in myscience courses here at NotreDame. With the gift of theJordan Hall of Science, ourscience facilities now fullyreflect the quality of ourfaculty. I believe Jordan Hallwill move us to the forefrontof undergraduate education,and I’m honored to be astudent here during thisexciting time.”Brennan Bollman ’09Biochemistry

PROVO ST ’ S N OT EStewarding a Bold VisionWhen I came to Notre Dame in summer 2005, several experienceshelped shape my expectations. I am a Notre Dame graduate, aNotre Dame parent, and had served as a consultant on severaloccasions over past years. However, shortly into my first year as provost,I realized that I was seeing the University in a way that I could only experience during my fi rst few months. Witnessing the day-to-day life of theUniversity brought an entirely new perspective. As my first year drew toa close, I savored this view, because it allowed me to see clearly many ofthe University’s distinctive strengths.This past year has convinced methat Notre Dame is poised to dosomething that no university in thelast two centuries has achieved:to be associated with a faith-basedtradition in a meaningful way whilebeing, and being regarded as, apreeminent research university.Self-confident universities measure themselvesprimarily by their own priorities and goals, not thoseimposed by magazines or pollsters. However, suchuniversities also are not afraid to benchmark themselves by the industry standards. Notre Dame doesboth. It sets high academic standards for itself andjudges its progress according to accepted measuresof excellence. It is also committed to preserving andstrengthening its Catholic character, and to providingits students not only with an excellent education but also with opportunities to grow spiritually and as ethical, responsible, and caring leaders.Notre Dame is and has been for many years an exceptionally well-rununiversity. Its success is evident to any visitor on campus, but also in itsspreadsheets and in the stories you read on these pages. My predecessor, Nathan Hatch, worked to ensure this, as did former President Rev.Edward A. Malloy, C.S.C. The standard measures of success bear this out,but unexpected and unusual factors also flesh out how integrally everypart of the enterprise works to further the University’s mission. Consider,for example, the financial contribution the athletics program makes tothe academic endeavor—be it to student scholarships, equipment for thenew Jordan Hall of Science, or materials for the University Libraries.10

ST E WA R DI NG A B OL D V I SIONThroughout my fi rst year, I realized that Notre Dame’s institutionalstrengths are matched by remarkable individual dedication. One of mypleasures was to come to know the faculty’s deep commitment to undergraduate students, their involvement with the life of the University, andtheir ability to deal with controversial issues in a civil, thoughtful, probingmanner.Before my arrival, I had been acquainted with various statistics ofstudent achievement: the remarkable number who study overseas, theincreasing number involved in research, the stellar GPAs, class placements,and board scores of our incoming freshmen. Until I entered the daily lifeof Notre Dame, I did not understand how passionately and vibrantly ourstudents seek to integrate their intellectual powers with their spirituality.They demand that we teach not just values, but virtues. In doing so, theyfeed our will to create a place where they not only learn, but also experiencetheir education as people of faith.Finally, Notre Dame is ambitious. Its passion to be better, toconstantly improve, creates intellectual excitement and provides aforceful momentum. Enduring institutions don’t just do somethingwell, they do something important and distinctive. They are boldin their vision. This past year has convinced me that Notre Dameis poised to do something that no university in the last two centuries has achieved: to be associated with a faith-based tradition in ameaningful way while being, and being regarded as, a preeminentresearch university.It is a gift to be part of this effort.Thomas G. BurishProvost11

Notre Dame has a long and proudathletic tradition that complementsits academic aspirations. Our studentathletes—there are now 26 varsitysports—consistently appear at thetop of the NCAA annual rankingsof graduation rates for Division I-Aschools. Over the years, revenuegenerated by athletic events hascontributed significantly to theUniversity’s resources.2006 FIESTA BOWL 11.2 MILLIONA L L O C AT E D T O WA R D :Undergraduate Financial AidGraduate Financial AidLibrary AcquisitionsScientific Instruments12

Case in Point:Notre Dame’s January 2006 appearance in the Fiesta Bowl netted 11.2 million for the University,which was allocated toward undergraduate and graduate financial aid, library acquisitions, and scientific instruments for the new Jordan Hall of Science.Bowl game revenue has produced in excess of 68 million in the past 25 years. These funds, alongwith a substantial portion of the proceeds from the University’s television contract with NBC, havebeen used to support student financial aid, and together have provided more than 2,000 scholarships.13

F I NA N C I A L OV E RV I E WSound Financial PrinciplesSupport a Robust Academic MissionThe University experienced another fi scally successful year in 2006.Total operating revenues for the year exceeded 580 million, theendowment earned a return of 19.4 percent, and several major construction projects were completed. Not coincidentally, our long-term commitment to fiscal prudence continues to provide the stable financial foundation necessary to support further growth in areas central to our core academicmission.As stewards of this University we possess a dual responsibility: to providethe best possible learning and research environment for our talented facultyand students while at the same time ensuring that Notre Dame will be in aposition to sustain this unique experience for future generations. One of themost important aspects of this responsibility is the stewardship of our financial resources. The sidebar of fiscal results highlights, among other things, thegrowth in the University’s investment portfolio. Also of note is the continuedgenerosity of our donors who contributed a record 180.7 million in cash giftsto the University this past fiscal year. Investment returns and contributionsaugment our operating budget and contribute to the expansion of our research activities; however, effective stewardship also demands the prudentuse of the University’s financial resources. To that end, we must continue toseek cost-effective strategies for building and maintaining state-of-the-artfacilities and attracting and retaining high-quality faculty and staff. In addition, we must continue to control the growth in central and administrativenonsalary costs, which increased 3 percent in fiscal 2006.As stewards of a Catholic university, our responsibilities are further expanded to include a service component. Fr. Jenkins notes in his letter at the beginning of this report that Notre Dame must continue to engage with external communities. In recent years, theUniversity has made a conscious effort to enhance its presenceand participation in the higher education community throughactive involvement with the National Association of College and University Business Officers (NACUBO) as well as14

S OU N D F I NA N C I A L PR I N C I PL E S2006F I S C A L R E S U LT SThe University’s financial position remained strongduring fiscal 2006. Total investments grew 1.0 billion to 5.3 billion at June 30, 2006, as a result of a19.4 percent return on the unitized investment pool.Total assets grew

Fortunately, Notre Dame has always been blessed by good people—whether faculty or staff , alumni or benefactor, Holy Cross priest or University Trustee. I knew this long ago, as a Notre Dame undergraduate in the early 1970s, as a graduate student, a teacher and professor, and as a member of the University’s

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