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Rice University

REPORT OF THE PRESIDENT

1985

Nancy and George Rupp and daughters; Kathy, 17, with dog (Chutney) and Stephanie, 14

From the President

This annual financial report covers the final year of the presidency of my dis- tinguished predecessor, Norman Hackerman. The figures testify eloquently to careful stewardship of the resources of this university. Accordingly, the publica- tion of this report affords yet one more occasion for us to convey our apprecia- tion to Norman and Gene Hackerman. On behalf of all of us associated with Rice, I express our heartfelt gratitude for faithful and vigorous leadership of this institution over a period of fifteen momentous years.

In documenting our financial situation for the past year, this report in effect also marks the point from which we look ahead. In keeping with this theme of continuity leading to new developments, the report includes along with its ret- rospective financial statements the prospective commitments that I outlined in my remarks in the context of the recent inaugural ceremony.

/

V

George Rupp President

President George Rupp

The Inauguration of President George Rupp, October 25, 1985.

Remarks of George Rupp at his Inauguration

OCTOBER 25, 1985

I am deeply honored to be appointed president of this distinguished univer- sity; and I pledge myself to continue the proud traditions that we inherit from our predecessors and to work assiduously with all of you who value this institu- tion in developing those traditions further in the years ahead.

This university embodies a sustained commitment to excellence in education. Throughout our history we have also aspired to and increasingly achieved dis- tinction in research, scholarship, and professional accomplishment. Finally, from the beginning, our forbears have construed the aim of education here to include contributions to the broader society. I pledge to uphold and to strive to enhance these three proud traditions.

I. Reaching Out to All Students

First, we will continue to offer outstanding education to the most capable, students we attract, irrespective of their ability to pay.

This university has a splendid record of providing the opportunity for learning to gifted students whether or not they have sufficient financial resources. In my few months here, I have again and again met alumni and alumnae who are deeply grateful for the opportunity they were offered to learn when they were not able to pay for it. We will continue this commitment as we seek outstanding students — we hope of even greater diversity in background and talents — and provide the financial support required to allow their attendance. We will, in short, maintain a policy of need-blind admissions, all the more so as fewer and fewer institutions of higher education are able to continue this policy.

The access that we offer will, furthermore, continue to be access to education that is excellent by the most stringent standards and that engages the full range of human inquiry. This university is not now and never has been simply a tech- nical school. We have great strength in the natural sciences and engineering. We value that strength enormously, and we will build it further. But Rice has al- ways also been committed to disciplined study in fields that today are repre- sented in the humanities and social sciences. I invite your attention to the words of the stone inscription on the inside of the arch behind me. Carved into the Sallyport — the most prominent architectural feature of our oldest building — is a succinct formulation of the grounding intention of this institution. The words are from our first president, Edgar Odell Lovett, after whom the building is named: "The Rice Institute of liberal and technical learning, founded by William Marsh Rice and dedicated by him to the advancement of letters, sci- ence and art."

Education here is, then, not only in the sciences but also in arts and letters. Across that entire range, we are firmly committed to the crucial importance of technical competence, whether that competence is in music or in the use of language or in engineering or in designing experiments or in architecture or in public policy analysis. But we are also aware that technical competence alone is not enough. Every exercise of such competence occurs in a context of meaning that shapes the purposes to which it is directed. To engage this dimension of meaning and purpose is to stand with Edgar Odell Lovett in insisting on liberal as well as technical learning.

We are extraordinarily fortunate in the setting provided for our pursuit of lib- eral as well as technical learning. We all too often take this wonderful campus for granted. Yet so much of our life together depends on the gift of this marvel- ous place. Both in the residential colleges and on the campus as a whole we are able to be a community of inquiry that allows, encourages, even requires the collaboration among students and faculty that characterizes education at its best. Learning in this vital and full and intimate sense will continue to flourish at this university. That is the first tradition I pledge to uphold and extend further.

Lovetl Hall and the Quadrangle, 1985

II. Reaching Our Full Potential in Advancing Knowledge

Secondly, we will continue and intensify our efforts in research, scholarship, and professional accomplishment. We are not only a liberal arts college but also a major university that invests substantial human and financial resources in the advancement of knowledge. These two dimensions of our identity mutually support each other: we provide excellent educational opportunities for students because we attract faculty who are themselves intensely involved in their own research or scholarship or professional practice. Accordingly, it is crucial both to the education we offer and to our contributions to the advancement of knowl- edge that we continue to develop our capacity for distinguished research, schol- arship, and professional accomplishment.

In intensifying our efforts, we will resist the temptation to try to do every- thing at once. Instead, we will identify areas in which clusters of our faculty and students are able to produce research and scholarship and professional achieve- ments that are incontestably of the first rank. In principle, every area can and should aspire to such excellence. But in practice, we will begin where we already have established strength or where special needs arise that we are well situated to address.

In developing further our capacity for research, scholarship, and professional accomplishment, we will be mindful of how great an asset is the relatively small scale of this institution. Consequently, we will seek out collaborative arrange- ments that may enhance the efforts of all involved and allow a scale of activity that this university alone cannot readily sustain. Examples that come to mind are the cooperation between our faculty in biochemistry and bioengineering and researchers at the Texas Medical Center; the sharing of personnel between our Shepherd School of Music and the Houston Symphony; and the collaboration among Texas A&M, the University of Houston, The University of Texas at Aus- tin, and Rice that the Houston Area Research Center represents.

Both through collaboration with other institutions and through increased in- vestment in faculty, facilities, graduate students, and support staff, we will, then, intensify our efforts to contribute to the advancement ot letters, science, and art. That is the second tradition I pledge to maintain and develop further.

Rice University's Engineering Buildings and sculpture, 1985

icrmwHall (985

III. Reaching the Broader Community

The third tradition I pledge to uphold and extend is integral to the very con- ception of education that animated the founder of this institution. William Marsh Rice considered several alternative institutional forms as the vehicles for expressing his intentions. In each case, his concern was to contribute through educational opportunity to the broader society — a concern evident in his em- phasis, when he settled on this institution, both on including a library open to the public and on assuring access to formal education for those without suffi- cient funds of their own.

Today we continue this tradition of service to the broader society in the first instance through the education that we offer to our formally enrolled students and the research, scholarship, and professional accomplishment that we sup- port. Through our continuing studies program, we also provide courses to over 5000 Houston residents each year — more than the total of our students in de- gree programs. Beyond that are thousands upon thousands of colleagues and friends and neighbors of the university who attend lectures, concerts, athletic events, dramatic presentations, social occasions, gallery exhibits, movies, con- ferences and so on.

In the years ahead, we will attend to opportunities to continue and expand this tradition of service both to our surrounding communities and to the broader society. In the case of our surrounding communities, I have the impression that the substantial traffic moves mostly in one direction. The hedges that set the campus off from the neighboring streets provide a perhaps too comfortable re- treat. The neatly numbered entrances to the campus too seldom serve as exits. We are solid citizens and charter members, tor example, in the South Main Center Association. But we are not as integrally involved in our surrounding communities as might be helpful for them and certainly would be educational for us. I am confident that there are larger opportunities both for learning and for service here, and I am delighted that a number of initiatives are now getting under way to enlist the participation of Rice students, staff, and faculty in local agencies, neighboring hospitals, and area schools.

Similarly, I think that we have a great opportunity for service to the broader society in helping to meet the challenge of conversation across what has become a chasm right through our society — the chasm between what have come to be called the two cultures. Our capacity tor such conversation is in part a function of small scale. It is also related to the relatively even division of labor in both our faculty and our student body between the two cultures: roughly equal num- bers in engineering and the natural sciences on the one hand and in the human- ities and social sciences on the other. This capacity for conversation across the two cultures of course also depends on the impressive ability of our students, which allows us to insist on serious work on both sides of the divide. In any case, as those of us who are students move on into future professional responsibilities and as those of us who are on the faculty and staff think and write, we will over time render a distinctive contribution from this institution — a contribution that this society sorely needs.

We face both challenges and opportunities ahead. I welcome them and look forward to working with all of you who value this institution in rising to meet them. To that end, I pledge my best efforts to preserve and enhance the quality of this university in our educational programs, in our research, scholar- ship, and professional accomplishment, and in our other contributions to the broader society.

Rice University, 1985

Auditors' Report

T> the Board of Governors, William Marsh Rice University:

We have examined the balance sheet of William Marsh Rice University (a nonprofit Texas corporation) as of June 30, 1985, and the related statements of changes in fund balances and current funds revenues, expenditures and other changes tor the year then ended. Our examination was made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the accompanying financial statements present fairly the financial position of William Marsh Rice University as of June 30, 1985, and the changes in fund balances and the current funds revenues, expenditures and other changes for the year then ended, in conformity with generally accepted accounting principles applied on a consistent basis.

ARTHUR ANDERSEN & CO. Houston, Texas September 30, 1985

WILLIAM MARSH RICE UNIVERSITY

Balance Sheet

June 30, 1985, with Comparative Totals at June 30, 1984 (Dollars in Thousands)

			1985			1984
	Current Funds	Endowment and Similar Funds	Plant Funds	Loan Funds	Combined $ 2,049 11,099 7,789 1,481	Combined
ASSETS CASH, RECEIVABLES AND OTHER ASSETS: Cash Accounts receivable Loans, net of allowance for doubtful accounts of $419 in 1985 and $423 in 1984 Other assets	$ 2.049 1,251 1,347	$ — 9,848 132	$ —	$ — 7,789 2	$ 543 3.439 8,231 1,611
	4,647	9,980	—	7,791	22,418	13,824
INTERFUND RECEIVABLE (PAYABLE): Interest-bearing endowment fund advances (Note 6) Noninterest-bearing advances	(219) 12,140 11,921	14,336 (7,863) 6,473	(9,557) (5,380) (14,937)	(4,560) 1,103 (3,457)	—	—
	—	—
INVESTMENTS (Note 3)	302	401,373	187	17	401,879	377.891
EDUCATIONAL PLANT (Note 5)	—	—	142,456	—	142,456	128 115
Total assets	$16 870	$417,826	S127.706	$4,351	$566,753	S519.830

LIABILITIES AND FUND BALANCES

LIABILITIES:

Accounts payable and accrued liabilities Deferred income and deposits Retirement funds (Note 4)

$ 3,463 676

$ 6,606 275

$ 10,070

676 275

5.451 743 484

Total liabilities

4,139

6,881

11,021

6,678

COMMITMENTS AND CONTINGENCIES (Note 7) FUND BALANCES:

U.S. Government and private grants refundable University funds —

Unrestricted

Internally designated

Restricted

Income unrestricted endowment

Income restricted endowment

Unrestricted funds functioning as endowment

Restricted funds functioning as endowment

Unexpended plant funds

Net investment in plant

4,305	—	—
2,821	—	—
5,605	—	—
—	185,964	—
—	96.187	—
—	104,666	—
—	24.128	—
—	—	2.018
—	—	125,688

2,976

1.374

2.976

4,305

2,821

6,979

185,964

96,187

104,666

24,128

2.018

125.688

3,206

4,305

3,665

7,155

168.503

83.801

101,791

22,005

3,762

114,959

Total fund balances	12,731	410,945	127,706	4,350	555,732	513,152
Total liabilities and fund balances	$16,870	$417,826	5127,706	$4,351	$566,753	$519,830

See notes to financial statements.

WILLIAM MARSH RICE UNIVERSITY Statement of Changes in Fund Balances

For the Year Ended June 30, 1985, with Comparative Totals for 1984 (Dollars in Thousands)

1985

1984

REVENUES AND OTHER ADDITIONS:

Investment income

Realized gams on investments

Gifts and bequests (Note 2)

Tuition and fees

Grants and contracts

Unrestricted revenue of auxiliary enterprises

Additions to investment in plant- Direct expenditures (including $4,072

charged to current funds expenditures) Repayment of advances from endowment funds

Interest on loans receivable

Other

	Current		Endowment and
	Funds		Similar Funds	Plant Funds
	Internally		Functioning as	Investment Loan
Unrestricted Designated	Restricted	Endowment Endowment	Unexpended in Plant Funds Combined	Combined
$27,532	$ 17	$ 7,683	$ 5,472 $ 1,868	$ 394 $ — $ 86 $ 43,052	$ 39,034
—	—	—	10,807 6.340	33 — 17,180	42,185
2,074	—	4,450	13,141	3.946 110 163 23,884	23,581
13,619	2.118	—	— —	— 15,737	14,955
3,207	—	15,326	— —	18,533	17,806
13,447	255	—	— —	13,702	12.701

Total revenues and other additions

1,772

13,065

536

13.065

892

146

216

61,651 3,282 27,605 29,426

,208

11,741

	536	533
616	616	655
50	3,087	2,978

4,589 13,716 915 149,392 166,169

EXPENDITURES AND OTHER DEDUCTIONS:

Educational and general expenditures

Auxiliary enterprises expenditures

Indirect costs recovered

Refunded to grantors

Expended for plant facilities

Repayment of advances from endowment

funds Interest on endowment fund advances Amortization of auxiliary and educational

service facilities Retirement of plant assets Loan cancellations and collection costs

44,886	3,648	24,311
15,354	1,002	471
	—	3,207
	—	20

1,669

54	—	—	72,899	64,199
	—	—	16.827	14,502
	—	—	3,207	2,985
	—	—	20	24
324	—	—	8,993	8,553
536	—	—	536	533
749	—	519	1,268	1,383
	536		536	533
	2,451	—	2,451	1,957
	—	75	75	8

Total expenditures and other
deductions	60,240	4,650	28.009	—	1,669	8663	2,987 594 106,812	94,677
TRANSFERS AMONG FUNDS— ADDITIONS
(DEDUCTIONS):
Mandatory-
Undesignated gifts (Note 2)	(78)	—	—	78	—	—	— — —	—
Provision for plant improvements (Note 5)	(2,718)	—	—	—	2,718	—	— — —	—
Funding of unrestricted current expenditures
for equipment	1,843	—	—	—	(1,843)	—	— — —	—
Funding of principal and interest payments
for plant additions	(1,285)	—	—	—	—	1,285	_ _ _	—
Other voluntary transfers, net	827	524	(336)	343	(2,416)	1,045	13 —	—
Total transfers	(1,411)	524	(336)	421	(1,541)	2330	13 —	—
NET INCREASE (DECREASE) FOR THE YEAR	—	(844)	(740)	29.847	4.998	(1,744)	10,729 334 42,580	71.492
FUND BALANCE AT BEGINNING OF YEAR	4,305	3,665	6.345	252.304	123,796	3,762	114,959 4,016 513,152	441,660
FUND BALANCE AT END OF YEAR	$ 4,305	$2,821	S 5.605	$282,151	S128.794	S 2.018	$125,688 $4,350 $555,732	$513,152

See notes to financial statements.

WILLIAM MARSH RICE UNIVERSITY Statement of Current Funds Revenues, Expenditures and Other Changes

For the Year Ended June 30, 1985, with Comparative Totals for 1984 (Dollars in Thousands)

REVENUES:

Educational and general- Endowment income (Note 3) Tuition and fees

Government grants and contracts Private grants and contracts Gifts and bequests (Note 2) Departmental sales and services Other sources

	1985			1984
	Internally
Unrestricted	Designated	Restricted	Combined	Combined
$27,532	$ 17	$ 7,683	$35,232	$34,313
13.619	2,118	—	15,737	14,955
2,547	—	8,898	11,445	10,274
660	—	3.705	4,365	4,102
2,074	—	3.889	5.963	4,872
1,590	806	116	2,512	2,478
182	86	20	288	322

Total educational and general Auxiliary enterprises

48.204 13,447

3,027 255

24,311 471

75.542 14.173

71,316 13,077

Total revenues

61,651

3,282

24,782

89,715

84,393

EXPENDITURES:

Educational and general- Instruction and departmental research Sponsored research Other sponsored programs Library

Scholarships and fellowships Student services

Operation and maintenance of plant General administration Institutional development

8.566	2,782	8.848	30.196	26.238
—	—	11.517	11,517	10,377
—	—	1,183	1.183	1,111
3,273	491	178	3,942	3,639
6,317	—	2.236	8,553	7,526
2,136	53	8	2.197	1,964
7,592	—	136	7,728	6,662
4,544	205	204	4,953	4,221
2,458	117	1	2,576	2,461

Total educational and general Auxiliary enterprises expenditures

Total expenditures

44,886 15,354

3,648 1,002

24,311

471

60,240

4,650

24,782

TRANSFERS AND ADDITIONS (DEDUCTIONS):

Mandatory transfers-

Undesignated gifts (Note 2)

Provision for plant improvements (Note 5) Voluntary transfers, net Other additions (deductions)-

Amount of restricted receipts over (under) transfers to revenues

Refunded to grantors

(78) (2,718) 1,385

524

(336)

(384) (20)

72,845 16,827

89,672

(78) (2,718) 1,573

(384) (20)

64,199 14,502

78,701

(210) (2,789) (1,379)

1,455 (24)

Net transfers and additions (deductions)	(1,411)	524	(740)	(1,627)	(2,947)
Net increase (decrease) in fund balances	S -	$ (844)	$ (740)	$(1,584)	S 2,745

See notes to financial statements.

WILLIAM MARSH RICE UNIVERSITY

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 1985

( 1 ) Summary of significant accounting policies —

Basis of accounting —

The financial statements of William Marsh Rice University (the University) have been prepared in accordance with generally accepted accounting principles for colleges and universities. Ac- cordingly, the financial statements have been prepared on the ac- crual basis of accounting, except for depreciation of educational plant facilities, as explained below. Limitations and restrictions placed on the use of available resources are recognized in the fi- nancial statements through the use of fund accounting. Fund ac- counting is a procedure by which resources are classified for accounting and reporting purposes into separate funds in accor- dance with specified objectives or activities. Funds having similar characteristics together with all related financial transactions have been combined into fund groups in the accompanying finan- cial statements.

The financial information shown for 1984 in the accompanying financial statements is included to provide a basis for comparison with 1985 and presents summarized totals only. Certain reclassifi- cations have been made to the 1984 account balances to conform with the 1985 presentation.

Current funds —

The statement of current funds revenues, expenditures and other changes is a statement of financial activities of current funds related to the current reporting period. It does not purport to present the net income or loss for the period as would a state- ment of income or a statement of revenues and expenses.

The unrestricted current fund is used to account for those transactions related to the University's operating budget as ap- proved by the board of governors and for certain resources which have been designated for specific purposes by the University ad- ministration. These latter items are presented under the inter- nally designated caption. With the exception of the internally designated fund balance, it is the policy of the board of governors to transfer any net increase in the unrestricted current fund bal- ance for the year to unrestricted funds functioning as endowment.

The restricted current fund is used to account for funds ex- pended for current operations but restricted by donors or other external sources for specific purposes. Restricted current fund re- ceipts are reported as revenues when expended.

Current funds used to purchase equipment are accounted for as expenditures of the current funds. Equipment expenditures of the unrestricted current fund are funded by a transfer from unre- stricted funds functioning as endowment (Note 5).

Endowment and similar funds —

Endowment funds are generally subject to the restrictions of gift instruments requiring that the principal be invested and only the income be expended. Gains and losses arising from the dispo- sition of the investments are accounted for as changes in princi- pal. Endowment funds are either income restricted or income unrestricted as stipulated by the donor. Investment income from income restricted endowments may be expended only for the pur- pose specified by the donor; unrestricted endowment income may be expended for any purpose approved by the board of governors.

The board of governors has designated certain restricted and unrestricted funds to function as endowment funds. Restricted funds functioning as endowment are comprised of ( 1 ) restricted current gifts transferred to this fund by the board of governors and

(2) any excess of restricted investment income over current ex- penditures. The principal of these funds may be expended, but

only in accordance with the original specifications of the donor. Investment income from these funds is also subject to the same restrictions as the original gifts. The principal of unrestricted funds functioning as endowment is spendable at the discretion of the board of governors.

Generally, income from unrestricted endowment and similar funds is reported as revenue of the unrestricted current fund, and income from restricted endowment and similar funds is reported in the fund to which it is restricted. However, investment income from developed real estate and oil and gas properties equal to am- ortization of the properties is retained in the endowment funds for the purpose of asset recovery. In addition, 27'/2% ($1,966,000 for 1985) of the net receipts from oil and gas royalties are retained in the income unrestricted endowment fund after the related proper- ties are fully amortized.

Plant funds —

Plant funds consist of the total invested in the educational plant together with unexpended gifts, grants, income and admin- istratively designated funds which are held for acquisition, re- placement or construction of physical properties. The educational plant is stated at cost for purchased assets and fair market value at the date of donation in the case of gifts. Auxiliary and educa- tional service facilities financed with advances from endowment funds are depreciated over their estimated useful lives. Although no other educational plant assets are depreciated, it is the University's policy to retire capitalized equipment at the rate of 62/3% per year.

Loan funds —

Loan funds include ( 1 ) gifts and grants which are limited by- donors to the purpose of making loans to students or faculty, (2) the National Direct Student Loan Program financed primarily by the federal government and administered by the University and (3) advances to the loan funds from unrestricted funds function- ing as endowment.

Life income funds —

Life income funds arise from gifts which are subject to the re- quirement that the University periodically pay the income earned on the assets to designated beneficiaries. Such payments termi- nate at a time specified in the agreements, usually upon the deaths of the designated beneficiaries. The amount and timing of the ultimate distribution to the University of its remainder inter- est in the assets is therefore not determinable, and the assets are not recorded in the accompanying financial statements.

At June 30, 1985, the assets (valued at market) and liabilities in the various trusts in which Rice has a remainder interest are as follows:

Marketable securities Real estate Other assets Less- Related liabilities

$22,415,000

4.927,000

573.000

(1,788.000)

$26427,000

In 1985, $216,000 of income was distributed from these trusts to the unexpended plant fund.

(2) Gifts and bequests —

It is the policy of the University to include gifts as revenues or additions to the appropriate fund balances only when received.

Gifts and bequests without any designated obligatory use are re- quired to be added to endowment, according to a legal interpreta- tion of the University's charter. These gifts are recorded as revenues of the unrestricted current fund and as mandatory trans- fers to the endowment funds.

Pledges outstanding at June 30, 1985, which will be recorded as revenues upon receipt of the gifts, are as follows:

Current funds — Unrestricted Restricted

44.000 484,000

Total current funds

Endowment funds Plant funds

528,000

617,000 4,704,000

Total pledges

$5,849,000

(3) Investments —

Investments are recorded at cost at date of acquisition or fair market value at date of donation in the case of gifts, except for donated interests in certain undeveloped real estate which are re- corded at nominal values and investments in wholly owned cor- porations. These corporations are accounted for in the endowment funds under the equity method. Property taxes and maintenance costs on the donated real estate interests have been capitalized (accumulated costs of approximately $1,285,000 at June 30, 1985).

Most income restricted endowment funds, restricted funds functioning as endowment and some unrestricted funds function- ing as endowment participate in a common investment pool which is operated on a market value basis. Those income re- stricted funds which by the terms of the gifts may not participate in such a pool are maintained on a separate investment basis. Other endowment funds are commingled for investment purposes in the general investment pool for unrestricted funds.

Investments of endowment and similar funds at June 30, 1985, are as follows:

Recorded Amount

Marketable securities ($570,678,000 market value) $371 ,825,000

Developed real estate 16,663,000

Undeveloped real estate 4,466,000

Mortgage loans 4,881,000

Wholly owned corporations, at underlying equity 2,655,000 Oil and gas properties (net of accumulated amortization of

$26,674.000) 883,000

$401,373,000

The following tabulation summarizes investment performance (excluding unrealized gains from market appreciation) for the year ended June 30, 1985:

			Realized
			Gains
	Investment Income	(Losses), net
	Current	Endowment and	Endowment and
	Funds	Similar Funds $1,341,000	Similar Funds
Marketable securities	$27,815,000	$16,679,000
Wholly owned corporations	50.000	3.556.000	—
Oil and gas properties	5.360,000	2.266,000	216.000
Other investments	2,007.000	177,000	252.000

(4) Retirement plans —

Substantially all employees are eligible to participate in a de- fined contribution retirement plan which is administered by an outside agency. The University's contributions to the plan of $1,925,000 in 1985 were recorded as expenditures of the unre- stricted current fund. The contributions of the University and the plan participants, who are fully vested, are applied to individ- ual annuities issued to each participant.

The University also has a defined benefit retirement plan ad- ministered by the same outside agency covering participants who began receiving retirement benefits ptior to July 1, 1976, and certain other employees. The University's contributions to this plan were $298,000 in 1985, which includes amortization over a 10-year period of prior service costs and certain guaranteed minimum benefits. As of the most recent benefit information date, June 30, 1984, the actuarially computed value of vested benefits of $1,252,000 exceeded the sum of the plan's assets and the recorded liability by $112,000. The assumed rate of return used in determining the actuarial present values of vested plan benefits was 7%.

(5) Educational plant and provision for plant improvements —

Propertv and equipment of the educational plant at June 30, 1985, were as follows:

Land S 8 499,000 Buildings and improvements 98,386.000 Equipment, furniture and library books 41 ,475,000 Construction in progress 2,007.000 Less- Allowance for amortization of auxiliary and educa- tional service facilities (7,91 1 ,000)

$142,456,000

$35,232,000 $7,340,000

$17,147,000

As a provision for plant improvements, a transfer equal to ap- proximately 10% of unrestricted endowment income has been made from unrestricted current funds to unrestricted funds func- tioning as endowment. The portion of the unrestricted funds functioning as endowment fund balance that applies to this provi- sion is $5, 125,000 at June 30, 1985.

(6) Interest-bearing endowment fund advances —

Certain capital projects, major maintenance projects for auxil- iary enterprises and student loans are funded with interest- bearing advances from unrestticted funds functioning as endowment. The advances for capital and major maintenance projects beat interest at rates from 4% to 19%. The interest re- ceived on student loans financed by these endowment fund ad- vances is repaid to the endowment funds.

(7) Commitments and contingencies —

There are several suits and claims pending against the Univer- sity, the effect of which cannot be estimated at this time; how- ever, officials of the University and legal counsel believe that the ultimate liability, if any, will not be material to the University's fi- nancial position.

The University was committed under contracts at June 30, 1985, for capital improvements of approximately $4,880,000 to be financed primarily from funds functioning as endowment and gifts. Commitments of $863,000 in the unre- stricted current fund and $974,000 in the restricted current fund were outstanding at June 30, 1985.

The fund balance of unrestricted funds functioning as en- dowment includes a $5,000,000 provision for contingencies at June 30, 1985. If funds are expended from this balance, it is replenished by transfers of unrestricted endowment income to maintain the balance at $5,000,000.

Administration

July 1, 1985

George E. Rupp

President William E. Gordon

Provost and Vice-President (retired)

Neal F. Lane

Provost and Vice-President

John L. Margrave

Vice-President for Advanced Studies and Research Ronald F. Stehhings

Vice-President for Undergraduate Affairs

William W. Akers

Vice-President for Administration

O. Jack Mitchell Dean of the School of Architecture J.D. Heliums

Dean of the George R. Brown School of Engineering G. King Walters

Dean of the Wiess School of Natural Science Francis D. Tuggle

Dean of the Jesse H. Jones Graduate School of Administration

Allen J. Matusow

Dean of the School of Humanities Larry J. Livingston

Dean of the Shepherd School of Music Joseph Cooper

Dean of the School of Social Sciences Richard Stabell

Dean of Admissions and Records Joseph Nalle

Treasurer-Secretary

J.F. White

Assistant Secretary Scott W. Wise

Comptroller

Board of Governors

July 1, 1985

TRUSTEES

Charles W. Duncan, Jr. Chairman of Rice Board o(

Governors Chairman of the Board Duncan, Cook &. Co.

Josephine E. Abercrombie Vice-Chairman of Rice Board of Governors Director

J.S. Abercrombie Mineral Co. John L. Cox

Oil Operatot CM. Hudspeth Partner

De Lange, Hudspeth, Pitman and Kati Edward W. Kelley, Jr. Chairman Investment Advisors, Inc.

Ralph S. O'Connor

Chairman of the Board, President and Chief Executive Officer

HR1 Resources, Inc. Jack T Trotter

Investments

TERM MEMBERS

Judy Ley Allen

Investments J. Evans Attwell

Managing Partner

Vinson and Elkms Thomas H. Cruikshank

President

Halliburton Company J. Thomas Eubank

Partnet

Baker and Botts James W. Glanville

Partner

Lazard Freres & Co. PaulN. Howell

Chairman of the Board

Howell Corporation George R. Miner

President

Miner-Dedenck Construction Corp.

M. Kenneth Oshman President ROLM Corporation

ALUMNI GOVERNORS

Neal T Lacey, Jr.

Partner

PLM Design Jerry McCleskey

Director ot Planning

Chemicals & Pigment Dept.

E.I. DuPont de Nemours & Company

Pat H. Moore

Senior Vice-President Raymond International, Inc.

TRUSTEES EMERITI

Herbert Allen

Chairman of the Board (retired)

Cameron Iron Works E.D. Butcher

President (retired)

American Commercial Lines, Incorporated Harry J. Chavanne

Banker and Investor

Chavanne Enterprises Oveta Culp Hobby

Chairman of the Executive Committee

H & C Communications, Incorporated W.A. Kirkland

Chairman of the Board (retired)

First City National Bank Theodore N . Law

Chairman

Falcon Seaboard Drilling Company H. Malcolm Lovett

Partner

Baker and Botts James U. league

Retired

GOVERNOR ADVISORS

Richard A. Chapman

Senior Member, Technical Staff Texas Instruments, Incorporated

John W. Cox

President and Director (retired) General Package Corporation and Automatic Canteen Company of Ametica

James A. Elkins III Senior Vice-President First City National Bank

WilliamS. Farish III

President

W.S. Farish and Company Catherine C. Hannah James W. Hargrove

Financial Consultant

Gerald D. Hines President Gerald Hines Interests

Carl Illig Attorney

Mary E. Johnston Board of Editors Fortune Magazine

Jack S. Josey President Lenoir M. Josey, Incorporated

Howard B. Keck

Chairman of the Board (retired) Superior Oil Company

Baine E Kerr

President (retired) Pennzoil Company

William F. Kieschnick

President and Chiet Executive Officer (retired)

Atlantic Richfield Company Wendel D. Ley

Investments J. Hugh Liedtke

Chairman of the Board and Chief Executive Officer

Pennzoil Company

William M. McCardell

President (retired)

Exxon Minerals Corporation J.W. McLean

Chairman

Liberty National Bank

James R. Meyers

Chief, Energy Division

Office of Texas Attorney General

S.I. Morris

Partner (retired) Morris/ Aubry Architects

Walter D. Murphy

Senior Vice-President

HCB Contractors Ralph W. Noble

President (retired)

Milchem, Inc. Haylett O'Neill, Jr.

Exxon (retired) J. Howard Rambin

Chairman of the Board (retired)

Texaco, Inc. Taylor Ray

Rancher David L. Rooke

Directot and Senior Consultant

Dow Chemical Company

Frank B. Ryan

Director of Athletics

Yale University John D. Simpson

Chaitman of the Board (retired)

Superior Dairies Harry K. Smith

Chairman of the Board and Chief Executive Officer

Big Three Industries

Louis D. Spaw, Jr.

Vice Chairman of the Board Spaw-Glass, Inc.

Karl C. ten Brink

General Manager (retired) Texaco, Inc.

Tilbott Wilson Architect Tilbott Wilson/ Associates

James O. Winston, Jr. Former Director Rowles, Winston and Company

Benjamin N. Woodson Chairman of the Board (retired) American General Companies

Helen S. Worden