2009 Annual Report

GROWTH THROUGH INNOVATION AND COLLABORATION

Table of Contents

Message f rom the President 1

Creat ing our Future 2

20 09 Highl ights 3

Directors 6

O f f icers and Senior V ice Presidents 6

Operat ions Managers 7

Management Discussion and Analysis 9

Repor t o f Independent Audi tors 17

Balance Sheets 18

Statements of Act iv i t ies 19

Statements of Cash Flows 20

Notes to F inancial S tatements 21

1 RF SUNY AR 0 9

Message From The President

We have spent the last two years asking fundamental

questions and evaluating how to enable the Research

Foundation (RF) to emerge as a more strategic and effec-

tive partner with the State University of New York (SUNY),

its sponsors, and the RF’s affiliated corporations in order to

benefit New York state.

In order to position the RF more effectively for the

future, the RF staff reached out to the SUNY campuses

and other entities to ascertain their perceptions of the

strengths, weaknesses, opportunities and threats that will

face the RF over the next three to five years. In addition,

a number of campus-RF working groups were tasked with

conducting operational studies concerning information

technology, service delivery, technology transfer and com-

mercialization, and funding. All of these efforts resulted in

the adoption of a new strategic plan for the RF.

This new strategic plan, which was adopted by the RF

board on August 31, 2009, was developed in a deliberate

and sequenced manner at a time of unprecedented chal-

lenge and change here in New York as well as nationally

and internationally.

What do these challenges mean for the RF? First and

foremost, the RF is committed to the ongoing assessment

of its service delivery and the way in which it communicates

and collaborates with its multiple constituents. Secondly, the

RF is committed to becoming a driving force in positioning

SUNY to generate collectively-increased levels of sponsored

research support, engaging technology transfer activities

in a more integrated, systematic manner, and augmenting

economic development efforts for the State of New York.

We are serious about changing the manner in which we

work and hold ourselves accountable.

The goals and strategies we articulated in the strategic

plan comprise a three to five year horizon. Maintaining

focus will enable the RF to address sponsored program

funding, technology transfer and economic development

efforts in concert with Chancellor Zimpher’s emerging

strategic plan for SUNY.

It is truly a new day for us at the RF and we are ready

to ensure that our plan’s theme of “Growth Through Inno-

vation and Collaboration” will permeate everything we do.

In the pages that follow, we highlight the mission, vision,

values and goals articulated in our new strategic plan and

describe the major accomplishments and challenges that

we faced this past year, with particular focus on managing

our resources.

This year we especially celebrate the efforts of SUNY’s

faculty – our principal investigators, their graduate students,

and our staff. Through innovation and collaboration they

are expanding SUNY’s research enterprise, developing new

products, processes and patents, and demonstrating the

vital role the RF and SUNY partnership has in New York’s

innovation economy.

John J. O’Connor

President

The Research Foundation

2 RF SUNY AR 0 9

As part of its strategic planning process, the RF updated

its vision, mission and value statements to emphasize

more strongly its service to SUNY and the State of New York.

RF Vision

The RF will be the best-in-class partner as it:

• delivers high-quality, focused and efficient service to

faculty and staff, sponsors and the SUNY research

community

• provides an environment that facilitates sponsored

program collaboration – among SUNY campuses and

with the public and private sectors

• capitalizes on the scope, scale and diversity of the

SUNY system as the engine of New York State’s

innovation economy.

RF Mission

The RF works with the academic and business leader-

ship of the campuses to support research and discovery at

SUNY through efficient and skillful administration of spon-

sored projects and adept transfer and sharing of intellectual

property for public benefit and economic growth.

RF Values

In carrying out its mission, the RF values:

• people, community and collaboration

• the academic environment and individual

campus missions

• integrity and ethical behavior

• flexibility, adaptability and innovation

• quality and efficiency

• accountability and transparency

The RF established three overarching goals that will be

realized through a series of detailed action steps to which

the RF will hold its management team accountable.

Goal 1 – Provide outstanding sponsored program

administration services and stewardship to the SUNY

community (faculty, students, and staff).

Goal 2 – Assist campuses in increasing sponsored

program funding.

Goal 3 – Increase Technology Transfer and

Commercialization

Measuring Our Progress

The Strategic Plan provides a roadmap for the next three

to five years. The RF is committed to identify metrics that

measure progress in meeting the strategic goals on a newly-

developed RF Dashboard. The RF expects that as it works to

attain its strategic goals, it will develop a new financial model.

Current information on the development of the RF

Dashboard is on the RF’s Strategic Planning Web site.

Creat ing Our Future

3 RF SUNY AR 0 9

Building on our Sixty-Year History

The State University of New York (SUNY) – through the Re-

search Foundation (RF) – engages in sophisticated research

and other sponsored programs that literally change the world.

As a private, nonprofit educational corporation, the RF

has the independence and authority to enter into busi-

ness arrangements that support research. The RF provides

SUNY faculty, students and staff with the support and flex-

ibility to focus on research and other programs funded by

federal and state governments, private sector companies,

and nonprofit foundations. The RF also moves inventions

made by researchers to the marketplace to benefit society

and the New York State economy.

RF staff at 30 state-operated campuses and the central

office in Albany work with the academic and business lead-

ership of campuses to support research and discovery at

SUNY through efficient and skillful administration of spon-

sored projects and adept transfer and sharing of intellectual

property for public benefit and economic growth.

The RF’s attention to detail and compliance with

all federal, state, and sponsor regulations – as well as its

commitment to ethics – ensures that research and other

sponsored programs are conducted in a climate of investi-

gation and integrity.

• Provide infrastructure to support faculty and comply with sponsor rules and regulations.

Examples:

Business systems

Policies and procedures

Training

• Day-to-day support of faculty.

• Process project-related transactions.

Examples:

Find funding

Put people on payroll

Buy goods and services

Disclose inventions

• Corporate infrastructure (Legal, Board of Directors, Audit, Financial Accounting).

• Functions to take advantage of economies of scale.

Example:

Benefits program development

T H E S U N Y R E S E A R C H E N T E R P R I S E

Campus RF Offices

• Conduct research/ direct sponsored programs.

Faculty

• Enhance campus research mission.

Academic Leadership

• Work with faculty on sponsored programs.

Post-Docs & Students

• Support faculty, post-docs and students.

Staff

Campus and Central Collaboration

Central Office

SUN

Y Ca

mpu

ses

The

Rese

arch

Fou

ndat

ion

of S

UN

Y

THE SUNY RESEARCH ENTERPRISE

The State University of New York, working in partnership with the Research Foundation, engages in sophisticated research and

other sponsored programs that will ensure economic vitality and quality of life in New York’s communities.

4 RF SUNY AR 0 9

2009 Highlights

During FY 2009, the RF began the implementation of its Strategic Plan in pursuit of its three principal goals.

PROVIDE OUTSTANDING SPONSORED PROGRAM ADMINISTRATION SERVICES AND STEWARDSHIP TO SUNY FACULTY AND SPONSORS, RESPECTIVELY.

SPONSORED PROGR AMS ACTIV IT Y

In fiscal year 2009, the RF managed $850 million in sponsored funding in support of 7,279 campus-based programs. See Sponsored Programs Fast Facts for more information.

AMERICAN RECOVERY AND REINVESTMENT ACT

At fiscal year end the RF was administering 51 American Recovery and Reinvestment Act (ARRA) awards with a dollar value of $16.4 million. The RF created the ARRA Section 1512 Compliance Project to ensure a consistent approach to complying with the ARRA reporting requirements. Central office and campus staff worked together to identify the data needed from the RF’s business applica-tions. The RF launched the ARRA Tracking and Reporting Web page to communicate important ARRA information to the campuses.

RF QUICK V IEW

The RF Quick View application, which provides principal investigators (PIs) and project administrative staff with a more intuitive tool to manage awards, was successfully implemented on Sept. 8. Subsequent improvements included department-level security, form enhancements and Excel exports. The tool was created at the request of SUNY’s vice presidents and built based on feedback from PIs and campus focus groups to ensure that it is easy to use and efficient.

IMPROVEMENTS TO RF WEB SITE

The RF initiated a Web continuous improvement program to make sure that employees have efficient and effective access to the tools and information they need to do their jobs via the RF Web site. The RF implemented a new search engine that provides better, more relevant and more descriptive search results and revamped the policies and procedures on the RF Web site to improve online readability. The RF is also building a benefits Web site that will give employees a “one-stop-shop” to learn about their benefits.

INCREASE FUNDING

PROVIDE OUTSTANDING ADMIN

ISTRATION

EXPA

ND

IP

CO

MM

ERCI

ALIZ

ATION

RFGROWTH THROUGH INNOVATION AND COLLABORATION

5 RF SUNY AR 0 95 RF SUNY AR 0 9

ASSIST CAMPUSES IN INCREASING SPONSORED PROGRAM FUNDING.

GR ANTS WORKSHOPS

The RF partnered with campuses and the University Faculty Senate to conduct How to Get Your Proposal Funded workshops at the University at Buffalo and the Levin Institute in New York City. More than 300 faculty members attended. These workshops were designed to help new investigators identify potential funding sources, write stronger grant proposals and network with sponsor representatives and fellow researchers.

SPONSORED PROGR AM INFORMATICS

The RF partnered with the Coeus Consortium, which comprises the four university research centers, to standardize and increase the efficiency of proposal development and pre and post-award management. The ability to measure numbers of proposals, by sponsor, dollar amount and other factors, is vital to determining progress made in achieving the goal of increased sponsored program funding.

AFF IL IATED CORPOR ATIONS

The RF administered over $16.5 million in agency activity on behalf of its affiliated corporations as well as over $9 million in sponsored programs activity. The RF, acting for SUNY, also established two new affiliated corporations:

CBN Connect Inc. was formed in Dec. 2008 to seek funding to develop the backbone infrastructure for broadband access throughout the North Country. It is anticipated that national broadband service providers will use this infrastructure to provide retail services to homeowners and businesses throughout the region.

Buffalo 2020 Development Corporation was formed in Jan. 2009 to develop research facilities that will support UB’s plan to achieve enduring academic excellence and bolster the economic future of the Buffalo-Niagara region.

RF WEB SITE

The RF’s new Funding Opportunities for Researchers Web page provides principal investigators with direct links to searchable data-bases, public and private funding organization Web sites, guidelines for writing proposals and other resources.

INCREASE INTELLECTUAL PROPERTY COMMERCIALIZATION.

TECHNOLOGY TR ANSFER ACTIV IT Y

The RF’s technology transfer offices (TTOs) reported signing 49 license or option agreements with businesses and receiving 320 new technology disclosures filed by SUNY researchers during fiscal year 2009. Additionally, 55 U.S. Patents were issued to the RF. See Technology Transfer Fast Facts for more information.

REGIONAL TECHNOLOGY TR ANSFER SUPPORT MODEL

The RF reviewed campus and central office roles, processes and responsibilities as it seeks to establish a fully integrated and regional-ized support model for technology transfer and commercialization.

Note: Data in this section of the annual report is presented on a cash basis. As a result, it is not consistent with corresponding information appearing in the financial

statements, which is presented on an accrual basis, in conformity with generally accepted accounting principles.

6 RF SUNY AR 0 9

Board of DirectorsThe Research Foundation of State University of New York

O f f icers and Senior V ice PresidentsThe Research Foundation of State University of New York

Appointed by the board of directors, the RF’s officers are responsible for directing and managing the affairs of the corporation.

The RF board of directors manages the operations of the corporation in accordance with its stated mission and purpose.

Dr. Nancy ZimpherChair Chancellor State University Of New York (Ex-Officio)

Dr. George B. Stefano Vice-Chair Director, Neuroscience Research Institute & Distinguished Professor Biological Sciences Old Westbury

Dr. Raymond W. CrossPresident Morrisville State College

Mr. Robert L. EcklinExecutive Vice President Environmental Technologies & Strategic GrowthCorning, Inc. (Retired)

Mr. John B. FitzgibbonsPresident J Fitzgibbons LLC

Mr. Paul W. KuteyCertified Public Accountant

Dr. John C. LaRosaPresident SUNY Downstate Medical Center

Mr. James McNamara, Jr.President & CEO Endicott Interconnect Technologies, Inc.

Dr. Myron J. MitchellDistinguished Professor & Director of Council on Hydrologic Systems Science Environmental Science And Forestry

Mr. George M. PhilipPresident University at Albany

Dr. Bahgat G. SammakiaDirector, Integrated Electronics Engineering Center Professor of Mechanical Engineering Binghamton University

Dr. Steven J. ScheinmanSenior Vice President & Dean College of Medicine Upstate Medical University

Dr. John B. SimpsonPresident University at Buffalo

Dr. Samuel L. Stanley, Jr.President Stony Brook University

Mr. Louis R. TomsonPrincipal L & J Rad, LLC

Mr. John J. O’Connor President

Ms. Bonny G. Boice Senior Vice President for Finance and Treasurer

Ms. Lynn D. ManningSecretary and Vice President for Administration and Human Resources

James A. Weyhenmeyer Ph.D.Senior Vice President for Research

7 RF SUNY AR 0 9

Operat ions ManagersThe Research Foundation of State University of New York

Mr. John F. Loonan Vice President for Finance and Fiscal Management at CNSE, University at Albany – College of Nanoscale Science & Engineering (CNSE)

Ms. Valerie B. NixonVice President for Administration and Enrollment, Alfred State College

Mr. Stephen A. GiljeAssociate Vice President for Research, Binghamton University

Mr. Louis M. SpiroVice President for Administration and Finance, SUNY Brockport

Dr. James (Beau) A. WillisExecutive Vice President for University Support Services

Mr. Edgar H. TurkleDirector, Research Administration and Services, Buffalo State College

Ms. Christine D. GrayInterim Vice President for Administration, SUNY Canton

RF operations managers, who are appointed by the RF’s board of directors on the recommendation of the respective campus presidents, supervise sponsored

program functions that have been delegated to the campuses.

Mr. Barry GellDirector of Grants and Sponsored Programs, SUNY Cobleskill

Dr. William E. ShautVice President for Finance and Management, SUNY Cortland

Mr. Brian G. HutzleyVice President for Business and Finance, SUNY Delhi

Mr. Paul J. DavisInterim Chief Financial Officer, SUNY Downstate Medical Center

Mr. Paul TucciAssistant Vice President for Administration, Empire State College

Mr. Joseph L. RufoVice President for Administration, SUNY ESF

Mr. George P. LaRosaSenior Vice President and Chief Financial Officer, Farmingdale State College

Mr. Tracy S. BennettVice President for Administration, SUNY Fredonia

Dr. Kenneth H. LevisonVice President for Administration, SUNY Geneseo

Ms. Patricia A. ConnollyDirector of Business Affairs, SUNYIT

Mr. Keith MurphyDirector of Business Affairs, Maritime State College

Mr. Richard J. CarrenoVice President for Administrative Services, Morrisville State College

Ms. Jacqueline S. DiStefanoVice President for Administration and Finance, SUNY New Paltz

Mr. Arthur H. Angst, Jr.Associate Vice President for Business Compliance, Old Westbury

Dr. Leif S. HartmarkVice President for Finance and Administration, College at Oneonta

Mr. David A. BowersVice President for Administration and Finance, College of Optometry

Mr. Nicholas A. LyonsVice President for Administration and Finance, SUNY Oswego

Mr. John R. HomburgerVice President for Administration, SUNY Plattsburgh

Mr. Michael D. LewisVice President for Business Affairs, SUNY Potsdam

Ms. Margaret SullivanVice President for External Affairs and Development, Purchase College

Dr. Gail HabichtVice President for Research, Stony Brook University

Mr. James P. KettererDeputy Provost, SUNY System Administration

Mr. Steven C. BradySenior Vice President for Administration and Finance, Upstate Medical University

SICKLE CELL ANEMIA RESEARCH LENDS INSIGHT TO DISEASES OF AGING Researchers at SUNY Upstate Medical

University have parlayed basic research on a specific disease mech-

anism into a broader theory about how cells age and die. • In sickle

cell anemia, red blood cells’ stiff crescent shape causes gridlock

in the bloodstream. Normal red blood cells are soft and round and

flexible enough to squeeze through even the tiniest blood vessels.

• Years ago, Steven Goodman, PhD, vice president for research

and professor of biochemistry and molecular biology at SUNY

Upstate, found that chemical reactions involving the structural protein actin was a key factor in causing the sickle

cell shape in patients. Now, David Amberg, PhD, professor of biochemistry and molecular biology, has demonstrated

that these same chemical reactions underlie the way other cells respond to stress. • In addition to sickle cell anemia,

oxidative stress contributes to diseases of aging, such as Alzheimer’s and Parkinson’s. Oxidation of actin can lead to

programmed cell death. • The opposite process, the reduction of actin, absorbs free radicals in the cell, thus serving as

a front line of defense and protecting cell functions that would otherwise be adversely affected. • “Sickle cell anemia

is a disease of oxidative stress, but the property occurs in all cells and affects processes related to cell protection,”

Amberg says. One goal of his research is to find ways to boost actin’s defense mechanism. • To date, Amberg’s studies

have used yeast as a model system, which allows him to use “sophisticated genetic manipulations to uncover the inner

workings of actin redox cycles.” Next, he’ll test what they’ve learned in mammals.

8 RF SUNY AR 0 9

The Research Foundation of State University of New York

Financial Review

Management Discussion and Analysis 9

Repor t o f Independent Audi tors 17

Balance Sheets 18

Statements of Act iv i t ies 19

Statements of Cash Flows 20

Notes to F inancial S tatements 21

9 RF SUNY AR 0 9

The Research Foundation of State University of New YorkThe Research Foundation of State University of New York

Managing Resources Judiciously

The RF is committed to comprehensive and judicious management of

the resources under its control, as well as the preparation, integrity,

and fair presentation of its financial statements. The financial state-

ments have been prepared in conformity with generally accepted ac-

counting principles and, as such, include amounts based on judg-

ments and estimates by management.

The financial statements have been audited by the independent

accounting firm KPMG, which was given unrestricted access to all

financial records and related data. The RF believes that all representa-

tions made to KPMG during its audit were valid and appropriate. The

independent auditors’ report expresses an independent opinion on

the fairness of presentation of these financial statements.

The RF maintains a system of internal controls over financial re-

porting that is designed to provide reasonable assurance to the RF’s

management and board of directors regarding the reliability of pub-

lished financial statements. The RF systematically analyzes and tests

its internal controls structure.

TRENDS

The RF persevered in its mission to support SUNY through unprec-

edented financial challenges during fiscal year 2009. Faltering na-

tional, state, and local economies and volatile financial markets had a

major effect on the RF’s financial position. RF management identified

four key trends that could affect the RF’s financial position in years

to come.

• Evolving mix of sponsors

• Investment returns

• Services to affiliated corporations

• Budgetary pressures on SUNY research

Management Discussion and Analysis

The RF persevered in its mission to sup-port SUNY through unprecedented financial challenges during fiscal year 2009. Falter-ing national, state, and local economies and volatile financial markets had a major effect on the RF’s financial position.

It is likely that ARRA will have a significant impact on the RF’s sponsored program activity during fiscal year 2010.

Evolving mix of sponsors

Most of the RF’s revenue derives from grants and contracts awarded

for research and other sponsored activities. In fiscal year 2009, spon-

sored program activity from federal sponsors remained relatively flat.

Significant increases in sponsored program activity from New York

state agencies and business and industry sponsors were primarily

due to activity at the College of Nanoscale Science and Engineering

(CNSE) at the University at Albany.

The American Recovery and Reinvestment Act of 2009, also

known as ARRA, acknowledged the important role that university-

based research plays in economic growth and development. The leg-

islation contained $21.5 billion for science, engineering, research and

infrastructure, and more than $26 billion for energy efficiency and

renewable energy projects.

Impact While the RF did not have a significant amount of ARRA

revenue as of June 30, 2009, it is likely that ARRA will have a signifi-

cant impact on the RF’s sponsored program activity during fiscal year

2010. This prediction is based on the number of projects awarded

at the end of fiscal year 2009. However, ARRA’s intent as a fiscal

stimulus measure means that its impact on research funding will not

be sustained beyond the next few years. Fiscal year 2010 may exhibit

the largest effect on sponsored program activity. The RF witnessed

daily increases in the number of ARRA-funded sponsored projects at

the end of fiscal year 2009.

While there are expectations that the Obama administration will

seek an increase in federal funding for research, uncertainties remain

about the national economy.

Investment returns

To earn income, the RF invests the cash it receives from sponsors and

campus-related organizations as well as its own operating funds. The

RF also provides for the cost of health insurance for current and future

retirees with a segregated invested fund. The RF board’s Investment

Subcommittee oversees investment policy, strategy, and the selection

of consultants and managers.

10 RF SUNY AR 0 9

The Research Foundation of State University of New York

vestments of operational funds, in fiscal year 2009 the RF chose to

refrain from allocating investment income to the campuses. In order to

maintain fiscal stability, RF leadership intends to refrain from allocat-

ing investment income until the deficits attributable to those invest-

ment losses are eliminated.

Services to affiliated corporations

The RF continues to support affiliated corporations that help specific

SUNY campuses achieve their education, research, and public sup-

port missions in an innovative, creative, and flexible manner. During

fiscal year 2009, the RF created two new affiliated corporations: Buf-

falo 2020 Development Corporation (Buffalo 2020) and CBN Con-

nect, Inc. Buffalo 2020 was created to develop research facilities

that will advance the academic mission of the University at Buffalo

and promote economic development in the region. CBN Connect was

The high volatility and significant declines experienced in the in-

vestment markets during fiscal year 2009 led to negative net rates

of return to the operational funds of 13.9% and to the retiree health

funds of 28.1%. The benchmark median performance of corporate

operational funds was a negative 18.5%, while the median return for

benefit plans was a negative 18.9%. The underperformance of the

RF’s benefit plan can be mostly attributed to exposure to investments

in mortgage-backed securities.

Impact The RF took proactive steps to control the effects of the vola-

tile markets and prevented those effects from negatively impacting the

RF’s support of SUNY research. In light of the uncertain market envi-

ronment, the RF’s board approved a change to its investment strategy

to minimize volatility and maximize liquidity of assets earmarked for

medium-term needs, while maximizing the expected return on longer-

term assets. The RF also established a Voluntary Employee Benefit

Association (VEBA) trust in June 2009 to provide a more formal segre-

gation of the assets that had, up to that point, been held by the RF to

pay the health and dental expenses of retired RF employees and their

dependents. Using a VEBA trust ensures that the assets are used for

employees’ benefits.

Typically, the RF allocates income earned on investments of op-

erational funds to SUNY campuses to support research, instruction,

or institutional activities. Due to the losses experienced with the in-

Management Discussion and Analysis

In light of the uncertain market environ-ment, the RF’s board approved a change to its investment strategy to minimize volatility and maximize liquidity of assets earmarked for medium-term needs, while maximizing the expected return on longer-term assets.

NEW SPECIES DISCOVERED IN ANCIENT NEW YORK A small eel-like animal, the length of your pinky

finger, lived in the seas that covered western New York

375 million years ago. Jeffrey Over, professor of geologi-

cal sciences at SUNY Geneseo, discovered fossil speci-

mens of a new species and named it after the place he

found it: Ellicott Township in Chautauqua County, New

York. • Pelekysgnathus ellicottensis is a new species of

conodont, one of a large family of marine animals, well

known for their tiny teeth. During the Late Devonian pe-

riod, while numerous fish and invertebrates lived in ma-

rine waters, the landscape was very wet as the first large

plants were becoming established and amphibians were just starting to come out of the water. • In other recent dis-

coveries, Over has described and named new species of conodonts from Bolivia and found trilobites in Mongolia, where

such fossils were not previously known. The newly discovered Bolivian and New York conodont species are from about

the same time, but lived in very different environmental conditions. Together with evidence of other plant and animals

in the layers of shale, Over and his colleagues can begin to make interpretations about geological events in Earth

history. • Conodonts are considered tropical species, so the discovery in Bolivian shale was particularly surprising.

The position of the continents during the Late Devonian period puts Bolivia very close to the South Pole. Thus, Over

hypothesizes that warm equatorial currents made this area of the globe habitable by conodonts. • Over has published

his findings in the Journal of Paleontology and Palaeontographica Americana.

Management Discussion and Analysis

11 RF SUNY AR 0 9

The Research Foundation of State University of New York

Net Assets Net assets indicate whether the RF’s assets exceed its

liabilities. Some liabilities are long-term, such as the retiree health li-

ability net of retiree health assets held in the VEBA trust. Net assets

as of June 30, 2009 are negative $66 million, compared to positive

$25 million as of June 30, 2008. The change is primarily due to fis-

cal 2009 investment losses and actuarial losses in the postretirement

benefit plan.

For additional insight on balance sheet strength, the RF uses ratio

analysis to measure:

• the RF’s ability to meet its current liabilities;

• the RF’s capacity to meet present levels of debt obligations.

The RF’s ability to meet its current liabilities

The RF’s ability to meet current liabilities is demonstrated through

the current ratio, which is current assets divided by current liabilities.

The NACUBO standard is a 2:1 ratio – twice as much current as-

sets as current liabilities. The RF’s current ratio for 2009 and 2008 is

as follows:

FYE 2009 FYE 2008

Current ratio 1.14:1 1.13:1

In order to meet its current liabilities, the RF also has an $80 mil-

lion line of credit, which is available to provide short-term cash to pre-

fund expenditures on sponsored projects. The line of credit mitigates

the need to liquidate assets to meet liabilities. The line of credit also

minimizes the impact of daily fluctuations in cash flow by allowing

investment managers to maintain a steady portfolio level and enhance

long-term earnings.

established in partnership with the St. Regis Mohawk tribe and the

Adirondack North Country Association to seek funding to develop the

backbone infrastructure for broadband access for residents and busi-

nesses throughout the North Country.

Impact The RF will continue its support of affiliated corporations

as SUNY campuses identify more ways to engage research, promote

economic development, and solve challenges in local economies.

Budgetary pressures on SUNY research

SUNY experienced continued decreases in state support throughout

fiscal year 2009. This has significantly impacted the SUNY mission,

including the growth of research on campuses.

Impact In a time of economic uncertainty for SUNY, the RF reduced

the costs of its central office operations. The reductions were care-

fully targeted to allow the RF to fully meet campus needs in a diffi-

cult economic climate and continue to invest in key initiatives that will

help grow revenue, increase efficiency, and reduce costs in the future.

Specifically, allocations to campuses increased by $1.4 million, the

corporate reserve was funded at $1.4 million, and projects identified

in the RF’s Strategic Plan were supported. RF leadership will continue

to monitor SUNY’s financial position and identify additional means by

which the RF can support SUNY’s mission.

BALANCE SHEET

Working capital and net assets are the two key indicators for evaluat-

ing the strength of the RF’s balance sheet. They provide insight into

the RF’s ability to cover expenditures given the timing uncertainties

inherent in sponsored program administration.

Working Capital Working capital, also known as operational cash,

is comprised of unrestricted and restricted balances. The bulk of un-

restricted working capital comes from cash-basis campus and central

office unexpended allocations. Restricted working capital consists of

cash-basis advances received from sponsors and agencies, fringe

benefits net credit balances, and other designated credit balances,

such as outstanding checks.

As of June 2009:

• The total amount of working capital is $254.7 million.

• Total restricted working capital is $218 million, which includes advances of $140.7 million from sponsors; advances of $49.2 million from agencies; fringe benefits net credit balances of $6.0 million; and other restricted credit balances of $22.1 million.

• Total unrestricted working capital is $36.7 million.

$36.7 million in unrestricted working capital is a relatively small cush-

ion for ensuring operating liquidity for an organization of the RF’s size.

RF leadership is exploring allocation options and cost reductions to

improve working capital levels.

The RF will continue its support of affiliated corporations as SUNY campuses identify more ways to engage research, promote economic development, and solve chal-lenges in local economies.

12 RF SUNY AR 0 9

The Research Foundation of State University of New York

reductions in volume for certain awards where the payments are re-

ceived after the outflows. In contrast, as noted in the Statement of Ac-

tivities section of this analysis, there were increases on CNSE awards,

which do not impact accounts receivable, since on those awards, the

RF generally receives cash in advance of the outflows.

Liabilities

The largest single component of the RF’s liabilities is the postretire-

ment benefits obligation, which represents the actuarially determined

amount required to pay future retiree medical benefits. Note 6 in the

Notes to Financial Statements provides detail on the retiree health pro-

gram and the policy in place to fund the liability.

The postretirement benefits obligation decreased by $25.4 million,

to a balance of $187.6 million as of June 30, 2009. This was caused

by the transfer of $66.4 million in retiree health assets to the VEBA

trust, which more than offset an increase of $41 million caused by the

effect of decreasing interest rates and the timing of benefit payments.

Additionally, the line of credit balance decreased by $25.6

million, due mainly to the RF’s decision to maintain higher levels of

liquid assets in light of investment market volatility.

Deposits held for others is money that the RF received from

agency activity in advance of expenditures. For fiscal year 2009, this

balance was $44.7 million and is largely due to $36 million in funds

received in fiscal year 2008 for BioBAT, Inc.

Net assets

The net assets of the RF represent primarily unrestricted revenue

allocated in the RF’s board-approved Financial Plan to campus-

es, central office, and reserves. It is important to note that certain

expenditure accruals, such as the postretirement benefit liability, are

not fully funded.

As of June 30, 2009, the RF’s net assets were a negative $66.2

million, a decrease of $92.1 million from the prior fiscal year. While

the majority of the decrease in fiscal year 2009 was due to investment

losses, the negative position of net assets is a result primarily of the

unfunded retiree health liability balance of $187.6 million. Changes

in accounting principles in recent years substantially increased this

liability. The RF made the prudent decision to set aside over $66 mil-

lion in a VEBA trust to pay for this obligation to employees and plans to

continue to increase this amount. Since a negative net asset position

indicates a potential decreased future ability to pre-fund expenditures

on sponsored projects, it is a priority of the RF to take measures, such

as the withholding of investment income allocations to campuses as

previously noted, as well as the continued projected funding of the

retiree health VEBA trust, to increase the net asset position.

The RF’s capacity to meet present levels of debt obligations

The RF’s debt burden ratio, which is debt service (cash required over

a given period for the repayment of interest and principal on a debt)

divided by adjusted operating expenses, was 0.73:1 in fiscal year

2009. A rule of thumb among investment bankers is that debt service

should not be greater than 7:1 of operating expenses; the RF’s debt

burden falls below that threshold. This means that the RF is capable

of providing resources to support the campuses’ general operating

purposes, while still covering debt service.

FYE 2009 FYE 2008

Debt burden ratio 0.73:1 1.13:1

During fiscal year 2009, Moody’s completed a review of the RF

and affirmed its A1/VMIG1 rating on the RF’s Series 2002A

variable-rate demand bonds. Moody’s report noted that the outlook

for the RF is stable.

ASSETS AND LIABILITIES SUMMARY

Assets

Assets decreased by $155.2 million in fiscal year 2009 to $455.0 mil-

lion, primarily due to decreased investment balances.

Investment balances totaled $239.0 million in fiscal year 2009,

a $149.2 million decrease over the prior fiscal year. The two main

drivers were losses of $63.3 million, and the transfer of $66.4 million

of retiree health investments to the newly created VEBA trust. The

transfer to the VEBA trust was effective June 29, 2009; therefore those

assets are not reflected in the RF balance sheet investment accounts

as of June 30, 2009. Note 4 of the financial statements provides more

information about investment balances, including a breakdown of the

different types of investments held by the RF.

Accounts receivable, which represents the amount due to the RF

from sponsors, decreased by $21.7 million, or 12%, in fiscal year

2009. The decrease can be attributed mainly to projects either spon-

sored by, or flowing through, New York State, for which there were

some timing-related increases to balances in the prior year, as well as

Management Discussion and Analysis

The largest single component of the RF’s liabilities is the postretirement benefits ob-ligation, which represents the actuarially determined amount required to pay future retiree medical benefits.

The RF established a Voluntary Employee Benefit Association (VEBA) trust to provide a more formal segregation of the assets that had been held by the RF to pay the health and dental expenses of retired RF employ-ees and their dependents. Using a VEBA trust ensures that the assets are used for employees’ benefits.

13 RF SUNY AR 0 9

The Research Foundation of State University of New York

STATEMENT OF ACTIVITIES

Revenues

Total revenue increased by $2.6 million in fiscal year 2009. Increas-

es in grants awarded for research were mostly offset by investment

losses. Grants and contracts awarded for sponsored program activities

at state-operated SUNY campuses represent 96% of the RF’s total

revenue excluding net investments losses. Additional revenue comes

from investment income, inventions and licenses, and other income

(gift income, fees earned for providing services to campus-related

organizations, and third-party use of service centers).

Grants awarded for research and other sponsored program activities

Federal Total federal funds represent $505 million, or 60% of

total sponsored revenues. Direct federal revenue – revenue from fed-

eral projects awarded directly to the RF not through other nonfederal

organizations – totaled $338 million, or 40% of total sponsored rev-

enues. Flow-through funding – revenue from federal projects awarded

to the RF through nonfederal organizations such as New York State or

other not-for-profit organizations including universities – totaled $166

million, or 20% of total sponsored revenues.

NEW METASEARCH ENGINES LEAVE GOOGLE, YAHOO CRAWLING One day in the not-too-distant

future, you’ll be able to type a query into an online search

engine and have it deliver not Web pages that may contain

an answer but just the answer itself. Weiyi Meng, a pro-

fessor of computer science at Binghamton University, is

helping to make such possibilities a reality, both through

his research and as president of a company called Webscalers. • The way Meng sees it, big search engines such as

Google and Yahoo have serious limitations. The Web has two parts: the surface Web, which is made up of perhaps

60 billion pages, and the deep Web, which includes some 1 trillion pages. • Google, which relies on a “crawler” to

examine pages and catalog them for future searches, can search about 20 billion pages. “Most of the pages on the

deep Web aren’t directly ‘crawlable,’” says Meng, who helped pioneer large-scale metasearch-engine technology that

harnesses the power of small search engines to come up with results that are more accurate, more complete, and

more current. • “Most of the other technologies do the metasearching on top of a small number of general-purpose

search engines, such as Yahoo, Google or MSN,” Meng explained. “We have a completely different perspective. We

want to build large-scale metasearch engines on top of many small search engines.” • Webscalers’ technology could

be useful for large organizations with many divisions. For example, Webscalers has developed a prototype that would

allow a search of all 64 campuses in the State University of New York system. “People can use it to find collabora-

tors,” Meng said. “It could also help prospective students find programs they’re interested in.” The technology could

be adapted to large companies or even the government. • Webscalers has already launched a news metasearch engine

called AllInOneNews. Available at www.allinonenews.com, it connects to 1,800 news sources in 200 countries. That’s

the largest metasearch engine in the world.

0

200000

400000

600000

800000

1000000TOTALREVENUE

Fiscal 2005-2009($ in thousands)

20082004 2005 20072006

76

6,0

71

74

1,6

05

86

9,7

98

81

8,1

42

82

0,7

62

‘05 ‘06 ‘07 ‘08 ‘09

Of the federally-sponsored projects, 55% of the funding was

received from the Department of Health and Human Services. Other

major federal sponsors include:

• National Science Foundation

• Agency for International Development

• Department of Education

• Department of Defense

• Department of Energy

14 RF SUNY AR 0 9

The Research Foundation of State University of New York

Nonfederal Revenue from nonfederal awards totaled $341 million,

or 40% of total sponsored revenues. This is a 22% increase from the

prior fiscal year. Sponsored programs revenue from New York State

increased by 24%. This included the completion of major upfront

capital and infrastructure projects at CNSE.

Sponsored programs revenue from industry and other increased

by 19%, mainly due to increased research activity at CNSE.

Facilities & Administration (F&A) cost recoveries One element

of the total within the line “Grants awarded for research and other

sponsored activity” is F&A cost recovery, which represents reimburse-

ments for the use of facilities and administrative costs that cannot be

directly and uniquely assigned to any particular project. F&A recov-

eries earned on grants and contracts administered by the RF were

$126.1 million for the fiscal year ending June 30, 2009, an increase of

1% from the prior year. The table below displays the ratio of total F&A

costs recovered to total direct costs in fiscal year 2009. Note that the

category totals are weighted averages.

Sponsor Type Ratio of F&A to Total Direct Cost

Federal 30.09%

Federal Flow Through:

Federal through Other 31.28%

Federal through NYS 15.42%

Total Federal Flow Through 20.06%

Nonfederal:

NYS Direct 2.69%

Business, Industry and Other 8.79%

Total Nonfederal 5.95%

The RF negotiates F&A rates with the US Department of Health

and Human Services for each SUNY campus every three to four years.

The following table displays for each campus the federally negotiated

F&A rate, its term date, and the actual rate of return (ROR) in 2009.

The ROR on this table is calculated by dividing total F&A cost recov-

ery by a base of total direct costs. Campus RORs are less than the

negotiated F&A rates for two major reasons:

1. The negotiated rate uses a base that excludes certain costs. For

the larger volume campuses, the negotiated rates use a base of

“modified total direct costs,” which excludes certain cost categories,

such as equipment and sub-awards over $25,000. Other campuses

use salaries and wages as the base for their negotiated rates.

2. In accepting awards, campuses sometimes elect to reduce or waive

total F&A cost recovery as part of their negotiations with sponsors.

Management Discussion and Analysis

ADULT STEM CELLS CAN STRENGTHEN FAILING HEARTS

Using stem cells to repair a damaged heart is not a new idea. But doing

it with a simple shot to the arm certainly is. • “Ours is absolutely the first

research group to try this,” says Techung Lee, an associate professor of bio-

chemistry at the University at Buffalo. Other researchers have injected stem

cells directly into the heart, but it’s an invasive procedure that includes

sedating the patient and inserting a cardiac catheter. In addition, it costs

$20,000-30,000 and doesn’t always work. • In an animal model, Lee

has demonstrated that injecting adult stem cells into skeletal muscle dra-

matically improves cardiac function. Concomitant changes in cellular and

molecular measures were also recorded. • The kind of stem cells Lee used,

called mesenchymal stem cells, secrete a whole variety of growth factors,

which travel through the bloodstream to benefit a failing heart. • In addition, stem cells stimulate the body’s muscles

to produce their own growth factors, which further amplify the treatment effect. “Muscle makes up forty percent of

the body’s mass,” he says, which means there’s a lot of amplification. • One challenge that remains is how to grow

enough stem cells to use in humans. Scaling up from laboratory animals, Lee predicts he’d need one billion cells to

treat a single patient. In current work, he is testing various genetic and pharmacologic approaches to try to grow the

stem cells faster and to make them more efficient producers of growth factors.

SPONSOREDREVENUES

$846,021Fiscal 2009

($ in thousands)

• Federal 504,636• State 152,870• Local 12,287• Private 176,228

20082004 2005 20072006

76

6,

07

1

74

1,6

05

86

9,7

98

81

8,1

42

82

0,7

62

‘05 ‘06 ‘07 ‘08 ‘09

15 RF SUNY AR 0 9

The Research Foundation of State University of New York

Inventions and license income

Inventions that result from sponsored research belong to the RF,

which is responsible for protecting the intellectual property and

commercializing the technologies as part of its technology transfer

service. Royalty income for fiscal year 2009 totaled $13.8 million.

Stony Brook University generated approximately 85% of the RF’s

invention and license income. The 23.3% decrease from last year is

primarily due to the nonrecurrence of a prior year license agreement

at Stony Brook University.

Other income

Other income represents

• revenues from third parties for use of service centers;

• gift income;

• nonsponsored income;

• fees earned for providing human resources/payroll and purchas-ing/payable services to campus-related organizations such as out-patient clinics at SUNY hospitals.

• Other income increased by $11.4 million, mainly due to an in-crease in nonsponsored income.

Expenses

Total expenses for the RF for fiscal year 2009 were $894 million and

consisted of expenditures for

• sponsored programs;

• administration and support (campus and central office operations).

Sponsored programs

The direct portion of sponsored programs expenditures (costs that can

be identified specifically with a sponsored project, such as salaries

and wages, fringe benefits, equipment, travel and publication expens-

es) was $721 million in fiscal year 2009, an increase of $56 million

from last fiscal year that can be primarily attributed to the increased

activity at CNSE.

The investment plan is governed by the RF’s board-approved investment policy and guidelines. The RF’s philosophy is centered on the belief that a professionally managed and well-diversified portfolio is necessary to achieve the highest level of return with a bal-anced level of risk.

Federal 2009 On-Campus Actual 2009Location Rate (in %) Term ROR (in %)

Applied to a Modified Total Direct Cost Base

University at Albany 51.5 2010 7.4

Binghamton University 53.0 2011 22.9

University at Buffalo 58.5 2012 30.4

Stony Brook University 56.0 2010 24.2

Upstate Medical University (Syracuse) 57.0 2009 28.9

Downstate Medical Center (Brooklyn) 56.0 2009 19.1

SUNY ESF 54.0 2009 18.5

Buffalo State College 47.0 2012 20.6

System Administration – Provost 19.0 2011 9.2

SUNY Cortland 56.5 2013 9.7

SUNY Delhi 56.5 2011 20.4

Empire State College 27.2 2011 12.5

Applied to Salary and Wage Base

SUNY Brockport 75.0 2010 8.0

SUNY Fredonia 70.0 2013 7.7

SUNY Geneseo 75.0 2011 20.6

SUNY New Paltz 78.0 2010 8.1

Old Westbury 70.5 2009 11.7

College at Oneonta 72.0 2010 10.5

SUNY Oswego 76.0 2013 12.7

SUNY Plattsburgh 70.6 2010 10.5

SUNY Potsdam 73.5 2011 8.2

Purchase College 75.0 2010 12.5

Maritime College 70.0 2011 1.1

College of Optometry 79.5 2010 29.4

SUNYIT (Utica/Rome) 70.0 2011 11.2

Alfred State College 70.0 2011 3.2

SUNY Canton 72.0 2010 7.4

SUNY Cobleskill 70.0 2010 4.2

Farmingdale State College 75.0 2013 8.6

Morrisville State College 70.0 2011 11.2

Investment income

For fiscal year 2009, the operational funds ended with a negative

rate of return (ROR) of 13.9 (see table below). As previously noted,

the retiree health funds are no longer held by the RF; they are now

held by the VEBA trust that was established in June of 2009. For the

period from July 1, 2008 until June 29, 2009 (the date assets were

transferred), the investment loss of 28.1% generated by the retiree

health funds was included in the RF’s 2009 financial results for fiscal

year 2009.

The investment plan is governed by the RF’s board-approved

investment policy and guidelines. In accordance with sound market

management practices, the RF uses an asset allocation target to bal-

ance its investment portfolio. The RF’s philosophy is centered on the

belief that a professionally-managed and well-diversified portfolio is

necessary to achieve the highest level of return with a balanced level

of risk. The following table displays the actual and budgeted rates of

return for 2009 and 2008.

2009 ROR (net) 2009 Budget 2008 ROR (net) 2008 Budget

Operating funds -13.9% 7.00% -1.0% 7.00%

16 RF SUNY AR 0 9

The Research Foundation of State University of New York

Administration and support

The RF’s campus and central office locations incur costs associated

with maintaining sufficient infrastructure to support research activity

and adequate staff to administer sponsored programs and provide

other services. The RF uses the money it receives from F&A cost

recovery, investments, and fees to pay for these expenditures.

Expenditures were $173 million in fiscal year 2009, a decrease of $10

million, or 5.4%, which was primarily driven by decreased spending

at the campuses.

The following chart shows the $894 million in sponsored program

and administration/support expenses broken down by expense cat-

egory. These expense categories are based on the categorization de-

fined by the National Association of College and University Business

Officers (NACUBO).

STATEMENT OF CASH FLOWS

The principal investigator (faculty member conducting the sponsored

project) determines the timing of expenditures based on the require-

ments for completing the project. The RF manages cash to be able to

support principal investigators, using cash from operating funds or the

line of credit, as necessary. Fixed asset purchases totaled $6.4 million,

and long-term debt was reduced by $1.1 million.

In 2009, cash and cash equivalents increased by $8.6 million.

Operating cash flow of $32 million was driven mainly by the decrease

in accounts receivable of $21.4 million.

Cash flows from financing activities were reduced by $26.7 million,

due to a reduction of the amount outstanding on the line of credit,

while $3.3 million in cash was provided by investing activities.

During fiscal year 2009, the RF worked with SUNY to increase

the timeliness of state reimbursements as New York State accounts

receivable amounted to 61.3% of total accounts receivable. New York

State sponsor and federal flow-through revenue was 31.7% of total

sponsored revenue.

NEW ACCOUNTING PRONOUNCEMENTS

Effective July 1, 2008, the RF adopted Statement of Financial

Accounting Standards No. 157, Fair Value Measurements (SFAS

157) and Statement of Financial Accounting Standards No. 159, The

Fair Value Option for Financial Assets and Financial Liabilities (SFAS

159). These adoptions have not had a material effect on the financial

statements. Under SFAS 157, the RF was required to provide addi-

tional disclosure of fair value measurements, and to categorize the

investments based on the ease with which their fair values can be

measured and verified. See Note 4 for that disclosure.

ACCOUNTS RECEIVABLEBALANCES BY MAJOR SPONSOR

$156,849Fiscal 2009

($ in thousands)

• Federal 16,526• Federal Flow Through — Other 19,501• Federal Flow Through — NYS 48,952• State 47,266• Industry & Other 24,605

20082004 2005 20072006

76

6,

07

1

74

1,6

05

86

9,7

98

81

8,1

42

82

0,7

62

‘05 ‘06 ‘07 ‘08 ‘09

EXPENSES

$894,063Fiscal 2009

($ in thousands)

• Research 458,546• Operations & Maintenance 22,620• Public Service 135,406• Academic Support 20,829• Institutional Support 129,643• Other 10,160• Instruction 116,859

20082004 2005 20072006

76

6,

07

1

74

1,6

05

86

9,7

98

81

8,1

42

82

0,7

62

‘05 ‘06 ‘07 ‘08 ‘09

Management Discussion and Analysis

17 RF SUNY AR 0 9

The Research Foundation of State University of New York

SEEING WITH YOUR BRAIN Two eyes are better than one, but they rely

on the brain to make our world 3D. • Small differences between what the left

and right eyes see are integrated in the brain to give us a palpable sense of

depth. • Ben Backus, an associate professor of vision sciences at SUNY State

College of Optometry, is studying how the brain interprets images from the

eyes and has shown that the process is malleable. This finding opens the door

to possible therapies for patients with stroke or head trauma; the therapies would teach the brain to “see” – a kind of

remedial course in perception. • In his experiments, Backus studies participants by using a virtual reality apparatus to

display a rotating wire frame cube. Sometimes the cube is enhanced in a way that makes clear which corner is closer,

and thus which way it’s spinning; other times the image is ambiguous and can be seen as rotating either way. • Next,

Backus adds a “training” cue, which predicts which way the cube will rotate. For instance, when the 3-D-enhanced

cube slides up a pole, it always rotates to the right; when it slides down, it rotates left. After a set amount of train-

ing, he tests his experimental subjects with the ambiguous cube. What people report – what they’ve learned – is that

when the cube slides up the pole, it is rotating to the right, even though the figure was ambiguous before the training.

• “We now have a new theoretical framework to devise novel treatments for visual problems where the eye is fine but

the brain doesn’t see,” says Backus. • Now, with a new grant from the National Eye Institute, he is further developing

his techniques and gearing up to study them in clinical populations.

Repor t of Independent Auditors

TO THE BOARD OF DIRECTORS THE RESEARCH FOUNDATION OF STATE UNIVERSITY OF NEW YORK

We have audited the accompanying balance sheet of The Research

Foundation of State University of New York (the RF) as of June 30,

2009, and the related statements of activities, and cash flows for the

year then ended. These financial statements are the responsibility of

the RF’s management. Our responsibility is to express an opinion on

these financial statements based on our audit. The financial state-

ments of the RF as of and for the year ended June 30, 2008 were

audited by other auditors whose report, dated September 19, 2008,

expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards

generally accepted in the United States of America. Those standards

require that we plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free of mate-

rial misstatement. An audit includes consideration of internal control

over financial reporting as a basis for designing audit procedures

that are appropriate in the circumstances, but not for the purpose of

expressing an opinion on the effectiveness of the RF’s internal control

over financial reporting. Accordingly, we express no such opinion. An

audit also includes examining, on a test basis, evidence supporting

the amounts and disclosures in the financial statements, assessing

the accounting principles used and significant estimates made by

management, as well as evaluating the overall financial statement

presentation. We believe that our audit provides a reasonable basis

for our opinion.

In our opinion, the 2009 financial statements referred to above

present fairly, in all material respects, the financial position of the RF

as of June 30, 2009, and the changes in its net assets and its cash

flows for the year then ended in conformity with U.S. generally ac-

cepted accounting principles.

Albany, New York

August 25, 2009

18 RF SUNY AR 0 9

The Research Foundation of State University of New York

Balance Sheets June 30, 2009 and 2008

2009 2008

A S S E T S

Current assets:

Cash and cash equivalents $ 8,840,237 $ 219,404

Accounts receivable, net 156,849,369 178,594,485

Advances to others 14,512,133 9,950,101

Short-term investments 184,858,471 209,831,895

Short-term investments—designated for post-retirement

benefit obligation — 6,180,000

Due from broker for securities sold 618,384 4,344,924

Other assets 3,291,450 2,919,667

Total current assets 368,970,044 412,040,476

Noncurrent assets:

Long-term investments 59,508,586 97,656,614

Long-term investments—designated for post-retirement benefit obligation — 75,901,790

Fixed assets, net 23,883,861 22,057,515

Other assets 2,621,598 2,561,983

Total noncurrent assets 86,014,045 198,177,902

Total assets $ 454,984,089 $ 610,218,378

L I A B I L I T I E S A N D N E T A S S E T S

Current liabilities:

Accounts payable and accrued expenses $ 61,044,920 $ 63,422,730

Accrued compensation 21,487,221 18,326,682

Accrued vacation 26,440,127 24,697,383

Deferred revenue 163,531,476 170,761,364

Deposits held for others 44,679,365 49,240,036

Current portion of post-retirement benefit obligation — 6,180,000

Due to broker for securities purchased 5,944,400 5,696,074

Current portion of long-term debt 666,952 952,658

Line of credit — 25,605,729

Total current liabilities 323,794,461 364,882,656

Noncurrent liabilities

Deposits held for others 1,037,306 3,451,556

Post-retirement benefit obligation, net of current portion 187,640,000 206,899,000

Long-term debt, net of current portion 5,593,378 6,415,107

Other liabilities 3,164,867 2,755,147

Total noncurrent liabilities 197,435,551 219,520,810

Total liabilities 521,230,012 584,403,466

Net (deficit) assets:

Unrestricted (66,245,923) 25,814,912

Total liabilities and net assets $ 454,984,089 $ 610,218,378

See accompanying notes to financial statements.

19 RF SUNY AR 0 9

The Research Foundation of State University of New York

Statements of Act iv i t ies Years Ended June 30, 2009 and 2008

2009 2008

Revenues:

Grants awarded for research and other sponsored activities $ 846,021,460 $ 794,324,700

Investment loss, net (63,312,585) (7,010,444)

Inventions and licenses income 13,791,952 17,976,431

Other income 24,261,250 12,851,145

Total revenues 820,762,077 818,141,832

Expenses:

Sponsored programs and other activities 721,252,422 665,711,307

Administration and support 172,810,490 182,678,739

Total expenses 894,062,912 848,390,046

Change in net assets from revenues and expenses (73,300,835) (30,248,214)

Post-retirement related (charge) credit other than net periodic benefit costs (18,760,000) 4,272,000

Net decrease in net assets (92,060,835) (25,976,214)

Net assets at beginning of year 25,814,912 51,791,126

Net (deficit) assets at end of year $ (66,245,923) $ 25,814,912

See accompanying notes to financial statements.

NEW ENERGY FRONTIER RESEARCH CENTER AT STONY BROOK

Better ways to store energy are critical to becoming more energy efficient in the

21st century. Although current batteries might be improved, scientists believe

that one key to big advances in energy storage lies in finding novel materials

and in understanding how they function. • In order to develop truly innovative

battery and energy storage technologies, scientists must understand the fun-

damentals of how different materials behave – how they hold and dispense an

electrical charge. This is the mission of the new Stony Brook-based Department

of Energy’s Frontier Research Center. • Clare Grey, a professor of chemistry at

Stony Brook University, has assembled an expert team of theorists and experimentalists from several of the nation’s

top universities and national laboratories, including Brookhaven National Laboratory, Binghamton University, and six

others outside of New York. Together they will form the Northeastern Chemical Energy Storage Center (NECESC), a

“virtual center” at Stony Brook. • Grey says the key issues in chemical energy storage are capacity (how far you can

go in your electric car) and power (how fast you can drive your electric car), as well as safety (how to keep highly reac-

tive species separate). • The new center will support basic research in developing the experimental methodology to

describe the movement of lithium and other ions as a battery is charged and discharged in real time, as opposed to

taking the battery apart after a test run. A theoretical group will model movement of ions and atoms as the battery is

cycled. Fundamental research on various aspects of how materials transform on cycling will be another focus. • To

find a true paradigm shift, Grey says researchers must spend the time and effort on understanding the basics. “Our

goal is to study the key fundamental issues in this field that will significantly impact the design of the next generation

of batteries,” Grey says. Discoveries will inform both transportation and electrical grid applications.

2 0 RF SUNY AR 0 9

The Research Foundation of State University of New York

Statements of Cash Flows Years Ended June 30, 2009 and 2008

2009 2008

Cash flows from operating activities:

Federal grants and contracts $ 527,442,191 $ 494,523,449

State and local grants and contracts 157,292,441 141,228,890

Private grants and contracts 152,010,724 186,712,842

Other receipts 218,360,589 227,679,508

Salaries and wages payments (390,492,712) (377,989,136)

Employee benefits payments (131,801,103) (125,079,037)

Payments to suppliers/vendors (431,739,728) (395,684,087)

Operating interest and dividends 7,501,641 10,077,676

Equity investment partnership income 1,928,038 1,833,236

Interest payments on capital debt/notes (268,195) (299,834)

Other payments (78,232,393) (68,868,812)

Net cash provided by operating activities 32,001,493 94,134,695

Cash flows from investing activities:

Proceeds from sales of investments 693,688,167 599,052,880

Purchases of investments (685,330,116) (697,720,477)

Equity investment partnership distribution 1,385,000 1,035,000

Cash paid for purchases of fixed assets (6,410,547) (6,237,008)

Net cash provided by (used in) investing activities 3,332,504 (103,869,605)

Cash flows from financing activities:

Principal payments on long-term debt (1,107,435) (1,685,257)

Proceeds from line of credit 34,223,530 53,359,225

Payments on line of credit (59,829,259) (42,367,361)

Net cash (used in) provided by financing activities (26,713,164) 9,306,607

Net increase (decrease) in cash and cash equivalents 8,620,833 (428,303)

Cash and cash equivalents, beginning of year 219,404 647,707

Cash and cash equivalents, end of year $ 8,840,237 $ 219,404

Reconciliation of change in net assets to net cash provided by operating activities:

Change in net assets $ (92,060,835) $ (25,976,214)

Adjustments to reconcile change in net assets to net cash provided by operating activities:

Realized and unrealized losses on investments 72,742,264 18,921,356

Unrealized loss, interest rate swap 350,105 360,707

Depreciation expense 4,352,447 4,629,552

Loss on disposal of fixed assets 503,041 565,034

Donated fixed assets (271,287) (158,500)

Trade in allowance — (98,000)

Changes in operating assets and liabilities:

Accounts receivable and other assets 21,313,718 (31,748,381)

Accrued investment income 299,975 209,120

Accounts payable and accrued expenses (2,377,810) 3,254,905

Other accruals and other liabilities 4,962,898 5,575,886

Deferred revenue (7,229,888) 62,101,243

Deposits held for and advances to others (11,536,953) 39,567,987

Post-retirement benefit obligation, net of investment transfer to trust 40,953,818 16,930,000

Net cash provided by operating activities $ 32,001,493 $ 94,134,695

Supplemental disclosure of noncash activities:

Investment transfer to trust $ (66,392,818) $ —

Capital lease obligation — 121,400

See accompanying notes to financial statements.

21 RF SUNY AR 0 9

The Research Foundation of State University of New York

NOTE 1: ORGANIZATION

The Research Foundation of State University of New York (RF) is a

private, nonprofit corporation that supports the advancement of edu-

cation, research, and discovery at the State University of New York

(SUNY). Established in 1951, the RF carries out its responsibilities

pursuant to a formal contract with SUNY that has been in force since

1977. The RF is tax-exempt under Internal Revenue Code (IRC) Sec-

tion 501(c)(3).

Separate from SUNY, the RF is able to form partnerships that

enhance SUNY’s education, research and public service mission

and spur economic development across New York state. The primary

service offered by the RF is sponsored programs administration. The

infrastructure in place for sponsored programs allows the RF to also

administer agency funds and assist campuses with establishing affili-

ated corporations.

The RF comprises a central office and operating units at 30 cam-

pus locations across New York state. Sponsored program functions

delegated to the campuses are conducted under the supervision of

RF operations managers who are appointed by the RF’s board of direc-

tors on the recommendation of the respective campus presidents.

The RF is governed by a board of directors composed of research-

ers, campus and system administrators, and representatives of busi-

ness and industry.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation

The financial statements of the RF have been prepared on the accrual

basis of accounting, in accordance with standards established by the

Financial Accounting Standards Board (FASB) for external financial

reporting by not-for-profit organizations.

(b) Use of Estimates

The preparation of financial statements in conformity with accounting

principles generally accepted in the United States of America requires

management to make significant estimates and assumptions that af-

fect the reported amount of net assets and disclosures of contingent

assets and liabilities as of the date of the financial statements and

the reported amount of change in net assets during the reporting pe-

riod. Significant estimates are used to calculate the balances for ac-

crued expenses, allowance for doubtful accounts, investments, and

the post-retirement benefit obligation. Actual results could differ from

those estimates.

Notes to Financial StatementsJune 30, 2009 and 2008

(c) Revenue Recognition

Grants awarded for research and other sponsored activities repre-

sent exchange transactions derived from grants, cost reimbursement

contracts, and cooperative agreements that provide for the recovery

of direct and indirect costs, subject to audit. In the opinion of man-

agement, no material adjustments are expected as a result of such

audits. Grants and contracts awarded for research and other spon-

sored activities are recognized only to the extent of costs incurred, in

the year in which the costs are eligible for reimbursement. Amounts

received in excess of expenses are recorded as deferred revenue.

The RF funds its operations primarily from recoveries of indirect costs

provided from grants and contracts. Such recoveries are recorded in

the year in which the costs are eligible for reimbursement.

Investment income or loss is comprised of dividends and interest,

realized and unrealized gains and losses, and income from invest-

ment in equity partnerships.

Inventions and licenses income includes the total amount derived

from inventions that result from sponsored research. The RF is re-

sponsible for protecting the intellectual property and commercializing

these technologies as part of its technology transfer service. The RF

follows the SUNY policy of apportioning up to 40% of the royalties to

the inventors, with the rest apportioned to the campuses. The inven-

tors’ shares of the royalties are reflected in the RF’s administration and

support expenses. Campus portions are spent under the provisions of

the Bayh-Dole Act and are also reflected in the RF’s administration

and support expenses.

Other income consists of third-party service center revenue, non-

sponsored income from activities such as fees for the use of the au-

tomated grants accounting system, and fees earned for administering

agency funds such as fiscal and personnel staffing agreements.

(d) Cash Equivalents

Cash equivalents include short-term, highly liquid investments with

a maturity of three months or less at the time of purchase. Cash and

cash equivalents included in the long-term investment portfolio are

classified as long-term investments.

(e) Investments

Investments in equity securities with readily determinable fair values

and all investments in debt securities are reported at fair value based

upon quoted market prices.

Hedge funds are valued using current estimates of fair value by

management based on information provided by the general partner or

investment manager for the respective funds. Because these invest-

2 2 RF SUNY AR 0 9

The Research Foundation of State University of New York

ments are not readily marketable, their estimated value is subject to un-

certainty and therefore may differ materially from the value that would

have been used had a ready market for such investments existed.

Purchases and sales of securities are recorded on a trade-date

basis. Dividend income is recorded on the ex-dividend date. Interest

income is recorded on the accrual basis of accounting. The average

cost of securities sold is used to determine the basis for computing

realized gains or losses.

The captions “Due from broker for securities sold” and “Due to bro-

ker for securities purchased” represent investment trade activity that

took place prior to year-end but had not been settled by year-end.

The RF does not use its investments as collateral. To minimize

potential losses, the RF maintains a diversified investment portfolio.

Investments are held with the investment custodian in the RF’s name.

(f) Fixed Assets

Fixed assets are stated at cost, net of accumulated depreciation, and

are depreciated on a straight-line basis over the estimated useful life

of the assets. Using historical and industry experience, estimated

useful lives with the exception of land range from five to 50 years.

Upon sale or retirement of fixed assets, the cost and the related

accumulated depreciation are removed from the accounts and the

resulting gain or loss is recorded. Depreciation expense for the years

ended June 30, 2009 and 2008 was $4,352,447 and $4,629,552,

respectively. Generally, title to equipment purchased using sponsored

funds is retained by the grantor institution until such time as final dis-

position is determined. Accordingly, purchases of equipment charged

to the respective grant or contract are not capitalized.

(g) Derivative Instruments and Hedging Activities

The RF accounts for derivative investments in accordance with the

FASB Statement No. 133, Accounting for Derivative Instruments and

Hedging Activities, as amended, which requires that all derivative in-

struments be recognized in the financial statements and measured

at fair value regardless of the purpose or intent for holding them. The

RF currently has an interest rate swap that is adjusted to fair value,

based upon information provided by the financial institution, through

net assets.

(h) Deferred Revenue

Deferred revenue represents three types of activities: (1) surplus

amounts for sponsored programs activity that occur when funds are

received in advance of spending, (2) surplus amounts on balance

awards that represent the balance of funds that remain after termina-

tion of a project (either grant or contract) supported by a fixed price

award, which can be used in the future to support research, and (3)

surplus balances related to service centers that are established and

maintained to provide a specific service and charge to sponsored

programs and other users, in which billing rates are reviewed at a

minimum of every two years and rates are adjusted prospectively to

reduce surplus/deficit amounts.

(i) Accrued Vacation

RF employees are granted vacation and sick leave in varying amounts.

In the event of termination, an employee is reimbursed for accumu-

lated vacation up to a maximum of 30 days. Employees are not reim-

bursed for accumulated sick leave at termination.

BRINGING AFFORDABLE BROADBAND ACCESS TO THE NORTH COUNTRY In its new capacity as a

private, not-for-profit corporation, CBN Connect Inc. is moving forward to bring a state-of-the-art open access fiber

optic network to counties in northeastern New York state. • The concept for what would become CBN Connect Inc.

was started by the Industrial Development Agencies of Clinton, Essex, and Franklin counties and the Town of Platts-

burgh. “They asked TAC to manage the project,” said Howard Lowe, director of economic development at the Technical

Assistance Center (TAC) at SUNY Plattsburgh and president of CBN Connect. Over the course of seven years, TAC

documented the demand for better broadband service and secured funding to plan and design the network. • “In order

to be certified as a telecommunications provider by the New York State Public Service Commission, CBN Connect

needed to be a legal entity,” Lowe explained. TAC worked with the RF to set up the new corporation, which is governed

by representatives from the communities it serves. CBN Connect was incorporated in December 2008. • CBN Connect

hopes to partner with the RF, which received $7.6 million to connect health care providers, hospitals, and colleges

through the Adirondack-Champlain Telemedicine Information Network (ACTION). The RF funding was made available

through the Federal Communications Commission Rural Health Care Pilot Program. • CBN Connect Inc. will not com-

pete with for-profit telecommunications service providers. In fact, CBN

Connect seeks to help for-profit providers reach areas that they may not

have been able to serve due to cost by creating an “open” infrastructure

they can all use. Its mission is to establish a world-class broadband system

that will be a platform for innovation and economic growth.

2 3 RF SUNY AR 0 9

The Research Foundation of State University of New York

(j) Post-Retirement Benefit Obligation

In June 2009, the RF established a Voluntary Employee Benefit As-

sociation (VEBA) trust for the post-retirement benefit plan. The im-

pact of the establishment of the trust, and the subsequent transfer of

investment assets to that trust, included $66.4 million in reductions

to the investment asset balances, and an equal reduction to the post-

retirement benefit liability balances.

(k) Reclassifications

Certain 2008 amounts have been reclassified to conform to the 2009

presentation.

(l) Other Information

Accounts receivable as of June 30, 2009 and 2008 are reported net

of an allowance for doubtful accounts of approximately $6,900,000

and $7,000,000, respectively.

In accordance with FASB Interpretation No. 39, Offsetting of

Amounts Related to Certain Contracts – an Interpretation of ABP

Opinion No. 10 and FASB Statement No. 105, the RF has recorded its

workers’ compensation accrual (for incurred but not reported claims)

at the gross amount. As such, a receivable and offsetting payable has

been recorded to account for losses, which will be recovered through

the RF’s existing insurance policies. This receivable, which is record-

ed in the current portion of other assets, amounted to $3,280,452

and $2,919,667 at June 30, 2009 and 2008, respectively.

Advances to others and deposits held for others represent

amounts related to agency activity at the campus and affiliated or-

ganization locations. Agency activity refers to those university-related

organizations, such as campus-based foundations or campus-based

clinical practice plans that use RF-provided human resources, pay-

roll, and purchasing and payables administration services. Included

in the noncurrent deposits held for others are planned gifts donated

to the RF to ultimately benefit the campus foundations of approxi-

mately $1,037,000 and $1,132,000 at June 30, 2009 and 2008,

respectively. Included in deposits held for others are approximately

$33,584,000 and $36,000,000 of construction funds for an affiliated

organization at June 30, 2009 and 2008, respectively.

Various SUNY employees perform work on RF sponsored grants.

SUNY pays these employees directly, and is reimbursed by the RF on

a monthly basis. The related amounts due to SUNY are included in

accrued compensation and consist of both a known and estimated

component. The total liability to SUNY at June 30, 2009 and 2008 is

approximately $7,952,000 and $7,019,000, respectively.

The RF maintains a deferred compensation plan established

in accordance with Section 457(b) of the IRC. Plan funds, totaling

$2,621,598 and $2,561,983 as of June 30, 2009 and 2008, respec-

tively, are a part of the general assets of the RF, which are subject to

claims of creditors of the RF.

The RF assisted in the creation and expansion of the University

at Albany College of Nanoscale Science and Engineering’s Albany

NanoTech complex. The RF leases various areas of clean room space

from Fuller Road Management Corporation to facilitate research and

development related activities at the University at Albany in the field

of nanotechnology (see note 3). The RF maintains a service center

where costs are incurred for the operation of this facility and sup-

ported by recharges to sponsored programs or third-party use. Agree-

ments have been executed between the RF and various third parties

for the use of tools and facilities for which the revenue is included in

other income in the statements of activities.

(m) Recently Adopted Accounting Pronouncements

In September 2006, the FASB released Financial Accounting Stan-

dard No. 157, Fair Value Measurements (FAS 157). FAS 157 defines

fair value, outlines a framework for measuring fair value in accordance

with generally accepted accounting principles, and enhances the re-

quired disclosures about fair value measurements. The expanded

disclosures include a requirement to disclose the fair value measure-

ments according to a hierarchy, segregating measurements using

quoted prices in active markets for identical assets and liabilities, sig-

nificant other observable inputs, and significant unobservable inputs.

The standard applies when other accounting pronouncements require

fair value measurements. FAS 157 is effective for financial statements

issued for fiscal years beginning after November 15, 2007. The RF

adopted this standard effective July 1, 2008. The adoption of FAS 157

did not have a material effect on the financial statements.

In October 2008, the FASB released FSP 157-3, Determining the

Fair Value of a Financial Asset in a Market That Is Not Active, which

was effective upon issuance. FSP 157-3 clarifies various application

issues with respect to the objective of a fair value measurement, dis-

tressed transactions, relevance of observable data, and the use of

management’s assumptions. There was no impact on the financial

statements as result of adopting FSP 157-3.

In April 2009, the FASB released FSP 157-4, Determining Fair

Value When the Volume and Level of Activity for the Asset or Liability

Have Significantly Decreased and Identifying Transactions That Are

Not Orderly (FSP 157-4) to provide additional guidance for estimating

fair value in accordance with FAS 157, when the volume and level of

activity for an asset or liability have significantly decreased. This FSP

also includes guidance on identifying circumstances that indicate a

transaction is not orderly. The RF adopted this guidance for the fiscal

year ended June 30, 2009. The adoption of FSP 157-4 did not have a

material effect on the financial statements.

In February 2007, the FASB released Financial Accounting Stan-

dard No. 159, The Fair Value Option for Financial Assets and Finan-

cial Liabilities, Including an Amendment of FASB Statement No. 115

(FAS 159). FAS 159 provides entities the ability, on an elective basis,

to report most financial assets and liabilities at fair value with corre-

sponding gains and losses recognized in current earnings. FAS 159

is effective for financial statements issued for fiscal years beginning

after November 15, 2007. The RF adopted this standard effective July

1, 2008. The adoption of FAS 159 had no impact on the financial

statements since management did not elect to measure any additional

eligible financial assets or liabilities at fair value as a result of adopting

FAS 159.

NOTE 3: AFFILIATED ORGANIZATIONS

The RF has 16 affiliated organizations as of June 30, 2009 that have

been established to facilitate university-industry-government partner-

ships and accelerate the growth of sponsored program and applied

research opportunities at SUNY. These entities limit liability to the RF

24 RF SUNY AR 0 9

The Research Foundation of State University of New York

and SUNY, establish separate and distinct governance structures, and

are often able to meet a variety of needs. The affiliated organizations

are as follows:

(a) Binghamton Technologies Corporation

Binghamton Technologies Corporation is a private, not-for-profit cor-

poration formed by the RF (acting on behalf of Binghamton Univer-

sity) to construct a high-technology facility at the eastern edge of the

Binghamton University campus to assist in the economic development

of the region. This corporation is inactive and will be dissolved during

fiscal year 2010.

(b) BioBAT, Inc.

BioBAT, Inc. is a private, not-for-profit corporation formed by the RF

(acting on behalf of SUNY Downstate Medical Center) and the New

York City Economic Development Corporation to develop the Brooklyn

Army Terminal into a site for biotechnology expansion, manufactur-

ing, and research. This facility will provide a committed location in

New York City where new and growth-stage biotechnology and bio-

pharmaceutical companies can expand, create jobs, and manufac-

ture products for market.

(c) Broad Hollow Bioscience Park, Inc.

Broad Hollow Bioscience Park, Inc. is a not-for-profit corporation

formed by the RF (acting on behalf of Farmingdale State College) and

Cold Spring Harbor Laboratory to operate an incubator facility on the

Farmingdale State campus. Its purpose is to assist in the economic

development of the region by attracting public and private funds to

further biotechnology development through the commercialization of

new technologies and the creation of new companies and new jobs.

(d) Brookhaven Science Associates, LLC

Brookhaven Science Associates, LLC (BSA) is a not-for-profit lim-

ited liability company formed by the RF (acting on behalf of Stony

Brook University) and Battelle Memorial Institute (Battelle). In a na-

tional competition against the country’s leading research universi-

ties, the U.S. Department of Energy in 1998 selected BSA to operate

Brookhaven National Laboratory. BSA profits and losses are allocated

50% each to Battelle and the RF; Battelle and the RF each made an

initial capital contribution of $125,000 in 1998.

Total assets of BSA as of September 30, 2008 and 2007 are

$23,375,183 and $19,797,194, respectively, and total liabilities are

$16,536,173 and $14,040,260, respectively. Total members equity

of BSA as of September 30, 2008 and 2007 are $6,839,010 and

$5,742,934, respectively. Total revenue for the years ended Septem-

ber 30, 2008 and 2007 are $7,431,674 and $7,151,146, respectively.

Total expenses for the years ended September 30, 2008 and 2007

are $3,575,598 and $3,484,674, respectively. The RF records its

share of the net earnings of BSA from BSA’s most recent completed

fiscal year. The RF records distributions received as a reduction of the

investment balance.

(e) Buffalo 2020 Development Corporation

Buffalo 2020 Development Corporation was formed by the RF (on

behalf of University at Buffalo) in partnership with FNUB, Inc., a sub-

sidiary of the University at Buffalo Foundation, in an effort to enable

the purchase, development and construction of research-based facili-

ties and infrastructure on University at Buffalo property on the down-

town Buffalo, NY campus. These facilities will support the research,

academic and economic development mission of the SUNY campus

at Buffalo.

(f) CBN Connect, Inc.

CBN Connect, Inc. was formed by the RF (on behalf of SUNY

Plattsburgh) in partnership with the St. Regis Mohawk Tribe and the

Adirondack North Country Association to promote and facilitate the

development of high-speed communications networks throughout the

eastern Adirondack Park and beyond. CBN Connect, Inc. will partner

with regional, state, and federal entities to develop a network infra-

structure through which broadband service providers will accommo-

date homes and business throughout the region.

(g) CUBRC, Inc.

CUBRC, Inc. is a private, not-for-profit corporation formed by the RF

(acting on behalf of the University at Buffalo) and, as of May 2006,

the University at Buffalo Foundation Incubator Inc. CUBRC, Inc.’s

mission is to leverage the capabilities of scientists from academia and

industry to expand capability and to provide economic and industrial

growth opportunities in Western New York. Incorporated in 1983, CU-

BRC, Inc. competes for research programs that would not otherwise

be available to the University at Buffalo.

(h) Central New York Biotechnology Research Center

Central New York Biotechnology Research Center (CNYBRC) is a pri-

vate, not-for-profit corporation formed by the RF (acting on behalf of

SUNY Upstate Medical University and SUNY College of Environmen-

tal Science and Forestry), Metropolitan Development Association of

Syracuse and Central New York, LeMoyne College and Syracuse Uni-

versity. CNYBRC seeks to promote economic development in Central

New York and across New York state by supporting technology trans-

fer, workforce development, and a high-tech business incubator.

(i) Downstate Technology Center, Inc.

Downstate Technology Center, Inc. is a private, not-for-profit corpora-

tion formed by the RF (acting on behalf of SUNY Downstate Medical

Center) in partnership with the Health Science Center at Brooklyn

Foundation, Inc. to provide a vehicle for the construction of an ad-

vanced biotechnology incubator adjacent to the SUNY Downstate

Medical Center. The facility seeks to advance medical research, pro-

vide incubator space and assist in the economic development of the

Borough of Brooklyn.

(j) Fuller Road Management Corporation

Fuller Road Management Corporation (FRMC) is a private, not-for-

profit corporation formed by the RF (acting on behalf of the University

at Albany) and the University at Albany Foundation. FRMC provides

a vehicle for the construction of comprehensive research facilities

at the College of Nanoscale Science and Engineering in an effort to

promote the advancement of the research portfolio of the University

at Albany, as well as to assist in the development of early and late

stage companies, the creation of jobs and the development of the

region’s economy.

Notes to Financial StatementsJune 30, 2009 and 2008

2 5 RF SUNY AR 0 9

The Research Foundation of State University of New York

In May 2005, the RF, as tenant, and FRMC, as landlord, executed

an agreement for the lease of clean room facilities, which are used for

nanotechnology-related research and development at the University

at Albany. Rent payments made by the RF pursuant to the agree-

ment for each of the years ended June 30, 2009 and 2008 were

$7,014,458. The annual rental payment may escalate annually at a

rate not to exceed one percent. The term of the lease is from May 20,

2005 through September 30, 2035.

At June 30, 2009, annual minimum lease payments on the FRMC

operating lease are as follows:

2010 $ 7,014,458

2011 7,014,458

2012 7,014,458

2013 7,014,458

2014 7,014,458

Thereafter 156,071,691

(k) Long Island High Technology Incubator

Long Island High Technology Incubator (LIHTI) is a private, not-for-

profit corporation incorporated in 1989 by the RF (acting on behalf of

Stony Brook University) and the Stony Brook Foundation, Inc. LIHTI’s

mission is the development of new high-technology companies in

a limited number of overlapping technology growth areas including

biotechnology, environmental technologies, electronics, information

technology and new materials technology.

(l) NanoTech Resources, Inc.

NanoTech Resources, Inc. was a private, not-for-profit corporation

formed by the RF (acting on behalf of the University at Albany) to

work with the University at Albany to help it meet its obligations in

support of the Center of Excellence in Nanoelectronics by assisting

in exploring and implementing corporate partnerships and securing

external funding; to partner with the College of Nanoscale Science

and Engineering at the University at Albany; and to link academic

teaching and research with technology development. This corporation

was dissolved during fiscal year 2009.

(m) New York Maritime College Sailing Foundation, Inc.

New York Maritime College Sailing Foundation, Inc. (NYMCSF) is a

private, not-for-profit corporation formed by the RF to support sailing

programs at the State University of New York Maritime College. The

goal of NYMCSF is to advance the college’s mission through the en-

hancement of the faculty, student and staff for the benefit of midship-

men and to facilitate the program’s short and long-term excellence

through donations of funds, equipment or boats.

(n) Purchase College Advancement Corporation

Purchase College Advancement Corporation is a private, not-for-profit

corporation formed by the RF (on behalf of the State University Col-

lege at Purchase) to operate facilities that will support the college’s

academic mission and spur economic development in the mid-Hud-

son region.

(o) Source Sentinel, LLC

Source Sentinel, LLC is a limited liability company formed by the RF

(acting on behalf of the College of Environmental Science and For-

estry), O’Brien & Gere Limited, and Sensis Corporation. Its mission is

to bring together scientists, engineers and resources from academia

and industry to develop real-time detection and monitoring products

for the protection of drinking water supplies, distribution systems and

treatment facilities against chemical and biological threats.

RISK AND RESILIENCE IN ADOLESCENCE Children who are

abused or neglected are at much higher risk for a host of psychological

and sociological problems growing up. However, some kids beat the odds

with surprising resilience. • What factors might make the difference? Per-

sonality certainly, but social competence, relationship with one’s mother,

characteristics of one’s community, and peer groups have also been pro-

posed to play roles in the success of some maltreated children. • Previous

work on what factors determine good versus bad outcomes most frequently

have been done in Western, white, middle-class populations. Hazel Prelow, associate professor of psychology at the

University at Albany, is studying the same dynamic in ethnic minority populations. • Funded by a two-year, $145,000

grant from the Eunice Kennedy Shriver National Institute of Child Health and Human Development, Prelow will make

use of data collected from the National Longitudinal Study of Child and Adolescent Well-Being, which includes

demographic and psychological data on more than 5,000 children on the rolls of child protective services. • Prelow

will analyze the data in a novel way, identifying subgroups of young adolescents, aged 11-14 years, within the popula-

tion who have different growth trajectories of emotional and behavioral problems. She will also identify how changes

over time in the adolescents’ socioenvironmental context are related to the different growth rates of emotional and

behavioral problems. • Through such a detailed and dynamic study, she hopes to identify those factors most likely to

have the biggest impact on children’s lives, thereby providing clues for therapeutic intervention.

2 6 RF SUNY AR 0 9

The Research Foundation of State University of New York

(q) University at Albany Bioscience Development Corporation

University at Albany Bioscience Development Corporation is a private,

not-for-profit corporation formed by the RF (on behalf of the Univer-

sity at Albany) in partnership with the University at Albany Foundation

to advance the educational and research mission of SUNY and the

University at Albany and enhance their ability to attract public and pri-

vate funds by providing facilities for research and scholarly programs

for the benefit of faculty, visiting scholars, students and staff.

Notes to Financial StatementsJune 30, 2009 and 2008

(p) SUNY China International Corporation

SUNY China International Corporation is a private, not-for-profit cor-

poration formed by the RF to foster and develop new academic and

research collaborations, programs and initiatives between SUNY and

Chinese universities. The organization, formerly known as State Uni-

versity of New York China Representative Office, Inc., was renamed

during fiscal year 2009. Also during fiscal year 2009, the Neil D. Levin

Graduate Institute of International Relations and Commerce Founda-

tion, Inc. became the second member of this corporation.

NOTE 4: INVESTMENTS

Investments by type consist of the following as of June 30:

2009 2008

Cash equivalents $104,459,286 $105,994,303

U.S. government securities 55,276,027 35,664,865

Mortgage/asset-backed securities 3,236,503 43,642,628

Corporate debt securities 18,214,707 18,112,847

Common stocks 2,952,525 80,028,956

International funds 2,644,986 41,541,344

Investment in equity partnership 2,034,506 1,836,468

Hedge funds 44,019,433 54,617,900

Other 6,203,068 6,779,838

Total $ 239,041,041 $ 388,219,149

In June of 2009, the RF established a Voluntary Employee Benefit

Association (VEBA) trust with the Bank of New York Mellon as the

trustee. As of June 30, 2009, the RF has transferred $66,392,818 in

assets to the VEBA trust, which included all short-term and long-term

investment assets previously held by the RF and designated for the

post-retirement benefit obligation.

Hedge fund investments consist of alternative investments in fund

of funds, limited partnerships and marketable alternatives. Hedge

funds may trade in derivative instruments that involve varying degrees

of market risk including credit exposure, liquidity and interest rates.

Due to the level of risk associated with these securities and the level of

uncertainty related to changes in their value, it is possible market con-

ditions could have a near-term material effect on balances reported in

the balance sheets and the statements of activities.

The following is the composition of investment loss for the years

ended June 30:

2009 2008

Dividends and interest $ 7,501,641 $ 10,077,676

Realized and unrealized loss (72,742,264) (18,921,356)

Income from investment in equity partnership 1,928,038 1,833,236

Total return on investments $ (63,312,585) $ (7,010,444)

Fair Value Measurements

As discussed in note 2, the RF adopted FAS 157 effective July 1,

2008. The three levels of the fair value hierarchy established under

FAS 157 are described below:

• Level 1 inputs are unadjusted quoted market prices in active mar-kets for identical assets or liabilities that are assessable at the mea-surement date.

• Level 2 inputs are other than quoted prices in active markets that are observable either directly or indirectly and fair value is determined through the use of models or other valuation methodologies.

• Level 3 inputs are unobservable and are used to measure fair value to the extent that observable inputs are not available.

The techniques used to estimate the fair values are affected by

the assumptions used, including discount rates and estimates of the

amount, and timing of future cash flows. Fair values for securities

are based on quoted market prices or dealer quotes, where available.

When quoted market prices are not available, fair values are based on

quoted market prices of comparable instruments. When necessary,

the RF uses matrix pricing from a third-party vendor to determine fair

value pricing.

The following table summarizes, as of June 30, 2009, the RF’s as-

sets and liabilities that are measured at fair value on a recurring basis.

Financial instruments are classified in their entirety based on the low-

est level of input that is significant to the fair value measurement.

2 7 RF SUNY AR 0 9

The Research Foundation of State University of New York

NOTE 6: POST-RETIREMENT BENEFIT OBLIGATION

The RF sponsors a defined benefit post-retirement plan that covers

substantially all nonstudent employees. The plan provides post-retire-

ment medical benefits and is contributory for employees hired after

1985. Retirees who were hired after 1985 are subject to the same

cost-sharing requirements as active employees, with respect to medi-

cal coverage. With respect to dental coverage, retirees must pay the

full premium cost of the coverage selected. Annual allocations are

made by management pursuant to a funding policy established by the

board of directors. For payment of benefits under the plan, as noted

above, the RF established a VEBA trust in June of 2009 with the Bank

of New York Mellon as the trustee. As of June 30, 2009, the RF has

transferred $66,392,818 in assets to the VEBA trust. Legal title to all

the assets of the trust is vested in the trust and is for the benefit of

Level 1 Level 2 Level 3 Total

Assets:

Cash equivalents $ 104,459,286 $ — $ — $104,459,286

U.S. government securities 29,025,773 26,250,254 — 55,276,027

Mortgage/asset-backed securities — 3,236,503 — 3,236,503

Corporate debt securities 4,880,717 13,333,990 — 18,214,707

Common stocks 2,952,525 — — 2,952,525

International funds 2,644,986 — — 2,644,986

Investment in equity partnership — 2,034,506 — 2,034,506

Hedge funds — — 44,019,433 44,019,433

Other 5,446,073 756,995 — 6,203,068

$ 149,409,360 $ 45,612,248 $ 44,019,433 $ 239,041,041

Liabilities:

Interest rate swaps $ — $ 543,268 $ — $ 543,268

A summary of activity for all assets and liabilities with Level 3 fair value measurements for the year ended June 30, 2009 follows:

2009

Beginning balance $ 54,617,900

Net realized and unrealized losses (5,026,067)

Net sales (5,572,400)

Ending balance $ 44,019,433

NOTE 5: FIXED ASSETS

Fixed assets consist of the following at June 30:

Fixed asset classification

Fixed assets June 30,

2008 AdditionsDispositions/

retirements

Fixed assets June 30,

2009

Building $ 6,500,000 $ — $ — $ 6,500,000

Office furniture and equipment 36,866,040 6,400,341 1,808,819 41,457,562

Information systems 32,639,068 281,493 43,375 32,877,186

Total fixed assets 76,005,108 6,681,834 1,852,194 80,834,748

Less accumulated depreciation:

Building 780,000 130,000 — 910,000

Office furniture and equipment 22,788,054 3,353,728 1,305,778 24,836,004

Information systems 30,379,539 868,719 43,375 31,204,883

Total accumulated depreciation 53,947,593 4,352,447 1,349,153 56,950,887

Fixed assets, net $ 22,057,515 $ 2,329,387 $ 503,041 $ 23,883,861

the participants. The effect of this transfer of assets to the trust was a

$66.4 million net reduction in liability presented on the RF’s financial

statements as of June 30, 2009. As noted in the table below, current

obligations are assumed to be paid out of the trust assets, with the

remaining unfunded obligation to be reflected as a noncurrent liability.

Prior to the establishment of the VEBA trust, assets were held in an

unrestricted investment account designated by the board of directors

and were not considered plan assets under FASB Statement No. 106,

Employers’ Accounting for Postretirement Benefits Other Than Pen-

sions. There were 6,536 participants in the plan as of July 1, 2008.

The following table sets forth the plan’s funded status reconciled

with the amount shown in the RF’s financial statements at June 30:

(amounts rounded to the nearest thousand)

2 8 RF SUNY AR 0 9

The Research Foundation of State University of New York

Notes to Financial StatementsJune 30, 2009 and 2008

2009 2008

Change in benefit obligation:

Benefit obligation at beginning of year $ 213,079,000 $ 196,149,000

Service cost 10,509,000 9,957,000

Interest cost 14,361,000 12,411,000

Plan participants’ contributions 202,000 204,000

Retiree Drug Subsidy receipts 231,000 132,000

Actuarial loss (gain) 21,298,000 (990,000)

Benefits paid (5,744,000) (4,784,000)

Benefit obligation at end of year 253,936,000 213,079,000

Change in plan assets:

Fair value of plan assets at beginning of year — —

Employer contributions 71,607,000 4,448,000

Plan participants’ contributions 202,000 204,000

Retiree Drug Subsidy receipts 231,000 132,000

Benefits paid (5,744,000) (4,784,000)

Fair value of plan assets at end of year 66,296,000 —

Funded status $ (187,640,000) $ (213,079,000)

Amounts recognized in the balance sheet:

Current liability $ — $ (6,180,000)

Noncurrent liability (187,640,000) (206,899,000)

Amounts recognized in unrestricted net assets:

Net transition obligation $ (552,000) $ (1,107,000)

Prior service credit 1,118,000 1,397,000

Net actuarial loss (65,559,000) (46,523,000)

2009 2008

Weighted average assumptions used to determine benefit obligation:

Discount rate at end of year 6.27% 6.84%

Components of net periodic benefit cost:

Service cost $ 10,509,000 $ 9,957,000

Interest cost 14,361,000 12,411,000

Amortization of:

Transition obligation 555,000 555,000

Prior service credit (279,000) (279,000)

Actuarial loss 2,262,000 3,006,000

Net periodic postretirement benefit cost $ 27,408,000 $ 25,650,000

Weighted average assumptions used to determine net periodic benefit cost:

Discount rate for the year 6.84% 6.33%

2009 2008

Other changes in plan assets and benefit obligations recognized in unrestricted net assets:

Net actuarial (loss) gain $ (21,298,000) $ 990,000

Amortization of:

Transition obligation 555,000 555,000

Prior service credit (279,000) (279,000)

Actuarial loss 2,262,000 3,006,000

Total recognized as an (decrease) increase in unrestricted net assets $ (18,760,000) $ 4,272,000

Expected amounts amortized from unrestricted net assets into net periodic benefit cost for fiscal year ending 2010:

Transition obligation $ (552,000)

Prior service credit 279,000

Actuarial loss (3,651,000)

2 9 RF SUNY AR 0 9

The Research Foundation of State University of New York

Estimated gross benefit payments (net of participants’ contributions):

Fiscal year ending 2010 $ 6,973,000

Fiscal year ending 2011 8,097,000

Fiscal year ending 2012 9,365,000

Fiscal year ending 2013 10,678,000

Fiscal year ending 2014 12,039,000

Fiscal year ending 2015 – 2019 84,676,000

Estimated gross amount of subsidy receipts:

Fiscal year ending 2010 $ 504,000

Fiscal year ending 2011 593,000

Fiscal year ending 2012 708,000

Fiscal year ending 2013 845,000

Fiscal year ending 2014 1,000,000

Fiscal year ending 2015 – 2019 7,636,000

Estimated net benefit payments:

Fiscal year ending 2010 $ 6,469,000

Fiscal year ending 2011 7,504,000

Fiscal year ending 2012 8,657,000

Fiscal year ending 2013 9,833,000

Fiscal year ending 2014 11,039,000

Fiscal year ending 2015 – 2019 77,040,000

For measurement purposes, the initial trend rates vary by cover-

age. The health maintenance organization rate is 9.0%, the preferred

provider organization (PPO) Medical Pre-65 rate is 7.0%, the PPO

Medical Post-65 rate is 7.0% and administrative fees are 5.0%. Trend

rates grade down to an ultimate rate of 5.0% in 2018 and later.

Assumed health care cost trend rates have a significant effect on

the amounts reported for the health care plans. A one-percentage

point change in assumed health care cost trend rates would have the

following effects:

One-Percentage point increase

One-Percentage point decrease

Effect on total service and interest cost components $ 4,879,000 $ (3,887,000)

Effect on postretirement benefit obligation 45,076,000 (36,448,000)

(a) Investment Policies and Strategies

The plan’s primary investment goal is to meet the ongoing obliga-

tions while minimizing contributions and controlling risks. Ordinarily,

the asset allocation plan would be structured such that short-term

liabilities are primarily funded with lower volatility short-term assets,

intermediate-term liabilities are funded with investments that exhibit

moderate volatility, and the longer-term liabilities are funded by long-

term assets. In addition, the plan’s asset allocation is structured to

meet a long-term targeted return. Borrowing from the diversification

techniques developed under the modern portfolio theory, the plan’s

assets are invested so that total portfolio risk exposure and risk ad-

justed returns meet the plan’s long-term total return goal.

The RF’s investment managers, under agreement to manage the

plan assets kept in the VEBA trust, exercise full investment discretion

within the guidelines as described in any or all of the appropriate docu-

ments including the respective investment advisory agreement, invest-

ment specification document, fund prospectus, offering memorandum

and/or limited partnership agreement. However, assets must be man-

aged with the care, skill, prudence and diligence that a prudent invest-

ment professional in similar circumstances would exercise. Investment

practices must comply with the applicable laws and regulations.

(b) Basis Used to Determine the Overall Expected Long-Term

Rate of Return on Assets Assumption

The RF works with a consultant to develop long-term rate of return

assumptions used to model and determine the overall asset alloca-

tion. The return assumptions used in the asset allocation analysis are

based on a building block approach in which risk premium is calcu-

lated for each asset class and adjusted for current market conditions

including, but not limited to, current market valuations, yield, inflation

and various economic indicators.

The plan’s asset allocation as of June 30, 2009, as shown in the

table below, is expected to meet the plan’s expected return.

3 0 RF SUNY AR 0 9

The Research Foundation of State University of New YorkThe Research Foundation of State University of New York

Notes to Financial StatementsJune 30, 2009 and 2008

The RF maintains a noncontributory defined contribution retirement

plan for substantially all nonstudent employees. Contributions are

based on a percentage of earnings and range from 8% to 15%, de-

pending on date of hire. In addition, the RF provides an additional pen-

sion contribution if an employee retires and meets the age and service

requirements for retiree health insurance. This additional contribution

is calculated by multiplying the value of the employee’s accrued sick

leave, up to a maximum of 200 days, by the employee’s contribution

rate at the time of retirement. As per a plan amendment adopted Janu-

ary 1, 2009, employees become fully vested after completing one year

of service (a one-year waiting period from their date of hire). At that

time, contributions begin and they gain ownership of all future contri-

butions made to their retirement accounts while employed by the RF.

Contributions are allocated to individual employee accounts.

Vested participants have the option of having contributions to their

accounts deposited in either the Teachers Insurance and Annuity As-

sociation (TIAA), which offers a guaranteed income account, or in

the College Retirement Equities Fund (CREF), which offers an assort-

ment of mutual funds, stocks, bonds, real estate, and money market

investments. The payroll for RF employees covered by TIAA/CREF

for the years end June 30, 2009 and 2008 was $349,998,000 and

$337,674,000, respectively. The RF pension contributions were ap-

proximately $28,254,000 and $27,515,000 for the years ended June

30, 2009 and 2008, respectively. These contributions are equal to

100% of the required contributions for the year.

Asset class Target Permissible ranges Actual

Cash 2% 0% – 10% 6.6%

Fixed income 10% 5% – 20% 9.5%

Equities 51% 40% – 60% 49.8%

Global equities 25% 20% – 33% 30.9%

Hedged equities 16% 10% – 20% 18.9%

Private equity 10% 0% – 15% —%

Absolute return 15% 5% – 25% 17.3%

Real assets 22% 15% – 25% 16.8%

Inflation-protected 5% 3% – 10% 7.9%

Commodities 5% 2% – 7% 4.4%

Global real estate 12% 4% – 14% 4.5%

NOTE 7: RETIREMENT PLAN

BUILDING A BETTER ENERGY STORAGE DEVICE Dr. Manisha V. Rane-Fondacaro, a materials scientist and

instructor at the College of Nanoscale Science and Engineering (CNSE), is exploring a broad range of green tech-

nologies with an eye toward using nanotechnology innovations to bring efficient, reliable and affordable clean energy

products to the American market. • Working in CNSE’s Energy and Environmental Technology Applications Center

(E2TAC), she works on characterization of superconductivity, fuel cells, ultracapacitors and photovoltaics materials

for improved performance and reliability, and helps to develop technologies that are practical and make business

sense. • Rane-Fondacaro is currently studying ultracapacitors for use as energy storage devices. Ultracapacitors have

high power density and are able to deliver energy quickly, while batteries have high energy density and are able to

store more energy. The potential benefits of a battery/ultracapaci-

tor combination are enormous. • “Energy storage is a $70 billion

business worldwide and is growing at a phenomenal rate. A battery/

ultracapacitor combination could provide longer talk time on a cell

phone, allow quick charging of a camera flash, increase the life

of storage devices, and improve the performance of electric and

hybrid cars,” said Rane-Fondacaro, who has already developed a

patentable idea capable of enhancing the ultracapacitor voltage

range and is now working on demonstrating the proof of concept.

She is currently working with a company that developed a pro-

cess for electroplating metal on a solar cell to address a contact

adhesion problem.

31 RF SUNY AR 0 9

The Research Foundation of State University of New York

Balance

June 30, 2008 Additions Reductions

Balance

June 30, 2009

Current

portion

Long-term debt:

Lease obligations $ 1,672,765 $ — $ 952,435 $ 720,330 $ 666,952

Bonds payable 5,695,000 — 155,000 5,540,000 —

Total long-term debt 7,367,765 — 1,107,435 6,260,330 666,952

Other long-term liabilities:

Post-retirement benefit obligation 213,079,000 46,601,000 72,040,000 187,640,000 —

Deposits held for others 3,451,556 207,645 2,621,895 1,037,306 —

Other liabilities 2,755,147 409,720 — 3,164,867 —

Total other long-term liabilities 219,285,703 47,218,365 74,661,895 191,842,173 —

Total long-term liabilities $ 226,653,468 $ 47,218,365 $ 75,769,330 $ 198,102,503 $ 666,952

Future payments on long-term debt as of June 30, 2009 are as follows:

Bonds payable-building Capital leases Total

Principal Interest Principal Interest Principal Interest

Fiscal year:

2010 $ — $ 29,916 $ 666,952 $ 15,837 $ 666,952 $ 45,753

2011 165,000 29,025 34,712 3,692 199,712 32,717

2012 170,000 28,107 18,666 536 188,666 28,643

2013 175,000 27,162 — — 175,000 27,162

2014 180,000 26,190 — — 180,000 26,190

2015—2019 1,000,000 115,128 — — 1,000,000 115,128

2020—2024 1,180,000 85,239 — — 1,180,000 85,239

2025—2029 1,385,000 50,112 — — 1,385,000 50,112

2030—2034 1,285,000 10,719 — — 1,285,000 10,719

Total $ 5,540,000 $ 401,598 $ 720,330 $ 20,065 $ 6,260,330 $ 421,663

Interest rate 0.54%

Interest rates range from 3.73% to 9.78%

NOTE 8: LONG-TERM DEBT AND OTHER LONG-TERM LIABILITIES

The RF entered into an agreement during 2002 with the City of Albany

Industrial Development Agency (IDA) whereby the IDA issued both a tax-

able and a tax-exempt series of bonds for the purpose of providing funds

to acquire a parcel of real estate together with the existing building there-

on. The RF occupies and conducts most of its central office operations

from this location. At June 30, 2009, the tax-exempt bond debt totaled

$5,540,000 with maturity in 2032 at an interest rate of 0.54% at June 30,

2009. The taxable bond debt was extinguished in 2009. Subsequent to

June 30, 2009, the tax-exempt bonds will bear interest at variable rates

as established by the remarketing agent. The adjustable rate for the tax

exempt-bonds will not exceed 12% per annum.

In January 2006, the RF entered into an interest rate swap agree-

ment with the Bank of New York (BNY) wherein the RF agreed to pay

BNY a fixed rate of interest equal to 3.615% on the tax-exempt bond

issuance total of $5,600,000 and to receive from BNY a payment

equal to 70% of the London Interbank Offered Rate (LIBOR) as pub-

lished by the British Bankers’ Association (BBA). The monthly interest

rate is calculated using the weighted average method applied to the

daily USD-LIBOR-BBA rate. The agreement expires coincident with

the maturity of the bonds in 2032. The RF’s net benefit or obligation

under the swap agreement is accounted for as an asset or liability at

fair value in the financial statements. The estimated fair value of the

swap at June 30, 2009 and 2008 was $(543,268) and $(193,163),

respectively. The balances are included within other liabilities in the

accompanying balance sheets.

The RF is also contractually obligated per long-term lease agree-

ments for capital equipment.

A summary of long-term debt as well as other long-term liabilities

is as follows:

Line of Credit

The RF maintains an unsecured line of credit in the amount of

$80,000,000 of which none was used as of June 30, 2009;

$25,605,729 was used as of June 30, 2008.

3 2 RF SUNY AR 0 9

The Research Foundation of State University of New York

NOTE 9: UNIVERSITY AT BUFFALO FOUNDATION SERVICES, INC.

The RF has an agreement with the University at Buffalo Foundation

Services, Inc. (UBFS) to enable UBFS to enter into contracts and ac-

cept grants for certain sponsored programs (generally excluding federal,

New York State, and foreign) on behalf of the SUNY at Buffalo. Under

this agreement, UBFS serves as an agent for the RF. Activity through

UBFS amounted to approximately $5,211,000 and $5,519,000 for the

years ended June 30, 2009 and 2008, respectively.

NOTE 10: ADMINISTRATION AND SUPPORT

Administration and support expenses are funded primarily from rev-

enue received from grants for the reimbursement of facilities and ad-

ministrative (F&A) costs. F&A costs are overhead expenses incurred

to support sponsored research and other sponsored programs within

the RF. Expenses incurred include sponsored program support and

development, institutional and departmental support, academic sup-

port, operations and maintenance and administrative costs.

NOTE 11: REVENUES

Revenues, by type, consist of the following for the years ended June 30:

2009 2008

Federal grants and contracts $ 504,636,122 $ 512,292,888

State grants and contracts 152,870,421 123,464,603

Local grants and contracts 12,286,586 12,144,868

Private grants and contracts 176,228,331 146,422,342

Investment income 9,429,679 11,343,850

Net realized and unrealized loss on investments

(72,742,264) (18,354,294)

Gifts, capital gifts and grants 264,271 175,240

Inventions and licenses income 13,791,952 17,976,431

Other income 23,996,979 12,675,904

Total revenues $ 820,762,077 $ 818,141,832

Notes to Financial StatementsJune 30, 2009 and 2008

NOTE 12: EXPENSES

Expenses consist of the following for the years ended June 30:

2009 2008

Instruction $ 116,858,648 $ 121,108,895

Research 458,545,681 382,658,125

Public service 135,405,663 137,128,410

Academic support 20,828,956 13,209,586

Student services 2,512,876 2,283,794

Operations and maintenance 22,619,885 33,813,208

Institutional support 129,643,943 149,915,421

Scholarships and fellowships 2,363,856 2,668,808

Auxiliary enterprises 159,721 109,379

Depreciation expense 4,352,447 4,629,552

Interest expense on capital related debt

268,195 299,834

Loss on disposal of fixed assets 503,041 565,034

Total expenses $ 894,062,912 848,390,046

NOTE 13: CONTINGENCIES

The RF has certain contingencies resulting from litigation and claims

incident to the ordinary course of business. Management believes that

the probable resolution of such contingencies will not materially affect

the financial position or results of operations of the RF.

SUNY SCIENTISTS DISCOVER MEMORY STORAGE MOLECULE In a discovery that may one day lead to the ability to

erase debilitating painful memories and addictions from the brain,

researchers at SUNY Downstate Medical Center have found that

a molecule known to preserve memories – PKMzeta – specifically

stores complex, high-quality memories that provide detailed information about an animal’s location, fears, and actions,

but does not control the ability to process or express this information. • This finding, which is detailed in are detailed in

the December edition of PLoS Biology in a paper titled, PKMzeta Maintains Spatial, Instrumental, and Classically Con-

ditioned Long-Term Memories, suggests that unwanted memories might be erasable without harming other brain func-

tions. • The paper is authored by Todd C. Sacktor, MD, professor of physiology and pharmacology and of neurology,

Andre A. Fenton, PhD, associate professor of physiology and pharmacology, and Peter Serrano, PhD, now at Hunter

College, now at Hunter College, research assistant professor of physiology and pharmacology, at SUNY Downstate,

as well as by colleagues at other institutions in Michigan, New York, Wisconsin, and the Czech Republic. • “If further

work confirms this view we can expect to one day see therapies based on PKMzeta memory erasure,” Dr. Fenton sug-

gests. “Negative memory erasing not only could help people forget painful experiences, but might be useful in treating

depression, general anxiety, phobias, post-traumatic stress, and addictions,” he adds.

3 3 RF SUNY AR 0 9

Acknowledgements

The 2009 Annual Report was produced by the Finance Office of the Research Foundation of State University of New York, a private nonprofit corporation headquartered at 35 State Street in Albany.

Senior Vice President for Finance and Treasurer

Bonny B. Boice

Assistant to CFO, Assistant Director of Corporate Relations

Angela Wright

Design

Graphic Expression, Inc., New York City; www.tgenyc.com

The Research Foundation

35 State Street

Albany, NY 12207-2826

(518) 434-7050

Visit www.rfsuny.org to learn more about the Research Foundation.

35 State StreetAlbany, NY 12207-2826518 434 7000www.rfsuny.org