TEXAS TECH UNIVERSITY SYSTEM
CONSOLIDATED
ANNUAL FINANCIAL REPORT
FISCAL YEAR 2006
ANNUAL FINANCIAL REPORT
OF
TEXAS TECH UNIVERSITY SYSTEM
FOR THE YEAR ENDED AUGUST 31, 2006
LUBBOCK, TEXAS
Table of Contents
Letters of Transmittal . ........................................................................................................................
Organizational Data ...........................................................................................................................
1
3
Financial Statements:
Statement of Net Assets................................................................................................................
Statement of Revenues, Expenses and Changes in Net Assets .................................................
Matrix of Operating Expenses by Natural Classification ……………………………………………..
Statement of Cash Flows ..............................................................................................................
5
7
8
9
Policies and Notes:
Notes to the Financial Statements ............................................................................................... .
11
Schedules:
Schedule 1A Schedule of Expenditures of Federal Awards ......................................................
Schedule 1B Schedule of State Grant Pass-Throughs from/to State Agencies.........................
Schedule 2A Miscellaneous Bond Information ..........................................................................
Schedule 2B Changes in Bonded Indebtedness........................................................................
Schedule 2C Debt Service Requirements..................................................................................
Schedule 2D Analysis of Funds Available for Debt Service.......................................................
Schedule 2E Defeased Bonds Outstanding...............................................................................
Schedule 2F Early Extinguishment and Refunding....................................................................
Schedule 3
Reconciliation of Cash in State Treasury ..............................................................
30
31
32
33
34
35
36
37
38
Texas Tech University System
Board of Regents
Larry Anders .............................. Term Expires January 31, 2011 ...................Dallas, TX
C. Robert Black.......................... Term Expires January 31, 2007 .... Horseshoe Bay, TX
F. Scott Dueser.......................... Term Expires January 31, 2009 .................Abilene, TX
L. Frederick Francis .................. Term Expires January 31, 2007 ................ El Paso, TX
Mark Griffin ................................ Term Expires January 31, 2011 ............... Lubbock, TX
J. Frank Miller, III ....................... Term Expires January 31, 2009 ...................Dallas, TX
Daniel T. Serna.......................... Term Expires January 31, 2011 .............. Arlington, TX
Windy Sitton............................... Term Expires January 31, 2009 ............... Lubbock, TX
Bob L. Stafford........................... Term Expires January 31, 2007 ................Amarillo, TX
Officers of the Board
L. Frederick Francis .................................................................................................Chair
J. Frank Miller, III .............................................................................................Vice Chair
Ben Lock...........................................................................................................Secretary
Fiscal Officers
Donald R. Haragan............................................................................Interim Chancellor
Jim Brunjes….………………………............Vice Chancellor and Chief Financial Officer
Jon Whitmore...........................................................................................TTU President
Bernhard T. Mittemeyer, M.D................................................Interim TTUHSC President
3
FINANCIAL STATEMENTS
Texas Tech University System
Statement of Net Assets (Unaudited)
August 31, 2006
ASSETS
Current Assets:
Cash and Cash Equivalents (Note 1)
Restricted:
Cash and Cash Equivalents (Note 1)
Legislative Appropriations
Accounts Receivable, net:
Federal Receivables
Interest and Dividends
Patient Receivables
Student Receivables
Contract Receivables
Gift Receivables
Accounts Receivable
Other Receivables
Due From Other Agencies (Note 8)
Prepaid Expenses
Consumable Inventories
Merchandise Inventories
Loans and Notes Receivable, net
Other Current Assets
Total Current Assets
$
218,804,102
116,000,951
51,224,048
6,705,579
1,907,987
16,570,213
672,428
11,740,034
20,397,746
3,153,890
7,319,231
4,753,381
12,291,332
514,689
2,936,374
4,041,027
909,323
479,942,335
Non-Current Assets:
Restricted:
Cash and Cash Equivalents (Note 1)
Investments (Note 3)
Gift Receivables
Loans and Notes Receivable, net
Investments (Note 3)
Capital Assets (Note 2)
Non-Depreciable
Depreciable
Accumulated Depreciation
Total Non-Current Assets
21,729,771
154,500,763
39,775,539
2,910,966
631,288,969
222,422,241
1,311,508,890
(659,638,378)
1,724,498,761
$ 2,204,441,096
Total Assets
LIABILITIES
Current Liabilities:
Accounts Payable
Payroll Payable
Liabilities Payable from Restricted Assets
Unclaimed Property Due to State Treasury
Deferred Revenues
Employees' Compensable Leave (Note 5)
Claims Payable
Notes and Loans Payable (Note 5)
Bonds Payable (Note 5)
Funds Held for Others
Other Current Liabilities
Total Current Liabilities
$
5
30,646,557
44,294,180
22,093,248
65,427
100,206,779
6,849,252
2,354,453
13,135,000
20,974,999
11,426,523
2,916,667
254,963,085
Texas Tech University System
Statement of Net Assets (Unaudited)
August 31, 2006
Non-Current Liabilities:
Unclaimed Property Due to State Treasury
Interfund Payable (Note 8)
Employees' Compensable Leave (Note 5)
Claims Payable (Note 5)
Bonds Payable (Note 5)
Other Non-Current Liabilities
Total Non-Current Liabilities
78,043
1,221,877
24,664,486
21,190,080
407,785,002
7,799
454,947,287
$
Total Liabilities
NET ASSETS
Invested in Capital Assets, Net of Related Debt
Restricted:
Nonexpendable:
Endowments
Expendable:
Capital Projects
Higher Education Assistance Fund
Debt Service
Other
Unrestricted (Note 1)
Total Net Assets
709,910,372
485,535,293
405,039,569
30,232,338
12,535,066
11,136,916
109,310,767
440,740,775
1,494,530,724
$ 2,204,441,096
Total Liabilities and Net Assets
See Accompanying Notes to the Financial Statements
6
Texas Tech University System
Statement of Revenues, Expenses, and Changes in Net Assets (Unaudited)
For the Year Ended August 31, 2006
Operating Revenues
Tuition and Fees
Tuition and Fees - Pledged
Less Discounts and Allowances
Professional Fees
Sales and Services of Auxiliary Enterprises - Pledged
Other Sales and Services
Other Sales and Services - Pledged
Federal Grants and Contracts (Schedule 1A)
Federal Grants and Contracts - Pledged (Schedule 1A)
Federal Grant Pass-Throughs (Schedule 1A)
State Grants and Contracts
State Grants and Contracts - Pledged
State Grant Pass-Throughs (Schedule 1B)
Local Governmental Grants and Contracts
Local Governmental Grants and Contracts - Pledged
Nongovernmental Grants and Contracts
Nongovernmental Grants and Contracts - Pledged
Total Operating Revenues
$
26,675,909
187,641,838
(22,089,674)
104,397,258
70,730,842
4,280,442
9,059,342
56,378,661
2,401,511
2,418,555
101,930,319
74,822
13,485,860
66,899,325
658,783
25,431,397
2,546,464
652,921,654
Operating Expenses
Instruction
Research
Public Service
Academic Support
Student Services
Institutional Support
Operations and Maintenance of Plant
Scholarships and Fellowships
Auxiliary Enterprises
Depreciation and Amortization
Total Operating Expenses
358,798,708
59,141,738
112,941,299
124,129,067
29,069,238
68,346,973
55,271,694
25,646,891
85,030,467
37,747,508
956,123,583
Operating Income (Loss)
(303,201,929)
Nonoperating Revenues (Expenses)
Legislative Revenue
Federal Grants and Contracts (Schedule 1A)
Private Gifts
Investment Income
Investment Income - Pledged
Interest Expense on Capital Asset Financing
Loss on Sale and Disposal of Capital Assets
Net Increase in Fair Value of Investments
Other Nonoperating Revenues (Expenses)
Other Nonoperating Revenues (Expenses) - Pledged
Total Nonoperating Revenues (Expenses)
281,637,094
1,035,779
63,245,133
51,100,835
30,143,690
(16,112,653)
(9,855,901)
778,957
(8,523,493)
18,153,425
411,602,866
Income (Loss) before Other Revenues, Expenses, Gains, Losses, and Transfers
108,400,937
Other Revenues, Expenses, Gains, Losses, and Transfers
Capital Appropriations (HEAF)
Capital Contributions
Additions to Permanent Endowments
Transfers Out to Other State Agencies (Note 8)
Net Other Revenues, Expenses, Gains, Losses, and Transfers
TOTAL CHANGES IN NET ASSETS
Beginning Net Assets (September 1, 2005)
Ending Net Assets (August 31, 2006)
See Accompanying Notes to the Financial Statements
7
29,785,945
3,874,563
1,817,755
(1,214,681)
34,263,582
$
142,664,519
1,351,866,205
$ 1,494,530,724
UNAUDITED
Texas Tech University System
Matrix of Operating Expenses by Natural Classification
For the Year Ended August 31, 2006
Function
Instruction
$
Research
Public Service
Academic Support
Student Services
Institutional Support
Operation and Maintenance of Plant
Scholarships and Fellowships
Auxiliary Enterprises
Depreciation and Amortization
Total Operating Expenses
$
Function
Instruction
$
Research
Public Service
Academic Support
Student Services
Institutional Support
Operation and Maintenance of Plant
Scholarships and Fellowships
Auxiliary Enterprises
Depreciation and Amortization
Total Operating Expenses
$
Function
Instruction
$
Research
Public Service
Academic Support
Student Services
Institutional Support
Operation and Maintenance of Plant
Scholarships and Fellowships
Auxiliary Enterprises
Depreciation and Amortization
Total Operating Expenses
$
Function
Instruction
$
Research
Public Service
Academic Support
Student Services
Institutional Support
Operation and Maintenance of Plant
Scholarships and Fellowships
Auxiliary Enterprises
Depreciation and Amortization
Total Operating Expenses
$
Salaries
and Wages
251,509,345 $
31,561,398
44,145,025
70,426,306
12,539,207
42,074,265
12,201,242
142,655
30,246,627
Payroll
Related Costs
58,903,386 $
6,424,016
10,872,553
16,906,627
3,049,869
11,434,473
3,003,118
6,311
6,261,862
494,846,070 $
116,862,215 $
1,299,571 $
59,263,384 $
11,028,279
Materials
and Supplies
21,056,936 $
8,990,208
13,815,882
14,708,490
3,734,596
1,432,310
5,261,078
Communications
and Utilities
2,854,392 $
160,423
961,884
3,495,732
615,609
793,552
23,462,454
Repairs and
Maintenance
1,217,312 $
602,958
318,024
1,978,972
626,860
2,239,029
7,388,792
Rentals and
Leases
1,939,478 $
449,564
1,063,037
1,997,131
367,139
2,094,458
598,932
Printing and
Reproduction
1,400,169
327,460
370,687
1,277,042
1,525,037
727,470
83,520
3,260,499
1,032,662
4,878,710
9,756,697
73,878,210 $
Depreciation
and Amortization
$
Federal SubProfessional Fees
Contracts
and Services
176,265 $
8,774,125 $
452,231
1,328,309
672,293
37,653,678
(1,218)
3,380,861
576,426
3,124,004
377,976
4,048,005
Travel
2,843,625
1,996,609
813,213
2,707,048
922,153
941,074
57,110
747,447
592,199
42,100,743 $
17,632,446 $
9,542,401 $
6,303,584
Scholarships
3,254,248 $
1,825,137
313,849
2,663,665
206,470
416,623
3,697
25,429,785
3,755,281
Bad Debt
2,768 $
Claims and
Losses
(40) $
71,100
Other
Operating
4,866,699
4,952,325
1,941,174
4,270,350
4,905,872
3,122,298
2,833,775
68,140
20,450,478
37,868,755 $
220,829 $
37,747,508
37,747,508 $
Other
Grand Total
358,798,708
59,141,738
112,941,299
124,129,067
29,069,238
68,346,973
55,271,694
25,646,891
85,030,467
37,747,508
956,123,583
8
218,061
100,000
(52,583)
118,477 $
47,411,111
Texas Tech University System
Statement of Cash Flows (Unaudited)
For the Year Ended August 31, 2006
Cash Flows from Operating Activities
Tuition and Fees
Grants and Contracts
Sales and Services of Auxiliary Enterprises
Collections from Patients and Insurers
Collections of Loans to Students
Other Sales and Services
Payments to Suppliers
Payments to Employees
Payments for Loans Issued to Students
Payments for Other Operating Activities
Net Cash Used By Operating Activities
$
Cash Flows from Noncapital Financing Activities
State Appropriations
Noncapital Gifts and Grants
Proceeds from Direct Lending
Payments for Direct Lending
Transfers Out to Other State Agencies
Proceeds from Agency Transactions
Other Noncapital Financing Activities
Net Cash Provided by Noncapital Financing Activities
201,984,601
270,386,410
72,527,275
103,677,373
1,206,451
6,584,839
(224,243,971)
(484,968,677)
(1,111,331)
(200,141,470)
(254,098,500)
266,994,519
69,009,950
34,404,059
(34,273,647)
(1,214,681)
822,028
9,351,391
345,093,619
Cash Flows from Capital and Related Financing Activities
Proceeds from Capital Debt Issuances
Capital Appropriations
Proceeds from Capital Gifts and Grants
Purchases of Capital Assets
Principal Paid on Capital Debt
Interest Paid on Capital Debt
Payments for Other Capital Related Activities
Net Cash Used by Capital and Related Financing Activities
218,802,727
29,785,945
3,874,563
(114,145,886)
(164,911,426)
(18,559,755)
434,154
(44,719,678)
Cash Flows from Investing Activities
Proceeds from Investment Sales and Maturities
Interest and Dividends Received
Purchases of Investments
Net Cash Provided by Investing Activities
50,254,869
92,132,677
(146,910,416)
(4,522,870)
TOTAL NET CASH FLOWS
$
Beginning Cash & Cash Equivalents - September 1, 2005
Ending Cash & Cash Equivalents - August 31, 2006
314,782,253
$
Reconciliation of Operating Loss to Net Cash Flows from Operating Activities
Operating Loss
Adjustments:
Depreciation Expense
Bad Debt Expense
(Increase) Decrease in Accounts Receivables
(Increase) Decrease in Loans and Notes Receivable
(Increase) Decrease in Inventory
(Increase) Decrease in Due From Other Agencies
(Increase) Decrease in Prepaid Expenses
(Increase) Decrease in Other Assets
Increase (Decrease) in Accounts Payables
Increase (Decrease) in Payroll Payables
Increase (Decrease) in Deferred Revenue
Increase (Decrease) in Compensable Leave
Increase (Decrease) in Claims Payable
Increase (Decrease) in Due To Other Agencies
Increase (Decrease) in Other Liabilities
Net Cash Used for Operating Activities
9
41,752,571
356,534,824
(303,201,929)
37,747,508
222,324
(9,292,831)
248,715
640,779
1,916,615
5,191,348
(832,908)
806,057
574,040
5,580,229
4,763,248
(657,891)
(14,280)
2,210,476
(254,098,500)
POLICIES AND NOTES
UNAUDITED
TEXAS TECH UNIVERSITY SYSTEM
Notes to the Financial Statements
Note 1: Summary of Significant Accounting Policies
Reporting Entity
Texas Tech University System is an agency of the State of Texas and its financial records comply with state
statutes and regulations. This includes compliance with the Texas Comptroller of Public Accounts’ Annual
Financial Reporting Requirements for State Agencies.
Components of the Texas Tech University System include Texas Tech University, Texas Tech University
Health Sciences Center and Texas Tech University System Administration. The Texas Tech University
System includes within this report all components as determined by an analysis of their relationship to the
Texas Tech University System as described below for blended component units.
Blended Component Units
The Texas Tech University Foundation and the Texas Tech University Research Foundation are not-forprofit 501(c)(3) organizations, exempt from income taxes. The Texas Tech University Foundation was
founded to financially support the Texas Tech University System. The Texas Tech University Research
Foundation was founded to support the research activities of the University. Based on the application of the
GASB Standard No. 14 criteria, The Texas Tech Foundation and the Texas Tech Research Foundation
have been blended into these financial statements because of the significance of their financial relationship
with the System.
Texas Tech Physician Associates is a certified non-profit health corporation authorized under the Medical
Practice Act Section 5.01(a), article 4495b of the State of Texas (the State). TTPA was created by
TTUHSC for the purpose of entering into prepaid capitation agreements for physician and other medical
services. TTPA is exempt from tax under Internal Revenue Service code section 501(c)(3). The board
consists of eight directors appointed by TTUHSC.
Due to the significant changes related to Governmental Accounting Standards Board Statement No. 34,
Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local
Governments, the Comptroller of Public Accounts does not require the accompanying annual financial
statements to be in compliance with generally accepted accounting principles (GAAP). The financial report
will be considered for audit by the State Auditor as part of the audit of the State of Texas Comprehensive
Annual Financial Report; therefore, an opinion has not been expressed on the financial statements and
related information contained in this report.
Basis of Accounting
The accounting records of the Texas Tech University System are maintained using a modified accrual basis
of accounting. Accounting data for most external reports, including this Annual Financial Report, are
converted to full accrual basis of accounting in compliance with GASB Statements 34 and 35. For financial
reporting purposes, the Texas Tech University System is considered a special-purpose government
engaged only in business-type activities. Accordingly, the System’s financial statements are presented
using the economic resources measurement focus and the accrual basis of accounting. Under the accrual
basis, revenues are recognized when earned, and expenses are recorded when an obligation has been
incurred.
Cash and Cash Equivalents
For the purpose of financial statement reporting, cash equivalents are short-term highly liquid investments
with an original maturity of three months or less. Included in this category are demand deposits in banks,
11
UNAUDITED
Texas Tech University System– Notes to the Financial Statements (continued)
local funds held by the state, state reimbursements in transit, repurchase agreements, TexPool and
TexStar investments.
The System records and reports its deposits in the general deposit account at cost. It records and reports
its special deposit accounts at fair value. Investment pool cash equivalents are recorded at fair value.
Cash and Cash Equivalents as reported on the Statement of Net Assets
Current
Restricted
$ 1,103
(2,777,859)
750,048
Non-Current
Restricted
$0
(468,357)
TexPool & TexStar Investments
Current
Unrestricted
$93,897
(5,894,825)
2,959,493
42,789,008
35,327,128
143,529,401
11,277,982
106,749,677
1,785,994
20,412,134
Total
$95,000
(9,141,041)
3,709,541
42,789,008
48,391,104
270,691,212
Total Cash and Cash Equivalents
$218,804,102
$116,000,951
$21,729,771
$356,534,824
Cash on Hand
Cash in Bank
Reimburse from Treasury
Cash in State Treasury
Repurchase Agreements
Investments
Texas Tech University System accounts for its investments at fair market value, as determined by quoted
market prices, in accordance with GASB Statement No. 31 – Accounting and Financial Reporting for
Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying
value of the investments are reported as a component of investment income in the Statement of Revenues,
Expenses, and Changes in Net Assets.
Restricted Assets
Restricted assets include monies or other resources restricted by legal or contractual requirements. These
assets include proceeds of revenue bonds and revenues set aside for statutory or contractual requirements.
Inventories
Inventories include both merchandise inventories on hand for sale and consumable inventories such as
maintenance supplies, housing supplies, janitorial supplies, office supplies, and telecommunications
supplies. Inventories are valued at cost, generally utilizing the last-in, first-out method.
Receivables
Accounts receivable consist of tuition and fees charged to students and auxiliary enterprise services
provided to students, faculty, and staff. Accounts receivable are recorded net of estimated uncollectible
amounts.
Federal receivable includes amounts due from the federal, state, and local governments or private sources,
in connection with reimbursement of allowable expenditures disbursed by the System’s grants and
contracts department.
Gift receivables are accounted for at their estimated net realizable value. The estimated net realizable value
consists of the present value of long-term pledges and a reduction for any allowance for uncollectible
pledges. Pledges vary from one to ten years and are used to support specifically identified System
programs and initiatives.
Interest and income receivable consists of amounts due from investment holdings, cash management
pools, and cash invested in various short-term investment items.
Other receivables include year-end revenue accruals not included in any other receivable category.
12
UNAUDITED
Texas Tech University System – Notes to the Financial Statements (continued)
Prepaid Expenses
Disbursements for insurances, subscriptions, prepaid postage, prepaid travel costs and similar services
paid in the current or prior fiscal years and benefiting more than one accounting period are allocated among
accounting periods.
Loans and Notes Receivable
These receivables are student loans receivable that consist of amounts due from the Federal Perkins Loan
Program, and from other loans administered by the System.
Capital Assets
Furniture, equipment, and vehicles with a cost of more than $5,000 and an estimated useful life in excess of
one year are capitalized. Capitalization thresholds for buildings, building improvements, facilities and other
improvements are $100,000. The capitalization threshold for infrastructure is $500,000. These assets are
capitalized at cost. Donated assets are reported at fair market value as of the acquisition date. Routine
repairs and maintenance and capital assets acquired for less than the threshold amounts are charges to
operating expenses in the year in which the expense was incurred. Depreciation is based on allocation
methods and estimated lives prescribed by the Statewide Property Accounting System (SPA). Assets are
depreciated over the estimated useful life of the asset using the straight-line method.
Accounts Payable and Accrued Liabilities
Accounts Payable represents the liability for the value of assets or services received at the balance sheet
date for which payment is pending.
Deferred Revenues
Deferred Revenues include amounts received for tuition and fees and certain auxiliary activities prior to the
end of the fiscal year but related to the subsequent accounting period. Deferred revenues also include
amounts received from grant and contract sponsors that have not yet been earned.
Employees’ Compensable Leave Balances
Employees’ Compensable Leave payable balances represent the liability that becomes “due” upon the
occurrence of relevant events such as resignations, retirements, and uses of leave balances by covered
employees. Liabilities are reported separately as either current or noncurrent in the statement of net
assets.
Notes and Loans Payable
Notes payable represents amounts owed for commercial paper that was issued during the current
accounting period. Notes and loans payable are further explained in Note 5.
Bonds Payable
Texas Tech University System has a number of bond issues outstanding, most of which are supported
either directly or indirectly by tuition revenue. Bonds payable are addressed in more detail in Note 13.
Funds Held for Others
Current balances in funds held for others result from the System acting as an agent or fiduciary for students
and student organizations.
13
UNAUDITED
Texas Tech University System – Notes to the Financial Statements (continued)
Interfund Payable
Interfund payables are resources payable to other state agencies for Lone Star that assisted the System
with utility costs. This payable is further explained in Note 8.
Net Assets
Net Assets are the difference between fund assets and liabilities. They are presented in three separate
classes: Invested in Capital Assets - Net of Related Debt, Restricted and Unrestricted.
Invested in Capital Assets, Net of Related Debt
Capital assets, net of accumulated depreciation and outstanding principal balances of debt attributable to
the acquisition, construction or improvement of those assets.
Restricted Net Assets
Restricted net assets result when constraints placed on net asset use are either externally imposed by a
party external to the System such as creditors, grantors, contributors, and the like, or imposed by law
through constitutional provisions or enabling legislation.
Unrestricted Net Assets
Unrestricted net assets consist of net assets, which do not meet the definition of restricted net assets.
Unrestricted net assets often have constraints on resources, which are imposed by management, but can
be moved or modified.
Unrestricted Net Assets as reported on the Statement of Net Assets
Reserved for:
Encumbrances
Accounts Receivable
Inventory
Prepaid Expenses
Imprest Funds
Balances Subject to Reappropriation
Working Capital
Self-Insured Plans
Fair Market Value Adjustment
Future Operating Budgets
Service Department Operating Funds
Student Service Fees
Funds Functioning as Endowments
Unreserved
$18,395,076
33,393,506
3,446,675
6,826,991
420,346
761,909
45,607
45,861,528
(73,464)
104,777,831
14,155,191
1,974,307
74,296,773
136,458,499
$440,740,775
Total Unrestricted Net Assets
Interfund Activity and Transactions
Texas Tech University System is regularly involved in both interfund activity and interfund transactions.
Interfund activity is defined as financial interaction between internal funds, including blended component
units. Interfund transactions are defined as financial transactions between legally separate entities.
Interfund activity and interfund transactions are both clearly identifiable and are eliminated where
appropriate.
14
UNAUDITED
Texas Tech University System - Notes to the Financial Statements (continued)
Note 2: Capital Assets
Depreciation of capital assets is recorded as a periodic expense and accumulated as an offset to the asset
book values. Depreciation of capital assets is based on allocation methods and estimated lives prescribed
by the Statewide Property Accounting (SPA) system.
Accumulated depreciation is classified by capital asset category, providing for an estimation of the net book
value of each asset category.
Capital assets are categorized as either (1) Land and Land Improvements, (2) Buildings and Building
Improvements, (3) Infrastructure, (4) Furniture and Equipment, (5) Vehicles, Boats and Aircraft, (6)
Construction in Progress, (7) Other Capital Assets, or (8) Facilities and Other Improvements. The changes
to fixed asset balances are summarized below.
Balance
09/01/05
Business-type Activities:
Non-depreciable Assets:
Land and Land Improvements
Construction In Progress
$
Adjustments
10,031,879
155,705,739
Other Capital Assets
44,096,915
Total Non-depreciable Assets
209,834,533
Completed
CIP
Increase
Int’agy
Transfers
Decrease
Int’agy
Transfers
Additions
Deletions
Balance
08/31/06
61,708,656
10,031,879
167,250,672
1,042,775
45,139,690
(50,163,723)
62,751,431
222,422,241
50,163,723
23,754,766
868,214,062
4,934,751
29,933,462
139,919,130
(50,163,723)
Depreciable Assets:
Buildings and Building Improvements
794,349,543
(53,970)
Infrastructure
Facilities and Other Improvements
29,918,916
134,984,379
14,546
Furniture and Equipment
Vehicles, Boats and Aircraft
152,764,962
10,546,880
(268,651)
131,407
Other Capital Assets
Total depreciable assets at
historical costs
100,037,454
(262,831)
1,222,602,134
(439,499)
(95,698)
53,213
17,227,337
1,301,472
(15,232,934)
(503,025)
7,742,650
50,163,723
53,213
(95,698)
54,960,976
154,395,016
11,529,947
107,517,273
(15,735,959)
1,311,508,890
Less Accumulated Depreciation for:
Buildings and Improvements
Infrastructure
(18,604,151)
(1,140,582)
Facilities and Other Improvements
Furniture and Equipment
(472,769,423)
(3,918,043)
(20,321,082)
(103,095,136)
Vehicles, Boats and Aircraft
Other Capital Assets
(7,196,305)
(21,461,106)
Total Accumulated Depreciation
(628,761,095)
Depreciable Assets, Net
Business-type Activities
Capital Assets, net:
593,841,039
(439,499)
50,163,723
$803,675,572
$(439,499)
$0
95,790
(5,869,193)
(13,226,996)
(491,373,574)
(5,058,625)
14,412,566
(950,266)
(6,045,101)
450,650
(7,695,921)
(27,506,207)
95,790
(45,836,289)
14,863,216
(659,638,378)
53,213
92
9,124,687
(872,743)
651,870,512
$53,213
$92
$71,876,118
$(872,743)
$874,292,753
Note 3: Deposits, Investments, and Repurchase Agreements
Texas Tech University System’s investment portfolio is invested pursuant to the parameters of applicable
Texas law and the governing board’s Investment Policies. Under Texas law, Texas Tech University System
investments may be “any kind of investment that persons of ordinary prudence, discretion, and intelligence,
exercising the judgment and care under the circumstances then prevailing, acquire or retain for their own
account in the management of their affairs, not in regard to speculation but in regard to the permanent
disposition of their funds, considering the probable income as well as the probable safety of their capital.”
Under Texas law, Texas Tech University System is required to invest its institutional funds according to
written investment policies adopted by the Board of Regents. No person may invest Texas Tech University
System funds without express written authority from the governing board.
15
(26,190,275)
(101,813,776)
UNAUDITED
Texas Tech University System – Notes to the Financial Statements (continued)
The governing investment policy is Regents’ Rules Chapter 09, “Investment, Endowments, and Income
Producing Lands.” The majority of Texas Tech University System assets are invested in two investment
pools; the Short/Intermediate Term Investment Fund (SITIF) and the Long Term Investment Fund (LTIF).
Endowment funds and certain eligible long-term institutional funds are invested in the LTIF, which invests in
equity and fixed income securities and is operated using total return philosophy. Other institutional funds
not in the LTIF are invested in the SITIF, which is a fixed income fund. Other assets include securities
gifted to Texas Tech University System with written donor instructions to maintain in their original form, and
bond proceeds invested in external investment pools.
Deposits of Cash in Bank
As of August 31, 2006, the carrying amount of deposits was $(9,141,041) as presented below.
Enterprise Funds
Cash in Bank -- Carrying Amount
Less: Certificates of Deposit included in carrying value and reported as Cash
Equivalent
Less: Uninvested Securities Lending Cash Collateral included in carrying value and
reported as Securities Lending Collateral
Less: Securities Lending CD Collateral included in carrying value and reported as
Securities Lending Collateral
Cash in Bank per AFR
0
$(9,141,041)
Enterprise Funds Current Assets Cash in Bank
Enterprise Funds Current Assets Restricted Cash in Bank
Enterprise Funds Non-Current Assets Restricted Cash in Bank
Cash in Bank per AFR
$(5,894,825)
(2,777,859)
(468,357)
$(9,141,041)
$(9,141,041)
0
0
These amounts consist of all cash in local banks and are included on the Statement of Net Assets as part of
current unrestricted and restricted “Cash and Cash Equivalents” and non-current restricted “Cash and Cash
Equivalents”.
As of August 31, 2006, the total bank balance for Enterprise Funds was $2,653,206
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial
institution, the agency will not be able to recover deposits of will not be able to recover collateral securities
that are in the possession of an outside party. The System’s policy is to require collateralization of bank
balances in excess of FDIC protection. The balance below was transferred to the University’s primary
depository, which has sufficient collateral, after fiscal year-end.
Fund Type
GAAP Fund
01
0001
Uninsured and
uncollateralized
Uninsured and
collateralized with
securities held by the
pledging financial
institution
$0
16
Uninsured and
collateralized with
securities held by the
pledging financial
institution's trust
department or agent but not
in the state's name
UNAUDITED
Texas Tech University System – Notes to the Financial Statements (continued)
Investments
As of August 31, 2006, the fair value of investments is as presented below.
Type of Security
Enterprise Funds
U.S. Government
U.S. Treasury Securities
U.S. Government Agency Obligations (Ginnie Mae, Fannie Mae, Freddie Mac,
Sallie Mae, etc.)
Equity
International Equity
Repurchase Agreement
Fixed Income Money Market and Bond Mutual Fund
Other Commingled Funds
Other Commingled Funds (Texpool)
Real Estate
Misc (alternative investments, limited partnerships, guaranteed investment
contract, political subdivision, bankers' acceptance, negotiable CD)
Total
Fair Value
$ 141,455,716
83,579,910
111,859,456
121,182,359
48,391,104
98,809,656
133,798,448
197,972,911
979,271
166,843,217
$1,104,872,048
Non-current Investments
$ 785,789,732
Items in Cash and Cash Equivalents:
Repurchase Agreements
TexPool & TexStar investments
48,391,104
270,691,212
Total
$1,104,872,048
Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty, the
agency will not be able to recover the value of its investments or collateral securities that are in the
possession of an outside party. The System’s investment policy is to require third party custody for the two
investment pools, the LTIF and the SITIF. The balances listed below relate to securities outside of those
pools.
Fund
Type
GAAP Fund
01
0001
Type
Uninsured and
unregistered with
securities held by the
counterparty
Equity
$2,153,324
17
Uninsured and
unregistered with
securities held by the
counterparty's trust
department or agent but
not in the state's name
UNAUDITED
Texas Tech University System – Notes to the Financial Statements (continued)
Foreign currency risk for investments is the risk that changes in exchange rates will adversely affect the
investment. The System’s policy is limit international equity investments to between 10-20% of the LTIF
portfolio. The exposure to foreign currency risk as of August 31, 2006, is as follows.
Fund
Type
GAAP
Fund
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
0001
International
Obligation
Foreign Currency
Argentine peso
Australian dollar
Bermudan dollar
Brazilian real
Bulgarian lev
Canadian dollar
Cayman dollar
Chilean Peso
Chinese yuan
Cyprus pound
Czech koruna
Danish krone
Egyptian pound
Euro
Hong Kong dollar
Hungarian forint
Indian rupee
Indonesian rupiah
Israeli shekel
Japanese yen
Jersey pound
Lithuanian litas
Malaysian ringgit
Mexican peso
New Zealand dollar
Norwegian krone
Phillippino peso
Polish zloty
Pound sterling
Romanian leu
Russian ruble
Singapore dollar
South African rand
Korean won
Swedish krona
Swiss franc
Taiwan dollar
Thai baht
Turkish lira
Venezuelan bolivar
International Equity
$0
1,985,825
0
3,923,096
13,410
1,066,085
44,109
236,958
2,049,276
184,389
564,792
372,249
16,763
34,831,593
2,531,809
696,432
1,846,360
254,879
376,723
18,856,969
0
36,878
1,318,942
1,621,297
125,338
1,430,703
335,030
1,907,976
16,682,576
227,971
3,362,109
816,281
2,093,486
6,882,306
2,135,478
5,042,666
5,732,174
1,040,838
538,593
0
Total
$121,182,359
18
UNAUDITED
Texas Tech University System – Notes to the Financial Statements (continued)
Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The
System’s investment policy limits fixed income securities held by the SITIF to those issued by the U.S. or its
agencies and instrumentalities. Fixed income mutual funds in the SITIF must hold securities that are at
least rated investment grade. The fixed income portfolio of the LTIF must have an overall weighted
average credit rating of “A” or better by Moody’s and/or Standard and Poor’s.
Standard & Poor's
Fund
GAAP
Type
Fund
01
0001
01
0001
01
0001
Investment Type
U.S. Government Agency Obligations
Repurchase Agreement
AAA
$83,579,910
$48,391,104
AA
AAAf
AAf
A
BB
Unrated
Af
Unrated
Fixed Income Money Market and Bond
Mutual Fund
$98,809,656
Derivative Investing
The System holds collateralized mortgage obligations. These securities were purchased to provide an
incremental yield above that available on corporate securities with similar terms. The overall return or yield
on mortgage-backed securities depends on the amount of interest collected over the life of the security and
the change in the fair value. It is estimated these securities, along with other securities held by the System,
will provide future cash inflows on a time schedule that approximately matches the outflows associated with
the System’s liabilities. These securities are rated AAA by the major rating agencies.
Note 4: Short-Term Debt
Texas Tech University System has no outstanding short-term debt as of August 31, 2006.
Note 5: Summary of Long-Term Liabilities
Changes in Long-Term Liabilities
During the year ended August 31, 2006, the following changes occurred in liabilities.
Long-Term Liability Category
Claims Payable
Balance
09/01/05
Increases
$24,202,424
Liabilities Payable from Restricted Assets
$0
26,324,586
Balance
08/31/06
Current
Portion
$657,891
$23,544,533
$2,354,453
26,324,586
0
0
Decreases
Notes and Loans
35,858,000
11,477,000
34,200,000
13,135,000
13,135,000
Revenue Bonds
353,530,001
220,915,000
145,685,000
428,760,001
20,974,999
26,750,490
4,858,637
95,389
31,513,738
6,849,252
$466,665,501
$237,250,637
$206,962,866
$496,953,272
$43,313,704
Compensable Leave
Total
19
UNAUDITED
Texas Tech University System– Notes to the Financial Statements (continued)
Claims Payable
Claims payable includes estimates for both known medical malpractice claims and those that have not yet
been made against the participants insured. The liability is actuarially estimated to reflect the anticipated
future claims for past medical services. Some of these claims are in process, while others are expected to
be filed in the future. The liability estimate does not consider the probability of payment on a claim-by-claim
basis, and instead considers overall probability of payment for medical malpractice claims. Claims payable
reports a combined liability of the Health Sciences Center and Texas Tech Physician Associates, a blended
component unit.
Employees’ Compensable Leave
A state employee is entitled to be paid for all unused vacation time accrued, in the event of the employee’s
resignation, dismissal, or separation from State employment, provided the employee has had continuous
employment with the State for six months. Under state law, the hours accumulated are capped depending
on the employees’ length of service. Expenditures for accumulated annual leave balances are recognized
in the period paid or taken. The liability for unpaid benefits is recorded in the Statement of Net Assets. No
liability is recorded for non-vesting accumulating rights to receive sick pay benefits.
Bonds Payable
See Note 13 for detailed information on bond liability balances and transactions.
Notes and Loans Payable
Commercial paper was issued during the fiscal year to finance various construction projects. Debt service
for the obligation is provided in general appropriation for tuition revenue bonds and revenue from various
projects. All commercial paper outstanding at 8/31/06 will be retired in fiscal year 2007.
Commercial paper has short maturities up to 270 days with interest rates ranging from 3.51% to 3.55%.
Summary of Debt Service Requirements for Notes Payable
Fiscal Year
2007
2008
2009
2010
2011
All Other Years
Total Requirements
Principal
$13,135,000
Interest
$100,682
Total
$13,235,682
$13,135,000
$100,682
$13,235,682
Note 6: Capital Leases
As of August 31, 2006, Texas Tech University System had no outstanding capital leases.
20
UNAUDITED
Texas Tech University System – Notes to the Financial Statements (continued)
Note 7: Operating Leases
Future minimum lease rental payments under non-cancelable operating leases having an initial term in
excess of one year are as follows:
Fiscal Year
2007
2008
2009
2010
2011
Total Minimum Future Lease Rental Payments
$3,961,246
3,884,194
3,903,431
4,020,534
4,141,149
$19,910,554
Note 8: Interfund Balances/Activities
As explained in Note 1 on interfund activities and transactions, there are numerous transactions between
funds and agencies. At year-end amounts to be received or paid are reported as:
Interfund Receivables or Interfund Payables
Due from Other Agencies or Due to Other Agencies
Transfers In or Transfers Out
Legislative Transfers In or Legislative Transfers Out
The agency experienced routine transfers with other state agencies, which were consistent with the
activities of the fund making the transfer. Repayment of interfund balances will occur within one year from
the date of the financial statement.
Individual balances and activity at August 31, 2006, follows:
Non-Current
Interfund Payable
Purpose
Agency 907, D23 Fund 0515
$1,221,877
Lone Star
Total Interfund Payable
$1,221,877
Interfund Payable
Current Due from
Other Agencies
Due from Other Agencies
Texas Education Agency (Agency 701)
Texas School for the Blind (Agency 771)
Texas Water Development Board (Agency 580)
Texas Parks and Wildlife (Agency 802)
Texas General Land Office (Agency 305)
Texas Department of Transportation (Agency 601)
Texas Technology Workforce Development Grant (Agency 781)
Texas Comptroller’s Office (Agency 902)
University of Texas System (Agency 720)
$105,693.97
73,158.28
137,478.78
4,450.74
9,442.01
36,280.00
271,495.01
107,919.49
4,007,462.00
$4,753,380.28
Total Due from Other Agencies
21
UNAUDITED
Texas Tech University System – Notes to the Financial Statements (continued)
Transfers Out to Other State Agencies
Amount
Texas Higher Education Coordinating Board (Agency 781)
$1,214,681
Total Transfers Out to Other State Agencies
$1,214,681
The detailed State Grant Pass-Through information is listed on Schedule 1B – Schedule of State Grant
Pass-Throughs from/to State Agencies.
Note 9: Contingent Liabilities
At August 31, 2006, lawsuits and claims involving Texas Tech University System were pending. While the
ultimate liability with respect to litigation and other claims asserted against the System cannot be precisely
estimated at this time, such liability, to the extent not provided for by insurance or otherwise, is in legal
counsel’s opinion, not likely to have a material effect on the System.
Note 10: Continuance Subject to Review
Texas Tech University System is not subject to the Texas Sunset Act.
Note 11: Risk Financing and Related Insurance
Texas Tech University System by state law is required to be a participant in the Workers Compensation
Program and Pool managed by the State Office of Risk Management (SORM). The University is assessed
fees by SORM based upon claims experience, claim incidences, payroll size and FTE. SORM also
determines the methodology for allocation to the major fund groups. The State Office of Risk Management
pays all WCI claims. The Worker’s Compensation pool for the fiscal year was funded by a .25 percent
charge on non-educational and general gross payroll for paying its proportionate share of the SORM
assessment.
The System has self-insured arrangements for Unemployment Compensation Fund coverage. The State of
Texas pays 50% of claims for employees paid from state funds. The System pays the remainder for
employees paid from state funds and 100% of the claims paid from non-state funds. The claims for
employees paid from non-state funds are funded by interest earnings on the Unemployment Compensation
Fund balance and utilization of fund balance.
Note 12: Segment Information
Texas Tech University System has no reportable segments.
Note 13: Bonded Indebtedness
Bonds Payable
Several bond issues were outstanding as of August 31, 2006 which are summarized in the paragraphs that
follow.
Revenue Financing System Refunding and Improvement Bonds, Series 1996
Financing of arena complex, housing complex, and other capital
Purpose:
projects and the advance refunding of Housing Revenue Bonds,
Series 1962,1963, 1966
Original Issue Amount:
$71,285,000
Issue Date:
December 5, 1996
Interest Rates:
4.00% to 6.00%
Maturity Date Range:
1998 through 2017
Type of Bond:
Revenue
Changes in Debt:
$0 issued; $4,205,000 retired
22
UNAUDITED
Texas Tech University System – Notes to the Financial Statements (continued)
Revenue Financing System Bonds, Second Series 1996 (Taxable)
Financing of arena complex, other capital projects, and costs of
Purpose:
issuance
Original Issue Amount:
$7,380,000
Issue Date:
December 5, 1996
Interest Rates:
5.75% to 6.75%
Maturity Date Range:
1998 through 2007
Type of Bond:
Revenue
$0 issued; $875,000 retired
Changes in Debt:
Revenue Financing System Refunding and Improvement Bonds, Series 1999
Current refunding of a portion of Series A Notes, advance refunding
of Revenue Bonds, Series 1995, 1996 and financing of a new English
Purpose:
building and other projects. Also, financing for projects in Amarillo,
Midland, and Lubbock.
Original Issue Amount:
$115,100,000
Issue Date:
May 4, 1999
Interest Rates:
4.00% to 5.25%
Maturity Date Range:
1999 through 2029
Type of Bond:
Revenue
Changes in Debt:
$0 issued; $2,740,000 retired; $43,150,000 refunded
Revenue Financing System Bonds, Seventh Series 2001
Financing of renovation of Jones Stadium, Student Union and
Student Recreational Center, and other projects, current refunding of
Purpose:
a portion of Series A Notes, and costs of issuance. Also, financing for
projects in El Paso and Lubbock.
Original Issue Amount:
$126,865,000
Issue Date:
January 23, 2002
Interest Rates:
3.00% to 5.50%
Maturity Date Range:
2002 through 2031
Type of Bond:
Revenue
Changes in Debt:
$0 issued; $3,680,000 retired; $81,985,000 refunded
23
UNAUDITED
Texas Tech University System – Notes to the Financial Statements (continued)
Revenue Financing System Bonds, Eighth Series 2001 (Taxable)
Purpose:
Financing of renovation of Jones Stadium and costs of issuance
Original Issue Amount:
$42,810,000
Issue Date:
January 23, 2002
Interest Rates:
3.46% to 6.75%
Maturity Date Range:
2003 through 2031
Type of Bond:
Revenue
Changes in Debt:
$0 issued; $1,765,000 retired
Revenue Financing System Refunding and Improvement Bonds, Ninth Series 2003
Refunding of Series A Notes and Series 1993 bonds, construction of
the Experimental Sciences Building and renovation of Horn/Knapp
Purpose:
dormitory and other System construction of capital improvement
projects and costs of issuance
Original Issue Amount:
$97,265,000
Issue Date:
September 23, 2003
Interest Rates:
2.00% to 5.50%
Maturity Date Range:
2003 through 2023
Type of Bond:
Revenue
Changes in Debt:
$0 issued; $4,695,000 retired
Revenue Financing System Refunding and Improvement Bonds, Tenth Series 2006
For advanced refunding of Series A Notes and Series 1999 and 2001
bonds, for construction of Murray Hall, renovation of the Student
Purpose:
Union Building, Medical Education Building project in El Paso and
various dormitories and other University construction of capital
improvement projects
Original Issue Amount:
$220,915,000; all authorized bonds have been issued
Issue Date:
February 2, 2006
Interest Rates:
4.00% to 5.00%
Maturity Date Range:
2006 through 2031
Type of Bond:
Revenue
Changes in Debt:
$220,915,000 issued; $2,590,000 retired
Sources of Debt-Service Revenue
On October 21, 1993, the governing board of the Texas Tech University System established a Revenue
Financing System for the purpose of providing a financing structure for all revenue supported indebtedness
of Texas Tech University System components. The source of revenues for debt service issued under the
Revenue Financing System includes pledged general tuition, pledged tuition fee, pledged general fee and
any other revenues, income, receipts, rentals, rates, charges, fees, including interest or other income, and
balances lawfully available to Texas Tech University components. Excluded from the revenues described
above are amounts received under Article 7, Section 17 of the Constitution of the State of Texas, general
revenue funds appropriated by the Legislature except to the extent so specifically appropriated,
encumbered housing revenues, and practice plan funds.
Note 14: Subsequent Events
The Texas Tech University System has no subsequent events.
24
UNAUDITED
Texas Tech University System – Notes to the Financial Statements (continued)
Note 15: Related Parties – Relationship with Texas Tech University System
The Texas Tech Foundation Inc. (TTFI) and Texas Tech Physician Associates (TTPA) are reported as
blended component units. TTFI is governed by a 30-member board appointed by the Texas Tech University
System governing board.
TTPA is a certified non-profit health corporation authorized under the Medical Practice Act Section 5.01(a),
article 4495b of the State of Texas (the State). TTPA was created by the Health Sciences Center for the
purpose of entering into prepaid capitation agreements for physician and other medical services. TTPA is
exempt from tax under Internal Revenue Service code section 501(c)(3). The board consists of eight
directors appointed by the Health Sciences Center.
Although both entities are legally separate from the Texas Tech University System, TTPA and TTFI are
reported as if they were part of the System because their sole purpose is to financially support Texas Tech
University System.
The Texas Tech Alumni Association provided services on behalf of Texas Tech University for which the
University paid $110,000 during the 2006 fiscal year. These services include public relations and general
support of the University through various scholarships and awards.
Note 16: Stewardship, Compliance and Accountability
Effective September 1, 2001, the Texas Tech University System changed the basis of financial reporting
from modified accrual to full accrual. This change was in response to the implementation of Governmental
Accounting Standards Board statements 34 and 35. The Texas Tech University System has no other
material stewardship, compliance, or accountability issues.
Note 17: The Financial Reporting Entity and Joint Ventures
The Financial Reporting Entity
The Texas Tech University System is an agency of the State of Texas. As required by generally accepted
accounting principles, these financial statements present the Texas Tech University System. The
component units discussed below this note are included in the System’s reporting entity because of the
significance of their operational or financial relationships with the System.
Individual Component Unit Disclosures
The Texas Tech University Foundation, the Texas Tech University Research Foundation and the Texas
Tech Physician Associates are blended component units of the Texas Tech University System. Although
each is legally separate from the System, the Texas Tech Foundation, the Texas Tech Research
Foundation and the Texas Tech Physician Associates are reported as if they were part of the primary
government.
The Texas Tech University Foundation is governed by a 30-member board whose appointment is approved
by the Texas Tech Board of Regents.
The Texas Tech University Research Foundation is governed by a six-member board whose appointment is
approved by the Texas Tech University Board of Regents. The Texas Tech University Research
Foundation is currently inactive. However, the entity has not been deactivated.
The Texas Tech Physician Associates is governed by an eight-member board appointed by Texas Tech
University Health Sciences Center.
25
UNAUDITED
Texas Tech University System – Notes to the Financial Statements (continued)
Note 18: Restatement of Fund Balances and Net Assets
Texas Tech University System has no restatement of Fund Balances and Net Assets as of August 31,
2006.
Note 19: Employee Retirement Plans (administering agencies only)
Not applicable
Note 20: Deferred Compensation (administering agencies only)
Not applicable
Note 21: Donor Restricted Endowments
Expenditure of endowed funds is not allowed without the express consent of the donor. Most of Texas
Tech University System endowments are held in perpetuity. In many cases, endowment earnings are
expendable for student financial assistance or other purposes as designated by the donor. In other cases,
endowment earnings are reinvested.
Endowment assets are invested predominantly in the Long Term Investment Fund (LTIF). The LTIF has
experienced varying performance since its inception. The cumulative effect of valuation changes
assignable to endowment fund assets are summarized in the following table:
Donor-Restricted Endowment
True Endowments
True Endowments
Term Endowments
Total
Amount of Net
Appreciation
$27,372,280
13,817,437
37,292
$41,227,009
Reported in Net Assets
Restricted Nonexpendable
Restricted Expendable
Restricted Nonexpendable
Note 22: Management Discussion and Analysis (MD&A)
Financial Highlights
• Net assets increased by $142.6 million for the year ended August 31, 2006, primarily due to increased
state appropriations, increased tuition and fees revenues, increased federal and state grants and
contracts, increased patient revenue and increased investment income.
•
Capital asset additions totaled $118 million for the year ended August 31, 2006.
Note 23: Post Employment Health Care and Life Insurance Benefits (UT, A&M, TRS and ERS only)
Not applicable
Note 24: Special or Extraordinary Items
The Texas Tech University System has no special or extraordinary items to report for the fiscal year ended
August 31, 2006.
26
UNAUDITED
Texas Tech University System – Notes to the Financial Statements (continued)
Note 25: Disaggregation of Receivable and Payable Balances
Receivables
Components of receivables as of August 31, 2006 are summarized below.
Type
Federal Receivables
Interest and Dividends Receivable
Patient Receivables
Student Receivables
Contract Receivables
Gift Receivables Current & Noncurrent
Accounts Receivables
Loans & Notes Receivable Current & Noncurrent
Other Receivables
Total Receivables
Net Amount
$6,705,579
1,907,987
16,570,213
672,428
11,740,034
60,173,285
3,153,890
6,951,993
7,319,231
$115,194,640
Contractual Arrangements and Concentrations of Credit Risk
The TTU Health Sciences Center provides care to patients covered by various third party payers such as
Medicare, Medicaid, and private insurance companies and health maintenance organizations (HMOs).
The TTU Health Sciences Center provides primary, secondary and tertiary health care services to counties
in west Texas, eastern New Mexico, and the Oklahoma panhandle region, as well as border regions in
southwest Texas. Patient care centers are located in the Texas cities of Amarillo, El Paso, Lubbock and
Odessa.
Concentrations of gross patient accounts receivables are depicted in the table below. Management does
not believe there are significant credit risks associated with the listed payors, other than the self pay and
medically indigent category. Further, management continually monitors and adjusts reserves and
allowances associated with these receivables. Patient accounts receivables are reported in this Annual
Financial Report net of allowances for bad debts, contractual adjustments, and charity care.
Type
Medicare
Medicaid
Managed Care, including Blue Cross
Commercial
Self Pay and Medically Indigent
Other
Total Gross Patient Accounts Receivable
Gross Amount
$5,275,441
7,725,313
6,128,762
4,478,158
18,958,081
322,229
$42,887,984
Payables
Components of payables as of August 31, 2006 are summarized below.
Type
Accounts Payable
Payroll Payable
Liabilities Payable from Restricted Assets
Total Payables
Net Amount
$30,646,557
44,294,180
22,093,248
$97,033,985
27
UNAUDITED
Texas Tech University System – Notes to the Financial Statements (continued)
Note 26: Termination Benefits
Texas Tech University System has no reportable voluntary or involuntary termination benefits as of August
31, 2006.
Note 27: Medical Patient Revenues
Patient charges for the medical practice plan are reported net of contractual adjustments and charity care.
Components of gross medical patient charges for the year ended August 31, 2006 are summarized below.
Gross Medical Patient Charges
Less Contractual Adjustments
Less Charity Care
Net Medical Patient Charges
$276,207,023
(82,756,232)
(85,644,627)
$107,806,164
Certain charges processed through the medical patient accounting system (IDX) are not classified in this
Annual Financial Report as professional fees and instead are reported as revenues from local and private
grants and contracts. Also, some professional fees reported in this Annual Financial Report are not
processed through the medical patient accounting system and include fees collected in the practice plans
for allied health sciences, nursing and pharmacy.
TTU Health Sciences Center provides care to patients who meet defined criteria under the charity care
policy at amounts less than established rates. A patient is classified as an eligible charity patient based on
federal poverty guidelines. Because TTU Health Sciences Center does not pursue collection of amounts
determined to qualify as charity care, such charges are included in gross patient charges but are not
included in net patient charges.
Patient charges earned under third party contractual arrangements are primarily from fixed rate agreements
which, for Medicare and Medicaid, are updated annually by the federal government and state government,
respectively. Gross patient services charges under the Medicare and Medicaid programs for the year
ended August 31, 2006 were $148,927,305. Compliance with these programs is complex and can be
subject to future government interpretation as well as potential regulatory action.
For the Medicaid program in Texas, and other government programs, contractual adjustments are reported
as charity care as defined in Article III of the General Appropriations Act of the 79th Texas Legislature.
28
SCHEDULES
UNAUDITED
Texas Tech University System
Schedule 1A - Schedule of Expenditures of Federal Awards
For The Year Ended August 31, 2006
Note 1: Non-Monetary Assistance:
The "Donation Of Federal Surplus Personal Property" is presented at 23.3 percent of the original federal acquisition cost of $343,590.
The surplus property is passed through from the Texas Building and Procurement Commission. The federal grantor is the General
Services Administration (GSA) and the Federal CFDA number is 39.003. The estimated fair value for fiscal year 2006 is $80,056.
Note 2: Reconciliation:
Federal Grants and Contracts - Unpledged (SRECNA)
Federal Grants and Contracts - Pledged (SRECNA)
$
56,378,661
2,401,511
Federal Grants and Contracts Pass Throughs (SRECNA)
Non-Operating Federal Grant and Contracts (SRECNA)
2,418,555
1,035,779
Total Federal Revenues
62,234,506
Reconciling Items:
Non-Monetary Assistance:
Donation of Federal Surplus Property
New Loans Processed
less Nurse Faculty Loan Program Revenue
80,056
146,565,386
(43,844)
Total Pass-Through and Expenditures Per Federal Schedule
$
208,836,104
Note 3: Student Loans Processed and Administrative Costs Recovered:
Federal Grantor/CFDA Number/
Program Name
U.S. Department of Health and Human Services
93.342 Health Professions Student Loans
93.364 Nursing Student Loans
Total U.S. Department of Health and Human Services
Department of Education
84.032 Federal Family Education Loans
84.038 Federal Perkins Loan Program
Total Department of Education
Total Student Loans
New Loans
Administrative
Costs
Total Loans
Processed and
Admin Costs
Ending
Balance
Previous
Processed
Recovered
Recovered
Years' Loans
$
$
$
$
$
$
$
$
92,611.00
92,741.00
185,352.00
$
145,632,367.77 $
933,018.00
146,565,385.77 $
146,565,385.77 $
$
51,291.11
51,291.11 $
51,291.11 $
145,632,367.77 $
984,309.11
146,616,676.88 $
146,616,676.88 $
2,922,614.47
2,922,614.47
3,107,966.47
$
$
Note 4: Government Publications
The University participates as a depository library in the government printing office's depository libraries for government
publications program, CFDA #40.001. The University is the legal custodian of government publications, which remain the
property of the federal government. The publications are not assigned a value by the government printing office.
Note 5: Unemployment Insurance Funds
Does not apply to Texas Tech University System
Note 6: (Agency 501 Only)
Note 7: Federal Deferred Revenue
The deferred revenue of $524,521.98 is federal grant prepayments that have
not yet been earned.
Balance
9/1/05
10.206
10.450
11.611
12.000
12.300
12.420
12.431
12.800
12.901
15.000
15.809
47.041
47.075
66.514
81.104
84.007
84.063
84.116
84.217
93.647
0.00
0.00
0.00
0.00
26,417.12
69,387.39
340,625.77
100,847.72
792.82
0.00
2,000.00
18,219.50
10,735.17
1,042.96
1,193.93
457,586.00
4,755,788.00
6,910.01
3,500.45
0.00
5,795,046.84
30
Net
Change
20,437.65
23,985.60
29,985.88
106,074.19
(26,417.12)
(27,716.25)
(172,751.12)
11,866.98
(792.82)
5,608.95
0.00
(18,219.50)
(10,735.17)
(1,042.96)
(1,193.93)
(457,586.00)
(4,755,788.00)
(6,910.01)
(3,500.45)
14,169.22
(5,270,524.86)
Balance
8/31/06
20,437.65
23,985.60
29,985.88
106,074.19
0.00
41,671.14
167,874.65
112,714.70
0.00
5,608.95
2,000.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
14,169.22
524,521.98
UNAUDITED
Texas Tech University System
Schedule 1B - Schedule of State Grant Pass-Throughs From/To State Agencies
For the Year Ended August 31, 2006
Pass-Throughs From:
Texas Emerging Technology Fund - Governor's Office (Agency 300)
The International Center of Excellence in Agriculture Genomics & Biotechnology
$
974,500.00
Texas Department of Agriculture (Agency 551)
A Novel Method of Biological Control of Feral Hogs in Texas
31,032.61
Texas Commission on Environmental Quality (Agency 582)
Design and Operation of Land Application Systems
48,248.65
Texas Water Development Board (Agency 580)
An Integrated Approach to Water Conservation
587,520.63
Texas State Energy Conservation Office (Agency 907)
Biomass Production from Recycled Waste and Water
5,449.96
Texas Agriculture Experiment Station (Agency 556)
Texas Cotton
124,529.12
Texas Cooperative Extension (Agency 555)
Texas Coopertive Extension
17,561.33
University of Texas at El Paso (Agency 724)
MHGP Hispanic Elderly Care
2,305.00
Employee Retirement System of Texas (Agency 327)
State Kids Insurance Program
61,360.00
Texas Higher Education Coordinating Board (Agency 781)
Texas Grant Program
Advanced Technology Program
Advanced Research Program
College Work Study Program
5th Year Accounting Scholarship
Family Practice Residency
Family Practice Rural and Public Health Rotation
Financial Aid Professional Nursing
Graduate Medical Education
Primary Care Residency Program
Nursing and Allied Health
Minority Health Research/Education
Total Pass-Throughs from Other Agencies
8,682,332.00
83,190.56
803,306.00
112,804.31
10,986.00
1,067,168.00
23,000.00
111,402.00
231,303.00
345,000.00
109,016.00
53,845.00
$
31
13,485,860.17
UNAUDITED
Texas Tech University System
Schedule 2A - Miscellaneous Bond Information
For the Year Ended August 31, 2006
Description of Issue
Bonds
Issued
to Date
Range of
Interest Rates
Revenue Bonds
Rev Fin Sys Ref & Imp Bds Ser '96
$ 71,285,000
Rev Fin Sys Bds Tax Ser '96
7,380,000
Rev Fin Sys Ref & Imp Bds Ser '99 (TRB)
55,091,182
Rev Fin Sys Ref & Imp Bds Ser '99
60,008,818
Rev Fin Sys Bds 7th Ser '01 (TRB)
19,510,000
Rev Fin Sys Bds 7th Ser '01
107,355,000
Rev Fin Sys Bds Tax 8th Ser '01
42,810,000
Rev Fin Sys Ref & Imp Bds 9th Ser '03 (TRB)
86,415,000
Rev Fin Sys Ref & Imp Bds 9th Ser '03
10,850,000
Rev Fin Sys Ref & Imp Bds 10th Ser '06 (TRB)
81,273,827
Rev Fin Sys Ref & Imp Bds 10th Ser '06
139,641,173
Total
4.00%
5.75%
4.00%
4.00%
3.00%
3.00%
3.46%
2.00%
2.00%
4.00%
4.00%
$ 681,620,000
32
6.00%
6.75%
5.25%
5.25%
5.50%
5.50%
6.75%
5.25%
5.25%
5.00%
5.00%
Scheduled Maturities
First
Last
Year
Year
1998
1998
1999
1999
2002
2002
2003
2004
2004
2006
2007
2006
2007
2029
2029
2021
2031
2031
2023
2023
2029
2031
First
Call
Date
02/15/2006
N/A
02/15/2009
02/15/2009
2/15/2012
2/15/2012
8/15/2012
8/15/2013
8/15/2013
2/15/2016
2/15/2016
UNAUDITED
Texas Tech University System
Schedule 2B - Changes in Bonded Indebtedness
For the Year Ended August 31, 2006
Description of Issue
Bonds
Outstanding
9/1/05
Bonds
Issued
Revenue Bonds
Rev Fin Sys Ref & Imp Bds Ser '96
$
4,205,000 $
$
Rev Fin Sys Bds Tax Ser '96
1,810,000
Rev Fin Sys Ref & Imp Bds Ser '99 (TRB)
47,501,052
Rev Fin Sys Ref & Imp Bds Ser '99
56,273,949
Rev Fin Sys Bds Ser '01 (TRB)
16,580,000
Rev Fin Sys Bds Ser '01
95,325,000
Rev Fin Sys Bds Tax Ser '01
38,660,000
Rev Fin Sys Ref & Imp Bds Ser '03 (TRB)
86,415,000
Rev Fin Sys Ref & Imp Bds Ser '03
6,760,000
Rev Fin Sys Ref & Imp Bds Ser '06 (TRB)
81,273,827
Rev Fin Sys Ref & Imp Bds Ser '06
139,641,173
Total
$ 353,530,001 $ 220,915,000 $
33
Bonds
Matured
or Retired
4,205,000 $
875,000
2,002,889
737,111
685,000
2,995,000
1,765,000
3,195,000
1,500,000
2,590,000
20,550,000 $
Bonds
Refunded or
Extinguished
Bonds
Outstanding
8/31/06
$
27,450,000
15,700,000
10,010,000
71,975,000
125,135,000
Amounts
Due Within
One Year
$
935,000
935,000
18,048,163
2,081,470
39,836,838
4,678,530
5,885,000
720,000
20,355,000
2,515,000
36,895,000
2,090,000
83,220,000
3,275,000
5,260,000
1,105,000
78,683,827
1,861,941
139,641,173
1,713,058
$ 428,760,001 $ 20,974,999
UNAUDITED
Texas Tech University System
Schedule 2C - Debt Service Requirements
For the Year Ended August 31, 2006
Description of Issue
Revenue Bonds
Rev Fin Sys Bds Tax Ser '96
Fiscal Year
2007
Principal
$
935,000 $
Interest
31,556
Rev Fin Sys Ref & Imp Bds Ser '99 (TRB)
2007
2008
2009
2010
2011
All Other Years
2,081,470
2,182,827
2,281,946
2,390,056
1,632,114
7,479,750
822,762
732,145
635,843
532,149
435,529
811,567
Rev Fin Sys Ref & Imp Bds Ser '99
2007
2008
2009
2010
2011
All Other Years
4,678,530
3,627,174
3,788,054
3,639,944
3,322,885
20,780,251
1,838,988
1,662,492
1,502,551
1,337,789
1,168,664
3,314,518
Rev Fin Sys Bds Ser '01 (TRB)
2007
2008
2009
2010
2011
All Other Years
720,000
755,000
795,000
835,000
880,000
1,900,000
310,026
274,026
236,276
194,538
150,700
158,126
Rev Fin Sys Bds Ser '01
2007
2008
2009
2010
2011
All Other Years
2,515,000
2,680,000
2,810,000
2,960,000
3,080,000
6,310,000
1,071,426
945,676
811,676
664,150
508,750
525,247
Rev Fin Sys Bds Tax Ser '01
2007
2008
2009
2010
2011
All Other Years
2,090,000
2,190,000
2,315,000
2,345,000
245,000
27,710,000
2,363,936
2,252,748
2,130,766
1,995,802
1,857,916
24,424,161
Rev Fin Sys Ref & Imp Bds Ser '03 (TRB)
2007
2008
2009
2010
2011
All Other Years
3,275,000
3,390,000
3,535,000
3,675,000
3,845,000
65,500,000
4,017,250
3,900,325
3,761,825
3,617,625
3,448,000
22,049,138
Rev Fin Sys Ref & Imp Bds Ser '03
2007
2008
2009
2010
2011
All Other Years
1,105,000
755,000
785,000
825,000
855,000
935,000
200,675
169,000
138,200
106,000
68,125
47,375
Rev Fin Sys Ref & Imp Bds Ser '06 (TRB)
2007
2008
2009
2010
2011
All Other Years
1,861,941
1,376,284
1,436,326
1,491,367
2,424,740
70,093,169
3,670,881
3,606,116
3,549,864
3,491,310
3,412,988
29,520,610
Rev Fin Sys Ref & Imp Bds Ser '06
2007
2008
2009
2010
2011
All Other Years
1,713,058
1,783,717
1,853,674
1,933,633
2,500,259
129,856,832
6,532,315
6,462,379
6,389,631
6,313,885
6,225,207
58,508,469
Total Principal and Interest
$
428,760,001 $
34
234,909,692
UNAUDITED
Texas Tech University System
Schedule 2D - Analysis of Funds Available for Debt Service
For the Year Ended August 31, 2006
Net Available for Debt Service
Operating
Total Pledged
Expenses/Expenditures
and Other Sources
and Capital Outlay
Description of Issue
Debt Service
Principal
Interest
$
4,205,000 $
875,000
2,002,889
737,111
685,000
2,995,000
1,765,000
3,195,000
1,500,000
2,590,000
126,150
92,425
1,601,914
2,648,558
614,084
7,368,338
2,452,187
4,102,319
234,125
1,846,145
2,757,654
302,043,827 $
20,550,000 $
23,843,899
Revenue Bonds:
RFS Ref & Imp Bds Series 1996
RFS Bds Tax Series 1996
RFS Ref & Imp Bds Series 1999 (TRB)
RFS Ref & Imp Bds Series 1999
RFS Bds 7th Series 2001 (TRB)
RFS Bds 7th Series 2001
RFS Bds Tax 8th Series 2001
RFS Ref & Imp Bds Series 2003 (TRB)
RFS Ref & Imp Bds Series 2003
RFS Ref & Imp Bds Series 2006 (TRB)
RFS Ref & Imp Bds Series 2006
Total
$
366,855,024 $
35
UNAUDITED
Texas Tech University System
Schedule 2E - Defeased Bonds Outstanding
For the Year Ended August 31, 2006
Year
Refunded
Description of Issue
Par Value
Outstanding
Revenue Bonds
Texas Tech University Housing System Revenue Bonds, Series 1962-E
Texas Tech University Housing System Revenue Bonds, Series 1963-A
Revenue Financing System Bonds, Series 1995
Revenue Financing System Refunding & Improvement Bonds, Series 1996
Revenue Financing System Refunding & Improvement Bonds, Series 1999 (TRB)
Revenue Financing System Refunding & Improvement Bonds, Series 1999
Revenue Financing System Bonds, Series 2001 (TRB)
Revenue Financing System Bonds, Series 2001
36
1996
1996
1999
1999
2006
2006
2006
2006
$
2,420,000
383,000
8,195,600
37,380,000
27,450,000
15,700,000
10,010,000
71,975,000
$ 173,513,600
UNAUDITED
Texas Tech University System
Schedule 2F - Early Extinguishment and Refunding
For the Year Ended August 31, 2006
Description of Issue
Category
Amount
Extinguished or
Refunded
Revenue Bonds
Rev Fin Sys Ref & Imp Bds Ser '99 (TRB)Advanced Refunding $
Rev Fin Sys Ref & Imp Bds Ser '99
Advanced Refunding
Rev Fin Sys Bds Ser '01 (TRB)
Advanced Refunding
Rev Fin Sys Bds Ser '01
Advanced Refunding
$
37
Refunding
Issue
Par Value
27,450,000 $ 27,411,553 $
15,700,000
15,116,610
10,010,000
10,142,274
71,975,000
74,464,563
125,135,000 $ 127,135,000 $
Cash Flow
Increase
(Decrease)
Economic
Gain/
(Loss)
1,083,306 $
645,831
1,259,427
957,243
1,052,397
623,058
3,625,467
1,361,492
7,020,597 $ 3,587,624
UNAUDITED
Texas Tech University System
Schedule 3 - Reconciliation of Cash in State Treasury
For the Year Ended August 31, 2006
Cash in State Treasury
Local Revenue (Fund 0239)
Local Revenue (Fund 0255)
Permanent Health Fund - El Paso Campus (Fund 0820)
Permanent Health Fund - Other Campuses (Fund 0821)
Permanent Health Fund - Other Campuses (Fund 9016)
Total Cash in State Treasury (Note 1)
$
$
38
Unrestricted
4,225,941 $
35,149,909
2,321,872
1,090,409
877
42,789,008 $
Restricted
$
$
Total
4,225,941
35,149,909
2,321,872
1,090,409
877
42,789,008