SCHEDULE 1 - Outstanding Parity Debt Obligations
The following table sets forth the Parity Debt Obligations outstanding as of December 1, 2004:
Par Amount
Outstanding as of
December 1, 2004
Parity Debt Obligations
Consolidated Revenue Bonds, Series 1995
$
900,000
Consolidated Revenue Bonds, Series 1997
3,970,000
Consolidated Revenue Bonds, Series 1998
8,130,000
Consolidated Revenue Bonds, Series 1999
27,715,000
Consolidated Revenue Bonds, Series 2000
50,540,000
Consolidated Revenue Bonds, Series 2002A
121,410,000
Consolidated Revenue Refunding Bonds, Series 2002B
40,370,000
Consolidated Revenue Refunding Bonds, Series 2003
Consolidated Revenue Variable Rate Demand Bonds, Series 2004
16,490,000
25,000,000
Total Parity Debt Obligations
$
294,525,000
SCHEDULE 2 - Pledged Revenues and Fund Balances
FY 2000
Tuition & Fees
Investment Income
Sales & Services
Federal Interest Grant
Bond Proceeds
$
(1)
FY 2001
149,053,868
6,714,016
31,654,548
303,770
$
(2)
Legislative Appropriations
Subtotal Pledged Revenues
160,545,454
10,170,915
33,723,571
-
FY 2002
$
177,036,964
11,135,083
34,642,591
-
$
FY 2003
FY 2004
202,213,426
4,931,382
36,156,165
-
252,740,917
3,254,526
37,896,685
-
2,816,554
2,947,556
-
-
8,707,242
196,433,444
9,116,324
216,372,818
7,152,363
232,914,557
12,515,090
255,816,063
9,634,334
303,526,462
114,382,231
120,875,801
133,470,509
119,559,007
97,170,835
Pledgeable Unappropriated
Fund & Reserve Balances
Total Pledged Revenue
& Fund Balances
(3)
$
310,815,675
$
337,248,619
$
366,385,066
$
375,375,070
(1)
Represents capitalized interest financed from proceeds of the Series 2000 Bonds.
(2)
Represents amounts appropriated by the State Legislature to reimburse the Board for payment of portions of the debt service
on certain outstanding parity debt obligations.
(3)
In addition to current year pledged revenues, any unappropriated or reserve fund balances remaining at year-end are
available for payment of the subsequent year's debt service.
$
400,697,297
SCHEDULE 3 - Exemptions and Waivers
The following table sets forth the total number of students who were either exempt from paying all
or a portion of the tuition charges and/or other fees (which includes Pledged Tuition) or for whom the
payment of student use and service fees (which includes the former Pledged General Fee) was waived
for the fall semester of the fiscal years indicated.
Fall Semester
Fiscal Year
Ended August 31
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Total Number
of Students
Granted
Exemptions
and Waivers
1,956
2,077
2,306
2,164
2,159
2,138
2,321
2,536
2,564
2,336
Number of
Students Granted
Exemptions
and Waivers
as % of Total
Headcount
4.16%
4.37%
4.79%
4.42%
4.32%
4.25%
4.43%
4.62%
4.56%
4.11%
SCHEDULE 4 - Historical Headcount Enrollment and Semester Credit Hours
(1)
The following table shows the historical headcount enrollment at each component university and the number
of semester credit hours taken by the students at each component university for the fall semester of the
fiscal years indicated.
Fall Semester
Fiscal Year
Ended
August 31(2)
1996
1997
1998
University of Houston
Headcount
Credit
Enrollment Hours
30,757
330,701
30,774
332,270
31,602
342,008
UH-Clear Lake
Headcount Credit
Enrollment Hours
7,095
54,543
6,968
54,525
6,947
54,829
UH-Downtown
Headcount Credit
Enrollment Hours
7,676
73,690
7,947
76,958
8,155
79,609
UH-Victoria
Headcount Credit
Enrollment Hours
1,518
10,851
1,795
11,335
1,491
10,529
1999
32,296
349,296
6,806
54,633
8,386
82,560
1,512
10,531
49,000
497,020
2000
32,651
353,809
7,114
58,172
8,712
86,341
1,526
10,756
50,003
509,078
2001
32,123
353,130
7,580
61,970
8,951
88,245
1,700
11,802
50,354
515,147
2002
2003
2004
2005
33,007
34,443
35,066
35,180
366,319
383,357
390,753
393,258
7,738
7,753
7,776
7,785
64,027
62,532
63,590
64,058
9,704
10,528
10,974
11,408
95,770
103,252
110,914
114,305
1,927
2,183
2,411
2,418
14,207
15,935
17,704
17,909
52,376
54,907
56,227
56,791
540,323
565,076
582,961
589,530
(1)
These figures include students who were either exempt from paying tuition and other fees or for whom the payment
of the Pledged Tuition was waived by the Board as allowed by law.
(2)
Totals
Headcount Credit
Enrollment Hours
47,046
469,785
47,484
475,088
48,195
486,975
Enrollment during the spring semesters and during each term of each summer session is generally less than the previous
fall semester enrollment.
SCHEDULE 5 - Full-Time Equivalent Enrollment (1)
The following table shows the historical amount of the "full-time equivalent" students at each
of the component universities for the fall semester of the fiscal years indicated.
Fall Semester
Fiscal Year
Ended Aug. 31
1996 (2)
1997 (2)
1998 (2)
1999
2000
2001
2002
2003
2004
2005
University of
Houston
23,504
23,546
24,156
24,600
24,892
24,815
25,683
27,157
27,683
27,849
UH-Clear Lake
3,995
3,990
3,953
3,986
4,227
4,498
4,647
4,561
4,669
4,680
UH-Downtown
4,931
5,148
5,296
5,475
5,756
5,921
6,444
6,993
7,419
7,638
(1)
UH-Victoria
785
833
760
760
779
859
1,040
1,157
1,303
1,680
Full-time equivalent enrollment is calculated by assuming that an undergraduate student is enrolled
for fifteen semester credit hours, a master's candidate is enrolled for twelve semester credit hours, and a
doctoral candidate is enrolled for nine semester credit hours.
(2)
Figures for Fiscal Years 1996 through 1998 have been restated due to changes in the methodology
employed to calculate the data.
Totals
33,215
33,517
34,165
34,821
35,654
36,093
37,814
39,868
41,074
41,847
SCHEDULE 6 - Condensed Statement of Net Assets
The following table reflects the condensed Statement of Net Assets of the System as of
August 31st of each year.
FY 2002 (1)
FY 2003 (1)
FY 2004 (1)
Assets:
Current Assets
Non-Current Investments
Other Non-Current Assets
Capital Assets, net
Total Assets
$
308,032,944
448,338,760
24,034,543
411,741,404
1,192,147,651
$
394,316,042
472,823,797
18,867,269
475,483,220
1,361,490,328
$
385,419,912
475,893,667
39,616,792
498,309,367
1,399,239,738
Liabilities:
Current Liabilities
Non-Current Liabilities
Total Liabilities
(122,015,630)
(165,071,531)
(287,087,161)
(156,789,272)
(279,388,836)
(436,178,108)
(200,756,637)
(292,320,836)
(493,077,473)
276,302,364
389,177,329
239,580,797
905,060,490
303,025,724
414,797,659
207,488,836
925,312,219
274,242,674
413,670,253
218,249,338
906,162,265
Net Assets:
Invested in Capital Assets, Net of Related Debt
Restricted
Unrestricted
Net Assets
$
(1) For more detailed information, refer to the Financial Reports of the System - Statement
of Net Assets as of August 31, 2004.
$
$
SCHEDULE 7 - Combined Statement of Revenues, Expenses and Changes in Net Assets
The following table presents the Statement of Revenues, Expenses and Changes in Net Assets of the System for fiscal years ending August 31. Only a
portion of the revenues shown in the following table may be legally used by the Board to pay debt service on the Parity Debt Obligations and no
inference should be drawn that all of such revenues constitute Pledged Revenues.
FY 2002(1)
Operating Revenues
Net Student Tuition and Fees
Net Sales and Services of Auxiliary Enterprises
Net Other Sales and Services
Federal Grant Revenues
Federal Pass-Through Revenues (net of administrative costs)
State Grant Revenues (net of refunds to grantors)
State Pass-Through Revenues
Other Grants and Contracts
Other Operating Revenue
Total Operating Revenues
$
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
Operating Income (Loss)
Nonoperating Revenues (Expenses)
Legislative Revenue
Gifts
Investment Income
Interest Expense and Fiscal Charges
Gain (Loss) on Sale of Capital Assets
Net Increase (Decrease) in Fair Value of Investments
Other Nonoperating Revenues (Expenses)
Total Nonoperating Revenues (Expenses)
Income (Loss) before Other Revenues, Expenses, Gains, Losses and Transfers
Other Revenues, Expenses, Gains, Losses and Transfers
HEAF Appropriation Revenue
Additions to Permanent and Term Endowments
Extraordinary Items
Legislative Transfer In/Out
Legislative Appropriations Lapsed
Transfers in/out from Other Agencies
Total Other Revenues, Expenses, Gains, Losses & Transfers
Total Changes in Net Assets
$
Beginning Net Assets
Restatements of Beginning Net Assets
Beginning Net Assets as Restated
Ending Net Assets
152,101,300
34,632,843
10,787,294
75,568,438
2,768,378
7,626,689
12,363,236
30,602,099
326,450,277
FY 2003
$
200,701,748
83,736,180
27,372,941
57,440,951
22,438,765
85,815,782
35,693,989
28,741,162
56,549,152
22,372,569
620,863,239
(294,412,962)
214,892,594
84,572,210
26,236,310
66,456,162
24,768,286
95,011,981
33,031,553
28,095,543
58,087,742
23,806,563
654,958,944
(295,716,054)
209,735,532
74,469,317
28,084,104
84,841,827
28,291,877
60,432,713
40,690,906
45,992,158
59,457,342
26,035,038
658,030,814
(263,932,082)
229,749,181
22,026,664
16,325,607
(9,217,279)
25,798,983
284,683,156
(9,729,806)
226,099,366
36,114,248
25,140,704
(12,633,712)
(6,265)
11,282,814
(20,768,886)
265,228,269
(30,487,785)
227,230,706
27,996,504
36,781,486
(12,652,440)
(8,494)
1,052,824
(76,956,482)
203,444,104
(60,487,978)
905,060,489
$
(1)
359,242,890
36,952,989
6,452,321
192,465
1,321,974
(138)
6,216,291
51,135,902
41,406,096 $
171,453,342
35,812,189
7,250,596
71,175,602
33,831,206
8,873,664
11,758,027
19,088,264
FY 2004
212,903,273
37,896,685
17,198,962
80,085,995
8,291,936
7,875,195
11,161,796
18,460,738
224,152
394,098,732
1,348,063,471
(484,409,078)
863,654,393
$
(1)
36,952,989
5,893,217
734,915
(314,370)
7,472,763
50,739,514
20,251,729 $
905,060,489
905,060,489
$
925,312,218
36,952,989
5,046,111
(876,895)
(426,376)
40,695,829
(19,792,149)
925,954,416
925,954,416
$
906,162,267
(1) For more detailed information, see the Financial Reports of the System - Statement of Revenues, Expenses and Changes in Net Assets
for the Year Ended August 31, 2004.
Information Relating to Fiscal Years 1999 through 2001. The System is not required to restate, and has not
restated, prior year financials in connection with the implementation of the New Financial Reporting Model.
The significant changes caused by these new accounting standards and the time required to implement
the changes on a consistent basis for all of the members of the System (in accordance with the related
rules of the State Comptroller of Public Accounts) made a restatement of the prior year financial statements
impractical. As such, historical financial data is not comparable to the data presented in Schedule 7.
SCHEDULE 7A - Historical Summary Combined Statement of Current Fund Revenues and Expenditures
The following table sets forth an Historical Summary Combined Statement of Current Fund Revenues
and Expenditures for Fiscal Years 1999 through 2001 computed in accordance with the accounting pinciples
in existence before the New Financial Reporting Model was developed. Only a portion of the revenues shown
in the following table were legally available to the Board to pay debt servcie on the Parity Debt Obligations
and no inference should be drawn that all of such revenues constituted Pledged Revenues.
Fiscal Year
1999
Revenues:
Tuition and Fees
Tuition
Designated Tuition
Student Service Fees
Other Fees
Remissions and Exemptions
State Appropriations - General Revenue
State Appropriations - H.E.A.F.
Federal Grants and Contracts
State Grants and Contracts
Local Gifts, and Grants and Contracts
Private Gifts, Grants and Contracts
Investment Income
Endowment Revenue (1)
Sales and Services
Educational Activities
Auxiliary Enterprises
Other Sources
Total Current Funds Revenues
$
61,766,465
31,038,190
11,062,086
25,296,294
10,911,708
177,992,124
37,726,969
56,703,386
3,608,202
214,453
31,597,893
4,462,338
12,151,044
Fiscal Year
2000
$
19,962,039
30,127,793
265,113
$
514,886,097
67,068,980
39,130,175
11,693,827
31,198,315
11,291,871
204,570,228
37,726,969
58,379,510
13,749,066
210,833
34,703,677
5,415,552
11,138,307
Fiscal Year
2001
$
20,113,815
31,638,529
785,880
$
578,815,534
70,636,126
42,260,878
12,313,990
35,334,460
12,254,270
207,429,441
36,952,989
65,504,130
8,128,046
304,868
39,520,059
13,267,023
13,261,073
20,100,139
33,702,857
554,978
$
611,525,327
(1)
Endowment Revenue - Substantially all endowment revenue is restricted, and as such may be reported only
to the extent of related expenditures (AICPA Industry Audit Guide for Colleges and Universities). The actual
revenue earned, net of fees and amortization expense, is as follows:
FY99: $18,803,657
FY00: $37,352,702
FY01: $33,303,904
Actual revenue earned may differ from amounts previously reported due to a change in the Uniform Investment
of Institutional Funds.
Schedule 7A - continued
Fiscal Year
1999
Expenditures:
Educational and General
Instruction
Research
Public Service
Academic Support
Student Services
Institutional Support
Physical Plant
Scholarships and Fellowships
Total Educational and General
$
$
Auxiliary Enterprises
Total Current Funds Expenditures (2)
(2)
162,313,770
49,390,202
25,309,813
46,628,253
13,299,146
52,454,761
27,782,728
49,217,814
426,396,487
Fiscal Year
2000
$
$
49,008,202
$
475,404,689
169,962,961
59,111,826
24,409,509
54,571,722
16,320,771
57,571,198
29,062,651
53,373,815
464,384,453
Fiscal Year
2001
$
$
52,074,924
$
516,459,377
184,066,047
64,506,760
26,212,713
59,870,954
17,315,393
60,684,113
34,754,914
61,048,705
508,459,599
54,049,557
$
Total Current Fund Expenditures - Does not include mandatory transfers for debt service. These amounts
were: FY99: $12,771,038; FY00: $15,567,716; FY01: $18,881,667
562,509,156
Schedule 7A - continued
Prior to adopting the New Financial Reporting Model, the System prepared its financial statements in
accordance with the principles of fund accounting. Under the previous financial statement presentation,
resources for various purposes were classified into funds in accordance with the activities or objectives
specified. In addition, the System accounted for its finances within current and non-current fund groups.
Current Funds were defined as those funds available for current operating and maintenance purposes as
well as those restricted by donors and other outside agencies for specific operating purposes. Non-current
funds included loan funds, endowment and similar funds. Plant funds were reported as unexpended plant
funds, renewal and replacement funds, retirement of indebtedness funds and investment in plant funds.
The following table sets forth a restatement of Fund Balances, as previously reported, to the net asset
balances as of September 1, 2001.
Combined Fund Blanaces, as previously reported
$
1,348,063,471
Restatements:
Accumulated Depreciation
Capitalization Threshold
Other Changes in Treastment Due to GASB 34/35
(547,628,114)
(55,833,210)
119,052,246
Total Restatements
(484,409,078)
Combined Fund Balances, restated as Beginning Net Assets
as of September 1, 2001
$
863,654,393
SCHEDULE 8 - Investment of Non-Endowed Funds
The following table sets forth the University of Houston System’s allocation of investments of its
non-endowed funds as of December 31, 2004.
Cash and Cash Equivalents
U.S. Treasury Securities
U.S. Agency/Mortgage Backed Securities
U.S. Agency Collateralized Mortgage Obligations
Municipal Securities
Corporate Debt Obligations
Soverign Debt / Other
Book Value
Market Value
Total Unrealized Gain/(Loss)
Total Unrealized Gain/(Loss) as % of Book Value
44%
29%
14%
0%
1%
11%
0%
$
200,402,512
199,601,083
(801,429)
-0.40%
SCHEDULE 9 - Current Tuition Rates
The following table shows the current tuition rates charged at System institutions. Pursuant to S.B. 1907, tuition has
become the primary source of credit for the Outstanding Parity Debt Obligations.
Undergraduate Students
Law Students
Pharmacy Students
Optometry Students:
New Students
Returning Students
Other Graduate Students:
University of Houston
UH-Clear Lake
UH-Downtown
UH-Victoria
(1)
(3)
(4)
2002-2003 Academic Year
Tuition Rates(1)
(per semester credit hour)
Resident
Non-Resident
$
88
$
306
284
384
176
377
2003-2004 Academic Year
Tuition Rates(1) (2)
(per semester credit hour)
Resident
Non-Resident
$
92
$
328
286
481
184
420
2004-2005 Academic Year
Tuition Rates(1)
(per semester credit hour)
Resident
Non-Resident
123
381
315
541
219
477
220
176
438
419
230
230
466
466
267
525
267
525
132
132
89
125
350
306
292
305
138
138
102
138
374
351
323
328
171
159
141
152
429
393
364
362
All tuition rates include amounts that were categorized in previous years as the Pledged General Fee prior to the fiscal year 1998. The Designated Tuition
for the 2004-2005 academic year is $75, $63, $58, and $56 per semester credit hour for the University of Houston, the University of Houston-Clear Lake,
the University of Houston-Downtown and the University of Houston-Victoria, respectively.
(2)
Tuition rates were increased in Spring 2004 by $19, $11, $5, and $10 per semester credit hour for University of Houston, University of Houston-Clear Lake,
University of Houston-Downtown, and University of Houston-Victoria, respectively.
(3)
(4)
Undergraduate tuition rate is for the UH main campus
For 2003-2004, the College of Optometry does not differentiate between returning and new students for purposes of assessing tuition.
Mandatory Fees. Mandatory fees are comprised of charges for certain activities and services utilized by all students and
include, but are not limited to, Student Service Fee, Library Fee, Recreational and Wellness Center Fee and Technology
Fees. Each component institution charges various types of fees and in various amounts. In addition, certain departments are
permitted to charge additional fees for students participating in certain areas of study.
Any changes in tuition or fees will originate and be recommended by the President of the component institution, reviewed
by the Chancellor and approved by the Board of Regents. Any changes in tuition will be implemented only after thorough
consultation and review.
Gifts, Grants, and Contracts.
contracts for research.
The System and its component institutions receive federal, state, local and private grants and
Investment and Endowment Income. Investment and endowment income is received on both a restricted and unrestricted
basis.
Sales and Services. Other educational activities and auxiliary enterprises generate revenue from sales and services which
is unrestricted.
Other Interest Income. The System and its component institutions generate interest from the investment of cash pursuant to
investment policies adopted by the Board in accordance with State law.
University of Houston System
Management’s Discussion and Analysis
Introduction
The following Management’s Discussion and Analysis section of the University of
Houston System’s Annual Financial Report has been prepared to provide an overview of the
activities and the financial position of the University of Houston System for the fiscal year ended
August 31, 2004. This presentation is intended to offer a summary of significant current year
activities, resulting changes, and currently known economic conditions and facts. This analysis
should be read in conjunction with the System’s basic financial statements and the notes to the
statements.
During the 2002 fiscal year, the State of Texas adopted Governmental Accounting
Standards Board (GASB) Statement No. 34, Basic Financial Statements - and Management's
Discussion and Analysis - for State and Local Governments, and Governmental Accounting
Standards Board Statement No. 35, Basic Financial Statements - and Management's Discussion
and Analysis - for Public Colleges and Universities. These accounting pronouncements
established new reporting requirements including the presentation of new financial information
and a restructuring of the presentation of previous fiscal years. Whereas the previous standards
focused on the accountability of individual fund groups, the new standards focus on the
preparation of financial statements that present aggregate operations. The financial statements for
fiscal years 2004 and 2003 have been prepared in accordance with these rules.
Background
The University of Houston System (UHS) serves the nation's fourth largest metropolitan
area and the upper Texas Gulf Coast, and is part of the state-supported system of higher
education in Texas. The System is comprised of four universities and a supporting System
Administration. The four universities are University of Houston, University of Houston – Clear
Lake, University of Houston – Downtown, and University of Houston – Victoria; all of which
are located along the Texas Gulf Coast. The System has also established teaching centers that
offer instructional opportunities at facilities at the UH System at Sugar Land, and the UH System
at Cinco Ranch.
The mission of the System and its universities is to educate students, create new
knowledge, and foster an interactive relationship with the communities served. The System
universities are the primary providers of graduate and undergraduate services for Houston and
the Upper Texas Gulf Coast region. In recent years, the universities have built multi-disciplinary
research programs in areas such as materials science, the biosciences, and the computational
sciences, all of which align with major regional and state industries – energy, biotechnology,
aerospace, and computers. In doing so, each of the System’s universities has created programs of
international repute that contribute greatly to the regional and state economies. The System
serves over 56,000 students and employs approximately 12,228 individuals.
UH System Distance Education/CampusNet is a partnership of the four institutions of the
System. Going beyond the traditional campus boundaries, UH, UH-Clear Lake, UH-Downtown,
and UH-Victoria cooperate in providing high-quality educational opportunities to the
community. This collaboration delivers more than forty degree programs taught by university
faculty via face-to-face instruction and electronic technologies at off-campus sites, including
UHS at Cinco Ranch, UHS at Sugar Land, selected community college campuses, corporations,
and organizations. A number of programs can be pursued completely through videotape and
online delivery. All courses are junior, senior, and graduate level and carry all the same
workloads, prerequisites, and requirements as on-campus courses. The University of Houston
System universities have won national awards in distance education and lead Texas universities
in distance education enrollments. UH System Distance Education provides maximum access to
higher education opportunities for residents throughout the Gulf Coast region.
Overview of the Financial Statements
The financial statements for the fiscal year ended August 31, 2004 are presented in a
significantly different format as compared to years prior to fiscal year 2002. Governmental
Accounting Standards Board Statement No. 35 requires the University to include three financial
statements in the annual financial report. They are (1) the Statement of Net Assets, (2) the
Statement of Revenues, Expenses, and Changes in Net Assets, and (3) the Statement of Cash
Flows. The information contained in the consolidated financial statements of the University of
Houston System is part of and included in the State of Texas Comprehensive Annual Financial
Report. The financial statements of the System are presented for the fiscal year ended August 31,
2004, with financial data for the fiscal year ended August 31, 2003, provided for comparative
purposes. Prior year totals have been reclassified, when necessary, to reflect current year changes
in reporting procedures and to enhance comparability of reported totals.
The format of the statewide financial statements presents a comprehensive perspective of
the state’s financial activities. The state’s activities are divided into three types for presentation
in the primary financial statements. They are Governmental Activities, Business-type Activities,
and Component Units. The financial operations of the University of Houston System are
considered a business-type activity because the primary activity of the System’s component
university campuses is the offering of higher education level instruction. The universities charge
a fee, in the form of tuition, to customers in order to pay for a majority of the cost of the services
provided. Under this classification, the System’s financial statements conform to the guidelines
and presentation formats prescribed for Proprietary Funds.
As a result of the adoption of the GASB reporting standards the System is required to
report accumulated depreciation on its capital assets. Additionally, the System recognizes a
current year charge for depreciation expense.
Revenues and expenses are classified as either operating or nonoperating in the financial
statements. Previous reporting standards focused on the accountability of individual fund groups
and did not provide a measurement of entity-wide operations. A significant portion of the
System’s recurring resources are classified as nonoperating by GASB Statement No. 35.
Substantially all state appropriations are treated as nonoperating revenues.
Tuition and fee revenues are reported net of any scholarship discounts and allowances. A
scholarship allowance is the difference between the stated charge for services provided by a
university and the amount that is paid by the student or third parties making payments on behalf
of the student. Funds received to satisfy student tuition and fee charges are reported as revenue
only once. Institutional resources provided to students as financial aid are reported as scholarship
allowances in amounts up to and equal to amounts owed by the students to the university. This
accounting procedure is known as tuition discounting.
Statement of Net Assets
The first schedule presented is the Statement of Net Assets. The statement reflects the
System’s assets and liabilities using the full accrual basis of accounting, and represents financial
position as of the conclusion of the fiscal year. This is a point in time financial presentation and
presents a snapshot view of the financial status as of August 31, 2004. Comparative data for the
previous fiscal year has also been presented as of August 31, 2003. Assets and liabilities are
presented as either current or noncurrent to provide an indication of their anticipated liquidation.
Net Assets is equal to Assets minus Liabilities. Unrestricted Net Assets are available to the
University for any lawful purpose. Unrestricted Net Assets often have constraints on resources,
which are imposed by management, but can be removed or modified. On August 31, 2004, the
University of Houston System’s Assets totaled $1.4 billion, and Liabilities totaled $493 million,
resulting in a Net Asset valuation of $906 million. This represents a decrease in net assets of $20
million.
The Statement of Net Assets enables the reader of the financial statements to determine
the assets available for use in the continuing operations of the institutions. Also, the reader will
be able to determine the amounts owed to vendors, investors, and lending institutions. Net Assets
are presented in three major categories: invested in capital assets, net of debt; restricted net
assets; and unrestricted net assets. The invested in capital assets category identifies the equity in
property, plant, and equipment owned by the System. Restricted net assets are presented in two
sub categories: non-expendable and expendable. Non-expendable restricted net assets are
available only for endowed investment purposes. Expendable net assets are available for
expenditure but must be expended for the purposes specified by the external donor/provider of
the assets. Unrestricted net assets are available for any lawful purpose of the institution.
Although not subject to the stipulations of external requirements, a significant portion of the
System’s unrestricted net assets are committed to various future operating budgets related to
academic, research, and capital programs and projects.
Statement of Revenues, Expenses and Changes in Net Assets
The next statement comprising the primary financial statements is the Statement of
Revenues, Expenses, and Changes in Net Assets. This schedule identifies operating and
nonoperating revenues received by the System. Additionally, both the operating and
nonoperating expenses incurred by the System during the fiscal year are displayed. Finally, any
other gains and losses or other forms of revenue and expense are reported.
During the 2004 fiscal year the System recognized operating revenues of $394 million
and operating expenses of $658 million. After recognizing nonoperating activities and other
gains and losses, the System realized a net decrease in net assets of $20 million. The decrease
was a result, in part, of a planned spending of accumulated equity balances and due to reductions
of capital asset balances. During the prior fiscal year, the System experienced an increase in net
assets of $21 million.
Operating revenues are received and recognized as a result of providing services to the
component universities’ customers. Operating expenses are the costs necessary to provide those
services and to fulfill the mission of the System. Operating expenses are displayed in the
Statement using the functional method of classification. The functional, or programmatic,
classification method presents operating expenses in a manner that reflects the System’s
commitments in fulfilling its mission of instruction, research, and public service, as well as the
requirements of supporting and maintaining it administrative and physical structure.
Nonoperating revenues are those received for which no services are directly provided. State
appropriations are classified as nonoperating revenue because they are provided by the
Legislature to the System without the Legislature directly receiving goods or services for those
revenues. As previously mentioned, significant portions of the System’s recurring resources are
classified as nonoperating. Net resources from other than operating revenues totaled $244
million for fiscal year 2004.
Statement of Cash Flows
The third primary statement included in the financial statements is the Statement of Cash
Flows. This schedule explains the change during the fiscal year in cash and cash equivalents,
regardless of whether there are restrictions on their use. The Statement of Cash Flows should be
used in conjunction with related disclosures and information in the other financial statements.
The statement can provide relevant information about an entity, such as the ability to generate
future net cash flows, the ability to meet obligations when due, or reasons for differences
between operating income and associated cash receipts and payments. The statement is
comprised of five sections. The first section recognizes the cash flows from operating activities
as well as the net cash used by operating activities. The second section identifies the cash flows
from noncapital financing activities. The third section reflects the cash flows from capital and
related financing activities. The next section details the cash flows from investing activities. The
final section reconciles net cash used to the operating loss or income reflected on the Statement
of Revenues, Expenses, and Changes in Net Assets.
The cash and cash equivalents balance at the conclusion of the 2004 fiscal year totaled
$183 million, which reflected a net increase in cash of $27 million.
Capital Assets
Critical to maintaining the quality of academic, research, and service programs, as well as
residential life, is the development and renewal of the System’s capital assets. The System’s
institutions continue the implementation of their long-range capital plans, with a prudent
combination of renovation and modernization of older facilities, along with new construction.
At the end of the 2004 fiscal year, the System had $498 million of capital assets, net of
accumulated depreciation. These assets included land, buildings, infrastructure and
improvements, furniture and equipment, library books, and works of art. Several major capital
construction projects are in various stages of completion, and the cumulative investment in these
assets is reported as construction in progress. Capital assets, net of accumulated depreciation, at
August 31, 2004, totaled $477 million.
Fiscal year 2004 continues to bring major changes to UH System facilities. At the
University of Houston, construction continued during the year and is nearly complete on the
expansion of the M. D. Anderson Library. Additionally, the new $76 million Science and
Engineering Research Building/Classroom Complex broke ground and is scheduled to open in
2005. Also, plans are in the beginning phase for a proposed $25.8 million parking garage to be
constructed during fiscal year 2005. The four-story, 519,000 square-foot garage will be located
on University Drive near the Hilton University of Houston Hotel. The garage will house a
Visitor’s Center and Academic Service Center.
Major construction projects are also underway at the other three UH System universities.
Construction nears completion on a new Student Services/Classroom Building at the University
of Houston – Clear Lake. In addition, the new Classroom Building for the University of Houston
– Downtown was completed in 2004. Revenue bonds have been issued to finance each of these
construction projects. Renovations continue at the University of Houston – Victoria on the
University West Building.
Completion of each of these projects will provide enhanced and significant benefits to the
System’s students and other constituencies. The System maintains a goal of improving the
physical condition of the campuses, while at the same time, preserving their condition and
maximizing their utilization.
Debt Administration
The System complements the management of its financial resources with the prudent use
of debt to finance capital projects. Detailed information concerning the System’s long-term debt
is found in the Notes to the Financial Statements.
The University of Houston System is authorized by statute to issue long term debt in the
form of revenue bonds. Each series of revenue bonds issued is backed by a pledged revenue
source specified in the bond resolution. Additionally, each issue is designed to be self supporting
from the primary revenue source. At August 31, 2004, the University of Houston System had
$298 million of long term bonded debt outstanding, $15 million of which will be retired during
the 2005 fiscal year.
In fiscal year 2004, the University of Houston System issued $16,490,000 of
Consolidated Revenue Refunding Bonds, Series 2003. Proceeds from this bond issue will be
used to refund and defease a portion of the outstanding debt on previously issued Consolidated
Revenue Bonds, Series 1995, which were originally issued to finance construction projects at the
University of Houston—Downtown. These proceeds will effectively reduce the total future debt
service obligations of the System. Additionally, the System issued $25,000,000 of Consolidated
Revenue Variable Rate Demand Bonds, Series 2004. Proceeds from this bond issue may be used
to finance the purchase, construction, renovation, and equipping of any property, buildings,
facilities, roads, or related infrastructure for the University of Houston System, including the
individual components of the System. Management has directed that these funds be used for the
benefit of the University of Houston (Main Campus). As a consequence of Tropical Storm
Allison in June, 2001, deferred maintenance and renovation reserves were redirected to fund
University of Houston recovery efforts. The bond proceeds will enable the University to
reinstate previously planned projects and deferred maintenance.
Economic Outlook
The Texas Legislature has been critical to our success and will continue to be so in the
79th session that begins in January, 2005, when the University of Houston System will again seek
the investments from the state needed to build on the momentum achieved over the past several
years. The University of Houston has identified five principal legislative priorities. The first is
reinstatement and expansion of the Research Development Fund. UH lost more funding than
any other university in the state when appropriation of these funds was vetoed. Re-appropriation
would position the university for continued growth in the future. Second is a funding request for
expansion of Special Item Funding for research, public service and institutional support
programs that fall outside the scope of formula funding. These impact research endeavors as
well as the community. The third principal is recapturing the funds removed by the five-percent
budget reduction levied by the Legislative Appropriations Request process. Fourth is an increase
in capital funds for facilities expansion and improvements. There is a need for expanded and
better infrastructure in order to keep up with the growing campus and student population. The
fifth and last principal legislative priority is increased formula funding and delaying adoption of
the Coordinating Board’s recommended formula changes. Increased base funding is needed in
order to support growth.
Becoming the state’s third top-tier research university by fiscal year 2006 and fiscal year
2007 will remain the University of Houston’s highest institutional priority. Over the past several
years, much progress has been made in accomplishing this goal. First, the University of Houston
is becoming an institution of choice for more students. UH serves more students than any other
institution in the state other than UT-Austin and Texas A&M. UH enrollment for the fall 2003
semester topped 35,000 students and was the highest in the institution’s history. The University
of Houston also graduated a record 6,273 students, almost 900 more than were graduated five
years earlier. This trend of continued growth is a direct result of new recruitment policies,
improved retention programs, expanded course availability, and better financial aid packages.
Second, growth in research funding has been tremendous. Research awards for fiscal year 2003
totaled $89 million (a 60 percent increase from fiscal year 1999), while federal awards—the
most sought after nationally—were $46 million (up 125% from fiscal year 1999).
The System is continuing the implementation and upgrading of an integrated student
information system that was purchased from PeopleSoft. The implementation of this system,
along with its integration with previously installed financial and human resources applications,
will increase the availability of accurate and timely management information. Over time, the
software will provide increased web-based services to students, faculty, and staff.
Recovery from the devastation that resulted from Tropical Storm Allison is still
underway. Restoration of damaged resource materials for the University of Houston Law School
Library is the last major project still in progress. The damage done to the books and documents
was extensive and extremely costly. Restoration of the Law Library is expected to continue, as
funds permit, over the next few years. The System has been fortunate that approximately 75
percent of the overall financial loss was covered by insurance proceeds and funds provided by
the Federal Emergency Management Agency (FEMA).
The System is not aware of any known facts or decisions that are expected to have a
significant effect on the financial position or results of operations during the 2005 fiscal year.
Although it is not possible to predict ultimate results, management believes the University of
Houston System’s financial condition and position are strong. The System’s administrative and
management teams realize that universities must be good stewards of the dollars with which they
are entrusted. The University of Houston System is committed to this principle. Accomplishing
the System’s goals and mission is predicated on the effective management of resources, which
the University of Houston System strives to achieve.
UNIVERSITY OF HOUSTON
SYSTEM
UNAUDITED COMBINED ANNUAL
FINANCIAL REPORT
FOR THE YEAR ENDED AUGUST 31, 2004
UNIVERSITY OF HOUSTON SYSTEM
TABLE OF CONTENTS
MISCELLANEOUS DATA
SECTION
Letter Of Transmittal ................................................................I
Organizational Data .................................................................II
Statement Of Procedure Regarding Annual Financial Report ...........................III
PRIMARY STATEMENTS
Combined Balance Sheet / Statement Of Net Assets - Proprietary Funds ..............1
Combined Statement Of Revenues, Expenses, And Changes In Net Assets - Proprietary
Funds .............................................................................2
Combined Matrix Of Operating Expenses Reported By Function - Proprietary Funds ....3
Combined Statement Of Cash Flows – Proprietary Funds ..............................4
Notes To The Financial Statements .................................................5
SUPPORTING STATEMENTS
SCHEDULE
1-A
Combined Schedule Of Expenditures Of Federal Awards ...............................6
1-B
Combined Schedule Of State Grant Pass – Throughs From/To State Agencies ...........7
2-A
Combined Miscellaneous Bond Information ...........................................8
2-B
Combined Changes In Bonded Indebtedness ...........................................9
2-C
Combined Debt Service Requirements ...............................................10
2-D
Combined Analysis Of Funds Available For Debt Service ............................11
2-E
Combined Defeased Bonds Outstanding ..............................................12
2-F
Combined Early Extinguishment And Refunding ......................................13
3
Combined Reconciliation Of Cash In State Treasury ................................14
UNIVERSITY OF HOUSTON SYSTEM
ORGANIZATIONAL DATA
AUGUST 31, 2004
BOARD OF REGENTS
Morrie K. Abramson, Houston
Morgan Dunn O’Connor, Victoria
Thad “Bo” Smith, Sugar Land
Michael J. Cemo, Houston
Raul A. Gonzalez, Austin
Leroy L. Hermes, Houston
Dennis D. Golden, O.D., Carthage
Lynden B. Rose, Houston
Calvin W. Stephens, Dallas
Term
Term
Term
Term
Term
Term
Term
Term
Term
Expires
Expires
Expires
Expires
Expires
Expires
Expires
Expires
Expires
August
August
August
August
August
August
August
August
August
31,
31,
31,
31,
31,
31,
31,
31,
31,
2005
2005
2005
2007
2007
2007
2009
2009
2009
OFFICERS OF THE BOARD (FISCAL YEAR 2004)
Thad “Bo” Smith
Morgan Dunn O’Connor
Michael J. Cemo
Chair
Vice Chair
Secretary
OFFICERS OF THE BOARD (FISCAL YEAR 2005)
Morgan Dunn O’Connor
Leroy L. Hermes
Raul A. Gonzalez
Chair
Vice Chair
Secretary
ADMINISTRATIVE OFFICERS
Jay Gogue
Jerald W. Strickland
John M. Rudley
Elwyn C. Lee
Grover S. Campbell
Arthur C. Vailas
Spencer T. Yantis
Dona G. Hamilton
Arthur K. Smith
William A. Staples
Max Castillo
Karen S. Haynes
Chancellor
Interim Senior Vice Chancellor for
Academic Affairs
Vice Chancellor for Administration
and Finance
Vice Chancellor for Student Affairs
Vice Chancellor for Governmental
Relations
Vice Chancellor for Research and
Intellectual Property Management
Interim Vice Chancellor for
University Advancement
Vice President for Legal Affairs
and General Counsel
President - University of Houston
President – Clear Lake
President - Downtown
President - Victoria
II - 1
UNIVERSITY OF HOUSTON SYSTEM
FINANCIAL STATEMENTS
(WITH DETAILED SUPPORTIVE SCHEDULES)
STATEMENT OF PROCEDURE REGARDING
ANNUAL FINANCIAL REPORT
Present herein are the combined financial statements with detailed
supportive schedules for the University of Houston System for the
fiscal year ended August 31, 2004. These statements and detailed
supportive schedules are in compliance with the guidelines in
Reporting Requirements for Annual Financial Reports of State Agencies
and Universities, published by the Texas Comptroller of Public
Accounts. Additionally, this report has been prepared in accordance
with the requirements contained in Governmental Accounting Standards
Board Statement No. 34, Basic Financial Statements - and Management's
Discussion and Analysis - for State and Local Governments.
The State Auditor has not audited the accompanying annual financial
statements and, therefore, an opinion has not been nor will be
expressed on the financial statements and related information
contained in this report.
The information contained in the combined
financial statements of the University of Houston System, and its
related components, is part of and included in the State of Texas
Comprehensive Annual Financial Report. The Annual Financial Report of
the University of Houston System is reviewed by the State Auditor as
part of the audit of the State of Texas Comprehensive Annual Financial
Report, upon which an opinion is expressed.
III - 1
Unaudited
University of Houston System
Combined Statement of Net Assets
August 31, 2004
Total 2004
Assets
Current Assets
Cash and Cash Equivalent
Cash on Hand
Cash in Bank
Cash in Transit/Reimb Due From Treasury
Cash in State Treasury
Cash Equivalents
Short-term Investments
Restricted:
Cash and Cash Equivalent
Cash on Hand
Cash in Bank
Cash Equivalents
Loans and Contracts
Legislative Appropriations
Receivables From:
Federal Receivables
Interest and Dividends
Accounts Receivable
Gifts
Other Receivables
Due From Agencies
Consumable Inventories
Merchandise Inventories
Deferred Charges
$
137,255.00
(59,424,545.20)
21,668,433.31
15,030,110.25
160,329,140.80
93,923,474.04
1,000.00
17,332,651.99
Total Current Assets
Non-Current Assets
Restricted:
Cash and Cash Equivalent
Cash in Bank
Cash Equivalents
Receivables
Loans and Contracts
Investments
Capital Assets
Non-Depreciable
Land and Land Improvements
Construction in Progress
Other Capital Assets
Depreciable
Building and Building Improvements
Less Accumulated Depreciation
Infrastructure
Less Accumulated Depreciation
Facilities and Other Improvements
Less Accumulated Depreciation
Furniture and Equipment
Less Accumulated Depreciation
Vehicles, Boats and Aircraft
Less Accumulated Depreciation
1-1
Total 2003
$
147,995.00
(11,959,113.34)
9,782,988.93
23,990,891.75
129,298,583.37
111,074,130.38
6,555,214.64
52,264,306.26
1,300.00
(3,421,704.71)
441,898.51
5,441,445.65
44,886,090.48
9,108,779.07
1,586,145.19
8,843,275.31
15,570,187.14
18,269,987.66
524,104.70
555,516.21
2,405,297.69
20,739,577.88
10,689,137.12
2,258,669.87
16,971,832.22
21,168,149.57
10,776,548.16
1,158,700.58
437,102.52
2,254,550.18
18,916,845.28
385,419,911.94
394,316,041.52
27,553,994.10
601.15
564,922.10
11,497,274.98
475,893,666.54
7,113,594.23
601.15
115,969.53
11,637,104.02
472,823,796.74
60,546,519.41
111,732,679.50
88,945,864.22
60,431,773.57
112,618,512.42
82,835,752.80
566,270,145.49
(388,317,927.71)
42,757,738.54
(33,670,528.18)
40,443,839.96
(31,623,310.34)
151,081,200.61
(113,804,243.34)
2,978,190.55
(2,241,426.71)
591,482,979.90
(426,769,620.31)
19,911,789.98
(15,268,806.89)
31,762,917.96
(22,408,440.56)
151,404,961.94
(110,901,896.09)
3,078,476.59
(2,322,486.97)
Unaudited
University of Houston System
Combined Statement of Net Assets
August 31, 2004
Total 2004
Other Capital Assets
Less Accumulated Depreciation
Total 2003
6,818,521.18
(3,607,895.85)
Total Noncurrent Assets
4,267,898.55
(3,339,687.49)
1,013,819,826.20
968,475,191.07
1,399,239,738.14
1,362,791,232.59
32,893,103.54
4,451,246.32
32,275,385.26
3,403,961.66
100,404,298.92
14,745,729.44
7,404,447.48
5,178,463.96
17,263,902.66
3,829,630.06
34,871,689.56
3,384,433.11
29,265.19
73,192,439.55
14,124,302.51
6,342,560.91
4,409,756.23
Total Current Liabilities
200,756,636.58
157,447,979.78
Noncurrent Liabilities
Revenue Bonds Payable
Employees' Compensable Leave
Other NonCurrent Liabilities
283,537,854.44
8,782,982.02
271,843,060.22
7,271,755.66
274,020.47
Total Noncurrent Liabilities
292,320,836.46
279,388,836.35
493,077,473.04
436,836,816.13
274,242,674.37
303,025,724.42
1,696.20
19,180,098.10
1,621.41
21,001,427.97
326,888,348.19
67,600,109.87
218,249,338.37
309,122,974.40
84,671,635.04
208,131,033.22
Total Assets
Liabilities
Current Liabilities
Payables
Accounts Payable
Federal Payable
Payroll Payable
Other Payable
Due to Other Agencies
Deferred Revenues
Revenue Bonds Payable
Employees' Compensable Leave
Funds Held for Others
Total Liabilities
Net Assets
Invested in Capital Assets, Net of Related Debt
Restricted for:
Debt Retirement
Capital Projects
Funds Held as Permanent Investments:
Non-Expendable
Endowment Funds
Other Restricted
Unrestricted
$
Total Net Assets
1-2
906,162,265.10
$
925,954,416.46
Unaudited
University of Houston System
Combined Statement of Revenues, Expenses and Changes in Net Assets
For The Year Ended August 31, 2004
Total 2004
Operating Revenues
Sales of Goods and Services (PR-Chgs for Services)
Tuition and Fees
Discounts and Allowances
Auxiliary Enterprise
Other Sales of Goods and Services
Federal Revenue-Operating (PR-OP Grants/Contributions)
Federal Pass Through Revenue (PR-OP Grants/Contributions)
State Grant Revenue (PR-OP Grants/Contributions)
State Grant Pass Through Revenue (PR-OP Grants/Contributions)
Other Grants and Contracts-Operating (PR-OP Grants/Contributions)
Other Operating Revenues (PR-Chgs for Services)
$
252,500,680.39
(39,597,407.48)
37,896,685.08
17,198,961.58
80,085,995.35
8,291,935.98
7,875,194.53
11,161,796.49
18,460,738.09
224,151.64
Total 2003
$
215,665,102.53
(44,211,760.99)
35,812,188.78
7,250,596.17
71,175,602.10
33,831,206.07
8,873,664.36
11,758,026.78
19,088,264.32
Total Operating Revenues
394,098,731.65
359,242,890.12
Operating Expenses
Instruction
Research
Public Service
Academic Support
Student Services
Institutional Support
Operation & Maintenance of Plant
Scholarships & Fellowships
Auxiliary Enterprises
Depreciation & Amortization
209,735,532.39
74,469,317.31
28,084,104.04
84,841,827.03
28,291,877.00
60,432,713.42
40,690,906.07
45,992,158.24
59,457,342.34
26,035,038.49
216,219,919.48
73,967,640.17
26,236,309.93
71,343,035.52
26,152,977.71
49,117,179.06
43,147,871.91
43,010,258.64
53,667,396.03
23,806,562.66
Total Operating Expenses
658,030,816.33
626,669,151.11
(263,932,084.68)
(267,426,260.99)
Non-Operating Revenues (Expenses)
Legislative Revenue (GR)
Gifts (PR-OP Grants/Contributions)
Interest and Investment Income (PR-Chgs for Services)
Interest Expense and Fiscal Charges
Gain (Loss) on Sale of Capital Assets (GR)
Net Increase (Decrease) in Fair Value of Investments (PR-OP Grants/Contributions)
Other Nonoperating Revenues (Expenses) (PR-Chgs for Services)
227,230,706.44
27,996,504.06
36,781,486.25
(12,652,440.15)
(8,494.14)
1,052,824.28
(76,956,482.22)
226,099,366.07
36,114,248.07
25,140,704.08
(12,633,711.91)
(6,265.00)
11,282,813.87
(48,416,481.07)
Total Nonoperating Revenues (Expenses)
203,444,104.52
237,580,674.11
(60,487,980.16)
(29,845,586.88)
Operating Income (Loss)
Income (Loss) before Other Revenues, Expenses, Gains, Losses and Transfers
2-1
Unaudited
University of Houston System
Combined Statement of Revenues, Expenses and Changes in Net Assets
For The Year Ended August 31, 2004
Other Revenues, Expenses, Gains, Losses and Transfers
Capital Appropriation (HEAF)
Additions to Permanent and Term Endowments
Transfers-In
Transfers-Out
Legislative Transfers-In
Legislative Transfers-Out
Legislative Appropriations Lapsed
Total 2004
Total 2003
36,952,989.00
5,046,110.92
36,952,989.00
5,893,216.97
7,472,763.00
(426,376.01)
495,288.00
(495,288.00)
(876,895.11)
Total Other Rev, Exp, Gains, Losses and Transfers
734,914.43
(314,369.73)
40,695,828.80
50,739,513.67
(19,792,151.36)
20,893,926.79
Net Assets Beginning
Restatements
925,954,416.46
905,060,489.67
Net Assets Beginning, as Restated
925,954,416.46
905,060,489.67
Change In Net Assets
Net Assets, Ending
$
2-2
906,162,265.10
$
925,954,416.46
Unaudited
University of Houston System
Matrix of Operating Expenses Reported by Function
Combined For The Year Ended August 31, 2004
Operating Expenses
Instruction
Cost of Goods Sold
Salaries and Wages
Payroll Related Costs
Professional Fees and Services
Federal Pass-Through Expenses
State Pass-Through Expenses
Travel
Materials and Supplies
Communication and Utilities
Repairs and Maintenance
Rentals and Leases
Printing and Reproduction
Depreciation and Amortization
Bad Debt Expense
Interest
Scholarships
Claims and Losses
Other Operating Expenses
$
Total Operating Expenses
$ 209,735,532.39
Public
Service
Research
$
156,171,004.04
33,525,926.58
451,893.33
52,345.14
$
1,770,520.96
57,200.87
2,283,493.30
338,879.54
710,064.21
686,280.12
39,105,357.18
6,715,510.64
2,902.69
2,646,109.24
158,515.00
2,576,926.37
23,544.53
957,855.36
550,717.25
1,679,351.37
438,414.96
115,324.24
2,398,909.73
837.00
11,172,853.33
30,328.47
915,077.68
1,317.00
18,667,389.57
$
74,469,317.31
3-1
$
752,504.95
12,281,282.74
2,813,007.30
523,305.88
244,201.95
Academic
Support
$
4,595.88
51,616,041.87
10,405,034.75
458,036.92
Student
Services
$
16,021,345.69
3,941,767.05
83,122.73
467,979.56
80,145.66
1,472,075.98
204,408.24
3,325,483.45
656,356.87
1,381,492.99
100,742.60
3,256,623.75
1,705,130.70
1,083,266.58
557,538.34
222,735.07
21,464.28
1,190,948.87
214,094.07
387,221.83
772,671.61
60,822.35
44,018.05
13.59
5,158,497.47
20,062.75
508,011.73
1,548,568.48
245,185.22
1,091.10
3,641,661.00
28,084,104.04
13,745,248.17
$
84,841,827.03
$
28,291,877.00
Unaudited
University of Houston System
Matrix of Operating Expenses Reported by Function
Combined For The Year Ended August 31, 2004
Operation and
Maintenance of
Plant
Institutional
Support
$
$
Scholarships
and
Fellowships
$
$
38,140,429.47
11,894,445.09
1,434,467.06
12,501,573.11
3,998,558.49
712,007.31
2,778,444.47
113,108.47
5,731.83
624,772.93
555,037.71
26,214.44
1,460,312.39
2,305,535.76
531,174.04
807,702.39
43,805.13
364,172.54
12,493,441.97
1,567,263.61
696,672.06
37,108.71
147,707.91
13,696.15
129,710.14
107.55
11,197.31
41,149.72
Depreciation
and
Amortization
Auxiliary
Enterprises
682,657.15
22,994,433.24
4,876,580.81
319,079.66
$
$
2,534,350.01
582,176.14
6,490,080.10
884,717.32
683,039.63
624,955.34
26,035,038.49
331,756.73
921,559.15
38,539.50
1,274,194.69
711,345.00
$
60,432,713.42
$
25,710.33
7,443.25
41,640,479.52
8,250,592.81
478,608.99
40,690,906.07
$
45,992,158.24
147,079.49
1,944,194.80
300,000.00
16,393,998.65
$
59,457,342.34
3-2
$
Total
2004
26,035,038.49
1,439,757.98
351,609,911.81
78,283,939.18
3,990,547.41
3,567,429.26
158,515.00
9,700,555.71
1,269,357.21
29,734,541.86
7,770,854.04
9,107,470.48
4,622,178.06
26,035,038.49
331,756.73
2,876,898.51
47,734,416.23
1,577,453.38
78,220,194.99
$ 658,030,816.33
Total
2003
$
1,795,860.16
333,792,260.29
80,033,520.75
5,254,531.71
3,457,364.68
17,025.00
8,631,531.94
1,259,707.53
27,876,889.19
6,304,668.48
8,727,240.36
4,922,521.01
23,806,562.66
41,000.70
744,306.75
43,676,033.73
1,726,735.93
74,601,390.24
$ 626,669,151.11
Unaudited
University of Houston System
Combined Statement of Cash Flows
For The Year Ended August 31, 2004
Total 2004
Cash Flows from Operating Activities
Receipts from Customers
Proceeds from Tuition & Fees
Proceeds from Research Grants & Contracts
Proceeds from Loan Programs
Proceeds from Auxiliaries
Proceeds from Other Revenues
Payments to Suppliers for Goods and Services
Payments to Employees for Salaries
Payments to Employees for Benefits
Payments for Loans Provided
Payments for Other Expenses
$
Net Cash Provided (Used) by Operating Activities
Cash Flows from Noncapital Financing Activities
Proceeds from State Appropriations
Proceeds from Gifts
Proceeds from Endowments
Proceeds from Other Revenues
Proceeds of Transfers from Other Funds
Proceeds from Other Financing
Payments for Transfers to Other Funds
Payments for Other Uses
21,767,354.39
233,106,367.30
28,333,383.45
4,148,792.94
40,955,722.37
97,668,330.53
(72,168,986.37)
(354,410,184.38)
(78,431,599.67)
(5,130,188.38)
(113,137,881.46)
Total 2003
$
51,573,310.30
200,873,604.52
29,904,445.15
15,050,009.50
41,420,611.08
116,042,576.18
(87,972,113.92)
(325,806,524.95)
(77,943,719.89)
(16,576,868.15)
(132,953,631.72)
(197,298,889.28)
(186,388,301.90)
197,875,954.67
31,914,438.11
6,177,611.31
225,759,643.28
17,653,347.00
6,904,536.97
138,499,463.90
(48,446,098.03)
9,902,672.99
(8,641,092.15)
(179,425,127.31)
17,238,515.05
(3,531,395.88)
Net Cash Provided by Noncapital Financing Activities
249,675,123.26
162,207,346.65
Cash Flows from Capital and Related Financing Activities
Proceeds from the Sale of Capital Assets
Proceeds from Debt Issuance
Proceeds from Other Financing Activities
Proceeds from Capital Contributions
Payments for Additions to Capital Assets
Payments of Principal on Debt
Payments of Interest on Debt Issuance
Payments of Other Costs on Debt Issuance
3,260.00
(8,066.11)
1,105,757.00
36,952,989.00
(41,281,742.36)
1,552,833.31
(3,038,749.56)
(22,118,524.55)
2,275.00
121,536,999.02
(9,826,281.40)
36,952,989.00
(87,270,566.41)
(12,428,109.54)
(3,265,078.73)
Net Cash Provided by Capital and Related Financing Activities
(26,832,243.27)
45,702,226.94
Cash Flows from Investing Activities
Proceeds from Sales of Investments
Proceeds from Interest Income
Proceeds from Investment Income
314,508.47
1,373,107.33
176,652.41
1,698,284.41
8,832.62
Net Cash Provided (Used) by Investing Activities
1,687,615.80
1,883,769.44
4-1
Unaudited
University of Houston System
Combined Statement of Cash Flows
For The Year Ended August 31, 2004
Total 2004
Total 2003
Net Increase (Decrease) in Cash and Cash Equivalents
27,231,606.51
23,405,041.13
Cash and Cash Equivalents, September 1, 2003
Restatements to Beginning Cash and Cash Equivalents
155,397,034.89
131,991,993.76
Cash and Cash Equivalents, August 31, 2004
182,628,641.40
155,397,034.89
(263,932,084.68)
(267,426,260.99)
26,035,038.49
331,756.73
23,806,562.66
41,000.70
297,365.93
(269,161.20)
(1,779,308.74)
(981,395.44)
634,595.88
14,801,828.11
27,870,566.99
2,813,566.62
(3,203,698.54)
82,040.57
25,347,337.04
1,918,331.90
(1,995,812.89)
(1,567,859.35)
2,673,316.44
12,900,651.14
11,789,141.26
1,382,878.95
1,697,236.24
3,045,175.00
66,633,195.40
81,037,959.09
Reconciliation of Operating Income (Loss) to Net Cash
Provided (Used) by Operating Activities
Operating Income (Loss)
Adjustments to Reconcile Operating Income to Net Cash
Provided (Used) by Operating Activities
Amortization and Depreciation
Bad Debt Expense
Changes in Assets and Liabilities:
(Increase) Decrease in Receivables
(Increase) Decrease in Inventories
(Increase) Decrease in Prepaid Expenses
(Increase) Decrease in Loans and Contracts
(Increase) Decrease in Other Assets
Increase (Decrease) in Payables
Increase (Decrease) in Deferred Income
Increase (Decrease) in Compensated Absence Liability
Increase (Decrease) in Benefits Payable
Increase (Decrease) in Other Liabilities
Total Adjustments
Net Cash Provided (Used) by Operating Activities
$
Non-Cash Transactions
Capitalization of Revenue Bond Interest Paid
Disposal of Capital Assets
Library Books Withdrawal
$
(197,298,889.28)
1,388,700.69
$
(186,388,301.90)
$
1,974,386.25
8,288.98
(471,818.20)
$
1,510,857.03
9,879.00
Non-Cash Transactions
$
4-2
1,398,579.69
UNAUDITED
UNIVERSITY OF HOUSTON SYSTEM
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED AUGUST 31, 2004
NOTE 1:
Summary of Significant Accounting Policies
Entity
The University of Houston System (the 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' Reporting Requirements for State Agencies.
The University of Houston System serves the state as the primary provider of educational and
cultural opportunities, skilled employers and leaders, technical knowledge, and innovative
research to the Houston metropolitan area and the Gulf Coast region. Houston and the upper
Gulf Coast region represent approximately one fourth of the state’s population and
economy.
The University of Houston System includes within this report all components as determined
by an analysis of their relationship to the University of Houston as listed below.
Due to the statewide requirements embedded in 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 report to comply with all the requirements in this
statement. 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.
The accompanying financial statements and related information have been prepared in
conformity with the instructions contained in the State Comptroller’s manual, Reporting
Requirements for Annual Financial Reports of State Agencies and Universities. The
instructions and the accompanying report are designed to assist the Texas Comptroller of
Public Accounts in compiling and preparing a Comprehensive Annual Financial Report for
the State of Texas. Since the University’s annual financial report is not subject to a
separate financial audit, certain information, such as a Management Discussion and
Analysis and a complete set of Government-Wide Financial Statements, are not included in
the accompanying report. The University’s financial statements are considered to be
materially accurate in all respects.
Blended Component Units
No component units have been identified which should have been blended into an
appropriated fund.
Discretely Presented Component Units
These component units are legally separate from the state, but are financially
accountable to the state, or have a relationship with the state such that exclusion
would cause the financial statements to be misleading or incomplete. The component
unit columns of the financial statements include the financial data of these
entities.
No component units have been identified which should have been discretely presented
in the financial statements.
Fund Structure
The accompanying financial statements are presented on the basis of funds, each
of which is considered a separate accounting entity.
5 - 1
UNAUDITED
Governmental Fund Types & Government-wide Adjustment Fund Types
General Fund
The General Fund is the principal operating fund used to account for most of
the state's general activities. It accounts for all financial resources
except those accounted for in other funds.
Special Revenue Funds
Special Revenue funds are used to account for the proceeds of specific
revenue sources (other than for private-purpose trusts or for major capital
projects) that are legally restricted to use for specified purposes.
Debt Service Funds
Debt Service funds are used to account for the accumulation of resources for,
and the payment of, general long-term debt principal and interest.
Capital Project Funds
Capital Project funds are used to account for financial resources used for
the acquisition, repair, renovation or construction of major capital
facilities (other than those financed by proprietary or similar trust funds).
Permanent Funds
Permanent funds are used to account for resources that are legally restricted
to the extent that only earnings, and not principal, may be used for purposes
that support the state's programs.
Capital Asset Adjustment Fund Type
Capital Asset Adjustment fund type will be used to convert governmental fund
type capital assets from modified accrual to full accrual.
Long-Term Liabilities Adjustment Fund Type
Long-Term Liabilities Adjustment fund type will be used to
governmental fund type debt from modified accrual to full accrual.
convert
Other Adjustments Fund Type
Other Adjustments fund type will be used to convert all other governmental
fund type activity from modified accrual to full accrual.
Proprietary Fund Types
Enterprise Funds
Enterprise funds are used to account for any activity for which a fee is
charged to external users for goods or services. Activities must be reported
as enterprise funds if any one of the following criteria is met.
1. The activity is financed with debt that is secured solely by a pledge of
the net revenues from fees and charges of the activity.
2. Laws or regulations require that the activity's costs of providing services
including capital costs (such as depreciation or debt service), be recovered
with fees and charges.
3. The pricing policies of the activity establish fees and charges designed
to recover its costs, including capital costs.
Internal Service Funds
Internal Service funds are used to account for the financing of goods and
services provided by one department or agency to other departments or agencies
of a governmental unit, or to other governmental units, within the state, on a
cost reimbursement basis.
5 - 2
UNAUDITED
Fiduciary Fund Types
Fiduciary funds account for assets held by the state in a trustee capacity or as
an agent for individuals, private organizations, other governmental units,
and/or other funds. When assets are held under the terms of a formal trust
agreement, either a pension trust fund, or a private purpose trust fund is used.
Pension Trust Funds
Pension trust funds are used to account for resources held in trust for the
member and beneficiaries of defined benefit pension plans. A separate pension
trust fund is used for each separate pension plan. Separate pension trust funds
also may be established to account for supplemental pension benefits.
External Investment Trust Funds
External investment trust funds are used to account for the state's external
portion of investment pools reported by the sponsoring government.
Agency Funds
Agency funds are used to account for assets the government holds on behalf of
others in a purely custodial capacity. Agency funds involve only the receipt,
temporary investment, and remittance of fiduciary resources to individuals,
private organizations, or other governments.
Private-Purpose Trust Funds
Private-purpose trust funds are used to account for all other trust
arrangements whose principal and interest benefit individuals, private
organizations, or other governments.
Component Units
The fund types of individual discrete component units are available from the
component units' separately issued financial statements. Additional information
about component units can be found in Note 17.
Governmental Component Units are used to account for discretely
component units that follow governmental fund accounting principles.
presented
Proprietary Component Units are used to account for the discretely presented
component units which follow proprietary fund measurement focus and accounting
principles.
Business-Type Activities
The operations of the System and its component universities are considered to
be a Business-Type Activity. The system charges fees to external users for
goods and services. Consequently the accompanying financial statements are
presented using the proprietary fund type structure.
Basis of Accounting
The basis of accounting determines when revenues and expenditures or expenses
are recognized in the accounts reported in the financial statements. The
accounting and financial reporting treatment applied to a fund is determined by
its measurement focus.
Governmental fund types that build the fund financial statements are accounted
for using the modified accrual basis of accounting. Under the modified accrual
basis, revenues are recognized in the period in which they become both
measurable and available to finance operations of the fiscal year or liquidate
liabilities existing at fiscal year end. The State of Texas considers
receivables collected within sixty days after year-end to be available and
recognizes them as revenues of the current year for Fund Financial Statements
prepared on the modified accrual basis. Expenditures and other uses of financial
resources are recognized when the related liability is incurred.
Governmental adjustment fund types that will build the government-wide financial
statements are accounted for using the full accrual basis of accounting. This
includes capital assets, accumulated depreciation, unpaid Employee Compensable
leave, the unmatured debt service (principal and interest) on general long-term
liabilities, long-term capital leases, long-term claims and judgments and full
5 - 3
UNAUDITED
accrual revenues and expenses. The activity will be recognized in these fund
types.
Proprietary funds, pension trust funds, external investment trust funds and
private-purpose trust funds are accounted for on the accrual basis of
accounting. Under the accrual basis of accounting, revenues are recognized when
earned and expenses are recognized at the time liabilities are incurred.
Proprietary funds distinguish operating from non-operating items. Operating
revenues and expenses result from providing services or producing and delivering
goods in connection with the proprietary funds’ principal ongoing operations.
Operating expenses for the enterprise and internal services funds include the
cost of sales and services, administrative expenses, and depreciation on capital
assets.
Budget and Budgetary Accounting
The budget is prepared biennially and represents appropriations authorized by
the legislature and approved by the Governor (the General Appropriations Act).
Additionally the System prepares an annual budget which represents anticipated
sources of revenues and authorized uses. This budget is approved by the System’s
Board of Regents.
Unencumbered appropriations are generally subject to lapse 60 days after the end
of the fiscal year for which they were appropriated.
Assets, Liabilities, and Fund Balances/Net Assets
ASSETS
Cash and Cash Equivalents
Short-term highly liquid investments with an
months or less are considered cash equivalents.
original
maturity
of
three
Securities Lending Collateral
Investments are stated at fair value in all funds except pension trust funds
in accordance with GASB Statement 31, Accounting and Financial Reporting for
Certain Investments and for External Investment Pools. For pension trust
funds, investments are required to be reported at fair value using the
accrual basis of accounting in accordance with GASB Statement 25, Financial
Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined
Contribution Plans.
Securities lent are reported as assets on the balance sheet. The costs of
securities lending transactions are reported as expenditures or expenses in
the Operating Statement. These costs are reported at gross.
Restricted Assets
Restricted assets include monies or other resources restricted by legal or
contractual requirements. These assets include proceeds of enterprise fund
general obligation and revenue bonds and revenues set aside for statutory or
contractual requirements. Assets held in reserve for guaranteed student loan
defaults are also included.
Inventories and Prepaid Items
Inventories include both merchandise inventories on hand for sale and
consumable inventories. Inventories are valued at cost, generally utilizing
the last-in, first-out method. The consumption method of accounting is used
to account for inventories and prepaid items that appear in the governmental
and proprietary fund types. The cost of these items is expensed when the
items are consumed.
Capital Assets
Assets with an initial, individual cost of more than $5,000 and an estimated
useful life in excess of one year are capitalized. These assets are
capitalized at cost or, if purchased, at appraised fair value as of the date
of acquisition. Purchases of assets by governmental funds are reported as
5 - 4
UNAUDITED
expenditures,
Depreciation
is
reported
on
all
exhaustible
assets.
Inexhaustible assets such as works of art and historical treasures are not
depreciated. Road and highway infrastructure is reported on the modified
basis. Assets are depreciated over the estimated useful life of the asset
using the straight-line method.
All capital assets acquired by proprietary funds or trust funds are reported
at cost or estimated historical cost, if actual historical cost is not
available. Donated assets are reported at fair value on the acquisition date.
Depreciation is charged to operations over the estimated useful life of each
asset, using the straight-line method.
Current Receivables - Other
Other receivables include year-end revenue accruals. This account can appear in
governmental and proprietary fund types.
Non-Current Receivables - Other
Receivable balances not expected to be collected within one year of fiscal year
end.
LIABILITIES
Accounts Payable
Accounts payable represent the liability for the value of assets or services
received at the balance sheet date for which payment is pending.
Current Payables - Other
Payables are the accrual at year-end of expenditure transactions. Payables
may be included in either the governmental or proprietary fund types.
Non-Current Payables - Other
Payable balances not expected to be paid within one year of fiscal year end.
Employees' Compensable Leave Balances
Employees' Compensable Leave 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.
Capital Lease Obligations
Capital lease obligations represent the liability for future lease payments
under capital lease contracts contingent upon the appropriation of funding by
the Legislature. Liabilities are reported separately as either current or
noncurrent in the statement of net assets.
Bonds Payable - General Obligation Bonds
The unmatured principal of general obligations bonds is accounted for in the
Long-term Liabilities column. Payables are reported separately as either
current or noncurrent in the statement of net assets.
Bonds payable are recorded at par. The bond proceeds are accounted for as an
Other Financing Source in the governmental funds when received, and
expenditures for payment of principal and interest are recorded in debt
service funds when paid. These amounts are adjusted in the long-term
liabilities column.
Bonds Payable - Revenue Bonds
Revenue bonds are generally accounted for in the proprietary funds. The bonds
payable are reported at par, less unamortized discount or plus unamortized
premium. Interest expense is reported on the accrual basis, with amortization
of discount or premium. Payables are reported separately as either current or
noncurrent in the Statement of Net Assets.
5 - 5
UNAUDITED
FUND BALANCE/NET ASSETS
The difference between fund assets and liabilities is Net Assets on the
government-wide, proprietary, and fiduciary fund statements, and the Fund
Balance is the difference between fund assets and liabilities on the
governmental fund statements.
Reservations of Fund Balance
Fund balances for governmental funds are classified as either reserved or
unreserved in the fund financial statements. Reservations are legally
restricted to a specific future use and are not available for expenditure.
Reserved for Encumbrances
This represents commitments of the value of contracts awarded or assets ordered
prior to year-end but not received as of that date. Encumbrances are not
included with expenditures or liabilities. They represent current resources
designated for specific expenditures in subsequent operating periods.
Unreserved/Undesignated:
This represents the unappropriated balance at year-end.
Invested In Capital Assets, Net Of Related Debt
Invested in capital assets, net of related debt consists of capital assets,
net of accumulated depreciation and reduced by outstanding balances for
bonds, notes, and other debt that are attributed 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 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 the two preceding categories. Unrestricted net assets often
have constraints on resources, which are imposed by management, but can be
removed or modified.
INTERFUND ACTIVITIES AND BALANCES
The University has the following types of transactions between funds:
1. Transfers - Legally required transfers that are reported when incurred as
Transfers In by the recipient fund and as Transfers Out by the disbursing
fund.
2. Reimbursements - Reimbursements are repayments from funds responsible for
expenditures or expenses to funds that made the actual payment.
Reimbursements of expenditures made by one fund for another that are
recorded as expenditures in the reimbursing fund and as a reduction of
expenditures in the reimbursed fund. Reimbursements are not displayed in
the financial statements.
3. Interfund Receivables and Payables - Interfund loans are reported as
interfund receivables and payables. If repayment is due during the
current year or soon thereafter it is classified as Current, repayment
for two (or more) years is classified as Non-Current.
4. Interfund Sales and Purchases - Charges or collections for services
rendered by one fund to another that are recorded as revenues of the
recipient fund and expenditures or expenses of the disbursing fund. The
composition of the University’s interfund activities and balances are
presented in Note 7.
5 - 6
UNAUDITED
NOTE 2: Capital Assets
A summary of changes in Capital Assets for the year ended August 31, 2004, is presented in
Table 2.
Table 2 - Capital Assets
University of Houston System
Balance
9/1/03
Business-type activities:
Non-depreciable Assets
Land and Land Improvements
Construction in Progress
Other Capital Assets
Total Non-depreciable Assets
Depreciable Assets
Buildings and Building Improvements
Infrastructure
Facilities & Other Improvements
Furniture and Equipment
Vehicle, Boats & Aircraft
Other Capital Assets
Total depreciable assets at historical costs
Less accumulated depreciation for:
Buildings and Improvements
Infrastructure
Facilities & Other Improvements
Furniture and Equipment
Vehicle, Boats & Aircraft
Other Capital Assets
Total accumulated depreciation
Depreciable assets, net
Business-type activities capital assets, net
60,431,773.57
112,618,512.42
82,835,752.80
255,886,038.79
Adjustments
Completed CIP
(16,120,338.56)
(5,892,780.94)
(22,013,119.50)
(31,430,634.91)
0.00
(31,430,634.91)
591,482,979.90
19,911,789.98
31,762,917.96
151,404,961.94
3,078,476.59
4,267,898.55
801,909,024.92
(55,467,409.53)
22,845,948.56
8,680,922.00
(30,669.89)
28,957,731.28
31,320.00
(23,939,888.86)
2,472,903.63
31,430,634.91
(426,769,620.31)
(15,268,806.89)
(22,408,440.56)
(110,901,896.09)
(2,322,486.97)
(3,339,687.49)
(581,010,938.31)
220,898,086.61
48,593,476.66
(17,678,557.16)
(7,760,215.72)
(1,494,191.82)
0.20
(7,583.60)
21,652,928.56
(2,286,960.30)
31,430,634.91
476,784,125.40
(24,300,079.80)
0.00
5 - 7
UNAUDITED
Table 2 - Capital Assets
University of Houston System
Balance
Inc-Int’agy Trans
Dec-Int’agy
Trans
Additions
Deletions
0.00
0.00
114,745.84
46,665,140.55
12,963,762.36
59,743,648.75
12,415,862.71
(12,568,025.67)
2,502,680.28
1,053,673.48
2,391,577.40
8,642,858.37
(2,391,577.40)
(8,664,232.09)
8,722,372.29
325,501.14
75,000.00
23,525,298.48
(75,000.00)
(23,698,835.16)
8,450,654.57
225,215.10
46,399.00
11,224,948.95
1,627,515.62
(311,944.32)
(6,604,517.86)
311,944.32
7,248,596.38
(33,750.00)
(6,950,212.18)
16,575,086.30
33,750.00
9,221,806.32
(14,477,028.84)
(12,787,447.68)
(696,816.28)
(1,454,654.06)
(9,749,710.78)
(189,848.38)
(260,624.76)
(25,139,101.94)
(13,914,152.99)
16,575,086.30
(14,477,028.84)
45,829,495.76
5 - 8
960,870.00
960,870.00
10,101,546.91
(1,018,148.00)
26,347.85
8/31/04
60,546,519.41
111,732,679.50
88,945,864.22
261,225,063.13
566,270,145.49
42,757,738.54
40,443,839.96
151,081,200.61
2,978,190.55
6,818,521.18
810,349,636.33
(8,960,185.42)
1,141,361.49
(388,317,927.71)
(33,670,528.18)
(31,623,310.34)
(113,804,243.34)
(2,241,426.71)
(3,607,895.85)
(573,265,332.13)
237,084,304.20
2,102,231.49
498,309,367.33
(7,697,476.83)
(270,908.44)
UNAUDITED
NOTE 3:
Deposits, Investments, & Repurchase Agreements
The University of Houston System is authorized by statute to make investments following the
prudent person rule. There were no significant violations of legal provisions during the
period.
Deposits of Cash in Bank
A. The carrying amount of $(14,537,899.11) for Cash in Bank (including restricted
assets and discretely presented component units) is presented below in Table 3.1.
B. The bank balance of the System has been classified according to the following risk
categories.
1. Category 1 - Insured or collateralized with securities held by the System or by
its agent in the name of the System.
2. Category 2 - Collateralized with securities held by the pledging financial
institution's trust department or agent in the System name.
3. Category 3 - Uncollateralized (which would include any deposits collateralized
with securities held by the pledging financial institutions, or by its trust
department or agent but not in the System’s name).
Table 3.1 – Cash Deposits
Category 1
Category 2
$1,264,129.00
Category 3
$0.00
$33,740.00
Consisting of the following:
Demand Deposits
Proprietary Funds Certificates of Deposit
Fiduciary Funds Uninvested Securities Lending
Cash Collateral
Bank
Balance
$1,297,869.00
Carrying
Amount
$(14,537,899.11)
$(14,537,899.11)
Total Deposits Carrying Amounts
$(14,537,899.11)
Investments
The fair values of investments including both short-term and long-term as of the balance
sheet date are shown below in Table 3B. Investments are categorized to give an indication
of the level of risk assumed by the System at year-end. The three categories are:
1 . C a t e g o r y 1 : Investments that are insured or registered, or for which the
securities are held by the System, or its agent in the System’s name.
2 . C a t e g o r y 2 : U n i n s u r e d and unregistered investments for which the securities
are held by the broker's or dealer's trust department or agent in the System’s name.
3 . C a t e g o r y 3 : U n i n s u r e d and unregistered investments for which the securities
are held by the broker or dealer, or by its trust department or agent, but not in the
System’s name.
5 - 9
UNAUDITED
Table 3.2 - Investments
Type of Security
Fair
Value
Category
2
1
Govt. Investments
$96,374,720.74
Corporate Stock
196,158,635.57
196,158,635.57
36,921,671.77
36,921,671.77
Corporate Obligations
$
3
$
$
96,374,720.74
Political Sub Bonds
Mortgage Backed Securities
Foreign Equity
Foreign Obligations
Commercial Paper
Miscellaneous Investments
7,754,962.00
7,754,962.00
Repurchase Agreements
Repurchase Agreements – Texas
Treasury Safekeeping Trust
$7,754,962.00
$329,455,028.08
Totals
$
0.00
$
337,209,990.08
Uncategorized Investments:
Investments held by broker-dealers under reverse repurchase agreements:
U.S. Government Securities
Investments held by broker-dealers under securities lending agreements:
Corporate Stock
Security Lending Collateral Investment Pool
Texpool
93,923,552.03
Other
138,683,598.47
Total Investments
$569,817,140.58
Consisting of the following:
Proprietary Funds Investments
$569,817,140.58
Proprietary Funds Non-Current Restricted Short Term Investments
Proprietary Funds Non-Current Restricted Investments
Total, as above
$569,817,140.58
Proprietary Funds CDs disclosed as Deposits but reported as Non-Current
Restricted as Non-Current Restricted Short-Term Investments on financial
Statement
Total Investments per Financial Statements
5 - 10
$569,817,140.58
UNAUDITED
Reverse Repurchase Agreements
The University of Houston System, by statute, is authorized to enter into reverse
repurchase agreements. A reverse repurchase agreement is a transaction in which a brokerdealer or financial institution transfers cash to the System and the System transfers
securities to the broker-dealer and promises to repay the cash plus interest in exchange
for the same or similar securities. Credit risk exposure for the System arises when a
broker-dealer does not return the securities or their value at the conclusion of the
reverse repurchase agreement. There were no significant violations of legal or contractual
provisions during the year.
Securities Lending
The University of Houston System does not participate in a security-lending program.
In securities lending transactions, the System transfers its securities to broker-dealers
and other entities for collateral - which may be cash, or securities - and simultaneously
agrees to return the collateral for cash or the same securities in the future. The System
invests the cash received as collateral and, if the returns on those investments exceed the
rebate paid to the borrowers of the securities, the securities lending transactions
generate income for the System. However, if the investment of the cash collateral does not
provide a return exceeding the rebate or if the investment incurs a loss on principal, part
of the payment to the borrower would come from the System’s resources. The borrower will
pay a loan premium or fee for the securities loan, thus generating income for the System.
Securities lending is authorized by state statutes. The System is authorized to lend its
U.S. Government and Agency securities. Collateral is either cash or U.S. Government or
Agency securities at a value of 102 percent of the value of the securities lent. The
securities lending contracts allow the System to pledge or sell collateral securities
without borrower default. At year-end, the University has no credit risk exposure to
borrowers because the amounts the System owes to borrowers exceed the amounts the
borrowers owe the System. Contracts with the lending agents require them to indemnify the
System if the borrowers fail to return the securities. The policy is to match the
maturities of the collateral investments and the securities loans. There were no
significant violations of legal or contractual provisions, any borrower or lending agent
default losses, and no recoveries of prior-period losses during the year.
Derivative Investing
The University of Houston System did not hold any collateralized mortgage obligations at
fiscal year-end. These securities are purchased to provide 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 that these securities will provide
future cash inflows on a time schedule that approximately matches the outflows associated
with the System’s liabilities. These highly marketable securities are rated AAA by the major
rating agencies.
The University of Houston System does not enter into forward-exchange contracts to manage
exposure of foreign portfolio holdings to changes in foreign currency exchange rates. A
forward exchange contract is a commitment to purchase or sell a foreign currency at a future
date at a negotiated forward rate. Risks associated with such contracts include movement in
the value of the foreign currency related to the U.S. dollar and the ability of the
counterpart to perform.
5 - 11
UNAUDITED
NOTE 4:
Short-Term Debt
The University of Houston did not hold any short-term debt resulting from anticipation
notes, lines of credit or any other similar type of loan at fiscal year-end.
NOTE 5:
Summary of Long Term Liabilities
Changes In Long-Term Liabilities
During the year ended August
occurred in liabilities.
31,
2004,
the
following
changes,
presented
in
Table
5,
Table 5 – Long Term Liabilities
Business-Type
Activities
Revenue Bonds
Payable
Compensable Leave
Total BusinessType Activities
Balance
9-1-03
Additions
$285,967,362.73
$41,490,000.00
13,614,316.57
2,573,112.93
$299,581,679.30
$44,063,112.93
Reductions
$29,173,778.85
$29,173,778.85
Balance
8-31-04
Amounts Due
Within One
Year
$298,283,583.88
$14,745,729.44
16,187,429.50
7,404,447.48
$314,471,013.38
$22,150,176.92
Notes and Loans Payable
The System reported no notes or loans payable at the end of the year ended August 31,
2004.
Claims and Judgments
At August 31, 2004, various lawsuits and claims involving the System and/or its components
were pending. While the ultimate liability, if any, with respect to litigation and other
claims asserted against the System cannot be reasonably estimated at this time, such
liability, to the extent not provided for by insurance or otherwise, is not expected to have
a material effect on System accounts.
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.
Expenditures for accumulated annual leave balances are recognized in the period paid or
taken in governmental fund types. For these fund types, the liability for unpaid benefits
is recorded in the Statement of Net Assets. An expense and liability for proprietary fund
types are recorded in the proprietary funds as the benefits accrue to employees. No
liability is recorded for non-vesting accumulating rights to receive sick pay benefits.
Full-time state employees earn annual leave from seven to fourteen hours per month depending on
the respective employees' years of state employment. The state's policy is that an employee may
carry his accrued leave forward from one fiscal year to another fiscal year with a maximum
number of hours up to 520 for those employees with 35 or more years of state service. Accrued
leave in excess of the normal maximum was converted to sick leave at the conclusion of fiscal
year 2003. Employees with at least six months of state service who terminate their employment
are entitled to payment for all accumulated annual leave up to the maximum allowed.
Lump sum payments made to employees, who separated from state service during the 2004 fiscal
year, for accrued vacation and compensatory leave, totaled $1,104,694.20.
5 - 12
UNAUDITED
NOTE 6:
Capital Leases
The System may enter into long-term leases for financing the purchase of certain fixed
assets. Such leases are classified as capital leases for accounting purposes and,
therefore, are recorded at the present value of the future minimum lease payments at the
inception of the lease. There were no outstanding capital lease payments payable at August
31, 2004.
NOTE 7:
Operating Lease Obligations
Future minimum lease rental payments under non-cancelable operating leases
initial term in excess of one year, as of August 31, 2004, are shown in Table 7.
having
an
Table 7 – Operating Leases
NOTE 8:
Year Ended August 31,
2005
2006
2007
2008
2009
2010 – 2014
2015 - 2019
$ 2,901,071.58
2,175,803.68
1,450,535.80
725,267.89
362,633.95
181,316.97
90,658.49
Total Minimum Future Lease Rental Payments
$ 7,887,288.36
Interfund Balances / Activities
As explained in Note 1, under Interfund Transactions and Balances, there are numerous
transactions between funds and agencies. At year-end amounts to be received or paid are
reported as:
1. Interfund Receivables or Interfund Payables
2. Due From Other Agencies or Due To Other Agencies
3. Due From Other Funds or Due To Other Funds
4. Transfers In or Transfers Out
5. Legislative
required)
Transfers
In
or
Legislative
Transfers
Out
(Note
8
presentation
The System 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, 2004, are shown in Table 8.
Table 8.1 – Interfund Receivables and Payables
Current Portion
Current Interfund Receivable
Current Interfund Payable
GENERAL REVENUE (01)
$ 0.00
$ 0.00
Total Current Interfund
Receivable/Payable
$ 0.00
$ 0.00
Non-Current Interfund Receivable
Non-Current Interfund Payable
GENERAL REVENUE (01)
$ 0.00
$ 0.00
Total Non-Current Interfund
Receivable/Payable
$ 0.00
$ 0.00
Non-Current Portion
5 - 13
UNAUDITED
Table 8.2 – Due From/To Other Agencies
Due From
Other Agencies
Due To
Other Agencies
Source
ENTERPRISE (05)
Appd Fund 0347, D23
Fund 0347 Agency
902, D23 Fund 0347
UH – Clear Lake
$ 21,280.70
$ 0.00
Transfer
University of
Houston
3,935.00
0.00
State Grant
UH – Clear Lake
2,233.00
0.00
State Grant
693.00
0.00
State Grant
88.00
0.00
State Grant
620.00
0.00
State Grant
314,018.34
0.00
49,792.02
0.00
57.08
0.00
131,387.56
0.00
Appd Fund 5015, D23
Fund 5015 Agency
601, D23 Fund 5015
UH – Victoria
UH – System Admin
UH – Downtown
Appd Fund 5079, D23
Fund 5079 Agency
781, D23 Fund 5079
University of
Houston
UH – Clear Lake
UH – Victoria
State
Pass-Through
State
Pass-Through
State
Pass-Through
Appd Fund 9999, D23
Fund 7999 Agency
753, D23 Fund 7999
University of
Houston
Total Due From/To
Other Agencies
$ 524,104.70
$
5 - 14
0.00
Federal
Pass-Through
UNAUDITED
Table 8.3 – Due From/To Other Funds
Current Portion
Due From Other Funds
Due To Other Funds
$ 0.00
$ 0.00
$ 0.00
$ 0.00
GENERAL REVENUE (01)
Source
Total Due From/To Other Funds
Table 8.4 – Transfers In and Out
Transfers In
Transfers Out
Purpose
$ 0.00
$ 317,721.56
§ 56.465. TUITION SET ASIDE
FOR PROGRAM
0.00
68,241.00
$ 0.00
$ 385,962.56
ENTERPRISE (05)
Appd Fund 9999,
D23
Fund
7999
Agency 781, D23
Fund 0001
University of
Houston System
Agency 902, D23
Fund 001
University of
Houston System
Total Transfers
§ 61.9731 TEX. EDUC. CODE
ANN.
Table 8.5 – Legislative Transfers In and Out
Legislative Transfers In
GENERAL REVENUE (01)
Appd Fund 0001, D23 Fund
001 Agency 730, D23 Fund
0001
UH-Clear Lake
$ 81,049.00
UH – Victoria
195,489.00
Agency 759, D23 Fund 0001
University of Houston
UH – Clear Lake
Total Legislative
Transfers in and Out
Legislative Transfers Out
$ 81,049.00
195,489.00
218,750.00
218,750.00
0.00
0.00
$495,288.00
$495,288.00
NOTE 9: Contingent Liabilities
As mentioned in Note 5, various lawsuits and claims involving the System were pending.
While the ultimate liability, if any, remains uncertain, management does not expect any
possible adverse ruling to have a material effect on System accounts.
The agency has received several federal grants for specific purposes that are subject to
review and audit by the grantor agencies. Such audits could lead to a request for
reimbursements to grantor agencies for expenditures disallowed under the terms of the
grant.
Based on prior experience, management believes such disallowances, if any, will
be immaterial.
5 - 15
UNAUDITED
NOTE 10: Continuance Subject to Review
The System is not subject to the provisions of the Texas Sunset Act (Chapter 325, Texas
Government Code Annotated). The Act provides for the regular assessment of the continuing
need for state agencies to exist. Certain agencies, such as institutions of higher
education and courts, are not subject to the Sunset Act.
NOTE 11: Risk Financing and Related Insurance
The University of Houston System is exposed to a variety of civil claims resulting from
the performance of its duties. It is System policy to periodically assess the proper
combination of commercial insurance and retention of risk to cover losses to which it may
be exposed.
The System assumes substantially all risks associated with tort and liability claims due
to the performance of its duties. Currently there is the purchase of some commercial
insurance, and the System is not involved in any risk pools with other government
entities.
The System’s liabilities are reported when it is both probable that a loss has occurred
and the amount of that loss can be reasonably estimated. Liabilities include an amount
for claims that have been incurred but not reported (IBNR). Liabilities are reevaluated
periodically to consider current settlements, frequency of claims, past experience and
economic factors.
Changes in the balances of the System’s claims liabilities during fiscal years 2004 and
2003 are shown in Table 11.
Table 11 - Claims Liabilities
Fiscal Year
2003
2004
Beginning Of Fiscal
Year Liability
Claims And
Estimate Changes
Claims
Payments
Balance At
Fiscal Year End
$207,328.85
$691,419.01
$685,737.86
$213,010.00
$213,010.00
$1,069,971.67
$1,080,897.14
$202,084.53
NOTE 12: Segment Information
The System has no segment activity that requires separate disclosure in the notes to the
financial statements. A segment is an identifiable activity, or group of activities, reported
as or within an enterprise fund or an other stand-alone entity that has one or more bonds or
other debt instruments outstanding, with a revenue stream pledged in support of that debt. In
addition, the activity’s revenues, expenses, gains and losses, assets, and liabilities are
required to be accounted for separately.
NOTE 13: Bonded Indebtedness
Bonds Payable
Detailed supplemental bond information is disclosed in Schedule 2-A, Miscellaneous Bond
Information, Schedule 2-B, Changes in Bonded Indebtedness, Schedule 2-C Debt Service
Requirements, Schedule 2-D, Analysis of Funds Available for Debt Service, Schedule 2-E,
Defeased Bonds Outstanding, and Schedule 2-F, Early Extinguishment and Refunding.
Revenue Bonds
•
Consolidated Revenue Bonds, Series 1995
- To acquire, purchase, construct, improve, renovate, enlarge, or equip property,
buildings, structures, facilities, roads, or related infrastructure for the University
of Houston - Downtown, including the construction and equipping of an academic and
student services building.
- Issued 4-1-95.
- $22,400,000; all bonds authorized have been issued.
5 - 16
UNAUDITED
- Source of revenue for debt service – Tuition and various other revenues and balances
that may be legally available for payment of debt obligations (funding for fiscal year
2004 from Legislative appropriation).
- Called for early redemption on 2-15-05.
- All outstanding bonds on 2-15-05 will be paid in full with proceeds from Consolidated
Revenue Refunding Bonds, series 2003.
•
Consolidated Revenue Bonds, Series 1997
- To acquire, purchase, construct, improve, renovate, enlarge, or equip property, land,
buildings, structures, facilities, roads, or infrastructure for the University of
Houston - Victoria.
- Issued 8-1-97.
- $5,150,000; all bonds authorized have been issued.
- Source of revenue for debt service – Tuition and various other revenues and balances
that may be legally available for payment of debt obligations (funding for fiscal year
2004 from Legislative appropriation).
•
Consolidated Revenue Bonds, Series 1998
- To
finance
the
acquisition,
purchase,
construction,
improvement,
renovation,
enlargement, and equipping of any property, building, structure, activity, service,
operation, or facility of the University of Houston, specifically energy conservation
projects.
- Issued 1-1-98.
- $14,565,000; all bonds authorized have been issued.
- Source of revenue for debt service – Tuition, state appropriations, and various other
revenues and balances that may be legally available for payment of debt obligations.
•
Consolidated Revenue Bonds, Series 1999
- To
finance
the
acquisition,
purchase,
construction,
improvement,
renovation,
enlargement, and equipping of any property, building, structure, activity, service,
operation, or facility of the University of Houston System, specifically projects at
the University of Houston, University of Houston - Downtown, University of Houston Victoria, and the University of Houston multi-institutional teaching center in Fort
Bend County.
- Issued 1-1-99.
- $33,350,000; all bonds authorized have been issued.
- Source of revenue for debt service - Tuition and various other revenues and balances
that may be legally available for payment of debt obligations (funding for fiscal year
2004 from Legislative appropriation).
•
Consolidated Revenue Bonds, Series 2000
- To construct a recreation and wellness facility at the University of Houston.
- Issued 9-01-00.
- $52,070,000: all bonds authorized have been issued.
- Source of revenue for debt service – Tuition and various other fees, and revenues and
balances that may be legally available for payment of debt obligations.
•
Consolidated Revenue Bonds, Series 2002-A
- To
finance
the
acquisition,
purchase,
construction,
improvement,
renovation,
enlargement, and equipping of any property, building, structure, activity, operation,
or facility of the University of Houston System.
- Issued 9-01-02.
- $130,955,000: all bonds authorized have been issued.
- Source of revenue for debt service – Tuition and various other fees, and revenues and
balances that may be legally available for payment of debt obligations (funding for
fiscal year 2004, partially from Legislative appropriation).
5 - 17
UNAUDITED
•
Consolidated Revenue Variable Rate Demand Bonds, Series 2004
- To
finance
the
acquisition,
purchase,
construction,
improvement,
renovation,
enlargement, and equipping of any property, buildings, structures, facilities, roads,
or related infrastructure for the University of Houston System, including the
individual campuses of the System.
- Issued 6-16-04.
- $25,000,000: all bonds authorized have been issued.
- Source of revenue for debt service – Tuition and various other fees, and revenues and
balances that may be legally available for payment of debt obligations (funding for
fiscal year 2004, from Legislative appropriation).
General Obligation Bonds
At August 31, 2004, the University had no bonds payable classified as General Obligation
Bonds.
Refunding Bonds
•
Consolidated Revenue Refunding Bonds, Series 2002-B
- To refund $27,415,000 of Consolidated Revenue Refunding Bonds, Series 1993 and
$19,385,000 of Consolidated Revenue Bonds, Series 1993-A.
- Issued 11-1-02.
- $45,425,000; all bonds authorized have been issued.
- Source of revenue for debt service - Designated tuition and various other revenues and
balances that may be legally available for payment of debt obligations.
- Average rate of bonds refunded - 5.4% (1993) and 5.5% (1993-A).
- Net proceeds from refunding series - $47,871,000, after receipt of bond premium of
$2,888,998 and payment of $442,998 in underwriting fees, insurance, and other issuance
costs.
- Funds were used to purchase state and local government securities which were deposited
in an irrevocable trust with an escrow agent to provide for all future debt payments on
the 1993 and 1993-A series bonds, when the bonds were called for early redemption on
2-15-03.
- The 1993 and 1993-A series bonds are considered fully defeased and the liability for
those bonds has been removed from the Investment in Plant fund group.
- Refunding of the 1993 and 1993-A series bonds reduced the University's debt service
payments over the life of the bond issues by approximately $3,228,503.
- Economic gain - $2,733,595; the difference between the net present value of the old and
new debt service payments.
•
Consolidated Revenue Refunding Bonds, Series 2003
- To refund $15,975,000 of Consolidated Revenue Bonds, Series 1995A.
- Issued 12-1-03.
- $16,490,000; all bonds authorized have been issued.
- Source of revenue for debt service – Tuition and various other fees, and revenues and
balances that may be legally available for payment of debt obligations (funding for
fiscal year 2004, from Legislative appropriation).
- Average rate of bonds refunded – 5.92%.
- Net proceeds from refunding series - $17,419,961.18, after receipt of bond premium of
$896,716.15 and payment of $266,453.44 in underwriting fees, insurance, and other
issuance costs.
- Funds were used to purchase state and local government securities which were deposited
in an irrevocable trust with an escrow agent to provide for all future debt payments on
the 1995 series bonds, when the bonds are called for early redemption on 2-15-05.
- The 1995 series bonds are considered partially defeased and the liability for those
bonds has been removed from the investment in Plant fund group.
- Refunding of the 1995 series bonds reduced the University’s debt service payments over
the life of the bond issues by approximately $1,377,275.10.
- Economic gain - $1,292,003.91; the difference between the net present value of the old
and new debt service payments.
5 - 18
UNAUDITED
NOTE 14: Subsequent Events
Effective August 31, 2004, all the assets, liabilities, and net assets of the System’s public
television station (KUHT-TV) were transferred from the ledger of the University of Houston –
System Administration to the University of Houston. This event did not reflect any change in
the organizational structure of the station or its relationship to the system. This was only
an accounting event, which will more effectively reflect the future transactions and balances
of the system’s public broadcasting operations. As of the date this report was issued, there
have been no additional occurrences since August 31, 2004 that have had a significant
financial impact.
NOTE 15: Related Parties
The System is affiliated with several foundations and organizations that have been created to
benefit certain operations of the University.
Those which have a significant relationship
with the System are described below. The assets, liabilities, and equities of the various
foundations are not contained in the financial statements of the University of Houston
System.
•
University of Houston System
The stated purpose of the University of Houston Foundation is for "the advancement of the
general welfare of the University of Houston, Houston, Texas, as a whole, including, without
limitation, all of the colleges and branches or divisions thereof, wheresoever located, as
well as all of the facilities and activities thereof, now or hereafter existing or created,
not inconsistent with the objectives, operation and management of the University of Houston."
The Foundation's Board of Trustees consists of nine members. The Foundation remitted
$2,352,831.15 of direct support to the System during the year ended August 31, 2004.
The stated purpose of the UHS Foundation is to operate exclusively for the benefit of the
University of Houston System and its component institutions for charitable, scientific,
educational, and literary purposes and to foster national or international amateur
sports. The Foundation's Board of Trustees consists of three members. The Foundation
remitted no direct support to the System during the year ended August 31, 2004.
The stated purpose of the Association for Community Television is to assist in securing
financial support for and in promoting in the community KUHT-TV, Channel 8, a Houston
non-commercial public television station operated by the University. The Organization's
Board of Trustees consists of twelve officers and two members-at-large. The Organization
remitted $4,479,463.55 of direct support to the System during the year ended August 31,
2004.
•
University of Houston
The stated purpose of the University of Houston College of Business Administration
Foundation is to solicit, receive, or otherwise acquire real or personal property with
the primary objective of improving the quality of education provided by the College of
Business Administration; to assist in developing and increasing the facilities of the
College for broader educational opportunities; to apply funds and other resources in
procuring quality personnel, materials, and equipment; and to foster professional zeal
among the faculty of the College and to promote the general educational interests of such
faculty. The Foundation's Board of Trustees consists of fourteen members. The Foundation
remitted $424,600.00 of direct support to the System during the year ended August 31, 2004.
The stated purpose of the University of Houston Law Foundation is to complement legal
education and assist in the orderly development of law and legal institutions through
basic and applied research, service and cooperative effort for the benefit of the Law
Program, and other programs and schools now or hereafter existing in related fields, of
the University of Houston. The Foundation's Board of Trustees consists of fifteen members.
The Foundation remitted $905,787.66 of direct support to the System during the year ended
August 31, 2004.
The stated purpose of the University of Houston Alumni Organization is to promote the
aims, ideals, and purposes of the founders, officers, and faculty of the University of
Houston. The Organization's Board of Trustees consists of fifteen officers and twenty-one
5 - 19
UNAUDITED
at large directors. The Organization remitted no direct support to the System during the
year ended August 31, 2004.
The stated purpose of the Houston Athletics Foundation, Inc. is to assist in the
development and implementation of a strategic plan for athletics development including
annual fund, major gifts, leadership gifts, and endowments for the University of Houston
in compliance with rules and regulations set forth by the National Collegiate Athletic
Association and the Board of Regents of the University of Houston System. The
Foundation's Board of Directors consists of one officer and twenty eight directors. The
Foundation remitted no direct support to the System during the year ended August 31, 2004.
•
University of Houston – Clear Lake
The University of Houston – Clear Lake has no material affiliations with any foundation
or organization.
•
University of Houston - Downtown
The University of Houston – Downtown has no material affiliations with any foundation or
organization.
•
University of Houston - Victoria
The University of Houston – Victoria has no material affiliations with any foundation or
organization.
NOTE 16: Stewardship, Compliance and Accountability
A negative Change in Net Assets occurred in the Enterprise fund operations.
This was
primarily a result of two factors.
First there was a planned spending of accumulated
equity balances. The change was also affected by reductions of capital asset balances.
NOTE 17: The Financial Reporting Entity and Joint Ventures
The Financial Reporting Entity
The University of Houston System is an agency of the State of Texas, and its financial
records reflect compliance with applicable state statutes and regulations. The System was
established by House Bill No. 188, Sixty-Fifth Legislature, Regular Session, effective
September 1, 1977. Components of the System are System Administration (1977), University
of Houston (1963), Clear Lake (1973), Downtown (1974), and Victoria (1973). The System is
governed by an appointed nine member Board of Regents.
Although the System is affiliated with several separate legal entities, as previously
disclosed, these organizations are not considered component units as defined by generally
accepted
accounting
principles.
Therefore,
the
account
balances
and
financial
transactions of these organizations are not included in the System’s financial
statements.
NOTE 18: Restatement Of Fund Balances/Retained Earnings
During fiscal year 2004, no adjustments were made which required the restatement of the
amounts in fund balances and fund equity.
NOTE 19: Employees Retirement Plans
The State has joint contributory retirement plans for substantially all its employees.
The System participates in the plans administered by the Teachers Retirement System of
Texas. Future pension costs are the liabilities of the Retirement System. The Retirement
System does not account for each State agency separately. Annual financial reports
prepared by the Retirement System include audited financial statements and actuarial
assumptions and conclusions.
5 - 20
UNAUDITED
The state has also established an Optional Retirement Program for institutions of higher
education. Participation in the Optional Retirement Program is in lieu of participation
in the Teacher Retirement System. The Optional Retirement Program provides for the
purchase of annuity or mutual fund contracts. Since these are individual investment
product contracts, the state has no additional or unfunded liability for this program.
NOTE 20:
Deferred Compensation
State employees may elect to defer a portion of their earnings for income tax and
investment purposes pursuant to authority granted in the Texas Government Code Annotated,
Section 609.001. Multiple plans are available for employees' deferred compensation plan.
Both plans are administered by the Employees Retirement System.
The State’s 457 plan complies with the Internal Revenue Code Section 457. The State also
administers another plan; “TexaSaver” created in accordance with Internal Revenue Code
Sec. 401(k). The assets of this plan do not belong to the state. The state has no liability
related to this plan.
The tax deferred investment program permits benefits-eligible employees of the University of
Houston System to purchase qualified tax deferred investments with a portion of their
salaries. Participation in the program is voluntary and is a supplement to the Teacher
Retirement System or the Optional Retirement Program. It is however, separate and apart from
either.
NOTE 21: Donor-Restricted Endowments
Amounts reported as net appreciation on investments of donor-restricted endowments that are
available for authorization for expenditure are disclosed in Table 21. Effective September 1,
1995, the Board of Regents adopted an endowment income payout policy whereby the payout rate is
based on a percentage of the fiscal year end market value averaged over rolling three year
periods. If an endowment were in existence less than three years, the average is based on the
number of years in existence.
Table 21 – Endowments
Donor-Restricted
Endowment
Endowments
Amount of Net
Appreciation /
(Depreciation)
$ 17,765,373.79
Term Endowments
Total
Reported in Net Assets
Restricted for Nonexpendable
Restricted for Nonexpendable
$ 17,765,373.79
5 - 21
UNAUDITED
NOTE 22: Management Discussion and Analysis
The System is continuing the development and implementation of integrated financial, human
resources, and student information systems that were purchased from PeopleSoft. The
implementation of these systems increases the availability of accurate and timely management
information.
The University of Houston System’s financial condition and position are strong. The System’s
administrative and management teams realize that universities must be good stewards of the
dollars with which they are entrusted. Management strives to make sound financial decisions.
NOTE 23: Post Employment Health Care and Life Insurance Benefits
(UT, A&M and ERS only)
Provisions of this requirement only apply to the following
Texas, Texas A&M University and Employees Retirement System.
agencies:
University
of
NOTE 24: Special or Extraordinary Items
No items have
statements.
NOTE 25:
been
identified
which
should
have
been
presented
in
the
financial
Disaggregation of Receivable and Payable Balances
Balances of receivables and payables reported on the Statement of Net Assets may be
aggregations of different components. GASB Statement 38, Certain Financial Statement Note
Disclosures, requires that the University provide details in the notes to the financial
statements when significant components have been obscured by aggregation. The Statement of
Net Assets is presented in the classified format, and therefore the current and noncurrent
portions of receivables and payable are separately disclosed. Significant balances in
various classifications of receivables and payables are disclosed below.
A. Taxes Receivable
No reportable balances for this classification.
5 - 22
UNAUDITED
B. Federal Receivable
Balances by category type for Federal Receivable are shown in Table 25.1.
Table 25.1 – Federal Receivable
Federal Receivable Program
Corporation for Public Broadcasting
Department of Agriculture
Department of Commerce
Department of Defense
Department of Education
Department of Energy
Department of Health and Human Services
Department of Housing and Urban Development
Department of Justice
Department of Labor
Department of State
Department of the Interior
Department of Transportation
Department of Veterans Affairs
Environmental Protection Agency
National Aeronautics and Space Administration
National Foundation for the Arts and Humanities
National Science Foundation
Small Business Administration
Net Receivable
$
580,035.75
81,038.72
157,027.53
608,136.86
6,184,350.02
98,521.22
290,664.36
7,204.83
92,590.00
56,227.48
70,748.80
16,683.82
55,785.37
41,751.36
73,619.09
220,620.79
100,400.26
295,475.94
77,896.87
Total Net Federal Receivable
$ 9,108,779.07
As Reported on the Financial Statements
Current Federal Receivable
$ 9,108,779.07
Total Net Federal Receivable
$ 9,108,779.07
C. Tax Refunds Payable
No reportable balances for this classification.
D. Other Receivables – Current
Balances by category type for Other Receivables – Current are shown in Table 25.2.
Table 25.2 – Other Receivables – Current
Type
State Contracts and Grants
Local Contracts and Grants
Private Contracts and Grants
Other Contracts and Grants
Miscellaneous Departmental Receivables
Total Other Receivables – Current
5 - 23
Amount
$ 6,007,927.08
3,859,811.76
1,111,596.60
6,485,240.56
805,411.66
$ 18,269,987.66
UNAUDITED
E. Other Payables – Current
Balances by category type for Other Payables – Current are shown in Table 25.3.
Table 25.3 – Other Payables – Current
Type
Equipment Held in Trust
IBNR Claims Liability
Arbitrage Rebate Liability
Accrued Bond Interest Payable
Miscellaneous Departmental Payables
Amount
$ 1,710,127.54
203,488.65
902,465.04
407,710.93
180,169.50
Total Other Payables – Current
$ 3,403,961.66
F. Other Receivables – Non-Current
No reportable balances for this classification.
G. Other Payables – Non-Current
No reportable balances for this classification.
5 - 24
Unaudited
Schedule 1 - A
University of Houston System
Schedule of Expenditures Of Federal Awards
For The Year Ending August 31, 2004
Total
Pass-Thru To &
Expenditures
Federal Grantor / Pass Through Grantor / Program Title
Note:1 Non-monetary assistance
Donation of Federal Surplus Personal Property
The donation of Federal Surplus Personal Property is
presented at 23.3% of the original Federal acquisition
cost of $3,809.17. The surplus property is passed through
from the General Services Commission (Agency 303). The
Federal Grantor agency is the General Services Administration
(GSA) and the Federal CFDA number is 39.003. The
estimated fair value at the date of receipt was $239.20.
$
Total Non-monetary Assistance
0.00
0.00
Note 2: Reconciliation
Federal Revenues
Federal Grants and Contracts
Federal Pass Through Grants
From Other State Agencies
Indirect Cost Recoveries
Federal Grants
Federal Pass Through From State Agencies
Total Federal Revenues
70,025,320.30
8,291,935.98
10,060,675.05
0.00
88,377,931.33
Reconciling Items
Additions
Pass Through To State Entities & Other Entities
Non-monetary Assistance
Donation-Federal Surplus Property
New Student Loans Processed / Adm Costs
Federal Family Education Loan Program
Federal Perkins Loan Program
Health Prof Student Loans - Optometry
Total Additions
7,894,740.22
0.00
153,756,644.88
2,384,756.43
0.00
164,036,141.53
Deductions
Federal Perkins Program Disb-Institute Share
Total Deductions
71,509.30
71,509.30
Total Reconciling Items
163,964,632.23
Total Pass Through & Expenditures Per Federal Schedule
$
6-1
252,342,563.56
Unaudited
Schedule 1 - A
University of Houston - System
Schedule of Expenses Of Federal Awards
New Loans
Processed
Federal Agency
Note 3: Student Loan Program & Adm Cost Recovered
Department Of Education
84.032 Federal Family Education Program
Loan - Non-monetary Loans
84.038 Federal Perkins Loan Program
Perkins Student Loans
Total Department Of Education
$
Total Loans
Processed
Administrative
Cost Recovered
Administrative
Cost Recovered
153,756,644.88
$
$
2,384,756.43
156,141,401.31
153,756,644.88
Loan Receivable
Ending Balances
$
2,384,756.43
156,141,401.31
11,497,274.98
11,497,274.98
Department Of Health & Human Services
93.342 Health Profession Student Loans
Optometry Loans
Total Department of Health & Human Services
Total Student Loan Program & Adm Cost Recovered
468,275.29
468,275.29
$
156,141,401.31
$
$
Note 4: Governmental Publications
Various University of Houston System libraries participate as a Depository Library in the Government
Publications Program, CFDA number 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. The University System Libraries that participate as a depository library are the University
of Houston M.D. Anderson Library, the University of Houston O'Quinn Law Library, and the University of Houston Clear Lake Alfred R. Neumann Library.
Note 5: Unemployment Insurance Funds
None received
6-2
156,141,401.31
$
11,965,550.27
Unaudited
Schedule 1 - B
University of Houston System
Combined Schedule of State Grant Pass-Throughs From/To State Agencies
For The Year Ended August 31, 2004
Total
Pass Through From
Coordinating Board (Agency 781)
Texas Grant Program
General Academic Developmental Education Program
General Academic Enrollment Growth Program
Advanced Research Program
Advanced Technology Program
Developmental Education Program
College Work Study Program
5th Year Accounting Scholarships Program
Roberta High Memorial Pharmacy Residency Program
Engineering & Technical Consortium
Total Coordinating Board (Agency 781)
$
Texas Education Agency (Agency 701)
Foundation School Program
Foundation School Program Technology Allotment
Student Success Initiatives
Total Texas Education Agency (Agency 701)
8,522,921.46
0.00
0.00
(1,527.71)
1,323,448.00
(28,607.66)
192,937.91
22,504.00
0.00
191,716.03
10,223,392.03
717,131.00
3,715.00
2,700.00
723,546.00
Texas State Library and Archives Commission (Agency 306)
Texas Treasures Grant Contract
Total Texas State Library and Archives Commission (Agency 306)
0.00
0.00
Texas Attorney General (Agency 302)
Immigration Clinic Crime Victims Program
29,491.00
Total Texas Attorney General (Agency 302)
29,491.00
Lamar University (Agency 734)
Texas Air Research Center
Texas Hazardous Waste Research Center
Total Lamar University (Agency 734)
106,769.28
78,598.18
185,367.46
Texas A&M University (Agency 711)
Telecommunications Infrastructure Funds
Total Texas A&M University (Agency 711)
0.00
0.00
Total Pass Through From Other Agencies
$
11,161,796.49
Pass Through To
Texas A&M University at Corpus Christi (Agency 760)
Texas Natural Resources Conservation Commission Grant
Total Texas A&M University at Corpus Christi (Agency 760)
$
158,515.00
158,515.00
Total Pass Through To Other Agencies
$
158,515.00
7-1
1998
2000
1995
1997
1999
2002-A
2004
Consolidated Revenue Bonds
Self-supporting Revenue Bonds
Consolidated Revenue Bonds Series
Consolidated Revenue Bonds Series
Tuition Revenue Bonds
Consolidated Revenue Bonds Series
Consolidated Revenue Bonds Series
Consolidated Revenue Bonds Series
Consolidated Revenue Bonds Series
Consolidated Revenue Variable Rate Demand Bonds Series
2003
Tuition Revenue Bonds
Consolidated Revenue Refunding Bonds Series
Issued Year
2002-B
Description of Issue
Consolidated Revenue Refunding Bonds
Self-supporting Revenue Bonds
Consolidated Revenue Refunding Bonds Series
Business-Type Activities
Revenue Bonds
$
$
8-1
345,405,000.00
25,000,000.00
130,955,000.00
33,350,000.00
5,150,000.00
22,400,000.00
52,070,000.00
14,565,000.00
16,490,000.00
45,425,000.00
Bonds Issued to Date
VAR - VAR
2.500% - 4.750%
4.500% - 5.000%
4.500% - 6.500%
5.250% - 7.050%
5.250% - 7.000%
4.100% - 5.500%
2.000% - 5.000%
3.000% - 5.250%
Range of Interest Rates
Schedule 2 - A
University of Houston System
Combined Schedule Of Miscellaneous Bond Information
For The Year Ended August 31, 2004
Unaudited
Weekly
Terms Of
Variable
Interest Rate
2006
2003
2000
1998
1997
2003
2000
2006
2003
2024
2022
2019
2017
2017
2030
2009
2017
2018
Scheduled Maturities
First Year
Last Year
8/15/2004
2/15/2012
2/15/2009
8/15/2007
2/15/2005
2/15/2010
8/15/2007
2/15/2013
2/15/2012
First Call Date
9-1
41,490,000.00
25,000,000.00
16,490,000.00
$
$
13,935,000.00
855,000.00
200,000.00
1,410,000.00
1,240,000.00
790,000.00
4,735,000.00
4,705,000.00
$
$
15,975,000.00
15,975,000.00
Bonds
Refunded or
Extinguished
$
$
$
$
$
Bonds
Matured or
Retired
Net Bonds Payable Outstanding
282,945,000.00
17,730,000.00
4,170,000.00
9,540,000.00
28,955,000.00
51,330,000.00
126,145,000.00
45,075,000.00
Bonds
Issued
$
$
$
Bonds
Outstanding
09/01/2003
Bonds Outstanding per Schedule
Unamortized Premium
Unamortized Discount
Unamortized Issuance Costs
Unamortized Gain / (Loss) on Refunding
Footnotes:
(A) Bonds Outstanding balance at 08/31/2004
does not include unamortized premium or discounts.
Total Revenue Bonds
Consolidated Revenue Bonds Series 1995
Consolidated Revenue Bonds Series 1997
Consolidated Revenue Bonds Series 1998
Consolidated Revenue Bonds Series 1999
Consolidated Revenue Bonds Series 2000
Consolidated Revenue Bonds Series 2002-A
Consolidated Revenue Variable Rate Demand Bonds Series 2004
Revenue Bonds
Consolidated Revenue Refunding Bonds Series 2002-B
Consolidated Revenue Refunding Bonds Series 2003
General Obligation Bonds
None
Description of Issue
Business-Type Activities
Schedule 2-B
University of Houston System
Combined Schedule Of Changes In Bonded Indebtedness
For The Year Ended August 31, 2004
Unaudited
298,283,583.94
294,525,000.00
3,758,583.94
(A)
294,525,000.00
900,000.00
3,970,000.00
8,130,000.00
27,715,000.00
50,540,000.00
121,410,000.00
25,000,000.00
40,370,000.00
16,490,000.00
Bonds
Outstanding
08/31/2004
$
$
$
$
14,797,648.35
14,525,000.00
272,648.35
14,525,000.00
900,000.00
210,000.00
1,475,000.00
1,300,000.00
850,000.00
4,840,000.00
4,950,000.00
Amounts
Due Within
One Year
Unaudited
Schedule 2 - C
University of Houston System
Combined Schedule Of Debt Service Requirements
For The Year Ended August 31, 2004
Business-Type Activities
Description of Issue
Revenue Bonds
Consolidated Revenue Bonds Series 1995
Principal
Interest
2005
$
900,000.00
491,928.75
2006
$
2007
$
2008
$
Consolidated Revenue Bonds Series 1997
Principal
Interest
210,000.00
199,531.26
225,000.00
185,393.76
240,000.00
170,281.26
255,000.00
156,584.38
Consolidated Revenue Bonds Series 1998
Principal
Interest
1,475,000.00
352,568.76
1,545,000.00
282,968.76
1,620,000.00
203,843.76
1,705,000.00
120,718.76
Consolidated Revenue Bonds Series 1999
Principal
Interest
1,300,000.00
1,287,090.00
1,370,000.00
1,227,015.02
1,435,000.00
1,163,902.52
1,510,000.00
1,097,640.01
Consolidated Revenue Bonds Series 2000
Principal
Interest
850,000.00
2,810,706.26
910,000.00
2,749,106.26
975,000.00
2,683,131.26
1,045,000.00
2,612,431.26
Consolidated Revenue Bonds Series 2002A
Principal
Interest
4,840,000.00
4,919,587.52
4,955,000.00
4,760,275.02
5,100,000.00
4,577,937.52
5,265,000.00
4,377,012.52
Consolidated Revenue Variable Rate Demand Bonds Series 2004
Principal
Interest
1,125,000.00
850,000.00
1,105,875.00
890,000.00
1,066,725.00
930,000.00
1,025,775.00
Consolidated Revenue Refunding Bonds Series 2002B
Principal
4,950,000.00
Interest
1,963,462.52
5,200,000.00
1,709,712.52
5,470,000.00
1,439,543.76
5,760,000.00
1,148,175.00
Consolidated Revenue Refunding Bonds Series 2003
Principal
Interest
704,012.50
520,000.00
698,812.50
1,185,000.00
672,875.00
1,225,000.00
633,762.50
28,378,887.57
28,294,158.84
28,893,240.08
28,867,099.43
13,853,887.57
12,719,158.84
11,978,240.08
11,172,099.43
Total Revenue Bonds
Less Interest
Total Principal
$
14,525,000.00
10 - 1
$
15,575,000.00
$
16,915,000.00
$
17,695,000.00
Unaudited
2009
$
2010 - 2014
$
265,000.00
144,393.75
2015 - 2019
$
1,585,000.00
504,250.00
2020 - 2024
$
2025 - 2029
$
Total
Requirements
2030 - 2034
$
$
1,190,000.00
91,500.00
3,970,000.00
1,451,934.41
1,785,000.00
39,046.88
$
900,000.00
491,928.75
8,130,000.00
999,146.92
1,585,000.00
1,028,002.49
9,070,000.00
3,922,637.42
11,445,000.00
1,472,425.03
1,125,000.00
2,536,481.26
6,720,000.00
11,544,862.55
8,730,000.00
9,514,715.66
11,470,000.00
6,793,050.00
5,445,000.00
4,162,812.52
30,580,000.00
17,308,962.60
37,830,000.00
10,439,084.46
27,395,000.00
1,961,734.42
121,410,000.00
52,507,406.58
975,000.00
982,912.50
5,590,000.00
4,198,725.00
6,995,000.00
2,788,762.50
8,770,000.00
1,021,950.00
25,000,000.00
13,315,725.00
6,080,000.00
837,375.00
6,420,000.00
2,580,900.00
6,490,000.00
703,237.50
40,370,000.00
10,382,406.30
1,270,000.00
589,987.50
7,115,000.00
2,165,706.25
5,175,000.00
396,625.00
16,490,000.00
5,861,781.25
28,851,011.90
109,306,043.82
103,261,350.15
57,411,734.42
18,302,137.50
3,668,175.00
435,233,838.71
10,321,011.90
42,226,043.82
25,406,350.15
9,776,734.42
3,157,137.50
98,175.00
140,708,838.71
18,530,000.00
$
67,080,000.00
$
77,855,000.00
27,715,000.00
11,198,712.49
$
47,635,000.00
10 - 2
15,145,000.00
3,157,137.50
$
15,145,000.00
3,570,000.00
98,175.00
$
3,570,000.00
50,540,000.00
44,499,797.01
$
294,525,000.00
Total
Total
Total
Description of Issue
Business-Type Activities
General Obligation Bonds
$
$
$
$
$
$
$
$
$
$
Interest
$
$
$
$
$
$
11 - 1
Application of Funds
Refunded or
Extinguished
$
$
$
$
Operating
Transfers
$
$
$
$
Total Application
of Funds
State's General
Revenue
Other Sources
Other Application
of Funds
Sources of Funds
Other Pledged
Sources
Pledged Sources
Interest Earned on
Investments
Ending Balance Available for
Debt Service at 08/31/2004
Required
Actual
Principal
Debt Service
09/01/2003
Beginning Balance
Available for
Schedule 2-D
University of Houston System
Combined Analysis Of Funds Available For Debt Service
For The Year Ending August 31, 2004
Unaudited
$
$
Total Sources
Available
Expenditure associated with pledged
sources were approximately $ 257,853,377.71
Total
Description of Issue
Consolidated Revenue Refunding Bonds Series 2002-B
Consolidated Revenue Refunding Bonds Series 2003
Consolidated Revenue Bonds Series 1995
Consolidated Revenue Bonds Series 1997
Consolidated Revenue Bonds Series 1998
Consolidated Revenue Bonds Series 1999
Consolidated Revenue Bonds Series 2000
Consolidated Revenue Bonds Series 2002-A
Consolidated Revenue Variable Rate Demand
Bonds Series 2004
(B)
Total as shown above
Other Pledged Revenues Consist of
Tuition and Fees
Investment Income
Sales and Service
Legislative Appropriations
$
$
$
Total
(A)
$
Description of Issue
Consolidated Revenue Refunding Bonds
and Consolidated Revenue Bonds (A)
Business-Type Activities
Revenue Bonds
$
$
13,935,000.00
855,000.00
200,000.00
1,410,000.00
1,240,000.00
790,000.00
4,735,000.00
$
$
12,754,925.53
Interest
2,204,837.52
496,719.93
70,807.50
211,656.26
413,153.76
1,344,240.00
2,868,106.26
5,063,212.52
82,191.78
2,619.91
2,619.91
Interest Earned
on Investments
Debt Service
Principal
4,705,000.00
Operating
Revenues
$
$
$
$
$
$
11 - 2
15,975,000.00
15,975,000.00
Refunded or
Extinguished
303,526,462.58
252,740,917.13
3,254,526.37
37,896,685.08
9,634,334.00
303,526,462.58
303,526,462.58
$
$
$
$
$
$
Minimum
$
$
Actual
Interest & Sinking Fund
303,529,082.49
303,529,082.49
$
$
$
$
$
$
Minimum
$
$
Reserve Fund
Pledged and Other Sources and Related Expenditure for FY 2004
Other Pledged
Total Pledged
Other
Operating Expenses
Revenues
Sources
Sources
& Expenditures
Schedule 2-D
University of Houston System
Combined Analysis Of Funds Available For Debt Service
For The Year Ending August 31, 2004
Unaudited
Actual
Capital
Outlay
$
$
303,529,082.49
303,529,082.49
Net Available for
Debt Service
Total
12 - 1
$
$
Revenue Bonds
Dormitory Revenue Bonds Series 1967-A
Consolidated Revenue Bonds Series 1995
$
$
1990
2003
Year Refunded
Total
General Obligations Bonds
Description of Issue
Business-Type Activities
Schedule 2-E
University of Houston System
Combined Schedule Of Defeased Bonds Outstanding
For The Year Ended August 31, 2004
Unaudited
16,915,000.00
940,000.00
15,975,000.00
Par Value Outstanding
Total
$
$
Revenue Bonds
Consolidated Revenue Refunding Bonds Series 2003
$
$
Advance Refunding
Category
Total
General Obligations Bonds
Description of Issue
Business-Type Activities
13 - 1
15,975,000.00
15,975,000.00
Amount Extinguished
Or Refunded
$
$
$
$
16,490,000.00
16,490,000.00
Refunding Issue
Par Value
Schedule 2-F
University of Houston System
Combined Schedule Of Early Extinguishment and Refunding
For The Year Ended August 31, 2004
Unaudited
$
$
$
$
1,377,275.10
1,377,275.10
For Refunding Only
Cash Flow
Increase / (Decrease)
$
$
$
$
1,292,003.91
1,292,003.91
Economic
Gain / (Loss)
Unaudited
Schedule 3
University of Houston System
Combined Reconciliation Of Cash In State Treasury
For The Year Ended August 31, 2004
Cash in State Treasury
Local Revenue Fund No 0225 (UH - 730)
Unrestricted
$
7,057,792.38
Restricted
$
Current Year Total
$
7,057,792.38
Local Revenue Fund No 0229 (UHC - 759)
5,338,691.28
5,338,691.28
Local Revenue Fund No 0233 (UHV - 765)
1,040,221.53
1,040,221.53
Local Revenue Fund No 0268 (UHD - 784)
1,593,405.06
1,593,405.06
Total Cash in State Treasury
$
15,030,110.25
14 - 1
$
$
15,030,110.25
UNIVERSITY OF HOUSTON
SYSTEM
UNAUDITED COMBINED ANNUAL
FINANCIAL REPORT
FOR THE YEAR ENDED AUGUST 31, 2004
UNIVERSITY OF HOUSTON SYSTEM
TABLE OF CONTENTS
MISCELLANEOUS DATA
SECTION
Letter Of Transmittal ................................................................I
Organizational Data .................................................................II
Statement Of Procedure Regarding Annual Financial Report ...........................III
PRIMARY STATEMENTS
Combined Balance Sheet / Statement Of Net Assets - Proprietary Funds ..............1
Combined Statement Of Revenues, Expenses, And Changes In Net Assets - Proprietary
Funds .............................................................................2
Combined Matrix Of Operating Expenses Reported By Function - Proprietary Funds ....3
Combined Statement Of Cash Flows – Proprietary Funds ..............................4
Notes To The Financial Statements .................................................5
SUPPORTING STATEMENTS
SCHEDULE
1-A
Combined Schedule Of Expenditures Of Federal Awards ...............................6
1-B
Combined Schedule Of State Grant Pass – Throughs From/To State Agencies ...........7
2-A
Combined Miscellaneous Bond Information ...........................................8
2-B
Combined Changes In Bonded Indebtedness ...........................................9
2-C
Combined Debt Service Requirements ...............................................10
2-D
Combined Analysis Of Funds Available For Debt Service ............................11
2-E
Combined Defeased Bonds Outstanding ..............................................12
2-F
Combined Early Extinguishment And Refunding ......................................13
3
Combined Reconciliation Of Cash In State Treasury ................................14
UNIVERSITY OF HOUSTON SYSTEM
ORGANIZATIONAL DATA
AUGUST 31, 2004
BOARD OF REGENTS
Morrie K. Abramson, Houston
Morgan Dunn O’Connor, Victoria
Thad “Bo” Smith, Sugar Land
Michael J. Cemo, Houston
Raul A. Gonzalez, Austin
Leroy L. Hermes, Houston
Dennis D. Golden, O.D., Carthage
Lynden B. Rose, Houston
Calvin W. Stephens, Dallas
Term
Term
Term
Term
Term
Term
Term
Term
Term
Expires
Expires
Expires
Expires
Expires
Expires
Expires
Expires
Expires
August
August
August
August
August
August
August
August
August
31,
31,
31,
31,
31,
31,
31,
31,
31,
2005
2005
2005
2007
2007
2007
2009
2009
2009
OFFICERS OF THE BOARD (FISCAL YEAR 2004)
Thad “Bo” Smith
Morgan Dunn O’Connor
Michael J. Cemo
Chair
Vice Chair
Secretary
OFFICERS OF THE BOARD (FISCAL YEAR 2005)
Morgan Dunn O’Connor
Leroy L. Hermes
Raul A. Gonzalez
Chair
Vice Chair
Secretary
ADMINISTRATIVE OFFICERS
Jay Gogue
Jerald W. Strickland
John M. Rudley
Elwyn C. Lee
Grover S. Campbell
Arthur C. Vailas
Spencer T. Yantis
Dona G. Hamilton
Arthur K. Smith
William A. Staples
Max Castillo
Karen S. Haynes
Chancellor
Interim Senior Vice Chancellor for
Academic Affairs
Vice Chancellor for Administration
and Finance
Vice Chancellor for Student Affairs
Vice Chancellor for Governmental
Relations
Vice Chancellor for Research and
Intellectual Property Management
Interim Vice Chancellor for
University Advancement
Vice President for Legal Affairs
and General Counsel
President - University of Houston
President – Clear Lake
President - Downtown
President - Victoria
II - 1
UNIVERSITY OF HOUSTON SYSTEM
FINANCIAL STATEMENTS
(WITH DETAILED SUPPORTIVE SCHEDULES)
STATEMENT OF PROCEDURE REGARDING
ANNUAL FINANCIAL REPORT
Present herein are the combined financial statements with detailed
supportive schedules for the University of Houston System for the
fiscal year ended August 31, 2004. These statements and detailed
supportive schedules are in compliance with the guidelines in
Reporting Requirements for Annual Financial Reports of State Agencies
and Universities, published by the Texas Comptroller of Public
Accounts. Additionally, this report has been prepared in accordance
with the requirements contained in Governmental Accounting Standards
Board Statement No. 34, Basic Financial Statements - and Management's
Discussion and Analysis - for State and Local Governments.
The State Auditor has not audited the accompanying annual financial
statements and, therefore, an opinion has not been nor will be
expressed on the financial statements and related information
contained in this report.
The information contained in the combined
financial statements of the University of Houston System, and its
related components, is part of and included in the State of Texas
Comprehensive Annual Financial Report. The Annual Financial Report of
the University of Houston System is reviewed by the State Auditor as
part of the audit of the State of Texas Comprehensive Annual Financial
Report, upon which an opinion is expressed.
III - 1
Unaudited
University of Houston System
Combined Statement of Net Assets
August 31, 2004
Total 2004
Assets
Current Assets
Cash and Cash Equivalent
Cash on Hand
Cash in Bank
Cash in Transit/Reimb Due From Treasury
Cash in State Treasury
Cash Equivalents
Short-term Investments
Restricted:
Cash and Cash Equivalent
Cash on Hand
Cash in Bank
Cash Equivalents
Loans and Contracts
Legislative Appropriations
Receivables From:
Federal Receivables
Interest and Dividends
Accounts Receivable
Gifts
Other Receivables
Due From Agencies
Consumable Inventories
Merchandise Inventories
Deferred Charges
$
137,255.00
(59,424,545.20)
21,668,433.31
15,030,110.25
160,329,140.80
93,923,474.04
1,000.00
17,332,651.99
Total Current Assets
Non-Current Assets
Restricted:
Cash and Cash Equivalent
Cash in Bank
Cash Equivalents
Receivables
Loans and Contracts
Investments
Capital Assets
Non-Depreciable
Land and Land Improvements
Construction in Progress
Other Capital Assets
Depreciable
Building and Building Improvements
Less Accumulated Depreciation
Infrastructure
Less Accumulated Depreciation
Facilities and Other Improvements
Less Accumulated Depreciation
Furniture and Equipment
Less Accumulated Depreciation
Vehicles, Boats and Aircraft
Less Accumulated Depreciation
1-1
Total 2003
$
147,995.00
(11,959,113.34)
9,782,988.93
23,990,891.75
129,298,583.37
111,074,130.38
6,555,214.64
52,264,306.26
1,300.00
(3,421,704.71)
441,898.51
5,441,445.65
44,886,090.48
9,108,779.07
1,586,145.19
8,843,275.31
15,570,187.14
18,269,987.66
524,104.70
555,516.21
2,405,297.69
20,739,577.88
10,689,137.12
2,258,669.87
16,971,832.22
21,168,149.57
10,776,548.16
1,158,700.58
437,102.52
2,254,550.18
18,916,845.28
385,419,911.94
394,316,041.52
27,553,994.10
601.15
564,922.10
11,497,274.98
475,893,666.54
7,113,594.23
601.15
115,969.53
11,637,104.02
472,823,796.74
60,546,519.41
111,732,679.50
88,945,864.22
60,431,773.57
112,618,512.42
82,835,752.80
566,270,145.49
(388,317,927.71)
42,757,738.54
(33,670,528.18)
40,443,839.96
(31,623,310.34)
151,081,200.61
(113,804,243.34)
2,978,190.55
(2,241,426.71)
591,482,979.90
(426,769,620.31)
19,911,789.98
(15,268,806.89)
31,762,917.96
(22,408,440.56)
151,404,961.94
(110,901,896.09)
3,078,476.59
(2,322,486.97)
Unaudited
University of Houston System
Combined Statement of Net Assets
August 31, 2004
Total 2004
Other Capital Assets
Less Accumulated Depreciation
Total 2003
6,818,521.18
(3,607,895.85)
Total Noncurrent Assets
4,267,898.55
(3,339,687.49)
1,013,819,826.20
968,475,191.07
1,399,239,738.14
1,362,791,232.59
32,893,103.54
4,451,246.32
32,275,385.26
3,403,961.66
100,404,298.92
14,745,729.44
7,404,447.48
5,178,463.96
17,263,902.66
3,829,630.06
34,871,689.56
3,384,433.11
29,265.19
73,192,439.55
14,124,302.51
6,342,560.91
4,409,756.23
Total Current Liabilities
200,756,636.58
157,447,979.78
Noncurrent Liabilities
Revenue Bonds Payable
Employees' Compensable Leave
Other NonCurrent Liabilities
283,537,854.44
8,782,982.02
271,843,060.22
7,271,755.66
274,020.47
Total Noncurrent Liabilities
292,320,836.46
279,388,836.35
493,077,473.04
436,836,816.13
274,242,674.37
303,025,724.42
1,696.20
19,180,098.10
1,621.41
21,001,427.97
326,888,348.19
67,600,109.87
218,249,338.37
309,122,974.40
84,671,635.04
208,131,033.22
Total Assets
Liabilities
Current Liabilities
Payables
Accounts Payable
Federal Payable
Payroll Payable
Other Payable
Due to Other Agencies
Deferred Revenues
Revenue Bonds Payable
Employees' Compensable Leave
Funds Held for Others
Total Liabilities
Net Assets
Invested in Capital Assets, Net of Related Debt
Restricted for:
Debt Retirement
Capital Projects
Funds Held as Permanent Investments:
Non-Expendable
Endowment Funds
Other Restricted
Unrestricted
$
Total Net Assets
1-2
906,162,265.10
$
925,954,416.46
Unaudited
University of Houston System
Combined Statement of Revenues, Expenses and Changes in Net Assets
For The Year Ended August 31, 2004
Total 2004
Operating Revenues
Sales of Goods and Services (PR-Chgs for Services)
Tuition and Fees
Discounts and Allowances
Auxiliary Enterprise
Other Sales of Goods and Services
Federal Revenue-Operating (PR-OP Grants/Contributions)
Federal Pass Through Revenue (PR-OP Grants/Contributions)
State Grant Revenue (PR-OP Grants/Contributions)
State Grant Pass Through Revenue (PR-OP Grants/Contributions)
Other Grants and Contracts-Operating (PR-OP Grants/Contributions)
Other Operating Revenues (PR-Chgs for Services)
$
252,500,680.39
(39,597,407.48)
37,896,685.08
17,198,961.58
80,085,995.35
8,291,935.98
7,875,194.53
11,161,796.49
18,460,738.09
224,151.64
Total 2003
$
215,665,102.53
(44,211,760.99)
35,812,188.78
7,250,596.17
71,175,602.10
33,831,206.07
8,873,664.36
11,758,026.78
19,088,264.32
Total Operating Revenues
394,098,731.65
359,242,890.12
Operating Expenses
Instruction
Research
Public Service
Academic Support
Student Services
Institutional Support
Operation & Maintenance of Plant
Scholarships & Fellowships
Auxiliary Enterprises
Depreciation & Amortization
209,735,532.39
74,469,317.31
28,084,104.04
84,841,827.03
28,291,877.00
60,432,713.42
40,690,906.07
45,992,158.24
59,457,342.34
26,035,038.49
216,219,919.48
73,967,640.17
26,236,309.93
71,343,035.52
26,152,977.71
49,117,179.06
43,147,871.91
43,010,258.64
53,667,396.03
23,806,562.66
Total Operating Expenses
658,030,816.33
626,669,151.11
(263,932,084.68)
(267,426,260.99)
Non-Operating Revenues (Expenses)
Legislative Revenue (GR)
Gifts (PR-OP Grants/Contributions)
Interest and Investment Income (PR-Chgs for Services)
Interest Expense and Fiscal Charges
Gain (Loss) on Sale of Capital Assets (GR)
Net Increase (Decrease) in Fair Value of Investments (PR-OP Grants/Contributions)
Other Nonoperating Revenues (Expenses) (PR-Chgs for Services)
227,230,706.44
27,996,504.06
36,781,486.25
(12,652,440.15)
(8,494.14)
1,052,824.28
(76,956,482.22)
226,099,366.07
36,114,248.07
25,140,704.08
(12,633,711.91)
(6,265.00)
11,282,813.87
(48,416,481.07)
Total Nonoperating Revenues (Expenses)
203,444,104.52
237,580,674.11
(60,487,980.16)
(29,845,586.88)
Operating Income (Loss)
Income (Loss) before Other Revenues, Expenses, Gains, Losses and Transfers
2-1
Unaudited
University of Houston System
Combined Statement of Revenues, Expenses and Changes in Net Assets
For The Year Ended August 31, 2004
Other Revenues, Expenses, Gains, Losses and Transfers
Capital Appropriation (HEAF)
Additions to Permanent and Term Endowments
Transfers-In
Transfers-Out
Legislative Transfers-In
Legislative Transfers-Out
Legislative Appropriations Lapsed
Total 2004
Total 2003
36,952,989.00
5,046,110.92
36,952,989.00
5,893,216.97
7,472,763.00
(426,376.01)
495,288.00
(495,288.00)
(876,895.11)
Total Other Rev, Exp, Gains, Losses and Transfers
734,914.43
(314,369.73)
40,695,828.80
50,739,513.67
(19,792,151.36)
20,893,926.79
Net Assets Beginning
Restatements
925,954,416.46
905,060,489.67
Net Assets Beginning, as Restated
925,954,416.46
905,060,489.67
Change In Net Assets
Net Assets, Ending
$
2-2
906,162,265.10
$
925,954,416.46
Unaudited
University of Houston System
Matrix of Operating Expenses Reported by Function
Combined For The Year Ended August 31, 2004
Operating Expenses
Instruction
Cost of Goods Sold
Salaries and Wages
Payroll Related Costs
Professional Fees and Services
Federal Pass-Through Expenses
State Pass-Through Expenses
Travel
Materials and Supplies
Communication and Utilities
Repairs and Maintenance
Rentals and Leases
Printing and Reproduction
Depreciation and Amortization
Bad Debt Expense
Interest
Scholarships
Claims and Losses
Other Operating Expenses
$
Total Operating Expenses
$ 209,735,532.39
Public
Service
Research
$
156,171,004.04
33,525,926.58
451,893.33
52,345.14
$
1,770,520.96
57,200.87
2,283,493.30
338,879.54
710,064.21
686,280.12
39,105,357.18
6,715,510.64
2,902.69
2,646,109.24
158,515.00
2,576,926.37
23,544.53
957,855.36
550,717.25
1,679,351.37
438,414.96
115,324.24
2,398,909.73
837.00
11,172,853.33
30,328.47
915,077.68
1,317.00
18,667,389.57
$
74,469,317.31
3-1
$
752,504.95
12,281,282.74
2,813,007.30
523,305.88
244,201.95
Academic
Support
$
4,595.88
51,616,041.87
10,405,034.75
458,036.92
Student
Services
$
16,021,345.69
3,941,767.05
83,122.73
467,979.56
80,145.66
1,472,075.98
204,408.24
3,325,483.45
656,356.87
1,381,492.99
100,742.60
3,256,623.75
1,705,130.70
1,083,266.58
557,538.34
222,735.07
21,464.28
1,190,948.87
214,094.07
387,221.83
772,671.61
60,822.35
44,018.05
13.59
5,158,497.47
20,062.75
508,011.73
1,548,568.48
245,185.22
1,091.10
3,641,661.00
28,084,104.04
13,745,248.17
$
84,841,827.03
$
28,291,877.00
Unaudited
University of Houston System
Matrix of Operating Expenses Reported by Function
Combined For The Year Ended August 31, 2004
Operation and
Maintenance of
Plant
Institutional
Support
$
$
Scholarships
and
Fellowships
$
$
38,140,429.47
11,894,445.09
1,434,467.06
12,501,573.11
3,998,558.49
712,007.31
2,778,444.47
113,108.47
5,731.83
624,772.93
555,037.71
26,214.44
1,460,312.39
2,305,535.76
531,174.04
807,702.39
43,805.13
364,172.54
12,493,441.97
1,567,263.61
696,672.06
37,108.71
147,707.91
13,696.15
129,710.14
107.55
11,197.31
41,149.72
Depreciation
and
Amortization
Auxiliary
Enterprises
682,657.15
22,994,433.24
4,876,580.81
319,079.66
$
$
2,534,350.01
582,176.14
6,490,080.10
884,717.32
683,039.63
624,955.34
26,035,038.49
331,756.73
921,559.15
38,539.50
1,274,194.69
711,345.00
$
60,432,713.42
$
25,710.33
7,443.25
41,640,479.52
8,250,592.81
478,608.99
40,690,906.07
$
45,992,158.24
147,079.49
1,944,194.80
300,000.00
16,393,998.65
$
59,457,342.34
3-2
$
Total
2004
26,035,038.49
1,439,757.98
351,609,911.81
78,283,939.18
3,990,547.41
3,567,429.26
158,515.00
9,700,555.71
1,269,357.21
29,734,541.86
7,770,854.04
9,107,470.48
4,622,178.06
26,035,038.49
331,756.73
2,876,898.51
47,734,416.23
1,577,453.38
78,220,194.99
$ 658,030,816.33
Total
2003
$
1,795,860.16
333,792,260.29
80,033,520.75
5,254,531.71
3,457,364.68
17,025.00
8,631,531.94
1,259,707.53
27,876,889.19
6,304,668.48
8,727,240.36
4,922,521.01
23,806,562.66
41,000.70
744,306.75
43,676,033.73
1,726,735.93
74,601,390.24
$ 626,669,151.11
Unaudited
University of Houston System
Combined Statement of Cash Flows
For The Year Ended August 31, 2004
Total 2004
Cash Flows from Operating Activities
Receipts from Customers
Proceeds from Tuition & Fees
Proceeds from Research Grants & Contracts
Proceeds from Loan Programs
Proceeds from Auxiliaries
Proceeds from Other Revenues
Payments to Suppliers for Goods and Services
Payments to Employees for Salaries
Payments to Employees for Benefits
Payments for Loans Provided
Payments for Other Expenses
$
Net Cash Provided (Used) by Operating Activities
Cash Flows from Noncapital Financing Activities
Proceeds from State Appropriations
Proceeds from Gifts
Proceeds from Endowments
Proceeds from Other Revenues
Proceeds of Transfers from Other Funds
Proceeds from Other Financing
Payments for Transfers to Other Funds
Payments for Other Uses
21,767,354.39
233,106,367.30
28,333,383.45
4,148,792.94
40,955,722.37
97,668,330.53
(72,168,986.37)
(354,410,184.38)
(78,431,599.67)
(5,130,188.38)
(113,137,881.46)
Total 2003
$
51,573,310.30
200,873,604.52
29,904,445.15
15,050,009.50
41,420,611.08
116,042,576.18
(87,972,113.92)
(325,806,524.95)
(77,943,719.89)
(16,576,868.15)
(132,953,631.72)
(197,298,889.28)
(186,388,301.90)
197,875,954.67
31,914,438.11
6,177,611.31
225,759,643.28
17,653,347.00
6,904,536.97
138,499,463.90
(48,446,098.03)
9,902,672.99
(8,641,092.15)
(179,425,127.31)
17,238,515.05
(3,531,395.88)
Net Cash Provided by Noncapital Financing Activities
249,675,123.26
162,207,346.65
Cash Flows from Capital and Related Financing Activities
Proceeds from the Sale of Capital Assets
Proceeds from Debt Issuance
Proceeds from Other Financing Activities
Proceeds from Capital Contributions
Payments for Additions to Capital Assets
Payments of Principal on Debt
Payments of Interest on Debt Issuance
Payments of Other Costs on Debt Issuance
3,260.00
(8,066.11)
1,105,757.00
36,952,989.00
(41,281,742.36)
1,552,833.31
(3,038,749.56)
(22,118,524.55)
2,275.00
121,536,999.02
(9,826,281.40)
36,952,989.00
(87,270,566.41)
(12,428,109.54)
(3,265,078.73)
Net Cash Provided by Capital and Related Financing Activities
(26,832,243.27)
45,702,226.94
Cash Flows from Investing Activities
Proceeds from Sales of Investments
Proceeds from Interest Income
Proceeds from Investment Income
314,508.47
1,373,107.33
176,652.41
1,698,284.41
8,832.62
Net Cash Provided (Used) by Investing Activities
1,687,615.80
1,883,769.44
4-1
Unaudited
University of Houston System
Combined Statement of Cash Flows
For The Year Ended August 31, 2004
Total 2004
Total 2003
Net Increase (Decrease) in Cash and Cash Equivalents
27,231,606.51
23,405,041.13
Cash and Cash Equivalents, September 1, 2003
Restatements to Beginning Cash and Cash Equivalents
155,397,034.89
131,991,993.76
Cash and Cash Equivalents, August 31, 2004
182,628,641.40
155,397,034.89
(263,932,084.68)
(267,426,260.99)
26,035,038.49
331,756.73
23,806,562.66
41,000.70
297,365.93
(269,161.20)
(1,779,308.74)
(981,395.44)
634,595.88
14,801,828.11
27,870,566.99
2,813,566.62
(3,203,698.54)
82,040.57
25,347,337.04
1,918,331.90
(1,995,812.89)
(1,567,859.35)
2,673,316.44
12,900,651.14
11,789,141.26
1,382,878.95
1,697,236.24
3,045,175.00
66,633,195.40
81,037,959.09
Reconciliation of Operating Income (Loss) to Net Cash
Provided (Used) by Operating Activities
Operating Income (Loss)
Adjustments to Reconcile Operating Income to Net Cash
Provided (Used) by Operating Activities
Amortization and Depreciation
Bad Debt Expense
Changes in Assets and Liabilities:
(Increase) Decrease in Receivables
(Increase) Decrease in Inventories
(Increase) Decrease in Prepaid Expenses
(Increase) Decrease in Loans and Contracts
(Increase) Decrease in Other Assets
Increase (Decrease) in Payables
Increase (Decrease) in Deferred Income
Increase (Decrease) in Compensated Absence Liability
Increase (Decrease) in Benefits Payable
Increase (Decrease) in Other Liabilities
Total Adjustments
Net Cash Provided (Used) by Operating Activities
$
Non-Cash Transactions
Capitalization of Revenue Bond Interest Paid
Disposal of Capital Assets
Library Books Withdrawal
$
(197,298,889.28)
1,388,700.69
$
(186,388,301.90)
$
1,974,386.25
8,288.98
(471,818.20)
$
1,510,857.03
9,879.00
Non-Cash Transactions
$
4-2
1,398,579.69
UNAUDITED
UNIVERSITY OF HOUSTON SYSTEM
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED AUGUST 31, 2004
NOTE 1:
Summary of Significant Accounting Policies
Entity
The University of Houston System (the 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' Reporting Requirements for State Agencies.
The University of Houston System serves the state as the primary provider of educational and
cultural opportunities, skilled employers and leaders, technical knowledge, and innovative
research to the Houston metropolitan area and the Gulf Coast region. Houston and the upper
Gulf Coast region represent approximately one fourth of the state’s population and
economy.
The University of Houston System includes within this report all components as determined
by an analysis of their relationship to the University of Houston as listed below.
Due to the statewide requirements embedded in 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 report to comply with all the requirements in this
statement. 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.
The accompanying financial statements and related information have been prepared in
conformity with the instructions contained in the State Comptroller’s manual, Reporting
Requirements for Annual Financial Reports of State Agencies and Universities. The
instructions and the accompanying report are designed to assist the Texas Comptroller of
Public Accounts in compiling and preparing a Comprehensive Annual Financial Report for
the State of Texas. Since the University’s annual financial report is not subject to a
separate financial audit, certain information, such as a Management Discussion and
Analysis and a complete set of Government-Wide Financial Statements, are not included in
the accompanying report. The University’s financial statements are considered to be
materially accurate in all respects.
Blended Component Units
No component units have been identified which should have been blended into an
appropriated fund.
Discretely Presented Component Units
These component units are legally separate from the state, but are financially
accountable to the state, or have a relationship with the state such that exclusion
would cause the financial statements to be misleading or incomplete. The component
unit columns of the financial statements include the financial data of these
entities.
No component units have been identified which should have been discretely presented
in the financial statements.
Fund Structure
The accompanying financial statements are presented on the basis of funds, each
of which is considered a separate accounting entity.
5 - 1
UNAUDITED
Governmental Fund Types & Government-wide Adjustment Fund Types
General Fund
The General Fund is the principal operating fund used to account for most of
the state's general activities. It accounts for all financial resources
except those accounted for in other funds.
Special Revenue Funds
Special Revenue funds are used to account for the proceeds of specific
revenue sources (other than for private-purpose trusts or for major capital
projects) that are legally restricted to use for specified purposes.
Debt Service Funds
Debt Service funds are used to account for the accumulation of resources for,
and the payment of, general long-term debt principal and interest.
Capital Project Funds
Capital Project funds are used to account for financial resources used for
the acquisition, repair, renovation or construction of major capital
facilities (other than those financed by proprietary or similar trust funds).
Permanent Funds
Permanent funds are used to account for resources that are legally restricted
to the extent that only earnings, and not principal, may be used for purposes
that support the state's programs.
Capital Asset Adjustment Fund Type
Capital Asset Adjustment fund type will be used to convert governmental fund
type capital assets from modified accrual to full accrual.
Long-Term Liabilities Adjustment Fund Type
Long-Term Liabilities Adjustment fund type will be used to
governmental fund type debt from modified accrual to full accrual.
convert
Other Adjustments Fund Type
Other Adjustments fund type will be used to convert all other governmental
fund type activity from modified accrual to full accrual.
Proprietary Fund Types
Enterprise Funds
Enterprise funds are used to account for any activity for which a fee is
charged to external users for goods or services. Activities must be reported
as enterprise funds if any one of the following criteria is met.
1. The activity is financed with debt that is secured solely by a pledge of
the net revenues from fees and charges of the activity.
2. Laws or regulations require that the activity's costs of providing services
including capital costs (such as depreciation or debt service), be recovered
with fees and charges.
3. The pricing policies of the activity establish fees and charges designed
to recover its costs, including capital costs.
Internal Service Funds
Internal Service funds are used to account for the financing of goods and
services provided by one department or agency to other departments or agencies
of a governmental unit, or to other governmental units, within the state, on a
cost reimbursement basis.
5 - 2
UNAUDITED
Fiduciary Fund Types
Fiduciary funds account for assets held by the state in a trustee capacity or as
an agent for individuals, private organizations, other governmental units,
and/or other funds. When assets are held under the terms of a formal trust
agreement, either a pension trust fund, or a private purpose trust fund is used.
Pension Trust Funds
Pension trust funds are used to account for resources held in trust for the
member and beneficiaries of defined benefit pension plans. A separate pension
trust fund is used for each separate pension plan. Separate pension trust funds
also may be established to account for supplemental pension benefits.
External Investment Trust Funds
External investment trust funds are used to account for the state's external
portion of investment pools reported by the sponsoring government.
Agency Funds
Agency funds are used to account for assets the government holds on behalf of
others in a purely custodial capacity. Agency funds involve only the receipt,
temporary investment, and remittance of fiduciary resources to individuals,
private organizations, or other governments.
Private-Purpose Trust Funds
Private-purpose trust funds are used to account for all other trust
arrangements whose principal and interest benefit individuals, private
organizations, or other governments.
Component Units
The fund types of individual discrete component units are available from the
component units' separately issued financial statements. Additional information
about component units can be found in Note 17.
Governmental Component Units are used to account for discretely
component units that follow governmental fund accounting principles.
presented
Proprietary Component Units are used to account for the discretely presented
component units which follow proprietary fund measurement focus and accounting
principles.
Business-Type Activities
The operations of the System and its component universities are considered to
be a Business-Type Activity. The system charges fees to external users for
goods and services. Consequently the accompanying financial statements are
presented using the proprietary fund type structure.
Basis of Accounting
The basis of accounting determines when revenues and expenditures or expenses
are recognized in the accounts reported in the financial statements. The
accounting and financial reporting treatment applied to a fund is determined by
its measurement focus.
Governmental fund types that build the fund financial statements are accounted
for using the modified accrual basis of accounting. Under the modified accrual
basis, revenues are recognized in the period in which they become both
measurable and available to finance operations of the fiscal year or liquidate
liabilities existing at fiscal year end. The State of Texas considers
receivables collected within sixty days after year-end to be available and
recognizes them as revenues of the current year for Fund Financial Statements
prepared on the modified accrual basis. Expenditures and other uses of financial
resources are recognized when the related liability is incurred.
Governmental adjustment fund types that will build the government-wide financial
statements are accounted for using the full accrual basis of accounting. This
includes capital assets, accumulated depreciation, unpaid Employee Compensable
leave, the unmatured debt service (principal and interest) on general long-term
liabilities, long-term capital leases, long-term claims and judgments and full
5 - 3
UNAUDITED
accrual revenues and expenses. The activity will be recognized in these fund
types.
Proprietary funds, pension trust funds, external investment trust funds and
private-purpose trust funds are accounted for on the accrual basis of
accounting. Under the accrual basis of accounting, revenues are recognized when
earned and expenses are recognized at the time liabilities are incurred.
Proprietary funds distinguish operating from non-operating items. Operating
revenues and expenses result from providing services or producing and delivering
goods in connection with the proprietary funds’ principal ongoing operations.
Operating expenses for the enterprise and internal services funds include the
cost of sales and services, administrative expenses, and depreciation on capital
assets.
Budget and Budgetary Accounting
The budget is prepared biennially and represents appropriations authorized by
the legislature and approved by the Governor (the General Appropriations Act).
Additionally the System prepares an annual budget which represents anticipated
sources of revenues and authorized uses. This budget is approved by the System’s
Board of Regents.
Unencumbered appropriations are generally subject to lapse 60 days after the end
of the fiscal year for which they were appropriated.
Assets, Liabilities, and Fund Balances/Net Assets
ASSETS
Cash and Cash Equivalents
Short-term highly liquid investments with an
months or less are considered cash equivalents.
original
maturity
of
three
Securities Lending Collateral
Investments are stated at fair value in all funds except pension trust funds
in accordance with GASB Statement 31, Accounting and Financial Reporting for
Certain Investments and for External Investment Pools. For pension trust
funds, investments are required to be reported at fair value using the
accrual basis of accounting in accordance with GASB Statement 25, Financial
Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined
Contribution Plans.
Securities lent are reported as assets on the balance sheet. The costs of
securities lending transactions are reported as expenditures or expenses in
the Operating Statement. These costs are reported at gross.
Restricted Assets
Restricted assets include monies or other resources restricted by legal or
contractual requirements. These assets include proceeds of enterprise fund
general obligation and revenue bonds and revenues set aside for statutory or
contractual requirements. Assets held in reserve for guaranteed student loan
defaults are also included.
Inventories and Prepaid Items
Inventories include both merchandise inventories on hand for sale and
consumable inventories. Inventories are valued at cost, generally utilizing
the last-in, first-out method. The consumption method of accounting is used
to account for inventories and prepaid items that appear in the governmental
and proprietary fund types. The cost of these items is expensed when the
items are consumed.
Capital Assets
Assets with an initial, individual cost of more than $5,000 and an estimated
useful life in excess of one year are capitalized. These assets are
capitalized at cost or, if purchased, at appraised fair value as of the date
of acquisition. Purchases of assets by governmental funds are reported as
5 - 4
UNAUDITED
expenditures,
Depreciation
is
reported
on
all
exhaustible
assets.
Inexhaustible assets such as works of art and historical treasures are not
depreciated. Road and highway infrastructure is reported on the modified
basis. Assets are depreciated over the estimated useful life of the asset
using the straight-line method.
All capital assets acquired by proprietary funds or trust funds are reported
at cost or estimated historical cost, if actual historical cost is not
available. Donated assets are reported at fair value on the acquisition date.
Depreciation is charged to operations over the estimated useful life of each
asset, using the straight-line method.
Current Receivables - Other
Other receivables include year-end revenue accruals. This account can appear in
governmental and proprietary fund types.
Non-Current Receivables - Other
Receivable balances not expected to be collected within one year of fiscal year
end.
LIABILITIES
Accounts Payable
Accounts payable represent the liability for the value of assets or services
received at the balance sheet date for which payment is pending.
Current Payables - Other
Payables are the accrual at year-end of expenditure transactions. Payables
may be included in either the governmental or proprietary fund types.
Non-Current Payables - Other
Payable balances not expected to be paid within one year of fiscal year end.
Employees' Compensable Leave Balances
Employees' Compensable Leave 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.
Capital Lease Obligations
Capital lease obligations represent the liability for future lease payments
under capital lease contracts contingent upon the appropriation of funding by
the Legislature. Liabilities are reported separately as either current or
noncurrent in the statement of net assets.
Bonds Payable - General Obligation Bonds
The unmatured principal of general obligations bonds is accounted for in the
Long-term Liabilities column. Payables are reported separately as either
current or noncurrent in the statement of net assets.
Bonds payable are recorded at par. The bond proceeds are accounted for as an
Other Financing Source in the governmental funds when received, and
expenditures for payment of principal and interest are recorded in debt
service funds when paid. These amounts are adjusted in the long-term
liabilities column.
Bonds Payable - Revenue Bonds
Revenue bonds are generally accounted for in the proprietary funds. The bonds
payable are reported at par, less unamortized discount or plus unamortized
premium. Interest expense is reported on the accrual basis, with amortization
of discount or premium. Payables are reported separately as either current or
noncurrent in the Statement of Net Assets.
5 - 5
UNAUDITED
FUND BALANCE/NET ASSETS
The difference between fund assets and liabilities is Net Assets on the
government-wide, proprietary, and fiduciary fund statements, and the Fund
Balance is the difference between fund assets and liabilities on the
governmental fund statements.
Reservations of Fund Balance
Fund balances for governmental funds are classified as either reserved or
unreserved in the fund financial statements. Reservations are legally
restricted to a specific future use and are not available for expenditure.
Reserved for Encumbrances
This represents commitments of the value of contracts awarded or assets ordered
prior to year-end but not received as of that date. Encumbrances are not
included with expenditures or liabilities. They represent current resources
designated for specific expenditures in subsequent operating periods.
Unreserved/Undesignated:
This represents the unappropriated balance at year-end.
Invested In Capital Assets, Net Of Related Debt
Invested in capital assets, net of related debt consists of capital assets,
net of accumulated depreciation and reduced by outstanding balances for
bonds, notes, and other debt that are attributed 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 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 the two preceding categories. Unrestricted net assets often
have constraints on resources, which are imposed by management, but can be
removed or modified.
INTERFUND ACTIVITIES AND BALANCES
The University has the following types of transactions between funds:
1. Transfers - Legally required transfers that are reported when incurred as
Transfers In by the recipient fund and as Transfers Out by the disbursing
fund.
2. Reimbursements - Reimbursements are repayments from funds responsible for
expenditures or expenses to funds that made the actual payment.
Reimbursements of expenditures made by one fund for another that are
recorded as expenditures in the reimbursing fund and as a reduction of
expenditures in the reimbursed fund. Reimbursements are not displayed in
the financial statements.
3. Interfund Receivables and Payables - Interfund loans are reported as
interfund receivables and payables. If repayment is due during the
current year or soon thereafter it is classified as Current, repayment
for two (or more) years is classified as Non-Current.
4. Interfund Sales and Purchases - Charges or collections for services
rendered by one fund to another that are recorded as revenues of the
recipient fund and expenditures or expenses of the disbursing fund. The
composition of the University’s interfund activities and balances are
presented in Note 7.
5 - 6
UNAUDITED
NOTE 2: Capital Assets
A summary of changes in Capital Assets for the year ended August 31, 2004, is presented in
Table 2.
Table 2 - Capital Assets
University of Houston System
Balance
9/1/03
Business-type activities:
Non-depreciable Assets
Land and Land Improvements
Construction in Progress
Other Capital Assets
Total Non-depreciable Assets
Depreciable Assets
Buildings and Building Improvements
Infrastructure
Facilities & Other Improvements
Furniture and Equipment
Vehicle, Boats & Aircraft
Other Capital Assets
Total depreciable assets at historical costs
Less accumulated depreciation for:
Buildings and Improvements
Infrastructure
Facilities & Other Improvements
Furniture and Equipment
Vehicle, Boats & Aircraft
Other Capital Assets
Total accumulated depreciation
Depreciable assets, net
Business-type activities capital assets, net
60,431,773.57
112,618,512.42
82,835,752.80
255,886,038.79
Adjustments
Completed CIP
(16,120,338.56)
(5,892,780.94)
(22,013,119.50)
(31,430,634.91)
0.00
(31,430,634.91)
591,482,979.90
19,911,789.98
31,762,917.96
151,404,961.94
3,078,476.59
4,267,898.55
801,909,024.92
(55,467,409.53)
22,845,948.56
8,680,922.00
(30,669.89)
28,957,731.28
31,320.00
(23,939,888.86)
2,472,903.63
31,430,634.91
(426,769,620.31)
(15,268,806.89)
(22,408,440.56)
(110,901,896.09)
(2,322,486.97)
(3,339,687.49)
(581,010,938.31)
220,898,086.61
48,593,476.66
(17,678,557.16)
(7,760,215.72)
(1,494,191.82)
0.20
(7,583.60)
21,652,928.56
(2,286,960.30)
31,430,634.91
476,784,125.40
(24,300,079.80)
0.00
5 - 7
UNAUDITED
Table 2 - Capital Assets
University of Houston System
Balance
Inc-Int’agy Trans
Dec-Int’agy
Trans
Additions
Deletions
0.00
0.00
114,745.84
46,665,140.55
12,963,762.36
59,743,648.75
12,415,862.71
(12,568,025.67)
2,502,680.28
1,053,673.48
2,391,577.40
8,642,858.37
(2,391,577.40)
(8,664,232.09)
8,722,372.29
325,501.14
75,000.00
23,525,298.48
(75,000.00)
(23,698,835.16)
8,450,654.57
225,215.10
46,399.00
11,224,948.95
1,627,515.62
(311,944.32)
(6,604,517.86)
311,944.32
7,248,596.38
(33,750.00)
(6,950,212.18)
16,575,086.30
33,750.00
9,221,806.32
(14,477,028.84)
(12,787,447.68)
(696,816.28)
(1,454,654.06)
(9,749,710.78)
(189,848.38)
(260,624.76)
(25,139,101.94)
(13,914,152.99)
16,575,086.30
(14,477,028.84)
45,829,495.76
5 - 8
960,870.00
960,870.00
10,101,546.91
(1,018,148.00)
26,347.85
8/31/04
60,546,519.41
111,732,679.50
88,945,864.22
261,225,063.13
566,270,145.49
42,757,738.54
40,443,839.96
151,081,200.61
2,978,190.55
6,818,521.18
810,349,636.33
(8,960,185.42)
1,141,361.49
(388,317,927.71)
(33,670,528.18)
(31,623,310.34)
(113,804,243.34)
(2,241,426.71)
(3,607,895.85)
(573,265,332.13)
237,084,304.20
2,102,231.49
498,309,367.33
(7,697,476.83)
(270,908.44)
UNAUDITED
NOTE 3:
Deposits, Investments, & Repurchase Agreements
The University of Houston System is authorized by statute to make investments following the
prudent person rule. There were no significant violations of legal provisions during the
period.
Deposits of Cash in Bank
A. The carrying amount of $(14,537,899.11) for Cash in Bank (including restricted
assets and discretely presented component units) is presented below in Table 3.1.
B. The bank balance of the System has been classified according to the following risk
categories.
1. Category 1 - Insured or collateralized with securities held by the System or by
its agent in the name of the System.
2. Category 2 - Collateralized with securities held by the pledging financial
institution's trust department or agent in the System name.
3. Category 3 - Uncollateralized (which would include any deposits collateralized
with securities held by the pledging financial institutions, or by its trust
department or agent but not in the System’s name).
Table 3.1 – Cash Deposits
Category 1
Category 2
$1,264,129.00
Category 3
$0.00
$33,740.00
Consisting of the following:
Demand Deposits
Proprietary Funds Certificates of Deposit
Fiduciary Funds Uninvested Securities Lending
Cash Collateral
Bank
Balance
$1,297,869.00
Carrying
Amount
$(14,537,899.11)
$(14,537,899.11)
Total Deposits Carrying Amounts
$(14,537,899.11)
Investments
The fair values of investments including both short-term and long-term as of the balance
sheet date are shown below in Table 3B. Investments are categorized to give an indication
of the level of risk assumed by the System at year-end. The three categories are:
1 . C a t e g o r y 1 : Investments that are insured or registered, or for which the
securities are held by the System, or its agent in the System’s name.
2 . C a t e g o r y 2 : U n i n s u r e d and unregistered investments for which the securities
are held by the broker's or dealer's trust department or agent in the System’s name.
3 . C a t e g o r y 3 : U n i n s u r e d and unregistered investments for which the securities
are held by the broker or dealer, or by its trust department or agent, but not in the
System’s name.
5 - 9
UNAUDITED
Table 3.2 - Investments
Type of Security
Fair
Value
Category
2
1
Govt. Investments
$96,374,720.74
Corporate Stock
196,158,635.57
196,158,635.57
36,921,671.77
36,921,671.77
Corporate Obligations
$
3
$
$
96,374,720.74
Political Sub Bonds
Mortgage Backed Securities
Foreign Equity
Foreign Obligations
Commercial Paper
Miscellaneous Investments
7,754,962.00
7,754,962.00
Repurchase Agreements
Repurchase Agreements – Texas
Treasury Safekeeping Trust
$7,754,962.00
$329,455,028.08
Totals
$
0.00
$
337,209,990.08
Uncategorized Investments:
Investments held by broker-dealers under reverse repurchase agreements:
U.S. Government Securities
Investments held by broker-dealers under securities lending agreements:
Corporate Stock
Security Lending Collateral Investment Pool
Texpool
93,923,552.03
Other
138,683,598.47
Total Investments
$569,817,140.58
Consisting of the following:
Proprietary Funds Investments
$569,817,140.58
Proprietary Funds Non-Current Restricted Short Term Investments
Proprietary Funds Non-Current Restricted Investments
Total, as above
$569,817,140.58
Proprietary Funds CDs disclosed as Deposits but reported as Non-Current
Restricted as Non-Current Restricted Short-Term Investments on financial
Statement
Total Investments per Financial Statements
5 - 10
$569,817,140.58
UNAUDITED
Reverse Repurchase Agreements
The University of Houston System, by statute, is authorized to enter into reverse
repurchase agreements. A reverse repurchase agreement is a transaction in which a brokerdealer or financial institution transfers cash to the System and the System transfers
securities to the broker-dealer and promises to repay the cash plus interest in exchange
for the same or similar securities. Credit risk exposure for the System arises when a
broker-dealer does not return the securities or their value at the conclusion of the
reverse repurchase agreement. There were no significant violations of legal or contractual
provisions during the year.
Securities Lending
The University of Houston System does not participate in a security-lending program.
In securities lending transactions, the System transfers its securities to broker-dealers
and other entities for collateral - which may be cash, or securities - and simultaneously
agrees to return the collateral for cash or the same securities in the future. The System
invests the cash received as collateral and, if the returns on those investments exceed the
rebate paid to the borrowers of the securities, the securities lending transactions
generate income for the System. However, if the investment of the cash collateral does not
provide a return exceeding the rebate or if the investment incurs a loss on principal, part
of the payment to the borrower would come from the System’s resources. The borrower will
pay a loan premium or fee for the securities loan, thus generating income for the System.
Securities lending is authorized by state statutes. The System is authorized to lend its
U.S. Government and Agency securities. Collateral is either cash or U.S. Government or
Agency securities at a value of 102 percent of the value of the securities lent. The
securities lending contracts allow the System to pledge or sell collateral securities
without borrower default. At year-end, the University has no credit risk exposure to
borrowers because the amounts the System owes to borrowers exceed the amounts the
borrowers owe the System. Contracts with the lending agents require them to indemnify the
System if the borrowers fail to return the securities. The policy is to match the
maturities of the collateral investments and the securities loans. There were no
significant violations of legal or contractual provisions, any borrower or lending agent
default losses, and no recoveries of prior-period losses during the year.
Derivative Investing
The University of Houston System did not hold any collateralized mortgage obligations at
fiscal year-end. These securities are purchased to provide 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 that these securities will provide
future cash inflows on a time schedule that approximately matches the outflows associated
with the System’s liabilities. These highly marketable securities are rated AAA by the major
rating agencies.
The University of Houston System does not enter into forward-exchange contracts to manage
exposure of foreign portfolio holdings to changes in foreign currency exchange rates. A
forward exchange contract is a commitment to purchase or sell a foreign currency at a future
date at a negotiated forward rate. Risks associated with such contracts include movement in
the value of the foreign currency related to the U.S. dollar and the ability of the
counterpart to perform.
5 - 11
UNAUDITED
NOTE 4:
Short-Term Debt
The University of Houston did not hold any short-term debt resulting from anticipation
notes, lines of credit or any other similar type of loan at fiscal year-end.
NOTE 5:
Summary of Long Term Liabilities
Changes In Long-Term Liabilities
During the year ended August
occurred in liabilities.
31,
2004,
the
following
changes,
presented
in
Table
5,
Table 5 – Long Term Liabilities
Business-Type
Activities
Revenue Bonds
Payable
Compensable Leave
Total BusinessType Activities
Balance
9-1-03
Additions
$285,967,362.73
$41,490,000.00
13,614,316.57
2,573,112.93
$299,581,679.30
$44,063,112.93
Reductions
$29,173,778.85
$29,173,778.85
Balance
8-31-04
Amounts Due
Within One
Year
$298,283,583.88
$14,745,729.44
16,187,429.50
7,404,447.48
$314,471,013.38
$22,150,176.92
Notes and Loans Payable
The System reported no notes or loans payable at the end of the year ended August 31,
2004.
Claims and Judgments
At August 31, 2004, various lawsuits and claims involving the System and/or its components
were pending. While the ultimate liability, if any, with respect to litigation and other
claims asserted against the System cannot be reasonably estimated at this time, such
liability, to the extent not provided for by insurance or otherwise, is not expected to have
a material effect on System accounts.
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.
Expenditures for accumulated annual leave balances are recognized in the period paid or
taken in governmental fund types. For these fund types, the liability for unpaid benefits
is recorded in the Statement of Net Assets. An expense and liability for proprietary fund
types are recorded in the proprietary funds as the benefits accrue to employees. No
liability is recorded for non-vesting accumulating rights to receive sick pay benefits.
Full-time state employees earn annual leave from seven to fourteen hours per month depending on
the respective employees' years of state employment. The state's policy is that an employee may
carry his accrued leave forward from one fiscal year to another fiscal year with a maximum
number of hours up to 520 for those employees with 35 or more years of state service. Accrued
leave in excess of the normal maximum was converted to sick leave at the conclusion of fiscal
year 2003. Employees with at least six months of state service who terminate their employment
are entitled to payment for all accumulated annual leave up to the maximum allowed.
Lump sum payments made to employees, who separated from state service during the 2004 fiscal
year, for accrued vacation and compensatory leave, totaled $1,104,694.20.
5 - 12
UNAUDITED
NOTE 6:
Capital Leases
The System may enter into long-term leases for financing the purchase of certain fixed
assets. Such leases are classified as capital leases for accounting purposes and,
therefore, are recorded at the present value of the future minimum lease payments at the
inception of the lease. There were no outstanding capital lease payments payable at August
31, 2004.
NOTE 7:
Operating Lease Obligations
Future minimum lease rental payments under non-cancelable operating leases
initial term in excess of one year, as of August 31, 2004, are shown in Table 7.
having
an
Table 7 – Operating Leases
NOTE 8:
Year Ended August 31,
2005
2006
2007
2008
2009
2010 – 2014
2015 - 2019
$ 2,901,071.58
2,175,803.68
1,450,535.80
725,267.89
362,633.95
181,316.97
90,658.49
Total Minimum Future Lease Rental Payments
$ 7,887,288.36
Interfund Balances / Activities
As explained in Note 1, under Interfund Transactions and Balances, there are numerous
transactions between funds and agencies. At year-end amounts to be received or paid are
reported as:
1. Interfund Receivables or Interfund Payables
2. Due From Other Agencies or Due To Other Agencies
3. Due From Other Funds or Due To Other Funds
4. Transfers In or Transfers Out
5. Legislative
required)
Transfers
In
or
Legislative
Transfers
Out
(Note
8
presentation
The System 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, 2004, are shown in Table 8.
Table 8.1 – Interfund Receivables and Payables
Current Portion
Current Interfund Receivable
Current Interfund Payable
GENERAL REVENUE (01)
$ 0.00
$ 0.00
Total Current Interfund
Receivable/Payable
$ 0.00
$ 0.00
Non-Current Interfund Receivable
Non-Current Interfund Payable
GENERAL REVENUE (01)
$ 0.00
$ 0.00
Total Non-Current Interfund
Receivable/Payable
$ 0.00
$ 0.00
Non-Current Portion
5 - 13
UNAUDITED
Table 8.2 – Due From/To Other Agencies
Due From
Other Agencies
Due To
Other Agencies
Source
ENTERPRISE (05)
Appd Fund 0347, D23
Fund 0347 Agency
902, D23 Fund 0347
UH – Clear Lake
$ 21,280.70
$ 0.00
Transfer
University of
Houston
3,935.00
0.00
State Grant
UH – Clear Lake
2,233.00
0.00
State Grant
693.00
0.00
State Grant
88.00
0.00
State Grant
620.00
0.00
State Grant
314,018.34
0.00
49,792.02
0.00
57.08
0.00
131,387.56
0.00
Appd Fund 5015, D23
Fund 5015 Agency
601, D23 Fund 5015
UH – Victoria
UH – System Admin
UH – Downtown
Appd Fund 5079, D23
Fund 5079 Agency
781, D23 Fund 5079
University of
Houston
UH – Clear Lake
UH – Victoria
State
Pass-Through
State
Pass-Through
State
Pass-Through
Appd Fund 9999, D23
Fund 7999 Agency
753, D23 Fund 7999
University of
Houston
Total Due From/To
Other Agencies
$ 524,104.70
$
5 - 14
0.00
Federal
Pass-Through
UNAUDITED
Table 8.3 – Due From/To Other Funds
Current Portion
Due From Other Funds
Due To Other Funds
$ 0.00
$ 0.00
$ 0.00
$ 0.00
GENERAL REVENUE (01)
Source
Total Due From/To Other Funds
Table 8.4 – Transfers In and Out
Transfers In
Transfers Out
Purpose
$ 0.00
$ 317,721.56
§ 56.465. TUITION SET ASIDE
FOR PROGRAM
0.00
68,241.00
$ 0.00
$ 385,962.56
ENTERPRISE (05)
Appd Fund 9999,
D23
Fund
7999
Agency 781, D23
Fund 0001
University of
Houston System
Agency 902, D23
Fund 001
University of
Houston System
Total Transfers
§ 61.9731 TEX. EDUC. CODE
ANN.
Table 8.5 – Legislative Transfers In and Out
Legislative Transfers In
GENERAL REVENUE (01)
Appd Fund 0001, D23 Fund
001 Agency 730, D23 Fund
0001
UH-Clear Lake
$ 81,049.00
UH – Victoria
195,489.00
Agency 759, D23 Fund 0001
University of Houston
UH – Clear Lake
Total Legislative
Transfers in and Out
Legislative Transfers Out
$ 81,049.00
195,489.00
218,750.00
218,750.00
0.00
0.00
$495,288.00
$495,288.00
NOTE 9: Contingent Liabilities
As mentioned in Note 5, various lawsuits and claims involving the System were pending.
While the ultimate liability, if any, remains uncertain, management does not expect any
possible adverse ruling to have a material effect on System accounts.
The agency has received several federal grants for specific purposes that are subject to
review and audit by the grantor agencies. Such audits could lead to a request for
reimbursements to grantor agencies for expenditures disallowed under the terms of the
grant.
Based on prior experience, management believes such disallowances, if any, will
be immaterial.
5 - 15
UNAUDITED
NOTE 10: Continuance Subject to Review
The System is not subject to the provisions of the Texas Sunset Act (Chapter 325, Texas
Government Code Annotated). The Act provides for the regular assessment of the continuing
need for state agencies to exist. Certain agencies, such as institutions of higher
education and courts, are not subject to the Sunset Act.
NOTE 11: Risk Financing and Related Insurance
The University of Houston System is exposed to a variety of civil claims resulting from
the performance of its duties. It is System policy to periodically assess the proper
combination of commercial insurance and retention of risk to cover losses to which it may
be exposed.
The System assumes substantially all risks associated with tort and liability claims due
to the performance of its duties. Currently there is the purchase of some commercial
insurance, and the System is not involved in any risk pools with other government
entities.
The System’s liabilities are reported when it is both probable that a loss has occurred
and the amount of that loss can be reasonably estimated. Liabilities include an amount
for claims that have been incurred but not reported (IBNR). Liabilities are reevaluated
periodically to consider current settlements, frequency of claims, past experience and
economic factors.
Changes in the balances of the System’s claims liabilities during fiscal years 2004 and
2003 are shown in Table 11.
Table 11 - Claims Liabilities
Fiscal Year
2003
2004
Beginning Of Fiscal
Year Liability
Claims And
Estimate Changes
Claims
Payments
Balance At
Fiscal Year End
$207,328.85
$691,419.01
$685,737.86
$213,010.00
$213,010.00
$1,069,971.67
$1,080,897.14
$202,084.53
NOTE 12: Segment Information
The System has no segment activity that requires separate disclosure in the notes to the
financial statements. A segment is an identifiable activity, or group of activities, reported
as or within an enterprise fund or an other stand-alone entity that has one or more bonds or
other debt instruments outstanding, with a revenue stream pledged in support of that debt. In
addition, the activity’s revenues, expenses, gains and losses, assets, and liabilities are
required to be accounted for separately.
NOTE 13: Bonded Indebtedness
Bonds Payable
Detailed supplemental bond information is disclosed in Schedule 2-A, Miscellaneous Bond
Information, Schedule 2-B, Changes in Bonded Indebtedness, Schedule 2-C Debt Service
Requirements, Schedule 2-D, Analysis of Funds Available for Debt Service, Schedule 2-E,
Defeased Bonds Outstanding, and Schedule 2-F, Early Extinguishment and Refunding.
Revenue Bonds
•
Consolidated Revenue Bonds, Series 1995
- To acquire, purchase, construct, improve, renovate, enlarge, or equip property,
buildings, structures, facilities, roads, or related infrastructure for the University
of Houston - Downtown, including the construction and equipping of an academic and
student services building.
- Issued 4-1-95.
- $22,400,000; all bonds authorized have been issued.
5 - 16
UNAUDITED
- Source of revenue for debt service – Tuition and various other revenues and balances
that may be legally available for payment of debt obligations (funding for fiscal year
2004 from Legislative appropriation).
- Called for early redemption on 2-15-05.
- All outstanding bonds on 2-15-05 will be paid in full with proceeds from Consolidated
Revenue Refunding Bonds, series 2003.
•
Consolidated Revenue Bonds, Series 1997
- To acquire, purchase, construct, improve, renovate, enlarge, or equip property, land,
buildings, structures, facilities, roads, or infrastructure for the University of
Houston - Victoria.
- Issued 8-1-97.
- $5,150,000; all bonds authorized have been issued.
- Source of revenue for debt service – Tuition and various other revenues and balances
that may be legally available for payment of debt obligations (funding for fiscal year
2004 from Legislative appropriation).
•
Consolidated Revenue Bonds, Series 1998
- To
finance
the
acquisition,
purchase,
construction,
improvement,
renovation,
enlargement, and equipping of any property, building, structure, activity, service,
operation, or facility of the University of Houston, specifically energy conservation
projects.
- Issued 1-1-98.
- $14,565,000; all bonds authorized have been issued.
- Source of revenue for debt service – Tuition, state appropriations, and various other
revenues and balances that may be legally available for payment of debt obligations.
•
Consolidated Revenue Bonds, Series 1999
- To
finance
the
acquisition,
purchase,
construction,
improvement,
renovation,
enlargement, and equipping of any property, building, structure, activity, service,
operation, or facility of the University of Houston System, specifically projects at
the University of Houston, University of Houston - Downtown, University of Houston Victoria, and the University of Houston multi-institutional teaching center in Fort
Bend County.
- Issued 1-1-99.
- $33,350,000; all bonds authorized have been issued.
- Source of revenue for debt service - Tuition and various other revenues and balances
that may be legally available for payment of debt obligations (funding for fiscal year
2004 from Legislative appropriation).
•
Consolidated Revenue Bonds, Series 2000
- To construct a recreation and wellness facility at the University of Houston.
- Issued 9-01-00.
- $52,070,000: all bonds authorized have been issued.
- Source of revenue for debt service – Tuition and various other fees, and revenues and
balances that may be legally available for payment of debt obligations.
•
Consolidated Revenue Bonds, Series 2002-A
- To
finance
the
acquisition,
purchase,
construction,
improvement,
renovation,
enlargement, and equipping of any property, building, structure, activity, operation,
or facility of the University of Houston System.
- Issued 9-01-02.
- $130,955,000: all bonds authorized have been issued.
- Source of revenue for debt service – Tuition and various other fees, and revenues and
balances that may be legally available for payment of debt obligations (funding for
fiscal year 2004, partially from Legislative appropriation).
5 - 17
UNAUDITED
•
Consolidated Revenue Variable Rate Demand Bonds, Series 2004
- To
finance
the
acquisition,
purchase,
construction,
improvement,
renovation,
enlargement, and equipping of any property, buildings, structures, facilities, roads,
or related infrastructure for the University of Houston System, including the
individual campuses of the System.
- Issued 6-16-04.
- $25,000,000: all bonds authorized have been issued.
- Source of revenue for debt service – Tuition and various other fees, and revenues and
balances that may be legally available for payment of debt obligations (funding for
fiscal year 2004, from Legislative appropriation).
General Obligation Bonds
At August 31, 2004, the University had no bonds payable classified as General Obligation
Bonds.
Refunding Bonds
•
Consolidated Revenue Refunding Bonds, Series 2002-B
- To refund $27,415,000 of Consolidated Revenue Refunding Bonds, Series 1993 and
$19,385,000 of Consolidated Revenue Bonds, Series 1993-A.
- Issued 11-1-02.
- $45,425,000; all bonds authorized have been issued.
- Source of revenue for debt service - Designated tuition and various other revenues and
balances that may be legally available for payment of debt obligations.
- Average rate of bonds refunded - 5.4% (1993) and 5.5% (1993-A).
- Net proceeds from refunding series - $47,871,000, after receipt of bond premium of
$2,888,998 and payment of $442,998 in underwriting fees, insurance, and other issuance
costs.
- Funds were used to purchase state and local government securities which were deposited
in an irrevocable trust with an escrow agent to provide for all future debt payments on
the 1993 and 1993-A series bonds, when the bonds were called for early redemption on
2-15-03.
- The 1993 and 1993-A series bonds are considered fully defeased and the liability for
those bonds has been removed from the Investment in Plant fund group.
- Refunding of the 1993 and 1993-A series bonds reduced the University's debt service
payments over the life of the bond issues by approximately $3,228,503.
- Economic gain - $2,733,595; the difference between the net present value of the old and
new debt service payments.
•
Consolidated Revenue Refunding Bonds, Series 2003
- To refund $15,975,000 of Consolidated Revenue Bonds, Series 1995A.
- Issued 12-1-03.
- $16,490,000; all bonds authorized have been issued.
- Source of revenue for debt service – Tuition and various other fees, and revenues and
balances that may be legally available for payment of debt obligations (funding for
fiscal year 2004, from Legislative appropriation).
- Average rate of bonds refunded – 5.92%.
- Net proceeds from refunding series - $17,419,961.18, after receipt of bond premium of
$896,716.15 and payment of $266,453.44 in underwriting fees, insurance, and other
issuance costs.
- Funds were used to purchase state and local government securities which were deposited
in an irrevocable trust with an escrow agent to provide for all future debt payments on
the 1995 series bonds, when the bonds are called for early redemption on 2-15-05.
- The 1995 series bonds are considered partially defeased and the liability for those
bonds has been removed from the investment in Plant fund group.
- Refunding of the 1995 series bonds reduced the University’s debt service payments over
the life of the bond issues by approximately $1,377,275.10.
- Economic gain - $1,292,003.91; the difference between the net present value of the old
and new debt service payments.
5 - 18
UNAUDITED
NOTE 14: Subsequent Events
Effective August 31, 2004, all the assets, liabilities, and net assets of the System’s public
television station (KUHT-TV) were transferred from the ledger of the University of Houston –
System Administration to the University of Houston. This event did not reflect any change in
the organizational structure of the station or its relationship to the system. This was only
an accounting event, which will more effectively reflect the future transactions and balances
of the system’s public broadcasting operations. As of the date this report was issued, there
have been no additional occurrences since August 31, 2004 that have had a significant
financial impact.
NOTE 15: Related Parties
The System is affiliated with several foundations and organizations that have been created to
benefit certain operations of the University.
Those which have a significant relationship
with the System are described below. The assets, liabilities, and equities of the various
foundations are not contained in the financial statements of the University of Houston
System.
•
University of Houston System
The stated purpose of the University of Houston Foundation is for "the advancement of the
general welfare of the University of Houston, Houston, Texas, as a whole, including, without
limitation, all of the colleges and branches or divisions thereof, wheresoever located, as
well as all of the facilities and activities thereof, now or hereafter existing or created,
not inconsistent with the objectives, operation and management of the University of Houston."
The Foundation's Board of Trustees consists of nine members. The Foundation remitted
$2,352,831.15 of direct support to the System during the year ended August 31, 2004.
The stated purpose of the UHS Foundation is to operate exclusively for the benefit of the
University of Houston System and its component institutions for charitable, scientific,
educational, and literary purposes and to foster national or international amateur
sports. The Foundation's Board of Trustees consists of three members. The Foundation
remitted no direct support to the System during the year ended August 31, 2004.
The stated purpose of the Association for Community Television is to assist in securing
financial support for and in promoting in the community KUHT-TV, Channel 8, a Houston
non-commercial public television station operated by the University. The Organization's
Board of Trustees consists of twelve officers and two members-at-large. The Organization
remitted $4,479,463.55 of direct support to the System during the year ended August 31,
2004.
•
University of Houston
The stated purpose of the University of Houston College of Business Administration
Foundation is to solicit, receive, or otherwise acquire real or personal property with
the primary objective of improving the quality of education provided by the College of
Business Administration; to assist in developing and increasing the facilities of the
College for broader educational opportunities; to apply funds and other resources in
procuring quality personnel, materials, and equipment; and to foster professional zeal
among the faculty of the College and to promote the general educational interests of such
faculty. The Foundation's Board of Trustees consists of fourteen members. The Foundation
remitted $424,600.00 of direct support to the System during the year ended August 31, 2004.
The stated purpose of the University of Houston Law Foundation is to complement legal
education and assist in the orderly development of law and legal institutions through
basic and applied research, service and cooperative effort for the benefit of the Law
Program, and other programs and schools now or hereafter existing in related fields, of
the University of Houston. The Foundation's Board of Trustees consists of fifteen members.
The Foundation remitted $905,787.66 of direct support to the System during the year ended
August 31, 2004.
The stated purpose of the University of Houston Alumni Organization is to promote the
aims, ideals, and purposes of the founders, officers, and faculty of the University of
Houston. The Organization's Board of Trustees consists of fifteen officers and twenty-one
5 - 19
UNAUDITED
at large directors. The Organization remitted no direct support to the System during the
year ended August 31, 2004.
The stated purpose of the Houston Athletics Foundation, Inc. is to assist in the
development and implementation of a strategic plan for athletics development including
annual fund, major gifts, leadership gifts, and endowments for the University of Houston
in compliance with rules and regulations set forth by the National Collegiate Athletic
Association and the Board of Regents of the University of Houston System. The
Foundation's Board of Directors consists of one officer and twenty eight directors. The
Foundation remitted no direct support to the System during the year ended August 31, 2004.
•
University of Houston – Clear Lake
The University of Houston – Clear Lake has no material affiliations with any foundation
or organization.
•
University of Houston - Downtown
The University of Houston – Downtown has no material affiliations with any foundation or
organization.
•
University of Houston - Victoria
The University of Houston – Victoria has no material affiliations with any foundation or
organization.
NOTE 16: Stewardship, Compliance and Accountability
A negative Change in Net Assets occurred in the Enterprise fund operations.
This was
primarily a result of two factors.
First there was a planned spending of accumulated
equity balances. The change was also affected by reductions of capital asset balances.
NOTE 17: The Financial Reporting Entity and Joint Ventures
The Financial Reporting Entity
The University of Houston System is an agency of the State of Texas, and its financial
records reflect compliance with applicable state statutes and regulations. The System was
established by House Bill No. 188, Sixty-Fifth Legislature, Regular Session, effective
September 1, 1977. Components of the System are System Administration (1977), University
of Houston (1963), Clear Lake (1973), Downtown (1974), and Victoria (1973). The System is
governed by an appointed nine member Board of Regents.
Although the System is affiliated with several separate legal entities, as previously
disclosed, these organizations are not considered component units as defined by generally
accepted
accounting
principles.
Therefore,
the
account
balances
and
financial
transactions of these organizations are not included in the System’s financial
statements.
NOTE 18: Restatement Of Fund Balances/Retained Earnings
During fiscal year 2004, no adjustments were made which required the restatement of the
amounts in fund balances and fund equity.
NOTE 19: Employees Retirement Plans
The State has joint contributory retirement plans for substantially all its employees.
The System participates in the plans administered by the Teachers Retirement System of
Texas. Future pension costs are the liabilities of the Retirement System. The Retirement
System does not account for each State agency separately. Annual financial reports
prepared by the Retirement System include audited financial statements and actuarial
assumptions and conclusions.
5 - 20
UNAUDITED
The state has also established an Optional Retirement Program for institutions of higher
education. Participation in the Optional Retirement Program is in lieu of participation
in the Teacher Retirement System. The Optional Retirement Program provides for the
purchase of annuity or mutual fund contracts. Since these are individual investment
product contracts, the state has no additional or unfunded liability for this program.
NOTE 20:
Deferred Compensation
State employees may elect to defer a portion of their earnings for income tax and
investment purposes pursuant to authority granted in the Texas Government Code Annotated,
Section 609.001. Multiple plans are available for employees' deferred compensation plan.
Both plans are administered by the Employees Retirement System.
The State’s 457 plan complies with the Internal Revenue Code Section 457. The State also
administers another plan; “TexaSaver” created in accordance with Internal Revenue Code
Sec. 401(k). The assets of this plan do not belong to the state. The state has no liability
related to this plan.
The tax deferred investment program permits benefits-eligible employees of the University of
Houston System to purchase qualified tax deferred investments with a portion of their
salaries. Participation in the program is voluntary and is a supplement to the Teacher
Retirement System or the Optional Retirement Program. It is however, separate and apart from
either.
NOTE 21: Donor-Restricted Endowments
Amounts reported as net appreciation on investments of donor-restricted endowments that are
available for authorization for expenditure are disclosed in Table 21. Effective September 1,
1995, the Board of Regents adopted an endowment income payout policy whereby the payout rate is
based on a percentage of the fiscal year end market value averaged over rolling three year
periods. If an endowment were in existence less than three years, the average is based on the
number of years in existence.
Table 21 – Endowments
Donor-Restricted
Endowment
Endowments
Amount of Net
Appreciation /
(Depreciation)
$ 17,765,373.79
Term Endowments
Total
Reported in Net Assets
Restricted for Nonexpendable
Restricted for Nonexpendable
$ 17,765,373.79
5 - 21
UNAUDITED
NOTE 22: Management Discussion and Analysis
The System is continuing the development and implementation of integrated financial, human
resources, and student information systems that were purchased from PeopleSoft. The
implementation of these systems increases the availability of accurate and timely management
information.
The University of Houston System’s financial condition and position are strong. The System’s
administrative and management teams realize that universities must be good stewards of the
dollars with which they are entrusted. Management strives to make sound financial decisions.
NOTE 23: Post Employment Health Care and Life Insurance Benefits
(UT, A&M and ERS only)
Provisions of this requirement only apply to the following
Texas, Texas A&M University and Employees Retirement System.
agencies:
University
of
NOTE 24: Special or Extraordinary Items
No items have
statements.
NOTE 25:
been
identified
which
should
have
been
presented
in
the
financial
Disaggregation of Receivable and Payable Balances
Balances of receivables and payables reported on the Statement of Net Assets may be
aggregations of different components. GASB Statement 38, Certain Financial Statement Note
Disclosures, requires that the University provide details in the notes to the financial
statements when significant components have been obscured by aggregation. The Statement of
Net Assets is presented in the classified format, and therefore the current and noncurrent
portions of receivables and payable are separately disclosed. Significant balances in
various classifications of receivables and payables are disclosed below.
A. Taxes Receivable
No reportable balances for this classification.
5 - 22
UNAUDITED
B. Federal Receivable
Balances by category type for Federal Receivable are shown in Table 25.1.
Table 25.1 – Federal Receivable
Federal Receivable Program
Corporation for Public Broadcasting
Department of Agriculture
Department of Commerce
Department of Defense
Department of Education
Department of Energy
Department of Health and Human Services
Department of Housing and Urban Development
Department of Justice
Department of Labor
Department of State
Department of the Interior
Department of Transportation
Department of Veterans Affairs
Environmental Protection Agency
National Aeronautics and Space Administration
National Foundation for the Arts and Humanities
National Science Foundation
Small Business Administration
Net Receivable
$
580,035.75
81,038.72
157,027.53
608,136.86
6,184,350.02
98,521.22
290,664.36
7,204.83
92,590.00
56,227.48
70,748.80
16,683.82
55,785.37
41,751.36
73,619.09
220,620.79
100,400.26
295,475.94
77,896.87
Total Net Federal Receivable
$ 9,108,779.07
As Reported on the Financial Statements
Current Federal Receivable
$ 9,108,779.07
Total Net Federal Receivable
$ 9,108,779.07
C. Tax Refunds Payable
No reportable balances for this classification.
D. Other Receivables – Current
Balances by category type for Other Receivables – Current are shown in Table 25.2.
Table 25.2 – Other Receivables – Current
Type
State Contracts and Grants
Local Contracts and Grants
Private Contracts and Grants
Other Contracts and Grants
Miscellaneous Departmental Receivables
Total Other Receivables – Current
5 - 23
Amount
$ 6,007,927.08
3,859,811.76
1,111,596.60
6,485,240.56
805,411.66
$ 18,269,987.66
UNAUDITED
E. Other Payables – Current
Balances by category type for Other Payables – Current are shown in Table 25.3.
Table 25.3 – Other Payables – Current
Type
Equipment Held in Trust
IBNR Claims Liability
Arbitrage Rebate Liability
Accrued Bond Interest Payable
Miscellaneous Departmental Payables
Amount
$ 1,710,127.54
203,488.65
902,465.04
407,710.93
180,169.50
Total Other Payables – Current
$ 3,403,961.66
F. Other Receivables – Non-Current
No reportable balances for this classification.
G. Other Payables – Non-Current
No reportable balances for this classification.
5 - 24
Unaudited
Schedule 1 - A
University of Houston System
Schedule of Expenditures Of Federal Awards
For The Year Ending August 31, 2004
Total
Pass-Thru To &
Expenditures
Federal Grantor / Pass Through Grantor / Program Title
Note:1 Non-monetary assistance
Donation of Federal Surplus Personal Property
The donation of Federal Surplus Personal Property is
presented at 23.3% of the original Federal acquisition
cost of $3,809.17. The surplus property is passed through
from the General Services Commission (Agency 303). The
Federal Grantor agency is the General Services Administration
(GSA) and the Federal CFDA number is 39.003. The
estimated fair value at the date of receipt was $239.20.
$
Total Non-monetary Assistance
0.00
0.00
Note 2: Reconciliation
Federal Revenues
Federal Grants and Contracts
Federal Pass Through Grants
From Other State Agencies
Indirect Cost Recoveries
Federal Grants
Federal Pass Through From State Agencies
Total Federal Revenues
70,025,320.30
8,291,935.98
10,060,675.05
0.00
88,377,931.33
Reconciling Items
Additions
Pass Through To State Entities & Other Entities
Non-monetary Assistance
Donation-Federal Surplus Property
New Student Loans Processed / Adm Costs
Federal Family Education Loan Program
Federal Perkins Loan Program
Health Prof Student Loans - Optometry
Total Additions
7,894,740.22
0.00
153,756,644.88
2,384,756.43
0.00
164,036,141.53
Deductions
Federal Perkins Program Disb-Institute Share
Total Deductions
71,509.30
71,509.30
Total Reconciling Items
163,964,632.23
Total Pass Through & Expenditures Per Federal Schedule
$
6-1
252,342,563.56
Unaudited
Schedule 1 - A
University of Houston - System
Schedule of Expenses Of Federal Awards
New Loans
Processed
Federal Agency
Note 3: Student Loan Program & Adm Cost Recovered
Department Of Education
84.032 Federal Family Education Program
Loan - Non-monetary Loans
84.038 Federal Perkins Loan Program
Perkins Student Loans
Total Department Of Education
$
Total Loans
Processed
Administrative
Cost Recovered
Administrative
Cost Recovered
153,756,644.88
$
$
2,384,756.43
156,141,401.31
153,756,644.88
Loan Receivable
Ending Balances
$
2,384,756.43
156,141,401.31
11,497,274.98
11,497,274.98
Department Of Health & Human Services
93.342 Health Profession Student Loans
Optometry Loans
Total Department of Health & Human Services
Total Student Loan Program & Adm Cost Recovered
468,275.29
468,275.29
$
156,141,401.31
$
$
Note 4: Governmental Publications
Various University of Houston System libraries participate as a Depository Library in the Government
Publications Program, CFDA number 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. The University System Libraries that participate as a depository library are the University
of Houston M.D. Anderson Library, the University of Houston O'Quinn Law Library, and the University of Houston Clear Lake Alfred R. Neumann Library.
Note 5: Unemployment Insurance Funds
None received
6-2
156,141,401.31
$
11,965,550.27
Unaudited
Schedule 1 - B
University of Houston System
Combined Schedule of State Grant Pass-Throughs From/To State Agencies
For The Year Ended August 31, 2004
Total
Pass Through From
Coordinating Board (Agency 781)
Texas Grant Program
General Academic Developmental Education Program
General Academic Enrollment Growth Program
Advanced Research Program
Advanced Technology Program
Developmental Education Program
College Work Study Program
5th Year Accounting Scholarships Program
Roberta High Memorial Pharmacy Residency Program
Engineering & Technical Consortium
Total Coordinating Board (Agency 781)
$
Texas Education Agency (Agency 701)
Foundation School Program
Foundation School Program Technology Allotment
Student Success Initiatives
Total Texas Education Agency (Agency 701)
8,522,921.46
0.00
0.00
(1,527.71)
1,323,448.00
(28,607.66)
192,937.91
22,504.00
0.00
191,716.03
10,223,392.03
717,131.00
3,715.00
2,700.00
723,546.00
Texas State Library and Archives Commission (Agency 306)
Texas Treasures Grant Contract
Total Texas State Library and Archives Commission (Agency 306)
0.00
0.00
Texas Attorney General (Agency 302)
Immigration Clinic Crime Victims Program
29,491.00
Total Texas Attorney General (Agency 302)
29,491.00
Lamar University (Agency 734)
Texas Air Research Center
Texas Hazardous Waste Research Center
Total Lamar University (Agency 734)
106,769.28
78,598.18
185,367.46
Texas A&M University (Agency 711)
Telecommunications Infrastructure Funds
Total Texas A&M University (Agency 711)
0.00
0.00
Total Pass Through From Other Agencies
$
11,161,796.49
Pass Through To
Texas A&M University at Corpus Christi (Agency 760)
Texas Natural Resources Conservation Commission Grant
Total Texas A&M University at Corpus Christi (Agency 760)
$
158,515.00
158,515.00
Total Pass Through To Other Agencies
$
158,515.00
7-1
1998
2000
1995
1997
1999
2002-A
2004
Consolidated Revenue Bonds
Self-supporting Revenue Bonds
Consolidated Revenue Bonds Series
Consolidated Revenue Bonds Series
Tuition Revenue Bonds
Consolidated Revenue Bonds Series
Consolidated Revenue Bonds Series
Consolidated Revenue Bonds Series
Consolidated Revenue Bonds Series
Consolidated Revenue Variable Rate Demand Bonds Series
2003
Tuition Revenue Bonds
Consolidated Revenue Refunding Bonds Series
Issued Year
2002-B
Description of Issue
Consolidated Revenue Refunding Bonds
Self-supporting Revenue Bonds
Consolidated Revenue Refunding Bonds Series
Business-Type Activities
Revenue Bonds
$
$
8-1
345,405,000.00
25,000,000.00
130,955,000.00
33,350,000.00
5,150,000.00
22,400,000.00
52,070,000.00
14,565,000.00
16,490,000.00
45,425,000.00
Bonds Issued to Date
VAR - VAR
2.500% - 4.750%
4.500% - 5.000%
4.500% - 6.500%
5.250% - 7.050%
5.250% - 7.000%
4.100% - 5.500%
2.000% - 5.000%
3.000% - 5.250%
Range of Interest Rates
Schedule 2 - A
University of Houston System
Combined Schedule Of Miscellaneous Bond Information
For The Year Ended August 31, 2004
Unaudited
Weekly
Terms Of
Variable
Interest Rate
2006
2003
2000
1998
1997
2003
2000
2006
2003
2024
2022
2019
2017
2017
2030
2009
2017
2018
Scheduled Maturities
First Year
Last Year
8/15/2004
2/15/2012
2/15/2009
8/15/2007
2/15/2005
2/15/2010
8/15/2007
2/15/2013
2/15/2012
First Call Date
9-1
41,490,000.00
25,000,000.00
16,490,000.00
$
$
13,935,000.00
855,000.00
200,000.00
1,410,000.00
1,240,000.00
790,000.00
4,735,000.00
4,705,000.00
$
$
15,975,000.00
15,975,000.00
Bonds
Refunded or
Extinguished
$
$
$
$
$
Bonds
Matured or
Retired
Net Bonds Payable Outstanding
282,945,000.00
17,730,000.00
4,170,000.00
9,540,000.00
28,955,000.00
51,330,000.00
126,145,000.00
45,075,000.00
Bonds
Issued
$
$
$
Bonds
Outstanding
09/01/2003
Bonds Outstanding per Schedule
Unamortized Premium
Unamortized Discount
Unamortized Issuance Costs
Unamortized Gain / (Loss) on Refunding
Footnotes:
(A) Bonds Outstanding balance at 08/31/2004
does not include unamortized premium or discounts.
Total Revenue Bonds
Consolidated Revenue Bonds Series 1995
Consolidated Revenue Bonds Series 1997
Consolidated Revenue Bonds Series 1998
Consolidated Revenue Bonds Series 1999
Consolidated Revenue Bonds Series 2000
Consolidated Revenue Bonds Series 2002-A
Consolidated Revenue Variable Rate Demand Bonds Series 2004
Revenue Bonds
Consolidated Revenue Refunding Bonds Series 2002-B
Consolidated Revenue Refunding Bonds Series 2003
General Obligation Bonds
None
Description of Issue
Business-Type Activities
Schedule 2-B
University of Houston System
Combined Schedule Of Changes In Bonded Indebtedness
For The Year Ended August 31, 2004
Unaudited
298,283,583.94
294,525,000.00
3,758,583.94
(A)
294,525,000.00
900,000.00
3,970,000.00
8,130,000.00
27,715,000.00
50,540,000.00
121,410,000.00
25,000,000.00
40,370,000.00
16,490,000.00
Bonds
Outstanding
08/31/2004
$
$
$
$
14,797,648.35
14,525,000.00
272,648.35
14,525,000.00
900,000.00
210,000.00
1,475,000.00
1,300,000.00
850,000.00
4,840,000.00
4,950,000.00
Amounts
Due Within
One Year
Unaudited
Schedule 2 - C
University of Houston System
Combined Schedule Of Debt Service Requirements
For The Year Ended August 31, 2004
Business-Type Activities
Description of Issue
Revenue Bonds
Consolidated Revenue Bonds Series 1995
Principal
Interest
2005
$
900,000.00
491,928.75
2006
$
2007
$
2008
$
Consolidated Revenue Bonds Series 1997
Principal
Interest
210,000.00
199,531.26
225,000.00
185,393.76
240,000.00
170,281.26
255,000.00
156,584.38
Consolidated Revenue Bonds Series 1998
Principal
Interest
1,475,000.00
352,568.76
1,545,000.00
282,968.76
1,620,000.00
203,843.76
1,705,000.00
120,718.76
Consolidated Revenue Bonds Series 1999
Principal
Interest
1,300,000.00
1,287,090.00
1,370,000.00
1,227,015.02
1,435,000.00
1,163,902.52
1,510,000.00
1,097,640.01
Consolidated Revenue Bonds Series 2000
Principal
Interest
850,000.00
2,810,706.26
910,000.00
2,749,106.26
975,000.00
2,683,131.26
1,045,000.00
2,612,431.26
Consolidated Revenue Bonds Series 2002A
Principal
Interest
4,840,000.00
4,919,587.52
4,955,000.00
4,760,275.02
5,100,000.00
4,577,937.52
5,265,000.00
4,377,012.52
Consolidated Revenue Variable Rate Demand Bonds Series 2004
Principal
Interest
1,125,000.00
850,000.00
1,105,875.00
890,000.00
1,066,725.00
930,000.00
1,025,775.00
Consolidated Revenue Refunding Bonds Series 2002B
Principal
4,950,000.00
Interest
1,963,462.52
5,200,000.00
1,709,712.52
5,470,000.00
1,439,543.76
5,760,000.00
1,148,175.00
Consolidated Revenue Refunding Bonds Series 2003
Principal
Interest
704,012.50
520,000.00
698,812.50
1,185,000.00
672,875.00
1,225,000.00
633,762.50
28,378,887.57
28,294,158.84
28,893,240.08
28,867,099.43
13,853,887.57
12,719,158.84
11,978,240.08
11,172,099.43
Total Revenue Bonds
Less Interest
Total Principal
$
14,525,000.00
10 - 1
$
15,575,000.00
$
16,915,000.00
$
17,695,000.00
Unaudited
2009
$
2010 - 2014
$
265,000.00
144,393.75
2015 - 2019
$
1,585,000.00
504,250.00
2020 - 2024
$
2025 - 2029
$
Total
Requirements
2030 - 2034
$
$
1,190,000.00
91,500.00
3,970,000.00
1,451,934.41
1,785,000.00
39,046.88
$
900,000.00
491,928.75
8,130,000.00
999,146.92
1,585,000.00
1,028,002.49
9,070,000.00
3,922,637.42
11,445,000.00
1,472,425.03
1,125,000.00
2,536,481.26
6,720,000.00
11,544,862.55
8,730,000.00
9,514,715.66
11,470,000.00
6,793,050.00
5,445,000.00
4,162,812.52
30,580,000.00
17,308,962.60
37,830,000.00
10,439,084.46
27,395,000.00
1,961,734.42
121,410,000.00
52,507,406.58
975,000.00
982,912.50
5,590,000.00
4,198,725.00
6,995,000.00
2,788,762.50
8,770,000.00
1,021,950.00
25,000,000.00
13,315,725.00
6,080,000.00
837,375.00
6,420,000.00
2,580,900.00
6,490,000.00
703,237.50
40,370,000.00
10,382,406.30
1,270,000.00
589,987.50
7,115,000.00
2,165,706.25
5,175,000.00
396,625.00
16,490,000.00
5,861,781.25
28,851,011.90
109,306,043.82
103,261,350.15
57,411,734.42
18,302,137.50
3,668,175.00
435,233,838.71
10,321,011.90
42,226,043.82
25,406,350.15
9,776,734.42
3,157,137.50
98,175.00
140,708,838.71
18,530,000.00
$
67,080,000.00
$
77,855,000.00
27,715,000.00
11,198,712.49
$
47,635,000.00
10 - 2
15,145,000.00
3,157,137.50
$
15,145,000.00
3,570,000.00
98,175.00
$
3,570,000.00
50,540,000.00
44,499,797.01
$
294,525,000.00
Total
Total
Total
Description of Issue
Business-Type Activities
General Obligation Bonds
$
$
$
$
$
$
$
$
$
$
Interest
$
$
$
$
$
$
11 - 1
Application of Funds
Refunded or
Extinguished
$
$
$
$
Operating
Transfers
$
$
$
$
Total Application
of Funds
State's General
Revenue
Other Sources
Other Application
of Funds
Sources of Funds
Other Pledged
Sources
Pledged Sources
Interest Earned on
Investments
Ending Balance Available for
Debt Service at 08/31/2004
Required
Actual
Principal
Debt Service
09/01/2003
Beginning Balance
Available for
Schedule 2-D
University of Houston System
Combined Analysis Of Funds Available For Debt Service
For The Year Ending August 31, 2004
Unaudited
$
$
Total Sources
Available
Expenditure associated with pledged
sources were approximately $ 257,853,377.71
Total
Description of Issue
Consolidated Revenue Refunding Bonds Series 2002-B
Consolidated Revenue Refunding Bonds Series 2003
Consolidated Revenue Bonds Series 1995
Consolidated Revenue Bonds Series 1997
Consolidated Revenue Bonds Series 1998
Consolidated Revenue Bonds Series 1999
Consolidated Revenue Bonds Series 2000
Consolidated Revenue Bonds Series 2002-A
Consolidated Revenue Variable Rate Demand
Bonds Series 2004
(B)
Total as shown above
Other Pledged Revenues Consist of
Tuition and Fees
Investment Income
Sales and Service
Legislative Appropriations
$
$
$
Total
(A)
$
Description of Issue
Consolidated Revenue Refunding Bonds
and Consolidated Revenue Bonds (A)
Business-Type Activities
Revenue Bonds
$
$
13,935,000.00
855,000.00
200,000.00
1,410,000.00
1,240,000.00
790,000.00
4,735,000.00
$
$
12,754,925.53
Interest
2,204,837.52
496,719.93
70,807.50
211,656.26
413,153.76
1,344,240.00
2,868,106.26
5,063,212.52
82,191.78
2,619.91
2,619.91
Interest Earned
on Investments
Debt Service
Principal
4,705,000.00
Operating
Revenues
$
$
$
$
$
$
11 - 2
15,975,000.00
15,975,000.00
Refunded or
Extinguished
303,526,462.58
252,740,917.13
3,254,526.37
37,896,685.08
9,634,334.00
303,526,462.58
303,526,462.58
$
$
$
$
$
$
Minimum
$
$
Actual
Interest & Sinking Fund
303,529,082.49
303,529,082.49
$
$
$
$
$
$
Minimum
$
$
Reserve Fund
Pledged and Other Sources and Related Expenditure for FY 2004
Other Pledged
Total Pledged
Other
Operating Expenses
Revenues
Sources
Sources
& Expenditures
Schedule 2-D
University of Houston System
Combined Analysis Of Funds Available For Debt Service
For The Year Ending August 31, 2004
Unaudited
Actual
Capital
Outlay
$
$
303,529,082.49
303,529,082.49
Net Available for
Debt Service
Total
12 - 1
$
$
Revenue Bonds
Dormitory Revenue Bonds Series 1967-A
Consolidated Revenue Bonds Series 1995
$
$
1990
2003
Year Refunded
Total
General Obligations Bonds
Description of Issue
Business-Type Activities
Schedule 2-E
University of Houston System
Combined Schedule Of Defeased Bonds Outstanding
For The Year Ended August 31, 2004
Unaudited
16,915,000.00
940,000.00
15,975,000.00
Par Value Outstanding
Total
$
$
Revenue Bonds
Consolidated Revenue Refunding Bonds Series 2003
$
$
Advance Refunding
Category
Total
General Obligations Bonds
Description of Issue
Business-Type Activities
13 - 1
15,975,000.00
15,975,000.00
Amount Extinguished
Or Refunded
$
$
$
$
16,490,000.00
16,490,000.00
Refunding Issue
Par Value
Schedule 2-F
University of Houston System
Combined Schedule Of Early Extinguishment and Refunding
For The Year Ended August 31, 2004
Unaudited
$
$
$
$
1,377,275.10
1,377,275.10
For Refunding Only
Cash Flow
Increase / (Decrease)
$
$
$
$
1,292,003.91
1,292,003.91
Economic
Gain / (Loss)
Unaudited
Schedule 3
University of Houston System
Combined Reconciliation Of Cash In State Treasury
For The Year Ended August 31, 2004
Cash in State Treasury
Local Revenue Fund No 0225 (UH - 730)
Unrestricted
$
7,057,792.38
Restricted
$
Current Year Total
$
7,057,792.38
Local Revenue Fund No 0229 (UHC - 759)
5,338,691.28
5,338,691.28
Local Revenue Fund No 0233 (UHV - 765)
1,040,221.53
1,040,221.53
Local Revenue Fund No 0268 (UHD - 784)
1,593,405.06
1,593,405.06
Total Cash in State Treasury
$
15,030,110.25
14 - 1
$
$
15,030,110.25