Houston community college r revised 2015 cafr_01262016
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Annual Financial Report 2015-2014
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Houston community college r revised 2015 cafr_01262016
- 1. Prepared by: Division of Finance and Administration Department ofAccounting and Finance Houston Community ConegeSystem r------------------------ --- For years ended August 31, 2015 and 2014 Houston Community College Comprehensive Annual Financial Report and Single Audit Reports HOUSTON COMMUNITY COLLEGE N~C - ii"
- 2. Tabk l Tahlc 2 Table J Fablc-t Table S Table 6 Table? Table 8 Table 9 76 78 Revenues by Source .. __ .. _. __ .__ .. _. __ .__ .__ .... __ .__ .. _. _ 79 Program Expenses by function ----------- ·-·--·----------------- .... 81 Tuition and Fees 83 Assessed Value and Taxable Assessed Value of Property .. :::. _::. :: .: .. .. .. .. 86 Stare Appropriations per Full Time Student Equivalents and Contact Hours .. . . 87 Principal Taxpayers (Taxable Value) . . 88 Property T3X Levies and Collections ·------------------ .. -------·-·-- ·------- 00 Ratios of Outstanding Debt -------·-·--·--·--·--·--·--·--·--·--·--·----· ...... 9.1 ST ATTSTIC'Al. SFC'TION (Unaudited) Net Position by Component Schedule A Schedule B Schedule C Schedule 1) Schedule of Operating Revenues , _ _.• __ 7~ Schedule ofOperating Expenses by Object 73 Schedule ofNon-operatmg Revenues and Expenses . .. ---· 7~ Schedule of Net Position by Source and Availability . ·-·----.. .... .. . 75 71SUPPLEMEN.IAL SCllCDULES 69REQUIRED SUPPLEMENTAi. INl'ORMATION (RSI} SECTION 37Notes to the Financial Statements Exhibit I lixhibit 2 Exhibit 3 33 ····-········-·· 34 35 FINANCIAL S1'ATEMENTS Statements of Net Position ................................... Statements of Revenues, Expenses, and Changes in Net Position Statements of Cash Flows 16MANAGE...V!ENT'S DISCUSSION AND ANALYSIS (UnauditcJ) 131.NDEPENDENT AUDITOR'S Rl°PORT 3TRANSMITTAL LETTER ORGANILATlON/1. l)A rA Exhibil/ Schedule/ Pane Table TABLE OF CONTENTS I TOUSTON OMMlJNlTY COLI .EGE SYSTl::M
- 3. Schedule F Schedule E 103 92 Table 10 93 Table 11 94 Table 12 95 Table 13 96 Table 14 Q? Table 15 98 Table 16 99 Table 17 100 Table 18 101 Table 19 102 Tablc20 Exhibit! Schedule- Page TuQ!!; Scheduleof Expendituresof federal Awards ·-- ·--- ··-·-- 109 Notes to the Schedule of Expenditures of Federal Awards _.__ .__ .__.. _.__ 113 Schedule of l'.xpenditures of State of Texas Awards 115 Notes to the Schedule of Expenditures of State ofTex~$· ;.;;,a;ds. · · · · · -- · -- - ·- · -- · J l6 Schedule of Findings and Questioned Costs ·········-··-·- ..... ::::::::::::::::: 117 Summary Schedule of l'rior Audit Findings ····-------··-··-·--·-··- ..... 127 Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Govemment Auditing. Standards ··--·--·- .. _·---- ·-- ·-- ·-- ·-- ·-- ·--.. _ ·--·-- ·-- ·--. 104 Independent Auditor's Report on Compliance with Requirements that could have a Direct and Material l-ffect on each Major Program and on lnternal Control over Compliance in Accordance with OMTl Circular A-13 land the State of Tero< SingleAudit Circular ._ _ _ _ _ _ I06 SINGLE AUDIT REPORTS AND SCHEDULE OF EXPENDITURl.:S OF FEDERAL AND Sf ATE OF TEXAS AWARDS Transfers to Senior Institutions Capital Asser Information Contact Hours Enrollment Details Student Profile SIAJIS flCAL SEC l'ION (Unaudited) CONJ JNUEO Legal Debt Margin Information . __ . __ . __ _ __ .. _ .. _ .. _. __ . __ . _ .. _ .. _ .. _. _ Pledged Revenue Coverage _. __ . __ . __ . __ . __ . __ . __ .. _ .... __ . __ . __ . __ . __ . _. . __ . _ Demographic and Economic Sratistics - Taxing District . Principal Employers ._ .. _ ... _. __ .__ .__ .__ .__ .__ .__ . __ .__ .__ ._ .. __ . .. _. _. ._ Faculty. Slaff,and AdministratorsStatistics --·--·--·--·--·--·--·--·--·--·--·--·-· Annual Student Enrollment TABLE OF CONTENTS HOUSTON C0~1UNITY COLLEGE SYSTEM
- 4. Chancellor Sr. Vice Chancellor, Finance & Administration Vice Chancellor. Instrucuonal Services & Chief Academic Officer Vice Chancellor, Information Technology Chief Human Resources Officer Acting President. Southeast College President. Central College President. Coleman College President, Northeast College President, Northwest College President, Southwest College ('hieffacilities Officer Acting Vice Chancellor, Student Services Controller Treasurer PRINCIPAL AOMINTSTRJTIVE OFFICERS 2015 2015 ~015 2017 ~017 2017 2019 2019 2019 Houston, Texas Houston. Texas Houston, Texas Houston, Texas Houston, Texas Houston. Tc.,a:-; Houston, Texas I Iouston, Texas Houston. Texas ·1 crm bprres December 31.Mf;J.ffiFRS OF THE BOARD OF TRUSTEES Chair Vice Chair Secretary OFFICERS OF THE BOARD OF TRUSTEES BOARD OF TRt:STEES HOUS !'ON COMMUNITY COLLFGE SYSTEM ORGANIL'- 1 IONAL DATA FOR THf. YEAR ENLJC:LJ AUGUST 31, 2015 Cesar Maldonado. Ph.D .. P.E. ·1eri Lamora. MACC Kimberly Beatty. Ph.D Wilham Carter. Ph.D. Janet May, M.A Rudy Soliz, Ed.U William Ilarmon, Ph.U. Philip Nicotera, MU Margaret Ford Fisher, Ed.LJ. Zachary Hodges, Ed.D. Orfclina Garza, Pb.D. Charles Smith, P.£. Irene Porcarcllo,Ed.LJ Karla Bender, Ed.D. Ronald Defalco, CPA Sandie Mullins Eva L. Loredo Dr. Adriana Tamez, Secretary Ur. Carolyn Evans-Shabazz Christopher W. Oliver Robert Glaser. Vice Chair Nccta Sane Zcph Capo, Chair Da·id Wilson Zeph Capo Robert Glaser Dr. Adriana 1 amez
- 5. I ~! --~ !) Ii~. s' 1~ .. i ti .. i ~ R ~, ~ r~~ ~~ j~l! .. ! 9 - ~ ~ l! ~]1 i.. !~ 0 (I • ~ u li ·~ ~ 'i ¥ 's 8~~ . ~ ~ 5 Ii: o ~ ~ .... 6.. WQ. < L..!!!...._ ' "' - ' • ' - - - ~- !8 is §j j~ ~... JI II 1~ JI E;; ' $? j n 1- -~ f! "~ I E u~ u! !?t ~I ~5 > > ~ (L "' < <tf> . t== ~ b:= L__ ~ L..__ L___ ~ "' • .. -..! 1~ B~IC J~ ~).. ! ~~~ (/) .. 11jt .... ~ : ~~a:,;~ < $ ..: . gj I'! 11 G £~~ ~!I~ t ~~ ~ < ~ ~~ " !i :e ~w< < o ~ e < 3 ... ;), "" Q s • . rl . . ' _, l I> ti .9~ ~ ~ll j . "j • ~il a ~· ~ e~j I~* .,. " ~1 (' I' ja§., ~it g (L l . ~1 .. ~ -ri ~ ii' if J ~1~ §!i - ~N < "' i~11 l ; F. iS ~.:: ~ ,jj ~ ' > !I ~ <.) (~ ~i"i'1 ~ ~ ~ ' '· ~ -- 2 ' o I ~ ;: ~s ;s e6 11: ~.. 11 r gji'l'I .. 1~1~ 1i) "~ ~;~1i) 5 i~ ~ g 5 2 1! ~~~ ~ ~I~~ c: 0 2?~ ~~ ~~- w.; ~ .:= ~ ~a: w c Ijj ~ I~ i~ " JQI ~ .l: ' .. l 1!. ~j "w ~ I jj ~ ~I 1 • < .~ I ~i~ .i • II •§ i.. ~ !!· iii j JI til 1£ ·l~ ga !}~ !li:· "~ sti" t • .!!. ~~ " t ~ ' ~ .. I
- 6. 3 PO Bo· 667517 Huu>!OI· rx 77?66 7517 : hm.•du T'' the besi of our ~JlO ledce anc behet. the oasrc fir.anc1al staremenrv referred ft' above present tbid~. in all material respect'>, the financral position of iI('("~ and the result-, of il'.-1 operations an<l casn flows 3) of All21St 31. :c lS. r he financial statement, have been .;;;,lntplcttcd in couforrnuv ''1th accounting prin..::pl<.·:i. genera II~ accepted in the 1 ·ni11!;~ Stares .H. Amenca. HCCS is reporting as a special purpose government engaged so1el) in bi.siness-rypc acriv 11y (BTAI This presentation of financral reporting ..~ornb1re:, all fund grour-. into a singtc ~~·lurnn and r:.:~1nblc:s the tonuat of the corporate presentauon. thus complying '' 11h rJA~B <talCllh.'lll'.l> J~ and ~~. The financial state.nerus are prepared tn accordance with Gener.lD) Accepted Accounting Pnncip.es cG: P• as esrablisbed b~ the l-manc ial xccoumiug xtandardv Rl'ard tFA~R) .tnd the GOl!'fnrnt>ntal Accounting Standards Beare t<J ..~Ul and :'t."mpl~ with Anr,u:~I financial Reporung Requirements ror f exas Pubhc (_ ommunrty and Junior c·.-.:1ege .. ai.. 'if( forth b~ lhc Texas Higher Educauon Coordmaung Beard t 1 Ill CB1 The 'otc, to the Financial Statements are provided in the financial secncn and are convidered essennal :~!r fair and adequate disclosure of all informatron presented 1~ this r.nancial report The nvte> include th.' ~u11;111.:tr} of Sign ificant Accounti n~ Pohc.es. :uthorized Lr. estmenis and other neccs ...a:~ drsclcsuies of important matters relatinj; to the tinanc ral posuion of 11<.·l·~. vores an: 111ea11t tu supplement the .nfonnatior; In the finnnciul statements. and snovld be read in <.:t)n:uncnon v.uh thern TI>e Comprehensive Annual £·1nan.:1al Report i'":{ the ll;.111;,tcn (':lmmunlt~ ('olh:gc Syll'lll (HCCS) for ::ie fiscal year endec August 31. 101~. r-, hcrcbv submitted. This ij management's report :if the finan~1al P•"-,i1ion z•nd result ... of operations to the Board ,f Trustees, taxpayers. ] cxas I ltgh~r Ldu~:10n Cocrdir-ating Ro.>ard. granror agcnciev. employees anc ether interested parties l ht" responsibiliry ~'r both .he accuracy tlf the data and u.e completenesv and fairness ot the: presentauon. 1nc-1uding all disclosurev, re...1-. with HCCS. Dear Board Members and Chancellar Honorable Chairman. Hoard of I rustees and Chance'lor The Citizens of the Houston Commun it) College 5~ stem Office: 713.718.5187 Fax: 713.718.8583HI •c I HOUSTON COMMUNITY COLLEGE V F!!il.llaA/IDADll!NlmAllll#'IVtS/aN
- 7. 4 PQ e:,(567517 HI( ,1~1 Tl 77~66 7'-17 hr.csedu Regular met>1in~-. ot rht' !l...'larOot I r.tstecs <trl' he'd on the tourth I hursdav ct each l!hJnth at the II((<; ~dmini,tratiH llu1ld:ng. 3100 1a1r.. end"'''"' .vuditor.urr; Boardroom. Houston, Teva-, ,..,.(10:.. O"llt>"S:> otherwise announced Otht: mecu:igs suet as commmees. Ork:,hvps and <pecial meetings are held on ar; as-needed basts. Pubhc notices of ,;ill meetings are posted at the Adrmmstranve B·Jild:ng and or. HCC') website. The Board of Trustees en' i.:.io:)ns HCc·s a~ (he ecucanonat instiun .on L'I choice tO:- those wh...1 seek skilled trniruna for :he workforce. those wno seek to uparace their skills to enhance preparedness for econormc opportunuy. and those ho seek b1~10n:l seaJ~1le~> educational oppor:Jn:hc' tv enhance rhetr ;;11ah1~ ot .ire. lhe Hnord ,,f I ""tees vieS HCC~ as an ullegJal pan t>t'tl1c tco?iom1c and cdu.:auonal life of the co1~11nuni~ and supports lhei: le b)· t:itabli!'llung quaht~ pannc-rship!). lx1ng respllnsh e t;') CC"·rnn11.1nit) need~ arid 3Ss.sein~ HC'C'S u:i pro' 1dtng this Hal se:!' ice • T1.) a.pp<li1t support. and 3SSC!'.)~ the performance of the: Chancellor • To clanfv the n1i:-.~H1n or'the mstuun.m • To approve long-range plans • 1 o approve the educational program • f:.l ensun..• the wellbeing of faculry , ;.1ucient>anc staff • ( .) ensure s~:-Clll!;i, t.nancial n1an•t!!t'Hl~n1 • Tv ensure adequate 1inanc1dt resources • 1·0 pcescrv c inst.tuuonal aut.morny • lo interpret the campus to tne comniunitv • 1o in~c;prt.'l the need.. of ..n::iel) 10 the ca1~1p:J • l0 assess ~.'leir U r. performance The ! (ou1;.10., Comm.miry College ':>~stem 3S estabhsned as a public commumty college b'.'" '~ttor, of tho lfot1>mn lrdependent Schoot D1>tn~t d ll'>DJ m an election held in Houston, rexas rn 19"1 llCC'; separated trorn Hl'>D and estabirshed 11s own board in 1989 and restructured into a mu.u-cotlege systcrn m JQ<>: l he Houston Commururv College System operates under the Constitution of the State ,,1 I evas and the Texas Education Cede. The Board ol Irustees is the otficial governing (>od~ of the Houston Conununiry College S)>lcm 1 he Board of I rusrees is composed vt' nine membe.s who are elected from single-member Distr.cts and "ho ~e1' e itheut 1 t";11uJJ~1~~~onThe Beare ..,f Tr u~tc..:~ 1~ elected to !-laggercd ~i'.. year terms and has ~inal au1burlt~ to determine and u.tcrprc: the policic-, that gc" crn HCC.~ !ii part ,..,~ their duties. the B('i.uJ lit Trustees maintains a full schedule of ccn.munny ::ten lees. public appearances. spea~H'Jt en)ta.i:,ement~ and h:g_i~lat1' e <iffaini un behalf ot llCCS. The Board of Trustees represents "" impressive mix of ;nci• idu•l talctus and proiessional backgrounds enabling thein tc p10 ide governance of the highest q-uah~~ Additional duties and responsrbiliues of the Board (If Trustcc, arc: GtJ'eTn.nu11raJStructure December 18, 20 I:'
- 8. 5 Pt) R~· bb]r..17 H 1h'.J( rx 11?&.l 751; hC($ Pdu .~ Houst10 Ccn1n1uni~ Co!!c~c: continue:~ ~l"'· .1npn.Je lti otu:::onle~ •tc·r i" among the- h>p in the nat1ou tCr prepa~io)l >tudents forjolls. ('0111nu11u(1t•u/h•gl• H et1k ni~" ran~' Jtrc th·.rd nat!t'lna:I) among t ,._~ i:ar 1n~ututions in the ;1u1nbe1 of ,s50..:1a1e Degrees produced. :n :;c;I ·1. hich is an incn:a~ frL'IJl 3 ranking of -'th in :013 Jn~ludir.g :s.S0C:.3-tes. De-grees. c·eniticate-.. Cure Complcler.. ;,..J ,l:ir~e1able Ski lb Ach:e,er<. HC(. ·,total a"ards for ~U I I "ert' 10.600 "' .11ajor lnitiar;,.es Houston Cornmumty College rs committed to eq1:ip?1ng -rudentv wuh the appropriate academic. technical and s.lft :>llils t.:i allO them tv ~ucceed i:i the '-'O:"kplace 4. con1prehcn'i"c approach i"S :Jtilized. comb1n1ng 3cadem1t and technical re:;oJrce'. releant i;tutlcnt .....:~ice..;. talent dee1L-.pn1ent orgaruzatlons. and ~areer hu. d1ng act: i~ie-.. R: emp!1l~ing a ~;)mprt-htnsnc approach. }tt( a~!iures t!le v1t3hi} of ns progran·<: for 1nda~ ~~ acadcn1:c and 1nd1J:,lnal dcn1aruJ~ and tcrr.orr~)" ·s 0pponun1Hts l he -:.enice th:li cry area •,SI),) of Houston r,1r.1nHJn1l} College mciudcs the school Ji,1:1.;1), of Houston. Statfcrd. Kary. Spr.ng Dranch ..'iie:·. and ponion-, of Fort Bend ISl) located in Houston, Pearland. and lhsS()uri Cit) lhe area 1> economically. educationally and ethn1c.tll~ diverse. 'hlle the average household income 1~ S80.2 :o. more than ~3 8' G of the hl'tl"<hnl.1-. 1r. 1h.: SD< have an income less tha:1 ~25.000. hrle J6"'c .;.H the popu.auon has some type of college degree. :3~• of the population ha' no h:gt school degree or Gl.D. the pooulanon's ethnicity ;, ~1•·,. Hispanic. ~8''·o whuc. 2:Q•.; ...fr;.c.an Arncncan and 9u., other. Fhere .s a rela~h·el~ large young populanon. wuh 8~'1.423 mdrviduats.or _;6 :ie. under the' age of 18 ~earc; old These (;tctor;,. ghe Houston Cornrnun.ty College the potenual o:' prov 1d1ng a large or~~·orct" pool f,,, the ...en ice de1hel) area, the state and the nauons ecoaormc growrn. and the e-n(>r~ and hea ihcare :.el.!h),,.. in parncular. fht cornmuniry 1s about one hour from the Toxa,· gulf coast. HCC is one of the largest insntuuons 01 hrgher educanon .n the country wuh a Fall enrollment of i'Sppr0'..1ma1~I) 70.000 students and 6 col.eges w ith ::~ campuses in a 6.; I square mile t'f' i;.:~: area Hf'(' ~tu:Jents arc served b) nearlv :-.·lOO tull and pan-tune faculty mcmberv. II(- cr.n,11 more .mcrnauor.a! students than an: commurnry college 10 the 1.vuntr: Houston Commumry College ts a diverse and complex muki-carnpus mstin.iion accredited b) tl1e Southern A-..S<k."'i(lli11n of Colleges an<l 'ii.:h~(~1~· Commivsion on Collegc-, to award il'»O'i~h~ degrees Wtth a population of~. million. 1 lou ...ton 1~ the fourth larg.c:.1 ctt~ ir A111cri<..:u and C1c largest C1{) in rexes. Profite Houston Communiry College (HCC 1 has a 1St1):1 to be a leader in pro' iding high qua lit~. 111110' auve education !eadi;iy. ti) student ...uccc-a and cornpteuon of workforce and academic pr.;'lgran1s H('(' will oe responsive to ccrr.munrv needs .utd drive economic develupmcnt in the commumties we serve H(.'C is comrn.ned to mccnng the needs ot' .ts diverse communities. pr;.>YiJing academic ccurses ti.)1 tn:u1-;;fec to tour-year instiruuons. degrees and ceruficares in more than <cen1} fields ('f work. 3!1 well as contir1uing education and corporate training, lifelong teaming and enrichment. December IS. :o I~Ccmprehcnsrvc A;1nu(:ll Fir1~111.:'.a1 Report
- 9. 6 ::i 1 Bu•btJS17 H IL~TJr• rx 77!66 7'lll hrcs1·du • lncrea;;c;cl ..::apaci:~ I<' ..l..':n ~ thi· 1..~un:nun1t~ 1th ll't.:hnk•;tl and a:.:adcr.1i~ prvgra1ns: • lncrea;ed lacilil} uuliw1ion rare;: • f>ec:-ea ...:od ,;o-.t"> tlfdcJic!:') of iti..,1!Ucll'r. .:tnd -.uppllrl 'en i.:c:"i: • Jni:1eai;ed prod.Jc-th it:-- d(hurna:1 :ari:al, • lnt·ri:.l;i.L'J acl'Ouo~h1H1~ at all lc'l'b.oflhi: orga:11£at11.1n. B) a1IO mg us ll'I focus VI.if re-).._)urc:e) and t>tsc :~cult} Ill (l[)t' lucath.fl. rhe c·ei:ter::t 0f L~i.;ellen.;t "' ilt pro tc.le the follOtng vuh:i.lmC> an~ bcn('tib: v.·~th 16 t.eniers ot Lxcellence located ilra1e~.1ca.l~ ::ir:lught'lut the llt~t··::t servicu.g cisrncrs. each Center '"II provide e~?ert iac"ll} 1ea~~1n£ and -rare of 1he art facuuies and equipment. [his Ill ~dh.> students to focus on an .n-dcmand li<:l:l .li ~ltid)-. wun concerrrateo counseling and shared expenences w.th ether .ike-mmded students. thereb~ 11l'.'rea.;.1ng perssrence and studenr succevs rares Io lac1lltatc rhe orgaruzauo» mio t'tt'.;~lm1:ig all lhat .r can be. rn lis.:.ll ) ear 20 I l ·:o 15. 11.)u>:i:>n t·orr.mt:flH"') ("01itge began Hi first phase of mstit.uional nansformauon. 11( C nas rnoved trorn a "center of delie') · model 10 a "centr:r ;1f exce 'ence" mcdel in order to achieve its vivion - one ith relevance, fi'>c<tl a;;:ci.)1n1at:iilil·~. and stn.ctural ni-nb.eness and fle'.ibilit). one tha1 supports our new 'is.ion • Enhance higher cducat ion rclarionsnips wuh univ c.r:)itlc:-. lo pro' ide :-.tuJl·nt~ scamle .-s transfer opportunities to continue their higher cducauon: • Provide techmcnl job ready grad.uues tnat can meet 1hL' demands ofthe mdustry ; • Pn,,i<l1: tude11i.., with tnc dl~gn:c~ and tra111u1~ nci.:C:.."-~ h' mcrca-e their cmpk-vrncnt oppor: Jn:lit:'!'> and -or career adv an..:t111C!1t • Work cooperauveiy w nh cornmurutj <cllt'gc:=> and otncr partners 10 aJdre~s Texas training needs: • Continue 1(' ...trcngthcn :-:.:ht11;)n,h1p' lit- T1..•:i~ public '..:hool:-. :l) pr'mnttt l:ig:1 ...:h(X)I gradr.auon and college preparati ...,n "iih a 'ariel) of joint pr......g:an1s that direct.y emphas.ze ':i r r 1 evperience ... • Maimai» close relationsl-ips with .ncu.;r0 l•' implemen; cunent bus.ness p1ac.:ti<.e::i in the desi~n arid delie( of technical training programs. set new standards in tne achievement of technical skills. and develop.redesign new technical programs IJ meet indu;::, needs: • ?f:tinl:1c ()lleg~,, T!)ur.:c ... h~ ~;1n11nuall~ loo.,.irg f°l)f '.:l) .. 1n inc!'e:JS' effi;;:ien..;~ in al! are as ·:th It) proponionare share of the cornn-unity college fLJnding. l lor ...ton (1,,)n111r.1nfr~ lflll~gl: pledges IC>: The 8-4;11 T~.3~ Leg.slaiurc passed HB L the G~11e1al ..pprupuatiou!) Act, which proi. ides $1.-t~S h1llin!1 in instrucuonal (u:1di•1g 10 e..:i'tr.111anii~ juni.lrt..'t.~lleg.t.·:o. in Fcxav compared tn 8.195 dunng ~O I 0. I he focu.. l -n rctcnuon and completion continues m 2015 and :O 16 :hrcugh a varietv of stuJeni S:T rec- u:10aln C-!) (':'lmprehenstv~ Anr-ual l 1ranc>('~ Reporr
- 10. 7 • The econnmic engine for ~hl" rcfUtln • A 'OJ Id class leader 1r. higher educauon • A gh.lbal l..:'.ttic: i;i mnovauon an<ltca1.:~1i11g • The educational nstiruuon of choice • l he ~ecogni1ed li.:adcr acr.or.g community ..:u:icgc~ • A trusted .eader proving innovative ed.icauonal opportumnes relevant ~(~ -rudcm <ucccss • Streamlined. nimble. innovative, and re-pensive • The intit•Jth~n that ;,:,1nt1nua1l~ uanstorms learning HCC will t-e: Vision - S1r111tgic Themes H(~C wrll he a leader in providmg ~.1~h quahry, inth)lltie education l!!ad1ng l.j student success and completion of workforce and academic program .. We will be responsive cu conununity needs and drive economic Jc cloprnent 111 Che commun-ie .. we ..crve I reedom wuh Rcpr·n~ihtlit~ Commitment to Excellerce Respect for the Person Sound Ste.,.,d,h1;> GuitlinK Principles 1 louston f omtnumry College i~ an open admission. public insutunon of h.gher educa-ion offenng a high-quahry. affordable educanon f.."lr acadcm:c advancement. workforce training. career and economic deve.oprnent. and life:('lr..g learning to prepare indi, idual-, in )U: diverse communities for lilt- and work 1:1 a global and techno.ogica: socictv stissio» Mix.,iun, Guidi11g Principle>, Vision, & Strategic Initlutives 12011 • ]015 Tomorrow '' l K'C .JI~ produce a more cf~ii.:it."ltcollege: a more mtcrcuunected college: a more responsive college: a more aligned college. a -nore innovanve college: and a more successtul ..iudcm and graduate. • lr.creased t.>:~m.:tl fJndin~ opportunities thr0u~h industry. grants. anci other non-traditional sources: • lncreased consistency and qua lit) of student t.'";"l!r:cncc; • Increased studcn: success. December .8. ~OJ~Comprehensr»e Ar.nual F1r.ancial Reper:
- 11. 8 J:J t:·~bt1'17 h•1 '11 !x ll!bol·li I ht:l~ti1lu Ai: iniuan- ~~ ate unpona.u tu n10' ~n,;:. the .nstituuon to fr1e next le' el. ho" ev er the tocus on >tuJ0111 cucce ,-, ~0n:i<111c> to be HCCs top p:iorit). The College is in the !i:ial stages of J:.·' ch~pi:1g its n:..-" s:r·utl'gi<.: plan. u hich wil, be put uno ope: ation i:1 Janua0 :ol6. 1. Increase Student Ccmpteuon through Advanced Lducauonal Opponuniues ~ Respona to the veeds ot'Busines, and Industry for ~J...1l!~<l Workers 3. Ensure Instructional Programs Provide the Knowledge and Skills Required for :1st Cenrurv Learners .i l-nri:h Institutional Capacity for Facult: and ~latr Professional Development and Student Leadership Dev elopment 5. S.1ppo:i Innovauon asa vteans ro lr1proe ln.;tuut~onai l{.~silience 6 Culnvate an Lntrepreneunal Cutt.rre Across the tustuuuon '? Leverage Loca. and lnrernational Partnershrps fur lnsnt.rnonal and Commurury :Jeeloprr.ent • Deli' er I hgt. (.1ualtc- of "erk • .Accepting rc:c-.J"Ht)Jbil11~ • ~el' mg our stakeholders • Supp1.1t1l11g orgamzat.cnal !!'·n:.1-, • Dnvm]; Conunuous Improvement • :~ting 11h inrcgruy • Critical thinking • 1~n•tl],iniC'h'.tnge - ,ufapling Tn ...upport .;.;ha.ngt: • Cor-imun.cauug t.ftC.c:i' el~ J-'i.ion - Behuvioral Competencies • ~1..·r anJ mairuain tutlh acauenuc 1'1.bndtu..:' • Collaboration • L nired through a common n1i~~ivn • Gi' v thc: ~()111111unil} .s well-cduc.ned "'""'~lo;-::i: • Culture orTrust - L>em0ns1r;uin_g lnresr f) a11c1 Fthics • Lead b) mnovauon 111 excellence • Demonstrate paesion • Accuumability • Commirment to cur ~tudent> student -.uc1.-t:v., • Consisrcncv a.:ro:>~ the institu~ien Vision - Core Values Cornprch!'n::.-1'~ Annca! F:oJn<:ial Reper;
- 12. 9 PO s,.bl.)7111 H~. }JI f)(. 71?6ti /Sli hccserlu lntcrual and ~.lc1nalauJH5 a11: periodical!~ .:~ndu.:ted 10 ...·,a:uare all fina:ic1al operation;, 0f HC'CS Thc>c a"d11> c:isurc 1hat HCCS :esou'"'' are pmpcrl~ managed and acco.1nred for and tho.tl the inte:nal CC'lf~t1 els. :u~ etfecth e and ad.:qua:t . ..:or.ipl) 1r1g ''1th app~O ec plh.;11;•s PtrioJ1 ... tinJr.c;:l: .:lnd bud~et rep(>ns are "uh:iutted tv :he U0ard of I rustet"s 10 :-epc1n on the status ofall ltCCS fur!d;, and a;:;C,ur:ts Ar~nut!I financial :epcns a.re prepared u: ac1.'crdar:ce "uh n~ICant )a' The Office of Fiscal Planning and Bud~et rnonuors the overall budget activ .r.es Ir.terr.a! controls :11a~ been implemented 10 ensure ~hat evpen-e.... fall within the bt.dgct and purcha-;-ing gut..:e:in~:.. An ~ncumbran~e acc...---untirg 11.)1tenl j, :1tili1!d lil help maintain budS?etaf") contr:i!. 3)1()!ng e~pen:;es for Prl"r fis..;a ~ellr... · en:unlbered amoun1.; h) impact the pre iou~ ~ears· budget in '' hich the (>~1g1na.l en::un1brance "as entered. Budgeting Control· I he Board of lrustees 3<!0p1S an operaung budget annually. provtd.ng dutho1i~ 10 expend fond; i:1 accordance wrth state law, board po.<>:). ar.d llCC:S' approved oudgeiing procedures. lncluded in the annual budge: arc the acuvmes ct the Unresrncied fund, iu~d1al) Fund. Operating 'lechnologv I-end ar.d Retirement oi Debi Se" ice I und HCCS has adopted the concept of Performance Based U,1dge11ng. Perfarmance Based Bucgeting c..enta.ns an integrated set of strategrc goals wrth associatea action plans. measures arid targets. and p:iorit~ funds dedicated H' a~tt<.'1ng. them. l ht Performarce JJase: fJodget aligns the budge. process to the strategies, g.()al~ enc a~t10;'I plans off ICC._.S, hich centers 011 tl:e outcome of it Jdenl success E.a.:h H('('S department bui.ds an 3.i.uon p.an to support tt:(' goals and objectives so that our s~rate~ is aligned trcn: the top-down. S:n~le Audit Ht'tS receives fcdera! and state financial assistance during the fi)..:al year, which re~·J]ts :n HC('S h<.'1n~ responsible It) ensure adequate inrerna; control and compliance with law s. regulanons. contracts. and grant agreements :elared to those programs. :ne :niU1ag.t:1neJ1t pe:-i.Jdicalb rev iew s the internal controls t..) ensure the adequacy o:' the conu ols. 1dditior:;f,:~. di;rin~ the federal and state single audit. the mdepencem auditor tests ::ie adequacy of internal controls and comphance wuh applicable lawv, regulations contracts. and grant agreements for the ll13JOr federal and stare progra1ns 11 the fiscl'll year ended ,uy.u't J J. ~HIS, the 5ing:e aud it rdcnuficd no marena. weaknesses I l(.'l'~ managemenr i.:io recponsible tor establishing and maimaming mterna] controls. Management ensures each department ~a' a clear understandiugof H~ a!>>ig:11nent, v.hetner 1t ~s adequately staffed. protects the cash assets. fun::ti~'n'i effectively in :a~ ing 0<11 :hi: overall plan of the Houston Commumty Coltege S) stern s buvine«, and maintams g'o<I records "(..., that financial statements art in ccrrpl ranee 1th l1"..I' I hi." internal control suucrure provioev reasonable protection from fraud anc waste The concept of reasonable assurance recognizes that (:)the ~~I uf a control should ·10· exceed the benefit-, li:..e1> to he derived. and i :) the valuation of cos: and benefits require ... evtirnarev and judgments b~ management Financia! Jnfnrmati11n Coauxehens.ve :r.r.u~I Emancsa. Repon
- 13. Comprehensive Annual Financial Report December 18, 2015 In accordance with HCCS' budgeting control policy, intra-fund transfers of budgets are allowed and must go through the approval process. The transfer must be approved by the budget authority of the requesting department, and then forwarded to the Office of Fiscal Planning and Budget for processing. Funds cannot be transferred from restricted budgets that are set up for salaries and fixed expenses. The transfer of budget between different fund groups is not allowed. For example, budgets can’t be transferred from unrestricted to restricted and vice versa. The management and discussion analysis references topics pertaining to Houston Community College’s major initiatives, future outlook and financial information. Independent Audit The annual audit is conducted in accordance with Generally Accepted Auditing Standards (GAAS) applicable to financial audits contained in Government Accounting Standards (including GASB 34 and 35). The audit includes the basic financial statements of HCCS and supplemental schedules in the precise format prescribed by the Texas Higher Education Coordinating Board. All federal reports and schedules as required by the Office of Management and Budget Circular A-133 (Single Audit) are included. The Single Audit financial reports consist of the Schedule of Expenditures of State Awards, Schedule of Expenditures of Federal Awards and the auditor’s report on compliance and internal controls. HCCS' Board of Trustees engaged Grant Thornton LLP as the accounting firm to perform the annual financial audit. Awards The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Houston Community College System for its comprehensive annual financial report for the fiscal year ended August, 31, 2014. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.
- 14. 11 PO Bo,667517 I Hoc>1011 TX I 772667~11 I hccsedu Trn Zau010.~ ACT Sr. V.ce Chan..:ellor. Finance and Admirustrauon titt.~rontrollcr Respeciivety Subm.rred. Jw ,~< ,..I 'e would like 10 chan~ the uoard of Tn....tcc-, flu 11_., guidance and direct.on It is ''ith special appreciation that we acknowtedgc rhc Finance and Admmisuauon Oh ision and all members o: the staff for the:r suppon. hard "Jrk ar.d dedicauon. We would like to also than~ Grant lhornron LLP for their assistance with !hl·audit. Acknowledgements December 1 S. 2015Comp.enensive ..ir.nua! Fmancia. Repon
- 15. 12 August 31. 2014 For 11s Comprehensive Annual Financia1 Report for the Fisca. Year Ended Houston Community College S~·stcm Texas Certificate of Achievement for Excellence in Financial Reporting Government Finance OfflcersAssociation
- 16. Gt•"'TilO!Al{lnl,l f) 1<; ••• .•,,,1,,.,.1,·.i11! lu11lu r ce- .)1+~11~11., An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. 'Ihe procedures selected depend on the auditor's iudgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In n1aking those risk assessments, the auditor considers internal control relevant 10 the System's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriatein the circumstauces, but not for the purpose of expressing an opinion on the effectiveness of the System's internal control. Accordingly, we express no such opinion. An audit also includes •v•lnacing rhe appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by 1.nanagemeut, as well as evaluating the overall presentation of the financial statements. Auditor's responsibility Our cesponsibility is co express an opinion on these financial statements based on our audits. X1c conducted our audit.' in accordance with auditin1~ standards generally accepted in the United States ofAmericaand the standardsapplicable to financial audits contained in Goremme»: A11dt1mg Standard.r issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Management's responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generallyaccepted in the United States of America; rhis includes the design, implementation, and maintenance of internal control relevant to the preparationand fair presentation of financial statements that arc free from materialmisstatement, whether due to fraud or error. We have audncd the accompanymgfinancial statements of Houston Community College System (the "System"), which comprise the statement of net position as of August 31, 2015 and 2014, and the related statements of revenues, expenses, and changes in net position and cash flows for rhe years then ended, and the related notes: to the. financial statements. Board of Trustees I louston Community College System Houston, TX Grant Thornton LLP 1oc1ri1 !Im St'e!"t St. ·e ;.:::o HouHOf, ix !lOC2 2848 T 8.1?.476.3(;:)0 f 713.6fi5 8741 G·i1tltl()ml~1 tOIO f'kC.1rv'G•a11tlt:irnt>rJ::> ·wirt~·-C:ilfl.'()rariffhorntonUS REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Grant Thornton
- 17. G.-.-"t Jhl)1l"llOO'I U.P .J', .,~·:.v·•yr· ,.11Y.)t:.1··~· rl,.r~·rr011'l":I Supplementary information Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. '!11e supplementalschedules on pages 72 and 75 and the schedule of expenditures of federal awards and schedule of expenditures of State of Texas a....-ards, as requited by the U.S. Office of Mauagemenr and Budget Circular :-133, Audi/$ efStatu, ],tJUJ/ Got<T111Pe1111, andNo11- Profit O~aniza:ions,and the State of Texas Si~gle A11di: Cirrslar are presented for purposes of additional analysis and are not a required part of the furnocbl statements. Such supplementary information is the responsibility of managt.'Incm and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audits of the financial statements and certain additional procedures. These additional procedures included comparing and reconciling the information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional Required supplementary Information Accounting pnnciples generally accepted in the United States ol America rcquttc that the management's discussion and analysis on pages 16 through 32, and required supplementary informationon pages 69 through 70, be presented to supplement the basic financial staremenrs. Such information, although not a required part of rhe basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statemenrs in an appropnate operational, economic,orhistoricalcontext. This requiredsupplementary information is the responsibilityof management. We have applied certain limited proceduees to the required supplementary information in accordance with auditing standards generallr accepted in the United States of America. These limited procedures consisted of inquines of management about the methods of preparing the informauon and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during out nudir of the basic financial statements. ~'edo not express an opinion orprovide any assurance on the information because the limited procedures <lo not provide us with sufficient evidence to express au opinion or provide any assurance. Emphasis of a mailer As discussed in Note 2 LO the financial statements, the System adopted new accounwig guidance in 2015 related to the accounting for pensions. Our opinion is not modified with respect to this matter. Other Matters Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Houston Community College System as of August 31, 2015 and 2014, and the changes in its netposition and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Y/e believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Grant Thornton
- 18. Ori1~ lhOf'l'ltOnl.LF' 1.~ .....,, 1;.., • •..- d' G·.:111 ret111n t-f«1 Jto::-..:1 ~''= Houston. Texas: December 18, 201 S Other reporting required by GovernmentAuditing Standards In accordance wtth GofJflYn!lltnf /l11ditir.g S1<111dard1, we have also issued our report, dated December 18, 2015, on our considerationof the System's internal controlover financial reporting and on our rests of irs compliance witb certain provisions of laws, regulations, contracts, and gram agreements and other matters. The purpose of that report is to descnbc the scope of our 1esting of internal control over financial reponing and compliance and the results of that res1ing, and not to provide an cpuuon on the effectivenessof uucmal control over financial reporting or on compliance. 'That report is an integral part of an audit performed III accordance with Cotemme»: /J"ditingStandards i.n considering the System 's internal control over financial reporting and compliance. Other information "Ille statistical section on pages 7B through !02, ts presented for purposes of additional analysis and is not a required part of die financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the financial statements, and accordingly,we. do not express an opinion or provide any assurance 011 it. procedures in accordance "'tll audiung standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly Stated. in au material respects. in relation to the financial statements as a whole Grant Thornton
- 19. [6 This discussion and analysis of the Sysiems financial statements provides an overview of us financial activities for the fiscal year. Another unponant factor lo consider when evaluating financial viability is the System's ability to meet financial obligations as they mature. The Statements of Cash Flows present information related to cash inflows and outflows summarized by operating. Hon-capital financing. capital and related financingand investing activities. ·1 he Statements of Revenues, Expenses, and Changes in Net Position present the revenues earned and expenses incurred over the course of the fiscal year. Activities are reported as either operating or non..operating. Operating revenues are primarily those that result from instruction, the operation of the System's auxiliary services, and federal and stale grants. Stale appropriations and ad-valorern taxes, while budgeted for operations. are considered to be non-operating revenue. Depreciation on capital assets is included in operating expenses. Since state appropriations and ad-valorcm taxes are a signi ficant portion of maintenance and operations funding, classification of chis revenue as non-operating will usually result in an cperating deficit Over tune, increases or decreases in net position indicate rhe improvement or erosion of the System's financial health when considered with non-financial facts .. such as enrollment levels and the condiuon of the facilities. The Staremeuts of Net Position report all of the System's assets, liabilities and deferred outflows and inflows of resources. Net position, the difference between aSlCI!-> and deferred outflows of resources and liabilities and deferred inflov..'S of resources, is subdivided into three categories to indicate the limnations on its use. Net investment in capital assets is not available for general use. since these are resources chat have been invested in capital assets such as land. building and improvements, and equipment of the System. Resmcted net position is not accessible for general use because the use of these assets is subject 10 third-party re-strict ions. Any remaining net position is classified a.-;. unrestricted and is available for general use. These three statements will assist the reader in determining whether the System, as a whole. rs performing financially better this year as compared to last year. The financial statements are presented using the accrual basis of accounting. Under the accrual basis of accounting? revenues arc recognized when earned and expenses arc recorded when a11 obligation has been incurred. The financial statements of this annual report cons isl of three parts - Management ·.,. Discussion and Analysis. the Basic Financial Statements. and Required Supplementary Information. The financial statements. consisting of the Statements of Net Position. the Statements of Revenues. Expenses, and ( hanges in Net Posinon, and the Statements of Cash Flows are prepared in accordance with the Governmental Accounting Standards Board Statements No. 34 (GASB 34), Busic Financial Statements and Managemenr's Discussion and Analysisfor State and local Governments; and No. 35 (GASH 35). Basi« Financiol Statements and Management's Discussion and A'1nalysis for Public Colleges and Universities. Fl~ANCIAL STATEMENTS This section of Houston Community College System's ("'HCC" or the "'Sy~tem"'J Annual Financial Report presents management's discussion and analysis. Managemenrs Discussion and Analysis is included to provide a narrative introduction, overview and analysis of the financial position and changes in financial position of the System'« financial activity dunng the fiscal years ended August 31. 2015 and 2014. Since management's discussion and analysis is designed to focus on current activities. and currently known facts. please read this in conjunction with the System's basic financial statements and the notes thereto. Responsibility for the completeness and fairnessofthis information rests with the management ufthc System. INTRODUCTION HOUSTON COMMLJllTY COLLEGE SYSTEM MAKAGEMENT'S DLSCUSSION ANO ANALYSIS (Unaudited)
- 20. 17 This statement defines the financial position of the System and includes a comparison for fiscal years 201 S, 2014 and 2013. lnforruation regarding the recording of deferred outflows and deferred inflows related to the pension plan. and the net pension liability can be found in Note 14 in the accompanying Notes to the financial Statements. Implementation ofGASB 68, as amended by GASJ3 Statement No. 71, impacts the current years· Statement of Nc1 Position. Significant changes in assets, liabilities and net position are attributable 10 implementation of GASB 68, as amended by GASB Statement No. 71. Deferred outflows on the pensions plan are related to changes in actuarial assumptions that occur at the plan level, differences in expected and actual economic experience at the plan level, contributions made lo the Teacher Retirement System (I RS) after the measurement date, and the difference between the employer's contributions and their proportionate share of contnbunons. Deferred inflows for the pension plan are related to the difference between projected and actual investment earnings and the difference between the employer's contributions and their proportionate share of contributions. The net pension amount was measured at August 3 l, 2014 and was established per amounts recorded in TRS · Comprehensive Annual Financial Statement and TRS' Audited 2014 GASB 68 Allocation Schedules. Curren! habilnies are generally those liabilnies which are due within one year. and current assets arc those assets which are available to satisfy current liabilities. Noncurrenr assets include restricted cash and C3'h equivalents, capital assets, investments and other assets not classified as current. Noncurrenr liabilities include bonds payable and other Iong-tcrm commitments. From the data presented, readers of the financial statements are able to determine the assets available 10 conunue operationsof the System and how much the System owes vendors. investors and lending insrirutions. The Statement of Net Position represents the System's financial position at the end of the fi:-cal year and includes all assets, liabilities and deferred inflows and outflows of resources of the System using the accrual basis of accounting. The accrual basis of accounting is similar to the accounting basis utilized by most private- sector institutions. Net Position is the difference between assets and deferred outflows of resources and liabilities and deferred inflows of resources and serves as a general indicator of financial stability. When permanent endowments (those that must be maintained in perpetuity) are included in this component, restricted net position must be further divided and displayed in two sub-components, expendable and non-expendable. S1a1enien1 of Net Position ANAJ.YSIS OF QVf,RAl.L FINA'iCIAL POSITION Al0 RESULTS OF OPERATlO:>IS AJl>D CONOF.NSED Fl:-IA:-ICIAL INFORMATION HOUSTON CO.MM.UNITY COLLEGE SYSTEM MANAGEl·IENT'S DISCUSSION AND ANALYSIS (Unaudited)
- 21. 18 Sl64,A:6,4l0 S'71J~C.>.h7 $l39.~X:J,lyj •tV101J S1,l /'J.I03,463 $1,12~.l>t!'),Eia) $1,ltil.llJ,;)// IOfAI .l/•flMll.t& f>UIR~H)l~ol10VOI Rl<.;()Ofld~ St,!i-'0.111,ss:l $1,4')9,Stl 1.756 St.'>00,/&t.,llt. -orAl ~tSI'> & OtHMIUO oun I OW 01 ~ISOlJlt( I C°han2e lOI~. 2014 llHJ 101 S to ltll-1 lflJ 14) 1111" Ai<il:l::t n.mtm ·"*'' s 141,6li,11(1 s l:'S.~4;;).21>4 l·H l'.7.182 s ?J 889.)AJ (17,J8S.S IS1 'l.Jol'·.:'.i!Ttnt AistlS 411.599.JJ-I •'•S.G6l,62<J 5ol).~4f.,()~ (i}..164.2~<-· r:1.1s ...... 1b1 (·a;iiul AUL't< 9S-0.8·*1 .107 s:o ~S<i.195 ?l!2,ll'l ...UJ ~(1,(11!(4,~I! lill.•)Ji/,1'J2 1.s::o.1n~.v.J<> 1.4~1 <(1QJli<J IA?!.I0;.21SI 1~.~oq,<.1"1 1~lf,?1i,, nrn:RRfO01 TFl.l)·lOf' RF.Q)l'::t{TS .-6" ar.cc r.uedar.~ Valuaiio.'11 8.7.f.li!:! i.<f~?.(,;~ S.08I .O.t5 'i"t1 ,)4) (?011, t~g' J>e•'u.>n I 1 .21,'1,1.IH:) 11.2/)(1,011 ::o(J4'.:.l!1'7 1.'l~2.t:J11 .._ f..K 1,0~ 12 f·"C·.16<> f138J~§; TOf,I 'S.Sf'5TS& OEfEAAED Ol 1 t't-OWS OI· Rt.:S.)l R<-'l..:S s LS.i0.121.883 1,.itl'l).~41, 1sc, s l.~(l•J.1lCO ..l16 s 4:1,S.!l•~.I :!7 ' (1.2'4.S{J.J, IJ.fili ITlfS; Cw'la'lt I i;ibt11-e' 111).:~f.J.t' 11 .ll~, l''> Ul(1Ql~7 ~.~l~~C-' ~6001 f'..lln·C11n'1'R( l i:thi!llW· 1.015 U~C·.~~6 '(ll l.479.$14 J.04$.4L.7<1G 23.SS0.%2 1.lb,9.14.1661 1.154.231.619 i 124.111 ...91) 1.161.7.?J.(171 294(1(1,/(1(, 1J(>,9(1l!.,J(l41 OCT[AACVJNfLOWSOI l<.l:~l Ktl~ ~un~< twHlll:i.;~lwt11>P ;•H.!4$ ~','.I TJIJ (1Q ~?'J S'i4.7~0 Poo~1l>P Ult>it-51'> 2ll.6:&..SJ9' 2JA:.l,'?lf4 871.770 ~(l.S.&7,(1.4 1114,i"'li TOTf Ll~fJ.IUTlt:S& Otfl;K.KLI> ; I 1,;,?1H ..lL<.' s I I .!5.b.:').(lljJ ' I.It-I "~).0~1 s }1).1)11.7~0 ' (~ti .. ,l.1'>4) 1:--1-LO sot Rt:~>l Rt ·t; :-.L! t'(n.il 110.'. Jnve;1mt:11 ii Pl:1ni.,,d "Q0,770.()(l(I ].&4,0j (~"! ?~O ?t~.76? 46.6'li.l78 IJ.)6;'.lllJ R.c1111('f~~FxrtPd.11.* 1~~~0.S4S 14.8C.).0:4 J.21 S.S4K i I.SI >.liti41 J}.588.(ko(i lllTtlllrn!t«l 6(1.)S6.912 114.974,S'?i ~07.J .. 1.$12 (~·{I I 7,$Ct.SJ r.l.J;.;:}J)) J UIAL Nll ~ti'ill llJ' s J(>4.41S. ..f21J l1 '.!l.(;":.1)7l ' lll)/16},ll<) ' 1<),•''~S1 s H.'=~Sjl4 ~··----·---- I Statement of Net Position Comparison - August 31, 2015, 2014, 2013 Statement of Cet Position HOUSH>:-< COMMUNITY COLLEGE SYSTEM MANAGEMENrs DISCUSSJON AND ANALYSIS (Unaudited)
- 22. 19 Overall liabilities decreased by 536.9 million from fiscal year 2013 to fiscal year 2014. General Obhgauon bond' decreased by$ 10.0 million due tu principal payments. Notes payable decreased by $R. l million due to principal payments. There were principal payments made on all revenue bonds of S 12. 7 million and prmcipal payment> of $4.2 million were made on PFC lease revenue bonds. Accounts payable and accrued liabilities decreased by $3.9 million. Unearned revenues increased by $1.6 million due to an increase in Fall 2014 enrollment versus Fall 2013 enrollment. Fiscal Year 2014: Overall liabilities increased by 529.5 million from fiscal year 2014 to fiscal year 2015. Net pension liability increased by $67.4 million for l-Y 2015 Jue the implementation of GASB 68. This is offset by a decrease in General Obligation bonds of$ I 6.0 million due to principal payments. Notes payable decreased by $6.8 million due to principal payments. Revenue bonds of $77.8 million were issued which defeased $34.7 milhon of System revenue bonds and $42.3 million in PFC lease revenue bonds. There were principal payments made on all revenue bond.' of SI 2.5 million and principal payments of S4.2 million were made on Pl'C lease revenue bonds. Accounts payable and accrued liabilities increased by $2.8 million. Fiscal Year 2015: l.iabifitie.~ Overall returns on investments increased slightly in fiscal year 2014 to a weighted average interest rate of .42~'6 at August 3 I, 2014. Hie investment portfolio is highly liquid with 89% of the assets invested in local government pools, money market funds and short-term certificates of deposit. All pools and money market funds arc rated al the highest level. Certificates of deposit, high yield savings and other bank deposits arc secured with U.S. Treasuries or United States agencies which have the full faith and credit of the United States government. The balance of the portfolio is invested in goverumeur-sponsored enuriesragencies with ··.~..'./.. credit ratings, In comparing fiscal year 2014 to fiscal year 2013. there was a decrease of $86.4 million in cash and cash equivalents, and long-term investments. The decrease is due mainly to land purchases of $30.7 million and capital expenditures of$50.9 million. Ftscal Year 2014: Overall returns on investments decreased by $754 thousand in fiscal year 2015 due to the $51.8 million decrease in cash and investments from fiscal 2014. The investment pore folio is highly liquid with 76% of the assets invested in local government pools. money market funds and short-term certificates of deposit. All pools and money market funds are rated at the highest level. Certificates of deposit, high yield savings and other bank deposits are secured with U.S. Treasuries or United States agencies which have the full faith and credit of the United States government. The balance of the portfolio is invested in government-sponsored entities/agencies with "AAA'' credit ratings. In comparing fiscal year 2015 to fiscal year 2014, overall assets increased by $2~.5 million. Current assets increased by $:! l.9 million, due to increases in cash and cash equivalents (Note 4). Noncurrent assets increased by $6.6 million. rhis was comprised of a decrease of S73.4 million in restricted cash and long-term mvcstmcnts and an increase in capital assets of $80.1 million (Note 6). The increase in capital assets consisted of land purchases of S 12.5 million. building purchases of $22.2 million and other capital expenditures of $69 ..l million, net of depreciation of$2 I .5 million. Fiscal Year 2015: HOUSTON COM:.1UNITY COLLEGE SYSTEM MANAGEMENT'S DISCCSSION AND ANALYSlS (Unaudited)
- 23. 20 ('.han~t 20t5 2014 20tJ 20t4to20t5 2013 to 2014 Operating Revenues s 113.965.188 s I 09,419,530 s 111.074.l:U s 4,545.658 s (l.6'4,59'2' Operating ~l!'rl~.::. 380.786.541 373.470.694 360.977,093 7315,R-i7 12.49.1.60t Opcnujng Loss (266.821.353) (264.051,164) (24'l.l02.971) tl.770.189) (14.148.193) Nonoperating Revenue. Net 333. 784,328 2'.l8.839.1198 266.649.417 .l4.944J30 32.190.58t Increase in Net Posit ion $ 66.%2.97 5 s 34.788.834 s 16,74(,,,'f.16 s 32.174-141 s 18.042.388 Net t>o$ilion. Begmning of Year s 373.852.073 $ 339,003-2.19 s 322,316. 793 34.788.834 16. 746,4¥• Cu~lativc f.ffcct forOi::ingec; in Accounting Principle (76.396.628) F6..l%.621!) l:lldi.ng Nel Position s 364.<118.420 $ 37.l.852.07J s 339.063.239 s (9AJ3.6~3) s 3-1.78!t834 Statement of Revenues, Expenses, and Changes in ~ct Position 1 summarized comparison of the System 's revenues, expenses and changes in net position for the years ended August 3 l, 20 l.5, W 14. and 2()13 is presented in table below. Total revenues and total expenses should be considered in assessing the change in the System's financial position. When total re'cnues exceed total expenses, the result is an increase in net position. When the reverse occurs, the result is a decrease in net position. Further detail is presented in the Statements of Revenues. Expenses and Change.._ in Net Position and notes to the financial state1nenrs. The Statement of Revenues, Expenses and Changes in Net Position present the System's results of operation' for the fiscal year. Operating revenues are generated from the services provided 10 students and other customers of the System. Operating expenses include those costs incurred in the production of goods and services which result in operating revenues, as well as depreciation and amortization. All other activity is classified as non- operating revenues. expenses, gains and losses. Since a large portion of the revenue including Ad Valorem Taxes and State of Texas apprcpnations are classified as non-operating revenues, Texas public community colleges may reflect anoperating loss with the increaseordecrease innetposition reflective of all activity. Changes in total net position as presented on the Statements of Net Position arc based on the activity presented in the Statements of Revenues. Expenses, and Changes in Net Position The purpose of the statement is to present the revenues earned by the System, both operating and non-operating. and the expenses incurred by the System, operating and non-operating. and any other revenues, expenses, gains and losses received or <pent by the System. Statement of Re,•enues. Expenses and Changes In !'et Position llOUSTON C01MUNTTY COLLF.GF, SYSTEM MANAGEME>JT'S DISCUSSION AND AKA!.YSIS (Unaudited)
- 24. 21 Overall, operating revenues decreased by SJ.7 million or 1.5% in fiscal year 2014 as compared to fiscal year 2013. The System experienced a decreaseof I% or$ O. 7 million in tuition and fee revenue;a decreaseof 5% or $0.7 million in federal grantsand contracts:and a decrease of9% in state grants and contract revenue. Tuition and fees decreased due to enrollmentdeclines experienced in the full and spring semesters. Decreases in federal and state grant revenue are due to several grants that ended during the period. These decreases are partially -01T.-.el by increases in revenuefront local grantsand contracts and auxiliary enterprise!". Fiscal Year 2014 Non-operaung revenues increased by 11.5~,,., or $37.4 million overthe previous year, mainly due to an increase in ad valorem tax revenue. along with an increase in other non-operating revenue (ScheduleC). The total tax base in the System's taxing district increasedfrom1014 to 20I 5 by approximately 10%, resultingin an increase in the Maimenunce & Operation portion of ad valorem taxes of $11.l million. An increase in debt service needs resulted in a correspondingincrease in the Debt Service portionof ad valorem taxes in the amount of $19 million. Other Non-OperatingRevenues increased by $5.8 million due to the gain realized on thedefeasance cf the 2006 Junior lien RevenueBondsand the 2005C and 2006 PFC Lease Revenue Bonds. Overall. operating revenues increased by S4.5 million or 4.2% in fiscal year 2015 as compared to fiscal year 2014 (Exhibit 2). The System experiencedan increase of 6.2% or S 4.4 million in tuition and fee revenue: a decrease of 1.7% or S0.2 million in federal grants and contracts; and an increaseof 5R.2% in state grants and contract revenue. Tuition and fees increaseddue to an increase in workforcecontinuing education enrollment. Increases in state grant revenue are due to au increase in financial aid awards of the Texas Education Opportunity Gram, Fisca! Year 2015 Revenues 1:1 FY2015 • FY2014 • FY2013 Ending Net Position Increase in Net Position Operating Expense Operating Revenues Statement of Revenue, Expenses, Changes in Net Position· Comparison - August 31, 2015, 2014, 2013 ~113,965,188 $109,419 ::>30 $111,074', 122 Non-Operating Revenue, Net HOt;STON COMMUNITY COLJ.F.GF. SYSTEM MANAGEl'vlENT'S DISCUSSION AND AN1L YSIS (Unaudited)
- 25. 22 TOTAL NOKOT'CRATJN<i Rr:VF.NlJ(':S Olhcr Total Qf1si1nd0lhct Ufh b.11.J (~her. (iii) .. TOla.I Low P1opc11r .• a.•CS L(X;al t>1upc11y I 11M;i.. M&O °'"' Rfl"f,1rt<:tt:'<I rou1l Sune Apl-'rop11a1101ls b':>.1)5.8')) '19.1·1~,YJ) 71>.014,(J()j 6.158 ($()5,061!.J 11.09) 1)02 12 ';,6,7K4 12,(Wl.2:?~ ~66.SIR AlS5~'> 82,249,4<>!- 81.675.719 82,105,.22! 573, 11b (~29,5091 11~.~1;.11'2 11 l,9H7.lR'7 H)6.f~'7 .4?6 I 1.'1~<C:.AR~ 7JUlllJll I 48,383.!lll 29.402,4~ 7 ~3.158,1101 18.9R1,.175 4),24l,6Sl'i J73,4S7.U0·' I 43.J89.7,~4 l2'l,1j(),277 10.0()7.26l) l<l,131.467 9~.t>,:O.J 11 9.!.°'92,798 ..... 423.841 l,58.0,JIJ (J.)1.043~ l .260.8<4 l.;i16.2Q? 1.~QLR~R ( 1 '7$.438) l I ~~.5%) J0.8!l8.464 S,547,831 2.,202. ll 9 S..140.6.11 J.J4S,714 J2.i49.318 c..984.12S 3.794.0iJ? :S.ltJ).1~3 J,IYO.l ll:i J6.l,S28,92fl .l~O.IJl.JS(; 309.-17~.J~J J7.J:8~.S42 l<i.563.0JJ $-I 17.4Y4,,16 $41$.S(,L'lll> $420.tJS).-l?S s -tl.93~.200 s 14.Wl:l.4·11TOT Al. RF.VE~U(.S &a1c App,opria1i<>t1~ Un1e:sifW:tcd NON()Pf:RATIN<) IU:'1;NlJE ..~ ., O'T Al Ol'IZRA T INCi ru:vr.:mrr.s AllXihary r utal (:ili=.nts. ('.c)uua.<:1!18. A1.tiollll1)· Gta:.lu.,C.:intra..·n &. Au.xdJ:uy: Fcdc'ral ~:!(fl" Loe-al. [')(1 ere & Non--Oo•cnHrtl·nt•I OPL'.RA"l'JNC RCIC:1'l1£:S. C:hun 'fl" 1015 2Ul4 lUIJ 2014 h• 201~ lUIJ to 1014 i 75,(>79.:?]0 S 70,6H9.0l4 s 7} ,433,953 s 4,:190,196 s (744,.,.19) I 3.i'82, I I() l·,,OIV.776 14.70:!.419 (217.(.C·(~} (6fl.:,64.H 8.772,l}fl. ~54l,b42 6J S658~ l.128.716 (f'll 2 .•)J}) :.786,499 2,747.018 2,6-BS,166 .19,481 58,751 J).54.f.Y')l IC.,.1:00.0MI 16JJ~2.81JY (!.~75.lH>Y) J17.l<>I .lX,$85.458 Jll.7ln J96 .19 fo>J(l,)69 t~';4(-' ('''l'>,n7l) 11.1.965,11111 109,419,S.lO It 1,07J,122 .i.5~5.6$8 (I .65J.S92' I W1Kltl & h.:l~ Net ul Dist.11.1111 ... Non-operating revenues increasedby 5.4% or $16.6 million over the previous year,mainly due to an iucrca,..e in ad valoremtax revenue,along with increases in investment income and other non-operating revenue. The total ta' base in the System's taxing district increased from 2013 to 2014 by approximately 10%, resulting in an increase in the Maintenance & Operation portion of ad valorcrn taxes of $7.9 million. An increase in debt service needs resulted iu a correspondingincrease in the Debt Service poruon of ad valorcm L1.xCs in the amount ofS6.2 million. The increase is offsetby a decrease in interest paid on capital related debi of S 16 million due to the capitalization of interest on construction in process. interest earned for FY 2014 was S3.7 million. Non· operating revenue. net of expenses. increased by $32.2 million for a total increase in net position of $14.~ million. HOUSTON CO.MMUNITY COLLEGE SYSTEM .M1."l/GEMEJT'S DISCUSSION AND ANALYSIS (Unaudited)
- 26. 23 $)8,885,957 $3~730,496 Sl:-.r,&40,169 llll·Y2015 •l·Y2014 •FY2013 $82 249,49S $81;675,719 $82, IOS.228 Revenue by Source Comparison - August 31, 2015, 2014, 2013 Gifts and Other Granr-, Contracts & Auxiliary I Tuition & Fees, Ne1 of Discourus StateAppropriations Firle IV Grams ......... j 5173,457,004 I ocal Property foxes: 5143,389.744 S129,256,277 ~ 9S,673,lll 94,092,,98 94,423841 llOUSTON C'OMMUNI rv COLLEGE SYS I H1 MANAGT·Ml:N 1 ·s DISCUSSION AND ANALYSIS (Unaudited)
- 27. 24 ------------·---- $21,484,508 $19,743,511 $19,492,034 Depreciation •FYlS •FY14 •FY13$76,091,223 $82,227,012 $17,183,320 Departmental Expenses Scholarships, Net of Discounts $61,638,293 $58,733,940 $57,092,409 Operating Expenses by Natural Classification Comparison· August 31, 2015, 2014, 2013 $221,572,517 $212,766,231 $207,209,330 Salaries & Benefits Optrul_i11J: 1>;.i,pct1.M:lri I~· '111h1rill Cla1'1'if'ic:ttion --- ("ban~t ~j,of •t.nf •;. tif 1015 To1al 2014 Toi.iii lfHJ T<1tal 101410 2015 1013 10 201 I Saeries & Beneflti; ---S2115F2.SI.,. '~·:" 0 Sll2,7(1ti.2i1 5"0"· 1•Ji,2(1(),l10 57.411.. S t,S06.~&6 s S.556,901 S..t1Ulahhi,p,., 1•.:1.1('r01•e111m•s 61.6)8.~l 16.2".i 58.';J.9,0 IS.?'o 57.092,4<•9 15.8110 2.~)4.353 1,o·H,Slt Oci>tt1t1ri..·111a1 f.-")cr-. ..... 76.09t..:2l 211.0" (I '12.21"'.01~ 22.0'·o 17.}~).J,:!t) i I .411t> {6.1)5.7~'9'1 S,(•4~.692 OcprC.'iatiC•l'I llAf..4.50~ 5.6•-o 19.~..13.~ 11 5.l"· 19...19~.0.34 5...1• ... l. ,,0,99C 2S 1,4,., Sllo-11,7~('>.~41 tl)ll"'O') ~~'? •.t111,1~ij ltXf'·o S3611.9i'1.IJlJ.~ IU(J"o $ 7.315,$47 $ 12,49.3.()i)I The schedules below provide a three-year historical record of tho use of fonJ., by functionality and natural classification. The expenses reported include bothre...uicted and unrestricted funds, and arc on the accrual basis. HOUSTON COMMUNITY COi.LEGE SYSTJ-~"1 MANAGEMENT'S DISCUSSION iND ANALYSIS (Unaudited)
- 28. 25 Depreciation S61.6J8.19J SS8,73.1.9.ffi $51.092,409 Operation/Maim. of Plant llFY2015 •rY2014 •FY~Ol3 S6J.0~1J96 $62.613.369 S56J98.020 Institutional Support Academic Support ..6,6W.l.'JI $'.!S,060,lll $31.4-18.416 $29,244,("1-I S29. t65.865 Student Services Scholarship/Fellowship Operating Expenses by Functional Classification Comparison -August 31, 2015, 2014, 2013 -~Stt8,J8J.IJQ Instruction -i1~,62J,40fi - ii I l.931.030 ii SI0,:95,4(19 Public Service S10.bl8.104 . $11,1·1R.Ol 1 SJ I.781.716 HOLS rON COMMUNITY COLLEGE SYSTEM MANAGLMl!Nrs DISCUSSJON ANO ANALYSIS (Lnaudited) Op~i.11::ig t;~l)C'll:.t'll l') l-IXl..:ho9'lll ( t.ullff1o1:111M:n 011111,att.: ·~or ..('( •.ol ,.,,~ f (1~11 ZOJ.I I ouJ 7!(113 1·,,1,,11 2{H110 :!015 :!011 tu2014 lnwrt1Ct1c-P s 118.383,131 31.1• .. $ 111.628-."06 l(> ?~ s 111.l>l I JJ10 11 o•.. .1~.i:1:s ' t>Q7.l'i6 Pblte ScJ~ ,.;~ IO.'!Y5,·IU9 2 ,., 10.628.104 1 8°0 11.6)8,o) I.I Ji•. (JJZ.<-95) (IJ)09.909) Acad::m:,·Suppo-rt ; I.781,726 8 3•. 26.6~.,.2()1 1.1• .. 2S,06G.1~3 69•. S.082,52~ 1.6)'>,04! !;ludm1Scon1c.cs ll 4'11S.417 8 1°.. 29 :!41 C>04 '? s•. :q.1 o~.sti.~ g ,... !20'.l,813 78-.'>)9 ln1111tv;ional~pon <i~.081.391 166".. 62.67:l,369 16 a•... 56.39'8,020 15 (>•. 40&,02i 6,~7~.)-19 ()rer:1;1in111''1m1 of Plr11 :A.Rl;).()28 14•. 1S88~D11 Q6•. <l 4lK.3H ~ 1•.. (:',C.l).i,()(ll) ";'11b.ll20 S..•h->la:i.l1i;i1FeUuWJhip vl.'1)8.29J l<i.~. )8,7)).940 IS J"':o S7,09Z.40~ JS 8•'0 l.91>..i.J.SJ J.(>41.$31 Dcpr~iatiCJ~ 21.48~.~oa !-.6•. 19. i'4:l.5 ! I $.~· .. 11~,ac;2.0J.4 j,4•., l.140.'JQ7 2S1.4?7 A1n1h11} t:111e1p1t~ll IJ,!l.!i:t,6'.>:? J (I"• 11',23,,Y.!•f 4.0 .... 13.?0'1,?}1 S.Z"• (l.~~0.29'lJ ( 1.$ 20.828' T 01tl ["pe:11;e $ )80,1'86.S~I 100·. s JiJ,470.4>94 tor..-. s J110.97i,09~ 100--. s 7,31S.ll46 s 12,413,(>01
- 29. 26 There was a significant increase m net capital assets of approximately $88.6 million from fiscal vear 2013 to fiscal year 2014. This increase was due primarily to a $36.0 million net increase in construction in progress. an increase in land of $~10.7 million, and increases in buildings. real estate improvements and equipment of 521.9 million (net of accumulated depreciation) which were funded from various bond proceeds. See footnote 6 of the financial statements. flscal Year 2014: fhere was a significant increase in net capital assets of approximately $80.1 million from fiscal year 2014 to fiscal year 2015. This increase was due primarily to a S9 l.4 million net increase in buildings, real estate improvements, equipment (net of accumulated depreciation). There also was a $12.6 million increase in land acquisitions. and a net decrease in construction m progress of $23.9 million which were funded from various bond proceeds. See Footnote6 ofthe financialstatements. Fiscal Year 2015: Changes in net capital assets are lhe result ofacquisitions. improvements,deletions and changes in accumulated depreciation and amortization. In accordance with GASB Statements No. 34 and 35, the System does not record the cost of capital assets as an expense at the time of acquisition or completion of the asset. but rather shows the expense systematically over the expected life of the asset as depreciationand amortizarion expense. The amount shown in the accounting records for the value of the asset will decrease each year until the asset is fully depreciated or removed from service. As a result. the amount of capital assets shown in the Statements of Net Position may decrease from one year to another. even though new assets have been acquired during the year. Capital assets subject to depreciation and amortization include improvementsto land (such as parkinglots and signage).buildings. library books, furniture and equipment Land is not depreciated. Capital Assetsand Debt Administration • Increase in employee benefits costs related 10 the reducnon in the Stace's contribution to !'RS and ORP, an increase in health insurance premiums and compliance with the Affordable Care Act: • Landpurchaseand buildings improvements; Increase in debt services. An analysis of operating expenses indicates an increase in fiscal year 2014 by $12.5 million or 3% comparedto fiscal year 2013.The increases are namely in the operations & maintenance of plant. institutional support and academic support functional areas due to the following: Fiscal Year 2014 Increase in employee salaries and benefitscosts related to general 2% raise and the increased costsof health benefits: • Increase in compensation of lab hours for faculty; • Increase in academic support function due to increase' in IT projects. An analysis of operating expenses indicates an increase in fiscal year 2015 by $7.3 million or 2% compared to fiscal year 2014. The increases an: namely in the instruction and academic support functional areas due to the following: Fiscal Year 2015 HOUSTON COMMUNITY COLLEGE SYSTEM MANAGElvfE1'TS DISCUSS!O>I AKO ANALYSIS (Unaudited)
- 30. 27 13FY15 •f'14 •fYl3 S6.607,543 $8.186,213 $9.697.379 Telecommunications and Peripheral Equipment S-1<i,922,:MO s22,s~.oss $24.1~2,94ll Furniture. Machinery. Vehicles and other Equipment SJ,487,889 SJ,646,937 53,495,011 Library Books Other Real Estate Improvements Buildings Construction in Progress ',......,~_, .$550,301,121: $463.274,451 ' $457.~73,817 Land Capital Assets (Net of Depreciation) Comparison -August 31, 2015, 2014, 2013 Capital Assets (~et of Depredation) Change ('apital Asset c:: 2015 20t4 2013 2014 to 2015 201J to 2014 Land s 157.283.434 s 144.723.•07 s 1t4.019.147 $ 12,560.027 s 30.704.260 Construction in Progress 126,849.663 150.738.677 114.762.207 (23.88Q.014) 35,976..170 Buildings 550,301.121 463.274.451 457,973.817 87.026.670 5.300.634 Other Real Estate Improvcmcru s R6,3R9.2 I 7 77.620..152 ~8.068.903 8.768.765 19,551.549 Library Books 3.487.889 3.646.Q37 3.495,0t 1 (I 59.048) 151.926 Fumit us e. M;1chillery. Vehicles and Other Equipment 19.922.240 22.~66,058 24.102.939 (2.643.818) ( 1.S36.88 I) Tclccommuo icat ions and Peripheral Equjpmcnt 6.607.543 $t,18(l,21' 9,697.379 '1.578,670) (1.511.166) Total Capital 1S.(,('tS s 950.841.107 s 870.756.195 s 782.119.403 s 80.084.912 s 88.63(,, 792 IJOUSTON COMMUNITY COLLEGE SYSTEM MANAGEMENT'S fJJS.IJSSION AND ANALYSIS (Unaudited)
- 31. Ol·Yl5 •FYl4 •l'Y 13 28 Net Pension Liability J Deposits General Obligation Bonds PFC Lease Revenue Bonds Revenue Bonds Outstanding Debt Comparison -August 31, 2015, 2014, 2013 Outsr:.tnding Oebr Chan?,c O..tstanding debt: 2(i1$ lti14 21113 2U~4 to 2015 2013to2014 Notes Payable s 162.127.985 s 168.926,738 s 177,016.888 s (6.7111.152) ! (8,090.llO) Revenue Bonds 2.12,296..tJS 2fJ2,U8,m 215,574.lli5 291437.621 112,?IS.889) PFC tease Revenue Oonds 56.506.229 103,5%.-12Q ICil,747.939 (47,090.200) (4.151,560) <kncr.il Obligaton Bonds 152,42Q,.l?(I 568.4117,151 S78,1>9.ll8 tlS.977,781) (9.?Jl,007) Ocp>1sits 441 441) .4(i Net Pension 1 iability 67,428..172 67428.372 Tl:alOutstanding lkh1 s l.O'll,788.834 s 1.i)H,789.574 s l.()78,471l.741) ! 22,999.259 s t.34,689.166) HOUSTON COMMlThlTY COLLEGE SYSTF~1 MAKAGEMENT'S DISCUSSION AND ANALYSIS (Unaudited)
- 32. 29 • Bonds and notes payable decreased as follows: • Decrease of S8,090. I 50 for principal payments on Maintenance Tax Notes. • Decrease ol'Sl2.715.889 due to principal payments on Revenue Bonds. • Pl·C Lease Revenue Bonds decreased by $4. IS I ,560 du" to principal payments. • Decrease ofS9,732.007 for principal payments on Limited Tax General Obligation Bonds. Uonds and notes payable decreased as follows: •·1scal Year 2014: • Bonds and notes payable decreased as follows: • Decrease ofS6,798,752 for principal payments on Maintenance Tax Notes. • Net increase ofS29,437,621 due to issuance of$77,851,896 in bonds, defeasance ofS34,695.000 and principal payments of $12,545,000 and amortization of bond premiums. • Pl'C I.ease Revenue Bonds decreased by $47,090.200 due to dcfeasancc of $42.325,000 and principal payments ofS4,240.000 and amortization of bond premiums. • Decrease of $15. 977,781 for principal payments on Limited Tax General Obligation Bonds and amortization of bond premium. Bonds and notes payable decreased a> follows: f/iscal Year 2015: HOUSTON COMMUNITY COLLEGE SYSTEM MANAGEMENT'S DlSCUSSION AND ANALYSIS (Unaudited)
- 33. 30 llC'C is leading the nation as the most diverse community college. We are devoted to championing the cause of diversity, inclusion. and equality for everyone, Fiscul Year 2014-2015 began our second year of the system- widc ITC Diversity & Inclusion Plan, highlighting: the institution's collaborative conuniuneru lo the evolving cultural and developmental nuances of all students. faculty, and staff The Diversity & Inclusion committees and programs continuously build a culture that fosters an inclusive, welcoming learning environmenr throughout all HCC campuses. Diversuyand lncluston College readiness is a metric that has been loosely defined and has become largely synonymous with dual credit programs, but it has a much broader 'cope. Due to the high level of influence on HCC's student :-;u.;-.;CS$ and JICC' meeting its obligation to produce workforceready and academically prepared graduates. we must view college readiness as applicable to other channels that bring studentslO HCC. HCC':-. college readiness endeavor witt expand pathways for workforce readiness and academic success by developing and promoting academic and technical pathways from secondary to post-secondary education through many channels) such as dual credit, Early College High School (F.Cl!S), Middle College High School (MCHS), Fexas Success Iuiuatives (TSI) academics. continuing education. etc. By developing str<n1g relationships with our partner Independent School Districts (!SD). internal HCC departments. and external organization' associated with building educational pipelines, 'C align access to both acadcnnc programs and to ongoing technical education so students can have a strong foundation for choices in the future. HCC"s goal is LO have our students leave IICC ready for the modem workplace and academia - that they have portable, marketable skill 'els lhat they can apply lo opportunities that come their way. that they receive credit thal can be applied LO future educational goals. Colteg»Readiness The highlighr« and accomplishrnents of the transformation also include the following changes that Vi11 move T-lCC toward increased accountability and transparency as we move through the planning of the organizational redesign of student success. • A consistent staffing mode) of anstudent service areas • A consistent staffing campus leadership model • Targeted support services forthe Ccrucrs of Excellence • System-wide training for student services staff • A comprehensive student success and completion model As weembark on Phase II of the transformation, the focus concentrates 011 Students Services A new model has been designed to support the success of our students, enhance the student experience. and support the success and completion goals established. Phase JJ of the transformation should result in the following bcncfirs: • System-wide leadership in academic in,...tructional areas • System-wide opportunities for collaboration among faculty within disciplines • Sixteen (16) Centers of Excellence aligned with the surrounding industry corridors • System-wide professional development opportunities for faculty through the Faculty Academy • System-wide goals on student success. retention, completion. and job placement Ao important pan of HCC's transformation is the focus on the student success experience. Phase I of the transtormation focused on Instructional services. With the redesign of lhe curriculum and development of staffing standards for all instrucuonal areas, the benefits include the following: We arc in the middle of transforming J !CC into the College of the Future. That future not only includes new technologies, but also comes with new opportunities. leadership. and strategies. Future Outlook HOUSTON COMMUNITY C'OlLEGE SYSTEM lVIANAGEMENT'S lllSC'USSIOr ANO ANALYSIS (Unaudited)
- 34. 31 • 550 million for core operations ($I million for the biennium to each community college) • 10% set-aside. about $169.2 million total, forStudent Success Points (based on outcome versus inputs) • 90% distriburion, based on contact hours: about $1 .52 billion in general revenue for the biennium. Texas Association of Community College's (TACC) model for funding community college instruction was initially adopted by the 83'' 1 exas Legislature for the 2014-2015 biennium. The R4"' Legislature continued this pattern of funding instruction at community colleges in the 2016-2017 biennium. Overall, community college appropriauons funded totaled $1. 745 bill ion in instructional funds. The Core Operations-Student Success Points-Contact Hour Funding methodology includes the following: HCC is commined to innovation that creates resiliency. ·1 he seven initiatives adopted in the strategic plan encompass our efforts 10 address and meet the needs. of our students <ind community. Stewardship, being one of our guiding principles. is the path to fulfilling TIC'(":-: mission and acknowledges our guardianship of its resources and positive impact on the Jives of our students and community at large. Sound stewardship incorporates adherence to the highest ethical standards in all professional and personal duties and responsibilities: to deal honestly with others: to stand for what is right: and ro secure the benefit of all by the wise care and utilization of our resources. including time. money. and people. The 20U Capital Improvements Program (CIP) continues with full operations and mobilizanon on multiple active sites. The Program Execution Plan (PEP) continues to be' in use for all aspects of the Bond Program activities. Planning and construction i$ underway to build several new TTCC facilities. The bond referendum, approved by the voters in 2012 for $425.000.0IJO, provides each llCC college with new or renovated facilities and the technology to meet student needs. especially in high-demand areas "'ch as science, technology, engineering. and math (STCM) education. as well as health sciences. Houston Community College looks forward 10 welcoming new and continuing students; offering new courses. implementing a new organizational structure with a new budget: and new opportunities. As we continue this momentum, we Vi11 be challenged by economic change and changes in (lUT stakeholdcrs needs. Ourrole in building: futures is still paramount forour students. for business. forthe economy. The role of all facultyand staff i:": more important than ever. The faculty and staff define our success through their power to teach. inspire. motivate. and engage with every single person who enters our doors. Vlc have much lo be proud of at JTC·c. Ve arc absolute in our focus on the student experience on campus or in the classroom, It is our joint responsibility to give students the best guidance. Our responsiveness to our students should he constant and consistent. Only our collective work Vi11 best prepare our studem-, for a four-year instiunion or the workplace. • Greater number of officers familiar wuh each college Iocauon • Increased number of officers able to respond to incidents within shorter timeframes • More frequent and ongoing conununication and training opportunities for officers • Increased levels of supervision on all shifts. including evening. and weekends. Safety and security of all students, employees and visitors is of utmost importance to the leadership of HCC. To enhance the college's ability to maintain safety and security, the HCC Police Department will begin implementation of its transformation plan. The new structure has been designed to increase communication. training, and the deployment of personnel to quickly meet strategic ueeds while keeping our focus on the safety of our faculty. staff, students, and visitors. So111e advaniages of the new structure include the following. Safetyand Security HOUSTON COMMUNITY COLLEGE SYS rEM MAl'<AGEMENrs DISCUSSION ANI) ANALYSIS (Unaudited)
- 35. 32 This financial report is designed to provide the System's cuizens, taxpayers. students, investors, and creditors with a general overview of the System's finances and to demonstrate the System's acccuntability for the money it receives. If you have question' about this report or need additional financial information. contact the Vice Chancellor of Finance and Administration's office at JI 00 Mam. IIouston, Texas 77002. Contactlng the System's Financial:Vlanagement HCC's outlook for the foreseeable future continues to be positive as a result of its strategic leadership, fiscal management and stable local economy. Ibe ad valorem tax rate for calendar year 2015 was decreased to SO. I01942 from the calendar year 2014 rate of S0.106890. (he tax rate for Maintenance & Operations (M&O) decreased from the prior year' rate and the rate for Debt Service also decreased due to the decrease in funding needed to cover debt payments in PY 21) 15-2016. Fhe maintenance and Operations tax rate for 2015 is S0.075631 per $I00 of assessed valuation. The debt service tax rate is S0.026311 per SIOO of assessed valuation. These adopted rates are in line with the Board's policy to minimize the tax burden on its constituents and provide for sufficient tax funds to support the fiscal year 2015-2016 operating budget and debt service. • ORJ' Renrement Rate: J·mployer share is 6.6 percent for PY 2016 and FY 2017 (same rate as for FY 2.014 and FY 2015). The state •hare is 3.3 percent; the community college share i' 3.J percent. • TRS Retirement Rate: Employer share is 6.8 percent for FY 2016 and FY 2017 {same rate as the previous rate of 6.4 percent for fY2014 and FY2015). The state share is 3.4 percent; the community college share is 3.4 percent, The Stale contributions LO TRS and ORP arc as follows: The cost sharing agreement established during the 83'0 legislative session for employee. benefits rernams as established with the state funding 50 percent of the costs and community colleges paying the remaining 50 percent of the: costs. HOUSTON COMMU:-llTY COLLEGE SYSTEM MANAGEMENT'S DISCUSSION AND ANALYSIS (Unaudited)
- 36. 144.073..582 1-i.S('l.t> 14 114.974,~11 874.770 $74.770 1.1:24.814.913 1.UI 1.4i9.S14 161,141.738 8SO.l37.J96 440 113,335.339 8,475.40~ 12.530.i62 2J'155l 852,319 56.809,299 7.785,000 l4.S2S.Cl()O 7.972.617 1,491.!"69.079 IR611l<,727 40.11.>6.842 26&.588.051 S70,7.<6.195 79.864.898 42.i78.64S 3.605.721 2014 Exhibit I 33 Tbe accompanytng notes arc au uuegral part vl'the Financial «tatemcntv 1'0 I Al. 1-FT P()Sl'l ION l'F'T PO~ITION 'h:t ln...::1tmcn1 in ( apllal Assets Restricted ~ [xr!ndable I:nrest rictcd l>l:J'l·.RKf.l) 1'f.l.OWS0f RPSOllRCCS 01!r~t~l l110ow<t Refo1ieJ 1;) Pcil~ion Advance rundmg 'alultton To1alO(f~ tnilows of'Rcsourcc, TO l :L u.varu I JI:~ 'JOM'l,;RRl'N I' I IAAll.l J'J~S. Deposits 11'1 Penvion I iahilhy !?(')IC' 14;• t-.oh.·s Payobk (Nut.: I and 111 Bond) Pa}'abk t~o1c 7 and t() Total Xoncurtem (.,iabili1its H04.298 14,004,7V~ 2.S26,0MJ 8)0.289 56.J27,43S R.7R).2qq 26.975,000 ll~.2;1.IH 440 6?',42g.J?1 1 s.~.3-14J•87 ~14.25?.(•J7 i,035.030,536 l.154,2li1J)79 Z0.626.539 19~,24S 21 ..i21.i8 ... 2Q0,770,960 13.2Y0548 61.1.356.9)~ s JM.41MW $ CIJRRl'NT I 1.•011.1Tlr$: AV',:,1111 b P.l~ ah~ (11'1e S} Accrued Liabtlitk'S Compc11sa1cd Absences tNotc l6J Funds I tcld for Others llr•:,":;111100 Hc.'t:r•l•~ Notes Payabk ~ Currentt'cruon ~~Gh.: 7 and 11) Bonds J'ayahk: ~ Current Portion (Note 7 and~; Total Current I iahili1icc: LIAHILI I IES llFl'l·RREll 011 fl. I 01'~or RE!;OIJRCFS H~ft":n~ (l~11 fk•'4to: R~lal<!i.l tu P<lb•<•f1 Advance funding valueuon T(Hal DeferredOutfjows ()f Resources JOT:L;~LI~ 1'UNt'LltKL1'1 ·SSl 1 S Restricted CJ.Sb and ('a:ioh Fqurvalcrus (N,it' 4) 0th.er I ong-Term tnvestmentv (Note 4t Resu cted l .ol'l,i! T~''" lll'"l'-lnl.,-nt ("lnte 4 t ( epuat A~St.'h, lct (Note 6) Toral Noncurrcm Assets 2015 ~ 101.545,:!22 s 4l,4)4,IJ4 4M9,24Q 147,638.6<!5 85.872.540 S0,26i.l.12:? 285,46(),()'2 950.R~l,107 I .372,4~J.44I l ,.~20.079.(146 11.29'1,0IS s '!·•~.R]J. 20,042,837 rt. RH>.1'T ASS~TS: Cash and Cash [quh,alf'fll~ (SOl(: 4) ,.¢C(l1ml<1 Receivable and Other Receivable, te1 (Nott" 5) Pn:paKI (·b:u~ Total Current Assets ASSETS HOUSTON CO.:.lMUNITY COLU:GE SYSTEM STATEMENTS OF NET POSITION AUGUST3 l, 20l5 At'D 2014
- 37. 34 I he accompanying notes are an integral part cf 1 he financial statements. lnvcstrrent tncone. Net Interest on Capdol Related i)ebt Tille IV Oanrs Nur.;ing Shortage ReJuclion OtherNonoperatingRevenues C>rhcr Nonopcrating f.'{lcnscs Net Nonopi:r.ning Revenues (Schedule (') NCREASf IN NIT POSITION N~:r POSITION. flf.(;INNINGOf YI-AR OJMlJVTIVEfffF.C'f FOR CliAl(FS 11' AC'COINrllGPR!lC!Plf (Notc 14) Nt;f' l'(l';fflClN, IU'(3NNINOOl'TllE WAR lll~qA IHl NETPOSITTOJ, END OF YEAR NOJOPERATINGREVENl.,'ES(EXJ'[JSES): State Appropriations ~1aintcnanc.r rd Vak>n:m I a>n Dl:bt Service ,,J V.kl1cm T..... s (ills OPERATINGl'.XPJ :NSl·:S: Instruction Public Service Academic Support Student Services lnstitut~nal Suppo« Ope.ra1ior1s ancl ti.1ain1enattce Scholar.;hips and FcJJo,.,.hips AuMUaryEnterprises Deprecation Total Opcmting l'-'P(nscs (S<hcduk BJ OPERATINGLOSS Exluoit 2 201.1 2014 s 75.079.230 s 70.689.034 13.7~2,110 14,019.no s.n:?.358 S.543,642 162920 116.89') 2,440.3.17 2,441.076 177.222 189.()43 13.544.991 16.420.000 113.%5.188 IC~.419.530 118.J83.131 112.628.-!06 10295.4-09 I0.628.1()l 31.781.726 26.6'1!.201 31.-1-lS,417 :?9.244.6{)4 63.081.397 62,6i3.36'l 211.R2!W28 35.885.6.11 61,638.293 58.733.940 13.853.632 17.2JJ.92R 21.48..J,508 19,743.51] 380,786,541 373,470.6().1 t2M.821,353J 121>1,(151.164) 82.249,495 ~1.67.1.719 125.073.172 J 13.987.287 48.383.832 29.402.457 l,21JH.X.14 1.436.2'12 2.950.156 3.704.351 (24.312.816) (16.346,6381 95.673,111 94.(.192.798 478,272 171,333 7,460,037 1,672,149 t5.431.7l5j 10.955.750) 333.781.328 298.839.998 Of,,'162975 :l-l.7Kll.KJ4 373.852.073 339.063.239 i76.396.628) 297.455.445 .l39.063,239 s 364,418.42(> s 373,852.073 OPERA TllG REVEl,1iES: Tuition and i:ees, Ne1 of Discounts I'edeml (rants and Contracts StateCranl<and Contracts Local <..runts •nd Comraas Non-Govem..,ntal <.i'ants and Comracts Sales and Services of l-ducational Acth iticl Auxilio.H)· Imerprses TotalOperating Revenues(S<:hedule A) HOUSTON COM~1UNJTY COLLEGE SYSTEM STATEMENTS OF REVENUES, EXPENSES, A,'IDCllANGES IN NET POSITION FOR THE YEARS ENDED AUGUST 31. 2015 A..'ID 2014
- 38. 35 [he accompanying notes are an integral part of the financial statements. 2015 201~ CASH FLOWS FRO)! OPIRATIJG.CTl'mES Re<eipl> fromstudent;and other customers s 88,1>9.957 s 86.573,534 Receipts from grants and contracts 22598,284 25,207,015 Paynvnis 10 suppliers for goodsand scri.·K:1.·~ (69.694.738) (69.448,900) Payncnts to or on behalfofemplo)ees 220,218.44'.li (213,l'.6,663) Paynvnts f<>r scholarships and fclkl'>hips (61.659,242) (58,715.132) Net cash used b)' operating activities (240.834,183) (229,520.1~1 (;ASH n.owsHIOI~0-"ICAl'ITAI. Fl'.ANCl~GAC11VITlfS Receipts fromad valorem tases 11~.()98,47~ 141,036.343 Rcccipt'i fromstate allocations 82.249.495 SJ,675.719 Receipts fromprivate gifts 1.260.854 1,436.2~2 Received rederal Direct Student Ioans ( SA. lcdcralnote 3) 87A52.991 I0'),%7.1 OS Disbursenent of Federal Direct Student toans (SA: Federalnote 3) (87,466.957) (109,88'1.I58) Other Non-Operating Revenue 1.292.453 1.257.033 Recejprs fromTjtle IV 99.329.674 94.1(».002 Receirts fmm Nursing 478.272 17).333 Net cash provided by noncapnat tinancing ac1ivi!ic'li 356.695,256 319.758.672 CASH fLOWS FRO"CAPITALFl"A:"ICNG ,01Tm:S Receipts fromthe issuance of capital debt 77.851.897 40.472.857 l'lond ti;sue cost paid on new capital debt issue (5.l-1..lOO) (362.857) Purchase) ofcaphal assets (81.350.577) (i7.466.9671 P3ymen1s of'e-penses relating co capiral assets in Plantl-unds 4, 161.937) (4.817.882) l'ayl1l:nts on cupital deb! and leases - principal I 14.06&299) (68.920.0001 Payments on capital debtand leases - inrerest and fees (47.118.ff,») (46-335.639) Net cash used by financing acli'itics (169.381.910) 157,430.488) CASH fLOWS FR0,111''E>Tll'iGACTl'TruS Proceeds trcm snles and rraturities ofmvesrmems 120.928.229 234.600.679 Interest on lnvcstrrems I.736.878 2.262.392 Purchase ofinvestments (147.960.133) (23.49(L6941 Net cash provided by Investing activires (25-295,026) 213.372.377 INCRfASl'{DloX.'Rl?AS~N CASHANDCASH EQLl'AlE''TS (78.815,863) 146.180.416 CA.SHA-"D CA.SH EQUl'AUNTS- BEG!~GOF ~R 2(16.21'.l.625 120.053.210 CASllA.'iD CASH [Qlll',l.ENTS- ~D OF YEAR (1-.-XlllRIT I) s 187.417.i62 s 266.233.625 Exhibit 3 1 IOUSTON C'OMMUNlTY COi .i.EGE SYSTEM STATEME!TS OF CASH FLOWS FOR Tl IE YEARS ENDED AUGUST 3 I, 20 15 ANO 20 14
- 39. The accompanying notes are an integral part ofthe financial statements. 36 s (266.811.353) s (26!_051,16'1) 21.4Sl.508 19.743.ll 1 8.476.851 708J58l 2.(lhl 1i2 1.533.270 t&44.511i 4,)59,704 (1.717.555) 7.9?),103 (2.'/i I ,•W:)I 3.80J.1~5 (481.868) 11.%6.494) j22.0JO) (32,872) 25,?87,)70 34.531.0)8 1 p10.8Jt 18.11 (229.520.146) Exhibit 3 Total adjusment Adjusments 10 recnncile opera1ing 1nss lt'I ne1 cash used in opera1ingac1i.ilies: Depreciation ().;fom:d Oulllolllnlkms Addback Non.(a<h lllargcs /Add in the Reserve) tor l)ouhtful Accounts Changesin assets and liabilities: Accounts Rtci:i•abk and other Rt:i..-<h·abk Prepaid Cll~cs Accounts (layahk:s and accmats Unearned revenues l.kposil~held forothers Operating loss RfCOliCIUUIOIOFxtr Ol'ERArrxcLOSSTO ET CASH HOUSTON COMMUNITY COLLEGE SYSTEM STATEMENTS or CASll FLOWS - CONTINUED FOR rus YEARS FNOED AUGUST 31. 2015 AN'D 2014
- 40. 37 The significant accounting policies followed by the System in preparing these financial statements are in accordance with accouruiug principles generally accepted in the United Stales of America as prescribed by GASB. The accompanying financial statements are also in accordance with the Texas Higher Educauoo Coordinating Board's .11111ual Financial Reporting Requirements fol' Texas Pub/le l"o111111u11i~1· and Junior Colleges ReportingGuidelines NOTE 2 SUJ';!MlRYOF SIGNIFICANT ACCOUN'l ll'>G POLICLE:S The Houston Community College Foundation (the "Foundation") is a legallyseparate not-for-profit corporation controlled by a separate board of trustees, whose sole purpose is to advance and assist in the development. growth and operationof the System. The System does not appoint any of the Foundation's board members nor does it fund or is it obligated10 pay debt related to the foundation.The financial position of the Foundation as of August 31, 2015 and2014 and the cost of services provided by the Systemto the foundation during the years then ended are uot significant 10 the System. The Foundation has therefore not been included as a component unit in the financial statements ofthe System. Financial information for the foundation may be obtained from its administrative office, The Houston Conununity College System Public Facility Corporation '·(PFC'') was incorporated on January 18. 2005. The PFC is a nonprofit public facility corporation and instrumentality formed by the System pursuant to the Public Facility Corporation Act and a resolution of the Board of Trustees of the System. The Pl'C was formed for the purpose of financing or providing for the acquisition. construction, rehabilitation, renovation, repair and equipment of public facilities for the benefit of the System. The PFC is reported as a blended component unit in the financial statements of the System. The PFC is a legally separate entity and is included in the System· s financial reporting entity because of the nature of its relationship to the System. Financial information for the PFC may be obtained from its administrative office. UASll gives guidance in dctemuning whether certain orgamzauons for which rhe System is not financially accountable should be reported as component units based on the nature and significance of their relationship with the primary government. It requires reporting as a component urut rf the organization raises and holds economic resources for the direct benefit of the governmental unit and the component unit is significant compared to the primary government. GASll guidance has been apphed as required in the preparation of these financial statements. Houston Community College System is considered lo be a special purpose, primary govemrnent according to the definition tn Governmental Accounting Standards Hoard (GASB). While the System receives fonding from local, state and federal sources,and must complywith the spending. reporting, and record keeping requirements ofthese entities, ii is not a component unit of any other governmental entity. Houston CommunityCollege System (the "System") was established on May 8, 1971, In accordance with the laws of the Stale of Texas. to serve the educational needs of the Houston Independent School District, Alief Independent School District, City of Staffordand City of Missouri City. The System also serves the school districts of Katy and Spring Branch al those districts' requests. The Systemis a comprehensive public two-year institution offering academic, general! occupational, development. and continuing adult education programs through a network of colleges. NOTE I - REPORTING ENTITY HOUSTON COMMU~ITY COLLEGE SYSTEM NOTES TO THE FINANCIAL STATEMENTS
- 41. 38 Cash and cash equivalents arc considered to be cash on hand and demand deposits with original maturities of three months or Jess from the date of acquisition. The System bas classified public funds investment pools comprised of Lone Star Investment Pool (First Public) and Texas Local Government Investment Pool (TexPool) to be cash equivalents. (.'a~h and (.'ash Equivalents Each community college district in l'exas is required by Jaw to prepare an annual operaung budget of anticipated revenues and expenditures for each fiscal year beginning September 1. The System's Board of Trustees adopts the budget, which is prepared on the accrual basis of accounting. A copy of the approved budget must be filed with the Texas Higher Education Coordinating Board, Legislative Budget Board, Legislauve Reference Library, and Governor's Office of Budget and Planning by December 1 of the respective year. Budgetary Data Other 711i1io11 Discounts - Student tuition and fees revenue are reported net of scholarship discounrs iu the accompanying Statement of Revenues, Expenses. and Changes in Ne1 Position. The scholarship discount is the difference between the actual amount tor tuition and fees charged by the System and the amount that is paid by students or by thirdparties on the students· behalf. Student financial assistance grants, such as Pell grants. and other federal, state or nongovernmental programs, are recorded as either operating or non-operating revenues in the accompanying Statement of Revenues, hxpenses, and Changes in Net Position, 1·0 the extent that revenues from these programs are used to satisfy tuition, fees. and other charges, the System has recorded a scholarship discount, Schedule A provides a detail of tuition discounts. Title IV. Higher Education Act (l/EAi ProgramFunds - Certain Title IV Higher J'.ducation Act Program (HEi) funds are received by the System to pass-through to the student. These funds are initially received by the System and recorded as grant revenue. Vhcn the award is used by the student fortuition and tees. the amount is recorded as tuition discount. If the amount is dispersed directly to the student, the amount is recorded as a scholarship expense. TexasPublicEducation Grants Certain tuition amounts arc required to be set aside for use as scholarships by qualifying students. Ihis set-aside, called the Texas Public Education Grant (TPC(i). is shown with tuition and fee revenue amounts as a separate set-aside amount (Texas Education Code ~56.033). When the award is used by the student for tuuion and fees, the amount is recorded as tuition discount. Ifthe amount is dispersed directly to the student, the amount is recorded as a scholarship expense. Tuition Discounting Encumbrance accounting. under which purchase orders, contracts. and other commitments forthe expenditures of funds arc recorded in order ro reserve that portion of tbe applicable appropriation. is employed as an extension of formal budgetary integration. Under Texas law, appropriations lapse ar August 31 of each year and encumbrances omstanding at chat rime are to be either canceled or appropnately provided for in the subsequent year's budget. The linancia1 statements of the System have been prepared on the accrual basis of accounting whereby all revenues art'. recorded when earned and all expenses arc recorded when they have been reduced 10 a legal or contractual obligation to pay. Basis ofAccounling NOTE 2 SUMMARY OF SIGN!FICAN.1 _ACCO! INTING.~OLIClfS - CONllNllED HOUSTON COM1UlJTY COLLEGE SYSTcM NOTES TO THE FINANCIAL STATEMENTS
- 42. 39 The System is. exempt from income taxes under Internal Revenue Code Section I 15. Income of States, A1unicipalitief:, Etc., although unrelated business income may he subject IC'I income taxes under Internal Revenue Code Section 511 (a)(2)(B). Imposition of Tax mt Unrelated 811S111Pss Income of Charitable Organizations, etc. The System had no unrelated business income tax liability for the years ended August 3 J. 2015 and 2014. Tuition. fees, and ocher revenues received and or billed <luring the current fiscal year but related to ihc period after August 31 of any 011e year have been reported as unearned revenues. Also reported as unearned revenues are public education grant revenues that must be marched to certain scholarship disbursements reported as prepaidcharges. Uneanied Revenues Interest expense on capital related debr totaled $41,259,322 and $41,20R,254 for fiscal yea" 2015 and 2014, respectively. Of these amounts. $16,'146.447 and S24.R61,616 was capitalized to construction in process for fiscal years 2015 and 2014. respectively. in accordance with provisions of GASTl Statement Ko. 61. Jnteresc on Capital Related Debi 50 years 20 ycarv I0 years 5 years 15 years I ease Tenn Buildings Facilities and Other Improvements Fumirure. Machinery, Vehicles and Other Equipment Telecommunications and Peripheral Fquipmenr Library Books Leasehold Improvements Capital assets are stated at cost at the date of acquisition. or fair value at the date c)f donation. A:;.~ct~ under capital leases arc recorded at the IO'Cr of the present value or the minimum lease payments or the fair value of the asset. The assets are amortized over the lesser of their related lease terms or their estimated productive lives, The System reports depreciation under a single line-item, as would be done- by an entity reporting as a business- type unit. Depreciation i'icomputed using the straight-line method over the estimated useful live> of the assets and i' not allocated to the functional expenditure categories. The threshold for capitalization of asset~ is $5,000. Renovations of $100,000 to buildings and infrastructure and land improvements that significantly increase the value or extend she useful life of the structure are capitalized. The c<l~ts of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are charged to operating expense in the year in which the expense is incurred. The following estimated useful lives arc used for depreciable assets: Qlilltal Assets Expenses and costs paid in advance which pertain to the subsequent fiscal yearfs). such as scholarships disbursed to Students before August 31 for fall semester classes arc accounted foras prepaid charges. Prepaid Cl1arl!cs Investments are reported at fair value. Fair values are based on published market rates. Short-term investments have an original maturity greater than three months but less than one year al the time of purchase. Long-term investments have an origiual maturity of greater than one year at the time of purchase. Investment funds related 10 bond issues set aside for construction of capital assets are classified as restricted long-term investments. Jnvesunents tJOJl: ~ SUMMARY Or SIGNIFICANT ACCOU.trrlNG l'QLLClES CONll~UED HOUSTON COM1UNITY COLLEGE SYSTEM NOTES TO TIIE FINAl~CIAL STATEMENTS
- 43. 40 On Schedule A. $84Y.320 has been reclassified from State funded Continuing Education 10 Non-State funded Continuing Education. Also S73,586 has been reclassified from Stale Grants& Contracts 10 Federal Grants and Contractsfor fiscal year 2014. On Exhibit I. Cash & Cash Equivalents has been increased by $49.966,068 due 10 the reclassification from Resmcted Long-term Investments. Also CD's for $33.207.309 has been reclassified from Cash & Cash hquivalents to other long-term Investments. Certain2014 amountshaw been reclassified as follows: Reclassifications The System participates in several federally-funded program~. Federal programsarc audited in accordance with the Single Audit Act Amendmentsof JQ()6, the ll.S. Office of Managementand Budget CircularA-133 Audit qi States. Local Governments and Non-Profit Organizations, and the OMO Circular A-133 Compliance Supplement FederalFinancial Assistance Programs The System presents its revenues and expenses as operating or non-operatingbased on recognition definitions from GAS13. Operating revenues and expenses generally result from providing services in connection with the System's principal ongoing operations. The principal operating revenues are tuition and related fees and contractsand grants. The major non-operating revenues are allocations from the State. property tax collections and Title 11 financial aid funds. Propertytaxes arc recognized as revenuesin the year for which they arc levied. Operating expenses include the c0~tof services, administrative expensesand depreciation on capital assets. The bookstore and vending machine operationsare ownedand managed by thirdparries. The preparation of financial statements on conformity with accounting pnnciples generally accepted in the UnitedStates of America requires management to make estimates and assumptions that affectcenain reported amounts and disclosures.. Accordingly. actual results could differ from those estimates. Estimatesthat have the most impact on financial posuion and resultsof operations primarily relate to the collectabiliry of tuition and taxes receivable. the useful lives of property and equipment. certain accrued habilitics. and the allocation of expenses among functional areas. Management believes these estimates and assumptions provide a reasonable basis for the fair presentation Of the financial statements. ManagementEstimates b'ill.Fl -,SUMMARY UF SJGNIFICAl'{I' AC'(QJlNJ..!Ni:; PQl~CIES-COJSTIN!ED HOUSTON COMMUNITY COLLEGE SYSTEM NOTES TO THE FINANCIAL STATE'.1El'TS