Comprehensive Annual Financial Report: State of Texas

State of texas
Comprehensive Annual Financial Report

Fiscal Year ending August 31, 2008
the
Susan Combs texas Comptroller of Public Accounts
State of texas
Comprehensive Annual Financial Report
Fiscal Year ending August 31, 2008
the
Susan Combs texas Comptroller of Public Accounts
Acknowledgments
Financial Reporting section of the Texas Comptroller of Public Accounts with The Comprehensive Annual Financial Report was prepared by the
assistance from other sections within the Fiscal Management and Public Outreach and Strategies Divisions. Irene Lee, CPA, Financial Reporting Supervisor Wiley Thedford, Assistant Supervisor Al Kruzel, Team Lead
Kelley Glaeser, CPA Kathy Hubert, CPA Lynn Gunn, CPA
Magdalena Foley
Wallace Lankford, CPA Rami Legha, CPA Laurel Mulkey
Amanda Landry, CPA
Barbara Swearingen Lori Williams, CPA Tom Zapata, CPA Other Sections: Linda Yarbrough
Patricia King Sigg
Aurora Ramirez
Shirley Perry
Stacy Parker
Francine Fowler, CPA Precilla Hauer
Armando Cantu
Gary Bryant
Bruce Holmstrom David Heffington Terri Whaley Jim Smith
Suzy Whittenton, CPA, Fiscal Management Division Director Tom Mathey, CPA, Fiscal Management Assistant Director Phillip Ashley, CPA, Fiscal Integrity Assistant Manager Public Outreach and Strategies, Graphics Team: Brad Wright Duana Gill Darrell Edge, Fiscal Integrity Manager
and universities whose extra time and effort made this report possible. The State Auditor, John Keel, CPA, and his auditing staff.
All accounting and budget personnel of state agencies
Special appreciation to:
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The 2008 Comprehensive Annual Financial Report for the State of Texas
State of Texas Comprehensive Annual Financial Report

For the Year ended August 31, 2008
Table of Contents
Letter of Transmittal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Elected State Officials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Government Structure of Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Certificate of Achievement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1: INTRODUCTORY SECTION
3 11 12 14
2: FINANCIAL SECTION
Independent Auditors Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Managements Discussion and Analysis Managements Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Basic Financial Statements Government-wide Financial Statements Statement of Net Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Statement of Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fund Financial Statements Governmental Fund Financial Statements Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets . . . . . . . . . . . . . Statement of Revenues, Expenditures and Changes in Fund Balances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proprietary Fund Financial Statements Statement of Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Statement of Revenues, Expenses and Changes in Fund Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fiduciary Fund Financial Statements Statement of Fiduciary Net Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Statement of Changes in Fiduciary Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Required Supplementary Information Other Than MD&A Budgetary Comparison Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Modified Approach to Reporting Infrastructure Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedules of Funding Progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
23
38 40
42 43 44 45 46 48 50 52 53 55
144 147 149
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2: FINANCIAL SECTION (continued)

Other Supplementary Information Combining Financial Statements and Schedules Governmental Funds Nonmajor Governmental Funds Combining Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153 Combining Statement of Revenues, Expenditures and Changes in Fund Balances . . . . . . . . . . . . . . . . . . . 154 Nonmajor Special Revenue Funds Combining Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 Combining Statement of Revenues, Expenditures and Changes in Fund Balances . . . . . . . . . . . . . . . . . . . 157 Budgetary Comparison Schedule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158 Nonmajor Debt Service Funds Combining Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162 Combining Statement of Revenues, Expenditures and Changes in Fund Balances . . . . . . . . . . . . . . . . . . . 163 Nonmajor Capital Projects Funds Combining Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166 Combining Statement of Revenues, Expenditures and Changes in Fund Balances . . . . . . . . . . . . . . . . . . . 168 Nonmajor Permanent Funds Combining Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 Combining Statement of Revenues, Expenditures and Changes in Fund Balances . . . . . . . . . . . . . . . . . . . 173 Enterprise Funds Nonmajor Enterprise Funds Combining Statement of Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Combining Statement of Revenues, Expenses and Changes in Fund Net Assets . . . . . . . . . . . . . . . . . . . . . Combining Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Colleges and Universities Major Enterprise Fund Schedule of Net Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule of Revenues, Expenses and Changes in Fund Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule of Cash Flows. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fiduciary Funds Pension and Other Employee Benefit Trust Funds Combining Statement of Fiduciary Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Combining Statement of Changes in Fiduciary Net Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Private-Purpose Trust Funds Combining Statement of Fiduciary Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Combining Statement of Changes in Fiduciary Net Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Agency Funds Combining Statement of Fiduciary Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Combining Statement of Changes in Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discretely Presented Component Units Combining Statement of Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Combining Statement of Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
178 182 186 192 196 200
208 210 214 215 219 220 226 232
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Financial Trends Net Assets by Component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Changes in Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fund Balances Governmental Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Changes in Fund Balance Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Revenue Capacity Taxable Sales by Industry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . State Tax Collections and Retail Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total Retail Sales, 1999-2008. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Texas Gross State Product by Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Debt Capacity Legal Debt Margin Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ratio of Outstanding Debt by Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ratio of General Bonded Debt Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pledged Revenue Bond Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Demographic and Economic Information Top 10 Private Employers in Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Texas and U.S. Selected Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Texas and U.S. Employment and Unemployment Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating Information Full-Time Equivalent Employees by Function. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capital Asset Statistics by Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating Indicators by Function. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3: STATISTICAL SECTION
239 240 242 243 244 245 245 246 247 248 249 250 251 252 252 253 254 255
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Section One
Introductory Section
February 27, 2009
To the Citizens of Texas, Governor Perry
and Members of the 81st Texas Legislature: The Comprehensive Annual Financial Report (CAFR) ductory overview and analysis of the financial statements; the financial statements, which present government-wide financial statements for the primary government along with the component units of the state of Texas and fund finanand fiduciary funds, together with the notes to financial cial statements for governmental funds, proprietary funds statements; required supplementary information other than MD&A, which presents budgetary comparison schedules and information about infrastructure assets; and other
of the state of Texas for the fiscal year ended Aug. 31,
2008, is submitted herewith. Responsibility for both the accuracy of the data presented, as well as the completeness and fairness of the presentation, rests with the office of the Texas Comptroller of Public Accounts. To the best of my knowledge, the information presented is accurate
in all material respects, and all disclosures necessary for a reasonable understanding of the states financial activities have been included. The reporting approach established by the National
supplementary information, which includes the combining financial statements. (3) The statistical section provides the state. various financial, economic and demographic data about The state auditor has performed an audit in accordance
Council on Governmental Accounting in Statement No. 1
and endorsed by the Governmental Accounting Standards follows the recommendations of the Government Finance Officers Association (GFOA) of the United States and Canada for the contents of government financial reports and participates in the GFOAs review program for the Certificate of Achievement for Excellence in Financial
Board (GASB) has been utilized. The state also voluntarily
with generally accepted auditing standards of the states sented in this report preceding the financial statements.
general-purpose financial statements. His opinion is preThe state auditor has contracted with KPMG to per-
Reporting. This report is divided into three sections. (1) The introductory section provides this transmittal letter, elected state officials, government structure of Texas and the GFOA Certificate of Achievement. (2) The financial section includes the auditors opinion; managements discussion and analysis (MD&A), which provides an intro-
form portions of the federal audit procedures necessary
to meet the requirements of the federal Single Audit Act
Amendments of 1996 and related Office of Management
and Budget (OMB) Circular A-133. The federal portion of 31, 2008, with the opinion expressed by KPMG, will be issued separately.
the Statewide Single Audit Report for the year ended Aug.
Profile of the Government
ments and fund financial statements of various depart-
This report includes government-wide financial state-
of activities), proprietary (including colleges and universities), pension and other employee benefit trust, external investment trust, private-purpose trust and agency funds
ments, agencies and other organizational units, which are considered part of the state of Texas financial reporting entity. Criteria for determining the reporting entity and
are accounted for on the accrual basis. A summary of the disclosures are included in the notes to financial statements.
states significant accounting policies and other necessary
presentation of the related financial data are established by GASB. The criteria includes legal standing and financial accountability. Other organizations, which would cause the financial statements to be misleading or incomplete if they were excluded, are also included in the reporting entity. Note 1 of the notes to financial statements provides detail on the financial reporting entity. A brief summary of the to the state of Texas is discussed in Note 19. nature of significant component units and their relationship All activities that would generally be considered part
sonable assurance regarding the safeguarding of assets against loss from unauthorized use or disposal and the
The states internal accounting controls provide rea-
reliability of financial records for preparing financial statements. The concept of reasonable assurance recognizes benefit. that the cost of a control should not exceed the resulting Budgetary control is exercised through expenditure bud-
of the state of Texas are included in this report. These
gets for each agency. These budgets are entered on the statelaw. The appropriations bill becomes law after passage by appropriated are within the estimated collections and the
activities provide a range of services in the areas of education, health and human services, public safety and corrections, transportation, natural resources and recreation, regulation, general government, employee benefits and teacher retirement benefits.
wide accounting system after an appropriations bill becomes the Legislature, certification by my office that the amounts signing of the bill by the governor. Controls are maintained first at the agency level, with additional control at the fund and appropriation level to ensure that expenditures do not exceed authorized limits. Further detail on budgetary tary information other than MD&A section.
Accounting System and Budgetary Controls

overview of the states financial activities addressing both governmental and business-type activities reported in the government-wide financial statements. In addition, MD&A focuses on the states major funds: the general fund, state highway fund, permanent school fund, colleges and univerTexas Department of Transportation Turnpike Authority. The fiduciary activities are excluded from the MD&A. The states financial statements for governmental The MD&A, in the financial section, provides an
accounting for the state is found in the required supplemenEncumbrance accounting, under which purchase
orders, contracts and other commitments for the expen-
diture of monies are recorded to reserve a portion of the
sities funds, Texas Water Development Board funds and the
applicable appropriations, is employed for purposes of budgetary control and contract compliance. Encumbrances at year-end do not constitute expenditures or liabilities.
funds, including general, special revenue, debt service,
capital projects and permanent funds, have been prepared with generally accepted accounting principles (GAAP).
Economic Outlook and Major Initiatives
on the modified accrual basis of accounting in conformity Revenues are recognized when measurable and available to finance current expenditures; expenditures are recognized when the related liability is incurred. The government-wide financial statements (statement of net assets and statement
state economy continued to grow at a rate that stood out
Even though the Texas economy slowed in 2008, the
among the states in terms of job gains. In a recessionary
national economy, Texas grew more slowly than average star. Only 15 states increased their nonfarm employment
during 2008, but relative to other states Texas was a lone from November 2007 to November 2008. The states ranked
second and third in nonfarm employment growth, Okla-
homa and Maryland, added fewer than 20,000 jobs each,
for over 90 percent of the states job growth in 2008. Conthe previous four years increased by 2.4 percent in 2008,
while Texas added 221,000 jobs, nearly 13 times more than of calendar 2008 and shed 1.9 million jobs from November 2007 to November 2008, for a loss of 1.4 percent. In short, the national economy experienced a significant decline overall rate of growth. in 2008, while the Texas economy has merely slowed its Likewise, the U.S. Bureau of the Census reported that
struction job increases that had averaged 4.5 percent during while manufacturing lost another 1.2 percent of its worktition. Boosted by robust oil and natural gas drilling rig
Oklahoma. The U.S. economy lost jobs during every month
ers, mostly in response to international labor cost compeproduction through most of 2008, the states manufacturing industry saw substantial hiring in the machinery and fabconsiderably in these sectors. ricated metal manufacturing sector, but hiring has slowed Texas has been the nations largest exporting state
Texas was one of only three states (with Utah and Arizona) with population growth over 2 percent in 2008. According to Census Bureau estimates, Texas (with 8 percent of the population) accounted for 15 percent of the nations total state. Migration accounted for almost two-thirds of the increase.
since 2002. During the first 10 months of 2008, the value of Texas exports to other countries totaled $165 billion, up 18.6 percent from the first 10 months of 2007. The value of Texas exports has doubled over the last five years and now accounts for 16 percent of the states gross product. This represents more than one-seventh of total U.S. exports, based on export data from the World
population growth from 2000 to 2008, more than any other
the fifth consecutive year, available jobs increased less rapidly than the states labor force, causing the Texas unemployment rate to climb from 4.2 to 5.7 percent between
Although the number of Texas workers increased for
Institute of Social and Economic Research. Manufacturers have benefited from a weak dollar that made Texasmade products cheaper in world markets, but the dollar strengthened markedly in 2008. Exports remain a hall-
November 2007 and November 2008. Even so, the states jobless rate remained below the nations, which climbed from 4.7 to 6.7 percent in the last year. Texas current-dollar Gross State Product (GSP)
mark of the state economy, but will face more price resistance in 2009, so the outlook for manufacturing employment is a leaner year ahead. Even with the relative strength of the state and con-
rose 6.4 percent in 2008, for a real (inflation-adjusted)
increase of 4.1 percent, a rate exceeding the average real largely to the strength of the states energy industry. The natural resources and mining industry, dominated by oil
GSP growth rate of 3.5 percent over the past decade, due
tinued growth in most industries, the Texas economy
experienced a clear weakening as 2008 came to a close. Underlying the weakness were the weight of a national recession, large losses in stock investments, a stronger dollar and the deflating of an oil and natural gas industry that had boomed during most of the year. Hurricane Ike left
and natural gas in Texas, added jobs at a faster pace (8.2 percent) than any other industry over the twelve months ending in November 2008. All Texas industries added jobs, except for information (down 2.2 percent) and manufacturing (down 1.2 percent). Unlike much of the nation, congrowth in 2008, although at a slower pace than before. lars in 2008. struction and real estate activity still contributed to Texas Texas current-dollar GSP reached nearly $1.2 trillion dolEven with the increase in mining industry jobs, a slow-
widespread destruction in the populous Houston-Galveston struction in the area, the Texas leading economic indicator index hints at net job losses during much of 2009.
region, and although this stimulated jobs in repair and con-
Leading Indicators Foresee Contraction

tors suggests a deceleration in economic activity in the state The Comptrollers Index of Leading Economic Indica-
er construction industry and job losses in manufacturing
meant that Texas service-providing industries accounted
over the near future. The index, a composite of 10 indicators, is designed to forecast the states employment growth four to
six months in advance. It predicts a retrenchment in the state economy in 2009, as Texas continues to be buffeted by tight credit markets, a stronger dollar and cutbacks in the states substantial oil and gas industry. After being at lofty levels from 2005 through 2007,
prices, relative to household income. Although prices were firmer than in many states, the number of existing home by 16 percent. sales in Texas during the first 11 months of 2008 tumbled Sales tax collections in Texas, an indicator of taxable
the consumer confidence index in the West South Central
states collapsed to below-average levels in 2008. Since it is a major factor driving housing and other major purchases, consumer optimism is a key indicator to economic health, but consumer confidence dropped to its lowest level in more than five years at the end of 2008.
retail sales activity, climbed by 5.5 percent during 2008,
following a four-year period where collections soared by an average of 9 percent each calendar year. On the other hand, 2008 was a difficult year for automobile sales in the plunged by 7.5 percent, reversing a three-year string of solid gains.
state, as evidenced by motor vehicle sales tax receipts that
price of oil and natural gas collapsed in the latter part of the
The mining industry retained most of its jobs after the
year, but the outlook is risky. Energy prices were high during most of the year, and although they put pressure on the budpositive effect on the states overall economy when prices are high enough to stimulate domestic and international gets of businesses and households, they also have a modestly
Texas experienced a decline in 2008. During 2008, the
After 16 years of rising new business incorporations,
state had a monthly average of 8,877 new incorporations,
compared to last years average of 9,347. Newly incorpo-
rated businesses are not always economically viable, but a growing number reflects a willingness of entrepreneurs to invest in new ventures.
drilling operations. The number of operating oil and natural gas drilling rigs in the state reached a 25-year peak of 946 in September, rising from a low of 306 rigs in 2002. With
Outlook for 2009 and 2010

10 leading economic indicators point toward a weaker At the close of calendar 2008, all but one of the states
an average of 898 drilling rigs in operation during the year,
2008 was the states most active year for oil and gas exploration since 1982, but with sharply reduced oil and gas prices, the rig count waned at the end of 2008. The single-family housing market is another leading
Texas economy in the upcoming months. The U.S. lead-
ing indicators index is at recessionary levels, and although the Texas index suggests the state economy will be pared than the national outlook. Texas gross domestic product since 1991, and the Comptrollers econometric forecast down as well, the state outlook is marginally less negative growth has outperformed U.S. growth in all but one year model predicts that Texas economy will outperform the
indicator of economic growth. The housing problem is
far less pronounced in Texas than nationally, but follow-
ing national trends, it is a weak link in the Texas economy quality than in the remainder of the nation since Texans
today. On average, Texas subprime mortgages are of better have a higher average percentage of home-owner equity. Still, single-family housing permits fell by 33 percent in Texas during the first 11 months of 2008, compared to dropped less, but still fell 7 percent. the same period of 2007. Multi-family housing permits On the bright side of the Texas housing market, Texas
nations in both 2009 and 2010, advancing by 0.8 percent in calendar year 2009 (beating the nation by two percentpoint higher). age points) and 2.9 percent in 2010 (almost one percentage Employment in Texas could decline by as much as
home pricesthe median sale price for existing homes was about $146,000were stable in a year in which home prices in many U.S. markets declined precipitously. Even with to have some of the nations most attractive real estate steep price declines in much of the nation, Texas continues
0.5 percent in 2009, the first losses since 2003, before
rebounding to 1.7 percent growth in 2010. In comparison, U.S. nonfarm employment is expected to decline by 1.5 percent in 2009 before advancing by a slight 0.1 percent in it is today, ranging between 6 and 7 percent in 2009 and
2010. The unemployment rate is expected to be higher than
2010. The states population will increase by 1.9 percent migration to the state, as job seekers elsewhere respond states population will average 24.8 million.
in 2009, with more than half the growth taking root in net to a relatively healthier Texas economy. During 2009, the While growth in the global economy and a weaker
tax base switched from taxable capital and earned surplus to taxable margin. The taxpayer may compute taxable margin in one of three ways. The calculation with the lowest result is then subject to an apportionment factor that is based on the share of total gross receipts generated in
dollar have boosted Texas export growth in recent years, the outlook for world economies is generally weak, with nearly every advanced economy expected to lose steam.
Texas. The result is the apportioned margin to which the
new tax rate of 1 percent is applied. Most businesses in the lower rate of 0.5 percent.
retail and wholesale trade sectors, however, are subject to a The 2008-09 biennium will be the first in which the
The value of the U.S. dollar is forecast to continue rising markets are facing strong headwinds.
in 2009 before subsiding again in 2010, but Texas export Personal income growth in Texas is forecast to see
franchise tax is calculated on the taxable margin base.
Estimated total (all funds) revenue for 2008-09 is $8.8 billion54.4 percent more than the $5.7 billion collected in 2006-07. However, pursuant to House Bill 2 (79th Legislachise tax revenuethe estimated amount that would have been collected under the previous franchise tax lawwill will be dedicated for school property tax relief. be available for general-purpose spending. The remainder In recognition of the Texas taxs unique nature and
retrenchment in 2009, with only a partial recovery in 2010. Low inflation will put a damper on wage gains. Texas total personal income advanced by more than 7 percent a year for four years before slipping in 2008. Personal income is expected to grow by an average of only 3.8 percent growth.
ture, 3rd Called Session), only $5.6 billion in 2008-09 fran-
per year in 2009 and 2010, with 2009 seeing the weakest Even with the economic engine cooling to only 0.8
percent real gross state product growth in 2009, the Texas economy should outpace the U.S. economy for the same reasons that it is outperforming the recessionary national the state, a Sunbelt location at the buckle of the nations
complexityinvolving such non-standard concepts as
taxable margin and cost of goods soldthe 80th Legislature (2007) established a Business Tax Advisory Committee to assist it in its evaluation of how the tax performs include the relative shares paid by industry type and busi(e.g., investment and employment) effects and factors
economy today. These include continued net migration into South and the West, an experienced workforce, a comparatively healthy housing market, a strategic geographic position for Latin American trade and a comparatively attractive cost of doing business.
relative to the tax that it replaced. Key issues to be studied ness size, tax incidence, interstate comparisons, economic affecting compliance and revenue generation. The results governor, lieutenant governor and speaker of the house through Jan. 31, 2013.
will be published in biennial reports to be delivered to the of representatives before each regular legislative session
Texas Revised Franchise Tax

the 80th Legislature (2007) revised the existing franchise The 79th Legislature, Third Called Session (2006) and
tax to give property tax relief. House Bill 3 in the 2006 session and House Bill 3928 in the 2007 session amended the Texas Tax Code Chapter 171 and extended the coverage of
Property Tax Value Limitations

1200 creating Tax Code Chapter 313, the Texas Economic Development Act (Act). The Act allows school districts to by offering a tax credit and an eight-year limitation on attract new taxable property and assist in new job creation the appraised value of real and personal tangible property for the maintenance and operations portion of a school In 2001, the 77th Legislature enacted House Bill
the tax to include not only corporations and limited liability companies, but also certain partnerships, professional associations, joint ventures and business trusts, among others. the bills contain changes to the tax base and tax rate. The In addition to the broadening of the taxable entities,
districts tax rate. In exchange for the appraised value
Texas Smart Buy

for the state and transferred the function to the Comptrollers office effective September 2007. The new Texas Procurement and Support Services Division at the Compcontracts for goods and services on behalf of more than The 80th Legislature reorganized procurement duties
limitation and tax credit, a property owner is required to a specific number of high-wage jobs and build or install tain amount.
enter into an agreement with the school district to create specified types of real and personal property worth a cerTo qualify, the property must be in a reinvestment zone
trollers office manages more than $1 billion of the states 180 state agencies and 1,700 local government agencies. largest purchasing entities in the country.
and must be devoted to manufacturing, research and development, renewable energy generation, nuclear power generation, advanced clean energy projects or electric power generation using integrated gasification combined cycle technology. The amount of investment and the minimum
With this level of activity, the state of Texas is one of the The Comptrollers office launched Texas Smart Buy
to maximize the states purchasing leverage and to identify savings and cost avoidance opportunities. Examination of expenditures in five of the states 175 spending categories is an average of more than 8 percent of state spending in those categories. These initial efforts focused on expenoutgoing mail machines and asphalt purchases for road projects.
amount of the value limitation varies according to whether and according to the amount of taxable property value in the school district.
the school district is considered a rural or non-rural district
yielded an initial savings of more than $28 million, which
to extend the expiration date of major subchapters of the Act from Dec. 31, 2007, to Dec. 31, 2011. The bill also modified the process requiring economic evaluations of
In 2007, the 80th Legislature enacted House Bill 1470
ditures for the state vehicle fleet, overnight/express mail,
proposed projects. Starting in 2008, rather than local school districts engaging a third party to conduct such evaluations, the Comptroller of Public Accounts started conducting the evaluations. In House Bill 1470, the Legislature also gave
of a new online ordering system called TxSmartBuy. The new ordering system is an online shopping cart, similar agencies, public universities and local governments to to those found on retail Web sites, which will allow state
The next phase of the initiative resulted in the launch
local school districts authority to waive the minimum number of jobs required by the Act if that number (10 for rural standard for that type of facility. districts and 25 for non-rural districts) exceeds the industry Other legislation from the 80th Legislature (House
search for goods and services, compare prices and specifications and order directly through the site, saving money by taking advantage of the states bulk buying power.
Bill 2994, House Bill 3693 and House Bill 3732) required the Comptroller to conduct a biennial study for the LegAccording to that analysis, as of June 2008, school districts had entered into 90 property tax limitation agreeover the lifetime of the agreements, with applicants ments reflecting an estimated $41 billion of investment proposing the creation of almost 5,600 jobs. The school district levy loss for the duration of the agreements was estimated to be over $2.1 billion. Thirty-five more new billion, were scheduled to be considered by school districts during the fall of 2008. projects, representing an estimated investment of $12.6 islature of the progress of all value limitation agreements.
Open Book Texas

ing its expenditures online down to the cost of pencils. for other state agencies. Building upon those efforts, the Comptrollers office created Where the Money Goes, an ditures in the database are searchable by vendor name, expenditure category or agency name. In January 2007, the Comptrollers office began post-
Shortly thereafter, the posting grew to include expenditures
online database for viewing state agency spending. Expen-
cies and savings can be identified more easily. The Comptrollers Office has saved $4.8 million and identified an additional $3.8 million in expected cost savings. Some
By making spending data more transparent, efficien-
examples of the cost savings at the agency include sav-
ing $73,000 by consolidating multiple contracts for toner cartridges and establishing separate post office boxes to receive different types of tax payments, thereby avoiding sorter.
obligation beyond two years. The states contributions for
OPEB are determined each biennium during the legislative estimated net actuarial OPEB obligation represents a legal liability of the state and thus its inclusion in the states financial statements may be misleading to the users of mented GASB 45 in fiscal 2008.
session. For these reasons, the state does not believe that an
having to spend $328,000 to buy and maintain a new mail
New Accounting Pronouncement

Board (GASB) issued GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. This standard In 2004 the Governmental Accounting Standards
those statements. Despite these concerns, the state impleThe Employees Retirement System of Texas (ERS)
administers the State Retiree Health Plan (SRHP), a costsharing multiple-employer defined benefit OPEB plan. The state of Texas is one of several employers and contributors to this plan. The plan covers OPEB for retired state employees (including all employees of public col-
established new requirements for the recording of other
postemployment benefits (OPEB) according to GAAP. In
2007 the 80th session of the Legislature passed House Bill 2365. The bill allows public entities in Texas the option to apply a statutory modified accrual basis of accounting for OPEB benefits.
leges except those in the University of Texas and Texas of the state, selected municipal districts and certain
A&M University Systems), certain community colleges other employers. GASB 45 prescribes different accounting treatments for different types of plans. An employer in a cost-sharing multiple-employer plan is required to
sity of Texas System and the Texas A&M University Sys-
As administrators of separate OPEB plans, the Univer-
tem chose to implement GASB 45 in fiscal 2008. The first
actuarial valuations in accordance with GASB 45 for these two single-employer defined benefit plans were completed in preparation for this implementation. As a result of these valuations, a net OPEB obligation and annual OPEB cost were calculated for these plans. The net OPEB obligation into the fiscal 2008 CAFR proprietary and governmentwide financial statements. GASB 45 valuations are based on the concept of a
report OPEB liabilities and expenses in accordance with contractually required contributions (CRC). The CRC is established by the plan administrator and is not required
to be based on the actuarial required contribution (ARC) the annual pay-as-you-go costs of the plan benefits. The state of Texas contributions for fiscal 2008 equaled the annual CRC. Therefore, there is no resulting net OPEB obligation related to the SRHP to report on the government-wide financial statements. The Teacher Retirement System of Texas (TRS)
of the plan. Currently the CRC for the SRHP is based on
and related expense of these plans have been incorporated
substantive plan. The substantive plan concept assumes that the current funding and structure of an OPEB plan will continue unchanged indefinitely. GASB 45 does not
administers the Texas Public School Retired Employees
distinguish between those plans that have legally enforceis not legally required to make contributions. The GASB does not require contributions to be made to an OPEB
Group Insurance Program (TRS-Care), a cost-sharing multhe retired school district employees from more than 1,200 school districts in the state. The state of Texas is not an help to partially fund the plan annual expenses through annual on-behalf contributions. employer in the TRS-Care plan. The state, however, does
able funding requirements and those to which the employer
tiple-employer defined benefit OPEB plan. The plan covers
plan. GASB 45, however, does require plan employers to benefits are not legally guaranteed by the state of Texas
record actuarial liabilities related to future benefits. OPEB for the plans the state administers. In addition, the Texas Constitution generally prohibits the creation of a debt or
does not apply for the SRHP and TRS-Care plans because the state is not the only contributing entity in either plan.
The special funding situation described in GASB 45
Awards and Acknowledgments

Certificate of Achievement
(GFOA) of the United States and Canada awarded a Certifto the state of Texas for its Comprehensive Annual Financial Report for the fiscal year ended Aug. 31, 2007. The The Government Finance Officers Association
one year only. The state of Texas has received a Certificate of Achievement for the last 18 years (fiscal years ended continues to conform to the Certificate of Achievement GFOA. August 1990 through 2007). We believe our current report Program requirements and we will be submitting it to the I will continue to maintain a highly qualified and pro-
A Certificate of Achievement is valid for a period of
icate of Achievement for Excellence in Financial Reporting
Certificate of Achievement is a prestigious national award
that recognizes conformance with the highest standards for
fessional staff to make this certification possible.
preparation of state and local government financial reports. government unit must publish an easily readable and effiwhose contents conform to program standards. Such principles and applicable legal requirements. In order to be awarded a Certificate of Achievement, a
Acknowledgments
efforts of literally hundreds of financial personnel throughout state government, including the dedicated management and staff of my Financial Reporting section and Fiscal Management Division; the chief financial officers, chief ment and staff of the State Auditors Office. I sincerely The preparation of this report requires the collective
ciently organized Comprehensive Annual Financial Report reports must satisfy both generally accepted accounting
accountants and their staff at each agency and the manageappreciate the dedicated efforts of all these individuals who continue to strive for improvements that will make Texas a national leader in quality financial reporting. Sincerely,
Susan Combs
10
State of Texas Comprehensive Annual Financial Report

State of Texas Elected State Officials
Executive Rick Perry Governor David Dewhurst Lieutenant Governor Susan Combs Comptroller Greg Abbott Attorney General Jerry Patterson Land Commissioner Todd Staples Commissioner of Agriculture Elizabeth Ames Jones Victor G. Carrillo Michael L. Williams Railroad Commissioners Legislative Lieutenant Governor, David Dewhurst, President of the Senate Joe Straus Speaker of the House of Representatives Judicial Wallace B. Jefferson Chief Justice of the Supreme Court Sharon Keller Presiding Judge, Court of Criminal Appeals
11
Government Structure of Texas

The Electorate
Legislative
Executive
Legislature*
Commissioner of the General Land Office*
Comptroller of Public Accounts*
Attorney General*
Lieutenant Governor*
Governor*
Legislative Committees
Office of the State Auditor
Various Boards, Councils, Compacts and Advisory Committees Governing Boards and Commissions
Legislative Budget Board General Government Health and Human Services Employee Benefits
Texas Legislative Council
Legislative Reference Library
Public Safety and Corrections
Regulatory Agencies
Teacher Retirement Benefits
Sunset Advisory Commission
* Elected Offices
12
Judicial
State Board of Education Texas Education Agency*
Secretary of State
Commissioner of Agriculture*
Texas Railroad Commission*
The Supreme Court of Texas*
The Court of Criminal Appeals*
Courts of Appeals*
Education
Natural Resources and Recreational Services
County-Level Courts*
District Courts*
Transportation
Municipal Courts*
Justice of the Peace Courts*
13
14
Section two
Financial Section
15
16
17
18
19
20
Section two (continued)

Managements Discussion and Analysis
21
22
Managements Discussion and Analysis
of Texas financial performance for the fiscal year ended Aug. 31, 2008. Use this section in conjunction with the states basic financial statements. Comparative data is available and presented for this 2008 report.
The following is a discussion and analysis of the state
Overview of the Financial Statements
as a whole and on the major individual funds. The report
The focus of this report is on reporting for the state
presents a more comprehensive view of the states financial activities and makes it easier to compare the performance of Texas state government to that of other governments. The Financial Section of this annual report presents
Highlights
Government-wide
Net Assets by $142.8 billion as of Aug. 31, 2008, an increase of $1.6 billion or 1.1 percent from fiscal 2007. The assets of the state of Texas exceeded its liabilities
the states financial activities and position in four parts-(1) MD&A (this part), (2) the basic financial statements, (3) required supplementary information other than MD&A and (4) other supplementary information presenting combining statements. The report also includes statistical and economic data.
Fund Level
Governmental Funds reported a combined ending fund balance of $44 billion, The state reported a positive unreserved fund balance of $13.6 billion in fiscal 2008. Proprietary Funds lion as of Aug. 31, 2008, a decrease of $746 million or 1.7 percent from fiscal 2007. The proprietary funds reported net assets of $42.2 bilAs of Aug. 31, 2008, the states governmental funds
wide financial statements, fund financial statements and notes to financial statements that provide more detailed information to supplement the basic financial statements.
The basic financial statements include government-
an increase of $1.6 billion or 3.9 percent from fiscal 2007.
Reporting on the State as a Whole

designed to present an overall picture of the financial position of the state. These statements consist of the statement of net assets and the statement of activities, which are The government-wide financial statements are
prepared using the economic resources measurement focus current years revenues and expenses are included, regardless of when cash is received or paid, producing a view of sector companies.
and the accrual basis of accounting. This means that all the
Long-Term Debt
billion or 15.5 percent during fiscal 2008 for governmental difference between net issuances, payments and refunding of outstanding bond debt. During the fiscal year, the state issued bonds totaling $6.3 billion. More detailed information regarding the government-wide, fund level and longterm debt activities can be found in the debt administra(MD&A). The states total bonds outstanding increased by $3.8
financial position similar to that presented by most privateThe statement of net assets combines and consolidates
and business-type activities. This amount represents the net
the governments current financial resources with capital all of the governments assets and liabilities.
assets and long-term obligations. This statement includes Net assets, which are the difference between the states
assets and liabilities, represent one measure of the states financial health.
tion section of this managements discussion and analysis
the condition of its roads and highways (infrastructure) and economic trends affecting the states future tax revenues. The statement of activities focuses on both the gross
Other indicators of the states financial health include
and net cost of various activities (governmental, businessThe 2008 Comprehensive Annual Financial Report for the State of Texas 23
type and component units); these costs are paid by the
states general tax and other revenues. This statement summarizes the cost of providing (or the subsidy provided by) specific government services and includes all current year revenues and expenses. The government-wide statement of net assets and the
on criteria set by the Governmental Accounting Standards Board (GASB). A fund is a separate accounting entity with a self-
balancing set of accounts. The state uses funds to keep activities.
track of sources of funding and spending related to specific
statement of activities divide the states activities into three types.
Governmental Funds
ernmental funds. Reporting of these funds focuses on remaining at year end for future spending. A majority of the states activity is reported in gov-
Governmental Activities general government, education, employee benefits, teacher retirement benefits, health and human services, public safety and corrections, transportation, natural resources and recreation and regulatory services. Taxes, fees and federal grants finance most of these activities. Business-Type Activities ers to pay most or all of the costs of certain services it provides are reported as business-type activities. The states colleges and universities are included as business-type activities. Activities for which the state charges a fee to customThe states basic services are reported here, including
how money flows into and out of the funds and amounts Governmental funds are accounted for using the modi-
fied accrual basis of accounting, which measures cash
and other assets that can be readily converted to cash. The view of the states general governmental operations and determine the level of resources available for the states
governmental fund statements provide a detailed short-term the basic services it provides. This information should help programs. The reconciliation following the fund financial statements explains the differences between the governments activities, reported in the government-wide state-
ment of net assets and the government-wide statement of
activities, and the governmental funds. The general fund, as major governmental funds.
Component Units for which the state is either financially accountable or the is such that exclusion would cause the states financial Component units are legally separate organizations
state highway fund and permanent school fund are reported
nature and significance of their relationship with the state statements to be misleading or incomplete. These entities financial statements. The state includes 17 separate legal entities in the notes to this report.
Proprietary Funds
vides, these activities are generally reported in proprietary funds. Services provided to outside (non-governmental) customers are reported in enterprise funds, a component When the state charges customers for services it pro-
are reported in a separate column in the government-wide
of proprietary funds, and are accounted for using the eco-
Reporting on the States Most Significant Funds

about the states financial position and activities. Some Fund financial statements provide additional detail
nomic resources measurement focus and the accrual basis
of accounting. These are the same business-type activities reported in the government-wide financial statements, but are reported here to provide information at the fund level. another are reported in internal service funds, the other Services provided by one program of the state to
information presented in the fund financial statements differs from the government-wide statements due to the peron the fund level statements as major or nonmajor based spective and basis of accounting used. Funds are presented
component of proprietary funds. The states employees as the only internal service fund.
life, accident and health insurance benefits fund is reported
24
Board funds and the Texas Department of Transportation
Colleges and universities, Texas Water Development
Turnpike Authority are shown as major proprietary funds.
Financial Analysis of the State as a Whole

Net Assets
billion, an increase of $13.6 billion or 6.9 percent. Total of $12 billion or 21.5 percent. Net assets were affected Total assets of the state on Aug. 31, 2008, were $210.8
Reporting on the States Fiduciary Responsibilities

benefit plans and one defined contribution plan. It is also beneficiaries. All state fiduciary activities are reported in The state is the trustee or fiduciary for six defined
liabilities as of Aug. 31, 2008, were $68 billion, an increase by a number of factors. Cash and cash equivalents grew $2.6 billion. The cash and cash equivalent growth was
responsible for other assets that can be used only for trust separate statements of fiduciary net assets and changes in fiduciary net assets. The activities are reported separately from other financial activities because the state cannot use the assets to finance state operations. The states fiduciary these funds are used for their intended purposes. responsibilities include ensuring that the assets reported in
$12.9 billion from fiscal 2007 while investments decreased increased by $10.3 billion from two sources, the issuance concessions for highway rights by the Texas Department
of tax and the revenue anticipation notes and the receipt of of Transportation. An increase in total liabilities of $12 billion is also primarily due to these two factors. Net capital
Statement of Net Assets

August 31, 2008 and 2007 (Amounts in Thousands)
Governmental Activities 2008 2007 Business-Type Activities 2008 2007 Total Primary Government 2008 2007
ASSETS Assets Other Than Capital Assets Capital Assets Total Assets LIABILITIES Current Liabilities Noncurrent Liabilities Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted Unrestricted Total Net Assets
$ 70,107,763 67,326,888 137,434,651
$ 59,609,496 63,802,726 123,412,222
$ 55,324,352 18,041,575 73,365,927
$ 57,302,088 16,482,661 73,784,749
$ 125,432,115 85,368,463 210,800,578
$ 116,911,584 80,285,387 197,196,971
24,613,778 12,149,685 36,763,463
15,627,216 9,434,902 25,062,118
10,783,876 20,429,743 31,213,619
11,521,853 19,364,288 30,886,141
35,397,654 32,579,428 67,977,082
27,149,069 28,799,190 55,948,259
58,207,920 31,358,171 11,105,097 $ 100,671,188
56,438,132 29,346,612 12,565,360 $ 98,350,104
7,384,503 24,882,981 9,884,824 $ 42,152,308
7,342,429 25,815,068 9,741,111 $ 42,898,608
65,592,423 56,241,152 20,989,921 $ 142,823,496
63,780,561 55,161,680 22,306,471 $ 141,248,712
25
assets increased $5.1 billion from additions to the states highway system and college and university construction billion as well. The net asset balance was $142.8 billion Of the states net assets, $65.6 billion were invested in projects. There was an increase in total bond debt of $3.7 in fiscal 2008, an increase of $1.6 billion or 1.1 percent. capital assets, net of related debt, while $56.2 billion were restricted by statute or other legal requirements and were not available to finance day-to-day operations of the state. indebtedness was $27.6 billion, which included new issuances of $6.3 billion in state bonds to finance new construction, housing, water conservation and other projects. Approximately $2.6 billion in bonded debt was retired or refunded.
proprietary funds to component unit presentation related Note 14, Adjustments to Fund Balances/Net Assets.
to the Teacher Retirement System, as explained further in The expenses of the state were $97.2 billion, an
increase of $6.7 billion or 7.4 percent. The expense fluctuations in governmental activities are largely attributable to the health and human services function and education functo offset local property tax reductions and increases to the
tion, due to increased state funding for local school districts Childrens Health Insurance Program. In the business-type est increase. Other proprietary entities showed relatively
Unrestricted net assets were $21 billion. The states bonded
activities, colleges and universities expenses were the largstable activity levels between the prior and current years.
total net assets increased by $2.1 billion, a decrease of $11.3 billion from the previous years increase of $13.4 billion. ness-type activities are detailed on the following page. Revenues and expenses of the states governmental and busiFurther discussion of results for improvement in the
As a result of revenues exceeding expenses, the states
Changes in Net Assets

and general revenues of $44.9 billion, for total revenues of major components of this decrease were operating grants The state earned program revenues of $54.4 billion
$99.3 billion, a decrease of $4.7 billion or 4.6 percent. The and contributions where education functions saw declines income losses. Tax revenues, however, offset some of the
states financial condition follows in the analysis of the
states funds. Economic strength through most of the year, plus legislative changes, brought higher tax revenues and ers received pay raises, and health and human services, funding. fees. The largest benefactors were education, where teachwhere urban and rural hospitals received additional state
totaling $9.4 billion, primarily from interest and investment loss as there was an increase of $4.3 billion in collections
over the prior year. There also was a reclassification from
26

For the Fiscal Years Ended August 31, 2008 and 2007 (Amounts in Thousands)
REVENUES Program Revenues: Charges for Services Operating Grants and Contributions Capital Grants and Contributions Total Program Revenues General Revenues: Taxes Unrestricted Investment Earnings Settlement of Claims Gain on Sale of Capital Assets Other General Revenues Total General Revenues Total Revenues EXPENSES General Government Education Employee Benefits Teacher Retirement Benefits Health and Human Services Public Safety and Corrections Transportation Natural Resources and Recreation Regulatory Services Indirect Interest on Long-Term Debt Lottery Total Expenses Excess (Deficiency) Before Contributions, Special Items and Transfers Capital Contributions Contributions to Permanent and Term Endowments Special Items Transfers Change in Net Assets Net Assets, Beginning Balance Restatements Net Assets, Beginning Balance, as Restated Net Assets, Ending Balance
7,239,392 25,900,072 2,585,507 35,724,971
$ 7,485,972 29,995,409 1,823,686 39,305,067
$ 13,658,706 4,808,580 245,962 18,713,248
$ 14,831,991 9,001,427 197,731 24,031,149
$ 20,898,098 30,708,652 2,831,469 54,438,219
$ 22,317,963 38,996,836 2,021,417 63,336,216
41,419,231 1,041,840 555,476 1,392,565 44,409,112 80,134,083
37,071,589 941,938 538,836 3,942 1,627,330 40,183,635 79,488,702
190,974 6 270 270,786 462,036 19,175,284
245,977 283 13,363 266,722 526,345 24,557,494
41,419,231 1,232,814 555,482 270 1,663,351 44,871,148 99,309,367
37,071,589 1,187,915 539,119 17,305 1,894,052 40,709,980 104,046,196
2,659,822 24,986,076 86,195 1,761,759 32,426,046 5,020,897 4,478,109 1,451,450 398,885 578,059 73,847,298
2,555,309 21,313,526 61,171 2,017,000 30,886,484 5,035,761 4,252,129 1,217,201 314,266 229,354 67,882,201
177,012 18,619,716
186,628 17,165,602 909,845 1,204,609 75,305 125,910 283,653
1,467,185 80,607 164,280 247,018
2,634,446 23,390,264
2,691,210 22,642,762
2,836,834 43,605,792 86,195 1,761,759 33,893,231 5,101,504 4,642,389 1,698,468 398,885 578,059 2,634,446 97,237,562
2,741,937 38,479,128 61,171 2,926,845 32,091,093 5,111,066 4,378,039 1,500,854 314,266 229,354 2,691,210 90,524,963
6,286,785 8,653
11,606,501 309
(4,214,980)
1,914,732 1,364
2,071,805 8,653 167,692 (150,026) 2,098,124 141,248,712 (523,340) 140,725,372 $ 142,823,496
13,521,233 1,673 184,193 (318,813) 13,388,286 127,901,431 (41,005) 127,860,426 $ 141,248,712
(3,909,529) 2,385,909 98,350,104 (64,825) 98,285,279 $ 100,671,188
(3,383,910) 8,222,900 90,162,159 (34,955) 90,127,204 $ 98,350,104
167,692 (150,026) 3,909,529 (287,785) 42,898,608 (458,515) 42,440,093 $ 42,152,308
184,193 (318,813) 3,383,910 5,165,386 37,739,272 (6,050) 37,733,222 $ 42,898,608
27
Expenses and Program Revenues: Governmental Activities

For the Fiscal Year Ended August 31, 2008 (In Millions)
Activities
Expenses
Program Revenues
Expenses Program Revenues
Health and Human Services Education Public Safety and Corrections Transportation General Government Teacher Retirement Benets Natural Resources and Recreation Indirect Interest on Long-Term Debt Regulatory Services Employee Benets
$ 32,426 24,986 5,021 4,478 2,660 1,762 1,451 578 399 86 $ 73,847
$ 23,254 3,658 730 4,508 1,805 1,131 638 $ 35,724
Health and Human Services
Education
Transportation
General Government
Teacher Retirement Benefits
Natural Resources and Recreation
Indirect Interest on Long-Term Debt
Regulatory Services
Employee Benefits
Revenue by Source: Governmental Activities

For the Fiscal Year Ended August 31, 2008 (In Billions)*
Operating Grants and Contributions $25.9 or 32.3% Charges for Services $7.2 or 9.0% Capital Grants and Contributions $2.6 or 3.2% Other Revenues $3.0 or 3.7%
Taxes $41.4 or 51.7%
Total = $80.1 Billion

* Totals may not add due to rounding
28
Expenses and Program Revenues: Business-Type Activities

For the Fiscal Year Ended August 31, 2008 (In Millions)
Activities
Expenses
Program Revenues
Expenses Program Revenues
General Government Education Health and Human Services Public Safety and Corrections Transportation Natural Resources and Recreation Lottery
177 18,620 1,467 81 164 247 2,634
196 13,025 1,193 87 45 494 3,672
$ 23,390
$ 18,712
General Government
Education
Health and Human Services
Transportation
Natural Resources and Recreation
Lottery
Revenue by Source: Business-Type Activities

For the Fiscal Year Ended August 31, 2008 (In Billions)*
Charges for Services $13.7 or 71.4%
Operating Grants and Contributions $4.8 or 25.0%
Capital Grants and Contributions $0.2 or 1.0%
Total = $19.2 Billion

* Totals may not add due to rounding
Other Revenues $0.5 or 2.6%

29
Governmental Activities billion, including charges for services of $7.2 billion, operating grants and contributions of $25.9 billion and $2.6 billion reported in capital grants and contributions. The The governmental activities program revenue is $35.7
ment-wide statement of activities have a net cost, except
transportation and regulatory services functions that report slight surpluses. Education and health and human services functions together account for 77.7 percent of governmentax collections of the state provide the primary source of ment for the governmental services. Business-Type Activities $18.7 billion, including charges for services of $13.7 bilBusiness-type activities generated program revenue of
largest decrease, $4.1 billion, was for charges for operating grants and services, which includes losses in interest and investment income. The largest changes in general revenue es in revenues from sales taxes, franchise taxes and oil and natural gas production taxes. Governmental activities expenses were $73.8 billion.
tal activities expenses and $30.5 billion of the net cost. The funding, which added to program revenues, support pay-
sources were attributable to taxes where there were increas-
All functions of governmental activities in the govern-
lion, operating grants and contributions of $4.8 billion and $246 million reported in capital grants and contributions. billion. There was a total net loss from the governments business-type activities of $287.8 million in comparison to the prior years net gain of $5.2 billion. The largest The total expenses for business-type activities were $23.4
Net Cost (Income) of the States Governmental Activities

For the Fiscal Year Ended August 31, 2008 (Amounts in Thousands)
Total Cost of Services Net Cost (Income) of Services
change occurred in the college and university sector, which the education function accordingly increased $5.1 billion over the prior year.
encountered interest and investment losses. The net cost for
General Government Education Employee Benefits Teacher Retirement Benefits Health and Human Services Public Safety and Corrections Transportation Natural Resources and Recreation Regulatory Services Indirect Interest on Long-Term Debt Total
$ 2,659,822 24,986,076 86,195 1,761,759 32,426,046 5,020,897 4,478,109 1,451,450 398,885 578,059 $ 73,847,298
854,512 21,328,046 86,088 1,761,759 9,171,731 4,290,869 (29,472) 320,166 (239,431) 578,059
Financial Analysis of the States Funds

Governmental Funds
fund balances of $44 billion. Of this total amount, $13.6 lion reserved fund balance. The general fund reported a positive $8.2 billion unreserved balance. As of Aug. 31, 2008, governmental funds reported
$ 38,122,327
Net Cost (Income) of the States Business-Type Activities

Total Cost of Services Net Cost (Income) of Services
billion constitutes unreserved fund balances and $30.4 bil-
General Fund 2008, was $10.7 billion, a decrease of $181.2 million from the $10.8 billion balance in fiscal 2007. As discussed in Budgetary Highlights, an increase in tax collections of $3.4 billion was largely attributable to sales, oil and natural gas and franchise taxes. Expenditures related to education and The fund balance for the general fund as of Aug. 31,
General Government Education Health and Human Services Public Safety and Corrections Transportation Natural Resources and Recreation Lottery Total
177,012 18,619,716 1,467,185 80,607 164,280 247,018 2,634,446
(19,271) 5,595,092 273,886 (6,758) 119,389 (247,336) (1,037,986)
$ 23,390,264
$ 4,677,016
30
health care showed increases of $4 billion and $1.5 billion, respectively. The increase in education expenditures was principally
opment Board funds and the Texas Department of Transportation Turnpike Authority are discussed separately. In addition, the Texas Workforce Commission unemployment trust fund accounts realized a net asset decrease of $235.1 benefit payments increased $283.4 million over the prior year. As explained in Note 14 there has been a change in million as unemployment taxes dropped $607.1 million and
due to property tax relief and corresponding increases in state funding allowing for increased payments to local school districts.
State Highway Fund 31, 2008, was $778.5 million, an increase of $766.3 milof $777.2 million in federal revenues from $2 billion in The fund balance for the state highway fund as of Aug.
the reporting of the Teacher Retirement System of Texas, crete component unit.
lion from $12.2 million as of Aug. 31, 2007. An increase federal revenues over the prior year was the largest factor for this increase. Cash equivalents and deferred revenues increased significantly as $3.2 billion was received from operate toll roads for a specified period of time. These separate agreements.
which has been moved and is now being reported as a dis-
Colleges and Universities 2008, totaled $36.5 billion, a decrease of $313.5 million from Aug. 31, 2007. There was a decline in investment holdings of $1.4 billion as financial and credit conditions weakened. In addition, there were increases in operating losses of $4.2 billion. expenses of $1.8 billion, as well as interest and investment Colleges and universities net assets as of Aug. 31,
both public and private sources for the right to build and concession revenues will be amortized over the lives of the
Permanent School Fund as of Aug. 31, 2008, totaled $25.2 billion, a decrease of $1.5 billion, or 5.8 percent, since Aug. 31, 2007. This The fund balance for the permanent school fund (PSF) Texas Water Development Board Funds totaled $2.3 billion as of Aug. 31, 2008, an increase of The Texas Water Development Board funds net assets
decrease was primarily attributable to the decrease in the fair value of investments, consistent with the decrease in value of the markets in which investments were made. Value in the fund provided $716.5 million in transfers to provide funding for public education. A second way the PSF supports the states public school system is through
$216.7 million from $2.1 billion as of Aug. 31, 2007. During fiscal 2008, federal revenues of $154.6 million and investment income of $176.5 million accounted for virtually all of the additions to the funds. The increase in net loans in clean water and drinking water state revolving talization grants and for the clean water program only, assets is the result of an increased number of underlying fund programs, which are provided through federal capirevenue bond proceeds. Funds are primarily used to pro-
a Bond Guarantee Program, where the PSF is pledged to
guarantee bonds issued by Texas school districts, enhancschool district bond issues were guaranteed. The capacity
ing their credit rating. As of Aug. 31, 2008, $49.9 billion in to guarantee bonds is limited by both Internal Revenue Service ruling and state law to two and a half times the cost or market value of the fund, whichever is lower.
vide financial assistance to political subdivisions for water projects.
development, water quality enhancement and flood control
Texas Department of Transportation
Proprietary Funds
as of Aug. 31, 2008, a decrease of $746.3 million from Proprietary funds reported net assets of $42.2 billion
Turnpike Authority tion Turnpike Authority totaled $757.4 million as of Aug. 31, 2008, a decrease of $48 million from Aug. 31, 2007, Net assets for the Texas Department of Transporta-
fiscal 2007. Colleges and universities, Texas Water Devel-
31
largely due to increases in operating expenses. The largest
Private-Purpose Trust Funds $3 billion in fiscal 2008, a decrease of $235.9 million or due to a combination of factors including lower rates of return on investments, as well as decreases to average made. monthly asset balances on which interest earnings were Total net assets for private-purpose trust funds were
portion of the Turnpike Authoritys total assets, $2.6 billion or 82.1 percent, consists of completed highway projects or those under construction.
7.2 percent from fiscal 2007. Decreases to net assets were
Fiduciary Funds
of Aug. 31, 2008, a decrease of $8.9 billion from $157 billion in fiscal 2007. Fiduciary funds reported $148.1 billion in net assets as
Budgetary Highlights
Variances for the General Fund
gets are due to both economic and legislative reasons. The differences from original and final revenue bud-
Pension and Other Employee Benefit Trust Funds trust funds were $127.7 billion, a decrease of $9.6 billion ity of plan assets are held as investments for the pension retirement plans declined during fiscal 2008. Although Total net assets for pension and other employee benefit
from the $137.3 billion reported in fiscal 2007. The majorfunds. The overall financial condition of the pension fund interest and investment losses in the volatile market were
Actual results for revenues produced an additional $453.8 million above the final budget number. The most positive revenue variance occurred with tax revenues, showing a
offset by increased member, state and employer contributions, there were increases in benefit payments by $793.8 est pension systems, the Teacher Retirement System of million. The return for investments for the states two largTexas and the Employees Retirement System of Texas, was a negative 4.5 percent and a negative 4.6 percent, respectively, compared to the previous years return percents of 14.4 and 13.9 percent.
$1.7 billion difference, actual over budget. Due to economic strength for most of the year the state was able to show overall growth in tax collections. There were increases in
all tax categories except for a slight decrease in motor fuels taxes. However, sales tax, franchise tax and oil and natural above the prior year. gas production taxes all reported increases over $1.3 billion Expenditure variances by function were also positive
after year-end. Revisions were made to original budget
amounts increasing expenditures in major functions for
External Investment Trust Fund assets of $17.4 billion in fiscal 2008, an increase of $922.1 million from the $16.5 billion reported in fiscal 2007. The increase is due to increased client participation. This offset ket yields. The Texas Government Investment Pool Trust Fund is the only external investment trust fund. The external investment trust fund reported total net
education, health and human services and public safety and funding for local school districts, primarily due to property tax reductions for the districts. Increases for health and human services are due to increases in caseloads (num-
corrections. Legislative action increased the states share of
declines in interest and investment income from lower mar-
ber of clients) and costs, as well as rate restorations and Program.
increases in Medicaid and the Childrens Health Insurance
32
Capital Assets Net of Depreciation

Land and Land Improvements Infrastructure Construction in Progress Buildings and Building Improvements Facilities and Other Improvements Furniture and Equipment Vehicles, Boats and Aircraft Other Capital Assets Total Capital Assets
$ 7,821,911 51,421,225 4,654,259 2,457,155 84,138 239,353 415,266 233,581 $ 67,326,888
$ 7,278,244 48,397,641 4,623,788 2,542,910 84,117 255,122 389,098 231,806 $ 63,802,726
$ 1,433,552 2,319,281 1,950,376 9,467,729 650,362 1,347,891 65,306 807,078 $ 18,041,575
$ 1,274,455 1,900,120 2,041,057 8,545,156 613,234 1,251,007 50,029 807,603 $ 16,482,661
$ 9,255,463 53,740,506 6,604,635 11,924,884 734,500 1,587,244 480,572 1,040,659 $ 85,368,463
$ 8,552,699 50,297,761 6,664,845 11,088,066 697,351 1,506,129 439,127 1,039,409 $ 80,285,387
Capital Assets and Debt Administration

Capital Assets
capital assets, of which $53.7 billion was infrastructure, As of Aug. 31, 2008, the state had $85.4 billion in net
ways at a condition level of 80 percent, its non-interstate highways (farm-to-market and other road systems) at a condition level of 75 percent and 80 percent for the Central Texas Turnpike System. The condition assessment results for fiscal 2008 reflect condition levels of 83.7 percent (84.1 percent in fiscal 2007) for the interstate system, 79 percent (79.5 percent for fiscal 2007) for the non-interstate system and 91.7 percent for the Central Texas Turnpike System (fiscal 2008 is first year of assessment).
The states policy is to maintain its interstate high-
primarily highway construction projects. This total repre-
sents an increase of $5.1 billion in net capital assets or 6.3 percent from fiscal 2007. The states capital assets include progress, buildings and building improvements, facilities land and land improvements, infrastructure, construction in and other improvements, furniture and equipment, vehicles, boats and aircraft and other capital assets. Details of capital assets are shown in Note 2.
that will be required to maintain the highway system at or were $502.1 million, $2.5 billion for the Non-Interstate
In fiscal 2008, the estimated maintenance expenditures
above the adopted condition levels for interstate highways system and $6.9 million for the Central Texas Turnpike
Infrastructure Assets
in the governmental activities column of the governmentwide statements. The state accounts for its system of roads and highThe value of the states infrastructure assets is included
System. Actual expenditures were $438.2 million for the and $5.4 million for the Central Texas Turnpike System. Additional information on the states road and highway infrastructure is presented in the financial sections required supplementary information other than MD&A.
Interstate system, $1.6 billion for the Non-Interstate system
ways using the modified approach allowed by GASB
Statement No. 34, Basic Financial Statements - and Managements Discussion and Analysis - for State and Local Governments. The Texas Department of Transportation (TxDOT) has developed a system of management, the
Debt Administration
bonds and revenue bonds. Each series of revenue bonds is specified in the bond resolution. Most revenue bonds are designed to be self-supporting from a primary revenue source related to the program financed. The state of Texas issues both general obligation
Texas Maintenance Assessment Program (TxMAP), which states roads and highways to near perpetuity.
is designed to maintain the service delivery potential of the
backed by the pledged revenue source and restricted funds
33
Outstanding Bonded Debt

General Obligation Bonds Payable Revenue Bonds Payable Total Bonds Payable
$ 8,060,709 3,444,984 $ 11,505,693
$ 6,756,893 2,030,739 $ 8,787,632
$ 2,707,763 13,369,971 $ 16,077,734
$ 2,775,467 12,304,358 $ 15,079,825
$ 10,768,472 16,814,955 $ 27,583,427
$ 9,532,360 14,335,097 $ 23,867,457
by Moodys Investors Service, AA by Standard & Poors fiscal 2008, Texas state agencies and universities issued
The states general obligation bond issues are rated Aa1
Cash Management
investment purposes. The Treasury is authorized to invest in fully collateralized time deposits, obligations of the United States, obligations of various federal credit orgaFunds deposited in the state Treasury are pooled for
Corporation and AA+ by Fitch as of August 2008. During $6.3 billion in state bonds to finance new construction, housing, water conservation and treatment and other projects. General obligation debt accounted for $2.3 billion of state bonds issued in fiscal 2008. This debt, which can only be faith and credit of the state. The remaining $4 billion is authorized by a constitutional amendment, carries the full due to new issuances of revenue bonds, which are serviced by the revenue flows of individual entity projects. Bonds retired during the year were composed of $413.3 million in general obligation bonds and $690.5 million in tion bonds and $791.8 million in revenue bonds were refunded. The total outstanding general obligation debt of the state after new issuances, retirements and represents an increase of $1.2 billion or 13 percent
nizations, direct security repurchase agreements, reverse
repurchase agreements, bankers acceptances, commercial paper and contracts written by the Comptroller which are commonly known as covered call options. consisted of the following. During fiscal 2008, the average investment portfolio
Average Investment Portfolio*

For the Fiscal Year Ended August 31, 2008
Average Amount Invested (Amounts in Millions) Average Interest Rate
revenue bonds. Also, $665.4 million in general obliga-
Investment Type
Percent of Total
refundings as of Aug. 31, 2008, was $10.8 billion. This from fiscal 2007. An additional $8.1 billion of general obligation bonds have been authorized but have not been issued. Total revenue bonds outstanding were 17.3 percent from fiscal 2007.
$16.8 billion, which is an increase of $2.5 billion or There was a $1.2 billion net increase in general
NOW Accounts Time Deposits BidTX Repurchase Agreements U.S. Treasury and Agency Securities U.S. Mortgages U.S. Treasury (Lottery) Commercial Paper Corporate Obligations Asset Backed Securities Mutual Funds Subtotal Reverse Repurchase Agreements Total
0.1 % 0.1 2.3 7.8 46.6 13.8 2.6 10.6 2.7 4.0 9.9 100.5 (0.5) 100.0 %
28.8 14.9 579.9 1,924.9 11,553.1 3,430.8 637.9 2,638.0 669.9 1,005.1 2,455.6 24,938.9 (120.3)
1.00 % 2.92 4.07 3.50 3.89 5.56 ** 3.68 4.16 4.40 3.66
obligation bonds and $1.9 billion net increase in revenue bonds for financing of highway projects. Other large revenue bond issuances were for water quality projects and for university campus improvements. Note 5 shows the details on the states long-term the states bond indebtedness. 34
2.94 4.08 %
$ 24,818.6
* The above numbers include all funds included in the state Treasury. ** The yield for the lottery is not included in the average yield for the state since the investments are long-term and are held for lottery prize winners.
liabilities and Note 6 provides detail information on
Economic Condition and Outlook
adding nearly 13 times more jobs than the second ranked state, Oklahoma. Completing its fifth consecutive year of employment growth, Texas nonfarm employment
Texas added more jobs than any other state in 2008,
states largest source of the tax revenue, is only expected
to grow slightly at 0.4 percent in fiscal 2009 and only 2.9
percent for the 2010-2011 biennium. Supporting the lower growth for the current biennium is projected to decelerate to a biennial rate of 6 percentdown from the previous periods 8.6 percent growth. Additionally, for the 2010-
rate of growth in the revenue estimate, Texas real economic
added 221,000 jobs from November 2007 to November
2008. The states economy was largely insulated from the nations housing-induced slowdown, as average housing ber of Texas workers increased, available jobs increased unemployment rate to climb from 4.2 to 5.7 percent in November 2008. Texas unemployment rate was a full percent. prices in Texas continued to increase. Although the numless rapidly than the states labor force, causing the states
2011 biennium, this economic growth ticks further down-
ward to a 5.8 percent biennial rate. Fiscal 2009 is expected the prior year. Fiscal 2010 fares only slightly better with a 1.9 percent annual growth rate. This period of uncertainty in credit markets, weak housing demand and recessionary domestic and export markets. Although economic stimuli and other corrective measures have been implemented requires cautious vigilance and prudence. at the national level, the current situation is volatile and
to be the low point in economic growth at 1.8 percent from
1 percent below the nations unemployment rate of 6.7 Texas real gross domestic product in 2008 rose by 4.1
in the states economy is ongoing due to the liquidity crisis
percent, when adjusted for inflation, exceeding its average
over the past decade. Credit is largely due to the strength of the states energy industry. Another positive for Texas is its position as the nations largest exporting state, accounting for one-seventh of total U.S. exports. Even with the relative strength and continued growth
Reporting Other Postemployment Benefits the reporting of other postemployment benefits (OPEB), This financial report contains information related to
in most industries, the Texas economy experienced a weakening as 2008 came to a close. Underlying the weakness were the weight of a national recession, large losses in stock investments, a stronger dollar and the deflating of
such as health and basic life insurance, offered to retired
state employees. These benefits are not contractual and are
subject to change each biennium when the Legislature is in
the energy industry that had boomed during most of the destruction in the populous Houston-Galveston region. many factors that prevent forecasting the same robust
session. The Texas Constitution does not allow the Legislatwo years. The Legislature meets every two years to appropriate funds necessary for payments for new or renewed obligations. In response to these concerns, House Bill 2365 was
year. There also was Hurricane Ike, which left widespread The state revenue outlook is guarded and there are
ture to impose financial obligations for a period longer than
revenue growth seen in recent years. Fiscal 2008 finished strong with an ending balance of $6.8 billion in general revenue-related funds after the required constitutional transfers to the Economic Stabilization Fund. On Jan.
passed during the 80th session of the Texas Legislature. The bill allows state and local governments the option
to report OPEB related expenses on a statutory modified OPEB plans.
12, 2009, the Comptroller released the 2010-11 Biennial Revenue Estimate and the state is expected to have sufficient revenue to support $77.1 billion in general purpose spending for the upcoming biennium. The Comptroller is forecasting a decline in revenues over the next three years stantial slowdown in the Texas economy. Sales tax, the
accrual basis. The state of Texas contributes to four distinct The University of Texas System and Texas A&M Uni-
versity System administer two single-employer defined ben-
efit OPEB plans. Each chose to implement GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, beginning in fiscal 2008. As a result of their implementation of
as a consequence of the U.S. economic recession and sub-
35
GASB 45 a $563 million net OPEB obligation is recognized in the statement of net assets. Additionally, a $699 million actuarially calculated annual OPEB cost for these plans is included in the expenses of the statement of activities. There is not a net OPEB obligation recorded for
pay-as-you-go costs. The state of Texas fiscal 2008 conamount.
tributions to the SRHP equaled this contractually required There is not a net OPEB obligation recorded for the
the State Retiree Health Plan (SRHP) administered by
Texas Public School Retired Employees Group Insurance
the Employees Retirement System of Texas (ERS). The SRHP is a cost-sharing multiple-employer defined benefit OPEB plan. In a cost-sharing plan, the contribution higher or lower than the amount that would result from employers employees.
Program (TRS-Care). TRS-Care is a cost-sharing multipleemployer defined benefit plan but the state of Texas is not an employer in the plan. Therefore, the state is not charged the state makes on-behalf payments to the TRS-Care plan The financial statements, notes and required supple-
rate or amount charged to an individual employer may be a calculation based on the projected benefits of only that Also, the obligation or commitment for benefits is not
with funding a contractually required contribution. Instead, administrators to partially fund the annual costs of the plan. mentary information contained in this report were preGASB 45.
directly attributable to any individual participating employer. Because of these factors, the OPEB expense/liability recognition requirements for cost-sharing plans are differgraph 23 of GASB 45 requires employers that participate
pared in full conformity to the requirements contained in
ent than those of single employer plans. Specifically, Parain cost-sharing plans to recognize annual OPEB expense/ expenditures for their contractually required contributions to the plan in fund financial statements on the accrual basis or on the modified accrual basis, whichever applies for the fund(s) used to report the employers contributions... Administrators of the SRHP established contractually
Contacting the States Financial Management
citizens, taxpayers, customers, investors and creditors with a general overview of the states finances and to demonstrate the states accountability for the money it receives.
This financial report is designed to provide the states
If you have questions about this report or need additional
financial information, contact the Financial Reporting sec17th Street, Austin, Texas 78774.
required contributions equal to the modified accrual based
tion of the Texas Comptroller of Public Accounts at 111 E.
36

Basic Financial Statements
37
STATE OF TEXAS
Statement of Net Assets

August 31, 2008 (Amounts in Thousands)
Governmental Activities Primary Government Business-Type Activities* Component Units
ASSETS Current Assets: Cash and Cash Equivalents Short-Term Investments Securities Lending Collateral Receivables: Taxes (Note 24) Federal Other Intergovernmental Accounts Interest and Dividends Gifts Investment Trades Other From Fiduciary Funds Due From Primary Government (Note 12) Due From Component Units (Note 12) Inventories Prepaid Items Loans and Contracts Other Current Assets Restricted: Cash and Cash Equivalents Short-Term Investments Loans and Contracts Total Current Assets Noncurrent Assets: Internal Balances (Note 12) Loans and Contracts Investments Receivables: Taxes (Note 24) Federal Gifts Other Restricted: Cash and Cash Equivalents Short-Term Investments Investments Receivables Loans and Contracts Other Assets Held in Trust Net Pension Asset (Note 9) Deferred Charges Other Noncurrent Assets Capital Assets: (Note 2) Nondepreciable Depreciable Accumulated Depreciation Total Noncurrent Assets Total Assets
Total
$ 30,143,109 716,121 3,520,567 3,292,262 1,868,182 1,023,583 839,028 157,503 5,073 52,959 1,122 395 278,106 7,872 110,451 32 327,145 60,293 42,403,803
$ 3,901,063 1,112,234 1,566,650
$ 34,044,172 1,828,355 5,087,217 3,292,262 2,308,077 1,087,315 1,464,545 307,907 118,373 350,064 1,215,969 1,122 413 406,509 119,339 393,077 260,006 3,415,916 711,731 143,490 56,555,859
$ 673,752 856,179
439,895 63,732 625,517 150,404 118,373 344,991 1,163,010
57,972 3,290 57,865 8,757
161 426
18 128,403 111,467 282,626 259,974 3,088,771 711,731 83,197 14,152,056
851 1,162 9,776 1,519 2,742 19,210 111 1,693,773
10,406 565,411 25,748,004 424,525 14,756
(10,406) 3,499,514 6,338,806
4,064,925 32,086,810 424,525 14,756 260,555 95,155 110,463 45,548 27,282,706 136,995 4,112,989 97,769 1,368 6,928 19,770 114,994 62,154,206 48,615,153 (25,400,896) 154,244,719 210,800,578
74,295 12,768
260,555 95,155 110,463 45,548 27,282,706 136,702 3,399,864 10,773 1,368
4,214 191 271,063 4,200
293 713,125 86,996 6,928 19,770 18,591 56,835,558 24,402,979 (13,911,649) 95,030,848 137,434,651
96,403 5,318,648 24,212,174 (11,489,247) 59,213,871 73,365,927
6,005 6,025 97,847 (49,680) 426,928 2,120,701
Concluded on the following page
38
STATE OF TEXAS
Statement of Net Assets (concluded)

Governmental Activities Primary Government Business-Type Activities* Component Units
LIABILITIES Current Liabilities: Payables: Accounts Payroll Other Intergovernmental Federal Investment Trades Interest Annuities To Fiduciary Funds Internal Balances (Note 12) Due To Primary Government (Note 12) Due To Component Units (Note 12) Unearned Revenue Obligations/Reverse Repurchase Agreement Obligations/Securities Lending Short-Term Debt (Note 4) Claims and Judgments (Note 5) Capital Lease Obligations (Note 5, 7) Employees' Compensable Leave (Note 5) Notes and Loans Payable (Note 5) General Obligation Bonds Payable (Note 5, 6) Revenue Bonds Payable (Note 5, 6) Liabilities Payable From Restricted Assets (Note 5) Funds Held for Others Other Current Liabilities Total Current Liabilities Noncurrent Liabilities: Claims and Judgments (Note 5) Capital Lease Obligations (Note 5, 7) Employees' Compensable Leave (Note 5) Notes and Loans Payable (Note 5) General Obligation Bonds Payable (Note 5, 6) Revenue Bonds Payable (Note 5, 6) Liabilities Payable From Restricted Assets (Note 5) Assets Held for Others Net Pension Obligation (Note 9) Net OPEB Obligation (Note 11) Other Noncurrent Liabilities Total Noncurrent Liabilities Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for: Education Debt Service Capital Projects Veterans Land Board Housing Programs Unemployment Trust Funds Economic Stabilization Funds Held as Permanent Investments: Nonexpendable Expendable Other Unrestricted Total Net Assets
Total
4,442,151 595,757 1,946,082 4,690 50,473 355,235 209,627 631,164 426 3,959,095 146,784 3,545,602 6,590,750 61,242 1,562 435,943 27,261 388,575 162,853
$ 1,162,385 582,940 10,194 30,762 1,186,726 62,378 12,174 31 (631,164)
5,604,536 1,178,697 1,956,276 35,452 1,237,199 417,613 12,174 209,658
$ 136,919 226 24,449 1,861
413 2,314,190 1,567,697 95,634 2,667 316,050 1,393,081 114,340 1,487,144 498,002 107,024 471,621 10,783,876 426 6,273,285 146,784 5,113,299 6,590,750 156,876 4,229 751,993 1,420,342 502,915 1,649,997 498,002 107,024 1,530,127 35,397,654 59,294
93 3,429 38,344 16,858 25 16,957 298,868
1,058,506 24,613,778
124,939 8,060 313,056 312,329 7,672,134 3,282,131
59,157 11,626 302,645 1,044,186 2,593,423 11,882,827 2,974,854 722,040 562,987 275,998 20,429,743 31,213,619
437,036
12,149,685 36,763,463
184,096 19,686 615,701 1,356,515 10,265,557 15,164,958 2,974,854 722,040 437,036 562,987 275,998 32,579,428 67,977,082
72 1,570 103,314 396,176 87,301
274,383 862,816 1,161,684
58,207,920 711,346 189,203 174,143
7,384,503 2,181,416 212,795 230,725 669,684 1,788,436
65,592,423 2,892,762 401,998 404,868 669,684 1,788,436 4,367,915 21,284,942 23,727,818 702,729 20,989,921 $ 142,823,496
34,325 4,651
4,367,915 10,303,017 14,924,168 688,379 11,105,097 $ 100,671,188 10,981,925 8,803,650 14,350 9,884,824 $ 42,152,308
920,041 $ 959,017
The accompanying notes to the financial statements are an integral part of this statement. * Other postemployment benefits are not legally required to be provided by the state of Texas. The Texas Constitution does not allow the Legislature to impose financial obligations for a period longer than two years. See Note 11 for additional details.
39
STATE OF TEXAS
Statement of Activities
Program Revenues Operating Grants and Contributions Capital Grants and Contributions
Functions/Programs
Expenses
Charges for Services
PRIMARY GOVERNMENT Governmental Activities: General Government Education Employee Benefits Teacher Retirement Benefits Health and Human Services Public Safety and Corrections Transportation Natural Resources and Recreation Regulatory Services Indirect Interest on Long-Term Debt Total Governmental Activities Business-Type Activities: General Government Education* Health and Human Services Public Safety and Corrections Transportation Natural Resources and Recreation Lottery Total Business-Type Activities Total Primary Government COMPONENT UNITS Component Units Total Component Units
$ 2,659,822 24,986,076 86,195 1,761,759 32,426,046 5,020,897 4,478,109 1,451,450 398,885 578,059 73,847,298
$ 1,171,997 821,291 107 1,832,315 331,101 1,785,835 661,657 635,089 7,239,392
633,091 2,836,739
222
21,421,963 398,927 136,498 469,627 3,227 25,900,072
37 2,585,248
2,585,507
177,012 18,619,716 1,467,185 80,607 164,280 247,018 2,634,446 23,390,264 $ 97,237,562
43,106 8,705,756 1,058,134 87,365 48,958 42,964 3,672,423 13,658,706 $ 20,898,098
153,177 4,068,805 135,165 34 451,390 9 4,808,580 $ 30,708,652
250,063
(4,101)
245,962 $ 2,831,469
$ 1,772,502 $ 1,772,502
$ 1,431,137 $ 1,431,137
$ $
290,954 290,954
$ $ 0
General Revenues Taxes: Sales and Use Motor Vehicle and Manufactured Housing Motor Fuels Franchise Oil and Natural Gas Production Insurance Occupation Cigarette and Tobacco Other Unrestricted Investment Earnings Settlement of Claims Gain on Sale of Capital Assets Other General Revenues Capital Contributions Contributions to Permanent and Term Endowments Special Items (Note 23) Transfers - Internal Activities (Note 12) Total General Revenues, Contributions and Transfers Change in Net Assets
The accompanying notes to the nancial statements are an integral part of this statement. * Other postemployment benets are not legally required to be provided by the state of Texas. The Texas Constitution does not allow the Legislature to impose nancial obligations for a period longer than two years. See Note 11 for additional details.
Net Assets, September 1, 2007 Restatements (Note 14) Net Assets, September 1, 2007, as Restated Net Assets, August 31, 2008
40
Governmental Activities
Net (Expense) Revenue and Changes in Net Assets Primary Government Business-Type Activities Total
Component Units
(854,512) (21,328,046) (86,088) (1,761,759) (9,171,731) (4,290,869) 29,472 (320,166) 239,431 (578,059) (38,122,327)
(854,512) (21,328,046) (86,088) (1,761,759) (9,171,731) (4,290,869) 29,472 (320,166) 239,431 (578,059) (38,122,327)
0 (38,122,327)
19,271 (5,595,092) (273,886) 6,758 (119,389) 247,336 1,037,986 (4,677,016) (4,677,016)
19,271 (5,595,092) (273,886) 6,758 (119,389) 247,336 1,037,986 (4,677,016) (42,799,343)
0 0
(50,411) 0 0 0 (50,411)
21,640,855 3,384,597 3,000,148 4,712,183 4,036,033 1,446,828 1,454,187 1,744,400 1,041,840 555,476 1,392,565 8,653
190,974 6 270 270,786 167,692 (150,026) 3,909,529 4,389,231 (287,785) 42,898,608 (458,515) 42,440,093 $ 42,152,308
21,640,855 3,384,597 3,000,148 4,712,183 4,036,033 1,446,828 1,454,187 1,744,400 1,232,814 555,482 270 1,663,351 8,653 167,692 (150,026)
36,034 812 20,282
(3,909,529) 40,508,236 2,385,909 98,350,104 (64,825) 98,285,279 $ 100,671,188
44,897,467 2,098,124 141,248,712 (523,340) 140,725,372 $ 142,823,496
57,128 6,717 516,547 435,753 952,300 $ 959,017
41
STATE OF TEXAS
Balance Sheet Governmental Funds

State Highway Fund Permanent School Fund Nonmajor Funds
ASSETS Cash and Cash Equivalents Short-Term Investments Securities Lending Collateral Receivables: Accounts Taxes (Note 24) Federal Investment Trades Other Intergovernmental Interest and Dividends Other (Note 1) Due From Other Funds (Note 12) Due From Component Units (Note 12) Interfund Receivable (Note 12) Inventories Prepaid Items Investments Loans and Contracts Other Assets Restricted: Cash and Cash Equivalents Receivables Loans and Contracts Other Assets Total Assets LIABILITIES AND FUND BALANCES Liabilities: Payables: Accounts Investment Trades Other Intergovernmental Payroll Federal Interest Due To Other Funds (Note 12) Due To Component Units (Note 12) Interfund Payable (Note 12) Deferred Revenues Obligations/Reverse Repurchase Agreements Obligations/Securities Lending Other Liabilities Short-Term Debt (Note 4) Total Liabilities Fund Balances/(Deficits): Reserved (Note 13) Unreserved (Note 13): General Special Revenue Capital Projects Permanent Total Fund Balances Total Liabilities and Fund Balances
General
Totals
$ 19,614,319 148,461 201 566,114 3,716,787 1,600,163 3 860,128 35,384 148,114 22,313 332 15,560 170,836 196 8,656 170,746
$ 4,623,950
834,243 86,376 3,433,544 144,974
$ 5,047,422 88,046 16,808 5,116 1,524 596 14,574 83,974 63 519 9 1,117,660 242,222 8,034 320,265 650,730 86,908
$ 30,119,934 322,883 3,450,553 742,828 3,716,787 1,882,938 4,953 1,023,583 153,905 148,114 376,083 395 15,563 278,106 7,872 25,340,186 675,862 18,623 327,145 293 773,418 86,996 $ 69,467,020
26,624 281,251
4,354 163,455 11,191 269,440 92,756 356 3 106,751 7,667 24,213,870 1,161
261,733 10,589
6,880 293 122,688 88 $ 27,208,262 $ 5,754,984 $ 28,819,304
$ 7,684,470
$ 2,725,368 8 1,946,082 487,344 4,650 68,325 1,061,788 426 59 2,897,228 146,784 201 814,833 6,400,000 16,553,096
$ 1,006,137
13,219 49,219 1,525 5,869 1,713
235,080 1,246 7,347 40 73,706 2,524 445 16,807 3,016 340,211
99,541
4,624
3,434,803
62,378 3,458,196
240,658 190,750 4,976,513
3,592,119
$ 3,979,804 50,473 1,946,082 595,757 4,690 74,194 1,141,831 426 2,583 6,394,854 146,784 3,475,204 1,058,507 6,590,750 25,461,939
2,471,181 8,183,985
496,233
25,227,185
2,232,894
30,427,493 8,183,985 4,953,007 (123,683) 564,279 44,005,081 $ 69,467,020
282,238
10,655,166 $ 27,208,262
778,471 $ 5,754,984
25,227,185 $ 28,819,304
4,670,769 (123,683) 564,279 7,344,259 $ 7,684,470
The accompanying notes to the financial statements are an integral part of this statement.
42
Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Asssets
Total Fund Balance Governmental Funds
$ 44,005,081
Amounts reported for governmental activities in the statement of net assets are different because: Capital assets less accumulated depreciation are included in the statement of net assets (Note 2): Capital Assets - Nondepreciable Capital Assets - Depreciable Accumulated Depreciation Some of the state's assets are not current available resources and are not reported in the funds. Net Pension Assets (Note 9) Deferred charges for unamortized bond issuance cost Some of the state's revenues will be collected after year-end but are not available soon enough to pay current year's expenditures and therefore, are deferred in the funds. Long-term liabilities applicable to the state's governmental activities are not due and payable in the current period and accordingly are not reported in the funds. However these liabilities are included in the statement of net assets. (Note 5 and Note 9) Claims and Judgments Capital Lease Obligations Employees Compensable Leave Notes and Loans Payable General Obligation Bonds Payable Revenue Bonds Payable Net Pension Obligation
* current portion = $1,077,436 and noncurrent portion = $12,149,685.
$ 56,835,558 24,402,979 (13,911,649) 67,326,888 6,928 19,770 26,698
2,436,174
(186,181) (9,622) (748,999) (339,590) (8,060,709) (3,444,984) (437,036) (13,227,121) *
Interest payable applicable to the state's governmental activities are not due and payable in the current period and accordingly are not reported in the funds. However these liabilities are included in the statement of net assets. The internal service fund is used by management to charge the costs of employees life, accident and health insurance benets fund to individual funds. Since governmental activities are the predominant activities of internal service funds, the assets and liabilities of the internal service funds are included in governmental activities in the statement of net assets.
Net Assets of Governmental Activities
(281,041)
384,509 $100,671,188
43
STATE OF TEXAS
Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds

State Highway Fund Permanent School Fund Nonmajor Funds
REVENUES Taxes Federal Licenses, Fees and Permits Interest and Other Investment Income Land Income Settlement of Claims Sales of Goods and Services Other Total Revenues EXPENDITURES Current: General Government Education Employee Benefits Teacher Retirement Benefits Health and Human Services Public Safety and Corrections Transportation Natural Resources and Recreation Regulatory Services Capital Outlay Debt Service: Principal Interest Other Financing Fees Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfer In (Note 12) Transfer Out (Note 12) Bonds and Notes Issued Bonds Issued for Refunding Premiums on Bonds Issued Payment to Escrow for Refunding Sale of Capital Assets Increase in Obligations Under Capital Leases Insurance Recoveries Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances, September 1, 2007 Restatements (Note 14) Fund Balances, September 1, 2007, as Restated Fund Balances, August 31, 2008
General
Totals
$ 38,715,847 25,879,090 2,799,921 721,787 19,389 554,412 1,582,483 2,504,791 72,777,720
38,908 2,750,490 1,146,625 146,100 5,910 923 294,269 8,560 4,391,785
(1,307,943) 624,498 163,857 (519,588)
$ 2,501,610 26,635 574,866 71,989 38 22,742 76,313 3,274,193
$ 41,256,365 28,656,215 4,521,412 (368,067) 649,835 555,335 2,063,351 2,589,664 79,924,110
2,395,984 23,076,592 1,487 1,780,758 32,263,718 4,134,180 8,420 1,355,996 301,502 137,059 52,317 62,539 65,570,552
12,440 50,000
310,270
219,900 1,539,192 12,640 81,559 83,506 16,118 64,315 91,220 106,415 362,646 328,271 8,513 2,914,295
10,000 645,929 3,870,772
4,159,789
307
2,628,324 24,976,054 14,127 1,780,758 32,355,277 4,863,615 3,895,310 1,420,311 392,722 4,403,570 414,963 428,451 14,839 77,588,321
37,641 6,326 8,792,897
310,577
7,207,168
(4,401,112)
(830,165)
359,898
2,335,789
4,661,664 (12,057,410)
3,727,027 (88,032) 1,408,940 73,051
(716,535)
5,443,058 (4,915,005) 1,578,810 515,408 107,117 (558,623)
16,747 715 2,842 (7,375,442) (168,274) 10,836,321 (12,881) 10,823,440 $ 10,655,166 $
5,311 11,685 5,137,982 736,870 12,198 29,403 41,601 778,471 500 2,171,265 2,531,163 4,735,617 77,479 4,813,096 $ 7,344,259
(716,535) (1,546,700) 26,773,885 26,773,885 $ 25,227,185
13,831,749 (17,776,982) 2,987,750 515,408 180,168 (558,623) 22,058 715 15,027 (782,730) 1,553,059 42,358,021 94,001 42,452,022 $ 44,005,081
The accompanying notes to the financial statements are an integral part of this statement.
44
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities
Net Change in Fund Balances
$ 1,553,059
Governmental funds report capital outlays as expenditures. In the statement of activities, however, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. The amount by which capital outlay exceeds depreciation in the current period is: Capital Outlay Depreciation Expense (Note 2) The effect of various miscellaneous transactions involving capital assets (i.e., sales and trade-ins) is to decrease net assets. Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. The internal service fund is used by management to charge the costs of the employees life, accident and health insurance benefits fund to individual funds. The adjustments for internal service fund close the fund by allocating these amounts to participating governmental activities. Bond proceeds provide current financial resources to governmental funds, but increase long-term liabilities in the statement of net assets. Repayment of long term debt consumes current financial resources and is an expenditure in the governmental funds, but reduces long-term liabilities in the statement of net assets. Bonds and Notes Issued Premiums (Discounts) on Bonds Proceeds Increase in Obligations Under Capital Leases Repayment of Bond and Capital Lease Principal Some expenses reported in the statement of activities do not require the use of current financial resources and therefore, are not reported as expenditures in governmental funds. Resource flows between fiduciary funds and governmental funds are converted to revenues or expenses on the statement of activities. Transfers of capital assets have not been reported in the governmental funds. Capital Asset Transfers Change in Transfers Increase in Revenues Increase in Expenses
Change in Net Assets of Governmental Activities
$ 4,403,570 (839,637) 3,563,933 (22,057) (1,284,016)
14,596
(3,503,158) (180,168) (715) 973,586 (2,710,455)
1,270,885
(36) 35,740 1,754 (37,494) (36) $ 2,385,909
45
STATE OF TEXAS
Statement of Net Assets Proprietary Funds

Business-Type Activities Enterprise Funds Texas Texas Water Department of Nonmajor Development Transportation Enterprise Board Funds Turnpike Authority Funds Governmental Activities Internal Service Fund**
ASSETS Current Assets: Cash and Cash Equivalents Short-Term Investments Securities Lending Collateral Restricted: Cash and Cash Equivalents Short-Term Investments Loans and Contracts Receivables: Federal Other Intergovernmental Accounts Interest and Dividends Gifts Investment Trades Other Due From Other Funds (Note 12) Due From Component Units (Note 12) Interfund Receivable (Note 12) Inventories Prepaid Items Loans and Contracts Other Current Assets Total Current Assets Noncurrent Assets: Restricted: Cash and Cash Equivalents Short-Term Investments Investments Receivables Loans and Contracts Other Loans and Contracts Investments Interfund Receivable (Note 12) Gifts Receivable Capital Assets: (Note 2) Nondepreciable Depreciable Accumulated Depreciation Assets Held in Trust Other Noncurrent Assets Total Noncurrent Assets Total Assets
Colleges and Universities*
Totals
$ 3,431,986 385,672 1,169,640 507,430 308,997 15 426,432 63,732 412,078 55,846 118,373 295,402 1,160,160 639,396 18 14,685 113,407 106,636 95,994 259,721 9,565,620
$ 231,466 726,562
237,611 397,010
$ 3,901,063 1,112,234 1,566,650 3,088,771 711,731 83,197 439,895 63,732 625,517 150,404 118,373 344,991 1,163,010 666,177 18 14,741 128,403 111,467 282,626 259,974 14,832,974
23,175 393,238 70,014
384,933 21,122
2,196,408 381,612 83,182 10,393
3,070 381 37,848 2,331 1,071
210,727 55,639 49,589 2,850 26,663 56 14,996 4,831 54,749 253 3,726,569
96,200 3,598 120 729
118
131,883 1,131,210 409,575
587,074
102,766 45,548 22,887,111 4,876 129,306 8,374 32,284 6,338,806 367,945 260,555 3,079,709 23,693,435 (11,430,582) 362 38,476 45,558,971 55,124,591
2,213 115,000
5,484 4,280,595 131,826 3,270,558 2,399 32,067
3,435,163
110,463 45,548 27,282,706 136,702 3,399,864 10,773 3,499,514 6,338,806 367,945 260,555 5,318,648 24,212,174 (11,489,247) 1,368 96,403 59,592,222 74,425,196
407,818
2,234,780 420,283 (24,088) 45,357 2,793,545 3,203,120
3,435,163 4,566,373
4,159 98,456 (34,577) 1,006 12,570 7,804,543 11,531,112
407,818 994,892
46
STATE OF TEXAS
Statement of Net Assets Proprietary Funds (concluded)

Business-Type Activities Enterprise Funds Texas Texas Water Department of Nonmajor Development Transportation Enterprise Board Funds Turnpike Authority Funds Governmental Activities Internal Service Fund**
LIABILITIES Current Liabilities: Payables: Accounts Payroll Other Intergovernmental Federal Investment Trades Interest Annuities Due To Other Funds (Note 12) Interfund Payable (Note 12) Unearned Revenue Obligations/Securities Lending Claims and Judgments (Note 5) Capital Lease Obligations (Note 5, 7) Employees' Compensable Leave (Note 5) Notes and Loans Payable (Note 5) General Obligation Bonds Payable (Note 5, 6) Revenue Bonds Payable (Note 5, 6) Liabilities Payable From Restricted Assets (Note 5) Funds Held for Others Other Current Liabilities Total Current Liabilities Noncurrent Liabilities: Interfund Payable (Note 12) Claims and Judgments (Note 5) Capital Lease Obligations (Note 5, 7) Employees' Compensable Leave (Note 5) Notes and Loans Payable (Note 5) Liabilities Payable From Restricted Assets (Note 5) General Obligation Bonds Payable (Note 5, 6) Revenue Bonds Payable (Note 5, 6) Assets Held for Others Net OPEB Obligation (Note 11) Other Noncurrent Liabilities Total Noncurrent Liabilities Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for: Education Debt Retirement Capital Projects Veterans Land Board Housing Programs Unemployment Trust Funds Funds Held as Permanent Investments: Nonexpendable Expendable Other Unrestricted Total Net Assets
Totals
$ 1,074,902 578,444 10,194 30,762 1,125,378 3,700 11,658 17,315 2,082,657 1,169,559 95,634 2,541 312,500 1,321,650 6,930 1,402,963
573
10,859
76,051 4,496
10,446 2,896 46,465
2,450 1,690 56,314
61,348 45,782 12,174 16,226 128,754 398,138 126 3,550 71,431 67,090 41,626 498,002
40,320 42,555
$ 1,162,385 582,940 10,194 30,762 1,186,726 62,378 12,174 32,470 17,315 2,314,190 1,567,697 95,634 2,667 316,050 1,393,081 114,340 1,487,144 498,002 107,024 471,621 11,464,794
$ 462,347
77,225 414 70,397
107,024 455,165 9,808,976
143,255
5,637 76,950
10,819 1,435,613
610,383
378,351 59,157 11,426 300,849 138,279
900,000
200 1,796 5,907 2,974,854 1,785,685 2,653,451 1,006 139,808 7,562,707 8,998,320
378,351 59,157 11,626 302,645 1,044,186 2,974,854 2,593,423 11,882,827 722,040 562,987 275,998 20,808,094 32,272,888
44,673 6,441,029 721,034 562,987 136,190 8,793,975 18,602,951
763,065 1,319,612
1,468,735
2,082,677 2,225,932
2,368,735 2,445,685
0 610,383
7,078,895 2,181,416 28,200 230,725
262,240
43,368
7,384,503 2,181,416 212,795 230,725 669,684 1,788,436 10,981,925 8,803,650 14,350 9,884,824 $ 42,152,308
173,245
11,350 669,684 1,788,436
10,981,925 8,803,650 7,216,829 $ 36,521,640 2,340,441 $ 2,340,441 321,950 $ 757,435 14,350 5,604 $ 2,532,792
384,509 $ 384,509
The accompanying notes to the nancial statements are an integral part of this statement. * Other postemployment benets are not legally required to be provided by the state of Texas. The Texas Constitution does not allow the Legislature to impose nancial obligations for a period longer than two years. See Note 11 for additional details. ** Employees life, accident and health insurance benefits fund - no combining statements presented.
47
STATE OF TEXAS
Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds
Business-Type Activities Enterprise Funds Texas Texas Department of Water Transportation Nonmajor Development Turnpike Enterprise Board Funds Authority Funds
OPERATING REVENUES Lottery Collections Tuition Revenue Tuition Revenue - Pledged Discounts and Allowances Hospital Revenue - Pledged Discounts and Allowances Professional Fees Professional Fees - Pledged Discounts and Allowances Auxiliary Enterprises Auxiliary Enterprises - Pledged Discounts and Allowances Unemployment Taxes Other Sales of Goods and Services Other Sales of Goods and Services - Pledged Discounts and Allowances Interest and Investment Income Interest and Investment Income - Pledged Federal Revenue State Grant Revenue Premium Revenue Other Operating Grant Revenue Other Operating Grant Revenue - Pledged Other Revenues Other Revenues - Pledged Total Operating Revenues OPERATING EXPENSES Cost of Goods Sold Salaries and Wages Payroll Related Costs Professional Fees and Services Travel Materials and Supplies Communication and Utilities Repairs and Maintenance Rentals and Leases Printing and Reproduction Depreciation and Amortization Unemployment Benefit Payments Bad Debt Expense Interest Expense Scholarships Lottery Fees and Other Costs Lottery Prize Payments Employee/Participant Benefit Payments Claims and Judgments Net Change in Pension/OPEB Obligations (Note 11) Other Expenses Total Operating Expenses Operating Income (Loss)
Totals
Governmental Activities Internal Service Fund**
$ 574,064 2,866,959 (618,222) 6,185,545 (3,168,917) 3,419,241 13,745 (2,147,973) 58,984 861,476 (28,178) 63,858 472,213 (16,955) 1,624 1,166 1,869,078 159,605 450,088 558,316 27,959 149,741 11,753,417
$ 3,671,884
86,605 1,058,134 15,575 30,825 252,848 154,969
48,945 75,134 101,348
$ 3,671,884 574,064 2,866,959 (618,222) 6,185,545 (3,168,917) 3,419,241 13,745 (2,147,973) 58,984 948,081 (28,178) 1,058,134 79,433 551,983 (16,955) 329,606 102,514 2,024,047 159,605 450,088 558,316 206,367 149,751 17,428,102
1,439,632 1,543
4,108 180,590 48,945
174,300 10 5,445,150
1,441,175
139,043 8,705,945 2,025,415 794,302 259,420 1,597,168 659,593 349,045 200,695 59,277 1,043,420 13,394 363 658,448
6,755 986 1,344 84 116 37 10 49 3
6,329 8,119 1,100 10,909 4 15,882
14 99,024
11
63,421 46,713 11,141 75,436 750 5,813 1,281 1,740 7,981 11,842 5,654 1,464,794 896 202,804 280,918 2,281,125 (26,992)
(574) 562,987 1,086,724 18,154,665 (6,401,248)
2,292 110,714 69,876
24,662 67,016 (18,071)
43,713 4,479,030 966,120
202,464 8,759,413 2,037,542 877,411 260,254 1,611,216 662,011 361,704 208,725 71,126 1,064,956 1,464,794 14,304 302,202 658,448 280,918 2,281,125 (26,992) (574) 562,987 1,157,391 22,811,425 (5,383,323)
4,520 1,124 831 34 605 244 200 365 29
1,460,528
370 1,468,850 (27,675)
48
STATE OF TEXAS
Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds (concluded)
Business-Type Activities Enterprise Funds Texas Texas Department of Water Transportation Nonmajor Development Turnpike Enterprise Board Funds Authority Funds
NONOPERATING REVENUES (EXPENSES) Federal Revenue Gifts Gifts - Pledged Land Income Interest and Investment Income (Loss) Interest and Investment Income - Pledged Loan Premium and Fees on Securities Lending Investing Activities Expense Interest Expense Borrower Rebates and Agent Fees Gain on Sale of Capital Assets Settlement of Claims Claims and Judgments Other Revenues Other Revenues - Pledged Other Expenses Total Nonoperating Revenues (Expenses) Income (Loss) Before Capital Contributions, Endowments and Transfers CAPITAL CONTRIBUTIONS, ENDOWMENTS, SPECIAL ITEMS AND TRANSFERS Capital Contributions - Federal Capital Contributions - Other Contributions to Permanent and Term Endowments Special Items (Note 23) Transfer In (Note 12) Transfer Out (Note 12) Total Capital Contributions, Endowments, Special Items and Transfers Change in Net Assets Net Assets, September 1, 2007 Restatements (Note 14) Net Assets, September 1, 2007, as Restated Net Assets, August 31, 2008
Totals
Governmental Activities Internal Service Fund**
467,596 551,668 119,976 5,472 (380,534) 317,643 (113,431) (294,272) (703) 261 (3,476) 106,314 34,640 (52,349) 758,805
$ 154,623
390 11
13 24,546
96,653 13,642 (18) (3,462) (10,927) 9 6 (107) (11,742) (684) 83,771
(96,776)
34 (2,147) 152,476 (487) (72,670)
622,609 551,679 119,976 5,485 (259,335) 317,643 13,642 (113,449) (394,510) (11,630) 270 6 (3,583) 94,606 34,640 (55,667) 922,382
41,543 3,001
(2,413) 140
42,271
(5,642,443)
222,352
(90,741)
1,049,891
(4,460,941)
14,596
27,412 222,797 167,692 5,414,776 (480,462) 5,352,215 (290,228) 36,835,169 (23,301) 36,811,868 $ 36,521,640 4,235 (9,846) (5,611) 216,741 2,123,700 2,123,700 $ 2,340,441
(4,102)
(110)
27,412 218,585 167,692 (150,026) 5,482,958 (1,573,465) 4,173,156 (287,785) 42,898,608 (458,515) 42,440,093 $ 42,152,308 0 14,596 369,913 369,913 $ 384,509
46,826
(150,026) 17,121 (1,083,157) (1,216,172) (166,281) 3,134,287 (435,214) 2,699,073 $ 2,532,792
42,724 (48,017) 805,452 805,452 $ 757,435
The accompanying notes to the financial statements are an integral part of this statement. * Other postemployment benefits are not legally required to be provided by the state of Texas. The Texas Constitution does not allow the Legislature to impose financial obligations for a period longer than two years. See Note 11 for additional details. ** Employees life, accident and health insurance benefits fund - no combining statements presented.
49
STATE OF TEXAS
Statement of Cash Flows Proprietary Funds

Business-Type Activities Enterprise Funds Texas Texas Water Department of Nonmajor Development Transportation Enterprise Board Funds Turnpike Authority Funds
CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Customers Proceeds from Tuition and Fees Proceeds from Research Grants and Contracts Proceeds from Gifts Proceeds from Loan Programs Proceeds from Auxiliaries Proceeds from Other Revenues Payments to Suppliers for Goods and Services Payments to Employees Payments for Loans Provided Payments for Other Expenses Net Cash Provided by Operating Activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Proceeds from Debt Issuance Proceeds from State Appropriations Proceeds from Gifts Proceeds from Endowments Proceeds from Transfers from Other Funds Proceeds from Grant Receipts Proceeds of Advances from Other Funds Proceeds from Other Financing Activities Payments of Principal on Debt Issuance Payments of Interest Payments of Other Costs on Debt Issuance Payments for Transfers to Other Funds Payments for Grant Disbursements Payments for Advances to Other Funds Payments for Other Uses Net Cash Provided by Noncapital Financing Activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from Sale of Capital Assets Proceeds from Debt Issuance Proceeds from State Grants and Contracts Proceeds from Federal Grants and Contracts Proceeds from Gifts Proceeds from Other Financing Activities Proceeds from Capital Contributions Proceeds of Advances from Other Funds Payments for Additions to Capital Assets Payments of Principal on Debt Issuance Payments for Capital Leases Payments of Interest on Debt Issuance Payments of Other Costs on Debt Issuance Net Cash Provided by Capital and Related Financing Activities
Colleges and Universities
Totals
Governmental Activities Internal Service Fund*
$ 4,436,991 2,881,699 3,145,641 12,364 175,416 892,404 541,958 (4,753,295) (10,576,037) (195,354) (716,022) (4,154,235)
$ 84,764
$ 5,027,270 131,114 798,396 107,348 (489,286) (56,449) (721,483) (3,909,893) 887,017
(1,564) (7,716) (81) (9,361)
(53,236)
(28,761) 2,767
$ 9,549,025 2,881,699 3,276,755 12,364 973,812 892,404 649,306 (5,297,381) (10,640,202) (916,837) (4,654,757) (3,273,812)
$ 365,828
1,113,683 (34,034) (5,914) (1,427,456) 12,107
4,258,402 581,063 217,933 683,136 463,151 78,627 (218) (118) (10) (585,087) (76) (21) (527,977) 5,168,805
622,360 3,735
352,818
223,471 153,803 40,572 (115,036) (104,883) (177) (340,916) (10,041) (55,520)
4,570,222
338,922 (653,314) (211,215) (1,669) (5,835,359)
(171,590) 417,368 0 (1,611,185)
975,178 4,262,137 581,063 217,933 5,476,829 616,954 40,572 417,549 (768,568) (316,216) (1,856) (6,761,362) (10,117) (55,541) (699,567) 3,974,988 0
2,987 2,749,808 22,092 2,735 11,960 3,366 254,554 64,171 (2,294,549) (1,646,011) (353) (302,262) (57,411) (1,188,913) 0
775,070
12
517
(89,130) (775,070) (93,362) (487) (182,967)
(2,034) (330) (1,480) (286) (3,613)
2,987 3,524,878 22,092 2,735 11,960 3,895 254,554 64,171 (2,385,713) (2,421,411) (353) (397,104) (58,184) (1,375,493) 0
50
STATE OF TEXAS
Statement of Cash Flows Proprietary Funds (concluded)

Business-Type Activities Enterprise Funds Texas Texas Water Department of Nonmajor Development Transportation Enterprise Board Funds Turnpike Authority Funds
CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sale of Investments Proceeds from Interest and Investment Income Proceeds from Principal Payments on Loans Payments for Nonprogram Loans Provided Payments to Acquire Investments Net Cash Provided by Investing Activities Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents, September 1, 2007 Restatements Cash and Cash Equivalents, September 1, 2007, as Restated Cash and Cash Equivalents, August 31, 2008 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating Income (Loss) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by Operating Activities: Depreciation and Amortization Bad Debt Expense Operating Income (Loss) and Cash Flow Categories Classification Differences Changes in Assets and Liabilities: (Increase) Decrease in Receivables (Increase) Decrease in Due From Other Funds (Increase) Decrease in Inventories (Increase) Decrease in Notes Receivable (Increase) Decrease in Loans and Contracts (Increase) Decrease in Other Assets (Increase) Decrease in Prepaid Expenses (Increase) Decrease in State Appropriations Increase (Decrease) in Payables Increase (Decrease) in Deposits Increase (Decrease) in Due To Other Funds Increase (Decrease) in Unearned Revenue Increase (Decrease) in Compensated Absence Liability Increase (Decrease) in Benefits Payable Increase (Decrease) in Other Liabilities Total Adjustments Net Cash Provided by Operating Activities NONCASH TRANSACTIONS Net Change in Fair Value of Investments Donation of Capital Assets Borrowing Under Capital Lease Purchase Other
Colleges and Universities
Totals
Governmental Activities Internal Service Fund*
$ 34,415,345 1,468,869 53 (35,268,423) 615,844
$ 169,664 189,626 (560,162) (226,729) (427,601)
$ 138,419 27,357
$ 3,234,305 262,253 (6) (3,097,241) 399,311
(60,000) 105,776
$ 37,788,069 1,928,143 189,679 (560,168) (38,652,393) 693,330
$ 1,553
(22,097) (20,544)
441,501 3,601,965 (1,284) 3,600,681 $ 4,042,182
(19,594) 251,060
(74,424) 461,570
(328,470) 3,265,342 (497,369) 2,767,973 $ 2,439,503
19,013 7,579,937 (498,653) 7,081,284 $ 7,100,297 $
(8,437) 31,666 (54) 31,612 23,175
251,060 $ 231,466
461,570 $ 387,146
$ (6,401,248)
$ 69,876
$ (18,071)
$ 966,120
$ (5,383,323)
$ (27,675)
1,043,420 251,355 (4,509) (467,650) (7,300) (2,776) 493 (12,296) (12,958) (54,812) (8,647) 607,901 2,911 464 180,539 34,815 560,515 135,548 2,247,013 $ (4,154,235)
15,882 14 (79,193) (165) 5,096
5,654 865 104,148 161,255 (510) (19,988) 30,574 (43)
1,064,956 252,234 20,446 (306,560) (2,204) (3,286) 493 (32,284) 17,616 (54,855) (8,647) 421,313 2,911 462 228,779 34,850 560,515 (87,228) 2,109,511 $ (3,273,812) $ 24 1,658 1,021
(29) (29)
(2,759)
(183,800) 27 45,456 35 (222,776) (79,103) $ 887,017
33,072 3,973 34
2,784
(79,237) $ (9,361) $
20,838 2,767
39,782 12,107
$ (2,040,292) $ 93,875 $ 3,865 $ (27,914)
$ $ $ $
(161)
$ $ $ $
(152)
$ $ $ $
(71,554)
(2,197)
$ (2,112,159) $ 93,875 $ 3,865 $ (30,111)
$ $ $ $
4,560
The accompanying notes to the nancial statements are an integral part of this statement. * Employees life, accident and health insurance benets fund no combining statements presented.
51
STATE OF TEXAS
Statement of Fiduciary Net Assets

Pension and Other Employee Benefit Trust Funds External Investment Trust Fund* PrivatePurpose Trust Funds Agency Funds
ASSETS Cash and Cash Equivalents Restricted Cash and Cash Equivalents Securities Lending Collateral Investments: U.S. Government Corporate Equity Corporate Obligations Repurchase Agreements Foreign Securities Other Receivables: Interest and Dividends Accounts Other Intergovernmental Investment Trades Other Due From Other Funds (Note 12) Inventories Properties, at Cost, Net of Accumulated Depreciation Other Assets Total Assets LIABILITIES Payables: Accounts Investment Trades Payroll Other Intergovernmental Interest Annuities Due To Other Funds (Note 12) Unearned Revenue Employees Compensable Leave Obligations/Securities Lending Funds Held for Others Other Liabilities Total Liabilities NET ASSETS Held in Trust for: Pension Benefits and Other Purposes Individuals, Organizations and Other Governments Pool Participants Total Net Assets
$ 15,186,834 25,617,840 16,676,380 42,348,632 7,268,078 880,995 27,372,544 18,406,989 450,957 238,777 130,475 384 247,715
666,035
44,412 789 32,763 21,206 738,607 82,319 568,246 1,601,335 3,148 334 1,574 1,708 32 1 997 76,470
1,154,730
8,124,776
8,556,171 47,406 19,237
324,462 160,239 125 47,676 26,212 1,159 8,525 1,338 8 1,332
35,477 250 154,862,327 17,413,625
1,875,464 3,601,270
3,173,941
257,085 308,711 105
37,792
14,974 2,772
22
791,720 44 520,293 40,128 28,872 6,313 26,004,315 751 27,165,822 38,543 414 176 32,763 76,469 39 127,237
2,809,114
3,601,270
127,696,505 3,046,704 17,375,082 $ 127,696,505 $ 17,375,082 $ 3,046,704 $ 0
The accompanying notes to the financial statements are an integral part of this statement. * Texas Government Investment Pool (TexPool) Trust Fund - no combining statements presented.
52
STATE OF TEXAS
Statement of Changes in Fiduciary Net Assets

Pension and Other Employee Benefit Trust Funds External Investment Trust Fund* PrivatePurpose Trust Funds
ADDITIONS Contributions: Member Contributions State Contributions Premium Contributions Federal Contributions Other Contributions Total Contributions Investment Income: From Investing Activities: Net Depreciation in Fair Value of Investments Interest and Investment Income Total Investing Income (Loss) Less Investing Activities Expense Net Income (Loss) from Investing Activities From Securities Lending Activities: Securities Lending Income Less Securities Lending Expense: Borrower Rebates Management Fees Net Income from Securities Lending Total Net Investment Income (Loss) Capital Share and Individual Account Transactions: Net Increase in Participant Investments Other Additions: Settlement of Claims Other Revenue Loss on Sale of Properties Transfer In (Note 12) Total Other Additions Total Additions DEDUCTIONS Benefits Refunds of Contributions Transfer Out (Note 12) Intergovernmental Payments Administrative Expenses Depreciation Expense Settlement of Claims Interest Expense Other Expenses Total Deductions INCREASE (DECREASE) IN NET ASSETS NET ASSETS Net Assets, September 1, 2007 Net Assets, August 31, 2008
2,505,049 2,571,286 761,545 92,450 516,148 6,446,478
13,760 84,029 97,789
(10,594,741) 4,100,248 (6,494,493) 63,490 (6,557,983)
716,731 716,731 10,293 706,438
(194,237) 52,662 (141,575) 1,021 (142,596)
1,189,074 901,754 39,676 247,644 (6,310,339)
2,155 2,000 0 706,438 155 (142,441)
215,661
25 1,052 (10) 99,803 100,870 237,009
3,403 258,985 10 262,398 217,746
0 922,099
9,340,614 350,060 62,319 49,659 1,106 140 2,994 9,806,892 (9,569,883) 0 922,099
56,427 1,754 96,649 7,252 39 57,440 21 234,065 453,647 (235,901)
137,266,388 $ 127,696,505
16,452,983 $ 17,375,082 $
3,282,605 3,046,704
The accompanying notes to the financial statements are an integral part of this statement. * Texas Government Investment Pool (TexPool) Trust Fund - no combining statements presented.
53
54
State of Texas Index for Notes to Financial Statements

NOTE 1 Summary of Significant Accounting Policies . . . . . . . . . . . . . . . . . NOTE 2 Capital Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTE 3 Deposits, Investments and Repurchase Agreements. . . . . . . . . . . . NOTE 4 Short-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTE 5 Long-Term Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTE 6 Bonded Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTE 7 Capital Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTE 8 Operating Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTE 9 Retirement Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTE 10 Deferred Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTE 11 Postemployment Health Care and Life Insurance Benefits. . . . . . . NOTE 12 Interfund Activity and Transactions . . . . . . . . . . . . . . . . . . . . . . . . NOTE 13 Fund Balances/Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTE 14 Adjustments to Fund Balances/Net Assets . . . . . . . . . . . . . . . . . . . NOTE 15 Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTE 16 Subsequent Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTE 17 Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTE 18 Contested Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTE 19 Component Units and Related Organizations . . . . . . . . . . . . . . . . . NOTE 20 Deficit Fund Balances/Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . NOTE 21 Tobacco Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTE 22 Donor-Restricted Endowments . . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTE 23 Extraordinary and Special Items . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTE 24 Taxes Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTE 25 Termination Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NOTE 26 Segment Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 57 65 68 81 82 83 106 107 107 116 116 120 124 126 127 128 132 133 133 137 138 138 139 139 140 140
55
56
Note 1
Summary of Significant Accounting Policies
BASIS OF PRESENTATION
state of Texas have been prepared in conformity with The accompanying basic financial statements of the
that do not conflict with or contradict GASB pronounceare not followed in the preparation of the accompanying financial statements.
ments. FASB pronouncements issued after Nov. 30, 1989,
FINANCIAL REPORTING ENTITY

included all funds, agencies, boards, commissions, authorities, colleges and universities and other organizations that comprise its legal entity. The reporting entity also includes legally separate organizations for which the state is financially accountable and any other organizations that would cause the financial statements to be misleading or incomplete if they were excluded. All activities considered part of the state are included. These activities provide a range For financial reporting purposes, the state of Texas has
generally accepted accounting principles (GAAP) as pre(GASB).
scribed by the Governmental Accounting Standards Board The state implemented the following GASB StateGASB Statement No. 45, Accounting and Financial
ments and GASB Technical Bulletin in fiscal 2008.
Reporting by Employers for Postemployment Benefits
Other Than Pensions, was implemented. This statement establishes standards for items reported in the financial reports of state and local governmental employers that
of services in the areas of education, health and human services, public safety and corrections, transportation, natural resources and recreation, regulation, general government, employee benefits and teacher retirement benefits. The reporting entity for the state is in accordance
provide other postemployment benefits (OPEB) to retirees. efits such as life insurance when provided separately from a pension plan.
OPEB includes post employment healthcare and other ben-
with the criteria established by GASB. A listing and brief
ables and Future Revenues and Intra-Entity Transfers of ment provides guidance on accounting for collateralized GASB Statement No. 50, Pension Disclosures, was
GASB Statement No. 48, Sales and Pledges of Receiv-
summary of the component units and their relationship to
the state of Texas is discussed in Note 19. These financial ment) and its component units.
Assets and Future Revenues, was implemented. This stateborrowings and sales of future revenues and receivables. implemented. This statement brings pension disclosures ment plans.
statements present the state of Texas (the primary governThe states public school districts and junior and com-
munity colleges are excluded from the reporting entity. The state is not financially accountable for these entities. They are legally separate entities that are fiscally independent of the state. This independence warrants their exclusion from the financial statements.
into alignment with those required for other postemployGASB Technical Bulletin 2004-2, Recognition of
Pension and other Postemployment Benefit Expenditures/ Expense and Liabilities by Cost-Sharing Employers, was implemented. This bulletin clarifies recognition requirements for cost-sharing employers related to pension and OPEB plans. Financial reporting for the state is based on all
FINANCIAL REPORTING STRUCTURE

ment-wide financial statements and fund financial stateThe basic financial statements include both govern-
ments. The reporting model based on GASB Statement No. 34, Basic Financial Statements - and Managements Discussion and Analysis - for State and Local Governments, focuses on the state as a whole in the government-wide financial statements.
GASB pronouncements, as well as Financial Accounting Standards Board (FASB) statements and interpretations, Accounting Principles Board (APB) opinions and Accounting Research Bulletins issued on or before Nov. 30, 1989,
financial statements and major individual funds in the fund
57
Government-wide Financial Statements of net assets and statement of activities) display informafinancial position resulting from the activities of the fisThe government-wide financial statements (statement
Multipurpose grants that do not provide for specific identification of the programs and amounts are reported as general revenues. The states fiduciary funds are presented in the fund
tion about the state as a whole and the change in aggregate cal period, except for its fiduciary activities. These state-
financial statements by type (pension and other employee
ments include separate columns for the governmental and business-type activities of the state (including its blended component units) as well as its discretely presented component units. In the statement of net assets, both the governon a consolidated basis by column and are reflected on a mental and business-type activities columns are presented full accrual, economic resource basis, which incorporates debt and obligations.
benefit trust, investment trust, private-purpose and agency). The assets of the fiduciary funds are held for the benefit of others and cannot be used to address activities or obligarated into the government-wide financial statements. Fund Financial Statements government-wide financial statements. They display inforfor governmental and proprietary funds. In governmental and fiduciary funds, assets and liabilities are presented in order of relative liquidity. In proprietary funds, assets The fund financial statements are presented after the tions of the government. They are not, therefore, incorpo-
noncurrent investments, capital assets as well as long-term The statement of activities reflects both the gross and
mation about major funds individually and in the aggregate
net cost per functional category (public safety, transportation, etc.), which is otherwise supported by general government revenues (sales, use, franchise taxes, etc.). In the program expenses, which include depreciation, to present the net cost of each program. Program revenues must be directly associated with the function or with a businesstype activity. Internally dedicated resources are reported
statement of activities, program revenues are netted against
and liabilities are presented in a classified format that distinguishes between all current and noncurrent assets and considered available for appropriation and expenditure. liabilities. Current assets in the classified format are those Examples of expendable financial resources include cash, various receivables and short-term investments. All other assets are considered noncurrent. Current liabilities are include payables and the current portion of long-term liabilities.
as general revenues rather than program revenues. Certain been charged to the various functions of the state. These
general government administrative overhead expenses have charges are paid from applicable funding sources and are expense included in direct expenses in the statement of activities is $53.9 million.
obligations to be paid within the next fiscal year. Examples
reflected as direct expenses. The amount of direct interest
statements are presented on a current financial resource and modified accrual basis of accounting. This presentation is deemed most appropriate to demonstrate (a) compliance use of financial resources and (c) how the states actual with legal and covenant requirements, (b) the source and experience conforms to the budget. Since the governmental fund financial statements are presented using a different measurement focus and basis of accounting than the govcolumn, a reconciliation is presented. This explains the
The major governmental funds in the fund financial
operating grants and contributions and (c) capital grants and contributions. Charges for services include special
Program revenues include (a) charges for services, (b)
assessments and payments made by parties outside of the states citizenry if that money is restricted to a particular program. Operating grants include operating-specific and
discretionary (either operating or capital) grants while the tipurpose grants that provide financing for more than one program are reported as program revenue if the amounts restricted to each program are specifically identifiable.
capital grants column reflects capital-specific grants. Mul-
ernment-wide financial statements, governmental activities adjustments required to restate the fund-based financial governmental activities column.
statements for the government-wide financial statements
58
the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities. A fund is a separate accountactions are recorded in the fund types described below. Governmental Fund Types funds. Included in the governmental fund financial statements are general, special revenue, debt service, capital Governmental funds focus on the sources and uses of
The state uses funds to report its financial position and
Proprietary Fund Types income, changes in net assets, financial position and cash flows. Generally accepted accounting principles similar to those used by private sector businesses are applied in financial statements are enterprise funds and an internal service fund. Enterprise funds are used to report any activity for Proprietary funds focus on determining operating
ing entity with a self-balancing set of accounts. State trans-
accounting for these funds. Included in proprietary fund
which a fee is charged to external users for goods or serone of the following criteria is met:
vices. Activities must be reported as enterprise funds if any The activity is financed with debt that is secured solely by a pledge of the net revenues from fees and charges of the activity, Laws or regulations require that the activitys costs
projects and permanent funds. The general fund is the principal operating fund used to account for most of the states general activities. It accounts for all financial resources except those accounted for in other funds. Special revenue
funds account for specific revenue proceeds that are legally restricted for specific purposes. Debt service funds account for the accumulation of resources for and the payment of general long-term debt principal and interest. Capital acquisition, repair, renovation or construction of major
of providing services, including capital costs (such as depreciation or debt service), be recovered with fees and charges, or
projects funds account for financial resources used for the capital facilities other than those financed by proprietary
The pricing policies of the activity establish fees and costs.
charges designed to recover its costs, including capital Internal service funds account for the financing of
or similar trust funds. Permanent funds are used to report
resources that are legally restricted to the extent that only support the states programs.
goods or services provided by one agency to other agencies on a cost reimbursement basis. The employees life, accident and health insurance benefits fund, presented on the
earnings, and not principal, may be used for purposes that The states major governmental funds are listed below. The General Fund includes transactions for general
proprietary fund financial statements, is used to account for the services provided by the Group Insurance Program to other agencies of the reporting entity. The states major enterprise funds are listed below. The Colleges and Universities include University
government, education, employee benefits, teacher retire-
ment benefits, health and human services, public safety and corrections, transportation, natural resources and recreation and regulatory services. The State Highway Fund receives funds allocated by
of Texas System, Texas A&M University System, Texas
Tech University System, University of Houston System, System, Texas Womans University, Stephen F. Austin
law for public road construction, maintenance, monitoring and law enforcement of the states highway system. The Permanent School Fund is an investment fund
Texas State University System, University of North Texas State University, Texas Southern University, Midwestern
consisting of land and proceeds from the sale of land that lic schools of Texas. All dividends and other income are allocated to the credit of the available school fund.
State University and Texas State Technical College. They financial statements and individually in the schedules of mation section of this report.
establishes a perpetual provision for the support of the pub-
are represented as a single column in the proprietary fund colleges and universities in the other supplementary infor-
59
water development funds, agricultural water conservation bonds to provide assistance to political subdivisions.
The Texas Water Development Board funds include
is available from the component units separately issued financial statements.
funds and water pollution control revolving funds that issue The Texas Department of Transportation Turn-
pike Authority receives proceeds from the sale of bonds designing, engineering, developing and constructing the Central Texas Turnpike System. Fiduciary Fund Types
BASIS OF ACCOUNTING, MEASUREMENT FOCUS AND FINANCIAL STATEMENT PRESENTATION

using the economic resources measurement focus and the Government-wide financial statements are presented
that are used to finance a portion of the costs of planning, initial phase (referred to as the FY2002 Project) of the
accrual basis of accounting. Under the economic resources of the reporting government, both current and noncurrent, are reported in the government-wide financial statements.
measurement focus, all economic resources and obligations
either a trustee capacity or as an agent for individuals, private organizations, other governmental units and/or other funds. When assets are held under the terms of a formal trust agreement, either a pension trust fund or a privatepurpose trust fund is used.
Fiduciary funds account for assets held by the state in
Under the accrual basis of accounting, revenues, expenses, gains, losses, assets and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses,
assets and liabilities resulting from non-exchange transactions are recognized in accordance with GASB Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions. The accounting and financial reporting treatment
resources held in trust for the members and beneficiaries of pension trust funds can be found in Note 9.
Pension and other employee benefit trust funds report
defined benefit pension plans. Additional information about Investment trust funds report the external portions of Private-purpose trust funds report all other trust
applied to a fund is determined by its measurement focus. Governmental funds use the flow of current financial resources measurement focus and the modified accrual
investment pools reported by the sponsoring government. arrangements whose principal and interest benefit individuals, private organizations or other governments. Agency funds report assets the state holds on behalf
basis of accounting. With this measurement focus, only current assets and current liabilities are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. All governmental funds use the modified accrual
of others in a purely custodial capacity. Agency funds involve only the receipt and remittance of fiduciary governments.
resources to individuals, private organizations or other
basis of accounting. Under the modified accrual basis of they become both measurable and available to finance
accounting, revenues are recognized in the period in which operations of the fiscal year or liquidate liabilities existing at fiscal year end. The state of Texas considers all major revenue reported in the governmental funds to be available if the revenues are due at year end and collected within 60 days thereafter. Under the modified accrual basis of accounting,
Component Units reported as nonmajor component units. The combining All of the component units for the state of Texas are
statement of net assets - component units and the combinfor all of the discrete component units.
ing statement of activities - component units are presented Additional information about blended and discretely
presented component units can be found in Note 19. More detailed information of the individual component units
as used in the governmental fund financial statements,
a receivable that is not expected to be collected within
60
60 days is not available to liquidate the liabilities of the Deferred revenue also includes unearned revenue when cash or other assets are received prior to being earned.
current period and will be reported as deferred revenue.
presents the original budget, the final budget and the actual activity of the major governmental funds. Reconciliations for the general fund and the state highway fund budgetary basis to the GAAP basis are presented as required supplementary information with explanations of the reconciling funds is presented as other supplementary information. Cash and Cash Equivalents hand, cash in transit, cash in local banks, cash in the Federal and State Treasuries and cash equivalents. Cash in local benefit trust funds, enterprise funds and component units. by the Treasury Operations Division of the Comptrollers office. Interest earned is deposited in the general revenue fund and specified funds designated by law. The statement of cash flows for proprietary funds banks is primarily held by special revenue funds, employee Cash balances of most state funds are pooled and invested For reporting purposes, this account includes cash on items. Budgetary information for nonmajor governmental
the government-wide statements, proprietary fund state-
Under the full accrual basis of accounting, as used in
ments, and fiduciary fund statements, unearned revenue is before the revenue recognition criteria are met.
recorded when cash or other assets are collected in advance Expenditures and other uses of financial resources are
recognized when the related liability is incurred. Although agency funds use the accrual basis of accounting, they do nize revenues and expenditures. not have a measurement focus because they do not recogAmounts paid to acquire capital assets are capital-
ized as assets in the government-wide financial statements debt are recorded as liabilities in the government-wide
rather than reported as expenditures. Proceeds of long-term financial statements rather than as other financing sources. are reported as reductions of the related liabilities rather
Amounts paid to reduce long-term indebtedness of the state than as expenditures. Proprietary fund types, pension and
shows the change in cash and cash equivalents during the fiscal year. Cash equivalents are defined as short-term, highly liquid investments that are both (a) readily convertible to known amounts of cash and (b) so near maturity they present insignificant risk of changes in value due
other employee benefit trust funds, investment trust funds
and private-purpose trust funds are reported on the accrual
basis of accounting. Under the accrual basis of accounting, ognized at the time liabilities are incurred.
revenues are recognized when earned and expenses are recProprietary funds distinguish operating from nonoper-
to changes in interest rates. Investments with an original
maturity of three months or less and that are used for cash
management rather than investing activities are considered securities lending are not included as cash equivalents on the statement of cash flows. Investments sheet or other statement of financial position. Fair value Investments are reported at fair value in the balance
ating items. Operating revenues and expenses result from providing services or producing and delivering goods in connection with the proprietary funds principal ongoing
cash equivalents. Restricted securities held as collateral for
operations. Operating expenses for enterprise and internal
service funds include the cost of sales and services, administrative expenses and depreciation on capital assets. Revas nonoperating revenues and expenses. Budgetary Information the budgetary comparison schedule are in the required supand Analysis section. The budgetary comparison schedule The budgetary comparison schedule and the notes to enues and expenses not meeting this definition are reported
is the amount at which an investment could be exchanged in a current transaction between willing parties other than in a forced or liquidation sale or through consultation
with industry advisors. Certain money market investments may be reported at amortized cost provided the investment has a remaining maturity of one year or less at time the fair value of investments, is recognized as revenue in
plementary information other than Management Discussion
of purchase. All investment income, including changes in
61
the operating statement or statement of activities. The distribution to the available school fund is based on the total return based formula methodology discussed in Note 22. fund is $716.5 million. The objective, significant terms be found in Note 3. The amount of transfers allocated to the available school and risks of derivative investments at Aug. 31, 2008, can
periods and are recorded in both government-wide financial statements and fund financial statements. Restricted Assets restricted by legal or contractual requirements. These assets include certain proceeds of enterprise fund general obligation and revenue bonds, as well as certain revenues, set in reserve for guaranteed student loan defaults are also included. Restricted assets include monies or other resources
Receivables and Payables business-type activities are taxes and investment trade, The major receivables for governmental activities and
aside for statutory or contractual requirements. Assets held
respectively. See Note 24 for details on taxes receivable. All receivables are shown net of uncollectible amounts. Other receivables consist primarily of food stamp and
Capital Assets funds and government-wide financial statements. The capiCapital assets are reported in proprietary funds, trust
nutrition assistance program receivables in the general fund and receivables from private sponsored programs in the colleges and universities fund. Activities between funds
talization threshold and the estimated useful life of the assets vary depending upon the asset type. Note 2 includes a chart identifying the capitalization threshold and the estimated useful life by asset type. It also provides information on the states depreciation policy and other detailed information. that reflects a reasonable value of the asset and cost GASB 34 allows an alternative (modified) approach
that represent lending/borrowing arrangements outstanding at the end of the fiscal year are interfund loans. All other outstanding balances between funds are reported as due
from/due to other funds. Any residual balances between
governmental and business-type activities are reported in ances.
the government-wide financial statements as internal balNoncurrent interfund receivables between funds, as
required to maintain the service potential at established
minimum standards in lieu of depreciation. The state has elected to use this option for its highway infrastructure. The state has developed and implemented an asset man-
shown in Note 12, are reported as a fund balance reserve
account in applicable governmental funds to indicate they financial resources.
are not available for appropriation and are not expendable Trade receivables are reported for sales of investments
agement system that establishes minimum standards and
makes a yearly determination whether the minimum stan-
dards are being met. Disclosures of the minimum standards and the current status of the states system of highways are included in the required supplementary information other than MD&A section of this report. Long-Term Liabilities assets requires two components (a) the amount due in one year (current) and (b) the amount due in more than one year (noncurrent). Reporting long-term liabilities in the statement of net
pending settlement. Trade payables are purchases of investments pending settlement.
Inventories and Prepaid Items hand for sale and consumable inventories. Inventories are The consumption method of accounting is used to Inventories include both merchandise inventories on
valued at cost generally utilizing the last-in, first-out method. account for inventories that appear in both governmenexpensed when the items are consumed. Prepaid items
tal and proprietary fund types. The cost of these items is reflect payments for costs applicable to future accounting
portion of capital lease obligations, compensable leave, claims and judgments and other noncurrent liabilities.
General long-term liabilities consist of the noncurrent
General long-term liabilities are not reported as liabilities
62
in governmental funds but are reported in the governmental activities column in the government-wide statement of net assets. The state reports rebatable arbitrage in claims and judgments. General long-term debt is not limited to noncurrent liabilities on lease-purchase agreements and recorded in governmental funds.
hours per month depending on years of employment. The the next fiscal year ranges from 180 hours to 532 hours based on years of service.
maximum number of hours that can be carried forward to
liabilities arising from debt issuances but may also include other commitments that are not current liabilities properly In the government-wide financial statements and pro-
and state laws, can be accumulated in lieu of immediate
Overtime, under the federal Fair Labor Standards Act
payment as compensatory leave (at one-and-one-half hours for each overtime hour worked) for nonexempt, nonemerexceeding 240 hours must be paid with the next regular payroll. At termination or death, all overtime balances gency employees to a maximum of 240 hours. All overtime
prietary fund financial statements, bond premiums and
discounts, as well as issuance costs, are deferred and amoreffective interest method. Bonds payable are reported net
tized over the life of the bonds using the straight-line or the of the applicable bond premium or discount. Deferred issuance costs are reported as deferred charges and amortized over the term of the debt. In the governmental fund financial statements, bond
must be paid in full. For emergency personnel (firefight-
ers, law enforcement, prison officers, etc.), overtime can be accumulated to a maximum of 480 hours. Unpaid overtime must be included in the calculation of current and noncurcompensatory time or be paid. rent liabilities for each employee since it may be used like Compensatory leave is allowed for exempt employ-
premiums and discounts, as well as bond issuance costs, of the debt issued is reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld service expenditures.
are recognized during the current period. The face amount
ees not eligible for overtime pay. This leave is accumu-
lated on an hour-for-hour basis and must be taken within one year from date earned or it lapses. There is no death or termination benefit for compensatory leave and it is rent liability.
from the actual debt proceeds received, are reported as debt
nontransferable. Compensatory leave is reported as a curSick leave is accrued at a rate of eight hours per month
Employees Compensable Leave Balances Absences, establishes standards of accounting and reporting for compensated absences (vacation, unpaid overtime and sick leave) by state and local governmental entities. GASB 34 requires governments to report and disclose the portion statement date. of compensated absences that is due within one year of the Annual leave, commonly referred to as vacation leave, GASB Statement No. 16, Accounting for Compensated
with no limit on the amount that can be carried forward at employee termination, although an employees estate may be paid for one-half of the accumulated sick leave
to the next fiscal year. Accumulated sick leave is not paid
to a maximum of 336 hours. A member who retires based
on service or a disability is entitled to service credit in the retirement system for unused sick leave on the last day of employment. The maximum amount of the states contin-
and other compensated absences with similar characteristics is accrued as a liability as the benefits are earned by
gent obligation for sick leave has not been determined. The probability of a material impact on state operations in any given fiscal year is considered remote. Capital Lease Obligations by current resources, represent the liability for future lease payments under capital lease contracts. Note 7 provides details for capital lease obligations. Capital lease contracts payable, which are not funded
the employee if both the employees right to receive compensation is attributable to services already rendered and for the benefits through paid time off or some other it is probable the employer will compensate the employee means, such as cash payments at termination or retirement. Employees accrue vacation time at a rate of eight to 21
63
Encumbrances unperformed contracts for goods or services. Encumbrance accounting is utilized in the governmental funds. Encumof fund balances and do not constitute expenditures or the subsequent year or years. Net Assets of capital assets including restricted capital assets, net of Invested in capital assets, net of related debt consists brances outstanding at year end are reported as reservations liabilities because the commitments will be honored during Encumbrances represent commitments related to
resources first and then unrestricted resources as they are needed. Fund balance reserve and designated fund balances for
governmental funds are classified to reserved, unreserved/ ances are (a) funds legally segregated for a specific use or
designated or unreserved/undesignated. Reserved fund bal(b) assets that, by their nature, are not available for expenable for appropriation for the general purposes. Designa-
diture. Unreserved fund balances reflect the balances availtions reflect senior managements self-imposed limitations presents disaggregated fund balances.
on the use of available current financial resources. Note 13
accumulated depreciation and reduced by the outstanding able to the acquisition, construction or improvement of
balances of bonds, mortgages, notes or other debt attributsuch assets. Significant unspent related debt proceeds are net of related debt. The unspent portion of the debt is included in restricted for capital projects.
Interfund Activity and Transactions Government-wide Financial Statements terms and definitions for interfund activity and modified requirements for reporting transfers. Interfund Activity GASB 34 established a classification system with
not included in the calculation of invested in capital assets,
straints placed on net assets are (a) externally imposed by creditors, grantors, contributors or laws or regulations of other governments or (b) imposed by law through constitutional provisions or enabling legislation. Enabling legislation authorizes the government to assess, levy,
The state reports net assets as restricted when con-
been eliminated from the government-wide financial state-
As a general rule, the effect of interfund activity has
ments with the exception of activities between governmental activities and business-type activities. Interfund activity with fiduciary funds has been reclassified and reported as external activity.
charge or otherwise mandate payment of resources (from
external resource providers) and includes a legally enforceable requirement that those resources be used only for the specific purposes stipulated in the legislation. Restricted net assets are designated as either expendable or nonex-
ed from the statement of net assets except for amounts due between governmental and business-type activities. These amounts are reported as internal balances on the statement
Interfund payables and receivables have been eliminat-
pendable. Expendable restricted net assets are those funds that may be expended for either a stated purpose or for a general purpose subject to externally imposed stipulations. required to be retained in perpetuity. Restricted net assets externally imposed restrictions governing their use.
of net assets. Interfund activities between the primary government and component units with a different year end are limited and immaterial. Note 12 provides details of interfund activities and transactions. Interfund Transactions
Nonexpendable restricted net assets are those funds that are include the states permanent endowment funds subject to Unrestricted net assets consist of net assets that do
ponent units have been reclassified and reported as external activity.
Interfund transactions with discretely presented com-
not meet the definition of invested in capital assets, net of related debt or restricted net assets. When both restricted and unrestricted net assets are
Risk Financing ance and a self-insurance program. The state is self-insured The state maintains a combination of commercial insur-
available for use, it is the states policy to use restricted
for workers compensation and unemployment compensation
64
claims and funds the liabilities on a pay-as-you-go basis.
The states group insurance program is provided through a and health maintenance organization contracts.
combination of insurance contracts, a self-funded health plan Liabilities are reported when it is probable that a loss
interests are incomplete or not available. Accordingly, historical costs have been estimated. The effect on the finanestimates is not considered material. cial statements of any error resulting from assumptions and Most land improvements (infrastructure), including
Historical cost records for some land and mineral
has occurred and the amount of that loss can be reasonably estimated. Liabilities include an amount for claims that mation, see Note 17. have been incurred but not reported. For additional infor-
curbs, sidewalks, fences, bridges and lighting systems, are
capitalized. The states highway infrastructure, expected to be maintained in perpetuity, is reported using the modified approach allowed by GASB 34.
Note 2
Capital Assets
appraised fair value as of the date of acquisition. Based on the requirements of GASB Statement No. 34, Basic Assets are capitalized at cost or, if not purchased, at Financial Statements - and Management Discussion and
tion of capital assets is not applicable for governmental activities in accordance with GASB Statement No. 37,
Capitalization of interest incurred during the construc-
Basic Financial Statements - and Management Discussion For proprietary fund types and trust funds with measurement focus on income determination or capital mainteis capitalized.
and Analysis - for State and Local Governments: Omnibus.
Analysis - for State and Local Governments, depreciation is reported on all exhaustible assets. Inexhaustible assets, such as works of art and historical treasures, are not depreciated. Professional, academic and research library books and materials are considered exhaustible assets and are or trust funds are reported at cost or estimated historical
nance, the net amount of interest cost for qualifying assets The schedule on the following pages presents the com-
position of the states capital assets, adjustments, reclas-
sifications, additions and deletions during fiscal 2008. The reported, accounting errors and other changes. The reclassifications column shows completed construction projects
depreciated. All capital assets acquired by proprietary funds cost if actual historical cost is not available. Donated assets are reported at fair value on the acquisition date. Assets are depreciated over the estimated useful life of the asset using the straight-line method. The capitalization threshold and useful lives are as follows.
adjustment column includes assets that were not previously
and transfers of capital assets between agencies. The addition. The deletions column shows assets removed during the current year.
tions column includes current year purchases and deprecia-
Capitalization of Assets
Type Capitalization Threshold Estimated Useful Life
Land and Land Improvements Infrastructure, Non-Depreciable Construction in Progress Buildings and Building Improvements Infrastructure, Depreciable Facilities and Other Improvements Furniture and Equipment Vehicles, Boats and Aircraft Other Capital Assets (Libraries, Leasehold Improvements and Livestock)
0 0 0 100,000 500,000 100,000 5,000 5,000
Not applicable Not applicable Not applicable 5-30 years 10-50 years 10-60 years 3-15 years 5-40 years
Various
0-22 years
65
Capital Asset Activity

Balance 9/1/07 PRIMARY GOVERNMENT Adjustments Reclassifications Additions Deletions Balance 8/31/08
GOVERNMENTAL ACTIVITIES Nondepreciable Assets Land and Land Improvements Infrastructure Construction in Progress Other Capital Assets Total Nondepreciable Assets Depreciable Assets Buildings and Building Improvements Infrastructure Facilities and Other Improvements Furniture and Equipment Vehicles, Boats and Aircraft Other Capital Assets Total Depreciable Assets at Historical Cost Less Accumulated Depreciation for: Buildings and Building Improvements Infrastructure Facilities and Other Improvements Furniture and Equipment Vehicles, Boats and Aircraft Other Capital Assets Total Accumulated Depreciation* Depreciable Assets, Net Governmental Activities Capital Assets, Net
7,278,244 41,358,055 4,623,788 181,198 53,441,285
(87) (39,029) (2,271) (1) (41,388)
5,421 2,859,300 (3,653,965) (789,244)
540,151 3,686,707 186 4,227,044
(1,818)
(321) (2,139)
7,821,911 44,178,326 4,654,259 181,062 56,835,558
5,182,546 16,108,502 199,956 1,089,879 940,857 97,050 23,618,790
(18) 38,724 (1) (8,955) (2,671) (16) 27,063
74,275 703,378 7,177 722 1,809 2,785 790,146
8,809 3,300 377 69,062 99,213 4,676 185,437
(9,815) (90,778) (789) (58,014) (57,706) (1,355) (218,457)
5,255,797 16,763,126 206,720 1,092,694 981,502 103,140 24,402,979
(2,639,636) (9,068,916) (115,839) (834,757) (551,759) (46,442) (13,257,349) 10,361,441 $ 63,802,726
159 (1,476) 3,126 (219) (101) 1,489 28,552 (12,836)
(495)
1,172 (1,815) 200 (938) 789,208 (36)
(165,430) (523,092) (7,327) (76,729) (61,628) (5,431) (839,637) (654,200) $ 3,572,844
6,760 73,257 584 53,847 49,185 1,153 184,786 (33,671) (35,810)
(2,798,642) (9,520,227) (122,582) (853,341) (566,236) (50,621) (13,911,649) 10,491,330 $ 67,326,888
* Depreciation expense was charged to Governmental Activities as follows: General Government $ Education Employee Benefits Health and Human Services Public Safety and Corrections Transportation Natural Resources and Recreation Regulatory Services Total Governmental Activities Depreciation Expense $
46,125 4,994 2 39,954 149,331 571,164 25,639 2,428 839,637
66
Capital Asset Activity (concluded)

Balance 9/1/07 Adjustments Reclassifications Additions Deletions Balance 8/31/08
BUSINESS-TYPE ACTIVITIES Nondepreciable Assets Land and Land Improvements Construction in Progress Infrastructure Other Capital Assets Total Nondepreciable Assets Depreciable Assets Buildings and Building Improvements Infrastructure Facilities and Other Improvements Furniture and Equipment Vehicles, Boats and Aircraft Other Capital Assets Total Depreciable Assets at Historical Cost Less Accumulated Depreciation for: Buildings and Building Improvements Infrastructure Facilities and Other Improvements Furniture and Equipment Vehicles, Boats and Aircraft Other Capital Assets Total Accumulated Depreciation** Depreciable Assets, Net Business-Type Activities Capital Assets, Net COMPONENT UNITS Nondepreciable Assets Land and Land Improvements Construction in Progress Total Nondepreciable Assets Depreciable Assets Buildings and Building Improvements Facilities and Other Improvements Furniture and Equipment Vehicles, Boats and Aircraft Other Capital Assets Total Depreciable Assets at Historical Cost Less Accumulated Depreciation for: Buildings and Building Improvements Facilities and Other Improvements Furniture and Equipment Vehicles, Boats and Aircraft Other Capital Assets Total Accumulated Depreciation Depreciable Assets, Net Component Units Capital Assets, Net
1,274,455 2,041,057 1,233,841 326,741 4,876,094
(2,817) (3,568) (17) (6,402)
2,539 (1,806,011) 371,753 31 (1,431,688)
159,669 1,718,898 11,567 1,890,134
(294)
(9,196) (9,490)
1,433,552 1,950,376 1,605,594 329,126 5,318,648
15,129,699 1,061,644 1,084,384 3,578,971 188,316 1,214,717 22,257,731
4,240 664 (4,176) (2,251) (71) (1,184) (2,778)
1,223,798 81,363 65,975 57,221 (1,135) 3,478 1,430,700
252,451 2,998 15,984 434,474 31,085 59,350 796,342
(33,182) (3) (9,198) (200,763) (11,060) (15,615) (269,821)
16,577,006 1,146,666 1,152,969 3,867,652 207,135 1,260,746 24,212,174
(6,584,543) (395,365) (471,150) (2,327,964) (138,287) (733,855) (10,651,164) 11,606,567 $ 16,482,661
(2,605) (19) 2,274 (10,366) (50) 92 (10,674) (13,452) (19,854)
141
(905) 1,788 1,024 1,431,724 $ 36
(550,069) (37,598) (39,613) (359,085) (15,793) (61,914) (1,064,072) (267,730) $ 1,622,404
27,799 3 5,882 178,559 10,513 12,883 235,639 (34,182) (43,672)
(7,109,277) (432,979) (502,607) (2,519,761) (141,829) (782,794) (11,489,247) 12,722,927 $ 18,041,575
3,469 651 4,120
$ 0
$ (455) (455)
$ 2,360 2,360
$ 0
3,469 2,556 6,025
39,792 370 32,005 23,158 3 95,328
455
563 39 4,972 984 6,558
455
(1,587) (2,906) (1) (4,494)
40,355 409 35,845 21,236 2 97,847
(8,560) (254) (22,168) (15,874) (46,856) 48,472 52,592
46 122
168 168 168
0 455 0
(852) (54) (3,309) (2,240) (2) (6,457) 101 2,461
1,568 1,897 3,465 (1,029) (1,029)
(9,412) (262) (23,787) (16,217) (2) (49,680) 48,167 54,192
** Depreciation expense was charged to business-type activities as follows: Colleges and Universities Other Business-Type Activities Total Business-Type Activities Depreciation Expense
$ 1,043,420 21,536 $ 1,064,956
67
Note 3
Deposits, Investments and Repurchase Agreements
LEGAL AND CONTRACTUAL PROVISIONS
Authority for Investments tions Division - Comptrollers office (Treasury) by the state Constitution or by an act of the Legislature are pooled for investment purposes. State statutes authorize the Treasury to invest state funds in fully collateralized time deposits, direct security repurchase agreements, reverse repurchase All monies in funds established in the Treasury Opera-
Collateralization in financial institutions above the amounts insured by the Federal Deposit Insurance Corporation be fully collateralized by pledging, to the Treasury, securities valued at market excluding accrued interest. Generally, the list of State law requires that all Treasury funds deposited
eligible securities includes all United States Treasury obligations, most agency obligations and securities issued by state agencies and political subdivisions within the state. All securities pledged to the Treasury must be held by a
third-party bank doing business in the state through a main the Trust Company, any Federal Home Loan Bank or in holding state funds failed.
office or one or more branches, any Federal Reserve Bank, the vault of the Treasury. During fiscal 2008 no depository State agencies and institutions of higher education
agreements, obligations of the United States, obligations of various federal credit organizations, bankers acceptances, which are commonly known as covered call options. commercial paper and contracts written by the Comptroller, The Treasury obtains direct access to the services of
with deposits of public funds that are not managed by the pledged by depository banks and savings and loans. Eliever, retirement systems are exempt by statute from this requirement.
the Federal Reserve System through the Texas Treasury
Treasury are required to secure deposits through collateral gible collateral securities are prescribed by state law; how-
Safekeeping Trust Company (Trust Company). The Federal Reserve Bank requires that the Trust Company maintain a positive cash balance in the account during and at the end of the day. The Trust Company met those requirements
throughout fiscal 2008. The Trust Company safekeeps U.S. Government securities in book-entry form for the major investment funds of the state, safekeeps collateral pledged to secure deposits of the Treasury in financial institutions age funds on their behalf. and acts as trustee for other public bodies to hold and manCertain state agencies, component units and colleges
External Investment Pool Pool (TexPool) trust fund as an external investment trust the Trust Company. Deposits for governmental and business-type activities was $950.9 As of Aug. 31, 2008, the carrying amount of deposits The state reports the Texas Government Investment
fund. A separate report for TexPool can be obtained from
and universities, are authorized to invest funds not depos-
ited with the Treasury. The Texas Education Agency (TEA) and the Employees Retirement System (ERS) make investments following the prudent person rule. The University of Texas System (UT) and Teacher Retirement System
million, for fiduciary funds was $262.6 million and for discretely presented component units was $68 million. These amounts consist of all cash in local banks and a portion of combined statement of net assets as part of the Cash and Cash Equivalents, Securities Lending Collateral and
(TRS) comply with the prudent investor rule when making investments. Authorized investments include equities, investments. fixed income obligations, cash equivalents and alternative
short-term investments. These amounts are included on the
Investments accounts. As of Aug. 31, 2008, the total bank balance for governmental and business-type activities was $1 billion, for fiduciary funds was $259.6 million and for discretely presented component units was $67.8 million.
68
its is the risk that, in the event of the failure of a depository financial institution, the state will not be able to recover that are in the possession of an outside party. The state deposits or will not be able to recover collateral securities does not have a deposit policy for custodial credit risk. The states securities lending programs are subject to custodial credit risk. This type of risk is inherent to the securities dial credit risk as follows. lending programs. Bank balances were exposed to custo-
Custodial Credit Risk: Custodial credit risk for depos-
bank balances is the risk that changes in exchange rates
Foreign Currency Risk: Foreign currency risk for
will adversely affect the deposit. The state does not have a formal deposit policy related to foreign currency. Foreign currency deposits are intended for settlement of pending international investment trades. The exposure to foreign lows.
currency risk for bank balances at Aug. 31, 2008, is as fol-
Bank Balances Exposed to Foreign Currency Risk

Governmental and Business-Type Activities Uninsured and Collateralized with Securities Held by the Pledging Financial Institution Pension and Other Employee Benefit Trust Funds
Bank Balances Exposed to Custodial Credit Risk

Uninsured and Uncollateralized
GOVERNMENTAL ACTIVITIES Permanent School Fund Total Governmental Activities BUSINESS-TYPE ACTIVITIES Colleges and Universities Other Nonmajor Funds Total Business-Type Activities Total Governmental and Business-Type Activities FIDUCIARY COMPONENT UNITS
6,892 6,892
$ 0
1,565 498 2,063
24,824 24,824
8,955
$ $ $
24,824 0 0
$ 199,855 $ 170
Australian Dollar Brazilian Real Canadian Dollar Chilean Peso Czech Koruna Danish Krone Euro Hong Kong Dollar Hungarian Forint Indian Rupee Indonesian Rupiah Japanese Yen Malaysian Ringgit Mexican Peso New Israeli Sheqel New Taiwan Dollar New Turkish Lira New Zealand Dollar Norwegian Krone Philippine Peso Polish Zloty Pound Sterling Qatar Riyal Russian Ruble Singapore Dollar South African Rand South Korean Won Swedish Krona Swiss Franc Thai Baht Total
(9) * 105 85 44
3,204 360
495
1,839 191 4
28 436 (167) *
12,153 448 12,318 77 776 1,589 75,932 6,771 758 94 (9) * 24,160 287 656 215 9,339 1,666 57 2,187 305 847 36,326
111 1,108 $ 7,834 $
1,448 2,634 355 2,818 4,534 1,028 199,769
* Balances are related to the timing of trade settlements.
69
Investment Fair Value

Governmental and Business-Type Activities Component Units
investments are reported at amortized cost which approximates market

Fiduciary
Investments in money market
value. Participating interest-earning investment contracts that have a remaining maturity at time of pur-
U.S. Treasury U.S. Treasury Strips U.S. Treasury TIPS U.S. Government Agency Corporate Obligations Corporate Asset and Mortgage Back Corporate Equity International Obligations International Equity International Other Commingled Funds Repurchase Agreements Fixed Income and Bond Mutual Fund Other Mutual Funds Other Commingled Funds Commercial Paper Securities Lending Collateral Pool Securities Lending Collateral Investment Pool Real Estate Alternative Investments Other Investments Total Investments
2,398,193 87,101 610,372 22,287,691 3,322,190 2,637,563 13,713,234 1,071,615 5,241,618 663,558 6,672,842 3,540,741 5,116,266 7,967,649 3,174,959 4,487,982 599,234 3,079,257 13,370,215 2,243,049
$ 10,125,342 52,603 2,918,743 13,583,485 5,987,677 8,777,950 42,678,921 5,149,673 22,220,609 739,894 10,927,364 380,395 924,241 524,596 1,007,743 25,617,840 32,763 16,089,334 7,987,465 $ 175,726,638
$ 201,168
chase of one year or less may also be reported at amortized cost, provided that the fair value of those invest-
621,678 4,185 278,547 99
ments is not significantly affected by of the issuer or by other factors. 31, 2008, are as shown.
the impairment of the credit standing The states investments at Aug. TRS, TEA, ERS and UT par-
133,172 8,528 21,998 6,921 15,407
ticipate in individual securities

480,053 $ 1,771,756
lending programs. Cash collateral received by the lending agent on behalf of each entity is invested in a
$ 102,285,329
Investments mined from published market prices, quotations from The fair value of the states investments is deter-
the benefit of the individual entity. Additional information about the states securities lending activity is disclosed in investment type for the invested securities lending cash collateral at Aug. 31, 2008, are as follows. the Securities Lending section of this note. Balances by
non-commingled pool exclusively for
major investment brokers or independent pricing services. In general, the fair value of fixed income securities is based on yields currently available on comparable securities of issuers with similar credit ratings or on prices from fixed income pricing services or external broker quotes. The changes in the fair value of statements.
Invested Securities Lending Collateral Fair Value

Governmental and Business-Type Activities
investments are reported as revenue in the operating Where no readily ascertainable market value
Fiduciary
exists (including private equity), fair values can be
determined in consultation with investment advisors and Master Trust Custodians or based on the capital account balance at the closest available reporting period, as communicated by the general partner, management fees and reserves.
adjusted for subsequent contributions, distributions,
U.S. Treasury U.S. Treasury TIPS U.S. Government Agency Corporate Obligations Corporate Asset and Mortgage Back Corporate Equity International Equity Repurchase Agreements Commercial Paper Other Investments Total Investments
55,562 10,246 407,699 613,058
1,582,359 423,155 1,395,903 $ 4,487,982
732,837 615,484 1,641,655 1,568,662 7,229,961 2,842,541 36,314 1,105,437 166,387 9,678,562
$ 25,617,840
70
ments is the risk that, in the event of the failure of the
Custodial Credit Risk: Custodial credit risk for invest-
investment policy for custodial credit risk. Consistent with on loans are subject to custodial credit risk. exposed to custodial credit risk as follows.
counterparty, the state will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The state does not have an
the states securities lending program, underlying securities At Aug. 31, 2008, the states investments were
Investments Exposed to Custodial Credit Risk

Fair Value that is Uninsured and Unregistered with Securities Held by the Counterparty's Trust Department or Agent But Not in the State's Name
GOVERNMENTAL ACTIVITIES Permanent School Fund Corporate Obligations Corporate Asset and Mortgage Back Repurchase Agreements Commercial Paper Other Investments Total Governmental Activities BUSINESS-TYPE ACTIVITIES Colleges and Universities Corporate Equity Other Proprietary Funds U.S. Treasury U.S. Government Agency Repurchase Agreements Total Business-Type Activities Total Governmental and Business-Type Activities FIDUCIARY Pension and Other Employee Benefit Trust Funds U.S. Treasury U.S. Treasury TIPS U.S. Government Agency Corporate Obligations Corporate Equity International Equity Other Commingled Funds Total Fiduciary COMPONENT UNITS U.S. Treasury Repurchase Agreements Total Component Units
Fair Value that is Uninsured and Unregistered with Securities Held by the Counterparty
296,807 631,917 1,135,587 7,984 1,385,901 3,458,196
1,965 29,581 3,150 114,999 116,964 $ 116,964 $ 32,731 3,490,927
2,795
470,412 40,549 27,893 208 3,287 2,659 22,514 $ 567,522
2,795
9,920 70,847 $ 80,767 $ 0
71
investments is the risk that changes in exchange rates will adversely affect the investment. TRS, TEA, ERS and UT have exposure to investment foreign currency risk. TRS
Foreign Currency Risk: Foreign currency risk for
U.S. denominated bonds. The amendments became effec-
tive March 1, 2008. Prior to the amendments, UTs investment policy limited investments in non-U.S. denominated bonds to 50 percent of its total fixed income exposure. ing foreign currency risk. 31, 2008, is as follows.
manages the risk of holding investments in foreign curreninvestments. UTs investment policies were amended during the year to remove limitations on investments in non-
cies through asset allocation limits on various international
TEA and ERS do not have an investment policy for managThe states exposure to foreign currency risk at Aug.
Investments Exposed to Foreign Currency Risk

Governmental and Business-Type Activities International Obligations International Equity Alternative Investments International Other Commingled Funds International Obligations Fiduciary International Equity Alternative Investments
Argentine Peso Australian Dollar Bermudan Dollar Brazilian Real Canadian Dollar Cayman Islands Dollar Chilean Peso Chinese Yuan Colombian Peso Czech Koruna Danish Krone Egyptian Pound Euro Hong Kong Dollar Hungarian Forint Iceland Krona Indian Rupee Indonesian Rupiah Japanese Yen Malaysian Ringgit Mexican Peso Moroccan Dirham New Israeli Sheqel New Taiwan Dollar New Turkish Lira New Zealand Dollar Nigerian Naira Norwegian Krone Pakistani Rupee Peruvian Nuevo Sol Philippine Peso Polish Zloty Pound Sterling Russian Ruble Singapore Dollar South African Rand South Korean Won Swedish Krona Swiss Franc Thai Baht Total
$ 78,185 16,564 40,725
146 233,163 321 122,759 383,203 20 4,165 2,242 6,889 37,708 3,243 1,217,547 276,876 6,531 1,073 11,193 865,316 17,165 37,451 1,521 9,563 61,251 13,309 3,925 43,851 490 239 5,321 11,941 817,074 5,205 65,980 55,161 93,292 77,428 241,178 15,606
$ 5,557
$ 951,137 3,246 190,551 418,956 1,222,690 36,183 443
2,628
25,359 236,826 5,967 11,451 8,903 152,121 39,041 18,993 6,002
437 391,480 37,561 1,071 1 1,793,948 3,589
40,293 146,065 1,539 5,530,462 846,148 35,166 45,700 65,057 3,127,861 91,905 85,033 34,502 295,149 53,978 10,405 201,461
1,255,570
5,001 16
1,788 423,116 1,324 2,559
1,039 2,367 54 993 14 655 8 2,630 4 8,140 494 2,338 6 663 $ 394,118 $ 62,686 179,474 1,455 $ 4,137,269 907 1,528,516
23,092
38,019 77,060 12,422 24,577 16,961
8,744 49,143 3,132,352 199,606 228,841 387,539 344,389 1,173,258 79,936 $ 18,843,498
33,827
$ 832,268
$ 4,749,346
$ 1,289,397
72
other counterparty to an investment will not fulfill its obligations. This is measured by the assignment of a rating (NRSRO). by a nationally recognized statistical rating organization TRS investment policy establishes tracking error
Credit Risk: Credit risk is the risk that an issuer or
adhere to specific Standard & Poors rating guidelines.
TEAs investment policy requires investments to
Fixed income securities must be rated at least BBB- and A-1.
short-term money market instruments must be rated at least ERS general investment policies require that noncash
limits that are intended to reduce the tracking error of the counter derivatives, the minimum credit rating, based on the contract. For any counterparty that experiences dete-
asset class. In addition, the policy states that for over-thea NRSRO, must be at least A- or better at the inception of rioration in credit quality that results in a NRSRO rating
interest paying securities in the high yield bond portfolios not exceed 15 percent of the market value of the portfolio and that investments in money market funds represent no more than 5 percent of each individual fund. UTs investment policies were amended to remove
below the A- level subsequent to the inception of the contract, additional eligible collateral must be posted. Repurchase agreements may not exceed 5 percent of the market cash equivalents, unless those transactions are covered by
requirements and limitations regarding investment ratings. that date investment policies limited investments in U.S.
The amendments became effective March 1, 2008. Prior to domestic bonds and non-dollar denominated bond investbetter by Standard & Poors. These requirements did not terms of an investment advisory agreement to invest in below investment grade bonds.
value of the total investment portfolio, including cash and a third-party indemnification agreement by an organization that bears a long-term NRSRO credit rating of A- or better ing agent must be an organization rated A- or better by a NRSRO. and is enhanced by acceptable collateral. A securities lend-
ments to those that were rated investment grade, BBB- or apply to investment managers that were authorized by the
for securities with credit risk exposure was as follows.
At Aug. 31, 2008, the states credit quality distribution
73
Investments Exposed to Credit Risk

GOVERNMENTAL ACTIVITIES U.S. Government Agency $ 8,030,938 $ $ Corporate Obligations 588,547 1,569,658 Corporate Asset and Mortgage Back 2,664,876 91,088 International Obligations Repurchase Agreements 4,119,519 Other Investments Total Governmental Activities $ 15,403,880 $ 1,660,746 $ BUSINESS-TYPE ACTIVITIES U.S. Government Agency $ 3,218,755 $ $ Corporate Obligations 77,800 268,956 Corporate Asset and Mortgage Back 396,123 14,602 International Obligations 452,791 156,424 Repurchase Agreements 1,695,166 114,999 Alternative Investments Other Investments 23,771 687,388 Total Business-Type Activities $ 5,864,406 $ 1,242,369 $
AAA AA A BBB BB B CCC CC C D NR
$ 934,113 21,461 280,433 2,873
$ 27,436 757
$ 30,536
$ 1,713
$ 9,106,008 603
955,574 $ 283,306 $ 28,193 $ 30,536 $
1,713 $
0 $
0 $
2,534,101 135,776 0 $ 11,776,488
$ 457,226 10,394 187,707 245,556 4,630 86,392
$ 69,239 500 7,187
$ 59,303 995 2,841
$ 1,028
$ 14
2,506 6,078 13,911 3,533 657,833 $ 342,656 $ 90,837 $ 66,672 $
1,028 $
14 $
0 $
0 $
259,127 28,841 50,848 172,821 54,043 1,430 238,632 805,742
GOVERNMENTAL AND BUSINESS-TYPE ACTIVITIES U.S. Government Agency $ 11,249,693 $ $ $ $ $ $ Corporate Obligations 666,347 1,838,614 1,391,339 525,989 96,675 89,839 Corporate Asset and Mortgage Back 3,060,999 105,690 10,394 4,630 500 995 International Obligations 452,791 156,424 209,168 89,265 7,944 2,841 Repurchase Agreements 5,814,685 114,999 Alternative Investments Other Investments 23,771 687,388 2,506 6,078 13,911 3,533 Total Governmental and Business-Type Activities $ 21,268,286 $ 2,903,115 $ 1,613,407 $ 625,962 $ 119,030 $ 97,208 $
$ 2,741 14
$ 9,365,135 29,444 50,848 172,821 2,588,144 1,430 374,408 0 $ 12,582,230
2,741 $
14 $
0 $
FIDUCIARY U.S. Government Agency $ 11,900,163 $ $ 20,002 $ $ $ $ $ $ $ $ 512,783 Corporate Obligations 1,693,175 878,787 1,875,082 1,229,536 535,205 909,555 162,345 2,442 5,220 2,695 119,686 Corporate Asset and Mortgage Back 13,237,390 45,128 2,283,246 34,600 15,107 1,940 8,139 371,004 International Obligations 3,023,042 429,759 1,063,864 303,122 58,269 3,838 267,779 Repurchase Agreements 9,196,467 1,986,431 138,600 Other Investments 499,323 6,537,212 10,355,776 2,094 79,853 Total Fiduciary $ 39,549,560 $ 7,890,886 $ 17,584,401 $ 1,567,258 $ 608,581 $ 917,427 $ 170,484 $ 2,442 $ 5,220 $ 2,695 $ 1,489,705 COMPONENT UNITS U.S. Government Agency $ Corporate Obligations Corporate Asset and Mortgage Back International Obligations Repurchase Agreements Total Component Units $
594,765 $ 907 277,993 29,966 903,631 $
$ 1,655 1,623 98 1,655 $
28,125
1,721 $
0 $
0 $
0 $
0 $
0 $
0 $
0 $
6,432 34,557
74
Investments Exposed to Credit Risk (concluded)

GOVERNMENTAL ACTIVITIES Fixed Income and Bond Mutual Fund BUSINESS-TYPE ACTIVITIES Fixed Income and Bond Mutual Fund GOVERNMENTAL AND BUSINESS-TYPE ACTIVITIES Fixed Income and Bond Mutual Fund FIDUCIARY Fixed Income and Bond Mutual Fund COMPONENT UNITS Fixed Income and Bond Mutual Fund
AAAf AAAm Aaf NR
$ 4,783,413
522
1,470
$ 2,428,907
$ 443,074
66,043
$ 209,338
$ 7,212,320
$ 443,596
66,043
$ 210,808
$ 353,641
14,848
21,999
6,673
A-1
A-2
NR
GOVERNMENTAL ACTIVITIES Commercial Paper BUSINESS-TYPE ACTIVITIES Commercial Paper GOVERNMENTAL AND BUSINESS-TYPE ACTIVITIES Commercial Paper FIDUCIARY Commercial Paper COMPONENT UNITS Commercial Paper
$ 3,222,323
2,600
$ 294,746
1,185
94,379
$ 3,517,069
1,185
96,979
$ 1,121,655
15,407
risk is the risk of loss attributed to the magnitude of the states investment in a single issuer. At Aug. 31, 2008,
Concentration of Credit Risk: Concentration of credit
manage interest rate risk. UT and ERS use the modified duration method. Duration is a measure of the price sensitivity of a
more than 5 percent of investments held by governmental activities were in securities issued by the Federal Home Loan Bank, the Federal National Mortgage Association
debt investment to changes arising from movements in
interest rates. Duration is the weighted average maturity the cash flows serves as the weights. The duration of an
and the Federal Home Loan Mortgage Corporation. These ticipation in the Treasurys internal investment pool. The one issuer.
of an instruments cash flows, where the present value of instrument can be calculated by first multiplying the time of that cash flow to the instruments total present value.
holdings were the result of the governmental activities parTreasury places no limit on the amount it may invest in any Interest Rate Risk: Interest rate risk is the risk that
until receipt of cash flow by the ratio of the present value The sum of these weighted time periods is the duration of the instrument. Effective duration extends this analysis to sensitivity to changes in interest rates. Modified durachanges in interest rates. incorporate an option adjusted measure of an instruments tion estimates the sensitivity of the funds investments to
changes in interest rates of debt investments will adversely affect the fair value of an investment. TEA and TRS use the effective weighted duration method to identify and
75
duration of the fixed income portfolio be consistent with
The investment policy of TEA mandates the average
floating rate securities, which is three years. The maximum weighted average maturity of the entire collateral portfolio rate exposure of the entire collateral portfolio must be 60 policy with respect to interest rate risk. must be 180 days. The maximum weighted average interest days. TRS, UT and ERS do not have a formal investment TEAs investments by investment type, fair value and
the Lehman Bros. Aggregate Indexs duration. The Lehman Bros. Aggregate Index duration as of Aug. 31, 2008, was 4.8 years. The maximum maturity for invested securities
lending collateral is 397 days except for bank time deposits which is 60 days, bankers acceptances, which is 45 days, reverse repurchase agreements, which is 180 days and
the effective weighted duration rate as of Aug. 31, 2008, are as follows.
Investments Exposed to Interest Rate Risk

August 31, 2008
Fair Value (in Thousands) Effective Weighted Duration Rate
TEA Investment Type
Asset Backed Securities Commercial Mortgage Backed Securities Corporate Obligations Non Agency Mortgage Backed Securities Private Placements - Corporate Private Placements - Government U.S. Government Agency Mortgage Backed Securities U.S. Government Agency Obligations U.S. Treasury Securities U.S. Treasury Strips U.S. Treasury TIPS Total Fixed Income
34,163 359,336 1,152,834 242,350 39,395 25,841 2,004,246 960,193 916,619 56,849 61,514
4.19 5.37 5.31 5.56 3.44 6.82 4.09 4.72 4.61 16.72 0.85 4.75
$ 5,853,340
maturities associated with its invested securities lending collateral by investment type.
The following provides information about TEAs interest rate risks and
Invested Securities Lending Collateral Exposed to Interest Rate Risk

Investment Maturities in Less Than One Year Investment Maturities Greater Than One Year
TEA Investment Type
Fair Value
Asset Backed Floating Rate Notes Bank Floating Rate Notes Certificates of Deposit Commercial Paper Corporate Floating Rate Notes Repurchase Agreements Time Deposits Total
$ 613,058 999,492 27,002 7,985 295,420 1,135,587 355,000 $ 3,433,544
$ 408,906 593,216 27,002 7,985 204,042 1,135,587 355,000 $ 2,731,738
$ 204,152 406,276
91,378
$ 701,806
76
the effective weighted duration rate as of Aug. 31, 2008, option-adjusted measure of a bonds (or portfolios) senaverage percentage change in a bonds value (price plus
TRS investments by investment type, fair value and
accrued interest) under shifts of the Treasury curve +/-100 for corporate bonds and changes in prepayments for mortgage backed securities (including pass-throughs, CMOs and ARMs). The effective weighted duration calculation pooled instruments and not debt securities.
are as follows. The effective weighted duration rate is an sitivity to changes in interest rates. It is calculated as the
basis points. It incorporates the effect of embedded options
excludes the High Yield Limited Partnerships, which are

August 31, 2008
Fair Value (in Thousands) Effective Weighted Duration Rate
TRS Investment Type
U.S. Government Obligations U.S. Government Agency Obligations Asset and Mortgage Backed Obligations Corporate Obligations International Government Obligations International Corporate Obligations Total Interest Rate Risk Debt Securities
$ 10,795,100 51,363 2,347,811 2,283,879 4,263,647 877,277 $ 20,619,077
9.80 6.30 6.45 4.71 9.00 4.91 8.47
fied duration rate as of Aug. 31, 2008, are as follows.
ERS investments by investment type, fair value and the modi-

August 31, 2008
Fair Value (Amounts in Thousands) Fiduciary Proprietary Fund Fund Modified Duration Fiduciary Proprietary Fund Fund
ERS Investment Type
U.S. Treasury Securities U.S. Treasury TIPS U.S. Government Agency Obligations Corporate Obligations Corporate Asset and Mortgage Backed Securities Cash and Cash Equivalents Overall Interest Rate Risk Debt Securities
$ 1,248,613 656,250 3,127,437 2,966,558 497,839 337,962 $ 8,834,659
$ 106,895 129,962 119,846 28,841 419,078 $ 804,622
6.04 11.73 4.69 5.18 3.98 0.01 5.36
6.99 2.68 2.21 3.46 0.05 1.70
77
UTs investments by investment type, fair value and the modified duration rate as of Aug. 31, 2008, are as follows.

August 31, 2008
UT Investment Type Fair Value (In Thousands) Modified Duration
INVESTMENTS IN SECURITIES: U.S. Government Guaranteed: U.S. Treasury Bonds and Notes U.S. Treasury Strips U.S. Treasury Bills U.S. Treasury Inflation Protected U.S. Agency Asset Backed Total U.S. Government Guaranteed U.S. Government Non-Guaranteed: U.S. Agency U.S. Agency Asset Backed Total U.S. Government Non-Guaranteed Total U.S. Government Corporate Obligations: Domestic Commercial Paper Foreign Total Corporate Obligations Foreign Government and Provincial Obligations Other Debt Securities Total Debt Securities Other Investment Funds Debt Fixed Income Money Market Funds Certificates of Deposit Total Investments in Securities DEPOSIT WITH BROKERS FOR DERIVATIVE CONTRACTS: U.S. Government Guaranteed: U.S. Treasury Bills Total U.S. Government Guaranteed Cash Total Deposit with Brokers for Derivative Contracts
$ 134,107 11,628 30,468 548,857 103,822 828,882
5.23 3.09 0.07 8.56 4.00 7.06
7,954 674,454 682,408 1,511,290
3.34 5.93 5.90 6.54
820,444 44,472 282,363 1,147,279 543,447 19,484 562,931 672,283 1,980,166 4,199 $ 5,878,148
5.03 0.10 5.09 4.86 7.76 9.77 7.83 5.70 0.08 0.78 4.06
62,644 62,644 53,152
0.17 0.17 0.06 0.12
$ 115,796
Investments with Fair Values Highly Sensitive to Interest Rate Changes TEA, TRS, ERS and UT may invest in asset backed and In accordance with the applicable investment policies,
payments by the obligee of the underlying assets in periods of declining interest rates could reduce or eliminate the stream of income that would have been received. At Aug. 31, 2008, the fair value of investments in asset and mortgage backed obligations highly sensitive to interest rate changes for TEA, TRS, ERS and UT was $6.6 billion. Reverse Repurchase Agreements Treasury and the Trust Company are permitted by statInvestments in reverse repurchase agreements by the
mortgage backed obligations. Mortgage backed obligations ing interest rates. The resultant reduction in expected cash flows will affect the fair value of these securities. Asset backed obligations are backed by home equity loans, auto loans, equipment loans and credit card receivables. Pre78
are subject to early principal payment in a period of declin-
ute. A reverse repurchase agreement consists of a sale
of securities by the state with a simultaneous agreement
to repurchase them in the future at the same price plus a state in securities or repurchase agreements that mature at or almost at the same time as the reverse repurchase to liquidate the agreement resulting in a matched position. With a matched position there is minimal market
transfer securities to an independent broker or dealer in tal securities or bank letters of credit. In addition, TEA
Under these programs, the governmental entities
contract rate of interest. Sale proceeds are invested by the
exchange for collateral in the form of cash, governmenmay receive collateral in the form of other assets which
agreement. Proceeds from the matured securities are used
it specifically agrees to with its lending agent and A&M
may receive collateral in the form of fixed income securi-
ties and repurchase agreements. TRS, ERS, UT and GLO/ domestic securities lent and 105 percent for international securities. TEA receives collateral in an amount of 102
risk because the seller-borrower will hold the securities to maturity and liquidate them at face value. In the event of default on a reverse repurchase agreement, the Treasury received does not exceed the fair value of the securities
VLB receive collateral equal to 102 percent of the value of
would potentially suffer a loss. The loss occurs if the cash underlying reverse repurchase agreements. The amount of the loss would equal the difference between the fair value plus accrued interest of the underlying securities and the
percent of the fair value plus accrued income for domestic corporate securities and 105 percent of the fair value plus foreign securities denominated and payable in U.S. Dolaccrued income for foreign securities; except in the case of lars, the required percentage is 102 percent. A&M receives collateral of 102 percent of the value of the securities lent. The Trust Company receives collateral of 102 percent of the value of U.S. securities lent plus any accrued interest
agreement price plus accrued interest. To minimize the risk of default, all securities backing reverse repurchase agreements are held by the Federal Reserve Bank in the states name. The Treasurys aggregate amount of reverse repur-
and 105 percent of the value of non-U.S. government securities plus any accrued interest. TPHETB receives collateral of 102 percent of the value of domestic securities lent
chase agreement obligations at Aug. 31, 2008, was $146.8 of the securities underlying those agreements, including at fiscal year end was $843.5 thousand. Securities Lending
million including accrued interest. The aggregate fair value accrued interest, was $147.6 million. The credit exposure
plus accrued interest and 105 percent plus accrued interest collateral received was other than cash or governmental Company to replace and secure appropriate collateral. for the same securities in the future.
for foreign securities. At fiscal year end, a portion of TRS securities. TRS is working with State Street Bank and Trust There is a simultaneous agreement to return the collateral The states securities custodians are the security lend-
A&M University System (A&M), the General Land Office/ Veterans Land Board (GLO/VLB) and the Texas Prepaid Higher Education Tuition Board (TPHETB) participate in securities lending programs as authorized by state statute. TRS, TEA, ERS and UT have established their own separately managed securities lending programs. A&M, GLO/ VLB and TPHETB participate in collateral investment
TRS, TEA, ERS, UT, the Trust Company, the Texas
ing agents. The securities lending contracts do not allow the state to pledge or sell collateral securities unless the borrower defaults. For TRS, TEA, ERS, UT, GLO/VLB and state if the borrowers fail to return the securities. For the
TPHETB, the lending agents are required to indemnify the Trust Company and A&M, the lending agent is not liable
pools that commingle the cash collateral of several entities. The Trust Company manages the investments in collateral investment pools for the Treasury, Texas Historical Commission, Office of Rural and Community Affairs and the University of North Texas System.
with respect to any losses except to the extent that such losses result from the lending agents negligence, failure to live up to its contractual responsibilities or willful misconduct. For ERS, the relationship between the maturities of
investments made with cash collateral generally matched
the maturities of the loan agreements. For A&M, cash col-
79
lateral is invested in a portfolio with a liquidity target of 20 percent, but does not generally match the maturities of investments with the term maturities of the loan agree-
Derivatives contracts) whose value is linked to or derived from Derivatives are financial instruments (securities or
ments. TRS, the Trust Company, GLO/VLB and TPHETB maintain an average maturity and overnight liquidity. For
loans are terminable at will. UT manages its investments to TEA, maturities are defined by the lending agreement and the loans are terminable at will. There were no significant violations of legal or contractual provisions, no borrower or lending agent default losses and no recoveries of prior period losses during the year. Due to illiquidity in the securities lending market,
changes in interest rates, currency rates and stock and
commodity prices. Certain state agencies and colleges and universities were parties to various derivative financial instruments including derivative contracts, options and derivatives and swaps.
investments in commingled funds that are authorized to use At Aug. 31, 2008, the following derivatives were held
and reported at fair value on the statement of net assets and the statement of fiduciary net assets.
Type Forward Contracts Futures Contracts Written Options Index Funds, Hedge Funds and Commingled Funds Swaps
several securities lending cash collateral pools have experienced declines in the fair value of invested cash collateral. In previous fiscal years there were no material differences between the fair value of the invested cash collateral and the cash collateral liability. Differences between the fair
Held By TRS, A&M and UT TRS, ERS, TEA and UT UT UT TRS and UT
value of the invested cash collateral and the cash collateral liability as of Aug. 31, 2008, have been recorded as part of the net increase/(decrease) in fair value of investments.
Decreases in the fair value of invested cash collateral rep-
resent additional credit risk exposure to borrowers. There is no credit risk exposure to the borrower when the fair value of the invested cash collateral exceeds the cash collateral 31, 2008, is summarized as follows. liability. The overall securities lending activity as of Aug.
tional trade has been made. The contract is in the currency associated with such contracts include movement in the the ability of the counterparty to perform.
Forward contracts are bought or sold when an interna-
native to the security transactions for settlement date. Risks value of the foreign currency related to the U.S. dollar and Futures contracts are used to facilitate various trading strategies, primarily as a tool to sure to various asset classes.
Fair Value of Invested Cash Collateral (Securities Lending Collateral)
Securities Lending Activity Summary

Cash Collateral Liability (Obligation/ Securities Lending)
increase or decrease market expoWritten options are used
to alter the market (systematic)

Net Increase/ (Decrease) In Fair Value**
Entity
Fair Value of Securities on Loan
Non-Cash Collateral*
exposure without trading the
underlying cash market securities and to hedge and control risks so that the actual risk/return profile is more closely aligned with the target risk/return profile. If a call option expires, the state realizes a gain to the extent of the premium received. If a call
TRS TEA ERS UT Trust Company A&M GLO/VLB TPHETB Total
$ 21,787,861 3,421,244 6,735,875 968,988 51,506 180,227 89,142 304,230 $ 33,539,073
$ 2,845,866 108,425 589,301 20,697 2,810 479 5,979 $ 3,573,557
$ 19,699,519 3,458,196 6,375,193 984,343 50,165 184,823 90,945 307,192 $ 31,150,376
$ 19,347,275 3,433,544 6,340,579 984,424 50,165 184,823 89,817 307,192 $ 30,737,819
$ (352,244) (24,652) (34,614) 81
(1,128) $ (412,557)
Non-cash collateral received for securities lending activities are not recorded as assets because the underlying investments remain under the control of the borrower, except in the event of default. ** The Trust Company, A&M and TPHETB did not experience any net change in fair value because the cash collateral pools they participated in were maintained at amortized cost as of Aug. 31, 2008.
option is exercised, the difference between the proceeds of the sale
80
plus the amount of the premium and the fair value of the security are realized as a gain or loss. If a call option is repurchased, the difference between the premium income received and the amount paid to close the option contract is realized as a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased. market exposure without trading the underlying cash market securities. Index funds, hedge funds and commingled funds alter
general revenue fund. The Series 2007 were repaid during to yield 3.728 percent.
fiscal 2008 and bore interest at 4.5 percent and were priced On Aug. 19, 2008, the Comptrollers office sold
approximately $6.4 billion of the state of Texas Tax and Revenue Anticipation Notes, Series 2008, with an issue date of Aug. 28, 2008, and a maturity date of Aug. 28,
2009. The notes bear interest at 3 percent and were priced prior to maturity. On Aug. 19, 2008, good faith funds in activity for the year ended Aug. 31, 2008, is as follows.
interest rate risks.
Swaps are entered into primarily to hedge and control
to yield 1.646 percent. They are not subject to redemption the amount of $64 million were received. Short-term debt During fiscal 2008, the Texas Department of Transpor-
Note 4
Short-Term Debt
2007), $4.9 billion in the state of Texas Tax and Revenue Anticipation Notes, Series 2007, were sold to coordinate the cash flow of the state for On Aug. 21, 2007 (with an issue date of Sept. 4,
tation issued commercial paper under its short-term borused to cover temporary funding short falls for capital expenditures.
rowing program. The commercial paper proceeds are being
Short-Term Debt
Beginning Balance 09/01/07 Ending Balance 08/31/08
the fiscal year ended Aug. 31, 2008. Issuance of these notes enhanced the states ability to make timely payment of expenditures payable from the
Issued
Redeemed
Tax and Revenue Anticipation Notes Commercial Paper
$ 158,000 $ 158,000
$ 11,300,000 434,224 $ 11,734,224
$ 4,900,000 401,474 $ 5,301,474
$ 6,400,000 190,750 $ 6,590,750
81
Note 5
Long-Term Liabilities
The long-term liabilities activity for fiscal 2008 is shown in the table below.
Long-Term Liabilities Activity

Beginning Balance 09/01/07 Ending Balance 08/31/08 Amounts Due Within One Year Amounts Due Thereafter
GOVERNMENTAL ACTIVITIES Claims and Judgments Capital Lease Obligations Employees Compensable Leave Notes and Loans Payable General Obligation Bonds Payable Revenue Bonds Payable Governmental Activities Long-Term Liabilities BUSINESS-TYPE ACTIVITIES Claims and Judgments Capital Lease Obligations Employees Compensable Leave Notes and Loans Payable General Obligation Bonds Payable Revenue Bonds Payable Liabilities Payable From Restricted Assets Business-Type Activities Long-Term Liabilities COMPONENT UNITS Capital Lease Obligations Employees Compensable Leave Notes and Loans Payable Revenue Bonds Payable Liabilities Payable From Restricted Assets Component Units Long-Term Liabilities
Additions
Reductions
206,968 10,560 722,530 215,700 6,756,893 2,030,739
24,272 715 697,295 145,000 2,064,988 1,587,440
45,059 1,653 670,826 21,110 761,172 173,195
186,181 9,622 748,999 339,590 8,060,709 3,444,984
61,242 1,562 435,943 27,261 388,575 162,853
124,939 8,060 313,056 312,329 7,672,134 3,282,131
$ 9,943,390
$ 4,519,710
$ 1,673,015
$ 12,790,085
$ 1,077,436
$ 11,712,649
163,840 13,579 580,183 2,029,322 2,775,467 12,304,358 3,668,564
$ 615,405 3,612 165,542 2,037,438 249,822 2,374,719 2,429,674 $ 7,876,212
$ 624,454 2,898 127,030 1,629,493 317,526 1,309,106 2,625,382 $ 6,635,889
154,791 14,293 618,695 2,437,267 2,707,763 13,369,971 3,472,856
95,634 2,667 316,050 1,393,081 114,340 1,487,144 498,002
59,157 11,626 302,645 1,044,186 2,593,423 11,882,827 2,974,854
$ 21,535,313
$ 22,775,636
$ 3,906,918
$ 18,868,718
150 4,752 168,018 376,322 229,091 778,333
193 2,963 200,500 57,426 17,426
178 2,716 226,860 20,714 159,216
165 4,999 141,658 413,034 87,301 647,157
93 3,429 38,344 16,858
72 1,570 103,314 396,176 87,301 588,433
$ 278,508
$ 409,684
58,724
purchase capital equipment. Other uses include the acquisition, construction and renovation of other capital assets, including the interim financing of higher education proj-
Notes and loans payable consists of amounts used to
Notes and Loans Payable Debt Service Requirements Governmental Activities

(Amounts in Thousands)
Year Principal Interest Total
ects; software/database acquisition and development; refimissions such as economic development projects and pest
nancing of existing debt and the funding of agency specific eradication programs. Debt service requirements for notes the right and at the top of the following page. described in detail in Note 6.
and loans payable in the long-term liabilities are shown to General Obligation Bonds and Revenue Bonds are
2009 2010 2011 2012 2013 2014 - 2018 2019 - 2023 2024 - 2028 2029 - 2033 Total Requirements
27,261 26,913 23,649 21,426 20,477 96,144 80,260 41,855 1,605 $ 339,590
14,502 14,102 13,571 12,464 11,424 42,684 19,768 4,793 7 $ 133,315
41,763 41,015 37,220 33,890 31,901 138,828 100,028 46,648 1,612 $ 472,905
82
Notes and Loans Payable Debt Service Requirements Business-Type Activities

for all unused vacation and unpaid overtime accrued by
Employees compensable leave is the states liability
employees, payable as severance pay under specified contion, usually from the same funding source(s) from which the employees salary or wage compensation was paid. Note 7. Capital lease obligations are described in detail in
ditions. This obligation is paid only at the time of termina-
2009 2010 2011 2012 2013 2014 - 2018 2019 - 2023 2024 - 2028 2029 - 2033 2034 - 2038 2039 - 2043 Total Requirements Premium Total Requirements
$ 1,392,394 6,387 6,830 6,807 6,459 45,523 30,198 86,140 146,615 288,561 420,666 2,436,580 687 $ 2,437,267
14,884 25,391 36,896 38,211 39,929 234,140 300,262 354,552 353,468 330,754 226,534 1,955,021
$ 1,407,278 31,778 43,726 45,018 46,388 279,663 330,460 440,692 500,083 619,315 647,200 4,391,601 687 $ 4,392,288
sition of restricted assets or long-term liabilities that will be liquidated with restricted assets are classified as liabilities payable from restricted assets.
Long-term liabilities that are associated with the acqui-
$ 1,955,021
Note 6
Bonded Indebtedness
DESCRIPTION OF BOND ISSUES
of Aug. 31, 2008. During fiscal 2008 the state paid $425.1 million from the general revenue fund for debt service. The state of Texas has 495 bond issues outstanding as
Notes and Loans Payable Debt Service Requirements Component Units

2009 2010 2011 2012 2013 2014 - 2018 2019 - 2023 2024 - 2028 Total Requirements
38,344 11,289 18,803 11,690 15,176 45,576 179 601
4,672 3,652 3,571 2,974 2,526 3,303 222 219 21,139
43,016 14,941 22,374 14,664 17,702 48,879 401 820
Bonds Issued and Issues Outstanding

Bond Issues Outstanding 8/31/08 Bonds Issued
$ 141,658
$ 162,797
GOVERNMENTAL ACTIVITIES General Obligation Bonds Revenue Bonds Governmental Activities Bond Total BUSINESS-TYPE ACTIVITIES General Obligation Bonds Revenue Bonds Business-Type Activities Bond Total COMPONENT UNITS Revenue Bonds Total Bonds
62 31 93
$ 10,036,057 4,190,587 14,226,644
state, its agencies and employees for various legal proceedings and claims. Tort claims are covered under the Texas Tort Claims Act. Numerous miscellaneous claims are covered under the Miscellaneous Claims Act for legal liabiliexists. Individual claims above $25,000 or numerous ties against the state for which no appropriation otherwise separate claims from the same individual or entity that in before being paid.
Claims and judgments are payments on behalf of the
90 286 376
3,826,596 18,015,603 21,842,199
26 495
501,682 $ 36,570,525
total exceed $25,000 must be approved by the Legislature
83
Changes in Bonds Payable

Bonds Outstanding 9/1/07 Bonds Issued Bonds Matured or Retired Bonds Refunded Bonds Outstanding 8/31/08 Due Within One Year
GOVERNMENTAL ACTIVITIES General Obligation Bonds Revenue Bonds Governmental Activities Bond Total BUSINESS-TYPE ACTIVITIES General Obligation Bonds Revenue Bonds Business-Type Activities Bond Total COMPONENT UNITS Revenue Bonds Total Bonds
$ 6,756,893 2,030,739 8,787,632
$ 2,064,988 1,587,440 3,652,428
279,952 112,250 392,202
481,220 60,945 542,165
$ 8,060,709 3,444,984 11,505,693
388,575 162,853 551,428
2,775,467 12,304,358 15,079,825
249,822 2,374,719 2,624,541
133,396 578,219 711,615
184,130 730,887 915,017
2,707,763 13,369,971 16,077,734
114,340 1,487,144 1,601,484
376,322 $ 24,243,779
57,426 $ 6,334,395
20,714 $ 1,124,531 $ 1,457,182
413,034 $ 27,996,461
16,858 $ 2,169,770
Miscellaneous Bond Information

Bonds Issued to Date Range of Interest Rates First Year Maturities Last Year First Call Date
Description of Issue
GOVERNMENTAL ACTIVITIES General Obligation Bonds Revenue Bonds Governmental Activities Bond Total BUSINESS-TYPE ACTIVITIES General Obligation Bonds Revenue Bonds Business-Type Activities Bond Total COMPONENT UNITS Revenue Bonds Grand Total
$ 10,036,057 4,190,587 14,226,644
2.00 2.50
8.00 7.25
1992 1991
2045 2028
07/01/04 02/01/01
3,826,596 18,015,603 21,842,199
1.37 1.50
8.06 15.00
1995 1988
2047 2047
02/24/94 02/01/88
501,682 $ 36,570,525
3.50
7.10
1986
2041
10/08/86
84
Debt Service Requirements

GOVERNMENTAL ACTIVITIES
Year Principal General Obligation Bonds Interest Total Principal Revenue Bonds Interest Total
2009 2010 2011 2012 2013 2014 - 2018 2019 - 2023 2024 - 2028 2029 - 2033 2034 - 2038 2039 - 2043 2044 - 2048 Accretion Premium Total BUSINESS-TYPE ACTIVITIES
Year
$ 379,744 313,160 326,070 294,410 304,175 1,150,070 950,570 1,167,305 1,453,945 1,558,300 45,000 7,942,749 * (47,860) 165,820 $ 8,060,709
$ 360,730 346,232 330,585 316,732 302,056 1,351,636 1,125,489 874,339 568,346 184,502 6,120 2,448 5,769,215
$ 5,769,215
740,474 659,392 656,655 611,142 606,231 2,501,706 2,076,059 2,041,644 2,022,291 1,742,802 6,120 47,448 13,711,964 (47,860) 165,820 $ 13,829,924
156,490 168,785 161,750 170,650 172,015 841,190 907,070 768,065
$ 152,822 149,061 141,965 134,834 127,401 521,252 313,827 81,104
3,346,015 * (16,992) 115,961 $ 3,444,984
1,622,266
$ 1,622,266
309,312 317,846 303,715 305,484 299,416 1,362,442 1,220,897 849,169 0 0 0 0 4,968,281 (16,992) 115,961 $ 5,067,250
Principal
General Obligation Bonds Interest
Total
Principal
Revenue Bonds Interest
Total
2009 2010 2011 2012 2013 2014 - 2018 2019 - 2023 2024 - 2028 2029 - 2033 2034 - 2038 2039 - 2043 2044 - 2048 Accretion Premium Discount Loss on Refunding Total COMPONENT UNITS
Year
$ 114,340 147,398 140,109 113,917 116,687 634,306 561,265 367,475 364,945 127,780 19,060 5,200 2,712,482 * (4,718) (1)
95,840 91,314 85,754 80,958 76,830 316,174 201,647 115,202 49,760 12,686 3,955 683 1,130,803
210,180 238,712 225,863 194,875 193,517 950,480 762,912 482,677 414,705 140,466 23,015 5,883 3,843,285 (4,718) (1)
$ 2,707,763
$ 1,130,803
$ 3,838,566
$ 1,475,848 442,957 430,828 440,524 468,551 2,563,996 2,413,761 1,951,373 1,723,026 1,529,993 1,008,890 99,060 14,548,807 * (1,357,748) 257,438 (18,609) (59,917) $ 13,369,971
$ 559,967 546,218 526,021 506,269 485,700 2,074,800 1,495,618 1,031,235 700,937 440,827 186,207 8,469 8,562,268
$ 8,562,268
$ 2,035,815 989,175 956,849 946,793 954,251 4,638,796 3,909,379 2,982,608 2,423,963 1,970,820 1,195,097 107,529 23,111,075 (1,357,748) 257,438 (18,609) (59,917) $ 21,932,239
Principal
Revenue Bonds Interest
Total
2009 2010 2011 2012 2013 2014 - 2018 2019 - 2023 2024 - 2028 2029 - 2033 2034 - 2038 2039 - 2043 Premium Total
16,716 8,958 3,989 4,247 4,506 26,348 36,306 150,316 70,917 71,273 4,885 398,461 * 14,573 $ 413,034
12,696 17,473 16,922 16,705 16,469 78,284 69,921 53,842 31,814 10,153 279 324,558
$ 324,558
29,412 26,431 20,911 20,952 20,975 104,632 106,227 204,158 102,731 81,426 5,164 723,019 14,573 737,592
* Increase/Decrease is due to accretion adjustment on deep discount bonds, premium, discount and/or loss on refunding.
85
General Obligation Bonds General Comments several types of general obligation bonds. Each issue of from a primary revenue source related to the program The Texas Constitution authorizes the state to issue
issues bonds to provide funds to loan to eligible Texas veterans for the purchase of land, housing or home improvements. Principal and interest payments on loans, plus for bonds.
The General Land Office and Veterans Land Board
general obligation bonds is designed to be self-supporting being financed, except for the general obligation bonds of the Texas Public Finance Authority, the Water DevelopThe purpose and primary pledged revenue sources ment Board and the Constitutional Appropriation Bonds. of each type of general obligation bond are summarized below. The Texas Higher Education Coordinating Board
investment earnings, are the primary source of repayment The Texas Department of Transportation through
the Texas Mobility Fund issues bonds to pay part of the
costs of constructing, reconstructing, acquiring and expanding state highways and providing participation by the state viding certain publicly owned toll roads and other public in the payment of part of the costs of constructing and protransportation projects. Debt service is payable from bal-
issues bonds for educational loans to eligible Texas colapplied to debt service on the bonds.
lege students. Payments received on the loan contracts are The Texas Parks and Wildlife Department issues
ances in and revenues of the Mobility Fund, which include inspection fees, driver record information fees and driver Constitutional Appropriation Bonds are issued in
certain license plate fees, investment income, motor vehicle license fees. Residual funding is from state appropriations. support of the construction programs of colleges and universities not benefiting from the Permanent University Fund, which is dedicated to the University of Texas and
bonds to finance the acquisition and development of state applied to debt service on the bonds.
park sites. Park entrance fees and investment earnings are The Texas Public Finance Authority (Authority)
issues general obligation bonds to finance the acquisition,
construction or renovation of buildings for the use of state agencies and institutions. The Authority is also authorized economic development projects to enhance the value of priations. to issue general obligation bonds to assist local government military facilities. The bonds are payable from state approThe Texas Water Development Board issues bonds
Texas A&M University systems. Debt service payments on bonds issued are limited to the $131.3 million in General Revenue Funds available for debt service each year.
division within the Office of the Governor, issues general obligation bonds to provide financial assistance to export
The Economic Development and Tourism Office, a
to provide financial assistance to political subdivisions
businesses, to promote domestic business development, to improved products and processes and to provide loans to defense-related communities for economic development
for water development, water quality enhancement proj-
provide loans to finance the commercialization of new and
ects and flood control projects. Debt service payments are cal subdivisions, repayments of purchased water storage contracts and earnings on temporary investments.
funded by principal and interest received on loans to politi-
projects. Debt service payments are funded primarily from the repayment of loans and the disposition of debt instruments.
86
General Obligation Bonds Authorized But Unissued can be issued in any of the general obligation categories. As of Aug. 31, 2008, the amounts of general obligation The Texas Constitution limits the amount of bonds that
The bonds are payable from certain pledged revenues, primarily rentals from the Adjutant Generals Department. The Texas Public Finance Authority issues bonds to
bonds, other than Constitutional Appropriation Bonds, that were authorized but unissued are listed in the table below.
finance the acquisition of real property and the construction, equipping or renovation of buildings for the use of state agencies and institutions of higher education. The marily occupant-agency rentals collected.
bonds are payable from specified pledged revenues, priThe Texas Parks and Wildlife Department (Depart-
General Obligation Bonds Authorized But Unissued

SELF-SUPPORTING Texas Agricultural Finance Authority Bonds Farm and Ranch Loan Bonds Veterans Land and Housing Bonds Water Development Bonds College Student Loan Bonds Texas Military Preparedness Commission NOT SELF-SUPPORTING Agricultural Water Conservation Bonds Texas Public Finance Authority Bonds Water Development Bonds - Economically Distressed Areas Program
ment) issues bonds for infrastructure repairs and construction. The bonds are payable from rent payments made by
$ 25,000 475,000 147,157 1,974,238 600,482 200,405 3,422,282
the Department to the Texas Public Finance Authority that are funded from state appropriations. The General Land Office and Veterans Land Board
(Board) issues bonds to assist in the construction of skilled gage loans to veterans. The bonds are limited and special
nursing care facilities for veterans and to make home mortrevenue obligations of the Board payable solely from the related trust indentures.
164,840 4,260,623 262,013 4,687,476 $ 8,109,758
income, revenues, receipts and collateral pledged under the The Texas Department of Housing and Community
Total General Obligation Bonds
Affairs (Department) issues bonds to assist in financing the purchase of homes by, or the construction of rental housing for, families with low to moderate incomes. Loan pay-
Revenue Bonds General Comments revenue sources and restricted funds specified in the bond resolution. Each series is designed to be self-supporting except for the following, which are supported by pledged lease or rental revenue derived from contracts with other priations. state agencies, which in turn comes from legislative approAdjutant Generals Department Bonds Each series of revenue bonds is backed by the pledged
ments provide the revenues for debt service payments. The collateralized mortgage obligations of federal agencies to finance mortgage loans and carry out financial assistance programs.
Department has also issued taxable bonds for investment in
for the water pollution control revolving fund commonly referred to as the state revolving fund. The proceeds are used to provide financial assistance to political subdivi-
The Texas Water Development Board issues bonds
Texas Public Finance Authority Bonds
Texas Department of Criminal Justice Bonds Texas Parks and Wildlife Department Bonds
sions for water quality enhancement purposes. Principal for debt service requirements of the bonds.
and interest from political subdivision bonds are pledged Permanent University Fund (Fund) Bonds are
each type of revenue bond are summarized below.
The purpose and primary pledged revenue sources of The Adjutant Generals Department assumed the
issued by the University of Texas and Texas A&M University systems to build, equip or buy buildings or other permanent improvements. The Texas Constitution limits each and 10 percent, respectively, of the cost value of Fund
Texas Military Facilities Commissions responsibilities on Sept. 1, 2007. This includes the issuance of bonds for the construction, expansion and renovation of armories.
systems Fund debt to an amount not to exceed 20 percent
87
assets, excluding real estate. Revenue from investments of the Fund is pledged to secure the payment of interest and excluding real estate, was $10.8 billion. A comparison standing at that date is shown below. principal. The cost value of Fund assets at Aug. 31, 2008, between the legal debt limits and the actual bonds out-
public authority created within the Texas Water Development Board (Board), issued bonds in order to purchase from the Board the majority of existing political subdivi-
The Texas Water Resources Finance Authority, a
sion bonds held. Principal and interest from political subdivision bonds are pledged for debt service requirements of the bonds. The Texas Department of Transportation
Permanent University Fund Bonds

Legal Debt Limits Actual Bonds Payable Authorized But Unissued
through the State Highway Fund issues bonds for
certain State highway improvement projects. Debt
service is payable from revenues of the State High-
University of Texas System Texas A&M University System Total
$ 2,158,019 1,079,009 $ 3,237,028
$ 918,980 382,630 $ 1,301,610
$ 1,239,039 696,379 $ 1,935,418
way Fund, which include dedicated registration fees,
dedicated taxes, dedicated Federal revenues, amounts
Bonds are issued to provide funds to acquire, construct,
Miscellaneous College and University Revenue
Fund Revenue Law and any interest or earnings from the investment of these funds.
collected or received pursuant to other State Highway
improve, enlarge and equip property, buildings, structures governing board are secured by the income of the respecThe Texas Small Business Industrial Development
or facilities. The revenue bonds issued by each institutions tive institutions and are an obligation of the state of Texas. Corporation (TSBIDC), a nonprofit corporation, came under the management of the Office of the Governor
Authority issued bonds to pay a portion of the costs of planning, designing, engineering, developing and con-
The Texas Department of Transportation Turnpike
structing the initial phase of the Central Texas Turnpike
System located in the greater city of Austin metropolitan
area in Travis and Williamson counties. The bond obligaand pledge of the Trust Estate. Demand Bonds the Department of Housing and Community Affairs, the
tions are payable from and secured solely by a first lien on
(Office) effective Sept. 1, 2003, based on Senate Bill 275. The Office is now the oversight agency for the TSBIDC, component unit of the Office. The TSBIDC bond prowhose financial status is reported as a discretely presented gram is composed of revenue demand bonds secured by an amended irrevocable letter of credit (LOC) issued by lion. This instrument replaces the previous LOC issued Bank of America, N.A. (Bank of America) for $101.7 milby Kredietbank Bank. As of Aug. 31, 2008, no principal drawings have been made on the LOC. The Office does not have a take out agreement as part of this LOC or as a repurchase every seven days. Any bonds so tendered will or, if not successfully marketed, from amounts drawn under the LOC.
The Office of the Governor, the General Land Office,
Department of Transportation, the University of Houston
System and the University of Texas System had outstandin the tables on the following pages.
ing demand bonds at Aug. 31, 2008. Details are presented A bond holder may tender any of these bonds for
repurchase prior to maturity, usually every seven days. Any bonds so tendered will be purchased either by the proceeds of the remarketing of such bonds or, if not successfully remarketed, from amounts drawn under the letter of credit, liquidity agreement or standby purchase agreement of the respective agency until such time as the remarketing is finalized. As of Aug. 31, 2008, there have been no draws year end, draws were made.
separate agreement. Bondholders may tender the bonds for be purchased by proceeds of the remarketing of the bonds
on the letters of credit or other agreements. Subsequent to
88
Demand Bonds
Number of Demand Bond Issues 8/31/08 Standby Purchase Agreement Principal Balance Outstanding 8/31/08
GOVERNMENTAL ACTIVITIES General Obligation Bonds Office of the Governor Texas Department of Transportation Revenue Bonds Texas Department of Transportation Governmental Activities Total BUSINESS-TYPE ACTIVITIES General Obligation Bonds General Land Office General Land Office/Veterans Land Board Revenue Bonds University of Texas System Texas Department of Housing and Community Affairs University of Houston System Business-Type Activities Bond Total COMPONENT UNITS Revenue Bonds Office of the Governor Texas Department of Transportation Component Units Total
a See Demand Bonds - Standby Purchase Agreements table.
Letter of Credit
Other
Bonds Redeemed
2 2 4 1 1 5
2 b 3 a 3 1 a 1 4 0 2
None None None None None None
45,000 241,275 286,275
0 0
0 2
100,000 100,000 $ 386,275
29 6 35 3 7 1 11 46
29 a 6 a 35
0 3 b
None None None None None None None None
$ 1,140,155 156,035 1,296,190 1,015,440 469,303 16,127 1,500,870 $ 2,797,060
7 a 7 42 0 0 1 b 4 4
1 1 2
1 c 1 a 1 1 0
None None None
99,335 150,000 $ 249,335
b In the event redeemed bonds are not remarketed, internal funds of the agency are available for redemption. c In the event that redeemed bonds are not remarketed, a letter of credit with Bank of America will be used until remarketed.
Demand Bond Standby Purchase Agreements

Counterparties Secured Bond Issue Agreements Annual Liquidity Fee Agreement Termination Date
Comptroller of Public Accounts DEPFA Bank plc DEPFA Bank plc DEPFA Bank plc DEPFA Bank plc DEPFA Bank plc DEPFA Bank plc DEPFA Bank plc Landesbank Hessen-Thuringen Girozentrale Dexia Credit Local Dexia Credit Local Dexia Credit Local Dexia Credit Local Dexia Credit Local State Street Bank and Trust Company State Street Bank and Trust Company California Public Employees Retirement System Banco Bilbao Vizcaya Argentaria, S.A. Total
3 8 5 1 1 1 1 1 4 10 1 3 1 1 3 1 1 1 47
0.0400% 0.0750% 0.0750% 0.0750% 0.0800% 0.0900% 0.0900% 0.1000% 0.1500% 0.0650% 0.1000% 0.2750% 0.1225% 0.3150% 0.1100% 0.0500% 0.0500% 0.0875%
08/31/09 02/22/10 05/10/09 02/22/10 04/08/12 11/15/09 06/05/12 05/01/16 12/31/15 11/15/11 11/15/11 04/28/11 12/15/15 04/28/11 11/17/10 12/13/13 12/13/13 11/07/16
89
Housing and Community Affairs and the Department of
Takeout agreements are used by the Department of
keted within the prescribed time constraints. The Demand provides the estimated impact of such an event.
Transportation to provide an alternative debt instrument to replace any repurchased bonds that have not been remar-
Bonds - Takeout Agreement Provisions table shown below
Demand Bonds Takeout Agreement Provisions

Estimated Debt Service Rate Basis
Governmental Activities General Obligation Bonds Texas Department of Transportation Texas Mobility Fund Bonds Series 2005B Series 2006B Revenue Bonds Texas Department of Transportation State Highway Fund Revenue Bonds Series 2006B Business Type Activities Revenue Bonds Texas Department of Housing and Community Affairs Single Family Bonds Series 2007A Series 2006H Series 2005A Series 2004D Series 2004B Series 2005C Series 2004 Jr. Lien Component Units Revenue Bonds Texas Department of Transportation Texas Turnpike Authority, Central Texas Turnpike System 1st Tier Variable Rate Demand Bonds Series 2002B Total
104,276 a 166,640 b
4.07% 8.32%
Fed Funds Rate (prior 7 Yr. Ave.) + 1.25% Bank Prime Rate (prior 3 Yr. Ave.) + 1%
115,533 b 386,449
9.32%
Bank Prime Rate (prior 3 Yr. Ave.) + 2%
167,521 42,750 116,203 42,875 64,925 8,568 4,722 447,564
c c c c c c c
5.00% 5.00% 6.00% 6.00% 6.00% 5.00% 6.00%
Bank Prime Rate (Nov. '08) Bank Prime Rate (Nov. '08) Bank Prime Rate (Nov. '08) Bank Prime Rate (Nov. '08) Bank Prime Rate (Nov. '08) Bank Prime Rate (Nov. '08) Bank Prime Rate (Nov. '08)
+ 1% + 1% + 2% + 2% + 2% + 1% + 2%
202,689 d 202,689 1,036,702
5.51%
Fed Funds Rate (prior 13 Yr. Ave.) + 1.5%
a b c d
Replacement debt is subject to semi-annual payments over seven years starting the first day of the third month of that period. Replacement debt is subject to semi-annual payments over three years starting the first day of the second month of that period. Replacement debt is subject to semi-annual payments over seven years starting the first day of the third month of that period. Replacement debt is subject to quarterly payments over thirteen years starting the first day of the fourth month of that period.
90
Early Extinguishment of Debt 2008 are as follows. The source of funds used for the extinguishments included loan repayments and other available funds. Entities that had early debt extinguishments in fiscal
Early Extinguished Debt Issues

BUSINESS-TYPE ACTIVITIES General Obligation Bonds General Land Office Revenue Bonds Texas Workforce Commission Texas Department of Housing and Community Affairs Texas Southern University University of Texas System Business-Type Activities Total Grand Total
8,460
Refunding lower interest rates or to restructure debt service requirements for cash management purposes. During fiscal 2008, seven entities refunded bonds to
248,060 89,807 3,090 3,800 353,217 $ 353,217
Refunding Issues
Par Value of Refunding Issue Par Value Refunded Cash Flow Difference Increase
GOVERNMENTAL ACTIVITIES General Obligation Bonds Texas Higher Education Coordinating Board Texas Public Finance Authority Revenue Bonds Texas Public Finance Authority Governmental Activities Total BUSINESS-TYPE ACTIVITIES General Obligation Bonds General Land Office and Veterans Land Board Texas Water Development Board Revenue Bonds Texas Department of Housing and Community Affairs Texas State University System University of Texas System University of Texas System Business-Type Activities Total Grand Total
Types of Refunding
Economic Gain
Current Refunding Current Refunding
72,600 381,655 454,255 60,910 515,165
75,730 405,490 481,220 60,945 542,165
2,010 30,518 32,528 2,578 35,106
$ 5,686 27,381 33,067 2,203 35,270
Current Refunding
Current Refunding Current Refunding
54,160 118,465 172,625 14,000 18,250 34,925 345,460 412,635 585,260 $ 1,100,425
54,160 121,510 175,670 14,000 18,540 34,715 318,875 386,130 561,800 $ 1,103,965
5,378 14,670 20,048 (248) 846 1,873 49,439 51,910 71,958 $ 107,064
2,510 6,611 9,121 (154) 845 1,583 30,193 32,467 41,588 $ 76,858
Current Refunding Current Refunding Current Refunding Advance Refunding
91
Defeased Bonds Outstanding funds in irrevocable trusts in the Texas Treasury Safekeepinstitutions to provide for all future debt service payments on the old bonds. Funds placed in the Trust Company to Texas has defeased various bond issues by placing
Defeased Bonds Outstanding

GOVERNMENTAL ACTIVITIES General Obligation Bonds Texas Water Development Board Texas National Research Laboratory Commission Texas Public Finance Authority Texas Parks and Wildlife Department Revenue Bonds Texas Public Finance Authority Texas Parks and Wildlife Department BUSINESS-TYPE ACTIVITIES General Obligation Bonds General Land Office and Veterans Land Board Texas Water Development Board Revenue Bonds University of Texas System Texas A&M University System Texas Tech University System Texas State University System Texas Workforce Commission University of Houston System University of North Texas System Texas Water Development Board Midwestern State University Stephen F. Austin State University Texas Southern University
ing Trust Company (Trust Company) and external financial
defease $313.1 million in bonds are included in the states financial statements in an agency fund. The trust account included in the states financial statements. Pledged Future Revenues ables and Future Revenues and Intra-Entity Transfers of Assets and Future Revenues, was implemented this year. GASB Statement No. 48, Sales and Pledges of Receivassets and the liability for all other defeased bonds are not
49,515 37,900 182,882 8,250 138,550 23,645 440,742
64,700 34,900 1,734,212 174,626 125,135 42,115 84,640 44,430 25,255 17,425 5,525 3,021 3,300 2,359,284 $ 2,800,026
The statement makes a basic distinction between sales of
receivables and future revenues, on the one hand, and the
pledging of receivables or future revenues to repay a bor-
rowing (a collateralized borrowing), on the other. The table below provides the pledged future revenue information for the states revenue bonds.
Total
Pledged Future Revenue

Governmental Activities Business-Type Activities Component Units
Pledged Revenue Required for Future Principal and Interest on Existing Revenue Bonds Term of Commitment Year Ending August 31, Percentage of Revenue Pledged Current Year Pledged Revenue Current Year Principal and Interest Paid
$ 4,968,281 2028 100% 6,748,490 230,453
$ 23,111,075 2047 100% 10,255,735 979,153
$ 723,019 2041 100% 10,971 8,700
92
Conduit Debt (Corporation) is authorized to issue statewide 501(c)(3) tax-exempt multifamily mortgage revenue bonds under the Texas Government Code 2306.555. The 501(c)(3) The Texas State Affordable Housing Corporation
DERIVATIVES
the Texas Department of Housing and Community Affairs and the University of Texas System (UT) have reported derivatives. During fiscal 2008 the Veterans Land Board (VLB),
(the Department), the Texas Department of Transportation
tax-exempt multifamily mortgage revenue bond program profit borrower/developers of new or existing multifamily rental properties in order to generate and/or preserve affordable rental housing. The Corporation may finance
provides long-term variable or fixed rate financing to non-
Pay-Fixed, Receive-Variable Interest Rate Swaps (Veterans Land Board) currently a party to 43 pay-fixed, receive-variable interest rate swaps that are associated with 46 variable-rate bond creates synthetic fixed-rate debt. The use of synthetic issues. The combination of swaps and variable-rate bonds fixed-rate debt has historically lowered the VLBs borrowing costs, as compared to the borrowing costs associated of the swaps contain embedded barrier options that provide for the VLB to be knocked out of the swaps by with the issuance of traditional fixed-rate bonds. Several Objective of the Swaps: The Veterans Land Board is
single developments or pools of properties located throughout the state of Texas. Borrowers must agree to set aside a prescribed percentage of a propertys units for rent to per-
sons and families of low income. The Corporation finances properties under the program primarily through the sale of tax-exempt multifamily housing revenue bonds. The bonds are secured by the property financed and
are payable solely from payments received on the underlying mortgage loans. Neither the Corporation, the state nor any political subdivision thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying statements.
the respective counterparties upon the breach of a certain paid an up-front option premium by the respective coun-
predetermined barrier. In each of these cases, the VLB was terparties. With regard to the swaps associated with the Vet Land Tax Ref Bds Ser 99B and the Vet Land Tax Ref Bds Ser 2000, the knock-outs are permanent and are optional at the discretion of the counterparty. In the remainder of the swaps with embedded barrier options, the knock-out
ily housing revenue bonds outstanding with an aggregate $329 million principal amount payable.
As of Aug. 31, 2008, there were 22 series of multifam-
is mandatory and is periodic in nature, with the knock-out period corresponding only to the period during which the barrier was breached. Terms, Fair Values and Credit Ratings: The terms,
fair values and counterparty credit ratings related to the
outstanding variable-to-fixed swaps as of Aug. 31, 2008,
are shown in the tables on the following pages. The notional amounts and amortization schedules of the swaps match those of the associated variable-rate bonds.
93
Pay-Fixed Receive-Variable Interest Rate Swaps

Notional Amount Effective Date Fixed-Rate Paid Variable-Rate Received Knock-out Barrier
Associated Bond Issue
GENERAL LAND OFFICE VETERANS LAND BOARD Vet Hsg Ref Bds Ser '95 $ Vet Land Ref Bds Ser '99A Vet Land Tax Ref Bds Ser '99B Vet Land Tax Ref Bds Ser 2000 Vet Hsg Fund II Bds Ser 2001A-2 Vet Hsg Fund II Bds Ser 2001C-2 Vet Land Bds Ser 2002 Vet Hsg Fund II Bds Ser 2002A-2 Vet Land Tax Ref Bds Ser 2002 Vet Hsg Fund I Tax Ref Bds Ser 2002B Vet Hsg Fund II Bds Ser 2003A Vet Hsg Fund II Bds Ser 2003B Vet Land Tax Ref Bds Ser 2003 Vet Hsg Fund I Tax Ref Bds Ser 2003 Vet Hsg Fund II Bds Ser 2004A Vet Hsg Fund I Tax Ref Bds Ser 2004 Vet Hsg Fund II Bds Ser 2004B Vet Land Tax Ref Bds Ser 2004 Vet Hsg Fund II Tax Ref Bds Ser 2004C,D,E Vet Hsg Fund II Bds Ser 2005A Vet Hsg Fund II Bds Ser 2005B Vet Land Tax Ref Bds Ser 2005 Vet Hsg Fund I/II Tax Ref Bds Ser 2005C/D
57,385 28,835 13,955 39,960 20,000 25,000 18,220 26,380 27,685 19,780 40,755 41,980 25,535 47,865 42,280 16,535 45,105 23,245 38,130 44,770 45,480 21,775 24,055
11/29/1995 06/01/1999 12/01/1999 12/01/2000 03/22/2001 12/18/2001 02/21/2002 07/10/2002 12/01/2002 12/01/2002 03/04/2003 10/22/2003 12/01/2003 12/01/2003 04/07/2004 06/01/2004 09/15/2004 12/01/2004 12/01/2004 02/24/2005 08/09/2005 12/01/2005 12/01/2005
5.5200% 5.1120% 5.1250% 6.1060% 4.3000% 4.3650% 4.1400% 3.8725% 4.9350% 4.9100% 3.3040% 3.4030% 5.1230% 5.1900% 3.3130% 5.4500% 3.6800% 5.4550% 5.3480% 3.2790% 3.0870% 6.5170% 5.1450%
Actual Bond Rate 68% of 6M LIBOR** 100% of 6M LIBOR 100% of 6M LIBOR 68% of 1M LIBOR 68% of 1M LIBOR 68% of 1M LIBOR 68% of 1M LIBOR 100% of 6M LIBOR 100% of 6M LIBOR 68% of 1M LIBOR 64.5% of 1M LIBOR 100% of 1M LIBOR 100% of 6M LIBOR 68% of 1M LIBOR 100% of 6M LIBOR 68% of 1M LIBOR 100% of 6M LIBOR 100% of 1M LIBOR 68% of 1M LIBOR 68% of 1M LIBOR 100% of 6M LIBOR 100% of 1M LIBOR
Vet Hsg Fund I Tax Ref Bds Ser 2005C
18,030
12/01/2005
4.9290%
100% of 1M LIBOR
Vet Hsg Fund I Tax Ref Bds Ser 2005C Vet Hsg Fund II Bds Ser 2006A Vet Land Tax Ref Bds Ser 2006A Vet Hsg Fund II Tax Ref Bds Ser 2006C Vet Hsg Fund II Tax Ref Bds Ser 2006B Vet Land Tax Ref Bds Ser 2006B Vet Hsg Fund II Bds Ser 2006D Vet Land Tax Ref Bds Ser 2006C Vet Hsg Fund II Tax Ref Bds Ser 2006E
3,365 46,740 29,680 21,375 38,570 22,990 48,170 38,800 39,560
12/01/2005 06/01/2006 06/01/2006 06/01/2006 06/01/2006 06/01/2006 09/20/2006 12/01/2006 12/01/2006
4.3300% 3.5170% 6.5400% 5.7900% 5.8300% 4.6100% 3.6890% 6.5130% 5.4610%
100% of 1M LIBOR 68% of 1M LIBOR 100% of 6M LIBOR 100% of 6M LIBOR 100% of 1M LIBOR 100% of 6M LIBOR 68% of 1M LIBOR 100% of 1M LIBOR 100% of 1M LIBOR
Vet Hsg Fund II Tax Ref Bds Ser 2007 Vet Hsg Fund II Bds Ser 2007A Vet Hsg Fund II Bds Ser 2007B Vet Hsg Fund II Tax Ref Bds Ser 2008A Vet Hsg Fund II Tax Ref Bds Ser 2008B Vet Hsg Fund II Tax Ref Bds Ser 2009 Vet Hsg Fund II Tax Ref Bds Ser 2009A Vet Hsg Fund II Tax Ref Bds Ser 2010A
51,615 48,700 49,620 50,000 50,000 16,950 65,845 66,720
12/01/2007 02/22/2007 06/26/2007 03/26/2008 09/11/2008 12/01/2009 12/01/2009 06/01/2010
4.6580% 3.6450% 3.7120% 3.1890% 3.2250% 6.2200% 5.4525% 5.4010%
100% of 1M LIBOR 68% of 1M LIBOR 68% of 1M LIBOR 68% of 1M LIBOR 68% of 1M LIBOR 100% of 6M LIBOR 100% of 6M LIBOR 100% of 1M LIBOR
Vet Land Tax Ref Bds Ser 2010
16,480
12/01/2010
5.2090%
100% of 1M LIBOR
Vet Homes Rev Ref Bds, Ser 2012 Subtotal General Land Office Veterans Land Board
21,795 1,479,715
08/01/2012
3.7600%
68% of 1M LIBOR
N/A N/A 1M LIBOR >= 6.50% 1M LIBOR >= 7.00% N/A N/A N/A N/A 6M LIBOR >= 7.00% 6M LIBOR > 7.00% N/A N/A 1M LIBOR >= 7.00% 6M LIBOR > 7.00% N/A 6M LIBOR >= 7.00% N/A 6M LIBOR >= 7.00% 1M LIBOR >= 7.00% N/A N/A 6M LIBOR >= 7.00% 1M LIBOR >= 7.00%; 6M LIBOR > 4.00% and SIFMA***/LIBOR Ratio > 74% 1M LIBOR >= 7.00%; 6M LIBOR > 4.00% and SIFMA/LIBOR Ratio > 74% N/A N/A 6M LIBOR >= 7.00% 6M LIBOR >= 7.00% 1M LIBOR >= 7.00% 6M LIBOR >= 7.00% N/A 1M LIBOR >= 7.00% 1M LIBOR >= 7.00%; 6M LIBOR > 4.00% and SIFMA/LIBOR Ratio > 74% 1M LIBOR >= 7.00%; SIFMA/5Y ISDA CMS >71% N/A N/A N/A N/A 6M LIBOR >= 7.00% 6M LIBOR >= 7.00% 1M LIBOR >= 7.00%; 6M LIBOR > 4.00% and SIFMA/LIBOR Ratio > 74% 1M LIBOR >= 7.00%; 6M LIBOR > 4.00% and SIFMA/LIBOR Ratio > 74% 1M LIBOR >= 7.00%
Continued on the following page 94 The 2008 Comprehensive Annual Financial Report for the State of Texas
Pay-Fixed Receive-Variable Interest Rate Swaps (continued)

Knock-out Type Knock-out Period Up-Front Knock-out Premium Received Swap Termination Date Counterparty Credit Ratings *
Fair Value
GENERAL LAND OFFICE VETERANS LAND BOARD Vet Hsg Ref Bds Ser '95 Vet Land Ref Bds Ser '99A Vet Land Tax Ref Bds Ser '99B Vet Land Tax Ref Bds Ser 2000 Vet Hsg Fund II Bds Ser 2001A-2 Vet Hsg Fund II Bds Ser 2001C-2 Vet Land Bds Ser 2002 Vet Hsg Fund II Bds Ser 2002A-2 Vet Land Tax Ref Bds Ser 2002 Vet Hsg Fund I Tax Ref Bds Ser 2002B Vet Hsg Fund II Bds Ser 2003A Vet Hsg Fund II Bds Ser 2003B Vet Land Tax Ref Bds Ser 2003 Vet Hsg Fund I Tax Ref Bds Ser 2003 Vet Hsg Fund II Bds Ser 2004A Vet Hsg Fund I Tax Ref Bds Ser 2004 Vet Hsg Fund II Bds Ser 2004B Vet Land Tax Ref Bds Ser 2004 Vet Hsg Fund II Tax Ref Bds Ser 2004C,D,E Vet Hsg Fund II Bds Ser 2005A Vet Hsg Fund II Bds Ser 2005B Vet Land Tax Ref Bds Ser 2005 Vet Hsg Fund I/II Tax Ref Bds Ser 2005C/D
N/A N/A Optional Optional N/A N/A N/A N/A Mandatory Mandatory N/A N/A Mandatory Mandatory N/A Mandatory N/A Mandatory Mandatory N/A N/A Mandatory Mandatory
N/A N/A Permanent Permanent N/A N/A N/A N/A Periodic Periodic N/A N/A Periodic Periodic N/A Periodic N/A Periodic Periodic N/A N/A Periodic Periodic
N/A N/A 740 2,700 N/A N/A N/A N/A 2,785 2,165 N/A N/A 1,896 4,470 N/A 1,442 N/A 2,075 2,594 N/A N/A 1,542 1,367 566 484 267 N/A N/A 1,931 1,493 1,992 886 N/A 2,725 2,652 1,018 935 1,020 N/A N/A N/A N/A 612 2,740 2,355 1,427 466 208 579 48,132
$ (7,578) (3,491) (332) (5,579) (2,784) (4,179) (2,098) (2,467) (2,017) (1,425) (1,228) (1,712) (2,268) (4,108) (1,276) (2,140) (2,798) (2,627) (3,853) (1,215) (493) (4,491) (3,285)
12/01/2016 12/01/2018 12/01/2009 12/01/2020 12/01/2029 12/01/2033 12/01/2032 06/01/2033 12/01/2021 06/01/2023 06/01/2034 06/01/2034 12/01/2023 06/01/2021 12/01/2034 12/01/2024 12/01/2034 12/01/2024 06/01/2020 06/01/2035 06/01/2036 12/01/2026 06/01/2026
A-/A2 A-/A2 AAA/Aaa AAA/Aaa AA-/Aa1 AAA/Aaa A+/A1 AAA/Aaa A+/A1 AAA/Aaa AA/Aaa AAA/Aaa AA/Aaa AAA/Aaa AAA/Aaa AAA/Aaa AAA/Aaa A+/A1 AA-/Aaa AAA/Aaa AAA/Aaa AAA/Aaa AA/Aaa
Vet Hsg Fund I Tax Ref Bds Ser 2005C
Mandatory
Periodic
(1,728)
12/01/2023
AA-/Aaa
Vet Hsg Fund I Tax Ref Bds Ser 2005C Vet Hsg Fund II Bds Ser 2006A Vet Land Tax Ref Bds Ser 2006A Vet Hsg Fund II Tax Ref Bds Ser 2006C Vet Hsg Fund II Tax Ref Bds Ser 2006B Vet Land Tax Ref Bds Ser 2006B Vet Hsg Fund II Bds Ser 2006D Vet Land Tax Ref Bds Ser 2006C Vet Hsg Fund II Tax Ref Bds Ser 2006E
N/A N/A Mandatory Mandatory Mandatory Mandatory N/A Mandatory Mandatory
N/A N/A Periodic Periodic Periodic Periodic N/A Periodic Periodic
(55) (2,018) (6,164) (3,165) (6,861) (1,190) (2,871) (8,185) (6,922)
12/01/2009 12/01/2036 12/01/2027 12/01/2027 12/01/2026 12/01/2026 12/01/2036 12/01/2027 12/01/2026
AA-/Aaa AAA/Aaa AAA/Aaa AAA/Aaa AA-/Aaa AAA/Aaa AA-/Aa2 AA/Aaa AA/Aaa
Vet Hsg Fund II Tax Ref Bds Ser 2007 Vet Hsg Fund II Bds Ser 2007A Vet Hsg Fund II Bds Ser 2007B Vet Hsg Fund II Tax Ref Bds Ser 2008A Vet Hsg Fund II Tax Ref Bds Ser 2008B Vet Hsg Fund II Tax Ref Bds Ser 2009 Vet Hsg Fund II Tax Ref Bds Ser 2009A Vet Hsg Fund II Tax Ref Bds Ser 2010A
Mandatory N/A N/A N/A N/A Mandatory Mandatory Mandatory
Periodic N/A N/A N/A N/A Periodic Periodic Periodic
(4,857) (2,966) (3,391) (698) (882) (1,862) (6,969) (9,181)
06/01/2029 06/01/2037 06/01/2038 06/01/2037 06/01/2038 12/01/2021 06/01/2031 12/01/2031
AA/Aaa AAA/Aaa AAA/Aaa AAA/Aaa AAA/Aaa AAA/Aaa AAA/Aaa AA/Aaa
Vet Land Tax Ref Bds Ser 2010
Mandatory
Periodic
(1,781)
12/01/2030
AA/Aaa
Vet Homes Rev Ref Bds, Ser 2012 Subtotal General Land Office Veterans Land Board
Mandatory
Periodic
(1,566) (136,756)
08/01/2035
AAA/Aaa
Continued on the following page The 2008 Comprehensive Annual Financial Report for the State of Texas 95
Pay-Fixed Receive-Variable Interest Rate Swaps (continued)

Notional Amount Effective Date Fixed-Rate Paid Variable-Rate Received Knock-out Barrier
TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS 2004B Single Family 2004D Single Family
53,000 35,000
09/01/2004 01/01/2005
3.8430% 3.6125%
2005A Single Family
94,860
08/01/2005
3.9900%
2006H Single Family 2007A Single Family
36,000 141,070
11/15/2006 06/05/2007
3.8570% 4.0130%
63% of LIBOR + .30% Lesser of (the greater of 65% of LIBOR and 56% of LIBOR + .45%) and LIBOR Lesser of (the greater of 65% of LIBOR and 56% of LIBOR + .45%) and LIBOR 63% of LIBOR + .30% Lesser of (the greater of 65% of LIBOR and 56% of LIBOR + .45%) and LIBOR
N/A N/A
N/A
N/A N/A
Subtotal Tx. Dept. of Housing and Comm Affairs UNIVERSITY OF TEXAS SYSTEM Rev Fin Sys Ref Bds Ser 2001A Rev Fin Sys Ref Bds Ser 2007B Rev Fin Sys Ref Bds Ser 2008 Rev Fin Sys Ref Bds Ser 2008 Subtotal University of Texas System Total
359,930
19,715 345,460 310,000 375,485 1,050,660 $ 2,890,305
08/15/2001 12/20/2007 03/18/2008 03/18/2008
4.6330% 3.8050% 3.9000% 3.6140%
67% of 1M LIBOR 100% of SIFMA 100% of SIFMA 100% of SIFMA
N/A N/A N/A N/A
* Standard and Poor's, Moody's Investor Service and Fitch Ratings, LTD. ** London Interbank Offered Rate (LIBOR). *** Securities Industry and Financial Markets Association Index (SIMFA) rate.
96
Pay-Fixed Receive-Variable Interest Rate Swaps (concluded)

Knock-out Type Knock-out Period Up-Front Knock-out Premium Received Swap Termination Date Counterparty Credit Ratings *
Fair Value
TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS 2004B Single Family 2004D Single Family
N/A N/A
N/A N/A
N/A N/A
(2,511) (1,344)
09/01/2034 03/01/2035
AA-/Aa2/AA+ A/NR/AA-
2005A Single Family
N/A
N/A
N/A
(3,327)
09/01/2036
AAA/Aaa/NR
2006H Single Family 2007A Single Family
N/A N/A
N/A N/A
N/A N/A
(1,829) (4,927)
09/01/2025 09/01/2038
AA-/Aa2/AA+ AAA/Aaa/NR
Subtotal Tx. Dept. of Housing and Comm Affairs UNIVERSITY OF TEXAS SYSTEM Rev Fin Sys Ref Bds Ser 2001A Rev Fin Sys Ref Bds Ser 2007B Rev Fin Sys Ref Bds Ser 2008 Rev Fin Sys Ref Bds Ser 2008 Subtotal University of Texas System Total
(13,938)
N/A N/A N/A N/A
N/A N/A N/A N/A
N/A N/A N/A N/A 0 $ 48,132
(1,231) (7,315) (10,524) (2,965) (22,035) $(172,729)
08/15/2013 08/01/2034 08/01/2036 08/01/2039
AA/Aaa 50% AA/Aaa 50% AA-/Aa2 50% AA/Aaa 50% A+/A1 AA/Aaa
97
Pay-Variable, Receive-Fixed Interest Rate Swaps (Veterans Land Board) to one pay-variable, receive-fixed interest rate swap that Objective of the Swaps: The VLB is currently a party
Terms, Fair Values and Credit Ratings: The terms,
outstanding fixed-to-variable basis swaps as of Aug. 31,
is associated with a taxable variable-rate bond issue. The
2008, are shown in the table below. The notional amounts associated variable-rate bonds.
swap was overlaid on an existing pay-fixed, receive-vari-
and amortization schedules of the swaps match those of the
able swap and effectively results in unhedged variable-rate market over the life of the swap.
bonds with an expected borrowing cost significantly below
Pay-Variable Receive-Fixed Interest Rate Swaps

Associated Bond Issue Notional Amount Effective Date Variable-Rate Paid Fixed-Rate Received Knock-out Barrier
GENERAL LAND OFFICE VETERANS LAND BOARD Vet Land Tax Ref Bds Ser 2006B Total
$ 22,990 $ 22,990
06/01/2006
100% of 6M LIBOR
4.6100%
6M LIBOR >= 8.00%
Knock-out Type
Knock-out Period
Up-Front Knock-out Premium Received
Fair Value
Swap Termination Date
Counterparty Credit Ratings
GENERAL LAND OFFICE VETERANS LAND BOARD Vet Land Tax Ref Bds Ser 2006B Total
Mandatory
Periodic
674 $ 674
$ 978 $ 978
12/01/2026
AAA/Aaa
98
Pay-Variable, Receive-Variable Interest Rate Swaps (Veterans Land Board) to four pay-variable, receive-variable interest rate swaps that are associated with three taxable variable-rate bond issues. These swaps are London Interbank Offered Rate Objective of the Swaps: The VLB is currently a party
Fair Value Methodology and Risk Exposure of Swap Transactions (Veterans Land Board) ed using the zero-coupon method. Using observable market information for Treasury bonds and LIBOR spreads, a smoothed LIBOR swap yield curve is constructed. From this swap yield curve, the path of future expected floating LIBOR interest rates is determined for a specific swap aged together to produce a single fixed swap rate for the same time horizon as the swap being valued. The differfixed swap rate on the transaction is then multiplied by payment date to generate a series of payments. These Fair Value: The fair values of the swaps were estimat-
(LIBOR) - to - Securities Industry Financial Markets Association rate (SIFMA) basis swaps and effectively convert from a LIBOR (taxable) based rate to a SIFMA (taxthe variable rate on the associated variable-rate bond issues exempt) based rate. The swaps are expected to generate an effective lower borrowing cost to the VLB over the life of the swaps. Terms, Fair Values and Credit Ratings: The terms,
transaction. The path of the floating payments is then aver-
ence between this calculated fixed swap rate and the actual the applicable outstanding notional amount at each future payments are then discounted back to the valuation date
outstanding variable-to-variable basis swaps as of Aug. 31, 2008, are shown in the table below. The notional amounts associated variable-rate bonds. and amortization schedules of the swaps match those of the
using hypothetical zero-coupon bond rates derived from payments produces the fair value of the swap.
the LIBOR swap yield curve. The sum of these discounted
Pay-Variable Receive-Variable Interest Rate Swaps

Notional Amount Effective Date Variable-Rate Paid Variable-Rate Received Swap Termination Date Counterparty Credit Ratings *
Fair Value
GENERAL LAND OFFICE VETERANS LAND BOARD Vet Hsg Fund II Tax Bds Ser '97B-2 Vet Hsg Fund II Tax Bds Ser '99A-2 Vet Hsg Fund II Tax Bds Ser '99A-2 Vet Land Tax Bds Ser 2000A/2002A Subtotal General Land Office Veterans Land Board TEXAS DEPARTMENT OF TRANSPORTATION Mobility Fund GO Bds Ser 2006A
$ 25,000 90,000 60,000 36,580
09/27/2002 08/05/2002 08/05/2002 08/05/2002
132.60% of SIFMA 134.40% of SIFMA 134.40% of SIFMA 131.25% of SIFMA
100% of 3M LIBOR 100% of 1M LIBOR 100% of 1M LIBOR 100% of 1M LIBOR
$ 163 156 137 (239)
12/01/2010 09/01/2011 09/01/2011 12/01/2032
AA/Aaa AAA/Aaa AAA/Aaa A+/A1
211,580
217
400,000
09/01/2007
100% of SIFMA
69.42% 10Y USD-ISDA
4,081
09/01/2027
50% AA-/Aa2/AA25% AAA/Aaa/NR 25% A+/A1/AA-
Subtotal Texas Department of Transportation Total
400,000 $ 611,580
4,081 $ 4,298
* Standard and Poor's, Moody's Investor Service and Fitch Ratings, LTD.
99
culation similar to that described above is conducted to determine the value of the options. Using the approach
For swaps with embedded options, an additional cal-
rate leg of each swap that is reasonably expected to closely bonds over the life of each bond issue.
match the interest rate resets on the associated variable-rate Termination Risk: The VLB or the counterparties may
described above, a swap rate is derived for each potential
exercise date of each option. Market-derived data for interest rate volatility is then used to determine a probabilistic range of potential swap rates. For each potential swap rate, a value is determined for the option. These values are then weighted by their probabilities and discounted back to the valuation date using hypothetical zero-coupon bond rates as described above. The sum of the present value of the option.
terminate any of the swaps if the other party fails to per-
form under the terms of the respective swap agreements. at any time without cause. In addition, the swaps associ-
The VLB also has the right to terminate any of the swaps ated with the Vet Land Tax Ref Bds Ser 99B and the Vet
Land Tax Ref Bds Ser 2000 provide the counterparty with the option to terminate the swap under certain conditions. If any of the swaps are terminated, the associated variablerate bonds would no longer have a synthetic fixed rate and that the variable-rate bonds were not hedged with another swap or with variable-rate assets on the VLBs balance the VLB would be subject to interest rate risk to the extent
values for each exercise date produces the fair value of the Credit Risk: The VLB mitigates the credit risk asso-
ciated with its swaps by entering into transactions with
highly-rated counterparties. As shown in the tables on the ties range from AAA to A- by Standard & Poors (S&P)
previous page, the credit ratings of the VLBs counterparand Aaa to A2 by Moodys Investors Service (Moodys).
sheet. If, at the time of termination for a reason other than a swap has a negative fair value, the VLB would owe the swaps fair value.
the exercise of a termination option held by a counterparty, respective counterparty a termination payment equal to the Rollover Risk: The swaps associated with the Vet
by diversifying its swap portfolio across several different are spread among nine different counterparties with no
The VLB also mitigates its concentration of credit risk
counterparties. The VLBs 48 currently outstanding swaps more than 26 percent of the total notional amount of swaps outstanding being associated with any single counterparty. tion provisions that require counterparties to post collateral in the full amount of the fair value of the swap if the counterpartys credit rating is at or below A+ by S&P or A1 by Moodys. Only U.S. Government The VLBs swap agreements also contain collateraliza-
Land Tax Ref Bds Ser 99B and the Vet Land Tax Ref
Bds Ser 2000 provide the counterparty with the option to terminate the swap under certain conditions at any time.
Interest Rate Swaps Subject to Rollover

Associated Bond Issue Maturity Date of Bonds Option Exercise Date Swap Termination Date
obligations are acceptable forms of collateral. Posted collateral may be held either by the VLB itself or by S&P or Baa1 by Moodys. a third party custodian that is rated at least BBB+ by Basis Risk: The VLB is exposed to basis risk to
GENERAL LAND OFFICE VETERANS LAND BOARD Vet Land Tax Ref Bds Ser '99B Vet Land Tax Ref Bds Ser 2000 TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS 2004 Single Family Series B 2004 Single Family Series D 2005 Single Family Series A 2006 Single Family Series H 2007 Single Family Series A
12/01/09 12/01/20
04/29/02 04/29/02
12/01/09 12/01/20
the extent that the interest payments on its variable-rate on the associated swaps. The VLB mitigates this risk schedule of each swap to the principal amount and
bonds do not match the variable-rate payments received by (a) matching the notional amount and amortization amortization schedule of each associated variable-rate bond issue and (b) selecting an index for the variable-
09/01/34 03/01/35 09/01/36 09/01/37 09/01/38
03/01/14 09/01/14 Anytime with 10 day notice 03/01/16 Anytime with 10 day notice
09/01/34 03/01/35 09/01/36 09/01/25 09/01/38
TEXAS DEPARTMENT OF TRANSPORTATION Mobility Fund GO Bds Ser 2006A 04/01/35
N/A
09/01/27
100
If either of these swaps is terminated through the counterpartys exercise of its option, the associated variable-rate VLB would be subject to interest rate risk to the extent swap or with variable-rate assets on the VLBs balance sheet. bonds would no longer have a synthetic fixed rate and the that the variable-rate bonds were not hedged with another
of the VLBs variable-rate bonds and associated net swap payments, assuming current interest rates and swap index relationships remain the same for their terms, are shown in the tables below: Pay-Fixed, Receive-Variable Inter-
est Rate Swaps: Estimated Debt Service Requirements of
Variable-Rate Debt Outstanding and Net Swap Payments and Pay-Variable, Receive-Variable Interest Rate Swaps: Estimated Debt Service Requirements of Variable-Rate Debt Outstanding and Net Swap Payments. As rates and actual interest payments and net swap payments.
in the table on the previous page.
Bonds that are exposed to such rollover risk are shown Swap Payments and Associated Debt: Using rates as
of Aug. 31, 2008, the estimated debt service requirements
index relationships vary in the future, so will the resulting
Pay-Fixed, Receive-Variable Interest Rate Swaps: Estimated Debt Service Requirements of VariableRate Debt Outstanding and Net Swap Payments
Variable-Rate Bonds Principal Interest Interest Rate Swaps, Net
Pay-Variable, Receive-Variable Interest Rate Swaps (Texas Department of Transportation) Department of Transportations Texas Objective of the Swaps: The Texas
Transportation Commission (Commission)

Total
Year
is currently a party to three pay-variable,
2009 2010 2011 2012 2013 2014 - 2018 2019 - 2023 2024 - 2028 2029 - 2033 2034 - 2038 2039 - 2043 Total
67,250 80,790 73,335 79,755 85,455 489,720 507,660 541,675 468,520 249,870 9,930
52,063 50,625 49,026 47,566 45,989 201,353 147,241 93,647 47,050 12,408 163
57,277 55,728 53,982 52,321 50,516 220,705 162,904 103,800 51,742 13,156 171
$ 176,590 187,143 176,343 179,642 181,960 911,778 817,805 739,122 567,312 275,434 10,264 $ 4,223,393
receive-variable Constant Maturity Swaps (CMS) associated with the Commissions State of Texas General Obligation Mobility Fund Series 2006A fixed rate bonds. These swaps exchange SIFMA rates for LIBOR rates. The swaps are expected to generate an effective lower borrowing cost to
$ 2,653,960
$ 747,131
$ 822,302
the Commission over the life of the swaps (the difference between short-term and between tax-exempt rates and taxable rates).
through the assumption of yield curve risk
Pay-Variable, Receive-Variable Interest Rate Swaps: Estimated Debt Service Requirements of VariableRate Debt Outstanding and Net Swap Payments
Variable-Rate Bonds Principal Interest Interest Rate Swaps, Net
long-term rates) and tax risk (the spread
ings: The terms, fair values and counterTotal
Terms, Fair Values and Credit Rat-
Year
party credit ratings related to the outstanding variable-to-variable basis swaps as of Aug. 31, 2008, are shown on the following page. The notional amounts and amortizathe associated variable-rate bonds. tion schedules of the swaps match those of
2009 2010 2011 2012 2013 2014 - 2018 2019 - 2023 2024 - 2028 2029 - 2033 2034 - 2038 Total
700 745 790 845 890 5,370 12,160 24,625 165,455
5,729 5,710 5,691 5,670 5,648 27,856 26,960 24,452 6,900
(137) (137) (90) (34) (23) (106) (84) (54) (16) (681)
6,292 6,318 6,391 6,481 6,515 33,120 39,036 49,023 172,339
$ 211,580
$ 114,616
$ 325,515
101
Pay-Variable, Receive-Variable Interest Rate Swaps: Estimated Debt Service Requirements of Fixed-Rate Debt Outstanding and Net Swap Payments
Fixed-Rate Bonds Principal Interest Interest Rate Swaps, Net
tion schedule of each swap to the principal amount and amortization schedule of each associated variable-rate bond issue, (b) selecting an index for the variable-rate leg of each swap that is reasonably expected to closely match the interest rate resets on
Year
Total
the associated variable-rate bonds over the life of each bond issue and (c) limiting the portion of the total portfolio that can be exposed to this risk at a given time.
2009 2010 2011 2012 2013 2014 - 2018 2019 - 2023 2024 - 2028 2029 - 2033 2034 - 2038 Total
375 1,325 2,275 3,215 4,185 39,500 124,510 252,315 418,080 194,300
49,795 49,779 49,727 49,635 49,507 244,153 227,491 184,777 109,458 12,622
(5,060) (5,060) (5,060) (5,060) (5,060) (25,300) (25,300) (20,662)
45,110 46,044 46,942 47,790 48,632 258,353 326,701 416,430 527,538 206,922
or the counterparties may terminate any of under the terms of the respective swap agreements. The Commission also has
Termination Risk: The Commission
the swaps if the other party fails to perform
$ 1,040,080
$ 1,026,944
(96,562)
$ 1,970,462
Risk Exposure of Swap Transactions (Texas Department of Transportation) associated with its swaps by entering into transactions with highly-rated counterparties. The credit ratings of the Commissions counterparties range from AAA to A+ by S&P and Aaa to A1 by Moodys. The Commission also mitigates its concentration of Credit Risk: The Commission mitigates the credit risk
the right to terminate any of the swaps at any time with-
out cause. The Commission mitigates termination risk by
maintaining a strong financial standing and by maintaining ment that might materialize.
sufficient reserves to cover all or part of a termination payRollover Risk: The swaps terminate on Sept. 1, 2027.
Final maturity of the associated debt is April 1, 2035.
credit risk by diversifying its swap portfolio across several different counterparties. The Commissions three currently outstanding swaps are spread among three different coun-
The Commission accepted the rollover risk for the period beyond Sept. 1, 2027, because extending the term of the ated debt provided only marginal projected benefit. swap agreements to match the final maturity of the associSwap Payments and Associated Debt: Using rates as
terparties, with no more than 50 percent of the total notional amount of swaps outstanding being associated with any single counterparty.
of Aug. 31, 2008, the estimated debt service requirements of the Commissions fixed-rate bonds and associated net index relationships remain the same for their terms, are swap payments, assuming current interest rates and swap included in the table above: Pay-Variable, Receive-Vari-
lateralization provisions that require counterparties to post the counterpartys credit rating is downgraded. Only cash
The Commissions swap agreements also contain col-
collateral in the full amount of the fair value of the swap if in the form of U.S. Dollars or U.S. Government obligations are acceptable forms of collateral. Posted collateral may be held either by the Commission or its designated third party custodian. Basis Risk: The Commission is exposed to basis risk
able Interest Rate Swaps: Estimated Debt Service Requirements of Fixed-Rate Debt Outstanding and Net Swap Payso will the resulting actual interest payments and net swap payments. Market-Access Risk: Market-access risk is the risk ments. As rates and index relationships vary in the future,
to the extent that the interest payments on its variable-rate bonds do not match the variable-rate payments received risk by (a) matching the notional amount and amortizaon the associated swaps. The Commission mitigates this
that an entity will not be able to enter credit markets or that credit will become more costly. This swap does not present market-access risk because the transaction does not require access to the credit market.
102
Pay-Fixed, Receive-Variable Interest Rate Swaps (Texas Department of Housing and Community Affairs) five pay-fixed, receive-variable interest rate swap agreeObjective of the Swaps: The Department is a party to
risk on swap agreements which mature or may be terminated prior to the maturity of the associated debt. Bonds est Rate Swaps Subject to Rollover.
Rollover Risk: The Department is exposed to rollover
that are exposed to rollover risk are shown in table InterSwap Payments and Associated Debt: Using rates as
ments with three rated counterparties, UBS AG, Goldman Sachs Capital Markets, L.P. (Goldman) and Bear Stearns Financial Products, Inc. The objective of the swaps is to reduce interest rate risk of certain variable rate demand
of Aug. 31, 2008, the estimated debt service requirements swap payments, assuming current interest rates and swap index relationships remain the same for their terms, are shown in the table Pay-Fixed, Receive-Variable Interest
of the Departments variable-rate bonds and associated net
bonds. Under the terms of the agreements, the Department makes periodic fixed interest rate payments in exchange for receiving variable rate payments comparable to the
rates payable on the variable rate demand bonds. The swap notional amounts amortize in accordance with the scheduled and/or anticipated reductions in the related variable exposed to loss in the event of nonperformance by the
Rate Swaps: Estimated Debt Service Requirements of Variable-Rate Debt Outstanding and Net Swap Payments. As rates and index relationships vary in the future, so will the resulting actual interest payments and net swap payments. Pay-Fixed, Receive-Variable Interest Rate Swaps (University of Texas System) UT Board of Regents executed forward-starting, floatingto-fixed rate interest rate swap agreements with J.P. Morgan Chase Bank (Morgan) and Goldman Sachs Mitsui Marine Derivative Products, LP (Goldman Mitsui). The swap agreements were used to create a synthetic fixedrate refunding of $80.5 million of UT Revenue FinancBonds), on their optional redemption date of Aug. 15, UT issued its Revenue Financing System Refunding Objective of the interest rate swap: In June 1999, the
rate demand bond liability. The Department is potentially counterparties under the swap agreements. Termination of or receiving termination payments. Each swap agreement Department the right, but not an obligation, to terminate the interest rate swaps at par without a termination payment after an effective date.
the swap agreements may result in the Department making includes optional early termination provisions granting the
Terms, Fair Values and Credit Ratings: The terms,
outstanding variable-to-fixed swaps as of Aug. 31, 2008,
ing System Bonds, Series 1991A and 1991B (Refunded 2001, to achieve debt service savings. On May 17, 2001, Bonds, Series 2001A, in the form of variable rate demand bonds. The swap agreements effectively change UTs interest rate on the Series 2001A Bonds, subject to some basis risk discussed below, to a fixed rate of 4.633 percent. The difference between the swap rate and the rates estimated present value debt service savings of approximately $5.6 million. On Dec. 4, 2007, UT executed floating-to-fixed rate
are shown in the table titled Pay-Fixed, Receive-Variable tion schedules of the swaps match those of the associated variable-rate bonds. Credit Risk: As of Aug. 31, 2008, the Department is
Interest Rate Swaps. The notional amounts and amortiza-
not exposed to credit risk on any of its outstanding swaps. The Department has entered into these transactions with highly-rated counterparties to mitigate credit risk. The
swap portfolio is spread among three counterparties. Col-
on the Refunded Bonds called Aug. 15, 2001, resulted in
lateral agreements and insurance policy requirements contained in the swap agreements further mitigate credit risk. Basis Risk: The Departments variable-rate bond cou-
pon payments are equivalent to the SIFMA rate. Payments rates converge, basis risk exposure increases.
interest rate swap agreements (2007B swap agreements) issued its Revenue Financing System Refunding Bonds,
received on these swaps are a function of LIBOR. As these
with Morgan and UBS AG (UBS). On Dec. 20, 2007, UT Series 2007B, in the form of variable rate demand bonds
103
for the purpose of refunding portions of the outstand-
ing Revenue Financing System Bonds, Series 2003B and 2007B Refunded Bonds). The 2007B swap agreements Bonds to a fixed rate of 3.805 percent. The difference
swap, utilizing market expectations implied by the current yield curve for interest rate swap transactions. Pursuant to the terms of the 2007B Swap Agreements,
Revenue Financing System Bonds, Series 2004D (Series effectively change UTs interest rate on the Series 2007B between the swap rate and the rates on the Series 2007B service savings of approximately $30.2 million.
UT agreed to pay interest on a notional amount of $345.5 million at a fixed rate of 3.805 percent per annum, with such obligation commencing on Dec. 20, 2007. In consideration of receiving the payments from UT, Morgan
Refunded Bonds resulted in estimated present value debt In March 2007, UT executed forward-starting, float-
and UBS agreed to pay to UT a variable rate based on the
SIFMA Municipal Swap Index. The Morgan 2007B Swap Agreement was for 50 percent of the notional amount and the UBS 2007B Swap Agreement was for 50 percent of the notional amount. The 2007B Swap Agreements are scheduled to terminate on Aug. 1, 2034, and had a negative fair value of $7.3 million as of Aug. 31, 2008. The fair value above.
ing-to-fixed rate interest rate swap agreements (2008B
Initial Swap Agreements) with Morgan and Morgan Stan-
ley Capital Services, Inc. (MSCS). The 2008B swap agreements are being used to hedge interest rate risk on revenue financing system bonds expected to be issued in February 2008. In February 2008, UT executed an additional
was estimated using market-standard practice, as described Pursuant to the terms of the 2008B initial swap agree-
floating-to-fixed rate interest rate swap agreement (2008B Revenue Financing System Bonds to be issued in March. On March 18, 2008, UT issued its Revenue Financing
Additional Swap Agreement) to hedge the remainder of the
ments, UT agreed to pay interest on a notional amount
of $310 million at a fixed rate of 3.9 percent per annum,
System Bonds, Series 2008B, in the form of variable rate demand bonds. The 2008B Swap Agreements effectively change UTs interest rate on the Series 2008B Bonds to swap rate and the rates on the Series 2008B Refunded ings of approximately $1.6 million. a fixed rate of 3.743 percent. The difference between the Bonds resulted in estimated present value debt service savTerms, Fair Values and Credit Ratings: On Feb.
commencing on March 18, 2008. Pursuant to the terms of the 2008B additional swap agreements, UT agreed to pay interest on a notional amount of $375 million at a fixed rate of 3.614 percent per annum, commencing on March
18, 2008. In consideration for these payments, Morgan and MSCS agreed to pay UT a variable rate based on SIFMA the MSCS Swap Agreement were each for 50 percent of Morgan is the sole counterparty in the 2008B additional scheduled to terminate on Aug. 1, 2036, and the 2008B Municipal Swap Index. The Morgan Swap Agreement and the notional amount of the 2008B initial swap agreement. swap agreement. The 2008B initial swap agreements are additional swap agreement is scheduled to terminate on
6, 2007, the Goldman Mitsui 2001A Swap Agreement
was ended and the Morgan 2001A Swap Agreement was fair values and counterparty credit ratings related to the
increased to 100 percent of the notional amount. The terms, outstanding variable-to-fixed swaps as of Aug. 31, 2008,
are shown in the table titled Pay-Fixed, Receive-Variable tion schedules of the swaps match those of the associated variable-rate bonds. Because interest rates have declined since the execution of the 2001A Swap Agreements, the
Aug. 1, 2039. Fair value of the 2008B swap agreements at Aug. 31, 2008 was estimated at a negative $13.5 million standard practice as described above. ($10.5 million and $3 million, respectively) using marketBasis and Termination Risk: The Morgan 2001A
Interest Rate Swaps. The notional amounts and amortiza-
2001A Swap Agreements had a negative fair value of $1.2 million as of Aug. 31, 2008. The fair value was estimated using market-standard practice, which includes a calculation of future net settlement payments required by the
Swap Agreement exposes UT to basis risk as the variable match the variable rate paid on the Series 2001A Bonds. The swap agreement may be terminated if the counter-
rate received under the swap agreement does not perfectly
party does not maintain a credit rating of at least Aa3 by
104
Moodys or AA- by S&P. The Aug. 31, 2008, ratings are
disclosed in the Pay-Fixed Receive-Variable Interest Rate by Morgan if UT does not maintain a credit rating of at least Aa3 by Moodys or AA- by S&P. As of Aug. 31, rated Aaa by Moodys and AAA by S&P.
Swaps table. The swap agreement may also be terminated
risk. Each 2008B swap agreement may be terminated if the respective counterparty does not maintain a credit rating of at least Baa2 by Moodys or BBB by S&P. The Aug. 31,
The 2008B swap agreements expose UT to termination
2008, the UT Revenue Financing System obligations were The 2007B swap agreements expose UT to termination
2008, ratings are disclosed in the Pay-Fixed Receive-Variable Interest Rate Swaps table. The swap agreements may also be terminated by Morgan or MSCS if the UT does not maintain a credit rating of at least Baa2 by Moodys or BBB by S&P. As of Aug. 31, 2008, the UT Revenue and AAA by S&P. Financing System obligations were rated Aaa by Moodys Swap Payments and Associated Debt: Using rates as
risk. Each 2007B swap agreement may be terminated if the respective counterparty does not maintain a credit rating of at least Baa2 by Moodys Investors Service (Moodys) Aug. 31, 2008, ratings are disclosed in the Pay-Fixed or BBB by Standard & Poors Corporation (S&P). The Receive-Variable Interest Rate Swaps table. As of Aug.
of Aug. 31, 2008, the estimated debt service requirements of UTs variable-rate bonds and associated net swap payments, assuming current interest rates and swap index relatable Pay-Fixed, Receive-Variable Interest Rate Swaps: Estimated Debt Service Requirements of Variable-Rate
31, 2008, the UT Revenue Financing System obligations swap agreements may also be terminated by Morgan or UBS, respectively, if UTs Revenue Financing System by S&P.
were rated Aaa by Moodys and AAA by S&P. The 2007B
tionships remain the same for their terms, are shown on the
obligations are not rated at least Baa2 by Moodys or BBB
Debt Outstanding and Net Swap Payments. As rates and actual interest and net swap payments.
index relationships vary in the future, so will the resulting
105
Note 7
Capital Leases
buy certain assets. The capital assets are recorded at the The state has entered into long-term capital leases to assets and liabilities are recorded in the government-wide financial statements. The table below is a summary of the future minimum For governmental and business-type activities, the present value of the future minimum lease payments at the inception of the lease plus any cash paid or trade-in value received.
lease payments for capital leases.
Future Capital Lease Payments

Primary Government Governmental Activities Business-Type Activities Total Future Total Future Minimum Lease Minimum Lease Principal Interest Payments Principal Interest Payments Discretely Presented Component Units Total Future Minimum Lease Principal Interest Payments
Year
2009 2010 2011 2012 2013 2014 - 2018 2019 - 2023 2024 - 2028 Total
$ 1,562 1,664 1,633 1,659 2,144 960
612 505 395 285 154 29
$ 2,174 2,169 2,028 1,944 2,298 989
2,667 2,143 1,664 975 935 3,993 1,488 428
557 561 360 293 255 751 246 50
3,224 2,704 2,024 1,268 1,190 4,744 1,734 478
93 64 8
3 2
96 66 8
$ 9,622
$ 1,980
$ 11,602
$ 14,293
$ 3,073
$ 17,366
165
170
The following table is an analysis of the property acquired under capital leases by asset category at Aug. 31, 2008.
Assets Under Capital Leases

Primary Government Governmental Activities Business-Type Activities Assets under Accumulated Assets under Accumulated Capital Lease Depreciation Capital Lease Depreciation Discretely Presented Component Units* Assets under Accumulated Capital Lease Depreciation
Type
Land Buildings Furniture and Equipment Vehicles, Boats, etc. Total
$ 18,084 4,707 $ 22,791
$ 10,974 3,718 $ 14,692
456 12,059 10,624 375
$ 1,838 3,003 194 $ 5,035
$ 23,514
* The original cost of each asset reported as a capital lease was lower than the capital asset threshold.
106
Note 8
Operating Leases
leased on a long-term basis that have been classified as operating leases. The following is a schedule of minimum future rentals on noncancelable operating leases as of Aug. 31, 2008. Included in rental expenditures or expenses are assets
Teacher Retirement System of Texas 1000 Red River Street Austin, Texas 78701-2698 Fire Fighters Pension Commission 920 Colorado Street, 11th Floor Austin, Texas 78701-2332
Noncancelable Operating Leases

Minimum Future Lease Payments Primary Component Government Units
plan as authorized by Tex. Gov. Code, Chapter 830. The
The state has also established a defined contribution
optional retirement program (ORP) is available as an alternative to the TRS defined benefit pension plan for certain GASB Statement No. 26, Financial Reporting for eligible employees of public higher education institutions. Postemployment Healthcare Plans Administered by
Year
2009 2010 2011 2012 2013 2014 2018 2019 2023 2024 2028 2029 2033 2034 2038 Total
$ 220,440 188,087 150,776 119,864 91,221 180,419 5,943 1,345 917 312 $ 959,324
1,421 893 636 322 262 649
Defined Benefit Pension Plans, is not applicable for the tered by the pension trust funds.
state of Texas since the health care plans are not adminis-
4,183
DESCRIPTION OF PLANS AND FUNDING POLICY

Employees Retirement System of Texas
Note 9
Retirement Plans
ment systems (PERS) that administer six defined benefit The state of Texas has three public employee retirepension plans. All defined benefit plans are included in the and types of securities held by the retirement systems are included in Note 3. The three entities that administer the plans are: the Employees Retirement System of Texas (ERS), the Teacher Retirement System of Texas (TRS) states financial statements as pension trust funds. Amounts
four pension plans. Each of these plans is considered to be a single-employer defined benefit pension plan. (ERS Plan); The Employees Retirement System of Texas Plan The Law Enforcement and Custodial Officer Supplemental Retirement Plan (LECOS); and Plan Two (JRS). The Judicial Retirement System of Texas Plan One and Each plan provides a standard monthly benefit in a
The Board of Trustees of ERS is the administrator of
life annuity at retirement as well as death and disabil-
and the Fire Fighters Pension Commission (FPC). These entities issue separate financial reports. These reports are and may be obtained from the following: individually audited with a separate opinion issued for each
ity benefits for members. A Partial Lump Sum Payment
Option is available to members of the employee class, the elected class and law enforcement and custodial officers. A one-time partial lump sum of up to three years of stanreduced for life. The benefit and contribution provisions are authorized by state law and may be amended by the
dard annuity at retirement can be taken and the annuity is
Employees Retirement System of Texas P.O. Box 13207 Austin, Texas 78711-3207
Legislature. Contribution requirements are not actuarially
107
determined, but are set by legislation, except for the JRS ally determined every even-numbered year for the next biennium.
Plan Two under which state contribution rates are actuari
compensation. The minimum monthly standard annucent of the average monthly compensation.
ity is $150; the maximum standard annuity is 100 perCommissioned peace officers and custodial officers may retire at age 55 with 10 years of service. LECOS, established under Tex. Gov. Code, Chapter
reported at fair value. The fair value is based on published market prices and quotations from major investment brokers at current exchange rates, as available, plus accrued interest and dividends. For investments where no readily
Investments of the ERS administered pension plans are
814.107, covers statutorily certified custodial officers
employed by the Department of Criminal Justice, including the Board of Pardons and Paroles, who have contact with missioned state agency law enforcement officers who are cer Standards and Education. inmates of that institution. The fund also covers other comrecognized by the Commission on Law Enforcement OffiBenefits vest after 20 years of credited service. Cov-
ascertainable market value exists, management, in consultation with their investment advisors and the Master Trust Custodian, determines the fair values for the individual investments.
ations as of Aug. 31, 2008, along with an actuarial letter would negatively affect their certification of actuarial soundness of the funds was noted.
The ERS audited report contains the actuarial valu-
dated Nov. 6, 2008. No subsequent legislative action that
ered employees may retire at age 50, if vested, or the age at which the sum of the members age and amount of service credit in the employee class equals 80. A member may receive reduced benefits upon completing 20 years of ser-
Title 8, Subtitle B, Chapters 811-815 covers elected class
The ERS Plan, established by the Tex. Gov. Code,
vice, regardless of age. The monthly benefit at retirement is payable in a life only form of annuity. The monthly annuity is equal to 2.8 percent of average monthly compensation multiplied by years of service. Average monthly compensathe members established service. The minimum monthly 100 percent of the average monthly compensation.
members, employee class members, commissioned peace
officers and custodial officers. The funding policy requires Funding Information, Actuarial Methods and Assumptions table). The monthly benefit is determined by the years and months of service multiplied by a statutorily determined percentage and may vary by class.
monthly contributions by both the state and employees (see
tion is the average of the highest 36 months of salary out of standard annuity is $150; the maximum standard annuity is There are no member contributions for the LECOS
The elected class members are vested after eight years of credited service and may retire at age 50 with 12 years of service or at age 60 with eight years of serof the current state salary of a district judge.
fund. Annual actuarial valuations of the fund are performed to monitor the adequacy of the financing arrangement. During the 2007 legislative session, state funding was
vice. The statutory percentage is equal to 2.3 percent The employee class includes all employees and
appropriated for this fund for the biennium ending Aug. 31, 2009, based on 1.59 percent of covered payroll for LECOS members. JRS covers judges, justices and commissioners of the
appointed officers of the state and excludes independent contractors and their employees and employees benefits vest after five years of credited service and employees may retire at age 60 with five years of service or at any age when the combination of age covered by TRS and JRS. Employee class retirement
Supreme Court, the Court of Criminal Appeals, the Court of Appeals, district courts and certain commissions to a court. Members prior to Sept. 1, 1985, participate in Plan both plans may retire at age 65 with 10 years of service
One and all others participate in Plan Two. Participants in with at least the last year being continuous and currently holding judicial office, or at age 65 with 12 years of service. Members of Plan One and Plan Two may retire at
and service (including months) total 80. The monthly
standard annuity equals the statutory percentage of 2.3 percent times the average of the highest 36 months of
108
any age with 20 years of service. Prior to Sept. 1, 2005,
members of Plan Two were restricted to retirement at age
the state of Texas. The state of Texas has elected to report the Plan under the sole-employer provisions of GASB 27 since it is legally responsible for a significant portion of the annual required contributions. The benefit and contribution provisions of the Plan are authorized by state law and may be amended by the Legislature. All employees of public, state-supported educational
55 with 20 years of service. Participants in both plans are they attain age 60 and complete 10 years of service if the
eligible for reduced early service retirement benefits once member currently holds judicial office with at least the last The monthly benefit at retirement is payable in a life
year being continuous or at age 60 with 12 years of service. only form of annuity. The monthly benefit for members of
institutions in Texas who are employed for one-half or
both plans is equal to 50 percent of the salary for the posipercent of final compensation if in office within one year of benefit commencement. Tex. Gov. Code, Title 8, Subtitle D, Chapter 835
more of the standard work load and who are not exempted from membership under Tex. Gov. Code, Title 8, Subtitle C, Chapter 822 are covered by the Plan.
tion from which the member retired and is increased by 10
vice and is eligible to retire at a future date and receive a lifetime monthly annuity. The normal service retirement is at age 65 with five years of credited service or when
A member is vested after five years of creditable ser-
requires employees to contribute 6 percent of their compensation and the state to make appropriations from the general revenue fund sufficient to administer JRS Plan One. The contribution requirements are not actuarially
the sum of the members age and years of credited service equals at least 80 years. The service age requirement for early retirement is age 55 with five years of credited ser-
determined since the plan is not funded in advance. There are actuarial valuations and an actuarial cost method only for Defined Benefit Pension Plans and Note Disclosures for fulfilling GASB Statement No. 25, Financial Reporting for Defined Contribution Plans, and GASB Statement No. 27, Accounting for Pensions by State and Local Governmental Employers, requirements. The funding policy of JRS Plan Two is established
vice or any age below 50 with 30 years of credited service. The standard life annuity benefit formula is 2.3 percent of the average of the five highest annual salaries multiplied by the years of service. For members who are grandfa-
thered, the three highest annual salaries are used. At nor-
mal retirement age, the minimum monthly standard annuity payments shall in no case be less than accumulated contributions at retirement. Law changes from the 2007 legislative session modi-
is the greater of $150 or the formula standard annuity. Total
by Tex. Gov. Code, Title 8, Subtitle E, Chapter 840. The states contribution to the plan is determined each evennumbered year for the next biennium and is based upon an actuarial valuation. Significant actuarial assumptions are the same as those used to compute the net pension benefit. Teacher Retirement System of Texas disability annuities and death and survivor benefits to school system of Texas (the Plan). TRS is a multipleemployer PERS. It is a cost-sharing PERS with one TRS administers retirement, proportional retirement,
fied the state contribution rate for the TRS plan. Effective Sept. 1, 2007, the state contribution rate was increased from 6 percent to 6.58 percent of pay. The new law also the member contribution rate. ing districts was as follows.
requires the state contribution rate to be at least equal to At Aug. 31, 2008, the number of participating employ-
employees and beneficiaries of employees of the public
Employing Districts
Public Schools, Service Centers and Charter Schools Colleges, Universities and Medical Schools Educational State Agencies Total 1,256 102 2 1,360
exception: risks and costs are generally not shared by the
employers (unless the employer is a senior college, medi-
cal school or a state agency in which case the employer is considered the state of Texas) but are the responsibility of
109
mined, but are legally established each biennium pursuant to the following state funding policy. The Texas Constitution requires the Legislature to
Contribution requirements are not actuarially deter-
A Partial Lump-Sum Cash Option (PLSO)
PLSO reduces the standard monthly annuity and provides a cash lump sum distribution. Members may participate in the PLSO if they are eligible for service retirement and meet the Rule of 90 (age and years of service credit equal at least 90), are not participating benefits. in the DROP plan and are not retiring with disability
establish a member contribution rate of not less than 6
percent of the members annual compensation and a state contribution rate of not less than 6 percent and not more than 10 percent of the aggregate annual compensation of
all members of TRS during that fiscal year. A state statute if, as a result of the particular action, the time required
prohibits benefit improvements or contribution reductions to amortize TRS unfunded actuarial liabilities would be
Optional Retirement Program tion employees employed in a position that is eligible All public higher education and public K-12 educa-
increased to a period that exceeds 31 years or, if the amortization period already exceeds 31 years, the period would be increased by such action. Investments of the Plan are reported at fair value.
for the TRS defined benefit pension plan are automatiFull-time faculty, librarians and certain professionals
cally enrolled in TRS on their first day of employment. and administrators employed in public higher education are eligible to elect the Optional Retirement Program (ORP) in lieu of TRS before the 91st day after becoming eligible. It is a one-time irrevocable choice between two distinct plans. The ORP is administered by the benefits offices at each employer. The Texas Higher Education
The fair value of investments is based on published market prices and quotations and current exchange rates. The fair value of commingled funds is based on the Net tive investments where no readily ascertainable market
Asset Value of the fund at the valuation date. For alternavalue exists, management has determined fair values for individual investments based on the capital account balance at the closest available reporting period, adjusted for subsequent contributions, distributions, management fees and reserves.
Coordinating Board develops policies, practices and procedures to provide greater uniformity in the administration of the ORP. The ORP is a defined contribution pension plan in
several annuity payment options that reduce the standard annuity by application of age-related actuarial reduction
TRS offers to all service and eligible disability retirees
which each participant selects from a variety of invest-
ments offered by several companies through annuity contracts or mutual fund investments. These types of investments are authorized by Section 403(b) of the Internal Revenue Code. With the purchase of these individual contracts, the state has effectively transferred the obligation for the vest after one year of participation. payment of benefits to the company. Benefits in the ORP The contributory percentages of participant salaries
factors in order to continue payment to a beneficiary after the retirees death. The available options include 100, 75 year guaranteed period annuities. and 50 percent joint and survivor annuities and five and 10 TRS also offers two other annuity payment options: The Deferred Retirement Option Plan (DROP) DROP allows members to freeze their standard annuity and, instead of retiring, to have a portion of the frozen continuing to work for a TRS-affiliated employer. standard annuity deposited into a DROP account while Members may elect to participate in the DROP proparticipants effective Dec. 31, 2005.
provided by each participant and the state were 6.65 per-
cent for the participant and 6.58 percent for the state. Institutions and agencies authorized under state law to provide tion at a rate up to 1.92 percent of payroll. ORP to their employees may supplement the state contribuIndividual accounts are maintained at the insurance
gram for up to five years. The plan was closed for new
and investment companies selected by each ORP participant. Separate financial statements for ORP are not pre-
110
Retirement Systems Membership

ERS* LECOS* JRS1* JRS2* TRS** TESRS***
Retirees and Beneficiaries Currently Receiving Benefits Terminated Employees Entitled to Benefits But Not Yet Receiving Them Current Employees: Vested and Non-Vested Total Members
*
72,678
6,204
471
117
275,228
1,939
74,094
35
120
56,300
1,975
134,626 281,398
33,642 39,881
27 505
518 755
924,247 1,255,775
4,340 8,254
Totals are from actuarial valuations as of Aug. 31, 2008.
** Totals are from the audited agency annual financial report. *** This total does not include the 562 retirees and beneficiaries from the TLFFRA (Texas Local Firefighters Retirement Act) plan as of Aug. 31, 2008.
Funding Information, Actuarial Methods and Assumptions

ERS LECOS JRS1 JRS2 TRS TESRS*
Contribution Rates Employees Legislators Employer** Annual Pension Cost Employer Contributions Made*** Actuarial Valuation Date
6.0% 8.0% 6.45% $378,269 $341,628 Aug. 31, 2008 Entry Age Normal Level Percent Open
0.0% N/A 1.59% $19,678 $20,192 Aug. 31, 2008 Entry Age Normal Level Percent Open
6.0% N/A N/A $26,792 $28,657 Aug. 31, 2008 Entry Age Normal Level Dollar Open
6.0% N/A 16.83% $11,480 $11,138 Aug. 31, 2008 Entry Age Normal Level Percent Open
6.4% N/A 6.58% $1,432,030 $1,451,028 Aug. 31, 2008 Entry Age Normal Level Percent Open
N/A N/A N/A $3,161 $2,439 Aug. 31, 2008 Entry Age
Actuarial Cost Method
Amortization Method
Level Dollar Open
Remaining Amortization Period of Unfunded Liability Asset Valuation Method
30 years 5-year Smoothed Fair Value
30 years 5-year Smoothed Fair Value
30 years N/A
2.8 years**** 5-year Smoothed Fair Value
20.7 years 5-year Smoothed Market
6 years 5-year Smoothed Market
Actuarial Assumptions: Investment Rate of Return Projected Salary Increases Includes Inflation at Cost-of-Living Adjustments
8.0% 0.0%-13.5% 3.5% None-Employee 3.5%-Elected
8.0% 5.5%-13.5% 3.5% None
8.0% 3.5% 3.5% 3.5%
8.0% 3.5% 3.5% None
8.0% 4.25%-26.4% 3.0% None
8.0% N/A 3.5% None
* **
Contributions and benefits are not based on the salaries of members. The plan for JRS1 is closed to new participants and the state contributions are based upon benefits paid to participants during the year. Contribution requirements for JRS2 are actuarially determined each even-numbered year. TRS and ERS contribution requirements are based on actuarial evaluations as established by state statute.
*** Contributions do not include $8.8 million of state appropriations to the TESRS plan. **** The amortization period was calculated based on estimated fiscal 2009 covered payroll. At the end of fiscal 2009, the ARC and the amortization period will be recalculated based on actual 2009 covered payroll.
111
pared because the state retains no liability for plan performance and has very limited administrative involvement. The employers of the ORP are state universities, one
of all contributions by governing bodies in one year. The sole-employer reporting provisions of GASB 27 for net pension obligation calculations are not applicable.
state is not an employer of the TESRS plan; therefore, the
educational state agency and several two-year college institutions that are not part of the state reporting entity. State entity participation in the ORP plan for fiscal 2008 resulted contributions of $234.2 million.
in participant contributions of $200.3 million and employer Updated information for the complete ORP plan will
fair value of investments is based on market prices proFor investments where no readily ascertainable market
Investments of TESRS are reported at fair value. The
vided by the fund custodian, State Street Bank and Trust. value exists, management, in consultation with their investment advisors, determines the fair values for the individual investments.
be available in the fiscal 2008 ORP Participation Report tion Coordinating Board. For the year ended Aug. 31,
Summary published annually by the Texas Higher Educa2007, the ORP plan had 39,429 participants. The total parcontributions were $257.3 million. ORP participation reports may be obtained from the following:
ticipant contributions were $226 million and total employer
personnel who are members in good standing with a qualifying fire-fighting unit. Effective Jan. 1, 2007, the TESRS board amended the vesting and reduced the compounded amount paid for each year of service over 15 years. The TESRS board protected currently vested members by 2006. grandfathering vested accrued benefits as of Dec. 31,
Eligible members include volunteer emergency service
Statewide Coordinator, Optional Retirement Program Texas Higher Education Coordinating Board P.O. Box 12788 Austin, TX 78711-2788 Fire Fighters Pension Commission vices Retirement System (TESRS), a cost-sharing multipleemployer pension plan established and administered by the state of Texas to provide pension benefits for emergency services personnel who serve without significant monetary remuneration. At Aug. 31, 2008, there were 182 member fire departments participating in TESRS. The statutory authority for TESRS is found in Tex. FPC is the administrator of the Texas Emergency Ser-
ed upon completing at least five years of qualified service.
Through Dec. 31, 2006, a current member became vest-
These members were vested, beginning with the fifth year of service at 5 percent per year of service for the first 10 years and 10 percent for each of the next five years of service. ten years of qualified service to become vested. Those 10 percent for each of the next five years of service. Effective Jan. 1, 2007, a member must have at least
members are vested at 50 percent and accrue an additional Vested members are eligible to receive a pension for
life starting at age 55 that is equal to six times the aver-
Gov. Code, Title 8, Subtitle H, Chapters 861-865. The to contribute at least the minimum prescribed amount
age contribution rate paid by the governing entity over the members period of qualified service. For years of service in excess of 15 years, this monthly benefit is increased at the rate of 7 percent compounded annually for grandfathe amended Jan. 1, 2007, TESRS board rules.
governing bodies of participating departments are required per month for each active member. No contributions are required by individual members of participating departments. Additional contributions may be made by a governing body to pay for granting credit for service before the department began participating in TESRS. The state may
thered members, or 6.2 percent for members vested under Actuarial valuations are performed biennially. Death
and disability benefits are dependent on whether or not the member was engaged in the performance of duties at the time of death or disability. Death benefits include a lumpsum amount and continuing monthly payments to a members spouse and dependents.
also be required to make a limited amount of annual contributions to make the fund actuarially sound. The contributions may not exceed the amount of one-third of the total
112
for the years ending Aug. 31, 2008, 2007 and 2006, were $2.4 million, $2.5 million and $2.1 million, respectively. In addition, the Legislature appropriated $8.8 million of contributions for the fiscal year ending Aug. 31, 2008. required contributions.
The member fire department contributions to the fund
governing board. Authority for contributions is established by statute. Separate accounts are maintained for each merged
plan. The vested members of former TLFFRA plans will
Contributions made were greater than the yearly statutorily The Texas Local Fire Fighters Retirement Act (TLF-
be paid by FPC with funds received from the local governing bodies on a pay-as-you-go basis. There are no reserves required in the TLFFRA retirement program. Fund assets are always offset by an equal amount of fund liabilities in
FRA) allows participating cities to administer local fire
fighter pension funds. These individually managed funds
accordance with the statutory requirements of the TLFFRA sisted of 562 retirees and beneficiaries currently receiving TLFFRA benefits.
have varied contribution requirements. FPC provides oversight, records administration and other administrative support to the locally managed pension plans. Upon election, a department under TLFFRA can
retirement program. As of Aug. 31, 2008, membership con-
Annual Pension Cost and Net Pension Obligation tion for plans subject to sole-employer provisions of GASB 27 for fiscal 2008 are presented below. The states annual pension cost and net pension obliga-
merge with the TESRS plan. At Aug. 31, 2008, there were tions for these merged plans are determined by each local
101 plans merged into the TESRS plan. Benefit determina-
Annual Pension Cost and Net Pension Obligation

ERS LECOS JRS1 JRS2 TRS* TESRS**
Annual Required Contribution, ARC Interest on Net Pension Obligation, NPO Adjustment to ARC Annual Pension Cost Employer Contributions Made Increase (Decrease) in NPO Net Pension Obligation/(Asset), September 1, 2007 Net Pension Obligation/(Asset), August 31, 2008***
*
$ 378,236 113 (80) 378,269 341,628 36,641 1,409 $ 38,050
19,516 557 (395) 19,678 20,192 (514) 6,956
27,258 6,818 (7,285) 26,791 28,656 (1,865) 85,225
11,022 (582) 1,040 11,480 11,138 342 (7,270)
$ 1,426,771 26,255 (20,996) 1,432,030 1,451,028 (18,998) 328,182 $ 309,184
3,161 N/A N/A 3,161 2,439 N/A N/A N/A
6,442
83,360
(6,928)
The sole-employer provisions of GASB 27 apply to TRS.
** An NPO calculation is not applicable for TESRS because the state is not an employer in the TESRS plan. Contributions do not include $8.8 million of state appropriations to the FPC plan. *** See "Funding Information, Actuarial Methods and Assumptions" table for actuarial assumptions used in determining cost and obligation.
113
Trend Information made in accumulating sufficient assets to pay benefits when due. Trend information gives an indication of the progress
tion regarding annual pension cost and net pension obligation of the plans.
The table below presents the three-year trend informa-
Three-Year Trend Information

Fiscal Year Ending Annual Pension Cost (APC) Percentage of APC Contributed Net Pension Obligation
Employees Retirement System (ERS) 08/31/08 $ 378,269 08/31/07 369,599 08/31/06 360,224 Law Enforcement and Custodial Officer Supplemental Retirement (LECOS) 08/31/08 $ 19,678 08/31/07 6,956 08/31/06 0
90.3% 89.2% 87.8%
38,050 1,409 (38,666)
102.6% 0.0% 0.0%
6,442 6,956 0
Judicial Retirement System Plan One (JRS1) 08/31/08 $ 26,791 107.0% 08/31/07 28,497 101.9% 08/31/06 27,239 101.6% Judicial Retirement System Plan Two (JRS2) 08/31/08 $ 11,480 97.0% 08/31/07 11,148 97.9% 08/31/06 9,938 101.1% Teacher Retirement System of Texas (TRS) 08/31/08 $ 1,432,030 101.3% 08/31/07 1,722,454 85.4% 08/31/06 1,593,347 83.6% Texas Emergency Services Retirement System (TESRS)* 08/31/08 ** $ 3,161 08/31/06 ** 2,753 08/31/04 2,897
83,360 85,225 85,757
(6,928) (7,270) (7,509)
$ 309,184 328,182 76,859
356.0% 100.0% 65.0%
N/A N/A N/A
* TESRS is not subject to NPO calculation because the state is not an employer in the TESRS plan. ** Actuarial assumptions and methodology were changed for the Aug. 31, 2006 and Aug. 31, 2008 valuations.
114
Funded Status each plan as of Aug. 31, 2008, is presented below. The states pension plans funded status information for The schedule of funding progress, presented as
Retirement System of Texas and the Fire Fighters Pension Commission are: (1) Schedules of funding progress that include historical trend information about the actuarially determined funded status of the plan from a long-term on-going ing sufficient assets to pay benefits when due.
required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets are accrued liability for benefits. increasing or decreasing over time relative to the actuarial Included in the audited financial reports for the
plan perspective and the progress made in accumulat(2) Schedules of employer contributions that include historical trend information about the Annual Required Contributions (ARC) of the employer and the contri-
Employees Retirement System of Texas, the Teacher
butions made by the employers in relation to the ARC.
Funded Status
Actuarial Value of Assets (a) Actuarial Accrued Liability (AAL) (b) Excess of Assets over AAL (Unfunded AAL) (a) - (b) Excess/UAAL as a Percentage of Covered Payroll ((a-b)/c)
Actuarial Valuation Date
Funded Ratio (a)/(b)
Covered Payroll (c)
Employees Retirement System (ERS) $ 23,511,918 08/31/08
$ 25,403,280
$ (1,891,362)
92.6%
$ 5,379,527
(35.2)%
Law Enforcement and Custodial Officer Supplemental Retirement (LECOS) $ 774,509 $ 842,135 $ 08/31/08 Judicial Retirement System Plan One (JRS1) $ 0 08/31/08 Judicial Retirement System Plan Two (JRS2) $ 232,891 08/31/08 Teacher Retirement System of Texas (TRS) $ 110,233,420 08/31/08
(67,626)
92.0%
$ 1,242,122
(5.4)%
289,671
(289,671)
0.0%
3,478
(8,328.7)%
239,098
(6,207)
97.4%
66,110
(9.4)%
$ 121,756,542
Actuarial Accrued Liability (AAL) (b)
$ (11,523,122)
Excess of Assets over AAL (Unfunded AAL) (a) - (b)
90.5%
$ 33,237,904
(34.7)%
Actuarial Value of Assets (a)
Total Members Covered (not rounded)
Excess/UAAL Per Member Covered (not rounded)
Texas Emergency Services Retirement System (TESRS) $ 60,987 $ 64,227 08/31/08*

* Actuarial assumptions and methodology were changed for the Aug. 31, 2008 valuation.
(3,240)
95.0%
8,254
(393)
115
Note 10
Deferred Compensation
deferred compensation plans. One is established in accoris established in accordance with Internal Revenue Code Section 401(k). All costs of administering and funding The assets of the two plans remain the property of the The state of Texas offers to all state employees two dance with Internal Revenue Code Section 457. The second
separately for each plan. The following note disclosures are organized by OPEB plan administrator.
University of Texas and Texas A&M University Systems defined benefit retiree health care plans: the UT System Care Health and Life Plan (A&M plan). The UT plan is The state of Texas contributes to two single-employer
Employee Group Insurance Program (UT plan) and A&M administered by the University of Texas System and the System.
these programs are the responsibility of plan participants. contributing employees and are not presented in the accompanying financial statements. The state makes no contributions to either plan, the assets do not belong to the state and the state has no liability related to the plans.
A&M plan is administered by the Texas A&M University The University of Texas System and the Texas A&M
University System elected to implement GASB 45 in fis-
cal 2008. The results of the first annual OPEB valuations Each system issues a publically available financial report
own deferred compensation plan, created in accordance
The University of Texas System (System) offers its
for the UT and A&M plans are incorporated into this note. that includes financial statements and required supplemento the systems at the following addresses. University of Texas System 601 Colorado Street Austin, Texas 78701-2982 Texas A&M University System 200 Technology Way College Station, Texas 77845 Plan Descriptions care and life insurance coverage to university system Each plan provides separate postemployment health
with Internal Revenue Code Section 457(b). All System and do not participate in the plan offered by the state of
employees are eligible to participate in the Systems plan, Texas. All investments, amounts, property and rights held exclusive benefit of participants and beneficiaries at the The System has no liability under the plan.
tary information. Those reports may be obtained by writing
under the deferred compensation trust fund are held for the fair market value of the plan account for each participant.
Note 11
Postemployment Health Care and Life Insurance Benefits
Texas contributes to four plans that provide health care and life insurance benefits for retired employees, their spouses and beneficiaries. These other postemployment benefits (OPEB) are authorized by statute and contributions are determined by the General Appropriations Act. In addition to providing pension benefits, the state of
retirees, surviving spouses and beneficiaries. The Uni-
versity of Texas System and Texas A&M University System are part of the state of Texas primary government. Employees of these systems are considered to be state
employees. Benefit provisions for the UT plan and A&M plan are established and amended by the administering systems as allowed under Texas Insurance Code Chapter 1601. Retiree eligibility for insurance continuation after ject to change. employment is determined by the Legislature and is sub-
different OPEB plans and is an on-behalf contributor to
The state of Texas is a participating employer in three
one plan. The financial statement recognition and note dising and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, were applied 116
closure requirements in GASB Statement No. 45, Account-
Funding Policy are determined annually by each system based on the recing actuaries. The plan rates are based on the plan costs The university system and member contribution rates
Annual OPEB Cost and Net OPEB Obligation plans is calculated based on the annual required contributions of the employers (ARC). The ARC is an amount actuarially determined in accordance with the parameters The states annual OPEB cost for the UT and A&M
ommendations of the employee benefits office and consultthat are expected to be incurred, the funds appropriated for
the plans and the funding policy established by the Legislature in connection with benefits provided through the plan. Amounts contributed by the state are currently based on pay-as-you-go financing requirements determined during established and may be amended by the Legislature. For costs are presented below.
of GASB 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities shows the components of the annual OPEB cost for the year for the UT and A&M plans. over a period no greater than 30 years. The following table
each legislative session. State contribution requirements are fiscal 2008 the employer contributions and annual OPEB
Annual OPEB Cost and Net OPEB Obligation

UT Plan A&M Plan
Schedule of Contributions from the Employers and Other Contributing Entities

Fiscal Year Ending Employer Contribution Annual OPEB Cost Percentage of Annual OPEB Cost Contributed Net OPEB Obligation
Annual Required Contribution, ARC Interest on Net OPEB Obligation Adjustment to ARC Annual OPEB Cost Employer Contributions Made Increase Net OPEB Obligation
$ 522,570
$ 176,593
522,570 99,892 422,678 0 $ 422,678
176,593 36,284 140,309 0 $ 140,309
UT Plan 8/31/08 A&M Plan 8/31/08
$ 99,892
$ 522,570
19.1%
$ 422,678 Net OPEB Obligation, September 1, 2007
$ 36,284
$ 176,593
20.5%
$ 140,309
Net OPEB Obligation, August 31, 2008
monthly contributions for health care and life insurance
For the year ended Aug. 31, 2008, the state made
Funded Status and Funding Progress Aug. 31, 2008, is disclosed below. The funded status of the UT and A&M plans as of
to the UT and A&M plans. Contribution rates are shown
below. Costs are estimated by an actuary for claims expected to be paid during the year. The retiree contributes any premium over and above state contributions.
Funded Status
UT Plan A&M Plan
Employer Contribution Rates Retiree Health and Basic Life Premium

Level of Coverage UT Plan A&M Plan
Actuarial Accrued Liability (AAL) Actuarial Value of Plan Assets Unfunded Actuarial Accrued Liability (UAAL) Funded Ratio (actuarial value of plan assets/AAL) Covered Payroll (active plan members) UAAL as a Percentage of Covered Payroll
$ 5,014,217
$ 1,993,236
$ 5,014,217
$ 1,993,236
Retiree Only Retiree/Spouse Retiree/Children Retiree/Family
$ 369 $ 563 $ 493 $ 687
$ 376 $ 552 $ 486 $ 639
0.0% $ 4,312,904 116.3%
0.0% $ 1,140,126 174.8%
117
mates of the value of reported amounts and assumptions
Actuarial valuations of an ongoing plan involve esti-
actuarial value of assets, consistent with the long-term perspective of the calculations. See the table below for addiin the UT and A&M plans valuations. tional detail on the actuarial methods and assumptions used
about the probability of events far into the future. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress is presented as
Employees Retirement System of Texas a program that provides postemployment health care, life Benefits Program as authorized by Texas Insurance Code The Employees Retirement System (ERS) administers
required supplementary information following the notes to the financial statements. The schedule presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits.
and dental insurance benefits to retirees through the Group Section 1551.102. The State Retiree Health Plan (SRHP) is a cost-sharing multiple-employer defined benefit plan with 56 participating employers. In a cost sharing multiple-employer plan without a
Actuarial Methods and Assumptions are based on the substantive plan (the plan as understood Projections of benefits for financial reporting purposes
special funding situation, employers recognize their annual contractually required contributions to the plan in the fund financial statements. Because the SRHP is funded by multiple employers the GASB 45 special funding situation does not apply.
by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial
methods and assumptions used in the UT and A&M plan
plans like the SRHP, the amount of OPEB liability or asset is equal to the difference between contributions required and contributions made. Contractually required contribu-
For cost-sharing multiple-employer defined benefit
valuations include techniques that are designed to reduce
short-term volatility in actuarial accrued liabilities and the
tions to a cost-sharing multiple-employer OPEB Plan are ally required contributions of the SRHP are currently set Each employer has limited note disclosure require-
not required to be based on the plan ARC. The contractuequal to the pay-as-you-go annual cost of the plan benefits.
Summary of Actuarial Methods and Assumptions

UT Plan A&M Plan
ments under the cost sharing multiple-employer provisions disclose the actuarial information as it relates to the entire
of GASB 45. Additionally, each employer is not required to plan on their individual employer report. Instead, the OPEB to their financial statements and required supplementary information. ERS issues a publically available financial mentary information for the SRHP. That report may be obtained by writing to ERS at the following address. Employees Retirement System of Texas P.O. Box 13207 Austin, Texas 78711-3207
Actuarial Valuation Date Actuarial Cost Method
Dec. 31, 2007 Entry Age Normal Level Percent Open
Sept. 1, 2007 Entry Age Normal Level Percent Open
plan discloses all required actuarial calculations in the notes
Amortization Method
Remaining Amortization Period of Unfunded Liability Asset Valuation Method Actuarial Assumptions: Investment Rate of Return Includes Inflation at Health Care Trend Rates
report that includes financial statements and required supple-
30 years Market
30 years N/A
7% 4% 8% initial 6% ultimate
7% 4% 8% initial 6% ultimate
118
Plan Description of the University of Texas and Texas A&M University Retirees of state agencies, state universities (not part
currently based on the annual pay-as-you-go expenses of
Contractually required contributions to the plan are
systems) and other non-state entities selected by the Legislature are eligible to receive these OPEB through the SRHP. Retirees must meet certain age and service requireparticipate in the plan. Surviving spouses and dependents
the SRHP. In fiscal 2008 the state contributed $376.5 mil-
lion to the SRHP, which equaled the required contribution. Teacher Retirement System a program that provides benefits to public school district retirees with at least 10 years of service. The Texas Public School Retired Employees Group Insurance Program (TRS-Care), a cost-sharing multiple-employer defined The Teacher Retirement System (TRS) administers
ments and have at least 10 years of service at retirement to of retirees are also covered by the plan. Benefit and contribution provisions of the SRHP are authorized by state law and may be amended by the Legislature. The financial statements of the SRHP are reported
using the accrual basis of accounting. Contributions are
benefit plan with 1,255 participating employers, provides a al coverage for eligible retirees and their dependents.
recognized when due, pursuant to state law. Benefits and able in accordance with the terms of the plan.
free basic level of coverage for eligible retirees and optionThe state of Texas is not an employer in the TRS-Care
refunds of contributions are recognized when due and payInvestments of the SRHP are reported at fair value.
OPEB plan and is not legally required to continue contributing benefits. A special funding situation is not created because costs are shared between the state and the many 2008 contributions to the TRS-Care OPEB plan are displayed below.
The fair value is based on published market prices and quotations from major investment brokers at current exchange rates, as available, plus accrued interest and
participating non-state school district employers. The fiscal
dividends. For investments where no readily ascertainable
market value exists, management, in consultation with their investment advisors and the Master Trust Custodian, determines the fair values for the individual investments. Funding Policy annual state contributions to the SRHP. Currently, the state ums and 50 percent of dependents premiums. The retiree contributes any premium over and above state contribuThe Legislature sets and has the power to amend
Schedule of Contributions from the Employers and Other Contributing Entities

TRS-Care
pays 100 percent of eligible retiree health insurance premi-
From Reporting Entities On Behalf From State On Behalf From Federal Government
$ 141,673 254,722 59,486 $ 455,881
tions. The chart below summarizes the maximum monthly miums of eligible retirees.
employer contribution toward the health and basic life pre-
Employer Contribution Rates Retiree Health and Basic Life Premium

Level of Coverage Retiree Only Retiree/Spouse Retiree/Children Retiree/Family ERS SRHP $ 361 $ 567 $ 498 $ 705
includes financial statements and required supplementary writing to TRS at the following address.
TRS issues a publically available financial report that
information for TRS-Care. That report may be obtained by
Teacher Retirement System of Texas 1000 Red River Street Austin, Texas 78701-2698
119
Plan Description cal group health insurance plan with deductibles based Basic coverage includes participation in a major medi-
Reporting for Certain Grants and Other Financial Assis-
tance, requires that these on-behalf payments be recorded istrators reported the following amounts of Medicare Part D payments from the federal government in fiscal 2008.
upon enrollment in Part A or Part B of Medicare. EligibiliInsurance Code Chapter 1575.
as revenues and expenses of each plan. The OPEB admin-
ty provisions of the TRS-Care plan are established in Texas The financial statements for TRS-Care are reported
using the accrual basis of accounting. Contributions are
Medicare Part D Receipts

UT Plan A&M Plan ERS SRHP TRS-Care $ 6,215 3,092 32,964 59,486
recognized in the period in which amounts are due, pursuant to state law. Benefits and refunds of contributions are recognized when due and payable in accordance with the terms of the plan. Investments of TRS-Care are reported at fair value.
The fair value of investments is based on published market prices and quotations at current exchange rates. For investments where no readily ascertainable market value exists, investments based on the capital account balance at the management has determined fair values for the individual closest available reporting period, adjusted for subsequent
$ 101,757
Note 12
Interfund Activity and Transactions
between funds and/or blended component units and is Interfund activity refers to financial interactions restricted to internal events. Interfund transactions under Managements Discussion and Analysis - for State and GASB Statement No. 34, Basic Financial Statements - and Local Governments, refer to financial interactions with
contributions, distributions, management fees and reserves. Funding Policy public school district payroll. The state and active school Funding for free basic coverage is provided based on
employee contribution rates are 1 percent and 0.65 percent also contributing 0.55 percent of payroll.
of school district payroll, respectively, with school districts TRS-Care retiree health care and life insurance ben-
legally separate entities, i.e., discrete component units and other governments, and are restricted to external events. Reciprocal Interfund Activity ity between funds and blended component units with a Interfund loans are reciprocal interfund activ-
efits are financed on a pay-as-you-go basis. The expenditures are recognized when reimbursements are made for claims paid by non-state entities or when premiums are paid.
TRS-Care. The state is not contractually required to conin the plan.
In fiscal 2008 the state contributed $254.7 million to
requirement for repayment. These loans are reported as or noncurrent.
interfund receivables/payables, classified as either current Interfund services are sales and purchases of goods
tribute to the TRS-Care plan because it is not an employer
and services between funds for a price approximating their external exchange value. This activity is reported as revenues in seller funds and expenditures or expenses in purchaser funds. Unpaid amounts are reported as receivables and payables.
Medicare Part D received payments from the federal government pursuant to the retiree drug subsidy provisions of Medicare Part D. GASB Statement No. 24, Accounting and Financial In fiscal 2008 the administrators of each OPEB plan
120
Nonreciprocal Interfund Activity This activity refers to flows of assets without equivalent flows of assets in return and without a requirement for Interfund transfers are nonreciprocal interfund activity.
wide financial statements, according to GASB 34. Due type activities and fiduciary funds are reported as due
from/due to amounts between governmental or businessfrom/due to amounts between funds in the fund financial statements and are reclassified to receivables from fiduciary funds/payables to fiduciary funds, as if they were external transactions on the government-wide financial statements.
repayment. In governmental funds, transfers are reported as other financing sources or uses. In proprietary funds, transfers are reported after nonoperating revenues and
expenses. The majority of transfers are legally authorized by statute or bond covenant to move amounts from one fund to another. Amounts not transferred at fiscal year end
are accrued as due from/due to. Activity occurring within the same fund has been eliminated. Additional eliminations have been made and transfers in and out have been netted ties as transfers-internal activities. and presented in the government-wide statement of activiAccording to GASB 34, certain reclassifications and
responsible for payment of expenditures or expenses to the not displayed in the financial statements.
Interfund reimbursements are repayments from funds
funds that actually made the payment. Reimbursements are For the state of Texas, routine transfers are those
transfers from unrestricted revenue collected in the general revenue fund to finance various programs accounted for tion Act, which is the primary budget document for the in other funds in accordance with the General Appropriastate of Texas. Other transfers are legally authorized by
eliminations have been made between the fund financial
statements and the government-wide financial statements. Resource flows between the primary government and its discretely presented component units have been reported
statute to move resources from one fund to another. The
as revenues and expenses, as if they were external transacwide financial statements. Transfers between the govern-
noncurrent interfund receivables/payables include loans for energy efficiency programs of approximately $12.5 million. There is also a $367.9 million receivable for Texas
tions on the fund financial statements and the governmentmental or business-type activities and the fiduciary funds ments and were reclassified to revenues and expenses, as financial statements.
A&M System from the University of Texas System from
have been reported as transfers on the fund financial stateif they were external transactions on the government-wide Due from/due to amounts between the primary gov-
permanent university funds. The earnings will be used for
bond payments. Significant transfers include a $980.7 milfund for educational programs and a $716.5 million trans-
lion transfer from lottery earnings to the foundation school fer from the permanent school fund to the available school fund. There was also a $2.3 billion transfer to the highway activity and transactions by fund type and category as of Aug. 31, 2008, is shown on the following pages. fund from the general revenue fund. The detail of interfund
ernment and the discretely presented component units are
reported separately from due from/due to amounts between funds in the fund financial statements and the government-
121
Interfund Receivables/Payables per the Fund Statements

Current Interfund Interfund Receivables Payables Noncurrent Interfund Interfund Receivables Payables Interfund Receivables Total Interfund Payables
Fund Type
INTERFUND RECEIVABLES/PAYABLES WITHIN THE PRIMARY GOVERNMENT Governmental Funds General Fund Permanent School Fund Nonmajor Governmental Funds Proprietary Funds Colleges and Universities Nonmajor Enterprise Funds
3,050 3 3,053 14,685 56 14,741
59 420 479 17,315 17,315
$ 12,510
$ 2,104 2,104 378,351 378,351
$ 15,560 3 15,563 382,630 56 382,686
59 2,524 2,583 395,666 395,666
12,510 367,945 367,945
Total Interfund Receivables/Payables Within the Primary Government
$ 17,794
$ 17,794
$ 380,455
$ 380,455
$ 398,249
$ 398,249
Due From/Due To per the Fund Statements

Due From Primary Government Due To Primary Government
Fund Type
Other Funds
Component Unit
Other Funds
Component Unit
DUE FROM/DUE TO WITHIN THE PRIMARY GOVERNMENT Governmental Funds General Fund State Highway Fund Permanent School Fund Nonmajor Governmental Funds Proprietary Funds Colleges and Universities Texas Water Development Board Funds Texas Department of Transportation Turnpike Authority Nonmajor Enterprise Funds Internal Service Fund Fiduciary Funds Pension and Other Employee Benefit Trust Funds Private-Purpose Trust Funds Agency Funds
22,313 269,440 356 83,974 376,083 639,396
332
63 395 18
$ 1,061,788 4,624 1,713 73,706 1,141,831 11,658 2,896 1,690 16,226 77,225 109,695 40,128 414 40,542 $ 1,292,068
426
426
118 26,663 729 666,906 247,715 32 1,332 249,079 $ 1,292,068 $
18
0 0 $
0 413
0 $ 0 $
0 426
Total Due From/Due To Within the Primary Government DUE FROM/DUE TO OUTSIDE THE PRIMARY GOVERNMENT Discretely Presented Component Units Total Due From/Due To Outside the Primary Government TOTAL DUE FROM/DUE TO
$ $ 0
$ $
426 426
$ $ 0
$ $ 0
$ $
413 413
$ $ 0
$ 1,292,907
$ 1,292,907
122
Internal Balances per the Government-wide Financial Statements

Governmental Activities Business-Type Activities Total
NONCURRENT ASSETS Internal BalancesReceivables CURRENT LIABILITIES Internal BalancesPayables
10,406
(10,406)
631,164
(631,164)
Transfers In/Out per the Fund Statements

Transfers In Other Funds Transfers Out Other Funds
Fund Type
Governmental Funds General Fund State Highway Fund Permanent School Fund Nonmajor Governmental Funds Proprietary Funds Colleges and Universities Texas Water Development Board Funds Texas Department of Transportation Turnpike Authority Nonmajor Enterprise Funds Fiduciary Funds Pension and Other Employee Benefit Trust Funds Private-Purpose Trust Funds
$ 4,661,664 3,727,027 5,443,058 13,831,749 5,414,776 4,235 46,826 17,121 5,482,958 99,803 10 99,813 $ 19,414,520
$ 12,057,410 88,032 716,535 4,915,005 17,776,982 480,462 9,846
1,083,157 1,573,465 62,319 1,754 64,073 $ 19,414,520
Total Transfers In/Out
Transfers In/Out per the Government-wide Financial Statements

Fund Category Other Funds
Governmental Activities Business-Type Activities
$(3,909,529) $ 3,909,529
123
Note 13
Fund Balances/Net Assets
tal fund balances is shown in the table below by fund type at Aug. 31, 2008. A summary of the nature and purposes of governmen-
is based on the function of the operation of the agencies are classified as designated for general government.
within the funds. The fund balances of oversight agencies The government-wide, proprietary and fiduciary
restrictions are listed on the face of their statements of net $56.2 billion of restricted net assets for the primary government, of which $38.6 billion is restricted by enabling legislation.
assets. The government-wide statement of net assets reports
served designated fund balances for governmental funds
The classification of unreserved undesignated or unre-
Governmental Fund Balances Reserved, Unreserved/Designated, Unreserved/Undesignated

MAJOR FUNDS General Fund Reserved: Encumbrances Inventories Imprest Accounts Loans and Contracts Interfund Receivables (Noncurrent) Tax Receivables (Noncurrent) Health and Human Services General Fund Unreserved Undesignated: State Highway Fund Reserved: Encumbrances Inventories Imprest Accounts Loans and Contracts State Highway Fund Unreserved: Designated: General Government Transportation Total Unreserved/Designated Undesignated: General Government Public Safety and Corrections Total Unreserved/Undesignated NONMAJOR FUNDS Special Revenue Funds Reserved: Encumbrances Inventories Imprest Accounts Loans and Contracts
$ 1,478,793 170,836 3,730 247,137 12,510 424,524 133,651 $ 2,471,181 $ 8,183,985
30,834 437 10 1,122,173 $ 1,153,454
140,593 106,751 584 248,305 496,233
Special Revenue Funds Unreserved: Designated: General Government Regulatory Services Health and Human Services Natural Resources and Recreation Education Transportation Public Safety and Corrections Employee Benefits Total Unreserved/Designated Special Revenue Funds Unreserved/Undesignated: Undesignated: General Government Education Public Safety and Corrections Total Unreserved/Undesignated Total Special Revenue Funds - Unreserved Debt Service Funds Reserved: Debt Service
$ 3,120,752 491,586 12,703 191,083 88,048 884,486 6,825 90 $ 4,795,573
1,625 330,527 332,152 (49,661) (253) (49,914) 282,238
(7,172) (117,201) (431) (124,804) $ 4,670,769
$ Permanent School Fund Reserved: Encumbrances Loans and Contracts Public School Support
189,203
997 1,160 25,225,028 $ 25,227,185
124
Governmental Fund Balances Reserved, Unreserved/Designated, Unreserved/Undesignated (concluded)

NONMAJOR FUNDS (continued) Capital Projects Funds Reserved: Encumbrances Inventories Capital Projects Capital Projects Funds Unreserved: Designated: Public Safety and Corrections Total Unreserved/Designated Undesignated: General Government Health and Human Services Natural Resources and Recreation Education Public Safety and Corrections Total Unreserved/Undesignated NONMAJOR FUNDS (concluded) Permanent Funds Reserved: Education Permanent Funds Unreserved: Designated: Permanent Health Fund Total Unreserved/Designated Undesignated: General Government Education Total Unreserved/Undesignated
116,689 82 197,535 314,306
$ $
575,931 575,931
560,520 560,520 9,829 (6,070) 3,759 564,279
563 563 1,818 (110,743) 6 (35) (15,292) (124,246) (123,683)
$ ALL GOVERNMENTAL FUNDS Reserved Unreserved/Designated Unreserved/Undesignated Total Fund Balances Governmental Funds
$ 30,427,493 5,688,808 7,888,780 $ 44,005,081
125
Note 14
Adjustments to Fund Balances/ Net Assets
restatement of fund balances or net assets as shown below and discussed on the following page. During fiscal 2008 certain accounting changes and adjustments were made that required the
Restatements to Fund Balances/Net Assets

September 1, 2007, As Previously Reported September 1, 2007, As Restated
GOVERNMENTAL FUNDS AND GOVERNMENT-WIDE ACTIVITIES Major Funds: General Fund State Highway Fund Permanent School Fund Total Major Funds Nonmajor Funds: Special Revenue Funds Debt Service Funds Capital Project Funds Permanent Funds Total Nonmajor Funds Total Governmental Funds Governmental Activities: Capital Assets Net of Accumulated Depreciation Long-Term Liabilities Other Adjustments Internal Service Fund Total Governmental Activities Total Governmental Funds and Government-wide Activities PROPRIETARY FUNDS Major Funds: Colleges and Universities Texas Water Development Board Funds Texas Department of Transportation Turnpike Authority Nonmajor Enterprise Funds Total Proprietary Funds FIDUCIARY FUNDS Pension and Other Employee Benefit Trust Funds External Investment Trust Funds Private-Purpose Trust Funds Total Fiduciary Funds Total Primary Government Discretely Presented Component Units Total Reporting Entity
Restatements
$ 10,836,321 12,198 26,773,885 37,622,404
(12,881) 29,403 16,522
$ 10,823,440 41,601 26,773,885 37,638,926
3,242,576 145,165 98,415 1,249,461 4,735,617 42,358,021
69,143 48 8,288 77,479 94,001
3,311,719 145,213 106,703 1,249,461 4,813,096 42,452,022
63,802,726 (10,461,260) 2,280,704 369,913 55,992,083
(12,836) (145,990)
(158,826)
63,789,890 (10,607,250) 2,280,704 369,913 55,833,257
98,350,104
(64,825)
98,285,279
36,835,169 2,123,700 805,452 3,134,287 42,898,608
(23,301)
36,811,868 2,123,700 805,452
(435,214) (458,515)
2,699,073 42,440,093
137,266,388 16,452,983 3,282,605 157,001,976 298,250,688 516,547 $ 298,767,235 $
0 (523,340) 435,753 (87,587)
137,266,388 16,452,983 3,282,605 157,001,976 297,727,348 952,300 $ 298,679,648
126
Restatements by Activity
Governmental Activities Business-Type Activities Component Unit Total Restatements
Note 15
Contingent Liabilities
(91) 167 $ (2,051) (31,589) (53,947)
Restatements
A. B. C. D. Total Restatements
2,340 (12,836) (53,947) (382)
(4,300) (18,920)
legal proceedings, which normally occur in governmental operations. The recurring pattern of such litigation is not likely to have a materially adverse effect on the states revenues or expenditures. Potential claims have been classified into the following categories to facilitate disclosure. Protested Tax Payments ments of $118.4 million, the majority of which were held by the Texas Comptroller of Public Accounts. The taxes included state sales and use tax, franchise tax, insurance As of Aug. 31, 2008, the state held protested tax pay-
The state has been named as a defendant in routine
(435,295)
435,677
$ (64,825)
$ (458,515)
$ 435,753
$ (87,587)
A. These are miscellaneous restatements and other changes necessary to correct accounting errors in the prior period that resulted in the over or understatement of revenues and/or expenditures.
premium and maintenance taxes, surtaxes and various other fees under protest. In addition, plaintiffs have filed lawsuits seeking refunds for franchise, sales, insurance, motor vehicle sales and use and oil and gas production taxes totaling presently be determined, adverse rulings in some of them could result in significant additional refunds. Unpaid Claims and Lawsuits have been filed that may affect the state. While the outA variety of cases with claims totaling $270.9 million $708 million. Although the outcome of these cases cannot
B. This restatement is for adjusting capital assets and accumulated depreciation.
C. This restatement relates to the adjustment for the Texas mobility fund and the state highway fund to eliminate accrued interest payable and related interest expense and issuance costs.
as well as to restore unamortized premiums, discounts
D. These restatements recognize a change in the reporting of the Teacher Retirement System (TRS). Previously TRS was reported as part of the state of Texas primary
come of these cases cannot be determined, adverse rulings
could result in additional liabilities. Included are a number state agencies. The Texas Department of Transportation
government. TRS is now reported as a discrete compolegal entity that does not provide services entirely or almost entirely to the state of Texas. Therefore, the
of lawsuits and claims that may be significant to individual faces a potential liability of $106.1 million from litigation tective Services is potentially impacted from civil rights, discrimination and tort claims of $133.4 million. Outstanding Loan Commitments visions for financing purposes to be provided from remaining current bond proceeds, future bond proceeds and federal drawdowns. The Texas Water Development Board has loan comThe state makes loan commitments to political subdi-
nent unit because TRS was determined to be a separate
and contractual claims. The Department of Family and Pro-
beginning balances of TRS governmental and proprinent unit financial statements.
etary activities were restated and moved to the compo-
mitments totaling $1.4 billion as of Aug. 31, 2008. The 2008 Comprehensive Annual Financial Report for the State of Texas
127
Federal Assistance is subject to review or audit by federal grantor agencies. The state receives federal financial assistance which
estimates that rebatable arbitrage liability, if any, will be immaterial to its overall financial condition. Guaranteed Debt anteed by the permanent school fund for 2,596 outstandstate statute, payments by the permanent school fund on such guarantees are recoverable from the state of Texas. At Aug. 31, 2008, $49.9 billion in debt had been guar-
Entitlement to this assistance is generally conditional upon compliance with the terms and conditions of grant agreements and applicable federal regulations, including the
expenditure of assistance for allowable purposes. Any disallowance as a result of the audits may become a liability of the state. The Texas Department of Aging and Disability Ser-
ing bond issues in 780 school districts in the state. Under
vices has potential federal funding deferrals totaling $60.2 million as of Aug. 31, 2008. The Health and Human Services Commission Office
The $49.9 billion represents principal amount and does not reflect any subsequent accretions in value for compound interest bonds (zero coupon securities). The amount also the Bond Guarantee Program. Partnerships certain limited partnerships. The partnership agreements The University of Texas System (UT) has invested in
of Inspector General and the Office of the Attorney General investigate allegations of overpayments to Medicaid providers. Until investigations are completed, the total
excludes bonds that have been refunded and released from
amount of overpayments to providers are potentially subject to recovery (amounts associated with the open case list) and may represent a corresponding potential liability for the federal share of these payments - about 60 percent of that total.
commit UT to possible future capital contributions amounting to $2.9 billion as of Aug. 31, 2008. The Teacher Retirement System has $14.2 billion in remaining commitments for private equity domestic and international partnerships.
ed investigation substantiates an overpayment, and (b) the
An actual liability is realized only after (a) a complet-
provider is notified of the results and given an opportunity dollars on the open case list that are ultimately confirmed as overpayments cannot be reliably predicted. The state
to submit rebuttal or claims for offsets. The percent of total
Note 16
Subsequent Events
Primary Government
Bonds and Commercial Paper Issued/Refunded/ Other Financing million in new bonds and commercial paper and $461.7 million in refunding bonds since Aug. 31, 2008. This is significantly less than fiscal 2007 due to the delay in issuing the Central Texas Turnpike Bonds and Texas Mobility Fund Bonds because of unfavorable market conditions. This routine activity finances state facilities, housing standing debt. State agencies and universities have issued $358.8
estimates the amounts that may become payable to the federal government will be immaterial to its overall financial condition.
Arbitrage Code Section 148 as earnings on investments purchased with the gross proceeds of a bond issue in excess of the amount that would have been earned if the investment were invested at a yield equal to the yield on the bond issue. The rebatable arbitrage must be paid to the federal government. State agencies and universities responsible for investments from bond proceeds carefully monitor their investments to restrict earnings to a yield less than the bond issue Rebatable arbitrage is defined by Internal Revenue
assistance programs, educational loans and refunds outThe states bond financing has been affected by sig-
and, therefore, limit any state arbitrage liability. The state
nificant events and volatility in the financial markets. Some state entities including the Texas State University System
128
and the Texas Department of Transportation have opted to postpone issuing bonds until the financial climate is more favorable. Since the conclusion of fiscal 2008, adverse
Assistance Program, Fund II Series 2004A Bonds; and the II Series 2005B Bonds. The Texas Comptroller of Public Accounts notified Lehman that the marketing and client
State of Texas Veterans Housing Assistance Program, Fund
events in the financial markets led to a period where volatile able rate bonds for the Texas Department of Transportation. Additionally, the credit rating of a standby bond purchase provider was downgraded, which resulted in sustained
and higher than historic interest rates were borne by the vari-
services contract provided by Lehman Brothers, Inc. was
terminated effective Oct. 17, 2008. The marketing and cli-
ent services previously provided by Lehman Brothers, Inc. ing Trust Company to Federated Investors, Inc.
higher than comparable market rates on the Texas Mobility Fund Series 2005-B variable rate bonds, as well as tenders ing. Remedies to resolve the status of the bank held bonds and failed remarketing of a portion of those bonds outstandare being pursued and are expected to be successful due to the high quality of the underlying general obligation credit rating of the state of Texas that the bonds bear. On Sept. 29, 2008, DEPFA Bank was downgraded to
under the contract were transferred by the Texas SafekeepThe General Land Office (GLO) and Veterans Land
Board issued $50 million State of Texas Veterans Housing
Assistance Program, Fund II Series 2008B Bonds on Sept. Veterans Housing Assistance Fund II.
11, 2008. The Series 2008B Bonds were issued to augment Texas Public Finance Authority (TPFA) issued $10
a BBB rating by the rating agencies. DEPFA Bank is the munity Affairs (Department) 2006H Single Family and
million of General Obligation Commercial Paper Notes, Series 2002A on Oct. 21, 2008. TPFA issued $2 million Oct. 15, 2008. of Master Lease Commercial Paper Notes, Series 2003 on The Texas Water Development Board issued non-
liquidity provider for the Department of Housing and Com2007A Single Family variable rate demand bonds. A bond rity. On Oct. 2, 2008, these bonds were downgraded from
holder may tender these bonds for repurchase prior to matuA-1 to A-2 by Standard & Poors rating agency. Upon the
general obligation debt, self-supporting Refunding Bonds
Series 2008B for $26.5 million for the purpose of refund-
downgrade these bonds were no longer eligible investments in tax-exempt money market funds; therefore, the Departthe remarketing of the bonds was unsuccessful, DEPFA ment began to receive tender notices on these bonds. Once Bank acquired temporary ownership of the bank bonds and subsequently have the bonds upgraded in rating.
ing 1998A, DFUND program bonds and general obligation
debt and Refunding Bonds Series 2008C (EDAP) for $34.2 bonds on Jan. 6, 2009.
million for the purpose of refunding 1998C EDAP program The Department of Agriculture on Sept. 18, 2008,
until the Department is able to get a new liquidity provider Lehman Brothers, Inc. is owned by Lehman Broth-
refinanced $25 million in outstanding commercial paper. nanced on Sept. 19, Sept. 26 and Oct. 2, 2008.
The commercial paper matured and was subsequently refiStephen F. Austin University issued $10.2 million in
ers Holding, Inc., which filed for Chapter 11 bankruptcy
protection on Sept. 15, 2008. On Sept. 26, 2008, two interest rate swaps with Lehman Brothers Derivative Products, Inc. on the State of Texas Veterans Housing Assistance Program, Fund II Series 2004A Bonds and the State of Texas Veterans Housing Assistance Program, Fund II
Higher Education Fund bonds in December 2008. The
university is also planning an issuance of Tuition Revenue deferred maintenance for Feb. 1, 2009.
Bonds, $13 million for a nursing center and $10 million for On Oct. 30, 2008, the University of Texas (UT) Sys-
Series 2005B Bonds were terminated. On Oct. 14, 2008, with Goldman Sachs & Co. as the remarketing agent for the State of Texas Veterans Housing Assistance Bonds, Series 1994A-1; the State of Texas Veterans Housing
tem Board of Regents issued $400.9 million in Permanent University Fund (PUF) Bonds, Series 2008A to refund $400 million of outstanding PUF Flexible Rate Notes, Series A. On Nov. 5, 2008, the UT System Board of
the Veterans Land Board replaced Lehman Brothers, Inc.
Regents issued $238.6 million in Revenue Financing Sys-
129
tem Commercial Paper Notes, Series A to finance a variety of capital projects at various UT System institutions. The Texas Department of Criminal Justice (TDCJ), in
search for long-term value. The states investment port-
folios are well diversified across asset classes; however,
an effort to fund fiscal 2008 operational shortfalls primar-
the declines after Aug. 31 had negative impacts on almost uncertainty in the markets may lead to additional equity
ily related to salaries, overtime, food, fuel and utility costs, requested approval from the Legislative Budget Board and the Office of the Governor to transfer appropriations total-
every investment asset class. A risk remains that continued declines. This period, however, also will provide opporbenefit returns over longer investment cycles.
ing $22.5 million from fiscal 2009 to fiscal 2008 as per the
tunities to acquire assets at substantial discounts that will The largest investment portfolios of the state that
guidelines set forth in the General Appropriations Act, 80th between years will result in a significant impact to fiscal 2009. Pending approval from the Texas Board of Criminal
Legislature, Regular Session. The transfer of appropriations
have been affected by the market volatility are those held by the Teacher Retirement System (TRS), the Employee Retirement System (ERS), the University of Texas System (UT) and the Texas Education Agency (TEA). As of Dec. 31, 2008, the investment portfolios have declined signifideclined $23.2 billion or 22.5 percent; ERS had declined $4.6 billion or 20.8 percent; UT Permanent University Fund had declined $2.5 billion or 22.3 percent; and TEA percent since Aug. 31, 2008. Hurricane Ike state of Texas when Hurricane Ike, a Category 2 hurricane, struck the southeast Texas coast, causing massive losses to tions for Texans. By Nov. 1, 2008, initial unemployment claims from Texans who had lost their job as a result of Texas structures and property as well as economic dislocaOn Sept. 13, 2008, a catastrophic disaster impacted the
Justice in December 2008, ownership of the Marlin VA the TDCJ to utilize as a medical facility.
Hospital will transfer from the Veterans Administration to In accordance with Section 204.123 of the Labor
cantly. As reported by the custodian of the funds, TRS had
Code, in September 2008, taxes that had been deposited
to the Employment Training Investment Act (ETIA) holding fund during fiscal 2008 were transferred to the Skills fund in the amounts of $20 million and $52.3 million, reserved for the training and stabilization fund. Investments/Economic Environment markets have in general experienced a significant decline in value due to the financial and credit crisis initiated by the subprime mortgage meltdown. This resulted in subSubsequent to the Aug. 31 fiscal year end, the financial Development Appropriation and the governors enterprise respectively. $17.4 million of the remaining balance is
Permanent School Fund had declined $5.2 billion or 22.8
Hurricane Ike exceeded 111,000 and unemployment benefit payments arising from these claims were approximately $21 million. The financial impact of the disaster was estimated at over $29 billion in the Annual Financial Report for the Office of the Governor submitted in late November 2008. Private and corporate donations in excess of $3 million were received by the Texas Disaster Relief Fund, a 2009 to assist with Hurricane Ike relief efforts. nonprofit corporation, and will be distributed during fiscal Pursuant to the Texas Administrative Code (TAC) and
stantial declines in equity, fixed income and commodities markets in which the state invests directly, and indirectly, through its investments in various hedge funds, private investments and public markets. The financial results of
the state are impacted by market volatility and therefore
the states investments have been negatively impacted as a markets are highly dynamic and change in value daily, the value of the states various investment portfolios change every day.
result of these market conditions. Since the global financial
the Funds Management Agreement (FMA), the Commisthe Catastrophe Reserve Trust Fund to the Texas Windstorm Insurance Association for the payment of losses
to center on proven principles of diversification and the
The states overriding investment philosophy continues
sioner of Insurance authorized the transfer of all funds in
130
as defined by the FMA and the TAC. The approximate amount of transfer was $370 million. Numerous state entities were affected by Hurricane
age to buildings and equipment. DPS anticipates federal reimbursement of $10 million to $15 million. Hurricane Ike made landfall at Galveston, Texas
Ike. The state is still accumulating data from state entities in an effort to assess the damage caused by the hurricane. Details for some of the entities impacted are addressed in the following paragraphs. The TDCJ responded to Hurricane Ike by providing
resulting in temporary closures of University of Texas Health Science Center at Houston (UT-HSC Houston) and University of Texas M.D. Anderson Cancer Center
(UT MD Anderson) and closure of a significant portion of University of Texas Medical Branch at Galveston (UTMB Galveston) for an undetermined period of time. Physical structures at UT-HSC Houston and UT MD Anderson sustained property damage of up to $10 million. UTMB Galveston sustained significant physical damage and loss of patient care activity. Costs for protecting and restoring evacuation and relocation, together with loss of revenue, may exceed $700 million based upon preliminary estifacilities, replacement of infrastructure and equipment and
evacuation transportation to approximately 5,900 offenders incarcerated at nine coastal correctional facilities and ties. In addition to the cost of transportation, the TDCJ approximately 1,100 high risk parolees from coastal counincurred costs related to overtime, fuel and maintenance are $18 million.
and repair. Estimated operational costs related to this event Texas parks on the Texas coast suffered significant
losses led by Galveston Island and Sea Rim. On Galveston Island there was extensive beach erosion, loss of headquarters, restrooms, shelters, vehicles and some
mates. UTMB Galveston is implementing restored operations for all of research and education, and a portion of the clinical activity. Clinical activity restoration will take damages to related facilities.
roads. At Sea Rim in Jefferson County, water has receded but with over 400 feet of beach lost. All park buildings are a total loss. Cost estimates for these two locations top $83.8 million with losses at other locations totaling about $15.5 million. Cost estimates for the Health and Human Services
an extended period of time due to the extent and nature of The UT System maintains property insurance coverage
through its comprehensive property protection plan. Losses (including business interruption) due to named windstorms are covered up to $100 million under a commercial insurNational Flood Insurance Program and Texas Windstorm Insurance Association policies provide up to $10 million
Commission (HHSC) for Hurricane Ike exceed $340 million. After federal dollars are taken into account, the state share is almost $100 million. The majority of this cost
ance policy subject to a $50 million deductible. Underlying
relates to HHSC client services for Other Needs Assistance (individual and household programs) and Medicaid Acute Care. It is unknown if additional federal dollars will be available for some of the states costs. The Department of State Health Services (DSHS)
in additional insurance recovery. Preliminary estimates for loss of revenue resulting from Hurricane Ike approximate $300 million. In December 2008, the United States Federal Emergency Management Agency (FEMA) obligated reimbursing repairs to UTMB Galveston. Hurricane Ike will result in a permanent impairment of capital assets for UTMB Galveston. It is unknown at this time if UTimpairment of capital assets.
provided a number of services, including but not limited special needs, medical staffing, medical supplies, crisis cost for the response is estimated to be $27 million.
almost $39 million to the state of Texas as an advance on
to: ambulances for evacuation, shelters for individuals with counseling and vector control for mosquitoes. The DSHS The Texas Department of Public Safety (DPS) incurred
HSC Houston and UT MD Anderson will have permanent As a result of the financial losses stemming from Hur-
an estimated cost to the agency from Hurricane Ike of
between $15 million and $20 million for response expenses for travel, salary, supplies and flight time as well as dam-
ricane Ike, on Nov. 12, 2008, the UT System Board of
Regents ordered layoffs of approximately 3,800 employees at UTMB Galveston. The university employs more than
131
12,000 people who have been on the payroll since Hurricane Ike struck Galveston. With UTMB Galvestons hospital largely shut down, the universitys expenses have exceeded revenues by $40 million a month and reserves will be exhausted shortly. The affected employees were carried on the payroll until mid-January of 2009. Component Unit able Housing Corporation made a decision to cancel the Subsequent to fiscal year end, the Texas State Afford-
Employees Retirement System of Texas (ERS) implementTexas. The managed care arrangement includes provider
ed a self-funded managed care health plan, HealthSelect of fee negotiations and utilization management. HealthSelect is administered by Blue Cross and Blue Shield of Texas, Inc. The administrative contract involves no transfer of
risk to the administrator. The states Group Insurance Fund retains all risk under HealthSelect. The GBP also includes HMOs to provide health care services in lieu of coverage under HealthSelect. There is a full transfer of risk to of premiums. The life, AD&D and disability insurance
Single Family Drawdown Program. All outstanding bonds in the Drawdown Program were expected to be redeemed prior to Jan. 1, 2009.
the HMOs. The state retains no risk beyond the payment coverages are administered by Group Life and Health (the carrier), a division of Fort Dearborn Life Insurance Comexceed the claims portion of premium. The AD&D insurpany. The carrier, not the fund, is liable in the event claims ance is fully insured. The ERS approved two dental plans tion (DHMO) administered by Aetna Dental, Inc., and a dental indemnity plan administered by the Government
Note 17
Risk Management
cally assess the proper combination of commercial insurit may be exposed. The state is not involved in any risk pools with other governmental entities. It is the policy of the state and its agencies to periodiance and self-insurance to cover the risk of losses to which
for fiscal year 2008, a dental health maintenance organiza-
Employees Hospital Association (GEHA). The DHMO is
has occurred and the amount of that loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported.
Liabilities are reported when it is probable that a loss
fully insured with all risk transferred to Aetna Dental, Inc. self-funded by ERS with all risk retained by the Group Insurance Fund.
Beginning Sept. 1, 1997, the dental indemnity plan became
pensation claims, the state is generally self-insured and
For workers compensation and unemployment com-
Employees Uniform Group Health Coverage Act, establishing a statewide health coverage program for public school employees and their dependents. The Teacher Retirement System administers this program. Enrollment commenced in September 2002. The plan includes employees of most small to mid-size districts, charter schools, education serated with this plan is retained by the plans participants, the state. vice centers and certain other employers. The risk associand no risk is transferred to the plans administrators or to A number of state universities have self-insurance
The 77th Texas Legislature enacted the Texas School
funds such liabilities on a pay-as-you-go basis. The state
assumes substantially all risks associated with tort claims conditions of property, vehicles, aircraft or watercraft.
and liability claims against the state or its agencies due to The Texas Employees Group Benefits Program (GBP),
provides health, life, accidental death and dismemberment (AD&D), disability and dental insurance coverage to state and higher education employees, retirees and their dependents. Coverage is provided through a combination of
insurance contracts, a self-funded health plan, a self-funded dental indemnity plan, health maintenance organization zation (DHMO) contracts. Effective Sept. 1, 1992, the (HMO) contracts and dental health maintenance organi-
plans providing various coverages in the areas of workers compensation, unemployment compensation, employee health and medical malpractice on a funded or pay-as-
you-go basis. Liabilities are reported when it is probable
132
that a loss has occurred and the amount of that loss can be reasonably estimated. Estimates of liabilities for incurred (both reported and unreported) but unpaid claims are actuarially determined based on estimates of the ultimate current trends and any other factors that would modify
not included in the receivables reported in the financial statements. As of Aug. 31, 2008, the redetermination hearings process had an estimated amount of $657 million.
cost of settling claims, using past experience adjusted for past experience. There have been no significant reductions in insurance coverage in the past year and losses did not The following table presents the changes in claims exceed funding arrangements during the past three years. liability reported in various balance sheet/statement of net assets liability accounts for the general fund governmentwide governmental activities, enterprise funds, internal service fund and colleges and universities during fiscal
Note 19
Component Units and Related Organizations
which the elected officials of the primary government are Component units are legally separate organizations for financially accountable. Component units can also be other relationship with a primary government is such that excluto be misleading or incomplete. In addition, component units can be organizations that raise and hold economic resources for the direct benefit of a government unit. Because of the closeness of their relationships with the
organizations for which the nature and significance of their sion would cause the reporting entities financial statements
years ending Aug. 31, 2007, and Aug. 31, 2008. Claims Liabilities) are also included in the table.
and Judgment amounts presented in Note 5 (Long-Term
Changes in Claims Liability Balances

Beginning Balance Increases Decreases Ending* Balance
primary government, some component units are blended
as though they are part of the primary government. Most of the component units for the state of Texas meet the
component units, however, are discretely presented. None criteria for major component unit presentation and those
2008 2007
$ 717,883 $ 810,226
$ 1,982,250 $ 1,716,867
$ 1,983,073 $ 1,809,210
$ 717,060 $ 717,883
* The ending balance includes both short-term and long-term claims. Long-term claims are reported as claims and judgments (current and noncurrent liabilities), which are included in Note 5 (long-term liabilities). Short-term claims payable, the majority of which relate to claims filed for the state's Group Benefits Program, are included as accounts payable in the statement of net assets and are not included in Note 5.
presented are for information purposes of interested parties. The component units are reported for the year ended Aug. 31, 2008, unless indicated otherwise. Blended Component Units
Note 18
Contested Taxes
independent administrative law judge if they wish to chalTaxpayers may petition for a formal hearing before an lenge a tax liability assessed by the state. If the request for a taxpayer does not have to pay the tax until a final decision upon the decisions of administrative law judges. These determination hearing is received within a specified time, the is reached. Collectability of these assessments is dependent assessments are not recognized as tax revenue until the
ing material blended component units. These component
The state is financially accountable for the follow-
units are reported as if they are part of the primary governdirectly to the state. The component units financial data is blended in the appropriate funds within the financial units of the state.
ment because they provide substantially all of their services
statements. There are no other material blended component Employees Retirement System of Texas (ERS) is
a legal entity established by the Legislature to administer benefits for officers and employees of the state. ERS is governed by a six member board of trustees. The governor,
administrative hearing is final. Therefore, these amounts are
with the advice and consent of the Senate, appoints three of
133
the six members of the board of trustees. The state of Texas has the ability to impose its will upon ERS through its budget approval powers. Separate financial statements may be Texas 78711. obtained by contacting the ERS at P.O. Box 13207, Austin, Texas Treasury Safekeeping Trust Company (Texas
powers. The State Bar is reported for the year ended May 31, 2008. Separate financial statements may be obtained Austin, Texas 78701. by contacting the State Bar of Texas at 1414 Colorado St., Texas Agricultural Finance Authority (Authority)
Trust) is a legally separate entity established by the Leg-
is a legally separate entity within the Texas Department of Agriculture (TDA) and is financially accountable to the state. The governor, with the advice and consent of the
islature. The Comptroller of Public Accounts is the single
shareholder of the Texas Trust and is charged with managing the Texas Trust. The Texas Trust is authorized to manrities provided by statute or belonging to state and local age, disburse, transfer, safekeep and invest funds and secuentities and gives the Comptroller direct access to services statements may be obtained by contacting the Texas Trust at 208 E. 10th St., 4th Floor, Austin, Texas, 78701. Discretely Presented Component Units legally separate entities (component units); however, the The state is financially accountable for the following
Senate, appoints seven of the nine members of the board of directors. The commissioner of TDA administers the Authority with the assistance of the board. The Authority
was created to provide financial assistance for the expannesses. The Authority primarily benefits the citizens of bond obligations, the primary government shall trans-
provided by the Federal Reserve System. Separate financial
sion, development and diversification of agricultural busiTexas. If there are insufficient funds to pay the Authoritys fer money from the state treasury to the Authority in an
amount sufficient to pay those obligations. Separate financial statements may be obtained by contacting the TDA at P.O. Box 12847, Austin, Texas 78711-2847. Texas On-Site Wastewater Treatment Research
units do not provide services entirely or almost entirely to presented in the component unit column of the states financial statements.
the state. The component units financial data is discretely
Council (Council) awards competitive grants and contracts to support applied research, demonstration projects and information transfer regarding on-site wastewater treatment. the on-site wastewater industry in the state of Texas. The
rate entity established by the Legislature to administer
Teacher Retirement System (TRS) is a legally sepa-
The Council is not an advisory council and does not regulate Council is a component unit due to its fiscal dependency on the Texas Commission on Environmental Quality (TCEQ). The Councils fiscal operations (revenues, budget, expendi-
retirement and disability annuities to employees and benties of Texas. TRS is governed by a nine member board governor. The remaining trustees are appointed by the
eficiaries of public school systems, colleges and universiof trustees, three of whom are direct appointments of the governor from lists prepared by various constituent groups. through its budget approval powers. Separate financial Red River Street, Austin, Texas 78701.
tures and administration) are maintained by TCEQ. In order to emphasize that the Council is a legally separate entity, its TCEQ combined financial statements. financial information is presented in a separate column in the Texas Appraiser Licensing and Certification Board
The state of Texas has the ability to impose its will on TRS statements may be obtained by contacting TRS at 1000 State Bar of Texas is a public corporation and an
(TALCB) was statutorily created as an independent subdivision of the Texas Real Estate Commission (TREC) and is a legally separate entity from the primary government. The governor appoints the members of the board. TREC provides administrative support to TALCB, but has no
administrative agency of the judicial branch of govern-
ment. The purpose of the State Bar is to ensure that public responsibilities of the legal profession are effectively discharged. The state of Texas has the ability to impose its will upon the State Bar through its budget approval
authority to approve or modify its budget or to set its fees. Although TALCB is not fiscally dependent on TREC, to exclude it would result in presentation of incomplete finan-
134
cial statements. TALCB serves the real estate community ing TREC at P.O. Box 12188, Austin, Texas 78711-2188. ship Foundation, Inc. (Foundation) is a legally separate entity created to provide prepaid tuition scholarships to Texas Prepaid Higher Education Tuition Scholar-
in Texas. Financial statements can be obtained by contact-
sioner appoints eight of the board members. TDA approves the Foundations budget, assessment fees and debt. The Foundation is reported for the year ended Dec. 31, 2007.
Separate financial statements may be obtained by contact-
ing the TDA at P.O. Box 12847, Austin, Texas 78711-2847. ity) was created by the Legislature as a governmental entity and body politic and corporate for the purpose of increasing the availability of financing for water-related projects. A board of directors, composed of the six members of the Texas Water Development Board (TWDB), governs the Authority. The members of the TWDB are appointed by ment, wholly manages the Authoritys operations. Prior must be reviewed by the Bond Review Board, which is of the house of representatives and the Comptroller of Texas Water Resources Finance Authority (Author-
students meeting economic or academic requirements. The Foundation is a direct-support organization of the prepaid Texas Education Code. The Foundation is governed by a board composed of the Comptroller of Public Accounts, tuition program and is authorized by Section 54-633 of the
a member appointed by the governor with the advice and by the Comptroller and the member who is appointed by
consent of the Senate and three members appointed jointly the governor. The state of Texas is financially accountable the Comptroller serving as custodian of the assets of the
the governor. TWDB, through a sales and servicing agreeto any bonds being issued by the Authority, the issuance composed of the governor, lieutenant governor, speaker Public Accounts. Financial statements may be obtained by contacting the TWDB at P.O. Box 13231, Austin, Texas 78711-3231. Texas Small Business Industrial Development
for the Foundation through board appointment and through Foundation. Separate financial statements may be obtained by contacting the Texas Comptroller of Public Accounts, tin, Texas 78774. Texas Guaranteed Tuition Plan at 111 E. 17th Street, AusTexas Guaranteed Student Loan Corporation (Cor-
poration) is a public nonprofit corporation that guarantees loans made to eligible students under the federal guaran-
Corporation (TSBIDC) was chartered in 1983 under the Development Corporation Act of 1979 to promote economic development in the state of Texas. The Office of
teed student loan program. The state of Texas is financially and imposition of will. All members of the Corporations board are appointed by the governor with the advice and debts of the state. The Corporation received a one-time
accountable for the Corporation through board appointment
the Governor is the oversight agency for the TSBIDC and is its reporting entity. The board of directors is appointed TSBIDC must be approved on behalf of the state by the primarily benefit the Texas citizenry. Separate financial Governor at P.O. Box 12428, Austin, Texas 78711. by the governor, and all programs and expenditures of the Texas Economic Development Bank. TSBIDCs services statements may be obtained by contacting the Office of the Texas Economic Development Corporation (TED
consent of the Senate. The Corporations liabilities are not appropriation of $1.5 million to fund initial startup opera30, 2008. Separate financial statements may be obtained Texas 78720-1725.
tions. The Corporation is reported for the year ended Sept. by contacting the Corporation at P.O. Box 201725, Austin, Texas Boll Weevil Eradication Foundation, Inc.
Corp), a nonprofit corporation, was created in 1991 under the provisions of the Texas NonProfit Corporation Act to assist, promote, develop and advance economic development in the state of Texas. The Office of the Governor is
(Foundation) was created by Senate Bill 30, 73rd Leg-
islature, 1993 (now codified at Texas Agriculture Code,
Chapter 74, Subchapter D). The Foundation establishes and implements a boll weevil eradication program for Texas. It is a legally separate entity, fiscally dependent on the TDA and governed by sixteen board members. TDAs commis-
the oversight agency for the TED Corp and is its reporting The entitys services primarily benefit the Texas citizenry.
entity. The board of directors is appointed by the governor. Separate financial statements may be obtained by contact-
135
ing the Office of the Governor at P.O. Box 12428, Austin, Texas 78711. Texas Disaster Relief Fund (TDRF), a nonprofit
is appointed by TDIs commissioner. Financial statements tin, Texas 78744.
may be obtained at 1701 Directors Blvd., Suite 120, AusTexas State Affordable Housing Corporation
corporation, was established to help the Office of the Governor provide disaster relief. The chief of staff, director of homeland security and the chief financial officer of the Office of the Governor serve as initial directors and will change only when these positions change. The services provided by TDRF assist the Office of the Governor in
(TSAHC) was incorporated under the Texas NonProfit
Corporation Act and is legally separate from the state. Its
purpose is to serve the housing needs of low-income Tex-
ans, professional educators, firefighters and police officers who are first-time home buyers and are not afforded housTSAHC operates under the name Texas Star Mortgage to provide single and multifamily loans to low-income ing finance options through conventional lending channels.
responding to the needs of the citizens before, during and after a disaster in Texas. TDRFs financial statements for the fiscal year ended Aug. 31, 2008, may be obtained by Austin, Texas 78711.
contacting the Office of the Governor at P.O. Box 12428, Surplus Lines Stamping Office of Texas (Stamping
Texans. Although a separate entity from the state, there is a statutory link between the state and TSAHC as it issues bonds. Because of this link, TSAHC is included in the states CAFR as a discretely presented component unit.
Office) is a nonprofit corporation created by the Legislathe regulation of surplus lines insurance. TDIs commis-
ture to assist the Texas Department of Insurance (TDI) in sioner appoints the board. The Stamping Office performs of TDI. The Stamping Office assesses each surplus lines
Separate financial statements may be obtained by contact-
ing TSAHC at P.O. Box 12637, Austin, Texas 78711-2637. by House Bill 1066, 80th Session to assist the Office of the Texas Health Services Authority (THSA) was created
its functions under a plan of operation approved by order insurance agent a stamping fee for the administrative fund-
Governor support the improvement of the Texas health care system. The THSA promotes and coordinates the electronic exchange of health information throughout the state to ensure that information is available to health care providers
ing of the Stamping Office. The state of Texas has the abilapproval of the assessment rate that funds its operations. The Stamping Office is reported for the year ended Dec, P.O. Box 160170, Austin, Texas 78716-0170.
ity to impose its will upon the Stamping Office through the
and to improve patient safety and quality of care. The board of directors consists of 11 members and is appointed by the governor, with the advice and consent of the Senate. The state of Texas has the ability to impose its will upon THSA through the ability of the governor to order the dissolution of THSA at any time the governor delares the purposes of THSA have been fulfilled or that THSA is inoperative or financial activity. abandoned. As of Aug. 31, 2008, THSA did not have any
31, 2007. Separate financial statements may be obtained at Texas Health Reinsurance System reinsures risks
covered under the health benefit plans of small employers insurance carriers. TDIs commissioner appoints, supervises and controls the nine-member board. The state of
Texas has the ability to impose its will through TDI comthe assessment rates against reinsured health benefit plan
missioner approval of base reinsurance premium rates and issuers. Financial statements may be obtained at 100 Great Meadow Rd., Suite 704, Wethersfield, Connecticut 06109. to quality health care at a minimum cost to the public for TDI approves all rates and rate schedules before they are Texas Health Insurance Risk Pool provides access
Related Organizations independent entities for which the state appoints a votaccountable for the entity. Related organizations are legally separate, fiscally
ing majority of the board, but the state is not financially Life, Accident, Health and Hospital Service Insur-
those unable to obtain traditional health care coverage. The used. The board of directors, composed of nine members,
ance Guaranty Association (Association) was created for
the protection of persons against failure in the performance
136
of contractual obligations under life, accident and health insurance policies and annuity contracts, because of the impairment or insolvency of the member insurer that issued the policies or contracts. TDIs commissioner appoints a board of directors of the Association consisting of nine members.
natural resources of the state. The state of Texas has voting majority for the following 15 river/water authorities: Angelina and Neches River Authority Brazos River Authority Central Colorado River Authority Lavaca-Navidad River Authority Lower Colorado River Authority Nueces River Authority Red River Authority Sabine River Authority
created for the purpose of providing funds for the protection of holders of covered claims, as defined in Article 9.48 of the Texas Insurance Code. This applies to all title
Texas Title Insurance Guaranty Association was
Guadalupe-Blanco River Authority
Lower Neches Valley River Authority
insurance written by title insurance companies authorized tors is appointed by TDIs commissioner.
to do business in Texas. The nine-member board of direcTexas Mutual Insurance Company (Texas Mutual)
Sulphur River Basin Authority Trinity River Authority Upper Colorado River Authority
was created by House Bill 3458. It was previously known as the Texas Workers Compensation Insurance Fund and reported as a discretely presented component unit. Texas
Upper Guadalupe River Authority
Mutual operates as a domestic mutual insurance company
Upper Neches Municipal Water Authority
providing workers compensation insurance in the state of
Texas and also serves as the insurer of last resort. It is legalappoints a voting majority of the Texas Mutuals board.
ly separate and fiscally independent of the state, but the state Midwestern State University Charitable Trust is a
Note 20
Deficit Fund Balances/Net Assets
A. Primary Government Governmental Funds The State Textbook Fund, a nonmajor special revenue fund, reported a deficit of $117.2 million. This is the dors at Aug. 31, 2008, that will be paid out of fiscal 2009 appropriations. The Texas Health Agencies Project Funds, a set of
nonprofit organization with the sole purpose of educational and other activities of Midwestern State University. It is governed by a five-member board of trustees. This board occur.
appoints individuals to fill vacancies on the board as they River Authorities are political subdivisions that are cre-
result of $130.6 million in payments owed to textbook ven-
ated by Texas statute. The Texas Constitution, Article XVI,
Section 59, authorizes the Legislature to create districts that servation and development of the states natural resources includes the control, storing, preservation and distribution of its storm and flood waters, the waters of its rivers and the reclamation and irrigation of its arid, semiarid and
conserve and develop natural resources of the state. The con-
related funds categorized as a nonmajor capital projects fund, reported a deficit of $38.2 million. This deficit is
primarily due to the commercial paper funding mechanism used for these projects. Because of arbitrage rebate guidelines, commercial paper is issued only to fund what is anticipated to be expended in the near future. The agencies, however, encumber balances related to long-term contracts. Prior year renovation costs also contributed to this deficit. Monies were advanced from the LoanStar program for renovating the electrical systems of various Texas Health and Human
streams, for irrigation, power and all other useful purposes; other lands needing irrigation; the reclamation of drainage of its overflowed lands and other lands needing drainage; the conservation and development of its forests, water and waters and the preservation and conservation of all such
hydro-electric power; the navigation of its inland and coastal
Services agencies. Future savings in utility costs will be used to repay the loans to the State Energy Conservation Office.
137
Proprietary Funds
Board, a nonmajor enterprise fund, reported a deficit of
The Texas Prepaid Higher Education Tuition
fiscal 2008. Cumulative actual tobacco settlement revenues as of fiscal 2008 were $5.7 billion.
$206.3 million. This deficit was caused by the impact of a lower than expected return on investments in fiscal 2008 and a change in the investment return and tuition increase assumptions for future years. The assumptions for investof that change was partially offset by a reduction in the assumption for future tuition increases. B. Discretely Presented Component Units Inc., a component unit of the Texas Department of Agriculture, reported a deficit unrestricted net assets of $15.9 milof the eradication program that resulted in a decrease in lion. This is a result of incurring debt during the early years unrestricted net assets on the statement of activities and an The Texas Boll Weevil Eradication Foundation, ment returns in future years were lowered, but the impact
Note 22
Donor-Restricted Endowments
with net appreciation of $23.4 billion on investments that The state of Texas has donor-restricted endowments are available for authorization for expenditure by the governing board. Details for the amounts of the net appreciation on investments and how they are reported in net assets can be found in the donor-restricted endowments schedule on the following page. True endowments require the principal to be maintained inviolate and in perpetuity. Term endowments allow the principal to be expended after the endowment have been met. Expendable funds are those funds that may be expended for either a stated purpose Nonexpendable funds are those that are required to be
unrestricted deficit on the statement of net assets. Although this loss was incurred during the initial operations of the program, management expects an increase in net assets in later years to offset this loss.
passage of a stated period of time and all conditions of the
or for a general purpose as per the endowment gift terms. retained in perpetuity. The policies of each individual state agency govern the authorizing and spending of net appreciation on endowment investments. Each endowment fund is evaluated to allocate their
Note 21
Tobacco Settlement
tobacco manufacturers in 1998. The settlement included ers agreed to remit annual payments to the state. EstiThe state of Texas settled a lawsuit against certain monetary and injunctive relief. The tobacco manufacturmates made at the time of the agreement projected that
restricted net assets between expendable and nonexpendable. The permanent school fund (PSF) and permanent university fund (PUF) account for the majority of the
donor-restricted endowment funds reported by the state. The PSF and PUF each consider historical oil and gas contributions from endowment lands as nonexpendable
these payments could total $15.1 billion over the first 25
years of the agreement. The actual amounts of the annual sales, inflation and any other court-ordered factors; however, the tobacco companies have no obligation to make settlement payments until cigarettes are shipped (sales).
net assets. The PUF also considers the reported value of the land as nonexpendable net assets. The PSF does not net assets as the land is considered investment property remaining restricted net assets of each endowment are classified as expendable. The Uniform Prudent Management of Institutional include the value of its land in calculating nonexpendable and not part of the original corpus of the endowment. The
payments are subject to adjustments for domestic tobacco
Since annual payments are based on cigarette sales from
the preceding calendar year, a revenue accrual of $324.8
million has been calculated on estimated sales from Jan. 1 to the end of the fiscal year. Tobacco settlement revenues were $503 million in fiscal 2007 and $520.1 million in
Funds Act, Property Code - Chapter 163, provides gen-
eral guidelines on how endowments should be maintained for higher education institutions. Each institution sets the
138
amounts and/or percentages that are authorized for expengoverned by provisions of the Texas Constitution. Dis-
diture in its spending plan; however, the PSF and PUF are tributions made by the PSF and PUF endowments to the
Note 24
Taxes Receivable
at Aug. 31, 2008, for revenues earned in the current fiscal Taxes receivable represent amounts due to the state year that will be collected in the future. Amounts expected to be collected in the next fiscal year are classified as curfiscal year are classified as noncurrent. The receivables have been recorded net of allowances for uncollectible accounts. Revenue is recorded on the governmental fund financial statements using the modified accrual basis of 31, 2008, that are considered available (e.g. received accounting for amounts due to the state of Texas at Aug. by the state within approximately 60 days after that date). Revenue earned but not available at Aug. 31, 2008, recorded as deferred revenue. is recorded as deferred revenue. Prepaid taxes are also On the government-wide financial statements, a cor-
available school fund (ASF) and available university fund ology. The ASF distribution should not exceed the lesser of 6 percent or the total return on all investment assets
(AUF), respectively, are made using a total return method-
over the current year and proceeding nine years. The AUF fair value of investment assets.
rent and amounts expected to be collected beyond the next
distribution should not exceed 7 percent of the average net
Donor-Restricted Endowments
DonorRestricted Endowments Amount of Net Appreciation Reported in Net Assets
True Endowments Term Endowments
$ 23,383,426 33,790 $ 23,417,216
Expendable Expendable
responding amount is recorded as revenue using the accrual basis of accounting, which includes revenue earned at fis-
Note 23
Extraordinary and Special Items
rent fiscal year. Extraordinary items, as defined in GASB agements Discussion and Analysis for State and Local unusual in nature and infrequent in occurrence. The state did not report extraordinary items in the curStatement No. 34, Basic Financial Statements and ManGovernments, are transactions or other events that are both The state reported a special item equal to $150 mil-
cal year end regardless of its availability. Deferred revenue includes only the prepaid taxes that have not been earned modified and full accrual bases. by fiscal year end. Taxes receivable are the same for both Taxes receivable, as reported in the general fund on
the balance sheet governmental funds, are detailed by tax type as follows.
Taxes Receivable by Tax Type

Tax Type Net Taxes Receivable
lion in the current fiscal year. Special items are significant transactions or other events within the control of management that are either unusual in nature or infrequent in
occurrence. At Oct. 1, 2007, the unemployment compensation trust fund exceeded the statutorily mandated ceiling of surplus tax credits to eligible employers based on tax of 2 percent of taxable wages. This required the refunding returns filed during the 2008 calendar year. Tax refunds of $150 million applied to 260,000 employers who had paid taxes into the unemployment compensation trust fund.
Sales and Use Tax Motor Vehicle and Manufactured Housing Motor Fuels Franchise Oil and Natural Gas Production Insurance Occupation Cigarette and Tobacco Other Total Net Taxes Receivable Liquidity Characteristics: Current Taxes Receivable Noncurrent Taxes Receivable Total Net Taxes Receivable
$ 1,443,039 131,053 133,798 1,354,404 322,253 117,993 7,682 206,565 $ 3,716,787 $ 3,292,262 424,525 $ 3,716,787
139
COBRA Benefits
Fiscal 2008 Summary Benefits Provided Through: Number of Participants Premium Revenue Amounts in Thousands 2 Percent Administrative Claims Fee Revenue Paid Cost to State
Employees Retirement System University of Texas System Texas A&M University System Total
2,138 1,203 251 3,592
$ 8,175 4,558 740 $ 13,473
163 90 15 268
$ 22,895 8,363 1,499 $ 32,757
$ 14,557 3,715 744 $ 19,016
Note 25
Termination Benefits
Healthcare-Related Termination Benefits
Omnibus Budget Reconciliation Act (COBRA) is proHealth care continuation under the Consolidated
Non-Healthcare-Related Termination Benefits

tary or involuntary termination benefits accepted in fiscal 2008. There were no material non-healthcare-related volun-
vided for both voluntary and involuntary terminations. The COBRA members are eligible to remain in their eligible insurance program for 18 months or 29 months if disabled. Covered dependents are eligible to remain in the program for 36 months. The COBRA Plan administrators for the state include the Employees Retirement System of Texas, University of Texas System and Texas A&M University System.
Note 26
Segment Information
Primary Government
as or within enterprise funds for which revenue bonds or other revenue-backed debt instruments are outstanding and for which related expenses, gains, losses, assets and liabilities can be identified. To qualify as a segment, an activity must also be subject to an external requirement to separately account for this revenue stream. The activities requirements. reported in the following financial information meet these The State of Texas David A. Gloier State Veterans Segments are separately identifiable activities reported
tions process for COBRA participants. The plan adminis-
The insurance carrier performs the billing and collec-
trators collect 100 percent of the blended insurance premiparticipant. However, since the plan is self-insured, the plan administrators are responsible for any claims or
ums and a 2 percent administrative fee from each COBRA
administrative costs associated with COBRA participants that exceed these payments. For fiscal 2008, the cost to participants. the state was approximately $19 million for 3,592 COBRA For the fully-insured HMO health insurance plans, the
Home Program was created to provide long-term skilled nursing care for veterans, spouses of veterans and gold star parents of veterans of the state of Texas. The construction of the first four homes was funded by the issuance of revenue bonds, which require these homes revenues,
insurance carrier retains all premiums and is liable for all not available for these plans.
claims and expenses. Premium and expense information is
expenses, gains and losses, assets and liabilities to be separately accounted for and independently audited. The tables on the following page present the financial statements of the homes related to the revenue bonds.
140
Condensed Statement of Net Assets

Veterans Homes Revenue Bonds
Condensed Statement of Cash Flows

ASSETS Current Restricted Assets: Cash and Cash Equivalents Other Current Assets Capital Assets, Net of Depreciation Total Assets LIABILITIES Current Liabilities Noncurrent Liabilities Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted Net Assets Total Net Assets
3,721 3,736 29,025 36,482
NET CASH PROVIDED (USED) BY: Operating Activities Noncapital Financing Activities Capital and Related Financing Activities Investing Activities NET DECREASE IN CASH AND CASH EQUIVALENTS
3,400 (11,238) (1,809) 1,246
(8,401) 12,122 $ 3,721
5,302 22,995 28,297
Cash and Cash Equivalents, September 1, 2007 Cash and Cash Equivalents, August 31, 2008
5,680 2,505 $ 8,185
Condensed Statement of Revenues, Expenses and Changes in Net Assets

OPERATING REVENUES (EXPENSES) Sale of Goods and Services Other Operating Revenues Operating Expenses Net Operating Income NONOPERATING REVENUES (EXPENSES) Other Nonoperating Revenues Interest Expense Net Nonoperating Revenues OTHER TRANSFERS TRANSFER OUT Change in Net Assets Net Assets, September 1, 2007 Net Assets, August 31, 2008
35,369 7 (34,937) 439
481 (1,478) (997) (11,237) (11,795) 19,980 $ 8,185
141
142

Required Supplementary Information Other Than MD&A
143
STATE OF TEXAS
Budgetary Comparison Schedule General Fund

Budgetary Amounts Actual Amounts Budgetary Basis Final to Actual Variance
REVENUES Taxes Federal Licenses, Fees and Permits Interest and Other Investment Income Land Income Settlement of Claims Sales of Goods and Services Other Total Revenues EXPENDITURES General Government Education Employee Benefits Teacher Retirement Benefits Health and Human Services Public Safety and Corrections Transportation Natural Resources and Recreation Regulatory Services Total Expenditures Excess of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfer In Transfer Out Sale of Capital Assets Insurance Recoveries Available Beginning Balances Total Other Financing Sources (Uses) Excess of Revenues and Other Financing Sources Over Expenditures and Other Financing Uses
Original
Final
$ 35,654,606 21,350,697 2,494,007 592,863 10,530 480,449 985,785 1,830,439 63,399,376
$ 36,423,499 24,417,600 2,844,629 727,878 10,585 508,128 1,296,001 1,689,629 67,917,949
$ 38,081,725 22,734,688 2,388,651 736,406 19,389 561,462 1,325,618 2,523,846 68,371,785
$ 1,658,226 (1,682,912) (455,978) 8,528 8,804 53,334 29,617 834,217 453,836
4,567,589 18,826,224 1,177,043 1,780,757 26,991,174 3,542,699 4,495 1,460,310 280,266 58,630,557
3,476,415 23,666,327 1,449 1,780,757 29,670,708 4,445,543 6,889 1,652,492 332,497 65,033,077
1,666,345 22,973,060 1,446 1,780,757 28,372,226 4,138,279 6,988 1,379,894 303,466 60,622,461
1,810,070 693,267 3 1,298,482 307,264 (99) 272,598 29,031 4,410,616
4,768,819
2,884,872
7,749,324
4,864,452
5,829,396 (6,832,785) 12,061 450 11,460,633 10,469,755
4,570,781 (10,429,097) 12,158 837 11,460,633 5,615,312
4,661,664 (12,057,410) 16,747 2,841 11,460,633 4,084,475
90,883 (1,628,313) 4,589 2,004 (1,530,837)
$ 15,238,574
$ 8,500,184
$ 11,833,799
$ 3,333,615
144
STATE OF TEXAS
Budgetary Comparison Schedule Major Special Revenue Fund State Highway Fund
Budgetary Amounts Actual Amounts Budgetary Basis Final to Actual Variance
REVENUES Taxes Federal Licenses, Fees and Permits Interest and Other Investment Income Land Income Settlement of Claims Sales of Goods and Services Other Total Revenues EXPENDITURES General Government Education Health and Human Services Public Safety and Corrections Transportation Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfer In Transfer Out Bond Proceeds* Sale of Capital Assets Insurance Recoveries Available Beginning Balances Total Other Financing Sources (Uses) Financing Revenues and Expenditures Excess of Sources Over Other Financing Sources and Other Financing UsesOther Financing Uses Over Expenditures and
Original
Final
38,908 3,076,789 1,070,721 3,600 3,702 1,442 179,736 7,392 4,382,290
38,908 3,560,785 1,103,581 3,600 3,702 1,442 230,860 33,728 4,976,606
38,908 5,827,788 1,152,717 145,217 5,910 923 293,192 8,560 7,473,215
$ 2,267,003 49,136 141,617 2,208 (519) 62,332 (25,168) 2,496,609
21,372 50,000 10,000 582,929 6,932,030 7,596,331
23,210 50,000 10,000 671,447 7,280,589 8,035,246
12,210 50,000 10,000 681,838 7,991,329 8,745,377
11,000
(10,391) (710,740) (710,131)
(3,214,041)
(3,058,640)
(1,272,162)
1,786,478
2,260,798 1,404,840 4,500 7,600 558,832 4,236,570
2,264,744 1,404,840 4,538 7,810 558,832 4,240,764
3,727,027 (88,032) 1,408,940 5,311 11,686 558,832 5,623,764
1,462,283 (88,032) 4,100 773 3,876 1,383,000
$ 1,022,529
$ 1,182,124
$ 4,351,602
$ 3,169,478
* The state highway fund received $1.4 billion in bond proceeds. These are authorized by Article 3, Sec 49-n of the Texas Constitution and Section 222.003, Texas Transportation Code.
145
Note to Budgetary Comparison Schedule
Perspective Differences
service, the Federal Food Stamps Program and the disproprogram are not budgeted by the Legislature. The activity Comparison Schedule. Certain revenues and expenditures, including debt
parisons of the legally adopted budget with actual data on a budgetary basis. Since accounting principles applied for purposes of developing data on a budgetary basis differ significantly from those used to present financial state-
The Budgetary Comparison Schedule presents com-
portionate share portion of the Federal Medical Assistance for these programs has been excluded from the Budgetary The beginning cash balances are included as other
ments in conformity with generally accepted accounting required and is presented below.
principles (GAAP), a reconciliation of these differences is
financing sources in the Budgetary Comparison Schedule. sources on the GAAP financial statements.
The beginning fund balances are not included as financing
Reconciliation of Budgetary Basis to GAAP Basis

State Highway Fund
Entity Differences
General Fund
sources from capital leases. These Budgetary Comparison Schedule.
Budgets are not established for
Excess of Revenues and Other Financing Sources Over Expenditures and Other Financing Uses Actual Budgetary Basis Basis of Accounting Differences: Receivables and Deferred Revenues Payables Perspective Differences: Beginning Cash Balances Reported as Other Financing Sources Federal Program Revenues Not Budgeted Federal Program Expenditures Not Budgeted Other Revenues Not Budgeted Other Expenditures Not Budgeted Entity Differences: Excess of Revenues and Other Financing Sources Over Expenditures and Other Financing Uses for Other Activities Excess of Revenues and Other Financing Sources Over Expenditures and Other Financing Uses GAAP Basis
financing sources are not included in the

$ 11,833,799 $ 4,351,602
346,453 (669,521)
(3,081,430) (3,554)
(11,460,633) (3,969,175) 3,969,175 90,306 (309,393)
(558,832)
Excess of Actual Budgetary Basis Expenditures over Final Budget

variance in transportation is due to General fund - the $99 thousand
73,051 (43,967)
expenditures made from beginning financing sources.
fund balance that are included in other

715
highway fund - the $711 million vari$ (168,274) $ 736,870
Major special revenue fund - state
ance in transportation is due to expen-
Comparison Schedule actual and the GAAP financial statements are due to the following items.
The major reconciling items between the Budgetary
and bond proceeds that are included in other financing sources. The $10 million variance in public safety and beginning cash balance in the fund.
ditures made, appropriated transfers-in
corrections is the result of expenditures being made from
Basis of Accounting Differences

basis of accounting in the Budgetary Comparison Schedule but are reported on the modified accrual basis on the receivables and payables are included as reconciling items. 146 GAAP financial statements. Therefore, deferred revenues, Revenues and expenditures are reported on the cash
Basis of Budgeting
Texas Constitution limits appropriation bills to two years. The states budget is prepared on a cash basis. The
The Legislative Budget Board (LBB) is required by statute to adopt an estimated rate of growth for the next biennium and calculate a limit on the amount of state tax revenue,
not dedicated by the Texas Constitution, that is available for spending in the next biennium. If the Legislature, by adoption of a resolution approved by a record vote of a
Act. Transfers and expenditures are monitored against the original budget by the Comptrollers office to ensure the agencys authorized budget is not exceeded. The level of legal control for all agencies is docu-
majority of the members of each house, finds that an emergency exists and identifies the nature of the emergency, the Legislature may provide appropriations in excess of
mented in the Appropriation Summary Report, which is separate document includes budget and actual data by
the adopted limit. The Governors Budget Office and LBB initiate the process by submitting budget requests to the Legislature. At final passage of the Appropriations Bill by the Legislature, it is sent to the Comptroller for certificaare available in the affected funds, the bill is sent to the governor. If not certified, the Legislature may pass the tion. If the Comptroller certifies that appropriated amounts
available by request from the Comptrollers office. This appropriation line item for each state agency. State agencies cannot exceed approved appropriations. In certain emergency situations, the governor may authorize additional appropriations from deficiency and emergency appropriation reserves. During fiscal 2008, $7.7 million was transferred to the Adjutant General and the Texas Department of Public Safety to assist with disaster recovery cash flow after the fiscal year unless they are encumbered during
bill with a four-fifths majority vote. The governor has the priations, but does not have the authority to reduce a line
option of vetoing the total bill or specific line-item approitem of appropriation. Upon approval by the governor, the cies to spend state funds. The Comptroller is responsible accordance with the expenditure budgets.
needs. Unexpended appropriations generally lapse 60 days the 60-day lapse period. Other appropriations referred
bill becomes law and is the budget authority for state agenfor controlling, accounting and reporting expenditures in
to as reappropriated unexpended balances represent the program.
continuation of a prior years balances for completion of a
Legal Level of Budgetary Control

submit a Biennial Revenue Estimate to the Legislature The Texas Constitution requires the Comptroller to
Modified Approach to Reporting Infrastructure Assets
prior to each regular session. This document contains an
cial Statements - and Managements Discussion and Analysis - for State and Local Governments, the state has adopted the modified approach for reporting its highway system. Under tain preservation and maintenance costs are expensed. The modified approach requires that the state: the modified approach, depreciation is not reported and cer-
As permitted by GASB Statement No. 34, Basic Finan-
itemized estimate of beginning cash balances, anticipated ditures from prior appropriations. The Texas Constitution
revenues based on laws then in effect and estimated expenalso requires the Comptroller to submit supplementary revat other necessary times to show probable changes.
enue estimates at any special session of the Legislature and The level of legal control for the budget is established
Maintain an asset management system that includes an up-to-date inventory of eligible infrastructure assets, Perform condition assessments of the eligible infrastructure assets and summarize the results using a
at the strategy (line item) level by agency. For example, Highway Patrol, Driver License and Records and
Vehicle Inspection Program are three of the strategies for the Texas Department of Public Safety. The legal level of budgetary control is defined as the level at which the governing body must approve any over expenditure of appropriations or transfers of appropriated amounts. Agencies
measurement scale in order to document that the elimately at (or above) the condition level established and disclosed by the government, and
gible infrastructure assets are being preserved approxi-
Estimate each year the annual amount needed to maintain and preserve the eligible infrastructure assets at the condition level established and disclosed by the government.
are authorized limited transfer authority between strategies, not to exceed 12.5 percent, by the General Appropriations
147
system, the state has elected to depreciate bridges. Therefore, they are not reported using the modified approach.
Although bridges are an integral part of the highway
Estimated and Actual Costs for Maintenance

TxDOTs estimate of maintenance expenditures required to maintain the highway system at or above the adopted condition levels and the actual expenditures. The table below provides a comparison between
Condition Assessments
tation (TxDOT) performs yearly condiThe Texas Department of Transpor-
tion assessments through its Texas Maintenance Assessment Program (TxMAP). Under this program, visual inspections are conducted on approximately 10 percent of the interstate system and 5 percent of the non-interstate system (national, state and farm-to-market
Maintenance Cost
INTERSTATE HIGHWAYS Estimate Actual OTHER HIGHWAYS Estimate Actual CENTRAL TEXAS TURNPIKE SYSTEM* Estimate Actual
2008 2007 2006 2005 2004
$ 502,128 $ 438,237
$ 438,460 $ 471,925
$ 469,818 $ 434,088
$ 314,000 $ 427,107
$ 400,000 $ 383,933
$ 2,455,243 $ 1,649,317
$ 1,702,612 $ 1,881,285
$ 1,608,015 $ 1,750,438
$ 1,590,417 $ 1,604,781
$ 1,450,000 $ 1,378,863
roadways). For each section of highway observed, 21 elements separated into scores from 0 to 5 (0=NA, 1=Failed, in order to determine the condition three highway components are assessed 2=Poor, 3=Fair, 4=Good, 5=Excellent)
6,910 5,411
N/A N/A
N/A N/A
N/A N/A
N/A N/A
* Fiscal 2008 is the first fiscal year in which a condition assessment has been conducted for the Central Texas Turnpike System, which opened in fiscal 2007.
of the highways. Each element within a component is
weighted according to importance and each component is condition of the highways. The overall score is converted
Factors Affecting Condition Assessments

ing such estimates. As additional experience is acquired in the estimation and reporting processes, TxDOT hopes to TxDOT continues to develop its methods for determin-
weighted according to importance to determine the overall to a percentage measurement for reporting (1=20 percent,
2=40 percent, 3=60 percent, 4=80 percent, 5=100 percent).
achieve a greater correlation between the estimated maintenance expenditures needed to maintain the highway system at or above the adopted condition levels and the condition level of the highways. In comparing actual expenditures to estimated expenditures, factors such as increases in traffic, legislative mandates, budgetary constraints and environmental effects (rainfall, drought, freeze, thaw, etc.) should funds and the condition of Texas roads.
Assessed Conditions
80 percent for the interstate system, 75 percent for the Turnpike System based on TxMap assessments.
Interstate Condition (Minimum 80%) Non-Interstate Condition (Minimum 75%)
TxDOT has adopted a minimum condition level of
non-interstate system and 80 percent for the Central Texas
be considered as they may have a major impact on needed
Year
Central Texas Turnpike System (Minimum (80%)
2008 2007 2006 2005 2004
83.7% 84.1% 83.4% 82.1% 82.3%
79.0% 79.5% 78.0% 77.9% 79.1%
91.7% N/A N/A N/A N/A
148
Schedules of Funding Progress
Schedules of Funding Progress OPEB

progress for the University of
The schedules of funding
Texas and Texas A&M University Systems other postemployment ed in the adjacent table. benefit (OPEB) plans are presentThe schedules of funding
Covered Payroll (c)
UT System Employee Group Insurance Program (UT Plan) $ 0 $ 5,014,217 $ (5,014,217) 12/31/07 A&M Care Health and Life Plan (A&M Plan) $ 0 $ 1,993,236 09/01/07
0.0%
$ 4,312,904
(116.3)%
progress for the three most recent pension plan valuations are presented below.
$ (1,993,236)
0.0%
$ 1,140,126
(174.8)%
Schedules of Funding Progress Pension

Covered Payroll (c)
Employees Retirement System (ERS) $ 23,511,918 08/31/08 22,938,947 08/31/07 21,780,437 08/31/06
$ 25,403,280 23,987,165 22,884,917
$ (1,891,362) (1,048,218) (1,104,480)
92.6% 95.6% 95.2%
$ 5,379,527 5,253,723 5,051,330
(35.2)% (20.0)% (21.9)%
Law Enforcement and Custodial Officer Supplemental Retirement (LECOS) $ 774,509 $ 842,135 $ 08/31/08 747,765 762,666 08/31/07 720,307 708,437 08/31/06 Judicial Retirement System Plan One (JRS1) $ 0 08/31/08 0 08/31/07 0 08/31/06 Judicial Retirement System Plan Two (JRS2) $ 232,891 08/31/08 211,933 08/31/07 186,400 08/31/06 Teacher Retirement System of Texas (TRS) $ 110,233,420 08/31/08 103,419,088 08/31/07 94,217,922 08/31/06
(67,626) (14,901) 11,870
92.0% 98.0% 101.7%
$ 1,242,122 1,360,819 1,279,463
(5.4)% (1.1)% 0.9%
289,671 312,852 325,977
(289,671) (312,852) (325,977)
0.0% 0.0% 0.0%
3,478 2,777 5,138
(8,328.7)% (11,265.8)% (6,344.4)%
239,098 220,884 198,840
(6,207) (8,951) (12,440)
97.4% 95.9% 93.7%
66,110 64,654 62,306
(9.4)% (13.8)% (20.0)%
$ 121,756,542 115,963,722 107,911,459

Actuarial Accrued Liability (AAL) (b)
$ (11,523,122) (12,544,634) (13,693,537)

Excess of Assets over AAL (Unfunded AAL) (a) - (b)
90.5% 89.2% 87.3%
$ 33,237,904 31,114,096 28,397,283
(34.7)% (40.3)% (48.2)%
Actuarial Value of Assets (a)
Total Members Covered (not rounded)
Excess/UAAL Per Member Covered (not rounded)
Texas Emergency Services Retirement System (TESRS) $ 60,987 $ 64,227 08/31/08* 08/31/06* 42,268 58,083 38,141 51,567 08/31/04
(3,240) (15,815) (13,426)
95.0% 72.8% 74.0%
8,254 8,061 7,994
(393) (1,962) (1,680)
* Actuarial assumptions and methodology were changed for the Aug. 31, 2006 and Aug. 31, 2008 valuations.
149
150

Other Supplementary Information Combining Financial Statements and Schedules Governmental Funds
151
152
STATE OF TEXAS
Combining Balance Sheet Nonmajor Governmental Funds

Special Revenue Funds Debt Service Funds Capital Projects Funds Permanent Funds Total Nonmajor Funds
ASSETS Cash and Cash Equivalents Short-Term Investments Securities Lending Collateral Receivables: Accounts Federal Investment Trades Interest and Dividends Due From Other Funds Due From Component Units Inventories Prepaid Items Investments Loans and Contracts Other Assets Restricted: Cash and Cash Equivalents Loans and Contracts Other Assets Total Assets LIABILITIES AND FUND BALANCES Liabilities: Payables: Accounts Investment Trades Payroll Federal Due To Other Funds Interfund Payable Deferred Revenues Obligations/Securities Lending Other Liabilities Total Liabilities Fund Balances: Reserved (Note 13) Unreserved (Note 13) Total Fund Balances Total Liabilities and Fund Balances
$ 4,795,772 53,468
6,554
$ 244,943
153 34,578 16,808
$ 5,047,422 88,046 16,808 5,116 1,524 596 14,574 83,974 63 519 9 1,117,660 242,222 8,034 320,265 650,730 86,908
4,255 1,524 12,258 65,039 63 437 5 12,315 242,222 8,034 138,755 650,730 86,908 $ 6,071,785
191
670 596 1,414 18,935 82
902
4 54
1,105,291
181,510
$ 189,215
$ 264,630
$ 1,158,840
$ 7,684,470
$ 163,959 7,267 40 73,654 147 445 2,050 247,562
12
70,532 80 52 2,377
577 1,246
16,807 12 966 74,007 18,630
$ 235,080 1,246 7,347 40 73,706 2,524 445 16,807 3,016 340,211
1,153,454 4,670,769 5,824,223 $ 6,071,785
189,203 189,203 $ 189,215
314,306 (123,683) 190,623 $ 264,630
575,931 564,279 1,140,210 $ 1,158,840
2,232,894 5,111,365 7,344,259 $ 7,684,470
153
STATE OF TEXAS
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds
Special Revenue Funds Debt Service Funds Capital Projects Funds Permanent Funds Total Nonmajor Funds
REVENUES Taxes Federal Licenses, Fees and Permits Interest and Other Investment Income Land Income Sales of Goods and Services Other Total Revenues EXPENDITURES Current: General Government Education Employee Benefits Health and Human Services Public Safety and Corrections Transportation Natural Resources and Recreation Regulatory Services Capital Outlay Debt Service: Principal Interest Other Financing Fees Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfer In Transfer Out Bonds and Notes Issued Bonds Issued for Advance Refunding Premiums on Bonds Issued Payment to Escrow for Advance Refunding Insurance Recoveries Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances, September 1, 2007 Restatements Fund Balances, September 1, 2007, as Restated Fund Balances, August 31, 2008
$ 2,501,610 26,656 574,866 127,162 15 5,288 76,175 3,311,772
$ (21) 13,449
7,642 17,454 73 25,169
(76,264) 23
65 13,493
(76,241)
$ 2,501,610 26,635 574,866 71,989 38 22,742 76,313 3,274,193
193,188 1,537,872 12,640 14,594 72,638 2,561 61,835 91,220 4,940 30,906 173,438 6,041 2,201,873
236
21,653 1,320 66,965 10,868 13,557 2,480 101,475
4,823
219,900 1,539,192 12,640 81,559 83,506 16,118 64,315 91,220 106,415 362,646 328,271 8,513 2,914,295
331,740 154,806 2,472 489,254
27 218,345 4,823
1,109,899
(475,761)
(193,176)
(81,064)
359,898
4,912,110 (4,862,223) 1,287,035 65,683
528,124 (90) 514,680 35,660 (558,623) 519,751 43,990 145,165 48 145,213 $ 189,203
2,824 (24,505) 291,775 728 5,774 500 277,096 83,920 98,415 8,288 106,703 $ 190,623
(28,187)
1,402,605 2,512,504 3,242,576 69,143 3,311,719 $ 5,824,223
(28,187) (109,251) 1,249,461 1,249,461 $ 1,140,210
5,443,058 (4,915,005) 1,578,810 515,408 107,117 (558,623) 500 2,171,265 2,531,163 4,735,617 77,479 4,813,096 $ 7,344,259
154
Nonmajor Special Revenue Funds

revenue fund. The proceeds of the fund are from allocations of the computation of motor vehicle sales tax, colThe Property Tax Relief Fund is outside the general bypassable fee in an amount not to exceed 65 cents per The System Benefit Fund receives funds from a non-
lection of all tobacco products tax increase and calculated amounts from franchise taxes. The intent of the fund will be to reduce school district property taxes.
megawatt hour and interest earned. The funds are used to customers, customer education and school funding loss mechanism.
provide funding for programs to assist low-income electric
from the Available School Fund to provide free textbooks for use of children attending public schools.
The State Textbook Fund holds money transferred
from the permanent school fund based on total return of investment assets, allocations of motor fuel taxes and used for the support of public schools. appropriations made by the Legislature. The fund is to be
The Available School Fund receives distributions
from the sale of Texas Water Development bonds for the purpose of aiding and making funds available to various political subdivisions for projects and other authorized purof assisting economically distressed areas. Monies in the funds are invested.
The Water Development Funds receive proceeds
poses. The funds also receive gifts or grants for the purpose
tion, reconstruction, acquisition and expansion of state highways, including costs of design and acquisition of
The Texas Mobility Fund accounts for the construc-
right of way. It provides payment of a portion of the costs transportation projects. It is financed primarily from the sale of obligations of the state, appropriations made by
of construction, publicly owned toll roads and other public
the Legislature of revenue, including taxes, other money not otherwise dedicated by the construction and money received from a regional mobility authority that determines it has surplus revenue from turnpike projects and chooses to send the excess to this fund.
155
STATE OF TEXAS
Combining Balance Sheet Nonmajor Special Revenue Funds

Other Nonmajor Special Revenue Funds**
ASSETS Cash and Cash Equivalents Short-Term Investments Receivables: Accounts Federal Interest and Dividends Due From Other Funds Due From Component Units Inventories Prepaid Items Investments Loans and Contracts Other Assets Restricted: Cash and Cash Equivalents Loans and Contracts Other Assets Total Assets LIABILITIES AND FUND BALANCES Liabilities: Payables: Accounts Payroll Federal Due To Other Funds Interfund Payable Deferred Revenues Other Liabilities Total Liabilities Fund Balances/(Deficits): Reserved for: Encumbrances Inventories Imprest Accounts Loans and Contracts Unreserved: Designated for: General Government Regulatory Services Health and Human Services Natural Resources and Recreation Education Transportation Public Safety and Corrections Employee Benefits Undesignated Total Fund Balances Total Liabilities and Fund Balances
Property Tax Relief Fund
State Textbook Fund*
Water Development Funds
System Benefit Fund
Available School Fund
Texas Mobility Fund
Totals
$ 3,000,000
$ 15,470
$ 137,143 36,491 464 969 10
$ 503,218
$ 20,507
$ 955,909
$ 163,525 16,977 3,025 1,524 9,050 1,443 63 437 5 12,315 8,034 138,755 650,730 86,908
$ 4,795,772 53,468 4,255 1,524 12,258 65,039 63 437 5 12,315 242,222 8,034 138,755 650,730 86,908 $ 6,071,785
306 1,916 47
460 276 63,586
242,222
$ 3,001,916
$ 15,823
$ 417,299
$ 503,218
$ 84,369
$ 956,369
$ 1,092,791
$ 133,024
937
$ 23,945
18
389
73,091
133,024
1,326
23,945
73,109
6,035 7,267 40 174 147 445 2,050 16,158
$ 163,959 7,267 40 73,654 147 445 2,050 247,562
18,977
5,324
239,343
6,533 437 10 882,830
30,834 437 10 1,122,173
3,001,916 473,949 157,653 84,369 883,260
3,001,916 $ 3,001,916
(117,201) (117,201) $ 15,823
415,973 $ 417,299
479,273 $ 503,218
84,369 $ 84,369
883,260 $ 956,369
118,836 17,637 12,703 33,430 3,679 1,226 6,825 90 (7,603) 1,076,633 $ 1,092,791
3,120,752 491,586 12,703 191,083 88,048 884,486 6,825 90 (124,804) 5,824,223 $ 6,071,785
* This is a new fund that is discretely presented. ** The other nonmajor special revenue funds column includes blended component units and the special revenue funds of the Employees Retirement System of Texas and the student loan fund. These funds do not meet the materiality threshold for separate column presentation.
156
STATE OF TEXAS
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Special Revenue Funds
Other Nonmajor Special Revenue Funds**
REVENUES Taxes Federal Licenses, Fees and Permits Interest and Other Investment Income Land Income Sales of Goods and Services Other Total Revenues EXPENDITURES Current: General Government Education Employee Benefits Health and Human Services Public Safety and Corrections Transportation Natural Resources and Recreation Regulatory Services Capital Outlay Debt Service: Principal Interest Other Financing Fees Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfer In Transfer Out Bonds and Notes Issued Premiums on Bonds Issued Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances, September 1, 2007 Restatements Fund Balances, September 1, 2007, as Restated Fund Balances, August 31, 2008
* This is a new fund that is discretely presented.
Property Tax Relief Fund
State Textbook Fund*
Water Development Funds
System Benefit Fund
Available School Fund
Texas Mobility Fund
Totals
$ 2,501,610
$ 660 1,058 1,597
$ 20,803
$ 144,043 19,304
$ 267,916 35,460
$ 5,853 162,247 47,593 15 3,196 72,458 291,362
6,287
13,427 495 3,717 38,442
4,033
2,507,897
3,315
163,347
4,033
303,376
$ 2,501,610 26,656 574,866 127,162 15 5,288 76,175 3,311,772
265,479
1,203,467
439 33,241 79,255 2 29 30,900 173,438 4,700 209,477
193,188 68,926 12,640 14,594 72,638 2,122 28,594 11,965 4,909 6 1,341 410,923
193,188 1,537,872 12,640 14,594 72,638 2,561 61,835 91,220 4,940 30,906 173,438 6,041 2,201,873
265,481
33,270
79,255
1,203,467
2,507,897
(262,166)
5,172
84,092
(1,199,434)
93,899
(119,561)
1,109,899
3,000,000 (3,239,142)
269,301
(239,142) 2,268,755 733,161
269,301 7,135 (124,336)
9,680 (13,247) 112,920 3,691 113,044 118,216 297,757
1,477,754 (270,442)
0 84,092 395,181
1,207,312 7,878 76,491
(1,212,608) 1,100,000 61,109 (51,499) 42,400 778,220 62,640 840,860 $ 883,260
155,375 (126,784) 74,115 883 103,589 (15,972) 1,086,102 6,503 1,092,605 $ 1,076,633
4,912,110 (4,862,223) 1,287,035 65,683 1,402,605 2,512,504 3,242,576 69,143 3,311,719 $ 5,824,223
733,161 $ 3,001,916
(124,336) $ (117,201)
297,757 $ 415,973
395,181 $ 479,273 $
76,491 84,369
** The other nonmajor special revenue funds column includes blended component units and the special revenue funds of the Employees Retirement System of Texas and the student loan fund. These funds do not meet the materiality threshold for separate column presentation.
157
STATE OF TEXAS
Budgetary Comparison Schedule Nonmajor Special Revenue Funds

Property Tax Relief Fund Actual Amounts Budgetary Amounts Budgetary Original Final Basis State Textbook Fund Actual Amounts Budgetary Amounts Budgetary Original Final Basis
Water Final To Actual Variance
REVENUES Taxes Federal Licenses, Fees and Permits Interest and Other Investment Income Land Income Sales of Goods and Services Other Total Revenues EXPENDITURES General Government Education Employee Benefits Health and Human Services Public Safety and Corrections Transportation Natural Resources and Recreation Regulatory Services Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfer In Transfer Out Bond Proceeds Available Beginning Balances Total Other Financing Sources (Uses) Excess (Deficiency) of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Uses
Final To Actual Variance
$ 3,707,887
$ 3,703,751
$ 2,501,608
$ (1,202,143)
$ 300
$ 300 257 1,750 2,307
$ 354 1,040 1,598 2,992
$ 54 783 (152) 685
11,392
11,392
6,610
(4,782)
257 1,750
3,719,279
3,715,143
2,508,218
(1,206,925)
2,307
4,231,466
499,329
500,793
263,820
236,973
4,231,466
499,329
500,793
263,820
236,973
(512,187)
3,715,143
2,508,218
(1,206,925)
(497,022)
(498,486)
(260,828)
237,658
(4,231,466) 730,924 (3,500,542)
3,000,000 (3,239,142) 730,924 491,782
3,000,000 (3,239,142) 730,924 491,782
496,245
496,245
269,302
(226,943)
6,936 503,181
6,936 503,181
6,936 276,238
(226,943)
$ (4,012,729)
$ 4,206,925
$ 3,000,000
$ (1,206,925)
$ 6,159
$ 4,695
$ 15,410
$ 10,715
158
Water Development Funds Actual Amounts Budgetary Amounts Budgetary Original Final Basis
System Benefit Fund Actual Amounts Budgetary Amounts Budgetary Original Final Basis
Available School Fund Actual Amounts Budgetary Amounts Budgetary Original Final Basis
$ 96 16,581 150 16,827
$ 20,665 16,597 295 37,557
$ 20,803 12,374 622 3,717 37,516
$ 138 (4,223) 327 3,717 (41)
$ 146,897 14,278
$ 146,897 14,278
$ 144,043 19,303
$ (2,854) 5,025
10,684
5,258
4,448
(810)
161,175
161,175
163,346
2,171
10,684
5,258
4,448
(810)
977,100
977,100
1,203,467
(226,367)
8,309 8,309
30,398 30,398
33,660 33,660
(3,262) (3,262) 97,107 97,107 97,211 97,211 64,440 64,440 32,771 32,771 977,100 977,100 1,203,467 (226,367)
8,518
7,159
3,856
(3,303)
64,068
63,964
98,906
34,942
(966,416)
(971,842)
(1,199,019)
(227,177)
(1,317) 89,497 89,497 89,497 89,497 89,497 88,180
(1,317) 404,311 404,311 404,311 404,311 404,311 404,311
1,472,664 (496,425) 12,351 988,590
1,473,850 (496,425) 12,351 989,776
1,477,752 (270,441) 12,351 1,219,662
3,902 225,984
(1,317)
229,886
$ 98,015
$ 96,656
$ 92,036
$ (4,620)
$ 468,379
$ 468,275
$ 503,217
$ 34,942
$ 22,174
$ 17,934
20,643
$ 2,709
159
STATE OF TEXAS
Budgetary Comparison Schedule Nonmajor Special Revenue Funds (concluded)

Texas Mobility Fund Actual Amounts Budgetary Amounts Budgetary Original Final Basis Other Nonmajor Special Revenue Funds Actual Amounts Final To Budgetary Amounts Budgetary Actual Original Final Basis Variance
REVENUES Taxes Federal Licenses, Fees and Permits Interest and Other Investment Income Land Income Sales of Goods and Services Other Total Revenues EXPENDITURES General Government Education Employee Benefits Health and Human Services Public Safety and Corrections Transportation Natural Resources and Recreation Regulatory Services Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfer In Transfer Out Bond Proceeds* Available Beginning Balances Total Other Financing Sources (Uses) Excess (Deficiency) of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Uses
$ 267,088 5,676
$ 263,105 6,000
$ 267,456 35,460
$ 4,351 29,460
$ 14,583 71,216 21,379
$ 14,583 82,691 21,470 49,298 59 168,101
$ 240,655 92,869 27,304 3 2,478 16,151 379,460
$ 226,072 10,178 5,834 3 (46,820) 16,092 211,359
272,764
269,105
302,916
33,811
48 107,226
430,351 5,066 505,953 27,861 29,043 1,394,837 2,003,919 3,149 2,000,770 23,007 1,394,837 2,003,919 3,149 2,000,770 1,021,281
177,566 45,565 12,479 28,176 29,043 26,510 7,833 327,172
95,314 1,264 12,600 17,294 725 23,439 11,213 161,849
82,252 44,301 (121) 10,882 28,318 3,071 (3,380) 165,323
(1,122,073)
(1,734,814)
299,767
2,034,581
(914,055)
(159,071)
217,611
376,682
7,300 1,100,000 1,125,545 2,225,545 1,100,000 1,125,545 2,225,545 (1,212,608) 1,100,000 1,125,545 1,012,937 (1,212,608) 132,064 139,364
7,310
114,382 (26,960) 132,064 219,486
107,072 (26,960)
(1,212,608)
132,064 139,374
80,112
$ 1,103,472
$ 490,731
$ 1,312,704
$ 821,973
$ (774,691)
$ (19,697)
$ 437,097
$ 456,794
he following page
* The Texas mobility fund received $1.1 billion in bond proceeds. These are authorized by Article 3, Section 49-p of the Texas Constitution.
160
Nonmajor Debt Service Funds

Sinking Fund receives deposits from the Texas Opportuand establishment of a reserve. The Texas College Student Loan Bonds Interest and Paper Funds receive deposits of any accrued interest on service payments. The Texas Public Finance Authority Commercial
nity Plan fund for payment of current interest and principal
sale of notes and pledged revenues necessary to make debt
Funds receive proceeds and accrued interest from the sale for those bonds.
The Texas Public Finance Authority Revenue Bond
of revenue bonds and provide the debt service requirements
receive proceeds to pay debt service on the bonds issued for the purpose of providing financial assistance for the construction of water and wastewater related projects, water supply and sewer services.
The Texas Water Development Board Bond Funds
Funds receive proceeds and accrued interest from the sale of general obligation bonds and provide the debt service requirements for those bonds.
The Texas Public Finance Authority G. O. Bond
161
STATE OF TEXAS
Combining Balance Sheet Nonmajor Debt Service Funds

Texas College Student Loan Bonds Interest and Sinking Fund Texas Public Finance Authority Revenue Bond Funds Texas Public Finance Authority G.O. Bond Funds Texas Public Finance Authority Commercial Paper Funds Other Nonmajor Debt Service Funds*
ASSETS Cash and Cash Equivalents Receivables: Accounts Interest and Dividends Prepaid Items Investments Restricted: Cash and Cash Equivalents Total Assets LIABILITIES AND FUND BALANCES Liabilities: Payables: Accounts Total Liabilities Fund Balances: Reserved for Debt Service Total Fund Balances Total Liabilities and Fund Balances
Texas Water Development Board Bond Funds
Totals
$ 191 902
1,357
251
4,841
27
78
6,554 191 902 4 54 181,510
4 54 181,507 $ 182,600 $ 1,411 $ 251 $ 4,841 $ 27 $ 3 85
$ 189,215
6 6
$ 0
6 6
$ 0
$ 0
$ 0
12 12
182,594 182,594 $ 182,600 $
1,411 1,411 1,411 $
245 245 251 $
4,841 4,841 4,841 $
27 27 27 $
85 85 85
189,203 189,203 $ 189,215
* The student loan revenue bond fund, Texas military facilities commission refund and improvement bond fund and the Texas park development bond interest and sinking fund are now being reported in this column.
162
STATE OF TEXAS
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Debt Service Funds
Texas College Student Loan Bonds Interest and Sinking Fund Texas Public Finance Authority Revenue Bond Funds Texas Public Finance Authority G.O. Bond Funds Texas Public Finance Authority Commercial Paper Funds Other Nonmajor Debt Service Funds*
REVENUES Federal Interest and Other Investment Income Other Total Revenues EXPENDITURES Current: General Government Debt Service: Principal Interest Other Payments for Refunding Total Expenditures Deficiency of Revenues Under Expenditures OTHER FINANCING SOURCES (USES) Transfer In Transfer Out Bond Proceeds for Advance Refunding Premiums on Bonds Issued Payment to Escrow for Advance Refunding Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances, September 1, 2007 Restatements Fund Balances, September 1, 2007, as Restated Fund Balances, August 31, 2008
Texas Water Development Board Bond Funds
Totals
(22) 11,730 11,708
$ 1,292 1,292
$ 211 65 276
$ 156 156
$ 42 42
1 18 19
(21) 13,449 65 13,493
236 18,000 27,765 547 46,312 57,905 17,030 390 75,325 209,950 81,722 1,535 293,443 20,360 3,118 23,478 17,105 17,529 34,634 8,420 7,642 16,062
236 331,740 154,806 2,472 489,254
(34,604)
(74,033)
(293,167)
(23,322)
(34,592)
(16,043)
(475,761)
79,651 72,600 3,125 (77,739) 77,637 43,033 139,513 48 139,561 $ 182,594 $
73,583 (1) 60,645 1,624 (61,911) 73,940 (93) 1,504 1,504 1,411 $
299,388 381,435 30,911 (418,973) 292,761 (406) 651 651 245 $
24,921
34,588
15,993 (89)
24,921 1,599 3,242 3,242 4,841 $
34,588 (4) 31 31 27 $
15,904 (139) 224 224 85
528,124 (90) 514,680 35,660 (558,623) 519,751 43,990 145,165 48 145,213 $ 189,203
* The student loan revenue bond fund, Texas military facilities commission refund and improvement bond fund and the Texas park development bond interest and sinking fund are now being reported in this column.
163
164
Nonmajor Capital Projects Funds

Project Funds utilize long-term financing for various state construction, repair or renovation projects. Funds are also agencies. used to refinance purchases of equipment by various state The Texas Public Finance Authority Administration used to pay for minor construction and repairs of the Texas Youth Commission. The Texas Youth Commission Project Funds are
Funds are used for the acquisition and development of for the repayments of long-term debt incurred.
The Texas Parks and Wildlife Department Project
to pay for the cost of construction, repair and remodeling projects.
The Texas Health Agencies Project Funds are used
for certain mental health facilities and other health related
state park sites. Revenues from park entrance fees are used
used to administer the states major and minor building construction programs.
The Texas Facilities Commission Project Funds are
Funds are used to finance construction of new DPS buildings and Crime Lab facilities in various state locations.
The Texas Department of Public Safety Project
Project Funds are used for construction of regional cenfacilities.
The Texas Department of Criminal Justice Prison
Funds are used to provide financial assistance to counties for roadway projects serving border colonias.
The Texas Department of Transportation Project
ters and for repairs and minor construction of correctional
are used to provide financial assistance to counties for the repair and renovation of court houses.
The Texas Historical Commission Project Funds
165
STATE OF TEXAS
Combining Balance Sheet Nonmajor Capital Projects Funds

Texas Public Finance Authority Administration Project Funds Texas Parks and Wildlife Department Project Funds Texas Facilities Commission Project Funds* Texas Department of Criminal Justice Prison Project Funds
ASSETS Cash and Cash Equivalents Accounts Receivable Due From Other Funds Inventories Total Assets LIABILITIES AND FUND BALANCES Liabilities: Payables: Accounts Payroll Due To Other Funds Interfund Payable Other Liabilities Total Liabilities Fund Balances/(Deficits): Reserved for: Encumbrances Inventories Capital Projects Unreserved: Designated for: Public Safety and Corrections Undesignated Total Fund Balances Total Liabilities and Fund Balances
Texas Youth Commission Project Funds
5,691
$ 26,714
$ 61,914 632 18,237
$ 64,696
8,489 179
3 $ 5,694 $ 26,714 $ 80,783 $ 64,696 $ 8,668
183 80
1,544 52
3,029
3,311
940
263
1,596
3,029
966 4,277
940
17,201 3 5,174 7,911
54,521 22,288
13,224 47,195
12,908 6,263
254 5,431 $ 5,694
6 25,118 $ 26,714
945 77,754 $ 80,783
60,419 $ 64,696 $
(11,443) 7,728 8,668
* **
The Building and Procurement Project Funds have been renamed as the Texas Facilities Project funds. The Texas Department of Public Safety Project Funds are now discretely presented.
*** The Texas military facilities commission project fund is now being reported in this column.
166
Texas Health Agencies Project Funds
Texas Department of Public Safety Project Funds**
Texas Department of Transportation Project Funds
Texas Historical Commission Project Funds
Other Nonmajor Capital Projects Funds***
Totals
$ 23,811 519
$ 26,076
5,642
$ 12,058
9,852 38 79
$ 244,943 670 18,935 82 $ 264,630
$ 24,330
$ 26,076
5,642
$ 12,058
9,969
$ 60,202
820
502
2,350 62,552 820 502
27 27 1
$ 70,532 80 52 2,377 966 74,007
5,263 67,258
3,849 25,256 5,140
9,689 1,723
34 79 9,327
116,689 82 197,535
(110,743) (38,222) $ 24,330
(3,849) 25,256 $ 26,076 $
5,140 5,642
619 12,031 $ 12,058 $
563 (35) 9,968 9,969
563 (124,246) 190,623 $ 264,630
167
STATE OF TEXAS
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Capital Projects Funds
Texas Public Finance Authority Administration Project Funds Texas Parks and Wildlife Department Project Funds Texas Facilities Commission Project Funds* Texas Department of Criminal Justice Prison Project Funds
REVENUES Interest and Other Investment Income Sales of Goods and Services Other Total Revenues EXPENDITURES Current: General Government Education Health and Human Services Public Safety and Corrections Transportation Natural Resources and Recreation Capital Outlay Debt Service: Interest Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfer In Transfer Out Bonds and Notes Issued Bond Proceeds for Advance Refunding Premiums on Bonds Issued Insurance Recoveries Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balances, September 1, 2007 Restatements Fund Balances, September 1, 2007, as Restated Fund Balances, August 31, 2008
Texas Youth Commission Project Funds
293 60 353
867
2,043 17,452 19,495
1,500 13 1,513
219
867
219
10,434
3,445
292
10,676 2,480 4,922
15,874
40,279
8,657
10,434
7,402
19,319
51,247
8,657
(10,081)
(6,535)
176
(49,734)
(8,438)
783 (23,406) 32,200 580 500 10,657 576 4,855 4,855 $ 5,431
(175) 11,500
(90) 58,854 5,774
(80) 90,621 148
(134) 15,200
11,325 4,790 20,328 20,328 $ 25,118
64,538 64,714 13,040 13,040 $ 77,754
90,689 40,955 19,464 19,464 $ 60,419 $
15,066 6,628 1,100 1,100 7,728
The Building and Procurement Project Funds have been renamed as the Texas Facilities Project funds.
** The Texas Department of Public Safety Project Funds are now discretely presented. *** The Texas military facilities commission project fund is now being reported in this column.
168
Texas Health Agencies Project Funds
Texas Department of Public Safety Project Funds**
Texas Department of Transportation Project Funds
Texas Historical Commission Project Funds
Other Nonmajor Capital Projects Funds***
Totals
828 2 830
278
419
742
453
278
419
742
453
7,642 17,454 73 25,169
7,482 1,320 66,965 23 13,557 6,498 27 73,490 16,974 403 7,868 169
21,653 1,320 66,965 10,868 13,557 2,480 101,475 27 218,345
16,997
13,557
7,885
9,357
(72,660)
(16,719)
(13,138)
(7,143)
(8,904)
(193,176)
1,881 (378) 21,500
(87) 38,400
(154) 15,000
160 (1) 8,500
23,003 (49,657) 3,147 8,288 11,435 $ (38,222)
38,313 21,594 3,662 3,662 $ 25,256 $
15,000 1,862 3,278 3,278 5,140
(154) (7,297) 19,328 19,328 $ 12,031 $
8,659 (245) 10,213 10,213 9,968
2,824 (24,505) 291,775 728 5,774 500 277,096 83,920 98,415 8,288 106,703 $ 190,623
169
170
Nonmajor Permanent Funds

is a permanent fund established by the Legislature from State of Texas v. The American Tobacco Co., et.al. The lature to be preserved. Distributions of earnings on the health care costs, tobacco education and enforcement. The Permanent Health Fund for Higher Education previous fiscal year shall be deposited and become part of the principal of the fund. Out of the remainder of the
a portion of the money received in the settlement of The corpus of the account has been designated by the Legisaccount are to be transferred to other accounts and used for
annual income, there shall be appropriated an annual sum and notes issued and the balance shall be allocated for Constitution.
sufficient to pay the principal and interest due on the bonds appropriations made in Article VII, sec. 17(a) of the Texas
lished by legislation to dedicate portions of the states rev-
The Permanent Higher Education Fund is estab-
sists of the Texas cultural endowment fund account held outside the treasury used for initial seed money for the
The Texas Commission on the Arts Trust Fund con-
enues. The principal shall never be expended. At the beginning of the fiscal year after the fund reaches $2 billion and each year thereafter, 10 percent of the interest, dividends and other income accruing from investments during the
endowment and deposits toward the endowment. This fund is to provide a stable funding source for the enhancement of art education, encourage economic development and advance the well being of communities.
171
STATE OF TEXAS
Combining Balance Sheet Nonmajor Permanent Funds

Permanent Health Fund for Higher Education Permanent Higher Education Fund Texas Commission on the Arts Trust Fund Other Nonmajor Permanent Funds
ASSETS Cash and Cash Equivalents Short-Term Investments Securities Lending Collateral Receivables: Investment Trades Interest and Dividends Investments Total Assets LIABILITIES AND FUND BALANCES Liabilities: Payables: Accounts Investment Trades Obligations/Securities Lending Total Liabilities Fund Balances: Reserved for: Education Unreserved: Designated for: Permanent Health Fund Undesignated Total Fund Balances Total Liabilities and Fund Balances
Totals
$ 17,076 8,010 295 677 534,790 $ 560,848
$ 17,502 8,798 301 737 558,315 $ 585,653
94
59
153 34,578 16,808 596 1,414 1,105,291
9,677 $ 9,771 $
2,509 2,568
$ 1,158,840
283 615 8,009 8,907
294 631 8,798 9,723
577 1,246 16,807 18,630
575,930
575,931
558,020 (6,079) 551,941 $ 560,848
575,930 $ 585,653 $
9,771 9,771 9,771 $
2,500 67 2,568 2,568
560,520 3,759 1,140,210 $ 1,158,840
172
STATE OF TEXAS
Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Permanent Funds
Permanent Health Fund for Higher Education Permanent Higher Education Fund Texas Commission on the Arts Trust Fund Other Nonmajor Permanent Funds
REVENUES Interest and Other Investment Income (Loss) Land Income Total Revenues EXPENDITURES Current: General Government Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING USES Transfer Out Total Other Financing Uses Net Change in Fund Balances Fund Balances, September 1, 2007 Fund Balances, August 31, 2008
Totals
(36,913) (36,913)
$ (39,152) (39,152)
(299) (299)
100 23 123
(76,264) 23 (76,241)
2,280 2,280
2,345 2,345
98 98
100 100
4,823 4,823
(39,193)
(41,497)
(397)
23
(81,064)
(22,905) (22,905) (62,098) 614,039 $ 551,941
0 (41,497) 617,427 $ 575,930 $
(5,009) (5,009) (5,406) 15,177 9,771 $
(273) (273) (250) 2,818 2,568
(28,187) (28,187) (109,251) 1,249,461 $ 1,140,210
173
174

Enterprise Funds
175
176
Nonmajor Enterprise Funds

Trust Fund Accounts are funds collected under the Old The Texas Workforce Commission Unemployment receive proceeds from the sale of bonds that are used to and home improvement for those qualifying veterans. The Veterans Land Board Loan Program Funds
Age and Survivors Insurance Act on deposit with the treasurer of the United States of America to the credit of this state. It also serves as a clearance fund for the Unemployment Compensation fund held by the United States TreaUnemployment Compensation Act. sury and as a holding account for paying benefits under the
administer, originate and service loans from land, housing
tutional Division accounts for the proceeds of the institutional divisions commissary operations and other miscellaneous revenue.
The Texas Department of Criminal Justice Insti-
Affairs issues bonds to assist in financing the purchase of homes or the construction of rental housing for families provide the revenue for debt service payments.
The Texas Department of Housing and Community
with low to moderate incomes. Loan payments and rentals
TRS-ActiveCare fund, which provides health care coverage to employees (and their dependents) of participating public education entities. TRS is now considered a discrete component unit of the state.
The Teacher Retirement System (TRS) includes the
operation of lottery games for the state. This fund includes both the net proceeds from the lottery and accounts for future installment obligations to prize winners.
The Texas Lottery Commission accounts for the
offers a program that allows Texas families to lock in the cost of tomorrows college tuition and required fees at todays prices.
The Texas Prepaid Higher Education Tuition Board
177
STATE OF TEXAS
Combining Statement of Net Assets Nonmajor Enterprise Funds

Texas Workforce Commission Unemployment Trust Fund Accounts Texas Department of Housing and Community Affairs Veterans Land Board Loan Program Funds
ASSETS Current Assets: Cash and Cash Equivalents Securities Lending Collateral Restricted: Cash and Cash Equivalents Short-Term Investments Loans and Contracts Receivables: Federal Accounts Interest and Dividends Investment Trades Other Due From Other Funds Interfund Receivable Inventories Prepaid Items Loans and Contracts Other Current Assets Total Current Assets Noncurrent Assets: Restricted: Cash and Cash Equivalents Investments Receivables Loans and Contracts Other Loans and Contracts Capital Assets: Nondepreciable Depreciable Accumulated Depreciation Assets Held in Trust Other Noncurrent Assets Total Noncurrent Assets Total Assets
Texas Lottery Commission
593
41,524
169,881
$ 89,818
1,775,261
163,616 159,097 12,656
190,269
121,937 32,246 70,526 3,751 59,454 10,839
6,642 115,312 14,877
1,549 14,898 75
33,531
2,875 56 12 1,608 253 395,344
79 7,326 4,667
1,915,560
405,753
388,572
1,346,771 1,246,109 32,067
1,111,265
218,378 2,024,449 2,399
1,158 (1,010) 12,570 2,637,665 3,033,009
5,861 (5,072)
3,500 78,821 (18,614)
0 1,915,560
1,112,054 1,517,807
2,308,933 2,697,505
* This fund has activity on the combining statement of revenues, expenses and changes in fund net assets - nonmajor enterprise funds and the combining statement of cash flows - nonmajor enterprise funds.
178
Texas Department of Criminal Justice Institutional Division
Teacher Retirement System*
Texas Prepaid Higher Education Tuition Board
Other Nonmajor Enterprise Funds
Totals
2,855 307,192 135,594
22,758
237,611 397,010 2,196,408 381,612 83,182 10,393 210,727 55,639 49,589 2,850 26,663 56 14,996 4,831 54,749 253 3,726,569
535 14,978 49,589 23,708 6,770 43,041 31,013 0 553,249
346 47 2,775
888 164 10,100 37,078
1,604,129 131,826
5,484 52
5,484 4,280,595 131,826 3,270,558 2,399 32,067 4,159 98,456 (34,577) 1,006 12,570 7,804,543 11,531,112
283 4,250 (3,780)
2,285 (2,266)
376 6,081 (3,835) 1,006 9,164 46,242
753 31,766
0 0
1,735,974 2,289,223
179
STATE OF TEXAS
Combining Statement of Net Assets Nonmajor Enterprise Funds (concluded)

LIABILITIES Current Liabilities: Payables: Accounts Payroll Investment Trades Interest Annuities Due To Other Funds Unearned Revenue Obligations/Securities Lending Capital Lease Obligations Employees' Compensable Leave Notes and Loans Payable General Obligation Bonds Payable Revenue Bonds Payable Liabilities Payable From Restricted Assets Other Current Liabilities Total Current Liabilities Noncurrent Liabilities: Capital Lease Obligations Employees' Compensable Leave Liabilities Payable From Restricted Assets Notes and Loans Payable General Obligation Bonds Payable Revenue Bonds Payable Assets Held for Others Other Noncurrent Liabilities Total Noncurrent Liabilities Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for: Debt Retirement Veterans Land Board Housing Programs Unemployment Trust Funds Other Unrestricted Total Net Assets
38,565
1,105
15,971 1,633
11,567
38,307 12,174 15,828 88,559 39,988
7,475 266 139 90,946
718 71,431 41,276 9,011 201,836
1,244 67,090 350 285,334 1,611 333,795 197 178,030
127,124
237
842 1,062,675 1,785,685 23,637
2,629,814 139,808 2,769,859 2,971,695
0 127,124
1,063,517 1,397,312
1,809,322 1,987,352
191 11,350
789
40,362
669,684 1,788,436 49,773 $ 1,788,436 $ 61,314 $ 13,739 105,967 120,495 $ 107 710,153
180
Teacher Retirement System
Totals
4,601 1,383
1,974 61,348
2,268 1,480
32
100 68 307,192 126 526
1,002
60
212,668 7,018 0 583,342 4,468
76,051 4,496 61,348 45,782 12,174 16,226 128,754 398,138 126 3,550 71,431 67,090 41,626 498,002 10,819 1,435,613
372
22 1,912,179
200 323 5,907
1,006 372 7,390 0 0 1,912,201 2,495,543 7,436 11,904
200 1,796 2,974,854 5,907 1,785,685 2,653,451 1,006 139,808 7,562,707 8,998,320
752
19
1,255
43,368 11,350 669,684 1,788,436 14,350 5,604 $ 2,532,792
23,624 $ 24,376 $ 0
(206,339) $ (206,320) $
611 32,472 34,338
181
STATE OF TEXAS
Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Nonmajor Enterprise Funds
OPERATING REVENUES Lottery Collections Auxiliary Enterprises - Pledged Unemployment Taxes Other Sales of Goods and Services Other Sales of Goods and Services - Pledged Interest and Investment Income Federal Revenue Other Revenues Other Revenues - Pledged Total Operating Revenues OPERATING EXPENSES Cost of Goods Sold Salaries and Wages Payroll Related Costs Professional Fees and Services Travel Materials and Supplies Communication and Utilities Repairs and Maintenance Rentals and Leases Printing and Reproduction Depreciation and Amortization Unemployment Benefit Payments Bad Debt Expense Interest Expense Lottery Fees and Other Costs Lottery Prize Payments Employee/Participant Benefit Payments Other Expenses Total Operating Expenses Operating Income (Loss)
$ 1,058,134
$ 3,671,884
152,104 135,165 92,013 1,285,312 12,154 164,258
2 44,625 3,716,511
8,032 30,825 100,360 19,804 20 159,041
7,649 1,281 2,075 289 227 112 189 51 17 945 1,464,794 390 136,893
15,950 3,819 4,074 301 1,964 612 366 5,685 11,610 282 470 2 280,918 2,281,125 27,169 2,634,347 1,082,164
54,128 8 2,491 365 3 3,704
65,908
1,464,794 (179,482)
102 150,220 14,038
4,149 130,756 28,285
182
Totals
$ 86,605
(791)
8,334 382
759 87,364 0
1,566 775
23,163 10 31,889
$ 3,671,884 86,605 1,058,134 15,575 30,825 252,848 154,969 174,300 10 5,445,150
61,846 13,053 3,900 40 604 1 188 762 69 95 30 1
777 170 7,233 4 111 50 348 23 44 10
1,575 9,284 1,971 7,926 108 416 506 284 1,460 99 618 6
18 80,607 6,757
0 0
(26,992) 10,020 (8,202) 8,977
2,255 26,508 5,381
63,421 46,713 11,141 75,436 750 5,813 1,281 1,740 7,981 11,842 5,654 1,464,794 896 202,804 280,918 2,281,125 (26,992) 43,713 4,479,030 966,120
183
STATE OF TEXAS
Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Nonmajor Enterprise Funds (concluded)
NONOPERATING REVENUES (EXPENSES) Federal Revenue Gifts Interest and Investment Income (Loss) Loan Premium and Fees on Securities Lending Investing Activities Expense Interest Expense Borrower Rebates and Agent Fees Gain on Sale of Capital Assets Settlement of Claims Claims and Judgments Other Revenues Other Expenses Total Nonoperating Revenues (Expenses) Income (Loss) Before Transfers CAPITAL CONTRIBUTIONS, SPECIAL ITEMS AND TRANSFERS Capital Contributions - Other Special Items Transfer In Transfer Out Total Capital Contributions, Special Items and Transfers Change in Net Assets Net Assets, September 1, 2007 Restatements Net Assets, September 1, 2007, as Restated Net Assets, August 31, 2008
$ 95,136
$ 36,620
109 11 19,495
(1,708) 9 5 (99) (11,755) (684) 92,744 (86,738) (11,755) 2,283 36,535 1,118,699
(1,478) (1,922)
16,215 44,500
(150,026) 1,646
5,325 (1,034,879)
2,990 (24,612) (21,622) 22,878 687,194 81 687,275 $ 710,153
(148,380) (235,118) 2,023,554 2,023,554 $ 1,788,436 $
5,325 7,608 53,706 53,706 61,314 $
(1,034,879) 83,820 36,675 36,675 120,495
184
Totals
$ (55,320) 13,642 (18) (9,005)
281 722
(276)
1 1 2 6,759 0 0 (50,701) (41,724) (8) 12 731 6,112
390 11 96,653 13,642 (18) (3,462) (10,927) 9 6 (107) (11,742) (684) 83,771 1,049,891
(110) 4,331 (21,883) (17,552) (10,793) 35,169 35,169 $ 24,376 $ 0 0 435,295 (435,295) 0 0 0 (41,724) (164,596) (164,596) $ (206,320) $ 2,829 (1,783) 936 7,048 27,290 27,290 34,338
(110) (150,026) 17,121 (1,083,157) (1,216,172) (166,281) 3,134,287 (435,214) 2,699,073 $ 2,532,792
185
STATE OF TEXAS
Combining Statement of Cash Flows Nonmajor Enterprise Funds

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Customers Proceeds from Research Grants and Contracts Proceeds from Loan Programs Proceeds from Other Revenues Payments to Suppliers for Goods and Services Payments to Employees Payments for Loans Provided Payments for Other Expenses Net Cash Provided by Operating Activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Proceeds from Debt Issuance Proceeds from Transfers from Other Funds Proceeds from Other Financing Activities Payments of Principal on Debt Issuance Payments of Interest Payments of Other Costs on Debt Issuance Payments for Transfers to Other Funds Payments for Other Uses Net Cash Provided by Noncapital Financing Activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from Other Financing Activities Payments for Additions to Capital Assets Payments of Principal on Debt Issuance Payments of Interest on Debt Issuance Payments of Other Costs on Debt Issuance Net Cash Provided by Capital and Related Financing Activities CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sale of Investments Proceeds from Interest and Investment Income Payments to Acquire Investments Payments for Nonprogram Loans Provided Net Cash Provided by Investing Activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, September 1, 2007 Restatements Cash and Cash Equivalents, September 1, 2007, as Restated Cash and Cash Equivalents, August 31, 2008
$ 1,032,088 131,114 93,292
$ 69,571 9,548 (8,405) (8,732) (63,176) (1,194)
$ 3,778,421
57,862 726,156 254 (58,024) (657,678) (164) 68,406
(342,307) (19,480) (2,310,052) 1,106,582
(1,476,036) (219,542)
4,459,100 (401,684) (4,339) (4,480,971) (109) (428,003)
254,674 17,080 147,827 (126,342) (139,304) (1,646) (11,979)
98,144 84,136 190,826 (122,963) (67,349) (288,394) (2,251) (107,851)
(1,036,776) (169,230) (1,058,179)
(7,517)
(19)
(411)
517 (311) (330) (1,480) (286) (1,890)
(19)
(411)
98,430
620,189 83,539 (654,573) 49,155 40,425 164,715 164,715 $ 205,140
173,393 6 (152,121) 21,278 69,270 100,611 100,611 $ 169,881
332,137 18,245 (282,948) 67,434 26,099 95,838 95,838 $ 121,937
98,430 (549,115) 2,324,969 2,324,969 $ 1,775,854
186
Totals
87,161
43,385
28,353 2,669 3,033 (1,851) (10,385) (629) (13,295) 7,895
759 (60,869) (16,952) (1,715) 8,384
462 (17,830) (900) (108,631) (83,514)
$ 5,027,270 131,114 798,396 107,348 (489,286) (56,449) (721,483) (3,909,893) 887,017
4,331
(12,712)
5,575 269 (2,325) (223) (23) (4,527)
352,818 4,570,222 338,922 (653,314) (211,215) (1,669) (5,835,359) (171,590) (1,611,185)
(8,381)
(1,254)
(5)
(1,288)
517 (2,034) (330) (1,480) (286) (3,613)
(5)
(1,288)
32,131 659 (32,788) 2 0 0 0 497,369 (497,369) 0 $ 0
2,076,455 60,647 (1,974,811) 162,291 78,777 59,672 59,672 $ 138,449 $
727 (6) 721 6,074 22,168 22,168 28,242
3,234,305 262,253 (3,097,241) (6) 399,311 (328,470) 3,265,342 (497,369) 2,767,973 $ 2,439,503
0 $ 0
187
STATE OF TEXAS
Combining Statement of Cash Flows Nonmajor Enterprise Funds

RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating Income (Loss) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by Operating Activities: Depreciation and Amortization Bad Debt Expense Operating Income (Loss) and Cash Flow Categories Classification Differences Changes in Assets and Liabilities: (Increase) Decrease in Receivables (Increase) Decrease in Inventories (Increase) Decrease in Loans and Contracts (Increase) Decrease in Other Assets (Increase) Decrease in Prepaid Expenses Increase (Decrease) in Payables Increase (Decrease) in Due To Other Funds Increase (Decrease) in Unearned Revenue Increase (Decrease) in Compensated Absence Liability Increase (Decrease) in Other Liabilities Total Adjustments Net Cash Provided by Operating Activities NONCASH TRANSACTIONS Net Change in Fair Value of Investments Other
$ (179,482)
14,038
$ 1,082,164
28,285
945 389 38,068 68,934 4,950 (6,629) (659) (148,092) 39,098 (1,514) 4,884 (55,666) (15,232) $ (1,194)
282 470
3,704
66,104 61,910 (471) (18,040) (15,083) 31,233 (39,328) 1,555 (31,507) 40,121 $ 68,406 3,710
(40,060) $ (219,542)
24,418 $ 1,106,582
$ $
$ $
6,488
$ $
36,614
$ $
957 (2,197)
188
Totals
6,757
8,977
5,381
$ 966,120
95
10
618 6 (24)
5,654 865 104,148 161,255 (510) (19,988) 30,574 (43) (183,800) 27 45,456 35 (222,776) (79,103) $ 887,017
556 (13)
43,092
(147) (26) 1,724 (43) 434 (81) 6 47 2,514 $ 7,895
989
1 27 29 (135,650) (92,491) $ (83,514)
1,627 $ 8,384 $
0 0
$ $
$ $
$ (115,613) $
$ $
$ $
(71,554) (2,197)
189
190
Colleges and Universities Major Enterprise Fund

column as a major fund on the basic financial statements. Schedules have been prepared to report the breakdown of the following universities. There are six university systems and five independent universities in Texas primary government presented in a single-
University of Texas System
Texas A&M University System Texas Tech University System University of Houston System
Texas State University System Texas Womans University Texas Southern University
University of North Texas System Stephen F. Austin State University Midwestern State University
Texas State Technical College
191
STATE OF TEXAS
Schedule of Net Assets Colleges and Universities Major Enterprise Fund

University of Texas System* Texas A&M University System* Texas Tech University System University of Houston System Texas State University System
ASSETS Current Assets: Cash and Cash Equivalents Short-Term Investments Securities Lending Collateral Restricted: Cash and Cash Equivalents Short-Term Investments Loans and Contracts Receivables: Federal Other Intergovernmental Accounts Interest and Dividends Gifts Investment Trades Other Due From Other Funds Due From Component Units Interfund Receivable Inventories Prepaid Items Loans and Contracts Other Current Assets Total Current Assets Noncurrent Assets: Restricted: Cash and Cash Equivalents Short-Term Investments Investments Receivables Loans and Contracts Other Loans and Contracts Investments Interfund Receivable Gifts Receivable Capital Assets: Nondepreciable Depreciable Accumulated Depreciation Assets Held in Trust Other Noncurrent Assets Total Noncurrent Assets Total Assets
$ 1,709,952 984,424 234,744
294,008 197,072 184,823 (8,930) 190,297
393,128
166,138 131,751
506,091
143,012
11,695
78,838 198
233,277 34,341 210,476 44,301 45,217 224,651 1,016,487 115,473
94,954 23,446 17,766 6,188 11,539 70,751 84,577 138,397 14,685 25,865 635 24,255 53,686 1,424,014
9,234 8,081 2,078 33,239 48,652 107,869 18 4,355 42,629 2,817 311 795,423
20,873 17,544 15,691 1,742 77,132
29,687 67,511 283 7,582 1,467 71,097
69,817 42,506 147,291 5,112,957
2,330 39,439 6,641 490,976
4,652 8,200 4,649 26,540 806,795
181 21,834,829 94,876 673,977 5,286 26,412 1,373,889 367,945 47,747 535,997 3,910,534 (2,222,236) 362 1,186 4,721,099 6,145,113
27,143 159,826
43,672
31,331 69,130 4,856 1,021 7,493 388 33,692
14,175 3,242 779,759 42,772 213,568 1,695,666 (834,845)
3,293,072 152,141 1,792,984 13,308,241 (5,803,304) 36,958 34,709,978 39,822,935
716,313 16,392 170,065 1,169,404 (713,212)
185,490 1,474,825 (767,842)
2,087,131 2,882,554
1,416,809 1,907,785
1,040,384 1,847,179
192
University of North Texas System
Texas Woman's University
Stephen F. Austin State University
Texas Southern University
Midwestern State University
Totals
227,299 393 34,610 100
11,118 32,050
60,131
37,340
4,628 16,409
22,153 8,390
$ 3,431,986 385,672 1,169,640 507,430 308,997 15 426,432 63,732 412,078 55,846 118,373 295,402 1,160,160 639,396 18 14,685 113,407 106,636 95,994 259,721 9,565,620
2,418 57,006
9,794 9,707
259 46,648
(564) 556 15 156 3,740 182 2,377 440 1,891
1,554 4,485
17,432 367 39,801 1,752 2,475
4,577 11,156 762
1,222 996 7,212 253 253 2,290 5,036
8,710 4,582 19,974
6,310 8,817 47
69,769
3,114 14,344
1,391 27,827
10,561
2,075 8,387 16,154 420,614
881 993 4,826 143,245
544 14,740 1,913 114,091
373
312
2,203
10,139 157,243
5,600 35,742
64,520
291 9,181 68,846 5,723 80,503 6,078 2,242 24,196 20 2,049
36,123
148 244
98 881 14,911 601
102,974 902 100,295 820,952 (408,654) 332 691,370 1,111,984 10,555 288,612 (128,310)
102,766 45,548 22,887,111 4,876 129,306 8,374 32,284 6,338,806 367,945 260,555 3,079,709 23,693,435 (11,430,582) 362 38,476 45,558,971 55,124,591
18,994 338,111 (180,913)
19,649 360,550 (191,791)
23,697 160,979 (77,137)
8,415 165,561 (102,338)
251,360 394,605
218,180 332,271
190,477 347,720
160,153 195,895
72,030 136,550
193
STATE OF TEXAS
Schedule of Net Assets Colleges and Universities Major Enterprise Fund (concluded)
LIABILITIES Current Liabilities: Payables: Accounts Payroll Other Intergovernmental Federal Investment Trades Interest Due To Other Funds Interfund Payable Unearned Revenue Obligations/Securities Lending Claims and Judgments Capital Lease Obligations Employees' Compensable Leave Notes and Loans Payable General Obligation Bonds Payable Revenue Bonds Payable Funds Held for Others Other Current Liabilities Total Current Liabilities Noncurrent Liabilities: Interfund Payable Claims and Judgments Capital Lease Obligations Employees' Compensable Leave Notes and Loans Payable General Obligation Bonds Payable Revenue Bonds Payable Assets Held for Others Net OPEB Obligation Other Noncurrent Liabilities Total Noncurrent Liabilities Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for: Education Debt Retirement Capital Projects Funds Held as Permanent Investments: Nonexpendable Expendable Unrestricted Total Net Assets
802,620 291,638 27 28,655 1,060,391 10,712 15,614 945,648 984,343 81,061 1,389 270,920 1,169,624 1,209,149 16,017 370,109 7,257,917
124,018 104,132
50,268 57,648
34,932 32,703 1,736
21,794 32,047 10,164
64,987 306 1,357 363,771 184,823 12,438 295 6,132 55,375 82,574 20,767 29,670 1,050,645 91 344 130,725 1,863 8,214 74,268 19,600 23,512 17,609 384,051 151,769 272 10,080 116 8,919 7 220,805
22,591 12,498 2,847 269,519
38,866 5,267 4,017 342,002
372,404 35,071 3,683 139,643 30,288 3,198,905 720,032 422,678 24,654 4,947,358 12,205,275
5,687 6,971 1,266 85,040 107,412 1,178,022 362 140,309 89,773 1,614,842 2,665,487
260 16,765 29,944
15 11,689 305 9,416
369,445
442,139
633,021
1,597 418,011 802,062
453,843 723,362
1,990 644,732 986,734
4,492,553 1,519,475 11,202 (18,981) 9,366,310 8,473,938 3,773,163 $ 27,617,660
928,495 216,526 (12,726) 17,392 464,722 75,450 1,789,767 $ 3,479,626
612,776 204,190 19,113 35,248 609,107 600,058 $ 2,080,492
283,561 115,471 5,790 4,141 350,554 145,963 278,943 $ 1,184,423 $
220,200 44,156 4,239 155,586 97,572 16,202 322,490 860,445
* Other postemployment benefits are not legally required to be provided by the state of Texas. The Texas Constitution does not allow the Legislature to impose financial obligations for a period longer than two years. See Note 11 for additional details.
194
Totals
16,992 31,926
2,992 4,880
2,990 7,377
9,750 6,169 3
2,930 3,198
5,616 6,726 371
3 118,545 393
464 33,788
2,205 75 50,544
1,413
82
35,967
18,815
12,280
1,985 22,071 11,090 16,566 3,615 223,186
180 2,071
18 398
4,508 4,406 53,289
5,475 10,610 3,293 82,985
3,045 312 4,270 6,005 17,781 84,715
125 1,215 2,520 112 1,339 30,254
543 611 1,445 585 1,675 479 30,413
$ 1,074,902 578,444 10,194 30,762 1,125,378 3,700 11,658 17,315 2,082,657 1,169,559 95,634 2,541 312,500 1,321,650 6,930 1,402,963 107,024 455,165 9,808,976
14,384
1,993 1,411
28 2,797
246,925 474 2,168 263,951 487,137
60,667 166 128 64,365 117,654
127,760
339 579 27,909 90,640
1,147 6,769 82,845
335 4,151 5,039 9,995 10,660
1,031 131,616 214,601
14,604 134,071 218,786
224 90,985 121,239
21 30,201 60,614
378,351 59,157 11,426 300,849 138,279 44,673 6,441,029 721,034 562,987 136,190 8,793,975 18,602,951
232,720 54,147 425 24,203 44,039 4,526 264,787 $ 624,847 $
103,597 1,647
51,007 13,829 2,621
58,692 10,887 143 5,939 30,012 23,261 $ 128,934 $
47,954
47,340 1,088 14 1,092 393 26,009 $ 75,936
7,078,895 2,181,416 28,200 230,725 10,981,925 8,803,650 7,216,829 $ 36,521,640
3,484 3,625 4,534 15,059 74,656
9,157 80,317 82,233 276,951 $
6,434 2,720 41,059 117,670
195
STATE OF TEXAS
Schedule of Revenues, Expenses and Changes in Fund Net Assets Colleges and Universities Major Enterprise Fund
OPERATING REVENUES Tuition Revenue Tuition Revenue - Pledged Discounts and Allowances Hospital Revenue - Pledged Discounts and Allowances Professional Fees Professional Fees - Pledged Discounts and Allowances Auxiliary Enterprises Auxiliary Enterprises - Pledged Discounts and Allowances Other Sales of Goods and Services Other Sales of Goods and Services - Pledged Discounts and Allowances Interest and Investment Income Interest and Investment Income - Pledged Federal Revenue State Grant Revenue Other Operating Grant Revenue Other Operating Grant Revenue - Pledged Other Revenues Other Revenues - Pledged Total Operating Revenues OPERATING EXPENSES Cost of Goods Sold Salaries and Wages Payroll Related Costs Professional Fees and Services Travel Materials and Supplies Communication and Utilities Repairs and Maintenance Rentals and Leases Printing and Reproduction Depreciation and Amortization Bad Debt Expense Interest Expense Scholarships Claims and Judgments Net Change in Pension/OPEB Obligations Other Expenses Total Operating Expenses Operating Loss
$ 1,290,956 (266,947) 6,185,545 (3,168,917) 3,126,151 4,500 (2,147,973) 350,927 (8,863) 294,038 (329)
$ 687,515 (130,426)
58,138 210,040 (33,293)
365,350 (56,859)
$ 361,950 (57,071)
213,465 9,245 46,478 217,652 89,440 5,074 14,381 20,155 95,204 (8,008) 14,546
151,590 (16,626) 1,394 386,876 70,562 893 154,489 59,837 1,593,001
1,276,162 51,245 296,550 399,478 6,860 88,604 7,777,987
38,748 9,772 121,118 4,074
58,850 14,176 14,698 1,172
40 578 31,424 7,078 6,587 13,569 465,897
730,957
464,020
96,351 5,333,038 1,261,852 383,069 129,998 1,091,055 343,731 186,490 109,638 20,865 679,831 3,940 276,044 11,838 422,678 721,183 11,071,601 (3,293,614)
18,686 1,331,437 309,152 222,228 70,505 209,496 124,497 80,429 43,453 14,525 137,311 734 252 121,896 (14,061) 140,309 174,037 2,984,886 (1,391,885)
597,981 134,532 63,237 14,875 87,304 48,944 25,660 11,248 7,801 61,087 36 46,754 566 67,481 1,167,506 (436,549)
3,038 437,261 92,028 40,597 14,401 41,581 50,299 9,603 12,707 5,338 41,232 72 56,621 951 33,045 838,774 (374,754)
6,878 376,308 81,351 35,976 13,109 68,847 37,493 16,369 8,880 4,470 47,864 262 37 56,748 81 27,900 782,573 (316,676)
196
Totals
84,578 142,086 (27,678)
59,964 441 (9,350)
3,437 67,239 (13,393)
$ 56,403 (14,162)
$ 24,711
2,597 25,618 (9,043)
79,625
1,162 40,525 (116) 23,054
9,091 10,216 (2,841)
1,152 30,791 (5,421) 1,029 4,428 190
8,796
5,541
1,101 12,384 (2,929) 6,767
40
969
38,999 2,857 7,059 199 392,350
3,836 673 265 1,189 73,484
6,208 838 866
19,687 1,410 2,172 4,970
1,732
588 6,556 994 145
10 4 97,368 1,296 34,259
79,316
44,778
574,064 2,866,959 (618,222) 6,185,545 (3,168,917) 3,419,241 13,745 (2,147,973) 58,984 861,476 (28,178) 63,858 472,213 (16,955) 1,624 1,166 1,869,078 159,605 450,088 558,316 27,959 149,741 11,753,417
1,595 307,485 66,158 27,046 7,924 45,846 18,227 13,725 6,168 3,984 31,415 5,984 39,308
224 76,075 17,183 1,725 1,704 11,306 7,431 3,929 1,149 552 10,991 607 7,599
7,793 75,960 18,332 1,625 2,279 15,038 11,789 3,896 2,110 698 9,940 317 13,152
70,068 16,799 14,236 1,825 9,183 5,708 4,242 3,749 573 12,445 1,290 19,581 49 4,210 163,958 (84,642)
33,222 8,096 3,111 1,538 5,072 3,761 1,817 440 319 6,024 224 5,810
4,478 67,110 19,932 1,452 1,262 12,440 7,713 2,885 1,153 152 5,280 2 14,935 2 10,649 149,445 (104,667)
36,036 610,901 (218,551)
5,946 146,421 (72,937)
5,682 168,611 (71,243)
555 69,989 (35,730)
139,043 8,705,945 2,025,415 794,302 259,420 1,597,168 659,593 349,045 200,695 59,277 1,043,420 13,394 363 658,448 (574) 562,987 1,086,724 18,154,665 (6,401,248)
197
STATE OF TEXAS
Schedule of Revenues, Expenses and Changes in Fund Net Assets Colleges and Universities Major Enterprise Fund (concluded)
NONOPERATING REVENUES (EXPENSES) Federal Revenue Gifts Gifts - Pledged Land Income Interest and Investment Income (Loss) Interest and Investment Income - Pledged Investing Activities Expense Interest Expense Borrower Rebates and Agent Fees Gain on Sale of Capital Assets Claims and Judgments Other Revenues Other Revenues - Pledged Other Expenses Total Nonoperating Revenues (Expenses) Loss Before Capital Contributions, Endowments and Transfers CAPITAL CONTRIBUTIONS, ENDOWMENTS AND TRANSFERS Capital Contributions - Federal Capital Contributions (Distributions) - Other Contributions to Permanent and Term Endowments Transfer In Transfer Out Total Capital Contributions, Endowments and Transfers Change in Net Assets Net Assets, September 1, 2007 Restatements Net Assets, September 1, 2007, as Restated Net Assets, August 31, 2008
158,309 352,374 16,412 (471,463) 341,026 (101,755) (161,687)
112,801 95,330 5,469 (47,290) (9,777) (56,631) (703) 261 (2,178) 22,931 (12,892) 107,321
22,552 94,668 3,727 (18,368) 21,622 (18,635)
43,362 66,128
52,303 24,724
79,449
8,726 (1,611) (14,153)
(13,718)
132,795 1,174 (30,029) 237,156
5,969 7,628 (3,115) 116,048
(36,163)
(256) 3,494 (275) 72,952
139,058
(3,056,458)
(1,284,564)
(320,501)
(235,696)
(243,724)
27,412 166,833 143,566 2,191,733 (192,897) 2,336,647 (719,811) 28,349,488 (12,017) 28,337,471 $ 27,617,660
37,711 9,070 1,247,847 (38,084) 1,256,544 (28,020) 3,511,915 (4,269) 3,507,646 $ 3,479,626
9,651 2,719 668,518 (14,103) 666,785 346,284 1,734,208 1,734,208 $ 2,080,492
(2) 11,827 352,099 (6,293) 357,631 121,935 1,063,187 (699) 1,062,488 $ 1,184,423 $
49 (647) 338,342 (221,240) 116,504 (127,220) 987,687 (22) 987,665 860,445
* Other postemployment benefits are not legally required to be provided by the state of Texas. The Texas Constitution does not allow the Legislature to impose financial obligations for a period longer than two years. See Note 11 for additional details.
198
Totals
19,920 7,704
7,698 3,976
13,466
6,461 66 (2,058)
(12,701)
11,224 2,432 36 3 (322) 2,731 (80) (5,217)
17,995 495 1,420 (3,078) (208) (6,472)
4,501 3,587
16,931 51
97 1,645 (1,863)
921 (1,137)
(967) 31 (426) 27,027 1,890 (904) 17,129
(12) 3 34 (122) 10,710
(63) 185 983 11,135 (152) 7,815 (4,434) 12,454
467,596 551,668 119,976 5,472 (380,534) 317,643 (113,431) (294,272) (703) 261 (3,476) 106,314 34,640 (52,349) 758,805
(191,524)
(55,808)
(60,533)
(73,507)
(27,915)
(92,213)
(5,642,443)
5,626 177 250,224 (2,847) 253,180 61,656 563,191 563,191 $ 624,847 $
75,918 (1,979) 73,939 18,131 258,986 (166) 258,820 276,951 $
372 137 67,066 (1,757) 65,818 5,285 113,092 (707) 112,385 117,670 $
659 102,502 (121) 103,040 29,533 104,692 (5,291) 99,401 128,934 $
1,962 184 28,318 (439) 30,025 2,110 72,546 72,546 74,656 $
595 92,209 (702) 92,102 (111) 76,177 (130) 76,047 75,936
27,412 222,797 167,692 5,414,776 (480,462) 5,352,215 (290,228) 36,835,169 (23,301) 36,811,868 $ 36,521,640
199
STATE OF TEXAS
Schedule of Cash Flows Colleges and Universities Major Enterprise Fund

University of Texas System Texas A&M University System Texas Tech University System University of Houston System Texas State University System
CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Customers Proceeds from Tuition and Fees Proceeds from Research Grants and Contracts Proceeds from Gifts Proceeds from Loan Programs Proceeds from Auxiliaries Proceeds from Other Revenues Payments to Suppliers for Goods and Services Payments to Employees Payments for Loans Provided Payments for Other Expenses Net Cash Provided by Operating Activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Proceeds from State Appropriations Proceeds from Gifts Proceeds from Endowments Proceeds from Transfers from Other Funds Proceeds from Grant Receipts Proceeds from Other Financing Activities Payments of Principal on Debt Issuance Payments of Interest Payments of Other Costs on Debt Issuance Payments for Transfers to Other Funds Payments for Grant Disbursements Payments for Advances to Other Funds Payments for Other Uses Net Cash Provided by Noncapital Financing Activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from Sale of Capital Assets Proceeds from Debt Issuance Proceeds from State Grants and Contracts Proceeds from Federal Grants and Contracts Proceeds from Gifts Proceeds from Other Financing Activities Proceeds from Capital Contributions Proceeds of Advances from Other Funds Payments for Additions to Capital Assets Payments of Principal on Debt Issuance Payments for Capital Leases Payments of Interest on Debt Issuance Payments of Other Costs on Debt Issuance Net Cash Provided by Capital and Related Financing Activities
$ 3,930,897 1,013,056 2,064,993 89,313 370,259 391,878 (2,757,066) (6,605,333) (98,072) (5,619) (1,605,694)
135,673 604,303 723,851 5,614 197,886 58,249 (999,722) (1,624,840) (6,850) (169,165) (1,075,001)
$ 215,815 230,611 169,764 3,435 94,075 14,239 (265,305) (591,921) (1,435) (260,440) (391,162)
$ 20,498 335,477 77,483 63,696 47,947 24,130 (171,911) (525,739) (68,822) (117,172) (314,413)
$ 22,630 300,183 29,439 12,364 5,198 86,451 18,502 (220,581) (456,999) (10,772) (54,549) (268,134)
1,918,133 323,347 176,847 227,023 158,309 12,304
942,913 101,125 9,071 254,089 108,041 52,603
347,185 87,928 78,339 22,552 4,285
262,475 35,055 20,290 46,779 43,361
270,234 18,131 10,731 33,516 52,620 897
(416,880)
(28,656)
(15,375)
(35,535)
(428,100) 1,970,983
(60,596) 1,378,590
(19) 524,895
(17,514) 354,911
(72,908) (76) (21) (10,553) 302,571
1,042 2,004,395
1,902 391,165 22,092 2,735
45,858
216,156
9,594 132,468 (1,563,029) (1,142,479) (160,046) (30,367) (758,016) (359,469) (293,801) (39) (56,602) (2,153) (294,170) 43,890 (124,768) (32,503) (20,033) (54) (78,016) 53,188 (23,147) (64,649) (13,597) (909) (49,114) 2,439 216 57,145 (99,617) (63,621) (143) (24,955) (21,401) 66,219
200
Totals
$ 104,833 197,548 46,305 8,120 42,804 827 (147,264) (372,776) (8,711) (56,082) (184,396)
$ 51,054 4,774
$ 58,219 8,052
$ 35,776 20,980
$ 27,028
6,645 28,444
17,656 (34,173) (93,257) (13,544) (67,490)
28,045 5,926 (52,577) (93,648) (692) (13,797) (60,472)
8,796 7,367 (49,925) (85,783)
40 5,712 3,184 (14,638) (40,158) (6,783) (25,615)
10,429 (40,133) (85,583) (18,871) (99,069)
(62,789)
$ 4,436,991 2,881,699 3,145,641 12,364 175,416 892,404 541,958 (4,753,295) (10,576,037) (195,354) (716,022) (4,154,235)
198,250 7,526 177 15,832 19,920 2,646 (218) (118) (10) (7,199)
75,034
3,906 7,697 5,866
56,076 2,468 708 7,397 11,224
82,533 1,845 3,888 17,995
23,912 3,587 109 1,941 4,501
81,657 51 10,426 16,931 26
(1,059)
(2,997)
(1,357)
(1,476)
(1,645)
(3,156) 233,650
(3,942) 87,502
(14) 74,862 104,904
(2) 32,572
(4,081) 103,365
4,258,402 581,063 217,933 683,136 463,151 78,627 (218) (118) (10) (585,087) (76) (21) (527,977) 5,168,805
8,885
21,670
43 20,183
38,300
3,196
20,406 (44,878) (18,151) (12,774) (3) (46,515) (11,578) (3,495) (171) (2,058) 4,368
40 569 7,026 (18,995) (7,169) (5,008) (171) (3,482)
156
2,366 731 3,434 (31,195) (2,575) (1,557) (240) 9,264
383 (10,284) (4,558) (1,131) (55) (12,449)
(7,589) (13,010) (6,559)
2,987 2,749,808 22,092 2,735 11,960 3,366 254,554 64,171 (2,294,549) (1,646,011) (353) (302,262) (57,411) (1,188,913)
(27,002)
201
STATE OF TEXAS
Schedule of Cash Flows Colleges and Universities Major Enterprise Fund (concluded)
University of Texas System Texas A&M University System Texas Tech University System University of Houston System Texas State University System
CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sale of Investments Proceeds from Interest and Investment Income Proceeds from Principal Payments on Loans Payments to Acquire Investments Net Cash Provided by Investing Activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, September 1, 2007 Restatements Cash and Cash Equivalents, September 1, 2007, as Restated Cash and Cash Equivalents, August 31, 2008 RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating Loss Adjustments to Reconcile Operating Loss to Net Cash Provided by Operating Activities: Depreciation and Amortization Bad Debt Expense Operating Loss and Cash Flow Categories Classification Differences Changes in Assets and Liabilities: (Increase) Decrease in Receivables (Increase) Decrease in Due From Other Funds (Increase) Decrease in Inventories (Increase) Decrease in Notes Receivable (Increase) Decrease in Loans and Contracts (Increase) Decrease in Other Assets (Increase) Decrease in Prepaid Expenses (Increase) Decrease in State Appropriations Increase (Decrease) in Payables Increase (Decrease) in Deposits Increase (Decrease) in Due To Other Funds Increase (Decrease) in Unearned Revenue Increase (Decrease) in Compensated Absence Liability Increase (Decrease) in Benefits Payable Increase (Decrease) in Other Liabilities Total Adjustments Net Cash Provided by Operating Activities
$ 29,760,191 1,104,269 (30,408,493) 455,967 63,240 1,881,637 1,881,637 $ 1,944,877
$ 3,571,130 67,647 (3,621,249) 17,528 26,947 259,167 (1,036) 258,131 $ 285,078
$ 196,716 33,187 (127,532) 102,371 158,088 405,195 405,195 $ 563,283
$ 730,805 215,932 (925,099) 21,638 13,022 208,483 208,483 $ 221,505
4,892 17,428 (5,847) 16,473 117,129 499,131 499,131
$ 616,260
$ (3,293,614)
$ (1,391,885)
$ (436,549)
$ (374,754)
$ (316,676)
679,831 240,458
137,311 3,622 127
61,087 36
41,232 162 (8,565)
47,864 262 4,517 (26,417) 435 (593) 109 1,154 1,320 (3,182) (4,150) 5,536 119 323 19,083 260 1,902 48,542 $ (268,134)
(382,108) (2,927) (8,760) (14,451)
(42,103) (2,278) (429) (2,226) 1,320 (25,323) 56,317 (182) 50,477 3,281 137,412 (442) 316,884 $ (1,075,001)
(11,799) (430) (503) 384 1,003 (8,563) (91) (41) 957 3,089 258 45,387 $ (391,162)
7,113 703 (977) 66 (15,589) (52)
540,635 2,491 64,359 25,482 422,678 120,232 1,687,920 $ (1,605,694)
29,297 1,901 425 4,625 60,341 $ (314,413)
NONCASH TRANSACTIONS Net Change in Fair Value of Investments Donation of Capital Assets Borrowing Under Capital Lease Purchase Other
$ (1,880,541) $ 72,490 $ 3,480 $ (23,912)
$ (124,556) $ 21,926 $ $ (10,648)
$ (44,858) $ $ $
$ 20,888 $ $ $
$ $ $ $
(4,969) (503) 385 6,844
202
Totals
$ 49,537 16,516 (17,940) 48,113 50,852 210,986 71 211,057 $ 261,909
$ 71,656 6,461 (106,239) (28,122) (3,742) 17,278 17,278 $ 13,536
2,530 (10,861) (8,331) 2,577 67,639 67,639 $ 70,216
2,164 53 (3,082) (865) 14,248 23,670 (319) 23,351 $ 37,599
$ 22,085 1,180 (38,158) (14,893) 1,328 2,736 2,736 $ 4,064
8,333 1,555 (3,923) 5,965 (2,188) 26,043 26,043
$ 34,415,345 1,468,869 53 (35,268,423) 615,844 441,501 3,601,965 (1,284) 3,600,681 $ 4,042,182
$ 23,855
$ (218,551)
$ (72,937)
$ (71,243)
$ (84,642)
$ (35,730)
$ (104,667)
$ (6,401,248)
31,415 5,984
10,991 607
9,940
12,445
6,024 224
5,280
1,043,420 251,355 (4,509) (467,650) (7,300) (2,776) 493 (12,296) (12,958) (54,812) (8,647) 607,901 2,911 464 180,539 34,815 560,515 135,548 2,247,013 $ (4,154,235)
(588) (7,877) 600 (835) (1,016) (2,596) 1,457 (361) (157) (36) (913) (1,353) (46) (692) (1,200) 91 (4,497) (3,708) 136 2,639 129 (387) 5,447 $ (67,490) 1,507 294 75 3,629 266 771 10,771 $ (60,472) 3,453 (29) 1,423 (103) 10,871 21,853 $ (62,789) (4,379) (3,508) 173 800 (5) 40 (1,157) 2,547 1,513 483 605 510 (2,877) 5,598 $ (99,069) 394 (9) 287
6,981
1,089
42 34,155 $ (184,396)
553 10,115 $ (25,615)
$ $ $ $
(2,828)
(99)
$ $ $ $
66
$ $ $ $
(171)
$ (3,078) $ $ $
$ $ $ $
(245) 9 (57)
$ $ $ $
(47) (42)
$ (2,040,292) $ 93,875 $ 3,865 $ (27,914)
203
204

Fiduciary Funds
(and Similar Component Units)
205
206
Pension and Other Employee Benefit Trust Funds

is for the accumulation of resources for pension benefit Texas. The Teacher Retirement System Trust Account Trust receives contributions and other funds authorized to The Retired School Employees Group Insurance
payments for qualified employees of public education in
be deposited in the fund to pay insurance premiums, to reimburse for claims paid by a non-state entity and to pay administrative expenses. The Teacher Retirement System of Texas, their dependents. The public school entities are not considered part of the reporting entity for the state of Texas. as trustee, administers the fund for public school retirees and
of resources for pension benefit payments to qualified state employees or beneficiaries.
The S.E.R.S. Trust Account is for the accumulation
plement Retirement Fund provides supplemental retirement and death benefits for members of the Employees Retirement System of Texas who have completed 20 or
The Law Enforcement and Custodial Officer Sup-
the receipt of monies for postemployment health care, life and dental insurance benefits provided under the Group Benefits Program. The Employees Retirement System of
The State Retiree Health Plan Trust accounts for
more years of service or have become occupationally disment officers of a state agency.
abled or died while serving as commissioned law enforce-
Texas, as trustee, administers the fund for retired employthe Legislature.
ees of the state and other non-state entities as specified by
Fund accounts for receipt of monies for retirement and death benefits for certain state-paid judges and judicial officers.
The Judicial Retirement System Plan Two Trust
employee deferrals in accordance with Internal Revenue
The Deferred Compensation Trust Fund receives
Code 457, appropriations by the state for the administration
of the deferred compensation plan, trust income and fees. The state of Texas is the only employer participating in the plan. The State Employee Cafeteria Plan Trust Fund
accounts for the accumulation of resources for pension, death and disability benefits for fire fighters who serve without monetary reward.
The Fire Fighters Relief and Retirement Fund
receives salary reduction payments and makes disburse-
ments for benefits included in a cafeteria plan, other than The fund also receives appropriations by the state for the administration of the cafeteria plan.
accounts for appropriations received from the states generjudicial employees.
The Judicial Retirement System Plan One Fund
Employees Uniform Group Insurance Program coverages.
al revenue fund for annuity and refund payments to eligible
deferrals, purchases qualified investments and pays expenses associated with administration of the deferred compensation plan.
The Texa$aver Administrative Trust Fund receives
207
STATE OF TEXAS
Combining Statement of Fiduciary Net Assets Pension and Other Employee Benefit Trust Funds
Teacher Retirement System Trust Account Law Enforcement and Custodial Officer Supplement Retirement Fund Judicial Retirement System - Plan Two Trust Fund Fire Fighters Relief and Retirement Fund
ASSETS Cash and Cash Equivalents Securities Lending Collateral Investments: U.S. Government Corporate Equity Corporate Obligations Repurchase Agreements Foreign Securities Other Receivables: Interest and Dividends Accounts Investment Trades Other Due From Other Funds Properties, at Cost, Net of Accumulated Depreciation Other Assets Total Assets LIABILITIES Payables: Accounts Investment Trades Payroll Annuities Due To Other Funds Unearned Revenue Employees Compensable Leave Obligations/Securities Lending Total Liabilities NET ASSETS Held in Trust for Pension Benefits and Other Purposes
S.E.R.S. Trust Account
$ 14,859,732 19,347,275 10,846,463 32,698,144 4,649,425 880,995 23,359,880 17,730,046 319,128 113,553 63,134 384 107,152 27,956
48,509 6,020,855 5,597,755 9,241,436 2,514,372 3,840,210 140,303 123,892 53,450 64,661 5,977 7,521
1,661 199,475 185,458 306,176 83,303 127,229 4,680 3,838 5 2,141
771 50,235 46,704 77,104 20,978 32,040 1,019 2,192 1,249 539 33,614
562
25,772
13,185 16,018 37 754
125,003,267
27,658,941
913,966
266,445
56,328
5,637 182,710 105 520,210 4,532 28,152 4,149 19,699,519 20,445,014
21,344 120,986 82 29,387 2,022 6,053,723 6,227,544
252 4,007 1 5,291
77 1,008
143
85 206
200,564 210,115
50,509 51,679 349
$ 104,558,253
$ 21,431,397
703,851
214,766
55,979
208
Judicial Retirement System - Plan One Fund
Retired School Employees Group Insurance Trust
State Retiree Health Plan Trust
Deferred Compensation Trust Fund
State Employee Cafeteria Plan Trust Fund
Texa$aver Administrative Trust Fund
Totals
256,966
12,431
1,212
3,607
1,383
$ 15,186,834 25,617,840 16,676,380 42,348,632 7,268,078 880,995 27,372,544 18,406,989
514,884 1,837 54,694
39 16 9,034 2 3 11 6,008 4
27
324
24,318
76,325
450,957 238,777 130,475 384 247,715 35,477 250
250 351 852,699 97,845 1,217 9,881 1,387
154,862,327
324
123,718
96,627
55
8,908
707 511 142
43 3
35
48
257,085 308,711 105 520,293 40,128 28,872 6,313 26,004,315 27,165,822
324
123,860
97,845
101
8,943
48
27
728,839
1,116
938
1,339
$ 127,696,505
209
STATE OF TEXAS
Combining Statement of Changes in Fiduciary Net Assets Pension and Other Employee Benefit Trust Funds
Teacher Retirement System Trust Account S.E.R.S. Trust Account Law Enforcement and Custodial Officer Supplement Retirement Fund Judicial Retirement System - Plan Two Trust Fund Fire Fighters Relief and Retirement Fund
ADDITIONS Contributions: Member Contributions State Contributions Premium Contributions Federal Contributions Other Contributions Total Contributions Investment Income: From Investing Activities: Net Depreciation in Fair Value of Investments Interest and Investment Income Total Investing Income (Loss) Less Investing Activities Expense Net Income (Loss) from Investing Activities From Securities Lending Activities: Securities Lending Income Less Securities Lending Expense: Borrower Rebates Management Fees Net Income from Securities Lending Total Net Investment Income (Loss) Other Additions: Settlement of Claims Other Revenue Loss on Sale of Properties Transfer In Total Other Additions Total Additions DEDUCTIONS Benefits Refunds of Contributions Transfer Out Administrative Expenses Depreciation Expense Interest Expense Other Expenses Total Deductions INCREASE (DECREASE) IN NET ASSETS NET ASSETS Net Assets, September 1, 2007 Net Assets, August 31, 2008
2,085,349 1,542,386
337,040 342,092
$ 20,192
3,964 11,138
2,889
515,175 4,142,910
679,132
20,192
15,102
2,889
(8,344,716) 3,203,523 (5,141,193) 27,957 (5,169,150)
(2,153,723) 827,918 (1,325,805) 34,095 (1,359,900)
(71,354) 27,426 (43,928) 1,170 (45,098)
(17,970) 6,917 (11,053) 262 (11,315)
(6,978) 3,605 (3,373) (3,373)
929,696 682,746 33,643 213,307 (4,955,843)
249,049 210,287 5,793 32,969 (1,326,931)
8,251 6,967 192 1,092 (44,006)
2,078 1,754 48 276 (11,039)
0 (3,373)
25 167 (10) 53,011 53,168 (594,631)
8,950 8,950 (803,983)
0 (23,814)
0 4,063
8,800 8,825 8,341
6,410,562 275,482 53,011 26,632 446 431 6,766,564 (7,570,547)
1,353,583 74,504 9,308 14,830 660 758 1,453,643 (2,048,274)
34,908
6,644 74 232
2,732
348
592
18 35,274 (59,088)
12 6,962 (2,899)
2 3,326 5,015
112,128,800 $ 104,558,253
23,479,671 $ 21,431,397 $
762,939 703,851 $
217,665 214,766 $
50,964 55,979
210
Judicial Retirement System - Plan One Fund
Retired School Employees Group Insurance Trust
State Retiree Health Plan Trust
Deferred Compensation Trust Fund
State Employee Cafeteria Plan Trust Fund
Texa$aver Administrative Trust Fund
Totals
$ 238,372 652,098 59,486 0 949,956
$ 417,106 109,447 32,964 559,517
75,807
973 76,780
2,505,049 2,571,286 761,545 92,450 516,148 6,446,478
0 0
29,252 29,252 29,252
1,363 1,363 1 1,362
52 52 2 50
73 73 73
119 119 3 116
(10,594,741) 4,100,248 (6,494,493) 63,490 (6,557,983)
1,189,074 901,754 39,676 247,644 (6,310,339)
0 0
0 29,252
0 1,362
0 50
0 73
0 116
92 28,684 28,684 28,684
234 358 592 642
95
464
92 979,300
0 560,879
95 76,948
464 580
25 1,052 (10) 99,803 100,870 237,009
28,657
870,257
558,228
75,043
2,997
2,535
529
399 140 1,619 77,201 (253)
565
4 28,657 27 873,258 106,042
116 560,879 0
18 547 95
16 581 (1)
9,340,614 350,060 62,319 49,659 1,106 140 2,994 9,806,892 (9,569,883)
622,797 $ 27 $ 728,839 $ 0 $
1,021 1,116 $
1,191 938 $
1,340 1,339
137,266,388 $ 127,696,505
211
212
Private-Purpose Trust Funds

Subdivisions) holds the portion of the tobacco settlement The Tobacco Settlement Permanent Trust (Political Fund accounts for offender commissary and medical The Inmate Trust and Employee Service Option
money designated for the exclusive benefit of other politicounties and/or local hospital districts that are responsible for indigent health care. The fund is administered by the Comptrollers office - Treasury Fiscal.
cal subdivisions. Other political subdivisions include cities,
accounts along with the Texas Department of Criminal tributions.
Justice employee commissary, laundry and/or barber con-
Reserve and Custodial Fund holds assets in trust for claims associated with insurance company liquidations. Department of Insurance administers the fund. Most balances are normally held outside the Treasury. The
The Texas Insurance Companies Assets Account
contributed by college saving plan account holders, money acquired from private sources and income from investment of deposits. The fund may be used only to pay costs to institutions of higher education or private or indepenaccount holders.
The Texas Tomorrow Trust Fund receives money
of program administration and operations, make payments dent institutions and make refunds to college saving plan
that was created to provide relief to insurance companies Certain property insurers authorized to transact property insurance in Texas make payments to the fund.
The Catastrophe Reserve Trust Fund is a state fund
within the state in the event of certain catastrophic losses.
213
STATE OF TEXAS
Combining Statement of Fiduciary Net Assets Private-Purpose Trust Funds

Tobacco Settlement Permanent Trust (Political Subdivisions) Texas Insurance Companies Assets Account Reserve and Custodial Fund
ASSETS Cash and Cash Equivalents Restricted Cash and Cash Equivalents Securities Lending Collateral Investments: U.S. Government Corporate Equity Corporate Obligations Repurchase Agreements Other Receivables: Interest and Dividends Accounts Investment Trades Other Due From Other Funds Inventories Properties, at Cost, Net of Accumulated Depreciation Other Assets Total Assets LIABILITIES Payables: Accounts Investment Trades Interest Unearned Revenue Obligations/Securities Lending Funds Held for Others Other Liabilities Total Liabilities NET ASSETS Net Assets Held in Trust for Individuals, Organizations and Other Governments Total Net Assets
Catastrophe Reserve Trust Fund
Inmate Trust and Employee Service Option Fund
Texas Tomorrow Trust Fund
Other PrivatePurpose Trust Funds
Totals
623
6,485
231
37,073 789
44,412 789 32,763 21,206 738,607 82,319 568,246 1,601,335 3,148 334 1,574 1,708 32 1
32,763 2,795 723,376 78,158 197,628 1,358,567 2,749 1,181 32 1 368,908 232,636 360 39 393 16,228 2,183 15,231 4,161 1,710 10,132 39 295 1,708
997 76,470 2,196,794 277,516 368,908 22,745 233,659 74,319
997 76,470 3,173,941
1,103 2,423
505
105 349 174
13,261 44 2
32,763 76,469 39 36,289 76,469 0 505 667 13,307
14,974 2,772 44 176 32,763 76,469 39 127,237
2,160,505 $ 2,160,505
201,047 $ 201,047
368,908 $ 368,908 $
22,240 22,240
232,992 $ 232,992 $
61,012 61,012
3,046,704 $ 3,046,704
214
STATE OF TEXAS
Combining Statement of Changes in Fiduciary Net Assets Private-Purpose Trust Funds

Texas Insurance Companies Assets Account Reserve and Custodial Fund
ADDITIONS Contributions: Federal Contributions Other Contributions Total Contributions Investment Income: From Investing Activities: Net Depreciation in Fair Value of Investments Interest and Investment Income Total Investing Income (Loss) Less Investing Activities Expense Net Income (Loss) from Investing Activities From Securities Lending Activities: Securities Lending Income Less Securities Lending Expense: Borrower Rebates Net Income from Securities Lending Total Net Investment Income (Loss) Other Additions: Settlement of Claims Other Revenue Transfer In Total Other Additions Total Additions DEDUCTIONS Benefits Transfer Out Intergovernmental Payments Administrative Expenses Depreciation Expense Settlement of Claims Interest Expense Other Expenses Total Deductions INCREASE (DECREASE) IN NET ASSETS NET ASSETS Net Assets, September 1, 2007 Net Assets, August 31, 2008
Tobacco Settlement Permanent Trust (Political Subdivisions)
Catastrophe Reserve Trust Fund
Inmate Trust and Employee Service Option Fund
Texas Tomorrow Trust Fund
Other PrivatePurpose Trust Funds
Totals
$ 0
$ 0
$ 0
$ 0
$ 84,029 84,029
13,760 13,760
13,760 84,029 97,789
(167,841) 24,866 (142,975)
6,289 6,289
13,075 13,075
(22,937) 5,037 (17,900) 1,021 (18,921)
(3,459) 3,395 (64)
(194,237) 52,662 (141,575) 1,021 (142,596)
(142,975)
6,289
13,075
(64)
2,155 2,000 155 (142,820) 0 6,289 0 13,075 0 0 0 (18,921) 0 (64)
2,155 2,000 155 (142,441)
63,401 0 (142,820) 63,401 69,690
74,336 74,336 87,411
118,702 118,702 118,702
63 63 65,171
3,403 2,483 10 5,896 19,592
3,403 258,985 10 262,398 217,746
55,879 1,000 92,304 6,989 53,624 5,264 99,293 (242,113) 58,888 10,802 100,075 101,075 (13,664) 116,691 116,691 2,011 55,945 9,226 66
548 754 4,345 197 39 3,816 21 12,035 21,755 (2,163)
56,427 1,754 96,649 7,252 39 57,440 21 234,065 453,647 (235,901)
2,402,618 $ 2,160,505
190,245 $ 201,047
382,572 $ 368,908 $
20,229 22,240
223,766 $ 232,992 $
63,175 61,012
3,282,605 $ 3,046,704
215
216
Agency Funds
Account is used to hold funds for various defeased or refunded bonds. The Texas Public Finance Authority Bond Escrow Fund is used to deposit certified self-insurer security ers incurred liabilities for compensation. The Texas Workers Compensation Self-Insurance
deposits. These deposits may be applied to the self-insur-
Companies Trust Account holds cash or securities deposited with the state by insurance companies as required by law.
The Life, Health, Accident and Casualty Insurance
(MTA) and Special Purpose District (SPD) Sales Tax and use tax collected by the Comptroller for each city, district authorizing the collection.
The City, County, Metropolitan Transit Authority
Trust Account is used to record the receipt of local sales county, metropolitan transit authority and special purpose
217
218
STATE OF TEXAS
Combining Statement of Fiduciary Net Assets Agency Funds

Texas Public Finance Authority Bond Escrow Account Life, Health, Accident and Casualty Insurance Companies Trust Account Texas Workers Compensation Self Insurance Fund City, County, MTA and SPD Sales Tax Trust Account
ASSETS Cash and Cash Equivalents Investments: U.S. Government Corporate Equity Corporate Obligations Repurchase Agreements Other Receivables: Other Intergovernmental Interest and Dividends Accounts Other Due From Other Funds Other Assets Total Assets LIABILITIES Payables: Accounts Other Intergovernmental Due To Other Funds Funds Held for Others Total Liabilities
Other Agency Funds
Totals
4 324,257
271
4,067
$ 782,224
$ 368,164 205 160,239 125 47,676 26,212 1,338 5 8,525 8 1,332 102,989
$ 1,154,730 324,462 160,239 125 47,676 26,212 1,338 1,159 8,525 8 1,332 1,875,464 $ 3,601,270
1,154
1,058,431 $ 325,415 $ 1,058,702
714,044 $ 718,111 $ 782,224
$ 716,818
$ 782,224
325,415 $ 325,415
1,058,702 $ 1,058,702
718,111 $ 718,111 $ 782,224
22 9,496 414 706,886
22 791,720 414 2,809,114
$ 716,818
$ 3,601,270
219
STATE OF TEXAS
Combining Statement of Changes in Assets and Liabilities Agency Funds

Beginning Balance September 1, 2007 Ending Balance August 31, 2008
Texas Public Finance Authority Bond Escrow Account ASSETS Cash and Cash Equivalents Investments Interest and Dividends Receivable Total Assets LIABILITIES Funds Held for Others Total Liabilities Life, Health, Accident and Casualty Insurance Companies Trust Account ASSETS Cash and Cash Equivalents Other Assets Total Assets LIABILITIES Funds Held for Others Total Liabilities Texas Workers Compensation Self Insurance Fund ASSETS Cash and Cash Equivalents Other Assets Total Assets LIABILITIES Accounts Payable Funds Held for Others Total Liabilities City, County, MTA and SPD Sales Tax Trust Account ASSETS Cash and Cash Equivalents Total Assets LIABILITIES Payables: Accounts Other Intergovernmental Funds Held for Others Total Liabilities
Additions
Deductions
38 235,832 1,263 237,133
$ 88,479 $ 88,479
34 54 109 197
4 324,257 1,154 325,415
$ $
237,133 237,133
$ $
88,336 88,336
$ $
54 54
$ $
325,415 325,415
$ $
215 883,987 884,202
$ $
271 234,777 235,048
$ $
215 60,333 60,548
$ $
271 1,058,431 1,058,702
$ $
884,202 884,202
$ $
235,048 235,048
$ $
60,548 60,548
$ $
1,058,702 1,058,702
$ $
15,750 687,184 702,934
$ $
33,111 26,860 59,971
$ $
44,794 44,794
$ $
4,067 714,044 718,111
$ $ 702,934 702,934
$ $
12,568 44,063 56,631
$ $
12,568 28,886 41,454
$ $ 718,111 718,111
$ $
709,588 709,588
$ $
7,222,477 7,222,477
$ $
7,149,841 7,149,841
$ $
782,224 782,224
$ 709,588 $ 709,588
6,030,681 782,224 7,932,065 $ 14,744,970
6,030,681 709,588 7,932,065 $ 14,672,334
$ 782,224 $ 782,224
220
STATE OF TEXAS
Combining Statement of Changes in Assets and Liabilities Agency Funds (concluded)

Beginning Balance September 1, 2007 Ending Balance August 31, 2008
Other Agency Funds ASSETS Cash and Cash Equivalents Investments Receivables: Other Intergovernmental Interest and Dividends Accounts Other Due From Other Funds Interfund Receivable Other Assets Total Assets LIABILITIES Payables: Accounts Other Intergovernmental Due To Other Funds Interfund Payable Funds Held for Others Total Liabilities Totals All Agency Funds ASSETS Cash and Cash Equivalents Investments Receivables: Other Intergovernmental Interest and Dividends Accounts Other Due From Other Funds Interfund Receivable Other Assets Total Assets LIABILITIES Payables: Accounts Other Intergovernmental Due To Other Funds Interfund Payable Funds Held for Others Total Liabilities
Additions
Deductions
230,886 206,547 1,492 6 21,241 15 255 92,265 552,707
7,931,122 193,052 478 1 150,709 1,354 3,527 11,809 8,292,052
7,793,844 165,142 632 2 163,425 7 277 3,527 1,085 8,127,941
368,164 234,457 1,338 5 8,525 8 1,332 102,989 716,818
14,878 6,537 479 530,813 552,707
1,025,854 2,959 613 3,495 8,097,354 9,130,275
1,040,710 678 3,495 7,921,281 8,966,164
22 9,496 414 706,886 716,818
956,477 442,379 1,492 1,269 21,241 15 255 1,663,436 3,086,564
$ 15,186,981 281,531 478 1 150,709 1,354 3,527 273,446 $ 15,898,027
$ 14,988,728 165,196 632 111 163,425 7 277 3,527 61,418 $ 15,383,321
1,154,730 558,714 1,338 1,159 8,525 8 1,332 1,875,464 3,601,270
14,878 716,125 479 2,355,082 3,086,564
7,069,103 785,183 613 3,495 16,396,866 $ 24,255,260
7,083,959 709,588 678 3,495 15,942,834 $ 23,740,554
22 791,720 414 2,809,114 3,601,270
221
222
Section two (concluded)

Discretely Presented Component Units
223
224
Discretely Presented Component Units

ponent unit are included in Note 19. A statement of net assets and a statement of activities have been prepared to report the breakdown of the following discretely presented component units. Teacher Retirement System State Bar of Texas Texas Agricultural Finance Authority There are 17 entities that are considered discretely presented component units of the state. Details regarding each com-
Texas On-Site Wastewater Treatment Research Council Texas Appraiser Licensing and Certification Board Texas Guaranteed Student Loan Corporation Texas Water Resources Finance Authority Texas Prepaid Higher Education Tuition Scholarship Foundation, Inc. Texas Boll Weevil Eradication Foundation, Inc. Texas Small Business Industrial Development Corporation Texas Economic Development Corporation Texas Disaster Relief Fund Surplus Lines Stamping Office of Texas Texas Health Reinsurance System Texas Health Insurance Risk Pool
Texas State Affordable Housing Corporation
225
STATE OF TEXAS
Combining Statement of Net Assets Component Units

August 31, 2008 (Amounts in Thousands)*
Texas Agricultural Finance Authority Texas On-Site Wastewater Treatment Research Council Texas Appraiser Licensing and Certification Board Texas Prepaid Higher Education Tuition Scholarship Foundation, Inc.
ASSETS Current Assets: Cash and Cash Equivalents Short-Term Investments Restricted: Cash and Cash Equivalents Short-Term Investments Loans and Contracts Receivables: Federal Other Intergovernmental Accounts Interest and Dividends Other Due From Primary Government Inventories Prepaid Items Loans and Contracts Other Current Assets Total Current Assets Noncurrent Assets: Restricted: Cash and Cash Equivalents Investments Loans and Contracts Loans and Contracts Investments Other Receivables Capital Assets: Nondepreciable Depreciable Accumulated Depreciation Other Noncurrent Assets Total Noncurrent Assets Total Assets
State Bar of Texas
$ 544,540
9,628 24,514
21,009
49,963 1,265
1,075 183 183 727 741 33 6,472 6 27,703 243 3
595,768
36,685
183
246
2,710 15,365 (11,220) 0 595,768 6,855 43,540 0 27,703 0 183
9 (9) 0 246 0 3
Continued on the following page
226
STATE OF TEXAS
Combining Statement of Net Assets Component Units (continued)

Texas Agricultural Finance Authority Texas On-Site Wastewater Treatment Research Council Texas Appraiser Licensing and Certification Board Texas Prepaid Higher Education Tuition Scholarship Foundation, Inc.
LIABILITIES Current Liabilities: Payables: Accounts Payroll Federal Interest Due To Primary Government Unearned Revenue Capital Lease Obligations Employees' Compensable Leave Notes and Loans Payable Revenue Bonds Payable Funds Held for Others Other Current Liabilities Total Current Liabilities Noncurrent Liabilities: Capital Lease Obligations Employees' Compensable Leave Notes and Loans Payable Liabilities Payable From Restricted Assets Revenue Bonds Payable Other Noncurrent Liabilities Total Noncurrent Liabilities Total Liabilities NET ASSETS Invested in Capital Assets, Net of Related Debt Restricted for: Education Unrestricted Total Net Assets
State Bar of Texas
$ 118,760
3,577
91
$ 1
9 59
118
392 7,553 93 430 93
18
3 24,996
24
118,878
12,138
25,090
19
92
72 739
0 118,878
811 12,949
4 25,094
0 19
5 97
0 0
172
476,890 $ 476,890 $
30,419 30,591 $
2,609 2,609 $
164 164 $
149 149 $
3 3

* Amounts reported as of Aug. 31, 2008, unless otherwise indicated in Note 19.
227
STATE OF TEXAS

Texas Guaranteed Student Loan Corporation Texas Boll Weevil Eradication Foundation, Inc. Texas Water Resources Finance Authority Texas Small Business Industrial Development Corporation Texas Economic Development Corporation Texas Disaster Relief Fund
23,293 650,966
1,012 70,847
2,381 18,724
51,028
1 1,961
712
55,157
2,815 3,290 4,686 361 121 121 334 3,304 202 1
6,097
1,513 737,026
83,226
24,770
51,234
1,962
713
24,262 12,768 4,214 3,315 54,096 (16,623) 94 40,882 777,908
49,411
622
24,829 (18,706) 10,337 93,563 37,030 61,800 49,411 100,645 0 1,962 622 1,335
he following page
228
STATE OF TEXAS

Texas Guaranteed Student Loan Corporation Texas Boll Weevil Eradication Foundation, Inc. Texas Water Resources Finance Authority Texas Small Business Industrial Development Corporation Texas Economic Development Corporation Texas Disaster Relief Fund
9,595 24,449
34 166
73
56
31 3
125
1,677 1,702
1,177 11,536 5,545 25 1,558 14,471
37,423
5,579
223
56
822 6,291 87,301 250,410 344,824 382,247
94,985 5,195 94,985 109,456 5,195 10,774 99,335 99,335 99,558 0 56 0 0
32,795 4,651 358,215 $ 395,661
942
(16,835) $ (15,893) $
51,026 51,026 $
1,087 1,087 $
1,906 1,906 $
1,335 1,335
he following page
229
STATE OF TEXAS

Surplus Lines Stamping Office of Texas Texas Health Reinsurance System Texas State Affordable Housing Corporation
Texas Health Insurance Risk Pool
Totals
10,670
2,986
1,975 87,515
4,514 1,652 2,742 19,210 111
$ 673,752 856,179 2,742 19,210 111 57,972 3,290 57,865 8,757 161 426 851 1,162 9,776 1,519 1,693,773
369 35 5
1,361
411 648
50
11,074
2,991
90,851
29,338
191 271,063 4,200
191 271,063 4,200 74,295 12,768 4,214 6,025 97,847 (49,680) 6,005 426,928 2,120,701
3,257 (2,875) 18 400 11,474
0 2,991
39 (30) 5 14 90,865
252 (217) 5,888 281,377 310,715
nued on the following page
230
STATE OF TEXAS
Combining Statement of Net Assets Component Units (concluded)

Surplus Lines Stamping Office of Texas Texas Health Reinsurance System Texas State Affordable Housing Corporation
Totals
153
64
4,363
144
1,705 51,741
17 11,313 173 326 2,927 2,991 11,511 67,615 788 13,967
$ 136,919 226 24,449 1,861 413 59,294 93 3,429 38,344 16,858 25 16,957 298,868
2,038 291,646 723 294,407 308,374
0 326
0 2,991
23,250 23,250 90,865
72 1,570 103,314 87,301 396,176 274,383 862,816 1,161,684
382
34
34,325 4,651 920,041 $ 959,017
10,766 $ 11,148 $ 0 $ 0 $
2,307 2,341
nued on the following page

231
STATE OF TEXAS
Combining Statement of Activities Component Units

For the Fiscal Year Ended August 31, 2008 (Amounts in Thousands)*
Texas Agricultural Finance Authority Texas On-Site Wastewater Treatment Research Council Texas Appraiser Licensing and Certification Board
EXPENSES Salaries and Wages Payroll Related Costs Professional Fees and Services Travel Materials and Supplies Communications and Utilities Repairs and Maintenance Rentals and Leases Printing and Reproduction Claims and Judgments Bad Debt Expense Cost of Goods Sold Depreciation and Amortization Other Financing Fees Public Assistance Payments Employee/Participant Benefit Payments Direct Interest Expense Interest Expense - Other Other Expenses Total Expenses PROGRAM REVENUES Charges for Services Operating Grants and Contributions Total Program Revenues Net Program Revenues (Expenses) GENERAL REVENUES Unrestricted Investment Earnings (Loss) Other Revenues Gain on Sale of Capital Assets Total General Revenues Change in Net Assets Net Assets, September 1, 2007 Restatements Net Assets, September 1, 2007, as Restated Net Assets, August 31, 2008
State Bar of Texas
1,006 289 628 5 7 1 80 2
14,244 3,701 2,456 2,506 2,008 565 696 1,278 2,417 429 432 824
90 41 105 3 2
6 102 13 4 1 7
426 150 2 9 38 7 18 41 2
50
32 229 1,074,945 918 13,124 1,090,087 15 9,265 40,836 186 1,427 46 408 36 729
1,096,934 62 1,096,996 6,909
35,809 1,682 37,491 (3,345)
2,701 2,701 1,274 0 (408)
23 23 (706)
21,184 13,120 34,304 41,213
5,437 5,437 2,092 28,499
1,224 1 1,225 2,499 110 110 $ 2,609 $
324 324 (84) 248 248 164 $
836 836 130 19 19 149
435,677 435,677 $ 476,890 $
28,499 30,591
* Amounts for the fiscal year ended Aug. 31, 2008, unless otherwise indicated in Note 19.
232
Texas Prepaid Higher Education Tuition Scholarship Foundation, Inc.
Texas Guaranteed Student Loan Corporation
Texas Boll Weevil Eradication Foundation, Inc.
Texas Water Resources Finance Authority
Texas Small Business Industrial Development Corporation
Texas Economic Development Corporation
Texas Disaster Relief Fund
44,397 11,673 13,050 2,102 1,662 1,767 2,175 620 714
21,665 680 265 11,873 830 1,125 976
65 9 1 3
$ 9
23 2 540 337 306
$ 3
73 103
2,901 53,834 7,892
2,445 6 4,941 1,025
423 144,121 287,331
4,781 16,654 61,300
12 6,056
2,571 453 3,033
438 1,822
0 0
1,930 220,557 222,487 (64,844)
40,925 34,880 75,805 14,505
4,139 4,139 (1,917)
625 625 (2,408)
140 1,878 2,018 196
0 (3)
8,640 31 8,671 (56,173) 451,713 121 451,834 $ 395,661
2,425 781 3,206 17,711 (33,650) 46 (33,604) $ (15,893) $
(4)
2,493
57 3 60 256 1,650 1,650 $ 1,906 $
15
0 0 3 3 $ 3
(4) (1,921) 52,947 52,947 51,026 $
2,493 85 1,093 (91) 1,002 1,087
15 12 1,323 1,323 1,335
233
STATE OF TEXAS
Combining Statement of Activities Component Units (concluded)

For the Fiscal Year Ended August 31, 2008 (Amounts in Thousands)*
Texas Health Reinsurance System Texas State Affordable Housing Corporation
EXPENSES Salaries and Wages Payroll Related Costs Professional Fees and Services Travel Materials and Supplies Communication and Utilities Repairs and Maintenance Rentals and Leases Printing and Reproduction Claims and Judgments Bad Debt Expense Cost of Goods Sold Depreciation and Amortization Other Financing Fees Public Assistance Payments Employee/Participant Benefit Payments Direct Interest Expense Interest Expense - Other Other Expenses Total Expenses PROGRAM REVENUES Charges for Services Operating Grants and Contributions Total Program Revenues Net Program Revenues (Expenses) GENERAL REVENUES Unrestricted Investment Earnings Other Revenues Gain on Sale of Capital Assets Total General Revenues Change in Net Assets Net Assets, September 1, 2007 Restatements Net Assets, September 1, 2007, as Restated Net Assets, August 31, 2008
Surplus Lines Stamping Office of Texas
Totals
1,206 435 411 8 27 31 86 209 11
278 13,185 3 30
1,104 359 66
66
142
261
407
267 2,952
366 366
240,012 253,579
14,407 6,088 22,573
84,510 16,300 31,531 5,317 15,960 3,201 4,101 3,485 3,256 429 50 432 6,843 53,872 13,062 1,074,945 1,943 22,197 431,068 1,772,502
3,299 397 3,696 744
273 93 366 0
245,228 8,351 253,579 0
3,875 18,290 22,165 (408)
1,431,137 290,954 1,722,091 (50,411)
561 0 744 10,404 10,404 $ 11,148 $ 0 0 $ 0 0 $ 0 0 0 0 561 153 2,188 2,188 2,341
36,034 20,282 812 57,128 6,717 516,547 435,753 952,300 $ 959,017
he following page
* Amounts for the fiscal year ended Aug. 31, 2008, unless otherwise indicated in Note 19.
234
Section Three
Statistical Section
235
236
State of Texas Index for Statistical Section

ments, note disclosures, required supplementary information and supplementary information says about the states overall financial health. Contents Financial Trends Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . These schedules contain trend information intended to help the reader understand how the states financial position has changed over time. Revenue Capacity Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . These schedules contain information intended to help the reader assess the states most significant revenue source, state tax collections. Debt Capacity Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . These schedules present information intended to assist users in understanding and assessing the states current levels of outstanding debt and the ability to issue additional debt. Demographic and Economic Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . These schedules provide demographic and economic indicators intended to help the reader understand the socioeconomic environment within which the states financial activities take place. Operating Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . These schedules provide contextual information about the states operations and resources intended to assist readers in using financial statement information to understand and assess the states economic condition. This section presents detailed information as a context for understanding what the information in the financial state-
Pages 239 243
244 246
247 250
251 252
253 255
Sources: Unless otherwise noted, the information in these schedules is derived from the Comprehensive Annual Financial Report databases for the relevant years. GASB 34 and 35 were implemented in 2002; schedules presenting government-wide information include information beginning in that year.
237
238
STATE OF TEXAS
Statistical Section Financial Trends
Net Assets by Component

Last Seven Fiscal Years*
(Amounts in Millions)
GOVERNMENTAL ACTIVITIES Tax Collections Assets, Net of Related Debt Invested in Capital Restricted Federal Funds Unrestricted Total Governmental Activities Net Assets BUSINESS-TYPE ACTIVITIES Tax Collections Assets, Net of Related Debt Invested in Capital Restricted Federal Funds Unrestricted Total Business-Type Activities Net Assets PRIMARY GOVERNMENT Tax Collections Assets, Net of Related Debt Invested in Capital Restricted Federal Funds Unrestricted Total Primary Government Net Assets
2002
2003
2004
$ 47,322 20,089 2,065 69,476
$ 49,254 20,846 (28) 70,072
$ 51,407 22,213 541 74,161
5,142 14,413 5,841 25,396
5,737 15,168 6,167 27,072
6,464 17,628 5,805 29,897
52,464 34,502 7,906 $ 94,872
54,991 36,014 6,139 $ 97,144
57,871 39,841 6,346 $ 104,058
GOVERNMENTAL ACTIVITIES Tax Collections Assets, Net of Related Debt Invested in Capital Restricted Federal Funds Unrestricted Total Governmental Activities Net Assets BUSINESS-TYPE ACTIVITIES Tax Collections Assets, Net of Related Debt Invested in Capital Restricted Federal Funds Unrestricted Total Business-Type Activities Net Assets PRIMARY GOVERNMENT Tax Collections Assets, Net of Related Debt Invested in Capital Restricted Federal Funds Unrestricted Total Primary Government Net Assets
2005
2006
2007
2008
$ 53,815 24,110 3,753 81,678
$ 55,473 25,993 8,696 90,162
$ 56,438 29,347 12,565 98,350
$ 58,208 31,358 11,105 100,671
6,253 20,581 7,076 33,910
6,871 22,812 8,056 37,739
7,343 25,815 9,741 42,899
7,385 24,882 9,885 42,152
60,068 44,691 10,829 $ 115,588
62,344 48,805 16,752 $ 127,901
63,781 55,162 22,306 $ 141,249
65,593 56,240 20,990 $ 142,823
* Due to the changes in the state's fund structure initiated when GASB Statements No. 34 and No. 35 were implemented, the net assets information is available only from 2002. Source: state of Texas financial statements 2002-08.
239
STATE OF TEXAS
Statistical Section Financial Trends

Last Seven Fiscal Years*
GOVERNMENTAL ACTIVITIES: Expenses General Government Education Employee Benefits Teacher Retirement Benefits Health and Human Services Public Safety and Corrections Transportation Natural Resources and Recreation Regulatory Services Indirect Interest on Long-Term Debt Total Expenses Program Revenues Charges for Services: General Government Education Employee Benefits Teacher Retirement Benefits Health and Human Services Public Safety and Corrections Transportation Natural Resources and Recreation Regulatory Services Operating Grants and Contributions Capital Grants and Contributions Total Program Revenues Total Governmental Activities Net Program Expense
2002
2003
2004
2005
2006
2007
2008
$ 1,947,049 15,831,226 14,757 1,201,886 22,817,118 4,170,817 3,576,274 736,111 273,023 403,784 50,972,045
$ 2,026,241 15,935,961 22,644 2,435,727 24,742,714 4,207,856 3,562,159 835,139 324,567 366,847 54,459,855
$ 2,234,369 16,250,938 60,536 2,269,667 25,060,588 4,030,120 3,476,342 864,508 375,951 338,693 54,961,712
$ 2,206,793 16,293,851 50,544 2,083,530 27,302,426 4,086,450 3,766,301 1,070,481 349,420 417,854 57,627,650
$ 2,681,117 18,025,550 56,718 1,932,325 28,808,315 5,084,923 4,452,154 961,178 282,067 54,121 62,338,468
$ 2,555,309 21,313,526 61,171 2,017,000 30,886,484 5,035,761 4,252,129 1,217,201 314,266 229,354 67,882,201
$ 2,659,822 24,986,076 86,195 1,761,759 32,426,046 5,020,897 4,478,109 1,451,450 398,885 578,059 73,847,298
1,378,004 236,776 383 710,167 144,120 988,612 453,990 63,986 17,563,832 2,191,470 23,731,340
1,378,735 485,676 112 821,773 148,420 974,627 437,834 92,875 22,801,211 2,570,634 29,711,897
1,695,987 520,621 171 838,377 164,959 1,016,809 473,608 212,919 24,501,850 2,773,764 32,199,065
802,588 594,702 97 10 1,124,402 463,097 1,342,073 716,981 534,469 26,667,982 3,253,051 35,499,452
1,199,924 626,224 120 93,694 1,177,825 441,803 1,373,339 570,872 596,705 28,979,226 2,803,006 37,862,738
1,141,278 584,971 116 26,661 2,059,789 823,602 1,530,669 714,687 604,199 29,995,409 1,823,686 39,305,067
1,171,997 821,291 107 1,832,315 331,101 1,785,835 661,657 635,089 25,900,072 2,585,507 35,724,971
(27,240,705) (24,747,958) (22,762,647)
(22,128,198)
(24,475,730)
(28,577,134) (38,122,327)
General Revenues Taxes: Sales and Use Motor Vehicle and Manufactured Housing Motor Fuels Franchise Oil and Natural Gas Production Insurance Occupation Cigarette and Tobacco Other Unrestricted Investment Earnings Federal Jobs and Growth Tax Relief Funds Settlement of Claims Gain on Sale of Capital Assets Other General Revenues Capital Contributions Transfers Total General Revenues, Contributions and Transfers Change in Net Assets Governmental Activities
14,249,422 2,891,742 2,687,798 1,999,005 640,615 973,279 536,464 1,454,357 383,608 512,579 618,981 (3,171,399) 23,776,451 (3,464,254)
14,349,758 2,795,211 2,790,936 1,532,820 1,531,275 1,179,553 583,159 1,405,325 239,198 354,535 563,196 6,359 787,866 600 (3,069,447) 25,050,344 302,386
15,564,085 2,665,258 2,931,753 1,657,141 1,918,989 1,192,829 540,404 1,426,026 211,239 354,535 523,518 31,189 723,157 944 (2,867,137) 26,873,930 4,111,283
16,260,689 2,897,031 2,915,680 2,203,578 2,409,276 1,213,627 596,569 1,435,701 327,516 885,975 8,461 822,652 107 (2,966,197) 29,010,665 6,882,467
18,475,176 3,046,856 3,053,476 2,632,780 3,441,638 1,238,846 547,000 1,558,073 760,207 583,787 2,762 1,071,679 1,449 (3,513,639) 32,900,090 8,424,360
20,230,164 3,338,498 3,149,043 3,273,050 2,692,032 1,368,340 1,325,712 1,694,750 941,938 538,836 3,942 1,627,330 309 (3,383,910) 36,800,034 8,222,900
21,640,855 3,384,597 3,000,148 4,712,183 4,036,033 1,446,828 1,454,187 1,744,400 1,041,840 555,476 1,392,565 8,653 (3,909,529) 40,508,236 2,385,909

* The state did not begin reporting government-wide financial statements until it implemented GASB Statements No. 34 and No. 35 in 2002. Source: state of Texas financial statements 2002-08.
240
STATE OF TEXAS
Statistical Section Financial Trends Last Seven Fiscal Years*

Changes in Net Assets (concluded)
BUSINESS-TYPE ACTIVITIES: Expenses General Government Education Employee Benefits Teacher Retirement Benefits Health and Human Services Public Safety and Corrections Transportation Natural Resources and Recreation Regulatory Services Lottery Total Expenses Program Revenues Charges for Services: General Government Education Employee Benefits Teacher Retirement Benefits Health and Human Services Public Safety and Corrections Transportation Natural Resources and Recreation Lottery Operating Grants and Contributions Capital Grants and Contributions Total Program Revenues Total Business-Type Activities Net Program Revenue (Expense)
2002
2003
2004
2005
2006
2007
2008
$ 246,183 12,584,976
$ 235,098 13,340,397 517,912 2,964,169 68,419 16,937 157,902 2,163,670 19,464,504
$ 187,064 13,538,233 615,692 2,203,096 68,828 22,725 146,815 2,426,019 19,208,472
142,142 14,716,405 761,240 1,540,459 71,308 346 264,707 2,594,241 20,090,848
162,499 15,982,582 813,133 1,253,431 73,775 16,339 284,241 2,687,084 21,273,084
186,628 17,165,602 909,845 1,204,609 75,305 125,910 283,653 2,691,210 22,642,762
$ 177,012 18,619,716
2,712,361 69,235 13,011 149,767 2,096 2,034,639 17,812,268
1,467,185 80,607 164,280 247,018 2,634,446 23,390,264
32,475 5,108,647
50,669 5,549,390 584,709 1,603,241 71,694 3,002 3,131,532 6,244,537 162,991 17,401,765
44,166 5,845,956 758,255 1,783,807 75,094 39,162 3,911 3,488,941 6,356,243 272,997 18,668,532
27,947 6,662,679 823,910 1,963,403 77,521 14 22,106 3,663,414 8,086,139 211,726 21,538,859
37,245 7,284,371 861,648 1,862,804 79,032 13 33,716 3,775,491 7,200,099 155,541 21,289,960
42,713 8,268,639 939,879 1,665,242 82,779 16,757 41,034 3,774,948 9,001,427 197,731 24,031,149
43,106 8,705,756
1,129,885 67,809 2,377 2,967,271 3,299,297 51,930 12,659,691
1,058,134 87,365 48,958 42,964 3,672,423 4,808,580 245,962 18,713,248
(5,152,577)
(2,062,739)
(539,940)
1,448,011
16,876
1,388,387
(4,677,016)
General Revenues Unrestricted Investment Earnings 108,831 Settlement of Claims 2,579 Gain on Sale of Capital Assets 750 Other General Revenue 301,020 Capital Contributions 112,088 Contributions to Permanent and Term Endowments 101,473 Special Items Extraordinary Items 603,679 Transfers 3,171,399 Total General Revenues, Contributions, Special Items, Extraordinary Items and Transfers Change in Net Assets Business-Type Activities Change in Net Assets Primary Government
28,020 5 329,235 1,318 235,997 36,532 3,069,447
193,347 4 194,474 2,715 235,182 (13,401) 2,867,137
68,423 20 6,431 126,957 133 145,919
55,150 94 276 91,017 3,874 123,939 (38,898) 3,513,639
245,977 283 13,363 266,722 1,364 184,193 (318,813) 3,383,910
190,974 6 269 270,787 167,692 (150,026) 3,909,529
2,966,197
4,401,819 (750,758)
3,700,554 1,637,815
3,479,458 2,939,518 $ 7,050,801
3,314,080 4,762,091 $ 11,644,558
3,749,091 3,765,967 $ 12,190,327
3,776,999 5,165,386 $ 13,388,286
4,389,231 (287,785) $ 2,098,124
$ (4,215,012) $ 1,940,201
241
STATE OF TEXAS
Statistical Section Financial Trends Last Seven Fiscal Years*

2002
Fund Balances Governmental Funds
GENERAL FUND Reserved Unreserved Total General Fund ALL OTHER GOVERNMENTAL FUNDS Reserved Unreserved Special Revenue Capital Projects Permanent Total All Other Governmental Funds
2003
2004
2005
2006
2007
2008
$ 1,430 (369) $ 1,061
$ 1,042 (2,326) $ (1,284)
$ 1,185 (1,562) $ (377)
$ 1,752 286 $ 2,038
$ 1,648 5,673 $ 7,321
$ 2,138 8,698 $ 10,836
$ 2,471 8,184 $ 10,655
$ 19,187 1,669 13 429 $ 21,298
$ 20,485 1,256 14 458 $ 22,213
$ 21,850 1,309 15 492 $ 23,666
$ 24,275 1,460 546 $ 26,281
$ 25,999 910 7 575 $ 27,491
$ 29,054 1,847 (11) 632 $ 31,522
$ 27,957 4,953 (124) 564 $ 33,350
* Due to the changes in the state's fund structure initiated when GASB Statements No. 34 and No. 35 were implemented, information for fund balances is available only for the line-items presented beginning in 2002. Source: state of Texas financial statements 2002-08.
242
STATE OF TEXAS
Statistical Section Financial Trends Last Ten Fiscal Years*

Changes in Fund Balances Governmental Funds
REVENUES BY SOURCE Tax Collections Federal Funds Licenses, Fees and Permits Interest and Other Investment Income Land Income Settlement of Claims Sales of Goods and Services Other Revenues Total Revenues EXPENDITURES BY FUNCTION General Government Education Employee Benefits Teacher Retirement Benefits Health and Human Services Public Safety and Corrections Transportation Natural Resources and Recreation Regulatory Services Debt Service: Principal Interest Other Financing Fees Capital Outlay Total Expenditures Excess (Deciency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfer In Transfer Out Bonds and Notes Issued Bonds Issued for Advance Refunding Payment to Escrow for Advance Refunding Premiums on Bonds Issued ** Sale of Capital Assets Increases in Obligations Under Capital Leases Insurance Recoveries Total Other Financing Sources (Uses) NET CHANGE IN FUND BALANCES DEBT SERVICE AS A PERCENTAGE OF NONCAPITAL EXPENDITURES
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
$ 23,499 $ 25,226 $ 27,045 $ 25,123 $ 25,939 $ 27,976 $ 29,830 $ 33,867 $ 36,670 $ 41,256 15,316 16,170 17,319 20,307 23,017 24,382 25,851 28,212 26,967 28,656 2,826 2,915 2,960 2,815 2,921 3,332 3,590 4,011 4,324 4,522 1,328 1,578 1,705 (815) 2,118 2,435 3,317 3,218 4,574 (368) 10 11 46 179 298 482 544 462 422 650 1,118 324 403 513 563 523 883 583 539 555 664 578 689 962 1,131 1,109 1,445 1,503 2,697 2,063 1,374 1,227 1,451 1,273 1,464 1,754 1,918 2,159 2,730 2,590 46,135 48,029 51,618 50,357 57,451 61,993 67,378 74,015 78,923 79,924
1,673 12,640 7 17,082 3,332 3,922 712 235 344 531 548 41,026
1,798 14,743 8 17,878 3,554 4,612 672 243 372 599 517 44,996
1,902 15,057 8 19,036 3,812 4,720 704 260 346 761 389 46,995
1,846 15,739 15 22,394 4,037 3,096 713 270 287 339 2,274 51,010
1,961 15,927 12 24,690 4,067 3,065 787 311 367 360 2,654 54,201
2,191 16,220 12 25,039 3,887 2,970 844 371 211 335 2,830 54,910
2,151 16,204 12 27,192 3,952 3,246 1,039 345 306 375 3,735 58,557
2,530 18,025 13 28,761 4,939 3,909 930 294 393 238 2 3,938 63,972
2,415 21,317 14 30,855 4,897 3,702 1,172 317 437 370 14 4,368 69,878
2,628 24,976 14 1,781 32,355 4,864 3,895 1,420 393 415 428 15 4,404 77,588
5,109
3,033
4,623
(653)
3,250
7,083
8,821
10,043
9,045
2,336
5,140 (9,975) 534 241 (241) 20 24 (4,257) $ 852 $
4,838 (8,802) 919
16 4 (3,025)
4,988 6,093 5,793 6,984 7,488 7,343 7,765 13,832 (9,070) (10,870) (10,937) (11,842) (12,248) (12,433) (12,887) (17,777) 464 232 383 87 1,242 1,440 3,471 2,988 8 164 58 208 72 249 515 (8) (164) (69) (208) (72) (263) (559) 126 180 19 80 21 50 37 17 29 22 1 4 3 1 7 2 15 (3,598) (4,465) (4,736) (4,732) (3,481) (3,623) (1,508) (783)
8 $ 1,025 $ (5,118) $ (1,486) $ 2,351 $ 5,340 $ 6,420 $ 7,537 $ 1,553
2.2%
2.2%
2.4%
1.3%
1.4%
1.0%
1.2%
1.1%
1.3%
1.2%
* This table is comprised of the following funds: general, special revenue, debt service, capital projects and permanent. ** Premiums on bonds issued were combined with bonds and notes issued in years prior to 2008. Source: state of Texas financial statements 1999-2008.
243
STATE OF TEXAS
Statistical Section Revenue Capacity
Taxable Sales by Industry

NAICS** Industry
For the Fiscal Years 1998 through 2007* (Amounts in Millions)

2002 2003 2004 2005 2006 2007
Agriculture, Forestry, Fishing, Hunting Mining, Quarrying, Oil & Gas Extraction Utilities Construction Manufacturing Wholesale Trade Retail Trade Transportation, Warehousing Information Finance, Insurance Real Estate, Rental, Leasing Professional, Scientific, Technical Serv. Management of Companies, Enterprises Admin Supt Waste Mgmt Remediation Serv. Educational Services Health Care, Social Assistance Arts, Entertainment, Recreation Accomodation, Food Services Other Services (except Public Admin) Public Administration Nonclassifiable Other Total Taxable Sales
Direct Sales Tax Rate
127 2,862 4,801 6,857 17,653 14,919 99,690 830 23,884 1,955 5,766 5,147 1,649 6,827 281 422 2,316 22,931 5,892 1,881 5 3,263 $ 229,958
6.25%
108 3,342 5,282 7,003 16,319 17,324 102,215 1,208 23,900 1,894 5,569 4,812 1,930 7,050 294 513 2,710 23,653 6,083 1,692 9 1,655 $ 234,565
6.25%
105 3,897 5,485 8,071 17,543 19,000 108,078 1,390 24,804 1,819 5,820 5,181 1,972 7,554 341 547 2,885 25,438 6,295 2,072 8 648 $ 248,953
6.25%
137 5,329 7,543 9,271 20,733 21,634 116,307 1,317 26,579 1,913 6,832 6,282 2,008 7,995 379 600 2,875 27,313 6,824 1,565 8 221 $ 273,665
6.25%
149 8,143 9,022 11,583 24,336 25,044 127,389 1,805 29,538 2,099 8,102 7,069 802 8,692 406 623 3,019 29,750 7,452 1,474 6 98 $ 306,601
6.25%
147 11,351 9,305 13,144 27,021 26,663 135,050 1,832 30,933 2,183 9,062 7,657 525 9,434 428 743 3,215 31,962 7,889 1,468 4 57 $ 330,073
6.25%
SIC*** Industry
1998
1999
2000
2001
Agriculture, Forestry, Fishing Mining, Natural Resources Construction Manufacturing Transportation, Communications, Utilities Wholesale Trade Retail Trade Finance, Insurance, Real Estate Services Public Administration Nonclassifiable Establishments Other Total Taxable Sales
Direct Sales Tax Rate
1,020 1,754 6,184 16,413 23,284 18,017 108,661 849 25,184 450 60 603 $ 202,479
6.25%
1,182 1,475 6,506 15,975 25,083 18,585 116,118 925 27,263 455 59 476 $ 214,102
6.25%
1,294 2,030 7,370 17,356 27,652 19,609 122,849 1,062 29,773 500 48 497 $ 230,040
6.25%
1,367 2,815 7,422 16,141 28,415 19,172 127,145 1,226 29,742 513 35 838 $ 234,831
6.25%
Fiscal 2008 data is not available until mid-year of the the following fiscal year.
** North American Industry Classification System -available only from 2002-07. *** Standard Industrial Classification System Note: The amount of sales tax revenue should not be calculated from the table as there are numerous adjustments, allocations and refunds to arrive at actual taxable revenue. Source: Texas Comptroller of Public Accounts, Quarterly Sales Tax Reports.
244
STATE OF TEXAS
Statistical Section Revenue Capacity

Last Ten Years
State Tax Collections and Retail Sales

(Amounts in Millions, Except Per Capita State Tax Collections and Percentage Data)
State Tax Collections Per Capita, 1999-2008*

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Tax Collections Percentage Tax Collection Change From Prior Year Resident Population Percentage Population Change From Prior Year State Tax Collections Per Capita
$ 23,499
$ 25,226
$ 27,045
$ 25,123
$ 25,939
$ 27,976
$ 29,830
$ 33,867
36,670
$ 41,256
4.0% 20.6
7.3% 21.0
7.2% 21.4
(7.1)% 21.8
3.2% 22.1
7.9% 22.5
6.6% 22.8
13.5% 23.4
8.3% 23.9
12.5% 24.3
2.0%
1.9%
1.9%
1.9%
1.4%
1.8%
1.8%
2.6%
1.7%
1.7%
$ 1,143
$ 1,204
$ 1,266
$ 1,155
$ 1,172
$ 1,242
$ 1,308
$ 1,447
1,534
1,698
* This table is comprised of the following funds: general, special revenue, debt service and capital projects. Source: Tax collections figures taken from the 1999-2008 state of Texas financial statements. Resident population figures are from the U.S. Department of Commerce, Bureau of Census and Bureau of Economic Analysis and have been revised from prior years due to changes in methodology, inflation factors, price indicators and revisions to interim census figures.
Total Retail Sales 19992008

Year Retail Sales Percent Change
1999 2000 2001 2002* 2003 2004 2005 2006 2007 2008**
$265,073 $298,614 $307,070 $289,652 $305,441 $331,077 $361,242 $375,564 $401,883 $ 96,048
8.2% 12.7% 2.8% (3.6)% 5.5% 8.4% 9.1% 4.0% 7.0% 7.6%
* Retail sales are classified on the basis of the North American Industrial Classification System (NAICS) for 2002-08, as opposed to Standard Industrial Codes (SICs) before that. The percentage change in 2002 is based on SIC data for both 2001-02. ** First quarter of 2008 and the percentage change over the first quarter of 2007. Source: Texas Comptroller of Public Accounts. Some revisions were made from 2002 onward, based on changes in retailer classifications in the Comptroller's database. Due to confidentiality issues, the names of the ten largest revenue payers are not available. This table provides alternative information regarding the source of the states major tax revenue.
245
STATE OF TEXAS
Statistical Section Revenue Capacity Last Ten Years

(Amounts in Millions of Dollars)
NAICS* Industry 1999 2000
Texas Gross State Product by Industry
2001
2002
2003
2004
2005
2006
2007
2008
Agriculture, Forestry and Fishing % Change Mining and Natural Resources % Change Construction % Change Manufacturing % Change Trade, Transportation and Utilities % Change Information % Change Financial Activities % Change Professional and Business Services % Change Educational and Health Services % Change Leisure and Hospitality Services % Change Other Private Services % Change Government, including Schools % Change TOTAL % Change TOTAL (In 2000 Chained Dollars) % Change
6,752 11.6
6,470 $ (4.2)
6,394 $ (1.2)
7,457 16.6
8,094 8.5
9,878 21.0
8,707 $ (11.9)
7,807 $ (10.3)
9,651 23.6
10,596 9.8
27,652 19.0 32,836 11.1 91,601 (6.5)
45,182 63.4 36,882 12.3 92,981 1.5
44,072 (2.5) 40,259 9.2 92,273 (0.8)
39,219 (11.0) 41,871 4.0 94,462 2.4
57,913 47.7 43,474 3.8 93,158 (1.4)
68,248 19.1 45,648 3.7 119,028 27.6
91,549 34.1 50,577 10.8 126,490 6.3
104,167 13.8 55,324 9.4 142,846 12.9
110,336 5.9 52,203 (5.6) 153,180 7.2
121,108 9.8 52,283 0.2 160,783 5.0
146,595 8.2 33,295 8.8 107,929 8.7
155,785 6.3 35,865 7.7 117,200 8.6
160,789 3.2 36,992 3.1 125,928 7.4
164,723 2.4 36,531 (1.2) 128,219 1.8
170,756 3.7 36,040 (1.3) 133,437 4.1
181,596 5.3 38,545 7.7 137,454 4.7
191,652 5.5 41,122 6.7 145,274 5.7
206,664 7.8 43,829 6.6 157,743 8.6
222,262 7.5 48,069 9.7 167,219 6.0
235,138 5.8 51,109 6.3 177,303 6.0
69,387 10.3
73,208 5.5
82,195 12.3
83,937 2.1
88,718 5.7
93,307 7.7
104,248 11.7
114,443 9.8
128,415 12.2
140,082 9.1
39,357 5.8
42,359 7.6
46,797 10.5
51,380 9.8
54,760 6.6
59,440 7.8
61,674 3.8
65,744 6.6
70,939 7.9
75,821 6.9
21,764 9.0 16,576 4.1
23,106 6.2 17,603 6.2
23,993 3.8 18,106 2.9
25,492 6.2 18,679 3.2
26,479 3.9 19,644 5.2
27,877 4.6 19,889 1.4
29,551 6.0 21,143 6.3
32,109 8.7 22,458 6.2
34,011 5.9 23,805 6.0
36,167 6.3 25,150 5.7
75,249 5.9 $ 668,993 6.3
80,590 7.1 $ 727,231 8.7
84,448 4.8 $ 762,246 4.8
91,512 8.4 $ 783,482 2.8
96,325 5.3 $ 828,798 5.8
100,759 5.0 $ 901,669 9.1
107,343 5.9 $ 979,330 9.4
114,970 5.5 $ 1,068,104 9.1
121,866 4.4 $ 1,141,956 6.9
128,635 4.4 $ 1,215,175 6.4
$ 699,101 4.9
$ 727,229 4.0
$ 745,325 2.5
$ 760,588 2.0
$ 770,975 1.4
$ 806,055 4.8
$ 825,217 2.4
$ 867,791 5.2
$ 903,383 4.1
$ 940,334 4.1
* North American Industry Classification System. BEA periodically revises its personal income and gross product data for periods up to five years. Source: U. S. Bureau of Economic Analysis (BEA). BEA numbers for gross product and real gross product are subject to revision.
246
STATE OF TEXAS
Statistical Section Debt Capacity Last Ten Fiscal Years

(Amounts in Thousands, Except Percentage Data)
Legal Debt Margin Information
1999
2000
2001
2002
2003
Debt Service Limit* Total Net Debt Service Applicable to Limit Legal Debt Service Margin Total Net Debt Service Applicable to Limit as a Percentage of Debt Service Limit
$ 1,162,163 511,259 $ 650,904
$ 1,213,667 492,915 $ 720,752
$ 1,265,625 484,448 $ 781,177
$ 1,308,045 580,012 $ 728,033
$ 1,318,449 626,185 $ 692,264
44.0%
2004
40.6%
2005
38.3%
2006
44.3%
2007
47.5%
2008
Debt Service Limit* Total Net Debt Service Applicable to Limit Legal Debt Service Margin Total Net Debt Service Applicable to the Limit as a Percentage of Debt Service Limit
$ 1,344,627 622,433 $ 722,194
$ 1,405,937 620,989 $ 784,948
$ 1,518,628 545,725 $ 972,903
$ 1,664,884 605,518 $ 1,059,366
$ 1,773,089 1,450,498 $ 322,591
46.3%
44.2%
35.9%
36.4%
81.8%
Legal Debt Service Margin Calculation for Fiscal 2008 Unrestricted General Revenue fiscal 2006 Unrestricted General Revenue fiscal 2007 Unrestricted General Revenue fiscal 2008 Debt Service Limit* Debt Service Applicable to Limit: Debt Service on Outstanding Debt Payable from GR Plus: Estimated Debt Service on Authorized but Unissued Debt Payable From GR Total Net Debt Service Applicable to Limit Legal Debt Service Margin $ 33,389,324 36,129,759 36,866,229 1,773,089
459,972 990,526 1,450,498 322,591
* Debt service limit Under state law, the maximum annual debt service in any fiscal year on state debt payable from the general revenue fund may not exceed 5 percent of an amount equal to the average of the unrestricted general revenue fund revenues for the three preceding fiscal years. Source: Texas Bond Review Board.
247
STATE OF TEXAS
Statistical Section Debt Capacity Last Seven Fiscal Years*
Ratio of Outstanding Debt by Type

(Amounts in Millions, Except Percentage Data and Per Capita)
Governmental Activities General Obligation Revenue Notes and Bonds Bonds Loans Business-Type Activities Revenue Bonds Notes and Loans
Fiscal Year
General Obligation Bonds
Total Primary Government
Percentage of Personal Income
Per Capita
2002 2003 2004 2005 2006 2007 2008
$ 3,081 3,185 3,116 3,972 4,479 6,757 8,061
$ 809 739 679 632 1,152 2,031 3,445
$ 98 103 116 262 331 216 340
$ 2,671 2,599 2,719 2,815 2,739 2,775 2,708
$ 8,264 9,277 10,844 11,749 12,378 12,304 13,370
$ 1,607 1,889 1,920 1,614 1,741 2,029 2,437
$ 16,530 17,792 19,394 21,044 22,820 26,112 30,361
2.6% 2.7% 2.8% 2.8% 2.8% 2.9% 3.2%
760 804 861 918 971 1,094 1,247
* Due to the changes in the state's fund structure initiated when GASB Statements No. 34 and No. 35 were implemented, the outstanding debt information is available only beginning in 2002. Source: 2002-08 state of Texas financial statements.
248
STATE OF TEXAS
Statistical Section Debt Capacity Last Ten Fiscal Years*
Ratios of General Bonded Debt Outstanding

(Amounts in Millions, Except Percentage Data and General Bonded Debt Per Capita)
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Bonded Debt (General Obligation Bonds Only) Percentage Bonded Debt Change From Prior Year Tax Collections Percentage Bonded Debt to Tax Collections Resident Population General Bonded Debt Per Capita
$ 4,920
$ 5,143
$ 5,271
$ 5,756
$ 5,784
$ 5,835
$ 6,787
$ 7,218
$ 9,532
$ 10,768
(1.6)% 23,499
4.5% 25,226
2.5% 27,045
9.2% 25,123
0.5% 25,939
0.9% 27,976
16.3% 29,830
6.4% 33,867
32.1% 36,670
13.0% 41,256
20.9% 20.6
20.4% 21.0
19.5% 21.4
22.9% 21.8
22.3% 22.1
20.9% 22.5
22.8% 22.8
21.3% 23.4
26.0% 23.9
26.1% 24.3
$ 239
$ 245
$ 247
$ 265
$ 262
$ 259
$ 298
$ 308
$ 399
443
* Historical data may reflect a variety of changes in methodology, inflation factors, price indicators and revisions to interim census figures made by the U.S. Bureau of Economic Analysis. Source: Bonded debt and tax collections amounts are taken from the 1999-2008 state of Texas financial statements. Tax Collections from 1999-2008 state of Texas financial statements. Resident population figures are from the U.S. Department of Commerce, Bureau of Census and Bureau of Economic Analysis.
249
STATE OF TEXAS
Statistical Section Debt Capacity Last Seven Fiscal Years*

(Amounts in Thousands, Except Ratio Data)
2002
Pledged Revenue Bond Coverage
2003
2004
2005
2006
2007
2008
GOVERNMENTAL ACTIVITIES Pledged Revenue Bond Amount Operating Expenditures Net Available Revenue Debt Service Principal Interest Total Debt Service Coverage Ratio BUSINESS-TYPE ACTIVITIES Pledged Revenue Bond Amount Operating Expenditures Net Available Revenue Debt Service Principal Interest Total Debt Service Coverage Ratio COMPONENT UNITS** Pledged Revenue Bond Amount Operating Expenditures Net Available Revenue Debt Service Principal Interest Total Debt Service Coverage Ratio Total Combined Coverage Ratio
*
93,796 2,257 91,539
93,942 11,772 82,170
$ 101,178 2,525 $ 98,653
$ 150,119 15,540 $ 134,579
81,011 1,452 79,559
$ 5,765,826 6,881,279 $ (1,115,453)
$ 6,748,490 7,447,496 $ (699,006)
70,230 41,996
74,106 37,478
77,058 33,314
84,087 26,115
86,056 25,764
104,077 66,822 170,899 (6.5)
112,250 118,203 230,453 (3.0)
$ 112,226 0.8
$ 111,584 0.7
$ 110,372 0.9
$ 110,202 1.2
$ 111,820 0.7
$ 7,236,922 207,852 $ 7,029,070
$ 6,401,630 536,191 $ 5,865,439
$ 7,049,189 885,294 $ 6,163,895
$ 8,369,686 839,699 $ 7,529,987
$ 9,088,841 364,043 $ 8,724,798
$ 9,869,477 1,457,567 $ 8,411,910
$ 10,225,735 11,698,563 $ (1,472,828)
$ 242,174 355,997 $ 598,171 11.8
$ 490,032 371,983 $ 862,015 6.8
$ 440,036 492,366 $ 932,402 6.6
$ 532,128 503,958 $ 1,036,086 7.3
$ 623,346 537,104 $ 1,160,450 7.5
683,150 560,359
420,487 558,666 979,153 (1.5)
$ 1,243,509 6.8
25,863 625 25,238
16,215
11,781 349 11,432
13,524 225 13,299
13,704 264 13,440
13,034 91 12,943
10,971 552 10,419
16,215
13,000 6,875 19,875 1.3 9.8
12,130 5,463 17,593 0.9 6.0
11,050 2,937 13,987 0.8 5.9
$ 3,628 $ 3,628 3.7 6.7
5,840 4,940 10,780 1.2 6.9
5,485 5,051 10,536 1.2 5.1
5,090 3,610 8,700 1.2 (1.8)
Due to the changes in the state's fund structure initiated when GASB Statements No. 34 and No. 35 were implemented, the pledged revenue bond information is available only beginning in 2002.
** Component Units have been revised from 2003 to 2007 to reflect revised reporting of debt coverage in 2008. Note: This bond data includes operating revenues, interest earned on investments, other pledged revenues and other sources. Operating expenditures include capital outlay expenditures. Source: 2002-08 state of Texas annual financial statements and bond reporting system.
250
STATE OF TEXAS
Statistical Section Demographic and Economic Information
Top 10 Private Employers in Texas*

Last Eight Years**
2000 Administaff Companies, Inc. Albertsons, Inc. American Airlines, Inc. Continental Airlines, Inc. HEB Grocery Company LP Kroger Texas LP Sears Roebuck & Company Southwestern Bell United Parcel Service, Inc. Wal-Mart Associates, Inc. 2003 Administaff Companies II LP American Airlines, Inc. HEB Grocery Company LP Home Depot USA, Inc. Kroger Texas LP Lockheed Martin Corp Southwestern Bell Telephone LP Target Stores Division United Parcel Service, Inc. Wal-Mart Associates, Inc. 2006 Administaff Companies II LP American Airlines, Inc. Continental Airlines, Inc. HEB Grocery Company LP Home Depot USA, Inc. Kroger Texas LP Southwestern Bell Telephone LP Target Stores Division United Parcel Service, Inc. Wal-Mart Associates, Inc.
2001 Administaff Companies, Inc. Albertsons, Inc. American Airlines, Inc. HEB Grocery Company LP Kroger Texas LP Sears Roebuck & Company Southwestern Bell Target Stores Division United Parcel Service, Inc. Wal-Mart Associates, Inc. 2004 Administaff Companies II LP American Airlines, Inc. Continental Airlines, Inc. HEB Grocery Company LP Home Depot USA, Inc. Kroger Texas LP Southwestern Bell Telephone LP Target Stores Division United Parcel Service, Inc. Wal-Mart Associates, Inc. 2007 Administaff Companies II LP American Airlines, Inc. Brinker International Continental Airlines Inc HEB Grocery Company LP Home Depot USA, Inc. Kroger Texas LP Target Stores Division United Parcel Service, Inc. Wal-Mart Associates, Inc.
2002 Administaff Companies II LP American Airlines, Inc. Continental Airlines, Inc. HEB Grocery Company LP Home Depot USA, Inc. Kroger Texas LP Southwestern Bell Telephone LP Target Stores Division United Parcel Service, Inc. Wal-Mart Associates, Inc. 2005 Administaff Companies II LP American Airlines, Inc. Continental Airlines, Inc. HEB Grocery Company LP Home Depot USA, Inc. Kroger Texas LP Southwestern Bell Telephone LP Target Stores Division United Parcel Service, Inc. Wal-Mart Associates, Inc.
* Employers are listed alphabetically, with no ranking intended. The number of employees is not disclosed due to confidentiality. ** The year 2008 and years prior to 2000 are not available. Source: Labor Market and Career Information Department of the Texas Workforce Commission.
251
STATE OF TEXAS
Statistical Section Demographic and Economic Information
Texas and U.S. Selected Statistics

Last Ten Years
Texas and U.S. Population, Total Personal Income and Per Capita Income Last Ten Years
Population (Thousands) Percent Change U.S. Percent Change Total Personal Income (Millions) Percent Change U.S. Per Capita Income Percent Change Texas Percent Change U.S. Percent Change
Year
Texas
Texas
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008*
20,558 20,952 21,358 21,731 22,086 22,455 22,844 23,408 23,904 24,349
2.0% 1.9% 1.9% 1.7% 1.6% 1.7% 1.7% 2.5% 2.1% 1.9%
279,040 282,217 285,226 287,884 290,449 293,191 295,898 298,751 301,617 304,566
1.2% 1.1% 1.1% 0.9% 0.9% 0.9% 0.9% 1.0% 1.0% 1.0%
539,661 593,139 619,642 626,604 649,419 694,925 758,435 821,639 884,601 943,995
6.3% 9.9% 4.5% 1.1% 3.6% 7.0% 9.1% 8.3% 7.7% 6.7%
7,796,137 8,422,074 8,716,992 8,872,871 9,150,320 9,711,363 10,252,849 10,977,312 11,631,571 12,122,110
5.1% 8.0% 3.5% 1.8% 3.1% 6.1% 5.6% 7.1% 6.0% 4.2%
26,251 28,309 29,012 28,835 29,404 30,948 33,201 35,101 37,006 38,769
4.2% 7.8% 2.5% (0.6)% 2.0% 5.3% 7.3% 5.7% 5.4% 4.8%
27,939 29,843 30,562 30,821 31,504 33,123 34,650 36,744 38,564 39,801
3.9% 6.8% 2.4% 0.8% 2.2% 5.1% 4.6% 6.0% 5.0% 3.2%
* Recent years are subject to revisions. 2008 numbers include some forecast model quarterly estimates for the second half of the year. The Bureau revises historical data due to more complete information, revised census gures, and changes in methodology. Source: U.S. Bureau of Economic Analysis, U.S. Bureau of the Census and Texas Comptroller of Public Accounts.
Texas and U.S. Employment and Unemployment Rates

Last 10 Years
(Thousands of Jobs and Percent)
Nonfarm Employment Percent Change U.S. Unemployment Percentage Rate Texas U.S.
Year
Texas
Percent Change
1999 2000 2001 2002 2003 2004 2005 2006 2007* 2008*
9,160 9,432 9,514 9,416 9,370 9,497 9,740 10,066 10,360 10,577
2.4% 3.0% 0.9% (1.0)% (0.5)% 1.4% 2.6% 3.3% 2.9% 2.1%
128,992 131,791 131,832 130,347 129,990 131,423 133,696 136,092 137,618 137,479
2.4% 2.2% 0.0% (1.1)% (0.3)% 1.1% 1.7% 1.8% 1.1% (0.1)%
4.6% 4.2% 4.8% 6.3% 6.7% 6.0% 5.3% 4.9% 4.3% 4.7%
4.2% 4.0% 4.7% 5.8% 6.0% 5.5% 5.1% 4.6% 4.6% 5.7%
* 2007 and 2008 numbers are subject to benchmark revisions. 2008 numbers include estimates for the last quarter. Source: Texas Workforce Commission, Texas Comptroller of Public Accounts and U.S. Bureau of Labor Statistics. Historical data have been revised.
252
STATE OF TEXAS
Statistical Section Operating Information Last Ten Fiscal Years

1999 2000
Full-Time Equivalent Employees by Function
FUNCTION General Government Education Employee Benefits Teacher Retirement Benefits Health and Human Services Public Safety and Corrections Transportation Natural Resources and Recreation Regulatory Services Total FTEs Percentage Change
Source: Texas State Auditors Office.
2001
2002
2003
2004
2005
2006
2007
2008
12,950 119,286 306 380 56,844 53,510 14,553 7,971 3,960 269,760 0.1%
12,981 122,009 313 397 54,923 52,699 14,751 8,062 3,931 270,066 0.1%
13,472 124,871 309 418 53,023 52,133 14,926 8,172 3,933 271,257 0.4%
13,362 129,767 314 437 53,420 52,405 14,845 8,370 3,973 276,893 2.1%
13,607 133,857 315 441 52,238 53,231 14,717 8,299 3,882 280,587 1.3%
13,034 134,456 302 440 49,288 51,473 14,078 7,990 3,779 274,840 (2.0)%
13,435 140,367 292 451 48,389 51,397 14,551 8,053 3,882 280,817 2.2%
12,999 144,636 294 444 49,097 51,564 14,744 8,018 3,869 285,665 1.7%
13,438 146,944 302 445 50,910 50,889 14,748 8,014 3,828 289,518 1.3%
13,155 152,121 311 454 53,161 50,340 14,148 7,597 4,558 295,845 2.2%
253
STATE OF TEXAS
Statistical Section Operating Information Last Three Fiscal Years

Function
Capital Asset Statistics by Function
2006
2007
2008
GENERAL GOVERNMENT Number of TBPC Owned Facilities State Real Property Inventory in Acres EDUCATION Number of School Districts Number of Students Number of Higher Education Institutions HEALTH AND HUMAN SERVICES Number of State Mental Health Facilities Number of State Hospitals PUBLIC SAFETY AND CORRECTIONS Number of State Prisons TDCJ only Number of available beds (capacity) Number of authorized vehicular state patrol units TRANSPORTATION Centerline Miles of Highways* Number of Bridges** NATURAL RESOURCES AND RECREATION Number of State Parks Managed Number of Park Acreage
75 2,425,037
75 1,322,123
137 1,325,319
1,033 4,505,572 145
1,031 4,576,933 145
1,031 4,671,493 145
39 10
39 10
39 11
106 156,520 1,195
106 156,652 1,281
112 160,622 1,281
79,696 33,322
79,849 32,996
79,975 33,118
112 608,716
110 602,892
93 605,470
Highway miles = state maintained centerline miles (miles traveled in one direction regardless of the number of lanes in a roadway).
** Number of bridges is the bridges owned by the state. TxDOT also works on off-system bridges (county and city-owned bridges). Off-system bridges are not included in the number of bridges total. Source: Various state agencies and official state agency Web sites.
254
STATE OF TEXAS
Statistical Section Operating Information
Operating Indicators by Function

Last Three Fiscal Years
Function
2006
2007
2008
GENERAL GOVERNMENT / REGULATORY SERVICES Number of Tax Returns Processed Number of Licenses Issued (2008 is Estimated) EDUCATION Average Daily School Attendance (ADA)* Percent of Students Passing TAKS Test* Texas Higher Education Enrollments Higher Education Degrees Awarded** HEALTH AND HUMAN SERVICES Number of Medicaid Clients Served Number of TANF Clients Served *** Number of Immunizations PUBLIC SAFETY AND CORRECTIONS Number of New Prison Population Number of Prison Population Released Average Daily Prison Population Authorized Number of Troopers Patrolling Texas Highways TRANSPORTATION Number of Construction Contracts Processed For Letting Number of Lane Miles Receiving Roadway Surface Improvments: By Contract Via State Sources Number of Vehicles Registered NATURAL RESOURCES AND RECREATION Number of State Parks Visits (In Millions) Number of Parks and Wildlife Licenses Issued****
* **
3,904,659 1,554,754
4,251,103 1,575,919
4,054,947 1,337,635
4,205,729 67% 1,211,582 188,258
4,260,406 70% 1,228,897 193,321
4,326,176 72% 1,273,954 N/A
2,873,786 172,776 11,617,682
2,831,832 145,807 12,827,417
2,877,326 125,250 12,771,928
74,170 71,214 151,734 1,628
73,525 72,032 152,805 1,689
74,283 72,002 155,588 1,709
1,075 15,811 6,406 20,609,866
877 13,197 5,984 21,432,773
694 8,462 6,344 24,359,319
5.0 2,625,225
4.9 2,665,045
4.3 2,892,695
The Percent of Students Passing TAKS test is from the 2007-08 TEA AEIS report at: http://www.tea.state.tx.us/perfreport/aeis/2008/state.pdf. These scores represent the TAKS Met 2008 Standard (Sum of All Grades Tested)(Standard Accountability Indicator). The 2008 degress conferred will not be available until later in 2009.
*** TANF fiscal 2008 is based on data through November 2008, but will not be finalized until March 2009. **** Includes commercial and recreational licenses, stamps, tags and permits. Does not include items such as hunting lease license sales, collector's stamp sales, hunt drawing sales and other similar items sold through the Point-of-Sale System. Other Sources: Various state agencies, state agency reports and official state agency Web sites.
255
Texas Comptroller of Public Accounts Publication #96-471. Printed February 2009. For additional copies, write: Texas Comptroller of Public Accounts Fiscal Integrity 111 E. 17th Street Austin, Texas 78774-0100 This book is also available on the internet at: www.window.state.tx.us/fm/pubs/cafr/

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State of texas

Comprehensive Annual Financial Report

Susan Combs texas Comptroller of Public Accounts

Susan Combs texas Comptroller of Public Accounts

Kelley Glaeser, CPA Kathy Hubert, CPA Lynn Gunn, CPA

Wallace Lankford, CPA Rami Legha, CPA Laurel Mulkey

Amanda Landry, CPA

Patricia King Sigg

Francine Fowler, CPA Precilla Hauer

Bruce Holmstrom David Heffington Terri Whaley Jim Smith

All accounting and budget personnel of state agencies

Special appreciation to:

State of Texas Comprehensive Annual Financial Report

144 147 149

2: FINANCIAL SECTION (continued)

178 182 186 192 196 200

208 210 214 215 219 220 226 232

February 27, 2009

To the Citizens of Texas, Governor Perry

Council on Governmental Accounting in Statement No. 1

Board (GASB) has been utilized. The state also voluntarily

form portions of the federal audit procedures necessary

to meet the requirements of the federal Single Audit Act

Amendments of 1996 and related Office of Management

Profile of the Government

ments and fund financial statements of various depart-

This report includes government-wide financial state-

states significant accounting policies and other necessary

The states internal accounting controls provide rea-

of the state of Texas are included in this report. These

Accounting System and Budgetary Controls

orders, contracts and other commitments for the expen-

diture of monies are recorded to reserve a portion of the

sities funds, Texas Water Development Board funds and the

funds, including general, special revenue, debt service,

Economic Outlook and Major Initiatives

state economy continued to grow at a rate that stood out

Even though the Texas economy slowed in 2008, the

among the states in terms of job gains. In a recessionary

second and third in nonfarm employment growth, Okla-

homa and Maryland, added fewer than 20,000 jobs each,

Oklahoma. The U.S. economy lost jobs during every month

population growth from 2000 to 2008, more than any other

Although the number of Texas workers increased for

rose 6.4 percent in 2008, for a real (inflation-adjusted)

tinued growth in most industries, the Texas economy

region, and although this stimulated jobs in repair and con-

Leading Indicators Foresee Contraction

er construction industry and job losses in manufacturing

meant that Texas service-providing industries accounted

the consumer confidence index in the West South Central

retail sales activity, climbed by 5.5 percent during 2008,

state, as evidenced by motor vehicle sales tax receipts that

The mining industry retained most of its jobs after the

Texas experienced a decline in 2008. During 2008, the

After 16 years of rising new business incorporations,

state had a monthly average of 8,877 new incorporations,

compared to last years average of 9,347. Newly incorpo-