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This Preliminary Official Statement and the information contained herein are subject to completion or amendment in a Final Official Statement. The Bonds may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delive ed in final
form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the
PRELIMINARY OFFICIAL STATEMENT
Dated: July 13, 2011
Ratings: S & P Underlying: “AA”
NEW ISSUE - Book-Entry-Only Moody’s Underlying: “Aa2”
See “OTHER INFORMATION - RATINGS” herein
In the opinion of Bond Counsel, interest on the Bonds is excludable from gross income for federal income tax purposes under
existing law, subject to the matters described under “Tax Exemption” herein, and is not includable in the alternative minimum
taxable income of individuals. See “TAX MATTERS” for a discussion of the opinion of Bond Counsel, including the alternative
registration or qualification under the applicable securities laws of any such jurisdiction. Final written confirmation of the sale shall not be conclusive unless the Final Official Statement is delivered to the purchaser.
minimum tax on corporations.
$68,118,357.20* SAN JACINTO COMMUNITY COLLEGE DISTRICT
(HARRIS AND CHAMBERS COUNTIES, TEXAS)
LIMITED TAX GENERAL OBLIGATION BUILDING AND REFUNDING BONDS, SERIES 2011
Interest Accrual Date: Date of Delivery Due: February 15, as shown on the inside cover
PAYMENT TERMS . . . San Jacinto Community College District (the “District”) is issuing $68,118,357.20* Limited Tax General
Obligation Building and Refunding Bonds, Series 2011 (the “Bonds”). The Bonds are being issued in part as Current Interest
Bonds (“CIBs”) and in part as Capital Appreciation Bonds and Premium Capital Appreciation Bonds (“CABs”). Interest on the
CIBs will accrue from the Date of Delivery and will be payable February 15 and August 15 of each year, commencing February
15, 2012, and will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The CABs will accrete
interest from the Date of Delivery. The definitive Bonds will be initially registered and delivered only to Cede & Co., the
nominee of The Depository Trust Company (“DTC”) pursuant to the Book-Entry-Only System described herein. Beneficial
ownership of the Bonds may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the
Bonds will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Bonds will be payable
by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the beneficial owners of
the Bonds (See “THE BONDS – BOOK-ENTRY-ONLY SYSTEM”). The initial Paying Agent/Registrar shall be Wells Fargo Bank,
N.A. (see “THE BONDS – PAYING AGENT/REGISTRAR”).
AUTHORITY FOR ISSUANCE . . . The District is authorized to issue the new money portion of the Bonds pursuant to the
Constitution and general laws of the State of Texas, including particularly Chapter 130, Texas Education Code, Chapter 1371,
Texas Government Code, an election held within the District on May 10, 2008, an order passed by the Board of Regents of the
District (the “Order”), and a pricing officer’s certificate executed pursuant to the Order. The refunding portion of the Bonds is
issued pursuant to Chapter 1207, Texas Government Code. The Bonds constitute direct and continuing obligations of the
District, payable as to principal and interest from the proceeds of an annual ad valorem tax levied, within the limits prescribed by
law, on all taxable property located within the District. See “THE BONDS – AUTHORITY FOR ISSUANCE”.
PURPOSE . . . Proceeds from the sale of the Bonds will be used to (i) construct and equip school buildings in the District and for
the purchase of necessary sites for school buildings; (ii) refund certain outstanding bonds of the District as more particularly
described in Schedule I (the “Refunded Bonds”); and (iii) pay costs of issuance of the Bonds. See “THE BONDS – USE OF
BOND PROCEEDS” herein.
MATURITY SCHEDULE - SEE INSIDE COVER
REDEMPTION . . . The Bonds are subject to optional and mandatory redemption as described herein. See “THE BONDS –
OPTIONAL REDEMPTION,” and “THE BONDS – MANDATORY SINKING FUND REDEMPTION.”
DELIVERY . . . The Bonds are offered for delivery when as and if issued and received by the underwriters listed below (the
“Underwriters”) and subject to the opinion of the Attorney General of the State of Texas and of Andrews Kurth LLP, Houston,
Texas, Bond Counsel. See “APPENDIX D – FORM OF BOND COUNSEL’S OPINION”. Certain legal matters will be passed upon for
the Underwriters by Bates & Coleman, P.C., Houston, Texas, as Counsel to the Underwriters. The Bonds are expected to be
available for delivery through the Depository Trust Company on or about August 9, 2011 (“Date of Delivery”).
SOUTHWEST SECURITIES
COASTAL SECURITIES, INC. ESTRADA HINOJOSA & COMPANY, INC.
CITI JEFFERIES & COMPANY
*Preliminary, subject to change.
SAN JACINTO COMMUNITY COLLEGE DISTRICT
$68,118,357.20* LIMITED TAX GENERAL OBLIGATION BUILDING AND REFUNDING BONDS, SERIES 2011
MATURITY SCHEDULE
CUSIP Prefix: 798025(c)
$41,530,000* CURRENT INTEREST BONDS
CUSIP(c) CUSIP (c)
(b) (b)
Maturity Amount Rate Yield Suffix Maturity Amount Rate Yield Suffix
(a) (a)
02/15/2023 $ 110,000 02/15/2028 $ 4,430,000
(a) (a)
02/15/2024 115,000 02/15/2029 4,680,000
(a) (a)
02/15/2025 120,000 02/15/2030 1,810,000
(a) (a)
02/15/2026 3,130,000 02/15/2031 2,130,000
(a) (a)
02/15/2027 7,485,000 02/15/2032 565,000
(a)
$7,365,000 Term Bonds Maturing February 15, 2036 at _____% to yield _____%(b) CUSIP _________ (c)
$9,590,000 Term Bonds Maturing February 15, 2040 (a) at _____% to yield _____%(b) CUSIP _________ (c)
(Interest accrues from Date of Delivery)
$26,563,357.20* CAPITAL APPRECIATION BONDS (d)
Initial Offering Price
(c)
Initial Yield Maturity per $5,000 in CUSIP
Maturity Principal Amount to Maturity Value Maturity Value Suffix
02/15/2015 $ 14,100.90
02/15/2016 2,824,410.05
02/15/2017 1,833,933.20
02/15/2018 1,426,753.35
02/15/2019 2,823,475.20
02/15/2020 3,757,792.50
02/15/2021 2,988,940.80
02/15/2022 1,772,973.00
02/15/2023 1,398,771.45
02/15/2024 1,385,189.75
02/15/2025 3,932,741.40
02/15/2026 2,404,275.60
$25,000* PREMIUM CAPITAL APPRECIATION BONDS (d)
Initial Offering Price
(c)
Principal Initial Yield Maturity per $5,000 in CUSIP
Maturity Amount to Maturity Value Maturity Value Suffix
02/15/2013 $ 10,000
02/15/2014 15,000
(Interest accretes from Date of Delivery)
*Preliminary, subject to change.
(a)
The CIBs maturing on February 15, 2023 and thereafter are subject to redemption, at the option of the District, on or after
February 15, 2021 at the price of par plus accrued interest to the date of redemption. See “THE BONDS – OPTIONAL
REDEMPTION” and “THE BONDS – MANDATORY SINKING FUND REDEMPTION” herein.
(b)
The yield represents the initial offering yield to the public which has been established by the Underwriters for offers to the public,
and which may subsequently be changed by the Underwriters in the sole discretion of the Underwriters.
(c)
CUSIP numbers have been assigned to this issue by the CUSIP Service Bureau and are included solely for the convenience of the
purchasers of the Bonds. Neither the District, the Financial Advisor, nor the Underwriters shall be responsible for the selection or
correctness of the CUSIP numbers set forth herein. CUSIP data herein is provided by CUSIP Global Services, managed by
Standard & Poor’s Financial Services LLC on behalf of The American Bankers Association. This data is not intended to create a
database and does not serve in anyway as a substitute for the CUSIP Services.
(d)
The CABs are not subject to redemption prior to stated maturity.
USE OF INFORMATION IN THIS OFFICIAL STATEMENT
For the purposes of compliance with Rule 15c-12 of the Securities and Exchange Commission (the “Rule”), as amended and in effect on the date
of this Preliminary Official Statement, this document constitutes an Official Statement of the District with respect to the Bonds described herein
that has been deemed “final” by the District as of its date except for the omission of no more than the information permitted by the Rule.
This Official Statement, which includes the cover page and the Appendices hereto, does not constitute an offer to sell or the solicitation of an
offer to buy in any jurisdiction to any person to whom it is unlawful to make such offer, solicitation or sale.
No dealer, broker, salesperson or other person has been authorized to give information or to make any representation other than those contained
in this Official Statement, and, if given or made, such other information or representations must not be relied upon.
The information set forth herein has been obtained from the District and other sources believed to be reliable, but such information is not
guaranteed as to accuracy or completeness and is not to be construed as the promise or guarantee of the District, the Financial Advisor or the
Underwriters. This Official Statement contains, in part, estimates and matters of opinion which are not intended as statements of fact, and no
representation is made as to the correctness of such estimates and opinions, or that they will be realized.
The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information
in the Official Statement in accordance with, and as part of, their responsibility to investors under the federal securities laws as applied to the
facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information.
The information and expressions of opinion contained herein are subject to change without notice, and neither the delivery of this Official
Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the
District or other matters described.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE
UPON EXEMPTION CONTAINED IN SUCH ACT. THE REGISTRATION OR QUALIFICATION OF THE BONDS IN
ACCORDANCE WITH APPLICABLE PROVISIONS OF SECURITIES LAW OF THE STATES IN WHICH THE BONDS
HAVE BEEN REGISTERED OR QUALIFIED AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN
OTHER STATES CANNOT BE REGARDED AS A RECOMMENDATION THEREOF.
TABLE OF CONTENTS
OFFICIAL STATEMENT SUMMARY........................II INVESTMENTS............................................................. 11
SELECTED FINANCIAL INFORMATION .............. III LEGAL INVESTMENTS ................................................... 11
INVESTMENT POLICIES.................................................. 12
VALUATION AND FUNDED DEBT HISTORY ...................... III
ADDITIONAL PROVISIONS ............................................. 12
TAX RATE, LEVY AND COLLECTION HISTORY ................ III
EMPLOYEES RETIREMENT SYSTEM ................... 13
DISTRICT ADMINISTRATION ................................. IV
VERIFICATION OF MATHEMATICAL
ADMINISTRATION OF THE DISTRICT ................................IV
ACCURACY............................................................... 13
ELECTED OFFICIALS.......................................................IV
APPOINTED OFFICIALS ...................................................IV CONTINUING DISCLOSURE OF INFORMATION 13
CONSULTANTS AND ADVISORS .......................................IV
ANNUAL REPORTS ........................................................ 13
INTRODUCTION ............................................................1
EVENT NOTICES ........................................................... 13
DESCRIPTION OF THE DISTRICT .......................................1 LIMITATIONS AND AMENDMENTS ................................. 14
THE BONDS .....................................................................1 COMPLIANCE WITH PRIOR UNDERTAKINGS ................... 14
OTHER INFORMATION............................................. 14
DESCRIPTION OF THE BONDS ...........................................1
YIELD ON CAPITAL APPRECIATION BONDS ......................1 RATINGS ...................................................................... 14
AUTHORITY FOR ISSUANCE .............................................1 LITIGATION .................................................................. 14
SECURITY FOR BONDS .....................................................1 REGISTRATION AND QUALIFICATION OF BONDS FOR SALE14
TAX RATE LIMITATION ...................................................2 LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE
USE OF BOND PROCEEDS.................................................2 PUBLIC FUNDS IN TEXAS .............................................. 14
THE REFUNDED BONDS ...................................................2 LEGAL MATTERS .......................................................... 15
OPTIONAL REDEMPTION..................................................2 AUTHENTICITY OF FINANCIAL DATA AND OTHER
MANDATORY SINKING FUND REDEMPTION .....................2 INFORMATION .............................................................. 15
DEFEASANCE ..................................................................3 FINANCIAL ADVISOR .................................................... 15
NOTICE OF REDEMPTION .................................................3 UNDERWRITING ............................................................ 15
BOOK-ENTRY-ONLY SYSTEM..........................................3 FORWARD-LOOKING STATEMENTS DISCLAIMER ........... 15
PAYING AGENT/REGISTRAR ............................................4 MISCELLANEOUS .......................................................... 16
TRANSFER, EXCHANGE AND REGISTRATION ....................5
RECORD DATE FOR INTEREST PAYMENT ..........................5
BONDHOLDERS’ REMEDIES .............................................5
TAX INFORMATION .....................................................6
AD VALOREM TAX LAW .................................................6
EFFECTIVE TAX RATE AND ROLLBACK TAX RATE ..........7
PROPERTY ASSESSMENT AND TAX PAYMENT ..................7
PENALTIES AND INTEREST ...............................................7
TAX MATTERS ...............................................................8
TAX EXEMPTION .............................................................8
TAX TREATMENT OF ORIGINAL ISSUE
DISCOUNT AND PREMIUM BONDS ......................9
DISCOUNT BONDS ...........................................................9
PREMIUM BONDS ..........................................................10
FINANCIAL POLICIES................................................10
BASIS OF ACCOUNTING .................................................10
NET ASSETS..................................................................10
CLASSIFICATION OF REVENUES .....................................11
SCHOLARSHIP DISCOUNTS AND ALLOWANCES ...............11
Schedule of Refunded Bonds .........................................................................................................................Schedule I
Table of Accreted Values ..............................................................................................................................Schedule II
Financial Information Regarding the District.............................................................................................. Appendix A
General Information Regarding the District's Students, Tuitions & Fees ................................................... Appendix B
Audited Financial Statement of the District for the Fiscal Year ended 2010 .............................................. Appendix C
Form of Bond Counsel’s Opinion ............................................................................................................... Appendix D
The cover page hereof, this page, the schedule, the table and the appendices included herein and any addenda, supplement or amendment hereto, are
part of the Official Statement.
OFFICIAL STATEMENT SUMMARY
This summary is subject in all respects to the more complete information and definitions contained or incorporated in this
Official Statement. The offering of the Bonds to potential investors is made only by means of this entire Official Statement. No
person is authorized to detach this summary from this Official Statement or to otherwise use it without the entire Official
Statement.
THE DISTRICT ...................... The San Jacinto Community College District (the "District") is a community college district and
a political subdivision of the State of Texas located within Harris and Chambers Counties, Texas
(see "INTRODUCTION - DESCRIPTION OF THE DISTRICT").
THE BONDS..................................... The Bonds are being issued as $68,118,357.20* Limited Tax General Obligation Building and
Refunding Bonds, Series 2011. They bear interest and mature as shown on the inside cover page
of this Official Statement. The Bonds are issued in part as Current Interest Bonds (the “CIBs”)
and in part as Capital Appreciation Bonds and Premium Capital Appreciation Bonds (together,
the “CABs”).
PAYMENT OF INTEREST ................. Interest on the CIBs will accrue from the Date of Delivery and will be payable as described on
the cover page hereof. Interest on the CABs accretes from the Date of Delivery. (See “THE
BONDS – DESCRIPTION OF THE BONDS”).
AUTHORITY FOR ISSUANCE............ The new money portion of the Bonds is being issued pursuant to the Constitution and general
laws of the State of Texas, including particularly Chapter 130, Texas Education Code, Chapter
1371, Texas Government Code, an election held within the District on May 10, 2008, an order
passed by the Board of Regents of the District (the “Order”), and a pricing officer’s certificate
executed pursuant to the Order. The refunding portion of the Bonds is issued pursuant to Chapter
1207, Texas Government Code (see “THE BONDS – AUTHORITY FOR ISSUANCE”).
SECURITY FOR THE BONDS ............ The Bonds are direct obligations of the District and are payable from an annual ad valorem tax
levied, within the limits prescribed by law, on all taxable property located within the District (see
“THE BONDS – SECURITY FOR BONDS”).
OPTIONAL REDEMPTION ............... The District reserves the right, at its option, to redeem CIBs having stated maturities on and after
February 15, 2023, in whole or in part in principal amounts of $5,000 or any integral multiple
thereof, on February 15, 2021, or any date thereafter, at the par value thereof plus accrued interest
to the date of redemption (see “THE BONDS – OPTIONAL REDEMPTION”). The CABs are not
subject to redemption prior to stated maturity.
MANDATORY SINKING
FUND REDEMPTION ....................... Term Bonds maturing on February 15 in the years 20__ and 20__ are subject to mandatory
sinking fund redemption prior to maturity at a price of par plus accrued interest to the redemption
date (see “THE BONDS – MANDATORY SINKING FUND REDEMPTION”).
TAX EXEMPTION ............................ In the opinion of Bond Counsel, interest on the Bonds is excludable from gross income for
federal income tax purposes under existing law, subject to the matters described under “Tax
Exemption” herein, and is not includable in the alternative minimum taxable income of
individuals. See “TAX MATTERS” for a discussion of the opinion of Bond Counsel, including
the alternative minimum tax on corporations.
USE OF THE BONDS ........................ Proceeds from the sale of the Bonds will be used to (i) construct and equip school buildings in
the District and for the purchase of necessary sites for school buildings; (ii) refund certain
outstanding bonds of the District as more particularly described in Schedule I (the “Refunded
Bonds”); and (iii) pay costs of issuance of the Bonds (see “THE BONDS – USE OF BOND
PROCEEDS”).
RATINGS ......................................... The Bonds are rated “Aa2” by Moody’s Investors Service, Inc. (“Moody’s”) and “AA” by
Standard & Poor’s Ratings Corporation (“S&P”) (see “OTHER INFORMATION – RATINGS”).
BOOK-ENTRY-ONLY
SYSTEM ...................................... The definitive Bonds will be initially registered and delivered only to Cede and Co., the
nominee of DTC pursuant to the Book-Entry-Only System described herein. Beneficial
ownership of the Bonds may be acquired in denominations of $5,000 or integral multiples
thereof. No physical delivery of the Bonds will be made to the beneficial owners thereof
(see “THE BONDS – BOOK-ENTRY ONLY SYSTEM”).
PAYMENT RECORD......................... The District has never defaulted in the timely payment of its tax-supported debt.
*Preliminary, subject to change.
ii
SELECTED FINANCIAL INFORMATION
VALUATION AND FUNDED DEBT HISTORY
Tax Ratio of Tax Supported Per Tax
Fiscal Supported Debt to Capita Supported
Year Taxable Debt Taxable Estimated Taxable Debt
Ended Assessed Change From Prior Year Outstanding at Assessed District Assessed Per
8/31 Valuation Amount Percent FYE Valuation Population Valuation Capita
2002 $ 23,939,259,000 $ 983,259,000 4.283% $ 61,545,000 0.257% 425,300 $ 56,288 $ 145
2003 25,027,781,710 1,088,522,710 4.547% 73,680,000 0.294% 435,609 57,455 169
2004 26,391,878,930 1,364,097,220 5.450% 89,970,000 0.341% 440,792 59,874 204
2005 27,462,180,560 1,070,301,630 4.055% 86,815,000 0.316% 443,684 61,896 196
2006 28,341,138,161 878,957,601 3.201% 82,140,000 0.290% 446,000 63,545 184
2007 31,590,596,942 3,249,458,781 11.466% 73,280,000 0.232% 449,000 70,358 163
2008 35,864,531,506 4,273,934,564 13.529% 183,307,000 0.511% 457,980 78,310 400
2009 39,049,915,986 3,185,384,480 8.882% 138,430,000 0.354% 464,850 84,005 298
2010 39,166,744,620 116,828,634 0.299% 275,490,000 0.703% 500,000 78,333 551
2011 36,512,755,061 (2,653,989,559) -6.776% 263,035,000 0.720% 500,000 73,026 526
Source: The District & Harris and Chambers County Appraisal Districts
TAX RATE, LEVY AND COLLECTION HISTORY
Tax Rate Distribution
Fiscal Year Local Interest & Tax Levy (a) Current Total
Ended 8/31 Tax Rate Maintenance Sinking Fund (in thousands) Collections (b) Collections
2002 $ 0.13071 $ 0.10128 $ 0.02943 $ 32,722 96.9% 98.7%
2003 0.13071 0.10128 0.02943 33,462 97.5% 99.6%
2004 0.13913 0.10970 0.02943 36,945 96.1% 98.7%
2005 0.13913 0.10970 0.02943 38,182 98.4% 100.0%
2006 0.14537 0.11593 0.02944 41,856 97.3% 100.0%
2007 0.14537 0.11593 0.02944 46,823 97.2% 100.0%
2008 0.14537 0.11593 0.02944 52,577 97.4% 99.0%
2009 0.16341 0.11593 0.04748 64,518 96.6% 99.0%
2010 0.17080 0.11429 0.05651 66,897 96.7% 98.1%
2011 0.17628 0.11429 0.06198 64,365 In Process of Collections
Source: Harris County Tax Assessor Collector and the District.
(a) As reported in notes to the financial statements for the year of the levy.
(b) Property tax only - does not include penalties and interest.
For additional information regarding the District, please contact:
Kenneth D. Lynn, CPA, Vice Chancellor of Fiscal Affairs David Tiffin
San Jacinto Community College District Clarence Grier
4624 Fairmont Pkwy., Suite 209 or RBC Capital Markets, LLC
Pasadena, TX 77504 Cityplace, Suite 2500
(281) 998-6306 Phone Dallas, TX 75204
(281) 998-6324 Fax (214) 989-1777 Phone
(214) 989-1650 Fax
iii
DISTRICT ADMINISTRATION
ADMINISTRATION OF THE DISTRICT
Policy-making and supervisory functions are the responsibility of, and are vested in, a seven-member Board of Regents who
serve six-year staggered terms with elections being held in May of each odd-numbered year. The Board of Trustees delegates
administrative responsibilities to the Chancellor who is the chief administrative officer of the District. Various supporting
services are provided by independent consultants and advisors.
ELECTED OFFICIALS
Term
Expires
Board of Regents Representative City Occupation (May)
Marie Flickinger, Chair Houston, Texas Newspaper Publisher 2013
Dan Mims, Vice Chair Channelview, Texas Owner of Mims Meat Co. 2015
Larry Wilson, Secretary Pasadena, Texas Attorney 2013
John Moon, Jr., Assistant Secretary Pasadena, Texas President & CEO Texas Coastal Bank 2015
Dr. Ruede Wheeler, D.D.S., Member La Porte, Texas Retired Dentist 2017
Keith Sinor, Member Deer Park, Texas Co-Owner & CFO Sinor Engine Co. 2017
Brad Hance, Member Pasadena, Texas President & CEO of MECO, Inc. 2017
APPOINTED OFFICIALS
Years of
Service
Name Position Within District
Dr. Brenda Hellyer Chancellor 11
Dr. Ron Rucker Vice Chancellor of Adminstration 46
Mr. Kenneth D. Lynn, CPA Vice Chancellor of Fiscal Affairs 4
Dr. Laurel Williamson Vice Chancellor of Instructional Programs and Services 4
Mr. James Fowler Vice Chancellor of Human Resources 43
Dr. H. Neil Matkin President, Centeral Campus 3
Dr. Allatia Harris President, North Campus 3
Dr. Maureen Murphy President, South Campus 4
CONSULTANTS AND ADVISORS
Bond Counsel ........................................................................................................................................................... Andrews Kurth LLP
Houston, Texas
Auditors ............................................................................................................................................... Mir Fox & Rodriguez, P.C., CPA
Houston, Texas
Financial Advisor ......................................................................................................................................... RBC Capital Markets, LLC
Dallas, Texas
iv
OFFICIAL STATEMENT
RELATING TO
$68,118,357.20* SAN JACINTO COMMUNITY COLLEGE DISTRICT
LIMITED TAX GENERAL OBLIGATION BUILDING AND REFUNDING BONDS, SERIES 2011
INTRODUCTION
This Official Statement provides certain information regarding the issuance by the San Jacinto Community College District (the
“District”) of its $68,118,357.20* Limited Tax General Obligation Building and Refunding Bonds, Series 2011 (the “Bonds”).
Except as otherwise indicated herein, capitalized terms used in this Official Statement have the same meanings assigned to such
terms in the order adopted by the Board of Regents authorizing the issuance of the Bonds (the “Order”).
There follows in this Official Statement descriptions of the Bonds and certain information regarding the District and its finances.
All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each such
document. Copies of such documents may be obtained from the District’s Financial Advisor, RBC Capital Markets, LLC,
Dallas, Texas.
DESCRIPTION OF THE DISTRICT
The District is a community college district and political subdivision of the State of Texas located in Harris and Chambers
Counties, Texas. The District is governed by a seven-member Board of Regents (the “Board”) who serve staggered six-year
terms with elections being held in May of each odd-numbered year. Policy-making and supervisory functions are the
responsibility of, and are vested in, the Board. The Board delegates administrative responsibilities to the Chancellor who is the
chief administrative officer of the District (see “DISTRICT ADMINISTRATION”). For more information regarding the
District, see “APPENDIX A – FINANCIAL INFORMATION REGARDING THE DISTRICT” and “APPENDIX B – GENERAL INFORMATION
REGARDING THE DISTRICT’S STUDENTS, TUITIONS, AND FEES”).
THE BONDS
DESCRIPTION OF THE BONDS
The Bonds are issued in part as Current Interest Bonds (the “CIBs”) and in part as Capital Appreciation Bonds and Premium
Capital Appreciation Bonds (together, the “CABs”). Interest on the CIBs will be computed on the basis of a 360-day year of
twelve 30-day months, and will be payable on August 15 and February 15 of each year, commencing February 15, 2012. Interest
on the CABs will accrete from the Date of Delivery. The Bonds will mature on the dates and in the principal amounts set forth
on the inside front cover page of this Official Statement. The Bonds will be issued only in fully registered form in any integral
multiple of $5,000 of principal amount and will be initially registered and delivered only to Cede & Co., the nominee of The
Depository Trust Company (“DTC”) pursuant to the Book-Entry-Only System described herein. No physical delivery of the
Bonds will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Bonds will be payable by
the Wells Fargo Bank, N.A. (the “Paying Agent/Registrar”) to Cede & Co., which will make distribution of the amounts so paid
to the beneficial owners of the Bonds. See “THE BONDS – BOOK-ENTRY-ONLY SYSTEM” herein.
YIELD ON CAPITAL APPRECIATION BONDS
The approximate yields of the CABs as set forth on the inside cover page of this Official Statement are based upon the initial
offering price therefor set forth on the inside cover page of this Official Statement. Such offering price includes the principal
amount of such CABs plus premium, if any, equal to the amount by which such offering price exceeds the principal amount of
such CABs. The yield on the CABs to a particular purchaser may differ depending upon the price paid by the purchaser. For
various reasons, securities that do not pay interest periodically, such as the CABs, have traditionally experienced greater price
fluctuations in the secondary market than securities that pay interest on a periodic basis.
AUTHORITY FOR ISSUANCE
The new money portion of the Bonds is being issued pursuant to the Constitution and general laws of the State of Texas,
including particularly Chapter 130, Texas Education Code, Chapter 1371, Texas Government Code, an election held within the
District on May 10, 2008, an order passed by the Board of Regents of the District (the “Order”), and a pricing officer’s certificate
executed pursuant to the Order. The refunding portion of the Bonds is issued pursuant to Chapter 1207, Texas Government
Code.
SECURITY FOR BONDS
The Bonds are direct obligations of the District and are payable from an annual ad valorem tax levied, within the limits
prescribed by law, on all taxable property located within the District, as provided in the Order.
*Preliminary, subject to change. 1
TAX RATE LIMITATION
Pursuant to Section 130.122, Texas Education Code, as amended, the District is authorized to levy annual ad valorem taxes for
debt service purposes, including payment of principal and interest on the Bonds, at a rate not to exceed $0.50 per $100 assessed
valuation of taxable property in the District. Furthermore, such bond tax, together with any maintenance tax shall not exceed
$1.00 per $100 assessed valuation of taxable property in the District.
USE OF BOND PROCEEDS
The proceeds of the Bonds will be used to (i) construct and equip school buildings in the District and for the purchase of
necessary sites for school buildings; (ii) refund certain outstanding bonds of the District as more particularly described in
Schedule I (the “Refunded Bonds”); and (iii) pay costs of issuance of the Bonds.
Sources:
Principal Amount of the Bonds $
Net Reoffering Premium
Total Sources of Funds $
Uses:
Deposit to Project Fund $
Deposit to Escrow Fund
Costs of Issuance and Underwriter’s Discount
Deposit to Interest & Sinking Fund
Total Uses of Funds $
THE REFUNDED BONDS
A portion of the proceeds of the Bonds, together with other available funds, if any, will be used to purchase a portfolio of
obligations authorized under Texas law (the “Escrowed Securities”) to be deposited in escrow (the “Escrow Fund”) with Wells
Fargo Bank, N.A. (the “Escrow Agent”), the maturing principal of and interest on which will be sufficient together with other
funds to pay, when due, the principal of and interest on the Escrowed Securities, together with other available funds held in the
Escrow Fund, to provide for the payment of the Refunded Bonds will be verified by Grant Thornton LLP, a firm of independent
certified public accountants. See “VERIFICATION OF MATHEMATICAL ACCURACY.”
In the opinion of Bond Counsel for the District, by making the escrow deposits required by the Order authorizing the issuance of
the Bonds and the escrow agreement to be entered into with the Escrow Agent in connection with the Refunded Bonds (the
“Escrow Agreement”), the District will have made firm banking and financial arrangements for the discharge and final payment
of the Refunded Bonds pursuant to the provisions of Chapter 1207, Texas Government Code, as amended. Thereafter, the
Refunded Bonds will be deemed to be fully paid and no longer outstanding, except for the purpose of being paid from the funds
provided therefore pursuant to the Escrow Agreement.
OPTIONAL REDEMPTION
The District reserves the right, at its option, to redeem CIBs having stated maturities on and after February 15, 2023, in whole or
in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2021, or any date thereafter, at the par
value thereof plus accrued interest to the date of redemption. If less than all of the CIBs are to be redeemed, the District may
select the maturities of CIBs to be redeemed. If a CIB (or any portion of the principal sum thereof) shall have been called for
redemption and notice of such redemption shall have been given, such CIB (or the principal amount thereof to be redeemed)
shall become due and payable on such redemption date and interest thereon shall cease to accrue from and after the redemption
date, provided funds for the payment of the redemption price and accrued interest thereon are held by the Paying Agent/Registrar
on the redemption date. The CABs are not subject to redemption prior to their stated maturity.
MANDATORY SINKING FUND REDEMPTION
The Bonds maturing on February 15 in the years 20__ and 20__ (the “Term Bonds”) are subject to mandatory redemption in part
prior to maturity at a price of par plus accrued interest to the redemption date as follows:
Bonds Maturing February 15, 20__ Bonds Maturing February 15, 20__
Redemption Redemption
Date Amount Date Amount
$ - $ -
- -
- -
- -
* - * -
*Maturity Date
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The particular Term Bonds to be redeemed shall be chosen by the Paying Agent/Registrar (or DTC while the Bonds are in Book-
Entry-Only form) at random by lot or other customary method; provided, however, that the principal amount of the Term Bonds
required to be redeemed pursuant to the operation of the mandatory redemption provisions shall be reduced, at the option of the
District, by the principal amount of said Term Bonds which, at least 45 days prior to the mandatory redemption date, (1) shall
have been acquired by the District and delivered to the Paying Agent/Registrar for cancellation or (2) shall have been redeemed
pursuant to the optional redemption provisions and not theretofore credited against a mandatory redemption requirement.
DEFEASANCE
The District reserves the right to defease the Bonds in any manner now or hereafter permitted by law.
NOTICE OF REDEMPTION
Not less than 30 days prior to an optional redemption date for the Bonds, the District shall cause a notice of redemption to be
sent by United States mail, first class, postage prepaid, to the registered owners of Bonds to be redeemed, in whole or in part, at
the address of the registered owner appearing on the registration books of the Paying Agent/Registrar. ANY NOTICE SO
MAILED SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN, WHETHER OR NOT THE
REGISTERED OWNER RECEIVES SUCH NOTICE. NOTICE HAVING BEEN SO GIVEN, THE BONDS CALLED FOR
REDEMPTION SHALL BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE, AND
NOTWITHSTANDING THAT ANY BOND OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR PAYMENT,
INTEREST ON SUCH BOND OR PORTION THEREOF SHALL CEASE TO ACCRUE.
BOOK-ENTRY-ONLY SYSTEM
This section describes how ownership of the Bonds is to be transferred and how the principal of, premium, if any, and interest on
the Bonds are to be paid to and credited by DTC while the Bonds are registered in its nominee name. The information in this
section concerning DTC and the Book-Entry-Only System has been provided by DTC for use in disclosure documents such as
this Official Statement. The District, the Financial Advisor and the Underwriters believe the source of such information to be
reliable, but none of the District, the Financial Advisor or the Underwriters take any responsibility for the accuracy or
completeness thereof.
The District, the Financial Advisor, and the Underwriters cannot and do not give any assurance that (1) DTC will distribute
payments of debt service on the Bonds, or other notices, to DTC Participants, (2) DTC Participants or others will distribute debt
service payments paid to DTC or its nominee (as the registered owner of the Bonds), or other notices, to the Beneficial Owners
(as hereinafter defined), or that they will do so on a timely basis, or (3) DTC will serve and act in the manner described in this
Official Statement. The current rules applicable to DTC are on file with the Securities and Exchange Commission, and the
current procedures of DTC to be followed in dealing with DTC Participants are on file with DTC.
DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name
of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC.
One fully-registered security will be issued for each maturity of the Bonds, as set forth on page ii hereof, each in the aggregate
principal amount of such maturity and will be deposited with DTC.
DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a
“banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing
corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million
issues of U.S. and non-U.S. equity, corporate and municipal debt issues, and money market instruments (from over 100
countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement
among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized
book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of
securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing
Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income
Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its registered subsidiaries.
Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust
companies, and clearing companies that clear through or maintain a custodial relationship with a Direct Participant, either
directly or indirectly (“Indirect Participants”). DTC has Standard & Poor’s highest rating: “AAA.” The DTC Rules applicable to
its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at
www.dtcc.com and www.dtc.org.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the
Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be
recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of
their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as
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well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered
into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct
and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their
ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s
partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit
of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in
beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the
identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners.
The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants,
and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject
to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take
certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions,
defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain
that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the
alternative, Beneficial Owners may wish to provide their names and addresses to the Paying Agent/Registrar and request that
copies of notices be provided directly to them.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a
Direct Participant in accordance with DTC’s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the
District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those
Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus
Proxy).
All payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized
representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding
detail information from the District or the Paying Agent/Registrar, on the payable date in accordance with their respective
holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and
customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street
name,” and will be the responsibility of such Participant and not of DTC, the Paying Agent/Registrar, or the District, subject to
any statutory or regulatory requirements as may be in effect from time to time. All payments to Cede & Co. (or such other
nominee as may be requested by an authorized representative of DTC) are the responsibility of the District or the Paying
Agent/Registrar, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of
such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to
the District or the Paying Agent/Registrar. Under such circumstances, in the event that a successor depository is not obtained,
Bond certificates are required to be printed and delivered (see “REGISTRATION, TRANSFER AND EXCHANGE – Future
Registration”).
The District may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities
depository.) In that event, Bonds will be printed and delivered in accordance with the Order.
Use of Certain Terms in Other Sections of this Official Statement.
In reading this Official Statement it should be understood that while the Bonds are in the Book-Entry-Only System, references in
other sections of this Official Statement to registered owners should be read to include the person for which the Participant
acquires an interest in the Bonds, but (i) all rights of ownership must be exercised through DTC and the Book-Entry-Only
System, and (ii) except as described above, notices that are to be given to registered owners under the Order will be given only to
DTC.
PAYING AGENT/REGISTRAR
The initial Paying Agent/Registrar is Wells Fargo Bank, N.A. In the Order, the District retains the right to replace the Paying
Agent/Registrar. The District covenants to maintain and provide a Paying Agent/Registrar at all times while the Bonds are
outstanding and any successor Paying Agent/Registrar shall be a commercial bank or trust company organized under the laws of
the United States or any State duly qualified and legally authorized to serve as and perform the duties and services of Paying
Agent/Registrar for the Bonds. Upon any change in the Paying Agent/Registrar for the Bonds, the District agrees to promptly
cause a written notice thereof to be sent to each registered owner of the Bonds by United States mail, first class, postage prepaid,
which notice shall also give the address of the new Paying Agent/Registrar.
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TRANSFER, EXCHANGE AND REGISTRATION
In the event that the Book-Entry-Only System should be discontinued, printed certificates will be issued to the holders, or owners
of the Bonds and thereafter, the Bonds may be transferred and exchanged on the registration books of the Paying Agent/Registrar
only upon presentation and surrender thereof to the Paying Agent/Registrar and such transfer or exchange shall be without
expense or service charge to the registered owner, except for any tax or other governmental charges required to be paid with
respect to such registration, exchange and transfer. A Bond may be assigned by the execution of an assignment form on the
Bond or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar. A new Bond or Bonds will be
delivered by the Paying Agent/Registrar, in lieu of the Bond being transferred or exchanged, at the principal office of the Paying
Agent/Registrar, or sent by United States mail, first class, postage prepaid, to the new registered owner or his designee. To the
extent possible, new Bonds issued in an exchange or transfer of Bonds will be delivered to the registered owner or assignee of
the registered owner in not more than three business days after the receipt of the Bonds to be canceled, and the written
instrument of transfer or request for exchange duly executed by the registered owner or his duly authorized agent, in form
satisfactory to the Paying Agent/Registrar. New Bonds registered and delivered in an exchange or transfer shall be in any
integral multiple of $5,000 of principal amount for any one maturity and for a like aggregate principal or maturity amount as the
Bond or Bonds surrendered for exchange or transfer. See “THE BONDS – BOOK-ENTRY-ONLY SYSTEM” herein for a description
of the system to be utilized initially in regard to ownership and transferability of the Bonds.
RECORD DATE FOR INTEREST PAYMENT
The record date (“Record Date”) for the interest payable on any interest payment date means the close of business on the last
business day of the preceding month.
In the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such
interest payment (a “Special Record Date”) will be established by the Paying Agent/Registrar, if and when funds for the payment
of such interest have been received by or on behalf of the District. Notice of the Special Record Date and of the scheduled
payment date of the past due interest (“Special Payment Date”), which shall be 15 days after the Special Record Date) shall be
sent at least five business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address
of each Holder of a Bond appearing on the registration books of the Paying Agent/Registrar at the close of business on the last
business day next preceding the date of mailing of such notice.
BONDHOLDERS’ REMEDIES
The Order does not establish specific events of default with respect to the Bonds. Under Texas law, there is no right to the
acceleration of maturity of the Bonds upon the failure of the District to observe any covenant under the Order. Such registered
owner's only practical remedy, if a default occurs, is a mandamus or mandatory injunction proceeding to compel the District to
levy, assess and collect an annual ad valorem tax sufficient to pay principal of and interest on the Bonds as it becomes due. The
enforcement of any such remedy may be difficult and time consuming and a registered owner could be required to enforce such
remedy on a periodic basis.
On June 30, 2006, the Texas Supreme Court ruled in Tooke v. City of Mexia, 197 S.W.3rd 325 (Tex. 2006) ("Tooke") that a
waiver of sovereign immunity must be provided for by statute in "clear and unambiguous" language. In so ruling, the Court
declared that statutory language such as "sue and be sued", in and of itself, did not constitute a clear and unambiguous waiver of
sovereign immunity. In Tooke, the Court noted the enactment in 2005 of sections 271.151-.160, Texas Local Government Code
(the "Local Government Immunity Waiver Act"), which, according to the Court, waives "immunity from suit for contract claims
against most local governmental entities in certain circumstances." The Local Government Immunity Waiver Act covers
community college districts and relates to contracts entered into by community college districts for providing goods or services
to community college districts. The District is not aware of any Texas court construing the Local Government Immunity Waiver
Act in the context of whether contractual undertakings of local governments that relate to their borrowing powers are contracts
covered by the Act. Neither the remedy of mandamus nor any other type of injunctive relief was at issue in Tooke, and it is
unclear whether Tooke will be construed to have any effect with respect to the exercise of mandamus, as such remedy has been
interpreted by Texas courts. In general, Texas courts have held that a writ of mandamus may be issued to require public officials
to perform ministerial acts that clearly pertain to their duties. Texas courts have held that a ministerial act is defined as a legal
duty that is prescribed and defined with a precision and certainty that leaves nothing to the exercise of discretion or judgment,
though mandamus is not available to enforce purely contractual duties. However, mandamus may be used to require a public
officer to perform legally-imposed ministerial duties necessary for the performance of a valid contract to which the State or a
political subdivision of the State is a party (including the payment of monies due under a contract).
The Order does not provide for the appointment of a trustee to represent the interest of the bondholders upon any failure of the
District to perform in accordance with the terms of the Order, or upon any other condition. The opinion of Bond Counsel will
note that the rights of bondholders are subject to the applicable provisions of the federal bankruptcy laws and any other similar
laws affecting the rights of creditors of political subdivisions generally, and may be limited by general principles of equity which
permit the exercise of judicial discretion.
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TAX INFORMATION
AD VALOREM TAX LAW
The appraisal of property within the District is the responsibility of the Harris and Chambers County Appraisal Districts (the
“Appraisal Districts”). Excluding agricultural and open-space land, which may be taxed on the basis of productive capacity, the
Appraisal Districts are required under the Property Tax Code to appraise all property within the Appraisal Districts on the basis
of 100% of its market value and is prohibited from applying any assessment ratios. In determining market value of property,
different methods of appraisal may be used, including the cost method of appraisal, the income method of appraisal and market
data comparison method of appraisal, and the method considered most appropriate by the chief appraiser is to be used. State law
further limits the appraised value of a residence homestead for a tax year to an amount not to exceed the less of (1) the market
value of the property, or (2) 110% of the appraised value of the residence homestead for the preceding tax year plus the market
value of all new improvements to the property. The value placed upon property within the Appraisal Districts is subject to review
by the Appraisal Review Boards for each Appraisal District, consisting of three members appointed by the Board of Directors of
the Appraisal Districts. The Appraisal Districts are required to review the value of property within the Appraisal Districts at least
every three years. The District may require annual review at its own expense, and is entitled to challenge the determination of
appraised value of property within the District by petition filed with the Appraisal Review Boards.
Reference is made to the Property Tax Code for identification of property subject to taxation; property exempt or which may be
exempted from taxation, if claimed; the appraisal of property for ad valorem taxation purposes; and the procedures and
limitations applicable to the levy and collection of ad valorem taxes.
Article VIII of the State Constitution (“Article VIII”) and State law provide for certain exemptions from property taxes, the
valuation of agricultural and open-space lands at productivity value, and the exemption of certain personal property from ad
valorem taxation.
Under Section 1-b, Article VIII, and State law, the governing body of a political subdivision, at its option, may grant: (1) an
exemption of not less than $3,000 of the market value of the residence homestead of persons 65 years of age or older and the
disabled from all ad valorem taxes thereafter levied by the political subdivision; and (2) an exemption of up to 20% of the market
value of residence homesteads. The minimum exemption under this provision is $5,000.
In the case of residence homestead exemptions granted under Section 1-b, Article VIII, ad valorem taxes may continue to be
levied against the value of homesteads exempted where ad valorem taxes have previously been pledged for the payment of debt
if cessation of the levy would impair the obligation of the contract by which the debt was created.
State law and Section 2, Article VIII, mandate an additional property tax exemption for disabled veterans or the surviving spouse
or children of a deceased veteran who died while on active duty in the armed forces; the exemption applies to either real or
personal property with the amount of assessed valuation exempted ranging from $5,000 to a maximum of $12,000. In addition, a
complete exemption is granted for the residential homesteads of disabled veterans determined to be 100% disabled by the U.S.
Department of Veterans Affairs.
Effective January 1, 2004, under Article VIII and State law, the governing body of a county, municipality or community college
district may freeze the total amount of ad valorem taxes levied on the residence homestead of a disabled person or persons 65
years of age or older to the amount of taxes imposed in the year such residence qualified for such exemption. Also, upon receipt
of a petition signed by five percent of the registered voters of the county, municipality or community college district, an election
must be held to determine by majority vote whether to establish such a limitation on taxes paid on residence homesteads of
persons 65 years of age or who are disabled. Upon providing for such exemption, such freeze on ad valorem taxes is transferable
to a different residence homestead and to a surviving spouse living in such homestead who is disabled or is at least 55 years of
age. If improvements (other than maintenance or repairs) are made to the property, the value of the improvements is taxed at the
then current tax rate, and the total amount of taxes imposed is increased to reflect the new improvements with the new amount of
taxes then serving as the ceiling on taxes for the following years. Once established, the tax rate limitation may not be repealed or
rescinded.
Article VIII provides that eligible owners of both agricultural land (Section 1-d) and open-space land (Section 1-d-1), including
open-space land devoted to farm or ranch purposes or open-space land devoted to timber production, may elect to have such
property appraised for property taxation on the basis of its productive capacity. The same land may not be qualified under both
Section 1-d and 1-d-1.
Non-business personal property, such as automobiles or light trucks, are exempt from ad valorem taxation unless the governing
body of a political subdivision elects to tax this property. Boats owned as non-business property are exempt from ad valorem
taxation.
Article VIII, Section 1-j, provides for “freeport property” to be exempted from ad valorem taxation. Freeport property is defined
as goods detained in Texas for 175 days or less for the purpose of assembly, storage, manufacturing, processing or fabrication.
Article VIII, section 1-n of the Texas Constitution provides for the exemption from taxation of “goods-in-transit.” “Goods-in-
transit” is defined by a provision of the Tax Code, which is effective for tax years 2008 and thereafter, as personal property
acquired or imported into Texas and transported to another location in the State or outside of the State within 175 days of the
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date the property was acquired or imported into Texas. The exemption excludes oil, natural gas, petroleum products, aircraft and
special inventory, including motor vehicle, vessel and out-board motor, heavy equipment and manufactured housing inventory.
The Tax Code provision permits local governmental entities, on a local option basis, to take official action by January 1 of the
year preceding a tax year, after holding a public hearing, to tax goods-in- transit during the following tax year. A taxpayer may
receive only one of the freeport exemptions or the goods-in-transit exemptions for items of personal property.
A city or county may create a tax increment financing district (“TIF”) within the city or county with defined boundaries and
establish a base value of taxable property in the TIF at the time of its creation. Overlapping taxing units, including the District,
may agree with the city or county to contribute all or part of future ad valorem taxes levied and collected against the
“incremental value” (taxable value in excess of the base value) of taxable real property in the TIF to pay or finance the costs of
certain public improvements in the TIF. Depending on the District’s level of participation in a TIF zone, if any, the District’s
ability to retain ad valorem taxes collected on the increased assessed valuation of real property in the TIF in excess of the tax
increment base value established for the TIF would be limited by the provisions of its participation in the TIF.
The District may also enter into tax abatement agreement to encourage economic development. Under the agreements, a
property owner agrees to construct certain improvements on its property. The District in turn agrees not to levy a tax on all or
part of the increased value attributable to the improvements until the expiration of the agreement. The abatement agreement
could last for a period of up to 10 years.
EFFECTIVE TAX RATE AND ROLLBACK TAX RATE
By each September 1 or as soon thereafter as practicable, the Board of Regents adopts a tax rate per $100 taxable value for the
current year. The tax rate consists of two components: (1) a rate for funding of maintenance and operation expenditures, and (2)
a rate for debt service.
Under the Property Tax Code, the District must annually calculate and publicize its “effective tax rate” and “rollback tax rate”.
The Board may not adopt a tax rate that exceeds the prior year’s levy until it has held two public hearings on the proposed
increase following notice to the taxpayers and otherwise complied with the Property Tax Code. If the adopted tax rate exceeds
the rollback tax rate the qualified voters of the District by petition may require that an election be held to determine whether or
not to reduce the tax rate adopted for the current year to the rollback tax rate.
“Effective tax rate” means the rate that will produce last year’s total tax levy (adjusted) from this year’s total taxable values
(adjusted).
“Adjusted” means lost values are not included in the calculation of last year’s taxes and new values are not included in this
year’s taxable values.
“Rollback tax rate” means the rate that will produce last year’s maintenance and operation tax levy (adjusted) from this year’s
values (adjusted) multiplied by 1.08 plus a rate that will produce this year’s debt service from this year’s values (unadjusted)
divided by the anticipated tax collection rate.
The Property Tax Code provides that certain cities and counties in the State may submit a proposition to the voters to authorize
an additional one-half cent sales tax on retail sales of taxable items. If the additional tax is levied, the effective tax rate and the
rollback tax rate calculations are required to be offset by the revenue that will be generated by the sales tax in the current year.
Reference is made to the Property Tax Code for definitive requirements for the levy and collection of ad valorem taxes and the
calculation of the various defined tax rates.
PROPERTY ASSESSMENT AND TAX PAYMENT
Property within the District is generally assessed as of January 1 of each year. Business inventory may, at the option of the
taxpayer, be assessed as of September 1. Oil and gas reserves are assessed on the basis of a valuation process which uses an
average of the daily price of oil and gas for the prior year. Taxes become due October 1 of the same year, and become delinquent
on February 1 of the following year. Taxpayers 65 years old or older are permitted by State law to pay taxes on homesteads in
four installments with the first due on February 1 of each year and the final installment due on August 1.
PENALTIES AND INTEREST
Charges for penalty and interest on the unpaid balance of delinquent taxes are made as follows:
Cumulative Cumulative
Month Penalty Interest Total
February 6% 1% 7%
March 7% 2% 9%
April 8% 3% 11%
May 9% 4% 13%
June 10% 5% 15%
July 12% 6% 18%
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After July, penalty remains at 12%, and interest increases at the rate of 1% each month. In addition, if an account is delinquent in
July, an attorney’s collection fee of up to 20% is added to the total tax penalty and interest charge.
Taxes levied by the District are a personal obligation of the owner of the property. On January 1 of each year, a tax lien attaches
to property to secure the payment of all taxes, penalties and interest ultimately imposed for the year on the property. The lien
exists in favor of the State and each taxing unit, including the District, having the power to tax the property. The District’s tax
lien is on a parity with tax liens of all other such taxing units. A tax lien on real property has priority over the claim of most
creditors and other holders of liens on the property encumbered by the tax lien, whether or not the debt or lien existed before the
attachment of the tax lien. Personal property under certain circumstances is subject to seizure and sale for the payment of
delinquent taxes, penalty and interest. At any time after taxes on property become delinquent, the District may file suit to
foreclose the lien securing payment of the tax, to enforce personal liability for the tax, or both. In filing a suit to foreclose a tax
lien on real property, the District must join other taxing units that have claims for delinquent taxes against all or part of the same
property. The ability of the District to collect delinquent taxes by foreclosure may be adversely affected by the amount of taxes
owed to other taxing units, adverse market conditions, taxpayer redemption rights, or bankruptcy proceedings which restrain the
collection of a taxpayer’s debt. Federal bankruptcy law provides that an automatic stay of actions by creditors and other entities,
including governmental units, goes into effect with the filing of any petition in bankruptcy. The automatic stay prevents
governmental units from foreclosing on property and prevents liens for post-petition taxes from attaching to property and
obtaining secured creditor status unless, in either case, an order lifting the stay is obtained from the bankruptcy court. In many
cases post petition taxes are paid as an administrative expense of the estate in bankruptcy or by order of the bankruptcy court.
Reference is made to the Property Tax Code for definitive requirements for the levy and collection of ad valorem taxes. For
more particular tax information regarding the District, see “APPENDIX A – FINANCIAL INFORMATION REGARDING THE DISTRICT.”
TAX MATTERS
TAX EXEMPTION
In the opinion of Andrews Kurth LLP, Houston, Texas, Bond Counsel, interest on the Bonds is (1) excludable under Section 103
of the Internal Revenue Code of 1986, as amended (the “Code”), from gross income of the owners thereof for federal income tax
purposes and (2) is not includable in the alternative minimum taxable income of individuals or corporations, except as described
below.
The foregoing opinions of Bond Counsel are based on the Code and the regulations, rulings and court decisions thereunder in
existence on the date of issue of the Bonds. Such authorities are subject to change and any such change could prospectively or
retroactively result in the inclusion of the interest on the Bonds in gross income of the owners thereof or change the treatment of
such interest for purposes of computing alternative minimum taxable income.
In rendering its opinions, Bond Counsel has assumed continuing compliance by the District with certain covenants of the Order
and has relied on representations by the District with respect to matters solely within the knowledge of the District, which Bond
Counsel has not independently verified. The covenants and representations relate to, among other things, the use of Bond
proceeds and any facilities financed therewith, the source of repayment of the Bonds, the investment of Bond proceeds and
certain other amounts prior to expenditure, and requirements that excess arbitrage earned on the investment of Bond proceeds
and certain other amounts be paid periodically to the United States and that the District file an information report with the
Internal Revenue Service (the “Service”). If the District should fail to comply with the covenants in the Order, or if its
representations relating to the Bonds that are contained in the Order should be determined to be inaccurate or incomplete, interest
on the Bonds could become taxable from the date of delivery of the Bonds, regardless of the date on which the event causing
such taxability occurs.
Interest on all tax-exempt obligations, such as the Bonds, owned by a corporation (other than an S corporation, a regulated
investment company, a real estate investment trust (REIT), a real estate mortgage investment conduit (REMIC) or a financial
asset securitization investment trust (FASIT)) will be included in such corporation’s adjusted current earnings for purposes of
calculating such corporation’s alternative minimum taxable income. A corporation’s alternative minimum taxable income is the
basis on which the alternative minimum tax imposed by the Code is computed.
Except as stated above, Bond Counsel will express no opinion as to any federal, state or local tax consequences resulting from
the ownership of, receipt or accrual of interest on or acquisition or disposition of the Bonds.
Bond Counsel’s opinion is not a guarantee of a result, but represents its legal judgment based upon its review of existing statutes,
regulations, published rulings and court decisions and the representations and covenants of the District described above. No
ruling has been sought from the Service with respect to the matters addressed in the opinion of Bond Counsel, and Bond
Counsel’s opinion is not binding on the Service. The Service has an ongoing program of auditing the tax-exempt status of the
interest on municipal obligations. If an audit of the Bonds is commenced, under current procedures the Service is likely to treat
the District as the “taxpayer,” and the owners of the Bonds may have no right to participate in the audit process. In responding
to or defending an audit of the tax-exempt status of the interest on the Bonds, the District may have different or conflicting
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interests from the owners of the Bonds. Public awareness of any future audit of the Bonds could adversely affect the value and
liquidity of the Bonds during the pendency of the audit, regardless of its ultimate outcome.
Under the Code, taxpayers are required to provide information on their returns regarding the amount of tax-exempt interest, such
as interest on the Bonds, received or accrued during the year.
Prospective purchasers of the Bonds should be aware that the ownership of tax-exempt obligations, such as the Bonds, may result
in collateral federal income tax consequences to, among others, financial institutions, life insurance companies, property and
casualty insurance companies, certain foreign corporations doing business in the United States, certain S corporations with
Subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits, taxpayers who are
deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations, taxpayers owning an interest in
a FASIT that holds tax-exempt obligations, and individuals otherwise eligible for the earned income tax credit. Such prospective
purchasers should consult their tax advisors as to the consequences of investing in the Bonds.
TAX TREATMENT OF ORIGINAL ISSUE DISCOUNT AND PREMIUM BONDS
DISCOUNT BONDS
Some of the Bonds may be offered at initial offering prices which are less than the stated redemption prices at maturity of such
Bonds. If a substantial amount of any maturity of the Bonds is sold to members of the public (which for this purpose excludes
bond houses, brokers and similar persons or entities acting in the capacity of wholesalers or underwriters) at such initial offering
price, an initial owner who purchases the Bonds of that maturity (the “Discount Bonds”) will be considered to have “original
issue discount” for federal income tax purposes equal to the difference between (a) the stated redemption price payable at the
maturity of such Discount Bond and (b) the initial offering price to the public of such Discount Bond. Under existing law, such
original issue discount will be treated for federal income tax purposes as additional interest on a Bond and such initial owner will
be entitled to exclude from gross income for federal income tax purposes that portion of such original issue discount deemed to
be earned (as discussed below) during the period while such Discount Bond continues to be owned by such initial owner. Except
as otherwise provided herein, the discussion regarding interest on the Bonds under the caption “TAX MATTERS” generally
applies to original issue discount deemed to be earned on a Discount Bond while held by an owner who has purchased such Bond
at the initial offering price in the initial public offering of the Bonds and that discussion should be considered in connection with
this portion of the Official Statement.
In the event of a redemption, sale, or other taxable disposition of a Discount Bond prior to its stated maturity, however, any
amount realized by such initial owner in excess of the basis of such Discount Bond in the hands of such owner (increased to
reflect the portion of the original issue discount deemed to have been earned while such Discount Bond continues to be held by
such initial owner) will be includable in gross income for federal income tax purposes.
Because original issue discount on a Discount Bond will be treated for federal income tax purposes as interest on a Bond, such
original issue discount must be taken into account for certain federal income tax purposes as it is deemed to be earned even
though there will not be a corresponding cash payment. Corporations that purchase Discount Bonds must take into account
original issue discount as it is deemed to be earned for purposes of determining alternative minimum tax. Other owners of a
Discount Bond may be required to take into account such original issue discount as it is deemed to be earned for purposes of
determining certain collateral federal tax consequences of owning a Bond. See “TAX EXEMPTION” for a discussion regarding
the alternative minimum taxable income consequences for corporations and for a reference to collateral federal tax consequences
for certain other owners.
The characterization of original issue discount as interest is for federal income tax purposes only and does not otherwise affect
the rights or obligations of the owner of a Discount Bond or of the District. The portion of the principal of a Discount Bond
representing original issue discount is payable upon the maturity or earlier redemption of such Bond to the registered owner of
the Discount Bond at that time.
Under special tax accounting rules prescribed by existing law, a portion of the original issue discount on each Discount Bond is
deemed to be earned each day. The portion of the original issue discount deemed to be earned each day is determined under an
actuarial method of accrual, using the yield to maturity as the constant interest rate and semi-annual compounding.
The federal income tax consequences of the purchase, ownership, redemption, sale or other disposition of Discount Bonds by an
owner that did not purchase such Bonds in the initial public offering and at the initial offering price may be determined
according to rules which differ from those described above. All prospective purchasers of Discount Bonds should consult their
tax advisors with respect to the determination for federal, state and local income tax purposes of interest and original issue
discount accrued upon redemption, sale or other disposition of such Discount Bonds and with respect to the federal, state, local
and foreign tax consequences of the purchase, ownership, redemption, sale or other disposition of such Discount Bonds.
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PREMIUM BONDS
Some of the Bonds may be offered at initial offering prices which exceed the stated redemption prices payable at the maturity of
such Bonds. If a substantial amount of any maturity of the Bonds is sold to members of the public (which for this purpose
excludes bond houses, brokers and similar persons or entities acting in the capacity of wholesalers or underwriters) at such initial
offering price, each of the Bonds of such maturity (“Premium Bonds”) will be considered for federal income tax purposes to
have “bond premium” equal to the amount of such excess. The basis for federal income tax purposes of a Premium Bond in the
hands of an initial purchaser who purchases such Bond in the initial offering must be reduced each year and upon the sale or
other taxable disposition of the Bond by the amount of amortizable bond premium. This reduction in basis will increase the
amount of any gain (or decrease the amount of any loss) recognized for federal income tax purposes upon the sale or other
taxable disposition of a Premium Bond by the initial purchaser. Generally, no corresponding deduction is allowed for federal
income tax purposes, for the reduction in basis resulting from amortizable bond premium. The amount of bond premium on a
Premium Bond which is amortizable each year (or shorter period in the event of a sale or disposition of a Premium Bond) is
determined under special tax accounting rules which use a constant yield throughout the term of the Premium Bond based on the
initial purchaser’s original basis in such Bond .
The federal income tax consequences of the purchase, ownership, redemption, sale or other disposition by an owner of Bonds
that are not purchased in the initial offering or which are purchased at an amount representing a price other than the initial
offering prices for the Bonds of the same maturity may be determined according to rules which differ from those described
above. Moreover, all prospective purchasers of Bonds should consult their tax advisors with respect to the federal, state, local
and foreign tax consequences of the purchase, ownership, redemption, sale or other disposition of Premium Bonds.
FINANCIAL POLICIES
The significant accounting policies followed by the District in preparing financial statements are in accordance with the Texas
Higher Education Coordinating Board’s Annual Financial Reporting Requirements for Texas Public Community and Junior
Colleges. These requirements are in substantial conformity with the AICPA Industry Audit Guide, Audits of Colleges and
Universities, 1973 and as modified by applicable FASB pronouncements issued through November 1989 and as modified by all
applicable GASB pronouncements cited in Codification Section Co5, “Colleges and Universities.” In June 1999, the GASB
issued Statement No. 34, Basic Financial Statements and Management Discussion and Analysis for State and Local
Governments. This was followed in November 1999 by GASB Statement No. 35, Basic Financial Statements and Management’s
Discussion and Analysis for Public Colleges and Universities. The financial statement presentation required by GASB No. 34
and No. 35 provides a comprehensive, entity-wide perspective of the District’s assets, liabilities, net assets, revenues, expenses,
changes in net assets, cash flows, and replaces the fund-group perspective previously required.
BASIS OF ACCOUNTING
For financial statement purposes, the District is considered a special-purpose government engaged only in business-type
activities. Accordingly, the financial statements of the District are presented using the economic measurement focus and the
accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned, and expenses are
recorded when an obligation has been incurred. All significant intra-agency transactions have been eliminated. Encumbrance
accounting, under which purchase order, contracts, and other commitments for expenditures of funds are recorded in order to
reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration in the financial
statements. Under Texas law, appropriations lapse at August 31, and encumbrances outstanding at that time are to be either
canceled or appropriately provided for in the subsequent year’s budget. Encumbrances outstanding at year-end that were
provided for in the subsequent year’s budget are reported as reservations of net assets since they do not constitute expenditures or
liabilities.
NET ASSETS
The District’s net assets are classified as follows:
Invested in Capital Assets, Net of Related Debt…This represents the District’s total investment in capital assets, net of
outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital
assets, such amounts are not included as a component of invested in capital assets, net of related debt.
Restricted Net Assets – Expendable…Restricted expendable net assets include resources in which the District is legally or
contractually obligated to spend resources in accordance with restrictions imposed by external third parties.
Restricted Net Assets – Nonexpendable…Restricted nonexpendable net assets consist of endowment and similar type funds in
which donors or other outside sources have stipulated, as condition of the gift instrument, that the principal is to be maintained
inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended
or added to principal.
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Unrestricted Net Assets…Unrestricted net assets represent resources derived from student tuition and fees, state appropriations,
and sales and services of educational departments and auxiliary enterprises. These resources are used for transactions relating to
the educational and general operations of the District, and may be used at the discretion of the governing board to meet the
current expenses for any purpose. These resources also include auxiliary enterprises, which are substantially self-supporting
activities that provide services for students, faculty and staff.
Investments…The District accounts for its investments at fair value in accordance with GASB Statement No. 31, Accounting and
Financial Reporting for Certain Investments and for External Investment Pools. Changes in unrealized gain (loss) on the carrying
values of investments are reported as a component of investment income in the statements of revenue, expenses, and changes in
net assets.
CLASSIFICATION OF REVENUES
The District has classified its revenues as either operating or non-operating revenues according to the following criteria:
Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as (1)
student tuition and fees, net of scholarship discounts and allowances, (2) sales and services of auxiliary enterprises, net of
scholarship discounts and allowances, (3) most Federal, state and local grants and contracts and Federal appropriations, and (4)
interest on institutional student loans.
Non-operating revenues: Non-operating revenues include activities that have the characteristics of non-exchange transactions,
such as gifts and contributions, and other revenue sources that are defined as non-operating revenues under GASB No. 9,
Reporting Cash Flows of Propriety and Nonexpendable Trust Funds and Governmental Entities that use Proprietary Fund
Accounting, and GASB No. 34, such as state appropriations and investment income.
SCHOLARSHIP DISCOUNTS AND ALLOWANCES
Student tuition and fee revenues, and certain other revenue from students, are reported net scholarship discounts and allowances
in the statements of revenues, expenses, and changes in net assets. Scholarship discounts and allowances are the difference
between the stated charge for goods and services provided by the District, and the amount that is paid by students and/or third
parties making payments on the students’ behalf. Certain governmental grants, such as Pell grants, and other Federal, state or
nongovernmental programs are recorded as either operating or non-operating revenues in the District’s financial statements. To
the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the District has
recorded a scholarship discount and allowance.
INVESTMENTS
The District invests its investable funds in investments authorized by Texas law in accordance with investment policies approved by
the Board. Both state law and the District’s investment policies are subject to change. See Table A-11 in Appendix A for a
description of the District’s investments as of August 31, 2010.
LEGAL INVESTMENTS
Available District funds are invested as authorized by Texas law and in accordance with investment policies approved by the
Board. Both state law and the District's investment policies are subject to change. Under Texas law, the District is authorized to
invest in (1) obligations of the United States or its agencies and instrumentalities, including letters of credit; (2) direct obligations
of the State of Texas or its agencies and instrumentalities; (3) collateralized mortgage obligations directly issued by a federal
agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency or instrumentality
of the United States; (4) other obligations, the principal and interest of which is guaranteed or insured by or backed by the full
faith and credit of, the State of Texas or the United States or their respective agencies and instrumentalities; (5) obligations of
states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally
recognized investment rating firm not less than A or its equivalent; (6) bonds issued, assumed or guaranteed by the State of
Israel; (7) certificates of deposit that are issued by or through an institution that either has its main office or a branch in Texas,
and are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund,
or are secured as to principal by obligations described in clauses (1) through (6) or in any other manner and amount provided by
law for District deposits; (8) fully collateralized repurchase agreements that have a defined termination date, are fully secured by
obligations described in clause (1), and are placed through a primary government securities dealer or a financial institution doing
business in the State of Texas, (9) securities lending programs if (i) the securities loaned under the program are 100%
collateralized, a loan made under the program allows for termination at any time and a loan made under the program is either
secured by (a) obligations that are described in clauses (1) through (6) above, (b) irrevocable letters of credit issued by a state or
national bank that is continuously rated by a nationally recognized investment rating firm at not less than A or its equivalent or
(c) cash invested in obligations described in clauses (1) through (6) above, clauses (11) through (13) below, or an authorized
investment pool; (ii) securities held as collateral under a loan are pledged to the District, held in the District's name and deposited
at the time the investment is made with the District or a third party designated by the District; (iii) a loan made under the
program is placed through either a primary government securities dealer or a financial institution doing business in the State of
Texas; and (iv) the agreement to lend securities has a term of one year or less, (10) certain bankers' acceptances with the
remaining term of 270 days or less, if the short-term obligations of the accepting bank or its parent are rated at least A-1 or P-1 or
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the equivalent by at least one nationally recognized credit rating agency, (11) commercial paper with a stated maturity of 270
days or less that is rated at least A-1 or P-1 or the equivalent by either (a) two nationally recognized credit rating agencies or (b)
one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a U.S. or
state bank, (12) no-load money market mutual funds registered with and regulated by the Securities and Exchange Commission
that have a dollar weighted average stated maturity of 90 days or less and include in their investment objectives the maintenance
of a stable net asset value of $1 for each share, and (13) no-load mutual funds registered with the Securities and Exchange
Commission that have an average weighted maturity of less than two years, invest exclusively in obligations described in the this
paragraph, and are continuously rated as to investment quality by at least one nationally recognized investment rating firm of not
less than AAA or its equivalent. In addition, bond proceeds may be invested in guaranteed investment contracts that have a
defined termination date and are secured by obligations, including letters of credit, of the United States or its agencies and
instrumentalities in an amount at least equal to the amount of bond proceeds invested under such contract, other than the
prohibited obligations described in the next succeeding paragraph.
The District may invest in such obligations directly or through government investment pools that invest solely in such
obligations provided that the pools are rated no lower than AAA or Aaa or an equivalent by at least one nationally recognized
rating service. The District may also contract with an investment management firm registered under the Investment Advisers Act
of 1940 (15 U.S.C. Section 80b-1 et seq.) or with the State Securities Board to provide for the investment and management of its
public funds or other funds under its control for a term up to two years, but the District retains ultimate responsibility as fiduciary
of its assets. In order to renew or extend such a contract, the District must do so by order, ordinance, or resolution. The District
is specifically prohibited from investing in: (1) obligations whose payment represents the coupon payments on the outstanding
principal balance of the underlying mortgage-backed security collateral and pays no principal; (2) obligations whose payment
represents the principal stream of cash flow from the underlying mortgage-backed security and bears no interest; (3)
collateralized mortgage obligations that have a stated final maturity of greater than 10 years; and (4) collateralized mortgage
obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index.
INVESTMENT POLICIES
Under Texas law, the District is required to invest its funds under written investment policies that primarily emphasize safety of
principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability of investment
management; and that includes a list of authorized investments for District funds, maximum allowable stated maturity of any
individual investment and the maximum average dollar-weighted maturity allowed for pooled fund groups. All District funds must
be invested consistent with a formally adopted "Investment Strategy Statement" that specifically addresses each funds’ investment.
Each Investment Strategy Statement will describe its objectives concerning: (1) suitability of investment type, (2) preservation and
safety of principal, (3) liquidity, (4) marketability of each investment, (5) diversification of the portfolio, and (6) yield.
Under Texas law, District investments must be made "with judgment and care, under prevailing circumstances, that a person of
prudence, discretion, and intelligence would exercise in the management of the person’s own affairs, not for speculation, but for
investment, considering the probable safety of capital and the probable income to be derived." At least quarterly the investment
officers of the District shall submit an investment report detailing: (1) the investment position of the District, (2) that all investment
officers jointly prepared and signed the report, (3) the beginning market value, any additions and changes to market value and the
ending value of each pooled fund group, (4) the book value and market value of each separately listed asset at the beginning and end
of the reporting period, (5) the maturity date of each separately invested asset, (6) the account or fund or pooled fund group for which
each individual investment was acquired, and (7) the compliance of the investment portfolio as it relates to: (a) adopted investment
strategy statements and (b) state law. No person may invest District funds without express written authority from the Board.
ADDITIONAL PROVISIONS
Under Texas law, the District is additionally required to: (1) annually review its adopted policies and strategies, (2) require any
investment officers with personal business relationships or family relationships with firms seeking to sell securities to the District to
disclose the relationship and file a statement with the Texas Ethics Commission and the District, (3) require the registered principal of
firms seeking to sell securities to the District to: (a) receive and review the District's investment policy, (b) acknowledge that
reasonable controls and procedures have been implemented to preclude imprudent investment activities, and (c) deliver a written
statement attesting to these requirements; (4) in conjunction with its annual financial audit, perform a compliance audit of the
management controls on investments and adherence to the District's investment policy, (5) restrict reverse repurchase agreements to
not more than 90 days and restrict the investment of reverse repurchase agreement funds to no greater than the term of the reverse
repurchase agreement, (6) restrict the investment in non-money market mutual funds in the aggregate to no more than 15% of the
District's monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service, (7) require local
government investment pools to conform to the new disclosure, rating, net asset value, yield calculation, and advisory board
requirements and (8) provide specific investment training for the Treasurer, the chief financial officer (if not the Treasurer) and the
investment officer.
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EMPLOYEES RETIREMENT SYSTEM
The District employees are required by State law to participate in either the Teacher Retirement System of Texas or an optional
retirement program. In both systems the State of Texas sets contribution levels for employees and the State. The District has no
pension fund expenditures or liabilities.
VERIFICATION OF MATHEMATICAL ACCURACY
The accuracy of the mathematical computations of the adequacy of the maturing principal of and interest earned on the Escrowed
Securities, together with other available funds held in the Escrow Fund, to provide for the payment of the Refunded Bonds will be
verified by Grant Thornton LLP, a firm of independent certified public accountants.
These computations will be based upon information and assumptions supplied by the Underwriters on behalf of the District. Grant
Thornton LLP has restricted its procedures to recalculating the computations provided by the Underwriters and has not evaluated or
examined the assumptions or information used in the computations.
CONTINUING DISCLOSURE OF INFORMATION
In the Order, the District has made the following agreement for the benefit of the holders and beneficial owners of the Bonds. The
District is required to observe the agreement for so long as it remains obligated to advance funds to pay the Bonds. Under the
agreement, the District will be obligated to provide certain updated financial information and operating data annually, and timely
notice of specified material events, to the Municipal Securities Rulemaking Board (the “MSRB”) through its Electronic Municipal
Market Access (“EMMA”) system.
ANNUAL REPORTS
The District will provide certain updated financial information and operating data to the MSRB annually. The information to be
updated includes all quantitative financial information and operating data with respect to the District of the general type included in
this Official Statement in Appendix A (excluding Table A-6 – Overlapping Debt) and Appendix C. The District will update and
provide this information within six months after the end of each fiscal year. The District will provide the updated information to the
MSRB.
The District may provide updated information in full text or may incorporate by reference certain other publicly available documents,
as permitted by SEC Rule 15c2-12. The updated information will include audited financial statements, if the District commissions an
audit and it is completed by the required time. If audited financial statements are not available by the required time, the District will
provide audited financial statements when and if the audit report becomes available and the District will provide unaudited financial
statements until the audit becomes available. Any such financial statements will be prepared in accordance with the accounting
principles described in Appendix C or such other accounting principles as the District may be required to employ from time to time
pursuant to state law or regulation.
The District’s current fiscal year end is August 31. Accordingly, it must provide updated information by the last day of February in
each year, unless the District changes its fiscal year. If the District changes its fiscal year, it will notify the MSRB of the change.
EVENT NOTICES
The District also will provide timely notices of any of the following events with respect to the Bonds (not in excess of ten (10)
business days after the occurrence of the event): (1) principal and interest payment delinquencies; (2) non-payment related defaults, if
material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit
enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse
tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed
Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other materials
events affecting the tax status of the Bonds; (7) modifications to rights of holders of the Bonds, if material; (8) Bond calls, if material,
and tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds, if material; (11)
rating changes; (12) bankruptcy, insolvency, receivership, or similar event of the District; (13) the consummation of a merger,
consolidation, or acquisition involving the District or the sale of all or substantially all of the assets of the District, other than in the
ordinary course of business, the entry into a definitive agreement to undertake such action, or the termination of a definitive
agreement relating to any such actions, other than pursuant to its terms, if material; and (14) the appointment of a successor or
additional trustee or change of name of the trustee, if material. Neither the Bonds nor the Order make any provision for liquidity
enhancement or require the funding of debt service reserves. In addition, the District will provide timely notice of any failure by the
District to provide annual financial information, data or financial statements in accordance with its agreement described above under
“Annual Reports.” The District will provide each notice described in this paragraph to the MSRB in an electronic format, as
prescribed by the MSRB.
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LIMITATIONS AND AMENDMENTS
The District has agreed to update information and to provide notices of material events only as described above. The District has
not agreed to provide other information that may be relevant or material to a complete presentation of its financial results of
operations, condition, or prospects or agreed to update any information that is provided, except as described above. The District
makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell
Bonds at any future date. The District disclaims any contractual or tort liability for damages resulting in whole or in part from
any breach of its continuing disclosure agreement or from any statement made pursuant to its agreement, although holders of
Bonds may seek a writ of mandamus to compel the District to comply with its agreement.
The District may amend its continuing disclosure agreement from time to time to adapt to changed circumstances that arise from
a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the District, if
(i) the agreement, as amended, would have permitted an underwriter to purchase or sell Bonds in the initial primary offering in
compliance with the SEC Rule 15c 2-12, taking into account any amendments or interpretations of the SEC Rule 15c 2-12 to the
date of such amendment, as well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate
principal amount of the outstanding Bonds consent to the amendment or (b) any person unaffiliated with the District (such as
nationally recognized bond counsel) determines that the amendment will not materially impair the interests of the holders and
beneficial owners of the Bonds. If the District so amends the agreement, it has agreed to include with the next financial
information and operating data provided in accordance with its agreement described above under “Annual Reports” an
explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of financial
information and operating data so provided.
COMPLIANCE WITH PRIOR UNDERTAKINGS
During the last five years, the District has complied in all material respects with all continuing disclosure agreements made
by it in accordance with the Rule.
OTHER INFORMATION
RATINGS
The presently outstanding tax supported uninsured debt of the District is rated “Aa2” by Moody’s Investors Service, Inc.
(“Moody’s”) and “AA” by Standard & Poor’s Ratings Corporation (“S&P”). The Bonds are assigned ratings of “Aa2” by
Moody’s and “AA” by S&P. An explanation of the significance of such ratings may be obtained from the companies furnishing
the ratings. The ratings reflect only the respective views of such organizations and the District makes no representation as to the
appropriateness of the ratings. There is no assurance that such ratings will continue for any given period of time or that they will
not be revised downward or withdrawn entirely by such rating companies, if in the judgment of such companies, circumstances
so warrant. Any such downward revision or withdrawal of such ratings, or either of them, may have an adverse effect on the
market price of the Bonds.
LITIGATION
The District is not a party to any litigation or other proceeding pending or to its knowledge, threatened, in any court, agency or
other administrative body (either state or federal) contesting or attacking the Bonds; restraining or enjoining the issuance,
execution or delivery of the Bonds; affecting the provisions made for the payment of or security for the Bonds; in any manner
questioning the authority or proceedings for the issuance, execution or delivery of the Bonds; affecting the validity of the Bonds,
or which, if decided adversely to the District, would have a material adverse effect on the financial condition or operations of the
District.
REGISTRATION AND QUALIFICATION OF BONDS FOR SALE
The sale of the Bonds has not been registered under the Federal Securities Act of 1933, as amended, in reliance upon the
exemption provided thereunder by Section 3(a)(2); and the Bonds have not been qualified under the Securities Act of Texas in
reliance upon various exemptions contained therein; nor have the Bonds been qualified under the securities acts of any
jurisdiction. The District assumes no responsibility for qualification of the Bonds under the securities laws of any jurisdiction in
which the Bonds may be sold, assigned, pledged, hypothecated or otherwise transferred. This disclaimer of responsibility for
qualification for sale or other disposition of the Bonds shall not be construed as an interpretation of any kind with regard to the
availability of any exemption from securities registration provisions.
LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS
Pursuant to the Texas Public Securities Procedures Act, Chapter 1201, Texas Government Code, as amended, the Bonds are legal
investments for (a) an insurance company, (b) a fiduciaries or trustee, or (c) a sinking fund of a municipality or other political
subdivision or public agency of the State of Texas. Most political subdivisions in the State of Texas are required to adopt
investment guidelines under the Public Funds Investment Act, Chapter 2256, Texas Government Code, and such political
subdivisions may impose a requirement consistent with such act that the Bonds have a rating of not less than “A” or its
equivalent to be legal investments for such entity’s funds. The Bonds are eligible under the Public Funds Collateral Act, Chapter
2257, Texas Government Code, to secure deposits of public funds of the State or any political subdivision or public agency of
14
the State and are lawful and sufficient security for those deposits to the extent of their market value. Again, political
subdivisions in the State of Texas may impose a requirement that the Bonds have a rating of not less than “A” or its equivalent to
be eligible to serve as collateral for their funds.
The District makes no representation that the Bonds will be acceptable to public entities to secure their deposits, or acceptable to
any such institutions or entities for investment purposes.
The District has made no investigation of other laws, regulations or investment criteria which might apply to any such persons or
entities or which might otherwise limit the suitability of the Bonds for any of the foregoing purposes or limit the authority of
such persons or entities to purchase or invest in the Bonds for such purposes.
LEGAL MATTERS
The District will furnish a complete transcript of proceedings incident to the authorization and issuance of the Bonds, including
the unqualified approving legal opinion of the Attorney General of Texas to the effect that the Bonds are valid and legally
binding obligations of the District payable from the proceeds of an annual ad valorem tax levied, within the limits prescribed by
law, upon all taxable property in the District, and the legal opinion of Andrews Kurth LLP, Bond Counsel, a copy of the
proposed form of which is attached hereto as Appendix D.
Bond Counsel was not requested to participate, and did not take part, in the preparation of this Official Statement, and such firm has
not assumed any responsibility with respect thereto or undertaken independently to verify any of the information contained therein,
except that, Bond Counsel has reviewed the statements and information contained in the Official Statement under the captions and
sub-captions “THE BONDS” (except for the information under the sub-captions “Book-Entry-Only System,” “Yield on Capital
Appreciation Bonds,” and “Use of Bond Proceeds,” as to which no opinion is expressed) and “CONTINUING DISCLOSURE OF
INFORMATION” (except for the information under the sub-caption “Compliance With Prior Undertakings,” as to which no opinion
is expressed), and Bond Counsel is of the opinion that the statements and information contained therein fairly and accurately reflect
the provisions of the Order; further, Bond Counsel has reviewed the statements and information contained in the Official Statement
under the captions and sub-captions “TAX MATTERS,” “TAX TREATMENT OF ORIGINAL ISSUE DISCOUNT AND
PREMIUM BONDS,” “OTHER INFORMATION – LEGAL MATTERS,” “OTHER INFORMATION – REGISTRATION AND
QUALIFICATION OF BONDS FOR SALE” and “OTHER INFORMATION – LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC
FUNDS IN TEXAS” and Bond Counsel is of the opinion that the statements and information contained therein are correct as to matters
of law.
AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION
The financial data and other information contained herein have been obtained from the District’s records, audited financial
statements and other sources which are believed to be reliable. There is no guarantee that any of the assumptions or estimates
contained herein will be realized. All of the summaries of the statutes, documents, orders and resolutions contained in this
Official Statement are made subject to all of the provisions of such statutes, documents, orders and resolutions. These
summaries do not purport to be complete statements of such provisions and reference is made to such documents for further
information. Reference is made to original documents in all respects.
FINANCIAL ADVISOR
RBC Capital Markets, LLC is employed as Financial Advisor to the District in connection with the issuance of the Bonds. The
Financial Advisor’s fee for services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery
of the Bonds. RBC Capital Markets, LLC, in its capacity as Financial Advisor has not verified and does not assume any
responsibility for the information, covenants and representations contained in any of the legal documents with respect to the
federal income tax status of the Bonds, or the possible impact of any present, pending or future actions taken by any legislative
or judicial bodies.
The Financial Advisor may also receive a fee for conducting a competitive bidding process regarding the investment of certain
proceeds of the Bonds.
UNDERWRITING
The Underwriters have agreed, subject to certain conditions, to purchase the Bonds from the District, at an underwriting discount
of $________. The Underwriters will be obligated to purchase all of the Bonds if any Bonds are purchased. The Bonds to be
offered to the public may be offered and sold to certain dealers (including the Underwriters and other dealers depositing Bonds
into investment trusts) at prices lower than the public offering prices of such Bonds and such public offering prices may be
changed, from time to time, by the Underwriters.
FORWARD-LOOKING STATEMENTS DISCLAIMER
The statements contained in this Official Statement, and in any other information provided by the District, that are not purely
historical, are forward-looking statements, including statements regarding the District's expectations, hopes, intentions, or
strategies regarding the future. Readers should not place undue reliance on forward-looking statements. All forward-looking
statements included in this Official Statement are based on information available to the District on the date hereof, and the
15
District assumes no obligation to update any such forward-looking statements. The District's actual results could differ materially
from those discussed in such forward-looking statements.
The forward-looking statements included herein are necessarily based on various assumptions and estimates and are inherently
subject to various risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying
assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal, and
regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including customers, suppliers,
business partners and competitors, and legislative, judicial, and other governmental authorities and officials. Assumptions related
to the foregoing involve judgments with respect to, among other things, future economic, competitive, and market conditions and
future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control
of the District. Any of such assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking
statements included in this Official Statement will prove to be accurate.
MISCELLANEOUS
The Order authorizing the issuance of the Bonds approved the form and content of this Official Statement, and any addenda,
supplement or amendment thereto, and authorizes its further use in the reoffering of the Bonds by the Underwriter.
/s/
Chair, Board of Regents
San Jacinto Community College District
ATTEST:
/s/
Secretary, Board of Regents
San Jacinto Community College District
16
SCHEDULE I
SCHEDULE OF BONDS TO BE REFUNDED
Original Original Principal Maturities Principal Principal
Dated Principal Amount Being Amount Amount Being Redemption
Series to be Refunded Dated Amount Outstanding Refunded Outstanding Refunded Date
(A)
Limited Tax General Obligation 07/15/09 $ 150,000,000.00 $ 145,000,000.00 02/15/12 $ 11,430,000.00 $ 2,500,000.00
(A)
Building Bonds, Series 2009 02/15/15 5,000,000.00 560,000.00
$ 16,430,000.00 $ 3,060,000.00
__________
(A)
Will be defeased to maturity.
Schedule I
SCHEDULE II
SCHEDULE OF ACCRETED VALUES OF THE CAPITAL APPRECIATION BONDS
CABs Delivery Date: August 9, 2011.
02/15/2013 02/15/2014 02/15/2015 02/15/2016 02/15/2017 02/15/2018 02/15/2019 02/15/2020 02/15/2021 02/15/2022 02/15/2023 02/15/2024 02/15/2025 02/15/2026
Initial Initial Initial Initial Initial Initial Initial Initial Initial Initial Initial Initial Initial Initial
Offering Offering Offering Offering Offering Offering Offering Offering Offering Offering Offering Offering Offering Offering
Yield Yield Yield Yield Yield Yield Yield Yield Yield Yield Yield Yield Yield Yield
@% @% @% @% @% @% @% @% @% @% @% @% @% @%
08/09/11 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
08/15/11
02/15/12
08/15/12
02/15/13
08/15/13
02/15/14
08/15/14
02/15/15
08/15/15
02/15/16
08/15/16
02/15/17
08/15/17
02/15/18
08/15/18
02/15/19
08/15/19
02/15/20
08/15/20
02/15/21
08/15/21
02/15/22
08/15/22
02/15/23
08/15/23
02/15/24
08/15/24
02/15/25
08/15/25
02/15/26
Schedule II
APPENDIX A
Financial Information Regarding the District
A-1
Appendix A Tables
THE PROPERTY TAX CODE AS APPLIED TO THE DISTRICT
The Harris County Appraisal District and the Chambers County Appraisal District ("Appraisal Districts") have the responsibility for
appraising property in the District as well as other taxing units in the area. Each Appraisal District is governed by a board of directors
appointed by voters of the governing bodies of various applicable political subdivisions.
The District's taxes are collected by the Harris County Tax Assessor-Collector and the Chambers County Tax Assessor
The District grants an exemption of $5,000 or 1% of the market value of residence homesteads, whichever is greater.
The District grants an exemption to the residence homestead of persons 65 years of age or older and disabled persons of $122,500.
The District grants a residence homestead exemption for disabled veterans of $122,500.
The District has not granted an Optional Percentage homestead exemption.
Ad valorem taxes are not levied by the District against the exempt value of residence homesteads for the payment of debt.
The District does not tax nonbusiness personal property.
The District does not permit split payments and discounts are not allowed.
The District has not granted the freeport property tax exemption.
The District has not granted the goods-in-transit tax exemption.
The District has not entered into tax abatement agreements.
A-2
Appendix A Tables
Table A - 1 - VALUATION, EXEMPTIONS, AND TAX SUPPORTED DEBT
2010/11 Total Appraised Value (Excludes Fully Exempt Property) $ 44,619,427,755
Less Exemptions/Reductions:
General Homestead $ 445,957,798
Over 65 or Disabled 1,920,431,498
Veterans 16,911,490
Polution Control 1,302,735,769
Total Exempt Property 2,393,013,292
Foreign Trade Zone 781,034,290
Transit Immune 1,211,460,392
Deferred Taxes 35,128,165
Less: Total Exemptions $ 8,106,672,694
2010/11 Net Taxable Assessed Valuation $ 36,512,755,061
District Debt Payable from Ad Valorem Taxes as of 08/31/11:
General Obligation Bonds $ 263,035,000
Maintenance Tax Notes 5,070,000
Less: The Refunded Bonds (3,060,000)
Less: The Refunded Maintenance Tax Notes (3,870,000)
Plus: The Bonds (Series 2011 - LT GO Bldg & Ref Bonds) 68,108,357
Plus: The Bonds (Series 2011 - Maintenance Tax Ref Bonds) 3,810,000
Total District Debt Payable from Ad Valorem Taxes as of 08/31/11 $ 333,093,357
Less: Interest & Sinking Fund Balance as of 8/31/2010 $ 3,090,752
Total District Net Debt Payable from Ad Valorem Taxes $ 330,002,605
Ratio Net Funded Debt to Taxable Assessed Valuation 0.904%
(a)
2011 Estimated District Population 500,000
Estimated Per Capita Taxable Assessed Valuation $73,026
Estimated Per Capita Tax Debt $660
_______________________
Source: The District
(a) Source: The District.
A-3
Appendix A Tables
Table A - 2 - TAXABLE ASSESSED VALUATIONS BY CATEGORY
FY 2011 FY 2010 FY 2009
% of % of % of
Amount Total Amount Total Amount Total
=Real, Residential, Single-Family $ 11,872,018,237 26.6% $ 12,039,633,980 25.3% $ 12,248,610,412 25.9%
Real, Residential, Multi-Family 1,088,471,960 2.4% 1,166,628,557 2.5% 1,187,994,389 2.5%
Real, Vacant Lots/Tracts 506,581,501 1.1% 534,519,068 1.1% 658,314,650 1.4%
Real, Acreage (Land Only) - 0.0% - 0.0% - 0.0%
Real, Farm and Ranch Improvements 245,992,799 0.6% 269,151,368 0.6% 1,730,585 0.0%
Real, Commercial 3,835,443,879 8.6% 4,043,223,990 8.5% 3,733,410,465 7.9%
Real, Industrial 10,294,491,679 23.1% 11,795,428,513 24.8% 13,464,262,828 28.5%
Real, Oil, Gas and Other Mineral Reserves 143,664,520 0.3% 116,723,523 0.2% 149,752,767 0.3%
Real & Tangible Personal, Utilities 631,608,367 1.4% 664,340,889 1.4% 694,036,481 1.5%
Tangible Personal, Commercial 2,513,762,409 5.6% 2,682,137,832 5.6% 2,230,592,906 4.7%
Tangible Personal, Industrial 10,885,753,268 24.4% 11,481,627,435 24.2% 10,471,693,813 22.1%
Other Personal, 72,255,391 0.2% 77,393,323 0.2% 82,913,177 0.2%
Real Property, Inventory 141,479,710 0.3% 184,637,361 0.4% 173,626,830 0.4%
Special Inventory 2,387,904,035 5.4% 2,444,698,578 5.1% 2,226,947,312 4.7%
Total Appraised Value $ 44,619,427,755 100.0% $ 47,500,144,417 100.0% $ 47,323,886,615 100.0%
Less: Exemptions/Reductions 8,106,672,694 8,333,399,797 8,273,970,629
Net Taxable Assessed Value $ 36,512,755,061 $ 39,166,744,620 $ 39,049,915,986
FY 2008 FY 2007 FY 2006
% of % of % of
Amount Total Amount Total Amount Total
Real, Residential, Single-Family $ 12,797,618,668 29.9% $ 11,724,261,350 30.5% $ 10,770,614,401 31.5%
Real, Residential, Multi-Family - 0.0% - 0.0% - 0.0%
Real, Vacant Lots/Tracts 584,340,320 1.4% 587,325,351 1.5% 492,698,640 1.4%
Real, Acreage (Land Only) - 0.0% - 0.0% - 0.0%
Real, Farm and Ranch Improvements - 0.0% - 0.0% - 0.0%
Real, Commercial 3,211,430,024 7.5% 2,681,634,897 7.0% 2,411,096,962 7.0%
Real, Industrial 12,708,301,477 29.7% 11,540,316,904 30.0% 10,542,976,796 30.8%
Real, Oil, Gas and Other Mineral Reserves 126,086,233 0.3% 96,652,261 0.3% 96,363,260 0.3%
Real & Tangible Personal, Utilities 719,838,009 1.7% 734,477,720 1.9% 749,278,485 2.2%
Tangible Personal, Commercial - 0.0% - 0.0% - 0.0%
Tangible Personal, Industrial 10,456,375,350 24.4% 9,295,579,089 24.2% 7,548,587,810 22.1%
Other Personal, - 0.0% - 0.0% - 0.0%
Real Property, Inventory 220,799,996 0.5% 111,601,249 0.3% 31,104,980 0.1%
Special Inventory 1,951,741,815 4.6% 1,713,771,444 4.5% 1,573,353,465 4.6%
Total Appraised Value $ 42,776,531,892 100.0% $ 38,485,620,265 100.0% $ 34,216,074,799 100.0%
Less: Exemptions/Reductions 6,912,000,386 6,895,023,323 5,874,936,638
Net Taxable Assessed Value $ 35,864,531,506 $ 31,590,596,942 $ 28,341,138,161
_______________________
Source: The District, Harris County Appraisal District and Chambers County Appraisal District
A-4
Appendix A Tables
Table A - 3 – VALUATION AND FUNDED DEBT HISTORY
Tax Ratio of Tax Supported Per Tax
Fiscal Supported Debt to Capita Supported
Year Taxable Debt Taxable Estimated Taxable Debt
Ended Assessed Change From Prior Year Outstanding at Assessed District Assessed Per
8/31 Valuation Amount Percent FYE Valuation Population Valuation Capita
2002 $ 23,939,259,000 $ 983,259,000 4.283% $ 61,545,000 0.257% 425,300 $ 56,288 $ 145
2003 25,027,781,710 1,088,522,710 4.547% 73,680,000 0.294% 435,609 57,455 169
2004 26,391,878,930 1,364,097,220 5.450% 89,970,000 0.341% 440,792 59,874 204
2005 27,462,180,560 1,070,301,630 4.055% 86,815,000 0.316% 443,684 61,896 196
2006 28,341,138,161 878,957,601 3.201% 82,140,000 0.290% 446,000 63,545 184
2007 31,590,596,942 3,249,458,781 11.466% 73,280,000 0.232% 449,000 70,358 163
2008 35,864,531,506 4,273,934,564 13.529% 183,307,000 0.511% 457,980 78,310 400
2009 39,049,915,986 3,185,384,480 8.882% 138,430,000 0.354% 464,850 84,005 298
2010 39,166,744,620 116,828,634 0.299% 275,490,000 0.703% 500,000 78,333 551
2011 36,512,755,061 (2,653,989,559) -6.776% 263,035,000 0.720% 500,000 73,026 526
Source: The District & Harris and Chambers County Appraisal Districts
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A-5
Appendix A Tables
Table A - 4 - TAX RATE, LEVY AND COLLECTION HISTORY
Tax Rate Distribution
Fiscal Year Local Interest & Tax Levy (a) Current Total
Ended 8/31 Tax Rate Maintenance Sinking Fund (in thousands) Collections (b) Collections
2002 $ 0.13071 $ 0.10128 $ 0.02943 $ 32,722 96.9% 98.7%
2003 0.13071 0.10128 0.02943 33,462 97.5% 99.6%
2004 0.13913 0.10970 0.02943 36,945 96.1% 98.7%
2005 0.13913 0.10970 0.02943 38,182 98.4% 100.0%
2006 0.14537 0.11593 0.02944 41,856 97.3% 100.0%
2007 0.14537 0.11593 0.02944 46,823 97.2% 100.0%
2008 0.14537 0.11593 0.02944 52,577 97.4% 99.0%
2009 0.16341 0.11593 0.04748 64,518 96.6% 99.0%
2010 0.17080 0.11429 0.05651 66,897 96.7% 98.1%
2011 0.17628 0.11429 0.06198 64,365 In Process of Collections
Source: Harris County Tax Assessor Collector and the District.
(a) As reported in notes to the financial statements for the year of the levy.
(b) Property tax only - does not include penalties and interest.
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A-1
Appendix A Tables
Table A - 5 - TEN LARGEST TAXPAYERS
Percent of Total
2010/11 Taxable Taxable Assessed
Name of Taxpayer Nature of Property Assessed Valuation Valuation
Shell Oil Co Refinery $ 1,486,769,000 4.07%
Equistar Chemicals LP Chemicals 848,797,000 2.3%
Houston Refining Refinery 702,549,000 1.9%
Dow Chemical Refinery 617,948,000 1.7%
Lyondell Chemical Co Chemicals 592,522,000 1.6%
Oxy Vinyls LP Petrochemical 404,812,000 1.1%
Chevron Chemical Co. Refinery 370,234,000 1.0%
Centerpoint Energy Inc Energy 345,960,000 0.9%
Air Liquide Chemicals 339,915,000 0.9%
Albemarile Corp Chemicals 290,230,000 0.8%
Taxable Assessed Valuation $ 5,999,736,000 16.4%
Total 2010/11 Net Taxable Assessed Valuation of the District $36,512,755,061
____________________________
Source: The District
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A-7
Appendix A Tables
Table A - 6 - OVERLAPPING DEBT
Outstanding Tax Estimated %
Political Subdivision Supported Net Debt As of Overlapping Amount Overlapping
Chambers Co $6,030,000 * 02/28/2010 ** $0
Channelview ISD 56,400,280 08/31/2008 100 56,400,280
Clear Brook City MUD 58,263,527 01/31/2009 77.15 44,950,311
Clear Lake City Water Au 56,870,046 06/30/2009 13.95 7,933,371
Deer Park ISD 161,835,000 * 02/28/2010 100 161,835,000
Deer Park, City of 30,955,000 * 02/28/2010 100 30,955,000
Galena Park ISD 241,607,489 * 02/28/2010 100 241,607,489
Galena Park, City of 7,750,000 * 02/28/2010 100 7,750,000
Greenwood UD 6,271,720 12/31/2008 100 6,271,720
Harris Co 2,230,951,628 * 02/28/2010 13.72 306,086,563
Harris Co Dept of Ed 8,160,000 * 02/28/2010 12.81 1,045,296
Harris Co Flood Control 92,904,373 02/28/2009 12.81 11,901,050
Harris Co FWSD #6 1,325,000 * 02/28/2010 100 1,325,000
Harris Co FWSD #51 13,581,503 06/30/2009 100 13,581,503
Harris Co MUD #8 5,023,946 06/30/2008 100 5,023,946
Harris Co MUD #53 27,990,503 10/13/2009 100 27,990,503
Harris Co MUD #148 3,461,712 11/11/2008 98.3 3,402,863
Harris Co MUD #285 42,427,426 04/14/2009 100 42,427,426
Harris Co MUD #381 7,607,561 07/31/2008 100 7,607,561
Harris Co MUD #382 7,544,651 07/31/2008 100 7,544,651
Harris Co MUD #410 5,314,858 04/30/2009 65.93 3,504,086
Harris Co Toll Road 0 02/28/2009 12.81 0
Harris Co WC&ID #21 8,090,000 * 02/28/2010 100 8,090,000
Harris Co WC&ID #36 12,937,003 06/30/2009 100 12,937,003
Harris Co WC&ID #84 7,087,531 12/10/2008 100 7,087,531
Houston, City of 2,693,830,271 06/30/2009 3.29 88,627,016
Jacinto City, City of 0 09/30/2009 42.41 0
Kirkmont MUD 240,000 * 02/28/2010 100 240,000
La Porte ISD 201,665,000 * 02/28/2010 100 201,665,000
La Porte, City of 30,519,244 09/30/2007 100 30,519,244
Parkway UD 19,477,723 03/17/2009 100 19,477,723
Pasadena ISD 439,180,000 * 02/28/2010 100 439,180,000
Pasadena, City of 121,257,147 10/01/2008 88.3 107,070,061
Pt of Houston Auth 525,705,000 12/31/2008 12.81 67,342,811
Sagemeadow UD 868,016 09/30/2007 100 868,016
Sheldon ISD 154,440,184 08/31/2008 100 154,440,184
South Houston, City of 6,924,845 09/30/2008 100 6,924,845
Total Net Overlapping Debt $2,133,613,053
San Jacinto Community College District Outstanding Net Debt 330,002,605
Total Direct and Overlapping Debt $2,463,615,658
Total 2010/11 District Assessed Value $ 36,512,755,061
Total 2011 Estimated District Population 500,000
Total Direct and Overlapping Debt % of A.V. 6.75%
Total Direct and Overlapping Debt % of Capita: $4,927
*
Gross Debt
**
Less than .01%
Source: Municipal Advisory Council of Texas
A-8
Appendix A Tables
Table A - 7 - LIMITED TAX - I&S TAX SUPPORTED DEBT SERVICE REQUIREMENTS VOTED BONDS
Grand Total
Fiscal Year Less: The Debt Service % Principal
Ending Outstanding Bonds Refunded Bonds Plus: The Bonds Requirement Payoff
8/31 Principal Interest Total Debt Service Principal Interest Total
2011 $ 10,310,000 $ 11,956,215 $ 22,266,215 $ (64,000) $ - $ - $ - 22,202,215
2012 14,855,000 11,471,051 26,326,051 (2,578,000) - 2,151,250 2,151,250 25,899,300
2013 10,805,000 10,987,426 21,792,426 (28,000) 10,000 2,174,244 2,184,244 23,948,670
2014 9,190,000 12,397,044 21,587,044 (28,000) 15,000 2,609,244 2,624,244 24,183,287
2015 9,260,000 14,183,402 23,443,402 (574,000) 14,101 2,055,143 2,069,244 24,938,646 18.87%
2016 7,685,000 9,931,686 17,616,686 2,824,410 2,314,834 5,139,244 22,755,930
2017 7,815,000 9,559,181 17,374,181 1,833,933 2,310,311 4,144,244 21,518,425
2018 8,485,000 9,169,334 17,654,334 1,426,753 2,442,490 3,869,244 21,523,578
2019 7,115,000 8,814,598 15,929,598 2,823,475 2,765,769 5,589,244 21,518,841
2020 5,985,000 8,532,312 14,517,312 3,757,793 3,246,451 7,004,244 21,521,556 30.83%
2021 6,305,000 9,003,839 15,308,839 2,988,941 3,220,303 6,209,244 21,518,083
2022 8,930,000 7,929,134 16,859,134 1,772,973 2,891,271 4,664,244 21,523,378
2023 9,645,000 7,517,271 17,162,271 1,508,771 2,838,135 4,346,906 21,509,177
2024 9,970,000 7,071,186 17,041,186 1,500,190 2,966,863 4,467,053 21,508,239
2025 5,665,000 6,702,621 12,367,621 4,052,741 5,088,796 9,141,538 21,509,158 46.78%
2026 5,460,000 6,428,864 11,888,864 5,534,276 4,091,012 9,625,288 21,514,152
2027 6,195,000 6,140,736 12,335,736 7,485,000 1,694,913 9,179,913 21,515,648
2028 6,265,000 5,833,049 12,098,049 4,430,000 1,397,038 5,827,038 17,925,087
2029 6,565,000 5,516,044 12,081,044 4,680,000 1,169,288 5,849,288 17,930,332
2030 10,005,000 5,104,413 15,109,413 1,810,000 1,007,038 2,817,038 17,926,450 64.59%
2031 10,285,000 4,598,663 14,883,663 2,130,000 916,525 3,046,525 17,930,188
2032 10,615,000 4,077,594 14,692,594 565,000 859,256 1,424,256 16,116,850
2033 10,555,000 3,549,434 14,104,434 1,200,000 817,250 2,017,250 16,121,684
2034 10,405,000 3,023,013 13,428,013 1,955,000 738,375 2,693,375 16,121,388
2035 10,950,000 2,483,119 13,433,119 2,045,000 638,375 2,683,375 16,116,494 83.10%
2036 11,515,000 1,915,159 13,430,159 2,160,000 533,250 2,693,250 16,123,409
2037 12,115,000 1,317,744 13,432,744 1,530,000 441,000 1,971,000 15,403,744
2038 12,745,000 689,225 13,434,225 1,605,000 362,625 1,967,625 15,401,850
2039 7,340,000 183,500 7,523,500 2,970,000 248,250 3,218,250 10,741,750 98.94%
2040 3,480,000 87,000 3,567,000 3,567,000 100.00%
$ 263,035,000 $ 196,086,857 $ 459,121,857 $ (3,272,000) $ 68,108,357 $ 54,076,296 $ 122,184,653 $ 578,034,510
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A-9
Appendix A Tables
Table A-7a - LIMITED TAX - M&O TAX SUPPORTED DEBT SERVICE REQUIREMENTS
Fiscal Grand Total
Year Less: The Debt Service % Principal
Ending Outstanding Notes Refunded Bonds Plus: The Bonds Requirement Payoff
8/31 Principal Interest Total Debt Service Principal Interest Total
2011 $ 690,000 $ 205,808 $ 895,808 $ (87,131) $ - $ - $ - $ 808,676
2012 510,000 183,825 693,825 (174,263) - 151,863 151,863 671,426
2013 220,000 169,973 389,973 (389,973) 225,000 140,875 365,875 365,875
2014 285,000 159,983 444,983 (444,983) 290,000 133,150 423,150 423,150
2015 300,000 147,983 447,983 (447,983) 300,000 124,300 424,300 424,300 40.22%
2016 315,000 134,910 449,910 (449,910) 310,000 113,600 423,600 423,600
2017 330,000 120,878 450,878 (450,878) 325,000 100,900 425,900 425,900
2018 345,000 105,855 450,855 (450,855) 340,000 87,600 427,600 427,600
2019 420,000 88,433 508,433 (508,433) 410,000 72,600 482,600 482,600
2020 440,000 68,433 508,433 (508,433) 430,000 55,800 485,800 485,800 76.45%
2021 455,000 47,286 502,286 (502,286) 440,000 38,400 478,400 478,400
2022 760,000 18,240 778,240 (778,240) 740,000 14,800 754,800 754,800 100.00%
$ 5,070,000 $ 1,451,604 $ 6,521,604 $ (5,193,365) $ 3,810,000 $ 1,033,888 $ 4,843,888 $ 6,172,127
A - 10
Appendix A Tables
Table A - 8 - INTEREST AND SINKING FUND BUDGET PROJECTION
Total
Interest and Sinking Fund Balance, August 31, 2010 $ 3,090,752
Plus: 2010/11 Tax Collections 21,675,000
Plus: Estimated Interest Earnings and Other Revenues 2010/11 600,000
Less: 2010/11 Tax Debt Payments (22,275,000)
Estimated Balance, August 31, 2011 $ 3,090,752
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A - 11
Appendix A Tables
Table A - 9 - AUTHORIZED BUT UNISSUED UNLIMITED TAX BONDS
After the sale of the new money portion of the Series 2011 Limited Tax General Obligation Building and Refunding Bonds, the
District will have no authorized but unissued bonds outstanding.
Date Amount Amount Amount Unissued
Purpose Authorized Authorized Issued to Date Being Issued Balance
(a)
College Facilities May 10, 2008 $ 295,000,000 $ 230,000,000 $ 65,000,000 $ -
Total $ -
(a) The new money portion of the Limited Tax General Obligation Building and Refunding Bonds, Series 2011.
[The remainder of this page is intentionally left blank.]
A - 12
Appendix A Tables
Table A - 10 - OTHER OBLIGATIONS
The District leases computers, office space, bowling alley facilities, storage space, copiers, and mailing equipment.
The following operating lease commitments requiring future minimum annual rental payments are as follows:
Fiscal Year Ending 8/31 2010 2009
2010 $ - $ 986,922
2011 2,109,077 1,314,884
2012 1,296,396 1,289,745
2013 600,836 555,535
2014 201,798 133,352
2015 20,539 53,364
Totals $ 4,228,646 $ 4,333,802
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A - 13
Appendix A Tables
Table A - 11 - CASH, CASH EQUIVALENTS, AND INVESTMENTS
08/31/2010 Market Value
Investments: Type of Security Portfolio % 08/31/2010 08/31/2009
U.S. Government Securities 93.0% $ 172,775,922 $ 76,179,171
Certificates of Deposits 7.0% 13,084,928 12,842,030
Total Investments 100.0% $ 185,860,850 $ 89,021,201
Market Value
Cash, Cash Equivalents, and Investments 08/31/2010 08/31/2009
Cash and Cash Equivalents - Current and Noncurrent $ 123,003,669 $ 245,878,551
Investments - short term and long term 185,860,850 89,021,201
Total Cash, Cash Equivalents and Investments $ 308,864,519 $ 334,899,752
Source: The District's Audited Financial Statements
[The remainder of this page is intentionally left blank.]
A - 14
Appendix A Tables
Table A - 12 - NET ASSETS
Fiscal Year Ended August 31
2010 2009 2008 2007 2006
ASSETS
Current Assets
Cash and Cash Equivalents $ 38,015,065 $ 24,538,401 $ 31,043,380 $ 27,043,703 $ 16,143,392
Deposits Held by Others 21,601 21,601 21,601 30,921 30,952
Short-Term Investments 14,102,513 12,842,030 29,023,750 19,437,412 -
Accounts Receivable (net) 20,554,264 19,622,797 15,189,794 12,273,346 10,124,517
Deferred Charge 1,412,608 539,034 555,976 237,135 740,679
Inventories 399,003 362,714 349,448 363,621 2,697,221
Total Current Assets $ 74,505,054 $ 57,926,577 $ 76,183,949 $ 59,386,138 $ 29,736,761
Noncurrent Assets
Restricted Cash and Equivalents $ 84,988,604 $ 221,340,150 $ 7,273,520 $ 5,980,776 $ 13,969,143
Endowment Investments - - - - 17,694
Other Long Term Investments 48,005,130 56,144,791 26,938,524 35,534,437 51,119,803
Restricted Long Term Investments 123,753,207 20,034,380 - - -
Bond Issuance Costs 1,726,507 1,809,949 855,872 866,822 619,140
Bond Discount - - - - -
Capital Assets (Net) 173,746,946 144,800,947 144,404,034 146,568,264 149,698,625
Total noncurrent assets 432,220,394 444,130,217 179,471,950 188,950,299 215,424,405
Total Assets $ 506,725,448 $ 502,056,794 $ 255,655,899 $ 248,336,437 $ 245,161,166
LIABILITIES
Current Liabilities
Accounts Payable $ 12,710,564 $ 8,677,848 $ 7,622,708 $ 6,158,840 $ 3,573,388
Accrued Liabilities 1,528,123 1,444,052 1,332,655 529,158 842,516
Accrued Compensable Absences Payable 258,766 316,930 1,393,493 1,063,777 934,616
Deferred Compensation 80,000 63,333 28,000 32,000
Deferred Revenues 18,771,419 16,332,336 15,292,731 13,941,440 13,410,439
Funds held for others - - - - 315,935
Notes Payable-current portion 690,000 1,225,000 1,225,000 1,310,000 952,015
Bonds Payable-current portion 10,539,512 12,446,175 3,775,000 7,345,000 4,320,000
Total Current Liabilities $ 44,578,384 $ 40,505,674 $ 30,669,587 $ 30,380,215 $ 24,348,909
Noncurrent Liabilities
Accrued Compensation Payable $ 2,345,281 $ 2,266,951 $ 1,560,006 $ 1,525,166 $ 1,565,267
Deferred Compensation - - - 18,000
Bond Premium Payable - - 897,634 592,296
Notes Payable 4,380,000 5,070,000 6,295,000 7,520,000 8,943,308
Bonds Payable 257,117,665 269,475,519 54,655,000 58,430,000 71,095,000
Total Noncurrent Liabilities $ 263,842,946 $ 276,812,470 $ 63,407,640 $ 68,085,462 $ 81,603,575
Total Liabilities $ 308,421,330 $ 317,318,144 $ 94,077,227 $ 98,465,677 $ 105,952,484
NET ASSETS
Invested in capital assets, net of related debt $ 98,002,083 $ 80,816,340 $ 78,718,634 $ 65,384,609 $ 64,388,302
Restricted for:
Nonexpendable-Student Aid $ - $ - $ - $ - $ 12,000
Expendable-Grants 1,533,284 1,192,545 1,332,684 1,209,603 $ 1,496,250
Expendable-Unexpended Bond Proceeds 11,323,672 8,257,567 243,967 5,986,359 2,397,237
Expendable-Debt Service 3,090,752 5,356,709 4,137,889 2,870,617 10,063,656
Unrestricted 84,354,327 89,115,489 77,145,498 74,419,572 60,851,237
Total Net Assets $ 198,304,118 $ 184,738,650 $ 161,578,672 $ 149,870,760 $ 139,208,682
Source: The District's Audited Financial Statements
A - 15
Appendix A Tables
Table A - 13 - REVENUES, EXPENSES AND CHANGES IN NET ASSETS
Fiscal Year Ended August 31
2010 2009 2008 2007 2006
Operating Revenues
Tuition and Fees $ 31,298,022 $ 30,068,715 $ 29,220,128 $ 28,361,060 $ 27,357,720
Federal Grants and Contracts 6,722,223 5,810,085 6,473,542 24,949,539 27,718,042
State Grants and Contracts 3,520,431 3,089,817 3,816,402 2,354,149 805,073
Non-Governmental Grants and Contracts 1,265,130 1,013,841 794,979 830,555 637,682
Sales and Services of Educational Activities 869,143 735,247 734,089 562,045 659,393
Auxiliary Enterprises 3,755,281 3,667,801 3,581,159 5,748,105 9,463,221
Other Operating Revenues 1,693 - 22,213 43,573 35,000
Total Operating Revenues $ 47,431,923 $ 44,385,506 $ 44,642,512 $ 62,849,026 $ 66,676,131
Operating Expenses
Instruction $ 60,430,231 $ 55,592,552 $ 57,486,803 $ 48,926,799 $ 46,147,392
Public Service 4,445,946 3,408,698 3,881,854 2,376,146 2,637,941
Academic Support 10,087,688 10,556,786 12,485,944 8,978,239 6,513,692
Student Services 13,238,676 12,343,454 11,829,664 8,107,698 7,723,536
Institutional Support 30,854,583 26,367,228 25,643,311 29,607,972 27,286,543
Operation and Maintenance of Plant 13,427,527 14,162,743 14,820,830 14,218,438 12,251,486
Scholarships and Fellowships 34,194,427 21,152,384 16,507,852 18,335,239 16,417,362
Auxiliary Enterprises 4,043,762 3,929,299 3,656,326 5,832,451 13,106,564
Depreciation 6,815,803 7,625,931 6,764,932 6,810,792 6,929,289
Total Operating Expenses $ 177,538,643 $ 155,139,075 $ 153,077,516 $ 143,193,774 $ 139,013,805
Operating Income (Loss) (130,106,720) (110,753,569) (108,435,004) (80,344,748) (72,337,674)
Non-Operating Revenues (Expenses)
State Appropriations $ 47,399,957 $ 47,838,243 $ 47,658,028 $ 44,309,565 $ 43,905,833
Taxes for Maintenance & Operations 45,349,704 46,492,505 42,518,691 37,666,186 33,439,538
Taxes for General Obligation Bonds 22,027,384 18,895,337 10,797,774 9,564,793 8,633,213
Federal Revenue, Non-Operating 40,150,985 24,743,586 19,511,315
Investment Income (Net of Inv. Expenses) 1,649,239 2,623,573 3,363,323 4,907,664 3,212,666
Interest on Capital Related Debt (12,355,349) (6,599,699) (3,544,135) (3,871,800) (3,645,229)
Hurricane Ike Expenses (Net of Recoveries) 620,355 169,405
Other Non-Operating Revenues (Expenses) (1,170,087) (249,403) (162,080) (1,569,582) (873,954)
Net Non-Operating Revenues (Expenses) $ 143,672,188 $ 133,913,547 $ 120,142,916 $ 91,006,826 $ 84,672,067
Increase in Net Assets $ 13,565,468 $ 23,159,978 $ 11,707,912 $ 10,662,078 $ 12,334,393
Net Assets
Net Assets - Beginning of Year 184,738,650 161,578,672 149,870,760 139,208,682 126,874,289
Net Assets - End of Year $ 198,304,118 $ 184,738,650 $ 161,578,672 $ 149,870,760 $ 139,208,682
Source: The District's Audited Financial Statements
A - 16
APPENDIX B
General Information Regarding the District's Students, Tuitions & Fees
(Additional information may be found in the Statistical Section of the District's Comprehensive
Annual Financial Report)
B-1
Appendix B Tables
Table B - 1 - PLEDGED REVENUES AND COVERAGE (in thousands)
Pledged Revenues Debt Service Requirements
Continuing or General
Fiscal General Non-Credit Fund Food Total
Year Ended Tuition Technology Services Lab Education Interest Service Bookstore Pledged Coverage
31-Aug Revenue Fees / Other Fees Fees Tuition/Fees Income Revenue Revenue Revenue Principal Interest Total Ratio
(a)
2000 $ 714 $ 1,854 $ 3,160 $ 383 $ 3,193 $ 2,126 $ 326 $ 8,699 $ 20,455 $ 760 $ 50 $ 810 25.3
(a)
2001 754 1,891 3,224 391 3,257 2,325 330 9,047 21,219 755 20 775 27.4
(a)
2002 809 2,223 6,288 399 3,322 2,372 333 9,228 24,974 1,610 14 1,624 15.4
(b)
2003 2,783 3,140 4,060 477 3,955 718 200 8,506 23,839 1,410 195 1,605 14.9
(b)
2004 4,409 4,159 5,369 600 3,315 1,220 313 10,808 30,193 2,927 355 3,282 9.2
(b)
2005 4,392 2,999 6,770 719 2,928 1,707 300 8,917 28,732 3,023 254 3,277 8.8
(b)
2006 4,744 - 11,435 724 2,391 3,213 344 7,276 30,127 3,135 147 3,282 9.2
(b)
2007 4,816 - 10,532 620 5,075 4,908 396 3,346 29,693 1,845 64 1,909 15.6
2008 5,605 - 9,560 625 5,511 3,363 119 1,278 26,061 - - - -
(c)
2009 - - - - - - - - - - - - -
(c)
2010 - - - - - - - - - - - - -
(a) $15 per student per regular semester. Also, $7.50 per student per summer session.
(b) H.B. 1621 permits college districts to pledge up to 25% of tuition collected from each enrolled student for each semester.
(c) The District paid off all outstanding revenue debt in 2009.
Source: The District
B-2
Appendix B Tables
Table B - 2 - TUITION AND FEES
Resident Fees per Semester Credit Hour (SCH)
Academic General Student
Year Matriculation Services In-District Out-of-District Technology Activity Cost For 12 SCH Change From Prior Year
(Fall) Fee Fee Tuition Tuition Fee Fee In-District Out-of-District In-District Out-of-District
2000 $ 15 $ 7 $ 16 $ 30 $ 3 $ 10 $ 262 $ 430 0.0% 0.0%
2001 32 7 18 34 5 10 327 519 24.8% 20.7%
2002 32 7 20 38 6 14 373 589 14.1% 13.5%
2003 15 60 22 45 6 14 433 709 16.1% 20.4%
2004 15 60 22 45 6 14 433 709 0.0% 0.0%
2005 - 130 30 55 - - 490 790 13.2% 11.4%
2006 - 130 30 55 - - 490 790 0.0% 0.0%
2007 - 130 33 58 - - 526 826 7.3% 4.6%
2008 - 130 33 58 - - 526 826 0.0% 0.0%
2009 - 130 33 58 - - 526 826 0.0% 0.0%
2010 - 135 38 63 - - 591 891 12.4% 7.9%
Non-Resident Fees per Semester Credit Hour (SCH)
Academic General Student
Year Matriculation Services Out-of-State International Technology Activity Cost For 12 SCH Change From Prior Year
(Fall) Fee Fee Tuition Tuition Fee Fee Out-of-State International Out-of-State International
2000 $ 15 $ 7 $ 60 $ 60 $ 3 $ 10 $ 790 $ 790 0.0% 0.0%
2001 32 7 60 60 5 10 831 831 5.2% 5.2%
2002 32 7 60 60 6 14 853 853 2.6% 2.6%
2003 15 60 68 68 6 14 985 985 15.5% 15.5%
2004 15 60 68 68 6 14 985 985 0.0% 0.0%
2005 - 130 75 75 - - 1,030 1,030 4.6% 4.6%
2006 - 130 75 75 - - 1,030 1,030 0.0% 0.0%
2007 - 130 108 108 - - 1,426 1,426 38.4% 38.4%
2008 - 130 108 108 - - 1,426 1,426 0.0% 0.0%
2009 - 130 108 108 - - 1,426 1,426 0.0% 0.0%
2010 - 135 113 113 - - 1,491 1,491 4.6% 4.6%
Source: The District
Note: Includes basic enrollment tuition and fees but excludes course based fees such as laboratory fees, testing fees, and certification fees.
B-3
Appendix B Tables
Table B - 3 - ENROLLMENT DETAILS
Fall 2010 Fall 2009 Fall 2008 Fall 2007 Fall 2006
Student Classification Number Percent Number Percent Number Percent Number Percent Number Percent
0-29 hours 17,023 59.63% 16,467 60.96% 14,854 60.34% 14,134 60.01% 13,968 58.85%
30-72 hours 7,589 26.58% 7,879 29.17% 7,265 29.51% 7,008 29.76% 7,170 30.21%
>72 hours 3,937 13.79% 2,665 9.87% 2,497 10.14% 2,409 10.23% 2,596 10.94%
Total 28,549 100.00% 27,011 100.00% 24,616 100.00% 23,551 100.00% 23,734 100.00%
Fall 2010 Fall 2009 Fall 2008 Fall 2007 Fall 2006
Semester Hour Load Number Percent Number Percent Number Percent Number Percent Number Percent
<3 hours 298 1.04% 297 1.10% 190 0.77% 146 0.62% 156 0.66%
3-5 hours 4,485 15.71% 5,077 18.80% 4,294 17.44% 4,317 18.33% 4,056 17.09%
6-8 hours 7,079 24.80% 6,809 25.21% 5,777 23.47% 5,484 23.29% 5,468 23.04%
9-11 hours 5,661 19.83% 5,171 19.14% 4,513 18.33% 4,235 17.98% 4,446 18.73%
12-14 hours 8,635 30.25% 7,743 28.67% 6,853 27.84% 6,505 27.62% 6,737 28.39%
15-17 hours 1,837 6.43% 1,746 6.46% 2,184 8.87% 2,144 9.10% 2,208 9.30%
18 & more hours 554 1.94% 168 0.62% 805 3.27% 720 3.06% 663 2.79%
Total 28,549 100.00% 27,011 100.00% 24,616 100.00% 23,551 100.00% 23,734 100.00%
Average course load 9.3 8.9 9.8 9.7 9.7
Fall 2010 Fall 2009 Fall 2008 Fall 2007 Fall 2006
Tuition Status Number Percent Number Percent Number Percent Number Percent Number Percent
TX Resident (In-District) 13,796 48.32% 12,891 47.73% 11,736 47.68% 11,523 48.93% 11,966 50.42%
TX Resident (Out-of-District) 10,217 35.79% 9,664 35.78% 8,866 36.02% 8,286 35.18% 8,374 35.28%
Non-Resident 853 2.99% 1,644 6.09% 1,584 6.43% 1,398 5.94% 1,358 5.72%
Tuition Exemption 2,864 10.03% 2,693 9.97% 2,399 9.75% 2,299 9.76% 1,989 8.38%
Other 819 2.87% 119 0.44% 31 0.13% 45 0.19% 47 0.20%
Total 28,549 100.00% 27,011 100.00% 24,616 100.00% 23,551 100.00% 23,734 100.00%
Does not include non-credit Continuing and Professional Development enrollment.
The District previously did not present this schedule. Information is being presented for the past five years, and the Colleege will continue to implement prospectively.
Source: The District, data from the CBM001.
B-4
APPENDIX C
Audited Financial Statement of the District for the Fiscal Year Ended 2010
San Jacinto Community College
District
COMPREHENSIVE
ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEARS ENDED
AUGUST 31, 2010 AND 2009
Preparedby
The Departmentof Fiscal Affairs
4624 Fairmont Parkway
T
Pasadena, exas 77504
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Comprehensive Annual Financial Report
For the Fiscal Years Ended August 31,2010 and 2009
TABLE OF CONTENTS
INTRODUCTORY SECTION
Table of Contents . i-iii
Organizational Data . iv
Organizational Chart . v
Letter of Transmittal , , . vi-ix
Certificate of Achievement of Excellence in Financial Reporting . x
FINANCIAL SECTION
Independent Auditors' Report............................................................. 1-2
Management's Discussion and Analysis (Unaudited}.................................................... 3-14
BASIC FINACIAL STATEMENTS
Exhibit 1 Statements of Net Assets., , . 15
Exhibit 2 Statements of Revenues, Expenses, and Changes in Net Assets . 16
Exhibit 3 Statements of Cash Flows . 17
Notes to Basic Financial Statements............................. 18-40
SUPPLEMENTAL SCHEDULES
REQUIRED BY THE TEXAS HIGHER EDUCATION COORDINATING BOARD
Schedule A Schedule of Operating Revenues.......................................................... 41
Schedule B Schedule of Operating Expenses by Object.......................................... 42
Schedule C Schedule of Non-Operating Revenues and Expenses......................... 43
Schedule D Schedule of Net Assets by Source and Availability....... 44
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Comprehensive Annual Financial Report
For the Fiscal Years Ended August 31,2010 and 2009
TABLE OF CONTENTS, CONTINUED
STATISTICAL SECTION (Unaudited).............................................................................45
55~1 Net Assets by Component . 46
55-2 Revenues by Source . 47
8S-3 Program Expenses by Function . 48
55-4 Tuition and Fees . 49
55-5 Assessed Value and Taxable Assessed Value of Property . 50
85-6 State Appropriation per FTSE and Contact Hour . 51
55-7 Principal Taxpayers . 52
5S-8 Property Tax Levies and Collections . 53
8S-9 Ratios of Outstanding Debt . 54
SS-10 Legal Debt Margin Information . 55
SS-11 Pledged Revenue Coverage . 56
SS-12 Demographic and Economic Statistics - Taxing District.. . 57
55-13 Principal Employers for the Service Area.. .. . 58
SS-14 Faculty, Staff, and Administrators Statistics . 59
55-15 Enrollment Details , . 60
SS-16 Student Profile , . 61
SS-17 Transfers to Senior Institutions . 62
SS-18 Capital Asset Information . 63
FEDERAL AWARDS SECTION
Independent Auditors' Report on Internal Control over Financial Reporting and
Compliance and Other Matters Based on an Audit of Financial Statements Performed
in Accordance with Government Auditing Standards................................ 64-65
Independent Auditors' Report on Compliance with ReqUirements that Could
Have a Direct and Material Effect on Each Major Program and Internal Control
over Compliance in Accordance with OMB Circular A-133 and the State of
Texas Single Audit Circular...................................................................................... 66-67
ii
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Comprehensive Annual Financial Report
For the Fiscal Years Ended August 31,2010 and 2009
TABLE OF CONTENTS, CONTINUED
Schedule E - Schedule of Expenditures of Federal Awards......................................... 68-70
Notes to Schedules of Expenditures of Federal Awards and State Awards.................. 72
Schedule of Findings and Questioned Costs............................................................... 73-75
Schedule of Prior Year Audit Findings 75
STATE AWARDS SECTION
Independent Auditors' Report on Compliance with Requirements Applicable to Each
Major Program and Internal Control over Compliance in Accordance with OMS
Circular A-133 and the State of Texas Single Audit Circular 66-67
Schedule F - Schedule of Expenditures of State Awards 71
Notes to Schedules of Expenditures of Federal and State Awards 72
Schedule of Findings and Questioned Costs................................................................. 73-75
Schedule of Prior Year Audit Findings ', 75
iii
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Organizational Data
Board of Trustees and Key Officers
Year Ended August 31,2010
Officers
Mrs. Marie Flickinger Chair
Mr. Dan Mims Vice Chair
Mr. Ben Meador Secretary
Mr. Larry Wilson Assistant Secretary
Members
Term Expires
May 31.
Mr. Ben Meador Pasadena, Texas 2011
Dr. Ruede Wheeler La Porte, Texas 2011
Mrs. Marie Flickinger Houston, Texas 2013
Mr. John Moon, Jr. Pasadena, Texas 2013
Mr. Larry Wilson Pasadena, Texas 2013
Mr. Dan Mims Channelview, Texas 2015
Mr. C. Wayne Slovacek Deer Park, Texas 2015
Mr. W.L. "Levi" Smallwood, Trustee Emeritus
Mr. J.D. Bruce, Trustee Emeritus
Key Officers
Dr. Brenda L. Hellyer Chancellor
Mr. Kenneth D. Lynn, CPA Vice Chancellor of Fiscal Affairs
Mr. Steve Trncak Vice Chancellor of Human Resources
Dr. Laurel V. Williamson Vice Chancellor for Instruction and Student
Services
Dr. Neil Matkin President, Central Campus
Dr. Allatia Harris President, North Campus
Dr. Maureen Murphy President, South Campus
Ms. Teri Fowle Associate Vice Chancellor of Marketing
Mr. Rob Stanicic Acting Chief Information Officer
iv
San Jacinto Community College District
August 31,2010
Board of Trustees
Chancellor
I
--'.- ."_.---.'" .. ~. - ... ,,- -_.._ ......... -- I
I I I I I I I l
Vice Chancellor of Associate Vice Acting Chief
Vice Chancellor of Vice Chancellor of President President PreSident
Instruction and Chancellor of Information Officer
Fiscal Affairs Human Resources Central Campus North Campus South Campus
S1udent Services Marketing
.~~._~
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v
December 13, 2010
To the members of the Board of Trustees, taxpayers of Harris and Chambers Counties, and citizens of
the San Jacinto Community College District service area:
Texas statutes require the Comptroller of Public Accounts and the Texas Higher Education Coordinating
Board to jointly prescribe a system for financial accounting and reporting for institutions of higher
education. Pursuant to that requirement, we have prepared the comprehensive annual financial report
(CAFR) of the San Jacinto Community College District (lithe College") for the fiscal years ended August
31,2010 and 2009.
The report consists of management's representations concerning the finances of the College.
Consequently, management assumes full responsibility for the completeness and reliability of the
information contained in this report. To provide a reasonable basis for making these representations,
management of the College has established a comprehensive internal control framework that is
designed to protect the College's assets from loss, theft, or misuse, and to compile sufficient reliable
information for the preparation of the College's financial statements in conformity with generally
accepted accounting principles (GAAP).
The College's system of internal control is supported by written policies and procedures and is
continually reviewed, evaluated, and modified to meet current needs. Because the cost of internal
controls should not outweigh their benefits, the College's comprehensive framework of internal controls
has been designed to provide reasonable rather than absolute assurance that the financial statements
will be free from material misstatement. As management, we assert that, to the best of our knowledge
and belief, this financial report is complete and reliable in all material respects.
The College's financial statements have been audited by MFR, P.c., a licensed certified public accounting
firm. The goal of the independent audit is to provide reasonable assurance that the financial statements
of the College for the years ended August 31,2010 and 2009 are free from material misstatement. The
independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements; assessing the accounting principles used and significant estimates made by
management; and, evaluating the overall financial statement presentation. The independent auditors
concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion
that the College's financial statements for the years ended August 31, 2010 and 2009 are fairly
presented in conformity with generally accepted accounting principles. The independent auditors'
report is presented as the first component of the financial section of this report.
vi
GAAP requires that management provide a narrative introduction, overview, and analysis to accompany
the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter
of transmittal is designed to complement the MD&A and should be read in conjunction with it. The
College's MD&A can be found immediately following the report of the independent auditors.
College Profile
San Jacinto Community College District opened its doors in September 1961 with one campus, the
Central campus in Pasadena, with over 850 students enrolled. The initial enrollment set a record for
new enrollment for community colleges in Texas.
By 1974the College opened its North campus on Uvalde Road near the communities of Galena Park and
Channelview which are north of the Houston Ship Channel. In 1979the College opened its South campus
near the intersection of Beamer Road and Dixie Farm Road.
From the initial enrollment of 850 students, the College has grown to three campuses, five outreach
centers, approximately 27,000 credit students and approximately 20,000 continuing and professional
development students. The College offers over 140 academic programs and provides students the
opportunity to get involved in inter-collegiate sports, intramural sports, and fine arts.
From the early administration to the current administration, community service has been embraced.
Administrators, faculty, and staff of the College serve on countless boards in the community and local
school districts. They are also members of Rotary, Chambers of Commerce, Kiwanis, YMCA, and other
community organizations. Serving the community and being active constituents of the community
remain at the core of the mission of San Jacinto Community College District.
In addition to the quality and rounded education experience offered to our students, San Jacinto
Community College District also partners with businesses in the community to provide continuing
development for current and future employees of local industry. The College partners with such
organizations as Shell, Aramco, General Motors, Ford, Toyota, Honda, BMW, Chrysler, NASA, the Port of
Houston Authority, Union Pacific Railroad and Delta Airlines.
San Jacinto Community College District has also partnered with local independent school districts to
provide dual credit for high school students. This program allows students to graduate from high school
with college credit and in some cases, a full associate degree. Our automotive, criminal justice, nursing
assistant, and cosmetology programs are also offering skills courses for high school students to enable
them to find employment after high school.
Recently, San Jacinto Community College District has also increased its partnership with other
institutions of higher education. The College has a long standing partnership with the University of
Houston Clear Lake providing freshman and sophomore year classes to nearly 70 percent of their
undergraduate students. San Jacinto Community College District has also entered into dual enrollment
agreements with Sam Houston State University and Texas A&M University including its Galveston
marine and maritime branch campus.
vii
San Jacinto Community College District, established 48 years ago, has been serving the Bay Area
Houston community by educating the workforce. We are proud to be a part of this community and look
forward to at least 48 more years of serving the people of our community through quality and well-
rounded education.
Local Economy
Harris County is located in southeast Texas within the Houston-Sugar Land-Baytown metropolitan area.
Harris County is named for John Richardson Harris, an early settler of the area. According to the U.S.
Census Bureau's 2009 estimates there were 4,070,989 people and 1,205,516 households in the county,
making it the largest county by population in Texas. The population density was 2,354 people per square
mile. There were 1,604,122 housing units at an average density of 928 per square mile. The racial
makeup of the county was 35.3% White, 39.8% Hispanic, 18.8% Black or African American, 0.7% Native
American, 5.8% Asian, 0.2% Pacific Islander, and 1.3% from two or more races. In 2006 Harris County
had 3,886,207 residents - a 4.75% growth since 2006.
The 2008 median income for a household in the county was $52,391 while 15.3% of the population was
below the poverty line.
San Jacinto Community College District is located in the City of Pasadena, Texas. The city's economy is
closely linked to the nearby Houston Ship Channel and its related industrial districts, as well as the
National Aeronautics and Space Administration's Lyndon B. Johnson Space Center in the bordering Clear
Lake area.
Cash Management Practices
Cash was invested in certificates of deposit, obligations of U.S. agencies, and local government money
market pools. The maturities of investments range from 1 month to 35 months. Coupon rates range
from 0.50% to 1.00%. Investment income includes the increase or decrease in the fair value. The fair
value of securities will increase or decrease due to changes in market interest rates during the year. As
individual securities come closer to their maturity date, the fair value of the security moves toward its
par value. As the price moves toward its par value, the unrealized gain or loss is reduced proportionally
and is eliminated by the time the security matures. The College generally holds securities to maturity.
Debt Management
The College is authorized to sell bonds and to levy an ad valorem tax in payment of the debt by the
Constitution and the laws of the State of Texas. At August 31, 2010, the College had $267,657,177 in
general obligation debt outstanding. Ad valorem property taxes to support outstanding debt are limited
to a maximum rate of $0.50 tax per hundred dollars of taxable assessed valuation. Proceeds from
general obligation debt may be used to purchase land for sites, construct, improve, renovate, and equip
College facilities; to refund certain bonds of the College; and to pay the issuance costs of bonds. The
College's uninsured general obligation debt is currently rated AA by Standard and Poor's and Aa3 by
Moody's.
viii
Bond Referendum
On May 22, 2008, the College conducted a successful bond referendum in which the voters of the
College authorized the issuance of $295 million of general obligation bonds for site improvements,
construction, and equipping facilities throughout the College. The successful election was the
culmination of a comprehensive facilities review and evaluation focused on providing facilities and
infrastructure for the College's three campuses which was conducted during the 2006-2007 year. The
planning process included a College leadership group, faculty and staff, architects and the College's
financial advisors. During the fiscal year ended August 31, 2008, the College issued $230 million of the
$295 million authorization.
GFOA Certificate of Achievement for Excellence in Financial Reporting
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to San Jacinto Community College
District for its comprehensive annual financial report for the fiscal year ended August 31, 2009. This was
the third consecutive year that the College received this prestigious award. In order to be awarded a
Certificate of Achievement, a government must publish an easily readable and efficiently organized
comprehensive annual financial report. This report must satisfy both generally accepted accounting
principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
comprehensive annual financial report continues to meet the Certificate of Achievement Program's
requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.
The preparation of this report could not have been accomplished without the services of the entire
Fiscal Affairs staff. I would like to express my appreciation for their efforts toward advancing the quality
and effectiveness of the College's financial reporting processes. Credit should also be given to the
Chancellor and the Board of ,Trustees for their support in maintaining the highest standards of
professionalism with regard to the College's financial operations.
Respectfully submitted,
Kenneth D. Lynn, CPA
Vice Chancellor of Fiscal Affairs
ix
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Accountants & Consultants t: (713) 622-1120
One Riverway, Suite 1900 f: (713) 961-0625
Houston, TX 77056 USA mfrpc.com
INDEPENDENT AUDITORS' REPORT
Board of Trustees
San Jacinto Community College District
We have audited the accompanying basic financial statements of San Jacinto Community College District
(the College) as of and for the years ended August 31,2010 and 2009, as listed in the table of contents.
These basic financial statements are the responsibility of the College's management. Our responsibility
is to express an opinion on these basic financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the basic financial statements are free of
material misstatement. An audit includes consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the College's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the basic financial statements, assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the basic financial statements referred to above present fairly, in all material respects, the
financial position of the College as of August 31,2010 and 2009, and the results of its operations and its
cash flows for the years then ended in conformity with accounting principles generally accepted in the
United States of America.
In accordance with Government Auditing Standards, we have also issued a report dated December 13,
2010 on our consideration of the College's internal control over financial reporting and our tests of its
compliance with certain provisions of laws, regulations, contracts, and grant agreements and other
matters. The purpose of that report is to describe the scope of our testing of internal control over financial
reporting and compliance and the results of that testing, and not to provide an opinion on the internal
control over financial reporting or on compliance. That report is an integral part of an audit performed in
accordance with Government Auditing Standards and should be considered in assessing the results of
our audit.
The management's discussion and analysis as listed in the table of contents is not a required part of the
basic financial statements but is supplementary information required by the Governmental Accounting
Standards Board. This information is the responsibility of the College's management. We have applied
certain limited procedures, which consisted principally of inqUiries of management regarding the methods
of measurement and presentation of the supplementary information. However, we did not audit the
information and express no opinion on it.
Momber of the American Institute of Certified Public IAccountants
Our audits were conducted for the purpose of forming an opinion on the 2010 and 2009 basic financial
statements of the College, taken as a whole. The supplemental schedules (schedule A through D) and
statistical information are presented for purposes of additional analysis and are not a required part of the
basic financial statements. Supplemental schedules A through D have been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our opinion, are fairly stated in
all material respects in relation to the basic financial statements taken as a whole. The statistical
information has not been subjected to the auditing procedures applied in the audits of the 2010 and 2009
basic financial statements and, accordingly, we express no opinion on it.
Our 2010 audit was conducted for the purpose of forming an opinion on the 2010 basic financial
statements. The accompanying schedule of expenditures of Federal awards (Schedule E) and schedule
of expenditures of state awards (Schedule F) as required by the U.S. Office of Management and Budget
Circular A-133, Audits of States, Local Governments and Non-profit Organizations and the State of Texas
Single Audit Circular, respectively, are presented for purposes of additional analysis and are not a
required part of the 2010 basic financial statements. Such information has been subjected to the aUditing
procedures applied in the audit of the 2010 basic financial statements and, in our opinion, is fairly stated,
in all material respects, in relation to the 2010 basic financial statements taken as a whole.
December 13, 2010
2
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Management's Discussion and Analysis
Fiscal Year Ended August 31,2010
(Unaudited)
About San Jacinto Community College District
The San Jacinto Community College District (the College) has served east Harris County in Texas since
the early 1960s, demonstrating a partnership between a growing community college and a sprawling area
rich in history. The diverse college district has now grown to include three campuses, a network of off-
campus learning centers, and online offerings. Total credit enrollment exceeds 28,500 students with
approximately 20,000 adult learners enrolled in continuing education classes for personal enrichment or
professional development. In order to serve these stUdents, the College employs over 2,600 full-time and
part-time personnel. Most faculty have earned master's and doctoral degrees, and many have been
nationally recognized for their teaching, research, or authorship.
The College benefits from a solid tax base and proximity to Houston, the largest city in the State of Texas
and the nation's fourth largest. The area is also home to the nation's second largest port and NASA's
Johnson Space Center. In true community college fashion, the College maintains partnerships with many
of the area's import and export companies, major oil and gas refineries, manufacturing firms, and a
consortium of aerospace interests. To help meet the specialized workforce needs of the surrounding
community, the College has fashioned innovative instructional partnerships with port industries, business,
healthcare providers, various foundations and nonprofit organizations, and other colleges and
universities.
Working closely with area school districts, the College has built educational ladders which take students
from kindergarten to college within a framework that includes state-approved tech prep initiatives,
articulation agreements, and dual credit programs. StUdents are attracted to the College's specialized
instructional programs and the transferability of all credits to four-year universities. Students can choose
from various certificate programs, workshops, and the following degrees: Associate of Arts, Associate of
Science, Associate of Applied Science, and Associate of Arts in Teaching. In total, the College offers
more than 140 degree and certificate programs.
The College is governed by a seven-member Board of Trustees (the Board) elected for six-year terms by
the taxpayers within its taXing district, which encompasses more than 497,000 citizens and 320 square
miles. The Board is responsible for oversight of academic programs, budgets, general administration,
and employment of staff and faCUlty.
Overview of the Annual Financial Report
The College presents its annual financial report in a "business type actiVity" format, in accordance with
generally accepted accounting principles as prescribed by the Governmental Accounting Standards
Board (GASB). The statements are prepared on the accrual basis of accounting, whereby revenues and
assets are recognized when the service is provided and expenses and liabilities are recognized when
services are provided to the College, regardless of when cash is exchanged.
The annual financial report consists of three basic financial statements: the Statement of Net Assets; the
Statement of Revenues, Expenses, and Changes in Net Assets; and the Statement of Cash Flows. While
each statement presents a unique set of information, they should be used together and in conjunction
with the notes to the basic financial statements. This section of the annual financial report is entitled
"Management's Discussion and Analysis". It provides an overview of the College's financial activities for
the current year along with a comparison to the prior year. In addition, the annual financial report
includes an unqualified opinion letter from the College'S independent auditors.
3
Financial Highlights for 2010
• The College has three primary sources of revenue - state appropriations, ad valorem taxes, and
tuition and fees. Historically, the College has endeavored to maintain a balance between the
revenue sources so that responsibility for funding College operations is to some extent equally
shared. For Fiscal Year 2009 - 2010, the percentages of the total among the revenue streams
were: State Appropriations 34.7% or $47,399,957, ad valorem taxes 33% or $45,349,704, and
tuition and fees (before discounts) 32.3% or $43,807,352, for a total of $136,557,013.
• The College had an increase of $20.5 million in Federal Title IV funds. The Pell Grant increased
by 79.4% ($15.5 million) in the amount paid and 42.4% (2,434) in the number of recipients. The
increases were primarily attributed to an increase in enrolled students who were eligible for the
Pell Grant. Federal regulations eased the eligibility criteria and increased the maximum amount
of Pell Grant students could receive. The College also had an increase in the number of students
who participated in the Federal Family Education Loan Program. The College had 30.4% (479)
more borrowers and a 40% ($5 million) increase in the amount paid. The increase can be
attributed to an increase in unemployed students and/or parents.
• The College purchased a 23.8596 acre tract of land located directly across from the San Jacinto
College North campus for $979,160. Options for best use of the land are still being evaluated
and will be determined in future facilities master planning activities. The land was acquired for
expansion of the North campus footprint and will provide fleXibility in planning for future land use.
• At the end of Fiscal Year 2009-2010, the College had approximately $19.6 million in
undesignated unrestricted net assets. On August 2,2010, the Board approved two designations
totaling $50 million, with one designation of $25 million for Business Continuity and Emergency
Recovery and the other designation of $25 million for Repair and Renovation of Facilities. The
need for the designated net assets arises from the Board's desire to establish, through the
financial records of the College, its intention to "set aside" financial resources. Designation of
unrestricted net assets will establish the reserves in the accounting records of the College and
preserve the expression of the Board's intention to fund these potential future cash flow needs.
• The State of Texas is experiencing bUdget difficulties because of the current economic
conditions. In February 2010, the Governor asked state agencies to prepare and submit written
plans to reduce their state revenue budgets by 5% for each year of the biennium. This reduction
in state revenue would encompass both years of the biennium (2009 - 2010 and 2010 - 2011).
The February 2010 proposal submitted by San Jacinto Community College District indicated that
the College would satisfy the requirement to reduce the state revenue appropriation by executing
a reclassification of bUdgeted revenue rather than a reduction. This is possible because during
the bUdget development process for 2009 - 2010, conservative projections were used for property
tax revenues due to economic uncertainties. It was anticipated that tax revenue collection issues
might arise related to the economic downturn, either through reduced collection rates or possibly
by taxpayer bankruptcies. As a result, a reserve of $3 million was created in the adopted tax
revenue bUdget to ensure conservatism. This reserve remains unused as collection rates have
remained at historical averages and no major taxpayers have filed bankruptcy.
• In March 2010 the Board approved a $5 per semester credit hour increase in tuition for all
resident statuses and a $5 increase in the general service fee effective with the Fall 2010
semester. The last tuition increase for the College occurred in April 2007. The tuition rates of the
College are comparable with the eight community colleges in the Gulf Coast area and are below
the state averages published by the Texas Association of Community Colleges. The tuition
increase will produce apprOXimately $3.5 million additional revenue for Fiscal Year 2010-2011
which may be offset by potential cuts in state funding. The proposed revenue increase will be
included in the budget development process to address instructional staffing, prioritized needs,
and annual goals established during the strategic planning process.
4
Financial Highlights for 2009
• On September 1,2008, the College issued $80,000,000 of Limited Tax Obligation Bonds, Series
2008. The Bonds mature serially through February 2038. The interest rates range from 3.250%
to 5.000%. The Bonds were issued as part of the May 10, 2008, bond referendum, providing for
the issuance of $295 million in general obligation bonds for College facilities.
• On September 13, 2008, the Texas Gulf Coast was struck by Hurricane Ike, a strong category 2
hurricane. All 60 of the College's buildings sustained some damage. The College was closed for
classes from September 11th through the 28th. The College reopened to faculty and students on
September 29th with 59 of 60 buildings in operation. The College sustained damage to its
facilities of approximately $9.36 million which has been covered by claims submitted to the
College property insurance provider, the State of Texas, and the Federal Emergency
Management Agency.
• On October 16, 2008, the College approved the 2008 tax rate of 16.3411 cents per $100
valuation of taxable property in the San Jacinto Community College District. This is an increase
of 1.8046 cents per $100 valuation from the 2007 rate of 14.5365 cents per $100 valuation. The
College maintained the maintenance and operations rate of 11.5927 cents per $100 valuation in
effect since 2005. The increase of 1.8046 cents per $100 valuation was added to the interest and
sinking portion of the ad valorem tax, changing the rate from $0.029438 to $0.47484. A
residential homeowner claiming a homestead exemption on a home valued at $100,000 would
pay $163 for 2008 as compared to $145 for 2007 or an $18 annual increase. Because of higher
appraised values, the College realized additional tax revenues of $3.9 million for maintenance
and operations and an additional $8.1 million for debt service due to the increase in the debt
service portion of the tax rate.
• On July 15, 2009, the College issued $150,000,000 of Limited Tax Obligation Bonds, Series
2009. The Bonds mature serially through February 2039, The interest rates range from 3.500%
to 5.0000%. The Bonds were issued as part of the May 10, 2008 bond referendum providing for
the issuance of $295 million in general obligation bonds for College facilities. The College has
$65 million remaining authorization not issued.
• The Board of Trustees maintained the tuition and fee rates approved in April of 2007. Through
the efforts of the College staff, faculty, and administrators during the aftermath of Hurricane Ike,
the College still experienced a 4.5% increase in enrollment to 24,616 for the fall of 2008
compared to 23,551 for the fall of 2007. Overall, the College had an $800,000 increase in tuition
and fee revenues for 2009.
• The College had an increase of $5,2 million in Federal Title IV funds. The Pell Grant increased
by 26.9% ($3.2 million) in the amount paid and 14.1 % (708) in the number of recipients. The
increases were primarily attributed to an increase in enrolled students who were eligible for the
Pell Grant. Federal regulations eased the eligibility criteria and increased the maximum amount
of Pell Grant students could receive. The College also had an increase in the number of students
who participated in the Federal Family Education Loan Program. The most significant increase
involved the Unsubsidized Loan Program. The College had 31.4% (312) more borrowers and a
63.3% ($1.7 million) increase in the amount paid. The Subsided Loan Program increased by
8.6% (102) in borrowers and 7.5% ($0.2 million) in amount paid. The increase can be attributed
to an increase in the amount students could borrow. Regulations allowed students to borrow an
extra $2,000.
• The College continued to focus on quality, efficiency, effectiveness, and underlying processes
throughout the campuses. During 2009, several areas began and/or completed restructuring
initiatives designed to increase revenues, better serve the student and business population, and
re-allocate resources for strategic goals.
5
The Statement of Net Assets
The Statement of Net Assets is a point in time financial statement and presents a fiscal snapshot of all
assets owned by the College, all liabilities owed by the College to others, and the resulting net assets -
the difference between assets and liabilities. The focus is to report the total net resources available to
finance future services. Assets and liabilities are presented in the order of their liquidity with noncurrent
defined as greater than one year. Net assets are displayed in three components: invested in capital
assets, net of related debt; restricted; and unrestricted.
Increases or decreases to net assets are one indicator of whether the overall financial condition has
improved or deteriorated during the year when considered with other factors such as enrollment, contact
hours of instruction, student retention, and other non-financial information. The Statement of Net Assets
is useful in determining the assets available to continue operations as well as how much the College
owes to vendors, bondholders, and other entities at the end of the year.
The following is prepared from the College's Statement of Net Assets and provides a summary of its
assets, liabilities, and net assets for the years ended August 31:
Summary of Statements of Net Assets - Exhibit 1
(In Thousands)
2010 2009 2008
Current assets $ 74,505 $ 57,927 $ 76,184
Noncurrent assets:
Capital assets, net of depreciation 173,747 144,801 144,404
Other, includes 2009 bond proceeds 258.473 299,329 35,068
Total assets $ 506.725 $ 502057 $ 255.656
Current liabilities $ 44,578 $ 40,506 $ 30,669
Noncurrent liabilities 263,843 276,812 63,408
Total liabilities $ 308.421 $ 317.318 $ 94,077
Net assets:
Invested in capital assets, net of related debt $ 98,002 $ 80,816 $ 78,719
Expendable - restricted 15,948 14,807 5,715
Unrestricted 84,354 89,116 77,145
Total net assets $ 198304 $ 184.739 $ 161.579
Fiscal Year 2010 Compared to 2009
Total assets increased $4,7 million during the fiscal year ended August 31,2010, a modest 1% increase.
Cash, cash equivalents, and investments decreased $26 million, primarily due to purchase of capital
assets and increase in capital debt interest. Responding to declining interest rate fluctuations over the
past year, the College maintained a conservative approach and invested a greater portion of the bond
proceeds in restricted long term investments, as well maintaining appropriate liqUidity through investment
pools included in the cash and cash equivalents category by definition.
The College's current ratio increased to 1,67 in 2010 from 1.43 in 2009 due to increases in pooled
investments of operating funds and a decrease in the current portion of bonds payable.
6
Total liabilities decreased by $8.9 million to $308.4 million in 2010 or 2.8%, from $317.3 million in 2009.
Current liabilities increased by $4.1 million to $44.6 million or 10.12% for 2010, from $40.5 million in 2009
primarily due to outstanding construction payments. Noncurrent liabilities decreased by $13.4 million to
$264 million or 4.8% in 2010, from $277 million in 2009. The decrease was due primarily from the
decrease in bonds payable. Net assets increased by $13.6 million, by $23.2 million, and by $11.7 million
for 2010, 2009, and 2008, respectively.
Fiscal Year 2009 Compared to 2008
Total assets increased $246.4 million during the fiscal year ended August 31, 2009, a 96.4% increase.
Cash, cash equivalents, and investments increased $245 million primarily due to the receipt of the Series
2008 and 2009 bond proceeds. Responding to interest rate fluctuations over the past year, the College
maintained a conservative approach and invested the bond proceeds in an investment pool included in
the cash and cash equivalents category by definition.
The College's current ratio decreased to 1.43 in 2009 from 2.48 in 2008 due to increases in long-term
investments of unexpended bond proceeds and with an increase in the current portion of bonds payable.
Total liabilities increased by $223 million to $317.3 million in 2009 or 237%, from $94 million in 2008.
Current liabilities increased by $9.8 million to $40.5 million or 32.1% for 2009, from $30.7 million in 2008.
Noncurrent liabilities increased by $213.4 million to $276.8 million or 336% in 2009, from $63.4 million in
2008. These increases were due primarily from the increase in bonds payable related to the 2008 and
2009 bond series.
Net assets increased by $23.2 million, by $11.7 million, and by $10.6 million for 2009, 2008, and 2007,
respectively.
The Statement of Revenues, Expenses and Changes in Net Assets
The Statement of Revenues, Expenses, and Changes in Net Assets focuses on the "bottom line results"
of the College's operations. This approach summarizes and simplifies the user's analysis of the revenues
earned and the cost of services. It details how net assets have increased during the year ended August
31, 2010, with comparative information for fiscal year 2009. The statement is divided into operating
revenues and expenses and non-operating revenues and expenses. Operating revenues are received for
providing goods and services to various customers and constituencies of the College. Operating
expenses are those expenses paid to acquire or produce the goods and services provided in return for
the operating revenues and to carry out the mission of the College.
Tuition and auxiliary revenues are shown net of scholarship allowances and discounts, depreciation is
provided for capital assets, and there is a required subtotal for net operating income or loss. This
required subtotal will generally reflect a "loss" for community colleges in Texas. This is primarily due to
the way operating and non-operating items are defined by generally accepted accounting principles. For
community colleges, state appropriations, ad valorem taxes, and Federal Title IV revenues, while
bUdgeted for operations, are non-exchange transactions and, as such, are treated as non-operating
revenues for financial statement purposes.
7
The following is a summary prepared from the College's Statement of Revenues, Expenses and Changes
in Net Assets for the years ended August 31 :
Summary of Revenues, Expenses, and Changes Net Assets - Exhibit 2
(In Thousands)
2010 2009 2008
Revenues:
Operating revenues:
Student tuition and fees, net of scholarship
allowances and discounts $ 31,298 $ 30,069 $ 29,220
Federal grants and contracts 6,722 5,810 6,474
State grants and contracts 3,521 3,090 3,816
Non-government grants and contracts 1,265 1,014 795
Sales and services of educational activities 869 735 734
Auxiliary enterprises, net of discounts 3,755 3,667 3,581
General operating revenues 2 22
Total operating revenues 47,432 44,385 44,642
Expenses:
Operating expenses:
Instruction 60,430 55,593 57,487
Public service 4,446 3,409 3,882
Academic support 10,088 10,557 12,486
Student services 13,239 12,343 11,830
Institutional support 30,855 26,367 25,643
Operation and maintenance of plant 13,427 14,163 14,820
Scholarships and fellowships 34,194 21,152 16,508
Auxiliary enterprises 4,044 3,929 3,656
Depreciation 6,816 7,626 6,765
Total operating expenses 177,539 155,139 153,077
Operating loss (130,107) (110,754) (108,435)
Non-operating revenues (expenses):
State appropriations 47,400 47,838 47,658
Maintenance ad valorem taxes 45,350 46,493 42,519
Debt service ad valorem taxes 22,027 18,895 10,798
Federal revenue, non-operating 40,151 24,744 19,511
Investment income (net of investment expenses) 1,649 2,624 3,363
Interest on capital related debt (12,355) (6,600) (3,544)
Hurricane Ike expenses (net of recoveries) 620 169
Other non-operating revenues (expenses) (1,170) (249) (162)
Total non-operating revenue, net 143,672 133,914 120,143
Increase in net assets 13,565 23,160 11,708
Net assets, beginning of year 184,739 161,579 149,871
Net assets, end of year $ 198.304 $ 184,739 $ 161 579
8
Fiscal Year 2010 Compared to 2009
Tuition and fee revenue (before the allowance for scholarships and discounts) increased to $43.8 million
in 2010 from $39.7 million in 2009. This 10.33% increase of $4.1 million is a result of a 9.7% increase in
enrollment while maintaining the same tuition rate as 2009. It includes tuition and fees for both state-
funded academic and non-state funded contract training and workforce development instructional
activities. Contact hours for fiscal year 2010 increased by 0.44 million to 10.7 million from 10.3 million
contact hours for 2009. Non-state funded contract training and workforce development instruction
revenues remained steady at $1.3 million for 2010 and $1.5 million for 2009.
Operating expenses increased by $22.5 million to $177.5 million for 2010. from $155 million for 2009.
Operating expenses related to instruction through operation and maintenance of plant increased by $10
million; this is attributable to reclassification of expenses related to Hurricane Ike in 2009 as non-
operating as well as related increase in expenses due to the 9.7% increase in enrollment in 2010.
Scholarships and Fellowships increased by $13 million, attributable primarily to an increase of over 2,900
Federal Title IV recipients. Auxiliary enterprises remained unchanged at $4 million, and depreciation
decreased by $0.8 million.
Increases in net non-operating revenue and expenses totaled $9.76 million in 2010 from 2009. Ad
valorem tax revenue increased a total of $2 million. The College's tax rate for maintenance and
operations per $100 valuation decreased to 11.4293 cents for 2010 from 11.5927 cents for 2009, while
the debt service increased to 5.6507 cents for 2010 from 4.7484 cents to offset the increase in debt
service payment requirements. Net investment income continued to decline due to lower rates. The
portfolio yielded $0.97 million less for 2010 than for 2009. Interest on capital related debt increased by
$5.76 million due to payments due on the 2009 and 2008 bond series included a full year of interest on
the $150 million of bonds issued in July of 2009.
Fiscal Year 2009 Compared to 2008
Tuition and fee revenue (before the allowance for scholarships and discounts) increased to $39.7 million
in 2009 from $39.0 million in 2008. This 1.75% increase ($0.7 million) is a result of a 4.5% increase in
enrollment while maintaining the same tuition rate as 2008. It includes tuition and fees for both state-
funded academic and non-state funded contract training and workforce development instructional
activities. Contact hours for fiscal year 2009 increased by 0.4 million to 10.3 million from 9.9 million
contact hours for 2008. Non-state funded contract training and workforce development instruction
revenues remained steady at $1.5 million for both 2009 and 2008.
Operating expenses increased by $2 million to $155 million for 2009 from $153 million for 2008.
Operating expenses related to instruction through operation and maintenance of plant decreased by $3.7
million; this is attributable to reclassification of expenses related to Hurricane Ike. Scholarships and
Fellowships increased by $4.6 million attributable primarily to Federal Title IV funds. Auxiliary enterprises
increased by $0.6 million, and depreciation increased by $0.9 million.
Increases in net non-operating revenue and expenses totaled $13.8 million in 2009 from 2008. Ad
valorem tax revenue increased a total of $12 million (21.8%), with maintenance and operating taxes
increasing $3.9 million and debt service tax revenues increasing $8.1 million. The College's tax rate per
$100 valuation for maintenance and operations remained the same at 11.5927 cents while the debt
service increased by 1.8046 cents for 2009, to offset the increase in debt service payment requirements.
Net investment income declined due to lower rates. The portfolio yielded $0.74 million less for 2009 than
for 2008. Interest on capital related debt increased by $3.01 million due to payments due on the 2009,
and 2008 bond series included a full year of interest on the $80 million of bonds issued in September of
2008.
9
The Statement of Cash Flows
The Statement of Cash Flows reports the cash receipts and cash payments that occurred during the fiscal
year with comparative data for the prior year. The statement helps users assess the following: 1) the
College's ability to generate future cash flows; 2) its ability to meet its obligations as they come due; and
3) its needs for external financing. The sources and uses of cash are categorized by operating, non-
capital financing, capital and related financing, and investing activities.
The following chart summarizes the statements of cash flows (rounded to the nearest thousand) for the
fiscal years ended August 31:
2010 2009 2008
Cash (used by) provided by:
Operating activities $(106,267) $(102,416) $ (90,973)
Non-capital financing activities 120,744 112,982 98,416
Capital and related financing activities (41,992) 226,818 (4,360)
Investing activities (95,360) (29,822) 2,210
Net (decrease) increase in cash and cash
equivalents (122,875) 207,562 5,293
Cash and cash eqUivalents - beginning of year 245,879 38,317 33,024
Cash and cash equivalents - end of year $ 123,004 $ 245,879 $ 38,317
In accordance with generally accepted accounting principles, state appropriations, maintenance ad
valorem tax revenues, and non-operating Federal revenue (Title IV) are reported as revenues from non-
exchange transactions and are, therefore, classified as cash flow from non-capital financing activities.
State appropriations, maintenance ad valorem tax revenues, and non-operating Federal revenue
provided cash flows of $122 million in 2010 and $114,5 million in 2009. Uses of non-capital financing for
2010 and 2009 are $1.5 million for scheduled interest payments on notes. Net cash (used)/provided by
capital and related financing activities was $42 million used for 2010 and $226,8 million prOVided in 2009.
The increase for 2009 is attributable to the issuance of the 2009 and 2008 bond series, Net cash flows
used for investing activities was $95.4 million for 2010 and $29.8 in 2008. This is attributable to changes
between pooled investments and securities,
Net cash provided by operating and non-capital financing activities resulted in an increase of $14,5
million, while net cash used for capital and related financing activities plus investing activities resulted in a
decrease of $137.4 million, for a net decrease of $122.9 million for 2010.
Capital Assets and Long-Term Debt ActiVity
Capital Assets - Fiscal Year 2010
In 2010, the College completed three roofing projects, new Childcare Centers for Central and North
Campus, Cafe remodeling for Central and South Campus, Phase 1 athletic field improvements for North
and South Campus, mechanical work on all three campuses, North Campus pavement and drainage
improvements, and District Administration bUilding electrical upgrades, for a total cost of $16.1 million. At
August 31, 2010, $22,8 million remained in Construction in Process for a new Central Transportation
Building, Central Welding addition, Central Allied Health addition, a new Central Science Building, a new
College Workforce Training Center, North Student Success Center addition, a new North Allied Health
Science BUilding, South Student Success Center addition, a new South Allied Health Science Building,
network upgrades on all three campuses, pavement and drainage improvements for Central and South
Campus, District Human Resources Office expansion and remodeling, site work related to Phase 2
athletic field improvements, and site work related to the new construction bond program. Several projects
undertaken during the year were related to repairs and maintenance and did not qualify for capitalization,
The College purchased an additional 23,8596 acres for $979,160 at the North Campus.
10
Capital Assets - Fiscal Year 2009
In 2009, the College completed five roofing projects. Central Campus covered walkways, and the North
Campus primary feeder tunnel for a total cost of $3.2 million. At August 31,2009, $5.7 million in projects
were still under construction consisting of a new Central Childcare Center, a new Central Transportation
Building, Central Welding addition, Central Allied Health addition, a new Central Science Building, Central
cafeteria remodeling, a new College Workforce Training Center, District Administration building electrical
upgrades, a new North Campus Childcare Center, North Student Success Center addition, a new North
Allied Health Science Building, South Student Success Center addition, a new South Allied Health
Science Building, South cafeteria remodeling, mechanical upgrades on all three campuses, site work
related to athletic fields, and site work related to the new construction bond program. Several projects
undertaken during the year were related to repairs and maintenance and did not qualify for capitalization.
The approved project list related to the $295 million authorization is as follows:
Central Campus
New Construction/Renovation/Rehabi litation
• Science Building - 98,000 square feet for classrooms and laboratories
• Allied Health Science addition - 35,000 square feet for new Allied Health Programs
• Automotive tech center - 75,000 square feet for new vocational labs for Automotive
Technology Programs
• Renovations
• Vocational Technical Building 2, Welding - 10,000 square foot addition to expand Welding
Program and Truck Driving School
• Vocational Technical Buildings 1 & 3 - 41,741 square foot renovation for replacement of
maintenance offices
• Anders Gymnasium - 7,000 square feet renovation to remove pool; renovate lobby and entrance
to competition gym; create a fitness center; and upgrade existing facility
• Lee Davis Library - 62,418 square foot update and renovate library
• Site work
• Replace Abshire Drive, Bader Drive, and Schoeler Drive
• Replace parking lots 1, 2, 3, 4 and 5
• Correct drainage and repair sidewalks in the interior of the quadrangle
• Demolition of stadium, retain jogging track and soccer field, and enlarge detention pond
• Right turn lane at Cunningham Drive
• Develop property east of Luella Drive for site of new Automotive Technical Center
• Infrastructure
• Upgrade campus primary electric service to include new switchgear and replace primary
underground feeders
• Provide new primary electrical gear to serve Davis Library, Anders Gymnasium and Ball
Technical buildings
• Extend second service to Slocomb Building and replace eXisting primary electrical gear
• Replace old York chiller in the Central Plant
• Upgrade and expand District Data Center network
• Provide new electrical service to support Automotive Program across Luella Drive
11
North Campus
New Construction/Renovation/Rehabilitation
• Allied Health Science BUilding - 128,000 square feet for classrooms and laboratories
• Spencer addition - 40,000 square feet to house student services center
• Renovations
• Nichols Gymnasium - 9,600 square feet for the Physical Education program and Fitness Center
• Lehr Library - 19,000 square feet to update and renovate library
• Site work
• Construct new parking lot adjacent to the tennis courts to serve the new Allied Health
Science BUilding and provide added detention
• Improve parking and entrance drive to Cobb Drive, improve drainage to Cravens Drive
• Repair sidewalks, pave plazas and correct drainage in the courtyard. Install covered
walkway between Slovacek and Wheeler Buildings
• Jogging trail
• New sanitary lift station at southwest corner of campus
• Infrastructure
• Replace existing chiller with new 800 ton energy efficient chiller
• Replace two original cooling towers with new stainless steel towers
• Replace two central plant boilers
• Update and expand District Data Center network
South Campus
New Construction/Renovation/Rehabilitation
• Allied Health Science Building - 155,500 square feet for classrooms and laboratories
• Longenecker addition - 40,000 square feet to house student services center
• Renovations
• Smallwood Gymnasium - 13,700 square feet for the PE program, fitness center and
upgrade the existing facility
• Williams Library - 24,000 square feet to update and renovate the library
• Site Work
• New water connection and sanitary sewer upgrades
• Construct a detention pond on the south side of Rick Sneider Drive
• Construct a new parking lot, drives and drainage at southwest corner of campus
• Jogging trail
• Infrastructure
• Create a satellite cooling and heating plant for the new portion of campus
• Replace 240 tons of air cooled chillers
• Install new primary electrical service for campus expansion
• Demo obsolete boilers in the courtyard
• Update and expand District Data Center network
District
New Construction/Renovation/Rehabilitation
• Business industry training center - 68,000 square feet
12
Long-Term Debt
On May 10, 2008, a bond referendum providing for the issuance of $295 million of general obligation
bonds for College facilities was approved by the voters by a margin of 3,335 "Yes" votes to 1,363 "No"
votes. Supporting the call for the election is the 2008 Facilities Master Plan which identified the facility·
needs of the College in priority order. Among the top construction priorities were the Science Building
and the Allied Health Science Building addition on the Central campus, the Allied Health/Science BUilding
and the Spencer addition on the North campus, and, the Science/Allied Health Building and the
Longenecker addition on the South campus. Construction of these facilities in particular is necessary to
meet instructional capacity needs in the science and allied health curriculums. On August 11, 2008, in
order to provide funds for architectural design, site work, infrastructure upgrades, facility programming,
and other construction activities, the Board of Trustees approved an initial issuance of $80 million. On
July 15, 2009, the College issued an additional $150 million of the $295 million bond authorization,
leaving a balance of $65 million authorized but not issued.
The Bonds were issued with a September 1, 2008, effective date and the delivery/settlement date was
September 16, 2008. On October 16,2008, the Board of Trustees approved the adoption of the 2008 tax
rate of $0.163411 cents per $100 valuation of taxable property in the San Jacinto Community College
District. The Maintenance and Operations tax rate remains the same at $0.115927 cents and the debt
service tax rate was increased to $0.047484 cents. This increase represents an increase of $18 to a
home owner for a home with a taxable assessed value of $100,000. The tax rate increase was
necessary to fund the increase in debt service requirements related to the $80 million dollars of neWly
issued 2008 general obligation bonds.
On October 5, 2009, the Board of Trustees approved the adoption of the 2009 tax rate of $0.170800
cents per $100 valuation. The Maintenance and Operations tax rate was red uced to $0.114293 cents
and the debt service tax rate increased to $0.056507, a net increase of $0.007389 cents, or 4.5%.
On October 4,2010, the Board of Trustees approved the adoption of the 2010 tax rate of $17.6277 cents
per $100 valuation. The Maintenance and Operations tax rate remained the same at $0.114293 cents
and the debt service tax rate was increased to $0.061984 cents. Due to average appraised values on a
residence homestead being reduced from $109,879 in 2009 to $107,473 in 2010, this will result in a $7.03
reduction in overall tax to the homeowner. The tax rate increase was necessary to fund the increase in
debt service requirements related to the $150 million dollars of neWly issued 2009 general obligation
bonds.
The College is committed to progressing with its construction, facilities management, and technology
programs, while still maintaining an aggressive debt payment schedule. As of August 31, 2010, the
balance of the College Notes and Bonds Payable is $272,727,177.
At August 31,2010, the College's credit ratings have been affirmed as follows:
Moody's Investor's Service Standard & Poor's
General Obligation Bonds Aa2 AA
Maintenance and Tax Notes Aa2 AA
Related information is included in the Notes to Basic Financial Statements:
Note 6 - Capital Assets Note 7 - Construction Commitments
Note 8 - Noncurrent Liabilities Note 9 - Bonds and Notes Payable
Note 10 - Debt Obligations Note 11 - Pledged Revenue Coverage
Note 12 - Refunding Bonds Note 13 - Defeased Bonds Outstanding
13
Currently Known Facts, Decisions and Conditions
Looking ahead to fiscal year 2011 and beyond, management sees continuing challenges regarding the
levels of State support, increased resistance to property tax increases, and increased pressure to keep
tuition and fees affordable for students. Consequently, the College is committed to bUilding upon current
efforts to diversify revenue bases, reduce operating costs, develop and expand community partnerships,
and manage financial risks, while maintaining a clear focus on quality instructional programs. A clear
indication of its focus on quality is the College's emphasis in 2011 on redefining expectations,
encouraging the exploration of new opportunities, and empowering students to achieve their goals.
The College will continue to focus on strengthening the teaching and learning process while maintaining
its sound financial position. San Jacinto Community College District is a dynamic institution which is an
integral part of the success of East Harris County and the surrounding communities.
Contacting the College'S Financial Management
This financial report is designed to provide the College's citizens, taxpayers, students, investors, and
creditors with a general overview of the College's finances and to demonstrate the College's
accountability for the money it receives. If you have questions about this report or need additional
financial information, please contact the Vice Chancellor of Fiscal Affairs.
14
Exhibit 1
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Statements of Net Assets
August 31, 2010 and 2009
2010 2009
Assets
Current assets:
Cash and cash equivalents $ 38,015,065 $ 24,538,401
Deposits held by others 21,601 21,601
Other short-term investments 14,102,513 12,842,030
Accounts receivable, net 20,554,264 19,622,797
Deferred charges 1,412,608 539,034
Inventories 399,003 362,714
Total current assets 74,505,054 57,926,577
Noncurrent assets:
Restricted cash and cash equivalents 84,988,604 221,340,150
Other long-term investments 48,005,130 56,144,791
Restricted long-term investments 123,753,207 20,034,380
Bond issuance costs 1,726,507 1,809,949
Capital assets net of accumulated depreciation 143,563,317 132,167,475
Capital assets not being depreciated 30,183,629 12,633,472
Total noncurrent assets 432,220,394 444,130,217
Total assets 506,725,448 502,056,794
Liabilities
Current liabilities:
Accounts payable 12,710,564 8,677,848
Accrued liabilities 1,528,123 1,444,052
Accrued compensable absences 258,766 316,930
Deferred compensation 80,000 63,333
Deferred revenues 18,771,419 16,332,336
Notes payable - current portion 690,000 1,225.000
Bonds payable· current portion 10,539,512 12,446,175
Total current liabilities 44,578,384 40,505,674
Noncurrent liabilities:
Accrued compensable absences 2,345,281 2,266,951
Notes payable 4,380,000 5,070,000
Bonds payable 257,117,665 269,475,519
Total noncurrent liabilities 263,842,946 276.812,470
Total liabilities 308,421,330 317,318.144
Net Assets
Invested in capital assets, net of related debt 98,002,083 80,816,340
Expendable, restricted for:
Grants 1,533.284 1,192,545
Unexpended bond proceeds 11,323,672 8.257,567
Debt service 3,090,752 5,356.709
Unrestricted 84,354,327 89,115,489
Total net assets (Schedule D) $ 198,304,118 $ 184,738,650
qee accompanying notes to basic financial statements.
15
Exhibit 2
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Statements of Revenues, Expenses, and Changes in Net Assets
Years Ended August 31 , 2010 and 2009
2010 2009
Operating Revenues
Student tuition and fees, (net of scholarship allowances and
discounts of $12,509,330 and $9,647,250, respectively) $ 31,298,022 $ 30,068,715
Federal grants and contracts 6,722,223 5,810,085
State grants and contracts 3,520,431 3,089,817
Non-governmental grants and contracts 1,265,130 1,013,841
Sales and services of educational and non - educational activities 869,143 735,247
Auxiliary enterprises, (net of discounts) 3,755,281 3,667,801
General operating revenues 1,693
Total operating revenues (Schedule A) 47,431,923 44,385,506
Operating Expenses
Instruction 60,430,231 55,592,552
Public service 4,445,946 3,408,698
Academic support 10,087,688 10,556,786
Student services 13,238,676 12,343,454
Institutional support 30,854,583 26,367,228
Operation and maintenance of plant 13,427,527 14,162,743
Scholarships and fellowships 34,194,427 21,152,384
Auxiliary enterprises 4,043,762 3,929,299
Depreciation 6,815,803 7,625,931
Total operating expenses (Schedule B) 177,538,643 155,139,075
Operating loss (130,106,720) (110,753,569)
Non-operating revenues (expenses)
State appropriations 47,399,957 47,838,243
Maintenance ad valorem taxes 45,349,704 46,492,505
Debt service ad valorem taxes 22,027,384 18,895,337
Federal revenue, non-operating 40,150,985 24,743,586
Investment income (net of investment expenses) 1,649,239 2,623,573
Interest on capital related debt (12,355,349) (6,599,699)
Hurricane Ike expenses (net of recoveries) 620,355 169,405
Other non-operating revenues (expenses) (1,170,087) (249,403)
Total non-operating revenues, net (Schedule C) 143,672,188 133,913,547
Increase in net assets 13,565,468 23,159,978
Net assets, beginning of year 184,738,650 161,578,672
Net assets, end of year $ 198,304,118 $ 184,738,650
See accompanying notes to basic financial statements.
16
Exhibit 3
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Statements of Cash Flows
Years Ended August 31,2010 and 2009
2010 2009
Cash flows from operating activities
Receipts from students and other customers $ 39,082,491 $ 33,794,082
Receipts of grants and contracts 10,986,076 10,416,425
Payments to suppliers for goods or services (30,190,715) (32,156,611)
Payments to or on behalf of employees and fellowships (92,533,370) (90,325,335)
Payments of scholarships (34,231,517) (21,052,102)
Hurricane Ike disbursements (56,665) (9,363,382)
FEMA proceeds 225,000
Insurance proceeds 677,020 3,000,000
State disaster relief appropriations 3,045,820
Net cash used by operating activities (106,266,680) (102,416,103)
Cash flows from non·capltal financing activities
Receipts from state approprietions 37,694,436 43,848,263
Receipts from ad valorem taxes· maintenance and operating 44,364,499 45,909,830
Receipts from non-operating Federal revenue 40,150,985 24,743,586
Payments on notes - prinCipal (1,225,000) (1,225,000)
Payments on notes - interest (240,596) (294,970)
Net cash provided by non-capital financial activities 120,744,324 112,981,709
Cash flows from capital and related financing activities
Receipts from ad valorem taxes - debt service 21,635,505 16,749.688
Purchases of capital assets (36,931,889) (8,272,247)
Proceeds from general obligation bonds 230,000,000
Payment on capital debt - principal (14,035,000) (12,940,000)
Payment on capital debt - Interest (12.861,098) (719,472)
Net cash (used) prOVided by capital and related financing activities (41.992,482) 226,817,949
Cash flows from investing activities
Proceeds from sale and maturities of investments 245,842,030 75,000,000
Investment income 1,617,854 2,978,806
Purcllase of inveslments (342,819,928) (107,800,710)
Net cash used by Invesllng activities (95,360,044) (29.621,904)
(Dacrease)/Increase in cash and cash eqUivalents (122,874,882) 207,561,651
Cash and cash equivalents, beginning of year 245,878,551 38,316,900
Cash and cash eqUivalents, end of year $ 123,003,669 $ 245,878,551
Reconciliation of operating loss to net cash used bv operating aclivities
Operating loss $ (130,106,720) $ (110.753,569)
Adjustments to reconcile operating loss to net cash used by operating activities:
Depreciation expense 6,815,803 7,625,931
Tax collection fee 217,690 158,462
State retirement match 2,792,061 3,989,980
State group insurance 6,913,460
Hurricane Ike disbursements (56,665) (9,363,382)
FEMA proceeds 225,000
Insurance proceeds 677,020 3,000,000
State dIsaster relief appropriations 3,045,820
Changes In assets and liabilities:
Receivables, net 197,561 (1,214,604)
Deferred charges (873,574) 16,942
Inventories (36,289) (13,266)
Accounts payable 4,761,972 1,055,140
Accrued liabilities (44,915) (893,877)
Compensated absences 36,833 (334,285)
Deferred revenuas 2,439,083 1,039,605
Net cash used by operating acllvities $ (108,266,660) $ (102,416,103)
See accompanying notes 10 basic financial statements.
17
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements
August 31,2010 and 2009
1. Reporting Entity
San Jacinto Community College District (the College) was established in 1960, in accordance with
the laws of the State of Texas, to serve the educational needs of the Taxing Entity and the
surrounding communities. The College is considered to be a special purpose, primary government
according to the definition in Governmental Accounting Standards Board (GASB) Statement No. 14,
The Financial Reporting Entity. While the College receives funding from local, state, and Federal
sources, and must comply with the spending, reporting, and record keeping requirements of these
entities, it is not a component unit of any other governmental entity.
2. Summary of Significant Accounting Policies
Reporting guidelines
The basic financial statements of the College are presented in accordance with GASB Statement No.
34, Basic Financial Statements and Management's Discussion and Analysis for State and Local
Government, Statement No. 35, Basic Financial Statements and Management's Discussion and
Analysis for Public Colleges and Universities, and Statement No. 37, Basic Financial Statements and
Management's Discussion and Analysis for State and local Governments: Omnibus. The College is
reported as a special government engaged in business-type activities. The basic financial statement
presentation provides a comprehensive, entitY-Wide perspective of the College's assets, liabilities, net
assets, revenues, expenses, changes in net assets, and cash flows. The basic financial statements
are prepared using the economic resources measurement focus and the accrual basis of accounting.
The significant accounting policies followed by the College in preparing these basic financial
statements are in accordance with the Texas Higher Education Coordinating Board's Annual
Financial Reporting Requirements for Texas Public Community and Junior Colleges. The College
applies all applicable GASB pronouncements and all applicable Financial Accounting Standards
Board (FASB) statements and interpretations issued on or before November 30, 1989, unless they
conflict or contradict GASB pronouncements. The College has elected not to apply FASB guidance
issued subsequentto November 30, 1989, unless specifically adopted by the GASB.
Tuition discounting
Texas Public Education Grants - Certain tuition amounts are required to be set aside for use as
scholarships by qualifying students. This set aside, called the Texas Public Education Grant (TPEG),
is shown with tuition and fee revenue amounts as a separate set aside amount (Texas Education
Code §56.0333). When the award for tuition is used by the student, the amount is recorded as tuition
and corresponding amount is recorded as a tuition discount. If the amount is disbursed directly to the
student, the amount is recorded as a scholarship expense.
Title IV Higher Education Authority Program Funds- Certain Title IV funds are received by the
College to pass through to the student. These funds are initially received by the College and
recorded as non-operating restricted revenue. When the student is awarded and uses these funds
for tuition and fees, the amounts are recorded as a tuition discount. If the amount is disbursed
directly to the student, the amount is recorded as a scholarship expense.
18 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements, Continued
Other tuition discounts - The College awards tuition and fee scholarships from institutional funds to
qualifying students. When these amounts are used for tuition and fees, the amounts are recorded as
tuition and fee revenue and a corresponding amount is recorded as a tuition discount. If the amount
is disbursed directly to the student, the amount is recorded as a scholarship expense.
Basis of accounting
The basic financial statements of the College have been prepared on the accrual basis whereby all
revenues are recorded when earned and all expenses are recorded when they have been reduced to
a legal or contractual obligation to pay.
Budgetary data
Each community college district in Texas is required by law to prepare an annual operating budget of
anticipated revenues and expenses for the fiscal year beginning September 1. The College's Board
of Trustees adopts the bUdget, which is prepared on the accrual basis of accounting. A copy of the
approved bUdget must be filed with the Texas Higher Education Coordinating Board, Legislative
Budget Board, Legislative Reference Library, and Governor's Office of Budget and Planning by
December 1.
Cash and cash equivalents
The College's cash and cash equivalents are considered to be cash on hand, demand deposits, and
short-term investments with original maturities of three months or less from the date of acquisition.
The governing board has designated public funds investment pools to be cash equivalents, as the
investments are redeemable on demand.
Investments
In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain
Investments and External Investment Pools, investments are reported at fair value. Fair values are
based on published market rates. Short-term investments have an original maturity greater than
three months but less than one year at time of purchase. Long-term investments have an original
maturity of greater than one year at the time of purchase and are considered as noncurrent assets.
Inventories
Inventories consist of physical plant supplies. Inventories are valued at cost on a first in, first out
basis and are charged to expense as consumed.
19 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements, Continued
Capital assets
Capital assets are long-lived assets in the service of the College and include land, bUildings,
improvements, equipment, and library books. Capital assets are recorded at cost at the date of
acquisition, or fair value at the date of donation. For equipment, the College's capitalization policy
includes all items with a unit cost of $5,000 or more and an estimated useful life in excess of one
year. Renovation in excess of $100,000 to bUildings, infrastructure, and land improvements that
significantly increase the value or extend the useful life of the structure are capitalized. The costs of
normal maintenance and repairs that do not add to the value of the asset or materiality extend assets'
lives are charged to operating expense in the year in which the expense is incurred. The College
annually evaluates impairment of capital assets. The College does not believe any impairment exists
as of August 31, 2010 and 2009. Depreciation is computed using the straight-line method over the
following estimated useful lives of the assets:
Buildings 50 years
Land improvements 20 years
Library books 15 years
Furniture, equipment and vehicles 10 years
Telecommunications and peripheral equipment 5 years
Deferred revenues
Deferred revenues, primarily consisting of tuition and fees, relate to academic terms in the next fiscal
year and, as such, have been deferred.
Net assets
The College's net assets are classified as follows:
Invested in capital assets, net of related debt: This represents the College's total investment in
capital assets, net of outstanding debt obligations related to those capital assets. To the extent
debt has been incurred but not yet expended for capital assets, such amounts are not included
as a component of invested in capital assets, net of related debt.
Restricted - non expendable: Net assets subject to externally imposed stipulations that they be
maintained in perpetuity by the College.
Restricted net assets - expendable: Net assets whose use is SUbject to externally imposed
stipulations that can be fulfilled by actions of the College pursuant to those stipulations or that
expire by the passage of time.
Unrestricted net assets: Unrestricted net assets represent resources derived from student tuition
and fees, state appropriations, and sales and services of educational departments and auxiliary
enterprises, These resources are used for transactions relating to the educational and general
operations of the College and may be used at the discretion of the governing board to meet
current expenses for any purpose, These resources also include auxiliary enterprises which are
substantially self-supporting activities that provide services for students, faCUlty, and staff.
20 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements, Continued
Classification of revenues and expenses
The College defines operating activities, for purposes of reporting on the statement of revenues,
expenses, and changes in net assets, as those activities that generally result from exchange
transactions, such as payments received for providing services and payments made for goods or
services received. With the exception of interest expense on long-term indebtedness, substantially all
College expenses are considered to be operating expenses. Certain significant revenue streams
relied upon for operations are recorded as non-operating revenues, as defined by GASB Statement
No. 35, including state appropriations, ad valorem taxes, Federal Title IV financial aid funds, and
investment income.
Management estimates
The preparation of the basic financial statements in conformity with generally accepted accounting
principles accepted in the United States of America requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could
differ from those estimates.
Income taxes
San Jacinto Community College District is exempt from Federal income taxes under Internal Revenue
Code Section 115, Income of States, Municipalities, Etc., although unrelated business income may be
subject to Federal income taxes under Internal Revenue Code Section 511 (a)(2)(8), Imposition of
Tax on Unrelated Business Income of Charitable, Etc., Organizations. The College had no unrelated
business income tax liability for the years ended August 31, 2010 and 2009.
Reclassifications
Certain 2009 amounts have been reclassified to conform to the 2010 presentation.
3. Authorized Investments
The Board of Trustees of the College has adopted a written investment policy regarding the
investments of its funds as defined in the Public Funds Investment Act (Chapter 2256.001 Texas
Government Code). The investments of the College are in compliance with the Board of Trustees'
investment policy and the Public Funds Investment Act. Such investments include (1) obligations of
the United States and its agencies, (2) directed obligations of the State of Texas or its agencies, (3)
obligations of political subdivisions rated not less than A by a national investment rating firm, (4)
certificates of deposit and, (5) other instruments and obligations authorized by statute.
21 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements, Continued
4. Deposits and Investments
Cash and deposits included on Exhibit 1, Statement of Net Assets, consist of the items reported
below, as of August 31:
Cash and Deposits
2010 2009
Cash and cash equivalents:
Petty cash on hand $ 44,380 $ 42,876
Investment pools 84,374,413 225,574,065
Money market 38,114,133 17,584,984
Sub total cash and cash equivalents $ 122,532,926 $ 243,201,925
Bank deposits - demand deposits 470,743 2,676,626
Total cash and deposits, August 31 $ 123,003 669 $ 245,878,551
Reconciliation of Cash, Deposits and Investments to Exhibit 1
Market Value
2010 2009
U,S, government securities $ 172,775,922 $ 76,179,171
Certificates of deposit 13.084,928 12,842,030
Total investments $ 185,860,850 $ 89,021,201
Total cash, deposits and investments $ 308,864,519 $ 334,899,752
Exhibit 1 - cash, cash equivalents and investments:
Cash and cash equivalents-
current and noncurrent $ 123,003,669 $ 245,878,551
Investments - short term and long term 185,860,850 89,021,201
Total cash, cash equivalents and investments $ 308,864,519 $ 334,899 752
22 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements,Continued
As of August 31, the College had the following investments and maturities.
2010 Weighted
Investment Maturities (in Years) Average
Fair Maturity Moody's
Investment Tvpe Value Less than 1 1 to 2 2 to 3 (Days) Rating
Fannie Mae:
US Domestic Multi Step
Coupon Bonds Structured Note $ 9,990,625 $ $ - $ 9,990,625 35.18 Aaa
Federal Home Loan Bank:
US Domestic Multi Step Coupon
Bonds Structured Note Series 1 58,743,980 58,743,980 113.97 Asa
US Domestic Bonds Multi Step
CPN Bond Series 5 Structured Note 5,001,562 5,001,562 12.27 Aaa
US Domestic Bonds Structured Note
Multi Step Coupon Bond 28,000,000 28,000,000 62.74 Aaa
Freddie Mac:
Domestic MTN Notes 1,017,585 1,017,585 0.73 Aaa
Global Unsecured Structured Note
Multi Step Coupon Bond 15,009,540 15,009,540 29.48 Aaa
Structured Note MS Coupon Bond 15,003,420 15,003,420 28.60 Aaa
US Domestic MTN Multi Step
Coupon Bond Structured Note 40,009,210 40,009,210 82.51 Aaa
Certificates of Deposit 13,084,928 13,084,928 5.76
Totals $ 185 860850 $14102513 $ 156766150 $ 14992187 3Z124
2009
Fannie Mae US Domestic
Multi Step Coupon Bond $ 4,996,875 $ $ - $ 4,996,875 14.43 Aaa
Fannie Mae US Domestic Notes
Multi Step Coupon Structured Bonds 15,021,875 15,021,875 34.19 Aaa
Federal Home Loan Bank
US Domestic Bonds Multi Step
Coupon Structured Bonds 35,090,630 25,067,190 10,023,440 72.49 Aaa
Federal Home Loan Bank
Structured Note
Multi Step Coupon Bonds 5,009,375 5,009,375 13.22 Aaa
Federal Home Loan Bank
US Domestic Structured Note
Mulli Step Coupon Bond 15,023,445 15,023,445 34.42 Aaa
Freddie Mac Domestic MTN Notes 1,036,971 1,036,971 176 Aaa
Certificates of Deposit 12,842,030 12,842,030 8.04
Totals $ 89021 201 $12842030 $ 61158856 $ 15020315 .1l.8..5.5
23 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements, Continued
Interest rate risk
In order to limit interest and market rate risk from changes in interest rates, the College's adopted
Investment Policy (the Policy) sets a maximum maturity of three (3) years. The operating funds have
a dollar weighted average maturity (WAM) limit of 365 days and debt service funds have a maximum
WAM of six (6) months.
During 2010 and 2009, the portfolio contained no investment maturing beyond three (3) years and the
dollar weighted average maturity of the total portfolio was 372 days and 179 days as of August 31,
2010 and 2009, respectively.
Credit risk
State law and the Policy restrict time and demand deposits to those fully collateralized by obligations
of the United States Government or its agencies or instrumentalities or FDIC insured from eligible
depositories (banks) doing business in Texas. By the Policy, certificates of deposit are limited to
maturities not exceeding one (1) year and are further collateralized to 102% with pledged securities,
and all collateral is to be held by an independent custodian. The bank is contractually liable for
monitoring and maintaining the collateral margins.
State law and the Policy limit repurchase agreements to primary dealers. The Policy requires an
industry standard written master repurchase agreement, independent safekeeping of collateral, and a
102% margin on collateral. Repurchase agreements are limited to a maximum maturity of ninety (90)
days except for flex repurchase agreements which are restricted by the Policy to be used only with
bond funds and are required to match the expenditure plan of the bond proceeds.
Commercial paper is restricted by state law and the Policy to dual rated A 1/P1 paper. The Policy
restricts all commercial paper to a maximum maturity of six months to stated maturity.
Constant dollar, local government investment pools, as defined by state law (2256.016) and approved
by the Policy are authorized investments. By state law all local government pools are rated AAA or
equivalent by at least one Nationally Recognized Statistical Rating Organization (NRSRO).
Neither state law nor the Policy require SEC registered money market funds to be rated.
Concentration of credit risk
The Policy requires diversification on all authorized investment types which are monitored on at least
a monthly basis. The Policy requires the follOWing diversifications:
Type of Investment Maximum % of Portfolio
Constant Dollar Pools 100 %
US Treasury Obligations 90 %
US Agency Obligations 85 %
Repurchase Agreements 75 %
Commercial Paper 25 %
24 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements, Continued
As of August 31,2010:
U.S. Government securities represented 55.94%; investment pools and money market accounts
represented 39.66%; and insured or collateralized certificates of deposit represented 4.24% of
the investment portfolio.
As of August 31, 2009:
Investment pools and money market accounts represented 72.61%; U.S. Government securities
represented 22.75%; and insured or collateralized certificates of deposit represented 3.8% of the
investment portfolio.
Custodial credit risk
To control custody risk, state law and the College's adopted Investment Policy require collateral for all
time and demand deposits and repurchase agreements with securities transferred only on a delivery
versus payment basis and held by an independent party approved by the College and held in the
College's name. The custodian is required to provide original safekeeping receipts and monthly
reporting of positions and position descriptions including market value. Repurchase agreements and
deposits must be collateralized to 102% (with 110% on mortgaged-backed securities), and
transactions are reqUired to be executed under a written agreement. The counter-party of each type
of transaction is held contractually liable for monitoring and maintaining the required collateral
margins on a daily basis.
Portfolio disclosure as of August 31, 2010:
The portfolio contained two fully insured certificates of deposit with a combined book value of
$13,084,928. The Portfolio did not contain any repurchase agreements. All bank demand
deposits were fully insured and collateralized. All pledged bank collateral for demand deposits
was held by an independent institution outside the bank's holding company.
Portfolio disclosure as of August 31, 2009:
The portfolio contained four fUlly insured certificates of deposit with a combined book value of
$12,842,030. The Portfolio did not contain any repurchase agreements. All bank demand
deposits were fully insured and collateralized. All pledged bank collateral for demand deposits
was held by an independent institution outside the bank's holding company.
25 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements, Continued
5. Disaggregation of Receivables and Payables Balances
Accounts receivable consist of the following at August 31:
2010 2009
Tuition and fees receivables $ 16,984,276 $ 15,564,194
Federal receivables 1,486,205 1,351,858
State and local receivables 1,109,234 721,873
Interest receivable 345,061 175,427
Other receivables 1,466,061 4,062,480
Less allowance for doubtful accounts (4.547,746) (5,004,814)
Total 16,843.091 16,871,018
Property tax receivable 3,962,553 3,395,767
Less allowance for doubtful accounts (251,380) (643,988)
Total 3)11.173 2.751,779
Total accounts receivables, net $ 20,554.264 $ 19,622,797
Accounts payable and accrued liabilities consist of the following at August 31:
2010 2009
Vendors payable $ 11,984,642 $ 8,093,545
Students payable 198,156 235,246
Other payables 1,257,022 349,057
Benefits payable 269,755 314,670
Accrued interest payable 529,112 1,129,382
Total accounts payable and accrued liabilities $ 14,238.687 $ 10,121,900
6. Capital Assets
Capital assets activities for the years ended August 31 :
2010
Balance Balance
September 1, August 31,
2009 Increase Decrease 2010
Not depreciated:
Land $ 6,427,404 $ 979,160 $ - $ 7,406,564
Construction in progress 6,206,068 32,686,570 16,115,573 22,777,065
Total not depreciated 12.633,472 33,665,730 16,115.573 30,183,629
Other capita! assets:
Buildings 160,570,144 12,048,859 3,442,756 169,176,247
Land improvements 25,650,157 5,150,342 50,750 30,749,749
Furniture, eqUipment and vehicles 15,017,064 1,659,424 2,003,275 14,673,213
Telecommunications and computer
peripheral equipment 12,979,954 893,794 515,811 13,357,937
Library books 6,595,503 391,360 271,033 6,715,830
Total depreciated 220.812,822 20,143,779 6,283,625 234,672,976
26 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements, Continued
Less accumulated depreciation:
BUildings 52,205,634 3,843,028 1,192,954 54,855,708
Land improvements 9,726,362 1,185,566 543,696 10,368,232
Furniture, equipment and vehicles 11,747,266 710,030 2,343,808 10,113,488
Telecommunications and computer
peripheral equipment 10,819,152 757,282 11,576,434
Library books 4,146,933 319,897 27t033 4,195,797
Total accumulated depreciation 88,645,347 6,815,803 4,351,491 91,109,659
Net capital assets $ 144,800,947 $ 46,993 706 $18.047}07 $173,746,946
2009
Balance Balance
September 1, August 31,
2008 Increase Decrease 2009
Not depreciated:
Land $ 6,427,404 $ - $ - $ 6,427,404
Construction in progress 2,933,996 8,596,174 5,324,102 6,206,068
Total not depreciated 9,361,400 8,596,174 5,324,102 12,633,472
Other capital assets:
Buildings 158,860,805 2,230,380 521,041 160,570,144
Land improvements 24,425,176 1,224,981 25,650,157
Furniture, equipment and vehicles 14,155,729 861,335 15,017,064
Telecommunications and computer
peripheral equipment 12,688,970 290,984 12,979,954
Library books 6,856,690 392,494 653,681 6,595,503
Total depreciated 216,987,370 5,000,174 1,174,722 220,812,822
Less accumulated depreciation:
Buildings 48,662,139 3,815,134 271,639 52,205,634
Land improvements 8,597,496 1,128,866 9,726,362
Furniture, equipment and vehicles 10,761,449 985,817 11,747,266
Telecommunications and computer
peripheral eqUipment 9,364,512 1,454,640 10,819,152
Library books 4,559,140 241,474 653,681 4,146,933
Total accumulated depreciation 81,944,736 7,625,931 925,320 88,645,347
Net capital assets $ 144 .404 034 $ 5,970417 $ 5 573 504 $144 800,947
7. Construction Commitments
The College has entered into construction commitments for various projects including the renovation
of facilities and the construction of buildings, At August 31,2010 and 2009, the outstanding
commitment under construction contracts for facilities and other projects are approximately
$22,470,868 and $18,082,500, respectively,
27 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements, Continued
8. Noncurrent Liabilities
Long-term liability activity for the years ended August 31:
2010
Balance Balance
September 1, August 31, Current
2009 I"crease Decrease 2010 Portion
Bonds payable-
general obligation bonds $281,921,694 $ - $14,264,517 $ 267,657,177 $10,539,512
Notes payable-
general obligation notes 6,295,000 1,225,000 5,070,000 690,000
Accrued
compensable absences
and deferred compensation 2,647,214 94,997 58,164 2,684,047 338,766
Total $290,863,908 $ ~ $15547681 $ 275411 224 $ 11,568278
Long-term liability activity for the years ended August 31:
2009
Balance Balance
September 1, August 31, Current
2008 Increase Decrease 2009 Portion
Bonds payable -
general obligation bonds $ 58,470,742 $236,431,694 $12,980,742 $ 281,921,694 $ 12,446,175
Notes payable -
general obligation notes 7,520,000 1,225,000 6,295,000 1,225,000
Accrued
compensable absences
and deferred compensation 2,981,499 433,989 768,274 2,647,214 380,263
Total $ 68,972.241 $236,865,683 $14,974016 $ 290,863908 $ 14.051.438
28 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements, Continued
9. Bonds and Notes Payable
Bonds and notes payable at August 31 are as follows:
General Obligation Bonds 2010 2009
Limited Tax General Obligation Bonds, Series 2001, to
construct, improve, renovate, and equip facilities. Issued
November 5, 2001, in the amount of $40,000,000. Tax
supported bonds. Interest rates range from 4.00% to 5.00%.
Due February 2011. $ 1,460,000 $ 2,870,000
Limited Tax General Obligation Bonds, Series 2003, to
construct, improve, renovate, and equip facilities. Issued
January 31, 2003, in the amount of $6,560,000. Tax
supported bonds. Interest rates range from 3.50% to 5.00%.
Due February 2031. 3,405,000 3,595,000
Limited Tax General Obligation Bonds, Series 2004, to
construct, improve, renovate, and equip facilities. Issued
February 2, 2004, in the amount of $20,835,000. Tax
supported bonds. Interest rates range from 3.125% to
5.125%. Due February 2033. 15,490,000 16,540,000
Limited Tax General Obligation Building and Refunding Bonds,
Series 2007, to refund 2001 General Obligation Bonds, to
construct, improve, renovate, and equip facilities. Issued May
1,2007, in the amount of $24,620,000. Tax supported bonds.
Interest rates range from 4.00% to 5.00%. Due February
2033. 18,805,865 19,608,646
Limited Tax Refunding Bonds, Series 2008, to refund 2000
General Obligation Bonds. Issued March 19, 2008, in the
amount of $12,700,000. Tax supported bonds. Interest rates
range from 3.00% to 5.00%. Due February 2025. 12,736,932 12,869,893
Limited Tax General Obligation Bonds, Series 2008A, to
construct and eqUip school buildings in the system, including
instructional facilities, academic support facilities,
administrative support facilities, plant system replacements,
technology infrastructure, and for the purchase of necessary
sites. Issued September 1, 2008, in the amount of
$80,000,000. Tax supported bonds. Interest rates range from
3.250% to 5.000%. Due February 2038. 60,963,012 71,475,831
Limited Tax General Obligation Bonds, Series 2009, to
construct and equip school buildings in the system, including
instructional facilities, academic support facilities,
administrative support facilities, plant system replacements,
technology infrastructure, and for the purchase of necessary
sites. Issued July 15, 2009, in the amount of $150,000,000.
Tax supported bonds. Interest rates range from 3.500% to
5.000%. Due February 2039. 154,796,368 154,962,324
29 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements, Continued
Maintenance Tax Note
Maintenance Tax Notes, Series 2001, to repair and renovate
major building system components and to purchase and install
equipment. Issued November 5, 2001, in the amount of
$4,645,000. Tax supported notes. Interest rates range from
3.50% to 3.875%. Due February 2010. 650,000
Maintenance Tax Notes, Series 2003, to repair and renovate
major building system components and to purchase and install
equipment. Issued January 31, 2003, in the amount of
$10,440,000. Tax supported notes. Interest rates range from
2.80% to 4.80%. Due February 2022. 5,070,000 5,645,000
Total bonds and notes payable $272727.177 $288216694
10. Debt Obligations
Debt service requirements as of August 31,2010 were as follows:
Year General Obligation
Ending Bonds/Notes
August 31 Principal Interest Total Bonds
2011 $ 11,229,518 $ 12.162,023 $ 23,391,541
2012 15,594,518 11.654,876 27.249,394
2013 11,254.518 11,157,399 22,411,917
2014 9,704,518 12,557,027 22,261,545
2015 9,789,518 14,331,385 24,120,903
2016-2020 40,082,590 46,525,619 86,608,209
2021-2025 42,870,108 38,289,578 81,159,686
2026-2030 35,547,785 29,023,106 64,570,891
2031-2035 53,824,125 17,731,822 71,555,947
2036-2039 42,829,979 4,105,628 46,935,607
Total $ 272.727.177 $ 197.538.463 $ 470 265.640
30 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements, Continued
11. Pledged Revenue Coverage
The College has pledged a portion of maintenance and operating tax revenues for repayment of 2001
and 2003 Maintenance Tax Notes as detailed in Note 9. The period covered is from fiscal year 2002
to fiscal year 2022.
Percent of
Total M&O
Maintenance Taxes
Fiscal Year and Operating Recognized to
Ended Tax Total
August 31 Recognized Amount of Pledged Revenue Pledged
Principal Interest Total
2002 $ 25,717,675 $ $ 107,826 $ 107,826 0.4193%
2003 26,355,326 500,000 161,131 661,131 2.5085%
2004 29,827,208 2,460,000 510,467 2,970,467 9.9589%
2005 30,668,749 1,290,000 450,370 1,740,370 5.6747%
2006 33,439,538 1,495,000 400,501 1,895,501 5.6684%
2007 37,666,186 510,000 364,018 874,018 2.3204%
2008 42,518,691 1,225,000 330,146 1,555,146 3.6576%
2009 46,492,505 1,225,000 284,065 1,509,065 3.2458%
2010 45,349,704 1,225,000 240,596 1,465,596 3.2318%
2011-2022 5,070,000 1,451,604 6,521,604
Total $ 318,035.582 $ 15.000,000 $ 4300724 $19300.724
12. Refunding Bonds
On April 1, 2008, the College issued $12,700,000 of Limited Tax Refunding Bonds, Series 2008. The
bonds mature serially through February 2025. The interest rates range from 3.000% to 5.000%. The
Bonds are to refund the variable rate Limited Tax General Obligation Bonds, Series 2000. The par
value of the refunding bonds was $12,700,000 with a reoffering premium of $304,487.
The total cash flows required to service the refunded bonds as of the effective date of the refunding
were $13,080,983. The aggregate debt service payments of the refunded bonds of $24,065,689 is
$2,495,905 less than the aggregate debt service payments of the refunding bonds of $21,569,784.
The net present value of the refunding transaction is $1,554,032 or 12.236%.
13. Defeased Bonds Outstanding
For the fiscal years ended August 31, 2010 and 2009, the College had the following defeased bonds
outstanding:
Year Par Value Outstanding
Bond Issue Refunded 2010 2009
Limited Tax General
Obligation Bonds, Series 2001 2007 $ 28950.000 $ 28,950,000
31 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements, Continued
14. Unrestricted Net Assets
The College designates a portion of unrestricted net assets to indicate management's tentative plans
for future use of financial resources. At August 31, 2010, the College designated $50 million of
accumulated unrestricted net assets comprised of $25 million for business continuity and emergency
recovery and another $25 million for repair and renovation of facilities. At August 31, 2009, the
College designated $25 million of unrestricted net assets for deferred maintenance and repairs, and
enhancements to technology and education.
15. Operating Lease Commitments and Rental Agreements
The College leases computers, office space, bowling alley facilities, storage space, copiers, and
mailing equipment. The following operating lease commitments requiring future minimum annual
rental payments for years ending August 31 are as follows:
Year Ending
August 31, 2010 2009
2010 $ $ 986,922
2011 2,109,077 1,314,884
2012 1,296,396 1,289,745
2013 600,836 555,535
2014 201,798 133,352
2015 20,539 53,364
Total $ 4228646 $ 4333802
Computer leases permit automatic renewal at three-month intervals and must be terminated in writing
no less than ninety days prior to the end of the lease term. The leases have term expiration dates
ranging from 2011 to 2013. In the event sufficient funds are not appropriated for SUbsequent fiscal
years, the leases may be terminated by prOViding written notice sixty days prior to the end of the
current fiscal year period In effect. Leases include purchase options at the end of the lease term at
fair market value.
Office space leases have term expiration dates ranging from 2012 to 2015. Each agreement
contains an escalation clause allowing the landlord to allocate additional direct costs related to the
operation of the leased sites, with the exception of the Galena Park Resource and Training Center
leases. Leases currently in effect contain options to renew and allow for subleasing property with
landlord's written consent, with the exception of the Galena Park Resource and Training Center
leases.
Bowling alley facilities leases expire in 2011 with renewal options of two one-year time periods. The
contracts allow for termination by giving thirty days notice in writing. The agreements contain exhibits
detailing specific per student rates for each semester.
The lease for record storage space permits automatic renewal every twelve months unless written
notice is given at least ninety days in advance. Additional per box charges and service rates apply in
addition to a flat monthly rental fee.
32 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements, Continued
The lease for storage space is based on a monthly term with a requirement of thirty days written
notice before the contract can be terminated.
Leases for copiers and mailing equipment have term expiration dates ranging from 2012 to 2014.
Monthly rental fees are based on model and number of units leased.
Operating expenses include $1,752,325 and $986,922 of lease payments paid during fiscal years
2010 and 2009, respectively.
16. Employees' Retirement Plan
The State of Texas (State) has joint contributory retirement plans for almost all its employees. One of
the primary plans in which the College participates is administered by the Teacher Retirement
System of Texas (TRS).
Teacher Retirement System of Texas
Plan Description. The College contributes to TRS, a cost-sharing multiple employer defined benefit
pension plan. TRS administers retirement and disability annuities, and death and survivor benefits to
employees and beneficiaries of employees of the public school systems of Texas. It operates
primarily under the provisions of the Texas Constitution, Article XVI, Sec. 67, and Texas Government
Code, Title 8, Subtitle C. The Texas State legislature has the authority to establish and amend
benefit provisions of the pension plan. TRS issues a publicly available financial report with required
supplementary information which can be obtained from http://www.ers.state.tx.us/. under the TRS
Publications heading.
Funding Policy. Contribution requirements are not actuarially determined but are established and
amended by the Texas State legislature. The State funding policy is as follows: (1) The State
constitution requires the legislature to establish a member contribution rate of not less than 6.0% of
the member's annual compensation and a State contribution rate of not less than 6.0% and not more
than 10% of the aggregate annual compensation of all members of the system; (2) A State statute
prohibits benefit improvements or contribution reductions if, as a result of the particular action, the
time required to amortize TRS' unfunded actuarial liabilities would be 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. State law provides for a member contribution rate of 6.644% for January
2010 through August 2010 and 6.4% September 2009 through December 2009 and for fiscal years
2009 and 2008 the State contribution rate was 6.58% and 6.65%, respectively. In certain instances
the College is required to make all or a portion of the State's contribution for fiscal years 2010,2009,
and 2008_
Optional Retirement Plan (ORP)
Plan Description. The State has also established an optional retirement program (ORP) for
institutions of higher education. Participation in ORP is in lieu of participation in TRS. ORP provides
for the purchase of individual annuity contracts and operates under the provisions of Texas
Constitution, Article XVI, Sec. 67 and Texas Government Code, Title 8, Subtitle C.
33 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements, Continued
Funding Policy. Contribution requirements are not actuarially determined but are established and
amended by the Texas State legislature. The percentage of participant salaries currently contributed
by the State and each participant are 6.4%, 6.58% and 6.65%, respectively, for fiscal years 2010,
2009, and 2008. The College contributed 2.1%, 1.92%, or 1.85% for fiscal years 2010,2009, and
2008, respectively, for employees who were participating in the optional retirement program prior to
September 1, 1995. Benefits fully vest after one year plus one day of employment. Because these
are individual annuity contracts, neither the State nor the College' has any additional or unfunded
liability for this program.
The retirement expense related to TRS and ORP contributions paid by the State for the College was
$4,108,280, $3,989,980 and $3,717,228 for the fiscal years ended August 31, 2010, 2009, and 2008,
respectively. This amount represents the portion of expended appropriations made by the State
legislature on behalf of the College. On-behalf payments of these benefits were recognized as
restricted revenues and restricted expenses during the period. The total payroll for all College
employees was $82,796,028, $76,126,461, and $75,143,132 for fiscal years 2010, 2009, and 2008,
respectively. The total payroll of employees covered by the State for TRS was $42,548,465,
$39,473,463, and $34,599,616 and the total payroll of employees covered by the State for ORP was
$21,142,154, $21,158,879, and $21,893,206 for fiscal years 2010,2009, and 2008, respectively. See
Schedules Band C.
17. Post Retirement Health Care and Life Insurance Benefits
In addition to providing pension benefits, the State provides certain health care and life insurance
benefits for retired employees. Almost all of the employees may become eligible for those benefits if
they reach normal retirement age while working for the State. Those and similar benefits for active
employees are provided through a State sponsored program with premiums based on benefits paid
during the previous year. The State recognizes the cost of providing these benefits by expending the
annual insurance premiums.
The State contribution per full-time employees were $343, $331, and $338 per month for the years
ended August 31, 2010, 2009, and 2008, respectively. The State's cost of prOViding those benefits
for 1,108 active employees was $4,558,277 and 436 retirees was $2,355,183, for a total State funded
amount of $6,913,460 for the year ended August 31, 2010. The State's cost of providing those
benefits for 1,171 active employees was $4,656,475 and 417 retirees was $2,068,771 for a total State
funded amount of $6,725,246 for the year ended August 31, 2009. The State's cost of providing
those benefits for 1,192 active employees was $4,835,969 and for 398 retirees was $1,981,819, for a
total State funded amount of $6,817,788 for the year ended August 31,2008. The amounts represent
the portion of expended appropriations made by the State Legislature on behalf of the College. On-
behalf payments of these benefits were recognized as restricted revenues and restricted expenses
during the period. See Schedules Band C.
34 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements, Continued
The following table provides a breakdown of the total premiums paid by fiscal year:
Fiscal
Year Total
Ended State College Employee Annual
August 31. Paid % Paid % Paid % Premiums
2010 $ 6,913,460 50.78% $ 5,164,773 37.93% $ 1,536,978 11.29% $ 13,615,211
2009 $ 6.725,246 52.52% $ 4,320,467 33.74% $ 1.759,089 13.74% $ 12,804,802
2008 $ 6,817,788 56.09% $ 3,718,457 30.59% $ 1,617,769 13.31% $ 12,154,014
The Government Accounting Standards Board Statement No. 45, Accounting and Financial Reporting
by Employers for Post Employment Benefits Other than Pensions, has been issued and is effective
for the fiscal years ended August 31,2010,2009, and 2008. The following information is provided to
comply with the requirements of the new statement.
Plan Description. The College contributes to the State Retiree Health Plan (SRHP), a cost-sharing
multiple-employer, defined benefit post-employment healthcare plan administered by the Employees
Retirement System of Texas (ERS). These medical benefits are provided to retired employees of
participating universities, community colleges, and state agencies in accordance with Chapter 1551,
Texas Insurance Code. Benefit and contribution provisions of the SRHP are authorized by State law
and may be amended by the Texas Legislature, ERS issues a publicly available financial report that
includes financial statements and required supplementary information for the plan. That report may
be obtained from ERS via their website at http://www.ers.state.tx.us/.
Funding Policy. Section 1551.055 of Chapter 1551, Texas Insurance Code provides that contribution
requirements of the plan members and the participating employers are established and may be
amended by the ERS board of trustees, Plan members or beneficiaries receiving benefits pay any
premium over and above the employer contribution. The employer's share of the cost of retiree
healthcare coverage for the current year is known as the implicit rate subsidy. It is the difference
between the claims costs for the retirees and the amounts contributed by the retirees. The ERS
board of trustees sets the employer contribution rate based on the implicit rate subsidy, which is
actuarially determined in accordance with the parameters of GASB Statement No. 45. The employer
contribution rate 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 (or funding excess) of the plan
over a period not to exceed thirty years. The College's contributions to the plan for the years ended
August 31 are detailed in the table above and equal the reqUired contributions each year.
The Board of Trustees approved a provision in a former Chancellor's contract in 2007 to pay an
annual premium of $7,685 for twenty years through July of 2026 to prOVide for a $500,000 term life
insurance policy. The insured has the discretion to name the beneficiary. The College is current on
the premium payments as of August 31, 2010 and 2009.
35 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements, Continued
18. Compensable Absences
Full-time employees earn annual leave from 6.66 to 16.66 hours per month depending on the number
of years employed with the College. The College's policy is that an employee may carry a maximum
of 200 hours of his accrued leave forward from one fiscal year to another fiscal year. Employees who
terminate their employment are entitled for payment of all annual leave earned in the current year.
The College recognized the accrued liability for the unpaid annual leave in the amounts of $1,050,317
and $895,039 as of August 31,2010, and 2009, respectively.
The College provides retirement incentive pay for unused sick days accumulated prior to August 1,
1988. To receive the incentive pay, the employees must not terminate for reasons other than leave
authorized by Board policy, must retire under the terms of the Teacher Retirement System of Texas,
or be paid by reason of death. There is no additional accumulation for retirement incentive pay
purposes for any sick days that an employee earned after August 1, 1988. The College recognized
for those employees who qualify for retirement incentive pay an accrued liability of $1,553,730 and
$1,688,842 as of August 31,2010 and 2009, respectively.
Effective August 1, 1988, the College allows sick leave to accumulate at a rate of eight hours per
month to a maximum of 1,280 hours. An employee who is on sick leave will be paid only to the extent
of accumulated hours. The College's policy is to recognize the sick leave cost when paid. Upon
termination of employment, the employees do not receive payment for unused accumulated sick
leave hours.
As of August 31, 2010, the College recognized an expense of $548,313 related to the Board
approved early exit program for 2010.
19. Deferred Compensation
The College has established a deferred compensation plan under which selected executives may
elect to defer a portion of their earnings for tax and investment purposes pursuant to authority granted
in Government Code 609.001. As of August 31,2010, the College had eight employee participants
and an accrued liability of $80,000. As of August 31, 2009, the College had seven employee
participants and an accrued liability of $63,333. Payment to a third-party provider on behalf of the
participants is paid in October.
20. Self-Insured Plans
The College provides workers' compensation insurance through a partially self-funded risk pool. An
accrued liability in the amount of $271,983 and $315,388 as of August 31, 2010 and 2009.
respectively, has been established as an estimate for unpaid claims and incurred but not reported
claims. Accrued liabilities are based on an actuarial valuation and represent the present value of
unpaid expected claims. Estimated future payments for incurred claims are charged to current
operations. The College is not responsible for claims beyond its annual maximum loss limitation.
Liability for Estimated Claims 2010 2009
Beginning Balance, September 1 $ 315,388 $ 457,217
Claims incurred and changes in estimates 195,114 (26,993)
Payments on claims (238,519) (114.836)
Ending Balance. August 31 $ 271.983 $ 315,388
36 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements, Continued
21. Ad Valorem Tax
The College's ad valorem tax is levied each October 1 on the assessed value listed as of the prior
January 1 for all real and business personal property located within the taxing district.
At August 31:
2010 2009
Assessed valuation of the College: $47,500,386,677 $47,918,939,586
Less: Exemptions (8,333,504,537) (8,436,860,386)
Less: Abatements
Net assessed valuation of the College $ 39.166,882,140 $ 39,482,079 200
2010 2009
Current Debt Current Debt
Operations Service Operations Service
Authorized tax rate
per $100 valuation $ 0,20000 $ 0,50000 $ 0,70000 $ 0,20000 $ 0,50000 $ 0,70000
Assessed tax rate
per $100 valuation
(Maximum per
Enabling legislation) $ 0,114293 $0,056507 $ 0.170800 $0.115927 $0,047484 $0.163411
Taxes levied for the years ended August 31, 2010 and 2009, amounted to $66,897,035 and
$64,518,060, respectively. Taxes are due on receipt of the tax bill and are delinquent if not paid
before February 1 of the year following the year in which imposed, Harris County and Chamber
County Tax collectors are the collecting agencies for the levy and remit the collections to the College,
net of collection fees,
Under GASB Statement No, 33, Accounting and Finanoial Reporting for Non Exchange Transaotions,
ad valorem taxes are imposed non-exchange revenue, Assets from imposed non-exchange
transactions are recorded when the entity has an enforceable legal claim to the assets or when the
entity receives resources, whichever comes first. The enforceable legal claim date for ad valorem
taxes is the assessment date, The College has recognized all assessed taxes in the current year and
recorded a receivable for uncollected taxes.
2010 2009
Taxes collected for Current Debt Current Debt
the year Operations Service Total Operations Service Total
Current taxes $ 43,329,909 $21,325,932 $64,655,841 $44,245,449 $18,093,132 $62,338,581
Delinquent taxes 640,359 315,400 955,759 1,093,490 427,203 1,520,693
Penalties and
interest 394,231 194,173 588,404 570,891 229,333 800,224
Total collections $ 44,364.499 $21,835,505 $ 66,200.004 $45,909,830 $ 18,749,668 $64659.498
37 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements, Continued
Tax collections for the years ended August 31, 2010 and 2009, were 96.65 percent and 96.62
percent, respectively, of the current tax levy. Allowances for uncollectible taxes are based upon
historical experience in collecting property taxes. The use of tax proceeds is restricted for the use of
maintenance and operations and/or general obligation debt service.
22. Federal and State Contract and Grant Awards
Federal and State contract and grant awards are accounted for in accordance with the requirements
of the AICPA Industry Audit Guide, Audit of Colleges and Universities. Revenues are recognized on
Exhibit 2 and Schedules A and C. For Federal and State contract and grant awards, funds expended,
but not collected, are included in Accounts Receivables on Exhibit 1. Federal and State contract and
grant awards that are not yet funded and for which the institution has not yet performed services are
not included in the financial statements. Federal and State contract and grant awards funds already
committed, e.g., mUlti-year awards, or funds awarded during fiscal years 2010 and 2009 for which
monies have not been received nor funds expended, totaled $44,148,626 and $21,234,177,
respectively. Of these amounts. $37,676,993 and $18,892,970 were from Federal contract and grant
awards; $6,471,633 and $2,341,207 were from State contract and grant awards for the fiscal years
ended August 31, 2010 and 2009, respectively.
23, Contingent Liabilities
Pending lawsuits and claims
As of August 31,2010, the College is a defendant in various legal actions. While the ultimate liability
with respect to litigation and other claims asserted against the College cannot be reasonably
estimated at this time, College management believes that this liability, to the extent not provided for
by insurance or otherwise, is not likely to have a material effect on the College.
State and Federally assisted programs
The College participates in a number of state and Federally assisted programs. These programs are
SUbject to program compliance audits by the grantors or their representatives. Accordingly, the
College's compliance with applicable grant requirements will be finally determined at some future
date. The amount, if any, of expenditures which may be disallowed by the grantor agencies cannot
be determined at this time, although the College expects such amounts, if any, to be immaterial.
24. Related Parties
The San Jacinto Community College Foundation (Foundation), incorporated in 1996, is a nonprofit
organization with the purpose of supporting the educational and general activities of the College. The
College does not appoint a voting majority nor does it fund or is it obligated to pay debt related to the
Foundation. The Foundation solicits donations and acts as a coordinator of gifts made by other
parties. The Foundation paid grants of $1,038,317 and $1,146,297 to the College's students and
programs during the years ended August 31, 2010 and 2009, respectively. The College furnished
certain services, such as office space, utilities, and staff assistance, to the Foundation. The cost of
these un-reimbursed services was $434,071 and $368,769 for the fiscal years ended August 31,
2010 and 2009, respectively. The financial position of the Foundation is not significant to the College;
therefore, it is not included in the College's basic financial statements.
38 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements, Continued
25. Recent Accounting Pronouncements· Governmental Accounting Standards Board
The GASB has issued Statement No. 49, Accounting and Financial Reporting for Poflution
Remediation Obligations, which provides guidance on how to calculate and report the costs and
obligations associated with pollution cleanup efforts. The requirements of the new statement became
effective for fiscal periods beginning after December 15, 2007. The College has not incurred costs or
obligations associated with pollution cleanup efforts as of August 31,2010 and 2009.
The GASB has issued Statement No. 50, Pension Disclosures. This statement more closely aligns
the financial reporting requirements for pensions with those for other postemployment benefits. The
requirements of the new statement became effective for fiscal periods beginning after June 15,2007,
except for the requirement for plans that use the aggregate actuarial cost method to present a
schedule of funding progress using the entry age actuarial cost method which is effective for the
actuarial valuations as of June 15, 2007. The College does not have any contractual liabilities related
to pension plans as of August 31. 2010 and 2009, respectively. from implementation of this
statement.
The GASB has issued Statement No. 51, Accounting and Financial Reporting for Intangible Assets.
This statement establishes accounting and financial reporting requirements for intangible assets
including easements, water rights, timber rights, patents, trademarks, and computer software. The
reqUirements of the new statement are effective for fiscal periods beginning after June 15, 2009. The
College does not have any intangible assets that meet the reqUirement of this statement.
The GASB has issued Statement No. 53, Accounting and Financial Reporting for Derivative
Instruments. This Statement establishes accounting and financial reporting requirements for
derivative instruments entered into by state and local governments. The requirements of this new
statement are effective for financial statements for periods beginning after June 15, 2009. The
College does not invest in derivative instruments.
The GASB has issued Statement No. 54, Fund Balance Reporting and Governmental Fund Type
Definitions. This Statement establishes the accounting and financial reporting requirements for fund
balance classifications that comprise a hierarchy based primarily on the extent to which a government
is bound to observe constraints imposed upon the use of the resources reported in governmental
funds. The requirements of this statement are effective for financial statements for periods beginning
after June 15, 2010. Management of the College is considering the effects of this new standard,
application will first be applied in the fiscal year 2011 financial statements, and management does not
believe statement will have a material effect to the College.
The GASB has issued Statement No. 58, Accounting and Financial Reporting for Chapter 9
Bankruptcies. This statement establishes accounting and financial reporting guidance for
governments that have petitioned for protection from creditors by filing for bankruptcy under Chapter
9 of the United States Bankruptcy Code. The requirements of this statement are effective for financial
statements for periods beginning after June 15, 2009. The College has not petitioned for protection
from creditors by filing for bankruptcy under Chapter 9 of the United States Bankruptcy Code.
39 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Basic Financial Statements, Continued
The GASB has issued Statement No. 59, Financial Instruments Omnibus. This statement updates
and improves existing standards regarding financial reporting of certain financial instruments and
external investment pools. The requirements of this new statement are effective for financial
statements for periods beginning after June 15. 2010. Management of the College is considering the
effects of this new standard. which will be applied in the fiscal year 2011 financial statements. and
management does not believe this standard will have a material effect to the College.
26. Subsequent Events
Management has evaluated subsequent events through December 13, 2010, the date which the
financial statements were available to be issued.
40 Continued
Schedule A
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Schedule of Operating Revenues
Year Ended August 31, 2010
(With Memorandum Totals for the Year Ended August 31, 2009)
41
Schedule B
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Schedule of Operating Expenses by Object
Year Ended August 31,2010
(With Memorandum Totals for the Year Ended August 31,2009)
2010 2009
Salaries Benefits Other
and Wages State Local Expenses Total Total
Unrestricted - educational activities
Instruction $ 46,067,542 $ - $ 3,001,032 $ 3,914,361 $ 52,982,935 $ 46,696,603
PUblic service 1,750,124 121,550 1,519,387 3,391,061 2,734,394
Academic support 6,162,101 414,022 1,440,612 6,016,735 6,302,225
Student services 7,608,663 560,741 1,366,738 9,758,142 6,945,929
Institutional support 12,660,183 2,065,784 12,731,676 27,477,843 23,616,588
Operation and maintenance of plant 3,963,166 1,618,100 7,826,261 13,427,527 14,162,743
Total unrestricted educational activities 78,451,779 7,781,229 26,621,235 115,054,243 106,458,482
Restricted· educational activilies
Instruction 727,616 5,981,589 233,150 504,939 7,447,296 6,895,949
Public service 506,673 377,712 45,284 125,216 1,054,685 674,304
Academic support 629,465 1,133,557 65,320 242,591 2,070,953 2,254,561
Student services 1,312,673 1,647,317 56,212 464,332 3,460,534 3,397,525
Institutional support 161,509 1,881,565 11,900 1,321,766 3,376,740 2,750,640
SChOlarShipsand fellowships 34,194,427 34,194,427 21,152,384
Total restricted educational activities 3,337,956 11,021,740 411,666 36,653,271 51,624,835 37,125,363
Total educational activities 61,789,737 11,021,740 8,193,095 65,674,506 166,679,078 143,583,845
Auxiliary enterprises 1,006,291 219,946 2,817,525 4,043,762 3,929,299
Depreciation expense· buildings and improvements 5,028,594 5,028,594 4,944,000
Depreciation expense -
equipment, furnilure and library books 1,787,209 1,787,209 2,681,931
Total operating expenses $ 82,796,028 $ 11,021,740 $ 8,413,041 $ 75,307,834 $ 177,538,643 $ 155,139,075
Exhlnlt2 Exhinil2
42
Schedule C
SAN JACINTO COLLEGE DISTRICT
Schedule of Non~Operating Revenues and Expenses
Year Ended August 31 , 2010
(With Memorandum Totals for the Year Ended August 31, 2009)
2010 2009
Unrestricted Restricted Total Total
Non-operating revenues
State appropriations:
Education and general State support $ 36,378,217 $ - $ 36,378,217 $ 37,123,017
State group insurance 6,913,460 6,913,460 6,725,246
State retirement matching 4,108,280 4,108,280 3,989,980
Total State appropriations 36,378,217 11,021,740 47,399,957 47,838,243
Ad valorem taxes:
Taxes for maintenance and operations 45,349,704 45,349,704 46,492,505
Taxes for general obligation bonds 22,027,384 22,027,384 18,895,337
Federal revenue, non-operating 102,125 40,048,860 40,150,985 24,743,586
Investment income 709,727 939,512 1,649,239 2,623,573
Total non-operating revenues 82,539,773 74,037,496 156,577,269 140,593,244
Non -'operating expenses
Interest on capital related debt 12,355,349 12,355,349 6,599,699
Hurricane Ike disbursements 56,665 56,665 9,363,382
FEMA proceeds (2,725,000)
Insurance proceeds (677,020) (677,020) (3,761,967)
State disaster relief appropriations (3,045,820)
Loss on disposal of capital assets 1,170,087 1,170,087 249,403
Total non-operating expenses 549,732 12,355,349 12,905,081 6,679,697
Net non-operating revenues, net $ 81,990,041 $ 61,682,147 $ 143,672,188 $ 133,913,547
(EXhibit 2) (Exhibit 2)
43
Schedule 0
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Schedule of Net Assets by Source and Availability
Year Ended August 31 , 2010
(With Memorandum Totals for the Year Ended August 31, 2009)
Current
Detail by Source Operations
Restricted Capital Assets
Net of Depreciation
Unrestricted Expendable and Related Debt Total Yes No
Current
Unrestricted -
Non-designated $ 19,581,146 $ - $ - $ 19,581,146 $ 19,581,146 $
Board designated:
Business continuity and emergency recovery 25,000,000 25,000,000 25,000,000
Repair and renovation of facilities 25,000,000 - - 25,000,000 - 25,000,000
Restricted - 1,533,284 1,533,284 1,533,284
Auxiliary 14,773,181 - 14,773,181 14,773,181
Plant
Unexpended bond proceeds - 11,323,672 - 11,323.672 11,323,672
Debt service - 3,090,752 - 3.090,752 - 3,090,752
Investment in plant - - 98,002,083 98.002.083 - 98,002,083
Total net assets, August 31,2010 84,354,327 15,947,708 98,002,083 198,304.118 34,354,327 163,949,791
Total net assets, August 31,2009 89,115,489 14,806,821 80,816,340 184,738,650 64,115,489 120,623,161
Net (decrease) increase in net assets $ (4,761,162) $ 1,140,887 $ 17,185,743 $ 13,565,468 $ {29,761,162) $ 43,326,630
Exhibit 2
44
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Statistical Section
Statistical
Supplements
Financial Trends •......•.....•.......•.•.•••...•..•.....•..•......•......•.••............•....................... 1- 3
These schedules pontain trend information to help the reader understand how the College's
financial performance and well-being have changed over time.
Revenue Capacity .........................................•....•...........•...•............•......•..•......... 4-8
These schedules contain trend information to help the reader assess the factors affecting
the College's ability to generate property taxes, tuition, grants, and other revenue.
Debt Capacity ................•..•....................•.........•...........•..•.............•..................... 9 - 11
The debt capacity information will assist the reader in understanding and assessing the
College's debt burden and ability to issue debt.
Demographic and Economic Information •........•...•.....................•..••....••...........•..•• 12 - 13
The demographic and economic information is presented to assist users in understanding
certain aspects of the environment in which the College operates.
Operating Information ..••.••.••......•..•......••..•.•..••..•...•.••..•..•..•..•......•..•..•...•.••.••.••.... 14 - 18
These schedules contain contextual information to help the reader assess the delivery and
effectiveness of College operations.
45
SS - 1
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Net Assets by Component
Fiscal Years 2002 to 2010
(Unaudited)
For the Year Ended August 31,
(amounts expressed in thousands)
2010 ~ ---1QQL --1Q.QL ~ .2QQL ~ 2003 ~
Invested in capital assets, net of related debt $ 98,002 $ 80,816 $ 78,719 $ 65,385 $ 64,369 $ 60,990 $ 54,161 $ 40,752 $ 44,699
Restricted - expendable 15,948 14,807 5,715 10,067 13,957 9,892 27,636 10,996 1,067
Restricted - nonexpendable 12 12 12 12 12
Unrestricted 84,354 89,116 77,145 74,419 60,651 55,981 39,144 64,248 69,695
Total primary government net assets $ 198,304$ 164,739 $ 161,579 $ 149,871 $ 139,209 $ 1261675 $~$~$~
Prior Year Change $ 13,565 $ 23,160 $ 11,708 $ 10,662 $ 12,334 $ 5,922 $ 4,945 $ 515
Note: Due to reporting format and definttion changes prescribed by GASB Statement No, 34, only fiscal years 2002-2010 are available.
46
SS-2
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Revenues by Source
Fiscal Years 2002 to 2010
(Unaudited)
For the Vear Ended August 31,
(amounts expressed in thousands)
-2Q!L ~ ~ ~ ~ ~ ~ ----lQ!.l.L .-1QQL
Tuilion and fees (net of scholarship allowances aM discounts) $ 31,298 $ 30,069 $ 29,220 $ 28,361 $ 27,358 $ 24,446 $ 28,868 $ 19,667 $ 18,619
Governmental grants end conlracts:
Federal grants and contracts 6,722 5,810 6,474 5,187 5,089 3,734 3,054 4,440 4,648
Stale and local grants and conlracts 3,521 3,090 3,816 2,354 805 449 761 1,244 1,597
Non.govemmental grarns and contracts 1,285 1,014 795 831 638 783 425 962 251
Sales and services of educatfonal activities 869 735 734 562 659 1,121 796 398 336
Auxiliary enterprises 3,755 3,668 3,581 5,748 9,463 8,154 11,299 6,931 8,658
Other operating revenues ___ 2_ __ _
2_2 __ 4_3_ __ 3_5 __
_ 26
_ ___ _
13
~ _ __ 41_
Total operatfng revenues ~ 44,386 44,642 43,086 44,047 ~ 45,216 33,923 34,350
State appropriations 47,400 47,838 47,658 44,310 43,906 41,472 41,457 42,976 44,950
Ad valorem taxes 67,377 65,388 53,316 47,231 42,073 38,777 37,984 33,848 32,897
Federal revenue, non-operating 40,151 24,744 19,511 19,763 22,629 22,646 19,802 10.766 8,564
Investment income ~ ~ ~ ~ ~ ~ ~ ----!..£!.. ~
Total nonoperating revenues 156,577 140.593 123,648 116.212
104,914 ~
100,879 89,061 88,672
Total (avenues $ 204,009 $ 184,979 $ 166,490 $ 159,296 $ 155,868 $ 143,627 $ 146,095 $ 122,964 $ 123,022
Prior Vear Change $ 19,030 $ 16,469 $ 9,192 $ 3,430 $ 12,241 $ (2,466) $ 23,111 $ (38)
Tuilion and fees (net of discounts) 15.35% 16.25% 17.36% 17.80% 17.55% 17.02% 19.76% 15.99% 15.14%
Govammantal grants and conlracts:
Federal granls and contracts 3.30% 3.14% 3.85% 3.26% 3.27% 2.60% 2.09% 3.61% 3.94%
Stele and local grants and contracts 1.73% 1.67% 2.27% 1.48% 0.52% 0.31% 0.52% 1.01% 1,30%
Non.govemmanlal grants and contracts 0.62% 0.55% 0.47% 0.52% 0.41% 0,54% 0.29% 0,78% 0.20%
Sales and services of educational ectivilies 0.43% 0.40% 0,44% 0.35% 0.42% 0.78% 0.55% 0.32% 0.27%
Auxiliary enterprises 1.84% 1.98% 1.91% 3.61% 6.07% 5.68% 7.73% 5.64% 7.04%
Other operating revenues 0.00% 0.00% ~ 0.03% ~ ~ ~ 0.23% 0.03%
Total operating revanues 23.27% 23.99% 26.33% 27.05% 28.26% ~ ~ 27.58% 27.92%
State appropriations 23.22% 25.00% 26.35% 27.81% 28.17% 28.87% 28.36% 34.95% 36.54%
Ad valorem taxes 33.03% 35.35% 31.71% 29.65% 26.99% 27.00% 26.00% 27.52% 26.74%
Faderal revenue, non-operating 19.66% 13.36% 11.61% 12.41% 14.52% 15.77% 13.55% 8.75% 6.96%
Investment income --ill!Qli. ~ 2.00% 3.0a0,1, 2.06% ~ ~ 1.20% 1.84%
Tolal nonoperating revenues 76.73% 76.01% ~ ~ ~ 73.05% 69.05% 72.42% 72.08%
Total revenues 100.00% 100.00%
~ ~ ~ 100.00% 100.00% ~ ~
Note: Que (0 reponing formst and definition changes prescribed by GASB Statement No. 34, only fiacal years 2002·2010 are available.
47
SS - 3
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Program Expenses by Function
Fiscal Years 2002 to 2010
(Unaudited)
For the Year Ended August 31,
(amounts expressed in thousands)
2010 2009 2008 2007 2006 2005 2004 2003 2002
Instruction $ 60,430 $ 55,593 $ 57,487 $ 48,927 $ 46,147 $ 43,506 $ 40,122 $ 44,550 $ 40,201
Public service 4,446 3,409 3,882 2,376 2,638 2,342 2,629 3,073 4,053
Academic support 10,088 10,557 12,486 8,978 6,514 6,143 5,870 6,687 7,028
Student services 13,239 12,343 11,830 8,108 7,724 7,619 7,199 7,660 7,284
Institutional support 30,655 26,367 25,643 29,608 27,287 24,294 25,266 23,240 21,889
Operation and maintenance of plant 13,427 14,163 14,620 14,218 12,251 12,781 10,705 9,920 10,972
Scholarships and fellowships 34,194 21,152 16,508 18,335 16,417 16,595 17,624 5,953 6,867
Auxiliary enterprises 4,044 3,929 3,656 5,832 13,107 10,137 10,181 9,608 9,048
Depreciation 6,816 7,626 6,765 6,811 6,929 6,923 7,103 2,999 3,361
Total operating expenses 177,539 155,139 153,077 143,193 139,014 130,340 126,701 113,670 110,501
Interest on capital related debt 12,355 6,600 3,544 3,872 3,645 3,953 3,282 3,062 1,746
loss on disposal of capital assets 1,170 249 162 59 348 2,747 241
Other non-operating (620) (169) 1,510 526 666 6,002 5,497 3,707
Total non-operating expenses 12,905 6,680 3,708 5,441 4,519 7,366 9,284 8,800 5,453
Total expenses $ 190.444 $ 161,819 $ 156.783 $ 148,634 $ 143,533 $ 137,706 $ 135,985 $ 122,470 $ 115,954
Prior Year Change $ 28,625 $ 5,036 $ 8,149 $ 5,101 $ 5,827 $ 1,721 $ 13,515 $ 6,516
Instruction 31.73% 34.36% 36.75% 32.92% 32.15% 31.59% 29.51% 36.37% 34.67%
Public service 2.33% 2.11% 2.48% 1.60% 1.84% 1.70% 1.93% 2.51% 3.50%
Academic support 5.30% 6.53% 7.98% 6.04% 4.54% 4.46% 4.32% 5.44% 6.06%
Student services 6.95% 7.63% 7.56% 5.46% 5.38% 5.53% 5.30% 6.25% 6.28%
Institutional support 16.20% 16.29% 16.40% 19.92% 19.01% 17.64% 18.58% 18.98% 18.70%
Operation and maintenance of plant 7.05% 8.75% 9.48% 9.56% 8.53% 9.28% 7.87% 8.10% 9.48%
Scholarships and fellowships 17.96% 13.07% 11.12% 12.33% 11.44% 12.05% 12.96% 4.86% 5.92%
Auxiliary enterprises 2.12% 2.43% 1.53% 3.92% 9.13% 7.36% 7.49% 7.85% 7.80%
Depreciation 3.58% 4.71% 4.33% 4.58% 4.83% 5.03% 5.22% 2.45% 2.90%
Total operating expenses 93.22% 95.88% 97.63% 96.33% 96.85% 94.64% 93.18% 92.81% 95.29%
Interest on capilal related debt 6.49% 4.07% 2.27% 2.61% 2.54% 2.87% 2.41% 2.50% 1.51%
loss on disposal of capital assets 0.61% 0.15% 0.10% 0.04% 0.24% 2.00% 0.00% 0.20% 0.00%
Other non-operating -0.32% -0.10% 0.00% 1.02% 0.37% 0.49% 4.41% 4.49% 3.20%
Total non-operating expenses 6.78% 4.12% 2.37% 3.67% 3.15% 5.36% 6.62% 7.19% 4.71%
Total expenses 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Nole: Due to reporting format and definition changes prescribed by GASB Slalement ·No. 34. only fiscal years 2002-2010 are available.
48
88-4
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Tuition and Fees
Last Ten Academic Years
(Unaudited)
Resident
Fees per Semester Credit Hour (SCH)
General Student Cost for 12 Costfor 12 Increase from Increase from
Academic Matriculation Service In-District Out-of-District Technology Activity SCH SCH Prior Year Prior Year
Year (Fall) Fee Fee Tuition Tuition Fees Fees In-District Out-of-District In-District Out-of-District
2010 $ $ 135 $ 38 $ 63 $ - $ - $ 591 $ 891 12.36% 7.87%
2009 - 130 33 58 - - 526 826
2008 - 130 33 58 526 826
2007 130 33 58 526 826 7.35% 4.56%
2006 - 130 30 55 - - 490 790
2005 - 130 30 55 490 790 13.16% 11.42%
2004 15 60 22 45 6 14 433 709
2003 15 60 22 45 6 14 433 709 16.09% 20.37%
2002 32 7 20 38 6 14 373 589 14.07% 13.49%
2001 32 7 18 34 5 10 327 519 24.81% 20.70%
Non-Resident
Fees per Semester Credit Hour (SCH)
Non-Resident Non-Resident Student Cost for 12 Cost for 12 Increase from Increase from
Academic Matriculation General Tuition Tuition Technology Activity SCH SCH Prior Year Prior Year
Year (Fall) Fee Service Fee Out-of-State International Fees Fees Out-of-State International Out-of-State International
2010 $ - $ 135 $ 113 $ 113 $ - $ - $ 1,491 $ 1,491 4.56% 4.56%
2009 130 108 108 1,426 1,426
2008 130 108 108 - - 1,426 1,426
2007 - 130 108 108 - - 1,426 1,426 38.45% 38.45%
2006
2005
- 130 75 75 - 1,030 1,030
130 75 75 1,030 1,030 4.57"10 4.57%
2004 15 60 68 68 6 14 985 985
2003 15 60 68 68 6 14 985 985 15.47"10 15.47%
2002 32 7 60 60 6 14 853 853 2.65% 2.65%
2001 32 7 60 60 5 10 831 831 5.19% 5.19%
Note: Includes basic enrollment tuition and fees but excludes course based fees such as laboratory fees, testing fees. and certification fees.
49
88-5
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Assessed Value and Taxable Assessed Value of Property
Last Ten Fiscal Years
(Unaudited)
(Amounts expressed in thousands) Direct Rate
Assessed Taxable Maintenance Debt
Fiscal Valuation Less: Assessed Ratio ofTAV to & Operations SeNlce Total
Year of Property Exemptions Value (TAV) Assessed Value (a) (a) (a)
2009·10 $ 47.500,367 $ 6.333,505 $ 39,166,862 62.46% 0.114293 0.056507 0.170600
2006·09 47.916,939 6.436,660 39,462,079 62.39% 0.115927 0.047464 0.163411
2007-08 43.571.837 7.403,078 36,166,759 63.01% 0.115927 0.029438 0.145365
2006·07 39.245,803 7,035,225 32,210,578 82.07% 0.115927 0.029436 0.145365
2005·06 34,624,332 6,030,925 26,793,407 82.68% 0.115927 0.029436 0.145365
2004·05 31,370,541 3.926,408 27,442,133 67.46% 0.109700 0.029430 0.139130
2003·04 30,129,024 3.576,960 26,552,044 66.13% 0.109700 0.029430 0.139130
2002-03 26,882,123 3.281,633 25,600,490 86.64% 0.101280 0.029430 0.130710
2001-02 28,294,370 3,260,583 25,033,787 86.48% 0.101280 0.029430 0.130710
2000-01 26,750,533 2,811,274 23,939,259 89.49% 0.096570 0.029430 0.126000
Source: Harris County Appraisal District
Notes: Properly is assessed at full market value.
(a) Per $100 Taxable Assessed Valuation
50
SS - 6
SAN JACINTO COMMUNITY COLLEGE DISTRICT
State Appropriation per FTSE and Contact Hour
Fiscal Years 2004 to 2010
(Unaudited)
(Amounts expressed in thousands)
Appropriation per FTSE Appropriation per Contact Hour
Academic Voc-Tech State
State Contact Contact Total Appropriation
State FTSE Appropriation Hours Hours Contact per Contact
Fiscal Year Appropriation (a) perFTSE (a) (b) Hours Hour
2009-10 $ 36,378 43 $ 846 7,455 3,284 10,739 $ 3.39
2008-09 37,123 39 952 7,191 3,097 10,288 3.61
2007-08 37,123 37 1,003 6,852 3,119 9,971 3.72
2006-07 35,203 37 951 6,781 3,148 9,929 3.55
2005-06 35,203 37 951 6,739 3,288 10,027 3.51
2004-05 32,999 37 892 6,395 3,447 9,842 3.35
2003-04 32,999 36 917 6,497 3,367 9,864 3.35
Notes: Full Time Student Equivalent (FTSE) is defined as the number of full time students plus total hours taken by part-time
students divided by 12, The College preViously did not present this schedule. Information is being presented for the
past seven years. and the College will continue to implement prospectively.
(a) Source CBM001 for FTSE
(b) Source THECB for Appropriation per Contact Hours (Prep Online Total Contact Hours by Fund)
51
SS-7
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Principal Taxpayers
Fiscal Years 2002 to 2010
(Unaudited)
Taxabl. A •••••• d Valu. HAY) by Tax Va.r ($000 omi«ed}
Taxpayer Type of Business 2010 2009 2008 2007 2008 2005 2004 2003 2002
Shall Oil Co. RefinoJY 1,486,769 1,677,717 2,322,379 2,259,147 2,023,449 1,535,652 1,357,730 1,583,169 1,221,691
Equistar Chemioats lP Chamlcal. 848,797 732,388 1,355,749 1,237,973 998,731 887,592 1,035,598 1,071,895
Houston Retining Refinery 702,649 1,101,988 1,149,523 925,293 368,605
Oow Chemical Refinery 617,946 778,994 309,693 265,665 275,072 254,916
Lyonde. Ch.mical Co. Chemical. 592,522 550,065 816,319 642,933 1,546,825 1,125,395 649,833 1,056,866 739,259
Oxy Vinyl. LP Petrochemical 404,812 402,232 420,549 425,328 394,494 399,150 373,560 410,875 529,838
Chevron ChernicKI Co. Refinery 370,234 442.761 433,345 301,017 238,414 197,235
Centerpoint Energy, Inc. "norgy 345,960 373,904 366,282 395,178 424,297 426,292 475,665 494,653
Air Liquide Chomlcal. 339,915 331,289 354,719
Albemarle Corp Chemicals 290,230 320,710
Rohm a Hao. Co. Pe1rochemical 601,731 593,949 558,543 565,260 538,852 560,546 330,957
Amow Chemical Chomical.
Calpin. C.nlr.1 LP Energy 226,987 412,796 306,800
C.lano •• LTD ChomicaTs 288,933 328,449
Conoco Phillip. Rannory 418,798 376,933 460,783
GE Aero Enoroy Ploduel' pel,oehomical 200,424
GE Packaged Power Enorgy 211,956 286,933 328,449
H La PC •. Eleclric Wilily 368,605
Lubtiz.ol Corp Chemicals
Lyondell Citgo Rof Co LTD Refinery 275,072 254,916
Phillip. 88 Company R8frne~ 233,513 384,037 287,017
Reliant En.IOY Chann.lvlew Ener9Y 208,466 205,169 277,296 226,000 250,000
Totals 6,999,734 6,010M6 8,192,469 7,663,279 6,067,966 6,242,632 5,781,149 8,628,559 6,331,557
Total Taxable Assessed Value 39,166,862 39.462,079 36,166,759 32,210,576 28,793,407 27,442,133 28,552M4 25,800,490 25,033.787
%.f ToxableA •••••• d V.lu. (rAY) by T.xV •• r
Taxpayer Type of Busine4S 2010 2009 2008 2007 2008 2005 2004 2003 2002
Sholl Oif Co. Refinery 3.80% 4,76% 6,42% 7.01% 7.03% 5.60% 5.11% 6.16% 4.66%
Hous10n Refining Refinery 2.17% 2.79% 3.18% 2.81% 0.00% 0,00% 0.00% 0.00% 1.47%
Oow Chemical Rellne,ry 1.79% 1.97% 0.66% 0.89% 0.00% 0.00% 1.04% 0.00% 1.02%
Equl.'ar Chemical. LP Chemicals 1.58% 1.85% 3,75% 3,84% 0,00% 3.64% 3.34% 4.05% 4.28%
Lyonden Chemical Co. Ch.mical. 1.51% 1.39% 2.43% 2.82% 5.36% 4.10% 2.45% 4.13% 2.95%
Chevron Chemical Co. Refinery 1.03% 1.12% 1.20% 0.94% 0.83% 0.72% 0,00% 0.00% 0.00%
Oxy Vinyl. LP PatrochemlcBI 0.95% 1.02% 1.16% 1.32% 1.37% 1..46% 1.41% 1.60% 2.12%
cenlerpoinl Energy, Inc. Energy 0.66% 0,95% 1.01% 1.23% 1.41% 1.56% 1.79% '.93% 0.00%
Air liquide Chemicals 0.87% 0.84% 0.96% 0.00% 0,00% 0.00% 0.00% 0.00% 0.00%
Albemarle Corp Chemical, 0.74% 0.81% 0.00% 0.00% 0,00% 0.00% 0.00% 0.00% 0.00%
Rohm & Haas Co. Petrochemical 0.00% 0.00% 1.66% I.B4% 1.94% 2.06% 2.02% 2.19% 1.32%
Amoco Chemlca\ Chemicals 0.00% 0.00% 0.00% 0.00% 0,00% 0.00% 0.00% 0.00% 0.00%
Calpine Cenlral LP Energy 0.00% 0.00% 0.00% 0,00% 0.760/. 1.50% 1.10% 0.00% 0.00%
Celansse LTC Chemical. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 1.13% 1.30%
Conoco Phillip. Relinory 0.00% 0.00% 0,00% 1.29% 0.00% 1.37% 0.00% 1.66% 0.00%
GE Aero Enorgy Product, Petrochemical 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.78% 0.00%
GE Psc;keged Power Energy 0.00% 0.00% 0.00% 0.00% 0.74% 0.00% 0.00% 1.1:!% 1.31%
H LepCo, Eloctric Utility 0.00% 0,00% 0.00% 0.00% 0,00% 0.00% 0.00% 0,00% 1.47%
Lub,l.ol Co,p Chemicals 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Lyonden Cilgo Rorco LTD Refinery 0.00% 0,00% 0.00% 0.00% 0.00% 0.00% 1.04% 0,00% 1.02%
Phillip. 66 Company Refinery 0.00% 0.00% 0.00% 0.00% 0.81% 0.00% 1.37% 0.00% 1.15%
Rellont Energy Channalviow Energy 0.00% 0.00% 0.00% 0.00% 0.72% 0,75% 1.04% 0.89% 1.00%
Toiol. 15.32% 17.50% 22.65% 23.85% 21.07% 22,75% 21.77% 25.69% 25.29%
Source: Hams. County Apprelsal District
Nole: The Conege previously did not p(EIlentthlsschedute. Information is being presented for the pall n[ne years. and (he Colt&ge wi" continue to Implement prospectively.
52
SS-8
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Property Tax Levies and Collections
Last Ten Tax Years
(Unaudited)
(amounts expressed in thousands)
Current Percentage
Collections Cumulative
Fiscal Year Cumulative Adjusted Tax Collections - of Prior Total Collections
Ended Levy Levy Levy year of Levy Levies Collections of Adjusted
August 31 (a) Adjustments (b) (c) Percentage (d) (c+d) Levy
2010 $ 66,897 $ $ 66,897 $ 64,656 96.65% $ 956 $ 65.612 98.08%
2009 64,518 64,518 62,339 96.62% 1.521 63.860 98.98%
2008 52,577 52,577 51,215 97.41% 811 52,026 98.95%
2007 46,823 46,823 45.515 97.21% 1.150 46,665 99.66%
2006 41,856 41.856 40,729 97.31% 839 41,568 99.31 %
2005 38,182 1,881 40,063 37,574 98.41% 1,335 38,909 97.12%
2004 36.945 1,168 38.113 35,487 96.05% 975 36,462 95.67%
2003 33,462 1,243 34.705 32,618 97.48% 702 33,320 96.01%
2002 32.722 700 33,422 31.700 96.88% 597 32,297 96.63%
2001 30,163 1,335 31,498 29.302 97.15% 678 29,980 95.18%
Source: Harris County Tax Assessor Collector
(a) As reported in notes to the financial statements for the year of the levy.
(b) As of August 31st of the current reporting year.
(c) Property tax only - does not include penalties and interest.
(d) Represents cumulative collections of prior years not collected in the current year or the year of the tax levy,
53
SS - 9
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Ratios of Outstanding Debt
Last Ten Fiscal Years
(Unaudited)
For the Year Ended August 31 (amounts expressed in thousands)
__ 2009 2004 --- 2003 -----2002 2001
2010 2008 2007 2006 2005
General Bonded Debt
General obligation bonds $ 267,657 $ 281,922 $ 58,471 $ 64,470 $ 72,800 $ 75,380 $ n,845 $ 59,095 $ 56,900 $ 20,800
Notes 5,070 6,295 7,520 8,830 9,340 10,835 12,125 14,585 4,645
Less: fu nds resbieted for debt service (3,091) (5,357) (4,138) (1,527) (8,541) (6,250) (3,940) (710) (4)
Net general bonded debt 269,636 282,860 61,853 71,773 73,599 79,965 86,030 72,970 61,541 20,800
Revenue bonds 1,325 2,615 5,325 7,940 10,475 5,590 190
Notes . - - 555 980 1,388 1,780 2,156
Less: funds restricted for debt service - (1,344) (1,342) (2,595) (2,755)
Total outstanding debt $ 269,636 $ 282,860 $ 61,853 $ 71,754 $ 75.427 $ 83,675 $ 92,603 $ 85,225 $ 69,287 $ 20,990
General Bonded Debt Ralios:
Per Capita $ 545 $ 582 $ 134 $ 151 $ 171 $ 181 $ 191 $ 158 $ 134 $ 46
Per FTSE 7,059 7,220 1,751 1,956 2,182 2,274 2,443 2,076 1,545 556
TAV 28,793,407 28,793,407 28,793,407 28,793,407 28,793,407 27,442,133 26,552,044 25,600,490 25,033,787 23,939,259
As a percentage of taxable assessed value 0.94% 0.98% 0.21% 0.25% 0.26% 0.29% 0.32% 0.29% 0.25% 0.09%
Total Outstanding Debt Ratios:
Per Capita $ 542 $ 575 $ 126 $ 147 $ 157 $ 176 $ 197 $ 183 $ 151 $ 46
Per FTSE 6,140 7,130 1.642 1,915 2.004 2,207 2,514 2,401 1,739 561
As a percentage of taxable assessed value 0.94% 0.98% 0.21% 0.25% 0.26% 0.30% 0.35% 0.33% 0.28% 0.09%
Notes: Ratios calculated using population and TAV from current year. Debt per student calculated using fUti-time equivalent enrollment.
General Bonded Oebt includes general obligation bonds and maintenance lax notes.
Revenue Bonds and Notes include revenue bonds and contractual obligation notes.
54
SS -10
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Legal Debt Margin Information
Last Ten Fiscal Years
(Unaudited)
For the Vear Ended August 31 (amounts expressed in thous§n$ls)
2010 2009 200S 2007 2006 200S 2004 2003 2002 2001
Taxable Assessed Value $ 39,166,8a2 $ 39.482.079 $ 36.168,759 $ 32,210,578 $ 28,793,407 $ 27,442,133 $ 26.552.044 $ 25.600,490 $ 25,033,787 $ 23.939,259
General Obligation BondS
Statutory Tax Levy Limit for Debt Service $ 195,834 $ 197,410 $ 180,644 $ 161,053 $ 143,967 $ 137,211 $ 132,760 $ 128.002 $ 125,169 $ 119.696
Less: funds restricted for repayment of general obligation bonds ~ (5,357) (4.138) (1.527) (8,3OS) (5.399) (2,952) (1.0oo) (1.000) (1,000)
Total net general obligation debt 192,743 192,OS3 176,706 159,526 135,662 131,812 129,8OS 127,002 124,169 118.696
Current year debt service requirements 25,625 18,590 9,138 6.843 6,488 5.731 5,492 5,544 • 6,546 5,428
Excess of statutory limit for debt service over current requirement $ •• 118
c7
'v,, $ 173.463 $ 167.568 $ 152,683 $ 129.174 $ 126,081 $ 124,316 $ 121,458 $ 117,623 $ 113,268
Net current requirements as a % of statutory limit 13.09% 9.42% 5.05% 4.25% 4.51% 4.18% 4.14% 4.33% 5.23% 4.53%
Note: Texes Education Code Sedion 130.122limits the delllservic:e tax levy of community collegesto $0.50 per hUndreddollars taxable asses_ valuation.
• The amountof funds restricted for repaymenthave beenestimated for FISCal Years ended2000 thru 2003.
55
SS -11
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Pledged Revenue Coverage
Last Ten Fiscal Years
(Unaudited)
Revenue
Bonds Pledged Revenues ($000 omitted) Debt Service Requirements ($000 omitted)
Continuing or General
General Non-Credit Fund Food
Fiscal Year Ended Technology ServicefOther laboratory Education Interest Service Bookstore Coverage
August 31 Tuilion Fee Fees Fees Tuition/Fees Income Revenue Revenue Total Principal Interest Total Ratio
---
2010 $ $ $ $ $ $ $ $ $ $ $ $ $
2009
2008
2007 4,816 10,532 620 5,075 4,908 396 3,346 29,693 1,732 66 1,798 16.51
2006 4,744 11,435 724 2.391 3.213 344 7,276 30,127 3,135 147 3,282 9.18
2005 4,392 2,999 6,770 719 2,928 1,707 300 8,917 28,732 3,023 254 3,277 8.77
2004 4,409 4,159 5,369 600 3,315 1,220 313 10,808 30,193 2,927 355 3,282 9.20
2003 2,783 3,140 4,060 477 3,955 718 200 8,506 23,839 1,410 195 1,605 14.85
2002 809 2,223 3,288 399 3,322 2,372 333 9,228 21,974 1,610 14 1,624 13.53
2001 754 1,891 3,224 391 3,257 2,325 330 9,047 21,219 755 20 775 27.38
Debt service requirements include revenue bonds.
56
SS -12
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Demographic and Economic Statistics - Taxing District
Last Ten Calendar Years
(Unaudited)
District Personal District Personal Harris
Income (a) Income County
Calendar District (thousands Per Unemployment
Year Population of dollars) Capita Rate
2009 497,422 $ 9,549,838 $ 19,265 8.20%
2008 491,929 9,332,877 18,972 5.50%
2007 486,664 9,104,016 18,707 5.10%
2006 481,398 8,877,766 18,442 5.50%
2005 476,133 8,654,310 18,176 5.70%
2004 470,868 8,433,649 17,911 6.00%
2003 465,602 8,215,782 17,646 6.40%
2002 460,337 8,000,710 17,380 6.10%
2001 455,071 7,788,433 17,115 4.80%
2000 449,806 7,578,950 16,849 4.30%
Sources: Personal income and Population from Economic Alliance - Houston Port Region.
Unemployment rate from Texas Workforce Commission.
57
55 - 13
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Principal Employers for the Service Area
Fiscal Years 2005 to 2009
(Unaudited)
Number of Employees
Employer ~ ~ ~ ~ ~
United Space Alliance 10,185 6,600 3,000 3,000 3,000
Pasadena ISO 7,062 7,000 7,000 7,000 7,000
Lockheed Martin Corp 5,000 3,250 5,000
NASA lyndon B Johnson Space Ctr 2,500 2,750 2,500 3,200 3,200
Boeing Co 2,000 2,000 2,000
Gulf Stream Marine 1,700 1,700 1,700
CHCA Clear lake, LP 1,600 1,550 1,600 1,300 1,300
Equislar Chemicals LP 1,500 1,500 1,500 1,500 1,500
IKON Office Solutions 1,400 1,400
Memorial Healthcare System 1,350 1,350 1,350 1,200 1,200
Pasadena Bayshore Hospltallnc 1,200 1,350 1,500 1,200 1,200
Lyondell Chemical Co 1,200 1,200 1,200
San Jaclnlo College 1,200 1,200 1,200 1,200 1,200
Channelview Complex 1,200 1,200 1,200
Powell Eleclrlcal Systams Inc 1,200 1,200 1,200
Internallonal Business 1,100 1,100
Pasadena Paper Co 1,100 1,100 1,100
University of Houston - Clear Lake 1,Q92 1,100 1,092 1,200 1,200
Wyle Life Science 1,000 1,000 1,000 1,000 1,000
East Houston Regional Med Ctr 1,000 1,000 1,000
Rohm & Haas Texes Inc 1,000 1,000 1,000 1,000 1,000
Lockheed Martin Corp 1,000 1,000 1,000
Shell Chemical 1,000 1,000 1,000
Pasapena City Hall 970 1,100 1,100
Kellogg Brown & Root 1,700 1,700
Memorial 55 Plus ~
TOlals 49,559 41,242 24,500
~ ~
Percentage oITotal Employment
Employer 2009
---- ~ 2007 2006 ~
United Space Alliance 5.61% 3.86% 2.39% 4.17% 4.17%
Pasadena ISO 3.89% 3.63% 1.02% 1.79% 1.79%
Lockheed Martin Corp 2.75% 1.79% 1.71% 0.00% 0.00%
NASA Lyndon 8 Johnson Spece Clr 1.38% 1.51% 0.86% 1.90% 1.90%
Boeing Co 1.10% 1.1ooA, 0.68% 0.00% 0.00%
Gulf Stream Marine 0.94% 0.94% 0.58% 0.00% 0.00%
CHCA Clear Lake, LP 0.88% 0.85% 0.55% 0.78% 0.78%
Equistar Chemicals LP 0.83% 0.83% 0.51% 0.89% 0.89%
IKON Office Solutions 0.77% 0.77% 0.00% 0.00% 0.00%
Memorial Healthcare System 0.74% 0.74% 0.51% 0.72% 0.72%
Pasadena Bayshore Hospitallnc 0.66% 0.66% 0.41% 0.72% 0.72%
Lyondell Chemical Co 0.66% 0.66% 0.41% 0.72% 0.72%
San Jacinto College 0.66% 0.68% 0.41% 0.72% 0.72%
Channelview Complex 0.66% 0.66% 0.41% 0.00% 0.00%
PoweRElectrical Syslems Inc 0.86% 0.61% 0.36% 0.00% 0.00%
International Business 0.61% 0.81% 0.00% 0.00% 0.00%
Pasadena Paper Co 0.61% 0.61% 0.36% 0.00% 0.00%
University of Houston - Clear Lake 0.60% 0.6oo'!' 0.37% 0,72% 0.72%
Wyle Life ScIence 0.55% 0.55% 0.34% 0.60% 0.60%
East Houston Regional Med Clr 0.55% 0.55% 0.34% 0.00% 0.00%
Rohm & Haas Texas Inc 0.55% 0.55% 0.34% 0.60% 0.60%
Lockheed Martin Corp 0.55% 0.55% 0.34% 0,00% 0.00%
Shell Chemical 0.55% 0,55% 0.34% 0,00% 0.00%
Pasadena City Hall 0.53% 0,61% 0.36% 1.01% 1.01%
Kellogg Brown & Root 0,00% 0.00",1, 0.46% 0,71% 0,71%
Memorial 55 Plus 0.00% 0,00% 0.34% 0,00% 0.00%
Totals 27.29% 24.45% 14.46% 16.04% 16.04%
Source: 0 & B MillionDollar and InfoUSA Dalabases
Note:Basedon businesseswith 1.000or more full time employeesfor a total 011Bl ,540local employees.
The College previouslydid notpresentlhis schedule.Informationis bein9 presentedfor the past five years,
and the Collegewill continueto implementprospectively.
58
SS -14
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Faculty, Staff, and Administrators Statistics
Fiscal Years 2004 to 2010
(Unaudited)
Fiscal Year
2010 2009 2008 2007 2006 2005 2004
Faculty:
Full-time 511 454 463 440 439 428 426
Part-time 763 763 648 685 680 720 696
Total 1,274 1,217 1,111 1,125 1,119 1,148 1,122
Percent:
Full-time 40.1% 37.3% 41.7% 39.1% 39.2% 37.3% 38.0%
Part-time 59.9% 62.7% 58.3% 60.9% 60.8% 62.7% 62.0%
Staff and Administrators:
Full-time 732 703 759 739 694 687 667
Part-time 577 526 583 518 571 502 553
Total 1,309 1,229 1,342 1,257 1,265 1,189 1,220
Percent:
Full-time 55.9% 57.2% 56.6% 58.8% 54.9% 57.8% 54.7%
Part-time 44.1% 42.8% 43.4% 41.2% 45.1% 42.2% 45.3%
FTSE per full-time faculty 74 84 78 82 83 86 83
FTSE per full-time staff member 52 54 48 49 52 53 53
Average over 9 months faculty salary $55,500 $55,722 $55,944 $49,000 $46,166 $47,686 $46,821
Source: Texas Community College Teacher's Association Salary Survey.
Note: The College previously did not present this schedule. Information is being presented for the past seven years,
and the College will continue to implement prospectively.
59
SS -15
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Enrollment Details
Fiscal Years 2005 to 2009
(Unaudited)
Fall 2009 Fall 2008 Fall 2007 Fall 2006 Fall 2005
Student Classification Number Percent Number Percent Number Percent Number Percent Number Percent
00-29 hours 16,467 60.96% 14,854 6035% 14,134 60.01% 13,968 58.85% 14,611 60.63%
30-72 hours 7,879 29.17% 7,265 29.51% 7,008 29.76% 7,170 30.21% 6,799 28.22%
> 72 hours 2,665 9.87% 2,497 10.14% 2,409 10.23% 2,596 10.94% 2,687 11.15%
Total 27,011 100.00% 24,616 100.00% 23,551 100.00% 23,734 100.00% 24,097 100.00%
Fall 2009 Fall 2008 Fall 2007 Fall 2006 Fall 2005
Semester Hour Load Number Percent Number Percent Number Percent Number Percent Number Percent
Less than 3 297 1.10% 190 0.77% ----:r46 0.62% ----:r56 0.66% ----:r5O 0.62%
3 - 5 semester hours 5,077 18.80% 4,294 17.44% 4,317 18.33% 4,056 1709% 4,013 16.65%
6 - 8 semester hours 6,809 25.21% 5,777 23.47% 5,484 23.29% 5,468 23.04% 5,601 23.24%
9 - 11 semester hours 5,171 1914% 4,513 18.33% 4,235 17.98% 4,446 18.73% 4,395 18.24%
12 - 14 semester hours 7,743 28.67% 6,853 27.84% 6,505 27.62% 6,737 28.39% 6,821 28.31%
15 - 17 semester hours 1,746 6.46% 2,184 8.87% 2,144 9.10% 2,208 9.30% 2,387 9.91%
720 3.06% 663 2.79% 730 3.03%
18 & over 168 062% 805
24,616
3.28%
100.00% _23,551 100.00% 23,734 100.00%
---
24,097 100.00%
Total 27,011 100.00%
=
Average course load 8.9 9.8 9.7 9.7 9.4
Fall 2009 Fall 2008 Fall 2007 Fall 2006 Fall 2005
Tuition Status Number Percent Number Percent Number Percent Number Percent Number Percent
Texas Resident (in-District) 12,891 47.72% 11,736 47.67% 11,523 48.93% 11,965 50.42% 12,482 51.80%
Texas Resident (out-of-District) 9,664 3578% 8,866 36.02% 8,286 35.18% 8,374 35.28% 8,453 35.08%
Non-Resident Tuition 1,644 6.09% 1,584 6.43% 1,398 5.94% 1,358 5.72% 1,260 5.23%
Tuition Exemption 2,693 9.97% 2,399 9.75% 2,299 9.76% 1,989 8.38% 1,826 7.58%
Other 119 0.44% 31 0.13% 45 0.19% 47 0.20% 76 0.31%
Total 27,011 100.00% 24,616 100.00% 23,551 100.00% 23,734 100.00% 24,097 100.00%
This schedule does not indude non-credit Continuing and Professional Development enrollment.
Souroe: Data from the CBM001.
Note: The College previously did not present this schedule. Infonnation is being presented for the past five years, and the College will continue to implement prospectively.
60
SS -16
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Student Profile
Fiscal Years 2005 to 2009
(Unaudited)
Fall 2009 Fall 2008 Fall 2007 Fall 2006 Fall 2005
Gender Number Percent Number Percent Number Percent Number Percent Number Percent
Female 15,107 55.93% 14,127 57.39% 13,437 57.05% 13,670 57.60% 14,008 58.13%
Male 11,904 44.07% 10,489 42.61% 10,114 42.95% 10,064 42.40% 10,089 41.87%
Total 27,01.l 100.00% 24,616 100.00% 23,551 100.00% 23,734 100.00% 24,097 100.00%
Fall 2009 Fall 2008 Fall 2007 Fall 2006 Fall 2005
Ethnic Origin Number Percent Number Percent Number Percent Number Percent Number Percent
White 11,114 41.15% 10,556 42.88% 10,577 44.91% 10,809 45.54% 11,247 46.67%
Hispanic 10,397 38.49% 8,965 36.42% 8,157 34.64% 8,053 33.93% 7,977 33.10%
African American 2,975 11.01% 2,496 10.14% 2,334 9.91% 2,424 10.21% 2,497 10.36%
Asian 1,590 5.89% 1,419 5.76% 1,327 5.63% 1,275 5.37% 1,192 4.95%
Foreign 791 2.93% 986 4.01% 859 3.65% B6B 3.66% 934 388%
Native American 144 0.53% 131 0.53% 115 0.49% 94 0.40% 69 0.29%
Other 0.00% 63 0.26% 182 0.77% 211 0.89% 181 0.75%
Total 27,O1.l 100.00% 24,616 100.00% 23,551 100.00% 23,734 100.00% 24,097 100.00%
Fall 2009 Fall 2008 Fall 2007 Fall 2006 Fall 2005
Age Number Percent Number Percent Number Percent Number Percent Number Percent
Under 18 2,594 9.61% 1,784 7.25% 1,644 6.98% 1,344 5.66% 1,123 ~%
18 - 21 12,362 45.77% 11,329 46.02% 10,851 46.07% 10,786 45.45% 10,653 44.21%
22 - 24 3,947 14.61% 3,901 15.85% 3,813 16.19% 3,956 16.67% 4,178 17.34%
25 - 35 5,571 20.62% 5,149 20.92% 4,834 20.53% 5,135 2164% 5,457 22.65%
36 - 50 2,135 7.90% 2,043 8.30% 2,021 8.58% 2,139 9.01% 2,305 9.56%
51 & over 402 1.49% 410 1.66% 388 1.65% 374 1.57% 381 1.58%
Total 27,011 100.00% 24,616 10000% 23,551 100.00% 23,734 100.00% 24,097 100.00%
Average age 24 24 24 24 25
This schedule does not include non-<:redit Continuing and Professional Development enrollment.
Source: Data from the CBM001.
Note: The College previously did not present this schedule. Information is being presented for the past five years, and the College will continue to implement prospectively.
61
SS -17
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Transfers to Senior Institutions
Institutions Attended Fall 2009
(Unaudited)
(Includes only public senior colleges in Texas)
Total Total Total Total
Transfer Transfer Transfer of all % of
Student Student Student Sample all Sample
Count Count Count Transfer Transfer
Academic Technical Tech-Prep Students Student
1 University of Houston - Clear Lake 1,328 49 54 1,431 26.94%
2 University of Houston 1,165 37 51 1,253 23.59%
3 Texas A&M University 362 12 7 381 7.17%
4 University of Texas - Austin 325 16 5 346 6.51%
5 University of Houston - Downtown 234 18 25 277 5.22%
6 Texas State University 191 13 10 214 4.03%
7 Sam Houston State University 174 9 16 199 3.75%
8 University of Texas Medical Branch Galveston 141 13 154 2.90%
9 Stephen F. Austin State University 130 9 6 145 2.73%
10 University of Texas - San Antonio 126 6 2 134 2.52%
11 Texas Tech University 104 3 1 108 2.03%
12 Texas Southern University 93 5 10 108 2.03%
13 Lamar University Institute of Technology 79 5 2 86 1.62%
15 University of Texas Health Science Center - Houston 52 4 56 1.06%
14 Texas A&M University - Galveston 52 1 1 54 1.02%
16 University of North Texas 44 2 46 0.87%
17 Prairie View A&M University 41 7 3 51 0.96%
18 University of Texas - Arlington 36 3 1 40 0.75%
19 Texas Woman's University 27 5 1 33 0.62%
20 Texas A&M University - Corpus Christi 25 3 28 0.53%
21 University of Texas· Dallas 19 20 0.38%
22 University of Houston - Victoria 17 3 20 0.38%
23 Texas Tech University Health Science Center 16 3 19 0.36%
24 University of Texas M.D. Anderson Cancer Center 16 16 0.30%
25 Midwestern State University 12 3 15 0.28%
26 University of Texas Health Science Center - San Antonio 9 1 11 0.21%
27 University of Texas - Tyler 8 2 11 0.21%
28 University of Texas - Pan American 8 8 0.15%
29 Texas A&M University - Kingsville 6 7 0.13%
30 Angelo State University 6 6 0.11%
31 West Texas A&M University 5 6 0.11%
32 Texas A&M University Health Science Center 5 5 0.09%
34 University ofTexas· EI Paso 4 1 5 0.09%
36 Texas A&M University - Commerce 3 2 5 0.09%
33 Tarleton State University 4 4 0.08%
35 Sui Ross State University 3 3 0.06%
37 Baylor College of Medicine 2 2 0.04%
38 University of North Texas Health Science Center· Fort Worth 1 2 0.04%
39 University of Texas - Permian Basin 1 1 0.02%
40 University of Texas Southwestern Medical Center at Dallas 1 1 0.02%
Totals 4,874 237 200 5,311 100.00%
Source: Texas Higher Education Coordinating Board Automated Student and Adult Learner Follow-Up System.
Note: This statistical supplement is presented with only the most current information.
62
SS -18
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Capital Asset Information
Fiscal Years 2006 to 2010
(Unaudited)
2010 2009 2008 2007 2006
Academic Buildings 34 32 32 32 32
Square footage (in thousands) 1,476.608 1,457,408 1,457,408 1,457,408 1,457,408
Libraries 3 3 3 3 3
Square footage (in thousands) 163,615 163,615 163,615 163,615 163,615
Number Of Volumes (in thousands) 243,695 244,602 259,434 238,489 275,713
Administrative and Support Buildings 4 4 4 4 4
Square footage (in thousands) 265,906 265,906 265,906 265,906 265,906
Dormitories 1 1 1 1 1
Square footage (in thousands) 6,050 6,050 6.050 6,050 6,050
Athletic Facilities 10 10 10 10 10
Square footage (in thousands) 165,527 165,527 165,527 165,527 165,527
Stadiums 3 3 3 3 3
Fitness Centers/Gymnasiums 4 4 4 4 4
Tennis Courts 3 3 3 3 3
Other 2 2 2 2 2
Plant Facilities 14 14 14 14 14
Square footage (in thousands) 49,137 49,137 49,137 49,137 49,137
Transportation:
Cars 11 11 11 12 12
Light TrucksNans 66 57 50 47 40
Source: Master property schedule.
Note: The College previously did not present this schedule. Information is being presented for the past five
years. and the College will continue to implement prospectively.
63
> OL \. ,~~ • :' :: •
: \ -
'.
~':x<~~i:~it'·
'~~';-.ol<~~
" ~~
Accountants & Consultants t: (713) 622-1120
•
One Riverway, Suite 1900 f: (713) 961-0625
Houston, TX 77056 USA mfrpc.com
INDEPENDENT AUDITORS' REPORT ON
INTERNAL CONTROL OVER FINANCIAL REPORTING
AND COMPLIANCE AND OTHER MATTERS BASED
ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
Board of Trustees
San Jacinto Community College District:
We have audited the basic financial statements of San Jacinto Community College District (the College)
as of and for the year ended August 31,2010, and have issued our report thereon dated December 13,
2010. We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States.
Internal Control over Financial Reporting
In planning and performing our audit, we considered the College's internal control over financial reporting
as a basis for designing our auditing procedures for the purpose of expressing our opinion on the basic
financial statements, but not for the purpose of expressing an opinion on the effectiveness of the
College's internal control over financial reporting. Accordingly, we do not express an opinion on the
effectiveness of the College's internal control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a material
misstatement of the entity's financial statements will not be prevented, or detected and corrected, on a
timely basis.
Our consideration of the internal control over financial reporting was for the limited purpose described in
the first paragraph of this section and would not necessarily identify all deficiencies in internal control over
financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not
identify any deficiencies in internal control over financial reporting that we consider to be material
weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the College's basic financial statements are
free of material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and material
effect on the determination of financial statement amounts. However, providing an opinion on compliance
with those provisions was not an objective of our audit, and accordingly, we do not express such an
opinion. The results of our tests disclosed no instances of noncompliance or other matters that are
required to be reported under Government Auditing Standards.
64
Member of the American Institute of Certified Public Accountants
This report is intended solely for the information and use of the Board of Trustees, the College's
management, and Federal and State awarding agencies and pass-through entities and is not intended to
be and should not be used by anyone other than these specified parties.
December 13, 2010
65
Accountants & Consultants t: (713) 622-1120
•
One Riverway, Suite 1900 f: (713) 961-0625
Houston, TX 77056 USA mfrpc.com
INDEPENDENT AUDITORS'
REPORT ON COMPLIANCE WITH REQUIREMENTS
THAT COULD HAVE A DIRECT AND MATERIAL EFFECT
ON EACH MAJOR PROGRAM AND ON
INTERNAL CONTROL OVER COMPLIANCE IN
ACCORDANCE WITH OMS CIRCULAR A-133
AND THE STA TE OF TEXAS SINGLE AUDIT CIRCULAR
Board of Trustees
San Jacinto Community College District:
Compliance
We have audited the compliance of San Jacinto Community College District (the College) with the types
of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could
have a direct and material effect on each of its major Federal and State of Texas (State) programs for the
year ended August 31, 2010. The College's major Federal and State programs are identified in the
summary of auditor's results section of the accompanying schedule of findings and questioned costs.
Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its
major Federal and State programs is the responsibility of the College's management. Our responsibility is
to express an opinion on the College's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government Auditing
Standards issued by the Comptroller General of the United States; OMB Circular A-133, Audits of States,
Local Governments, and Non-Profit Organizations and the State of Texas Single Audit Circular. Those
standards, OMB Circular A-133 and the State of Texas Single Audit Circular require that we plan and
perform the audit to obtain reasonable assurance about whether noncompliance with the types of
compliance requirements referred to above that could have a direct and material effect on a major
Federal and State program occurred. An audit includes examining, on a test basis, evidence about the
College's compliance with those requirements and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Our audit does not provide a legal determination of the College's compliance with those requirements.
In our opinion, the College complied, in all material respects, with the compliance requirements referred
to above that could have a direct and material effect on each of its major Federal and State programs
identified in the accompanying schedule of findings and questioned costs for the year ended August 31,
2010. However, the results of our auditing procedures disclosed instances of noncompliance with those
requirements, which are required to be reported in accordance with applicable sections of OMS Circular
A-133 which are described in the accompanying schedule of findings and questioned costs as item
2010-1.
Internal Control over Compliance
Management of the College is responsible for establishing and maintaining effective internal control over
compliance with requirements of laws, regulations, contracts and grants applicable to Federal and State
programs In planning and performing our audit, we considered the College's internal control over
compliance with requirements that could have a direct and material effect on a major Federal and State
program in order to determine our auditing procedures for the purpose of expressing our opinion on
66
McrY'Iberof the Arnerican Institute of Certified Public Accountants
compliance, and to test and report on internal control over compliance in accordance with OMS Circular
A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over
compliance. Accordingly, we do not express an opinion on the effectiveness of the College's internal
control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, in the normal course of performing their assigned
functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a
Federal or State program on a timely basis. A material weakness in internal control over compliance is a
deficiency, or combination of deficiencies, in internal control over compliance, such that there is a
reasonable possibility that a material noncompliance with a type of compliance requirement of a Federal
and State program will not be prevented, or detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over
compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not
identify any deficiencies in internal control over compliance that we consider to be material weaknesses,
as defined above. However, we identified a deficiency in internal control over compliance that we
consider to be significant deficiencies as described in the accompanying schedule of findings and
questioned costs as item 2010 - 1. A significant deficiency in internal control over compliance is a
deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance
requirement of a Federal or State Program that is less severe than a material weakness in internal control
over compliance, yet important enough to merit attention by those charged with governance.
The College's response to the finding identified in our audit is described in the accompanying schedule of
finding and questioned costs. We did not audit the College responses and, accordingly, we express no
opinion on the responses .
. This report is intended solely for the information and use of the Board of Trustees, the College's
management, and Federal and State awarding agencies and pass-through entities and is not intended to
be and should riOt be used by anyone other than these specified parties.
December 13,2010
67
Schedule E
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Schedule of Expenditures of Federal Awards
Year Ended August 31, 2010
Federal Pass-Through Expenditures
CFoA GrenlMs and Pa.s-Through
Federal Grantors/Pass·Through Grantorl
Number Nymber Di.bursement.
Program Tille
U. $, pepartment of Education:
Student Financial Aid Cluster:
Direct Pr"llrams:
84,007 P007A094114 $ 747,707
Fade,al Supplemental Educational Opportunity Grants
84.032 91-4261-G-1-502 4.423,673
Federal Family Education Loans - Subsidized Loens
84.032 91-4261-G-1·502 6,744,447
federal Family Education Loans - Unsubsidized Loans
Federal Family Educational Loans - Plus Loans 84,032 91-4261-G-1-502 26695
10,194,615
federel Work - Study Program 84.033 P033A094114 441,578
ARRA84.033 P033A094114 88,676
Federal Work· Study Program (ARRA)
530,254
84.063 P063P092303 27,284,905
federal Pell Grant Program
84,268 P268K102303 473,050
Federal Direct Student Loans - Subsidized
84,288 P268K102303 602,654
Federal Direct Student Loans - Unsubsldized
1,165,704
84.375 P376A092303 197,526
Academic Competitiveness Gtants
Pass-Through From:
Texas Higher Education Coordinating Board:
Laveraglng Educational Assistance Partnarship (LEAP) 84.069A 91·0200-0-1·502 21,907
Speciel leveraging Educational Assistance Partnership (SLEAP) B4,069A 91-0200-0-1-502 28167
50,074
Total Student Financiel Aid Cluster - SChedule C 40,150,095
Direct Pr"llrams:
Higher Education In.titutionel Aid 84.0318 P0315060003 574,716
TRIO Cluster:
TRIO Talent Search 84,044A P044A070353 243,240
TRIO Upward Bound 84,047A P047A070042 264,500
TRIO Upward Bound· Meth & Science 84.047M P047M070003 344,496
TRIO Student Support Services 84,042A P042A050182 235075
1,087,311
Fund for The Improvement 0'
Postsll<Ondary Education (FIPSE):
Fund for The Improvement of Postsecondary Education (FIPSE) 84,1162 P116Z060320 144.579
Fund for the Improvement of Postsecondary Educalion (FIPSE) - Meritime Equipment 84,1162 P116Z100183 106.416
250,900
Pass-Through From:
Texas Education Agency
Pa.s· Through From -
Clear Creek Independent Sellool District
Adult Education - Basic Granls 10 States - EnRlIsh Uteracvand Civics Educallon Grant No, 2 54,002 2010.017 51,053
Pass-Through From:
Harris Counly Juvenile Board
TiUe I Part 0 Granls to Locel Educational Agencies:
Title I Granls to Local Educatlonal Agencies· HCJJCSVEP 08-09 84,010 A P140068 (15,020)
Tillal Grants to Local Educetlonel Agencies - HCJJCSVEP 09-10 54,010 A X2784 194.710
179,690
Pe •• ·Through From:
Texes Higher Education Coordin.ting Board
Cereer end T ethnical EducaUon/Basic Grants to States -
Ce~ Perklns Vocational Education Besic 09/10 84,048 10042 538,107
Stete Fiscal Stebillzation Fund (SFSF) - Government Service. (ARRA) ARRA 54.397A 3588 639,852
Pass-Throuoh From -
Del Mar Colfeoe
Career and Technical Education/Basic GrEln~ to Statos 84,048 P096728 1287
Tolel U. S. Department of Education 43.473.996
U. S. Department of Aoriculture
P••• ·Through From-
Texas Department of Agricuilure
Child and Aduil Care Food Pf"llram 10558 NA 3,635
Total U. S. Depariment of Agriculture 3,835
Continued
68
Schedule E
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Schedule of Expenditures of Federal Awards, Continued
Year Ended August 31,2010
Fe<leral Pass-Through Expenditures
Fe<leral GrantOf$/Pass-Through Grantor! CFOA Granto~s and Pa.s-Through
PcogramTiUe Number Number Disbursements
u. S. Demlrtmeolof Housloa and Lkbao Development
Direct P/ograms -
Hispanic $erving Inslitution Assisting Communllies Program 14.514 HSIAe-lJ6. TX-28 140.018
Total U. S. Oepartment of Housing and Urban Oevetopment 140.018
U. S. Department 01 Labor:
Direcl Programs-
Program of Competitive Grants for Wori<er Training and Placement in High
Growth and Emerging Induslly Sectors (ARRA) ARRA 17.275 GJ-20047-1()'60-A-46 44.639
Pas.-Through From·
Lee College •
Community Based Job Training Grants -
High Growth and Community Based JOb Training Grant (CBJD 17.289 CB-18226-lJ6.60-A·48 261.140
Pass·Through From:
T."". Worl<force Commission
Worl<force Inve5tmenl Acl Cluster:
Worl<force Investment AcYOisloCaled Worker. - Summer Merit Program 2010 - EVIINSPIRE 17.280 2810WSWOO2 61.906
Worklorce Investment AcYOislocated Worker. - Summer Merit Program 2009 - EVIINSPIRE 17.280 2809WSW005 52.700
Workforce rnvestment Act/Dislocated Workers· Texas Youth tn Technology Grant Program 17.280 2809WSWOO3 135.759
Worl<force Inve.tment AcYOislocated Worker. - Partne",hip v,;lh Center Poinl Energy (ARRA) ARRA 17.260 2810XSDOOO 70.322
320.689
Houston-Galveston Area Council -
W1A Adult ProgramIWIA Dislocated Workers (ARRA) ARRA 17.256 & 17.280 742-10 347.542
Alvin Community Collego w
W1A Adult Program· Ucensed Vocational N"",ing Ins!Nction (ARRA) ARRA 17.256 NA 43.741
711972
Tolal U. S. Oepartment 01 Lebor 1,007.661
National Aeronautics and Space AdmInistration:
Direct Programs· .
Aerospace Education Selllices Program • NASA Strategic Education Allience Grant 43.001 NNX07AP99A 1.850.269
Tolel National Aeronaulics end Space Administration 1850269
National Science Foundation:
Direct programs.
Engineering Grants· Partnership lor Innovation in Biotechnology and Ule Sciences 47.041 IIP·0649713 00.341
Education and Human Resources:
Education and Human Resources - StUdents Expanding Possibilities Undergraduate Program 47.076 DUE-0B49391 00.856
Education and Human Resources - National Middle School Aerospace Scholars 47.076 ESI·0422698 1.103
87.959
Pass-Through From:
University 01 Hou.ton
Education and Human Resources (IASNRCDUEl:
Education and Human Resou,ws • Houston AlIIence for Minority Panic<pation Project (PH 1111 47.076 R·09-0147 10,795
Education and Human Resourws • Houston Alliance for Minoritv Panic<oalion Project (PH III 47.076 R-09-0172 21,402
Educalion and Humen Rasources • Expanding Pall1ways 10 Success in Science 47.078 HRO-0402823 49,291
47.076 DUE·00336612 (9.824)
71,684
Lee College-
Education and Human Resources .• Analyzer Technician Opportunities Project 47.076 DUE-0801907 43.442
Total National Science Foundation 291 400
U. S. Small Business Administration:
Pass·Through From:
Tha University of Houston·Contral:
Small Business Development Conter 09110 69.037 R-10-0075-63826 133.691
Small Business Development Genter 08109 69.037 R·09-0109 30271
Total U. S. Smell Busine •• Administration 163962
U S Daoertmenl 01 Veterans Affairs:
Direct progrems. AIiNolunte.r Force Educational A.aislance 64.124 36212420 6.646
Continued
69
Schedule E
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Schedule of Expenditures of Federal Awards, Continued
Year Ended August 31,2010
Federel Pass.Through Expenditures
Federal Grantors/Pass~Thr(lugh Grantort CFDA Grantor's and Pass-ThlOugh
Program Title Number Number Disbursements
U. S. Department of Health and Human Services:
Pass.ThlOugh From •
Child Care and Development Fund Cluster (CCDF) •
The University of Texas Health Science Center al Hou,lon
Child Care and Devalopment Block Grant - Higher Education grant 93.~75 NA 1,761
Texas Workfo"", Commission:
Child Care and Development Block Grant 09-10 93.~75 0626OC267FY10 62,610
Child Care and Development Block Grant 08-09 93.~75 0626OC260FY09 3692
66,292
Texas Education Agancy.
TM University of Texas Health Science Center at Houston:
Child Care and Development Block Grant· Higher Demonstration 93.575 PO/OOOO265725 (255)
Child Care Mandatory and Matching Funds of the Child Care and Davelopment Fund 93.596 P0/0000380571 67,435
67,180
Total U. S. Department of Heallh and Human Services· CCDF Clu.ler 135,233
Tola1 Federal Financial Assistance $ 48,873,208
70
Schedule F
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Schedule of Expenditures of State Awards
Year Ended August 31, 2010
Grant General
Contract Ledger
Grantor Agency/Program Title Number Account Expenditures
Texas Workforce Commission· Skills Development Fund:
Aerospace Consortium Grant 2808SDF002 241046 $ 276,844
West Gulf Maritime Association II 2809SDF008 541001 396,596
Aerospace Consortium II 2810SDF004 551003 226,161
Maritime Consortium 2010 2810SDF005 551002 105,875
Total Texas Workforce Commission 1,007,476
Texas Higher Education Coordinating Board:
College G Force Workstudy #740 245133 4,602
P-16 College Readiness Special Advisors Program P-16 $A·SJCD 245128 781
P-16 Initiatives - First Year Experience Calling Program 2448 555001 60,000
State Military Tuition Assistance 26041 245127 4,535
Texas Grant I-Initial 13099 245606 827,700
Texas Grant I- Renewal 13099 245610 338,200
Texas Education Opportunity Grant Program· Initial (TEOG) 13399 245706 297,260
Texas Education Opportunity Grant Program - Renewal (TEOG) 13399 245710 46,280
Financial Aid· Professional Nursing 13025 245301 16,160
Financial Aid· Licensed Vocational Nursing 13026 245302 1,772
College Work Study Program 22339 245506 53,851
Early High School- House 8ill1479 33080 245125 219,401
Certified Education Aide Program 33081 245126 25,090
Top Ten Percent 20356 245129 104.000
Combat Expemption Program 21985 245130 2,540
Alternative Teacher Certification 13093 245134 5,750
Health Educational Loan Program 245211 4,346
College Access Loan 245216 98,212
Professional Nursing Shortage Reduction Program FY09 NSRD • FY2009 245121 57,018
Professional Nursing Shortage Reduction Program FY10 - S.C. HB 3034 FY10 RegUlar 555002 94,807
Professional Nursing Shortage Reduction Program FY10 - C.C HB 3034 FY10 Under 70 555003 85,649
Professional Nursing Shortage Reduction Program FY10· S.C. HB 3034 FY10 Under 70 555004 15,902
Pass-Through From -
EI Paso Community College -
Community College Develop Education Initiative Program NA 545001 4,165
Total Texas Higher Education Coordinating Board 2,368,221
Texas Education Agency:
Pass-Through From:
Clear Creek Independent School District
Early College High School Grant SAS#628·07 240203 21,711
Total Texas Education Agency 21.711
Texas Comptroller of Public Accounts -
Jobs and Education for Texans Block Grant 3572-39 542001 123,023
Total Texas Comptroller of Public Accounts 123,023
Total State Financial Assistance $ 3,520,431
71
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Notes to Schedules of Expenditures of Federal Awards and State Awards
Year Ended August 31 2010 t
Note 1: Federal Assistance Reconciliation
Direct Federal grants and contracts per Schedule A $ 6,515,797
Add: Indirect/Administrative Cost Recoveries - per Schedule A 206,426
Direct Federal revenue, non-operating - Schedule C 40,048,860
Add: Indirect/Administrative Cost Recoveries - per Schedule C 102,125
Total Federal Revenues per Schedule E - Schedule of Expenditures of Federal Awards $ 46873208
Note 2: State Assistance Reconciliation
Direct State grants and contracts per Schedule A $ 3,455,801
Add: Indirect/Administrative Cost Recoveries - per Schedule A 64,630
Total State Revenues per Schedule F - Schedule of Expenditures of State Awards $ 3520431
Note 3: Significant Accounting Policies Used in Preparing the Schedules
The schedules of expenditures of Federal and State awards present the activity of Federal and State
programs of the College for the year ended August 31, 2010. Expenditure reports to funding agencies are
prepared on the award period basis. The expenditures reported above represent funds which have been
expended by the College for the purposes of the award and may not have been reimbursed by the funding
agencies as of the end of the fiscal year. Separate accounts are maintained for the different awards to aid in
the observance of limitations and restrictions imposed by the funding agencies, The College has followed all
applicable guidelines issued by various entities in the preparation of the schedules.
Note 4: Amounts passed through by the College - Sub-recipients
The following amounts were passed-through to the listed sub-recipients by the College. These amounts are
included in Note 1 above.
College of the Mainland CFDA 17.258 u.s. Department of Labor WIA Grant/Dislocated Wrk $ 4,034
College of the Mainland CFDA 17.258 U.S. Department of Labor WIA Grant/Adult 4,408
Brazosport College CFDA 17.258 U.S. Department of Labor WIA Grant/Dislocated Wrk 7,983
Lee College CFDA 17.258 U.S. Department of Labor WIA Grant/Dislocated Wrk 14,905
Brazosport College CFDA 17.258 U.S. Department of Labor WIA Grant/Adult 43,321
Lee College CFDA 17.258 U.S. Department of Labor WIA Grant/Adult 88,696
Brazosport College CFDA 17.260 U.S. Department of Labor WIA Grant/Summer Merit 2,772
College of the Mainland CFDA 17.260 U.S. Department of Labor WIA Grant/Summer Merit 4,505
Lee College CFDA 17.260 U.S. Department of Labor WIA Grant/Summer Merit 7,623
Brazosport College CFDA 17.275 U.S. Department of Labor Prog of Competitive Grants 30,694
Universities Space
Research Association CFDA43.001 NASA Aerospace Education Svc Prog 883,954
$1092895
72
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Schedule of Findings and Questioned Costs
Year Ended August 31, 2010
Section 1 Summary of Auditors' Results
Financial Statements
1. Type of auditors' report issued: Unqualified
2. Internal control over financial reporting:
a. Material weaknesses identified? No
b. Significant deficiencies identified? No
c. Noncompliance material to the financial
statements noted? No
Federal and State Awards
1. Internal control over major programs:
a. Material weaknesses identified? No
b. Significant deficiencies identified? Yes
2. Type of auditors' report issued on
compliance for major programs: Unqualified
3. Any audit findings disclosed that are
required to be reported in accordance
with Section 510{a) of OMS Circular A-133
and the State of Texas Single Audit Circulat1 Yes
4. Identification of major programs:
Federal CFDA Number Name of Federal Program
Student Financial Aid Cluster:
84.007 Federal Supplemental
Educational Opportunity Grants
84.063P Federal Pell Grant Program
84.032 Federal Family Education Loans
84.033 Federal Work-Study Program
84.033 Federal Work-Study Program
84.268 Federal Direct Student Loans
84.375 Academic Competitiveness Grants
84.397A State Fiscal Stabilization Fund
17.258 WIA Adult Program
17.260 WIA Dislocated Workers
State - Contract Number Name of State Program
TWC Cluster:
2808SDF002 TWC SDF Aerospace Consortium Grant
2809SDF008 TWC SDF WGMA II
2810SDF004 TWC SDF Aerospace Consortium II
281SDF0005 TWC Maritime Consortium 2010
2810S8D001 TWC Skill for Small Business
2810SDF007 TWC San Jacinto College in Partnership with
a Petrochemical Consortium
73 Continued
SAN JACINTO COMMUNITY COLLEGE DISTRICT
Schedule of Findings and Questioned Costs, Continued
Year Ended August 31, 2010
Professional Nursing Shortage
Reduction Cluster:
1310SDFOOO A Partnership with Hospital Corporation of
America and United Health Services
NSRD Professional Nursing Shortage Reduction
Program FY09
HB 3034 Professional Nursing Shortage Reduction
Program FY10 - S.C.
5. Dollar threshold used to distinguish
between Type A and Type B programs:
Federal $1,099,825
State $ 300,000
6. Auditee qualified as a low-risk auditee?
Federal Yes
State Yes
Section 2
Financial Statement Findings
No matters were reported
Section 3
Federal and State Award Findings and Questioned Costs
Finding 2010-1
SUB-RECIPIENT MONITORING
CFDA #17.258 and CFDA #17.260
Workforce Investment Act Adult Program/Dislocated Workers (ARRA)
U.S. Department of Labor; Pass-through from Houston - Galveston Area Council
Criteria: The OMB Circular A-133 states that a recipient of Federal assistance which passes that
assistance to another recipient is responsible to monitor the Federal assistance activities of that sub-
recipient, as well as assure that they are both complying with laws and regulations. It is essential that the
College comply with Federal regulations regarding SUb-recipient monitoring of Federal programs.
Condition: During our audit, we noted that the College provided funds to SUb-recipients during the year
and did not perform adequate monitoring of said sub-recipients of Federal funds.
Questioned costs: None
Context: The program had a total of 3 sub-recipients and all were tested, we noted a lack of sub-recipient
monitoring in all. The total findings to the sub-recipients was $178,247, during 2010.
Effect: The College did not properly monitor the sub-recipients in accordance with Federal regulations.
There could be potential non-compliance with the program requirements and the College could potentially
be liable for any reimbursement necessary.
Cause: In our judgment. the College does not have proper internal processes in place regarding sub-
recipient monitoring.
74
Recommendation: We recommend that management establish policies and procedures to ensure proper
sub-recipient monitoring occur within compliance with Federal regulations.
Management's response and 90rrective actions: SUbsequent to year end, the College has implemented a
sub-recipient monitoring process that will assist them in their handling of Federal assistance monies that
are passed to other recipients. .
Section 4
Schedule of Prior Year Audit Findings
The audit of Federal and State of Texas awards disclosed no findings that were required to be reported
for the year ended August 31,2009.
75
APPENDIX D
Form of Bond Counsel's Opinion
DRAFT
06/22/11
600 Travis, Suite 4200
Houston, Texas 77002
713.220.4200 Phone
713.220.4285 Fax
andrewskurth.com
____________, 2011
WE HAVE ACTED as Bond Counsel for the San Jacinto Community College District
(the “District”) in connection with an issue of bonds (the “Bonds”) described as follows:
SAN JACINTO COMMUNITY COLLEGE DISTRICT LIMITED TAX
GENERAL OBLIGATION BUILDING AND REFUNDING BONDS, SERIES
2011, dated July 1, 2011, in the aggregate principal amount of $_____________.
The Bonds mature, bear interest, are subject to redemption prior to maturity and
may be transferred and exchanged as set out in the Bonds and in the order (the
“Order”) adopted by the Board of Trustees of the District authorizing their
issuance.
WE HAVE ACTED as Bond Counsel for the sole purpose of rendering an opinion with
respect to the legality and validity of the Bonds under the Constitution and laws of the State of
Texas and with respect to the exclusion of interest on the Bonds from gross income under federal
income tax law. In such capacity we have examined the Constitution and laws of the State of
Texas; federal income tax law; and a transcript of certain certified proceedings pertaining to the
issuance of the Bonds and the bonds that are being refunded (the “Refunded Bonds”) with the
proceeds of the Bonds, as described in the Order. The transcript contains certified copies of
certain proceedings of the District and Wells Fargo Bank, N.A. (the “Escrow Agent”); the report
(the “Report”) of Grant Thornton LLP (the “Verification Agent”), which verifies the sufficiency
of the deposits made with the Escrow Agent for the defeasance of the Refunded Bonds and the
mathematical accuracy of certain computations of the yield on the Bonds and the obligations
acquired with the proceeds of the Bonds; certain certifications and representations and other
material facts within the knowledge and control of the District, upon which we rely; and certain
other customary documents and instruments authorizing and relating to the issuance of the Bonds
and the firm banking and financial arrangements for the discharge and final payment of the
Refunded Bonds. We have also examined executed Bonds No. ICI-1 and ICA-1 of this issue.
WE HAVE NOT BEEN REQUESTED to examine, and have not investigated or verified,
any original proceedings, records, data or other material, but have relied upon the transcript of
certified proceedings. We have not assumed any responsibility with respect to the financial
condition or capabilities of the District or the disclosure thereof in connection with the sale of the
Bonds. Our role in connection with the District’s Official Statement prepared for use in
connection with the sale of the Bonds has been limited as described therein.
HOU:3086797.1
Austin Beijing Dallas Houston London New York The Woodlands Washington, DC
____________, 2011
Page 2
BASED ON SUCH EXAMINATION, it is our opinion as follows:
(1) The transcript of certified proceedings evidences complete legal authority for the
issuance of the Bonds in full compliance with the Constitution and laws of the
State of Texas presently in effect; the Bonds constitute valid and legally binding
obligations of the District enforceable in accordance with the terms and
conditions thereof, except to the extent that the rights and remedies of the owners
of the Bonds may be limited by laws heretofore or hereafter enacted relating to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors of political subdivisions and the exercise of
judicial discretion in appropriate cases; and the Bonds have been authorized and
delivered in accordance with law;
(2) The Bonds are payable, both as to principal and interest, from the receipts of an
annual ad valorem tax levied, within the limits prescribed by law, upon all taxable
property located within the District, which taxes have been pledged irrevocably to
pay the principal of and interest on the Bonds; and
(3) The escrow agreement between the District and the Escrow Agent (the “Escrow
Agreement”) has been duly executed and delivered and constitutes a binding and
enforceable agreement in accordance with its terms; the establishment of the
Escrow Fund pursuant to the Escrow Agreement and the deposit made therein
constitute the making of firm banking and financial arrangements for the
discharge and final payment of the Refunded Bonds; in reliance upon the
accuracy of the calculations contained in the Report, the Refunded Bonds, having
been discharged and paid, are no longer outstanding and the lien on and pledge of
ad valorem taxes and other revenues as set forth in the order authorizing their
issuance will be appropriately and legally defeased; the holders of the Refunded
Bonds may obtain payment of the principal of, redemption premium, if any, and
interest in the Refunded Bonds only out of the funds provided therefor now held
in escrow for that purpose by the Escrow Agent pursuant to the terms of the
Escrow Agreement; and therefore the Refunded Bonds are deemed to be fully
paid and no longer outstanding, except for the purpose of being paid from the
funds provided therefor in such Escrow Agreement.
BASED ON OUR EXAMINATION AS DESCRIBED ABOVE, it is further our opinion
that, subject to the restrictions hereinafter described, interest on the Bonds is excludable from
gross income of the owners thereof for federal income tax purposes under existing law and is not
subject to the alternative minimum tax on individuals or, except as hereinafter described,
corporations. The opinion set forth in the first sentence of this paragraph is subject to the
condition that the District comply with all requirements of the Internal Revenue Code of 1986, as
amended (the “Code”), that must be satisfied subsequent to the issuance of the Bonds in order
that interest thereon be, or continue to be, excluded from gross income for federal income tax
purposes. The District has covenanted in the Order to comply with each such requirement.
HOU:3086797.1
____________, 2011
Page 3
Failure to comply with certain of such requirements may cause the inclusion of interest on the
Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance
of the Bonds. The Code and the existing regulations, rulings and court decisions thereunder,
upon which the foregoing opinions of Bond Counsel are based, are subject to change, which
could prospectively or retroactively result in the inclusion of the interest on the Bonds in gross
income of the owners thereof for federal income tax purposes.
INTEREST ON all tax-exempt obligations, including the Bonds, owned by a corporation
(other than an S corporation, a regulated investment company, a real estate investment trust
(REIT), a real estate mortgage investment conduit (REMIC) or a financial asset securitization
investment trust (FASIT)) will be included in such corporation's adjusted current earnings for
purposes of calculating such corporation's alternative minimum taxable income. A corporation's
alternative minimum taxable income is the basis on which the alternative minimum tax imposed
by the Code is computed.
EXCEPT AS DESCRIBED HEREIN, we express no opinions as to any other matters
except with respect to the excludability of the interest on the Bonds from gross income from the
owners thereof for federal income tax purposes.
IN PROVIDING THE FOREGOING OPINIONS, we have relied upon representations of
the District with respect to matters solely within the knowledge of the District, which we have
not independently verified, and have assumed the accuracy and completeness thereof.
IN ADDITION, EXCEPT AS DESCRIBED ABOVE, we express no opinion as to any
federal, state or local tax consequences under present law, or future legislation, resulting from
the ownership of, receipt or accrual of interest on, or the acquisition or disposition of, the Bonds.
Prospective purchasers of the Bonds should be aware that the ownership of tax-exempt
obligations, such as the Bonds, may result in collateral federal income tax consequences to,
among others, financial institutions, property and casualty insurance companies, certain foreign
corporations doing business in the United States, certain S corporations with Subchapter C
earnings and profits, individual recipients of Social Security or Railroad Retirement benefits,
taxpayers who are deemed to have incurred or continued indebtedness to purchase or carry tax-
exempt obligations, taxpayers owning an interest in a FASIT that holds tax-exempt obligations
and individuals otherwise qualified for the earned income credit. For the foregoing reasons,
prospective purchasers should consult their tax advisors as to the consequences of investing in
the Bonds.
HOU:3086797.1
____________, 2011
Page 4
OUR OPINIONS ARE BASED ON EXISTING LAW, which is subject to change. Such
opinions are further based on our knowledge of facts as of the date hereof. We assume no duty
to update or supplement our opinions to reflect any facts or circumstances that may thereafter
come to our attention or to reflect any changes in any law that may thereafter occur or become
effective. Moreover, our opinions are not a guarantee of result and are not binding on the
Internal Revenue Service; rather, such opinions represent our legal judgment based upon our
review of existing law that we deem relevant to such opinions and in reliance upon the
representations and covenants referenced above.
7443/7868
HOU:3086797.1
