SOUTHWEST SECURITIES by liuqingyan

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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

                                                                2
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
                                                           3
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.


                                                            4
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.




                                                            5
                                                     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
                                                             6
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%
                                                            7
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
                                                             8
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.



                                                            9
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.



                                                           10
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
                                                             11
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.




                                                              12
                                              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.



                                                               13
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.




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                                                                   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

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                                                               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
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      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
            Certificate of
            Achievement
           for Excellence
              in Financial
                 Rep;ortin.g
                        Pres~ntedto
San JacintoCommunity College
                District, Texas

           For its ComprehensiveAnnual
                   Financial Report
             for the Fiscal Year Ended
                   August 31~2009
  A Certificate of Achievement for Exc¢llence in Financial
 Reptlrting ispre~ent~d by the (iovelllrrjelltFinanceOffic¢rs
       Association of the UnitedStatcsand Camlda'to
     government units andpublic emplQyeeretirement
       systemswhose comprehensiveal1l1ualfinancial
             r~ports (CAFRs) achjeve~hehjg~~st
             stlllld31'ds in goVeri)lnenlaC~ollntjng
                     and finllndal reporting .




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                                            x
                                                                    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   \.   ,~~   •       :'       ::        •




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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 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.




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         Austin   Beijing   Dallas   Houston   London   New York   The Woodlands   Washington, DC
____________, 2011
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        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
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        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

								
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