Texas Annual Financial Report for the Year Ended

Glenn Hegar Texas Comptroller of Public Accounts Annual Financial Report For the Year Ended August 31, 2020

Glenn Hegar Texas Comptroller of Public Accounts

November 20, 2020

The Honorable Greg Abbott, Governor Lisa Collier, CPA, CFE, CIDA, First Assistant State Auditor Jerry McGinty, Director, Legislative Budget Board

Ladies and Gentlemen:

We are pleased to submit the Annual Financial Report for the Comptroller of Public Accounts, the Comptroller’s Judiciary Section, the Comptroller’s Fiscal Programs, the Comptroller’s Treasury Operations Fiscal Agency, the Texas Bullion Depository, the Texas Safekeeping Trust Company and the State Energy Conservation Office for the year ended Aug. 31, 2020, in compliance with Texas Government Code, Section 2101.011, and in accordance with the requirements established by the Texas Comptroller of Public Accounts.

Due to the statewide requirements embedded in Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments, the Comptroller of Public Accounts does not require the accompanying annual financial report to comply with all the requirements in this statement. The financial report will be considered for audit by the state auditor as part of the audit of the State of Texas Comprehensive Annual Financial Report (CAFR); therefore, an opinion has not been expressed on the financial statements and related information contained in this report.

If you have any questions, please contact Shari Curtis, manager of our Budget and Internal Accounting Division, at [email protected] or 512-463-4771.

Sincerely,

Glenn Hegar

cc: Shari Curtis

Comptroller.Texas.Gov 512-463-4444 P.O. Box 13528 Toll Free: 1-800-531-5441 ext: 3-4444 Austin, Texas 78711-3528 Fax: 512-463-4902 The spreadsheets in this publication are available in accessible data form (Excel) for the sections below.

For Agency 304, pages 1-20 https://comptroller.texas.gov/transparency/reports/annual-financial/2020/agency-304.xlsx

For Agency 241, pages 21-40 https://comptroller.texas.gov/transparency/reports/annual-financial/2020/agency-241.xlsx

For Agency 902, pages 41-88 https://comptroller.texas.gov/transparency/reports/annual-financial/2020/agency-902.xlsx

For Agency 311, pages 89-130 https://comptroller.texas.gov/transparency/reports/annual-financial/2020/agency-311.xlsx

For Agency 930, pages 131-156 https://comptroller.texas.gov/transparency/reports/annual-financial/2020/agency-930.xlsx

For Agency 907, pages 157-176 https://comptroller.texas.gov/transparency/reports/annual-financial/2020/agency-907.xlsx

For Agency 908, pages 177-184 https://comptroller.texas.gov/transparency/reports/annual-financial/2020/agency-908.xlsx

For Agency 903, pages 185-196 https://comptroller.texas.gov/transparency/reports/annual-financial/2020/agency-903.xlsx 2020 Annual Financial Report Table of Contents

Transmittal Letter ...... i COMPTROLLER OF PUBLIC ACCOUNTS (304) BASIC FINANCIAL STATEMENTS EXHIBITS I Combined Balance Sheet/Statement of Net Position – Governmental Funds ...... 3 II Combined Statement of Revenues, Expenditures and Changes in Fund Balances/ Statement of Activities – Governmental Funds ...... 4 Notes to the Financial Statements ...... 5 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS J-1 Combining Statement of Changes in Assets and Liabilities – Agency Funds ...... 15 SUPPLEMENTARY SCHEDULES 1A Schedule of Expenditures of Federal Awards ...... 18 COMPTROLLER’S JUDICIARY SECTION (241) BASIC FINANCIAL STATEMENTS EXHIBITS I Combined Balance Sheet/Statement of Net Position – Governmental Funds ...... 23 II Combined Statement of Revenues, Expenditures and Changes in Fund Balances/ Statement of Activities – Governmental Funds ...... 24 Notes to the Financial Statements ...... 25 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS A-1 Combining Balance Sheet – Special Revenue Funds ...... 33 A-2 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Special Revenue Funds ...... 34 J-1 Combining Statement of Changes in Assets and Liabilities – Agency Funds ...... 35 SUPPLEMENTARY SCHEDULES 1B Schedule of State Grant Pass-Throughs From/To State Agencies ...... 39 COMPTROLLER – FISCAL (902) BASIC FINANCIAL STATEMENTS EXHIBITS I Combined Balance Sheet – Governmental Funds ...... 43 II Combined Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 44 VI Combined Statement of Fiduciary Net Position – Fiduciary Funds ...... 45 VII Combined Statement of Changes in Fiduciary Net Position – Fiduciary Funds ...... 46 Notes to the Financial Statements ...... 47

Texas Comptroller of Public Accounts • 2020 Annual Financial Report iii COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS A-1 Combining Balance Sheet – All General and Consolidated Funds ...... 64 A-2 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – All General and Consolidated Funds ...... 67 B-1 Combining Balance Sheet – Special Revenue Funds ...... 70 B-2 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Special Revenue Funds ...... 72 C-1 Combining Balance Sheet – Permanent Funds ...... 74 C-2 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Permanent Funds ...... 75 I-1 Combining Statement of Fiduciary Net Position – Private-Purpose Trust Funds ...... 76 I-2 Combining Statement of Changes in Fiduciary Net Position – Private-Purpose Trust Funds ...... 77 J-1 Combining Statement of Changes in Assets and Liabilities – Agency Funds ...... 78 SUPPLEMENTARY SCHEDULES 1A Schedule of Federal Financial Assistance ...... 84 4 Schedule of Modified to Full Accrual Adjustments – Governmental Funds Balance Sheet/ Statement of Net Position – Governmental Funds ...... 86 4 Schedule of Modified to Full Accrual Adjustments – Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances/Statement of Activities – Governmental Funds ...... 87 5 Schedule of Tax Revenue, Tax Receivable and Deferred Inflow Tax Revenue ...... 88 COMPTROLLER TREASURY – FISCAL (311) BASIC FINANCIAL STATEMENTS EXHIBITS I Combined Balance Sheet/Statement of Net Position – Governmental Funds ...... 91 II Combined Statement of Revenues, Expenditures and Changes in Fund Balances/ Statement of Activities – Governmental Funds ...... 92 VI Combined Statement of Fiduciary Net Position – Fiduciary Funds ...... 93 VII Combined Statement of Changes in Net Position – Fiduciary Funds ...... 94 Notes to the Financial Statements ...... 95 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS A-1 Balance Sheet – All General and Consolidated Funds ...... 113 A-2 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – All General and Consolidated Funds ...... 114 B-1 Combining Balance Sheet – Special Revenue Funds ...... 115 B-2 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance – Special Revenue Funds ...... 116 E-1 Combining Balance Sheet – Permanent Funds ...... 117 E-2 Combining Statement of Revenues, Expenditures and Changes in Fund Balance – Permanent Funds . . . 118 I-1 Combining Statement of Fiduciary Net Position – Private-Purpose Trust Funds ...... 119 I-2 Combining Statement of Changes in Fiduciary Net Position – Private-Purpose Trust Funds ...... 120 J-1 Combining Statement of Changes in Assets and Liabilities – Agency Funds ...... 121 SUPPLEMENTARY SCHEDULES 1 Balance Sheet – Arising from Custodial Operations ...... 125 2 Comparative Summary of Securities Held for State Investment Accounts ...... 127 3 Summary of Collateral Securities Pledged by State Depositories for All Types of Deposits ...... 128 4 Summary of Pledges Under Statutory Requirements ...... 129 iv Texas Comptroller of Public Accounts • 2020 Annual Financial Report TEXAS TREASURY SAFEKEEPING TRUST COMPANY (930) BASIC FINANCIAL STATEMENTS EXHIBITS III Combined Statement of Net Position – Proprietary Fund ...... 133 IV Combined Statement of Revenues, Expenses and Changes in Net Position – Proprietary Fund ...... 134 V Combined Statement of Cash Flows – Proprietary Fund ...... 135 VI Combined Statement of Net Position – Fiduciary Funds ...... 136 VII Combined Statement of Changes in Fiduciary Net Position ...... 137 Notes to the Financial Statements ...... 139 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS H-1 Combining Statement of Fiduciary Net Position – External Investment Trust Funds ...... 153 H-2 Combining Statement of Changes in Fiduciary Net Position – External Investment Trust Funds . . . . . 154 J-1 Combining Statement of Changes in Assets and Liabilities – Agency Funds ...... 155 COMPTROLLER STATE ENERGY CONSERVATION OFFICE (907) BASIC FINANCIAL STATEMENTS EXHIBITS I Combined Balance Sheet/Statement of Net Position – Governmental Funds ...... 159 II Combined Statement of Revenues, Expenditures and Changes in Fund Balances/ Statement of Activities – Governmental Funds ...... 160 Notes to the Financial Statements ...... 161 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS A-1 Combining Balance Sheet – All General and Consolidated Funds ...... 171 A-2 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – All General and Consolidated Funds ...... 172 SUPPLEMENTARY SCHEDULES 1A Schedule of Expenditures of Federal Awards ...... 174 J-1 Combining Statement of Changes in Assets and Liabilities – Agency Funds ...... 176 COMPTROLLER – TEXAS BULLION DEPOSITORY (908) BASIC FINANCIAL STATEMENTS EXHIBITS I Combined Balance Sheet/Statement of Net Position – Governmental Funds ...... 179 II Combined Statement of Revenues, Expenditures and Changes in Fund Balances/Statement of Activities – Governmental Funds ...... 180 Notes to the Financial Statements ...... 181 COMPTROLLER – FUNDS MANAGEMENT (903) BASIC FINANCIAL STATEMENTS EXHIBITS I Combined Balance Sheet/Statement of Net Position – Governmental Funds ...... 187 II Combined Statement of Revenues, Expenditures and Changes in Fund Balances/ Statement of Activities – Governmental Funds ...... 188 Notes to the Financial Statements ...... 189 A-1 Combining Balance Sheet – All General and Consolidated Funds ...... 195 A-2 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – All General and Consolidated Funds ...... 196

Texas Comptroller of Public Accounts • 2020 Annual Financial Report v vi Texas Comptroller of Public Accounts • 2020 Annual Financial Report Comptroller of Public Accounts (304) BASIC FINANCIAL STATEMENTS

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 1 UNAUDITED Comptroller of Public Accounts (304)

2 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller of Public Accounts (304)

EXHIBIT I Combined Balance Sheet/Statement of Net Position – Governmental Funds August 31, 2020

Governmental Governmental Capital Long-Term Fund Type Fund Assets Liabilities Statement of General Funds Total Adjustments Adjustments Net Position ASSETS Current Assets: Cash and Cash Equivalents: Cash on Hand $ 4,800.00 $ 4,800.00 $ $ $ 4,800.00 Cash in Bank (Note 3) 35,000.00 35,000.00 35,000.00 Legislative Appropriations 113,935,863.65 113,935,863.65 113,935,863.65 Receivables From: Accounts Receivable 21,231.77 21,231.77 21,231.77 Interfund Receivable (Note 12) 20,483.00 20,483.00 20,483.00 Consumable Inventories 460,422.47 460,422.47 460,422.47 Total Current Assets 114,477,800.89 114,477,800.89 0.00 0.00 114,477,800.89

Non-Current Assets: Capital Assets (Note 2): Non-Depreciable or Non-Amortizable: Other Tangible Capital Assets 3,250.00 3,250.00 Construction in Progress 5,349,725.37 5,349,725.37 Depreciable Assets: Furniture and Equipment 7,142,703.41 7,142,703.41 Less Accumulated Depreciation (6,109,768.95) (6,109,768.95) Vehicles, Boats, and Aircraft 390,532.45 390,532.45 Less Accumulated Depreciation (180,841.00) (180,841.00) Amortizable Assets - Intangible: Computer Software 59,620,668.24 59,620,668.24 Less Accumulated Amortization: (54,647,666.19) (54,647,666.19) Total Non-Current Assets 0.00 0.00 11,568,603.33 0.00 11,568,603.33 Total Assets $114,477,800.89 $114,477,800.89 $ 11,568,603.33 $ 0.00 $ 126,046,404.22

LIABILITIES Current Liabilities: Payables From: Accounts Payable $ 2,973,511.90 $ 2,973,511.90 $ $ $ 2,973,511.90 Payroll Payable 20,506,533.00 20,506,533.00 20,506,533.00 Interfund Payable (Note 12) 20,483.00 20,483.00 20,483.00 Employees' Compensable Leave (Note 5) 13,086,361.22 13,086,361.22 Total Current Liabilities 23,500,527.90 23,500,527.90 0.00 13,086,361.22 36,586,889.12

Non-Current Liabilities: Employees' Compensable Leave (Note 5) 7,598,770.23 7,598,770.23 Total Non-Current Liabilities 0.00 0.00 0.00 7,598,770.23 7,598,770.23 Total Liabilities 23,500,527.90 23,500,527.90 0.00 20,685,131.45 44,185,659.35

FUND FINANCIAL STATEMENT Fund Balances (Deficits): Nonspendable – Inventory 460,422.47 460,422.47 460,422.47 Unassigned 90,516,850.52 90,516,850.52 90,516,850.52 Total Fund Balances 90,977,272.99 90,977,272.99 0.00 0.00 90,977,272.99 Total Liabilities and Fund Balances $114,477,800.89 $114,477,800.89

GOVERNMENT-WIDE STATEMENT OF NET POSITION Net Position Invested in Capital Assets, Net of Related Debt 11,568,603.33 11,568,603.33 Restricted for: Employee Benefits (20,685,131.45) (20,685,131.45) Total Net Position $ 11,568,603.33 $ (20,685,131.45) $ 81,860,744.87

The accompanying notes to the financial statements are an integral part of this statement.

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 3 UNAUDITED Comptroller of Public Accounts (304)

EXHIBIT II Combined Statement of Revenues, Expenditures and Changes in Fund Balances/Statement of Activities – Governmental Funds For the Fiscal Year Ended August 31, 2020

Capital Long-Term Statement Governmental Fund Governmental Fund Assets Liabilities of Type General Funds Total Adjustments Adjustments Activities REVENUES Legislative Appropriations: Original Appropriations $ 331,183,502.00 $ 331,183,502.00 $ $ $ 331,183,502.00 Additional Appropriations 53,623,003.97 53,623,003.97 53,623,003.97 Federal Revenue 2,218.12 2,218.12 2,218.12 Licenses, Fees and Permits 1,684,249.34 1,684,249.34 1,684,249.34 Sales of Goods and Services 2,826,054.29 2,826,054.29 2,826,054.29 Other 265,810.01 265,810.01 265,810.01 Total Revenues 389,584,837.73 389,584,837.73 0.00 0.00 389,584,837.73

EXPENDITURES Salaries and Wages 192,391,801.70 192,391,801.70 473,695.82 192,865,497.52 Payroll-Related Costs 56,575,199.30 56,575,199.30 56,575,199.30 Professional Fees and Services 57,817,810.56 57,817,810.56 57,817,810.56 Travel 2,834,493.58 2,834,493.58 2,834,493.58 Materials and Supplies 7,898,228.03 7,898,228.03 7,898,228.03 Communication and Utilities 3,755,083.12 3,755,083.12 3,755,083.12 Repairs and Maintenance 13,316,525.93 13,316,525.93 13,316,525.93 Rentals and Leases 16,250,042.20 16,250,042.20 16,250,042.20 Printing and Reproduction 743,024.81 743,024.81 743,024.81 Claims and Judgements 1,759.88 1,759.88 1,759.88 Other Expenditures 4,412,581.28 4,412,581.28 4,412,581.28 Capital Outlay (Note 2) 5,615,710.06 5,615,710.06 (5,615,710.06) Depreciation and Amortization Expense (Note 2) 4,557,203.09 4,557,203.09 Total Expenditures/Expenses 361,612,260.45 361,612,260.45 (1,058,506.97) 473,695.82 361,027,449.30

Excess (Deficiency) of Revenues over (under) Expenditures 27,972,577.28 27,972,577.28 1,058,506.97 (473,695.82) 28,557,388.43

OTHER FINANCING SOURCES (USES) Transfers Out (227,980.37) (227,980.37) (227,980.37) Sale of Capital Assets 5,009.82 5,009.82 5,009.82 Insurance Recoveries 18,296.81 18,296.81 18,296.81 Gain/(Loss) on Sale of Capital Assets (Note 2) (21,941.74) (21,941.74) Total Other Financing Sources and Uses (204,673.74) (204,673.74) (21,941.74) 0.00 (226,615.48)

Net Change in Fund Balances/Net Position 27,767,903.54 27,767,903.54 1,036,565.23 (473,695.82) 28,330,772.95

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances – Beginning September 1, 2019 63,209,369.45 63,209,369.45 63,209,369.45 Restatements (Note 14) Fund Balances, September 1, 2019, as Restated 63,209,369.45 63,209,369.45 0.00 0.00 63,209,369.45

Fund Balances – August 31, 2020 $ 90,977,272.99 $ 90,977,272.99 $ 1,036,565.23 $ (473,695.82) $ 91,540,142.40

GOVERNMENT-WIDE STATEMENT OF NET POSITION Net Position/Net Change in Net Position $ 90,977,272.99 $ 1,036,565.23 $ (473,695.82) $ 91,540,142.40

Net Position-September 1, 2019 10,532,038.10 (20,211,435.63) (9,679,397.53) Restatements (Note 14) Net Position, September 1, 2019, as Restated 10,532,038.10 (20,211,435.63) (9,679,397.53)

Net Position, August 31, 2020 $ 90,977,272.99 $ 11,568,603.33 $ (20,685,131.45) $ 81,860,744.87

The accompanying notes to the financial statements are an integral part of this statement.

4 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller of Public Accounts (304)

Notes to the Financial Statements

NOTE 1: Summary of Significant Accounting Policies ENTITY

The Comptroller of Public Accounts is an agency of the state of Texas .

The Comptroller’s financial records comply with state statutes and regulations . This includes compliance with the Comptrol- ler of Public Accounts’ Reporting Requirements for Annual Financial Reports of State Agencies .

The Comptroller’s office has three major statutory duties . First, the Comptroller serves as the state’s primary tax collector, responsible for collecting most major state taxes . Second, the Comptroller is the state’s chief accountant, responsible for writing the state’s checks and monitoring all spending by state agencies . Third, the Comptroller is the state’s official revenue estimator, responsible for issuing an estimate of state revenues over the upcoming two-year budget period .

Due to the statewide requirements embedded in Governmental Accounting Standards Board (GASB) Statement 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments, the Comptroller of Public Accounts does not require the accompanying annual financial report to comply with all the requirements in this statement . The financial report will be considered for audit by the State Auditor as part of the audit of the state’s Comprehensive Annual Financial Report; therefore, an opinion has not been expressed on the financial statements and related information contained in this report .

This section of the report includes only those funds and accounts from which the Comptroller’s own departmental activities are financed . The fiscal functions of the Comptroller’s office are reported in separate sections of this report .

There are no component units in which the Comptroller of Public Accounts is financially accountable or any organization in which exclusion would create misleading or incomplete financial statements .

FUND STRUCTURE

The accompanying financial statements are presented on the basis of funds, each of which is considered a separate accounting entity .

GOVERNMENTAL FUND TYPES AND GOVERNMENT-WIDE ADJUSTMENT FUND TYPES

General Revenue Fund The General Revenue Fund (Fund 0001) is the principal operating fund used to account for most of the state’s general activities . It accounts for all financial resources except those required to be accounted for in another fund . Capital Assets Adjustment Fund Type The Capital Assets Adjustment Fund (Fund 9998) is used to convert governmental fund types’ capital assets from modified accrual to full accrual . Long-Term Liabilities Adjustment Fund Type The Long-Term Liabilities Adjustment Fund (Fund 9997) is used to convert governmental fund types’ debt from modified accrual to full accrual .

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 5 UNAUDITED Comptroller of Public Accounts (304)

FIDUCIARY FUND TYPES

Agency Funds Agency funds are used to report resources held by the agency on behalf of others in a purely custodial capacity . Agency funds involve only the receipt, temporary investment and remittance of fiduciary resources to individuals, private organizations or other governments . They are as follows: Unappropriated General Revenue (Fund 1000), Direct Deposit Correction Account (Fund 0980), Departmental Suspense (Fund 0900), Statewide Procurement Division (SPD) Postage (Fund 0999) and Child Support Employee Deductions (Fund 8070) . SPD Postage (Fund 0999) consists of funds held for other state agencies for prepaid postage .

BASIS OF ACCOUNTING

The basis of accounting determines when revenues and expenditures are recognized in the accounts reported in the financial statements . The accounting and financial reporting treatment applied to a fund is determined by its measurement focus .

Governmental fund types that build the fund financial statements are accounted for using the modified accrual basis of accounting . Under the modified accrual basis, revenues are recognized in the period in which they become both measurable and available to finance operations of the fiscal year or liquidate liabilities existing at fiscal year-end .

The state of Texas considers receivables collected within 60 days after fiscal year-end to be available and recognizes them as revenues of the current year for fund financial statements prepared on the modified accrual basis . Expenditures and other uses of financial resources are recognized when the related liability is incurred .

Governmental adjustment fund types that build the government-wide financial statements are accounted for using the full accrual basis of accounting . The activity that is recognized in these fund types is as follows: capital assets, accumulated depreciation/amortization and unpaid employee compensable leave .

BUDGET AND BUDGETARY ACCOUNTING

The budget is prepared biennially and represents appropriations authorized by the Legislature and approved by the Governor (the General Appropriations Act) . Encumbrance accounting is employed for budgetary control purposes .

Unencumbered appropriations are generally subject to lapse 60 days after the end of the fiscal year for which they were appropriated, unless the agency has authority to retain unexpended balances for use in future periods . The Comptroller of Public Accounts has authority to retain unexpended balances for use in future periods .

ASSETS, LIABILITIES AND FUND BALANCES/NET POSITION

ASSETS

Cash and Cash Equivalents Short-term highly liquid investments with an original maturity of three months or less are considered cash equivalents . Current Receivables – Accounts Receivable This account appears in governmental fund types and includes year-end revenue accruals . Inventories Consumable inventories include supplies and postage on hand at year-end . Inventories are valued at cost, generally utilizing the last-in, first-out method . The consumption method of accounting is used to account for inventories and prepaid items that appear in the governmental fund types . The cost of these items is expensed when the items are consumed .

6 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller of Public Accounts (304)

Capital Assets

Tangible Assets Tangible assets include assets such as furniture, fixtures, equipment and vehicles . Tangible assets with an initial individual unit cost of $5,000 or more and an estimated useful life that meets or exceeds one year are capitalized . These assets are capitalized at cost or, if purchased, at appraised fair market value as of the date of acquisition . Purchases of assets by governmental funds are reported as expenditures .

Depreciation is reported on all “exhaustible” assets . Tangible assets are depreciated over the estimated useful life of the asset using the straight line method . Assets such as works of art or historical treasures are considered “inexhaustible” and are not depreciated . Intangible Assets Intangible assets include assets such as purchased or developed software . These are assets that lack physical substance, are nonfinancial in nature and have an estimated useful life of one year or greater .

Internally generated computer software with a total development cost of $1,000,000 or greater is capitalized . Purchased computer software is capitalized, if the aggregate cost of the software purchased meets or exceeds $100,000 .

Intangible software assets are amortized on an annual basis over the estimated useful life of the software using a straight line method .

Intangible software assets are reported in accordance with GASB Statement 51, Accounting and Financial Reporting for Intangible Assets .

LIABILITIES

Accounts Payable Accounts payable represents the liability for the value of assets or services received at the balance sheet date for which payment is pending . Employees’ Compensable Leave Balances Employees’ compensable leave balances represent the liability that becomes due upon the occurrence of relevant events such as resignations, retirements and uses of leave balances by covered employees . Liabilities are reported separately as either current or noncurrent in the statement of net position . These obligations are normally paid from the same funding source from which each employee’s salary or wage compensation was paid .

FUND BALANCE/NET POSITION

Fund balance is the difference between fund assets and liabilities on the governmental fund statements . Net position is the difference between fund assets and liabilities on the government-wide fund statements .

Fund Balance Components

The fund balance amounts for governmental funds are classified as non-spendable, and unassigned in the fund financial statements .

• Non-spendable fund balance includes amounts not available to be spent because they are either (1) not in spendable form or (2) legally or contractually required to be maintained intact . The nonspendable fund balance for this purpose represents the amount of supplies, postage and prepaid assets held to be used in the next fiscal year .

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Net Investment in Capital Assets

Net Investment in Capital Assets consists of capital assets, net of accumulated depreciation/amortization and reduced by outstanding balances for bond, notes and other debt, that are attributed to the acquisition, construction or improvement of those assets .

INTERFUND ACTIVITIES AND TRANSACTIONS

The agency experienced routine transfers with other state agencies, which were consistent with the activities of the fund making the transfer . Repayment of interfund balances will occur within one year from the date of the financial statement .

The Comptroller’s office has the following types of transactions between funds/agencies:

• Due From Other Agencies • Transfers In • Transfers Out • Interfund Receivables and Interfund Payables

The composition of the agency’s interfund receivable and payable activities and balances is presented in Note 12 . NOTE 2: Capital Assets Revenue received from the sale of surplus property has been transferred to unappropriated general revenue in accordance with HB 7, Section 20 .

A summary of changes in capital assets for the year ended Aug . 31, 2020, is presented below:

GOVERNMENTAL ACTIVITIES Increase Decrease Balance Adjust Completed Interagency Interagency Balance Sept. 1, 2019 ments CIP Transfers Transfers Additions Deletions Aug. 31, 2020 GOVERNMENTAL ACTIVITIES Non-depreciable or Non-amortizable Assets Other Tangible Capital Assets $ 3,250.00 $ $ $ $ $ $ $ 3,250.00 Construction in Progress 1,345,806.63 4,003,918.74 5,349,725.37 Total Non-depreciable or Non-amortizable Assets 1,349,056.63 0.00 0.00 0.00 0.00 4,003,918.74 0.00 5,352,975.37 Depreciable Assets Furniture and Equipment 6,765,562.02 435,454.54 (58,313.15) 7,142,703.41 Vehicles, Boats and Aircraft 428,416.45 25,768.00 (63,652.00) 390,532.45 Total Depreciable Assets at Historical Cost 7,193,978.47 0.00 0.00 0.00 0.00 461,222.54 (121,965.15) 7,533,235.86 Less Accumulated Depreciation for: Furniture and Equipment (5,796,400.52) (362,905.82) 49,537.39 (6,109,768.95) Vehicles, Boats and Aircraft (185,680.34) (45,646.68) 50,486.02 (180,841.00) Total Accumulated Depreciation (5,982,080.86) (408,552.50) 100,023.41 (6,290,609.95) Depreciable Assets, Net 1,211,897.61 0.00 0.00 0.00 0.00 52,670.04 (21,941.74) 1,242,625.91 Intangible Capital Assets - Amortizable Computer Software 58,470,099.46 1,150,568.78 59,620,668.24 Total Intangible Assets at Historical Cost 58,470,099.46 0.00 0.00 0.00 0.00 1,150,568.78 0.00 59,620,668.24 Less Accumulated Amortization for: Computer Software (50,499,015.60) (4,148,650.59) (54,647,666.19) Total Accumulated Amortization (50,499,015.60) (4,148,650.59) (54,647,666.19) Amortizable Assets, Net 7,971,083.86 0.00 0.00 0.00 0.00 (2,998,081.81) 0.00 4,973,002.05 Total Governmental Activities Capital Assets, Net $ 10,532,038.10 0.00$ 0.00$ 0.00$ 0.00$ $ 1,058,506.97 $ (21,941.74) $ 11,568,603.33

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NOTE 3: Deposits, Investments and Repurchase Agreements The Comptroller of Public Accounts is authorized by statute to make investments following the “prudent person rule ”. There were no significant violations of legal provisions during the period .

Deposits of Cash in Bank

As of Aug . 31, 2020, the carrying amount of deposits was $35,000, as presented below:

GOVERNMENTAL AND BUSINESS TYPE ACTIVITIES

Cash In Bank – Carrying Amount 35,000.00$ Total Cash in Bank, per AFR, (Exhibit I) 35,000.00$

The carrying amount of $35,000 for Cash in Bank represents the Comptroller’s travel advance fund . This amount consists of all cash in local banks . This amount is included on the combined balance sheet/statement of net position as part of the “cash and cash equivalents ”. NOTE 4: Short-Term Debt (Not Applicable) NOTE 5: Long-Term Liabilities Changes in Long-Term Liabilities

During the year ended Aug . 31, 2020, the following changes occurred in liabilities reported in the general long-term liability account group:

Balance Balance Amounts Due Governmental Activities Sept. 1, 2019 Additions Reductions Aug. 31, 2020 Within One Year Thereafter

Employees' Compensable Leave$ 20,211,435.63 $ 18,921,884.34 $ (18,448,188.52) $ 20,685,131.45 $ 13,086,361.22 $ 7,598,770.23 Total Governmental Activities $ 20,211,435.63 $ 18,921,884.34 $ (18,448,188.52) $ 20,685,131.45 $ 13,086,361.22 $ 7,598,770.23

Employees’ Compensable Leave

A state employee is entitled to be paid for all unused vacation time accrued, in the event of the employee’s resignation, dismissal or separation from state employment, provided the employee has had continuous employment with the state for at least six months . Expenditures for accumulated annual leave balances are recognized in the period paid or taken in governmental fund types . For these fund types, the liability for unpaid benefits is recorded in the statement of net position . No liability is recorded for non-vesting employees accumulating rights to receive sick pay benefits . This obligation is paid from the same funding source from which the employee’s salary or wage compensation was paid . NOTE 6: Bonded Indebtedness (Not Applicable) NOTE 7: Derivatives (Not Applicable)

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 9 UNAUDITED Comptroller of Public Accounts (304)

NOTE 8: Leases Operating Leases

Included in the expenditures reported in the financial statements are the following amounts of rent paid or due under operating lease obligations:

Operating Leases

Fund Type 01 Amount

General – Rent Paid $ 5,020,745.99 General – Operating Leases 7,692,435.55 Total $ 12,713,181.54

Future minimum rental payments under operating leases having an initial term in excess of one year are as follows:

Year Ended Aug. 31, 2020

2021 $ 12,514,771.54 2022 8,930,008.55 2023 6,157,846.55 2024 4,299,923.93 2025 2,702,021.59 2026 thru 2030 7,703,282.12 Total Minimum Future Lease Rental Payments $ 42,307,854.28

NOTE 9: Defined Benefit Pension Plans and Defined Contribution Plan (Not Applicable) NOTE 10: Deferred Compensation (Not Applicable) NOTE 11: Postemployment Benefits Other Than Pensions (Not Applicable) NOTE 12: Interfund Activity and Transactions As detailed in Note 1, Interfund Activities and Transactions, the agency had numerous transactions between funds and agencies . The reporting on the interfund receivable and interfund payable balances and activity at Aug . 31, 2020, is as follows:

Interfund Interfund Receivable Payable Source GENERAL REVENUE (01) Agency 304, GR D23 Fund 0001 20,483.00$ $ Consumable Supplies Agency 304, GR D23 Fund 3027 20,483.00 Consumable Supplies Total Interfund Payable/Receivable (Exh I) 20,483.00$ 20,483.00$

NOTE 13: Continuance Subject to Review (Not Applicable) NOTE 14: Adjustments to Fund Balances and Net Position (Not Applicable)

10 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller of Public Accounts (304)

NOTE 15: Contingencies and Commitments (Not Applicable) NOTE 16: Subsequent Events (Not Applicable) NOTE 17: Risk Management The Comptroller of Public Accounts is exposed to civil claims resulting from the performance of its duties . It is agency policy to periodically assess potential risks to which it may be exposed .

The agency assumes substantially all risks associated with tort and liability claims due to the performance of its duties .

Liabilities are reported when it is both probable that a loss has occurred, and the amount of that loss can be reasonably estimated .

The agency’s claim and judgement liability activity at Aug . 31, 2020, is as follows:

Fiscal Beginning Ending Year Balance Increases Decreases Balance

2020 $ 0.00 $ 1,759.88 $ (1,759.88) $ 0.00 2019 $ 0.00 $ 4,748.30 $ (4,748.30) $ 0.00

NOTE 18: Management’s Discussion and Analysis No material accounting events occurred at the Comptroller of Public Accounts for fiscal year 2020 . NOTE 19: The Financial Reporting Entity (Not Applicable) NOTE 20: Stewardship, Compliance and Accountability This report reflects the Comptroller’s operating transactions in the state’s General Revenue Fund .

The activities of the Comptroller’s Judiciary Section (241), the Comptroller’s Treasury – Fiscal (311), the Comptroller’s State Energy Conservation Office (SECO) (907), the Comptroller – State Fiscal (902), the Texas Treasury Safekeeping Trust Company (930), the Comptroller - Texas Bullion Depository (908) and the Comptroller - Funds Management (903) are reported in separate sections of this report .

The activities of the Texas Prepaid Higher Education Tuition Board (315) are presented in a separate report . NOTE 21: Not Applicable to the AFR (Not Applicable) NOTE 22: Donor-Restricted Endowments (Not Applicable) NOTE 23: Extraordinary and Special Items (Not Applicable) NOTE 24: Disaggregation of Receivable and Payable Balances (Not Applicable) NOTE 25: Termination Benefits (Not Applicable)

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 11 UNAUDITED Comptroller of Public Accounts (304)

NOTE 26: Segment Information (Not Applicable) NOTE 27: Service Concession Arrangements (Not Applicable) NOTE 28: Deferred Outflows of Resources and Deferred Inflows of Resources (Not Applicable) NOTE 29: Troubled Debt Restructuring (Not Applicable) NOTE 30: Non-Exchange Financial Guarantees (Not Applicable) NOTE 31: Tax Abatements (Not Applicable) NOTE 32: Governmental Fund Balances GASB 54 established financial reporting standards for fund balances . For governmental funds, if an agency uses a classification other than the default or assigned, the agency needs to cite the specific provision, federal requirement or court order causing the restriction or commitment .

The Comptroller of Public Accounts is not reporting a classification other than default or assigned as of Aug . 31, 2020 .

12 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller of Public Accounts (304)

COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS

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14 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller of Public Accounts (304)

EXHIBIT J-1 Combining Statement of Changes in Assets and Liabilities – Agency Funds August 31, 2020

Beginning Ending Balance Balance Sept. 1, 2019 Additions Deductions Aug. 31, 2020 UNAPPROPRIATED RECEIPTS General Revenue Fund (0001) U/F (1000) ASSETS Current Cash in State Treasury $ 0.00 $ 14,581,147.74 $ 14,581,147.74 $ 0.00 Total Assets $ 0.00 $ 14,581,147.74 $ 14,581,147.74 $ 0.00

LIABILITIES Current Accounts Payable $ 0.00 $ 5,454.81 $ 5,454.81 $ 0.00 Funds Held for Others 0.00 14,581,147.74 14,581,147.74 0.00 Total Liabilities $ 0.00 $ 14,586,602.55 $ 14,586,602.55 $ 0.00

Suspense Fund (0900) U/F (9015) (9016) ASSETS Current Cash in State Treasury $ 1,906.42 $ 17,839.59 $ 19,746.01 $ 0.00 Total Assets $ 1,906.42 $ 17,839.59 $ 19,746.01 $ 0.00

LIABILITIES Current Funds Held for Others $ 1,906.42 $ 17,839.59 $ 19,746.01 $ 0.00 Total Liabilities $ 1,906.42 $ 17,839.59 $ 19,746.01 $ 0.00

Direct Deposit Correction (0980) U/F (0980) (9014) ASSETS Current Cash in State Treasury $ 0.00 $ 61,337.88 $ 61,337.88 $ 0.00 Total Assets $ 0.00 $ 61,337.88 $ 61,337.88 $ 0.00

LIABILITIES Current Funds Held for Others $ 0.00 $ 61,337.88 $ 61,337.88 $ 0.00 Total Liabilities $ 0.00 $ 61,337.88 $ 61,337.88 $ 0.00

SPD Postage Fund (9999) U/F (0999) ASSETS Current Other Current Assets $ 434,753.37 $ 13,480.58 $ 6,740.29 $ 441,493.66 Total Assets $ 434,753.37 $ 13,480.58 $ 6,740.29 $ 441,493.66

LIABILITIES Current Funds Held for Others $ 434,753.37 $ 6,740.29 $ 0.00 $ 441,493.66 Total Liabilities $ 434,753.37 $ 6,740.29 $ 0.00 $ 441,493.66

Concluded on the following page

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 15 UNAUDITED Comptroller of Public Accounts (304)

EXHIBIT J-1 (concluded) Combining Statement of Changes in Assets and Liabilities – Agency Funds August 31, 2020

Beginning Ending Balance Balance Sept. 1, 2019 Additions Deductions Aug. 31, 2020 Child Support Employ Deduct – Offset Acct Fund (0807) U/F (8070) ASSETS Current Cash in State Treasury $ 40,496.30 $ 503,749.87 $ 509,546.18 $ 34,699.99 Total Assets $ 40,496.30 $ 503,749.87 $ 509,546.18 $ 34,699.99

LIABILITIES Current Accounts Payable $ 0.00 $ 468,563.33 $ 468,563.33 $ 0.00 Funds Held for Others 40,496.30 503,749.87 509,546.18 34,699.99 Total Liabilities $ 40,496.30 $ 972,313.20 $ 978,109.51 $ 34,699.99

Totals – All Agency Funds ASSETS Current Cash in State Treasury $ 42,402.72 $ 15,164,075.08 $ 15,171,777.81 $ 34,699.99 Other Current Assets 434,753.37 13,480.58 6,740.29 441,493.66 Total Assets $ 477,156.09 $ 15,177,555.66 $ 15,178,518.10 $ 476,193.65

LIABILITIES Current Accounts Payable $ 0.00 $ 474,018.14 $ 474,018.14 $ 0.00 Funds Held for Others 475,249.67 15,170,815.37 15,171,777.81 476,193.65 Total Liabilities $ 475,249.67 $ 15,644,833.51 $ 15,645,795.95 $ 476,193.65

The accompanying notes to the financial statements are an integral part of this statement.

16 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller of Public Accounts (304)

SUPPLEMENTARY SCHEDULES

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 17 UNAUDITED Comptroller of Public Accounts (304)

SCHEDULE 1A Schedule of Expenditures of Federal Awards For the Fiscal Year Ended August 31, 2020

Pass-through From Total Federal Grantor/ NSE Name Agy Agencies or Non-State Direct Pass-Through Pass-through Grantor/ CFDA Identifying Univ Universities Entities Program From and Direct Program Title Number Number No. Amount Amount Amount Program Amount

U.S. DEPARTMENT OF JUSTICE Direct Programs: Equitable Sharing Program 16.922 $ $ $ 2,218.12 $ 2,218.12

Totals – U.S. Department of Justice (Exhibit II) $ 0.00 $ 0.00 $ 2,218.12 $ 2,218.12

The accompany notes to the financial statements are an integral part of this statement.

Concluded on the following page

18 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller of Public Accounts (304)

SCHEDULE 1A (concluded) Schedule of Expenditures of Federal Awards For the Fiscal Year Ended August 31, 2020 Total Pass-through To Pass-Through Federal Grantor/ Agy Agencies or Non-State To and Pass-through Grantor/ Univ Universities Entities Expenditures Expenditures Program Title No. Amount Amount Amount Amount

U.S. DEPARTMENT OF JUSTICE Direct Programs: Equitable Sharing Program $ $ $ 2,218.12 $ 2,218.12

Totals – U.S. Department of Justice (Exhibit II) $ 0.00 $ 0.00 $ 2,218.12 $ 2,218.12

The accompany notes to the financial statements are an integral part of this statement.

Concluded on the following page

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 19 UNAUDITED Comptroller of Public Accounts (304)

20 Texas Comptroller of Public Accounts • 2020 Annual Financial Report Comptroller’s Judiciary Section (241) BASIC FINANCIAL STATEMENTS

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 21 UNAUDITED Comptroller’s Judiciary Section (241)

22 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller’s Judiciary Section (241)

EXHIBIT I Combined Balance Sheet/Statement of Net Position – Governmental Funds August 31, 2020 Special General Revenue Governmental Funds Funds Funds (Exh A-1) Total ASSETS Current Assets: Cash Cash In State Treasury $ $ 9,863,032.00 $ 9,863,032.00 Legislative Appropriations 31,694,663.92 31,694,663.92 Due From Other Agencies 209,554.89 209,554.89 Total Current Assets 31,904,218.81 9,863,032.00 41,767,250.81 Total Assets $ 31,904,218.81 $ 9,863,032.00 $ 41,767,250.81

LIABILITIES AND FUND BALANCES Liabilities: Current Liabilities: Payables From: Accounts Payable $ 946,298.30 $ 21,000.00 $ 967,298.30 Payroll 10,622,198.43 10,622,198.43 Total Current Liabilities 11,568,496.73 21,000.00 11,589,496.73 Total Liabilities 11,568,496.73 21,000.00 11,589,496.73

FUND FINANCIAL STATEMENT Fund Balances (Deficits): Committed 9,842,032.00 9,842,032.00 Unassigned 20,335,722.08 20,335,722.08 Total Fund Balances 20,335,722.08 9,842,032.00 30,177,754.08 Total Liabilities and Fund Balances $ 31,904,218.81 $ 9,863,032.00 $ 41,767,250.81

The accompanying notes to the financial statements are an integral part of this statement.

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 23 UNAUDITED Comptroller’s Judiciary Section (241)

EXHIBIT II Combined Statement of Revenues, Expenditures, and Changes in Fund Balances/Statement of Activities – Governmental Funds For the Fiscal Year Ended August 31, 2020 Special Revenue Governmental General Funds Funds Funds (Exh A-2) Total REVENUES Legislative Appropriations: Original Appropriations $103,124,655.00 $ $103,124,655.00 Additional Appropriations 21,024,365.38 21,024,365.38 State Grant Pass-Through Revenue (Schedule 1B) 1,415,826.90 1,415,826.90 Licenses, Fees & Permits 9,427,619.13 66,839,817.64 76,267,436.77 Other 281,814.74 281,814.74 Total Revenues 135,274,281.15 66,839,817.64 202,114,098.79

EXPENDITURES Salaries and Wages 77,218,523.03 27,214,926.15 104,433,449.18 Payroll Related Costs 20,819,326.99 7,153,865.06 27,973,192.05 Travel 364,001.86 364,001.86 Claims and Judgements Intergovernmental Payments 25,289,981.92 30,464,595.45 55,754,577.37 Other Expenditures 2,916,645.60 367,886.30 3,284,531.90 Total Expenditures/Expenses 126,608,479.40 65,201,272.96 191,809,752.36 Excess (Deficiency) of Revenues Over Expenditures 8,665,801.75 1,638,544.68 10,304,346.43

OTHER FINANCING SOURCES (USES) Transfers In 28,170,134.74 28,170,134.74 Transfers Out (5,947,690.12) (75,671,571.06) (81,619,261.18) Total Other Financing Sources (Uses) (5,947,690.12) (47,501,436.32) (53,449,126.44) Net Change in Fund Balances/Net Position 2,718,111.63 (45,862,891.64) (43,144,780.01)

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances – Beginning Restatements Fund Balances, September 1, 2019, as Restated 19,557,982.30 55,704,923.64 75,262,905.94 Appropriations Lapsed (1,940,371.85) (1,940,371.85) Fund Balances – August 31, 2020 $ 20,335,722.08 $ 9,842,032.00 $ 30,177,754.08

The accompanying notes to the financial statements are an integral part of this statement.

24 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller’s Judiciary Section (241)

Notes to the Financial Statements

NOTE 1: Summary of Significant Accounting Policies ENTITY

The Comptroller’s Judiciary Section is an agency of the state of Texas, and its financial records comply with state statutes and regulations . This includes compliance with the Comptroller of Public Accounts Reporting Requirements for Annual Financial Reports of State Agencies .

The Comptroller’s Judiciary Section is responsible for paying the salaries of the district judges and district attorneys of Texas . The agency also pays miscellaneous expenses incurred by the judges and district attorneys as provided by the Gener- al Appropriations Act .

Due to the statewide requirements embedded in Governmental Accounting Standards Board (GASB) Statement 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments, the Comptroller of Public Accounts does not require the accompanying annual financial report to be in compliance with generally accepted accounting principles (GAAP) . The financial report will be considered for audit by the State Auditor as part of the audit of the state’s Comprehensive Annual Financial Report; therefore, an opinion has not been expressed on the financial statements and related information contained in this report .

There are no component units in which the Comptroller’s Judiciary Section is financially accountable or any organization whose exclusion would create misleading or incomplete financial statements .

FUND STRUCTURE

The accompanying financial statements are presented on the basis of funds, each of which is considered a separate accounting entity .

GOVERNMENTAL FUND TYPES

General Fund The General Revenue Fund (Fund 0001) is the principal operating fund used to account for most of the state’s general activities . It accounts for all financial resources except those accounted for in other funds . Special Revenue Funds Special revenue funds are used to account for the proceeds of specific revenue sources (other than for private-purpose trusts or for major capital projects) that are legally restricted to use for specified purposes . The Felony Prosecutor Supplement (Fund 0303) The fund receives two-thirds of a $15 fee paid by each surety posting a bail bond to fund longevity supplements for eligible assistant prosecutors . The remaining one-third is deposited to the GR Account — Fair Defense Fund . The Jury Service Fund (Fund 0328) Used to reimburse a county $34 a day for the reimbursement paid under government code, section 61 .001 to a person who reports for jury service in response to the process of a court for each day or fraction of each day after the first day in atten- dance in court in response to the process .

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 25 UNAUDITED Comptroller’s Judiciary Section (241)

The Judicial Fund (Fund 0573) Used only for court-related purposes in support of the judicial branch of the state, including child support, court management and basic legal services for the indigent .

FIDUCIARY FUND TYPES

Agency Funds Agency funds are used to report resources held by the agency on behalf of others in a purely custodial capacity . Agency funds involve only the receipt, temporary investment, and remittance of fiduciary resources to individuals, private organizations or other governments . They are as follows: Unappropriated General Revenue (Fund 0001), Departmental Suspense (Fund 0900), Direct Deposit Correction Fund (Fund 0980) and Child Support Employee Deductions (Fund 8070) .

BASIS OF ACCOUNTING

The basis of accounting determines when revenues and expenditures or expenses are recognized in the accounts reported in the financial statements . The accounting and financial reporting treatment applied to a fund is determined by its measurement focus .

Governmental fund types that will build the fund financial statements are accounted for using the modified accrual basis of accounting . Under the modified accrual basis, revenues are recognized in the period in which they become both measurable and available to finance operations of the fiscal year or liquidate liabilities existing at fiscal year-end .

The state of Texas considers receivables collected within sixty days after year–end to be available and recognizes them as revenues of the current year for fund financial statements prepared on the modified accrual basis . Expenditures and other uses of financial resources are recognized when the related liability is incurred .

BUDGETS AND BUDGETARY ACCOUNTING

ASSETS, LIABILITIES, AND FUND BALANCES/NET POSITION

ASSETS

Cash and Cash Equivalents Short-term highly liquid investments with an original maturity of three months or less are considered cash equivalents .

LIABILITIES

Accounts Payable Accounts Payable represents the liability for the value of assets or services received at the balance sheet date for which payment is pending .

26 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller’s Judiciary Section (241)

FUND BALANCE/NET POSITION

Fund balance is the difference between fund assets plus deferred outflows of resources and liabilities plus deferred inflows of resources on the governmental fund statements .

Fund Balance Components

The fund balance amounts for governmental funds are classified as committed and unassigned in the fund financial statements .

• Committed fund balance can be used only for specific purposes pursuant to constraints imposed through legislation passed into law by a formal action of the Texas Legislature, the state’s highest level of decision making authority . • Unassigned fund balance is the residual classification for the general fund . This classification represents fund balance that was not assigned to other funds and was not restricted, committed or assigned to specific purposes within the general fund .

INTERFUND ACTIVITIES AND TRANSACTIONS

Interfund transaction refers to interactions with legally separate entities such as other state agencies and is restricted to external events . The agency experienced routine transfers with other state agencies, which were consistent with the activities of the fund making the transfer .

The Comptroller’s Judiciary Section has the following types of transactions between funds/agencies:

• Due From Other Agencies • Transfers In • Transfers Out NOTE 2: Capital Assets (Not Applicable) NOTE 3: Deposits, Investments & Repurchase Agreements (Not Applicable) NOTE 4: Short-Term Debt (Not Applicable) NOTE 5: Long-Term Liabilities Employees’ Compensable Leave

The employees paid through the Comptroller’s Judiciary Section, Agency 241, are not eligible for state compensable leave . The Comptroller’s Judiciary Section does not have any compensable leave liability for these employees . NOTE 6: Bonded Indebtedness (Not Applicable) NOTE 7: Derivatives (Not Applicable) NOTE 8: Leases (Not Applicable)

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 27 UNAUDITED Comptroller’s Judiciary Section (241)

NOTE 9: Defined Benefit Pension Plans and Defined Contribution Plan (Not Applicable) NOTE 10: Deferred Compensation (Not Applicable) NOTE 11: Postemployment Health Care and Life Insurance Benefits (Not Applicable) NOTE 12: Interfund Activity and Transactions (Not Applicable) NOTE 13: Continuance Subject to Review (Not Applicable) NOTE 14: Adjustment to Fund Balances/Net Position (Not Applicable) NOTE 15: Contingencies and Commitments (Not Applicable) NOTE 16: Subsequent Events (Not Applicable) NOTE 17: Risk Management The Comptroller Judiciary Section may be exposed to civil claims .

Liabilities are reported when it is both probable that a loss has occurred and the amount of that loss can be reasonably estimated .

The agency’s claim and judgement liability activity for fiscal 2017, 2018, 2019 and 2020 are reported below:

Beginning Ending Balance Increases Decreases Balance 2020 $ 0.00 $ 0.00 $ 0.00 $ 0.00 2019 $ 180.25 $ 0.00 $ (180.25) $ 0.00 2018 $ 180.25 $ 0.00 $ 0.00 $ 180.25 2017 $ 0.00 $ 180.25 $ 0.00 $ 180.25

NOTE 18: Management’s Discussion and Analysis (MD&A) No material accounting events occurred at the Comptroller’s Judiciary Section for fiscal year 2020 . NOTE 19: The Financial Reporting Entity (Not Applicable) NOTE 20: Stewardship, Compliance and Accountability (Not Applicable) NOTE 21: Not Applicable to the AFR (Not Applicable)

28 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller’s Judiciary Section (241)

NOTE 22: Donor Restricted Endowments (Not Applicable) NOTE 23: Extraordinary and Special Items (Not Applicable) NOTE 24: Disaggregation of Receivable and Payable Balances (Not Applicable) NOTE 25: Termination Benefits (Not Applicable) NOTE 26: Segment Information (Not Applicable) NOTE 27: Service Concession Arrangements (Not Applicable) NOTE 28: Deferred Outflows of Resources and Deferred Inflows of Resources (Not Applicable) NOTE 29: Troubled Debt Restructuring (Not Applicable) NOTE 30: Non-Exchange Financial Guarantees (Not Applicable) NOTE 31: Tax Abatements (Not Applicable) NOTE 32: Fund Balances The Comptroller’s Judiciary Section has the following restrictions/covenants causing fund balances to be committed as of Aug . 31, 2020:

GAAP Fund Fund AFR 54 Class Amount Citation Comments 0573 0573 Committed $ 9,842,032.00 TX Govt Code §21.006, To receive one-half of judicial fees collected by 14 Courts of §51.0051, §51.208, Appeals (Revenue Code 3711) and filing fee collected by District §402.007 Courts (Revenue Code 3709). Money in the fund to be used only for court-related purposes for support of judicial branch of the state, for child support and court management as provided by §21.007, Government Code and for basic legal services to the indigent as provided by §51.943, Government Code.

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 29 UNAUDITED Comptroller’s Judiciary Section (241)

30 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller’s Judiciary Section (241)

COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 31 UNAUDITED Comptroller’s Judiciary Section (241)

32 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller’s Judiciary Section (241)

EXHIBIT A-1 Combining Balance Sheet – Special Revenue Funds August 31, 2020 Special Revenue Special Revenue Special Revenue Felony Prosecutor Jury Service Fund Judicial (0303) (0328) (0573) Totals U/F (0303) U/F (0328) U/F (0573, 1573) (Exh I) ASSETS Current Assets: Cash Cash In State Treasury $ $ $ 9,863,032.00 $ 9,863,032.00 Total Current Assets 0.00 0.00 9,863,032.00 9,863,032.00 Total Assets $ 0.00 $ 0.00 $ 9,863,032.00 $ 9,863,032.00

LIABILITIES AND FUND BALANCES Liabilities: Current Liabilities: Payables From: Accounts Payable $ $ $ 21,000.00 $ 21,000.00 Total Current Liabilities 0.00 0.00 21,000.00 21,000.00 Total Liabilities 0.00 0.00 21,000.00 21,000.00

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances (Deficits): Committed 9,842,032.00 9,842,032.00 Total Fund Balances 0.00 0.00 9,842,032.00 9,842,032.00 Total Liabilities and Fund Balances $ 0.00 $ 0.00 $ 9,863,032.00 $ 9,863,032.00

The accompanying notes to the financial statements are an integral part of this statement.

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 33 UNAUDITED Comptroller’s Judiciary Section (241)

EXHIBIT A-2 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Special Revenue Funds For the Fiscal Year Ended August 31, 2020 Special Revenue Special Revenue Special Revenue Felony Prosecutor Jury Service Fund Judicial (0303) (0328) (0573) Totals U/F (0303) U/F (0328) U/F (0573, 1573) (Exh II) REVENUES Licenses, Fees & Permits $ 3,270,210.44 $ 2,768,419.45 $ 60,801,187.75 $ 66,839,817.64 Total Revenues 3,270,210.44 2,768,419.45 60,801,187.75 66,839,817.64

EXPENDITURES Salaries and Wages 27,214,926.15 27,214,926.15 Payroll Related Costs 7,153,865.06 7,153,865.06 Intergovernmental Payments 3,270,210.44 2,768,419.45 24,425,965.56 30,464,595.45 Other Expenditures 367,886.30 367,886.30 Total Expenditures/Expenses 3,270,210.44 2,768,419.45 59,162,643.07 65,201,272.96

Excess (Deficiency) of Revenues Over Expenditures 0.00 0.00 1,638,544.68 1,638,544.68

OTHER FINANCING SOURCES (USES) Transfers In 28,170,134.74 28,170,134.74 Transfers Out (75,671,571.06) (75,671,571.06) Total Other Financing Sources (Uses) 0.00 0.00 (47,501,436.32) (47,501,436.32)

Net Change in Fund Balances/Net Position 0.00 (45,862,891.64) (45,862,891.64)

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances – September 1, 2019 55,704,923.64 55,704,923.64 Restatements Fund Balances, September 1, 2019, as Restated 0.00 0.00 55,704,923.64 55,704,923.64

Appropriations Lapsed Fund Balances – August 31, 2020 $ 0.00 $ 0.00 $ 9,842,032.00 $ 9,842,032.00

The accompanying notes to the financial statements are an integral part of this statement.

34 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller’s Judiciary Section (241)

EXHIBIT J-1 Combining Statement of Changes in Assets and Liabilities – Agency Funds August 31, 2020

Beginning Ending Balance Balance September 1, 2019 Additions Deductions August 31, 2020 UNAPPROPRIATED RECEIPTS General Revenue Fund (0001) U/F (1000) ASSETS Cash in State Treasury $ 0.00 $ 636.60 $ 636.60 $ 0.00 Total Assets $ 0.00 $ 636.60 $ 636.60 $ 0.00

LIABILITIES Funds Held for Others $ 0.00 $ 636.60 $ 636.60 $ 0.00 Total Liabilities $ 0.00 $ 636.60 $ 636.60 $ 0.00

Suspense Fund (0900) U/F (9015) ASSETS Cash in State Treasury $ 0.00 $ 6,936.93 $ 6,936.93 $ 0.00 Total Assets $ 0.00 $ 6,936.93 $ 6,936.93 $ 0.00

LIABILITIES Funds Held for Others $ 0.00 $ 6,936.93 $ 6,936.93 $ 0.00 Total Liabilities $ 0.00 $ 6,936.93 $ 6,936.93 $ 0.00

Direct Deposit Correction Fund (0980) U/F (0980) ASSETS Cash in State Treasury $ 0.00 $ 27,617.83 $ 27,617.83 $ 0.00 Total Assets $ 0.00 $ 27,617.83 $ 27,617.83 $ 0.00

LIABILITIES Funds Held for Others $ 0.00 $ 27,617.83 $ 27,617.83 $ 0.00 Total Liabilities $ 0.00 $ 27,617.83 $ 27,617.83 $ 0.00

CHILD SUPPORT EMPLOYEE DEDUCT - Offset Account Fund (0807) U/F (8070) ASSETS Cash in State Treasury $ 9,368.00 $ 123,678.79 $ 124,199.25 $ 8,847.54 Total Assets $ 9,368.00 $ 123,678.79 $ 124,199.25 $ 8,847.54

LIABILITIES Funds Held for Others $ 9,368.00 $ 123,678.79 $ 124,199.25 $ 8,847.54 Total Liabilities $ 9,368.00 $ 123,678.79 $ 124,199.25 $ 8,847.54

TOTALS – ALL AGENCY FUNDS ASSETS Cash in State Treasury $ 9,368.00 $ 158,870.15 $ 159,390.61 $ 8,847.54 Total Assets $ 9,368.00 $ 158,870.15 $ 159,390.61 $ 8,847.54

LIABILITIES Funds Held for Others $ 9,368.00 $ 158,870.15 $ 159,390.61 $ 8,847.54 Total Liabilities $ 9,368.00 $ 158,870.15 $ 159,390.61 $ 8,847.54

The accompanying notes to the financial statements are an integral part of this statement.

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 35 UNAUDITED Comptroller’s Judiciary Section (241)

36 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller’s Judiciary Section (241)

SUPPLEMENTARY SCHEDULES

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 37 UNAUDITED Comptroller’s Judiciary Section (241)

38 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller’s Judiciary Section (241)

SCHEDULE 1B Schedule of State Grant Pass-Throughs From/To State Agencies For the Fiscal Year Ended August 31, 2020

Agency Pass-through From Grant ID Number Amount

Criminal Justice Planning Grants 300.0004 300 $ 1,415,826.90 Governor – Fiscal Total Pass-Through from Other Agencies (Exh. II): $ 1,415,826.90

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 39 UNAUDITED Comptroller’s Judiciary Section (241)

40 Texas Comptroller of Public Accounts • 2020 Annual Financial Report Comptroller – Fiscal (902) BASIC FINANCIAL STATEMENTS

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 41 UNAUDITED Comptroller – Fiscal (902)

42 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902)

EXHIBIT I Combined Balance Sheet – Governmental Funds August 31, 2020 Governmental Fund Types Special Permanent Governmental General Funds Revenue Funds Funds Funds (Exhibit A-1) (Exhibit B-1) (Exhibit C-1) Total ASSETS Current Assets: Cash and Cash Equivalents: Cash in State Treasury $ 5,814,540,338.12 $ 9,596,447.05 $ 51,793,964.39 $ 5,875,930,749.56 Cash in Bank (Note 3) 9,982,579.39 9,982,579.39 Legislative Appropriations (27,633,116.00) (27,633,116.00) Short Term Investments (Note 3) 254,962,629.30 69,786,048.38 324,748,677.68 Receivables: Accounts 291,866,666.67 291,866,666.67 Interest and Dividends 3,519,350.00 642,449.88 5,045.15 4,166,845.03 Taxes (Note 27) 732,658,348.09 732,658,348.09 Due From Other Agencies 1,383,536,583.62 1,461,366.56 1,384,997,950.18 Total Current Assets 8,453,450,799.80 21,682,842.88 121,585,057.92 8,596,718,700.60 Non-Current Assets: Taxes Receivable (Note 27) 485,751,207.74 485,751,207.74 Investments (Note 3) 3,845,598,401.63 558,975,236.27 4,404,573,637.90 Total Non-Current Assets 4,331,349,609.37 0.00 558,975,236.27 4,890,324,845.64 Total Assets $ 12,784,800,409.17 $ 21,682,842.88 $ 680,560,294.19 $ 13,487,043,546.24

LIABILITIES AND FUND BALANCES Liabilities: Current Liabilities: Payables From: Accounts $ 1,099,011.85 $ 7,194,409.22 $ 4,099,930.03 $ 12,393,351.10 Interest 13,782.17 13,782.17 Federal 7,631,073.00 7,631,073.00 Investment Trade Payable 23,942.68 23,942.68 Hedging Derivative Investment Liability Other Intergovernmental 23,761,173.12 23,761,173.12 Unclaimed Property Claimant Liabilities Taxes Refund Payable 163,032,767.51 163,032,767.51 Due To Other Agencies 2,692,899,102.99 50,258,296.02 2,743,157,399.01 Unearned Revenues 365,320,941.90 365,320,941.90 Other Current Liabilities 303,997,441.06 303,997,441.06 Total Current Liabilities 3,557,741,511.43 7,194,409.22 54,395,950.90 3,619,331,871.55 Non-Current Liabilities: Employees' Compensable Leave 2,754.81 2,754.81 Total Non-Current Liabilities 2,754.81 0.00 0.00 2,754.81 Total Liabilities 3,557,744,266.24 7,194,409.22 54,395,950.90 3,619,334,626.36

DEFERRED INFLOWS Deferred Inflow of Resources (Note 29) 635,716,801.12 635,716,801.12 Total Deferred Inflows 635,716,801.12 0.00 0.00 635,716,801.12

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances (Deficits): Nonspendable 485,751,207.74 485,751,207.74 Restricted 72,115,479.40 11,393,734.40 626,164,343.29 709,673,557.09 Committed 18,425,775.76 3,094,699.26 21,520,475.02 Unassigned 8,015,046,878.91 8,015,046,878.91 Total Fund Balances 8,591,339,341.81 14,488,433.66 626,164,343.29 9,231,992,118.76

Total Liabilities and Fund Balances $ 12,784,800,409.17 $ 21,682,842.88 $ 680,560,294.19 $ 13,487,043,546.24

The accompanying Notes to the Financial Statements are an integral part of this financial statement.

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 43 UNAUDITED Comptroller – Fiscal (902)

EXHIBIT II Combined Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds For the Fiscal Year Ended August 31, 2020

Governmental Fund Types Special Permanent Governmental General Funds Revenue Funds Funds Funds (Exhibit A-2) (Exhibit B-2) (Exhibit C-2) Total REVENUES Taxes $ 46,453,402,796.17 $ 2,817,747,417.18 $ $ 49,271,150,213.35 Federal Revenue 3,214,532.71 3,214,532.71 Licenses, Fees & Permits 1,274,134,748.48 5,003,634.13 1,279,138,382.61 Interest and Other Investment Income 345,906,158.75 1,462,600.01 24,171,251.99 371,540,010.75 Land Income 2,184,332.06 2,184,332.06 Settlement of Claims 594,134,503.44 594,134,503.44 Sales of Goods and Services 41,479,688.31 41,479,688.31 Other 457,213,515.91 37,261,502.24 24,454,555.98 518,929,574.13 Total Revenues 49,168,455,743.12 2,864,689,686.27 48,625,807.97 52,081,771,237.36

EXPENDITURES Payroll Related Costs 851,151,758.97 851,151,758.97 Professional Fees and Services 12,528,204.29 841,325.00 701,504.86 14,071,034.15 Materials and Supplies 246,560.32 246,560.32 Communications and Utilities Repairs and Maintenance 402,842.85 402,842.85 Claims and Judgments 21,829,788.02 21,829,788.02 Intergovernmental Payments 425,624,522.74 47,220,976.62 687,914.00 473,533,413.36 Other Expenditures 47,673,685.87 4,687.09 47,678,372.96 Capital Outlay Total Expenditures 1,359,457,363.06 48,066,988.71 1,389,418.86 1,408,913,770.63

Excess (Deficiency) of Revenues over Expenditures 47,808,998,380.06 2,816,622,697.56 47,236,389.11 50,672,857,466.73

OTHER FINANCING SOURCES (USES) Transfer In 5,398,582,520.39 7,100,906.94 131,469.44 5,405,814,896.77 Transfer Out (28,284,078,694.46) (2,821,741,992.03) (44,784,276.80) (31,150,604,963.29) Legislative Transfer Out (28,595,028,216.14) (28,595,028,216.14) Insurance Recoveries 225,419.42 225,419.42 Total Other Financing Sources (Uses) (51,480,298,970.79) (2,814,641,085.09) (44,652,807.36) (54,339,592,863.24)

Net Change in Fund Balances (3,671,300,590.73) 1,981,612.47 2,583,581.75 (3,666,735,396.51)

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances, September 1, 2019 12,262,639,932.54 11,324,091.52 623,947,810.37 12,897,911,834.43 Restatements (Note 14) 1,182,729.67 (367,048.83) 815,680.84 Fund Balances, September 1, 2019, as Restated 12,262,639,932.54 12,506,821.19 623,580,761.54 12,898,727,515.27

Fund Balances, August 31, 2020 $ 8,591,339,341.81 $ 14,488,433.66 $ 626,164,343.29 $ 9,231,992,118.76

The accompanying Notes to the Financial Statements are an integral part of this financial statement.

44 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902)

EXHIBIT VI Combined Statement of Fiduciary Net Position Fiduciary Funds August 31, 2020

Private Purpose Trust Funds Agency Funds (Exhibit I-1) (Exhibit J-1) Totals ASSETS Cash and Cash Equivalents: Cash in State Treasury $ $ 1,279,284,631.35 $ 1,279,284,631.35 Investments (Note 3): U.S. Government Obligations 225,337.59 225,337.59 Corporate Obligations 534,377.75 534,377.75 Corporate Equity 242,759,003.39 242,759,003.39 Pooled Investments 253,032,864.91 253,032,864.91 Other Investments 4,486,635.37 4,486,635.37 Receivables: Federal Interest and Dividends Total Assets 0.00 1,780,322,850.36 1,780,322,850.36

LIABILITIES Payables: Accounts Payables Intergovernmental Payables 1,204,299,174.90 1,204,299,174.90 Funds Held for Others 576,023,675.46 576,023,675.46 Deferred Revenues Total Liabilities 0.00 1,780,322,850.36 1,780,322,850.36

NET POSITION Held in Trust for: Individuals, Organizations, and Other Governments Total Net Position $ 0.00 $ 0.00 $ 0.00

The accompanying Notes to the Financial Statements are an integral part of this financial statement.

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 45 UNAUDITED Comptroller – Fiscal (902)

EXHIBIT VII Combined Statement of Changes in Fiduciary Net Position Fiduciary Funds For the Fiscal Year Ended August 31, 2020

Private Purpose Trust Funds (Exhibit I-2) Totals ADDITIONS Contributions: Investment Income: From Investing Activities Interest and Investment Income $ $ Total Investing Income 0.00 0.00

Other Additions Federal Revenue Other Revenue Transfers-In 77,063,840.94 77,063,840.94 Total Other Additions 77,063,840.94 77,063,840.94

Total Additions 77,063,840.94 77,063,840.94

DEDUCTIONS Intergovernmental Payments 73,831,824.00 73,831,824.00 Transfers-Out 3,232,016.94 3,232,016.94 Total Deductions 73,831,824.00 73,831,824.00

NET INCREASE (DECREASE) 3,232,016.94 3,232,016.94

Net Position, August 31, 2019 1,182,729.67 1,182,729.67 Restatements (1,182,729.67) (1,182,729.67) Net Position, August 31, 2019, as Restated 0.00 0.00

Net Position – August 31, 2020 $ 0.00 $ 0.00

The accompanying Notes to the Financial Statements are an integral part of this financial statement.

46 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902)

Notes to the Financial Statements

NOTE 1: Summary of Significant Accounting Policies ENTITY

The Comptroller – Fiscal is an agency of the state of Texas and its financial records comply with state statutes and regulations . This includes compliance with the Comptroller of Public Accounts Reporting Requirements for Annual Financial Reports of State Agencies .

This report applies to those funds, which the Comptroller of Public Accounts is statutorily required to expend, transfer, allo- cate or administer as trustee . Included are the funds and accounts over which the Comptroller exercises statutory administrative control, which includes revenues, collected for the benefit of others . The operating activity of the Comptroller of Public Accounts (Agency 304) is included in a separate section of this report .

There are no component units in which the Comptroller – Fiscal is financially accountable or any organization in which exclusion would create misleading or incomplete financial statements .

Due to the significant changes related to Governmental Accounting Standards Board (GASB) Statement 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments, the Comptroller of Public Accounts does not require the accompanying annual financial report to be in compliance with generally accepted accounting principles (GAAP) . The financial report will be considered for audit by the State Auditor as part of the audit of the state’s Comprehensive Annual Financial Report; therefore, an opinion has not been expressed on the financial statements and related information contained in this report .

GOVERNMENTAL FUND TYPES AND GOVERNMENT-WIDE ADJUSTMENT FUND TYPES

General Fund

The General Fund is used to account for all financial resources of the state except those that must be accounted for in another fund . Listed below are the agency’s General Funds and their purpose .

General Revenue Fund 0001 – To receive those revenues directed to be deposited to the General Revenue Fund and those revenues for which a specific fund has not been designated; such revenues to be used as the Constitution prescribes and the Legislature directs .

Deposit Default Fund 9000 – To provide a temporary depository for money held in suspense pending final disposition . Items held in the fund are cleared to the various Special Revenue Funds or the General Revenue Fund, or refunded to the payer .

County and Road District Highway Fund 0057 – To take care of outstanding county and road district indebtedness assumed by the state along with the highway system . The Fund also receives allocation of gasoline taxes up to $7 .3 million each fiscal year, which in turn is distributed to the counties of the state .

Law Enforcement Officer Standards and Education Fund 0116 – To receive court costs collected from defendants con- victed under certain sections of the Penal Code .

Compensation to Victims of Crime Auxiliary Fund 0494 – This is used only for the payment of compensation to claimants under the Victims of Crime Act .

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 47 UNAUDITED Comptroller – Fiscal (902)

Federal Resource Receipts Distribution Fund 0521 – To deposit money received by state under section 191 or 355, Title 30, United States Code, including state portion of sales, bonuses, royalties or rentals .

Economic Stabilization Fund 0599 – To receive transfer of one-half of any unencumbered positive balance in the General Revenue Fund (0001) as of the last day of the preceding biennium, at least one-half of an amount equal to 37 .5 percent of excess oil and gas production taxes received in fiscal year 1987, and any other money appropriated to the fund by the legislature . The fund may be used to eliminate temporary cash deficiency in the General Revenue Fund (0001) . Until the 2019 session, state law required the Comptroller’s office to keep much of revenue in the ESF in relatively low-yield investments that barely kept pace with inflation . SB 69 will allow the agency to move up to 75 percent of the ESF into prudent but higher-yield investments that would maintain the fund’s purchasing power .

License Plate Trust Fund 0802 – Used for deposit of specialty license plate fees and related revenue collected under Sub- chapter G, Transportation Code . Dedicated balances and revenues are to be deposited into accounts within the fund to be used in accordance with their specific statutory purpose .

Events Trust Fund for Municipality/County Fund 0830 – If an event plan is approved and a host community is select- ed as the site of a special event, the comptroller shall deposit the amount requested in the special event plan from state tax receipts as soon as practicable after the taxes are collected .

Major Events Trust Fund 0869 – Used to fulfill joint obligations of the state and endorsing municipality or county to a site selection organization under a games support contract .

Sexual Assault Program Fund 5010 – Created to receive parole supervision and probation fees collected under arts . 42 .12, 22(e) and art 42 .18 8(p), C .C .P . and gifts, grants and money appropriated for grants to maintain or expand existing services .

Tobacco Settlement Fund 5040 – To receive settlement money resulting from the final judgment in the state of Texas . The American Tobacco Company, et . al ., civil action no . 5:96cv91 . These funds are distributed to appropriate agencies and funds as identified in the court ordered settlement .

Disabled Veterans Local Government Assistance Fund 5160–To provide reimbursements to qualifying local governments who have lost at least two percent of property tax revenue providing homestead property tax exemptions to totally disabled veterans or their surviving spouses .

GR Account – Game, Fish, and Water Safety 0009 – To receive revenues directed to be deposited to the Game, Fish, and Water Safety Account .

Texas Home Visiting Program Trust Fund 0803 – To receive voluntary contributions at the time of issuance of a marriage license .

GR Account – Commission on State Emergency Communications 5007–To receive 9-1-1 equalization surcharges imposed on each local exchange access line . Money is allocated to regional planning commissions and poison control centers .

Special Revenue Funds

Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes . Listed below are the agency’s Special Revenue Funds and their purpose .

County Road Oil and Gas Trust Fund (0808) – To receive money from the leasing of oil and gas under lands owned by the state that were or may be acquired by a county to construct a county road .

Property Tax Relief Fund 0304 – Special fund in the state treasury outside the general revenue fund . The proceeds of the fund are from allocations of the computation of motor vehicle sales tax, collection of all tobacco products tax increases and calculated amounts from franchise taxes . The intent of the fund will be to reduce school district property taxes .

48 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902)

Binding Arbitration Trust Fund 0838 – This is used to retain and pay the administrative costs in binding arbitration cases of property value appeals initiated by property owners . Monies are moved to this special revenue fund from the same agency fund for payment of administrative costs

International Fuels Tax Agreement (IFTA) Trust Fund 0886 – To receive motor fuels taxes estimated to be due to other jurisdictions or otherwise subject to refund during the fiscal year, penalties and interest on those taxes due other jurisdictions, licensing fees, and other costs collected under the agreement .

Flood Area School and Road Trust Account 0903 – To hold money allocated by the Federal Government to be distributed to counties and political subdivisions of the state based on the tax rate applied to lands acquired for flood purposes .

Habitat Protection Fund 9999 – This fund held with the Texas Treasury Safekeeping Trust Company was established by the 82nd Legislature to support the development or coordination of the development of a habitat conservation plan or a candidate conservation plan or to pay the costs of monitoring or administering the implementation of such a plan . The fund consists primarily of donations and fees paid by entities or individuals who voluntarily enroll in such a plan .

PERMANENT FUNDS

Permanent Fund Supporting Graduate Education Fund 0179 – To receive transfers or appropriated amounts, gifts or grants, and investments returns . Receives assets transferred from the Texas Medical Liability Insurance Underwriting Asso- ciation . Distributions from the fund are for graduate medical education planning and partnership grants to hospitals, medical schools, and community-based, ambulatory patient care centers . For the development of new graduate medical education programs with first-year residency positions .

Permanent Fund Supporting Military and Veterans Exemptions Fund 0210 – To receive gifts, grants and investment returns for distributions to higher education institutions to offset the cost of the exemptions to certain veterans and/or dependents . Distributions are determined by the Legislative Budget Board based on each Institution’s respective share of the aggregate cost to all institutions of the exemptions . The Texas Treasury Safekeeping Trust Company determines the amount available for distribution from the fund .

Available National Research University Fund 0214 – To receive disbursements from the National Research University Fund held outside the treasury . The money is to be used by eligible institutions only for the support and maintenance of educational and general activities that promote increased research capacity at the institution .

FIDUCIARY FUNDS

Private-Purpose Trust Funds Private-Purpose Trust funds are used to account for all other trust arrangements whose principal and interest benefit individuals, private organizations, or other governments . Listed below are the agency’s Private-Purpose Trust funds and their purpose .

Private-Purpose Tobacco Settlement Political Subdivision Trust Fund 0872 – To hold a portion of the tobacco settlement money designated for the exclusive benefit of political subdivisions and will be distributed to political subdivisions as directed in the settlement . Agency Funds Agency Funds are used to account for assets held as an agent for individuals, private organizations, and other government entities . These funds are custodial in nature and do not involve measurement of results of operations . Listed below are the agency’s Agency Funds and their purpose .

Binding Arbitration Trust Fund 0838 – To receive arbitration deposits from property owners on appeals made to appraisal review boards until a determination of the appeal is made . The Comptroller shall refund the deposit to the property owner or pay the arbitrator from the deposit, retain administrative costs and return the difference to the property owner .

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 49 UNAUDITED Comptroller – Fiscal (902)

Customs Brokers Bond / Security Trust Fund 0866 – Created to hold bonds or securities from which the customs broker intends to issue exemption certificates .

Texas Racing Commission Security Trust Fund 0868 – Created to hold securities posted by each racing association as required by the comptroller rule to ensure payment of the state’s portion of the pari-mutuel pool .

Local Tax Collections for Sports / Community Venue Project Trust Fund 0874 – To hold taxes collected by the Comp- troller under an inter-local contract for a local government until they are returned to the local government’s venue project fund . Taxes are to be used for sports or community venue projects .

City, County, MTA and SPD Sales Tax Trust Account 0882 – To record the receipt of local sales and use tax collected by the Comptroller for each city, county, metropolitan transit authority and special purpose district authorizing the collection .

International Fuels Tax Agreement (IFTA) Guarantee Trust Fund 0884 – To hold in trust money or securities deposited with the Comptroller by participants in the International Fuels Tax Agreement .

Departmental Suspense Fund 0900 – To provide a temporary depository for money held in suspense pending final disposition . Items held in the fund are cleared to the various Special Revenue Funds or the General Revenue Fund, or refunded to the payer .

Motor Fuel Distributors Bond Guaranty Trust Fund 0904 – To hold in trust money or securities deposited by motor fuel distributors, in lieu of surety bonds, to insure complete and faithful performance by the distributor of all conditions and requirements imposed upon him by the laws pertaining to motor fuel and motor fuel distributors .

Qualified Hotel Project Fund 0905 – Created as a suspense account outside the Treasury, consists of eligible taxable proceeds . These proceeds are used to rebate, refund or pay each qualified hotel project the hotel occupancy taxes and sales and use taxes to which the project is entitled .

Mixed Beverage Tax Guaranty Trust Fund 0906 – To hold in trust money or securities deposited by mixed beverage permit holders .

Sexually Oriented Business Security Bond Trust Fund 0912–To receive security bonds submitted by businesses required to pay the sexually oriented business fee under TEX . BUS . & COMM . CODE ANN . sec . 102 .052 .

Sales Tax Guaranty Trust Fund 0962 – To receive cash and/or other negotiable securities pledged to guarantee payment of Sales Tax liabilities .

Direct Deposit Correction Fund 0980 – To hold money returned by financial institutions which had been transmitted for direct deposit where problems prevented credit are given to individual depositors until the agency issuing the original payment makes the correction by transferring the funds back to the original issuing fund or the person for whom the original payment was made is refunded the money .

Unclaimed Property Securities 4113 – To hold securities received from property owners or heirs who are unknown or can’t be located until designated period of time has elapsed for escheat to state . The unclaimed property law requires financial institutions, businesses, and government entities to report to the state, personal property they are holding that is considered abandoned or unclaimed . Property is turned over to the Comptroller’s office annually when the owner’s whereabouts are unknown and the property has been inactive on the books of the reporting company after the appropriate abandonment period has expired .

BASIS OF ACCOUNTING

The basis of accounting determines when revenues and expenditures are recognized in the accounts reported in the financial statements . Governmental fund types are accounted for using the modified accrual basis of accounting . Revenues are recognized when they become both measurable and available . Expenditures are generally recognized when the related fund liability is incurred . Exceptions are unpaid employee compensable leave, and the unmatured debt service (principal and interest)

50 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902) on general long-term debt, long-term capital leases, and long-term claims and judgments, which are not recognized until actual payment is made .

Budgets and Budgetary Accounting

The budget is prepared biennially and represents appropriations authorized by the Legislature and approved by the Governor (the General Appropriations Act) . Unobligated appropriations are generally subject to lapse 60 days after the end of the fiscal year for which they were appropriated .

Since the Comptroller reports the entire cash balance for the general fund, budgetary accounts are eliminated for the Annual Financial Report .

ASSETS, LIABILITIES AND FUND EQUITY

Assets

Taxes Receivables Amounts shown as taxes receivable represent various state taxes due to the state at Aug . 31, 2020 .

Liabilities

Accounts Payable Accounts Payable represents the liability for the value of assets or services received at the balance sheet date for which payment is pending . Other Liabilities Other Liabilities represent intergovernmental taxes and the value of unclaimed property at the balance sheet date . Deferred Inflows Amounts shown as deferred inflows represent tax revenues earned but not available and resources received but not earned, ie ., prepaid sales taxes, at Aug . 31, 2020 . A breakdown by Tax Type is available on Schedule 5 . Fund Balance/Net Position The difference between fund assets and liabilities is ‘Net Position’ on the government-wide and fiduciary fund statements and the ‘Fund Balance’ is the difference between fund assets and liabilities on the governmental fund statements . Restricted Fund Balance This fund balance is reported as restricted when constraints placed on the use of resources are either (a . externally imposed by laws and regulations of other governments or (b . imposed by law through constitutional provisions or enabling legislation . Committed Fund Balance Amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the state’s highest level of decision-making authority (the Legislature) are reported as committed fund balance . Unassigned Fund Balance This is the residual classification for the general fund . This classification represents fund balance that has not been assigned to other funds and has not been restricted, committed or assigned for specific purposes within the general fund . The general fund is the only fund that can report a positive unassigned fund balance .

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 51 UNAUDITED Comptroller – Fiscal (902)

INTERFUND TRANSACTIONS AND BALANCES

Interfund transactions refers to interactions with legally separate entities such as other state agencies and is restricted to external events . The agency experienced routine transfers with other state agencies, which were consistent with the activities of the fund making the transfer . Repayment of interfund balances will occur within one year from the date of the financial statements .

The Comptroller’s Fiscal Section has the following types of transactions between funds/agencies:

• Due To Other Agencies • Due From Other Agencies • Transfers In • Transfers Out NOTE 2: Capital Assets Capital assets are not shown on the governmental fund financial statements, but rather are included as governmental activities in the government-wide financial statements . A summary of changes in capital assets for the year ended Aug . 31, 2020, is presented below:

Balance Balance Sept. 1, 2019 Adjustments Reclassifications Additions Deletions Aug. 31, 2020 Depreciable Assets: Furniture and Equipment $ 303,467.20 $ $ $ $ $ 303,467.20 Less Accumulated Depreciation (300,740.82) (2,726.38) (303,467.20) Depreciable Assets, Net 2,726.38 0.00 0.00 (2,726.38) 0.00 0.00

Computer Software 4,176,030.99 (584,079.99) 3,591,951.00 Less Accumulated Amortization (4,176,030.99) 584,079.99 (3,591,951.00) Amortizable Assets, Net 0.00 0.00 0.00 0.00 0.00 0.00

Total Capital Assets $ 2,726.38 $ 0.00 $ 0.00 $ (2,726.38) $ 0.00 $ 0.00 $0.00

NOTE 3: Deposits, Investments and Repurchase Agreements INVESTMENTS

The Comptroller- Sate Fiscal categorizes fair value measurements within the fair value hierarchy established by generally accepted accounting principles . The hierarchy is based on the valuation inputs used to measure the fair value of the asset . The three-tiered fair value hierarchy us as follows .

• Level 1- Quoted prices for identical investments in an active market

• Level 2–Significant other observable inputs other than quoted market prices

• Level 3–Significant unobservable inputs

52 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902)

As of Aug . 31, 2020, the carrying value and fair value of investments are as presented below .

Fair Value Fiduciary Fund -Unclaimed Property Level 1 Inputs Level 2 Inputs Level 3 Inputs Amortized Cost Net Asset Value Fair Value

U.S. Government Treasuries $ $ 143,789.31 $ $ $ $ 143,789.31 U.S. Government Agency Obligations 38,709.04 38,709.04 Government Sponsored Enterprises 42,839.24 42,839.24 Non-Agency Collateral Mortgage Obligations Corporate Obligations 534,377.75 534,377.75 Political Subdivisions 4,486,635.37 4,486,635.37 Equity 242,759,003.39 242,759,003.39 Fixed Income Money Market and Bond Mutual Funds 253,032,864.91 253,032,864.91

Total $ 495,791,868.30 $ 5,246,350.71 $ 0.00 $ 0.00 $ 0.00 $ 501,038,219.01

Fair Value Permanent Fund -0210 Level 1 Inputs Level 2 Inputs Level 3 Inputs Amortized Cost Net Asset Value Fair Value

Fixed Income Money Market and Bond Mutual Funds $ 27,628,495.77 $ $ $ $ $ 27,628,495.77 Equity Externally Managed Investments 1,615,150.69 236,623,622.52 238,238,773.21 Pooled Investments 2,538,454.14 2,538,454.14

Total $ 30,166,949.91 $ 1,615,150.69 $ 0.00 $ 0.00 $ 236,623,622.52 $ 268,405,723.12

Fair Value Permanent Fund - 0179 Level 1 Inputs Level 2 Inputs Level 3 Inputs Amortized Cost Net Asset Value Fair Value

Fixed Income Money Market and Bond Mutual Funds $ 42,157,552.61 $ $ $ $ $ 42,157,552.61 Equity 0.04 0.04 Externally Managed Investments 2,805,875.03 310,982,275.91 313,788,150.94 Pooled Investments 4,409,857.94 4,409,857.94

Total $ 46,567,410.59 $ 2,805,875.03 $ 0.00 $ 0.00 $ 310,982,275.91 $ 360,355,561.53

Fair Value General Fund - 0599 Level 1 Inputs Level 2 Inputs Level 3 Inputs Amortized Cost Net Asset Value Fair Value

Fixed Income Money Market and Bond Mutual Funds $ 3,230,882,759.06 $ $ $ $ $ 3,230,882,759.06 Externally Managed Investments – Domestic 614,715,642.57 614,715,642.57 Pooled Investments 254,962,628.30 254,962,628.30

Total $ 3,485,845,387.36 $ 0.00 $ 0.00 $ 0.00 $ 614,715,642.57 $ 4,100,561,029.93

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 53 UNAUDITED Comptroller – Fiscal (902)

Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations . As of Aug . 31, 2020, the agency’s credit risk quality distribution for securities with credit risk exposure was as follows:

Standard & Poor’s Fund GAAP Type Fund Investment Type Market Value AAA AA A BBB

09 0001 Asset Back Security $ 0.53 U.S. Government Treasuries 143,789.31 $ 143,789.31 U.S. Government Agencies 42,839.24 11,582.00 REFCo Strip Govt Mortgage Backed Securities Non Agency Collateral Mortgage Obligation 38,708.51 1,460.77 Certificates of Deposit Corporate Obligations 534,377.75 6,528.26 $ 8,959.55 $ 143,398.64 Political Subdivisions 191,126.45 $ 31,327.91 89,541.89 21,056.57 Mutual Funds 253,032,864.91 $ 253,983,706.70 $ 31,327.91 $ 252,902.23 $ 30,016.12 $ 143,398.64

19 0210 Corporate Obligations International Corp. Obligations Mutual – Global Fixed Income $ 2,538,454.14 Mutual – Domestic Fixed Income Investments in STIF 27,628,495.77 $ 27,628,495.77 Repurchase Agreements $ 30,166,949.91 $ 27,628,495.77 $ 0.00 $ 0.00 $ 0.00

19 0179 Corporate Obligations International Corp. Obligations Mutual – Global Fixed Income $ 4,409,857.94 Mutual – Domestic Fixed Income Investments in STIF 42,157,552.61 42,157,552.61 Repurchase Agreements $ 46,567,410.55 $ 42,157,552.61 $ 0.00 $ 0.00 $ 0.00

01 0599 Corporate Obligations International Corp. Obligations Mutual – Global Fixed Income $ 3,230,882,759.06 Mutual – Domestic Fixed Income Investments in STIF 254,962,628.30 $ 254,962,628.30 Repurchase Agreements $ 3,485,845,387.36 $ 254,962,628.30 $ 0.00 $ 0.00 $ 0.00

54 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902)

Standard & Poor’s Fund GAAP Type Fund Investment Type BB B C Not Rated Not Applicable

09 0001 Asset Back Security $ 0.53 U.S. Government Treasuries U.S. Government Agencies 31,257.24 REFCo Strip Govt Mortgage Backed Securities Non Agency Collateral Mortgage Obligation 37,247.74 Certificates of Deposit Corporate Obligations 372,908.23 $ 2,583.07 Political Subdivisions $ 4,517.93 $ 5,008.89 36,673.26 Mutual Funds 253,032,864.91 $ 4,517.93 $ 5,008.89 $ 0.00 $ 478,087.00 $ 253,035,447.98

19 0210 Corporate Obligations International Corp. Obligations Mutual – Global Fixed Income $ 2,538,454.14 Mutual – Domestic Fixed Income Investments in STIF Repurchase Agreements $ 0.00 $ 0.00 $ 0.00 $ 2,538,454.14 $ 0.00

19 0179 Corporate Obligations International Corp. Obligations Mutual – Global Fixed Income $ 4,409,857.94 Mutual – Domestic Fixed Income Investments in STIF Repurchase Agreements $ 0.00 $ 0.00 $ 0.00 $ 4,409,857.94 $ 0.00

01 0599 Corporate Obligations International Corp. Obligations Mutual – Global Fixed Income $ 3,230,882,759.06 Mutual – Domestic Fixed Income Investments in STIF Repurchase Agreements $ 0.00 $ 0.00 $ 0.00 $ 3,230,882,759.06 $ 0.00

DEPOSITS OF CASH IN BANK

As of Aug . 31, 2020 the carrying amount and the total balance of cash deposits was $9,982,579 .39 . These deposits are from the Habitat Protection Fund’s activities and are held with the Texas Treasury Safekeeping Trust Company .

FOREIGN CURRENCY RISK

Foreign currency risk is the risk that an asset or investment denominated in a foreign currency will lose value as a result of unfavorable exchange rate fluctuations between the investment’s foreign currency and the investment holder’s domestic currency . The exposure to foreign currency risk for alternative investments in fund type 19 totals $9,051,328 .29 Euros . NOTE 4: Short-Term Debt (Not Applicable)

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 55 UNAUDITED Comptroller – Fiscal (902)

NOTE 5: Summary of Long-Term Liabilities (Not Applicable) NOTE 6: Bonded Indebtedness (Not Applicable) NOTE 7: Derivatives Derivatives are financial instruments whose value is derived, in whole or part, from the value of any one of more underlying securities or assets, or index of securities or assets, such as stocks, bonds, commodities, or currencies . The Endowment funds use derivatives as part of the portfolio hedging and overlays program . The objective of the program is to facilitate risk management and provide efficiency in the implementation of various investment strategies . Permitted applications of the portfolio hedging and overlays program are to implement strategies in a low cost and efficient manner; to hedge and control risks; to alter the Funds’ market (systemic) exposure without trading the underlying cash market securities; to construct portfolios with risk and return characteristics that could not be created with cash market securities; or to facilitate transition trading .

Through the use of derivatives, the risks that are bound together in traditional cash market investments can be separated and managed independently . The primary intent of the Fund’s investment in derivative instruments is to management and implement investment strategies more effectively and at a lower cost than would be possible in the cash market . To achieve these purposes, the Fund used futures and swaps during fiscal year 2020 . All of the Fund’s derivative instruments are considered investment derivatives and therefore are measured and reported at fair value .

The fair value, changes in fair value, and notional value of the Fund’s derivatives investments, classified by derivative type, are displayed in the following table as of Aug . 31, 2020 . Note 3 also discloses details about these investment derivatives .

Changes in Fair Value Fair Value as of August 31, 2020 Notional Classification Amount Classification Amount Amount Permanent Fund Supporting Graduate Education (Appd Fund 0179) Futures Commodities Futures Investment Revenue Investment Equity Index Futures Investment Revenue Investment Swaps Total Return Swap – Fixed Income Investment Revenue 1,323,975.04 Investment 38,077.28 30,004,595.84 Total Return Swap – Equity Investment Revenue 7,245,871.70 Investment 2,767,797.75 49,112,899.90

Permanent Fund Supporting Military and Veterans Exemptions (Appd Fund 0210) Futures Commodities Futures Investment Revenue Investment Equity Index Futures Investment Revenue Investment Swaps Total Return Swap – Fixed Income Investment Revenue 762,122.04 Investment 21,918.50 17,271,597.32 Total Return Swap – Equity Investment Revenue 4,170,953.64 Investment 1,593,232.19 28,270,943.38

NOTE 8: Leases (Not Applicable) NOTE 9: Pension Plans (Not Applicable) NOTE 10: Deferred Compensation (Not Applicable)

56 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902)

NOTE 11: Postemployment Health Care and Life Insurance Benefits (Not Applicable) NOTE 12: Interfund Activity and Transactions (Not applicable) NOTE 13: Continuance Subject to Review (Not Applicable) NOTE 14: Adjustments to Fund Balances and Net Position During fiscal year 2020, certain accounting changes and accounting errors were made that required the restatement of fund balances or net position . These restatements are presented below:

Restatements to Net Position / Fund Balances Change in Fund Change in Fund Balance/Net Position Correction of Balance/Net Position Aug. 31, 2019, as Prior Year Changes in Aug. 31, 2019, as Previously Reported Errors Fund Type Restated Special Revenue Funds: Flood Area School and Road Trust Fund (2903) $ $ $ (1,182,729.67) $ (1,182,729.67)

Permanent Funds: Supporting Graduate Education Fund 0179 (1179) (354,734,871.46) 206,764.04 (354,528,107.42) Military & Veterans Exemptions Fund 0210 (0210, 1210) (267,401,322.58) 160,284.79 (267,241,037.79)

Private-Purpose Trust Funds: Flood Area School and Road Trust Fund (0903) (1,182,729.67) 1,182,729.67

Total $ (623,318,923.71) $ 367,048.83 $ 0.00 $ (622,951,874.88)

The restatements of $206,764 .04 in the Permanent Fund Supporting Graduate Medical Education and $160,284 .79 in the Permanent Fund Supporting Military and Veterans Exemptions is to correct certain adjustments made in fiscal year 2018 overstating revenues and noncurrent investments-derivative instruments .

The restatements affecting Special Revenue and Private Purpose Trust Funds–Flood Area School and Road of $1,182,729 .67 were made pursuant the requirements in GASB 84 . NOTE 15: Contingent Liabilities PROTEST TAX PAYMENTS:

As of Aug . 31, 2020, pending litigation filed by taxpayers seeking refunds of state taxes totaled $192 million . The taxes protested include sales, franchise, insurance and other taxes . Although the outcome of these cases cannot presently be determined, adverse ruling in some of them could result in significant additional refunds . NOTE 16: Subsequent Events (Not Applicable) NOTE 17: Risk Management The Comptroller of Public Accounts – State Fiscal pays for certain miscellaneous claims and judgments against the state out of funds appropriated that are specifically approved by the Legislature for payment pursuant to 86th Leg, HB 4071, pays for state agencies’ miscellaneous claims pursuant to Gov’t Code 403 .074 (the Miscellaneous Claims Act) from available funds appropriated for this purpose, pays for identifiable attorney’s fees for settlements and judgments recovered against the state and claimant or plaintiff for settlements and judgments, and other legal expenses (excluding attorney’s fees) that are recovered against the state under TEX . CIV . PRAC . & REM . CODE ANN . § 104 .003, federal court judgments, medical malpractice

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 57 UNAUDITED Comptroller – Fiscal (902) claims under Chapter 59, EDUCATION CODE, and other statutes and pays for compensation payments authorized by the Crime Victims Compensation Act to victims of crimes previously not located by local departments within five (5) years after the court has ordered restitution .

It is agency policy to periodically assess potential risks to which it may be exposed . The agency assumes substantially all risks associated with these miscellaneous liability claims . Liabilities are reported when it is both probable that a loss has occurred, and the amount of that loss can be reasonably estimated .

The agency’s claim and judgement liability activity at Aug . 31, 2020, is as follows:

Beginning Ending Balance Increases Decreases Balance

2020 0 21,830,935.19 21,830,935.19 0 2019 0 10,255,858.44 10,255,858.44 0

There were no significant reductions in insurance coverage in the past year . Losses did not exceed funding arrangements during the past three years . NOTE 18: Management Discussion and Analysis The General Revenue Fund 0001 cash balance decreased to $(160) million in fiscal 2020, a decrease of 2 .4 billion from the balance of $2 .2 billion in fiscal 2019 . This is attributable to a net decrease in total net revenue and other sources over total net expenditures and other uses . This agency provides legislative funding for statewide agency’s expenditures and this is reflected in its legislative transfers-out . As disclosed in Note 27, a portion of the accrued taxes reported in this agency’s report will not be finalized until the Comprehensive Annual Financial Report is completed .

The Economic Stabilization Fund (ESF) ended fiscal 2020 with a total balance of $10 .0 billion, a decrease of $103 million over fiscal 2019 . The ESF ending balance was comprised of $5 .9 billion in cash and investments having a fair market value of $4 .1 billion as detailed in Note 3 . The Texas Constitution mandates that if oil or natural gas taxes exceed the net amount received in fiscal 1987, an amount of at least one-half of 37 .5 percent of the excess must be transferred to the state’s ESF from the general revenue fund . In addition to the oil and gas transfer, one half of any unencumbered balance in fund 0001 at the close of the biennium must be transferred to the ESF .

The Property Tax Relief Fund had no ending cash balance . This year’s revenues of $2 .1 billion were transferred out to the Foundation School Fund 193 to pay for property tax relief .

Tax collections, the major source of revenue reported in this agency, experienced a 3 .4 percent decrease from fiscal 2019 . Growth in sales tax collections increased again in 2020, with revenue up 0 .2 percent over 2019, and motor vehicle sales tax collections decreased by 3 .9 percent . Sales tax collections account for 59 .4 percent of all tax collections . Motor fuels taxes on gasoline, diesel and other fuels decreased 5 .8 percent from 2019 . Oil production and regulation taxes also decreased 16 .9 percent from fiscal 2019, and natural gas production tax collections decreased by 45 .1 percent in 2020 to $925 .5 million . A non-tax category for agency 902, licenses, fees, fines & permits, decreased 4 .6 percent from fiscal 2019 . On a statewide basis, this category accounts for 4 .4 percent of total net revenue and contributed $6 .2 billion in fiscal 2020 . NOTE 19: The Financial Reporting Entity There were no significant related party transactions in agency 902 in fiscal 2020 . NOTE 20: Stewardship, Compliance and Accountability This section of the report reflects the activities of the Comptroller–Fiscal function (Agency 902) in the General Revenue Fund (0001), the Economic Stabilization Fund (0599), the Flood Area School and Road Expendable Trust Fund (0903), and other funds . The entire activity of the state’s General Revenue Fund will be reflected in the fiscal 2020 State of Texas Com- prehensive Annual Financial Report .

58 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902)

NOTE 21: Tobacco Settlement The state of Texas settled a lawsuit against certain tobacco manufacturers in 1998 . The settlement included monetary and injunctive relief . The settling tobacco manufacturers agreed to remit annual payments to the state . Estimates made at the time of the agreement projected that these payments could total $15 1. billion over the first 25 years of the agreement . The court-ordered annual payment amounts are subject to adjustments on the tobacco companies’ domestic cigarette sales, the general consumer inflation rate, the profitability of the tobacco companies and any other court-ordered factors . A revenue accrual and deferred revenue of $291 9. million has been calculated on estimated sales from Jan . 1 to the end of the fiscal year . Actual tobacco settlement revenues were $438 5. million in fiscal 2020 and $489 9. million in fiscal 2019 . Cumulative actual tobacco settlement revenues as of fiscal 2020 were $11 1. billion . NOTE 22: Donor-Restricted Endowments (Not Applicable) NOTE 23: Extraordinary and Special Items (Not Applicable) NOTE 24: Disaggregation of Receivables and Payables See Note 1 for disaggregation of Other Payables . NOTE 25: Termination Benefits (Not Applicable) NOTE 26: Segment Information (Not Applicable) NOTE 27: Taxes Receivables/Payables A. Taxes Receivable

The Comptroller–Fiscal agency collects certain taxes for the state of Texas . Taxes receivable represent amounts due to the state at Aug . 31, for revenues earned in the current fiscal year that will be collected in the future . The receivables have been recorded net of allowances for uncollectible accounts . Revenue is recorded on the governmental fund financial statements using the modified accrual basis of accounting for amounts due to the state of Texas at Aug . 31 that are considered as “available” (e g. . received by the state within approximately 60 days after that date) . Revenue earned but not “available” at Aug . 31 is recorded as deferred inflow revenue . Prepaid taxes are also recorded as deferred inflow revenue .

On the government-wide financial statements a corresponding amount is recorded as revenue using the accrual basis of accounting, which includes revenue earned at fiscal year-end regardless if it is available . Unearned revenue includes only the prepaid taxes that have not been earned by fiscal year end . Taxes receivable are the same for both modified and full accrual basis .

Taxes receivable have been netted against any refunds payable and estimated uncollectable taxes with the exception of the Franchise Tax and Oil and Gas Production Tax . Refunds payable will be shown separately for the Franchise Tax and Oil and Gas Production Taxes . The full accrual basis is reported on the government-wide financial statements in the State of Texas Comprehensive Annual Financial Report (CAFR) .

As of Nov . 20, 2020 the taxes receivable and unearned revenue balances for the Franchise Tax had not been finalized . The Franchise Tax Revenue and Tax Receivable will be finalized after the final returns for the tax due May 15, 2020, are processed . The tax returns are due Nov . 15, 2020 . Adjustments will be made if necessary prior to publication of the CAFR .

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 59 UNAUDITED Comptroller – Fiscal (902)

Taxes receivable, as reported in the General Fund (Exhibit I), are detailed by tax type as follows:

Net Taxes Tax Type Receivable

Sales and Use Tax $ 236,020,694.24 Motor Vehicle & MFG Housing 43,474,011.68 Motor Fuels 133,794.06 Oil & Natural Gas Production 378,253,400.07 Franchise Insurance 309,400,115.87 Cigarette & Tobacco (925,778.71) Other 89,020,551.11 Total Net Taxes Receivable $ 1,055,376,788.32

As Reported on the Financial Statements

Current Taxes Receivable $ 732,658,348.09 Noncurrent Taxes Receivable 485,751,207.74 Total Taxes Receivable $ 1,218,409,555.83

Refunds Payable $ (163,032,767.51) Total Net Taxes Receivable $ 1,055,376,788.32

NOTE 28: Contested Taxes The state may assess a claim against one or multiple taxpayers for a tax liability . Taxpayers may petition for a formal hearing before an independent administrative law judge if they wish to challenge a tax liability assessed by the state . If the request for a determination hearing is received within a specified time, the taxpayer does not have to pay the tax until a final decision is reached . As of Aug . 31, 2020, there was an estimated $548 million of assessments filed that are currently in the redetermination hearings process . Collectability of these assessments is dependent upon the decisions of administrative law judges . These assessments are not recognized as tax revenue until the administrative hearing is final . Therefore, these amounts are not included in the receivables reported in the financial statements . NOTE 29: Deferred Inflow of Resources The deferred inflow revenue in general revenue of $636 million consists of revenues earned but not available to finance expenditures of the current fiscal period . NOTE 30: Unclaimed Property The state holds certain property that is escheated to the state in the absence of legal claimants or heirs . Although a rightful owner can reclaim escheat property unto perpetuity, large portions of escheated property are never reclaimed . Additional- ly, the revenue generated from escheat property has always exceeded the amount needed to pay current claims . In fiscal year 2020, the unclaimed property fund received $715 million in gross revenues, made $297 million in claimant payments and transferred $407 million to the general fund . The claimant liability in the general fund of $304 million represents the probable amount that will be reclaimed and paid to claimants in the following year . As of Aug . 31, 2020, a balance of $501 million in marketable securities and mutual funds were held in trust . The state also holds an insignificant amount of personal property, such as jewelry .

60 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902)

NOTE 31: Fund Balances The Comptroller – Fiscal has the following restrictions/covenants causing fund balances to be committed and restricted:

GAAP Fund Fund AFR 54 Class Citation Comments

0116 0116 Committed TEX. LOC. GOV'T CODE ANN. Funds committed for allocation to local law enforcement agencies for sec. 133.102 continuing education of law enforcement personnel as stipulated by the legislature. There are no significant external restrictions.

0210 0210 / 1210 Restricted TEX. EDUC. CODE ANN. Funds restricted to a specific purpose, to higher education institutions sec. 54.3411 to offset the cost of the exemptions to certain veterans and/or dependents. Distributions are determined by the Legislative Budget Board based on each institution's respective share of the aggregate cost to all institutions of the exemptions.

0214 0214 Restricted TEX. CONST. art. VII sec. 20(a) Funds restricted to a specific purpose, to eligible institutions only for the support and maintenance of educational and general activities that promote increased research capacity at the institution.

0494 0494 Restricted TX Const. Art I , sec. 31 Funds restricted to a specific purpose, delivering victim-related compensation, services or assistance.

0838 8380 Committed TX Tax Code, Ch. 41a The comptroller has broad authority to prescribe rules and administer funds deposited for pending arbitration concerning the appraised or market value of property. There are no significant external restrictions.

0886 0886 Committed TX Tax Code, sec. 162.003(g) The comptroller has broad authority to transfer funds as necessary to carry out the purposes of the International Fuels Tax Agreement (IFTA). There are no significant external restrictions.

0903 2903 Restricted TX GOV'T CODE ANN. sec. 403.101; To hold money allocated by the Federal Government to be distributed 33 U.S.C. Sec. 701c-3 to counties and political subdivisions of the state based on the tax rate applied to lands acquired for flood control purposes.

5040 5040 Restricted The State of Texas v. The American Restrictions are externally imposed by the court-ordered settlement. Tobacco Company, et. Al, No. 5.96cv91 (U.S. District Court, Texarkana Division)

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 61 UNAUDITED Comptroller – Fiscal (902)

62 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902)

COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 63 UNAUDITED Comptroller – Fiscal (902)

EXHIBIT A-1 Combining Balance Sheet – All General and Consolidated Funds August 31, 2020

Consolidated Funds Consolidated Funds County & Game, Fish, Road District General And Water Highway Law Enforcement Compensation Revenue Fund Safety Fund Fund Standards/Educ Victims Crime Fd (0001) (0009) (0057) Fd (0116) (0494) U/F (0001, 9000) U/F (0009) U/F (0057) U/F (0116) U/F (0494) ASSETS Current Assets: Cash and Cash Equivalents: Cash in State Treasury $ (160,062,187.30) $ $ $ $ 8,250,467.91 Legislative Appropriations (27,633,116.00) Short-Term Investments (Note 3) Receivables: Accounts Interest and Dividends 2,033.25 4,875.53 Taxes (Note 27) 732,658,348.09 Due From Other Agencies 33,287,254.00 18,425,770.73 Total Current Assets 578,252,332.04 0.00 0.00 18,425,770.73 8,255,343.44 Non-Current Assets: Taxes Receivable (Note 27) 485,751,207.74 Investments (Note 3) Total Non-Current Assets 485,751,207.74 0.00 0.00 0.00 0.00 Total Assets $ 1,064,003,539.78 $ 0.00 $ 0.00 $ 18,425,770.73 $ 8,255,343.44

LIABILITIES AND FUND BALANCES Liabilities: Current Liabilities: Payables From: Accounts $ 405,735.14 $ $ $ $ Federal Payable 7,631,073.00 Other Intergovernmental 23,761,173.12 Unclaimed Property Claimant Liabilities Taxes Refund Payable 163,032,767.51 Due To Other Agencies 2,612,843,251.77 9,407.54 Unearned Revenues 68,709,438.53 Other Current Liabilities 303,997,441.06 Total Current Liabilities 3,180,380,880.13 0.00 0.00 0.00 9,407.54 Non-Current Liabilities: Employees' Compensable Leave 2,754.81 Total Non-Current Liabilities 2,754.81 0.00 0.00 0.00 0.00 Total Liabilities 3,180,383,634.94 0.00 0.00 0.00 9,407.54

DEFERRED INFLOWS Deferred Inflow of Resources (Note 29) 635,716,801.12 Total Deferred Inflows 635,716,801.12 0.00 0.00 0.00 0.00

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances (Deficits): Nonspendable for Long-Term Taxes Receivable 485,751,207.74 Restricted 8,245,935.90 Committed 18,425,770.73 Unassigned (3,237,848,104.02) Total Fund Balances (2,752,096,896.28) 0.00 0.00 18,425,770.73 8,245,935.90

Total Liabilities and Fund Balances $ 1,064,003,539.78 $ 0.00 $ 0.00 $ 18,425,770.73 $ 8,255,343.44

Continued on the following page

64 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902)

EXHIBIT A-1 (continued) Combining Balance Sheet – All General and Consolidated Funds August 31, 2020

Consolidated Funds Consolidated Funds Events Trust Texas Home Fund for Federal Resource Economic License Plate Visiting Municipality/ Receipt Distribution Stabilization Trust Fund Program Trust County Fund (0521) Fund (0599) (0802) (0803) (0830) U/F (1521) U/F (0599,5990,5991) U/F (0802) U/F (0803) U/F (0830) ASSETS Current Assets: Cash and Cash Equivalents: Cash in State Treasury $ 17,484.23 $ 5,895,953,909.46 $ $ $ Legislative Appropriations Short-Term Investments (Note 3) 254,962,629.30 Receivables: Accounts Interest and Dividends 3,512,438.71 2.51 Taxes (Note 27) Due From Other Agencies 1,331,823,558.89 Total Current Assets 0.00 7,486,252,536.36 2.51 0.00 0.00 Non-Current Assets: Taxes Receivable (Note 27) Investments (Note 3) 3,845,598,401.63 Total Non-Current Assets 0.00 3,845,598,401.63 0.00 0.00 0.00 Total Assets $ 0.00 $ 11,133,715,439.10 $ 2.51 $ 0.00 $ 0.00

LIABILITIES AND FUND BALANCES Liabilities: Current Liabilities: Payables From: Accounts $ $ 693,276.71 $ $ $ Federal Payable Other Intergovernmental Unclaimed Property Claimant Liabilities Taxes Refund Payable Due To Other Agencies 73,535,323.36 Unearned Revenues 17,484.23 Other Current Liabilities Total Current Liabilities 0.00 74,228,600.07 0.00 0.00 0.00 Non-Current Liabilities: Employees' Compensable Leave Total Non-Current Liabilities 0.00 0.00 0.00 0.00 0.00 Total Liabilities 0.00 74,228,600.07 0.00 0.00 0.00

DEFERRED INFLOWS Deferred Inflow of Resources (Note 29) Total Deferred Inflows 0.00 0.00 0.00 0.00 0.00

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances (Deficits): Nonspendable for Long-Term Taxes Receivable Restricted Committed 5.03 Unassigned 11,257,622,337.92 (2.52) Total Fund Balances 0.00 11,257,622,337.92 2.51 0.00 0.00

Total Liabilities and Fund Balances $ 0.00 $ 11,331,850,937.99 $ 2.51 $ 0.00 $ 0.00

Continued on the following page Concluded on the following page

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 65 UNAUDITED Comptroller – Fiscal (902)

EXHIBIT A-1 (concluded) Combining Balance Sheet – All General and Consolidated Funds August 31, 2020

Consolidated Funds GR Account - Commission on Disabled Major Events State Emergency Sexual Assault Tobacco Settlement Veterans Local Trust Fund Communications Program Fund Temporary Hold Gov. Assistance Total (0869) (5007) (5010) (5040) (5160) (Exhibit I) U/F (0869) U/F (5007) U/F (5010) U/F (5040) U/F (5160) 2020 ASSETS Current Assets: Cash and Cash Equivalents: Cash in State Treasury $ $ $ $ 70,380,663.82 $ $ 5,814,540,338.12 Legislative Appropriations (27,633,116.00) Short-Term Investments (Note 3) 254,962,629.30 Receivables: Accounts 291,866,666.67 291,866,666.67 Interest and Dividends 3,519,350.00 Taxes (Note 27) 732,658,348.09 Due From Other Agencies 1,383,536,583.62 Total Current Assets 0.00 0.00 0.00 362,247,330.49 0.00 8,453,450,799.80 Non-Current Assets: Taxes Receivable (Note 27) 485,751,207.74 Investments (Note 3) 3,845,598,401.63 Total Non-Current Assets 0.00 0.00 0.00 0.00 0.00 4,331,349,609.37 Total Assets $ 0.00 $ 0.00 $ 0.00 $ 362,247,330.49 $ 0.00 $ 12,586,647,426.05

LIABILITIES AND FUND BALANCES Liabilities: Current Liabilities: Payables From: Accounts $ $ $ $ $ $ 1,099,011.85 Federal Payable 7,631,073.00 Other Intergovernmental 23,761,173.12 Unclaimed Property Claimant Liabilities Taxes Refund Payable 163,032,767.51 Due To Other Agencies 6,511,120.32 2,692,899,102.99 Unearned Revenues 4,727,352.47 291,866,666.67 365,320,941.90 Other Current Liabilities 303,997,441.06 Total Current Liabilities 0.00 0.00 4,727,352.47 298,377,786.99 0.00 3,557,741,511.43 Non-Current Liabilities: Employees' Compensable Leave 2,754.81 Total Non-Current Liabilities 0.00 0.00 0.00 0.00 0.00 2,754.81 Total Liabilities 0.00 0.00 4,727,352.47 298,377,786.99 0.00 3,557,744,266.24

DEFERRED INFLOWS Deferred Inflow of Resources (Note 29) 635,716,801.12 Total Deferred Inflows 0.00 0.00 0.00 0.00 0.00 635,716,801.12

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances (Deficits): Nonspendable for Long-Term Taxes Receivable 485,751,207.74 Restricted 63,869,543.50 72,115,479.40 Committed 18,425,775.76 Unassigned (4,727,352.47) 8,015,046,878.91 Total Fund Balances 0.00 0.00 (4,727,352.47) 63,869,543.50 0.00 8,591,339,341.81

Total Liabilities and Fund Balances $ 0.00 $ 0.00 $ 0.00 $ 362,247,330.49 $ 0.00 $ 12,784,782,924.94

Concluded on the following page

66 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902)

EXHIBIT A-2 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – All General and Consolidated Funds For the Fiscal Year Ended August 31, 2020

Consolidated Funds Consolidated Funds County & Game, Fish, Road District General And Water Highway Law Enforcement Compensation Revenue Fund Safety Fund Fund Standards/Educ Victims Crime Fd (0001) (0009) (0057) Fd (0116) (0494) U/F (0001, 9000) U/F (0009) U/F (0057) U/F (0116) U/F (0494) REVENUES Taxes $ 46,403,103,638.88 $ $ $ $ Licenses, Fees & Permits 1,270,016,483.23 4,117,608.93 Interest and Other Investment Income 51,301,501.02 143,035.66 Land Income 2,184,332.06 Settlement of Claims 155,111,618.76 494,449.88 Sales of Goods and Services 41,479,688.31 Other 457,213,515.91 Total Revenues 48,380,410,778.17 0.00 0.00 4,117,608.93 637,485.54

EXPENDITURES Payroll Related Costs 851,151,758.97 Professional Fees and Services 8,583,962.52 Materials and Supplies 246,560.32 Communications and Utilities Repairs and Maintenance 402,842.85 Claims and Judgments 21,281,170.43 (1,147.17) 685.42 549,079.34 Intergovernmental Payments 403,823,103.78 7,300,000.00 6,001,418.96 Other Expenditures 47,673,685.87 Capital Outlay Total Expenditures 1,333,163,084.74 (1,147.17) 7,300,000.00 6,002,104.38 549,079.34

Excess (Deficiency) of Revenues over Expenditures 47,047,247,693.43 1,147.17 (7,300,000.00) (1,884,495.45) 88,406.20

OTHER FINANCING SOURCES (USES) Transfer In 140,819,869.69 7,300,000.00 Transfer Out (21,871,811,842.87) (3,290,961.03) Legislative Transfer Out (28,595,028,216.14) Insurance Recoveries 225,419.42 Total Other Financing Sources (Uses) (50,325,794,769.90) 0.00 7,300,000.00 0.00 (3,290,961.03)

Net Change in Fund Balances (3,278,547,076.47) 1,147.17 0.00 (1,884,495.45) (3,202,554.83)

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances, September 1, 2019 526,450,180.19 (1,147.17) 20,310,266.18 11,448,490.73 Restatements (Note 14) Fund Balances, September 1, 2019, as Restated 526,450,180.19 (1,147.17) 0.00 20,310,266.18 11,448,490.73

Fund Balances, August 31, 2020 $ (2,752,096,896.28) $ 0.00 $ 0.00 $ 18,425,770.73 $ 8,245,935.90

Continued on the following page

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 67 UNAUDITED Comptroller – Fiscal (902)

EXHIBIT A-2 (continued) Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – All General and Consolidated Funds For the Fiscal Year Ended August 31, 2020

Consolidated Funds Consolidated Funds Events Trust Texas Home Fund for Federal Resource Economic License Plate Visiting Municipality/ Receipt Distribution Stabilization Fund Trust Fund Program Trust County Fund (0521) (0599) (0802) (0803) (0830) U/F (1521) U/F (0599) U/F (0802) U/F (0803) U/F (0830) REVENUES Taxes $ $ $ $ $ 20,859,198.29 Licenses, Fees & Permits 656.32 Interest and Other Investment Income 294,461,559.58 62.49 Land Income Settlement of Claims Sales of Goods and Services Other Total Revenues 0.00 294,461,559.58 718.81 0.00 20,859,198.29

EXPENDITURES Payroll Related Costs Professional Fees and Services 3,944,241.77 Materials and Supplies Communications and Utilities Repairs and Maintenance Claims and Judgments Intergovernmental Payments Other Expenditures Capital Outlay Total Expenditures 0.00 3,944,241.77 0.00 0.00 0.00

Excess (Deficiency) of Revenues over Expenditures 0.00 290,517,317.81 718.81 0.00 20,859,198.29

OTHER FINANCING SOURCES (USES) Transfer In 17,484.23 5,241,945,166.47 Transfer Out (17,484.23) (5,973,732,230.02) (723.40) (20,859,198.29) Legislative Transfer Out Insurance Recoveries Total Other Financing Sources (Uses) 0.00 (731,787,063.55) (723.40) 0.00 (20,859,198.29)

Net Change in Fund Balances 0.00 (441,269,745.74) (4.59) 0.00 0.00

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances, September 1, 2019 11,698,892,083.66 7.10 Restatements (Note 14) Fund Balances, September 1, 2019, as Restated 0.00 11,698,892,083.66 7.10 0.00 0.00

Fund Balances, August 31, 2020 $ 0.00 $ 11,257,622,337.92 $ 2.51 $ 0.00 $ 0.00

Continued on the following page Concluded on the following page

68 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902)

EXHIBIT A-2 (concluded) Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – All General and Consolidated Funds For the Fiscal Year Ended August 31, 2020

EXPENDITURES Payroll Related Costs 851,151,758.97 Professional Fees and Services 12,528,204.29 Materials and Supplies 246,560.32 Communications and Utilities Repairs and Maintenance 402,842.85 Claims and Judgments 21,829,788.02 Intergovernmental Payments 8,500,000.00 425,624,522.74 Other Expenditures 47,673,685.87 Capital Outlay Total Expenditures 0.00 0.00 0.00 0.00 8,500,000.00 1,359,457,363.06

Excess (Deficiency) of Revenues over Expenditures 29,439,959.00 0.00 0.00 438,528,434.80 (8,500,000.00) 47,808,998,380.06

OTHER FINANCING SOURCES (USES) Transfer In 8,500,000.00 5,398,582,520.39 Transfer Out (29,439,959.00) (764,266.69) (384,162,028.93) (28,284,078,694.46) Legislative Transfer Out (28,595,028,216.14) Insurance Recoveries 225,419.42 Total Other Financing Sources (Uses) (29,439,959.00) 0.00 (764,266.69) (384,162,028.93) 8,500,000.00 (51,480,298,970.79)

Net Change in Fund Balances 0.00 0.00 (764,266.69) 54,366,405.87 0.00 (3,671,300,590.73)

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances, September 1, 2019 (3,963,085.78) 9,503,137.63 12,262,639,932.54 Restatements (Note 14) Fund Balances, September 1, 2019, as Restated 0.00 0.00 (3,963,085.78) 9,503,137.63 0.00 12,262,639,932.54

Fund Balances, August 31, 2020 $ 0.00 $ 0.00 $ (4,727,352.47) $ 63,869,543.50 $ 0.00 $ 8,591,339,341.81

Concluded on the following page

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 69 UNAUDITED Comptroller – Fiscal (902)

EXHIBIT B-1 Combining Balance Sheet – Special Revenue Funds August 31, 2020

General Land Tax Reduction Office County Binding Property Tax Property Tax and Excellence Right of Way Arbitration Relief Fund Relief Fund In Educ Fund Leases Trust Fund (0006) (0304) (0305) (0808) (0838) U/F (0006) U/F (0304) U/F (0305) U/F (2521) U/F (8380) ASSETS Current Assets: Cash and Cash Equivalents: Cash in State Treasury $ $ $ $ $ 4,900.00 Cash in Bank Receivables From: Interest and Dividends 639,767.92 Due From Other Agencies 1,461,366.56 Total Current Assets 0.00 639,767.92 0.00 1,461,366.56 4,900.00 Total Assets $ 0.00 $ 639,767.92 $ 0.00 $ 1,461,366.56 $ 4,900.00

LIABILITIES AND FUND BALANCES Liabilities: Current Liabilities: Accounts Payable $ $ $ $ 1,461,366.56 $ Total Current Liabilities 0.00 0.00 0.00 1,461,366.56 0.00 Total Liabilities 0.00 0.00 0.00 1,461,366.56 0.00

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances (Deficits): Restricted 639,767.92 Committed 4,900.00 Total Fund Balances 0.00 639,767.92 0.00 0.00 4,900.00

Total Liabilities and Fund Balances $ 0.00 $ 639,767.92 $ 0.00 $ 1,461,366.56 $ 4,900.00 $0.00 $0.00 $0.00 $0.00 $0.00

Concluded on the following page

70 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902)

EXHIBIT B-1 (concluded) Combining Balance Sheet – Special Revenue Funds August 31, 2020

International Fuels Tax Flood Area Habitat Agreement School and Road Protection Trust Fund Trust Fund Fund Total (0886) (0903) (9999) (Exhibit I) U/F (0886) U/F (2903) U/F (2999) 2020 ASSETS Current Assets: Cash and Cash Equivalents: Cash in State Treasury $ 3,089,799.26 $ 6,501,747.79 $ $ 9,596,447.05 Cash in Bank 9,982,579.39 9,982,579.39 Receivables From: Interest and Dividends 2,681.96 642,449.88 Due From Other Agencies 1,461,366.56 Total Current Assets 3,089,799.26 6,504,429.75 9,982,579.39 21,682,842.88 Total Assets $ 3,089,799.26 $ 6,504,429.75 $ 9,982,579.39 $ 21,682,842.88

LIABILITIES AND FUND BALANCES Liabilities: Current Liabilities: Accounts Payable $ $ 5,241,565.89 $ 491,476.77 $ 7,194,409.22 Total Current Liabilities 0.00 5,241,565.89 491,476.77 7,194,409.22 Total Liabilities 0.00 5,241,565.89 491,476.77 7,194,409.22

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances (Deficits): Restricted 1,262,863.86 9,491,102.62 11,393,734.40 Committed 3,089,799.26 3,094,699.26 Total Fund Balances 3,089,799.26 1,262,863.86 9,491,102.62 14,488,433.66

Total Liabilities and Fund Balances $ 3,089,799.26 $ 6,504,429.75 $ 9,982,579.39 $ 21,682,842.88 $0.00 $0.00 $0.00 $0.00

Concluded on the following page

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 71 UNAUDITED Comptroller – Fiscal (902)

EXHIBIT B-2 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Special Revenue Funds For the Fiscal Year Ended August 31, 2020

General Land State Tax Reduction Office County Binding Highway Property Tax and Excellence Right of Way Arbitration Fund Relief Fund In Educ Fund Leases Trust Fund (0006) (0304) (0305) (0808) (0838) U/F (0006) U/F (0304) U/F (0305) U/F (2521) U/F (8380) REVENUES Taxes $ $ 2,139,747,417.18 $ 678,000,000.00 $ $ Federal Revenue Licenses, Fees & Permits Interest and Other Investment Income 1,235,410.63 Other 841,975.00 Total Revenues 0.00 2,140,982,827.81 678,000,000.00 0.00 841,975.00

EXPENDITURES Intergovernmental Payments 3,886,374.23 Professional Fees and Services 841,325.00 Claims and Judgments Other Expenditures Total Expenditures 0.00 0.00 0.00 3,886,374.23 841,325.00

Excess (Deficiency) of Revenues Over Expenditures 0.00 2,140,982,827.81 678,000,000.00 (3,886,374.23) 650.00

OTHER FINANCING SOURCES (USES) Transfer In 3,886,374.23 Transfer Out (2,140,483,243.90) (678,000,000.00) Total Other Financing Sources (Uses) 0.00 (2,140,483,243.90) (678,000,000.00) 3,886,374.23 0.00

Net Change in Fund Balances 0.00 499,583.91 0.00 0.00 650.00

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances, September 1, 2019 140,184.01 4,250.00 Restatements (Note 14) Fund Balances, September 1, 2019, as Restated 0.00 140,184.01 0.00 0.00 4,250.00

Fund Balances, August 31, 2020 $ 0.00 $ 639,767.92 $ 0.00 $ 0.00 $ 4,900.00

Concluded on the following page

72 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902)

EXHIBIT B-2 (concluded) Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Special Revenue Funds For the Fiscal Year Ended August 31, 2020

International Fuels Tax Flood Area Habitat Agreement School and Road Protection Trust Fund Trust Fund Fund Total (0886) (0903) (9999) (Exhibit I) U/F (0886) U/F (2903) U/F (2999) 2020 REVENUES Taxes $ $ $ $ 2,817,747,417.18 Federal Revenue 3,214,532.71 3,214,532.71 Licenses, Fees & Permits 5,003,634.13 5,003,634.13 Interest and Other Investment Income 44,215.42 80,134.19 102,839.77 1,462,600.01 Other 36,419,527.24 37,261,502.24 Total Revenues 36,463,742.66 3,294,666.90 5,106,473.90 2,864,689,686.27

EXPENDITURES Intergovernmental Payments 37,904,244.36 3,214,532.71 2,215,825.32 47,220,976.62 Professional Fees and Services 841,325.00 Claims and Judgments Other Expenditures 4,687.09 4,687.09 Total Expenditures 37,904,244.36 3,214,532.71 2,220,512.41 48,066,988.71

Excess (Deficiency) of Revenues Over Expenditures (1,440,501.70) 80,134.19 2,885,961.49 2,816,622,697.56

OTHER FINANCING SOURCES (USES) Transfer In 3,214,532.71 7,100,906.94 Transfer Out (44,215.42) (3,214,532.71) (2,821,741,992.03) Total Other Financing Sources (Uses) (44,215.42) 0.00 0.00 (2,814,641,085.09)

Net Change in Fund Balances (1,484,717.12) 80,134.19 2,885,961.49 1,981,612.47

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances, September 1, 2019 4,574,516.38 6,605,141.13 11,324,091.52 Restatements (Note 14) 1,182,729.67 1,182,729.67 Fund Balances, September 1, 2019, as Restated 4,574,516.38 1,182,729.67 6,605,141.13 12,506,821.19

Fund Balances, August 31, 2020 $ 3,089,799.26 $ 1,262,863.86 $ 9,491,102.62 $ 14,488,433.66

Concluded on the following page

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 73 UNAUDITED Comptroller – Fiscal (902)

EXHIBIT C-1 Combining Balance Sheet – Permanent Funds August 31, 2020

Supporting Available Nat'l Graduate Military & Veterans Research Education Fund Exemptions Fund University Fund Total (0179) (0210) (0214) (Exhibit I) U/F (1179) U/F (0210,1210) U/F (0214) 2020 ASSETS Current Assets: Cash and Cash Equivalents: Cash in State Treasury $ $ 1,584,245.54 $ 50,209,718.85 $ 51,793,964.39 Cash in Bank Short-Term Investments (Note 3) 42,157,552.61 27,628,495.77 69,786,048.38 Receivables From: Interest and Dividends 1,942.68 3,099.72 2.75 5,045.15 Due From Other Agencies Total Current Assets 42,159,495.29 29,215,841.03 50,209,721.60 121,585,057.92 Non-Current Assets: Investments (Note 3) 318,198,008.92 240,777,227.35 558,975,236.27 Total Non-Current Assets: 318,198,008.92 240,777,227.35 0.00 558,975,236.27 Total Assets $ 360,357,504.21 $ 269,993,068.38 $ 50,209,721.60 $ 680,560,294.19

LIABILITIES AND FUND BALANCES Liabilities: Current Liabilities: Accounts Payable $ 2,599,221.26 $ 1,500,708.77 $ $ 4,099,930.03 Interest Payable 13,782.17 13,782.17 Investment Trade Payable 23,942.68 23,942.68 Hedging Derivative Investment Liability Due To Other Agencies 50,587.00 50,207,709.02 50,258,296.02 Total Current Liabilities 2,623,163.94 1,565,077.94 50,207,709.02 54,395,950.90 Total Liabilities 2,623,163.94 1,565,077.94 50,207,709.02 54,395,950.90

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances (Deficits): Nonspendable Restricted 357,734,340.27 268,427,990.44 2,012.58 626,164,343.29 Committed Total Fund Balances 357,734,340.27 268,427,990.44 2,012.58 626,164,343.29

Total Liabilities and Fund Balances $ 360,357,504.21 $ 269,993,068.38 $ 50,209,721.60 $ 680,560,294.19 $0.00 $0.00 $0.00 $0.00

74 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902)

EXHIBIT C-2 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Permanent Funds For the Fiscal Year Ended August 31, 2020

Supporting Available Nat'l Graduate Military & Veterans Research Education Fund Exemptions Fund University Fund Total (0179) (0210) (0214) (Exhibit I) U/F (1179) U/F (0210) U/F (0214) 2020 REVENUES Licenses, Fees & Permits $ $ $ $ Interest and Other Investment Income 15,409,926.86 8,761,326.59 (1.46) 24,171,251.99 Other 24,454,555.98 24,454,555.98 Total Revenues 15,409,926.86 8,761,326.59 24,454,554.52 48,625,807.97

EXPENDITURES Professional Fees and Services 402,886.49 298,618.37 701,504.86 Intergovernmental Payments 687,914.00 687,914.00 Other Expenditures Total Expenditures 402,886.49 986,532.37 0.00 1,389,418.86

Excess (Deficiency) of Revenues Over Expenditures 15,007,040.37 7,774,794.22 24,454,554.52 47,236,389.11

OTHER FINANCING SOURCES (USES) Transfer In 131,469.44 131,469.44 Distributions from Permanent Fund Principal (11,800,807.52) (8,528,913.30) (24,454,555.98) (44,784,276.80) Total Other Financing Sources (Uses) (11,800,807.52) (8,397,443.86) (24,454,555.98) (44,652,807.36)

Net Change in Fund Balances 3,206,232.85 (622,649.64) (1.46) 2,583,581.75

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances, September 1, 2019 354,734,871.46 269,210,924.87 2,014.04 623,947,810.37 Restatements (Note 14) (206,764.04) (160,284.79) (367,048.83) Fund Balances, September 1, 2019, as Restated 354,528,107.42 269,050,640.08 2,014.04 623,580,761.54

Fund Balances, August 31, 2020 $ 357,734,340.27 $ 268,427,990.44 $ 2,012.58 $ 626,164,343.29

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 75 UNAUDITED Comptroller – Fiscal (902)

EXHIBIT I-1 Combining Statement of Fiduciary Net Position – Private-Purpose Trust Funds August 31, 2020

Private Purpose Federal Resource Private Purpose Tobacco Settlement Receipt Flood Area School Subdivision Trust Distribution Fund and Road Trust Fund Total (0872) (0521) (0903) (Exhibit VI) U/F (2872) U/F (0521) U/F (0903) 2020 ASSETS Cash and Cash Equivalents: Cash in State Treasury $ $ $ $ Receivables: Federal Interest and Dividends Total Assets 0.00 0.00 0.00 0.00

LIABILITIES Accounts Payable Unearned Revenues Total Liabilities 0.00 0.00 0.00 0.00

NET POSITION Held In Trust For: Individuals, Organizations, and Other Governments Total Net Position $ 0.00 $ 0.00 $ 0.00 $ 0.00

76 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902)

EXHIBIT I-2 Combining Statement of Changes in Fiduciary Net Position – Private-Purpose Trust Funds For the Fiscal Year Ended August 31, 2020

Private Purpose Federal Resource Private Purpose Tobacco Settlement Receipt Flood Area School Subdivision Trust Distribution Fund and Road Trust Fund Total (0872) (0521) (0903) (Exhibit VII) U/F (2872) U/F (0521) U/F (0903) 2020 ADDITIONS Contributions: Investment Income: From Investing Activities Interest and Investment Income $ $ $ $ Total Investment Income 0.00 0.00 0.00 0.00

Other Additions: Federal Revenue Other Revenue Transfers-In 73,831,824.00 17,484.23 3,214,532.71 77,063,840.94 Total Other Additions 73,831,824.00 17,484.23 3,214,532.71 77,063,840.94

Total Additions 73,831,824.00 17,484.23 3,214,532.71 77,063,840.94

DEDUCTIONS Intergovernmental Payments 73,831,824.00 73,831,824.00 Transfers-Out 17,484.23 3,214,532.71 3,232,016.94 Total Deductions 73,831,824.00 17,484.23 3,214,532.71 77,063,840.94

NET INCREASE (DECREASE) 0.00 0.00 0.00 0.00

Net Position, September 1, 2019 1,182,729.67 1,182,729.67 Restatements (Note 14) (1,182,729.67) (1,182,729.67) Net Position, September 1, 2019, as Restated 0.00 0.00 0.00 0.00

Net Position – August 31, 2020 $ 0.00 $ 0.00 $ 0.00 $ 0.00

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 77 UNAUDITED Comptroller – Fiscal (902)

EXHIBIT J-1 Combining Statement of Fiduciary Net Position – Changes in Assets and Liabilities – Agency Funds August 31, 2020

Beginning Balance Ending Balance Sept. 1, 2019 Additions Deductions Aug. 31, 2020 General Revenue Fund (0001) – Unclaimed Property Securities Receipts (U/F 4113) ASSETS Investments: U.S. Government & Agency Obligations (Note 3) $ 99,382.67 $ 225,337.59 $ 99,382.67 $ 225,337.59 Corporate Obligations (Note 3) 422,696.86 534,377.75 422,696.86 534,377.75 Corporate Equity (Note 3) 194,083,105.78 242,759,003.39 194,083,105.78 242,759,003.39 Pooled Investments Note 3) 172,359,769.07 253,032,864.91 172,359,769.07 253,032,864.91 Other Investments (Note 3) 4,419,094.41 4,486,635.37 4,419,094.41 4,486,635.37 Total Assets $ 371,384,048.79 $ 501,038,219.01 $ 371,384,048.79 $ 501,038,219.01

LIABILITIES Funds Held for Others $ 371,384,048.79 $ 501,038,219.01 $ 371,384,048.79 $ 501,038,219.01 Total Liabilities $ 371,384,048.79 $ 501,038,219.01 $ 371,384,048.79 $ 501,038,219.01

OTHER AGENCY FUNDS Binding Arbitration Trust Fund (0838) U/F (0838) ASSETS Cash in State Treasury $ 869,100.00 $ 408,050.00 $ 869,100.00 $ 408,050.00 Total Assets $ 869,100.00 $ 408,050.00 $ 869,100.00 $ 408,050.00

LIABILITIES Accounts Payable $ $ $ $ Funds Held for Others 869,100.00 408,050.00 869,100.00 408,050.00 Total Liabilities $ 869,100.00 $ 408,050.00 $ 869,100.00 $ 408,050.00

Custom Brokers Bond/Security Trust Fund (0866) U/F (0866) ASSETS Cash in State Treasury $ 10,000.00 $ $ $ 10,000.00 Total Assets $ 10,000.00 $ 0.00 $ 0.00 $ 10,000.00

LIABILITIES Funds Held for Others $ 10,000.00 $ $ $ 10,000.00 Total Liabilities $ 10,000.00 $ 0.00 $ 0.00 $ 10,000.00

Texas Racing Commission Security Trust Fund (0868) U/F (0868) ASSETS Cash in State Treasury $ 12,100.00 $ $ $ 12,100.00 Total Assets $ 12,100.00 $ 0.00 $ 0.00 $ 12,100.00

LIABILITIES Funds Held for Others $ 12,100.00 $ $ $ 12,100.00 Total Liabilities $ 12,100.00 $ 0.00 $ 0.00 $ 12,100.00

The accompanying notes to the financial statements are an integral part of this financial statement. Continued on the following page

78 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902)

EXHIBIT J-1 (continued) Combining Statement of Fiduciary Net Position – Changes in Assets and Liabilities – Agency Funds August 31, 2020

Beginning Balance Ending Balance Sept. 1, 2019 Additions Deductions Aug. 31, 2020 Local Tax Collections For Sports/Community Venue Project Trust Fund (0874) U/F (0874) ASSETS Cash in State Treasury $ 6,185,351.68 $ 3,845,994.80 $ 6,185,351.68 $ 3,845,994.80 Total Assets $ 6,185,351.68 $ 3,845,994.80 $ 6,185,351.68 $ 3,845,994.80

LIABILITIES Accounts Payable $ $ $ $ Funds Held for Others 6,185,351.68 3,845,994.80 6,185,351.68 3,845,994.80 Total Liabilities $ 6,185,351.68 $ 3,845,994.80 $ 6,185,351.68 $ 3,845,994.80

City, County, MTA & SPD Sales Tax Trust (0882) U/F (0882) ASSETS Cash in State Treasury $ 1,233,994,736.53 $ 1,204,299,174.90 $ 1,233,994,736.53 $ 1,204,299,174.90 Total Assets $ 1,233,994,736.53 $ 1,204,299,174.90 $ 1,233,994,736.53 $ 1,204,299,174.90

LIABILITIES Accounts Payable $ $ $ $ Other Intergovernmental Payables 1,233,994,736.53 1,204,299,174.90 1,233,994,736.53 1,204,299,174.90 Funds Held for Others Total Liabilities $ 1,233,994,736.53 $ 1,204,299,174.90 $ 1,233,994,736.53 $ 1,204,299,174.90 Continued on the following page

International Fuels Tax Agreement (IFTA) Guaranty Trust Account (0884) U/F (0884) ASSETS Cash in State Treasury $ 499,764.06 $ 529,281.14 $ 499,764.06 $ 529,281.14 Total Assets $ 499,764.06 $ 529,281.14 $ 499,764.06 $ 529,281.14

LIABILITIES Accounts Payable $ $ $ $ Funds Held for Others 499,764.06 529,281.14 499,764.06 529,281.14 Total Liabilities $ 499,764.06 $ 529,281.14 $ 499,764.06 $ 529,281.14

Departmental Suspense Fund (0900) U/F (0900) ASSETS Cash in State Treasury $ 9,459,048.10 $ 17,115,914.83 $ 9,459,048.10 $ 17,115,914.83 Total Assets $ 9,459,048.10 $ 17,115,914.83 $ 9,459,048.10 $ 17,115,914.83

LIABILITIES Accounts Payable $ $ $ $ Funds Held for Others 9,459,048.10 17,115,914.83 9,459,048.10 17,115,914.83 Total Liabilities $ 9,459,048.10 $ 17,115,914.83 $ 9,459,048.10 $ 17,115,914.83

The accompanying notes to the financial statements are an integral part of this financial statement. Continued on the following page

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 79 UNAUDITED Comptroller – Fiscal (902)

EXHIBIT J-1 (continued) Combining Statement of Fiduciary Net Position – Changes in Assets and Liabilities – Agency Funds August 31, 2020

Beginning Balance Ending Balance Sept. 1, 2019 Additions Deductions Aug. 31, 2020 Motor Fuel Distributor's Bond Guaranty (0904) U/F (0904) ASSETS Cash in State Treasury $ 1,514,827.68 $ 3,345,037.68 $ 1,514,827.68 $ 3,345,037.68 Total Assets $ 1,514,827.68 $ 3,345,037.68 $ 1,514,827.68 $ 3,345,037.68

LIABILITIES Accounts Payable $ $ $ $ Funds Held for Others 1,514,827.68 3,345,037.68 1,514,827.68 3,345,037.68 Total Liabilities $ 1,514,827.68 $ 3,345,037.68 $ 1,514,827.68 $ 3,345,037.68

Qualified Hotel Project Trust Fund (0905) U/F 0905) ASSETS Cash in State Treasury $ 250,000.00 $ 126,479.51 $ 250,000.00 $ 126,479.51 Total Assets $ 250,000.00 $ 126,479.51 $ 250,000.00 $ 126,479.51

LIABILITIES Accounts Payable $ $ $ $ Funds Held for Others 250,000.00 126,479.51 250,000.00 126,479.51 Total Liabilities $ 250,000.00 $ 126,479.51 $ 250,000.00 $ 126,479.51

Mixed Beverage Tax Guaranty Fund (0906) U/F (0906) ASSETS Cash in State Treasury $ 21,088,208.96 $ 22,491,463.75 $ 21,088,208.96 $ 22,491,463.75 Total Assets $ 21,088,208.96 $ 22,491,463.75 $ 21,088,208.96 $ 22,491,463.75

LIABILITIES Accounts Payable $ $ $ $ Funds Held for Others 21,088,208.96 22,491,463.75 21,088,208.96 22,491,463.75 Total Liabilities $ 21,088,208.96 $ 22,491,463.75 $ 21,088,208.96 $ 22,491,463.75 Concluded on the following page

Sexually Oriented Business Security Bond Trust Fund (0912) U/F (0912) Cash in State Treasury $ 149,525.00 $ 139,050.00 $ 149,525.00 $ 139,050.00 Total Assets $ 149,525.00 $ 139,050.00 $ 149,525.00 $ 139,050.00

LIABILITIES Accounts Payable $ $ $ $ Funds Held for Others 149,525.00 139,050.00 149,525.00 139,050.00 Total Liabilities $ 149,525.00 $ 139,050.00 $ 149,525.00 $ 139,050.00

Sales Tax Guaranty Trust (0962) U/F (0962) Cash in State Treasury $ 26,819,716.45 $ 26,924,882.75 $ 26,819,716.45 $ 26,924,882.75 Total Assets $ 26,819,716.45 $ 26,924,882.75 $ 26,819,716.45 $ 26,924,882.75

LIABILITIES Accounts Payable $ $ $ $ Funds Held for Others 26,819,716.45 26,924,882.75 26,819,716.45 26,924,882.75 Total Liabilities $ 26,819,716.45 $ 26,924,882.75 $ 26,819,716.45 $ 26,924,882.75

The accompanying notes to the financial statements are an integral part of this financial statement. Concluded on the following page

80 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902)

EXHIBIT J-1 (concluded) Combining Statement of Fiduciary Net Position – Changes in Assets and Liabilities – Agency Funds August 31, 2020

Beginning Balance Ending Balance Sept. 1, 2019 Additions Deductions Aug. 31, 2020 Direct Deposit Correction Account (0980) U/F (0980) Cash in State Treasury $ 49,045.80 $ 37,201.99 $ 49,045.80 $ 37,201.99 Total Assets $ 49,045.80 $ 37,201.99 $ 49,045.80 $ 37,201.99

LIABILITIES Funds Held for Others $ 49,045.80 $ 37,201.99 $ 49,045.80 $ 37,201.99 Total Liabilities $ 49,045.80 $ 37,201.99 $ 49,045.80 $ 37,201.99

Totals – All Agency Funds Cash in State Treasury $ 1,300,901,424.26 $ 1,279,262,531.35 $ 1,300,879,324.26 $ 1,279,284,631.35 Investments: U.S. Government & Agency Obligations (Note 3) 99,382.67 225,337.59 99,382.67 225,337.59 Corporate Obligations (Note 3) 422,696.86 534,377.75 422,696.86 534,377.75 Corporate Equity (Note 3) 194,083,105.78 242,759,003.39 194,083,105.78 242,759,003.39 Pooled Investments Note 3) 172,359,769.07 253,032,864.91 172,359,769.07 253,032,864.91 Other Investments (Note 3) 4,419,094.41 4,486,635.37 4,419,094.41 4,486,635.37 Total Assets $ 1,672,285,473.05 $ 1,780,300,750.36 $ 1,672,263,373.05 $ 1,780,322,850.36

LIABILITIES Accounts Payable $ $ $ $ Intergovernmental Payables 1,233,994,736.53 1,204,299,174.90 1,233,994,736.53 1,204,299,174.90 Funds Held for Others 438,290,736.52 576,001,575.46 438,268,636.52 576,023,675.46 Total Liabilities $ 1,672,285,473.05 $ 1,780,300,750.36 $ 1,672,263,373.05 $ 1,780,322,850.36

The accompanying notes to the financial statements are an integral part of this financial statement.

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 81 UNAUDITED Comptroller – Fiscal (902)

82 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902)

SUPPLEMENTARY SCHEDULES

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 83 UNAUDITED Comptroller – Fiscal (902)

SCHEDULE 1A Schedule of Federal Financial Assistance For the Fiscal Year Ended August 31, 2020

Pass-Through From State Agy. Non-State Direct Total Pass- Federal Grantor/Pass Through CFDA Or Univ. Entities Program Through & Direct Grantor/Program Title Number Amount Amount Amount Program

U.S. Department of Defense Payment to States in Lieu of Real Estate Taxes 12.112 $ $ $ 3,214,532.71 $ 3,214,532.71 Total U.S. Dept of Defense 0.00 0.00 3,214,532.71 3,214,532.71

Total Federal Financial Assistance $ 0.00 $ 0.00 $ 3,214,532.71 $ 3,214,532.71

NOTE 2 – RECONCILIATION Per Combined Statement of Changes in Fiduciary Net Assets – Fiduciary Funds – (Exh VII):

Federal Revenues $ 3,214,532.71

Reconciling Items 0.00

Total Pass-Through and Expenditures Per Federal Schedule $ 3,214,532.71

NOTE 7 – FEDERAL DEFERRED REVENUE CFDA Balance 09/01/19 Net Change Balance 08/31/20 15.227 $ 17,484.23 $0.00 $ 17,484.23

The deferred revenue of $17,484.23 are federal grant prepayments that have not been earned. This relates to CFDA 15.227 - Distribution of Receipts to State and Local Governments.

84 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902)

Pass-Through To State Agy. Non-State Total Pass- Or Univ. Entities Expenditures Through & Amount Amount Amount Expenditures

$ $ $ 3,214,532.71 $ 3,214,532.71 0.00 0.00 3,214,532.71 3,214,532.71

$ 0.00 $ 0.00 $ 3,214,532.71 $ 3,214,532.71

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 85 SCHEDULE 4 Schedule of Modified to Full Accrual Adjustments – Governmental Funds Balance Sheet/Statement of Net Position – Governmental Funds August 31, 2020 Governmental Capital Long-Term Statement Funds Assets Liabilities Other of Total Adjustments Adjustments Adjustments Net Assets ASSETS Current Assets: Cash in State Treasury $ 5,875,930,749.56 $ $ $ $ 5,875,930,749.56 Cash in Bank 9,982,579.39 9,982,579.39 Legislative Appropriations (27,633,116.00) (27,633,116.00) Short Term Investments 324,748,677.68 324,748,677.68 Receivables: Accounts Receivable 291,866,666.67 291,866,666.67 Interest and Dividends 4,166,845.03 4,166,845.03 Taxes 732,658,348.09 732,658,348.09 Due From Other Agencies 1,384,997,950.18 1,384,997,950.18 Total Current Assets 8,596,718,700.60 0.00 0.00 0.00 8,596,718,700.60

Non-Current Assets: Taxes Receivable 485,751,207.74 485,751,207.74 Investments 4,404,573,637.90 4,404,573,637.90 Capital Assets: Depreciable Furniture and Equipment 303,467.20 303,467.20 Accumulated Depreciation (303,467.20) (303,467.20) Computer Software 3,591,951.10 3,591,951.10 Accumulated Amortization (3,591,951.10) (3,591,951.10) Total Non-Current Assets 4,890,324,845.64 0.00 0.00 0.00 4,890,324,845.64 Total Assets $ 13,487,043,546.24 $ 0.00 $ 0.00 $ 0.00 $ 13,487,043,546.24

LIABILITIES AND FUND BALANCES Current Liabilities: Payables From: Accounts Payable $ 12,393,351.10 $ $ $ $ 12,393,351.10 Federal Payable 7,631,073.00 7,631,073.00 Interest Payable 13,782.17 13,782.17 Investment Trade Payable 23,942.68 23,942.68 Hedging Derivative Investment Liability Other Intergovernmental 23,761,173.12 23,761,173.12 Unclaimed Property Claimant Liabilities Taxes Refund Payable 163,032,767.51 163,032,767.51 Due to Other Agencies 2,743,157,399.01 2,743,157,399.01 Other Current Liabilities 303,997,441.06 303,997,441.06 Unearned Revenues 365,320,941.90 365,320,941.90 Total Current Liabilities 3,619,331,871.55 0.00 0.00 0.00 3,619,331,871.55 Non-Current Liabilities: Employees' Compensable Leave 2,754.81 2,754.81 Total Non-Current Liabilities 2,754.81 0.00 0.00 0.00 2,754.81 Total Liabilities 3,619,334,626.36 0.00 0.00 0.00 3,619,334,626.36 DEFERRED INFLOWS Deferred Inflow of Resources (Note 29) 635,716,801.12 (635,716,801.12) Total Deferred Inflows 635,716,801.12 0.00 0.00 (635,716,801.12) 0.00 FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances (Deficits): Nonspendable for LT Taxes Receivable 485,751,207.74 Restricted 709,673,557.09 Committed 21,520,475.02 Unassigned 8,015,046,878.91 Total Fund Balances 9,231,992,118.76 Total Liabilities and Fund Balance $ 13,487,043,546.24

GOVERNMENT-WIDE STATEMENT – NET POSITION Net Position: Net Investment in Capital Assets $ $ $ $ Unrestricted (635,716,801.12) 9,867,708,919.88 Total Net Position $ 0.00 $ 0.00 $ (635,716,801.12) $ 9,867,708,919.88

86 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Fiscal (902)

SCHEDULE 4 Schedule of Modified to Full Accrual Adjustments – Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances/Statement of Activities – Governmental Funds For the Fiscal Year Ended August 31, 2020

Governmental Capital Long-Term Statement Funds Assets Liabilities Other of Total Adjustments Adjustments Adjustments Net Assets REVENUES Taxes $ 49,271,150,213.35 $ $ $ 635,716,801.12 $ 49,906,867,014.47 Federal Revenue 3,214,532.71 3,214,532.71 Licenses, Fees & Permits 1,279,138,382.61 1,279,138,382.61 Interest and Other Investment Income 371,540,010.75 371,540,010.75 Land Income 2,184,332.06 2,184,332.06 Settlement of Claims 594,134,503.44 594,134,503.44 Sales of Goods and Services 41,479,688.31 41,479,688.31 Other 518,929,574.13 518,929,574.13 Total Revenues 52,081,771,237.36 0.00 0.00 635,716,801.12 52,717,488,038.48

EXPENDITURES Payroll Related Costs 851,151,758.97 851,151,758.97 Professional Fees and Services 14,071,034.15 14,071,034.15 Materials and Supplies 246,560.32 246,560.32 Communications and Utilities Repairs and Maintenance 402,842.85 402,842.85 Claims and Judgments 21,829,788.02 21,829,788.02 Intergovernmental Payments 473,533,413.36 473,533,413.36 Other Expenditures 47,678,372.96 47,678,372.96 Capital Outlay Depreciation/Amortization Expense 2,726.38 2,726.38 Total Expenditures 1,408,913,770.63 2,726.38 0.00 0.00 1,408,916,497.01

Excess (Deficiency) of Revenues Over Expenditures 50,672,857,466.73 (2,726.38) 0.00 635,716,801.12 51,308,571,541.47

OTHER FINANCING SOURCES (USES) Net Inc (Dec) on Transfer of Capital Assets Transfer In 5,405,814,896.77 5,405,814,896.77 Transfer Out (31,150,604,963.29) (31,150,604,963.29) Legislative Transfer Out (28,595,028,216.14) (28,595,028,216.14) Insurance Recoveries 225,419.42 225,419.42 Total Other Financing Sources and Uses (54,339,592,863.24) 0.00 0.00 0.00 (54,339,592,863.24)

Net Change in Fund Balances/Net Assets (3,666,735,396.51) (2,726.38) 0.00 635,716,801.12 (3,031,021,321.77)

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances, September 1, 2019 12,897,911,834.43 Restatements 815,680.84 Fund Balances, September 1, 2019, as Restated 12,898,727,515.27

Fund Balances, August 31, 2020 $ 9,231,992,118.76

GOVERNMENT-WIDE STATEMENT – NET POSITION Net Position/Net Change in Net Position $ (3,666,735,396.51) $ (2,726.38) $ 0.00 $ 635,716,801.12 $ (3,031,021,321.77)

Net Position, September 1, 2019 12,897,911,834.43 2,726.38 12,897,914,560.81 Restatements 815,680.84 815,680.84 Net Position, September 1, 2019, as Restated 12,898,727,515.27 2,726.38 0.00 0.00 12,898,730,241.65

Net Position, August 31, 2020 $ 9,231,992,118.76 $ 0.00 $ 0.00 $ 635,716,801.12 $ 9,867,708,919.88

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 87 UNAUDITED Comptroller – Fiscal (902)

SCHEDULE 5 Schedule of Tax Revenue, Tax Receivable and Deferred Inflow Tax Revenue For the Fiscal Year Ended August 31, 2020

Tax Revenue Modified Full Taxes Refunds Net Taxes Tax Type Accrual Accrual Receivable Payable Receivable

Sales and Use $ 29,177,901,589.30 $ 29,177,907,634.85 $ 236,020,694.24 $ $ 236,020,694.24 Motor Vehicle & MFG Housing 4,689,087,587.32 4,690,572,510.82 43,474,011.68 43,474,011.68 Motor Fuels* 73,403,897.67 73,403,898.28 133,794.06 133,794.06 Oil & Natural Gas Production 3,808,247,223.44 4,144,690,533.28 541,286,167.58 (163,032,767.51) 378,253,400.07 Franchise 3,299,410,717.66 3,299,410,717.66 Insurance 2,737,607,312.30 2,995,992,894.36 309,400,115.87 309,400,115.87 Cigarette & Tobacco 527,378,478.09 527,378,478.09 (925,778.71) (925,778.71) Other Taxes: Alcoholic Beverage 1,041,395,821.51 1,041,395,821.51 18,801,104.22 18,801,104.22 Utility 479,189,841.49 518,586,781.04 67,140,881.10 67,140,881.10 Hotel and Motel 420,596,057.09 420,596,057.09 3,078,565.79 3,078,565.79 Other 138,326,205.85 138,326,205.85

Total Taxes $ 46,392,544,731.72 $ 47,028,261,532.83 $ 1,218,409,555.83 $ (163,032,767.51) $ 1,055,376,788.32

* Motor fuel tax revenue, taxes receivable and deferred inflow revenue transferred to the Texas Department of Transportation and Texas Education Agency will be reported by those agencies instead of Comptroller - Fiscal

Deferred Inflow Tax Type Tax Revenue

Sales and Use $ 16,129.13 Motor Vehicle & MFG Housing 2,166,546.60 Motor Fuels* 81,926.63 Oil & Natural Gas Production Franchise Insurance 200,182,216.48 Cigarette & Tobacco Other Taxes: Alcoholic Beverage Utility 37,952,266.88 Hotel and Motel 7,256,485.03

Total Taxes $ 247,655,570.75

88 Texas Comptroller of Public Accounts • 2020 Annual Financial Report Comptroller Treasury – Fiscal (311) BASIC FINANCIAL STATEMENTS

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 89 UNAUDITED Comptroller Treasury – Fiscal (311)

90 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller Treasury – Fiscal (311)

EXHIBIT I Combined Balance Sheet/Statement of Net Position – Governmental Funds August 31, 2020

General Special Revenue Permanent Governmental Funds Funds Funds Funds (Ex A-1) (Ex B-1) (Ex E-1) Total ASSETS Current Assets: Cash and Cash Equivalents: Cash in Bank $ $ 102,653.20 $ 1,072,163.72 $ 1,174,816.92 Cash in State Treasury 71,989,356.00 71,989,356.00 Short Term Investments 3,021,253.10 10,963,701.44 81,302,045.19 95,286,999.73 Receivables From: Interest and Dividends 3.12 363.19 3,767.49 4,133.80 Trade Receivables Due From Other Agencies 14,559,140.23 14,559,140.23 Non-Current Assets: Investments 103,406,535.79 734,644,429.26 838,050,965.05 Total Assets $ 89,569,752.45 $ 114,473,253.62 $ 817,022,405.66 $ 1,021,065,411.73

LIABILITIES AND FUND BALANCES Liabilities: Current Liabilities: Payables From: Accounts Payable $ 200,000.00 $ 434,536.50 $ 4,535,937.84 $ 5,170,474.34 Trade Payable Interest Payable 3,988.53 41,658.29 45,646.82 Due to Other Agencies Futures Contracts at Fair Value Swaps at Fair Value Other Liabilities 86,559,140.23 86,559,140.23 Total Liabilities 86,759,140.23 438,525.03 4,577,596.13 91,775,261.39

FUND FINANCIAL STATEMENT Fund Balances (Deficits): Restricted Committed 3,021,256.22 114,034,728.59 812,444,809.54 929,500,794.34 Unassigned (210,644.00) (210,644.00) Total Fund Balances 2,810,612.22 114,034,728.59 812,444,809.54 929,290,150.34

Total Liabilities and Fund Balances $ 89,569,752.45 $ 114,473,253.62 $ 817,022,405.66 $ 1,021,065,411.73

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 91 UNAUDITED Comptroller Treasury – Fiscal (311)

EXHIBIT II Combined Statement of Revenues, Expenditures, and Changes in Fund Balances/Statement of Activities – Governmental Funds For the Fiscal Year Ended August 31, 2020

General Special Revenue Permanent Governmental Funds Funds Funds Funds (Ex A-2) (Ex B-2) (Ex E-2) Total REVENUES Interest and Other Investment Income $ 338,835,573.93 $ 3,185,203.94 $ 8,235,263.40 $ 350,256,041.27 Net Increase (Decrease) in Fair Value 221,243.18 15,477,258.95 15,698,502.13 Other Revenue Total Revenues 338,835,573.93 3,406,447.12 23,712,522.35 365,954,543.40

EXPENDITURES Professional Fees and Services 450,923.82 92,173.44 909,506.94 1,452,604.20 Travel Interest 313,005,464.01 313,005,464.01 Information Technology Service 58,000.00 58,000.00 Purchased Contracted Service Rentals and Leases Prompt Payment Interest Fees and other charges 200.00 200.00 Advertising 869.00 869.00 Total Expenditures/Expenses 313,515,456.83 92,173.44 909,506.94 314,517,137.21

Excess (Deficiency) of Revenues Over Expenditures 25,320,117.10 3,314,273.68 22,803,015.41 51,437,406.19

OTHER FINANCING SOURCES (USES) Transfers In 14,313,005,464.01 14,313,005,464.01 Transfers Out (14,340,700,130.68) (4,249,184.78) (26,979,456.98) (14,371,928,772.44) Bond and Note Issued Total Other Financing Sources and Uses (27,694,666.67) (4,249,184.78) (26,979,456.98) (58,923,308.43)

Net Change in Fund Balances/Net Assets (2,374,549.57) (934,911.10) (4,176,441.57) (7,485,902.24)

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances, September 1, 2019 5,185,161.79 114,969,639.69 816,621,251.10 821,806,412.89 Restatements Fund Balances, September 1, 2019, as Restated 5,185,161.79 114,969,639.69 816,621,251.10 821,806,412.89

Fund Balances – August 31, 2020 $ 2,810,612.22 $ 114,034,728.59 $ 812,444,809.53 $ 814,320,510.65

92 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller Treasury – Fiscal (311)

EXHIBIT VI Combined Statement of Net Position – Fiduciary Funds August 31, 2020

Private- Purpose Agency Trust Funds (Exhibit I-1) (Exhibit J-1) Totals ASSETS Cash and Cash Equivalents: Cash in Bank $ 3,407,606.63 $ 38,070.00 $ 3,445,676.63 Cash in State Treasury 1,776,108.96 1,776,108.96 Other Short Term Investments 281,573,939.28 32,705,743.62 314,279,682.90 Investments (Note 3) U.S. Government and Agency Obligations Corporate Equity 0.24 0.24 Corporate Obligations Foreign Securities 50,340,331.71 50,340,331.71 Other Investments 2,291,612,347.26 2,291,612,347.26 Repurchase Agreements Receivables: Interest and Dividends 12,968.99 33.81 13,002.80 Trade Receivables Due From Other Fund Other Assets 525,000.00 525,000.00 Total Assets 2,626,947,194.11 35,044,956.39 2,661,992,150.50

LIABILITIES Payables: Accounts Payable 14,418,675.93 14,418,675.93 Trade Payable Interest Payable 132,400.54 132,400.54 Due to Other Agencies Obligations/Securities Lending Swaps at Fair Value Funds Held for Others 35,044,956.39 35,044,956.39 Total Liabilities 14,551,076.47 35,044,956.39 49,596,032.86

NET ASSETS Held in trust for: Individuals, Organizations, and Other Governments 2,612,396,117.64 2,612,396,117.64 Total Net Assets $ 2,612,396,117.64 $ 0.00 $ 2,612,396,117.64

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 93 UNAUDITED Comptroller Treasury – Fiscal (311)

EXHIBIT VII Combined Statement of Changes in Net Position – Fiduciary Funds August 31, 2020

Private Purpose Trust (Exhibit I-2) Totals ADDITIONS Investment Income: From Investing Activities: Net appreciaiton(Depreciation) in Fair Value of Investments $ 50,142,325.09 $ 50,142,325.09 Interest and Investment Income 26,800,949.66 26,800,949.66 Total Investing Income (Loss) 76,943,274.75 76,943,274.75 Less Investing Activities Expense Net Income from Investing Activities 76,943,274.75 76,943,274.75

From Securities Lending Activities Securities Lending Income Less Securities Lending Expense: Borrower Rebates and Agent Fees Net Income from Securities Lending Activities Total Net Investment Income (Loss) 76,943,274.75 76,943,274.75

Total Additions 76,943,274.75 76,943,274.75

DEDUCTIONS Transfer out 73,831,824.00 73,831,824.00 Professional Fees and Services 2,978,695.73 2,978,695.73 Total Deductions 76,810,519.73 76,810,519.73

INCREASE (DECREASE) IN NET ASSETS 132,755.02 132,755.02

NET POSITION Net Position September 1, 2019 2,612,263,362.63 2,612,263,362.63 Restatements Net Position, September 1, 2019, as Restated 2,612,263,362.63 2,612,263,362.63

Net Position – August 31, 2020 $ 2,612,396,117.65 $ 2,612,396,117.65

94 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller Treasury – Fiscal (311)

Notes to the Financial Statements

NOTE 1: Summary of Significant Accounting Policies GENERAL INTRODUCTION

The Comptroller Treasury–Fiscal is an agency of the state of Texas, and its financial records comply with the state statutes and regulations . This includes compliance with the Comptroller of Public Accounts Reporting Requirements of State Agen- cies .

Effective Sept . 1, 1996, the constitutional office of the Treasurer was abolished, and the powers, duties, obligations, rights and contracts of the Treasurer were transferred to and assumed by the Comptroller of Public Accounts .

There are no component units in which the Comptroller Treasury–Fiscal is financially accountable or any organization in which exclusion would create misleading or incomplete financial statements .

Due to the statewide requirements embedded in Governmental Accounting Standards Board Statement No .34, Basic Finan- cial Statements – and Management’s Discussion and Analysis – for State and Local Governments, the Comptroller of Public Accounts does not require the accompanying annual financial report to be in compliance with all the requirements in this statement . The financial report will be considered for audit by the State Auditor as part of the audit of the state’s Compre- hensive Annual Financial Report; therefore, an opinion has not been expressed on the financial statements and related information contained in this report .

FUND STRUCTURE

The accompanying financial statements are presented on the basis of funds and account groups, each of which is considered a separate accounting entity .

GOVERNMENTAL FUND TYPES

General Fund The general fund is used to account for all financial resources of the state except those required to be accounted for in another fund . Permanent Funds Permanent funds are used to account for resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the state’s programs .

FIDUCIARY FUND TYPES

Agency Funds Agency funds are used to account for assets held as an agent for individuals, other government entities, and/or other funds . These funds are custodial in nature and do not involve measurement of results of operations . Private-Purpose Trust Funds Agencies use private-purpose trust funds to account for all other trust arrangements whose principal and interest benefit individuals, private organizations, or other governments .

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 95 UNAUDITED Comptroller Treasury – Fiscal (311)

BASIS OF ACCOUNTING

The basis of accounting determines when revenues and expenditures or expenses are recognized in the accounts reported in the financial statements . All governmental fund types and agency funds are accounted for on the modified basis of accounting . Revenues are recognized when they become both measurable and available . Expenditures are generally recognized when the related fund liability is incurred . Exceptions are unpaid employee compensable leave, and the un-matured debt service (principal and interest) on general long-term debt, long-term capital leases, and long-term claims and judgments, which are not recognized until actual payment is made .

BUDGETS AND BUDGETARY ACCOUNTING

The budget is prepared biennially and represents appropriations authorized by the legislature and approved by the Governor (The General Appropriations Act) . Encumbrance accounting is employed for budgetary control purposes .

Unencumbered appropriations are generally subject to lapse 60 days after the end of the fiscal year for which they were appropriated .

ASSETS, LIABILITIES AND FUND BALANCES/NET ASSETS

ASSETS

Investments Investments are stated at fair value in all funds in accordance with GASB Statement 31 – Accounting and Financial Report- ing for Certain Investments and for External Investment Pools. Securities Lending Collateral Securities lent are reported as assets on the balance sheet . The costs of securities lending transactions are reported as expenditures or expenses in the Operating Statement . These costs are reported at gross . Interest and Dividend Receivables This includes interest and dividends accrued on investments at year-end that will not be deposited to the Fund until after the fiscal year . Investment Trade Receivables This represents investment sales that occurred on or before fiscal year-end for which cash payment will be received after fiscal year-end .

LIABILITIES

Accounts Payable Accounts Payable represents the liability for the value of assets or services received at the balance sheet date for which payment is pending . Notes Payable State of Texas Tax and Revenue Anticipation Notes are recorded at par . The bond proceeds are accounted for as an “Other Financing Source” in the Tax and Revenue Anticipation Note Fund 577 when received, and expenditures for payment of principal and interest are recorded in the Tax and Revenue Anticipation Note Fund 577 when paid . Investment Trade Payables This represents the liability for investment purchases that occurred on or before fiscal year-end for which cash payment will be received after fiscal year-end .

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FUND BALANCE/NET POSITION

Fund Balance/Net Position “Fund balance” is the difference between assets plus deferred outflows of resources and liabilities plus deferred inflows of resources on the governmental fund statements . “Net position” is the difference between assets plus deferred outflows of resources and liabilities plus deferred inflows of resources on the government-wide, proprietary and fiduciary fund statements . Fund Balance Components Fund balances for governmental funds are classified as non-spendable, restricted, committed, assigned or unassigned in the fund financial statements .

• Non-spendable fund balance includes amounts not available to be spent because they are either:

• Not in spendable form – OR – • Legally or contractually required to be maintained intact .

• Restricted fund balance includes those resources that have constraints placed on their use through external parties — such as creditors, grantors, contributors, laws or regulations of other governments — or by law through constitutional provisions or enabling legislation .

• Assigned fund balance includes amounts constrained by the state’s intent to be used for specific purposes, but the constraints do not meet the requirements to be reported as restricted or committed . Intent is expressed by:

• The Texas Legislature – OR – • A body (for example, a budget or finance committee) or official to which the governing body has delegated the authority to assign amounts to be used for specific purposes .

• Unassigned fund balance is the residual classification for the general fund . This classification represents fund balance that was not assigned to other funds and was not restricted, committed or assigned to specific purposes within the general fund . Restricted Net Position Restricted net position results when constraints placed on net resources are either externally imposed by creditors, grantors, contributors and the like or imposed by law through constitutional provisions or enabling legislation . Unrestricted Net Position Unrestricted net position consists of net resources that do not meet the definition of the two preceding categories . Unrestrict- ed net position often has constraints on resources that are imposed by management but can be removed or modified .

INTERFUND ACTIVITIES AND BALANCES

The Treasury has the following types of transactions between funds:

(1) Transfers: Legally required transfers that are reported when incurred as “Transfers In” by the recipient fund and as “Transfers Out” by the disbursing fund

The composition of the agency’s Interfund activities and balances are presented in Note 12 .

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NOTE 2: Capital Assets (Not Applicable) NOTE 3: Deposits, Investments & Repurchase Agreements All monies in funds established in the Treasury by the state constitution or by an act of the Legislature are pooled for investment purposes . All monies of the Trust Company are invested according to Section 404 106. of the Government Code .

INVESTMENT AUTHORITY

Section 404 024. of the Government Code permits the investment of these funds in the following instruments:

1 . Fully collateralized time deposits in banks and savings and loan associations domiciled in the state which have been approved by the State Depository Board to receive state deposits;

2 . Direct security repurchase agreements;

3 . Reverse repurchase agreements;

4 . Direct obligations of, or obligations the principal and interest of which are guaranteed by the United States, its’ agencies and instrumentalities;

5 . Bankers’ acceptances that: (i) are eligible for purchase by the Federal Reserve System, (ii) do not exceed 270 days to maturity, and (iii) are issued by a bank that has received the highest short-term credit rating by a nationally recognized investment firm;

6 . Commercial paper that has received the highest short-term credit rating by a nationally recognized investment rating firm and does not exceed 270 days to maturity; and

7 . Contracts written by the Comptroller in which the Comptroller grants the purchaser the right, for a fee, to purchase securities in the Treasury’s marketable securities portfolio at a specified price over a specified period . These contracts are commonly known as covered call options . Uncovered option trading is specifically prohibited .

No more than 20 percent of Treasury Pool assets may be invested in time deposits at approved state depositories .

Repurchase and reverse repurchase agreements may be entered into by the Comptroller only with state or national banks doing business in Texas or primary dealers approved by the Federal Reserve System .

There were no significant violations of legal provisions during the period .

DEPOSITS OF CASH IN BANK

Custodial Operations As of Aug . 31, 2020, the carrying amount and the total bank balance of deposits is presented below:

Custodial Operations

Cash in Bank – Carrying Amount$ 1,447,489,894.35

Total Cash in Bank $ 1,447,489,894.35

The Trust Company’s contract with the Federal Reserve Bank permits the Trust Company to wire transfer funds for the purpose of facilitating investment transactions . Correspondingly, a minimum cash balance is maintained in the account to generate earnings credits sufficient to offset the costs of the services received . As these investment transactions occur, the

98 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller Treasury – Fiscal (311)

Federal Reserve Bank requires that the Trust Company maintain a positive cash balance in the account intraday and at the end of the day . The Trust Company met those requirements throughout fiscal 2020 .

Collateralization and Risk Categorization – In accordance with state law, all amounts deposited in financial institutions above the amounts insured by the Federal Deposit Insurance Corporation are fully collateralized by the pledging, to the Comptroller, of eligible securities valued at market, excluding accrued interest . Generally, the list of eligible securities includes all U . S . Treasury and most Agency Obligations, including certain mortgage backed securities pledged at 125 percent, and securities issued by state agencies and political subdivisions within the state . All securities pledged to the Comp- troller must be held by a third-party custodian bank doing business in the state through a main office or one or more branches, any Federal Reserve Bank, the Texas Treasury Safekeeping Trust Company, any Federal Home Loan Bank or in the vault of Treasury Operations at the Comptroller of Public Accounts .

Securities pledged as collateral on Aug . 31, 2020, were categorized as follows:

Political Subdivision Securities U.S. Government Securities

Percent of Percent of Moody's Investors Service Ratings Collateral Pledged Description Collateral Pledged

AAA 19.24% Federal Farm Credit Bank 1.98% AA 31.76% Federal Home Loan Bank Debentures 0.92% A 6.79% Federal Home Mtg. Corp-Mtg. backed 4.25% Subtotal 57.79% Federal National Mortgage Assn 0.33% Federal National Mtg. Assn-Mtg. backed 2.27% Government National Mortgage Assn 0.50% Federal Home Loan Bank Letters of Credit 31.96% Subtotal 42.21% TOTAL 100.00%

Based on an opinion letter received by the Treasury from the FDIC, it is the policy of the Treasury to collateralize bank deposits based on a collected funds basis .

During fiscal year 2020, no depository holding state funds failed .

All securities pledged to the Trust Company must be held by the Trust Company, a third-party bank that is an approved depository and approved custodian, any Federal Reserve Bank, Federal Home Loan Bank or in the vault of the Treasury . The Trust Company has contracted with financial institutions to collateralize Trust Company deposits in excess of depository insurance .

State statute permits depository institutions to select the bank that may serve as their third-party custodian for collateral pledged by that institution to the Comptroller . These banks must be approved depositories and approved custodians with capital and surplus of $5 million or more .

All deposits in financial institutions for Comptroller custodial operations, as of Aug . 31, 2020, were fully secured by FDIC insurance and securities pledged to the Comptroller .

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Departmental Operations As of Aug . 31, 2020, the carrying amount and the total bank balance of deposits is presented below:

Departmental Operations

Fiduciary Funds

Cash in Bank – Carrying Amount $ 38,070.00 Total Cash in Bank per AFR $ 38,070.00

Fiduciary Funds Cash in Bank $ 38,070.00 Cash in Bank per AFR $ 38,070.00

Governmental Funds

Cash in Bank – Carrying Amount $ 1,174,816.92 Total Cash in Bank per AFR $ 1,174,816.92

Governmental Funds Cash in Bank $ 1,174,816.92 Cash in Bank per AFR $ 1,174,816.92

INVESTMENTS AND REPURCHASE AGREEMENTS

Custodial Operations As of Aug . 31, 2020, the fair value of investments is as presented below .

Investments for the Treasury Pool, as of Aug . 31, 2020 are as follows:

Fair Value of Investments As of 08/31/2020 Amortized Fair Treasury Portfolio Level 1 Level 2 Level 3 Cost Value

Investment Type U.S. Government Agencies $ $ 1,754,145,476.00 $ $ $ 1,754,145,476.00 U.S. Government Treasuries 15,171,506,029.00 15,171,506,029.00 Government Mortgage Backed Securities 2,970,862,553.00 2,970,862,553.00 Commercial paper 9,066,134,451.00 9,066,134,451.00 Repurchase Agreements 1,600,000,000.00 1,600,000,000.00 Supranationals/Israel Bonds 2,340,921,420.00 2,340,921,420.00 Corporate Obligations 2,912,040,062.00 2,912,040,062.00 Asset Backed Securities 3,199,242,691.00 3,199,242,691.00 Small Business Administration 8,068,893.00 8,068,893.00 Stock In Texas Trust Company 1,000,000.00 1,000,000.00 Money Market Mutual Funds 2,111,000,000.00 2,111,000,000.00 Total Treasury Pool without Lottery Securities 2,111,000,000.00 37,422,921,575.00 1,000,000.00 1,600,000,000.00 41,134,921,575.00

U. S. Government Agencies - Lottery - Refco 230,871,014.00 230,871,014.00 U. S. Government Agencies - Lottery - Treasury Strips 216,437,424.00 216,437,424.00

Total Investments $ 2,111,000,000.00 $ 37,870,230,013.00 $ 1,000,000.00 $ 1,600,000,000.00 $ 41,582,230,013.00

Credit risk. The risk that an issuer or other counterparty to an investment will not fulfill its obligation . Pursuant to Govern- ment Code section 404 .024(a) and (b), Treasury funds may be invested in fully collateralized repurchase agreements secured by obligations of the U .S ., its agencies, or Government Sponsored Enterprises (GSEs), including mortgage-backed securities of such agencies and GSEs . The Comptroller may purchase direct obligations of or obligations, the principal and interest

100 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller Treasury – Fiscal (311) of which are guaranteed by the U .S .; and direct obligations of, or obligations guaranteed by U .S . agencies or GSEs . Mort- gage-backed securities are eligible for purchase except those specifically prohibited by section 404 .024 (e) of the Govern- ment Code . Treasury funds may invest in commercial paper that does not exceed 270 days to maturity and that has received the highest short-term credit rating by a nationally recognized statistical rating organization or “NRSRO” . “Highest short- term credit rating” includes at least one of the following short-term credit ratings, Moody’s (P-1), Standard & Poor’s (A-1), or Fitch, Inc . (F-1) . Money market funds must be rated AAAm by a NRSRO . Treasury funds may invest in asset-backed securities that are rated at least A or its equivalent by a NRSRO and that have a weighted-average maturity of five years or less, as well as corporate debt obligations that are rated at least A or its equivalent by a NRSRO and mature in five years or less from the date on which the obligations were acquired . The Treasury portfolio is rated AAAf by Standard & Poor’s . The following table lists Standard & Poor’s credit rating by investment type for the Treasury Pool securities that are subject to credit risk .

Standard & Poor's

Fund Investment Type AAA AA A A -1 Unrated

Treasury Portfolio U.S. Government Agencies $ $ 1,754,145,476 $ $ $ Treasury Portfolio Government Mortgage Backed Securities 2,854,201 2,968,008,353 Treasury Portfolio Commercial paper 9,066,134,451 Treasury Portfolio Repurchase Agreements 1,600,000,000 Treasury Portfolio Small Business Administration 8,068,893 Treasury Portfolio Supranationals 2,258,921,420 82,000,000 Treasury Portfolio Corporate Obligations 721,454,692 1,585,354,903 605,230,467 Treasury Portfolio Asset Backed Securities 3,199,242,691 Treasury Portfolio Mutual Funds (2A 7-Like) 2,111,000,000

Concentration of credit risk . The Comptroller places a 5 percent limit on the amount the Treasury Pool may invest in any single corporate issuer . The Treasury Pool investments did not exceed this limit at year-end .

Interest rate risk. In accordance with its investment policy, the Treasury Pool manages its exposure to interest rate risk by maintaining a weighted-average maturity of no more than two (2) years . The following schedule reflects the average modified duration (a measure of the price sensitivity of a bond to interest rate movements) of the Treasury Pool by investment type and as a whole:

Modified Duration Investment Type (Years)

U.S. Government Agencies 2.398 U.S. Government Treasuries 0.421 Government Mortgage Backed Securities 3.778 Commercial Paper 0.291 Repurchase Agreements 0.003 Small Business Administration 14.065 Supranationals 1.510 Corporate Obligations 0.820 Asset Backed Securities 0.890 Placement of deposits with financial institutions 0.322 Treasury Portfolio Modified Duration 0.852

Reverse Repurchase Agreements . The Treasury Pool may enter into reverse repurchase agreements for up to 35 percent of the pool’s assets . The Treasury Pool’s aggregate amount of reverse repurchase agreement obligations at Aug . 31, 2020, was $15,222,728 including accrued interest . The aggregate fair value of the securities underlying those agreements, including accrued interest, was $15,254,067 . There was no credit exposure at year-end .

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Departmental Operations As of Aug . 31, 2020, the fair value of investments is as presented below:

Investments Measured at Net Asset Value As of 08/31/2020

Unfunded Redemption Redemption Governmental Funds Fair Value Commitments Frequency Notice Period

Daily, Monthly, Quarterly, Hedge Funds – Fund of funds $ 31,652,034.60 N/A Annually 1-95 days Quarterly, Semi- Hedge Funds – Direct funds 345,476,839.26 N/A annual, Annually 1-90 days Domestic Alternative Investments 400,086,111.26 235,732,213.33 N/A N/A International Alternative Investments 17,273,175.46 59,745,497.24 N/A N/A Total Investments $ 794,488,160.58 $ 295,477,710.57

Unfunded Redemption Redemption Fiduciary Funds Fair Value Commitments Frequency Notice Period

Daily, Monthly, Quarterly, Hedge Funds – Fund of funds $ 91,808,077.54 N/A Annually 1-95 days Monthly, Quarterly, Semi- Hedge Funds – Direct funds 1,002,070,320.20 N/A annual, Annually 1-90 days Domestic Alternative Investments 1,157,831,695.99 35,145,592.63 N/A N/A International Alternative Investments 50,340,331.71 828,485,527.43 N/A N/A Total Investments $ 2,302,050,425.44 $ 863,631,120.06

Investments by Fair Value Hierarchy As of 08/31/2020

Governmental Funds Level 1 Level 2 Level 3 Net Asset Value Fair Value

Mutual Market Funds $ 89,143,800.79 $ $ $ $ 89,143,800.79 Mutual Funds – Global Fixed Income 8,407,411.57 8,407,411.57 Mutual Funds – Global Equities 0.07 0.07 Overnight Repurchase Agreement 3,001,253.10 3,001,253.10 Total Return SWAP - Fixed Income 72,594.54 72,594.54 Total Return SWAP - Equity 5,276,817.29 5,276,817.29 Corporate Equities 6,103,757.08 1,166,470.06 7,270,227.14 Corproate Obligations 2,142,310.96 2,142,310.96 International Other Comingled Funds 7,397,444.61 3,222,873.32 10,620,317.93 Other Investments 9,773,124.97 9,773,124.97 Short Term Investments 3,121,945.84 3,121,945.84 Total Investments $ 117,175,613.06 $ 11,881,066.17 $ 9,773,124.97 $ 0.00 $ 138,829,804.20

Fiduciary Funds Level 1 Level 2 Level 3 Net Asset Value Fair Value

Mutual Market Funds $ $ 2,861,069.19 $ $ $ 2,861,069.19 Mutual Funds – Equities 7,782,688.99 3,809,039.01 11,591,728.01 Mutual Funds – Global Fixed Income 5,486,113.09 2,622,156.21 8,108,269.31 Mutual Funds – Commodities 8,907,810.04 Total Return SWAP - Fixed Income Total Return SWAP - Equity 1,920,998.47 1,920,998.47 Total Investments $ 15,189,800.55 $ 9,292,264.42 $ 0.00 $ 8,907,810.04 $ 24,482,064.97

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Valuations are intended to be made in a manner that is consistent with the Governmental Accounting Standard Board’s (GASB) Statement 72, Fair Value Measurement and Application . GASB 72 generally requires state and local governments to measure investments at fair value with some exceptions . GASB defines an investment as a security or other asset that (a) a government holds primarily for the purpose of income or profit and (b) has a present service capacity based solely on its ability to generate cash or to be sold to generate cash . The investment designation is made at acquisition and remains for the life of the asset . Investments not measured at fair value continue to include, for example, money market investments, 2a7-like external investment pools, investments in life insurance contracts, common stock meeting the criteria for applying the equity method, unallocated insurance contracts, and synthetic guaranteed investment contracts . A government is permitted in certain circumstances to establish the fair value of an investment that does not have a readily determinable fair value by using the net asset value per share (or its equivalent) of the investment . Investments are categorized based on the fair value hierarchy of inputs summarized below:

• Level 1 Inputs – Quoted (unadjusted) prices in active markets for identical assets or liabilities . Examples of markets in which inputs might be observable include exchange markets, dealer markets, brokered markets, and principal-to-principal markets .

• Level 2 Inputs – Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves, implied volatilities, credit spreads; or market-corroborated inputs .

• Level 3 Inputs – Unobservable inputs for the asset or liability . They should be used only when relevant Level 1 and Level 2 inputs are unavailable . A government should develop Level 3 inputs using the best information available under the circumstances, which might include the government’s own data . It should adjust those data if (a) reasonably available information indicates that other market participants would use different data or (b) there is something particular to the government that is not available to other market participants . A government need not undertake exhaustive efforts to obtain information about market participant assumptions .

Investments in private equity, real estate, and hedge funds are generally limited partner interests in the funds and reported at net asset value (“NAV”) . Private Equity and Real Estate Investments; Investments are valued monthly at NAV using the lat- est account statements from the funds . NAV is adjusted for cash flows that occur after the date of the statements through the month-end date . Account statements are typically issued quarterly . Hedge Funds; Investments are valued monthly at NAV using the current monthly account statements from the funds; If a current monthly account statement is unavailable, the value is calculated by using the estimated monthly return from the fund . Once a statement is received, the value is adjusted to reflect the NAV from the statement adjusted for cash flows that occur after the statement date . Mutual Funds; Investments are valued daily or monthly, as appropriate, at NAV per share . Exchange Traded Funds (“ETF”s); Investments are valued daily using electronic feeds from pricing vendors .

Credit Risk . Corporate obligations must be rated investment grade by at least one NRSRO and not rated below investment grade by any NRSRO . Short-term securities must be rated in the highest rating category by an NRSRO . The average quality rating of the high-yield fixed income portfolio shall be B1/B+ or higher . All high-yield securities when purchased must be rated at least CCC . The following schedule lists Standard & Poor’s credit rating by investment type for the Endowment Fund securities that are subject to credit risk . The high-yield securities not rated by Standard & Poor’s are rated Ba or B by Moody’s . The investments in the short-term investment fund are investments in State Street’s Institutional Liquid Reserve fund which is rated AAA by Standard & Poor’s .

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Standard & Poor's Fund Type Investment Type AAA Unrated

02 Mutual Funds – Global Fixed Income $ $ 734,623.13 02 Investments in Short-Term Investment Fund 7,841,755.60

19 Mutual Funds – Global Fixed Income 7,672,788.44 19 Investments in Short-Term Investment Fund 81,302,045.19

20 Mutual Funds – Global Fixed Income 24,386,056.17 20 Investments in Short Term Investment Fund 281,573,939.28

Concentration Risk . Excluding securities issued or guaranteed by the U .S . Government, its agencies, instrumentalities, and GSE’s, no more than 5 percent of the portfolio at the time of purchase, shall be invested in securities of one issuer .

Interest Rate Risk . The endowment funds do not have a formal investment policy that limits investment maturities . The following schedule reflects the average effective duration of the Endowment Funds by investment type . The investments in the securities lending cash collateral pool and the short-term investment fund use a weighted average maturity to reflect the interest rate risk .

Effective Duration Investment Type (Years)

Mutual Funds – Global Fixed Income 1.62

Weighted Average Maturity Investment Type (Days)

Investments in Short-Term Investment Fund 40

Foreign Currency Risk . The endowment funds do not have a formal investment policy that limits foreign currencies . The endowment funds exposure to foreign currency risk derives from its position in foreign currency-denominated investment in Alternative Investments .

Fair Market Value As of August 31, 2020

Alternative Fund Foreign Investments Other Type Currency International Investments

01 Euro $ $ 3,448,590.99 02 Euro 1,676,834.98 - 19 Euro 15,596,340.47 - 20 Euro 50,340,331.71 - Total $ 67,613,507.16 $ 3,448,590.99

Marketable Securities – All United States Treasury and Agency Securities owned by the Comptroller are held in the Trust Company’s book-entry account at the San Antonio Branch of the Federal Reserve Bank of Dallas where they are delivered versus payment . All bankers’ acceptances and commercial paper are held by the state’s agent in the state’s name . A safekeeping receipt is issued to the state acknowledging delivery .

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Investment in the Trust Company – Section 404 105. of the Government Code authorizes the investment of state funds in the Trust Company . Through an order of the State Depository Board, dated Oct . 31, 1986 the Comptroller has invested $1,000,000 in the Trust Company . These funds are invested by the Trust Company in obligations authorized by law for the investment of funds held and managed by the Comptroller . Any net earnings attributable to this investment are credited and allocated annually to the Comptroller . The Trust Company’s total contributed capital consists of one share of no-par common stock for $1,000,000 owned by the Comptroller . One share was authorized and issued . NOTE 4: Short-Term Debt Pursuant to Subchapter H of Chapter 404 of the Texas Government Code, the Comptroller is authorized to issue, sell, and deliver Tax and Revenue Anticipation Notes (TRAN) on behalf of the state . The TRAN are valid and binding obligations of the state, payable in accordance with the terms of the Comptroller’s TRAN order . The TRAN are payable from transfers from the General Revenue Fund to a payment account .

On Aug . 21, 2019 (with an issue date of Sept . 4, 2019), $8,000,000,000 in State of Texas Tax and Revenue Anticipation Notes, Series 2019 were sold for the purpose of coordinating the cash flow of the state for the fiscal year ended Aug . 31, 2020 . Issuance of the TRAN also enhanced the state’s ability to make timely payments of expenditures which are payable from the General Revenue Fund . The TRAN matured on Aug . 27, 2020 and bore an interest rate of 4 percent and was priced to yield at 1 3357. percent as determined by the bids of the initial purchasers .

Gross note proceeds were $8,208,483,394 81. . Interest and other investment income on gross TRAN proceeds were $338,800,151 30. . Debt service payments included $8,000,000,000 for principal and $313,005,464 01. in interest expense .

On Aug . 19, 2020, the Comptroller sold $7,200,000,000 of State of Texas Tax and Revenue Anticipation Notes, Series 2020 . The TRAN is dated Sept . 2, 2020 and will mature on Aug . 26, 2021 . The TRAN bear interest at 4 percent and were priced to yield 0 2483. percent . The notes are not subject to redemption prior to maturity .

On Aug . 19, 2020, good faith funds in the amount of $72,000,000 were received by the Comptroller and on Sept . 2, 2020, the balance of the note proceeds, in the amount of $7,392,941,505, were received .

TAX AND REVENUE ANTICIPATION NOTES

For the Year Ended Aug . 31, 2020 (Amounts In Thousands):

Beginning Ending Balance Balance September 1, 2019 Issued Redeemed August 31, 2020

Tax and Revenue Anticipation Notes $ 0 8,000,000 8,000,000 $ 0

NOTE 5: Long-Term Liabilities (Not Applicable) NOTE 6: Bonded Indebtedness (Not Applicable) NOTE 7: Derivative Instruments Derivatives are financial instruments whose value is derived, in whole or part, from the value of any one of more underlying securities or assets, or index of securities or assets, such as stocks, bonds, commodities, or currencies . The Endowment funds use derivatives as part of the portfolio hedging and overlays program . The objective of the program is to facilitate risk management and provide efficiency in the implementation of various investment strategies . Permitted applications of the portfolio hedging and overlays program are to implement strategies in a low cost and efficient manner; to hedge and control risks; to alter the Funds’ market (systemic) exposure without trading the underlying cash market securities; to construct portfolios with risk and return characteristics that could not be created with cash market securities; or to facilitate transition trading .

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Through the use of derivatives, the risks that are bound together in traditional cash market investments can be separated and managed independently . The primary intent of the Fund’s investment in derivative instruments is to management and implement investment strategies more effectively and at a lower cost than would be possible in the cash market . To achieve these purposes, the Fund used futures and swaps during fiscal year 2020 . All the Fund’s derivative instruments are considered investment derivatives and therefore are measured and reported at fair value .

The fair value, changes in fair value, and notional value of the Fund’s derivatives investments, classified by derivative type, are displayed in the following table as of Aug . 31, 2020 .

Derivative Instruments As of 08/31/2020

Changes in Fair Value Fair Value as of August 31, 2020 Classification Amount Classification Amount Notional Amount Governmental Activities Investment Derivatives Total Return Swaps Investment Revenue $ 16,338,446.65 Investment $ 5,349,411.83 $ 150,837,818.04 Futures Investment Revenue $ 0.00 $ 0.00 $ 0.00

Fiduciary Activities Investment Derivatives Total Return Swaps Investment Revenue $ 47,390,361.97 Investment $15,516,197.36 $ 437,511,530.27 Futures Investment Revenue $ 0.00 $ 0.00 $ 0.00

NOTE 8: Leases (Not Applicable) NOTE 9: Defined Benefit Pension Plans and Defined Contribution Plan (Not Applicable) NOTE 10: Deferred Compensation (administering agencies only) (Not Applicable) NOTE 11: Post-employment Benefits Other Than Pensions (Not Applicable) NOTE 12: Interfund Activity and Transactions As explained in Note 1 on Interfund Activities and Balances, there are numerous transactions between funds and agencies . At year-end, amounts received or paid are reported as:

• Transfers In or Transfers Out

• Due From Other Agencies or Due To Other Agencies

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Individual balances and activity at Aug . 31, 2020, are as follows:

August 31, 2020 Transfers In Transfers Out Purpose GENERAL (01) Appd Fund 0577, Fund 0577 (Agency 902, Fund 0001) $ $ 25,282,333.98 Net FYE Bal Transfer Appd Fund 5044, Fund 5044 (Agency 347, Fund 5044) 579,315.86 Distribution Appd Fund 5044, Fund 5044 (Agency 537, Fund 5044) 424,993.00 Distribution Appd Fund 5045, Fund 5045 (Agency 347, Fund 5045) 290,336.48 Distribution Appd Fund 5045, Fund 5045 (Agency 537, Fund 5045) 312,504.00 Distribution Appd Fund 5046, Fund 5046 (Agency 347, Fund 5046) 290,300.96 Distribution Appd Fund 5046, Fund 5046 (Agency 537, Fund 5046) 514,882.40 Distribution

SPECIAL REVENUE (02) Appd Fund 0823, Fund 0823 (Agency 781, Fund 0823) 1,561,112.74 Distribution Appd Fund 0824, Fund 0824 (Agency 781, Fund 0824) 1,727,503.36 Distribution Appd Fund 0825, Fund 0825 (Agency 781, Fund 0825) 960,568.68 Distribution

PERMANENT (19) Appd Fund 5047, Fund 5047 (Agency 551 Fund 5047) 1,683,298.28 Distribution Appd Fund 5048, Fund 5048 (Agency 537, Fund 5048) 841,602.72 Distribution

PRIVATE PURPOSE (20) Appd Fund 0872, Fund 0872 (Agency 902, Fund 2872) 73,831,824.00 Distribution Total Transfers $ 0.00 $ 108,300,576.46

Due From Due To Other Agencies Other Agencies Source Appd Fund 0001, Fund 1900 (Agency 902, Fund 0001) 14,559,140.23 Shared Cash Total Due From/To Other Agencies $ 0.00 $ 14,559,140.23

NOTE 13: Continuance Subject to Review (Not Applicable) NOTE 14: Adjustments to Fund Balance/Net Position (Not Applicable) NOTE 15: Contingencies and Commitments (Not Applicable) NOTE 16: Subsequent Events (Not Applicable) NOTE 17: Risk Management (Not Applicable)

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NOTE 18: Management Discussion and Analysis (MD&A) (Not Applicable) NOTE 19: The Financial Reporting Entity (Not Applicable) NOTE 20: Stewardship, Compliance and Accountability (Not Applicable) NOTE 21: N/A to the AFR (Not Applicable) NOTE 22: Donor Restricted Endowments (Not Applicable) NOTE 23: Extraordinary and Special Items (Not Applicable) NOTE 24: Disaggregation of Receivable and Payable Balances (Not Applicable) NOTE 25: Termination Benefits (Not Applicable) NOTE 26: Segment Information (Not Applicable) NOTE 27: Service Concession Arrangements (Not Applicable) NOTE 28: Deferred Outflows of Resources and Deferred Inflows of Resources (Not Applicable) NOTE 29: Troubled Debt Restructuring (Not Applicable) NOTE 30: Non-Exchange Financial Guarantees (Not Applicable) NOTE 31: Tax Abatements (Not Applicable) NOTE 32: Government Fund Balances (Not Applicable) NOTE 33: Cigarette Tax Recovery Trust Fund The Cigarette Stamp Tax Recovery Trust Fund (the “Trust Fund”) was created pursuant to Section 154 .051 of the Texas Tax Code . On Sept . 1, 1987, the Trust Fund replaced surety/payments bonds as a source of security for the state’s extension of credit to purchasers of cigarette tax stamps . The Trust Fund is maintained outside Treasury . The Trust Fund operates much like a self-insurance pool in that distributors deposit 20 percent of their desired line credit . The pool of deposits insures the state from loss in the event of default by any distributors . The distributors determine their respective level of participation .

108 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller Treasury – Fiscal (311)

NOTE 34: Texas Treasury Safekeeping Trust Company The Texas Treasury Safekeeping Trust Company (Texas Trust) was incorporated as a special-purpose trust company as outlined within section 404 .102 of the Government Code . The purposes of the Texas Trust are to provide a means for the Comptroller to obtain direct access to services provided by the Federal Reserve System and to enable the Comptroller to manage, disburse, transfer, safe keep, and invest funds and securities more efficiently, economically and in accordance with the applicable governing investment guidelines .

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110 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller Treasury – Fiscal (311)

COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS

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112 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller Treasury – Fiscal (311)

EXHIBIT A-1 Balance Sheet – All General and Consolidated Funds August 31, 2020

Permanent Fund for Tobacco Education Permanent Fund for Permanent Fund for General Revenue General Revenue and Enforcement Children and Public EMS and Trauma Care Fund (0001) Fund (0577) Fund (5044) Health Fund (5045) Fund (5046) Total U/F (1900) U/F (0577) U/F (5044) U/F (5045) U/F (5046) (Ex I) ASSETS Current Assets: Cash and Cash Equivalents: Cash in Bank $ $ $ $ $ $ Cash in State Treasury 71,989,356.00 71,989,356.00 Overnight Repurchase Agreement 1,712,519.19 755,737.73 552,996.18 3,021,253.10 Receivables From: Interest 1.77 0.78 0.57 3.12 Trades Due From Other Agencies 14,559,140.23 14,559,140.23

Non-Current Assets: Investments

Total Assets $ 14,559,140.23 $ 71,989,356.00 $ 1,712,520.96 $ 755,738.51 $ 552,996.75 $ 89,569,752.45

LIABILITIES AND FUND BALANCES Liabilities: Current Liabilities: Payables From: Accounts Payable $ $ 200,000.00 $ $ $ $ 200,000.00 Trades Payable Due to Other Agencies Other Liabilities 14,559,140.23 72,000,000.00 86,559,140.23

Total Liabilities 14,559,140.23 72,200,000.00 0.00 0.00 0.00 86,759,140.23

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances (Deficits): Restricted Committed 1,712,520.96 755,738.51 552,996.75 3,021,256.22 Unassigned (210,644.00) (210,644.00) Total Fund Balances 0.00 (210,644.00) 1,712,520.96 755,738.51 552,996.75 2,810,612.22

Total Liabilities and Fund Balances $ 14,559,140.23 $ 71,989,356.00 $ 1,712,520.96 $ 755,738.51 $ 552,996.75 $ 89,569,752.45

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 113 UNAUDITED Comptroller Treasury – Fiscal (311)

EXHIBIT A-2 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – All General and Consolidated Funds For the Fiscal Year Ended August 31, 2020

Permanent Fund for Tobacco Education Permanent Fund for Permanent Fund for General Revenue General Revenue and Enforcement Children and Public EMS and Trauma Care Fund (0001) Fund (0577) Fund (5044) Health Fund (5045) Fund (5046) Total U/F (1900) U/F (0577) U/F (5044) U/F (5045) U/F (5046) (Ex II) REVENUES Interest and Other Investment Income $ $ 338,800,151.30 $ 18,085.85 $ 8,858.36 $ 8,478.42 $ 338,835,573.93 Net Increase (Decrease) in Fair Value Other Revenue Total Revenues 0.00 338,800,151.30 18,085.85 8,858.36 8,478.42 338,835,573.93

EXPENDITURES Professional Fees and Services 450,923.82 450,923.82 Travel Interest 313,005,464.01 313,005,464.01 Information Technology Service 58,000.00 58,000.00 Purhcased Contracted Service Rentals and Leases Prompt Payment Interest Fees and other charges 200.00 200.00 Advertising 869.00 869.00

Total Expenditures/Expenses 0.00 313,515,456.83 0.00 0.00 0.00 313,515,456.83

Excess (Deficiency) of Revenues Over Expenditures 0.00 25,284,694.47 18,085.85 8,858.36 8,478.42 25,320,117.10

OTHER FINANCING SOURCES (USES) Transfer In 14,313,005,464.01 14,313,005,464.01 Transfers Out (14,338,287,797.99) (1,004,308.86) (602,840.47) (805,183.36) (14,340,700,130.68) Bond and Note Issued Total Other Financing Sources and Uses 0.00 (25,282,333.98) (1,004,308.86) (602,840.47) (805,183.36) (27,694,666.67)

Net Change in Fund Balances/Net Assets 0.00 2,360.49 (986,223.01) (593,982.11) (796,704.94) (2,374,549.57)

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances, September 1, 2019 (213,004.49) 2,698,743.97 1,349,720.62 1,349,701.69 5,185,161.79 Restatements Fund Balances, September 1, 2019, as Restated 0.00 (213,004.49) 2,698,743.97 1,349,720.62 1,349,701.69 5,185,161.79

Fund Balances – August 31, 2020 $ 0.00 $ (210,644.00) $ 1,712,520.96 $ 755,738.51 $ 552,996.75 $ 2,810,612.22

114 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller Treasury – Fiscal (311)

EXHIBIT B-1 Combining Balance Sheet – Special Revenue Funds August 31, 2020

Permanent Fund for Higher Education Permanent Nursing, Allied Permanent Fund for Endowment Health and Other Minority and Fund-Baylor College Health Related Research Educaton of Medicine (0823) Programs (0824) Fund (0825) Totals U/F (2823) U/F (0824) U/F (0825) (Ex I) ASSETS Current Assets: Cash and Cash Equivalents: Cash in Bank $ $ 65,968.85 $ 36,684.34 $ 102,653.20 Cash in State Treasury Securities Lending Collateral Short Term Investments 3,121,945.84 5,039,723.36 2,802,032.24 10,963,701.44 Receivables From: Interest and Dividends 233.41 129.78 363.19 Trade Receivables Due From Other Agencies Total Current Assets 3,121,945.84 5,105,925.62 2,838,846.36 11,066,717.83

Non-Current Assets: Investments 29,805,981.00 47,299,733.26 26,300,821.53 103,406,535.79 Total Noncurrent Assets 29,805,981.00 47,299,733.26 26,300,821.53 103,406,535.79

Total Assets $ 32,927,926.84 $ 52,405,658.88 $ 29,139,667.89 $ 114,473,253.62

LIABILITIES AND FUND BALANCES Liabilities: Current Liabilities: Payables From: Accounts Payable $ $ 279,249.82 $ 155,286.68 $ 434,536.50 Trade Payable Interest Payable 2,563.18 1,425.35 3,988.53 Futures Contracts at Fair Value Swaps at Fair Value Total Current Liabilities 0.00 281,813.00 156,712.03 438,525.03

Total Liabilities 0.00 281,813.00 156,712.03 438,525.03

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances (Deficits): Unreserved/Designated for: Restricted Committed 32,927,926.84 52,123,845.89 28,982,955.86 114,034,728.59 Total Fund Balances 32,927,926.84 52,123,845.89 28,982,955.86 114,034,728.59

Total Liabilities and Fund Balances $ 32,927,926.84 $ 52,405,658.88 $ 29,139,667.89 $ 114,473,253.62

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 115 UNAUDITED Comptroller Treasury – Fiscal (311)

EXHIBIT B-2 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance – Special Revenue Funds For the Fiscal Year Ended August 31, 2020

Permanent Fund for Higher Education Permanent Nursing, Allied Permanent Fund for Endowment Health and Other Minority and Fund-Baylor College Health Related Research Educaton of Medicine (0823) Programs (0824) Fund (0825) Totals U/F (2823) U/F (2824) U/F (0825) (Ex II) REVENUES Interest and Other Investment Income $ 2,324,712.77 $ 553,006.62 $ 307,484.55 $ 3,185,203.94 Income from Securities Lending Net Increase (Decrease) in Fair Value (1,225,548.20) 929,771.15 517,020.23 221,243.18 Total Revenues 1,099,164.57 1,482,777.77 824,504.78 3,406,447.12

EXPENDITURES Professional Fees and Services 59,235.92 32,937.52 92,173.44 Borrower Rebate and Agent Fees Total Expenditures/Expenses 0.00 59,235.92 32,937.52 92,173.44

Excess (Deficiency) of Revenues Over Expenditures 1,099,164.57 1,423,541.85 791,567.26 3,314,273.68

OTHER FINANCING SOURCES (USES) Transfers In Distributions (1,561,112.74) (1,727,503.36) (960,568.68) (4,249,184.78) Total Other Financing Sources and Uses (1,561,112.74) (1,727,503.36) (960,568.68) (4,249,184.78)

Net Change in Fund Balances/Net Assets (461,948.17) (303,961.51) (169,001.42) (934,911.10)

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances, September 1, 2019 33,389,875.01 52,427,807.40 29,151,957.28 114,969,639.69 Restatements

Fund Balances, September 1, 2019, as Restated 33,389,875.01 52,427,807.40 29,151,957.28 114,969,639.69 Fund Balances – August 31, 2020 $ 32,927,926.84 $ 52,123,845.89 $ 28,982,955.86 $ 114,034,728.59

116 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller Treasury – Fiscal (311)

EXHIBIT B-2 EXHIBIT E-1 Combining Statement of Revenues, Expenditures, Combining Balance Sheet – Permanent Funds and Changes in Fund Balance – Special Revenue Funds August 31, 2020 Permanent Fund for For the Fiscal Year Ended August 31, 2020 Rural Health Permanent Fund for Facility Capital Community Hospital Permanent Fund for National University Improvement Capital Improvement Higher Education Research Fund (0214) Fund (5047) Fund (5048) Totals Permanent Nursing, Allied Permanent Fund for U/F (0214) U/F (5047) U/F (5048) (Ex I) Endowment Health and Other Minority and ASSETS Fund-Baylor College Health Related Research Educaton of Medicine (0823) Programs (0824) Fund (0825) Totals Current Assets: U/F (2823) U/F (2824) U/F (0825) (Ex II) Cash and Cash Equivalents: REVENUES Cash in Bank $ 975,775.80 $ 64,259.86 $ 32,128.06 $ 1,072,163.72 Interest and Other Investment Income $ 2,324,712.77 $ 553,006.62 $ 307,484.55 $ 3,185,203.94 Cash in State Treasury Income from Securities Lending Securities Lending Collateral Net Increase (Decrease) in Fair Value (1,225,548.20) 929,771.15 517,020.23 221,243.18 Short Term Investments 73,939,620.11 4,908,453.97 2,453,971.11 81,302,045.19 Total Revenues 1,099,164.57 1,482,777.77 824,504.78 3,406,447.12 Receivables From: Interest and Dividends 3,426.50 227.33 113.66 3,767.49 EXPENDITURES Trade Receivables Professional Fees and Services 59,235.92 32,937.52 92,173.44 Total Current Assets 74,918,822.41 4,972,941.16 2,486,212.83 82,377,976.40 Borrower Rebate and Agent Fees Total Expenditures/Expenses 0.00 59,235.92 32,937.52 92,173.44 Non-Current Assets: Investments 665,510,556.31 46,090,100.02 23,043,772.93 734,644,429.26 Excess (Deficiency) of Revenues Total Noncurrent Assets 665,510,556.31 46,090,100.02 23,043,772.93 734,644,429.26 Over Expenditures 1,099,164.57 1,423,541.85 791,567.26 3,314,273.68 Total Assets $ 740,429,378.72 $ 51,063,041.18 $ 25,529,985.76 $ 817,022,405.66 OTHER FINANCING SOURCES (USES) Transfers In LIABILITIES AND FUND BALANCES Distributions (1,561,112.74) (1,727,503.36) (960,568.68) (4,249,184.78) Liabilities: Total Other Financing Sources and Uses (1,561,112.74) (1,727,503.36) (960,568.68) (4,249,184.78) Current Liabilities: Payables From: Net Change in Fund Balances/Net Assets (461,948.17) (303,961.51) (169,001.42) (934,911.10) Accounts Payable $ 4,127,920.99 $ 272,016.51 $ 136,000.34 $ 4,535,937.84 Trade Payable FUND FINANCIAL STATEMENT – Interest Payable 37,913.19 2,496.78 1,248.32 41,658.29 FUND BALANCES Futures Contracts at Fair Value Fund Balances, September 1, 2019 33,389,875.01 52,427,807.40 29,151,957.28 114,969,639.69 Swaps at Fair Value Restatements Total Current Liabilities 4,165,834.18 274,513.29 137,248.66 4,577,596.13

Fund Balances, September 1, 2019, Total Liabilities 4,165,834.18 274,513.29 137,248.66 4,577,596.13 as Restated 33,389,875.01 52,427,807.40 29,151,957.28 114,969,639.69 Fund Balances – August 31, 2020 $ 32,927,926.84 $ 52,123,845.89 $ 28,982,955.86 $ 114,034,728.59 FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances (Deficits): Unreserved/Designated for: Restricted Committed 736,263,544.54 50,788,527.89 25,392,737.10 812,444,809.54 Total Fund Balances 736,263,544.54 50,788,527.89 25,392,737.10 812,444,809.54

Total Liabilities and Fund Balances $ 740,429,378.72 $ 51,063,041.18 $ 25,529,985.76 $ 817,022,405.66

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 117 UNAUDITED Comptroller Treasury – Fiscal (311)

EXHIBIT E-2 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance – Permanent Funds For the Fiscal Year Ended August 31, 2020

Permanent Fund for Rural Health Permanent Fund for Facitility Capital Community Hospital National University Improvement Capital Improvement Research Fund (0214) Fund (5047) Fund (5048) Totals U/F (0214) U/F (5047) U/F (5048) (Ex II) REVENUES Interest and Other Investment Income $ 7,426,905.54 $ 538,984.21 $ 269,373.65 $ 8,235,263.40 Income from Securities Lending Net Increase (Decrease) in Fair Value 14,119,366.41 905,310.18 452,582.36 15,477,258.95 Total Revenues 21,546,271.95 1,444,294.39 721,956.01 23,712,522.35

EXPENDITURES Professional Fees and Services 822,949.12 57,719.25 28,838.57 909,506.94 Borrower Rebate and Agent Fees Total Expenditures/Expenses 822,949.12 57,719.25 28,838.57 909,506.94

Excess (Deficiency) of Revenues Over Expenditures 20,723,322.83 1,386,575.14 693,117.44 22,803,015.41

OTHER FINANCING SOURCES (USES) Transfers In (A) Distributions (24,454,555.98) (1,683,298.28) (841,602.72) (26,979,456.98) Total Other Financing Sources and Uses (24,454,555.98) (1,683,298.28) (841,602.72) (26,979,456.98)

Net Change in Fund Balances/Net Assets (3,731,233.15) (296,723.14) (148,485.28) (4,176,441.57)

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances, September 1, 2019 739,994,777.69 51,085,251.03 25,541,222.38 816,621,251.10 Restatements

Fund Balances, September 1, 2019, as Restated 739,994,777.69 51,085,251.03 25,541,222.38 816,621,251.10 Fund Balances – August 31, 2020 736,263,544.54 50,788,527.89 25,392,737.10 812,444,809.53

Note (A) Fund 0214: The distributions reported here were actually processed under Agency 902-Comptroller-Fiscal in the Uniform Statewide Accounting System (USAS). The distributions are reported here to report the Fund Balance for the fund.

118 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller Treasury – Fiscal (311)

EXHIBIT I-1 Combining Statement of Fiduciary Net Position – Private-Purpose Trust Funds August 31, 2020

Tobacco Settlement Permanent Trust Fund (0872) Totals U/F (0872) (Ex VI) ASSETS Current Assets: Cash and Cash Equivalents: Cash in Bank $ 3,407,606.63 $ 3,407,606.63 Securities Lending Collateral Short Term Investments (Note 3) Other Short Term Investments 281,573,939.28 281,573,939.28 Investments (Note 3) U.S. Government and Agency Obligations Corporate Equity 0.24 0.24 Corporate Obligations Foreign Securities 50,340,331.71 50,340,331.71 Other Investments 2,291,612,347.26 2,291,612,347.26 Receivables From: Interest and Dividends 12,968.99 12,968.99 Trade Receivables Due From Other Fund Total Assets 2,626,947,194.11 2,626,947,194.11

LIABILITIES Payables: Accounts Payable 14,418,675.93 14,418,675.93 Trade Payable Interest Payable 132,400.54 132,400.54 Due To Other Agencies Obligations/Securities Lending Swaps at Fair Value Total Liabilities 14,551,076.47 14,551,076.47

NET ASSETS Held in Trust for: Individuals, Organizations, and Other Governments 2,612,396,117.64 2,612,396,117.64 Total Net Position $ 2,612,396,117.64 $ 2,612,396,117.64

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 119 UNAUDITED Comptroller Treasury – Fiscal (311)

EXHIBIT I-2 Combining Statement of Changes in Fiduciary Net Position – Private-Purpose Trust Funds For the Fiscal Year Ended August 31, 2020

Tobacco Settlement Permanent Trust Fund (0872) Total U/F (0872) (Ex VII) ADDITIONS Investment Income: From Investing Activities: Net Appreciation (Depreciation) in Fair Value of Investments $ 50,142,325.09 $ 50,142,325.09 Interest and Investment Income 26,800,949.66 26,800,949.66 Total Investing Income (Loss) 76,943,274.75 76,943,274.75 Less Investing Activities Expense Net Income from Investing Activities 76,943,274.75 76,943,274.75

From Securities Lending Activities: Securities Lending Income Less Securities Lending Expense: Borrower Rebates and Agent Fees

Net Income from Securities Lending Activities 0.00 0.00

Total Net Investment Income (Loss) 76,943,274.75 76,943,274.75

Total Additions 76,943,274.75 76,943,274.75

DEDUCTIONS Transfers Out 73,831,824.00 73,831,824.00 Professional Fees and Services 2,978,695.73 2,978,695.73 Total Deductions 76,810,519.73 76,810,519.73

INCREASE (DECREASE) IN NET POSITION 132,755.02 132,755.02

NET POSITION Net Position September 1, 2019 2,612,263,362.63 2,612,263,362.63 Restatements Net Position September 1, 2019, as Restated 2,612,263,362.63 2,612,263,362.63

Net Position August 31, 2020 $ 2,612,396,117.65 $ 2,612,396,117.65

120 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller Treasury – Fiscal (311)

EXHIBIT J-1 Combining Statement of Changes in Assets and Liabilities – Agency Funds August 31, 2020

Beginning Ending Balance Balance September 1, 2019 Additions Deductions August 31, 2020 Suspense Fund (0900) U/F (0900) ASSETS Cash in State Treasury $ 2,446,490.32 $ 2,518,233.15 $ 3,188,614.51 $ 1,776,108.96 Total Assets $ 2,446,490.32 $ 2,518,233.15 $ 3,188,614.51 $ 1,776,108.96

LIABILITIES Funds Held for Others $ 2,446,490.32 $ 2,518,233.15 $ 3,188,614.51 $ 1,776,108.96 Total Liabilities $ 2,446,490.32 $ 2,518,233.15 $ 3,188,614.51 $ 1,776,108.96

Bond and Investment Companies Trust Acct. (0908) U/F (0908) ASSETS Other Assets $ 525,000.00 $ $ $ 525,000.00 Total Assets $ 525,000.00 $ 0.00 $ 0.00 $ 525,000.00

LIABILITIES Funds Held for Others $ 525,000.00 $ $ $ 525,000.00 Total Liabilities $ 525,000.00 $ 0.00 $ 0.00 $ 525,000.00

Cigarette Stamp Tax Recovery Trust Fund (9999) U/F( 3000) ASSETS Cash in Bank $ 298,685.63 $ $ 260,615.63 $ 38,070.00 Investments: Repurchase Agreements 34,397,418.86 1,691,675.24 32,705,743.62 Receivables: Interest and Dividends 3,945.92 3,912.11 33.81 Total Assets $ 34,700,050.41 $ 0.00 $ 1,956,202.98 $ 32,743,847.43

LIABILITIES Funds Held for Others $ 34,700,050.41 $ 42,489,005.93 $ 44,445,208.91 $ 32,743,847.43 Total Liabilities $ 34,700,050.41 $ 42,489,005.93 $ 44,445,208.91 $ 32,743,847.43

Totals – All Agency Funds ASSETS Cash in Bank $ 298,685.63 $ $ 260,615.63 $ 38,070.00 Cash in State Treasury 2,446,490.32 2,518,233.15 3,188,614.51 1,776,108.96 Investments: Repurchase Agreements 34,397,418.86 1,691,675.24 32,705,743.62 Receivables: Interest and Dividends 3,945.92 3,912.11 33.81 Other Assets 525,000.00 525,000.00 Total Assets $ 37,671,540.73 $ 2,518,233.15 $ 5,144,817.49 $ 35,044,956.39

LIABILITIES Funds Held for Others $ 37,671,540.73 $ 45,007,239.08 $ 47,633,823.42 $ 35,044,956.39 Total Liabilities $ 37,671,540.73 $ 45,007,239.08 $ 47,633,823.42 $ 35,044,956.39

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 121 UNAUDITED Comptroller Treasury – Fiscal (311)

122 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller Treasury – Fiscal (311)

SUPPLEMENTARY SCHEDULES

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124 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller Treasury – Fiscal (311)

SCHEDULE 1 Balance Sheet – Arising from Custodial Operations August 31, 2020 (With Comparative Totals for August 31, 2019)

August 31, 2020 August 31, 2019 ASSETS Cash Cash on Hand Cash in Vault $ 107,031.12 $ 243,295.31 Checks Returned by State Depositories 1,012,535.59 (70,940.52) Total Cash Items on Hand 1,119,566.71 172,354.79

State Funds and Suspense and Trust Accounts in Depositories Banks Demand Accounts 34,741,667.99 21,006,065.23 Time Accounts and Bid TX 573,598,500.00 583,551,000.00 Total Cash in State Depositories 608,340,167.99 604,557,065.23

Cash in TTSTC Treasury Fed Acct. 839,149,726.36 723,046.94

Total Cash in State Depositories and TTSTC Treasury Fed Acct. 1,447,489,894.35 605,280,112.17

Total Cash on Hand and In Banks 1,448,609,461.06 605,452,466.96

Total Trust Funds on Deposit with U.S. Treasury Unemployment Trust Fund 128,545,788.01 2,342,137,186.60

Total Cash 1,577,155,249.07 2,947,589,653.56

Investment In Texas Treasury Safekeeping Trust Company 1,000,000.00 1,000,000.00

Short-Term Investments United States Government Securities 13,296,877,378.41 6,789,035,065.68 Commercial Paper 9,066,134,451.13 10,838,157,743.92 Money Market Funds 2,111,000,000.00 1,835,000,000.00 Repurchase Agreements 1,600,000,000.00 2,729,000,000.00 Total Short-Term Investments 26,074,011,829.54 22,191,192,809.60

Long-Term Investments United States Government Securities 3,623,367,207.53 2,269,470,750.00 Government Mortgage Backed Securities 2,818,325,360.12 2,995,295,855.90 Asset backed Securities 3,199,242,691.04 3,441,240,536.07 Agency Commercial Mortgage Back Securities 152,537,193.14 134,857,833.81 Corporate Obligations 2,912,040,061.86 2,585,851,461.53 Supranational (includes Israel Bonds) 2,340,921,419.52 3,214,744,500.00 SBA's 8,068,892.64 11,669,725.37 United States Government Securities – Lottery 447,308,438.71 488,094,053.88 Total Long-Term Investments 15,501,811,264.56 15,141,224,716.56

Securities Held in Trust – Both Corporate and Governmental State Funds Investment Accounts 22,818,000.00 24,594,000.00 Bonds and Securities Pledged to Guarantee State Depositories' Deposits 943,912,056.00 972,892,079.00 Other Securities Pledged under Statutory Requirements 280,332,734.88 648,256,528.64

Total Securities Held in Trust – Both Corporate and Governmental 1,247,062,790.88 1,645,742,607.64

Accounts Receivable Interest Receivable 45,388,567.23 55,464,108.95

Total Assets – Arising From Custodial Operations $ 44,446,429,701.28 $ 41,982,213,896.31

Concluded on the following page

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 125 UNAUDITED Comptroller Treasury – Fiscal (311)

SCHEDULE 1 (concluded) Balance Sheet – Arising from Custodial Operations August 31, 2020 (With Comparative Totals for August 31, 2019)

August 31, 2020 August 31, 2019 LIABILITIES AND ACCOUNTABILITY Liabilities Accounts Payable – Warrants Outstanding – State Funds and Suspense and Trust Accounts $ 814,424,924.27 $ 586,716,689.95 Obligations under Reverse Repurchase Agreements 15,222,723.75 19,763,813.75 Pending Purchases 47,732,354.00 Options Written, at Fair Value Interest Payable 4.24 849.02 Total Liabilities 877,380,006.26 606,481,352.72

Accountability Available Cash Balance and Investments: State Funds and Suspense and Trust Accounts 41,746,132,677.42 36,899,758,695.47 Fund 0895 Lottery Prize Trust Fund 447,308,438.71 488,094,053.88 Total Available Cash Balances and Investments 42,193,441,116.13 37,387,852,749.35

Trust Account – Unemployment Trust Fund 128,545,788.01 2,342,137,186.60

State Fund Investments 22,818,000.00 24,594,000.00

Trust Fund Securities: Collateral of Deposits 943,912,056.00 972,892,079.00 Pledged under Statutory Requirements 280,332,734.88 648,256,528.64 Total Trust Fund Securities 1,224,244,790.88 1,621,148,607.64

Total Accountability 43,569,049,695.02 41,375,732,543.59

Total Liabilities and Accountability – Arising from Custodial Operations $ 44,446,429,701.28 $ 41,982,213,896.31

126 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller Treasury – Fiscal (311)

SCHEDULE 2 Comparative Summary of Securities Held For State Investment Accounts For the Fiscal Year Ended August 31, 2020 (With Comparative Memorandum Totals for the Fiscal Year Ended August 31, 2019)

Increase- Percent 2020 2019 (Decrease) BY CATEGORY Texas Water Development Board Funds Texas Water Resource Finance Authority Fund No. 0751 $ 2,668,000 $ 3,049,000 $ (381,000) Total Water Resources Funds 2,668,000 3,049,000 (381,000) Other Funds T.P.F.A.G.O. Refunding Bonds (TMVLRP) No. 7065 20,150,000 21,545,000 (1,395,000) Total Other Funds 20,150,000 21,545,000 (1,395,000)

Total All Funds $ 22,818,000 $ 24,594,000 $ (1,776,000)

BY TYPE OF SECURITY School Districts, Junior College Districts, Cities, Counties and District Bonds 100.00% $ 22,818,000 $ 24,594,000 $ (1,776,000)

Totals 100.00% $ 22,818,000 $ 24,594,000 $ (1,776,000)

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 127 UNAUDITED Comptroller Treasury – Fiscal (311)

SCHEDULE 3 Summary of Collateral Securities Pledged by State Depositories for All Types of Deposits For the Fiscal Year Ended August 31, 2020

PAR Value Market Value BY LOCATION In Custody Texas Treasury Safekeeping Trust Company: Demand and Time Accounts $ $ Total Held by Texas Treasury Safekeeping Trust Company 0 0

In Vaults of Trustee Banks: Demand and Time Accounts: Clearing Banks 15,305,000 8,422,000 Other Banks 680,682,056 519,174,000 Total in Vaults of Trustee Banks 695,987,056 527,596,000

Letters of Credit held by Texas Comptroller 247,925,000 247,925,000 A

Total Pledged Collateral $ 943,912,056 $ 775,521,000 B

BY FUND Time Depository Bonds Guaranty Account Fund No. 0910 $ 943,912,056 $ 775,521,000

Total Pledged Collateral $ 943,912,056 $ 775,521,000

Note A: 32 FHLB Letters of Credit from 12 Depositories Note B: These amounts are exclusive of Federal Deposit Insurance Corporation Coverage

128 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller Treasury – Fiscal (311)

SCHEDULE 4 Summary of Pledges Under Statutory Requirements For the Fiscal Year Ended August 31, 2020

Trust Agency Fund Securities No. No. Agency/Fund Name Pledged

454 TEXAS DEPARTMENT OF INSURANCE: 0893 Texas Worker's Compensation Self Insurance Trust Account $ 355,305,691

304 TREASURY OPERATIONS 0908 Bond and Investment Companies Account 525,000

454 TEXAS DEPARTMENT OF INSURANCE: 0921 Life, Health, Accident and Casualty Insurance Companies Account 180,021,401

320 TEXAS WORKFORCE COMMISSION: 0936 Unemployment Compensation Clearance Account 244

405 TEXAS DEPARTMENT OF PUBLIC SAFETY: 0940 Motor Vehichle Proof of Responsibility Account 3,782,322

537 DEPARTMENT OF STATE HEALTH SERVICES: 5096 GR – Perpetual Care 96,528,768

TOTALS $ 280,332,735

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 129 UNAUDITED Comptroller Treasury – Fiscal (311)

130 Texas Comptroller of Public Accounts • 2020 Annual Financial Report Texas Treasury Safekeeping Trust Company (930) BASIC FINANCIAL STATEMENTS

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 131 UNAUDITED Texas Treasury Safekeeping Trust Company (930)

132 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Texas Treasury Safekeeping Trust Company (930)

Exhibit III Combined Statement of Net Position Proprietary Fund August 31, 2020

Total Proprietary Funds Fund (1004) U/F (1004) ASSETS Current Assets: Cash and Cash Equivalents: Cash in Bank $ 10,052,270.12 Cash in State Treasury 917,625.77 Restricted cash in bank 97,026.00 Investments in repurchase agreements 59,370,086.43 Restricted investment 485,600.72 Receivables from: Management Fees 5,933,819.25 Interest 26,474.21 Other 22,747.00 Prepaid Expenses 959,632.77 Total Current Assets 77,865,282.27

Non-Current Assets: Capital Assets: Depreciable or Amortizable, Net 2,103,570.97 Total Non-Current Assets 2,103,570.97 Total Assets 79,968,853.24

LIABILITIES Current Liabilities: Payables from: Accounts Payable 1,590,523.51 Payroll Payable 1,761,298.64 Other Employees’ Compensable Leave 837,133.18 Total Current Liabilities 4,188,955.33

Non-Current Liabilities: (Note 5) Employees’ Compensable Leave 362,022.80 Total Non-Current Liabilities 362,022.80 Total Liabilities 4,550,978.13

NET POSITION Invested in Capital Assets, Net of Related Debt 2,103,570.97 Unrestricted 73,314,304.14 Total Net Position $ 75,417,875.11

The accompanying notes to the financial statements are an integral part of this statement.

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 133 UNAUDITED Texas Treasury Safekeeping Trust Company (930)

Exhibit IV Combined Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Fund For the Fiscal Year Ended August 31, 2020

Total Proprietary Funds Fund (1004) U/F (1004) OPERATING REVENUES Operating Revenues – Management Fees $ 26,741,968.16 Total Operating Revenues 26,741,968.16

OPERATING EXPENSES Salaries and Wages 8,865,396.08 Payroll Related Costs 2,264,620.62 Professional Fees and Services 6,120,923.01 Travel 66,690.25 Materials and Supplies 3,006,867.36 Communication and Utilities 1,702,028.76 Repairs and Maintenance 1,163,802.69 Rentals and Leases 13,235.38 Printing and Reproduction 10,002.80 Depreciation and Amortization 163,504.12 Other Operating Expenses 909,599.20 Total Operating Expenses 24,286,670.27

Operating Income (Loss) 2,455,297.89

NONOPERATING REVENUE (EXPENSES) Investment Income (Expense) 565,601.79 Settlement of Claims 1,369.26 Total Nonoperating Revenues (Expenses) 564,232.53

Income (loss) before Other Revenues, Expenses, Gains/Losses and Transfers 3,019,530.42

OTHER REVENUES, EXPENSES, GAINS/LOSSES, AND TRANSFERS Transfers Out Transfer In Total Other Revenues, Expenses, Gains/Losses, and Transfers 0.00

Change in Net Position 3,019,530.42

Total Net Position, September 1, 2019 72,398,344.69 Restatements Total Net Position, September 1, 2019, as Restated 72,398,344.69

Total Net Position, August 31, 2020 $ 75,417,875.11

The accompanying notes to the financial statements are an integral part of this statement.

134 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Texas Treasury Safekeeping Trust Company (930)

Exhibit V Combined Statement of Cash Flows – Proprietary Fund For the Fiscal Year Ended August 31, 2020

Total Proprietary Funds Fund (1004) U/F (1004) CASH FLOWS FROM OPERATING ACTIVITIES Proceeds from Loan Programs $ Proceeds from Other Revenues 25,858,443.82 Payments to Employees (12,194,188.65) Payments for Other Expenses (13,161,357.83) Net Cash Provided by Operating Activities 502,897.34

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Payments for Additions to Capital Assets (46,385.29) Net Cash Used for Capital and Related Financing Activities (46,385.29)

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Interest and Investment Income 553,170.52 Payments to Acquire Investments/Proceeds from Sale of Investments (47,689.88) Net Cash Provided by Investing Activities 505,480.64

Net (Decrease) in Cash and Cash Equivalents 961,992.69

Cash and Cash Equivalents – September 1, 2019 69,475,015.63

Cash and Cash Equivalents – August 31, 2020 $ 70,437,008.32

Reconciliation of Operating Income to Net Cash Used by Operating Activities:

Operating Income $ 2,455,297.89 Adjustments to Operating Income to Net Cash Used by Operating Activities: Classification Differences (1,369.26) Depreciation Expense 163,504.12 Changes in Assets/Liabilities: (Increase) Decrease in Accounts Receivables (883,524.34) (Increase) Decrease in Prepaid Expenses (69,366.47) Increase (Decrease) in Payables (1,161,644.60) Net Cash Provided by Operating Activities $ 502,897.34

Displayed As: Cash at Bank $ 10,052,270.12 Cash in State Treasury 917,625.77 Cash Equivalents – Repurchase Agreements 59,370,086.43 Restricted Cash and Cash Equivalents 97,026.00 $ 70,437,008.32

The accompanying notes to the financial statements are an integral part of this statement.

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 135 UNAUDITED Texas Treasury Safekeeping Trust Company (930)

Exhibit VI Combined Statement of Net Position – Fiduciary Funds August 31, 2020

External Investment Trust Funds Agency Funds (Exhibit H-1) (Exhibit J-1) Totals ASSETS Cash and Cash Equivalents (Note 3) Cash in State Treasury Cash in Bank $ 2,274.29 $ 3,756,725.79 $ 3,759,000.08 Investments (Note 3) US Government and Agency Obligations 16,222,165,158.04 276,834,567.24 16,498,999,725.28 Repurchase Agreements 8,325,414,607.66 8,325,414,607.66 Commercial Paper 5,006,113,244.87 5,006,113,244.87 Corporate Bonds Mutual Funds 3,216,200,499.35 3,216,200,499.35 Political Subdivisions (4,858,547.85) (4,858,547.85) Interest Receivable 11,201,490.96 976,628.05 12,178,119.01 Pending Transactions Total Assets 32,781,097,275.17 276,709,373.23 33,057,806,648.40

LIABILITIES Payables From: Dividends Payable 5,928,436.03 5,928,436.03 Accounts Payable Pending Transactions 774,507,447.84 774,507,447.84 Other Liabilities 219,879.23 219,879.23 Funds Held For Others 276,709,373.23 276,709,373.23 Total Liabilities 780,655,763.10 276,709,373.23 1,057,365,136.33

NET POSITION Held in Trust For Pool Participants 32,000,441,512.07 32,000,441,512.07 Total Net Position $ 32,000,441,512.07 $ 0.00 $ 32,000,441,512.07

The accompanying notes to the financial statements are an integral part of this statement.

136 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Texas Treasury Safekeeping Trust Company (930)

Exhibit VII Combined Statement of Changes in Fiduciary Net Position For the Fiscal Year Ended August 31, 2020

External Investment Trust Funds (Exhibit H-2) ADDITIONS Investment Income Interest and Investment Income $ 356,505,895.98 Expenses: Management Fees and Expenses (13,629,454.73) Net Income from Investing Activities 342,876,441.25

Total Additions 342,876,441.25

Net Increase (Decrease) in Participant Investments 5,069,004,989.36

Net Increase (Decrease) in Net Position 5,411,881,430.61

Net Position – Beginning Restatements Net Position, September 1, 2019 26,588,560,081.46

Net Position, August 31, 2020 $ 32,000,441,512.07

The accompanying notes to the financial statements are an integral part of this statement.

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 137 UNAUDITED Texas Treasury Safekeeping Trust Company (930)

138 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Texas Treasury Safekeeping Trust Company (930)

Notes to the Financial Statements

NOTE 1: Summary of Significant Accounting Policies GENERAL INTRODUCTION

The Texas Trust is authorized to manage, disburse, transfer, safekeep and invest funds and securities provided by statute or belonging to state and local entities and gives the Comptroller direct access to services provided by the Federal Reserve Sys- tem .

This section of the report includes only those funds and accounts from which the Texas Trust’s own departmental activities are financed . The Texas Trust’s fiscal function (Agency 930) is reported in a separate section of this report .

Due to the significant changes related to Governmental Accounting Standards Board Statement No .34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments, the Comptroller of Public Accounts does not require the accompanying annual financial report to be in compliance with generally accepted accounting principles (GAAP) . The financial report will be considered for audit by the State Auditor as part of the audit of the state’s Comprehensive Annual Financial Report; therefore, an opinion has not been expressed on the financial statements and related information contained in this report .

There are no component units in which the Texas Trust is financially accountable or any organization in which exclusion would create misleading or incomplete financial statements .

FUND STRUCTURE

The accompanying financial statements are presented on the basis of funds and account groups, each of which is considered a separate accounting entity . The funds and account groups used to reflect the Texas Trust’s transactions are as follows:

Proprietary Fund Types

Enterprise Funds Enterprise funds are used to report any activity for which a fee is charged to external users for services such as investment management and custodial services . The Texas Trust accounts for its daily operations using an enterprise fund . Operating revenues result from exchange transactions associated with the principal activity of the fund . Exchange transactions are those in which each party receives and gives up essentially equal values . Non-operating revenues, such as investment earnings, result from non-exchange transactions or ancillary activities .

Fiduciary Fund Types

Custodial Funds Agencies use custodial funds to account for assets the government holds on behalf of others in a custodial capacity . Custodi- al funds involve only the receipt, temporary investment, and remittance of fiduciary resources to individuals, private organi-

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 139 UNAUDITED Texas Treasury Safekeeping Trust Company (930) zations, or other governments . The Texas Trust has the Texas Public Finance Authority Bond Escrow, which is used to hold funds for various defeased or refunded bonds and the Child Support Employee Deductions (Fund 8070), which is just Cash in State Treasury . External Investment Trust Funds Agencies use external investment trust funds to account for the state’s external portion of investment pools reported by the sponsoring government . The Texas Government Investment Pools (TexPool and TexPool Prime) are local government investment pools administered by the Texas Treasury Safekeeping Trust Company – Comptroller’s office . The participants in the Texas Government Investment Pools consist of cities, counties, school districts, institutions of higher education, special districts, and other public entities of Texas .

BASIS OF ACCOUNTING

The Texas Trust financial statements are reported using the economic resources measurement focus and the accrual basis of accounting . The basis of accounting determines when revenues and expenditures or expenses are recognized in the accounts reported in the financial statements . All enterprise fund types are accounted for using the accrual basis of accounting . This includes unpaid Employee Compensable leave . Revenues are recognized when they become both measurable and available . Expenditures are generally recognized when the related fund liability is incurred .

The Texas Trust has adopted the provisions of Governmental Accounting Standards Board (GASB) Statement 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities that use Proprietary Fund Accounting, which specifies that in addition to adopting all applicable GASB pronouncements, the Texas Trust has adopted Statements and Interpretations of the Financial Accounting Standards Board, Accounting Principles Board Opinions, and Accounting Research Bulletins of the Committee on Accounting Procedure issued prior to November 30, 1989, unless those pronouncements con- flict with or contradict GASB pronouncements . Texas Trust has elected to follow only GASB Standards issued subsequent to November 30, 1989 .

ASSETS, LIABILITIES, AND FUND BALANCES/NET ASSETS

CURRENT ASSETS

Cash and Cash Equivalents Short-term, highly liquid investments with an original maturity of three months or less are considered cash equivalents .

The Texas Trust has agreed to maintain a positive clearing balance within its Federal Reserve account . Earnings on the clearing balance are used to offset fees associated with its use of Federal Reserve services . The Texas Trust Federal Reserve account balance reported in cash on Aug . 31, 2020 was $9,999,838 .35 from the Texas Trusts’ Enterprise Fund . Restricted Cash The Texas Trust maintains an account with the Depository Trust Company (DTC) . In accordance with the agreement between DTC and the Texas Trust, $97,026 .00 in cash was held at DTC as of Aug . 31, 2020, in order to maintain the account . Investments Investments are reported at fair value based upon quoted market prices, with the change in fair value of investments cap- tioned as Net Increase (Decrease) in the Fair Value of Investments, and interest income reported at the relevant stated interest rate . Restricted Investments The Texas Trust has a balance of $485,600 .72 in stock with the Depository Trust Company as of Aug . 31, 2020 .

140 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Texas Treasury Safekeeping Trust Company (930)

Receivables The business-type activities of Texas Trust include providing investment management and custody services . Manage- ment fees charged to customers support these activities . Receivables from management fees as of Aug . 31, 2020 were $5,933,819 .25 . The amount due from Other Agencies as of Aug . 31, 2020 was $22,747 .00 . This balance consisted of fees for agency return items and Bloomberg Terminals for the Comptroller of Public Accounts .

NON-CURRENT ASSETS

Capital Assets Assets with an initial, individual cost of more than $5,000 for furniture and equipment and building and building improvements of more than $100,000 and an estimated useful life in excess of one year are capitalized . These assets are capitalized at cost or, if any purchased, at appraised fair value as of the date of acquisition . Depreciation is charged to operations over the estimated useful life of each asset, using the straight-line method .

LIABILITIES

Accounts Payable Accounts Payable represents the liability for the value of assets or services received at the balance sheet date for which payment is pending . Employees’ Compensable Leave Employees’ Compensable Leave Balances represent the liability that becomes “due” upon the occurrence of relevant events such as resignations, retirements, and uses of leave balances by covered employees . Liabilities are reported separately as either current or non-current in the statement of net assets .

FUND BALANCE/NET ASSETS

The difference between fund assets and liabilities is ‘Net Assets’ on the government-wide, proprietary and fiduciary fund statements, and the ‘Fund Balance’ is the difference between fund assets and liabilities on the enterprise fund statements . Invested In Capital Assets, Net Of Related Debt Invested in capital assets, net of related debt consists of capital assets, net of accumulated depreciation and reduced by outstanding balances for bond, notes, and other debt that are attributed to the acquisition, construction, or improvement of those assets . Restricted Net Assets Restricted net assets result when constraints placed on net asset use are either externally imposed by creditors, grantors, contributors, and the like, or imposed by law through constitutional provisions or enabling legislation . Unrestricted Net Assets Unrestricted net assets consist of net assets, which do not meet the definition of the two preceding categories . Unrestricted net assets often have constraints on resources, which are imposed by management, but can be removed or modified .

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 141 UNAUDITED Texas Treasury Safekeeping Trust Company (930)

NOTE 2: Capital Assets A summary of changes in General Fixed Assets for the year ended Aug . 31, 2020, is presented below:

PRIMARY GOVERNMENT Balance Balance Aug. 31, 2019 Adjustments* Reclassification Additions Deletions Aug. 31, 2020 BUSINESS-TYPE ACTIVITIES Non-depreciable or Non-amortizable Assets: Construction in Progress $ 934,458.99 $ $ (934,458.99) $ $ $ Total Non-depreciable or Non-amortizable Assets 934,458.99 (934,458.99) Depreciable Assets: Building and Building Improvements 1,438,187.80 934,458.99 2,372,646.79 Furniture and Equipment 1,366,385.76 46,385.29 1,412,771.05 Total Depreciable Assets at Historical Costs 2,804,573.56 0.00 934,458.99 46,385.29 0.00 3,785,417.84

Less Accumulated Depreciation For: Building and Building Improvements (541,446.57) (85,494.24) (626,940.81) Furniture and Equipment (976,896.18) (78,009.88) (1,054,906.06) Total Accumulated Depreciation (1,518,342.75) 0.00 0.00 (163,504.12) 0.00 (1,681,846.87) Depreciable Assets, Net 1,286,230.81 0.00 934,458.99 (117,118.83) 0.00 2,103,570.97

Amortizable assets-intangible Computer software 2,910,356.42 2,910,356.42 Total amortizable assets-intangible 2,910,356.42 0.00 0.00 0.00 0.00 2,910,356.42

Less Accumulated amortization for: Computer software (2,910,356.42) (2,910,356.42) Total accumulated amortization (2,910,356.42) 0.00 0.00 0.00 0.00 (2,910,356.42) Amortizable assets-Intangible, net 0.00 0.00 0.00 0.00 0.00 0.00 Business-type Activities Capital Assets, Net 2,220,689.80 0.00 0.00 (117,118.83) 0.00 2,103,570.97

NOTE 3: Deposits, Investments & Repurchase Agreements All monies in funds established in the Texas Trust by the state constitution or by an act of the Legislature are pooled for investment purposes . All monies of the Trust Company are invested according to Section 404 .106 of the Government Code .

1 . Investment Authority

A . Section 404 .024 of the Government Code permits the investment of these funds in the following instruments:

1 . time deposits in state depositories;

2 . direct security repurchase agreements;

3 . reverse security repurchase agreements;

4 . direct obligations of or obligations the principal and interest of which are guaranteed by the United States, its’ agencies and instrumentalities;

5 . bankers’ acceptances that: (i) are eligible for purchase by the Federal Reserve System, (ii) do not exceed 270 days to maturity, and (iii) are issued by a bank that has received the highest short-term credit rating by a nationally recognized statistical rating organization;

6 . commercial paper that has received the highest short-term credit rating by a nationally recognized statistical rating organization and does not exceed 270 days to maturity;

7 . contracts written by the Comptroller in which the Comptroller grants the purchaser the right, for a fee, to purchase securities in the Texas Trust’s marketable securities portfolio at a specified price over a specified period . These contracts are commonly known as covered call options . Uncovered option trading is specifically prohibited;

142 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Texas Treasury Safekeeping Trust Company (930)

8 . direct obligations of or obligations guaranteed by the Inter-American Development Bank, the International Bank for Reconstruction and Development (the World Bank), the African Development Bank, the Asian Development Bank, and the International Finance Corporation that have received the highest long-term rating categories for debt obligations by a nationally recognized statistical rating organization;

9 . bonds issued, assumed, or guaranteed by the State of Israel;

10 . obligations of a state or an agency, county, city, or other political subdivision of a state;

11 . mutual funds secured by obligations that are described in (2) through (6) above or by obligations consistent with Rule 2a-7 (17 C .F .R . Section 270 .2a-7), promulgated by the Securities and Exchange Commission;

12 . foreign currency for the sole purpose of facilitating investment by state agencies that have the authority to invest in foreign securities;

13 . asset-backed securities, as defined by the Securities and Exchange Commission in Rule 2a-7 (17 C .F .R . Section 270 .2a-7), that are rated at least A or its equivalent by a nationally recognized statistical rating organization and that have a weighted-average maturity of five years or less; and

14 . corporate debt obligations that are rated at least A or its equivalent by a nationally recognized statistical rating organization and mature in five years or less from the date on which the obligations were “acquired,” as defined by the Securities and Exchange Commission in Rule 2a-7 .

B . No more than 5 percent of the treasury’s total investments will be invested in the aggregate value of derivative investments .

C . Repurchase and reverse repurchase agreements may be entered into by the Comptroller only with state or national banks doing business in Texas or primary dealers approved by the Federal Reserve System .

2 . There were no significant violations of legal provisions during the period .

3 . DEPOSITS OF CASH IN BANK

A . Collateralization and Risk Categorization – In accordance with state law, all amounts deposited in financial institutions above the amounts insured by the Federal Deposit Insurance Corporation are fully collateralized by the pledging, to the Texas Trust, of securities valued at market, excluding accrued interest . Generally, the list of eligible securities includes all U .S . Government and most Agency Obligations, including certain mortgage backed securities issued by state agencies and political subdivisions within the state . All securities pledged to the Texas Trust must be held by any Federal Reserve Bank or one of its branches or the Texas Trust .

Securities pledged as collateral on Aug . 31, 2020 were categorized under the Political Subdivision Securities, Moody’s Investors Service Ratings AAA or U .S . Government Securities as U .S . Treasury Bills or U .S . Treasury Notes and Bonds .

As of Aug . 31, 2020, the balance of cash at bank and carrying amount of cash is presented below:

Bank Balance $ 14,599,868.22 Carrying Amount $ 13,908,296.20

Business-Type Activities Proprietary Funds Cash at Bank $ 10,052,270.12 Proprietary Funds Current Assets Restricted Cash at Bank 97,026.00 Cash in Bank per AFR $ 10,149,296.12

Fiduciary Funds Fiduciary Funds Cash at Bank $ 3,759,000.08

Total Cash at Bank $ 13,908,296.20

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 143 UNAUDITED Texas Treasury Safekeeping Trust Company (930)

The Trust Company’s contract with the Federal Reserve Bank permits the Trust Company to wire transfer funds for the purpose of facilitating investment transactions . Correspondingly, a minimum cash balance is maintained in the account to generate earnings credits sufficient to partially offset the costs of the services received . As these investment transactions occur, the Federal Reserve Bank requires that the Trust Company maintain a positive cash balance in the account intraday and at the end of the day .

4 . INVESTMENTS

As of Aug . 31, 2020, the carrying and fair value of investments are presented below . All securities are insured or regis- tered by the Texas Trust or its agent in the Texas Trust’s name . Therefore, there is no custodial credit risk .

Carrying Value and Market Value As of 08/31/2020

Carrying Fair Value Value Business-Type Activities Repurchase Agreements $ 59,370,086.43 $ 59,370,086.43 Equities 485,600.72 485,600.72 Total Business-Type Activities 59,855,687.15 59,855,687.15

Fiduciary Funds-TPFA Escrow US Treasury Securities US Government Agencies 267,117,471.54 267,117,471.54 Mutual Funds Political Subdivision 4,858,547.85 4,858,547.85 Total TPFA Escrow 271,976,019.39 271,976,019.39

Fiduciary Funds-Texpool & Texpool Prime US Treasury Securities 9,314,322,537.38 9,318,014,807.25 US Government Agencies 6,907,842,620.66 6,910,085,514.75 Mutual Funds 3,216,200,499.35 3,216,126,003.75 Repurchase Agreements 8,325,414,607.66 8,325,414,607.66 Commercial Paper 5,006,113,244.87 5,008,725,060.03 Corporate Bonds Total Texpool & Texpool Prime 32,769,893,509.92 32,778,365,993.44

Total Fiduciary Investments 33,041,869,529.31 33,050,342,012.83

Total Categorized Investments $ 33,101,725,216.46 $ 33,110,197,699.98

Enterprise, TPFA Escrow, Texpool and Texpool Prime categorize its fair value measurements within the fair value hierarchy established by generally accepted accounting principles . They have the following recurring fair value measurements as of Aug . 31, 2020 and 2019:

144 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Texas Treasury Safekeeping Trust Company (930)

Enterprise Fund Fair Value Measurements Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs 2020 (Level 1) (Level 2) (Level 3)

Investments by Fair Value Level Fair Value Equity securities 485,600.72 - 485,600.72 - Total investments at fair value 485,600.72 - 485,600.72 -

Investments measured at amortized cost: Carrying Value Repurchase Agreements 59,370,086.43 Total investments at amortized cost 59,370,086.43

Total investments 59,855,687.15

Fair Value Measurements Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs 2019 (Level 1) (Level 2) (Level 3)

Investments by Fair Value Level Fair Value Equity securities 437,910.84 - 437,910.84 - Total investments at fair value 437,910.84 - 437,910.84 -

Investments measured at amortized cost: Carrying Value Repurchase Agreements 58,413,469.65 Total investments at amortized cost 58,413,469.65

Total investments 58,851,380.49

TPFA Escrow Fair Value Measurements Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs 2020 Carrying Amount Fair Value (Level 1) (Level 2) (Level 3)

Investments by Fair Value Level Debt securities: United States government treasuries - - - - - United States government agencies 267,117,471.54 267,117,471.54 - 267,117,471.54 - Political Subdivisions 4,858,547.85 4,858,547.85 4,858,547.85 Total debt securities 271,976,019.39 271,976,019.39 - 271,976,019.39 - Total investments by carrying and fair value level 271,976,019.39 271,976,019.39 - 271,976,019.39 -

Investments measured at the net asset value (NAV) Mutual Funds - Total investments measured at the NAV -

Total investments 271,976,019.39

Fair Value Measurements Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs 2019 Carrying Amount Fair Value (Level 1) (Level 2) (Level 3)

Investments by Fair Value Level Debt securities: United States government treasuries 171,579,843.00 171,579,843.00 - 171,579,843.00 - United States government agencies 171,141,888.89 171,141,888.89 - 171,141,888.89 - Total debt securities 342,721,731.89 342,721,731.89 - 342,721,731.89 - Total investments by carrying and fair value level 342,721,731.89 342,721,731.89 - 342,721,731.89 -

Investments measured at the net asset value (NAV) Mutual Funds - Total investments measured at the NAV -

Total investments 342,721,731.89

Concluded on the following page Texas Comptroller of Public Accounts • 2020 Annual Financial Report 145 UNAUDITED Texas Treasury Safekeeping Trust Company (930)

Concluded from the previous page

Texpool Fair Value Measurements Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs 2020 Principal Value Carrying Amount Fair Value (Level 1) (Level 2) (Level 3)

Investments by Fair Value Level Debt securities: Repurchase agreements 6,980,159,607.66 6,980,159,607.66 6,980,159,607.66 6,980,159,607.66 Commercial paper United States government agencies 6,907,215,000.00 6,907,842,620.66 6,910,085,514.75 6,910,085,514.75 United States government treasuries 8,258,040,000.00 8,262,778,145.00 8,266,441,334.83 8,266,441,334.83 Money market mutual funds 2,654,074,000.00 2,654,074,000.00 2,654,074,000.00 2,654,074,000.00 Total investments 24,799,488,607.66 24,804,854,373.32 24,810,760,457.24 2,654,074,000.00 22,156,686,457.24 0.00

Fair Value Measurements Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs 2019 Principal Value Carrying Amount Fair Value (Level 1) (Level 2) (Level 3)

Investments by Fair Value Level Debt securities: Repurchase agreements 8,947,015,294.31 8,947,015,294.31 8,947,015,294.31 8,947,015,294.31 Commercial paper United States government agencies 7,718,015,000.00 7,708,204,205.70 7,709,468,432.06 7,709,468,432.06 United States government treasuries 3,311,190,000.00 3,301,391,277.14 3,302,386,662.75 3,302,386,662.75 Money market mutual funds 618,074,000.00 618,074,000.00 618,074,000.00 618,074,000.00 Total investments 20,594,294,294.31 20,574,684,777.15 20,576,944,389.12 618,074,000.00 19,958,870,389.12 0.00

Texpool Prime Fair Value Measurements Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs 2020 Principal Value Carrying Amount Fair Value (Level 1) (Level 2) (Level 3)

Investments by Fair Value Level Debt securities: Repurchase agreements 1,345,255,000.00 1,345,255,000.00 1,345,255,000.00 1,345,255,000.00 Commercial paper 5,010,041,000.00 5,006,113,244.87 5,008,725,060.03 5,008,725,060.03 United States government agencies United States government treasuries 1,051,870,000.00 1,051,544,392.38 1,051,573,472.42 1,051,573,472.42 Money market mutual funds 562,052,003.75 562,126,499.35 562,052,003.75 562,052,003.75 Total investments 7,969,218,003.75 7,965,039,136.60 7,967,605,536.20 562,052,003.75 7,405,553,532.45 0.00

Investments by Fair Value Level Debt securities: Repurchase agreements 1,471,217,000.00 1,471,217,000.00 1,471,217,000.00 1,471,217,000.00 Commercial paper 4,177,000,000.00 4,166,383,727.20 4,167,370,090.00 4,167,370,090.00 United States government treasuries United States government agencies Money market mutual funds 572,052,003.75 572,126,953.71 572,052,003.75 572,052,003.75 Total investments 6,220,269,003.75 6,209,727,680.91 6,210,639,093.75 572,052,003.75 5,638,587,090.00 0.00

146 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Texas Treasury Safekeeping Trust Company (930)

Fair value is the price that would be received to sell an asset in an orderly transaction between market participants . Debt securities and repurchase agreements classified as Level 2 of the fair value hierarchy are valued using other observable significant inputs, including but not limited to, quoted prices for similar securities, interest rates and a fixed-income pricing model . Money market mutual funds classified as Level 1 of the fair value hierarchy are valued using a published net asset value per share .

Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its Obligation . The Trust Company only invests in overnight Repurchase Agreements which are collateralized by US Government Securities, US Government Agencies or Government Sponsored Enterprises . TexPool and TexPool Prime portfolios are designed and managed to ensure that they maintain a AAAm rating (or the equivalent) by a nationally recognized statistical rating organization (“NRSRO”) . As of Aug . 31, 2020, TexPool Prime’s underlying securities of all Repurchase Agree- ments were rated A-1 by Standard & Poor’s, P-1 by Moody’s Investors Service, and F-1 by Fitch ratings . Standard & Poor’s ranks both TexPool and TexPool Prime with the highest principal stability rating of AAAm .

Standard & Poor's Fund Type Fund Investment Type AAA AA N/R

05 1004 Repurchase Agreements $ 59,370,086.43 09 4000 US Government Agencies 267,117,471.54 09 4000 Mutual Funds 09 4000 Political Subdivisions $ 4,858,547.85

A-1 A-2 N/R

18 3181 Repurchase Agreements $ 8,325,414,607.66 18 3181 US Government Agencies 6,907,842,620.66 18 3181 Commercial Paper 5,006,113,244.87 18 3181 Mutual Funds 2,654,074,000.00 $ 562,126,499.35 18 3181 Corporate Bonds

Concentration of credit risk.

Texpool: Up to 100 percent of TexPool assets may be invested in government obligations of the United States, its agencies or instrumentalities . However, no more than 60 percent of the portfolio may be invested in variable rate notes . Up to 100 percent of TexPool assets may be invested in direct repurchase agreements . TexPool may enter into reverse repurchase agreements for up to one third (1/3) of the value of the TexPool assets . No more than 10 percent of the TexPool assets may be invested in a single money market fund . The money market mutual fund must be rated AAA or its equivalent by at least one NRSRO . TexPool’s investment policy has no limit on the amount it may invest in any single Governmental Sponsored Enterprise (GSE) . As of Aug . 31, 2020, TexPool had more than 5 percent of the pool’s investments in the following GSEs: 18 .1 percent with the Federal Home Loan Bank . As of Aug . 31, 2019, TexPool had more than 5 percent of the pool’s investments in the following GSEs: 26 .2 percent with the Federal Home Loan Bank and 7 .8 percent with the Federal Farm Credit Bank .

Texpool Prime: Up to 100 percent of TexPool Prime assets may be invested in government obligations of the United States, its agencies or instrumentalities . However, no more than 60 percent of the portfolio may be invested in variable rate notes . Up to 100 percent of TexPool Prime assets may be invested in direct repurchase agreements . The term of a reverse repurchase agreements may not exceed 90 days after the date of delivery . Up to 75 percent of TexPool Prime assets may be invested in commercial paper . No more than 25 percent of TexPool Prime assets may be invested in a single industry or business sector, provided that this limitation does not apply to securities issued or guaranteed by companies in the financial services industry . No more than 5 percent of TexPool Prime assets at the time of purchase may be invested in a single corporate entity . Up to 15 percent of the TexPool Prime assets may be invested in money market mutual funds that do not seek to maintain a stable net asset value per share . However, TexPool Prime may not acquire shares of a money market mutual fund that represent more than 10 percent of and outstanding shares of that fund at the time of purchase . As of Aug . 31, 2020, no investment in a single entity exceeded the 5 percent policy

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 147 UNAUDITED Texas Treasury Safekeeping Trust Company (930)

limit . As of Aug . 31, 2019, commercial paper investments in Toronto Dominion Bank were 5 06. percent exceeding the 5 percent policy limit . However, at the time of the last purchase, these investments were under 5 percent of total investments .

Interest rate risk. The weighted average maturity of the portfolio is limited to 60 days calculated using the reset date for variable rate notes (“VRNs”) and 90 days or fewer using the final maturity date for VRNs, with the maximum maturity for any individual security in the portfolio not exceeding 397 days for fixed rate securities and 24 months for VRNs . The following schedule reflects the weighted average maturity by investment type and as a whole for Texpool and Texpool Prime .

Weighted Average Maturity (Days) Investment Type TexPool TexPool Prime

Repurchase Agreements 1 1 Commercial Paper 0 64 Corporate Bonds Mutual Funds 1 1 U.S. Government Agency Securities 25 0 U.S. Government Treasuries 75 94 Weighted Average Maturity 32 53

NOTE 4: Short-Term Debt (Not Applicable) NOTE 5: Summary of Long Term Liabilities Changes in Long-Term Liabilities

During the year ended Aug . 31, 2020, the following changes occurred in liabilities:

Amounts Due Business-Type Balance Balance Within Activities Sept. 1, 2019 Additions Reductions Sept. 1, 2020 One Year

Compensable Leave $ 1,044,611.85 $ 999,793.73 $ 845,249.60 $ 1,199,155.98 $ 837,133.18 Total Business-Type Activities $ 1,044,611.85 $ 999,793.73 $ 845,249.60 $ 1,199,155.98 $ 837,133.18

Employees’ Compensable Leave

A state employee is entitled to be paid for all unused vacation time accrued, in the event of the employee’s resignation, dismissal, or separation from state employment, provided the employee has had continuous employment with the state for six months . Expenditures for accumulated annual leave balances are recognized in the period paid or taken in Governmental and/or Expendable Trust fund types . For these fund types, the liability for unpaid benefits is recorded in the Statement of Net Assets . No liability is recorded for non-vesting accumulating rights to receive sick pay benefits . NOTE 6: Bonded Indebtness (Not Applicable) NOTE 7: Derivatives (Not Applicable) NOTE 8: Leases (Not Applicable)

148 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Texas Treasury Safekeeping Trust Company (930)

NOTE 9: Defined Benefit Pension and Contribution Plans (Not Applicable) NOTE 10: Deferred Compensation State employees may elect to defer a portion of their earnings for income tax and investment purposes pursuant to authority granted in the TEX . GOV’T . CODE ANN ., sec 609 .001 . Two plans are available for employees’ deferred compensation plan . Both plans are administered by the Employees Retirement System .

The state’s 457 plan complies with the Internal Revenue Code Sec . 457 . Deductions, purchased investments and earnings attributed to the 457 plan are the property of the state subject only to the claims of the state’s general creditors . Participant’s rights under the plan are equal to those of the general creditors of the state in an amount equal to the fair market value of the 457 account for each participant .

The state has no liability under the 457 plan and it is unlikely that plan assets will be used to satisfy the claims of general creditors in the future . The state also administers another plan, ‘Texsaver’ created in accordance with Internal Revenue Code Sec . 401(k) . However, the assets of this plan do not belong to the state nor does the state have a liability related to this plan . NOTE 11: Postemployment Health Care and Life Insurance Benefits (Not Applicable) NOTE 12: Interfund Activity and Transactions (Not Applicable) NOTE 13: Continuance Subject To Review (Not Applicable) NOTE 14: Adjustments to Fund Balances and Net Assets (Not Applicable) NOTE 15: Contingencies and Commitments (Not Applicable) NOTE 16: Subsequent Events (Not Applicable) NOTE 17: Risk Management The agency is exposed to a variety of civil claims resulting from the performance of its duties . It is agency policy to periodically assess the proper combination of commercial insurance and retention of risk to cover losses to which it may be exposed .

The agency assumes substantially all risks associated with tort and liability claims due to the performance of its duties .

The agency’s liabilities are reported when it is both probable that a loss has occurred and the amount of that loss can be reasonably estimated . Liabilities include an amount for claims that have been incurred but not reported . Liabilities are reevalu- ated periodically to consider current settlements, frequency of claims, past experience and economic factors . There were no significant reductions in insurance coverage in the past year and losses did not exceed funding arrangements during the past three years . Changes in the balances of the agency’s claims liabilities during fiscal 2020 were:

Fiscal Beginning Ending Year Balance Increases Decreases Balance

2020 $ 0.00 $ 1,369.26 $ (1,369.26) $ 0.00 2019 $ 0.00 $ 3,388.00 $ (3,388.00) $ 0.00

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 149 UNAUDITED Texas Treasury Safekeeping Trust Company (930)

NOTE 18: Management Discussions and Analysis The following events occurred at our agency:

The Texas Treasury Safekeeping Trust Company (“Texas Trust”) was created in 1986 by the 69th Legislature to provide a separate legal entity for the State Treasurer . The incorporation of the trust company was necessary to obtain direct access to services provided by the Federal Reserve System, namely wire and custody services, and resulted in cost savings to the state of Texas . Texas Trust is one of only two state-owned trust companies with direct access to the Federal Reserve System . NOTE 19: The Financial Reporting Entity (Not Applicable) NOTE 20: Stewardship, Compliance and Accountability (Not Applicable) NOTE 22: Donor-Restricted Endowments (Not Applicable) NOTE 23: Extraordinary and Special Items Not Applicable) NOTE 24: Disaggregation of Receivable and Payable Balances (Not Applicable) NOTE 25: Termination Benefits (Not Applicable) NOTE 26: Segment Information (Not Applicable) NOTE 27: Service Concession Arrangements (Not Applicable) NOTE 28: Deferred Outflows of Resources and Deferred Inflows of Resources (Not Applicable) NOTE 29: Troubled Debt Restructuring (Not Applicable) NOTE 30: Non-Exchange Financial Guarantees (Not Applicable) NOTE 31: Tax Abatements (Not Applicable) NOTE 32: Governmental Fund Balances (Not Applicable) NOTE 33: Related parties The Texas Trust has entered into a services agreement with the Comptroller of Public Accounts (CPA) . The agreement provides for specified rates based on hours of utilization . As of Aug . 31, 2020, the Texas Trust paid CPA $70,413 .29 for services provided . At Aug . 31, 2020, the Texas Trust had accrued $17,176 .86 for services provided by CPA and this amount is included in accounts payable .

150 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Texas Treasury Safekeeping Trust Company (930)

COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 151 UNAUDITED Texas Treasury Safekeeping Trust Company (930)

152 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Texas Treasury Safekeeping Trust Company (930)

Exhibit H-1 Combining Statement of Fiduciary Net Position – External Investment Trust Funds August 31, 2020

Texas Treasury Texas Treasury Safekeeping Trust Safekeeping Trust Company Company TEXPOOL TEXPOOL/Prime (9999) (9999) Totals U/F (6050) U/F (7050) (Ex VI) ASSETS Cash In Bank $ 675.33 $ 1,598.96 $ 2,274.29 Investments US Government and Agency Obligations 15,170,620,765.66 1,051,544,392.38 16,222,165,158.04 Repurchase Agreements 6,980,159,607.66 1,345,255,000.00 8,325,414,607.66 Commercial Paper 5,006,113,244.87 5,006,113,244.87 Mutual Funds 2,654,074,000.00 562,126,499.35 3,216,200,499.35 Corporate Bonds Interest Receivable 10,725,420.70 476,070.26 11,201,490.96 Pending Transactions Total Assets 24,815,580,469.35 7,965,516,805.82 32,781,097,275.17

LIABILITIES Dividends Payable 3,758,312.44 2,170,123.59 5,928,436.03 Accounts Payable Pending Transactions 524,694,770.25 249,812,677.59 774,507,447.84 Other Liabilities 209,364.10 10,515.13 219,879.23 Total Liabilities 528,662,446.79 251,993,316.31 780,655,763.10

NET POSITION Held in Trust For: Pool Participants 24,286,918,022.56 7,713,523,489.51 32,000,441,512.07 Total Net Position $ 24,286,918,022.56 $ 7,713,523,489.51 $ 32,000,441,512.07

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 153 UNAUDITED Texas Treasury Safekeeping Trust Company (930)

Exhibit H-2 Combining Statement of Changes in Fiduciary Net Position – External Investment Trust Funds For the Fiscal Year Ended August 31, 2020

Texas Treasury Texas Treasury Safekeeping Trust Safekeeping Trust Company Company TEXPOOL TEXPOOL/Prime (9,999) (9,999) Totals U/F (6050) U/F (7050) (Ex VII) ADDITIONS Investment Income Interest and Investment Income $ 264,114,196.51 $ 92,391,699.47 $ 356,505,895.98 Expenses: Management Fees and Expenses (10,199,093.98) (3,430,360.75) (13,629,454.73) Net Income from Investing Activities 253,915,102.53 88,961,338.72 342,876,441.25

Total Additions 253,915,102.53 88,961,338.72 342,876,441.25

Net Increase (Decrease) in Participant Investments 3,548,502,574.35 1,520,502,415.01 5,069,004,989.36

Net Increase (Decrease) in Net Position 3,802,417,676.88 1,609,463,753.73 5,411,881,430.61

Net Position, September 1, 2019 20,484,500,345.68 6,104,059,735.78 26,588,560,081.46

Net Position, August 31, 2020 $ 24,286,918,022.56 $ 7,713,523,489.51 $ 32,000,441,512.07

154 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Texas Treasury Safekeeping Trust Company (930)

Exhibit J-1 Combining Statement of Changes in Assets and Liabilities – Agency Funds August 31, 2020

Beginning Ending Balance Balance Sept. 1, 2019 Additions Deductions Aug. 31, 2020

Texas Public Finance Authority (9999) U/F (4000)

ASSETS Cash in Bank $ 11,161,689.53 $ $ 7,404,963.74 $ 3,756,725.79 Interest and Dividend Receivable 4,664,482.19 3,687,854.14 976,628.05 Investments: (US Gov & Agencies Oblig) 342,721,731.89 65,887,164.65 276,834,567.24 (Mutual Funds) (Political Subdivision) 4,858,547.85 (4,858,547.85) Total Assets 358,547,903.61 0.00 81,838,530.38 276,709,373.23

LIABILITIES Funds Held for Others 358,547,903.61 81,838,530.38 276,709,373.23 Total Liabilities $ 358,547,903.61 $ 0.00 $ 81,838,530.38 $ 276,709,373.23

Beginning Ending Balance Balance Sept. 1, 2019 Additions Deductions Aug. 31, 2020 Child Support Employ Deduct- Offset Acct Fund (0807) U/F (8070)

ASSETS Cash in State Treasury $ $ $ $ Total Assets 0.00 0.00 0.00 0.00

LIABILITIES Funds Held for Others Total Liabilities $ 0.00 $ 0.00 $ 0.00 $ 0.00

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 155 UNAUDITED Texas Treasury Safekeeping Trust Company (930)

156 Texas Comptroller of Public Accounts • 2020 Annual Financial Report Comptroller State Energy Conservation Office (907) BASIC FINANCIAL STATEMENTS

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 157 UNAUDITED Comptroller State Energy Conservation Office (907)

158 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller State Energy Conservation Office (907)

EXHIBIT I Combined Balance Sheet/Statement of Net Position – Governmental Funds For the Fiscal Year Ended August 31, 2020

General Governmental Capital Long-Term Statement Funds Funds Assets Liabilities Other of (Exh A-1) Total Adjustments Adjustments Adjustments Net Position ASSETS Current Assets: Cash: Cash in State Treasury $ 81,507,186.32 $ 81,507,186.32 $ $ $ $ 81,507,186.32 Legislative Appropriations 34,709,494.65 34,709,494.65 34,709,494.65 Receivables From: Federal 417,995.52 417,995.52 417,995.52 Interfund Receivables (Note 12) 5,555,118.88 5,555,118.88 5,555,118.88 Due from Other Agencies 157.97 157.97 157.97 Loans and Contracts 17,635,160.90 17,635,160.90 17,635,160.90 Total Current Assets 139,825,114.24 139,825,114.24 0.00 0.00 0.00 139,825,114.24

Non-Current Assets: Interfund Receivables (Note 12) 15,875,076.95 15,875,076.95 15,875,076.95 Loans and Contracts 70,156,554.85 70,156,554.85 70,156,554.85 Total Non-Current Assets 86,031,631.80 86,031,631.80 0.00 0.00 0.00 86,031,631.80 Total Assets $ 225,856,746.04 $ 225,856,746.04 $ 0.00 $ 0.00 $ 0.00 $ 225,856,746.04

LIABILITIES Current Liabilities: Payables from: Accounts $ 512,152.85 $ 512,152.85 $ $ $ $ 512,152.85 Payroll 78,016.94 78,016.94 78,016.94 Due to Other Agencies 265,926.29 265,926.29 265,926.29 Unearned Revenues 211,760.74 211,760.74 211,760.74 Employees Compensable Leave (Note 5) 71,070.63 71,070.63 Total Current Liabilities 1,067,856.82 1,067,856.82 0.00 71,070.63 0.00 1,138,927.45

Non-Current Liabilities: Employees Compensable Leave (Note 5) 48,799.45 48,799.45 Total Non-Current Liabilities 0.00 0.00 0.00 48,799.45 0.00 48,799.45 Total Liabilities 1,067,856.82 1,067,856.82 0.00 119,870.08 0.00 1,187,726.90

FUND FINANCIAL STATEMENT Fund Balances (Deficits): Nonspendable (Note 32) 44,341,492.51 44,341,492.51 44,341,492.51 Committed 135,088,223.38 135,088,223.38 135,088,223.38 Unassigned 45,359,173.33 45,359,173.33 45,359,173.33 Total Fund Balances 224,788,889.22 224,788,889.22 0.00 0.00 0.00 224,788,889.22 Total Liabilities and Fund Balances $ 225,856,746.04 $ 225,856,746.04

GOVERNMENT-WIDE STATEMENT OF NET POSITION Net Position: Restricted for: Employee Benefits (Note 5) (119,870.08) (119,870.08) Total Net Position $ 0.00 $ (119,870.08) $ 0.00 $ 224,669,019.14

The accompanying notes to the financial statements are an integral part of this statement.

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 159 UNAUDITED Comptroller State Energy Conservation Office (907)

EXHIBIT II Combined Statement of Revenues, Expenditures, and Changes in Fund Balances/Statement of Activities – Governmental Funds For the Fiscal Year Ended August 31, 2020

General Governmental Capital Long-Term Statement Funds Funds Assets Liabilities Other of (Exh A-2) Total Adjustments Adjustments Adjustments Activities REVENUES Legislative Appropriations: Original Appropriations (GR) $ 418,247.00 $ 418,247.00 $ $ $ $ 418,247.00 Additional Appropriations (GR) 20,077.34 20,077.34 20,077.34 Federal Revenue (Schedule 1A) 6,129,147.26 6,129,147.26 6,129,147.26 Interest and Investment Income 3,922,067.96 3,922,067.96 3,922,067.96 Other (0.04) (0.04) (0.04) Total Revenues 10,489,539.52 10,489,539.52 0.00 0.00 0.00 10,489,539.52

EXPENDITURES Salaries and Wages 678,671.83 678,671.83 (13,000.10) 665,671.73 Payroll Related Costs 169,102.41 169,102.41 169,102.41 Professional Fees and Services 1,561,309.05 1,561,309.05 1,561,309.05 Travel 13,914.17 13,914.17 13,914.17 Communication and Utilities 6,658.15 6,658.15 6,658.15 Rentals & Leases 8,594.76 8,594.76 8,594.76 Federal Grant Pass-Through Expenditures (Schedule 1A) 1,919,332.83 1,919,332.83 1,919,332.83 State Grant Pass-Through Expenditures (4.75) (4.75) (4.75) Intergovernmental Payments 1,702,515.63 1,702,515.63 1,702,515.63 Public Assistance Payments 18,200.00 18,200.00 18,200.00 Other Expenditures 22,081.23 22,081.23 22,081.23 Total Expenditures/Expenses 6,100,375.31 6,100,375.31 0.00 (13,000.10) 0.00 6,087,375.21

Excess (Deficiency) of Revenues Over Expenditures 4,389,164.21 4,389,164.21 0.00 13,000.10 0.00 4,402,164.31

OTHER FINANCING SOURCES (USES) Appropriations Lapsed (2,715,320.28) Total Other Financing Sources and Uses (2,715,320.28) 0.00 0.00 0.00 0.00 0.00

Net Change in Fund Balances/Net Position 1,673,843.93 4,389,164.21 0.00 13,000.10 0.00 4,402,164.31

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances – Beginning 223,115,045.29 223,115,045.29 223,115,045.29 Restatements Fund Balances, September 1, 2019, as Restated 223,115,045.29 223,115,045.29 0.00 0.00 0.00 223,115,045.29

Fund Balances – August 31, 2020 $ 224,788,889.22 $ 224,788,889.22 $ 0.00 $ 0.00 $ 0.00 $ 224,788,889.22

GOVERNMENT-WIDE STATEMENT OF NET POSITION Change in Net Position $ 224,788,889.22 $ $ 13,000.10 $ $ 224,801,889.32

Net Position – Beginning (132,870.18) (132,870.18) Net Position, September 1, 2019, as Restated 0.00 (132,870.18) 0.00 (132,870.18) Net Position – August 31, 2020 $ 224,788,889.22 $ 0.00 $ (119,870.08) $ 0.00 $ 224,669,019.14

The accompanying notes to the financial statements are an integral part of this statement.

160 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller State Energy Conservation Office (907)

Notes to the Financial Statements

NOTE 1: Summary of Significant Accounting Policies ENTITY

The State Energy Conservation Office (SECO) is an agency of the state of Texas and its financial records comply with state statutes and regulations . This includes compliance with the Texas Comptroller of Public Accounts Reporting Requirements for State Agencies .

The function of the State Energy Conservation Office is to promote and provide for the efficient use of energy, while pro- tecting human health and safety, and the environment . SECO administers and delivers a variety of energy efficient and renewable programs that significantly impact energy cost and consumption in the institutional, industrial, transportation and residential sectors .

Due to the significant changes related to Governmental Accounting Standards Board Statement (GASB) 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments, the Comptroller of Public Accounts does not require the accompanying annual financial report to comply with all the requirements in this statement . The financial report will be considered for audit by the State Auditor as part of the audit of the state’s Comprehensive Annu- al Financial Report; therefore, an opinion has not been expressed on the financial statements and related information contained in this report .

There are no component units in which the State Energy Conservation Office is financially accountable for in which exclusion would create misleading or incomplete financial statements .

FUND STRUCTURE

The accompanying financial statements are presented on the basis of funds, each of which is considered a separate accounting entity .

GOVERNMENTAL FUND TYPES AND GOVERNMENT-WIDE ADJUSTMENT FUND TYPES

General Revenue Funds The General Revenue Fund (Fund 0001) is used to account for all financial resources of the state except those required to be accounted for in another fund . Long-Term Liabilities Adjustment Fund Type The Long-Term Liabilities Adjustment Fund (Fund 9997) is used to convert governmental fund types’ debt from modified accrual to full accrual .

FIDUCIARY FUND TYPES

Agency Funds Agency funds are used to account for assets the government holds on behalf of others in a purely custodial capacity . Agency funds involve only the receipt, temporary investment, and remittance of fiduciary resources to individuals, private organizations, or other governments . Within SECO, the agency fund is Departmental Suspense (Fund 0900) .

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 161 UNAUDITED Comptroller State Energy Conservation Office (907)

BASIS OF ACCOUNTING

Governmental fund types that build the fund financial statements are accounted for using the modified accrual basis of accounting . Under the modified accrual basis, revenues are recognized in the period that they become both measurable and available to finance operations of the fiscal year or liquidate liabilities existing at fiscal year-end .

The state of Texas considers receivables collected within sixty days after year-end to be available and recognizes them as revenues of the current year for fund financial statements prepared on the modified accrual basis . Expenditures and other uses of financial resources are recognized when the related liability is incurred .

Governmental adjustment fund types that will build the government-wide financial statements are accounted for using the full accrual basis of accounting . The following activities are recognized in these fund types:

• Unpaid employee compensable leave

• Capital Assets BUDGET AND BUDGETARY ACCOUNTING The budget is prepared biennially and represents appropriations authorized by the Legislature and approved by the Governor (the General Appropriations Act) .

Unencumbered appropriations are generally subject to lapse 60 days after the end of the fiscal year for which they were appropriated .

ASSETS, LIABILITIES AND FUND BALANCES/NET POSITION

ASSETS

Cash and Cash Equivalents Short-term highly liquid investments with an original maturity of three months or less are considered cash equivalents . Federal Receivables-Current This represents federal grant reimbursements including indirect costs that have been earned but not received . Loans and Contracts

LoanSTAR Program

The State Energy Conservation Office offers loans from the oil overcharge LoanSTAR fund for energy related cost reduction projects . These low interest loans are made to state agencies and public institutions and are paid back with the funds saved from the reduction of energy costs .

Federally Funded Loan Programs

State Energy Program (SEP - CFDA 81.041)

The State Energy Conservation Office receives an annual grant from the U .S . Department of Energy (DOE) to provide funds for the State Energy Program (SEP) . A portion of these funds are authorized by DOE to be used as low interest loans that enable municipalities to maximize their energy efficiency through building retrofits . The loans are paid back with funds saved from the reduction of energy costs . Furthermore, the State Energy Conservation Office chose to continue the administration of the American Recovery and Reinvestment Act (ARRA) revolving loan program made

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available through DOE in 2009 . The program still offers low interest loans intended to assist governmental entities in financing their energy related cost reduction efforts . No dollars have been transferred from the now discontinued ARRA award to the annual SEP award and all monitoring will follow the same guidelines as the SEP annual grant .

LIABILITIES

Accounts Payable Accounts payable represents the liability for the value of assets or services received at the balance sheet date for which payment is pending . Employees’ Compensable Leave Employees’ compensable leave balances represent the liability that become “due” upon the occurrence of relevant events such as resignations, retirements, and uses of leave balances by covered employees . Liabilities are reported separately as either current or noncurrent in the statement of net position . These obligations are normally paid from the same funding source from which each employee’s salary or wage compensation was paid .

FUND BALANCE/NET POSITION

“Fund balance” is the difference between assets plus deferred outflows of resources and liabilities plus deferred inflows of resources on the governmental fund statements . “Net Position” is the difference between assets plus deferred outflows of resources and liabilities plus deferred inflows of resources on the government-wide, proprietary and fiduciary fund statements . Fund Balance Components Fund balances for governmental funds are classified as nonspendable, restricted, committed, assigned or unassigned in the fund financial statements .

• Nonspendable fund balance includes amounts not available to be spent because they are either (1) not in spendable form or (2) legally or contractually required to be maintained intact .

• Committed fund balance can be used only for specific purposes pursuant to constraints imposed by a formal action of the Texas Legislature, the state’s highest level of decision-making authority .

• Unassigned fund balance includes the residual classification for the general fund . The net resources of the general fund in excess of non-spendable, restricted, committed and assigned fund balances (a surplus fund balance) are classified as unassigned fund balance .

INTERFUND ACTIVITIES AND TRANSACTIONS

The agency has the following types of transactions between funds/agencies:

• Due To Other Agencies

• Transfers In

• Transfers Out

• Interfund Receivables and Interfund Payables

The composition of the agency’s interfund receivables and interfund payables are presented in Note 12 . NOTE 2: Capital Assets (Not Applicable)

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NOTE 3: Deposits, Investments and Repurchase Agreements (Not Applicable) NOTE 4: Short-Term Debt (Not Applicable) NOTE 5: Long-Term Liabilities Changes In Long-Term Liabilities

The following changes occurred in liabilities during the year ending Aug . 31, 2020:

Amounts Due Amounts Governmental Balance Balance Within Due Activities Sept. 1, 2019 Additions Reductions Aug. 31, 2020 One Year Thereafter

Compensable Leave$ 132,870.18 82,618.14$ 95,618.24$ $ 119,870.08 71,070.63$ 48,799.45$ Total Governmental$ 132,870.18 82,618.14$ 95,618.24$ $ 119,870.08 71,070.63$ 48,799.45$

Employees’ Compensable Leave

If a state employee had continuous employment with the state for at least six months, the state employee is entitled to be paid for all unused vacation time accrued in the event of the employee’s resignation, dismissal or separation from state employment .

Expenditures for accumulated annual leave balances are recognized in the period paid or taken in governmental fund types . For these fund types, the liability for unpaid benefits is recorded in the statement of net position . Both an expense and a liability for business-type activities are recorded in the proprietary funds as the benefits accrue to employees . No liability is recorded for non-vesting employees accumulating rights to receive sick pay benefits . This obligation is usually paid from the same funding source(s) from which the employee’s salary or wage compensation was paid . NOTE 6: Bonded Indebtedness (Not Applicable) NOTE 7: Derivatives (Not Applicable) NOTE 8: Leases (Not Applicable) NOTE 9: Defined Benefit Pension Plans and Defined Contribution Plan (Not Applicable) NOTE 10: Deferred Compensation (Not Applicable) NOTE 11: Postemployment Benefits Other Than Pensions (Not Applicable) NOTE 12: Interfund Activity and Transactions The State Energy Conservation Office experienced routine transfers with other state agencies that were consistent with the activities of the fund making the transfer . Repayment of interfund balances will occur within one year from the date of the financial statement .

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Interfund loans are reported as interfund receivables and payables . If repayment is due during the current year or soon thereafter, the balance is classified as “current .” Balances for repayment due in two (or more) years are classified as “noncurrent .” The State Energy Conservation Office’s LoanSTAR Revolving Loan programs are reported in interfund receivables and payables . The LoanSTAR Revolving loan balances are provided below .

Individual balances and activity as of Aug . 31, 2020 are as follows:

Current Current Interfund Receivable Interfund Payable Purpose Current Portion Appd Fund 5005, D23 Fund 0515 Agency 303, Texas Facilities Commission $ $ Loan Star Loans Agency 401, Texas Military Department 48,097.40 Loan Star Loans Agency 696, Texas Department of Criminal Justice 44,903.10 Loan Star Loans Agency 711, Texas A&M University 542,910.52 Loan Star Loans Agency 719, Texas State Technical College Harlingen 228,187.65 Loan Star Loans Agency 714, UT at Arlington 56,662.40 Loan Star Loans Total Interfund Receivable/Payable $ 920,761.07 $ 0.00

Non-Current Non-Current Interfund Receivable Interfund Payable Purpose Non-Current Portion Appd Fund 5005, D23 Fund 0515 Agency 303, Texas Facilities Commission $ 201,381.76 $ Loan Star Loans Agency 401, Texas Military Department 231,893.05 Loan Star Loans Agency 696, Texas Department of Criminal Justice 128,204.16 Loan Star Loans Agency 696, Texas Department of Criminal Justice 4,674,531.92 Loan Star Loans Agency 711, Texas A&M University 1,265,438.10 Loan Star Loans Agency 719, Texas State Technical College Harlingen 333,351.07 Loan Star Loans Agency 714, UT at Arlington 285,929.15 Loan Star Loans Total Interfund Receivable/Payable $ 7,120,729.21 $ 0.00

Current Current Interfund Receivable Interfund Payable Purpose Current Portion Appd Fund 0001, D23 Fund 0230 Agency 711, Texas A&M University $ 1,772,120.16 $ Federal Lone Star Loans Agency 714, UT at Arlington 540,528.83 Federal Lone Star Loans Agency 719, Texas State Technical College Waco 537,616.88 Federal Lone Star Loans Agency 735, Midwestern State University 132,802.87 Federal Lone Star Loans Agency 745, UT Health Science Center At San Antonio 144,853.07 Federal Lone Star Loans Agency 755, Stephen F. Austin State University 1,506,436.00 Federal Lone Star Loans Total Interfund Receivable/Payable $ 4,634,357.81 $ 0.00

Non-Current Non-Current Interfund Receivable Interfund Payable Purpose Non-Current Portion Appd Fund 0001, D23 Fund 0230 Agency 711, Texas A&M University $ 6,867,856.08 $ Federal Lone Star Loans Agency 719, Texas State Technical College Waco 1,639,526.87 Federal Lone Star Loans Agency 745, UT Health Science Center At San Antonio 64,661.06 Federal Lone Star Loans Agency 755, Stephen F. Austin State University 182,303.73 Federal Lone Star Loans Total Interfund Receivable/Payable $ 8,754,347.74 $ 0.00

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NOTE 13: Continuance Subject to Review (Not Applicable) NOTE 14: Adjustments to Fund Balances and Net Position (Not Applicable) NOTE 15: Contingencies and Commitments (Not Applicable) NOTE 16: Subsequent Events (Not Applicable) NOTE 17: Risk Management (Not Applicable) NOTE 18: Management’s Discussion and Analysis (Not Applicable) NOTE 19: The Financial Reporting Entity (Not Applicable) NOTE 20: Stewardship, Compliance and Accountability (Not Applicable) NOTE 21: Not Applicable to the AFR (Not Applicable) NOTE 22: Donor-Restricted Endowments (Not Applicable) NOTE 23: Extraordinary and Special Items (Not Applicable) NOTE 24: Disaggregation of Receivable and Payable Balances (Not Applicable) NOTE 25: Termination Benefits (Not Applicable) NOTE 26: Segment Information (Not Applicable) NOTE 27: Service Concession Arrangements (Not Applicable) NOTE 28: Deferred Outflows of Resources and Deferred Inflows of Resources (Not Applicable) NOTE 29: Trouble Debt Restructuring (Not Applicable)

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NOTE 30: Non-Exchange Financial Guarantees (Not Applicable) NOTE 31: Tax Abatements (Not Applicable) NOTE 32: Governmental Fund Balances GASB 54 establishes financial reporting standards for fund balances . For governmental funds, if an agency uses a classification other than the default or assigned, the agency needs to cite the specific provision, federal requirement or court order causing the restriction or commitment .

The State Energy Conservation Office has the following restrictions and is reporting the following fund balance as nonspendable as of Aug . 31, 2020:

GAAP AFR 54 Fund Fund Class Amount Citation Comments

1 0229/0230 Nonspendable $44,341,492.51 Federal CFDA 81.041 The Nonspendable amounts are federal loans. The Department of Energy has allowed the State Energy Conservation Office to use a portion of the State Energy Program Formula Grant funds for loans and approved to continue the American Recovery and Reinvestment Act (ARRA) revolving loan program. These low interest loans allow municipalities to maximize their energy efficiency through building retrofits. The loans are paid back with funds saved from the reduction of energy costs.

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COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS

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EXHIBIT A-1 Combining Balance Sheet – All General and Consolidated Funds For the Fiscal Year Ended August 31, 2020

General Revenue General Revenue Fund (0001) Dedicated-Oil Overcharge U/F (0001),(0224), (0226),(0227) Fund (5005) (0229), (0230), (0231), (0232) UF (0505), (0515), (0525), (0535) Total (0510), (0512), (1999), (2000), (2370) (0545),(2005),(5999) (Exh I) ASSETS Current Assets: Cash Cash in State Treasury $ $ 81,507,186.32 $ 81,507,186.32 Legislative Appropriations 34,709,494.65 34,709,494.65 Receivables From: Federal 417,995.52 417,995.52 Interfund Receivables (Note 12) 4,634,357.81 920,761.07 5,555,118.88 Due from Other Agencies 157.97 Loans and Contracts 6,143,407.02 11,491,753.88 17,635,160.90 Total Current Assets 45,905,412.97 93,919,701.27 139,824,956.27

Non-Current Assets: Interfund Receivables (Note 12) 8,754,347.74 7,120,729.21 15,875,076.95 Loans and Contracts 35,587,144.77 34,569,410.08 70,156,554.85 Total Noncurrent Assets 44,341,492.51 41,690,139.29 86,031,631.80 Total Assets $ 90,246,905.48 $ 135,609,840.56 $ 225,856,588.07

LIABILITIES AND FUND BALANCES Liabilities: Current Liabilities: Payables From: Accounts $ 219.59 $ 511,933.26 $ 512,152.85 Payroll 68,333.02 9,683.92 78,016.94 Due To Other Agencies 265,926.29 265,926.29 Unearned Revenues 211,760.74 211,760.74 Total Current Liabilities 546,239.64 521,617.18 1,067,856.82

Non-Current Liabilities: Total Non-Current Liabilities 0.00 0.00 0.00 Total Liabilities 546,239.64 521,617.18 1,067,856.82

Fund Balances (Deficits): Nonspendable 44,341,492.51 44,341,492.51 Committed 135,088,223.38 135,088,223.38 Unassigned 45,359,173.33 45,359,173.33 Total Fund Balances 89,700,665.84 135,088,223.38 224,788,889.22 Total Liabilities and Fund Balances $ 90,246,905.48 $ 135,609,840.56 $ 225,856,746.04

The accompanying notes to the financial statements are an integral part of this statement.

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EXHIBIT A-2 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – All General and Consolidated Funds For the Fiscal Year Ended August 31, 2020

General Revenue General Revenue Fund (0001) Dedicated-Oil Overcharge U/F (0001),(0224), (0226),(0227) Fund (5005) (0229),(0230), (0231),(0232) UF (0505), (0515), (0525), (0535) Total (0510),(0512),(1999), (2000), (2370) (0545),(2005),(5999) (Exh II) REVENUES Legislative Appropriations: Original Appropriations $ 418,247.00 $ $ 418,247.00 Additional Appropriations 20,077.34 20,077.34 Federal Revenue (Schedule 1A) 6,129,147.26 6,129,147.26 Interest and Investment Income 1,258,557.38 2,663,510.58 3,922,067.96 Other (0.04) (0.04) Total Revenues 7,826,028.98 2,663,510.54 10,489,539.52

EXPENDITURES Salaries and Wages 666,280.25 12,391.58 678,671.83 Payroll Related Costs 139,845.07 29,257.34 169,102.41 Professional Fees and Services 1,460,342.53 100,966.52 1,561,309.05 Travel 13,914.17 13,914.17 Communication and Utilities 6,655.01 3.14 6,658.15 Rentals & Leases 8,581.13 13.63 8,594.76 Federal Grant Pass-Through Expenditures (Schedule 1A) 1,919,332.83 1,919,332.83 State Grant Pass-Through Expenditures (4.75) (4.75) Intergovernmental Payments 1,702,515.63 1,702,515.63 Public Assistance Payments 18,200.00 18,200.00 Other Expenditures 21,967.31 113.92 22,081.23 Total Expenditures/Expenses 5,957,633.93 142,741.38 6,100,375.31

Excess (Deficiency) of Revenues Over Expenditures 1,868,395.05 2,520,769.16 4,389,164.21

OTHER FINANCING SOURCES (USES) Appropriations Lapsed (2,715,320.28) (2,715,320.28) Total Other Financing Sources and Uses (2,715,320.28) 0.00 (2,715,320.28)

Net Change in Fund Balances (846,925.23) 2,520,769.16 1,673,843.93

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances, September 1, 2019 90,547,591.07 132,567,454.22 223,115,045.29 Restatements Fund Balances, September 1, 2019, as Restated 90,547,591.07 132,567,454.22 223,115,045.29

Fund Balances – August 31, 2020 $ 89,700,665.84 $ 135,088,223.38 $ 224,788,889.22

The accompanying notes to the financial statements are an integral part of this statement.

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SUPPLEMENTARY SCHEDULES

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Schedule 1A Schedule of Expenditures of Federal Awards For the Fiscal Year Ended August 31, 2020

Pass-through From Total Federal Grantor/ NSE Name Agy Agencies or Non-State Direct PT From and Pass-through Grantor/ CFDA Identifying Univ Universities Entities Program Direct Program Program Title Number Number No. Amount Amount Amount Amount U.S. DEPARTMENT OF ENERGY Direct Programs: State Energy Program 81.041 $ $ $ 3,132,910.13 $ 3,132,910.13 State Energy Program 81.041 72,615.22 72,615.22 Pass-Through To: Texas Facilities Commission State Energy Program 81.041 22,295.18 22,295.18 Pass-Through To: Public Utility Commission of Texas State Energy Program 81.041 150,619.66 150,619.66 Pass-Through To: Texas A&M Engineering Experiment Station State Energy Program 81.041 351,006.97 351,006.97 Pass-Through To: University of Texas at Austin State Energy Program 81.041 99,282.94 99,282.94 Pass-Through To: University of Houston Transport of Transuranic Wastes to the Waste Isolation Pilot Plant: States and Tribal Concerns, Proposed Solutions 81.106 42,379.34 42,379.34 Transport of Transuranic Wastes to the Waste Isolation Pilot Plant: States and Tribal Concerns, Proposed Solutions 81.106 43,700.69 43,700.69 Pass-Through To: Texas Department of Public Safety Transport of Transuranic Wastes to the Waste Isolation Pilot Plant: States and Tribal Concerns, Proposed Solutions 81.106 647,030.33 647,030.33 Pass-Through To: Department of State Health Services Transport of Transuranic Wastes to the Waste Isolation Pilot Plant: States and Tribal Concerns, Proposed Solutions 81.106 101,740.53 101,740.53 Pass-Through To: Texas Division of Emergency Management Environmental Monitoring/Cleanup, Cultural and Resource Mgmt., Emergency Response Research, Outreach, Technical Analysis, 81.214 1,034,524.96 1,034,524.96 Environmental Monitoring/Cleanup, Cultural and Resource Mgmt., Emergency Response Research, Outreach, Technical Analysis, 81.214 24,776.58 24,776.58 Pass-Through To: Texas Department of Public Safety Environmental Monitoring/Cleanup, Cultural and Resource Mgmt., Emergency Response Research, Outreach, Technical Analysis, 81.214 240,483.52 240,483.52 Pass-Through To: Texas Division of Emergency Management Environmental Monitoring/Cleanup, Cultural and Resource Mgmt., Emergency Response Research, Outreach, Technical Analysis, 81.214 165,781.21 165,781.21 Pass-Through To: Texas Commission on Environmental Quality Totals – U.S. Department of Energy 0.00 0.00 6,129,147.26 6,129,147.26 Total Expenditures of Federal Awards $ 0.00 $ 0.00 $ 6,129,147.26 $ 6,129,147.26

Concluded on the following page

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SCHEDULE 1A (concluded) Schedule of Expenditures of Federal Awards For the Fiscal Year Ended August 31, 2020

Pass-through To Total Federal Grantor/ Agy Agencies or Non-State PT To and Pass-through Grantor/ Univ Universities Entities Expenditures Expenditures Program Title No. Amount Amount Amount Amount U.S. DEPARTMENT OF ENERGY Direct Programs: State Energy Program $ $ 804,427.11 $ 2,328,483.02 $ 3,132,910.13 State Energy Program 72,615.22 Pass-Through To: Texas Facilities Commission 303 72,615.22 State Energy Program 22,295.18 Pass-Through To: Public Utility Commission of Texas 473 22,295.18 State Energy Program 150,619.66 Pass-Through To: Texas A&M Engineering Experiment Station 712 150,619.66 State Energy Program 351,006.97 Pass-Through To: University of Texas at Austin 721 351,006.97 State Energy Program 99,282.94 Pass-Through To: University of Houston 730 99,282.94 Transport of Transuranic Wastes to the Waste Isolation Pilot Plant: States and Tribal Concerns, Proposed Solutions 42,379.34 42,379.34 Transport of Transuranic Wastes to the Waste Isolation Pilot Plant: States and Tribal Concerns, Proposed Solutions 43,700.69 Pass-Through To: Texas Department of Public Safety 405 43,700.69 Transport of Transuranic Wastes to the Waste Isolation Pilot Plant: States and Tribal Concerns, Proposed Solutions 647,030.33 Pass-Through To: Department of State Health Services 537 647,030.33 Transport of Transuranic Wastes to the Waste Isolation Pilot Plant: States and Tribal Concerns, Proposed Solutions 101,740.53 Pass-Through To: Texas Division of Emergency Management 575 101,740.53 Environmental Monitoring/Cleanup, Cultural and Resource Mgmt., Emergency Response Research, Outreach, Technical Analysis, 898,088.52 136,436.44 1,034,524.96 Environmental Monitoring/Cleanup, Cultural and Resource Mgmt., Emergency Response Research, Outreach, Technical Analysis, 24,776.58 Pass-Through To: Texas Department of Public Safety 405 24,776.58 Environmental Monitoring/Cleanup, Cultural and Resource Mgmt., Emergency Response Research, Outreach, Technical Analysis, 240,483.52 Pass-Through To: Texas Division of Emergency Management 575 240,483.52 Environmental Monitoring/Cleanup, Cultural and Resource Mgmt., Emergency Response Research, Outreach, Technical Analysis, 165,781.21 Pass-Through To: Texas Commission on Environmental Quality 582 165,781.21 Totals – U.S. Department of Energy 1,919,332.83 1,702,515.63 2,507,298.80 6,129,147.26 Total Expenditures of Federal Awards $ 1,919,332.83 $ 1,702,515.63 $ 2,507,298.80 $ 6,129,147.26

Concluded on the following page

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EXHIBIT J-1 Combining Statement of Changes in Assets and Liabilities Agency Funds For the Fiscal Year Ended August 31, 2020

Beginning Ending Balance Balance September 1, 2019 Additions Deductions August 31, 2020 Suspense Fund (0900) U/F (0900) ASSETS Cash in State Treasury $ 470.01 $ 5,778,929.59 $ 5,779,399.60 $ 0.00 Total Assets $ 470.01 $ 5,778,929.59 $ 5,779,399.60 $ 0.00

LIABILITIES Funds Held for Others $ 470.01 $ 5,778,929.59 $ 5,779,399.60 $ 0.00 Total Liabilities $ 470.01 $ 5,778,929.59 $ 5,779,399.60 $ 0.00

UNAPPROPRIATED RECEIPTS General Revenue Fund (0001) U/F (1000) ASSETS Current Cash in State Treasury $ 0.00 $ 470.01 $ 470.01 $ 0.00 Total Assets $ 0.00 $ 470.01 $ 470.01 $ 0.00

LIABILITIES Current Funds Held for Others $ 0.00 $ 470.01 $ 470.01 $ 0.00 Total Liabilities $ 0.00 $ 470.01 $ 470.01 $ 0.00

Totals – All Agency Funds ASSETS Cash in State Treasury $ 470.01 $ 5,779,399.60 $ 5,779,869.61 $ 0.00 Total Assets $ 470.01 $ 5,779,399.60 $ 5,779,869.61 $ 0.00

LIABILITIES Funds Held for Others $ 470.01 $ 5,779,399.60 $ 5,779,869.61 $ 0.00 Total Liabilities $ 470.01 $ 5,779,399.60 $ 5,779,869.61 $ 0.00

The accompanying notes to the financial statements are an integral part of this statement.

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Comptroller – Texas Bullion Depository (908) BASIC FINANCIAL STATEMENTS

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EXHIBIT I Combined Balance Sheet – Governmental Funds August 31, 2020

Long-Term Statement General Capital Assets Liabilities of Net Funds Adjustments Adjustments Position ASSETS Current Assets: Legislative Appropriations $ 488,542.24 $ $ $ 488,542.24 Accounts Receivable 85,765.42 85,765.42 Total Current Assets 574,307.66 0.00 0.00 574,307.66 Total Non-Current Assets 0.00 0.00 0.00 0.00 Total Assets $ 574,307.66 $ 0.00 $ 0.00 $ 574,307.66

LIABILITIES AND FUND BALANCES Liabilities: Current Liabilities: Accounts Payable $ 224,307.66 $ $ $ 224,307.66 Total Current Liabilities 224,307.66 0.00 0.00 224,307.66 Total Liabilities 224,307.66 0.00 0.00 224,307.66

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances (Deficits): Nonspendable Restricted Committed Unassigned 350,000.00 350,000.00 Total Fund Balances 350,000.00 0.00 0.00 350,000.00 Total Liabilities and Fund Balances $ 574,307.66 $ 574,307.66

GOVERNMENT-WIDE STATEMENT – NET POSITION Net Position: Net Investment in Capital Assets Unrestricted 350,000.00 Total Net Position $ 0.00 $ 0.00 $ 350,000.00

The accompanying Notes to the Financial Statements are an integral part of this financial statement.

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EXHIBIT II Combined Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds For the Fiscal Year Ended August 31, 2020

Long-Term General Capital Assets Liabilities Statement Funds Adjustments Adjustments of Activities REVENUES Legislative Appropriations: Original Appropriations $ 350,000.00 $ $ $ 350,000.00 Licenses, Fees & Permits 281,507.50 281,507.50 Total Revenues 631,507.50 0.00 0.00 631,507.50

EXPENDITURES Professional Fees and Services 281,507.50 281,507.50 Total Expenditures 281,507.50 0.00 0.00 281,507.50

Excess (Deficiency) of Revenues Over Expenditures 350,000.00 0.00 0.00 350,000.00

OTHER FINANCING SOURCES (USES) Transfer In Transfer Out Legislative Transfer Out Appropriations Lapsed Insurance Recoveries Total Other Financing Sources (Uses) 0.00 0.00 0.00 0.00

Net Change in Fund Balances/Net Position 350,000.00 0.00 0.00 350,000.00

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances, September 1, 2019 Restatements (Note 14) Fund Balances, September 1, 2019, as Restated 0.00 0.00 0.00 0.00

Fund Balances, August 31, 2020 $ 350,000.00 $ 0.00 $ 0.00 $ 350,000.00

GOVERNMENT-WIDE STATEMENT OF NET POSITION Net Position, September 1, 2019 Restatements Net Position, September 1, 2019, as Restated 0.00 0.00 0.00 0.00

Net Position, August 31, 2020 $ 350,000.00 $ 0.00 $ 0.00 $ 350,000.00

The accompanying Notes to the Financial Statements are an integral part of this financial statement.

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Notes to the Financial Statements

NOTE 1: Summary of Significant Accounting Policies ENTITY

The Comptroller – Texas Bullion Depository (Depository) is an agency of the state of Texas and its financial records comply with state statutes and regulations . This includes compliance with the Comptroller of Public Accounts Reporting Require- ments for Annual Financial Reports of State Agencies .

The Depository is established to serve as the custodian, guardian, and administrator of certain bullion and specie that may be transferred or otherwise acquired by the state of Texas, a state agency, a political subdivision, or another entity of the state . The Depository does not own the assets on deposit and does not report them on its financial statements .

There are no component units in which the Depository is financially accountable or any organization in which exclusion would create misleading or incomplete financial statements .

GOVERNMENTAL FUND TYPES AND GOVERNMENT-WIDE ADJUSTMENT FUND TYPES

General Fund

BASIS OF ACCOUNTING

BUDGETS AND BUDGETARY ACCOUNTING

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ASSETS, LIABILITIES AND FUND EQUITY

Assets

Legislative Appropriations Amounts shown as legislative appropriations represent cash balances in the General Fund at Aug . 31, 2020 . The cash balances of these funds are reported by a different agency at the statewide level .

Liabilities

Accounts Payable Accounts Payable represents the liability for the value of assets or services received at the balance sheet date for which payment is pending .

Fund Balance/Net Position

The difference between fund assets and liabilities is ‘Net Position’ on the government-wide and fiduciary fund statements and the ‘Fund Balance’ is the difference between fund assets and liabilities on the governmental fund statements .

Restricted Fund Balance

This fund balance is reported as restricted when constraints placed on the use of resources are either (a . externally imposed by laws and regulations of other governments or (b . imposed by law through constitutional provisions or enabling legislation .

Committed Fund Balance

Amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the state’s highest level of decision-making authority (the Legislature) are reported as committed fund balance .

Unassigned Fund Balance

This is the residual classification for the general fund . This classification represents fund balance that has not been assigned to other funds and has not been restricted, committed or assigned for specific purposes within the general fund . The general fund is the only fund that can report a positive unassigned fund balance .

INTERFUND TRANSACTIONS AND BALANCES

The Depository did not have any interfund transactions or balances during fiscal year 2020 . NOTE 2: Capital Assets (Not Applicable) NOTE 3: Deposits, Investments and Repurchase Agreements (Not Applicable) NOTE 4: Short-Term Debt (Not Applicable)

182 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Texas Bullion Depository (908)

NOTE 5: Summary of Long Term Liabilities (Not Applicable) NOTE 6: Bonded Indebtedness (Not Applicable) NOTE 7: Derivatives (Not Applicable) NOTE 8: Leases (Not Applicable) NOTE 9: Pension Plans (Not Applicable) NOTE 10: Deferred Compensation (Not Applicable) NOTE 11: Postemployment Health Care and Life Insurance Benefits (Not Applicable) NOTE 12: Interfund Activity and Transactions (Not applicable) NOTE 13: Continuance Subject to Review (Not Applicable) NOTE 14: Adjustments to Fund Balances and Net Position (Not Applicable) NOTE 15: Contingent Liabilities (Not Applicable) NOTE 16: Subsequent Events (Not Applicable) NOTE 17: Risk Management (Not Applicable) NOTE 18: Management Discussion and Analysis The Depository was a new agency effective for fiscal year 2018 . None of the amounts reported in the financial statements are material to the Comptroller’s Office or the state of Texas . NOTE 19: The Financial Reporting Entity There were no significant related party transactions in the Depository in fiscal 2020 . NOTE 20: Stewardship, Compliance and Accountability This section of the report reflects the activities of the Comptroller–Texas Bullion Depository function (Agency 908) in the General Revenue Fund (0001) . The entire activity of the state’s General Revenue Fund will be reflected in the fiscal 2020 State of Texas Comprehensive Annual Financial Report .

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 183 UNAUDITED Comptroller – Texas Bullion Depository (908)

NOTE 21: Tobacco Settlement (Not Applicable) NOTE 22: Donor-Restricted Endowments (Not Applicable) NOTE 23: Extraordinary and Special Items (Not Applicable) NOTE 24: Disaggregation of Receivables and Payables See Note 1 for disaggregation of Other Payables . NOTE 25: Termination Benefits (Not Applicable) NOTE 26: Segment Information (Not Applicable) NOTE 27: Taxes Receivables/Payables (Not Applicable) NOTE 28: Contested Taxes (Not Applicable) NOTE 29: Deferred Inflow of Resources (Not Applicable) NOTE 30: Unclaimed Property (Not Applicable) NOTE 31: Fund Balances (Not Applicable)

184 Texas Comptroller of Public Accounts • 2020 Annual Financial Report Comptroller – Funds Management (903) BASIC FINANCIAL STATEMENTS

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 185 UNAUDITED Comptroller – Funds Management (903)

186 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Funds Management (903)

Exhibit I Combined Balance Sheet/Statement of Net Position – Governmental Funds August 31, 2020

Combined Balance Sheet – Capital Long-Term Governmental Assets Liabilities Other Statement of Funds Adjustments Adjustments Adjustments Net Position ASSETS Current Assets: Legislative Appropriations $ $ $ $ $ Accounts Receivable Total Current Assets 0.00 0.00 0.00 0.00 0.00 Total Non-Current Assets 0.00 0.00 0.00 0.00 0.00 Total Assets $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00

LIABILITIES AND FUND BALANCES Current Liabilities: Payables From: Accounts Payable $ $ $ $ $ Total Current Liabilities 0.00 0.00 0.00 0.00 0.00 Total Liabilities 0.00 0.00 0.00 0.00 0.00

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances (Deficits): Nonspendable Restricted Committed Unassigned Total Fund Balances 0.00 Total Liabilities and Fund Balance $ 0.00

GOVERNMENT-WIDE STATEMENT – NET POSITION Net Position: Net Investment in Capital Assets Unrestricted Total Net Position $ 0.00 $ 0.00 $ 0.00 $ 0.00

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 187 UNAUDITED Comptroller – Funds Management (903)

Exhibit II Combined Statement of Revenues, Expenditures, and Changes in Fund Balances/Statement of Activities – Governmental Funds For the Fiscal Year Ended August 31, 2020

Combined Statement of Revenues, Expenditures, and Changes to Fund Balances – Long-Term Governmental Capital Assets Liabilities Other Statement of Funds Adjustments Adjustments Adjustments Net Assets OTHER FINANCING SOURCES (USES) Transfer In $ 889,008,132.00 $ $ $ $ 889,008,132.00 Transfer Out (889,008,132.00) (889,008,132.00) Legislative Transfer Out Insurance Recoveries Total Other Financing Sources and Uses 0.00 0.00 0.00 0.00 0.00

Net Change in Fund Balances/Net Assets 0.00 0.00 0.00 0.00 0.00

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances, September 1, 2019 Restatements Fund Balances, September 1, 2019, as Restated 0.00 0.00 0.00 0.00 0.00

Fund Balances, August 31, 2020 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00

GOVERNMENT-WIDE STATEMENT – NET POSITION Net Position/Net Change in Net Position $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00

Net Position, September 1, 2019 Restatements Net Position, September 1, 2019, as Restated 0.00 0.00 0.00 0.00 0.00

Net Position, August 31, 2020 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00

188 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Funds Management (903)

Notes to the Financial Statements

NOTE 1: Summary of Significant Accounting Policies ENTITY

The Comptroller – Funds Management Agency (Agency) is an agency of the state of Texas and its financial records comply with state statutes and regulations . This includes compliance with the Comptroller of Public Accounts Reporting Require- ments for Annual Financial Reports of State Agencies .

The Agency is used by the Comptroller’s Office, for accounting purposes only, to transfer surplus ash between funds in the State Treasury . No expenditures are made from this fund .

There are no component units in which the Agency is financially accountable or any organization in which exclusion would create misleading or incomplete financial statements .

GOVERNMENTAL FUND TYPES AND GOVERNMENT-WIDE ADJUSTMENT FUND TYPES

General Fund

GR Federal Disaster Federal Account 0092–This account is created in General Revenue to record transactions related to federal funds received for disaster relief by the state of Texas .

GR Workforce Commission Federal Account 5026–This account is created in General Revenue to record all transactions related to federal funds received by the Texas Workforce Commission .

BASIS OF ACCOUNTING

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 189 UNAUDITED Comptroller – Funds Management (903)

BUDGETS AND BUDGETARY ACCOUNTING

ASSETS, LIABILITIES AND FUND EQUITY

Assets

Liabilities

Accounts Payable Accounts Payable represents the liability for the value of assets or services received at the balance sheet date for which payment is pending . Fund Balance/Net Position The difference between fund assets and liabilities is ‘Net Position’ on the government-wide and fiduciary fund statements and the ‘Fund Balance’ is the difference between fund assets and liabilities on the governmental fund statements . Restricted Fund Balance This fund balance is reported as restricted when constraints placed on the use of resources are either (a . externally imposed by laws and regulations of other governments or (b . imposed by law through constitutional provisions or enabling legislation . Committed Fund Balance Amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the state’s highest level of decision-making authority (the Legislature) are reported as committed fund balance . Unassigned Fund Balance This is the residual classification for the general fund . This classification represents fund balance that has not been assigned to other funds and has not been restricted, committed or assigned for specific purposes within the general fund . The general fund is the only fund that can report a positive unassigned fund balance .

INTERFUND TRANSACTIONS AND BALANCES

The Agency has transfers between the General Revenue Fund and the GR Workforce Commission Federal Account during fiscal year 2020 . NOTE 2: Capital Assets (Not Applicable) NOTE 3: Deposits, Investments and Repurchase Agreements (Not Applicable)

190 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Funds Management (903)

NOTE 4: Short-Term Debt (Not Applicable) NOTE 5: Summary of Long Term Liabilities (Not Applicable) NOTE 6: Bonded Indebtedness (Not Applicable) NOTE 7: Derivatives (Not Applicable) NOTE 8: Leases (Not Applicable) NOTE 9: Pension Plans (Not Applicable) NOTE 10: Deferred Compensation (Not Applicable) NOTE 11: Postemployment Health Care and Life Insurance Benefits (Not Applicable) NOTE 12: Interfund Activity and Transactions (Not applicable) NOTE 13: Continuance Subject to Review (Not Applicable) NOTE 14: Adjustments to Fund Balances and Net Position (Not Applicable) NOTE 15: Contingent Liabilities (Not Applicable) NOTE 16: Subsequent Events (Not Applicable) NOTE 17: Risk Management (Not Applicable) NOTE 18: Management Discussion and Analysis The Depository was a new agency effective for fiscal year 2018 . None of the amounts reported in the financial statements are material to the Comptroller’s Office or the state of Texas . NOTE 19: The Financial Reporting Entity There were no significant related party transactions in the Depository in fiscal 2020 .

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 191 UNAUDITED Comptroller – Funds Management (903)

NOTE 20: Stewardship, Compliance and Accountability This section of the report reflects the activities of the Comptroller–Funds Management function (Agency 903) in the General Revenue Fund (0001) . The entire activity of the state’s General Revenue Fund will be reflected in the fiscal 2020 State of Texas Comprehensive Annual Financial Report . NOTE 21: Tobacco Settlement (Not Applicable) NOTE 22: Donor-Restricted Endowments (Not Applicable) NOTE 23: Extraordinary and Special Items (Not Applicable) NOTE 24: Disaggregation of Receivables and Payables See Note 1 for disaggregation of Other Payables . NOTE 25: Termination Benefits (Not Applicable) NOTE 26: Segment Information (Not Applicable) NOTE 27: Taxes Receivables/Payables (Not Applicable) NOTE 28: Contested Taxes (Not Applicable) NOTE 29: Deferred Inflow of Resources (Not Applicable) NOTE 30: Unclaimed Property (Not Applicable) NOTE 31: Fund Balances (Not Applicable)

192 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Funds Management (903)

COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 193 UNAUDITED Comptroller – Funds Management (903)

194 Texas Comptroller of Public Accounts • 2020 Annual Financial Report UNAUDITED Comptroller – Funds Management (903)

EXHIBIT A-1 Combining Balance Sheet – All General and Consolidated Funds August 31, 2020 GR Account – GR Account – Workforce General Revenue Federal Disaster Commission Fund (0001) (0092) Federal (5026) U/F (0001, 9000) U/F (0092) U/F (5026) Total ASSETS Current Assets: Legislative Appropriations $ $ $ $ Accounts Receivable Total Current Assets 0.00 0.00 0.00 0.00 Total Non-Current Assets 0.00 0.00 0.00 0.00 Total Assets $ 0.00 $ 0.00 $ 0.00 $ 0.00

LIABILITIES AND FUND BALANCES Liabilities: Current Liabilities: Accounts Payable $ $ $ $ Total Current Liabilities 0.00 0.00 0.00 0.00 Total Liabilities 0.00 0.00 0.00 0.00

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances (Deficits): Nonspendable Restricted Committed Unassigned Total Fund Balances 0.00 0.00 0.00 0.00 Total Liabilities and Fund Balances $ 0.00 $ 0.00 $ 0.00 $ 0.00

Texas Comptroller of Public Accounts • 2020 Annual Financial Report 195 UNAUDITED Comptroller – Funds Management (903)

EXHIBIT A-2 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – All General and Consolidated Funds For the Fiscal Year Ended August 31, 2020

Consolidated Funds GR Account – GR Account – Workforce General Revenue Federal Disaster Commission Fund (0001) (0092) Federal (5026) U/F (0001, 9000) U/F (0092) U/F (5026) Total 2019 OTHER FINANCING SOURCES (USES) Transfer In $ 296,336,044.00 $ $ 592,672,088.00 $ 889,008,132.00 Transfer Out (296,336,044.00) (592,672,088.00) (889,008,132.00) Legislative Transfer Out Insurance Recoveries Total Other Financing Sources (Uses) 0.00 0.00 0.00 0.00

Net Change in Fund Balances 0.00 0.00 0.00 0.00

FUND FINANCIAL STATEMENT – FUND BALANCES Fund Balances, September 1, 2019 Restatements (Note 14) Fund Balances, September 1, 2019, as Restated 0.00 0.00 0.00 0.00

Fund Balances, August 31, 2020 $ 0.00 $ 0.00 $ 0.00 $ 0.00

196 Texas Comptroller of Public Accounts • 2020 Annual Financial Report

Texas Comptroller of Public Accounts Publication #96-542. Revised November 2020.

An electronic version of this report may be found online at comptroller.texas.gov/transparency/reports/annual-financial/

For additional copies, write: Texas Comptroller of Public Accounts Budget and Internal Accounting Division P.O. Box 13528 Austin, Texas 78711-3528