TEXAS TECH UNIVERSITY HEALTH SCIENCES CENTER Annual Financial Report Fiscal Year 2011 TEXAS TECH UNIVERSITY HEALTH SCIENCE CENTER Annual Financial Report U N A U D I T E D Table of Contents August 31, 2011 LETTERS OF TRANSMITTAL ........................................................................................................................................ 1 ORGANIZATIONAL DATA ........................................................................................................................................... 3 FINANCIAL STATEMENTS: Statement of Net Assets ................................................................................................................................................ 6 Statement of Revenues, Expenses, and Changes in Net Assets ............................................................................... 8 Matrix of Operating Expenses by Function .............................................................................................................. 10 Statement of Cash Flows ............................................................................................................................................. 12 NOTES TO THE FINANCIAL STATEMENTS: Note 1 Summary of Significant Accounting Policies ......................................................................................... 17 Note 2 Capital Assets ............................................................................................................................................. 23 Note 3 Deposits, Investments, and Repurchase Agreements ........................................................................... 25 Note 4 Short Term Debt ......................................................................................................................................... 29 Note 5 Summary of Long Term Liabilities .......................................................................................................... 29 Note 6 Bonded Indebtedness ................................................................................................................................ 30 Note 7 Derivatives .................................................................................................................................................. 33 Note 8 Leases ........................................................................................................................................................... 33 Note 9 Pension Plans .............................................................................................................................................. 35 Note 10 Deferred Compensation ............................................................................................................................ 36 Note 11 Post Employment Health Care and Life Insurance Benefits ................................................................ 36 Note 12 Interfund Balances/Activity ..................................................................................................................... 37 Note 13 Continuance Subject to Review ................................................................................................................ 39 Note 14 Adjustments to Fund Balances and Net Assets ..................................................................................... 39 Note 15 Contingent Liabilities ................................................................................................................................ 39 Note 16 Subsequent Events ..................................................................................................................................... 40 Note 17 Risk Financing and Related Insurance .................................................................................................... 40 Note 18 Management Discussion and Analysis ................................................................................................... 41 Note 19 The Financial Reporting Entity ................................................................................................................ 47 Note 20 Stewardship, Compliance and Accountability ...................................................................................... 47 Note 21 Not Applicable ........................................................................................................................................... 48 Note 22 Donor Restricted Endowments ................................................................................................................ 48 Note 23 Special or Extraordinary Items ................................................................................................................. 48 Note 24 Disaggregation of Receivable and Payable Balances ............................................................................ 48 Note 25 Termination Benefits ................................................................................................................................. 50 Note 26 Segment Information ................................................................................................................................. 50 Note 27 Medical Patient Revenues ......................................................................................................................... 50 TEXAS TECH UNIVERSITY HEALTH SCIENCE CENTER Annual Financial Report U N A U D I T E D Table of Contents August 31, 2011 SUPPORTING SCHEDULES: Schedule 1A: Expenditures of Federal Awards ...................................................................................................... 54 Schedule 1B: State Grant Pass-Throughs from/to State Agencies ...................................................................... 68 Schedule 2A: Miscellaneous Bond Information ...................................................................................................... 69 Schedule 2B: Changes in Bonded Indebtedness .................................................................................................... 70 Schedule 2C: Debt Service Requirements Schedule ............................................................................................... 72 Schedule 2D: Analysis of Funds Available for Debt Service ................................................................................ 73 Schedule 2E: Defeased Bonds Outstanding ............................................................................................................ 74 Schedule 3: Reconciliation of Cash in State Treasury ......................................................................................... 75 SUPPLEMENTAL SCHEDULES: TEXAS TECH FOUNDATION, INC. Statement of Net Assets .............................................................................................................................................. 78 Statement of Revenues, Expenses, and Changes in Net Assets ............................................................................. 79 Statement of Cash Flows ............................................................................................................................................. 80 TEXAS TECH UNIVERSITY HEALTH SCIENCE CENTER Annual Financial Report U N A U D I T E D Organizational Data August 31, 2011 BOARD OF REGENTS Term Expires Jerry E. Turner (Chair) ............................... January 31, 2013 ........................................................... Blanco Mickey L. Long (Vice Chair) .................... January 31, 2015 ....................................................... Midland L. Frederick (Rick) Francis ......................... January 31, 2013 .......................................................... El Paso John Field Scovell ....................................... January 31, 2013 ............................................................ Dallas John T. Huffaker ......................................... January 31, 2015 ....................................................... Amarillo Nancy Neal .................................................. January 31, 2015 ....................................................... Lubbock Larry K. Anders .......................................... January 31, 2017 ............................................................ Dallas Debbie Montford ........................................ January 31, 2017 ................................................. San Antonio John D. Steinmetz ....................................... January 31, 2017 ....................................................... Lubbock Jill Fadal (Student Regent)........................... May 31, 2012 .............................................................. Austin FISCAL OFFICERS Kent Hance .................................................................................................................................. Chancellor Jim Brunjes .......................................................................... Vice Chancellor and Chief Financial Officer Tedd L. Mitchell, M.D. ................................................................................................................. President Elmo M. Cavin ............................................... Executive Vice President for Finance & Administration Michael Crowder, CPA ................................................... Associate Vice President for Business Affairs Melody Miller, CPA ............................................................................... Director of Accounting Services