The University of Texas at San Antonio

FY 09 Annual Financial Report

Highlights

January, 2010

Annual Financial Report Highlights

The Annual Financial Report (AFR) is made up of three primary

statements with many supporting schedules.

1. Balance Sheet – Explains what we own, our obligations and what is available.

2. Statement of Revenues, Expenses and Changes in Net Assets (SRECNA) – Shows the results of operations for the year.

3. Statement of Cash Flows – Shows what revenue came in, what was expended and what is left.

Review pie charts and ratios that help explain our financial condition

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UTSA FY 09Balance Sheet

The Balance Sheet has three sections:

Assets: What we own - Items that are available to meet operating costs of the Institution, plus buildings, land, equipment, etc.

Investments decreased by $12.7 due to decreases in fair market value.

Capital Assets increased by $24.8M predominantly due to the construction of Engineering Building and other lab renovations.

Liabilities: Our obligations -Amounts due and payable within one year or beyond.

Net Assets: What’s available - Capital Assets net of depreciation, endowment funds and other unrestricted funds.

Amount invested in Capital Assets increased predominately by $24.8M due to construction.

Unrestricted Net Assets decreased by $11.2M due to an increase in operating expenses of $43.3M. Additionally, a decrease in unrestricted quasi endowments due to a decrease in the fair market value of investments.

The University of Texas at San Antonio – Balance Sheet ($ in millions)

ASSETS: 2009 2008 Variance % Change

Current Assets

157.2

161.8 (4.6) (3%)

Noncurrent Assets

218.5

231.2 (12.7) (5%)

Other Noncurrent Assets

5.8

4.3 1.5 35%

Capital Assets, net

654.2

629.4 24.8 4%

Total Assets

1,035.7

1,026.7 9.0 1%         

LIABILITIES:        

Current Liabilities

149.5

153.7 (4.2) (3%)

Noncurrent Liabilities

2.5 2.3 0.2 9%

Total Liabilities

152.0 156.0 (4.0) (3%)         

NET ASSETS:        

Invested in Capital

654.2 629.4 24.8 4%

Assets, Net of

Related Debt

Restricted 89.0

89.6 (0.6) (1%)

Unrestricted

140.5

151.7 (11.2) (7%)

Net Assets

883.7

870.7 13.0 1%

UTSA Operating Revenues ($ in millions)

2007 2006

Student Tuition and Fees

- Net of Discounts

143.57

118.7Sponsored

Programs72.8 73.

2Sales and Services of Educational Activities

6.7 6.0Auxiliary

Enterprises15.1 14.

2Other

2.5

3.2Total Operating

Revenues240.6

215.3Total Operating

Expenses315.6

293.8Operating

Loss(75.0)Nonoperating Revenues

(Expenses):State Appropriations

98.1

97.1Gift

Contributions3.8

3.5Net Investment Income

(Loss)10.9 6.

1Net Inc. (Dec.) in Fair Value of Investments

12.4 4.1Gain/(Loss) on State of Capital

Assets(0.1)Othe

r Nonoperating

Revenues/Expenses

0.0

0.0Income (Loss) Before Other Revenues, Expenses,

Gains or Losses

50.1

32.2Gifts and Sponsored

Programs0.0

0.6Additions to Permanent

Endowments4.0

4.9Reclass From (To) Other

Institutions(48.7)

19.8

Mandatory Transfers

- Comp & Sys Admin

-Debt Svc

(19.7)

(16.6)Nonmandator

yTransfers

- Comp & Sys Admin

141.9

28.6Transfers From (To) Other State

entities(1.4)Change in Net

Assets126.2

68.7Net Assets, Beginning of the

Year635.1

566.4

Net Assets, End of the Year

761.3

635.1

UTSA Operating Revenues ($ in millions)

2009 2008

Student Tuition and Fees

Net of Discounts

161.5 148.1

Sponsored Programs

64.9 79.7

Sales and Services of Educational Activities

9.6 7.7Auxiliary

Enterprises21.7 17.9

Other

2.0

3.1Total Operating

Revenues259.7

256.5Total Operating

Expenses388.8

348.7Operating

Loss(129.1) (92.2

)Non-Operating Revenues (Expenses):

State Appropriations

115.5 114.7

Gift Contributions

6.5

5.8

Net Investment Income (Loss)

4.4 12.7

Net Inc. (Dec.) in Fair Value of Investments

(28.2) (13.6)

Income (Loss) Before Other Revenues, Expenses, Gains or Losses

(2.2) 27.4

Gifts and Sponsored Programs

.3

.5Additions to Permanent

Endowments1.5

4.4 Re-Class From (To) Institutions 38.9

97.8Mandatory Transfers

(31.8)

(28.3)

Non-Mandatory Transfers 8.5

9.1

Transfers From (To) Other State entities

(2.2)

(1.5)

Change in Net Assets

13.0

109.4

Net Assets, Beginning of the Year

870.7 761.3Net Assets, End of the

Year883.7 870.

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The Statement of Revenue, Expenses, and Changes in Net Assets (SRECNA) . This statement is called the “Operating Statement” as it reports the results of operations for the year.

Tuition and Fees increased by $13.4 (9%). Sponsored Programs decreased by $14.8M (18%) due to Pell and State Sponsored Programs being reported as non-exchange sponsored programs and SSEA respectively.

Operating Loss is calculated before State Appropriations. Operating expenses outpaced operating revenues causing an increase of $36.9M (40%).

State Appropriations slightly increased by $.8M (.7%).

Income (Loss) Before Other Revenues decreased

by $29.6M (108%) due to decrease in FV of Investments, an increase in Operating Loss, and decrease in investment income.

Mandatory Transfers represent amounts transferred to System to pay debt service and Nonmandatory Transfers represent anticipated bond proceeds transferred to UTSA to fund construction projects.

As on the previous exhibit, Change in Net Assets was $13.0M. This is predominately due to debt issued for construction projects for which bond proceeds are due from System.

Non-Exchange Sponsored Programs 28.7 0.0

  ($ in millions) Cash Flows

2009

2008

Cash received from operations 281.1 277.7

Cash expended for operations (366.6) (337.1)

Net cash used by operating activities (85.5) (59.4)

Net cash provided by noncapital financing activities 156.8 111.3

Net cash used by capital and related financing activities (49.3) (26.3)

Net cash used by investing activities (10.8) (38.8)

Net increase in cash and cash equivalents 11.2 (13.2)

Cash and cash equivalents, beginning of the year 64.6 77.8

Cash and cash equivalents, end of year 75.8 64.6

The University of Texas at San AntonioFY 09 – Statement of Cash Flows

Cash from operations includes tuition and fees and expenditures for operations includes salaries, scholarship/fellowship and supplies.

Noncapital financing activities include State appropriations and Gifts.

Capital and related financing activities include purchase of equipment and construction of buildings.

Investing Activities include the purchase/sale of investments, interest income and endowment income distribution.

Cash & Cash Equivalents increased by $11.2M due to cash provided for noncapital financing.

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UTSA FY 2009 Sources of Revenue by Category

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Federal Government

$74.1 18%

Institutional Resources

$48.112%

Student & Parent $161.5

39%

State of Texas$131.1

31%

Operating Sources by Category

($ in Millions)

UTSA FY 09 Sources of Revenue

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Net Auxilary $21.66%

Other Income$1.81%

State Appropriations $112.527%

State Grants & Contracts

$15.6 3%

Research Development$3.01%Tuition & Fees

$161.539%

Federal Grants & Contracts

$74.118%

Endowment & Interest Income

$4.71%

Local Government Grants

$.6 0%

Private Gifts & Grants $9.82%

Sales & Services$9.62%

Operating Sources($ in Millions)

UTSA FY 09 Uses of Funds

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Instruction$107.929%

Research $35.910%

Public Service $19.25%

Academic Support $35.210%

Student Services$24.57%

Institutional Support $40.4 11%

Operations and Maintenance of Plant

$36.810%

Scholarships and Fellowships

$30.18%

Auxiliary Enterprises $26.17% Capital Outlay

$10.13%

Other Expenses $.20%

Operating Uses

Comparison of Sponsored Programs for FY09 and FY08

$22.644%

$4.59%

$5.210%

$2.34%

$10.921%

$2.14%

$4.28%

$.10%

FY 08

$27.040%

$6.29%

$10.716%

$2.64%

$14.121%

$2.33%

$4.47%

$.10%

Restricted Research-FederalRestricted Research- Non-FederalUnrestricted Research-GeneralUnrestricted Research-DesignatedRestricted Non-Research-FederalRestricted Non-Research-Non-FederalUnrestricted Non-Research- GeneralUnrestricted Non-Research- Designated

FY 09 9

Comparison of Sponsored Programs for FY09 and FY08Sponsored Programs % Change

Federal 22,574,016 26,966,122 19% Non-Federal 4,523,394 6,178,993 37%Restricted Research 27,097,410 33,145,115 22% General 5,159,454 10,757,935 109% Designated 2,344,581 2,618,437 12%Unrestricted Research 7,504,034 13,376,372 78%

Total Research Expenditures 34,601,444 46,521,487 34% Federal 10,905,815 14,091,550 29% Non-Federal 2,088,135 2,287,820 10%Restricted Non-Research 12,993,950 16,379,370 26% General 4,147,020 4,401,523 6% Designated 127,159 125,077 2%Unrestricted Non-Research 4,274,179 4,526,600 6%

Non-Research Expenditures 17,268,129 20,905,970 21%

Total Expenditures 51,869,574 67,427,457 30%

FY 08 FY 09

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Reconciliation of Research Expenditures to AFR Operating Expenses - Research

Reconciliation: FY 08 FY 09

Statement of Revenues, Expensed and 26,773,114 35,929,725Changes in Net Assets- Research Expenses

F+A 5,188,035 6,356,539

Capital Outlay 2,640,295 4,235,223

Total Research Expenditures 34,601,444 46,521,487

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UTSA FY 09 Analysis of Financial ConditionComposite Financial Index

Composite Financial Index measures the overall financial health by combining four core ratios into a single score: primary reserve ratio, expendable resources to debt ratio, return on net assets ratio and the annual operating margin ratio.

The CFI decreased by 1.5 primarily due to decrease in the fair value of investments of $28.2M, decrease in bond proceeds as a result of completion of several construction projects, and a decline in operating margin.

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UTSA FY 09 Analysis of Financial ConditionOperating Expense Coverage Ratio

Measures an institution’s ability to cover future operating expenses with available year-end balances. Ratio is expressed in number of months coverage.

Decrease from 5.1 months to 4.2 months is due to decrease in unrestricted net assets as a result of decreases in Quasi Endowments Investments. In addition, operating expenditures have increased by $43.3M.

System satisfactory rating is at two months or above and should be stable or improve.

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UTSA FY 09 Analysis of Financial ConditionDebt Service Coverage Ratio

This ratio measures the actual margin of protection provided to investors by annual operations. Calculation is used by Moody’s Investment Services, system-wide to determine bond rating. This is watched very closely so UT System can maintain AAA bond rating.

Trend helps to determine if an institution has assumed more debt than it can afford to service.

The debt service coverage declined but still exceeds UT System’s benchmark of greater than 1.8. This means that our net resources are 2.1 times what we are currently expending for debt payments. The ratio decreased as a result of a reduction in operating performance and an increase in debt service.

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UTSA FY 09 Analysis of Financial ConditionExpendable Resources to Debt Ratio

This ratio measures an institution’s ability to fund outstanding debt with existing net asset balances should an emergency occur.

UTSA’s debt ratio changed slightly due to a increase in debt associated with Engineering Building Phase II.

This ratio shows that more and more of our resources are going towards paying off debt. System’s Satisfactory benchmark is 0.8x or greater.

Restated

Restated

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UTSA FY09 Analysis of Financial ConditionDebt Burden Ratio

This ratio examines the institution’s dependence on borrowed funds and cost of borrowing relative to overall expenses.

UTSA’s debt burden ratio increased slightly as a result of a major capital improvements program resulting in increased debt service payments this year of $3.5M. The institution is heavily reliant on debt to fund cost.

System’s Satisfactory benchmark is less than 5.0%.

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UTSA FY 09 AFR Summary

UTSA continues to receive a “Satisfactory” rating from UT System as a result of a healthy financial condition.

UTSA’s operating margin ratio decreased from 7.3% for FY 2008 to 4.0% for 2009. Expenditures exceeded revenue growth as expected. Strategic initiatives were implemented, new positions were hired, equipment was replaced and planned capital renovations were completed. The university must establish an appropriate level of reserves and closely monitor its debt capacity.

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