Section 3: Resources
The institution's recent financial history demonstrates financial stability.
Analysis of the Western Texas College (WTC) audited Annual Financial Reports (AFR) for the last three fiscal years shows the college has the financial stability to support its mission and purpose.
The Chief Financial Officer (CFO)--titled the Director of Fiscal Services prior to September 1, 2005--occupies a line position directly responsible to the president and heads the Fiscal Services division, which includes the Business Office, the Human Resources office, the Financial Aid office, the golf course and its pro shop, and the Senior Center. The CFO also closely monitors the outsourced services and contracts to include the campus cafeteria, bookstore management, and physical plant maintenance. The CFO is responsible for implementing and administering budgetary controls within the parameters of the Board policies. Administrative Policy 2180 provides a full job description and requirements for the Chief Financial Officer.
WTC maintains its accounts and prepares its financial statements in accordance with generally accepted accounting principles (GAAP) in the United States as set forth by the Governmental Accounting Standards Board (GASB). The College also complies with all applicable statements and interpretations of the Financial Accounting Standards Board (FASB) issued prior to November 30, 1989, unless they conflict or contradict GASB pronouncements. FASB statements issued after November 30, 1989, are invoked if they are specifically adopted by GASB. Recommendations and guidelines issued by the Texas Higher Education Coordinating Board (THECB) are implemented as required in the College’s presentation of its Annual Financial Report (AFR).
In June of 1999, the GASB released statement No. 34, Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments,which requires a comprehensive, one-line look at the reporting entity as a whole along with the depreciation of capital assets. In November of 1999, GASB issued statement No. 35, Basic Financial Statements – Management’s Discussion and Analysis for Public Colleges and Universities- an amendment of GASB Statement No. 34, which requires public colleges and universities to abide by GASB No. 34 beginning with fiscal year 2002.
WTC generated its second Annual Financial Review implementing GASB No. 34 and No. 35 with fiscal year 2003 (FY 2003). The new AFR format consists of the following audited financial statements:
- Statement of Net Assets
- Statement of Revenues, Expenses, and Changes in Net Assets
- Statement of Cash Flows.
The AFR also includes the following audited schedules:
- Schedule of Operating Revenue
- Schedule of Operating Expenses by Object
- Schedule of Non-Operating Revenues and Expenses
- Schedule of Net Assets by Source and Availability
- Schedule of Expenditures of Federal Awards
- Schedule of Expenditures of State Awards.
Prior to the issuance of GASB No. 34 and No. 35, WTC did not record depreciation of its capital assets. In October 2001, a subcommittee formed by THECB, the Infrastructure and Depreciation Subcommittee, presented recommendations to Texas community colleges for the implementation of new capitalization and depreciation rules set by GASB No. 34. In accordance with the Subcommittee’s recommendations, WTC has a capitalization threshold of $5,000 and a useful life in excess of one year for all asset classifications unless otherwise mandated for capital assets purchased with externally funded grants. All capital assets with an initial cost of $5,000 or more are tagged and/or assigned a unique inventory number by the Purchasing Clerk in the Business Office. A qualifying asset’s description, vendor, cost, classification, and any other pertinent information are entered into the fixed asset program associated with the College’s fiscal software package in order to maintain an inventory of these assets and to calculate annual depreciation of these assets. Asset classification, useful life, and residual value are also set using the recommendations of the Subcommittee. The following capital asset classifications, residual values, and useful-life definitions are used by WTC:
All financial statements and schedules contain a prior-year comparison.
Buildings 10% residual 50 year life Land Improvements 10% residual 20 year life Library Books no residual 15 year life Furniture & Equipment no residual 10 year life Telecommunications & Peripherals no residual 5 year life
The College uses the straight-line method of depreciation over the useful life of the asset, applying the half-year convention for the first year the asset is in use. In fiscal years 2002, 2003 and 2004, library books were not depreciated in keeping with the original guidelines set by the THECB subcommittee. In 2005, the Texas Comptroller issued a notice to all State agencies changing the classification of library books from non-depreciable to depreciable as recommended by GASB No. 34. WTC implemented the depreciation of library books with its 2005 AFR. The total library book purchases for a year are subject to the $5,000 capitalization threshold and are depreciated using the straight-line method over the useful life; a half-year is calculated the year of the actual purchase.
The 2003 AFR Statement of Net Assets shows the College’s 2002 total assets as being $10,536,109 compared to the 2003 total assets of $11,173,721, a 1.2 percent increase. Total liabilities are also shown on this financial, FY 2003 totaling $2,164,540 and FY 2004 totaling $2,051,801, a decrease of 6 percent. As of August 31, 2005, WTC’s Statement of Net Assets indicates assets totaling $13,120,313 compared to assets totaling $9,896,342 as of August 31, 2004. The 2004 total assets were restated in the 2005 AFR prior-year comparison figures to show the accumulated depreciation for library books, hence the decrease in total assets from the 2004 AFR Statement of Net Assets figures. The 2004 Total liabilities at the end of FY 2005 were $5,826,668 compared to $2,422,651 at the end of FY 2004. Both the increase in total assets and the increase in total liabilities from FY 2004 to FY 2005 are predominantly due to the issuance of a bond in April 2005 totaling $2,970,000 for the construction of a new dormitory facility on campus.
The Statement of Revenues, Expenses and Changes in Net Assets for 2004 reflects operating revenues of $7,095,366 for FY 2003 and $6,717,263 for FY 2004. It should be noted that for FY 2005, the THECB reversed its prior decision to treat state appropriations as operating revenue and now requires these funds to be presented as non-operating revenues; therefore, the FY 2004 total operating revenues were restated to $3,335,455 in order to better compare to the FY 2005 operating revenues of $3,563,671. The Statement of Revenues, Expenses, and Changes in Net Assets shows in more detail the current sources of revenue for WTC.
Enrollment increases, as listed in the Western Texas College Fact Book, (http://wtc.edu/factbook/enrollment_chart.pdf) have helped to fuel the increase in tuition and fees revenue considerably over the last three years from $795,943 in FY 2004 to $1,266,314 in FY 2005. Slight increases in tuition and fee rates have also aided in the increased revenue. State funding has remained relatively unchanged over the last three years; however, this funding source remains critical to the college by making up 36.5 percent, 34.7 percent, and 34.1 percent of the total revenue received for years 2003, 2004, and 2005 respectively.
Federally funded programs, although remaining a presence on the campus, have had a steadily decreasing effect as a percentage of total revenue over the last three years by contributing 18.3 percent, 16.1 percent, and 14.2 percent of the total revenues for 2003, 2004, and 2005 respectively.
The Statement of Revenues, Expenses, and Changes in Net Assets also reflects in more detail the expenses incurred by the college. The 2004 AFR shows operating expenses of $9,590,695 for FY 2003 and $9,763,177 for FY 2004, an increase of 2 percent. Since the depreciation of library books was implemented in FY 2005, the operating expenses for FY 2004 were restated to reflect the accumulated depreciation of those assets in the 2005 AFR. Comparing the recalculated FY 2004 operating expenses and the FY 2005 operating expenses results in an increase of $229,013 from one year to the next. The main source of additional expenses lies in the areas of instruction and institutional support. Operation and maintenance of plant also showed a significant increase in expenditures. The college administration has expended funds over the last few years to repair and reorganize WTC’s 35-year-old campus to better accommodate the growing student enrollment. Utility expenses have continued to rise also and have greatly affected the operating expenses for WTC.
The Statement of Cash Flows reports net cash provided or used by the operations of the institution by deducting the gross cash outflows from the gross cash inflows. The Statement of Cash Flows for 2004 indicates cash usage of $2,144,286 for FY 2003 and $2,719,201 for FY 2004 with ending cash and cash equivalents of $492,709 for FY 2003 and $492,620 for FY 2004. The THECB’s decision in 2005 to no longer allow state appropriations to be reflected as operating revenue also created the need to restate the FY 2004 State of Cash Flows numbers in the 2005 AFR. The AFR for 2005 indicates cash usage totaling $5,913,148 for FY 2005 and $6,101,009 for FY2004, and ending cash and cash equivalents of $3,542,808 and $492,620 respectively. The major contributor to the increase in cash and cash equivalents from FY 2004 to FY 2005 is the cash inflow from a bond issuance in April 2005 for the construction of a new residence hall.
Evidence of Support:
FY2005 Budget Requirements and Annual Financial Reporting Requirements for Texas Public Community Colleges and Junior Colleges
Summary of GASB Statement No. 34
GASB 34 Implementation, Infrastructure and Depreciation Subcommittee
Summary of GASB Statement No. 35
Institutional Policy 2180
Western Texas College Administrative Personnel Roster Information
WTC Enrollment Chart