Judgment of Compliance

Narrative

Sam Houston State University (SHSU) is a member of The Texas State University System as specified in the Texas Statutes Education Code, Chapter 96.61, “Sam Houston State University is a coeducational institution of higher education located in the city of Huntsville. It is under the management and control of the Board of Regents, Texas State University System” [1].

One of the strongest indicators of SHSU’s financial stability is its audit track record. The Texas State Auditor’s Office provides audit services to Texas state agencies, including audits of annual financial statements [2]. As an agency of the State of Texas, SHSU is included annually in a statewide audit. There have been no findings regarding SHSU in the State Auditor’s Statewide Audit since the last SACS reaffirmation in 1998.

SHSU also has an internal audit function which reports directly to the Board of Regents and is described on the TSUS website [3]. The Finance and Audit Committee of the Board of Regents oversees this function [4]. SHSU has not been found by the Internal Audit staff to have any financial stability issues.

SHSU’s Multi-year Statement of Unrestricted Net Assets exclusive of Plant for the years FY04 through FY08 demonstrates the stability of our institution [5]. The University has maintained substantial balances for the four years presented. The apparent decrease from FY04 to FY05 is due to a write-off of Library Periodicals in the amount of $15,486,806. This category was no longer considered capital assets and was eliminated from the statements. During the same years, revenues increased more than 32% [5].

The Annual Budget documents for Fiscal Year 2005 [6], Fiscal Year 2006 [7], Fiscal Year 2007 [8], and Fiscal Year 2008 [9] further demonstrate SHSU’s financial stability. Revenues and expenditures increase annually as do our student population and faculty. Table 1 below shows the increases in tuition charged from FY2005 through FY2008. Table 2 presents the increase in student headcount for the same period.

Table 1. Five year tuition rate history

Table 2. Five year history of fall semester Student Headcount

SHSU has increased construction activity to keep abreast of its growing student population. In turn, the University’s bonded indebtedness has also increased. While bonds are sold by the TSUS Board of Regents and held in the System’s name, SHSU is responsible for the annual payment of that principal and interest. The current bond rating for the TSUS Board of Regents is Aa3 (Moody’s) and A+ (S&P). The TSUS Board of Regents is careful to be sure that the University is financially capable of making those payments prior to allowing the issuance of the bonds.

Another indicator of the financial stability of the University is the success of its initial capital campaign [10]. The University is close to reaching its goal of $50 million set in 2004. To date, the campaign has received over $40 million in gifts, pledges, and gift expectancies. The total number of living donors who have given $25,000 or more has increased 221% from 1,900 in 2004 to 6,100 in 2007. SHSU’s endowment position is discussed in detail in Core Requirement 2.11.1.

The investment policy and August 31, 2007 investment report further demonstrate the financial stability of SHSU [11] [12]. SHSU invests primarily in Texpool and Commonfund which are both very safe investments. At 8/31/07, the cost of the University’s investments was $125,059,374; the fair market value of those investments was $128,917,397 [12].

Finally, financial stability is demonstrated by the fact that there are no lawsuits or other conditions pending which would adversely impact the financial stability of the institution.

Supporting Documentation