THEUNIVERSITYOFTEXASSYSTEM
CONSOLIDATEDFINANCIALSTATEMENTSFORTHE
YEARSENDEDAUGUST31,2023AND2022
ANDINDEPENDENTAUDITOR’SREPORT
TheUniversityofTexasatArlingtonTheUniversityofTexasatAustinTheUniversityofTexasatDallasTheUniversity
ofTexasatElPasoTheUniversityofTexasPermianBasinTheUniversityofTexasRioGrandeValleyTheUniversityof
Texas at San Antonio The University of Texas at Tyler The University of Texas Southwestern Medical Center The
University of Texas Medical Branch at Galveston The University of Texas Health Science Center at Houston The
UniversityofTexasHealthScienceCenteratSan AntonioTheUniversityofTexasM. D.AndersonCancerCenterThe
UniversityofTexasSystemAdministration
THEUNIVERSITYOFTEXASSYSTEM
TABLEOFCONTENTS
Page
THEUNIVERSITYOFTEXASSYSTEMBOARDOFREGENTS 1
THEUNIVERSITYOFTEXASSYSTEMEXECUTIVEADMINISTRATIVEOFFICIALS 2
INDEPENDENTAUDITOR'SREPORT 3
MANAGEMENT'SDISCUSSIONANDANALYSIS 6
CONSOLIDATEDFINANCIALSTATEMENTSFORTHEYEARSENDEDAUGUST31,2023AND2022
ConsolidatedStatementsofNetPosition–BusinessTypeActivities
17
ConsolidatedStatementsofRevenues,ExpensesandChangesinNetPosition–BusinessTypeActivities
19
ConsolidatedStatementsofCashFlows–BusinessTypeActivities
20
ConsolidatedStatementsofFiduciaryNetPosition
22
ConsolidatedStatementsofChangesinFiduciaryNetPosition
23
NotestotheConsolidatedFinancialStatements
24
REQUIREDSUPPLEMENTARYINFORMATION 143
THEUNIVERSITYOFTEXASSYSTEM
BOARDOFREGENTS
AsofAugust31,2023
Officers
KevinP.Eltife,Chairman
JanieceLongoria,ViceChairman
JamesC.“Rad”Weaver,ViceChairman
FrancieA.Frederick,GeneralCounseltotheBoardofRegents
Members
TermsscheduledtoexpireFebruary1,2025*
ChristinaMeltonCrain Dallas
JodieLeeJiles Houston
KelcyL.Warren Dallas
TermsscheduledtoexpireFebruary1,2027*
KevinP.Eltife Tyler
NolanPerez Houston
StuartW.Stedman Houston
TermsscheduledtoexpireFebruary1,2029*
JanieceLongoria Houston
JamesC.“Rad”Weaver SanAntonio
RobertP.Gauntt Austin
TermscheduledtoexpireMay31,2024*
JohnMichaelAustin(StudentRegent) SanAntonio
*EachRegent’stermexpireswhenasuccessorhasbeenappointed,qualified,andtakentheoathofoffice.The
StudentRegentservesaone-yearterm.
1
THEUNIVERSITYOFTEXASSYSTEM
EXECUTIVEADMINISTRATIVEOFFICIALS
AsofAugust31,2023
JamesB.Milliken,Chancellor
JonathanC.Pruitt,ExecutiveViceChancellorforBusinessAffairs
ArchieL.Holmes,Jr.,ExecutiveViceChancellorforAcademicAffairs
JohnM.Zerwas,ExecutiveViceChancellorforHealthAffairs
DavidL.Lakey,ViceChancellorforHealthAffairsandChiefMedicalOfficer
StaceyNapier,ViceChancellorforGovernmentalRelations
RandaS.Safady,ViceChancellorforExternalRelations,Communications,andAdvancementServices
DanielH.Sharphorn,ViceChancellorandGeneralCounsel
RichHall,President,ChiefExecutiveOfficer,andChiefInvestmentOfficer–UTIMCO
2

3
4
5
THEUNIVERSITYOFTEXASSYSTEM
MANAGEMENT’SDISCUSSIONANDANALYSIS
FortheYearEndedAugust31,2023
INTRODUCTION
The University of Texas System (the System) was
established by the Texas Constitution of 1876. In 1881,
Austin was designated the site of the main academic
campus and Galveston as the location of the medical
branch.TheUniversityofTexasatAustinopenedin1883,
and eight years later, the John Sealy Hospital in
Galveston established a program for university-trained
medical professionals. In addition to the original
academic campus of The University of Texas at Austin,
the System now includes seven additional academic
institutions:
TheUniversityofTexasatArlington
TheUniversityofTexasatDallas
TheUniversityofTexasatElPaso
TheUniversityofTexasPermianBasin
TheUniversityofTexasRioGrandeValley
TheUniversityofTexasatSanAntonio
StephenF.AustinStateUniversity(9/1/23)
TheUniversityofTexasatTyler
Health institutions for medical education and research
have expanded beyond The University of Texas Medical
BranchatGalvestontoinclude:
TheUniversityof Texas M. D. Anderson Cancer
Center
The University of Texas Southwestern Medical
Center
TheUniversityofTexasHealthScienceCenterat
Houston
TheUniversityofTexasHealthScienceCenterat
SanAntonio
TheSystem’sthirteeninstitutionsare,collectively,oneof
thenation’slargesteducationalenterprises.Theyprovide
instruction and learning opportunities to approximately
255,000 undergraduate, graduate, and professional
school students from a wide range of social, ethnic,
cultural, and economic backgrounds. The System is
governedbyanine-memberBoardofRegentsappointed
by the Governor of Texas and confirmed by the Texas
Senate. In addition, the Governor appoints a Student
Regentforaone-yearterm.
OVERVIEWOFTHEFINANCIALSTATEMENTS
ANDFINANCIALANALYSIS
The objective of Management’s Discussion and Analysis
(MD&A) is to provide an overview of the financial
positionand activitiesof the Systemfor theyearended
August31,2023,withselectedcomparativeinformation
for the years ended August 31, 2022 and 2021. The
completesetoffinancialstatementsincludes:
6
Management’s
Discussion&Analysis
PrimaryFinancialStatements–
ProprietaryandFiduciaryFunds
Statementsof
NetPosition
Statementsof
Revenues,Expenses&
ChangesinNetPosition
Statementsof
CashFlows
StatementsofFiduciary
NetPosition
StatementsofChangesin
Fiduciary
NetPosition
NotestotheFinancialStatements
RequiredSupplementaryInformation
PensionPlansand
OtherPostemploymentBenefits
The System’s financial statements were prepared in
accordancewithaccountingprinciplesgenerallyaccepted
in the United States of America as prescribed by the
Governmental Accounting Standards Board (GASB). The
System’s financial records are reported as a business-
typeactivityintheStateofTexas’AnnualComprehensive
FinancialReportandtheSystem’scustodialfundfinancial
records are reported as fiduciary funds in the State of
Texas’ Annual Comprehensive Financial Report. For
purposesofthe MD&A,referencestotheSysteminthe
discussion of financial results relate to the System's
business-typeactivity.
FINANCIALHIGHLIGHTS
TheSystemcontinuestomaintainandprotectitsstrong
financialcondition,withnetpositionof$70.7billionasof
August 31, 2023. Revenues totaled $31.4 billion and
expenses totaled $27.1 billion in 2023. Net patient care
revenues and sponsored program revenues were the
largest contributors to the revenues of the System in
2023. Net investment income and the change in fair
value of investments often drive the year to year
fluctuationinSystemrevenues,asthosevaluesvaryfrom
year to year based on market conditions and other
factors. Compensation and benefits, including the
Teacher Retirement System of Texas pension and other
postemployment benefits (OPEB) continue to be the
largestexpenseoftheSystem.TheSystemiscommitted
torecruitingandretainingoutstandingfacultyandstaff,
andthecompensationpackageisonewaytosuccessfully
compete with peer institutions and nonacademic
employers.
TheStatementofNetPosition
The statement of net position presents the assets,
deferred outflows, liabilities, deferred inflows, and net
positionoftheSystemasoftheendoftheyear.Thisisa
pointintimefinancialpresentationofthefinancialstatus
asofAugust31,2023,withcomparativeinformationfor
the previous years. Net position is the residual value of
theSystem’s assetsanddeferred outflowsofresources,
after liabilities and deferred inflows of resources are
deducted. Changes in net position are one indicator of
the improvement or decline of the System’s financial
strength. A summarized comparison of the System’s
statement of net position as of August 31, 2023, 2022
and2021follows:
CondensedStatementsofNetPosition
($inmillions)
2023 2022 2021
Assets
Currentassets $ 13,443.4  11,471.7  10,538.3
Noncurrentinvestments  78,468.0  74,289.5  74,707.9
Capital/intangibleassets,net  19,541.1  19,063.6  18,569.2
Othernoncurrentassets 1,546.5  1,858.0  1,153.5
Totalassets 112,999.0  106,682.8 104,968.9
Totaldeferredoutflows 6,088.9  5,546.1  4,644.2
Totalassetsanddeferred
outflows $119,087.9  112,228.9  109,613.1
Liabilities
Currentliabilities $ 13,149.2  11,153.4  10,897.4
Noncurrentliabilities  26,001.1  29,572.3  29,013.8
Totalliabilities  39,150.3  40,725.7  39,911.2
Totaldeferredinflows 9,273.7  4,814.1  2,829.5
Totalliabilitiesanddeferred
inflows $ 48,424.0  45,539.8  42,740.7
NetPosition
Netinvestmentincapitalassets $ 6,963.7  6,571.0  6,383.5
Restricted  59,514.7  57,175.1  57,151.7
Unrestricted 4,185.5  2,943.2  3,337.2
Netposition $ 70,663.9  66,689.3  66,872.4
7
AssetsandDeferredOutflows
The chart below depicts the makeup of the System’s
assetsanddeferredoutflowsasofAugust31,2023.
AssetsandDeferredOutflows
NoncurrentInvestments67%
CapitalAssets16%
CurrentAssets11%
DeferredOutflows5%
OtherNoncurrentAssets1%
Assets and deferred outflows increased $6.9 billion, or
6.1%,to$119.1billionin2023primarilyduetoincreases
incurrentassetsanddeferredoutflows.
CurrentAssets
Currentassetsarecomprisedofassetsthatareavailable
or can be made readily available to meet the cost of
operations or to pay current liabilities including cash,
temporary investments and receivables. These assets
increased $1,971.7 million in 2023 largely due to
increases in cash and equivalents and balances in State
appropriations,offsetbyadecreaseinsecuritieslending
collateral.
Cash and cash equivalents increased due to increased
collectionsonpatientchargesandtuitionandfeesasthe
populationbegantoreverttopre-pandemiclevelsalong
with higher liquidity levels being maintained due to the
fluctuating market. Securities lending collateral
decreased due to less securities on loan at the end of
2023comparedto2022.Thebalanceinsecuritieslending
collateral, which is exactly offset by the balance in
securities lending obligations in current liabilities,
fluctuates from year to year as the System manages
securitylendingtransactionstomaximizeearnings.
NoncurrentInvestments
Noncurrent investments are comprised of permanent
endowments,fundsfunctioningasendowments,annuity
and life income funds, and other investments including
investment derivative instruments. These assets
increased $4,178.5 million in 2023 largely due to
investmentandmineralincomeearnedandincreasesin
thefairvalueofPermanentUniversityFund(PUF)lands.
Theseincreaseswerepartiallyoffsetbynetdecreasesin
thefairvalueofinvestments.
ThePermanentUniversityFund(PUF),whichincludesthe
fairvalueofthePUFinvestmentfundandthefairvalue
ofPUFlands,increased$1.5billionin2023primarilydue
to significant investment income partially offset by net
decreases in fair value of investments. The increases in
the PUF investments in 2023 can be broken down as
follows:(1)$1.8billionPUFlandsmineralincomeearned
that was added to the endowment in accordance with
requirements of the Texas Constitution; (2) $2.3 billion
decrease in the fair value of the PUF lands due to an
increase in the forecasted price of oil and gas; (3) $1.4
billioninvestmentincomeearnedinthePUFinvestment
fund. These increases were partially offset by a $123
millionincreaseinthefairvalueofthePUFinvestments.
CapitalandIntangibleAssets
Acritical factorin sustainingthe qualityof theSystem’s
academic and research programs and residential life is
the development and maintenance of its capital assets.
Capital additions totaled $2.4 billion in 2023, of which
$1.1billionconsistedofnewprojectsunderconstruction.
Capital additions were comprised of replacement,
renovation,andnewconstructionofacademic,research
and healthcare facilities, as well as significant
investmentsinequipmentandsoftware.Thetablebelow
depicts the System’s capital improvement program for
thenextsixyears.
CapitalImprovementProgram
2024-2029
Institution: ($inbillions)
UTArlington $ 0.4
UTAustin 1.5
UTDallas 0.5
UTElPaso 0.2
UTPermianBasin 0.1
UTRioGrandeValley 0.2
UTSanAntonio 0.2
UTTyler 0.1
StephenF.AustinStateUniversity 0.1
UTSouthwesternMedicalCenter 0.4
UTMBGalveston 0.3
UTHSCHouston 0.3
UTHSCSanAntonio 0.8
UTHSC-Tyler 0.3
UTMDAndersonCancerCenter 3.1
Total $ 8.6
DeferredOutflows
Totaldeferredoutflowsincreased$542.8millionin2023
primarilyduetodifferencebetweenprojectedandactual
investmentearningsandchangesinassumptionsrelated
toTRS.
8
LiabilitiesandDeferredInflows
The chart below depicts the makeup of the System’s
liabilitiesanddeferredinflowsasofAugust31,2023.
LiabilitiesandDeferredInflows
OPEBLiability17%
Debt-RelatedLiabilities27%
OtherCurrentLiabilities17%
DeferredInflows19%
PensionLiabilities14%
OtherNoncurr.Liabilities6%
Liabilitiesand deferredinflows increased$2.9 billion,or
6.3%,to$48.4 billionin 2023primarilydue toincreases
in the pension liabilities and deferred inflows of
resources and partially offset by decreases in the OPEB
liability.
Debt-RelatedLiabilities
Debt-related liabilities consist of both the current and
noncurrent portions of short-term debt, or commercial
paper,aswellasleases,notes,loans,andbondspayable.
The $626.6 million increase in debt-related liabilities in
2023wasprimarilydrivenbyanincreaseinleases,notes
andloanspartiallyoffsetbyadecreaseinbondspayable
and commercial paper. Bonds payable relate to the
financing of the System’s capital needs. Commercial
paper notes are issued periodically to provide interim
financing for capital improvements and to finance the
acquisition of capital equipment. The System typically
refundsaportionoftheseoutstandingnotesthroughthe
issuance of long-term debt to provide permanent
financing for projects. The table below depicts the
change in the System’s debt-related liabilities over the
pastthreeyears:
Current&NoncurrentDebt
2023 2022 2021
($inmillions)
BondsPayable $ 9,836.4  9,408.6  9,686.8
CommercialPaper 2,341.1  1,788.8  1,891.1
Leases,Notes&Loans 1,172.1  1,525.6  925.0
TotalDebt-RelatedLiabilities $ 13,349.6  12,723.0 12,502.9
OPEBLiabilities
The State provides certain health and life insurance
benefits for retired employees which are guaranteed in
accordance with State statutes. Other postemployment
benefitsareprovidedtotheSystem’sretireesunderthe
U. T. System Employee Group Insurance Program. The
EmployeeGroupInsuranceProgramisasingle-employer
defined benefit OPEB plan; however, because State
statute requires funding for the plan from State
appropriations,theState’s governmental fund reports a
proportionate share of the OPEB liability. The System
reported a total OPEB liability of $8.1 billion in 2023
compared to $14.7 billion in 2022. $6.6 billion of the
decrease in 2023 was related to benefit changes (and
resulting actuarial assumption changes made) to the
OPEB Plan that reduced the Total OPEB Liability (TOL)
quitesignificantly.Inaddition,thediscountraterequired
by GASB 75 increased from the prior year which also
reduced the TOL. In combination, these two factors
reducedthetotalOPEBPlan’sTOLbyapproximately50%.
This TOL reduction also had large impacts on the OPEB
ExpenseandDeferredInflowsandOutflows.
PensionLiabilities
The System participates in a cost-sharing multiple-
employer defined benefit pension plan with a special
funding arrangement administered by the Teacher
RetirementSystemofTexas(TRS).TheSystemreceivesa
proportional share of the net pension liability, pension-
related deferred outflows and pension-related deferred
inflows,andpensionexpensefromtheTexasComptroller
of Public Accounts. The System’s proportion of the
State’s collective net pension liability was based on its
contributions to the pension plan relative to the
contributions of all the employers to the plan. The
Systemreported a netpensionliability of $5.6billionin
2023 compared to $2.3 billion in 2022. The change is
drivenbyadecreaseinthediscountrateandinvestment
earningsbelowprojections.TheUniversityofTexasM.D.
Anderson Cancer Center has established, primarily for
the physicians of its Physicians Referral Service, the
Physicians Referral Service SRP/RBP Plans. The System
reported a total pension liability of $0.9 billion in 2023
comparedto$1.0billionin2022relatedtotheSRP/RBP
Plans.
DeferredInflows
Total deferred inflows increased $4.5 billion in 2023
primarily driven by changes to OPEB deferred inflows.
OPEBdeferredinflowsincreased$6.5billionin2023due
to benefit changes (and resulting actuarial assumption
changesmade)totheOPEBPlan.
9
Thefollowingchartcomparestheliabilitiesanddeferred
inflows with or without OPEB and pension to illustrate
these items’ significant impact on the System’s total
liabilitiesanddeferredinflows.
Liabilities&DeferredInflowsComparison
Excluding/Including
OPEB&PensionBalances
($inbillions)
25.3
23.5
22.5
48.4
45.5
42.7
ExcludingOPEB&Pension IncludingOPEB&Pension
2023 2022 2021
0
5
10
15
20
25
30
35
40
45
50
NetPosition
Netpositionincreased$4.0billionin2023comparedtoa
$0.2billion decreasein 2022.Thesignificant increasein
net position was primarily due to the increase in
investmentincome.In2023,therewasanincreaseinfair
value of investment of $0.5 billion compared to a
decreaseof$5.0billionin2022,ayearoveryearincrease
of$5.5billion.ThePUFaccountedfor$1.5billionofthis
year over year increase. The three-year trend of the
classificationsofnetpositionisdepictedhere:
NetPosition
($inbillions)
59.5
57.2 57.2
7.0
6.6 6.4
4.2
2.9 3.3
Restricted NetInvestmentinCapitalAssets Unrestricted
2023 2022 2021
0
10
20
30
40
50
60
70
NetInvestmentinCapitalAssets
NetinvestmentincapitalassetsrepresentstheSystem’s
capital and intangible assets, net of accumulated
depreciation and amortization and outstanding debt
obligations attributable to the acquisition, construction,
orimprovementofthoseassets.
RestrictedNetPosition
Restricted net position primarily includes the System’s
permanent endowment funds subject to externally
imposedrestrictionsgoverningtheiruse.Theyinclude:
Permanent University Fund (PUF) - supports
boththeSystemandTAMUS,
Permanent Health Fund endowments (PHF) -
established in 1999 from tobacco-related
litigation funds which support programs that
benefit medical research, health education or
treatmentathealth-relatedinstitutions,and
Donor restricted endowments - income
generatedis used to fund various endeavors in
accordancewiththedonors’restrictions.
Restrictednetpositionalsoincludescurrentpurposegifts
and grants. System’s restricted net position was $59.5
billionin2023comparedto$57.2billionin2022.
UnrestrictedNetPosition
System’s unrestricted net position was $4.2 billion in
2023ascomparedto$2.9billionin2022.Theincreasein
unrestricted net position between 2022 and 2023 was
primarily due to long term funds, investments, general
designatedandpracticeplanfunds,andimprovementin
income/loss before other revenue, expenses,
gains(losses),andtransfers.
2022Highlights–StatementofNetPosition
The System’s assets and deferred outflows increased
$2.6 billion to $112.2 billion in 2022 primarily due to
increases in deferred outflows and current assets.
Liabilities and deferred inflows increased $2.8 billion to
$45.5billion in2022 primarilydue toan increasein the
OPEB liability and the related deferred inflows mainly
duetochangesinassumptionsandotherinputs.
10
Restatements
Therestatementinfiscalyear2021resultedfromOPEB
errorcorrectionsandtheimplementationofGASB
StatementsNo.87,Leases,andNo.97,Certain
ComponentUnitCriteria,andAccountingandFinancial
ReportingforInternalRevenueCodeSection457Deferred
CompensationPlans.Fiscalyear2022wasrestatedasa
resultoftheimplementationofGASBStatementsNo.94,
Public-PrivateandPublic-PublicPartnershipsand
AvailabilityPaymentArrangements,andNo.96,
Subscription-BasedInformationTechnology
Arrangements.Theimplementationofthesenew
accountingstandardshadnoaffectonopeningnet
positionforfiscalyear2022.SeeNote1forfurther
informationontheimpactsofthesestandards.Fiscal
year2021informationhasnotbeenrestatedtoreflect
theeffectsofGASBStatementsNo.94and96.
TheStatementofRevenues,Expensesand
ChangesinNetPosition
Thestatementofrevenues,expensesandchangesinnet
position details the changes in total net position. The
following table summarizes the System’s revenues,
expensesandchangesinnetpositionfortheyearsended
August31,2023,2022and2021:
CondensedStatementsofRevenues,Expensesand
ChangesinNetPosition
($inmillions)
2023 2022 2021
Operatingrevenues:
Netstudenttuitionandfees $ 2,162.3  2,124.3  2,006.9
Sponsoredprograms 5,114.9  4,711.9  4,280.4
Netsalesandservicesofhospitals 9,638.1  8,737.1  7,849.9
Netprofessionalfees 2,577.5  2,354.7  2,204.2
Netauxiliaryenterprises 723.2  646.0  377.8
Other 1,275.8  1,279.9  1,104.9
Totaloperatingrevenues 21,491.8  19,853.9  17,824.1
Totaloperatingexpenses (26,720.6) (24,577.4) (22,670.8)
Operatingincome(loss) (5,228.8) (4,723.5) (4,846.7)
Nonoperatingrevenues(expenses):
Stateappropriations 3,052.8 2,529.9  2,194.3
Nonexchangesponsoredprograms 621.7  958.5  1,247.9
Giftcontributionsforoperations 684.0  634.2  618.6
Netinvestmentincomeexcluding
thechangeinfairvalueof
investments 4,744.2  5,619.3 8,807.4
Netincrease(decrease)infairvalue
ofinvestments 479.2  (5,017.2) 8,905.7
Interestexpenseoncapitalasset
financings (379.4) (338.2) (332.0)
Netothernonoperatingrevenues
(expenses) 139.5  36.9  (25.0)
Income(loss)beforeotherchanges
innetposition 4,113.2  (300.1) 16,570.2
Capitalgiftsandgrantsand
additionstoendowments 347.4  563.1  356.0
NettransferstootherState
agencies (485.9) (446.3) (272.6)
Changeinnetposition 3,974.7  (183.3) 16,653.6
Netposition,beginningoftheyear 66,689.1  66,872.4  48,663.7
Restatement —  —  1,555.1
Netposition,beginningoftheyear
(asrestated) 66,689.1  66,872.4  50,218.8
Netposition,endoftheyear $ 70,663.8  66,689.1  66,872.4
RevenuesSupportingCoreActivities
Revenues to support the System’s core activities,
including those classified as nonoperating revenues,
were $30.9 billion, $30.2 billion, and $31.0 billion in
2023, 2022, and 2021, respectively. These diverse
sourcesofrevenuesincreasedby$783.0millionin2023
primarilyduetoincreasesinnetinvestmentincome.
11
The chart below shows a three-year comparison of the
componentsofrevenuesthatsupportthecoreactivities
oftheSystem:
RevenuesSupportingCoreActivities
($inbillions)
2023 2022 2021
NetPatientCare
NetInvestmentIncome
SponsoredPrograms
StateAppropriations
NetTuition&Fees
Gifts
Other
AuxiliaryEnterprises
0 1 2 3 4 5 6 7 8 9
10 11 12
NetStudentTuitionandFees
Student tuition and fees, net of scholarship allowances,
are a primary source of funding for the System’s
academicprograms.Scholarship allowances, or financial
aid, are the differences between the stated charge for
tuition and fees and the amount that is paid by the
student and third parties on behalf of the student.
Tuition and fees are generated from students enrolled
primarily in the System’s academic institutions as
illustratedinthechartbelow:
Academic&HealthEnrollment(Fall)
(headcountinthousands)
254
243
244
Academic Health
2023 2022 2021
0
50
100
150
200
250
The System’s academic institutions enroll 35.9% of the
State’spubliccollegestudents,andtheSystem’shealth-
related institutions enroll 54.2% of the students
attendingtheState’spublichealthinstitutions.
SponsoredPrograms
Sponsored program revenues are primarily generated
from governmental and private sources related to
researchprogramsthattypicallyprovidefortherecovery
ofdirectandindirectcosts.Sponsoredprogramsinclude
student financial aid and contracts with affiliated
hospitals for clinical activities. Sponsored programs
revenueswere$5.7billion,$5.7billion,and$5.5billionin
2023,2022,and2021,respectively.
NetPatientCareRevenues
Netpatientcarerevenues,whichconsistofnetsalesand
services of hospitals and net professional fees, are
principally generated within the System’s hospitals and
physicians’ practice plans under contractual
arrangements with governmental payors and private
insurers.Theserevenuesarereportednetofcontractual
allowances, bad debt expense, and unreimbursed
chargesforfinanciallyormedicallyindigentpatients.Net
patient care revenues were $12.2 billion, $11.1 billion,
and $10.1 billion in 2023, 2022, and 2021, respectively.
Net patient care revenues increased $1.1 billion, or
10.1%, in 2023, primarily because of increased patient
volumes.
NetAuxiliaryEnterprises
Net auxiliary enterprise revenues were earned from a
host of activities such as athletics, housing and food
services, bookstores, parking, student health, and other
activities. Net auxiliary enterprises were $723.2 million,
$646.0 million, and $377.8 million in 2023, 2022, and
2021, respectively. Net auxiliary enterprise revenues
increased $77.2 million or 12.0% in 2023 due to
normalizationofauxiliaryactivitiespostCOVID-19.
StateAppropriations
Stateappropriations,inconjunctionwithstudenttuition
and fees, are core components that support the
instructionalmissionoftheSystem.Stateappropriations
were $3.1 billion, $2.5 billion, and $2.2 billion in 2023,
2022,and2021,respectively.Theincreaseof$0.6billion
was primarily due to $440 million given to UT Austin in
SenateBill30(2023-2024,88thLegislature)forforward-
looking technology research and establishing and
operating a research and development fabrication
facility.
12
Net Investment Income Excluding the Change in Fair
ValueofInvestments
The System carefully navigates the investment
environmentandworksdiligentlytomanageitsfinancial
resources.Netinvestmentincome,excludingthechange
infairvalueofinvestments,was$4.7billion,$5.6billion,
and $8.8 billion in 2023, 2022, and 2021, respectively.
Net investment income includes realized gains of $1.9
billion in 2023 and $2.7 billion in 2022. Net investment
income, excluding the change in the fair value of
investments, decreased $0.9 billion from 2022 to 2023,
primarily due to decreases in net realized gains and
investmentincomeinthePUF.
NetIncrease(Decrease)inFairValueofInvestments
Net increase (decrease) in fair value of investments
reportedanincreaseof$0.5billionin2023,adecreaseof
$5.0 billion in 2022, and an increase of $8.9 billion in
2021.In2023,therewas anincreasefrom2022of$5.5
billionprimarilyduetofavorablemarketconditions.
Gifts
The System receivesgiftcontributionsfor operations as
wellasnonoperatinggiftsandgrantsofcapitalandgifts
that are held in perpetuity which are added to the
System’s endowment holdings. In 2023, gifts for
operations totaled $684.0 million, an increase of $49.8
million or 7.9% over 2022. Capital gifts and grants and
additions to permanent endowments totaled $347.4
millionfor2023,adecreaseof$215.7millionover2022
primarilyduetodecreasedgiftsforcapitalacquisitionsin
2023. The System continues its fundraising efforts to
address facilities expansion and renovation, and the
establishment of endowments for instruction, research,
andpatientcareactivities.
ExpensesSupportingCoreActivities
Expenses associated with the System’s core activities,
including interest expense classified as nonoperating,
were $27.1 billion, $24.9 billion, and $23.0 billion in
2023, 2022, and 2021, respectively. The changes, by
category,forthethreeyearsaredepictedbelow:
ExpensesAssociatedwithCoreActivities
($inbillions)
2023 2022 2021
Compensation&
Benefits
Materials/Supplies/Cost
ofGoodsSold
ProfessionalFees/
ContractedServices
Depreciation/Amortization
Other
OPEB
Utilities/Maintenance
Pension
Scholarships/Fellowships
Interest
0 2 4 6 8 10 12 14
Operatingexpensesincreasedby$2.1billionin2023and
increased by $1.9 billion in 2022 primarily due to the
growing cost of providing support for the institution’s
primarymissionsofinstruction,research,publicservice,
patientcare,andstudentsupportactivities.Additionally,
operatingexpenses in2023include $0.5billionof OPEB
expense and $795.6 million of pension expense.
Nonoperating expenses include interest expense which
increasedslightlyto$379.4millionin2023.
The following charts illustrate the makeup of operating
expenses by functional classification for the year ended
August31,2023:
FunctionalClassification
Hospitals&Clinics36%
Instruction21%
Research14%
Depreciation/Amortization7%
AcademicSupport5%
InstitutionalSupport5%
Operations/Maint.ofPlant4%
AuxiliaryEnterprises3%
Scholarships&Fellowships2%
PublicService2%
StudentServices1%
13
Income(Loss)BeforeOtherChangesinNetPosition
Income(Loss)beforeotherchangesinnetpositionisthe
sum of the operating loss plus nonoperating revenues
(expenses).Itisanindicationofrecurringrevenues and
expensesfortheSystemanddoesnottakeintoaccount
capital and endowment-related additions, discussed
above, or transfers. The income (loss) before other
changes in net position totaled $4.1 billion in 2023, an
increase of $4.4 billion over 2022. This increase was
largelyaresultoftheincreaseinnetinvestmentincome
discussedabove.
NetTransferstoOtherStateAgencies
Net transfers to other State agencies totaled $485.9
million in 2023, an increase of $39.6 million over 2022.
These transfers primarily include $485.9 million and
$446.3 million for 2023 and 2022, respectively, for the
AUF distribution to TAMUS for its one-third share of
distributions from the PUF endowment and PUF land
surface income, in accordance with the Texas
Constitution. In addition to the transfers of the current
yearearnings,thenetchangeinPUFdebtoutstandingat
TAMUSisreflectedasatransfertootherStateagencies.
In2022,thePUFdebtatTAMUSincreased$68.2million,
whereas in 2023 the debt increased $86.4 million
contributing to the increase in net transfers to other
Stateagenciesin2023.
2022Highlights–StatementofRevenues,Expensesand
ChangesinNetPosition
System’s change in net position was a decrease of $0.2
billionin2022comparedtoanincreaseof$16.7billionin
2021.Thesignificantdecreaseinchangeinnetposition
in2022wasduetothefluctuatingvalueofthefairvalue
ofinvestments.In2022therewasadecreaseinfairvalue
ofinvestmentsof$5.0billioncomparedtoanincreaseof
$8.9 billion in 2021, a year over year decrease of $13.9
billion. The PUF accounted for $5.6 billion of this
decreasein2022.
TheStatementofCashFlows
TheStatementofCashFlowsprovidesinformationabout
the System’s financial results by reporting the major
sourcesandusesofcashandcashequivalentsduringthe
fiscal year. Ending cash and cash equivalents were $6.5
billion, $5.5 billion, and $4.9 billion in 2023, 2022, and
2021,respectively.Asummarizedthree-yearcomparison
of the System’s changes in cash and cash equivalents
follows:
CondensedStatementsofCashFlows
($inmillions)
2023 2022 2021
Netcashprovidedby(usedfor):
Operatingactivities $ (2,392.4) (2,357.8) (2,316.4)
Noncapitalfinancingactivities 3,637.6  3,750.6  3,882.8
Capitalandrelatedfinancing
activities (1,619.4) (2,160.5) (1,634.2)
Investingactivities 1,390.0  1,355.5  992.0
Netincrease(decrease)incashand
cashequivalents 1,015.8  587.8  924.2
Beginningcashandcashequivalents 5,508.8  4,921.0  3,996.8
Endingcashandcashequivalents $ 6,524.6  5,508.8  4,921.0
In 2023, cash and cash equivalents increased $1,015.8
million.
Cashincreasesduring2023wereprimarilydueto(1)$3.6
billion providedbynoncapitalfinancingactivities,which
includescashinflowsrelatedtostateappropriationsand
nonexchangesponsoredprograms,offsetbytransfersto
other agencies and (2) $1.4 billion of cash provided by
investing activities, which includes cash inflows for
interestandinvestmentincome.
Cash decreases during 2023 were primarily due to (1)
$2.4 billion used by operating activities, which includes
cash payments to employees and suppliers, partially
offset by collection of cash related to tuition and fees,
patient charges, and sponsored program activities and
(2) $1.6 billion used by capital and related financing
activitiesprimarilyforthepurchaseofcapitalassetsand
the net activity associated with issuing and retiring
capitalrelateddebt.
14
ECONOMICOUTLOOK
The mission of the System is to leverage scientific and
academicinsightsandinnovation,educationandtraining
and the delivery of clinical health care for the common
good,inTexasandaroundtheworld.Itisamissionthat
dependsupontheSystem’sabilitytoattractandsupport
students from backgrounds with various goals and
talents; to recruit and retain a broadly skilled and
respectedfacultyofvariousviewpointsandexpertise;to
employ and appropriately recognize dedicated
administratorsandstaffmembers;tobuildandmaintain
physical environments and facilities that enhance and
complement these other goals; and to encourage
ongoing public and private sector support of higher
education, creating a virtuous cycle of investment and
returnforallofTexas.
Incarryingoutthismission,theSystemhasavast,deep
andpositiveimpactonsocietythroughthegenerationof
a thoughtful, skilled and engaged citizenry and the
dissemination of knowledge, ideas and inventions that
influence public policy and society’s shared economic
success.
TheSystemisoneofthelargestandmostcomprehensive
institutionsofhighereducationinthecountry,aswellas
one of the largest employers in Texas. The System’s
operating budget provides a wide range of services for
Texans. Budgeted revenues of the System include both
operating and nonoperating revenues. Budgeted
revenuesfor 2024increased11.3% to$29.1 billion. The
largest area of growth is net sales and services of
hospitals and clinics. Budgeted expenses for 2024
increased 11.5% to $28.1 billion. The most significant
areaofgrowthispersonnelcostswhichincludesthecost
of the benefits provided to its employees and retirees.
The State provides certain health and life insurance
benefits for retired employeesin accordancewith State
statutes.InadditiontoOPEB,theSystemalsoreceivesa
proportional share of the State’s net pension liability,
which is also guaranteed in State statute. These
significant costs will continue to be a challenge to both
theSystemandthestateofTexasasawhole.TheSystem
continues to sustain the highest credit ratings of Fitch
Ratings (AAA), Moody’s Investors Service (Aaa) and
Standard & Poor’s Global Ratings (AAA). The System’s
ongoing efforts toward revenue diversification and cost
containmentwillenabletheSystemtoachieveitsgoals
andrealizeitsmission.
Public support for this mission, and the resulting
economichealthoftheSystem,isvitaltoourcontinued
success.TheU.T.Systemgreatlyappreciatesthesupport
of the Texas Legislature, which made historic
investments in funding for public institutions and
affordabilityduringthe88thRegularSession,whichwill
result in more than over $1 billion in new funding for
System institutions in the 2024-2025 biennium.
Legislativesupportforanaffordabilityplandevelopedby
thestate’spublicuniversitysystemspriortothesession
resulted in $700 million included in the appropriations
actthatwillallowUTinstitutionstokeeptuitionflatfor
thenexttwoyears.
15

CONSOLIDATEDFINANCIALSTATEMENTS
FORTHEYEARSENDED
AUGUST31,2023AND2022
16
ASSETSANDDEFERREDOUTFLOWS
CURRENTASSETS
Cashandcashequivalents $ 5,473,784,479 4,551,818,565
Restrictedcashandcashequivalents 973,964,277 857,752,653
BalanceinStateappropriations 664,215,443 141,809,722
Accountsreceivable,net:
Federal(netofallowancesof$3,957,160and$3,910,665,respectively) 665,841,688 665,076,836
Otherintergovernmental(netofallowancesof$4,100,301and$3,541,020,respectively) 298,835,897 274,813,104
Student(netofallowancesof$55,300,637and$52,792,914,respectively) 379,514,971 376,161,655
Patientandhealthcare(netofallowancesof$695,773,699and$439,178,955,respectively) 1,486,945,600 1,369,175,589
Interestanddividends 101,155,887 81,983,222
Contributions(netofallowancesof$4,097,475and$1,820,620,respectively) 181,084,910 173,286,539
Investmenttrades 703,501,548 345,148,156
Other(netofallowancesof$15,168,682and$16,594,440,respectively) 883,400,303 751,444,363
Leasereceivable 13,959,036 18,637,142
P3receivable 3,237,578 4,202,465
Duefromotheragencies 112,433,174 131,237,557
Inventories 238,891,148 229,590,521
Restrictedloansandcontracts(netofallowancesof$23,081,990and$21,797,065,respectively) 41,343,207 41,067,421
Securitieslendingcollateral 704,550,572 988,091,640
Othercurrentassets 516,703,972 470,420,594
Totalcurrentassets 13,443,363,690 11,471,717,744
NONCURRENTASSETS
Cashandcashequivalents(noncurrentrestricted) 76,865,502 99,203,976
Restrictedinvestments 61,363,454,138 58,114,854,780
Depositwithbrokersforderivativecontracts 292,613,399 141,074,033
Restrictedloansandcontracts(netofallowancesof$13,004,090and$20,048,387,respectively) 29,510,591 34,259,142
Contributionsreceivable(netofallowancesof$3,014,444and$2,682,258,respectively) 377,070,059 433,198,505
Unrestrictedinvestments 17,104,572,735 16,174,609,398
Hedgingderivativeasset 130,779,738 125,007,462
Leasereceivable 215,032,962 230,438,676
P3receivable 36,421,649 380,129,263
Othernoncurrentassets 388,191,302 414,831,068
Grosscapital/intangibleassets 41,388,735,830 39,520,152,343
Lessaccumulateddepreciation/amortization (21,847,634,137) (20,456,594,152)
Netcapitalassets 19,541,101,693 19,063,558,191
Totalnoncurrentassets 99,555,613,768 95,211,164,494
TOTALASSETS 112,998,977,458 106,682,882,238
Deferredoutflowsofresources 6,088,895,030 5,546,067,549
TOTALASSETSANDDEFERREDOUTFLOWS $ 119,087,872,488 112,228,949,787
Seeaccompanyingnotestoconsolidatedfinancialstatements
(Continued)
2023 2022
THEUNIVERSITYOFTEXASSYSTEM
CONSOLIDATEDSTATEMENTSOFNETPOSITION—BUSINESS-TYPEACTIVITIES
AUGUST31,2023AND2022
17
LIABILITIESANDDEFERREDINFLOWS
CURRENTLIABILITIES
Accountspayableandaccruedliabilities $ 1,714,244,380 1,639,769,344
Salariespayable 937,064,048 850,799,344
Investmenttradespayable 1,645,273,366 736,872,733
Incurredbutnotreportedself-insuranceclaims 199,965,066 187,951,915
Totalotherpostemploymentbenefitsliability 208,395,911 243,697,144
Pensionliabilities 72,533,114 —
Securitieslendingobligations 704,550,572 988,091,640
DuetootherStateagencies 258,790,763 153,619,664
Statewideinterfundpayable 65,215,901 58,042,824
Unearnedrevenue 2,202,202,631 1,982,271,942
Employees'compensableleave 523,251,766 445,635,293
Short-termdebt 2,341,061,000 1,788,750,000
Notes,loans,andleasespayable 384,724,163 173,827,855
Bondspayable 1,671,517,223 1,699,296,681
Othercurrentliabilities 220,436,207 204,858,805
Totalcurrentliabilities 13,149,226,111 11,153,485,184
NONCURRENTLIABILITIES
Incurredbutnotreportedself-insuranceclaims 37,936,609 33,767,326
Employees'compensableleave 393,281,192 409,789,419
Assetsheldforothers 145,578,487 135,662,470
Liabilitytobeneficiaries 13,491,033 13,079,769
Totalotherpostemploymentbenefitsliability 7,881,338,444 14,451,897,162
Pensionliabilities 6,485,446,939 3,346,763,840
Notes,loansandleasespayable 787,359,337 1,351,805,344
Bondspayable 8,164,839,316 7,709,342,982
Statewideinterfundpayable 1,502,731,182 1,423,609,953
Hedgingderivativeliability 39,388,655 87,510,811
Payabletobrokersforcollateralheld 204,889,560 223,503,673
Investmentderivatives-liabilitypositions 144,154,033 183,196,878
Assetretirementobligation 20,268,251 19,508,940
Othernoncurrentliabilities 180,421,005 182,866,512
Totalnoncurrentliabilities 26,001,124,043 29,572,305,079
TOTALLIABILITIES 39,150,350,154 40,725,790,263
Deferredinflowsofresources 9,273,707,418 4,814,067,890
TOTALLIABILITIESANDDEFERREDINFLOWS $ 48,424,057,572 45,539,858,153
NETPOSITION
Netinvestmentincapitalassets $ 6,963,671,907 6,570,970,880
Restricted:
Nonexpendable 38,161,618,752 36,029,323,644
Expendable 21,353,034,539 21,145,744,390
Totalrestricted 59,514,653,291 57,175,068,034
Unrestricted 4,185,489,718 2,943,052,720
TOTALNETPOSITION $ 70,663,814,916 66,689,091,634
Seeaccompanyingnotestoconsolidatedfinancialstatements (Concluded)
2023 2022
THEUNIVERSITYOFTEXASSYSTEM
CONSOLIDATEDSTATEMENTSOFNETPOSITION—BUSINESS-TYPEACTIVITIES(Continued)
AUGUST31,2023AND2022
18
OPERATINGREVENUES
Netstudenttuitionandfees(netofdiscountsandallowancesof$920,673,147and$871,777,535,
respectively)
$ 2,162,269,633 2,124,295,749
Sponsoredprograms 5,114,905,185 4,711,876,833
Netsalesandservicesofeducationalactivities(netofdiscountsandallowancesof$363,083and
$77,302,respectively)
668,820,587 590,119,778
Netsalesandservicesofhospitals(netofdiscountsandallowancesof$14,613,104,666and
$12,876,923,014,respectively)
9,638,135,140 8,737,119,023
Netprofessionalfees(netofdiscountsandallowancesof$7,174,634,375and$6,598,098,913,
respectively)
2,577,503,943 2,354,663,591
Netauxiliaryenterprises(netofdiscountsandallowancesof$21,638,531and$20,123,708,
respectively)
723,247,145 645,955,901
Other 606,940,322 689,783,082
Totaloperatingrevenues 21,491,821,955 19,853,813,957
OPERATINGEXPENSES
Instruction 5,638,164,384 5,199,819,819
Research 3,640,738,442 3,194,183,886
Publicservice 511,503,631 429,348,663
Hospitalsandclinics 9,676,906,898 8,744,934,586
Academicsupport 1,414,239,637 1,255,690,025
Studentservices 306,673,392 298,348,467
Institutionalsupport 1,279,734,313 1,276,182,991
Operationsandmaintenanceofplant 1,070,710,379 1,017,726,879
Scholarshipsandfellowships 535,517,010 655,962,518
Auxiliaryenterprises 818,920,278 719,059,025
Depreciationandamortization 1,827,434,267 1,786,126,507
Totaloperatingexpenses 26,720,542,631 24,577,383,366
Operatingloss (5,228,720,676) (4,723,569,409)
NONOPERATINGREVENUES(EXPENSES)
Stateappropriations 3,052,789,252 2,529,939,818
Nonexchangesponsoredprograms 621,739,519 958,497,034
Giftcontributionsforoperations 684,013,267 634,248,452
Netinvestmentincome 5,223,373,475 602,130,522
Interestexpenseoncapitalassetfinancings (379,417,070) (338,180,900)
Gain(loss)onsaleofcapitalassets 11,829,051 (14,276,880)
Other 127,629,171 51,133,270
Netnonoperatingrevenues 9,341,956,665 4,423,491,316
Income(loss)beforeotherchangesinnetposition 4,113,235,989 (300,078,093)
OTHERCHANGESINNETPOSITION
Capitalgiftsandgrants 91,953,165 265,383,743
Additionstopermanentendowments 255,404,287 297,645,918
NettransferstootherStateagencies (491,344,254) (439,263,990)
Legislativeappropriationslapsed 5,474,096 (7,034,920)
Changeinnetposition 3,974,723,283 (183,347,342)
NETPOSITION
Netposition,beginningofyear 66,689,091,633 66,872,438,976
Restatement — —
Netposition,beginningofyear(asrestated) 66,689,091,633 66,872,438,976
Netposition,endofyear $ 70,663,814,916 66,689,091,634
Seeaccompanyingnotestoconsolidatedfinancialstatements
2023 2022
THEUNIVERSITYOFTEXASSYSTEM
CONSOLIDATEDSTATEMENTSOFREVENUES,EXPENSESANDCHANGESINNETPOSITION—BUSINESS-TYPEACTIVITIES
YEARSENDEDAUGUST31,2023AND2022
19
CASHFLOWSFROMOPERATINGACTIVITIES
Proceedsfromtuitionandfees $ 2,186,521,845 2,104,420,809
Proceedsfrompatientsandcustomers 12,166,305,616 10,917,142,878
Proceedsfromsponsoredprograms 5,135,503,295 4,718,184,684
Proceedsfromauxiliaries 1,086,757,122 638,529,604
Proceedsfromotherrevenues 1,214,105,473 1,242,747,015
Paymentstosuppliers (8,867,196,287) (8,153,067,866)
Paymentstoemployees (15,323,924,275) (13,835,044,914)
Paymentsforloansprovided (74,703,244) (66,946,084)
Proceedsfromloanprograms 84,196,551 76,275,350
Netcashusedforoperatingactivities (2,392,433,904) (2,357,758,524)
CASHFLOWSFROMNONCAPITALFINANCINGACTIVITIES
ProceedsfromStateappropriations 2,535,857,628 2,533,285,114
Proceedsfromoperatinggifts 723,224,391 606,108,141
Proceedsfromprivategiftsforendowmentpurposes 234,256,142 252,687,057
Proceedsfromothernoncapitalfinancingactivities 279,803,519 623,920,373
Receiptsfortransfersfromotheragencies 864,245,229 737,380,761
Paymentsfortransferstootheragencies (1,243,892,349) (1,436,193,978)
Paymentsforotheruses (513,081,650) (478,789,861)
Proceedsfromnonexchangesponsoredprograms 757,207,336 912,221,027
Netcashprovidedbynoncapitalfinancingactivities 3,637,620,246 3,750,618,634
CASHFLOWSFROMCAPITALANDRELATEDFINANCINGACTIVITIES
Proceedsfromissuanceofcapitaldebt 2,490,240,538 1,168,139,785
Paymentsofothercostsondebtissuance (5,928,851) (2,818,969)
Proceedsfromcapitalappropriations,grantsandgifts 64,318,637 135,289,571
Proceedsfromsaleofcapitalassets 53,986,387 10,309,988
Paymentsforadditionstocapitalassets (1,685,940,404) (1,843,867,656)
Paymentsofprincipaloncapitalrelateddebtandotherlong-termobligations (2,066,421,131) (1,216,650,988)
Paymentsofinterestoncapitalrelateddebtandotherlong-termobligations (469,704,889) (410,898,328)
Netcashusedforcapitalandrelatedfinancingactivities (1,619,449,713) (2,160,496,597)
CASHFLOWSFROMINVESTINGACTIVITIES
Proceedsfromsalesofinvestments 51,076,535,789 40,952,830,872
Proceedsfrominterestandinvestmentincome 2,820,206,156 3,109,959,169
Paymentstoacquireinvestments (52,506,639,510) (42,707,356,676)
Netcashprovidedbyinvestingactivities 1,390,102,435 1,355,433,365
Netincreaseincashandcashequivalents 1,015,839,064 587,796,878
Cashandcashequivalents,beginningofyear 5,508,775,194 4,920,978,316
Cashandcashequivalents,endofyear $ 6,524,614,258 5,508,775,194
Seeaccompanyingnotestoconsolidatedfinancialstatements (Continued)
2023 2022
THEUNIVERSITYOFTEXASSYSTEM
CONSOLIDATEDSTATEMENTSOFCASHFLOWS—BUSINESS-TYPEACTIVITIES
YEARSENDEDAUGUST31,2023AND2022
20
Reconciliationofoperatinglosstonetcashprovidedby(usedfor)operatingactivities:
Operatingloss $ (5,228,720,676) (4,723,569,409)
Adjustmentstoreconcileoperatinglosstonetcashprovidedby(usedfor)operatingactivities:
Depreciationandamortizationexpense 1,827,434,267 1,786,126,507
Baddebtexpense 519,888,573 510,724,894
Otherpostemploymentbenefitsobligationexpense 462,609,141 1,150,530,177
Pensionexpense 795,557,940 196,300,549
Changesinassetsandliabilities:
Accountsreceivable (973,734,899) (786,540,416)
Lessor-relatedbalances (1,602,714) (2,610,002)
P3RelatedBalances
344,561,998.47
9,561,867
Inventories (9,300,627) (24,278,731)
Loansandcontracts 9,499,354 9,341,378
Othercurrentandnoncurrentassets (17,874,611) (102,644,463)
Deferredoutflows-otherpostemploymentbenefits 387,358,832 (1,469,676,692)
Deferredoutflows-pensionrelated (983,743,005) 353,819,451
Accountspayable 355,733,608 215,096,547
Unearnedrevenue 213,149,901 69,030,025
Employees'compensableleave 61,108,247 35,614,998
Otherpostemploymentbenefitsobligation (7,068,469,092) 1,613,646,315
Pensionrelatedobligations 2,415,658,273 (2,681,321,506)
Assetretirementobligations 328,392 1,438,430
Deferredinflows-otherpostemploymentbenefits 6,485,154,252 (347,967,009)
Deferredinflows-pensionrelated (2,000,162,951) 1,832,923,932
Othercurrentandnoncurrentliabilities 13,131,894 (3,305,364)
Totaladjustments 2,836,286,773 2,365,810,887
Netcashusedforoperatingactivities $ (2,392,433,903) (2,357,758,522)
Noncashtransactions:
Netincrease(decrease)infairvalueofinvestments $ 479,219,230 (5,017,196,360)
Donatedcapitalassets 41,182,030 78,065,085
Capitalassetsacquired/adjustedunderleasepurchasesordirectborrowings 308,284,799 272,745,940
Miscellaneousnoncashtransactions 32,851,542 11,183,512
CapitalAssetsreceivedfromP3arrangement 347,652,000 —
Seeaccompanyingnotestoconsolidatedfinancialstatements (Concluded)
2023 2022
THEUNIVERSITYOFTEXASSYSTEM
CONSOLIDATEDSTATEMENTSOFCASHFLOWS—BUSINESS-TYPEACTIVITIES(Continued)
YEARSENDEDAUGUST31,2023AND2022
21
ASSETS
Cashandcashequivalents $ — 1,928,948 1,928,948 — 1,888,492 1,888,492
Accountsreceivable,net:
Interestanddividends 220,472 — 220,472 217,355 — 217,355
Investmenttrades 2,964,301 — 2,964,301 1,505,074 — 1,505,074
Other 528,881 4,735 533,616 1,757,072 4,735 1,761,807
Totalaccountsreceivable,net 3,713,654 4,735 3,718,389 3,479,501 4,735 3,484,236
Investmentsatfairvalue:
Investmentderivatives-asset
positions 496,874 — 496,874 719,630 — 719,630
Otherinvestments 293,885,919 — 293,885,919 285,878,283 — 285,878,283
Totalinvestments 294,382,793 — 294,382,793 286,597,913 — 286,597,913
Securitieslendingcollateral 3,234,769 — 3,234,769 4,333,856 — 4,333,856
Depositwithbrokersforderivative
contracts 1,156,668 — 1,156,668 622,586 — 622,586
Otherassets 121,334 — 121,334 3,314 — 3,314
Totalassets 302,609,218 1,933,683 304,542,901 295,037,170 1,893,227 296,930,397
LIABILITIES
Accountspayableandaccrued
liabilities 295,079 46,705 341,784 312,171 23,031 335,202
Investmenttradespayables 6,859,987 — 6,859,987 2,987,464 — 2,987,464
Securitieslendingobligations 3,234,769 — 3,234,769 4,333,855 — 4,333,855
Investmentderivatives-liability
positions 576,154 — 576,154 726,153 — 726,153
Payabletobrokersforcollateralheld 129,286 — 129,286 417,944 — 417,944
Totalliabilities 11,095,275 46,705 11,141,980 8,777,587 23,031 8,800,618
NETPOSITION
Restrictedfor:
Poolparticipants 291,513,943 — 291,513,943 286,259,583 — 286,259,583
Individuals,organizations,andother
governments — 1,886,978 1,886,978 — 1,870,196 1,870,196
TOTALNETPOSITION $ 291,513,943 1,886,978 293,400,921 286,259,583 1,870,196 288,129,779
Seeaccompanyingnotestoconsolidatedfinancialstatements
2023 2022
CustodialFunds
Total
Fiduciary
Activities
CustodialFunds
Total
Fiduciary
Activities
External
InvestmentPool
Fund
CustodialFunds,
Other
External
InvestmentPool
Fund
CustodialFunds,
Other
THEUNIVERSITYOFTEXASSYSTEM
CONSOLIDATEDSTATEMENTSOFFIDUCIARYNETPOSITION
AUGUST31,2023AND2022
22
ADDITIONS
Contributions:
Contributionsfromstudent
organizations $ — 302,097 302,097 — 55,903 55,903
Contributionsfromfoundationsor
associations 5,480,078 681,873 6,161,951 2,827,924 633,813 3,461,737
Contributionsfaculty/staff
organizations — — — — — —
Contributionsfromparticipants — — — — 10,340 10,340
Othercontributions — 85,651 85,651 — 66,266 66,266
Totalcontributions 5,480,078 1,069,621 6,549,699 2,827,924 766,322 3,594,246
Investmentearnings:
Interest,dividends,andother 6,209,747 — 6,209,747 4,353,736 — 4,353,736
Realizedgain(loss)onsaleof
investments 400,316 — 400,316 1,074,039 — 1,074,039
Netincrease(decrease)infairvalue
ofinvestments (1,409,739) — (1,409,739) (33,768,703) — (33,768,703)
Totalinvestmentearnings 5,200,324 — 5,200,324 (28,340,928) — (28,340,928)
Miscellaneous — 131,995 131,995 — 138,294 138,294
Totaladditions 10,680,402 1,201,616 11,882,018 (25,513,004) 904,616 (24,608,388)
DEDUCTIONS
Paymentstostudentorganizations — 248,345 248,345 — 37,880 37,880
Paymentstofoundationsor
associations 5,426,043 62,795 5,488,838 4,542,672 119,466 4,662,138
Paymentstofaculty/staff
organizations — 1,432 1,432 — 605 605
Paymentstoparticipants — 2,008 2,008 — 81,744 81,744
Otherexpenses — 870,253 870,253 — 565,799 565,799
Totaldeductions 5,426,043 1,184,833 6,610,876 4,542,672 805,494 5,348,166
Netincrease(decrease)infiduciary
netposition
5,254,359 16,783 5,271,142 (30,055,676) 99,122 (29,956,554)
Beginningnetposition
286,259,584 1,870,196 288,129,779 316,315,259 1,771,074 318,086,333
Endingnetposition
$ 291,513,943 1,886,979 293,400,921 286,259,583 1,870,196 288,129,779
Seeaccompanyingnotestoconsolidatedfinancialstatements
2023 2022
CustodialFunds
Total
Fiduciary
Activities
CustodialFunds
Total
Fiduciary
Activities
External
InvestmentPool
Fund
CustodialFunds,
Other
External
InvestmentPool
Fund
CustodialFunds,
Other
THEUNIVERSITYOFTEXASSYSTEM
CONSOLIDATEDSTATEMENTSOFCHANGESINFIDUCIARYNETPOSITION
YEARSENDEDAUGUST31,2023AND2022
23
THEUNIVERSITYOFTEXASSYSTEM
NOTESTOTHECONSOLIDATEDFINANCIALSTATEMENTS
YEARSENDEDAUGUST31,2023AND2022
1. TheFinancialReportingEntity
ThefinancialrecordsofTheUniversityofTexasSystem(theSystem)reflectcompliancewithapplicableStatestatutes
andGovernmentalAccountingStandardsBoard(GASB)pronouncements.TheSystem’sfinancialrecordsarereported
as a business-typeactivityin the State of Texas’ Annual Comprehensive Financial Report and the System’scustodial
fundfinancial recordsare reportedas fiduciaryfunds inthe Stateof Texas’Annual ComprehensiveFinancial Report.
The significant accounting policies followed by the System in maintaining accounts and in the preparation of the
consolidatedfinancial statementsare inaccordance withthe TexasComptrollerof PublicAccounts’ AnnualFinancial
ReportingRequirementsandwithgenerallyacceptedaccountingprinciplesintheUnitedStatesofAmerica(GAAP).
TheconsolidatedfinancialstatementsincludeTheUniversityofTexasSystemAdministrationandallinstitutionsofthe
System.Amountsduebetweenandamonginstitutions,amountsheldforinstitutionsbyTheUniversityofTexasSystem
Administrationandotherduplicationsinreportingareeliminatedinconsolidatingthefinancialstatements.
TheSystemiscomposedofthirteeninstitutionsofhighereducation,aswellastheSystemadministrativeoffices.The
thirteen institutions are as follows: The University of Texas at Arlington, The University of Texas at Austin, The
UniversityofTexasatDallas,TheUniversityofTexasatElPaso,TheUniversityofTexasPermianBasin,TheUniversity
ofTexasRioGrandeValley,TheUniversityofTexasatSanAntonio,TheUniversityofTexasatTyler(whichincludestwo
state agencies – The University of Texas at Tyler and The University of Texas Health Science Center at Tyler), The
UniversityofTexasSouthwesternMedicalCenter,TheUniversityofTexasMedicalBranchatGalveston,TheUniversity
of Texas Health Science Center at Houston, The University of Texas Health Science Center at San Antonio, and The
University of Texas M. D. Anderson Cancer Center. The System is governed by a ten-member Board of Regents
(includingonenon-votingstudentmember)appointedbytheGovernor.
BLENDEDCOMPONENTUNITS
Thefollowingcomponent unitsare includedintheconsolidatedfinancial statementsbecausethe Systemappointsa
voting majority of the component units’ boards and the System is able to impose its will on the component units.
Blendedcomponentunitfinancialinformationisavailableuponrequest.
U. T. Southwestern Health Systems is governed by a three-member board appointed by the president of U. T.
SouthwesternMedicalCenter.U.T.SouthwesternHealthSystemsprovidessupportofhealthcareservicesandgrants
to conduct research and provide educational programs to accomplish the mission of U. T. Southwestern Medical
Center. The corporation is blended rather than discretely presented because it is organized as a not-for-profit
corporationandU.T.SouthwesternMedicalCenteristhesolecorporatemember.Thecorporation’sfiscalyearendis
August 31. Separate financial statements may be obtained by contacting U. T. Southwestern Health Systems, 5323
HarryHinesBoulevard,Dallas,Texas75390.
U.T.SouthwesternMoncriefCancerCenterisgovernedbyafour-memberboardappointedbythepresidentofU.T.
SouthwesternMedicalCenter.U.T.SouthwesternMoncriefCancerCenterprovidesresourcesforcancerprevention,
earlydetectionandsupportservicestocancerpatientsandtheirfamilieswithinTarrantCountyandsurroundingareas.
Thecorporationisblendedratherthandiscretelypresentedbecauseitisorganizedasanot-for-profitcorporationand
U. T. Southwestern Medical Center is the sole corporate member. The corporation’s fiscal year end is August 31.
Separatefinancialstatements maybe obtainedbycontactingU.T. SouthwesternMoncriefCancerCenter,400 West
MagnoliaAvenue,FortWorth,Texas76104.
Moncrief Cancer Foundation is governed by a six-member board appointed by the president of U. T. Southwestern
MedicalCenter.MoncriefCancerFoundationsupportscomprehensive,multidisciplinarycancertreatmentprogramsin
Tarrant County and surrounding areas. The foundation is blended rather than discretely presented because it is
organized as a not-for-profit foundation and U. T. Southwestern Medical Center is the sole corporate member. The
foundation’s fiscal year end is August 31. Separate financial statements may be obtained by contacting Moncrief
CancerFoundation,5323HarryHinesBlvd.,Dallas,Texas75390.
24
UTMBHealthCareSystems,Inc.isgovernedbyaneight-memberboardappointedbyU.T.MedicalBranch-Galveston.
UTMB HealthCare Systems, Inc. provides temporary staffing and leased property, and manages the Medicare Select
insuranceproductin selectedmarketsfor U.T. Medical Branch- Galveston.The corporationis blended ratherthan
discretelypresentedbecauseitisorganizedasanot-for-profitcorporationandU.T.MedicalBranch–Galvestonisthe
solecorporatemember.Thecorporation’sfiscalyearendisAugust31.Separatefinancialstatementsmaybeobtained
bycontactingUTMBHealthCareSystems,Inc.,301UniversityBoulevard,Galveston,Texas77555.
TheUniversityMedicalBranchStudentBookStore,Inc.isgovernedbyafive-memberboardappointedbyU.T.Medical
Branch-Galveston.Thecorporationisblendedratherthandiscretelypresentedbecauseitoperatesthebookstorefor
U.T.MedicalBranch-GalvestonandprovidesservicesentirelyoralmostentirelytoU.T.MedicalBranch-Galveston.
The corporation’s fiscal year end is August 31. Separate financial statements may be obtained by contacting The
UniversityMedicalBranchStudentBookStore,Inc.,301UniversityBoulevard,Galveston,Texas77555.
MedicalBranchInnovations,Inc.isgovernedbyathree-memberboardappointedbyU.T.MedicalBranch–Galveston.
Thecorporationisblendedratherthandiscretelypresentedbecauseitisorganizedasanot-for-profitcorporationand
U.T.MedicalBranch–Galvestonisthesolecorporatemember.Thecorporation’sfiscalyearendisAugust31.Separate
financial statements may be obtained by contacting Medical Branch Innovations, Inc., 301 University Boulevard,
Galveston,Texas77555.
U. T. Physicians is governed by a nine-member board appointed by its sole corporate member. The corporation is
blended rather than discretely presented because it is organized as a not-for-profit corporation and Giuseppe N.
Colasurdo,asPresidentofU.T.HealthScienceCenter-Houston,isthesolecorporatemember.Thecorporation’sfiscal
year end is August 31. Separate financial statements may be obtained by contacting U. T. Physicians, 7000 Fannin
Street,Suite860,Houston,Texas77030.
UniversityPhysiciansGroupisgovernedbyafive-memberboard.TheDeanoftheSchoolofMedicineistheChairman
of the Board, and four board members are members of and elected by the physician practice plan board. The
corporationisblendedratherthandiscretelypresentedbecauseitisorganizedasanot-for-profitcorporationandU.T.
Health Science Center - San Antonio is the sole corporate member. The corporation’s fiscal year end is August 31.
SeparatefinancialstatementsmaybeobtainedbycontactingUniversityPhysiciansGroup,8431FredericksburgRoad,
Suite500,SanAntonio,Texas78229.
U.T.HealthSanAntonioRegionalPhysicianNetworkisgovernedbyaseven-memberboard.TheDeanoftheSchoolof
Medicineis the Chairof the Boardof Directors. Thecorporation owns, operates,and managesanAccountable Care
OrganizationinaccordancewiththerequirementsoftheMedicareSharedSavingsProgram,assetforthinsection1899
oftheSocialSecurityActandrelatedregulations.Thecorporationisblendedratherthandiscretelypresentedbecause
it is organized as a not-for-profit corporation and U. T. Health Science Center - San Antonio is the sole corporate
member.Thecorporation’sfiscalyearendisAugust31.Separatefinancialstatementsmaybeobtainedbycontacting
U.T.HealthSanAntonioRegionalPhysicianNetwork,8431FredericksburgRoad,Suite503,SanAntonio,Texas78229.
M. D. Anderson Physician’s Network is governed by a nine-member board appointed by the president of M. D.
Anderson. M. D. Anderson Physicians Network transfers programs representative of M. D. Anderson to the broad
community. The corporation is blended rather than discretely presented because it is organized as a not-for-profit
corporationandM.D.Andersonisthesolecorporatemember.Thecorporation’sfiscalyearendisAugust31.Separate
financial statements may be obtained by contacting M. D. Anderson Physician’s Network, 1515 Holcomb Blvd., Unit
1670,Houston,TX77030-4009.
M. D. Anderson Services Corporation is governed by a seven-member board appointed by the president of M. D.
Anderson.M.D.AndersonServicesCorporationservesasaninstrumentofM.D.Andersoninitseffortstoachieveits
missionbeyondtheM.D.Andersonmaincampus.Thecorporationisblendedratherthandiscretelypresentedbecause
itisorganizedasanot-for-profitcorporationandM.D.Andersonisthesolecorporatemember.Thecorporation’sfiscal
year end is August 31. Separate financial statements may be obtained by contacting M. D. Anderson Services
Corporation,1515HolcombBlvd.,Unit1670,Houston,TX77030-4009.
EastTexasQualityCareNetwork,Inc.isgovernedbyafour-memberboardappointedbyU.T.HealthScienceCenter-
Tyler. The corporation is blended rather than discretely presented because it is organized as a not-for-profit
corporationandU.T.HealthScienceCenter-Tyleristhesolecorporatemember.Thecorporation’sfiscalyearendis
August31.SeparatefinancialstatementsmaybeobtainedbycontactingEastTexasQualityCareNetwork,Inc.,11937
USHighway271,Tyler,Texas75708-3154.
25
TheUniversityofTexas/TexasA&MInvestmentManagementCompany(UTIMCO)isgovernedbyanine-memberboard
consistingofatleastthreemembersoftheU.T.SystemBoardofRegents,fourmembersappointedbytheU.T.System
BoardofRegents(oneofwhommaybetheChancelloroftheSystem),andtwomembersappointedbytheTexasA&M
SystemBoard ofRegents. Atleast threemembers appointedby theU. T.System Boardof Regentsandat leastone
memberappointedby the Texas A&M System Board of Regents must have substantial background and expertise in
investments.Thecorporationisblendedratherthandiscretelypresentedbecauseitprovidesinvestmentmanagement
services entirely or almost entirely to the System. The corporation’s fiscal year end is August 31. Separate financial
statements may be obtained by contacting The University of Texas/Texas A&M Investment Management Company
(UTIMCO),210West7thStreet,Suite1700,Austin,Texas78701.
TheUniversityofTexasCommunicationFoundationisgovernedbyathree-memberboardappointedbyU.T.Austin.
TheUniversityofTexasCommunicationFoundationprovidesservicestotheU.T.AustinCollegeofCommunicationto
facilitatethe participationby students,faculty andothersin professionalcommunication projects.The foundationis
blendedratherthandiscretelypresentedbecauseitprovidesservicesentirelytoU.T.Austin.Thefoundation’sfiscal
year end is August 31. Separate financial statements may be obtained by contacting The University of Texas
CommunicationFoundation,U.T.Austin,P.O.Box7322,Austin,Texas78713.
TheUniversityof Texas at Austin – Mexico Institute, A.C.,Centrode Ciencias de la Complejidad (Edificio C3), Planta
Baja,UnidadInternacionaldeSedesUniversitarias,CircuitoCulturalc/n,ZonaCultural,CiudadUniversitaria,Ciudadde
México,México,CP.04510,isgovernedbyafour-memberboardappointedbyU.T.Austin.TheUniversityofTexasat
Austin–MexicoInstitute,A.C.advancescollaborativecross-disciplinaryacademicandscientificresearchpartnerships
in science, technology, engineering, and mathematics, and scholarly and cultural studies between The University of
TexasatAustinandMexico’sacademicinstitutions.Theinstituteisblendedratherthandiscretelypresentedbecauseit
isorganizedasanot-for-profitcorporationandU.T.Austinisthesolecorporatemember.TheMexicoInstitute’sfiscal
year end is December 31. Separate financial statements may be obtained by contacting The University of Texas at
AustinJ.Pinon,DirectorofInstitutionalRelations–Mexico,2275Speedway,Austin,TX,78712.
TheCrow Museumof AsianArt -Foundation isgoverned bya boardof fivedirectorsappointedby U.T. Dallas.The
foundationisblendedratherthandiscretelypresentedbecauseitisorganizedasanot-for-profitcorporationandU.T.
Dallasisthesolecorporatemember.Thefoundation’sfiscalyearendisDecember31.Infiscalyear2021,substantially
allassetsandoperationsofthefoundationtransferredtoU.T.Dallasinaccordancewithaunanimousconsentletter
executed by the board of directors. Assets distributed to U. T. Dallas will be managed in accordance with the
memorandumofunderstandingassociatedwiththe2018donationoftheCrowMuseumofAsianArt.Thefoundation
willcontinueitscorporateexistenceasdeemedadvisablebytheboardofdirectors.
26
Condensed financial statement information related to the System’s blended component units for the year ended
August31,2023isasfollows:
AsofAugust31,2023
UT
Southwestern
Health
Systems
UT
Southwestern
Moncrief
Cancer
Center
Moncrief
Cancer
Foundation
UTMB
HealthCare
Systems,Inc.
TheUniversity
MedicalBranch
Student
BookStore,Inc.
CondensedStatementofNet
Position
CurrentAssets $ 2,357,970 5,407,990 828,935 22,752,805 740,195
NoncurrentAssets 7,442,775 31,620,298 91,552,701 21,644,699 1,641,209
TotalAssets 9,800,745 37,028,288 92,381,636 44,397,504 2,381,404
CurrentLiabilities — 9,064,197 1,462,473 4,683,999 70,981
NoncurrentLiabilities — — — 255,322 —
TotalLiabilities — 9,064,197 1,462,473 4,939,321 70,981
NetInvestmentinCapitalAssets — 24,793,977 — 1,338,896 —
RestrictedNonexpendable — 1,704,801 — — —
RestrictedExpendable — — 90,919,163 — —
Unrestricted 9,800,745 1,465,313 — 38,119,287 2,310,423
TotalNetPosition $ 9,800,745 27,964,091 90,919,163 39,458,183 2,310,423
CondensedStatementofRevenues,
ExpensesandChangesinNet
Position
OperatingRevenues $ 45,661 8,778,368 25 99,546,414 972,066
OperatingExpenses (24,004) (13,182,645) (509,680) (92,152,575) (906,564)
OperatingIncome(Loss) 21,657 (4,404,277) (509,655) 7,393,839 65,502
NonoperatingRevenues(Expenses) 2,406,197 3,556,408 6,145,765 1,234,555 71,502
Income(Loss)BeforeOther
ChangesinNetPosition 2,427,854 (847,869) 5,636,110 8,628,394 137,004
OtherChangesinNetPosition (2,743,000) 1,115,690 (3,384,310) — —
ChangeinNetPosition (315,146) 267,821 2,251,800 8,628,394 137,004
NetPosition-August31,2022 — — 88,667,363 30,829,789 2,173,419
NetPosition-August31,2023 $ (315,146) 267,821 90,919,163 39,458,183 2,310,423
CondensedStatementofCash
Flows
NetCashprovidedby(usedfor):
OperatingActivities $ (167,404) 1,311,183 3,492,178 2,161,864 53,097
NoncapitalFinancingActivities — — (19,000,000) — —
CapitalandRelatedFinancing — — — — —
InvestingActivities 45,661 (324,326) 11,827,561 (583,369) 5,945
NetIncrease(Decrease)inCashand
CashEquivalents (121,743) 986,857 (3,680,261) 1,578,495 59,042
CashandCashEquivalents-
August31,2022 — — 4,410,506 9,946,116 270,649
CashandCashEquivalents-
August31,2023 $ (121,743) 986,857 730,245 11,524,611 329,691
27
(Continued)
AsofAugust31,2023
MedicalBranch
Innovations,Inc.
U.T.
Physicians
University
Physicians
Group
U.T.HealthSan
AntonioRegional
Physician
Network
M.D.
Anderson
Physician's
Network
CondensedStatementofNet
Position
CurrentAssets $ 1,363,303 117,093,675 — — 89,554,248
NoncurrentAssets 4,587,569 249,895,512 1,935,622 — 219,554,928
TotalAssets 5,950,872 366,989,187 1,935,622 — 309,109,176
CurrentLiabilities 532,068 85,811,908 — — 8,500,361
NoncurrentLiabilities 7,409,137 200,009,007 — — —
TotalLiabilities 7,941,205 285,820,915 — — 8,500,361
NetInvestmentinCapitalAssets — 39,741,361 — — 704,035
RestrictedNonexpendable — — — — —
RestrictedExpendable — — — — —
Unrestricted (1,990,333) 41,426,912 1,935,622 — 299,904,780
TotalNetPosition $ (1,990,333) 81,168,273 1,935,622 — 300,608,815
CondensedStatementofRevenues,
ExpensesandChangesinNet
Position
OperatingRevenues $ 560,952 119,303,470 — — 45,852,423
OperatingExpenses (1,026,670) (122,643,132) — (1,537,778) (17,905,689)
OperatingIncome(Loss) (465,718) (3,339,662) — (1,537,778) 27,946,734
NonoperatingRevenues(Expenses) 221,418 5,255,345 — — 11,995,439
Income(Loss)BeforeOther
ChangesinNetPosition (244,300) 1,915,683 — (1,537,778) 39,942,173
OtherChangesinNetPosition — — — 1,537,778 —
ChangeinNetPosition (244,300) 1,915,683 — — 39,942,173
NetPosition-August31,2022 (1,746,033) 79,252,590 1,935,622 — 260,666,642
NetPosition-August31,2023 $ (1,990,333) 81,168,273 1,935,622 — 300,608,815
CondensedStatementofCash
Flows
NetCashprovidedby(usedfor):
OperatingActivities $ (251,504) 7,069,906 — — 26,419,670
NoncapitalFinancingActivities — — — — —
CapitalandRelatedFinancing — (16,821,357) — — (208,191)
InvestingActivities 40,572 28,451,833 — — (4,315,529)
NetIncrease(Decrease)inCashand
CashEquivalents (210,932) 18,700,382 — — 21,895,950
CashandCashEquivalents-
August31,2022 1,382,440 88,035,192 — — 62,450,374
CashandCashEquivalents-
August31,2023 $ 1,171,508 106,735,574 — — 84,346,324
28
(Continued)
AsofAugust31,2023
M.D.
Anderson
Services
Corporation
EastTexas
Quality
Care
Network,Inc. UTIMCO
TheUniversityof
Texas
Communication
Foundation
CondensedStatementofNet
Position
CurrentAssets $ 84,750,530 197,289 43,750,144 2,042
NoncurrentAssets 809,177,475 — 4,720,620 177,911
TotalAssets 893,928,005 197,289 48,470,764 179,953
CurrentLiabilities 107,457,087 (230,090) 22,148,608 121,528
NoncurrentLiabilities 56,453,369 — 4,244,466 39,052
TotalLiabilities 163,910,456 (230,090) 26,393,074 160,580
NetInvestmentinCapitalAssets 24,679 — 224,226 —
RestrictedNonexpendable 50,000,000 — — —
RestrictedExpendable 638,085,173 — — —
Unrestricted 41,907,697 427,379 21,853,464 19,373
TotalNetPosition $ 730,017,549 427,379 22,077,690 19,373
CondensedStatementofRevenues,
ExpensesandChangesinNet
Position
OperatingRevenues $ 1,722,666 19,437 67,943,364 —
OperatingExpenses (1,465,614) (26,068) (60,906,770) —
OperatingIncome(Loss) 257,052 (6,631) 7,036,594 —
NonoperatingRevenues(Expenses) 37,117,793 — 1,750,535 —
Income(Loss)BeforeOther
ChangesinNetPosition 37,374,845 (6,631) 8,787,129 —
OtherChangesinNetPosition — — — —
ChangeinNetPosition 37,374,845 (6,631) 8,787,129 —
NetPosition-August31,2022 — 434,010 13,290,561 19,373
NetPosition-August31,2023 $ 37,374,845 427,379 22,077,690 19,373
CondensedStatementofCash
Flows
NetCashprovidedby(usedfor):
OperatingActivities $ 924,919 (200,973) 6,847,008 —
NoncapitalFinancingActivities (28,051,423) — — —
CapitalandRelatedFinancing (4,633) — (1,357,280) —
InvestingActivities 30,926,795 — 2,141,957 —
NetIncrease(Decrease)inCashand
CashEquivalents 3,795,658 (200,973) 7,631,685 —
CashandCashEquivalents-
August31,2022 — 472,913 34,166,841 2,042
CashandCashEquivalents-
August31,2023 $ 3,795,658 271,940 41,798,526 2,042
29
(Concluded)
AsofAugust31,2023
TheUniversityof
TexasatAustin-
MexicoInstitute
A.C.
TheCrow
Museumof
AsianArt-
Foundation
Combined
Blended
ComponentUnit
Total
CondensedStatementofNet
Position
CurrentAssets $ 20,070 45,872 368,865,068
NoncurrentAssets — — 1,443,951,319
TotalAssets 20,070 45,872 1,812,816,387
CurrentLiabilities — — 239,623,120
NoncurrentLiabilities — — 268,410,353
TotalLiabilities — — 508,033,473
NetInvestmentinCapitalAssets — — 66,827,174
RestrictedNonexpendable — — 51,704,801
RestrictedExpendable — — 729,004,336
Unrestricted 20,070 45,872 457,246,604
TotalNetPosition $ 20,070 45,872 1,304,782,915
CondensedStatementofRevenues,
ExpensesandChangesinNet
Position
OperatingRevenues $ 150,468 — 344,895,314
OperatingExpenses (177,599) (1,453) (312,466,241)
OperatingIncome(Loss) (27,131) (1,453) 32,429,073
NonoperatingRevenues(Expenses) — — 69,754,957
Income(Loss)BeforeOther
ChangesinNetPosition (27,131) (1,453) 102,184,030
OtherChangesinNetPosition — — (3,473,842)
ChangeinNetPosition (27,131) (1,453) 98,710,188
NetPosition-August31,2022 47,201 47,325 475,617,862
NetPosition-August31,2023 $ 20,070 45,872 574,328,050
CondensedStatementofCash
Flows
NetCashprovidedby(usedfor):
OperatingActivities $ 35,812 (1,453) 47,694,303
NoncapitalFinancingActivities — — (47,051,423)
CapitalandRelatedFinancing — — (18,391,461)
InvestingActivities — — 68,217,100
NetIncrease(Decrease)inCashand
CashEquivalents 35,812 (1,453) 50,468,519
CashandCashEquivalents-
August31,2022 47,201 47,325 201,231,599
CashandCashEquivalents-
August31,2023 $ 83,013 45,872 251,700,118
30
CondensedfinancialstatementinformationrelatedtotheSystem’sblendedcomponentunitsfortheyearendedAugust31,
2022,withsomefinancialstatementinformationrestatedforGASBStatementNo.96,isasfollows:
AsofAugust31,2022
Southwestern
Health
Systems
Southwestern
Moncrief
Cancer
Center
Moncrief
Cancer
Foundation
UTMB
HealthCare
Systems,Inc.
TheUniversity
MedicalBranch
Student
BookStore,Inc.
CondensedStatementofNet
Position
CurrentAssets $ 10,115,891 4,567,576 4,492,583 13,185,168 650,423
NoncurrentAssets — 33,308,379 105,752,943 20,974,634 1,573,544
TotalAssets 10,115,891 37,875,955 110,245,526 34,159,802 2,223,967
CurrentLiabilities — 10,179,685 21,578,163 3,231,312 50,548
NoncurrentLiabilities — — — 98,701 —
TotalLiabilities — 10,179,685 21,578,163 3,330,013 50,548
NetInvestmentinCapitalAssets — 25,862,195 — 1,429,800 —
RestrictedNonexpendable — 1,633,095 — — —
RestrictedExpendable — — 88,667,363 — —
Unrestricted 10,115,891 200,980 — 29,399,989 2,173,419
TotalNetPosition $ 10,115,891 27,696,270 88,667,363 30,829,789 2,173,419
CondensedStatementofRevenues,
ExpensesandChangesinNet
Position
OperatingRevenues $ 2,841 6,736,381 429 92,717,894 827,124
OperatingExpenses (38,636) (12,104,484) (505,157) (88,463,416) (773,467)
OperatingIncome(Loss) (35,795) (5,368,103) (504,728) 4,254,478 53,657
NonoperatingRevenues(Expenses) 2,128,039 3,467,418 (10,825,651) (822,099) (132,959)
Income(Loss)BeforeOther
ChangesinNetPosition 2,092,244 (1,900,685) (11,330,379) 3,432,379 (79,302)
OtherChangesinNetPosition (2,800,000) (593,368) (3,593,368) — —
ChangeinNetPosition (707,756) (2,494,053) (14,923,747) 3,432,379 (79,302)
NetPosition-August31,2021 10,823,647 30,190,323 103,591,110 27,397,410 2,252,721
NetPosition-August31,2022 $ 10,115,891 27,696,270 88,667,363 30,829,789 2,173,419
CondensedStatementofCash
Flows
NetCashprovidedby(usedfor):
OperatingActivities $ 295,853 (500,683) 4,126,209 2,455,709 (14,935)
NoncapitalFinancingActivities — — — — —
CapitalandRelatedFinancing — — — — —
InvestingActivities (323,009) 90,909 (859,369) (601,134) (3,851)
NetIncrease(Decrease)inCashand
CashEquivalents (27,156) (409,774) 3,266,840 1,854,575 (18,786)
CashandCashEquivalents-
August31,2021 2,504,694 1,252,481 1,143,666 8,091,541 289,435
CashandCashEquivalents-
August31,2022 $ 2,477,538 842,707 4,410,506 9,946,116 270,649
31
(Continued)
AsofAugust31,2022
MedicalBranch
Innovations,Inc.
U.T.
Physicians
University
Physicians
Group
U.T.HealthSan
AntonioRegional
Physician
Network
M.D.
Anderson
Physician's
Network
CondensedStatementofNet
Position
CurrentAssets $ 1,592,834 104,156,809 — 210 66,937,719
NoncurrentAssets 4,406,724 281,848,529 1,935,622 — 203,182,481
TotalAssets 5,999,558 386,005,338 1,935,622 210 270,120,200
CurrentLiabilities 546,454 87,287,265 — 210 9,453,558
NoncurrentLiabilities 7,199,137 219,465,483 — — —
TotalLiabilities 7,745,591 306,752,748 — 210 9,453,558
NetInvestmentinCapitalAssets — 31,865,541 — — 642,556
RestrictedNonexpendable — — — — —
RestrictedExpendable — — — — —
Unrestricted (1,746,033) 47,387,049 1,935,622 — 260,024,086
TotalNetPosition $ (1,746,033) 79,252,590 1,935,622 — 260,666,642
CondensedStatementofRevenues,
ExpensesandChangesinNet
Position
OperatingRevenues $ 946,447 199,985,715 — — 54,079,887
OperatingExpenses (1,641,058) (179,951,056) — (1,757,801) (23,663,421)
OperatingIncome(Loss) (694,611) 20,034,659 — (1,757,801) 30,416,466
NonoperatingRevenues(Expenses) (351,259) (8,292,622) — — (16,777,997)
Income(Loss)BeforeOther
ChangesinNetPosition (1,045,870) 11,742,037 — (1,757,801) 13,638,469
OtherChangesinNetPosition — — — 1,757,801 —
ChangeinNetPosition (1,045,870) 11,742,037 — — 13,638,469
NetPosition-August31,2021 (700,163) 67,510,553 1,935,622 — 247,028,173
NetPosition-August31,2022 $ (1,746,033) 79,252,590 1,935,622 — 260,666,642
CondensedStatementofCash
Flows
NetCashprovidedby(usedfor):
OperatingActivities $ (471,618) 37,495,780 — — 20,349,914
NoncapitalFinancingActivities — — — — —
CapitalandRelatedFinancing — (18,613,254) — — (172,642)
InvestingActivities 4,380 599,936 — — (14,386,024)
NetIncrease(Decrease)inCashand
CashEquivalents (467,238) 19,482,462 — — 5,791,248
CashandCashEquivalents-
August31,2021 1,849,678 68,552,730 — — 56,659,126
CashandCashEquivalents-
August31,2022 $ 1,382,440 88,035,192 — — 62,450,374
32
(Continued)
AsofAugust31,2022
M.D.
Anderson
Services
Corp
EastTexas
Quality
Care
Network,Inc. UTIMCO
TheUniversityof
Texas
Communication
Foundation
CondensedStatementofNet
Position
CurrentAssets $ 80,211,672 448,728 35,450,191 2,042
NoncurrentAssets 803,523,651 — 4,593,078 177,911
TotalAssets 883,735,323 448,728 40,043,269 179,953
CurrentLiabilities 100,258,091 14,718 20,144,469 121,528
NoncurrentLiabilities 90,834,528 — 6,608,239 39,052
TotalLiabilities 191,092,619 14,718 26,752,708 160,580
NetInvestmentinCapitalAssets 20,387 — 203,428 —
RestrictedNonexpendable 50,000,000 — —
RestrictedExpendable 603,195,087 — —
Unrestricted 39,427,230 434,010 13,087,133 19,373
TotalNetPosition $ 692,642,704 434,010 13,290,561 19,373
CondensedStatementofRevenues,
ExpensesandChangesinNet
Position
OperatingRevenues $ 1,365,571 37,469 60,648,574 2,000
OperatingExpenses (746,921) (17,411) (58,283,634) (801)
OperatingIncome(Loss) 618,650 20,058 2,364,940 1,199
NonoperatingRevenues(Expenses) (51,910,767) — 198,951 —
Income(Loss)BeforeOther
ChangesinNetPosition (51,292,117) 20,058 2,563,891 1,199
OtherChangesinNetPosition — — (6,000,000) —
ChangeinNetPosition (51,292,117) 20,058 (3,436,109) 1,199
NetPosition-August31,2021 743,934,821 413,952 16,726,670 18,174
NetPosition-August31,2022 $ 692,642,704 434,010 13,290,561 19,373
CondensedStatementofCash
Flows
NetCashprovidedby(usedfor):
OperatingActivities $ (2,041,805) 69,344 4,506,494 1,831
NoncapitalFinancingActivities (34,753,876) — (6,000,000) —
CapitalandRelatedFinancing — — (919,306) —
InvestingActivities 37,758,714 — 203,209 —
NetIncrease(Decrease)inCashand
CashEquivalents 963,033 69,344 (2,209,603) 1,831
CashandCashEquivalents-
August31,2021 78,663,646 403,569 36,376,444 211
CashandCashEquivalents-
August31,2022 $ 79,626,679 472,913 34,166,841 2,042
33
(Concluded)
AsofAugust31,2022
CentroGlobalde
Innovaciony
Emprendimiento
A.C.
TheUniversityof
TexasatAustin-
MexicoInstitute
A.C.
TheCrow
Museumof
AsianArt-
Foundation
Combined
Blended
ComponentUnit
Total
CondensedStatementofNet
Position
CurrentAssets $ — 47,201 47,325 321,906,372
NoncurrentAssets — — — 1,461,277,496
TotalAssets — 47,201 47,325 1,783,183,868
CurrentLiabilities — — — 252,866,001
NoncurrentLiabilities — — — 324,245,140
TotalLiabilities — — — 577,111,141
NetInvestmentinCapitalAssets — — — 60,023,907
RestrictedNonexpendable — — — 51,633,095
RestrictedExpendable — — — 691,862,450
Unrestricted — 47,201 47,325 402,553,275
TotalNetPosition $ — 47,201 47,325 1,206,072,727
CondensedStatementofRevenues,
ExpensesandChangesinNet
Position
OperatingRevenues $ — 67,492 — 417,417,824
OperatingExpenses (41,430) (29,065) (81,923) (368,099,681)
OperatingIncome(Loss) (41,430) 38,427 (81,923) 49,318,143
NonoperatingRevenues(Expenses) — — (634) (83,319,580)
Income(Loss)BeforeOther
ChangesinNetPosition (41,430) 38,427 (82,557) (34,001,437)
OtherChangesinNetPosition — — 85,000 (11,143,935)
ChangeinNetPosition (41,430) 38,427 2,443 (45,145,372)
NetPosition-August31,2021 41,430 8,774 44,882 1,251,218,099
NetPosition-August31,2022 $ — 47,201 47,325 1,206,072,727
CondensedStatementofCash
Flows
NetCashprovidedby(usedfor):
OperatingActivities $ — 38,427 (663,715) 65,646,805
NoncapitalFinancingActivities — — 85,000 (40,668,876)
CapitalandRelatedFinancing — — 580,527 (19,124,675)
InvestingActivities — — 64 22,483,825
NetIncrease(Decrease)inCashand
CashEquivalents — 38,427 1,876 28,337,079
CashandCashEquivalents-
August31,2021 — 8,774 45,449 255,841,444
CashandCashEquivalents-
August31,2022 $ — 47,201 47,325 284,178,523
34
ASSETSHELDBYAFFILIATEDORGANIZATIONS
GASB authoritative guidance provides criteria for determining whether certain organizations should be reported as
componentunitsbasedonthenatureandsignificanceoftheirrelationshiptotheSystem.Thisguidancestatesthata
legally separate, tax-exempt organization should be reported as a component unit of a reporting entity if all of the
followingcriteriaaremet:
1. Theeconomicresourcesreceivedorheldbytheseparateorganizationareentirelyoralmostentirelyforthe
directbenefitoftheprimarygovernment,itscomponentunits,oritsconstituents.
2. The primary government is entitled to or has the ability to otherwise access a majority of the economic
resourcesreceivedorheldbytheseparateorganization.
3. Theeconomicresourcesreceivedorheldbyanindividualorganizationthatthespecificprimarygovernment,
or its component units, is entitled to, or has the ability to otherwise access, are significant to that primary
government.
The System has defined significance as 5% of System’s net position. As of August 31, 2023, none of the System’s
potential component units individually meet the 5% of System’s net position criteria for inclusion in the System’s
financialstatements.Baseduponthemostrecentavailableinformation,thecombinednetpositionofthesepotential
component units reported by the organizations total $3,967,673,833 at August 31, 2023 and $3,379,730,061 at
August31,2022.
2. RelatedParties
Through the normal course of operations, the System both receives funds from and provides funds to other State
agenciesinsupportofsponsoredresearchprograms.FundsreceivedandprovidedduringtheyearendedAugust31,
2023,relatedtopass-throughgrantswere$609,197,382and$14,032,008,respectively.Fundsreceivedandprovided
during the year ended August 31, 2022, related to pass-through grants were $533,765,956 and $20,760,320,
respectively.
Otherrelated-partytransactionsidentifiedinthefinancialstatementsincludeDueFrom/ToOtherStateAgencies,State
Appropriations,CapitalAppropriationsandTransfersFrom/ToOtherStateAgencies.
3. JointVentures
The University of Texas Southwestern Medical Center (UTSW) and Texas Health Resources (THR) are participating
members of Southwestern Health Resources (SWHR) entities, including SWHR, SWHR Clinically Integrated Network
(CIN), and SWHR Joint Operating Company (JOC). This integrated regional health network offers key advantages for
patientsinNorthTexasincludingabroad,integratedcontinuumofphysician-drivencareutilizingUTSW’snetworkof
facultyandcommunity-basedphysicians,THR’semployedphysicians,andindependentphysiciansaffiliatedwithboth
organizations; and an integrated hospital network consisting of UTSW’s two university hospitals and THR’s wholly-
controlled and joint-ventured community hospitals. UTSW’s equity interest in SWHR, SWHR CIN, and SWHR JOC at
August31,2023and2022was$861,990and$61,751,430,respectively,orapproximately50%.
UTSWisaparticipatingmemberofTexasHealthHospitalFrisco(THHF).THHFisajointventureenteredintobyUTSW
andTHRonAugust27,2018whosepurposeistoprovidesuperiormedicalcaretotheresidentsofCollinCountyand
other surrounding areas. UTSW’s equity interest in THHF at August 31, 2023 and 2022 was $126,720,765 and
$117,814,831,respectively,or50%.
UTSWisaparticipatingmemberofPediatricHealthManagementServices.PediatricHealthManagementServicesisa
non-profitcorporateentitythatwasformedbyUTSWandChildren’sHealthSystemofTexasonOctober1,2019forthe
purposeofdevelopingajointpediatricenterprise.UTSW’sequityinterestinPediatricHealthManagementServicesat
August 31, 2023 and 2022 was $27,281,015 and $4,389,470, respectively, or 50%. UTSW is committed to providing
fundingofupto$75,000,000peradevelopmentagreementdatedMay11,2022.
U.T. SouthwesternHealth Systems(UTSHS), ablended componentunit ofUTSW,isaparticipating memberof U.T.
SouthwesternDVAHealthcare,LLP(DVA). DVAisajointventurebetweenUTSHSandDaVitaInc.toprovidecarefor
dialysis patients in the Dallas-Fort Worth area. UTSHS's equity interest in DVA at August 31, 2023 and 2022 was
$6,234,205and$6,614,563,respectively,or49%.SeparatefinancialstatementsforDaVitamaybeobtainedatDaVita
Inc.,601HawaiiStreet,ElSegundo,California90245.
35
UTSHS is a participating member of Crowder Dialysis, LLC (Crowder). Crowder is a joint venture between UTSHS,
Crowder,andRenalTreatmentCenters-Southeast,LP,formedforthepurposeofdeveloping,establishing,owningor
leasing,andoperatingoneormorelicensedoutpatientdialysisandrenalcareservicecentersandforthepurposeof
doing such other things as are necessary, convenient, desirable or incidental to the foregoing, and for such other
purposesasmaybeagreeduponfromtimetotime.UTSHS'sequityinterestinCrowderatAugust31,2023and2022
was$1,208,570and$1,017,704,respectivelyor49%.SeparatefinancialstatementsforCrowdermaybeobtainedatc/
oDaVitaInc.,200016thStreet,Denver,Colorado,80202.
U. T. Health Science Center - Houston’s blended component unit, U. T. Physicians, is a participating member of
Physician’sDialysisofHouston.Physician’sDialysisofHoustonisajointventureenteredintobyU.T.Physiciansand
DaVita, Inc. U. T. Physicians’ equity interest in Physician’s Dialysis of Houston at August 31, 2023 and 2022 was
$562,976and$713,564,respectively,or35.6%.SeparatefinancialstatementsforPhysician’sDialysisofHoustonmay
be obtained at Physician’s Dialysis of Houston, Attention: D. Gieser, JV Accounting, 32275 32nd Ave South, Federal
Way,Washington98001.
U.T.HealthScienceCenter-Houston’sblendedcomponentunit,U.T.Physicians,isa participatingmemberofTMC
HoldingCompany,L.L.C.(TMCHolding).TMCHoldingisaLimitedLiabilityCorporationenteredintobyU.T.Physicians,
BaylorCollege ofMedicine andMemorial Hermann/USPSurgery CentersIII,L.L.P.U. T.Physicians’ equityinterest in
TMC Holding at August 31, 2023 and 2022 was $181,656 and $180,271, respectively, or 18.1%. Separate financial
statementsforTMCHoldingmaybeobtainedbycontactingS.Rossmann,750TownandCountryBoulevard,Suite920,
Houston,Texas77024.
U.T.HealthScienceCenter-Houston’sblendedcomponentunit,U.T.Physicians,isaparticipatingmemberofBluesky
MOB,L.L.P.BlueskyMOB,L.L.P.isaLimitedLiabilityPartnershipofwhichU.T.Physicianspurchasedan18.7%interest
infor$380,755onAugust1,2012.U.T.Physicians’equityinterestinBlueskyMOB,LLPatAugust31,2023and2022
was$380,755,or18.7%.SeparatefinancialstatementsforBlueskyMOB,L.L.P.maybeobtainedatMoore,Reichl,&
Baker,P.C.,c/oC.Presley,CPA,11200WestheimerSuite410,Houston,Texas,77042.
U. T. Health Science Center - Houston and M. D. Anderson are participating members of the Texas Medical Center
CentralHeatingandCoolingServicesCooperativeAssociation(TECO).TECOwasincorporatedonOctober2,1975,for
thepurposeofoperatingacentralheatingandcoolingservicesfacilityonacooperativebasissolelyforthebenefitof
eligibleinstitutions.OnJune1,2003,TECOtransferredsubstantiallyallofitsassetsandoperationtoTECOCorporation,
andTECOCorporationassumedtheliabilitiesandobligationsofTECO.TECOstillrendersservicestomemberandnon-
memberpatrons atcost.Savings ormarginsare refundedtothe memberandnon-member patronson a patronage
basisintheformofcashorequitybyTECO.Infiscalyear2016,U.T.HealthScienceCenter–Houstonpurchasedthe
Jessie Jones Library and obtained additional patronage equity in TECO in the amount of $301,800 via the Houston
Academy of Medicine’s shares of TECO equity. In fiscal year 2022, U. T. Health Science Center – Houston obtained
additional patronage equity in TECO in the amount of $153,252 related to the School of Biomedical Informatics
additionviatheHoustonAcademyofMedicine’ssharesofTECOequity.U.T.HealthScienceCenter-Houston’sequity
interestinTECOatAugust31,2023 and 2022 was $20,790,009 and $19,857,229,respectively,or 10.1% and 10.2%,
respectively.M.D.Anderson’sequityinterestinTECOatAugust31,2023and2022was$68,223,067and$65,034,537,
respectively,or 33.5% and 33.9%, respectively. Separate financial statements for TECO may be obtained at Thermal
EnergyCorporation,1615BraeswoodBoulevard,Houston,Texas77030.
M.D.AndersonisaparticipatingmemberoftheTexasMedicalCenterHospitalLaundryCooperativeAssociation(the
Association).TheAssociationwasestablishedonApril30,1971,forthepurposeofacquiring,owning,andoperatinga
laundry system on a cooperative basis solely for the benefit of members of the Association. Net earnings of the
AssociationmayberefundedtothemembersonapatronagebasisorretainedbytheAssociationasequityallocatedto
themembers. M.D.Anderson’s equityinterestin theAssociationat August31,2023 and2022 was $6,433,549and
$6,519,135,respectively, or40%.Separate financial statementsforthe Association may beobtainedat 9424 Fannin
Street,BuildingC,Houston,Texas77045.
M.D.AndersonisaparticipatingmemberofP.E.T.NetHouston,LLC(PETNet).PETNetisajointventureenteredintoby
M.D.AndersonandP.E.T.Pharmaceuticals,Inc.toleaseandoperateafacilitylocatedonM.D.Anderson’scampusto
producepositronradiopharmaceuticalsandisotopes.Constructionofthefacilitycommencedin2003.M.D.Anderson’s
equityinterestinPETNetatAugust31,2023and2022was$5,202,367and$4,766,112,respectively,or49%.Separate
financialstatementsforPETNet maybeobtained atSiemensMedicalSolutionsUSA,Inc.,51 ValleyStreamParkway,
Malvern,Pennsylvania19355.
36
M.D.Anderson,NationalResilience, Inc. a Delaware corporation (Resilience), and ResilienceTexas,LLC, a Delaware
limitedliability company enteredinto a newjointventure onOctober21, 2021toform Cell TherapyManufacturing
Center(CTMC).Theentitywasformedforthepurposeofengaginginastrategicmanufacturingrelationshipforgene
andcelltherapycGMPmanufacturingattheResilienceTexas,LLCfacilityforallphasesofclinicaldevelopmentandfor
commercial supply. M. D. Anderson’s participation in such strategic manufacturing relationship for gene and cell
therapy cGMP manufacturing will support and advance its mission by facilitating and funding the development and
commercializationofnewproductsandtechnologiesforthediagnosis,teaching,study,prevention,andtreatmentof
cancer.TheBoardofRegentsoftheUniversityofTexasSystem,onbehalfofM.D.Anderson’sengagementinthejoint
venture,supportthepublicmissionofandservepublicpurposesappropriatetothefunctionofM.D.Anderson.Asof
August31,2023and2022,M.D.Anderson’sequityinterestinCTMCwas$20,516,472and$23,739,656,respectively,
or50%.SeparatefinancialstatementsforResilienceTexas,LLCdbaCTMCmaybeobtainedat2130WHolcombeBlvd.
HoustonTX,77030.
OnMarch1,2018,U.T.HealthScienceCenter–Tyler(UTHSC–Tyler)enteredintoajointventurewithAHSEastTexas
Health System, LLC, to form East Texas Health System, LLC, a Texas Limited Liability Company. The resulting health
system,knownasU.T.HealthEastTexas,isdesignedtoexpandmedicaleducation,researchandcommunityhealthin
NortheastTexas.U.T. HealthScienceCenter– Tyler’shospitalandphysicianclinicoperationsareparticipantsinthe
ten-hospital system, designed to advance the achievement of UTHSC – Tyler’s mission through financial and clinical
alignmentandintegrationandtoimprovethedeliveryofcosteffective,qualityhealthcareservicesintheNortheast
Texasregion.UTHSC–Tyler’sequityinterestinU.T.HealthEastTexasatAugust31,2023and2022was$24,681,700
and$18,709,700,respectively,orapproximately30%.
InMarch2016,U.T.AustinenteredintoajointventurewithAscensionSetonandCentralHealthtoformCapitalCity
Innovation(CCI), a nonprofitorganization.CCI wascreatedto provideavision, focused strategicdirection, advocacy
for, and synergistic coordination of expertise, culture, uses and development to support the creation, growth and
sustainabilityofanInnovationZoneinAustin,Texas.U.T.Austin’sequityinterestinCCIatAugust31,2023and2022
was$350,000,or23.7%.
4. SummaryofSignificantAccountingPolicies
BASISOFACCOUNTING
TheproprietaryfinancialstatementsoftheSystemhavebeenprepared usingtheeconomic resourcesmeasurement
focusand theaccrualbasis ofaccounting and reportsas abusinesstype activity,as definedby GASB. Businesstype
activities(enterprisefunds)arethosethatarefinancedinwholeorinpartbyfeeschargedtoexternalpartiesforgoods
orservices.TheSystem’sfiduciaryfundsaccountforassetsheldinacustodialcapacityandareaccountedforonthe
accrualbasisofaccountinginaccordancewithGASBStatementNo.84,FiduciaryActivities.Allfinancialstatementsof
theSystem have beenpreparedin accordancewithaccounting principles generallyaccepted in theUnitedStates of
AmericaasprescribedbytheGASB.
GASBSTATEMENTSIMPLEMENTEDINFISCALYEAR2022
TherequirementsofGASBStatementNo.87,Leases,wereeffectivein2022.Thisstatementestablishedasinglemodel
forleaseaccountingbasedontheprinciplethatleasesarefinancingsoftherighttouseanunderlyingasset.Underthis
Statement,alesseeisrequiredtorecognizealeaseliabilityandanintangibleright-to-useleaseasset,andalessoris
requiredtorecognizealeasereceivableandadeferredinflowofresources.Limitedexceptionstothesingleapproach
guidanceareprovidedforshort-termleases,defined aslastingamaximumoftwelvemonthsatinception,including
any options to extend, financed purchases, leases of assets that are investments and certain regulated leases. The
applicationofthestatementhadaneffectontheSystem’snetpositionandchangeinnetposition.
Otherthantheportionofthisstatementimplementedin2020,therequirementsoftheremainderofGASBStatement
No.97,CertainComponentUnitCriteria,andAccountingandFinancialReportingforInternalRevenueCodeSection457
DeferredCompensationPlans,wereeffectivein2022.Therequirementsofthisstatementimplementedin2022related
totheaccountingandfinancialreportingforSection457plans.Theapplicationofthestatementhadaneffectonthe
System’snetpositionandchangeinnetposition.
Otherthantheportionsofthisstatementimplementedin2021,therequirementsoftheremainderofGASBStatement
No.93,ReplacementofInterbankOfferedRates,wereeffectivebeginning2022orlaterdependingonwhenLIBORisno
longeravailable.Thisstatementpreservesconsistencyandcomparabilityofreportinghedgingderivativeinstruments
andleasesafteragreementsare amendedtoreplaceLIBOR.Theapplicationofthisportionofthestatementhad no
effectontheSystem’snetpositionorchangesinnetposition.
37
The requirements of GASB Statement No. 98, The Annual Comprehensive Financial Report, were effective in 2022,
establishesthetermannualcomprehensivefinancialreportanditsacronymACFR.TheimplementationofStatement
98hasnoeffectontheSystem.
For GASB Statement No. 99, Omnibus 2022, the following portions of the statement were effective in 2022: the
requirementsrelatedtoextensionoftheuseofLIBOR,accountingfortheSupplementalNutritionAssistanceProgram
(SNAP)distributions, disclosures of nonmonetary transactions,pledges of future revenuesbypledginggovernments,
clarificationofcertainprovisionsinStatement34,asamended,andterminologyupdatesrelatedtoStatement53and
Statement63.TheapplicationoftheseportionsofthestatementhadnoeffectontheSystem’snetpositionorchanges
innetposition.
GASBSTATEMENTSIMPLEMENTEDINFISCALYEAR2023
GASBStatementNo.91,ConduitDebtObligations,effective2023,providesasinglemethodofreportingconduitdebt
obligations.TheapplicationofthestatementhadnoeffectontheSystem’snetpositionorchangesinnetposition.
GASBStatementNo.94,Public-PrivateandPublic-PublicPartnerships(PPPs)andAvailabilityPayment Arrangements,
effective2023,improvesfinancialreportingbyaddressingissuesrelatedtopublic-privateandpublic-publicpartnership
arrangements and provides guidance for availability payment arrangements. Changes adopted to conform to the
provisions of this Statement were applied retroactively by restating the financial statements for the earliest period
presented,August31,2022,andrelateddisclosuresinNotes20,21,and23.
GASB Statement No. 96, Subscription-Based Information Technology Arrangements (SBITA), is effective 2023. This
StatementdefinesaSBITA;establishesthataSBITAresultsinaright-to-usesubscriptionasset—anintangibleasset—
and a corresponding subscription liability; provides the capitalization criteria for outlays other than subscription
payments, including implementation costs of a SBITA; and requires note disclosures regarding a SBITA. Changes
adoptedtoconformtotheprovisionsofthisStatementwereappliedretroactivelybyrestatingthefinancialstatements
fortheearliestperiodpresented,August31,2022,andrelateddisclosuresinNotes1,9,11,12,20,and21.
Otherthantheportion of this statement implemented in 2022, the remainderofGASBStatement No. 99, Omnibus
2022, is effective in 2023 and 2024. The requirements related to leases, PPPs, and SBITAs are effective 2023. The
applicationofthisportionofthestatementhadnoeffectontheSystem’snetpositionorchangesinnetposition.
38
TheeffectoftheimplementationofGASBStatementNo.94and96ontheSystem’sfinancialstatementsfortheyear
endedAugust31,2022wasasfollows:
AsReportedin
FiscalYear2022
GASBStatement
No.94Restatement
GASBStatement
No.96Restatement
Restated
FiscalYear2022
AssetsandDeferredOutflows
TotalCurrentAssets $ 11,474,182,132 4,202,465  (6,666,853) 11,471,717,744
TotalNoncurrentAssets 94,709,746,366 387,175,087  114,243,041  95,211,164,494
TotalAssets 106,183,928,498 391,377,552  107,576,188  106,682,882,238
TotalDeferredOutflowsofResources 5,546,067,549 —  —  5,546,067,549
TotalAssetsandDeferredOutflows $ 111,729,996,047 391,377,552  107,576,188  112,228,949,787
LiabilitiesandDeferredInflows
TotalCurrentLiabilities $ 11,120,163,187 (8,353,452) 41,675,449  11,153,485,184
TotalNoncurrentLiabilities 29,519,166,256 —  53,138,823  29,572,305,079
TotalLiabilities 40,639,329,443 (8,353,452) 94,814,272  40,725,790,263
TotalDeferredInflowsofResources 4,420,174,296 393,893,594  —  4,814,067,890
TotalLiabilitiesandDeferredInflows $ 45,059,503,739 385,540,142  94,814,272  45,539,858,153
NetPosition
NetInvestmentinCapitalAssets $ 6,543,836,872 7,045,825  20,088,183  6,570,970,880
Restricted:
Nonexpendable 36,029,323,644 —  —  36,029,323,644
Expendable 21,146,284,170 —  (539,780) 21,145,744,390
Unrestricted 2,951,047,622 (1,208,415) (6,786,487) 2,943,052,720
TotalNetPosition $ 66,670,492,308 5,837,410  12,761,916  66,689,091,634
AsReportedin
FiscalYear2022
GASBStatement
No.94Restatement
GASBStatement
No.96Restatement
Restated
FiscalYear2022
TotalOperatingRevenues $ 19,847,504,034 6,309,923  —  19,853,813,957
TotalOperatingExpenses 24,589,880,632 647,452 (13,144,718) 24,577,383,366
OperatingIncome(Loss) (4,742,376,598) 5,662,471  13,144,718  (4,723,569,409)
NetNonoperatingRevenues(Expenses) 4,423,699,179 174,938  (382,801) 4,423,491,316
Income(Loss)BeforeOtherChanges (318,677,419) 5,837,409  12,761,917  (300,078,093)
OtherChanges 116,730,751 —  —  116,730,751
ChangeinNetPosition (201,946,668) 5,837,409  12,761,917  (183,347,342)
BeginningNetPosition 66,872,438,976 —  —  66,872,438,976
EndingNetPosition $ 66,670,492,308 5,837,409  12,761,917  66,689,091,634
AsReportedin
FiscalYear2022
GASBStatement
No.94Restatement
GASBStatement
No.96Restatement
Restated
FiscalYear2022
CashFlowsfromOperatingActivities $ (2,426,019,082) 7,518,338  60,742,220  (2,357,758,524)
CashFlowsfromNoncapitalFinancing
Activities 3,750,618,633 —  1  3,750,618,634
CashFlowsfromCapitalandRelatedFinancing
Activities (2,092,061,101) (7,693,276) (60,742,220) (2,160,496,597)
CashFlowsfromInvestingActivities 1,355,258,428 174,938  (1) 1,355,433,365
NetIncrease(Decrease)inCash 587,796,878 —  —  587,796,878
BeginningCashandCashEquivalents 4,920,978,316 —  —  4,920,978,316
EndingCashandCashEquivalents $ 5,508,775,194 —  —  5,508,775,194
39
CASHANDCASHEQUIVALENTS
Short-term,highlyliquidinvestmentswithmaturitiesofthreemonthsorlesswhenpurchasedaregenerallyconsidered
cash and cash equivalents. It is the System’s policy to exclude items that meet this definition if they are part of an
investmentpool,whichhasaninvestmenthorizonofoneyearorgreater.Therefore,highlyliquidinvestmentsthatare
partofthePermanentUniversityFund(PUF),GeneralEndowmentFund(GEF)andIntermediateTermFund(ITF)are
not considered cash and cash equivalents. Additionally, endowments invested in money market accounts are also
excludedfromCashandCashEquivalentsastheintentistoinvestthesefundsformorethanoneyear.Cashheldinthe
StatetreasuryforthePUF,thePermanentHealthFund(PHF)andtheAvailableUniversityFund(AUF)areconsidered
cashandcash equivalents.Otherhighly liquidinvestmentsof thesemajorfunds whichareheld inpooledfundsand
invested with custodians are not considered cash and cash equivalents according to the investment policies of the
System.RestrictedcashandcashequivalentsincludecashheldintheStatetreasuryforthePUFandPHFandrestricted
sourcesoffundsusedforconstructionofcapitalassetsaswellasfundsheldfordebtservice.TheSystemholdsbond
proceedsinrestrictedinvestmentstobedisbursedtotheinstitutionstosupportcapitalprojectsonacostreimbursable
basis.
BALANCEINSTATEAPPROPRIATIONS
ThisitemrepresentsthebalanceofGeneralRevenuefundsatAugust31ascalculatedintheTexasStateComptroller’s
GeneralRevenueReconciliation.
DERIVATIVEFINANCIALINSTRUMENTS
Derivative instruments are recorded at fair value. The fair value of derivative instruments is recorded as either an
investment, an investment derivative liability, a hedging derivative asset or a hedging derivative liability on the
statement of net position. The valuation of investment derivative instruments is discussed in the Investments
disclosure below. The System has calculated the fair value of the interest rate swaps using a forecast of expected
discountedfuturenetcashflowsandconsideredthenonperformanceriskoftheparties.
TheSystemhasenteredintointerestrateswapagreementswithvariouscounterparties,allofwhicharehighlyrated
financialinstitutions,tomanagevariousrisksassociatedwiththeSystem’sdebtprograms.EachoftheSystem’sinterest
rateswapsisacontractualagreemententeredintobetweentheSystemandacounterpartyunderwhicheachparty
agreestoexchangeperiodicfixedorvariablepayments,baseduponastatednotionalamount,overthestatedlifeof
theagreement.Thenetdifferentialpaidorreceivedisrecognizedoverthelifeoftheagreementasanadjustmentto
interestexpense.
Interest rate swaps determined to be hedging derivative instruments are designated as cash flow hedges. Hedging
derivativeinstrumentassetsand hedgingderivative instrumentliabilities arerecorded onthe System’sstatement of
netposition.Underhedgeaccounting,forderivativeinstrumentsthataredeterminedtobeeffective,changesinthe
fairvalueofhedgingderivativeinstrumentsareconsideredtobedeferredinflows(forhedgingderivativeinstruments
withpositivefairvalues)ordeferredoutflows(forhedgingderivativeinstrumentswithnegativefairvalues).
Changes in the fair value of derivative instruments that are not effective are recorded as investment income in the
statementofrevenues,expensesandchangesinnetposition.
INVESTMENTS
ThemajorityoftheinvestmentsoftheSystem,exceptforPUFlands,aremanagedbyUTIMCO,aprivateinvestment
corporation that provides services to the System and its related foundations. All investments are reported as
noncurrent as these funds have an investment horizon extending beyond one year. Restricted investments include
investments restricted by legal or contractual requirements, including those related to donors and constitutional
restrictions.
TheauditedfinancialstatementsofthefundsmanagedbyUTIMCOmaybefoundonUTIMCO’swebsiteandinquiries
maybedirectedtoUTIMCO.
Investmentsarereportedatfairvalue.Fairvalueisdefinedasthepricethatwouldbereceivedtosellanassetorpaid
totransferaliabilityinanorderlytransactionbetweentwomarketparticipantsatthemeasurementdate.
The System is authorized to invest funds, as provided in Section 51.0031 of the Texas Education Code and the
Constitution of the State of Texas, under prudent investor investment standards. Such investments include various
fixedincomeandequitytypesecurities,hedgefunds,publicmarketfunds,andprivateinvestments.Theinvestmentsof
theSystemaregovernedbyvariousinvestmentpoliciesapprovedbytheU.T.SystemBoardofRegents.
40
CONTRIBUTIONSRECEIVABLE
Current and noncurrent contributions receivable are amounts pledged to the System by donors, net of allowances.
Multi-yeargift pledges greater than$10,000must be reported atthediscounted present value. Atthebeginning of
eachfiscalyear,theSystemre-establishesthescaleofdiscountratesapplicableforpresentvaluingnewmulti-yeargift
pledgesthatarereceivedduringthenewfiscalyear.ThescaleofdiscountratesisbaseduponU.S.TreasuryNotesand
BondsaskedyieldsaslistedintheWallStreetJournalonthefirstdayofthefiscalyear.Existinggiftpledgesarenot
recalculatedsincethesepledgeswerepreviouslycalculatedathistoricaldiscountrates.
INVENTORIES
Inventories, consisting primarily of supplies and merchandise for resale, are valued at cost, typically based on the
specificidentification,weightedaverageorfirst-in,first-outmethods,whicharenotinexcessofnetrealizablevalue.
RESTRICTEDASSETS
Restrictedassets include fundsrestrictedby legal orcontractualrequirements, includingthoserelated to sponsored
programs,donors,constitutionalrestrictions,bondcovenants,andloanagreements.
LOANSANDCONTRACTS
Currentandnoncurrentloansandcontractsarereceivables,netofallowances,relatedtostudentloans.
SECURITIESLENDINGCOLLATERALANDOBLIGATIONS
Thecollateralsecuredforsecuritieslentarereportedasanassetonthestatementofnetposition.Theobligationsfor
securities lent are reported as a liability on the statement of net position that directly offsets the cash collateral
received from brokers or dealers in exchange for securities loaned. The costs of securities lending transactions are
reportedaspartofinvestmentincomeinthestatementofrevenues,expensesandchangesinnetposition.SeeNote6
fordetailsregardingthesecuritieslendingprogram.
LEASERECEIVABLES
LeasereceivablesarerecordedbytheSystematthepresentvalueofleasepaymentsexpectedtobereceivedunderall
leases other than short term leases, regulated leases, or leases of assets that are classified as investments. Lease
receivablesaresubsequentlyreducedoverthelifeoftheleaseascashisreceivedintheapplicablereportingperiod.
Shorttermleases,thosewithamaximumperiodof12months,arerecognizedascollected.
P3RECEIVABLE
TheSystem recognizes a receivablefor payments to be receivedfrom the operator underpublic-privateand public-
public partnerships (PPPs or P3s). The receivable for PPP installment payments is initially measured at the present
value of PPP installment payments expected to be received over the term reduced by any provision for estimated
uncollectible amounts. Present value of PPP installment payments are discounted based on a borrowing rate
determinedbytheSystem.
ForP3arrangementsthatdonotmeetthe criteriatobea serviceconcessionarrangement,theSystemrecognizesa
receivable for underlying PPP assets when a new asset has been purchased or constructed by an operator and the
System is to receive the asset during or at the end of the PPP term. The receivable for the underlying PPP asset is
measuredattheoperator’sestimatedcarryingvalueoftheunderlingPPPassetasoftheexpecteddateofthetransfer
inownershipfromtheoperatortotheSystem.
CAPITALANDINTANGIBLEASSETS
Capitalassetsarerecordedatcostatthedateofacquisitionoracquisitionvalueatthedateofdonationinthecaseof
gifts.TheSystemfollows the State’s capitalization policy with a cost equal to or greaterthan$5,000for equipment
items, $100,000 for buildings, building improvements and improvements other than buildings, and $500,000 for
infrastructureitems,andanestimatedusefullifeofgreaterthanoneyear.Purchasesoflibrarybooksarecapitalized.
Routine repairs and maintenance are charged to operating expense in the year in which the expense is incurred.
Outlaysforconstructioninprogressarecapitalizedasincurred.Thethresholdsforsoftwareare$100,000forpurchased
softwareand$1,000,000forinternallydevelopedsoftwareincludingEnterpriseResourcePlanningreplacements.The
Systemcapitalizesbutdoesnotdepreciateworksofartandhistoricaltreasuresthatareheldforexhibition,education,
researchandpublicservice.Thesecollectionsareprotectedandpreserved.
Right-of-Use(ROU)intangibleassetsarerecognizedatthecontract’scommencementdateandrepresenttheSystem's
righttouseanunderlyingassetforthecontractterm.ROUassetsaremeasuredattheinitialvalueoftheliabilityplus
anypaymentsmadeatorbeforecommencementandinitialdirectcosts.
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Depreciationandamortizationformostcapitalandintangibleassetsiscomputedusingthestraight-linemethodover
theestimatedusefullivesoftheassets,generallytwotofifteenyearsforequipmentitems,fiveyearsforsoftware,six
yearsforEnterpriseResourcePlanningreplacements,fifteenyearsforlibrarybooks,tentofiftyyearsforbuildingsand
their components and fifteen to forty years for infrastructure elements. Amortization for ROU intangible assets is
computedusingthestraight-linemethodovertheshorterofthecontracttermorestimatedusefullivesoftheassets;
butiftheunderlyingcontractcontainsapurchaseoptiondeterminedtobereasonablycertainofbeingexercised,the
ROUintangibleassetisamortizedovertheestimatedusefullifeoftheasset.
OTHERASSETS
Othercurrentassetsareprimarilymadeupofprepaidexpenses,whileothernoncurrentassetsareprimarilymadeup
of equity interests in joint ventures that do not meet the definition of an investment and beneficial interests in
irrevocablesplit-interestagreementsinwhichathird-partyistheintermediary.
DEFERREDOUTFLOWS
Deferredoutflowsconsistofthefairvalueofhedgingderivativeinstrumentsinaliabilityposition,unamortizedlosses
onrefundingofdebt,unamortizedinterestratelockterminationpayments,certainchangesinthepensionandOPEB
liabilities, unamortized portions of asset retirement obligation, and excess consideration paid in a government
acquisition.Changesinfairvalueforeffectivehedgesthatareachievedwithderivativeinstrumentsaretobereported
as deferred inflows and deferred outflows in the statement of net position. For debt refundings, the difference
between the reacquisition price and the net carrying amount of the old debt is deferred and reported as deferred
outflowsordeferredinflows.Thegainorlossisamortized,usingthestraight-linemethod,overtheremaininglifeof
theolddebtorthelifeofthenewdebt,whicheverisshorter,inthestatementofrevenues,expensesandchangesin
netpositionas a componentofinterestexpense.When a Treasury Lock is used to hedge interest rate exposure on
bonds, the lock termination payment is recorded as a deferred outflow and is amortized, using the straight-line
method,overtheremaininglifeoftherelateddebtinthestatementofrevenues,expensesandchangesinnetposition
asacomponentofinterestexpense.Changesinthepensionliabilitiesnotincludedinpensionexpensearerequiredto
be reported as deferred outflows of resources or deferred inflows of resources related to pensions, and employer
contributions subsequent to the measurement date of the pension liabilities are also required to be reported as
deferredoutflowsofresources.Similarly,changesinthetotalOPEBliabilitynotincludedinOPEBexpensearerequired
to be reported as deferred outflows of resources or deferred inflows of resources related to OPEB, and employer
contributions subsequent to the measurement date of the total OPEB liability are also required to be reported as
deferred outflows of resources. For asset retirement obligations, deferred outflows are recognized for anticipated
clean-up and decommissioning costs, amortized over the life of the related assets. Deferred outflows are also
recognizedforexcessconsiderationpaidinagovernmentacquisition,amortizedovertheestimatedservicelife.
UNEARNEDREVENUE
UnearnedrevenuerepresentsrevenuessuchastuitionrecordedinAugustforthefallsemesterandpaymentsreceived
inadvanceforsponsoredprograms.
ASSETSHELDFOROTHERS
Assets held for others is the liability offsetting the assets held for the University of Texas System Governmental
RetirementArrangementexcessbenefitplanmanagedbytheSystemdiscussedinNote18.
LIABILITYTOBENEFICIARIES
TheSystemholdsnumerousirrevocablecharitableremaindertrustsandapooledincomefund.Together,theseassets
arereflectedintheaccompanyingconsolidatedfinancialstatementswithinrestrictedinvestments.
The charitable remainder trusts designate the U. T. System Board of Regents as both trustee and remainder
beneficiary.TheSystemisrequiredtopaytothedonors(orotherdonor-designatedincomebeneficiaries)eitherafixed
amount or the lesser of a fixed percentage of the fair value of the trusts’ assets or the trusts’ income during the
beneficiaries’ lives. Trust assets are measured at acquisition value when received and at fair value thereafter. A
correspondingliabilitytobeneficiariesismeasuredatthepresentvalueofexpectedfuturecashflowstobepaidtothe
beneficiaries based upon the applicable federal rate on the gift date. Upon death of the income beneficiaries,
substantiallyalloftheprincipalbalancepassestotheSystemtobeusedinaccordancewiththedonors’restrictions.
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Thepooledincomefundwasformedwithcontributionsfromseveraldonors.Thecontributedassetsareinvestedand
managedbyUTIMCO.Donors(ordesignatedbeneficiaries)periodicallyreceive,duringtheirlives,ashareoftheincome
earned on the fund proportionate to the value of their contributions to the fund. Upon death of the income
beneficiaries,substantiallyalloftheprincipalbalancepassestotheSystemtobeusedinaccordancewiththedonors’
restrictions.Contributionrevenueis measuredat theacquisition valueofthe assetsreceived, discountedfor aterm
equaltothelifeexpectanciesofthebeneficiaries.
TOTALOPEBLIABILITY
OPEB are provided to the System’s retirees under the U. T. System Employee Group Insurance Program (EGIP). The
EGIP is a single-employer defined benefit OPEB plan. The System and member contribution rates are determined
annuallybytheSystembasedontherecommendationsoftheOfficeofEmployeeBenefitsstaffandconsultingactuary.
Thecontributionratesaredeterminedbasedonthebenefitandadministrativecostsexpectedtobeincurredand(i)
the funds appropriated and (ii) the funding policy established by the Texas Legislature in connection with benefits
providedthroughtheEGIP.TheSystemrevisesbenefitswhennecessarytomatchexpectedbenefitandadministrative
costs with available revenue. The plan is operated on a pay-as-you-go basis. The OPEB plan described herein is not
administeredthroughatrust.
PENSIONLIABILITIES
NetPensionLiability
The System participates in a cost-sharing multiple-employer defined benefit pension plan with a special funding
situation administeredby the Teacher RetirementSystemofTexas (TRS). TRS is primarily funded through State and
employeecontributions.TheSystemreceivesaproportionalshareofthenetpensionliability,pension-relateddeferred
outflowsandpension-relateddeferredinflowsfromtheTexasComptrollerofPublicAccounts.
TotalPensionLiability
M.D.AndersonCancerCenterparticipatesinasingle-employerdefinedbenefitdeferredcompensationpensionplan
primarily for physicians, the Physicians Referral Service Supplemental Retirement Plan and Retirement Benefit Plan
(SRP/RBPPlan).TheSRP/RBPPlanisanonqualifiedplandescribedbySection457(f)oftheInternalRevenueCodeof
1986(IRC),asamended.TheSRP/RBPPlanisfundedthroughcontributionsfromM.D.AndersonCancerCenterandis
administeredthroughatrustthatisnotprotectedfromthecreditorsofM.D.AndersonCancerCenter.TheSRP/RBP
Plan assets are measured at fair value and presented as restricted investments in the System’s statement of net
position.Thetotalpensionliabilityandrelateddeferredoutflowsofresourcesanddeferredinflowsofresourcesare
measuredandreportedinaccordancewithGASBStatementNo.73,AccountingandFinancialReportingforPensions
and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of
GASBStatements67and68.
NOTES,LOANS,ANDLEASESPAYABLE
LeaseLiability
Leaseliabilities,includedaspartof notes,loans,and leasespayableonthestatementof netposition,representthe
System's obligation to make lease payments arising from leases other than short term leases. Lease liabilities are
recognizedattheleasecommencementdatebasedonthepresentvalueoffutureleasepaymentsovertheremaining
leaseterm.Shorttermleases,thosewithamaximumperiodof12months,areexpensedasincurred.
SubscriptionLiability
Subscriptionliabilities,includedaspartofnotes,loans,andleasespayableonthestatementofnetposition,represent
theSystem’sobligationtomakepaymentstothevendor,measuredatthepresentvalueofsubscriptionpaymentsover
theremainingterm.SubscriptionliabilitiesarerecognizedattheSBITAcommencementdatebaseduponthepresent
valueoffuturesubscriptionpaymentsovertheremainingSBITAterm.Shorttermsubscriptionliabilities,thosewitha
maximumperiodof12months(orless),areexpensedasincurred.
ASSETRETIREMENTOBLIGATION
Theliabilityrelatedtoclean-upanddecommissioningofitemsusingradiationsuchasbroadscopelicenses,cyclotrons,
and nuclear reactors is reported as asset retirement obligation. The liability is measured using best estimates of
expectedoutlaysforclean-upanddecommissioningcosts.
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DEFERREDINFLOWS
Deferredinflowsconsistofthefairvalueofhedgingderivativeinstrumentsinanassetposition,unamortizedgainson
refunding of debt, certain changes in the pension and total OPEB liabilities, beneficial interests in irrevocable split-
interestagreements,futureperiodrevenuesfromleases,andfutureperiodrevenuesfromPPPs.Changesinfairvalue
foreffectivehedgesthatareachievedwithderivativeinstrumentsaretobereportedasdeferredinflowsanddeferred
outflowsinthestatementofnetposition.Fordebtrefundings,thedifferencebetweenthereacquisitionpriceandthe
netcarryingamountoftheolddebtisdeferredandreportedasdeferredoutflowsordeferredinflows.Thegainorloss
is amortized, using the straight-line method, over the remaining life of the old debt or the life of the new debt,
whicheverisshorter,inthestatementofrevenues,expensesandchangesinnetpositionasacomponentofinterest
expense.Changes in thepensionliabilities not includedinpension expense arerequiredto be reportedas deferred
outflowsofresourcesordeferredinflowsofresourcesrelatedtopensions.Similarly,changesinthetotalOPEBliability
not included in OPEB expense are required to be reportedas deferredoutflowsof resourcesordeferredinflowsof
resources related to OPEB. For irrevocable split-interest agreements in which U. T. System has an unconditional
beneficialinterest,the fairvalue ofthe giftbeneficial interestis deferredandreportedasdeferred inflowsuntil the
resources become applicable to the reporting period. Future period revenues from leases where the System is the
lessor are recorded as deferred inflows and amortized using the straight-line method over the lease term. Future
period revenues from PPPs where the System is the transferor are recorded as deferred inflows and are amortized
usingthestraight-linemethodoverthePPPterm.
NETPOSITION–EnterpriseFunds
TheSystemhasclassifiedresourcesintothefollowingthreenetpositioncategories:
NetInvestmentinCapitalAssets
Capital assets, net of accumulated depreciation and outstanding principal balances of debt and other liabilities and
deferredinflowsofresourcesattributabletotheacquisition,constructionorimprovementofthoseassets.
Restricted:
Nonexpendable
Netpositionsubjecttoexternally imposedstipulationsthatrequirethe amountsbe maintainedinperpetuitybythe
System.SuchassetsincludetheSystem’spermanentendowmentfunds.
Expendable
NetpositionwhoseusebytheSystemissubjecttoexternallyimposedstipulationsthatcanbefulfilledbyactionsofthe
Systempursuanttothosestipulationsorthatexpirewiththepassageoftime.
Unrestricted
Net position that is not subject to externally imposed stipulations. Unrestricted net position may be designated for
special purposes by action of management or the U. T. System Board of Regents. Substantially all unrestricted net
position is designated for academic programs, patient care, research programs and initiatives, and capital programs
(seeNote21fordetailsonunrestrictednetposition).
Whenanexpenseisincurredthatcanbepaidusingeitherrestrictedorunrestrictedresources,theSystemaddresses
eachsituationonacase-by-casebasispriortodeterminingtheresourcestobeusedtosatisfytheobligation.Generally,
theSystem’spolicyistofirstapplytheexpensetowardsrestrictedresourcesandthentowardsunrestrictedresources.
NETPOSITION–FiduciaryFunds
TheSystemfiduciaryfundsclassifyresourcesintothefollowingtwonetpositioncategories:
RestrictedforPoolParticipants
Netpositionrelatedtocustodialfunds-externalinvestmentpool
RestrictedforIndividuals,Organizations,andOtherGovernments
Netpositionrelatedtocustodialfunds-other
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REVENUESANDEXPENSES
Operating revenues include activities such as student tuition and fees; net sales and services of hospitals; net
professionalfees;netsalesandservicesofauxiliaryenterprises;theexchangebasisfederal,stateandlocalgrantsand
contracts.Operatingexpensesincludesalariesandwages,payrollrelatedcosts,materialsandsupplies,depreciation,
othercontractedservices,pensionexpense,postemploymentbenefits,andscholarshipsandfellowships.Inaddition,all
changestoincurredbutnotreportedliabilitiesrelatedtoinsuranceprogramsarereflectedasoperating.
Nonoperating revenues include activities such as gifts and contributions, insurance recoveries received in years
subsequenttotheassociatedloss,Stateappropriations,investmentincome,thenonexchangebasisfederalandstate
grants and contracts, and other revenue sources that are defined as nonoperating revenues by GASB. The System’s
institutionsarethenamedbeneficiariesincertainlawsuits,wills,trusts,andinsurancepolicies.TheSystemdoesnot
recognizethesepotentialrefunds,giftsandcontributionsuntilrealized.Nonoperatingexpensesincludeactivitiessuch
as interest expense on capital asset financings, and other expenses that are defined as nonoperating expenses by
GASB.
SCHOLARSHIPALLOWANCESANDSTUDENTAID
FinancialaidtostudentsisreportedinthefinancialstatementsasprescribedbytheNationalAssociationofCollegeand
University Business Officers (NACUBO). Certain aid (student loans, funds provided to students as awarded by third
partiesandFederalDirectLending)isaccountedforasthird-partypayments(creditedtothestudent’saccountasifthe
studentmadethepayment).Allotheraidisreflectedinthefinancialstatementsasoperatingexpenseorscholarship
allowances,whichreducerevenues.Theamountreportedasoperatingexpenserepresentstheportionofaidthatwas
provided to the student in the form of cash. Scholarship allowances represent the portion of aid provided to the
studentintheformofreducedtuition.Underthealternativemethod,theseamountsarecomputedonanentity-wide
basisbyallocatingcashpaymentstostudents,excludingpaymentsforservices,ontheratiooftotalaidtotheaidnot
consideredtobethirdpartyaid.
STATEWIDEINTERFUNDTRANSFERSANDINTERFUNDPAYABLES
InaccordancewiththeprovisionssetforthinArticle7,Section18oftheTexasConstitution,theSystemtransfersone-
third of the annual earnings of the PUF investments and lands to the Texas A&M University System (TAMUS). In
additiontothetransferofthecurrentyearearningsin2023and2022of$450,227,364and$418,847,698,respectively,
theSystemrecordeda liabilityof$1,567,537,241and$1,481,155,516atAugust31,2023and2022,respectively,for
futureamountsduetoTAMUSfromthePUFtocoverprincipalonoutstandingPUFbondsandnotesissuedbyTAMUS.
This liability is reported as current and noncurrent statewide interfund payable on the statement of net position.
Additionaldetails relatedto theoperations ofthe PUFcan befoundin Note8. Alsoincluded instatewideinterfund
payables as of August 31, 2023 and 2022 is $409,842 and $497,261, respectively, related to the revolving loan
programsadministeredbytheTexasStateComptroller’sOffice.
UNCOMPENSATEDCAREANDCHARITYCARE
The System’s health-related institutions and medical schools provide uncompensated care to patients who meet
certaincriteria.Uncompensatedcareincludestheunreimbursedcostsfortheuninsuredandtheunderinsuredaswell
asthe unreimbursedcostsfrom government-sponsoredhealth programs. Tocalculate uncompensatedcare,charges
are converted to costs which are offset by appropriate patient specific and lump sum funding. Hospital charges are
convertedtocostbytheapplicationoftheMedicarecosttochargeratio,ascalculatedinthemostrecentMedicare
cost report. Since a standard cost report does not exist for physician charges, a proxy cost to charge ratio was
developed through a process involving all Texas public academic medical centers and the State Auditor’s Office.
Uncompensatedcarecostsamountedto$1,428,236,852and$1,179,418,717for2023and2022,respectively.
GASB requires health-related institutions to report the cost of providing “charity care.” The American Institute of
CertifiedPublicAccountants(AICPA)definescharitycareascareforwhichhospitalsneverexpectedtobereimbursed.
Charitycareoccurswhenapatientappliestothehospitalforfinancialassistanceandthehospitalwaivesallorpartof
itschargesinaccordancewiththehospital’sestablishedfinancialassistancepolicy.Thecostofcharitycareiscalculated
usingtheuncompensatedcarecalculationmethodologydiscussedabove.Charitycarecostsamountedto$169,371,268
and$180,340,866for2023and2022,respectively.
NETPATIENTSERVICEREVENUE
TheSystem’shealth-relatedinstitutionsandmedicalschoolshaveagreementswiththird-partypayorsthatprovidefor
payments to these institutions at amounts different from their established rates. A summary of the payment
arrangementswithmajorthird-partypayorsfollows:
45
Medicare
U. T. Southwestern Medical Center’s, U. T. Medical Branch - Galveston’s and U. T. Health Science Center - Tyler’s
inpatient acute care services and outpatient services rendered to Medicare program beneficiaries are reimbursed
under a prospective reimbursement methodology. Also, additional reimbursement is received for graduate medical
education, disproportionate share, bad debts and other reimbursable costs, as defined, under a variety of payment
methodologies.
M.D.Anderson’sinpatientacutecareservicesrenderedtoMedicareprogrambeneficiariesarepaidbasedonacost
reimbursementmethodologythatislimitedbyafacility-specificamountperdischarge.Thefinalreimbursementalso
includesacalculationofanincentiveorreliefpaymentdeterminedthroughacomparisonofthefacility’scurrentyear
costto thefacility-specificcostperdischarge.Certainoutpatient servicesand definedcapital andmedical education
costsrelatedtoMedicarebeneficiariesarepaidbasedonacostreimbursementmethodology.EffectiveAugust1,2000,
the Medicare program implemented a prospective payment system for outpatient services. However, as M. D.
Anderson is designated as a cancer hospital, the Medicare program provides for a “hold-harmless” payment that is
equalto thedifferencebetweentheprospectivelydeterminedamounts andthe currentyear adjustedcost (i.e.,the
current year adjusted cost is determined through application of a payment to cost ratio, which is derived from a
previous Medicarecostreportto the currentyearactual cost). M. D. Anderson is reimbursed for cost reimbursable
itemsatatentativeratewithfinalsettlementdeterminedaftersubmissionofannualcostreportsandauditsthereofby
theMedicarefiscalintermediary.
Thephysicianpracticesatotherinstitutions–U.T.HealthScienceCenter-Houston,U.T.HealthScienceCenter–San
Antonio,U.T.AustinDellMedicalSchool,andU.T.RioGrandeValley–arereimbursedbyMedicareaccordingtothe
MedicarePhysicianFeeScheduleand/orvariousMedicareAlternativePaymentModels.
Medicaid
TheSystem’shealth-relatedinstitutions’hospitalsarereimbursedforcostreimbursableitemsatatentativeratewith
final settlement determined after submission of annual cost reports by the System’s health-related institutions and
auditsthereofbytheMedicaidfiscalintermediary.InpatientservicesrenderedtoMedicaidprogrambeneficiariesare
reimbursed based on a TEFRA (Tax Equity and Fiscal Responsibility Act) methodology. Certain outpatient services
renderedtoMedicaidprogrambeneficiariesarereimbursedunderacostreimbursementmethodology.
The System’s health-related institutions have also entered into payment agreements with certain commercial,
MedicaidandMedicarepayorswhichofferbenefitplansforhealthmaintenanceorganizations,andpreferredprovider
organizations. The basis for payment to the System’s health-related institutions under these agreements includes
prospectively determined rates for inpatient and outpatient services. The System’s health-related institutions
recognizedbaddebtexpenseof$520,966,225and$512,303,847in2023and2022,respectively.
USEOFESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect the reported amounts of
assetsandliabilitiesanddisclosureofcontingentassetsandliabilitiesatthedateofthefinancialstatements.Estimates
alsoaffectthereportedamountsofrevenuesandexpensesduringthereportingperiod.Actualresultscoulddifferfrom
thoseestimates.
46
5. DisaggregationofOtherReceivableBalances
NetotherreceivablesatAugust31,2023and2022fortheSystemaredetailedbytypeasfollows:
2023 2022
ReceivablesRelatedtoInvestments $ 317,279,526 396,060,459
ReceivablesRelatedtoGifts,GrantsandSponsoredPrograms 193,971,324 79,735,806
ReceivablesRelatedtoExternalParties/OtherCompanies 264,284,754 173,132,614
ReceivablesRelatedtoAuxiliaryEnterprises 38,842,943 36,379,065
ReceivablesRelatedtoPayroll 3,551,258 9,616,780
ReceivablesRelatedtoPatents 235,000 825,632
ReceivablesRelatedtoTravel 1,260,967 1,352,490
ReceivablesRelatedtoLoanFundsandFinancialAid 7,182,358 4,456,317
ReceivablesRelatedtoOtherVariousActivities 56,792,173 49,885,200
Total $ 883,400,303 751,444,363
In addition, net other receivables at August 31, 2023 and 2022 for the System’s fiduciary funds were $533,616 and
$1,761,807,respectively.
6. Deposits,InvestmentsandRepurchaseAgreements
DEPOSITSOFCASHINBANK
As of August 31, 2023 and 2022,the carrying amount of the System’s deposits was $66,237,194and $103,098,355,
respectively,aspresentedbelow:
2023 2022
CashandCashEquivalentsperStatementofCashFlowsandStatementofNetPosition $ 6,524,614,258 5,508,775,194
Less:CashinStateTreasury 1,381,704,404 1,268,126,557
RepurchaseAgreement–TexasTreasurySafekeepingTrustCo. 10,321,917 2,550,637
OtherCashEquivalentInvestments 5,040,478,597 4,057,590,726
Other 25,872,146 77,408,919
DepositsofCashinBank $ 66,237,194 103,098,355
Inaddition,cashandcashequivalentsatAugust31,2023and2022fortheSystem’sfiduciaryfundswere$1,928,948
and$1,888,492,respectively.
As of August 31, 2023 and 2022, the total bank balances held by System were $112,139,814 and $168,423,931,
respectively.
47
DEPOSITRISKS
CustodialCreditRisk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the
Systemwillnotbeabletorecoverdepositsorwillnotbeabletorecovercollateralsecuritiesthatareinthepossession
of an outside party. The System maintains depository relationships with various banking institutions. The System’s
policy is that all deposits are governed by a bank depository agreement between the System and the respective
bankinginstitution. State law requiresthat the System’sdeposits,to the extentsuchdeposits exceed themaximum
insured limit under deposit insurance provided by the Federal Deposit Insurance Corporation, shall at all times be
collateralizedwithgovernmentsecurities.
AsofAugust31,2023,U.T.HealthScienceCenteratTyler’sblendedcomponentunit,EastTexasQualityCareNetwork
(ETQCN),helddepositsthatwereexposedtocustodialcreditrisk.ETQCNhasnopoliciesregardingthesedeposits.As
of August 31, 2023, the bank balances exposed to custodial risk as uninsured and uncollateralized deposits were
$112,723. As of August 31, 2022, there were no System bank balances exposed to custodial risk as uninsured and
uncollateralizeddeposits.
INVESTMENTS
Investmentsarereportedatfairvalue.Fairvalueisdefinedasthepricethatwouldbereceivedtosellanassetorpaid
to transfer a liability in an orderly transaction between two market participants at the measurement date. GAAP
provides a hierarchy that prioritizes the inputs of fair value measurements based on the extent to which inputs to
valuationtechniques areobservablein themarketplace. Thehierarchyassigns ahigher prioritytoobservable inputs
thatreflectverifiableinformationobtainedfromindependentsources,andalowerprioritytounobservableinputsthat
wouldreflectmanagement’sassumptionsabouthowmarketparticipantswouldvalueanassetorliabilitybasedonthe
bestinformationavailable.Fairvaluemeasurementsmustmaximizetheuseofobservableinputsandminimizetheuse
ofunobservableinputs.
Thethreelevelsofthehierarchyofinputsusedtomeasurefairvalueareasfollows:
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities that are available at the
measurementdate.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
eitherdirectlyorindirectly.
Level3–Unobservableinputs.
The System’s investments with readily available fair values are primarily valued on the basis of market valuations
providedbyindependentpricingservices.
DebtsecuritiesheldbySystemincludeU.S.governmentandagencyobligations,corporateobligations,corporateasset
and mortgage-backed securities, and international obligations. U.S. government obligations valued based on
unadjusted prices in active markets are categorized as Level 1. Debt securities, including corporate obligations and
governmentalandinternationalobligationsarevaluedbaseduponpricessuppliedbyIntercontinentalExchangeData
Services and other major fixed income pricing services, external broker quotes and internal pricing matrices. Debt
securitiesvaluedbasedonmultiplequotationsormodelsutilizingobservablemarketinputsarecategorizedasLevel2;
otherwise,theywouldbecategorizedasLevel3.
Fixedincomemoneymarketandbondmutualfundsconsistprimarilyofmoneymarketinvestments,foreigncurrencies
andotherovernightfunds.InvestmentsinpubliclylistedmoneymarketfundsarecategorizedasLevel1.
Mutual funds include a large portion of the holdings for the University of Texas System Governmental Retirement
Arrangement(UTGRA),discussedinNote18.AmajorityoftheunderlyinginvestmentsinUTGRAarevaluedbasedon
the closing price on the primary exchange on which they are traded and are classified as Level 1. The remaining
holdingsareclassifiedasLevels2and3.
48
Equity securities, including common and preferred stocks, fair values are based on the closing price on the primary
exchangeonwhichtheyaretraded(ifaclosingpriceisnotavailable,theaverageofthelastreportedbidandaskprice
isused).Whenthesesecuritiesareactivelytraded,andvaluationadjustmentsarenotapplied,theyarecategorizedas
Level1.Intheeventthatastockisnotactivelytradedoraclosingpriceisunavailableonanationalorinternational
securitiesexchange,thelastavailablepricepertheexchangewouldbeused,andthesecuritywouldbecategorizedas
Level2.
OthercommingledfundsatfairvalueincludefixedincomeandU.S.equityfunds.Internationalothercommingledfunds
atfairvalue includenon-U.S.developed equity,emergingmarkets,real estateandnatural resources.Fairvaluesare
basedontheclosingpriceontheprimaryexchangeonwhichthesecurityistraded(ifaclosingpriceisnotavailable,
theaverageofthelastreportedbidandaskpriceisused).InvestmentsvaluedassuchareclassifiedasLevel1.
Realestateand otherinvestments includerealestate,commoditiesand theassetpositionsofinvestmentderivative
instruments.ThefairvalueofthePUFland’sinterestinoilandgasisbasedonathirdpartyreservestudyofproved,
probable,andpossiblereserves.Thepresentvalueoftheroyaltycashflowsiscalculatedbyapplyinga10%discount
rateto future expectedproductionvolumes of oil andgasbased on the priceofoil and gas onAugust31. The PUF
lands’ surface interests are reported at the price per acre from the American Society of Farm Managers and Rural
Appraisers. The PUF lands are categorized as Level 3 in the fair value hierarchy. The remaining minerals, the trust
minerals,becauseofsize,distribution,andlimitedproductionhistoriesaregenerallyvaluedatthreetimestheprevious
12months’revenue.Asaruleofthumb,thismeasurehasbeenusedhistoricallytodeterminethesellingpriceofthese
types of properties by willing parties. Other real estate holdings are reported by one of the following methods of
valuation: the latest available appraised amount as determined by an independent State certified or other licensed
appraiser,taxassessmentsuseforrealestateinvestmentswithvaluesthatarenotsignificantorbyanyothergenerally
accepted industry standard. All other real estate is categorized as Level 3 in the fair value hierarchy, with a small
amountvaluedusingnetassetvalue.
All derivative instrument investments are categorized as Level 2 in the fair value hierarchy, except for some of the
purchasedoptionswhicharecategorizedasLevel1.ThefairvaluesoftheinterestrateswapsonU.T.System’sdebt
are calculated using a forecast of expected discounted future net cash flows. Other swaps are fair valued by using
independent broker quotes or using models with primarily externally verifiable model inputs. Foreign exchange
contractsarefairvaluedatclosingmarketpricesonthevaluationdate.
Alternativeinvestmentsincludeprivateequitysecuritiesandlimitedpartnerships,orprivateinvestmentfunds.Equity
securitiesrelatedtonon-publicequityinvestmentsarevaluedusingavarietyofmethods,includinginformationfrom
recentrounds of financing,theGuideline Public Companymethod, the DiscountedCashFlow method, theCommon
StockEquivalentmethodandtheOption-Pricingmethod.Thefairvalueofprivateinvestmentfunds,whichconsistof
non-regulated investment funds and various other investment vehicles, are estimated by management using the
investment’s capital account balance at the closest available reporting date, as communicated by the investment
manager, adjusted for contributions and withdrawals subsequent to the latest available reporting date as well as
considerationofanyotherinformation,whichhasbeenprovidedbytheinvestmentmanagerorothersources.These
investmentsareclassifiedasLevel3.
Miscellaneous investments primarily include municipal bonds, valued on multiple quotations or models utilizing
observablemarketinputs,andarecategorizedasLevel2.Investmentswithfairvaluesbasedontheclosingpriceonthe
primaryexchangeonwhichtheyaretradedarecategorizedasLevel1.
GAAPpermitsmanagementtofairvaluecertaininvestmentsthatdonothaveareadilydeterminablefairvalueusing
the investment’s net asset value per share or the System’s ownership interest in partners’ capital as a practical
expedient.Investmentsvaluedinthismannerarenotclassifiedinthefairvaluehierarchy.
49
ThefollowingtablesreflectfairvaluemeasurementsofinvestmentsasofAugust31,2023and2022,respectively,as
categorizedbylevelofthefairvaluehierarchy,andincludeboththeSystem’senterpriseandfiduciaryfunds:
InvestmentsbyFairValueLevel:
DebtSecurities:
U.S.GovernmentTreasurySecurities $ 2,436,951,905 2,436,951,905 — —
U.S.GovernmentTreasuryTIPS 1,504,143,392 1,504,143,392 — —
U.S.GovernmentAgencyObligations 360,446,554 — 360,446,554 —
CorporateObligations 84,962,471 — 84,773,003 189,468
CorporateAssetandMortgage-BackedSecurities 179,073,878 — 179,073,878 —
InternationalObligations(Governmentand
Corporate) 994,413,357 — 994,413,357 —
FixedIncomeMoneyMarketandBondMutual
Funds 3,333,716,533 2,859,416,533 474,300,000 —
MutualFunds 493,569,031 489,270,259 4,298,772 —
EquitySecurities:
Equity 3,231,574,441 3,231,064,436 — 510,005
InternationalEquity 3,527,663,911 3,527,659,191 4,720 —
OtherCommingledFunds:
FixedIncome 144,858,334 144,858,334 — —
U.S.Equity 11,268,172 11,268,172 — —
InternationalOtherCommingledFunds:
Non-U.S.DevelopedEquity 312,346,898 312,346,898 — —
EmergingMarkets 36,732,048 36,732,048 — —
RealEstateandOther:
PUFLands 11,111,083,413 — — 11,111,083,413
OtherRealEstate 679,958,750 — — 679,958,750
InvestmentDerivativeInstruments–Asset
Positions 168,650,144 6,272,064 162,378,080 —
AlternativeInvestments:
PrivateInvestments 522,841,473 — — 522,841,473
Miscellaneous 2,812,649 1,704,801 1,107,823 25
TotalInvestmentsbyFairValueLevel 29,137,067,354 14,561,688,033 2,260,796,187 12,314,583,134
FairValueMeasurementUsing
TypeofSecurity
FairValueasof
August31,2023
QuotedPricesin
Activemarketsfor
IdenticalAssets
(Level1)
SignificantOther
ObservableInputs
(Level2)
Significant
UnobservableInputs
(Level3)
50
InvestmentFundsFairValuedUsingNetAsset
Value:
RealEstate 35,386,543
HedgeFunds 15,352,264,565
InternationalOtherCommingledFunds 10,261,298,622
OtherInvestmentFunds 39,536,000
PrivateInvestments 23,787,531,978
TotalInvestmentFundsFairValuedUsingNet
AssetValue 49,476,017,708
InvestmentsHeldinCash(NotatFairValue) 148,866,412
OtherInvestments(NotatFairValue) 458,192
TotalInvestments $ 78,762,409,666
SecuritiesLendingCollateralInvestmentPool(See
SecuritiesLendingSection) $ 707,785,341 — 707,785,341 —
InvestmentsClassifiedasCashEquivalents:
RepurchaseAgreement–TexasTreasury
SafekeepingTrustCo.(NotatFairValue) $ 10,321,917
FixedIncomeMoneyMarketFunds 5,040,371,989 5,040,371,989 — —
TimeDeposits(NotatFairValue) 106,608
TotalInvestmentsClassifiedasCashEquivalents $ 5,050,800,514
DepositwithBrokersforDerivativeContracts,Net
(RelatedtoInvestments):
U.S.GovernmentDirectObligations $ 97,445,283 97,445,283 — —
HeldinCash(NotatFairValue) 152,345,938
TotalDepositwithBrokersforDerivative
Contracts,Net(RelatedtoInvestments) $ 249,791,221
FairValueMeasurementUsing
TypeofSecurity
FairValueasof
August31,2023
QuotedPricesin
Activemarketsfor
IdenticalAssets
(Level1)
SignificantOther
ObservableInputs
(Level2)
Significant
UnobservableInputs
(Level3)
51
InvestmentsbyFairValueLevel:
DebtSecurities:
U.S.GovernmentTreasurySecurities $ 1,931,621,893 1,931,621,893 — —
U.S.GovernmentTreasuryTIPS 1,605,784,871 1,605,784,871 — —
U.S.GovernmentAgencyObligations 303,582,859 — 303,582,859 —
CorporateObligations 491,136,083 — 490,891,694 244,389
CorporateAssetandMortgage-BackedSecurities 271,497,076 — 271,497,076 —
InternationalObligations(Governmentand
Corporate) 1,996,994,605 262,798 1,996,731,807 —
FixedIncomeMoneyMarketandBondMutual
Funds 3,179,692,034 3,179,692,034 — —
MutualFunds 468,652,537 464,616,496 4,036,041 —
EquitySecurities:
Equity 2,191,245,912 2,188,076,555 3,169,357 —
InternationalEquity 2,657,725,884 2,656,823,904 901,980 —
OtherCommingledFunds:
FixedIncome 139,391,702 139,391,702 — —
U.S.Equity 410,596,173 410,596,173 — —
InternationalOtherCommingledFunds:
Non-U.S.DevelopedEquity 97,615,120 97,615,120 — —
EmergingMarkets 5,400,010 5,400,010 — —
RealEstateandOther:
PUFLands 11,113,844,125 — — 11,113,844,125
OtherRealEstate 713,210,749 — — 713,210,749
InvestmentDerivativeInstruments–Asset
Positions 214,034,766 31,253,451 182,781,315 —
AlternativeInvestments:
PrivateInvestments 618,601,269 — — 618,601,269
ReverseRepurchaseAgreements 257,900,000 — 257,900,000 —
Miscellaneous 13,463,684 1,790,182 11,673,477 25
TotalInvestmentsbyFairValueLevel 28,681,991,352 12,712,925,189 3,523,165,606 12,445,900,557
FairValueMeasurementUsing
TypeofSecurity
FairValueasof
August31,2022
QuotedPricesin
Activemarketsfor
IdenticalAssets
(Level1)
SignificantOther
ObservableInputs
(Level2)
Significant
UnobservableInputs
(Level3)
52
InvestmentFundsFairValuedUsingNetAsset
Value:
RealEstate 39,712,834
HedgeFunds 13,409,062,571
OtherCommingledFunds 3,855,692,308
InternationalOtherCommingledFunds 6,197,034,824
PrivateInvestments 22,216,888,849
TotalInvestmentFundsFairValuedUsingNet
AssetValue 45,718,391,386
InvestmentsHeldinCash(NotatFairValue) 175,224,507
OtherInvestments(NotatFairValue) 454,846
TotalInvestments $ 74,576,062,091
SecuritiesLendingCollateralInvestmentPool(See
SecuritiesLendingSection) $ 992,425,496 – 992,425,496 –
InvestmentsClassifiedasCashEquivalents:
RepurchaseAgreement–TexasTreasury
SafekeepingTrustCo.(NotatFairValue) $ 2,550,637
FixedIncomeMoneyMarketFunds 4,057,481,665 4,057,481,665 – –
TimeDeposits(NotatFairValue) 109,061
TotalInvestmentsClassifiedasCashEquivalents $ 4,060,141,363
DepositwithBrokersforDerivativeContracts,Net
(RelatedtoInvestments):
U.S.GovernmentDirectObligations $ 40,498,619 40,498,619 – –
HeldinCash(NotatFairValue) (8,923,617)
TotalDepositwithBrokersforDerivative
Contracts,Net(RelatedtoInvestments) $ 31,575,002
FairValueMeasurementUsing
TypeofSecurity
FairValueasof
August31,2022
QuotedPricesin
Activemarketsfor
IdenticalAssets
(Level1)
SignificantOther
ObservableInputs
(Level2)
Significant
UnobservableInputs
(Level3)
53
Thefollowingtablesdisplaythebreakoutoftotalinvestments,securitieslendingcollateral,totalinvestmentsclassified
ascashequivalents,andtotaldepositwithbrokersforderivativecontracts,netbetweenenterpriseandfiduciaryfunds
asofAugust31,2023and2022:
August31,2023
EnterpriseFunds FiduciaryFunds Total
TotalInvestments $ 78,468,026,873 294,382,793 78,762,409,666
SecuritiesLendingCollateral 704,550,572 3,234,769 707,785,341
TotalInvestmentsClassifiedasCashEquivalents 5,050,800,514 — 5,050,800,514
TotalDepositwithBrokersforDerivativeContracts,Net(Relatedto
Investments) 248,763,839 1,027,382 249,791,221
August31,2022
EnterpriseFunds FiduciaryFunds Total
TotalInvestments $ 74,289,464,178 286,597,913 74,576,062,091
SecuritiesLendingCollateral 988,091,640 4,333,856 992,425,496
TotalInvestmentsClassifiedasCashEquivalents 4,060,141,363 — 4,060,141,363
TotalDepositwithBrokersforDerivativeContracts,Net(Relatedto
Investments) 31,370,360 204,642 31,575,002
54
Investment funds fair valued at net asset value per share or based on the System’s ownership interest in partner’s
capitalincludeexternallymanagedfunds,limitedpartnerships,andcorporatestructureswhicharegenerallyunrated
and may be unregulated. The composition of investment funds that are fair valued using Net Asset Value (NAV) at
August31,2023and2022issummarizedinthetablesbelowastheyareincludedwithintheassetmixoftheSystem.
TablesanddisclosuresthatfollowincludeboththeSystem’senterpriseandfiduciaryfunds.
FairValueasof
August31,2023
Unfunded
Commitments
Redemption
Frequency
Redemption
NoticePeriod
InvestmentFundsFairValuedUsingNetAssetValue
RealEstate
RedeemableWithinOneYear $ 35,386,543 — Quarterly 60days
HedgeFunds
RedeemableWithinOneYear 7,601,346,011 MonthlytoAnnually 5-100Days
RedeemableBeyondOneYear 5,502,664,331 MonthlytoAnnually 5-100Days
Nonredeemable 2,248,254,223 NotApplicable NotApplicable
TotalHedgeFunds 15,352,264,565 1,104,178,390
GlobalDevelopedEquity
RedeemableWithinOneYear 7,558,868,335 DailytoAnnually 5-105Days
RedeemableBeyondOneYear 344,488,423 MonthlytoAnnually 45-105Days
Nonredeemable 1,419,197 NotApplicable NotApplicable
TotalGlobalDevelopedEquity 7,904,775,955 28,565,144
EmergingMarkets
RedeemableWithinOneYear 2,132,504,776
DailytoSemi-
Annually 1-120Days
RedeemableBeyondOneYear 221,242,975
MonthlytoSemi-
Annually
60Days
Nonredeemable 2,774,916 NotApplicable NotApplicable
TotalEmergingMarkets 2,356,522,667 24,300,992
TotalInternationalOtherCommingledFunds 10,261,298,622 52,866,136
Other
RedeemableWithinOneYear 9,884,000 Quarterly 90Days
RedeemableBeyondOneYear 29,652,000 Quarterly 90Days
TotalOther 39,536,000 —
LimitedPartnerships(PrivateInvestments)
RedeemableWithinOneYear 36,286,284 Quarterly 90days
Nonredeemable 23,751,245,694 NotApplicable NotApplicable
TotalLimitedPartnerships(PrivateInvestments) 23,787,531,978 13,696,032,465
TotalInvestmentFundsFairValuedUsingNAV $ 49,476,017,708 14,853,076,991
55
FairValueasof
August31,2022
Unfunded
Commitments
Redemption
Frequency
Redemption
NoticePeriod
InvestmentFundsFairValuedUsingNetAssetValue
RealEstate
RedeemableWithinOneYear $ 39,712,834 — Quarterly 60days
HedgeFunds
RedeemableWithinOneYear 7,044,667,460 MonthlytoAnnually 5–100Days
RedeemableBeyondOneYear 4,403,595,679
Quarterlyto
Annually 30–120Days
Nonredeemable 1,960,799,432 NotApplicable NotApplicable
TotalHedgeFunds 13,409,062,571 1,337,329,761
OtherCommingledFunds:
FixedIncome
RedeemableWithinOneYear 9,257,744 — Daily 1Day
U.S.Equity
RedeemableWithinOneYear 3,009,736,171 DailytoAnnually 5–105Days
RedeemableBeyondOneYear 836,698,393 Annually 90–105Days
TotalU.S.Equity 3,846,434,564 28,565,144
TotalOtherCommingledFunds 3,855,692,308 28,565,144
InternationalOtherCommingledFunds:
Non-U.S.DevelopedEquity
RedeemableWithinOneYear 1,280,929,121 DailytoQuarterly 5–30Days
TotalNon-U.S.DevelopedEquity 1,280,929,121 —
GlobalDevelopedEquity
RedeemableWithinOneYear 1,990,892,912 DailytoQuarterly 5–60Days
RedeemableBeyondOneYear 488,417,076 Monthly 45–60Days
Nonredeemable 1,912,293
TotalGlobalDevelopedEquity 2,481,222,281 —
EmergingMarkets
RedeemableWithinOneYear 2,231,469,056
DailytoSemi-
Annually 1–90Days
RedeemableBeyondOneYear 159,559,845 MonthlytoAnnually 60Days
Nonredeemable 43,854,521 NotApplicable NotApplicable
TotalEmergingMarkets 2,434,883,422 48,300,992
TotalInternationalOtherCommingledFunds 6,197,034,824 48,300,992
LimitedPartnerships(PrivateInvestments)
RedeemableWithinOneYear 32,594,029 Quarterly 90days
Nonredeemable 22,184,294,820 NotApplicable NotApplicable
TotalLimitedPartnerships(PrivateInvestments) 22,216,888,849 12,137,786,657
TotalInvestmentFundsFairValuedUsingNAV $ 45,718,391,386 13,551,982,554
56
TheSysteminvestsinhedgefundpoolswhichareinvestedinprivatefundswithexternalinvestmentmanagerswho
invest in equity and fixed income securities of both domestic and international issuers. These investment managers
mayinvestin both long and short securities and may utilize leveragein their portfolios. The funds invested may be
subject to a lock-up restriction of typically one to three years before the investment may be withdrawn from the
manager without significant penalty. The amounts shown as nonredeemable are considered illiquid in that they
typicallybecomeliquidovermulti-yearperiodswhenandifthefundmanagersdistributeproceedsrealizedfromthe
underlyingfundinvestmentsandthetimingcannotbeestimated.Therearecertainrisksassociatedwiththeseprivate
funds, some of which include investment manager risk, market risk and liquidity risk, as well as the risk of utilizing
leverageintheportfolios.Thehedgefundpoolshavecommitted$1,104,178,390and$1,337,329,761offuturefunding
to various hedge fund investments as of August 31, 2023 and 2022, respectively. Hedge funds are fair valued by
management based on net asset value information provided by the investment manager, as well as other relevant
factors.
Public market funds are invested in exchange traded funds, index funds and private placements with external
investment managers who invest in equity and fixed income securities of both domestic and international issuers.
These funds are characterized as public market funds based on individual risk/return characteristics and their
relationshiptothe overall asset mix of the funds. Some of theseinvestmentmanagers may invest in both long and
short securities and may utilize modest leverage in their portfolios. The amounts shown as nonredeemable are
considered illiquid in that they typically become liquid over multi-year periods when and if the fund managers
distribute proceeds realized from the underlying fund investments and the timing cannot be estimated. Certain of
theseinvestmentsareheldthroughlimitedliabilitycompaniesofwhichUTIMCOisthesolemanagingmember.There
are certain risks associated with these investments, some of which are investment manager risk, market risk and
liquidityrisk,aswellastheriskofutilizingleverageintheportfolios.AsofAugust31,2023and2022,futurefundingsin
theamountof$52,866,136and$76,866,136,respectively,havebeencommittedtocertainpublicmarketfunds.The
fair value of private investment funds, are estimated using the investment’s capital account balance at the closest
available reporting date, as communicated by the investment manager, adjusted for contributions and withdrawals
subsequentto the latest availablereporting date as wellasconsideration of any otherinformation, which has been
providedbytheinvestmentmanagerorothersources.
TheSysteminvestsinprivateinvestmentsthroughprivateinvestmentpoolswhichareinvestedinlimitedpartnerships
with external investment managers or general partners who invest primarily in private equity securities. These
investments,domesticandinternational,areilliquidandtypicallybecomeliquidovermulti-yearperiodswhenandif
thefundmanagersdistributeproceedsrealizedfromunderlyingfundinvestments.Itisestimatedthattheunderlying
assets of the private investments will be liquidated over seven to ten years. There are certain risks associated with
these investments, some of which are liquidity risk, market risk, event risk and investment manager risk. Certain of
theseinvestmentsareheldthroughLLCs,ofwhichUTIMCOisthesolemanagingmember.TheSystemhadcommitted
$13,696,032,465and$12,137,786,657offuturefundingtovariousprivateinvestmentsasofAugust31,2023and2022,
respectively.
Hedgefunds,privateinvestmentsandpublicmarketfundsincludeinvestmentsinprivateplacementvehiclesthatare
subjecttorisk,whichcouldresultinthelossofinvestedcapital.Therisksincludethefollowing:
Keypersonnelrisk–Thesuccess ofcertainfunds issubstantiallydependent uponkeyinvestmentmanagersand
thelossofthoseindividualsmayadverselyimpactthefund’sperformance.
Liquidityrisk–ManyoftheSystem’sinvestmentfundsmayimposelock-upperiods,whichwouldcausetheSystem
toincur penaltiesto redeemits unitsor preventthe Systemfrom redeemingits sharesuntil acertainperiodof
timehaselapsed.
Limited transparency – As private placement investment vehicles, these funds may not disclose the holdings of
theirportfolios.
Investmentstrategy risk – These funds often employ sophisticatedinvestmentstrategies and may use leverage,
whichcouldresultinthelossofinvestedcapital.
Investments in hedge funds, private investments and public market funds are also subject to the investment risks
discussedbelow.Fixedincomeinvestmentsheldbythesefundswouldalsobesubjecttocreditriskandinterestrate
risk;moreover,theymayinvestinsecuritieswhosefairvalueswouldbesensitivetochangesininterestrates.
Thefairvaluesofthesevariousinvestmentfunds,excludingthepubliclytradedfunds,asofAugust31,2023and2022
were$49,476,017,708and$45,718,391,386,respectively.
57
INVESTMENTRISKS
(A) CreditRisk-ArticleVII,Section11boftheTexasConstitutionauthorizestheU.T.SystemBoardofRegents,subject
to procedures and restrictions it establishes, to invest System funds in any kind of investment and in amounts it
considersappropriate,providedthatitadherestotheprudentinvestorstandard.ThisstandardprovidesthattheU.T.
SystemBoardof Regents, in making investments, may acquire, exchange,sell,supervise,manage or retain, through
proceduresandsubjecttorestrictionsitestablishesandinamountsitconsidersappropriate,anykindofinvestment
thatprudentinvestors,exercisingreasonablecare,skillandcaution,wouldacquireorretaininlightofthepurposes,
terms, distribution requirements and other circumstances of the fund then prevailing, taking into consideration the
investmentofalloftheassetsofthefundratherthanasingleinvestment.
Creditriskistheriskthatanissuerofaninvestmentwillnotfulfillitsobligationtotheholderoftheinvestment.Thisis
measuredbytheassignmentofaratingbyanationallyrecognizedstatisticalratingorganization(NRSRO).TheSystem’s
investment policy does not provide specific requirements and limitations regarding investment ratings. Per GASB
authoritativeguidance,unlessthereisinformationtothecontrary,obligationsoftheU.S.governmentorobligations
explicitlyguaranteedbytheU.S. governmentarenotconsideredto havecreditriskand donotrequiredisclosureof
credit quality. The following tables present each applicable investment type, in both the System’s enterprise and
fiduciaryfunds,groupedbyratingasofAugust31,2023and2022:
InvestmentsandInvestmentsClassified
asCashEquivalents:
U.S.GovernmentDirectObligations $ 3,941,095,297 Aaa 3,941,095,297 AA 20,786,394 AAA
3,920,308,903 AA
U.S.GovernmentAgencyObligations 121,797,653 Aaa 121,797,653 AA 116,101,127 AAA
238,648,901 NR 238,648,901 NR 5,696,526 AA
238,648,901 NR
CorporateObligations 3,822,491 Aaa 6,251,301 AAA 1,830,531 AAA
11,906,833 Aa 9,465,159 AA 13,267,312 AA
49,468,351 A 45,437,203 A 20,132,141 A
15,155,718 Baa 21,725,444 BBB 17,387,076 BBB
1,033,433 Ba 186,188 BB 32,345,411 NR
3,575,645 NR 1,897,176 NR —
CorporateAssetandMortgage-Backed
Securities 64,423,502 Aaa 45,359,687 AAA 44,451,829 AAA
9,223,914 Aa 8,057,321 AA 6,807,854 AA
6,059,886 A 6,184,987 A 3,274,080 A
690,890 Baa 1,879,090 BBB 45,052 BBB
98,424 Ba 2,503,173 BB 969,195 BB
2,010,443 B 2,185,446 B 246,615 CC
3,111,453 Caa 3,475,641 CCC 122,432,014 NR
1,451,477 Ca 2,101,425 CC 847,239 C
1,018,128 C 107,327,108 NR —
90,985,761 NR — —
August31,2023
MOODY’S STANDARD&POOR’S FITCH
InvestmentType FairValue Rating FairValue Rating FairValue Rating
58
InternationalObligations(Government
andCorporate) 91,691,591 Aaa 79,888,872 AAA 72,092,502 AAA
32,341,625 Aa 13,320,303 AA 65,498,986 AA
88,577,589 A 51,470,304 A 99,672,322 A
271,869,678 Baa 284,720,072 BBB 170,782,439 BBB
66,308,365 Ba 75,372,756 BB 172,839,594 BB
10,290,216 B 489,641,050 NR 10,290,217 B
433,334,293 NR — 403,194,497 NR
42,800 C
InvestmentFunds,Other 39,536,000 NR 39,536,000 NR 39,536,000 NR
FixedIncomeMoneyMarketandMutual
Funds 7,524,768,779 Aaa 7,524,768,779 AAA 510,740,517 AAA
998,186,155 NR 998,186,155 NR 8,012,214,417 NR
RepurchaseAgreement–TexasTreasury
SafekeepingTrustCo. 10,321,917 NR 10,321,917 AA 10,321,917 NR
Miscellaneous 709,272 Aaa 398,551 A 398,551 A
398,551 A 145,674,214 NR 145,674,214 NR
144,964,942 NR — —
TotalInvestmentsandInvestments
ClassifiedasCashEquivalents $ 14,278,877,173 14,278,877,173 14,278,877,173
DepositwithBrokersforDerivative
Contracts,Net(Relatedto
Investments):
U.S.GovernmentDirectObligations $ 97,445,283 Aaa 97,445,283 AA 97,445,283 AA
Cash 152,345,938 NR 152,345,938 NR 152,345,938 NR
TotalDepositwithBrokersforDerivative
Contracts,Net(Relatedto
Investments) $ 249,791,221 249,791,221 249,791,221
August31,2023
MOODY’S STANDARD&POOR’S FITCH
InvestmentType FairValue Rating FairValue Rating FairValue Rating
59
InvestmentsandInvestmentsClassified
asCashEquivalents:
U.S.GovernmentDirectObligations $ 3,537,406,764 Aaa 3,537,406,764 AA 3,537,406,764 AAA
U.S.GovernmentAgencyObligations 271,112,784 Aaa 227,071,626 AA 271,045,253 AAA
32,470,075 NR 76,511,233 NR 32,537,606 NR
CorporateObligations 24,899,759 Aaa 13,941,120 AAA 8,933,294 AAA
28,853,656 Aa 41,904,793 AA 55,635,856 AA
226,559,906 A 210,266,438 A 124,843,947 A
182,706,375 Baa 203,980,906 BBB 122,236,692 BBB
9,459,931 Ba 5,492,236 BB 1,165,838 BB
675,500 Caa 675,500 CCC 1,298,785 F
1,298,785 P 14,875,090 NR 177,021,671 NR
16,682,171 NR — —
CorporateAssetandMortgage-Backed
Securities 105,152,126 Aaa 53,087,218 AAA 71,187,096 AAA
11,027,595 Aa 11,905,286 AA 7,264,829 AA
8,936,084 A 14,061,715 A 4,471,440 A
3,723,817 Baa 3,542,485 BBB 74,045 BBB
113,514 Ba 2,277,671 BB 283,719 BB
4,049,142 B 4,144,918 B 784,070 B
2,549,832 Caa 6,888,904 CCC 252,630 CC
1,705,650 Ca 1,422,982 CC 187,179,247 NR
1,045,207 C 1,045,207 D —
2,762,120 P 173,120,690 NR —
130,431,989 NR — —
InternationalObligations(Government
andCorporate) 247,415,837 Aaa 193,945,192 AAA 198,815,664 AAA
148,485,329 Aa 69,329,486 AA 267,095,316 AA
215,998,429 A 117,884,272 A 151,048,750 A
320,502,479 Baa 295,944,287 BBB 254,713,810 BBB
95,299,916 Ba 110,269,574 BB 178,150,843 BB
6,267,733 B 7,363,722 B 1,660,658 B
963,024,882 NR 1,202,258,072 NR 945,509,564 NR
FixedIncomeMoneyMarketandMutual
Funds 6,181,210,223 Aaa 6,181,210,223 AAA 84,928,687 AAA
1,231,187,983 NR 1,231,187,983 NR 7,327,469,519 NR
RepurchaseAgreement–TexasTreasury
SafekeepingTrustCo. 2,550,637 NR 2,550,637 AA 2,550,637 NR
ReverseRepurchaseAgreements 257,900,000 NR 257,900,000 NR 257,900,000 NR
Miscellaneous 765,485 Aaa 3,271,590 AAA 3,271,590 AAA
7,270,205 Aa 3,998,615 AA 3,998,615 AA
3,490,079 A 1,914,201 A 3,622,628 BBB
148,906,215 NR 1,708,428 BBB 149,539,151 NR
— 149,539,150 NR —
TotalInvestmentsandInvestments
ClassifiedasCashEquivalents $ 14,433,898,214 14,433,898,214 14,433,898,214
August31,2022
MOODY’S STANDARD&POOR’S FITCH
InvestmentType FairValue Rating FairValue Rating FairValue Rating
60
DepositwithBrokersforDerivative
Contracts,Net(Relatedto
Investments):
U.S.GovernmentDirectObligations $ 40,498,619 Aaa 40,498,619 AA 40,498,619 AAA
Cash (8,923,617) NR (8,923,617) NR (8,923,617) NR
TotalDepositwithBrokersforDerivative
Contracts,Net(Relatedto
Investments) $ 31,575,002 31,575,002 31,575,002
August31,2022
MOODY’S STANDARD&POOR’S FITCH
InvestmentType FairValue Rating FairValue Rating FairValue Rating
(B) ConcentrationsofCreditRisk–TheSystem’sinvestmentpolicystatementsforfundsmanagedbyUTIMCOcontain
the limitation that no more than 5% of the fair value of fixed income securities may be invested in corporate or
municipalbondsofasingleissuer.AsofAugust31,2023and2022,thesefundsdidnotholdanydirectinvestmentsin
any one issuer of corporate or municipal bonds that were 5% or more of the fair value of the fund’s fixed income
investments.
(C) CustodialCreditRisk–Thecustodialcreditriskforinvestmentsistheriskthat,intheeventofthefailureofthe
counterpartytoatransaction,theSystemwillnotbeabletorecoverthevalueofitsinvestmentorcollateralsecurities
thatareinthepossessionofanotherparty.TexasStateStatutesandtheSystem’sinvestmentpolicystatementsdonot
containlegalorpolicyrequirementsthatwouldlimittheexposuretocustodialcreditriskfordepositsorinvestments.
AsofAugust31,2023and2022,theSystemdidnothaveanyinvestmentsthatareexposedtocustodialcreditrisk.
61
(D) InterestRateRisk–Interestrateriskistheriskthatchangesinmarketinterestrateswilladverselyaffectthefair
valueofaninvestment.Generally,thelongerthematurityofaninvestmentthegreaterthesensitivityofitsfairvalue
tochangesinmarketinterestrates.InterestrateriskinherentintheSystem’sinvestmentsismeasuredbymonitoring
themodifieddurationoftheoverallinvestmentportfolio.ModifieddurationestimatesthesensitivityoftheSystem’s
investmentsto changesininterestrates. The System has no specific policy statement limitations with respect to its
overallmodifiedduration.ThefollowingtablesummarizestheSystem’smodifieddurationinyearsbyinvestmenttype,
inboththeSystem’senterpriseandfiduciaryfunds,asofAugust31,2023and2022:
August31,2023 August31,2022
InvestmentType FairValue
Modified
Duration FairValue
Modified
Duration
Investments:
U.S.GovernmentGuaranteed:
U.S.TreasuryBills $ 23,567,463 0.10 9,499,386 0.18
U.S.TreasuryBondsandNotes 2,413,384,442 13.57 1,922,122,507 11.26
U.S.TreasuryInflationProtected 1,504,143,392 6.62 1,605,784,871 7.10
U.S.AgencyAssetBacked 9,248,776 5.54 675,736 0.65
TotalU.S.GovernmentGuaranteed 3,950,344,073 10.82 3,538,082,500 9.34
U.S.GovernmentNon-Guaranteed:
U.S.Agency 5,696,526 10.27 55,789,746 7.03
U.S.AgencyAssetBacked 345,501,252 6.36 247,117,377 7.34
TotalU.S.GovernmentNon-Guaranteed 351,197,778 6.42 302,907,123 7.28
TotalU.S.Government 4,301,541,851 10.47 3,840,989,623 9.17
CorporateObligations:
Domestic 264,036,349 3.17 762,633,159 5.43
Foreign 188,058,260 2.85 392,473,405 2.89
TotalCorporateObligations 452,094,609 3.04 1,155,106,564 4.57
ForeignGovernmentandProvincialObligations 806,355,097 13.14 1,604,521,200 6.47
OtherDebtSecurities 1,107,823 1.52 11,673,477 6.15
TotalDebtSecurities 5,561,099,380 9.15 6,612,290,864 7.71
OtherInvestmentFunds-Debt 144,858,334 1.52 148,649,446 1.65
FixedIncomeMoneyMarketandMutualFunds 3,482,582,945 0.43 3,354,916,541 0.33
InvestmentFunds,Other 39,536,000 —
ReverseRepurchaseAgreements — 257,900,000
TotalInvestments $ 9,228,076,659 5.69 10,373,756,851 5.04
InvestmentsClassifiedasCashEquivalents:
RepurchaseAgreement-TexasTreasurySafekeepingTrustCo. $ 10,321,917 2,550,637
FixedIncomeMoneyMarketFunds 5,040,371,989 0.08 4,057,481,665 0.08
TimeDeposits 106,608 109,061
TotalInvestmentsClassifiedasCashEquivalents $ 5,050,800,514 0.08 4,060,141,363 0.08
DepositwithBrokersforDerivativeContracts,Net(Relatedto
Investments):
U.S.GovernmentGuaranteed:
U.S.GovernmentDirectObligations $ 97,445,283 0.14 40,498,619 0.70
TotalU.S.GovernmentGuaranteed 97,445,283 0.14 40,498,619 0.70
Cash 152,345,938 (8,923,617)
TotalDepositwithBrokersforDerivativeContracts,Net(Relatedto
Investments) $ 249,791,221 31,575,002
62
(E) InvestmentswithFairValuesThatAreHighlySensitivetoInterestRateChanges–TheSystemmayinvestinvarious
mortgage-backed securities, such as collateralized mortgage-backed obligations. The System also may invest in
investmentsthathave floatingrateswithperiodiccoupon changesinmarketrates,zerocouponbondsand stripped
treasuryandagencysecuritiescreatedfromcouponsecurities.Nopercentageofholdingslimitationsarespecifiedin
theinvestmentpolicy statements regardingthesetypes of securities. As of August 31,2023and 2022, the System’s
investmentsincludedthefollowinginvestmentsthatarehighlysensitivetointerestratechanges:
Collateralizedmortgageobligationswhicharesubjecttoearlypaymentinaperiodofdeclininginterestrates.The
resultantreductioninexpectedtotalcashflowswillaffectthefairvalueofthesesecurities.AsofAugust31,2023
and2022,thesesecuritiesamountedto$127,461,330and$215,310,881,respectively.
Mortgage-backed securities which are subject to early payment in a period of declining interest rates. The
resultantreductioninexpectedtotalcashflowswillaffectthefairvalueofthesesecurities.AsofAugust31,2023
and2022,thesesecuritiesamountedto$354,133,590and$246,767,929,respectively.
Asset backed securities which are backed by home equity loans, auto loans, equipment loans and credit card
receivables. Prepayments by the obligees of the underlying assets in periods of decreasing interest rates could
reduceoreliminatethestreamofincomethatwouldhavebeenreceived.AsofAugust31,2023and2022,these
securitiesamountedto$98,922,914and$151,335,548,respectively.
(F) ForeignCurrencyRisk–Foreigncurrencyriskistheriskthatchangesinexchangerateswilladverselyaffectthefair
valueoftheSystem’snon-U.S.dollarinvestments.Therearenolimitationsoninvestmentsin non-U.S.denominated
bondsorcommonstocksinrelationtotheSystem’stotalfixedincomeanddevelopedcountryequityexposuresinthe
System’sinvestmentpolicystatements.
Classificationbetweendomesticcommonstockandforeigncommonstockisbasedonthecountryofdomicileofthe
issuer,notthecurrencyinwhichthesecurityistraded.ThefollowingtablessummarizetheSystem’sexposuretonon-
U.S.dollarinvestmentsbyassettypeasofAugust31,2023and2022.
63
August31
InvestmentType 2023 2022
ForeignCommonStock:
AustralianDollar $ 22,399,245 8,919,847
BrazilianReal 176,988,105 171,242,058
CanadianDollar 25,560,870 37,837,825
ChileanPeso 203,998 522,978
ChineseYuanRenminbi 165,100,251 158,839,837
CzechKoruna 555,918 62,772
DanishKrone 57,083,420 37,354,459
EgyptianPound 1,325,151 795,405
Euro 431,191,573 293,054,538
HongKongDollar 176,325,268 94,987,990
HungarianForint 1,036,377 909,339
IndianRupee 97,974,096 48,997,000
IndonesianRupiah 36,021,046 28,932,563
IsraeliShekel — 960,416
JapaneseYen 449,415,790 271,293,050
MalaysianRinggit 12,735,993 6,076,615
MexicanPeso 13,264,746 4,355,446
NewZealandDollar 2,064,088 365,088
NorwegianKrone 24,686,023 14,497,334
PeruvianSol — 122,644
PhilippinePeso 2,026,883 605,527
PolishZloty 6,580,784 6,834,035
QatariRiyal 1,972,469 2,441,098
SingaporeDollar 10,039,655 2,800,626
SouthAfricanRand 17,359,855 6,466,703
RussianRuble 153 —
SaudiArabianRiyal 775,852 —
SouthKoreanWon 214,674,700 180,751,018
SwedishKrona 27,210,452 15,939,698
SwissFranc 113,792,044 58,586,940
TaiwanDollar 375,832,170 296,750,500
ThaiBaht 17,442,624 18,210,711
TurkishLira 7,356,306 2,829,371
UKPound 266,806,251 217,788,844
UnitedArabEmiratesDirham 6,887,062 2,374,589
TotalForeignCommonStock 2,762,689,218 1,992,506,864
Other-EquitySecurities:
BrazilianReal 11,084 —
IndianRupee — 17,862
SwissFranc 72,543 48,949
TaiwanDollar 32 —
TotalOther-EquitySecurities 83,659 66,811
ForeignPreferredStocks:
BrazilianReal 37,988,325 60,253,202
Euro 922,045 2,914,496
SouthAfricanRand — 88,712
SouthKoreanWon 46,857,220 30,357,556
TotalForeignPreferredStock 85,767,590 93,613,966
64
August31
InvestmentType 2023 2022
ForeignGovernmentandProvincialObligations:
AustralianDollar 10,440,330 66,866,614
BrazilianReal 56,284,769 71,776,218
CanadianDollar 12,854,952 55,243,455
ChineseYuanRenminbi 956,176 65,027,579
ColombianPeso 66,459,824 70,876,372
CzechKoruna — 7,467,463
Euro 38,035,704 218,728,544
HungarianForint — 6,260,428
IndonesianRupiah 4,950,494 25,600,177
IsraeliShekel 2,041,384 27,827,846
JapaneseYen 257,953,828 397,540,256
MalaysianRinggit 32,829,644 27,857,376
MexicanPeso 147,447,577 177,684,021
NewZealandDollar 18,133,414 10,959,332
NorwegianKrone 8,014,771 36,043,586
PeruvianSol — 10,976,262
PolishZloty 1,902,946 31,255,775
RomanianLeu — 7,435,732
RussianRuble 4,396,565 9,425,722
SingaporeDollar 10,377,427 48,061,324
SouthAfricanRand 47,623,809 58,361,423
SouthKoreanWon 25,398,675 102,939,378
UKPound 28,524,998 43,596,927
TotalForeignGovernmentandProvincialObligations 774,627,287 1,577,811,810
CorporateObligations:
AustralianDollar 2,067,378 2,283,640
BrazilianReal 455,792 556,635
CanadianDollar — 23,909,858
DanishKrone 15,563,303 24,924,994
Euro 24,623,207 45,239,839
IndianRupee — 791
UKPound 36,166,002 78,132,657
TotalCorporateObligations 78,875,682 175,048,414
PurchasedOptions:
BrazilianReal 284,124 171,296
Euro 433,477 722,700
TotalPurchasedOptions 717,601 893,996
InvestmentFunds-EmergingMarkets:
BrazilianReal 1,172,760 6,356,312
PrivateInvestments:
AustralianDollar 51,277,328 108,206,247
CanadianDollar 171,723,226 197,445,816
Euro 1,056,615,290 789,502,646
JapaneseYen 41,780,446 29,582,375
SwedishKrona 56,802,563 52,544,344
UKPound 246,318,795 212,702,494
TotalPrivateInvestments 1,624,517,648 1,389,983,922
65
August31
InvestmentType 2023 2022
CashandCashEquivalents:
AustralianDollar 1,115,317 986,612
BrazilianReal 14,302,680 7,218,450
CanadianDollar (29,542) 864,701
ChileanPeso 263 16,704
ChineseYuanRenminbi 4,532,387 5,240,418
ColombianPeso — 379,570
CzechKoruna 20,405 30,430
DanishKrone 80,543 110,435
EgyptianPound 226,138 1,052
Euro 29,490,167 35,522,404
HongKongDollar (526,957) 1,620,370
HungarianForint — 3
IndianRupee 109,194 394,376
IndonesianRupiah 77,682 1,322,065
IsraeliShekel 2,700 18,927
JapaneseYen (4,443,921) 13,778,639
MalaysianRinggit 106,569 880,555
MexicanPeso 9,094 32,754
NewZealandDollar 136,465 201,616
NorwegianKrone 641 192,018
PhilippinePeso — 4,394
PolishZloty 3,528 5,852
QatariRiyal — 7,595
RomanianLeu 72 378
RussianRuble — 21
SingaporeDollar 181,559 544,500
SouthAfricanRand 2,625,981 2,902,878
SouthKoreanWon 4,720,787 7,150,973
SwedishKrona 115,920 84,666
SwissFranc 71,720 1,400,810
TaiwanDollar 1,380,985 1,538,120
ThaiBaht 919 1,718
TurkishLira 31,209 126
UKPound (5,607,501) 5,108,592
UnitedArabEmiratesDirham — 10,452
TotalCashandCashEquivalents 48,735,004 87,573,174
WrittenOptions:
BrazilianReal (331,526) (236,134)
Euro (413,319) (1,025,269)
UKPound (2,820) (37,279)
TotalWrittenOptions (747,665) (1,298,682)
66
August31
InvestmentType 2023 2022
Swaps:
AustralianDollar 62,927 1,814,610
CanadianDollar (4,144,298) (5,362,487)
ChineseYuanRenminbi (1,554,193) 252,938
CzechKoruna (35,489) (116,140)
Euro (1,702,327) (40,128,900)
IndianRupee 22,477 182,950
JapaneseYen 110,068 (143,140)
MalaysianRinggit 66,700 455,029
MexicanPeso (123,892) (260,670)
NewZealandDollar (1,004,302) (874,653)
SingaporeDollar (6,140) (146,350)
SouthAfricanRand — 18,601
SouthKoreanWon (484,362) (1,283,489)
SwedishKrona (103,476) (195,500)
SwissFranc (340,939) (4,033,028)
ThaiBaht (6,446) 316,418
UKPound (6,661,297) (11,524,408)
TotalSwaps (15,904,989) (61,028,219)
Futures:
AustralianDollar (165,027) 53,515
BrazilianReal 196,688 (3,646)
CanadianDollar (39,972) 314,828
Euro (4,876,376) 3,091,601
JapaneseYen 87,550 (82,169)
UKPound 533,183 1,097,276
TotalFutures (4,263,954) 4,471,405
Total $ 5,356,269,841 5,265,999,773
(G) Counterparty (Credit) Risk – The derivative instruments utilized by the System contain varying degrees of off-
statementofnetpositionriskwherebychangesinthefairvaluesofsecuritiesunderlyingthefinancialinstrumentsmay
exceedtheamountsrecognizedinthestatementofnetposition.TheSystemmanagestheserisksonanaggregatebasis
alongwiththerisksassociatedwithitsotherinvestmentsaspartofitsoverallriskmanagementprocess.
67
TheSystemhadgrosscounterpartyexposureasofAugust31,2023foroptions,swaps,andforeigncurrencyexchange
contractsasshowninthefollowingtable:
Notional FairValue
Assets Liabilities Assets Liabilities
Counterparty
Rating
Options $ 563,624,974 504,689,870 11,650,756 10,409,175 AA
Options 949,997,520 750,898,225 31,680,509 9,145,897 A
Swaps 648,523,660 935,113,558 13,612,907 28,374,404 AA
Swaps 12,625,099 230,833,970 2,977,376 13,259,353 A
ForeignCurrencyExchangeContracts 894,864,740 634,768,783 14,231,057 9,769,338 AA
ForeignCurrencyExchangeContracts 918,907,713 894,830,705 16,187,024 32,882,146 A
$ 3,988,543,706 3,951,135,111 90,339,629 103,840,313
TheSystemhadgrosscounterpartyexposureasofAugust31,2022foroptions,swaps,andforeigncurrencyexchange
contractsasshowninthefollowingtable:
Notional FairValue
Assets Liabilities Assets Liabilities
Counterparty
Rating
Options $ — 12,770,485 — 721,200 AA
Options 100,685,235 106,675,029 31,168,803 7,528,770 AA–
Options — 108,365,139 — 264,324 A
Swaps 236,637,131 836,665,174 5,887,664 21,651,679 AA
Swaps — 517,568 — 120,181 AA–
Swaps 78,180,673 91,409,515 3,209,527 18,775,670 A
ForeignCurrencyExchangeContracts 1,324,012,062 612,662,155 30,122,108 11,211,574 AA
ForeignCurrencyExchangeContracts 1,643,592,387 1,002,993,980 63,605,962 23,825,272 A
$ 3,383,107,488 2,772,059,045 133,994,064 84,098,670
AsofAugust31,2023and2022,theSystemalsohadinvestmentsinfuturescontracts,optionsonfuturescontractsand
exchange-cleared swaps. Futures contracts, options on futures contracts and exchange-cleared swaps expose the
System to minimal counterparty credit risk since they are exchange traded and the exchange’s clearinghouse, as
counterparty to all exchange traded futures, guarantees the futures against default, and therefore, they are not
presentedintheprevioustables.
Counterparty risk for swaps, options and foreign currency exchange contracts which are traded over-the-counter is
mitigatedby havingmaster nettingarrangements betweenthe Systemandits counterparties,and bytheposting of
collateralonadailybasisbythecounterpartytotheSystemtocovertheSystem’sexposuretoacounterpartyabove
thelimitssetinplaceineachmasternettingagreement.CollateralpostedbycounterpartiesisheldbytheSystemin
oneofitsaccountsattheSystem’scustodianbank.AsofAugust31,2023and2022,theSystemheld$43,978,845and
$110,121,616,respectively,ascollateralrelatedtoderivativeinstrumentsotherthanfutures,andhadondepositwith
brokers $239,341,773 and $118,302,873, respectively, as collateral related to derivative instruments other than
futures.
68
SECURITIESLENDING
Inaccordancewiththeprudentinvestorinvestmentstandards,theSystemparticipatesinasecuritieslendingprogram.
TheSystembegantheprogram,underacontractwiththeSystem’slendingagent,onSeptember1,1995.Thelending
agent is authorized to lend any securities held by the System’s custodian except those securities, which the policy
guidelinesprohibit lending.At August31, 2023and 2022,there werea totalof $1,046,773,903and $1,075,164,462,
respectively,ofsecuritiesoutonloantobrokers/dealers.Acombinationofcashandqualifiednon-cashsecuritiesare
held as collateral against the outstanding securities on loan. The value of cash collateral held for these securities
consistedof$707,785,341atAugust31,2023and$992,425,496atAugust31,2022.Theseamountsarerecordedas
assets,withanoffsettingliabilitytoreturnthecollateralontheconsolidatedstatementofnetposition.Thequalified
non-cash securities received as collateral for securities lending activities are not recorded as assets because these
securitiesremainunderthecontrolofthetransferor,exceptintheeventofdefault.
Insecuritylendingtransactions,theSystemtransfersitssecuritiestobrokers/dealersforcollateral,whichmaybecash,
securitiesissuedorguaranteedbytheUnitedStatesgovernmentoritsagencies,andirrevocablebanklettersofcredit,
andsimultaneouslyagreestoreturnthecollateralforthesamesecuritiesinthefuture.
Cash received as collateral for securities lending activities is invested and reinvested in a non-commingled pool
exclusivelyforthebenefitoftheSystem.Thepoolismanagedinaccordancewithinvestmentguidelinesestablishedin
thesecuritieslendingcontractbetweentheSystemanditssecuritieslendingagent.Thematuritiesoftheinvestments
inthepooldonotnecessarilymatchthetermoftheloans,ratherthepoolismanagedtomaintainamaximumdollar
weighted average maturity of 60 days and an overnight liquidity of 20%. The System was collateralized 106% on
August31,2023and103%onAugust31,2022forsecuritiesonloancollateralizedbycash.TheSystem’scollateralpool
investments,ratingbyNRSROandweightedaveragematurityindaysasofAugust31,2023and2022,areshowninthe
followingtableandincludeboththeSystem’senterpriseandfiduciaryfunds:
August31,2023 August31,2022
Description FairValue Rating
Weighted
Average FairValue Rating
Weighted
Average
RepurchaseAgreements $ 440,394,170 NotRated 1 $ 552,776,500 NotRated 1
CommercialPaper 145,864,142 A 19 172,603,891 A 13
CorporateObligations 11,099,158 AA 10,000,000 A
CorporateObligations — 21,400,000 P
CorporateObligations — 5,975,000 NotRated
TotalCorporateObligations 11,099,158 1 37,375,000 1
InternationalObligations — 128,974,420 AA
InternationalObligations — 92,949,998 A
InternationalObligations — 24,975,000 P
InternationalObligations — 8,475,000 NotRated
TotalInternationalObligations — 255,374,418 1
CertificateofDeposit 33,053,827 AA —
CertificateofDeposit 79,726,982 A —
TotalCertificateofDeposit 112,780,809 1 —
OtherReceivables/Payables (2,352,938) NotRated (25,704,313) NotRated
TotalCollateralPoolInvestment $ 707,785,341 5 $ 992,425,496 3
69
Collateralpoolinvestmentsareuninsuredandareheldbythesecuritieslendingagent,initsname,onbehalfofthe
System,exceptfortheinvestmentsinrepurchaseagreements,whichareheldinthesecuritieslendingagent’snameby
athirdpartycustodiannotaffiliatedwiththeSystemortheborroweroftheassociatedloanedsecurities.Therefore,
thecollateralpoolisnotexposedtocustodialcreditrisk,becausethepoolinvestmentsarenotheldbycounterparties
to the lending transactions or a counterparties’ trust department or agent. All collateral pool investments are
categorized as Level 2 in the fair value hierarchy and are valued based upon prices supplied by major fixed income
pricingservices,externalbrokerquotesandinternalpricingmatrices.
Lendingincomeisearnedifthereturnsonthoseinvestmentsexceedthe“rebate”paidtoborrowersofthesecurities.
Theincomeisthensharedwiththelendingagentbasedonacontractuallynegotiatedratesplit.Iftheinvestmentof
thecashcollateraldoesnotprovideareturnexceedingtherebateoriftheinvestmentincursalossofprincipal,partof
thepaymenttotheborrowerwouldcomefromtheSystem’sresourcesandthelendingagentbasedontheratesplit.
Loansthatarecollateralizedwithsecuritiesgenerateincomewhentheborrowerpaysaloanpremiumorfeeforthe
securitiesloan.Thisincomeissplitwiththesameratioastheearningsforcashcollateral.Thecollateralpledgedtothe
Systembytheborroweriscustodiedbythelendingagentorthroughathird-partyarrangement.Thesesecuritiesheld
ascollateralarenotavailabletotheSystemforsellingorpledgingunlesstheborrowerisindefaultoftheloan.The
Systemheldcollateralequalto103%and104%ofthesecuritiesonloanthatwerecollateralizedbynon-cashsecurities
asofAugust31,2023andAugust31,2022,respectively.
Thecollateralreceivedmusthaveafairvalueof102%oftheloanedsecuritiesofUnitedStatesissuers.Ifthefairvalue
ofthecollateralheldinconnectionwithloansofsecuritiesofUnitedStatesissuersislessthan100%atthecloseof
tradingonanybusinessday,theborrowerisrequiredtodeliveradditionalcollateralbythecloseofthenextbusiness
daytoequal102%ofthefairvalue.
Fornon-U.S. issuers,except thoseforeign securitiesthat aredenominated andpayable inU.S.Dollars,thecollateral
shouldremainat105%ofthefairvalueoftheloanedsecuritiesatthecloseofanybusinessday.Ifitfallsbelow105%,
the borrower must deliver additional collateral by the close of the following business day. The System was
collateralized121%forinternationalloansonAugust31,2023and107%forinternationalloansonAugust31,2022.
Intheeventofdefault,wheretheborrowerisunabletoreturnthesecuritiesloaned,theSystemhasauthorizedthe
lendingagenttoseizethecollateralheld.Thecollateralisthenusedtoreplacetheborrowedsecuritieswherepossible.
Due to some market conditions, it is possible that the original securities cannot be replaced. If the collateral is
insufficient to replace the securities, the lending agent has indemnified the System from any loss due to borrower
default.
AtAugust31,2023and2022,theSystemhadnocreditriskexposuretoborrowersbecausetheamountstheSystem
owedtoborrowersexceededtheamountstheborrowersowedtheSystem.
Therewerenosignificantviolationsoflegalorcontractualprovisions,noborrowerorlendingagentdefaultlossesand
norecoveriesofpriorperiodlossesduringtheyearsendedAugust31,2023and2022.
DERIVATIVEFINANCIALINSTRUMENTS
Derivativeinstrumentsecuritiesarefinancialinstrumentswhosevalueisderived,inwholeorinpart,fromthevalueof
anyoneormoreunderlyingsecuritiesorassets,orindexofsecuritiesorassets,suchasstocks,bonds,commoditiesor
currencies.Derivativeinstrumentscoverabroadrangeoffinancialinstruments,suchasforwards,futures,optionsand
swaps.
(A) FuturesContracts–Futurescontractsareusedtofacilitatevarioustradingstrategies,primarilyasatooltoincrease
ordecreasemarketexposuretovariousassetclasses.Thefairvalueoftheassetpositionsisincludedininvestments,
andthefairvalueoftheliabilitypositionsisincludedininvestmentderivatives-liabilitypositionsontheconsolidated
statementofnetposition.Futurescontractsaremarkedtomarketdaily;thatis,theyarevaluedatthecloseofbusiness
eachdayandagainorlossisrecordedbetweenthevalueofthecontractsthatdayandonthepreviousday.Thedaily
gainorlossdifferenceisreferredtoasthedailyvariationmargin,whichissettledincashwiththebrokereachmorning
fortheamountofthepreviousday’smarktomarket.Theamountthatissettledincashwiththebrokereachmorning
isthefairvalueofthefuturescontracts.
70
Thechangesinfairvalueofopenfuturescontractswereincreasesof$66,634,619and$30,951,309fortheyearsending
August31,2023and2022,respectively,whichareincludedininvestmentincomeontheconsolidatedstatementsof
revenues,expensesandchangesinnetposition.TheSystemhad$54,428,293and$23,393,745ondepositwithbrokers
forcollateralasmarginfor thefuturescontractsasof August31,2023and2022,respectively.Shortfuturesmaybe
usedbyinternalmanagersandalimitednumberofexternalmanagersoftheSystemtohedgetheSystem’sinterest
rateorcurrencyriskassociatedwithsecuritypositions.TheSystemexecutessuchcontractseitheronmajorexchanges
orwithmajorinternationalfinancialinstitutionsandminimizesmarketandcreditriskassociatedwiththesecontracts
throughthemanagers’varioustradingandcreditmonitoringtechniques.
Thefollowingdisclosesthetype,notionalvalue,andfairvalueoffuturescontractsatAugust31,2023:
NotionalValueat
August31,2023
FairValueat
August31,2023
Long Short Assets Liabilities
DomesticFixedIncome $ 1,960,018,260 669,942,895 10,470,648 1,377,350
InternationalFixedIncome 389,465,242 2,107,176,210 1,402,561 5,435,135
DomesticEquity 785,925,143 59,049,980 411,442 5,834,373
InternationalEquity 101,386,918 6,831,265 14,605 245,985
Totals $ 3,236,795,563 2,843,000,350 12,299,256 12,892,843
Thefollowingdisclosesthetype,notionalvalue,andfairvalueoffuturescontractsatAugust31,2022:
NotionalValueat
August31,2022
FairValueat
August31,2022
Long Short Assets Liabilities
DomesticFixedIncome $ 996,142,017 567,543,379 338,238 4,376,631
InternationalFixedIncome 144,484,504 1,434,032,603 3,749,183 506,446
DomesticEquity 438,308,290 93,983,335 927,766 2,360,557
InternationalEquity 125,030,161 117,229,432 1,396,062 167,394
Totals $ 1,703,964,972 2,212,788,749 6,411,249 7,411,028
(B) Foreign Currency Exchange Contracts – The System enters into forward foreign currency exchange contracts to
hedge against foreign currency exchange rate risks on its non-U.S. dollar denominated investment securities and to
facilitatetradingstrategiesprimarilyasatooltoincreaseordecreasemarketexposuretovariousforeigncurrencies.
When enteringintoa forwardcurrencycontract,the System agrees to receive or deliver a fixed quantity of foreign
currencyforanagreed-uponpriceonan agreedfuturedate.Thesecontractsare valued daily and the System’snet
equity therein, representing unrealized gain or loss on the contracts, as measured by the difference between the
forwardforeignexchangeratesatthedatesofentryintothecontractsandtheforwardratesatthereportingdate,is
includedininvestmentsfortheassetpositionsandinvestmentderivatives-liabilitypositionsfortheliabilitypositions.
Theseinstrumentsinvolvemarketand/orcreditriskinexcessoftheamountrecognizedintheconsolidatedstatement
ofnetposition.Risksarisefromthepossibleinabilityofcounterpartiestomeetthetermsoftheircontractsandfrom
movementincurrencyandsecuritiesvaluesandinterestrates.
71
Thefollowingtablessummarize,bycurrency,thecontractualamountsoftheSystem’sforeignexchangecontractsat
August31,2023and2022.ForeigncurrencyamountsaretranslatedatexchangeratesasofAugust31,2023and2022.
The“NetBuy”amountsrepresenttheU.S.dollarequivalentofnetcommitmentstopurchaseforeigncurrenciesand
the“NetSell”amountsrepresenttheU.S.dollarequivalentofnetcommitmentstosellforeigncurrencies.
August31,2023
Currency NetBuy NetSell
UnrealizedGains
onForeign
Exchange
Contracts
UnrealizedLosses
onForeign
Exchange
Contracts
AustralianDollar $ 37,929,306 — 782,898 1,106,428
BrazilianReal — 8,820,026 1,180,049 866,327
CanadianDollar 31,485,963 16,558,590 1,055,626 944,165
ChileanPeso 29,086 2,095,333 294,083 48,458
ChineseYuanRenminbi — 58,784,892 1,362,505 761,551
ColombianPeso — 49,042,260 668,664 261,639
CzechKoruna 10,339,975 2,700,973 30,140 128,613
DanishKrone — 14,287,333 272,339 15,426
EgyptianPound — 25,566 — 71
Euro — 133,896,097 2,896,084 409,425
HongKongDollar 20,985 294,860 2,080 —
HungarianForint 1,810,773 411,639 26,189 9,501
IndianRupee 36,224,956 — 76,038 157,652
IndonesianRupiah 2,326,485 4,726,823 84,205 68,236
IsraeliShekel 8,394 4,084,785 639,516 163,418
JapaneseYen — 84,865,281 13,246,925 30,459,621
MalaysianRinggit — 963,395 19,162 18
MexicanPeso — 113,541,296 650,594 952,722
NewZealandDollar — 23,167,835 1,058,835 647,859
NorwegianKrone 42,533,045 — 524,119 1,206,178
PeruvianSol — 1,292,628 39,793 40,126
PhilippinesPeso — 2,102,527 39,716 65,401
PolishZloty — 10,205,150 39,274 61,393
RomanianLeu — 2,085,209 6,803 12,628
SingaporeDollar — 19,287,238 727,792 475,355
SouthAfricanRand — 28,429,615 66,127 181,848
SouthKoreanWon — 13,859,902 1,043,199 1,383,073
SwedishKrona 30,187,864 — 97,550 266,773
SwissFranc — 7,733,804 234,899 144,208
TaiwanDollar — 10,411,267 495,798 15,104
ThailandBaht 4,585,546 2,268,510 834,073 552,978
TurkishLira 50,526 — 46,133 46,141
UKPound — 106,401,148 1,876,873 1,199,148
TOTAL $ 197,532,904 722,343,982 30,418,081 42,651,484
ThechangeinfairvalueofopenforeigncurrencyexchangecontractsfortheyearendingAugust31,2023wasadecreasein
theamountof$12,233,403,whichisincludedininvestmentincomeontheconsolidatedstatementofrevenues,expenses
andchangesinnetposition.
72
August31,2022
Currency NetBuy NetSell
UnrealizedGains
onForeign
Exchange
Contracts
UnrealizedLosses
onForeign
Exchange
Contracts
AustralianDollar $ — 76,772,827 4,803,639 1,596,715
BrazilianReal — 44,100,394 250,192 3,594,191
CanadianDollar — 72,184,915 2,735,736 1,487,851
ChileanPeso 36,864,134 — 1,831,663 1,196,214
ChineseYuanRenminbi — 140,892,054 3,849,575 538,508
ColombianPeso — 47,948,939 981,115 658,265
CzechKoruna — 10,113,863 366,222 23,431
DanishKrone — 29,179,467 466,426 79,286
Euro — 366,754,925 8,401,002 1,692,254
HongKongDollar — 90,832 — 4
HungarianForint 12,710,377 — 371,616 1,018,828
IndianRupee 1,584,941 — 19,602 25,906
IndonesianRupiah — 24,307,525 215,755 263,614
IsraeliShekel — 47,355,441 1,038,273 1,086,616
JapaneseYen — 381,562,235 42,297,736 11,145,655
MalaysianRinggit — 1,296,083 1,719,747 324,033
MexicanPeso — 145,081,145 288,684 1,193,766
NewZealandDollar — 31,159,156 3,700,031 1,143,293
NorwegianKrone — 6,143,957 442,278 608,504
PeruvianSol — 16,547,670 245,857 640,175
PhilippinesPeso — 7,826,606 83,129 —
PolishZloty — 21,925,190 508,661 289,013
RomanianLeu — 6,284,586 238,573 —
SingaporeDollar — 45,750,172 250,935 63,288
SouthAfricanRand — 55,457,382 2,472,525 459,802
SouthKoreanWon — 95,022,898 4,569,263 209,706
SwedishKrona 70,878,755 — 512,327 2,188,764
SwissFranc — 16,186,904 1,031,975 746,930
TaiwanDollar — 1,304,335 45,741 36,163
ThailandBaht — 12,202,745 1,976,121 910,514
TurkishLira — 3,624,760 — 21,790
UKPound — 150,490,891 8,013,671 1,793,767
TOTAL $ 122,038,207 1,857,567,897 93,728,070 35,036,846
The change in fair value of open foreign currency exchange contracts for the year ending August 31, 2022 was an
increase in the amount of $58,691,224, which is included in investment income on the consolidated statement of
revenues,expensesandchangesinnetposition
73
(C) Written Options – Written options are used to alter the market (systematic) exposure without trading the
underlyingcashmarketsecurities,andtohedgeandcontrolrisks,sothattheactualrisk/returnprofileismoreclosely
alignedwiththetargetrisk/returnprofile.Thefairvalueisincludedontheconsolidatedstatementofnetpositionin
investmentderivatives-liabilitypositions.Thefollowingdisclosesthefairvaluesoftheoutstandingwrittencalloptions
contractsasofAugust31,2023and2022:
FairValueat
August31,2023
Type Assets Liabilities
Equity — 8,846,918
InterestRateSwap 33,335 65,458
Other — 15,963
$ 33,335 8,928,339
ThechangeinfairvalueofopencalloptionsfortheyearendingAugust31,2023,wasanincreaseintheamountof
$417,783,whichisincludedininvestmentincomeontheconsolidatedstatementofrevenues,expensesandchangesin
netposition.
FairValueat
August31,2022
Type Assets Liabilities
Currency $ — 56
Equity 149 7,571,904
InterestRateSwap 34,518 151,178
Other 75 15,559
$ 34,742 7,738,697
ThechangeinfairvalueofopencalloptionsfortheyearendingAugust31,2022,wasanincreaseintheamountof
$15,866,628, which is included in investment income on the consolidated statement of revenues, expenses and
changesinnetposition.
ThefollowingdisclosesthefairvaluesoftheoutstandingwrittenputoptionscontractsasofAugust31,2023and2022:
FairValueat
August31,2023
Type Assets Liabilities
Equity — 10,623,079
InterestRateSwap — 1,454,366
Other — 53,012
$ — 12,130,457
74
ThechangeinfairvalueofopenputoptionsfortheyearendingAugust31,2023,wasan increaseintheamountof
$2,022,266,whichisincludedininvestmentincomeontheconsolidatedstatementofrevenues,expensesandchanges
innetposition.
FairValueat
August31,2022
Type Assets Liabilities
Currency $ — 6,806
Equity — 197,706
InterestRateSwap — 6,296,157
Other — 37,804
$ — 6,538,473
Thechange infair valueof openput optionsfor theyear endingAugust 31,2022, wasa decreasein theamount of
$5,199,202,whichisincludedininvestmentincomeontheconsolidatedstatementofrevenues,expensesandchanges
innetposition.
(D) Swaps–Swapsareusedtoadjustinterestrateandyieldcurveexposures.Thefairvalueoftheassetpositionsis
included in investments, and the fair value of the liability positions is included in investment derivatives-liability
positionsontheconsolidatedstatementofnetposition.Thefollowingdisclosesthenotionalamount(presentedinUS
dollarequivalents)andthefairvaluesoftheoutstandingswapcontractsasofAugust31,2023:
FairValueat
August31,2023
Type
USD
NotionalValue Assets Liabilities
InterestRate(Pay-FixedReceive-Variable) $ 2,119,495,052 16,929,671 40,606,022
InterestRate(Pay-VariableReceive-Fixed) 263,864,073 12,222,985 23,075
Commodity 197,576,514 — 2,664,416
CreditDefault 344,614,079 4,895,863 476,602
Currency 12,895,400 1,284,453 1,242,567
Equity 1,426,259,205 14,395,971 35,881,009
FixedIncome 135,806,676 760,969 147,284
Volatility 20,989,665 575,694 12,261
Total $ 4,521,500,664 51,065,606 81,053,236
ThechangeinfairvalueofopenswappositionsfortheyearendingAugust31,2023,wasadecreaseintheamountof
$25,303,709, which is included in investment income on the consolidated statement of revenues, expenses and
changesinnetposition.
75
Thefollowingdisclosesthenotionalamount(presentedinUSdollarequivalents)andthefairvaluesoftheoutstanding
swapcontractsasofAugust31,2022:
FairValueat
August31,2022
Type
USD
NotionalValue Assets Liabilities
InterestRate(Pay-FixedReceive-Variable) $ 1,619,776,728 9,376,149 93,188,565
InterestRate(Pay-VariableReceive-Fixed) 1,115,286,562 38,599,479 —
Commodity 71,259,311 — 152,024
CreditDefault 189,099,349 2,486,471 470,216
Currency 30,478,920 1,817,226 2,044,696
Equity 991,170,297 5,779,299 34,293,071
FixedIncome 6,451,743 639,269 6,625
Inflation 8,959,720 — 1,874,916
Volatility 141,588,641 1,456,581 1,639,564
Total $ 4,174,071,271 60,154,474 133,669,677
ThechangeinfairvalueofopenswappositionsfortheyearendingAugust31,2022,wasadecreaseintheamountof
$73,297,468,whichisincludedininvestmentincomeontheconsolidatedstatementofrevenues,expensesandchangesin
netposition.
76
7. DerivativeInstruments
Derivativeinstrumentsarefinancialinstrumentsthevalueofwhichisderived,inwholeorpart,fromthevalueofany
oneormoreunderlyingassetsorindexofassetvalues.Derivativeinstrumentsincludeforwards,futures,optionsand
swaps. Hedging derivative instrument contracts are entered into for the purpose of reducing the overall cost of
borrowinglong-termcapitalandtoprotecttheSystemagainsttheriskofrisinginterestrates.Thehedgingderivative
instrumentsprimarilyconsistofinterestrateswapagreementsenteredintoinconnectionwithlong-termbonds.The
derivativeinstrumentcontractsenabletheSystemtoissuebondsatacostlessthanwhattheSystemwouldhavepaid
to issue conventional fixed-rate debt. Investment derivative instruments are entered into with the intention of
managingtransaction orcurrencyexchangeriskin purchasing,selling or holdinginvestments. Ineffectivehedges are
alsoreportedasinvestmentderivativeinstruments.
AllderivativeinstrumentsarecategorizedasLevel2inthefairvaluehierarchy,exceptforfuturescontractsandsome
of the purchasedoptionswhicharecategorizedas Level 1. The fair values of the interest rate swaps are calculated
usingaforecastofexpecteddiscountedfuturenetcashflows.Otherswapsarefairvaluedbyusingindependentbroker
quotes or using models with primarily externally verifiable model inputs. Futures contracts and foreign exchange
contracts are fair valued at closing market prices on the valuation date. The following disclosures summarize the
System’s derivative instrument activity, in both the System’s enterprise and fiduciary funds, as reported in the
consolidatedfinancialstatements.
77
ChangeinFairValue(FV)
August31,2022toAugust31,2023 FairValueatAugust31,2023
Classification Amount Classification Amount NotionalAmount
InterestRateSwaps
FairValueHedgingDerivative
InstrumentAssetsPay-Variable
Receive-Fixed DefInflows $ 540,818
HedgingDerivative
InstrumentAsset $ 540,818 128,180,000
CashFlowHedgingDerivative
InstrumentAssetsPay-Fixed
Receive-Variable DefInflows 5,231,458
HedgingDerivative
InstrumentAsset 130,238,920 500,000,000
CashFlowHedgingDerivative
InstrumentLiabilitiesPay-Fixed
Receive-Variable DefOutflows 48,122,156
HedgingDerivative
InstrumentLiab (39,388,655) 976,475,000
InvestmentDerivativeInstrument
AssetsBasisSwaps
NetIncr.(Decr.)in
FVofInvest 13,606,748 Investments 41,277,103 804,760,000
InvestmentDerivativeInstrument
LiabilitiesBasisSwaps
NetIncr.(Decr.)in
FVofInvest 974,081
InvestDeriv
Instrument–Liab
Positions — —
InvestmentDerivativeInstruments
InvestmentDerivativeInstrumentAssets:
Swaps:
Pay-FixedReceive-Variable 16,388,033 16,929,671 722,909,240
Pay-VariableReceive-Fixed 8,774,567 12,222,985 256,456,211
Commodity — — —
CreditDefault 4,673,046 4,895,863 317,514,079
Currency (52,319) 1,284,453 6,217,440
Equity 14,395,971 14,395,971 526,687,054
FixedIncome 760,969 760,969 91,850,000
Inflation — — —
Volatility 550,160 575,694 14,142,557
TotalSwaps
NetIncr.(Decr.)in
FVofInvest 45,490,427 Investments 51,065,606 1,935,776,581
Futures
NetIncr.(Decr.)in
FVofInvest 12,299,256
OtherAccounts
Receivable 12,299,256 3,236,795,563
UnrealizedGainsonForeignForwards
NetIncr.(Decr.)in
FVofInvest 30,418,081 Investments 30,418,081 1,813,772,453
PurchasedOptions
NetIncr.(Decr.)in
FVofInvest (13,932,374) Investments 45,889,354 1,606,156,470
InvestmentDerivativeInstrument
Liabilities:
Swaps:
Pay-FixedReceive-Variable (31,819,186) (40,606,022) 1,396,585,812
Pay-VariableReceive-Fixed (23,075) (23,075) 7,407,862
Commodity (2,664,416) (2,664,416) 197,576,514
CreditDefault (476,602) (476,602) 27,100,000
Currency 229,697 (1,242,567) 6,677,960
Equity (35,881,009) (35,881,009) 899,572,151
FixedIncome (147,284) (147,284) 43,956,676
Inflation — — —
Volatility (12,261) (12,261) 6,847,108
TotalSwaps
NetIncr.(Decr.)in
FVofInvest (70,794,136)
InvestDeriv–Liab
Positions (81,053,236) 2,585,724,083
Futures
NetIncr.(Decr.)in
FVofInvest (12,892,843)
CurrentAccounts
Payable (12,892,843) 2,843,000,350
UnrealizedLossesonForeign
Forwards
NetIncr.(Decr.)in
FVofInvest (42,651,484)
InvestDeriv–Liab
Positions (42,651,484) 1,529,599,488
OptionsWritten
NetIncr.(Decr.)in
FVofInvest 2,440,049
InvestDeriv–Liab
Positions (21,025,461) 1,451,390,932
78
ChangeinFairValue(FV)
August31,2021toAugust31,2022 FairValueatAugust31,2022
Classification Amount Classification Amount NotionalAmount
InterestRateSwaps
FairValueHedgingDerivative
InstrumentAssetsPay-Variable
Receive-Fixed DefInflows $ —
HedgingDerivative
InstrumentAsset $ — —
CashFlowHedgingDerivative
InstrumentAssetsPay-Fixed
Receive-Variable DefInflows 107,491,753
HedgingDerivative
InstrumentAsset 125,007,462 740,340,000
CashFlowHedgingDerivative
InstrumentLiabilitiesPay-Fixed
Receive-Variable DefOutflows 205,849,951
HedgingDerivative
InstrumentLiab (87,510,811) 1,024,660,000
InvestmentDerivativeInstrument
AssetsBasisSwaps
NetIncr.(Decr.)in
FVofInvest 9,460,411 Investments 27,670,355 631,590,000
InvestmentDerivativeInstrument
LiabilitiesBasisSwaps
NetIncr.(Decr.)in
FVofInvest (442,173)
InvestDeriv
Instrument–Liab
Positions (974,081) 206,010,000
InvestmentDerivativeInstruments
InvestmentDerivativeInstrumentAssets:
Swaps:
Pay-FixedReceive-Variable 8,897,765 9,376,149 413,469,720
Pay-VariableReceive-Fixed 37,943,540 38,599,479 1,115,286,562
Commodity — — —
CreditDefault 1,716,803 2,486,471 146,040,517
Currency (179,654) 1,817,226 9,254,925
Equity 5,779,299 5,779,299 206,681,360
FixedIncome 639,269 639,269 211,743
Inflation — — —
Volatility 1,456,581 1,456,581 63,070,029
TotalSwaps
NetIncr.(Decr.)in
FVofInvest 56,253,603 Investments 60,154,474 1,954,014,856
Futures
NetIncr.(Decr.)in
FVofInvest 6,411,249
OtherAccounts
Receivable 6,411,249 1,703,964,972
UnrealizedGainsonForeignForwards
NetIncr.(Decr.)in
FVofInvest 93,728,070 Investments 93,728,070 2,967,604,449
PurchasedOptions
NetIncr.(Decr.)in
FVofInvest 9,436,135 Investments 32,481,867 111,480,027
InvestmentDerivativeInstrument
Liabilities:
Swaps:
Pay-FixedReceive-Variable (91,786,346) (93,188,565) 1,206,307,008
Pay-VariableReceive-Fixed — — —
Commodity (152,024) (152,024) 71,259,311
CreditDefault (236,369) (470,216) 43,058,832
Currency 16,847 (2,044,696) 21,223,995
Equity (34,293,071) (34,293,071) 784,488,937
FixedIncome (6,625) (6,625) 6,240,000
Inflation (1,453,919) (1,874,916) 8,959,720
Volatility (1,639,564) (1,639,564) 78,518,612
TotalSwaps
NetIncr.(Decr.)in
FVofInvest (129,551,071)
InvestDeriv–Liab
Positions (133,669,677) 2,220,056,415
Futures
NetIncr.(Decr.)in
FVofInvest (7,411,028)
CurrentAccounts
Payable (7,411,028) 2,212,788,749
UnrealizedLossesonForeign
Forwards
NetIncr.(Decr.)in
FVofInvest (35,036,846)
InvestDeriv–Liab
Positions (35,036,846) 1,615,656,135
OptionsWritten
NetIncr.(Decr.)in
FVofInvest 10,667,426
InvestDeriv–Liab
Positions (14,242,427) 797,770,648
79
Fiduciary fund investment derivative instrument assets of $496,874 and $719,630 as of August 31, 2023 and 2022,
respectively, are included in the numbers in the tables above. Fiduciary fund investment derivative instrument
liabilitiesof$576,154and$726,153asofAugust31,2023and2022,respectively,areincludedinthenumbersinthe
tablesabove.
SeeNote 13formore informationonCash Flow Hedges– Interest RateSwaps and Note6 for moreinformation on
InvestmentDerivativeInstruments.
8. Endowments
Investments include $59,937,190,064 and $57,204,588,630 of endowment funds as of August 31, 2023 and 2022,
respectively. The net position classifications on the statement of net position related to endowment funds as of
August31,2023and2022areasfollows:
NetPositionClassificationofEndowments 2023 2022
Restricted,Nonexpendable $ 38,161,618,752 36,029,323,644
Restricted,Expendable:
NetAppreciationonTrueEndowments 17,487,270,676 17,343,207,979
FundsFunctioningasEndowments 1,031,549,265 983,968,501
BookValueofTermEndowments 42,599,504 43,040,932
NetAppreciationonTermEndowments 55,979,709 58,063,077
Unrestricted:
FundsFunctioningasEndowments 1,342,467,476 1,319,166,760
Total $ 58,121,485,382 55,776,770,893
Inthetableabove,amounts reported as “Net Appreciation” represent netappreciationoninvestmentsof donor or
constitutionallyrestrictedendowmentsthatareavailableforauthorizationforexpenditurebytheU.T.SystemBoard
of Regents.For donor restrictedendowments,pursuant to the Uniform Prudent Management of Institutional Funds
Act,asadoptedbyTexas,theU.T.SystemBoardofRegentsmaydistributenetappreciation,realizedandunrealized,in
thefairvalueoftheassetsofendowmentholdingsoverthehistoricdollarvalueofthegifts,totheextentprudent.The
System’spolicyistoretainallundistributednetrealizedandunrealizedappreciationwithintheendowmentfunds.The
System’sendowmentdistributionpolicyisfurtherdiscussedbelow.
ENDOWMENTSANDSIMILARFUNDS–STATE
TheseendowmentsarecomprisedofthePUFandthePHF.ThePUFwasestablishedforthebenefitoftheSystemand
theTexasA&MUniversitySystem.TheUniversityofTexasSystemadministersthePHFandthedistributionsfromthe
PHFbenefittheSystem’shealth-relatedinstitutions,aswellasfortheTexasA&MUniversityHealthScienceCenter,the
UniversityofNorthTexasHealthScienceCenteratFortWorth,theTexasTech UniversityHealthScienceCenterand
BaylorCollegeofMedicine.
ThePUFwasestablishedbyArticle7,Section11oftheTexasConstitutionof1876throughtheappropriationofland
grants.AmendmentstotheConstitution,approvedbyvotersin1999,wererelatedtotheinvestmentofthePUFand
thedistributionsfromthePUFtotheAUF.TheConstitution,asamended,issummarizedasfollows:(i)TheU.T.System
BoardofRegentsisheldtoa“prudentinvestor”ratherthana“prudentperson”standard;(ii)distributionstotheAUF
aremadefrom thetotalreturnonall PUFinvestmentassets;(iii)theU. T.SystemBoardofRegentsdeterminesthe
amount of distributions to the AUF, which may not exceed an amount equal to 7% of the average net fair value of
investment assets, except as necessary to pay debt service on PUF bonds and notes; (iv) the U. T. System Board of
RegentsdeterminestheamountofdistributionstotheAUFinamannerintendedtoprovidetheAUFwithastableand
predictablestreamofannualdistributionsandtomaintain,overtime,thepurchasingpowerofPUFinvestmentsand
annualdistributionstotheAUF;and(v)theexpensesofmanagingPUFlandandinvestmentsarepaidbythePUF.
80
TheU.T.SystemBoardofRegentsmanagescertainpermanentfundsforhealth-relatedinstitutionsofhighereducation
as more fully described in Chapter 63 of the Texas Education Code. Certain funds created by this statute were
transferredtotheU.T.SystemBoardofRegentsonAugust30,1999,tobemanagedandinvestedinthesamemanner
astheU.T.SystemBoardofRegentsmanagesandinvestsotherendowmentfunds.ThePHFasdefinedinthestatuteis
classified as Endowment and Similar Funds – State. These endowments provide support for programs that benefit
medical research, health education or treatment at health-related institutions. The U. T. System Board of Regents
determinestheamountofdistributionstosupporttheprogramsonanannualbasis.
The annual payout of the PHF is determined by the U. T. System Board of Regents. The annual payout is typically
adjusted by the average consumer price index of the previous twelve quarters provided that the distribution rate
remainswithin a rangeof 3.5% to5.5% of thePHF’s net position;however, theU.T. System Boardof Regentsmay
approvedistributionamountabove,within,orbelowthisrange.
TheGeneralEndowmentFund(GEF),createdMarch1,2001,isapooledfundestablishedforthecollectiveinvestment
oflong-termfundsunderthecontrolandmanagementoftheU.T.SystemBoardofRegents.TheGEFisorganizedasa
pooledinvestmentandhastwoparticipants,thePHFandtheLTF.ThePHFandLTFinitiallypurchasedunitsoftheGEF
on March 1, 2001, in exchange for the contribution of their investment assets. The GEF provides for greater
diversificationofinvestmentsthanwouldbepossibleifeachaccountweremanagedseparately.Theannualpayoutof
theLTFisalsodeterminedbytheU.T.SystemBoardofRegents.Theannualpayoutistypicallyadjustedbytheaverage
consumer price index of the previous twelve quarters provided that the distribution rate remains within a range of
3.5%to5.5%oftheLTF’snetposition;however,theU.T.SystemBoardofRegentsmayapprovedistributionamount
above,within,orbelowthisrange.
ENDOWMENTANDSIMILARFUNDS-OTHERTHANSTATE
Thefundsaresubjecttorestrictionsofendowmentandtrustinstruments,requiringthattheprincipalbemaintained
and that only the income be utilized. Funds may include Permanent Endowments, Term Endowments and Funds
FunctioningasEndowments.FundsFunctioningasEndowmentsconsistofamountsthathavebeeninternallydedicated
by the System for long-term investment purposes. Funds with external donor restrictions are classified as Funds
FunctioningasEndowments–Restricted.Ifnoexternalrestrictionexists,thefundsareclassifiedasFundsFunctioning
asEndowments–Unrestricted.EndowmentholdingsmaybeinvestedintheLTF,ormaybeseparatelyinvestedbased
upon the following three factors: (i) there are investment restrictions incorporated into the trust or endowment
document;(ii)theinabilitytosellthegiftedinvestmentasset;or(iii)theyareholdingsbeingmigrateduponliquidation
intotheLTF.Distributionsarebasedupontheactualincomereceivedfromtheseparatelyinvestedholdings.
AVAILABLEUNIVERSITYFUND
TheAUFconsistsofdistributionsmadetoitfromthetotalreturnon thePUFinvestmentassets andsurfaceincome
fromPUF lands. All surface incomefromthe PUF lands (i.e.,grazingleases and land easements)isdeposited to the
AUF.TheAUFmustbeusedfirsttopaydebtserviceonthePUFbondsandnotes.Afterdebtservicerequirementsare
met,theAUFmaybeappropriatedforthesupportandmaintenanceofU.T.AustinandU.T.SystemAdministration.
81
9. CapitalAssets
A summary of changes in the capital assets for the year ended August 31, 2023, is presented below.
NondepreciableAssets:
LandandLandImprovements $ 1,129,134,066 8,657,278 —
ConstructioninProgress(CIP) 1,232,888,101 (776,807,967) —
NondepreciableCollections 802,829,247 28,503 —
NonamortizableIntangibleAssets 24,596,943 — 1,030,343
TotalNondepreciable/NonamortizableAssets 3,189,448,357 (768,122,186) 1,030,343
DepreciableAssets:
BuildingsandBuildingImprovements 24,988,624,631 566,492,061 —
Infrastructure 807,835,306 24,832,556 —
FacilitiesandOtherImprovements 1,310,148,423 33,059,512 (1,030,343)
FurnitureandEquipment 5,429,492,054 28,635,968 207,790
Vehicles,BoatsandAircraft 103,080,654 447,354 —
OtherDepreciableAssets(includingLibraryBooks) 1,059,610,677 95,159,830 —
TotalDepreciableAssetsatHistoricalCost 33,698,791,745 748,627,281 (822,553)
LessAccumulatedDepreciationfor:
BuildingsandBuildingImprovements (13,264,799,249) — —
Infrastructure (347,520,031) — —
FacilitiesandOtherImprovements (693,130,290) — —
FurnitureandEquipment (3,955,699,950) — (112,471)
Vehicles,BoatsandAircraft (78,308,318) — —
OtherDepreciableAssets(includingLibraryBooks) (692,919,278) — —
TotalAccumulatedDepreciation (19,032,377,116) — (112,471)
DepreciableAssets,Net 14,666,414,629 748,627,281 (935,024)
AmortizableIntangibleAssets:
ComputerSoftware 1,339,031,443 19,494,905 —
OtherIntangibles 700,000 — —
Right-of-UseLand 85,536,270 — —
Right-of-UseBuilding 975,543,614 — —
Right-of-UseEquipment 74,871,279 — —
Right-of-UseInfrastructure 1,715,358 — —
Right-of-UseSBITA 154,514,277 — —
TotalAmortizableIntangibleAssets 2,631,912,241 19,494,905 —
LessAccumulatedAmortizationfor:
ComputerSoftware (1,176,856,529) — —
OtherIntangibles (420,000) — —
Right-of-UseLand (3,049,899) — —
Right-of-UseBuilding (166,471,128) — —
Right-of-UseEquipment (36,754,637) — —
Right-of-UseInfrastructure (393,608)  — —
Right-of-UseSBITA (40,271,235) — —
TotalAccumulatedAmortization (1,424,217,036) — —
IntangibleCapitalAssets,Net 1,207,695,205 19,494,905 —
CapitalAssets,Net $ 19,063,558,191 — 95,319
Balance
September1,2022
Reclassifications
CompletedCIP
Reclassifications
Interagency
Transfers-In
82
NondepreciableAssets:
LandandLandImprovements $ — 10,109,040 (5,365,421) 1,142,534,963
ConstructioninProgress(CIP) — 1,079,194,432 (1,097,663) 1,534,176,903
NondepreciableCollections — 47,470,869 (579,474) 849,749,145
NonamortizableIntangibleAssets (1,030,343) — — 24,596,943
TotalNondepreciable/NonamortizableAssets (1,030,343) 1,136,774,341 (7,042,558) 3,551,057,954
DepreciableAssets:
BuildingsandBuildingImprovements — 384,870,166 (184,395,994) 25,755,590,864
Infrastructure — 1,172 (2,608,517) 830,060,517
FacilitiesandOtherImprovements 1,030,343 8,864,820 (1,963,503) 1,350,109,252
FurnitureandEquipment (163,355) 449,610,443 (202,646,303) 5,705,136,597
Vehicles,BoatsandAircraft — 8,953,211 (3,753,574) 108,727,645
OtherDepreciableAssets(includingLibraryBooks) — 30,154,007 (14,686,168) 1,170,238,346
TotalDepreciableAssetsatHistoricalCost 866,988 882,453,819 (410,054,059) 34,919,863,221
LessAccumulatedDepreciationfor:
BuildingsandBuildingImprovements (162,545) (952,359,783) 170,376,022 (14,046,945,555)
Infrastructure — (32,244,320) 2,608,517 (377,155,834)
FacilitiesandOtherImprovements — (60,879,563) 1,963,503 (752,046,350)
FurnitureandEquipment 113,355 (428,415,222) 178,187,023 (4,205,927,265)
Vehicles,BoatsandAircraft — (7,312,033) 3,604,376 (82,015,975)
OtherDepreciableAssets(includingLibraryBooks) — (58,684,464) 14,353,490 (737,250,252)
TotalAccumulatedDepreciation (49,190) (1,539,895,385) 371,092,931 (20,201,341,231)
DepreciableAssets,Net 817,798 (657,441,566) (38,961,128) 14,718,521,990
AmortizableIntangibleAssets:
ComputerSoftware — 17,982,519 (8,166,591) 1,368,342,276
OtherIntangibles — — — 700,000
Right-of-UseLand — 1,146,933 (157,630) 86,525,573
Right-of-UseBuilding — 141,133,694 (26,175,514) 1,090,501,794
Right-of-UseEquipment — 48,999,194 (22,834,821) 101,035,652
Right-of-UseVehicle — 265,361 — 265,361
Right-of-UseInfrastructure — 408,672 — 2,124,030
Right-of-UseSBITA — 130,070,877 (16,265,185) 268,319,969
TotalAmortizableIntangibleAssets — 340,007,250 (73,599,741) 2,917,814,655
LessAccumulatedAmortizationfor:
ComputerSoftware — (85,768,332) 8,154,463 (1,254,470,398)
OtherIntangibles — (140,000) — (560,000)
Right-of-UseLand — (1,592,963) 139,422 (4,503,440)
Right-of-UseBuilding — (95,071,633) 20,055,062 (241,487,699)
Right-of-UseEquipment — (31,375,580) 22,490,673 (45,639,544)
Right-of-UseVehicle — (26,240) — (26,240)
Right-of-UseInfrastructure — (258,001) — (651,609)
Right-of-UseSBITA — (72,939,580) 14,256,839 (98,953,976)
TotalAccumulatedAmortization — (287,172,329) 65,096,459 (1,646,292,906)
IntangibleCapitalAssets,Net — 52,834,921 (8,503,282) 1,271,521,749
CapitalAssets,Net $ (212,545) 532,167,696 (54,506,968) 19,541,101,693
Reclassifications
Interagency
Transfers-Out Additions Deletions
Balance
August31,2023
83
A summary of changes in the capital assets for the year ended August 31, 2022, is presented below and includes
adjustments made for GASB Statement No. 94 and 96. See Note 4 for further details on the restatements.
NondepreciableAssets:
LandandLandImprovements $ 997,515,696 2,950 —
ConstructioninProgress(CIP) 1,497,415,939 (1,291,484,206) —
NondepreciableCollections 714,510,491 1,638,459 —
NonamortizableIntangibleAssets 24,597,868 — —
TotalNondepreciable/NonamortizableAssets 3,234,039,994 (1,289,842,797) —
DepreciableAssets:
BuildingsandBuildingImprovements 23,662,335,586 1,134,461,371 —
Infrastructure 767,127,817 40,689,365 —
FacilitiesandOtherImprovements 1,297,961,682 32,275,996 —
FurnitureandEquipment 5,134,069,554 15,373,578 904,703
Vehicles,BoatsandAircraft 101,129,516 106,132 —
OtherDepreciableAssets(includingLibraryBooks) 992,355,249 39,987,457 —
TotalDepreciableAssetsatHistoricalCost 31,954,979,404 1,262,893,899 904,703
LessAccumulatedDepreciationfor:
BuildingsandBuildingImprovements (12,324,633,166) — —
Infrastructure (316,790,369) — —
FacilitiesandOtherImprovements (664,223,150) — —
FurnitureandEquipment (3,661,348,777) — (836,648)
Vehicles,BoatsandAircraft (74,133,435) — —
OtherDepreciableAssets(includingLibraryBooks) (663,498,728) — —
TotalAccumulatedDepreciation (17,704,627,625) — (836,648)
DepreciableAssets,Net 14,250,351,779 1,262,893,899 68,055
AmortizableIntangibleAssets:
ComputerSoftware 1,312,700,009 26,948,898 —
OtherIntangibles 700,000 — —
Right-of-UseLand 85,396,848 — —
Right-of-UseBuilding 821,065,758 — —
Right-of-UseEquipment 71,834,784 — —
Right-of-UseInfrastructure 1,486,381 — —
Right-of-UseSBITA 94,828,058 — —
TotalAmortizableIntangibleAssets 2,388,011,838 26,948,898 —
LessAccumulatedAmortizationfor:
ComputerSoftware (1,097,273,683) — —
OtherIntangibles (280,000) — —
Right-of-UseLand (1,471,723) — —
Right-of-UseBuilding (82,028,020) — —
Right-of-UseEquipment (27,155,598) — —
Right-of-UseInfrastructure (191,791) — —
Right-of-UseSBITA — — —
TotalAccumulatedAmortization (1,208,400,815) — —
IntangibleCapitalAssets,Net 1,179,611,023 26,948,898 —
CapitalAssets,Net $ 18,664,002,796 — 68,055
Balance
September1,2021
Reclassifications
CompletedCIP
Reclassifications
Interagency
Transfers-In
84
NondepreciableAssets:
LandandLandImprovements $ — 131,615,420 — 1,129,134,066
ConstructioninProgress(CIP) — 1,028,347,223 (1,390,855) 1,232,888,101
NondepreciableCollections — 86,770,009 (89,712) 802,829,247
NonamortizableIntangibleAssets — — (925) 24,596,943
TotalNondepreciable/NonamortizableAssets — 1,246,732,652 (1,481,492) 3,189,448,357
DepreciableAssets:
BuildingsandBuildingImprovements — 205,931,207 (14,103,533) 24,988,624,631
Infrastructure — 18,124 — 807,835,306
FacilitiesandOtherImprovements — 11,327,801 (31,417,056) 1,310,148,423
FurnitureandEquipment (554,150) 433,977,331 (154,278,962) 5,429,492,054
Vehicles,BoatsandAircraft — 5,417,529 (3,572,523) 103,080,654
OtherDepreciableAssets(includingLibraryBooks) — 42,455,955 (15,187,984) 1,059,610,677
TotalDepreciableAssetsatHistoricalCost (554,150) 699,127,947 (218,560,058) 33,698,791,745
LessAccumulatedDepreciationfor:
BuildingsandBuildingImprovements — (951,283,893) 11,117,810 (13,264,799,249)
Infrastructure — (30,729,662) — (347,520,031)
FacilitiesandOtherImprovements — (60,195,006) 31,287,866 (693,130,290)
FurnitureandEquipment 424,532 (426,885,955) 132,946,898 (3,955,699,950)
Vehicles,BoatsandAircraft — (7,591,366) 3,416,483 (78,308,318)
OtherDepreciableAssets(includingLibraryBooks) — (44,605,784) 15,185,234 (692,919,278)
TotalAccumulatedDepreciation 424,532 (1,521,291,666) 193,954,291 (19,032,377,116)
DepreciableAssets,Net (129,618) (822,163,719) (24,605,767) 14,666,414,629
AmortizableIntangibleAssets:
ComputerSoftware — 18,144,588 (18,762,052) 1,339,031,443
OtherIntangibles — — — 700,000
Right-of-UseLand — 139,422 — 85,536,270
Right-of-UseBuilding — 172,272,301 (17,794,445) 975,543,614
Right-of-UseEquipment — 24,120,847 (21,084,352) 74,871,279
Right-of-UseInfrastructure — 228,977 — 1,715,358
Right-of-UseSBITA — 59,686,219 — 154,514,277
TotalAmortizableIntangibleAssets — 274,592,354 (57,640,849) 2,631,912,241
LessAccumulatedAmortizationfor:
ComputerSoftware — (98,156,336) 18,573,490 (1,176,856,529)
OtherIntangibles — (140,000) — (420,000)
Right-of-UseLand — (1,578,176) — (3,049,899)
Right-of-UseBuilding — (97,567,410) 13,124,302 (166,471,128)
Right-of-UseEquipment — (26,552,738) 16,953,699 (36,754,637)
Right-of-UseInfrastructure — (201,817) — (393,608)
Right-of-UseSBITA — (40,271,235) — (40,271,235)
TotalAccumulatedAmortization — (264,467,712) 48,651,491 (1,424,217,036)
IntangibleCapitalAssets,Net — 10,124,642 (8,989,358) 1,207,695,205
CapitalAssets,Net $ (129,618) 434,693,575 (35,076,617) 19,063,558,191
Reclassifications
Interagency
Transfers-Out Additions Deletions
Balance
August31,2022
85
GASBStatementNo.42,AccountingandFinancialReportingforImpairmentofCapitalAssetsandInsuranceRecoveries,
requiresthedisclosureofimpairmentlossesandassociatedinsurancerecoveries.
TheSystemreportednoimpairmentofcapitalassetsfortheyearsendedAugust31,2023and2022.InFebruary2021,
U. T. System institutions experienced significant property damage and business income losses as a result of Winter
StormUri,whichresultedininsurancerecoveriestotaling$24.2millionfortheyearendedAugust31,2022and$24.4
millionfortheyearendedAugust31,2023.
GASBStatementNo.83,CertainAssetRetirementObligations,requiresthedisclosureofassetretirementobligations
resulting from Texas Administrative Code, Title 25, Part 1, Chapter 289. Subchapter F, Rule 289.252, Licensing of
Radioactive Material. The liabilities were measured using best estimates of current values of outlays expected. The
TexasAdministrativeCode,Title25,Part1,Chapter289.SubchapterF,Rule289.252(gg)(6)(D)exemptsStatelicenses
fromprovidingfinancialassurancesandnoassetshavebeenrestrictedforpaymentoftheliability.
The Asset Retirement Obligation as of August 31, 2023 is presented below (remaining life of the corresponding
DeferredOutflowsinmonths):
AssetRetirementObligation Amount Life
Broadscope $ 9,285,751 0-41months
Cyclotron 2,060,663 0months
GammaKnife 2,981,819 0-31months
ProtonTherapy 1,289,963 0months
GammaPod 334,753 12months
Irradiator 51,097 0months
NuclearEngineeringTeachingLab 4,264,205 27months
Total $ 20,268,251
TheAssetRetirementObligationasofAugust31,2022ispresentedbelow:
AssetRetirementObligation Amount Life
Broadscope $ 9,285,751 0-53months
Cyclotron 2,060,663 0months
GammaKnife 2,346,043 0-43months
ProtonTherapy 1,289,963 0months
GammaPod 334,753 24months
Irradiator 51,097 0months
NuclearEngineeringTeachingLab 4,140,670 39months
Total $ 19,508,940
86
10. Short-TermDebt
TheSystemhadRFS CommercialPaperNotesand PUFCommercialPaperNotes outstandingatAugust31, 2023and
2022.Thenotesareissuedtoprovideinterimfinancingforcapitalimprovementsandtofinanceequipmentpurchases.
While the interest is payable on these notes in periodic installments not to exceed 270 days, they are generally
intended to be refinanced with long-term debt. Short-term debt activity for the year ended August 31, 2023, is
summarizedbelow:
Balance
September1,2022 Additions Reductions
Balance
August31,2023
CommercialPaperNotes:
PermanentUniversityFundCPNotes $ 832,300,000 350,000,000 176,000,000 1,006,300,000
RevenueFinancingSystemCPNotes 956,450,000 913,151,000 534,840,000 1,334,761,000
TotalCommercialPaperNotes $ 1,788,750,000 1,263,151,000 710,840,000 2,341,061,000

Short-termdebtactivityfortheyearendedAugust31,2022,issummarizedbelow:
Balance
September1,2021 Additions Reductions
1
Balance
August31,2022
CommercialPaperNotes:
PermanentUniversityFundCPNotes $ 1,095,000,000 280,000,000 542,700,000 832,300,000
RevenueFinancingSystemCPNotes 796,053,000 603,388,000 442,991,000 956,450,000
TotalCommercialPaperNotes $ 1,891,053,000 883,388,000 985,691,000 1,788,750,000
1
Reductionsofshort-termdebtinclude$417,700,000ofPUFcommercialpapernotesreclassifiedtolong-
termnotesandloanspayableonthestatementofnetpositionasaresultofrefundingcommercial
papernotessubsequenttoAugust31,2022throughtheissuanceoflong-termbonds.
GeneralinformationrelatedtothecommercialpapernotesatAugust31,2023,issummarizedasfollows:
Note or Loan Payable issue name: Permanent University Fund Commercial Paper Notes, Series A and Taxable
CommercialPaperNotes,SeriesB
Purpose:Toprovideinterimfinancingforcapitalimprovementsandtofinancecapitalequipmentpurchases
AuthorizedAmount:Aggregateprincipalamountnottoexceed$1.25billion
Sourceofrevenuefordebtservice:AvailableUniversityFund
Terms: Interest payable in periodic installments not to exceed 270 days at interest rates established by the
System’scommercialpaperdealers
NoteorLoanPayableissuename:RevenueFinancingSystem(RFS)CommercialPaperNotes,SeriesAandTaxable
CommercialPaperNotes,SeriesB
Purpose:Toprovideinterimfinancingforcapitalimprovementsandtofinancecapitalequipmentpurchases
AuthorizedAmount:Aggregateprincipalamountnottoexceed$1.75billion
Source of revenue for debt service: All pledged revenues, subject to the provisions of the Prior Encumbered
Obligations, collectively: (a) the pledged tuition fee; (b) the pledged General Fee; and (c) any or all of the
revenues, funds, and balances lawfully available to the U. T. System Board of Regents and derived from and
attributabletoanyMemberoftheRevenueFinancingSystem,whicharelawfullyavailabletotheU. T.System
BoardofRegentsforpaymentsonparitydebt.
Terms: Interest payable in periodic installments not to exceed 270 days at interest rates established by the
System’scommercialpaperdealers
87
11. LeasesandSBITAs
LEASESWHERETHESYSTEMISTHELESSEE
TheSystementeredintovariousleasesforland,building,equipment,vehicle,andinfrastructure.Oftheseleases,some
agreementscallforpaymentsthatarepartiallyorcompletelyvariableandthereforewerenotincludedinROUassets
orleaseliabilities.Thesevariableleasepaymentsarederivedfromapercentageofsales,useoftheleasedasset,or
changes in indexes or rates. The System recognized a total of $7,828,402 and $3,406,107 as expenses from these
variablepaymentsfortheyearsendedAugust31,2023and2022,respectively.
SeeNote9 fora summaryof changesin theROUassets,displayedby thenature ofunderlyingassets,forthe years
endedAugust31,2023and2022.SeeNote12fortheleaseliabilityactivityfortheyearsendedAugust31,2023and
2022.
Theprincipalandinterestexpenseforthenextfiveyearsandbeyondareprojectedbelowforleaseobligations:
FiscalYear Principal Interest Total
2024 $ 329,093,142 14,422,949 343,516,091
2025 94,210,414 12,168,149 106,378,563
2026 84,532,791 10,694,151 95,226,942
2027 76,678,870 9,296,457 85,975,327
2028 64,784,167 8,039,702 72,823,869
2029–2033 187,368,000 27,844,335 215,212,335
2034–2038 86,292,416 15,862,134 102,154,550
2039–2043 28,831,342 10,447,990 39,279,332
2044–2048 7,512,531 8,601,750 16,114,281
2049–2053 5,809,506 7,919,570 13,729,076
2054–2058 2,961,045 7,380,583 10,341,628
2059–2063 2,319,663 7,051,302 9,370,965
2064–2068 1,328,166 6,793,407 8,121,573
2069–2073 2,427,380 6,539,494 8,966,874
2074–2078 3,260,659 6,110,306 9,370,965
2079–2083 2,414,915 5,706,659 8,121,574
2084–2088 3,682,456 5,284,417 8,966,873
2089–2093 4,710,136 4,660,829 9,370,965
2094–2098 4,088,903 4,032,671 8,121,574
2099–2103 5,615,731 3,351,143 8,966,874
2104–2108 6,942,857 2,428,107 9,370,964
2109–2113 6,667,453 1,454,120 8,121,573
2114–2118 5,709,931 400,419 6,110,350
TotalRequirements $ 1,017,242,474 186,490,644 1,203,733,118
FUTURELEASES
TheSystem entered intoadditionalleases that havenot yet commencedasof August 31,2023,including leasesfor
building, with both fixed and variable payments required. Terms range from 2024 to 2034 with a total future
commitmentof$21,741,448.
SUBLEASES
TheSystemsubleasescertainportionsofvariousRight-of-Usebuildingassetstothirdparties.SincetheSystemisbotha
lessee and a lessor in these sublease arrangements, the System’s lessor transactions are included within lessor
disclosures,separatelyfromtheSystem’slesseetransactionsrelatedto theoriginalleaseswhich areincludedwithin
thelesseedisclosures.
88
LEASESWHERETHESYSTEMISTHELESSOR
Forthe years ended August31, 2023 and 2022,the System earnedatotal of $20,013,844and$26,833,195 inlease
revenue and $5,684,402 and $5,344,277 in lease interest revenue, respectively, from arrangements meeting the
definitionofalease.
TheSystementeredintosomeleaseswhichcallforpaymentsthatarepartiallyorcompletelyvariableandtherefore
were not included in lease receivables or deferred inflows of resources. These variable lease payments are derived
fromapercentageofsales,useoftheleasedasset,orchangesinindexesorrates.TheSystemrecognizedatotalof
$3,387,753and$2,293,757asrevenuefromthesevariablepaymentsfortheyearsendedAugust31,2023and2022,
respectively.
SBITAs
TheSystementeredintovariousSBITAsthatconveytheSystemcontroloftherighttousevendor-providedsoftware,
alone or in combination with an underlying tangible IT capital asset. Of these SBITAs, some agreements call for
payments that are partially or completely variable and therefore were not included in ROU subscription assets or
subscriptionliabilities.Thesevariablepaymentsarederivedfromanumberoflicensesthatchangefromtimetotime,
useoftheITasset,orchangesinindexrates.TheSystemrecognizedatotalof$992,551and$709,544asexpenses
fromthesevariablepaymentsfortheyearsendedAugust31,2023,and2022,respectively.
Theprincipalandinterestexpenseforthenextfiveyearsandbeyondareprojectedbelowforsubscriptionobligations:

SBITAMaturitySchedule
FiscalYear Principal Interest Total
2024 $ 54,369,896 2,311,472 56,681,368
2025 $ 36,395,202 1,669,007 38,064,209
2026 $ 25,037,141 998,097 26,035,238
2027 $ 15,388,834 512,006 15,900,840
2028 $ 4,729,768 179,784 4,909,552
2029-2033 $ 2,567,232 74,067 2,641,298
TotalRequirements $ 138,488,073 5,744,433 144,232,506
FUTURESBITAS
TheSystemhasenteredintoadditionalSBITAsthathavenotyetcommencedasofAugust31,2023,withbothfixedand
variablepaymentsrequired.Termsrangefrom2024to2028withatotalfuturecommitmentof$8,368,398.
89
12. SummaryofLong-TermLiabilities
Long-termliabilityactivityfortheyearendedAugust31,2023,issummarizedasfollows:
Balance
September1,2022 Additions Reductions
Balance
August31,2023
Amountsdue
withinoneyear
BondsPayable:
PermanentUniversityFund $ 2,248,090,000 748,185,000 381,805,000 2,614,470,000 399,390,000
RevenueFinancingSystem 6,544,540,000 337,915,000 322,920,000 6,559,535,000 1,176,745,000
SubtotalBondsPayable–Par 8,792,630,000 1,086,100,000 704,725,000 9,174,005,000 1,576,135,000
UnamortizedNetPremiums 616,009,663 144,429,189 98,087,313 662,351,539 95,382,223
TotalBondsPayable 9,408,639,663 1,230,529,189 802,812,313 9,836,356,539 1,671,517,223
Notes,LoansandLeasesPayable:
NotesandLoansPayable 436,700,000 — 436,700,000 — —
NotesfromDirectBorrowings 31,720,463 (13,473,267) 1,894,242 16,352,954 1,261,125
LeaseObligations 963,057,878 191,953,855 137,769,259 1,017,242,474 329,093,142
SBITALiability 94,154,858 130,070,877 85,737,662 138,488,073 54,369,896
TotalNotes,LoansandLeasesPayable 1,525,633,198 308,551,465 662,101,163 1,172,083,500 384,724,163
TotalOPEBLiability 14,695,594,306 1,357,523,674 7,963,383,625 8,089,734,355 208,395,911
NetPensionLiability 2,300,711,499 3,338,429,170 — 5,639,140,669 —
TotalPensionLiability 1,046,052,341 63,233,057 190,446,014 918,839,384 72,533,114
HedgingDerivativeLiability 87,510,811 — 48,122,156 39,388,655 —
EmployeeCompensableLeave 855,424,712 544,226,620 483,118,374 916,532,958 523,251,766
IncurredButNotReportedSelf-
InsuranceClaims 221,719,241 1,857,021,751 1,840,839,317 237,901,675 199,965,066
AssetRetirementObligation 19,508,940 759,311 — 20,268,251 —
Total $ 30,160,794,711 8,700,274,237 11,990,822,962 26,870,245,986 3,060,387,243

90
Long-termliabilityactivityfortheyearendedAugust31,2022,asrestatedforGASBStatementNo.96issummarizedas
follows:
Balance
September1,2021 Additions Reductions
Balance
August31,2022
Amountsdue
withinoneyear
BondsPayable:
PermanentUniversityFund $ 2,307,025,000 — 58,935,000 2,248,090,000 386,695,000
RevenueFinancingSystem 6,702,085,000 256,395,000 413,940,000 6,544,540,000 1,224,490,000
SubtotalBondsPayable–Par 9,009,110,000 256,395,000 472,875,000 8,792,630,000 1,611,185,000
UnamortizedNetPremiums 677,676,799 30,320,873 91,988,009 616,009,663 88,111,681
TotalBondsPayable 9,686,786,799 286,715,873 564,863,009 9,408,639,663 1,699,296,681
Notes,LoansandLeasesPayable:
NotesandLoansPayable 19,000,000 417,700,000
1
— 436,700,000 19,000,000
NotesfromDirectBorrowings
17,678,505 16,519,598 2,477,640 31,720,463 6,443,614
LeaseObligations
888,343,155 196,761,546 122,046,823 963,057,878 107,368,206
SBITALiability 94,815,658 59,698,619 60,359,419 94,154,858 41,016,036
TotalNotes,LoansandLeasesPayable
2
1,019,837,318 690,679,763 184,883,883 1,525,633,198 173,827,855
TotalOPEBLiability
11,931,417,814 2,945,429,208 181,252,716 14,695,594,306 243,697,144
NetPensionLiability 4,805,427,562 — 2,504,716,063 2,300,711,499 —
TotalPensionLiability
1,026,357,235 66,700,741 47,005,635 1,046,052,341 —
HedgingDerivativeLiability 293,360,762 — 205,849,951 87,510,811 —
EmployeeCompensableLeave 819,809,713 460,625,101 425,010,102 855,424,712 445,635,293
IncurredButNotReportedSelf-Insurance
Claims 177,110,866 1,753,641,214 1,709,032,839 221,719,241 187,951,915
AssetRetirementObligation 18,178,517 1,330,423 — 19,508,940 —
Total
1,2
$ 29,778,286,586 6,205,122,323 5,822,614,198 30,160,794,711 2,750,408,888
1
Additions of Notes and Loans Payable include $417,700,000 of commercial paper notes reclassified from short-term debt to long-term notes and loans payable on the
statementofnetpositionasaresultofrefundingcommercialpapernotessubsequenttoAugust31,2022throughtheissuanceoflong-termbonds.Seenote10relatedto
short-termdebtandnote24fordetailsonthesubsequentevents.
2
IncludesretroactiverestatementsrelatedtoGASBStatementNo.96.SeeNote4forfurtherdetails.

PROJECTEDBONDDEBTSERVICEREQUIREMENTS
The principal and interest expense for the next five years and beyond are projected below for bonds issued and
outstanding:
FiscalYear Principal Interest Total
2024 $ 1,576,135,000 351,905,496 1,928,040,496
2025 341,695,000 333,658,298 675,353,298
2026 373,915,000 316,794,406 690,709,406
2027 287,145,000 298,384,320 585,529,320
2028 256,505,000 284,253,913 540,758,913
2029–2033 1,693,215,000 1,207,518,020 2,900,733,020
2034–2038 1,065,404,000 827,593,054 1,892,997,054
2039–2043 964,256,000 601,168,323 1,565,424,323
2044–2048 1,901,600,000 354,101,248 2,255,701,248
2049–2053 714,135,000 50,820,658 764,955,658
TotalRequirements $ 9,174,005,000 4,626,197,736 13,800,202,736
91
The System’s variable rate demand bonds mature at various dates through August 1, 2045. Outstanding principal
balances on variable rate demand bonds may be classified as non-current liabilities if the issuer has entered into a
“take-out agreement” to convert bonds “put” but not resold into some other form of long-term obligation. In the
absenceofsuchanagreement,thetotaloutstandingprincipalbalancesforthesebondsarerequiredtobeclassifiedas
currentliabilities. Although itisthe System’s intenttorepay its variable ratedemand bonds in accordancewiththe
maturities set forth in the bond offering circulars, the System does not have “take-out” agreements in place.
Accordingly,the System has classified the totaloutstandingprincipal balances on its variable ratedemandbondsas
current liabilities. The obligations totaled $1,226,475,000 and $1,274,660,000 at August 31, 2023 and 2022,
respectively.
PLEDGEDFUTUREREVENUES
ThefollowingtableprovidesthepledgedfuturerevenueinformationfortheSystem’sbonds:
2023 2022
PledgedRevenueRequiredforFuturePrincipalandInterest
onExistingBonds $ 13,800,202,736 13,331,009,655
TermofCommitmentYearEnding8/31 2052 2052
PercentageofSpecificRevenuesPledged 100% 100%
CurrentYearPledgedRevenue $ 16,843,156,924 14,994,269,165
CurrentYearPrincipalandInterestPaid $ 767,185,761 768,817,572
92
DIRECTBORROWINGS
Certaindirectborrowingstofinancethepurchaseofpropertyarecapitalizedatthepresentvalueoffutureminimum
direct borrowing payments. The original capitalized cost of all such property financed with direct borrowings as of
August31,2023and2022isasfollows:
Assets-DirectBorrowings 2023 2022
FurnitureandEquipment $ 4,837,000 25,099,067
Less:AccumulatedDepreciation (3,176,762) (1,331,329)
Buildings 13,581,387 13,581,387
Less:AccumulatedDepreciation (1,439,819) (775,287)
NondepreciableCollections 1,420,997 407,712
Total $ 15,222,803 36,981,550
Direct borrowing obligations are due in annual installments through 2046.The following is a schedule of the future
minimumpaymentsfordirectborrowingsatAugust31,2023.
FiscalYear Principal Interest Total
2024 $ 1,261,125 680,583 1,941,708
2025 734,490 657,531 1,392,021
2026 643,479 631,806 1,275,285
2027 889,939 605,061 1,495,000
2028 670,775 579,225 1,250,000
2029–2033 2,464,647 2,535,352 4,999,999
2034–2038 3,108,314 1,891,685 4,999,999
2039–2043 3,920,082 1,079,918 5,000,000
2044–2048 2,660,103 173,231 2,833,334
TotalMinimumPayments $ 16,352,954 8,834,392 25,187,346
POLLUTIONREMEDIATIONOBLIGATION
TheUniversityofTexasSystemAdministrationpurchasedcontaminatedlandwithplanstoremediate.Theestimated
outlays for the pollution remediation are $3,500,000 using the expected cash flow technique. These pollution
remediationoutlaysqualifyforcapitalizationand$3,161,511and$3,148,595werecapitalizedthroughAugust31,2023
and2022respectively.Thepurchasepriceof$213,584,352andtotalexpectedoutlaysdidnotexceedthefairmarket
valueoftheuncontaminatedpropertyof$232,290,000,andassuch,nopollutionremediationliabilitywasestablished.
EMPLOYEES’COMPENSABLELEAVE
Employees’ compensable leave is the System’s liability for accrued compensable absences. This obligation is usually
paidfromthesamefundingsource(s)astheemployee’ssalaryorwagecompensation.
13. BondedIndebtedness
At August 31, 2023 and 2022, the System had outstanding bonds payable of $9,174,005,000 and $8,792,630,000,
respectively.PermanentUniversityFundbondsaresecuredbyandpayablefromtheSystem’sinterestintheAvailable
University Fund, which consists of distributions from the investment income of the Permanent University Fund.
RevenueFinancingSystemdebtissecuredbyandpayablefromPledgedRevenuesasdefinedintheMasterResolution
establishing the Revenue Financing System. Pledged Revenues consist of all lawfully available revenues, funds and
balances, with certain exceptions, pledged to secure revenue-supported indebtedness issued under the Master
Resolution.
93
BondedIndebtedness InterestRates
Maturity
Dates
Outstanding
Principal
PermanentUniversityFund 2.00%-5.262% 2024-2052 $ 2,614,470,000
RevenueFinancingSystem 2.00%-5.375% 2024-2052  6,559,535,000
AsofAugust31,2023,thefollowingamountswereauthorized,butunissued:PermanentUniversityFundbondsuptoa
maximumaggregateamountof$975millionandRevenueFinancingSystembondsuptoamaximumaggregateamount
of$975million,eachauthorizedtobeissuedonorbeforeAugust23,2024.AllbondsissuedbytheSystemaredefined
as revenue bonds. Segment information requirements are not applicable, due to the bond indentures’ lack of
specificallyidentifiable activitiesandexternal partyimposedseparate accountingrequirements.General information
relatedtobondsoutstandingasofAugust31,2023,issummarizedinthefollowingtable.
PermanentUniversityFund:
RefundingBonds,Series2006B
Torefund$85,545,000principalamountofPermanent
UniversityFundBonds,Series2002B,maturingonJuly1in
theyears2020through2022,bothinclusive;torefund
$172,985,000principalamountofPermanentUniversity
FundBonds,Series2004B,maturingonJuly1intheyears
2023,2026and2028through2030,bothinclusive;torefund
$51,905,000principalamountofPermanentUniversityFund
Bonds,Series2005B,maturingonJuly1intheyear2035,
andpaythecostofissuance
January24,2007 $ 284,065,000
TaxableBonds,Series2009A
Torefund$250,000,000principalamountofPermanent
UniversityFundTaxableCommercialPaperNotes,SeriesB
andpaythecostofissuance
September17,2009 250,000,000
Bonds,Series2014B
Torefund$17,240,000principalamountofPermanent
UniversityFundBonds,Series2004A,maturingonJuly1in
theyears2015and2016;andtorefund$223,535,000
principalamountofPermanentUniversityFundBonds,Series
2004B,maturingonJuly1intheyears2024,2025,2027and
2033,andpaythecostofissuance
April2,2014 221,580,000
RefundingBonds,Series2015A
Torefund$50,390,000principalamountofPermanent
UniversityFundRefundingBonds,Series2005A,maturingon
July1intheyears2016through2019,bothinclusive;to
refund$72,720,000principalamountofPermanent
UniversityFundBonds,Series2005B,maturingonJuly1in
theyears2018,2019,2034and2035;andtorefund
$87,485,000principalamountofPermanentUniversityFund
Bonds,Series2006C,maturingonJuly1intheyears2017
through2035,bothinclusive,andpaythecostofissuance
April2,2015 197,970,000
Bonds,Series2015B Torefund$252,500,000principalamountofPermanent
UniversityFundTaxableCommercialPaperNotes,SeriesB
andpaythecostofissuance
August25,2015 220,565,000
Bonds,TaxableSeries2015C
Torefund$125,500,000principalamountofPermanent
UniversityFundTaxableCommercialPaperNotes,SeriesB
andpaythecostofissuance
December9,2015 126,020,000
Bonds,Series2016A
Torefund$137,000,000principalamountofPermanent
UniversityFundTaxableCommercialPaperNotes,SeriesB
andpaythecostofissuance
January5,2016 117,270,000
Bonds,Series2016B
Torefund$319,000,000principalamountofPermanent
UniversityFundCommercialPaperNotes,SeriesAandpay
thecostofissuance
September1,2016 272,350,000
BondSeries Purpose IssueDate
AmountIssued
94
Bonds,TaxableSeries2017A
Torefund$81,000,000principalamountofPermanent
UniversityFundCommercialPaperNotes,SeriesA,andto
refund$220,000,000principalamountofPermanent
UniversityFundTaxableCommercialPaperNotes,SeriesB
andpaythecostofissuance
November14,2017 302,640,000
Bonds,Series2022A
Torefund$417,700,000principalamountofPermanent
UniversityFundCommercialPaperNotes,SeriesAandpay
thecostofissuance
October13,2022 372,915,000
Bonds,Series2023A
Torefund$240,340,000ofPermanentUniversityFund
Bonds,Series2014A,torefund$176,000,000ofPermanent
UniversityFundCommercialPaperNotes,SeriesA,andpay
thecostofissuance
April4,2023 375,270,000
RevenueFinancingSystem:
RefundingBonds,Series2010B
Torefund$393,690,000principalamountofportionsof
RevenueFinancingSystemBonds,2006B,2006Dand2006F
andpaythecostofissuance
April14,2010 385,380,000
TaxableBonds,Series2010C
Toprovidenewmoneyof$600,741,596andpaythecostof
issuance
September23,2010 604,310,000
TaxableBonds,Series2010D
Torefund$349,415,000principalamountofRevenue
FinancingSystemCommercialPaperNotes,SeriesA,provide
newmoneyof$163,441,000andpaythecostofissuance
June30,2010 516,245,000
Bonds,Series2014A
Torefund$179,411,000principalamountofRevenue
FinancingSystemCommercialPaperNotes,SeriesA,provide
newmoneyof$103,148,328andpaythecostofissuance
May1,2014 259,135,000
RefundingBonds,Series2014B
Torefund$261,840,000principalamountofportionsof
RevenueFinancingSystemBonds,2006B,2006Dand2006F,
andpaythecostofissuance
November24,2014 250,700,000
Bonds,TaxableSeries2016A
Torefund$48,494,000principalamountofRevenue
FinancingSystemCommercialPaperNotes,SeriesA,to
refund$107,630,000principalamountofRevenueFinancing
SystemTaxableCommercialPaperNotes,SeriesB,provide
newmoneyof$98,745,350andpaythecostofissuance
January14,2016 255,825,000
Bonds,Series2016B
Torefund$105,478,000principalamountofRevenue
FinancingSystemCommercialPaperNotes,SeriesA,provide
newmoneyof$118,490,125andpaythecostofissuance
January22,2016 206,040,000
RefundingBonds,Series2016C
Torefund$87,145,000principalamountofRevenue
FinancingSystemBonds,Series2008A,providenewmoney
of$64,800,000andpaythecostofissuance
May10,2016 133,240,000
Bonds,Series2016D
Toprovidenewmoneyof$260,000,000andpaythecostof
issuance
July1,2016 213,180,000
Bonds,Series2016E
Toprovidenewmoneyof$245,000,000andpaythecostof
issuance
August22,2016 196,215,000
Bonds,Series2016F
Torefund$465,019,000principalamountofRevenue
FinancingSystemCommercialPaperNotes,SeriesA,andpay
thecostofissuance
September1,2016 376,030,000
RefundingBonds,Series2016H
Torefund$266,640,000principalamountofportionsof
RevenueFinancingSystemBonds,2006Dand2006F,andpay
thecostofissuance
November17,2016 233,350,000
BondSeries Purpose IssueDate
AmountIssued
95
RefundingBonds,Series2016I
Torefund$202,010,000principalamountofportionsof
RevenueFinancingSystemBonds,2006Eand2010A,andpay
thecostofissuance
November30,2016 184,725,000
Bonds,Series2016J
Toprovidenewmoneyof$352,832,000andpaythecostof
issuance
January4,2017 306,925,000
Bonds,TaxableSeries2017A
Torefund$349,000,000principalamountofRevenue
FinancingSystemTaxableCommercialPaperNotes,SeriesB,
andpaythecostofissuance
September14,2017 350,815,000
Bonds,Series2017B
Torefund$87,455,000principalamountofRevenue
FinancingSystemCommercialPaperNotes,SeriesA,to
refund$191,664,000principalamountofRevenueFinancing
SystemTaxableCommercialPaperNotes,SeriesB,andpay
thecostofissuance
October24,2017 265,490,000
RefundingBonds,Series2017C
Torefund$265,855,000principalamountofportionsof
RevenueFinancingSystemBonds,2009D,2012Aand2012B,
andpaythecostofissuance
December7,2017 258,465,000
RefundingBonds,Series2019A
Torefund$386,785,000principalamountofportionsof
RevenueFinancingSystemBonds,2009Band2014B,andpay
thecostofissuance
June13,2019 320,435,000
Bonds,Series2019B
Torefund$449,478,000principalamountofRevenue
FinancingSystemCommercialPaperNotes,SeriesA,andpay
thecostofissuance
July18,2019 318,715,000
Bonds,Series2020A
Torefund$381,590,000principalamountofRevenue
FinancingSystemCommercialPaperNotes,SeriesA,to
refund$99,530,000ofRevenueFinancingSystemBonds,
Series2016Fandpaythecostofissuance
April14,2020 347,580,000
Bonds,TaxableSeries2020B
Torefund$159,500,000principalamountofRevenue
FinancingSystemCommercialPaperNotes,SeriesA,to
refund$139,412,000principalamountofRevenueFinancing
SystemTaxableCommercialPaperNotes,SeriesBandpay
thecostofissuance
May29,2020 300,805,000
Bonds,Series2020C
Torefund$98,800,000principalamountofRevenue
FinancingSystemCommercialPaperNotes,SeriesA,to
refund$28,405,000ofRevenueFinancingSystemBonds,
Series2017Bandpaythecostofissuance
June16,2020 101,065,000
Bonds,Series2021A
Torefund$300,000,000principalamountofRevenue
FinancingSystemCommercialPaperNotes,SeriesA,to
refund$115,000,000ofRevenueFinancingSystemBonds,
Series2016Bandpaythecostofissuance
May19,2021 381,865,000
Bonds,Series2022A
Torefund$194,911,000principalamountofRevenue
FinancingSystemCommercialPaperNotes,SeriesA,to
refund$11,920,000ofRevenueFinancingSystemBonds,
Series2012A,torefund$76,855,000ofRevenueFinancing
SystemBonds,Series2012Bandpaythecostofissuance
May18,2022 256,395,000
Bonds,Series2023A
Torefund$389,340,000principalamountofRevenue
FinancingSystemCommercialPaperNotes,SeriesA,andpay
thecostofissuance
June21,2023 337,915,000
BondSeries Purpose IssueDate
AmountIssued
96
DEMANDBONDS
RevenueFinancingSystem RefundingBonds, Series2007B,RevenueFinancingSystem Bonds,Series 2008B,Revenue
FinancingSystemBonds,TaxableSeries2016G,andPermanentUniversityFundBonds,Series2008Aarevariablerate
demandbonds with an optiontotender on sevendays’ notice. TheSystemhas entered intocorrespondinginterest
rateswapagreementstoconverttheSystem’sinterestrateexposuretoafixedrate.TheRevenueFinancingSystem
Refunding Bonds, Series 2007B and the corresponding swap agreements extend to August 1, 2034. The Revenue
FinancingSystemBonds,Series2008BandthecorrespondingswapagreementsextendtoAugust1,2039.TheRevenue
FinancingSystemBonds,TaxableSeries2016GandthecorrespondingswapagreementsextendtoAugust1,2045.The
PermanentUniversityFundBonds,Series2008AandthecorrespondingswapagreementsextendtoJuly1,2038.The
BoardofRegentsisobligatedtopaythepurchasepriceofdemandbondstenderedforpurchaseandnotremarketed
byusinglawfullyavailablefunds.Generalinformationrelatedtothesedemandbondsissummarizedinthefollowing
table:
BondSeries Purpose IssueDate AmountIssued
PermanentUniversityFund:
Bonds,Series2008A
Torefund$400,000,000ofPermanentUniversityFundFlexible
Notes,SeriesAandpaycostsofissuance
October30,2008 $ 400,905,000
RevenueFinancingSystem:
RefundingBonds,Series
2007B
Torefund$169,015,000ofRevenueFinancingSystemBonds,Series
2003Band$149,860,000ofRevenueFinancingSystemBonds,Series
2004D,andpaycostsofissuance
December20,2007 345,460,000
Bonds,Series2008B Torefund$461,922,000ofRevenueFinancingSystemCommercial
PaperNotes,SeriesAand$34,715,000ofRevenueFinancingSystem
Bonds,Series1998B,provide$182,590,000ofnewmoneyto
financethecostsofcampusimprovements,andpaycostsof
issuance
March18,2008 685,485,000
Bonds,TaxableSeries2016G
Torefund$250,000,000principalamountofRevenueFinancing
SystemCommercialPaperNotes,SeriesA,andpaythecostof
issuance
September15,2016 250,000,000
BUILDAMERICABONDS
TheAmericanRecoveryandReinvestmentActof2009authorizedtheissuanceofBuildAmericaBonds(BABs),whereby
certainissuersareauthorizedtoissuetaxablebondsandreceivefromthefederalgovernmentasubsidyequalto35%
oftheinterestpaymentsonDirectPaymentBABsreducedbytheapplicablefederalsequestrationreductionrate.The
System did not issue any BABs during 2023 or 2022. The System had $1,125,360,000 and $1,157,030,000 of BABs
outstandingatAugust31,2023and2022,respectively.
EARLYEXTINGUISHMENTSINFISCALYEAR2023
OnSeptember20,2022,$79,675,000principalamountofPermanentUniversityFundBonds,Series2014B,werelegally
defeasedusingavailablefunds.
Thedefeasanceinvolvedusingavailablefundstopurchase$81,967,061ofeligibledefeasancesecurities.
Thedefeasedbondsareconsideredfullydefeasedandtheliabilityfortheseobligationshasbeenremovedfrom
theconsolidatedstatementofnetposition.
Anaccountinglossof$973,238resultedfromthetransactionasthereacquisitionpriceof$81,967,061exceeded
thenetcarryingamountof$79,675,000parvalueand$1,318,823unamortizedoriginalissuepremium.
Asaresultofthisdefeasance,theSystemreduceditsfuturedebtservicepaymentsby$106,229,750fromclosing
throughJuly1,2032.
97
Permanent University Fund Bonds, Series 2022A were issued on October 13, 2022, to current refund $417,700,000
principal amount of Permanent University Fund Commercial Paper Notes, Series A and to pay the costs of issuance
relatedthereof.
Net proceeds related to the issuance were $418,184,091, which represents the principal amount of the 2023A
Bonds of $372,915,000, plus an original issue premium of $46,291,287, less an underwriting discount of
$1,022,196.Thenetproceedswereusedtopaycostsofissuanceof$316,140,topurchase$417,867,442ofeligible
defeasancesecuritiesandtodeposit$510withtheescrowagentfortherefundednotes.
Therefundednotesareconsideredfullydefeasedandtheliabilityfortheseobligationshasbeenremovedfromthe
consolidatedstatementofnetposition.
Anaccountinglossof$167,442resultedfromthetransactionasthereacquisitionpriceof$417,867,442exceeded
thenetcarryingamountof$417,700,000parvalue.
PermanentUniversityFundBonds,Series2023AwereissuedonApril4,2023,tocurrentrefund$176,000,000principal
amountofPermanentUniversityFundCommercialPaperNotes,SeriesA,tocurrentrefund$240,340,000principalof
PermanentUniversityFundBonds,Series2014A,andtopaythecostsofissuancerelatedthereof.
Net proceeds related to the issuance were $420,077,523, which represents the principal amount of the 2023A
Bonds of $375,270,000, plus an original issue premium of $45,958,372, less an underwriting discount of
$1,150,849.Thenetproceedswereusedtopaycostsofissuanceof$297,242,topurchase$419,779,650ofeligible
defeasancesecuritiesandtodeposit$631withtheescrowagentfortherefundedbondsandnotes.
The refunded bonds and notes are considered fully defeased and the liability for these obligations has been
removedfromtheconsolidatedstatementofnetposition.
An accounting loss of $3,066,122 resulted from the transaction as the reacquisition price of $419,779,650
exceededthenetcarryingamountof$416,340,000parvalueand$373,528unamortizedoriginalissuepremium.
As a result of this refunding, the System reduced its future debt service payments by $42,115,329from closing
through July 1, 2041, and an economic gain from the transaction resulted in a net present value savings of
$28,306,665betweentheoldandnewdebtservicepayments.
RevenueFinancingSystemBonds,Series2023AwereissuedonJune21,2023,tocurrentrefund$389,340,000amount
ofRevenueFinancingSystemCommercialPaperNotes,SeriesAandtopaythecostsofissuancerelatedthereof.
Net proceeds related to the issuance were $389,159,546, which represents the principal amount of the 2023A
Bondsof$337,915,000,plusanoriginalissuepremiumof$52,179,529,lessanunderwritingdiscountof$934,984.
Thenetproceedswereusedtopaycostsofissuanceof$365,988,topurchase$388,793,557ofeligibledefeasance
securities.
Therefundednotesareconsideredfullydefeasedandtheliabilityfortheseobligationshasbeenremovedfromthe
consolidatedstatementofnetposition.
Anaccountinggainof$546,443resultedfromthetransactionasthereacquisitionpriceof$388,793,557wasbelow
thenetcarryingamountof$389,340,000parvalue.
98
EARLYEXTINGUISHMENTSINFISCALYEAR2022
RevenueFinancingSystemBonds,Series2022AwereissuedonMay18,2022tocurrentrefund$194,911,000principal
amountofRevenueFinancingSystemCommercialPaperNotes,SeriesA,tocurrentrefund$11,920,000principalofRFS
Bonds, Series 2012A, to current refund $76,855,000 principal amount of Revenue Financing System Bonds, Series
2012B,andtopaythecostsofissuancerelatedthereof.
Net proceeds related to the issuance were $285,877,754, which represents the principal amount of the 2022A
Bondsof$256,395,000,plusanoriginalissuepremiumof$30,320,873,lessanunderwritingdiscountof$838,119.
The net proceeds along with $163,904 of System funds were used to pay costs of issuance of $297,528, to
purchase$78,695,781ofeligibledefeasancesecuritiesandtodeposit$1withtheescrowagentfortherefunded
bonds,andtodeposit$207,048,348withtheescrowagentfortherefundednotes.
The refunded bonds and notes are considered fully defeased and the liability for these obligations has been
removedfromtheconsolidatedstatementofnetposition.
An accounting loss of $1,566,031 resulted from the transaction as the reacquisition price of $285,744,130
exceededthenetcarryingamountof$283,686,000parvalueand$492,099unamortizedoriginalissuepremium.
As a result of this refunding, the System reduced its future debt service payments by $24,940,493from closing
throughAugust 15, 2043,andan economic gain fromthe transaction resultedina net present valuesavingsof
$18,824,826betweentheoldandnewdebtservicepayments.
DERIVATIVEINSTRUMENTS–HEDGINGDERIVATIVEINSTRUMENTINTERESTRATESWAPS
Allinterestrateswapsarevaluedusingthefairvaluehierarchyoflevel2.TheSystemhascalculatedthefairvalueof
the interest rate swaps using a forecast of expected discounted future net cash flows and considered the
nonperformance risk of the parties. The following table outlines the terms of the System’s hedging derivative
instrumentinterestrateswapagreementsineffectatAugust31,2023:
99
Interest
Rate
Swaps-
byType
Hedgeable
Item
Current
Notional EffectiveDate
Maturity
Date Terms*
Embedded
Options?
CashPaid
or
Received
Counterparty
CreditRating
(Moody's/
S&P)
Weighted
Average
Maturity
Asof
08/31/23
PayFixed;
Receive
Variable
PUFBonds
2008A
$ 162,452,500 11/3/2008 7/1/2038 Pay3.696%;
receiveSIFMA
No No Aa2/A+ 11.5yrs
PUFBonds
2008A
162,452,500 11/3/2008 7/1/2038 Pay3.6575%;
receiveSIFMA
No No Aa3/A+ 11.5yrs
RFSBonds
2007B
141,760,000 12/20/2007 8/1/2034 Pay3.805%;
receiveSIFMA
No No Aa2/A+ 6.0yrs
RFSBonds
2007B
141,760,000 12/20/2007 8/1/2034 Pay3.805%;
receiveSIFMA
No No Aa2/A+ 6.0yrs
RFSBonds
2008B
94,830,000 3/18/2008 8/1/2036 Pay3.900%;
receiveSIFMA
No No Aa2/A+ 8.5yrs
RFSBonds
2008B
94,830,000 3/18/2008 8/1/2036 Pay3.900%;
receiveSIFMA
No No A1/A- 8.5yrs
RFSBonds
2008B
178,390,000 3/18/2008 8/1/2039 Pay3.614%;
receiveSIFMA
No No Aa2/A+ 8.2yrs
RFSBonds
2016G
250,000,000 12/1/2016 8/1/2045
Pay2.000%;
receive100%
of100%of
SOFR+
No No Aa3/A+ 21.9yrs
RFSTaxable
Commercial
Paper
250,000,000 11/1/2020 8/1/2049
Pay1.576%;
receive100%
of100%of
SOFR+
No No Aa3/A+ 25.9yrs
Pay
Variable;
Receive
Fixed
PUFBonds
2023A
128,180,000 9/1/2023 7/1/2033 PaySIFMA;
receive
3.250%
No No Aa2/A+ 9.3yrs
TOTAL
$1,604,655,000
*SecuredOvernightFinancingRate(SOFR)
SecuritiesIndustryandFinancialMarketsAssociation(SIFMA)
USD-FederalFunds-H.15(FedFunds)
100
ThefollowingtableoutlinesthetermsoftheSystem’shedgingderivativeinstrumentinterestrateswapagreementsin
effectatAugust31,2022:
Interest
Rate
Swaps-
byType
Hedgeable
Item
Current
Notional EffectiveDate
Maturity
Date Terms*
Embedded
Options?
CashPaid
or
Received
Counterparty
CreditRating
(Moody's/
S&P)
Weighted
Average
Maturity
Asof
08/31/2022
PayFixed;
Receive
Variable
PUFBonds
2008A
$ 166,042,500 11/3/2008 7/1/2038 Pay3.696%;
receiveSIFMA
No No Aa2/A+ 12.2yrs
PUFBonds
2008A
166,042,500 11/3/2008 7/1/2038 Pay3.6575%;
receiveSIFMA
No No Aa3/A+ 12.2yrs
PUFBonds
2014A
240,340,000 6/30/2023 7/1/2041 Pay0.720%;
receive80%of
FedFunds
No No Aa3/A+ 18.3yrs
RFSBonds
2007B
151,552,500 12/20/2007 8/1/2034 Pay3.805%;
receiveSIFMA
No No Aa2/A+ 6.6yrs
RFSBonds
2007B
151,552,500 12/20/2007 8/1/2034 Pay3.805%;
receiveSIFMA
No No Aa2/A+ 6.6yrs
RFSBonds
2008B
99,205,000 3/18/2008 8/1/2036 Pay3.900%;
receiveSIFMA
No No Aa2/A+ 9.1yrs
RFSBonds
2008B
99,205,000 3/18/2008 8/1/2036 Pay3.900%;
receiveSIFMA
No No A1/A- 9.1yrs
RFSBonds
2008B
191,060,000 3/18/2008 8/1/2039 Pay3.614%;
receiveSIFMA
No No Aa2/A+ 8.7yrs
RFSBonds
2016G
250,000,000 12/1/2016 8/1/2045 Pay2.000%;
receive100%
of1MLIBOR
No No Aa3/A+ 22.9yrs
RFSTaxable
Commercial
Paper
250,000,000 11/1/2020 8/1/2049 Pay1.576%;
receive100%
of1MLIBOR
No No Aa3/A+ 26.9yrs
TOTAL
$1,765,000,000
*LondonInterbankOfferRate(LIBOR)
SecuritiesIndustryandFinancialMarketsAssociation(SIFMA)
USD-FederalFunds-H.15(FedFunds)
101
The following is the fair value of the derivative instrument agreements related to debt in effect at August 31, 2023
basedonthezero-couponmethodandtheclassificationofchangeinfairvaluefromthepreviousfiscalyear:
Derivative
Instrumentsby
Type
Hedgeable
Item
Current
Notional
AccruedInterest
(through
08/31/2023)
FairValueasof
08/31/2023
FairValueasof
08/31/2022
ChangeinFair
Value08/31/2022
-08/31/2023
ChangeinFair
ValueRecorded
as
Hedging
Derivative
Assets PUFBonds2014A $ —  —  —  44,006,224  (44,006,224) DefInflow
PUFBonds2023A 128,180,000  —
—
540,818  —  540,818 DefInflow
RFSBonds2016G 250,000,000  (735,444) 57,075,740  32,631,844  24,443,896 DefInflow
RFSTaxableCP 250,000,000  (823,778) 73,163,180  48,369,394  24,793,786 DefInflow
628,180,000  (1,559,222) 130,779,738  125,007,462  5,772,276
Hedging
Derivative
Liabilities PUFBonds2008A 162,452,500  469,578  (7,713,532) (17,120,521) 9,406,989 DefOutflow
PUFBonds2008A 162,452,500  459,502  (7,169,550) (16,511,329) 9,341,779 DefOutflow
RFSBonds2007B 141,760,000  15,129  (4,905,722) (10,823,257) 5,917,535 DefOutflow
RFSBonds2007B 141,760,000  15,129  (4,545,722) (10,823,257) 6,277,535 DefOutflow
RFSBonds2008B 94,830,000  17,628  (4,820,866) (9,461,705) 4,640,839 DefOutflow
RFSBonds2008B 94,830,000  17,628  (4,820,866) (9,461,705) 4,640,839 DefOutflow
RFSBonds2008B 178,390,000  (9,355) (5,412,397) (13,309,037) 7,896,640 DefOutflow
976,475,000  985,239  (39,388,655) (87,510,811) 48,122,156
Investment
Derivatives-
AssetPositions PUFBonds2006B 180,350,000  (129,249) 1,199,420  —  1,199,420
Incr./Decr.inFair
ValueofInv
PUFBonds2008A 162,452,500  (490,739) 8,123,820  4,697,372  3,426,448
Incr./Decr.inFair
ValueofInv
PUFBonds2008A 162,452,500  (582,388) 11,138,314  8,215,211  2,923,103
Incr./Decr.inFair
ValueofInv
RFSBonds2008B 90,270,000  (151,298) 7,977,272  5,528,660  2,448,612
Incr./Decr.inFair
ValueofInv
RFSBonds2008B 92,045,000  (126,604) 3,846,609  2,716,535  1,130,074
Incr./Decr.inFair
ValueofInv
RFSBonds2008B 117,190,000  (199,127) 8,991,668  6,512,577  2,479,091
Incr./Decr.inFair
ValueofInv
804,760,000  (1,679,405) 41,277,103  27,670,355  13,606,748
Investment
Derivatives-
LiabilityPositions PUFBonds2006B —  —  —  (974,081) 974,081
Incr./Decr.inFair
ValueofInv
—  —  —  (974,081) 974,081
TOTAL $ 2,409,415,000  (2,253,388) 132,668,186  64,192,925  68,475,261
102
The following is the fair value of the derivative instrument agreements related to debt in effect at August 31, 2022
basedonthezero-couponmethodandtheclassificationofchangeinfairvaluefromthepreviousfiscalyear:
Derivative
Instrumentsby
Type
Hedgeable
Item
Current
Notional
AccruedInterest
(through
08/31/2022)
FairValueasof
08/31/2022
FairValueasof
08/31/2021
ChangeinFair
Value08/31/2021
-08/31/2022
ChangeinFair
ValueRecorded
as
Hedging
Derivative
Assets PUFBonds2014A $ 240,340,000  —  44,006,224  17,515,709  26,490,515 DefInflow
RFSBonds2016G 250,000,000  (92,215) 32,631,844  —  32,631,844 DefInflow
RFSTaxableCP 250,000,000  (180,549) 48,369,394  —  48,369,394 DefInflow
740,340,000  (272,764) 125,007,462  17,515,709  107,491,753
Hedging
Derivative
Liabilities PUFBonds2008A 166,042,500  782,720  (17,120,521) (50,525,255) 33,404,734 DefOutflow
PUFBonds2008A 166,042,500  772,065  (16,511,329) (49,765,271) 33,253,942 DefOutflow
RFSBonds2007B 151,552,500  261,399  (10,823,257) (32,529,951) 21,706,694 DefOutflow
RFSBonds2007B 151,552,500  261,399  (10,823,257) (32,529,951) 21,706,694 DefOutflow
RFSBonds2008B 99,205,000  178,963  (9,461,705) (26,641,589) 17,179,884 DefOutflow
RFSBonds2008B 99,205,000  178,963  (9,461,705) (26,641,589) 17,179,884 DefOutflow
RFSBonds2008B 191,060,000  299,131  (13,309,037) (44,294,009) 30,984,972 DefOutflow
RFSBonds2016G —  —  —  (24,977,781) 24,977,781 DefOutflow
RFSTaxableCP —  —  —  (5,455,366) 5,455,366 DefOutflow
1,024,660,000  2,734,640  (87,510,811) (293,360,762) 205,849,951
Investment
Derivatives-
AssetPositions PUFBonds2008A 166,042,500  (152,361) 4,697,372  3,230,931  1,466,441
Incr./Decr.inFair
ValueofInv
PUFBonds2008A 166,042,500  103,345  8,215,211  5,179,802  3,035,409
Incr./Decr.inFair
ValueofInv
RFSBonds2008B 90,270,000  (99,158) 5,528,660  3,862,789  1,665,871
Incr./Decr.inFair
ValueofInv
RFSBonds2008B 92,045,000  (86,256) 2,716,535  1,672,858  1,043,677
Incr./Decr.inFair
ValueofInv
RFSBonds2008B 117,190,000  (130,183) 6,512,577  4,263,564  2,249,013
Incr./Decr.inFair
ValueofInv
631,590,000  (364,613) 27,670,355  18,209,944  9,460,411
Investment
Derivatives-
LiabilityPositions PUFBonds2006B 206,010,000  (46,130) (974,081) (531,908) (442,173)
Incr./Decr.inFair
ValueofInv
206,010,000  (46,130) (974,081) (531,908) (442,173)
TOTAL $ 2,602,600,000  2,051,133  64,192,925  (258,167,017) 322,359,942
103
DerivativeInstrumentObjectives
Derivative
Instrumentsby
Type
Hedgeable
Item
Current
Notional Objective
Effectiveat
08/31/2023
Evaluationfor
Effectiveness
Hedging
Derivative
Instruments
PUFBonds2008A $ 162,452,500 HedgechangesincashflowsonSeries2008Abonds Yes ConsistentCritical
Terms
PUFBonds2008A 162,452,500 HedgechangesincashflowsonSeries2008Abonds Yes ConsistentCritical
Terms
PUFBonds2023A 128,180,000 HedgechangesinfairvalueofSeries2023Abonds Yes ConsistentCritical
Terms
RFSBonds2007B 141,760,000 HedgechangesincashflowsonSeries2007Bbonds Yes ConsistentCritical
Terms
RFSBonds2007B 141,760,000 HedgechangesincashflowsonSeries2007Bbonds Yes ConsistentCritical
Terms
RFSBonds2008B 94,830,000 HedgechangesincashflowsonSeries2008Bbonds Yes ConsistentCritical
Terms
RFSBonds2008B 94,830,000 HedgechangesincashflowsonSeries2008Bbonds Yes ConsistentCritical
Terms
RFSBonds2008B 178,390,000 HedgechangesincashflowsonSeries2008Bbonds Yes ConsistentCritical
Terms
RFSBonds2016G 250,000,000 HedgechangesincashflowsonSeries2016Gbonds Yes ConsistentCritical
Terms
RFSTaxableCP 250,000,000 HedgeinterestrateriskonRFStaxablecommercialpaper Yes OtherQuantitative
Method
Investment
Derivative
Instruments
PUFBonds2006B 180,350,000 ManagechangesincashflowsonSeries2006Bbonds N/A N/A
PUFBonds2008A 162,452,500 ManagechangesincashflowsonSeries2008Abonds N/A N/A
PUFBonds2008A 162,452,500 ManagechangesincashflowsonSeries2008Abonds N/A N/A
RFSBonds2008B 90,270,000 ManagechangesincashflowsonSeries2008Bbonds N/A N/A
RFSBonds2008B 92,045,000 ManagechangesincashflowsonSeries2008Bbonds N/A N/A
RFSBonds2008B 117,190,000 ManagechangesincashflowsonSeries2008Bbonds N/A N/A
TOTAL $ 2,409,415,000
104
DerivativeInstrumentObjectives
Derivative
Instrumentsby
Type
Hedgeable
Item
Current
Notional Objective
Effectiveat
08/31/2022
Evaluationfor
Effectiveness
Hedging
Derivative
Instruments
PUFBonds2008A $ 166,042,500 HedgechangesincashflowsonSeries2008Abonds Yes ConsistentCritical
Terms
PUFBonds2008A 166,042,500 HedgechangesincashflowsonSeries2008Abonds Yes ConsistentCritical
Terms
PUFBonds2014A 240,340,000 HedgechangesincashflowsonSeries2014Abonds Yes ConsistentCritical
Terms
RFSBonds2007B 151,552,500 HedgechangesincashflowsonSeries2007Bbonds Yes ConsistentCritical
Terms
RFSBonds2007B 151,552,500 HedgechangesincashflowsonSeries2007Bbonds Yes ConsistentCritical
Terms
RFSBonds2008B 99,205,000 HedgechangesincashflowsonSeries2008Bbonds Yes ConsistentCritical
Terms
RFSBonds2008B 99,205,000 HedgechangesincashflowsonSeries2008Bbonds Yes ConsistentCritical
Terms
RFSBonds2008B 191,060,000 HedgechangesincashflowsonSeries2008Bbonds Yes ConsistentCritical
Terms
RFSBonds2016G 250,000,000 HedgechangesincashflowsonSeries2016Gbonds Yes ConsistentCritical
Terms
RFSTaxableCP 250,000,000 HedgeinterestrateriskonRFStaxablecommercialpaper Yes OtherQuantitative
Method
Investment
Derivative
Instruments
PUFBonds2006B 206,010,000 ManagechangesincashflowsonSeries2006Bbonds N/A N/A
PUFBonds2008A 166,042,500 ManagechangesincashflowsonSeries2008Abonds N/A N/A
PUFBonds2008A 166,042,500 ManagechangesincashflowsonSeries2008Abonds N/A N/A
RFSBonds2008B 90,270,000 ManagechangesincashflowsonSeries2008Bbonds N/A N/A
RFSBonds2008B 92,045,000 ManagechangesincashflowsonSeries2008Bbonds N/A N/A
RFSBonds2008B 117,190,000 ManagechangesincashflowsonSeries2008Bbonds N/A N/A
TOTAL $ 2,602,600,000
Thefairvalueofinterestrateswapsreportedasinvestmentderivativeinstruments-assetpositionsof$41,277,103and
$27,670,355asofAugust31,2023and2022,respectively,isincludedontheconsolidatedstatementofnetpositionas
noncurrentunrestrictedinvestmentsandinthesummaryofinvestmentsinNote6.Thefairvalueofinterestrateswaps
reportedasinvestmentderivativeinstruments-liabilitypositionsof$0and$974,081asofAugust31,2023and2022is
included on the consolidated statement of net position as investment derivative instruments-liability positions. The
changeinfairvalueofinterestrateswapsreportedasinvestmentderivativeinstrumentsareincludedininvestment
income on the consolidated statement of revenues, expenses and changes in net position. For the years ending
August 31, 2023 and 2022, the change in fair value of interest rate swaps reported as investment derivative
instrumentswasanincreaseintheamountof$14,580,829andanincreaseintheamountof$9,018,238,respectively.
105
HedgingDerivativeInstrumentandInvestmentDerivativeInstrumentRisks
CreditRisk:TheSystemisexposedtocreditriskifthecounterpartytoaninterestrateswapfailstomeetthetermsand
obligationsof its contracts.Contracts withapositive fair valueexpose the Systemto creditrisk.The Systemfacesa
maximum possible loss equivalent to the amount of the swap contract’s fair value, less any collateral held by the
Systemprovidedbythecounterparty.ContractswithanegativefairvaluedonotexposetheSystemtocreditrisk.Allof
thecounterpartiesassociatedwithswapcontractswiththeSystemarecreditworthyfinancialinstitutions.Additionally,
each of the System’s swap counterparties has agreed to provide collateral to the System to the extent the positive
valuebeforeconsideringnonperformanceriskofthepartiesexceedscertainthresholdamounts.Shouldacounterparty
failtomeetitscontractualagreements,oriftheSystem’screditratingfallsbelowinvestmentgrade(Baa2byMoody’s
orBBBbyS&P),theSystemcouldberequiredtopayorreceiveasubstantialterminationpayment.AsofAugust31,
2023,theSystem’screditratingswereAaabyMoody’sandAAAbyS&P.TheSystemdoesnothavetopostcollateral
due to changes in fair value of its swap agreements unless the System does not have a credit rating or the System
commitsaspecifiedeventofdefaultandtheeventofdefaultiscontinuing.AsofAugust31,2023,themaximumloss
duetocreditriskwas$33,844,819.ItistheSystem’spolicytorequirecounterpartycollateralpostingprovisionsinits
non-exchange-tradedderivativeinstruments.Thesetermsrequirecollateralizationoftheaggregatevalueofderivative
instrumentsinassetpositions,netoftheeffectofapplicablethresholdamountsbasedoneachcounterparty’scredit
rating.Althoughcollateralpostedcanbeintheformofcash,U.S.TreasuryorU.S.agencysecuritieshelddirectlybythe
Systemorbyathird-partycustodianapproved bythe System,collateralpostediscurrentlyonlyin theform ofcash
helddirectlybytheSystem.TheSystemhasnotenteredintomasternettingarrangements.
BankruptcyRisk:TheSystemisexposedtobankruptcyriskofitsswapcounterparties.Theamountofanytermination
theSystemwouldreceive,if aterminationpaymentis owed,would besubjecttotheswapcounterparty’sabilityto
maketherequiredpayment.Upontheswapcounterparty’sbankruptcy,theSystem’sobligationtomakepayments,the
timingoftermination,andthevaluationoftheswapuponterminationmaybeaffectedbyrelevantbankruptcylaw.
InterestRateRisk:InterestrateriskinvolvestheriskthatthevalueoftheSystem’sinterestrateswapswillfluctuate
because of changes in interest rates. The value of interest rate swap agreements with a longer weighted average
maturity tend to be more sensitive to changing interest rates, and therefore, more volatile than those with shorter
maturities.
BasisRisk:TheSystemisexposedtobasisriskwhenthevariableratereceivedunderaninterestrateswapdoesnot
matchthevariableratepaidonhedgedbonds.TheinterestrateontheSystem’svariableratebondsisatax-exempt
interestratebasedontheSystem’screditratings.ThevariablereceiptontheSystem’sinterestrateswapsisbasedon
either a tax-exempt index (SIFMA) or a taxable index (SOFR). Tax-exempt interest rates can change without a
corresponding change in taxable interest rates due to factors affecting the tax-exempt market that do not have a
similareffectonthetaxablemarket.
IndexRisk:TheSystemisexposedtoriskthatthemethodofestablishingSOFR,theThomsonMunicipalMarketData
(MMD)ortheSIFMAindexcouldchangeovertime.AchangeinSOFR,MMDortheSIFMAindexmayaffecttherate
thattheSystempaysorreceivesoncertaininterestrateswaps.
Liquidity Risk: The System is exposed to risk that, under certain market conditions, the System may be unable to
terminate,assignornovateaninterestrateswap.TheSystemmaynotamend,assignornovateaswapwithoutthe
swapcounterparty’sconsent.Therecanbenoassurancethatanotherpartywillbewillingtoacceptanassignmentor
novationoftheSystem’sinterestrateswap.
TerminationRisk:Terminationriskistheriskthattheswapmaybeterminatedpriortoitsscheduledmaturitydateasa
resultofcertainspecifiedevents.NoneoftheSystem’sinterestrateswapsaresubjecttoautomaticearlytermination.
TheSystemissubjecttoterminationriskiftheSystem’screditratingfallsbelowinvestmentgrade(Baa2byMoody’sor
BBBbyS&P),oriftheSystemcommitsaspecifiedeventofdefaultorotherspecifiedeventoftermination.TheSystem
has the right to optionally terminate any of its swaps at any time. At termination, if the fair value of the swap is
negative,theSystemwouldbeliabletopayaterminationpaymenttotheappropriatecounterpartyintheamountof
theswap’sfairvalue.Ifthefairvalueoftheswapispositiveattermination,thecounterpartywouldoweatermination
paymenttotheSystemintheamountoftheswap’sfairvalue.
Amortization Risk: Amortization risk is the risk caused by a mismatch between the amortization of a derivative
instrument contract and the underlying hedged bonds. The System is not exposed to amortization risk by exactly
matching the notional amounts and amortization schedules of its swap contracts with the principal amounts and
amortizationschedulesoftheassociatedhedgedbonds.
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MarketAccessRisk:Eachswapassociatedwithunderlyingvariableratedebtthatissubjecttotenderattheoptionof
thebondholderissubjecttomarketaccessrisk.IntheeventtheSystemisunabletoremarketitsvariableratebonds,
theSystemmaychoosetorefundthevariableratebondswithfixed-ratebondsandoptionallyterminatetherelated
interestrate swap agreements.Shouldan early termination eventoccur,the System couldberequired to pay or to
receiveasubstantialterminationpayment.AsofAugust31,2023,theSystemhadmarketaccessriskassociatedwith
$1,226,475,000aggregatenotional amount of pay-fixed, receive-variable interest rate swaps used to hedge interest
rateriskonvariableratebondssubjecttotender.AsofAugust31,2023,theSystem’svariableratebondscarriedthe
highestshort-termratingsfromMoody’sandS&PofVMIG1andA-1+,respectively.
HedgingDerivativeInstrumentSwapScheduledPayments
The following tables reflect the scheduled payments on the hedging derivative instrument swap agreements which
differfromthepresentationintheprojectedbonddebtservicerequirementstablefortherelateddemandbondsand
commercialpaper.Thedebtservicerequirementsreflecttheentireoutstandingbalanceofthedemandbondsin2024
becausethebondsaresupportedbyinternalliquidity.
AsofAugust31,2023
Associated
VariableRateBondsandCommercial
Paper
Pay-Fixed
Receive-Variable
InterestRate
Swaps
3
TotalFiscalYear Principal
1
Interest
2
2024 $ 49,785,000 65,762,900 (21,249,650) 94,298,250
2025 57,325,000 63,808,391 (21,097,382) 100,036,009
2026 50,360,000 61,551,687 (20,925,219) 90,986,468
2027 59,605,000 59,578,166 (20,770,135) 98,413,031
2028 61,850,000 57,233,825 (20,590,758) 98,493,067
2029-2033 313,440,000 250,124,954 (100,289,349) 463,275,605
2034-2038 374,870,000 189,141,800 (95,829,430) 468,182,370
2039-2043 9,240,000 135,359,600 (90,953,210) 53,646,390
2044-2048 250,000,000 95,127,500 (65,228,400) 279,899,100
2049-2053 250,000,000 13,710,500 (9,621,200) 254,089,300
1ReflectsscheduledprincipalandinterestpaymentsofRevenueFinancingSystemRefundingBonds,Series2007B,RevenueFinancing
System Bonds, Series 2008B, Revenue Financing System Bonds, Taxable Series 2016G, and Permanent University Fund Bonds,
Series 2008A to be optionally or mandatorily redeemed in the fiscal years reflected. Also includes $250 million of projected
principalinAugust2049ofRevenueFinancingSystemCommercialPaper.
2AnnualdebtservicerequirementsarecomputedusingtheSystem’sinterestratesineffectonAugust31,2023,onitsSeries2008A
Bonds,Series2007BBonds,Series2008B,Series2016GBonds,andtaxablecommercialpaper.
3Reflectsnetpaymentsonpay-fixed,receive-variableinterestrateswapsbasedonstaticinterestrateenvironmentasofAugust31,
2023,andappliedontherespectivenotionalamountsoftheswapsthroughtheirrespectiveterminationdates.
AsofAugust31,2023
AssociatedFixedRateBonds
1
Receive-Fixed
Pay-Variable
InterestRate
Swaps
2
TotalFiscalYear Principal Interest
2024 $ — 6,409,000 850,996 7,259,996
2025 — 6,409,000 1,038,258 7,447,258
2026 — 6,409,000 1,038,258 7,447,258
2027 — 6,409,000 1,038,258 7,447,258
2028 — 6,409,000 1,038,258 7,447,258
2029-2033 128,180,000 28,918,750 4,684,838 161,783,588
1
Reflectsscheduledprincipalandinterest paymentsofPermanentUniversityFund Bonds,Series2023Amaturingin thefiscalyears
reflected.
2
Reflectsnetpaymentsonreceive-fixed,pay-variableinterestrateswapsbasedonstaticinterestrateenvironmentasofAugust31,
2023,andappliedontherespectivenotionalamountsoftheswapsthroughtheirrespectiveterminationdates.
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AsofAugust31,2022
Associated
VariableRateBondsandCommercial
Paper
Pay-Fixed
Receive-Variable
InterestRate
Swaps
3
TotalFiscalYear Principal
1
Interest
2
2023 $ 48,185,000 27,428,430 17,447,007 93,060,437
2024 49,785,000 26,673,896 16,443,353 92,902,249
2025 57,325,000 25,894,157 15,405,760 98,624,917
2026 50,360,000 24,993,281 14,207,854 89,561,135
2027 59,605,000 24,206,295 13,159,334 96,970,629
2028-2032 307,955,000 106,816,027 46,863,944 461,634,971
2033-2037 339,775,000 82,917,837 15,355,796 438,048,633
2038-2042 111,670,000 57,494,992 (16,738,574) 152,426,418
2043-2047 250,000,000 43,961,250 (16,368,600) 277,592,650
2048-2052 250,000,000 10,639,500 (4,887,150) 255,752,350
1
ReflectsscheduledprincipalandinterestpaymentsofRevenueFinancingSystemRefundingBonds,Series2007B,RevenueFinancing
System Bonds, Series 2008B, Revenue Financing System Bonds, Taxable Series 2016G, and Permanent University Fund Bonds,
Series 2008A to be optionally or mandatorily redeemed in the fiscal years reflected. Also includes $250 million of projected
principalinAugust2049ofRevenueFinancingSystemCommercialPaper.
2
AnnualdebtservicerequirementsarecomputedusingtheSystem’sinterestratesineffectonAugust31,2022onitsSeries2008A
Bonds,Series2007BBonds,Series2008B,Series2016GBonds,andtaxablecommercialpaper.
3
Reflectsnetpaymentsonpay-fixed,receive-variableinterestrateswapsbasedonstaticinterestrateenvironmentasofAugust31,
2022andappliedontherespectivenotionalamountsoftheswapsthroughtheirrespectiveterminationdates.
14. Stewardship,ComplianceandAccountability
TheSystemhadnosignificantviolationsofbondornotecovenants.PerStatelaw,theSystemcannotspendamountsin
excessofappropriationsgrantedbytheTexasLegislature.Therearenodeficitsreportedinnetposition.
15. RiskManagementandRelatedInsurance
TheSystemhaseightfundedself-insurance/highretentionplansprovidingcoverageinthefollowingareas:employee
health and dental, unemployment compensation, workers’ compensation, professional medical liability, property
protection, directors and officers/employment practices and cyber liability, construction contractor insurance, and
automobile,propertyandliability.
EMPLOYEEANDRETIREEINSURANCEBENEFITS
The U. T. System Employee Benefits program provides health insurance, dental insurance, vision insurance, life
insurance, accidental death and dismemberment (AD&D), long-term disability, short-term disability, and flexible
spendingaccountcoveragetoallbenefits-eligible employeesandretireesoftheSystem anditsthirteeninstitutions.
These insurance benefits are provided through both self-funded and fully-insured arrangements. A portion of the
System’scostofprovidinggrouphealthandbasiclifeinsurancecoverageispaidbytheStateasspecifiedintheGeneral
AppropriationsAct.TheSystem’sOfficeofEmployeeBenefits(OEB)isresponsiblefortheoveralladministrationofthe
insuranceplans.TheSystem’sOEBprogramwasestablishedbyChapter1601oftheTexasInsuranceCodeandcomplies
withStatelawsandstatuespertinenttoemployeebenefitsfortheSystem.
UNEMPLOYMENTCOMPENSATIONINSURANCE
TheGeneralAppropriationsActrequirestheSystemtoreimbursetheTexasWorkforceCommission(TWC)for50%of
the unemployment benefits paid to qualified former employees paid from general revenue funds and 100% of the
unemploymentbenefitspaidfromlocalfunds.
WORKERS’COMPENSATIONINSURANCE
The Workers’ Compensation Insurance (WCI) program provides coverage to all employees of the System and its
institutions. Under the oversight of the System’s Office of Risk Management (ORM), the System self-insures and
administersthesystemwideprogramthroughtheuseofathird-partyadministrator.Thecoverageprovidesincomeand
medicalbenefitstoallemployeeswhohavesustainedcompensablejob-relatedinjuriesoroccupationaldiseases.The
program’sstatutoryauthorityisembodiedinChapter503oftheTexasLaborCode.
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PROFESSIONALMEDICALLIABILITYBENEFITPLAN
ThecoverageprovidedundertheProfessionalMedicalLiabilityBenefitPlan(the“Plan”)isonanoccurrencebasis;thus,
aparticipantiscoveredbythePlanforclaimsandlawsuitsrelatingtoeventsthatoccurredwhileenrolledinthePlan,
includingthosefiledaftertheparticipanthaslefttheSystem’semploymentortraining.ThePlancoversalltheSystem
staffphysicians,dentists,residents,fellows,andmedicalanddentalstudentswhohavebeenenrolled.EffectiveJuly1,
2020,healthcareprofessional staffmembersand facultywho arelicensed,certified, orregisteredto providepatient
carehavePlancoverage.ThelimitsofliabilityofthePlanincludeanannualpolicyaggregateof$30million,anannual
aggregateof $1.5 million for each staff physician, resident, fellow and healthcare professional($500,000per claim),
and a $75,000 annual aggregate for each medical and dental student ($25,000 per claim). Additional coverage is
availableoutsideofTexasandforapprovedinternationalactivities.Liabilityislimitedto$2millionperclaim,regardless
ofthenumberofclaimantsorplanparticipantsinvolvedinanincident.
Thelimitsofliabilityareprescribedbylawas$100,000perhealthcareliabilityclaimperphysiciandeterminedtobea
public servant. U. T. institutions are covered under the Plan for actions that could have been brought against an
individual plan participant. The liability of a U. T. institution is limited by law to $250,000 per person injured and
$500,000peroccurrenceforbodilyinjuryordeath.
COMPREHENSIVEPROPERTYPROTECTIONPROGRAM
TheComprehensivePropertyProtectionPlan(CPPP)usesacombinationofinterimfinancingandcommercialinsurance
toprovideFireandAllOtherPerils(FireandAOP) andNamedWindstormandFlood(Wind andFlood)coverage.All
coverageissubjecttotheterms,exclusions,limitsandconditionsoftheInsurancePolicies.TheFireandAOPprogram
providesa$1.3billionperoccurrencelimitformostperils,withsub-limitsthatdoapply.TheSystemparticipatesina
quotashareofthefollowinglayersofcommercialinsurancecoverage:thirteenpercent(13%)ofthe$25millionlayer
excessof$25million,twelvepercent(12%)ofthe$25millionlayerexcessof$50million,ninepercent(9%)ofthe$25
millionlayerexcessof$75million,andfivepercent(5%)ofthe$50millionlayerexcessof$100million.Deductiblesfor
FireandAOPare$10millionperoccurrencewitha$20millionannualaggregatelimit;institutionshavea$500,000per
occurrencedeductible.ThecommercialinsurancecoverageforNamedWindstormandresultingperilsprovidesa$250
million per occurrence limit with the System participating in a quota share of the following layers of commercial
insurancecoverage:thirteenpercent(13%)ofthe$25millionlayerexcessof$25million,twelvepercent(12%)ofthe
$25millionlayerexcessof$50million,ninepercent(9%)ofthe$25millionlayerexcessof$75million,andfivepercent
(5%)ofthe$50millionlayerexcessof$100million.M.D.Andersonpurchasesadedicated$100millionpolicyexcessof
the$250millionperoccurrenceNamedWindstormCPPPlimit.DeductiblesforWindandFlood are$100millionper
occurrence for U. T. Medical Branch - Galveston (locations in Galveston only), $50 million per occurrence for U. T.
Health Science Center - Houston (locations in Texas Medical Center only) and M. D. Anderson (locations in Texas
Medical Center Only), 5% of affected values in other Tier 1 counties subject to a $10 million minimum, and AOP
deductiblesforallotherlocations.Tier1countiesincludecountiesalongtheTexascoastpluspartsofHarrisCounty.
Primary insurance policies are purchased on certain flood and wind exposed properties to partially offset the large
deductibles.Thesepoliciesprovideunderlyinglimits(upto$4.4millionperbuilding/contentsforwindand$1million
maximumbuilding/contentsforflood)andarepurchasedthroughtheTexasWindstormInsuranceAssociation(TWIA)
for facilities in Tier 1 seacoast territories and the National Flood Insurance Program (NFIP) for properties located in
higherriskfloodzones.U.T.MedicalBranch-Galvestonpurchasesa$50millionNamedWindstormbuydownpolicyto
reducethe$100millionWindandFlood deductibleforlocationsinGalvestononly.M.D.Andersonpurchasesa$25
millionNamed WindstormMulti YearSingle Limit(MYSL)buydown policyto reducethe $50millionWind andFlood
deductible; they have a 25% share of the $25 million to $50 million layer. The interim financing component of the
programparticipatesinlossesresultingfromphysicaldamagethatexceedsthecoverageavailableundertheseprimary
policies and the institution’s deductible.TheinterimfinancingfortheWindand Flood program is funded by annual
contributionsmadebyeachinstitutioninadditiontothepaymentofinsurancepremiums.
DIRECTORSANDOFFICERS/EMPLOYMENTPRACTICESLIABILITYPLANANDCYBERLIABILITYPROGRAM
TheDirectorsandOfficersLiability(D&O)andEmploymentPracticesLiability(EPL)Plan(the“Plan”)providescoverage
forclaimsarisingfromactualorallegedwrongfulactsperformedbythePlanbeneficiariesandforEPLclaims,suchas
wrongfultermination,failuretopromote,andwrongfuldiscipline.
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Coverageappliestoindividualboardmembers,employees,faculty,andothercoveredindividuals,aswellastoeachof
theinstitutionsandU.T.SystemAdministration.Thelimitofliabilityisa$15millionannualaggregate(CoveragesA,B
andCcombined),withanadditional$5millionself-insuredannualaggregateexcesslimitforCoveragesAandB.Self-
insuredretentionsforthePlanaresubjecttoa$5millionannualaggregate.CoverageAappliestonon-indemnifiable
claimsmadeagainstindividualsandithasnodeductible.CoverageBappliestoaU.T. institutionthatisrequiredto
indemnifyacoveredindividualwithdeductiblesof$100,000perindividualand$300,000peroccurrence.CoverageC
appliestoaU.T.institutionwitha$300,000deductible.IntheeventalossinvolvesanyorallofCoveragesA,B,andC,
thenonlythesinglelargestdeductibleamountwillapply.
The Cyber Liability Program provides coverage for claims arising from the following causes of loss: media liability,
network security liability, privacy liability, regulatory liability, loss of digital assets, network asset protection, and
PaymentCardIndustryDataSecurityStandard(PCI-DSS).Eachclaimissubjecttoa$10millionself-insuredretention;
institutionshavea$500,000peroccurrencedeductible.
ROLLINGOWNERCONTROLLEDINSURANCEPROGRAM
TheRollingOwnerControlledInsuranceProgram(ROCIP)wasestablishedforthecentralizedpurchaseofconstruction
contractor insurance on various capital improvement projects. This program provides workers’ compensation,
employers’liabilityandgeneralliabilityinsurancecoverageforallcontractorsenrolledonprojectsparticipatinginthe
program.Eachcoveragecarriesa$250,000peroccurrencedeductiblewithamaximum$375,000peroccurrenceclash
deductible,ifmorethanonecoverageistriggeredbythesameoccurrence.Deductiblesarepaidthroughtheprogram’s
self-insurancefund.Theself-insurancefundalsopaysportionsofBuilder’sRiskdeductibles.
AUTOMOBILE,PROPERTY&LIABILITYPLAN
The Automobile, Property & Liability Plan provides automobile liability and physical damage coverage for owned,
leased,hired,andnon-owned(excessliabilityonly)vehicles,alongwithgeneralliabilitycoverageforcertainscheduled
exposures.All auto liabilityandgeneral liabilitycoveragesare subjecttoa self-insured retentionof $100,000witha
corridor endorsement for an additional layer of up to $50,000 per occurrence with an aggregate limit of $200,000
applicabletolossesover$100,000subjecttoa$996,000annualaggregatestoplossforthefiscalyear2023policyterm.
Physical Damage claims are subject to a $25,000 deductible per occurrence. Institution deductibles are $2,500 per
occurrenceforliability,$1,000pervehicleforphysicaldamage,and$5,000pervehicleforphysicaldamageforvehicles
valuedover$100,000.
INCURREDBUTNOTREPORTEDSELF-INSURANCECLAIMS
InsuranceclaimsthatwereIncurredButNotReported(IBNR)wereactuariallydeterminedfortheemployee’shealth
anddental,workers’compensation,professionalmedicalliability,directorsandofficers/employmentpracticesliability
andcyberliabilityprogram,rollingownercontrolled,andautomobile,propertyandliabilityself-insuranceplans.IBNR
figures for the workers’ compensation, professional medical liability, directors and officers/employment practices
liabilityandcyberliabilityprogram,rollingownercontrolled,andautomobile,propertyandliabilityself-insuranceplans
include liabilities for unpaid reported claims and are reported on an undiscounted basis. The IBNR liability for the
propertyprotectionself-insuranceplanisnotactuariallydeterminedbutestimatedbasedonunpaidreportedclaims.
SinceanannualaccrualisrecordedforthethirdquarterTWCbilling,noIBNRliabilityisrecordedforUnemployment
CompensationInsurance.Nosettlementsexceededinsurancecoverageinthepastthreefiscalyears.
Since the responsibility for processing all claims for self-funded employee health and dental benefits has been fully
delegatedtothirdparties,theIBNRclaimsliabilityforthosebenefitsdoesnotincludeaprovisionforunallocatedloss
adjustmentexpenses(ULAE).However,itdoesincludeaprovisionof5%oftheprojectedincurredbutunpaidclaimsfor
the administrative expenses associated with processing those claims. The IBNR claims liability for the workers’
compensation, professional medical liability, directors and officers/employment practices liability and cyber liability
program,rollingownercontrolled,andautomobile,propertyandliabilityself-insuranceplansincludesarelatedaccrual
forallocated loss adjustment expenses(ALAE), which are theclaim-specificdefense and settlementcosts associated
with the ultimate settlement of those claims. They do not include a provision for ULAE, which are general
administrativeexpensesassociatedwithclaimssettlement,butarenotspecificallyattributabletoindividualclaims.
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ChangesintheSystem’sclaimsliabilitiesforthevariousself-insuranceplansduringfiscalyears2023and2022wereas
follows:
FiscalYear2023
Plan
IBNRLiability
09/01/2022
CurrentYear
Claimsand
Changesin
Estimates ClaimsPayments
IBNRLiability
08/31/2023
EmployeeHealthandDental $ 179,000,000 1,826,588,154 (1,816,488,154) 189,100,000
Workers’Compensation 4,145,000 4,551,855 (4,093,855) 4,603,000
ProfessionalMedicalLiability 20,450,642 4,897,466 (3,620,866) 21,727,242
PropertyProtection–Fire&AOP 7,596,212 15,837,827 (12,629,406) 10,804,633
PropertyProtection–Wind&Flood — — — —
DirectorsandOfficers/EPL/Cyber 5,753,058 4,122,788 (2,118,471) 7,757,375
ROCIP 4,280,367 46,279 (1,091,215) 3,235,431
Automobile,Property&Liability 493,962 977,382 (797,350) 673,994
TOTAL $ 221,719,241 1,857,021,751 (1,840,839,317) 237,901,675
FiscalYear2022
Plan
IBNRLiability
09/01/2021
CurrentYear
Claimsand
Changesin
Estimates ClaimsPayments
IBNRLiability
08/31/2022
EmployeeHealthandDental $ 134,300,000 1,750,116,117 (1,705,416,117) 179,000,000
Workers’Compensation 3,486,000 4,973,970 (4,314,970) 4,145,000
ProfessionalMedicalLiability 20,973,497 3,766,215 (4,289,070) 20,450,642
PropertyProtection–Fire&AOP 10,047,571 (9,113,950) 6,662,591 7,596,212
PropertyProtection–Wind&Flood — — — —
DirectorsandOfficers/EPL/Cyber 3,340,089 2,612,969 (200,000) 5,753,058
ROCIP 4,442,581 700,545 (862,759) 4,280,367
Automobile,Property&Liability 521,128 585,348 (612,514) 493,962
TOTAL $ 177,110,866 1,753,641,214 (1,709,032,839) 221,719,241
16. PostemploymentHealthCareandLifeInsuranceBenefits
HEALTHANDLIFEINSURANCEBENEFITSFORRETIREDEMPLOYEES
Inadditiontoprovidingpensionbenefits,theStateprovidescertainhealth(medicalandpharmacy)andlifeinsurance
benefitsforretiredemployees(OPEB),inaccordancewithStatestatutes.Manyemployeesmaybecomeeligibleforthe
healthandlifeinsurancebenefitsasaretiredemployeeiftheymeetcertainageandservicerequirementsasdefined
bytheState.Similarbenefitsforactiveemployeesareprovidedthroughthesameself-fundedplan.Priortoandduring
fiscal year 2022 and continuing through December 31, 2022, all retiree medical benefits were provided through UT
Select,System’sself-fundedhealthplan.EffectiveJanuary1,2023,medicalbenefitsforretireesforwhomMedicareis
primary (Medicare-primary retirees) and retiree dependents for whom Medicare is primary (Medicare-primary
dependents)areprovidedthroughUTCare,afullyinsuredMedicareAdvantageplanprovidedbyBlueCrossBlueShield
of Texas. Medical benefits for retirees and retiree dependents for whom Medicare is not primary continue to be
providedthroughUTSelect.PharmacybenefitsforallretireesregardlessofMedicarestatushavebeenandcontinueto
be provided through UT Select. For the years ended August 31, 2023 and 2022, the employer and retiree monthly
contributionratesforfull-timeretiredemployeeareshowninthefollowingtable.Theretireecontributesanypremium
chargedoverandabovetheemployercontributions.Notecontributionratesforfiscalyear2023arethesameforUT
SelectandUTCare.
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
2023 2022
LevelofCoverage Employer Retiree Employer Retiree
RetireeOnly $ 675.16 — 628.06 —
Retiree/Spouse 1,029.06 290.70 957.26 270.42
Retiree/Children 901.60 304.04 838.70 282.82
Retiree/Family 1,257.62 572.46 1,169.88 532.52
RetireecontributionsasofJanuary1,2023underUTCareMedicareAdvantageare$316.87forthespouse,ifretireeis
deceased,$316.87fordependentchildren,and$633.74forspousepluschildren,ifretireeisdeceased.
PLANDESCRIPTIONANDFUNDINGPOLICY
OPEBareprovidedtotheSystem’sretireesundertheUTSystemEmployeeGroupInsuranceProgram(EGIP).TheEGIP
isasingle-employerdefinedbenefitOPEBplan;however,duetotheStatestatuterequiringappropriationsforfunding
theplan,theStateisreportingaproportionateshare.Chapter1551oftheTexasInsuranceCode,Sections310and311,
require that the State contribute to the cost of each participant’s insurance coverage. The funds are appropriated
undertheGeneralAppropriationsActHigherEducationEmployeesGroupInsurance(HEGI)Contributions.TheState’s
proportion was 17.18% and 18.06% of the collective OPEB-related liabilities, deferred outflows and inflows and
expensebasedonHEGIcontributionsbytheStatetototalcontributionsasofAugust31,2023and2022.TheSystem’s
proportionasofAugust31,2023and2022was82.82%and81.94%.AtAugust31,2023and2022,theamountofthe
totalOPEBliabilityrelatedtotheSystemreportedbytheStatewas$1,678,372,322and$3,239,950,544,respectively.
The amount reported by the State is related to the premium sharing contributions, which are recognized as State
appropriationgeneral revenue on theSystem’sfinancial statements inthefiscal year that theStatecontributed the
amountsforOPEBontheSystem’sbehalf.
TheSystemandmembercontributionratesaredeterminedannuallybytheSystembasedontherecommendationsof
theOEBstaffandconsultingactuary.Thecontributionratesaredeterminedbasedonthebenefitandadministrative
costs expected to be incurred and (i) the funds appropriated and (ii) the funding policy established by the Texas
Legislature in connection with benefits provided through the EGIP. The System revises benefits when necessary to
matchexpectedbenefitandadministrativecostswithavailablerevenue.Theplanisoperatedonapay-as-you-gobasis
andnoassetsareaccumulatedinatrustthatmeetsthecriteriainparagraph4ofGASBStatementNo.75.
EMPLOYEESCOVEREDBYBENEFITTERMS
ThebenefitsprovidedarediscussedinNote15.Theauthorityunderwhichtheobligationsoftheplanmembersandthe
SystemareestablishedandmaybeamendedisChapter1601,TexasInsuranceCode.Attherespectivemeasurement
dates,thefollowingemployeeswerecoveredbythebenefitterms:
MeasurementDates
December31,2022
&December31,
2021
a.
InactiveEmployeesorBeneficiaries
CurrentlyReceivingBenefitPayments 31,104
b.
InactiveEmployeesEntitledtobutnotyet
ReceivingBenefitPayments 15,091
c.
ActiveEmployees 104,546
d.
Total 150,741
TOTALOPEBLIABILITY
TheSystemhaselectedtouseameasurementdatethatiseightmonthsinadvanceofthefiscalyearend.TheSystem’s
proportionateshare ofthetotal OPEBliabilityof $8,089,734,355,current portionof$208,395,911anda noncurrent
portionof$7,881,338,444,reportedforthefiscalyearendedAugust31,2023wasmeasuredasofDecember31,2022
andwasdeterminedbyanactuarialvaluationasofDecember31,2021androlledforwardtwelvemonthstoDecember
31, 2022. The System’s proportionate share of the total OPEB liability of $14,695,594,306, current portion of
$243,697,144andanoncurrent portionof $14,451,897,162,reported forthe fiscalyearended August31, 2022was
measuredasofDecember31,2021,andwasdeterminedbyanactuarialvaluationasofthesamedate.
112
ACTUARIALASSUMPTIONSANDOTHERINPUTS
ThetotalOPEBliabilityasofDecember31,2022wasdeterminedbyanactuarialvaluationasofDecember31,2021
androlledforwardtwelvemonthstoDecember31,2022.Thefollowingactuarialassumptionsappliedtoallperiods
includedinthemeasurement,unlessotherwisespecified:
SummaryofActuarialMethodsandAssumptions–OPEB
Inflation 2.30%
SalaryIncreases 3.05%to9.05%(includesinflation)
DiscountRate 3.72%forDecember31,2022;2.06%forDecember31,2021;
HealthcarecostTrendRates:
Medical UTSelect:5.50%forCY24,5.25%forCY25,5.00%forCY26,4.75%forCY27,4.60%
forCY28,4.50%forCY29,4.40%forCY30and4.30%forCY31andlateryears
UTCare:0.00%forCY24,3.00%forCY25,5.00%forCY26,4.75%forCY27,4.60%
forCY28,4.50%forCY29,4.40%forCY30and4.30%forCY31andlateryears
Pharmacy 10.00%forCY24,9.50%forCY25,9.00%forCY26,8.00%forCY27,7.00%forCY28,
6.00%forCY29,5.00%forCY30and4.30%forCY31andlateryears
Retireecontributionsandopt-out
credittrendrates
7.50%
1
forCY23,6.90%forCY24,6.60%forCY25,6.25%forCY26,5.80%forCY27,
5.35%forCY28,4.95%forCY29,4.60%forCY30and4.30%forCY31andlateryears
Mortality:
a. ServiceRetirees,SurvivorsandotherInactiveMembers:
TablesbasedonTRSexperiencewithUltimateMPProjectionScalefromtheyear
2018.
b. DisabilityRetirees:
TablesbasedonTRSexperiencewithUltimateMPProjectionScalefromtheyear
2018usinga3-yearsetforwardandminimummortalityratesoffourper100
malemembersandtwoper100femalemembers.
c. ActiveMembers:
SexDistinctRP-2014EmployeeMortalitymultipliedby90%withUltimateMP
ProjectionScalefromtheyear2014.
DiscountRate:
a. ForfiscalyearendedAugust31,2023:Thediscountrateusedtomeasurethetotal
OPEBliabilityasofDecember31,2022was3.72%.Thediscountrateusedto
determinethetotalOPEBliabilityasofDecember31,2021was2.06%.
b. ForfiscalyearendedAugust31,2022:Thediscountrateusedtomeasurethetotal
OPEBliabilityasofDecember31,2021was2.06%.Thediscountrateusedto
measurethetotalOPEBliabilityasofDecember31,2020was2.12%.
c. MunicipalBondRate:3.72%asofDecember31,2022and2.06%asofDecember
31,2021;thesourceofthemunicipalbondrateistheBondBuyerIndexof
generalobligationbondswith20yearstomaturityandmixedcreditquality.In
describingtheirindex,theBondBuyernotesthatthebonds’averagecredit
qualityisroughlyequivalenttoMoody’sInvestorsService’sAa2ratingand
Standard&Poor’sCorp.’sAA.
1
ForFY23,actualretireecontributionsareequaltoFY22retireecontributionsincreasedby7.50%forallcoveragelevelsexceptas
indicated in the following sentence. Retiree contributions as of 1/1/2023 under UT Care Medicare Advantage are $316.87 for
“Spouse,ifRetireeisdeceased”,$316.87for“DependentChildren”and$633.74for“SpouseplusChildren,ifRetireeisdeceased”.
113
LastStateEmployerAssumption:
Memberswhoterminate employmentareassumedtoparticipate inthe EGIP(i.e.,asaresultofUT System
being their last State employer), provided all other eligibility requirements are satisfied, according to the
followingschedule:
AgeatTerminationRate Participation
<20 20%
20-24 20%
25-34 20%
35-44 40%
45-54 40%
≥55 40%
Manyofthe actuarialassumptionsusedinthis valuationwerebased ontheresultsofan actuarialexperiencestudy
performedbytheTRSretirementplanactuaryasofAugust31,2017.
Thefollowingassumptionsorotherinputswerechangedsincethepreviousmeasurementdate:
i. EconomicAssumptions
Assumed Per Capita Health Benefit Costs and Health Benefit Cost trends have been updated since the
previousvaluationtoreflectincreasesinretireecostsharinginUTSelectandtheimplementationofUT
CareeffectiveJanuary1,2023.
The expenses directly related to the payment of EGIP health benefits have been updated since the
previousvaluation.
The Patient-Centered Outcome Research Institute (PCORI) fees payable under the Affordable Care Act
(ACA)havebeenupdatedsincethepreviousvaluation.
ii. OtherInputs
ThediscountratewaschangedasaresultofrequirementsbyGASBStatementNo.75toutilizetheyieldor
indexrateasofthemeasurementdatefor20-year,tax-exemptgeneralobligationmunicipalbondsrated
AA/Aa(orequivalent)orhigher.
AsofthemeasurementdateofDecember31,2022,thebenefittermshavechangedtoreflect:i)increasesinretiree
costsharingforretireesforwhomMedicareisnotprimaryandii)anincreasein theemployerfundedlifeinsurance
coverageforretireeswhodonotoptoutofEGIPhealthcoverageuponretirement.Accordingly,thebenefittermsused
inthisvaluationhavechangedsincethepriorvaluation.
SensitivityoftheSystem’sProportionateShareoftheTotalOPEBLiabilitytoChangesintheDiscountRate
1%Decrease
FY23
DiscountRate 1%Increase
(2.72)% (3.72)% (4.72)%
TotalOPEBLiability $ 9,558,708,298 $ 8,089,734,355 $ 6,927,817,838
1%Decrease
FY22
DiscountRate 1%Increase
(1.06)% (2.06)% (3.06)%
TotalOPEBLiability $ 17,933,558,969 $ 14,695,594,306 $ 12,207,045,887
114
SensitivityoftheSystem’sProportionateShareoftheTotalOPEBLiabilitytoChangesintheHealthcareCostTrendRates
1%Decrease
1
FY23
HealthcareCost
TrendRates
1
1%Increase
1
TotalOPEBLiability $ 6,754,616,645 $ 8,089,734,355 $ 9,847,385,898
1%Decrease
2
FY22
HealthcareCost
TrendRates
2
1%Increase
2
TotalOPEBLiability $ 11,924,338,193 $ 14,695,594,306 $ 18,456,093,101
1

HealthcareCostTrendRatesusedforfiscalyear2023areshownbelow:
Medical-UTSelect Medical-UTCare
CalendarYear 1%Decrease
HealthcareCost
TrendRates 1%Increase 1%Decrease
HealthcareCost
TrendRates 1%Increase
2024
4.50% 5.50% 6.50% (1.00)% —% 1.00%
2025
4.25% 5.25% 6.25% 2.00% 3.00% 4.00%
2026
4.00% 5.00% 6.00% 4.00% 5.00% 6.00%
2027
3.75% 4.75% 5.75% 3.75% 4.75% 5.75%
2028
3.60% 4.60% 5.60% 3.60% 4.60% 5.60%
2029
3.50% 4.50% 5.50% 3.50% 4.50% 5.50%
2030
3.40% 4.40% 5.40% 3.40% 4.40% 5.40%
2031and
beyond
3.30% 4.30% 5.30% 3.30% 4.30% 5.30%
Pharmacy
CalendarYear 1%Decrease
HealthcareCost
TrendRates 1%Increase
2024
9.00% 10.00% 11.00%
2025
8.50% 9.50% 10.50%
2026
8.00% 9.00% 10.00%
2027
7.00% 8.00% 9.00%
2028
6.00% 7.00% 8.00%
2029
5.00% 6.00% 7.00%
2030
4.00% 5.00% 6.00%
2031and
beyond
3.30% 4.30% 5.30%
2
HealthcareCostTrendRatesusedforfiscalyear2022areshownbelow:
115
Medical Pharmacy
CalendarYear 1%Decrease
Healthcare
CostTrendRates 1%Increase 1%Decrease
Healthcare
CostTrendRates 1%Increase
2023 5.00% 6.00% 7.00% 9.50% 10.50% 11.50%
2024 4.50% 5.50% 6.50% 9.00% 10.00% 11.00%
2025 4.25% 5.25% 6.25% 8.50% 9.50% 10.50%
2026 4.00% 5.00% 6.00% 8.00% 9.00% 10.00%
2027 3.75% 4.75% 5.75% 7.00% 8.00% 9.00%
2028 3.60% 4.60% 5.60% 6.00% 7.00% 8.00%
2029 3.50% 4.50% 5.50% 5.00% 6.00% 7.00%
2030 3.40% 4.40% 5.40% 4.00% 5.00% 6.00%
2031andbeyond 3.30% 4.30% 5.30% 3.30% 4.30% 5.30%
CHANGESINTHESYSTEM’SPROPORTIONATESHAREOFTHETOTALOPEBLIABILITY
Increase(Decrease)inTotalOPEBLiability
ForMeasurementYear
from12/31/2021-
12/31/2022
ForMeasurementYear
from12/31/2020-
12/31/2021
BalanceatBeginningofMeasurementYear $ 14,695,594,306 11,931,417,814
ChangesfortheYear:
ServiceCost 877,350,009 708,022,293
Interest 321,938,242 266,654,173
BenefitTerms (52,783,790) —
DifferencesBetweenExpectedandActualExperience — 160,861,824
ChangesofAssumptionsorOtherInputs (7,704,380,357) 1,780,677,623
BenefitPayments(Employer) (206,219,478) (181,252,716)
NetChanges (6,764,095,374) 2,734,963,197
ChangesinProportionateShare 158,235,423 29,213,295
BalanceatEndofMeasurementYear $ 8,089,734,355 14,695,594,306
TheSystemrecognizedOPEBexpenseof$462,609,141forthefiscalyearendedAugust31,2023and$1,150,530,177
forthefiscalyearendedAugust31,2022.
116
The changes in the total OPEB liability, including both the System’s and the State’s portion, are shown in the table
below.
Increase(Decrease)inTotalOPEBLiability
ForMeasurementYear
from12/31/2021-
12/31/2022
ForMeasurementYear
from12/31/2020-
12/31/2021
BalanceatBeginningofMeasurementYear $ 17,935,544,850 14,597,601,922
ChangesfortheYear:
ServiceCost 1,059,373,288 864,120,588
Interest 388,730,575 325,443,652
BenefitTerms (63,734,811) —
DifferencesBetweenExpectedandActualExperience — 196,327,171
ChangesofAssumptionsorOtherInputs (9,302,803,516) 2,173,265,178
BenefitPayments(Employer) (249,003,709) (221,213,661)
NetChanges (8,167,438,173) 3,337,942,928
ChangesinProportionateShare — —
BalanceatEndofMeasurementYear $ 9,768,106,677 17,935,544,850
Ateachfiscalyear-end,theSystemreporteddeferredoutflowsofresourcesanddeferredinflowsofresourcesrelated
toOPEBfromthesourceslistedinthetablebelow.
AsofAugust31,2023 AsofAugust31,2022
Deferred
Outflowsof
Resources
Deferred
Inflowsof
Resources
Deferred
Outflowsof
Resources
Deferred
Inflowsof
Resources
DifferencesBetweenExpectedandActual
Experience $ 124,515,711 81,950,260  142,025,545 110,741,721
ChangesofAssumptionsorOtherInputs 2,485,262,865 7,706,119,307 2,871,138,715 1,184,874,462
ChangeinProportionandContribution
Difference 529,653,958 12,919,463  500,240,792 20,218,595
ContributionsSubsequenttotheMeasurement
Date 127,487,908 — 140,874,223 —
Total $ 3,266,920,442 7,800,989,030 3,654,279,275 1,315,834,778
117
AmountsreportedasDeferredOutflows/(Inflows)ofResourceswillberecognizedinOPEBexpenseasfollows:
FortheFiscalYearendedAugust31,2023:
FiscalYearEnded
August31 Amount
2024 $ (687,018,165)
2025 (642,018,293)
2026 (528,481,088)
2027 (484,628,521)
2028 (425,741,144)
Thereafter (1,893,669,285)
Total $ (4,661,556,496)
CHANGESINTHETOTALOPEBLIABILITYBETWEENTHEMEASUREMENTDATEANDAUGUST31,2023
Thefollowingchangewas made to the OPEB plan between theDecember31, 2022 measurement date of theTotal
OPEBLiabilityandtheEmployer’sfiscalyear2023reportingdateofAugust31,2023:
Texas Senate Bill 1055, which was signed by the Governor on May 10, 2023, added Stephen F. Austin State
UniversityintotheUniversityofTexasSystem.Asaresult,eligibleemployeesofStephenF.AustinStateUniversity
willbecomemembersunderthisOPEBplaneffectiveSeptember1,2023.
TheSystemestimatesthattheabovechangewouldincreasetheTotalOPEBLiability,includingboththeSystem’sand
theState’sportion,to$9.9billionasofDecember31,2022,usingthecurrentdiscountrateof3.72%.
17. PensionPlans
TEACHERRETIREMENTSYSTEM(TRS)
TheStateofTexashasjointcontributoryretirementplansforsubstantiallyallitsemployees.Oneoftheprimaryplans
in which the System participates is a cost-sharing multiple-employer defined benefit pension plan with a special
fundingsituationadministeredbytheTeacherRetirementSystemofTexas.TRSisprimarilyfundedthroughStateand
employeecontributions.Dependinguponthesourceoffundingforaparticipant’ssalary,theSystemmayberequired
tomakecontributionsinlieuoftheState.
AllSystempersonnelemployedinapositiononahalftimeorgreaterbasisforatleastfourandonehalfmonthsor
moreare eligiblefor membershipinthe TRSretirement plan.However,studentsemployedin positionsthat require
studentstatusasaconditionof employment do not participate. Members with at least fiveyearsofservicehave a
vested right to unreduced retirement benefits at age 65 or provided they have a combination of age plus years of
servicetotaling80ormore.However,memberswhobeganTRSparticipationonorafterSeptember1,2007mustbe
age60toretirewithunreducedbenefitsandmemberswhoarenotvestedinTRSonAugust31,2014mustbeage62
toretirewithunreducedbenefitsunderthesecondoption.Membersarefullyvestedafterfiveyearsofserviceandare
entitledtoany reducedbenefitsfor whichtheeligibilityrequirementshavebeen metpriorto meetingtheeligibility
requirementsforunreducedbenefits.
TheTRSPlan provides retirement, disability annuitiesanddeathand survivor benefits. The benefit andcontribution
provisionsoftheTRSPlanareauthorizedbystatelawand maybeamendedbytheLegislature.Thepensionbenefit
formulas are based on members’ average annual compensation and years of service credit. The standard annuity is
2.3%oftheaverageofthefivehighestannualsalariesmultipliedbyyearsofservicecredit.Forgrandfatheredmembers
whowerehiredonorbeforeAugust31,2005andmeetcertaincriteria,thestandardannuityisbasedontheaverageof
thethreehighestannualsalaries.Theplandoesnotprovideautomaticcostoflivingadjustments.
118
TRScontributionratesforbothemployersandemployeesarenotactuariallydeterminedbutarelegallyestablishedby
theStateLegislature.Contributionsbyemployeeswere8.0%ofgrossearningsfor2023,and8.0%ofgrossearningsfor
2022.Dependinguponthesourceoffundingfortheemployee’scompensation,theStateortheSystemcontributesa
percentageofparticipantsalariestotaling8.0%ofannualcompensationfor2023,and7.75%ofannualcompensation
for 2022. The System’s actual contributions excluding the State match to TRS for the years ended August 31, 2023,
2022and2021were$514,850,265,$439,933,274,and$381,611,428,respectively.
The total pension liability is determined by an annual actuarial valuation. The tables below present the actuarial
methodsandassumptionsusedtomeasurethetotalpensionliabilityasoftheAugust31,2022andAugust31,2021
measurementdates.
SummaryofActuarialMethodsandAssumptions–TRSPlan
ActuarialValuationDate Aug31,2021rolledforwardtoAug31,2022
ActuarialCostMethod IndividualEntryAgeNormal
AssetValuationMethod MarketValue
ActuarialAssumptions:
DiscountRate 7.00%
Long-termExpectedRateofReturn 7.00%
MunicipalBondRateasofAugust2022* 3.91%
Inflation 2.30%
SalaryIncrease 2.95%to8.95%includinginflation
PayrollGrowthRate 2.90%
Mortality:
Active BasedonthePUB(2010),Amount-Weighted,Below-
MedianIncome,Teacher,MaleandFemaletables,witha
2-yearsetforwardformales.Theratesareprojectedona
fullygenerationalbasisbythelong-termratesofscale
UMP2021toaccountforfuturemortalityimprovements.
Post-Retirement The2021TRSofTexasHealthyPensionerMortalityTables.
Theratesareprojectedonafullygenerationalbasisby
ScaleUMP2021,butwithimmediateconvergence,to
accountforfuturemortalityimprovements.Fordisabled
retirees,athree-yearsetforwardofthesetablesareused,
withminimummortalityratesof0.0200forfemalesand
0.0400formales,respectively.
AdHocPost-EmploymentBenefitChanges None
119
SummaryofActuarialMethodsandAssumptions–TRSPlan
ActuarialValuationDate Aug31,2020rolledforwardtoAug31,2021
ActuarialCostMethod IndividualEntryAgeNormal
AssetValuationMethod MarketValue
ActuarialAssumptions:
DiscountRate 7.25%
Long-termExpectedRateofReturn 7.25%
MunicipalBondRateasofAugust2021* 1.95%
Inflation 2.30%
SalaryIncrease 3.05%to9.05%includinginflation
PayrollGrowthRate 3.00%
Mortality:
Active 90%oftheRP2014EmployeeMortalityTablesformales
andfemaleswithfullgenerationalmortality
Post-Retirement 2018TRSHealthyPensionerMortalityTableswithfull
generationprojectionusingScaleU-MP
AdHocPost-EmploymentBenefitChanges None
Notes:
*SourceforthemunicipalbondrateistheFixedIncomeMarketData/YieldCurve/DataMunicipalBonds
with20yearstomaturitythatincludeonlyfederallytax-exemptmunicipalbondsasreportedinFidelity
Index’s“20-YearMunicipalGOAAIndex.”
The actuarial assumptions used in the determination of the total pension liability as of the August 31, 2022
measurement date were updated from the assumptions used in the actuarial valuation as of August 31, 2021. The
actuarial assumptions used in the August 31, 2022 valuation were primarily based on the result of an actuarial
experiencestudyfortheperiodendingAugust31,2021andadoptedonJuly15,2022.Therehavebeennochangesto
thebenefitprovisionsoftheplansincethepriormeasurementdate.
Thefollowingassumptionsorotherinputswerechangedsincethepreviousmeasurementdate:
i. EconomicAssumptions
The discount rate and long-term expected rate of return were updated based on the current capital
marketassumptionsfromAon(TRS’investmentconsultant)andtheSystem’stargetassetallocation.
The salary increase and payroll growth rates were updated to reflect a 0.10% decrease in the general
wageinflationassumption.
ii. DemographicAssumptions
Pre-andpost-retirementmortalitytableswereupdatedbasedonobservationsduringthefive-yearperiod
endingAugust31,2019.
Theterminationanddisabilitytableswereupdatedtocombinemaleandfemaleexperiencepatterns.
Theretirementtableswereupdatedtoreflectsmalldecreasestotheretirementprobabilities.
The discount rate of 7.00% was applied to measure the total pension liability. The discount rate was based on the
expectedrateofreturnonpensionplaninvestmentsof7.00%.Theprojectedcashflowsintoandoutofthepension
planassumedthatactivemembers,employers,andnon-employercontributingentitymaketheircontributionsatthe
statutorilyrequiredrates.ItisassumedthatfutureemployerandStatecontributionswillbe8.50%ofpayrollforthe
measurementperiodendingAugust31,2020,graduallyincreasingto9.55%overthenextseveralyears.Thisincludesa
factorforallemployerandStatecontributionsforactiveandrehiredretirees.Basedontheseassumptions,thepension
plan’sfiduciarynetpositionandfuturecontributionsweresufficienttofinancethebenefitpaymentsofcurrentplan
members.Asaresult,thelong-termexpectedrateofreturnonpensionplaninvestmentswasappliedtoallprojected
benefitpaymentstodeterminethetotalpensionliability.
120
Thelong-termexpectedrateofreturnonplaninvestmentswasdevelopedusingabuilding-blockmethod,inwhichbest
estimate ranges of expected future real rates of return (net of pension plan investment expense and inflation) are
developedforeachmajorassetclass.Theserangesarecombinedtoproducethelong-termexpectedrateofreturnby
weighingtheexpectedfuturereal rates of returnbythetargetasset allocation percentage and by adding expected
inflation.
The target allocation and best estimates of geometric real rates of return for each major asset class for the plan’s
investmentportfolioasoftheAugust31,2022,measurementdatearepresentedbelow:
AssetClass*
Target
Allocation**
Long-TermExpected
GeometricReal
RateofReturn***
GlobalEquity
U.S. 18.0% 4.6%
Non-U.S.Developed 13.0% 4.9%
EmergingMarkets 9.0% 5.4%
PrivateEquity 14.0% 7.7%
StableValue
U.S.Treasury 16.0% 1.0%
AbsoluteReturn — 3.7%
StableValueHedgeFunds 5.0% 3.4%
RealReturn
RealAssets 15.0% 4.1%
Energy,NaturalResources,and
Infrastructure
6.0% 5.1%
Commodities — 3.6%
RiskParity
RiskParity 8.0% 4.6%
AssetAllocationLeverageCash 2.0% 3.0%
AssetAllocationLeverage (6.0)% 3.6%
Total 100.0%
Notes:
*AbsoluteReturnincludesCreditSensitiveInvestments.
**Targetallocationsarebasedonfiscalyear2022policymodel.
***CapitalMarketassumptionscomefromAonHewitt(asof08/31/2022).
121
The target allocation and best estimates of geometric real rates of return for each major asset class for the plan’s
investmentportfolioasoftheAugust31,2021,measurementdatearepresentedbelow:
AssetClass
Target
Allocation*
Long-TermExpected
GeometricReal
RateofReturn**
GlobalEquity
U.S. 18.0% 3.6%
Non-U.S.Developed 13.0% 4.4%
EmergingMarkets 9.0% 4.6%
PrivateEquity 14.0% 6.3%
StableValue
U.S.Treasury 16.0% (0.2)%
AbsoluteReturn — 1.1%
StableValueHedgeFunds 5.0% 2.2%
RealReturn
RealAssets 15.0% 4.5%
Energy,NaturalResources,and
Infrastructure
6.0% 4.7%
Commodities — 1.7%
RiskParity
RiskParity 8.0% 2.8%
AssetAllocationLeverageCash 2.0% (0.7)%
AssetAllocationLeverage (6.0)% (0.5)%
Total 100.0%
Notes:
*Targetallocationsarebasedonfiscalyear2021policymodel.
**CapitalMarketassumptionscomefromAonHewitt(asof08/31/2021).
SensitivityanalysiswasperformedontheimpactofchangesinthediscountrateontheSystem’sproportionateshare
ofthenetpensionliability.Theresultoftheanalysisispresentedinthetablebelow:
SensitivityofSystem’sProportionateShareoftheNetPensionLiability
toChangesintheDiscountRateFY23
1%Decrease CurrentDiscountRate 1%Increase
6.00% 7.00% 8.00%
$8,772,364,757 $5,639,140,669 $3,099,515,475
SensitivityofSystem’sProportionateShareoftheNetPensionLiability
toChangesintheDiscountRateFY22
1%Decrease CurrentDiscountRate 1%Increase
6.25% 7.25% 8.25%
$5,027,419,794 $2,300,711,499 $88,523,417
122
Thepensionplan’sfiduciarynetpositionisdeterminedusingeconomicresourcesmeasurementfocusandtheaccrual
basisofaccounting,whichisthesamebasisusedbyTRS.Benefitsandrefundsofcontributionsarerecognizedwhen
due and payable in accordance with the terms of the plan. Investments are reported at fair value. Fair value is a
market-basedmeasurement,notanentity-specificmeasurement.TRSutilizesoneormoreofthefollowingvaluation
techniquesinordertomeasurefairvalue:themarketapproach,thecostapproach,andtheincomeapproach.More
detailed information on the plan’s investment policy, assets, and fiduciary net position, may be obtained from TRS’
fiscal 2022 Annual Comprehensive Financial Report. Further information regarding actuarial assumptions and
conclusions,togetherwithauditedfinancialstatementsareincludedintheTRS’annualfinancialreport,whichmaybe
obtainedfromtheTRSwebsite.
AsofAugust31,2023and2022,respectively,theSystemreportedaliabilityof$5,639,140,669and$2,300,711,499for
itsproportionate shareofthe collectivenetpension liability.Thecollective netpension liability wasmeasuredas of
August31,2022and2021,andthetotalpensionliabilityusedtocalculatethenetpensionliabilitywasdeterminedby
anactuarialvaluationasofAugust31,2021and2020,respectively,androlledforwardtothemeasurementdate.The
System’s proportion as of the August 31, 2022 and 2021 measurements dates was 9.4987114% and 9.0342804%,
respectively. The System’s proportion of the collective net pension liability was based on its contributions to the
pensionplanrelativetothecontributionsofalltheemployersandnon-employercontributingentitytotheplanforthe
periodsSeptember1,2021throughAugust31,2022andSeptember1,2020throughAugust31,2021.AtAugust31,
2023and2022,respectively,theamountofthenetpensionliabilityrelatedtotheSystemreportedbytheStatewas
$2,209,241,002and$729,928,272.TheamountreportedbytheStateisrelatedtotheon-behalfcontributions,which
arerecognizedasStateappropriationgeneralrevenueontheSystem’sfinancialstatementsinthefiscalyearthatthe
StatecontributedtheamountstoTRSontheSystem’sbehalf.
For the years ending August 31, 2023 and 2022, the System recognized pension expense of $739,191,094 and
$125,990,889, respectively. At August 31, 2023 and 2022, the System reported deferred outflows of resources and
deferredinflowsofresourcesrelatedtopensionsfromthefollowingsources:
2023 2022
DeferredOutflows
ofResources
DeferredInflows
ofResources
DeferredOutflows
ofResources
DeferredInflows
ofResources
DifferenceBetweenExpectedandActual
Experience
$ 81,767,085 122,943,946 3,850,171 161,971,911
ChangesofAssumptions 1,050,755,436 261,877,598 813,256,571 354,510,118
NetDiffBetweenProjectedandActual
InvestmentReturn
557,129,061 — — 1,929,116,735
ChangeinProportionandContribution
Difference
450,681,969 178,847,679 404,726,884 242,046,563
ContributionsSubsequenttotheMeasurement
Date
514,850,265 — 439,933,274 —
Total $ 2,655,183,816 563,669,223 1,661,766,900 2,687,645,327
The $514,850,265 and $439,933,274 reported as deferred outflows of resources resulting from contributions
subsequenttothemeasurementdatewillberecognizedasareductioninthenetpensionliabilityfortheyearsending
August31,2024and2023,respectively.
123
Amounts reported as deferred outflows and inflows of resources related to pensions as of August 31, 2023 will be
recognizedinpensionexpenseinthefollowingyears:
FiscalYear
Increase(Reduction)of
PensionExpense
2024
$ 427,721,381
2025
246,997,078
2026
102,650,629
2027
687,111,814
2028
112,183,426
Total
$ 1,576,664,328
OPTIONALRETIREMENTPROGRAM(ORP)
TheStatehasalsoestablishedanoptionaldefinedcontributionretirementprogramforinstitutionsofhighereducation.
ParticipationintheORPisinlieuof participationintheTRS.ORPisavailabletocertaineligibleemployeeswhohold
faculty positions and other professional positions including but limited to director-level and above, librarians and
coaches. The ORP provides for the purchase of annuity contracts and mutual funds. Participants are vested in the
employer contributions after one year and one day of service. Depending upon the source of funding for the
employee’scompensation,theSystemmayberequiredtomaketheemployercontributionsinlieuoftheState.Since
these are individual annuity contracts, the State and the System have no additional or unfunded liability for this
program.TheemployeeandemployercontributionratesareestablishedbytheStateLegislatureeachbiennium.The
Stateprovidesanoptionforalocalsupplementontopofthestatebaserate.EachinstitutionwithintheSystemcan
decidetoadoptandfundalocalsupplementeachyeartoprovideeachORPemployeethemaximumemployerrate.
Thechancellor thenapproves theemployerrates eachfiscal year.The contributionsmadeby participants(6.65% of
annualcompensation)andtheSystem(6.6%Statebaserateplusanylocalsupplementforamaximumof8.5%)forthe
fiscalyearsendedAugust31,2023,2022and2021,respectively,areprovidedinthefollowingtable.
2023 2022 2021
ParticipantContributions $ 206,452,660 194,384,449 183,972,473
SystemContributions 264,003,722 248,522,747 235,157,931
Total $ 470,456,382 442,907,196 419,130,404
EMPLOYEESRETIREMENTSYSTEM(ERS)
CertainemployeesatU.T.MedicalBranch-GalvestonparticipateintheEmployeesRetirementSystemofTexas.The
BoardofTrusteesoftheEmployeesRetirementSystemofTexasistheadministratoroftheERS,whichisconsideredto
beasingleemployerdefinedbenefitpensionplan.ERScoverstheeligibleSystememployeeswhoarenotcoveredby
theTRSortheORP.Benefitsvestafterfiveyearsofcreditedservice.Employeesmayretireatage60withfiveyearsof
serviceoranycombinationofageplusyearsofservicethatequals80.
TheERSplanprovidesastandardmonthlybenefitinalifeannuityatretirementaswellasdeathanddisabilitybenefits
for members. Additional payment options are available. The benefit and contribution provisions are authorized by
Statelaw and may beamended by theTexasLegislature. Contribution requirementsare not actuariallydetermined.
The ERS contribution requirement, calculated using entry age normal actuarial cost method, is established through
Statestatute.
ThefundingpolicyrequiresmonthlycontributionsbyboththeStateandemployees.FortheyearbeginningSeptember
1,2015,the requiredcontributionsfortheStateandthe employeeareeach9.5%of pay.For LawEnforcementand
Custodial OfficersSupplementalRetirementFund eligible employees, the State and the employee contribution is an
additional0.50%ofpay,respectively.
TheTexasStateComptroller’sOfficehasdecidednottoallocateERSpensiontoproprietaryfundsduetoimmateriality,
as a result, there is no ERS pension net pension liability reported in the System’s financial statements. Additional
information can be obtained from the separately issued ERS Annual Comprehensive Financial Report which can be
obtainedfromtheEmployeesRetirementSystemofTexas,200East18thStreet,Austin,Texas78701orfoundonthe
ERSwebsite.
124
PHYSICIANSREFERRALSERVICE(PRS)SUPPLEMENTALRETIREMENTPLAN(SRP)/RETIREMENTBENEFITPLAN(RBP)
M.D.Andersonhasestablished,primarilyforthephysiciansofitsPhysiciansReferralService,thePhysiciansReferral
ServiceSRP/RBPPlans(theSRP/RBPPlans).TheSRP/RBPPlansarenonqualifiedplansdescribedbySection457(f)ofthe
InternalRevenueCodeof1986(IRC),asamended.TheassetsoftheSRP/RBPPlansofapproximately$622millionand
$585 million at August 31, 2023 and 2022, respectively, are measured at fair value and presented as restricted
investmentsintheSystem’sstatementofnetposition.SRP/RBPdeferredcompensationplanassetsremainsubjectto
theclaimsofthegeneralcreditorsofM.D.Anderson.
PRSofferseligibleemployeesparticipationinoneoftwononqualifiedretirementplansbasedondateofemployment.
TheassetsintheSRP/RBPtrustcanbeusedtopaythebenefitsofeitherplan’sparticipants.ThePRSExecutiveCouncil
andRetirementBoardmembershavetheauthoritytoadministerthePlansunderthetermsthatareestablishedand
mayapproveamendmentstothePlans.ThePRSBylawsestablishthePRSRetirementBoardandExecutiveCouncil.Per
thePRSBylaws,oneofthestandingcommitteesforthePhysiciansReferralServiceFacultyPracticePlan(Plan)isthe
PRSRetirementBoard.Achairisappointed,andelectionsareheldeverytwoyearsforcommitteemembership.There
are both voting members and non-voting ex-officio members. The PRS Retirement Board is advisory to the PRS
Executive Council which is chaired by the President. The PRS Executive Council also has committee membership
electionseverythreeyearsandincludesvotingandex-officiomembers.ThePresidentistheheadofthePlanandhas
theultimatedecisionauthority.
EmployeesCoveredbyBenefitTerms
Attherespectivemeasurementdates,thefollowingemployeesofM.D.Andersonwerecoveredbythebenefitterms:
MeasurementDate
September1,2022
MeasurementDate
September1,2021
a.
InactiveEmployeesorBeneficiariesReceiving
BenefitPayments 511 508
b.
InactiveEmployeesEntitledtobutnotyet
ReceivingBenefitPayments 278 279
c.
ActiveEmployees 1,590 1,597
d.
Total 2,379 2,384
SRPoftheAndersonHospital
EligibleemployeesofM.D.AndersonpriortoJuly1,1986mayparticipateintheSRP,asingle-employernonqualified
noncontributorydefinedbenefitpensionplan.Eligibleemployeesincludephysicianswithalicensetopracticemedicine
inthestateofTexas;anyindividualwithaPh.D.rankofassistantorhigher;D.D.S.withtherankofclinicalinstructoror
higher; D.V.M. degree or equivalent having attained the rank of assistant or higher; and individuals elected to
membershipbytheExecutiveCouncilofPRSasanadministrativestaffofficer.Nonewmembershavebeenadmittedto
theSRPsinceMay31,1989astheSRPisclosedtonewentrants.Ingeneral,participantsarefullyvestedinthe SRP
afterfiveyearsofcreditedservice.FormerparticipantsnotinactiveserviceonJanuary1,1985,requiretenyearsof
creditedserviceasrequiredbypreviousplanprovisions.Anactivememberreceivesfullretirementbenefitsbasedon
the SRP payment formula at age 65, age 60 with 20 years of credited service, or age 55 with 25 years of credited
service.Avestedmemberwhobecomesinactiveforanyreasonotherthandeathorretirementisentitledtoanearned
retirementallowance.Thisisadeferredallowancewithbenefitpaymentsbeginningattheformerparticipant'snormal
retirementage.ParticipantsintheSRParenottaxedontheemployer’scontributionsmadeuntilbenefitsarepaidsince
theSRPisgrandfatheredundertheprovisionsofSection457oftheInternalRevenueCode.
PRSRBP
OnSeptember1,1990,PRSestablishedtheRBP,asingle-employernonqualifiednoncontributorydefinedbenefitplan.
Eligible employees may participate in the RBP upon the later of their employment date or September 1, 1990.
Employees who were eligible for the SRP because of their employment date had a one-time option to become
membersoftheRBPandforegomembershipintheSRP.
Theamountofaparticipant'sbenefitisequaltoeachparticipant'saccountbalance,asoutlinedintheRBPprovisions.
Ingeneral,a participant's account balance is equal to a stated percentage of annual compensationforeachyearof
service plus a provision for annual interest credits. The earnings credit percentageis equal to the Moody's Average
CorporateBondyielddeterminedasofthefirstdayofsuchplanyear.
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Participants are taxed on the employer’s contributions made when the contributions become vested. Participants
becomevestedintheiraccountbalancesafterfiveyearsofservice.Anyvestedmemberwhobecomesinactiveforany
reason other than death or retirement and has not attained the age of 55 will have his or her account maintained
underRBPuntilretirementandearnhalftheinterestcreditsofactiveparticipants.
FederalincomeandSocialSecuritytaxesresultingfromannualbenefitsearnedintheRBParereimbursedbythePlans
totheEmployer,whopaysthetaxesto,oronbehalfof,participantsatthetimeparticipantsvestintheircontributions
andarereflectedasaliabilityinthetrust’sfinancialstatements.
TotalPensionLiabilityforSRP/RBPPlans
The total pension liability for the SRP/RBP Plans is determined by an annual actuarial valuation. The tables below
presenttheactuarialmethodsandassumptionsusedtomeasurethetotalpensionliabilityasoftheSeptember1,2022
and2021measurementdates.
SummaryofActuarialMethodsandAssumptions
ActuarialValuationDate September1,2022
ActuarialCostMethod IndividualEntryAgeNormal
AmortizationMethod AverageRemainingServiceLife
AssetValuationMethod N/A–UnfundedPlan
ActuarialAssumptions:
DiscountRate* 3.59%
RateofCompensationIncrease 4.00%
Mortality: Themortalitytableisbaseduponthefinalreportof
PRI-2012MortalityTablesandMP-2021mortality
improvementscaleaspublishedbytheSocietyof
Actuaries’(SOA’s)RetirementPlansExperience
Committee(RPEC).Thistableandprojectionscale
representthemostrecentavailabledataasofthe
valuationdate.
Theotherkeydemographicassumptions,suchas
TerminationandRetirement,arebaseduponareviewof
thePRSparticipantexperience.Thisexperiencestudyis
documentedintheAssumptionRationaleaslastbeing
conductedin2021.
126
SummaryofActuarialMethodsandAssumptions
ActuarialValuationDate September1,2021
ActuarialCostMethod IndividualEntryAgeNormal
AmortizationMethod AverageRemainingServiceLife
AssetValuationMethod N/A–UnfundedPlan
ActuarialAssumptions:
DiscountRate* 2.14%
RateofCompensationIncrease 4.00%
Mortality: ThemortalitytableisbaseduponthefinalreportofRP-
2014MortalityTablesandMP-2014mortality
improvementscaleaspublishedbytheSocietyof
Actuaries'(SOA’s)RetirementPlansExperience
Committee(RPEC),withadjustmentsthatalignwiththe
SOA’ssubsequentreleaseofupdatestomortality
improvementscales.
Theotherkeydemographicassumptions,suchas
TerminationandRetirement,arebaseduponareviewof
thePRSparticipantexperience.Thisexperiencestudyis
documentedintheAssumptionRationaleaslastbeing
conductedin2021.
Notes:
*Thediscountratesusedinthesevaluationsweredeterminedusingthe20-yearyieldsontheBondBuyer20-Bond
GOIndexasofAugust31,priortothemeasurementdate.
ThetotalpensionliabilityforthefiscalyearendingAugust31,2023wasmeasuredasofSeptember1,2022basedon
anactuarialvaluationasofthatdateThetotalpensionliabilityforthefiscalyearendedAugust31,2022wasmeasured
asofSeptember1,2021basedonactuarialvaluationasofthatdate.
Benefit accruals during each period were estimated by calculating the accruals as a percentage of payroll for
September 1, 2022 and then applying that percentage to the expected payroll for measurement dates
September1,2021.
Thedeferred outflows(inflows) includedinthe expenseeach yearforassumption changesreflect theimpactof the
changesindiscountratesnotedabove.
Thedeferredoutflows(inflows)includedintheexpenseeachyeardonotincludeanydifferenceinactualandexpected
demographicexperiencewhichwillbemeasuredinfutureyears.
Thevaluationdoesnotincludeanyassetssincetheassetsarenotinatrustthatisprotectedfromcreditorsandthus,
theplanisconsideredunfundedunderGASB73.
Sensitivityanalysis was performedon the impact ofchangesin the discountrate on M. D.Anderson’stotal pension
liability.Theresultoftheanalysisispresentedinthetablebelow:
SensitivityofTotalPensionLiability
toChangesintheDiscountRateFY23
1%Decrease CurrentDiscountRate 1%Increase
2.59% 3.59% 4.59%
$1,001,974,232 $918,839,384 $846,111,334
127
SensitivityofTotalPensionLiability
toChangesintheDiscountRateFY22
1%Decrease CurrentDiscountRate 1%Increase
1.14% 2.14% 3.14%
$1,150,980,528 $1,046,052,341 $955,425,484
AtAugust31,2023and2022,M.D.Andersonreportedatotalpensionliabilityof$918,839,384and$1,046,052,341
respectively,fortheSRP/RBPPlans.
Increase(Decrease)inTotalPensionLiability
ForMeasurementYear
from09/01/2021to
08/31/2022
ForMeasurementYear
from09/01/2020to
08/31/2021
BalanceatBeginningofMeasurementYear $ 1,046,052,341 1,026,357,235
ChangesfortheYear:
ServiceCost 40,513,997 37,988,952
Interest 22,719,060 22,898,554
ChangesofAssumptionsorOtherInputs (140,590,003) 5,813,235
BenefitPayments(Employer) (49,856,011) (47,005,635)
NetChanges (127,212,957) 19,695,106
BalanceatEndofMeasurementYear $ 918,839,384 1,046,052,341
For the years ended August 31, 2023 and 2022, M. D. Anderson recognized pension expense of $56,366,846 and
$70,309,660,respectively.AtAugust31,2023and2022,M.D.Andersonreporteddeferredoutflowsofresourcesand
deferredinflowsofresourcesrelatedtothePRSRBPandSRPfromthefollowingsources:
AsofAugust31,2023 AsofAugust31,2022
Deferred
Outflowsof
Resources
Deferred
Inflowsof
Resources
Deferred
Outflowsof
Resources
Deferred
Inflowsof
Resources
ChangesofAssumptions $ 50,706,142 123,813,153 58,641,508 —
BenefitPaymentsSubsequenttothe
MeasurementDate 49,321,919 51,531,435 —
AdministrativeCostsSubsequenttothe
MeasurementDate 847,079 376,107 —
Total $ 100,875,140 123,813,153 110,549,050 —
The $49,321,919 and $51,531,435 reported as deferred outflows and inflows of resources resulting from benefit
paymentssubsequenttothemeasurementdatewillberecognizedasareductioninthetotalpensionliabilityforthe
years ending August 31, 2024 and 2023, respectively. Other amounts reported as deferred outflows and inflows of
resourcesrelatedtotheSRP/RBPPlansasofAugust31,2023willberecognizedinpensionexpenseinthefollowing
years:
FiscalYearEnded
August31
Increase(Reduction)
ofPensionExpense
2024 $ (6,883,724)
2025 (7,370,803)
2026 (7,370,803)
2027 (7,370,803)
2028 (7,370,803)
Thereafter (35,892,996)
Total $ (72,259,932)
128
18. DeferredCompensation
DEFERREDCOMPENSATION-457(b)
TheSystememployeesmayelecttodeferaportionoftheirearningsforincometaxandinvestmentpurposespursuant
toauthoritygrantedintheTexasGovernmentCode,Sec.609.001.TheSystemoffersitsowndeferredcompensation
plan,createdinaccordancewithInternalRevenueCodeSection457(b).AllSystememployeesareeligibletoparticipate
in the System's plan and cannot participate in the plan offered by the state of Texas. All investments, amounts,
property,andrightsheldundertheDeferredCompensationTrustFundareheldfortheexclusivebenefitofparticipants
andbeneficiariesatthefairmarketvalueoftheplanaccountforeachparticipantintheaccountsestablishedbythe
participantswiththeSystem’sretirementproviders.TheSystemhasnoliabilityundertheplan.
TAX-SHELTEREDANNUITY-403(b)
TheSystemalsoadministerstheUTSaverTax-ShelteredAnnuityProgram(TSA),createdinaccordancewithIRCSection
403(b). All employees are eligible to participate. The UTSaver TSA is a private plan, and the deductions, purchased
investmentsandearningsattributedtoeachemployee’s403(b)planareheldbyvendorschosenbytheemployee.The
vendors may be insurance companies, banks or approved non-bank trustees such as mutual fund companies. The
assetsofthisplandonotbelongtotheSystemortheState.Therefore,neithertheSystemnortheStatehasaliability
relatedtothisplan.
THEUNIVERSITYOFTEXASSYSTEMGOVERNMENTALRETIREMENTARRANGEMENT(UTGRA)
TheUniversityofTexasSystemGovernmentalRetirementArrangement(UTGRA)isanexcessbenefitplanestablished
bytheSystem,viaSection415(m)oftheInternalRevenueCode,toprovidecertainparticipantsintheORPthatportion
oftheirbenefitsthatwouldotherwisebepayableundertheORPexceptforthe$66,000limitoncontributionsimposed
by Section 415 of the Internal Revenue Code (IRC) for calendar year 2023 ($61,000 for calendar year 2022). As of
August31,2023and2022,therewere557and577planmembers,respectively.PersonsemployedbytheSystemprior
to September 1, 1996, whose compensation exceeds the limit set by IRC Section 401(a)(17) and whose ORP
contributionislimitedbythe$66,000capunderIRCSection415(c)forcalendaryear2023($61,000forcalendaryear
2022),defer6.65% of their excess compensation while the System contributes between 6.58%and 8.5%depending
upontheinstitutionandthedateofemployment.TheSystemcontributed$3,240,602fortheyearendedAugust31,
2023and$3,449,994fortheyearendedAugust31,2022.Theparticipantscontributed$2,535,294fortheyearended
August 31, 2023 and $2,699,113 for the year ended August 31, 2022. Plan provisions are established and may be
amendedatanytimebytheU.T.SystemBoardofRegents.
Plan assets are recorded at fair value and are invested in contracts and accounts in a similar manner to the ORP.
Participants are immediately vested in the plan, both for the employee deferrals and the employer contributions.
However,deferrals,contributions,purchasedinvestmentsandearningsattributabletotheplanarethepropertyofthe
SystemandsubjectonlytotheclaimsoftheSystem’sgeneralcreditors.Participant’srightsundertheplanareequalto
thoseofthegeneralcreditorsoftheSysteminanamountequaltothefairvalueoftheparticipant’saccountbalance.
The System has no liability under the UTGRA that would exceed the aggregate value of the investments, and it is
unlikelythatanyofUTGRA’sassetswillbeusedtosatisfytheclaimsofgeneralcreditorsinthefuture.
19. CommitmentsandContingentLiabilities
OnAugust31,2023,variouslawsuitsandclaimsinvolvingtheSystemwerepending.Afterconferringwithlegalcounsel
concerning pending litigation and claims, the System’s management believes that the outcome of pending litigation
shouldnothaveamaterialadverseeffectonthefinancialstatementsoftheSystem.
TheSystemcontinuestoimplementits$8.6billioncapitalimprovementprogram,plannedforfiscalyears2024through
2029,toupgradefacilities.Contractshavebeenenteredintofortheconstructionandrenovationofvariousfacilities.
Theseprojectsareinvariousstagesofcompletion.
TheSystemreceivesgrantsandotherformsofreimbursementfromvariousfederalandstateagencies.Theseactivities
aresubjecttoauditbyagentsofthefundingauthority,thepurposeofwhichistoensurecompliancewithconditions
precedenttoprovidingsuchfunds.TheSystembelievesthattheliability,ifany,forreimbursementwhichmayariseas
theresultofaudits,wouldnotbematerial.
Basedonthecreditsupportannexagreementswithallcounterparties,theSystemdoesnothavetopostanycollateral
foranyhedgingderivativeinstruments.
129
Laws and regulations governing the Medicare and Medicaid programs and certain other third-party programs are
complexandsubjecttointerpretation.Asaresult,thereisatleastareasonablepossibilitythatrecordedestimatesof
third-partysettlementswillchangebyamaterialamountinthenearterm.TheSystem’sintentistobeincompliance
with all applicable laws and regulations, and it is not aware of any significant pending or threatened investigations
involving allegations of potential wrongdoing. Compliance with such laws and regulations can be subject to future
reviewandinterpretation.ChangesintheMedicareandMedicaidprogramsandareductionoffundingcouldhavean
adverseeffectontheSystem.
130
20. MatrixofOperatingExpensesReportedbyFunction
FortheyearendedAugust31,2023,thefollowingtablerepresentsoperatingexpensesforbothnaturalandfunctional
classificationsfortheSystem:
OperatingExpenses Instruction Research PublicService
Hospitalsand
Clinics
CostofGoodsSold $ 141,719 85,108 3,285,723 75,873,856
SalariesandWages 4,016,295,153 1,780,307,068 203,341,038 4,193,135,966
PayrollRelatedCosts 793,121,825 403,219,268 48,653,417 1,000,751,038
MembershipDues 13,038,011 3,156,394 454,341 10,068,866
RegistrationFees/Meetings/Conferences 21,080,514 14,267,151 5,579,445 6,218,179
ProfessionalFeesandServices 59,116,049 145,227,619 52,624,859 334,040,910
OtherContractedServices 56,394,388 360,859,280 68,879,355 378,733,465
FeesandOtherCharges 11,872,694 60,441,800 3,991,238 20,799,736
Travel 33,133,679 49,556,214 5,191,360 19,411,495
MaterialsandSupplies 114,615,766 404,899,340 64,053,717 2,875,337,502
Utilities 864,529 1,167,607 297,178 17,011,686
Communications 6,444,719 3,817,216 2,606,282 25,673,470
RepairsandMaintenance 26,573,302 27,630,113 6,009,387 187,785,007
RentalsandLeases 12,593,387 7,518,172 2,694,305 36,414,124
PrintingandReproduction 5,319,453 6,460,395 3,430,379 4,925,616
RoyaltyPayments 62,672 5,294,223 112 1,821,530
BadDebtExpense — — — —
ImpairmentofCapitalAssets — — — —
AssetRetirementExpense — — — —
InsuranceCosts/Premiums 7,230,723 874,879 261,230 37,123,138
ClaimsandLosses — — — —
OPEBExpense 153,206,338 67,023,617 7,117,672 154,982,096
PensionExpense 244,804,416 107,095,292 11,373,143 304,008,699
ScholarshipsandFellowships 15,389,008 56,209,636 2,952,078 74,025
DepreciationandAmortization — — — —
FederalSponsoredPass-throughtoState
Agencies 1,836,499 6,134,030 3,096,702 —
StateSponsoredPass-throughtoState
Agencies — 1,001,374 71,355 —
OtherOperatingExpenses 45,029,540 128,492,646 15,539,315 (7,283,506)
TotalOperatingExpenses $ 5,638,164,384 3,640,738,442 511,503,631 9,676,906,898
131
OperatingExpenses AcademicSupport StudentServices
Institutional
Support
Operationsand
Maintenanceof
Plant
CostofGoodsSold $ 523,933
14,684 1,863,854 525
SalariesandWages 740,298,664
140,158,074 616,503,573 303,005,404
PayrollRelatedCosts 191,781,437
35,602,472 (5,431,355) 83,987,956
MembershipDues 4,508,021
601,023 5,217,361 652,759
RegistrationFees/Meetings/Conferences 13,168,057
2,347,165 4,806,693 826,867
ProfessionalFeesandServices 42,711,633
10,212,986 95,779,280 31,823,174
OtherContractedServices 80,721,060
42,800,543 79,162,615 71,036,454
FeesandOtherCharges 3,974,810
2,624,322 1,620,703 (117,908)
Travel 17,236,429
6,237,426 7,243,502 1,201,166
MaterialsandSupplies 119,350,861
21,587,549 56,363,895 96,066,246
Utilities 256,558
29,476 13,764,167 244,198,909
Communications 5,162,804
1,452,798 15,271,994 3,096,239
RepairsandMaintenance 22,946,511
3,704,998 52,711,467 172,063,654
RentalsandLeases 6,756,907
3,336,625 9,674,250 13,332,047
PrintingandReproduction 4,033,722
2,929,524 4,418,578 170,364
RoyaltyPayments 58,361,886
784 141,534 1,688
BadDebtExpense —
(1,077,652) — —
ImpairmentofCapitalAssets —
— — —
AssetRetirementExpense —
— — 328,392
InsuranceCosts/Premiums 128,529
340,673 14,621,276 6,238,142
ClaimsandLosses —
— 218,137,957 —
OPEBExpense 28,452,395
5,470,210 24,110,626 11,355,923
PensionExpense 45,463,341
8,740,706 38,525,741 18,145,334
ScholarshipsandFellowships 5,542,340
5,608,915 1,373,712 75
DepreciationandAmortization —
— — —
FederalSponsoredPass-throughtoState
Agencies —
16,304 25,933 —
StateSponsoredPass-throughtoState
Agencies —
— 2,326,065 —
OtherOperatingExpenses 22,859,739
13,933,787 21,500,892 13,296,969
TotalOperatingExpenses $ 1,414,239,637 306,673,392 1,279,734,313 1,070,710,379
132
OperatingExpenses
Scholarships
andFellowships
Auxiliary
Enterprises
Depreciationand
Amortization TotalExpenses
CostofGoodsSold
$ (110,899) 44,949,789 — 126,628,292
SalariesandWages
19,934,736 271,709,859 — 12,284,689,535
PayrollRelatedCosts
2,122,696 60,555,625 — 2,614,364,379
MembershipDues
42,451 3,713,554 — 41,452,781
RegistrationFees/Meetings/Conferences
501,514 4,979,464 — 73,775,049
ProfessionalFeesandServices
846,944 25,311,408 — 797,694,862
OtherContractedServices
614,956 120,534,354 — 1,259,736,470
FeesandOtherCharges
1,161,383 7,649,105 — 114,017,883
Travel
969,970 40,619,556 — 180,800,797
MaterialsandSupplies
1,291,701 52,265,403 — 3,805,831,980
Utilities
(17,960) 39,188,647 — 316,760,797
Communications
11,792 8,190,426 — 71,727,740
RepairsandMaintenance
80,816 44,724,822 — 544,230,077
RentalsandLeases
333,735 11,099,063 — 103,752,615
PrintingandReproduction
74,378 2,919,783 — 34,682,192
RoyaltyPayments
— 87,750 — 65,772,179
BadDebtExpense
— — — (1,077,652)
ImpairmentofCapitalAssets
— — — —
AssetRetirementExpense
— — — 328,392
InsuranceCosts/Premiums
13,858 3,133,428 — 69,965,876
ClaimsandLosses
— — — 218,137,957
OPEBExpense
792,632 10,097,632 — 462,609,141
PensionExpense
1,266,526 16,134,743 — 795,557,941
ScholarshipsandFellowships
502,714,531 19,468,900 — 609,333,220
DepreciationandAmortization
— — 1,827,434,267 1,827,434,267
FederalSponsoredPass-throughtoState
Agencies
(22,465) — — 11,087,003
StateSponsoredPass-throughtoState
Agencies
(453,788) — — 2,945,006
OtherOperatingExpenses
3,347,503 31,586,967 — 288,303,852
TotalOperatingExpenses $ 535,517,010 818,920,278 1,827,434,267 26,720,542,631
133
FortheyearendedAugust31,2022,thefollowingtablerepresentsoperatingexpensesforbothnaturalandfunctional
classificationsfortheSystem,withsomeexpensesrestatedforGASBStatementNo.94and96.SeeNote4forfurther
detailsontherestatements:
OperatingExpenses Instruction Research PublicService
Hospitalsand
Clinics
CostofGoodsSold $ 799,837 12,128 2,194,377 48,003,377
SalariesandWages 3,691,024,775 1,614,723,226 171,477,922 3,733,806,074
PayrollRelatedCosts 708,833,299 368,942,811 41,451,040 878,059,737
MembershipDues 12,650,721 3,221,002 322,854 9,275,833
RegistrationFees/Meetings/Conferences 16,451,823 8,995,993 3,048,853 4,627,887
ProfessionalFeesandServices 48,454,878 124,266,618 33,052,668 339,759,927
OtherContractedServices 59,346,409 320,552,302 69,164,901 389,394,653
FeesandOtherCharges 12,192,030 17,184,984 4,263,336 21,823,975
Travel 18,167,180 25,094,058 2,813,703 9,417,650
MaterialsandSupplies 100,507,271 271,530,001 48,607,804 2,528,682,323
Utilities 655,296 1,286,279 263,294 12,450,950
Communications 15,982,440 4,206,668 2,284,946 24,817,697
RepairsandMaintenance 12,167,996 30,535,054 7,871,256 170,621,084
RentalsandLeases 8,561,040 6,359,447 1,845,334 43,785,800
PrintingandReproduction 4,632,863 5,644,205 2,062,141 4,869,986
RoyaltyPayments 43,478 3,413,318 63 1,424,650
BadDebtExpense — — — —
ImpairmentofCapitalAssets — — — —
AssetRetirementExpense — — — —
InsuranceCosts/Premiums 8,016,293 546,824 248,447 29,665,956
ClaimsandLosses — — — —
OPEBExpense 384,324,944 173,262,164 18,200,920 373,456,821
PensionExpense 42,086,199 18,973,387 1,993,125 111,205,725
ScholarshipsandFellowships 15,051,259 55,161,354 2,456,992 116,775
DepreciationandAmortization — — — —
FederalSponsoredPass-throughtoState
Agencies 1,095,522 6,518,317 2,051,803 —
StateSponsoredPass-throughtoState
Agencies 60,000 550,657 172,541 —
OtherOperatingExpenses 38,714,266 133,203,089 13,500,343 9,667,706
TotalOperatingExpenses $ 5,199,819,819 3,194,183,886 429,348,663 8,744,934,586
134
OperatingExpenses AcademicSupport StudentServices
Institutional
Support
Operationsand
Maintenanceof
Plant
CostofGoodsSold $ 207,588
(13,868) 1,010,887 109
SalariesandWages 685,470,954
131,787,505 580,869,695 273,585,248
PayrollRelatedCosts 181,526,258
32,583,901 (29,869,940) 77,299,306
MembershipDues 4,148,496
679,751 4,732,307 465,202
RegistrationFees/Meetings/Conferences 8,141,991
1,630,175 3,515,636 515,176
ProfessionalFeesandServices 33,686,428
8,645,630 67,410,403 33,689,072
OtherContractedServices 64,716,612
50,158,244 85,084,998 64,457,922
FeesandOtherCharges 3,767,387
2,919,461 66,422,269 1,276,606
Travel 8,724,588
3,839,936 3,608,209 711,775
MaterialsandSupplies 96,866,459
21,244,278 38,969,194 93,566,903
Utilities 132,674
24,484 7,044,753 241,632,850
Communications 4,573,454
1,344,746 17,411,955 3,221,613
RepairsandMaintenance 14,631,824
4,088,657 57,665,411 162,247,982
RentalsandLeases 5,684,758
2,558,787 8,205,331 12,804,268
PrintingandReproduction 3,213,615
2,529,002 5,142,494 226,150
RoyaltyPayments 26,543,084
432 215,762 1,376
BadDebtExpense —
(1,578,953) — —
ImpairmentofCapitalAssets —
— — —
AssetRetirementExpense —
— — 1,438,430
InsuranceCosts/Premiums 222,324
1,533,186 1,049,252 8,021,835
ClaimsandLosses —
— 273,083,485 —
OPEBExpense 70,917,916
14,198,745 59,355,305 28,294,717
PensionExpense 7,765,995
1,554,859 6,499,810 3,098,464
ScholarshipsandFellowships 5,484,432
6,413,143 2,863,808 5,000
DepreciationandAmortization —
— — —
FederalSponsoredPass-throughtoState
Agencies —
— — —
StateSponsoredPass-throughtoState
Agencies 8,769,094
— 919,316 —
OtherOperatingExpenses 20,494,094
12,206,366 14,972,651 11,166,875
TotalOperatingExpenses $ 1,255,690,025 298,348,467 1,276,182,991 1,017,726,879
135
OperatingExpenses
Scholarships
andFellowships
Auxiliary
Enterprises
Depreciationand
Amortization TotalExpenses
CostofGoodsSold
$ (55,384) 32,121,848 — 84,280,899
SalariesandWages
19,095,970 243,270,674 — 11,145,112,043
PayrollRelatedCosts
1,973,833 55,906,892 — 2,316,707,137
MembershipDues
38,927 3,154,562 — 38,689,655
RegistrationFees/Meetings/Conferences
226,666 4,253,846 — 51,408,046
ProfessionalFeesandServices
866,472 15,139,222 — 704,971,318
OtherContractedServices
497,711 104,703,947 — 1,208,077,699
FeesandOtherCharges
1,033,959 7,363,581 — 138,247,588
Travel
628,399 34,004,003 — 107,009,501
MaterialsandSupplies
1,790,699 44,338,339 — 3,246,103,271
Utilities
(7,489) 38,051,641 — 301,534,732
Communications
22,888 8,221,664 — 82,088,071
RepairsandMaintenance
269,811 33,502,363 — 493,601,438
RentalsandLeases
96,240 10,137,622 — 100,038,627
PrintingandReproduction
70,453 2,374,799 — 30,765,708
RoyaltyPayments
2,500 37,634 — 31,682,297
BadDebtExpense
— — — (1,578,953)
ImpairmentofCapitalAssets
— — — —
AssetRetirementExpense
— — — 1,438,430
InsuranceCosts/Premiums
4,979 3,851,094 — 53,160,190
ClaimsandLosses
— — — 273,083,485
OPEBExpense
2,152,325 26,366,320 — 1,150,530,177
PensionExpense
235,694 2,887,291 — 196,300,549
ScholarshipsandFellowships
619,887,185 20,187,294 — 727,627,242
DepreciationandAmortization
— — 1,786,126,507 1,786,126,507
FederalSponsoredPass-throughtoState
Agencies
37,071 — — 9,702,713
StateSponsoredPass-throughtoState
Agencies
586,000 — — 11,057,608
OtherOperatingExpenses
6,507,609 29,184,389 — 289,617,388
TotalOperatingExpenses $ 655,962,518 719,059,025 1,786,126,507 24,577,383,366
136
21. NetPosition
TheSystem’snetpositionatAugust31,2023and2022wascomprisedofthefollowing:
2023 Restated2022*
NetInvestmentinCapitalAssets $ 6,963,671,907 6,570,970,880
Restricted:
Nonexpendable 38,161,618,752 36,029,323,644
Expendable 21,353,034,539 21,145,744,390
TotalRestricted 59,514,653,291 57,175,068,034
UnrestrictedNetPosition:
Unrestricted:
Reserved:
Encumbrances 1,813,523,746 1,545,150,178
StateAppropriationstobeLapsed — —
AccountsReceivable(LessUnearnedRevenuePortion) 2,105,381,601 1,832,236,035
Inventories 238,891,148 229,590,521
Self-insurancePlans 329,128,558 509,247,085
OtherSpecificPurposes:
AdvancedResearchProgram/AdvancedTechnologyProgram/
TDT — —
NotesReceivable 244 37,610
Deposits 486,519 1,057,339
PrepaidExpenses 186,603,530 162,828,969
DeferredCharges 102,650 50,043
ImprestFunds 822,207 891,305
TravelAdvances 11,574,819 7,943,025
Unreserved:
Allocated:
FundsFunctioningasEndowment-unrestricted 1,342,467,476 1,319,166,760
ProvisionforOperatingBudgets 78,536,877 52,904,471
CapitalProjects 5,419,127,496 5,034,070,157
DebtService 207,339,660 177,355,885
Start-up/Matching 171,806,915 118,090,400
UtilitiesReserve 9,866,192 10,767,469
ResearchEnhancementandSupport 733,147,013 683,630,370
MarketAdjustments 115,009,663 96,278,063
StudentFees 247,591,086 253,016,442
TexasTomorrowFundShortfall 2,079,144 2,606,196
InstructionalProgramSupport 1,938,485,335 1,306,105,922
Dean,ChairandFacultyRecruitmentPackages 3,621,921 6,629,387
Self-supportingEnterprises 339,040,388 232,208,368
PotentialLawsuits — —
PatientCareSupport 3,071,423,581 2,869,014,517
PracticePlanMinimumOperatingReserveof90Days 372,233,253 377,616,544
UncompensatedPatientCare — —
Unallocated (14,552,801,304) (13,885,440,341)
TotalUnrestricted 4,185,489,718 2,943,052,720
TotalNetPosition $ 70,663,814,916 66,689,091,634
*August31,2022netinvestmentincapitalassets,restricted,andunrestrictednetpositionwasrestatedasaresultofimplementing
GASBStatementNo.94and96.SeeNote4forfurtherdetails.
137
AsofAugust31,2023and2022,restrictednonexpendablenetpositionincludes$30,601,703,562and$28,824,603,058,
respectively,ofthePermanentUniversityFundcorpus,and$820,000,000forbothyearsofthePermanentHealthFund
corpus. As of August 31, 2023 and 2022, restricted expendable net position includes $12,257,112,433 and
$12,086,454,920,respectively, of the Permanent UniversityFundappreciation,and $639,231,070and $630,484,275,
respectively,ofthePermanentHealthFundappreciation.
Unrestrictednetposition,detailedinthetableabove,isnotsubjecttoexternallyimposedstipulations.Unrestrictednet
position may be designated for special purposes by actions of the Texas Legislature, internal management, and the
U. T. System Board of Regents, or may otherwise be limited by contractual agreements with outside parties.
Substantiallyall unrestricted net position isdesignatedfor academic programs, patientcare,research programs and
initiatives,andcapitalprograms.
TheSystem’sfiduciaryfundnetpositionatAugust31,2023and2022wascomprisedofthefollowing:
2023 2022
Restrictedfor:
PooledParticipants $ 291,513,943 286,259,583
Individuals,Organizations,andOtherGovernments 1,886,978 1,870,196
TotalFiduciaryFundNetPosition $ 293,400,921 288,129,779
22. TerminationBenefits
U. T. System Administration contracted with NextJob to provide outplacement services to employees of the System
whoimplementedareductioninforce.U.T.SystemAdministrationincurredexpensesof$94,365for272terminated
employees of the System as of August 31, 2023, and $56,050 for 174 terminated employees of the System as of
August31,2022.While U. T. System Administration contracted with NextJob, the U. T. institutions may incur travel
expensesforNextJobiftheyrequestNextJobtocometotheircampusoriftheinstitutionrequestsservicesthatfall
outsideofthestandardserviceinthecontract.
In2023,UTSanAntoniohadthreeemployeeswhoreceivedalump-sumpaymentof$125,000,$145,000,and$48,264,
respectively, upon separation from the University. In 2023, UT San Antonio offered a Phased Faculty Retirement
program,atypeofVoluntaryIncentiveRetirementProgram,toeligibletenuredfaculty.Phasedretirementrefersto
reducedappointmentsinteachingservicestoassist anindividualinpreparingforfullretirement.Apost-retirement
contractisenteredintoforuptooneacademicyear.Tentenuredfacultyparticipatedintheprogramandreceiveda
lump-sumpayouttotaling$719,416.
In 2021, U. T. Austin Intercollegiate Athleticsterminated10employeesentitled to buyoutclauses. The total buyout
payments of $20,759,265 span from January 1, 2021 to December 31, 2023. As of August 31, 2023, $19,350,931 in
buyoutpaymentshavebeenmade.Additionally,in2022,U.T.AustinIntercollegiateAthleticsterminated1employee
entitledto abuyoutclause. AsofAugust 31,2023, thetotalbuyout paymentof $573,125spanningfrom January1,
2022toFebruary31,2023hasbeenpaid.
138
Healthcare continuation under the Consolidated Omnibus Budget Reconciliation Act (COBRA) is provided for both
voluntaryandinvoluntaryterminations.COBRAparticipantsareeligibletocontinuegroupbenefitsfor18to36months,
dependinguponthecircumstancesleadingtolossofcoverage.COBRAbenefitsfortheself-insuredplansofferedbythe
SystemfortheyearsendedAugust31,2023and2022areprovidedbelow:
2023 2022
TotalNumberofParticipants
1
2,062 2,886
PremiumRevenue
2
$ 5,634,482 5,900,342
2%AdministrativeFeeRevenue
3
(113,475) (118,934)
NetCOBRAPremium 5,521,007 5,781,408
LessClaimsPaid (13,524,041) (13,990,913)
CosttoSystem $ (8,003,034) (8,209,505)
1
Theparticipantsabovearefortheself-insuredprogram.
2
ThepremiumrevenueinFY2023andFY2022include$97,967and$496,490,respectively,ofFederalCOBRAsubsidyfundingrecognizedby
theSystemunderARPforthemedical,dentalandvisioninsuranceplansoffered.
3
The2%administrativefeeisretainedbyU.T.COBRAinOEBforadministeringtheCOBRAbenefitandispaidbytheparticipant.
23. DeferredOutflowsofResourcesandDeferredInflowsofResources
AsofAugust31,2023and2022,theSystemreporteddeferredoutflowsofresourcesanddeferredinflowsofresources
inconnectionwith its hedging derivativeinstruments, unamortized (losses)/gainsonrefunding debt, the OPEBplan,
theTRSandSRP/RBPpensionplans,unamortizedinterestratelockterminationpayments,assetretirementobligations,
beneficial interests in irrevocable split-interest agreements, acquisitions, lease revenues, and P3 related balances as
presentedinthetablebelow:
2023 Restated2022*
Deferred
Outflows
Deferred
Inflows
Deferred
Outflows
Deferred
Inflows
HedgingDerivativeInstruments $ 39,388,655 130,779,738 87,510,811 125,007,462
UnamortizedLoss/GainonRefundingDebt 4,543,043 2,363,765 9,724,176 3,104,870
OPEB-Related 3,266,920,443 7,800,989,030 3,654,279,275 1,315,834,778
PensionRelated 2,756,058,955 687,482,376 1,772,315,950 2,687,645,327
UnamortizedInterestRateLockTermination 7,452,384 — 7,769,755 —
AssetRetirementObligation 1,611,014 — 1,180,094 —
Split-InterestAgreements
—
35,379,352
—
43,965,260
AcquisitionRelated 12,920,536 — 13,287,488 —
LeaseRevenueRelated — 222,930,065 — 244,616,599
P3RelatedBalances* — 393,783,092 — 393,893,594
Total $ 6,088,895,030 9,273,707,418 5,546,067,549 4,814,067,890
Deferredoutflows of resourcesof $39,388,655 and$87,510,811as ofAugust31, 2023and2022, respectively,were
related to hedging derivative instruments in a liability position. Deferred inflows of resources of $130,779,738 and
$125,007,462asofAugust31,2023and2022,respectively,wererelatedtohedgingderivativeinstrumentsinanasset
position.ThehedgingderivativeinstrumentassetandliabilityaredisclosedinNote7.
Deferred outflows of resources of $4,543,043 and $9,724,176 as of August 31, 2023 and 2022, respectively, were
relatedtotheunamortizedlossesonrefundingdebt.Deferredinflowsofresourcesof$2,363,765and$3,104,870asof
August31,2023and2022,respectively,wererelatedtotheunamortizedgainsonrefundingdebt.Fordebtrefundings,
thedifferencebetweenthereacquisitionpriceandthenetcarryingamountoftheolddebtisdeferredandreportedas
deferredoutflowsordeferredinflows.
Deferred outflows of resources of $3,266,920,443 and $3,654,279,275 and deferred inflows of resources of
$7,800,989,030 and $1,315,834,778 as of August 31, 2023 and 2022, respectively, were related to the OPEB plan.
August31,2022deferredoutflowsandinflowsofresourceswererestatedasaresultofcorrectionofOPEBerrors.See
Note4and16foradditionalinformation.
139
Deferred outflows of resources of $2,655,183,815 and $1,661,766,899 and deferred inflows of resources of
$563,669,223and$2,687,645,327asofAugust31,2023and2022,respectively,wererelatedtotheTRSpensionplan.
Deferredoutflowsofresourcesof$100,875,140and$110,549,051asofAugust31,2023and2022,respectively,were
relatedtotheSRP/RBPpensionplans.ThesedeferredoutflowsrelatedtotheSRP/RBPpensionplansarenewdueto
implementing GASB Statement No. 97 in 2022. August 31, 2022 balances were retroactively restated as a result of
implementingthisstatement.SeeNote4andNote17foradditionalinformation.
Deferred outflows of resources of $7,452,384 and $7,769,755 as of August 31, 2023 and 2022, respectively, were
relatedtounamortizedinterestratelockterminationpayments.
Deferred outflows of resources of $1,611,014 and $1,180,094 as of August 31, 2023 and 2022, respectively, were
relatedtoassetretirementobligations.
Deferredoutflows of resourcesof $12,920,536 and$13,287,488as ofAugust31, 2023and2022, respectively,were
related to unamortized excess consideration paid as a result of an asset purchase agreement with PTC- Houston
Management,LPinfiscalyear2019.
Deferred inflows of resources of $35,379,352 and $43,965,260 as of August 31, 2023 and 2022, respectively, were
relatedtotheSystem’sunconditionalbeneficialinterestsinirrevocablesplit-interestagreements.
Deferredinflowsofresourcesof$222,930,065and$244,616,599asofAugust31,2023and2022,respectively,were
relatedtofutureperiodrevenuesfromleasesinwhichtheSystemisthelessorotherthanshorttermleases,regulated
leases,andleasesofassetsclassifiedasinvestments.
Deferredinflowsofresourcesof$393,783,092and$393,893,594asofAugust31,2023and2022,respectively,were
relatedtoP3RelatedBalancesinwhichtheSystemisthetransferor.
24. Public-PrivateandPublic-PublicPartnerships
TheSystemhasenteredintovariousPPPsunderwhichtheSystemmeetsthedefinitionofthetransferor,inwhichthe
operator has been contracted to provide public services for, but not limited to the operation of student housing,
operationofsports/recreationalarenas,andgeneralimprovementsmadetodiningfacilitiesonbehalfoftheSystem.
ThenatureandextentofrightsretainedbytheSystemastransferorunderthePPParrangementsinclude,butarenot
limitedto,maintainingresidualinterestoftheutilityoftheassetsusedinP3agreementsandsettingpricesandhours
ofoperations.Rightsgrantedtooperatorsintheseagreementsmayincludetheabilitytomakeimprovementstothe
spacewithwrittenpermissionfromtheSystem.
Totalsof$33,699,879and$30,720,628wererecognizedastheReceivableforPPPInstallmentPaymentsfortheyears
endedAugust31,2023and2022,respectively.Ofthetotalreceivable,$3,237,578and$4,202,465wererecognizedas
the current portion of the receivable for PPP installment payments for the years ended August 31, 2023 and 2022,
respectively.PresentvalueofPPPinstallmentpaymentsarediscountedbasedonaborrowingratedeterminedbythe
Systemandrangedfrom0.106%to3.809%.
VariablepaymentsarearesultoftheunderlyingPPPmeasurednotinafixedrate,butrathervariableduetounderlying
paymentsderivedfromarevenueand/orprofit-sharingarrangements,usageoftheunderlyingPPPasset,orchangesin
anindexorrate.Atotalof$7,895,137and$1,288,391wasrecognizedasrevenuefromthesevariablepaymentsforthe
yearsendedAugust31,2023,and2022,respectively.
ForcapitalassetsunderP3agreements,atotalof$365,461,001and$15,039,785wererecognizedfortheyearsended
August31,2023,and2022respectively.
Receivables for the Underlying PPP Assets purchased or constructed and placed into service by the operator were
$5,959,348 and $353,611,099 for the years ended August 31, 2023, and 2022, respectively. Ownership of the
underlyingassetofthePPPhasnotyetbeentransferredtotheSystemforassetscarriedbytheSystemasPPPasset
receivables.
DeferredInflowofResourcescorrespondingtotheP3Receivables,P3AssetstobeTransferred,andP3capitalassets
were$393,783,092and$393,893,594fortheyearsendedAugust31,2023and2022,respectively.
140
A general description of the PPP arrangements, including the status of projects during the construction period and
termsispresentedinthetablebelow:
Institution Partner Description
Construction
Status
Termof
Concession
Contract
Begin
Contract
End
UTArlington Chartwells DiningServices Complete 10years 2021 2031
UTArlington CentennialApartments CollegeApartments Complete 35years 1994 2029
UTArlington Follett Bookstore Complete 25years 1999 2024
UTAustin MoodyCenter Arena Complete 35years 2022 2057
UTDallas Chartwells DiningServices Complete 16Years 2019 2035
UTRioGrandeValley Boyer MedicalOfficeBuilding Complete 21Years 2009 2030
UTRioGrandeValley HarlingenCISD SchoolBuilding Complete 35Years 2021 2056
UTRioGrandeValley Sodexo DiningServices Complete 12Years 2011 2023
UTSanAntonio Follett Bookstore UnderConstruction 15years 2023 2038
UTSanAntonio Aramark DiningServices Complete 15Years 2020 2035
25. SubsequentEvents
OnSeptember1,2023,StephenF.AustinStateUniversity(SFASU)becameaninstitutionwithintheSystempursuantto
legislation enacted by the 88th Texas Legislature. Prior to that date, SFASU was an independent public university
withintheStateofTexasandwasseparatelyincludedintheAnnualComprehensiveFinancialReportoftheState.
OnSeptember20,2023,theU.T.SystemBoardofRegentsissued$41,000,000inRFSTaxableCommercialPaperNotes,
SeriesBtofinanceavarietyofcapitalprojectsatvariousU.T.Systeminstitutions.OnSeptember21,2023,theU.T.
SystemBoard of Regentsretired $56,897,000of RFSTaxableCommercial PaperNotes,Series B. Subsequent tothis
issuanceandretirement,theSystemhad$568,101,000ofRFSTaxableCommercialPaperNotes,SeriesBoutstanding.
FromOctober2,2023,throughOctober6,2023,theU.T.SystemBoardofRegentsretired$71,000,000ofoutstanding
PUFTaxableCommercialPaperNotes,SeriesB.Subsequenttotheseretirements,theSystemhad$190,000,000ofPUF
TaxableCommercialPaperNotes,SeriesBoutstanding.
OnNovember1,2023,theU.T.SystemBoardofRegentsissued$50,000,000inRFSTaxableCommercialPaperNotes,
SeriesBtofinanceavarietyofcapitalprojectsatvariousU.T.Systeminstitutions.OnNovember2,2023,theU.T.
System Board of Regents retired $75,000,000 of outstanding RFS Taxable Commercial Paper Notes, Series B.
Subsequenttothisissuanceandretirement,the System had $543,101,000 of RFS Taxable Commercial Paper Notes,
SeriesBoutstanding.
OnNovember28,2023,theU.T.SystemBoardofRegentsissued$250,000,000inRFSTax-ExemptCommercialPaper
Notes,SeriesAto financeavarietyof capitalprojectsandequipmentpurchasesatvariousU.T.Systeminstitutions.
Subsequent to this issuance, the System had $1,000,763,000 of RFS Tax-Exempt Commercial Paper Notes, Series A
outstanding.
OnDecember5,2023,theU.T.SystemBoardofRegentsissued$200,000,000inPUFTax-ExemptCommercialPaper
Notes,SeriesAto financeavarietyof capitalprojectsandequipmentpurchasesatvariousU.T.Systeminstitutions.
Subsequent to this issuance, the System had $945,300,000 of PUF Tax-Exempt Commercial Paper Notes, Series A
outstanding.
26. UpcomingAccountingPronouncements
Otherthanthe portionof thisstatementimplemented in2022and2023,the remainderofGASB StatementNo.99,
Omnibus 2022, is effective in 2024. The requirements related to financial guarantees and the classification and
reportingofderivativeinstrumentswithinthescopeofStatement53areeffective2024.TheSystemisevaluatingthe
effectthattheremainderofStatement99willhaveonitsfinancialstatements.
141
GASB Statement No. 100, Accounting Changes and Error Corrections—an amendment of GASB Statement No. 62,
effective2024,enhancesaccountingandfinancialreportingrequirementsforaccountingchangesanderrorcorrections
to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or
assessingaccountability.TheSystemisevaluatingtheeffectthatStatement100willhaveonitsfinancialstatements.
GASBStatementNo.101,CompensatedAbsences,effective2025,updatestherecognitionandmeasurementguidance
for compensated absences by aligning the recognition and measurement guidance under a unified model and by
amendingcertainpreviouslyrequireddisclosures.TheSystemisevaluatingtheeffectthatStatement101willhaveon
itsfinancialstatements.
142
REQUIREDSUPPLEMENTARYINFORMATION
143
THEUNIVERSITYOFTEXASSYSTEM
REQUIREDSUPPLEMENTARYINFORMATION
SCHEDULEOFTHESYSTEM’SPROPORTIONATESHAREOFCHANGES
INTHEEMPLOYERTOTALOPEBLIABILITYANDRELATEDRATIOS
December31,2022
2022 2021 2020 2019 2018 2017 2016
TotalOPEBLiability
ServiceCost $ 877,350,009 708,022,293 572,677,209 471,785,731 548,093,347 569,296,804 584,209,916
Interest 321,938,242 266,654,173 286,398,460 442,516,885 394,480,742 426,298,831 384,344,675
ChangesofBenefitTerms
(52,783,790) — — — — — —
DifferencesBetweenExpectedandActual
Experience
— 160,861,824 — (89,235,022) — (136,662,956) —
ChangesofAssumptionsorOtherInputs (7,704,380,357) 1,780,677,623 1,269,349,798 478,407,758 (1,429,460,396) (781,692,644) (299,449,010)
BenefitPayments(Employer) (206,219,478) (181,252,716) (153,657,997) (152,076,995) (153,396,451) (137,157,472) (147,648,350)
NetChangeinTotalOPEBLiability (6,764,095,374) 2,734,963,197 1,974,767,470 1,151,398,357 (640,282,758) (59,917,437) 521,457,231
TotalOPEBLiability–Beginning 14,695,594,306 11,931,417,814 9,683,463,315 * 10,355,785,546 10,717,111,345 10,777,028,782 10,255,571,551
ChangesinProportionateShare 158,235,423 29,213,295 273,187,029 41,561,977 278,956,959 — —
TotalOPEBLiability–Ending $ 8,089,734,355 14,695,594,306 11,931,417,814 11,548,745,880 10,355,785,546 10,717,111,345 10,777,028,782
*InFY2022,theBeginningTotalOPEBLiabilityforthemeasurementyearendedDecember31,2020wasrestatedtocorrectdemographicdataerrorsandassumptionsrelatedtoassumed
ratesofparticipationbyeligibleterminatedemployees.MeasurementyearspriortoDecember31,2020havenotbeenrestatedforthecorrectionoftheerror.
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NotestoSchedule:
Thisscheduleisintendedtopresenttenyearsofinformation.OnlysevenyearsofinformationispresentedduetoGASBStatementNo.75beingimplementedinfiscalyear2018.Additionalyearswillbe
displayedastheybecomeavailable.
Informationispresentedusingmeasurementdatewhichprecedesthefiscalyearendbyeightmonths.
Noassetsareaccumulatedinatrustthatmeetsthecriteriainparagraph4ofGASBStatementNo.75topayrelatedbenefits.
Changesinbenefitterms
From2021to2022,thefollowingarereflectedaschangesinbenefitterms:
-IncreasesinretireecostsharingforretireesforwhomMedicareisnotprimary
-AnincreaseintheemployerfundedlifeinsurancecoverageforretireeswhodonotoptoutofEGIPhealthcoverageuponretirement
Changesinassumptionsorotherinputs:
From2021to2022,thefollowingarereflectedaschangesinassumptionsorotherinputs:
-Assumedexpenses,assumedpercapitahealthbenefitcostsandassumedhealthbenefitcosttrendshavebeenupdatedtoreflectincreasesinretireecostsharinginUTSelectandtheimplementation
ofUTCare,afullyinsuredMedicareAdvantagePlanforretireesforwhomMedicareisprimary,effectiveJanuary1,2023.ThisdecreasedtheTotalOPEBLiabilitybyapproximately$4.4billion.
Changesinthediscountrate(seetablebelow).ThisdecreasedtheTotalOPEBLiabilitybyapproximately$4.9billion.
From2020to2021,thefollowingarereflectedaschangesinassumptionsorotherinputs:
-Adjustmentstoassumptionsforexpenses,assumedpercapitahealthbenefitcostsandassumedtrendforhealthbenefitcostsandretireecontributions.
Thefollowingarethediscountratesusedineachperiod:
2022 3.72%
2021 2.06%
2020 2.12%
2019 2.74%
2018 4.10%
2017 3.44%
2016 3.78%
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THEUNIVERSITYOFTEXASSYSTEM
REQUIREDSUPPLEMENTARYINFORMATION
OTHERPOSTEMPLOYMENTBENEFITSPLAN
August31,2023
ScheduleoftheSystem’sProportionateShareoftheTotalOPEBLiability
asoftheDecember31MeasurementDate
2022 2021 2020 2019 2018 2017 2016
System’sProportionoftheTotalOPEB
Liability 82.8178338% 81.9355890% 81.7354650% 79.4928364% 79.1750747% 77.1664987% 77.1664987%
System’sProportionateShareoftheTotal
OPEBLiability $ 8,089,734,355 14,695,594,306 11,931,417,814 11,548,745,880 10,355,785,546 10,717,111,345 10,777,028,782
State’sProportionateShareoftheTotal
OPEBLiabilityRelatedtoSystem 1,678,372,322 3,239,950,544 2,666,184,108 2,979,287,588 2,723,817,586 3,171,184,120 3,188,913,639
TotalOPEBLiabilityRelatedtoSystem $ 9,768,106,677 17,935,544,850 14,597,601,922 14,528,033,468 13,079,603,132 13,888,295,465 13,965,942,421
System’sCoveredPayroll $ 9,812,399,798 9,457,441,724 6,791,262,006 6,425,556,183 6,062,198,170 5,820,998,450 5,987,051,307
System’sProportionateShareoftheTotal
OPEBLiabilityasaPercentageofits
CoveredPayroll 82.44% 155.39% 175.69% 179.73% 170.83% 184.11% 180.01%
PlanFiduciaryNetPositionasaPercentage
oftheTotalOPEBLiability 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
OnlysevenyearsofinformationispresentedduetoGASBStatement75beingimplementedinfiscalyear2018.Additionalyearswillbedisplayedastheybecomeavailable.
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THEUNIVERSITYOFTEXASSYSTEM
REQUIREDSUPPLEMENTARYINFORMATION
TEACHERRETIREMENTSYSTEMPENSIONPLAN
August31,2023
ScheduleoftheSystem’sProportionateShareoftheNetPensionLiability
asoftheAugust31MeasurementDate
2022 2021 2020 2019 2018 2017 2016 2015 2014
System’s
Proportionof
theNetPension
Liability 9.4987114% 9.0342804% 8.9723873% 8.6902629% 8.9377185% 8.2879633% 8.2932305% 7.7646311% 8.6199871%
System’s
Proportionate
ShareoftheNet
PensionLiability $ 5,639,140,669 2,300,711,499 4,805,427,562 4,517,470,315 4,919,537,167 2,650,044,162 3,133,888,495 2,744,693,745 2,302,987,541
State’s
Proportionate
ShareoftheNet
PensionLiability
Relatedto
System 2,209,241,002 729,928,272 1,587,993,294 1,898,921,776 1,355,571,593 894,941,498 893,178,321 786,436,009 892,687,939
TotalNetPension
LiabilityRelated
toSystem $ 7,848,381,671 3,030,639,771 6,393,420,856 6,416,392,091 6,275,108,760 3,544,985,660 4,027,066,816 3,531,129,754 3,195,675,480
System’sCovered
Payroll $ 6,783,241,812 6,196,286,308 5,942,147,682 5,435,527,295 5,106,576,133 4,891,473,913 4,635,793,582 4,472,632,860 4,018,776,650
System’s
Proportionate
ShareoftheNet
PensionLiability
asaPercentage
ofitsCovered
Payroll 83.13% 37.13% 80.87% 83.11% 96.34% 54.18% 67.60% 61.37% 57.31%
PlanFiduciaryNet
Positionasa
Percentageof
theTotal
PensionLiability 75.62% 88.79% 75.54% 75.24% 73.74% 82.17% 78.00% 78.43% 83.25%
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ScheduleoftheSystem’sContributionsasofAugust31
2023 2022 2021 2020 2019 2018 2017 2016 2015
Statutorily
Required
Contributions $ 601,660,709 525,701,240 464,721,473 445,661,076 369,615,856 347,247,177 332,620,226 315,233,963 304,139,034
Contributionsin
Relationtothe
Statutorily
Required
Contributions $ 514,850,265 439,933,274 381,611,428 366,510,043 302,294,698 282,808,370 262,734,718 262,370,366 244,723,301
Contribution
Deficiency
(Excess) $ 86,810,444 85,767,966 83,110,045 79,151,033 67,321,158 64,438,807 69,885,508 52,863,597 59,415,733
System’sCovered
Payroll $ 7,592,051,434 6,783,241,812 6,196,286,308 5,942,147,682 5,435,527,295 5,106,576,133 4,891,473,913 4,635,793,582 4,472,632,860
Contributionsasa
Percentageof
CoveredPayroll 6.78% 6.49% 6.16% 6.17% 5.56% 5.54% 5.37% 5.66% 5.47%
ContributionsbytheStateofTexasonbehalfoftheSystemsubstantiallyresolvethecontributiondeficiency.
OnlynineyearsofinformationispresentedduetoGASBStatement68beingimplementedinfiscalyear2015.Additionalyearswillbedisplayedastheybecomeavailable.
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THEUNIVERSITYOFTEXASSYSTEM
REQUIREDSUPPLEMENTARYINFORMATION
SCHEDULEOFM.D.ANDERSON’SPRSSRP/RBPPENSIONLIABILITY
ASOFTHESEPTEMBER1MEASUREMENTDATE
2022 2021 2020 2019
1.TotalPensionLiability
ServiceCost $ 40,513,997 37,988,952 32,367,864
Interest 22,719,060 22,898,554 28,255,880
ChangesofAssumptionsorOtherInputs (140,590,003) 5,813,235 71,349,543
BenefitPayments(Employer) (49,856,011) (47,005,635) (49,249,256)
NetChangeinTotalPensionLiability (127,212,957) 19,695,106 82,724,031
TotalPensionLiability-Beginning 1,046,052,341 1,026,357,235 943,633,204
TotalPensionLiability-Ending $ 918,839,384 1,046,052,341 1,026,357,235 943,633,204
2.Covered-EmployeePayroll $ 575,070,266 549,500,639 520,630,549 506,351,431
3.TotalPensionLiabilityasaPercentageof
Covered-EmployeePayroll 159.78% 190.36% 197.14% 186.36%
OnlyfouryearsofinformationispresentedduetoGASBStatementNo.97beingimplementedinfiscalyear2022.Additionalyearswillbedisplayedastheybecomeavailable.Noassetsareaccumulatedinatrust
thatmeetsthecriteriainparagraph4ofGASBStatementNo.68topayrelatedbenefits.
149