1. USES OF AVAILABLE UNIVERSITY FUNDS
2. ENDING FUND BALANCES

Appendix A – CAPITAL IMPROVEMENT PLAN – GENERAL POLICIES
Appendix B – PUF BOND RATINGS
Appendix C – NET APPROPRIATIONS OF PUF BOND PROCEEDS
Appendix D – TAMUS AVAILABLE UNIVERSITY FUNDS – RESERVES
Appendix E – TAMUS AVAILABLE UNIVERSITY FUNDS – DEBT SERVICE
Appendix F – TEXAS A&M UNIVERSITY – OPERATING/EXCELLENCE
Appendix G – PRAIRIE VIEW A&M UNIVERSITY – OPERATING/EXCELLENCE
Appendix H – SYSTEM ADMINISTRATIVE & GENERAL OFFICES - OPERATING

Please note: Appendix C - H are published in Adobe Acrobat. If you do not have this free reader software, visit the Adobe website to download it.

The AUF is used for two primary purposes:  1) to pay interest and principal due on PUF bonds, and 2) to provide operating and excellence funds for Texas A&M University, Prairie View A&M University, and The Texas A&M University System Administrative and General Offices.

PUF DEBT SERVICE
Income generated from the Permanent University Fund is used to pay debt service on bonds and variable rate notes issued for capital needs, which are assessed each year and detailed in a five-year Capital Plan document.  These needs include new construction, repairs and renovations, equipment purchases, and library books and materials.  The Texas A&M University System Members benefiting from bonds and notes include the following:

 Texas A&M University
      Texas A&M University at Galveston
      System Health Science Center *
 Prairie View A&M University
 Tarleton State University
 Texas Agricultural Experiment Station
 Texas Agricultural Extension Service
 Texas Forest Service
 Texas Engineering Experiment Station
 Texas Engineering Extension Service
 Texas Transportation Institute
 System Administrative and General Offices

  *  Benefited as a unit of Texas A&M University

The methodology applied to the allocation of the debt service for the benefit of eligible A&M System Members is based on the original appropriations of bond proceeds.  Debt service for bond issues that include equipment are split so that equipment is paid off in seven years, while new construction and renovation projects are financed for the full term of the bonds.  Debt service is tracked by A&M System Member and bond issue, and further divided into equipment and other categories (including repairs, renovations, and new construction).

The first call on the use of AUF funds is to service PUF-backed debt.  Appendix C summarizes the allocation of A&M System PUF Bond Proceeds to each Member.

OPERATING AND EXCELLENCE ALLOCATIONS
Pursuant to the terms of the constitution, Texas A&M University, Prairie View A&M University, and the Texas A&M University System Administrative and General Offices are the only A&M System Members eligible to receive appropriations from the remaining Available University Funds.  These appropriations are made in support of each Member’s operating and excellence budgets.

As approved by the Board of Regents, Texas A&M University, and Prairie View A&M University, the distribution of AUF income to the two institutions is based on the ratio of the total of all funds appropriated by the legislature to each institution, averaged over a five year period.  The split for FY 2000 – FY 2003 is 89.03% for Texas A&M University and 10.97% for Prairie View A&M University.

As of August 31, 1999, the cash balance of the AUF reserve was $83,728,675.  This balance does not include receivables of $8,429,027 or payables of $721,631.  After considering the receivables and payables, the AUF reserve fund balance is $91,436,071.  Of this balance, $48,340,860 has been set aside for debt service needs for fiscal year 2000.

In addition to the reserve fund balance, the A&M System Offices has an additional $632,582 set aside for emergency needs.  Texas A&M University and Prairie View A&M University had ending fund balances of $2,008,104 and $9,488,426, respectively.  The Prairie View A&M University ending fund balance includes $5.4 million set aside in an Endowed Matching Scholars fund.

Summaries of fiscal year 1999 actual activity and fiscal year 2000 budgets can be found in Appendices E – H.

CAPITAL IMPROVEMENT PLAN – GENERAL POLICIES

Capital needs are determined as part of an on-going capital planning process that clearly identifies the available resources of the A&M System Members.  These needs are tracked for five fiscal years and are compiled into the official Capital Plan (Plan) of the System.  Management of available capital resources is a joint effort between the component institutions and agencies and the System Administrative and General Offices (SAGO).  The Plan is updated continuously and is formally reviewed and approved by the Chancellor at the beginning of each fiscal year and again in March of each year.

The Plan includes all capital equipment, land purchases and projects for the construction of new buildings, facilities or other permanent improvements and projects for the repair, renovation or rehabilitation of existing buildings, facilities or other permanent improvements funded from all available resources.  Additions to the Plan are submitted in writing for review and incorporation as far in advance of the planned expenditure as possible, and at least concurrent with a request for project initiation or purchase.  Details submitted include scope, justification, and funding sources by type of funds, i.e., Permanent University Funds (PUF), Higher Education Funds (HEF), Revenue Financing System Funds (RFS) and/or component local funds.

A cash flow analysis is prepared for the five years covered by the Plan.  The analysis reflects those projects and equipment purchases that will expend funds during the five-year period, and the expected balances of debt proceeds remaining and planned debt issuances during each of the five fiscal years.  Actual cash balances and remaining project expenditures are incorporated into the analysis periodically.  Revisions to the cash flow analysis are included in the updated Capital Plan published twice each fiscal year.

PUF BOND RATINGS

Pursuant to constitutional provisions, the A&M System may sell bonds equal to ten percent (10%) of the book value of the PUF.  The indebtedness is secured by AUF income and is rated on the stability of the PUF, the quality of its investment management, other commitments against the AUF, and various other factors.  The overall credit rating of PUF bonds is AAA.  The Variable Rate Note programs have been rated with the highest commercial paper credit ratings:  Fitch – F-1+, Moody’s – P-1, and S&P – A-1+.