Narrative:  

Troy University is in compliance with this Core Requirement.

Troy University prepares and publishes annual financial reports which show the University’s total and consolidated results for financial operations. The audit reports and management letters for years 2005-2006 and 2006-2007, conducted by the Department of Examiners for the State of Alabama, include the corresponding management comments and notes to financial statements. In addition, the audited statements include the financial statements of the Troy University Foundation.

The audited reports, along with the annual budgets for fiscal years 2006-2007 and 2007-2008 clearly show that Troy is a financially stable academic institution. Troy’s financial resources are sufficient to maintain its physical infrastructure and support the programs derived from the University’s mission statement.

Troy University considers its operations to be stable and adequate to meet its financial requirements because

• The resources obtained from tuition and associated activities are sufficient to offer and maintain high quality academic and co-curricular programs, which are aligned with the Troy University mission statement,
  
• The resources are sufficient to maintain the functionality of its physical infrastructure and to enhance the appearance of physical facilities, which supports the mission of the University, and
  
• Troy University’s assets are complemented by donations from the Troy University Foundation through fundraising campaigns and investments.

As shown in Table 1, this financial stability is further reflected in Troy’s steady increase in net assets. The total annual change in a university’s net assets is defined as the increase or decrease in assets from a fiscal year’s financial activity. An increase in net assets is a positive accumulation of financial value (surplus) concerning all the fiscal transactions in a fiscal year. Troy University has experienced a significant increase in net assets since fiscal year 2002. Total ending net assets have increased by $66.2 million (79.3 percent from fiscal year end 2002 through fiscal year end 2006. This increase reflects an impressive increase in both capital assets (71 percent) and unrestricted assets (86.8 percent).

TABLE 1

SCHEDULE OF NET ASSETS AND CHANGES IN NET ASSETS

	For the Year Ended September 30
	(amounts expressed in thousands)
	2006	2005	2004	2003	2002
Total revenues (from schedule of revenues by source)	201,324	182,959	159,525	149,461	127,620
Total expenses (from schedule of expenses by use and function)	180,966	169,296	149,369	134,944	118,847
Income before other revenues, expenses, gains and losses	20,358	13,663	10,156	14,517	8,773
Permanent Endowment Additions	246	0	130	183	(6,342)
Gifts/Transfers from Troy University Foundation	(92)	2,403	2,527	3,391	958
Total changes in net assets	20,512	16,066	12,813	18,091	3,389
Net assets, beginning	129,112	113,233	99,326	81,905	80,067
Net assets, ending	149,624	129,299	112,139	99,996	83,456
Invested in capital assets, net of related debt	67,426	59,478	51,764	43,674	39,349
Restricted - expendable	2,321	2,574	3,640	1,742	548
Restricted - nonexpendable	1,290	1,620	1,500	1,500	1,500
Unrestricted	78,587	65,627	55,235	53,080	42,059
Total	149,624	129,299	112,139	99,996	83,456

The basis for financial stability

Troy University’s financial stability is based on a constant increase in revenue and effective cost control. The increase in revenue has come from four main sources as evidenced by Table 2:

1. strong increases in student enrollment,
2. modest increases in tuition,
   
3. recent large increases in state appropriations, and
   
4. growth in investment income due to increases in interest rates and cash reserves.

Tuition revenue has increased by $44.4 million (74.1 percent) from fiscal year 2002 to 2006. Troy University’s appropriations from the State of Alabama have increased by $7.4 million (20.5 percent) between 2002 and 2006. Investment income for investments and cash has increased $3.8 million from 2002 to 2006. Total revenue from all sources within Troy University has increased $79.2 million (64.8 percent) from fiscal year 2002 through 2006.

TABLE 2

SCHEDULE OF REVENUES BY SOURCE

	For the Year Ended September 30
	(amounts expressed in thousands)
	2006	2005	2004	2003	2002
Revenues
Student tuition and fees (net of scholarship allowances)	104,377	98,181	81,426	72,536	59,939
Federal grants and contracts	28,479	23,847	20,017	18,763	12,892
State and local grants and contracts	5,538	4,261	5,099	5,535	4,438
Nongovernmental grants and contracts	999	684	396	451	695
Sales and services of educational and other activities	6,802	5,558	6,000	5,454	4,617
Sales and services of auxiliary enterprises (net of scholarship allowances)	7,617	11,301	9,846	9,764	8,861
Other operating revenues
Total operating revenues	153,812	143,832	122,784	112,503	91,442
State appropriations	43,516	37,133	35,808	35,966	36,060
Gifts/Transfers from Troy Foundation	(92	2,403	2,527	3,391	958
Investment income	3,961	1,994	933	992	116
Permanent endowment additions	24	0	130	183	(6,342)
Other non-operating revenues	35	0	0	0	2
Total non-operating revenues	47,666	41,530	39,398	40,532	30,794
Total revenues	201,478	185,362	162,182	153,035	122,236

This robust increase in revenue is mirrored by the strong increase in students attending Troy University exhibited in Table 3. During the fall of 2002, Troy’s FTEs under ACHE (Alabama Commission on Higher Education) method was 11,720. During the fall of 2006, Troy’s FTE count was 17,086, an increase of 46 percent.

TABLE 3

Undergraduate and Graduate FTEs

Enrollment	2006	2005	2004	2003	2002	2001
Undergraduate         and Graduate FTE	17,086	16,900	16,374	14,559	12,998	11,720
Undergraduate and Graduate Headcount
Percentage of Men	42%	42%	44%	44%	46%	43%
Percentage of Women	58%	58%	56%	56%	54%	57%
Percentage of Black	39%	38%	37%	35%	32%	30%
Percentage of White	48%	50%	52%	54%	56%	56%
Percentage of Other	13%	12%	11%	11%	12%	14%

These increases in students did not come at the expense of admissions standards. Table 4 below displays the average ACT test scores for students accepted into Troy University. Those scores are the same as seven years earlier. These scores are also on par with the average national ACT score.

TABLE 4

TROY UNIVERSITY FRESHMAN ENROLLMENT (Troy Campus)

	2006	2005	2004	2003	2002	2001	2000	1999
Admissions-Freshman (Troy Campus Only)
Accepted as a Percentage of Applications	89%	94%	64%	69%	74%	74%	68%	78%
Percentage of Accepted who enrolled	48%	46%	82%	42%	45%	47%	50%	50%
Average ACT Test Scores	20.7	20.7	20.4	20.4	20.7	20.9	21.0	20.6
National Average ACT Score-Total	N/A	21.1	20.9	20.9	20.8	21.0	21.0	21.0

Troy’s budgetary process

The budget process begins in early April when budget worksheets are mailed from the Troy University budget director under the direction of the Senior Vice Chancellor for Finance and Business Affairs. The worksheets are sent to department heads throughout Troy University. Those worksheets include information concerning salaries and expenses. Instructions are given to department heads concerning acceptable changes for the next year. Department heads must justify budgeted items that exceed the previous year’s budget.

Once the department heads complete their budgets, the various vice chancellors, deans and university-wide directors review them. After their review, the four senior vice chancellors make any necessary adjustments. Once those are completed, the Senior Vice Chancellor for Finance and Business Affairs reviews the tentative budget and submits it to the Chancellor who makes any final adjustments. The budget is then submitted to the Board of Trustees (usually in early August) for approval.

After approval of the final budget, each department can adjust its budget. The budget revision is submitted and approved by one of the four senior vice chancellors or a designee. The Senior Vice Chancellor for Finance and Business Affairs then approves the revision. After its approval, the budget revision is then sent to the budget director for input into the general ledger system (Datatel).

In addition, each department receives weekly reports detailing its expenses versus the annual budget. The general ledger system requires a manual override before an invoice is paid against a general ledger account number where budgeted funds are not available. The accounts payable process is centralized so that maximum control of payments is ensured.

The Troy University budget

Troy University has a documented annual budgetary process to ensure that Troy is fiscally responsible in fulfilling its mission. The Senior Vice Chancellor for Finance and Business Affairs is responsible for the preparation of the University budget and oversight control of the budget. The Troy University Chancellor approves each preliminary annual budget before its presentation to the Troy University Board of Trustees. The Board of Trustees must approve the annual budget before it is enacted. Tables 5 and 6 illustrate the approved annual revenue and expense budgets for fiscal years 2004 thru 2007 and the pro forma budget for 2008. The pro forma 2008 budget projects a strong growth in revenue and a modest increase in operating expenses.

Board of Trustees Budget Control

Table 7 provides the dates of Troy University Board of Trustee meetings with asterisks indicating those meetings with budget approval sessions. Minutes of Board of Trustee meetings are available online.

Table 7

TROY UNIVERSITY BOARD OF TRUSTEES

July 25, 2008 *

May 1, 2008

July 27, 2007*

May 10, 2007

March 2, 2007

November 18, 2006

August 4, 2006*

March 10, 2006

September 10, 2005*

May 6, 2005

March 11, 2005

September 9, 2004*

* Budget Approval Sessions

TROY UNIVERSITY BOND RATINGS

Troy University's bond ratings are listed as A1 by Moody's.

Capital Campaign

Troy University is currently in the silent phase of a capital campaign with a long-term goal of raising $50 million. The Building Beyond Boundaries Campaign will support increased funding for need-based scholarships, communication facilities to increase global connectivity, a new international student center, continued advances in technology and software, a new academic center on the Dothan campus, an extended campus presence in Phenix City, additions to the School of Music, an eminent scholar’s initiative for the university, an Honors College on the Troy campus, and the establishment of a Quality Enhancement Institute for the Troy faculty.

Summary

Troy University is in compliance with this requirement. Additional information is available in Comprehensive Standards 3.10.1, 3.10.2 and 3.10.4.