2023 Central Texas Turnpike System Annual Financial Report

CENTRAL TEXAS

TURNPIKE SYSTEM

Annual Financial Report

For the Fiscal Year Ended August 31, 2023

(With Independent Auditor’s Report)

An enterprise fund of the Texas Department of Transportation

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Central Texas Turnpike System

An Enterprise Fund of

the Texas Department of Transportation

Annual Financial Report

For the Fiscal Year Ended

August 31, 2023

Prepared by:

Financial Management Division of the Texas Department of Transportation

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CENTRAL TEXAS TURNPIKE SYSTEM

Annual Financial Report

For the Fiscal Year Ended August 31, 2023

TABLE OF CONTENTS

INTRODUCTORY SECTION (Unaudited)

Letter of Transmittal �� 1

Organizational Chart �� 3

Commission and Key Personnel �� 4

FINANCIAL SECTION

Independent Auditor’s Report �� 8

Management’s Discussion and Analysis (Unaudited) �� 12

Basic Financial Statements:

Statement of Net Position

�� 18

Statement of Revenues, Expenses and Changes in Net Position �� 19

Statement of Cash Flows �� 20

Notes to Financial Statements �� 23

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Section One

Introductory Section

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Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System Page 1

Fiscal Year Ending August 31, 2023 - Central Texas Turnpike System Page 1

December 15, 2023

To: The Citizens of the State of Texas and the Creditors of the Central Texas Turnpike System

The audited annual financial statements of the Central Texas Turnpike System (CTTS) for the year ended Aug. 31, 2023 are

enclosed in accordance with the Indenture of Trust dated July 15, 2022. The Indenture of Trust, as supplemented by the first through

eighth Supplemental Indentures (Indenture), requires the preparation and submission of audited annual financial statements.

An external audit firm, Crowe LLP, performed an independent audit, in accordance with generally accepted auditing standards,

of CTTS’ basic financial statements for the year ended Aug. 31, 2023. The audit opinion is presented in this report preceding the

financial statements. This report was prepared by the accounting staff in the Financial Management Division of the Texas Department

of Transportation (TxDOT). CTTS’ internal accounting controls provide reasonable assurance regarding the safeguarding of assets

against loss from unauthorized use or disposal and the reliability of financial records for preparing financial statements. The concept

of reasonable assurance recognizes that the cost of a control should not exceed the resulting benefit.

Management is responsible for the accuracy of the data in this report as well as for the completeness and fairness of the

presentation. Consequently, management assumes full responsibility for the completeness and fairness of all of the information

presented in the financial statements. To the best of my knowledge and belief, the financial statements are accurate in all material

respects, are reported in a manner that presents fairly the financial position and results of operations of CTTS and provide disclosures

that enable the reader to understand CTTS’ financial condition.

The Management’s Discussion and Analysis (MD&A) provides a narrative introduction, overview and analysis of the financial

activities of TxDOT. We encourage readers to consider the information in this letter of transmittal in conjunction with the MD&A.

Profile of the Government

This report includes financial statements for CTTS, a fund within TxDOT’s reporting entity. TxDOT is an agency of the state

of Texas. TxDOT is managed by an executive director and is governed by the five-member Texas Transportation Commission. All

members of the Commission are appointed by the Governor. The Commission is authorized to issue general obligation and revenue

bonds per statutory and constitutional provisions.

Texas Transportation Code grants the Commission the authority to study, plan, design, construct, finance, operate and maintain

turnpikes in all 254 counties of the state as a part of the state’s highway system. The Commission can issue turnpike revenue bonds

to pay all or a part of the cost of a turnpike project, to enter into comprehensive development agreements to execute projects and to

acquire right of way through quick-take procedures. Such revenue bonds were issued to fund a portion of the costs of constructing

the CTTS roadways.

Budgetary Controls

Annual budgets are approved by the Texas Transportation Commission in accordance with the indenture and reviewed by the

general engineering consultants. These budgets are entered and maintained in the statewide accounting system as collected revenues

or reimbursements. Controls are maintained at the agency level, with additional control at the fund and appropriation level to ensure

expenditures do not exceed collected amounts.

Page 2 Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System

Page 2 Fiscal Year Ending August 31, 2023 - Central Texas Turnpike System

Information Useful in Assessing CTTS’ Financial Condition

TxDOT and the Trustee are responsible for ensuring that funds maintain the proper minimum balances as set forth in the Indenture

and for investing in securities required to meet liquidity requirements. The criteria for suitable investments for each fund type are

detailed in the Commission’s investment strategies.

All monies in the revenue fund, debt service funds, rate stabilization fund and construction fund – capital contributions account

are invested in money market funds, government securities and investment pools that are in compliance with the Commission’s

investment policy.

The debt service reserve fund is invested in an investment pool and a repurchase agreement collateralized by U.S. Treasury and

Agency Securities.

Acknowledgements

The preparation of the report requires the efforts of individuals throughout TxDOT, including the dedicated efforts of the

management and staff of the TxDOT’s Financial Reporting Section and other sections of the Financial Management Division, and

the Project, Finance, Debt and Strategic Contracts Division. I sincerely appreciate the efforts of all these individuals who continue

to help make TxDOT a leader in quality financial reporting.

Sincerely,

Fiscal Year Ending August 31, 2022 � Central Texas Turnpike System Page 3

*Interim

Transportation

Commission

Executive Director

M. Williams

Chief Engineer

Simmons

Chief

Administrative

Officer

McMonagle

Chief Financial

Officer

S. Stewart

Director District

Operations

C. Johnson

Chief Information

Officer

Selissen

Contract Services

K. Stewart

Fleet Operations

Pratt

Human Resources

McMillan

Procurement

Wood

Support Services

Sweat

Project Finance,

Debt & Strategic

Contracts

Asher

Financial

Management

Landry

Toll Operations

T. Johnson

Director Project

Development

Bur

Director

Engineering &

Safety Operations

Butler

El Paso

Trevino

Fort Worth

D. Salazar

Houston

Paul

Laredo

E. Gonzalez

Lubbock

Warren

Lufkin

Morris

Brownwood

Cedillo

San Antonio

Gallegos

Information

Technology

Selissen

Alternative

Delivery

Snider

Environmental

Affairs

Booher

Professional

Engineering Proc.

Services

Rodin

Right of Way

Madsen

Transportation

Programs

C. Williams

Bryan

Bohne

Childress

Lankford

Abilene

Allbritton

Amarillo

B. Johnson

Atlanta

Wells

Austin

Ferguson

Corpus Christi

Olivarez

Dallas

Clemens

Bridge

Bettis

Construction

Milligan

Odessa

Lykins

Paris

Paramanantham

Tyler

Webb

Beaumont

M. Gonzalez

Pharr

Alvarez

San Angelo

Cowen

Waco

Swiatek

Wichita Falls

Beaver

Yoakum

Horst

Deputy Executive Director

Planning & Administration

Hendrickson

Public

Transportation

Gleason

Rail

Davis

Maritime

Kalhagen

Occupational

Safety

S. Salazar

Aviation

Harmon

Civil Rights

Bryant

Chief of Staff

Griss

Chief Audit & Compliance

Officer

Ybarra

Director Strategy

& Innovation

Anderson

Director

Communications

& Public Affairs

Garcia

Strategic Planning

Kemp

General Counsel

Graham

Research &

Technology

Implementation

Pete

Communications

Hodges

Travel

Information

Henderson

Maintenance

Stevenson

Materials & Tests

Barborak

Traffic Safety

Chacon

Deputy Executive Director

Program Delivery

Barth

Design

Ramthun

Compliance

Townsend

Internal Audit

Otto

Government

Affairs

Thomas

Director Planning

& Modal

Programs

Mays

Transportation

Planning &

Programming

H. Gonzalez

Texas Department of Transportation

Organization Chart as of August 31, 2023

Page 4 Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System

TEXAS DEPARTMENT OF TRANSPORTATION

TEXAS TRANSPORTATION COMMISSION

as of August 31, 2023

J. Bruce Bugg, Jr.

Cha irman

San Antonio

W. Alvin New

Commissioner

Sa n Angelo

Robert C. Vaughn

Commissioner

Da lla s

Alejandro “Alex” G. Meade III

Commissioner

Mission

Steven D. Alvis

Commissioner

Houston

Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System Page 5

TEXAS DEPARTMENT OF TRANSPORTATION

TxDOT ADMINISTRATION

as of August 31, 2023

The following is a list of a dministrators who oversee the Texas Department of Transportation. All TxDOT districts,

divisions and offices report to a member of the administration, headquartered in Austin.

Marc Williams

Executive Director

Brandye

Hendrickson

Deputy Executive

Director for

Planning and

Administration

Brian Barth

Deputy Executive

Director for

Program Delivery

Richard

McMonagle

Chief

Administrative

Officer

Benito Ybarra

Chief Audit and

Compliance

Officer

Lance W.

Simmons

Chief Engineer

Stephen

Stewart

Chief Financial

Officer

Anh Selissen

Chief Information

Officer

Mary Anne

Griss

Chief of Staff

Alejandro

Garcia

Director of

Communications

and Public Affairs

Carl Johnson

Director of District

Operations

Jessica Butler

Director of

Engineering and

Safety Operations

Trent Thomas

Director of

Government

Affairs

Caroline Mays

Director of

Planning and

Modal Programs

Mohamed

“Mo” Bur

Director of Project

Development

Darran

Anderson

Director of

Strategy and

Innovation

Jeff Graham

General Counsel

As of August 31, 2023

Page 6 Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System

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Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System Page 7

Section Two

Financial Section

Page 8 Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System

Crowe LLP

Independent Member Crowe Global

INDEPENDENT AUDITOR'S REPORT

Members of the Texas Transportation Commission

State of Texas

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of the Central Texas Turnpike System (System), an enterprise

fund of the Texas Department of Transportation (TxDOT), an agency of the State of Texas, as of and for

the year ended August 31, 2023, and the related notes to the financial statements, as listed in the table of

contents.

In our opinion, the accompanying financial statements referred to above present fairly, in all material

respects, the financial position of the System, of TxDOT, as of August 31, 2023, and the changes in its

financial position and its cash flows for the year then ended in accordance with accounting principles

generally accepted in the United States of America.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in the United States of

America (GAAS) and the standards applicable to financial audits contained in Government Auditing

Standards (Government Auditing Standards), issued by the Comptroller General of the United States. Our

responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of

the Financial Statements section of our report. We are required to be independent of TxDOT, and to meet

our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

audit opinion.

Emphasis of Matter

As discussed in Note 1, the financial statements present only the System and do not purport to, and do not,

present fairly the financial position of TxDOT or the State of Texas, as of August 31, 2023, and the changes

in its financial position, or, where applicable, its cash flows for the year then ended in accordance with

accounting principles generally accepted in the United States of America. Our opinion is not modified with

respect to this matter.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in

accordance with accounting principles generally accepted in the United States of America, and for the

design, implementation, and maintenance of internal control relevant to

the preparation and fair

presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System Page 9

Auditor’s Responsibility for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are

free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes

our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore

is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards

will always detect a material misstatement when it exists. The risk of not detecting a material misstatement

resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,

intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered

material if there is a substantial likelihood that, individually or in the aggregate, they would influence the

judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS and Government Auditing Standards, we

 Exercise professional judgment and maintain professional skepticism throughout the audit.

 Identify and assess the risks of material misstatement of the financial statements, whether due to

fraud or error, and design and perform audit procedures responsive to those risks. Such procedures

include examining, on a test basis, evidence regarding the amounts and disclosures in the financial

statements.

 Obtain an understanding of internal control relevant to the audit in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the TxDOT’s internal control. Accordingly, no such opinion is expressed.

 Evaluate the appropriateness of accounting policies used and the reasonableness of significant

accounting estimates made by management, as well as evaluate the overall presentation of the

financial statements. 

We are required to communicate with those charged with governance regarding, among other matters, the

planned scope and timing of the audit, significant audit findings, and certain internal control-related matters

that we identified during the audit.

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management’s

Discussion and Analysis on pages 12-15 be presented to supplement the basic financial statements. Such

information is the responsibility of management and, although not a part of the basic financial statements,

is required by the Governmental Accounting Standards Board who considers it to be an essential part of

financial reporting for placing the basic financial statements in an appropriate operational, economic, or

historical context. We have applied certain limited procedures to the required supplementary information in

accordance with auditing standards generally accepted in the United States of America, which consisted of

inquiries of management about the methods of preparing the information and comparing the information for

consistency with management's responses to our inquiries, the basic financial statements, and other

knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or

provide any assurance on the information because the limited procedures do not provide us with sufficient

evidence to express an opinion or provide any assurance.

Other Information

Management is responsible for the other information included in the annual report. The other information

comprises the introductory section but does not include the basic financial statements and our auditor's

report thereon. Our opinion on the basic financial statements do not cover the other information, and we do

not express an opinion or any form of assurance thereon.

In connection with our audit of the basic financial statements, our responsibility is to read the other

information and consider whether a material inconsistency exists between the other information and the

basic financial statements, or the other information otherwise appears to be materially misstated. If, based

on the work performed, we conclude that an uncorrected material misstatement of the other information

exists, we are required to describe it in our report.

Page 10 Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 15,

2023, on our consideration of TxDOT’s internal control over nancial reporting and on our tests of its

compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters.

The purpose of that report is solely to describe the scope of our testing of internal control over nancial

reporting and compliance and the results of that testing, and not to provide an opinion on the eﬀectiveness

of the TxDOT’s internal control over nancial reporting or on compliance. That report is an integral part of

an audit performed in accordance with Government Auditing Standards in considering TxDOT’s internal

control over nancial reporting and compliance.

Crowe LLP

Austin, Texas

December 15, 2023

Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System Page 11

Section Two (Continued)

Management’s Discussion & Analysis

(Unaudited)

Page 12 Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System

Management’s Discussion and Analysis

As management of the Texas Department of Transportation (TxDOT), we offer readers of the Central Texas Turnpike System’s

(CTTS) financial statements this narrative overview and analysis of its financial activities for the year ended Aug. 31, 2023, with selected

comparative information for the year ended Aug. 31, 2022. The information presented should be read in conjunction with our letter of

transmittal, the financial statements and the accompanying notes to the financial statements.

Highlights

During fiscal 2023, CTTS generated $274.2 million in toll revenues (net of allowance), an increase of $61.1 million or 28.7 percent

over fiscal 2022, due to increased traffic and also to the substantial resolution of interruptions caused by the TxDOT toll back office

transition to a new provider in fiscal 2021. CTTS roadways recorded 193.6 million transactions in fiscal 2023, an increase of 11 percent

over fiscal 2022.

CTTS’ indenture requires certain operating, maintenance, and reserve maintenance funds to be held separate and apart from its other

funds and accounts. As of Aug. 31, 2023, these funds held reserves of $96.9 million. These balances will enable CTTS to pay directly

for budgeted expenses throughout the coming year.

The assets and deferred outflows of CTTS exceeded its liabilities and deferred inflows by $217.4 million as of Aug. 31, 2023, an

increase of $31.4 million or 16.9 percent from fiscal 2022. The increase mainly reflects an increase in capital assets of $40.1 million,

offset by an increase in noncurrent liabilities of $25.3.

Overview of the Financial Statements

The annual financial report consists of two parts: management’s discussion and analysis (this section) and the basic financial statements

with their accompanying notes.

Fund Financial Statements

A fund is a group of related accounts that is used to maintain control over resources that have been segregated for specific activities

or objectives. TxDOT, like other states and local governments, uses fund accounting to ensure and demonstrate compliance with finance�

related legal requirements. Proprietary funds are used to account for a government’s business�type activities. The activities related to

CTTS are accounted for in an enterprise fund, which is a type of proprietary fund used to report activities in which a fee is charged to

external users for goods and services.

Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System Page 13

Financial Analysis

The overall financial position and operations of CTTS for the past two years is summarized as follows.

Statement of Net Position

August 31, 2023 and 2022 (Amounts in Thousands)

2023 2022

ASSETS

Assets Other Than Capital Assets

$ 656,840

$ 612,202

Capital Assets

2,594,928

2,554,860

Total Assets

3,251,768

3,167,062

DEFERRED OUTFLOWS OF RESOURCES

27,202

29,600

LIABILITIES

Current Liabilities

170,238

143,345

Noncurrent Liabilities

2,867,682

2,842,300

Total Liabilities

3,037,920

2,985,645

DEFERRED INFLOWS OF RESOURCES

23,675

25,067

NET POSITION

Net Investment in Capital Assets

413,619

465,225

Restricted for Debt Service

175,418

186,436

Restricted for Operations and Maintenance

90,561

37,277

Unrestricted

(462,223)

(502,988)

Total Net Position

$ 217, 375

$ 185,950

Changes in Net Position

For the Fiscal Years Ended August 31, 2023 and 2022 (Amounts in Thousands)

2023 2022

OPERATING REVENUES

Operating Revenues

$ 345,176

$ 256,524

Total Operating Revenue

345,176

256,524

OPERATING EXPENSES

Operating Expenses

234,217

230,298

Total Operating Expenses

234,217

230,298

Operating Income

110,959

26,226

Total Nonoperating Revenues (Expenses)

(91,221)

(113,849)

Income (Loss) before Capital Contribution and Transfer

19,738

(87,623)

Capital Contribution

61

322

Transfers In

11,626

Transfers Out

(161)

Total Capital Contribution and Transfers

11,687

161

Change in Net Position

31,425

(87,462)

Net Position – Beginning

185,950

273,412

Net Position – Ending

$ 217, 375

$ 185,950

Page 14 Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System

Net position may serve over time as a useful indicator of CTTS’ financial position. Net position will decline as additional noncurrent

liabilities are accrued via principal accretion on outstanding CTTS debt, and as capital assets are depreciated and amortized. Debt service

was $151.7 million in fiscal 2023 and is scheduled to increase to $163.0 million in fiscal 2024. Operations and maintenance expense

(excluding depreciation) is estimated to increase approximately $68.1 million.

Capital Assets and Debt Administration

Capital Assets

As of Aug. 31, 2023, CTTS had approximately $2.6 billion in net capital assets.

Capital Assets-Net of Depreciation and Amortization

August 31, 2023 and 2022 (Amounts in Thousands)

2023 2022

Land

$ 668,525

$ 668,831

Construction in Progress

48,761

100,138

Land Use Rights

19,466

Software

29,787

39,999

Infrastructure�Roadways and Bridges

1,730,835

1,723,989

Buildings

2,076

2,437

Right�to�Use Subscriptions

95,478

Total Capital Assets

$ 2,594,928

$ 2,554,860

Debt Administration

The increase in net capital assets of $40.1 million mainly reflects transfer in of $129.1 of a right�to�use subscription and $11.4 million

of other additions, offset by annual depreciation and amortization of $100.3 million.

The Commission has issued revenue bonds backed by the pledged revenues and restricted assets specified in the bond resolutions.

As of Aug. 31, 2023, CTTS had approximately $2.9 billion of outstanding revenue bond debt. See Notes 4 & 5 for more information.

Outstanding Debt Obligations

August 31, 2023 and 2022 (Amounts in Thousands)

2023 2022

Revenue Bonds Payable

$ 2,650,007

$ 2,683,020

Revenue Bonds Payable � Direct Placements

225,000

Total Outstanding Debt

$ 2,875,007

$ 2,908,020

Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System Page 15

Bond Credit Ratings

The outstanding bonds of CTTS were rated by each of the three major Nationally Recognized Statistical Rating Organizations. As

of Aug. 31, 2023, the CTTS bonds carried the following ratings:

CTTS Credit Ratings as of August 31, 2023

(Amounts in Thousands)

Bond Description Net Outstanding Moody’s S & P Fitch

First Tier Bonds Series 2002�A

Non�Callable Capital Appreciation Bonds

$ 446,215

A3 A A+

First Tier Revenue Refunding Bonds, Series 2012�A

129,600

A3 A A+

First Tier Revenue Refunding Bonds, Series 2015�B

214,976

A3 A A+

First Tier Revenue Refunding Bonds, Series 2015�B

Capital Appreciation Bonds

134,181

A3 A A+

Second Tier Revenue Refunding Bonds, Series 2015�C

1,233,003

Baa1 A� A�

First Tier Revenue Refunding Bonds, Series 2020�A

212,727

A3 A A+

First Tier Revenue Refunding Bonds, Series 2020�B

225,000

A3 A A+

First Tier Revenue Refunding Bonds, Series 2020�C

279,305

A3 A A+

Total

$ 2,875,007

An explanation of the significance of each rating may be obtained from the company furnishing the rating. The ratings reflect only

the views of such companies at the time such ratings are given, and the Commission makes no representation as to the appropriateness of

the ratings. There is no assurance that such ratings will continue for any given period of time or that they will not be revised downward

or withdrawn entirely by such companies if, in the judgment of such companies, circumstances so warrant.

Requests for Information

This financial report is designed to provide a general overview of CTTS’ finances. Questions concerning any of the information

provided in this report or requests for additional financial information should be addressed to the TxDOT Financial Management Division

at the following address:

Texas Department of Transportation

Financial Management Division � Accounting Management Section

125 East 11

th

Street

Austin, Texas 78701�2483

Page 16 Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System

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Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System Page 17

Section Two (Continued)

Basic Financial Statements

Page 18 Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System

Central Texas Turnpike System

Statement of Net Position

August 31, 2023 (Amounts in Thousands)

ASSETS

Current Assets:

Cash and Cash Equivalents:

Cash and Cash Equivalents

$ 117,111

Restricted:

Cash and Cash Equivalents

443,589

Receivables:

Accounts Receivable

26,054

Interest and Dividends

287

Due from Other Funds (Note 8)

24,170

Consumable Inventory

267

Total Current Assets

611,478

Noncurrent Assets:

Restricted:

Investments

18,173

Investments

27,189

Capital Assets:

Non�Depreciable Capital Assets (Note 2)

736,752

Depreciable Capital Assets, Net (Note 2)

1,858,176

Total Noncurrent Assets

2,640,290

Total Assets

3,251,768

DEFERRED OUTFLOWS OF RESOURCES

Deferred Outflows of Resources

Loss on Bond Refunding

27,202

Total Deferred Outflows of Resources

27,202

LIABILITIES

Current Liabilities:

Payables:

Accounts

13,195

Interest

4,153

Due to Other Funds (Note 8)

20,048

Unearned Revenues

16,604

Revenue Bonds Payable (Notes 4, 5)

74,743

Subscription Obligations (Note 5, 7)

41,495

Total Current Liabilities

170,238

Noncurrent Liabilities:

Revenue Bonds Payable (Notes 4, 5)

2,800,264

Subscription Obligations (Note 5, 7)

67,418

Total Noncurrent Liabilities

2,867,682

Total Liabilities

3,037,920

DEFERRED INFLOWS OF RESOURCES

Deferred Inflows of Resources

Gain on Bond Refunding

23,675

Total Deferred Inflows of Resources

23,675

NET POSITION

Net Investment in Capital Assets

413,619

Restricted for:

Transportation � Operations and Maintenance

90,561

Debt Service

175,418

Unrestricted

(462,223)

Total Net Position

$ 217, 375

The accompanying notes to the financial statements are an integral part of this financial statement.

Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System Page 19

Central Texas Turnpike System

Statement of Revenues, Expenses and Changes in Net Position

For the Fiscal Year Ended August 31, 2023 (Amounts in Thousands)

OPERATING REVENUES

Toll Revenue � Pledged

$ 316,556

Discounts and Allowances

(42,326)

Fee Revenue � Pledged

28,368

Other Sales Goods & Services�Pledged

42,578

Total Operating Revenues

345,176

OPERATING EXPENSES

Salaries

2,542

Professional Fees and Services

22,454

Travel

2

Materials and Supplies

1,331

Communication and Utilities

843

Repairs and Maintenance

25,517

Rentals and Leases

833

Contracted Services

69,396

Advertising

980

Depreciation and Amortization

100,295

Interest Expense

4

Other Operating Expenses

10,020

Total Operating Expenses

234,217

Operating Income

110,959

NONOPERATING REVENUES (EXPENSES)

Lease Revenue

7,847

Interest and Investment Income

23,059

Net Increase in Fair Value of Investments

1,373

Amortization

11,405

Interest Expense

(134,828)

Bond Issuance Expenses

(32)

Other Financing Fees

(45)

Total Nonoperating Revenues (Expenses)

(91,221)

Income before Capital Contributions and Transfers

19,738

CAPITAL CONTRIBUTIONS AND TRANSFERS

Capital Contributions

61

Transfers In (Note 8)

11,626

Total Capital Contributions and Transfers

11,687

Change in Net Position

31,425

Net Position, September 1, 2022

185,950

Net Position, August 31, 2023

$ 217, 375

The accompanying notes to the financial statements are an integral part of this financial statement.

Page 20 Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System

Central Texas Turnpike System

Statement of Cash Flows

For the Fiscal Year Ended August 31, 2023 (Amounts in Thousands)

CASH FLOWS FROM OPERATING ACTIVITIES

Proceeds from Customers

$ 340,443

Payments to Suppliers for Goods and Services

(158,148)

Net Cash Provided by Operating Activities

182,295

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES

Proceeds from Land Revenue

8,153

Payments for Purchase of Capital Assets

(11,550)

Payments of Principal on Debt and Other Liabilities

(64,069)

Payments of Interest on Debt and Other Liabilities

(99,055)

Payments for Interfund Services

(77)

Net Cash (Used) By Capital And Related Financing Activities

(166,598)

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from Sales and Maturities of Investments

40,000

Proceeds from Interest and Investment Income

22,999

Net Cash Provided By Investing Activities

62,999

Net Increase In Cash And Cash Equivalents

78,696

Cash And Cash Equivalents � Beginning

482,004

Cash And Cash Equivalents � Ending

$ 560,700

Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System Page 21

Central Texas Turnpike System

Statement of Cash Flows (concluded)

For the Fiscal Year Ended August 31, 2023 (Amounts in Thousands)

RECONCILIATION OF OPERATING INCOME TO NET CASH

PROVIDED BY OPERATING ACTIVITIES

Operating Income

$ 110,959

Adjustments:

Depreciation

100,295

Other non�cash items

(731)

(Increase) in Receivables

(6,092)

Decrease in Inventories

208

(Decrease) in Payables

(29,747)

Increase in Due to Other Funds

4,869

Decrease in Due from Other Funds

2,534

Total Adjustments

71,336

Net Cash Provided by Operating Activities

$ 182,295

NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES:

Subscription Liability Paid by Other Funds

$ 10,509

Net change in Fair Market Value of Investments

$ 1,373

Accretion on Bonds Payable

$ (32,706)

Amortization of Bonds Payable

$ 11,405

Amortization of Deferred Inflow/Outflow

$ (1,005)

Capital Contribution

$ 61

The accompanying notes to the financial statements are an integral part of this financial statement.

Page 22 Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System

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Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System Page 23

Central Texas Turnpike System

Notes to Financial Statements

Note 1 – Summary of Significant Accounting Policies �� 24

Note 2 – Capital Assets �� 28

Note 3 � Deposits, Investments, and Repurchase Agreements �� 29

Note 4 � Summary of Long�Term Liabilities �� 31

Note 5 – Bonded Indebtedness �� 32

Note 6 – Retirement Plan and Postemployment Benefits other than Pensions �� 34

Note 7 � Subscription�Based Information Technology Arrangements (SBITA) �� 35

Note 8 – Interfund Activity �� 35

Note 9 – Continuance Subject to Review �� 36

Note 10 – Commitments & Contingencies �� 36

Note 11 – Risk Financing and Related Insurance �� 37

Page 24 Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reporting Entity

The accompanying financial statements reflect the financial position of the Central Texas Turnpike System (CTTS). CTTS is an

enterprise fund of the Texas Department of Transportation (TxDOT), an agency of the state of Texas. The Texas Transportation Commission

(Commission), the governing body of TxDOT, has the authority to commit CTTS to various legal agreements.

As of Aug. 31, 2023, CTTS consists of State Highway 130 Segments 1 through 4, State Highway 45 North, CTTS tolled portion of

Loop 1 and State Highway 45 Southeast. A portion of the costs of planning, designing, engineering, developing and constructing of the

first three elements was financed by bonds issued by the Commission. In fiscal 2013, State Highway 45 Southeast was transferred to

CTTS. In the future, at the Commission’s discretion, additional projects may be added to CTTS.

CTTS does not have any employees, although labor costs are included in the cost of constructing, operating and maintaining CTTS.

When TxDOT staff members perform work on behalf of CTTS, the proportionate cost of that labor is reported as an expense of CTTS.

TxDOT’s risk financing and insurance programs apply to CTTS.

The records of CTTS are maintained in accordance with the practices set forth in the provisions of the indentures of the outstanding

revenue bonds. These practices are modeled after generally accepted accounting principles that are similar to private business enterprises.

Basis of Presentation and Basis of Accounting

The accompanying financial statements were prepared in conformance with generally accepted accounting principles (GAAP) as

prescribed by the Governmental Accounting Standards Board (GASB). Financial reporting for CTTS is based on all GASB pronouncements.

The data in this report is combined and consolidated by the Texas Comptroller’s Office with similar data from other state agencies and

universities in the preparation of the state of Texas Annual Comprehensive Financial Report (ACFR).

GASB Pronouncements and Implementation Guides Effective for Fiscal 2023

In fiscal 2023 CTTS adopted the following new GASB pronouncements and implementation guides:

●

GASB Statement No. 91, Conduit Debt Obligations. This statement provides a single method of reporting conduit debt obligations

by issuers and eliminate diversity in practice. It clarifies the definition of a conduit debt; establishing that a conduit debt obligation is

not a liability of the issuer; establishing standards for accounting and financial reporting of additional and voluntary commitments;

and improving required note disclosures. The effective date of the statement was postponed from fiscal 2022 to fiscal 2023.

● GASB Statement No. 94, Public�Private and Public�Public Partnerships and Availability Payments Arrangements. This statement

addresses financial reporting issues related to public�private and public�public partnership arrangements (PPPs). A PPP is an

arrangement in which a government (the transferor) contracts with an operator (a governmental or nongovernmental entity) to

provide public services by conveying control of the right to operate or use a nonfinancial asset for a period of time in an exchange

or exchange�like transactions. Some PPPs meet the definition of a service concession arrangement (SCA). This statement requires

a transferor to recognize a receivable for installment payments and a deferred inflow of resources to account for a PPP in financial

statements prepared using the current financial resources measurement focus. Governmental fund revenue would be recognized

in a systematic and rational manner over the PPP term. An APA is an arrangement in which a government procures a capital

asset or service by compensating an operator for activities that may include designing, constructing, financing, maintaining, and

operating an underlying nonfinancial asset for a period of time in an exchange or exchange�like transaction. In contrast to PPPs,

the other party to an APA is receiving compensation from the government based entirely on the asset’s availability and not the

actual performance of a public service. The statement is effective fiscal 2023.

●

GASB Statement 96, Subscription�Based Information Technology Arrangements. This statement provides guidance on the

accounting and financial reporting for subscription�based information technology arrangements (SBITAs) for government end

users. A SBITA is a contract that conveys control of the right to use another party’s information technology software for a period

of time in an exchange or exchange�like transaction. The statement establishes that a SBITA results in a right�to�use subscription

asset, an intangible asset, and a corresponding subscription liability. The standards for SBITAs are based on the standards

established in Statement 87, Leases. The statement is effective fiscal 2023.

● GASB Statement 99, Omnibus 2022. Paragraphs 18�22, PPPs. Paragraphs 23�25, SBITAs. Effective fiscal 2023.

●

Implementation Guide 2020�1, Implementation Guidance Update 2020. Questions 4.19�4.21, Conduit Debt Obligations. Effective

fiscal 2023.

● Implementation Guide 2021�1, Implementation Guidance Update 2021. Questions 4.4�4.21 Leases. Effective fiscal 2023.

Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System Page 25

These financial statements present only the financial position, changes in financial position and cash flows of CTTS. They are not

intended to, and do not, present fairly the financial position, changes in financial position or cash flows of TxDOT. The reporting period

is for the state fiscal year ended Aug. 31, 2023.

Fund Structure

The activity of CTTS is reported in a proprietary fund. Proprietary funds are accounted for using the economic resources measurement

focus and the accrual basis of accounting. Under the accrual basis, revenues are recognized when earned and expenses are recognized

at the time liabilities are incurred.

A proprietary fund distinguishes operating from nonoperating items. Operating revenues and expenses result from providing services

or producing and delivering goods in connection with the proprietary fund’s principal ongoing operations. Operating expenses for an

enterprise fund include cost of sales and services, administrative expenses and depreciation on capital assets.

Assets, Deferred Outflows, Liabilities, Deferred Inflows and Net Position

Cash and Cash Equivalents

For reporting purposes, cash and cash equivalents include cash on hand, cash in transit, cash in local banks, cash in the treasuries,

money market funds, state and local government investment pools, and cash equivalents. The statement of cash flows presents the change

in cash and cash equivalents during the fiscal year. Cash equivalents are defined as short�term, highly�liquid investments that are both

readily convertible to known amounts of cash and so near maturity they present insignificant risk of a decrease in value due to changes in

interest rates. Investments with an original maturity of three months or less and used for cash management rather than investing activities

are considered cash equivalents.

Investments

Short�term investments are investments with a maturity greater than 90 days but less than one year at the time of purchase. Short�

term investments are recorded on an amortized cost basis. Long�term investments are investments with a maturity of one year or more

at the time of purchase. Long�term investments are recorded at fair value based upon quoted market prices as of the fiscal year end.

All investment income, including changes in the fair value of investments, is recognized as nonoperating revenue in the Statement of

Revenues, Expenses and Change in Net Position. See Note 3 for more information.

Accounts Receivable

The accounts receivable asset is comprised of toll operations revenue earned but not yet received by CTTS of $96.3 million, net of

an allowance for doubtful accounts of $70.3 million, as of Aug. 31, 2023.

Interest and Dividends Receivable

The amount of interest and dividends that has been earned, but which has not yet been received as of fiscal year end.

Due from Other Funds

Due from other funds represents amounts due to other funds within TxDOT, for a variety of costs. See Note 8 for more information.

Consumable Inventory

Consumable inventory consists of toll tags. The consumption method of accounting is used to account for inventory. The costs of

these items are expensed when the items are distributed to consumers.

Restricted Assets

Restricted assets include monies or other resources restricted by legal or contractual requirements. These assets include proceeds of

enterprise fund notes/loans, revenue bonds and revenues set aside for statutory or contractual requirements. CTTS may receive funding

whose related expenditure is restricted to certain activities. In situations where both restricted and unrestricted resources are available to

cover expenses, CTTS will first expend the restricted resources and cover additional costs with unrestricted resources. CTTS reserves

the right to selectively defer the use of restricted assets.

Capital Assets

Capital assets, which include buildings, construction in progress, infrastructure, intangible assets, land and permanent land�use rights,

are capitalized and reported in the financial statements.

Page 26 Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System

Capital assets are assets with a cost above a set minimum capitalization threshold that, when acquired, have an estimated useful life

of more than one year. Land, permanent land�use rights and construction in progress do not have a capitalization threshold and are not

depreciated. The capitalization thresholds and useful lives of CTTS’ depreciable capital assets are as follows:

Capitalization of Assets

Type

Capitalization

Threshold

Estimated

Useful Life

Buildings and Building Improvements $100,000 22 years

Infrastructure, Depreciable $500,000 40 years

Internally Developed Software $1,000,000 5 years

Intangible Right�to�Use Asset �Subscription based IT Arrangements (SBITAs) $500,000 >1 Ye a r

All capital assets are capitalized at cost or estimated historical cost if actual historical cost is not available. Donated capital assets

are recorded at acquisition value at the date of donation. Costs of normal maintenance and repairs that do not add value to the asset or

materially extend the asset’s useful life are not capitalized.

CTTS uses the depreciation approach for reporting both highways and highway bridges of the infrastructure assets. Under the

depreciation approach, infrastructure assets are depreciated over a 40�year life, and certain preservation costs are capitalized. The

capitalization threshold of $500,000 is used for both highway bridges and roadways.

CTTS also holds three years of infrastructure costs in construction in progress at all times. At the fourth year, the first year is moved

to depreciable infrastructure. The three�year assumption is based on a 2.7 year contract life when using the weighted dollar analysis of

project costs and completion dates over the ten year history.

Internally generated software costs are recorded as construction in progress during the application development stage of the project.

Development costs are moved to Computer Software the year the asset is placed into service. See Note 2 for more information on Capital

Assets.

The intangible Right To Use (RTU) subscription asset is measured at the amount of the initial measurement of the subscription

liability, plus any payments made to the SBITA vendor before the commencement of the subscription term plus any payments made in

the implementation stage at or before the commencement of the subscription term. A RTU subscription asset should be amortized in a

systematic and rational manner over the shorter of the subscription term or the useful life of the underlying asset. The amortization of

the RTU subscription asset should be reported as an outflow of resources over the subscription term. See Note 7 for more information.

Deferred Inflows of Resources and Deferred Outflows of Resources

Deferred outflows of resources are a consumption of net position by the government that is applicable to a future reporting period.

Deferred outflows of resources increase net position, similar to assets. Loss on refunding debt is reported as deferred outflows of resources.

Deferred inflows of resources are on acquisition of net assets by TxDOT that are applicable to a future reporting period. Deferred

inflows have a negative effect on net position, similar to liabilities.

Accounts Payable

Accounts payable represents the liability for the value of assets or services received during the reporting period for which payment

is pending.

Interest Payable

Interest payable represents the liability for the interest expense incurred during the reporting period for which payment is pending.

Due to Other Funds

Due to other funds represents amounts due to other funds within TxDOT, for a variety of costs. See Note 8 for more information.

Unearned Revenue

Unearned revenue is reported when cash or other assets are received prior to being earned.

Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System Page 27

Revenue Bonds Payable

Revenue bonds payable are reported at par less unamortized discount or plus unamortized premium. Payables are reported separately

as either current or noncurrent in the statement of net position. See Notes 4 and 5 for more information

Subscription Obligations

The GASB 96 requires the subscription obligations be recognized at the commencement of the SBITA term when the subscription

asset is placed into service. The subscription liability should be initially measured at the present value of subscription payments expected

to be made during the subscription term.

Net Position

Proprietary funds report net position as the residual amount in a statement of net position. The categories of net position reported in

this report include:

Net Investment in Capital Assets

Net investment in capital assets consists of capital assets (net of accumulated depreciation), and deferred outflow of resources, reduced

by outstanding balances for bonds, notes and other debt that are attributed to the acquisition, construction or improvement of those assets.

Restricted

Restricted net position results when constraints placed on net position’s use are either externally imposed by creditors, grantors,

contributors and the like, or imposed by law through constitutional provisions or enabling legislation. The restricted component of net

position represents restricted assets reduced by liabilities related to those assets.

Unrestricted

Unrestricted net position consists of the assets and liabilities that are not included in the determination of net investment in capital

assets or the restricted component of net position.

Revenues, Expenses, and Transfers

Operating Revenues

CTTS operating revenues for fiscal 2023 is mainly comprised of $274.2 million in toll revenue. This represents $316.6 million in

gross toll revenue, less a decrease of allowance for doubtful accounts of $42.3 million. CTTS also earned toll fees of $28.4 million and

other sales revenue of $42.6 million.

Operating Expenses

Operating expenses include expenses incurred in operating the toll roads and the customer service center, and depreciation and

amortization on capital assets.

Nonoperating Revenues/Expenses

Nonoperating revenues are mainly comprised of interest and investment revenue and lease revenue. Nonoperating expenses are any

expenses not classified as operating, including bond interest expense and accretion on capital appreciation bonds

Capital Contributions

Capital contributions represent the capital asset contribution made from the State Highway Fund to CTTS. The capital contribution

made from a governmental fund to a proprietary fund should be reported as capital contribution, instead of transfers, on the proprietary

fund financial statements. No transfers should be reported on the governmental fund financial statements.

Transfers

Transfers In/Out represents the flow of assets between funds. See Note 8 Interfund Activity for more information.

Page 28 Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System

NOTE 2 – CAPITAL ASSETS

The table below presents the composition of CTTS’ capital assets, reclassifications, additions and deletions during fiscal 2023. The

reclassifications column represents completed construction projects, and transfers of capital assets between the governmental and business�

type activities of TxDOT, including Subscription�Based Information Technology Arrangements (see Note 7 for more information). The

additions column includes current year purchases, depreciation and amortization. The deletions column represents assets removed during

the current fiscal year via sale or disposition.

Capital Assets Activity

For the fiscal year ended August 31, 2023

(Amounts in Thousands)

Balance

09/1/2022

Reclass-

ifications Additions Deletions

Balance

08/31/2023

Non-Depreciable Assets & Non-Amortizable Assets

Land

$ 668,831 $ $ $ (306) $ 668,525

Construction in Progress

100,138 (62,808) 11,431 48,761

Land Use Rights

19,466 19,466

Total Non�Depreciable Assets

788,435 (62,808) 11,431 (306) 736,752

Depreciable Assets

Buildings

8,360 8,360

Infrastructure

2,328,853 62,870 2,391,723

Total Depreciable Assets

2,337,213 62,870 0 0 2,400,083

Less Accumulated Depreciation for:

Buildings

(5,923) (361) (6,284)

Infrastructure

(604,864) (56,024) (660,888)

Total Accumulated Depreciation

(610,787) 0 (56,385) 0 (667,172)

Depreciable Assets, Net

1,726,426 62,870 (56,385) 0 1,732,911

Intangible Capital Assets - Amortizable

Software

51,063

Total Amortizable Assets

51,063 0 0 0 51,063

Less Accumulated Amortization for:

Software

(11,064) (10,212) (21,276)

Total Accumulated Amortization

(11,064) 0 (10,212) 0 (21,276)

Amortizable Assets, Net

39,999 0 (10,212) 0 29,787

Intangible Right to Use (RTU) Assets - Amortizable

Subscriptions

129,176 129,176

Total Amortizable RTU Assets

0 129,176 0 0 129,176

Less Accumulated Amortization for:

Subscriptions

(33,698) (33,698)

Total Accumulated Amortization RTU Assets

0 0 (33,698) 0 (33,698)

Amortizable Intangible RTU Assets, Net

0 129,176 (33,698) 0 95,478

Total Capital Assets, Net

$ 2,554,860 $ 129,238 $ (88,864) $ (306) $ 2,594,928

Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System Page 29

NOTE 3 – DEPOSITS, INVESTMENTS, AND REPURCHASE AGREEMENTS

CTTS is authorized by statute to make investments following the “prudent person rule”. CTTS has complied, in all material respects,

with statutory authorization, bond documents, constraints and commission policies during the period.

Deposits

The following amounts consist of all cash and cash equivalents in local banks. These amounts are included on the combined statement

of net position as part of the “cash and cash equivalents” accounts.

Cash and Cash Equivalents - Carrying Amount

August 31, 2023 (Amounts in Thousands)

Current Assets Cash

$ 28,746

Cash and Cash Equivalents � Carrying Amount

$ 28,746

Investments

Measurement

CTTS categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles.

The hierarchy is based on the valuation inputs used to measure the fair value of the asset. The three�tiered fair value hierarchies are as

follows.

● Level 1 – Quoted prices in active markets for identical investments

● Level 2 – Significant other observable inputs other than quoted market prices

● Level 3 – Significant unobservable inputs

As of Aug. 31, 2023, the measurements of CTTS’s investments are summarized below:

Investment Fair Value and Maturities

August 31, 2023 (Amounts in Thousands)

Investment Type

Fair Value Hierarchy

Level 1

Other Measurement

Amortized Cost Tot a l

Money Market Mutual Funds

$

$ 45,602

Government Sponsored Entities

45,362

Government Investment Pools

389,420

Repurchase Agreements

96,932

Total Investments

$ 45,362

$ 531,954

$ 577, 316

Government sponsored entities investments of $45.4 million with maturities of one year or more are valued at quoted market prices

(Level 1 input).

As of Aug. 31, 2023, CTTS also has the following types of investments which are excluded from measurement at fair value according

to GASB 72.

● Investments in money market mutual funds, government investment pools and repurchase agreements of $532.0 million with

maturities less than one year are valued at amortized cost.

Page 30 Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System

Custodial Credit Risk - Investments

Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty, the Commission will not be able to

recover the value of its investments or collateral securities that are in the possession of an outside party. The Commission’s investment

policy states that all securities purchased by the Commission shall be designated as assets of the Commission and shall be protected

through the use of a third�party custody/safekeeping agent, which may be a Trustee.

Credit Risk - Investments

Direct credit risk for investments is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The

investment policy prohibits the Commission from entering into long�term investment agreements or other ongoing investment transactions

with a final maturity or termination date of longer than six months with any financial institution that initially has a long� term rating

category of less than “A” and that does not have at least one long�term rating of at least “AA” by a nationally recognized statistical rating

organization (NRSRO). All investments made by the Commission have been made through a firm on the then�current list of qualified

financial institutions approved by the Commission.

The Commission’s policy does not limit the amount of investment in obligations of the United States or its agencies.

As of Aug. 31, 2023, CTTS’ investments had the following ratings:

Investment Credit Ratings

August 31, 2023 (Amounts in Thousands)

Investment Type Valuation Moody’s

Standard

& Poor’s Fitch

Money Market Mutual Funds:

JPMorgan US Government Fund

$ 23,902

Aaa�mf AAAm AAAmmf

Morgan Stanley Instl Liquidity Government Fund

21,700

Aaa�mf AAAm AAAmmf

Government Sponsored Entities:

Federal Farm Credit Banks Funding Corporation

9,015

Aaa AA+ AA+

Federal Home Loan Mortgage Corporation

36,347

Aaa AA+ AA+

Government Investment Pools:

Tex Pool Prime

389,420

NR AAAm NR

Repurchase Agreements:

Repo (TTSTC)

96,932

NR AAAf NR

Total

$ 577, 316

NR= Not Rated

Concentration of Credit Risk

Concentration of credit risk is the risk of loss attributed to the magnitude of a government’s investment in a single issuer. Assets held

shall be diversified to eliminate the risk of loss resulting from over�concentration of assets in a specific maturity, a specific issuer or a

specific class of securities. As of Aug. 31, 2023, the following investments exceeded five percent of the total portfolio: Federal Home

Loan Mortgage Corporation, TexPool Prime and the Repurchase Agreement.

The Commission addresses diversification in the Commission’s Investment Policy. Diversification strategies shall be determined and

revised periodically by the investment officer.

Interest Rate Risk

Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The Commission has

addressed interest rate risk in its various accounts by matching as closely as possible anticipated cash flows with income and return of

principal on investments. Investment maturities are noted in the investment table. Approximately 92.1 percent of the investments mature

within one year. Market value fluctuation of the overall portfolio is minimized by keeping the weighted average maturity low.

Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System Page 31

NOTE 4 – SUMMARY OF LONG-TERM LIABILITIES

As of Aug. 31, 2023, CTTS had seven bond issues and one subscription obligation outstanding. Additional detail is provided in the

sections that follow. As detailed below, the following changes occurred in long�term liabilities during the year ended Aug. 31, 2023.

Long-Term Liabilities Activity

For the Fiscal Year Ended August 31, 2023 (Amounts in Thousands)

Beginning

Balance

09/01/2022 Adjustments* Additions** Reductions

Ending

Balance

08/31/2023

Due Within

One Year

Amou nts Due

Thereafter

Revenue Bonds Payable

$ 2,683,020

$ (11,404)

$ 32,706

$ (54,315)

$ 2,650,007

$ 74,743

$ 2,575,264

Revenue Bonds � Direct Placements

225,000

Right�to�Use Subscription

Obligations

129,176

(20,263)

108,913

41,495

67,418

Total

$ 2,908,020

$ 117,772

$ 32,706

$ (74,578)

$ 2,983,920

$ 116,238

$ 2,867,682

* Includes current year amortization of premiums and discounts.

** Includes current year accretion.

Pledged Future Revenues

Pledged revenues are those specific revenues that are formally committed to directly secure the payment of bond debt service. The

table below provides information on pledged revenue and pledged future revenue of the CTTS revenue bonds.

Pledged Future Revenue (Amounts in Thousands)

Pledged Revenue Required for Future Principal and Interest on Existing Debt

$ 4,312,949

Term of Commitment Ending

8/15/2042

Percentage of Revenue Pledged

97.19%

Current Year Pledged Revenue

$ 365,817

Current Year Principal and Interest Paid

$ 151,654

Page 32 Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System

NOTE 5 – BONDED INDEBTEDNESS

Revenue Bonds

Transportation Code, Chapter 228 Subchapter C authorizes the Commission to issue revenue bonds to pay a portion of the costs

of planning, designing, engineering, developing and constructing the CTTS. The bonds are payable from and secured solely by a first

and second lien on, as applicable, and pledge of the trust estate. The trust estate consists of all project revenues and all project earnings

including investment earnings deposited into the revenue fund, construction fund (except for any amounts held in a sub�account containing

monies derived from the state highway fund or any monies received by the Commission that are restricted to another use), the debt service

fund, the debt service reserve fund, the rate stabilization fund, and the general reserve fund.

In an event of default under the terms of the Indenture of Trust dated as of July 15, 2002, the Trustee may take the following actions

and upon the written request of the owners of not less than 20 percent in principal amount of outstanding obligations shall proceed to:

(i) Protect and enforce its rights and the rights of the owners under the state law and the Indenture by such suits, actions or special

proceedings in equity or at law, or by proceedings in the office of any board or officer having jurisdiction, either for mandamus or

the specific performance of any covenant or agreement contained in the Indenture or in aid or execution of any power granted by the

Indenture or for the enforcement of any proper legal or equitable remedy, as the Trustee, being advised by counsel, shall deem most

effectual to protect and enforce such rights.

(ii) In the enforcement of any remedy under the Indenture the Trustee shall be entitled to sue for, enforce payment of and receive any

and all amounts then or during any event of default becoming, and at any time remaining, due from the Commission.

Miscellaneous Bond Information

(Amounts in Thousands)

Maturities

Description of Issue

Bonds Issued

to Date Date Issued

Range of

Interest Rates

First

Year

Last

Year

First Call

Date

First Tier Revenue Bonds Series 2002�A

Non�Callable Capital Appreciation Bonds*

$ 792,168

08/29/2002 4.47% 5.75% 2012 2030 n/a

Callable Capital Appreciation Bonds

325,494

08/29/2002 6.00% 6.10% 2025 2038 08/15/2012

First Tier Revenue Refunding Bonds Series 2012�A

585,330

11/27/2012 4.00% 5.00% 2038 2041 08/15/2022

First Tier Revenue Refunding Bonds Series 2015�B

Current Interest Bonds + Term Bond*

198,025

02/04/2015 5.00% 5.00% 2032 2037 08/15/2024

Capital Appreciation Bonds

134,181

02/04/2015 4.36% 4.38% 2036 2037 08/15/2024

Second Tier Revenue Refunding Bonds, Series 2015�C

1,157,320

02/04/2015 5.00% 5.00% 2022 2042 08/15/2024

First Tier Revenue Refunding Bonds Series 2020�A

179,475

03/05/2020 3.00% 5.00% 2039 2040 08/15/2030

First Tier Revenue Refunding Variable Rate Bonds

Series 2020�B

225,000

03/05/2020 VA R VA R 2042 2042 **

First Tier Revenue Refunding Bonds Taxable Series

2020�C

279,305

03/05/20 3.03% 3.03% 2031 2041 08/15/2030

Tot al

$ 3,876,298

* Bonds issued to date include interest accreted to principal.

** Bonds are subject to redemption prior to their respective maturities at the option of the Commission.

Neither the state, Commission, TxDOT nor any other agency or political subdivision of the state is obligated to pay the principal,

premium, discount or interest on the CTTS revenue bonds except from the trust estate. The bond indenture does not create a mortgage

on the CTTS.

Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System Page 33

Debt service requirements for the First Tier Revenue Bonds as of Aug. 31, 2023, are detailed in the following tables:

Debt Service Requirements - Revenue Bonds (Amounts in Thousands)

Revenue Bonds

Year Principal Interest Tot a l

2024

$ 63,380

$ 88,752

$ 152,132

2025

72,655

88,319

160,974

2026

87,030

87,707

174,737

2027

98,405

87,216

185,621

2028

105,225

86,513

191,738

2029�2033

644,255

404,432

1,048,687

2034�2038

943,485

249,107

1,192,592

2039�2043

722,940

63,348

786,288

2,737,375

1,155,394

3,892,769

Unamortized Accretion

(227,194)

Unamortized Premium

139,826

Total

$ 2,650,007

$ 1,155,394

$ 3,805,401

Debt Service Requirements - Revenue Bonds (Amounts in Thousands)

Revenue Bonds - Direct Placements

Year Principal Interest* Tota l

2024

$

$ 10,889

2025

10,386

2026

10,395

2027

10,395

2028

10,404

2029�2033

51,966

2034�2038

51,975

2039�2043

225,000

39,255

264,255

Total

$ 225,000

$ 195,665

$ 420,665

* Series 2020�B debt service requirements are calculated with interest rate of 4.62 percent which is the interest rate

reported at Aug. 31, 2023.

Defeased Bonds

The Commission has defeased various bond issues by placing funds in irrevocable trusts with external financial institutions to provide

for all future debt service payments on the old bonds. As of Aug. 31, 2023, the amount of CTTS defeased bonds that remain outstanding

are presented in the following table:

Defeased Bonds Outstanding (Amount in Thousands)

Description Par Value

Revenue Bonds

Series 2002�A Capital Appreciation Bonds*

$ 15,312

Tot al

$ 15,312

* Includes $10,600 of accreted interest.

Page 34 Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System

NOTE 6 - RETIREMENT PLAN AND POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS

CTTS, an enterprise fund of the Texas Department of Transportation (TxDOT), is part of TxDOT’s reporting entity. CTTS does not

have any employees and does not make contributions to any retirement plans or other postemployment benefits (OPEB) plans. TxDOT

employees provide all accounting and administrative services for CTTS. Those employees are members of the Employee Retirement

System of Texas defined benefit pension plan (ERS Plan) and the State Retiree Health Plan (SRHP). CTTS is not obligated in any form

for the funding of the pension benefits provided by the ERS Plan or the postemployment benefits provided through the SRHP. Allocation

of the pension and OPEB liabilities and expense for CTTS is deemed unnecessary and not required. The details are disclosed in the

TxDOT’s Annual Comprehensive Financial Report for the pension plan in Note 8 and the OPEB plan in Note 10.

Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System Page 35

NOTE 7 – SUBSCRIPTION-BASED INFORMATION TECHNOLOGY ARRANGEMENTS (SBITA)

TxDOT implemented GASB Statement No. 96 Subscription Based Information Technology Arrangements during fiscal 2023, and

recognized one agreement in support of the Texas Department of Transportation Tolls Back Office System (TxBOS). The initial term is

for one year from June 30, 2022 to June 29, 2023 with the option to renew for three additional one�year periods. The subscription asset

and accumulated amortization are $129.2 million and $33.7 million.

Below are the principal and interest requirements:

Future Subscription Payments

(Amounts in Thousands)

Year Principal Interest

Total Future Minimum

Subscription Payments

2024

$ 41,495

$ 2,613

$ 44,108

2025

36,326

1,485

37,811

2026

31,092

418

31,510

Total

$ 108,913

$ 4,516

$ 113,429

NOTE 8 – INTERFUND ACTIVITY

Transfers In/Out represents the flow of assets (cash or goods) between CTTS and other funds of TxDOT. In fiscal 2023, CTTS

transfers in from other funds were $11.6 million.

Due To and Due From Other Funds represent amounts due to or due from other funds within TxDOT, for a variety of costs. The State

Highway Fund (SHF) is the major governmental fund of TxDOT. The Grand Parkway Transportation Corporation (GPTC) is a blended

component unit of TxDOT.

At the end of fiscal 2023, the net Due To and Due From Other Funds were as detailed in the following tables:

Interfund Balance

August 31, 2023 (Amounts in Thousands)

Category Due To (From)

Due to SHF � Operations and Maintenance

$ 21,965

Due from SHF � Veterans Waiver

(801)

Due from SHF � Transaction fees

(1,116)

Net due to SHF from CTTS

$ 20,048

Page 36 Fiscal Year Ending August 31, 2023 � Central Texas Turnpike System

Due from Other Funds totaled $24.2 million, as detailed in the following table:

Interfund Balance

August 31, 2023 (Amounts in Thousands)