Annual Comprehensive Financial Report and Compliance Reports

Organizational Data

TEMPLE COLLEGE
ORGANIZATIONAL DATA
For the Year Ended August 31, 2025

Board of Trustees

Officers

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

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Independent Auditors' Report

LOTT, VERNON & COMPANY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
KILLEEN • COPPERAS COVE • TEMPLE

20 SOUTH FOURTH STREET — POST OFFICE BOX 160 — TEMPLE, TEXAS 76503
254/778/4783  •  800/460/4783  •  FAX 254/778/4792
Member of American Institute & Texas Society of Certified Public Accountants

Board of Trustees
Temple College
Temple, Texas

Report on the Audit of the Financial Statements

Opinions

We have audited the Statements of Net Position, the Statements of Revenues, Expenses, and Changes in Net Position and the Statements of Cash Flows of Temple College (the College), as of and for the year ended August 31, 2025 and 2024, and the related notes to the financial statements, which collectively comprise the College’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the College, as of August 31, 2025 and 2024, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions

We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in 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 the College 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 opinions.

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.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the College’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

Auditor’s Responsibilities 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 opinions. 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 generally accepted auditing standards 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 generally accepted auditing standards 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 College’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.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the College’s ability to continue as a going concern for a reasonable period of time.

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, the Schedule of College’s Proportionate Share of Net Pension Liability, the Schedule of College’s Contributions for Pensions, the Schedule of College’s Proportionate Share of Net OPEB Liability, the Schedule of College’s Contributions for OPEB and Notes to Required Supplementary Information (RSI) as listed in the table of contents 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.

Supplementary Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the College’s basic financial statements. The Supplementary Schedules (Schedules A–F), which include the Schedule of Expenditures of Federal Awards (Schedule E) and the Schedule of Expenditures of State Awards (Schedule F), as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, Audit Requirements for Federal Awards, and the State of Texas Single Audit Circular, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, Supplementary Schedules (Schedules A–F), which include the Schedule of Expenditures of Federal Awards (Schedule E) and the Schedule of Expenditures of State Awards (Schedule F) are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information

Management is responsible for the other information included in the annual report. The other information comprises the Organizational Data but does not include the basic financial statements and our auditor’s report thereon. Our opinions 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.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our reports dated March 23, 2026, on our consideration of the College’s internal control over financial 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 financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the College’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the College’s internal control over financial reporting and compliance.

Lott, Vernon & Co. P.C.

Temple, Texas
March 23, 2026

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Management’s Discussion and Analysis

Management’s Discussion and Analysis Exhibit,
Fiscal Year Ended August 31, 2025

This discussion and analysis of Temple College financial statements provides an overview of College financial activities for the year ended August 31, 2025. Management has prepared the financial statements and the related footnote disclosures and this discussion and analysis statement. Responsibility for the completeness and fairness of this information is that of the College management. The current report, for the year ended August 31, 2025, is issued under the Governmental Accounting Standards Board (GASB) Statement No. 34, “Basic Financial Statements and Management’s Discussion and Analysis for State and Local Governments.” This accounting policy established the reporting format for governmental annual financial statements. The State of Texas elected to adopt these reporting standards in the fiscal year 2001-2002, and Temple College as a component unit of state government converted its financial reporting to the GASB 34 format. The following sections present comparative financial data as called for by the reporting principle.

Financial and Enrollment Highlights

• Enrollment in the academic/technical programs increased compared to the prior year, increasing from 95,666 semester hours to 101,833 hours.
• Enrollment revenue in the Workforce and Continuing Education Division, previously referred to as Business and Continuing Education, increased by 4.2% compared to FY 2024.
• Tuition/Fee totals by resident type for this period were:

  Tuition/fee totals per semester credit hour by resident type, Fall 2024 through Fall 2022

  Resident Type	Fall 2024	Fall 2023	Fall 2022
  In-District	$125/semester hour	$125/semester hour	$125/semester hour
  Out-of-District	$210/semester hour	$210/semester hour	$200/semester hour
  Non-Resident	$383/semester hour	$383/semester hour	$350/semester hour

• Students taking Health Science courses are charged an additional $80/SCH starting in FY 2024. This tuition is a 6% increase for Health Science programs for resident students compared to general academic and other technical courses. General fee revenue increased by 78%, largely due to tuition staying flat and fees increasing for FY 2024 which carried over into FY 2025.
• The district property tax rate for FY 2025 stayed flat from the prior year’s rate of $0.2017/$100. This rate is the combined debt/maintenance and operations rate.

State funding (appropriations) for fiscal year 2025 were determined under a revised funding formula that incorporated performance metrics. Certain graduation metrics included in the fiscal year 2025 calculation reflected an atypical, non-recurring performance outcome from the prior year that was not indicative of normal graduation trends. This outlier was used by the State in establishing fiscal year 2025 performance funding levels.

As a result, the State has recalculated performance-based funding excluding the impact of this anomalous metric. The variance between this recalculated amount and the net fiscal year 2025 performance funding disbursed represents a projected settle-up adjustment. This adjustment is expected to be incorporated into the state’s funding determination for fiscal year 2026 and subsequent 4 years.

Notwithstanding this adjustment, projected fiscal year 2026 funding levels are expected to exceed fiscal year 2024 base funding, which did not include the impact of the prior year outlier.

The Annual Report

This report consists of three basic financial statements: (1) the Statement of Net Position; (2) the Statement of Revenues, Expenses, and Changes in Net Position; and (3) the Statement of Cash Flows. These three statements provide information on the College as a whole (excluding the Temple College Foundation activities) and present a long-term view of the financial position of the College. One of the most important questions asked about finances is, “Is Temple College as a whole better off or worse off as a result of the year’s activities?” The Statement of Net Position and the Statement of Revenues, Expenses, and Changes in Net Position report information on total institution activities in a way that helps to answer this question. When revenues and other support exceed expenses, the result is an increase in net position. When the reverse occurs, the result is a decrease in net position. The relationship between revenues and expenses can be thought of as Temple College’s operating results.

These two statements report the College’s net position and the changes in net position. The difference between assets and liabilities is one way to measure the financial health or financial position of Temple College. Over time, an increase or decrease in the College net position is one indicator of whether its financial health is improving. However, several non-financial factors are relevant as well, such as the trend and quality of applicants, freshman class size, student retention, faculty use of technology, building condition, campus safety, and quality of student services, to completely assess the overall health of the College.

These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting method used by most private-sector institutions. All current year revenues and expenses are reflected regardless of when cash is received or paid.

Financial statements for the College’s component unit, the Temple College Foundation, are issued independent to those of the College but are presented with the College’s basic financial statements.

Statement of Net Position

Cash and short-term investment balances decreased significantly compared to the prior year due to the utilization of short-term investments for construction related expenses.

Total net position increased by $10.6 million, from $41.4 million in fiscal year 2024 to $52.0 million in fiscal year 2025. This increase reflects growth in capital assets and a reduction in overall liabilities, partially offset by changes in deferred outflows and inflows related to pensions and OPEB.

Net investment in capital assets increased by $9.5 million to $53.0 million, primarily due to significant additions to capital assets during the year, net of depreciation and related debt activity. Capital assets (net) increased by approximately $5.5 million, indicating continued investment in facilities and infrastructure.

Total liabilities decreased by $5.2 million, largely driven by reductions in bonds payable and net pension liability, partially offset by an increase in net OPEB liability. The decrease in long-term debt contributed positively to the overall improvement in net position.

Deferred outflows of resources decreased by $1.4 million, while deferred inflows of resources decreased by $1.3 million, reflecting changes in actuarial assumptions and investment performance related to pension and OPEB plans.

Unrestricted net position improved significantly, increasing by $1.8 million from a deficit of $4.5 million in fiscal year 2024 to a deficit balance of $2.7 million in fiscal year 2025. This shift indicates improved financial flexibility. Restricted net position categories experienced minor fluctuations, with decreases in certain expendable categories, particularly in “Other,” reflecting timing and use of restricted resources.

Overall, the increase in total net position is primarily attributable to capital investment and debt reduction, along with improved unrestricted balances, partially offset by ongoing obligations related to OPEB and changes in deferred pension-related amounts.

Non-Current Assets include Restricted Cash balances and Other Long-Term Investments. Non-Current Assets increased by 55% compared to the prior year, primarily due to increase in Capital Assets and Subscription-based Assets.

As a direct result of the implementation of GASB Statement No. 75, the College no longer has a positive unrestricted net position.

Compensable absences (vacation/sick leave) increased this year to $1,106,073 and is a material liability to the College.

Statement of Revenues, Expenses and Changes in Net Position

The Statement of Revenues, Expenses and Changes in Net Position presents the annual operating results for the College, as well as all non-operating revenues and expenses. Tuition and fee revenue, net of exemption allowances, Decreased by 8.47% in FY 2025. The change is primarily due to an increase in Tuition and Fee Discount of Title IV, and Texas grants I & II Discount. Tuition rates for students remained unchanged from the previous year. A significant portion of the tuition structure is a $13 per SCH use fee. This charge is restricted for payment of debt service costs related to revenue bonds for facility construction and improvements on campus.

State allocations (appropriations) for instructional and support purposes increased in FY 2025, which is the first year of the biennium; as mentioned in previous financial reports, the majority of community college funding is now based upon student success points, a type of performance-based funding. As the state legislature moves forward with the evolution of student success points, the College will expect an increased emphasis on student performance, as opposed to headcount enrollment only.

Auxiliary Enterprise revenues consist primarily of commissions from the campus bookstore, vending sales and athletics. These revenues decreased by 13% from the previous year, to $104,395, largely as a result of fewer donations from Agency Accounts.

The operating revenue category of Grants and Contracts does not include Title IV Grants. Higher Education Emergency Relief (HEERF) funds provided through the federal CARES, CRRSAA and ARP COVID relief acts were fully expended in FY 2023, which is primary reason for the reduction in Federal Grants and Contracts for FY 2024, and FY 2025. Private Gifts, Grants and Contracts increased by 9% due in large part to increased Branch Campus Maintenance Tax collections, as well as student success-focused private grants.

Title IV revenue is included in the Non-Operating Revenue section and increased by 8% for FY 2025, primarily due to an increase in PELL grant awards compared to the prior year.

Operating Expenses

Below is a comparison chart of expenses arranged by the natural classification categories:

Operating expenses by functional area are shown in the following schedule:

In the schedules of operating expenses shown above, the total expenditures increased by 4% over the prior year.

Depreciation and amortization expense increased as a result of an increase in capital assets during the year, and the implementation of GASB 87 and GASB 96.

The College awarded raises in FY 2025 of 2% with a $1,000 stipend August 31, 2025.

The net assessed valuation for the district increased for FY 2025 to $11,428,306,251 from the previous year (FY 2024) amount of $10,292,827,842. The property tax rate cap for the Temple College district is $0.25/$100 valuation. This is the maximum permissible rate for both debt service requirements and operations combined.

Statement of Cash Flows

Another way to assess the health of an institution is to look at the Statement of Cash Flows. Its primary purpose is to provide relevant information about cash receipts and cash payments of an entity during a period. The Statement of Cash Flows also helps users assess:

• an entity’s ability to generate future net cash flows;
• its ability to meet its obligations as they come due; and
• its needs for external financing.

The College liquidity position increased $1.1 million during this year ended August 31, 2025, ending cash totaled $2.8 million at August 31, 2025. as shown in the chart below:

Capital Asset and Debt Administration

Capital assets, net of depreciation, increased by $60 million, from $100.9 million at August 31, 2024 to $160.9 million at August 31, 2025, reflecting significant investment in capital projects during the year.

The increase was primarily driven by construction in progress, which grew by $56.4 million to $105.5 million, indicating substantial ongoing projects not yet placed into service. Buildings increased by $9.6 million, reflecting project completions and capital improvements. Furniture and equipment increased by $1.6 million, while land improvements remained steady at $3.8 million. Land and library materials remained unchanged from the prior year.

Overall, the growth in capital assets highlights the College’s continued investment in expanding and improving its facilities. A significant portion of these assets remains in construction in progress and is expected to be placed into service in future periods.

On August 31, 2025, the College had $8.1 million invested in capital leases, net of approximately $2.6 million in accumulated amortization.

At year-end 2025, Temple College had approximately $122.6 million in debt outstanding, a $4.2 million decrease from the prior year-end balance of $126.7 million. The table below summarizes this amount by debt type.

During FY 2025, all scheduled debt service requirements were paid.

Outstanding debt decreased by $3.9 million, from $126.7 million at August 31, 2024 to $122.6 million at August 31, 2025. This decrease was primarily attributable to scheduled principal repayments on bonds payable.

Bonds payable declined from $132.8 million to $129.1 million as a result of normal debt service activity. Other long-term obligations, including right-to-use and subscription liabilities, decreased modestly due to amortization. Financed purchase obligations were eliminated during the year, further contributing to the overall reduction in debt.

The year-over-year decrease reflects the College’s continued progress in reducing long-term obligations while maintaining investment in capital assets.

Capital Leases, detailed in Footnote 8, are the result of the implementation of GASB 87.

Economic Factors That Will Affect the Future

Temple College’s future financial condition and operational performance will be significantly influenced by regional and statewide economic conditions, workforce trends, and public funding environments. The following key economic factors are expected to shape the institution’s outlook:

The economy of Temple, Texas is experiencing sustained growth driven by business investment, infrastructure development, and industrial expansion. Over $122 million has been invested in local capital projects, alongside continued job creation and rising wages. In addition, large-scale industrial projects—including advanced manufacturing facilities and logistics investments—are expected to generate new employment opportunities and expand the regional tax base.

Temple College plays a critical role in supporting workforce development in Central Texas. Economic expansion in sectors such as semiconductor manufacturing and advanced technology is increasing demand for technical education and credentialing programs.

A notable example is the $9.8 million state investment supporting a semiconductor training hub, designed to build a talent pipeline for one of the fastest-growing industries in Texas.

Community colleges in Texas are highly influenced by state funding formulas, grants, and legislative initiatives. Programs such as dual-credit funding and workforce grants have already contributed to enrollment increases and program expansion.

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Financial Statements

Exhibit 1 — Statement of Net Position

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

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Exhibit 1-A — Statement of Financial Position, Temple College Foundation, Inc.

Note: the Foundation’s Statement of Financial Position is dated August 31, 2023 and August 31, 2022, as printed in the source document — these dates are one to two years behind the College’s FY2025 reporting period and are transcribed exactly as they appear.

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Exhibit 2 — Statement of Revenues, Expenses, and Changes in Net Position

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

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Exhibit 2-A — Statement of Activities, Temple College Foundation, Inc.

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

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Exhibit 2-B — Statement of Activities, Temple College Foundation, Inc.

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

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Exhibit 3 — Statement of Cash Flows

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

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Notes to Financial Statements

Note 1 — Reporting Entity

Temple Junior College District was established in 1926, in accordance with the laws of the State of Texas, to serve the educational needs of Temple and the surrounding communities. On April 22, 1996, the name of the Temple Junior College District was changed to Temple College. The College has a campus in Temple, Texas, Taylor, Texas and Hutto, Texas. Temple College is considered to be a special purpose, primary government according to the definition in Governmental Accounting Standards Board (GASB) Statement 14. While the College receives funding from local, state, and federal sources, and must comply with the spending, reporting, and record keeping requirements of these entities, it is not a component unit of any other governmental entity.

Note 2 — Summary of Significant Accounting Policies

Reporting Guidelines

The significant accounting policies followed by the College in preparing these financial statements are in accordance with the Texas Higher Education Coordinating Board’s Annual Financial Reporting Requirements for Texas Public Community and Junior Colleges and in accordance with generally accepted accounting policies. The College applies all applicable GASB pronouncements and all applicable Financial Accounting Standard Board (FASB) statements and interpretations issued on or before November 30, 1989, unless they conflict or contradict GASB pronouncements. The College has elected not to apply FASB guidance issued subsequent to November 30, 1989, unless specifically adopted by the GASB. The College is reported as a special-purpose government engaged in business-type activities.

Tuition Discounting

Texas Public Education Grants

Certain tuition amounts are required to be set aside for use as scholarships by qualifying students. This set aside, called the Texas Public Education Grant (TPEG), is shown with tuition and fee revenue amounts as a separate set aside amount (Texas Education Code 56.0333). When the award is used by the student for tuition and fees, the amount is recorded as a tuition discount. If the amount is dispersed directly to the student, the amount is recorded as a scholarship expense.

Title IV, HEA, Program Funds

Certain Title IV HEA Program funds are received by the college to pass through to the student. These funds are initially received by the College and recorded as revenue. When the award is used by the student for tuition and fees, the amount is recorded as a tuition discount. If the amount is dispersed directly to the student, the amount is recorded as a scholarship expense.

Other Tuition Discounts

The College awards tuition and fee scholarships from institutional funds to students who qualify. When these amounts are used for tuition and fees, the amount is recorded as a tuition discount. If the amount is dispersed directly to the student, the amount is recorded as a scholarship expense.

Basis of Accounting

The financial statements of the College have been prepared on the accrual basis whereby all revenues are recorded when earned and all expenses are recorded when they have been reduced to a legal or contractual obligation to pay.

Encumbrance accounting, under which purchase orders, contracts, and other commitments for expenditures of funds are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration. Under Texas law, appropriations lapse at August 31, and encumbrances outstanding at that time are to be either canceled or appropriately provided for in the subsequent year’s budget. Encumbrances outstanding at year-end that are provided for in subsequent year’s budget are reported as designations of net assets since they do not constitute expenditures or liabilities.

Budgetary Data

Each community college district in Texas is required by law to prepare an annual operating budget of anticipated revenues and expenditures for the fiscal year beginning September 1. The College’s Board of Trustees adopts the budget, which is prepared on the accrual basis of accounting. A copy of the approved budget must be filed with the Texas Higher Education Coordination Board, Legislative Budget Board, Legislative Reference Library, and Governor’s Office of Budget and Planning by December 1st.

Cash and Cash Equivalents

The College’s cash and cash equivalents are considered to be cash on hand, demand deposits and short term investments with original maturities of three months or less from the date of acquisition.

Deferred Inflows

In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. Governments are only permitted to report deferred inflows in circumstances specifically authorized by the GASB.

Deferred Outflows

In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense) until that time. Governments are only permitted to report deferred outflows in circumstances specifically authorized by the GASB.

Change in Accounting Principle

None.

Investments

In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and External Investment Pools, investments are reported at fair value. Fair values are based on published market rates. Short-term investments have an original maturity greater than three months but less than one year at time of purchase. The governing board has designated public fund investment pools to be short-term investments. Long-term investments have an original maturity of greater than one year at the time of purchase.

Capital Assets

Capital assets are recorded at cost at the date of acquisition, or fair value at the date of donation. For equipment, the College’s capitalization policy includes all items with a unit cost of $5,000 or more and an estimated useful life in excess of one year. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’ lives are charged to operating expense in the year in which the expense is incurred. Depreciation is computed using the straight–line method over the estimated useful lives of the assets applying the half-year convention. The following lives are used:

Unearned Revenue

Tuition and fees of $7,292,596 and $7,352,797 have been reported as unearned revenues at August 31, 2025 and August 31, 2024, respectively. Grant funds received but not yet earned of $1,592,489 and $586,042 have been reported as unearned revenues at August 31, 2025 and August 31, 2024, respectively.

Pensions

The College participates in the Teacher Retirement System of Texas (TRS) pension plan, a multiple-employer cost sharing defined benefit pension plan with a special funding situation. The fiduciary net position of TRS has been determined on the flow of economic resources measurement focus and full accrual basis of accounting. This includes for purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, pension expense, and information about assets, liabilities, and additions to/deductions from TRS’s fiduciary net position. Benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

Other Post-Employment Benefits (OPEB)

The fiduciary net position of the Employees Retirement System of Texas (ERS) State Retiree Health Plan (SRHP) has been determined using the flow of economic resources measurement focus and full accrual basis of accounting. This includes, for purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to other post-employment benefits; OPEB expense; and information about assets, liabilities and additions to/deductions from SRHP’s fiduciary net position. Benefit payments are recognized when due and are payable in accordance with the benefit terms.

Estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Accounting Changes and Error Corrections

The College has adopted GASB Statement 100, “Accounting Changes and Error Corrections” in FY23-24. The College has no changes in accounting principal, accounting estimates, or changes to/within the college that require a correction of previously issued financial statements.

Operating and Non-Operating Revenue and Expense Policy

The College distinguishes operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services in connection with the College’s principal ongoing operations. The principal operating revenues are tuition and related fees. The major non-operating revenues are state appropriations and property tax collections. Operating expenses include the cost of sales and services, administrative expenses, and depreciation on capital assets. The operation of the bookstore and food service is not performed by the College.

Note 3 — Authorized Investments

Temple College is authorized to invest in obligations and instruments as defined in the Public Funds Investment Act (Sec. 2256.001 Texas Government Code). Such investments include (1) obligations of the United States or its agencies, (2) direct obligations of the State of Texas or its agencies, (3) obligations of political subdivisions rated not less than A by a national investment rating firm, (4) certificates of deposit, and (5) other instruments and obligations authorized by statute. The Board of Trustees of Temple College has adopted a written investment policy regarding the investment of its funds as defined in the Public Funds Investment Act of 1995 (Chapter 2256, Texas Government Code). The investments of the College are in compliance with the Trustee’s investment policies.

Note 4 — Deposits and Investments

Cash and Deposits included in Exhibit 1, Statement of Net Position, consists of the items reported below:

As of August 31, 2025, the College had the following investments and maturities:

As of August 31, 2024, the College had the following investments and maturities:

The governing board has designated public fund investment pools comprised of $26,511,033 and $23,734,014 at August 31, 2025, and August 31, 2024, respectively, to be short-term investments.

Interest Rate Risk – In accordance with state law and College policy, the College does not purchase any investments with maturities greater than two years.

Credit Risk – In accordance with state law and the College’s investment policy, investments in mutual funds and investment pools must be rated at least AAA, commercial paper must be rated at least A-1 or P-1, and investments in obligations from other states, municipalities, counties, etc. must be rated at least A.

Concentration of Credit Risk – The College does not place a limit on the amount the College may invest in any one issuer. No individual issuer exceeds 5% of the College’s investments.

Note 5 — Derivatives

None.

Note 6 — Capital Assets

Capital assets activity for the year end August 31, 2025 was as follows:

Capital assets activity for the year ended August 31, 2024, was as follows:

Leased capital asset activity for the year ended August 31, 2025, was as follows:

Software subscription asset activity for the year ended August 31, 2025, was as follows:

Software subscription asset activity for the year ended August 31, 2024, was as follows:

Note 7 — Long Term Liabilities

Long-term liability activity for the year ended August 31, 2025 was as follows:

Long-term liability activity for the year ended August 31, 2024 was as follows:

Note 8 — Debt and Lease and Subscription Obligations

Debt Service Requirements

Capital Lease Obligations at August 31, 2025 were as follows:

Leases Payable

For the year ended 8/31/2025, the financial statements include the adoption of GASB Statement No. 87, Leases. The primary objective of this statement is to enhance the relevance and consistency of information about governments’ leasing activities. This statement establishes 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. For additional information, refer to the disclosures below.

On 09/01/2020, Temple College, TX entered into a 192 month lease as Lessee for the use of Hutto Building. An initial lease liability was recorded in the amount of $7,948,780. As of 08/31/2025, the value of the lease liability is $5,577,704, and the value of the short-term lease liability is $485,933. Temple College, TX is required to make semi-annual fixed payments of $303,142. The lease has an interest rate of 1.8620%. The Buildings estimated useful life was 0 months as of the contract commencement. The value of the right to use asset as of 08/31/2025 of $7,948,780 with accumulated amortization of $2,483,994 is included with Buildings on the Lease Class activities table found below. Temple College, TX has 2 extension option(s), each for 300 months.

On 05/12/2022, Temple College, TX entered into a 60 month lease as Lessee for the use of Affiniti 50 Ultrasound System. An initial lease liability was recorded in the amount of $172,674. As of 08/31/2025, the value of the lease liability is $53,486. Temple College, TX is required to make quarterly fixed payments of $9,083. The lease has an interest rate of 2.1567%. The value of the right to use asset as of 08/31/2025 of $172,674 with accumulated amortization of $114,061 is included with Equipment on the Lease Class activities table found below.

On 01/12/2024, Temple College, TX entered into a 48 month lease as Lessee for the use of TSYS Credit Card Machine. An initial lease liability was recorded in the amount of $1,882. As of 08/31/2025, the value of the lease liability is $1,158, and the value of the short-term lease liability is $471. Temple College, TX is required to make monthly fixed payments of $41. The lease has an interest rate of 2.3500%. The Equipment estimated useful life was 60 months as of the contract commencement. The value of the right to use asset as of 08/31/2025 of $1,882 with accumulated amortization of $770 is included with Equipment on the Lease Class activities table found below.

Subscriptions Payable

For the year ended 8/31/2024, the financial statements include the adoption of GASB Statement No. 96, Subscription-Based Information Technology Arrangements. The primary objective of this statement is to enhance the relevance and consistency of information about governments’ subscription activities. This statement establishes a single model for subscription accounting based on the principle that subscriptions are financings of the right to use an underlying asset. Under this Statement, an organization is required to recognize a subscription liability and an intangible right-to-use subscription asset. For additional information, refer to the disclosures below.

On 04/17/2023, Temple College, TX entered into a 36 month subscription for the use of Claris Platform. An initial subscription liability was recorded in the amount of $925. As of 08/31/2025, the value of the subscription liability is $0, and the value of the short-term subscription liability is $0. Temple College, TX is required to make annual fixed payments of $925. The subscription has an interest rate of 2.3630%. The value of the right to use asset as of 08/31/2025 of $925 with accumulated amortization of $731 is included with Software on the Subscription Class activities table found below.

On 06/02/2023, Temple College, TX entered into a 60 month subscription for the use of Fortimanager-VM Subscription License. An initial subscription liability was recorded in the amount of $1,214. As of 08/31/2025, the value of the subscription liability is $0, and the value of the short-term subscription liability is $0. Temple College, TX is required to make annual fixed payments of $1,214. The subscription has an interest rate of 2.3100%. The value of the right to use asset as of 08/31/2025 of $1,214 with accumulated amortization of $546 is included with Software on the Subscription Class activities table found below.

On 07/31/2023, Temple College, TX entered into a 36 month subscription for the use of templejc.edu. An initial subscription liability was recorded in the amount of $231. As of 08/31/2025, the value of the subscription liability is $0, and the value of the short-term subscription liability is $0. Temple College, TX is required to make annual fixed payments of $231. The subscription has an interest rate of 3.1020%. The value of the right to use asset as of 08/31/2025 of $231 with accumulated amortization of $165 is included with Software on the Subscription Class activities table found below.

On 07/25/2022, Temple College, TX entered into a 36 month subscription for the use of Self Study Software. An initial subscription liability was recorded in the amount of $25,080. As of 08/31/2025, the value of the subscription liability is $0, and the value of the short-term subscription liability is $0. Temple College, TX is required to make annual fixed payments of $25,080. The subscription has an interest rate of 2.1840%. The value of the right to use asset as of 08/31/2025 of $0 with accumulated amortization of $0 is included with Software on the Subscription Class activities table found below.

On 09/01/2021, Temple College, TX entered into a 47 month subscription for the use of Blackbaud Software and Services. An initial subscription liability was recorded in the amount of $12,634. As of 08/31/2025, the value of the subscription liability is $0, and the value of the short-term subscription liability is $0. Temple College, TX is required to make annual fixed payments of $4,250. The subscription has an interest rate of 0.4570%. The value of the right to use asset as of 08/31/2025 of $0 with accumulated amortization of $0 is included with Software on the Subscription Class activities table found below.

On 06/30/2022, Temple College, TX entered into a 36 month subscription for the use of Community College Engage. An initial subscription liability was recorded in the amount of $36,809. As of 08/31/2025, the value of the subscription liability is $0, and the value of the short-term subscription liability is $0. Temple College, TX is required to make annual fixed payments of $11,803. The subscription has an interest rate of 2.0150%. The value of the right to use asset as of 08/31/2025 of $0 with accumulated amortization of $0 is included with Software on the Subscription Class activities table found below.

On 04/29/2022, Temple College, TX entered into a 36 month subscription for the use of VMWARE Software. An initial subscription liability was recorded in the amount of $33,392. As of 08/31/2025, the value of the subscription liability is $0, and the value of the short-term subscription liability is $0. Temple College, TX is required to make annual fixed payments of $33,392. The subscription has an interest rate of 2.0150%. The value of the right to use asset as of 08/31/2025 of $0 with accumulated amortization of $0 is included with Software on the Subscription Class activities table found below.

On 02/06/2023, Temple College, TX entered into a 36 month subscription for the use of .COM Domain Registration. An initial subscription liability was recorded in the amount of $70. As of 08/31/2025, the value of the subscription liability is $0, and the value of the short-term subscription liability is $0. Temple College, TX is required to make annual fixed payments of $70. The subscription has an interest rate of 2.6560%. The value of the right to use asset as of 08/31/2025 of $70 with accumulated amortization of $60 is included with Software on the Subscription Class activities table found below.

On 02/06/2023, Temple College, TX entered into a 36 month subscription for the use of Standard SSL. An initial subscription liability was recorded in the amount of $210. As of 08/31/2025, the value of the subscription liability is $0, and the value of the short-term subscription liability is $0. Temple College, TX is required to make annual fixed payments of $210. The subscription has an interest rate of 2.6560%. The value of the right to use asset as of 08/31/2025 of $210 with accumulated amortization of $180 is included with Software on the Subscription Class activities table found below.

On 06/01/2023, Temple College, TX entered into a 36 month subscription for the use of PMAM SaaS Human Capital Management Platform. An initial subscription liability was recorded in the amount of $18,795. As of 08/31/2025, the value of the subscription liability is $0, and the value of the short-term subscription liability is $0. Temple College, TX is required to make annual fixed payments of $6,412. The subscription has an interest rate of 2.3630%. The value of the right to use asset as of 08/31/2025 of $18,795 with accumulated amortization of $14,097 is included with Software on the Subscription Class activities table found below.

On 09/01/2021, Temple College, TX entered into a 60 month subscription for the use of Flinn’s Online Chemventory License. An initial subscription liability was recorded in the amount of $349. As of 08/31/2025, the value of the subscription liability is $0, and the value of the short-term subscription liability is $0. Temple College, TX is required to make annual fixed payments of $349. The subscription has an interest rate of 0.5770%. The value of the right to use asset as of 08/31/2025 of $349 with accumulated amortization of $279 is included with Software on the Subscription Class activities table found below. Temple College, TX had a termination period of 1 month as of the subscription commencement.

On 06/28/2023, Temple College, TX entered into a 36 month subscription for the use of Mobile Queuing Platform. An initial subscription liability was recorded in the amount of $23,535. As of 08/31/2025, the value of the subscription liability is $0, and the value of the short-term subscription liability is $0. Temple College, TX is required to make annual fixed payments of $8,929. The subscription has an interest rate of 2.5600%. The value of the right to use asset as of 08/31/2025 of $26,892 with accumulated amortization of $19,209 is included with Software on the Subscription Class activities table found below. Temple College, TX has 2 extension option(s), each for 12 months.

On 05/30/2023, Temple College, TX entered into a 36 month subscription for the use of Qless - Single Sign On. An initial subscription liability was recorded in the amount of $3,488. As of 08/31/2025, the value of the subscription liability is $1,170, and the value of the short-term subscription liability is $1,170. Temple College, TX is required to make annual fixed payments of $1,200. The subscription has an interest rate of 2.5600%. The value of the right to use asset as of 08/31/2025 of $3,488 with accumulated amortization of $2,619 is included with Software on the Subscription Class activities table found below. Temple College, TX has 2 extension option(s), each for 12 months.

On 07/07/2022, Temple College, TX entered into a 48 month subscription for the use of Zoom Platform. An initial subscription liability was recorded in the amount of $59,127. As of 08/31/2025, the value of the subscription liability is $0, and the value of the short-term subscription liability is $0. Temple College, TX is required to make annual fixed payments of $13,886. The subscription has an interest rate of 2.0240%. The value of the right to use asset as of 08/31/2025 of $59,127 with accumulated amortization of $46,563 is included with Software on the Subscription Class activities table found below. Temple College, TX has 1 extension option(s), each for 24 months.

On 02/22/2023, Temple College, TX entered into a 36 month subscription for the use of Microsoft Software. An initial subscription liability was recorded in the amount of $63,941. As of 08/31/2025, the value of the subscription liability is $0, and the value of the short-term subscription liability is $0. Temple College, TX is required to make annual fixed payments of $63,941. The subscription has an interest rate of 2.6560%. The value of the right to use asset as of 08/31/2025 of $63,941 with accumulated amortization of $53,817 is included with Software on the Subscription Class activities table found below.

On 05/01/2023, Temple College, TX entered into a 24 month subscription for the use of 2022 Renewal Membership. An initial subscription liability was recorded in the amount of $0. As of 08/31/2025, the value of the subscription liability is $0, and the value of the short-term subscription liability is $0. Temple College, TX is required to make annual fixed payments of $0. The subscription has an interest rate of 2.4700%. The value of the right to use asset as of 08/31/2025 of $0 with accumulated amortization of $0 is included with Software on the Subscription Class activities table found below.

On 12/01/2022, Temple College, TX entered into a 36 month subscription for the use of Higher Ed License. An initial subscription liability was recorded in the amount of $7,450. As of 08/31/2025, the value of the subscription liability is $0, and the value of the short-term subscription liability is $0. Temple College, TX is required to make annual fixed payments of $7,450. The subscription has an interest rate of 3.2380%. The value of the right to use asset as of 08/31/2025 of $7,450 with accumulated amortization of $6,829 is included with Software on the Subscription Class activities table found below. The Vendor had a termination period of 1 month as of the subscription commencement.

On 10/02/2023, Temple College, TX entered into a 60 month subscription for the use of TouchNet Annual Subscription Service Copy. An initial subscription liability was recorded in the amount of $252,842. As of 08/31/2025, the value of the subscription liability is $151,999, and the value of the short-term subscription liability is $48,928. Temple College, TX is required to make annual fixed payments of $54,265. The subscription has an interest rate of 3.5110%. The value of the right to use asset as of 08/31/2025 of $252,842 with accumulated amortization of $96,836 is included with Software on the Subscription Class activities table found below.

On 03/07/2024, Temple College, TX entered into a 60 month subscription for the use of ReadSpeaker webReader. An initial subscription liability was recorded in the amount of $21,506. As of 08/31/2025, the value of the subscription liability is $12,899, and the value of the short-term subscription liability is $4,202. Temple College, TX is required to make annual fixed payments of $4,500. The subscription has an interest rate of 2.3120%. The value of the right to use asset as of 08/31/2025 of $21,506 with accumulated amortization of $6,380 is included with Software on the Subscription Class activities table found below.

On 12/04/2023, Temple College, TX entered into a 60 month subscription for the use of Panopto Recording Utility & Web Hosting. An initial subscription liability was recorded in the amount of $73,642. As of 08/31/2025, the value of the subscription liability is $49,324, and the value of the short-term subscription liability is $13,268. Temple College, TX is required to make annual fixed payments of $11,500. The subscription has an interest rate of 3.5110%. The value of the right to use asset as of 08/31/2025 of $73,642 with accumulated amortization of $25,695 is included with Software on the Subscription Class activities table found below. Temple College, TX has 1 extension option(s), each for 24 months.

On 10/01/2023, Temple College, TX entered into a 24 month subscription for the use of D2L Ltd 1. An initial subscription liability was recorded in the amount of $15,786. As of 08/31/2025, the value of the subscription liability is $0, and the value of the short-term subscription liability is $0. Temple College, TX is required to make annual fixed payments of $6,515. The subscription has an interest rate of 3.7420%. The value of the right to use asset as of 08/31/2025 of $15,786 with accumulated amortization of $15,128 is included with Software on the Subscription Class activities table found below.

On 09/01/2023, Temple College, TX entered into a 36 month subscription for the use of Adobe Sign for Ent ProSvcs Copy. An initial subscription liability was recorded in the amount of $80,488. As of 08/31/2025, the value of the subscription liability is $26,822, and the value of the short-term subscription liability is $26,822. Temple College, TX is required to make annual fixed payments of $27,600. The subscription has an interest rate of 2.9010%. The value of the right to use asset as of 08/31/2025 of $80,488 with accumulated amortization of $53,658 is included with Software on the Subscription Class activities table found below.

On 07/01/2023, Temple College, TX entered into a 60 month subscription for the use of Axon Enterprise Body Cams & Tasers. An initial subscription liability was recorded in the amount of $55,890. As of 08/31/2025, the value of the subscription liability is $24,269, and the value of the short-term subscription liability is $7,872. Temple College, TX is required to make annual fixed payments of $8,536. Additionally, there are one-time other reasonably certain payments of $15,730. The subscription has an interest rate of 2.7360%. The value of the right to use asset as of 08/31/2025 of $55,890 with accumulated amortization of $24,219 is included with Software on the Subscription Class activities table found below.

On 12/12/2023, Temple College, TX entered into a 36 month subscription for the use of DataDefense FortiEDR. An initial subscription liability was recorded in the amount of $452,482. As of 08/31/2025, the value of the subscription liability is $151,347, and the value of the short-term subscription liability is $151,347. Temple College, TX is required to make annual fixed payments of $156,842. The subscription has an interest rate of 3.6310%. The value of the right to use asset as of 08/31/2025 of $452,482 with accumulated amortization of $259,339 is included with Software on the Subscription Class activities table found below.

Note 9 — Bonds Payable

Bonds payable at August 31, 2025 are comprised of the following individual issues:

Note 10 — Advance Refunding Bonds General Obligation Bond Issue

Not applicable.

Note 11 — Defeased Bonds Outstanding

Not Applicable.

Note 12 — Short-term Debt

None.

Note 13 — Employees’ Retirement Plan

The State of Texas has joint contributory retirement plans for almost all its employees.

Teacher Retirement System of Texas

Plan Description

Temple College participates in a cost-sharing multiple-employer defined benefit pension that has a special funding situation. The plan is administered by the Teacher Retirement System of Texas (TRS). It is a defined benefit pension plan established and administered in accordance with the Texas Constitution, Article XVI, Section 67 and Texas Government Code, Title 8, Subtitle C. The pension trust fund is a qualified pension trust under Section 401(a) of the Internal Revenue Code. The Texas Legislature establishes benefits and contribution rates within the guidelines of the Texas Constitution. The pension’s Board of Trustees does not have the authority to establish or amend benefit terms.

All employees of public, state-supported educational institutions in Texas who are employed for one-half or more of the standard work load and who are not exempted from membership under Texas Government Code, Title 8, Section 822.002 are covered by the system.

Pension Plan Fiduciary Net Position

Detailed information about the TRS’s fiduciary net position is available in a separately issued Annual Comprehensive Financial Report that includes financial statements and required supplementary information. That report may be obtained from on the Internet at https://trs.texas.gov/files/documents/annual-comprehensive-financial-report-2025.pdf, selecting About TRS then Publications then Financial Reports or by writing to TRS at attention finance division, PO Box 149676 Austin, TX 78701-0185.

Benefits Provided

TRS provides service and disability retirement, as well as death and survivor benefits, to eligible employees (and their beneficiaries) of public and higher education in Texas. The pension formula is calculated using 2.3 percent (multiplier) times the average of the five highest annual creditable salaries times years of credited service to arrive at the annual standard annuity except for members who are grandfathered, the three highest annual salaries are used. The normal service retirement is at age 65 with 5 years of credited service or when the sum of the member’s age and years of credited service equals 80 or more years. Early retirement is at age 55 with 5 years of service credit or earlier than 55 with 30 years of service credit. There are additional provisions for early retirement if the sum of the member’s age and years of service credit total at least 80, but the member is less than age 60 or 62 depending on date of employment, or if the member was grandfathered in under a previous rule. There are no automatic post-employment benefit changes; including automatic COLAs. Ad hoc post-employment benefit changes, including ad hoc COLAs can be granted by the Texas Legislature as noted in the Plan description above.

Texas Government Code section 821.006 prohibits benefit improvements if it increases the amortization period of TRS’ unfunded actuarial liability to greater than 31 years or, if the amortization period already exceeds 31 years, the period would be increased by such action.

Contributions

Contribution requirements are established or amended pursuant to Article 16, section 67 of the Texas Constitution which requires the Texas legislature to establish a member contribution rate of not less than 6% of the member’s annual compensation and a state contribution rate of not less than 6% and not more than 10% of the aggregate annual compensation paid to members of the system during the fiscal year.

Employee contribution rates are set in state statute, Texas Government Code 825.402. The TRS Pension Reform Bill (Senate Bill 12) of the 86th Texas Legislature amended Texas Government Code 825.402 for member contributions and increased employee and employer contribution rates for fiscal years 2019 thru 2025. Contribution Rates can be found in the TRS 2025 ACFR, Note 11.D.1, on page 87.

Contributors to the plan include members, employers, and the State of Texas as the only non-employer contributing entity. The State is the employer for senior colleges, medical schools, and state agencies including TRS. In each respective role, the State contributes to the plan in accordance with state statutes and the General Appropriations Act (GAA).

As the non-employer contributing entity for public education and junior colleges, the State of Texas contributes to the retirement system an amount equal to the current employer contribution rate times the aggregate annual compensation of all participating members of the pension trust fund during that fiscal year reduced by the amounts described below which are paid by the employers. Employers (public school, junior college, other entities or the State of Texas as the employer for senior universities and medical schools) are required to pay the employer contribution rate in the following instances:

• On the portion of the member’s salary that exceeds the statutory minimum for members entitled to the statutory minimum under Section 21.402 of the Texas Education Code.
• During a new member’s first 90 days of employment.
• When any part or all of an employee’s salary is paid by federal funding sources, a privately sponsored source, from non-educational and general, or local funds.
• When the employing district is a public junior college or junior college district, the employer shall contribute to the retirement system an amount equal to 50% of the state contribution rate for certain instructional or administrative employees; and 100% of the state contribution rate for all other employees.

In addition to the employer contributions listed above, there are two additional surcharges an employer is subject to.

• When employing a retiree of the Teacher Retirement System the employer shall pay both the member contribution and the state contribution as an employment after retirement surcharge.
• All public schools, charter schools and regional education service centers must contribute 1.9 percent of the member’s salary beginning in fiscal year 2024, gradually increasing to 2 percent in 2025.

Actuarial Assumptions

The total pension liability in the August 31, 2024 actuarial valuation was determined using the following actuarial assumptions: Actuarial Assumptions can be found in the 2024 TRS ACFR, Note 11.F.1.

• Valuation Date – August 31, 2023 rolled forward to August 31, 2024
• Actuarial Cost Method – Individual Entry Age Normal
• Asset Valuation Method – Fair Value
• Single Discount Rate – 7.0%
• Long-term expected Investment Rate of Return – 7.0%
• Municipal Bond Rate as of August 2022 – 3.87%
• Last year ending August 31 in Projection Period – 2123
• Inflation – 2.30%
• Salary Increases including inflation – 2.95% to 8.95%
• Ad hoc post-employment benefit changes – None

The actuarial assumptions used in the determination of the total pension liability are the same assumptions used in the actuarial valuation as of August 31, 2024. For a full description of these assumptions please see the actuarial valuation report dated November 21, 2024.

Discount Rate

A single discount rate of 7.0 percent was used to measure the total pension liability. The single discount rate was based on the expected rate of return on plan investments of 7.0 percent. The projection of cash flows used to determine this single discount rate assumed that contributions from active members, employers and the non-employer contributing entity will be made at the rates set by the legislature during the 2019 session. It is assumed that future employer and state contributions will be 9.54 percent of payroll in fiscal year 2025 and thereafter.

Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

The long-term rate of return on pension plan investments is 7.00%. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimates ranges of expected future real rates of return (expected returns, 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 weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of geometric real rates of return for each major asset class included in the Systems target asset allocation as of August 31, 2025 (see page 56 of the TRS ACFR) are summarized below:

Source: TRS 2024 Annual Comprehensive Report, page 56, Table 3.A.1

Discount Rate Sensitivity Analysis

The following schedule shows the impact of the Net Pension Liability if the discount rate used was 1% less and 1% greater than the discount rate that was used (7.00%) in measuring the Net Pension Liability. The discount rate can be found in the 2024 TRS ACFR.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At August 31, 2025, Temple College reported a liability of $8,208,403 for its proportionate share of the TRS’s net pension liability. This liability reflects a reduction for State pension support provided to the College. The amount recognized by the College as its proportionate share of the net pension liability, the related State support, and the total portion of the net pension liability that was associated with the College were as follows:

The net pension liability was measured as of August 31, 2023 and rolled forward to August 31, 2024 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The employer’s proportion of the net pension liability was based on the employer’s contributions to the pension plan relative to the contributions of all employers to the plan for the period September 1, 2023 thru August 31, 2024.

At the measurement date of August 31, 2024, the employer’s proportion of the collective net pension liability was 0.0134372658%, a decrease from 0.0138469597%, its proportion measured as of August 31, 2023.

Changes Since the Prior Actuarial Valuation

There were no changes in assumptions since the prior measurement date.

There were no changes of benefit terms that affected measurement of the total pension liability during the measurement period.

For the year ended August 31, 2025, Temple College recognized pension expense of $726,474 and revenue of $726,474 for support provided by the State.

At August 31, 2025, Temple College reported its proportionate share of the TRS’s deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

The net amounts of the employer’s balances of deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows:

Optional Retirement Plan

Plan Description

Participation in the Optional Retirement Program is in lieu of participation in the Teacher Retirement System. The optional retirement program provides for the purchase of annuity contracts and operates under the provisions of the Texas Constitution, Article XVI, Sec. 67, and Texas Government Code, Title 8, Subtitle C.

Funding Policy

Contribution requirements are not actuarially determined but are established and amended by the Texas legislature. The percentages of participant salaries currently contributed by the state and each participant are 6.6% (state = 3.3%, local = 3.3%) and 6.65%, respectively. Benefits fully vest after one year plus one day of employment. Because these are individual annuity contracts, the state has no additional or unfunded liability for this program. SB 1812, effective September 1, 2013, limits the amount of the State’s contribution to 50% of eligible employees in the reporting district.

The retirement expense to the State for the College was $139,981 and $109,846 for the fiscal years ended August 31, 2025 and 2024, respectively. This amount represents the portion of expended appropriations made by the State Legislature on behalf of the College.

The total payroll for all College employees was $24,396,682 and $21,543,000 for fiscal years 2025 and 2024 respectively.

14. Deferred Compensation Program

College employees may elect to defer a portion of their earnings for income tax and investment purposes pursuant to authority granted in Government Code 609.001. The Plan is through AIG through the State.

As of August 31, 2025, the College had 4 employees participating in the program. These 4 employees were vested as of August 31, 2025. A total of $35,450 in contributions was invested in the plan during the fiscal year. The funds are invested in Empower Retirement in each of the employee’s account and are not a liability to Temple College.

15. Compensable Absences

Exempt full-time staff and 12 month faculty earn annual leave from 8 to 12 hours per month depending on the number of years employed with Temple College. Non-exempt full-time staff earn the same annual leave total as exempt, but the monthly accrual is prorated based upon hours worked each month. The College’s policy is that an employee may carry his/her accrued leave forward with proper approval. Employees who terminate employment for whatever reason are entitled to payment for all accumulated annual leave up to a maximum of one year’s worth of accumulation. The College recognized the accrued liability for the unpaid annual leave in the amount of $516,927 and $467,155 for fiscal years 2025 and 2024, respectively.

Sick leave for exempt full-time staff and 12 month faculty is earned at a rate of 8 hours per month, with a maximum of 1,040 hours. Non-exempt full-time staff earn the same annual sick leave total as exempt, but the monthly accrual is prorated based upon hours worked each month. Sick leave use is allowed when an employee misses work due to illness or immediate family illness. Employees who terminate employment for whatever reason or upon death of the employee, in which the funds are paid to the estate of the employee, are entitled to payment of 173.33 hours provided the employee has worked 10 or more years of full-time employment at Temple College. The maximum sick leave that may be paid to the employee at termination of employment, or the employee’s estate, is 173.33 hours. The College recognized the accrued liability for the unpaid sick leave in the amount of $589,146 and $571,293 for fiscal years 2025 and 2024, respectively.

16. Pending Lawsuits and Claims

As of August 31, 2025, there were no pending lawsuits or claims against the College.

17. Disaggregation of Receivables and Payables Balances

Receivables

Receivables at August 31, 2025 and 2024 were as follows:

Payables

Payables at August 31, 2025 and 2024, were as follows:

Leases Receivable

For the year ended 8/31/2025, the financial statements include the adoption of GASB Statement No. 87, Leases. The primary objective of this statement is to enhance the relevance and consistency of information about governments’ leasing activities. This statement establishes 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. For additional information, refer to the disclosures below.

On 07/01/2023, Temple College, TX entered into a 24 month lease as Lessor for the use of Baylor Scott & White Temple College Sim Center. An initial lease receivable was recorded in the amount of $317,504. As of 08/31/2025, the value of the lease receivable is $0 and the value of the short-term lease receivable is $0. The lessee is required to make annual fixed payments of $650,000. The lease has an interest rate of 3.0180%. The Infrastructure estimated useful life was 0 months as of the contract commencement. The value of the deferred inflow of resources as of 08/31/2025 was $0, and Temple College, TX recognized lease revenue of $132,293 during the fiscal year. The lessee has 1 extension option(s), each for 12 months. The lessee had a termination period of 3 months as of the lease commencement. Temple College, TX had a termination period of 3 months as of the lease commencement.

16. Funds Held in Trust by Others

None.

18. Contracts and Grant Awards

Contract and grants awards are accounted for in accordance with the requirements of the AICPA Industry Audit Guide, Audits of Colleges and Universities. Revenues are recognized on Exhibit 2 and Schedule A. For federal and non-federal contracts and grant awards, funds expended, but not collected, are reported as Accounts Receivable on Exhibit 1. Contract and grant awards that are not yet funded and for which the institution has not yet performed services are not included in the financial statements. For any grant awarded in FY 2025 in which funding was provided to the college in advance of expenditures, the unexpended portion is included on the financial statements as Unearned Revenue. Contract and grant awards funds already committed, e.g., multi-year awards, or funds awarded during fiscal years 2025 and 2024 for which monies have not been received nor funds expended totaled $1,492,249 and $4,629,087. Of these amounts, $1,492,249 and $4,629,087 were from Federal Contract and Grant Awards.

19. Self-Insured Plans

The College participates in self-insured worker’s compensation and unemployment compensation plans. Employee health insurance is offered through the State of Texas Employee Retirement System group plan. The Worker’s Compensation plan is a self-insured group comprised of approximately fifteen (15) state community colleges and a loss fund is set up on the College books to record the estimated exposure each year. Unemployment claims are managed by the Texas Workforce Commission and payments are made on a claims-made basis.

20. Post-Retirement Health Care & Life Insurance Benefits

In addition to providing pension benefits, the state provides certain health care and life insurance benefits for retired employees. Almost all of the employees may become eligible for those benefits if they reach normal retirement age while working for the state. Those and similar benefits for active employees are provided through an insurance company whose premiums are based on benefits paid during the previous year. The state recognizes the cost of providing these benefits by expending the annual insurance premiums. The state’s contribution per full-time employee was $924 per month for the year ended August 31, 2025 ($924 per month for 2025) and totaled $2,334,548 for 2025 ($2,170,730 for 2024). The cost of providing those benefits for retirees is not separable from the cost of providing benefits for the active employees.

21. Ad Valorem Tax

The College’s ad valorem property tax is levied each October 1 on the assessed value listed as of the prior January 1 for all real and business personal property located in the College’s taxing district.

Taxes levied for the year ended August 31, 2025 and 2024 amounted to $21,076,933 and $19,115,297, respectively, including any penalty and interest assessed. Taxes are due on receipt of the tax bill and are delinquent if not paid before February 1 of the year following the year in which imposed.

Tax collections for the year ended August 31, 2025 and 2024 were 99% and 99% respectively of the current year tax levy. Allowance for the uncollectible taxes are based upon historical experience in collecting property taxes. The use of tax proceeds is restricted for the use of maintenance and/or general obligation debt service. The College remitted payments of $2,902,746 and $2,248,281 in fiscal year 2025 and 2024, respectively, for taxes collected on behalf of the Temple Tax Increment Reinvestment Zone.

Tax Abatements

The city of Temple entered into abatement agreements that reduced ad valorem tax payable on real property improvements. The total abated for FY 2025 was $49,038,637, resulting in $98,911 of forgone revenue, based on the College’s tax rate of $0.20170 per $100 of value.

22. Branch Campus Maintenance Tax

A branch campus maintenance tax has been established by election and levied by Hutto Independent School District in Williamson County, Texas. It is levied each October 1 on the assessed value listed as of the prior January 1 for all real and business personal property located in Hutto Independent School District. Collections are transferred to the College to be used for the operation of a Branch Campus at Hutto. This revenue is reported under Local Grants and Contracts.

23. Income Taxes

The College is exempt from income taxes under Internal Revenue Code Section 115, Income of States, Municipalities, Etc., although unrelated business income may be subject to income taxes under Internal Revenue Code Section 511 (a)(2)(B), Imposition of Tax on Unrelated Business Income of Charitable, Etc Organizations. The College had no unrelated business income tax liability for the years ended August 31, 2025 and 2024.

24. Component Units

Temple College Foundation – Discrete Component Unit

Temple College Foundation (the Foundation) was established as a separate nonprofit organization in 1982, for the purpose of providing student scholarships and assistance in the development and growth of the College. Under Governmental Accounting Standards Board Statement No. 39, Determining Whether Certain Organizations are Component Units, the Foundation is a component unit of the College because:

• The College provides financial support to the Foundation and the economic resources received or held by the Foundation are entirely for the benefit of the College.

Accordingly, the Foundation financial statements are included in the College’s annual report as a discrete component unit (see table of contents). Complete financial statements of Temple College Foundation can be obtained from the administrative office of the Foundation. The most recent audited financial statements available were FY23 and FY22.

25. Related Parties (Not a Component Unit)

Not applicable.

26. Subsequent Events

The College’s management has evaluated subsequent events through March 23, 2026, the date which the financial statements were available issue.

27. Other Postemployment Benefits (OPEB)

Plan Description

Temple College participates in a cost-sharing, multiple-employer, other post-employment benefit (OPEB) plan with a special funding situation. The Texas Employees Group Benefits Program (GBP) is administered by the Employees Retirement System of Texas (ERS). The GBP provides certain postemployment health care, life and dental insurance benefits to retired employees of participating universities, community colleges, and State agencies in accordance with Chapter 1551, Texas Insurance Code. Almost all employees may become eligible for those benefits if they reach normal retirement age while working for the State and retire with at least 10 years of service to eligible entities. Surviving spouses and dependents of these retirees are also covered. Benefit and contribution provisions of the GBP are authorized by State law and may be amended by the Texas Legislature.

OPEB Plan Fiduciary Net Position

Detailed information about the GBP’s fiduciary net position is available in the separately issued ERS Annual Comprehensive Financial Report (ACFR) that includes financial statements, notes to the financial statements and required supplementary information. That report may be obtained on the Internet at https://ers.texas.gov/About-ERS/Reports-and-Studies/Reports-on-Overall-ERS-Operations-and-Financial-Management; or by writing to ERS at: 200 East 18th Street, Austin, TX 78701; or by calling (877) 275-4377.

Benefits Provided

Retiree health benefits offered through the GBP are available to most State of Texas retirees and their eligible dependents. Participants need at least ten years of service credit with an agency or institution that participates in the GBP to be eligible for GBP retiree insurance. The GBP provides self-funded group health (medical and prescription drug) benefits for eligible retirees under HealthSelect. The GBP also provides a fully insured medical benefit option for Medicare-primary participants under the HealthSelect Medicare Advantage Plan and life insurance benefits to eligible retirees via a minimum premium funding arrangement. The authority under which the obligations of the plan members and employers are established and/or may be amended is Chapter 1551, Texas Insurance Code.

Contributions

Section 1551.055 of Chapter 1551, Texas Insurance Code, provides that contribution requirements of the plan members and the participating employers are established and may be amended by the ERS Board of Trustees. The employer and member contribution rates are determined annually by the ERS Board of Trustees based on the recommendations of ERS staff and its consulting actuary. The contribution rates are determined based on (i) the benefit and administrative costs expected to be incurred, (ii) the funds appropriated and (iii) the funding policy established by the Texas Legislature in connection with benefits provided through the GBP. The Trustees revise benefits when necessary to match expected benefit and administrative costs with the revenue expected to be generated by the appropriated funds.

The following table summarizes the maximum monthly employer contribution toward eligible retirees’ health and basic life premium. Retirees pay any premium over and above the employer contribution. The employer does not contribute toward dental or optional life insurance. Surviving spouses and their dependents do not receive any employer contribution. As the non-employer contributing entity (NECE), the State of Texas pays part of the premiums for the junior and community colleges.

Source: ERS 2024-ACFR

Contributions of premiums to the GBP plan for the current and prior fiscal year by source is summarized in the following table.

Source: ERS FY 2024 Annual Comprehensive Financial Report.

Actuarial Assumptions

The total OPEB liability was determined by an actuarial valuation as of August 31, 2024 using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:

Source: 2024 ERS ACFR

Investment Policy

The State Retiree Health Plan is a pay-as-you-go plan and does not accumulate funds in advance of retirement. The System’s Board of Trustees adopted the amendment to the investment policy in August 2022 to require that all funds in the plan be invested in cash and cash equivalent securities.

Discount Rate

Because the GBP does not accumulate funds in advance of retirement, the discount rate that was used to measure the total OPEB liability is the municipal bonds rate. The discount rate used to determine the total OPEB liability as of the beginning of the measurement year was 3.81%. The discount rate used to measure the total OPEB liability as of the end of the measurement year was 3.87%, which amounted to an increase of .06%. The source of the municipal bond rate was the Bond Buyer Index of general obligation bonds with 20 years to maturity and mixed credit quality. The bonds average credit quality is roughly equivalent to Moody’s Investors Service’s Aa2 rating and Standard & Poor’s Corp’s AA rating. Projected cash flows into the plan are equal to projected benefit payments out of the plan. Because the plan operates on a pay-as-you-go (PAYGO) basis and is not intended to accumulate assets, there is no long-term expected rate of return on plan assets and therefore the years of projected benefit payments to which the long-term expected rate of return is applicable is zero years.

Discount Rate Sensitivity Analysis

The following schedule shows the impact on the College’s proportionate share of the collective net OPEB Liability if the discount rate used was 1 percent less than and 1 percent greater than the discount rate that was used 3.87% in measuring the net OPEB Liability.

Source: 2024 ERS ACFR.

Healthcare Trend Rate Sensitivity Analysis

The initial healthcare trend rate is 5.60% and the ultimate rate is 4.30%. The following schedule shows the impact on the College’s proportionate share of the collective net OPEB Liability if the healthcare cost trend rate used was 1 percent less than and 1 percent greater than the healthcare cost trend rate that was used (5.60%) in measuring the net OPEB liability.

Source: 2024 ERS ACFR.

OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB

At August 31, 2024, the College reported a liability of $20,185,273 for its proportionate share of the ERS’s net OPEB liability. This liability reflects a reduction for State support provided to the College for OPEB. The amount recognized by the College as its proportionate share of the net OPEB liability, the related State support, and the total portion of the net OPEB liability that was associated with the College were as follows:

The net OPEB liability was measured as of August 31, 2024, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of that date. The employer’s proportion of the net OPEB liability was based on the employer’s contributions to the OPEB plan relative to the contributions of all employers to the plan for the period September 1, 2023, thru August 31, 2024.

At the measurement date of August 31, 2024, the employer’s proportion of the collective net OPEB liability was 0.06887480%. The proportion measured as of August 31, 2023 was 0.07280919%.

For the year ended August 31, 2024 the College recognized OPEB expense of $3,302 and revenue of $3,302 for support provided by the State.

Changes Since the Prior Actuarial Valuation

Changes to the actuarial assumptions or other inputs that affected measurement of the total OPEB liability since the prior measurement period were as follows:

Demographic Assumptions

• The percentage of current retirees and their spouses not yet eligible to participate in the HealthSelect Medicare Advantage Plan and future retirees and their spouses who will participate in the plan at the earliest date at which coverage can commence.
• The percentage of future retirees assumed to cover dependent children.
• Proportion of future retirees assumed to elect health coverage at retirement and proportion of future retirees expected to receive the Opt-Out Credit at retirement.
• Percentage of Higher Education vested terminated members assumed to have terminated less than one year before valuation date.
• The Patient-Centered Outcome Research Institute fee payable under the Affordable Care Act have been updated to reflect recent plan experience and expected trends.

Economic Assumptions

• Assume Per Capital Health Benefit Costs and Health Benefit Cost and Retiree Contribution trends have been updated since the previous valuation to reflect recent health plan experiences and its effects on short-term expectations.
• Annual rate of increase in the Patient-Centered Outcome Research Institute fee payable under the Affordable Care Act has been updated to reflect recent health plan experience and its effect on the short-term expectations.
• Assumed expenses directly related to the payment of GBP HealthSelect medical benefits have been updated to reflect recent contract revisions.

At August 31, 2025, the College reported its proportionate share of the ERS plan’s collective deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

The net amounts of the employer’s balances of deferred outflows and inflows of resources related to OPEB will be recognized in OPEB expense as follows:

28. Arbitrage Rebate Payable

As of August 31, 2025, the College had earned cumulative interest earnings on the unspent proceeds from its 2021 GO Bond of $10,321,928. Cumulative interest earnings allowable as of August 31, 2025 were $5,250,129. An arbitrage rebate liability of $5,071,800 to account for the excess interest earnings that will be owed to the Federal Government upon the College’s first, five-year arbitrage rebate filing with the IRS.

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Required Supplementary Information (RSI) Schedules

Schedule of College's Proportionate Share of Net Pension Liability

*The amounts presented above are as of the measurement date of the collective net pension liability for the respective fiscal year.

**Schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

The accompanying notes are an integral part of the supplementary information schedules.

Schedule of College's Contributions for Pensions

*The amounts presented above are as of TC’s respective fiscal year-end.

**Schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

The accompanying notes are an integral part of the supplementary information schedules.

Schedule of College's Proportionate Share of Net OPEB Liability

*The amounts presented above are as of the measurement date of the collective net OPEB liability for the respective fiscal year.

**Schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

The accompanying notes are an integral part of the supplementary information schedules.

Schedule of College's Contributions

*The amounts presented above are as of TC’s respective fiscal year-end.

**Schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

The accompanying notes are an integral part of the supplementary information schedules.

Notes to Required Supplementary Information

For the Year Ended August 31, 2025.

Pensions

1. Changes in Assumptions:

The actuarial assumptions and methods are the same as used in the determination of the prior year’s Net Pension Liability.

OPEB

1. Change of Benefit Terms

The 2023 Texas Legislature passed Senate Bill 10 (SB 10), which provided a stipend payment to certain retirees and variable ad hoc cost-of-living adjustments (COLA) to certain retirees in early fiscal year 2025. Due to its timing, the legislation and payments were not reflected in the August 31, 2023 actuarial valuation. Under the roll forward method, an adjustment was made to reflect the legislation in the rolled forward liabilities for the current measurement year, August 31, 2025. SB 10 and House Joint Resolution 2 (HJR 2) of the 88th Regular Legislative Session appropriated payments of $1.645 billion for one-time stipends and $3.355 billion for COLAs. This appropriation is treated as a supplemental contribution and included in other additions. Since the Legislature appropriated funds for this one-time stipend and COLA, there was no impact on the Net Pension Liability of TRS.

2. Changes of Assumptions

Changes to the actuarial assumption or other inputs that affected measurement of the total OPEB liability since the prior measurement period were as follows:

Since the last valuation was prepared for this plan, demographic assumptions (including the mortality projection scale for all State Agency members; base mortality for Judges; assumed rates of retirement for certain members who are Regular Class, Elected Class or Certified Peace Officers/Custodial Officers (CPO/CO); assumed rates of termination for certain members who are Regular Class, Judges or Certified Peace Officers/Custodial Officers (CPO/CO); and assumed rates of disability for all State Agency members) have been updated to reflect assumptions recently adopted by the ERS Trustees.

These new assumptions were adopted to reflect an experience study on the ERS retirement plan performed by the ERS retirement plan actuary.

In addition, assumed Per Capita Health Benefit Costs and assumed Health Benefit Cost and Retiree Contribution trends have been updated to reflect recent experience and its effects on short-term expectations. In addition,

• the percentage of future retirees assumed to be married and electing coverage for their spouse,
• proportion of future retirees assumed to elect health coverage at retirement and the proportion of future retirees expected to receive the Opt-Out Credit at retirement, and
• the Patient-Centered Outcomes Research Institute fee payable under the Affordable Care Act and the rate of future increases in the fee have been updated to reflect recent plan experience and expected trends.

Lastly, the discount rate was changed from 3.81% as of August 31, 2023 to 3.87% as of August 31, 2024 as a result of requirements by GASB No. 74 to utilize the yield or index rate for 20-year, tax-exempt general obligation municipal bonds rated AA/Aa (or equivalent) or higher in effect on the measurement date. Actuarial assumption changes are described in ERS’s Annual Comprehensive Financial Report and the ERS Actuarial Valuation Report for the year ended August 31, 2024, which can be accessed at https://ers.texas.gov/about-ers/reports-and-studies/gasb-requirements.

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Supplementary Schedules

Schedule A — Schedule of Operating Revenues

*In accordance with Education Code 56.033, $259,739 and $399,376 for years August 31, 2025 and 2024, respectively, of tuition was set aside for Texas Public Education grants (TPEG).

Schedule B — Schedule of Operating Expenses by Object

Schedule C — Schedule of Non-Operating Revenues and Expenses

^aThis line label is printed truncated in the source document ("Small Institution, Article IX and Supplement") — transcribed exactly as it appears on the page image.

Schedule D — Schedule of Net Position by Source and Availability

^bThis line label is printed truncated in the source document ("Prior Period Adjustment - Change in ac") — transcribed exactly as it appears on the page image.

Schedule E — Schedule of Expenditures of Federal Awards

Notes to schedule on following page.

Note 1: Federal Assistance Reconciliation

Note 2: Significant Accounting Policies Used in Preparing the Schedule

The expenditures included in the schedule are reported for the College’s fiscal year. Expenditure reports to funding agencies are prepared on the award period basis. The expenditures reported above represent funds, which have been expended by the College for the purposes of the award. The expenditures reported above may not have been reimbursed by the funding agencies as of the end of the year. Some amounts reported in the schedule may differ from amounts used in the preparation of the financial statements. Separate accounts are maintained for the different awards to aid in the observance of limitations and restrictions imposed by the funding agencies. The College has followed all applicable guidelines issued by various entities in the preparation of the schedule.

Note 3: Expenditures Not Subject to Federal Single Audit

None

Note 4: Student Loans Processed and Administrative Costs Recovered – Not Included in Schedule

None

Note 5: Nonmonetary Federal Assistance Received

None

Note 6: Amounts Passed Through by the College

The following amounts were passed through to the listed sub-recipients by the College.

Schedule F — Schedule of Expenditures of State Awards

Note 1: State Assistance Reconciliation

Note 2: Significant Accounting Policies Used in Preparing the Schedule

The accompanying schedule is presented using the accrual basis. See Notes to the financial statements for Temple College’s significant accounting policies. These expenditures are reported on Temple College’s fiscal year. Expenditure reports to funding agencies are prepared on the award period basis.

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Auditors' Report on Controls and Compliance

LOTT, VERNON & COMPANY, P.C. — CERTIFIED PUBLIC ACCOUNTANTS
Killeen • Copperas Cove • Temple
20 South Fourth Street • Post Office Box 160 • Temple, Texas 76503
254/778/4783 • 800/460/4783 • Fax 254/778/4792
Member of American Institute & Texas Society of Certified Public Accountants

Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

Board of Trustees
Temple College
Temple, Texas

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements, as listed in table of contents, of Temple College (the “College”), as of and for the years ended August 31, 2025 and 2024, and the related notes to the financial statements, which collectively comprise the College’s basic financial statements, and have issued our report thereon dated March 23, 2026.

Report on Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the College’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the College’s internal control. Accordingly, we do not express an opinion on the effectiveness of the College’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the College’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.

Report on Compliance and Other Matters

As part of obtaining reasonable assurance about whether the College’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, including the Public Funds Investment Act (Chapter 2256, Texas Government Code), noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards or the Public Funds Investment Act (Chapter 2256, Texas Government Code).

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the College’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the College’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Lott, Vernon & Co., P.C.
Temple, Texas
March 23, 2026

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Report on Compliance for Each Major Program

LOTT, VERNON & COMPANY, P.C. — CERTIFIED PUBLIC ACCOUNTANTS
Killeen • Copperas Cove • Temple
20 South Fourth Street • Post Office Box 160 • Temple, Texas 76503
254/778/4783 • 800/460/4783 • Fax 254/778/4792
Member of American Institute & Texas Society of Certified Public Accountants

Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance and the State of Texas Single Audit Circular

Board of Trustees
Temple College
Temple, Texas

Report on Compliance for Each Major Federal and State Program

Opinion on Each Major Federal and State Program

We have audited Temple College’s (the College) compliance with the types of compliance requirements described in the OMB Compliance Supplement and The State of Texas Single Audit Circular that could have a direct and material effect on each of its major federal and state programs for the year ended August 31, 2025. The College’s major federal programs are identified in the summary of auditor’s results section of the accompanying Schedule of Findings and Questioned Costs.

In our opinion, the College complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal and state programs for the year ended August 31, 2025.

Basis for Opinion on Each Major Federal and State Program

We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and The State of Texas Single Audit Circular. Our responsibilities under those standards and the Uniform Guidance and the State of Texas Single Audit Circular are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.

We are required to be independent of the College and to meet our other ethical responsibilities, in accordance with 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 opinion on compliance for each major federal and state program. Our audit does not provide a legal determination of the College’s compliance with the compliance requirements referred to above.

Responsibilities of Management for Compliance

Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the College’s federal and state programs.

Auditor’s Responsibilities for the Audit of Compliance

Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the College’s compliance based on our audit. 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 generally accepted auditing standards, Government Auditing Standards, the Uniform Guidance and The State of Texas Single Audit Circular will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the College’s compliance with the requirements of each major federal and state program as a whole.

In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards, Uniform Guidance, and The State of Texas Single Audit Circular, we:

• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material noncompliance, 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 College’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.
• Obtain an understanding of the College’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance and the State of Texas Single Audit Circular, but not for the purpose of expressing an opinion on the effectiveness of the College’s internal control over compliance. Accordingly, no such opinion is expressed.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.

Report on Internal Control Over Compliance

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal and state program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal and state program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal and state program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance and The State of Texas Single Audit Circular. Accordingly, this report is not suitable for any other purpose.

Lott, Vernon & Co., P.C.
Temple, Texas
March 23, 2026

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Schedule of Findings and Questioned Costs

August 31, 2025

I. Summary of Audit Results

7. Identification of Major Programs

II. Financial Statement Findings

None.

III. Federal and State Awards Findings and Questioned Costs

None.

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