NEW: State Ended Fiscal Year with Big Surplus
Wednesday, January 11, 2012
The Office of the Auditor General has completed its annual audit of the State of Rhode Island’s financial statements for the fiscal year ended June 30, 2011. General Fund revenues and other sources exceeded expenditures and other uses by $85 million for fiscal 2011. The Budget Reserve and Cash Stabilization or “Rainy Day” Account was fully funded in compliance with the General Laws and had a balance of $130.3 million at June 30, 2011.
The Independent Auditor’s Report, prepared by Acting Auditor General Dennis E. Hoyle and included in the State’s Comprehensive Annual Financial Report (CAFR), is unqualified indicating that the financial statements present fairly the financial position and changes in financial position of the State of Rhode Island in conformity with accounting principles generally accepted in the United States of America. The annual audit of the State’s financial statements is required by the State’s General Laws. The Independent Auditor’s Report is directed to the Finance Committee of the House of Representatives and the Joint Committee on Legislative Services – those vested with official oversight of the annual audit.
The CAFR is prepared by the State’s Office of Accounts and Control - Department of Administration and includes financial information on all the funds and accounts of the State for the fiscal year ended June 30, 2011, including component units that are legally separate but considered part of State government. It also includes comprehensive government-wide financial statements, which are intended to present the changes in the State’s net assets inclusive of the State’s capital assets and other long-term assets and liabilities.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTThe CAFR and the annual audit were completed at the end of December - one of the earliest dates that such information has been available in recent years. This reflects a continuous effort by the Office of the Auditor General and the Department of Administration to improve the timeliness of audited financial information for the State.
Total net assets of the State increased by $140.5 million for fiscal 2011. This amount includes governmental and business-type activities (Lottery, Convention Center, and Employment Security) but excludes discretely presented component units. At June 30, 2011, capital assets net of accumulated depreciation totaled $3.3 billion and long-term liabilities, including bonds payable, totaled $3.4 billion.
Fund balance of the State’s general fund totaled $271 million at June 30, 2011 of which $64.2 million was available for appropriation in fiscal 2012. Remaining fund balance amounts are generally restricted for specific purposes. The primary sources of general fund revenue were taxes (42%) and federal grants (41%).
The Employment Security fund continued to incur significant expenses for unemployment benefits which totaled $646 million for fiscal 2011. This necessitated continued borrowing from the federal government to fund these benefits and caused a deficit in the fund of $153 million at June 30, 2011.
The financial statements also detail the State’s progress in meeting future pension and other postemployment benefit (OPEB) obligations. Net assets in the pension and OPEB trusts totaled $7.5 billion at June 30, 2011. The Employees’ Retirement System’s net assets increased by $912 million for the fiscal year primarily due to net income from investing activities. The State created a trust in fiscal 2011 for its OPEB or retiree health programs covering most state employees, participating teachers, and certain employees of the Board of Governors for Higher Education. First year OPEB trust operations resulted in net assets of $15 million which are available for the payment of future benefits.
The pension plan covering state employees and teachers was 61% funded based on a restated June 30, 2010 actuarial valuation, which reflects pension reforms enacted in November 2011. The State’s unfunded liability for retiree health benefits for state employees is reported at $775 million based on an actuarial valuation performed as of June 30, 2009.
The State disclosed contingencies related to a lawsuit filed by unions representing state employees and teachers challenging pension reform measures enacted in 2009 and 2010. Further legal challenges are likely for pension reform measures recently enacted in November 2011.
Other communications resulting from the annual audit will follow separately. These include findings and recommendations related to the State’s controls over financial reporting and the Single Audit Report which focuses on the State’s compliance with federal requirements related to more than $5 billion of federal assistance. The Single Audit Report is required by federal law and is provided to federal funding agencies as a condition of continued federal assistance.
