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, 2014. General Fund expenditures and other uses exceeded revenues and other sources by $5.8 million for fiscal 2014. The Budget Reserve and Cash Stabilization or “Rainy Day” account was fully funded in compliance with the General Laws and had a balance of $177 million at June 30, 2014.
The Independent Auditor’s Report, prepared by Auditor General Dennis E. Hoyle and included in the State’s Comprehensive Annual Financial Report (CAFR), is unmodified, 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, 2014, including quasi-public entities considered to be component units for financial reporting purposes (e.g., URI, RIC, CCRI, RI Resource Recovery, and RI Housing). It also includes comprehensive government-wide financial statements, which are intended to present the changes in the State’s net position inclusive of the State’s capital assets and other long-term assets, liabilities, and deferred inflows and outflows.
Net position of the State (primary government) increased by $291 million for fiscal 2014. This amount includes governmental and business-type activities (Lottery, Convention Center, and Employment Security) but excludes discretely presented component units. At June 30, 2014, capital assets net of accumulated depreciation totaled $3.8 billion and long-term liabilities, including bonds payable, totaled $3.1 billion.
Fund balance of the State’s General Fund totaled $395 million at June 30, 2014 of which $68 million was appropriated or available for appropriation in fiscal 2015. Remaining fund balance amounts are generally restricted for specific purposes. The primary sources of General Fund revenue and other sources were taxes (44%) and federal grants (39%). Transfers from the Rhode Island Lottery totaled $376 million, a decrease of $3 million compared to fiscal 2013. General Fund expenditures totaled $5.9 billion of which the human services and education categories totaled $3.3 billion and $1.4 billion, respectively. Federal grant revenue, within the General Fund, totaled $2.35 billion, an increase of $216 million or 10% over fiscal 2013 largely due to Medicaid expansion under the Affordable Care Act and reimbursement ofHealthSource RI expenditures. Actual general revenues exceeded estimates by $14.2 million, requiring a transfer of such amounts to the retirement system in fiscal 2015.
The financial position of the Employment Security (ES) Fund improved through reduced unemployment benefit expenses and increases in tax revenues and assessments on employers. This allowed repayment of amounts previously borrowed from the federal government to fund benefits. Subsequent to June 30, 2014, the amount owed to the federal government was fully repaid.
At June 30, 2014, fiduciary net position available for pension and OPEB benefits totaled $8.6 billion, an increase of $860 million over 2013. Fiduciary net position available for pension benefits totaled $8.5 billion at June 30, 2014 of which $277 million had accumulated within the new defined contribution plan created by the November 2011 enacted pension reforms. At June 30, 2014, fiduciary net position of $110 million was available for retiree health benefits.
The Employees’ Retirement System covering state employees and teachers was 58.7% funded based on a June 30, 2014 actuarial valuation while the State Police plan was 95.6% funded. Two judicial plans, one covering judges appointed after December 31, 1989 and the other covering active judges appointed before January 1, 1990, were 94.0% and 1% funded, respectively, as of the June 30, 2014 and June 30, 2013 actuarial valuations. The State disclosed contingencies related to lawsuits challenging recent pension reform measures.
The fiscal 2014 CAFR includes the Government Finance Officers Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting awarded for the 2013 CAFR. This award reflects the State’s continued commitment to ensuring audited financial information, which meets generally accepted accounting principles as well as all the required elements of a comprehensive governmental financial report, is available on a timely basis.
Other communications resulting from the annual audit will 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 requirements related to federal assistance expenditures. The Single Audit Report is required by federal law and is provided to federal funding agencies as a condition of continued federal assistance.
The State’s CAFR is available on the State of Rhode Island’s website – Office of Accounts and Control – Department of Administration – http://controller.admin.ri.gov/index.php as well as the Office of the Auditor General’s website www.oag.ri.gov.
The Auditor General’s website includes a Comprehensive Annual Financial Report – Highlights document that summarizes key State financial operating results for fiscal 2014.