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1/7/2020
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Auditor General releases annual audit of the State of Rhode Island’s financial statements
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STATE HOUSE – The State of Rhode Island’s Budget Reserve and Cash Stabilization or “Rainy Day” fund was fully funded in compliance with the General Laws and had a balance of $203.9 million at June 30, 2019, while $96.9 million was available in the RI Capital Plan Fund for future capital projects.
General Fund revenues and other sources exceeded expenditures and transfers by $8.5 million for fiscal 2019. 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, 2019, which included these fiscal 2019 operating results.
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 the funds and accounts of the state for the fiscal year ended June 30, 2019, including quasi-public entities considered to be component units for financial reporting purposes (e.g., URI, RIC, CCRI, RI Resource Recovery, and RI Commerce Corporation). 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.
Fund balance of the state’s General Fund totaled $371 million at June 30, 2019, of which $25.5 million has been appropriated in support of the fiscal 2020 budget and $5.0 million is available for future appropriation. 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 $397.3 million, an increase of $32.3 million compared to fiscal 2018. General Fund expenditures totaled $7.2 billion, of which the human services and education categories totaled $4.0 billion and $1.6 billion, respectively. Federal grant revenue, within the General Fund, totaled $2.8 billion, an increase of $82.1 million over fiscal 2018.
For fiscal 2019, government-wide net position (deficit) of the primary government increased by $102.4 million thereby reducing the net deficit to ($265.5) million at June 30, 2019. This amount includes governmental and business-type activities (Lottery, Convention Center, and Employment Security) but excludes discretely presented component units.
Capital assets of the primary government, net of accumulated depreciation, totaled $4.6 billion at June 30, 2019 - $2.3 billion were infrastructure assets.
Long-term liabilities, including bonds payable and net pension and OPEB (retiree healthcare) liabilities of the primary government, totaled $7.5 billion.
Net pension liabilities included in the 2019 financial statements (governmental activities) totaled $3.6 billion at the June 30, 2018 measurement date. This amount is the combined liability for six defined benefit plans covering state employees and the state’s proportionate share of the net pension liability for teachers — $1.4 billion.
Five defined benefit plans (covering state employees) are managed as trusts by the Employees’ Retirement System of RI (ERSRI) - the pension liability is net of plan fiduciary net position accumulated for future benefits (fair value at the June 30, 2018 measurement date). An additional plan covering certain judges is managed as a pay-as-you-go plan — no amounts have been accumulated for future benefits — annual benefit payments are appropriated each year. The net pension liability included in the financial statements is the accounting measure of pension liabilities which differs from measurements used to determine the actuarially determined annual contributions to each plan.
Plan fiduciary net position as a percentage of the total pension liability for the plans managed by ERSRI at the June 30, 2018, measurement date follows:
ERS – State employees 52.5%
ERS – Teachers 54.3%
SPRBT - State Police 83.6%
SPRFT – State Police 8.9%
JRBT – Judges 92.8%
RIJRFT – Judges 4.2%
Fiscal 2019 State employer contributions to the defined benefit pension plans totaled $300.6 million, including $102.2 million as the state’s share for teachers.
Assets of the defined contribution plan, part of the hybrid pension benefit structure, totaled $1 billion at June 30, 2019.
The net OPEB liability included in the 2019 financial statements totaled $500.6 million at the June 30, 2018 measurement date. Six defined benefit Other Post-Employment Benefit (OPEB) plans provide healthcare benefits to retired state employees including certain electing teachers and Board of Education employees. State employer contributions to the OPEB plans totaled $50.3 million.
Plan fiduciary net position as a percentage of the total OPEB liability at the June 30, 2018, measurement date follows:
State employees 26.3%
Teachers 95.6%
State Police 53.2%
Judicial 341.0%
Legislators 190.9%
Board of Education 38.6%
The fiscal 2019 CAFR includes the Government Finance Officers Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting awarded for the 2018 CAFR. This award reflects the state’s continued commitment to ensuring audited financial information, which meets generally accepted accounting principles and 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 website of the Office of Accounts and Control, Department of Administration. A link to the report is provided below:
http://controller.admin.ri.gov/documents/Financial%20Reports//121_Comprehensive%20Annual%20Financial%20Report_06-30-2019.pdf
The Auditor General’s website includes a Comprehensive Annual Financial Report – Highlights document that summarizes key State financial operating results for fiscal 2019. A link to the CAFR — highlights is provided below:
http://www.oag.ri.gov/reports/CAFR_RI_2019_Summary.pdf
For more information, contact:
Dennis E. Hoyle, CPA, Auditor General
Office of the Auditor General
Providence, RI 02903
401.222.2435 ext. 3038
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