STATE OF CONNECTICUT
NANCY WYMAN COMPTROLLER	OFFICE OF THE STATE COMPTROLLER 55 ELM STREET HARTFORD, CONNECTICUT 06106-1775	MARK OJAKIAN DEPUTY COMPTROLLER

January 9, 1998

To the Citizens of the State of Connecticut:

I am pleased to present this Comprehensive Annual Financial Report (CAFR) of the State of Connecticut for the fiscal year ended June 30, 1997.

This report was prepared in its entirety by this office and we take full responsibility for the accuracy of the data and the completeness and fairness of the presentation of the financial statements, supporting schedules, and statistical tables in it.

The CAFR is designed to be in conformance with generally accepted accounting principles (GAAP) for governmental units as promulgated by the Governmental Accounting Standards Board (GASB) as well as the reporting requirements prescribed by the Government Finance Officers Association and the American Institute of Certified Public Accountants. We believe that this report presents fairly the financial position of the state and the results of its operations as measured by the financial activity of its various funds. The report is consistent with full disclosure so that the reader may gain maximum understanding of the state's financial affairs. The report is presented in three sections:

The Introductory Section contains this transmittal letter, a list of the state's principal elected, appointed and administrative officials, an organizational chart of the state government, and a table of contents.

 

The Financial Section contains the Auditors of Public Accounts' report, the general purpose financial statements which include the notes to the financial statements, and the combining and individual fund and account group financial statements.

 

The Statistical Section contains comprehensive statistical data and selected financial and demographic information on a multi-year basis.

THE REPORTING ENTITY

Connecticut, a state of approximately 3.3 million people in an area of 5,009 square miles, has a developed infrastructure, technologically advanced industrial base and a strong insurance and financial services industry. The State of Connecticut ratified the Constitution of the United States on January 9, 1788. It has a legislative - executive - judicial form of government with a bicameral legislature (36 Senators, 151 Representatives). The Governor, Lieutenant Governor, Secretary of State, Treasurer, Comptroller, and Attorney General are independently elected for four-year terms. Senators and Representatives are elected for two-year terms.

The state provides a broad range of services including public safety, state highways and other transportation services, state parks, social services, higher education, health services, economic development, and regulatory responsibilities.

This report includes all the funds and account groups of the state as well as all of its component units. Component units are legally separate entities for which the primary government is financially accountable. Blended component units, although legally separate entities, are, in substance, part of the primary government's operations and are included as part of the primary government. Accordingly, the Connecticut Lottery Corporation is reported as an enterprise fund of the primary government. Discretely presented component units are reported in a separate column in the combined financial statements to emphasize that they are legally separate from the primary government. These would include the Connecticut Development Authority, Connecticut Housing Finance Authority, Connecticut Resources Recovery Authority, Connecticut Higher Education Supplemental Loan Authority, Connecticut Health and Educational Facilities Authority, and Connecticut Innovations, Incorporated.

STATE INITIATIVES

• WELFARE REFORM

  In August 1996, federal welfare reform was signed into law. The federal reforms radically changed eligibility standards and federal funding for the public support program formerly known as Aid to Families with Dependent Children (AFDC). Seven months earlier, however, Connecticut had already passed its own version of welfare reform called Jobs First. The federal reform placed a 60 month lifetime benefit limit on cash assistance. Connecticut's program uses a shorter 21 month benefit limit, although extensions may be granted in six-month increments if recipients have made a "good faith" effort to find work. Jobs First provides an additional work incentive that permits families to keep earnings up to the federal poverty level ($13,330 for a family of three) with no reduction in benefit payments.

  During the 1997 state fiscal year, the welfare caseload dropped by 3,142 recipients -- to a total caseload of 52,875. In addition, the percentage of recipients reporting job earnings rose during the 1997 fiscal year from 25.4 percent to 45.2 percent. Unfortunately, it is difficult to determine the proportion of the caseload decline that is attributable to a strong economy as opposed to the welfare reform program. Changes in welfare caseloads have historically shown a strong correlation to economic conditions. For example, during the state's economic recession of the early 1990s, there was a 46 percent increase in the AFDC caseload. By contrast, the caseload has traditionally declined in good economic times.

  Under the federal reform, a 50 percent reimbursement to the state for AFDC expenditures was replaced by a $266.8 million federal block grant. The combination of declining caseloads and additional available federal funding has given the state the opportunity to reduce state spending for welfare while expanding spending for transitional support and safety net programs. The success of welfare reform over time will be closely monitored.

• TAX RELIEF

  A policy of reducing the overall state tax burden on Connecticut's citizens and businesses has significantly influenced budget deliberations over the past several years. The state's personal income, sales and corporation taxes are the three largest sources of General Fund operating revenue, amounting to over 60 percent of total revenue. These three tax sources have also been targeted for the largest tax cuts.

  In 1993, the state passed legislation to lower the corporate tax rate, which had reached the highest level in the nation. The rate is scheduled to phase down from a January 1, 1996 level of 10.75 percent to 7.5 percent by January 1, 2000. The state's personal income tax was introduced in 1991 with a rate of 4.5 percent on Connecticut adjusted gross income. Beginning in 1995, a series of personal income tax reductions have reduced the base rate to 3 percent on a portion of income (dependent on filing status), provided a property tax credit that will phase up from $100 in 1996 to $285 in 1998, and provided a level of exemption on social security income. The sales tax with a present rate of 6 percent has been reduced through the exemption of various goods and services.

  In addition, other less significant taxes have been reduced, including the gasoline tax, which will phase down from $0.39 per gallon to $0.33 per gallon by July 1, 1998. The net budgetary impact of tax cuts and other related revenue changes represent a reduction of almost $300 million in the revenue base from Fiscal Year 1997 to Fiscal Year 1998. The revenue loss to the Fiscal Year 1997 base will phase up to a cumulative total of approximately $650 million by Fiscal Year 2002.

• EXPANDING HEALTH INSURANCE FOR CHILDREN

  In recent years, Connecticut legislators, policy makers, and community groups have been alarmed by the growing number of uninsured state residents. The Census Bureau estimates there were 368,000 uninsured in Connecticut in 1996, including about 88,000 children. In response to this problem, the State Comptroller convened a task force to recommend possible solutions. The State Comptroller not only brings a financial perspective to health policy issues but also administers a health plan that covers 166,000 state employees, retirees and their dependents. The task force -- the Work Group for Health Care Access -- had a diverse membership that included state legislators and legislative staff, the State Comptroller, representatives of Connecticut hospitals, physicians, health maintenance organizations, insurance companies, the business community, and advocates for the uninsured. The Work Group issued its final report in January 1997.

  One of the Work Group's consensus recommendations was to expand Medicaid to cover as many of Connecticut's uninsured children as possible. Another was to enhance outreach efforts to reach the estimated 37,000 uninsured children who are currently eligible but not enrolled in the Medicaid program. During the 1997 legislative session, a modest Medicaid expansion was enacted, making the program available to an additional 8,600 children.

  The Federal Balanced Budget Act of 1997 included new funding for health coverage under the State Children's Health Insurance Program (SCHIP). Under the SCHIP provision, states have the option of expanding Medicaid coverage for children or creating new programs within certain federal guidelines under Title XXI of the Social Security Act. Connecticut used this opportunity to create a new health insurance program called the HUSKY Plan -- Healthcare for UninSured Kids and Youth -- which was passed during an October 1997 Special Legislative Session and signed into law by the Governor. The program will be financed with state dollars (35 percent) and enhanced Federal matching funds (65 percent).

  The HUSKY Plan will provide subsidized coverage -- cost sharing on a sliding scale -- for uninsured children who live in families that earn between 186 percent to 300 percent of the Federal Poverty Level (FPL). Families above 300 percent of the FPL can enroll children into the HUSKY program, but must pay the full cost. In addition, all children in families at or below 185 percent of the FPL will now be eligible for Medicaid coverage. Pending the plan's approval by the Health Care Financing Administration, HUSKY is scheduled to begin operating in April 1998. Outreach and marketing for HUSKY will be coordinated with Medicaid and feature a single point-of-entry system for both programs. When fully implemented, the two programs -- Medicaid and HUSKY -- will have the potential to reach every uninsured child in Connecticut.

OPERATING RESULTS

The fiscal year 1996-97 saw the deterioration of the state's financial condition slowed substantially, but we have not yet reached the point of turnaround.

• While the operating deficit is the lowest in both absolute terms and as a percent of tax revenue in the last five years at $95 million, this is the tenth year in a row of operating deficits highlighting the state's continual reliance on debt-financing.
• Long-term obligations increased $357 million, which will have to be financed by future generations.
• Debt service, excluding the debt service on the state's Economic Recovery Notes, was 9.1% of governmental operating expenditures, an increase from 8.0% in the prior year. In absolute terms, such expenditures increased 10%.
• Net debt per capita, also exclusive of the Economic Recovery Notes, rose to $2,774 more than double that of fiscal 1990.
• Government expenditures showed a slight decrease from 11% to 10% of total personal income in the state when compared to the prior fiscal year. The decrease in expenditures can be attributed to the transfer out of the lottery operations from governmental funds into enterprise funds due to the creation of the Connecticut Lottery Corporation, a blended component unit. This resulted in a subsequent reduction of revenues and expenditures of $770 million and $517 million respectively.

In the ten years since 1988, governmental expenditures have increased 84% while personal income increased only 51%.

* Includes general, special revenue and debt service funds. Operating expenditures also include higher education expenditures which are treated as an operating transfer out in the general fund.

Uncontrollable and fixed costs continued to consume a large share of the state's spending. Debt service, exclusive of the Economic Recovery Notes, increased to 9.1% of total governmental expenditures. Total debt service, including the Economic Recovery Notes, decreased to 9.9% of governmental expenditures, still almost two times the ratio of fiscal year 1990. Medicaid spending rose slightly in fiscal year 1997 to $1.96 billion, however, it still remains at almost one-fifth of total General Fund spending. The net state share of Medicaid, after adjusting for the 50% share of federal reimbursements, was $300 for every man, woman, and child in Connecticut.

Deficit financing for operating purposes continued in fiscal year 1997. Deficits of $341 million were incurred in the Grant and Loan Programs and the Housing Programs special revenue funds in fiscal year 1997. This represents 26% of total special revenue funds spending. Debt financing for these and other special revenue programs was $429 million, which is a little over one half of our spending on legitimate capital needs for state facilities and infrastructure.

As a result, debt per capita, exclusive of the Economic Recovery Notes, increased to $2,774 - over twice what it was in fiscal year 1990. The remaining Economic Recovery Notes constitute an additional $48 of debt per capita.

General Fund

Fiscal year 1997 saw the state again end the year with a general fund operating surplus, the second year in a row, with revenues growing faster than expenditures.

Tax revenues increased 3% while intergovernmental revenues (grants, etc.) decreased 2%. All expenditure categories increased except for education and other.

As shown above, except for taxes, the net increase of other sources of revenues is relatively minor. A further analysis of the tax revenues shows that with the exception of the personal income tax and the sales and use tax, tax revenues continue to be fairly stagnant, increasing marginally or even decreasing. Revenue from the personal income tax increased by $193 million, an increase of approximately 7.4% while the sales and use tax increased $154 million or an increase of 6.3%.

The largest increases in General Fund expenditures were Health and Hospitals, Human Services and Corrections, two of which are being driven by outside factors such as mandated Medicaid expenditures and rising prison populations.

As previously discussed, Corrections and Judicial expenditures have continued to expand in step with crime and the increasing correction facility population. As of December 31, 1996 Correction facility population was 15,007, an increase of 38% from 1993.

Special Revenue Funds

Special revenue funds continue to be heavily debt-financed, suggesting that we are burdening future generations of taxpayers with the cost of current programs. Grant and loan programs and housing programs have shown operating deficits for the last five years. To the extent that loan programs result in receivables that can be counted on to mature in time to service the related debt, a case may be made that the economic benefits accrue to current and future taxpayers. Financing grants with debt, however, should be undertaken sparingly and in unusual circumstances.

The deficits primarily arose in the Grant and Loan Programs Fund and the Housing Programs Fund. The Grant and Loan Fund expended $310 million in fiscal year 1997 supported by revenues of only $11 million. Bond proceeds of $324 million financed the balance. The Housing Programs Fund expended $46 million in fiscal year 1997. Like the Grant and Loan Programs Fund, the balance was financed by $35 million of bond proceeds, and $4 million of revenues and additional fund balance resources.

Other major special revenue funds include the Transportation Fund, which is generally self-supporting. Expenditures and transfers of $902 million were supported by revenues and transfers of $949 million in fiscal year 1997. The fund balance of the Transportation Fund was $138 million or 15% of expenditures and transfers.

The Employment Security Administration Fund expended $107 million on administration of the unemployment compensation program, supported by a like amount of federal financial assistance.

The Environmental Programs Fund also required debt financing. Expenditures and transfers of $66 million were supported by $33 million of revenues and transfers, along with bond proceeds of $28 million and additional fund balance resources.

Capital Projects Funds

Capital spending has averaged over 800 million for the past five years with most of that spending directed toward infrastructure projects. Approximately 60% of infrastructure expenditures were financed by federal aid and the balance by state debt. Unlike the deficit financing of certain special revenue funds, the debt used to finance capital construction will provide a tangible benefit to the future generation of taxpayers who will use the asset for which they will pay the debt service. In addition, these infrastructure investments improve the economic climate of the state both immediately and for many years to come.

Expendable Trust Funds

The Employment Security Fund continues to have a growing fund balance with expenditures (unemployment compensation claims) the lowest in five years.

Pension Trust Funds

The operations of the pension trust funds showed slow growth for 1997. The State Employees' Retirement System (SERS), by far the largest pension fund for state employees (the Teachers' Retirement System primarily serves municipal employees), funded status increased to 55.2% as of fiscal year 1997 as compared to 51.4% as of fiscal year 1993. The Teachers' Retirement System (TRS) funded status increased from 66.6% to 69.1%, and the Judicial Retirement System (JRS) from 39.8% to 48.2% respectively.

Enterprise Funds

Two major changes to the enterprise funds combined financial statements occurred in fiscal year 1997. The Connecticut Lottery Corporation was created by the legislature as a public instrumentality and political subdivision of the state and was, accordingly, added to the enterprise fund category. Secondly, the John Dempsey Hospital Fund was reclassified out of the higher education funds group after it was determined that the fund was better suited to enterprise fund type accounting. The Connecticut Lottery Corporation provided substantial support to the General Fund with revenues of $770 million providing $252 million to the General Fund after prizes and expenses of $517 million.

Higher Education

Expenditures showed a modest growth of 3% in fiscal year 1997, with increasing state support. Total revenues increased 3% over fiscal year 1996.

Debt Administration

State general obligation bonds are rated Aa3, AA-, and AA by Moody's, Standard and Poor's, and Fitch Investors Service, respectively, while transportation-related special tax obligation bonds are currently rated A1, AA-, and AA-, respectively.

The state issued approximately $.9 billion of bonds in fiscal year 1997, a decrease from the past two fiscal years. To the extent this bonding is for infrastructure or other assets benefiting future taxpayers, the debt is fully justifiable. The continued increase in the debt burden, however, particularly that portion that is used to finance current programs, bodes ill for the future. It means that future generations will pay for the sins of the past. And it means that the state will have reduced flexibility in future budgets, which will now be burdened by higher fixed costs for debt service.

Debt service as a percent of government operations, excluding debt service on the Economic Recovery Notes, has increased to 9.1% as compared to 7.3% from only five years ago.

Net state debt increased almost 3% to $9.2 billion from $9 billion in fiscal year 1996. Net State debt has more than doubled since fiscal year 1990.

Debt per capita has more than doubled to $2,774 from $1,204 in fiscal year 1990. Bonded debt is the primary focus of most analyses but it is only half the amount of incurred long-term obligations that will need to be paid by future generations of taxpayers. Long-term obligations also include capital leases; compensated absences that were earned by employees in past periods but which will be paid by future generations; workers' compensation claims, which arose from past events but will be settled in future periods; and the unfunded actuarial accrued liability, which represents the value of pension benefits earned by employees but which is not funded currently. The total of these obligations increased $357 million in fiscal year 1997.

*Exclusive of Economic Recovery Notes.

Internal Controls

Elected officials, agency commissioners, directors of public benefit corporations and agency managers are responsible for establishing internal control structures. Good internal controls are essential to achieving the proper conduct of government business with full accountability. This means that:

• resource use is consistent with laws, regulations and policies;
• resources are safeguarded against waste, loss and misuse; and
• reliable data are obtained, maintained and fairly disclosed in reports.

Good internal controls also facilitate the achievement of management objectives. In achieving these goals, good internal controls must strike a balance, providing reasonable, not absolute assurance. This recognizes that costs should not exceed benefits, nor should controls negatively impact operations.

Good internal control is comprised of the following elements:

• Control Environment - which reflects the overall attitude, awareness, and actions of elected officials or agency managers concerning the importance of control and its emphasis in state government (i.e. What is the tone at the top?)
• Accounting System - which consists of the methods and records established to identify, assemble, analyze, classify, record, and report transactions and to maintain accountability over state resources.
• Control Procedures - which includes those procedures that elected officials and management have established to provide reasonable assurance that specific objectives are being achieved.

This office has been making consistent efforts to improve the overall internal control in state government and simultaneously to give managers authority commensurate with their responsibilities.

Budgetary Controls

The key control mechanism of government finance is the budget. The Government Accounting Standards Board (GASB) has concluded that, "The budgetary process, including comparison of the approved budget with actual experience, is... a major aspect of accountability." The budget is more than just an aspect of accountability, however, it is also:

• An expression of public policy that identifies that activity or program to be carried out, the amounts that may be expended for these purposes, and the time period in which these are to occur.
• A financial plan, or expression of financial intent. For example, what are the expected sources of financing for these programs - who bears the burden of paying for them?
• A form of control usually having the force of law.

Budget control is maintained at the individual appropriation account level by agency as established in authorized bills. Control over the obligation is exercised by the allotment process. Funds, both for budgeted and non-budgeted funds, are allotted by the Governor through the Office of Policy and Management. The Governor is further allowed to modify the allotments up to 3% of the fund or 5% of the appropriation amount. Modifications beyond those limits, but not in excess of 5% of the total funds, require the approval of the Finance Advisory Committee, which is comprised of the Governor, the Lieutenant Governor, the Treasurer, the Comptroller, two senate members, not of the same party, and three house members, not more than two of the same political party.

Cash and Investments Management

The State Treasurer continually monitors cash flow to maximize the utilization of cash resources. During the year, temporary balances are invested in short-term investment funds, combined investment pools consisting of various certificates of deposit, bankers' acceptances, commercial paper, repurchase agreements, and student loans with various ranges of maturities. The investment income and average yield rate for the fiscal year 1996-97 for these funds were approximately $145 million and 5.66%, respectively. By comparison, 90-day Treasury Bills and 90-day Certificates of Deposit earned 5.17% and 5.51%, respectively, during the same time period.

Bank balances at June 30, 1997, were $146 million of which about fortyfive percent was not insured or protected by collateral.

Risk Management

The state retains risk for certain property and liability claims, including workers' compensation. The State Insurance Purchasing Board serves as the focal point of risk management and insurance matters, maintaining a balance of commercially placed coverage and risk retention to provide optimal coverage at minimal cost.

ECONOMIC CONDITION AND OUTLOOK

Connecticut's economic recovery, which began slowly toward the end of 1992, is strengthening. Connecticut led the country in many economic performance measurements prior to a devastating recession that began in early 1989. The recession was more severe in Connecticut than in the nation as a whole. Throughout most of the present recovery, Connecticut has lagged behind the nation in economic growth; however, during 1997, Connecticut's economy has performed well and is showing a growth pattern that is consistent with the rest of the country.

EMPLOYMENT

• During the recession of the early 1990s, Connecticut lost 158,200 jobs. The largest total job loss occurred in the manufacturing sector, which has continued to lose jobs to date. Manufacturing's share of total state employment has dropped from 22.3 percent (386,138 jobs) in 1987 to 16.6 percent (276,681 jobs) at the end of 1996.
• Most of the loss in manufacturing employment resulted from reductions in federal defense spending. Connecticut's defense contract revenues dropped by 65 percent between 1985 and 1995.
• As of October 1997, Connecticut had recovered 101,900 jobs, or 64.4 percent of the total jobs lost during the recession. The strongest job gains occurred in the service sector. In 1987 employment in the service sector accounted for 24 percent (415,431 jobs) of Connecticut's total jobs. By the end of 1996, the percentage of service sector jobs had risen to 31.4 percent (521,667 jobs). The strongest service industry gains have been in recreational services and health care. The industries that have continued to lose jobs during the present recovery are manufacturing, and finance, insurance and real estate.
• Small business is fueling much of the state's job growth. Businesses with fewer than 100 employees have contributed over 60 percent of Connecticut's net job gain over the last 20 years, as compared with 50 percent nationally.
• Throughout most of the present recovery, Connecticut lagged behind the rest of the nation in job growth. However, during the first three-quarters of 1997, Connecticut's annual growth in non-farm payroll employment has been approximately 2 percent, a rate more consistent with the 2.4 percent national average.
• Connecticut's seasonally adjusted October 1997 unemployment rate of 4.7 percent (81,900 unemployed workers) is the same as the national unemployment rate. This represents a decrease from the 1996 state rate of 5.7 percent.
• The number of people employed in Connecticut as a percent of the state's total population is 64.1 percent, which is down from a 67.6 percent level five years ago. This reduction in the employed population is consistent with an aging labor force.

• Connecticut's per capita income for 1996 is $33,875, an increase of 4.7 percent from the previous year. Connecticut's per capita income is the highest among the fifty states. It is 38.7 percent higher than the 1996 nationwide per capita income of $24,426 and is 16.9 percent higher than the New England region figure of $28,989. However, to put these numbers in perspective, it should be noted that prices for goods and services in Connecticut are 22 percent higher than the national average.
• Real median household income in Connecticut for 1996 is $42,119, an increase of 1.6 percent from 1995. This places Connecticut 18.7 percent above the 1996 nationwide figure of $35,492. Over the past five years, real median household income in Connecticut has declined by 7.8 percent. The drop is largely due to job losses in higher paying industries being replaced with lower paying service sector jobs. For example, electronics manufacturing -- with an average annual 1996 wage and salary of $56,010 -- experienced a 44 percent employment decline between 1987 and 1996. During the same period, health services employment grew by 33 percent and had an average annual wage and salary of $34,765.
• There has been some upward pressure on wages through the first three-quarters of 1997. Average hourly manufacturing pay (an indicator of general wage levels) grew at an annual 4 percent rate in October of 1997. This follows three years with a 2 percent average annual growth in hourly earnings. As the state's labor force ages, less state income is derived from wages and salaries and more comes from transfer payments (social security, government pensions, welfare payments, and unemployment compensation). Approximately 58 percent of total state personal income came from wages and salaries in 1987. This number had declined to 54 percent by 1996. The amount of state personal income contributed by transfer payments rose during this same period from 10 percent to 13 percent.
• There is a high degree of income inequality in Connecticut. According to a recent study by The Center on Budget and Policy Priorities, Connecticut ranks fifth in the nation in income inequality. For the years 1994 through 1996, the average family income of the top twenty percent in Connecticut was 14.2 times higher than the bottom twenty percent. The top fifth had average income of $147,594 and the bottom fifth had income of $10,415. Nationally, the top fifth of families have income that is 12.7 times higher than the bottom fifth.

OTHER ECONOMIC INDICATORS AND PROJECTIONS

• Most significant indicators of present and future state economic activity are trending up.
• Housing permits and new business starts, both indicators of future state economic activity, are up from the third quarter of 1996 to the third quarter of 1997. Housing permits during the period rose 10.9 percent, and new business starts were up 25.4 percent.
• In June 1997, a 24.6 percent increase was recorded in state exports. Exports represent an important component in Connecticut's overall economic development strategy.
• Connecticut's Department of Labor projects that between the years 1994 and 2005, the state will add 181,500 jobs, a 10.8 percent employment increase.

Certificate of Achievement

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the State of Connecticut for its comprehensive annual financial report for the fiscal year ended June 30, 1996. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports.

In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. This report must satisfy both generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. The State of Connecticut has received a Certificate of Achievement for the last eight consecutive years (fiscal years ended 1989-1996). We believe our current report continues to conform to the Certificate of Achievement program requirements, and we are submitting it to GFOA.

Independent Audit

The Auditors of Public Accounts, who report to the legislature and are independent of the executive Branch, have audited the accompanying financial statements in accordance with generally accepted auditing standards and their opinion has been included in this report.

ACKNOWLEDGMENTS

I wish to express my appreciation to the many individuals in all agencies whose cooperation and assistance has made this report possible. In addition, the efforts of the GAAP Reporting Unit and others in our Budget and Financial analysis Division deserve special acknowledgment.

Sincerely,

Nancy Wyman
State Comptroller

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