State of Connecticut Comprehensive Annual Financial Report Fiscal Year Ended June 30, 1998 - Notes to the Financial Statements

RESTATEMENT OF FUND BALANCES/RETAINED EARNINGS/NET ASSETS AND CHANGE IN ACCOUNTING ESTIMATE

As of June 30, 1998, the beginning fund balances/retained earnings/net assets for the following funds were restated as follows (amounts in thousands):

Fund	Balance 6-30-97 Previously Reported	Fund Reclas- sification	GASB Statement No. 31	Correction of Reported Assets/ Liabilities	Balance 6-30-97 as Restated
Special Revenue:
Environmental
Programs	$ 148,142	$ (1,153)	$ -	$ -	$ 146,989
Enterprise:
Rental Housing	35,373	-	2,835	4,589	42,797
Expendable Trust:
Other	1,770	544	1,014	-	3,328
Nonexpendable Trust:
Other	23,813	581	1,351	-	25,745
Investment Trust:
External Investment Pool	-	-	691,788	-	691,788
Higher Education:
Unrestricted	60,861	-	-	(2,894)	57,967
Restricted	29,863	-	-	967	30,830
Endowment	14,444	-	1,449	-	15,893
Loan	30,088	-	-	49	30,137
Plant	1,693,882	-	-	(224,917)	1,468,965

As part of implementing GASB Statement No. 31 (see Note 1a), the State reported certain fund's investments at fair value, which were reported at cost or amortized cost in prior years. The State also added a new fund to its financial reporting entity, the external investment pool fund (an investment trust fund).

As of June 30, 1998, the University of Connecticut recorded depreciation in its Plant funds. The cumulative effect of implementing this accounting change ($215 million) is reported as a restatement of beginning fund balance.

For the year ended June 30, 1988, the State universities calculated the liability for accrued compensated absences based on salary rates in effect as of the balance sheet date. In previous years, the liability was calculated based on certain factors and assumptions including salary rate increases, vesting provisions, discount rate and other assumptions related to employee age and probability of cash settlement. The cumulative effect of this change in accounting estimate (11.2 million) is reported as a decrease in fund balance in the combined statements of changes in fund balances and current funds revenues, expenditures, and other changes.