State of Connecticut Comprehensive Annual Financial Report Fiscal Year Ended June 30, 1999 - Notes to the Financial Statements - Note 22

State of Connecticut

June 30,1999

Note 22 Commitments and Contingencies

  1. Commitments

At June 30, 1999, the State, including its component units, had the following outstanding commitments:

  1. Infrastructure (highways, roads, etc.) and other construction contracts and miscellaneous contracts with various vendors totaling approximately $1,402.3 million of which $877.3 million is expected to be reimbursed by Federal Grants.
  2. School construction and alteration grants with various towns for $885 million and interest costs of $324 million for a total of $1,209 million. Funding for these projects is expected to come from bond sales.
  3. Loan commitments, mortgage and grant programs, and loan guarantees total approximately $378.3 million. Funding for these programs is expected to come from bond sales.
  1. Contingent Liabilities

    The State, in May, settled a lawsuit for $17 million which charged that the state police violated the constitutional rights of thousands people by taping phone calls from 1978 to 1989. The state has $12 million available, which has been appropriated from the June 30, 1999 surplus, while insurance companies covering the State during that period will pay $5 million. In December, the state began accepting claims from individuals who may collect up to approximately two thousand dollars depending on the type and number of incidents. However, at this time it can not be determined how much money the state will finally expend although the maximum state exposure would be limited to is $12 million.

    The State has entered into a contractual agreement with H.N.S. Management Company, Inc. and ATE Management and Service Company, Inc. to manage and operate the bus transportation system for the State. The State shall pay all expenses of the system including all past, present and future pension plan liabilities of the personnel employed by the system and any other fees as agreed upon. When the agreement is terminated the State shall assume or make arrangements for the assumption of all the existing obligations of the management companies including but not limited to all past, present and future pension plan liabilities and obligations.

  2. Litigation

    The State, its units and employees are parties to numerous legal proceedings, many of which normally occur in government operations. Most of these legal proceedings are not, in the opinion of the Attorney General, likely to have a material adverse impact on the State's financial position.

    There are, however, several legal proceedings which, if decided adversely against the State, may require the State to make material future expenditures for expanded services or capital facilities or may impair future revenue sources. It is neither possible to determine the outcome of these proceedings nor to estimate the possible effects adverse decisions may have on the future expenditures or revenue sources of the State.

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