Office of the State Comptroller - Nancy Wyman

2001 Comptroller's Report on  Connecticut's Economic Health

The State's Financial Position

REPORTING FORMAT

The financial data presented below was developed in accordance with Generally Accepted Accounting Principles (GAAP). GAAP is the standard for financial reporting in both the public and private sectors. To date, Connecticut has not adopted GAAP for budgetary appropriation and control purposes. The state uses a modified cash accounting system as its legal budget basis. However, due to volatility in the timing of payments and posting of revenues, the modified cash system can distort the state's true financial picture. GAAP reporting eliminates the distortions and, therefore, provides a more accurate financial overview of the state's fiscal position.

This chart shows  the General Fund Operating Surplus/Deficit for 1989 through 2000. Click here for a text description of this chart.

In Fiscal Year 2000, the state posted a net General Fund budget surplus of $300.4 million on a modified cash basis; however, on a GAAP basis the state recorded a General Fund deficit of $77 million. Two factors explain the large difference in the Fiscal Year 2000 General Fund modified cash basis and GAAP numbers. First, $86.1 million in state financed Medicaid expenditures incurred in Fiscal Year 2000 were not included in the calculation of the Fiscal Year 2000 modified cash basis surplus. Because these Medicaid payments were not processed until Fiscal Year 2001, they were not counted as expenditures under modified cash accounting. Thus, the surplus was artificially inflated.

On a GAAP basis, the date on which the liability is incurred is used without regard to when the actual payments are processed. Therefore, Fiscal Year 2000 Medicaid expenditures were $86.1 million higher on a GAAP basis. Second, on a modified cash basis, surplus revenues from prior years can be brought forward to finance current spending. On a GAAP basis, only revenues actually earned during the year can be used to finance that year's spending.

Pie chart for General Fund Tax Revenue By Source Fiscal Year 2000. Click here for a text description.

In Fiscal Year 2000, $290 million in spending was financed from prior year revenues. Under GAAP, these expenditures must be charged against revenue actually earned in Fiscal Year 2000, thus reducing the surplus. A majority of the spending financed from prior year revenues has been for one-time items. To the extent that the expenditures financed from prior year revenues are not recurring, a permanent GAAP imbalance between revenues and expenditures is not created.

FISCAL YEAR 2000 GENERAL FUND PERFORMANCE - OPERATING RESULTS FOR ONE STATE FUND IN A SINGLE FISCAL YEAR

GENERAL FUND REVENUES:

GENERAL FUND REVENUES (MILLIONS OF DOLLARS)
FY95 FY96 FY97 FY98 FY99 FY00 FIVE-YEAR ANNUAL
COMPOUNDED
GROWTH RATE
Income 2,306 2,606 2,799 3,197 3,368 3,777 10.4%
Sales 2,355 2,444 2,598 2,759 2,922 3,082 5.5%
Corporation 604 629 534 506 461 413 -7.3%
Public Utilities 185 192 179 170 168 163 -2.5%
Inheritance & Estate 183 231 208 259 216 200 1.8%
Insurance Companies 171 167 189 183 180 187 1.8%
Tobacco 130 125 126 126 122 121 -1.4%
Other Taxes 416 437 421 385 362 340 -4.0%
TOTAL TAXES 6,350 6,831 7,054 7,585 7,799 8,283 5.5%

OTHER REVENUE

Federal Grants 2,562 2,644 2,585 2,646 2,709 3,005 3.2%
Casino Payments 136 149 204 258 288 319 18.6%
Lottery 250 262 252 267 274 254 0.3%
Miscellaneous 346 333 370 356 387 475 6.5%

TOTAL REVENUE

9,644 10,219 10,465 11,112 11,457 12,336 5.0%

GENERAL FUND EXPENDITURES:

GENERAL FUND EXPENDITURES (MILLIONS OF DOLLARS)
FIVE-YEAR ANNUAL
FY95 FY96 FY97 FY98 FY99 FY00 COMPOUNDED
GROWTH RATE
Legislative 47 48 52 55 65 69 8.0%
General Government 510 550 554 600 845 815 9.8%
Regulation & Protection 103 105 116 121 215 255 19.9%
Conservation and Development 64 65 80 81 92 99 9.1%
Health & Hospitals 781 819 893 952 1,050 1,146 8.0%
Human Services 3,378 3,439 3,496 3,541 3,475 3,770 2.2%
Education 1,725 1,820 1,805 1,879 1,952 2,065 3.7%
Higher Education 450 442 482 517 588 698 9.2%
Corrections 789 839 943 932 1,027 1,153 7.9%
Judicial 234 265 290 311 352 399 11.3%
Federal & Other Grants 871 808 607 682 551 713 -3.9%
Debt Service 845 729 805 864 973 1,037 4.2%
Other 89 92 90 188 103 194 16.9%

TOTAL

 9,886 10,021 10,213 10,723 11,288 12,413 4.7%
Note: Human Services includes Medicaid expenditures. The decrease in Federal & Other Grants is largely due to an accounting correction n the treatment of disproportionate share payments not a reduction in federal money.

BEYOND THE GENERAL FUND - TOTAL GOVERNMENTAL OPERATIONS

The state undertakes various activities that do not appear in the General Fund. These activities include transportation and housing programs, grants to municipalities, loan programs and other services. When these activities are combined with those of the General Fund, a true picture of state governmental operations emerges.

CUMULATIVE FINANCIAL POSITION OF THE STATE- THE BALANCE SHEET

Total Government Operating Results from 1989 through 2000. Click here for a text description of this chart.

Cumulative General Fund GAAP Deficit, 1996 through 2000. Click here for a text description of this chart.

DEBT POSITION

 Outstanding State Debt. Click here for a text description of this chart.

 Debt Issuance 1996 throught 2000. Click here for a text description of this chart.

TRENDS IN LONG-TERM DEBT OBLIGATIONS
(MILLIONS OF DOLLARS)
CATEGORY     FY96     FY97     FY98     FY99     FY00
Bonds     8,981     9,229     9,299     9,355     9,752
Pension Liabilities     6,334     6,597     6,761     7,242     7,623
Workers' Comp.     268     283     279     280     284
Compensated Absences     262     260     264     275     294
Capital Leases     54     49     48     52     49
TOTAL     15,899     16,418     16,651     17,204     18,002