This statutory based report was prepared in accordance with the accounting standards that were applied in the budget act and the related legislation. Commencing in Fiscal Year 2014, appropriations were made to budgeted state agencies and to the non-functional spending group in order to account for expense accruals. The new appropriation accruals were posted exclusively to the budgeted funds. The accruals relate to payments that were made after the close of the fiscal year on June 30th but are directly related to obligations incurred within that fiscal year. The expense accruals are reported using the Generally Accepted Accounting Principles (GAAP) approach that is employed in preparing the state's Comprehensive Annual Financial Report (CAFR).
Specifically, goods and services that are received during the fiscal year and are paid through the Core-CT system within 60 days of the close of the fiscal year are charged to the closed fiscal year. This same approach is used for payroll expenses and the associated fringe benefit costs to ensure that the cumulative days worked in a closed fiscal year are charged to the closed year. Certain agencies process special payments outside of the statewide Core-CT system. The Department of Social Services processes Medicaid payments through an agency based system and reports accrued amounts to the Comptroller?s Office manually. The Department's Medicaid accruals have historically had a material impact on total state expenses. Therefore, although the payments are not processed through Core-CT, the accruals are included in the budget and are part of this report. Other payments that are made outside the Core-CT system in the budgeted funds do not have a significant impact on the overall fiscal results and are therefore not included in the financial statements.
Revenues within this report are recognized when received except in the General and Transportation Fund. Certain accrued taxes and Indian Gaming Payments within these funds are recognized within a statutory accrual period that is accepted by the Comptroller.
As used in this report, the GAAP budgetary basis refers to the reporting method described above. The policy objective of GAAP budgeting was to eliminate or to mitigate the growth in the GAAP deficit reported in the state?s CAFR, and in future years to eliminate the total deficit. The GAAP deficit reported in the CAFR is the total fund balance that has not been restricted, committed, or otherwise assigned to a specific purpose. That balance is negative. The growth in the GAAP deficit over time is largely attributable to the growth in spending accruals within the budgeted funds.
BUDGET RESERVE FUND LEGISLATION
The purpose of the Budget Reserve Fund, as amended in PA 15-244, is to "maintain and invest its funds for the purposes of reducing volatility in the General Fund and reducing the need for increases in tax revenue and reductions in state aid due to economic changes."
In order to achieve the expressed purpose of the Budget Reserve fund Public Act 15-244, beginning in fiscal year 2021, requires revenue collected from the estimated and finals portion of the income tax and the corporation business tax in excess of a calculated threshold to be deposited into the Budget Reserve Fund at the close of each fiscal year. The Comptroller?s office is required to certify the threshold level for deposits to the Budget Reserve Fund annually in this report.
The threshold level for deposits to the Budget Reserve Fund is calculated "by determining: (A) Combined revenue for each of the prior twenty fiscal years; (B) the ten-year average for the current fiscal year; (C) the ten-year average for each of the ten fiscal years preceding the current fiscal year; (D) the differential for each of the ten fiscal years preceding the current fiscal year; (E) the average of the differentials calculated pursuant to subparagraph (D) of this subdivision; and (F) the number calculated in subparagraph (E) of this subdivision and adding the number one. The threshold level for deposits to the Budget Reserve Fund shall be the number calculated by multiplying the number calculated under subparagraph (B) of this subdivision by the number calculated under subparagraph (F) of this subdivision. For the purposes of this subdivision, "ten-year average" means the average of combined revenue from the ten fiscal years preceding any given fiscal year; and "differential" means the difference between the actual combined revenue from any given fiscal year and the ten-year average for that same fiscal year, divided by the ten-year average for that fiscal year;?."combined revenue" means revenue in any given fiscal year from estimated and final payments of the personal income tax imposed under chapter 229 plus the revenue from the corporation business tax imposed under chapter 208."
The Comptroller certifies that the Budget Reserve Fund deposit threshold for fiscal year 2017 is $5,016,708,946. Please see the table below for reference.
Table 1: Formula for Fiscal Year 2017 Threshold Level for Deposits to the Budget Reserve Fund
|Fiscal Year||Combined Revenue||Ten Year Average||Differential||Calculated Threshold|