Auditor General releases Annual Audit of The
State of Rhode Island’s Financial Statements
STATE HOUSE – Fund balance of the State’s General Fund totaled $402 million at June 30, 2020 — $156.2 million is available for future appropriation. The State’s fiscal 2020 operations were significantly affected by the global pandemic which negatively impacted certain revenue sources, increased costs in response to the public health emergency and dramatically increased the volume and amount of unemployment claims. New federal funding totaling approximately $1.5 billion was expended in fiscal 2020 in response to the effects of the pandemic.
The Office of the Auditor General completed its annual audit of the State of Rhode Island’s financial statements for the fiscal year ended June 30, 2020 which included these fiscal 2020 operating results. The Independent Auditor’s Report, prepared by Auditor General Dennis E. Hoyle and included in the State’s Comprehensive Annual Financial Report (CAFR), is unmodified, indicating that the financial statements present fairly the financial position and changes in financial position of the State of Rhode Island in conformity with accounting principles generally accepted in the United States of America. The results of the required annual audit of the State’s financial statements are directed to the Finance Committee of the House of Representatives and the Joint Committee on Legislative Services – those vested with official oversight of the annual audit.
The CAFR is prepared by the State’s Office of Accounts and Control - Department of Administration and includes financial information on the funds and accounts of the State for the fiscal year ended June 30, 2020, including quasi-public entities considered to be component units for financial reporting purposes (e.g., URI, RIC, CCRI, RI Resource Recovery, and RI Commerce Corporation). It also includes comprehensive government-wide financial statements, which present the changes in the State’s net position inclusive of the State’s capital assets and other long-term assets and liabilities.
The budget reserve (“rainy day”) account totaled $90.7 million at June 30, 2020, reflecting a $120 million appropriation to address anticipated revenue reductions and increased expenditures related to the pandemic. The fiscal 2021 budget includes a provision to restore $90 million to the budget reserve beginning in fiscal 2021. $62.2 million is available in the RI Capital Plan Fund for future capital projects.
The State received $1.25 billion of federal assistance through the Coronavirus Relief Fund (CARES Act funded). $255 million had been spent at June 30, 2020 and $995 million was available at that date for expenditures through December 31, 2021.
Unemployment insurance benefits totaled more than $1.4 billion in fiscal 2020 compared to $148 million in fiscal 2019. Approximately $1 billion of new COVID-19 related federal assistance funded most of those benefits.
Fund balance of the IST Fund, which accounts for transportation activity, increased $46.6 million to $370.4 million largely due to the issuance of new debt for transportation projects.
Long-term liabilities, including bonds payable and net pension and OPEB (retiree healthcare) liabilities of the primary government, totaled $7.6 billion at June 30, 2020.
Net pension liabilities included in the 2020 financial statements (governmental activities) totaled $3.7 billion which represents the combined liability for six defined benefit plans covering State employees and the State’s proportionate share of the net pension liability for teachers - $1.4 billion.
Five defined benefit plans (covering state employees) are managed as trusts by the Employees’ Retirement System of RI - the pension liability is net of amounts accumulated for future benefits. An additional plan covering certain judges is managed as a pay-as-you-go plan – no amounts have been accumulated for future benefits - annual benefit payments are appropriated each year.
The State made employer contributions totaling $318.3 million in fiscal 2020 to the pension plans including $108.6 million as the State’s share for teachers. The net investment return on assets within the defined benefit pension plans was approximately 3.8% for fiscal 2020. Assets of the defined contribution plan, part of the overall hybrid pension benefit structure, totaled $1.2 billion at June 30, 2020.
Six defined benefit OPEB plans provide retiree healthcare benefits for State employees including certain electing teachers and Board of Education employees. Net OPEB liabilities totaled $425.7 million, which is net of amounts accumulated for future benefits at the measurement date. The funded status of the OPEB plans is improving — the largest plan covering most State employees increased from 26.3% to 33.6% at June 30, 2020. For three plans, a net OPEB asset results from plan assets exceeding the OPEB plan liabilities by $7.2 million. Employer contributions to the OPEB plans totaled $53.6 million in fiscal 2020. The net investment return on assets within the OPEB trusts was 8.4% for fiscal 2020.
The fiscal 2020 CAFR includes the Government Finance Officers Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting awarded for the 2019 CAFR. This award reflects the State’s continued commitment to ensuring audited financial information, which meets generally accepted accounting principles and the required elements of a comprehensive governmental financial report, is available on a timely basis.
Other communications resulting from the annual audit will include findings and recommendations related to the State’s controls over financial reporting and the Single Audit Report, which focuses on the State’s compliance with requirements related to federal assistance expenditures. The Single Audit Report is required by federal law and is provided to federal funding agencies as a condition of continued federal assistance.
The State’s CAFR is available on the website of the Office of Accounts and Control, Department of Administration. A link to the report is provided below:
The Auditor General’s website includes a Comprehensive Annual Financial Report – Highlights document that summarizes key State financial operating results for fiscal 2020. A link to the CAFR - highlights is provided below: