Auditor General’s Office completes audit of state’s financial statements for Fiscal 2022
STATE HOUSE – 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, 2022. The Independent Auditor’s Report, prepared by Interim Auditor General David A. Bergantino and included in the State’s Annual Comprehensive Financial Report (ACFR), 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 ACFR 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, 2022. It also includes comprehensive government-wide financial statements, which present the changes in the State’s net position inclusive of the capital assets and other long-term assets and liabilities.
The State’s fiscal 2022 operations were significantly enhanced by strong tax revenue resulting from improved employment and inflation in prices of consumer goods and wages. In addition, the continuation of COVID related federal assistance made federal revenue the State’s largest revenue source in fiscal 2022. Fund balances and net position of the primary government were largely improved. Fund balance of the General Fund totaled $983.7 million at June 30, 2022, an increase of $86.5 million, of which $209.7 million is available for future appropriation.
Government-wide net position (governmental activities) totaled $1.3 billion, an increase of $1.1 billion. $4.3 billion represents the State’s net investment in capital assets. $1.5 billion is restricted for specific purposes leaving an unrestricted net deficit of $4.5 billion.
The budget reserve (“rainy day”) account within the General Fund totaled $279 million at June 30, 2022. $699.2 million is available in the RI Capital Plan (RICAP) Fund for future capital projects. $563 million was specifically appropriated to the RICAP Fund in fiscal 2022 and expenditures totaled $142.5 million.
Unemployment insurance benefits totaled $451 million in fiscal 2022, a decrease of $1.6 billion from fiscal 2021. Pandemic unemployment benefits ended in September 2021 resulting in a significant decrease in benefits paid in fiscal 2022.
In fiscal 2022, the State began expending its $1.13 billion in funding from the State Fiscal Recovery funds provided under the American Rescue Plan Act. The State expended $83.2 million in fiscal 2022. The General Assembly has appropriated the remainder of the funds, which will be expended through fiscal 2027. The State also disbursed $132 million of Local Fiscal Recovery funds to cities and towns from the State’s allotment of non-entitlement municipalities and county distributions.
Fund balance of the IST Fund, which accounts for transportation activity, increased $57.4 million to $323.2 million. This increase resulted from the use of additional federal funding for maintenance activities and strong revenue from motor vehicle fees, increasing the portion of net position restricted for future infrastructure maintenance.
Long-term liabilities, including bonds payable, lease liabilities, and net pension and OPEB (retiree healthcare) liabilities of the primary government, totaled $6.4 billion at June 30, 2022.
Net pension liabilities included in the 2022 financial statements totaled $2.8 billion which represents the combined liability for six defined benefit plans covering State employees totaling $1.8 billion and the State’s proportionate share of the net pension liability for teachers which totaled $1.0 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 $344 million in fiscal 2022 to the pension plans including $116.3 million as the State’s share for teachers. The Pension Trust Funds collectively recognized a $516.4 million net loss on investments at June 30, 2022. Assets of the defined contribution plan, part of the overall hybrid pension benefit structure, totaled $1.5 billion at June 30, 2022. The State also made a supplemental contribution totaling $61.8 million to the Employee’s Retirement System Plan in fiscal 2022 relating to pension contribution deferrals from 1991 and 1992.
Six defined benefit retiree healthcare benefit (OPEB) plans provide retiree healthcare benefits for State employees including certain electing teachers and Board of Education employees. Net OPEB liabilities totaled $211.4 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 42.5% funded to 60.5% at June 30, 2022 (based on the June 30, 2021 measurement date). For four plans, a net OPEB asset resulted from plan assets exceeding the OPEB plans’ liabilities by $18.4 million. Employer contributions to the OPEB plans totaled $43.8 million in fiscal 2022. The OPEB Trust Funds collectively recognized a $58.3 million net loss on investments at June 30, 2022.
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 ACFR 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 an Annual Comprehensive Financial Report – Highlights document that summarizes key State financial operating results for fiscal 2022. A link to the ACFR - highlights is provided below: