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3/1/2024
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Auditor General’s Office completes audit of state’s financial statements for Fiscal 2023
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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, 2023. The Independent Auditor’s Report, prepared by 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, 2023. 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 2023 financial statements reported strong operating results. Tax revenues, while slightly reduced over fiscal 2022, remained solid. Federal revenue continued to be the state’s largest revenue source. Expenditures remained comparable to the prior year as the state continued to utilize pandemic recovery funds across government.
Government-wide net position (governmental activities) totaled $2.5 billion – an increase of $1.3 billion. $4.8 billion represents the state’s net investment in capital assets. $1.8 billion is restricted for specific purposes, leaving an unrestricted net deficit of $4.1 billion.
Fund balance of the General Fund totaled $1.2 billion at June 30, 2023, an increase of $209.5 million – $412.3 million is available for future appropriation. The budget reserve (“rainy day”) account totaled $271 million at June 30, 2023. A supplemental budget reserve account was statutorily created in fiscal 2023, totaling $6.5 million at June 30, 2023.
Federal revenue exceeded $5.0 billion in fiscal 2023. Federal revenue relating to State and Local Fiscal Recovery funding increased by $230.5 million over fiscal 2022 in support of expenditures for a wide array of pandemic recovery initiatives throughout state government. In addition, federal revenue relating to Education Stabilization funding increased by $95 million over the prior year as local school districts utilized their funding allocations.
The Rhode Island Lottery transferred $434.7 million in net income to the General Fund in fiscal 2023 as compared to $388.6 million in the prior year.
Unemployment insurance benefits totaled $154.7 million in fiscal 2023, a decrease of $296.3 million from fiscal 2022, which was the last year for pandemic expanded unemployment benefits.
The RI Capital Plan Fund reported $998.5 million available for future capital projects. $427.9 million was transferred to the fund from the General Fund, including a fiscal 2023 appropriation of $257 million for future capital projects. Expenditures in the fund totaled $81.6 million in fiscal 2023.
RIDOT expended $649.8 million on infrastructure projects and maintenance programs. Infrastructure expenditures accounted for $449.1 million. The two largest infrastructure projects were the I-95 Viaduct North Bound Bridge and the Route 6/10 interchange project with expenditures totaling $52.7 million and $26.4 million, respectively. Transfers of gas tax revenue from the IST Fund to the RI Public Transit Authority (RIPTA) in fiscal 2023 totaled $41.9 million, consistent with the prior year. The notes to the financial statements reported (a) continued litigation regarding the state’s RhodeWorks tolling program which suspended in September 2022 and (b) the closure of the I-195 Washington Bridge westbound span deemed no longer safe for public use. The outcome of these issues will significantly impact future revenues and expenditures relating to the State’s transportation infrastructure.
Net pension liabilities included in the 2023 financial statements totaled $3.2 billion which represents the combined liability for six defined benefit plans covering state employees totaling $2.0 billion and the state’s proportionate share of the net pension liability for teachers which totaled $1.2 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 $238.2 million in fiscal 2023 to the defined benefit pension plans in addition to $122.5 million as the state’s share of pension contributions for teachers. Net position restricted for state employee pension benefits increased by $161.6 million in those respective Pension Trust Funds. These funds collectively recognized a $249.7 million net investment gain across those plans in fiscal 2023.
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 $259.3 million, which is net of amounts accumulated for future benefits at the measurement date. The funded status of the OPEB plans at the June 30, 2022 measurement date declined slightly, with the largest plan covering most state employees decreasing from 60.5% to 55.1%. For three plans, a net OPEB asset results from plan assets exceeding the OPEB plans’ liabilities by $15.2 million. Employer contributions to the OPEB plans totaled $39.6 million in fiscal 2023. The OPEB Trust Funds collectively recognized a $56.4 million net gain on investments across all funds for fiscal 2023.
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:
State of RI - 2023 Annual Comprehensive Financial Report
The Auditor General’s website includes an Annual Comprehensive Financial Report – Highlights document that summarizes key state financial operating results for fiscal 2023. A link to the ACFR - highlights is provided below:
Highlights Summary - State of RI - 2023 Annual Comprehensive Financial Report
For more information, contact:
David Bergantino, CPA, CFE, Auditor General
Office of the Auditor General
Providence, RI 02903
(401) 222-2435, x3020
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