Institutional Federal Compliance Report 2021

T HOMAS P. D I N APOLI C OMPTROLLER

110 S TATE S TREET A LBANY, N EW Y ORK 12236

S TATE OF N EW Y ORK O FFICE OF THE S TATE C OMPTROLLER

September 1, 2019

To the Citizens, Governor and Members of the Legislature of the State of New York:

I

am pleased to present the Comprehensive Annual Financial Report for the State of New York for the fiscal year ended March 31, 2019. Under generally accepted accounting principles (GAAP), the State reported a General Fund operating deficit of $1.3 billion as of March 31, 2019 (compared to a $2.4 billion operating surplus last year), decreasing the fund balance to $3.4 billion. This operating deficit is one indicator of the State’s structural budget imbalance. New York State’s net position (a broader indicator of GAAP-basis financial condition) turned negative this year, primarily due to the recognition of other post-employment benefits (OPEB) on the statement of net position under newly adopted accounting standards. These liabilities, which totaled $65 billion as of SFY 2018-19, are primarily related to future retiree health care costs. This office has been highlighting the State’s growing unfunded OPEB liability for some time, and has advocated for a comprehensive approach to managing these liabilities. The State’s net position also continues to be impacted by levels of debt issued for purposes not resulting in a State capital asset. After accounting for all of these factors, the State’s net position deficit is $12.5 billion. The State’s primary revenue sources continue to be federal grants and the personal income tax, and the largest areas of expenses are education and public health programs. On a government-wide basis, total revenues were $165.3 billion for SFY 2018-19, while expenses totaled $163.2 billion. On a GAAP basis, total debt outstanding was $59.6 billion as of March 31, 2019, an increase of $3.3 billion from last year. Debt issuances are expected to rise markedly over the next several years, and debt capacity under the State’s statutory cap is projected to decline to only $415 million by fiscal year 2023-24. The cap applies only to debt classified as State-supported and therefore does not encompass all forms of State financing. While the State’s current fiscal position is relatively stable, risks remain. Federal trade policies, continued financial market volatility and global economic conditions add uncertainty regarding the future direction of the State and national economies. Shrinking statutory borrowing capacity and threats to federal funding, including those produced by burgeoning federal budget deficits, place added pressure on the State’s fiscal condition. This report is an important part of my obligation to provide accurate, objective and comprehensive financial information to the public and State policymakers. The Office of the State Comptroller will continue to provide oversight of these important issues in an independent and impartial manner, helping to ensure New York residents are informed and taxpayer interests are protected.

Sincerely,

Thomas P. DiNapoli State Comptroller