Institutional Federal Compliance Report 2021

______________________________________________________________________________________________ STATE OF NEW YORK • 27

The Enterprise Funds financial statements provide the same type of information found in the government-wide financial statements, but in more detail. The change in net position of the Enterprise Funds has already been discussed in the preceding discussion of business-type activities. General Fund Budgetary Highlights The State’s official Financial Plan, which uses the cash basis of accounting, is adopted following enactment of the annual budget (the “initial Financial Plan”) and updated quarterly throughout the year, as required by the State Finance Law. The quarterly updates to the 2018-19 initial Financial Plan for reflected revisions based on monthly operating results and an updated analysis of underlying economic, revenue, and spending trends, as well as other actions and developments. Total General Fund receipts for the year (including transfers from other funds) were $70.5 billion, or $2.1 billion below the initial Financial Plan estimate. The primary factors contributing to lower than projected total receipts was $1.1 billion in lower Personal Income Tax (PIT) receipts due to a combination of lower December 2018 and January 2019 estimated payments and approximately $2.4 billion in reduced transfers from the Revenue Bond Tax Fund, mainly due to the prepayment in fiscal year 2019 of debt service on PIT bonds due in fiscal year 2020 (prepayments reduce the amount of PIT receipts available to the General Fund in the year in which they are made, and increase the amount in the year in which they were originally due). Business tax receipts were approximately $125 million below initial projections due to the timing of audit receipts, insurance tax payments and refunds. Miscellaneous receipts were almost $1.5 billion higher than the initial projections mainly due to the receipt of unplanned extraordinary monetary settlements and higher than expected fines, fees, reimbursements and investment income. Total General Fund disbursements for the year (including transfers to other funds) were approximately $72.8 billion, or $3.8 billion below the initial Financial Plan estimate. Lower than projected disbursements were due in large part to the cautious calculation of General Fund local assistance and agency operations expenses and lower than anticipated transfers to support capital projects spending due to a large amount of bond reimbursements used to reimburse the General Fund for prior-year capital advances and slower than expected spending supported by extraordinary monetary settlements. In the initial Financial Plan, the Division of Budget (DOB) projected that General Fund disbursements would exceed receipts by $3.9 billion. The difference was expected to be funded with the use of $1.9 billion carried forward from 2017-18 that DOB attributed to the acceleration of tax payments in response to the Federal limit on State and Local Taxes (SALT) deductibility, which became effective January 1, 2018. In addition, Extraordinary Monetary Settlements on hand in the General Fund were used as planned to support spending from the Dedicated Infrastructure Investment Fund and other funds for authorized purposes. Actual General Fund disbursements exceeded receipts by $2.2 billion, or $1.7 billion more favorable than anticipated in the initial Financial Plan. The operating results for 2018-19 were affected by the deferral of the final cycle payment to Medicaid Managed Care Organizations, as well as other payments, from March 27, 2019, until April 1, 2019 (and from fiscal year 2019 to fiscal year 2020). The 2018-19 deferral had a State-share value of a $1.7 billion. Absent the deferral, Medicaid spending under the Global Cap would have exceeded the statutorily indexed rate in 2018-19. This higher spending in 2018-19 appears to reflect growth in managed care enrollment and costs above projections, as well as certain savings actions and offsets that were not processed by year-end. The General Fund ended 2018-19 with a closing cash fund balance of $7.2 billion, which was $1.7 billion higher than the initial plan. The higher balance is attributable to a higher extraordinary monetary settlement balance mainly due to unplanned payments received ($1 billion) and the reserve of resources for the timing of payments ($206 million for retroactive labor agreements and $202 million for a business tax refund), as well as a deposit to the Rainy Day Fund ($250 million). The closing balance is comprised of approximately $2.1 billion in the State’s Rainy Day Reserve Funds ($1.3 billion in the Tax Stabilization Reserve Account and $790 million in the Rainy Day Reserve Fund), $35 million in the Community Projects Fund, $21 million in the Contingency Reserve Fund, and $5.1 billion in the Refund Reserve Account. The State’s current year General Fund GAAP deficit of $1.3 billion reported on page 40 differs from the General Fund’s cash basis operating deficit of $2.2 billion reported in the reconciliation found under Budgetary Basis Reporting on page 134. This variation results from differences in basis of accounting, entity and perspective differences between budgetary reporting versus those established as GAAP and followed in preparation of this financial statement.