Institutional Federal Compliance Report 2021

62 • Notes to Basic Financial Statements __________________________________________________________________________

Pensions Net position restricted for pension payments. Other Government Programs Net position restricted for the funding of legal and law enforcement programs, various gifts, grants or bequests received by the State, and other legally restricted programs. Unrestricted Unrestricted net position is the net amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted components of net position described above. o. Fund Balance On governmental fund financial statements, “Fund Balance” is the difference between (a) fund assets and deferred outflows of resources and (b) liabilities and deferred inflows of resources. Fund Balance Hierarchy Fund balance for governmental funds is reported in the following classifications, which describe the relative strength of the constraints that control how specific amounts in the funds can be spent: Nonspendable fund balance includes amounts that cannot be spent because they: (a) are either not in spendable form; or (b) are legally or con- tractually required to remain intact. Restricted fund balances have constraints placed on the use of resources that are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation. Committed fund balances can only be used for specific purposes pursuant to constraints imposed by formal action of the State’s highest level of deci- sion-making authority, which includes establish- ment of laws of the State, and by bills passed by the Legislature and approved by the Governor of the State of New York, or any contracts approved by authorized State officials that are known to have their liability satisfied with the current fund bal- ance. Commitments may be changed or lifted only by the State’s highest level of decision-making authority taking the same formal action that orig- inally imposed the constraint. Assigned fund balances are constrained by the intent to use amounts for specific purposes, but are neither restricted nor committed. The Director of the Budget is authorized to assign amounts to a specific purpose through the approval of budget certificates as required by statute.

Enabling legislation, which restricts net position, authorizes the State to assess, levy, charge or otherwise mandate payment of resources and includes a legally enforceable requirement that those resources be used only for the specific purposes stipulated in the leg- islation. A legally enforceable requirement is one that an outside party (such as citizens, public interest groups or the judiciary) can compel the government to honor. When both restricted and unrestricted resources are available for use, it is the State’s policy to use restricted resources first, then unrestricted resources as they are needed. At March 31, 2019, the Governmental Activities reported restricted net position of $4.8 billion due to restrictions externally imposed by creditors or enabling legislation. This included $2.4 billion restricted for debt service payments from various capital reserve funds, and $2.4 billion restricted for other purposes (details of fund balance classification are available in Note 1.o.). The following terms are used in the reporting of net position: Net Investment in Capital Assets Net investment in capital assets consists of capital assets, including restricted capital assets, net of accu- mulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other bor- rowings that are attributable to the acquisition, con- struction, or improvement of those assets. Debt Service Net position restricted for the payment of future debt service payments from various capital reserve funds. Higher Education, Research and Patient Care Net position restricted for funding of various higher education instruction, research, scholarships, and oper- ations, as well as medical research and patient care. Environmental Projects and Energy Programs Net position restricted for funding of various envi- ronmental projects and energy programs. Economic Development, Housing and Transportation Net position restricted for funding of various economic development, housing-related and transportation- related programs. Insurance and Administrative Requirements Net position restricted for funding certain insurance payments and administrative costs. Unemployment Benefits Net position restricted for the payment of unemploy- ment benefits. Future Lottery Prizes Net position restricted for future lottery prize payments.