STATE OF WEST VIRGINIA
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 1995
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying general purpose financial statements of the State of West Virginia (the State) conform to generally accepted accounting principles (GAAP) for governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for governmental accounting and financial reporting. In addition, GAAP requires that the State’s proprietary activities apply GAAP in a manner similar to the way it is applied for business activities in the private sector. As a result, the financial statements of certain component units follow the specialized reporting practices of the insurance, higher education, health care, housing finance agency and other not-for-profit industries, as prescribed by the GASB and other authoritative sources, including pronouncements of the Financial Accounting Standards Board (FASB). The financial statements of the State’s colleges and universities have been prepared in accordance with the accounting guidance as outlined in GASB Statement No. 15, “Governmental College and University Accounting and Financial Reporting Models.” The financial model followed by West Virginia is the American Institute of Certified Public Accountants (AICPA) College and University Industry Audit Guide.
The general purpose financial statements have been prepared primarily by the Financial Accounting and Reporting Section (FARS) of the Department of Administration from accounts maintained by the State Auditor and the State Board of Investments (BOI). Additional data has been derived from the audited financial statements of certain entities and from reports and data prepared by various state agencies and departments. These prescribed reports and data were prepared by various State agencies and departments based on independent or subsidiary accounting records maintained by them.
Certain fund equity accounts presented for the preceding year have been restated, corrected or reclassified. See Note 3 for further explanation.
The Reporting Entity
The State of West Virginia is governed by elected officials. In accordance with GASB Statement No. 14, “The Financial Reporting Entity,” these financial statements present the State (the primary government) and its component units. The component units discussed below are included in the State’s reporting entity because of the significance of their operational or financial relationships with the State.
Individual Component Unit Disclosures
GAAP defines component units as those entities which are legally separate organizations for which the State’s elected officials are financially accountable, or other organizations for which the nature and significance of their relationship with the State are such that exclusion would cause the State’s financial statements to be misleading or incomplete. GAAP details two methods of presentation: blending the financial data of the component units’ balances and transactions in a manner similar to the presentation of the State’s balances and transactions; or discrete presentation of the component units’ financial data in columns separate from the State’s financial data.
Blended Component Units
The entities below are legally separate from the State and meet the GAAP criteria for component units. These entities are blended with the primary government because they provide services entirely or almost entirely to the State.
Lottery Commission
The State Lottery Commission is governed by a seven-member board appointed by the Governor. It was formed to assist the State in funding education and other basic governmental activities. This is accomplished by transferring the net profits of the lottery games conducted by the Commission to other special revenue funds (budgetary basis) for uses including, but not limited to, debt service, education and promotion of tourism. Because the Commission exists to provide funding entirely to the State, it is blended in the enterprise funds of the State.
Armory Board
The State Armory Board is governed by the Governor, the State Auditor, and the Secretary of State. Its activities are blended in the governmental funds of the State. The Armory serves the State by providing facilities for the activities of the regiment of the national guard.
State Road Fund
The Division of Highways, while governed by a commissioner appointed by the Governor, does not have a governing board separate from the State Legislature. It is a legally separate entity defined by the state constitution. Since its operations are to improve the State’s roads, the Division of Highways is blended in the governmental funds of the State.
School Building Authority
The School Building Authority is governed by a ten-member board of which six members are appointed by the Governor. It is blended in the governmental funds of the State since its activities are designed to provide a financing vehicle for school facilities as part of the distribution of state educational aid to local school boards.
Regional Jail Authority
The Regional Jail and Correctional Facility Authority (hereafter referred to as the Regional Jail Authority) is governed by an eight-member board of which five members are appointed by the Governor. It was formed to assist the State in constructing and operating regional jails for federal, state and local prisoners. Because the Authority exists to facilitate the State’s criminal confinement responsibilities, it is blended in the governmental funds of the State.
Blended Component Unit Financial Statements
Complete financial statements for each of the audited blended component units can be obtained directly from their respective administrative offices.
Administrative Offices:
Lottery Commission
P.O. Box 2067
Charleston, WV 25327
Armory Board
1707 Coonskin Drive
Charleston, WV 25311
State Road
Building 5, Room 109
1900 Kanawha Boulevard, East
Charleston, WV 25305
School Building Authority
Finance Division
2300 Kanawha Boulevard, East
Charleston, WV 25311
Regional Jail Authority
307 Jefferson Street
Charleston, WV 25305-0285
Discretely Presented Component Units
Because of the nature of the services they provide and the State’s ability to impose its will on them, the following component units are discretely presented in accordance with GASB Statement No. 14. Financial information for entities included in Higher Education is presented in a separate column.
Higher Education
The Board of Directors of the State College System and the State University System Board of Trustees (the Boards) are responsible for the State’s higher education system. Members of the two boards are appointed by the Governor. The Boards manage the day-to-day affairs of the various universities and colleges, which are financially dependent on the State for funding a significant portion of their operations.
Economic Development Authority
The Economic Development Authority (EDA) is administered by a nine-member board composed of the Governor, Secretary of Tax and Revenue and seven other members appointed by the Governor. The Authority is responsible for developing and advancing the business prosperity and economic welfare of the State. EDA is authorized to make loans, including direct financing and operating leases to industrial development agencies for the promotion and retention of new and existing commercial and industrial development. EDA is empowered to borrow money and issue bonds, notes, commercial paper and other debt instruments to furnish money for the enhancement of business development projects and has the ability to establish loan terms, including interest rates, at its discretion. EDA promotes economic development among private industries, and though its services benefit the State by increasing the tax base, its primary function is to provide jobs.
Educational Broadcasting Authority
The Educational Broadcasting Authority consists of eleven members. Seven members are appointed by the Governor. The other four members include the State Superintendent of Schools and one member each from the West Virginia Board of Education, the Board of Trustees for the University System of West Virginia and the Board of Directors of the State College System. The Authority is responsible for extending educational, cultural and informational experiences to all State citizens. This is accomplished through the construction and operation of noncommercial educational television and radio stations and related facilities statewide. The Authority’s revenues are derived primarily through donations, with a portion of operational costs supplemented by federal and state grants.
Jobs Investment Trust Board
The Jobs Investment Trust Board consists of thirteen members. Eight members are appointed by the Governor and the remaining members include the president of West Virginia University, the president of Marshall University, the chancellor of the Board of Directors of the State College System, the executive director of the West Virginia Housing Development Fund and the executive director of the West Virginia Development Office. The Board is responsible for improving and promoting economic development in the State, primarily through the issuance of loans to businesses that will stimulate economic growth and provide or retain jobs in the State.
Housing Development Fund
The Housing Development Fund (HDF) is governed by an eleven-member board consisting of the Governor, the Attorney General, the Commissioner of Agriculture, the State Treasurer and seven other members appointed by the Governor. The Fund is responsible for providing residential housing programs for low-income and moderate-income families, elderly persons and other eligible persons and families, as well as financing certain nonresidential projects. It is empowered to issue bonds which are payable from the mortgage payments. The assets and revenues of the bond programs of the HDF are restricted by resolution to repay the outstanding debt.
Parkways, Economic Development and Tourism Authority
The Parkways, Economic Development and Tourism Authority is composed of seven members. The Secretary of the Department of Transportation serves as its chairperson and six members are appointed by the Governor. Its responsibilities include the operation, maintenance and economic development and tourism for areas within 75 miles of the West Virginia Turnpike. The Authority can also issue bonds and set the rates for using the turnpike.
West Virginia State Rail Authority
The Rail Authority consists of seven members. Six members are appointed by the Governor and the seventh member is the Secretary of the Department of Transportation. The Authority is responsible for the rehabilitation, improvement and restoration of the financial stability of the railway system in the State. It can issue bonds and set rates for the rail system. The Authority receives federal and state grants to supplement its cost of operations.
Solid Waste Management Board
The Solid Waste Management Board is composed of seven members. Five members are appointed by the Governor and the remaining members are the Secretary of the Department of Health and Human Resources and the Director of the Division of Environmental Protection. The Board is responsible for improving collection and disposal of solid wastes and encouraging recycling, reuse and recovery of resources from wastes. The Board is the financing mechanism for solid waste projects and is empowered to issue bonds (with approval of the Water Development Authority) and set a rate structure.
Water Development Authority
The Water Development Authority is governed by a seven-member board consisting of the Director of the Division of Environmental Protection, the Director of the Division of Health, and five members appointed by the Governor. The Authority is responsible for all water facilities in the State, which includes construction, maintenance, repair projects and operation of such facilities. The revenue bonds are payable solely from the revenues of the projects. The Authority under certain conditions, may set the rates for the operation of the projects.
West Virginia University Hospitals, Inc. (WVU Hospitals)
WVU Hospitals is a non-stock, not-for-profit corporation governed by a board of directors. Board representatives from West Virginia University include the president and vice president of health sciences, the vice president of administration and finance, the medical staff chief of the Medical Center, the dean of the School of Medicine and the dean of the School of Nursing. The chief executive officer and a representative elected by the hospitals’ employees constitute the WVU Hospitals' officials on the Board. The Board of Trustees’ president, its vice chancellor for health affairs and seven other members appointed by the Governor complete the Board. The corporation is responsible for financing and managing the construction and/or operation of all health care facilities, other than those used for student health and family practice, at the WVU Medical Center. The hospital primarily provides health care services and related benefits to the residents of the region.
Discretely Presented Component Unit Financial Statements
Complete financial statements of the individual higher education institutions can be obtained by contacting:
Central Office of the State College and University System
Administrative Services
1018 Kanawha Boulevard, East
Suite 700
Charleston, WV 25301
Note 17 presents condensed financial statements for each of the discretely presented other component units. Complete financial statements of the individual component units can be obtained directly from their respective administrative offices.
Administrative Offices:
Economic Development Authority
Building 6, Room B 525
1900 Kanawha Boulevard, East Charleston, WV 25305-0311
Educational Broadcasting Authority
600 Capitol Street
Charleston, WV 25301
Jobs Investment Trust Board
814 Virginia Street, East
Suite 202
Charleston, WV 25301-2877
Housing Development Fund
814 Virginia Street, East
Charleston, WV 25301-2877
Parkways, Economic Development
and Tourism Authority
P.O. Box 1469
Charleston, WV 25325-1469
WV State Rail Authority
P.O Box 1469
Moorefield, WV 26836-0470
Solid Waste Management Board
1615 Washington Street, East
Charleston, WV 25311-2126
Water Development Authority
1201 Dunbar Avenue
Dunbar, WV 25064-3017
WVU Hospitals, Inc.
Medical Center Drive
Morgantown, WV 26506-8128
Fund Structure
The financial activities of the State are accounted for in individual funds and account groups. A fund is a fiscal and accounting entity with a self-balancing set of accounts recording cash and other financial resources, together with all related liabilities and residual equities or balances, and changes therein. These funds are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. For financial reporting purposes, the State reporting entity is divided into the primary government and the discretely presented component units. Individual funds of the primary government are classified into three fund categories: governmental funds, proprietary funds and fiduciary funds. Discretely presented component units are classified into higher education and other.
Account groups are entities used to report the State’s general fixed assets and long-term debts. These account groups are not funds because they do not reflect available financial resources and related liabilities.
The following describes the fund categories and account groups used in the accompanying general purpose financial statements:
Governmental Funds
General Fund - The General Fund is the general operating fund of the State. It is used to account for all financial resources obtained and spent for those services normally provided by the State (e.g. health, social assistance, education, primary and secondary education), which are not accounted for in other funds.
Special Revenue Funds - These funds are used to account for the proceeds of specific revenue sources (other than expendable trusts, certain debt service activities and major capital projects) that are legally restricted to expenditures for specified purposes.
Debt Service Funds - These funds are used to account for the accumulation of resources for, and the payment of, principal and interest on general long-term indebtedness.
Capital Projects Funds - These funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities and infrastructure projects (other than those financed by proprietary funds).
Proprietary Funds
Enterprise Funds - These funds are used to account for operations of those state agencies providing goods or services to the general public on a user-charge basis, or where the State has decided that periodic determination of revenues earned, expenses incurred and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes.
Internal Service Funds - These funds account for the operations of those state agencies that provide goods and services to other state agencies and governmental units on a cost-reimbursement basis.
Fiduciary Funds
Trust and Agency Funds - These funds are used to account for assets held by the State in a trustee capacity or as an agent for individuals, private organizations or other funds. These funds include expendable trust, nonexpendable trust, pension trust and agency funds. Nonexpendable trust funds and pension trust funds are accounted for in the same manner as proprietary funds, since capital maintenance is critical. Expendable trust funds are accounted for in the same manner as governmental funds. Agency funds are custodial in nature (assets equal liabilities) and do not involve the measurement of results of operations.
Account Groups
General Fixed Assets - This account group includes all the fixed assets (excluding infrastructure) that are not accounted for in the proprietary funds or component units.
General Long-Term Debt - This account group includes the unmatured portion of the long-term general obligation debt which is to be financed from governmental funds. Also included in this group are long-term liabilities resulting from capital lease obligations, pension obligations, claims and judgments, environmental reclamation obligations and compensated absences.
Discretely Presented Component Units
Higher Education - The financial statements of Higher Education have been prepared with the accounting guidance and reporting practices applicable to colleges and universities, as outlined in GASB Statement No. 15, by following the AICPA College and Universities Industry Audit Guide model. This requires that financial statements reflect the accrual basis of accounting (except that depreciation is not recognized) and essentially adopts the flow of current financial resources as the measurement focus. The following paragraphs describe the fund groups used to account for higher education activities.
Current Funds - These funds account for economic resources used in conducting the primary purposes of colleges and universities: instruction, research and public service. Resources received by an institution that have no limitations or stipulations placed on them by external agencies or donors are reported in this fund type. Current restricted funds account for resources provided to an institution that have externally established limitations or stipulations placed on their use.
Loan Funds - These funds are used to account for loans to students, faculty or staff and for resources available for such purposes.
Plant Funds - These funds account for resources which have been or will be used for institutional property acquisition, renewal and replacement and resources accumulated for the retirement of debt associated with institutional properties.
The Combined Statement of Current Funds Revenues, Expenditures and Other Changes in Fund Balances presents financial activities related to the current reporting period. It does not purport to present the results of operations or the net income or loss for the period, as would a statement of income or a statement of revenues and expenses.
Other Discretely Presented Component Units - The financial activities of the State’s discretely presented component units (excluding Higher Education) are reported in this column.
Basis of Accounting
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus, as described below. The revenue, expenditure and expense recognition policies have been applied in the determination of the related assets and liabilities at June 30, 1995.
Governmental and Expendable Trust Funds are accounted for using a flow of current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they become both measurable and available. “Available” means expected to be collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The State’s revenue recognition policies conform to the provisions of GASB Statement No. 22, “Accounting for Taxpayer-Assessed Tax Revenues in Governmental Funds” and GASB Statement No. 24, “Accounting and Financial Reporting for Certain Grants and Other Financial Assistance.” Significant revenues susceptible to accrual include income, sales and use, corporation and other taxes, federal grants, federal reimbursements and other reimbursements for use of materials and services. Revenues from federal grants are recognized when the related expenditures have been incurred. Receipts and disbursements of U.S. Government food stamps are accounted for in the General Fund. In accordance with GASB Statement No. 24, revenues and expenditures are recognized when food stamps are physically given to recipients. All food stamp transactions are recorded at face value. Undistributed food stamps at fiscal year end are recorded on the balance sheet as food stamps and deferred revenue. Revenues from other sources are recognized when received.
Expenditures under the modified accrual basis of accounting are recognized when the related fund liability is incurred. Exceptions to this rule are: (1) principal and interest on general long-term debt, which are recognized when paid and (2) inventories, which may be considered as expenditures when purchased.
The accrual basis of accounting, with a flow of economic resources measurement focus, is utilized in the proprietary funds, nonexpendable trust funds, pension trust funds, higher education funds and other component unit funds. Under this accounting basis, revenues are recognized when earned and expenses are recognized when incurred. The State has adopted the provisions of GASB Statement No. 20, “Accounting and Financial Reporting for Proprietary Funds and Other Governmental Funds that Use Proprietary Fund Accounting.” As permitted by GASB Statement No. 20, the State has elected not to adopt FASB Statements or Interpretations issued after November 30, 1989, unless the GASB specifically adopts such FASB Statements or Interpretations. Consistent with current GAAP for public colleges and universities, depreciation on higher education physical or plant assets is not recorded.
To the extent that higher education current funds are used to finance plant assets, the amounts so provided are accounted for as (1) expenditures, in the case of normal replacement of library books and movable equipment; (2) mandatory transfers, in the case of required provisions for debt amortization and interest and equipment renewal and replacement; and (3) transfers of a non-mandatory nature for all other cases.
Escheat property transactions are recorded in accordance with GASB Statement No. 21, “Accounting for Escheat Property.” Escheat property transactions are reflected in the General Fund of the State. When escheat property is received, it is recorded as an escheat liability until all legal claims to the property have expired. At that time, it is recorded as escheat revenue. GASB Statement No. 21 is effective for the fiscal year ended June 30, 1995.
Budgetary Basis of Accounting
The State’s budget is adopted in accordance with a statutory basis of accounting which is not in accordance with GAAP. Revenues are generally recognized when cash is received.
Expenditures generally are recorded when the related cash disbursement occurs. At year-end, accounts payable and accrued payroll and related benefits are recognized to the extent they are paid as of July 31, if the goods or services have been encumbered by June 30. If encumbered goods or services are not received by July 31, such encumbrances lapse; therefore, no reserve for encumbrances are reported at year end.
Assets and Liabilities
Cash and Cash Equivalents - The State principally deposits its cash in investment pools maintained by the State Board of Investments (BOI), and such deposits are generally available with overnight notice. Deposits in certain BOI pools with underlying investments being cash, temporary investments with original maturities not in excess of 90 days, or investment securities having average maturities not in excess of 90 days, together with cash deposits in outside bank accounts, are considered to be cash and cash equivalents. Deposits by certain operating funds of the Workers’ Compensation Fund in certain BOI investment pools are reported at market value.
Investments - Amounts reported under investments include certain deposits with the BOI and investments maintained outside the Board’s authority. Deposits in certain BOI maintained investment pools having underlying investments with average maturities in excess of 90 days, deposits in an investment pool having long-term investment securities designated to be held to maturity and deposits in certain investment pools established to acquire participant directed securities are classified as investments. Investments are carried at cost or amortized cost.
Interfund Receivables/Payables - Receivables and payables related to transactions between individual funds for goods provided or services rendered are recorded as “due from” or “due to” other funds. Such interfund accounts are further defined by reference to the affected segment of the reporting entity. For example, an amount due to Higher Education from the General Fund would be reflected as “Due From Other Funds - Primary Government” in the Higher Education Fund. The General Fund would record the same transaction as “Due to Other Funds - Component Units.”
Advances To/From Other Funds - Advances to other funds represent Economic Development Authority loans held by the State Board of Investments and Workers’ Compensation Fund in separate investment pools.
Inventories - Consumable inventories, consisting of expendable materials and supplies held for consumption, are valued and reported for financial statement purposes. Materials and supplies inventories are physically counted and valued at cost (first-in, first-out (FIFO) method) at year end. During the year, inventories are recorded as expenditures in the governmental funds using the purchases method, except for the State Road Fund, which utilizes the consumption method. Both methods are in conformity with generally accepted accounting principles for governmental entities. The net change in inventory is reported as a change in fund balance in the Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types. A reservation of fund balance is also recorded for the ending inventory amount, indicating that inventory does not constitute “expendable available financial resources.” Proprietary fund and component units’ inventories are valued at the lower of cost (FIFO) or market and are expensed when used.
Restricted Assets - Certain proceeds of enterprise and internal service funds and component units revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. Other restricted assets are so classified because their usage is restricted to pay specified benefits or specific program costs.
Fixed Assets - General fixed assets are recorded in the General Fixed Assets Account Group (GFAAG) at historical cost, or at estimated historical cost if actual historical cost is not available. Donated fixed assets are recorded at fair market value or estimated fair market value at the time of the donation. In accordance with the capitalization policy adopted by the State for financial reporting, equipment in excess of $25,000 is capitalized. Certain small blended component units may follow other capitalization policies which range from $5,000 to $25,000 for equipment. Buildings in excess of $100,000 are capitalized; improvements which extend the useful lives and/or significantly increase values of capitalized buildings are reported. All land, regardless of acquisition price, is capitalized.
Capital outlay expenditures on the Combined Statement of Revenues, Expenditures and Changes in Fund Balances will materially exceed the amount reported as additions to the General Fixed Assets Account Group, due to the fact that expenditures for general fixed assets by the governmental funds are recorded as capital outlay expenditures of those funds, regardless of acquisition price. In addition, the capital outlay expenditures include “infrastructure” expenditures reported by State Road which are not capitalized in the General Fixed Assets Account Group. Infrastructure includes public domain general fixed assets such as roads, bridges, streets, sidewalks, drainage systems and lighting systems, which are immovable and of value only to the government. The costs of normal maintenance and repairs that do not add value to the asset or materially extend asset lives are not capitalized. Assets in the GFAAG are not depreciated.
Fixed assets held in enterprise funds, internal service funds and component units have been valued in the same manner as the General Fixed Assets Account Group. The fixed assets of these funds and discretely presented component units, other than Higher Education, are depreciated over their estimated useful lives. Buildings are depreciated over various lives, ranging from 20-50 years, using the straight-line depreciation method. Improvements are capitalized and depreciated over the remaining useful lives of the related fixed assets. The Parkways, Economic Development and Tourism Authority has capitalized infrastructure assets because such assets are used to generate revenues. Their assets are depreciated over a period of 10-50 years.
Insurance Enterprises and Obligations - The Board of Risk and Insurance Management (BRIM), the Public Employees’ Insurance Agency (PEIA) and the Workers’ Compensation Fund each represent and are accounted for as insurance enterprise funds of the State. Accordingly, these enterprises use risk pool accounting in the financial reporting of their insurance operations in accordance with Statement of Financial Accounting Standards (SFAS) No. 60, “Accounting and Reporting for Insurance Enterprises” and GASB Statement No. 10, “Accounting and Financial Reporting for Risk Financing and Related Insurance Issues.” Each organization has included the required supplemental information (in accordance with GASB Statement No. 10) in its separately audited financial statements.
Long-term debt - Long-term debt is recognized as a fund liability of a governmental fund when due, or when resources have accumulated in the debt service fund for payment in the following year. For other long-term debt, only that portion expected to be financed from expendable, available financial resources is reported as a fund liability of a governmental fund. The remaining portion of such debt is reported in the General Long-Term Debt Account Group. Long-term liabilities expected to be financed from proprietary fund or component unit operations are accounted for in those funds.
Claims and judgments, environmental obligations and accumulated compensated absences that are expected to be liquidated with expendable, available financial resources are reported as an expenditure and a fund liability of the governmental and expendable trust funds responsible for their payment. The remaining portion that is not expected to be liquidated with expendable, available financial resources is reported in the General Long-Term Debt Account Group. In the proprietary, pension and nonexpendable trust, higher education and other discretely presented component unit fund types, such obligations are recorded as fund liabilities.
Compensated Absences - The amount of compensated absences to be paid from future resources is reported in the General Long-Term Debt Account Group. Vested or accumulated vacation leave of the proprietary, higher education and other component units’ funds is recorded as an expense and a liability of those funds as the benefits accrue to employees.
State employees earn sick leave benefits, which accumulate, but do not vest. When separated from employment with the State, an employee’s sick leave benefits are considered ended and no reimbursement is provided. However, an employee may convert, at the time of retirement, any unused or accumulated sick leave to pay a portion of the employee’s postemployment health care insurance premium. If this option is not selected, the leave amount may be applied toward an increase in the employee’s retirement benefits with such sick leave constituting additional credited service in computation of such benefits. These options and computations may occur under any of the State’s retirement systems. The liability for accumulated sick leave for employees has been recorded at June 30, 1995, in accordance with GASB Statement No. 16, using the termination payment method.
Fund Equity - Reserved or restricted fund equity represent amounts that are legally segregated, external to State legislative mandates, for specific purposes. Reserves for inventories, advances to other funds and long-term receivables represent the portion of governmental fund assets which are not available, expendable financial resources. Reserves in the Debt Service Fund represent the amount of fund balance restricted for payment of debt service. Capital Projects Fund balances are restricted for construction of capital assets and in compliance with bond covenants. Reserves in the fund balances of Trust Funds represent amounts held in a trustee capacity for others. Reserves in Higher Education Funds represent amounts restricted for loan or plant programs or for other legally restricted purposes.
Designations of fund balances represent tentative plans that are subject to change at the discretion of management. Designations in the Special Revenue Fund represent amounts designated by management for construction or purchase of capital assets. Capital Projects fund balance designation represents amounts set aside by management for other specific purposes.
Total Columns (Memorandum Only) - Total columns on the combined financial statements are captioned “Memorandum Only” to indicate that they are presented only to facilitate financial analysis. Data in these columns is not comparable to a consolidation, and interfund balances and transactions have not been eliminated in the aggregation of this data.
Future Adoption of Accounting Pronouncements - The GASB issued Statement No. 27, “Accounting for Pensions by State and Local Government Employers,” that the State expects to adopt in fiscal year 1996, as permitted by the Statement.