Summary of Report 98-061

August 1998

Report Number 98-061

Overall Conclusion

Our review of the Benefits Proportional by Fund Reports of eight agencies and universities found that salaries were not paid proportionally to funding sources as required in the General Appropriations Act, thus requiring the transfer of $4.6 million to the General Revenue Fund.

The Benefits Proportional by Fund Reports (Fund Reports) help determine if the percentage of expenditures that a state entity spends on employee benefits matches the percentage of total funding that the entity receives from the General Revenue Fund. The amount ($4.6 million) is based on the original reports filed by the entities and it takes into account the adjustments these entities made as of April 1, 1998. See the attachment for details concerning the estimated adjustments.

Key Facts and Findings

• There were errors in calculations and interpreting or not following state reporting guidelines. State entities do not appear to fully understand the Comptroller of Public Accounts' (Comptroller) guidelines for preparing Fund Reports. One agency did not use the correct process to compute the method of funding. Two entities believed that retirement benefits were exempt from the calculations. One did not include benefit replacement pay in the calculations. Some of the entities did not believe transfers should be made when the calculations indicated that benefits were not paid proportionally. Other entities believed that a transfer should be executed only when funds were due the General Revenue Fund.

• We noted other issues that need to be addressed in the Comptroller's guidelines.
The issues that need attention include: earned federal funds, federal pass-through funds, health benefits paid for retirees, institutional funds for higher education institutions, and an adequate review of Fund Reports before they are submitted. In addition, the guidelines should place more emphasis on the requirement to make adjustments to achieve proportionality for employee benefits paid.

• The purpose of the review was to verify the accuracy of the information in the reports and compliance with proportionality requirements.
The process for selecting the eight reports reviewed was designed to target reports most likely to have errors that could lead to significant adjustments. All state entities that have multiple sources of funding are required to submit the Fund Report in accordance with the guidelines in the Comptroller's Accounting Policy Statement 011. The legal basis for the requirement is the General Appropriations Act, 74th Legislature, Article IX, Section 30.

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