Full text
Dennis E. Hoyle, CPA, Auditor General
Office of the Auditor General
General Assembly
State of Rhode Island
State of Rhode Island
Single Audit Report
Fiscal Year Ended June 30, 2021
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33 Broad Street Suite 201 Providence, RI 02903-4177
tel: 401.222.2435 fax: 401.222.2111
Office of the Auditor General
State of Rhode Island - General Assembly
Dennis E. Hoyle, CPA - Auditor General
oag.ri.gov
June 30, 2022
Finance Committee of the House of Representatives and Joint Committee on Legislative Services
General Assembly, State of Rhode Island:
I am pleased to submit the State’s Single Audit Report for the fiscal year ended June 30, 2021.
This audit was required by both state law (sections 22-13-4 and 35-7-10 of the General Laws) and the
federal Single Audit Act. The audit was conducted in accordance with the requirements of Title 2 U.S.
Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and
Audit Requirements for Federal Awards (Uniform Guidance). As required, this report is submitted to the
Federal Single Audit Clearinghouse for distribution to federal funding agencies.
The Single Audit Report includes our reports on (1) the basic financial statements of the State of
Rhode Island, (2) internal control over financial reporting and on compliance and other matters, and
(3) compliance with requirements applicable to each major federal program and on internal control over
compliance. A detailed Schedule of Expenditures of Federal Awards is also included, as outlined in the
Table of Contents. Findings and related recommendations that are required to be reported in the Single
Audit Report are included in the Schedule of Findings and Questioned Costs. These include financial
statement related findings and those related to the administration of federal programs.
The State’s management has prepared a corrective action plan addressing each finding, which is
included in Section E of this report. The status of prior year findings has also been prepared by the State
and is included in Section F of this report.
The Single Audit Highlights section on the following pages summarizes (1) COVID-19 federal
assistance received by the State to address the effects of the global pandemic, (2) key statistics about federal
assistance received by the State over the last decade, (3) the federal programs audited in fiscal 2021 as
major programs, and (4) audit findings related to the financial statements and the administration of federal
programs.
I would like to express our appreciation to the many individuals that cooperated with and assisted
us in the conduct of our audit.
Respectfully submitted,
Dennis E. Hoyle, CPA
Auditor General
State of Rhode Island
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Memorandum
To:
Federal Single Audit Clearinghouse
Re:
Submission of the State of Rhode Island – Single Audit Report
Fiscal Year Ended June 30, 2021
Federal EIN # 05-6000522
Submission of the State of Rhode Island’s Single Audit Report, for the fiscal year ended
June 30, 2021, was delayed beyond the original due date of March 31, 2022, due to the effect of the global
COVID-19 pandemic. Such extensions were permitted pursuant to federal Office of Management and
Budget (OMB) Memo M-21-20 - Appendix 3 - Disaster Relief Flexibilities to Reduce Burden for Financial
Assistance.
OMB authorized therein:
IX. Extension of Single Audit submission: Awarding agencies, in their capacity as cognizant or
oversight agencies for audit, should allow recipients and subrecipients that have not yet filed their
single audits with the Federal Audit Clearinghouse as of the date of the issuance of this
memorandum that have fiscal year-ends through June 30, 2021, to delay the completion and
submission of the Single Audit reporting package, as required under Subpart F of 2 CFR § 200.501
to six months beyond the normal due date. No further action by awarding agencies is required to
enact this extension. This extension does not require individual recipients and subrecipients to seek
approval for the extension by the cognizant or oversight agency for audit; however, recipients and
subrecipients should maintain documentation of the reason for the delayed filing. Recipients and
subrecipients taking advantage of this extension would still qualify as a "low-risk auditee" under
the criteria of 2 CFR § 200.520(a). (2 CFR § 200.501)
The State of Rhode Island experienced delays both in preparing and auditing components of the
comprehensive Single Audit Report due to multiple effects of the COVID-19 global pandemic. This
memorandum is included within the reporting package for the State of Rhode Island’s Single Audit Report
- Fiscal Year Ended June 30, 2021 - to meet the documentation requirement of OMB Memo M-21-20.
State of Rhode Island – Fiscal 2021 – Single Audit Highlights
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The annual Single Audit is required by federal law and regulation as a condition of continued federal assistance. The report
includes the State’s financial statements, a detailed schedule of federal award expenditures and our reports outlining internal control
deficiencies and noncompliance relating to financial reporting and the administration of federal programs.
Unprecedented amounts of federal assistance were expended in fiscal 2021. Total expenditures of federal awards increased
to $8.4 billion in fiscal 2021 of which approximately $3.6 billion was COVID related. Some COVID funding was received from new
federal programs created in response to the pandemic while other awards resulted from the expansion or modification of existing
federal programs. The major sources of COVID-19 related funding available during fiscal 2021 and expenditures through June 30,
2021, are detailed below:
COVID-19 related Federal Assistance:
Fiscal 2021
Expenditures
Unemployment Insurance Benefits
$ 1,730,031,801
Unemployment Benefits funded by FEMA
172,253,113
Coronavirus Relief Fund (CRF) – (total award $1.25 billion)
947,668,662
FEMA Disaster Assistance (Stafford Act)
182,946,726
Epidemiology and Laboratory Capacity
55,309,124
Enhanced Federal Medicaid Assistance Percentage (FMAP) for Medicaid
120,414,960
Enhanced SNAP Benefits
107,070,005
Pandemic EBT (cash benefits in lieu of in-school meals provided to students)
50,374,577
Education Stabilization Fund
54,833,985
Other COVID-19 related assistance
127,360,375
Total
$ 3,548,263,328
Eligibility and benefit provisions for many programs were modified in response to the pandemic to either facilitate the application
for benefits, continue eligibility that existed pre-pandemic, or enhance benefits available through the programs. An extensive array
of services to individuals and costs to support pandemic response efforts were reimbursed under these programs as shown in the
chart below:
Federal COVID-Related Program Expenditures by Category ($ in millions)
Testing, Infection
Mitigation, etc.:
$173.6 , 5%
Assistance to Local
Governments:
$78.8 , 2%
Assistance to
Businesses:
$153.0 , 4%
Assistance to
Other Entities:
$177.5 , 5%
State Employee
Payroll Costs:
$246.1 , 7%
Unemployment
Insurance Benefits:
$1,940.6 , 55%
Enhanced Human
Services Benefits:
$282.5 , 8%
Education-related
Assistance:
$67.3 , 2%
Transportation
Subsidies:
$51.1 , 1%
Other
Assistance:
$377.7 , 11%
State of Rhode Island – Fiscal 2021 – Single Audit Highlights
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The following graph details the changes in total expenditures of federal awards as reported in the State’s Single Audit Reports
for fiscal years 2012 to 2021. In years 2020 and 2021, the significant increase was due to COVID-19 federal assistance. In fiscal
2019, the decrease in total expenditures of federal awards largely resulted from the return of federally guaranteed student loans to
the federal government.
Federal assistance consists of both direct cash and noncash awards (e.g., loan and loan guarantee programs and donated
food commodities). Federal assistance is received under a wide variety of more than 450 individual programs. Many programs are
jointly financed with federal and state funding. Medicaid continues to be the single largest program with fiscal 2021 expenditures
totaling approximately $3.1 billion - the federal government shared $2.1 billion of that cost. Consistent with federal guidelines, we
tested 81% of the total expenditures of federal awards as major programs following risk-based criteria established in the federal
Uniform Guidance. Major program expenditures are summarized in the chart below:
Fiscal 2021 Federal Award Expenditures Tested as Major Programs – Summarized by Program Type
Medicaid, CHIP
$2,135,700,322
Unemployment Insurance
$2,285,734,788
Education
$149,417,824
Transportation
$410,813,510
Social Services
$521,662,460
Housing Assistance
$27,464,544
Coronavirus Relief
$1,131,710,226
Environmental
$9,169,528
Law Enforcement
$8,764,415
Public Health
$57,103,328
Research & Development
$79,130,251
$4.908 $4.491 $4.455 $4.592 $4.875 $4.928 $4.927 $4.371
$6.094
$8.402
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Total Expenditures of Federal Awards
($ billions)
State of Rhode Island – Fiscal 2021 – Single Audit Highlights
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The Single Audit Report includes 78 findings as summarized in the following table.
Summary of findings included in the 2021 Single Audit Report
Primary
government
Component
units
Total
Findings related to the financial statements
Material noncompliance / material weakness in internal control
1
1
Material weaknesses in internal control
6
3
9
Significant deficiencies in internal control
23
3
26
Material noncompliance
1
1
Findings related to the administration of federal programs
Material noncompliance / material weaknesses in internal control
5
5
Material weaknesses in internal control
10
1
11
Significant deficiencies in internal control
18
5
23
Noncompliance / significant deficiencies in internal control
2
2
Total
65
13
78
Findings Summary
Financial Statement Findings
Weaknesses identified in the State’s internal control over
financial reporting, result from our annual audit of the State’s
financial statements for the year ended June 30, 2021. The
State’s management has responsibility for, and maintains internal
control over, financial reporting. Government Auditing Standards
require that we communicate deficiencies in internal control over
financial reporting and material noncompliance based on our
audit. Findings repeated from prior years are identified. These
financial statement related findings are also required to be
included in the Single Audit Report submitted to the federal
government.
The State is implementing its strategic plan to replace and
enhance key statewide financial and administrative systems and
is in the process of selecting a software vendor and system
integrator. The implementation should focus on ensuring a
successful outcome through effective management of critical
risks. The plan detailed the need for, and the benefits to be
derived from, an enterprise applications modernization effort
ultimately concluding that “the risks of inaction far outweigh the
cost of upgrades in capability”.
This effort is intended to address certain long-standing issues
which negatively impact controls over operations and financial
reporting resulting from the need for (1) increased investment in
information technology to keep pace with citizen expectations, (2)
rapid technology advancements, (3) meeting federal program
compliance mandates, and (4) addressing business continuity
risks.
Controls within the systems used to process unemployment
insurance claims are insufficient to prevent fraudulent
unemployment insurance benefit payments. The Department of
Labor and Training has identified a significant amount of
fraudulent benefits paid to claimants. The State’s system for
payment of unemployment insurance claims and collection of
employment taxes is outdated.
Management focus, training and implementation resources
have been insufficient to ensure that departments and agencies
are assessing and documenting internal control consistent with
management’s overall responsibility for the adequacy of the
design and operation of internal control. Internal controls
safeguard public resources and support accurate financial
reporting.
The State should commit to providing additional training and
implementation materials to assist departments and agencies in
documenting their internal control. An internal control
assessment and documentation effort should be implemented.
The State can continue to improve its consideration of controls
over functions performed by external parties by enhancing the
use and documentation of Service Organization Control (SOC)
reports. These improvements are necessary and consistent with
management’s responsibility for the overall adequacy of the
design and operation of internal control.
The complexity of Medicaid program operations adds to the
challenge of accurately accounting for all Medicaid financial
activity within the State’s financial statements. This complexity
increases each year through new federal regulations, various
State initiatives, and additional challenges resulting from the
implementation of its RIBridges eligibility system. Medicaid is the
State’s single largest activity - representing nearly 35% of the
annual budgeted outlays of the State’s General Fund.
The Executive Office of Health and Human Services (EOHHS)
authorized more than $170 million in system payouts and manual
disbursements in fiscal 2021, representing provider advances,
payments to managed care organizations for contract settlements
and/or non-claims based financial activity, and other program
disbursements. The reporting and internal control processes
relating to these types of disbursements are manual in nature and
external to other established control procedures.
State of Rhode Island – Fiscal 2021 – Single Audit Highlights
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The State can improve controls over recording federal revenue
to ensure (1) amounts are consistent with the limitations of grant
awards from the federal government and (2) federally claimed
expenditures are consistent with amounts recorded in the State’s
accounting system.
The State can improve controls over the use of the DBC Debt
Manager system to support debt related accounting entries.
Procedures for recording transactions included in the
government-wide financial statements can be improved.
A variance of $2.5 million existed between the balance of the
unexpended Coronavirus Relief Funds and the total federal
award less cumulative expenditures through June 30, 2021.
Reconciliations should also be completed to ensure eligible
expenditures were not reimbursed from more than one funding
source.
The State received an unprecedented amount of federal
assistance to respond to the effects of the global pandemic.
Certain costs were reimbursable under multiple programs and
federal guidance was continually evolving which resulted in
changing direction as to costs to be applied to specific federal
awards.
There is an excessive volume of journal entries recorded within
the centralized accounting system. This volume weakens
controls over the appropriate authorization and classification of
expenditures and limits transparency regarding the underlying
primary expenditure transactions.
The processes followed for periodic physical inventories of
capital assets and the evaluation of inventory results can be
improved to ensure that accurate capital asset records are
maintained.
Third-party insurance reimbursements for COVID testing
totaling $3.2 million at June 30, 2021 are pending (1) credit to the
federal government for previously reimbursed costs or (2)
recognition as general revenues. Other third-party insurance
recoveries that are in process have not been recognized as
receivables, revenue, or amounts due to the federal government.
We proposed multiple material audit adjustments during our
audit of the State’s fiscal 2021 financial statements.
Taxes receivable required adjustment at year end due to timing
differences and the inclusion of some invalid amounts.
The State needs to (1) ensure its IT security policies and
procedures are current and (2) complete assessments of
compliance for all critical IT applications. Systems posing the
most significant operational risk should be prioritized.
The State does not follow uniform enterprise-wide program
change control procedures for the various IT applications
operating within State government. This increases the risk that
unauthorized or inappropriate changes could be made to IT
applications without detection.
The Department of Transportation’s use of multiple systems to
meet its operational and financial reporting objectives results in
unnecessary complexity and control weaknesses since these
systems were never designed to share data.
The resources necessary to effectively manage and administer
the OPEB (retiree healthcare) System to ensure all functions are
met and adequately controlled should be assessed. A unified
database or computer application is needed to maintain
membership data for each of the State’s OPEB plans. This would
improve controls over the administration of the benefit programs
and the process to accumulate data necessary for periodic
actuarial valuations of the OPEB plans for both funding and
accounting purposes.
Controls over the preparation of the Schedule of Expenditures
of Federal Awards (SEFA) can be enhanced to ensure all
program activity is accurately reported to the proper Assistance
Listing number and amounts passed through to subrecipients are
appropriately classified and reported.
Our report includes control deficiencies and material
noncompliance reported by the independent auditors of
component units included within the State’s financial statements.
Their accounting and control procedures are generally
independent of the State’s control procedures.
Federal Program Findings
The federal Single Audit Act and Uniform Guidance
implementing regulations require that the annual audit of
governmental entities, expending more than $750,000 of federal
funds in a fiscal year, include federal compliance related audit
procedures within the scope of their annual audit. Under the
Uniform Guidance, the federal programs subject to audit are
guided by the total expenditures for the program and risk
assessment processes reflecting the results of prior audits and
other risk factors impacting the likelihood of noncompliance.
The federal Office of Management and Budget Compliance
Supplement assists auditors in identifying relevant and material
compliance provisions for testing along with suggested audit
procedures. Auditors are required to assess the control
procedures that have been established to ensure compliance with
federal requirements.
The federal programs tested as major programs (see following
table) for the fiscal 2021 Single Audit were selected based on the
methodology required in the Uniform Guidance. Our audits of
major programs included procedures to (1) gain an understanding
of controls established to ensure compliance and (2) test the
effectiveness of those controls, and (3) assess compliance with
requirements specific to each program.
For fiscal 2021, the federal funds received in response to the
global pandemic were unprecedented in volume but also in the
need to use the funds in an expedited manner to address the
needs of the public health emergency. In some instances, this
challenged existing control mechanisms due to changes or
relaxation of eligibility requirements or stressed systems due to
the volume and demand for services.
Additionally, multiple federal programs had overlapping
objectives, which led to significant reallocation of costs as federal
requirements were continually modified and the State’s strategic
COVID response efforts were implemented and refined. These
factors had an impact on the controls to ensure compliance with
federal requirements for most programs tested as major
programs in fiscal 2021.
State of Rhode Island – Fiscal 2021 – Single Audit Highlights
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2021 Major Programs
Pandemic EBT Food Benefits (P-EBT)
Supplemental Nutrition Assistance Program (SNAP) Cluster
Child Nutrition Cluster
Home Investment Partnerships Program
Fish and Wildlife Cluster
Crime Victim Assistance
Unemployment Insurance
Airport Improvement Program
Highway Planning and Construction Cluster
Federal Transit Cluster
Coronavirus Relief Fund
Special Education (IDEA) Cluster
Education Stabilization Fund
Epidemiology and Laboratory Capacity for Infectious
Diseases (ELC)
Temporary Assistance for Needy Families (TANF)
Child Care and Development Fund (CCDF) Cluster
Children’s Health Insurance Program (CHIP)
Medicaid Cluster
Disaster Grants – Public Assistance (Presidential Declared
Disasters)
Presidential Declared Disaster Assistance to Individuals and
Households – Other Needs
Research and Development Cluster
Federal Funding Accountability and Transparency Act
(FFATA) – Controls over reporting of subawards to a federal
transparency website can be enhanced to ensure accurate
reporting in compliance with the requirements of FFATA.
Federal benefit programs for healthcare, cash assistance
and childcare – Controls over the RIBridges eligibility and benefit
system are inadequate to ensure that user access is limited to
only authorized individuals and such access is consistent with
each user’s specific scope of duties. Additionally, automated
password change controls were not operational; and therefore,
users were not required to change passwords at required
intervals.
EOHHS, DHS and the Division of Information Technology must
enhance systems security oversight over systems used to
administer multiple federally funded programs to fully comply with
federal regulations relating to ADP risk and system security
review. The plan must be sufficiently comprehensive and include
timely reaction to and consideration of identified security issues
and risk factors.
Child Nutrition Cluster – The Department of Corrections
needs to ensure that it complies with federal regulations
governing the receipt, distribution and inventory of USDA-
Donated Foods.
Fish and Wildlife Cluster – DEM’s subrecipient monitoring
procedures need to be enhanced to ensure that funds are
expended by subrecipients in compliance with applicable
program laws and regulations.
DEM’s controls to ensure compliance with state matching
requirements for the Fish and Wildlife Cluster need to be
enhanced.
DEM’s Real Property Management procedures need to be
enhanced to ensure that property acquired or constructed with
Wildlife Restoration program funds shall continue to serve the
purpose for which it was acquired or constructed in compliance
with applicable program laws and regulations.
Crime Victim Assistance – Controls over federal reporting
can be enhanced to ensure SF-425 Federal Financial Reports are
accurate and adequately supported.
Subrecipient monitoring procedures should be enhanced to
ensure that funds are expended by subrecipients in compliance
with applicable program laws and regulations.
Unemployment Insurance – Controls over the processing of
unemployment insurance claims were ineffective to sufficiently
prevent fraudulent unemployment insurance benefit payments.
DLT estimated approximately $98 million of fraudulent claims
have been paid and an additional $550 million are considered
suspected fraudulent claims.
Controls were also ineffective to ensure compliance with the
documentation of self-employment income for the Pandemic
Unemployment Assistance (PUA) program.
The Department of Labor and Training (DLT) did not make the
necessary changes to its system to allow for the imposition of
penalties on overpayments due to fraud, and to prohibit relief from
charges to an employer’s Unemployment Compensation (UC)
account when the overpayment was the result of the employer’s
failure to respond timely or adequately to a request for
information.
Highway Planning and Construction – RIDOT’s Quality
Assurance Program should be updated to reflect current testing
procedures.
Department policies and procedures for the administration of
engineering and design-related service contracts require written
approval from FHWA.
Federal Transit Cluster – RIDOT’s controls are insufficient to
ensure Federal Transit Cluster funds are expended or obligated
within the applicable period of performance.
Multiple recommendations were also made to improve controls
and enhance compliance by the Rhode Island Public Transit
Authority in their use of Federal Transit Cluster funds.
Coronavirus Relief Fund – Controls over final centralized
approval of expenditures funded by the Coronavirus Relief Fund
(CRF) should be improved.
State of Rhode Island – Fiscal 2021 – Single Audit Highlights
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Questioned costs totaling $508 thousand were identified for
expenditures reimbursed from the Coronavirus Relief Fund
program.
The State has not implemented sufficient overall subrecipient
monitoring activities for Coronavirus Relief Fund amounts
passed-through to subrecipients.
The State had insufficient controls to ensure expenditures were
not reimbursed from more than one award under federal
programs with similar pandemic response related objectives.
Epidemiology and Laboratory Capacity – RIDOH can
enhance monitoring controls over time and effort reporting to
ensure payroll cost allocations are adequately supported by
employee timesheets.
RIDOH can enhance its monitoring of subrecipients to ensure
compliance with federal program requirements.
Temporary Assistance for Needy Families – The State can
improve compliance with TANF eligibility requirements
specifically by ensuring consistent documentation of eligibility
components within RIBridges.
Child Care and Development Cluster – RIBridges controls
over eligibility determinations, income validation and calculation
of required parent cost-sharing amounts require strengthening for
the CCDF Cluster programs.
Matching expenditures reported on the CCDF ACF-696 report
for the 2021 grant period were inconsistent with data included in
the RIFANS accounting system.
Controls over the monitoring of background check
requirements
for
licensed
childcare
centers
requires
strengthening.
Medicaid and Children’s Health Insurance Programs – The
State did not materially comply with CHIP eligibility requirements
during fiscal 2021. RIBridges is not fully evaluating all eligibility
criteria to ensure compliance with federal regulations.
The State is not currently in compliance with federal
regulations requiring States to implement certain program
integrity safeguards when administering Medicaid managed care
programs.
The State is not currently in compliance with federal
regulations for the screening, enrollment, and revalidation of
providers used in managed care organization (MCO) networks.
Although many of these providers are also enrolled as Medical
Assistance providers, the new regulations mandate that States
screen, enroll, and periodically revalidate all managed care
network providers.
Capitation payments to MCOs represent approximately 64% of
Medicaid benefit expenditures. EOHHS needs to improve
controls over managed care financial activity to ensure
compliance with allowable cost principles for related program
expenditures.
Controls can be improved to timely terminate Medicaid
eligibility for deceased individuals to prevent continued payment
of managed care capitation after death. Payments totaling $942
thousand were made for individuals who had been deceased for
more than 90 days. The federal share of these questioned costs
totaled $681 thousand.
Controls should be improved over the quarterly reporting of
expenditures for the Medicaid and CHIP programs.
The State should improve controls to ensure that its managed
care organizations (MCOs) are effectively identifying TPL
insurance coverage for Medicaid recipients and cost avoiding for
claims covered by other insurance. Medicaid should be the payor
of last resort when processing medical claims for individuals
covered by other insurance.
The State’s current practices for inpatient hospital and long-
term care facility rate setting do not fully comply with its State plan
provisions requiring an annual review of inpatient hospital rate
components and nursing facility audit requirements. Controls to
ensure NCCI claims processing edits are functioning over
Medicaid activity require improvement to ensure compliance with
federal regulations.
Certain psychiatric residential treatment facility (PRTF)
services provided to children in the State’s custody have been
charged to Medicaid in fiscal 2021 in accordance with a
methodology that is pending State Plan Approval. Controls over
other services provided to children in the State’s custody would
be improved if processed through the Medicaid Management
Information System (MMIS).
Disaster Grants – Public Assistance – RIEMA can improve
its reporting function. Required federal financial reports for fiscal
2021 were not properly supported by the State accounting
system.
Presidential Declared Disaster Assistance to Individuals
and Households – Supplemental unemployment benefits were
paid to claimants that did not meet the minimum benefit threshold
required for eligibility. Questioned costs totaling $6.3 million were
identified.
Corrective Action Plans (Section E), prepared by the State’s
management, and a Summary Schedule of Prior Audit
Findings (Section F) reports the status of findings from prior
audits.
State of Rhode Island
Single Audit Report
For the Fiscal Year Ended June 30, 2021
Office of the Auditor General
- ix -
General Assembly
Condensed Table of Contents
Page
A.
Basic Financial Statements
Independent Auditor’s Report on the Basic Financial Statements
and Supplementary Schedule of Expenditures of Federal Awards ................................................. A-1
Management’s Discussion and Analysis ......................................................................................... A-4
Basic Financial Statements ........................................................................................................... A-31
Notes to Basic Financial Statements ............................................................................................. A-49
Required Supplementary Information ......................................................................................... A-185
B.
Schedule of Expenditures of Federal Awards
Schedule of Expenditures of Federal Awards ................................................................................. B-1
Notes to the Schedule of Expenditures of Federal Awards ........................................................... B-18
C.
Auditor’s Reports
Independent Auditor’s Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards ................................................... C-1
Independent Auditor’s Report on Compliance for Each Major Federal Program
and Report on Internal Control Over Compliance as Required by Uniform Guidance .................. C-4
State of Rhode Island
Single Audit Report
For the Fiscal Year Ended June 30, 2021
Office of the Auditor General
- x -
General Assembly
Condensed Table of Contents
(continued)
Page
D.
Schedule of Findings and Questioned Costs
Section I
–
Summary of Auditor’s Results .............................................................................. D-1
Section II –
Financial Statement Findings ................................................................................ D-4
Section III –
Federal Award Findings and Questioned Costs
Table of Findings by Major Program .................................................................. D-45
E.
Corrective Action Plans – (Prepared by the State’s Management) .......................................... E-1
F.
Summary Schedule of Prior Audit Findings – (Prepared by the State’s Management) .......... F-1
State of Rhode Island
Single Audit Report
For the Fiscal Year Ended June 30, 2021
Office of the Auditor General
General Assembly
Financial Statements
State of Rhode Island
Single Audit Report
For the Fiscal Year Ended June 30, 2021
Office of the Auditor General
A-i
General Assembly
Basic Financial Statements
Table of Contents
Page
INDEPENDENT AUDITOR’S REPORT ............................................................................................ A-1
MANAGEMENT’S DISCUSSION AND ANALYSIS ......................................................................... A-4
BASIC FINANCIAL STATEMENTS
Government-wide Financial Statements
Statement of Net Position .......................................................................................................... A-32
Statement of Activities ............................................................................................................... A-34
Fund Financial Statements
Balance Sheet – Governmental Funds ....................................................................................... A-35
Reconciliation of the Balance Sheet of the Governmental Funds
to the Statement of Net Position .......................................................................................... A-36
Statement of Revenues, Expenditures, and Changes in Fund
Balances – Governmental Funds ......................................................................................... A-37
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balances of the Governmental Funds to the Statement of Activities ......................... A-38
Statement of Net Position – Proprietary Funds .......................................................................... A-39
Statement of Revenues, Expenditures, and Changes in Fund
Net Position – Proprietary Funds ........................................................................................ A-40
Statement of Cash Flows – Proprietary Funds ........................................................................... A-41
Statement of Fiduciary Net Position – Fiduciary Funds ............................................................ A-42
Statement of Changes in Fiduciary Net Position – Fiduciary Funds ......................................... A-43
Component Unit Financial Statements
Combining Statement of Net Position ....................................................................................... A-44
Combining Statement of Activities ............................................................................................ A-48
Notes to the Basic Financial Statements ....................................................................................... A-49
State of Rhode Island
Single Audit Report
For the Fiscal Year Ended June 30, 2021
Office of the Auditor General
A-ii
General Assembly
Basic Financial Statements
Table of Contents (continued)
Page
REQUIRED SUPPLEMENTARY INFORMATION
Budgetary Comparison Schedule – General Fund ................................................................... A-186
Budgetary Comparison Schedule – Intermodal Surface Transportation Fund ........................ A-190
Notes to the Required Supplementary Information – Budget and Actual................................ A-191
Schedule of State’s Proportionate Share of the Net Pension Liability – Employees’
Retirement System – State Employees – Governmental Activities................................... A-193
Schedule of State’s Proportionate Share of the Net Pension Liability – Employees’
Retirement System – State Employees – Business-Type Activities .................................. A-194
Schedule of State’s Proportionate Share of the Net Pension Liability – Employees’
Retirement System – State Share – Teachers (Special Funding Situation) ....................... A-195
Schedule of State Contributions – Employees’ Retirement System – State
Employees – Governmental Activities .............................................................................. A-196
Schedule of State Contributions – Employees’ Retirement System – State
Employees – Business-Type Activities ............................................................................. A-197
Schedule of State Contributions – Employees’ Retirement System – State
Share – Teachers (Special Funding Situation) .................................................................. A-198
Schedule of Changes in Net Pension Liability and Related Ratios – State Police
Retirement Benefits Trust ................................................................................................. A-200
Schedule of Changes in Net Pension Liability and Related Ratios – Judicial
Retirement Benefits Trust ................................................................................................. A-201
Schedule of Changes in Net Pension Liability and Related Ratios – RI Judicial
Retirement Fund Trust ....................................................................................................... A-202
Schedule of Changes in Net Pension Liability and Related Ratios – State Police
Retirement Fund Trust ....................................................................................................... A-203
Schedule of State Contributions – State Police Retirement Benefits Trust ............................. A-204
Schedule of State Contributions – Judicial Retirement Benefits Trust .................................... A-205
Schedule of State Contributions – RI Judicial Retirement Fund Trust .................................... A-206
Schedule of State Contributions – State Police Retirement Fund Trust .................................. A-207
Schedule of Changes in Total Pension Liability – Judicial Non-Contributory
Retirement Plan ................................................................................................................. A-209
Notes to the Required Supplementary Information – Pensions ............................................... A-210
State of Rhode Island
Single Audit Report
For the Fiscal Year Ended June 30, 2021
Office of the Auditor General
A-iii
General Assembly
Basic Financial Statements
Table of Contents (continued)
Page
REQUIRED SUPPLEMENTARY INFORMATION (continued)
Schedules of State’s Proportionate Share of the Net OPEB Liability – State
Employees – Governmental Activities .............................................................................. A-214
Schedules of State’s Proportionate Share of the Net OPEB Liability – State
Employees – Business-Type Activities ............................................................................. A-215
Schedules of State’s Proportionate Share of the Board of Education Plan Net
OPEB Liability .................................................................................................................. A-216
Schedule of State Contributions – State Employees – Governmental Activities ..................... A-217
Schedule of State Contributions – State Employees – Business-Type Activities .................... A-218
Schedule of State Contributions to Board of Education Plan .................................................. A-219
Schedule of Changes in Net OPEB Liability (Asset) and Related Ratios – Teachers Plan ..... A-221
Schedule of Changes in Net OPEB Liability (Asset) and Related Ratios – Judges Plan ........ A-222
Schedule of Changes in Net OPEB Liability and Related Ratios – State Police Plan ............. A-223
Schedule of Changes in Net OPEB Liability (Asset) and Related Ratios –
Legislators Plan ................................................................................................................. A-224
Schedule of State Contributions – Teachers Plan .................................................................... A-225
Schedule of State Contributions – Judges Plan ........................................................................ A-226
Schedule of State Contributions – State Police Plan ................................................................ A-227
Schedule of State Contributions – Legislators Plan ................................................................. A-228
Notes to Required Supplemental Information – Other Postemployment Benefits .................. A-229
A-1
33 Broad Street Suite 201 Providence, RI 02903-4177
tel: 401.222.2435 fax: 401.222.2111
Office of the Auditor General
State of Rhode Island - General Assembly
Dennis E. Hoyle, CPA - Auditor General
oag.ri.gov
INDEPENDENT AUDITOR'S REPORT
Finance Committee of the House of Representatives and Joint Committee on Legislative Services
General Assembly, State of Rhode Island:
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-
type activities, the aggregate discretely presented component units, each major fund, and the aggregate
remaining fund information of the State of Rhode Island (the State), as of and for the year ended June 30,
2021, and the related notes to the financial statements, which collectively comprise the State’s basic financial
statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes the
design, implementation, and maintenance of internal control relevant to the preparation and fair presentation
of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We did not
audit the financial statements of:
•
the Tobacco Settlement Financing Corporation, a blended component unit which represents less than
1% of the assets and deferred outflows and the revenues of the governmental activities and less than
1% of the assets and the revenues of the aggregate remaining fund information;
•
the Convention Center Authority, a major fund, which represents 37% of the assets and deferred outflows
and less than 1% of the revenues of the business-type activities;
•
the Ocean State Investment Pool - an investment trust fund, and the HealthSource RI, Rhode Island
Higher Education Savings, and ABLE private-purpose trust funds, which collectively represent 29% of
the assets and 22% of the revenues of the aggregate remaining fund information; and
•
all the component units comprising the aggregate discretely presented component units.
The financial statements for these entities were audited by other auditors whose reports have been furnished
to us, and our opinions, insofar as they relate to the amounts included for the governmental activities, the
business-type activities, the aggregate discretely presented component units, the Convention Center Authority
major fund, and the aggregate remaining fund information, are based solely on the reports of the other auditors.
Office of the Auditor General
Finance Committee of the House of Representatives
Joint Committee on Legislative Services
A-2
We conducted our audit in accordance with auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In
making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and
fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management,
as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinions.
Opinions
In our opinion, based on our audit and the reports of other auditors, the financial statements referred
to above present fairly, in all material respects, the respective financial position of the governmental activities,
the business-type activities, the aggregate discretely presented component units, each major fund, and the
aggregate remaining fund information of the State, as of June 30, 2021, and the respective changes in financial
position and, where applicable, cash flows thereof for the year then ended in accordance with accounting
principles generally accepted in the United States of America.
Matters of Emphasis
As described in Note 10 – Restatements – Net Position and Fund Balances – the State restated certain
beginning fund balances and net position which included the effects of the State’s implementation of GASB
Statement No. 84 – Fiduciary Activities during fiscal 2021.
As described in Note 17 – Contingencies – fraudulent unemployment benefit claims increased
significantly due to unemployment resulting from the global pandemic and new federally funded benefit
programs implemented to meet those needs. The State has identified a substantial amount of unemployment
benefits paid in fiscal years 2020 and 2021 as fraudulent.
As described in Note 2 – Cash, Cash Equivalents, Investments, and Funds in Trust – the fair values
of certain investments included within the fiduciary funds - pension and other employee benefit trusts, which
represent 29% of the assets of the pension and other employee benefit trusts and 19% of the assets of the
aggregate remaining fund information, have been estimated by management in the absence of readily
determinable fair values. Management’s estimates are based on information provided by the fund managers
or general partners.
Our opinions are not modified with respect to these matters.
Office of the Auditor General
Finance Committee of the House of Representatives
Joint Committee on Legislative Services
A-3
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
Management’s Discussion and Analysis and required supplementary information listed in the table of contents
be presented to supplement the basic financial statements. Such information, although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board who considers it to be an
essential part of financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of America, which
consisted of inquiries of management about the methods of preparing the information and comparing the
information for consistency with management’s responses to our inquiries, the basic financial statements, and
other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion
or provide any assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the State’s basic financial statements. The accompanying Schedule of Expenditures of
Federal Awards (Section B) is presented for purposes of additional analysis as required by the Uniform
Guidance and is not a required part of the basic financial statements. Such information is the responsibility of
management and was derived from and relates directly to the underlying accounting and other records used
to prepare the basic financial statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and certain additional procedures, including comparing
and reconciling such information directly to the underlying accounting and other records used to prepare the
basic financial statements or to the basic financial statements themselves, and other additional procedures in
accordance with auditing standards generally accepted in the United States of America. In our opinion, the
Schedule of Expenditures of Federal Awards is fairly stated in all material respects in relation to the basic
financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have issued our report dated January 28,
2022 and June 28, 2022 on our consideration of the State’s internal control over financial reporting and on our
tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other
matters. The purpose of that report is to describe the scope of our testing of internal control over financial
reporting and compliance and the results of that testing, and not to provide an opinion on internal control over
financial reporting or on compliance. That report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the State’s internal control over financial reporting and
compliance.
Dennis E. Hoyle, CPA
Auditor General
January 28, 2022 except for the Schedule of Expenditures of Federal Awards (Section B)
as to which the date is June 28, 2022.
As managers of the State financial records, we offer readers of the State of Rhode Island's Annual
Comprehensive Financial Report (ACFR) this narrative overview and analysis of the financial activities of
the State for the fiscal year ended June 30, 2021. We present this information in conjunction with the
information included with our letter of transmittal, which can be found preceding this narrative, and with
the State’s financial statements which follow. To gain a thorough understanding of the State financial
condition, we encourage readers to consider the information presented here in conjunction with the
financial statements, notes and required supplemental information which follow this narrative document.
All amounts unless otherwise indicated are expressed in thousands.
Highlighted Impacts of the Pandemic
•
General Fund federal grant revenue increased $1.5 billion compared to fiscal 2020, reflecting
increased federal support to address the effects of the pandemic.
•
A significant year-over-year spending increase of $600.1 million within the Health and Human
Services function is primarily attributable to the significant inflow of federal funds to address the
overwhelming need for supplemental nutritional benefits, child care benefits, vaccine and testing
supplies, site operations, and extended Medicaid supported expenses.
•
Certain pandemic related costs totaling $212.7 million were supported by general revenue pending
reimbursement by FEMA.
Financial Highlights - Primary Government
Government-wide Financial Statements
• Net Position: The total assets plus deferred outflows of resources of the State were greater
than total liabilities plus deferred inflows of resources at June 30, 2021 by $342.9 million. This
amount is presented as "net position" on the Statement of Net Position for the Total Primary
Government. Of this amount $0.9 billion was reported as restricted net position, $4.0 billion as
net investment in capital assets and $4.6 billion was reported as a deficit unrestricted net
position.
• Changes in Net Position: The net increase to the primary government net position of $659.6
million, was attributable to an increase in governmental activities of $787.4 million, offset by a
decrease to net position of $127.8 million during the fiscal year for business-type activities. The
increase to governmental activities was largely due to the positive operating surplus of $509.3
million within the General Fund. The decrease to the business-type activities was primarily due
to the Employment Security Fund operating at a $134.3 million deficit during fiscal 2021.
Governmental Funds
• As of the close of the current fiscal year, governmental funds reported a combined ending fund
balance of $1.9 billion, an increase of $587.3 million compared with the restated previous fiscal
year.
• As of June 30, 2021, the General Fund reported an ending fund balance of $897.3 million, an
increase of $509.3 million (131.3%) as compared to the prior year restated fund balance.
• Total General Fund expenditures were $1.3 billion greater than fiscal 2020 due to greater
spending across a number of categories the most significant of which are discussed below.
◦The year-over-year increase of approximately $563.9 million to the General Government
function is mostly attributable to a number of new programmatic initiatives to assist
individuals and businesses impacted by the pandemic. These programs, mostly funded
with pandemic-related federal assistance, provided relief through supplemental
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-5
unemployment benefits ($250 million), payments to municipalities ($130 million), small
business ($87 million) and various others.
◦The significant year-over-year increase of $600.1 million in Health and Human Services
function spending is attributable to the continued impact of the pandemic on the State's
social services programs. The number of individuals covered by Medicaid continued to
increase throughout fiscal 2021 resulting in approximately $190 million in additional
spending. Other social service programs that experienced additional spending to address
specific pandemic related challenges included child care benefits ($20 million), additional
provider relief to cover additional compensation to workers in health fields significantly
impacted by the pandemic ($40 million), and expanded Supplemental Nutrition Assistance
Program benefits ($100 million). The Department of Health (DOH), in addition, to
expanding pandemic related testing during fiscal 2021, also experienced increased
expenditures for Coronavirus vaccine administration. DOH's expenditures increased by
more than $250 million in fiscal 2021, most of which related directly to pandemic response
activities.
Proprietary Funds
• Rhode Island Lottery transferred $301.8 million to the General Fund to support general revenue
expenditures during the fiscal year, an increase of $17.9 million in comparison with the previous
fiscal year. However, the transferred amount remained significantly reduced from the pre-
pandemic fiscal 2019 transfer of $397.3 million.
• Unemployment benefits processed through the Employment Security Fund totaled $2.1 billion,
an increase of approximately $700 million over fiscal 2020. The benefit increase was
attributable to persistent unemployment during the pandemic and supplemental benefits for the
unemployed funded by federal grants. Federal grants funded $1.7 billion of the benefits paid in
fiscal 2021, an increase of $700 million over fiscal 2021. The Employment Security Fund ended
the fiscal year with a net position of $231.4 million, a decrease of $134.3 million from the prior
fiscal year. This decrease approximates the reduction of the Employment Security Trust Fund
for fiscal 2021 which funded the benefits for unemployed workers not covered by specific
pandemic related unemployment assistance during the fiscal year.
• The Rhode Island Convention Center Authority ended the fiscal year with a deficit net position
of $31.4 million. This was an increase of $7.0 million to the net position when compared with
the prior year restated balance. The Authority has historically had a negative net position. The
amount of debt related to capital assets has exceeded the net book value of the capital assets
and the depreciable life of the assets are shorter than the related debt repayment terms which
promotes this negative position.
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-6
Overview of the Financial Statements
This discussion and analysis are intended to serve as an introduction to the State of Rhode Island’s basic
financial statements. The State’s basic financial statements consist of three components; 1) government-
wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. The
basic financial statements present two different views of the State through the use of government-wide
statements and fund financial statements. In addition to the basic financial statements, this report
contains other supplemental information that will enhance the reader’s understanding of the financial
condition of the State of Rhode Island.
Government-wide Financial Statements
The government-wide financial statements are designed to provide the reader with a broad overview of
the State’s finances, similar in format to a financial statement of a private-sector business. The
government-wide statements provide short and long-term information about the State’s financial status as
a whole.
The two government-wide statements report the State’s net position and how it has changed. Net
position is the difference between the total of the State’s assets and deferred outflows of resources and
the total liabilities and deferred inflows of resources. Measuring net position is one way to gauge the
State’s financial condition.
• The Statement of Net Position presents all of the government's assets, deferred outflows of
resources, liabilities, and deferred inflows of resources, with the difference reported as "net
position." Over time, increases and decreases in the government's net position may serve as a
useful indicator of whether the financial position of the State is improving or deteriorating.
• The Statement of Activities presents information indicating how the government's net position
changed during the fiscal year. All changes in net position are reported as soon as the
underlying event giving rise to the change occurs, regardless of the timing of related cash flows.
Therefore, revenues and expenses for some items are reported in this statement that will not
result in cash flows until future fiscal periods - for example, uncollected taxes and earned but
unused vacation leave. Additionally, this statement presents a comparison between direct
expenses and program revenues for each function of the government.
The government-wide statements are divided into three categories: 1) governmental activities; 2)
business-type activities; and 3) discretely presented component units.
•
The governmental activities include most State basic services such as public safety, parks and
recreation, and general administration. Taxes, intergovernmental transfers, and federal grants
finance most of these activities.
•
The business-type activities are those that the State charges customers to provide. These include
the operations of the Rhode Island Lottery, Rhode Island Convention Center Authority, and the
Employment Security Trust Fund.
•
The discretely presented component units are entities that are legally separate from the State, but
for which the State is financially accountable. These entities are listed in Note 1. The financial
information for these entities is presented separately from the financial information presented for
the primary government.
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-7
Fund Financial Statements
The fund financial statements provide a more detailed look at the State’s most significant activities. A
fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. The State of Rhode Island uses fund accounting to ensure
and reflect compliance (or non-compliance) with finance-related legal requirements, (General Laws). All
of the funds of the State can be divided into three categories: governmental funds, proprietary funds, and
fiduciary funds. These are explained below:
• Governmental funds: The majority of State basic services are financed through governmental
funds. Governmental funds are used to account for essentially the same functions reported as
governmental activities on the government-wide financial statements. However, unlike the
government-wide financial statements, the governmental fund financial statements focus is
near-term inflows and outflows of spendable resources, as well as on spendable resources
available at the end of the fiscal year. Such information helps determine whether there are more
or fewer financial resources that can be expended in the near future to finance the State's
programs.
Governmental funds include the general fund, special revenue, capital projects, debt service,
and permanent funds. Generally accepted accounting principles (GAAP) designate the general
fund as a major fund, the criteria for determining if any of the other governmental funds are
major funds are detailed in Note 1 C. Each major fund is presented in a separate column on the
governmental funds balance sheet and statement of revenues, expenditures and changes in
fund balances. The remaining governmental funds are combined in a single aggregated column
on these financial statements. Individual fund data for each of these nonmajor governmental
funds can be found in the other supplementary information section of this ACFR.
Because the focus of governmental funds is narrower than that of the government-wide
financial statements, it is useful to compare the information presented for governmental funds
with similar information presented for governmental activities in the government-wide financial
statements. By doing so, readers may better understand the long-term impact of the State's
near-term financial decisions. Both the governmental fund balance sheet and the governmental
fund statement of revenues, expenditures and changes in fund balances provide a
reconciliation to facilitate this comparison between governmental funds and the governmental
activities in the government-wide financial statements.
• Proprietary funds: Services for which the State charges customers a fee are generally
reported as proprietary funds. The State maintains two categories of proprietary funds -
enterprise funds and internal service funds (ISFs). Enterprise funds report activities that provide
supplies and services to the general public. Internal service funds report activities that provide
supplies and services for the State's other programs and activities. Similar to the government-
wide statements, proprietary funds use the accrual basis of accounting. The State has three
enterprise funds - the Lottery Fund, the Rhode Island Convention Center Authority (RICCA)
Fund, and the Employment Security Fund. These funds are each presented in separate
columns on the basic proprietary fund financial statements. The (ISFs) are reported as
governmental activities on the government-wide statements, since the services they provide
predominantly benefit governmental activities. The (ISFs) are reported within the basic
proprietary fund financial statements in a single combined column. Individual fund data is
provided in the form of combining statements and can be found within the supplementary
information section of this ACFR.
• Fiduciary funds: Resources accounted for as fiduciary funds are held for the benefit of parties
outside the State government. Fiduciary funds are not included in the government-wide
financial statements because the resources of these funds are not available to support the
State's programs. These funds, which include the pension and other postemployment benefits
trusts, an external investment trust, private-purpose trusts and custodial funds, are reported
using accrual accounting. Individual fund data for fiduciary funds can be found at the
supplementary information section of this ACFR.
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-8
Discretely Presented Component Units
Discretely presented component units are legally separate from the primary government. They are
financially accountable to the primary government, or have relationships with the primary government
such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete.
These discretely presented component units serve or benefit those outside of the primary government.
The State distinguishes between major and nonmajor component units. The criteria for distinguishing
between major and nonmajor component units are discussed in Note 1 B.
Notes to the Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided on
the government-wide and fund financial statements. The notes to the financial statements can be found
immediately following the fiduciary funds financial statements.
Required Supplementary Information
The basic financial statements and accompanying notes are followed by a section of required
supplementary
information,
including
information
concerning
the
State
pension
and
other
postemployment benefit obligations. This section also includes a budgetary comparison schedule for each
of the State's major governmental funds that have a legally enacted budget.
Other Supplementary Information
This section includes the combining financial statements for nonmajor governmental funds, internal
service funds and fiduciary funds. It can be found immediately following the Required Supplementary
Information section.
Government-Wide Financial Analysis
Net Position
Net position may serve as a useful indicator of a government's financial position. The State's combined
net position for governmental and business-type activities totaled $342.9 million at the end of fiscal 2021,
compared to a deficit of $316.7 million for the restated prior fiscal year. Governmental activities reported
a unrestricted deficit net position of $4,595.4 million.
A portion of the State's net position reflects its investment in capital assets less any related outstanding
debt that was needed to acquire or construct the assets. The State uses these capital assets such as
land, buildings, equipment and infrastructure to provide services to its citizens; consequently, these
assets are not available for future spending. Although the State's investment in its capital assets is
reported net of related debt, it should be noted that the resources needed to repay this debt must be
provided from other sources.
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-9
Additionally, a portion of the State's net position represents resources that are subject to external use
restrictions.
State of Rhode Island Net Position as of June 30, 2021 and 2020
(Expressed in Thousands)
Governmental
Activities
Business-Type
Activities
Total
Primary
Government
2021
2020*
2021
2020*
2021
2020*
Current and other assets
$ 4,639,013
$ 3,601,750
$
286,594
$
410,974
$ 4,925,607
$ 4,012,724
Capital assets
4,957,871
4,788,465
157,631
169,746
5,115,502
4,958,211
Total assets
9,596,884
8,390,215
444,225
580,720
10,041,109
8,970,935
Deferred outflows of resources
712,407
722,392
11,697
12,683
724,104
735,075
Long-term liabilities outstanding
6,944,261
7,065,884
208,570
223,803
7,152,831
7,289,687
Other liabilities
2,927,800
2,492,893
66,642
61,675
2,994,442
2,554,568
Total liabilities
9,872,061
9,558,777
275,212
285,478
10,147,273
9,844,255
Deferred inflows of resources
273,477
177,487
1,573
968
275,050
178,455
Net position (deficit):
Net investment in capital assets
4,049,759
3,845,461
(29,662)
(31,295)
4,020,097
3,814,166
Restricted
709,429
460,163
231,685
366,561
941,114
826,724
Unrestricted
(4,595,435)
(4,929,281)
(22,886)
(28,309)
(4,618,321)
(4,957,590)
Total net position (deficit)
$
163,753
$
(623,657) $
179,137
$
306,957
$
342,890
$
(316,700)
*Restated
As indicated above, the State reported a deficit balance in unrestricted net position of $4.6 billion as of
June 30, 2021. Several factors, which are discussed below, contributed to this deficit.
As required by generally accepted accounting principles (GAAP) the State recognizes the net pension
liability for the pension plans it has funding responsibility. In addition, the State has recognized the net
other post-employment benefit (OPEB) liability or asset for the retiree health care plans for which it has
funding responsibility. Recognition of these liabilities has had a significant adverse impact to unrestricted
net position. At June 30, 2021 the net pension liability related to governmental activities was $3.7 billion
and the net pension liability related to business-type activities was $21.7 million. In addition, the net
OPEB liability related to governmental activities was $341.9 million and the net OPEB liability related to
business-type activities was $3.4 million.
Another significant contributing factor creating the deficit to unrestricted net position is the use of general
obligation bond proceeds (which are reported as debt of the primary government) for other than the
primary government’s direct capital purposes. In these instances, proceeds are transferred to
municipalities, discretely presented component units and non-profit organizations within the State to fund
specific projects.
Examples of these uses of general obligation bond proceeds include, but are not limited to, the following:
• Certain transportation projects funded with bond proceeds that do not meet the State’s criteria
for capitalization as infrastructure;
• Construction of facilities at the State’s university and colleges, which are reported as capital
assets of those discretely presented component units;
• Water resources projects including the acquisition of sites for future water supply resources,
various water resources planning initiatives, and funding to upgrade local water treatment
facilities;
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-10
• Environmental programs to acquire, develop, and rehabilitate local recreational facilities and
ensure that open space is preserved;
• Facility projects funded through Rhode Island Health and Educational Building Corporation
(RIHEBC); and
• Historical preservation initiatives designed to protect and preserve historical buildings as well as
to provide funding for cultural facilities.
Lastly, the State also has the following non-capital related debt outstanding:
• Tobacco Settlement Asset-Backed Bonds and Accreted Interest - The Tobacco Settlement
Financing Corporation (TSFC), a blended component unit, has issued Tobacco Asset-Backed
Bonds that were used to purchase the State’s future rights in the Tobacco Settlement Revenues
under the Master Settlement Agreement, the Consent Decree and Final Judgment. The bonds
are secured solely by and are payable solely from the tobacco receipts sold to the TSFC. Other
monies of the TSFC do not constitute a general, legal, or moral obligation to the State or any
political subdivision thereof and the State has no obligation to satisfy any deficiency or default
of any payment of the bonds. As of June 30, 2021 approximately $580.9 million of principal and
$137.0 million of accreted interest are included in the State calculation of debt.
• Historic Tax Credit Bonds - The R.I. Commerce Corporation (RICC), on behalf of the State,
issued revenue bonds under the Historic Structures Tax Credit Financing Program. The bonds
do not constitute a debt, liability, or obligation to the State or any political subdivision thereof.
The State is obligated under a Payment Agreement to make payments to the trustee. This
obligation is subject to annual appropriations by the General Assembly. The proceeds of the
bonds are being used to provide funds for redemption of Historic Structures Tax Credits. As of
June 30, 2021, approximately $88.5 million of such bonds are outstanding.
• The State has entered into certain capital lease agreements, known as Certificates of
Participation (COPS). The proceeds of which are sometimes used to benefit certain entities
outside of the primary government, for example, by the State’s university and colleges for
energy conservation projects or by local school districts to improve technology infrastructure on
a state-wide basis. Obligation of the State to make payments under COPS is subject to and
dependent upon annual General Assembly appropriations. As of June 30, 2021, approximately
$137.4 million of net obligations are outstanding.
In the above instances, the primary government records a liability for the outstanding debt, but no related
capitalized asset is recorded. A cumulative deficit to unrestricted net position results from financing these
types of projects.
Changes in Net Position
Governmental Activities
The State’s overall net position related to governmental activities increased by almost $787.4 million for
fiscal 2021.
Total revenues and transfers of $10.3 billion increased by $1.91 billion compared to fiscal 2020. This
increase to revenue primarily resulted from a significant influx of federal assistance (reported as operating
grants) to help the State respond to the pandemic. Tax revenues increased by a total of $450.6 million
during fiscal 2021 with personal income and sales and use taxes increasing $209.5 million and $193.6
million respectively, over the prior year.
The State’s expenses, which cover a wide range of services, increased by $1.2 billion. The most notable
increases were directly related to the State's response to the pandemic and were primarily categorized as
General Government or Health and Human Services.
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-11
The increase in Health and Human Services expenses is attributable to two factors. The Department of
Human Services saw increased spending of over $100 million, primarily due to additional federal funding
for the Supplemental Nutrition Assistance Program. The Rhode Island Department of Health experienced
increased spending of $283.7 million primarily for pandemic related activities such as laboratory testing,
contact tracing and vaccine supplies.
General Government expenses increased by approximately $485.6 million during fiscal 2021 over the
prior year. The increase is largely attributable to a number of programs associated with the recovery from
the global pandemic, examples include supplemental unemployment benefits ($250 million), payments to
municipalities ($130 million) and small businesses ($87 million).
Business-Type Activities
•
The Employment Security Fund net position decreased as a result of benefits paid significantly
exceeding premium revenue. Benefits paid from the fund totaled $2.1 billion and total operating
revenue were $1.9 billion. which included $1.7 billion of federal grants to fund these benefits.
•
The RI Lottery's transfer to the General Fund was up 6.3% compared to fiscal 2020. However,
Lottery revenue remains lower than pre-pandemic levels due to the operational restrictions at the
State licensed casinos, i.e., closure of the casinos from November 29, 2020 to December 21,
2020 and a reduction of player seating capacity of 50% the rest of the fiscal year.
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-12
A more detailed analysis of changes in revenues and program expenses for both governmental activities
and business-type activities is as follows:
State of Rhode Island Changes in Net Position
For the Fiscal Years Ended June 30, 2021 and 2020
(Expressed in Thousands)
Governmental
Activities
Business-Type
Activities
Total
Primary Government
2021
2020
2021
2020
2021
2020
Revenues:
Program revenues:
Charges for services
$
735,112
$
797,486
$ 1,305,481
$ 1,113,028
$ 2,040,593
$ 1,910,514
Operating grants and contributions
4,697,836
3,159,368
1,693,345
1,010,408
6,391,181
4,169,776
Capital grants and contributions
282,976
288,421
—
—
282,976
288,421
General revenues:
Taxes
4,143,930
3,693,329
—
—
4,143,930
3,693,329
Interest and investment earnings
3,110
12,884
156
764
3,266
13,648
Miscellaneous
109,667
142,310
15,271
14,148
124,938
156,458
Gain on sale of capital assets
8,326
—
—
—
8,326
—
Total revenues
9,980,957
8,093,798
3,014,253
2,138,348
12,995,210
10,232,146
Program expenses:
General government
1,399,797
914,244
—
—
1,399,797
914,244
Health and human services
4,959,473
4,361,236
—
—
4,959,473
4,361,236
Education
1,929,835
1,802,009
—
—
1,929,835
1,802,009
Public safety
610,263
586,841
—
—
610,263
586,841
Natural resources
96,158
103,506
—
—
96,158
103,506
Transportation
375,266
365,022
—
—
375,266
365,022
Interest and other charges
98,595
102,687
—
—
98,595
102,687
Lottery
—
—
773,867
600,854
773,867
600,854
Convention Center
—
—
33,499
46,544
33,499
46,544
Employment Security
—
—
2,058,867
1,424,693
2,058,867
1,424,693
Total expenses
9,469,387
8,235,545
2,866,233
2,072,091
12,335,620
10,307,636
Excess (deficiency) before transfers
511,570
(141,747)
148,020
66,257
659,590
(75,490)
Transfers (net)
275,840
251,466
(275,840)
(251,466)
—
—
Change in net position
787,410
109,719
(127,820)
(185,209)
659,590
(75,490)
Net position (deficit) - Beginning
(609,814)
(719,533)
306,186
491,395
(303,628)
(228,138)
Cumulative effect of prior period
adjustments
(13,843)
—
771
—
(13,072)
—
Net position (deficit) - Beginning, as
restated
(623,657)
(719,533)
306,957
491,395
(316,700)
(228,138)
Net position (deficit) - Ending
$
163,753
$ (609,814) $
179,137
$
306,186
$
342,890
$ (303,628)
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-13
Chart 1 depicts the State’s sources of revenues from Governmental Activities for the fiscal year ended
June 30, 2021.
Chart 1 - Revenues and Transfers - Governmental Activities
Transfers
3%
Charges for
services
7%
Operating grants
and contributions
46%
Capital grants and
contributions
3%
Taxes
40%
Miscellaneous
1%
The relative mix of revenue and transfers by source for governmental activities remained fairly consistent
during fiscal 2021 versus the prior fiscal year. Taxes continued to represent one of the largest sources of
revenue at 40% of the total. However, operating grants and contributions represented the greatest
revenue source in fiscal year 2021 at 46%. The proportion of total revenue derived from operating grants
and contributions increased in fiscal 2021 due to the influx of federal assistance as a result of the
pandemic.
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-14
Chart 2 depicts the purposes for which program expenses related to Governmental Activities were
expended during the fiscal year ended June 30, 2021.
Chart 2 - Program Expenses - Governmental Activities
General
government
15%
Health and human services
52%
Education
20%
Public safety
7%
Natural resources
1%
Transportation
4%
Interest
1%
The relative mix of program expenses for governmental activities remained about the same in fiscal 2021
as for the prior fiscal year. There was an increase to General Government services from 11% to 15% in
2021 consistent with an increase of overall expenditures incurred in response to the COVID-19 public
health emergency.
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-15
Chart 3 depicts the program expenses related to Business Type Activities during the fiscal year ended
June 30, 2021.
Chart 3 - Program Expenses - Business Type Activities
Convention
Center
1%
Employment
Security
72%
Lottery
27%
There was an increase to the Employment Security expenses due to the increased demand for
unemployment benefits resulting from continuing negative economic effects from the COVID-19
pandemic.
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-16
Financial Analysis Funds
As noted earlier, the State uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements.
Governmental Funds
The focus of the State's governmental funds is to provide information about near-term inflows, outflows, and
balances of spendable resources. Such information is useful when assessing the State financing requirements.
At the end of the current fiscal year, the governmental funds reported a combined ending fund balance of
approximately $1.9 billion, an increase of $587.3 million from June 30, 2020. A breakdown of the components
follows (expressed in thousands):
2021
2020
(restated)
2021 vs 2020
Change
Percent
Governmental Funds
Nonspendable
$
1,712
$
8,092
$
(6,380)
(78.8) %
Restricted
1,204,880
984,317
220,563
22.4 %
Unrestricted
Committed
50,403
57,907
(7,504)
(13.0) %
Assigned
292,564
6,851
285,713
4,170.4 %
Unassigned
319,425
224,550
94,875
42.3 %
Total
$
1,868,984
$
1,281,717
$
587,267
45.8 %
Governmental funds report fund balance as nonspendable, restricted, committed, assigned or unassigned
primarily based on the extent to which the State is bound to honor constraints about how specific funds may be
spent. More information about each category is presented below:
•
Nonspendable fund balance - amounts that cannot be spent because they are either (a) not spendable
in form, or (b) legally or contractually required to be maintained intact.
•
Restricted fund balance - amounts with constraints placed on their use that are either (a) externally
imposed by creditors, grantors, contributors, or laws or regulations of other governments, or (b)
imposed by constitutional provisions or by law through enabling legislation enacted by the General
Assembly.
•
Committed fund balance - amounts that can only be used for specific purposes determined by the
enactment of legislation by the General Assembly, and that remain binding unless removed in the
same manner. The underlying action that imposed the limitation must occur no later than the close of
the fiscal year and must be binding unless repealed by the General Assembly.
•
Assigned fund balance - amounts that are constrained by stated intent that they be used for specific
purposes. The intent is generally established by legislation enacted by the General Assembly and is
implemented at the direction of the Governor.
•
Unassigned fund balance - within the General Fund, the residual classification for amounts not
contained in the other classifications. Other than the General Fund, the unassigned classification is
used only if expenditures incurred for specific purposes exceed the amounts restricted, committed, or
assigned to those purposes.
Significant changes in fund balance:
•
Restricted - net increase of $220.6 million is primarily related to unspent proceeds legislatively
approved for various capitol projects, including $50 million for a new ERP system. The increase was
offset to an extent by reductions in prior year GARVEE bond proceeds.
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-17
•
Committed - net decrease of $7.5 million is primarily attributable to a decrease in the RI Highway
Maintenance Account within the Intermodal Surface Transportation Fund. This account, which is
funded by a variety of motor vehicle and license related fees, was created by the General Assembly in
the 2014 session to address the State’s highway and bridge infrastructure improvement needs.
•
Assigned - net increase of $285.7 million is primarily resulted from an increase in the amount of
assigned fund balance allocated to fund the subsequent year's budget.
•
Unassigned - net increase of $94.9 million is primarily was due to more favorable actual operating
results in fiscal 2021 than were expected when the fiscal 2021 budget was enacted.
General Fund
The General Fund is the primary operating fund of the State. The fund balance of the General Fund consisted
of the following (expressed in thousands):
2021
2020
(restated)
2021 vs 2020
Change
Percent
Nonspendable
$
1,538
$
7,918
$
(6,380)
(80.6) %
Restricted
276,172
141,229
134,943
95.5 %
Unrestricted
Committed
8,135
6,791
1,344
19.8 %
Assigned
291,985
6,851
285,134
4,161.9 %
Unassigned
319,425
225,138
94,287
41.9 %
Total
$
897,255
$
387,927
$
509,328
131.3 %
Revenues and other sources of the General Fund totaled $9.5 billion in fiscal 2021, an increase of $1.85 billion
or 24.3% from the previous year. The revenues from various sources and the change from the previous year
are shown in the following table (expressed in thousands):
Increase (decrease) from 2020
2021
2020
Amount
Percent
Revenues
Taxes:
Personal income
$
1,606,554
$
1,398,121
$
208,433
14.9 %
Sales and use
1,524,014
1,326,149
197,865
14.9 %
General business
496,345
463,786
32,559
7.0 %
Other
61,165
70,037
(8,872)
(12.7) %
Subtotal
3,688,078
3,258,093
429,985
13.2 %
Federal grants
4,649,167
3,128,124
1,521,043
48.6 %
Restricted revenues
305,523
349,753
(44,230)
(12.6) %
Licenses, fines, sales, and services
378,662
406,489
(27,827)
(6.8) %
Other general revenues
66,626
105,916
(39,290)
(37.1) %
Subtotal
5,399,978
3,990,282
1,409,696
35.3 %
Total revenues
9,088,056
7,248,375
1,839,681
25.4 %
Other sources
Transfer from Lottery
301,803
283,871
17,932
6.3 %
Other transfers
65,941
75,627
(9,686)
(12.8) %
Total revenues and other sources
$
9,455,800
$
7,607,873
$
1,847,927
24.3 %
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-18
Significant Drivers of Revenue
Fiscal 2021 personal income taxes increased 14.9% from fiscal 2020 levels as pandemic restrictions eased.
Personal income tax withholding payments rose to $1.3 billion in fiscal 2021, up 4.7% compared to fiscal 2020.
The growth in withholding payments in fiscal years 2021 and 2020 were likely enhanced by the $600
Pandemic Unemployment Compensation payments made to unemployment insurance recipients; the Federal
Emergency Management Agency’s $300 Lost Wages Supplemental Payment Assistance payments made to
unemployment recipients during the weeks August 1, 2020 through September 5, 2020; and the Federal
Emergency Management Agency’s $300 Lost Wages Supplemental Payment Assistance payments made to
unemployment recipients during January – May 2021.
The State’s unemployment rate increased to 8.4% in fiscal 2021, according to IHS Markit, up 2.1 percentage
points from the 6.2% rate realized in fiscal 2020. The fiscal 2021 unemployment rate is the highest fiscal year
unemployment rate since 2014. Nominal personal income growth eased slightly to a still strong 5.6% in fiscal
2021 from 6.5% growth in fiscal 2020 which was boosted by growth in transfer payments as a result of not only
Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation payments but
also the $1,200 per person CARES Act Economic Impact Payments (EIP). General sales and use tax revenues
posted an increase of 14.9% in fiscal 2021 over fiscal 2020. Fiscal 2021 use tax payments paid at the time of
registration of a new motor vehicle increased by 34.8%, up from a negative 5.6% rate of growth between fiscal
2019 and fiscal 2020. The strong increase in fiscal 2021 sales and use tax was likely attributable to a shift in
consumption expenditures from in-person taxable sales to remote (on-line) taxable sales and a rise in the
purchase of taxable items associated with home improvement projects.
General business tax revenues increased by 7.0% in fiscal 2021, driven by large gains in business corporation
taxes, of 35.9%. This increase was offset by year-over-year decreases to financial institutions tax of 21.9%,
public utilities gross earnings tax of 13.6% and the health care provider assessment of 17.6%.
Other taxes declined by 12.7% from fiscal 2020. The decrease is attributable to estate and transfer tax
revenues, which declined $12.3 million, or 22.3%, from fiscal 2020. Realty transfer tax revenues rose 27.6%
over fiscal 2020 levels, indicating ongoing strength in the housing market.
Finally, the R.I. Lottery’s transfer to the General Fund was up 6.3% for fiscal 2021 compared to fiscal 2020.
The Casinos were mostly operational during fiscal year 2021.
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-19
Chart 4 illustrates the fiscal 2021 General Fund Revenue and transfers.
Chart 4 - Revenues and Other Sources - General Fund
Personal income
taxes
17%
Sales and use taxes
16%
General business
taxes
5%
Other taxes
1%
Federal grants
49%
Restricted revenues
3%
Licenses, fines,
sales, and services
4%
Other general
revenues
1%
Other transfers
1%
Transfers from
Lottery
3%
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-20
Expenditures and transfers out totaled $8.95 billion in fiscal 2021, an increase of $1.37 billion, or 18.07%, from
the previous year. Changes in expenditures and other uses by function from the previous year are shown in
the following tabulation (expressed in thousands):
Increase (decrease) from 2020
2021
2020
Amount
Percent
General government
$
1,141,313
$
577,417
$
563,896
97.66 %
Health and human services
4,925,442
4,325,361
600,081
13.87 %
Education
1,839,019
1,662,174
176,845
10.64 %
Public safety
587,243
578,721
8,522
1.47 %
Natural resources
85,374
83,703
1,671
2.00 %
Debt Service:
Principal
139,023
143,503
(4,480)
(3.12) %
Interest
64,095
62,348
1,747
2.80 %
Total expenditures
8,781,509
7,433,227
1,348,282
18.14 %
Transfers out
164,963
143,909
21,054
14.63 %
Total expenditures and transfers out $
8,946,472
$
7,577,136
$
1,369,336
18.07 %
Significant Drivers of Expenditures
The year-over-year increase of approximately $563.9 million to the General Government function is primarily
attributable to significant inflow of federal stimulus grants specifically targeted to address the impact of the
COVID-19 pandemic. The federal money addressed a wide range of governmental operations, such as the
administrative costs of various federal pandemic unemployment assistance programs, enhanced
unemployment benefits, support to Rhode Island small businesses, additional aid to Rhode Island
municipalities via the Municipal COVID Relief Fund, workforce development programs, and various housing
and rental support programs.
The year-over-year increase of $600.1 million to the Health and Human Services function is attributable to
several distinct factors, including an increase of approximately $186.9 million attributable to the significant
inflow of federal grants targeted to address the impact of the COVID-19 pandemic. Of this total, an increase of
$110.4 million was evidenced in the Department of Health (RIDOH) for various direct pandemic management
activities, such as community mitigation, testing administration, laboratory processing, contact tracing, and
vaccination programming. It must also be noted that RIDOH experienced a highly atypical year-over-year
expenditure increase of $168.1 million, separate and apart from the increase generated by the major federal
COVID response grants. This increase is largely attributable to expenditures supported by general revenue
pending FEMA approval.
In addition, expenditures within the Medical Assistance (Medicaid) program at the Executive Office of Health
and Human Services increased by $253.5 million. Though it has no effect on total program expenses, the
Medicaid program benefited from heightened federal financial participation via a full-year of the FFCRA-
enhanced Federal Medical Assistance Percentage (FMAP) in fiscal 2021, relative to only two quarters of said
enhancement in fiscal 2020.
Irrespective of the major federal COVID response grants, the Department of Human Services saw increased
spending of $74.6 million, primarily due to an increase in federal funds expenditures for SNAP, LIHEAP, and
various other federal grants administered by the Department. The year-over-year increase at DHS for the
major federal COVID response grants totaled approximately $57.1 million, concentrated within the areas of the
Child Care and Development Block Grant, the Community Services Block Grant, enhanced SNAP benefits,
nutrition services for the elderly, and veteran’s services.
The year-over-year increase to the Education function expenditures of $176.8 million is primarily the result of
$86.5 million more in additional funding for education aid to local school districts and state schools via the
education aid funding formula; a $4.0 million increase to the state’s contribution to teacher retirement costs,
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-21
and a net increase of $7.7 million to state support for Rhode Island’s public higher education institutions. Also
driving this year-over-year education function increase is the major federal COVID response grants, which
totaled approximately $63.4 million. They were comprised mainly of increases to direct grants for school
nutrition and food service programs, increased allocations from the Coronavirus Relief Fund for supplemental
education aid to local education agencies and K-12 reopening activities, and the segment of the workforce
development program known as “Back to Work RI” administered by the Office of the Postsecondary
Commissioner.
Chart 5 depicts the General Fund expenditures and other uses for fiscal 2021.
Chart 5 - Expenditures and Other Uses - General Fund
General government
13%
Health and human services
55%
Education
21%
Public safety
6%
Natural resources
1%
Principal
1%
Transfers
2%
Interest
1%
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-22
Intermodal Surface Transportation Fund
The Intermodal Surface Transportation Fund (IST) is a special revenue fund that accounts for the collection of
gasoline tax, motor vehicle registration and licensing fees, tolls, federal grants, Rhode Island Capital Plan
funds, and bond proceeds that are used for maintenance, upgrading, and construction of the State's surface
transportation systems. It also accounts for the proceeds of the Grant Anticipation Revenue Vehicle (GARVEE)
and the RI Motor Fuel Tax (RIMFT) revenue bonds, the I-195 Redevelopment District Commission bonds, and
related expenditures. The components of the fund balance of the IST fund are as follows (expressed in
thousands):
Increase (decrease) from 2020
2021
2020
Change
Percent
Restricted
$
223,404
$
320,289
$
(96,885)
(30.25) %
Unrestricted
Committed
41,835
50,717
(8,882)
(17.51) %
Assigned
579
—
579
100.00 %
Unassigned (deficit)
—
(588)
588
(100.00) %
Total
$
265,818
$
370,418
$
(104,600)
(28.24) %
The net decrease of $96.9 million in the restricted portion of the fund balance is primarily related to GARVEE
bond proceeds used by the State as the pace of bridge and highway improvements being made under the
State's RhodeWorks initiative rose significantly this year. The net decrease of $8.9 million in the committed
portion of the unrestricted fund balance resulted from multiple factors including a decrease in the RI Highway
Maintenance Account.
General Fund Budgetary Highlights - General Revenue Sources
According to the State’s Constitution, general revenue appropriations of the general fund cannot exceed 97%
of available general revenue sources. These sources consist of the current fiscal year’s budgeted general
revenue plus the general fund undesignated fund balance from the prior fiscal year. Excess revenue is
transferred to the State Budget Reserve Account which is in the General Fund. If the balance in the Reserve
exceeds 5% of the total general revenues and opening surplus, the excess is transferred to the R.I. Capital
Plan Fund to be used for capital projects. The current fiscal year’s general revenue estimates are established
by the State’s revenue estimating conference. If actual general revenue is less than the projection,
appropriations have to be reduced or additional revenue sources must be identified. Certain agencies have
federal programs that are entitlements, which continue to require State funds to match the federal funds.
Agencies may get additional appropriation from the General Assembly, provided a need is established.
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-23
Pandemic related adjustments to general revenue receipt estimates resulted in a significant increase of $161.6
million between the original budget and the final budget. General revenue appropriations decreased from the
original budget by $170.6 million. Some significant changes between the preliminary and final estimated
general revenues and the enacted and final general revenue appropriations (expressed in thousands) are
listed below.
General Fund Budgetary Highlights
General Revenue Sources
For the Year Ended June 30, 2021
Original
Budget
Final
Budget
Actual*
Final Budget
vs. Actual
Variance
Revenues and other sources:
Taxes:
Personal income
$
1,450,400
$
1,540,516
$
1,615,512
$
74,996
General business
458,200
424,012
500,507
76,495
Sales and use
1,390,800
1,475,100
1,524,014
48,914
Other taxes
73,900
61,200
61,165
(35)
Departmental revenue
390,000
398,928
402,688
3,760
Other sources:
Lottery transfer
272,500
288,900
301,803
12,903
Unclaimed property
10,300
15,600
16,270
670
Miscellaneous
10,325
13,800
9,620
(4,180)
Total revenues and other sources
4,056,425
4,218,056
4,431,579
213,523
Expenditures and other uses:
General government
586,510
618,763
628,517
9,754
Health and Human services
1,613,907
1,487,142
1,574,987
87,845
Education
1,525,091
1,524,789
1,522,546
(2,243)
Public safety
382,412
306,874
307,538
664
Natural resources
45,350
45,081
45,051
(30)
Total expenditures and other uses
4,153,270
3,982,649
4,078,639
95,990
Excess of revenues and other sources
over expenditures and other uses
$
(96,845) $
235,407
$
352,940
$
117,533
*See Notes on the General Fund Budgetary Comparison Schedule
The favorable variance between the fiscal 2021 actual revenues and the fiscal 2021 final budget for personal
income taxes was largely attributable to a stronger than expected recovery from the pandemic induced
economic decline in 2020.
Actual fiscal 2021 general business taxes ended the year $76.5 million above the final enacted budget but just
$42.3 million more than the original budget due to actual public utilities gross earnings tax and health care
provider assessment revenues coming in a combined $23.0 million lower than the estimated amount included
in the original budget. At the time of final enactment in June 2021, the revenue estimates for these items had
been reduced such that the difference between actual fiscal 2021 revenues and final enacted fiscal 2021
revenues for these items was a negative $7.2 million. Actual business corporation tax revenues ended the year
$50.5 million higher than the original estimate, and $86.2 million higher than the final enacted budget amount.
Sales and use and excise tax revenues received in fiscal 2021 were $133.3 million more than estimated sales
and use tax revenues included in the fiscal 2021 original budget, led by a surplus in sales and use tax
revenues of $128.7 million. The excess in sales and use tax revenues was reduced when compared to the final
enacted fiscal 2021 budget with actual sales and use tax revenues coming in $48.9 million above the estimate.
The strength in sales and use tax revenues in fiscal 2021 is likely the result of the state’s successful efforts in
getting remote sellers to collect and remit the sales tax on taxable sales made into the state and stronger than
expected retail sales during the COVID-19 pandemic.
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-24
Actual fiscal 2021 other tax revenues were substantively lower than in the original budget but only slightly
below the final budget estimate. In the case of the former, the difference was $12.7 million while in the case of
the latter, the difference was $35.0 thousand. The receipt of estate and transfer tax payments are difficult to
predict in number and amount. Compared to the final enacted budget, estate and transfer tax payments
exceeded expectations by $86.7 thousand, versus a shortfall of $15.1 million compared to the original budget.
In addition, actual realty transfer tax revenues in fiscal 2021 ended up slightly less than expected in the final
budget by $125.4 thousand but exceeded the amount included in the original budget by $2.4 million.
Finally, the actual fiscal 2021 Lottery transfer to the General Fund was $12.9 million above the revenue
estimate contained in the final budget and was $29.3 million above the estimated Lottery transfer to the
General Fund contained in the fiscal 2021 original budget. The surplus compared to the final budget was
largely driven by higher than expected transfers of net terminal income from video lottery terminals installed at
Twin River and Tiverton. The final fiscal 2021 transfer of net terminal income from video lottery terminals ended
up $8.4 million above the final enacted estimate and was $31.4 million above the fiscal 2021 original budget.
This large increase in the transfer of net terminal income resulted from better than expected performance after
the closure of the State’s two casinos for nearly three months as a result of the COVID-19 pandemic in the
prior fiscal year. The transfer revenues generated by traditional lottery products was $9.9 million more than
contained in the fiscal 2021 original budget, and $2.4 million more than the revenue estimate in the final
budget. All lottery components exceeded estimated budget amounts for both the original budget and final
budget.
The negative expenditure variance for the General Government function of approximately $9.8 million was
primarily due to the categorization of certain COVID-19 pandemic-related expenses as general revenue
expenses in anticipation of Federal Emergency Management Agency (FEMA) reimbursements received during
fiscal 2022. Pandemic-related expenses re-categorized totaled approximately $25.1 million, which was not
budgeted as a general revenue expense in the final fiscal 2021 enacted budget. This deficit was offset by
$15.3 million in surpluses across several General Government agencies, the largest of which was $5.9 million
in the General Assembly. The General Assembly typically ends the fiscal year with a surplus, which under
Rhode Island law is mostly reappropriated to fiscal 2022. The next largest surplus was $4.0 million in the
Department of Revenue, split mostly between the Division of Taxation and the Division of Motor Vehicles,
which both experienced higher turnover savings from vacant positions than expected and also witnessed
significant operating surpluses, particularly within the Division of Taxation’s Tax Compliance Improvement
Program (TCIP). The Department of Labor and Training concluded fiscal 2021 with a surplus totaling $1.5
million, largely attributable to unexpended state appropriations for various workforce development initiatives,
most notably within the Real Jobs Rhode Island program.
The negative variance for the Health and Human Services function of $87.8 million was fully attributable to
$177.2 million in COVID-19 pandemic-related expenses re-categorized as general revenue expenses in
anticipation of Federal Emergency Management Agency (FEMA) reimbursements in fiscal 2022. Again, these
constitute unbudgeted general revenue expenses relative to the final fiscal 2021 enacted budget. The vast
majority of these expenditures, or $176.8 million, are housed within the Department of Health, which closed
with an overall general revenue deficit totaling $174.7 million. Offsetting surpluses occurred within several
major health and human services agencies, including the Departments of Human Services ($2.5 million);
Children, Youth and Families ($3.3 million); and Behavioral Healthcare, Developmental Disabilities, and
Hospitals ($68.2 million). The surplus within DHS is primarily due to unexpended appropriations in support of
the operations of the Rhode Island Veteran’s Home, which received significantly heightened federal support via
FEMA while simultaneously experiencing a decline in patient/resident census. The DCYF surplus was primarily
in the Child Welfare program and is generally due to lower caseloads than assumed in the final enacted
budget, coupled with attendant savings in contract services and personnel expenses. Finally, the highly
significant surplus within BHDDH is primarily the result of surpluses in two major programs: $13.1 million in
services for the developmentally disabled, which incurred lower caseload expenditures than budgeted, and
$45.8 million at the state-run Eleanor Slater Hospital, which arose mainly due to unanticipated federal financial
participation for retroactive hospital billing combined with a rate settlement receivable recorded in the amount
of $3.4 million.
The positive variance to the Education function of approximately $2.2 million is driven by a surplus of $2.3
million in the Department of Elementary and Secondary Education. Approximately $0.8 million of this surplus
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-25
stems from savings in both the Early Childhood Demonstration and the Multilingual Learners “categorical” aid
programs, due largely to decreased enrollment demand during the ongoing COVID-19 pandemic. Additionally,
a favorable variance of $1.5 million is evidenced in the Teacher Retirement program, which finances 40% of
the employer cost of annual retirement contributions for public school teachers enrolled in the Employees’
Retirement System of Rhode Island (ERSRI). While this surplus reflects lower aggregate fiscal 2021 ERSRI
billings than were estimated as part of the final enacted budget, the relative variance represents only 1.3% of
appropriated program financing.
As with the General Government function, the negative variance in the Public Safety function of $0.7 million is
entirely due to the categorization of certain COVID-19 pandemic-related expenses as general revenue
expenses in anticipation of Federal Emergency Management Agency (FEMA) reimbursements in fiscal 2022.
Pandemic-related expenses re-categorized totaled approximately $10.4 million, which was not budgeted as a
general revenue expense in the final enacted budget. Without these expenses, the Public Safety function
would have had a surplus of $9.7 million. COVID-19 pandemic-related expenses incurred by the Rhode Island
Emergency Management Agency (RIEMA) totaled $10.3 million of the re-categorized expenses. Irrespective of
these re-categorizations, the Departments of Public Safety and Corrections closed fiscal 2021 with surpluses
of $2.5 million and $2.0 million, respectively. However, while the surplus in Corrections is primarily due to
unexpended appropriations in non-personnel operating categories, the surplus in Public Safety is almost
wholly attributable to turnover savings stemming from continuing unfilled vacancies at both the State Police
and Security Services divisions. Finally, the Judiciary ended the year with a surplus of $2.8 million, which under
Rhode Island law is carried forward to fiscal 2022.
Capital Assets and Debt Administration
Capital Assets
The State investment in capital assets for its governmental and business-type activities as of June 30, 2021
amounts to $5.1 billion, net of accumulated depreciation of $4.0 billion. This investment in capital assets
includes land, buildings, improvements, equipment, infrastructure, computer systems, and construction in
progress. The total increase in the State investment in capital assets for the current fiscal year was
approximately 3.17% of net book value. This increase is primarily related to investments for the construction
and rehabilitation of highways and bridges as well as other infrastructure, and new buildings.
Actual expenditures to purchase or construct capital assets were $413.5 million for the year. Of this amount,
$375.5 million was used to construct or reconstruct highways. Depreciation charges for the year totaled
$263.8 million.
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-26
State of Rhode Island Capital Assets as of June 30, 2021 and 2020
(Expressed in Thousands)
Governmental
Activities
Business-Type
Activities
Total
Primary Government
2021
2020
2021
2020
2021
2020
Capital assets not being depreciated
or amortized
Land
$
395,488
$
391,363
$
46,808
$
46,808
$
442,296
$
438,171
Works of Art
4,385
4,385
—
—
4,385
4,385
Intangibles
183,456
182,036
—
—
183,456
182,036
Construction in progress
704,362
660,498
2,799
4,931
707,161
665,429
Total capital assets not being
depreciated or amortized
1,287,691
1,238,282
49,607
51,739
1,337,298
1,290,021
Capital assets being depreciated
or amortized
Land improvements
8,331
8,331
—
—
8,331
8,331
Buildings
891,818
891,078
277,708
276,453
1,169,526
1,167,531
Building improvements
529,424
510,132
—
—
529,424
510,132
Equipment
371,266
361,788
51,318
48,608
422,584
410,396
Intangibles
344,315
341,738
175
175
344,490
341,913
Infrastructure
5,273,433
4,948,464
—
—
5,273,433
4,948,464
7,418,587
7,061,531
329,201
325,236
7,747,788
7,386,767
Less: Accumulated depreciation
or amortization
3,748,407
3,511,348
221,177
207,229
3,969,584
3,718,577
Total capital assets being depreciated
or amortized
3,670,180
3,550,183
108,024
118,007
3,778,204
3,668,190
Total capital assets (net)
$ 4,957,871
$ 4,788,465
$
157,631
$
169,746
$ 5,115,502
$ 4,958,211
Additional information about the State's capital assets can be found at Note 5 to the financial statements.
Debt Administration
According to the State's Constitution, the General Assembly has no power to incur State debts in excess of
$50 thousand without the consent of the people (voters), except in the case of war, insurrection or invasion, or
to pledge the faith of the State to the payment of obligations of others without such consent.
At the end of the current fiscal year, the State governmental activities had total bonded debt outstanding of
$2.6 billion, of which $1.3 billion is general obligation debt, $647.1 million is special obligation debt and $580.9
million is debt of the blended component units. Additionally, accreted interest of $137.0 million has been
recognized for debt of one blended component unit, which is not scheduled to be paid until 2052. On an overall
basis the state total bonded debt decreased by $32.7 million during fiscal 2021. This decrease consists of a
$48.4 million increase in general obligation debt, a decrease of $57.7 million in special obligation debt, and a
decrease of $23.4 million in the blended component unit debt.
The general obligation debt is supported by the full faith and credit of the State. Other obligations subject to
annual appropriation by the R.I. General Assembly totaling $214.5 million and $1.3 billion are supported by
pledged revenue. These obligations are discussed in the financial statement Notes 7 and 13.
During April 2021 the State issued $136 million of general obligation bonds with interest rates of 0.25% -
5.00%, maturing from 2023 through 2041. The premium paid on these bonds was $14.9 million. In accordance
with certain bond statutes, net premiums of $8.8 million were transferred to RI Infrastructure Bank to provide
municipalities with low-cost financial assistance for road and bridge projects and $5.8 million was transferred to
the Rhode Island Capital Plan Fund.
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-27
The State also issued $87.7 million of general obligation refunding bonds with interest rates of 1.00% - 5.00%,
maturing from 2022 through 2034. The premium paid on these bonds was $1.9 million. These bonds,
combined with the premium, were deposited in an irrevocable trust to advance refund $80.7 million of series
2011A, 2012A, 2013A, 2013B, and 2014B bonds with interest rates between 3.000% and 5.058%. The
refunding resulted in a $8.2 million reduction of debt service and a $8 million economic gain (difference
between the present value of the debt service payments on the old and new debt). The advanced refunding
resulted in a deferred loss (difference between the reacquisition price and the net carry amount of the old debt)
of approximately $2.7 million that was recorded as a deferred outflow of resources.
The State’s assigned general obligation bond ratings are as follows: AA (Stable) by Standard & Poor’s Ratings
Services (S&P), Aa2 (Stable) by Moody’s Investor Service, Inc., and AA (Stable) by Fitch Ratings. The State
does not have any debt limitation.
Bonds authorized by the voters that remain unissued as of June 30, 2021 amounted to $576 million; other
obligations that are authorized but unissued totaled $208.8 million and are described at Note 7 of the financial
statements. State long-term debt information can also be found in the notes to the financial statements of this
report.
Economic Outlook and Fiscal 2022 Budget
The first quarter report for fiscal 2022 prepared by the State Budget Office contains estimates of annual
expenditures based upon analysis of expenditures through the first quarter, as well as caseload and medical
assistance expenditure estimates and revenue estimates adopted at the November 2021 Caseload and
Revenue Estimating Conferences. The fiscal 2022 balance, based upon these assumptions, is estimated to
reflect a $618.4 million general revenue surplus at year end in the General Fund.
The first quarter report for fiscal 2022 reported expenditures revised downward by $86.5 million, primarily in
the Human Service functional area. The extension of the enhanced Federal Medical Assistance Percentage
rendered a savings of $39.0 million. In addition, there was a decrease of $41.8 million of expenditures within
various programs subject to the November 2021 Caseload Estimating Conference. All changes recommended
by the Governor in the fiscal 2022 enacted appropriations, or adopted revenues, will be incorporated in the
supplemental appropriations bill, which must be submitted to the General Assembly early 2022.
The November Revenue Estimating Conference’s estimates reflect recent revenue trends and expected
collections based upon the current economic forecast. Consensus estimates of general revenue receipts were
increased by $273.6 million, up from $4.41 billion to $4.68 billion compared with the enacted fiscal 2022
estimate. The largest factor is an expected increase to taxes of $259.8 million. The transfer from the Rhode
Island Lottery is also expected to increase by $17.4 million. These increases are offset by anticipated
decreases to the enacted estimate of departmental revenues and other sources of $3.1 million.
Conditions Expected to Affect Future Operations
American Rescue Plan - State Fiscal Recovery Funding
Funding to the State from the American Rescue Plan Act's State Fiscal Recovery funds will allow large-scale,
sustainable investments in the climate, blue and green economies, workforce, public health care, housing, and
more. The 2023 budget proposal includes a wide array of proposals to use these funds to begin investing in
the State's recovery from the pandemic and provides important resources to assist the State in managing the
continuing challenges of the on-going pandemic. Use of the funding will be appropriated by the General
Assembly. The significance of the amount of recovery funding represents an unprecedented opportunity to
make significant investments designed to benefit the State's overall economy for several years.
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-28
Lottery Revenue
Net operations of the Rhode Island Lottery (Lottery) represent the State’s third-largest revenue source. The
following factors currently exist that will impact future operations:
•
Continuing impacts to revenue caused by the COVID-19 pandemic – The State's two licensed casinos
and related Lottery revenue will continue to be impacted as the State manages the public health
emergency.
•
Changes in gaming technology – Lottery continues to utilize new gaming technology to expand product
offerings. Planned expansions of newly implemented mobile sports betting and iLottery gaming
products allow patrons to play Lottery games utilizing mobile applications and the internet. Facilitating
access to Lottery games, especially during the public health emergency, may offset some of the
negative impacts that have resulted from the pandemic.
•
Competition from casinos in nearby states – Efforts to compete effectively with casino offerings in
nearby states will undoubtedly persist and continue to involve enhanced player incentives and
ensuring new games and gambling options are offered to patrons.
In June 2021, the Rhode Island General Assembly enacted legislation authorizing the State Lottery Division to
extend contracts for services and products with IGT Global Solutions Corporation (IGT) through June 30, 2043.
The State Lottery Division may amend the IGT master contract to June 30, 2043, including agreements related
to online gaming, the video lottery central computer system, the video lottery technology provider license,
instant tickets and related vending machine agreement, and the website services agreement. Of most
significance, the executed contract extensions will require IGT to pay $27 million (up-front payment) to be the
exclusive provider to the Division of its products and services under the contract; amend the online lottery
agreement rates of compensation (online and instant games); and obligate IGT to capital investment,
employment, and compensation pay requirements.
The legislation also authorizes the State Lottery Division to agree to contract extensions through June 30,
2043 with the Bally’s Corporation (owner and operator of the Lottery’s licensed gaming facilities) or an affiliate
(Bally’s) in exchange for constructing a 50,000 square foot addition to the Lincoln Gaming Facility and leasing
commercial space in the City of Providence. The extension would mandate a $100 million investment by
Bally’s relating to the Lincoln expansion and improvements. In addition, the Bally’s extension will require Bally’s
to enter into a Joint Venture with IGT for the right to be the exclusive Technology Provider of video lottery
terminals (VLT) from the date of the Joint Venture to June 30, 2043.
Finalization of contracts reflecting the newly authorized provisions are in process but have not been executed.
Pension Benefits
The State’s financial statements include the net pension liability for the various defined benefit pension plans
covering state employees and teachers. Please see Note 18 to the financial statements for information about
each of the state’s pension plans.
Future operations will continue to be affected by the actuarially calculated amounts required to responsibly
fund pensions consistent with statutory and actuarial requirements. Similarly, the overall net position will
continue to be affected by market conditions affecting the fair value of assets accumulated for future pension
benefits and the accounting measures reflecting the changes in those pension liabilities from year to year.
In addition to the comprehensive pension reform measures adopted in prior years, the State continues to
responsibly manage its pension liabilities through investment management and adoption of appropriate
actuarial assumptions.
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-29
Transportation Funding Initiative
In order to address Rhode Island’s continuing issues with deteriorating roads and bridges, an initiative, called
RhodeWorks, was enacted by the General Assembly in 2016. RhodeWorks calls for investing an additional $1
billion above current plans in transportation infrastructure to fix more than 150 structurally deficient bridges and
make repairs to another 500 bridges to prevent them from becoming structurally deficient. The plan also
refocuses efforts to expand transit. The plan is financed by 1) user fees on large commercial trucks, 2) $300
million of new GARVEE debt that will be repaid with federal funds, and 3) $129 million of federal funds made
available sooner by restructuring existing federally-funded debt. The plan is expected to save nearly $1 billion
over 10 years by addressing transportation infrastructure problems on a more proactive basis. Since
RhodeWorks was enacted in 2016, DOT has overseen 233 projects including completion of 183 bridges.
In addition, as more fully described in Note 23, Subsequent Events, the federal Infrastructure Investment and
Jobs Act (IIJA), a 5-year infrastructure funding package, is expected to provide $1.7 billion for transportation
infrastructure to the State. This new funding will expedite 100 projects valued at $2.1 billion in the state
Transportation Improvement Program. State matching funds will be combined with the federal funds to
accelerate these improvements. In addition, the IIJA provides funding for significant investments in the State’s
airports, transit systems, electric vehicle charging networks, high-speed internet coverage, and drinking water
infrastructure, as many of the infrastructure improvements targeted by the act. This unprecedented
infrastructure investment will greatly assist the State in addressing current transportation infrastructure
deficiencies while also allowing the State to make new investments modernizing the infrastructure that
supports telecommunications, power grids, clean energy initiatives and other vital infrastructure.
Information Technology Security and Cybersecurity
The State relies upon a large and complex technology environment to conduct its operations and faces
multiple cybersecurity threats and potential attacks on its computing and other digital networks and systems.
To mitigate the risk of impact to State operations and damage from cybersecurity incidents or cyber-attacks,
the State has prioritized and increased investments in multiple forms of cybersecurity and operational
safeguards based on strategies developed by the State’s Chief Information Security Officer that align with the
well-defined cybersecurity and risk management frameworks.
Statewide School Construction Funding
Voters approved a $250 million Statewide School Construction Bond, a new funding mechanism designed to
provide upfront funding for local school construction projects. Pursuant to RIGL 45-38.2-4(e)(2), funding is
based on a set percentage of foundational housing aid awarded. Local education agencies with Necessity of
School Construction approvals will be offered 15% of the state share of their approval on a pay-as-you-go
basis for projects that have not completed and for projects that have not issued permanent financing (bonds)
through RIHEBC. The State has authorized school project awards approximating $186 million of the $250
million to date in conjunction with this program. This commitment will help our state to create learning
environments that support the attainment of the academic, social, emotional, career readiness, and citizenship
knowledge, skills, and competencies necessary to be successful in the 21st century.
Requests for Information
This report is designed to provide a general overview of the State finances and accountability for the State
citizens, taxpayers, customers, investors and creditors. Questions concerning any of the information provided
in this report or requests for additional information should be sent to Tara Mello, Associate Controller at
tara.m.mello@doa.ri.gov. The State’s Annual Comprehensive Financial Report may be found on the State
Controller’s home page, http://controller.admin.ri.gov/index.php. Requests for additional information related to
component units should be addressed to the entities as listed in Note 1 of the financial statements.
State of Rhode Island
Management's Discussion and Analysis
Fiscal Year Ended June 30, 2021
A-30
Assets and deferred outflows of resources
Current assets:
Cash and cash equivalents
$
2,881,971 $
39,093 $ 2,921,064
$
410,478
Funds on deposit with fiscal agent
273,826
158,089
431,915
—
Investments
—
—
—
3,383
Receivables (net)
900,181
75,939
976,120
128,544
Restricted assets:
Cash and cash equivalents
50,448
3,465
53,913
811,409
Investments
—
—
—
160,580
Receivables (net)
—
—
—
106,342
Other assets
—
—
—
51,032
Due from primary government
—
—
—
36,417
Due from component units
14,847
—
14,847
2,054
Internal balances
613
(613)
—
—
Due from other governments and agencies
406,309
8,719
415,028
4,203
Inventories
1,537
913
2,450
7,637
Other assets
6,019
814
6,833
16,704
Total current assets
4,535,751
286,419
4,822,170
1,738,783
Noncurrent assets:
Investments
—
—
—
322,915
Receivables (net)
33,265
—
33,265
108,072
Due from other governments and agencies
21,955
—
21,955
—
Restricted assets:
Cash and cash equivalents
—
—
—
72,432
Investments
—
—
—
796,977
Receivables (net)
—
—
—
1,110,548
Other assets
—
—
—
1,322,489
Due from component units
36,816
—
36,816
923
Net OPEB Asset
11,226
—
11,226
—
Capital assets - nondepreciable
1,287,691
49,607
1,337,298
350,794
Capital assets - depreciable (net)
3,670,180
108,024
3,778,204
2,076,393
Other assets
—
175
175
199,162
Total noncurrent assets
5,061,133
157,806
5,218,939
6,360,705
Total assets
9,596,884
444,225 10,041,109
8,099,488
Deferred outflows of resources
712,407
11,697
724,104
95,865
(Continued)
State of Rhode Island
Statement of Net Position
June 30, 2021
(Expressed in Thousands)
Primary Government
Governmental
Activities
Business - Type
Activities
Total
Component
Units
A-32
Liabilities and deferred inflows of
resources
Current Liabilities:
Accounts payable
$
889,121 $
27,254 $
916,375
$
79,147
Notes payable
—
—
—
74,861
Due to primary government
—
—
—
14,847
Due to component units
36,417
—
36,417
2,054
Due to other governments and agencies
—
642
642
—
Accrued expenses
—
5,894
5,894
—
Unearned revenue
1,522,595
—
1,522,595
42,411
Other current liabilities
205,291
2,821
208,112
457,460
Current portion of long-term debt
274,376
17,204
291,580
147,794
Obligation for unpaid prize awards
—
12,827
12,827
—
Total current liabilities
2,927,800
66,642
2,994,442
818,574
Noncurrent Liabilities:
Due to primary government
—
—
—
36,816
Net pension liability
2,310,286
21,652
2,331,938
305,265
Net pension liability-special funding
situation
1,361,982
—
1,361,982
—
Net OPEB liability
341,930
3,420
345,350
161,726
Unearned revenue
—
2,022
2,022
4,908
Due to component units
—
—
—
923
Notes payable
—
—
—
182,524
Loans payable
—
—
—
13,130
Obligations under capital leases
113,816
—
113,816
1,011
Compensated absences
13,089
317
13,406
26,340
Bonds payable
2,716,748
180,975
2,897,723
2,789,443
Other liabilities
86,410
184
86,594
431,562
Total noncurrent liabilities
6,944,261
208,570
7,152,831
3,953,648
Total liabilities
9,872,061
275,212 10,147,273
4,772,222
Deferred inflows of resources
273,477
1,573
275,050
63,255
Net position (deficit)
Net investment in capital assets
4,049,759
(29,662)
4,020,097
1,669,844
Restricted for:
Capital Projects
148,694
—
148,694
—
Debt
71,558
299
71,857
392,560
Employment security programs
173,570
231,386
404,956
—
Other
315,433
—
315,433
1,113,114
Nonexpendable
174
—
174
156,468
Unrestricted
(4,595,435)
(22,886) (4,618,321)
27,890
Total net position
$
163,753 $
179,137 $
342,890
$ 3,359,876
(Concluded)
State of Rhode Island
Statement of Net Position
June 30, 2021
(Expressed in Thousands)
Primary Government
Governmental
Activities
Business - Type
Activities
Total
Component
Units
The notes to the financial statements are an integral part of this statement.
A-33
State of Rhode Island
Statement of Activities
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Net (Expense) Revenue and Changes in Net Position
Program Revenues
Primary Government
Functions/Programs
Expenses
Charges for
Services
Operating
grants and
contributions
Capital
grants and
contributions
Governmental
activities
Business-type
activities
Totals
Component
Units
Primary government:
Governmental activities:
General government
$
1,399,797 $
253,378 $
704,971 $
3,296 $
(438,152) $
— $
(438,152) $
—
Health and human services
4,959,473
306,969
3,270,278
4,938
(1,377,288)
—
(1,377,288)
—
Education
1,929,835
40,478
315,048
86
(1,574,223)
—
(1,574,223)
—
Public safety
610,263
41,677
315,918
6,693
(245,975)
—
(245,975)
—
Natural resources
96,158
34,447
24,196
4,143
(33,372)
—
(33,372)
—
Transportation
375,266
58,163
67,425
263,820
14,142
—
14,142
—
Interest and other charges
98,595
—
—
—
(98,595)
—
(98,595)
—
Total governmental activities
9,469,387
735,112
4,697,836
282,976
(3,753,463)
—
(3,753,463)
—
Business-type activities:
State Lottery
773,867
1,074,012
—
—
—
300,145
300,145
—
Convention Center
33,499
4,521
—
—
—
(28,978)
(28,978)
—
Employment Security
2,058,867
226,948
1,693,345
—
—
(138,574)
(138,574)
—
Total business-type activities
2,866,233
1,305,481
1,693,345
—
—
132,593
132,593
—
Total primary government
$
12,335,620 $
2,040,593 $
6,391,181 $
282,976
(3,753,463)
132,593
(3,620,870)
—
Component units:
$
1,579,505 $
713,104 $
842,873 $
143,936
120,408
General Revenues:
Taxes:
Personal income
1,609,848
—
1,609,848
—
General business
497,284
—
497,284
—
Sales and use
1,522,519
—
1,522,519
—
Gasoline
143,345
—
143,345
—
Other
370,934
—
370,934
—
Interest and investment earnings
3,110
156
3,266
117,076
Miscellaneous revenue
109,667
15,271
124,938
43,487
Net gain (loss) on sale of capital assets
8,326
—
8,326
(2,316)
Transfers (net)
275,840
(275,840)
—
—
Total general revenues and transfers
4,540,873
(260,413)
4,280,460
158,247
Change in net position
787,410
(127,820)
659,590
278,655
Net position (deficit) - beginning as restated
(623,657)
306,957
(316,700)
3,081,221
Net position- ending
$
163,753 $
179,137 $
342,890 $
3,359,876
The notes to the financial statements are an integral part of this statement.
A-34
State of Rhode Island
Balance Sheet
Governmental Funds
June 30, 2021
(Expressed in Thousands)
General
Intermodal
Surface
Transportation
Other
Governmental
Funds
Total
Governmental
Funds
Assets
Cash and cash equivalents
$
2,416,779
$
60,751
$
367,436
$
2,844,966
Funds on deposit with fiscal agent
—
216,443
57,383
273,826
Restricted cash equivalents
—
—
50,448
50,448
Receivables (net)
819,079
17,037
89,557
925,673
Due from other funds
—
133
139,820
139,953
Due from component units
—
211
—
211
Due from other governments
and agencies
355,401
60,476
—
415,877
Loans to other funds
24,208
—
33,031
57,239
Other assets
1,571
—
—
1,571
Total assets
$
3,617,038
$
355,051
$
737,675
$
4,709,764
Liabilities, deferred inflows of
resources and fund balances
Liabilities
Accounts payable
790,760
71,331
11,085
873,176
Due to other funds
144,239
—
383
144,622
Due to component units
21,125
—
5,077
26,202
Loans from other funds
33,031
—
15,008
48,039
Unearned revenue
1,521,331
—
—
1,521,331
Other liabilities
176,578
8,280
211
185,069
Total liabilities
2,687,064
79,611
31,764
2,798,439
Deferred inflows of resources
32,719
9,622
—
42,341
Fund Balances
Nonspendable
1,538
—
174
1,712
Restricted
276,172
223,404
705,304
1,204,880
Unrestricted
Committed
8,135
41,835
433
50,403
Assigned
291,985
579
—
292,564
Unassigned
319,425
—
—
319,425
Total fund balances
897,255
265,818
705,911
1,868,984
Total liabilities, deferred inflows
of resources and fund balances
$
3,617,038
$
355,051
$
737,675
$
4,709,764
The notes to the financial statements are an integral part of this statement.
A-35
State of Rhode Island
Reconciliation of the Balance Sheet of the Governmental Funds
to the Statement of Net Position
June 30, 2021
(Expressed in Thousands)
Fund balance - total governmental funds
$ 1,868,984
Amounts reported for governmental activities in the Statement of Net Position are different
because:
Capital Assets used in the governmental activities are not financial resources and therefore are
not reported in the funds.
Capital assets
8,703,013
Accumulated depreciation
(3,748,407)
4,954,606
Deferred outflows of resources
712,407
Bonds, notes, certificates of participation, accrued interest, net pension liabilities and other
liabilities are not due and payable in the current period and therefore are not recorded in the
governmental funds.
Compensated absences
(80,408)
Bonds payable
(2,676,703)
Net premium/discount on Bonds
(212,395)
Obligations under capital leases
(128,046)
Premium on Certificates of Participation
(9,398)
Interest payable
(21,874)
Net pension liabilities
(3,672,268)
Net OPEB liabilities
(341,930)
Other liabilities
(83,737)
(7,226,759)
Other long-term assets and unearned revenue are not available to pay for current-period
expenditures and, therefore, are deferred in the funds.
Receivables
12,309
Due from component units
41,236
Net OPEB asset
11,226
Unavailable revenue
42,341
107,112
Deferred inflows of resources
(273,477)
Internal service funds are used by management to charge the costs of certain activities to
individual funds. The net position of the internal service funds is reported with governmental
activities.
20,880
Net position - total governmental activities
$
163,753
The notes to the financial statements are an integral part of this statement.
A-36
State of Rhode Island
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
General
Intermodal
Surface
Transportation
Other
Governmental
Funds
Total
Governmental
Funds
Revenues:
Taxes
$ 3,688,078 $
218,124 $
234,991 $
4,141,193
Licenses, fines, tolls, sales, and services
378,662
58,596
1,677
438,935
Departmental restricted revenue
305,523
—
—
305,523
Federal grants
4,649,167
326,705
—
4,975,872
Income from investments
1,976
543
554
3,073
Other revenues
64,650
1,520
48,325
114,495
Total revenues
9,088,056
605,488
285,547
9,979,091
Expenditures:
Current:
General government
1,141,313
—
197,007
1,338,320
Health and human services
4,925,442
—
—
4,925,442
Education
1,839,019
—
323
1,839,342
Public safety
587,243
—
—
587,243
Natural resources
85,374
—
—
85,374
Transportation
—
583,658
3,284
586,942
Capital outlays
—
—
131,900
131,900
Debt service:
Principal
139,023
41,571
24,859
205,453
Interest and other charges
64,095
29,864
24,999
118,958
Total expenditures
8,781,509
655,093
382,372
9,818,974
Excess (deficiency) of revenues
over (under) expenditures
306,547
(49,605)
(96,825)
160,117
Other financing sources (uses):
Issuance of bonds and notes
—
—
135,900
135,900
Issuance of refunding bonds
—
—
87,660
87,660
Debt issuance premiums
—
—
16,755
16,755
Transfers in
367,744
29
149,023
516,796
Payment to advance refunded bonds
escrow agent
—
—
(89,005)
(89,005)
Transfers out
(164,963)
(55,024)
(20,969)
(240,956)
Total other financing sources (uses)
202,781
(54,995)
279,364
427,150
Net change in fund balances
509,328
(104,600)
182,539
587,267
Fund balances - beginning (as restated)
387,927
370,418
523,372
1,281,717
Fund balances - ending
$
897,255 $
265,818 $
705,911 $
1,868,984
The notes to the financial statements are an integral part of this statement.
A-37
State of Rhode Island
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances
of the Governmental Funds to the Statement of Activities
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Net change in fund balances - total governmental funds
$
587,267
Amounts reported for governmental activities in the Statement of Activities are different because:
Governmental funds report capital outlays as expenditures. However, in the Statement of
Activities the cost of those assets is allocated over their estimated useful lives and reported as
depreciation expense. Current year acquisitions are therefore deducted from expenses on the
Statement of Activities, less current year depreciation expense and revenue resulting from
current year disposals.
Capital outlay
435,027
Depreciation expense
(249,056)
185,971
Bond, note, and certificate of participation proceeds provide current financial resources to
governmental funds by issuing debt which increases long-term debt in the Statement of Net
Position. Repayments of bond principal is an expenditure in the governmental funds, but the
repayment reduces long-term liabilities in the Statement of Net Position.
Principal paid on debt
205,334
Debt defeased in refunding
80,700
Accrued interest and other charges
2,264
Proceeds from sale of debt
(223,560)
Refunding loss deferral
2,763
Deferral of premium/discount
(16,755)
Amortization of premium/discount
43,467
Accreted interest
(13,917)
Amortization of refunding gains/losses
(5,789)
74,507
Revenues, expense reductions, and (expenses) in the Statement of Activities that do not provide
(use) current financial resources are not reported as revenues (expenditures) in the
governmental funds. In the current period, the net adjustments consist of:
Compensated absences
3,833
Pension expenses, net of related deferred
outflows
(67,334)
OPEB expenses, net of related deferred
outflows
27,690
Program expenses
(17,881)
Program and miscellaneous revenue
(6,000)
Operating and capital grant revenue
4,540
General revenue - taxes
2,738
(52,414)
Internal service funds are used by management to charge the costs of certain activities to
individual funds. The change in net position of the internal service funds is reported with
governmental activities.
(7,921)
Change in net position - total governmental activities
$
787,410
The notes to the financial statements are an integral part of this statement.
A-38
State of Rhode Island
Statement of Net Position
Proprietary Funds
June 30, 2021
(Expressed in Thousands)
Business-type Activities-
Governmental
Enterprise Funds
Activities
R.I.
R.I.
Convention Employment
Internal
Lottery
Center
Security
Totals
Service Funds
Assets and deferred outflows of resources
Current assets:
Cash and cash equivalents
$
33,584 $
3,037 $
2,472 $
39,093 $
37,005
Restricted cash and cash equivalents
—
3,465
—
3,465
—
Funds on deposit with fiscal agent
—
—
158,089
158,089
—
Receivables (net)
4,817
245
70,877
75,939
7,811
Due from other funds
1
958
1,786
2,745
5,544
Due from other governments and agencies
—
—
8,719
8,719
—
Loans to other funds
—
—
—
—
—
Inventories
913
—
—
913
1,537
Other assets
396
418
—
814
4,661
Total current assets
39,711
8,123
241,943
289,777
56,558
Noncurrent assets:
Capital assets - nondepreciable
—
49,607
—
49,607
—
Capital assets - depreciable (net)
346
107,678
—
108,024
3,265
Other assets
—
175
—
175
—
Total noncurrent assets
346
157,460
—
157,806
3,265
Total assets
40,057
165,583
241,943
447,583
59,823
Deferred outflows of resources
7,029
4,668
—
11,697
—
Liabilities and deferred inflows of resources
Current liabilities:
Accounts payable
14,723
3,772
8,759
27,254
18,552
Due to other funds
3,358
—
—
3,358
262
Due to other governments and agencies
—
—
642
642
—
Loans from other funds
—
—
—
—
9,200
Accrued expenses
5,894
—
—
5,894
—
Unearned revenue
625
2,296
—
2,921
—
Other current liabilities
2,650
129
42
2,821
10,929
Bonds payable
—
13,995
—
13,995
—
Compensated absences
288
—
—
288
—
Obligation for unpaid prize awards
12,827
—
—
12,827
—
Total current liabilities
40,365
20,192
9,443
70,000
38,943
Noncurrent liabilities:
Net pension liability
21,652
—
—
21,652
—
Net OPEB liability
3,420
—
—
3,420
—
Unearned revenue
625
283
1,114
2,022
—
Bonds payable
—
180,975
—
180,975
—
Compensated absences
317
—
—
317
—
Other noncurrent liabilities
—
184
—
184
—
Total noncurrent liabilities
26,014
181,442
1,114
208,570
—
Total liabilities
66,379
201,634
10,557
278,570
38,943
Deferred inflows of resources
1,573
—
—
1,573
—
Net Position (Deficit)
Net investment in capital assets
346
(30,008)
—
(29,662)
3,265
Restricted for:
Debt
—
299
—
299
—
Employment insurance programs
—
—
231,386
231,386
—
Unrestricted
(21,212)
(1,674)
—
(22,886)
17,615
Total net position (deficit)
$ (20,866) $
(31,383) $
231,386 $ 179,137 $
20,880
The notes to the financial statements are an integral part of this statement.
A-39
State of Rhode Island
Statement of Revenues, Expenses and Changes in Fund Net Position
Proprietary Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Business-type Activities-
Governmental
Enterprise Funds
Activities
R.I.
R.I.
Convention Employment
Internal
Lottery
Center
Security
Totals
Service Funds
Operating revenues:
Charges for services
$
— $
4,242 $
— $
4,242 $
433,525
Employer premiums
—
—
214,516
214,516
—
Lottery sales
295,942
—
—
295,942
—
Video lottery, net
345,066
—
—
345,066
—
Table games
79,459
—
—
79,459
—
Sports book
352,995
—
—
352,995
—
Federal grants
—
—
1,693,345
1,693,345
—
Miscellaneous
550
279
12,432
13,261
—
Total operating revenues
1,074,012
4,521
1,920,293
2,998,826
433,525
Operating expenses:
Personnel services
12,224
3,558
—
15,782
55,952
Supplies, materials, and services
260,910
5,853
—
266,763
384,967
Prize awards, net of prize recoveries
500,595
—
—
500,595
—
Depreciation and amortization
138
14,007
—
14,145
562
Benefits paid
—
—
2,058,867
2,058,867
—
Total operating expenses
773,867
23,418
2,058,867
2,856,152
441,481
Operating income (loss)
300,145
(18,897)
(138,574)
142,674
(7,956)
Nonoperating revenues (expenses):
Interest revenue
155
1
—
156
34
Other nonoperating revenues (expenses)
1,003
9,997
4,271
15,271
1
Interest expense
—
(10,081)
—
(10,081)
—
Total nonoperating revenue (expenses)
1,158
(83)
4,271
5,346
35
Income (loss) before transfers
301,303
(18,980)
(134,303)
148,020
(7,921)
Transfers in
—
25,963
—
25,963
—
Transfers out
(301,803)
—
—
(301,803)
—
Change in net position
(500)
6,983
(134,303)
(127,820)
(7,921)
Net position (deficit) - beginning as restated
(20,366)
(38,366)
365,689
306,957
28,801
Net position (deficit) - ending
$ (20,866) $
(31,383) $
231,386 $ 179,137 $
20,880
The notes to the financial statements are an integral part of this statement.
A-40
State of Rhode Island
Statement of Cash Flows
Proprietary Funds
For the Fiscal Year Ended June 30, 2021
Business-type Activities-
Enterprise Funds
Governmental
Activities
R.I.
Lottery
R.I. Convention
Center
Employment
Security
Totals
Internal
Service Funds
Cash flows from operating activities:
Cash received from gaming activities
$ 1,077,135 $
— $
— $ 1,077,135 $
—
Cash received from customers
—
4,337
—
4,337
444,681
Cash received from employer premiums
—
—
201,246
201,246
—
Cash received from grants
—
—
1,688,242
1,688,242
—
Cash received for other program benefits
—
—
219,669
219,669
—
Cash payments for gaming activities
(747,206)
—
—
(747,206)
—
Cash payments to suppliers
(5,638)
(6,494)
—
(12,132)
(385,898)
Cash payments to employees
(11,235)
(3,275)
—
(14,510)
(54,111)
Cash payments for benefits - Employment Security Fund
—
—
(2,041,954)
(2,041,954)
—
Cash payments for benefits – other
—
—
(219,669)
(219,669)
—
Other operating revenue (expense)
—
8,842
(10,229)
(1,387)
(268)
Net cash provided by (used for) operating activities
313,056
3,410
(162,695)
153,771
4,404
Cash flows from noncapital financing activities:
Loans from other funds
—
—
—
—
(4,701)
Loans to other funds
—
—
—
—
2,236
Repayment of loans to other funds
—
—
—
—
(214)
Repayment of loans from other funds
—
—
—
—
1,538
Transfers in
—
26,346
1,217
27,563
—
Transfers out
(301,308)
—
(51)
(301,359)
—
Net transfers from (to) fiscal agent
—
—
161,643
161,643
—
Net cash provided by (used for) noncapital financing activities
(301,308)
26,346
162,809
(112,153)
(1,141)
Cash flows from capital and related financing activities:
Proceeds from issuance of bonds
—
32,170
—
32,170
—
Principal paid on capital obligations
—
(13,360)
—
(13,360)
—
Refunded bond escrow agent
—
(32,013)
—
(32,013)
—
Interest paid on capital obligations
—
(8,759)
—
(8,759)
—
Acquisition of capital assets
(12)
(6,196)
—
(6,208)
(780)
Net cash provided by (used for) capital and related financing
activities
(12)
(28,158)
—
(28,170)
(780)
Cash flows from investing activities:
Interest on investments
155
1
—
156
37
Net cash provided by investing activities
155
1
—
156
37
Net increase (decrease) in cash and cash equivalents
11,891
1,599
114
13,604
2,520
Cash and cash equivalents, July 1
21,693
4,903
2,358
28,954
34,485
Cash and cash equivalents, June 30
$
33,584 $
6,502 $
2,472 $
42,558 $
37,005
Reconciliation of operating income (loss) to net cash
provided by (used for) operating activities:
Operating income (loss)
300,145
(18,897)
(138,574)
142,674
(7,956)
Adjustments to reconcile operating income (loss)
to net cash provided by (used for) operating activities:
Depreciation and amortization
138
14,007
—
14,145
563
Other revenue (expense) and transfers in (out)
377
8,856
(16,748)
(7,515)
1
Net changes in assets and liabilities:
Receivables, net
185
260
(13,270)
(12,825)
11,570
Inventory
38
—
—
38
680
Deferred outflows of resources
289
—
—
289
—
Prepaid items
42
41
—
83
—
Due to / due from transactions
66
—
2,232
2,298
—
Accounts and other payables
7,998
(399)
8,759
16,358
(4,748)
Accrued expenses
766
—
8
774
4,294
Net pension liability
802
—
—
802
—
Net OPEB liability
(571)
—
—
(571)
—
Deferred inflows of resources
605
—
—
605
—
Unearned revenue
1,433
(458)
(5,102)
(4,127)
—
Prize awards payable
743
—
—
743
—
Total adjustments
12,911
22,307
(24,121)
11,097
12,360
Net cash provided by (used for) operating activities
$ 313,056 $
3,410 $
(162,695) $
153,771 $
4,404
The notes to the financial statements are an integral part of this statement.
A-41
State of Rhode Island
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2021
(Expressed in Thousands)
Pension and
Other
Employee
Benefit
Trusts
Investment
Trust
Ocean State
Investment
Pool
Private
Purpose
Trusts
Custodial
Funds
Assets
Cash and cash equivalents
$
15,472 $
— $
8,852 $
—
Deposits held as security for entities
doing business in the State
—
—
—
57,104
Receivables
Contributions
19,228
—
—
—
Due from State for teachers
24,092
—
—
—
Due from other plans
1,331
—
—
—
Other
1,101
—
—
21,259
Miscellaneous
—
—
3,783
—
Total receivables
45,752
—
3,783
21,259
Prepaid expenses
2,806
—
—
—
Investments, at fair value
Equity in short-term investment fund
—
55,412
—
—
Equity in pooled trusts
11,037,830
—
—
—
Other investments
1,620,178
—
5,411,505
—
Total investments
12,658,008
55,412
5,411,505
—
Total assets
12,722,038
55,412
5,424,140
78,363
Liabilities
Accounts payable
5,398
4
13,680
—
Due to other plans
1,331
—
—
—
Incurred but not reported claims
1,005
—
—
—
Other
6,463
—
—
—
Unclaimed Property Claims
—
—
—
1,529
Deposits held for others
—
—
—
508
Total liabilities
14,197
4
13,680
2,037
Net position
Restricted for:
Pension benefits
12,175,165
—
—
—
Other postemployment benefits
532,676
—
—
—
External investment pool participants
—
55,408
—
—
Tuition savings program
—
—
5,403,888
—
Individuals, organizations and other
governments
—
—
—
76,326
Other
—
—
6,572
Total fiduciary net position
$ 12,707,841 $
55,408 $ 5,410,460 $ 76,326
The notes to the financial statements are an integral part of this statement.
A-42
State of Rhode Island
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Pension and
Other
Employee
Benefit Trusts
Investment Trust
Ocean State
Investment Pool
Private
Purpose
Trusts
Custodial
Funds
Additions
Contributions
Member contributions
$
215,711 $
—
$
— $
—
Employer contributions
535,293
—
—
—
New employer contributions
1,232
—
—
—
Supplemental employer contributions
197
—
—
—
State contributions for teachers
112,623
—
—
—
Interest on service credits purchased
98
—
—
—
Service credit transfers
18,269
—
—
—
From program participants
—
119,640
373,071
—
Total contributions
883,423
119,640
373,071
—
Other income
1,630
—
—
—
Investment income
Increase (Decrease) in fair value of investments
2,804,885
—
606,743
(2,540)
Interest
49,731
104
—
—
Dividends
72,779
—
148,986
—
Other investment income
956
—
—
—
2,928,351
104
755,729
(2,540)
Less: investment expense
188,040
77
—
—
Net investment income (loss)
2,740,311
27
755,729
(2,540)
Unclaimed Property
—
—
—
35,571
Deposits for patients, clients and inmates
—
—
—
10,080
Miscellaneous
—
—
—
6,815
Total additions
3,625,364
119,667
1,128,800
49,926
Deductions
Retirement benefits
975,612
—
—
—
Death benefits
3,781
—
—
—
Distributions
32,261
143,556
—
—
Program participant redemptions
—
—
866,769
—
Refund of contributions
4,811
—
—
—
Administrative expense
10,832
—
20,920
—
Service credit transfers
18,269
—
—
—
OPEB benefits
30,984
—
—
—
Payments and transfers of Unclaimed Property
—
—
—
31,577
Payments made on behalf of individuals in State care
—
—
—
9,306
Miscellaneous
—
—
—
6,382
Total deductions
1,076,550
143,556
887,689
47,265
Change in net position restricted for:
Pension benefits
2,420,221
—
—
—
Other postemployment benefits
128,593
—
—
—
External investment pool participants
—
(23,889)
—
—
Tuition Savings Program
—
—
239,028
—
Other
—
—
2,083
2,661
Fiduciary net position - beginning (as restated)
10,159,027
79,297
5,169,349
73,665
Fiduciary net position - ending
$
12,707,841 $
55,408
$
5,410,460 $
76,326
The notes to the financial statements are an integral part of this statement.
A-43
Assets and deferred outflows of
resources
Current Assets:
Cash and cash equivalents
$
79,151
$
7,962
$
476
$
10,536
$
506
Investments
—
—
—
2,969
—
Receivables (net)
7,299
1,742
—
5,637
92
Restricted assets:
Cash and cash equivalents
22,931
98,922
9,185
—
12,913
Due from primary government
—
—
—
—
—
Investments
—
2,196
—
—
7,547
Receivables (net)
—
44
—
—
—
Other assets
—
—
—
—
6,388
Due from primary government
—
15,423
—
9,380
1,898
Due from other governments
—
—
13
—
—
Due from other component units
—
151
—
—
—
Inventories
—
—
—
1,727
24
Other assets
211
167
54
1,223
241
Total current assets
109,592
126,607
9,728
31,472
29,609
Noncurrent Assets:
Investments
—
455
—
3,060
—
Receivables (net)
—
7,529
—
—
—
Restricted assets:
Cash and cash equivalents
42,453
6,982
—
—
10,995
Investments
9,583
6,920
—
—
96,560
Receivables (net)
5,314
165
—
—
—
Other assets
—
924
—
—
—
Capital assets - nondepreciable
71,703
521
—
29,175
3,064
Capital assets - depreciable (net)
445,957
327
—
107,515
234,006
Due from other component units
—
—
—
—
—
Other assets, net of amortization
128
—
487
2,620
—
Total noncurrent assets
575,138
23,823
487
142,370
344,625
Total assets
684,730
150,430
10,215
173,842
374,234
Deferred outflows of resources
883
322
—
26,637
—
(Continued)
State of Rhode Island
Combining Statement of Net Position
Component Units
June 30, 2021
(Expressed in Thousands)
RIAC
RICC
I-195 RDC
RIPTA
RITBA
A-44
Liabilities and deferred inflows of
resources
Current liabilities:
Accounts payable
7,248
1,444
197
6,722
464
Notes payable
—
—
—
—
—
Due to primary government
—
—
—
2,295
8,932
Due to other component units
235
—
—
—
—
Unearned revenue
1,314
3,287
255
280
6,025
Other liabilities
9,082
10,193
857
9,079
8,568
Current portion of compensated
absences
—
—
—
46
—
Current portion of long-term debt
18,163
1,249
1,790
—
6,220
Total current liabilities
36,042
16,173
3,099
18,422
30,209
Noncurrent liabilities:
Due to primary government
45
—
—
8,025
—
Due to other component units
923
—
—
—
—
Unearned revenue
—
3,530
—
—
—
Notes payable
—
—
—
—
—
Loans payable
—
—
—
—
—
Obligations under capital leases
863
—
—
—
—
Net pension liability
1,697
305
—
78,513
—
Net OPEB liability
264
48
—
73,871
—
Other liabilities
—
1,803
—
9,602
—
Compensated absences
—
—
—
303
—
Bonds payable
253,315
7,808
31,990
—
206,594
Total noncurrent liabilities
257,107
13,494
31,990
170,314
206,594
Total liabilities
293,149
29,667
35,089
188,736
236,803
Deferred inflows of resources
364
498
—
9,315
—
Net position (deficit)
Net investment in capital assets
265,518
849
487
127,697
51,908
Restricted for:
Debt
15,733
—
8,253
—
85,688
Other
39,848
111,782
869
4,055
—
Other nonexpendable
—
—
—
—
—
Unrestricted
71,001
7,956
(34,483)
(129,324)
(165)
Total net position (deficit)
$ 392,100
$
120,587
$
(24,874) $
2,428
$
137,431
(Continued)
State of Rhode Island
Combining Statement of Net Position
Component Units
June 30, 2021
(Expressed in Thousands)
RIAC
RICC
I-195 RDC
RIPTA
RITBA
A-45
Assets and deferred outflows of
resources
Current Assets:
Cash and cash equivalents
$ 163,863
$
25,490
$
22,005
$
100,489
$
410,478
Investments
—
—
—
414
3,383
Receivables (net)
66,025
11,407
8,091
28,251
128,544
Restricted assets:
Cash and cash equivalents
—
—
500
666,958
811,409
Due from primary government
—
—
—
—
—
Investments
—
—
—
150,837
160,580
Receivables (net)
—
—
—
106,298
106,342
Other assets
—
—
71
44,573
51,032
Due from primary government
1,067
736
565
7,348
36,417
Due from other governments
—
—
—
4,190
4,203
Due from other component units
1,421
—
—
482
2,054
Inventories
3,161
—
461
2,264
7,637
Other assets
2,881
720
3,561
7,646
16,704
Total current assets
238,418
38,353
35,254
1,119,750
1,738,783
Noncurrent Assets:
Investments
270,519
42,808
6,073
—
322,915
Receivables (net)
22,310
1,441
—
76,792
108,072
Restricted assets:
Cash and cash equivalents
3,378
653
—
7,971
72,432
Investments
—
—
—
683,914
796,977
Receivables (net)
395
—
—
1,104,674
1,110,548
Other assets
26,796
1,183
70
1,293,516
1,322,489
Capital assets - nondepreciable
12,812
16,516
5,017
211,986
350,794
Capital assets - depreciable (net)
849,042
176,326
76,401
186,819
2,076,393
Due from other component units
—
—
—
923
923
Other assets, net of amortization
2,599
—
—
193,328
199,162
Total noncurrent assets
1,187,851
238,927
87,561
3,759,923
6,360,705
Total assets
1,426,269
277,280
122,815
4,879,673
8,099,488
Deferred outflows of resources
30,334
9,818
8,049
19,822
95,865
(Continued)
State of Rhode Island
Combining Statement of Net Position
Component Units
June 30, 2021
(Expressed in Thousands)
URI
RIC
CCRI
Other
Component
Units
Totals
A-46
Liabilities and deferred inflows of
resources
Current liabilities:
Accounts payable
22,427
10,220
7,492
22,933
79,147
Notes payable
—
151
—
74,710
74,861
Due to primary government
1,677
1,775
—
168
14,847
Due to other component units
1,421
—
—
398
2,054
Unearned revenue
15,188
4,115
2,977
8,970
42,411
Other liabilities
16,375
132
—
393,134
447,420
Current portion of compensated
absences
1,543
4,138
3,713
600
10,040
Current portion of long-term debt
13,268
1,009
304
105,791
147,794
Total current liabilities
71,899
21,540
14,486
606,704
818,574
Noncurrent liabilities:
Due to primary government
17,589
11,157
—
—
36,816
Due to other component units
—
—
—
—
923
Unearned revenue
—
—
—
1,378
4,908
Notes payable
—
328
—
182,196
182,524
Loans payable
248
—
—
12,882
13,130
Obligations under capital leases
11
—
—
137
1,011
Net pension liability
115,632
40,248
31,746
37,124
305,265
Net OPEB liability
34,020
17,633
13,834
22,056
161,726
Other liabilities
7,823
1,589
—
410,745
431,562
Compensated absences
20,507
1,787
804
2,939
26,340
Bonds payable
265,733
11,905
637
2,011,461
2,789,443
Total noncurrent liabilities
461,563
84,647
47,021
2,680,918
3,953,648
Total liabilities
533,462
106,187
61,507
3,287,622
4,772,222
Deferred inflows of resources
24,115
10,623
6,869
11,471
63,255
Net position (deficit)
Net investment in capital assets
596,737
166,518
80,476
379,654
1,669,844
Restricted for:
Debt
—
—
—
282,886
392,560
Other
172,725
12,993
4,421
766,421
1,113,114
Other nonexpendable
123,932
29,443
3,093
—
156,468
Unrestricted
5,632
(38,666)
(25,502)
171,441
27,890
Total net position (deficit)
$ 899,026
$ 170,288
$
62,488
$ 1,600,402
$ 3,359,876
(Concluded)
State of Rhode Island
Combining Statement of Net Position
Component Units
June 30, 2021
(Expressed in Thousands)
URI
RIC
CCRI
Other
Component
Units
Totals
The notes to the financial statements are an integral part of this statement.
A-47
State of Rhode Island
Combining Statement of Activities
Component Units
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
RIAC
RICC
I-195
RDC
RIPTA
RITBA
URI
RIC
CCRI
Other
Component
Units
Totals
Expenses
$ 71,150
$ 141,941
$
3,310
$ 133,744
$ 33,454
$ 593,805
$ 157,215
$ 132,850
$
312,036
$ 1,579,505
Program revenues:
Charges for services
43,538
6,799
543
18,334
19,353
336,427
61,340
33,840
192,930
713,104
Operating grants and contributions
12,466
141,123
3,004
114,531
—
267,954
97,949
110,685
95,161
842,873
Capital grants and contributions
26,882
—
—
19,920
14,273
7,689
13,459
3,304
58,409
143,936
Total program revenues
82,886
147,922
3,547
152,785
33,626
612,070
172,748
147,829
346,500
1,699,913
Net (expenses) revenues
11,736
5,981
237
19,041
172
18,265
15,533
14,979
34,464
120,408
General revenues:
Interest and investment earnings
129
1,498
10
(1)
27
54,876
8,620
1,323
50,594
117,076
Miscellaneous revenue
28
40,303
—
—
186
—
664
—
2,306
43,487
Gain (Loss) on sale of capital assets
(2,316)
(2,316)
Total general revenue
157
41,801
10
(1)
213
54,876
9,284
1,323
50,584
158,247
Change in net position
11,893
47,782
247
19,040
385
73,141
24,817
16,302
85,048
278,655
Net position (deficit) - beginning as restated
380,207
72,805
(25,121) (16,612)
137,046
825,885
145,471
46,186
1,515,354
3,081,221
Net position (deficit) - ending
$ 392,100
$ 120,587
$ (24,874) $
2,428
$ 137,431
$ 899,026
$ 170,288
$ 62,488
$ 1,600,402
$ 3,359,876
The notes to the financial statements are an integral part of this statement.
A-48
Index
Note 1. Summary of Significant Accounting Policies .......................................................................... A-53
A. Basis of Presentation ................................................................................................................ A-53
B. Reporting Entity .......................................................................................................................... A-53
C. Financial Statement Presentation .......................................................................................... A-59
D. Measurement Focus and Basis of Accounting .................................................................. A-63
E. Cash and Cash Equivalents ..................................................................................................... A-64
F. Funds on Deposit with Fiscal Agent .................................................................................... A-64
G. Investments ................................................................................................................................. A-64
H. Receivables .................................................................................................................................. A-64
I. Due From Other Governments and Agencies ..................................................................... A-64
J. Interfund Activity ......................................................................................................................... A-64
K. Inventories ................................................................................................................................... A-64
L. Capital Assets .............................................................................................................................. A-65
M. Bonds Payable ............................................................................................................................ A-66
N. Obligations Under Capital Leases ......................................................................................... A-66
O. Pensions ....................................................................................................................................... A-66
P. Postemployment Benefits Other Than Pensions (OPEB) ................................................ A-67
Q. Compensated Absences .......................................................................................................... A-67
R. Other Assets and Liabilities .................................................................................................... A-67
S. Deferred Outflows of Resources ............................................................................................ A-67
T. Deferred Inflows of Resources ............................................................................................... A-67
U. Fund Balances ............................................................................................................................ A-67
V. Recently Issued Accounting Standards .............................................................................. A-68
Note 2. Cash, Cash Equivalents, Investments, and Funds in Trust ................................................ A-70
A. Primary Government-Governmental and Business-Type Activities ............................ A-70
B. Concentration of Credit Risk ................................................................................................... A-76
C. Pension Trusts ............................................................................................................................ A-77
D. OPEB Trusts ................................................................................................................................ A-91
E. Private Purpose Trusts ............................................................................................................. A-93
F. Custodial Funds .......................................................................................................................... A-93
Note 3. Receivables ..................................................................................................................................... A-94
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-49
Note 4. Intra-Entity Receivables and Payables ....................................................................................... A-95
Note 5. Capital Assets ................................................................................................................................... A-96
Note 6. Notes Payable and Line of Credit Arrangements ................................................................... A-98
Note 7. Long-Term Liabilities ................................................................................................................... A-100
A. Changes in Long-Term Liabilities .......................................................................................... A-100
B. Bonds Payable ............................................................................................................................ A-101
C. Loans Payable ............................................................................................................................. A-106
D. Obligations Under Capital Leases ......................................................................................... A-107
E. Defeased Debt ............................................................................................................................. A-108
F. Conduit Debt ................................................................................................................................ A-108
G. Job Creation Guaranty Program - Moral Obligations ....................................................... A-108
H. Pollution Remediation Liabilities ........................................................................................... A-109
I. Compensated Absences ........................................................................................................... A-110
J. Arbitrage Rebate ......................................................................................................................... A-110
K. Due to the Primary Government ............................................................................................. A-110
L. Other Long-Term Liabilities ..................................................................................................... A-110
Note 8. Deferred Outflows of Resources and Deferred Inflows of Resources ............................. A-111
Note 9. Governmental Fund Balance, Budget Reserve and Cash Stabilization
Account, and Net Position Restricted for Enabling Legislation ...................................... A-112
Note 10. Restatements - Net Position and Fund Balances ................................................................ A-114
Note 11. Taxes ............................................................................................................................................... A-115
Note 12. Tax Abatements ............................................................................................................................ A-115
Note 13. Pledged Revenue ......................................................................................................................... A-123
Note 14. Transfers ........................................................................................................................................ A-124
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-50
Note 15. Operating Lease Commitments ................................................................................................. A-124
Note 16. Commitments ................................................................................................................................. A-125
Note 17. Contingencies ................................................................................................................................ A-132
Note 18. Employer Pension Plans ............................................................................................................. A-139
A. Summary of Employer Plans .................................................................................................... A-139
B. Defined Benefit Plan Descriptions - Advance Funded Plans .......................................... A-140
C. Defined Benefit Advance Funded Plans - Summary of Significant
Accounting Policies ................................................................................................................. A-147
D. Defined Benefit Plan - Non-Contributory (pay-as-you-go) Pension Plan ..................... A-147
E. Special Funding Situation - ERS Plan - Teachers ............................................................... A-147
F. Contributions and Funding Policy .......................................................................................... A-148
G. Net Pension Liability .................................................................................................................. A-150
H. Changes in the Net Pension Liability ..................................................................................... A-154
I. Pension Expense and Deferred Outflows of Resources and Deferred
Inflows of Resources ............................................................................................................... A-154
J. Defined Contribution Plan - ERS ............................................................................................. A-158
K. Defined Benefit Plan - LIUNA ................................................................................................... A-159
L. Defined Contribution Plan - FICA Alternative Retirement Income Security
Program ..................................................................................................................................... A-159
M. Other Pension Plans - Component Units ............................................................................. A-160
Note 19. Postemployment Benefit Plans ................................................................................................ A-161
A. Summary of Employer Plans .................................................................................................... A-161
B. Benefit Plan Descriptions ......................................................................................................... A-162
C. Contributions and Funding Policy .......................................................................................... A-164
D. Net OPEB Liability (Asset) ........................................................................................................ A-165
E. Changes in Net OPEB Liability (Asset) .................................................................................. A-170
F. OPEB Expense and Deferred Outflows of Resources and Deferred
Inflows of Resources ............................................................................................................... A-171
G. Component Unit Postemployment Benefit Plans ............................................................... A-175
Note 20. Deferred Compensation .............................................................................................................. A-176
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-51
Note 21. Risk Management .......................................................................................................................... A-177
Note 22. Other Information .......................................................................................................................... A-179
A. Elimination Entries ...................................................................................................................... A-179
B. Related Party Transactions ...................................................................................................... A-179
C. Budgeting, Budgetary Control, and Legal Compliance .................................................... A-181
D. Significant Transactions with Component Units ................................................................ A-183
E. Individual Fund Deficits ............................................................................................................. A-183
Note 23. Subsequent Events ....................................................................................................................... A-183
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-52
Note 1. Summary of Significant Accounting Policies
A. Basis of Presentation
The accompanying basic financial statements of the State of Rhode Island (the State) and its component
units have been prepared in conformance with generally accepted accounting principles (GAAP) for
governments as prescribed by the Governmental Accounting Standards Board (GASB). GASB is the
accepted standard setting body for establishing governmental accounting and financial reporting
principles.
B. Reporting Entity
The accompanying financial statements include all funds of the State and its component units. GASB
defines component units as legally separate organizations for which the elected officials of the primary
government (such as the State) are financially accountable. In addition, component units can be other
organizations for which the nature and significance of their relationship with the State are such that
exclusion from the State’s financial statements would cause the statements to be misleading.
GASB has set forth criteria to be considered in determining financial accountability. The primary
government (the State) is financially accountable if it appoints a voting majority of the entity’s governing
body and (1) it is able to impose its will on that entity or (2) there is a potential for the entity to provide
specific financial benefits to, or to impose specific financial burdens on, the State. Also, the State is
financially accountable if an entity is fiscally dependent on the State and there is the potential for the
entity to provide specific financial benefits to, or to impose specific financial burdens on, the State,
regardless of the State’s appointment power over the governing body.
In accordance with GAAP, entities such as local school districts, charter schools, and other local
authorities that may only partially meet the criteria for inclusion in this report have not been included. The
State’s financial support for the public education system is reported in the General Fund.
Blended Component Units
A component unit is reported as part of the primary government and blended into the appropriate funds in
any of the following circumstances:
•
The component unit provides services entirely or almost entirely to the primary government, or
otherwise exclusively, or almost exclusively, benefits the primary government even though it does
not provide services directly to it; or
•
The component unit’s governing body is substantively the same as the governing body of the
primary government and (a) there is a financial benefit or burden relationship between the
primary government and the component unit, or (b) management of the primary government has
operational responsibility for the component unit; or
•
The component unit’s total debt outstanding is expected to be repaid entirely or almost entirely
with resources of the primary government.
For each blended component unit the potential exists for a financial burden or benefit to be imposed on
the State as a result of the existence of the component unit. Also, for the blended component units
included in the State’s ACFR, the State, generally acting through the Governor, appoints a voting majority
of the component units’ governing boards.
The following component units are reported as part of the primary government in both the fund and
government-wide financial statements.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-53
Rhode Island Convention Center Authority (RICCA)
The RICCA was established by State law as a single purpose building authority to finance the
development of convention and other event facilities in Providence, RI. RICCA is responsible for the
management and operations of the R.I. Convention Center, Dunkin’ Donuts Center and the Veterans
Memorial Auditorium Arts and Cultural Center located in Providence. RICCA is dependent upon annual
State appropriations of lease revenue by the General Assembly to fund debt service on its outstanding
bonds; therefore RICCA’s total debt outstanding, including leases, is expected to be repaid entirely with
the resources of the State. For more detailed information, a copy of the financial statements can be
obtained by writing to the R.I. Convention Center Authority, One LaSalle Square, Providence, RI 02903 or
at www.riconvention.com.
Tobacco Settlement Financing Corporation (TSFC)
TSFC was organized in June 2002 as a public corporation by the State. TSFC is legally separate and
provides services exclusively to the State through the purchase of its future tobacco settlement revenues.
TSFC is authorized to issue bonds necessary to provide sufficient funds for carrying out its purpose.
The Corporation recognizes receivables and revenue with respect to Tobacco Settlement Revenues
(TSRs) based on the domestic shipment of cigarettes. The Corporation accrues at June 30th for TSRs
that are derived from estimated sales of cigarettes from January 1 to June 30. This accrual is estimated
based upon the historical TSR payments for the prior three fiscal years.
The GASB issued Statement No. 48, Sales and Pledges of Receivables and Future Revenues and Intra-
Entity Transfers of Assets and Future Revenues (the Statement), effective for financial statement periods
beginning on or after December 15, 2006. The Statement required restatement of prior period financial
statements, except for the deferral requirements relative to sales of future revenues which were permitted
to be applied prospectively.
As allowed under GASB Statement No. 48, the Corporation and the State elected to not retroactively
apply the deferral requirements to its 2002 and 2007 TSR sales completed prior to the effective date. In
accordance with accounting standards in effect at the time of the 2002 and 2007 TSR sales, the State
fully recognized the amount received for its sale of future TSRs to the TSFC as revenue in those years.
For more detailed information, a copy of the financial statements can be obtained by writing to the
Tobacco Settlement Financing Corporation, One Capitol Hill, Providence, RI 02908.
Rhode Island Public Rail Corporation (RIPRC)
This corporation was created and established for the purpose of enhancing and preserving the viability of
commuter rail operations in the State. Currently its primary purpose, as outlined in the State’s General
Laws, is to provide indemnity for rail service operating within the State. The State is fully responsible for
reimbursing RIPRC for all costs associated with the purchase of such insurance coverage. RIPRC
provides services exclusively to the State. Separately issued financial statements are not available for
RIPRC.
Discretely Presented Component Units
Discretely presented component units are reported in a separate column in the government-wide financial
statements to emphasize that they are legally separate from the primary government. They are financially
accountable to the primary government, or have relationships with the primary government such that
exclusion would cause the reporting entity's financial statements to be misleading.
For each discretely presented component unit the potential exists for a financial burden or benefit to be
imposed on the State as a result of the existence of the component unit. For the discretely presented
component units included in the State’s ACFR, the State, generally acting through the Governor, appoints
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-54
a voting majority of the component units’ governing boards. These discretely presented component units
primarily serve or benefit those outside of the primary government.
The State distinguishes between major and nonmajor component units based upon the nature and
significance of the component unit’s relationship to the State. The factors underlying this determination
include the type and dollar value of services provided to the citizens of the State, the presence of
significant transactions with the State, and a significant benefit or burden relationship with the State.
Discretely presented component units, grouped by major and nonmajor categories, are as follows:
Major Component Units
Rhode Island Airport Corporation (RIAC)
This corporation was created in 1992 and its purpose is to undertake the management, operation,
maintenance and improvements of the six airports in the State. Revenues of RIAC include airline and
concession contract revenues, federal grants, licenses, and permits. RIAC leases the land on which the
State’s largest airport is located from the State and reimburses the State annually for general obligation
proceeds utilized for certain airport projects. For more detailed information, a copy of the financial
statements can be obtained by writing to the Chief Financial Officer, Rhode Island Airport Corporation,
2000 Post Road, Warwick, RI 02886 or at www.pvdairport.com.
Rhode Island Commerce Corporation (RICC)
This corporation was created in 1995 and its purpose is to promote and encourage the preservation,
expansion, and sound development of new and existing industry, business, commerce, agriculture,
tourism, and recreational facilities in the State, so as to promote economic development. RICC has the
power to issue tax-exempt bonds to accomplish its corporate purpose. RICC has one component unit, the
Small Business Loan Fund Corporation, which was created for the purpose of granting secured and
unsecured loans to Rhode Island’s small business community. RICC’s activities are largely supported by
State appropriations and RICC has used its debt issuance authority to finance various economic
development initiatives on behalf of the State. For more detailed information, a copy of the financial
statements can be obtained by writing to the Director of Finance and Administration, R.I. Commerce
Corporation, 315 Iron Horse Way, Suite 101, Providence, RI 02908, or at www.commerceri.com.
I-195 Redevelopment District Commission (I-195 RDC)
This commission was created in 2011 by the Rhode Island General Assembly, to oversee, plan,
implement, and administer the development of land reclaimed from the Interstate 195 relocation project
and the Washington Bridge project. The I-195 RDC issued debt and utilized the proceeds to reimburse
the State for the fair value of the land acquired. The State appropriates amounts to the I-195 RDC for debt
service and operating assistance until sufficient land sale proceeds are available to fund these expenses.
For more detailed information, a copy of the financial statements can be obtained by writing to the
Executive Director, I-195 Redevelopment District, 315 Iron Horse Way, Suite 101, Providence, RI 02908,
or at www.195district.com.
Rhode Island Public Transit Authority (RIPTA)
This authority was established in 1964 to acquire any mass motor bus transportation system that has filed
a petition to discontinue its service, provided that the Authority has determined it to be in the public
interest to continue such service. Revenues of RIPTA include passenger revenue, a portion of the tax on
gasoline and operating assistance grants from the State and federal governments. In addition to
significant operating assistance, the State has also forgiven certain debt service obligations owed to the
State as a means to provide additional financial assistance to the Authority. For more detailed information,
a copy of the financial statements can be obtained by writing to the Finance Department, R.I. Public
Transit Authority, 705 Elmwood Avenue, Providence, RI 02907, or at www.ripta.com.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-55
Rhode Island Turnpike and Bridge Authority (RITBA)
This authority was created by the General Assembly, with powers to construct, acquire, maintain and
operate bridge projects as defined by law. RITBA is responsible for the maintenance and operation of the
Claiborne Pell, Mount Hope, Jamestown, and Sakonnet River Bridges which are a vital segment of the
State’s infrastructure. In addition, the Authority is responsible for the collection of toll revenue from the
users of the Claiborne Pell Bridge and provides back office functions for the State's truck tolling initiative
that began on June 11, 2018. Title relating to the Jamestown and Sakonnet River bridges has remained
with the State, thus those capital assets are reported within the primary government on the State’s
government-wide financial statements. The Claiborne Pell and Mount Hope bridges are reported as
capital assets of RITBA. For more detailed information, a copy of the financial statements can be obtained
by writing to the Executive Director, R.I. Turnpike and Bridge Authority, P.O. Box 437, Jamestown, RI
02835-0437, or at www.ritba.org.
University and Colleges
The State’s University and Colleges include the University of Rhode Island (URI), Rhode Island College
(RIC) and the Community College of Rhode Island (CCRI). The Council on Postsecondary Education is
vested with the responsibility of providing oversight for Rhode Island College (RIC) and the Community
College of Rhode Island (CCRI), along with the Office of the Postsecondary Commissioner. URI is
governed by the URI Board of Trustees. The university and colleges are funded through State
appropriations, tuition, federal grants, and private donations and grants. For more detailed information, a
copy of the financial statements can be obtained by writing to Office of the Controller, University of Rhode
Island, 75 Lower College Road, Kingston, RI 02881; Office of the Controller, Rhode Island College, 600
Mount Pleasant Avenue, Providence, RI 02908; and Office of the Controller, Community College of Rhode
Island, 400 East Avenue, Warwick, RI 02886-1805. The financial statements can also be viewed at
www.riopc.edu.
Nonmajor Component Units
Central Falls School District
The Central Falls School District (the District) is governed by a seven member board of trustees that is
appointed by the State’s Board of Education (Board). As a result of the enactment of Chapter 312 of
Rhode Island Public Laws of 1991, the State assumed responsibility for the administration and
operational funding of the District effective July 1, 1991. In June 2002, Chapter 16-2 of the Rhode Island
General Laws established the board of trustees to govern the District in a manner consistent with most
local school committees. In addition, the Commissioner of Elementary and Secondary Education and the
Board have oversight over the development and approval of the District’s operating budget and for other
significant operating decisions and contracts. The District, which provides elementary and secondary
education to residents of the City of Central Falls, is funded primarily through State appropriations and
federal grant funds. For more detailed information, a copy of the financial statements can be obtained by
writing to the Central Falls School District, 949 Dexter Street – Lower Level, Central Falls, RI 02863-1715.
Division of Higher Education Assistance (DHEA)
DHEA was established on July 1, 2015 by an Act of the Rhode Island General Assembly for purpose of
administering programs of post-secondary student financial assistance assigned by law to the Division.
For more detailed information, a copy of the financial statements can be obtained by writing to the Chief
Financial Officer, Office of Postsecondary Commissioner, Division of Higher Education Assistance, 560
Jefferson Boulevard, Warwick, RI 02886, or at www.riopc.edu.
Rhode Island Housing and Mortgage Finance Corporation (RIHMFC)
This corporation, established in 1973, was created in order to expand the supply of housing available to
persons of low and moderate income and to stimulate the construction and rehabilitation of housing and
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
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health care facilities in the State. It has the power to issue notes and bonds to achieve its corporate
purpose. Certain debt issued by RIHMFC is secured in part by capital reserve funds. The General
Assembly may, but is not required to, appropriate funding of any deficiencies in such reserves. For more
detailed information, a copy of the financial statements can be obtained by writing to the Chief Financial
Officer, R.I. Housing and Mortgage Finance Corporation, 44 Washington Street, Providence, RI
02903-1721, or at www.rihousing.com.
Rhode Island Industrial Facilities Corporation (RIIFC)
The purpose of this corporation is to issue revenue bonds, construction loan notes and equipment
acquisition notes for the financing of projects which further industrial development in the State. All bonds
and notes issued by RIIFC are payable solely from the revenues derived from leasing or sale by RIIFC of
its projects. The bonds and notes do not constitute a debt or pledge of the faith and credit of RIIFC or the
State and, accordingly, have not been reported in the accompanying financial statements. Certain
obligations of RIIFC are secured by mortgages which are insured by the Rhode Island Industrial-
Recreational Building Authority for which the State’s full faith and credit is pledged. For more detailed
information, a copy of the financial statements can be obtained by writing to the Director of Finance and
Administration, R.I. Industrial Facilities Corporation, 315 Iron Horse Way, Suite 101, Providence, RI
02908, or at www.commerceri.com.
Rhode Island Industrial-Recreational Building Authority (RIIRBA)
This authority is authorized to insure first mortgages and first security agreements granted by financial
institutions and the Rhode Island Industrial Facilities Corporation for companies conducting business in
the State. RIIRBA’s insurance of first mortgages and first security agreements is backed by a pledge of
the full faith and credit of the State. For more detailed information, a copy of the financial statements can
be obtained by writing to the Director of Finance and Administration, R.I. Industrial-Recreational Building
Authority, 315 Iron Horse Way, Suite 101, Providence, RI 02903, or at www.commerceri.com.
Rhode Island Resource Recovery Corporation (RIRRC)
This corporation was established in 1974 in order to provide and/or coordinate solid waste management
services to municipalities and persons within the State. RIRRC has the power to issue negotiable bonds
and notes to achieve its corporate purpose. RIRRC coordinates and administers a statewide recycling
program and has periodically transferred amounts to the State’s general fund as operating assistance.
The State is one of several potentially responsible parties for the costs of remedial actions at RIRRC’s
superfund site. For more detailed information, a copy of the financial statements can be obtained by
writing to R.I. Resource Recovery Corporation, 65 Shun Pike, Johnston, RI 02919, or at www.rirrc.org.
Quonset Development Corporation (QDC)
This corporation was established in 2004 as a real estate development and management company for the
Quonset Point/Davisville Industrial Park. Its purpose is to promote the preservation, expansion, and
development of new and existing industry and business, in order to stimulate and support diverse
employment opportunities in the State. The State has provided funding for certain capital improvements
required at the industrial park to aid in its expansion and development. For more detailed information, a
copy of the financial statements can be obtained by writing to the Finance Director, Quonset Development
Corporation, 95 Cripe Street, North Kingstown, RI 02852 or at www.quonset.com.
The Metropolitan Regional Career and Technical Center
The Metropolitan Regional Career and Technical Center (The Met) is a State funded, local education
agency established by the R.I. Department of Education under the Rhode Island General Laws. The Met
serves approximately 800 students statewide in grades 9-12. It is governed by a board of trustees that is
appointed by the State’s Board of Education. The Met is funded primarily through State appropriations
and federal grant funds. In addition, it conducts its operations in facilities that are owned by the State. For
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
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more detailed information, a copy of the financial statements can be obtained by writing to the Chief
Financial Officer, The Metropolitan Regional Career and Technical Center, 325 Public Street, Providence,
RI 02905.
Rhode Island Infrastructure Bank (RIIB)
This agency was established in 1989 as the R.I. Clean Water Finance Agency for the purpose of providing
financial assistance in the form of loans to municipalities, businesses and homeowners in the State for the
construction or upgrading of water pollution abatement, energy efficiency, brownfield remediation and
climate resiliency projects. RIIB receives capital grants from the State and federal governments and is
authorized to issue revenue bonds and notes. In conjunction with the creation of the Municipal Road and
Bridge Revolving Fund (MRBRF) which was established to provide municipalities with low-cost financial
assistance for road and bridge projects, the agency name was changed to the Rhode Island Infrastructure
Bank. RIIB is considered to be a discretely presented component unit due in large part to its management
of the MRBRF on behalf of the State. For more detailed information, a copy of the financial statements
can be obtained by writing to the R.I. Infrastructure Bank, 235 Promenade Street, Suite 119, Providence,
RI 02908 or at www.riib.org.
Rhode Island Health and Educational Building Corporation (RIHEBC)
RIHEBC was established to assist eligible institutions in the educational and healthcare fields in Rhode
Island in gaining access to capital. RIHEBC also remains proactive in developing cost-effective programs,
offering staff assistance, and providing technical resources that benefit these institutions.
RIHEBC assists the State with the administration of two funding programs to assist school districts with
capital project funding. Funding from the School Building Authority Capital Fund (SBACF) provides grants
and loans for high priority local school capital projects in communities with limited financial resources.
The State fiscal year 2019 budget legislation authorized a $250M Statewide School Construction Bond
which was approved by voters in the November 2018 election. The bond proceeds allow RIDE/SBA to
provide LEAs who have been approved for Necessity of School Construction, with upfront funding as
opposed to waiting until their project is completed to receive state aid. RIHEBC has administrative duties
related to the management and custody of monetary assets of the SBACF and School Construction Bond
Proceeds (once drawn from the State’s Trustee), including establishing a trust to hold related funds,
creating and maintaining accounting records and the distribution and management of award and loan
programs. RIHEBC was determined to be a discretely presented component unit largely due to its support
in administering these school construction funding programs.
For more detailed information, a copy of the financial statements can be obtained by writing to the Chief
Financial Officer, Rhode Island Health and Educational Building Corporation, 33 Broad Street, Suite 200,
Providence, RI 02903 or at www.rihebc.com.
Fiduciary Component Units
The following entities qualify as fiduciary component units of the State of Rhode Island and are reported
in the State’s fiduciary funds in accordance with GAAP prescribed by GASB:
The Rhode Island Employees’ Retirement System (ERS) (pension trust and defined contribution plans) –
ERS administers pension plans covering various public employees of the State and its political
subdivisions. A copy of the annual report for ERS can be obtained by writing to the Office of the General
Treasurer, 50 Service Avenue, Warwick, RI 02886.
The Rhode Island State Employees’ and Electing Teachers OPEB System (OPEB System) (OPEB Trust)
is administered by the State of Rhode Island OPEB Board. The OPEB System administers the State’s six
defined benefit OPEB plans. A copy of the financial statements can be obtained by writing to the State
Controller’s Office, One Capitol Hill, Providence, RI 02908.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-58
The Ocean State Investment Pool (Investment Trust Fund) is administered by the Office of the General
Treasurer and because of the State’s trustee responsibilities for the portion of the investment pool owned
by participants external to the reporting entity, GAAP requires that activity to be reported as an investment
trust fund. A copy of the annual report for the Ocean State Investment Pool can be obtained by writing to
the Office of the General Treasurer, 50 Service Avenue, Warwick, RI 02886.
The Rhode Island Higher Education Savings Trust (RIHEST) and ABLE Consortium Trust (ABLE) are
also administered by the Office of the General Treasurer. RIHEST allows families to save money for
qualified higher education expenses on a tax-advantaged basis. ABLE allows for families a tax-
advantaged means to save money for disability related expenses. Under GAAP, these trust funds are
required to be reported as private purpose trust funds. A copy of the annual report for RIHEST or ABLE
can be obtained by writing to the Office of the General Treasurer, 50 Service Avenue, Warwick, RI 02886.
The HealthSource RI Trust (HSRI) is administered by the Rhode Island Health Benefits Exchange (HBE),
a department within the State of Rhode Island. HSRI collects health insurance premium payments for
qualifying plans purchased through the HBE and remits those payments to the respective insurers
providing the coverage to qualifying employers and individuals. Under GAAP, these trust funds are
required to be reported as private purpose trust funds. A copy of the annual report for HSRI can be
obtained by writing to the Office of the General Treasurer, 50 Service Avenue, Warwick, RI 02886.
Because of the State’s trustee responsibilities for these systems, plans, and trusts, GAAP requires them
to be reported as fiduciary activities of the reporting entity rather than discretely presented component
units.
In accordance with GAAP, fiduciary funds and discretely presented component units that are fiduciary in
nature are excluded from the government-wide financial statements.
Related Organizations
The Rhode Island Student Loan Authority and Narragansett Bay Commission are “related organizations”
of the State under GAAP as defined by GASB. The State is responsible for appointing a voting majority of
the members of each entity’s board, however, the State’s accountability does not extend beyond the
appointments. These entities do not meet the criteria for inclusion as component units of the State and
therefore are not included in these financial statements.
C. Financial Statement Presentation
Government-Wide Financial Statements
The government-wide financial statements (i.e., the Statement of Net Position and the Statement of
Activities) report information on all nonfiduciary activities of the primary government and its component
units. For the most part, the effect of interfund activity has been removed from these statements.
Governmental activities, which normally are supported by taxes and intergovernmental revenues, are
reported separately from business-type activities, which rely to a significant extent on fees and charges
for support. Likewise, the primary government is reported separately from certain legally separate
component units for which the primary government is financially accountable.
The Statement of Net Position presents the reporting entity's nonfiduciary assets, deferred outflows of
resources, liabilities, and deferred inflows of resources, with the difference reported as net position. The
net position is reported in three categories:
Net investment in capital assets – This category reflects the portion of net position associated
with capital assets, net of accumulated depreciation and the amount of outstanding bonds and
other debt attributable to the acquisition, construction or improvement of those assets.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-59
Restricted – This category represents the portion of net position whose use is subject to
constraints that are either a) imposed externally by creditors, grantors or contributors, or b)
imposed by law through constitutional provisions or enabling legislation.
Unrestricted – This category represents the portion of net position that does not meet the
definition of the two preceding categories. The use of the unrestricted net position is often subject
to constraints imposed by management, but such constraints can be removed or modified.
The Statement of Activities demonstrates the degree to which the direct expenses of a given function are
offset by program revenues. Direct expenses are those that are specifically associated with a service,
program, or department and, thus, are clearly identifiable to a particular function. The State includes
certain centralized services charged through internal service funds as direct expenses by charging these
amounts directly to departments and programs. The State does not allocate indirect costs amongst the
functional expenditure categories.
Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit
from goods, services, or privileges provided by a given function, and 2) grants and contributions that are
restricted to meeting the operational or capital requirements of a particular function. Taxes and other
items not properly included among program revenues are reported instead as general revenues.
Fund Financial Statements
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds,
even though the latter are excluded from the government-wide financial statements. Major individual
governmental funds and enterprise funds are reported as separate columns in the fund financial
statements, with nonmajor funds being combined into a single column.
The State reports the following fund types:
Governmental Fund Types
General Fund - This is the State's primary operating fund. It accounts for all financial resources
of the general government, except those required to be accounted for in another fund.
Special Revenue Funds - These funds account for the proceeds of specific revenue sources that
are legally restricted to expenditures for specified purposes and where a separate fund is legally
mandated.
Capital Projects Funds - These funds reflect transactions related to resources received and used
for the acquisition, construction, or improvement of capital facilities of the State and its
component units.
Debt Service Funds - These funds are used to account for and report financial resources that are
restricted, committed, or assigned to expenditure for principal and interest. Debt service funds are
used to report resources if legally mandated or when financial resources are being accumulated
for principal and interest maturing in future years.
Permanent Fund - The Permanent School Fund accounts for certain resources and the earnings
thereon, which are used for the promotion and support of public education.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-60
Proprietary Fund Types
Internal Service Funds - These funds account for, among other things, employee medical
benefits, State fleet management, unemployment and workers' compensation for State
employees, human resources administration, facilities maintenance, information technology,
prison industry operations, surplus property, telecommunications and other utilities, and records
maintenance.
Enterprise Funds - These funds may be used to report any activity for which a fee is charged to
external users for goods and services.
Fiduciary Fund Types
Pension and Other Employee Benefit Trust Funds
Pension Trust Funds - These funds account for the activities of the Employees' Retirement
System, Municipal Employees' Retirement System, State Police Retirement Benefit Trust,
Judicial Retirement Benefit Trust, Rhode Island Judicial Retirement Fund Trust, State Police
Retirement Fund Trust, Teachers’ Survivors Benefit Plan, FICA Alternative Retirement Income
Security Program, and the defined contribution retirement plan, which all accumulate
resources for pension benefit payments to eligible retirees.
Other Employee Benefit Trust Funds - These funds account for the activities of the Rhode
Island State Employees’ and Electing Teachers OPEB System, which accumulates resources
to provide postemployment health care benefits to eligible retirees.
Investment Trust Fund - This fund accounts for the share of the Ocean State Investment Pool that
is owned by participants external to the reporting entity.
Private Purpose Trust Funds
The Rhode Island Higher Education Savings Trust (RIHEST) administers the CollegeBound
Saver fund which was established as part of the Rhode Island Tuition Savings Program
(Program) to enable residents of any state to save money on a tax-advantaged basis, to pay
qualified higher education expenses of their designated beneficiaries. All assets of the
Program are held for the benefit of Program participants.
The Touro Jewish Synagogue Fund accounts for the earnings on monies bequeathed to the
State for the purpose of maintaining the Touro Jewish Synagogue.
HealthSource RI Trust was established for the purpose of collecting health and dental
insurance premium payments from qualified employers and individuals and remitting such
payments to issuers of Qualified Health Plans and Qualified Dental Plans offered through
the Rhode Health Benefits Exchange (HSRI).
The ABLE Consortium Trust was established to facilitate, in an efficient and cost effective
manner, the investment of contributions from account owners in ABLE savings accounts
which qualify under section 529A of the Internal Revenue Code. ABLE accounts allow
individuals with disabilities and their families a tax-advantaged way to save money for
disability related expenses.
Custodial Funds - These funds account for assets held by the State pending distribution to others
including confiscated property, assets pledged to the State as required by statute, funds held for
the use of hospital patients and individuals with developmental disabilities, workers'
compensation insurance bond deposits, funds held for the use of inmates, and unclaimed
property.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-61
In accordance with GAAP for government as prescribed by the GASB, the focus in the fund financial
statements is on major and nonmajor funds rather than on fund type. The general fund is a major fund.
Other governmental funds and enterprise funds are evaluated on these criteria:
• Total assets and deferred outflows, liabilities and deferred inflows, resources/revenues, or
expenditures/expenses of that fund are at least 10% of the respective total for all funds of that
type, and
• Total assets and deferred outflows, liabilities and deferred inflows, resources/revenues, or
expenditures/expenses of that fund are at least 5% of the same respective total for all funds
being evaluated.
Major Funds
Governmental Funds:
General Fund
This is the State's primary operating fund. It accounts for all financial resources of the general
government, except those required to be accounted for in another fund.
Intermodal Surface Transportation Fund
This fund accounts for the collection of the gasoline tax, federal grants, bond proceeds, Rhode Island
Capital Plan funds, tolls and certain motor vehicle registration and licensing surcharges, that are used in
maintenance, upgrading, and construction of the State's highway system. It also accounts for the
proceeds from the Grant Anticipation Revenue Vehicle (GARVEE) bonds, the RI Motor Fuel Tax (RIMFT)
revenue bonds, the I-195 Redevelopment District Commission bonds, the Mission 360 Loan Program, RI
Bridge Maintenance Fund tolls, and related expenditures. Management considers this a major fund
regardless of the above criteria.
Proprietary Funds:
Rhode Island Lottery
The R.I. Lottery, a division of the Department of Revenue, operates games of chance for the purpose of
generating resources for the State's General Fund. For more detailed information, a copy of the financial
statements can be obtained by writing to the Rhode Island Lottery, 1425 Pontiac Avenue, Cranston, RI
02920, or at www.rilot.com.
Rhode Island Convention Center Authority (RICCA)
The RICCA was established by State law as a single purpose building authority to finance the
development of convention and other event facilities in Providence, RI. RICCA is responsible for the
management and operations of the R.I. Convention Center, Dunkin’ Donuts Center and the Veterans
Memorial Auditorium Arts and Cultural Center located in Providence.
Employment Security Fund
This fund accounts for the State's unemployment compensation program. Revenues consist of taxes
assessed on employers to pay benefits to qualified unemployed persons. Funds are also provided by the
federal government and interest income. Management considers this a major fund regardless of the
above criteria.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-62
D. Measurement Focus and Basis of Accounting
The government-wide financial statements are reported using the economic resources measurement
focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial
statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred,
regardless of the timing of related cash flows. Taxes, grants and donations are nonexchange transactions,
in which the State receives value without directly giving equal value in exchange. Tax revenue is
recognized in the fiscal year in which the related sales, wages, or activity being taxed occurred.
Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the
provider have been met. Federal grants and assistance awards made on the basis of entitlement periods
are recorded as revenues when entitlement occurs. All federal reimbursement-type grants are recorded
as revenues when the related allowable expenditures are incurred and all applicable eligibility
requirements are met and federal grant authority is received. Federal grants also include nonmonetary
transactions for food commodities and vaccines. Nonmonetary commodity and vaccine revenues and
expenditures are valued at their federally reported value. When federal funds are received in advance of
meeting eligibility requirements or incurrence of allowable expenditures, amounts are reflected as
unearned revenue.
Governmental fund financial statements are reported using the current financial resources measurement
focus and the modified accrual basis of accounting. Revenues and related receivables are recognized as
soon as they are both measurable and available. Revenues are considered to be available when they are
collectible within the current period (i.e., earned and collected within the next 12 months) or soon enough
thereafter to pay liabilities of the current period. Significant sources of tax revenues susceptible to accrual
are recorded as taxpayers earn income (personal income and business corporation taxes), as sales are
made (sales and use taxes) and as other taxable events occur (miscellaneous taxes), net of estimated tax
refunds. Expenditures generally are recorded when a liability is incurred, as under accrual accounting.
However, expenditures for principal and interest on long-term debt and compensated absences are
recorded when payments come due. Expenditures and liabilities relating to other claims and judgments
are recorded to the extent that such amounts are expected to be paid within the current period.
All proprietary and trust funds are accounted for using the economic resources measurement focus. With
this measurement focus, all assets, liabilities, deferred outflows of resources, and deferred inflows of
resources associated with the operations of these funds are included on their respective statements of net
position. Operating statements present increases (i.e., revenues) and decreases (i.e., expenses) in total
net position.
All proprietary and trust funds are reported using the accrual basis of accounting. Under the accrual basis
of accounting, revenues are recognized when earned and expenses are recognized when incurred.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating
revenues and expenses generally result from providing services and producing and delivering goods in
connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the
enterprise and internal service funds are charges to customers for sales and services. Operating
expenses for enterprise and internal service funds include the cost of sales and services, administrative
expenses and depreciation on capital assets. All revenues and expenses not meeting these definitions
are reported as nonoperating revenues and expenses.
Custodial funds are a type of fiduciary fund used to account for the assets held for distribution by the
State as a custodian for another entity for which the government has custodial responsibility and accounts
for the flow of assets. Custodial funds have no measurement focus.
The State’s enacted budget designates the source of funds for expenditures. When a type of expenditure
is allocable to multiple funding sources, generally the State uses restricted resources first, then
unrestricted resources as they are needed.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-63
E. Cash and Cash Equivalents
Cash represents amounts in demand deposit accounts with financial institutions. Cash equivalents are
highly liquid investments with a maturity of three months or less at the time of purchase. Cash equivalents
are stated at cost, which approximates fair value except for those of the Ocean State Investment Pool and
other money market mutual funds which are stated at amortized cost, which approximates fair value.
Except for certain internal service funds, the State does not pool its cash deposits. For those internal
service funds that pool cash, each fund reports its share of the cash on the Statement of Net Position.
F. Funds on Deposit with Fiscal Agent
Funds on deposit with fiscal agent in the governmental activities and business-type activities represent
the unexpended portion of debt instruments sold primarily for capital acquisitions and historic tax credit
financing, as well as funds held by the United States Treasury for the payment of unemployment benefits.
G. Investments
Investments have a maturity of more than three months and are generally stated at fair value. Fair value
is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
H. Receivables
Receivables are stated net of estimated allowances for uncollectible amounts, which are determined
based upon past collection experience. Within governmental funds, an allowance for unavailable amounts
(amounts not expected to be collected in the next twelve months) is also reflected.
I. Due From Other Governments and Agencies
Due from other governments and agencies is primarily comprised of amounts due from the federal
government for reimbursement-type grant programs.
J. Interfund Activity
In general, eliminations have been made to minimize the double counting of internal activity, including
internal service fund type activity, on the government-wide financial statements. However, in order to
avoid distorting the direct costs and program revenues of the applicable functions, interfund services
provided and used between different functional categories have not been eliminated.
The Due From/To Other Funds are reported at the net amount on the fund financial statements. Transfers
between governmental and business-type activities are reported at the net amount on the government-
wide financial statements.
In the fund financial statements, transactions for services rendered by one fund to another are treated as
revenues of the recipient fund and expenditures/expenses of the disbursing fund. Reimbursements of
expenditures/expenses made by one fund for another are recorded as expenditures/expenses in the
reimbursing fund and as a reduction of expenditures/expenses in the reimbursed fund. Transfers
represent flows of assets between funds of the primary government without equivalent flows of assets in
return and without a requirement for payment.
K. Inventories
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-64
Inventory type items acquired by governmental funds are accounted for as expenditures at the time of
purchase. Inventories of the proprietary funds are stated at cost (first-in, first-out). Certain inventories of
the University and Colleges are held for resale, and are stated at the lower of cost or market (retail
inventory method). Other University and Colleges' inventory consists of supplies and are stated at cost
(first in, first out). All inventories of the University and Colleges consist primarily of bookstore and dining,
health and residential life services items. Inventories of all other component units are stated at cost.
L. Capital Assets
Capital assets, which include land, intangible assets not being amortized, construction in progress, land
improvements, buildings, building improvements, furniture and equipment (which also includes
subcategories for vehicles and computer systems), depreciable intangibles (computer software), and
infrastructure (e.g., roads, bridges, dams, piers) are reported in the applicable governmental or business-
type activities columns in the government-wide financial statements. Capital assets are recorded at
historical cost or estimated historical cost. Donated capital assets, donated works of art and similar items
are reported at acquisition value. Acquisition value is defined as the price that would be paid to acquire
an asset with equivalent service potential in an orderly market transaction at the acquisition date.
Intangible assets not being amortized consist mostly of perpetual land rights such as conservation,
recreational, and agricultural easements.
Applicable capital assets are depreciated or amortized using the straight-line method (using a half-year
convention). Capitalization thresholds and estimated useful lives for depreciable capital asset categories
of the primary government are as follows:
Asset Category
Capitalization Thresholds
Estimated Useful Lives
Capital Assets (Depreciable)
Land improvements
$1 million
20 years
Buildings
No minimum
20 - 50 years
Building Improvements
$1 million
10 - 20 years
Furniture and equipment
$5 thousand
3 - 10 years
Intangibles (including computer
software)
$2 million
5 - 10 years
Infrastructure
$1 million
7 - 75 years
The costs of normal maintenance and repairs that do not add to the value of the asset or materially
extend asset lives are not capitalized. Interest incurred during the construction of capital facilities is not
capitalized, with the exception of the Convention Center Authority, an enterprise fund.
Capital assets acquired in the governmental funds are recorded as capital outlay expenditures in capital
projects funds and current expenditures by function in other governmental fund financial statements.
Depreciation and amortization are recorded in the government-wide financial statements, proprietary
funds, fiduciary funds and component unit financial statements. Capital assets of the primary government
are depreciated using the straight-line method over the assets’ estimated useful lives.
The State has recorded its investment in intangible assets, which includes certain land rights such as
conservation and agricultural easements as well as certain rights of way obtained by the State. These
easements tend to be of a perpetual nature and thus are not amortized. Intangible assets also include
computer software, which is amortized over a 5-10 year period. The State has included its investment in
intangible assets within Note 5, Capital Assets.
The State recognizes and records liabilities and deferred outflows of resources related to legal obligations
to perform future asset retirement activities in accordance with GASB Statement No. 83 Certain Asset
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-65
Retirement Obligations. The related deferred outflows of resources are amortized over the estimated
useful remaining life of the underlying assets.
Discretely presented component units have adopted estimated useful lives for their capital assets as well
as capitalization thresholds. These entities depreciate capital assets using the straight-line method.
M. Bonds Payable
In the Statement of Revenues, Expenditures, and Changes in Fund Balances-Governmental Funds, bond
discounts, premiums, and issuance costs are recognized in the current period. In the government-wide
financial statements bond discounts, premiums, and deferred gains and losses on refundings are deferred
and amortized over the term of the bonds using the outstanding principal method.
For proprietary fund types and component units, bond discounts, premiums and deferred gains and
losses on refundings are generally deferred and amortized over the term of the bonds using the interest
method.
Bond premiums and discounts are presented as adjustments to the face amount of the bonds payable.
Deferred gains and losses on refundings are presented as either deferred inflows of resources or deferred
outflows of resources.
N. Obligations Under Capital Leases
The construction and acquisition of certain office buildings, campus facilities and other public facilities, as
well as certain equipment acquisitions, have been financed through bonds and notes issued by a trustee
pursuant to a lease/purchase agreement with the State or similar financing arrangements (See Note 7D).
O. Pensions
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of
resources related to pensions, and pension expense, information about the fiduciary net position of the
Employees’ Retirement System (ERS) cost-sharing plan and the single-employer plans administered by
the Employees’ Retirement System of Rhode Island (System) and the additions to and deductions from
the plans’ fiduciary net position have been determined on the same basis as they are reported by the
System. The primary government’s proportionate share of pension amounts were further allocated to
proprietary funds (the Lottery) based on the amount of employer contributions paid by each proprietary
fund. For this purpose, benefit payments (including refunds of employee contributions), are recognized
when due and payable and in accordance with the benefit terms. Investments are recorded at fair value.
As more fully explained in Note 18, a special funding situation exists with respect to local teachers for
which the State funds 40% of actuarially determined contributions to the ERS plan. Accordingly, the
financial statements reflect the State’s proportionate share of the net pension liability, pension expense
and deferred inflows/outflows related to this special funding situation.
As of the June 30, 2020 measurement date, the State administered one non-contributory (pay-as-you-go)
plan covering certain retired judges. For the plan, the provisions of GASB Statement No. 73 have been
implemented which are largely consistent with the provisions of GASB Statement No. 68 regarding
recognition of the pension liability, pension expense and deferred inflows/outflows except there is no
fiduciary net position accumulated to offset the total pension liability, and no employer contributions are
made other than the amount needed to provide benefits on a pay-as you-go basis. See Note 18 for
complete details of the State's reporting of this plan.
For certain employees participating in the LIUNA defined benefit pension plan (a non-governmental union
sponsored plan), there is no required employer contribution and no pension expense is recorded in the
financial statements. Consistent with the provisions of GASB Statement No. 78, which provides an
exception for non-governmental sponsored plans, no determination of the proportionate net pension
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-66
liability, pension expense, or deferred inflows or outflows, if any, is made for this cost-sharing defined
benefit pension plan.
P. Postemployment Benefits Other Than Pensions (OPEB)
For purposes of measuring the net OPEB liability (asset), deferred outflows of resources and deferred
inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of
the State Employees' and Electing Teachers OPEB System of the State of Rhode Island (the System) and
additions to/deductions from the System's fiduciary net position have been determined on the same basis
as they are reported by the System. For this purpose, the System recognizes benefit payments when due
and payable in accordance with the benefit terms. Investments are reported at fair value, except for
money market investments that have a maturity at the time of purchase of one year or less, which are
reported at amortized cost which approximates fair value.
Q. Compensated Absences
Vacation pay may be discharged, subject to limitations as to carry-over from year to year, by future paid
leave or by cash payment upon termination of service. Sick pay may be discharged by payment for an
employee's future absence caused by illness or, to the extent of vested rights, by cash payment upon
death or retirement. Also, an additional category of leave obligation has been established as a result of
pay reductions taken by certain classes of employees. For governmental fund types, such obligations are
recognized when paid. For the government-wide financial statements and proprietary fund types, they are
recorded as liabilities when earned.
R. Other Assets and Liabilities
Other assets reported within the primary government mainly consist of deposits required by contract with
the State’s healthcare claims administrator. Other liabilities include 1) escrow deposits, accrued salary
and fringe benefits for the governmental fund types; 2) accrued interest payable, accrued salaries,
accrued vacation and sick leave for the proprietary fund types; and 3) escrow deposits, landfill closure
costs, accrued expenses, and arbitrage and interest payable for the component units.
S. Deferred Outflows of Resources
Deferred outflow of resources represents a consumption of net position by the government that applies to
a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until
then. Deferred outflows of resources are reported in the applicable governmental or business-type
activities columns, or in the component units column on the government-wide Statement of Net Position.
See Note 8 for a disaggregation of deferred outflows. Deferred outflows of resources of governmental
funds, proprietary funds, and discrete component units are reported in detail in their respective fund
statements.
T. Deferred Inflows of Resources
Deferred inflows of resources represent an acquisition of net position that applies to a future period, and
so will not be recognized as an inflow of resources (revenue) until that time. Deferred inflows of
resources are reported in the applicable governmental or business-type activities columns or in the
discrete component units column on the government-wide Statement of Net Position. See Note 8 for a
disaggregation of deferred inflows. Deferred inflows of resources of governmental funds, proprietary
funds, and discrete component units are reported in detail in their respective fund statements.
U. Fund Balances
In the fund financial statements, governmental funds report fund balance as nonspendable, restricted,
committed, assigned or unassigned based primarily on the extent to which the State is bound to honor
constraints on how specific amounts can be spent. More information about each category is presented
below:
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-67
•
Nonspendable – amounts that cannot be spent because they are either (a) not spendable in form
or (b) legally or contractually required to be maintained intact.
•
Restricted – amounts with constraints placed on their use that are either (a) externally imposed
by creditors, grantors, contributors, or laws or regulations of other governments; or (b) imposed
by constitutional provisions, or (c) by law through enabling legislation enacted by the General
Assembly.
•
Committed – amounts that can only be used for specific purposes as established through the
enactment of legislation by the General Assembly, and that remain binding unless modified or
rescinded through subsequent legislative action. The underlying action that imposed the limitation
must occur no later than the close of the fiscal year and must be binding unless repealed by the
General Assembly.
•
Assigned – amounts that are constrained by the State’s intent that they be used for specific
purposes. The intent is generally established by legislation enacted by the General Assembly and
is implemented at the direction of the Governor.
•
Unassigned – the residual classification for the State’s General Fund that includes amounts not
contained in the other classifications. In other funds, the unassigned classification is used only if
expenditures incurred for specific purposes exceed the amounts restricted, committed, or
assigned to those purposes.
When both restricted and unrestricted resources are available for use, it is the State’s policy to use
restricted resources first, followed by unrestricted resources. Unrestricted resources, when available for a
particular use, are used in the following order: committed, assigned, and unassigned.
V. Recently Issued Accounting Standards
During the fiscal year ended June 30, 2021, the State adopted the following new accounting standards
issued by GASB:
•
GASB Statement No. 84, Fiduciary Activities
•
GASB Statement No. 98, Renaming the Annual Comprehensive Financial Report
In fiscal year 2021, the State implemented Governmental Accounting Standards Board (GASB) Statement
No. 98, The Annual Comprehensive Financial Report. The objective of GASB 98 is to establish the term
annual comprehensive financial report and its acronym ACFR. This new term and its acronym replace
instances of comprehensive annual financial report and its acronym in generally accepted accounting
principles for state and local governments. Replacing the term had no impact on the effort required to
prepare, audit, or use GAAP-based financial statements.
In fiscal year 2021, the State implemented GASB Statement No. 84, Fiduciary Activities (GASB 84),
which improves guidance regarding the identification of fiduciary activities for accounting and financial
reporting purposes and how those activities should be reported. The focus of the criteria generally is on
(1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with
whom a fiduciary relationship exists. Fiduciary fund statements should include pension trusts, investment
trusts, private purpose trusts, and custodial funds. GASB 84 resulted in the reporting of custodial funds
(largely replacing agency funds) in the Statement of Fiduciary Net Position and the Statement of Changes
in Fiduciary Net Position. The State’s consideration of GASB 84 identified the ABLE Trust as a private
purpose trust fund of the State that requires reporting in the State’s fiduciary fund financial statements.
The adoption of GASB 84 resulted in the restatement of net position in the government-wide financial
statements, fund balance in the General Fund, net position in component unit financial statements, and
the fiduciary financial statements. See Note 10 for complete details regarding restatements resulting from
the implementation of GASB 84.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-68
The State will adopt the following new accounting pronouncements in future years:
GASB Statement No. 87, Leases, will be effective for reporting periods beginning after June 15, 2021.
This Statement requires a lessee to recognize a lease liability and an intangible right to use leased
assets. The lessor is required to recognize a lease receivable and a deferred inflow of resources.
GASB Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period,
will be effective for reporting periods beginning after December 15, 2020. The objective of this Statement
is to enhance the relevance and comparability of information about capital assets and the cost of
borrowing for a reporting period. Additionally, the standard simplifies accounting for interest cost incurred
before the end of a construction period.
GASB Statement No. 91, Conduit Debt Obligations, will be effective for reporting periods beginning after
December 15, 2021. The primary objectives of this Statement are to provide a single method of reporting
conduit debt obligations by issuers and eliminate diversity in practice associated with commitments
extended by issuers, arrangements associated with conduit debt obligations, and related note
disclosures. Additionally, this Statement improves the comparability of financial reporting for issuers by
eliminating the option to recognize a liability for a conduit debt obligation.
GASB Statement No. 92, Omnibus, will be effective for reporting periods beginning after June 15, 2021.
The objective of this Statement is to improve comparability in financial reporting for leases, pensions,
OPEB, and asset retirement obligations.
GASB Statement No. 93, Replacement of Interbank Offered Rates, the removal of LIBOR as an
appropriate benchmark interest rate will be effective for reporting periods ending after December 31,
2021. All other requirements of this Statement will be effective for reporting periods beginning after June
15, 2020. The objective of this Statement is to enhance comparability in the application of accounting and
financial reporting requirements and will improve the consistency of authoritative literature. More
comparable reporting will improve the usefulness of information for users of state and local government
financial statements.
GASB Statement No. 94, Public-Private and Public-Private Partnerships and Availability Payment
Arrangements, will be effective for reporting periods beginning after June 15, 2022. The objective of this
Statement is to provide accounting and financial reporting guidance for arrangements in which the
governmental entity (the transferor) contracts with an operator to provide public services by conveying
control of the right to operate or use a nonfinancial asset.
GASB Statement No. 96, Subscription-Based Information Technology Arrangements (SBITA), will be
effective for reporting periods beginning after June 15, 2022. The objective of this Statement is to provide
accounting and financial reporting guidance for transactions in which a government entry contracts with
another party for the right to use their software. A right-of-use and a corresponding liability would be
recognized for SBITA's.
GASB Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for
Internal Revenue Code Section 457 Deferred Compensation Plans, will be effective for reporting periods
beginning after June 15, 2021. The objective of this Statement is to provide financial reporting
consistency in which the potential component unit does not have a governing board and the primary
government performs the duties that the governing board would perform. In the absence of a governing
board of the potential component unit, the situation should be treated the same as the primary
government appointing a majority of the potential component unit's governing board.
Management has not yet determined the effect that the above GASB statements will have on the financial
statements.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-69
Note 2. Cash, Cash Equivalents, Investments, and Funds in Trust
A. Primary Government-Governmental and Business-Type Activities
Cash Deposits
Cash deposits include demand deposit accounts, interest-bearing deposit accounts, and certificates of
deposit. Deposits are exposed to custodial credit risk if they are not covered by federal depository
insurance and the deposits are a) uncollateralized, b) collateralized with securities held by the pledging
financial institution, or c) collateralized with securities held by the pledging financial institution’s trust
department or agent but not in the State’s name.
In accordance with Chapter 35-10.1 of the General Laws, depository institutions holding deposits of the
State, its agencies or governmental subdivisions of the State shall, at a minimum, insure or pledge eligible
collateral equal to 100% of time deposits with maturities greater than 60 days. Any of these institutions
which do not meet minimum capital standards prescribed by federal regulators shall insure or pledge
eligible collateral equal to 100% of deposits, regardless of maturity. None of the cash deposits of the
primary government were required to be collateralized at June 30, 2021 pursuant to this statutory
provision. However, the State Investment Commission has instituted a collateralization requirement for
institutions holding the State’s deposits. Financial institutions are required to pledge collateral equal to
amounts ranging from 100%-102% of the balance of uninsured deposits. The percentage of collateral
required is determined by the underlying classification of the collateral. Additionally, consistent with State
Investment Commission guidelines, certain interest-bearing deposit accounts used as short-term
investments require collateral ranging from 100%-102% of the outstanding balance. The percentage of
collateral required is determined by the underlying classification of the collateral. The lone exception to
the full collateralization requirement is the Ocean State Investment Pool Trust (OSIP or the Trust), which
follows the 60 day time deposit rule, but otherwise does not require full collateralization. The investment
objective of the OSIP's Cash Portfolio is to seek to obtain as high a level of current income as is generally
consistent with the preservation of principal and liquidity within the OSIP's investment guidelines which
are consistent with GASB Statement No. 79 – Certain External Investment Pools and Pool Participants.
While investment in the pool is not guaranteed or fully collateralized, certain investments within the pool
are collateralized. At June 30, 2021, of the $551.0 million invested, $302.5 million were Collateralized
Repurchase Agreements.
All of the bank balances of the primary government and its blended component units were either covered
by federal depository insurance, collateralized by securities held by an independent third party in the
State’s or the blended component unit’s name, or collateralized by a Federal Home Loan Bank Letter of
Credit in the State's or the blended component unit's name.
Cash Equivalents and Investments
The State Investment Commission (Commission) is responsible for the investment of all State funds.
Pursuant to Chapter 35-10 of the General Laws, the Commission may, in general, "invest in securities as
would be acquired by prudent persons of discretion and intelligence in these matters who are seeking a
reasonable income and the preservation of their capital.”
The Ocean State Investment Pool Cash Portfolio (the Cash Portfolio) is a portfolio of the Ocean State
Investment Pool Trust, which is an investment pool established by the General Treasurer of the State of
Rhode Island under Declaration of Trust, dated January 25, 2012, under the Rhode Island Local
Government Investment Pool Act, G.L. 35-10.2, of the Rhode Island General Laws as amended, for the
purpose of investing funds of, and funds under custody of agencies, authorities, commissions, boards,
municipalities, political subdivisions, and other public units of the State of Rhode Island. The Cash
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-70
Portfolio, which began operations on March 6, 2012, is not registered with the Securities and Exchange
Commission (SEC) as an investment company, but maintains a policy to operate in a manner consistent
with GASB Statement No. 79 – Certain External Investment Pools and Pool Participants.
OSIP has met the criteria outlined in GASB Statement No. 79 – Certain External Investment Pools and
Pool Participants to permit election to report its investments at amortized cost which approximates fair
value. The OSIP is not rated and the weighted average maturity of investments held in the pool is not to
exceed 60 days. OSIP transacts with its participants at a stable net asset value (“NAV”) per share.
Investments reported at NAV are not subject to the fair value hierarchy. There are no participant
withdrawal limitations.
A copy of the annual report for the Ocean State Investment Pool can be obtained by writing to the Office
of the General Treasurer, 50 Service Avenue, Warwick, RI 02886.
Other short-term cash equivalent type investments are made by the General Treasurer in accordance with
guidelines established by the Commission. Investments of certain blended component units are not made
at the direction of the Commission, but are governed by specific statutes or policies established by their
governing body.
Fair Value of Financial Instruments
GASB Statement No. 72—Fair Value Measurement and Application—establishes a fair value hierarchy
for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the
use of unobservable inputs by requiring that the most observable inputs be used when available, of how
the market would price the asset or liability. The fair value hierarchy is categorized into three levels based
on the inputs as follows:
Level 1 - Unadjusted quoted priced in active markets that are accessible at the measurement
date for identical assets or liabilities.
Level 2 - Inputs other than quoted prices in active markets for identical assets and liabilities that
are observable either directly or indirectly for substantially the full term of the asset or
liability.
Level 3 - Unobservable inputs for the asset or liability (supported by little or no market activity).
Level 3 inputs include management's own assumption about the assumptions that
market participants would use in pricing the asset or liability (including assumptions
about risk).
Debt and equity securities classified in Level 1 of the fair value hierarchy are valued using prices quoted
in active markets for those securities. Debt securities classified in Level 2 of the fair value hierarchy are
valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities’
relationship to benchmark quoted prices.
The asset's or liability's fair value measurement level within the fair value hierarchy is based on the lowest
level of any input that is significant to the fair value measurement. Valuation techniques maximize the use
of relevant observable inputs and minimize the use of unobservable inputs.
Following is a description of the State's cash equivalents and investments (expressed in thousands) at
June 30, 2021:
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-71
Pooled cash equivalents (at amortized cost)
Financial Company Commercial Paper
$
170,099
Asset Backed Commercial Paper
36,406
U.S. Government Agency Repurchase Agreement
299,478
U.S.Treasury Debt
2,000
Certificates of Deposit
5,000
Non-Negotiable Time Deposit
35,000
US Treasury Repurchase Agreement
3,000
Total Investments
550,983
Add: assets in excess of other liabilities
36
Total investment pool
551,019
Less: funds held by fiduciary funds and discretely presented component units
Amounts held by fiduciary trust funds:
Pension trust
328
OPEB trust
133
Amounts held by discretely presented component units:
URI
3,809
RIIB
—
RIC
6,549
RIIRBA
1,069
RIHEBC
503
RIPTA
6,452
Amounts held for external parties
55,408
Primary government pooled cash equivalents
$
476,768
Add: other primary government cash equivalents and investments
Money Market Mutual Funds
588,550
Total primary government cash equivalents and investments
$
1,065,318
Cash equivalents and investments
$
1,065,318
Cash deposits and interest bearing deposits
1,909,659
Total cash, cash equivalents and investments
$
2,974,977
Statement of Net Position
Cash and cash equivalents
$
2,921,064
Restricted cash and cash equivalents
53,913
Total cash, cash equivalents and investments
$
2,974,977
Of the State’s restricted cash and cash equivalents totaling $53.9 million, $50.4 million is held by the
Tobacco Settlement Financing Corporation and $3.5 million is held by the R.I. Convention Center
Authority. Both entities are blended component units.
Investments held within the OSIP pooled trust are valued and net asset value per unit (NAV) is calculated
daily. The OSIP pooled trust categorizes the inputs to valuation techniques used to value its investments
into a disclosure hierarchy consisting of three levels as described previously. The securities held within
the OSIP pooled trust are valued at amortized cost, which approximates fair value. Securities held within
the OSIP pooled trust are generally high quality and liquid; however, they are reflected as Level 2 in the
hierarchy because the inputs used to determine fair value are not quoted prices in an active market.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-72
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial
institution, the State will not be able to recover deposits or will not be able to recover collateral securities
that are in the possession of an outside party. Investment securities are exposed to custodial credit risk if
the securities are uninsured, are not registered in the name of the government, and are held by either: a.
the counterparty, or b. the counterparty’s trust department or agent but not in the government’s name.
Pursuant to guidelines established by the SIC, securities purchased or underlying collateral are required
to be delivered to an independent third party custodian for the investments of the primary government.
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an
investment. Based on SIC policy, the State’s short-term investment portfolio is structured to minimize
interest rate risk by matching the maturities of investments with the requirements for funds disbursement.
Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations.
Credit risk is mitigated by the State’s minimum rating criteria policy, collateralization requirements, and the
fact that maximum participation by any one issuer is limited to 35% of the total portfolio. Credit risk
policies have been developed for investments in commercial paper.
As of June 30, 2021, information about the State’s exposure to interest rate risk for pooled cash
equivalents and investments (expressed in thousands) is as follows:
Investment Maturities (in days)
Investment Type
Fair
Value
Amortized
Cost
0-30
31-90
91-180
181-397
Financial Company Commercial Paper
$ 170,114
$ 170,099
$ 36,099
$ 99,024
$ 28,985 $
5,991
Asset Backed Commercial Paper
36,407
36,406
16,549
19,857
—
—
U.S. Government Agency Repurchase
Agreements
299,478
299,478
299,478
—
—
—
U.S. Treasury Debt
2,001
2,000
—
1,000
1,000
—
U.S. Treasury Repurchase Agreement
3,000
3,000
3,000
—
—
—
Certificates of Deposit
5,000
5,000
—
5,000
—
—
Non-Negotiable Time Deposit
35,000
35,000
35,000
—
—
—
$ 551,000
$ 550,983
$ 390,126
$ 124,881
$ 29,985 $
5,991
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-73
At June 30, 2021 information on investment ratings for pooled cash equivalents and investments
(expressed in thousands) is as follows:
Quality Ratings (1)
Investment Type
At
Fair Value
Total
Amortized
Cost
A-1+
A-1
A-2
Financial Company Commercial Paper
$ 170,114
$ 170,099
$
34,285
$ 130,315 $
5,499
Asset Backed Commercial Paper
36,407
36,406
—
36,406
U.S. Government Agency Repurchase
Agreements
299,478
299,478
294,478
5,000
U.S. Treasury Debt
2,001
2,000
2,000
—
U.S. Treasury Repurchase Agreement
3,000
3,000
1,000
2,000
Certificates of Deposit
5,000
5,000
5,000
—
Non-Negotiable Time Deposit
35,000
35,000
—
35,000
$ 551,000
$ 550,983
$ 336,763
$ 208,721 $
5,499
(1) Moody's Investor Service, except where not available Standard & Poor's ratings are used.
The Ocean State Investment Pool has not been assigned credit quality ratings by rating agencies.
As of June 30, 2021, information about the State’s exposure to interest rate risk and credit risk for non-
pooled cash equivalents and investments (expressed in thousands) is as follows:
All the non-pooled cash equivalents and investments have a maturity date of less than one year.
Issuer
Fair
Value (in
thousands)
Type of
Investment
Moody's
Rating
Average
Maturities
in Days
Money Market Mutual Funds
Fidelity Investments Money Market Government
Portfolio Institutional Class
$
534,470
Money Market
Aaa-mf
28
Fidelity Institutional Money Market Government
Portfolio Class I and III
2,953
Money Market
AAA-mf
28
BlackRock Federal Fund Institutional Shares
447
Money Market
Aaa-mf
42
GS Financial Square Treasury Instruments Fund
50,680
Money Market
Aaa-mf
59
$
588,550
Money market mutual funds are used as temporary cash management investments. The fair value of
these money market funds reflects the net asset value reported by the fund administrator which is a
stable $1 per unit. The underlying investments, which are short-term cash equivalent type investments
are generally carried at amortized cost which approximates fair value. There are no participant withdrawal
limitations.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-74
Funds on Deposit with Fiscal Agent
Investments within the category – Funds on deposit with fiscal agent – are governed by specific trust
agreements entered into at the time of the issuance of the related debt. The trust agreements outline the
specifically permitted investments, including any limitations on credit quality and concentrations of credit
risk.
The State's funds on deposit with fiscal agent reported in the governmental funds (expressed in
thousands) at June 30, 2021 and the breakdown by maturity are as follows:
U.S. Treasuries
$
2,957
$
—
$
2,957
—
U.S. Government Agencies
9,553
3,369
6,184
Aaa
Money Market Funds
230,983
230,983
—
Aaa-mf
Commercial Paper
526
—
526
P-1
Negotiable Certificates of Deposit
—
—
—
P-1
Fixed Income
15,721
6,563
9,158
See Table
Investment Contracts
2,682
—
2,682
N/A
262,422
$ 240,915
$
21,507
Cash/Cash Reserve
11,404
Funds on Deposit with fiscal agent
$
273,826
Investment Type
Fair Value
Less Than
1 year
1-5 years
Quality
Rating
Cash includes $11.4 million in uninsured and uncollateralized cash reserve funds on deposit with the
fiscal agent.
Quality Rating
Aaa
Aa1
Aa2
Aa3
A1
A2
A3
Baa1
Total
Fixed Income
$
3,727 $
707 $
550 $
901 $
3,375 $
4,586 $
1,360 $
515
$ 15,721
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-75
The following (expressed in thousands) represents the fair value of investments by type held by the fiscal
agent at June 30, 2021:
Fair Value
June 30, 2021
Quoted Prices in
Active Markets for
Identical Assets
Significant Other
Observable Inputs
(Level 1)
(Level 2)
Investments at Fair Value
Debt Securities
U.S. Treasuries
$
2,957 $
2,957 $
—
U.S. Government Agencies
9,553
—
9,553
Commercial Paper
526
—
526
Fixed Income
15,721
—
15,721
Total investments by fair value level
$
28,757 $
2,957 $
25,800
Investments Measured at Net Asset Value
(NAV)
Money Market Mutual Funds
230,983
Investments not Subject to Leveling
Requirements
Guaranteed Investment Contracts
2,682
Total Funds on Deposit with Fiscal Agent
$
262,422
Money market mutual funds are used as temporary cash management investments. The fair value of
these money market funds reflects the net asset value reported by the fund administrator which is a
stable $1 per unit. The underlying investments, which are short-term cash equivalent type investments
are generally carried at amortized cost which approximates fair value. There are no participant withdrawal
limitations.
Funds on deposit with fiscal agent also include approximately $158 million held by the Federal
Unemployment Insurance Trust Fund within the Business-Type Activities-Employment Security Fund.
B. Concentration of Credit Risk
The State Investment Commission has adopted limitations as to the maximum percentages of the State’s
total short-term investment portfolio that may be invested in a specific investment type or with any one
issuer of securities.
The combined portfolio concentrations for cash equivalents, investments and funds in trust by issuer
(expressed in thousands) that are greater than 5% are as follows:
Type
Issuer
Amount
Percentage
Money Market
Fidelity Investments Money Market Government
Portfolio Institutional Class
$ 534,470
42.00 %
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-76
C. Pension Trusts
Summary of Significant Accounting Policies
Investments - Investment transactions are recorded on a trade date basis. Gains or losses on foreign
currency exchange Contracts are included in income consistent with changes in the underlying exchange
rates. Dividend income is recorded on the ex-dividend date.
Method Used to Value Investments - Investments are recorded in the financial statements at fair value.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
Short-term investments are generally carried at cost or amortized cost, which approximates fair value.
The fair value of fixed income securities and domestic and international equity securities is generally
based on published market prices and quotations from national security exchanges and securities pricing
services.
Commingled funds and collective unit trusts include international equity index funds and an emerging
markets debt fund. The fair value of these commingled funds is based on the reported net asset value
(NAV) based upon the fair value of the underlying securities or assets held in the fund.
Derivative investments (e.g., futures contracts and credit default swaps) are valued at the settlement price
established each day by the board of trade or exchange on which they are traded.
The System also trades in foreign exchange contracts to manage exposure to foreign currency risks.
Such contracts are used to purchase and sell foreign currency at a guaranteed future price. The change
in the estimated fair value of these contracts, which reflects current foreign exchange rates, is included in
the determination of the fair value of the System’s investments.
Other investments that are not traded on a national security exchange (primarily private equity, real
estate, hedge funds, infrastructure investments, Crisis Protection Class - Trend Following, and emerging
markets debt) are valued based on the reported Net Asset Value (NAV) by the fund manager or general
partner. Publicly traded investments held by the partnerships are valued based on quoted market prices.
If not publicly traded, the fair value is determined by the general partner following U.S. generally accepted
accounting principles. Financial Accounting Standards Board ASC Topic 820, Fair Value Measurements
and Disclosures, requires the limited partnership general partners for these investment types to value
nonpublicly traded assets at current fair value, taking into consideration the financial performance of the
issuer, cash flow analysis, recent sales prices, market comparable transactions, a new round of financing,
a change in economic conditions, and other pertinent information.
Hedge funds, private equity, real estate, infrastructure, crisis protection class - trend following
investments, and emerging markets debt represented 6.2%, 14.4%, 5.2%, 2.4%, 4.6% and 1.8%
respectively of the total reported fair value of all pooled pension trust investments at June 30, 2021.
Investment Expenses - Investment expenses include investment consultant fees, custodial fees, direct
investment expenses paid to managers, and certain indirect expenses allocated by managers to fund or
partnership investors. Certain Office of the General Treasurer expenses associated with oversight of the
pooled investment trust are also allocated and included as investment expenses. When indirect
investment expenses for certain types of investments (e.g., hedge funds, private equity, real estate,
infrastructure, and crisis protection class), are not reported separately to System management and the
investment custodian, additional information is obtained to allow reporting of the System’s share of such
indirect investment expenses on a gross fee basis.
Net investment income within the defined contribution plan is reported on a net-of-fees basis.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-77
Cash and Cash Equivalents
At June 30, 2021, the carrying amount of pension trust cash deposits was approximately $9.5 million and
the bank balance was approximately $9.9 million. The bank and book balances represent the plans’
deposits in short-term trust accounts, which include demand deposit accounts and interest-bearing,
collateralized bank deposit accounts. The bank balances, include interest-bearing collateralized bank
deposits and are either federally insured or collateralized (102%) with U.S. Treasury, agencies, and
federal home loan bank letters of credit held by a third-party custodian.
In accordance with Rhode Island General Law Chapter 35-10.1, depository institutions holding deposits of
the State, its agencies or governmental subdivisions of the State shall, at a minimum, insure or pledge
eligible collateral equal to 100% of time deposits with maturities greater than sixty days. Any of these
institutions that do not meet minimum capital standards prescribed by federal regulators shall insure or
pledge eligible collateral equal to 100% of deposits, regardless of maturity. None of the System’s deposits
were required to be collateralized at June 30, 2021 (excluding the collateralized interest-bearing
deposits). However, the State Investment Commission has adopted a collateralization requirement for
institutions holding the State’s deposits. Financial institutions are required to pledge collateral equal to
102% of the deposit amounts that are not insured by federal depository insurance unless FHLB letters of
credit are used as collateral, in which case those are required at 100%.
Investments - Pooled Investment Trust
(a). General
The custodian bank holds assets of the System in a Pooled Investment Trust and each plan holds units in
the trust. The number of units held by each plan is a function of each plans’ respective contributions to, or
withdrawals from, the trust.
Investment Policy - The State Investment Commission (SIC) oversees all investments made by the
State of Rhode Island, including those made for the System’s Pooled Investment Trust. The establishment
of the SIC, its legal authority and investment powers are outlined in Chapter 35-10 of the Rhode Island
General Laws.
The SIC has adopted a Defined Benefit Investment Policy Statement which includes specific asset
allocation targets and asset class policies. The most recent policy statement was adopted by the SIC on
June 27, 2018 and updated on January 22, 2020 and may be amended by a majority vote of SIC
members. The SIC’s asset allocation policy seeks to achieve the assumed rate of return adopted by the
System over the long-term while reducing risk through the prudent diversification of the portfolio across
various asset classes.
The System leverages the services of actuaries and consultants to provide guidance regarding actuarial
matters, asset allocation, and investment policy development. The SIC manages the investment program
pursuant to the investment policy, develops asset class guidelines, monitors and evaluates performance,
and makes determinations regarding the retention of managers. Professional investment managers are
selected by the SIC to manage portfolios in accordance with investment management agreements.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-78
The following was the SIC’s adopted asset allocation policy targets as of June 30, 2021:
Asset Class
Long-Term Target
Asset Allocation
GROWTH
Global Equity
40.0%
Private Growth
15.0%
subtotal
55.0%
INCOME
12.0%
STABILITY
Crisis Protection Class
10.0%
Inflation Protection
8.0%
Volatility Protection
15.0%
subtotal
33.0%
Total
100.0%
Consistent with a target asset allocation model adopted by the State Investment Commission (SIC), the
System directs its separate-account investment managers to maintain, within the mandate specified by
the SIC, diversified portfolios by sector, credit rating and issuer using the prudent person standard, which
is the standard of care employed solely in the interest of the participants and beneficiaries of the funds
and for the exclusive purpose of providing benefits to participants and defraying reasonable expenses of
administering the funds.
Specific manager performance objectives are outlined and generally stated in relation to a benchmark or
relevant index. These guidelines also include prohibited investments, limitations on maximum exposure
to a single industry or single issuer, a minimum number of holdings within the manager’s portfolio and, for
fixed income managers, minimum credit quality ratings and duration/maturity targets.
Investment expense is allocated to each plan based on the plan’s units in the Pooled Investment Trust at
the end of each month.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-79
The following table presents the fair value of investments by type that are held within the Pooled
Investment Trust for the defined benefit plans at June 30, 2021:
Investment Type
Fair Value
(in thousands)
Cash and Cash Equivalents:
US Cash
$
49,412
Non-US Cash
4,111
Commercial Paper
4,249
Repurchase Agreements
77,700
Short-Term Collective Investment Funds
258,271
US Government Securities
745,747
US Government Agency Securities
163,097
Collateralized Mortgage Obligations
45,391
Corporate Bonds
699,596
Term Loans
194,008
Emerging Markets Debt - Collective Unit Trust
186,848
Commingled Funds - International Equity
1,299,793
Domestic Equity Securities
2,658,682
International Equity Securities
482,307
Equity Options - Private LLC Investment
259,245
Private Equity
1,509,546
Real Estate
545,388
Hedge Funds
653,376
Crisis Protection Class - Trend Following - Limited partnerships
485,478
Infrastructure
256,704
Derivatives:
Futures
2,532
Credit Default Swaps
4,295
Investments at Fair Value
$
10,585,776
Investment receivable
366,363
Investment payable
(446,727)
Total Pooled Investment Trust
$
10,505,412
(b). Fair Value Hierarchy
The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value into
three levels:
Level 1 inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets
that a government can access at the measurement date.
Level 2 inputs are other than quoted prices included within Level 1—that are observable for an
asset or liability, either directly or indirectly.
Level 3 includes unobservable inputs for an asset or liability.
The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3
inputs. If the fair value of an asset or a liability is measured using inputs from more than one level of the
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-80
fair value hierarchy, the measurement is considered to be based on the lowest priority level input that is
significant to the entire measurement.
Investments and Derivative Instruments Measured at Fair Value (in thousands)
Investments at Fair Value
Fair Value
June 30, 2021
Quoted Prices
in Active Market
for Identical
Assets
(level 1)
Significant
Other
Observable
Inputs
(level 2)
Significant
Unobservable
Inputs
(level 3)
Equity Investments
Global Equity
$
3,140,989
$
3,140,989
$
—
$
—
$
3,140,989
$
3,140,989
$
—
$
—
Fixed Income
US Government Securities
$
745,746
$
733,793
$
11,953
$
—
US Government Agency Securities
163,097
—
163,097
—
Corporate Bonds
699,596
—
699,596
—
Collateralized Mortgage Obligations
45,391
—
45,391
—
Term loans
194,008
—
—
194,008
$
1,847,838
$
733,793
$
920,037
$
194,008
Derivative Investments
Equity and Fixed Income Index Futures
$
2,532
$
2,532
$
—
$
—
Other Derivatives
4,295
—
4,295
—
$
6,827
$
2,532
$
4,295
$
—
Commercial Paper
$
4,249
$
—
$
4,249
$
—
Total Investment at Fair Value Level
$
4,999,903
$
3,877,314
$
928,581
$
194,008
Investments Measured at Net Asset Value (NAV)
Money Market Mutual Funds
$
258,271
Commingled Funds - International Equity
1,299,793
Hedge Funds
653,376
Private Equity
1,509,546
Real Estate
545,388
Infrastructure
256,704
Emerging Markets Debt Collective Unit Trust
186,848
Equity Options - Private LLC Investment'
259,245
Crisis Protection Class - Trend Following
485,478
$
5,454,649
Cash and Cash Equivalents
US Cash
$
49,412
Non US Cash
4,111
Repurchase Agreements
77,700
$
131,223
Net Investment Receivable
(80,363)
Total Pooled Investment Trust
$
10,505,412
Debt and equity securities classified in Level 1 of the fair value hierarchy are valued using prices quoted
in active markets for those securities. Debt securities classified in Level 2 of the fair value hierarchy are
valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities’
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-81
relationship to benchmark quoted prices. Term loans classified in Level 3 are valued using consensus
pricing.
Derivative instruments classified in Level 2 of the fair value hierarchy are valued using a market approach
that considers benchmark interest rates and foreign exchange rates.
The valuation method for investments measured at the net asset value (NAV) per share (or its equivalent)
is presented on the following table (in thousands).
Fair Value
Unfunded
Commitments
Redemption
(if currently
eligible)
Redemption
Notice Period
Money Market Mutual Funds (1)
$
258,271
$
—
daily
none
Commingled Funds - International Equity (2)
1,299,793
—
daily
see note below
Hedge Funds (3)
653,376
—
see note below
see note below
Private Equity (4)
1,509,546
1,185,833
see note below
see note below
Real Estate (5)
545,388
151,649
see note below
see note below
Private Infrastructure Investments (6)
256,704
280,291
see note below
see note below
Crisis Protection Class - Trend Following (7)
485,478
—
see note below
see note below
Emerging Markets Debt - Collective Unit Trust (8)
186,848
—
see note below
see note below
Equity Options - Private LLC investment (9)
259,245
—
see note below
see note below
$
5,454,649
$
1,617,773
(1) Short-Term Collective Investment Funds - these investments are used as temporary cash
management investments for amounts pending investment or for amounts liquidated from investments
pending distribution for pension benefits. The fair value of these investments reflect the net asset value
reported by the fund administrator which is a stable $1 per unit. The underlying investments, which are
short-term cash equivalent type investments, are generally carried at amortized cost which approximates
fair value. There are no withdrawal limitations for the Short-Term Collective Investment Funds.
(2) Commingled Funds – consist of three international equity index funds which are intended to replicate
the performance of a specific index; e.g., MSCI EAFE. The fair values of the investments in this type have
been determined using the NAV per share of the investments as reported by the commingled fund
manager which reflects the exchange pricing of the equity holdings within each fund. The international
equity commingled funds may be redeemed daily.
(3) Hedge Funds – this portfolio is comprised of 9 limited partnerships divided into two sub-categories:
global equity and absolute return. Global equity funds are designed to benefit from the stock market with
considerably less risk. They own stakes in companies they expect to outperform and also sell short stocks
that they expect to underperform. Absolute return hedge funds employ strategies that seek to generate
long-term returns and mitigate risk, regardless of broader market moves. The funds invest across asset
classes, including government bonds, other fixed income securities, equity indexes, commodities, and
currencies.
The fair values of the investments in this type have been determined using the NAV per share of the
investments as reported by the general partner at June 30, 2021. Of the underlying holdings within the
hedge funds approximately 64% were valued based on Tier 1 inputs (unadjusted quoted prices in active
markets that are accessible at the measurement date for identical, unrestricted investments).
The system’s investments in hedge fund assets are available for redemption on a monthly, quarterly,
semi-annual or annual basis, and are subject to notice periods which vary by fund and range from 30
days to 75 days. Some funds limit redemptions to 25% of invested capital on any one redemption date.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-82
(4) Private equity – these 116 limited partnership funds provide the portfolio exposure to private
companies through equity and/or debt investments. Private equity fund managers invest in private
companies with the goal of enhancing their value over the long-term.
The fair values of the investments in this type have been determined using the NAV per share of the
investments as reported by the general partner at June 30, 2021.
Private equity – the investments cannot be redeemed. The nature of these investments provides for
distributions through the liquidation of the underlying assets or net operating cash flows.
(5) Real Estate – these 17 limited partnership investments are comprised of two different private real
estate equity components, Core and Non-Core, which generally refer to the relative levels of risk in the
underlying assets. Core investments include existing, substantially leased, income-producing properties
located principally in economically diversified metropolitan areas. Non-Core investments represent those
properties and/or investment strategies that require specialized acquisition and management expertise
and skill to mitigate the business and leasing risks that may be associated with individual investments.
Non-Core investments, which may be referred to as Value Added and Opportunistic investments, are
expected to be held for shorter periods, have greater volatility compared to Core investments, and as
such, are expected to provide yields higher than those associated with Core investments.
These funds acquire, manage and sell physical properties, including office, retail, apartment, and
industrial buildings as well as more niche property types, such as student housing, self-storage and
hotels. The primary goals of this asset class are to provide current income, risk-adjusted total returns, and
diversification.
The fair values of the investments in this type have been determined using the NAV per share of the
investments as reported by the general partner at June 30, 2021.
With the exception of four core open-end funds which allow for quarterly redemptions, the investments
cannot be redeemed. The nature of these investments provides for distributions through the liquidation of
the underlying assets or net operating cash flows.
(6) Infrastructure – These nine funds provide inflation-protection and current income to the portfolio
through investments in facilities and services required for an economy to function including electricity
production and distribution, pipelines, sewers and waste management, airports, roads, bridges, ports,
railroads, telephone and cable networks, and hospitals. The fair values of the investments in this type
have been determined using the NAV per share of the investments as reported by the general partner at
June 30, 2021.
With the exception of one open-end core fund which allows for quarterly liquidity, the investments cannot
be redeemed. The nature of these investments provides for distributions through the liquidation of the
underlying assets or net operating cash flows.
(7) Crisis Protection Class – Trend Following – These three funds were created as limited liability
companies with the Employees’ Retirement System of the State of Rhode Island as the sole member.
The investment managers’ principal investment objectives for the companies include:
•
providing diversified exposure to market trends across asset classes, geographies and time
horizons to generate sizable profits during the periods when growth-risk exposed assets decline
significantly;
•
generating significant medium-term capital growth independent of overall movements in
traditional stock and bond markets within a rigorous risk management framework; and
•
outperforming the Credit Suisse Liquid Alternative Beta Managed Futures Index (CLABT18 Index)
over a 5-year period.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-83
The fair values of the investments in this type have been determined using the NAV per share of the
investments as reported by the general partner at June 30, 2021. As the Employees’ Retirement System
of the State of Rhode Island is the sole member, the limited liability company could be liquidated at its
option. The nature of these investments provides for distributions through the liquidation of the underlying
assets or net operating cash flows.
(8) Emerging Markets Debt – Collective Unit Trust – This collective unit trust seeks to generate
attractive returns relative to an emerging markets debt blended benchmark. The strategy seeks to take
advantage of investment opportunities across emerging markets fixed income spectrum, including hard
and local currency denominated sovereign, quasi sovereign and corporate debt, and their derivatives.
Currencies are used both to manage risk and enhance return.
The fair value of the collective unit trust has been determined using the NAV per share of the investments
as reported by the manager of the collective trust at June 30, 2021.
This investment includes monthly liquidity provisions (first business day of the month) with notice required
by the 22nd of the prior month.
(9) Equity Options – Private LLC Investment – The fund seeks to achieve its goal primarily through a
strategy of writing exchange-traded put options on the S&P 500® Index. These options are fully
collateralized by short duration U.S. Treasury securities. The advisor attempts to generate returns through
the receipt of option premiums from selling puts, as well as through investments in short duration fixed
income instruments, which collectively are intended to reduce volatility relative to what it would be if the
fund held the underlying equity index on which the options are written.
The fair value of the equity options – private LLC investment has been determined using the NAV per
share of the investments as reported by the general partner at June 30, 2021. The underlying investments
at June 30, 2021, which consist of equity options and fixed income investments were publicly traded.
This investment includes monthly liquidity provisions with 7 business days’ notice.
(c). Rate of Return
For the year ended June 30, 2021, the annual money-weighted returns on investments within each of the
plans, net of investment expense, are shown in the following table. The money-weighted rate of return
expresses investment performance, net of investment expense, adjusted for the changing amounts
actually invested.
ERS
TSB
MERS
SPRBT
JRBT
RIJRFT
SPRFT
Money-weighted rate
of return - year
ended
June 30, 2021
27.67%
27.21%
27.56%
27.08%
27.15%
15.33%
29.73%
(d). Interest Rate Risk
Interest rate risk is the possibility that the value of a fixed income security will decline due to changes in
market interest rates. Due to its significant holdings of fixed income securities, the System manages its
investment exposure to interest rate risk by comparing its fixed income and cash managers’ portfolio-level
and security-level interest rate sensitivities against a predetermined benchmark index based on that
manager's mandate. In general, the System uses duration (in years) to measure interest rate sensitivity.
However, for its Liquid Credit managers, the System uses effective duration, which takes into effect the
embedded optionality, to measure the sensitivity of its investments to changes in interest rates. In some
cases, the System also sets absolute restrictions with respect to effective duration or maturity for
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-84
individual securities or portfolios for manager portfolios. The interest rate risk policies currently utilized by
the System vary by asset class which include Investment Grade Fixed Income, Liquid Credit, Long
Duration Treasuries, Inflation-Linked Bonds, CPC Enhanced Cash Portfolio, and Strategic Cash.
The fixed income indices currently used by the System are:
•
Barclays US Treasury Inflation Notes - 1-10 Year Index
•
Liquid Credit Custom BM: 50% BofA US High Yield Index + 50% Credit Suisse Leveraged Loan
Index
•
Long Duration BM: Barclays Long Duration US Treasury Index
•
ICE BofA ML US Treasury Notes 0-1 Year
•
Emerging Market Debt Custom BM: 50% JPM EMBI Global Diversified Index + 50% JPM GBI‑EM
Global Diversified Index
•
Bloomberg Barclays US Corporate Bond Index
•
Bloomberg Barclays Securitized MBS/ABS/CMBS Index
At June 30, 2021, no fixed income manager was outside of their policy guidelines.
The following table shows the System’s fixed income investments (in thousands) by type, fair value and
the effective duration at June 30, 2021:
Investment Type
Fair Value
(in thousands)
Effective
Duration
US Government Agency Securities
$
163,097
3.79
US Government Securities
745,747
10.30
Collateralized Mortgage Obligations
45,391
3.45
Corporate Bonds
699,596
5.23
Term Loans
194,008
1.38
Emerging Market Debt
186,848
6.38
Total Fixed Income
$
2,034,687
6.67
The System had investments at June 30, 2021 totaling $258 million in short-term collective investment
funds. The cash-equivalent type investments held in those funds had a weighted average maturity of 69
days at June 30, 2021. The fund, by policy, holds only high-grade, highly liquid cash equivalent-type
investments.
Repurchase agreements are secured with collateral held at a custodian bank. The System enters into
repurchase agreements to earn interest on short-term funds. The System’s repurchase agreements
outstanding at June 30, 2021 had maturities of one to two days.
The System’s investment in commercial paper totaling $4,248,566 at June 30, 2021 had maturities
ranging from 34 to 76 days.
The System invests in various mortgage-backed securities, such as collateralized mortgage obligations
(CMO), interest-only and principal-only strips. They are reported in U.S. Government Agency Securities
and Collateralized Mortgage Obligations in the table above. CMO’s are bonds that are collateralized by
whole loan mortgages, mortgage pass-through securities or stripped mortgage-backed securities.
Income is derived from payments and prepayments of principal and interest generated from collateral
mortgages. Cash flows are distributed to different investment classes or tranches in accordance with the
CMO’s established payment order. Some CMO tranches have more stable cash flows relative to changes
in interest rates while others are significantly sensitive to interest rate fluctuations.
The System may invest in interest-only and principal-only strips in part to hedge against a rise in interest
rates. Interest-only strips are based on cash flows from interest payments on underlying mortgages.
Therefore, they are sensitive to pre-payments by mortgagees, which may result from a decline in interest
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-85
rates. Principal-only strips receive principal cash flows from the underlying mortgages. In periods of
rising interest rates, homeowners tend to make fewer mortgage prepayments.
(e). Credit Risk
Credit risk is the possibility of a loss due to the failure of a counterparty to repay a loan or meet another
contractual obligation. The System may be exposed to credit risk with respect to its fixed income
investments. The System manages its credit risk by setting credit rating criteria to govern the investment
activities of its fixed income managers at the portfolio and security level. Ratings criteria may be
expressed on a relative basis against predetermined benchmark index or on an absolute basis based on
that manager's mandate. If a security is not rated by any Rating Agency, the internal rating assigned by
the investment manager or an affiliate (Internal Rating) will be used. The credit risk policies currently
utilized by the System vary by asset class and reflect the manager’s strategy and the System’s overall
asset allocation targets and related objectives.
The System manages exposure to credit risk generally by instructing fixed income managers to adhere to
an overall target weighted average credit quality for their portfolios and by establishing limits on the
percentage of the portfolios that are invested in non-investment grade securities. The System’s exposure
to credit risk as of June 30, 2021 is as follows (in thousands):
Moody's Quality
Term
Grand
Rating
Agency
CMO
Corporate
Loans
Total
A1
$
— $
940 $
29,538 $
— $ 30,478
A2
—
4,564
63,252
—
67,816
A3
—
426
41,482
—
41,908
Aa1
—
2,226
7,145
—
9,371
Aa2
—
7,580
30,500
—
38,080
Aa3
—
3,184
14,152
—
17,336
Aaa
134,457
25,172
59,154
—
218,783
B1
—
—
34,377
59,168
93,545
B2
—
—
34,952
63,727
98,679
B3
—
—
25,792
17,164
42,956
Ba1
—
265
36,955
10,598
47,818
Ba2
—
—
25,630
10,913
36,543
Ba3
—
—
29,586
14,873
44,459
Baa1
—
—
53,178
4,920
58,098
Baa2
—
—
81,285
—
81,285
Baa3
—
—
84,911
529
85,440
Caa1
—
—
14,391
3,372
17,763
Caa2
—
—
7,444
—
7,444
Caa3
—
—
1,427
—
1,427
Not Rated
28,640
1,034
24,445
8,744
62,863
Grand Total
$
163,097 $
45,391 $
699,596 $ 194,008 $ 1,102,092
Ratings provided by Moody’s Investors Service
An emerging market debt portfolio totaling $186,847,642 at June 30, 2021 and held within a collective unit
trust had an overall average credit quality rating of Baa2 (Moody’s).
Investments in commercial paper totaling $4,248,566 at June 30, 2021 were rated P1 (Moody’s).
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-86
(f). Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributed to the magnitude of investments in a single issuer.
There is no single issuer exposure within the System’s pooled investment trust that comprises 5% of the
overall portfolio.
(g). Custodial Credit Risk
For an investment, custodial credit risk is the risk that, in the event of the failure of a counterparty, the
System will not be able to recover the value of its investment or collateral securities that are in the
possession of an outside party. At June 30, 2021, all securities were registered in the name of the
System (or in the nominee name of its custodial agent) and were held in the possession of the System's
custodial bank, Bank of New York Mellon.
(h). Foreign Currency Risk
Foreign currency risk is the risk that changes in exchange rates will adversely impact the fair value of an
investment. Portfolios are diversified to limit foreign currency and security risk. The System may enter
into foreign currency exchange contracts to minimize the short-term impact of foreign currency
fluctuations on foreign investments. The System's exposure to foreign currency risk at June 30, 2021, is
detailed in the following table. In addition to the foreign currency exposure highlighted in the following
table, certain hedge fund investments may have foreign currency exposure.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-87
Foreign Currency Risk (in thousands)
Currency
Commingled
Funds
Equities
Emerging
Market
Debt
Private
Equity
Cash
Futures
Corporate
Bonds
Total
Australian Dollar
$
45,695 $
23,761 $
(1,405) $
— $
(129) $
6 $
— $
67,928
Brazilian Real
29,870
—
8,749
—
—
—
—
38,619
Canadian Dollar
73,650
61,560
(1,408)
1,705
(121)
(2)
—
135,384
Chilean Peso
2,215
—
3,285
—
—
—
—
5,500
Chinese Yuan
16,597
—
11,066
—
—
—
—
27,663
Colombian Peso
1,350
—
5,122
—
—
—
—
6,472
Czech Republic
Koruna
689
—
4,404
—
—
—
—
5,093
Danish Krone
16,230
17,128
—
—
2
—
—
33,360
Egyptian Pound
458
—
1,361
—
—
—
—
1,819
Euro Currency
209,803
135,470
(2,001)
94,925
2,478
70
5,243
445,988
Great Britain
Pound
—
48,702
—
—
330
17
—
49,049
Hong Kong Dollar
163,943
15,885
—
—
(80)
7
—
179,755
Hungarian Forint
1,449
—
4,680
—
—
—
—
6,129
Indian Rupee
57,326
—
915
—
—
—
—
58,241
Indonesia Rupiah
6,259
—
10,171
—
—
—
—
16,430
Israeli Shekel
2,152
—
—
—
—
—
—
2,152
Japanese Yen
147,810
96,248
—
—
766
19
—
244,843
Kazakhstani Tenge
—
—
390
—
—
—
—
390
Kuwaiti Dinar
2,893
—
—
—
—
—
—
2,893
Malaysian Ringgit
7,001
—
—
—
—
—
—
7,001
Mexican Peso
9,972
—
9,575
—
—
—
—
19,547
New Taiwan Dollar
79,121
—
—
—
—
—
—
79,121
New Zealand
Dollar
1,526
5,457
(1,412)
—
5
—
—
5,576
Norwegian Krone
4,056
—
—
—
1
—
—
4,057
Pakistani Rupee
112
—
—
—
—
—
—
112
Peruvian Nouveau
Sol
—
—
2,488
—
—
—
—
2,488
Philippine Peso
3,625
—
—
—
—
—
—
3,625
Polish Zloty
4,028
—
8,133
—
—
—
—
12,161
Qatari Real
3,535
—
—
—
—
—
—
3,535
Romanian Ieu
—
—
3,355
—
—
—
—
3,355
Russian Ruble
12,440
—
7,934
—
—
—
—
20,374
Saudi Riyal
16,371
—
—
—
—
—
—
16,371
Singapore Dollar
6,651
7,730
1,840
—
36
—
—
16,257
Swedish Krona
23,856
20,705
—
—
772
4
—
45,337
Swiss Franc
59,991
48,925
—
—
51
—
—
108,967
South African
Rand
19,671
—
7,457
—
—
—
—
27,128
South Korean Won
74,683
—
924
—
—
—
—
75,607
Thailand Baht
9,050
—
9,197
—
—
—
—
18,247
Turkish Lira
1,448
—
1,390
—
—
—
—
2,838
United Arab
Emirates Dirham
3,929
—
—
—
—
—
—
3,929
United Kingdom
Pound Sterling
93,472
—
—
—
—
—
—
93,472
Total
$
1,212,927 $ 481,571 $
96,210 $
96,630 $
4,111 $
121 $
5,243 $ 1,896,813
United States
Dollar
86,866
736
90,638
Grand Total
$
1,299,793 $ 482,307 $ 186,848
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-88
(i). Derivatives and Other Similar Investments
Certain of the System’s investment managers are allowed to invest in derivative type transactions
consistent with the terms and limitations governing their investment objective and related contract
specifications. Derivatives and other similar investments are financial contracts whose value depends on
one or more underlying assets, reference rates, or financial indices.
The System’s derivative investments include forward foreign currency transactions, futures contracts,
options, rights, and warrants. The System enters into these transactions to enhance performance,
rebalance the portfolio consistent with overall asset allocation targets, gain or reduce exposure to a
specific market, or mitigate specific risks.
Forward foreign currency contracts – The System enters into foreign currency exchange contracts to
minimize the short-term impact of foreign currency fluctuations on foreign investments. A currency forward
is a contractual agreement to pay or receive specific amounts of foreign currency at a future date in
exchange for another currency at an agreed upon exchange rate. If not offset by a corresponding
position with the opposite currency exposure, these contracts involve risk in excess of the amount
reflected in the System’s Statements of Fiduciary Net Position. The face or contract amount in U.S.
dollars reflects the total exposure the System has in currency contracts. The U.S. dollar value of forward
foreign currency contracts is determined using forward currency exchange rates supplied by a quotation
service. Losses may arise due to changes in the value of the foreign currency or if the counterparty does
not perform under the contract.
Futures contracts – The System uses futures to manage its exposure to the domestic and international
equity, money market, and bond markets and the fluctuations in interest rates and currency values.
Futures are also used to obtain target market exposures in a cost-effective manner and to narrow the gap
between the System’s actual cash exposures and the target policy exposures. Using futures contracts in
this fashion is designed to reduce (or hedge) the risk of the actual plan portfolio deviating from the policy
portfolio more efficiently than by using cash securities. The program is only used to manage intended
exposures and asset allocation rebalancing.
Buying futures tends to increase the System’s exposure to the underlying instrument. Selling futures
tends to decrease the System’s exposure to the underlying instrument or hedge other System
investments. Losses may arise due to movements in the underlying or reference markets.
Credit Default Swaps – A credit manager may use credit default swaps in the portfolio to either obtain
exposure to the high yield market efficiently (i.e. by selling protection) at a similar or better price than what
can be obtained in cash bonds, or to hedge the credit risk of the portfolio (i.e. buying protection).
Through commingled funds, the System also indirectly holds derivative type instruments, primarily equity
index futures.
Additionally, the System is an investor in a private investment fund that writes collateralized put options on
both U.S. indices, including the S&P 500® Index and the Russell 2000® Index, and exchange traded
funds. The advisor attempts to generate returns through the receipt of option premiums from selling puts,
as well as through investments in fixed income instruments, which collectively are intended to reduce
volatility relative to what it would be if the fund held the underlying equity index on which the options are
written.
The System invests in mortgage-backed securities, which are included in the categories described as
collateralized mortgage obligations and U.S. Government Agency Securities. These securities are based
on the cash flows from interest and principal payments by the underlying mortgages. As a result, they are
sensitive to prepayments by mortgagees, which are likely in declining interest rate environments, thereby
reducing the value of these securities.
Additional information regarding interest rate risks for these investments is included in Interest Rate Risk.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-89
The System may sell a security in anticipation of a decline in the fair value of that security or to lessen the
portfolio allocation of an asset class. Short sales may increase the risk of loss to the System when the
price of a security underlying the short sale increases and the System is obligated to deliver the security
in order to cover the position.
The following summarize the System’s exposure to specific derivative investments at June 30, 2021.
Investment Derivative Instruments
Change in fair
value included
in investment
income
Fair Value at
June 30, 2021
Notional
Amount
Fixed income futures - long
$
2,204
$
2,260
$
226,400
Equity index futures - long
(251)
377
23,527
Equity index futures - short
349
(104)
(41,755)
Credit default swaps (index)
4,294
4,295
—
Total
$
6,596
$
6,828
Foreign Currency Forward Contracts Payable
Pending payable (liability)
$
1,025
Pending receivable (asset)
(53)
Total
$
972
The System is exposed to counterparty risk on foreign currency contracts that are in asset positions. The
aggregate fair value of derivative instruments in asset positions at June 30, 2021 was $971,983. This
represents the maximum loss that would be recognized if all counterparties failed to perform as
contracted. Risk is mitigated by using a continuous linked settlement process.
The System executes (through its investment managers) derivative instruments with various
counterparties. The credit ratings of five counterparties were Aa2 (Moody’s) and one counterparty was
Aa3 (Moody’s).
Other Investments - Defined Contribution Plan
The State Investment Commission selected various investment options for defined contribution plan
participants with the overall objective of offering low-cost, strategic, and long-term oriented investment
products. Plan participants can choose one or more of the various options and can change options at any
time. Plan participants who do not elect a specific option default to a target date retirement fund
consistent with their anticipated Social Security retirement eligibility date.
The majority (98%) of investments held by participants in the defined contribution plan are target date
retirement funds, equity or fixed income funds. The target retirement date funds provide for diversified
portfolios of equities and bonds that become progressively more conservative as the fund’s associated
target retirement date approaches. Equity index funds seek to replicate the price and yield performance of
a particular index.
The target retirement date and equity and fixed income funds are priced daily based on the traded prices
of the underlying securities held within the funds. There are no withdrawal limitations for these funds.
These funds are classified as Level 1 investments (quoted prices in active markets for identical assets)
within the fair value hierarchy. Annuities are reported at contract value, which approximates fair value.
Annuities held by participants within the defined contribution plan (approximately 2% of total defined
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-90
contribution plan investments) are classified as Level 3 investments (significant unobservable inputs)
within the fair value hierarchy.
For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the
System will not be able to recover the value of its investment or collateral securities that are in the
possession of an outside party. At June 30, 2021, all non-annuity assets, including mutual funds, that are
traded and held in retirement plans by TIAA were held at TIAA, FSB (formerly TIAA-CREF Trust
Company, FSB) as custodian/trustee.
The majority of the defined contribution plan investment options are funds that invest in diversified
portfolios of securities including equity and fixed-income investments.
Fixed income funds (approximately 2% of total defined contribution plan investments) are subject to
interest rate, inflation and credit risks. Target-date retirement funds share the risks associated with the
types of securities held by each of the underlying funds in which they invest including equity and fixed
income funds. Funds may have exposure to foreign currency risk through investment in non-US
denominated securities.
D. OPEB Trusts
The Rhode Island State Employees’ and Electing Teachers OPEB System (OPEB System), which
accumulates resources for other postemployment benefit payments to qualified employees, consists of six
plans: State employees, Teachers, Judges, State Police, Legislators and Board of Education.
Summary of Significant Accounting Policies
Investments - Investment transactions are recorded on a trade date basis. Dividend income is recorded
on the ex-dividend date.
Method Used to Value Investments - Investments are recorded in the financial statements at fair value.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
The fair value of fixed income securities and domestic and international equity securities is generally
based on published market prices and quotations from national security exchanges and securities pricing
services.
Commingled funds consist of an institutional domestic equity index fund. The fair value of the commingled
fund is based on the reported net asset value (NAV) based upon the fair value of the underlying securities
or assets held in the fund.
Investment Expenses - Investment management expenses are presented separately as a component of
net investment income and include investment consultants, custodial fees and direct investment
expenses allocated by managers. In some instances, investment related costs are not readily separable
from investment income and consequently investment income is recorded net of related expenses.
Cash Deposits and Cash Equivalents
At June 30, 2021, the carrying amount of the OPEB System’s cash deposits was approximately
$5.8 million and the bank balance was $5.8 million. The bank and book balances represent the OPEB
System’s deposits in short-term trust accounts, which include fully insured demand deposit accounts and
interest-bearing, collateralized bank deposit accounts.
In accordance with Rhode Island General Law Chapter 35-10.1, depository institutions holding deposits of
the State, its agencies or governmental subdivisions of the State shall, at a minimum, insure or pledge
eligible collateral equal to 100% of time deposits with maturities greater than sixty days. Any of these
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-91
institutions that do not meet minimum capital standards prescribed by federal regulators shall insure or
pledge eligible collateral equal to 100% of deposits, regardless of maturity. In addition, the State
Investment Commission has adopted a collateralization requirement for institutions holding the State’s
deposits. Financial institutions are required to pledge collateral equal to amounts ranging from 100% -
102% of the uninsured deposit amounts. The percentage of collateral required is determined by the
underlying classification of the collateral. At June 30, 2021, the OPEB System’s cash deposits were
either federally insured or collateralized.
The System also had cash equivalents totaling $0.1 million invested in the Ocean State Investment Pool
at June 30, 2021. See Note 2A for details.
Investments
The State Investment Commission oversees all investments made by the State of Rhode Island, including
those made for the OPEB System. The General Treasurer makes certain short-term investments on a
daily basis. Rhode Island General Law Section 35-10-11 (b) (3) requires that all investments shall be
made in securities as would be acquired by prudent persons of discretion and intelligence who are
seeking a reasonable income and the preservation of capital.
The assets of each of the plans are pooled for investment purposes only, and units are assigned to the
plans based on their respective share of fair value. The custodian bank holds assets of the OPEB System
in a Pooled Account and each plan holds units in the account. The number of units held by each plan is a
function of each plan’s respective contributions to, or withdrawals from, the account. Investment expense
is allocated to each plan based on the plan’s units in the pooled trust at the end of each month.
Consistent with a target asset allocation model adopted by the State Investment Commission, the OPEB
System maintains a diversified portfolio by sector, credit rating and issuer using the prudent person
standard, which is the standard of care employed solely in the interest of the participants and
beneficiaries of the funds and for the exclusive purpose of providing benefits to participants and defraying
reasonable expenses of administering the funds. The SIC’s adopted asset allocation policy targets of
Domestic Equity and Fixed Income of 65% and 35%, respectively, for fiscal 2021.
The following table presents the fair value of investments by type that are held within the pooled trust at
June 30, 2021 (expressed in thousands):
June 30, 2021
Investments measured at the net asset value (NAV)
Commingled Funds - Domestic Equity Index Fund
$
349,844
Commingled Funds- Bond Index Fund
182,574
Total Pooled Investment Trust
$
532,418
Commingled funds – The fair values of these investments have been determined using the NAV per
share of the investments as reported by the commingled fund manager which reflects the exchange
pricing of the equity holdings. There are no withdrawal limitations for the index funds.
Money market mutual funds are used as temporary cash management investments. The fair value of
these money market funds reflects the net asset value reported by the fund administrator which is a
stable $1 per unit. The underlying investments, which are short-term cash equivalent type investments
are generally carried at amortized cost which approximates fair value. There are no participant withdrawal
limitations.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-92
Interest Rate Risk
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an
investment.
The overall duration of the OPEB System’s investment in a commingled bond index fund was 6.59 years.
Credit Risk
The OPEB System generally manages exposure to credit risk by adhering to an overall target weighted
average credit quality for the portfolio. The average credit quality of the bonds within the commingled
bond index fund was Aa2.
Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributed to the magnitude of the OPEB System’s
investments in a single issuer. There is no single issuer exposure within the OPEB System’s portfolio that
comprises more than 5% of the overall portfolio.
Custodial Credit Risk
For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the
OPEB System will not be able to recover the value of its investment or collateral securities that are in the
possession of an outside party. At June 30, 2021, all securities were registered in the name of the OPEB
System (or in the nominee name of its custodial agent) and were held in the possession of its custodial
bank, Bank of New York Mellon.
Derivatives and Other Similar Investments
Through its commingled funds, the OPEB System indirectly holds derivative type instruments.
E. Private Purpose Trusts
The Tuition Savings Program had investments of approximately $5.4 billion in a number of mutual funds
and other investment vehicles as of June 30, 2021. These investments are categorized as Level 1 of the
fair value hierarchy, with the exception of investment contracts totaling $1.0 billion which are reported at
contract value and therefore not subject to the fair value hierarchy.
The Touro Jewish Synagogue Fund had investments of approximately $4.1 million in the Fidelity
Balanced Fund as of June 30, 2021. These investments are categorized in Level 1 of the fair value
hierarchy.
The ABLE Consortium Trust's investments consist of mutual funds and other investment vehicles as of
June 30, 2021. These investments are categorized as Level 1 of the fair value hierarchy, with the
exception of a High Yield Savings Account and FDIC-Insured Checking Account which are not subject to
the fair value hierarchy.
F. Custodial Funds
As of June 30, 2021, all of the bank balances of Custodial Funds were either covered by federal
depository insurance or collateralized by securities held by an independent third party in the State’s
name.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-93
Note 3. Receivables
Receivables at June 30, 2021 (expressed in thousands) consist of the following:
Primary
Government
Taxes
Receivable
Accounts
Receivable
Notes and
Loans
Receivable
Gross
Receivables
Less:
Allowance for
Uncollectibles
Total
Receivable,
Net
Due from
Other
Governments
and Agencies
Governmental
activities
receivables
$
728,640 $
454,813 $
2,887 $ 1,186,340 $
(252,894) $
933,446 $
428,264
Less current
portion
706,527
444,207
776
1,151,510
(251,329)
900,181
406,309
Noncurrent
portion
$
22,113 $
10,606 $
2,111 $
34,830 $
(1,565) $
33,265 $
21,955
Business-type
activities
receivables
$
69,136 $
38,811 $
— $
107,947 $
(32,008) $
75,939 $
8,719
Less current
portion
69,136
38,811
—
107,947
(32,008)
75,939
8,719
Noncurrent
portion
$
— $
— $
— $
— $
— $
— $
—
In addition to the receivables shown above as reflected on the financial statements, the Employment
Security Fund has potential receivables related to fraudulent unemployment insurance claims paid in both
fiscal years 2020 and 2021. The potential receivables relate to claims that have been categorized by the
State’s Department of Labor and Training as known fraud and suspected fraud. Recoveries of
overpayments due to fraud are not recognized in the Employment Security Fund until collected, due to the
unlikelihood of collection. When benefits are funded with federal appropriations, any amounts ultimately
recovered would be due to the federal government.
The State is pursuing a claim against its insurance provider for reimbursement for the unemployment
insurance claims paid which have been deemed fraudulent. Insurance policy limits total $40 million.
Management cannot estimate the likelihood of reimbursement from its insurer for the fraudulent claims
and consequently no estimated recovery from the insurer is reflected on the financial statements of the
Employment Security Fund at June 30, 2021.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-94
Note 4. Intra-Entity Receivables and Payables
Intra-entity receivables and payables as of June 30, 2021 are the result of ongoing operations and are
expected to be reimbursed within the subsequent fiscal year. They are summarized below (expressed in
thousands):
Interfund
Receivable
Interfund
Payable
Description
Governmental Funds
Major Funds
General
$
—
$
144,239
Appropriations to other funds
Intermodal Surface Transportation
133
—
Transportation funding
Non-Major Funds
RI Temporary Disability Insurance
—
350
Operating expenses
Historic Tax Credit Financing
20,600
—
Appropriations from other funds
Permanent School
10
Operating expenses
Bond Capital
420
—
Project funding
RI Capital Plan
118,800
—
Appropriations from other funds
COPS
—
23
Fees restricted for COPS debt service
Total Non-Major Funds
139,820
383
Total Governmental Funds
139,953
144,622
Proprietary Funds
Enterprise Funds
RI Lottery
1
3,358
Statutory transfer due to General Fund
RI Convention Center
958
—
Project funding and operating assistance
Employment Security Trust
1,786
—
Benefit payments
Total Enterprise Funds
2,745
3,358
Internal Service Funds
5,544
262
Settlement of services rendered
Total Primary Government
$
148,242
$
148,242
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-95
Note 5. Capital Assets
The capital asset activity of the reporting entity for the year ended June 30, 2021 consists of the following
(expressed in thousands):
Primary Government
Governmental Activities
Beginning
Balance*
Increases
Decreases
Ending
Balance
Capital assets not being depreciated or amortized:
Land
$
391,363
$
5,132
$
(1,007) $
395,488
Works of Art
4,385
—
—
4,385
Intangibles
182,036
1,420
—
183,456
Construction in progress
660,498
433,368
(389,504)
704,362
Total capital assets not being depreciated or amortized
1,238,282
439,920
(390,511)
1,287,691
Capital assets being depreciated or amortized:
Land improvements
8,331
—
—
8,331
Buildings
891,078
5,322
(4,582)
891,818
Building Improvements
510,132
19,292
—
529,424
Furniture and equipment
361,788
18,268
(8,790)
371,266
Intangibles*
341,738
2,577
—
344,315
Infrastructure
4,948,464
324,969
—
5,273,433
Total capital assets being depreciated or amortized
7,061,531
370,428
(13,372)
7,418,587
Less accumulated depreciation or amortization for:
Land improvements
4,300
256
—
4,556
Buildings
355,971
24,990
(1,076)
379,885
Building Improvements
238,006
9,249
(3,067)
244,188
Furniture and equipment
282,616
23,834
(8,418)
298,032
Intangibles*
120,041
32,920
—
152,961
Infrastructure
2,510,414
158,371
—
2,668,785
Total accumulated depreciation or amortization
3,511,348
249,620
(12,561)
3,748,407
Total capital assets being depreciated or amortized, net
3,550,183
120,808
(811)
3,670,180
Governmental activities capital assets, net **
$ 4,788,465
$
560,728
$ (391,322) $ 4,957,871
*Including information system development costs.
**Net governmental activities capital assets includes Internal Service Fund net capital assets totaling $3.3 million at June 30, 2021.
The current period depreciation or amortization was charged to the governmental functions on the
Statement of Activities as follows:
General government
$
21,155
Health and human services
31,784
Education
4,682
Public safety
22,320
Natural resources
6,000
Transportation
163,679
Total depreciation or amortization expense - governmental activities
$
249,620
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-96
Business-type Activities
Beginning
Balance
Increases
Decreases
Ending
Balance
Capital assets not being depreciated:
Land
$
46,808
$
—
$
—
$
46,808
Construction in progress
4,931
2,015
(4,147)
2,799
Total capital assets not being depreciated
51,739
2,015
(4,147)
49,607
Capital assets being depreciated:
Buildings
276,453
1,268
(13)
277,708
Machinery and equipment
48,608
2,905
(195)
51,318
Intangibles
175
—
—
175
Total capital assets being depreciated
325,236
4,173
(208)
329,201
Less accumulated depreciation for:
Buildings
174,921
9,599
(13)
184,507
Machinery and equipment
32,133
4,547
(185)
36,495
Intangibles
175
—
—
175
Total accumulated depreciation
207,229
14,146
(198)
221,177
Total capital assets being depreciated, net
118,007
(9,973)
(10)
108,024
Business-type activities capital assets, net
$
169,746
$
(7,958) $
(4,157) $
157,631
Discretely Presented Component Units
Beginning
Balance
Increases
Decreases
Ending
Balance
Capital assets not being depreciated or amortized:
Land
$
126,534
$
3,500
$
(269) $
129,765
Construction in progress
158,770
123,618
(61,609)
220,779
Other
250
—
—
250
Total capital assets not being depreciated or amortized
285,554
127,118
(61,878)
350,794
Capital assets being depreciated or amortized:
Buildings
2,801,139
55,580
(11,327)
2,845,392
Land Improvements
313,021
11,809
—
324,830
Leasehold Improvements
410
5
—
415
Machinery and equipment
528,949
33,048
(12,948)
549,049
Infrastructure
332,913
24,741
—
357,654
Total capital assets being depreciated or amortized
3,976,432
125,183
(24,275)
4,077,340
Less accumulated depreciation or amortization for:
Buildings
1,172,175
83,783
(1,123)
1,254,835
Land Improvements
190,122
12,683
—
202,805
Leasehold Improvements
44
3
—
47
Machinery and equipment
384,178
32,843
(12,784)
404,237
Infrastructure
125,779
13,244
—
139,023
Total accumulated depreciation or amortization
1,872,298
142,556
(13,907)
2,000,947
Total capital assets being depreciated or amortized, net
2,104,134
(17,373)
(10,368)
2,076,393
Total capital assets, net
$ 2,389,688
$
109,745
$
(72,246) $ 2,427,187
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-97
Note 6. Notes Payable and Line of Credit Arrangements
Primary Government
Notes Payable – Direct Borrowings – Line of Credit Agreements: During fiscal 2020, the State
entered into two $150 million line of credit agreements with Bank of America, N.A. and Santander Bank,
N.A., respectively, for a total $300 million in available borrowings. At June 30, 2020, a total of $10 million
remained outstanding while a total of $290 million remained available under the line of credit agreements.
Drawings on the line of credit agreements constitute direct borrowing notes payable to the financial
institutions and are unsecured.
The State maintained the minimum balance draw of $5 million on each line until closing the credit
agreements in February 2021 and March 2021 for the Santander and Bank of America lines of credit,
respectively. The interest rates at the time of agreement closures were 1.15% and 0.75%, for the
Santander and Bank of America lines of credit, respectively.
Notes Payable – Lines of Credit – Changes in Short-term Financing (expressed in thousands)
Line of Credit
Description
Balance
July 1, 2020
Additions
Reductions
Balance
June 30, 2021
Bank of America, N.A.
$
5,000
$
—
$
5,000
$
—
Santander Bank, N.A
5,000
—
5,000
—
Totals
$
10,000
$
—
$
10,000
$
—
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-98
Discretely Presented Component Units
Notes payable (expressed in thousands) at June 30, 2021 are as follows:
Component Units:
Direct Borrowings
Rhode Island College note payable to the federal government with interest
at 5.5% payable in semi-annual installments of principal and interest through 2024
$
479
R.I. Resource Recovery Corporation note payable to the host municipality, payable in
equal installments over the next 14 years
1,893
R.I. Housing and Mortgage Finance Corporation bank notes and lines of credit,
0.00% to 6.25% interest, payable through 2048
108,510
110,882
Less: current portion
74,861
Non-current portion
$
36,021
Other
R.I. Housing and Mortgage Finance Corporation federal bank note,
2.239% to 3.577% interest, payable from 2056 through 2060.
$
146,503
Direct borrowing – Line of credit arrangements
R.I. Housing and Mortgage Finance Corporation (RIHMFC) - As of June 30, 2021, RIHMFC may borrow
up to a maximum of $135 million under various revolving loan agreements expiring between August 2021
and January 2022. Borrowings under the lines of credit are payable on demand and are unsecured. One
of the lines of credit, in the outstanding amount $2 million, has a variable interest rate, which was 1.650%
at June 30, 2021. The outstanding remaining lines of credit, with borrowings of $80 million at June 30,
2021 have fixed rates which range from .097% - 1.12%.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-99
Note 7. Long-Term Liabilities
A. Changes in Long-Term Liabilities
Changes in long-term liabilities for the year ended June 30, 2021 are presented in the following table
(expressed in thousand):
Beginning
Balance*
Additions
Reductions
Ending
Balance
Amounts
Due Within
One Year
Amounts
Due
Thereafter
Governmental Activities
Bonds Payable
General Obligation bonds (see section B)
$ 1,263,280
$ 223,560
$ (175,175) $ 1,311,665
$
100,130
$ 1,211,535
RICC Grant Anticipation Revenue bonds
572,260
—
(37,305)
534,955
39,170
495,785
RICC Rhode Island Motor Fuel Tax Revenue bonds
27,625
—
(3,980)
23,645
4,180
19,465
Tobacco Settlement asset-backed bonds
604,298
—
(23,365)
580,933
12,040
568,893
Accreted interest on TSFC bonds
123,055
13,965
—
137,020
—
137,020
RICC Historic Tax Credit bonds
104,870
—
(16,385)
88,485
16,830
71,655
Net unamortized premium/discount
236,013
16,755
(40,373)
212,395
—
212,395
Bonds payable, net
2,931,401
254,280
(296,583)
2,889,098
172,350
2,716,748
Obligation under capital leases (see section D)
157,870
—
(29,824)
128,046
23,628
104,418
Net unamortized premium/discount
12,492
—
(3,094)
9,398
—
9,398
Obligation under capital leases, net
170,362
—
(32,918)
137,444
23,628
113,816
Net pension liability (see note 18) **
2,286,088
24,198
—
2,310,286
—
2,310,286
Net pension liability-special funding (see note 18)**
1,366,538
—
(4,556)
1,361,982
—
1,361,982
Net OPEB liability (see note 19 C) **
421,757
—
(79,827)
341,930
—
341,930
Job Creation Guaranty Program obligation (see sec. G)
12,747
—
(12,747)
—
—
—
Compensated absences (see section I)**
91,191
145,929
(148,568)
88,552
75,463
13,089
Pollution remediation (see section H)
12,520
8,006
(5,552)
14,974
2,671
12,303
Other (see section L) *
64,222
18,579
(8,430)
74,371
264
74,107
Total Governmental Long-term Liabilities
$ 7,356,826
$ 450,992
$ (589,181) $ 7,218,637
$
274,376
$ 6,944,261
Business-type Activities
Revenue bonds (see section B)
$
206,240
$ 32,170
$
(43,440) $
194,970
$
13,995
$
180,975
Net unamortized premium/discount
1,134
(1,134)
—
—
—
Revenue bonds, net
207,374
32,170
(44,574)
194,970
13,995
180,975
Net pension liability **
20,850
802
—
21,652
—
21,652
Net OPEB liability **
3,990
—
(570)
3,420
—
3,420
Unearned revenue
11,787
1,739
(8,583)
4,943
2,921
2,022
Compensated absences (see section I)**
769
—
(164)
605
288
317
Other long-term liabilities
—
184
—
184
—
184
Total Business-type Long-term Liabilities
$
244,770
$ 34,895 0 $
(53,891) $
225,774
$
17,204
$
208,570
Component Units
Bonds payable (see section B)
$ 2,738,908
$ 405,189
$ (444,836) $ 2,699,261
$
122,645
$ 2,576,616
Bonds payable - direct placements
134,881
—
(12,650)
122,231
12,926
109,305
Net unamortized premium/discount
120,298
13,945
(13,074)
121,169
11,347
109,822
Refunding credits
(7,972)
—
835
(7,137)
(837)
(6,300)
Bonds payable, net
2,986,115
419,134
(469,725)
2,935,524
146,081
2,789,443
Loans payable (see section C)
13,888
4,760
(3,850)
14,798
1,668
13,130
Obligations under capital leases
1,934
—
(458)
1,476
465
1,011
Net pension liability**
302,394
7,821
(4,950)
305,265
—
305,265
Net OPEB liability**
165,265
6,020
(9,559)
161,726
—
161,726
Compensated absences (see section I)**
34,055
4,309
(1,984)
36,380
10,040
26,340
Due to primary government (see section K)
48,108
168
(6,872)
41,404
4,588
36,816
Unearned revenue
12,442
6,344
(301)
18,485
13,577
4,908
Due to component units
1,698
172
(314)
1,556
633
923
Other Long-term liabilities
Arbitrage rebate (see section J)
1,591
—
(134)
1,457
—
1,457
Pollution remediation (see section H)
13,193
993
—
14,186
936
13,250
Other liabilities (see section L)
391,991
82,045
(47,786)
426,250
9,395
416,855
Total Component Units Long-term Liabilities
$ 3,972,674
$ 531,766
$ (545,933) $ 3,958,507
$
187,383
$ 3,771,124
**The net pension, net OPEB, and compensated absences liabilities of the governmental activities are liquidated principally in the General Fund, the
Intermodal Surface Transportation Fund and individual institutions of higher education according to the applicable employing state agency.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-100
B. Bonds Payable
At June 30, 2021, future debt service requirements were as follows (expressed in thousands):
Fiscal
Year
Ending
June 30
Primary Government
Component Units
Governmental Activities
Business Type
Activities
Other
Direct Placements
Principal
Interest
Principal
Interest
Principal
Interest
Principal
Interest
2022
$ 172,350
$ 104,480
$ 13,995
$
7,833
$ 122,645
$
92,393
$ 12,926
$
3,376
2023
174,200
96,926
20,250
7,464
127,983
88,467
13,228
3,085
2024
184,660
89,028
20,525
7,008
124,674
83,985
16,598
2,750
2025
171,165
80,970
21,225
6,306
121,943
79,511
12,873
2,377
2026
179,010
73,148
21,975
5,560
119,648
75,164
5,603
2,106
2027 - 2031
733,850
258,428
46,955
18,638
595,803
178,785
36,703
6,583
2032- 2036
409,775
128,375
34,330
8,427
524,499
107,616
17,866
2,138
2037 - 2041
201,835
66,339
12,815
2,314
451,139
58,222
6,434
214
2042 - 2046
85,820
45,730
2,900
124
268,601
24,461
—
—
2047 - 2051
121,130
24,226
—
—
214,116
8,873
—
—
2052 - 2056
105,888
1,411,722 *
—
—
16,920
983
—
—
2057 - 2061
—
—
—
—
11,290
391
—
—
$ 2,539,683
$ 2,379,372
$ 194,970
$ 63,674
$ 2,699,261
$ 798,851
$ 122,231
$
22,629
* Accreted interest on capital appreciation bonds of the Tobacco Settlement Financing Corporation.
Primary Government - Governmental Activities
General obligation bonds of the State are serial bonds with interest payable semi-annually.
In April 2021 the State issued $136 million of general obligation bonds with interest rates of 0.25% -
5.00%, maturing from 2023 through 2041. The premium paid on these bonds was $14.9 million. In
accordance with certain bond statutes, net premiums of $8.8 million were transferred to RI Infrastructure
Bank to provide municipalities with low-cost financial assistance for road and bridge projects and $5.8
million was transferred to the Rhode Island Capital Plan Fund.
The State also issued $87.7 million of general obligation refunding bonds with interest rates of 1.00% -
5.00%, maturing from 2022 through 2034. The premium paid on these bonds was $1.9 million. These
bonds, combined with the premium, were deposited in an irrevocable trust to advance refund $80.7
million of series 2011A, 2012A, 2013A, 2013B, and 2014B bonds with interest rates from 3.000% to
5.058%. The refunding resulted in a reduction of debt service of $8.2 million and an economic gain
(difference between the present value of the debt service payments on the old and new debt) of $8
million. The advanced refunding resulted in a deferred loss (difference between the reacquisition price
and the net carry amount of the old debt) of approximately $2.7 million that was recorded as a deferred
outflow of resources.
Forward Delivery Bond Purchase Agreement – The State entered into a forward delivery bond purchase
agreement with a financial institution in March 2021. The agreement provides the financial institution with
a purchase option for the State’s 2022 Series Refunding Bonds anticipated for issuance in October 2022.
In consideration of the purchase option, the financial institution advanced the State an upfront amount
(minus commitment fees and expenses) of $5.9 million. The upfront payment is reflected as a deposit
liability of the State at June 30, 2021.
The agreement provides both the financial institution and the State the option of executing the purchase
option in the agreement (which stipulates the purchase of $49 million in refunding bonds at a set price) or
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-101
a settlement option where the State would provide a determined amount to the purchaser (based on a
calculation specified in the agreement). The purchaser could also elect neither the purchase nor
settlement option and the agreement would be voided and the State would not be liable for returning the
upfront payment. The deposit liability will be considered in conjunction with the determination of any gain
or loss on the future debt refunding transaction.
At June 30, 2021, general obligation bonds authorized by the voters and unissued amounted to
approximately $576 million. In accordance with the General Laws, unissued bonds are subject to
extinguishment seven years after the debt authorization was approved, unless extended by the General
Assembly. Additionally, the General Assembly, pursuant to General Law Chapter 35-18, authorized $144
million for school construction in the Central Falls School District (a component unit) and $10.5 million for
the Providence River Dredge Project.
In addition to the debt authorized by the voters for which the full faith and credit is pledged, the General
Assembly has authorized the issuance of other debt that is subject to annual appropriation.
RICC Grant Anticipation Bonds and Rhode Island Motor Fuel Tax Revenue Bonds - RICC, on behalf of
the State, issues special obligation debt. Grant Anticipation Revenue Vehicle Bonds are payable solely
from future federal aid revenues to be received by the State in reimbursement of federally eligible costs of
specific transportation construction projects. Rhode Island Motor Fuel Tax Revenue Bonds are payable
solely from certain pledged revenues derived from two cents ($.02) per gallon of the thirty-four cents
($.34) per gallon Motor Fuel Tax. The bonds provide the State matching funds for the Grant Anticipation
Revenue Vehicle Bonds. The bonds do not constitute a debt, liability, or obligation of the State or any
political subdivision thereof.
Pledged revenues were sufficient to fund fiscal 2021 debt service payments for Grant Anticipation and
Motor Fuel Tax Revenue Bonds. These revenues have been pledged for the term of the Grant Anticipation
and Motor Fuel Tax Revenue Bonds through fiscal 2035 and 2027, respectively.
Historic Tax Credit Bonds - In fiscal years 2009, 2015 and 2019 the R.I. Commerce Corporation (RICC),
on behalf of the State, issued $150 million, $75 million and $76.9 million, respectively, of revenue bonds
under the Historic Structures Tax Credit Financing Program. The bonds do not constitute a debt, liability,
or obligation of the State or any political subdivision thereof. The State is obligated under a Payment
Agreement to make payments to the trustee, subject to annual appropriation by the General Assembly.
The proceeds of the bonds are being used to provide funds for redemption of Historic Structures Tax
Credits. There is remaining authorization to issue up to $54.3 million of Historic Tax Credit Bonds.
Tobacco Settlement Asset-Back Bonds and Accreted Interest - the Tobacco Settlement Finance
Corporation (Corporation) has issued various series of Tobacco Settlement Asset-Backed Bonds, the
proceeds of which were used to purchase the State’s future rights in the Tobacco Settlement Revenues
(TSRs) under the Master Settlement Agreement and the Consent Decree and Final Judgment (the MSA).
The Corporation issued $197,005,742 of Tobacco Settlement Asset-Backed Bonds (2007 Series). The
bond proceeds were used to purchase the State’s future rights to residual Tobacco Settlement Revenues
which were not previously purchased under a 2002 purchase agreement. The bonds are Capital
Appreciation Bonds, on which no periodic interest payments are made, but which are issued at a deep
discount from par and accreting to full value at maturity in the year 2052. At maturity, the bond redemption
values represent accreted yields ranging from 6.000% to 6.750%. The bonds are subject to early
redemption provisions, in whole or in part, at the redemption price of 100% of the issue amount plus
accreted interest, without premium. A portion of the 2007 Series Bonds were redeemed in March 2015
and June 2017.
The Corporation issued $620,935,000 of Tobacco Settlement Asset-Backed Bonds (Series 2015 A and B)
that bear interest at annual rates ranging from 0.590% to 5.000% and mature in varying amounts through
June 1, 2050. The bonds are subject to a number of early redemption provisions, in whole or in part, at
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-102
the redemption price of 100% of the principal amount plus accrued interest, without premium. Term
Maturities represent the minimum amount of principal that the Corporation has to pay as of specific dates.
The proceeds of the issuance of the Series 2015 bonds (along with the release of debt service funds
related to the bonds retired, and the proceeds from the early termination of investment contracts) were
used to fully redeem the outstanding balance of the Corporation’s 2002 Series bonds, and to repurchase
and retire certain principal and accreted interest on the Corporation’s 2007 Series bonds.
The Series 2015 bond indenture contains “Turbo Maturity” provisions, whereby the Corporation is
required to apply the funds collected that are in excess of the then current funding requirements of the
indenture to the early redemption of certain of the Series 2015 B bonds (based upon a minimum turbo
redemption schedule established for the bonds). The amount available for turbo redemptions on the
Series 2015 B bonds are credited against the term maturities in ascending chronological order based on a
schedule contained in the indenture. Excess turbo funds available, if any, will be used to retire Series
2007 bonds.
Reserve accounts in the amount of $26,700,250 and $12,175,975 were established for the Series 2015 A
and Series 2015 B bonds, respectively. The Corporation is required to maintain these reserve accounts to
the extent of available funds. Amounts on deposit with the trustee in the respective reserve account are
available to pay (i) the principal of sinking fund installments of, and interest on, the Series 2015A and
2015 B bonds to the extent revenues are insufficient for such purpose and (ii) upon the occurrence of an
event of default, extraordinary prepayments. Unless an event of default has occurred, amounts withdrawn
from the reserve account will be replenished from revenues.
The bonds are payable both as to principal and interest solely out of the assets of the Corporation
pledged for such purpose, and neither the faith and credit nor the taxing power of the State of Rhode
Island or any political subdivision thereof is pledged to the payment of the principal of or the interest on
the bonds. The bonds do not constitute an indebtedness of or a general, legal or “moral” obligation of the
State or any political subdivision of the State.
The Corporation has debt service requirements totaling $2.4 billion at June 30, 2021. The related bonds
were structured based upon assumptions in tobacco settlement revenue (TSR) collections prepared by an
independent consultant at the time the bonds were issued. The repayment of the bonds is dependent
upon the receipt of TSRs from the Master Settlement Agreement, which are based on domestic cigarette
sales. Any amounts received in excess of the scheduled principal and interest are applied to turbo
maturities (principal and interest paid on the bonds in excess of scheduled principal and interest
requirements). Any payment of turbo maturities in future years impacts, potentially significantly, the overall
debt service requirements to maturity schedule. The domestic cigarette consumption estimates, and
projections are highly sensitive to a variety of assumptions. Since the Corporation's last sale of bonds in
fiscal 2015, amounts received by the Corporation pursuant to the Master Settlement Agreement have
been less than the amounts projected in the consumption estimates used to structure the debt service
requirements. TSRs received by the Corporation in future years that are less than the amounts projected
to be received at the time of the sale of bonds could delay the payment of scheduled debt service on the
bonds until sufficient TSRs are available to the Corporation.
Primary Government - Business-Type Activities
R.I. Convention Center Authority
The R.I. Convention Center Authority (RICCA) is limited to the issuance of bonds or notes in an aggregate
principal amount of $305 million. At June 30, 2021, outstanding bond indebtedness totaled $194.9 million.
During April 2021, the Authority issued its 2021 Series A Bonds in an aggregate amount of $32,170,000
for the purpose of refunding the Authority’s outstanding 2015 Series A Bonds and to pay the costs of
issuance. The 2021 Series A Bonds mature between 2021 and 2026. The net proceeds of $32,013,491
(after payment of $156,509 in issuance costs) were deposited in an irrevocable trust fund under an
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-103
escrow agreement between the escrow agent and the Authority. As a result of the refunding, total debt
service payments from 2021 to 2026 are scheduled to increase by $750,487, which causes an economic
loss (the difference between the present value of the debt service payments on the old and new debt) of
$494,198. The Authority expects the future economic benefits associated with the elimination of the
private use restrictions to exceed $494,198.
All outstanding indebtedness is subject to optional and mandatory redemption provisions. Mandatory
redemption is required for certain bonds over various years through 2027 at the principal amount of the
bonds. Certain bonds may be redeemed early, at the option of RICCA, at amounts ranging from 100% to
102% of the principal balance.
Outstanding indebtedness is collateralized by all rents receivable (if any) under a lease and agreement
between RICCA and the State covering all property purchased by RICCA for the site, all other revenues
and receipts from the project, a mortgage on constructed facilities, land financed by proceeds of the
bonds, and amounts held in various accounts into which bond proceeds were deposited. In addition,
outstanding indebtedness is insured under certain financial guaranty insurance policies.
Each of the bond resolutions contains certain restrictive covenants. During the year ended June 30, 2021,
RICCA was unable to fund the Operating Reserve requirement of the restrictive covenants for the R.I.
Convention Center and the DDC pursuant to the indentures.
RICCA and the R.I. Department of Administration have entered into agreements that provide for total
appropriations from the RI Capital Plan (RICAP) for various purposes, including funding the Renewal and
Replacement requirement of the restrictive covenant for the DDC. Detailed information regarding these
agreements is in RICCA’s financial statements for the fiscal year ended June 30, 2021.
Concurrent with the issuance of the RICCA's 2009 Series A Bonds, a Debt Service Reserve Fund Facility
(the Facility) was issued by Assured Guaranty Municipal Corp., formerly Financial Security Assurance,
Inc. (FSA) to meet the Debt Service Reserve Fund requirement. The Facility provides maximum coverage
of approximately $16.2 million. Coverage under the Facility expires at the earlier of May 15, 2027 or the
date upon which the 2021 Series A, 2015 Series A and 2017 Series A are no longer outstanding. In June
2021, AGM was rated by Moody’s as A2. In June 2021, AGM was rated by S&P as AA.
RICCA maintains an agreement with AMBAC Indemnity Corporation (AMBAC) under which AMBAC
provides RICCA with surety bond coverage to meet Debt Service Reserve Fund requirements for the R.I.
Convention Center. The surety bond provides a maximum coverage of $15.2 million. Coverage under the
surety bond expires on May 15, 2023. RICCA maintains additional agreements with AMBAC for the R.I.
Convention Center under which AMBAC provides RICCA with separate surety bond coverages to meet
Debt Service Reserve Fund and Operating Reserve Fund requirements, respectively. The surety bond
relating to the Debt Service Reserve Fund requirements replaced mandated investments and provides a
maximum coverage of approximately $8.8 million. The surety bond relating to the Operating Reserve
Fund requirements also replaced mandated investments and provides a maximum coverage of
approximately $3.9 million. Coverage under both surety bonds expires on May 15, 2027. The Debt
Service and Operating Reserve Fund Facilities are required to have a credit rating in one of the three
highest categories by Moody’s and S&P. As of June 30, 2021, AMBAC’s credit rating did not meet the
aforementioned requirement, however, RICCA acquired from Assured Guaranty Corporation a surety
bond that meets the Debt Service Reserve Fund requirement for the R.I. Convention Center.
Discretely Presented Component Units
University of Rhode Island, Rhode Island College and the Community College of Rhode Island
The University of Rhode Island (URI), Rhode Island College (RIC), and the Community College of Rhode
Island (CCRI) have issued a number of series of revenue bonds to finance housing, student union
(including bookstores) and dining facilities. Under terms of the trust indentures, certain net revenues from
these operations must be transferred to the trustees for payment of interest, retirement of bonds, and
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-104
maintenance of facilities. The bonds are payable in annual or semi-annual installments to various maturity
dates. Revenue bonds also include amounts borrowed under loan and trust agreements between the R.I.
Health and Educational Building Corporation (RIHEBC) and the Board of Education acting for URI, RIC,
and CCRI. The agreements provide for RIHEBC's issuance of the bonds with a loan of the proceeds to
the University and Colleges and the payment by the University and Colleges to RIHEBC of loan payments
that are at least equal to debt service on the bonds. The bonds are secured by a pledge of revenues of
the respective institutions.
At June 30, 2021 revenue bonds outstanding were approximately as follows: URI - $257.8 million, RIC -
$12.3 million, and CCRI - $906,000.
R.I. Airport Corporation
Revenue bonds are issued by RICC on behalf of RIAC. The proceeds from these bonds are used to
finance construction and related costs of certain capital improvements. These bonds, except for the 2006
First Lien Special Facility Bonds, are secured by the net revenues derived from the operation of the
airports. The 2006 First Lien Special Facility Bonds are secured solely by the net revenues derived from
the InterLink facility.
Per its Master Indenture of Trust and Supplemental Indentures, RIAC has pledged net revenues derived
from the operation by RIAC of the Airport and certain general aviation airports to repay approximately
$185.5 million in airport revenue bonds. Proceeds from the bonds were used for various airport
improvement projects. Amounts available to pay debt service per the Master Indenture, including pledged
passenger facility charges, were approximately $45.1 million for the year ended June 30, 2021. Principal
and interest payments for the year ended June 30, 2021 were approximately $23 million.
In June 2006, the R.I. Airport Corporation (RIAC), R.I. Commerce Corporation (RICC), and the R.I.
Department of Transportation (RIDOT) executed a Secured Loan Agreement (Agreement) which provides
for borrowings of up to $42 million with the United States Department of Transportation under the
Transportation Infrastructure Finance and Innovation Act of 1998 (TIFIA). The purpose of the Agreement
was to reimburse RICC and RIDOT and to provide funding to RIAC for a portion of eligible project costs
related to the InterLink Facility Project. RIAC was permitted under the Agreement to make requisition of
funds for eligible project costs through fiscal 2013. RIAC began making monthly payments of interest in
fiscal 2012, with interest at a rate of 5.26%. Payments are made on behalf of RICC (the borrower per the
Agreement), and debt service payments commenced in fiscal 2012 with a final maturity in fiscal 2042.
Such repayments are payable solely from the net revenues derived from the InterLink. As of June 30,
2021, RIAC had approximately $39.6 million in borrowings under this agreement.
I-195 Redevelopment District Commission
In April 2013, RICC issued Economic Development Revenue Bonds 2013 Series A, and Economic
Development Bonds 2013 Series B (federally taxable) in the aggregate principal amounts of $37.4 million,
for which the I-195 RDC is the obligor. The 2013 Series A Bonds mature in April 2033 and bear interest at
the lesser of the 30-Day London InterBank Offered Rate (LIBOR) (0.10250% at June 30, 2021) plus
applicable margin, or 7.75%. Applicable margin is the rate that corresponds to the lesser of the two long-
term bond ratings of the State from Moody’s Investors Service (Moody’s) and Standard & Poor’s (S&P) in
the following table:
State Bond Rating (S & P/Moody's):
AA/Aa2 or Higher
AA-/Aa3
A+/A1
A/A2
A-/A3
Applicable Margins, 2013 Series A
1.00%
1.17%
1.37%
1.57%
1.82%
At June 30, 2021, the State’s general obligation bonds were rated AA and Aa2 by S&P and Moody’s,
respectively. As such, at June 30, 2021, the 2013 Series A Bonds bore interest at 1.10250%.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-105
Proceeds from the 2013 Series A bonds were transferred by the I-195 RDC to the State.
Simultaneously with the issuance of the 2013 Series A Bonds, the I-195 RDC, RICC, and a Bank entered
into a bond purchase agreement under the terms of which the 2013 Series A Bonds were purchased by
the Bank. The Bank holds a mandatory tender option to sell the bonds to RICC on either April 1, 2023 or
April 1, 2028.
Concurrent with the issuance of the 2013 Series A Bonds, the State entered into separate rate cap
transaction agreements with the Bank for each bond series (the Cap Agreement). Under the terms of the
2013 Series A Rate Cap Agreement, the State paid the Bank $658,500. In exchange, the Bank agreed to
pay the State interest on a monthly basis at 30-Day LIBOR, to the extent 30-Day LIBOR exceeds the
interest rate cap, on the notional amount, which mirrors the scheduled principal balance of the 2013
Series A Bonds, through April 1, 2023. The interest rate under the 2013 Series A Rate Cap Agreement is
capped at 6.75%. At June 30, 2021, the fair value of the 2013 Series A Rate Cap Agreements was $973
and is estimated as the amount the Bank would receive to terminate the Rate Cap Agreements at the
reporting dates, taking into account current interest rates and the current credit worthiness of the
counterparties.
Repayment of the 2013 Series A Bonds shall be solely from i) appropriated funds, if any, made available
and appropriated by the General Assembly of the State for bond payments, but not for payment of
administrative expenses and ii) pledged receipts, which are the net proceeds derived from the sale, lease,
transfer, conveyance, or other disposition of any interest in all or any portion of the I-195 land owned by
the I-195 RDC.
The I-195 RDC has pledged and granted to RICC a security interest, which has been assigned to the
bond trustee, in all pledged receipts and all deposits in the bond, project, expense and credit facility funds
established with the bond trustee.
To the extent that the I-195 RDC has insufficient funds to meet its payment obligations under the bonds, it
shall seek appropriations from the State; however, there are no assurances that the State will appropriate
amounts to fund the I-195 RDC’s payment obligations.
Other Component Units
Nonmajor component units have various bonds outstanding. These revenue bonds were generally issued
to fulfill the component unit’s corporate purpose. Additional information on each nonmajor component
unit’s debt obligations is available in their audited financial statements.
C. Loans Payable
Discretely Presented Component Units
This balance consists of loans payable by the University of Rhode Island and the Quonset Development
Corporation of approximately $368,000 and $14.4 million, respectively.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-106
D. Obligations Under Capital Leases
Primary Government
The State has entered into capital lease agreements, primarily Certificates of Participation (COPS), with
financial institutions. These financing arrangements have been used by the State to acquire, construct or
renovate facilities and acquire other capital assets. The State’s obligation under capital leases at June 30,
2021, consists of the present value of future minimum lease payments less any funds available in debt
service reserve funds. Obligation of the State to make payments under lease agreements is subject to
and dependent upon annual appropriations being made by the General Assembly.
The following is a summary of material future minimum lease payments (expressed in thousands)
required under capital leases that have initial or remaining non-cancelable lease terms in excess of one
year as of June 30, 2021:
Fiscal Year
Ending June 30
Certificates of
Participation
Other Capital
Leases
Total
2022
$
28,366 $
943 $
29,309
2023
28,453
812
29,265
2024
24,431
314
24,745
2025
19,889
—
19,889
2026
8,777
—
8,777
2027 - 2031
29,842
—
29,842
2032 - 2036
9,313
—
9,313
Total future minimum lease payments
149,071
2,069
151,140
Amount representing interest
(23,076)
(18)
(23,094)
Present value of future minimum lease payments
$
125,995 $
2,051 $
128,046
Each COPS transaction generally covers multiple capital projects supporting multiple functions of the
primary government. In general, the amount of capital asset additions funded through COPS is equivalent
to the amount of the issuance. The State reports the amortization charge on assets acquired through
COPS with depreciation expense on the government-wide financial statements and discloses the
amounts in Note 5, Capital Assets.
When issuances also fund component unit projects, the State records the full lease under the obligation
and recognizes the related receivable from the component unit for their portion of debt service in the
government-wide financial statements.
Assets purchased with capital leases as of June 30, 2021 (expressed in thousands) are as follows:
Category
Cost
Accumulated
Depreciation
Net Book
Value
Buildings
$
215,583
$
70,780
$
144,803
Building Improvement
86,737
39,923
46,814
Computer Systems
70,186
34,490
35,696
Infrastructure
26,754
9,364
17,390
Equipment
1,327
465
862
$
400,587
$
155,022
$
245,565
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-107
E. Defeased Debt
The State and its component units have defeased certain general obligation bonds and revenue bonds by
placing the proceeds of the new bonds or other sources in irrevocable trusts to provide for all future debt
service payments on the old bonds. Accordingly, the trust account assets and the liabilities for the
defeased bonds are not included in the basic financial statements.
At June 30, 2021, the following bonds outstanding (expressed in thousands) are considered defeased:
Amount
Primary government:
General Obligation Bonds
$
160,175
Component Units:
R.I. Depositors Economic Protection Corporation (ceased operations during FY04)
42,250
R.I Infrastructure Bank
117,200
R.I. Airport Corporation
14,090
R.I. Turnpike and Bridge Authority
48,805
F. Conduit Debt
The R.I. Health and Educational Building Corporation has issued various series of revenue bonds, notes,
and leases to finance capital expenditures for Rhode Island educational institutions, hospitals, and
healthcare providers. The bonds, notes and leases are special obligations of the Corporation, payable
from revenues derived solely from the institution for which the project was financed. The bonds, notes,
and leases do not constitute a debt or pledge of the faith and credit of the corporation or the State, and
accordingly are not reflected in the financial statements. The amount of conduit debt outstanding on June
30, 2021 was $3.3 billion.
The R.I. Industrial Facilities Corporation and the R.I. Commerce Corporation issue revenue bonds,
equipment acquisition notes, and construction loan notes to finance various capital expenditures for
Rhode Island business entities. The bonds and notes issued by the corporations are not general
obligations of the corporations and are payable solely from the revenues derived from the related
projects. They neither constitute nor give rise to a pecuniary liability for the corporations nor do they
represent a charge against their general credit. Under the terms of the various indentures and related
loan and lease agreements, the business entities make loan and lease payments directly to the trustees
of the related bond and note issues in amounts equal to interest and principal payments due on the
respective issues. The payments are not shown as receipts and disbursements of the corporations, nor
are the related assets and obligations included in the financial statements. The amount of conduit debt
outstanding on June 30, 2021 was $32.1 million and $958 million for these component units. Certain
issues of conduit debt are moral obligations of the State, and the current amounts outstanding are
disclosed in Note 17.
The Rhode Island Infrastructure Bank (RIIB) has issued conduit bonds for the express purpose of
providing capital financing for a specific third party. RIIB has no obligation for the conduit debt beyond
resources provided by a loan with the third party on whose behalf the conduit bonds were issued. As of
June 30, 2021, RIIB had seven series of conduit bonds outstanding, with an aggregate principal amount
payable of approximately $55.3 million.
G. Job Creation Guaranty Program – Moral Obligations
The Job Creation Guaranty Program (JCGP) was established by the General Assembly in 2010 for the
purpose of promoting economic development in the State and authorized the issuance of a maximum of
$125 million of obligations by the RI Commerce Corporation (RICC), formerly known as the RI Economic
Development Corporation.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-108
In November 2010, RICC issued $75 million of taxable revenue bonds under the JCGP. The bond
proceeds were loaned to 38 Studios, LLC (38 Studios) and provided funding for the relocation of the
company’s corporate headquarters to the State and establishment and operation of a video gaming
software development studio in Providence. In accordance with the enabling legislation and the
agreement between RICC, the trustee and 38 Studios, should amounts in the Capital Reserve Fund fall
below minimum requirements, RICC agreed to present the Governor with a certificate stating the amounts
required to restore any shortfall and the Governor is required to include such amounts in his or her budget
request for appropriation by the General Assembly.
38 Studios filed for Chapter 7 bankruptcy in 2012 and the General Assembly has appropriated amounts
needed to fund debt service of the JCGP bonds in prior years. The General Assembly appropriated
$12.7 million in fiscal 2021 to fund the last required debt service on the JCGP bonds related to 38
Studios.
The General Assembly repealed the authority for RICC to guarantee further loans under the JCGP during
the 2013 legislative session.
H. Pollution Remediation Liabilities
GASB Statement No. 49 establishes guidance to estimate and report potential costs which may be
incurred for pollution remediation liabilities. GASB Statement No. 49 requires the reporting entity to
reasonably estimate and report a remediation liability when one of the following obligating events has
occurred:
• Pollution poses an imminent danger to the public and the reporting entity is compelled to take
action.
• The reporting entity is in violation of a pollution related permit or license.
• The reporting entity is named or has evidence it will be named as a responsible party by a
regulator.
• The reporting entity is named or has evidence it will be named in a lawsuit to enforce a cleanup.
• The reporting entity commences or legally obligates itself to conduct remediation activities.
The State and certain component units have remediation activities underway, and these are in stages
including site investigation, planning and design, clean up and site monitoring. Several agencies within
State government have as part of their mission the responsibility to investigate possible pollution sites and
oversee the remediation of those sites. These agencies have the expertise to estimate the remediation
obligations presented herein based on prior experience in identifying and funding similar remediation
activities. The remediation liabilities reported have been calculated using the expected cash flow
technique. Situations posing potential liabilities, for which a reasonable estimate could not be made, have
not been included.
Additionally, the State may have a pollution remediation obligation for certain sites for which investigations
and studies, or related litigation, are still in progress and consequently, associated future costs cannot be
estimated.
The remediation obligation estimates presented are subject to change over time. Cost may vary due to
price fluctuations, changes in technology, changes in potential responsible parties, results of
environmental studies, changes in laws or regulations, and other factors that could result in revision to the
estimates. Recoveries from responsible parties may reduce the State’s obligation. As of June 30, 2021,
no reasonable estimates of those recoveries can be made. Capital assets may be created when pollution
remediation outlays are made under specific circumstances.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-109
I. Compensated Absences
State employees and those of certain component units are granted vacation and sick leave in varying
amounts based upon years of service. Additionally, the State has deferred payment of certain
compensation to employees. A liability has been calculated for all earned vacation credits, subject to
certain limitations, and vested sick leave credits that are payable at retirement, subject to certain
limitations. Payment is calculated at the employees’ current rate of pay.
J. Arbitrage Rebate
A liability accrues for income on the investment of debt proceeds determined to be arbitrage earnings in
accordance with federal regulations. These amounts are generally payable to the federal government five
years after the issuance date of the bonds.
K. Due to the Primary Government
This consists of the repayment of general obligation debt that was issued by the State on behalf of certain
component units.
L. Other Long-Term Liabilities
Governmental Activities - the liabilities consist primarily of:
•
Retainage related to infrastructure construction projects – these amounts are considered long-
term liabilities since the related construction projects are not expected to be completed in the
subsequent fiscal period.
•
Asset Retirement Obligations – these amounts are considered long-term liabilities since the
nuclear reactor that the liability relates to has an estimated useful life in excess of one year.
In addition, certain other long-term payables are included in this category. Historically, long-term liabilities,
other than debt, will be paid through certain funds as follows:
•
Compensated absences – Assessed Fringe Benefits Fund, an internal service fund and the
respective fund to which the underlying employee’s wages and benefits are charged.
•
Asset Retirement Obligations – General and RI Capital Plan.
•
Pollution remediation – General, RI Capital Plan, and Intermodal Surface Transportation Funds.
•
Other long-term liabilities – General and Intermodal Surface Transportation Funds.
Component Units – the liabilities consist primarily of landfill closure and post-closure costs, grants
refundable and escrow deposits.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-110
Note 8. Deferred Outflows of Resources and Deferred Inflows of Resources
Deferred outflows of resources represent a consumption of net position by the State that is applicable to a
future reporting period. Deferred inflows of resources represent an acquisition of net position by the State
that is applicable to a future reporting period. Deferred outflows of resources increase net position, similar
to assets, and deferred inflows of resources decrease net position, similar to liabilities.
The components of the deferred outflows of resources and deferred inflows of resources related to the
primary government and its discretely presented component units as of June 30, 2021 are as follows
(expressed in thousands):
Governmental
Activities
Business-
Type
Activities
Total Primary
Government
Component
Units
Deferred outflows of resources:
Deferred loss on refunding of debt
$
19,549 $
4,668 $
24,217 $
11,776
Deferred pension costs - ERS
546,367
5,720
552,087
35,964
Deferred pension costs - single
employer plans and other
51,104
—
51,104
23,300
Deferred OPEB costs - multiple
employer plans
54,401
1,309
55,710
23,960
Deferred OPEB costs - single
employer plans
7,034
—
7,034
—
Asset Retirement Obligations
33,952
—
33,952
—
Derivatives
—
—
—
865
Total deferred outflows of resources
$
712,407 $
11,697 $
724,104 $
95,865
Deferred inflows of resources:
Deferred gain on refunding of debt
$
26,072 $
— $
26,072 $
2,048
Deferred pension credit - ERS
119,605
525
120,130
21,068
Deferred pension credit - single
employer plans and other
9,752
—
9,752
2,047
Deferred OPEB credit - multiple
employer plans
99,525
1,048
100,573
38,092
Deferred OPEB credit - single
employer plans
18,523
—
18,523
—
Total deferred inflows of resources
$
273,477 $
1,573 $
275,050 $
63,255
The components of the deferred inflows of resources related to the governmental funds as of June 30,
2021 are as follows (expressed in thousands):
General Fund
IST Fund
Total
Governmental
Funds
Deferred inflows of resources:
Taxes
$
22,113 $
— $
22,113
Other General Revenue
10,606
—
10,606
Federal Revenue
—
9,622
9,622
Total deferred inflows of resources
$
32,719 $
9,622 $
42,341
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-111
Note 9. Governmental Fund Balance, Budget Reserve and Cash Stabilization Account, and Net
Position Restricted for Enabling Legislation
A. Governmental Funds Balances
Governmental fund balance categories are detailed below (expressed in thousands):
Governmental Funds - Fund Balance
Major Funds
General
Fund
IST
Fund
Other
Funds
Total
Fund Balances:
Nonspendable:
General Fund
$
1,538
$
—
$
—
$
1,538
Permanent Fund Principal
—
—
174
174
Restricted for:
Purposes specified by enabling legislation
276,172
—
—
276,172
RI Capital Plan
—
—
149,825
149,825
Debt Service
—
12,204
71,558
83,762
Capital Projects
—
—
241,451
241,451
Temporary Disability Insurance
—
—
173,571
173,571
Historic Tax Credit Redemption
—
—
67,929
67,929
Transportation-Infrastructure
—
209,336
—
209,336
Mission 360 Loan Program
—
1,864
—
1,864
Education
—
—
347
347
Other
—
—
623
623
Committed to:
Transportation-Maintenance
—
41,835
—
41,835
Other
8,135
—
433
8,568
Assigned to:
Subsequent Years Expenditures
283,539
579
—
284,118
Statutory Reappropriations
8,446
—
—
8,446
Unassigned:
Budget Reserve and Cash Stabilization
227,949
—
—
227,949
Other
91,476
—
—
91,476
Totals
$
897,255
$
265,818
$
705,911
$
1,868,984
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-112
B. Budget Reserve and Cash Stabilization Account
Article IX of the State Constitution requires the maintenance of a State Budget Reserve and Cash
Stabilization Account (the Reserve) within the State’s General Fund. Section 35-3 of the General Laws
specifically establishes the annual minimum balance requirements for the account. For fiscal 2021, 3.0%
of total general revenues and opening surplus are transferred to the Reserve. Amounts in the Reserve in
excess of 5.0% of total general revenues and opening surplus are transferred to the RI Capital Plan Fund
to be used for capital projects.
According to the State Constitution and related enabling laws the Reserve, or any portion thereof, may be
appropriated by a majority of each chamber of the General Assembly, in the event of an emergency
involving the health, safety or welfare of the citizens or to fund any unanticipated general revenue deficit
caused by a general revenue shortfall in any given year.
The General Assembly appropriated the transfer of $120 million from the Budget Reserve and Cash
Stabilization Account as part of the fiscal 2020 supplemental appropriations act to provide resources in
anticipation of revenue reductions and additional expenditures in response to the COVID-19 pandemic.
The Budget Reserve and Cash Stabilization Account is included within Unassigned Fund Balance within
the General Fund but is not considered available for appropriation until specifically made available by the
General Assembly. Amounts appropriated from the Budget Reserve and Cash Stabilization Account are
available to support general revenue expenditure appropriations. At the close of fiscal 2021, the Budget
Reserve and Cash Stabilization Account was almost fully restored.
The State has not adopted any minimum fund balance requirements for any funds beyond the State
Budget Reserve and Cash Stabilization Account within the General Fund.
C. Net Position Restricted for Enabling Legislation
The State's net position restricted by enabling legislation represents resources which a party external to a
government such as citizens, public interest groups, or the judiciary can compel the government to use
only for the purpose specified by the legislation. The government-wide Statement of Net Position reports
$709.4 million of restricted net position, of which $596.3 million is restricted by enabling legislation.
See Note 1, Section S of these Notes for more information regarding the five categories of fund balance.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-113
Note 10. Restatements – Net Position and Fund Balance
Restatements of beginning net position (expressed in thousands) are in the following table:
Fiduciary Funds
Governmental
Activities
Business-
Type
Activities
Discretely
Presented
Component
Units
General
Fund
Private
Purpose
Trusts
Custodial
Funds
Previously reported at June 30, 2020:
Fund Balance
$ 401,770
Net Position
$
(609,814) $
306,186 $ 3,094,967
$ 5,168,052 $
—
Restatement due to:
1) Implementation of GASB
Statement No. 84 - Fiduciary
Activities - reclassification of
certain activities within the
RIHealth and Educational
Building Corporation and
Central Falls School District
(discretely presented
component units) to fiduciary
activities and establishment of
custodial funds
—
—
(14,128)
—
—
73,665
2) Retroactive Medicaid billing
for State Eleanor Slater
Hospital
9,827
—
—
9,827
—
—
3) Change in recognition of
public health personnel costs
at the Eleanor Slater Hospital
reimbursed through federal
CRF
(23,670)
—
—
(23,670)
—
—
4) Correction of interest
income - Convention Center
Authority
—
771
—
—
—
—
5) Correction of revenue -
I-195 Redevelopment
Redistrict Commission
—
—
(16)
—
—
—
6) Correction of commitment
payable - RI Health and
Educational Building
Corporation
—
—
398
—
—
—
7) Change in reporting entity -
inclusion of ABLE Trust as a
Private Purpose Trust
—
—
—
—
1,297
—
8) Reclassification of Health
Source RI Trust from Agency
Funds to Private Purpose
Trusts
—
—
—
—
—
—
Restated Beginning balances at July 1, 2020:
Fund Balance
$ 387,927
Net Position
$
(623,657) $
306,957 $ 3,081,221
$ 5,169,349 $
73,665
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-114
Note 11. Taxes
Tax revenue reported on the Statement of Activities is reported net of the allowance for uncollectible
amounts and net of estimated refunds. Tax revenue on the Statement of Revenues, Expenditures and
Changes in Fund Balances – Governmental Funds is reported net of estimated refunds, uncollectible
amounts and the amount that will not be collected within one year (unavailable). The unavailable amount
is reported as deferred inflows of resources. The detail of the general revenue taxes as stated on the
Statement of Activities and the Governmental Funds Statement of Revenues, Expenditures and Changes
in Fund Balances is presented below (expressed in thousands):
Governmental
Funds
Statement of
Activities
General Fund
Personal Income
$
1,606,554 $
1,609,848
General Business Taxes:
Business Corporations
201,789
202,728
Public Utilities Gross Earnings
93,475
93,475
Financial Institutions
34,856
34,856
Insurance Companies
127,285
127,285
Bank Deposits
3,819
3,819
Health Care Provider Assessment
35,121
35,121
Sub-total - General Business Taxes
496,345
497,284
Sales and Use Taxes:
Sales and Use
1,341,418
1,339,923
Motor Vehicle
682
682
Cigarettes
159,713
159,713
Alcoholic Beverages
22,201
22,201
Sub-total - Sales and Use Taxes
1,524,014
1,522,519
Other Taxes:
Inheritance and Gift
42,986
42,986
Racing and Athletics
404
404
Realty Transfer
17,775
17,775
Sub-total - Other Taxes
61,165
61,165
Total - General Fund
3,688,078
3,690,816
Intermodal Surface Transportation Fund
Gasoline
143,346
143,345
RI Highway Maintenance
74,778
74,778
Other Governmental Funds
234,991
234,991
Total Taxes
$
4,141,193 $
4,143,930
Note 12. Tax Abatements
For financial reporting purposes (GASB Statement No. 77 - Tax Abatements), a tax abatement is defined
as a reduction in tax revenues that results from an agreement between one or more governments and an
individual entity in which (a) one or more governments promise to forgo tax revenues to which they are
otherwise entitled and (b) the individual or entity promises to take a specific action after the agreement
has been entered into that contributes to economic development or otherwise benefits the governments
or the citizens of those governments.
The State of Rhode Island has eleven programs in place to abate taxes. Of the eleven programs, seven
are managed by the State and four are managed by the Rhode Island Commerce Corporation.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-115
For certain economic development programs with tax abatement provisions, the General Assembly
appropriated funds which were paid to the Rhode Island Commerce Corporation (RICC) to fund these
programs. Upon notification by the Division of Taxation, the RICC transfers funds to reimburse the State
for the amount of foregone tax revenue.
The State has issued Historic Tax Credit Preservation Bonds to fund historic tax preservation credits
presented for redemption or as credits to taxes owed to the State. Approximately $67.9 million is available
in the Historic Tax Credit Fund at June 30, 2021.
The following is a summary of taxes abated during fiscal 2021 by tax type (expressed in thousands):
Tax Abatement
Program
Personal
Income
Business
Corporation
Insurance
Companies
Financial
Institutions
Hotel
Tax
Sales
Tax
Non-Profit
Redemption*
Total
Job
Development
Act
$
— $
1,208 $
— $
13,202 $
— $
— $
—
14,410
Motion Picture
Production Tax
Credits
521
1,632
81
—
—
—
—
2,234
Historic
Preservation
Tax Credits
8,958
—
4,162
—
—
—
197
13,317
Tax Credit for
Contributions to
Qualified
Scholarship
Organizations
1,014
—
180
—
—
—
—
1,194
Qualified Jobs
Incentive Tax
Credit
62
—
—
—
—
—
—
62
Tax Increment
Financing
(PILOT)
—
—
—
—
68
405
—
473
Tax Increment
Financing
(Traditional)
—
—
—
—
33
270
—
303
Wavemaker
Fellowship**
93
—
—
—
—
—
—
93
Apprenticeship
Program
—
—
—
—
—
—
—
—
Rebuild Rhode
Island
1,248
150
7,316
—
—
—
—
8,714
Total
$ 11,896 $
2,990 $
11,739 $
13,202 $
101 $
675 $
197 $ 40,800
* Non-profit entities may request payment for the value of historic preservation tax credits awarded in lieu
of a credit to tax liabilities.
** Wavemaker fellows have the option of directly receiving their payments. During the fiscal year ended
June 30, 2021 direct payments made to fellows totaled approximately $1.1 million.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-116
Other Commitments under Tax Abatement Agreements - Certain tax abatement programs include
commitments by the State other than the reduction of taxes.
•
The Wavemaker Fellowship programs include a provision that the entity or individual, as
applicable, may redeem the tax credit for 100% of its value upon fulfilling its responsibilities under
the agreement. During the fiscal year ended June 30, 2021, direct payments made to
Wavemaker fellows totaled approximately $1.1 million.
•
Individual taxpayer information is protected by state and federal laws mandating its confidentiality
and cannot be disclosed without specific statutory authority. To the extent GASB Statement No.
77 – Tax Abatements requires disclosure of such information, the State is legally prohibited from
providing disclosures of individual taxpayer information.
•
Non-profit entities may redeem historic tax credits awarded by payment for the value of the credit
in lieu of a credit to tax liabilities.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-117
The following pages summarize the key provisions of the tax abatement programs authorized by the State
at June 30, 2021.
Program Name:
Job Development Act
Enterprise Zone
Program purpose:
To foster job creation for companies
that create new employment in RI
over a three-year period.
To stimulate jobs growth and
encourage business development in
targeted distressed areas of the State.
Taxes being abated:
Business Corporation, Public Service
Corporation, Financial Institution,
Insurance Company, or Personal
Income
Business Corporation, Public Service
Corporation, Financial Institution,
Insurance Company, or Personal
Income
Authority under which
abatements are entered
into:
Jobs Development Act (RI Gen. Laws
42-64.5-1) and as amended by Rhode
Island New Qualified Jobs Incentive
Act 2015 (RIGL 44-48.3-12)
Distressed Areas Economic
Revitalization Act - Enterprise Zones
(RIGL 42-64.3)
Criteria to be eligible to
receive abatements and
commitment of the
taxpayer:
(1) Subject to a finding of revenue
neutrality based on an economic
impact analysis conducted by RI
Commerce Corporation (RICC); (2)
must be approved by the RICC Board
of Directors; (3) company must show
that "but for" the incentives, the
company is not likely to retain, expand
or add employment in the State, and
that the company has generated new
tax revenue for the State that is at
least equivalent to the value of this
incentive; (4) the company must
maintain a certain level of
employment as stated in the
agreement; (5) new employees must
be paid at least 250% of the State
minimum wage.
A business has to: (1) be physically
located within a State-approved
Enterprise Zone (EZ), (2) be
registered with the State as an EZ
member business, (3) grow its
existing workforce by at least 5%,
consisting of only RI residents, (4)
grow total corporation wages paid
over that of the prior year, (5) obtain
specific letters of good standing from
the State, and (6) receive certification
prior to July 1, 2015.
How taxes are reduced:
Reduction of tax rate.
As a credit to the amount of taxes
owed.
How abatement is
determined:
For example, corporate income tax
may be reduced to as low as 3%.
The reduction equals: 0.20% for every
10 new jobs created for companies
having a baseline employment below
100; or .20% for every 50 new jobs
created, for those companies having a
baseline employment above 100.
Rate reduction(s) discontinued
effective July 1, 2015 except for any
company that qualified prior to July 1,
2015 which may maintain its reduction
so long as it carries out its obligations.
Not more than one type of tax liability
can be used to claim the credit. 50%
of the wages paid a new hire up to a
maximum of $2,500 per new
employee; 75% of the wages paid a
new hire up to a maximum of $5,000
per new employee if that employee
lived within a State-designated EZ.
Unused EZ Tax credits can be carried
forward for up to 3 years.
Recapture provisions:
N/A
N/A
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-118
Program Name:
Qualified Jobs Incentive Tax Credit
Rebuild Rhode Island Tax Credit
Program purpose:
Stimulate business expansion and
attraction, create well-paying jobs for
State residents, and generate
revenues for necessary State and
local governmental services.
Stimulate business development;
retain and attract new business and
industry to the State; create good-
paying jobs for State residents; assist
with commercial and industrial real
estate development; and generate
revenues for necessary State and
local governmental services.
Taxes being abated:
Business Corporation, Public Service
Corporation, Financial Institution,
Insurance Company, or Personal
Income
Business Corporation, Public Service
Corporation, Financial Institution,
Insurance Company, Personal
Income, or Sales and Use.
Authority under which
abatements are entered
into:
Rhode Island Qualified Jobs Incentive
Act of 2015 (RIGL Title 44-48.3)
Rebuild Rhode Island Tax Credit Act
(RIGL 42-64.20)
Criteria to be eligible to
receive abatements and
commitment of the
taxpayer:
(1) Must create minimum number of
new full-time jobs defined in the
statute; (2) new full-time jobs must
earn at least Rhode Island's median
wage; (3) must certify and provide
evidence that without the Tax Credit
the new full time jobs would not occur
within the State; (4) must be approved
by the RlCC Board of Directors; (5)
must perform in accordance with an
executed incentive agreement.
Applicants may be eligible for Tax
Credits for up to 10 years and must
commit to remain in the State for 20%
longer than the total time tax credit is
received.
(1) Applicant must provide equity of at
least 20% of project costs; (2) must
certify and provide evidence that the
project has a financing gap and that
the project is not likely to be
accomplished by private enterprise
without the tax credits; (3) project
fulfills the State's policy and planning
objectives and priorities including
minimum project size, cost, and/or job
creation thresholds; (4) must be
approved by the RICC Board of
Directors; (5) entity must perform in
accordance with an executed
incentive agreement.
How taxes are reduced:
As a credit to the amount of taxes
owed.
As a credit to the amount of taxes
owed.
How abatement is
determined:
The annual benefit for each new full-
time job created is the lesser of (1)
75% of the reasonable State income
tax withholding generated; or (2) a
cap of $2,500 to $7,500 defined in the
incentive agreement and depending
on median salary level, location,
industry, whether the job is being
relocated from out-of-state, number of
new full-time jobs, and capital
investment being made.
Total tax credit calculated as the
lesser of the Project Financing Gap or
30% of Project Costs* up to a
maximum of $15 million. Tax Credits
are available for up to 5 years in
increments ranging from 15% to 30%
of total tax credit beginning in the year
the project is placed in service.
*Tax credits shall not exceed 20%
provided, however, that the applicant
shall be eligible for additional tax
credits of not more than 10% of the
project cost, if the project meets other
specific, additional criteria as defined
in the agreement.
Recapture provisions:
If the Applicant ceases operations in
the State or transfers more than 50%
of the jobs for which a Tax Credit was
granted under the Act to another
state, the Tax Credit shall cease, and
the Applicant shall be liable to the
State for, at a minimum, 20% of all tax
benefits granted to the Applicant.
Projects may be required to repay tax
credits in the event the project
achieves outsize financial returns.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-119
Program Name:
Tax Increment Financing
Wavemaker Fellowship
Program purpose:
Stimulate business development;
retain and attract new business and
industry to RI; create good-paying
jobs for RI residents; assist with
business, commercial, and industrial
real estate development; and
generate revenues for necessary
State and local governmental
services.
Promote economic opportunity and
bring more and higher-paying jobs to
the State; offer educational
opportunity and retraining to
individuals impacted by job loss,
workplace injury, disability or other
hardship; keep young people in the
State; encourage an entrepreneurial
economy in the State.
Taxes being abated:
Business Corporation, Public Service
Corporation, Financial Institution,
Insurance Company, Personal
Income, Hotel, or Sales and Use.
Personal Income
Authority under which
abatements are entered
into:
Rhode Island Tax Increment
Financing Act of 2015 (RIGL
42-64.21)
Stay Invested in RI Wavemaker
Fellowship (RIGL 42-64.26)
Criteria to be eligible to
receive abatements and
commitment of the
taxpayer:
(1) Project must be located in a
qualifying TIF Area; (2) project must
have a financing gap; (3) project must
be either a new facility and not a
replacement or relocation of an
existing facility already located in the
State, an expansion of an existing
facility that will increase the number of
full-time employees in the State, or
necessary to retain one or more At
Risk Businesses; (4) must be
approved by the RICC Board of
Directors; (5) must perform in
accordance with an executed
incentive agreement.
Applicants selected on a competitive
basis by a fellowship committee on a
name-blind and employer-blind basis.
Selected applicants shall meet
specific criteria for education, student
loan debt, and full-time employment
with a Rhode Island-based employer
located in this State throughout the
eligibility period, and employment in a
field specified in the agreement.
How taxes are reduced:
Eligible taxes are reimbursed to the
developer.
As a credit to the amount of taxes
owed. Wavemaker fellows may also
request payment for the value of the
credit awarded.
How abatement is
determined:
Up to 75% of the projected annual
incremental revenues may be
allocated under a TIF agreement.
Total incentive may not exceed 30%
of project costs or the amount needed
to close the financing gap. RICC may
exempt public infrastructure, a
preexisting municipally-owned
stadium of 10,000 seats or greater, or
utilities from the 30% cap.
Awards are limited to $1,000 for an
associate's degree holder, $4,000 for
a bachelor's degree holder, and
$6,000 for a graduate or post-
graduate degree holder, and may not
exceed the education loan repayment
expenses incurred by the selected
taxpayer during each service period
completed, for up to four (4)
consecutive service periods provided
that the taxpayer continues to meet
the eligibility requirements throughout
the eligibility period.
Recapture provisions:
Tax Credits may be denied or revoked
if Applicant's certification or
information is found to be willfully
false; if the Applicant or successor is
convicted of bribery, fraud, theft,
embezzlement, misappropriation, and/
or extortion involving the State, any
State agency or political subdivision of
the State.
Tax Credits may be denied or revoked
if Applicant's certification or
information is found to be willfully
false; if the Applicant or successor is
convicted of bribery, fraud, theft,
embezzlement, misappropriation, and/
or extortion involving the State, any
State agency or political subdivision of
the State.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-120
Program Name:
Motion Picture Production Tax
Credits
Historic Preservation Tax Credits
Program purpose:
To encourage development in Rhode
Island of a strong capital base for
motion picture film, videotape, and
television program productions, in
order to achieve a more independent,
self-supporting industry.
To create economic incentives for the
purpose of stimulating the
redevelopment and reuse of Rhode
Island's historic structures, as well as
to generate the positive economic and
employment activities that will result
from such redevelopment and reuse.
Taxes being abated:
Business Corporation, Public Service
Corporation, Financial Institution,
Insurance Company, or Personal
Income
Business Corporation, Personal
Income, Insurance Tax, Insurance -
HMO.
Authority under which
abatements are entered
into:
RIGL 44-31.2
RIGL 44-33.6
Criteria to be eligible to
receive abatements and
commitment of the
taxpayer:
Primary production locations are to be
within the State of Rhode Island, and
the total production budget must be at
least $100,000. 30% of State certified
production costs incurred that are
directly attributable to activity within
the State.
A certified historic structure is to be
substantially rehabilitated.
How taxes are reduced:
As a credit to the amount of taxes
owed.
As a credit to the amount of taxes
owed. Non-profit entities without tax
liabilities may request payment for the
value of the credit awarded.
How abatement is
determined:
The amount of the credit shall be 30%
of State certified production costs
incurred that are directly attributable
to activity within the State. Motion
picture production tax credit
certificates are issued to the motion
picture production company, or to one
or more transferees to be applied as a
credit to taxes owed.
The Division of Taxation issues a
certificate in the amount of the
qualifying credit for which the
rehabilitation qualifies, up to 20% of
qualified rehabilitation expenditures,
or 25% if a specified portion of the
structure will be made available for a
trade or business. The maximum
credit allowed for any one project is
$5,000,000.
Recapture provisions:
N/A
N/A
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-121
Program Name:
Employer's Apprenticeship Tax
Credits
Tax Credit for Contributions to
Qualified Scholarship
Organizations
Program purpose:
To encourage the creation of machine
tool, metal trade, and plastic process
technician apprenticeships.
To enhance the educational
opportunities available to all students
in Rhode Island.
Taxes being abated:
Business Corporation
Business Corporation, Public Service
Corporation, Bank Tax, Bank
Deposits, Insurance Company,
Personal Income Tax.
Authority under which
abatements are entered
into:
RIGL 44-11-41
RIGL 44-62
Criteria to be eligible to
receive abatements and
commitment of the
taxpayer:
The apprentice must be enrolled in a
registered qualified program through
the RI Department of Labor and
Training's State Apprenticeship
Council. The number of
apprenticeships for which credit is
calculated must exceed the average
number of qualifying apprenticeships
begun in the preceding five years.
A business entity is approved by the
Division of Taxation if the dollar
amount of the tax credit is no greater
than $100,000 in any tax year and if
the scholarship organization qualified
under RIGL 44-62-2. Approvals are
available on a first-come-first-served
basis, with the total aggregate amount
of all tax credits approved not to
exceed $1,500,000 in a fiscal year.
How taxes are reduced:
As a credit to the amount of taxes
owed.
The Division of Taxation issues a
certificate for the amount of credit to
be granted.
How abatement is
determined:
Based on 50% of actual wages paid
to a qualifying apprentice or $4,800,
whichever is less.
Unless a two-year contribution plan is
in place, the credit is computed at
75% of the total voluntary contribution
made. In general, if a two-year
contribution plan is in place, the credit
for each year shall be 90% of the total
voluntary contribution made.
Recapture provisions:
N/A
If the amount of the second-year
contribution is less than 80% of the
first-year contribution, then the credit
for both the first- and second-year
contributions shall equal 75% of each
year's contribution. In such case, the
tax administrator shall prepare the tax
credit certificate for the second year at
75%. The difference in credit
allowable for the first year (15% of the
first-year contribution) shall be
recaptured by adding it to the
taxpayer's tax in that year.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-122
Note 13. Pledged Revenue
The State’s debt supported by pledged revenue is as follows (expressed in thousands):
Revenue Bonds-Tobacco Settlement Financing Corporation
Revenue:
Tobacco settlement revenue-cash basis (a)
$
46,987
Investment income
9
Total revenue
46,996
General and administrative expenses
72
Net revenue available for debt service
$
46,924
Required debt service payments
$
35,507
Covered ratio before turbo principal payments (b)
132.15 %
Turbo redemptions - principal (c)
11,860
Total annual debt service
$
47,367
Covered ratio after turbo principal payments (d)
99.07 %
Term of commitment - through June 2052
Revenue Bonds-GARVEE (Federal Highway)
Revenue - FHWA participation
$
65,517
Less: operating expenses
—
Net available revenue
$
65,517
Debt service
Principal
$
37,305
Interest
28,214
Total debt service
$
65,519
Coverage (b)
100.00 %
Term of commitment - through June 2035
Revenue Bonds-Motor Fuel (Gas Tax)
Revenue - 2 cents per gallon of the gasoline tax
$
8,151
Less: operating expenses
—
Net available revenue
$
8,151
Debt service
Principal
$
3,980
Interest
1,381
Total debt service
$
5,361
Coverage (b)
152.04 %
Term of commitment - through June 2027
(a)
Included for fiscal year 2021 are certain one-time revenue items totaling $12,625,252. A total of
$2,036,738 related to disputed payment amount for 2018, as a settled, not transition, year at 75%
of the 2018 NPM Adjustment disputed payment amount and $10,588,514 related to the NPM
Adjustment 'disputed payment amount for 2020 as a transition year at 100% of Rhode Island’s
potential maximum '2020 NPM Adjustment. The 2020 year was settled on a 75% / 25% split
between the States and PMs with 100% of the potential maximum NPM Adjustment amount paid
to Rhode Island in 2021. A 25% credit of approximately $2,647,129 for the 2020 NPM Adjustment
is due to the PMs in the 2023 payment year.
(b)
Coverage ratio equals net revenue available for debt service divided by required debt service
payments.
(c)
"Turbo" redemption provisions require the Corporation to apply collections that are in excess of
current funding requirements to the early redemption of the bonds.
(d)
Coverage ratio equals net revenue available for debt service divided by total annual debt service.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-123
Note 14. Transfers
Transfers for the fiscal year ended June 30, 2021 are presented below (expressed in thousands):
Transfers
Description
Governmental Funds
Major Funds
General
Major Funds
Intermodal Surface Transportation $
51,761 Debt service and operating assistance
Nonmajor Funds
RI Temporary Disability Insurance
971 Operating assistance
Historic Tax Credit Financing
13,120 Tax credits claimed
Bond Capital
73 Interest earnings transfer
Clean Water
4 Transfer
RI Capital Plan
12 Capital expenditures
Proprietary Funds
Lottery
301,803 Net income transfer
Total General
367,744
Intermodal Surface Transportation
RI Bond Capital
29 Infrastructure funding
Nonmajor Funds
RI Capital Plan
General
120,000 Transfer of FY21 Appropriations
Bond Capital
5,759 Premium on new bonds
Historic Tax Credit Financing
20,000 Transfer of FY21 appropriations
RI Public Rail Corp
Intermodal Surface Transportation
3,264 Operating assistance
Total Nonmajor Funds
145,759
Total Governmental Funds
513,532
Proprietary Funds
Convention Center
General
24,963 Debt service and operating assistance
RI Capital Plan
1,000 Capital improvement
Total Proprietary Funds
25,963
Total Transfers Primary Government
$ 539,495
Note 15. Operating Lease Commitments
The primary government is committed under numerous operating leases covering real property. Operating
lease expenditures totaled approximately $18.6 million for the fiscal year ended June 30, 2021. Most of
the operating leases contain an option allowing the State, at the end of the initial lease term, to renew its
lease at the then fair rental value. In most cases, it is expected that these leases will be renewed or
replaced by other leases.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-124
The following is a summary of material future minimum rental payments (expressed in thousands)
required under operating leases that have initial or remaining lease terms in excess of one year as of
June 30, 2021:
Fiscal Year
Ending June 30
2022
$
15,887
2023
13,364
2024
10,457
2025
9,798
2026
7,913
2027 - 2031
16,139
2032 - 2036
2,278
Total
$
75,836
The minimum payments shown above have not been reduced by any sublease receipts.
Note 16. Commitments
Primary Government
The primary government is committed at June 30, 2021 under various contractual obligations for
transportation infrastructure improvements, construction and renovation of buildings, software
development and implementation, and other capital projects. A substantial portion of the cost of these
projects will be reimbursed by federal grants, with the remainder principally financed with debt proceeds
and Rhode Island Capital Plan Funds.
At June 30, 2021, the primary government had transportation infrastructure design, construction and other
contract commitments of approximately $852 million, and contract commitments for the design,
construction and renovation of buildings of approximately $19 million. At June 30, 2021 the primary
government had software development and implementation contract commitments of approximately $133
million. These amounts include only purchase orders and related amendments generally processed
through June 30, 2021. The State is also committed under multiple contracts for ongoing services which
are not included in these commitment amounts.
RI Public Rail Corporation Letter of Credit
The RI Public Rail Corporation (RIPRC), a special revenue fund, has obtained a letter of credit in the
amount of $7.5 million in favor of AMTRAK to secure RIPRC’s performance of its obligations arising under
any South County Rail Service agreements and bridges over AMTRAK's Northeast Corridor. RIPRC has
been designated as the entity responsible for indemnifying AMTRAK and MBTA, and securing and
maintaining liability insurance coverage to provide funds to pay all or a portion of the liabilities of the
State, the MBTA, and AMTRAK for property damage, personal injury, bodily injury or death arising out of
the South County Commuter Rail Service and Pawtucket/Central Falls Commuter rail station with policy
limits of $295 million, per federal law, subject to a self-insured retention of $7.5 million.
United States Department of Justice Consent Decree
The State of Rhode Island entered in consent decree in April 2014 with the United States Department of
Justice (USDOJ) relating to the statewide day activity service system for individuals with intellectual and
developmental disabilities to remedy any and all violations of the integration mandate of Title II of the
Americans with Disabilities Act (ADA) and Olmstead Decision (Olmstead v. L.C.), that were identified as a
result of the United States’ calendar year 2013 investigation of the State’s day activity service system.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
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The consent decree is intended to ensure that the State will timely meet the requirements of the
integration mandate of the ADA and the Olmstead decision as it pertains to the statewide day activity
service system, which require that the State’s day activity services, including employment and day
services, for individuals with intellectual and developmental disabilities be provided in the most integrated
setting appropriate to meet their needs. The consent decree anticipated that Rhode Island will have
complied with all provisions of the consent decree by the end of State Fiscal Year 2024, unless
terminated, cancelled, or extended.
As the State continues to comply with the terms of the consent decree, recent court orders by the judge
overseeing the consent decree will require a significant investment in upcoming years in the operations
and underlying infrastructure that support the service system for individuals with intellectual and
developmental disabilities. Specifically, the court order requires the State develop and adopt a three-year
budget strategy to, among other things, fund increases in wages to direct support professionals, increase
funding for transportation and technology, and address the costs of transitioning the supports to an
individualized community-based model. These supports are largely met through service providers
contracted by the State. The amount of additional investment, while not currently determined, is expected
to be significant and expended over fiscal years 2022 through 2024, subject to budgetary appropriations.
In October 2021, the court approved (and ordered) terms agreed to by the State and USDOJ. The court
ordered terms would increase the State’s Medicaid reimbursable rate to allow for a significant increase in
the starting wage for direct support professionals through fiscal 2024. This increase is estimated to cost
$34.7 million, with the State’s share approximating $15.5 million. Additionally, the State will establish a
$12 million programmatic transition fund, which shall not supplant or replace existing funding for
intellectual and development disability supports and services and must be used solely for integrated day
activities and supported employment services as defined in the consent decree. It is likely that the
transition fund will be funded with State general revenues. The terms would also commit the State to a $2
million fund for technology acquisition for individuals receiving intellectual and development disability
supports and services.
United States Environmental Protection Agency Consent Decree
RIDOT entered into a Consent Decree with the EPA in 2015 concerning violations of the Clean Water Act
by failing to comply with the conditions in the General Permit – Rhode Island Pollutant Discharge
Elimination System Storm Water Discharge from Small Municipal Separate Storm Sewer Systems. The
Consent Decree requires RIDOT to implement remedial actions necessary in order to address discharges
to impaired waters, illicit discharge detection and elimination, street sweeping pollution prevention and
catch basin and other drainage system component inspection and maintenance. The State has committed
to significant annual investments to implement the remedial actions. The Consent Decree also
incorporates stipulated penalties for RIDOT’s failure to meet specific compliance deadlines. To date,
RIDOT has met all the required milestones and expects to meet all future milestones outlined in the
Consent Decree.
Department of Children, Youth and Families Foster Care Program Settlement Agreement
Children’s Rights of New York (Children's Rights) brought suit against the State in 2007 alleging
constitutional and statutory violations in its foster care programs. Children's Rights sought substantial
changes to these programs, prolonged supervision by a private, outside monitor and attorney's fees. A
judgment was entered in favor of the State in United States District Court for the District of Rhode Island
on April 30, 2014. Children's Rights appealed to the United States Court of Appeals for the First Circuit,
which reversed the judgment and remanded the case to the District Court for additional discovery and
further litigation.
A settlement agreement was approved by the District Court after a fairness hearing in May 2018. The
State began to implement the requirements of the Settlement Agreement. To date, the State has
successfully achieved three of the benchmarks in the Settlement Agreement and has successfully exited
out of the three sections to the agreement. In accord with the terms of the Settlement Agreement, the
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
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State is going through the procurement process to engage a contractor to conduct a work load study. The
purpose of the work load study is to assess what, if any, additional staffing resources are necessary for
the State to achieve compliance on the sections of the Settlement Agreement related to child welfare
practice, A determination on additional staffing resources needs will be made after the agency receive the
results of the workload study.
While the parties have entered into the settlement agreement, pursuant to which the state has paid $3.4
million in attorney’s fees to plaintiffs’ counsel and is providing services, the state may face continuing
exposure for damages and additional attorney’s fees arising out of a challenge to the State’s completion
of agreed benchmarks and entitlement to exit the agreement on several parameters.
Performance-based Agreements
RICC has issued economic development revenue bonds whereby the State will assume the debt if the
employer reaches and maintains a specified level of full-time equivalent employees. The State has
commitments relating to this debt through fiscal 2027. In addition, RICC has committed to funding various
economic development initiatives that are further described in Note 12, Tax Abatements.
Asset Retirement Obligations
The Rhode Island Nuclear Science Center (RINSC) located on the University of Rhode Island's Bay
Campus houses a nuclear reactor. The process by which nuclear reactors are retired from service and
terminate their operating licenses granted by the U.S. Nuclear Regulatory Commission (USNRC) is
referred to as decommissioning. The USNRC regulates the decommissioning of nuclear power plants
and has established requirements that must be adhered to in the process.
In accordance with GASB Statement No. 83 Certain Asset Retirement Obligations a liability for the
estimated cost of decommissioning the nuclear reactor and an offsetting deferred outflow of resources,
each totaling $32.6 million was recorded as of July 1, 2018. In fiscal 2021 an additional $4.0 million was
recorded. The liability was measured using the estimated current value of outlays expected to be incurred
for required decommissioning and post-decommissioning costs. The liability estimate calculation
assumed a post-decommissioning monitoring period of 20 years and a contingency factor calculated
using weighted average probability factors of 25%, 32% and 60%.
The estimated remaining useful life of the nuclear reactor is 37 years as of June 30, 2021. During fiscal
2021 amortization expense of $918 thousand related to the deferred outflow of assets was charged to
general government functions on the Statement of Activities. The total deferred outflows remaining to be
amortized at June 30, 2021 was $34 million.
In accordance with GASB Statement No. 83 Certain Asset Retirement Obligations all relevant factors are
reevaluated annually to determine whether the effect of one or more of those factors is expected to
significantly increase or decrease the expected outlays associated with the liability. Based on the results
of each reevaluation, the liability is remeasured if required.
State Takeover of Providence Public School District
The State, acting through the Council on Elementary and Secondary Education (“Council”) and the Rhode
Island Department of Education (“RIDE”), oversees the performance of schools and school districts that
receive state education aid. This oversight role includes adopting statewide standards for student
performance and annually assessing the performance of individual schools and school districts against
such statewide standards.
Pursuant to the Crowley Act, R.I. Gen. Laws § 16-7.1-5, the State is required to intervene when a school
or school district continually falls short of performance standards. State intervention initially consists of
support and technical assistance. However, when improvement remains lacking, the Act provides that a
school or school district may be reconstituted. Reconstitution “may range from restructuring the school [or
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
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school district’s] governance, budget, program, personnel, and/or may include decisions regarding the
continued operation of the school [or school district].”
RIDE identified the Providence Public School District (the “PPSD”) as consistently among the lowest
performing districts in the State, based on objective criteria such as academic proficiency, absenteeism
and graduation rates. The State, in collaboration with the PPSD, attempted to improve the PPSD through
operational, policy and financial support, all of which were unsuccessful. Thus, pursuant to the Crowley
Act, the State assumed governance and management responsibility for the PPSD for an initial period of
five years, commencing on November 1, 2019, pursuant to the Council’s July 23, 2019 delegation of
authority to the Commissioner, the Commissioner’s October 15, 2019 Order of Control and
Reconstitution, and the Collaboration Agreement between RIDE and the City. The State has appointed an
acting “turnaround superintendent” to manage PPSD operations and develop and implement a
Turnaround Action Plan.
In connection with its takeover of the PPSD, it is conceivable that, under certain circumstances, the State
could be held responsible for budget deficits and other costs relative to the PPSD, subject to the State
appropriations and budget process. Whether, and to what extent, the State could be held responsible for
such budget deficits and other costs is unknown at this time.
Rhode Island Lottery – Master Contract Agreements
Gaming Systems Provider – International Game Technology (IGT)
The Lottery entered into a 20-year master contract with its gaming systems provider granting them the
right to be the exclusive provider of information technology hardware, software, and related services for
all lottery games. This contract is effective from July 1, 2003 through June 30, 2023, and amends all
previous agreements between the parties.
As consideration for this exclusive right, the gaming systems provider paid the Lottery $12.5 million. In
the event that the contract term is not fulfilled, the Lottery will be obligated to refund a pro-rata share of
this amount to the gaming systems provider ($1.25 million at June 30, 2021).
The contract mandates commission percentages ranging between 1.00% and 5.00% of lottery ticket sales
and 1.00% and 2.50% of video lottery net terminal income, depending on the amount of sales in each
category.
Video Lottery Terminal Provider - International Game Technology (IGT)
IGT is also a provider of video lottery terminals and receives compensation equal to 7% of net terminal
income. The Master Contract (as amended) also includes provisions related to premium IGT video lottery
terminals and responsibility for related license fees (IGT) as well as concurrence on agreement on the
promotional points program with the casinos and the Lottery.
Sportsbook - International Game Technology (IGT)
The Lottery also executed a Sports Betting Agreement with IGT to provide, along with its subcontractor,
American Wagering, Inc., D/B/A William Hill US (William Hill), a proprietary sports betting solution for all
sports betting at the Twin River Casino Hotel and the Tiverton Casino Hotel facilities. The initial term of
the software license is five years from launch date (November 26, 2018), and upon mutual agreement of
the parties, there are two successive five-year renewal options. In exchange, IGT has allocated its
revenue share in accordance with RI General Laws 42-61.2-7. In the event of a loss of sports wagering
revenue in a quarterly period, IGT will cover the State’s share of said loss interest free until a subsequent
invoicing period is sufficient to cover said prior period loss.
During July 2019, the Lottery executed the first amendment to the Sports Betting Agreement authorizing
IGT to supply the equipment, software, and services for online sports wagering using mobile devices.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-128
This is in accordance with authorized sports wagering legislation enacted in June 2019. Effective April 30,
2020 the Division is responsible for two-thirds (2/3) payment of all transaction processing fees.
The Sports Betting Agreement was further amended in January 2020 to authorize IGT additional
responsibilities for the provision of certain fraud and security services, as wells as, cash fund
management services in connection with the online sports wagering agreement executed in July 2019. In
consideration of these additional services, the Division invoices Twin River Casino Hotel and remits
payment to IGT a fixed monthly fee of $20,000 since the launch of online sports wagering, with the initial
month pro-rated. As of August 12, 2020, the fraud and security services were assumed by Twin River. The
monthly fees collected by the Lottery and remitted to IGT have been reduced to $12,000 per month in the
aggregate to reflect Twin River’s assumption of these responsibilities.
Licensed Gaming Facilities (Twin River Casinos)
Twin River Worldwide Holdings, Inc. purchased the Bally’s brand previously owned by Caesars
Entertainment, Inc. and as a result, the Lottery’s licensed gaming facilities are owned and operated by
Bally’s Corporation and operate as Twin River – Lincoln (Twin River Casino Hotel) and Twin River –
Tiverton (Tiverton Casino Hotel).
Both licensed facilities operate under a common Master Contract with options to extend the agreement for
two additional five (5) year terms commencing on July 18, 2020 and July 17, 2025 and continuing until
July 17, 2030. Certain extensions are contingent on the owners’ compliance with full-time employment
mandates. The contract entitles the owners to compensation ranging from 26% to 28.85% of video lottery
net terminal income at the facility.
The Master Contract reflects the statutory authorization of a promotional points program at the licensed
gaming facilities. For fiscal year 2021, each facility’s allowable promotional points are 20% of prior year
net terminal income plus $750,000. In fiscal 2021, Twin River – Lincoln and Twin River – Tiverton were
authorized and issued approximately $43.8 million and $15.0 million, respectively, in promotional points to
facility patrons.
The Lottery is required to reimburse the Twin River casinos for allowable marketing expenses incurred at
the same percentage as the Lottery’s share of net terminal income for the fiscal year 2021 (60.61% for
Twin River -Lincoln and 58.80% for Twin River - Tiverton). For fiscal 2021, the Lottery accrued $315,336
and $356,622 in reimbursable marketing expenses for Twin River – Lincoln and Twin River – Tiverton,
respectively.
Table games are operated at the Twin River Casino Hotel and Tiverton Casino Hotel. Commissions for
both casino facilities and the respective host community were 83.5% and 1%. In June 2021, legislation
enacted required a guaranteed minimum $3 million payment to be made to the Towns of Lincoln and
Tiverton, RI from net table games revenue and video lottery net terminal income, with any shortfall coming
from the State’s share of table games net revenue and video lottery net terminal income. In fiscal year
2021, there was a shortfall to the Town of Tiverton, RI, therefore the State was required to make a
payment of $1,613,473 to bring their minimum required payment up to $3 million.
The Lottery also entered into a Sports Wagering Hosting Agreement with Twin River to host in-person and
on-line sports wagering. The agreement entitles the owners to compensation of 17% of sports wagering
revenue generated at the facilities. The agreement can be extended for two five-year periods so long as
there is a master video lottery terminal contract between the relevant parties. The first amendment to the
sports wagering hosting agreement allowed Twin River to host, manage and enable players to participate
in online sports wagering including validation and registration of players.
During the term of the first amendment, Twin River remits to the Division $20,000 per month for fraud,
security, and cash fund management services (performed by IGT). Twin River has the option, upon
approval by the Division, to assume any or all of these services. As of August 12, 2020, the fraud and
security services were assumed by Twin River. The monthly fees collected by the Lottery and remitted to
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
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IGT have been reduced to $12,000 per month in the aggregate to reflect Twin River’s assumption of these
responsibilities.
Discretely Presented Component Units
R.I. Resource Recovery Corporation
Landfill closure and post-closure:
The Environmental Protection Agency (EPA) established closure and post-closure care requirements for
municipal solid waste landfills as a condition for the right to currently operate them. The landfill operated
by RIRRC has been segregated into six distinct phases. Phases I, II, III and IV were closed by RIRRC in
prior years. In 2005, the Corporation began landfilling in Phase V, which is near capacity and has
temporarily stopped accepting waste. In December 2015, RIRRC began accepting waste in Phase VI.
A liability for closure and post-closure care of $110.0 million as of June 30, 2021 has been recorded in the
statement of net position, as summarized by Phases below:
Year ended
June 30, 2021
Phase I
$
700,263
Phase II and III
18,365,775
Phase IV
19,289,601
Phase V
41,626,306
Phase VI
29,381,589
Other
587,062
$
109,950,596
As of June 30, 2021, the remaining total estimated current cost to be recognized in the future as landfill
closure and post-closure care expense, the estimated percent of landfill capacity used and the estimated
remaining years for accepting waste are as follows:
Estimated
remaining costs
to be
recognized
Estimated
Capacity
Used
Estimated
remaining years
for
accepting waste
Phase V
$
3,637,835
91.96 %
13 months
Phase VI
$
78,574,969
27.22 %
19 years 5
months
As of June 30, 2021 RIRRC revised its estimate for future pollution remediation and landfill closure and
post-closure care costs. The revised estimate resulted in a $8.4 million increase of the corresponding
liability from $115.7 million at June 30, 2020 to $124.1 million at June 30, 2021.
Amounts provided for closure and post-closure care are based on current costs. These costs may be
adjusted each year due to changes in the closure and post-closure care plan, inflation or deflation,
technology, or applicable laws or regulations. It is reasonably possible that these estimates and
assumptions could change in the near term and that the change could be material.
Included in the restricted component of net position at June 30, 2021 is $78.0 million placed in trust to
meet the financial requirements of closure and post-closure care related to Phases II, III, IV, V and VI.
RIRRC plans to make additional trust fund contributions each year to enable it to satisfy these and future
costs.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-130
Pollution remediation obligations:
Amounts provided for pollution remediation obligations are based on current costs. These costs may be
adjusted each year due to changes in the remediation plan, inflation or deflation, technology, or applicable
laws or regulations. It is at least reasonably possible that these estimates and assumptions could change
in the near term and that the change could be material.
Changes in the pollution remediation obligation for the year ended June 30, 2021 is as follows:
Balance,
June 30, 2020
Additions
Reductions
Balance, June
30, 2021
Current
Portion
$
13,193,377 $
992,881 $
— $
14,186,258 $
935,746
In prior years, the EPA issued administrative orders requiring RIRRC to conduct environmental studies of
the Central Landfill and undertake various plans of action. Additionally, in 1986, the Central Landfill was
named to the EPA's Superfund National Priorities List.
During 1996, RIRRC entered into a Consent Decree with the EPA concerning remedial actions taken by
RIRRC for groundwater contamination. The Consent Decree, which was approved by the U.S. District
Court on October 2, 1996, required the establishment of a trust fund in the amount of $27 million for
remedial purposes. The balance of the trust fund totaled $49.5 million as of June 30, 2021.
In 2004, RIRRC began the capping project for the Superfund site and continued to revise its estimates for
leachate pretreatment costs and flows. RIRRC has recorded a liability for future remediation costs of
approximately $14.2 million as of June 30, 2021.
R.I. Public Transit Authority
The R.I. Public Transit Authority is committed under various contracts in the amount of $19.7 million at
June 30, 2021.
Quonset Development Corporation
Quonset Development Corporation (QDC) has entered into a $33.6 million contract to rehabilitate a pier at
the Port of Davisville funded by GO debt, RICAP appropriations from the State and QDC resources. As
of June 30, 2021, the remaining commitment totaled $13.5 million.
R.I. Airport Corporation
The R.I. Airport Corporation has active construction projects expected to be funded from available
resources and future operations that relate to certain airport improvements. As of June 30, 2021, RIAC's
commitments with contractors were approximately $21.8 million.
Other Component Units
Other component units have various commitments arising from the normal course of their operations.
These commitments are not significant, overall, to the State’s financial statements.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-131
Note 17. Contingencies
COVID-19 Global Pandemic
On March 11, 2020 the World Health Organization declared a pandemic following the outbreak of
COVID-19. On March 9, 2020 the Governor of the State of Rhode Island declared a state of emergency
due to the dangers to health and life posed by COVID-19. The COVID-19 pandemic continues to have an
adverse impact to state operations. Significant costs have been incurred to maintain public health and
respond to the economic fallout. In addition, the pandemic has had a negative impact on certain state
revenues, especially revenues related to the Rhode Island Lottery because of business closings or
limitations to the hours of operations. Additionally, impacts to the hospitality industry continue to have a
negative impact to the overall State economy during this ongoing public health emergency.
Primary Government
The American Rescue Plan (ARPA) was passed by Congress on March 10, 2021 and signed into law on
March 11, 2021. ARPA continues many of the programs started by the CARES Act (2020) and
Consolidated Appropriations Act (2021) by adding new phases, new allocations, and new guidance to
address issues related to the continuation of the COVID-19 pandemic through direct federal grants to
state agencies. The State received $1.13 billion of state fiscal recovery funds in addition to other direct
agency federal assistance. The $1.13 billion is subject to appropriation which is expected to happen
during the 2022 legislative session.
The State of Rhode Island received $1.25 billion from the Coronavirus Relief Fund (CRF) during the year
ended June 30, 2020. The State expended approximately $255 million of those funds during fiscal 2020.
The remaining funds totaling $995 million were fully obligated or expended during calendar 2021 as
required by the Act and subsequent guidance provided by the U.S. Treasury.
The State has utilized a significant portion of its CRF to administer assistance programs for a variety of
individuals and businesses subject to eligibility criteria. The assistance has been in the form of grants or
forgivable loans subject to meeting established requirements. Any funding subsequently determined to be
ineligible based on program requirements was recovered and reprogrammed for eligible COVID-19
expenditures.
In addition, the federal government expanded the Stafford Act to provide significant funding for pandemic
related expenses through Federal Emergency Management Agency (FEMA) disaster related assistance.
Pandemic related expenses incurred by the State during fiscal 2021 likely to be reimbursed by FEMA
during fiscal 2022 exceeded $200 million. These expenditures included costs to maintain alternative
hospital sites, the procurement of personal protective equipment and vaccine related costs. Significant
federal assistance has also been received to support benefits to unemployed individuals including
supplemental benefits and benefits to self-employed individuals.
We expect pandemic related costs to continue throughout fiscal 2022 and potentially longer. Both the
extent of expenditures required to continue to address the costs of the pandemic and additional
assistance from the federal government to assist with these costs continues to evolve. In addition, it is
expected that significant costs will be incurred by the State to administer testing sites and vaccine
distribution programs.
Component Units
•
There has been significant disruption to the hospitality industry during fiscal years 2021 and 2020,
including the closing of the Rhode Island Convention Center Authority (RICCA) operations during
March 2020. RICCA operations include the management of the R.I. Convention Center, the
Dunkin’ Donuts Center and the Veterans Memorial Auditorium Arts and Cultural Center. While the
disruption is currently expected to be temporary, there is considerable uncertainty about the
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-132
duration. The State has utilized the RICCA for a wide array of COVID-19 response activities,
including alternative hospital site operations, public testing site and information broadcasts, which
assisted RICCA to manage revenue losses associated with the disruption of normal operations.
•
The pandemic and resulting restrictions have caused significant disruption in aviation activity and
passenger traffic at the Rhode Island Airport Corporation.
•
Precautionary measures to slow the spread of COVID-19 were ordered that have affected the
Rhode Island Public Transit Authority’s operations resulting in decreased ridership and fares,
decreased State gas tax revenues and increased operating costs for cleaning and additional
buses.
•
The University of Rhode Island, Rhode Island College and Community College of Rhode Island
had a decrease in the number of students living on campus due to the pandemic and the offering
of online classes. In addition, a class action lawsuit was filed against the University of Rhode
Island in June 2020 claiming the plaintiffs suffered academic harm after the spring semester 2020
transitioned to distance learning. This case is still in the discovery phase.
Some component unit entities have also received direct federal assistance from the CARES Act to
manage the impacts to those industries relating to the pandemic. While the disruption of normal
operations to the above component units is expected to be temporary, there is considerable uncertainty
about the duration and extent to which these entities will be impacted by the global pandemic and the
need for additional State or federal assistance as the public health emergency persists.
Primary Government - Litigation Contingencies
The State, its departments, agencies, officers and employees are defendants in numerous lawsuits and
other proceedings. For those cases in which it is probable that a material loss has or will occur and the
amount of the potential judgment can be reasonably estimated or a settlement or judgment has been
reached but not paid, the State has recognized a liability within its financial statements. Significant
contingencies are discussed below.
American Trucking Associations, Inc. et al. v. Alviti
The American Trucking Associations and four trucking companies have sued the State in federal district
court alleging that the statute authorizing only tractor-trailer tolling violates the Dormant Commerce
Clause of the United States Constitution. The matter is currently pending and a trial start is possible
during fiscal 2022. The State receives about $45-50 million per year in revenue from the tolling and this
federal court litigation seeks to enjoin or stop the receipt of revenue but does not seek damages or
restitution for tolls previously paid. It is possible that if the plaintiffs are successful, other litigants could file
suit seeking the payment of damages or restitution for prior tolls charged.
K.L. Class v. R.I. Council on Elementary and Secondary Education, et. al.
A student, through their parents and on behalf of a class of similarly situated individuals, filed suit in
federal court arguing that Local Education Agencies in the State must provide free appropriate public
education to students with a disability who have not earned a regular high school diploma until the age
of 22. Such services have historically been provided until the age of 21. On appeal of a district court
decision in favor of the State, the First Circuit Court of Appeals reversed the district court , held in favor of
Plaintiffs and remanded the case to the trial court to determine remedies.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-133
Taxpayer v. Tax Administrator
This case is pending in Sixth District Court as a tax appeal. A taxpayer seeks a refund for five prior years
of contested tax payments (assessed tangible personal property tax) in the collective amount of
approximately $28 million including interest and challenges the method of depreciation, which would
result in recalculation of the State’s assessments regarding its equipment and assets. Management is
contesting the case vigorously and believes they will be successful.
Over 99% of the collected tax payments are forwarded to municipalities. Therefore, an adverse verdict
would impact each city and town regarding future tax payments which would be reduced to cover any
amount awarded to the Plaintiff.
A.C. et al. v. Gina Raimondo, et al.
The State has been sued by the Rhode Island Center for Justice alleging that the State has “downgraded
the teaching of social studies and civics” and thereby violated students’ rights under the Equal Protection,
Privileges and Immunities and Due Process Clauses of the Fourteenth Amendment, the Sixth and
Seventh Amendments, as well as the Guarantee Clause of Art. 4, § 4 of the United States Constitution.
The First District US Court of Appeals upheld the lower court ruling in favor of the State. However, the
plaintiffs are likely to appeal to the U.S. Supreme Court.
Chariho Regional School District, et al. v. RIDE, et al.
This matter includes the Council on Elementary and Secondary Education and the R.I. Department of
Administration as defendants. Chariho alleges RIDE breached an agreement concerning the transfer of
ownership of the Chariho Career and Technical Center by allowing other communities in the county to
operate career and technical programs. Defendants' joint motion to dismiss was granted March 20, 2017.
On May 26, 2017, plaintiffs filed an appeal to the R.I. Supreme Court. The Supreme Court remanded the
case back to Superior Court for trial on May 30, 2019. A hearing on a motion to dismiss by one of the
defendants was held in November, 2019. The Court denied that motion. The case is currently in the
discovery phase.
Liberty v. Rhode Island Department of Corrections (RIDOC)
This case is a putative class action brought by Disability Rights of Rhode Island and the ACLU National
Prison Project in the name of six named individuals who were/are inmates at the RIDOC. The Complaint
alleges that the RIDOC violates the ADA and the constitutional rights of inmates who have severe and
persistent mental illness when the inmate is placed in administrative or disciplinary confinement. The
relief sought includes injunctive relief regarding DOC’s policies, practices and programs as well as
seeking to have an expert appointed to assess DOC’s confinement and make recommendations. The
case is currently in discovery with mediation on-going. The State will contest any claim for class
certification as well as defending the lawsuit on the merits.
Tobacco Master Settlement Agreement - Tobacco Settlement Financing Corporation
In 1998, Rhode Island, along with 45 other states, the District of Columbia and 5 territories, entered into
the Master Settlement Agreement (MSA) with major tobacco manufacturers (the Participating Tobacco
Manufacturers, or “PMs”) to provide restitution for damages arising from the use of tobacco products. The
terms of the MSA include annual payments to all States and territories in perpetuity. The State assigned
all revenues from the MSA to the Tobacco Settlement Financing Corporation (TSFC) which in turn used
those committed revenues to secure its bonds. The bonds are payable both as to principal and interest
solely out of the assets of TSFC and do not constitute an indebtedness of or a general, legal or “moral”
obligation of the State or any political subdivision of the State.
The annual payments are subject to numerous adjustments including the non-participating manufacturer
(NPM) adjustment which reduces the amount of the annual payment and is applicable to each State
found by an arbitration panel not to have diligently enforced the qualifying statute. States found not
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-134
diligent share the cost of the annual NPM adjustment which is applied against the next annual MSA
payment. It is unknown how much of Rhode Island’s MSA revenues would be at risk in a given year due
to this adjustment, however, no State can lose more than its entire annual payment.
As of September 2020 NPM adjustments have been settled through 2022. Future NPM adjustment claims
remain possible for calendar year 2023 and all future years. This could result in the TSFC receiving less
revenue than assumed in out-year projections, potentially impacting its ability to service its debt
obligations. Should the PMs be determined with finality to be entitled to a full NPM adjustment in a future
year, this could have a material adverse effect on the amounts of tobacco settlement revenues available
to the TSFC to make turbo redemptions and other debt service payments on its debt obligations.
Also, any failure on the part of the PMs to perform their obligations under the MSA and/or related
agreements could also have a material adverse effect on receipt of future tobacco settlement revenues. A
reduction in the amount of tobacco settlement revenues received could affect the TSFC’s ability to make
turbo redemptions and other debt service payments on its debt obligations.
Future payments may be impacted by a number of factors including, but not limited to, future or potential
litigation against the tobacco industry, changes in the financial condition of the tobacco companies and
sales of tobacco products.
For additional information about these matters, please refer to the separately issued Tobacco Settlement
Financing Corporation financial statements for the year ended June 30, 2021.
Lottery
The Lottery’s master contracts with its video lottery facilities contain revenue protection provisions in the
event that existing video lottery facilities incur revenue losses caused by new gaming ventures within the
State.
The Lottery’s gaming operations currently compete with casinos in nearby Connecticut and
Massachusetts. The Lottery and the State continually monitor the risk to gaming operations resulting
from competition in nearby states.
The Narragansett Indian Tribe filed a complaint against the State of Rhode Island in the Rhode Island
Superior Court on or about September 28, 2011, challenging, inter alia, the constitutionality of the Rhode
Island Casino Gaming Act (“Act”) on the grounds that it would not be "state-operated" and the Act
"delegates unconstitutional authority to a private corporation.” On or about June 29, 2012, the Rhode
Island Superior Court found that the Narragansett Indian Tribe had not sustained their burden of proof
beyond a reasonable doubt that the Act is facially unconstitutional. The Narragansett Indian Tribe filed a
notice of appeal of that decision with the Rhode Island Supreme Court. On or about March 4, 2015, the
Rhode Island Supreme Court issued a decision upholding the Superior Court’s decision. The remaining
issue in the case relating to whether the State “operates” the Twin River - Lincoln and Twin River -
Tiverton facilities remains pending in the Superior Court. If the tribe were to prevail, there could be a
significant impact on the State's gaming revenue.
A plaintiff has filed suit against the Division of Lottery and Department of Administration challenging the
constitutionality of sports betting in Rhode Island. The complaint asserts that the conduct of State
operated sports betting in Tiverton and Lincoln violates the express constitutional requirement of voter
approval and must be declared unconstitutional and enjoined until and unless the voters of Rhode Island
approve sports gambling at duly authorized statewide and local elections. The complaint was dismissed
once by the Rhode Island Superior Court due to a lack of standing by the Plaintiff, but subsequently the
Court permitted the Plaintiff to refile an amended complaint. The parties then filed summary judgement
motions. On June 1, 2020, the Rhode Island Superior Court issued a decision where it found that the
legislation enabling sports betting did not impermissibly expand the location of gambling and that the acts
are constitutional. The case is currently in full briefing before the Rhode Island Supreme Court. State
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-135
revenues collected from Twin River Casino and Tiverton Casino would be affected if a court were to enjoin
or otherwise restrict sports wagering.
Federal Assistance
The State receives significant amounts of federal financial assistance under grant agreements or joint
state/federally financed programs which specify the purpose of the grant and conditions under which the
funds may be used. Generally, these grants are subject to audit. The Single Audit for the State of Rhode
Island is submitted to the Federal Single Audit Clearinghouse annually by the State. The Single Audit
reports instances of federal non-compliance, questioned costs, and other matters to federal grantor
agencies regarding the State’s administration of federal programs. These matters could result in federal
disallowances and/or sanctions upon review by the respective federal agencies. The fiscal 2021 Single
Audit is in progress. It is anticipated that there will be additional questioned costs identified in that audit.
Adjustments have been made to the financial statements when costs have been specifically disallowed by
the federal government or sanctions have been imposed upon the State and the issue is not being
appealed or the right of appeal has been exhausted.
Eleanor Slater Hospital Medicaid Claiming – The State-operated Eleanor Slater Hospital (ESH)
suspended billings to Medicaid early in fiscal 2020 for Medicaid-eligible patients due to concerns relating
(1) the allowability of certain services billed to Medicaid, (2) compliance with federal regulations regarding
the classification and ratio of ESH medical and psychiatric patients (Institute for Mental Disease (IMD)
compliance regulations) and (3) federal approval of the ESH’s Medicaid reimbursement rate development
process. The Executive Office of Health and Human Services (EOHHS) (State Medicaid Agency) sought
approval of a State Plan Amendment (SPA) from the Centers for Medicare and Medicaid Services (CMS).
CMS approved the SPA, which formalized approval of the ESH’s cost reimbursement methodology for
establishing a per diem billing rate. The approved SPA allowed ESH to recommence billing for Medicaid
eligible individuals as of the April 1, 2020 effective date. EOHHS also obtained an independent
assessment of all ESH patients as to their primary classification as medical or psychiatric. That patient
classification verification along with previously approved IMD measurement intervals yielded data that
supported recommencement of Medicaid billing. The State has recognized retroactive billing for Medicaid
eligible individuals in the financial statements for fiscal 2021 including restatement of prior year balances
to reflect the retroactive Medicaid billing for periods in fiscal 2020.
ESH’s continued compliance with the federal IMD regulations is not assured as it is subject to continued
measurement and contingent upon the mix of patients (medical and psychiatric) at the prescribed
measurement intervals. ESH was not in compliance for the months of May and June 2021 and for periods
subsequent to June 30, 2021.
ESH has been subject to inquiries by the Centers for Medicaid and Medicare Services and the State
Attorney General’s Medicaid Fraud Control Unit. The possibility that prior claiming activity could be
deemed noncompliant with federal regulations remains. Efforts continue to potentially restructure the ESH
with the goal of increasing the likelihood of IMD compliance and the ability to seek Medicaid
reimbursement for eligible patients.
Medicaid Managed Care Contracts – The State contracts with three Managed Care Organizations
(MCOs) to provide capitated healthcare coverage for individuals eligible for Medical Assistance.
Premiums paid for this health coverage approximate $2 billion annually. Contracts with the MCOs include
a variety of settlement provisions that often don’t finalize until 16 months after year-end once all claims for
the coverage period have processed. Expected final settlements are reflected in the State’s financial
statements, however, a variety of factors could result in additional amounts being owed to or from the
Medicaid Program upon settlement completion.
Unemployment Insurance Benefit Fraud – Due to the impact of the global pandemic, a significant
increase in the number of applicants and the amount of benefits paid to unemployed individuals occurred
during fiscal 2020 and 2021. Rhode Island, as well as a number of other states, has experienced,
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-136
concurrently, a significant increase in fraudulent claims for unemployment benefits. The State has
implemented multiple objectives to attempt to prevent and detect fraudulent claims; however, the State
Department of Labor and Training has estimated that a significant amount of fraudulent claims were paid
during fiscal 2020 and 2021. Recoveries or collections of these fraudulent benefits, if any, will be refunded
to the federal government. The State Department of Labor and Training continues to quantify the amount
of benefits considered fraudulent, however, the actual extent to which benefits have been obtained
fraudulently may be significantly greater.
Challenges to Pension Reforms
The 2009, 2010 and 2011 legislative pension reforms resulted in numerous lawsuits against the State
brought by current and retired employees, as well as their unions. Of these lawsuits, two remain pending
as described below.
In September 2014, a case challenging pension reforms was commenced by the Rhode Island State
Troopers Association in Superior Court. The State and ERSRI filed motions to dismiss which were heard
on December 13, 2019. A decision on the motions was made on January 10, 2022 which allowed the
case, in part to go forward in the litigation process. The State intends to vigorously defend this lawsuit.
In March 2020, a case challenging the Rhode Island Retirement Security Act and/or a settlement
agreement related to legal challenges to pension reforms approved by the Court in July 2015 was
commenced by numerous plaintiffs who were part of the class action in the Rhode Island Federal District
Court against the State and ERSRI as co-defendants. The co-defendants have filed a motion to dismiss,
which remains pending.
Component Units - Other
R.I. Industrial-Recreational Building Authority (RIIRBA)
The R.I. Industrial-Recreational Building Authority (RIIRBA) is authorized to insure contractual principal
and interest payments required under first mortgages and first security agreements issued to private
sector entities by financial institutions and the Rhode Island Industrial Facilities Corporation (RIIFC), a
component unit of the State, on industrial or recreational projects in the State up to a maximum of $60
million of outstanding principal balances under such insured mortgages and security agreements.
Losses, if any, are first payable from RIIRBA’s available resources. RIIRBA must then request
appropriations of the General Assembly for any losses in excess of insured amounts. RIIRBA’s insurance
guarantee is backed by the full faith and credit of the State.
At June 30, 2021, RIIRBA has insured contractual principal and interest payments required under first
mortgages and first security agreements principally for land and buildings of manufacturing and
distribution entities located throughout Rhode Island. Principal balances outstanding under first
mortgages and first security agreements insured by RIIRBA at June 30, 2021 are $7.5 million.
RIIRBA insures a bond issued by RIIFC on behalf of a private sector entity. During the year ended June
30, 2012 the private sector entity defaulted on its payments to the bond holder and RIIRBA assumed
responsibility for making the debt payments. In July 2018, a mediation settlement in connection with a
pending case in the Providence Superior Court was entered into and approved with a formal vote by the
board of the Authority. This settlement resulted in a payment of $1.5 million to the Rhode Island Industrial
Recreational Authority replenishing existing available financial resources. Bond payments will continue to
be made by first exhausting RIIRBA’s available financial resources and if losses related to the default
exceed available resources, the Authority will then request appropriations of the Rhode Island General
Assembly for any loss in excess of the insured amount. The insured commitment, which is included in
total liabilities on the accompanying Statement of Net Position, amounts to $2.3 million at June 30, 2021.
No request has been made to the General Assembly at June 30, 2021 for appropriations to satisfy any
liability under the insurance guarantee.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-137
R.I. Housing and Mortgage Finance Corporation (RIHMFC)
RIHMFC is party to financial instruments with off-balance sheet risk in connection with its commitments to
provide financing. Such commitments expose RIHMFC to credit risk in excess of the amounts recognized
in the accompanying statement of net position. RIHMFC’s exposure to credit loss in the event of
nonperformance by the borrowers is represented by the contractual amount of such instruments. Total
credit exposure as a result of loan commitments at June 30, 2021 is $97.8 million.
University of Rhode Island
On September 23, 2019, a family filed suit against the University of Rhode Island and the Council for
Postsecondary Education, in the death of a family member, who drowned at the Tootell Aquatic Center at
the University. Discovery is ongoing. The impact of this matter, if any, cannot presently be determined.
R.I. Airport Corporation (RIAC)
In April of 2017, two Transportation Security Administration ("TSA") employees filed lawsuits against RIAC
stemming from a 2015 incident. Plaintiffs alleged negligence after suffering from carbon monoxide
poisoning from airline equipment located near TSA office space at the airport. RIAC filed a cross claim
against the airline seeking contractual indemnification under the lease and operating agreement.
Insurance coverage for the defense has been provided through an aviation commercial liability policy
effective July 1, 2015. The policy provides coverage up to a limit of $200 million per occurrence. The
insurer issued a coverage position letter to RIAC on May 10, 2017, stating that it would provide RIAC with
defense subject to a reservation of rights as to whether coverage for the claims asserted were excluded
by certain policy exclusions.
In October 2021, the jury returned a verdict against RIAC and awarded the plaintiffs a total of $46 million.
RIAC is appealing and the process will likely remain ongoing for months.
On December 2, 2021, RIAC was served with a declaratory judgement complaint filed in federal court by
the issuer. The issuer is seeking a declaratory judgement that they do not owe RIAC coverage, indemnity
or defense citing a "noise and pollution" exclusion. RIAC challenges this position. The outcome cannot
be determined and will not be know for several months.
Other Component Units
Other component units have various contingent liabilities that have arisen in the normal course of their
operations. These contingencies are not significant to the State’s financial statements.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-138
Note 18. Employer Pension Plans
A. Summary of Employer Plans
The State provides pension benefits for its employees through multiple retirement benefit plans as
outlined below (expressed in thousands):
Plan
Plan Type
Covered employees
FY 2021 pension
expense (credit)
Net pension
liability at
June 30, 2020
measurement
date
A
Employees'
Retirement
System (ERS)
Cost-sharing multiple-
employer defined benefit
plan – advance funded
through a trust
State employees excluding state
police and judges:
Governmental activities
$221,771
$2,044,888
Business-type activities
$3,098
$21,652
Special funding – teachers - state
share (see Note Section 18-E)
$137,834
$1,361,982
B
State Police
Retirement
Benefits Trust
(SPRBT)
Single-employer defined
benefit plan – advance
funded through a trust
State Police hired after July 1,1987
$8,482
$33,903
C
Judicial
Retirement
Benefits Trust
(JRBT)
Single-employer defined
benefit plan -– advance
funded through a trust
Judges appointed after December
31, 1989
$2,657
$8,904
D
RI Judicial
Retirement Fund
Trust (RIJRFT)
Single-employer defined
benefit plan – advance
funded through a trust
Covers 7 judges appointed prior to
January 1, 1990
$2,218
$21,338
E
State Police
Retirement Fund
Trust (SPRFT)
Single-employer defined
benefit plan – advance
funded through a trust
State Police hired before July 1,
1987
$9,301
$154,720
F
Judicial Non-
Contributory
Retirement Plan
(JNCRP)
Single employer defined
benefit – non trusteed –
pay-as-you-go plan
Judges appointed before January
1, 1990 who retired before July 1,
2012
$11,487
$46,533
Totals
$396,848
$3,693,920
G
LIUNA – union
plan for members
of the LIUNA
bargaining units
Cost-sharing multiple
employer defined benefit
plan – “Taft-Hartley”
non-governmental plan
Members of the LIUNA bargaining
unit.
Not applicable
(see note below)
Not applicable
(see note below)
H
ERS – Defined
Contribution Plan
Multiple-employer
defined contribution plan
State employees subject to the
“hybrid” defined benefit/defined
contribution plan provisions
$5,400
Not applicable
I
FICA Alternative
Retirement
Income Security
Program
Single-employer defined
contribution plan
State employees not eligible to
participate in the State’s other
defined benefit plans
Not applicable
Not applicable
Employer pension expense and related liabilities and deferred inflows of resources/deferred outflows of
resources for defined benefit plans A-E as identified above are recognized in the financial statements
based on the provisions of GASB Statement No. 68.
Employer pension expense and related liabilities and deferred inflows/outflows for defined benefit plan F
as identified above are recognized in the financial statements consistent with the provisions of GASB
Statement No. 73 Accounting and Financial Reporting for Pensions and Related Assets That Are Not
within the Scope of GASB Statement No. 68, and Amendments to Certain Provisions of GASB
Statements No. 67 and 68. The State provides these benefits on a pay-as-you-go basis rather than
through an advance funding arrangement and a qualifying trust.
The LIUNA sponsored, cost-sharing, multiple-employer pension plan (plan G) is not a state or local
government pension plan. As there is no required employer contribution for covered employees, no
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-139
employer pension expense is reflected in these financial statements. Consistent with the requirements of
GASB Statement No. 78, there is no recognition of an employer proportionate net pension liability, if any.
Pension expense recognized for the defined contribution plans (H and I) – is recognized based on actual
employer contributions required and made during the fiscal year consistent with the requirements of
GASB Statement No. 68 regarding defined contribution plans. There is no required employer contribution
to the FICA Alternative Retirement Income Security Program.
Plan membership, based on the June 30, 2019 actuarial valuations (with the exception of JNCRP which
has a June 30, 2020 valuation date), is summarized in the table below:
Retirees and
beneficiaries
Terminated
plan members
entitled to but
not yet
receiving
benefits
Active
Vested
Active
Non-vested
Total by
Plan
ERS-State Employees
11,224
3,784
8,071
3,247
26,326
JRBT
26
1
14
41
82
RIJRFT
2
—
5
—
7
SPRBT
73
56
56
204
389
SPRFT
259
—
—
—
259
JNCRP
47
—
—
—
47
B. Defined Benefit Plan Descriptions – Advance Funded Plans
EMPLOYEES’ RETIREMENT SYSTEM (ERS) - The ERS was established and placed under the
management of the Retirement Board for the purpose of providing retirement allowances for employees
of the State of Rhode Island under the provisions of chapters 8 to 10, inclusive, of Title 36, and public
school teachers under the provisions of chapters 15 to 17, inclusive, of Title 16 of the Rhode Island
General Laws.
Plan members - The plan covers most State employees other than certain personnel at the State
colleges and university (principally faculty and administrative personnel). The plan also covers teachers,
including superintendents, principals, school nurses, and certain other school officials in the public
schools in the cities and towns. Membership in the plan is mandatory for all covered state employees and
teachers. Elected officials may become members on an optional basis and legislators may participate if
elected to office prior to January 1, 1995.
Certain employees of the Rhode Island Airport Corporation (hired before July 1, 1993), the Rhode Island
Commerce Corporation (active contributing members and employees of the Department of Economic
Development before October 31, 1995 who elected to continue membership) and the Narragansett Bay
Water Quality District Commission (members of a collective bargaining unit) are also covered and have
the same benefits as State employees.
Plan vesting provisions – after five years of service.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-140
Retirement eligibility and plan benefits – are summarized in the following table:
Schedule
Schedule Criteria
Retirement eligibility
Benefit accrual rates
Maximum
benefit
(A)
Completed 10 years of
service on or before
July, 1, 2005 and
eligible to retire as of
September 30, 2009
Age 60 with 10 years of
service or after 28 years
of service at any age
Effective until June 30, 2012:
1.7% for each of first ten years
1.9% for each of next ten years
3.0% for each of next fourteen
years
2% for the 35th year
Effective July 1, 2012: 1.0% per
year through June 30, 2015
Effective July 1, 2015: for
members with 20 years of service
as of July 1, 2012: 2% per year
80% of final
average
earnings (3
consecutive
highest years)
(AB)
Completed 10 years of
service on or before
July, 1, 2005 but
ineligible to retire as of
September 30, 2009
Minimum retirement age
of 62 and ten years of
service with a downward
adjustment of the
minimum retirement age
based on the years of
service credit as of
September 30, 2009
Effective until June 30, 2012:
Same accrual rates as (A) above to
September 30, 2009 and then
Schedule B rates (below)
thereafter
Effective July 1, 2012: 1.0% per
year through June 30, 2015
Effective July 1, 2015, for members
with 20 years of service as of July
1, 2012: 2% per year
80% of final
average
earnings (5
consecutive
highest years)
(B)
Less than 10 years of
service before July 1,
2005 and eligible to
retire as of September
30, 2009
Age 65 with 10 years of
service or after 29 years
of service and age 59
Effective until June 30, 2012:
1.6% for each of first ten years
1.8% for each of next ten years
2.0% for each of next five years
2.25% for each of next five years
2.5% for each of next seven years
2.25% for the 38th year
Effective July 1, 2012: 1.0% per
year
75% of final
average
earnings (5
consecutive
highest years)
(B1)
Less than 10 years of
service before July 1,
2005 and ineligible to
retire as of September
30, 2009
Age 65 with ten years of
service, or age 62 with
at least 29 years of
service with a downward
adjustment of the
minimum retirement age
based on the years of
service credit as of
September 30, 2009
Same as Schedule B
75% of final
average
earnings (5
consecutive
highest years)
(B2)
Less than 5 years of
service as of July 1,
2012
Social Security
Retirement Age and 5
years of contributory
service
1.6% for each of first ten years
Effective July 1, 2012: 1.0% per
year
75% of final
average
earnings (5
consecutive
highest years)
Effective July 1, 2015 general employees with more than 20 years of service at July 1, 2012 increased
their employee contribution rates to 11% and participate solely in the defined benefit plan. Members
receive a benefit accrual of 2% per year based on the three or five year average compensation.
Effective July 1, 2015 employees are eligible to retire upon attainment of: age 65 with 30 years of service,
age 64 with 31 years of service, age 63 with 32 years of service or age 62 with 33 years of service.
Members may retire earlier if their RIRSA date is earlier or are eligible under a transition rule.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-141
State correctional officers may retire at age 50 with 20 years of service. However, if not eligible to retire
as of September 30, 2009, the minimum retirement age was modified to 55 with 25 years of service credit
for correctional officers and registered nurses at the Department of Behavioral Healthcare, Developmental
Disabilities, and Hospitals.
The plan provides for survivor's benefits for service-connected death and certain lump sum death
benefits.
Joint and survivor options are available to members. For members with 10 years of service as of July 1,
2005, the Service Retirement Allowance (SRA) Plus option provides for the payment of a larger benefit
before the attainment of age sixty-two (62) and a reduced amount thereafter. The reduced amount is
equal to the benefit before age sixty-two (62), including cost-of-living increases, minus the member’s
estimated social security benefits payable at age sixty-two (62).
Vested members that have 10 or more years of contributing service credit on June 30, 2012, may choose
to retire at a retirement eligibility date that was calculated as of September 30, 2009, if the member
continues to work and make retirement contributions until that date. If the member chooses this option,
their retirement benefits will be calculated using the benefit that they have accrued as of June 30, 2012 -
members will accumulate no additional defined benefits after this date, but the benefit will be paid without
any actuarial reduction.
State employees and public school teachers may retire with a reduced pension benefit if they have 20
years of service credit and they are within five years of their retirement date as prescribed in the Rhode
Island Retirement Security Act (RIRSA). The actuarially reduced benefit will be calculated based on how
close the member is to their RIRSA eligibility date.
Cost of Living Adjustments - The Cost of Living Adjustment (COLA) has been suspended until the
collective ERS, SPRBT and JRBT plans reach a funded status of 80%. The COLA provision will be
reviewed in a four-year interval while the plans are less than 80% funded. When the collective funding
level of a plan exceeds 80%, eligible retirees may receive a COLA annually effective on their date of
retirement plus one month.
The COLA calculation is represented by the following formula: 50% of the COLA is calculated by taking
the previous 5-year average investment return, less 5% (5-year return - 5.0%, with a max of 4%) and 50%
calculated using the increase in the CPI-U from the prior September 30 (max of 3%) for a total maximum
COLA of 3.5%.
The benefit adjustments are provided to all retirees entitled to receive a benefit adjustment as of June 30,
2012 under the law then in effect, and for all other retirees, the benefit adjustments shall commence upon
the third anniversary of the date of retirement or the date on which the retiree reaches his or her Social
Security retirement age, whichever is later. For members (and their beneficiaries) retiring after June 30,
2015, the annual benefit adjustment provided in any calendar year is equal to the lesser of either the
member's retirement allowance or the first $27,608 (indexed as of January 1, 2021) of retirement
allowance multiplied by the percentage resulting from the COLA calculation as outlined in the preceding
paragraph. The retirement amount subject to the COLA calculation is indexed annually in the same
percentage as the COLA determination and is run annually regardless of the collective funding status.
For members and/or beneficiaries of members who retired on or before June 30, 2015, the current
indexed amount of $27,608 is replaced with $33,130 (indexed as of January 1, 2021) until the funded
ratio of the ERS, SPRBT and JRBT, calculated by the system's actuary on an aggregate basis, exceeds
80%. At such time, the benefit adjustments will then be provided on the lower amount (currently indexed
at $27,608).
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-142
Disability retirement provisions - The plan also provides nonservice-connected disability benefits after
five years of service and service-connected disability pensions with no minimum service requirement.
Effective for applications filed after September 30, 2009, accidental disability will be available at 66 2/3%
for members who are permanently and totally disabled as determined by the Retirement Board. If the
disability is determined to be partial and the member is able to work in other jobs, the benefit will be
limited to 50%. Disability benefits are subject to annual review by the Retirement Board.
Other plan provisions - Service credit purchases, excluding contribution refund paybacks and military
service, requested after June 16, 2009 are calculated at full actuarial cost.
JUDICIAL RETIREMENT BENEFITS TRUST (JRBT) - The Judicial Retirement Benefits Trust was
established under Rhode Island General Laws 8-8.2-7; 8-3-16; 8-8-10.1; 28-30-18.1; and was placed
under the management of the Retirement Board for the purpose of providing retirement allowances to
Justices of the Traffic Tribunal, Supreme, Superior, Family, District and Workers Compensation courts.
Plan members – The plan covers all Judges appointed after December 31, 1989.
Retirement eligibility and plan benefits – are summarized in the following table:
Retirement benefit
Judges appointed after
December 31, 1989 but
before July 2, 1997
75% of the final salary at the time of retirement after 20 years of service, or 10 years
of service and attainment of age 65. Judges retiring after 20 years of service after age
65 or 15 years of service after age 70 receive full retirement benefits, which is the final
salary at time of retirement.
Judges appointed after July
2, 1997 but before January
1, 2009
Same as above except, salary is the average highest three (3) consecutive years of
compensation rather than final salary.
Judges appointed after
January 1, 2009 but before
July 1, 2009
Judges with 20 years of service after age 65 or judges with 15 years of service after
age 70 will receive 90% of the average of the highest three consecutive years of
compensation. Judges appointed on or after January 1, 2009 with 10 years of service
and age 65 or 20 years of service at any age are entitled to a reduced benefit of 70%
of the average highest three consecutive years of compensation.
Judges designating a survivor benefit with 20 years of service and age 65 or 15 years
of service and age 70 receive a reduced benefit equal to 80% of the average highest
three consecutive years of compensation. Judges designating a survivor benefit with
10 years of service after age 65 or 20 years of service at any age receive a reduced
benefit equal to 60% of the average highest three consecutive years of compensation.
Judges appointed after July
1, 2009
Judges with 20 years of service after age 65 or with 15 years of service after age 70
will receive 80% of the average of the highest five consecutive years of compensation.
Judges with 10 years of service and age 65 or 20 years of service at any age are
entitled to a reduced benefit of 65% of the average highest five consecutive years of
compensation.
Judges designating a survivor benefit with 20 years of service and age 65 or 15 years
of service and age 70 receive a reduced benefit equal to 70% of the average highest
five consecutive years of compensation. Judges designating a survivor benefit with 10
years of service after age 65 or 20 years of service at any age receive a reduced
benefit equal to 55% of the average highest five consecutive years of compensation.
Certain survivor benefits are also provided to judges who are plan members, which is 50% of the benefit
amount payable to the judicial member.
Cost of Living Adjustments - The Cost of Living Adjustment (COLA) has been suspended until the
collective ERS, SPRBT and JRBT plans reach a funded status of 80%. The COLA provision will be
reviewed in a four-year interval while the plans are less than 80% funded. When the collective funding
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-143
level of a plan exceeds 80%, eligible retirees may receive a COLA annually effective on their date of
retirement plus one month.
The COLA calculation is represented by the following formula: 50% of the COLA is calculated by taking
the previous 5-year average investment return, less 5% (5-year return - 5.0%, with a max of 4%) and 50%
calculated using the increase in the CPI-U from the prior September 30 (max of 3%) for a total maximum
COLA of 3.5%.
The benefit adjustments are provided to all retirees entitled to receive a benefit adjustment as of June 30,
2012 under the law then in effect, and for all other retirees, the benefit adjustments shall commence upon
the third anniversary of the date of retirement or the date on which the retiree reaches his or her Social
Security retirement age, whichever is later. For members (and their beneficiaries) retiring after June 30,
2015, the annual benefit adjustment provided in any calendar year is equal to the lesser of either the
member's retirement allowance or the first $27,608 (indexed as of January 1, 2021) of retirement
allowance multiplied by the percentage resulting from the COLA calculation as outlined in the preceding
paragraph. The retirement amount subject to the COLA calculation is indexed annually in the same
percentage as the COLA determination and is run annually regardless of the collective funding status.
For members and/or beneficiaries of members who retired on or before June 30, 2015, the current
indexed amount of $27,608 is replaced with $33,130 (indexed as of January 1, 2021) until the funded
ratio of the ERS, SPRBT and JRBT, calculated by the system's actuary on an aggregate basis, exceeds
80%. At such time, the benefit adjustments will then be provided on the lower amount (currently indexed
at $27,608).
STATE OF RHODE ISLAND JUDICIAL RETIREMENT FUND TRUST (RIJRFT) - Effective July 1, 2012,
and pursuant to Rhode Island General Law section 8-3-16, the retirement board established a trust to
collect proceeds for the purpose of paying retirement benefits to participating judges or their beneficiaries.
Plan members – The plan covers seven (7) judges appointed prior to January 1, 1990. These members
are active judges (as of June 30, 2012) appointed prior to January 1, 1990 that do not participate in the
Judicial Retirement Benefit Trust. Prior to creating the trust, benefits for these members were intended to
be funded on a pay-as-you-go basis. To the extent assets in the trust are insufficient to fund member
benefits, the State would also fund retirement benefits on a pay-as-you-go basis as it does for fifty-one
(51) retired judges and surviving beneficiaries who were not members of either judicial plan. The
employee contribution rate is 12% of salary (except for members of the Supreme Court who contribute
8.75%).
Retirement eligibility and plan benefits – The plan generally provides retirement benefits for members
who have served as a justice of the Supreme Court, the Superior Court, the Family Court or the District
Court, for 20 years (or a combination of service in various courts) and have reached the age of 65 years,
or have served 15 years, and reached the age of 70 years. These members may retire from regular
service and receive a benefit equal to the annual salary the member was receiving at the time of their
retirement. Members of the Traffic Tribunal who served as a justice for 20 years, or have served for 10
years and reached age 65 years may retire from regular service and receive a benefit equal to the 75% of
the annual salary at the time of retirement. However, any Traffic Tribunal judge who has served 20 years
and has reached age 65 years, or has served for 15 years and has reached age 70 years may retire from
active service and receive a benefit equal to the annual salary the justice was receiving at the time of their
retirement.
Cost of Living Adjustments - The Cost of Living Adjustment (COLA) has been suspended until the
collective ERS, SPRBT and JRBT plans reach a funded status of 80%. The COLA provision will be
reviewed in a four-year interval while the plans are less than 80% funded. When the collective funding
level of a plan exceeds 80%, eligible retirees may receive a COLA annually effective on their date of
retirement plus one month.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-144
The COLA calculation is represented by the following formula: 50% of the COLA is calculated by taking
the previous 5-year average investment return, less 5% (5-year return - 5.0%, with a max of 4%) and 50%
calculated using the increase in the CPI-U from the prior September 30 (max of 3%) for a total maximum
COLA of 3.5%.
The benefit adjustments are provided to all retirees entitled to receive a benefit adjustment as of June 30,
2012 under the law then in effect, and for all other retirees, the benefit adjustments shall commence upon
the third anniversary of the date of retirement or the date on which the retiree reaches his or her Social
Security retirement age, whichever is later. For members (and their beneficiaries) retiring after June 30,
2015, the annual benefit adjustment provided in any calendar year is equal to the lesser of either the
member's retirement allowance or the first $27,608 (indexed as of January 1, 2021) of retirement
allowance multiplied by the percentage resulting from the COLA calculation as outlined in the preceding
paragraph. The retirement amount subject to the COLA calculation is indexed annually in the same
percentage as the COLA determination and is run annually regardless of the collective funding status.
For members and/or beneficiaries of members who retired on or before June 30, 2015 the current
indexed amount of $27,608 is replaced with $33,130 (indexed as of January 1, 2021) until the funded
ratio of the ERS, SPRBT and JRBT, calculated by the system's actuary on an aggregate basis, exceeds
80%. At such time, the benefit adjustments will then be provided on the lower amount (currently indexed
at $27,608).
STATE POLICE RETIREMENT BENEFITS TRUST (SPRBT) - The State Police Retirement Benefits
Trust was established under Rhode Island General Law Section 42-28-22.1 and was placed under the
management of the Retirement Board for the purpose of providing retirement allowances to State Police.
Plan members – The plan covers all State Police and Superintendents hired after July 1, 1987.
Retirement eligibility and plan benefits – Prior to June 30, 2012 the plan generally provides retirement
benefits equal to 50% of final salary after 20 years of service, plus 3.0% of final salary times service in
excess of 20 years through 25 years to a maximum of 65% of final salary. Such benefits are available to
members after 20 years of service regardless of age. The Superintendent of the State Police will receive
50% of his/her final salary and may retire after attainment of age 60 and 10 years of service.
The General Laws were amended such that any member of the State Police, other than the
Superintendent, who is hired on or after July 1, 2007 and who has served for twenty-five (25) years shall
be entitled to a retirement allowance of 50% of the final salary. In addition, any member may serve up to a
maximum of 30 years and shall be allowed an additional amount equal to 3.0% for each completed year
served after 25 years to a maximum retirement allowance not to exceed 65% of the final salary.
Benefits are based on the final base salary earned at retirement including longevity increment, holiday
pay, clothing allowance and up to 400 overtime hours.
Effective July 1, 2012 State Police officers are eligible to retire once they have accrued a retirement
benefit equal to 50% of their whole salary, with mandatory retirement once they have accrued a
retirement benefit equal to 65% of their whole salary. State Police officers will earn a 2% accrual rate for
each year of contributing service. Benefits will be calculated on the average of the highest five
consecutive years of salary, including up to 400 hours of mandatory overtime service. Benefits accrued as
of June 30, 2012 will be protected under the Rhode Island Retirement Security Act.
Cost of Living Adjustments - The Cost of Living Adjustment (COLA) has been suspended until the
collective ERS, SPRBT and JRBT plans reach a funded status of 80%. The COLA provision will be
reviewed in a four-year interval while the plans are less than 80% funded. When the collective funding
level of a plan exceeds 80%, eligible retirees may receive a COLA annually effective on their date of
retirement plus one month.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-145
The COLA calculation is represented by the following formula: 50% of the COLA is calculated by taking
the previous 5-year average investment return, less 5% (5-year return - 5.0%, with a max of 4%) and 50%
calculated using the increase in the CPI-U from the prior September 30 (max of 3%) for a total maximum
COLA of 3.5%.
The benefit adjustments are provided to all retirees entitled to receive a benefit adjustment as of June 30,
2012 under the law then in effect, and for all other retirees, the benefit adjustments shall commence upon
the third anniversary of the date of retirement or the date on which the retiree reaches his or her Social
Security retirement age, whichever is later. For members (and their beneficiaries) retiring after June 30,
2015, the annual benefit adjustment provided in any calendar year is equal to the lesser of either the
member's retirement allowance or the first $27,608 (indexed as of January 1, 2021) of retirement
allowance multiplied by the percentage resulting from the COLA calculation as outlined in the preceding
paragraph. The retirement amount subject to the COLA calculation is indexed annually in the same
percentage as the COLA determination and is run annually regardless of the collective funding status.
For members and/or beneficiaries of members who retired on or before June 30, 2015 the current
indexed amount of $27,608 is replaced with $33,130 (indexed as of January 1, 2021) until the funded
ratio of the ERS, SPRBT and JRBT, calculated by the system's actuary on an aggregate basis, exceeds
80%. At such time, the benefit adjustments will then be provided on the lower amount (currently indexed
at $27,608).
Disability retirement provisions - The plan provides nonservice-connected disability benefits after 10
years of service and service-connected disability pensions with no minimum service requirement.
STATE POLICE RETIREMENT FUND TRUST (SPRFT) - Effective July 1, 2016 and pursuant to Rhode
Island General Law section 42-28-22.1,the retirement board established a trust to collect proceeds for the
purpose of paying retirement benefits to participating members of the state police initially hired on or
before July 1, 1987, or their beneficiaries.
Plan members - the plan covers members of the state police hired on or before July 1, 1987. Prior to
creating the trust, benefits for these members were intended to be funded on a pay-as-you-go basis.
Retirement eligibility and plan benefits - The plan generally provides retirement benefits equal to 50%
of final salary after 20 years of service, members that retired after July 1, 1972 could earn an additional
3.0% of final salary times service in excess of 20 years through 25 years to a maximum of 65% of final
salary. Such benefits are available to members after 20 years of service regardless of age.
Cost of Living Adjustments - The Cost of Living Adjustment (COLA) has been suspended until the
collective ERS, SPRBT and JRBT plans reach a funded status of 80%. The COLA provision will be
reviewed in a four-year interval while the plans are less than 80% funded. When the collective funding
level of a plan exceeds 80%, eligible retirees may receive a COLA annually effective on their date of
retirement plus one month.
The COLA calculation is represented by the following formula: 50% of the COLA is calculated by taking
the previous 5-year average investment return, less 5% (5-year return - 5.0%, with a max of 4%) and 50%
calculated using the increase in the CPI-U from the prior September 30 (max of 3%) for a total maximum
COLA of 3.5%.
The benefit adjustments are provided to all retirees entitled to receive a benefit adjustment as of June 30,
2012 under the law then in effect, and for all other retirees, the benefit adjustments shall commence upon
the third anniversary of the date of retirement or the date on which the retiree reaches his or her Social
Security retirement age, whichever is later. For members (and their beneficiaries) retiring after June 30,
2015, the annual benefit adjustment provided in any calendar year is equal to the lesser of either the
member's retirement allowance or the first $27,608 (indexed as of January 1, 2021) of retirement
allowance multiplied by the percentage resulting from the COLA calculation as outlined in the preceding
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-146
paragraph. The retirement amount subject to the COLA calculation is indexed annually in the same
percentage as the COLA determination and is run annually regardless of the collective funding status.
For members and/or beneficiaries of members who retired on or before June 30, 2015 the current
indexed amount of $27,608 is replaced with $33,130 (indexed as of January 1, 2021) until the funded
ratio of the ERS, SPRBT and JRBT, calculated by the system's actuary on an aggregate basis, exceeds
80%. At such time, the benefit adjustments will then be provided on the lower amount (currently indexed
at $27,608).
C. Defined Benefit Advance Funded Plans - Summary of Significant Accounting Policies
The Fiduciary Net Position presented for defined benefit plans which are advance funded and accounted
for in a trust has been determined on a basis consistent with that used by the respective plans in
preparing their financial statements. ERS issues a publicly available financial report that includes financial
statements and required supplementary information for the plans. The report may be obtained at http://
www.ersri.org. The plans’ basis of accounting and accounting policies, including those related to benefit
payments and valuation of plan investments is summarized below.
Basis of Accounting
The financial statements of the ERS are prepared on the accrual basis of accounting. Under this method,
revenues are recorded when earned and expenses are recorded when incurred. Plan member
contributions are recognized in the period in which the wages, subject to required contributions, are
earned for the performance of duties for covered employment. Employer contributions to each plan are
recognized when due and the employer has made a formal commitment to provide the contributions.
Benefits and refunds are recognized when due and payable in accordance with the terms of each plan.
Disclosures regarding methods used to value investments and investment expenses are included in Note
2C, Pension Trusts.
D. Defined Benefit Plan – Non-Contributory (pay-as-you-go) Pension Plan
In addition to the defined benefit plans administered by the ERS, the State also administers one other
non-trusteed single employer defined benefit pension plan that is closed to new members. The Judicial
Non-Contributory Retirement Plan (JNCRP) provides retirement benefits to judges appointed before
January 1, 1990 and who retired before July 1, 2012. The plan was created by statute and has
historically been funded by the State on a pay-as-you-go basis. Accordingly, no assets have been
accumulated to pay benefits under this non-trusteed plan.
Pension benefits paid under the JNCRP are generally determined based on years of service at retirement
and are payable to the retiree or their beneficiary. JNCRP members, in general, are eligible for full
retirement benefits equal to their final annual compensation at age 65, if the member has served for 20
years, or at age 70 with 15 years of service. The plan has provisions that allow survivors, upon the death
of the participant, to continue to receive a portion of the participant’s benefit.
E. Special Funding Situation – ERS Plan – Teachers
The State is required by law to contribute 40% of the cost of providing retirement benefits for teachers
covered by the Employees’ Retirement System. Under GASB Statement No. 68, for teachers, the State is
considered to be a non-employer contributing entity under a special funding situation. The total net
pension liability for teachers covered by the Employees’ Retirement System measured as of June 30,
2020 is approximately $3.2 billion and the State’ share of the net pension liability is approximately $1.4
billion. The State’s share of the net pension liability for teachers has been allocated based upon the
statutory contribution percentage and is reflected in the Statement of Net Position as of June 30, 2020 as
Net Pension Liability-Special Funding Situation. The State’s proportion for the special funding situation for
the teachers covered in the ERS Plan was 42.63%, a decrease of (0.20)% since the prior reporting
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-147
period. Benefit provisions, contribution requirements, and other information related to the measurement
and proportionate share of the net pension liability under a special funding situation for teachers are
described in other sections of this Note relating to the ERS plan.
F. Contributions and Funding Policy
Contribution requirements for plan members and participating employers are established pursuant to the
Rhode Island General Laws. With the exception of the RIJRFT employers are required by statute to make
annual actuarially determined contributions to the respective defined benefit plans.
Actuarially determined contributions are calculated as of June 30, two years prior to the commencement
of the fiscal year in which the contributions are reported. The actuarially determined contribution rates (or
amounts if not expressed as a rate) for fiscal 2021 were determined based on valuations performed as of
June 30, 2019 for all plans, with the exception of RIJRFT which was determined based on a valuation
performed as of June 30, 2020.
The Rhode Island Judicial Retirement Fund Trust is not currently advance funded. Employees make
contributions to the plan; however the State is not making full actuarially determined contributions. This
plan is for a closed group of individuals and the amortization payment has been calculated based on
level-dollar amortization over 17 years from June 30, 2013.
The Rhode Island State Police Retirement Fund Trust is a closed group of individuals and the annual
contributions into the Trust have been calculated on a level-dollar amortization over 20 years from June
30, 2020. The actuarial accrued liability will be fully amortized by year 2040.
The non-contributory judges (JNCRP) plan is financed on a pay-as-you-go basis. Upon Statutory creation
of the RISPRFT in fiscal 2017, an annual contribution amount totaling $16.4 million was actuarially
determined. This amount has been contributed annually since 2017.
A summary of the contribution rates by both the participating employers and members and the State’s
annual pension plan contributions (expressed in thousands) for the fiscal year ended June 30, 2021 is
provided in the table below:
ERS
JRBT
RIJRFT*
SPRBT
SPRFT*
JNCRP**
Contribution rate:
State
27.54%
21.61%
$1,242
19.82%
$16,387
—
Plan members
3.75% and
11.00%
8.75% and
12.00%
8.75% and
12.00%
8.75%
—
—
State contribution for
teachers
10.75%
—
—
—
—
—
Contributions made for
state employees
$185,904
$2,246
$399
$5,241
$16,387
$4,184
Contribution made for
teachers
$112,623
—
—
—
—
—
*Actuarially determined contribution not expressed as a rate
**JNCRP is a pay-as-you-go plan.
ERS Plan Supplemental Contributions - The General Laws (Section 36-10-2(a) 1 and 2) also require, in
addition to the contributions provided for by the funding policy, for each fiscal year in which the actuarially
determined state contribution rate for state employees and teachers is lower than that for the prior fiscal
year, the governor shall include an appropriation to that system equivalent to 20% of the rate reduction to
be applied to the actuarial accrued liability. The amounts to be appropriated shall be included in the
annual appropriation bill and shall be paid by the general treasurer into the retirement system. The
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-148
retirement system's actuary shall not adjust the computation of the annual required contribution for the
year in which supplemental contributions are received; such contributions once made may be treated as
reducing the actuarial liability remaining for amortization in the following actuarial valuation to be
performed. For fiscal 2021, no supplemental contribution was required in accordance with this provision of
the General Laws.
The Retirement Security Act provides for additional contributions to the System based on 5.5% of the
value of contracts where the services performed by the contractor were previously performed by state
employees. A supplemental contribution of $197 thousand was paid to the System pursuant to Section
42-149-3.1 of the General Laws.
Employer contributions to the defined contribution plan are also prescribed by statute. In addition, plan
member contributions for both the defined benefit and defined contribution plans are set by statute.
Member and employer contribution rates can be changed by the General Assembly.
ERS Plan Special funding situation for local teachers - The actual proportionate share of employer
contributions required by the State varies slightly from 40% due to differences in the amortization period
for the unfunded liability between the State and teacher units which is reflected in the actuarially
determined contribution for the State share and the local teacher share. This results in the actual dollar
amount of State contributions to be proportionately larger than the stated statutory amount of 40%.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-149
G. Net Pension Liability
The net pension liability of the State and other participating employers in the Employees’ Retirement
System, a multiple-employer cost-sharing plan, has been apportioned based on the percentage share of
total contributions made by each employer in fiscal 2020. The State’s proportion for the ERS Plan for
State employees was 89.92%, an increase of 0.26% since the prior reporting period. At June 30, 2020
measurement date, the Lottery's proportion was 0.95%, an increase of 0.03% since the prior reporting
period.
Following is a summary of the net pension liability of the State and other employers participating in the
Employees’ Retirement System as well as the State’s liability related to the five single employer defined
benefit plans it sponsors, all measured as of June 30, 2020 (expressed in thousands and excluding
amounts related to teachers under the special funding arrangement discussed above):
Total Net Pension Liability - Employees' Retirement System (ERS) - State Employees
$
2,274,146
Less portion attributable to other entities:
Enterprise Fund - Rhode Island Lottery
$
(21,652)
Discretely Presented Component Units
University of Rhode Island
$
115,632
Rhode Island College
40,248
Community College of RI
31,746
RI Division of Higher Education Assistance
277
RI Commerce Corporation
305
RI Airport Corporation
1,697
(189,905)
Related organization - Narragansett Bay Commission
(17,701)
ERS - Net Pension Liability - Governmental Activities
$
2,044,888
Net Pension Liability - Single Employer Defined Benefit Pension Plans
JRBT
8,904
RIJRFT
21,338
SPRBT
33,903
SPRFT
154,720
JNCRP
46,533
Total Net Pension Liability
$
2,310,286
Further details regarding the State’s total pension liability and net pension liability for the single employer
trusteed defined benefit pension plans (expressed in thousands) which was measured as of June 30,
2020 is presented below:
JRBT
RIJRFT
SPRBT
SPRFT
Total pension liability
$ 89,062
$ 22,452
$ 187,812
$ 171,976
Plan fiduciary net position
80,158
1,114
153,909
17,256
Net pension liability
$
8,904
$ 21,338
$ 33,903
$ 154,720
Plan fiduciary net position as a
percentage of total pension liability
90.0 %
5.0 %
81.9 %
10.0 %
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-150
a. Actuarial assumptions used in determining total pension liability
The total pension liability was determined by actuarial valuations performed as of June 30, 2019 and
rolled forward to the June 30, 2020 measurement date, with the exception of JNCRP. The total pension
liability for JNCRP is based on a valuation performed as of June 30, 2020. The following table
summarizes the actuarial assumptions, applied to all periods included in the measurement.
ERS
State
Employees
Teachers
JRBT
RIJRFT
SPRBT
SPRFT
JNCRP
Valuation Date
6/30/2019
rolled
forward to
6/30/2020
6/30/2019
rolled
forward to
6/30/2020
6/30/2019
rolled
forward to
6/30/2020
6/30/2019
rolled
forward to
6/30/2020
6/30/2019
rolled
forward to
6/30/2020
6/30/2019
rolled
forward to
6/30/2020
06/30/20
Actuarial Cost
Method
Entry Age Normal-the Individual Entry Age Actuarial Cost methodology is used
Assumptions
Investment Rate
of Return
7.00%
7.00%
7.00%
2.45%
7.00%
7.00%
2.45%
Projected Salary
increases
3.25% to
6.25%
3.00% to
13.00%
2.75%
2.75%
3.75% to
11.75%
N/A
N/A
Inflation
2.50%
2.50%
2.50%
2.50%
2.50%
2.50%
2.50%
Mortality
Variants of the Pub-10 Median mortality tables-for the improvement scale, update to the ultimate rates
of the MP16 projection scale.
COLA
Post-retirement Benefit Increase: Post-retirement benefit increases are assumed to be 2.1%, per
annum, while the plan has a funding level that exceeds 80%; however, an interim COLA will be granted
in four-year intervals while the COLA is suspended. The second such COLA was provided in fiscal
2021. As of June 30, 2019, it is assumed that the COLAs will be suspended for 8 years due to the
current funding level of the plans. The actual amount of the COLA is determined based on 50% of the
plan’s five-year average investment rate of return minus 5.00% which will range from zero to 4.0%, and
50% of the lesser of 3% or last year’s CPI-U increase for a total maximum increase of 3.5%.
Factors affecting trends for amounts related to the net pension liability
The actuarial assumptions used in the calculation of the total pension liability at the June 30, 2020
measurement date were consistent with the 2020 Actuarial Experience Investigation Study for the six year
period ended June 30, 2019.
As part of the 2020 Actuarial Experience Study, certain assumptions were modified and reflected in the
determination of net pension liability (asset) at the June 30, 2020 measurement date. Significant changes
in assumptions included:
•
Updated the underlying mortality tables from the RP-2014 set of tables to the public sector-based
PUB (10) tables.
•
Increased slightly the probabilities of turnover.
•
Decreased slightly the probabilities of retirement.
•
Modified slightly the probabilities of disability, including adding material incidence of disability for
members in the age ranges that historically have been eligible to retire but under prospective
provisions are not.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-151
The long-term expected rate of return best-estimate on pension plan investments was determined by the
actuary using a building-block method. The actuary started by calculating best-estimate future expected
real rates of return (expected returns net of pension plan investment expense and inflation) for each major
asset class, based on a collective summary of capital market expectations from 39 sources. These return
assumptions are then weighted by the target asset allocation percentage, factoring in correlation effects,
to develop the overall long-term expected rate of return best-estimate on an arithmetic basis.
The June 30, 2020 expected arithmetic returns over the long term (20 years) by asset class are
summarized in the following table:
Asset Class
Long-term
Asset
allocation
Long-term Expected
Arithmetic Real Rate
of Return
GROWTH
Global Equity
U.S. Equity
23.00 %
6.31 %
International Developed Equity
12.10 %
6.71 %
Emerging Markets Equity
4.90 %
8.69 %
Private Growth
Private Equity
11.25 %
9.71 %
Non-Core Real Estate
2.25 %
5.66 %
Opportunistic Private Credit
1.50 %
9.71 %
INCOME
High Yield Infrastructure
1.00 %
3.88 %
REITS
1.00 %
5.66 %
Equity Options
2.00 %
6.04 %
EMD (50/50 Blend)
2.00 %
2.28 %
Liquid Credit
2.80 %
3.88 %
Private Credit
3.20 %
3.88 %
STABILITY
Crisis Protection Class
Treasury Duration
5.00 %
0.10 %
Systematic Trend
5.00 %
3.84 %
Inflation Protection
Core Real Estate
3.60 %
5.66 %
Private Infrastructure
2.40 %
6.06 %
TIPs
2.00 %
0.74 %
Volatility Protection
IG Crop Credit
3.25 %
1.54 %
Securitized Credit
3.25 %
1.54 %
Absolute Return
6.50 %
3.84 %
Cash
2.00 %
0.10 %
100.00 %
b. Discount rate
The discount rate used to measure the total pension liability of the plans was 7.0% for all plans but the
RIJRFT and JNCRP plans. The projection of cash flows used to determine the discount rate assumed that
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-152
contributions from plan members will be made at the current contribution rate and that contributions from
the employers will be made at statutorily required rates, actuarially determined. Based on those
assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected
future benefit payments of current plan members. Therefore, the long-term expected rate of return on
pension plan investments was applied to all periods of projected benefit payments to determine the total
pension liability for all but one system.
For the RIJRFT and JNCRP plans, the State has not opted to make actuarially determined employer
contributions and based on those assumptions, the pension plans’ fiduciary net position was not projected
to be available to make all projected future benefit payments of current plan members. Consequently, for
those plans, the municipal bond index rate, based on fixed-income mutual bonds with 20 years to maturity
that include only federally tax-exempt municipal bonds as reported in Fidelity Index's "20-Year Municipal
GO AA Index", 2.45% at June 30, 2020) was applied to all periods of projected benefit payments to
determine the total pension liability.
c. Sensitivity of the net pension liability to changes in the discount rate
The following presents the net pension liability of the employers calculated using the discount rate of
7.0% (for all plans except the RIJRFT and JNCRP), as well as what the employers’ net pension liability
would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point
higher than the current rate. The RIJRFT and JNCRP plans’ fiduciary net position was not projected to be
available to make all projected future benefit payments of current plan members and consequently the
municipal bond index rate of 2.45% at June 30, 2020 was used in the determination of the net pension
liability (asset) for those plans with a similar +1/-1 % sensitivity analysis (expressed in thousands):
Governmental Activities:
1.00% Decrease
(6.00%)
Current
Discount Rate
(7.0%)
1.00% Increase
(8.00%)
ERS - State employees
$
2,439,070
$
2,044,888
$
1,569,191
ERS - Teachers (State share) $
1,634,163
$
1,361,982
$
1,033,504
JRBT
$
16,816
$
8,904
$
(642)
SPRBT
$
50,431
$
33,903
$
13,958
SPRFT
$
170,836
$
154,720
$
135,272
1.00% Decrease
(1.45%)
Municipal Bond
Index Rate
(2.45%)
1.00% Increase
(3.45%)
RIJRFT
$
23,269
$
21,338
$
19,002
JNCRP
$
50,389
$
46,533
$
43,195
Business-type Activities:
1.00% Decrease
(6.00%)
Current
Discount Rate
(7.00%)
1.00% Increase
(8.00%)
Rhode Island Lottery:
ERS Plan - State
Employees
$
25,826
$
21,652
$
16,615
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-153
H. Changes in the Net Pension Liability
Information on the State’s net pension liability for single employer plans is as follows (expressed in
thousands):
JRBT
RIJRFT
SPRBT
SPRFT
JNCRP*
Total Pension Liability
Service cost
$
3,335 $
323 $
5,788 $
— $
—
Interest
5,663
640
12,405
11,878
1,170
Benefit changes
—
—
—
—
—
Differences between expected
and actual experience
180
(646)
(3,126)
(162)
3,560
Changes of assumptions
2,515
2,060
1,541
(1,136)
6,757
Benefit payments
(3,724)
(399)
(6,229)
(16,581)
(4,659)
Net change in Total Pension Liability
7,969
1,978
10,379
(6,001)
6,828
Total Pension Liability - beginning
81,093
20,474
177,433
177,977
39,705
Total Pension Liability - ending
$
89,062 $
22,452 $ 187,812 $ 171,976 $
46,533
Plan Fiduciary Net Position
Employer contributions
$
2,189 $
399 $
4,878 $
16,387 $
4,656
Employee contributions
1,204
126
2,346
—
—
Net investment income
2,955
23
5,642
868
—
Benefit payments
(3,724)
(399)
(6,229)
(16,581)
(4,656)
Administrative expenses
(80)
(1)
(158)
(17)
—
Other
—
—
25
—
—
Net change in Fiduciary Net Position
$
2,544 $
148 $
6,504 $
657 $
—
Plan Fiduciary Net Position -
beginning
77,614
966
147,405
16,599
—
Plan Fiduciary Net Position - ending
$
80,158 $
1,114 $ 153,909 $
17,256 $
—
Net Pension Liability
$
8,904 $
21,338 $
33,903 $ 154,720 $
46,533
*This is a non-trusteed plan which historically has been funded on a pay-as-you-go basis; therefore no assets
have been accumulated and total pension liability and net pension liability are the same.
I. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Employees’ Retirement System of Rhode Island
For the fiscal year ended June 30, 2021 the State recognized net pension expense of $259.0 million
related to State employees who are covered by the pension plans administered by ERS as well as the
JNCRP. In addition, it recognized an Education expense of $137.8 million in the Statement of Activities
relating to the State’s share of the pension expense for teachers who are covered by the ERS.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-154
At June 30, 2021 the State reported deferred outflows of resources and deferred inflows of resources
related to its participation in the ERS from the following sources (expressed in thousands):
Governmental Activities:
State
Employees
Teachers
Totals
Deferred Outflows of Resources
State contributions subsequent to the measurement date
$
184,004
$
112,623
$
296,627
Net difference between projected and actual
earnings on pension plan investments
40,885
27,651
68,536
Differences between expected and actual experience
17,579
13,317
30,896
Changes of assumptions
48,252
60,801
109,053
Changes in proportion and differences between employer
contributions and proportionate share of contributions
10,745
30,510
41,255
Totals
$
301,465
$
244,902
$
546,367
Deferred Inflows of Resources
Net difference between projected and actual
earnings on pension plan investments
—
—
$
—
Differences between expected and actual experience
1,412
26,543
27,955
Changes of assumptions
40,230
31,739
71,969
Changes in proportion and differences between employer
contributions and proportionate share of contributions
—
19,681
19,681
Totals
$
41,642
$
77,963
$
119,605
The $184.0 million reported as deferred outflows of resources related to pensions resulting from State
contributions to ERS subsequent to the measurement date will be recognized as a reduction in the net
pension liability in the year ended June 30, 2022. In addition, the $112.6 million reported as deferred
outflows of resources related to pensions resulting from State contributions to ERS for the teachers plan
subsequent to the measurement date will be recognized as a reduction in the net pension liability in the
year ended June 30, 2022. Other amounts reported as deferred outflows (inflows) of resources related to
pensions will be recognized in the determination of pension expense as follows (expressed in thousands):
State
Employees
Teachers
Year ended June 30:
2021
$
36,886 $
6,301
2022
20,105
23,875
2023
13,138
30,309
2024
7,044
8,829
2025
(1,354)
(8,342)
Thereafter
—
(6,658)
$
75,819 $
54,314
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-155
Business-type Activities:
For the year ended June 30, 2021, the Lottery, a proprietary fund of the State, recognized pension
expense of $3.1 million. At June 30, 2021, the Lottery reported deferred outflows of resources and
deferred inflows of resources related to pensions from the following sources:
Deferred Outflows of Resources
Contributions subsequent to the measurement date
$
1,900
Net difference between projected and actual
earnings on pension plan investments
433
Differences between expected and actual experience
186
Changes of assumptions
511
Changes in proportion and differences between employer
contributions and proportionate share of contributions
2,690
Totals
$
5,720
Deferred Inflows of Resources
Net difference between projected and actual
earnings on pension plan investments
$
—
Differences between expected and actual experience
15
Changes of assumptions
426
Changes in proportion and differences between employer
contributions and proportionate share of contributions
84
Totals
$
525
The $1.9 million reported as deferred outflows of resources related to pensions resulting from
contributions subsequent to the measurement date will be recognized as a reduction in the net pension
liability in the year ended June 30, 2022. Other amounts reported as deferred outflows (inflows) of
resources related to pensions will be recognized in the determination of pension expense as follows
(expressed in thousands):
Year ended June 30:
2021
$
1,112
2022
1,001
2023
906
2024
270
2025
6
Thereafter
—
$
3,295
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-156
Other Single Employer Pension Plans
For the fiscal year ended June 30, 2021 the table below provides information about pension expense
(credit) recognized for each of the State’s five single employer plans (expressed in thousands):
Plan
Annual
Pension
Expense (Credit)
JRBT
$
2,657
RIJRFT
2,218
SPRBT
8,482
SPRFT
9,301
JNCRP
11,487
Total
$
34,145
At June 30, 2021 the State reported deferred outflows of resources and deferred inflows of resources
related to its participation in the single employer plans from the following sources (expressed in
thousands):
JRBT
RIJRFT
SPRBT
SPRFT
JNCRP
Totals
Deferred Outflows of Resources
Employer contributions subsequent to the
measurement date
$
2,246 $
399 $
5,241 $
16,387 $
4,184 $
28,457
Net difference between projected and actual
earnings on pension plan investments
1,390
—
2,586
161
—
4,137
Differences between expected and actual
experience
146
—
8,217
—
—
8,363
Change of Assumptions
3,187
—
6,960
—
—
10,147
Totals
$
6,969 $
399 $
23,004 $
16,548 $
4,184 $
51,104
Deferred Inflows of Resources
Net difference between projected and actual
earnings on pension plan investments
$
— $
8 $
— $
— $
—
8
Differences between expected and actual
experience
3,162
—
6,463
—
—
9,625
Change of assumptions
—
—
118
—
—
118
Totals
$
3,162 $
8 $
6,581 $
— $
— $
9,751
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-157
The amount of $28.5 million reported as deferred outflows of resources, related to pensions resulting from
State contributions to the single employer plans subsequent to the measurement date, will be recognized
as a reduction in the net pension liability in the year ended June 30, 2022. Other amounts reported as
deferred outflows(inflows) of resources related to pensions will be recognized in the determination of
pension expense as follows (expressed in thousands):
Year ending June 30
JRBT
RIJRFT
SPRBT
SPRFT
JNCRP
Totals
2022
$
(165) $
(8) $
1,128 $
(143) $
— $
812
2023
(29)
(3)
2,124
119
—
2,211
2024
618
—
2,376
128
—
3,122
2025
1,005
2
2,291
57
—
3,355
2026
132
—
1,423
—
—
1,555
Thereafter
—
—
1,839
—
—
1,839
$
1,561 $
(9) $
11,181 $
161 $
— $
12,894
J. Defined Contribution Plan - ERS
Plan Description – Employees participating in the Employees Retirement System (ERS) defined benefit
plan with less than 20 years of service as of June 30, 2012, as described above, also participate in a
defined contribution plan of the Employees’ Retirement System as authorized by General Law Chapter
36-10.3. The defined contribution plan is established under IRS section 401(a) and is administered by
TIAA-CREF. Plan Assets are held by J. P. Morgan as investment custodian. The Retirement Board is the
plan administrator and plan trustee. The employees (“members”) may choose among various investment
options available to plan participants. The State Investment Commission is responsible for implementing
the investment policy of the plan and selecting the investment options available to members.
Contributions – Members contribute 5% of their annual covered salary and employers contribute 1% to
1.5% of annual covered salary, depending on years of service as of June 30, 2012. Member contributions
are immediately vested while employer contributions are vested after three years of contributory service.
Contributions required under the plan by both the members and employers are established by the
General Laws, which are subject to amendment by the General Assembly.
The State contributed and recognized as pension expense $5.4 million for the fiscal year ended June 30,
2021, equal to 100% of the required contributions for the fiscal year.
Investment options – See Note 2C, Other Investments - Defined Contribution Plan.
Plan vesting and contribution forfeiture provisions – The total amount contributed by the member,
including associated investment gains and losses, shall immediately vest in the member’s account and is
non-forfeitable. The total amount contributed by the employer, including associated investment gains and
losses, vests with the employee and is non-forfeitable upon completion of three (3) years of contributory
service. Non-vested employer contributions are forfeited upon termination of employment. Such
forfeitures can be used by employers to offset future remittances to the plan.
Retirement benefits – Benefits may be paid to a member after severance from employment, death, plan
termination, or upon a deemed severance from employment for participants performing qualified military
service. At a minimum, retirement benefits must begin no later than April 1 of the calendar year following
the year in which the member attains a certain age or terminates employment, if later.
The System issues a publicly available financial report that includes financial statements and required
supplementary information for plans administered by the system. The report may be obtained at http://
www.ersri.org.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-158
K. Defined Benefit Plan - LIUNA
All State employees who are members of the Laborers’ International Union of North America (LIUNA), in
addition to participating in ERSRI, also participate in the LIUNA National Pension Fund (the Plan), a cost
sharing multi-employer defined benefit plan subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA), as amended. The Plan is administered by the Fund’s Board of Trustees.
Eligibility and benefit provisions are defined in the Plan document adopted by the Board of Trustees. As of
June 30, 2021, 787 employees of the State were members of the Plan.
All employees who are members of LIUNA are eligible to participate in the Plan. An employee is eligible
for a regular pension if they have attained age 62, have five or more years of pension credits and have
had at least one pension credit in a year after contributions paid to the Plan by an employer on their
behalf began. Vesting of benefits is attained for participants who have five or more years of vesting
service, at least one year of which was earned during the period in which the employer paid contributions
to the Plan on behalf of the participant. Participants who pay their own contributions are immediately and
fully vested in their accrued benefits, plus interest credited to their account. Benefit amounts for
employees of the same age with the same years of service may be different because their employers’
contribution to the Pension Fund may have been at different levels. The Plan allows for an optional
immediate 25% partial lump sum for all surviving spouses of participants who died pre-retirement with an
actuarially reduced monthly benefit to be paid at age 55. Information regarding the Plan can be obtained
from the Fund Office maintained by the Board of Trustees at the following address: Laborers’ International
Union of North America National (Industrial) Pension Fund, 905 16th Street, N.W., Washington, DC
20006-1765, or at www.lnipf.org.
The contribution requirements of the State and employees are established by contract and may be
amended by union negotiation. Employees are required to contribute $0.77 to $1.73 per hour up to a
maximum of 1,820 hours per year to the Plan for calendar year 2021. The State is not required to
contribute to the Plan.
The Multiemployer Pension Plan Amendments Act of 1980 imposes certain liabilities upon employees
associated with multiemployer pension plans who withdraw from such a plan or upon termination of said
plan. The State has no plans to withdraw or partially withdraw from the plan.
L. Defined Contribution Plan - FICA Alternative Retirement Income Security Program
The State of Rhode Island FICA Alternative Retirement Income Security Program (the FARP) is a defined
contribution (money purchase) plan that operates under Section 401(a) of the Internal Revenue Code.
The FARP was established under Rhode Island General Law section 36-7-33.1 and was placed under the
management of the State’s Department of Administration (DOA), which also serves as the FARP plan
sponsor. The FARP took effect on December 15, 2013. TIAA serves as record keeper for the FARP, and
FARP assets are held by J.P. Morgan as investment custodian.
Plan members – Eligible members of the FARP are any part-time, seasonal, or temporary employees of
the State of Rhode Island, hired after July 1, 2013, who are ineligible for participation in the Employees’
Retirement System of Rhode Island (ERSRI). With the exception of the One-Time Opt-Out Provision
described below, participation in the FARP is mandatory for these employees. Part-time, seasonal, or
temporary employees hired prior to July 1, 2013, who do not participate in the ERSRI may opt to continue
contributing to Social Security for the duration of their continuous employment.
One-time opt-out provision – The FARP contains a provision which allows a FARP-eligible employee,
hired after July 1, 2013, to opt-out or elect to not participate in the FARP. An employee who opts to not
participate will continue to make FICA contributions and the State will continue to make FICA
contributions on behalf of the employee. An employee who opts to not participate in the FARP may
subsequently, without penalty, choose to participate in the FARP; this election is irrevocable as long as
the employee is a FARP-eligible employee.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-159
Plan vesting provisions – The total amount contributed by the member, including associated investment
gains and losses, shall immediately vest in the member‘s account and is non-forfeitable. The State does
not make matching contributions to the FARP.
Member accounts – Each member’s account is credited with the member’s contribution and an
allocation of the plan’s earnings. Allocations are based on a relationship of the member’s account balance
in each investment fund to the total of all account balances in that fund. The retirement benefit to which a
member is entitled is the benefit that can be provided from the member’s account.
Contributions – FARP benefits are funded by contributions from the participants as specified in RI
General Law section 36-7-33.1. FARP participants make mandatory payroll deduction contributions to the
FARP equal to 7.5% of the employee’s gross wages for each pay period.
Investment options – Member and employer contributions must be invested in one of the Vanguard
Target Retirement Trusts, which are age-appropriate.
Retirement benefits – Benefits may be paid to a member after termination from employment, death, total
disability, or upon attaining age 59½. In the case of termination, a 10% IRS penalty upon withdrawal will
apply if the member is younger than 55 years of age. At a minimum, retirement benefits must begin no
later than April 1 of the calendar year following the year in which the member attains a certain age or
terminates employment, if later.
M. Other Pension Plans – Component Units
Certain employees of the University of Rhode Island, Rhode Island College and the Community College
of Rhode Island (principally faculty and administrative personnel) are covered by individual annuity
contracts under a defined contribution retirement plan. Eligible employees who have reached the age of
30, and who have two years of service are required to participate in either the Teachers Insurance and
Annuity Association, the Metropolitan Life Insurance Company, or Variable Annuity Life Insurance
Company retirement plan. Eligible employees must contribute at least 5% of their gross biweekly
earnings. The University and Colleges contribute 9% of the employees’ gross biweekly earnings. Total
expenses by the institutions for such annuity contracts amounted to approximately $21.1 million during
the year ended June 30, 2021.
The Rhode Island Public Transit Authority has two single-employer defined benefit pension plans that
cover eligible employees which are described below. Other information about the plans can be found in
the audited financial statements of RIPTA which are available at www.ripta.com.
•
The first plan, RIPTA Employees' Pension Plan, covers employees of the Authority who work
more than 1,000 hours per year. There are no age or minimum service requirements and
employees are eligible to participate immediately upon employment. Any changes to the plan are
subject to the collective bargaining process. Plan benefits and other provisions are established
by the plan document. The Plan is administered by the Authority's Joint Pension Board. The plan
provides retirement, disability and death benefits. Benefits vest upon completion of ten years of
service. Authority employees are eligible to retire upon attainment of normal retirement age (62,
or if later, upon completion of 5 years of service). Retired employees are entitled to a monthly
benefit for life as stipulated in the plan provisions. Employees are required to contribute between
3% and 4% of their base salary to the plan each year until the earlier of the participant’s normal
retirement date or termination of service. The remaining contributions to the plan are made by the
Authority. At the June 30, 2020 measurement date the plans’ total pension liabilities exceeded
the plans’ fiduciary net position by an aggregate amount of $78.5 million. Accordingly, a net
pension liability of that amount has been recorded as of June 30, 2021. For the fiscal year ended
June 30, 2021 pension expense of $14.4 million was recorded related to the plan.
•
The second plan, Laborers' International Union of North America National Pension Fund, covers
all employees who are members of the Local 808 union. The Plan is administered by the Fund's
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-160
Board of Trustees. The plan provides retirement, disability and death benefits to plan members.
An employee is eligible to receive pension benefits if they have attained age 62, have five or
more years of pension credit and have earned at least one of the years of pension credit during
the period that his or her employer is contributing to the plan. The amount of regular pension
benefits payable to an employee is determined by the highest contribution rate at which he or she
earned pension credit and years of pension credits earned (up to a maximum of 30 years of
pension credits). The contribution requirements of the Authority and employees are established
by contract and may be amended by union negotiation. Employees are required to contribute
$1.46 per hour up to a maximum of 40 hours per week to the Plan for calendar year 2021. The
Authority is not required to contribute to the Plan.
Certain other component units have defined benefit pension plans, defined contribution pension plans,
and deferred compensation retirement plans. For information regarding these pension and savings plans,
please refer to the component units' separately issued financial reports.
Note 19. Postemployment Benefit Plans
A.
Summary of Employer Plans
The State provides other postemployment benefits (OPEB) for its employees through multiple benefit
plans as outlined below (expressed in thousands):
Plan
Plan Type
Covered employees
FY 2021
OPEB
expense
(credit)
Net OPEB
liability
(asset) at
June 30, 2020
measurement
date
A
State
Employees
Cost-sharing
multiple-employer
plan – advance
funded through a
trust
State employees excluding
state police, legislators and
judges
Governmental activities
$
16,190 $
324,502
Business-type activities
$
307 $
3,420
B
Teachers
Single-employer plan
– advance funded
through a trust
Certified public school
teachers electing to
participate in the System
$
(1,944) $
(4,445)
C
Judges
Single-employer plan
- advance funded
through a trust
Judges and magistrates
$
(610) $
(4,490)
D
State Police
Single-employer plan
- advance funded
through a trust
State police officers
$
2,031 $
17,338
E
Legislators
Single-employer plan
- advance funded
through a trust
Retired and former
members of the General
Assembly
$
(196) $
(2,291)
F
Board of
Education
(BOE)
Cost-sharing
multiple-employer
plan – advance
funded through a
trust
Certain employees of the
Board of Education inclusive
of URI, RIC, CCRI and the
Office of Higher Education
$
6 $
89
Totals
$
15,784 $
334,123
The Rhode Island State Employees’ and Electing Teachers OPEB System (the “System”) acts as a
common investment and administrative agent for benefits to be provided for six defined benefit other
postemployment plans as listed above.
The System is administered by the State of Rhode Island OPEB Board and was authorized, created and
established under Chapter 36-12.1 of RI General Laws. The Board was established under Chapter
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-161
36-12.1 as an independent board to hold and administer, in trust, the funds of the OPEB system. The four
members of the OPEB Board are: the State Controller, the State Budget Officer, the State Personnel
Administrator and the General Treasurer, or their designees.
The System issues a publicly available financial report that includes financial statements and required
supplementary information for the plans and a description of the benefit structures. The report may be
obtained by writing to the State Controller’s Office, One Capitol Hill, Providence, RI 02908.
The System’s financial statements are included as Trust Funds within the Fiduciary Funds.
The OPEB Trust Funds are reported using the economic resources measurement focus and the accrual
basis of accounting under which expenses, including benefits and refunds, are recorded when the liability
is incurred. Employer contributions are recorded in the accounting period in which they are earned or
become measurable.
Additional disclosure regarding the methods used to value investments and investment expenses are
included in Note 2D, OPEB Trust Funds.
Employer OPEB expense and related liabilities and deferred inflows of resources/deferred outflows of
resources for defined benefit plans A-F as identified previously are recognized in the financial statements
based on the provisions of GASB Statement No. 75.
Plan membership, based on the June 30, 2019 actuarial valuations, is summarized in the table below:
Retirees and
beneficiaries
Active
Total by
Plan
State Employees
6,698
11,184
17,882
Teachers
99
N/A
99
Judges
33
61
94
State Police
163
261
424
Legislators
15
113
128
Board of Education (BOE)
857
1,869
2,726
Terminated employees are not included in the valuation.
B. Benefit Plan Descriptions
Members of the System, which include State employees, legislators, judges, State police officers,
certified public school teachers and employees of certain component units, if they meet certain eligibility
requirements, are eligible to receive some form of retiree health care benefits. In addition, certain
employees of the Board of Education receive benefits under another plan known as the Rhode Island
Board of Education Health Care Insurance Retirement Program (hereafter referred to as the “BOE
Plan”).
Membership and Benefit Provisions
The plans within the System generally provide healthcare coverage to pre-Medicare eligible retirees and
health reimbursement account contributions or Medicare supplement coverage for members who are
Medicare eligible. Members may purchase coverage for spouses and dependents. Depending on the
plan and the time of retirement, the cost to purchase coverage for spouses and dependents is either at
the “active rate” applicable to active employees or at the retiree rate. Dental and vision coverage is
generally not provided (except for those plans that allow active health care coverage to continue after
retirement - judges, state police and legislators). Dental and vision coverage may be purchased by these
groups with no state subsidy.
Members of the System must meet the eligibility and services requirements set forth in the RI General
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-162
Laws or other governing documents. RIGL Sections 16-17.1-1 and 2, 36-10-2, 36-12.1, 36-12-2.2 and
36-12-4 govern the provisions of the System, and they may be amended in the future by action of the
General Assembly.
Active employees (other than the Board of Education active members) do not make contributions to the
respective plans. Retired member contributions consist of the required retiree share of coverage based
on the time of retirement and years of service. Other member contributions include purchased coverage
for spouses or dependents or for non-subsidized coverage for dental and vision care.
A summary of the principal provisions of the plans follow:
State Employees
For members age 59 through 64 who retire on or after October 1, 2008, with a minimum of 20 years of
service, the State pays 80% of the actual cost of health care coverage.
At age 65, State retirees must purchase Medicare Part B (deducted from their Social Security payment)
and may enroll in a health reimbursement account plan to which the OPEB Trust contributes an amount.
The amount deposited by the State into each HRA varies based on the date of retirement and years of
service at retirement but is based on the lowest-cost Medicare supplemental plan available through the
program that meets the plan requirements defined in the law. Amounts available in each retiree’s HRA
can be used for any eligible medical care expense including reimbursement for health insurance
premiums.
For State employees who retired on or before September 30, 2008, the State provides two types of
subsidies for health care benefits. The Tier I subsidy applies to non-Medicare eligible plans and provides
that the State will pay the portion of the cost of retiree health care for the retiree and any dependents
above the active group rate. The retiree pays the active group monthly rate and the State pays the
difference between the active group rate and the early retiree rate. This subsidy is not based on years of
service and ends at age 65. In addition to the Tier I benefits, the State pays a portion of the cost of
retiree health care above the Tier I costs for certain retirees meeting eligibility requirements based upon
the age and service of the retiree, which is referred to as the Tier II benefit.
Employees retiring on or before September 30, 2008 who are under 60 year of age at retirement may
retire with a minimum of 28 years of service and must pay 0% - 10% of retiree health care costs, as
determined by the number of years of each employee's service. Employees retiring on or before
September 30, 2008 who are 60 years of age or over at retirement may retire with a minimum of 10
years of service and must pay 0% - 50% of retiree health care costs, as determined by the number of
years of each employee's service.
Teachers
Teachers who elect to participate in the System and retired on or before September 30, 2008, receive
the Tier I subsidy but no other State cost sharing. For all teachers retiring on or after October 1, 2008,
the Tier I subsidy ends and there is no other cost sharing by the State. Retired teachers may purchase
coverage through the System at the actual cost for retirees.
Judges
Effective July 1, 2012 new retirees (and spouses and dependents) that are eligible for Medicare are
required to enroll in Medicare and a Medicare Supplemental plan. Retirees who retired before that date
are able to continue on the active health care plan provided they enroll in Medicare Part B.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-163
State Police
Retired state police officers (including spouses and dependents) receive the active health care plan
benefits or Medicare supplement coverage with the same co-share amount in effect at the date of their
retirement.
Legislators
Effective July 1, 2012 new retirees (and spouses and dependents) that are eligible for Medicare are
required to enroll in Medicare and a Medicare Supplemental plan. Retirees who retired before that date
can continue on the active health care plan provided they enroll in Medicare Part B.
Board of Education
The BOE Plan offers three types of retiree health care benefits: (1) a self-insured health care plan for
retirees not covered by Medicare, (2) a self-insured Medicare supplement plan for Medicare eligible
post-65 retirees and (3) a fully insured Medicare HMO plan for Medicare eligible post-65 retirees.
The Tier I non-Medicare eligible plan subsidy provides that the Board will pay the portion of the cost of
post-retirement health care for the retiree between the active group rate and the early retiree rate. This
subsidy is based on years of service and ends when the retiree enrolls in Medicare. This subsidy is
available only to eligible employees retiring before July 1, 2008.
To be eligible for coverage, the retiree retiring before July 1, 2008 must have worked a minimum of 10
years for the Board and must be at least 60 years of age, unless they have 28 years or more of service.
Depending on the years of service and the retiree’s age, the Board will pay from 50% to 100% of medical
insurance premium while the retiree contributes from 50% to 0%.
Employees retiring after June 30, 2008, who are not yet 65 years of age, who have worked a minimum of
10 years for the Board and are at least 60 years of age or who have 28 years or more of service, may
purchase health insurance coverage at the actual (100%) retiree premium rate for themselves and their
spouses. The Board will continue to pay a portion of the post-65 Tier II benefits, 50% to 100% of medical
insurance premium, depending on the years of service and the retiree’s age while the retiree will
contribute from 50% to 0%.
Active employees covered by the BOE plan contribute 0.9% of their salary. The contribution of
employees covered under the BOE plan can be changed by the Board of Education.
C. Contributions and Funding Policy
Contribution requirements for plan members and participating employers are established pursuant to the
Rhode Island General Laws and may be amended by the General Assembly.
The State and other participating employers are required by law to fund the plans on an actuarially
determined basis. For the fiscal year ended June 30, 2021, the State and other participating employers
paid $51 million into the plans.
The fiscal 2021 contribution rates for the six plans in the System were based on the actuarial valuation of
those plans performed as of June 30, 2018.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-164
A summary of the contribution rates by both the participating employers and members and the State’s
annual plan contributions (expressed in thousands) for the fiscal year ended June 30, 2021 is provided in
the table below:
State
Employees
Teachers
Judges
State
Police
Legislators
BOE
Contribution rate:
Employer
5.49 %
— *
— *
23.31 %
— *
2.93 %
Plan members
—
—
—
—
—
0.9 %
Contributions made
$ 37,377
$
—
$
—
$ 6,178
$
—
$ 12
* An actuarial valuation determined that no contribution was required for this OPEB plan.
D. Net OPEB Liability (Asset)
The net OPEB liability of the State and other participating employers in the State Employees Plan and the
Board of Education Plan, which are multiple employer cost-sharing plans, has been apportioned based on
the percentage share of total contributions made by each participating employer in fiscal 2020. The
State’s proportion for the State Employees Plan and Board of Education Plan for State employees was
89.9% and 0.25%, respectively. At the June 30, 2020 measurement date, the Lottery’s proportionate
share of the net OPEB liability, reported under Business-type activities, was 0.95%.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-165
Following is a summary of the net OPEB liability of the State and other employers participating in the
State Employees Plan, the net OPEB liability of the State's share of the Board of Education Plan and the
State’s liability (asset) related to the four single employer defined benefit plans it sponsors, all measured
as of June 30, 2020 (expressed in thousands):
Net OPEB Liability - Multiple Employer Cost-sharing OPEB Plans:
Total Net OPEB Liability - State Employees Plan
$
360,904
Less portion attributable to other entities:
Enterprise Fund - Rhode Island Lottery
$
(3,420)
Discretely Presented Component Units
University of Rhode Island
$
18,380
Rhode Island College
6,407
Community College of RI
5,046
RI Division of Higher Education Assistance
35
RI Commerce Corporation
48
RI Airport Corporation
264
(30,180)
Related organization - Narragansett Bay Commission
(2,802)
State Employees Plan - State's Share of Net OPEB Liability -
Governmental Activities
$
324,502
Board of Education Plan - State's Share of Net OPEB Liability -
Governmental Activities
89
State's Share of Net OPEB Liability - Multiple Employer Cost-sharing
Plans - Governmental Activities
$
324,591
State Employees Plan - Rhode Island Lottery's Share of Net OPEB
Liability - Business-type Activities
$
3,420
Total State's Share of Net OPEB Liability - Multiple Employer Cost-
sharing Plans
$
328,011
Net OPEB Liability (Asset) - Single Employer Plans:
Net OPEB Liability - Single Employer OPEB Plans
State Police
17,338
Total Net OPEB Liability
$
17,338
Net OPEB Liability - All Plans
$
345,350
Net OPEB (Asset) - Single Employer OPEB Plans
Teachers
$
(4,445)
Judges
(4,490)
Legislators
(2,291)
Total Net OPEB (Asset)
$
(11,226)
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-166
Statement of Net Position
Governmental
Business-Type
Activities
Activities
Total
Net OPEB Liability
$
341,930
$
3,420
$
345,350
Net OPEB (Asset)
$
(11,226) $
—
$
(11,226)
Further details regarding the State’s total OPEB liability and net OPEB liability (asset) for the single
employer trusteed OPEB plans (expressed in thousands) which was measured as of June 30, 2020 is
presented below:
Teachers
Judges
State Police
Legislators
Total OPEB liability
$
9,984
$
322
$
83,749
$
1,231
Plan fiduciary net position
14,429
4,812
66,411
3,522
Net OPEB liability (asset)
$
(4,445)
$
(4,490)
$
17,338
$
(2,291)
Plan fiduciary net position as a percentage
of total OPEB liability (asset)
144.53 %
1494.26 %
79.30 %
286.23 %
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-167
a. Actuarial assumptions used in determining total OPEB liability
The total OPEB liability was determined by an actuarial valuation performed as of June 30, 2019 and
rolled forward to the June 30, 2020 measurement date using the following actuarial assumptions, applied
to all periods included in the measurement.
Summary of Actuarial Methods and Assumptions
Plan
State
Employees
Teachers
Judges
State Police
Legislators
Board of
Education
Actuarial Cost
Method
Individual Entry Age
Actuarial Assumptions
Investment Rate of
Return
5.00%
Projected
Salary
Increases
3.0%
to
6.0%
N/A
3.0%
4.0%
to
14.0%
3.0%
to
6.0%
3.0%
to
6.0%
Valuation Health
Care Cost Trend
Rate
8.25% in 2020, grading to 3.5% in 2033
Mortality Rates
Healthy Male Teachers, Judges, Legislators, and Board of Education: RP-2014 Combined Healthy for males
with White Collar adjustment, projected with the MP 2016 ultimate rates.
Healthy Female Teachers, Judges, Legislators, and Board of Education: RP-2014 Combined Healthy for
females with White Collar adjustment, projected with the MP 2016 ultimate rates.
Healthy Male State Employees and Police: RP-2014 Combined Healthy for males with Blue Collar
adjustment, projected with the MP 2016 ultimate rates.
Healthy Female State Employees and Police: RP- 2014 Combined Healthy for females, projected with the
MP2016 ultimate rates.
Excise Tax Under
the Patient
Protection and
Affordable Care
Act
None. H.R. 1865, Further Consolidated Appropriation Act of 2020 repealed the excise tax (“Cadillac tax”)
provision of the Affordable Care Act.
Note: Although an inflation rate was not explicitly used, for purposes of determining total OPEB liability inflation was consistent with
a 2.5% assumption.
The actuarial assumptions used in the June 30, 2019 valuation and the calculation of the total OPEB
liability (asset) at June 30, 2020 were consistent with an actuarial experience review performed as of
June 30, 2017.
The long-term expected rate of return best-estimate on OPEB plan investments was determined by the
actuary using a building-block method. The actuary started by calculating best-estimate future expected
real rates of return (expected returns net of OPEB plan expense and inflation) for each major asset
class, based on a collective summary of capital market expectations from 39 nationally recognized
consulting firms. The June 30, 2020 expected arithmetic returns over the long-term (20 years) by asset
class are summarized in the following table:
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-168
Asset Class
Long-Term Target Asset
Allocation
Long-Term Expected Real Rate
of Return
Domestic Equity
65%
6.31%
Fixed Income
35%
1.57%
These return assumptions are then weighted by the target asset allocation percentage, factoring in
correlation effects, to develop the overall long-term expected rate of return best-estimate on an arithmetic
basis.
b. Discount rate
The discount rate used to measure the total OPEB liability of the plans was 5%. The projection of cash
flows used to determine the discount rate assumed that the contributions, if any, from the plan members
will be made at the current contribution rate and that the contributions from the employers will be made
at statutorily required rates, actuarially determined. Based on those assumptions, the OPEB plan’s
fiduciary net position was projected to be available to make all projected future benefit payments of
current plan members. Therefore, the long-term expected rate of return on OPEB plan investments was
applied to all periods of projected benefit payments to determine the total OPEB liability.
c. Sensitivity of the net OPEB liability (asset) to changes in the discount rate
The following table presents the net OPEB liability (asset) of the employers calculated using the discount
rate of 5.0%, as well what the employers’ net OPEB liability (asset) would be if it were calculated using a
discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate
(expressed in thousands).
Governmental Activities:
1.00% Decrease
(4.00%)
Current
Discount Rate
(5.0%)
1.00% Increase
(6.00%)
State employees
$
400,729
$
324,502
$
261,370
Teachers
$
(3,499)
$
(4,445)
$
(5,258)
Judges
$
(4,475)
$
(4,490)
$
(4,507)
State Police
$
24,112
$
17,338
$
11,223
Legislators
$
(2,204)
$
(2,291)
$
(2,394)
BOE
$
121
$
89
$
63
Business-type Activities:
1.00% Decrease
(4.00%)
Current
Discount Rate
(5.0%)
1.00% Increase
(6.00%)
Rhode Island Lottery:
OPEB Plan - State Employees
$
4,223
$
3,420
$
2,754
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-169
d. Sensitivity of the net OPEB liability (asset) to changes in the healthcare inflation rate
The following table presents the net OPEB liability (asset) of the employers calculated using the
healthcare cost trend rate of 8.25% and gradually decreasing to an ultimate rate of 3.5%, as well what
the employers’ net OPEB liability (asset) would be if it were calculated using a trend rate that is 1-
percentage point lower or 1-percentage point higher than the current rate (expressed in thousands).
Governmental Activities:
1.00% Decrease
Healthcare Cost
Trend Rate
1.00% Increase
State employees
$
246,863
$
324,502
$
421,941
Teachers
$
(5,306)
$
(4,445)
$
(3,459)
Judges
$
(4,510)
$
(4,490)
$
(4,468)
State Police
$
9,124
$
17,338
$
26,942
Legislators
$
(2,413)
$
(2,291)
$
(2,182)
BOE
$
58
$
89
$
129
Business-type Activities:
1.00% Decrease
Healthcare Cost
Trend Rate
1.00% Increase
Rhode Island Lottery:
OPEB Plan - State Employees
$
2,601
$
3,420
$
4,446
E. Changes in the Net OPEB Liability (Asset)
Information on the State’s net OPEB liability for single employer plans is as follows (expressed in
thousands):
Teachers
Judges
State Police
Legislators
Total OPEB Liability
Service cost
$
— $
22 $
4,481 $
57
Interest
556
64
4,391
80
Changes of benefit terms
—
—
—
—
Difference between expected
and actual experience
(1,212)
(960)
(2,230)
(83)
Changes of assumptions
(164)
(69)
(6,974)
(350)
Benefit payments, net of retiree contributions
(629)
(18)
(3,009)
(85)
Net change in Total OPEB Liability
(1,449)
(961)
(3,341)
(381)
Total OPEB Liability - beginning
11,433
1,283
87,090
1,612
Total OPEB Liability - ending
$
9,984 $
322 $
83,749 $
1,231
Plan Fiduciary Net Position
Employer contributions
$
— $
— $
7,797 $
—
Net investment income
1,082
327
4,775
263
Benefit payments
(629)
(18)
(3,009)
(85)
Administrative expenses
(24)
(2)
(35)
(2)
Other
150
56
335
79
Net change in Fiduciary Net Position
$
579 $
363 $
9,863 $
255
Plan Fiduciary Net Position - beginning
13,850
4,449
56,548
3,267
Plan Fiduciary Net Position - ending
$
14,429 $
4,812 $
66,411 $
3,522
Net OPEB Liability (Asset)
$
(4,445) $
(4,490) $
17,338 $
(2,291)
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-170
F. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Cost-Sharing Multiple Employer OPEB Plans
For the fiscal year ended June 30, 2021 the State recognized OPEB expense of $16.5 million related to
State employees who are covered by the OPEB cost-sharing plans administered by the System.
At June 30, 2021 the State reported deferred outflows of resources and deferred inflows of resources
related to its participation in the System from the following sources (expressed in thousands):
Governmental Activities:
State
Employees
BOE
Totals
Deferred Outflows of Resources
State contributions subsequent to the measurement
date
$
36,998 $
12 $
37,010
Differences between expected and actual experience
—
10
10
Changes of assumptions
14,818
6
14,824
Changes in proportion and differences between
employer contributions and proportionate share of
contributions
2,527
30
2,557
Totals
$
54,343 $
58 $
54,401
Deferred Inflows of Resources
Differences between expected and actual experience $
65,997 $
22 $
66,019
Net difference between projected and actual
investment earnings
13,855
7
13,862
Changes of Assumptions
19,626
6
19,632
Changes in proportion and differences between
employer contributions and proportionate share of
contributions
—
12
12
Totals
$
99,478 $
47 $
99,525
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-171
The $37.0 million reported as deferred outflows of resources related to OPEB resulting from State
contributions to the plans subsequent to the measurement date will be recognized as a reduction in the
net OPEB liability in the year ended June 30, 2022. Other amounts reported as deferred outflows (inflows)
of resources related to OPEB will be recognized in the determination of OPEB expense as follows
(expressed in thousands):
State
Employees
BOE
Year ended June 30:
2021
$
(16,620) $
(3)
2022
(15,189)
(2)
2023
(14,146)
(2)
2024
(12,886)
—
2025
(11,545)
3
Thereafter
(11,748)
3
$
(82,134) $
(1)
Business-type Activities:
For the year ended June 30, 2021, the Lottery, a proprietary fund of the State, recognized OPEB expense
of $307 thousand. At June 30, 2021, the Lottery reported deferred outflows of resources and deferred
inflows of resources related to OPEB from the following sources:
Deferred Outflows of Resources
Contributions subsequent to the measurement date
$
379
Changes of assumptions
156
Changes in proportion and differences between
employer contributions and proportionate share of
contributions
774
Totals
$
1,309
Deferred Inflows of Resources
Differences between expected and actual experience $
695
Net difference between projected and actual
investment earnings
146
Changes of assumptions
207
Totals
$
1,048
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-172
The $379 thousand reported as deferred outflows of resources related to OPEB resulting from
contributions to the plan subsequent to the measurement date will be recognized as a reduction in the net
OPEB liability in the year ended June 30, 2021. Other amounts reported as deferred outflows (inflows) of
resources related to OPEB will be recognized in the determination of OPEB expense as follows
(expressed in thousands):
Year ended June 30:
2021
$
(39)
2022
(24)
2023
(13)
2024
—
2025
7
Thereafter
(49)
$
(118)
Other Single Employer OPEB Plans
For the fiscal year ended June 30, 2021 the table below provides information about OPEB expense
(credit) recognized for each of the State’s four single employer plans (expressed in thousands):
Plan
Annual
OPEB
Expense
(Credit)
Teachers
$
(1,944)
Judges
(610)
State Police
2,031
Legislators
(196)
Total
$
(719)
The June 30, 2020 measurement date information includes pension credits of $1,944 thousand, $610
thousand, and $196 thousand for the Teachers' plan, the Judges' plan, and the Legislators' plan,
respectively. These credits result from several factors including recognition of investment gains,
recognition of experience gains, changes to underlying healthcare plans and the reduction of certain
liabilities.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-173
At June 30, 2021 the State reported deferred outflows of resources and deferred inflows of resources
related to its participation in the single employer plans from the following sources (expressed in
thousands):
Teachers
Judges
State Police
Legislators
Totals
Deferred Outflows of Resources
Employer contributions subsequent to
the measurement date
$
— $
— $
6,178 $
— $
6,178
Differences between expected and
actual experience
—
44
478
334
856
Change of Assumptions
—
—
—
—
—
Totals
$
— $
44 $
6,656 $
334 $
7,034
Deferred Inflows of Resources
Differences between expected and
actual experience
$
— $
724 $
2,616 $
74 $
3,414
Change of assumptions
—
56
9,679
362
10,097
Net difference between projected and
actual investment earnings
805
240
3,740
227
5,012
Totals
$
805 $
1,020 $
16,035 $
663 $
18,523
The amount of $6.2 million reported as deferred outflows of resources, related to OPEB resulting from
State contributions to the single employer plans after the measurement date, will be recognized as a
reduction in the net OPEB liability in the year ended June 30, 2022. Other amounts reported as deferred
outflows/(inflows) of resources related to OPEB will be recognized in the determination of OPEB expense
as follows (expressed in thousands):
Teachers
Judges
State Police
Legislators
Year ended June 30:
2021
$
(317) $
(350) $
(3,588) $
(95)
2022
(230)
(319)
(3,206)
(66)
2023
(178)
(286)
(2,925)
(45)
2024
(80)
(21)
(1,720)
(35)
2025
—
—
(1,247)
(32)
Thereafter
—
—
(2,871)
(56)
$
(805) $
(976) $
(15,557) $
(329)
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-174
G. Component Unit Postemployment Benefit Plans
Rhode Island Public Transit Authority
The Rhode Island Public Transit Authority has a single employer defined benefit post-retirement health
and life insurance program that covers eligible employees. The Authority provides lifetime health care
benefits to substantially all retired employees and their spouses. The Authority also provides life
insurance benefits to retired employees who purchase life insurance for at least one year prior to
retirement. Benefits are provided through a group insurance policy that covers both active and Pre-65
retired employees. Post-65 retired employee healthcare coverage benefits are provided through
contributions to healthcare reimbursement accounts. Benefit terms, changes in benefit terms, and
financing requirements are established by the Authority and are subject to the collective bargaining
process. No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement
No. 75. The plan does not issue a separate audit report.
At June 30, 2021 the plan's total OPEB liability totaled $73.9 million. The total OPEB liability was
determined by an actuarial valuation as of July 1, 2020 rolled forward to June 30, 2021. For the fiscal
year ended June 30, 2021 OPEB expense of $4.3 million was recorded related to the plan. Other
information about the plan can be found in the audited financial statements of RIPTA which are available
at www.ripta.com.
University of Rhode Island, Rhode Island College and the Community College
Certain employees of the University of Rhode Island, Rhode Island College and the Community College
of Rhode Island participate in one of two OPEB plans: the State Employees' OPEB Cost-Sharing Plan
and the Board of Education Cost-Sharing OPEB Plan (collectively referred to as the Plans). The Plans are
cost-sharing multiple-employer defined benefit OPEB plans included within the Rhode Island State
Employees' and Electing Teachers OPEB System. The plans generally provide healthcare coverage to
pre-Medicare eligible retirees and health reimbursement account contributions or Medicare supplement
coverage for members who are Medicare eligible. Members may purchase coverage for spouses and
dependents. Dental and vision coverage may be purchased by these groups with no state subsidy.
At June 30, 2021 each institution's proportionate share of net OPEB liability related to participation in the
plans was as follows (in thousands):
University of Rhode Island
$
34,020
Rhode Island College
17,633
Community College of Rhode Island
13,834
Total
$
65,487
The net OPEB liabilities in the table above were measured as of June 30, 2020, the measurement date.
The total OPEB liabilities used to calculate the net OPEB liabilities were determined for each plan by a
separate actuarial valuation as of June 30, 2019 rolled forward to the June 30, 2020 measurement date.
The proportion of net OPEB liability for each institution was based on its share of contributions to the
Plans for fiscal 2020 relative to the total contributions of all participating employers for that fiscal year.
For the fiscal year ended June 30, 2021 each institution recognized OPEB expense as follows (in
thousands):
University of Rhode Island
$
637
Rhode Island College
589
Community College of Rhode Island
437
Total
$
1,663
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-175
Other information about the plans can be found in the audited financial statements for each institution as
follows:
•
University of Rhode Island - www.uri.edu
•
Rhode Island College - www.ric.edu
•
Community College of Rhode Island - www.ccri.edu
Other Component Units
Certain other component units have OPEB plans. For information regarding these plans, please refer to
the component units' separately issued financial reports.
Note 20. Deferred Compensation
The State offers its employees a deferred compensation plan created in accordance with Internal
Revenue Code Section 457. The Department of Administration, pursuant to Chapter 36-13 of the General
Laws, administers the plan. The Department of Administration contracts with private corporations to
provide investment products related to the management of the deferred compensation plan. Plan
distributions are normally available to employees without penalty at the later of age 59 or retirement and
mandatory distributions must commence once the individual reaches a certain age. The plan also allows
for distributions for qualifying events such as termination, death or “unforeseeable emergency.”
Current Internal Revenue Service regulations require that amounts deferred under a Section 457 plan be
held in trust for the exclusive benefit of participating employees and not be accessible by the government
or its creditors. The plan assets also may be held in annuity contracts or custodial accounts, which are
treated as trusts.
The State does not serve in a trustee capacity. Accordingly, the plan assets are not included in the State’s
financial statements.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-176
Note 21. Risk Management
The State uses a combination of commercial insurance and self-insurance to cover the risk of losses to
which it may be exposed. The most significant risks include potential loss relating to torts; theft of,
damage to, and destruction of assets; errors and omissions; employee injury; information technology
security and cybersecurity; employee healthcare, Medicaid managed care contracts, and natural
disasters.
To manage losses associated with the theft, damage, or loss of assets (most notably, capital assets), the
State has entered into various lines of coverage with commercial insurance carriers for insurance
coverage, subject to certain deductibles. Furthermore, the State is required by the General Laws to
provide insurance coverage on all motor vehicles owned by the State and operated by State employees.
During fiscal 2021, and the two preceding fiscal years, no settlements exceeded insured coverage limits.
Employee and certain retiree healthcare - The State also has a contract with an insurance carrier/
administrator to provide health care benefits to active and certain retired employees. For coverage
provided to active employees and retirees who are not eligible for Medicare, the State retains the full risk
of loss. The State reimburses the administrator for the costs of all claims paid plus administrative fees.
The estimated liability for incurred but not reported (IBNR) claims at June 30, 2021 and June 30, 2020
was calculated based on historical claims data. The change in claims liability (expressed in thousands) is
as follows:
Liability at
July 1, 2020
Current Year
Claims and
IBNR Estimate
Claim
Payments
Liability at
June 30, 2021
Health Insurance
Internal Service Fund
Unpaid claims
$
16,440 $
245,300 $
248,144 $
13,596
Liability at
July 1, 2019
Current Year
Claims and
IBNR Estimate
Claim
Payments
Liability at
June 30, 2020
Health Insurance
Internal Service Fund
Unpaid claims
$
18,542 $
237,398 $
239,500 $
16,440
Torts - The State is self-insured for risks of loss related to torts. Tort claims are defended by the State's
Attorney General and, when necessary, appropriations are provided to pay claims.
Worker’s Compensation - The State is self-insured for various risks of loss related to work-related injuries
of State employees. The State contracts with a claims administrator to handle claims processing and
provide certain loss prevention services for an administrative fee; however, the cost of worker’s
compensation claims (benefits) are paid by the State. The State maintains the Assessed Fringe Benefits
Fund, an internal service fund that services, among other things, workers' compensation claims. Funding
is provided through a fringe benefit rate applied to State payrolls on a pay-as-you-go basis.
Medicaid Managed Care - The State’s Medicaid program provides health and dental coverage to a
significant percentage of the Medicaid population through risk-based contracts with managed care
organizations (MCOs) where the State is exposed to risk when actual medical claims exceed the
capitation paid to the MCOs (subject to certain risk corridor limitations). Managed care expenditures
represent a relatively large portion of the State’s Medical Assistance expenditures. The State's known
estimated risk (loss) or gain share amounts related to these contracts have been included in the financial
statements.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-177
Information Technology Security and Cybersecurity - The State relies upon a large and complex
technology environment to conduct its operations, and accordingly is potentially exposed to cybersecurity
threats which could disrupt operations or result in inadvertent disclosure of personal, private, or sensitive
information. Additionally, cybersecurity breaches could expose the State to litigation and other legal risks.
The State has not obtained insurance coverage specific to cybersecurity risks but does employ multiple
forms of cybersecurity and operational safeguards based on strategies developed by the State’s Chief
Information Security Officer and other coordinating agencies.
Discretely Presented Component Units
The State’s component units are also exposed to various risks of loss related to torts, property damage
and theft, worker’s compensation, employee healthcare, accident and casualty liability, etc.. Component
units manage these risks, in most instances, through the purchase of commercial insurance coverage. In
certain instances, entities have opted to self-insure and maintain the risk of certain losses.
Specifically, the Rhode Island Public Transit Authority (RIPTA) is self-insured for claims associated with
workers' compensation, health insurance and accident and casualted losses. RIPTA has accrued a
liability of $10.8 million at June 30, 2021 for self-insurance claims (accident and casualty related) based
on an independent evaluation that it believes is adequate to cover the ultimate liability arising from such
claims. However, the recorded liability is based upon estimates of final settlement amounts, which may
be more or less than the amounts ultimately paid.
For further detailed information regarding specific component unit risk management practices, please
refer to the separately audited financial statements for those entities.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-178
Note 22. Other Information
A. Elimination Entries
When the governmental fund statements and the internal service fund statements are combined into one
column for governmental activity on the government-wide financial statements, interfund balances and
activity should be eliminated. The following are the eliminations (expressed in thousands) that were
made:
Total
Governmental
Funds
Internal
Service
Funds
Total
Eliminations
Internal
Balances
Assets
Due from other funds
$
139,953
$
5,544
$
145,497
$
(144,884) $
613
Loans to other funds
57,239
—
57,239
(57,239)
—
Total assets
$
197,192
$
5,544
$
202,736
$
(202,123) $
613
Liabilities
Due to other funds
$
144,622
$
262
$
144,884
$
(144,884) $
—
Loans from other funds
48,039
9,200
57,239
(57,239)
—
Total liabilities
$
192,661
$
9,462
$
202,123
$
(202,123) $
—
Program revenue
General government
$
—
$
426,371
$
426,371
$
(426,371) $
—
Public safety
—
7,154
7,154
(7,154)
—
Expenses
General government
—
(425,193)
(425,193)
425,193
—
Public safety
—
(8,332)
(8,332)
8,332
—
Net revenue (expenses)
$
—
$
—
$
—
$
—
$
—
Transfers
Transfers in
$
516,796
$
—
$
516,796
$
(240,956) $
275,840
Transfers out
(240,956)
—
(240,956)
240,956
—
Net transfers
$
275,840
$
—
$
275,840
$
—
$
275,840
Total
Business-type
Activities
Total
Eliminations
Internal
Balances
Assets
Due from other funds
$
2,745
$
—
$
2,745
$
(3,358) $
(613)
Total assets
$
2,745
$
—
$
2,745
$
(3,358) $
(613)
Liabilities
Due to other funds
$
3,358
$
—
$
3,358
$
(3,358) $
—
Total liabilities
$
3,358
$
—
$
3,358
$
(3,358) $
—
Transfers
Transfers in
$
25,963
$
—
$
25,963
$
(25,963) $
—
Transfers out
(301,803)
—
(301,803)
25,963
(275,840)
Net transfers
$
(275,840) $
—
$ (275,840) $
—
$
(275,840)
B. Related Party Transactions
Rhode Island Turnpike and Bridge Authority (RITBA) - The State has transferred custody, control and
supervision of the Jamestown and the Sakonnet River Bridges and related land and improvements from
the Department of Transportation to the R.I. Turnpike and Bridge Authority (RITBA). While maintenance
responsibilities for the two bridges rest with RITBA, ownership and title remains with the State. Per
statute, the State earmarks $0.035 per gallon of the gas tax to the Authority to fund the additional
maintenance costs associated with these bridges. In addition, the Authority provides administrative and
operational functions for the RhodeWorks truck tolling initiative which commenced in fiscal 2018. The
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-179
Authority collected tolls on behalf of the State approximating $31.9 million during the fiscal year ended
June 30, 2021.
The R.I. Industrial-Recreational Building Authority (RIIRBA) - RIIRBA is authorized to insure contractual
principal and interest payments required under first mortgages and first security agreements issued to
private sector entities by financial institutions and the Rhode Island Industrial Facilities Corporation
(RIIFC) on industrial or recreational projects in the State up to a maximum of $60 million of outstanding
principal balances under such insured mortgages and security agreements. The RIIRBA has a net deficit
as of June 30, 2021 relating to the insured commitments payable for a bond issued by the RIIFC on
behalf of a private-sector entity that is in default on its payments to the bondholder. As the insurer of the
bond, the RIIRBA is responsible for making the debt payments. The RIIRBA has estimated the insured
commitments payable to be $2.3 million as of June 30, 2021.
I-195 Redevelopment District Commission (I-195 RDC) - The State has transferred land associated with
the former Interstate 195 highway in Providence, Rhode Island to the I-195 Redevelopment District
Commission (I-195 RDC). The value of the land, which the Commission intends to develop, was reported
in the State’s financial statements as a capital contribution at the historical cost of $343 per acre, for a
total of $7,203. Improvements to the land are being funded by the State to complete redevelopment of the
land for sale. In April 2013, the R.I. Commerce Corporation (RICC) issued conduit debt obligations on
behalf of the I-195 RDC totaling $38.4 million. State appropriations for debt service were $2.0 million in
fiscal 2021. Also the State appropriated $1.0 million for operations in fiscal 2021. The State has
appropriated $28 million to I-195 RDC to facilitate the sale of land and project development within the
District.
Because Wexford is receiving incentives under the Rebuild Rhode Island Tax Credit Act and the I-195
Redevelopment Project Fund Act, the Commission is requiring Wexford to provide for return to the
Commission from cash flows and/or upon a capital event based upon higher than expected returns from
the project. Such contractual provisions are intended to recoup funding to the extent the project performs
above an expected level of return as determined on a case by case basis. To date, no payment has been
made to the Commission under such contractual provisions with respect to the project.
Rhode Island College (RIC) - The voters of Rhode Island authorized the issuance of $30 million in general
obligation debt for the construction of a new residence hall at Rhode Island College (RIC). Of this amount,
$20 million will be repaid to the State. The residence hall was finished and in service by September 2007,
at which time RIC began collecting revenues to pay for its share of the debt service. Debt service
obligation is to be split two-thirds to RIC and one-third to the State for all payments after September 2007.
RIC will repay the State for the debt service paid on its behalf on a straight-line basis, amortized over the
remaining life of the bonds, which carry rates ranging from 3% to 5% and a life of 19 years beginning in
fiscal 2009.
Rhode Island Higher Education Savings Trust (RIHEST) - All non-Rhode Island resident accounts
invested in the CollegeBound 529 savings plan operated by RIHEST are assessed a fee, which is paid to
the State to support the administration and operation of CollegeBound 529 and the establishment and
marketing of educational activities and scholarship funds in the State of Rhode Island. The amount of
state administrative fees and expenses includes 0.5 basis points (0.005%) accrued on all investment
options in CollegeBound 529, which is remitted to the Treasurer to cover administrative costs, and 1.5
basis points (0.015%) accrued on all investment options in CollegeBound 529, which is used to fund
Rhode Island Promise scholarships. For the year ended June 30, 2021 the administrative costs fee
totaled $239 thousand and the scholarship fund contribution totaled $712 thousand.
In addition to the 1.5 basis points used to fund scholarships discussed above, the investment manager of
the fund is required to contribute 9.5 basis points (0.095%) to fund scholarships. Such contributions,
which totaled $4.5 million for the year ended June 30, 2021, are paid directly by the investment manager
and are not included in administrative fees and expenses in RIHEST’s financial statements.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-180
Rhode Island Health and Educational Building Corporation (RIHEBC) - During fiscal 2016, the State
created the School Building Authority Fund program to address high priority school building projects in
communities with limited resources. Certain administrative duties related to the management and custody
of monetary assets of the program were assigned to the Rhode Island Health and Educational Building
Corporation (RIHEBC), including establishing a trust to hold related monies, creating and maintaining
program accounting records, and the distribution and management of awards. Approved awards can be
loans, grants or a combination of both. Funding is expected to continue through annual appropriations
from the legislature, interest earned on loans, bond refinance interest savings and other payments
received by RIHEBC pursuant to finance agreements with cities, towns and local education agencies. The
State issued $70 million of General Obligation Bonds (of the total $250 million authorized by the voters) in
December 2019 to fund the School Construction Bond Program administered by RIHEBC, to provide
further assistance to cities and towns for school construction projects. RIHEBC reported bond proceed
transfers from the State of $35.9 million and related project cost expenses of $18.2 million (approved by
the State’s School Building Authority) for fiscal 2021.
Rhode Island Infrastructure Bank (RIIB) - The Municipal Road and Bridge Revolving Fund was created
within the Rhode Island Infrastructure Bank (RIIB) to provide municipalities with low-cost financial
assistance for road and bridge projects. In accordance with certain bond statutes, premium received from
the issuance of bonds totaling $8.8 million was transferred to RIIB for this fund during fiscal 2021. State
statute requires RIIB to administer the financial components of the fund and requires the RI Department
of Transportation to receive, review and rank municipal road and bridge projects submitted for funding
consideration on an annual basis.
R. I. Commerce Corporation (RICC) - RICC received various State appropriations totaling approximately
$51.7 million during fiscal 2021 to fund various economic development initiatives on behalf of the State.
The Corporation reported approximately $98.3 million reserved for economic development initiatives at
June 30, 2021 relating to State appropriations received in recent years.
The Corporation has on occasion required developers of projects receiving incentives under the Rebuild
Rhode Island Tax Credit Program or the Tax Increment Financing Program to provide for return from cash
flows and/or upon a capital event based upon higher than expected returns from a project. Such
contractual provisions are intended to recoup funding to the extent the project performs above an
expected level of return as determined on a case by case basis. To date, no developer has made a
payment to the Rhode Island Commerce Corporation under such contractual provisions in relation to a
project for which incentives have been provided under the foregoing programs.
Other Component Units - The University of Rhode Island, Rhode Island College, Community College of
Rhode Island, Central Falls School District, RI I-195 Redevelopment Commission, Rhode Island
Commerce Corporation, and Rhode Island Public Transit Authority receive significant financial support
from the State of Rhode Island. See Note 22 D, Significant Transactions with Component Units for further
details.
C. Budgeting, Budgetary Control, and Legal Compliance
Budget Preparation
An annual budget is adopted on a basis consistent with generally accepted accounting principles. The
budget encompasses the General, Intermodal Surface Transportation and Temporary Disability Insurance
Funds as well as selective portions of certain other funds. Preparation and submission of the budget is
governed by the State Constitution and the Rhode Island General Laws. The budget, as enacted,
contains a complete plan of proposed expenditures from all sources of funds (general, federal, restricted,
and transfers in). Revenues upon which the budget plan is based are determined as part of the State’s
Revenue Estimating Conference. The Conference, held twice each year, results in a consensus estimate
of revenues for the next fiscal year and an update of prior revenue estimates for the current fiscal year.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-181
As required by the Constitution and the Rhode Island General Laws, annual appropriations are limited to
97.0% of estimated general revenues. The remaining 3.0% is contributed to the Budget Reserve Account
until such account equals 5.0% of total general revenues and opening surplus. Excess contributions to
the Budget Reserve Account are transferred to the Rhode Island Capital Plan Fund to be used for capital
projects.
The annual budget is adopted on a comprehensive basis and includes activity that, for financial reporting
purposes, is recorded in multiple funds. Consequently, the budgetary comparison schedules for an
individual fund include amounts in the “actual” column that have no corresponding budget amount. These
amounts are principally interfund transfers which are not included in the comprehensive budget to avoid
duplication but are appropriately reflected in the individual fund financial statements.
The State’s budget documents may be accessed at the following website: http://www.omb.ri.gov/budget.
Budgetary Controls
The legal level of budgetary control, i.e., the lowest level at which management (executive branch) may
not reassign resources without special approval (legislative branch), is the line item within the
appropriation act. Management cannot reallocate any appropriations without special approval from the
legislative branch.
Budgetary controls utilized by the State consist principally of statutory restrictions on the expenditure of
funds in excess of appropriations, accounting system controls to limit expenditures in excess of
authorized amounts, and budgetary monitoring controls.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-182
D. Significant Transactions with Component Units
The significant transactions with the discretely presented component units are presented (expressed in
thousands) below:
Significant transactions between primary government and component units
Amount
Description
Governmental activities
General
University of Rhode Island
$
78,153
Operating assistance
Rhode Island College
54,304
Operating assistance
Community College of Rhode Island
52,259
Operating assistance
Central Falls School District
56,192
Operating assistance
The Met
11,161
Operating assistance
I-195 District Commission
761
Operating assistance
R.I. Commerce Corporation
51,735
Operating assistance
R.I. Division of Higher Education Assistance
5,579
Operating assistance
R.I. Public Transit Authority
3,546
Operating assistance
R.I. Health and Educational Building Corporation
59,060
School Building Authority Capital Fund/School
Housing Aid
IST
R.I. Public Transit Authority
49,507
Operating assistance
R.I. Turnpike and Bridge Authority
16,164
Infrastructure improvements
Bond Capital
University of Rhode Island
2,287
Construction, improvement or purchase of assets
Rhode Island College
11,627
Construction, improvement or purchase of assets
R.I. Infrastructure Bank
13,174
Infrastructure improvements, bond proceeds and
bond premiums
R.I. Health and Educational Building Corporation
35,920
Infrastructure improvements and bond proceeds
R. I. Capital Plan
University of Rhode Island
3,419
Construction, improvement or purchase of assets
Rhode Island College
2,423
Construction, improvement or purchase of assets
Community College of Rhode Island
3,304
Construction, improvement or purchase of assets
Total Governmental Activities
$
510,575
E. Individual Fund Deficits
The following Internal Service Funds had cumulative fund deficits at June 30, 2021:
• Central Utilities ($66 thousand)
• Information Technology ($1,188 thousand)
• Correctional Industries ($500 thousand)
• Records Center ($98 thousand)
• Capitol Police ($17 thousand)
The deficits will be eliminated through charges for services in fiscal 2022.
Note 23. Subsequent Events
Primary Government
Issuance of Bonds - In October 2021 the State issued the following General Obligation Bonds;
$90,500,000 Consolidated Capital Development Loan of 2021, Series E (Tax-Exempt)
$44,500,000 Consolidated Capital Development Loan of 2021, Series F (Federally Taxable)
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-183
Employee Contract Negotiations - The State of Rhode Island reached a four-year agreement with its
largest employee union group in December 2021. The agreement includes a retroactive salary
agreement for fiscal 2021 with an estimated cost (all funds) approximating $5.1 million. The agreement
includes 2.5% salary increases in each of the next three years and additional benefits. It is expected that
the State will reach agreements with other bargaining units with similar terms.
Legal Settlement - In January 2022, the State announced its participation in an Opioid Litigation
Settlement with three entities that contributed to the Opioid Epidemic through the production, marketing,
and distribution of opioids. The State’s share of the settlement is estimated at $114 million over 18 years.
The majority of the funding is expected in the first 10 years of the agreement and all funding is to be used
for opioids abatement purposes (i.e., treatment, prevention, recovery). Twenty percent (20%) of the
funding will go directly to RI’s cities and towns for local Opioid Abatement purposes. Further litigation
efforts against additional Opioid drug manufacturers continue.
Federal Funds - The federal Infrastructure Investment and Jobs Act (IIJA), a 5-year transportation
funding package, provides RIDOT with an additional $576 million of federal funds over a five-year period
to expedite 100 projects valued at $2.1 billion in the state Transportation Improvement Program. State
matching funding will be combined with the federal funds to accelerate these improvements. Funding
from the IIJA in total is expected to approximate $1.7 billion for transportation infrastructure and bridge
replacement in the State. In addition, the IIJA provides funding for significant investments in the State’s
airports, transit systems, electric vehicle charging networks, high-speed internet coverage, and drinking
water infrastructure, as many of the infrastructure improvements targeted by the act.
Component Units
Rhode Island Infrastructure Bank - Issuance of Bonds - In September 2021, Rhode Island Infrastructure
Bank issued $127.6 million in State Revolving Fund Refunding Revenue Bonds, Series 2021A. As part of
the sale, the Bank refunded $106.4 million of outstanding bonds.
Rhode Island Public Transit Authority - Data Breach - During August 2021, RIPTA identified unauthorized
access to their computer systems. An investigation determined that the personal identification information
of a significant number of past and present State employees had been potentially compromised during
the incident. RIPTA has offered free credit monitoring to impacted employees and retirees. The Rhode
Island Attorney General is investigating the matter. At this time, RIPTA cannot reasonably assess its
potential future liability, if any, relating to this incident.
State of Rhode Island
Notes to Basic Financial Statements
Fiscal Year Ended June 30, 2021
A-184
Revenues:
General Revenues:
Personal Income Tax
$
1,450,400 $
1,540,516 $
1,615,512 $
74,996
General Business Taxes:
Business Corporations
151,300
115,612
201,789
86,177
Public Utilities Gross Earnings
109,600
99,200
93,475
(5,725)
Financial Institutions
18,500
33,800
34,856
1,056
Insurance Companies
133,700
135,100
131,447
(3,653)
Bank Deposits
3,100
3,700
3,819
119
Health Care Provider Assessment
42,000
36,600
35,121
(1,479)
Sales and Use Taxes:
Sales and Use
1,212,800
1,292,300
1,341,418
49,118
Motor Vehicle
1,000
800
682
(118)
Motor Fuel
—
—
—
—
Cigarettes
155,000
160,000
159,713
(287)
Alcohol
22,000
22,000
22,201
201
Other Taxes:
Inheritance and Gift
58,100
42,900
42,986
86
Racing and Athletics
400
400
404
4
Realty Transfer Tax
15,400
17,900
17,775
(125)
Total Taxes (1)
3,373,300
3,500,828
3,701,198
200,370
Departmental Revenue
390,000
398,928
402,688
3,760
Total Taxes and Departmental Revenue
3,763,300
3,899,756
4,103,886
204,130
Other Sources:
Lottery
272,500
288,900
301,803
12,903
Unclaimed Property
10,300
15,600
16,270
670
Other Miscellaneous
10,325
13,800
9,620
(4,180)
Total Other Sources
293,125
318,300
327,693
9,393
Total General Revenues
4,056,425
4,218,056
4,431,579
213,523
Federal Revenues
4,728,135
5,371,634
4,649,356
(722,278)
Restricted Revenues
318,902
345,448
305,523
(39,925)
Other Revenues
67,487
88,213
69,342
(18,871)
Total Revenues (2)
9,170,949
10,023,351
9,455,800
(567,551)
Expenditures (4):
General government
1,618,044
1,997,784
1,596,636
401,148
Health and human services
4,992,214
5,080,041
4,788,175
291,866
Education
1,925,339
1,944,404
1,862,965
81,439
Public safety
630,399
641,614
587,743
53,871
Natural resources
101,798
104,101
85,374
18,727
Total Expenditures (2)
9,267,794
9,767,944
8,920,893 $
847,051
Transfer of scholarship revenue to RI Division of Higher Education (3)
—
—
5,579
Transfer to Historic Tax Credit Fund (4)
20,000
Total Expenditures and Transfers
$
9,267,794 $
9,767,944 $
8,946,472
Change in Fund Balance
509,328
Fund balance - beginning (as restated)
387,927
Fund balance - ending
$
897,255
(Continued)
State of Rhode Island
Schedule of Revenues, Expenditures and Changes in Fund Balance
Budget and Actual
General Fund
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Original
Budget
Final
Budget
Actual
Variance
with Final
Budget
A-186
Expenditures by Source:
General Revenues
$
4,153,270 $
3,982,649 $
3,865,954 $
116,695
General Revenues - pending FEMA reimbursement
—
—
212,685
(212,685)
Federal Funds
4,728,135
5,371,634
4,543,552
828,082
Restricted Receipts
318,902
345,448
235,423
110,025
Other Funds
67,487
68,213
63,279
4,934
$
9,267,794 $
9,767,944 $
8,920,893 $
847,051
General Fund - Reconciliation of Budget Results to Changes in Fund Balance:
Budgeted Surplus:
Total Revenue - Final Budget
$ 10,023,351
Total Expenditures - Final Budget
9,767,944
Final Budget - Projected Surplus
$
255,407
Final Budget and Actual - Results
Total Revenues - Variance (Actual Revenue less than Budget)
$
(567,551)
Total Expenditures - Variance (Actual Expenditures less than Budget)
847,051
Surplus resulting from operations compared to final budget
$
279,500
Total General Fund Surplus - Fiscal Year Ended June 30, 2021
$
534,907
Transfer to RI Division of Higher Education Assistance (3)
(5,579)
Transfer to Historic Tax Credit Fund (4)
(20,000)
(25,579)
Net Change in General Fund - Fund Balance
$
509,328
Fund Balance, Beginning (as restated)
387,927
Fund Balance, Ending
$
897,255
Notes:
Due to rounding, numbers presented may not add up precisely to the totals provided.
(1) Transfers from the Historic Tax Credit Special Revenue Fund reported as "Other Financing Sources" on the General Fund have been allocated to
General Revenue Tax Categories on this schedule to align with the State's legally adopted budget format.
Historical Tax Credit Fund Transfers to the General Fund in Fiscal 2021 by Tax
Type:
General Fund
Reported
Revenue
Historic Tax
Credits Applied
Transfer from
HTCF
Reported
Revenue
Budget and
Actual
Personal Income
$
1,606,554 $
8,958 $
1,615,512
Business Corporations
201,789
—
201,789
Insurance Corporations
127,285
4,162
131,447
Financial Institutions
34,856
—
34,856
(2) Certain revenue and expenditure amounts classified as "Other Financing Sources (Uses)" have been reclassified within the budgetary comparison
schedule to align with the State's legally adopted budgetary format.
(3) Amounts are provided for scholarships by the administrator of the Rhode Island Higher Education Savings Trust. For financial reporting purposes
such amounts are recorded as restricted revenue and a transfer to the Rhode Island Division of Higher Education Assistance which administers the
scholarship program. These amounts are non-budgeted items.
(4) Transfer to the Historic Tax Credit Fund was reclassified to align with the State's legally adopted budget format.
(Continued)
State of Rhode Island
Schedule of Revenues, Expenditures and Changes in Fund Balance
Budget and Actual
General Fund
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Original
Budget
Final
Budget
Actual
Variance
with Final
Budget
A-187
State of Rhode Island
Schedule of Revenues, Expenditures and Changes in Fund Balance
Budget and Actual
General Fund
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
(5) Functional Expenditure Reclassifications - Budgetary presentation compared to Financial Statement Presentation: During Fiscal 2021, certain COVID-19
related expenditures were programmed in the department or agency administering the activity. For financial reporting purposes, certain expenditures have been
reclassified to align to the appropriate functional expenditure classification.
General
Government
Health and
Human
Services
Education
Public Safety
Natural
Resources
Debt Service
Transfers
Total
Expenditures
Budgetary Presentation
$
1,596,636 $
4,788,175 $
1,862,965 $
587,743 $
85,374 $
— $
25,579 $
8,946,472
Reclassifications:
General Government (DOA)
reclassed to Health and
Human Services - primarily
Hospital Assistance
Partnership Program
$
(137,315) $
137,315 $
— $
— $
— $
— $
— $
—
General Government (DOA)
reclassed to Education -
primarily additional aid to
higher education institutions
$
(23,007) $
— $
23,007 $
— $
— $
— $
— $
—
Debt Service
$
(155,665) $
— $
(46,953) $
(500) $
— $
203,118 $
— $
—
Other Transfers - RICAP
$
(120,000) $
— $
— $
— $
— $
— $
120,000 $
—
Other Transfers - RIDHEA
$
5,579 $
— $
— $
— $
— $
— $
(5,579) $
—
Other Transfers - RICCA
$
(24,915) $
(48) $
— $
— $
— $
— $
24,963 $
—
Financial Statement
Presentation
$
1,141,313 $
4,925,442 $
1,839,019 $
587,243 $
85,374 $
203,118 $
164,963 $
8,946,472
(6) COVID-19 related expenditures funded by federal Coronavirus Relief Fund (CRF) - certain fiscal 2021 expenditures were funded through new federal funding
available to the State to address the effects of the Covid-19 pandemic. The following summarizes the actual expenditures by functional category that were funded by
the CRF. Actual expenditures in the budgetary comparison schedule are designated as federal funds; the original and final budget, in most instances, classified these
amounts as general revenue funded.
General
Government
Health and
Human
Services
Education
Public Safety
Natural
Resources
Debt Service
Transfers
Total
Expenditures
$
556,921 $
123,388 $
91,771 $
191,480 $
2,812 $
— $
— $
966,372
(Continued)
A-188
State of Rhode Island
Schedule of Revenues, Expenditures and Changes in Fund Balance
Budget and Actual
General Fund
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Reconciliation of Fund Balance - Financial Reporting Perspective to Budgetary Perspective
Budgetary Perspective
Fund Balance
Reported in the
Financial
Statements
Fund Balance Not
Available for
Appropriation in
Fiscal 2022
Fund Balance
Available for
Appropriation in
Fiscal 2022
Nonspendable
$
1,538
$
—
$
1,538
Restricted
276,172
276,172
—
Committed
8,135
8,135
—
Assigned
291,985
10,574
(a)
281,411
Unassigned
319,425
227,949
(b)
91,476
Total Fund Balance
$
897,255
$
522,830
$
374,425
(c)
(a) Assigned fund balance not available for appropriation in fiscal 2022 includes general revenue appropriations carried forward by the
Governor, Judiciary, and Legislature and intra-agency balances assigned for specific purposes.
(b) Budget Reserve and Cash Stabilization Account - for financial statement purposes, this account is classified as unassigned, yet, it
is not considered available for recurring operational appropriations.
(c) Fund balance available for appropriation in fiscal 2022.
(Concluded)
See Notes to Required Supplementary Information.
A-189
State of Rhode Island
Schedule of Revenues, Expenditures, and Changes in Fund Balance
Budget and Actual
Intermodal Surface Transportation Fund
For the Fiscal Year Ended June 30, 2021
(Expressed in Thousands)
Original
Budget
Final
Budget
Actual
Amounts
Variance
with Final
Budget
Revenues:
Taxes
$
225,668 $
225,668 $
218,124 $
(7,544)
Licenses, fines, sales, and services
61,491
61,491
58,596
(2,895)
Departmental restricted revenue
2,711
2,586
—
(2,586)
Federal grants
339,392
404,132
326,705
(77,427)
Other revenues
3,330
10,862
1,643
(9,219)
Total revenues
632,592
704,739
605,068
(99,671)
Revenues and other Financing Sources (unbudgeted):
Miscellaneous revenue
420
Total revenues
605,488
Other Financing Sources:
Transfers from RI Capital Plan
29
Total Other Financing Sources
29
Total Revenues and Other Financing Sources
605,517
Expenditures (budgeted):
Central Management
Federal Funds
10,063
12,723
8,344
4,379
Gasoline Tax
7,524
9,440
7,446
1,994
Total - Central Management
17,587
22,163
15,790
6,373
Management and Budget
Gasoline Tax
4,775
5,039
3,375
1,664
Total - Management and Budget
4,775
5,039
3,375
1,664
Infrastructure-Engineering-GARVEE/Motor Fuel Tax Bonds
Federal Funds
329,329
354,363
317,112
37,251
Restricted Receipts
2,711
2,586
1,294
1,292
Gasoline Tax
65,894
73,396
74,437
(1,041)
Toll Revenue
46,946
41,615
44,219
(2,604)
Land Sale Revenue
3,280
10,812
2,437
8,375
Total - Infrastructure - Engineering
448,160
482,772
439,499
43,273
Infrastructure - Maintenance
Federal Funds
—
37,046
1,446
35,600
Gasoline Tax
17,178
16,152
13,974
2,178
Non-Land Surplus Property
50
50
—
50
Rhode Island Highway Maintenance Account
116,660
118,491
113,621
4,870
Total - Infrastructure - Maintenance
133,888
171,739
129,041
42,698
Total Expenditures (budgeted)
$
604,410 $
681,713 $
587,705 $
94,008
Expenditures and Other Financing Uses (unbudgeted):
Infrastructure Expenditures - GARVEE and State Match funded
by RI Capital Plan and Bond Capital Funds
80,390
I-195 Redevelopment District project
(29)
Mission 360 Loan Program
7
Transfers to General Fund - Gas Tax
42,044
Total Expenditures and Other Financing Uses (unbudgeted)
122,412
Total Expenditures and Other Financing Uses
710,117
Net change in fund balance
(104,600)
Fund balance, beginning
370,418
Fund balance, ending
$
265,818
See Notes to Required Supplementary Information.
A-190
Budget and Actual
An annual budget is adopted on a basis consistent with generally accepted accounting principles for the
General Fund and certain special revenue funds. The annual budget is prepared on a comprehensive
basis and includes activity that, for financial reporting purposes, is recorded in multiple funds.
Consequently, the budgetary comparison schedules for an individual fund include amounts in the "actual"
column that have no corresponding original or final budget amount. These amounts are principally
interfund transfers which are not included in the comprehensive budget to avoid duplication but are
appropriately reflected in the individual fund financial statements.
The budget to actual comparison for the General Fund on the preceding pages is summarized and does
not present budget and actual amounts detailed at the legal level of budgetary control. The legal level of
budgetary control, i.e., the lowest level at which management (executive branch) may not reassign
resources without special approval (legislative branch) is the line item within the appropriation act.
Examples of line items under “Administration” are “Central Management” and “Purchasing.” Management
cannot reallocate any appropriations without special approval from the legislative branch. A separate
schedule presenting such amounts at the detailed legal level of budgetary control is labeled “Annual
Budgetary Comparison Schedules” and is available on the State Controller’s website, http://
controller.admin.ri.gov/index.php. General fund original and final budgeted revenues reflect annual
amounts adopted during the State's revenue estimating conferences which meet biannually in November
and May.
The comprehensive annual budget includes transportation function expenditures, the majority of which
are reflected in the IST Fund for financial reporting purposes. The IST Fund major fund financial
statements include transportation related activity of the various transportation funding sources including
gas tax revenues, certain motor vehicle related fees and surcharges collected by the Department of Motor
Vehicles, tolls, federal funds, GARVEE and Motor Fuel Bonds, and the proceeds of bonds issued by the
I-195 Redevelopment District which were transferred to the IST fund to be utilized for infrastructure
projects. The budget to actual comparison schedule for the IST fund on the preceding page is presented
at the legal level of budgetary control consistent with the legally adopted budget. Not all the activity
reported within the IST fund financial statements is budgeted. Unbudgeted activity has been separately
identified in the budget to actual comparison schedule to facilitate reconciliation to the IST fund financial
statements. By statute, the IST fund receives a percentage of certain motor vehicle related fees and
surcharges collected by the Department of Motor Vehicles which are dedicated to the Rhode Island
Highway Maintenance Account within the IST Fund. These revenues are not specifically budgeted
through the revenue estimating process. Annual budgeted expenditures from the Highway Maintenance
Account reflect amounts available in the account.
The original budget includes the amounts in the applicable appropriation act, general revenue
appropriations carried forward by the Governor, and any unexpended balances designated by the
General Assembly.
State of Rhode Island
Notes to Required Supplementary Information
Fiscal Year Ended June 30, 2020
A-191
State of Rhode Island
Required Supplementary Information - Pension Information
Defined Benefit Multiple-Employer Cost-sharing Plan
The Employees’ Retirement System (ERS) Plan is a multiple-employer cost-sharing defined benefit plan
covering state employees and local teachers. Separate actuarial valuations are performed for state
employees and teachers but not for individual employers within those groups. The net pension liability
and other pension related amounts are apportioned based on proportionate employer contributions to the
plan.
By statute, the State funds 40% of the actuarially determined employer contribution for teachers. This
constitutes a special funding situation as described in GASB Statement No. 68. Consequently, the State
has recognized its proportionate share of the net pension liability and other related pension amounts for
this special funding situation in its financial statements.
The amounts included in these schedules for fiscal 2021 reflect a June 30, 2020 measurement date.
Additional information for the ERS plan is available in the separately issued audited financial statements
of the Employees’ Retirement System of Rhode Island.
The following schedules are presented for the ERS cost-sharing plan with a special funding situation:
•
ERS - Schedule of State’s Proportionate Share of the Net Pension Liability - State
Employees-Governmental Activities
•
ERS - Schedule of State’s Proportionate Share of the Net Pension Liability - State
Employees-Business-Type Activities
•
ERS - Schedule of State’s Proportionate Share of the Net Pension Liability - Teachers
•
ERS - Schedule of State Contributions - State Employees - Governmental Activities
•
ERS - Schedule of State Contributions - State Employees - Business-Type Activities
•
ERS - Schedule of State Contributions - Teachers
These schedules are intended to show information for 10 years - additional years will be displayed as
information becomes available. Note 18 to the financial statements contains detailed information
concerning pension plans.
See Notes to Required Supplementary Information
A-192
State of Rhode Island
Required Supplementary Information - Pension Information
Schedule of State's Proportionate Share
of the Net Pension Liability
Last Seven Fiscal Years
(Expressed in Thousands)
Employees' Retirement System-State Employees-Governmental Activities
Year Ended
June 30, 2021
June 30, 2020
June 30, 2019
June 30, 2018
June 30, 2017
June 30, 2016
June 30, 2015
Measurement Date
June 30, 2020
June 30, 2019
June 30, 2018
June 30, 2017
June 30, 2016
June 30, 2015
June 30, 2014
State's proportion of the net pension liability
89.9 %
89.7 %
89.5 %
89.2 %
88.9 %
89.0 %
89.0 %
State's proportionate share of the net pension liability
$
2,044,888
$
2,031,989
$
2,013,417
$
2,010,955
$
1,887,351
$
1,767,095
$
1,585,647
State's covered payroll
$
679,351
$
644,463
$
627,595
$
620,754
$
612,081
$
594,466
$
581,589
State's proportionate share of the net pension liability
as a percentage of its covered payroll
301.0 %
315.3 %
320.8 %
324.0 %
308.3 %
297.3 %
272.6 %
Plan fiduciary net position as a percentage of the
total pension liability
52.6 %
52.8 %
52.5 %
51.8 %
51.9 %
55.0 %
58.6 %
The State of Rhode Island adopted GASB Statement No. 68 in fiscal 2015. This schedule is to be reported prospectively until 10 years of data are presented.
See Notes to Required Supplementary Information.
A-193
State of Rhode Island
Required Supplementary Information - Pension Information
Schedule of State's Proportionate Share
of the Net Pension Liability
Last Seven Fiscal Years
(Expressed in Thousands)
Employees' Retirement System-State Employees - Business-Type Activities
Rhode Island Lottery
Year Ended
June 30, 2021
June 30, 2020
June 30, 2019
June 30, 2018
June 30, 2017
June 30, 2016
June 30, 2015
Measurement Date
June 30, 2020
June 30, 2019
June 30, 2018
June 30, 2017
June 30, 2016
June 30, 2015
June 30, 2014
Lottery's proportion of the net pension liability
1.0 %
0.9 %
0.8 %
0.7 %
0.8 %
0.8 %
0.7 %
Lottery's proportionate share of the net pension liability
$
21,652
$
20,850
$
17,142
$
16,869
$
16,260
$
15,074
$
13,315
Lottery's covered payroll
$
7,199
$
6,613
$
5,311
$
5,186
$
5,156
$
5,071
$
4,891
Lottery's proportionate share of the net pension liability
as a percentage of its covered payroll
300.8 %
315.3 %
322.8 %
325.3 %
315.4 %
297.3 %
272.2 %
Plan fiduciary net position as a percentage of the
total pension liability
52.6 %
52.8 %
52.5 %
51.8 %
51.9 %
55.0 %
58.6 %
The State of Rhode Island adopted GASB Statement No. 68 in fiscal 2015. This schedule is to be reported prospectively until 10 years of data are presented.
See Notes to Required Supplementary Information.
A-194
State of Rhode Island
Required Supplementary Information - Pension Information
Schedule of the State's Proportionate Share
of the Net Pension Liability
Last Seven Fiscal Years
(Expressed in Thousands)
Employees' Retirement System-State Share-Teachers (Special Funding Situation)
Year Ended
June 30, 2021
June 30, 2020
June 30, 2019
June 30, 2018
June 30, 2017
June 30, 2016
June 30, 2015
Measurement Date
June 30, 2020
June 30, 2019
June 30, 2018
June 30, 2017
June 30, 2016
June 30, 2015
June 30, 2014
State's proportion of the net pension liability
42.6 %
42.8 %
42.7 %
43.1 %
40.7 %
40.6 %
40.7 %
State's proportionate share of the net pension
liability
$
1,361,982
$
1,366,538
$
1,357,444
$
1,357,577
$
1,212,754
$
1,117,395
$
990,129
Plan fiduciary net position as a percentage of the
total pension liability
54.3 %
54.6 %
54.3 %
54.0 %
54.1 %
57.6 %
61.4 %
The State of Rhode Island adopted GASB Statement No. 68 in fiscal 2015. This schedule is to be reported prospectively until 10 years of data are presented.
See Notes to Required Supplementary Information.
A-195
State of Rhode Island
Required Supplementary Information - Pension Information
Schedule of State Contributions
Last Seven Fiscal Years
(Expressed in Thousands)
Employees' Retirement System-State Employees-Governmental Activities
2021
2020
2019*
2018
2017
2016
2015
Actuarially determined contribution
$
184,004
$
179,281
$
169,365
$
156,083
$
157,299
$
144,696
$
138,689
Contributions in relation to the actuarially
determined contribution
$
184,004
$
179,281
$
169,365
$
156,083
$
157,299
$
144,696
$
138,689
Contribution deficiency (excess)
$
—
$
—
$
—
$
—
$
—
$
—
$
—
Covered payroll
$
668,135
$
679,351
$
644,463
$
627,595
$
620,754
$
612,081
$
594,466
Contributions as a percentage of covered payroll
27.54 %
26.39 %
26.28 %
24.87 %
25.34 %
23.64 %
23.33 %
* The 2019 contributions as a percentage of covered payroll includes the actuarially determined contribution rate of 25.75% and an additional contribution of .53%
representing an elective contribution by the State to offset the impact of a voluntary retirement incentive offered to State employees in 2017.
The State of Rhode Island adopted GASB Statement No. 68 in fiscal 2015. This schedule is to be reported prospectively until 10 years of data are presented.
See Notes to Required Supplementary Information.
A-196
State of Rhode Island
Required Supplementary Information - Pension Information
Schedule of State Contributions
Last Seven Fiscal Years
(Expressed in Thousands)
Employees' Retirement System-State Employees - Business-Type Activities
Rhode Island Lottery
2021
2020
2019*
2018
2017
2016
2015
Actuarially determined contribution
$
1,900
$
1,900
$
1,738
$
1,321
$
1,314
$
1,219
$
1,183
Contributions in relation to the actuarially
determined contribution
$
1,900
$
1,900
$
1,738
$
1,321
$
1,314
$
1,219
$
1,183
Contribution deficiency (excess)
$
—
$
—
$
—
$
—
$
—
$
—
$
—
Covered payroll
$
6,899
$
7,199
$
6,613
$
5,311
$
5,186
$
5,156
$
5,071
Contributions as a percentage of covered payroll
27.54 %
26.39 %
26.28 %
24.87 %
25.34 %
23.64 %
23.33 %
* The 2019 contributions as a percentage of covered payroll includes the actuarially determined contribution rate of 25.75% and an additional contribution of .53%
representing and elective contribution by the State to offset the impact of a voluntary retirement incentive offered to State employees in 2017.
The State of Rhode Island adopted GASB Statement No. 68 in fiscal 2015. This schedule is to be reported prospectively until 10 years of data are presented.
See Notes to Required Supplementary Information.
A-197
State of Rhode Island
Required Supplementary Information - Pension Information
Schedule of State Contributions
Last Seven Fiscal Years
(Expressed in Thousands)
Employees' Retirement System-State Share-Teachers (Special Funding Situation)
2021
2020
2019
2018
2017
2016
2015
Statutorily required contribution
$
112,623 $
108,636 $
102,239 $
98,121 $
96,542 $
87,998 $
84,944
Contributions in relation to the statutorily
required contribution
112,623
108,636
102,239
98,121
96,542
87,998
84,944
Contribution deficiency (excess)
$
— $
— $
— $
— $
— $
— $
—
The State of Rhode Island adopted GASB Statement No. 68 in fiscal 2015. This schedule is to be reported prospectively until 10 years of data are
presented.
See Notes to Required Supplementary Information.
A-198
State of Rhode Island
Required Supplementary Information - Pension Information
Single-Employer Defined Benefit Plans
Certain state employees are covered by the following single-employer plans, separate from the ERS plan,
which covers most state employees.
▪
State Police Retirement Benefits Trust (SPRBT)
▪
Judicial Retirement Benefits Trust (JRBT)
▪
Rhode Island Judicial Retirement Fund Trust (RIJRFT)
▪
State Police Retirement Fund Trust (SPRFT)
These plans are administered within the Employees’ Retirement System of Rhode Island. Separate
actuarial valuations are performed for each plan. Additional information for the plans is available in the
separately issued audited financial statements of the Employees’ Retirement System of Rhode Island.
The amounts included in these schedules for fiscal 2021 reflect a June 30, 2020 measurement date.
The following schedules are presented for each single-employer plan:
▪
Schedule of Changes in the Net Pension Liability and Related Ratios
•
SPRBT
•
JRBT
•
RIJRFT
•
SPRFT
▪
Schedule of State Contributions
•
SPRBT
•
JRBT
•
RIJRFT
•
SPRFT
These schedules are intended to show information for 10 years - additional years will be displayed as
information becomes available. Note 18 to the financial statements contains detailed information
concerning pension plans.
See Notes to Required Supplementary Information.
A-199
State of Rhode Island
Required Supplementary Information - Pension Information
Schedule of Changes in Net Pension Liability and Related Ratios
Last Seven Fiscal Years
(Expressed in Thousands)
State Police Retirement Benefits Trust
Year Ended
June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015
Measurement Date
June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014
Total Pension Liability
Service cost
$
5,788
$
5,342
$
4,999
$
4,498
$
4,316
$
4,198
$
5,122
Interest
12,405
11,590
10,763
9,393
9,058
8,540
7,768
Benefit Changes
—
—
—
—
—
1,170
—
Differences between expected and actual experience
(3,126)
624
1,912
10,694
(4,139)
(3,522)
—
Changes of assumptions
1,541
—
—
9,274
—
—
(364)
Benefit payments
(6,229)
(6,047)
(6,024)
(5,142)
(4,585)
(2,497)
(1,767)
Net Change in Total Pension Liability
10,379
11,509
11,650
28,717
4,650
7,889
10,759
Total Pension Liability-Beginning
177,433
165,924
154,274
125,557
120,907
113,018
102,259
Total Pension Liability-Ending
$
187,812
$
177,433
$
165,924
$
154,274
$
125,557
$
120,907
$
113,018
Plan Fiduciary Net Position
Employer contributions
$
4,878
$
3,567
$
2,797
$
2,980
$
4,005
$
3,432
$
3,331
Employee contributions
2,346
2,130
1,994
2,060
2,035
1,732
2,034
Net investment income
5,642
9,161
10,298
13,694
58
2,656
14,124
Benefit payments
(6,229)
(6,047)
(6,024)
(5,142)
(4,585)
(2,497)
(1,767)
Administrative expenses
(158)
(140)
(137)
(125)
(103)
(100)
(83)
Other
25
1
16
5
1
4
5
Net Change in Plan Fiduciary Net Position
$
6,504
$
8,672
$
8,944
$
13,472
$
1,411
$
5,227
$
17,644
Plan Fiduciary Net Position-Beginning
147,405
138,733
129,789
116,317
114,906
109,679
92,035
Plan Fiduciary Net Position-Ending
$
153,909
$
147,405
$
138,733
$
129,789
$
116,317
$
114,906
$
109,679
Net Pension Liability
$
33,903
$
30,028
$
27,191
$
24,485
$
9,240
$
6,001
$
3,339
Plan Fiduciary Net Position as a Percentage of the Total
Pension Liability
81.9 %
83.1 %
83.6 %
84.1 %
92.6 %
95.0 %
97.0 %
Covered Payroll
$
26,419
$
24,216
$
22,590
$
22,728
$
20,985
$
19,701
$
23,051
Net Pension Liability as a Percentage of Covered Payroll
128.3 %
124.0 %
120.4 %
107.7 %
44.0 %
30.5 %
14.5 %
The State of Rhode Island adopted GASB Statement No. 68 in fiscal 2015. This schedule is to be reported prospectively until 10 years of data are presented.
See Notes to Required Supplementary Information.
A-200
State of Rhode Island
Required Supplementary Information - Pension Information
Schedule of Changes in Net Pension Liability and Related Ratios
Last Seven Fiscal Years
(Expressed in Thousands)
Judicial Retirement Benefits Trust
Year Ended
June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015
Measurement Date
June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014
Total Pension Liability
Service cost
$
3,335
$
3,184
$
3,215
$
3,001
$
2,859
$
3,024
$
3,002
Interest
5,663
5,526
5,303
5,031
4,744
4,540
4,134
Benefit Changes
—
—
—
—
—
253
—
Differences between expected and actual experience
180
(3,165)
(2,032)
(1,788)
(1,206)
(2,857)
—
Changes of assumptions
2,515
—
—
5,173
—
—
(672)
Benefit payments
(3,724)
(3,609)
(2,956)
(2,740)
(2,531)
(1,809)
(1,631)
Net Change in Total Pension Liability
7,969
1,936
3,530
8,677
3,866
3,151
4,833
Total Pension Liability-Beginning
81,093
79,158
75,628
66,951
63,085
59,934
55,101
Total Pension Liability-Ending
$
89,062
$
81,094
$
79,158
$
75,628
$
66,951
$
63,085
$
59,934
Plan Fiduciary Net Position
Employer contributions
$
2,189
$
1,922
$
2,058
$
2,057
$
2,410
$
2,709
$
2,543
Employee contributions
1,204
1,109
1,142
1,118
1,053
1,121
1,093
Net investment income
2,955
4,821
5,377
7,107
29
1,368
7,221
Benefit payments
(3,724)
(3,609)
(2,956)
(2,740)
(2,531)
(1,809)
(1,631)
Administrative expenses
(80)
(74)
(71)
(65)
(53)
(51)
(43)
Other
—
—
—
—
—
—
—
Net Change in Plan Fiduciary Net Position
$
2,544
$
4,169
$
5,550
$
7,477
$
908
$
3,338
$
9,183
Plan Fiduciary Net Position-Beginning
77,614
73,445
67,895
60,418
59,510
56,172
46,989
Plan Fiduciary Net Position-Ending
$
80,158
$
77,614
$
73,445
$
67,895
$
60,418
$
59,510
$
56,172
Net Pension Liability
$
8,904
$
3,480
$
5,713
$
7,733
$
6,533
$
3,575
$
3,762
Plan Fiduciary Net Position as a Percentage of the Total
Pension Liability
90.0 %
95.7 %
92.8 %
89.8 %
90.2 %
94.3 %
93.7 %
Covered Payroll
$
10,284
$
9,474
$
9,653
$
9,532
$
8,981
$
9,570
$
9,314
Net Pension Liability as a Percentage of Covered Payroll
86.6 %
36.7 %
59.2 %
81.1 %
72.7 %
37.4 %
40.4 %
The State of Rhode Island adopted GASB Statement No. 68 in fiscal 2015. This schedule is to be reported prospectively until 10 years of data are presented.
See Notes to Required Supplementary Information.
A-201
State of Rhode Island
Required Supplementary Information - Pension Information
Schedule of Changes in Net Pension Liability and Related Ratios
Last Seven Fiscal Years
(Expressed in Thousands)
Rhode Island Judicial Retirement Fund Trust
Year Ended
June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015
Measurement Date
June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014
Total Pension Liability
Service cost
$
323
$
277
$
294
$
350
$
466
$
416
$
498
Interest
640
685
726
586
719
673
710
Benefit Changes
—
—
—
—
—
—
—
Differences between expected and actual experience
(646)
—
(1,953)
—
(1,060)
(642)
1,617
Changes of assumptions
2,060
917
(116)
(666)
1,865
859
(1,160)
Benefit payments
(399)
(399)
(399)
(399)
(231)
—
—
Net Change in Total Pension Liability
1,978
1,480
(1,448)
(129)
1,759
1,306
1,665
Total Pension Liability-Beginning
20,474
18,994
20,442
20,571
18,812
17,506
15,841
Total Pension Liability-Ending
$
22,452
$
20,474
$
18,994
$
20,442
$
20,571
$
18,812
$
17,506
Plan Fiduciary Net Position
Employer contributions
$
399
$
399
$
399
$
332
$
140
$
—
$
—
Employee contributions
126
122
117
117
135
159
153
Net investment income
23
38
44
64
4
9
12
Benefit payments
(399)
(399)
(399)
(399)
(231)
—
—
Administrative expenses
(1)
(1)
(1)
(1)
—
—
—
Other
—
—
—
—
—
—
—
Net Change in Plan Fiduciary Net Position
$
148
$
159
$
160
$
113
$
48
$
168
$
165
Plan Fiduciary Net Position-Beginning
966
807
647
534
486
318
153
Plan Fiduciary Net Position-Ending
$
1,114
$
966
$
807
$
647
$
534
$
486
$
318
Net Pension Liability
$
21,338
$
19,508
$
18,187
$
19,795
$
20,037
$
18,326
$
17,188
Plan Fiduciary Net Position as a Percentage of the Total
Pension Liability
5.0 %
4.7 %
4.2 %
3.2 %
2.5 %
2.6 %
1.8 %
Covered Payroll
$
1,046
$
1,002
$
1,020
$
988
$
963
$
1,321
$
1,276
Net Pension Liability as a Percentage of Covered Payroll
2040.0 %
1946.9 %
1783.0 %
2003.3 %
2189.2 %
1387.4 %
1346.8 %
The State of Rhode Island adopted GASB Statement No. 68 in fiscal 2015. This schedule is to be reported prospectively until 10 years of data are presented.
See Notes to Required Supplementary Information.
A-202
State of Rhode Island
Required Supplementary Information - Pension Information
Schedule of Changes in Net Pension Liability and Related Ratios
Last Four Fiscal Years
(Expressed in Thousands)
State Police Retirement Fund Trust
Year Ended
June 30, 2021
June 30, 2020
June 30, 2019
June 30, 2018
Measurement Date
June 30, 2020
June 30, 2019
June 30, 2018
June 30, 2017
Total Pension Liability
Service cost
$
—
$
—
$
—
$
—
Interest
11,878
12,193
11,712
12,589
Benefit Changes
—
—
—
—
Differences between expected and actual experience
(162)
—
12,187
—
Changes of assumptions
(1,136)
—
—
4,214
Benefit payments
(16,581)
(16,799)
(17,273)
(17,392)
Net Change in Total Pension Liability
(6,001)
(4,606)
6,626
(589)
Total Pension Liability-Beginning
177,977
182,583
175,957
176,546
Total Pension Liability-Ending
$
171,976
$
177,977
$
182,583
$
175,957
Plan Fiduciary Net Position
Employer contributions
$
16,387
$
16,387
$
16,387
$
31,566
Employee contributions
—
—
—
—
Net investment income
868
770
1,137
1,839
Benefit payments
(16,581)
(16,799)
(17,273)
(17,392)
Administrative expenses
(17)
(17)
(6)
—
Other
—
—
—
—
Net Change in Plan Fiduciary Net Position
$
657
$
341
$
245
$
16,013
Plan Fiduciary Net Position-Beginning
16,599
16,258
16,013
—
Plan Fiduciary Net Position-Ending
$
17,256
$
16,599
$
16,258
$
16,013
Net Pension Liability
$
154,720
$
161,378
$
166,325
$
159,944
Plan Fiduciary Net Position as a Percentage of the Total
Pension Liability
10.0 %
9.3 %
8.9 %
9.1 %
Covered Payroll
$
—
$
—
$
—
$
—
Net Pension Liability as a Percentage of Covered Payroll
— %
— %
— %
— %
There is no covered payroll because there are no active members of the plan.
The State of Rhode Island adopted GASB Statement No. 68 in fiscal 2015. This schedule is required prospectively until 10 years of data are presented. However, there are
only four years of activity to report as the Trust began operations in fiscal 2018.
See Notes to Required Supplementary Information.
A-203
State of Rhode Island
Required Supplementary Information - Pension Information
Schedule of State Contributions
Last Seven Fiscal Years Ended June 30
(Expressed in Thousands)
State Police Retirement Benefits Trust
2021
2020
2019
2018
2017
2016
2015
Actuarially determined contribution
$
5,241
$
4,878
$
3,567
$
2,802
$
2,980
$
4,005
$
3,432
Contributions in relation to the actuarially
determined contribution
5,241
4,878
3,567
2,802
2,980
4,005
$
3,432
Contribution deficiency (excess)
$
—
$
—
$
—
$
—
$
—
$
—
$
—
Covered payroll
$ 26,442
$ 26,394
$ 24,199
$ 22,930
$ 22,191
$ 23,258
$ 19,907
Contributions as a percentage of covered payroll
19.82 %
18.48 %
14.74 %
12.22 %
13.43 %
17.22 %
17.24 %
The State of Rhode Island adopted GASB Statement No. 68 in fiscal 2015. This schedule is to be reported prospectively until 10 years of data are
presented.
See Notes to Required Supplementary Information.
A-204
State of Rhode Island
Required Supplementary Information - Pension Information
Schedule of State Contributions
Last Seven Fiscal Years Ended June 30
(Expressed in Thousands)
Judicial Retirement Benefits Trust
2021
2020
2019
2018
2017
2016
2015
Actuarially determined contribution
$
2,246
$
2,189
$
1,922
$
2,064
$
2,057
$
2,410
$
2,709
Contributions in relation to the actuarially
determined contribution
2,246
$
2,189
1,922
2,064
2,057
2,410
$
2,709
Contribution deficiency (excess)
$
—
$
—
$
—
$
—
$
—
$
—
$
—
Covered payroll
$ 10,393
$ 10,278
$
9,477
$
9,768
$
9,532
$
8,993
$
9,566
Contributions as a percentage of covered payroll
21.61 %
21.30 %
20.28 %
21.13 %
21.58 %
26.80 %
28.32 %
The State of Rhode Island adopted GASB Statement No. 68 in fiscal 2015. This schedule is to be reported prospectively until 10 years of data are
presented.
See Notes to Required Supplementary Information.
A-205
State of Rhode Island
Required Supplementary Information - Pension Information
Schedule of State Contributions
Last Seven Fiscal Years Ended June 30
(Expressed in Thousands)
Rhode Island Judicial Retirement Fund Trust
2021
2020
2019
2018
2017
2016
2015
Actuarially determined contribution
$
1,242
$
1,215
$
1,224
$
1,322
$
1,241
$
1,200
$ 1,623
Contributions in relation to the actuarially
determined contribution
399
399
399
399
332
140
—
Contribution deficiency (excess)
$
843
$
816
$
825
$
923
$
909
$
1,060
$ 1,623
Covered payroll
$
1,046
$
1,046
$
1,002
$
1,020
$
988
$
964
$ 1,321
Contributions as a percentage of covered payroll
38.15 %
38.15 %
39.82 %
39.12 %
33.60 %
14.52 %
— %
The State of Rhode Island adopted GASB Statement No. 68 in fiscal 2015. This schedule is to be required prospectively until 10 years of data are
presented.
See Notes to Required Supplementary Information.
A-206
State of Rhode Island
Required Supplementary Information - Pension Information
Schedule of State Contributions
Last Four Fiscal Years Ended June 30
(Expressed in Thousands)
State Police Retirement Fund Trust
2021
2020
2019
2018
Actuarially determined contribution
$
16,387 $
16,387 $
16,387 $
16,387
Contributions in relation to the actuarially
determined contribution
16,387
16,387
16,387
16,387
Contribution deficiency (excess)
$
— $
— $
— $
—
There is no covered payroll because there are no active members of the plan.
The State of Rhode Island adopted GASB Statement No. 68 in fiscal 2015. This schedule is required prospectively until 10 years of data
are presented. However, there are only four years of activity to report as the Trust began operations in fiscal 2018.
See Notes to Required Supplementary Information.
A-207
State of Rhode Island
Required Supplementary Information - Pension Information
Non-Contributory (pay-as-you-go) Defined Benefit Single-Employer Plan
Certain retired state employees are covered by the Judicial Non-Contributory Retirement Plan, a single-
employer plan, which is separate from the plans previously described, and is not part of the Employees’
Retirement System of Rhode Island.
The State funds this plan on a pay-as-you-go basis and no actuarially determined advance employer
contribution is made nor are assets accumulated in a trust to pay future benefits. A separate actuarial
valuation is performed to provide an accounting measure of the total pension liability for the plan.
A Schedule of Changes in Total Pension Liability is presented for this plan. The amounts included in this
schedule for fiscal 2021 reflects a June 30, 2020 measurement date. The Schedule of Changes in Total
Pension Liability is intended to show information for 10 years - additional years will be displayed as
information becomes available. A Schedule of State Contributions is not presented as the plan operates
on a pay-as-you-go basis and there is no covered payroll because there are no active members of the
plan.
Note 18 to the financial statements contains detailed information concerning pension plans.
See Notes to Required Supplementary Information.
A-208
State of Rhode Island
Required Supplementary Information - Pension Information
Schedule of Changes in Total Pension Liability
Last Seven Fiscal Years
(Expressed in Thousands)
Judicial Non-Contributory Retirement Plan
Year Ended
June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015
Measurement Date
June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014
Total Pension Liability
Service cost
$
— $
— $
— $
— $
— $
— $
—
Interest
1,170
1,413
1,497
1,380
1,860
2,172
2,334
Benefit changes
—
—
—
—
—
—
—
Differences between expected and actual experience
3,560
521
916
182
—
328
—
Changes of assumptions
6,757
1,250
(166)
(2,291)
3,510
1,885
—
Benefit payments
(4,659)
(5,029)
(5,486)
(5,763)
(6,107)
(6,020)
(6,173)
Net Change in Total Pension Liability
6,828
(1,845)
(3,239)
(6,492)
(737)
(1,635)
(3,839)
Total Pension Liability-Beginning
39,705
41,550
44,789
51,281
52,018
53,653
57,492
Total Pension Liability-Ending
$
46,533 $
39,705 $
41,550 $
44,789 $
51,281 $
52,018 $
53,653
The State of Rhode Island adopted GASB Statement No. 68 in fiscal 2015. This schedule is to be reported prospectively until 10 years of data are presented.
See Notes to Required Supplementary Information.
A-209
Required Supplementary Information - Pensions
Significant Methods and Assumptions used in calculating the actuarially determined contributions
Generally, actuarially determined contributions are calculated as of June 30, three years prior to the fiscal
year in which the contribution rates are applicable. The actuarially determined contribution rates for fiscal
2021 were determined based on valuations performed as of June 30, 2018, with the exception of the
RIJRFT contribution which was determined based on a valuation performed as of June 30, 2020.
Significant methods and assumptions are summarized for each plan in the table below:
ERS
SPRBT
JRBT
RIJRFT
SPRFT
State
Employees
Teachers
Actuarial Cost Method
Entry Age Normal - the Individual Entry Age Actuarial Cost methodology is used.
Amortization Method
Level Percent of Payroll - Closed
Level
Dollar
Level
Dollar
Equivalent single
remaining amortization
period
18 years
20 years
20 years
20 years
20 years
18 years
Asset valuation method
5 year smoothed market
Fair
Value
Fair
Value
Amortization period for
new gains and losses
20 years
N/A
N/A
Actuarial Assumptions
Investment Rate of
Return
7.0%
2.45%
7.00%
Projected Salary
Increases
3.25% to 6.25%
3.0% to 13.0%
3.75% to 11.75%
3.00%
3.00%
N/A
Mortality
Male Employees: RP-2014 Combined Healthy for Males with Blue Collar adjustments,
projected with Scale Ultimate MP16.
Female Employees: RP-2014 Combined Healthy for Females, projected with Scale
Ultimate MP16.
Male Teachers: RP-2014 Combined Healthy for Males with White Collar adjustments,
projected with Scale Ultimate MP16.
Female Teachers: RP-2014 Combined Healthy for Females with White Collar
adjustments, projected with Scale Ultimate MP16.
Inflation
2.5%
The required contribution for the State Police Retirement Fund Trust (SPRFT), a plan newly created in
fiscal 2017 covering a closed group of retired individuals, was calculated based on a level-dollar
amortization over 18 years from June 30, 2016. Upon statutory creation of the RISPRFT, an annual
contribution amount totaling $16.4 million was actuarially determined. This amount has been contributed
annually since 2017.
Cost of Living Adjustments
Post-retirement Benefit Increase: Post-retirement benefit increases are assumed to be 2.1%, per annum,
while the plan has a funding level that exceeds 80%; however, an interim COLA will be granted in four-
year intervals while the COLA is suspended. The first such COLA will be applicable in Calendar Year
2017 and the second such COLA will be applicable in Calendar Year 2021. As of June 30, 2017, it is
State of Rhode Island
Notes to Required Supplementary Information
Fiscal Year Ended June 30, 2021
A-210
assumed that the COLAs will be suspended for 10 years due to the current funding level of the plans. The
actual amount of the COLA is determined based on 50% of the plan’s five-year average investment rate
of return minus 5.00% which will range from zero to 4.0%, and 50% of the lesser of 3% or last year’s CPI-
U increase for a total maximum increase of 3.0%.
Factors affecting trends for amounts related to the net pension liability
June 30, 2020 measurement date:
As part of the 2020 Actuarial Experience Study for the six–year period ending June 30, 2019 as approved
by the System Board on May 22, 2020, certain assumptions were modified and reflected in the
determination of net pension liability (asset) at the June 30, 2020 measurement date. The following
summarizes the more significant changes in assumptions:
•
Separated Correctional Officers from State Employees for all assumptions.
•
Updated the underlying mortality tables from the RP-2014 set of tables to the public sector-based
PUB (10) tables.
•
Increased slightly the probabilities of turnover.
•
Decreased slightly the probabilities of retirement.
•
Modified slightly the probabilities of disability, including adding material incidence of disability for
members in the age ranges that historically have been eligible to retire but under prospective
provisions are not.
•
Lowered wage assumptions for Judges from 3.00% to 2.75%.
The RIJRFT and JNCRP plans used the municipal bond index rate of 2.45% instead of the plan's
assumed investment rate of return of 3.13%.
June 30, 2019 measurement date:
The RIJRFT and JNCRP plans used the municipal bond index rate of 3.13% as of June 30, 2019. This
rate was 3.62% at June 30, 2018. Also, there was a decrease in certain salary increase assumptions
used as of June 30, 2019 as compared to June 30, 2018.
June 30, 2018 measurement date:
There were no changes in actuarial methods or assumptions reflected in the calculation of the net
pension liability (asset) of the plans as of the June 30, 2018 measurement date compared to the June 30,
2017 measurement date except for the changes in assumptions for the RIJRFT and JNCRP plans due to
use of the municipal bond index rate of 3.62% as of June 30, 2018. This rate was 3.56% at June 30,
2017.
June 30, 2017 measurement date:
As part of the 2017 Actuarial Experience Investigation Study for the six-year period ending June 30, 2016
as approved by the System Board on May 15, 2017, certain assumptions were modified and reflected in
the determination of the net pension liability (asset) at the June 30, 2017 measurement date. The
following summarizes the more significant changes in assumptions:
•
Decreased the general inflation assumption from 2.75% to 2.50%;
•
Decreased the nominal investment return assumption from 7.50% to 7.00%;
•
Decreased the general wage growth assumption from 3.25% to 3.00%;
•
Decreased salary increase assumptions; and
•
Updated the post-retirement mortality tables to variants of the RP-2014 table. For the
improvement scale, update to the ultimate rates of the MP-2016 projection scale.
For RIJRFT, the municipal bond index rate, based on fixed-income municipal bonds with 20 years to
maturity that include only federally tax-exempt municipal bonds as reported in Fidelity Index’s “20-Year
Municipal GO AA Index” (3.56% at June 30, 2017) was applied to all periods of projected benefit
payments to determine the total pension liability.
State of Rhode Island
Notes to Required Supplementary Information
Fiscal Year Ended June 30, 2021
A-211
The June 30, 2017 measurement date information includes a pension credit of $96.5 million for the
SPRFT plan which results from a change in assumption attributable to the establishment of an advance
funded trust (effective July 1, 2016) that replaced the previous plan which was funded on a pay-as-you-go
basis. As allowed by GASB standards, the discount rate for advance funded plans used in actuarial
calculations of net pension liability is typically higher than the discount rate used for pay-as-you- go plans.
Higher discount rates result in lower pension expense. The discount rate for the SPRFT plan increased
from 2.85% to 7.00% with the establishment of the advance funded trust, which resulted in a large
pension credit. GASB standards require the immediate recognition of this change in the discount rate
assumption since the SPRFT plan is a closed plan that is comprised entirely of retired employees.
A pension credit of $664 thousand for the JNCRP plan results from an increase in the discount rate from
2.85% to 3.56%. GASB standards require the immediate recognition of this change in the discount rate
assumption since the JNCRP plan is a closed plan that is comprised entirely of retired employees.
Accordingly, the effect of this change in assumption was recorded in fiscal 2018 and was reflected in the
pension credit total of $664 thousand.
June 30, 2016 measurement date:
There were no changes in actuarial methods or assumptions reflected in the calculation of the net
pension liability (asset) as of the June 30, 2016 measurement date compared to the June 30, 2015
measurement date except for the changes in assumption for the RIJRFT plan due to use of the municipal
bond index rate of 2.85%.
June 30, 2015 measurement date:
There were no changes in actuarial methods or assumptions reflected in the calculation of the net
pension liability (asset) as of the June 30, 2015 measurement date compared to the June 30, 2014
measurement date except for the changes in assumption for the RIJRFT plan due to use of the municipal
bond index rate of 3.8% compared to 4.29% used in the June 30, 2014 valuation.
Benefit changes, which resulted from the settlement of the pension litigation and the subsequent
enactment of those settlement provisions by the General Assembly, are reflected in the calculation of the
net pension liability at the June 30, 2015 measurement date. Significant benefit changes are summarized
below:
•
Employees with more than 20 years of service at July 1, 2012 will increase their employee
contribution rates to 11% for state employees and participate solely in the defined benefit plan
effective July 1, 2015 - service credit accruals will increase from 1% to 2% per year.
•
Members are eligible to retire upon the attainment of: age 65 with 30 years of service, 64 with 31
years of service, or 62 with 33 years of service. Members may retire earlier if their RI Retirement
Security Act date is earlier or are eligible under a transition rule.
•
The COLA formula was adjusted to: 50% of the COLA is calculated by taking the previous 5-year
average investment return, less the discount rate (5 year return - 5.5%, with a maximum of 4%)
and 50% is calculated using the previous year’s CPI-U (maximum of 3%) for a total maximum
COLA of 3.5%. The COLA is calculated on the first $25,855, effective 01/01/2016, and indexed
as of that date as well.
•
Other changes included providing interim cost of living increases at four rather than five year
intervals, providing a one-time cost of living adjustment of 2% (applied to the first $25,000), two
$500 stipends, and minor adjustments.
State of Rhode Island
Notes to Required Supplementary Information
Fiscal Year Ended June 30, 2021
A-212
State of Rhode Island
Required Supplementary Information - OPEB Information
Multiple-Employer Cost-Sharing Plans
The Rhode Island State Employees' and Electing Teachers OPEB System administers two multiple-
employer cost-sharing OPEB plans covering state employees; the State Employees plan and the Board
of Education plan. Separate actuarial valuations are performed for each plan but not for individual
employers within each plan. The net OPEB liability and other OPEB related amounts are apportioned
based on proportionate employer contributions to the plan.
The amounts included in these schedules for fiscal 2021 reflect a June 30, 2020 measurement date.
Additional information for these plans is available in the separately issued audited financial statements of
Rhode Island State Employees' and Electing Teachers OPEB System and an additional report prepared
to provide the GASB Statement No. 75 related information for participating employers.
The following schedules are presented for these multiple-employer cost-sharing plans:
▪
Schedule of State’s Proportionate Share of the Net OPEB Liability - State Employees Plan -
Governmental Activities
▪
Schedule of State’s Proportionate Share of the Net OPEB Liability - State Employees Plan -
Business-Type Activities
▪
Schedule of State’s Proportionate Share of the Net OPEB Liability - Board of Education
Plan
▪
Schedule of State Contributions - State Employees Plan - Governmental Activities
▪
Schedule of State Contributions - State Employees Plan - Business-Type Activities
▪
Schedule of State Contributions - Board of Education Plan
These schedules are intended to show information for 10 years - additional years will be displayed as
information becomes available. Note 19 to the financial statements contains detailed information
concerning OPEB plans.
See Notes to Required Supplementary Information.
A-213
State of Rhode Island
Required Supplementary Information - OPEB Information
Schedule of State's Proportionate Share
of the Net OPEB Liability
Last Four Fiscal Years
(Expressed in Thousands)
State Employees-Governmental Activities
Year Ended
June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018
Measurement Date
June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017
State's proportion of the net OPEB liability
89.9 %
89.6 %
89.4 %
89.2 %
State's proportionate share of the net OPEB liability
$
324,502
$
391,135
$
455,475
$
463,597
State's covered payroll
$
681,554
$
657,222
$
633,562
$
632,672
State's proportionate share of the net OPEB liability as a percentage of its covered
payroll
47.6 %
59.5 %
71.9 %
73.3 %
Plan fiduciary net position as a percentage of the total OPEB liability
42.5 %
33.6 %
26.3 %
22.4 %
The State of Rhode Island adopted GASB Statement No. 75 in fiscal 2018. This schedule is to be reported prospectively until 10 years of data are
presented.
See Notes to Required Supplementary Information.
A-214
State of Rhode Island
Required Supplementary Information - OPEB Information
Schedule of State's Proportionate Share
of the Net OPEB Liability
Last Four Fiscal Years
(Expressed in Thousands)
State Employees-Business-Type Activities
Year Ended
June 30, 2021
June 30, 2020
June 30, 2019
June 30, 2018
Measurement Date
June 30, 2020
June 30, 2019
June 30, 2018
June 30, 2017
Rhode Island Lottery
Lottery's proportion of the net OPEB liability
0.9 %
0.9 %
0.8 %
0.7 %
Lottery's proportionate share of the net OPEB liability
$
3,420
$
3,990
$
3,876
$
3,864
Lottery's covered payroll
$
7,182
$
6,705
$
5,308
$
5,186
Lottery's proportionate share of the net OPEB liability as a percentage of its
covered payroll
47.6 %
59.5 %
73.0 %
74.5 %
Plan fiduciary net position as a percentage of the total OPEB liability
42.5 %
33.6 %
26.3 %
22.4 %
The State of Rhode Island adopted GASB Statement No. 75 in fiscal 2018. This schedule is to be reported prospectively until 10 years of
data are presented.
See Notes to Required Supplementary Information.
A-215
State of Rhode Island
Required Supplementary Information - OPEB Information
Schedule of State's Proportionate Share
of the Board of Education Plan Net OPEB Liability
Last Four Fiscal Years
(Expressed in Thousands)
State's Share of Board of Education Plan
Year Ended
June 30, 2021
June 30, 2020
June 30, 2019
June 30, 2018
Measurement Date
June 30, 2020
June 30, 2019
June 30, 2018
June 30, 2017
State's proportion of the net OPEB liability
0.2 %
0.2 %
0.2 %
0.2 %
State's proportionate share of the net OPEB liability
$
89
$
80
$
87
$
111
State's covered payroll
$
335
$
276
$
411
$
264
State's proportionate share of the net OPEB liability as a percentage of its
covered payroll
26.6 %
29.0 %
21.2 %
42.0 %
Plan fiduciary net position as a percentage of the total OPEB liability
57.3 %
51.6 %
38.6 %
32.1 %
The State of Rhode Island adopted GASB Statement No. 75 in fiscal 2018. This schedule is to be reported prospectively until 10 years of
data are presented.
See Notes to Required Supplementary Information.
A-216
State of Rhode Island
Required Supplementary Information - OPEB Information
Schedule of State Contributions
Last Four Fiscal Years Ended June 30
(Expressed in Thousands)
State Employees-Governmental Activities
2021
2020
2019
2018
Actuarially determined contribution
$
36,998
$
45,323
$
39,302
$
37,887
Contributions in relation to the actuarially determined contribution
36,998
45,323
39,302
$
37,887
Contribution deficiency (excess)
$
—
$
—
$
—
$
—
Covered payroll
$
673,924
$
681,554
$
657,222
$
633,562
Contributions as a percentage of covered payroll
5.49 %
6.65 %
5.98 %
5.98 %
The State of Rhode Island adopted GASB Statement No. 75 in fiscal 2018. This schedule is to be reported prospectively until 10 years of
data are presented.
See Notes to Required Supplementary Information.
A-217
State of Rhode Island
Required Supplementary Information - OPEB Information
Schedule of State Contributions
Last Four Fiscal Years Ended June 30
(Expressed in Thousands)
State Employees-Business-Type Activities
Rhode Island Lottery
2021
2020
2019
2018
Actuarially determined contribution
$
379
$
478
$
401
$
317
Contributions in relation to the actuarially determined contribution
379
478
401
$
317
Contribution deficiency (excess)
$
—
$
—
$
—
$
—
Covered payroll
$
6,911
$
7,182
$
6,705
$
5,308
Contributions as a percentage of covered payroll
5.49 %
6.65 %
5.98 %
5.98 %
The State of Rhode Island adopted GASB Statement No. 75 in fiscal 2018. This schedule is to be reported prospectively until 10 years of
data are presented.
See Notes to Required Supplementary Information.
A-218
State of Rhode Island
Required Supplementary Information - OPEB Information
Schedule of State Contributions to Board of Education Plan
Last Four Fiscal Years Ended June 30
(Expressed in Thousands)
State's Share of Board of Education Plan
2021
2020
2019
2018
Actuarially determined contribution
$
12
$
14
$
12
$
18
Contributions in relation to the actuarially determined contribution
12
14
12
$
18
Contribution deficiency (excess)
$
—
$
—
$
—
$
—
Covered payroll
$
417
$
335
$
276
$
411
Contributions as a percentage of covered payroll
2.93 %
4.08 %
4.36 %
4.36 %
The State of Rhode Island adopted GASB Statement No. 75 in fiscal 2018. This schedule is to be reported prospectively until 10 years of
data are presented.
See Notes to Required Supplementary Information.
A-219
State of Rhode Island
Required Supplementary Information - OPEB Information
Single-Employer Plans
Certain state employees are covered by the following single-employer plans, which are separate from the
State Employees and Board of Education multiple-employer cost-sharing plans, that cover most state
employees.
▪
Teachers Plan
▪
Judges Plan
▪
State Police Plan
▪
Legislators Plan
These plans are administered within the Rhode Island State Employees' and Electing Teachers OPEB
System. Separate actuarial valuations are performed for each plan. Additional information for the plans is
available in the separately issued audited financial statements of the Rhode Island State Employees' and
Electing Teachers OPEB System.
The amounts included in these schedules for fiscal 2021 reflect a June 30, 2020 measurement date.
The following schedules are presented for each single-employer plan:
▪
Schedule of Changes in the Net OPEB Liability (Asset) and Related Ratios
•
Teachers Plan
•
Judges Plan
•
State Police Plan
•
Legislators Plan
▪
Schedule of State Contributions
•
Teachers Plan
•
Judges Plan
•
State Police Plan
•
Legislators Plan
These schedules are intended to show information for 10 years - additional years will be displayed as
information becomes available. Note 19 to the financial statements contains detailed information
concerning OPEB plans.
See Notes to Required Supplementary Information.
A-220
State of Rhode Island
Required Supplementary Information - OPEB Information
Schedule of Changes in Net OPEB Liability (Asset) and Related Ratios
Last Four Fiscal Years
(Expressed in Thousands)
Teachers Plan
Year Ended
June 30, 2021
June 30, 2020
June 30, 2019
June 30, 2018
Measurement Date
June 30, 2020
June 30, 2019
June 30, 2018
June 30, 2017
Total OPEB Liability
Service cost
$
—
$
—
$
—
$
—
Interest
556
581
612
562
Benefit Changes
—
(1,952)
—
—
Differences between expected and actual experience
(1,212)
1,954
91
1,625
Changes of assumptions
(164)
(45)
—
217
Benefit payments
(629)
(1,438)
(1,202)
(1,610)
Net Change in Total OPEB Liability
(1,449)
(900)
(499)
794
Total OPEB Liability-Beginning
11,433
12,333
12,832
12,038
Total OPEB Liability-Ending
$
9,984
$
11,433
$
12,333
$
12,832
Plan Fiduciary Net Position
Employer contributions
$
—
$
2,277
$
2,321
$
2,321
Net investment income
1,082
1,101
780
864
Benefit payments
(629)
(1,438)
(1,202)
(1,610)
Administrative expenses
(24)
(2)
(17)
7
Other
150
117
136
103
Net Change in Plan Fiduciary Net Position
$
579
$
2,055
$
2,018
$
1,685
Plan Fiduciary Net Position-Beginning
13,850
11,795
9,777
8,092
Plan Fiduciary Net Position-Ending
$
14,429
$
13,850
$
11,795
$
9,777
Net OPEB Liability (Asset)
$
(4,445)
$
(2,417)
$
538
$
3,055
Plan Fiduciary Net Position as a Percentage of the Total OPEB Liability
144.5 %
121.1 %
95.6 %
76.2 %
Covered Payroll
$
—
$
—
$
—
$
—
Net OPEB Liability (Asset) as a Percentage of Covered Payroll
N/A
N/A
N/A
N/A
The State of Rhode Island adopted GASB Statement No. 75 in fiscal 2018. This schedule is to be reported prospectively until 10 years of data are
presented.
See Notes to Required Supplementary Information.
A-221
State of Rhode Island
Required Supplementary Information - OPEB Information
Schedule of Changes in Net OPEB Liability (Asset) and Related Ratios
Last Four Fiscal Years
(Expressed in Thousands)
Judges Plan
Year Ended
June 30, 2021
June 30, 2020
June 30, 2019
June 30, 2018
Measurement Date
June 30, 2020
June 30, 2019
June 30, 2018
June 30, 2017
Total OPEB Liability
Service cost
$
22
$
22
$
15
$
20
Interest
64
60
68
50
Benefit Changes
—
(42)
—
—
Differences between expected and actual experience
(960)
102
(271)
(306)
Changes of assumptions
(69)
(11)
—
503
Benefit payments
(18)
(54)
72
138
Net Change in Total OPEB Liability
(961)
77
(116)
405
Total OPEB Liability-Beginning
1,283
1,206
1,322
917
Total OPEB Liability-Ending
$
322
$
1,283
$
1,206
$
1,322
Plan Fiduciary Net Position
Employer contributions
$
—
$
—
$
—
$
—
Net investment income
327
341
293
334
Benefit payments
(18)
(54)
72
138
Administrative expenses
(2)
—
(6)
—
Other
56
49
54
26
Net Change in Plan Fiduciary Net Position
$
363
$
336
$
413
$
498
Plan Fiduciary Net Position-Beginning
4,449
4,113
3,700
3,202
Plan Fiduciary Net Position-Ending
$
4,812
$
4,449
$
4,113
$
3,700
Net OPEB Liability (Asset)
$
(4,490)
$
(3,166)
$
(2,907)
$
(2,378)
Plan Fiduciary Net Position as a Percentage of the Total OPEB Liability
1494.3 %
346.8 %
341.0 %
279.9 %
Covered Payroll
$
11,636
$
11,297
$
10,746
$
10,746
Net OPEB Liability (Asset) as a Percentage of Covered Payroll
(38.6) %
(28.0) %
(27.1) %
(22.1) %
The State of Rhode Island adopted GASB Statement No. 75 in fiscal 2018. This schedule is to be reported prospectively until 10 years of data are
presented.
See Notes to Required Supplementary Information.
A-222
State of Rhode Island
Required Supplementary Information - OPEB Information
Schedule of Changes in Net OPEB Liability and Related Ratios
Last Four Fiscal Years
(Expressed in Thousands)
State Police Plan
Year Ended
June 30, 2021
June 30, 2020
June 30, 2019
June 30, 2018
Measurement Date
June 30, 2020
June 30, 2019
June 30, 2018
June 30, 2017
Total OPEB Liability
Service cost
$
4,481
$
4,108
$
3,920
$
3,836
Interest
4,391
4,369
4,148
4,202
Benefit Changes
—
(4,790)
—
—
Differences between expected and actual experience
(2,230)
630
(907)
(174)
Changes of assumptions
(6,974)
(1,161)
—
(6,005)
Benefit payments
(3,009)
(2,801)
(2,849)
(3,130)
Net Change in Total OPEB Liability
(3,341)
355
4,312
(1,271)
Total OPEB Liability-Beginning
87,090
86,735
82,423
83,694
Total OPEB Liability-Ending
$
83,749
$
87,090
$
86,735
$
82,423
Plan Fiduciary Net Position
Employer contributions
$
7,797
$
8,257
$
7,919
$
7,702
Net investment income
4,775
4,683
3,413
3,491
Benefit payments
(3,009)
(2,801)
(2,849)
(3,130)
Administrative expenses
(35)
(12)
(73)
(1)
Other
335
277
197
163
Net Change in Plan Fiduciary Net Position
$
9,863
$
10,404
$
8,607
$
8,225
Plan Fiduciary Net Position-Beginning
56,548
46,144
37,537
29,312
Plan Fiduciary Net Position-Ending
$
66,411
$
56,548
$
46,144
$
37,537
Net OPEB Liability (Asset)
$
17,338
$
30,542
$
40,591
$
44,886
Plan Fiduciary Net Position as a Percentage of the Total OPEB Liability
79.3 %
64.9 %
53.2 %
45.5 %
Covered Payroll
$
24,661
$
23,943
$
21,334
$
21,334
Net OPEB Liability as a Percentage of Covered Payroll
70.3 %
127.6 %
190.3 %
210.4 %
The State of Rhode Island adopted GASB Statement No. 75 in fiscal 2018. This schedule is to be reported prospectively until 10 years of data are
presented.
See Notes to Required Supplementary Information.
A-223
State of Rhode Island
Required Supplementary Information - OPEB Information
Schedule of Changes in Net OPEB Liability (Asset) and Related Ratios
Last Four Fiscal Years
(Expressed in Thousands)
Legislators Plan
Year Ended
June 30, 2021
June 30, 2020
June 30, 2019
June 30, 2018
Measurement Date
June 30, 2020
June 30, 2019
June 30, 2018
June 30, 2017
Total OPEB Liability
Service cost
$
57
$
71
$
54
$
63
Interest
80
79
74
66
Benefit Changes
—
(257)
—
—
Differences between expected and actual experience
(83)
284
102
168
Changes of assumptions
(350)
(61)
—
(45)
Benefit payments
(85)
(98)
(161)
(36)
Net Change in Total OPEB Liability
(381)
18
69
216
Total OPEB Liability-Beginning
1,612
1,594
1,525
1,309
Total OPEB Liability-Ending
$
1,231
$
1,612
$
1,594
$
1,525
Plan Fiduciary Net Position
Employer contributions
$
—
$
15
$
14
$
27
Net investment income
263
276
247
283
Benefit payments
(85)
(98)
(161)
(36)
Administrative expenses
(2)
—
(4)
—
Other
79
32
42
29
Net Change in Plan Fiduciary Net Position
$
255
$
225
$
138
$
303
Plan Fiduciary Net Position-Beginning
3,267
3,042
2,904
2,601
Plan Fiduciary Net Position-Ending
$
3,522
$
3,267
$
3,042
$
2,904
Net OPEB Liability (Asset)
$
(2,291)
$
(1,655)
$
(1,448)
$
(1,379)
Plan Fiduciary Net Position as a Percentage of the Total OPEB Liability
287.6 %
202.6 %
190.9 %
190.4 %
Covered Payroll
$
1,868
$
1,814
$
1,719
$
1,719
Net OPEB Liability (Asset) as a Percentage of Covered Payroll
(122.6) %
(91.2) %
(84.2) %
(80.2) %
The State of Rhode Island adopted GASB Statement No. 75 in fiscal 2018. This schedule is to be reported prospectively until 10 years of data are
presented.
See Notes to Required Supplementary Information.
A-224
State of Rhode Island
Required Supplementary Information - OPEB Information
Schedule of State Contributions
Last Four Fiscal Years Ended June 30
(Expressed in Thousands)
Teachers Plan
2021*
2020*
2019
2018
Actuarially determined contribution
$
— $
— $
2,321
$
2,321
Contributions in relation to the actuarially determined contribution
—
—
2,277 **
2,321
Contribution deficiency (excess)
$
— $
— $
44
$
—
Covered payroll
N/A
N/A
N/A
N/A
Contributions as a percentage of covered payroll
N/A
N/A
N/A
N/A
*An actuarial valuation determined that no contribution was required for this OPEB plan.
** The contribution funded in Fiscal 2019 was the amount appropriated by the General Assembly.
There is no covered payroll because there are no active members of the plan.
The State of Rhode Island adopted GASB Statement No. 75 in fiscal 2018. This schedule is to be reported prospectively until 10 years of data are
presented.
See Notes to Required Supplementary Information.
A-225
State of Rhode Island
Required Supplementary Information - OPEB Information
Schedule of State Contributions
Last Four Fiscal Years Ended June 30
(Expressed in Thousands)
Judges Plan
2021
2020
2019
2018
Actuarially determined contribution
$
—
$
—
$
—
$
—
Contributions in relation to the actuarially determined contribution
—
—
—
—
Contribution deficiency (excess)
$
—
$
—
$
—
$
—
Covered payroll
$
11,932
$
11,589
$
11,297
$
10,746
Contributions as a percentage of covered payroll
— %
— %
— %
— %
An actuarial valuation determined that no contribution was required for this OPEB plan.
The State of Rhode Island adopted GASB Statement No. 75 in fiscal 2018. This schedule is to be reported prospectively until 10 years of
data are presented.
See Notes to Required Supplementary Information.
A-226
State of Rhode Island
Required Supplementary Information - OPEB Information
Schedule of State Contributions
Last Four Fiscal Years Ended June 30
(Expressed in Thousands)
State Police Plan
2021
2020
2019
2018
Actuarially determined contribution
$
6,178
$
7,797
$
8,257
$
7,919
Contributions in relation to the actuarially determined contribution
6,178
7,797
8,257
7,919
Contribution deficiency (excess)
$
—
$
—
$
—
$
—
Covered payroll
$26,505
$26,297
$23,666
$22,698
Contributions as a percentage of covered payroll
23.3 %
29.7 %
34.9 %
34.9 %
The State of Rhode Island adopted GASB Statement No. 75 in fiscal 2018. This schedule is to be reported prospectively until 10 years of
data are presented.
See Notes to Required Supplementary Information.
A-227
State of Rhode Island
Required Supplementary Information - OPEB Information
Schedule of State Contributions
Last Four Fiscal Years Ended June 30
(Expressed in Thousands)
Legislators Plan
2021*
2020*
2019
2018
Actuarially determined contribution
$
—
$
—
$
15
$
14
Contributions in relation to the actuarially determined contribution
—
—
15
14
Contribution deficiency (excess)
$
—
$
—
$
—
$
—
Covered payroll
$
1,897
$
1,856
$
1,812
$
1,728
Contributions as a percentage of covered payroll
— %
— %
0.8 %
0.8 %
* An actuarial valuation determined that no contribution was required for this OPEB plan.
The State of Rhode Island adopted GASB Statement No. 75 in fiscal 2018. This schedule is to be reported prospectively until 10 years of
data are presented.
See Notes to Required Supplementary Information.
A-228
Required Supplementary Information - OPEB
Significant Methods and Assumptions used in calculating the actuarially determined contributions
The actuarially determined contribution rates for fiscal 2021 were determined based on valuations
performed as of June 30, 2018. Significant methods and assumptions are summarized for each plan in
the table below:
State
Employees
Teachers
Judges
State Police
Legislators
Board of
Education
Actuarial Cost Method
Individual Entry Age Normal
Amortization Method
Level
Percent of
Pay
Level Dollar
Level
Percent of
Pay
Level
Percent of
Pay
Level
Percent of
Pay
Level
Percent of
Pay
Remaining amortization
period
18 Years
Closed
Determined
by Statutory
Contribution
30 Years
Open
18 Years
Closed
30 Years
Open
18 Years
Closed
Asset valuation method
4 Year smoothed market, 20% corridor
Actuarial Assumptions
Investment Rate of
Return
5% per year, compounded annually, net of investment expenses
Projected Salary
Increases
3.0% to 6.0%
N/A
3.0%
4.0% to
14.0%
3.0% to 6.0% 3.0% to 6.0%
Retirement Age
Experience-based table of rates that are specific to the type of eligibility condition.
Mortality
Post-Retirement Mortality
Healthy Male Teachers, Judges, Legislators, and Board of Education: RP-2014
Combined Healthy for males with White Collar adjustment, projected with the MP 2016
ultimate rates.
Healthy Female Teachers, Judges, Legislators, and Board of Education: RP-2014
Combined Healthy for females with White Collar adjustment, projected with the MP 2016
ultimate rates.
Healthy Male State Employees and Police: RP-2014 Combined Healthy for males with
Blue Collar adjustment, projected with the MP 2016 ultimate rates.
Healthy Female State Employees and Police: RP-2014 Combined Healthy for females,
projected with the MP 2016 ultimate rates.
Disabled Mortality
Disabled Males: RP-2014 Disabled Retiree Table for males, projected with the MP 2016
ultimate rates.
Disabled Females: RP-2014 Disabled Retiree Table for females, projected with the MP
2016 ultimate rates.
Pre-Retirement Mortality
The mortality tables used to project the pre-termination mortality experience of plan
members are the RP-2014 Employee tables for males and females as the base
table,and then to apply a 75% multiplier for Teachers, Judges, Legislators, and Board of
Education and a 100% multiplier for State Employees and State Police.
Healthcare Cost Trend
Rate
Based on the Getzen Model, with trend starting at 8.25% and gradually decreasing to an
ultimate trend rate of 3.5%.
Aging Factors
The tables used in developing the retiree only premium are based on the 2013 SOA
Study "Health Care Costs-From Birth to Death".
Inflation
Not explicitly used, consistent with 2.50% assumption.
State of Rhode Island
Notes to Required Supplementary Information
Fiscal Year Ended June 30, 2021
A-229
Factors affecting trends for amounts related to the net OPEB liability
The actuarial methods and assumptions used to calculate the net OPEB liability of the participating
employers are described in Note 19 to the financial statements. The following information is presented
about factors that significantly affect trends in the amounts reported between years.
June 30, 2020 measurement date:
The “Cadillac tax”, which was a tax provision from the federal Affordable Care Act (ACA), was repealed in
December 2019. As a result, liability amounts previously included for the “Cadillac tax” within the
development of the total OPEB liability have been removed as of the June 30, 2020 measurement date.
June 30, 2019 measurement date:
The June 30, 2018 actuarial valuation rolled forward to the June 30, 2020 measurement date reflected a
change in Excise Tax load on pre-65 liabilities from 11.0% to 9.5%. The healthcare cost trend rate used in
determining the OPEB liability at June 30, 2019 measurement date decreased slightly from the previous
measurement date.
June 30, 2018 Measurement date:
There were no changes in actuarial methods or assumptions reflected in the calculation of the net OPEB
liability of the plan as of the June 30, 2018 measurement date compared to the June 30, 2017
measurement date.
June 30, 2017 Measurement date:
Certain actuarial assumptions for State Employees were updated to match the assumptions used for
State Employees in the pension valuation for the Employees’ Retirement System of Rhode Island
(ERSRI) and the results of an actuarial experience investigation performed for ERSRI at June 30, 2016.
Changes were made to the following assumptions:
•
Merit and longevity portion of the salary increase assumption
•
Rates of separation from active membership
•
Rates of retirement
•
Rates of disability
•
The rate of wage inflation
•
The mortality assumption
•
The trend assumption
•
Aging factors and health and inflation trends
The excise tax load on pre-65 liabilities was changed from 13.8% to 11.0%. The Patient Protection and
Affordable Care Act includes an excise tax on high cost health plans beginning in 2022. The excise tax is
40% of costs above a threshold. The actual actuarial assumptions used in the most recent valuations
assume that the plans will be subject to the excise tax in 2022.
Actuarially determined contributions
Generally, actuarially determined contributions are calculated as of June 30, three years prior to the fiscal
year in which the contribution rates are applicable. For example, the annual required contributions for
fiscal 2021 were based on the actuarial valuation for the fiscal year ended June 30, 2018.
State of Rhode Island
Notes to Required Supplementary Information
Fiscal Year Ended June 30, 2021
A-230
State of Rhode Island
Single Audit Report
For the Fiscal Year Ended June 30, 2021
Office of the Auditor General
General Assembly
Schedule of Expenditures
of Federal Awards
State of Rhode Island
Single Audit Report
For the Fiscal Year Ended June 30, 2021
Office of the Auditor General
B-i
General Assembly
Schedule of Expenditures of
Federal Awards
Table of Contents
Page
Schedule of Expenditures of Federal Awards ........................................................................................... B-1
Notes to the Schedule of Expenditures of Federal Awards ..................................................................... B-18
Note: See page A-1 for Independent Auditor’s Report on Basic Financial Statements
and Supplemental Schedule of Expenditures of Federal Awards
Federal Grantor
Assistance
Additional Award
Name of
Pass-through
Total Program
Passed
Listing
Identification
Pass-through
Entity Award
Federal
or Cluster
Through to
Program Title
Number
Number
Entity
Number
Expenditures
Expenditures
Subrecipients
U.S. Department of Agriculture (USDA)
Agricultural Research Basic and Applied Research
10.001
$
90,714
Plant and Animal Disease, Pest Control, and Animal Care
10.025
299,446
$
37,697
Inspection Grading and Standardization
10.162
6,180
Market Protection and Promotion
10.163
(7)
Specialty Crop Block Grant Program - Farm Bill
10.170
162,311
95,671
Organic Certification Cost Share Programs
10.171
805
Trade Mitigation Program Eligible Recipient Agency Operational Funds
10.178
89,022
89,000
Outreach and Assistance for Socially Disadvantaged and Veteran
Farmers and Ranchers
10.443
7
CACFP Meal Service Training Grants
10.534
21,106
SNAP Fraud Framework Implementation Grant
10.535
104,407
Pandemic EBT Food Benefits
10.542
COVID-19
50,374,577
SNAP Cluster:
Supplemental Nutrition Assistance Program
10.551
$
235,647,891
Supplemental Nutrition Assistance Program
10.551
COVID-19
107,070,005
State Administrative Matching Grants for the Supplemental Nutrition
Assistance Program
10.561
22,536,917
365,254,813
1,054,004
Child Nutrition Cluster:
School Breakfast Program
10.553
(494,365)
School Breakfast Program (See Note 10)
10.553
COVID-19
646,751
133,215
National School Lunch Program (See Notes 4 and 9)
10.555
3,207,155
National School Lunch Program (See Notes 4, 9 and 10)
10.555
COVID-19
1,854,299
309,345
Special Milk Program for Children
10.556
450
450
Special Milk Program for Children (See Note 10)
10.556
COVID-19
323
323
Summer Food Service Program for Children (See Notes 4 and 9)
10.559
33,837,014
32,304,768
Summer Food Service Program for Children (See Notes 4, 9 and 10)
10.559
COVID-19
10,255,447
9,423,211
Child Nutrition Discretionary Grants Limited Availability
10.579
31,949
49,339,023
31,949
WIC Special Supplemental Nutrition Program for Women, Infants, and
Children (See Note 5)
10.557
18,433,302
4,167,304
Child and Adult Care Food Program
10.558
7,120,245
7,056,288
Child and Adult Care Food Program
10.558
COVID-19
2,134,135
9,254,380
2,121,883
State Administrative Expenses for Child Nutrition
10.560
1,387,278
Food Distribution Cluster:
Commodity Supplemental Food Program
10.565
135,528
114,518
Emergency Food Assistance Program (Administrative Costs)
10.568
302,668
302,619
Emergency Food Assistance Program (Administrative Costs)
10.568
COVID-19
81,550
519,746
81,525
WIC Farmers' Market Nutrition Program (FMNP)
10.572
55,098
44,128
Team Nutrition Grants
10.574
104,343
Farm to School Grant Program
10.575
28,627
Senior Farmers Market Nutrition Program
10.576
30,946
WIC Grants to States (WGS)
10.578
575,195
Supplemental Nutrition Assistance Program, Process and Technology
Improvement Grants
10.580
2,300
Fresh Fruit and Vegetable Program
10.582
779,114
694,984
Pandemic EBT Administrative Costs
10.649
COVID-19
232,233
Cooperative Forestry Assistance
10.664
521,345
106,578
Forest Legacy Program
10.676
32,159
Environmental Quality Incentives Program
10.912
6,365
Total U.S. Department of Agriculture (USDA)
$
497,704,835
$
58,169,460
U.S. Department of Commerce (DOC)
Economic Development Cluster:
Investments for Public Works and Economic Development Facilities
11.300
$
1,186,959
Economic Adjustment Assistance (See Note 3)
11.307
9,297,155
$
10,484,114
$
246,707
Interjurisdictional Fisheries Act of 1986
11.407
110,512
Sea Grant Support
11.417
12,635
Coastal Zone Management Administration Awards
11.419
1,327,122
14,490
Coastal Zone Management Estuarine Research Reserves
11.420
630,368
Marine Fisheries Initiative
11.433
460,608
STATE OF RHODE ISLAND
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
B-1
Federal Grantor
Assistance
Additional Award
Name of
Pass-through
Total Program
Passed
Listing
Identification
Pass-through
Entity Award
Federal
or Cluster
Through to
Program Title
Number
Number
Entity
Number
Expenditures
Expenditures
Subrecipients
STATE OF RHODE ISLAND
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
Regional Fishery Management Councils
11.441
57,442
Unallied Management Projects
11.454
COVID-19
15,322
Unallied Science Program
11.472
16
Office for Coastal Management
11.473
108,237
43,660
Atlantic Coastal Fisheries Cooperative Management Act
11.474
502,561
State and Local Implementation Grant Program
11.549
386
Total U.S. Department of Commerce (DOC)
$
13,709,323
$
304,857
U.S. Department of Defense (DOD)
Procurement Technical Assistance for Business Firms
12.002
$
313,474
State Memorandum of Agreement Program for the Reimbursement of
Technical Services
12.113
610,665
National Guard Military Operations and Maintenance (O&M) Projects
12.401
19,050,324
$
159,433
GenCyber Grants Program
12.903
23,991
Total U.S. Department of Defense (DOD)
$
19,998,454
$
159,433
U.S. Department of Housing and Urban Development (HUD)
Mortgage Insurance Homes (See Note 3)
14.117
$
363,832,323
Qualified Participating Entities (QPE) Risk Sharing (See Note 3)
14.189
276,569,509
Section 8 Project-Based Cluster:
Section 8 Housing Assistance Payments Program
14.195
$
192,830,060
Section 8 Housing Assistance Payments Program
14.195
COVID-19
1,912,843
Lower Income Housing Assistance Program Section 8 Moderate
Rehabilitation
14.856
614,861
195,357,764
Community Development Block Grants/State's Program and Non-
Entitlement Grants in Hawaii (See Note 3)
14.228
13,169,868
$
4,478,936
Community Development Block Grants/State's Program and Non-
Entitlement Grants in Hawaii (See Note 3)
14.228
COVID-19
252,889
13,422,757
186,893
Emergency Solutions Grant Program
14.231
683,799
651,047
Emergency Solutions Grant Program
14.231
COVID-19
1,744,820
2,428,619
1,662,663
Home Investment Partnerships Program (See Note 3)
14.239
27,464,544
Housing Opportunities for Persons with AIDS
14.241
390,191
388,088
Housing Opportunities for Persons with AIDS
14.241
COVID-19
141,692
531,883
133,382
Continuum of Care Program
14.267
3,469,290
CDBG - Disaster Recovery Grants - Pub. L. No. 113-2 Cluster:
Hurricane Sandy Community Development Block Grant Disaster
Recovery Grants (CDBG-DR)
14.269
87,942
1,700
Housing Trust Fund (See Note 3)
14.275
5,408,455
Project Rental Assistance Demonstration (PRA Demo) Program of
Section 811 Supportive Housing for Persons with Disabilities
14.326
190,075
Fair Housing Assistance Program State and Local
14.401
251,228
Housing Voucher Cluster:
Section 8 Housing Choice Vouchers
14.871
18,157,887
Family Self-Sufficiency Program
14.896
140,003
Lead-Based Paint Hazard Control in Privately-Owned Housing
14.900
463,397
Total U.S. Department of Housing and Urban Development (HUD)
$
907,775,676
$
7,502,709
U.S. Department of the Interior (DOI)
Fish and Wildlife Cluster:
Sport Fish Restoration
15.605
$
4,687,769
Wildlife Restoration and Basic Hunter Education
15.611
4,481,759
$
9,169,528
Fish and Wildlife Management Assistance
15.608
42,705
Cooperative Endangered Species Conservation Fund
15.615
6,649
Clean Vessel Act
15.616
67,573
48,164
Sportfishing and Boating Safety Act
15.622
(10)
Coastal
15.630
28,459
2,361
State Wildlife Grants
15.634
478,147
Endangered Species Recovery Implementation
15.657
2,830
Hurricane Sandy Disaster Relief Activities-FWS
15.677
2,822
B-2
Federal Grantor
Assistance
Additional Award
Name of
Pass-through
Total Program
Passed
Listing
Identification
Pass-through
Entity Award
Federal
or Cluster
Through to
Program Title
Number
Number
Entity
Number
Expenditures
Expenditures
Subrecipients
STATE OF RHODE ISLAND
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
Historic Preservation Fund Grants-In-Aid
15.904
585,246
32,000
Water Use and Data Research
15.981
28,109
Block Island Wind Farm Monitoring Project
15.U01
140EO119003
164,946
Total U.S. Department of the Interior (DOI)
$
10,577,004
$
82,525
U.S. Department of Justice (DOJ)
Sexual Assault Services Formula Program
16.017
$
270,056
$
255,403
Coronavirus Emergency Supplemental Funding Program
16.034
COVID-19
3,068
Juvenile Accountability Block Grants
16.523
55
Juvenile Justice and Delinquency Prevention
16.540
161,838
18,297
Missing Children's Assistance
16.543
287,301
State Justice Statistics Program for Statistical Analysis Centers
16.550
72,060
National Criminal History Improvement Program (NCHIP)
16.554
369,180
Crime Victim Assistance
16.575
8,764,415
7,765,241
Crime Victim Compensation
16.576
242,669
Crime Victim Assistance/Discretionary Grants
16.582
60,566
50,081
Drug Court Discretionary Grant Program
16.585
375,014
Violence Against Women Formula Grants
16.588
824,472
468,093
Grants to Encourage Arrest Policies and Enforcement of Protection
Orders Program
16.590
(3)
Residential Substance Abuse Treatment for State Prisoners
16.593
29,012
Bulletproof Vest Partnership Program
16.607
26,353
Project Safe Neighborhoods
16.609
10,717
Public Safety Partnership and Community Policing Grants
16.710
8,950
Special Data Collections and Statistical Studies
16.734
276,000
PREA Program: Strategic Support for PREA Implementation
16.735
56,282
Edward Byrne Memorial Justice Assistance Grant Program
16.738
287,258
89,293
DNA Backlog Reduction Program
16.741
264,583
Paul Coverdell Forensic Sciences Improvement Grant Program
16.742
198,050
Support for Adam Walsh Act Implementation Grant Program
16.750
204,061
Edward Byrne Memorial Competitive Grant Program
16.751
(2)
Harold Rogers Prescription Drug Monitoring Program
16.754
536,782
Second Chance Act Reentry Initiative
16.812
71,598
John R. Justice Prosecutors and Defenders Incentive Act
16.816
10,832
Smart Prosecution Initiative
16.825
96,766
Justice Reinvestment Initiative
16.827
310,494
Comprehensive Opioid, Stimulant, and Substance Abuse Program
16.838
801,670
157,872
Equitable Sharing Program
16.922
958,451
Total U.S. Department of Justice (DOJ)
$
15,578,548
$
8,804,280
U.S. Department of Labor (DOL)
Labor Force Statistics
17.002
$
849,930
Compensation and Working Conditions
17.005
17,363
Employment Service Cluster:
Employment Service/Wagner-Peyser Funded Activities
17.207
$
2,467,459
Jobs for Veterans State Grants
17.801
172,232
Local Veterans' Employment Representative Program
17.804
334,136
2,973,827
Unemployment Insurance (See Note 6)
17.225
383,449,874
Unemployment Insurance (See Note 6)
17.225
COVID-19
1,730,031,801
2,113,481,675
Senior Community Service Employment Program
17.235
423,163
Trade Adjustment Assistance
17.245
638,758
WIOA Cluster:
WIOA Adult Program
17.258
2,681,010
$
995,166
WIOA Youth Activities
17.259
3,415,232
1,740,031
WIOA Dislocated Worker Formula Grants
17.278
3,084,225
9,180,467
808,194
WIOA Pilots, Demonstrations, and Research Projects
17.261
(34,774)
H-1B Job Training Grants
17.268
256,970
Reentry Employment Opportunities
17.270
(1)
B-3
Federal Grantor
Assistance
Additional Award
Name of
Pass-through
Total Program
Passed
Listing
Identification
Pass-through
Entity Award
Federal
or Cluster
Through to
Program Title
Number
Number
Entity
Number
Expenditures
Expenditures
Subrecipients
STATE OF RHODE ISLAND
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
WIOA National Dislocated Worker Grants/WIA National Emergency
Grants
17.277
3,538,157
WIOA Dislocated Worker National Reserve Demonstration Grants
17.280
671,847
169,085
Apprenticeship USA Grants
17.285
387,096
Consultation Agreements
17.504
275,327
Total U.S. Department of Labor (DOL)
$
2,132,659,805
$
3,712,476
U.S. Department of Transportation (DOT)
Airport Improvement Program
20.106
$
18,588,515
Airport Improvement Program
20.106
COVID-19
11,867,563
$
30,456,078
Highway Research and Development Program
20.200
1,199,408
Highway Planning and Construction Cluster:
Highway Planning and Construction
20.205
$
281,946,119
$
2,412,371
Recreational Trails Program
20.219
411,559
282,357,678
Highway Training and Education
20.215
16,831
FMCSA Cluster:
Motor Carrier Safety Assistance
20.218
1,125,972
Motor Carrier Safety Assistance High Priority Activities Grants and
Cooperative Agreements
20.237
33,229
1,159,201
Commercial Driver's License Program Implementation Grant
20.232
243,976
Fuel Tax Evasion - Intergovernmental Enforcement Effort
20.240
35,319
Federal-State Partnership for State of Good Repair
20.326
162,294
Federal Transit Cluster:
Federal Transit Capital Investment Grants
20.500
1,747,036
1,293,370
Federal Transit Formula Grants
20.507
40,965,168
317,164
Federal Transit Formula Grants
20.507
COVID-19
39,620,005
State of Good Repair Grants Program
20.525
4,727,078
Buses and Bus Facilities Formula, Competitive, and Low or No
Emissions Programs
20.526
10,940,467
97,999,754
Metropolitan Transportation Planning and State and Non-Metropolitan
Planning and Research
20.505
608,988
Formula Grants for Rural Areas and Tribal Transit Program
20.509
160,455
Public Transportation Emergency Relief Program
20.527
1,644
Highway Safety Cluster:
State and Community Highway Safety
20.600
2,421,387
1,259,482
Incentive Grant Program to Prohibit Racial Profiling
20.611
70,969
70,930
National Priority Safety Programs
20.616
2,933,425
5,425,781
1,480,226
Minimum Penalties for Repeat Offenders for Driving While Intoxicated
20.608
5,340,926
2,292,697
National Highway Traffic Safety Administration (NHTSA) Discretionary
Safety Grants and Cooperative Agreements
20.614
90,644
Pipeline Safety Program State Base Grant
20.700
176,958
Interagency Hazardous Materials Public Sector Training and Planning
Grants
20.703
18,517
National Infrastructure Investments
20.933
14,597,713
Total U.S. Department of Transportation (DOT)
$
440,052,165
$
9,126,240
U.S. Department of the Treasury (TREAS)
Capital Magnet Fund (See Note 3)
21.011
$
5,427,266
Equitable Sharing
21.016
46,385
Coronavirus Relief Fund (See Notes 6 and 9)
21.019
COVID-19
947,668,662
$
220,852,838
Emergency Rental Assistance Program
21.023
COVID-19
5,001,500
Total U.S. Department of the Treasury (TREAS)
$
958,143,813
$
220,852,838
Equal Employment Opportunity Commission (EEOC)
Employment Discrimination - State and Local Fair Employment Practices
Agency Contracts
30.002
$
157,741
Total Equal Employment Opportunity Commission (EEOC)
$
157,741
$
-
B-4
Federal Grantor
Assistance
Additional Award
Name of
Pass-through
Total Program
Passed
Listing
Identification
Pass-through
Entity Award
Federal
or Cluster
Through to
Program Title
Number
Number
Entity
Number
Expenditures
Expenditures
Subrecipients
STATE OF RHODE ISLAND
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
General Services Administration (GSA)
Donation of Federal Surplus Personal Property (See Notes 4 and 9)
39.003
$
4,521,138
$
4,521,138
Total General Services Administration (GSA)
$
4,521,138
$
4,521,138
National Endowment for the Arts (NEA)
Promotion of the Arts Partnership Agreements
45.025
$
569,876
$
255,362
Promotion of the Arts Partnership Agreements
45.025
COVID-19
119,505
$
689,381
82,953
Grants to States
45.310
942,444
153,954
Grants to States
45.310
COVID-19
56,258
998,702
56,258
Total National Endowment for the Arts (NEA)
$
1,688,083
$
548,527
U.S. Department of Veterans Affairs (VA)
Veterans State Nursing Home Care
64.015
$
8,544,102
All-Volunteer Force Educational Assistance
64.124
2,831
Veterans Cemetary Grants Program
64.203
439,701
All Volunteer Force Education Assistance
64.U01
V101(223C)--P-5453
42,138
Veterans Home Direct Payment (P.L. 116-260 Sec. 517)
64.U02
COVID100MSHARE
840,916
Total U.S. Department of Veterans Affairs (VA)
$
9,869,688
$
-
Environmental Protection Agency (EPA)
State Indoor Radon Grants
66.032
$
139,732
Surveys, Studies, Research, Investigations, Demonstrations, and Special
Purpose Activities Relating to the Clean Air Act
66.034
1,129,770
Diesel Emissions Reduction Act (DERA) State Grants
66.040
218,700
Healthy Communities Grant Program
66.110
4,251
$
4,250
Southeastern U.S. Regional Targeted Watershed Initiative
66.127
17,042
Southeast New England Coastal Watershed Restoration Program
66.129
416
Multipurpose Grants to States and Tribes
66.204
1,122
State Public Water System Supervision
66.432
431,528
Water Quality Management Planning
66.454
160,480
Clean Water State Revolving Fund Cluster:
Capitalization Grants for Clean Water State Revolving Funds
66.458
1,074,049
1,074,049
Drinking Water State Revolving Fund Cluster:
Capitalization Grants for Drinking Water State Revolving Funds
66.468
7,598,855
4,838,449
Beach Monitoring and Notification Program Implementation Grants
66.472
168,623
Performance Partnership Grants
66.605
5,207,544
8,250
Environmental Information Exchange Network Grant Program and Related
Assistance
66.608
6,064
Toxic Substances Compliance Monitoring Cooperative Agreements
66.701
49,135
TSCA Title IV State Lead Grants Certification of Lead-Based Paint
Professionals
66.707
68,466
Pollution Prevention Grants Program
66.708
63,665
Superfund State, Political Subdivision, and Indian Tribe Site-Specific
Cooperative Agreements
66.802
354,079
Underground Storage Tank (UST) Prevention, Detection, and Compliance
Program
66.804
246,657
Leaking Underground Storage Tank Trust Fund Corrective Action
Program
66.805
575,817
Superfund State and Indian Tribe Core Program Cooperative Agreements
66.809
96,179
State and Tribal Response Program Grants
66.817
739,772
Brownfields Multipurpose, Assessment, Revolving Loan Fund, and
Cleanup Cooperative Agreements
66.818
39,682
Total Environmental Protection Agency (EPA)
$
18,391,628
$
5,924,998
U.S. Department of Energy (DOE)
State Energy Program
81.041
$
348,474
State Energy Program
81.041
ARRA
390,238
$
738,712
Weatherization Assistance for Low-Income Persons
81.042
260,446
$
260,297
B-5
Federal Grantor
Assistance
Additional Award
Name of
Pass-through
Total Program
Passed
Listing
Identification
Pass-through
Entity Award
Federal
or Cluster
Through to
Program Title
Number
Number
Entity
Number
Expenditures
Expenditures
Subrecipients
STATE OF RHODE ISLAND
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
Office of Science Financial Assistance Program
81.049
128,927
87,425
Conservation Research and Development
81.086
76,437
Energy Efficiency and Renewable Energy Information Dissemination,
Outreach, Training and Technical Analysis/Assistance
81.117
20,270
State Energy Program Special Projects
81.119
194,523
109,981
State Heating Oil and Propane Program
81.138
15,327
Maintaining Grid Health in Rural Communities
81.U01
AGR-2020-10203
7,278
Total U.S. Department of Energy (DOE)
$
1,441,920
$
457,703
U.S. Department of Education (ED)
Adult Education - Basic Grants to States
84.002
$
2,615,438
$
2,060,647
Student Financial Assistance Cluster: (See Note 7)
Federal Supplemental Educational Opportunity Grants
84.007
$
2,892,360
Federal Work-Study Program
84.033
1,774,809
Federal Perkins Loan Program - Federal Capital Contributions (See
Note 3)
84.038
6,911,239
Federal Pell Grant Program
84.063
51,919,118
Federal Direct Student Loans (See Note 3)
84.268
109,817,193
Teacher Education Assistance for College and Higher Education
Grants (TEACH Grants)
84.379
12,357
173,327,076
Title I Grants to Local Educational Agencies
84.010
45,844,157
42,513,381
Title I State Agency Program for Neglected and Delinquent Children and
Youth
84.013
394,765
Special Education (IDEA) Cluster:
Special Education Grants to States
84.027
43,652,404
36,866,420
Special Education Preschool Grants
84.173
1,592,412
45,244,816
1,072,651
Higher Education Institutional Aid
84.031
239,892
TRIO Cluster:
TRIO Student Support Services
84.042
948,749
TRIO Talent Search
84.044
613,072
TRIO Upward Bound
84.047
581,394
TRIO Educational Opportunity Centers
84.066
944,295
TRIO McNair Post-Baccalaureate Achievement
84.217
250,325
3,337,835
Career and Technical Education - Basic Grants to States
84.048
4,232,353
2,961,197
Career and Technical Education - National Programs
84.051
223,967
55,834
Rehabilitation Services Vocational Rehabilitation Grants to States
84.126
7,854,849
Rehabilitation Services Independent Living Services for Older Individuals
Who Are Blind
84.177
241,922
Special Education - Grants for Infants and Families
84.181
3,321,653
1,964,272
School Safety National Activities (formerly, Safe and Drug-Free Schools
and Communities - National Programs)
84.184
620,062
42,089
Supported Employment Services for Individuals with the Most Significant
Disabilities
84.187
235,013
Education for Homeless Children and Youth
84.196
243,786
186,009
Assistive Technology
84.224
290,524
Charter Schools
84.282
1,947,309
1,595,688
Twenty-First Century Community Learning Centers
84.287
4,733,523
4,440,429
Special Education - Personnel Development to Improve Services and
Results for Children with Disabilities
84.325
225,183
Special Education Technical Assistance and Dissemination to Improve
Services and Results for Children with Disabilities
84.326
62,803
Gaining Early Awareness and Readiness for Undergraduate Programs
84.334
2,932,469
2,931,590
English Language Acquisition State Grants
84.365
1,591,445
1,228,414
Supporting Effective Instruction State Grants (formerly Improving Teacher
Quality State Grants)
84.367
8,713,210
8,002,600
Grants for State Assessments and Related Activities
84.369
3,647,581
Comprehensive Literacy Development
84.371
3,631,873
2,952,721
Statewide Longitudinal Data Systems
84.372
740,396
School Improvement Grants
84.377
1,012,302
459,040
B-6
Federal Grantor
Assistance
Additional Award
Name of
Pass-through
Total Program
Passed
Listing
Identification
Pass-through
Entity Award
Federal
or Cluster
Through to
Program Title
Number
Number
Entity
Number
Expenditures
Expenditures
Subrecipients
STATE OF RHODE ISLAND
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
Transition Programs for Students with Intellectual Disabilities into Higher
Education
84.407
284,269
Education Innovation and Research (formerly Investing in Innovation (i3)
Fund)
84.411
1,012,524
414,036
Student Support and Academic Enrichment Program
84.424
5,848,592
5,650,876
Education Stabilization Fund:
Elementary and Secondary School Emergency Relief (ESSER) Fund
84.425D
COVID-19
1,506,666
Higher Education Emergency Relief Fund (HEERF) - Student Aid
Portion
84.425E
COVID-19
16,682,903
Higher Education Emergency Relief Fund (HEERF) - Institution Portion
84.425F
COVID-19
36,131,039
Higher Education Emergency Relief Fund (HEERF) - Strengthening
Institutions Program
84.425M
COVID-19
513,377
54,833,985
National Center For Educational Statistics
84.U01
91990020C0023
371
National Assessment Of Educational Programs
84.U02
91990020C0023
158,819
Total U.S. Department of Education (ED)
$
379,644,762
$
115,397,894
Consumer Product Safety Commission (CPSC)
Virginia Graeme Baker Pool and Spa Safety
87.002
$
122,968
Total Consumer Product Safety Commission (CPSC)
$
122,968
$
-
Election Assistance Commission (EAC)
Help America Vote Act Requirements Payments
90.401
$
22,852
2018 HAVA Election Security Grants
90.404
$
413,757
2018 HAVA Election Security Grants
90.404
COVID-19
1,899,811
2,313,568
Total Election Assistance Commission (EAC)
$
2,336,420
$
-
U.S. Department of Health and Human Services (HHS)
Special Programs for the Aging, Title VII, Chapter 3, Programs for
Prevention of Elder Abuse, Neglect, and Exploitation
93.041
$
23,970
Special Programs for the Aging, Title VII, Chapter 2, Long Term Care
Ombudsman Services for Older Individuals
93.042
$
106,428
$
106,403
Special Programs for the Aging, Title VII, Chapter 2, Long Term Care
Ombudsman Services for Older Individuals
93.042
COVID-19
72,413
178,841
72,400
Special Programs for the Aging, Title III, Part D, Disease Prevention and
Health Promotion Services
93.043
80,652
80,631
Aging Cluster:
Special Programs for the Aging, Title III, Part B, Grants for Supportive
Services and Senior Centers
93.044
2,268,259
1,514,743
Special Programs for the Aging, Title III, Part B, Grants for Supportive
Services and Senior Centers
93.044
COVID-19
50,986
50,986
Special Programs for the Aging, Title III, Part C, Nutrition Services
93.045
2,669,505
2,174,666
Special Programs for the Aging, Title III, Part C, Nutrition Services
93.045
COVID-19
2,517,389
2,516,324
Nutrition Services Incentive Program
93.053
400,129
7,906,268
400,000
Special Programs for the Aging, Title IV, and Title II, Discretionary Projects
93.048
202,742
100,468
Special Programs for the Aging, Title IV, and Title II, Discretionary Projects
93.048
COVID-19
213,409
416,151
213,346
National Family Caregiver Support, Title III, Part E
93.052
733,859
733,629
National Family Caregiver Support, Title III, Part E
93.052
COVID-19
67,124
800,983
67,107
Public Health Emergency Preparedness
93.069
4,592,494
524,624
Environmental Public Health and Emergency Response
93.070
1,399,939
9,009
Medicare Enrollment Assistance Program
93.071
93,011
70,791
Lifespan Respite Care Program
93.072
227,861
170,963
Birth Defects and Developmental Disabilities - Prevention and
Surveillance
93.073
83,048
Hospital Preparedness Program (HPP) and public Health Emergency
Preparedness (PHEP) Aligned Cooperative Agreements
93.074
(24,393)
B-7
Federal Grantor
Assistance
Additional Award
Name of
Pass-through
Total Program
Passed
Listing
Identification
Pass-through
Entity Award
Federal
or Cluster
Through to
Program Title
Number
Number
Entity
Number
Expenditures
Expenditures
Subrecipients
STATE OF RHODE ISLAND
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
Cooperative Agreements to Promote Adolescent Health through School-
Based HIV/STD Prevention and School-Based Surveillance
93.079
68,739
Guardianship Assistance
93.090
1,103,217
Guardianship Assistance
93.090
COVID-19
(295,918)
807,299
Affordable Care Act (ACA) Personal Responsibility Education Program
93.092
245,837
109,873
Food and Drug Administration Research
93.103
897,359
Maternal and Child Health Federal Consolidated Programs
93.110
1,327,291
893,278
Maternal and Child Health Federal Consolidated Programs
93.110
COVID-19
20,291
16,500
Maternal and Child Health Federal Consolidated Programs
93.110
Rhode Island Hospital
N/A
113,705
1,461,287
Environmental Health
93.113
106,663
39,408
Project Grants and Cooperative Agreements for Tuberculosis Control
Programs
93.116
224,641
Emergency Medical Services for Children
93.127
168,709
63,412
Cooperative Agreements to States/Territories for the Coordination and
Development of Primary Care Offices
93.130
114,487
Injury Prevention and Control Research and State and Community Based
Programs
93.136
4,925,545
1,899,759
Injury Prevention and Control Research and State and Community Based
Programs
93.136
COVID-19
131,462
5,057,007
110,551
Projects for Assistance in Transition from Homelessness (PATH)
93.150
246,497
246,423
Grants to States for Loan Repayment
93.165
513,688
Childhood Lead Poisoning Prevention Projects, State and Local
Childhood Lead Poisoning Prevention and Surveillance of Blood Lead
Levels in Children
93.197
532,271
Family Planning Services
93.217
1,458,129
773,000
Traumatic Brain Injury State Demonstration Grant Program
93.234
85,949
4,011
Grants to States to Support Oral Health Workforce Activities
93.236
176,185
State Capacity Building
93.240
375,437
Mental Health Research Grants
93.242
49,960
Substance Abuse and Mental Health Services Projects of Regional and
National Significance
93.243
9,687,472
5,715,871
Early Hearing Detection and Intervention
93.251
254,303
109,229
Immunization Cooperative Agreements (See Note 4)
93.268
16,888,967
111,542
Immunization Cooperative Agreements (See Note 4)
93.268
COVID-19
5,031,004
21,919,971
587,175
Viral Hepatitis Prevention and Control
93.270
592,075
190,617
Drug Abuse and Addiction Research Programs
93.279
134,609
10,921
Centers for Disease Control and Prevention Investigations and Technical
Assistance
93.283
1,041,132
420,090
State Partnership Grant Program to Improve Minority Health
93.296
41,400
14,239
PPHF 2018: Office of Smoking and Health - National State-Based
Tobacco Control Programs, financed in part by 2018 Prevention and
Public Health Funds (PPHF)
93.305
22,321
CSELS Partnership: Strengthening Public Health Laboratories
93.322
32,104
Epidemiology and Laboratory Capacity for Infectious Diseases (ELC)
93.323
1,794,204
35,115
Epidemiology and Laboratory Capacity for Infectious Diseases (ELC)
93.323
COVID-19
55,309,124
57,103,328
4,085,895
State Health Insurance Assistance Program
93.324
216,731
102,301
The Healthy Brain Initiative: Technical Assistance to Implement Public
Health Actions related to Cognitive Health, Cognitive Impairment, and
Caregiving at the State and Local Levels
93.334
101,684
Behavioral Risk Factor Surveillance System
93.336
270,864
Student Financial Assistance Cluster: (See Note 7)
Health Professions Student Loans, Including Primary Care
Loans/Loans for Disadvantaged Students (See Note 3)
93.342
2,628,586
Nursing Student Loans (See Note 3)
93.364
2,409,060
5,037,646
Public Health Emergency Response: Cooperative Agreement for
Emergency Response: Public Health Crisis Response
93.354
(609)
Public Health Emergency Response: Cooperative Agreement for
Emergency Response: Public Health Crisis Response
93.354
COVID-19
2,879,445
2,878,836
State Actions to Improve Oral Health Outcomes and Partner Actions to
Improve Oral Health Outcomes
93.366
2,227,641
423,919
B-8
Federal Grantor
Assistance
Additional Award
Name of
Pass-through
Total Program
Passed
Listing
Identification
Pass-through
Entity Award
Federal
or Cluster
Through to
Program Title
Number
Number
Entity
Number
Expenditures
Expenditures
Subrecipients
STATE OF RHODE ISLAND
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
ACL Independent Living State Grants
93.369
429,040
National and State Tobacco Control Program
93.387
846,978
188,510
The State Flexibility to Stabilize the Market Grant Program
93.413
11,870
Strengthening Public Health Systems and Services through National
Partnerships to Improve and Protect the Nation's Health
93.421
COVID-19
59,683
Every Student Succeeds Act/Preschool Development Grants
93.434
5,155,640
3,925,005
Innovative State and Local Public Health Strategies to Prevent and
Manage Diabetes and Heart Disease and Stroke
93.435
2,566,661
357,769
Food Safety and Security Monitoring Project
93.448
34,439
Alzheimer's Disease Program Initiative (ADPI)
93.470
178,623
113,558
Pregnancy Assistance Fund Program
93.500
156,754
116,633
Public Health Training Centers Program
93.516
12,402
MaryLee Allen Promoting Safe and Stable Families Program
93.556
1,453,244
Temporary Assistance for Needy Families
93.558
61,644,318
8,113,873
Child Support Enforcement
93.563
10,803,530
Refugee and Entrant Assistance State/Replacement Designee
Administered Programs
93.566
269,289
233,935
Low-Income Home Energy Assistance
93.568
27,849,838
25,855,233
Low-Income Home Energy Assistance
93.568
COVID-19
4,647,690
32,497,528
4,647,690
Community Services Block Grant
93.569
4,162,418
4,136,545
Community Services Block Grant
93.569
COVID-19
2,171,499
6,333,917
2,170,923
CCDF Cluster:
Child Care and Development Block Grant
93.575
11,902,025
3,821,192
Child Care and Development Block Grant
93.575
COVID-19
21,325,860
1,860,519
Child Care Mandatory and Matching Funds of the Child Care and
Development Fund
93.596
11,160,867
44,388,752
Refugee and Entrant Assistance Discretionary Grants
93.576
117,631
96,283
State Court Improvement Program
93.586
198,003
State Court Improvement Program
93.586
COVID-19
32,686
230,689
Community-Based Child Abuse Prevention Grants
93.590
180,668
Grants to States for Access and Visitation Programs
93.597
72,257
Chafee Education and Training Vouchers Program (ETV)
93.599
21,873
Chafee Education and Training Vouchers Program (ETV)
93.599
COVID-19
77,147
99,020
Head Start
93.600
124,313
Adoption and Legal Guardianship Incentive Payments
93.603
805,721
Community Health Access and Rural Transformation (CHART) Model
93.624
9,596
8,971
University Centers for Excellence in Developmental Disabilities Education,
Research, and Service
93.632
416,833
Support for Ombudsman and Beneficiary Counseling Programs for States
Participating in Financial Alignment Model Demonstrations for Dually
Eligible Individuals
93.634
412,232
173,168
Children's Justice Grants to States
93.643
91,972
Stephanie Tubbs Jones Child Welfare Services Program
93.645
814,488
Stephanie Tubbs Jones Child Welfare Services Program
93.645
COVID-19
118,933
933,421
Adoption Opportunities
93.652
4,424
Foster Care Title IV-E
93.658
14,784,253
Foster Care Title IV-E
93.658
COVID-19
615,233
15,399,486
Adoption Assistance
93.659
9,137,750
Adoption Assistance
93.659
COVID-19
886,141
10,023,891
Substance Use-Disorder Prevention that Promotes Opioid Recovery and
Treatment (SUPPORT) for Patients and Communities Act
93.664
1,871,878
Emergency Grants to Address Mental and Substance Use Disorders
During COVID-19
93.665
COVID-19
810,276
577,143
Social Services Block Grant
93.667
11,455,391
2,517,427
Child Abuse and Neglect State Grants
93.669
370,264
Family Violence Prevention and Services/Domestic Violence Shelter and
Supportive Services
93.671
647,036
646,833
Family Violence Prevention and Services/Domestic Violence Shelter and
Supportive Services
93.671
COVID-19
55,791
702,827
55,776
B-9
Federal Grantor
Assistance
Additional Award
Name of
Pass-through
Total Program
Passed
Listing
Identification
Pass-through
Entity Award
Federal
or Cluster
Through to
Program Title
Number
Number
Entity
Number
Expenditures
Expenditures
Subrecipients
STATE OF RHODE ISLAND
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
John H. Chafee Foster Care Program for Successful Transition to
Adulthood
93.674
247,181
John H. Chafee Foster Care Program for Successful Transition to
Adulthood
93.674
COVID-19
151,583
398,764
Mental and Behavioral Health Education and Training Grants
93.732
405,122
Empowering Older Adults and Adults with Disabilities through Chronic
Disease Self-Management Education Programs, financed by Prevention
and Public Health Funds (PPHF)
93.734
36,182
State Public Health Approaches for Ensuring Quitline Capacity, funded in
part by Prevention and Public Health Funds (PPHF)
93.735
7,329
Elder Abuse Prevention Interventions Program
93.747
202,022
34,041
Elder Abuse Prevention Interventions Program
93.747
COVID-19
3,980
206,002
Cancer Prevention and Control Programs for State, Territorial and Tribal
Organizations, financed in part by Prevention and Public Health Funds
(PPHF)
93.752
1,578,873
215,825
State and Local Public Health Actions to Prevent Obesity, Diabetes, Heart
Disease and Stroke (PPHF)
93.757
3
Preventive Health and Health Services Block Grant, funded solely with
Prevention and Public Health Funds (PPHF)
93.758
61
Children's Health Insurance Program (See Note 5)
93.767
75,776,335
Children's Health Insurance Program (See Note 5)
93.767
COVID-19
4,582,723
80,359,058
Medicaid Cluster:
State Medicaid Fraud Control Units
93.775
951,369
State Survey and Certification of Health Care Providers and Suppliers
(Title XVIII) Medicare
93.777
3,777,051
State Survey and Certification of Health Care Providers and Suppliers
(Title XVIII) Medicare
93.777
COVID-19
51,080
Medical Assistance Program (See Notes 5, 8 and 9)
93.778
1,930,686,514
Medical Assistance Program (See Notes 5, 8 and 9)
93.778
COVID-19
120,414,960
2,055,880,974
Opioid STR
93.788
9,517,728
8,121,354
Money Follows the Person Rebalancing Demonstration
93.791
2,156,521
563,699
Organized Approaches to Increase Colorectal Cancer Screening
93.800
578,752
185,063
Hospital Preparedness Program (HPP) Ebola Preparedness and
Response Activities
93.817
55,324
Section 223 Demonstration Programs to Improve Community Mental
Health Services
93.829
7
Allergy and Infectious Diseases Research
93.855
101,234
Maternal, Infant and Early Childhood Home Visiting Grant
93.870
8,082,920
6,429,600
National Bioterrorism Hospital Preparedness Program
93.889
1,290,955
690,745
National Bioterrorism Hospital Preparedness Program
93.889
COVID-19
1,319,113
2,610,068
1,009,446
Family and Community Violence Prevention Program
93.910
230,491
96,608
Grants to States for Operation of State Offices of Rural Health
93.913
128,498
13,665
HIV Care Formula Grants (See Note 5)
93.917
12,576,025
6,180
HIV Care Formula Grants (See Note 5)
93.917
COVID-19
171,224
12,747,249
144,193
HIV Prevention Activities Health Department Based
93.940
1,226,816
443,870
Assistance Programs for Chronic Disease Prevention and Control
93.945
302,522
Cooperative Agreements to Support State-Based Safe Motherhood and
Infant Health Initiative Programs
93.946
123,311
Block Grants for Community Mental Health Services
93.958
2,928,382
2,485,648
Block Grants for Prevention and Treatment of Substance Abuse
93.959
6,778,748
6,050,266
Block Grants for Prevention and Treatment of Substance Abuse
93.959
COVID-19
25,000
6,803,748
25,000
Sexually Transmitted Diseases (STD) Prevention and Control Grants
93.977
328,027
34,901
Preventive Health and Health Services Block Grant
93.991
699,324
257,404
Maternal and Child Health Services Block Grant to the States
93.994
1,740,871
740,784
Mammography Quality Standards Act
93.U01
HHSF223201710206C
60,602
Vital Records - National Death Index
93.U02
200-2017-M-93737
28,466
Vital Records - SSA Death Data
93.U03
SS00-12-60050
22,769
Vital Records - SSA Birth Data/EAB
93.U04
SS00-14-61090
42,206
Food Inspections
93.U05
HHSF223201710096C
94,954
Vital Records - Data Collection
93.U06
200-2017-92545
470,840
B-10
Federal Grantor
Assistance
Additional Award
Name of
Pass-through
Total Program
Passed
Listing
Identification
Pass-through
Entity Award
Federal
or Cluster
Through to
Program Title
Number
Number
Entity
Number
Expenditures
Expenditures
Subrecipients
STATE OF RHODE ISLAND
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
Ovarian Cancer Care Improvement
93.U07
19BFSK0021
35,849
Transformation Transfer Initiative
93.U08
SC-3011.3-RI-01
58,188
58,188
Childhood Cancer Star Project
93.U09
75D30119C04797
11,705
11,698
Total U.S. Department of Health and Human Services (HHS)
$
2,530,966,284
$
112,004,383
Corporation for National and Community Service (CNCS)
State Commissions
94.003
$
165,498
AmeriCorps
94.006
1,162,005
$
1,162,005
Training and Technical Assistance
94.009
186,172
20,169
Foster Grandparent/Senior Companion Cluster:
Senior Companion Program
94.016
413,632
234,153
Total Corporation for National and Community Service (CNCS)
$
1,927,307
$
1,416,327
Social Security Administration (SSA)
Disability Insurance/SSI Cluster:
Social Security Disability Insurance
96.001
$
9,556,183
Social Security - Work Incentives Planning and Assistance Program
96.008
129,765
Social Security Investigations
96.U01
10.066.3005117
191,713
Total Social Security Administration (SSA)
$
9,877,661
$
-
U.S. Department of Homeland Security (DHS)
Non-Profit Security Program
97.008
$
72,147
$
72,128
Boating Safety Financial Assistance
97.012
985,832
Community Assistance Program State Support Services Element (CAP-
SSSE)
97.023
1,409
Emergency Food and Shelter National Board Program
97.024
58,322
Crisis Counseling
97.032
COVID-19
886,198
637,773
Disaster Grants - Public Assistance (Presidentially Declared Disasters)
(See Note 9)
97.036
$
1,094,838
Disaster Grants - Public Assistance (Presidentially Declared Disasters)
(See Note 9)
97.036
COVID-19
182,946,726
184,041,564
12,271,711
Hazard Mitigation Grant
97.039
263,667
263,631
National Dam Safety Program
97.041
8,014
Emergency Management Performance Grants
97.042
2,687,382
444,596
Assistance to Firefighters Grant
97.044
128,844
Federal Disaster Assistance to Individuals and Households in Presidential
Declared Disaster Areas
97.048
26,623
10,500
Presidential Declared Disaster Assistance to Individuals and Households -
Other Needs (See Note 6)
97.050
COVID-19
172,253,113
Port Security Grant Program
97.056
204,203
Homeland Security Grant Program
97.067
3,663,820
897,937
Aviation Research Grants
97.069
35,739
National Explosives Detection Canine Team Program
97.072
151,499
Law Enforcement Officer Reimbursement Agreement Program
97.090
114,940
Total U.S. Department of Homeland Security (DHS)
$
365,583,316
$
14,598,276
Research and Development Cluster: (See Note 1)
U.S. Department of Agriculture (USDA)
Agricultural Research Basic and Applied Research
10.001
$
110,918
Plant and Animal Disease, Pest Control, and Animal Care
10.025
87,393
Plant and Animal Disease, Pest Control, and Animal Care
10.025
University of Connecticut, Storrs
418586
2,668
Specialty Crop Block Grant Program - Farm Bill
10.170
83,286
$
11,383
Acer Access Development Program
10.174
170,143
Grants for Agricultural Research, Special Research Grants
10.200
71,021
Grants for Agricultural Research, Special Research Grants
10.200
University of Maryland
91285-2511204
20,534
Grants for Agricultural Research, Special Research Grants
10.200
University of Maryland
91289-25111208
26,239
183
Payments to Agricultural Experiment Stations Under the Hatch Act
10.203
1,363,946
Animal Health and Disease Research
10.207
11,580
Sustainable Agriculture Research and Education
10.215
University of Vermont
GNE19-192-33243
5,082
B-11
Federal Grantor
Assistance
Additional Award
Name of
Pass-through
Total Program
Passed
Listing
Identification
Pass-through
Entity Award
Federal
or Cluster
Through to
Program Title
Number
Number
Entity
Number
Expenditures
Expenditures
Subrecipients
STATE OF RHODE ISLAND
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
Sustainable Agriculture Research and Education
10.215
University of Vermont
SNE19-12-34268
4,240
Sustainable Agriculture Research and Education
10.215
University of Vermont
SNE20-012-RI-34268
12,869
Sustainable Agriculture Research and Education
10.215
University of Vermont
LNE19-381-33243
50,428
Higher Education - Multicultural Scholars Grant Program
10.220
32,500
Integrated Programs
10.303
West Virginia University
18-726-URI
24,270
Homeland Security Agricultural
10.304
Cornell University
80289-10775
4,367
Homeland Security Agricultural
10.304
Michigan State University
RC106556AF
21,671
Specialty Crop Research Initiative
10.309
9,732
Specialty Crop Research Initiative
10.309
Pennsylvania State University
S000323-USDA
51,216
Agriculture and Food Research Initiative (AFRI)
10.310
684,448
40,559
Agriculture and Food Research Initiative (AFRI)
10.310
University of Washington
UWSC10287
30,897
Agriculture and Food Research Initiative (AFRI)
10.310
University of Connecticut, Storrs
420026
6,833
Agriculture and Food Research Initiative (AFRI)
10.310
University of Massachusetts Medical
School
OSP18346-02
17,726
National Food Safety Training, Education, Extension, Outreach, and
Technical Assistance Competitive Grants Program
10.328
University of Massachusetts, Amherst
18 10161A00
7,116
Crop Protection and Pest Management Competitive Grants Program
10.329
125,975
Cooperative Extension Service
10.500
1,255,148
Cooperative Extension Service
10.500
Auburn University
Putnam_UnivAuburn
(179)
Expanded Food and Nutrition Education Program
10.514
279,439
Renewable Resources Extension Act and National Focus Fund
Projects
10.515
40,590
Soil and Water Conservation
10.902
23,992
10,899
Soil Survey
10.903
6,675
Environmental Quality Incentives Program
10.912
105,736
11,141
Regional Conservation Partnership Program
10.930
Connecticut Council on Soil & Water
Conservation
08-URI-SH
12,137
Technical Agricultural Assistance
10.960
104,153
Other Research and Development - Department of Agriculture
10.RD
57326
National Crop Insurance Services
57326
14,763
Other Research and Development - Department of Agriculture
10.RD
RIRCD McWilliams 100219
RI Resource Conservation &
Development
RIRCD McWilliams 100219
120,627
U.S. Department of Commerce (DOC)
Ocean Exploration
11.011
428,233
2,860
Integrated Ocean Observing System (IOOS)
11.012
Northeastern Regional Association of
Coastal Ocean Observing Systems
A008-003
62,516
Integrated Ocean Observing System (IOOS)
11.012
Rutgers University
731601
14,614
Sea Grant Support
11.417
2,663,003
272,302
Sea Grant Support
11.417
University of Connecticut, Storrs
36463
32,155
Sea Grant Support
11.417
University of Connecticut, Storrs
368948
90,389
Fisheries Development and Utilization Research and Development
Grants and Cooperative Agreements Program
11.427
118,465
16,358
Marine Sanctuary Program
11.429
Ocean Exploration Trust
2020-131
62,500
Climate and Atmospheric Research
11.431
56,284
Climate and Atmospheric Research
11.431
RI Natural History Survey
2019-1
26,396
National Oceanic and Atmospheric Administration (NOAA) Cooperative
Institutes
11.432
7,278,343
6,561,665
National Oceanic and Atmospheric Administration (NOAA) Cooperative
Institutes
11.432
Woods Hole Oceanographic Institution
A101446
1,236
Marine Fisheries Initiative
11.433
95,770
31,741
Unallied Management Projects
11.454
788
Meteorologic and Hydrologic Modernization Development
11.467
Northeast States Emergency
Consortium
NA19NWS4670011-SUD
41,258
Office for Coastal Management
11.473
National Fish and Wildlife Foundation
0318.20.069217
31,315
Atlantic Coastal Fisheries Cooperative Management Act
11.474
Rutgers University
1194043
64,065
Center for Sponsored Coastal Ocean Research Coastal Ocean
Program
11.478
43,441
4,031
Measurement and Engineering Research and Standards
11.609
Enfield Department
Enfield Fire_Parent
31,087
Manufacturing Extension Partnership
11.611
46,821
Other Research and Development - Department of Commerce
11.RD
NOAA-2
The Nature Conservancy
NOAA-2
3,070
B-12
Federal Grantor
Assistance
Additional Award
Name of
Pass-through
Total Program
Passed
Listing
Identification
Pass-through
Entity Award
Federal
or Cluster
Through to
Program Title
Number
Number
Entity
Number
Expenditures
Expenditures
Subrecipients
STATE OF RHODE ISLAND
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
Other Research and Development - Department of Commerce
11.RD
18-24
New England Fishery Management
Council
18-24
8,390
Other Research and Development - Department of Commerce
11.RD
NA20NWS4670061-SURI
Northeast States Emergency
Consortium
NA20NWS4670061-SURI
40,098
Other Research and Development - Department of Commerce
11.RD
2021-02
Ocean Exploration Trust
2021-02
20,000
U.S. Department of Defense (DOD)
Community Economic Adjustment Assistance for Responding to
Threats to the Resilience of a Military Installation
12.003
City of Newport, Rhode Island
1
159,233
Basic and Applied Scientific Research
12.300
3,146,087
43,256
Basic and Applied Scientific Research
12.300
Creare LLC
103289
123,714
Basic and Applied Scientific Research
12.300
Electro Standards Laboratories
FSElectro12019
487
Basic and Applied Scientific Research
12.300
McLaughlin Research Corporation
PO-20-0902
30,932
Basic and Applied Scientific Research
12.300
McLaughlin Research Corporation
PO-19-0854
9,888
Basic and Applied Scientific Research
12.300
Naval Undersea Warfare Center
N00174-19-1-0005
81,079
Basic and Applied Scientific Research
12.300
TelAztec
N00178-17-C-1323
15,214
Basic and Applied Scientific Research
12.300
Goetz Composites
NVX-20-URI-1
22,886
Basic and Applied Scientific Research
12.300
Navatek
00-K493-9000000
231,940
Basic and Applied Scientific Research
12.300
Physical Science Inc.
SC-8030-001
116,187
Basic and Applied Scientific Research
12.300
University of Massachusetts, Dartmouth
32953-VC-RB-110892
6,148
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
165273
106,237
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
347117
65,853
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
347119
2,664
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
347120
7,793
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
347122
318
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
347123
102,114
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
347124
30,942
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
347127
24,108
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
347128
106,032
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
347130
8,881
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
347131
2,434
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
386360
25,065
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
386364
10,833
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
386368
29,801
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
386373
92,567
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
386378
49,939
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
386380
41,710
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
386381
107,072
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
386382
87,779
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
386388
572,365
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
388683
22,121
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
388687
43,339
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
389994
35,572
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
390719
30,909
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
405429
90,146
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
405447
41,601
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
419210
92,197
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
419212
13,542
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
419214
26,168
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
419215
2,983
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
419221
51,701
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
419224
73,386
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
422919
18,290
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
422920
12,352
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
422921
20,890
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
422924
12,786
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
422925
5,163
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
422926
3,594
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
422927
8,999
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
422928
33,845
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
422929
26,617
B-13
Federal Grantor
Assistance
Additional Award
Name of
Pass-through
Total Program
Passed
Listing
Identification
Pass-through
Entity Award
Federal
or Cluster
Through to
Program Title
Number
Number
Entity
Number
Expenditures
Expenditures
Subrecipients
STATE OF RHODE ISLAND
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
422930
21,015
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
422931
24,717
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
422932
2,406
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
423318
31,147
Basic and Applied Scientific Research
12.300
University of Connecticut, Storrs
426742
26,199
Scientific Research - Combating Weapons of Mass Destruction
12.351
138
Scientific Research - Combating Weapons of Mass Destruction
12.351
Northeastern University
505201-78050
180,118
Scientific Research - Combating Weapons of Mass Destruction
12.351
Northeastern University
505187-78050
119,379
Military Medical Research and Development
12.420
The Research Foundation for SUNY
1156130-85693
29,515
Basic Scientific Research
12.431
213,456
12,457
The Language Flagship Grants to Institutions of Higher Education
12.550
476,468
The Language Flagship Grants to Institutions of Higher Education
12.550
Institute for International Education
IIE_He_03.31.21
23,110
Basic, Applied, and Advanced Research in Science and Engineering
12.630
158,823
1,048
Basic, Applied, and Advanced Research in Science and Engineering
12.630
Harvard University
124152-5105177
100,749
Air Force Defense Research Sciences Program
12.800
381,182
Air Force Defense Research Sciences Program
12.800
Electro Standards Laboratories
FSElectro12017
16,214
Other Research and Development - Department of Defense
12.RD
347129
University of Connecticut
347129
145,912
Other Research and Development - Department of Defense
12.RD
15700-0040/001
Cherokee Nation Technology Solutions
15700-0040/001
50,359
U.S. Department of the Interior (DOI)
Bureau of Ocean Energy Management Renewable Energy
15.408
11,035
Bureau of Ocean Energy Management (BOEM) Environmental Studies
(ES)
15.423
25,484
Bureau of Ocean Energy Management (BOEM) Environmental Studies
(ES)
15.423
HDR / e2M
1000300001036
45,752
Water Desalination Research and Development
15.506
10,646
Fish and Wildlife Management Assistance
15.608
Wildlife Management Institute
GSA 00076 Supplement
2,661
Coastal
15.630
93,046
Coastal
15.630
Wildlife Management Institute
FS2018McGreevy
5,004
Coastal
15.630
Wildlife Management Institute
GSA 00076
61,619
Migratory Bird Joint Ventures
15.637
52,104
Migratory Bird Monitoring, Assessment and Conservation
15.655
2,606
Hurricane Sandy Disaster Relief Activities - FWS
15.677
31,038
Cooperative Ecosystem Studies Units
15.678
95,298
Assistance to State Water Resources Research Institutes
15.805
72,513
Economic, Social, and Political Development of the Territories
15.875
HDR / e2M
1000300001232
82,301
Natural Resource Stewardship
15.944
New Mexico Department of Game &
Fish
AWD08023
11,387
Cooperative Research and Training Programs – Resources of the
National Park System
15.945
394,240
18,221
Other Research and Development - Department of the Interior
15.RD
G17PA00033
244
Other Research and Development - Department of the Interior
15.RD
140M0118C0001
140,047
33,326
Other Research and Development - Department of the Interior
15.RD
1000300001414
HDR / e2M
1000300001414
9,270
Other Research and Development - Department of the Interior
15.RD
AV18-RI-01
AmericaView
AV18-RI-01
28,109
U.S. Department of Transportation (DOT)
Other Research and Development - Department of Transportation
20.RD
UMS-1185
University of Maine
UMS-1185
105,703
National Aeronautics and Space Administration (NASA)
Science
43.001
514,804
Science
43.001
University of Colorado Boulder
1552614
24,962
Science
43.001
Earth and Science Research
2017-241-URI
13,182
Science
43.001
Woods Hole Group, Inc.
23156800 / A101249
13,724
Science
43.001
University of Washington
UWSC10146
50,574
Science
43.001
Skidmore College
32175-2
161
Science
43.001
Farallon Institute
020-241-URI
19,752
Science
43.001
University of Maine
UMS1296
8,365
Office of Stem Engagement (OSTEM)
43.008
Brown University
00001476
7,844
Office of Stem Engagement (OSTEM)
43.008
Brown University
00001572
9,962
Office of Stem Engagement (OSTEM)
43.008
Brown University
00001615
10,035
Office of Stem Engagement (OSTEM)
43.008
Brown University
00001616
37,547
Office of Stem Engagement (OSTEM)
43.008
Brown University
00001617
43,603
Office of Stem Engagement (OSTEM)
43.008
Brown University
00001633
27,270
B-14
Federal Grantor
Assistance
Additional Award
Name of
Pass-through
Total Program
Passed
Listing
Identification
Pass-through
Entity Award
Federal
or Cluster
Through to
Program Title
Number
Number
Entity
Number
Expenditures
Expenditures
Subrecipients
STATE OF RHODE ISLAND
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
Other Research and Development - National Aeronautics and Space
Administration
43.RD
80NSSC19K0994
30,623
Other Research and Development - National Aeronautics and Space
Administration
43.RD
5710004170
Massachusetts Institute of Technology
5710004170
27,876
Other Research and Development - National Aeronautics and Space
Administration
43.RD
00001614
Brown University
00001614
10,035
Other Research and Development - National Aeronautics and Space
Administration
43.RD
00001501
Brown University
00001501
14,244
National Science Foundation (NSF)
Engineering
47.041
1,245,521
15,098
Engineering
47.041
University of Southern Mississippi
8006386-01.01 URI
617
Mathematical and Physical Sciences
47.049
180,942
Geosciences
47.050
9,438,772
225,446
Geosciences
47.050
Texas A&M Research Foundation
F001329/41829BA33
331
Geosciences
47.050
University of Washington
UWSC11189
21,813
Geosciences
47.050
Woods Hole Oceanographic Institution
82423600
11,655
Geosciences
47.050
Woods Hole Oceanographic Institution
85568600
90,290
Geosciences
47.050
Brown University
1141
43,429
Geosciences
47.050
Lamont-Doherty Earth Observatory
OCE 1450528
30,182
Computer and Information Science and Engineering
47.070
831,122
1,283
Computer and Information Science and Engineering
47.070
Columbia University
3(GG014586-02)
6,983
Computer and Information Science and Engineering
47.070
Columbia University
9(GG014586-02)
15,281
Computer and Information Science and Engineering
47.070
Yale University
GR109669(CON-80002382)
4,500
Biological Sciences
47.074
1,008,209
30,033
Biological Sciences
47.074
University of Arizona
466240
11,721
Biological Sciences
47.074
Washington State University Vancouver
Subaward138/022-G00414
8,580
Social, Behavioral, and Economic Sciences
47.075
141,659
1,212
Education and Human Resources
47.076
923,078
65,617
Polar Programs
47.078
1,734
Polar Programs
47.078
University of Connecticut, Storrs
KFS#5628610, PO13627
83,533
Office of International Science and Engineering
47.079
428,655
315,242
Office of International Science and Engineering
47.079
University of New Hampshire
16-019
40,688
Integrative Activities
47.083
4,446,579
1,098,525
Integrative Activities
47.083
Dartmouth College
R1302
148,355
Integrative Activities
47.083
University of Southern California
88919743
402,095
Other Research and Development - National Science Foundation
47.RD
IGA112277782
Oregon State University
IGA112277782
46,729
Small Business Administration (SBA)
Small Business Development Centers
59.037
1,210,063
Environmental Protection Agency (EPA)
Southeast New England Coastal Watershed Restoration Program
66.129
Restore America's Estuaries
SNEPWG18-6-URI
79,602
4,891
Southeast New England Coastal Watershed Restoration Program
66.129
Restore America's Estuaries
SNEPWG20-6-URI-MHB
41,035
Southeast New England Coastal Watershed Restoration Program
66.129
University of Maine
SNEP1-06
57,754
Surveys, Studies, Investigations, Demonstrations, and Training Grants
and Cooperative Agreements - Section 104(b)(3) of the Clean Water
Act
66.436
Rural Community Assistance
Partnership
83938801
5,010
Research, Development, Monitoring, Public Education, Outreach,
Training, Demonstrations, and Studies
66.716
Extension Foundation
SA-2020-29
806
Environmental Education Grants
66.951
14,242
Other Research and Development - Environmental Protection Agency
66.RD
75K000011DB
General Dynamics Information
Technology
75K000011DB
7,726
Other Research and Development - Environmental Protection Agency
66.RD
00A00249
Extension Foundation
00A00249
16,676
Other Research and Development - Environmental Protection Agency
66.RD
00A00252
Mass Audubon
00A00252
37,650
U.S. Department of Energy (DOE)
Office of Science Financial Assistance Program
81.049
88,317
Office of Science Financial Assistance Program
81.049
Donald Danforth Plant Science Center
23021-R
416,795
Office of Science Financial Assistance Program
81.049
Pennsylvania State University
5027-URI-DOE-1090
148,501
Office of Science Financial Assistance Program
81.049
University of Georgia
SUB00001808
31,789
Los Alamos National Laboratory - Fire Protection
81.140
Triad National Security, LLC
526876
15,254
B-15
Federal Grantor
Assistance
Additional Award
Name of
Pass-through
Total Program
Passed
Listing
Identification
Pass-through
Entity Award
Federal
or Cluster
Through to
Program Title
Number
Number
Entity
Number
Expenditures
Expenditures
Subrecipients
STATE OF RHODE ISLAND
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
Los Alamos National Laboratory - Fire Protection
81.140
Triad National Security, LLC
526766
8,181
Other Research and Development - Department of Energy
81.RD
TSI-4089-20-20203103
19,041
Other Research and Development - Department of Energy
81.RD
TSI-2576-19-109768
Triton Systems, Inc.
TSI-2576-19-109768
22,125
Other Research and Development - Department of Energy
81.RD
TSI-2576-19-108768
Triton Systems, Inc.
TSI-2576-19-108768
35,073
Other Research and Development - Department of Energy
81.RD
USABC-Gotion
Gotion
USABC-Gotion
191,961
Other Research and Development - Department of Energy
81.RD
378690
Brookhaven National Laboratories
378690
93,996
Other Research and Development - Department of Energy
81.RD
7456216
Lawrence Berkeley National Laboratory
7456216
5,043
U.S. Department of Education (ED)
Ready-to-Learn Television
84.295
PBS
URI/Sweetman
28,918
Education Research, Development and Dissemination
84.305
University of Wisconsin, Madison
184
6,718
U.S. Department of Health and Human Services (HHS)
Food and Drug Administration Research
93.103
250,394
Food and Drug Administration Research
93.103
University of Connecticut, Storrs
362106
280,589
Area Health Education Centers
93.107
Brown University
00001125
89,130
Area Health Education Centers
93.107
Brown University
00001676
11,849
Maternal and Child Health Federal Consolidated Programs
93.110
20,275
Environmental Health
93.113
553,053
Oral Diseases and Disorders Research
93.121
424,798
119,958
NIEHS Superfund Hazardous Substances - Basic Research and
Education
93.143
1,886,290
814,249
Human Genome Research
93.172
125,181
Research on Healthcare Costs, Quality and Outcomes
93.226
The Research Foundation for SUNY
89055-1163444-URI
69,554
Mental Health Research Grants
93.242
Brown University
1682
32,515
Mental Health Research Grants
93.242
Women & Infants Hospital of RI
N/A
35,564
Substance Abuse and Mental Health Services Projects of Regional and
National Significance
93.243
131,579
Substance Abuse and Mental Health Services Projects of Regional and
National Significance
93.243
Newport County CHMC, Inc
MCA_NMH_URI_2
33,191
Advanced Nursing Education Workforce Grant Program
93.247
662,033
63,193
Occupational Safety and Health Program
93.262
163,657
15,996
Alcohol Research Programs
93.273
417,614
90,610
Drug Abuse and Addiction Research Programs
93.279
613,312
85,055
Drug Abuse and Addiction Research Programs
93.279
Brown University
1483
195,941
Drug Abuse and Addiction Research Programs
93.279
Oregon Health & Science University
1011948_URI
144,467
Drug Abuse and Addiction Research Programs
93.279
Oregon Health & Science University
1016803_URI
45,164
Drug Abuse and Addiction Research Programs
93.279
University of Oregon
217300C
6,185
Minority Health and Health Disparities Research
93.307
University of California Riverside
S-001198
59,507
Trans-NIH Research Support
93.310
Brown University
00001759
12,563
Trans-NIH Research Support
93.310
Brown University
00001760
15,070
Nursing Research
93.361
491,894
31,834
Nursing Research
93.361
Yale University
M17A12609(A10935)
85,805
Cancer Cause and Prevention Research
93.393
17,475
17,475
Cancer Biology Research
93.396
422,428
Cancer Research Manpower
93.398
Brown University
00000941
13,740
Child Care and Development Block Grant
93.575
RI Association for the Education of
Young Children
3669269
24,149
Developmental Disabilities Basic Support and Advocacy Grants
93.630
410,824
390,294
Elder Abuse Prevention Interventions Program
93.747
Disabled Persons Protection
Commission
Venkatasubramanian_MDPPC
39,972
Opioid STR
93.788
516,414
Section 223 Demonstration Programs to Improve Community Mental
Health Services
93.829
Newport County CHMC, Inc
MCA_NMH_URI
302,305
Section 223 Demonstration Programs to Improve Community Mental
Health Services
93.829
Thrive Behavioral Health, Inc.
CCBHC-URI
118,040
Cardiovascular Diseases Research
93.837
218,790
106,988
Cardiovascular Diseases Research
93.837
University of California, Los Angeles
031690-01-URI
134,208
46,334
Lung Diseases Research
93.838
278,655
70,146
Lung Diseases Research
93.838
Ocean State Research Institute, Inc
122208
29,507
13,669
Lung Diseases Research
93.838
Albert Einstein College of Medicine
310969
19,892
Blood Diseases and Resources Research
93.839
243,522
B-16
Federal Grantor
Assistance
Additional Award
Name of
Pass-through
Total Program
Passed
Listing
Identification
Pass-through
Entity Award
Federal
or Cluster
Through to
Program Title
Number
Number
Entity
Number
Expenditures
Expenditures
Subrecipients
STATE OF RHODE ISLAND
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
Arthritis, Musculoskeletal and Skin Diseases Research
93.846
Massachusetts General Hospital
236365
24,536
Extramural Research Programs in the Neurosciences and Neurological
Disorders
93.853
1,992,074
398,560
Extramural Research Programs in the Neurosciences and Neurological
Disorders
93.853
Johns Hopkins University
2004741519
62,448
Allergy and Infectious Diseases Research
93.855
2,322,196
933,581
Allergy and Infectious Diseases Research
93.855
Columbia University
6(GG011896-65)
3,093
Biomedical Research and Research Training
93.859
3,976,629
1,967,393
Biomedical Research and Research Training
93.859
Brown University
00000938
177,586
Biomedical Research and Research Training
93.859
Brown University
00001023
20,511
Biomedical Research and Research Training
93.859
Brown University
00001098
22,356
Biomedical Research and Research Training
93.859
Brown University
00001441
15,978
Biomedical Research and Research Training
93.859
Brown University
0001637
50,181
Biomedical Research and Research Training
93.859
Brown University
00001396
8,634
Biomedical Research and Research Training
93.859
Yale University
GR108643(CON-80002175)
269,109
Biomedical Research and Research Training
93.859
Celdara Medical, LLC
CMCho2018
36,297
Biomedical Research and Research Training
93.859
Rhode Island Hospital
7137384NHW
14,251
Biomedical Research and Research Training
93.859
Rhode Island Hospital
7137384SJK
29,564
Biomedical Research and Research Training
93.859
The Miriam Hospital
7147123KLL
14,363
Child Health and Human Development Extramural Research
93.865
83,426
Child Health and Human Development Extramural Research
93.865
Boston University
4500002896
37,627
Child Health and Human Development Extramural Research
93.865
Florida State University
R000002706
35,047
Aging Research
93.866
247,337
Aging Research
93.866
The Research Foundation for SUNY
82900
309,346
Aging Research
93.866
Yale University
GR100954CON80000919
291,928
Aging Research
93.866
Rhode Island Hospital
701-7137507
71,567
Research, Prevention, and Education Programs on Lyme Disease in
the United States
93.942
Western Connecticut State University
CDC2019A
61,452
PPHF Geriatric Education Centers
93.969
819,846
195,401
Other Research and Development - Department of Health and Human
Services
93.RD
75D30119C05160
144,601
Other Research and Development - Department of Health and Human
Services
93.RD
R01HL135236
342,764
9,845
Other Research and Development - Department of Health and Human
Services
93.RD
2R44ES028649-02-001
Enchem Engineering, Inc.
2R44ES028649-02-001
48,512
Other Research and Development - Department of Health and Human
Services
93.RD
7139196DSL
Lifespan
7139196DSL
1,362
Other Research and Development - Department of Health and Human
Services
93.RD
A20-0501-S001
University of California at Davis
A20-0501-S001
80,021
Other Research and Development - Department of Health and Human
Services
93.RD
MCA_NMH_URI_2
Newport County CHMC, Inc
MCA_NMH_URI_2
92,317
U.S. Department of Homeland Security (DHS)
Centers for Homeland Security
97.061
University of North Carolina - Chapel Hill
5101662
343,040
Centers for Homeland Security
97.061
University of North Carolina - Chapel Hill
5117116
66,373
Centers for Homeland Security
97.061
University of North Carolina - Chapel Hill
5119463
158,172
Centers for Homeland Security
97.061
Northeastern University
SUB 505035-78059
157,977
Other Research and Development - Department of Homeland Security
97.RD
S-539-G40001-00-URI
Applied Research Associates
S-539-G40001-00-URI
80,055
U.S. Agency for International Development (USAID)
USAID Foreign Assistance for Programs Overseas
98.001
7,143,613
3,103,032
USAID Foreign Assistance for Programs Overseas
98.001
International Union for Conservation
IUCN-Ricci06102019
61,487
USAID Foreign Assistance for Programs Overseas
98.001
Mississippi State University
19300.312455.04
337,489
USAID Foreign Assistance for Programs Overseas
98.001
PACT
72068718C00001
426,175
USAID Foreign Assistance for Programs Overseas
98.001
PACT
265-011929
315,872
USAID Foreign Assistance for Programs Overseas
98.001
DAI Global LLC
1004343-S21-35515
119
Total Research and Development Cluster
$
79,130,251
$
17,302,390
Total Expenditures of Federal Awards
$
8,401,858,790
$
580,886,454
B-17
STATE OF RHODE ISLAND
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
B-18
NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying Schedule of Expenditures of Federal Awards (the Schedule) includes the federal grant
activity of the State of Rhode Island (the State). This Schedule is presented for purposes of additional
analysis and in accordance with Title 2 U.S. Code of Federal Regulations Part 200 Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”).
The reporting entity is defined in the Notes to the Basic Financial Statements that are presented in Section A
of this report (see Note 1 to the basic financial statements – Summary of Significant Accounting
Policies – B. Reporting Entity). When federal financial assistance is received by one state entity and
passed through to another state organization (contained within the reporting entity), the federal financial
assistance is reflected by the primary recipient organization to avoid duplication and overstatement of the
aggregate level of federal financial assistance expended by the State.
Expenditures reported on the Schedule are recognized consistent with the specific federal compliance
requirements for each program regarding allowable costs and, when applicable, the cost principles
contained the Uniform Guidance. Any matching expenditures from non-federal sources are not included in
the Schedule.
Programs are generally listed in the Assistance Listing numerical order by federal funding agency. When
the Assistance Listing number is not available from the State or component unit’s accounting records, the
federal funding agency is identified and these amounts are included in the Schedule along with federal
awards for that federal grantor agency (e.g., 84.U01). Certain Research and Development expenditures of
federal awards are similarly reflected in the accompanying Schedule when the federal awarding agency is
known but not the specific Assistance Listing number (e.g., 15.RD).
The Research and Development (R&D) Cluster is presented at the end of the Schedule because there are
multiple federal funding agencies. As a result, total expenditures of federal awards presented for some
federal funding agencies do not include expenditures for R&D programs.
The State received COVID-19 pandemic related federal assistance under several programs to address the
effects of managing the impact of the global pandemic. The related expenditures to this funding have been
identified in the Schedule with “COVID-19” as the additional award identification number.
The State expended some residual federal assistance from the American Recovery and Reinvestment Act
of 2009 (ARRA) in fiscal 2021. The related expenditures to this funding have been identified in the Schedule
with “ARRA” as the additional award identification number.
Cash assistance is presented using the same basis of accounting as that used in reporting the expenditures
(or expenses) of the related funds and component units in the State’s basic financial statements (see Note 1
to the basic financial statements – Summary of Significant Accounting Policies – D. Measurement Focus
and Basis of Accounting).
Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of
business to amounts reported as expenditures in prior years.
Loans have been included in the Schedule in accordance with the Uniform Guidance, whereby, loans with
continuing federal compliance requirements are recorded at the value of new loans made or received during
the audit period, plus beginning of the audit period balance of loans from previous years, plus cash and/or
administrative cost allowances. Loans that do not have continuing federal compliance requirements are
recorded at the value of new loans made or received during the audit period, plus cash and/ or
administrative cost allowances.
STATE OF RHODE ISLAND
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
B-19
NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
None of the State’s large loan programs met the criteria that would require such amounts to be excluded
from the State’s Type “A” major program threshold.
Non-monetary assistance is also included in the Schedule consistent with Uniform Guidance requirements.
Additionally, all non-monetary assistance has been included in determining major programs as defined by
the Uniform Guidance. Non-monetary assistance included in the Schedule is listed by federal program in
Note 4 to this Schedule.
NOTE 2. DE MINIMIS INDIRECT COST RATE
Agencies that have never received a negotiated cost rate may elect to charge a de minimis rate of 10% of
modified total direct costs that may be used indefinitely. This methodology must be used consistently for
all federal awards until such time as an agency chooses to negotiate for a rate, which an agency may apply
to do at any time. The Department of Behavioral Healthcare, Developmental Disabilities and Hospitals
(BHDDH) and the Department of Public Safety (DPS) elected to use the 10% de minimis rate in FY2021.
NOTE 3. LOAN, LOAN GUARANTEE AND INSURANCE PROGRAMS
Expenditures of federal awards include assistance in the form of loans, loan guarantees, and insurance.
The following table details all loans, loan guarantees, and insurance included in the Schedule of
Expenditures of Federal Awards.
Assistance
Listing
Number
Program
Expenditures
of Federal
Awards
Year Ended
June 30, 2021
Loan
Outstanding
Balance
June 30, 2021
11.307
Economic Adjustment Assistance
$ 9,297,155 $ 4,900,333
14.117
Mortgage Insurance Homes
363,832,323
N/A
14.189
Qualified Participating Entities (QPE) Risk Sharing
276,569,509
258,828,906
14.228
Community Development Block Grants/State’s Program and
Non-Entitlement Grants in Hawaii
13,422,757
8,458,372
14.239
Home Investment Partnerships Program
27,464,544
27,237,784
14.275
Housing Trust Fund
5,408,455
5,355,821
21.011
Capital Magnet Fund
5,427,266
3,554,366
84.038
Federal Perkins Loan Program – Federal Capital
Contributions
6,911,239
5,114,953
84.268
Federal Direct Student Loans
109,817,193
N/A
93.342
Health Professions Student Loans, Including Primary Care
Loans/Loans for Disadvantaged Students
2,628,586
1,992,846
93.364
Nursing Student Loans
2,409,060
1,753,706
Note: Outstanding Loan Balance containing “N/A” indicates no continuing compliance requirements.
STATE OF RHODE ISLAND
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
B-20
NOTE 3. LOAN, LOAN GUARANTEE AND INSURANCE PROGRAMS (continued)
Federal awards which include loan, loan guarantee and insurance programs are presented as follows:
•
Economic Adjustment Assistance (11.307) includes the outstanding principal balance of loans
originated under, and the balance of cash and cash equivalents of the Revolving Loan Fund, and the
administrative expenses paid from income earned.
•
Mortgage Insurance Homes (14.117), a guaranteed/insured mortgage loan program is reported at
the value of loans originated or purchased during the fiscal year.
•
Other guaranteed/insured mortgage loan programs are reported at the beginning loan balances of
the audit period plus loans originated or purchased during the fiscal year: Qualified Participating
Entities (QPE) Risk Sharing (14.189); Community Development Block Grants/State’s Program and
Non-Entitlement Grants in Hawaii (14.228); Home Investment Partnerships Program (14.239);
Housing Trust Fund (14.275); Capital Management Fund (21.011). Note: the amount of expenditures
of federal awards as detailed above for the Community Development Block Grants/State’s Program
and Non-Entitlement Grants in Hawaii (14.228) includes non-loan related expenditures of $4,959,149.
•
Federal Direct Student Loans (84.268) are reported at the value of loans made during the fiscal year.
•
Federal Perkins Loan Program – Federal Capital Contributions (84.038), Health Professions Student
Loans, Including Primary Care Loans/Loans for Disadvantaged Students (93.342) and Nursing
Student Loans (93.364) are reported at the beginning loan balances of the audit period plus loans
made during the year and any administrative cost allowances.
NOTE 4. NON-MONETARY ASSISTANCE
Expenditures of federal awards include non-monetary assistance in the form of donated food commodities,
vaccines, and property. The following table details all non-monetary assistance included in the Schedule of
Expenditures of Federal Awards.
Assistance
Listing
Number
Program
Expenditures
of Federal
Awards
Year Ended
June 30, 2021
Non-Monetary
Assistance
Year Ended
June 30, 2021
10.555
National School Lunch Program
$ 5,061,454
$ 4,721,640
10.559
Summer Food Service Program for Children
44,092,461
52,629
39.003
Donation of Federal Surplus Personal Property
4,521,138
4,521,138
93.268
Immunization Cooperative Agreements
21,919,971
14,663,336
Non-Monetary Assistance is presented as follows:
•
National School Lunch Program (10.555) and Summer Food Service Program for Children (10.559)
are reported at the fair market value of food distributed.
•
Donation of Federal Surplus Personal Property (39.003) is reported at the assessed value provided
by the federal agency.
•
Immunization Cooperative Agreements (93.268) includes the value of vaccines received at the
contracted price (amount paid by the federal Centers for Disease Control to the manufacturer) and
cash assistance for administrative costs.
STATE OF RHODE ISLAND
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
B-21
NOTE 4. NON-MONETARY ASSISTANCE (continued)
During fiscal 2021, the State received donated vaccines, personal protective equipment, including masks,
gowns, testing kits from the federal government to address the COVID-19 pandemic. Per federal guidance
the value of such amounts is not included in the SEFA for fiscal 2021.
NOTE 5. REBATES OF PROGRAM EXPENDITURES
The State received the following program expenditure rebates during fiscal 2021:
Assistance
Listing
Number
Program
Rebate
Amount
10.557
WIC Special Supplemental Nutrition Program for Women, Infants and
Children
$ 2,341,629
93.767
Children’s Health Insurance Program (CHIP)
2,167,196
93.778
Medical Assistance Program
99,706,258
93.917
HIV Care Formula Grants
7,455,331
Manufacturers of infant formula (WIC) and prescription drugs (Medical Assistance, CHIP, and HIV) remitted
the rebates. The Medical Assistance Program and CHIP rebates reduced previously incurred program
expenditures; therefore, expenditures of these programs are reported net of the applicable federal share of
rebates earned during fiscal year 2021. Amounts included in the SEFA for WIC and HIV Care Formula
Grants include amounts funded by rebates earned as well as direct federal assistance.
NOTE 6. UNEMPLOYMENT INSURANCE EXPENDITURES
Expenditures of federal awards for Unemployment Insurance (17.225) represent $360.3 million funded from
the State’s account in the federal Unemployment Trust Fund, $1,730.0 million funded by COVID-19 federal
grants (CARES Act), and $23.2 million funded through other federal grants.
In addition, other Unemployment Insurance benefits of $47.4 million and $172.3 million were funded by the
Coronavirus Relief Fund (21.019) and Presidential Declared Disaster Assistance to Individuals and
Households – Other Needs (97.050), respectively. These expenditures are reported on the Schedule under
these Assistance Listing numbers.
NOTE 7. STUDENT FINANCIAL ASSISTANCE CLUSTER
Expenditures for the Student Financial Assistance Cluster are listed under two separate departments,
Department of Education and Department of Health and Human Services. The total expenditures for the
Cluster are $178,364,722.
STATE OF RHODE ISLAND
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
B-22
NOTE 8. MEDICAL ASSISTANCE PROGRAM – ACCRUED PROGRAM EXPENDITURES
The Schedule of Expenditures of Federal Awards reports federal expenditures for the Medical Assistance
Program (93.778) on an accrual basis causing timing differences with federal expenditures claimed on a
cash basis on federal reports. These accrued expenditures are typically claimed/reported in the next
quarter. In certain instances, as described below, the timing differences may be longer. The following are
examples of accruals made for the Medical Assistance Program to properly reflect the following program
activity in the State’s financial statements:
a) The federal share of advances to nursing home providers for services rendered, which were required
due to delays in determining recipient eligibility, was estimated for financial reporting purposes
(including the SEFA). These advances will not be claimed on federal reports until eligibility is
documented and the related claims are adjudicated through the Medicaid Management Information
System (MMIS).
b) The federal share of contract settlements with managed care organizations was estimated for
financial reporting purposes (including the SEFA). These amounts are not claimed on federal reports
until final settlements are calculated and paid or received by the State.
c) The federal share of accrued drug rebates was estimated for financial reporting purposes based on
the claim date of service. These rebate credits are claimed on federal reports when received from
the drug manufacturer.
NOTE 9. RECONCILIATION BETWEEN THE STATE’S BASIC FINANCIAL STATEMENTS AND THE
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Total Federal Expenditures Reported in Financial Statements
$ 8,272,463,189
Additions to Schedule of Expenditures of Federal Awards:
National School Lunch Program (10.555) – USDA donated food commodities(a)
4,721,640
Summer Food Service Program for Children (10.559) – USDA donated food
commodities(a)
52,629
Federal Donated Surplus Property (39.003)(a)
4,521,138
Medicaid (93.778) Health System Transformation Program(b)
13,671,872
FEMA Stafford Act (97.036) reimbursement amounts recorded as expenditure
credits or escrow liability disbursements(c)
14,467,491
Adjustments to SEFA for Prior Period Activity:
Coronavirus Relief Fund (21.019) – restatement of July 1, 2020 beginning
balances(d)
(23,669,697)
Medical Assistance Program (93.778) billing recoupment – restatement of July
1, 2020 beginning balances(e)
9,826,016
FEMA Stafford Act (97.036) revenues received in fiscal 2021 for expenditures
incurred in fiscal 2020(f)
105,804,512
Net Additions to Schedule of Expenditures of Federal Awards
129,395,601
Total Expenditures on Schedule of Expenditures of Federal Awards
$ 8,401,858,790
(a) Non-monetary assistance (Note 4) for National School Lunch Program (10.555), Summer Food Service
Program for Children (10.559), and Donation of Federal Surplus Personal Property (39.003) is included in
the Schedule of Expenditures of Federal Awards; however, these amounts are not included in the State’s
basic financial statements.
STATE OF RHODE ISLAND
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
Fiscal Year Ended June 30, 2021
B-23
NOTE 9. RECONCILIATION BETWEEN THE STATE’S BASIC FINANCIAL STATEMENTS AND THE
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (continued)
(b) The Health System Transformation Program (HSTP) is funded through regular federal financial
participation (FFP) for the Medical Assistance Program (93.778) and specific qualifying expenditures of the
State’s public institutions of higher education related to the training of students in the health care related
fields pursuant to the Designated State Health Programs (DSHP). The State has authority to claim FFP
under the DSHP to solely support the goals of the HSTP. The DSHP qualifying expenditures are quantified
and reimbursed by the federal government independent of the HSTP expenditures. For financial reporting
purposes in the basic financial statements, the DSHP amounts are reported as restricted revenue when
drawn (to designate their HSTP restricted use) with the State share of HSTP expenditures funded by that
restricted revenue source. For purposes of presentation in the Schedule of Expenditures of Federal Awards,
the State share of HSTP expenditures is presented (reclassified) as expenditures of federal awards to
recognize the expenditure of the DSHP federal reimbursement to the State.
(c) Amounts reimbursed by FEMA to municipalities and other non-State entities under the FEMA Stafford
Act, Public Assistance (PA) Category B (97.036) were received and disbursed by the State; however, for
financial reporting purposes, these amounts were not reflected as federal revenues or expenditures. For
presentation of the Schedule, these amounts have been included as expenditures of federal awards and
amounts passed through to subrecipients.
(d) The State reclassified certain expenditures reimbursed through the Coronavirus Relief Fund (21.019) in
fiscal 2020 and these amounts were reflected as adjustments to July 1, 2020 beginning balances (refer to
Note 10 of the Basic Financial Statements in Section A of this report). Reported expenditures have been
reduced on the 2021 Schedule to recognize the reclassification of these funds reported in fiscal 2020.
(e) Medical Assistance Program (93.778) billings were processed for the State-operated Eleanor Slater
Hospital in fiscal 2021 for periods of service in fiscal 2020. These amounts were reflected as adjustments
to July 1, 2020 beginning balances (refer to Note 10 of the Basic Financial Statements in Section A of this
report).
(f) The State was reimbursed for eligible COVID-19 related expenditures under the FEMA Stafford Act,
Public Assistance (PA) Category B (97.036) in fiscal 2021 for expenditures that were incurred in fiscal 2020.
For presentation of the Schedule these amounts have been included in fiscal 2021 as expenditures of federal
awards. These amounts were not previously reported on the State’s Schedule of Expenditures of Federal
Awards in fiscal 2020.
NOTE 10. IDENTIFICATION OF COVID-RELATED ASSISTANCE
For the Child Nutrition Cluster, the Schedule includes certain COVID-19/CARES Act expenditures originally
reported as non-COVID/CARES Act in fiscal 2020. Non-COVID 19/CARES ACT expenditures included on
the fiscal 2021 Schedule have been reduced by the same amounts and therefore, there is no effect on total
fiscal 2021 expenditures of federal awards. Following is a summary of those expenditures:
Assistance
Listing
Number
Additional
Award
Identification
Number
Program
Expenditures
of Federal
Awards
Year Ended
June 30, 2021
COVID-19
Related
Expenditures
Reported in
Fiscal 2020
10.553
COVID-19
School Breakfast Program
$ 646,751
$ 617,087
10.555
COVID-19
National School Lunch Program
1,854,299
1,796,477
10.556
COVID-19
Special Milk Program for Children
323
292
10.559
COVID-19
Summer Food Service Program for Children
10,255,447
5,856,699
State of Rhode Island
Single Audit Report
For the Fiscal Year Ended June 30, 2021
Office of the Auditor General
General Assembly
Auditor’s Reports
State of Rhode Island
Single Audit Report
For the Fiscal Year Ended June 30, 2021
Office of the Auditor General
C-i
General Assembly
Auditor’s Reports
Table of Contents
Page
Independent Auditor’s Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards ............................................................. C-1
Independent Auditor’s Report on Compliance for Each Major Federal Program and Report
on Internal Control Over Compliance as Required by Uniform Guidance ............................................... C-4
C-1
33 Broad Street Suite 201 Providence, RI 02903-4177
tel: 401.222.2435 fax: 401.222.2111
Office of the Auditor General
State of Rhode Island - General Assembly
Dennis E. Hoyle, CPA - Auditor General
oag.ri.gov
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT
OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
Finance Committee of the House of Representatives and
Joint Committee on Legislative Services, General Assembly,
State of Rhode Island:
We have audited, in accordance with the auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, the business-type activities, the aggregate discretely presented component units, each major fund,
and the aggregate remaining fund information of the State of Rhode Island (the State), as of and for the year
ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the
State’s basic financial statements and have issued our report thereon dated January 28, 2022. Our report
includes a reference to other auditors who audited the financial statements of:
•
the Tobacco Settlement Financing Corporation, a blended component unit which represents less than
1% of the assets and deferred outflows and the revenues of the governmental activities and less than
1% of the assets and the revenues of the aggregate remaining fund information;
•
the Convention Center Authority, a major fund, which represents 37% of the assets and deferred
outflows and less than 1% of the revenues of the business-type activities;
•
the Ocean State Investment Pool - an investment trust fund, and the HealthSource RI, Rhode Island
Higher Education Savings, and ABLE private-purpose trust funds, which collectively represent 29%
of the assets and 22% of the revenues of the aggregate remaining fund information; and
•
all the component units comprising the aggregate discretely presented component units.
This report includes our consideration of the results of the other auditors’ testing of internal control over
financial reporting and compliance and other matters that are reported on separately by those other auditors.
However, this report, insofar as it relates to the results of the other auditors, is based solely on the reports
of the other auditors.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the State’s internal
control over financial reporting (internal control) as a basis for designing audit procedures that are
appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but
not for the purpose of expressing an opinion on the effectiveness of the State’s internal control.
Accordingly, we do not express an opinion on the effectiveness of the State’s internal control.
Office of the Auditor General
Finance Committee of the House of Representatives and
Joint Committee on Legislative Services, General Assembly
C-2
Our consideration of internal control was for the limited purpose described in the preceding
paragraph and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may
exist that were not identified. However, as discussed in the accompanying Schedule of Findings and
Questioned Costs (Section D), we and the other auditors did identify certain deficiencies in internal control
that we consider to be material weaknesses and significant deficiencies.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis.
A material weakness is a deficiency, or a combination of deficiencies, in internal control such that
there is a reasonable possibility that a material misstatement of the State’s financial statements will not be
prevented or detected and corrected on a timely basis. We consider the deficiencies described in the
accompanying Schedule of Findings and Questioned Costs as findings 2021-002, 2021-003, 2021-004,
2021-005, 2021-009, 2021-022, and 2021-027 to be material weaknesses. Other auditors of the discretely
presented component units considered the deficiencies described in the accompanying Schedule of Findings
and Questioned Costs as findings 2021-031, 2021-033 and 2021-036 to be a material weaknesses.
A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is
less severe than a material weakness, yet important enough to merit attention by those charged with
governance. We consider the deficiencies described in the accompanying Schedule of Findings and
Questioned Costs as findings 2021-001, 2021-006, 2021-007, 2021-008, 2021-010, 2021-011, 2021-012,
2021-013, 2021-014, 2021-015, 2021-016, 2021-017, 2021-018, 2021-019, 2021-020, 2021-021, 2021-023,
2021-024, 2021-025, 2021-026, 2021-028, 2021-029, and 2021-037 to be significant deficiencies. Other
auditors of the discretely presented component units considered the deficiencies described in the
accompanying Schedule of Findings and Questioned Costs as findings 2021-032, 2021-034, and 2021-035
to be significant deficiencies.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the State’s financial statements are free of
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The
results of our tests disclosed an instance of noncompliance or a matter that is required to be reported under
Government Auditing Standards and which is described in the accompanying Schedule of Findings and
Questioned Costs as finding 2021-002. Other auditors of the discretely presented component units
disclosed an instance of noncompliance that is required to be reported under Government Auditing
Standards and which is described in the accompanying Schedule of Findings and Questioned Costs as
finding 2021-030.
Office of the Auditor General
Finance Committee of the House of Representatives and
Joint Committee on Legislative Services, General Assembly
C-3
State’s Response to Findings
The State’s responses and corrective action plans to the findings identified in our audit are described
in the accompanying State’s Corrective Action Plan (Section E). The State’s responses and corrective
action plans were not subjected to the auditing procedures applied in the audit of the financial statements
and, accordingly, we express no opinion on the responses or corrective action plans.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the State’s
internal control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the State’s internal control and compliance. Accordingly,
this communication is not suitable for any other purpose.
Dennis E. Hoyle, CPA
Auditor General
January 28, 2022 except for Finding 2021-037 regarding the Schedule of Expenditures of Federal Awards
(Section B) as to which the date is June 28, 2022.
C-4
33 Broad Street Suite 201 Providence, RI 02903-4177
tel: 401.222.2435 fax: 401.222.2111
Office of the Auditor General
State of Rhode Island - General Assembly
Dennis E. Hoyle, CPA - Auditor General
oag.ri.gov
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR
FEDERAL PROGRAM AND REPORT ON INTERNAL CONTROL OVER
COMPLIANCE AS REQUIRED BY THE UNIFORM GUIDANCE
Finance Committee of the House of Representatives and
Joint Committee on Legislative Services, General Assembly,
State of Rhode Island:
Report on Compliance for Each Major Federal Program
We have audited the State of Rhode Island’s (the State’s) compliance with the types of compliance
requirements described in the OMB Compliance Supplement that could have a direct and material effect on
each of the State’s major federal programs for the year ended June 30, 2021.
The State’s major federal programs are identified in Section I - Summary of Auditor’s Results of
the accompanying Schedule of Findings and Questioned Costs (Section D).
We did not audit the major federal programs or percentages of federal programs listed below.
Those programs were audited by other auditors whose reports on compliance with requirements applicable
to each major federal program were furnished to us, and our opinion, insofar as it relates to compliance
requirements for these programs, is based solely on the reports of the other auditors.
2021 Major Programs Audited by Other Auditors
Program Title:
Assistance
Listing No.
Home Investment Partnerships Program
14.239
Airport Improvement Program
20.106
Federal Transit Cluster: *
Federal Transit – Capital Investment Grants
20.500
Federal Transit – Formula Grants
20.507
State of Good Repair Grants Program
20.525
Bus and Bus Facilities Formula Program
20.526
Coronavirus Relief Fund **
21.019
Education Stabilization Fund ***
84.425
Research and Development Cluster
Various
* The Federal Transit Cluster was administered by both the primary government (State) and a component unit
(Rhode Island Public Transit Authority).
** The Coronavirus Relief Fund was administered by the primary government (State) and funds were passed
through to a component unit (Rhode Island Commerce Corporation). These pass-through funds were audited
by the component unit auditor.
*** The Education Stabilization Fund program was administered by both the primary government (State) and
several component units (University of Rhode Island, Rhode Island College, and Community College of
Rhode Island).
Office of the Auditor General
Finance Committee of the House of Representatives and
Joint Committee on Legislative Services, General Assembly
C-5
Management’s Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and
conditions of its federal awards applicable to its federal programs.
Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for each of the State’s major federal
programs based on our audit of the types of compliance requirements referred to above. We conducted our
audit of compliance in accordance with auditing standards generally accepted in the United States of
America; the standards applicable to financial audits contained in Government Auditing Standards, issued
by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal
Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for
Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and
perform the audit to obtain reasonable assurance about whether noncompliance with the types of
compliance requirements referred to above that could have a direct and material effect on a major federal
program occurred. An audit includes examining, on a test basis, evidence about the State’s compliance
with those requirements and performing such other procedures as we considered necessary in the
circumstances.
We believe that our audit, and the reports of the other auditors, provide a reasonable basis for our
qualified and unmodified opinions on compliance for major federal programs. However, our audit does not
provide a legal determination of the State’s compliance.
Basis for Qualified Opinions on Unemployment Insurance, Children’s Health Insurance Program,
and Medicaid Cluster
As identified in the following table and as described in the accompanying Schedule of Findings
and Questioned Costs, the State did not comply with requirements that are applicable to the following major
federal programs:
Assistance
Listing No.
Program / Cluster Name
Compliance Requirement
Finding
17.225
Unemployment Insurance
Eligibility
2021-047
Special Tests and Provisions – UI Program Integrity
– Overpayments
2021-048
93.767
Children’s Health
Insurance Program
Eligibility
2021-068
Special Tests and Provisions – Managed Care
Financial Audit
2021-069
Special Tests and Provisions – Medicaid Managed
Care Organizations – Provider Eligibility
2021-070
93.775
93.777
93.778
Medicaid Cluster
Special Tests and Provisions – Managed Care
Financial Audit
2021-069
Special Tests and Provisions – Medicaid Managed
Care Organizations – Provider Eligibility
2021-070
Compliance with such requirements is necessary, in our opinion, for the State to comply with the
requirements applicable to those major federal programs.
Office of the Auditor General
Finance Committee of the House of Representatives and
Joint Committee on Legislative Services, General Assembly
C-6
Qualified Opinions on Unemployment Insurance, Children’s Health Insurance Program, and
Medicaid Cluster
In our opinion, except for the noncompliance described in the Basis for Qualified Opinions
paragraph, the State complied, in all material respects, with the types of compliance requirements referred
to above that could have a direct and material effect on the Unemployment Insurance, Children’s Health
Insurance Program, and Medicaid Cluster for the year ended June 30, 2021.
Unmodified Opinion on Each of the Other Major Federal Programs
In our opinion, based on our audit and the reports of the other auditors, the State complied, in all
material respects, with the types of compliance requirements referred to above that could have a direct and
material effect on each of its other major federal programs identified in Section I - Summary of Auditor’s
Results of the accompanying Schedule of Findings and Questioned Costs for the year ended June 30, 2021.
Other Matters
The results of our auditing procedures disclosed other instances of noncompliance, which are
required to be reported in accordance with the Uniform Guidance and which are described in the
accompanying Schedule of Findings and Questioned Costs as findings 2021-038 and 2021-059. Our
opinion on each major program is not modified with respect to these matters.
The State’s responses and corrective action plans to the noncompliance findings identified in our
audit are described in the accompanying State’s Corrective Action Plan (Section E). The State’s responses
and corrective action plans were not subjected to the auditing procedures applied in the audit of compliance
and, accordingly, we express no opinion on the responses and corrective action plans.
Report on Internal Control Over Compliance
Management of the State is responsible for establishing and maintaining effective internal control
over compliance with the types of compliance requirements referred to above. In planning and performing
our audit of compliance, we, and the other auditors, considered the State’s internal control over compliance
with the types of requirements that could have a direct and material effect on each major federal program
to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing
an opinion on compliance for each major federal program and to test and report on internal control over
compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on
the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the
effectiveness of the State’s internal control over compliance.
Our consideration, and the consideration of the other auditors, of internal control over compliance
was for the limited purpose described in the preceding paragraph and was not designed to identify all
deficiencies in internal control over compliance that might be material weaknesses or significant
deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not
identified. However, as discussed below, we did identify certain deficiencies in internal control over
compliance that we consider to be material weaknesses and significant deficiencies.
A deficiency in internal control over compliance exists when the design or operation of a control
over compliance does not allow management or employees, in the normal course of performing their
assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement
of a federal program on a timely basis.
Office of the Auditor General
Finance Committee of the House of Representatives and
Joint Committee on Legislative Services, General Assembly
C-7
A material weakness in internal control over compliance is a deficiency, or combination of
deficiencies, in internal control over compliance, such that there is a reasonable possibility that material
noncompliance with a type of compliance requirement of a federal program will not be prevented, or
detected and corrected, on a timely basis. We, and the other auditors, consider the deficiencies in internal
control over compliance described in the accompanying Schedule of Findings and Questioned Costs as
findings 2021-039, 2021-040, 2021-047, 2021-048, 2021-052, 2021-058, 2021-060, 2021-061, 2021-062,
2021-064, 2021-067, 2021-068, 2021-069, 2021-070, 2021-071, and 2021-078 to be material weaknesses.
A significant deficiency in internal control over compliance is a deficiency, or a combination of
deficiencies, in internal control over compliance with a type of compliance requirement of a federal program
that is less severe than a material weakness in internal control over compliance, yet important enough to
merit attention by those charged with governance. We, and the other auditors, consider the deficiencies in
internal control over compliance described in the accompanying Schedule of Findings and Questioned
Costs as findings 2021-038, 2021-041, 2021-042, 2021-043, 2021-044, 2021-045, 2021-046, 2021-049,
2021-050, 2021-051, 2021-053, 2021-054, 2021-055, 2021-056, 2021-057, 2021-063, 2021-065, 2021-066,
2021-072, 2021-073, 2021-074, 2021-075, 2021-076, and 2021-077 to be significant deficiencies.
The State’s responses and corrective action plans to the internal control over compliance findings
identified in our audit are described in the accompanying State’s Corrective Action Plan (Section E). The
State’s responses were not subjected to the auditing procedures applied in the audit of compliance and,
accordingly, we express no opinion on the responses and corrective action plans.
The purpose of this report on internal control over compliance is solely to describe the scope of our
testing of internal control over compliance and the results of that testing based on the requirements of the
Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Dennis E. Hoyle, CPA
Auditor General
June 28, 2022
State of Rhode Island
Single Audit Report
For the Fiscal Year Ended June 30, 2021
Office of the Auditor General
General Assembly
Schedule of Findings
and Questioned Costs
State of Rhode Island
Single Audit Report
For the Fiscal Year Ended June 30, 2021
Office of the Auditor General
D-i
General Assembly
Schedule of Findings and
Questioned Costs
Table of Contents
Page
Section I – Summary of Auditor’s Results ........................................................................................... D-1
Section II – Financial Statement Findings ............................................................................................. D-4
Section III – Federal Award Findings and Questioned Costs
Table of Findings by Major Program ............................................................................... D-45
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section I – Summary of Auditor’s Results
Office of the Auditor General
D-1
Basic Financial Statements
1) The independent auditor’s report on the basic financial statements expressed the following opinions:
Opinion Unit
Opinion
Governmental Activities
Unmodified
Business–type Activities
Unmodified
Aggregate Discretely Presented Component Units
Unmodified
Major funds –
General
Unmodified
Intermodal Surface Transportation
Unmodified
Lottery
Unmodified
Convention Center Authority
Unmodified
Employment Security
Unmodified
Aggregate Remaining Fund Information
Unmodified
2) The audit of the basic financial statements disclosed significant deficiencies and material weaknesses
in internal control over financial reporting.
3) The audit disclosed an instance of noncompliance, which was material to the basic financial statements,
and is required to be reported in accordance with Government Auditing Standards.
Federal Awards
4) The audit disclosed significant deficiencies in internal control over major programs, some of which
were classified as material weaknesses.
5) The independent auditor’s report on compliance for major programs expressed:
a qualified opinion for the following major programs:
Program
Assistance Listing No.
Unemployment Insurance
17.225
Children’s Health Insurance Program
93.767
Medicaid Cluster
93.775, 93.777 and 93.778
and an unmodified opinion for all remaining major programs.
6) The audit disclosed findings that must be reported in accordance with 2 CFR 200.516(a) of OMB
Uniform Guidance provisions.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section I – Summary of Auditor’s Results
Office of the Auditor General
D-2
7) Major programs are listed in the table below.
2021 Major Programs
Program Title:
Assistance
Listing No.
Pandemic EBT Food Benefits
10.542
SNAP Cluster:
Supplemental Nutrition Assistance Program
10.551
State Administrative Matching Grants for the Supplemental Nutrition Assistance
Program
10.561
Child Nutrition Cluster:
School Breakfast Program
10.553
National School Lunch Program
10.555
Special Milk Program for Children
10.556
Summer Food Service Program for Children
10.559
Child Nutrition Discretionary Grants Limited Availability
10.579
Home Investment Partnerships Program
14.239
Fish and Wildlife Cluster:
Sport Fish Restoration
15.605
Wildlife Restoration and Basic Hunter Education
15.611
Crime Victim Assistance
16.575
Unemployment Insurance
17.225
Airport Improvement Program
20.106
Highway Planning and Construction Cluster:
Highway Planning and Construction
20.205
Recreational Trails
20.219
Federal Transit Cluster:
Federal Transit – Capital Investment Grants
20.500
Federal Transit – Formula Grants
20.507
State of Good Repair Grants Program
20.525
Bus and Bus Facilities Formula Program
20.526
Coronavirus Relief Fund
21.019
Special Education (IDEA) Cluster:
Special Education Grants to States
84.027
Special Education Preschool Grants
84.173
Education Stabilization Fund
84.425
Epidemiology and Laboratory Capacity for Infectious Diseases (ELC)
93.323
Temporary Assistance for Needy Families
93.558
CCDF Cluster:
Child Care and Development Block Grant
93.575
Child Care Mandatory and Matching Funds of the Child Care Development Fund
93.596
Children’s Health Insurance Program
93.767
Medicaid Cluster:
State Medicaid Fraud Control Units
93.775
State Survey and Certification of Health Care Providers and Suppliers (Title XVIII)
Medicare
93.777
Medical Assistance Program
93.778
Disaster Grants – Public Assistance (Presidentially Declared Disasters)
97.036
Presidential Declared Disaster Assistance to Individuals and Households – Other Needs
97.050
Research and Development Cluster
Various
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section I – Summary of Auditor’s Results
Office of the Auditor General
D-3
8) The dollar threshold used to distinguish between Type A and Type B programs was $25,205,576.
9) The State did not qualify as a low-risk auditee as defined by OMB Uniform Guidance.
10) Major programs audited by other auditors are listed in the table below:
2021 Major Programs Audited by Other Auditors
Program Title:
Assistance
Listing No.
Home Investment Partnerships Program
14.239
Airport Improvement Program
20.106
Federal Transit Cluster: *
Federal Transit – Capital Investment Grants
20.500
Federal Transit – Formula Grants
20.507
State of Good Repair Grants Program
20.525
Bus and Bus Facilities Formula Program
20.526
Coronavirus Relief Fund **
21.019
Education Stabilization Fund ***
84.425
Research and Development Cluster
Various
* The Federal Transit Cluster was administered by both the primary government (State) and a component unit
(Rhode Island Public Transit Authority).
** The Coronavirus Relief Fund was administered by the primary government (State) and funds were passed
through to a component unit (Rhode Island Commerce Corporation). These pass-through funds were audited by
the component unit auditor.
*** The Education Stabilization Fund program was administered by both the primary government (State) and
several component units (University of Rhode Island, Rhode Island College, and Community College of
Rhode Island).
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-4
Finding 2021-001
(significant deficiency – repeat finding – 2020-001)
IMPLEMENTATION
OF
THE STRATEGIC PLAN
FOR CRITICAL FINANCIAL
AND
ADMINISTRATIVE COMPUTER SYSTEMS
Background: The State’s strategic plan details the need for,
and the benefits to be derived from, an enterprise applications
modernization effort, highlighting that “the risks of inaction
far outweigh the cost of upgrades in capability”. Responses to
the State’s Request for Proposals for a new ERP system are
currently being evaluated. Funding has been made available
through a direct appropriation of $50 million to the State’s
Information Technology Investment Fund for this initiative.
Implementation of the strategic plan is essential to ensure that
critical legacy financial systems, such as the payroll system,
which pose a business continuity risk, will be available to support State operations.
Criteria: Management needs well-designed financial systems that support comprehensive internal controls
over financial reporting, enable organization-wide efficiencies, and promote business continuity. Integrated
functionalities support appropriate internal controls and eliminate inefficiencies resulting from multiple
systems, duplicate data entry and ineffective communication between systems.
Condition: Important functionalities are minimally met through legacy systems, the existing statewide
accounting system, and multiple departmental processes without intended integration and efficiencies. This
results in business continuity risk, decreased efficiency and effectiveness, and control weaknesses. Some
of the State’s critical systems utilize outdated technology which makes these operations vulnerable from a
business continuity and systems security perspective. Certain legacy systems utilize software that is no
longer supported and the availability of skilled personnel to work on these systems is limited. Many of the
needed financial functionalities are interdependent and, consequently, the risk of failed integration is
increased absent appropriate strategic planning and sequencing.
With funding now secured, the primary system implementation risks that remain are (1) selecting software
and a system integrator that are the best match for the State’s needs, (2) managing the process re-engineering
that must be done to align the State’s processes to the software-as-a-service functionalities within the ERP
system, and (3) ensuring sufficient subject matter experts are involved in the implementation process to
ensure a high likelihood of success.
Cause: The State’s current accounting and financial reporting system lacks the integration, functionality,
and controls of a comprehensive Enterprise Resource Planning (ERP) system. The State’s human resource
and payroll systems are separate applications that utilize outdated technology and are supported by multiple
paper-based data collection and approval processes.
Effect: Business continuity risks, deficiencies in internal control over financial reporting, and the lack of
organization-wide efficiencies exist and are exacerbated due to the lack of an integrated ERP system.
The State is implementing its strategic
plan to replace and enhance key
statewide financial and administrative
systems and is in the process of
selecting a software vendor and system
integrator. The implementation should
focus on ensuring a successful outcome
through effective management of
critical risks.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-5
RECOMMENDATIONS
2021-001a
Select software and a system integrator that are the best match for the State’s needs.
2021-001b
Manage the process re-engineering that must be done to align the State’s processes
to the software-as-a-service functionalities within the ERP system.
2021-001c
Ensure sufficient subject matter experts are involved in the implementation process
to ensure a high likelihood of success.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-002
(material noncompliance / material weakness / other matter required to be
reported by Government Auditing Standards – repeat finding – 2020-002)
CONTROLS OVER UNEMPLOYMENT INSURANCE BENEFIT PAYMENTS
See related Federal Award Finding 2021-047.
Background: In fiscal 2021, the Department of Labor and
Training (DLT) paid more than $2.3 billion in unemployment
insurance benefits. In response to the COVID-19 pandemic,
the federal Coronavirus Aid, Relief, and Economic Security
(CARES) Act expanded and/or extended unemployment
insurance benefits, including providing new benefits to self-
employed
individuals
and
independent
contractors.
Fraudulent claims for unemployment insurance benefits also
increased rapidly, concurrent with the overall increase in
claims due to the pandemic. This unprecedented increase in
fraudulent claims was experienced nationwide and was not
unique to Rhode Island.
The system used by DLT to process unemployment insurance (UI) benefits utilizes outdated technology. This
legacy system is mainframe based and programmed in COBOL. In response to the pandemic-related surge
in unemployment insurance claims, new “cloud-based” technologies were rapidly deployed to facilitate
processing the volume of claims and interactions with claimants; however, the primary claims processing
functions were still performed by the legacy system.
Criteria: Management is responsible for establishing and maintaining effective internal controls to process
and disburse unemployment insurance benefits consistent with federal program guidelines including
appropriate procedures to prevent and detect fraudulent payments.
Collections on overpayments due to error or fraud must be reported and credited to the appropriate federal
award that funded unemployment insurance benefit.
Condition: DLT’s internal control procedures were not sufficiently effective to ensure that unemployment
benefit payments were made only to eligible individuals. DLT estimated $70 million in known fraudulent
claims were paid between March 2020 and June 30, 2021. An additional $480 million of claims are
considered suspected fraud. In response to the increase in fraudulent benefit claims, DLT engaged a
contractor to assist in the detection of likely fraud which included the use of advanced analytic techniques.
Additionally, identity verification controls have recently been implemented (after June 30, 2021) on a pilot
basis.
Controls over the processing of
unemployment insurance claims were
insufficient to prevent fraudulent
unemployment
insurance
benefit
payments. While efforts continue to
identify the amount of fraud, fraudulent
payments increased over the prior year.
Recoveries
of
fraudulent
unemployment insurance benefits have
not been recognized or credited to the
federal grantor.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-6
Controls over claims processing were weakened through suspension of the first week waiting period, a
simplified application implemented to streamline and expedite processing, and the inability to apply the
normal wage verification procedures to claims from self-employed individuals and independent contractors.
In December 2020, the federal government required adherence to the documentation of income provisions
for self-employed individuals; however, most claimants did not provide the required documentation and
benefits continued.
In some limited instances, claw back of amounts paid to fraudulent beneficiaries has been successful;
however, collections and claw backs have not been accounted for within the State’s accounting system nor
credited back to the appropriate federal award, as applicable.
Cause: The large volume of claims stressed an outdated system and the unprecedented economic impact
warranted rapid processing of claims. The rapid implementation of new unemployment benefit programs
authorized by the CARES Act did not allow sufficient time to employ wage verification and other
procedures. Other procedures to verify client identity, prior wages and overall eligibility were also
weakened due to the unprecedented volume of claims and new procedures employed to expedite benefit
payments. Lastly, the substantial increase in fraudulent claims activity is largely considered to be the result
of sustained and targeted efforts impacting many states.
When fraudulent benefits are successfully clawed-back or collected, the funding source for that benefit
must be investigated and determined. Most weekly benefit amounts paid were funded by multiple federal
awards (e.g., base benefit + supplemental benefit). The investigation and accounting for these amounts has
lagged and was pending at June 30, 2021.
Effect: Fraudulent unemployment insurance claims have been paid and DLT’s systems require further
enhancements to timely identify fraudulent benefit claims prior to disbursement. DLT remains at a critical
juncture in developing a strategy to upgrade and modernize its unemployment insurance claims processing
systems while ensuring compliance with federal program requirements including the prevention and
detection of fraudulent benefit payments.
The impact of successful collections and claw back of fraudulent benefits was not appropriately reflected
on the financial statements of the Employment Security Fund or on federal reports. The federal grantor has
not been credited for their share of recoveries.
RECOMMENDATIONS
2021-002a
Continue to enhance procedures to timely identify fraudulent claims by
strengthening controls within the legacy claims processing system as well as those
newly implemented processing functionalities employed to meet the increase in
claims activity.
2021-002b
Implement a strategic plan to address the required modernization of the
unemployment benefit claims processing system.
2021-002c
Research recoveries of overpayments or fraudulent payments and record within
the State’s RIFANS accounting system.
2021-002d
Credit the federal government (appropriate federal award) for amounts recovered.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-7
Finding 2021-003
(material weakness – repeat finding – 2020-004)
MEDICAID PROGRAM COMPLEXITY AFFECTS FINANCIAL REPORTING AND OVERALL
PROGRAM CONTROLS
See related Federal Award Finding 2021-071.
Background: The complexity of the Medicaid program
increases each year through new federal regulations, complex
managed care contract settlement provisions, new State
initiatives, and continued challenges relating to the State’s
integrated human services eligibility system, RIBridges.
Medicaid is the State’s single largest program activity -
representing just under $3 billion in expenditures or
approximately 35% of the State’s General Fund expenditures. Consequently, the financial aspects of this
program are material to the State’s financial reporting objectives. Expenditures for individuals covered under
managed care approximate $2 billion representing the majority of benefit expenditures reported for Medicaid.
Criteria: Management is responsible for establishing and maintaining internal control over financial
reporting to ensure accurate and complete reporting of transactions in accordance with generally accepted
accounting principles.
Condition: Significant Medicaid program activity is currently being accounted for external to the systemic
controls and processes designed within the Medicaid Management Information System (MMIS). The
MMIS was developed as a claims processing system over 30 years ago and was not designed to meet the
current processing and reporting needs of the State’s managed care programs. Managed care requires a
system that can handle capitation adjustments and a more robust adjudication of encounter data submitted
by the State’s contracted managed care organizations (MCOs). While the MMIS has been modified over
time to handle the disbursement of capitation and the submission of encounter data, it lacks the functionality
to completely process and account for managed care activity.
Due to the length of settlement periods, eligibility discrepancies between the claims payment system and
the State’s integrated eligibility system, retroactive capitation adjustments, and the volume of transactions
being accumulated and evaluated independent of regular program controls, risks relating to inaccurate
financial activity and federal compliance have increased.
The following were examples during fiscal 2021 where financial reporting was impacted by the above
condition:
•
Retroactive rate increases totaling $86.1 million due to the State’s three MCOs were manually
settled based on off-line calculations in fiscal 2021;
•
Provider capitation recoupments totaling $31.9 million representing a fiscal 2020 rate adjustment
for the removal of federally qualified health center supplemental payments was processed in fiscal
2021 and supported by off-line calculations;
•
Amounts totaling $2 million due at year-end to the MCOs for vaccination reimbursements not
covered under capitation were omitted from year-end accruals;
•
EOHHS still lacks processes to validate various “general ledger” adjustments which factor into
final MCO contract settlements; and
•
Certain year-end manual calculations of liabilities and receivables did not include consistent
treatment with how the related expenditures were split amongst the various managed care
populations because the year-end calculations are separate and distinct from the systemic
processing of the activity during the fiscal year.
While EOHHS’s off-line analysis is making every attempt to accurately and completely settle and account
for its managed care activities, systemic controls do not currently support those efforts and control
deficiencies exist that continue to impact the State’s financial reporting. With the State currently exploring
The continued and growing complexity
of Medicaid program operations adds
to
the
challenge
of
accurately
accounting for all Medicaid program
related financial activity within the
State’s financial statements.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-8
procurement for a new MMIS, significant focus should be placed on ensuring that controls over managed
care capitation and claiming activity are significantly improved. In the near term, the State should look to
utilize federally required audit procedures to improve controls over segments of the managed care
settlement process that are currently not being validated.
Cause: Ensuring all financial activity is properly and completely recorded in the State’s financial statements
is an increasingly complex task. The State does not currently have a system that can process retroactive
capitation rate changes and/or changes in participant enrollment category. The current MMIS performs
limited edits in encounter data submitted by the plans that are no longer adequate for the size and volume of
medical claims covered under capitation.
Effect: Potential effects of this control deficiency include unrecorded or inaccurately recorded financial
transactions, incorrect reimbursements to providers or managed care organizations, and noncompliance
with federal regulations.
RECOMMENDATIONS
2021-003a
Formalize a risk assessment process for significant Medicaid related activities to
determine where controls and other data validation procedures are required.
Delineate areas where audit procedures could be utilized to validate data currently
not supported within contract settlement procedures.
2021-003b
Develop specific objectives for managed care data processing (i.e., premium and
encounter data processing functionality) that will be required of and included in
the specifications for the next MMIS.
2021-003c
Minimize instances where material financial activities are reliant on manual
processes to ensure proper financial reporting.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-9
Finding 2021-004
(material weakness – repeat finding – 2020-005)
SYSTEM PAYOUTS AND MANUAL DISBURSEMENTS BY THE MEDICAID FISCAL AGENT
See related Federal Award Finding 2021-071.
Criteria: Management is responsible for establishing and
maintaining internal control over financial reporting to ensure
accurate and complete reporting of transactions in accordance
with generally accepted accounting principles. Such
processes should support the validity and accuracy of all
payments made by the fiscal agent, the completeness of
reported program activity, and to ensure compliance with
federal regulations for allowable cost principles and activities
allowed or unallowed.
Condition: The MMIS lacks formalized reporting that details
system
payouts,
manual
disbursements,
and
system
recoupments. To the extent that system payouts and
recoupments net with current claims processing activity, these
transactions result in net cycle activity being posted to the
State accounting system which is the basis for the State’s
financial and federal reporting functions. When system
payouts and recoupments relate to prior period activity, the
netting with current period claiming distorts financial
reporting. This can negatively impact both financial reporting
and federal reporting for the Medicaid and CHIP programs.
EOHHS has several options to initiate non-claims processing financial activity (i.e., system payouts, manual
payouts, system recoupments, and payments through the State accounting system). Policies should be
formalized to identify the financial transaction type that best aligns with the nature of the transaction. For
example, disbursements for prior-year managed care activity should be made by a manual payment that is
recorded independently in the State accounting system rather than a system payout that nets the activity
against current capitation payment processing. Yet, a recoupment of an advance made in the prior month
is more efficiently accomplished through a system recoupment since they relate to the same financial period
(quarter or fiscal year). This consideration should involve consultation with the Office of Accounts and
Control to ensure proper financial accounting for the transaction.
The State should ensure that its next MMIS can provide improved processing and accounting for non-claims
based payments. New processes should improve the transparency and reporting of the underlying
transactions while ensuring that controls are in place to ensure that they are accurately recorded for financial
reporting and federal reporting purposes.
Cause: System payouts and recoupments often net prior period financial activity with current claims
processing activity which can result in misstatements to financial and federal reporting. Insufficient system
reporting for system payouts and recoupments increases the risk that material transactions are not identified
that require reporting as prior period activity on federal reports and for financial reporting. To the extent
that system payouts are not individually recorded in the State Accounting System increases the risk that
these transactions are not accounted for properly for financial reporting since they by-pass the State’s
centralized review procedures designed to ensure that transactions are recorded in the correct accounts and
reflected in the correct fiscal period.
Effect: Errors or omissions in financial reporting and federal noncompliance are possible effects of this
control deficiency.
The Executive Office of Health and
Human Services (EOHHS) authorized
more
than
$170
million
in
disbursements (system payouts and
manual payments) and $85 million in
system recoupments during fiscal
2021. This financial activity represents
transactions outside of the normal
claims processing functionality of the
Medicaid Management Information
System (MMIS). While these types of
payments
are
necessary
within
Medicaid, the reporting and internal
control processes relating to these
types
of
disbursements
and
recoupments are manual and external
to other established control procedures.
Such amounts are not easily identified
or quantified by the MMIS.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-10
RECOMMENDATIONS
2021-004a
Adopt policies that formalize the financial transaction type that best aligns with
the nature of the transaction.
2021-004b
Develop comprehensive reporting for system payouts, manual disbursements, and
system recoupments to improve the transparency of these transactions processed
by the Medicaid fiscal agent.
2021-004c
Improve controls over non-claims based financial transactions in the next MMIS
to provide for individual reporting and proper financial accounting treatment of
non-claims based financial transactions.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-005
(material weakness – repeat finding – 2020-006)
COMPREHENSIVE DOCUMENTATION OF THE STATE’S INTERNAL CONTROL STRUCTURE
Background: The State’s management has responsibility for
the design and operation of internal control. The Committee
of Sponsoring Organizations (COSO) has designed a
framework for internal control that consists of three categories
of objectives – operations, reporting, and compliance – and
five components – control environment, control activities, risk
assessment, information and communication, and monitoring.
The Government Accountability Office’s “Green Book” -
Standards for Internal Control in the Federal Government
tailors this conceptual framework to the public environment.
The “Green Book” is required for federal agencies and is
useful to other governments when applying the principles of
an internal control framework.
Criteria: An internal control framework, such as COSO and/or the Green Book, provides an overall
structure for management to design, document, and monitor its internal control policies and procedures.
Both within and outside government, management has responsibility for the adequacy of design and
operation of an entity’s control structure.
Condition: While certain control policies and processes have been documented, there is a lack of
formalized documentation and comprehensive internal control structure throughout State government that
complies with an accepted framework such as COSO and/or the Green Book. Opportunity exists for a
coordinated effort to implement the revised internal control framework and to reassess the design of its
current control structure (both statewide and at the individual agency level) with emphasis on risk
assessment and monitoring - both essential components of internal control. As the State considers
implementing a fully integrated ERP system, which will likely include modification of certain processes
and related controls, opportunities exist to evaluate and document amended control procedures consistent
with the internal control framework.
Cause: Management focus, training and implementation resources have been insufficient to ensure that
departments and agencies are adequately documenting their internal control structures inclusive of all
elements.
Management
focus,
training
and
implementation resources have been
insufficient to ensure that departments
and
agencies
are
assessing
and
documenting
internal
control
consistent with management’s overall
responsibility for the adequacy of the
design and operation of internal
control. Internal controls safeguard
public resources and support accurate
financial reporting.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-11
Effect: Control weaknesses could exist and go undetected either through inadequate design or through
noncompliance resulting from insufficient monitoring.
RECOMMENDATIONS
2021-005a
Commit additional resources to training and implementation materials to ensure
that departments and agencies are adequately documenting their internal controls
to reflect an understanding of its required elements in accordance with an
acceptable framework such as COSO or the Green Book.
2021-005b
Implement an internal control assessment and documentation effort to coincide
with the implementation of a fully integrated ERP system.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-006
(significant deficiency – repeat finding – 2020-007)
EVALUATION OF CONTROLS OVER FUNCTIONS PERFORMED BY EXTERNAL PARTIES
Background: SOC reports are provided by service
organizations to assure customers/clients that controls are
sufficiently designed and in operation over relevant activities.
Management of the user entity should use these reports as part
of their overall consideration and documentation of the
adequacy of the design and operation of internal control.
Criteria: Management has responsibility for the adequacy of
design and operation of an entity’s control structure including
functions performed by external parties.
Condition: The State has made progress by training
employees and implementing a uniform SOC report assessment tool to document the consideration of
controls at its service organizations. Further training and monitoring are needed to ensure all SOC reports
are appropriately and consistently evaluated. Additionally, the State must ensure that relevant
complimentary user entity (State) controls identified by service organizations are also in place and operating
effectively.
When SOC reports identify exceptions, evaluation of such matters must be timely and thorough. Any
highlighted deviations in control testing that may result in a qualified opinion regarding the design and
effectiveness of certain control procedures at the service organization, as well as complementary user entity
control considerations should be documented, reviewed, and thoroughly vetted. For fiscal year 2021,
documentation support obtained by the State departments utilizing the service organization was incomplete
regarding the evaluations of the exceptions and the impact on the State’s overall control procedures.
Continued training is recommended along with monitoring and follow-up with departments and agencies.
Cause: The lack of comprehensive documentation and consideration of controls at service organizations
that perform critical functions for State government represent a weakness in internal control over financial
reporting.
The State can continue to improve its
consideration
of
controls
over
functions performed by external parties
by enhancing use and documentation
of Service Organization Control (SOC)
reports provided by the external
parties.
These
improvements
are
necessary
and
consistent
with
management’s responsibility for the
overall adequacy of the design and
operation of internal control.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-12
Effect: Many functions performed by external parties are material to the State’s overall operations.
Deficiencies in the design or operation of controls at service organizations could materially impact the
State’s overall controls over financial reporting and compliance.
RECOMMENDATIONS
2021-006a
Enhance training and monitoring to ensure compliance with newly implemented
SOC report evaluation procedures.
2021-006b
Ensure that relevant complimentary user entity (State) controls identified by
service organizations are also in place and operating effectively.
2021-006c
Ensure exceptions and auditor report modifications included in SOC reports are
evaluated timely and documented regarding the impact on the State’s overall
control procedures.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-007
(significant deficiency – repeat finding – 2020-008)
MONITORING RIFANS ACCESS PRIVILEGES AND AGENCY APPROVAL HIERARCHIES
Background: Authorizing and monitoring access to RIFANS,
the State’s centralized accounting system, is a key control over
financial reporting. Access roles for all RIFANS users are
assigned and controlled through unique passwords. Ensuring
access is consistent and appropriate with each individual’s responsibilities is an important control process.
Individuals with “Super User” access require specific monitoring procedures due to their unlimited system
access and the ability to potentially override established control procedures.
Criteria: Controls over system access by users and system administrators is critical to ensure that
transactions in RIFANS are properly authorized and recorded for financial reporting purposes.
Condition: The State’s lack of adequate monitoring of user and administrator access represents a collective
weakness in internal control over financial reporting. There are three distinct, but interrelated areas where
the State can improve its monitoring of RIFANS access privileges by implementing reporting
functionalities that allow for the periodic review of RIFANS user and administrator access:
•
RIFANS “Super Users” – Activities of individuals with system administrator or “super user” roles
are logged but not reported and reviewed by qualified personnel. These individuals have unlimited
access to RIFANS functions and data. Consequently, any RIFANS transactions or activity initiated
by system administrators should be monitored. The Division of Information Technology’s (DoIT)
policies and procedures require the activities of privileged users (system administrators) be logged
by the system and reviewed for appropriateness by assigned personnel.
•
Agency Hierarchies – Access roles for all RIFANS users are controlled through unique passwords.
These roles, which are assigned based on job functions and responsibilities, permit access to various
system capabilities. Agency hierarchies allow specific transaction types and dollar authorization
limits. Other transaction-specific authorization controls are managed through workflow paths
within RIFANS. The Office of Accounts and Control (Accounts and Control) is responsible for
the design and control of system access by RIFANS users. This “blueprint” of the RIFANS control
structure is periodically documented through hierarchies detailing access and approval flows for
The State can enhance certain system
access controls within the RIFANS
statewide accounting system.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-13
each department or agency and system workflows documenting the routing of certain types of
transactions.
•
RIFANS Delegated Authority – RIFANS users may delegate their authority to other users in certain
situations (e.g., vacation rules). The State implemented a policy that restricts employees from
delegating their authority to others with a lower level of authority and requiring notification of the
delegation to Accounts and Control in certain circumstances.
The State created a report designed to monitor changes to the agency hierarchies, authorization thresholds,
and other select data fields; however, there were no procedures in place requiring periodic review of the
report by DoIT IT Security personnel who possess sufficient knowledge of the IT security protocols to
monitor “super user” activity. Further refinements to the report are required to capture all “super user”
activity on the system. For example, there are no existing system-enforced policies restricting “super users”
from effecting changes to their own level of access or authorization levels.
In conjunction with our audit testing, we noted instances where individuals were granted general ledger
approval authority inconsistent with requested access, sometimes at significantly higher levels and longer
periods of time than intended. These inconsistencies went undetected and uncorrected during the
subsequent review of the ‘Super User’ report. In other instances, we noted that approval of access was not
documented if the individual was replacing another with previously approved access. Additionally, the
system workflows, which route transactions centrally following agency approval, were not properly
documented and in some instances were operating inconsistent with established policies set by the Office
of Accounts and Control.
Cause: The State did not have sufficient reporting to allow for comprehensive “super user” access
monitoring during fiscal 2021. Additionally, the largely manual administration of system access for
RIFANS which has a large volume of users diminishes effective controls over system access. The State
should ensure the new ERP system being selected contains robust functionality to manage and document
user access controls and authorization levels including the activities of super users.
Effect: Potential for unauthorized transactions being recorded in RIFANS.
RECOMMENDATIONS
2021-007a
Enhance current procedures for reviewing the activities of “super users” (including
system administrators) on a scheduled basis to ensure that additions, modifications,
and deletions initiated by them are appropriate. Ensure that current documentation
of system access and transaction workflows is current and that all access is granted
or terminated with appropriate approval.
2021-007b
Ensure the new ERP system being procured contains robust functionality to
manage and document user access controls and authorization levels including the
activities of super users.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-14
Finding 2021-008
(significant deficiency – repeat finding – 2020-009)
COMPREHENSIVE GENERAL LEDGER CONTROLS OVER RECEIVABLES
Background: Revenues are collected at many points
throughout the State and, in many instances, due to volume
and complexity (e.g., tax revenues), independent systems must
be maintained to control and account for those revenues and related receivables.
Currently, general ledger balances are adjusted at fiscal year-end to match the summary balances reported
by the various revenue collecting agencies. Long-term receivables, which are included in the State’s
government-wide financial statements, are typically recorded, and then reversed each year without a
“permanent” general ledger or subsidiary ledger detail record of such amounts.
The lack of an integrated revenue and receivables functionality within the RIFANS accounting system
requires that receipts/revenue be recorded via journal entry transactions (directly to the general ledger).
Typically, receipts/revenue would be recorded in a separate module with expanded functionality that would
interface with and post information to the general ledger.
The Office of Accounts and Control has added certain receivable categories to an existing
revenue/receivables module that is part of RIFANS. However, since that module is more designed to track
receivables on a unique customer basis, it does not easily match the need to control receivables within the
State’s various subsidiary systems (e.g., tax receivables). Other options need to be considered to meet the
State’s comprehensive control objectives for receivables, given the complicated and decentralized nature
of revenue collection points throughout the State.
Criteria: Controls are enhanced when there are effective general ledger controls over all receivable
balances with periodic reconciliation to detailed subsidiary accounts receivable systems. Additions and
reductions (receipts) of receivables should be recorded in aggregate at the general ledger level with the
detailed recording at the customer/taxpayer level within the various subsidiary receivable systems.
Condition: The State must enhance its comprehensive general ledger controls over amounts owed to the
State. Receivable balances are generally maintained by the revenue-collecting department or agency (e.g.,
Division of Taxation, Courts, and Department of Environmental Management). Summary balances are
only reported annually to the Office of Accounts and Control for inclusion in the State’s financial
statements. The effectiveness of receivable recording at year-end is dependent upon agencies fully
reporting balances to the Office of Accounts and Control and procedures performed by Accounts and
Control to identify possible omissions. This manual process provides a level of compensating control but
is susceptible to omission. Accounting and monitoring controls over the State’s receivables in aggregate
are limited.
Cause: Inadequate general ledger controls over accounts receivable.
Effect: Potential for misstatement or omission of accounts receivable and related revenue in the State’s
financial statements.
RECOMMENDATION
2021-008
Ensure the statewide ERP system in procurement includes appropriate and
integrated revenue/receivable functionalities.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Statewide accounting controls over
receivables should be enhanced.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-15
Finding 2021-009
(material weakness – repeat finding – 2020-010)
CONTROLS OVER FEDERAL PROGRAM FINANCIAL ACTIVITY
Background: Federal programs represented 49% of fiscal
2021 General Fund expenditures. Financial reporting risks
include categorizing expenditures as federally reimbursable
when grant funds have either been exhausted or the
expenditures do not meet the specific program limitations.
Further, the State can improve its overall centralized
monitoring of federal program operations to ensure
compliance with federal requirements.
Some federal grants are open-ended entitlement programs
where the federal government will reimburse the State for all allowable costs incurred under the program.
Other federal grants are limited by a specific award amount and grant period. These grant periods are often
for the federal fiscal year and are not aligned with the State’s fiscal year.
Criteria: Federal revenue and expenditures recorded by the State must be consistent with the limitations
of grant awards from the federal government and claimed expenditures on federal reports must be consistent
with amounts recorded in the State’s accounting system.
Condition: Knowledge of grant requirements, spending authorizations, and limitations on reimbursable
expenditures all rests with departmental managers who administer the federal grant programs. The Office
of Accounts and Control, in preparing the State’s financial statements, relies primarily on the coding of
expenditures (by funding source – federal) within the RIFANS accounting system. All expenditures
recorded in federal accounts are considered reimbursable from the federal government and federal revenue
is recorded to match those expenditures. From an overall statewide perspective, controls over financial
reporting are ineffective to ensure that all federal expenditures are reimbursable and federal revenue is
recognized appropriately.
The Office of Accounts and Control requires departments to complete a Federal Grants Information
Schedule (FGIS) to reconcile RIFANS program activity with amounts drawn and claimed on federal
reports. The FGIS process is not effective and there is no other statewide control measure to ensure that
grant expenditures do not exceed available award authority.
The State’s RIFANS accounting system does not meet the State’s needs in three important and interrelated
areas – time reporting/payroll, grants management, and cost allocation – all functionalities that are integral
to management of federal programs. These functions are currently performed independent of RIFANS and
generally through multiple departmental systems – most of which are duplicative and utilize old and
sometimes unsupported technology.
Cause: Sufficient controls have not been implemented within the statewide accounting system to ensure
amounts are consistent with the limitations of grant awards from the federal government and claimed
expenditures on federal reports are consistent with amounts recorded in the State’s accounting system;
however, the current FGIS process is ineffective.
Enhanced statewide accounting functionalities that support time reporting/payroll, grants management, and
cost allocation are being contemplated through the strategic plan initiative which recognizes the need for a
grants management component within the overall planned ERP implementation.
Effect: Federal revenue could be overstated and not detected for financial reporting purposes. The share
of program costs allocable to funding sources (e.g., general revenue vs. federal) could be misstated.
The State can improve controls over
recording federal revenue to ensure (1)
amounts are consistent with the
limitations of grant awards from the
federal government and (2) claimed
expenditures on federal reports are
consistent with amounts recorded in
the State’s accounting system.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-16
RECOMMENDATION
2021-009
Implement controls to ensure that the allocable share of federal program
expenditures is consistent with grant award limitations. Reassess the current FGIS
process with the goal of enhancing compliance and effectiveness.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-010
(significant deficiency –new finding)
CONTROLS OVER DEBT-RELATED ACCOUNTING ENTRIES
Background: The State uses the DBC Debt Manager system
as a subsidiary ledger to account for long-term debt
obligations and related costs. DBC has reporting
functionalities that are used to support the manual journal
entries prepared by the Office of Accounts and Control that
are necessary to reach the appropriate year-end balances for outstanding debt and related deferred costs.
Criteria: GASB Statement No. 65 – Items Previously Reported as Assets and Liabilities states that “[f]or
current refundings and advance refundings resulting in defeasance of debt reported by governmental
activities, business-type activities, and proprietary funds, the difference between the reacquisition price and
the net carrying amount of the old debt should be reported as a deferred outflow of resources or a deferred
inflow of resources and recognized as a component of interest expense in a systematic and rational manner
over the remaining life of the old debt or the life of the new debt, whichever is shorter.” The net carrying
amount is further defined as “the amount due at maturity, adjusted for any unamortized premium or discount
related to the old debt, as well as any deferred outflows of resources or deferred inflows of resources
associated with a derivative instrument that is an effective hedge of the old debt.”
Condition: In April 2021, the State issued approximately $87.7 million of general obligation bonds to
advance refund $80.7 million of outstanding general obligation bonds. Due to errors in the timing of reports
obtained from the DBC Debt Manager system, the journal entries to record the defeasance, including the
calculation of deferred amounts on refunding and the change in the balance of bond premiums, were in
error. Prior to audit adjustment, deferred premiums were overstated by approximately $5.0 million,
deferred outflows of resources related to the April 2021 advance refunding were overstated by
approximately $5.5 million, and amortization of deferred refunding costs were overstated by approximately
$119,000 at June 30, 2021.
Cause: Errors in the timing of reports obtained from the DBC Debt Manager system resulted in incorrect
journal entries to record the defeasance, including the calculation of deferred amounts on refunding and the
change in the balance of bond premiums.
Effect: A material audit adjustment was required to correct year-end balances of long-term debt obligations
(net of premiums and/or discounts) and deferred outflows of resources.
The State can improve controls over
the use of the DBC Debt Manager
system
to
support
debt-related
accounting entries.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-17
RECOMMENDATIONS
2021-010a
Run all DBC reports for year-end related balances with a June 30 effective date to
ensure all transactions are accurately captured in the reports.
2021-010b
Research additional report functionalities within DBC to summarize fiscal year
beginning and ending balances of unamortized premiums.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-011
(significant deficiency – new finding)
STATE PROCUREMENT PROCESS AND SUPPORTING DOCUMENTATION
Background: The Chief Purchasing Officer and State
Purchasing Agent are responsible for ensuring that
procurement is conducted in a competitive manner (when
possible) and compliant with state procurement laws,
regulations, rules, codes, and procedures.
Criteria: All determinations regardless of procurement
method are to be in writing and based upon written findings of
fact and retained in the purchasing file (G. L. § 37-2-6).
Condition: All procurements are required to have the basis of determination documented. In conjunction
with the audit of the State’s financial statements, we noted certain instances where required forms were
incomplete, absent, or lacked required Purchasing approvals. We also noted where certain procurements
were deemed sole source (only one reasonable source for the required goods or services existed), however,
the justification as to how it was determined to be the only practical vendor was lacking. In these limited
instances, inadequate documentation prevented a complete evaluation of sampled procurements for
compliance with State purchasing regulations.
Cause: Controls over required documentation being maintained in purchasing files need to be improved.
We observed more procurement documentation deficiencies in fiscal 2021 compared to prior years, which
may be attributable, in part, to pandemic-induced remote work.
Effect: Potential noncompliance with procurement documentation requirements mandated by RI General
Laws.
RECOMMENDATION
2021-011
Reinforce policies, procedures, and controls to ensure that required procurement
documentation is maintained in accordance with State policies and procedures.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
The
Division
of
Purchases
(Purchasing)
should
improve
enforcement
of
procurement
documentation
requirements
in
accordance with State purchasing
regulations.
Our
audit
noted
documentation deficiencies for certain
procurements included in our sample.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-18
Finding 2021-012
(significant deficiency – new finding)
PREPARATION OF THE GOVERNMENT-WIDE FINANCIAL STATEMENTS
Background: The State accounting system maintains distinct
accounting records to support the preparation of the
government-wide (full accrual) financial statements. The full
accrual set of books is populated through consolidation entries
of the monthly activity from the modified accrual set of books, capital asset transactions throughout the
fiscal year, and conversion entries to record noncurrent assets and liabilities and to reclassify fund-level
activity as needed.
Criteria: Trial balances from the accounting system should not require significant modification to generate
accurate financial statements. Controls should be operational to ensure that all transaction activity is
recorded in both sets of books and required adjustments and updates are consistently made. Preparation of
the government-wide financial statements should include adequate review to ensure results are consistent
with expectations.
Condition: The fiscal 2021 draft government-wide financial statements required substantial adjustment
prior to finalization. Some of these audit adjustments were significant and duplicated prior adjustments
made to the governmental fund financial statements.
There are no procedures in place to review and reconcile the consolidation entries for accuracy and
completeness. Consolidation of modified accrual transactions to the full accrual set of books resulted in
immaterial but problematic variances in fiscal 2021. These differences were not identified by the Office of
Accounts and Control prior to the preparation of government-wide financial statements.
Reconciliations, included as a required component of the basic financial statements, identify and explain
the differences between the government-wide and fund level financial statements. These reconciliations
are not prepared timely nor sufficiently detailed to detect or prevent misclassifications.
Due in part to time limitations, the draft government-wide financial statements were not sufficiently
reviewed for consistency with expectations and to identify errors or misclassifications.
The State should consider the potential benefits of implementing a different conversion model in preparing
the government-wide financial statements compared to the current method of preparation.
Cause: There is a high level of reliance placed upon system-reported accounting data without adequate
analysis of the results or other procedures to ensure that required adjustments and changes are made
consistently and accurately between the two sets of books.
Effect: Without the required audit adjustments, the State’s financial statements could have been materially
misstated.
RECOMMENDATION
2021-012
Enhance procedures for preparing the government-wide financial statements to
ensure consistent and accurate recording of transaction activity. Consider adapting
procedures to integrate the conversion method of preparation.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Procedures for recording transactions
included in the government-wide
financial statements can be improved.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-19
Finding 2021-013
(significant deficiency –new finding)
RECONCILIATION
OF CORONAVIRUS RELIEF FUND
AND CONTROLS
TO ENSURE
EXPENDITURES WERE NOT REIMBURSED FROM MULTIPLE FEDERAL FUNDING SOURCES
Background: The State received an unprecedented amount of
federal assistance to respond to the effects of the global
pandemic including $1.25 billion for the Coronavirus Relief
Fund (CRF) pursuant to the CARES Act. Certain costs were
reimbursable under multiple programs and federal guidance
was continually evolving which resulted in changing direction
as to costs to be applied to specific federal awards. In fiscal
2021, the State expended approximately $967 million in CRF
funds. CRF funds were reflected as unearned revenue until
expended for valid purposes.
Criteria: An eligible program cost can only be reimbursed from one federal award. A reconciliation should
be completed to demonstrate that qualifying expenditures were only reimbursed from one federal award.
The balance of the unexpended CRF should be equal to the original federal award less cumulative CRF
expenditures.
Condition: There was an unreconciled difference between the residual balance in the CRF escrow liability
account and total cumulative expenditures recorded for CRF as of June 30, 2021. Prior to audit adjustment,
the difference totaled $2.5 million.
Controls were also insufficient to ensure that costs were not reimbursed from more than one federal award.
Reconciliations to adequately identify any potential duplicate reimbursement are incomplete.
Cause: Due to the rapid response required during the pandemic, the existence of multiple federal funding
sources, and continually evolving federal guidance, costs were moved in the accounting system to various
funding sources which increased the risk that a cost could be reimbursed from more than one federal award.
Effect: Potential misstatement of CRF and other federal program reported expenditures.
RECOMMENDATIONS
2021-013a
Resolve unreconciled differences between CRF expenditures and activity in the
CRF unearned revenue account.
2021-013b
Complete reconciliations to demonstrate that eligible COVID program costs were
not reimbursed from more than one federal funding source.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
A variance of $2.5 million existed
between the balance of the unexpended
CRF and the total federal award less
expenditures through June 30, 2021.
Reconciliations should be completed to
ensure eligible expenditures were not
reimbursed from more than one
funding source.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-20
Finding 2021-014
(significant deficiency – new finding)
ACCOUNTING FOR COMPENSATED ABSENCES LIABILITIES
Background: Liabilities for compensated absences (e.g.,
accrued vacation, sick and compensatory time) must be
reported on the State’s full accrual financial statements.
Criteria: Liabilities must be measured at the balance sheet
date reflecting employee balances for accrued but unused
leave using current salary rates. An estimate of the current vs. long-term portion of the liability is needed
for presentation on the Statement of Net Position.
Condition: Calculation of the compensated absence liability involves a large volume of employee specific
data and requires estimates for amounts only paid at retirement (unused sick leave) for eligible individuals,
as well as when the liability will be relieved by discharge of time by the employees. Additionally, during
the pandemic employees could earn compensatory time and be eligible for payment in certain instances.
The compensatory time balances are maintained independent of the statewide payroll system which
accumulates other annual leave and sick time balances and consequently were not included in the liability
calculation at June 30, 2021.
To streamline the calculations of these balances as part of the annual financial reporting process, the Office
of Accounts and Control moved towards an estimation process whereby the liability is calculated as a
percentage of annual payroll expense based on a five-year average.
A portion of the liability can be easily calculated using actual employee balances at fiscal year end and we
recommend that actual data be used rather than estimated data for this portion of the liability. Estimates
are appropriate for the portion of unused sick time that may be paid at retirement and for estimating both
the current and long-term portions of the liability.
Cause: The State maintains IT security policies and procedures; however, they are not regularly updated
and appropriately communicated with State agencies.
Effect: Balances reported on the financial statements may not accurately reflect the State’s liability for
compensated absences.
RECOMMENDATIONS
2021-014a
Utilize actual data to calculate the compensated absence liability when readily
available and use estimates for the remaining portion (sick leave payable upon
retirement and the current and long-term portions of the overall liability).
2021-014b
Segregate the vacation and sick leave portions of amounts paid at retirement to
facilitate developing reliable estimates of the liability for sick time eligible for
payment at retirement.
Auditee views: The auditee partially disagrees with this finding – see Corrective Action Plan in
Section E.
The process to record the liability for
compensated
absences
can
be
enhanced by using a combination of
actual data when readily available and
estimates where appropriate.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-21
Finding 2021-015
(significant deficiency – new finding)
VOLUME OF ACCOUNTING SYSTEM JOURNAL ENTRIES
Background: More than 10,000 journal entries were
processed during fiscal 2021 in the RIFANS accounting
system. An additional 35,000 journal entries were used to
record receipts/revenues.
Criteria: Initiation and approval of journal entries is typically
restricted to a small number of higher-level accounting staff to
record specific financial reporting related entries or to make
corrections.
Condition: The volume of journal entries continues to increase due to the inability of the current accounting
system to allocate costs to multiple programs and activities. In addition, the significant increase in federal
awards provided to address pandemic related costs increased the volume of journal entries as costs were
moved to the most appropriate funding source.
Additionally, RIFANS lacks any receipt/revenue functionality and consequently, receipts/revenues are
recorded through journal entries.
Journal entries typically are considered higher risk from an internal control perspective as approval level
controls require understanding and appropriate review of complex transactions to be effective. As the
volume increases the time to adequately review and approve what are often material transactions also
increases which threatens the effectiveness of control procedures. The approval process is also dependent
on various approval hierarchies which we have not found to be operationally effective (see Finding
2021-007). Additionally, see Finding 2021-017 Material Audit Adjustments.
Cause: Insufficient cost allocation functionality in the current accounting system necessitates a high level
of journal entries to effect allocation of costs. Since accounting personnel in all departments and agencies
need to process receipts through journal entries, the ability to initiate and approve journal entries is more
widespread than would be typically seen in most large accounting systems.
As the State prepares to select an ERP system to replace RIFANS, one of the objectives should be to
significantly reduce the volume of journal entries required to record and adjust financial activity.
Effect: Controls are weakened through the high volume of high-dollar transactions that are recorded
through journal entries which increase the possibility that a misstatement could occur and not be detected
in the normal course of operations.
RECOMMENDATIONS
2021-015a
Ensure the statewide ERP (in procurement) includes appropriate cost allocation,
including payroll distributions and an integrated revenue/receipt functionality to
significantly reduce the volume of journal entries needed to maintain the
accounting system and support financial reporting.
2021-015b
Enhance review and oversight of material journal entries to ensure appropriate
recording of transactions and to avoid misstatement of the financial statements.
Auditee views: The auditee partially disagrees with this finding – see Corrective Action Plan in
Section E.
There is an excessive volume of journal
entries recorded within the centralized
accounting system. This volume
weakens controls over the appropriate
authorization and classification of
expenditures and limits transparency
regarding the underlying primary
expenditure transactions.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-22
Finding 2021-016
(significant deficiency – new finding)
THIRD-PARTY INSURER RECOVERIES FOR VACCINE ADMINISTRATION AND COVID
TESTING
Background: The State implemented statewide COVID-19
testing in March 2020 in response to the public health
emergency. Subsequently, the State began to seek
reimbursement from health insurers for covered individuals.
These reimbursement efforts have been identified and tracked
manually. The State needs to improve controls over these
receivables to ensure the accounting is appropriate and
recoveries are credited to the original funding source (e.g.,
federal grants). Receivables for amounts billed to insurers are
not currently recorded in the State’s accounting system.
Criteria: Costs and expenditures should be recognized net of applicable credits. When recoveries are
obtained for costs previously reimbursed by federal awards, amounts should be credited back to the federal
government for its applicable share.
Condition: Receipts from third-party insurers for COVID testing were deposited in an escrow account
pending research and a decision regarding how to credit the federal government for their proportionate
share and the criteria to record general revenues, if any. The balance in the escrow account at June 30,
2021 totaled $3.2 million.
COVID vaccine administration during fiscal 2021 was complex due to costs shared in multiple
arrangements including a vendor contract that provided for potential residual payment to the State if
insurance recoveries exceeded the actual costs of vaccine administration. No estimate was made for
potential insurance recoveries for vaccine administration.
Cause: COVID testing costs were reimbursed through at least three separate federal awards and
consequently, determining the appropriate amounts to credit to each program was challenging. Vaccine
administration was similarly funded by multiple sources.
Effect: Credits to federal programs have not been applied for third party insurer recoveries. Other amounts
receivable from third party insurers may have not been recognized and reflected on the State’s financial
statements.
RECOMMENDATIONS
2021-016a
Improve accounting controls over COVID-19 testing receivables to ensure
completeness of billing and collections and appropriate crediting to the original
funding source, where applicable.
2021-016b
Assess any amounts due to the State for third-party reimbursement for vaccine
administration or from contracts with vendors who administered vaccines and
obtained the right to bill insurers for vaccine administration.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Third-party insurance reimbursements
for COVID testing totaling $3.2
million on June 30, 2021 are pending
(1) credit to the federal government for
previously reimbursed costs or (2)
recognition as general revenues. Other
third-party insurance recoveries that
are in process have not been recognized
as receivables, revenue, or amounts
due to the federal government.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-23
Finding 2020-017
(significant deficiency – new finding)
MATERIAL AUDIT ADJUSTMENTS
Background: Generally accepted auditing standards require
the need for material audit adjustments to be considered a
control deficiency.
Criteria: Material audit adjustments are likely indicative of
weaknesses in controls over the preparation of financial statements.
Condition: We proposed multiple material audit adjustments deemed necessary to fairly present the State’s
financial statements in accordance with generally accepted accounting principles.
Cause: Audit adjustments resulted from (1) unusual transactions during the fiscal year, (2) unusual and
complicated accounting challenges caused by the influx of federal awards to fund pandemic related costs,
(3) agency and department level staffing challenges, and (4) a high volume of journal entries in the current
and prior years which require attention as to reversing and non-reversing status.
Additionally, multiple audit adjustments were required for the activities of the Department of Behavioral
Health, Development Disabilities and Hospitals as described below:
•
department expenditures were overstated by $11 million for fiscal 2021 due to an improper reversal
of an adjustment from the prior year that went undetected;
•
accruals were recorded incorrectly;
•
accruals for final rate settlements for the state-operated Eleanor Slater Hospital (ESH) and State-
operated Group Homes were initially omitted;
•
hospital billings to Medicare ceased during the year and any potential recovery was not quantified;
•
recognition of the patient share of room and board had not been recognized in fiscal 2021; and
•
significant amounts of ESH claiming to Medicaid, processed in fiscal 2022 for prior periods,
required restatement to a prior period and accrual at June 30, 2021 to properly classify the
underlying reimbursements to the proper periods.
Effect: The State’s financial statements could have been misstated without the required audit adjustments.
RECOMMENDATION
2021-017
Enhance oversight of material and complex journal entries to decrease the risk of
misstatement of the financial statements.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
We proposed multiple material audit
adjustments during our audit of the
State’s
fiscal
2021
financial
statements.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-24
Finding 2021-018
(significant deficiency –new finding)
TAXES RECEIVABLE
Background: Processing of returns generates taxpayer
billings in certain situations. Taxpayers that file and pay taxes
in multiple jurisdictions must file an apportionment schedule
with their tax return. When filing electronically and the
apportionment schedule is missing, the return is rejected.
When filed manually without the apportionment schedule all income is apportioned to Rhode Island. This
generates a receivable for tax purportedly, but likely inappropriately, due.
Tax returns for large businesses are reviewed by tax personnel before they are posted to the taxpayer’s
account. This review can take several weeks to months and may substantially change the amount due to or
from the taxpayer.
Criteria: Taxes receivable should represent valid receivables net of an appropriate allowance for
uncollectible amounts.
Condition: Certain taxes receivable balances were overstated (prior to adjustment) by taxpayer error or
other errors that were corrected and adjusted soon after fiscal year end.
Receivables were generated for returns that lacked apportionment schedules thereby attributing all income
to Rhode Island. Controls could be enhanced by mandating electronic filing which includes edits to detect
missing schedules and information.
Cause: Certain large receivable balances were not reviewed prior to year-end and included in tax receivable
information provided for financial reporting purposes.
By Division of Taxation policy, if a corporation does not file an apportionment form with its tax return, the
tax system adjusts the return to assign all income to the state and adjusts the tax due accordingly.
Effect: Taxes receivable were overstated (prior to adjustment) by a total of $1.2 million (net after allowance
for doubtful accounts). The balance was adjusted for financial reporting purposes.
RECOMMENDATIONS
2021-018a
Review large tax receivable balances at June 30 and remove any balances that are
not valid receivables due to adjustment soon after year end.
2021-018b
Adjust tax receivable balances due to the incorrect or non-filing of an
apportionment schedule. Consider legislative remedy to mandate electronic filing
which will enhance control over the completeness of filed returns.
Auditee views: The auditee disagrees with this finding – see Corrective Action Plan in Section E.
Taxes receivable required adjustment
at year end due to timing differences
and the inclusion of some invalid
amounts.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-25
Finding 2021-019
(significant deficiency –new finding)
RIFANS – TIMELY APPLICATION SOFTWARE UPDATES
Background: Software developers provide customers with
periodic updates to address or correct known system glitches,
security deficiencies, or to improve system functionality.
Criteria: Software updates should be installed timely to
ensure continued system functionality and to maintain system
security features. When software updates cannot be effectively installed, notification should be made to
key application users and information technology personnel to assess options and evaluate related risks.
Condition: During fiscal 2021, RIFANS software updates were installed in January 2021; however,
subsequent updates through February 2022 have not been installed. Quarterly updates (“patches) are
provided by the software vendor and consequently the RIFANS is four “patch sets” behind.
Cause: RIFANS system configuration, excessive software customization, and lack of technical personnel,
add complexity to the update installation process. No required notification process exists to alert key
application users that the updates could not be successfully installed or to trigger an appropriate risk
evaluation/mitigation consideration process. Despite the State actively procuring a new statewide ERP
system, the existing RIFANS accounting system will be in use for multiple years even under the most
aggressive implementation schedule and consequently must be adequately maintained.
Effect: Risk was enhanced by the failure to install updates on a timely basis and because no required
notification process exists to alert key application users and information technology personnel to assess
options and evaluate related risks.
RECOMMENDATIONS
2021-019a
Install software updates timely and at required intervals to ensure continued system
operating functionality and maintain system security.
2021-019b
Implement a required notification process to alert key application users and
information technology personnel to allow an appropriate evaluation of risk and
any required risk mitigation efforts.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-020
(significant deficiency – previously reported as
Management Comment 2020-04 and Finding 2019-006)
PERIODIC INVENTORY OF CAPITAL ASSETS
Background: The Office of Accounts and Control requires
departments to perform agency-specific inventory verification
for capital assets on a three-year cycle. Inventory results are
reported to the Office of Accounts and Control which prompts
any required accounting adjustments.
Failure to install timely updates to the
application
software
results
in
increased security risk and uncorrected
software functionality issues identified
by the software developer.
The processes followed for periodic
physical inventories of capital assets
and the evaluation of inventory results
can be enhanced to ensure that accurate
capital asset records are maintained.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-26
Criteria: Periodic physical capital asset inventories are a best-practice and important control procedure to
ensure the accuracy of the State’s capital asset accounting records.
Condition: A fiscal 2021 capital asset inventory conducted by the Department of Transportation identified
approximately 40 capitalizable assets (mostly outdated furniture and computer equipment with historical
acquisition costs above the State’s capitalization threshold), that could not be located including a dump
truck acquired in fiscal 2016 for $261,000. As a result of the RIDOT inventory results, the Office of
Accounts and Control removed the assets from the capital asset records. Documentation provided to the
Office of Accounts and Control included the required certification by the RIDOT Director.
We subsequently found that the truck had been mis-identified as disposed which led to the erroneous “asset
not found” status. The truck was removed from service but located on State property awaiting to be sold.
Material capital assets reported as “asset not found” should prompt robust inquiry and investigation by both
the Department and the Office of Accounts and Control before the asset is written-off or removed from the
capital asset inventory system.
Cause: Cyclical departmental inventories are conducted without on-site participation by the Office of
Accounts and Control to ensure completeness and consistency. Inventory results are forwarded and
accepted without sufficient review and inquiry before adjusting the State’s capital asset records.
Over-reliance is placed on the certification provided by the Departments when assets are not located without
sufficient inquiry and investigation for material assets reported as not found.
Effect: Capital asset records and the State’s financial statements could be misstated. Physical control of
capital assets is diminished when there is insufficient follow-up and consequence for lost, misplaced, or
misclassified material assets.
RECOMMENDATIONS
2021-020a
Include staff from Office of Accounts and Control on the team performing each
cyclical, departmental capital asset inventory.
2021-020b
Enhance review and inquiry for material capital assets reported as not found before
assets are removed from the State’s capital asset inventory records.
Auditee views: The auditee disagrees with this finding – see Corrective Action Plan in Section E.
Finding 2021-021
(significant deficiency – repeat finding – 2020-012)
DIVISION OF INFORMATION TECHNOLOGY – DISASTER RECOVERY TESTING
Background: Periodic tests of the disaster recovery plan are
a vital component of an overall business continuity plan to
increase the likelihood that critical systems can be restored
should a disaster disable or suspend operations at the State’s
data center. DoIT has a designated disaster recovery facility
in New Jersey (operated by a vendor).
Criteria: Industry best practices stipulate that disaster recovery testing be performed twice a year to
accommodate the ever-changing systems environment. The State should perform a full disaster recovery
test at least annually. Also, off-site storage of backups should be geographically diverse enough to
successfully recover from a regional disaster.
The
State
should
formalize
identification
of
major
systems,
standardize application testing, and
incorporate
business
continuity
planning within its overall disaster
recovery testing.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-27
Condition: A list of major systems has been developed, but the restoration priority needs to be formalized
and communicated to State agencies. In addition, further progress is needed to test all critical functionality
of major systems and their applications. During the fiscal 2021 test, the system and database were recovered
for critical applications, however, the State did not fully validate the application functionality.
Cause: While major systems to be recovered have been identified, prioritization has not been formalized.
Sufficient time has not been allotted to test all systems thoroughly. In addition, a repeatable level of
application testing has not been formally established nor has business continuity planning been incorporated
into disaster recovery testing.
Effect: Incomplete disaster recovery testing reduces the assurance that all mission critical systems can be
restored, should a disaster disable or suspend operations.
RECOMMENDATIONS
2021-021a
Formalize and communicate the restoration priority of major applications and
communicate the priority order with the affected State agencies within disaster
recovery tests at the State’s designated disaster recovery site.
2021-021b
Establish a repeatable level of application testing and incorporate business
continuity planning within periodic disaster recovery testing.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-022
(material weakness – repeat finding – 2020-013)
DIVISION OF INFORMATION TECHNOLOGY – PROGRAM CHANGE CONTROLS
Background: Program change controls are a critical
component of any IT control environment, which ensures that
only authorized changes are made to programs (after adequate
and sufficient user acceptance testing) before being placed
into a production environment. Additionally, program change
control procedures prevent and detect unauthorized program
modifications from being made.
Almost all custom-developed computer applications require
changes and/or updates throughout their production lifecycles.
Consequently, these customized, home-grown applications require a formalized change management
system to ensure that only authorized changes are made.
While some agencies have formally implemented program change controls, a standardized statewide
approach has not been implemented.
Criteria: The State’s change management process should be standardized so that all movement of code,
modifications, testing, acceptance, and implementation provide management with a tracking history and
record of approvals. This leads to consistent outcomes, efficient use of resources, auditability, and
enhanced integrity of the application systems, which flow through the process. Automated tools help
control this process and make the process consistent, predictable, repeatable and aids in the reduction of
“human error” in the process.
The State does not follow uniform
enterprise-wide
program
change
control procedures for the various IT
applications operating within State
government. This increases the risk
that unauthorized or inappropriate
changes
could
be made
to
IT
applications without detection.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-28
DoIT should develop procedural guidance that details the correct use of change management software and
mandated internal control practices and procedures, thus ensuring a documented, monitored, auditable, and
repeatable process.
Condition: The State lacks a uniform enterprise-wide program change control management process for
the various IT applications operating within State government. This led to inconsistent methods, as well as
noncompliance and circumvention of DoIT’s change control policy and procedures. In several instances,
automated change control system procedures were lacking to substantiate that only authorized and proper
changes had been implemented.
Cause: Various methods are used to control program change management which rely mostly upon manual
and semi-automated procedures that incorporate emails, memorandums, and other paper-based forms to
document application changes. In response to prior audit recommendations made since fiscal 2007, DoIT
has attempted to implement change control software.
Effect: A lack of a uniform enterprise-wide program change control management process increases the
risk that unauthorized or inappropriate changes could be made to IT applications without detection.
RECOMMENDATIONS
2021-022a
Develop and implement procedures detailing specific requirements for program
change control and disseminate and train DoIT support staff in its proper
execution.
2021-022b
Determine the appropriate combination of operational, procedural and/or technical
adjustments required to use change management software to result in adequate
program change control for the entire enterprise.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-29
Finding 2021-023
(significant deficiency – repeat finding – 2020-014)
DIVISION OF INFORMATION TECHNOLOGY – COMPREHENSIVE INFORMATION SYSTEMS
SECURITY POLICIES AND PROCEDURES AND PERIODIC RISK ASSESSMENT
See related Federal Award Finding 2021-040.
Background: The Division of Information Technology
(DoIT) within the Department of Administration (DOA) has
responsibility for the State’s varied and complex information
systems. This includes ensuring that appropriate security
measures are operational over each system and the State’s
information networks. Information security is critically
important to ensure that information technology dependent
operations continue uninterrupted, and that sensitive data
accumulated within State operations remains secure with
access appropriately controlled.
Periodic comprehensive technology risk assessments are key
to uncovering underlying vulnerabilities in the environment as
well as providing guidance on where to best spend limited
assets to reduce risk. Recent cybersecurity attacks
demonstrate the ongoing need to periodically assess the
technology infrastructure for threats. During our audit we
focused on the following mission critical systems due to their impact on the State’s financial reporting:
RIFANS, STAARS, RIBridges, MMIS, DMV- RIMS, and DLT benefit and revenue systems. We also
reviewed the State’s network security which is critical to the State’s operations and can negatively impact
application security if not maintained at an acceptable industry level standard. Our detailed findings and
recommendations have been communicated confidentially since they involve security matters; however,
those findings generally support the overall recommendations expressed in this finding.
Periodic comprehensive technology risk assessments are key to uncovering underlying vulnerabilities in
the environment as well as providing guidance on where to best spend limited assets to reduce risk. Recent
cybersecurity attacks demonstrate the ongoing need to periodically assess the technology infrastructure for
threats. During our audit we focused on the following mission critical systems due to their impact on the
State’s financial reporting: RIFANS, STAARS, RIBridges, MMIS, DMV- RIMS, and DLT benefit and
revenue systems. We also reviewed the State’s network security which is critical to the State’s operations
and can negatively impact application security if not maintained at an acceptable industry level standard.
Our detailed findings and recommendations have been communicated confidentially since they involve
security matters; however, those findings generally support the overall recommendations expressed in this
finding.
Criteria: Risk assessment policies and procedures must be documented (National Institute of Standards
and Technology – NIST RA-1). Risk assessments should be performed every three years or whenever there
are significant changes (e.g., new system implementations) (NIST RA-3).
The oversight and management of the State’s information security program relies upon the implementation
of DoIT’s comprehensive information systems security plan, which includes detailed policies and
procedures that are designed to safeguard all the information contained within the State’s critical systems.
Assessments of compliance to IT policies and procedures for all critical IT applications should be performed
on a periodic basis as part of the risk assessment.
IT best practices require updates and patches be implemented timely as recommended by software vendors
to ensure continued security and operational integrity.
The State can enhance its enterprise-
wide security policies and procedures
and communication of these policies
and procedures with State agencies.
Additionally, the State can enhance its
ongoing
security
posture
by
periodically
performing
risk
assessments to identify if mission
critical systems comply with IT
policies and procedures. A formal
comprehensive risk-based approach to
identify, prioritize, and manage DoIT
infrastructure hardware and software
improvements will help to maximize
the effect of security upgrades.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-30
Condition: The State has updated and created new policies and procedures for its critical information
systems; however, it has lagged in approving, communicating, and implementing these policies. Further,
the State has not implemented a practice of conducting formalized security risk assessments (or updates)
on a cyclical basis to determine whether its IT systems (applications, networks, etc.) comply with State IT
security policies and procedures.
Due to the size and complexity of systems (and related infrastructure) within State government, a risk-based
approach should be employed where those systems deemed most critical, or most at risk, are prioritized.
Further, a formalized risk assessment will ensure that risks deemed most critical (to operations and security)
are mitigated in a timely manner.
The State should make continued use of external system assessments and reviews to complement on-going
risk assessment monitoring. When State systems are operated by external parties or interface with external
processing entities, these entities often provide Service Organization Controls (SOC) reports, which
describe key controls within the application or organization and testing of the operational effectiveness of
those controls. These reports should be accumulated and reviewed within DoIT as part of a risk-based
approach to assessing and ensuring IT security compliance. Any user-entity controls identified in the SOC
reports should be considered, evaluated, and documented. This may assist in expanding coverage of the
State’s many systems considering the minimal resources allocated to this function.
The State has insufficient resources allocated to timely evaluate and apply patches and updates to ensure
continued security and operational integrity. As a result, updates and patches are not always implemented
in a timely manner.
A large number of initiatives are either being planned or implemented to upgrade/enhance manageability
and security but without a formal risk-based prioritization. A formalized plan should include risks by
priority level, a corrective action or remediation plan, and anticipated costs and resources so that State
management can adequately plan to address critical areas in a timely manner. The State should consider
external resources to expedite the completion of this formalized assessment. Layering this effort on the
State resources responsible for maintaining current operations and security is not practical.
Cause: The State maintains IT security policies and procedures; however, they are not regularly updated
and appropriately communicated with State agencies. The evaluation of agency compliance with IT
security policies and procedures needs improvement.
Policy and practice to perform information security risk assessments has improved, however, such efforts
need to be formalized and expedited to ensure that critical issues are being mitigated in a timely manner.
Current resources are insufficient to maintain certain mission critical systems and information system
security for an enterprise the size of the State.
Effect: Critical systems may be exposed to security vulnerabilities and cyber-attacks when comprehensive
information security risk assessments are not performed routinely. This could impact the State’s ability to
ensure continued operation of mission critical systems.
Without a formal risk-based prioritization approach, ensuring that resources (funding and personnel)
required to support the number of system implementations and security monitoring and improvements in
process at any one time will be difficult to manage. Further, insufficient resources will increase the chances
of project delay and failure as well as impacting the State’s ability to manage the continuity and security of
existing IT operations.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-31
RECOMMENDATIONS
2021-023a
Continue to update IT security policies and procedures to ensure such policies and
procedures conform to current standards and address all critical systems security
vulnerabilities with particular emphasis on keeping patches and versioning current
to minimize cybersecurity risk.
2021-023b
Perform formalized risk assessments at least once every three years (with annual
updates to adjust security priorities) with the results documented and
communicated to management for action. Contract for the performance of IT
security compliance reviews and make use of available Service Organization
Control reports to extend IT security monitoring of critical systems.
2021-023c
Formalize a plan that prioritizes significant system security risks with the goal of
achieving compliance with DoIT’s formalized system security standards for all
significant State systems. Assign each project a likelihood and impact risk rating
and use as a factor to determine the prioritization of projects. Review project risk
ratings at least once a year and update as needed. Use the plan to guide required
funding and staffing to address significant priorities in a timely manner.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-024
(significant deficiency – repeat finding – 2020-016)
DIVISION OF MOTOR VEHICLES – REVENUES COLLECTED FOR USE WITHIN THE
INTERMODAL SURFACE TRANSPORTATION (IST) FUND
Background: In fiscal 2021, the DMV collected $106 million
in revenues (excluding sales taxes) of which $86 million was
remitted to the IST Fund’s Highway Maintenance Account.
Criteria: DMV must have controls in place to ensure the
completeness of revenue reflected within the IST Fund.
RI General Law 39-18.1 designates certain fees to be deposited in the IST Fund for transportation purposes.
Condition: DMV lacks effective controls to ensure that all revenues collected by the DMV for deposit
within the IST Fund have been recorded. RIDOT should have procedures in place to provide reasonable
assurance that the appropriate fees have been earmarked for the IST Fund and have been received and
recorded as revenue. This should include documentation of the fee structure identified by RI General Law
Chapter 39-18.1, the surcharge amount being applied to each DMV transactions code, and how the DMV
computer system is programmed to identify such amounts for the IST Fund. RIDOT and the DMV should
periodically assess the reasonableness of the actual revenue recognized for recording in the IST Fund. We
identified the following control deficiencies:
•
There is no “cross-walk” of the fee structure identified by the RI General Laws for licenses,
registrations, surcharges, etc. and how the DMV computer system is programmed to identify such
amounts.
•
The current reconciliation performed between RIFANS and DMV’s RIMS does not include all fees
collected by the DMV.
Controls can be improved over the
recording of license, registration and
surcharge
fees
collected
by
the
Division of Motor Vehicles (DMV)
and deposited in the IST Fund.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
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•
Manual write offs are not recorded in RIMS; they are maintained outside of the system. Manual
write offs should be recorded within RIMS to maintain a log of the adjustments and to facilitate
RIMS/RIFANS reconciliation.
•
Deposit date within the RIMS system is pre-populated – the date should reflect the actual deposit
date to allow matching RIMS activity to RIFANS receipt entries.
Cause: The DMV’s focus has been on successful system implementation, while using the system for
enhanced monitoring of compliance with statutory revenue requirements and enhancing the control
environment has not been fully explored.
Effect: Controls to ensure the completeness of the DMV revenues earmarked for transportation purposes
within the IST Fund are ineffective.
RECOMMENDATIONS
2021-024a
Enhance the monthly and annual reconciliations between RIFANS and RIMS, to
include all RIFANS revenue accounts to ensure the data in RIMS supports the
revenue recorded in RIFANS.
2021-024b
Create a crosswalk between the fees charged in RIMS and the section of the Rhode
Island General Laws authorizing the fee.
2021-024c
Record the actual deposit date in the RIMS deposit date field.
Auditee views: The auditee partially disagrees with this finding – see Corrective Action Plan in
Section E.
Finding 2021-025
(significant deficiency – repeat finding – 2020-017)
DIVISION OF MOTOR VEHICLES – SECURITY SYSTEM PLAN – RIMS
Criteria: A strong and well-designed information security
program is essential for protecting an organization’s
communications, systems, and assets from both internal and
external threats. Per NIST 800- 53, PM-2, “The organization
appoints a senior information security officer with the mission
and resources to coordinate, develop, implement, and maintain an organization-wide information security
program.”
Per NIST SP800-18, “The purpose of the system security plan is to provide an overview of the security
requirements of the system and describe the controls in place or planned for meeting those requirements.
The system security plan also delineates responsibilities and expected behavior of all individuals who
access the system.”
A data inventory is essential for identifying and tracking an organization’s financial data, intellectual
property as well as other sensitive data such as personally identifiable information, in addition to helping
organizations apply required access controls and security safeguards such as database logging and
monitoring.
Proper Access Management is essential to both protect and maintain the integrity of the DMV data stored
within the RIMS system. Part of this function is to ensure the timely adjustment of access privileges or
removal of system access altogether for RIMS users who either transfer or terminate employment with the
DMV.
The
Division’s
system
security
approach can be further improved by
including additional critical system
security requirements.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
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Condition: A system security plan was adopted in fiscal 2020. However, additional steps are needed to
provide a comprehensive approach to address critical system security requirements which include:
•
Assigning a senior information security officer;
•
Maintaining a sensitive data inventory for the DMV RIMS database;
•
Logging and monitoring the database for access to sensitive data; and
•
Implementing formal incident response training (such as handling a data breach) for employees.
An analysis of 2,073 RIMS users determined that four users did not have their access removed in
a timely manner after departing. DMV administration indicated that they perform an annual sweep
for access that should be removed; however, an annual review is insufficient to appropriately limit
the risk of unauthorized access.
Cause: Additional focus is needed on the key elements of a well-designed information security program.
Effect: The overall information security program is weakened in the absence of a senior information
security officer. The lack of a sensitive data inventory leaves data susceptible to unauthorized access, theft,
and loss. Understanding the type of data collected, where it is held, whom has access, and how it is
transferred is a critical component of data privacy and data security programs. In the event of a data breach,
the organization would not be able to quickly and accurately identify which data was accessed and/or lost.
Additionally, if data is not properly classified, inventoried, and stored, unauthorized users within the
organization may be able to access sensitive/confidential data.
Formal Incident Response training is essential so that all staff are clear on their roles and the steps to be
taken in the event of an IT security incident (e.g., data breach).
RECOMMENDATIONS
2021-025a
Develop a sensitive data inventory for the RIMS system to identify sensitive data
elements needing greater protection.
2021-025b
Implement RIMS database logging and monitoring for sensitive data.
2021-025c
Conduct formal incident response training for DMV staff.
2021-025d
Enhance controls and timeframes to ensure prompt termination of system access
when employees leave or change functions. Document timely reviews of access
privileges.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-026
(significant deficiency – repeat finding – 2020-018)
INTERMODAL SURFACE TRANSPORTATION FUND – FINANCIAL REPORTING
Background: The Intermodal Surface Transportation (IST)
Fund, a special revenue fund, accounts for transportation
related activities of the State, including the federal highway
construction
program,
transportation
bond
proceeds,
designated revenues collected by the Division of Motor
Vehicles and toll revenues.
Controls can be enhanced over the
presentation of financial statements to
ensure
consistent
and
accurate
reporting of fund activity in accordance
with generally accepted accounting
principles.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
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Criteria: Controls over the preparation of financial statements should ensure consistent and accurate
reporting of fund activity in accordance with generally accepted accounting principles. Fund balance
components must reflect any restrictions on use or commitments by management. Classification of fund
balance components, particularly within the IST Fund, demonstrates amounts available to support the
transportation program consistent with any limitations or restrictions on use.
Condition: We identified deficiencies in controls over the presentation of fund balance. RIDOT posts
journal entries at fiscal year end to allocate the fund balance to the correct accounts within the general
ledger, which then supports the fund balance categorization requirements of generally accepted accounting
principles. One journal entry was misposted which understated/overstated components of fund balance by
$3.3 million.
Due to the multiple computer systems used by RIDOT the department must identify accounts payable
within each subsystem which caused accounts payable and expenditures to be overstated by $7.9 million
and a related overstatement of federal revenue and due from the federal government by $3.5 million.
Transfers from the IST Fund to the General Fund and RIPTA related to the Highway Maintenance Account
were understated by $1.2 million and $0.3 million, respectively.
Cause: The presentation of fund balance components is more of a manual rather than system-controlled
process and errors can occur and not be detected. The use of multiple systems makes the identification of
accounts payable more challenging. Additionally, the accounting structure between RIFANS and the other
systems are not the same, causing the department to manually assign RIFANS accounting structures to
thousands of detailed transactions to record accounts payable, a process susceptible to error.
Effect: Account balances within the IST financial statements could be misstated.
RECOMMENDATIONS
2021-026a
Ensure the transactions identified through the analysis of each activity and/or
funding source within the IST Fund result in the appropriate categorization and
reporting of fund balance components on the financial statements and general
ledger. Perform a complete reconciliation of activity by funding source to the fund
balance components included on the financial statements.
2021-026b
Reassess policies, procedures and controls to identify and record accounts payable
at fiscal close with the aim of streamlining and simplifying where possible.
Consider increased use of estimates where appropriate.
2021-026c
Enhance controls to ensure that 5% of Highway Maintenance Account revenues
are transferred to the General Fund and RIPTA as required by law.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
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Finding 2021-027
(material weakness – repeat finding – 2020-019)
TRANSPORTATION INFRASTRUCTURE REPORTING
Background: RIDOT enhanced its process to identify
transportation infrastructure assets which uses the RIDOT
Financial Management System (FMS) to identify each project
and ensures that total project costs (e.g., design and
construction costs) are included in the capitalized amount.
Since the source of the information used to identify capitalized
infrastructure is FMS and the financial statements are based
on RIFANS (statewide accounting system), the data used must
be reconciled between the two systems.
Projects classified as infrastructure are assigned to nine
infrastructure codes established to identify the infrastructure type (road, bridge, etc.) and the estimated
useful life which drives depreciation expense.
Criteria: Generally accepted accounting principles (GAAP) require recording the State’s investment in
infrastructure assets to be reflected on the government-wide financial statements. Such amounts should be
capitalized and depreciated consistent with the State’s adopted accounting policies. Amounts are recorded
as construction in progress until placed in service at which time depreciation commences.
GAAP also requires that capital assets be evaluated for impairment when events or changes in
circumstances suggest that the service utility of a capital asset may have significantly and unexpectedly
declined. These standards also require adjustment of the carrying value of capital assets that meet certain
impairment criteria.
The cost and related accumulated depreciation associated with infrastructure assets that have been replaced
or are no longer in service should be removed from the infrastructure amounts included on the financial
statements.
Condition: RIDOT did not document its consideration of transportation infrastructure assets that may be
impaired and provide such documentation to the Office of Accounts and Control for the purpose of
preparing the State’s financial statements.
The cost and related accumulated depreciation associated with infrastructure assets that have been replaced
or are no longer in service has not been removed from the infrastructure amounts included on the State’s
financial statements.
We proposed material adjustments to correct balances at June 30, 2021 – construction in progress was
overstated by $62.5 million and infrastructure was overstated by $37.7 million as detailed below:
•
Infrastructure assets were misstated when year-end accruals were not properly included (or
reversed) in reported construction in progress amounts.
•
Costs related to the construction of toll gantries were identified as road maintenance in error,
causing an understatement of CIP additions of $10.9 million.
•
Ten projects identified as substantially complete in fiscal 2021 and reclassified from CIP to
Infrastructure were overstated by $38.3 million.
Cause: Controls over RIDOT’s infrastructure asset identification process are not sufficient to ensure
accurate accumulation of capitalized infrastructure amounts.
A process to remove estimated costs for retired/replaced infrastructure has not been implemented. The
consideration and documentation of impaired infrastructure assets has not been formalized.
Controls over the identification of
transportation
infrastructure
assets
have been improved but can be further
enhanced to ensure the accuracy of
such amounts. Controls should be
improved
to
identify
impaired
infrastructure
assets
as
well
as
removing infrastructure costs when
assets are retired or replaced.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
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RIDOT does not review the Capital Asset portrait to ensure that balances are consistent with supporting
documentation and RIFANs.
Effect: Infrastructure assets and related depreciation expense may be misstated in the State’s financial
statements.
RECOMMENDATIONS
2021-027a
Enhance controls over the assignment of project infrastructure codes.
2021-027b
Improve controls over the calculation and identification of projects to be
reclassified from Construction in Progress (CIP) to Infrastructure. Record any
infrastructure related journal entry at the funding source level. Ensure information
maintained in the Department’s Schedule of Construction in Progress agree to
FMS, RIFANS and the capital asset portrait. Any differences should be researched
and resolved.
2021-027c
Document consideration of whether any of the State’s transportation infrastructure
has been impaired consistent with GAAP criteria.
2021-027d
Implement a process to remove estimated infrastructure assets and related
accumulated depreciation when assets have been replaced or taken out of service.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-028
(significant deficiency – new finding)
TOLLING REVENUES – EVALUATION OF CONTROLS OVER FUNCTIONS PERFORMED BY
EXTERNAL PARTIES
Background: Service Organization Control (SOC) reports are
provided by service organizations to assure customers/clients
that controls are sufficiently designed and in operation over
relevant activities. Management of the user entity should use
these reports as part of their overall consideration and
documentation of the adequacy of the design and operation of internal control. During fiscal 2021 there
were 12 tolling locations which collected approximately $32.7 million in revenue.
Criteria: Management has responsibility for the adequacy of design and operation of an entity’s control
structure including functions performed by external parties.
Condition: Management lacks assurance that information system related internal controls provided by the
vendor responsible for identifying the proper vehicles to be tolled and reporting such information to RIDOT
are adequate to ensure financial and other information is accurate, complete, available, and secure.
Cause: The State did not obtain an independent SOC report from the vendor responsible for running the
Tolling System because RIDOT did not include a specific requirement to provide the results of independent
SOC testing as part of their contractual agreement.
Effect: Many functions performed by external parties are material to the State’s overall operations.
Deficiencies in the design or operation of controls at service organizations could materially impact the
State’s overall controls over financial reporting.
Obtain a service organization control
report to provide assurance on key
controls of a vendor involved in
highway tolling operations.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
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RECOMMENDATION
2021-028
Modify the contract with the tolling vendor to require the vendor to provide the
results and conclusions of the annual SOC testing.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-029
(significant deficiency – repeat finding – 2020-020)
ASSESS THE RESOURCES AND SYSTEMS NECESSARY TO EFFECTIVELY ADMINISTER THE
OPEB SYSTEM
Background: The Rhode Island State Employees’ and
Electing Teachers OPEB System (the System), acts as a
common investment and administrative agent for post-
employment health care benefits provided by six plans
covering state employees and certain employees of the Board
of Education.
When the State began to advance fund its retiree health
benefits, OPEB trusts were established for each of the plans
and a formalized governance structure was established by
statute; however, no dedicated personnel were specifically
tasked with administering the System and no administrative
systems were implemented at that time, or subsequently, to
capture and control membership data for the various OPEB
plans. Instead, membership data, the determination of
eligibility for benefits and any required retiree copays are
administered through a variety of processes which largely lack the controls needed to administer plans of
this size and complexity. In prior years, certain plan benefit functions were administered through the
member benefit system used by the Employees’ Retirement System of Rhode Island (ERSRI) for pension
benefits; however, the ERSRI’s newly implemented member benefit system no longer includes those
functionalities.
The System’s functions are managed through various units within State government. The Department of
Administration’s Office of Employee Benefits (OEB) currently determines eligibility and manages member
benefits for the State Employees, Teachers, Judges, State Police and Legislator plans. The Human
Resources Department at the University of Rhode Island separately determines eligibility, calculates
benefits, and manages member subsidy receivables for the Board of Education plan. The Office of
Accounts and Control handles the accounting and financial reporting aspects of the System and coordinates
the actuarial valuations. The Office of the General Treasurer oversees the investment activity of the System.
Census data for each plan is provided annually to the System’s actuary to prepare required actuarial
valuations of the plans. Each plan has unique benefit eligibility and healthcare coverage provisions.
Criteria: As the System grows and matures, the administrative infrastructure supporting the System should
be assessed to ensure adequate resources and systems with appropriate controls are in place to manage the
System effectively.
Maintaining membership data and determining the eligibility for benefits and required co-pays should be
managed through systems and processes with adequate controls to ensure that membership data is reliable,
benefits are accurately and consistently determined consistent with plan provisions, and plan census data is
maintained to facilitate extraction for actuarial valuations. Duties should be appropriately segregated to
The resources necessary to effectively
manage and administer the OPEB
System to ensure all System functions
are met and adequately controlled
should be assessed. A unified database
or computer application is needed to
maintain membership data for each of
the State’s OPEB plans. This would
improve
controls
over
the
administration of the benefit programs
and the process to accumulate data
necessary
for
periodic
actuarial
valuations of the OPEB plans for both
funding and accounting purposes.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
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ensure that no one individual is responsible for determining eligibility and required copays, enrolling the
individual for coverage, collecting and accounting for copay amounts, and maintaining plan census data.
Condition: We identified control deficiencies over the various disjointed processes used to administer the
OPEB plans as follows:
•
Insufficient resources have been allocated and centralized to administer the System effectively.
Knowledge of key System benefit provisions, administrative operations and operating procedures
are dispersed among too many separate units of State government without effective coordination.
•
The accumulation of census data provided to the actuary for plan valuation purposes is derived
from multiple sources and requires analysis of other external source data to establish the active and
retiree plan members for each plan. Because much of the analysis is done on spreadsheets, controls
over data validity, data protection, and completeness are lacking. Controls are inadequate to
prevent duplicate or inaccurate census data from being provided to the actuary.
•
Inadequate segregation of duties exists between eligibility determinations, benefit calculations,
copay receivable billings and collections, healthcare plan enrollment, and maintenance of the plan
census information.
•
Periodic reconciliations between the plans’ records and healthcare providers enrollment data are
not documented.
•
Procedures for identifying and terminating coverage for deceased members, spouses and
dependents are inconsistent and can be improved.
Cause: The State and System have not implemented System specific administrative processes and
computer applications to effectively support the overall administration of the OPEB System, accumulate
plan census data, manage and control the eligibility, copay determination, and plan enrollment functions.
Existing processes used to support healthcare plan enrollment for active employees have generally been
used to support the OPEB System but lack certain functions and controls that are unique to and requisite
for the administration of the OPEB System.
Effect: Inadequate controls over key plan administrative functions could impact the reliability of amounts
(e.g., member co-pays and member benefits) reported on the System’s financial statements as well as the
accuracy of census data used by the actuary to determine each plan’s annual actuarially determined
contribution amount and the net OPEB liability or asset for each plan.
RECOMMENDATIONS
2021-029a
Assess the resources necessary to effectively manage and administer the OPEB
System to ensure all System functionalities are met and adequately controlled.
2021-029b
Implement a member benefit computer application to accumulate and manage plan
membership data to support the overall administration of the OPEB System with
enhanced controls.
2021-029c
Evaluate assigned responsibilities for key functions and segregate certain
responsibilities for incompatible functions to enhance controls over critical plan
administrative functions.
2021-029d
Establish consistent procedures to identify deceased plan members and prompt
timely termination of coverage.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
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Finding 2021-030
(material noncompliance – repeat finding – 2020-022)
RHODE ISLAND CONVENTION CENTER AUTHORITY – RESTRICTIVE COVENANTS
Criteria: Bond indentures require that the Authority fund the Operating Reserve requirement of the
restrictive covenants for the RICC and the DDC.
Condition: During the year ended June 30, 2021, the Authority was unable to fund the Operating Reserve
requirement of the restrictive covenants for the RICC and the DDC pursuant to the indentures.
Context: The Authority is currently in violation of certain debt indentures with respect to the Operating
Reserve requirement.
Effect: As a result of this fund not being funded, the Authority is in noncompliance with certain bond
indentures.
Cause: The Authority does not have sufficient cash flow to fund the Operating Reserve.
RECOMMENDATION
2021-030
We recommend that the Authority fund the Operating Reserve.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-031
(material weakness – repeat finding – 2020-023)
CENTRAL FALLS SCHOOL DISTRICT – SIGNIFICANT ADJUSTMENTS
Criteria: Management is responsible for the maintenance of adequate accounting records, internal controls,
and the fair presentation of the financial statements in accordance with generally accepted accounting
principles.
Condition: Material adjustments to year-end balances and current year activity were necessary for the
financial statements to be fairly presented in accordance with generally accepted accounting principles.
Cause: There are a number of causes for this condition, many being the result of attempts to correct
circumstances. However, the principal causes are a lack of a coordinated, comprehensive plan to implement
and train employees with new financial software, concurrent with the retirement of several key long-term
employees.
Effect: Information recorded in, and reports produced from the accounting system contained numerous
material errors related to the inclusion or exclusion of information resulting from data entry and software
execution errors, resulting in material adjustments accepted by management to the district’s financial
statements.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
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RECOMMENDATION
2021-031
A comprehensive plan to coordinate all District financial accounting recording and
reporting activities is in the process of being developed and implemented. This
plan should include the development of a comprehensive policies and procedures
manual; adequate staffing including training of all staff as to both the processes
and the software involved; appropriate controls related to authorization and review
of recorded transactions; timely recording of transactions, reconciliations and
reviews of reconciliations so as to detect and correct errors in a timely manner, and
a comprehensive review of the District’s organizational structure to ensure
adequate levels of supervision and clear reporting paths for all staff involved.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-032
(significant deficiency – repeat finding – 2020-024)
CENTRAL FALLS SCHOOL DISTRICT – CAPITAL ASSETS
Criteria: Capital assets are maintained by the District and reported in the government-wide statement of
net position. Although these capital assets and the related depreciation do not impact the fund statements
of the District, they do have an impact on the overall governmental net position. Additionally, the District
is required to maintain capital asset records for all assets that are purchased with federal grant funds.
Condition: The District does not have procedures for maintaining the capital asset records on a perpetual
basis or for taking a physical inventory of these assets. In addition, the District does not have a system in
place for identifying capital assets acquired with federal grant funds.
Cause: The District currently maintains the capital asset records utilizing an excel database which is
updated on an annual basis. This database contains a complete listing of capital assets and related
depreciation expense which is maintained for financial reporting purposes only. The listing currently does
not include any information regarding the location of the asset or the source of the funds used to acquire
the asset.
Effect: Failure to maintain the capital asset records on a perpetual basis increases the risk of potential
misstatement of the capital assets at year end. In addition, failure to conduct a periodic inventory of capital
assets, including controllable assets (assets not meeting the capitalization threshold but included in
inventory due to their sensitive, portable, and/or theft prone nature) increases the risk of misuse and
misappropriation of District assets.
RECOMMENDATION
2021-032
We recommend that the District implement an integrated software package that
will enable capital assets to be recorded when the asset is acquired rather than
being captured at year end. We further recommend that the capital asset inventory
be updated to include the location of the asset and a code to identify all assets that
are acquired with federal funds. Management should utilize this capital asset
inventory listing, as well as the controllable asset listing, to conduct periodic
inventories of the assets.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-41
Finding 2021-033
(material weakness – new finding)
I-195 REDEVELOPMENT DISTRICT – RESTATEMENT OF 2020 FINANCIAL STATEMENTS
Criteria: Financial statements should accurately reflect transactions recorded in the financial records.
Condition: As part of an internal review and reconciliation process with the State, management discovered
amounts incorrectly reported in the 2020 financial statements.
Cause: During the year-end close for the year ended June 30, 2020, there was a change in who managed
the accounting for the District. During the year ended June 30, 2021, the District noted changes that were
needed to the prior year financial statements, as described in the notes to the Financial Statements.
In addition, there were unknown permit fees collected by the State by credit card that the District was not
made aware of until after the June 30, 2020 audited financial statements were made available to issue.
Effect: The District’s internal controls over financial reporting were unable to prevent, or detect and correct
errors on a timely basis. The District found it necessary to record adjustments totaling $27,971 (reducing
revenues and reallocating expenses) to its 2020 financial statements.
RECOMMENDATION
2021-033
We recommend that management ensure that appropriate controls are in place over
its financial reporting to prevent, or detect and correct, errors on a timely basis.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-034
(significant deficiency – new finding)
I-195 REDEVELOPMENT DISTRICT – CYBERSECURITY
Criteria: The District should ensure that appropriate cybersecurity policies, procedures and controls are in
place to protect the District against losses.
Condition: During the year, the District was the target of a phishing attack where the perpetrator portrayed
an employee, successfully instructed management to amend payroll direct deposit information, and
fraudulently obtained an employee’s net pay for two payroll cycles.
Cause: The District lacked sufficient cybersecurity training and related control policies and procedures to
protect the District from this type of fraudulent scheme.
Effect: As a result, the District incurred uninsured losses of approximately $6,599 for payroll that was
routed to the perpetrator’s bank account.
RECOMMENDATION
2021-034
We recommend that management implement cybersecurity training and
appropriate control policies and procedures to ensure that such instances do not
recur in the future.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-42
Finding 2021-035
(significant deficiency – new finding)
THE METROPOLITAN REGIONAL CAREER AND TECHNICAL CENTER – FAILURE TO
RECONCILE THE GENERAL LEDGER
Criteria: Internal controls should be in place to provide reasonable assurance that general ledger accounts
are properly reconciled.
Condition: During the performance of our audit of the MET’s financial statements, we noted that the trial
balance was not properly reviewed before given to the auditors. We noted significant entries needed to be
made related to state aid, accrued payroll, accounts payable, and fixed assets upon review of the accounts.
Cause: Management failed to enforce policies and procedures to ensure internal controls are functioning
properly in relation to the conditions listed above.
Effect: Failure to properly reconcile general ledger accounts resulted in a significant amount of adjusting
journal entries and increases the risk of material misstated financial statements.
RECOMMENDATION
2021-035
Policies and procedures should be developed and implemented by the Met’s
management to ensure that appropriate internal controls are enforced.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-036
(material weakness – new finding)
RHODE ISLAND COMMERCE CORPORATION – REVENUE RECOGNITION
Criteria: The Rhode Island Commerce Corporation should recognize revenue in the period in which it is
earned.
Condition: In regards to the Small Business Loan Fund, there was $1,000,000 of CARES Act Revolving
Loan Fund revenue recognized on June 29, 2021, during the fiscal year ended June 30, 2021, when the
funds were received. The Rhode Island Commerce Corporation should have (1) delayed revenue
recognition until when the funds were disbursed on July 1, 2021, during the year ending June 30, 2022, or
(2) been recorded as unearned revenue to be recognized as of July 1, 2021. This appears to be an isolate
incidence and is not systemic.
Cause: There are multiple causes, including (1) the Rhode Island Commerce Corporation experienced
significant turnover in accounting staff, including the loss of two chief financial officers during the year,
and hiring two new personnel, (2) a significant increase in the volume of transactions and (3) the impact of
the ongoing COVID-19 pandemic.
Effect: Because the Rhode Island Commerce Corporation’s internal controls were unable, on a timely basis,
to prevent, or detect and correct, a material error resulting in revenue being overstated by $1,000,000.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-43
RECOMMENDATION
2021-036
We recommend that the Rhode Island Commerce Corporation review its revenue
recognition policy to ensure proper recognition or deferral of amounts.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-037
(significant deficiency – new finding)
CONTROLS OVER PREPARATION OF THE SCHEDULE OF EXPENDITURES OF FEDERAL
AWARDS
Criteria: 2 CFR 200.510(b) requires “The auditee must also
prepare a schedule of expenditures of Federal awards for the
period covered by the auditee’s financial statements which
must include the total Federal awards expended as determined
in accordance with §200.502. … At a minimum, the schedule
must:
(1) List individual Federal programs by Federal agency. For
a cluster of programs, provide the cluster name, list
individual Federal programs within the cluster of programs,
and provide the applicable Federal agency name. For R&D,
total Federal awards expended must be shown either by individual Federal award or by Federal agency
and major subdivision within the Federal agency. For example, the National Institutes of Health is a major
subdivision in the Department of Health and Human Services.
(2) For Federal awards received as a subrecipient, the name of the pass-through entity and identifying
number assigned by the pass-through entity must be included.
(3) Provide total Federal awards expended for each individual Federal program and the Assistance
Listings Number or other identifying number when the Assistance Listings information is not available.
For a cluster of programs also provide the total for the cluster.
(4) Include the total amount provided to subrecipients from each Federal program.”
Condition: We noted several instances in which adjustments to the SEFA were necessary to accurately
report the federal expenditure activity for fiscal 2021:
•
Pandemic EBT Food Benefits (10.542) expenditures totaling $50,374,577 were not separately
identified within the State’s accounting system and were instead included in the benefits paid
through the Supplemental Nutrition Assistance Program (10.551).
•
Disaster Grants – Public Assistance (Presidentially Declared Disasters) (97.036) awards flowing
through the State to municipalities and local non-profit organizations totaling $14,467,491 were
recorded in the State’s accounting system as offsetting expenditure credits for the related charges,
which were not presented in the program total on the SEFA. Related subrecipient amounts totaling
$12,038,654 were similarly not presented on the SEFA.
•
Coronavirus Relief Fund (21.019) amounts passed through to subrecipients were overstated by
$66,023,867 for funds provided to business that would fall under the category of “business
beneficiaries” but do not meet the Uniform Guidance definition of a subrecipient.
Controls over the preparation of the
Schedule of Expenditures of Federal
Awards (SEFA) can be enhanced to
ensure
all
program
activity
is
accurately reported to the proper
Assistance
Listing
number
and
amounts
passed
through
to
subrecipients
are
appropriately
classified and reported.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section II – Financial Statement Findings
Office of the Auditor General
D-44
Cause: During the pandemic, the State received multiple new funding sources which presented unique
challenges in presenting the SEFA consistent with Uniform Guidance.
Effect: Without correction, the SEFA would not accurately present federal expenditures in accordance with
the Uniform Guidance.
RECOMMENDATION
2021-037
Ensure policies and procedures for presenting the SEFA are consistent with
Uniform Guidance requirements.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-45
Table of Findings by Major Program
Program Title
Assistance
Listing No.
Applicable Findings
Pandemic EBT Food Benefits
10.542
None
SNAP Cluster:
2021-039, 2021-040
Supplemental Nutrition Assistance Program (SNAP)
10.551
State Administrative Matching Grants for the
Supplemental Nutrition Assistance Program
10.561
Child Nutrition Cluster:
2021-041
School Breakfast Program
10.553
National School Lunch Program
10.555
Special Milk Program for Children
10.556
Summer Food Service Program for Children
10.559
Child Nutrition Discretionary Grants Limited Availability
10.579
Home Investment Partnerships Program
14.239
None
Fish and Wildlife Cluster:
2021-042, 2021-043, 2021-044
Sport Fish Restoration
15.605
Wildlife Restoration and Basic Hunter Education
15.611
Crime Victim Assistance
16.575
2021-038, 2021-045, 2021-046
Unemployment Insurance
17.225
2021-047, 2021-048
Airport Improvement Program
20.106
None
Highway Planning and Construction Cluster:
2021-049, 2021-050
Highway Planning and Construction
20.205
Recreational Trails
20.219
Federal Transit Cluster
2021-051, 2021-052, 2021-053,
2021-054, 2021-055, 2021-056,
2021-057
Federal Transit – Capital Investment Grants
20.500
Federal Transit – Formula Grants
20.507
State of Good Repair Grants Program
20.525
Bus and Bus Facilities Formula Program
20.526
Coronavirus Relief Fund
21.019
2021-047, 2021-058, 2021-059,
2021-060, 2021-061
Special Education (IDEA) Cluster:
None
Special Education Grants to States
84.027
Special Education Preschool Grants
84.173
Education Stabilization Fund
84.425
2021-038
Epidemiology and Laboratory Capacity for Infectious
Diseases (ELC)
93.323
2021-038, 2021-061, 2021-062,
2021-063
Temporary Assistance for Needy Families
93.558
2021-038, 2021-039, 2021-040,
2021-064
CCDF Cluster:
2021-038, 2021-039, 2021-040,
2021-065, 2021-066, 2021-067
Child Care and Development Block Grant
93.575
Child Care Mandatory and Matching Funds of the Child
Care Development Fund
93.596
Children’s Health Insurance Program
93.767
2021-039, 2021-040, 2021-068,
2021-069, 2021-070, 2021-071,
2021-072, 2021-073
Medicaid Cluster:
2021-039, 2021-040, 2021-069,
2021-070, 2021-071, 2021-072,
2021-073, 2021-074, 2021-075,
2021-076
State Medicaid Fraud Control Units
93.775
State Survey and Certification of Health Care Providers
and Suppliers (Title XVIII) Medicare
93.777
Medical Assistance Program
93.778
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-46
Table of Findings by Major Program (cont’d)
Program Title
Assistance
Listing No.
Applicable Findings
Disaster Grants – Public Assistance (Presidentially Declared
Disasters)
97.036
2021-038, 2021-061, 2021-077
Presidential Declared Disaster Assistance to Individuals and
Households – Other Needs
97.050
2021-078
Research and Development Cluster
Various
None
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-47
Finding 2021-038
(other noncompliance / significant deficiency – new finding)
CRIME VICTIM ASSISTANCE – 16.575
Federal Award Agency: U.S. Department of Justice (DOJ)
Federal Award Fiscal Years: 2018, 2019 and 2020
Federal Award Numbers: 2018-V2-GX-0062, 2019-V2-GX-0056 and 2020-V2-GX-0062
Administered by: Department of Public Safety (DPS), Rhode Island Public Safety Grant Administration
Office (RIPSGAO)
ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF (ESSER) FUND – 84.425D
Federal Award Agency: U.S. Department of Education (ED)
Federal Award Fiscal Year: 2020
Federal Award Number: S425D200046
Administered by: Rhode Island Department of Elementary and Secondary Education (RIDE)
EPIDEMIOLOGY AND LABORATORY CAPACITY FOR INFECTIOUS DISEASES (ELC) – 93.323
Federal Award Agency: U.S. Department of Health and Human Services (HHS)
Federal Award Fiscal Year: 2019-2024
Federal Award Number: NU50CK000519
Administered by: Rhode Island Department of Health (RIDOH)
TEMPORARY ASSISTANCE FOR NEEDY FAMILIES – 93.558
Federal Award Agency: Department of Health and Human Services (HHS), Administration for Children and
Families
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: G2002RITANF and G2102RITANF
Administered by: Department of Human Services (DHS)
CCDF CLUSTER – 93.575, 93.596
Federal Award Agency: Department of Health and Human Services (HHS), Administration for Children and
Families
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: G2001RICCDF and G2101RICCDF
Administered by: Department of Human Services (DHS)
DISASTER GRANTS – PUBLIC ASSISTANCE (PRESIDENTIALLY DECLARED DISASTERS) – 97.036
Federal Award Agency: U.S. Department of Homeland Security (DHS), Federal Emergency Management Agency
(FEMA)
Federal Award Fiscal Year: Not Applicable
Federal Award Number: Not Applicable
Administered by: Rhode Island Emergency Management Agency (RIEMA)
Compliance Requirement: Reporting
FEDERAL FUNDING ACCOUNTABILITY AND TRANSPARENCY ACT (FFATA)
Criteria:
The
Federal
Funding
Accountability
and
Transparency Act (Public Law 109-282; as amended by
Section 6202 of Public Law 110-252), as codified in 2 CFR
Part 170, requires recipients of grants and cooperative
agreements to report first-tier subawards of $30,000 or more
to the Federal Funding Accountability and Transparency Act
Subaward Reporting System (FSRS).
Condition: Subaward information entered into the FSRS, made publicly available via USASpending.gov,
was not inclusive of all subawards made for several programs during fiscal 2021. For some grants where
the reporting requirement was applicable, no sub-award information was reported and for one grant as
detailed below we noted errors in the data reported.
Controls over reporting of subawards
to a federal transparency website can
be enhanced to ensure accurate
reporting in compliance with the
requirements of FFATA.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-48
Crime Victim Assistance (16.575)
Transactions
Tested
Subaward not
reported
Report not
timely
Subaward amount
incorrect
Subaward missing
key elements
177
7
0
4
0
Dollar Amount of
Tested Transactions
Subaward not
reported
Report not
timely
Subaward amount
incorrect
Subaward missing
key elements
$22,674,644**
$1,400,336
$0
$256,011
$0
**Includes all active award years, not specifically fiscal 2021 expenditures.
Epidemiology and Laboratory Capacity for Infectious Diseases (93.323)
Transactions
Tested
Subaward not
reported
Report not
timely
Subaward amount
incorrect
Subaward missing
key elements
7
7
0
0
0
Dollar Amount of
Tested Transactions
Subaward not
reported
Report not
timely
Subaward amount
incorrect
Subaward missing
key elements
$1,813,847
$1,813,847
$0
$0
$0
Disaster Grants – Public Assistance (Presidentially Declared Disasters) (97.036)
Transactions
Tested
Subaward not
reported
Report not
timely
Subaward amount
incorrect
Subaward missing
key elements
2
2
0
0
0
Dollar Amount of
Tested Transactions
Subaward not
reported
Report not
timely
Subaward amount
incorrect
Subaward missing
key elements
$584,058
$584,058
$0
$0
$0
The State has not established statewide control procedures or monitoring to ensure FFATA reporting
requirements are met by the various departments and agencies administering federal grants. Training to
enhance awareness and compliance by state departments and agencies is needed.
Cause: Centralized statewide controls and monitoring efforts have not been established to ensure
compliance with FFATA reporting requirements.
Effect: The State did not sufficiently comply with the reporting requirements of FFATA.
Questioned Costs: Not Applicable
Valid Statistical Sample: Not Applicable
RECOMMENDATIONS
2021-038a
Establish statewide policies and procedures to ensure accurate and timely reporting
of subawards in accordance with FFATA.
2021-038b
Implement FFATA training for departments and agencies administering federal
program to enhance awareness and compliance.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-49
Finding 2021-039
(material weakness – repeat finding – 2020-026)
SNAP CLUSTER – 10.551, 10.561
Federal Award Agency: U.S. Department of Agriculture (USDA), Food and Nutrition Service
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: Not Applicable
Administered by: Department of Human Services (DHS)
TEMPORARY ASSISTANCE FOR NEEDY FAMILIES – 93.558
Federal Award Agency: Department of Health and Human Services (HHS), Administration for Children and
Families
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: G2002RITANF and G2102RITANF
Administered by: Department of Human Services (DHS)
CCDF CLUSTER – 93.575, 93.596
Federal Award Agency: Department of Health and Human Services (HHS), Administration for Children and
Families
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: G2001RICCDF and G2101RICCDF
Administered by: Department of Human Services (DHS)
CHILDREN’S HEALTH INSURANCE PROGRAM – 93.767
Federal Award Agency: Department of Health and Human Services (HHS)
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: 2005RI5021 and 2105RI5021
Administered by: Executive Office of Health and Human Services (EOHHS)
MEDICAID CLUSTER – 93.775, 93.777, 93.778
Federal Award Agency: Department of Health and Human Services (HHS)
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: 2005RI5MAP and 2105RI5MAP
Administered by: Executive Office of Health and Human Services (EOHHS)
Compliance Requirement: Special Tests and Provisions – ADP Risk Analysis and System Security
Review
RIBRIDGES USER ACCESS CONTROLS
Background: Approximately 960 individuals have access to
RIBridges. Users include State employees within various
State departments and various vendors/contractors that require
access (e.g., Deloitte – system developer and Automated
Health Solutions (AHS) – contact/call center operator).
RIBridges system access roles define a user’s access to various
system functions and system information and define the ability
to view, change or authorize transactions. The State’s
Division of Information Technology (DoIT) has oversight
responsibility for system security but delegates management
of user access to State departments and vendors. RIBridges
contains extensive personally identifiable information for more than 300,000 individuals. Medical
insurance, cash, and childcare benefits are authorized through the system.
Criteria: Controls over user access to the RIBridges application should appropriately limit access to only
authorized individuals and such access must be consistent with each user’s specific scope of duties. Timely
monitoring is required to ensure access is (1) granted with appropriate authorization, (2) terminated or
modified promptly when employees leave service or change duties, and (3) reviewed periodically.
Controls over the RIBridges eligibility
and benefit system are inadequate to
ensure that user access is limited to
only authorized individuals and such
access is consistent with each user’s
specific scope of duties. Additionally,
automated password change controls
were not operational; and therefore,
users were not required to change
passwords at required intervals.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-50
Additionally, monitoring of user actions that indicate attempted access to sensitive data and changes to
access rights or the attempted change to access rights should be logged, reported and followed up on to
ensure the security of the application and its data are within applicable laws and regulations.
Controls to ensure security of users and passwords should be functioning appropriately and password
expiration/reset should occur at least every 90 days (60 days for those with higher level access) to ensure
that the application and its sensitive recipient data are not compromised (RI DOA Enterprise Policy:
ETSS – Enterprise Passwords – 2019).
Effective controls to ensure timely termination of system access typically involve integration with an
entity’s human resource or payroll systems. Those functionalities do not currently exist in the State’s
antiquated personnel and payroll systems; however, implementation of a new ERP system with
prioritization of the human capital and resource management functionality is soon anticipated.
Condition: Access to the RIBridges application is not sufficiently controlled. In some instances, access is
not terminated timely for users no longer requiring access and overall monitoring of user access should be
improved.
Oversight of access to RIBridges is managed through a decentralized process. RIBridges users are
segregated by organizational group (State department or agency, vendor/contractor) and responsibility for
monitoring access is designated to an individual for each subgroup.
During fiscal 2021, a contractor performing a required Minimum Acceptable Risk Standards for Exchanges
(MARS-E 2.0 framework) in accordance with CMS information security and privacy programs also
highlighted continued weaknesses in controls over user access. MARS-E-2 reviews are required for all
ACA administering entities, including exchanges or marketplaces, state Medicaid, or Children's Health
Insurance Program (CHIP) agencies, and supporting contractors.
DoIT efforts to monitor system access including timely termination of system access for employees and
contractors and Deloitte employees was not fully operational during fiscal 2021 – more robust efforts were
performed in October 2021 after the close of the fiscal year.
Cause: Comprehensive user access monitoring procedures were not sufficiently operational over the
disparate groups of RIBridges users (including State employees and vendors/consultants) during fiscal
2021.
Automated password change controls were not operational during most of fiscal 2021; and therefore, users
were not required to change passwords at required intervals. The State continues to defer password resets
during high volume customer activity associated with open enrollment periods.
Effect: Decentralized management and limited monitoring of user action reporting results in a weakening
of application and data security. RIBridges access may continue after employment has terminated and
RIBridges access may be inconsistent with an individual’s responsibilities and not be detected timely.
Questioned Costs: None
Valid Statistical Sampling: Not Applicable
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-51
RECOMMENDATIONS
2021-039a
Ensure the overall monitoring of RIBridges access is continually performed to
ensure access is granted appropriately, terminated timely, and consistent with each
individual’s scope of duties.
2021-039b
Evaluate the access control management process and the report elements so that
privilege changes and attempted changes are captured and evaluated for
appropriateness. Periodically check that the Deloitte Security Administrator and
Deloitte employee privilege changes and actions are appropriate.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-52
Finding 2021-040
(material weakness – repeat finding – 2020-027)
SNAP CLUSTER – 10.551, 10.561
Federal Award Agency: U.S. Department of Agriculture (USDA), Food and Nutrition Service
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: Not Applicable
Administered by: Department of Human Services (DHS)
TEMPORARY ASSISTANCE FOR NEEDY FAMILIES – 93.558
Federal Award Agency: Department of Health and Human Services (HHS), Administration for Children and
Families
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: G2002RITANF and G2102RITANF
Administered by: Department of Human Services (DHS)
CCDF CLUSTER – 93.575, 93.596
Federal Award Agency: Department of Health and Human Services (HHS), Administration for Children and
Families
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: G2001RICCDF and G2101RICCDF
Administered by: Department of Human Services (DHS)
CHILDREN’S HEALTH INSURANCE PROGRAM – 93.767
Federal Award Agency: Department of Health and Human Services (HHS)
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: 2005RI5021 and 2105RI5021
Administered by: Executive Office of Health and Human Services (EOHHS)
MEDICAID CLUSTER – 93.775, 93.777, 93.778
Federal Award Agency: Department of Health and Human Services (HHS)
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: 2005RI5MAP and 2105RI5MAP
Administered by: Executive Office of Health and Human Services (EOHHS)
Compliance Requirement: Special Tests and Provisions – ADP Risk Analysis and System Security
Review
COMPREHENSIVE DEPARTMENTAL AUTOMATED DATA PROCESSING (ADP) RISK
ANALYSIS AND SYSTEM SECURITY PROGRAM
See related Financial Statement Finding 2021-023.
Criteria: Federal regulation 45 CFR section 95.621 requires
State agencies to review the ADP system security of
installations used in the administration of DHHS programs on
a biennial basis or when a significant change to the security or
system(s) occur. At a minimum, State agencies must establish
and maintain an ADP security plan and implement a program
for conducting periodic risk analyses to ensure that
appropriate, cost-effective safeguards are incorporated into
new and existing systems.
EOHHS and DHS are charged with managing and securing
ADP systems, which administer various federal DHHS and
State programs (Medicaid, TANF, etc.). These programs had
eligibility, benefit determinations, and payments processed
mainly by two systems – MMIS and RIBridges. State agencies (EOHHS, DHS, and the Department of
Administration’s Division of Information Technology – DoIT) were required to determine appropriate ADP
EOHHS, DHS and the Division of
Information Technology must enhance
systems
security
oversight
over
systems used to administer multiple
federally funded programs to fully
comply
with
federal
regulations
relating to ADP risk and system
security review. The plan must be
sufficiently comprehensive and include
timely reaction to and consideration of
identified security issues and risk
factors.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-53
security requirements based upon recognized industry standards for each system, optimally within a
comprehensive plan.
Condition: While EOHHS, DHS, and DoIT accumulate documentation in support of system security
considerations, the departments do not currently formalize an annual plan that meets the compliance
requirement of a risk assessment and documented approach to ensure compliance with federal requirements
for ADP risk analysis and system security review.
EOHHS largely utilizes independent service organization control (SOC) reports to meet their security and
risk monitoring activities for the MMIS. However, the ADP system security plan should be improved by
(1) ensuring that the coverage provided by the SOC reports is supplemented with other monitoring
procedures as required, and (2) developing a comprehensive plan encompassing all systems that meets the
required federal components. Additionally, any deficiencies noted in the SOC reports must be evaluated
timely and documented to determine if they affect any of the required controls over federal program
administration. The SOC report also relies on several complementary user controls that EOHHS is
responsible for ensuring are in place and operating effectively which require more formalized consideration.
Examples of areas in need of improvement include the reliability and consistency of data transmitted from
RIBridges to the MMIS and improved monitoring of system access by the MMIS system contractor.
A contractually required SOC report of the RI Bridges system for controls in effect during fiscal 2022 has
been procured by Deloitte. Going forward this SOC report will provide additional information that should
be integrated into the overall ADP risk analysis and system security monitoring process.
Clearly documented roles and responsibilities outlining the coordination among EOHHS, DHS, and DoIT
in managing IT security over RIBridges can be enhanced and formalized. For example, we found
weaknesses in RIBridges user access controls as described in Finding 2021-039. This is an example of
potential risks that should be assessed and mitigated through a robust risk assessment monitoring process.
Such documentation should consider all available information as well as the need to utilize external
resources to monitor or evaluate RIBridges’ information systems security. Other information that is
available for consideration within the ADP risk assessment process includes ongoing IV&V monitoring of
RIBridges as well as MARS-E evaluations applicable to Health Insurance Exchanges.
The federally required ADP risk analysis and system security considerations are consistent with an overall
enterprise-wide need (as described in Finding 2021-023), to complete risk assessments for all IT systems
within the State.
EOHHS, DHS, and DoIT should (1) consider the significance of these issues and impact on the State’s
internal control procedures for the administration of the affected federal programs, and (2) require
corrective action by the appropriate party (including contractors assigned those responsibilities).
Cause: Failure to fully comply with federal requirements to establish and maintain an ADP security plan
and implement a program for conducting periodic risk analyses to ensure that appropriate, cost-effective
safeguards are incorporated into new and existing systems.
Effect: Federal non-compliance with requirements relating to ADP risk analysis and system security review
and exposure to the information system security and program integrity risks that those regulations are
designed to mitigate.
Questioned Costs: None
Valid Statistical Sampling: Not Applicable
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-54
RECOMMENDATIONS
2021-040a
Enhance compliance with federal ADP Risk Analysis and System Security Review
requirements by creating a comprehensive, integrated plan for RIBridges and the
MMIS. Coordinate the efforts of EOHHS, DHS, DoIT, and contractors in meeting
these objectives.
2021-040b
Ensure that the formalized plan includes a comprehensive risk assessment for both
systems (RIBridges and MMIS), critical controls deemed effective in mitigating
those risks, and specific monitoring procedures to ensure the effective operation of
those policies and procedures, including reliance on external contract services
when required.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-041
(significant deficiency – repeat finding – 2018-044)
CHILD NUTRITION CLUSTER – 10.553, 10.555, 10.556, 10.559 AND 10.579
Federal Award Agency: US Department of Agriculture (USDA)
Federal Award Year: 2020-2021
Federal Award Number: 4RI300306
Administered by: Department of Corrections (DOC)
Compliance Requirement: Special Tests and Provisions
ACCOUNTABILITY FOR USDA-DONATED FOODS
Background: DOC receives USDA-Donated Foods for use in
the Child Nutrition Cluster programs. These foods are stored
in the state warehouse and distributed to eligible local
educational agencies.
Criteria: 7 CFR section 250.12(b) requires DOC to take an
annual physical inventory of its storage facility and reconcile the results with its inventory records.
Condition: DOC performed a physical inventory of USDA-Donated Foods in June 2021. In sum, there
were 50 types of donated commodities in inventory that were available for use in the Child Nutrition Cluster
programs. The physical count revealed that 22 of the 50 items counted did not match amounts recorded in
the inventory records. In some instances, the number of items on hand was less than recorded in the
inventory records. Conversely, there were other instances where the physical count showed more items on
hand than reflected in the inventory system. The discrepancies ranged from 1 to 95 cases. The causes of
these variances were not resolved.
Cause: The inventory system software is not functioning as intended.
Effect: DOC cannot accurately account for the donated commodities.
Questioned Costs: None
Valid Statistical Sampling: Not Applicable
The Department of Corrections needs
to ensure that it complies with federal
regulations governing the receipt,
distribution and inventory of USDA-
Donated Foods.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-55
RECOMMENDATION
2021-041
Improve the functionality of the software used to account for USDA-Donated
Foods to ensure compliance with federal regulations.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-042
(significant deficiency – new finding)
FISH AND WILDLIFE CLUSTER – 15.605, 15.611
Federal Award Agency: U.S. Department of the Interior (DOI), Office of Inspector General
Federal Award Fiscal Years: 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019 and 2020
Federal Award Numbers: F11AF01084, F12AF01143, F13AF00418, F13AF01274, F14AF00358, F14AF00457,
F15AF00017, F15AF00106, F15AF01099, F15AF01316, F16AF00148, F16AF00935, F16AF00937,
F16AF00938, F16AF01101, F17AF00141, F17AF00192, F17AF00893, F17AF01143, F18AF00158,
F18AF00968, F18AF01050, F18AF01111, F18AF01112, F19AF00482, F19AF00609, F19AF01093,
F19AF01094, F19AF01095, F20AF00145, F20AF00146, F20AF00241, F20AF10461, F20AF10572,
F21AF00018, F21AF00372, F21AF00660, F21AF01234 and F21AF03287
Administered by: Department of Environmental Management (DEM)
Compliance Requirement: Subrecipient Monitoring
SUBRECIPIENT MONITORING
Criteria: All pass-through entities must monitor subrecipients
to ensure that the subaward is used for authorized purposes, in
compliance with federal statutes, regulations, and the terms
and conditions of the subaward; and that subaward
performance goals are achieved (2 CFR 200.331(d) through
(f)).
A pass-through entity (PTE) is responsible for: During-the-
Award Monitoring – Monitoring the activities of the subrecipient (through reporting, site visits, regular
contact or other means) as necessary to ensure that the subaward is used for authorized purposes, complies
with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d)
through (f)).
Subaward monitoring must include the following:
1. Reviewing financial and programmatic (performance and special reports) required by the PTE.
2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all
deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected
through audits, on-site reviews, and other means.
3. Issuing a management decision for audit findings pertaining to the federal award provided to the
subrecipient from the PTE as required by 2 CFR section 200.521.
DEM’s
subrecipient
monitoring
procedures need to be enhanced to
ensure that funds are expended by
subrecipients in compliance with
applicable
program
laws
and
regulations.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
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Federal award recipients must determine whether each agreement entered into for the disbursement of
federal program funds casts the entity receiving the funds in the role of a subrecipient or a contractor based
on the following definitions (2 CFR 200.330):
•
A subrecipient receives federal funds from a non-federal entity to carry out part of a federal
program. The legal agreement between the two parties creates a federal assistance relationship
commonly known as a sub-award.
•
A contractor is an entity (dealer, distributor, merchant or other seller) who has a legal agreement
with a non-federal entity to provide goods and services needed to carry out the program under the
federal award.
Condition: DEM did not perform any on-site fiscal monitoring of its Fish and Wildlife Cluster program
subrecipients during State fiscal year 2021. DEM indicated it did obtain and review Single Audit reports
(for two subrecipients which received more than $750,000 in federal funds in fiscal year 2021) to verify if
any of the subrecipients had reported deficiencies pertaining to any applicable program laws or regulations;
however, DEM maintained no documentation of their review of the audit reports.
DEM utilizes a RI OMB Subrecipient / Contractor Determination Tool to document their determination of
vendor or subrecipient status. Of the 30 active Fish and Wildlife Cluster contracts during fiscal 2021
twenty-one had the completed subrecipient/ contractor determination tool documentation and nine did not.
We observed that when the required state match was to be provided by the contractor/subrecipient, that did
not always result in a determination of a subrecipient relationship. We believe requiring an entity to provide
the State match (either actual or in-kind) is likely indicative of a subrecipient rather than vendor
relationship.
Documentation should be maintained for the evaluation of all contracts and when a subrecipient relationship
exists, during the award monitoring and review of subrecipient audit reports (when available) should be
performed.
Cause: Limitations regarding on-site subrecipient monitoring procedures were common during fiscal 2021
due to continuing COVID-19 pandemic considerations. In addition, DEM considered all fiscal year 2021
Fish and Wildlife Cluster contracts to be vendor rather than subrecipient relationships. DEM should revisit
the determination of subrecipient vs. vendor status when matching requirements are being met by the
contractor.
Effect: Subrecipient monitoring procedures may be insufficient to ensure that DEM is correctly identifying
and classifying subrecipients and complying with applicable program regulations and requirements.
Questioned Costs: None
Valid Statistical Sampling: Not Applicable
RECOMMENDATIONS
2021-042a
Enhance subrecipient monitoring procedures to ensure that DEM is correctly
identifying and classifying subrecipients and complying with applicable program
regulations and requirements.
2021-042b
Perform on-site fiscal monitoring and obtain and review all relevant audit reports
to verify if any subrecipients had reported deficiencies pertaining to any applicable
program laws or regulations.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
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Finding 2021-043
(significant deficiency – new finding)
FISH AND WILDLIFE CLUSTER – 15.605, 15.611
Federal Award Agency: U.S. Department of the Interior (DOI), Office of Inspector General
Federal Award Fiscal Years: 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019 and 2020
Federal Award Numbers: F11AF01084, F12AF01143, F13AF00418, F13AF01274, F14AF00358, F14AF00457,
F15AF00017, F15AF00106, F15AF01099, F15AF01316, F16AF00148, F16AF00935, F16AF00937,
F16AF00938, F16AF01101, F17AF00141, F17AF00192, F17AF00893, F17AF01143, F18AF00158,
F18AF00968, F18AF01050, F18AF01111, F18AF01112, F19AF00482, F19AF00609, F19AF01093,
F19AF01094, F19AF01095, F20AF00145, F20AF00146, F20AF00241, F20AF10461, F20AF10572,
F21AF00018, F21AF00372, F21AF00660, F21AF01234 and F21AF03287
Administered by: Department of Environmental Management (DEM)
Compliance Requirement: Matching, Level of Effort, Earmarking
MATCHING
Criteria: Fish and Wildlife Cluster grants require a state
match. The federal share is at least 10 percent and up to 75
percent of allowable costs of the grant funded project. The
specific amount will be in the approved grant award (50 CFR
section 80.83).
The state fish and wildlife agency must not draw down federal funds in a greater proportion to the use of
match than total federal funds bear to total match unless:
1. The drawdown is to pay for construction, including land acquisition.
2. An in-kind contribution is not yet available for delivery to the grantee or subgrantee.
3. The project is not at the point where it can accommodate an in-kind contribution.
The conditions above require the regional director’s prior approval and the state must satisfy the match
requirement before it submits the final Federal Financial Report (50 CFR section 80.96(a)).
The vast majority of DEM’s Sport Fish and Wildlife Cluster open grant awards for State fiscal year 2021
had a twenty-five percent (25%) state matching requirement. The required match is typically met in one of
three ways, (a) matching expenditures are paid from a restricted receipt account funded by fishing and
hunting licenses, (b) provided by the subaward contractor or subrecipient, or (c) verified through
documentation provided detailing in-kind (good or service provided other than money (voluntary labor or
donated services)) contributions.
Condition: DEM was unable to consistently provide adequate supporting documentation to demonstrate
how the match was met and that it was met before it drew down (requested reimbursement for) the federal
share of expenditures. Separate samples of sixty transactions were randomly selected for each of the two
programs within the Fish and Wildlife Cluster.
Within the Sport Fish Restoration sample, one invoice transaction was drawn without the required twenty-
five percent match being met (current drawdowns for this grant award are now on hold). DEM was unable
to provide any verification or support indicating what appears to be a similar situation on a second
transaction within that program.
Within the Wildlife sample one invoice transaction was drawn without the required twenty-five percent
match being met (current drawdowns for this grant award are now on hold). Also, three separate invoice
transactions processed for the same vendor were all drawn without the required match being provided by
the vendor, although no hold was noted by DEM for these grant awards.
DEM’s controls to ensure compliance
with state matching requirements for
the Fish and Wildlife Cluster need to be
enhanced.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
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Controls to ensure compliance with matching requirements are weakened by the structure of accounts
established within RIFANS accounting system. Five RIFANS accounts were assigned to multiple grant
awards. We also noted all fiscal year 2021 expenditures specific to line sequence number 3700111 (Grant
Award F17AF00141), were erroneously charged to Sport Fish Restoration (15.605) in the State’s
accounting system instead of Wildlife Restoration and Basic Hunter Education (15.611).
Similar findings are documented in the Office of Inspector General, U.S. Department of the Interior’s Audit
Report No. 2019-WR-007 (dated December 2020), U.S. Fish and Wildlife Service Grants Awarded to the
State of Rhode Island, Department of Environmental Management, Division of Fish and Wildlife, From
July 1, 2016, Through June 30, 2018, Under the Wildlife and Sport Fish Restoration Program, under
Insufficient Controls Over Grant-Specific Data and Improper Drawdown Support sections of the Report.
Not all Corrective Action Plans specific to that Report have been successfully implemented at this time.
Cause: For most of fiscal year 2021, DEM had one FTE responsible for the majority of the Sport Fish and
Wildlife Cluster programs grant matching requirement documentation. In addition, efforts to work in
conjunction with Accounts and Control and the State Budget Department, to correct RIFANS system
account inconsistencies were attempted, yet unsuccessful.
Effect: Current monitoring procedures may be insufficient to ensure that grant matching requirements are
complying with applicable program regulations and requirements. Also, current accounting system controls
may be ineffective to ensure that DEM’s financial management systems are sufficient to be able to verify
and trace funds to a level of expenditures adequate to establish that such funds have been used according
to federal regulations and conditions outline in the grant awards.
Questioned Costs: None
Valid Statistical Sampling: Not Applicable
RECOMMENDATIONS
2021-043a
Improve agency procedures to ensure that grant matching requirements are met in
compliance with applicable program regulations and requirements.
2021-043b
Streamline the RIFANS accounts established for Fish and Wildlife Cluster grants
to facilitate reporting and to demonstrate that applicable matching requirements
have been met.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-59
Finding 2021-044
(significant deficiency – new finding)
FISH AND WILDLIFE CLUSTER – 15.605, 15.611
Federal Award Agency: U.S. Department of the Interior (DOI), Office of Inspector General
Federal Award Fiscal Years: 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019 and 2020
Federal Award Numbers: F11AF01084, F12AF01143, F13AF00418, F13AF01274, F14AF00358, F14AF00457,
F15AF00017, F15AF00106, F15AF01099, F15AF01316, F16AF00148, F16AF00935, F16AF00937,
F16AF00938, F16AF01101, F17AF00141, F17AF00192, F17AF00893, F17AF01143, F18AF00158,
F18AF00968, F18AF01050, F18AF01111, F18AF01112, F19AF00482, F19AF00609, F19AF01093,
F19AF01094, F19AF01095, F20AF00145, F20AF00146, F20AF00241, F20AF10461, F20AF10572,
F21AF00018, F21AF00372, F21AF00660, F21AF01234 and F21AF03287
Administered by: Department of Environmental Management (DEM)
Compliance Requirement: Equipment and Real Property Management
REAL PROPERTY MANAGEMENT
Criteria: When grant funds are used for a capital
improvement, a state fish and wildlife agency must have
control adequate for the protection, maintenance, and use of
the capital improvement for its authorized purpose during its
useful life even if the agency did not acquire the land with
grant funds. If the State fish and wildlife agency and the
regional director jointly decide grant-funded real property is
not needed for its original purpose, the real property must be
used for another eligible purpose, or the State fish and wildlife
agency must dispose of the property (50 CRF Part 80,
Subpart J). In addition, federal regulation (50 CRF 80.90(f)) requires the Division to maintain control of
all assets acquired under the grant to ensure that they serve the purpose for which acquired throughout their
useful life.
Condition: We inspected and toured DEM Fish and Wildlife Cluster program sites including the Round
Top Management Area Headquarters. We found that DEM has not adequately maintained the property at
Round Top Management Area Headquarters as it was in very poor condition. The property was purchased
with grant award funds and is not currently being used in any capacity by DEM.
Similar findings are documented in the Office of Inspector General, U.S. Department of the Interior’s Audit
Report No. 2019-WR-007 (dated December 2020), U.S. Fish and Wildlife Service Grants Awarded to the
State of Rhode Island, Department of Environmental Management, Division of Fish and Wildlife, From
July 1, 2016, Through June 30, 2018, Under the Wildlife and Sport Fish Restoration Program, under the
Inadequate Real Property Management section of the Report. Not all Corrective Action Plans specific to
that Report have been successfully implemented at this time.
Cause: DEM has not developed and implemented adequate policies and procedures to maintain, manage,
and monitor real property acquired or maintained with applicable grant award funds.
Effect: Real property acquired with federal funds are not maintained adequately to support continued use
consistent with intended federal program objectives.
Questioned Costs: None
Valid Statistical Sampling: Not Applicable
DEM’s Real Property Management
procedures need to be enhanced to
ensure that property acquired or
constructed with Wildlife Restoration
program funds shall continue to serve
the purpose for which it was acquired
or constructed in compliance with
applicable
program
laws
and
regulations.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-60
RECOMMENDATION
2021-044
Modify real property management procedures to ensure properties acquired with
federal funds are adequately maintained, consistent with all applicable federal
program requirements.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-045
(significant deficiency –new finding)
CRIME VICTIM ASSISTANCE – 16.575
Federal Award Agency: U.S. Department of Justice (DOJ)
Federal Award Fiscal Years: 2018, 2019 and 2020
Federal Award Numbers: 2018-V2-GX-0062, 2019-V2-GX-0056 and 2020-V2-GX-0062
Administered by: Department of Public Safety (DPS), Rhode Island Public Safety Grant Administration
Office (RIPSGAO)
Compliance Requirement: Reporting
REPORTING
Criteria: Grantees must submit quarterly SF-425 reports
which detail federal expenditures and unobligated balances on
a quarterly basis throughout the grant award periods.
Condition:
RIPSGAO
was
unable
to
provide
all
documentation necessary to support the quarterly SF-425 Federal Financial Reports selected for testing.
In some instances, information on the reports was inconsistent with supporting documentation or was
insufficiently supported.
We found errors on the reports that appeared to be due to transcribing errors or omitted information.
Currently, reports are prepared and certified by the same individual without independent review.
Cause: The reporting deficiencies noted are attributable to insufficient independent or supervisory review
of the reports prior to submission.
Effect: The reports required to be filed with the federal government included errors that were not detected.
Questioned Costs: None
Valid Statistical Sampling: Not Applicable
RECOMMENDATIONS
2021-045a
Ensure the data in the quarterly SF-425 Federal Financial Reports is complete and
accurate.
2021-045b
Enhance the review process over quarterly SF-425 Federal Financial Reports to
prevent or detect misstatements prior to submission.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Controls over federal reporting can be
enhanced to ensure SF-425 Federal
Financial Reports are accurate and
adequately supported.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
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Finding 2021-046
(significant deficiency – new finding)
CRIME VICTIM ASSISTANCE – 16.575
Federal Award Agency: U.S. Department of Justice (DOJ)
Federal Award Fiscal Years: 2018, 2019 and 2020
Federal Award Numbers: 2018-V2-GX-0062, 2019-V2-GX-0056 and 2020-V2-GX-0062
Administered by: Department of Public Safety (DPS), Rhode Island Public Safety Grant Administration
Office (RIPSGAO)
Compliance Requirement: Subrecipient Monitoring
SUBRECIPIENT MONITORING
Criteria: All pass-through entities must monitor the activities
of the subrecipient as necessary to ensure that the subaward is
used for authorized purposes, in compliance with federal
statutes, regulations, and the terms and conditions of the
subaward; and that subaward performance goals are achieved
(2 CFR 200.331(d) through (f)). In addition, 45 CFR 96.30(a)
states that fiscal control and accounting procedures must be sufficient to (a) permit preparation of reports
required by the statute authorizing the block grant and (b) permit the tracing of funds to a level of
expenditure adequate to establish that such funds have not been used in violation of the restrictions and
prohibitions of the statute authorizing the block grant.
A pass-through entity (PTE) is responsible for: During-the-Award Monitoring – Monitoring the activities
of the subrecipient (through reporting, site visits, regular contact or other means) as necessary to ensure that
the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and
achieves performance goals (2 CFR sections 200.332(d) through (f)).
Subaward monitoring must include the following:
1. Reviewing financial and programmatic (performance and special reports) required by the PTE.
2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all
deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected
through audits, on-site reviews, and other means.
3. Issuing a management decision for audit findings pertaining to the federal award provided to the
subrecipient from the PTE as required by 2 CFR section 200.521.
Condition: RIPSGAO did not perform on-site fiscal monitoring of its subrecipients during State fiscal
year 2021 due to risks related to the COVID-19 global pandemic; however, periodic remote or “virtual”
monitoring was performed. On-site monitoring is planned to resume beginning in fiscal year 2023.
Forty-seven subrecipients were funded through Crime Victim Assistance awards and twenty-eight
represented they expended more than $750,000 from all sources of federal funds and were subject to single
audit requirements. Eighteen submitted their single audit reports to RIPSGAO.
When the single audit reports are provided by the subrecipient, RIPSGAO accepts and files the Single Audit
Reports; however, RIPSGAO lack a comprehensive process to ensure timely receipt and review of all
subrecipient audit reports. Subrecipient single audit reports are obtainable through the federal single audit
clearinghouse.
Additionally, subrecipient audit report review procedures should be enhanced to determine if; (a) Crime
Victim Assistance was audited as a major program and (b) any control weaknesses or noncompliance
related to the Crime Victim Assistance program are included in those reports. Timely review of
Subrecipient monitoring procedures
should be enhanced to ensure that
funds are expended by subrecipients in
compliance with applicable program
laws and regulations.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
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subrecipient audit reports, including issuance of management decisions where applicable, is a required
subrecipient monitoring activity.
RIPSGAO has implemented risk assessment procedures which guide their subrecipient monitoring
activities including the timing and frequency of site visits; however, these procedures do not include
consideration of information available in the subrecipient single audit reports.
Cause: The State plan for fiscal year 2021 was modified to only require periodic remote/virtual monitoring
of all subrecipients, due to the continued risks related to the COVID-19 global pandemic. Comprehensive
procedures have not been implemented to obtain and review Single Audit Reports of all subrecipients and
fully include consideration of such information in RIPSGAO risk assessment procedures.
Effect: Monitoring procedures may be insufficient to ensure that subrecipients are complying with
applicable program regulations and requirements.
Questioned Costs: None
Valid Statistical Sampling: Not Applicable
RECOMMENDATIONS
2021-046a
Obtain and review all Single Audit Reports for subrecipients. Issue management
decisions on audit findings within six months as required by federal regulations.
2021-046b
Restore on-site monitoring for subrecipients to ensure compliance with program
requirements.
2021-046c
Modify subrecipient risk assessment procedures to include consideration of
whether Crime Victim Assistance was tested as a major program and other
information available in subrecipient Single Audit Reports.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-63
Finding 2021-047
(material noncompliance / material weakness – repeat finding – 2020-030)
UNEMPLOYMENT INSURANCE – 17.225
Federal Award Agency: Department of Labor (DOL), Employment and Training Administration
Federal Award Fiscal Years: Not Applicable
Federal Award Numbers: Not Applicable – Direct payments with Unrestricted Use Funded through U.S. Treasury
Trust Fund
Administered by: Department of Labor and Training (DLT)
CORONAVIRUS RELIEF FUND – 21.019
Federal Award Agency: U.S. Department of the Treasury (TREAS)
Federal Award Fiscal Year: 2020
Federal Award Numbers: SLT0005 and SLT0227
Administered by: Department of Labor and Training (DLT)
Compliance Requirement: Eligibility
CONTROLS OVER UNEMPLOYMENT INSURANCE BENEFIT PAYMENTS
See related Financial Statement Finding 2021-002.
Background: The Department of Labor and Training (DLT)
disbursed nearly $2.2 billion in unemployment insurance
benefits in fiscal 2021. In response to the COVID-19
pandemic, the federal Coronavirus Aid, Relief, and Economic
Security
(CARES)
Act
expanded
and/or
extended
unemployment insurance benefits, including providing new
benefits to self-employed individuals and independent
contractors. During fiscal 2021, a portion ($47 million) of
unemployment insurance benefits were funded by the
Coronavirus Relief Fund (21.019).
Fraudulent claims for unemployment insurance benefits also
increased rapidly, concurrent with the overall increase in claims due to the pandemic. This unprecedented
increase in fraudulent claims was experienced nationwide and was not unique to Rhode Island.
The system used by DLT to process unemployment insurance (UI) benefits utilizes outdated technology.
This legacy system is mainframe based and programmed in COBOL. In response to the pandemic related
surge in unemployment insurance claims, new “cloud-based” technologies were rapidly deployed to
facilitate processing the volume of claims and interactions with claimants; however, the primary claims
processing functions were still performed by the legacy system.
Criteria: Management is responsible for establishing and maintaining effective internal controls to process
and disburse unemployment insurance benefits consistent with federal program guidelines including
appropriate procedures to prevent and detect fraudulent payments.
The PUA program was created under the CARES Act to provide benefits to self-employed individuals who
were previously ineligible for traditional unemployment insurance benefits. A “covered individual” is
someone who meets each of the following three conditions:
1. The individual is not eligible for regular UC, EB, or PEUC. This also includes those who have
exhausted all rights to such benefits, self-employed, those seeking part-time employment,
individuals lacking sufficient work history. Self-employed individuals include independent
contractors and “gig economy workers”.
Controls over the processing of
unemployment insurance claims were
ineffective to sufficiently prevent
fraudulent unemployment insurance
benefit payments. Controls were also
ineffective to ensure compliance with
the documentation of self-employment
income
for
the
Pandemic
Unemployment
Assistance
(PUA)
program.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
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2. Individual must self-certify that they are unemployed, partially unemployed, or unable or
unavailable to work due to one of the COVID19 related reasons identified in
Section 2102(a)(3)(A)(ii)(I) of the CARES Act and in Departmental guidance (UIPL 16-20 and
Attachment I, Section C.1. of UIPL 16-20, Change 4). Because this eligibility is based on self-
certification, states may only request supporting documentation if they have reasonable suspicions
of fraud (question 23 of Attachment I to UIPL No. 16-20, Change 2).
3. Additionally, individuals who are paid on or after December 27, 2020, must submit proof of
documentation substantiating employment, self-employment, or the planned commencement of
employment or self-employment (see Attachment I, Section C.2. of UIPL No. 16-20, Change 4).
This includes individuals requesting retroactive payments that are not received until after
December 27, 2020.
Condition: DLT’s internal control procedures were not sufficiently effective to ensure that unemployment
benefit payments were made only to eligible individuals. DLT estimated approximately $98 million in
fraudulent claims were paid between July 1, 2020 and June 30, 2021. An additional $550 million are
estimated as suspected fraudulent claims.
Controls over claims processing were weakened through suspension of the first week waiting period, a
simplified application implemented to streamline and expedite processing, and the inability to apply the
normal wage verification procedures to claims from self-employed individuals and independent contractors.
In a sample of 60 PUA claimants, our testing identified:
•
51 of 60 (85%) claimants received PUA payments without self-certifying their employment status.
•
50 of 60 (83%) claimants receiving PUA payments after December 27, 2020, provided no evidence
of employment status or self-employment income.
•
31 of 60 (52%) claimants receiving PUA payments had no prior earnings history in the prior 18
months. The individual must have worked in the past 18 months to be considered part of the work
force to collect benefits.
•
24 of 60 (40%) claimants receiving PUA payments declared dependents without providing SSN
for each of their dependents. DLT did not obtain the department director’s approval to waive the
receipt of SSN for all dependents claimed by the claimant.
Cause: The large volume of claims stressed an outdated system and the unprecedented economic impact
warranted rapid processing of claims. The rapid implementation of new unemployment benefit programs
authorized by the CARES Act did not allow sufficient time to employ wage verification and other
procedures. Other procedures to verify client identity, prior wages and overall eligibility were also
weakened due to the unprecedented volume of claims and new procedures employed to expedite benefit
payments. Lastly, the substantial increase in fraudulent claims activity is largely considered to be the result
of sustained and targeted efforts impacting many states.
Claimant documentation requirements for the PUA program were not enforced during fiscal 2021.
Effect: Fraudulent unemployment insurance claims have been paid and DLT’s systems require further
enhancements to timely identify fraudulent benefit claims prior to disbursement. DLT remains at a critical
juncture in developing a strategy to upgrade and modernize its unemployment insurance claims processing
systems while ensuring compliance with federal program requirements including the prevention and
detection of fraudulent benefit payments.
Questioned Costs: $28,905
Valid Statistical Sampling: Yes
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-65
RECOMMENDATIONS
2021-047a
Enhance procedures to timely identify fraudulent claims by strengthening controls
within the legacy claims processing system as well as using data analytics
tools/process outside of the legacy system.
2021-047b
Implement a strategic plan to address the required modernization of the
unemployment benefit claims processing system.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-048
(material noncompliance / material weakness – repeat finding – 2020-031)
UNEMPLOYMENT INSURANCE – 17.225
Federal Award Agency: Department of Labor (DOL), Employment and Training Administration
Federal Award Fiscal Years: Not Applicable
Federal Award Numbers: Not Applicable – Direct payments with Unrestricted Use Funded through U.S. Treasury
Trust Fund
Administered by: Department of Labor and Training (DLT)
Compliance Requirement: Special Tests and Provisions
UNEMPLOYMENT INSURANCE PROGRAM INTEGRITY – BENEFIT OVERPAYMENTS
Criteria: Federal law provides that (1) States are required to
impose a monetary penalty (not less than 15 percent) on
claimants whose fraudulent acts resulted in overpayments and
deposit the funds in the State’s account in the Unemployment
Trust Fund, and (2) States are prohibited from providing relief
from charges to an employer’s UC account when
overpayments are the result of the employer’s failure to
respond timely or adequately to a request for information.
Pub. L. No. 112-40, enacted on October 21, 2011, and
effective October 21, 2013, amended sections 303(a) and
453A of the Social Security Act and sections 3303, 3304, and
3309 of the Federal Employment Tax Act (FUTA) to improve
program integrity and reduce overpayments. (See UIPL Nos. 02-12, and 02-12, Change 1).
In compliance with federal law, the State enacted these requirements into State law effective October 1,
2013, including a 15% penalty on overpayments due to claimant fraud (RIGL 28-42- 62.1(a)(4)) and a
prohibition on relieving the employer’s account of charges relating to any benefit overpayments made if
the employer was at fault for failure to respond timely or adequately to a request of the department for
information relating to the claim (RIGL 28-43-3(2)(viii)).
Condition: We had previously found that the State was not properly identifying and handling
overpayments, including, as applicable, assessment of the 15% penalty on claimants who commit fraud,
and not relieving an employer’s account of charges for overpayments when their untimely or inaccurate
responses cause improper payments. Overpayments must be established and communicated to the recipient
to initiate collection.
The Department of Labor and Training
(DLT) did not make the necessary
changes to its system to allow for the
imposition
of
penalties
on
overpayments due to fraud, and to
prohibit relief from charges to an
employer’s
Unemployment
Compensation (UC) account when the
overpayment was the result of the
employer’s failure to respond timely or
adequately to a request for information.
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Cause: Due to the increased fraudulent activity in UI claims, the department was unable to keep up with
the establishment of overpayments due to claimant fraud. DLT management had previously advised us
they were programming the existing benefit system to impose penalties for overpayments due to fraud. This
programming change was not made in fiscal 2021.
Effect: Noncompliance with federal and State laws as well as lost revenue on penalties not assessed.
Questioned Costs: None
Valid Statistical Sampling: Not Applicable
RECOMMENDATION
2021-048
Adopt procedures to: (1) impose and collect a 15% penalty on benefit
overpayments of claimants who commit fraud (RIGL 28-42-62.1(a)(4)) and
(2) prohibit providing relief to an employer account when an overpayment is the
result of the employer’s failure to respond timely or adequately to a request for
information by the State agency (RIGL 28-43-3(2)(viii)).
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-049
(significant deficiency – new finding)
HIGHWAY PLANNING AND CONSTRUCTION CLUSTER – 20.205, 20.219
Federal Award Agency: U.S. Department of Transportation (DOT), Federal Transit Administration (FTA)
Federal Award Fiscal Year: 2021
Federal Award Number: Not Applicable
Administered by: Rhode Island Department of Transportation (RIDOT)
Compliance Requirement: Special Tests and Provisions – Quality Assurance Program
SPECIAL TESTS AND PROVISIONS – QUALITY ASSURANCE PROGRAM
Criteria: A State DOT or LPA must have a quality assurance
(QA) program, approved by FHWA, for construction projects
on the NHS to ensure that materials and workmanship
conform to approved plans and specifications. Verification
sampling must be performed by qualified testing personnel
employed by the State DOT, or by its designated agent, excluding the contractor (23 CFR sections 637.201,
637.205, 637.207, and 637.209).
Condition: The last formally approved quality assurance program (i.e., Master Schedule of Tests (MST))
was in 2012. RIDOT submitted an updated plan in 2016 but only received verbal approval. There have
been numerous changes to the MST, making both the 2012 and 2016 versions not reflective of the current
program.
RIDOT’s Quality Assurance Program
should be updated to reflect current
testing procedures.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
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Testing of the Quality Assurance program identified 4 of 81 items tested not meeting the criteria identified
in the Master Schedule of Tests as follows:
•
One test was not documented in the project’s material test book, nor had it been provided to the
Resident Engineer for review;
•
Two required tests were not performed;
•
The test identified in the materials test book did not agree to the same test requirement per the
Master Schedule of Tests. However, the materials were in conformance with the respective
requirement.
Cause: Department personnel responsible for the QA Program have not focused on the
administrative/federal approval aspects of the program to ensure compliance with all federal requirements.
The Master Schedule of Tests has been loaded into the Project Management Portal (PMP) as templates;
however, the proper template must be selected for each required test to be included in the project’s Material
Test Book. The individual creating the Material Test Book (MTB) can also manually modify the selected
templates once loaded into the MTB. This weakens overall controls to ensure materials conform to
approved plans and specifications. Due to the number of materials and required tests loaded into the
Material Test Book, a second or supervisory review of all materials test is impractical.
The controls put in place over the Quality Assurance Program do not ensure that responsible Department
personnel are notified when there is a missing test or failed test for materials put in place.
Effect: Controls over the quality assurance program are not adequate to ensure materials used in the
construction of roads and bridges meet RIDOT’s and FHWA standards.
Questioned Costs: $25,422
Valid Statistical Sampling: Yes
RECOMMENDATIONS
2021-049a
Obtain formal approval of the Department’s Quality Assurance Program.
2021-049b
Enhance coordination among the three sections of RIDOT that have shared
responsibility for the overall operation of the Department’s Quality Assurance
Program. Enhance training for all project-related staff on the requirements of the
Quality Assurance Program (23 CFR 637.205) and the Department’s related
policies, procedures and controls.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
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Finding 2021-050
(significant deficiency – new finding)
HIGHWAY PLANNING AND CONSTRUCTION CLUSTER – 20.205, 20.219
Federal Award Agency: U.S. Department of Transportation (DOT), Federal Transit Administration (FTA)
Federal Award Fiscal Year: 2021
Federal Award Number: Not Applicable
Administered by: Rhode Island Department of Transportation (RIDOT)
Compliance Requirement: Special Tests and Provisions – Administration of Engineering and Design-
Related Service Contracts
SPECIAL TESTS AND PROVISIONS – ADMINISTRATION OF ENGINEERING AND DESIGN-
RELATED SERVICE CONTRACTS
Criteria: State DOTs must use qualifications-based selection
procedures (Brooks Act) when acting as contracting agencies
to procure engineering and design-related services from
consultants and sub-consultants for projects using federal
highway funds (23 USC 112(b)(2); 23 CFR Part 172).
Requirements applicable to engineering and design-related
services contracts include:
•
Contracting agencies (state DOTs and LPAs) must have written policies and procedures for each
method of procurement used to procure engineering and design services. State DOT policies and
procedures, or recipient LPA policies and procedures, must be approved by FHWA. LPAs that are
subrecipients may adopt written policies and procedures prescribed by the awarding State DOT or
prepare and maintain their own written policies and procedures approved by the State DOT
(23 CFR section 172.5(b)).
•
Contracting agencies (state DOTs and LPAs) are required to accept the indirect cost rates for
consultants and sub-consultants that have been established by a cognizant agency in accordance
with the Federal Acquisition Regulation (48 CFR Part 31) for one-year applicable accounting
periods if such rates are not currently under dispute. Consultants and sub-consultants providing
engineering and design related services contracts must certify to contracting agencies that costs
used to establish indirect cost rates are in compliance with the applicable cost principles contained
in the Federal Acquisition Regulation (48 CFR Part 31) by submitting a “Certificate of Final
Indirect Costs” (23 USC 112(b)(2)(C); 23 CFR section 172.11(c)(3)).
Condition: The Department was unable to provide the required FHWA approval of the Department’s
written policies and procedures for procurement of engineering and design services.
The Department was unable provide the Certificate of Final Indirect Costs for 2 of 25 vendors selected for
testing (1 railroad and 1 utility company).
Cause: The Department did not request FHWA’s approval of its written policies and procedures for
procurement of engineering and design services.
The State’s Office of Internal Audit (OIA) performs indirect cost rate reviews and obtains the Certificate
of Final Indirect Costs for other contractors but does not review the indirect cost rates for railroads or utility
companies. Other documentation of indirect cost rate approval was not obtained for railroads or utility
companies.
Effect: The Federal Highway Administration (FHWA), the grantor agency, may not concur with the
Department’s policies and procedures.
Department policies and procedures
for the administration of engineering
and design-related service contracts
require written approval from FHWA.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-69
Questioned Costs: None
Valid Statistical Sampling: None
RECOMMENDATIONS
2021-050a
Obtain FHWA approval of RIDOT’s written policies and procedures for
procurement of engineering and design services. Incorporate the approval letter
into the policy and procedures manual.
2021-050b
Ensure the indirect cost rate reviews are performed for utility and railroad vendors.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-051
(significant deficiency – new finding)
FEDERAL TRANSIT CLUSTER – 20.500, 20.507, 20.525, 20.526
Federal Award Agency: U.S. Department of Transportation (DOT), Federal Transit Administration (FTA)
Federal Award Fiscal Years: 2012, 2014, 2018, 2019
Federal Award Numbers: RI040009, RI050104, RI050106, RI550001, RI2016002, RI2019002
Administered by: Department of Transportation (RIDOT)
Compliance Requirement: Period of Performance
CONTROLS OVER PERIOD OF PERFORMANCE
Criteria: The Department must expend or obligate federal
awards within the period specified for each award. The Federal
Transit Administration’s Circular 5010-1E (revised July 16,
2018) states “Period of performance means the time during
which the recipient or subrecipient may incur new obligations
to carry out the scope of work authorized under the Grant or
Cooperative Agreement.” The Department obligates funds via purchase orders, contracts, or memorandums
of understanding. For funds not formally obligated, the expenditures must be incurred during the specified
period of performance.
Condition: The Department’s controls are insufficient to ensure FTA awards are expended or obligated
within the applicable period of performance.
We tested expenditures applied to 10 of the 12 federal awards with expenditures incurred during fiscal
2021. We reviewed eight purchase orders that related to those expenditures (94% of the expenditures).
The documentation (purchase order, contract or memorandum of understanding) for five of the eight
purchase orders tested did not provide sufficient information (missing federal award numbers) to determine
that federal awards: RI040009, RI550001, RI050104, RI050106, RI2016002, RI2016009, RI2019001,
RI2019007 and RI2019008 were obligated during the period of performance.
Comprehensive procedures to track the periods of performance for each open grant have not been
implemented by RIDOT.
FTA requires RIDOT to perform milestone reporting on a quarterly basis. Those quarterly milestone
reports include the updated project completion dates and confirmation that FTA reviewed the updates.
Through the milestone reporting process, FTA effectively approved the extension of the period of
performance for grants tested during our audit period. This cleared most expenditures which initially
RIDOT’s controls are insufficient to
ensure Federal Transit Cluster funds
are expended or obligated within the
applicable period of performance.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-70
appeared to be outside of the period of performance. A journal entry for grant RI55001 totaling $7,470
remained outside the period of performance for that award and is therefore questioned.
RIDOT should implement procedures to track the period of performance for each open FTA award and
incorporate any extension information that is a byproduct of the FTA milestone reporting process.
Cause: The Department did not demonstrate a sufficient understanding of FTA period of performance
compliance requirements to design and support controls to ensure compliance. Consequently, controls have
not been sufficiently implemented to meet those compliance objectives.
Effect: Expenditures could be applied to federal awards when the period of performance has ended resulting
in disallowed costs.
Questioned Costs: RI550001
$7,470
Valid Statistical Sampling: Not Applicable
RECOMMENDATIONS
2021-051a
Enhance the understanding of FTA period of performance compliance objectives
and requirements for key personnel to support the design of controls to ensure
compliance.
2021-051b
Implement procedures to track the period of performance for each open FTA award
and include relevant information from the FTA milestone reporting process which
impacts period of performance timelines.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-71
Finding 2021-052
(material weakness – new finding)
FEDERAL TRANSIT CLUSTER – 20.500, 20.507, 20.525, 20.526
Federal Award Agency: U.S. Department of Transportation (DOT)
Federal Award Fiscal Years: 2020, 2021
Federal Award Numbers: RI 2020-005-00, RI 2020-007-00, RI 2020-009-00, RI 2021-001-00
Administered by: Rhode Island Public Transit Authority (RIPTA)
Compliance Requirement: Allowable Costs/Cost Principles
RHODE ISLAND PUBLIC TRANSIT AUTHORITY – ALLOWABLE COSTS/COST PRINCIPLES
Criteria: The grant awards include CARES Act emergency relief operating assistance, which is available
for all operating activities (net of fare revenues and other operating reimbursements) incurred on or after
January 20, 2020 for fixed route, demand response, ADA paratransit and shuttle services. The operating
expense reimbursements should be determined and documented in accordance with Uniform Guidance
(2 CFR 200) Subpart E – Cost Principles and FTA Circular 9030.1E including the requirement that costs
be accounted for in accordance with generally accepted accounting principles and be adequately
documented.
Condition: During our test of internal controls, we noted that costs related to four operating expense
reimbursements were determined for a period using fixed route statistics which included average costs per
mile and hour, less preventative maintenance and farebox recovery. We also noted that documentation for
three operating expense reimbursements for a period included only the payroll reports for fixed route drivers
plus benefits, calculated using a fringe benefit percentage rate, and there was no documentation that fare
revenues and other operating reimbursements had been deducted from the operating expense
reimbursement.
Cause: The Rhode Island Public Transit Authority did not account for CARES Act operating expense
reimbursements in accordance with generally accepted accounting principles and did not adequately
document CARES Act operating expense reimbursements.
Effect: The Rhode Island Public Transit Authority has not accounted for and documented CARES Act
operating expense reimbursements in accordance with Uniform Guidance (2 CFR 200) Subpart E – Cost
Principles and FTA Circular 9030.1E.
Questioned Costs: None
Valid Statistical Sampling: Not Applicable
RECOMMENDATION
2021-052
We recommend that CARES Act operating expense reimbursements be prepared
utilizing the Rhode Island Public Transit Authority’s general ledger which is
prepared in accordance with generally accepted accounting principles and
documented using a worksheet prepared in accordance with FTA Circular
9030.1E, that excludes ineligible costs and deducts fares and other operating
expense reimbursements.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-72
Finding 2021-053
(significant deficiency – new finding)
FEDERAL TRANSIT CLUSTER – 20.500, 20.507, 20.525, 20.526
Federal Award Agency: U.S. Department of Transportation (DOT)
Federal Award Fiscal Years: 2020
Federal Award Numbers: RI 2020-012-00
Administered by: Rhode Island Public Transit Authority (RIPTA)
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of
Performance
RHODE ISLAND PUBLIC TRANSIT AUTHORITY – ACTIVITIES ALLOWED OR UNALLOWED,
ALLOWABLE COSTS/COST PRINCIPLES, AND PERIOD OF PERFORMANCE
Criteria: An entity is responsible for establishing and maintaining effective internal controls over
compliance with requirements of laws, regulations, contracts and grant agreements applicable to federal
award programs. In addition, cost principles require that charges to federal award programs be supported
by appropriate documentation including approved requisitions, vendor invoices or other documentation.
Condition: The Rhode Island Public Transit Authority has internal control policies and procedures in place
to ensure compliance with activities allowed or unallowed, allowable costs/cost principles, and period of
performance requirements. The Rhode Island Public Transit Authority’s internal control procedure to
ensure compliance with these requirements is the approving initials of the Chief of Strategic Advancement
or his designee and the approving initials of the Executive Director of Budget and Finance or his designee
on the capital supply or operating requisition. During our testing of internal controls, we noted that an
approved requisition could not be located for one of the forty transactions selected.
Cause: The Rhode Island Public Transit Authority did not follow established internal control policies and
procedures for requisition approval.
Effect: The Rhode Island Public Transit Authority has no documentation on file to demonstrate compliance
with internal control policies and procedures related to activities allowed or unallowed, allowable costs/cost
principles, and period of performance requirements for this transaction.
Questioned Costs: None
Valid Statistical Sampling: Not Applicable
RECOMMENDATION
2021-053
We recommend that the Rhode Island Public Transit Authority ensure a properly
approved requisition form is prepared for all federal award program expenses to
ensure proper documentation of the internal control policies and procedures related
to activities allowed or unallowed, allowable costs/cost principles, and period of
performance compliance requirements.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-73
Finding 2021-054
(significant deficiency – repeat finding – 2020-036)
FEDERAL TRANSIT CLUSTER – 20.500, 20.507, 20.525, 20.526
Federal Award Agency: U.S. Department of Transportation (DOT)
Federal Award Fiscal Year: 2020
Federal Award Number: RI 2019-010-00
Administered by: Rhode Island Public Transit Authority (RIPTA)
Compliance Requirement: Subrecipient Monitoring
RHODE ISLAND PUBLIC TRANSIT AUTHORITY – SUBRECIPIENT MONITORING
Criteria: A pass-through entity must establish policies and procedures to ensure subrecipients are properly
monitored. Procedures should include identifying the award and applicable requirements; evaluating a
subrecipient’s risk of noncompliance to determine appropriate monitoring related to the subaward; and
monitoring the subrecipient to ensure the subaward is used for the authorized purposes, complies with the
term and conditions of the subaward and achieves performance goals.
Condition: During the process of obtaining an understanding of the internal controls over subrecipient
monitoring, we determined that the Rhode Island Public Transit Authority has established policies and
procedures for subrecipient monitoring in accordance with Uniform Guidance. These policies and
procedures, however, were not properly adhered to for a subaward that was active during the 2021 fiscal
year. The grant award notice and subrecipient agreement were not executed in a timely manner and
quarterly and final reports were not submitted during fiscal year 2021 as required by the subrecipient
agreement.
Cause: The Rhode Island Public Transit Authority did not follow established subrecipient monitoring
policies and procedures.
Effect: The subrecipient was not properly notified of the award details or applicable requirements and was
not properly monitored during the year.
Questioned Costs: None
Valid Statistical Sampling: Not Applicable
RECOMMENDATION
2021-054
We recommend that the Rhode Island Public Transit Authority ensure its
established policies and procedures are followed and that subaward activities not
begin until the grant award notice and subrecipient agreement have been properly
executed. We also recommend that the formal monitoring procedures described
in its subrecipient policy be performed and documented.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-74
Finding 2021-055
(significant deficiency – new finding)
FEDERAL TRANSIT CLUSTER – 20.500, 20.507, 20.525, 20.526
Federal Award Agency: U.S. Department of Transportation (DOT)
Federal Award Fiscal Year: 2020
Federal Award Number: RI 2020-008-00
Administered by: Rhode Island Public Transit Authority (RIPTA)
Compliance Requirement: Allowable Costs/Cost Principles
RHODE ISLAND PUBLIC TRANSIT AUTHORITY – ALLOWABLE COSTS/COST PRINCIPLES
Criteria: An entity is responsible for establishing and maintaining effective internal controls over
compliance with requirements of laws, regulations, contracts and grant agreements applicable to federal
award programs. In addition, cost principles require that charges to federal award programs be supported
by appropriate documentation including approved requisitions, vendor invoices or other documentation.
Condition: During our testing of internal controls, we noted that documentation for one of the forty
transactions selected was incomplete. The transaction was a preventative maintenance reimbursement and
the accounting system reports to support parts and towing expenses could not be located.
Cause: The Rhode Island Public Transit Authority did not follow established internal control policies and
procedures relating to documentation of charges to federal programs.
Effect: The Rhode Island Public Transit Authority has incomplete documentation on file for this
transaction.
Questioned Costs: None
Valid Statistical Sampling: Not Applicable
RECOMMENDATION
2021-055
We recommend that the Rhode Island Public Transit Authority ensure proper
documentation is prepared and maintained for all federal award program expenses
in accordance with the cost principles.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-75
Finding 2021-056
(significant deficiency – new finding)
FEDERAL TRANSIT CLUSTER – 20.500, 20.507, 20.525, 20.526
Federal Award Agency: U.S. Department of Transportation (DOT)
Federal Award Fiscal Year: 2021
Federal Award Number: RI 2021-003-00
Administered by: Rhode Island Public Transit Authority (RIPTA)
Compliance Requirement: Allowable Costs/Cost Principles
RHODE ISLAND PUBLIC TRANSIT AUTHORITY – ALLOWABLE COSTS/COST PRINCIPLES
Criteria: An entity is responsible for establishing and maintaining effective internal controls over
compliance with requirements of laws, regulations, contracts and grant agreements applicable to federal
award programs. In addition, cost principles require that charges to federal award programs be supported
by appropriate documentation including approved requisitions, vendor invoices or other documentation.
Condition: During our testing of internal controls, we noted that the documentation for one service
reimbursement to the Rhode Island Public Transit Authority’s operating fund contained errors resulting in
the incorrect calculation of the reimbursement amount. We also noted that the documentation maintained
in the grant file for the reimbursement was not in sufficient detail to support the reimbursement calculation.
Cause: The Rhode Island Public Transit Authority did not detect the errors in the calculation of the
reimbursement and did not follow established internal control policies and procedures relating to
documentation of charges to federal award programs.
Effect: The Rhode Island Public Transit Authority has inaccurate and incomplete documentation on file
for this transaction.
Questioned Costs: None
Valid Statistical Sampling: Not Applicable
RECOMMENDATION
2021-056
We recommend that Rhode Island Public Transit Authority ensure an individual
independent of the preparation process perform a detailed review of all service
reimbursements and related cost factor calculations and approve the
reimbursement request prior to it being submitted to the FTA. We also recommend
that Rhode Island Public Transit Authority ensure proper documentation is
prepared and maintained for all federal award program expenses in accordance
with the cost principles.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
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Finding 2021-057
(significant deficiency – new finding)
FEDERAL TRANSIT CLUSTER – 20.500, 20.507, 20.525, 20.526
Federal Award Agency: U.S. Department of Transportation (DOT)
Federal Award Fiscal Year: 2016, 2017
Federal Award Number: RI 2016-005-00, RI 2017-001-00
Administered by: Rhode Island Public Transit Authority (RIPTA)
Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles
RHODE ISLAND PUBLIC TRANSIT AUTHORITY – ACTIVITIES ALLOWED OR UNALLOWED,
ALLOWABLE COSTS/COST PRINCIPLES
Criteria: An entity is responsible for establishing and maintaining effective internal controls over
compliance with requirements of laws, regulations, contracts and grant agreements applicable to federal
award programs.
Condition: The Rhode Island Public Transit Authority has internal control policies and procedures in place
to ensure compliance with activities allowed or unallowed and allowable costs/cost principles. The Rhode
Island Public Transit Authority’s internal control procedure to ensure compliance with these requirements
is the approving initials of the Chief of Strategic Advancement or his designee and the approving initials of
the Executive Director of Budget and Finance or his designee on the capital supply or operating requisition.
During our testing of internal controls, we noted that although a requisition was properly approved for three
charges to federal award programs, the specific items were not included in the grant budget. The charges
were for three 29 foot buses, but the grant budgets only included an expense line for 40 foot buses.
Cause: The Rhode Island Public Transit Authority did not follow established internal control policies and
procedures for requisition approval.
Effect: The Rhode Island Public Transit Authority charged items to grants that were not approved in the
budget.
Questioned Costs: RI 2016-005-00 - $741,791; RI 2017-001-00 - $475,676
Valid Statistical Sampling: Not Applicable
RECOMMENDATION
2021-057
We recommend that more care be taken when reviewing and approving
requisitions to ensure only charges included in the grant budget are approved or
that approval from FTA be obtained to amend the grant agreement to include any
changes in planned spending.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-77
Finding 2021-058
(material weakness – repeat finding – 2020-033)
CORONAVIRUS RELIEF FUND – 21.019
Federal Award Agency: U.S. Department of the Treasury (TREAS)
Federal Award Fiscal Year: 2020
Federal Award Numbers: SLT0005 and SLT0227
Administered by: Department of Administration (DOA) – Pandemic Recovery Office
Compliance Requirement: Activities Allowed or Unallowed
CONTROLS OVER CENTRALIZED APPROVAL OF EXPENDITURES TO THE CORONAVIRUS
RELIEF FUND
Background: The State created the Pandemic Recovery
Office (PRO) to oversee the distribution of Coronavirus Relief
Funds and provide guidance to State agencies and departments
regarding allowable uses of the CRF funding. The PRO
implemented a centralized review and pre-approval process
for projects and activities funded by the CRF and other CARES Act funding. This process had three
primary phases: (1) review of the initial project design; (2) determination of compliance as an allowable
activity as per the federal guidance issued; and (3) governance. Personnel within the Department of
Administration’s Grants Management Office, PRO, Office of Internal Audit and the Office of Management
and Budget were utilized for the various phases. The projects and activities proposed were captured in a
centralized database that also maintained certain required documentation, such as the departmental proposal
descriptions and estimated budgets.
Once projects were approved through the centralized process, departmental CFOs were responsible for
ensuring that expenditures complied with federal guidance.
Criteria: Management is responsible for designing and maintaining internal controls over compliance with
federal requirements for activities allowed or unallowed. Controls should be sufficient to ensure that all
uses of federal funding meet the applicable allowability criteria.
Condition: The State addressed the need to centralize a CRF review and approval process through the
PRO. However, the project database utilized was designed to facilitate approval at a preliminary proposal
phase, but not document either the preliminary project approval or final approval of amounts ultimately
charged to the CRF. Further, a significant portion of the expenditures ultimately charged to CRF funding
were not subject to this proposal phase review and pre-approval process. Most of these expenditures were
not project-based but were for categorically allowable public health and public safety payroll expenditures.
State departments and agencies were responsible for making the allowability determinations based on
guidance issued by the Pandemic Recovery and State Budget Offices.
Departments and agencies were provided guidance which were effective in summarizing the federal
requirements and providing practical guidelines. Departments and agencies were largely responsible for
correctly applying the policies without subsequent centralized review for compliance.
Cause: The PRO centralized process did not extend to final approval of amounts charged to and reimbursed
from the CRF. The determination of allowable CRF grant expenditures was further complicated by
continual updates to federal guidance regarding permitted uses.
Effect: Expenditures could be charged to and reimbursed from the CRF that do not meet the criteria for
allowable activities and expenditures.
Questioned Costs: None
Controls
over
final
centralized
approval of expenditures funded by the
Coronavirus Relief Fund (CRF) should
be improved.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
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Valid Statistical Sampling: Yes
RECOMMENDATION
2021-058
Ensure that all CRF expenditures and activities charged by the departments and
agencies are consistent with the PRO centralized project and program approval
process.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-059
(other noncompliance - questioned cost only – new finding)
CORONAVIRUS RELIEF FUND – 21.019
Federal Award Agency: U.S. Department of the Treasury (TREAS)
Federal Award Fiscal Year: 2020
Federal Award Numbers: SLT0005 and SLT0227
Administered by: Department of Administration (DOA), Executive Office of Health and Human Services
(EOHHS)
Compliance Requirement: Activities Allowed or Unallowed
ACTIVITIES ALLOWED OR UNALLOWED
Criteria: U.S. Treasury guidance and federal regulations
define eligible costs under the Coronavirus Relief Fund
(CRF). The Fund is authorized by the CARES Act, Pub. L.
No. 116-136, Division A, Title V (2020) (codified as 42 USC
801 et seq.), as amended by the Consolidated Appropriations
Act, 2021, Pub. L. No.116-260, Division N, Title X, Section 1001. Permitted uses are further outlined in
Federal Register notice 86 FR 4182 (Jan. 15, 2021)
Condition: Legal case tracking software costs totaling $508,000 was charged to CRF and are questioned.
The project to implement this software began prior to the pandemic and, while the software is needed for
operational reasons, we believe the need for the software is not specifically COVID related.
Cause: The federal guidelines and regulations defining allowable activities under the CRF program
ultimately must be applied to a variety of types of expenditures and therefore involve interpretation.
Effect: Expenditures charged to the Coronavirus Relief Fund (at June 30, 2021) are overstated.
Questioned Costs: $508,000
Valid Statistical Sampling: Not Applicable
RECOMMENDATION
2021-059
Restore the questioned costs to the balance of CRF fund pending disbursement or
reimburse the federal government.
Auditee views: The auditee disagrees with this finding – see Corrective Action Plan in Section E.
Auditor response: Final determination regarding resolution of questioned costs rests with the
federal grantor.
Questioned costs were identified for
certain expenditures reimbursed from
the Coronavirus Relief Fund program.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-79
Finding 2021-060
(material weakness – new finding)
CORONAVIRUS RELIEF FUND – 21.019
Federal Award Agency: U.S. Department of the Treasury (TREAS)
Federal Award Fiscal Year: 2020
Federal Award Numbers: SLT0005 and SLT0227
Administered by: Various Departments and Agencies
Compliance Requirement: Subrecipient Monitoring
SUBRECIPIENT MONITORING
Background: During fiscal 2021, the State passed-through
approximately $220 million of CRF funds to subrecipients –
primarily local governments and non-for-profit entities.
Criteria: Management is responsible for monitoring
subrecipients
to
ensure
compliance
with
program
requirements. Controls should be sufficient to ensure that all uses of federal funding by subrecipients meet
the applicable allowability criteria. Single audit reports available for subrecipient entities should be
obtained and reviewed timely – when required, management decisions on applicable findings must be
issued within 180 days.
Condition: A significant amount of CRF pass-through awards were made to subrecipients during fiscal
2021. Some included provisions to support the award by providing documentation of qualifying public
safety expenditures made by the subrecipient. Other awards were more general to provide specific COVID
pandemic mitigation type services. In some instances, sub-awards were made with requirements to collect
performance or other measurement data subsequent to the award. In these instances, there was inconsistent
collection and centralization of this data as required by the contract between the State and these entities.
The State did not implement a comprehensive subrecipient monitoring effort for CRF amounts passed-
through to subrecipients. There were efforts performed by the Office of Internal Audit to assess compliance
with the subaward provisions which were primarily directed to the Hospital Assistance Program and the
Workforce Stabilization grants. Other sub-awards were administered by various departments and agencies
without a consistent or centralized approach or expectation of subrecipient monitoring. There was no
centralized effort to obtain or review single audit reports for local governments or non-profit entities
receiving CRF pass-through amounts. For example, the hospitals which participated in the CRF funded
Hospital Assistance Program did have single audits performed which appropriately identified the CRF
subaward from the State and identified the CRF program as a major program tested for compliance. These
reports were not obtained or reviewed by the State.
Cause: The State did not implement a comprehensive subrecipient monitoring process for CRF funds
passed-through to subrecipients.
Effect: Amounts paid to subrecipients may be used for activities not allowed by the Coronavirus Relief
Fund guidelines and regulations
Questioned Costs: None
Valid Statistical Sampling: Yes
The State has not implemented
sufficient
overall
subrecipient
monitoring activities for Coronavirus
Relief Fund amounts passed-through to
subrecipients.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-80
RECOMMENDATION
2021-060
Obtain and review single audit reports for subrecipients receiving subawards of
CRF funds. Issue timely management decisions when required.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-061
(material weakness – new finding)
CORONAVIRUS RELIEF FUND – 21.019
Federal Award Agency: U.S. Department of the Treasury (TREAS)
Federal Award Fiscal Year: 2020
Federal Award Numbers: SLT0005 and SLT0227
Administered by: Department of Administration (DOA); Executive Office of Health and Human Services
(EOHHS)
EPIDEMIOLOGY AND LABORATORY CAPACITY FOR INFECTIOUS DISEASES (ELC) – 93.323
Federal Award Agency: U.S. Department of Health and Human Services (HHS)
Federal Award Fiscal Year: 2019-2024
Federal Award Number: NU50CK000519
Administered by: Rhode Island Department of Health (RIDOH)
DISASTER GRANTS – PUBLIC ASSISTANCE (PRESIDENTIALLY DECLARED DISASTERS) – 97.036
Federal Award Agency: U.S. Department of Homeland Security (DHS), Federal Emergency Management Agency
(FEMA)
Federal Award Fiscal Year: Not Applicable
Federal Award Number: Not Applicable
Administered by: Rhode Island Emergency Management Agency (RIEMA)
Compliance Requirement: Activities Allowed or Unallowed
CONTROLS OVER PANDEMIC-RELATED EXPENDITURES ALLOCABLE TO MULTIPLE
FEDERAL AWARDS
Background: The State received an unprecedented amount of
federal assistance to respond to the effects of the global
pandemic including $1.25 billion for the Coronavirus Relief
Fund (CRF) pursuant to the CARES Act. Assistance was also
received under the FEMA program and the Epidemiology and
Laboratory Capacity Program. Certain costs were
reimbursable under any of these programs and federal guidance was continually evolving which resulted in
changing direction as to costs to be applied to a specific federal award. As guidelines and circumstances
changed expenditures were often applied to one funding source and then adjusted subsequently to another
funding source.
Criteria: Expenditures may only be reimbursed from one federal award.
Condition: Due to continuing changing federal guidelines and the continually evolving State response to
the pandemic eligible program, costs were often charged to one funding source and then later moved to
another funding source. When activity is moved within the RIFANS accounting system, journal entries are
used to move the aggregate dollar activity; however, the original transaction (expenditure/disbursement)
remains in the account originally charged offset by a credit. This process complicates the identification of
the underlying expenditures reimbursed by the federal award and increases the risk that expenditures could
The State had insufficient controls to
ensure
expenditures
were
not
reimbursed from more than one award
under federal programs with similar
pandemic response related objectives.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-81
be reimbursed from more than one federal award. See financial statement finding 2021-013 - Reconciliation
of Coronavirus Relief Fund and Controls to Ensure Expenditures Were Not Reimbursed from Multiple
Federal Funding Sources
Controls were insufficient to ensure that costs were not reimbursed from more than one federal award. The
State’s process for recording accounting adjustments via aggregate dollar journal entries limits the
effectiveness of controls to prevent duplicate reimbursement from federal funding sources.
Reconciliations to adequately identify any potential duplicate reimbursement were incomplete during fiscal
2021 but continued after the close of the fiscal year. Numerous journal entries were subsequently processed
in fiscal 2022 to adjust CRF activity for expenditures claimed in fiscal 2021 and fiscal 2020 to other federal
funding sources (principally FEMA and ELC).
Cause: Due to the rapid response required during the pandemic, the existence of multiple federal funding
sources, and continually evolving federal guidance, costs were moved and adjusted in the accounting
system to various funding sources which increased the risk that a cost could be reimbursed from more than
one federal award.
Effect: Potential duplicate reimbursement of expenditures from more than one federal award.
Misstatement of CRF and other federal program reported expenditures could occur.
Questioned Costs: Not Determined
Valid Statistical Sampling: Not Applicable
RECOMMENDATION
2021-061
Ensure reconciliations and any required adjustments are complete to demonstrate
that eligible COVID program costs were not reimbursed from more than one
federal funding source.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-062
(material weakness – new finding)
EPIDEMIOLOGY AND LABORATORY CAPACITY FOR INFECTIOUS DISEASES (ELC) – 93.323
Federal Award Agency: U.S. Department of Health and Human Services (HHS)
Federal Award Fiscal Year: 2019-2024
Federal Award Number: NU50CK000519
Administered by: Rhode Island Department of Health (RIDOH)
Compliance Requirements: Activities Allowed and Unallowed; Allowable Costs/Cost Principles
TIME AND EFFORT REPORTING
Background: RIDOH has built robust, but complex, time
reporting worksheets for employees to allocate their time
spent on various activities during the week. Reconciliation of
the hours worked versus the hours charged to the State’s
payroll system and accounting system is performed on a
quarterly basis, and amounts recorded are adjusted
RIDOH
can
enhance
monitoring
controls over time and effort reporting
to ensure payroll cost allocations are
adequately supported by employee
timesheets.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-82
accordingly, to ensure charges in the accounting system are consistent with actual time spent on the various
activities.
Criteria: 45 CFR 75.430(i)(1) requires that “Charges to Federal awards for salaries and wages must be
based on records that accurately reflect the work performed.”
Condition: Amounts allocated to federal programs for personnel costs were not consistently supported by
timesheets. Official signed copies of employee timesheets are retained within the Department; however,
there is not a centralized repository for maintaining these records. The signed timesheets were kept by the
section supervisors within the various groups within the Department. Due to significant staff turnover
within the Department and the overall challenges of managing the State’s response to the pandemic, RIDOH
was unable to provide the signed timesheets for 12 of the 29 selected biweekly pay periods. RIDOH was,
however, able to provide the quarterly workbooks for all selected pay periods.
We noted several instances where employees had reported time spent on COVID response and had allocated
those hours to the Coronavirus Relief Fund (CRF) but were actually charged to ELC in the State’s payroll
system and accounting system. RIDOH indicated that CRF funds were no longer used for payroll charges
after the week ended January 2, 2021; however, employees continued to allocate their time to CRF on their
timesheets. Additionally, several employees allocated their time to a general emergency response activity
for COVID-19, but there was no corresponding account shown on the timesheet to determine the
appropriate funding source. RIDOH allocated these hours based on the employee's work stream (where in
the Department they work, and what activities), but this was undeterminable from the timesheet that should
be supportive of these charges. We also reviewed the quarterly reconciliations and determined that the
adjustments made, and the resulting payroll charges in the accounting system, appear to accurately represent
the actual time spent on various activities under Federal awards.
Cause: The challenges in responding to the COVID-19 pandemic dramatically increased the amount of
cost and payroll allocations to the various COVID related federal programs. The State’s lack of an
integrated time and effort reporting system necessitates that these payroll allocations be largely processed
offline through complex Excel spreadsheets which support journal entries. The increased volume and
complexity combined with the use of Excel resulted in weakened controls overs payroll allocations.
RIDOH, anticipating there would likely be adjustments to the various funding sources, instructed
employees to allocate their time to the appropriate work activity on their timesheets rather than a specific
funding source.
Effect: Personnel costs reimbursed from Federal awards could be unallowable due to insufficient support
and documentation.
Questioned Costs: None
Valid Statistical Sampling: Yes
RECOMMENDATIONS
2021-062a
Establish a central location within RIDOH to maintain official signed timesheets
to support payroll charges against Federal awards.
2021-062b
Enhance monitoring controls over the weekly reporting of time and effort to ensure
that hours allocated on the timesheet were representative of the work performed.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-83
Finding 2021-063
(significant deficiency – new finding)
EPIDEMIOLOGY AND LABORATORY CAPACITY FOR INFECTIOUS DISEASES (ELC) – 93.323
Federal Award Agency: U.S. Department of Health and Human Services (HHS)
Federal Award Fiscal Year: 2019-2024
Federal Award Number: NU50CK000519
Administered by: Rhode Island Department of Health (RIDOH)
Compliance Requirement: Subrecipient Monitoring
SUBRECIPIENT MONITORING - AUDIT REPORTS
Criteria: 45 CFR 75.352(d) Requirements for pass-through
entities, requires that all pass-through entities must “Monitor
the activities of the subrecipient as necessary to ensure that the
subaward is used for authorized purposes, in compliance with
Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance
goals are achieved. Pass-through entity monitoring must include:
(1) Reviewing financial and performance reports.
(2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies
pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through
audits, on-site reviews, and other means.
(3) Issuing a management decision for audit findings pertaining to the Federal award provided to the
subrecipient from the pass-through entity as required by §75.521.”
Condition: The Executive Office of Health and Human Services previously evaluated subrecipient audit
reports for the departments within the secretariat, including RIDOH. However, this process was not
performed during fiscal 2021. Additionally, RIDOH did not conduct a separate review of subrecipient audit
reports.
Cause: The COVID-19 public health emergency, combined with staff turnover, significantly impacted
monitoring activities that are typically performed under more normal circumstances, as staff focused on
responding to the effects of the public health emergency.
Effect: Subrecipients may not comply with federal requirements when expending pass-through awards.
Questioned Costs: None
Valid Statistical Sampling: Not Applicable
RECOMMENDATION
2021-063
Ensure all subrecipients are identified to allow for timely collection and review of
subrecipient single audit reports.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
RIDOH can enhance its monitoring of
subrecipients to ensure compliance
with federal program requirements.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-84
Finding 2021-064
(material weakness – repeat finding – 2020-041)
TEMPORARY ASSISTANCE FOR NEEDY FAMILIES – 93.558
Federal Award Agency: Department of Health and Human Services (HHS), Administration for Children and
Families
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: G2002RITANF and G2102RITANF
Administered by: Department of Human Services (DHS)
Compliance Requirement: Eligibility
TANF ELIGIBILITY – RIBRIDGES
Background: RIBridges is the State’s federally approved
computer system used to manage multiple health care and
human service programs. It was designed to allow for
integrated eligibility across programs, enhanced client
accessibility, and provide for periodic validation of client
attested data through multiple electronic interfaces. RIBridges
system operation has been problematic since implementation and efforts to address eligibility processing
challenges are ongoing. Enhanced federal funding for new eligibility systems was approved to provide more
efficient, economical, and effective administration of these human service programs.
Criteria: Federal regulation 45 CFR 260.20 requires that a family be needy in order to be eligible for TANF
Cluster assistance and job preparation services. Federal regulation 45 CFR 205.60(a) requires (the state
agency) “to maintain records to support eligibility, including facts to support the client’s need for assistance.
The State’s policies and procedures require that documentation used to verify eligibility be maintained in
the case file.”
Condition: Documentation in RIBridges was insufficient to support eligibility for many of the cases tested.
RIBridges lacks sufficient historical case data to evaluate past eligibility determinations, especially for
client attested data and external resource panel results which only provide current data reported in the
system.
Sample 1 – Eligible cases (households) within RIBridges during fiscal 2021
Population – 29,962 cases, $12,827,942 in benefits paid
Sample
Size
Number of
Exceptions
Exception type
Error
Rate
Known
Questioned
Costs*
59
17*
Exceptions related to nonconformance with
established eligibility process and/or control
procedures, including documentation deficiencies -
no eligibility impact or undetermined eligibility
impact
29%
None
Exceptions – nonconformance with established eligibility process and/or control procedures (control exception
without impact on eligibility):
•
Identification documents for all household members were not scanned to the system (17 instances).
Two cases contained individuals whose social security numbers were not verified by the SSA
interface.
* Represents the number of cases containing errors; a case may have more than one error.
The State can improve compliance
with TANF eligibility requirements
specifically by ensuring consistent
documentation
of
eligibility
components within RIBridges.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-85
Cause: Most case errors noted resulted from worker noncompliance with documentation requirements for
elements of eligibility determination. Additional focus and training are required to ensure consistent
documentation of eligibility components within RIBridges.
Effect: Ineffective controls over the eligibility process for TANF increase the potential for payment of
benefits to ineligible families and/or payment of incorrect benefit amounts.
Questioned Costs: None
Valid Statistical Sampling: Yes
RECOMMENDATION
2021-064
Continue efforts to ensure that all required eligibility compliance requirements are
documented within RIBridges.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-065
(significant deficiency – repeat finding – 2020-049)
CCDF CLUSTER – 93.575, 93.596
Federal Award Agency: Department of Health and Human Services (HHS)
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: G2001RICCDF and G2101RICCDF
Administered by: Department of Human Services (DHS)
Compliance Requirement: Eligibility
CONTROLS OVER ELIGIBILITY, INCOME VALIDATION, AND DETERMINATION OF PARENT
COST-SHARING AMOUNTS
Background: RIBridges is the State’s federally approved
computer system used to manage multiple health care and
human service programs. It was designed to allow for
integrated eligibility across programs, enhanced client
accessibility, and provide for periodic validation of client
attested data through multiple electronic interfaces. RIBridges
system operation has been problematic since implementation and efforts to address eligibility processing
challenges are ongoing. RIBridges determines eligibility for a childcare subsidy and the amount of parental
co-pay based on family income. Payments to licensed childcare providers are made through RIBridges.
Criteria: Lead agencies must have in place procedures for documenting and verifying eligibility in
accordance with federal requirements, as well as the specific eligibility requirements selected by each State
in its approved plan. A lead agency is the designated State, territorial or tribal entity to which the CCDF
grant is awarded and that is accountable for administering the CCDF program.
Lead agencies shall establish a sliding fee scale, based on family size, income, and other appropriate factors,
that provides for cost sharing by families that receive CCDF childcare services (45 CFR section 98.42).
Lead agencies may exempt families below the poverty line from making copayments and shall establish a
payment rate schedule for childcare providers caring for subsidized children (45 CFR section 98.43).
RIBridges controls over eligibility
determinations, income validation and
calculation of required parent cost-
sharing amounts require strengthening
for the CCDF Cluster programs.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-86
Condition: RIBridges lacked effective income validation controls to determine program eligibility and
potential family co-share amounts.
Sample 1 – Eligible cases (households) within RIBridges during fiscal 2021
Population – 293,949** payments to childcare providers, $57,471,148 in benefits paid
Sample Size
Number of
Exceptions
Exception type
Error
Rate
Known
Questioned
Costs*
59
5
Exceptions related to nonconformance with
established eligibility process and/or control
procedures, including documentation deficiencies
- no eligibility impact or undetermined eligibility
impact.
8.5%
n/a
8
Exceptions not impacting eligibility but resulting
in incorrect determination of family
income/family co-share.
13.6%
$0***
Questioned costs, when applicable and determined, represent the amounts paid to providers for ineligible
cases or cases that should have been terminated, and/or amounts paid to providers that would have been
paid by parents if co-shares had been properly calculated.
** The population represents the number of payments made to childcare providers from all sources. Benefits
paid is only federal Child Care funds.
***Family copays were waived during fiscal 2021. While the family income/co-share may have been
calculated incorrectly DHS committed to paying the family portion for the duration of FY21 and as result no
questioned costs were identified as the providers were appropriately paid the correct amounts.
•
Eight instances where the family income/co-share amount was incorrectly determined because
payroll information was not entered or incorrectly entered.
•
Documentation deficiencies consisted of five instances where the case lacked residency verification
and/or income information.
Cause: Lack of controls over input of payroll information, resulting in improper co-share amounts being
determined.
Additionally, case errors noted resulted from worker noncompliance with documentation requirements for
elements of eligibility determination. Additional focus and training are required to ensure consistent
documentation of eligibility components within RIBridges.
Effect: Parental income/co-shares were incorrectly determined for some cases. Controls over the
administration of the program were weakened.
Questioned Costs: None
Valid Statistical Sampling: Yes
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-87
RECOMMENDATION
2021-065
Improve controls over CCDF eligibility determinations by ensuring appropriate
consideration of parent earnings information for determination of parent co-shares
and consistent inclusion of eligibility documentation in the electronic case record.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-066
(significant deficiency – new finding)
CCDF CLUSTER – 93.575, 93.596
Federal Award Agency: Department of Health and Human Services (HHS)
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: G2001RICCDF and G2101RICCDF
Administered by: Department of Human Services (DHS)
Compliance Requirement: Reporting
REPORTING OF STATE MATCHING EXPENDITURES
Criteria: ACF-696, Child Care and Development Fund
Financial Report (OMB No 0970- 0510) is due quarterly from
states and territories. These reports are in lieu of the SF-425,
Federal Financial Report (financial status). Each fiscal year’s
expenditure report must be separate; therefore, multiple
reports may be required if awards from more than one fiscal
year are expended in each quarter.
Condition: The ACF-696 report for the 2021 grant year contained an error. The amount of State funds
expended towards its matching requirement was inconsistent with data included in the RIFANS accounting
system. The variance was $637,384. An adjustment made in the prior year inadvertently affected the 2021
report as well. The matching expenditures were compliant with federal requirements but were misreported
on the ACF-696 report.
Cause: The amount reported on federal reports is not reconciled to the amount recorded in the State
RIFANS accounting system.
Effect: State matching expenditures included on the ACF-696 report were inaccurate.
Questioned Costs: None
Valid Statistical Sampling: Not Applicable
RECOMMENDATION
2021-066
Improve controls over federal reporting by completing a reconciliation between
reports and the state accounting system to detect reporting errors.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Matching expenditures reported on the
CCDF ACF-696 report for the 2021
grant period were inconsistent with
data
included
in
the
RIFANS
accounting system.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-88
Finding 2021-067
(material weakness – new finding)
CCDF CLUSTER – 93.575, 93.596
Federal Award Agency: Department of Health and Human Services (HHS)
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: G2001RICCDF and G2101RICCDF
Administered by: Department of Human Services (DHS)
Compliance Requirement: Special Tests and Provisions – Health and Safety Requirements
CONTROLS OVER MONITORING OF BACKGROUND CHECK REQUIREMENTS FOR CHILD
CARE CENTERS
Background: Upon initial application for licensure both
family home providers and childcare centers are required to
provide comprehensive background checks consisting of in-
state criminal history, in-state sex offender registry, FBI
fingerprint, and National Crime Information Center’s National
Sex Offender Registry (NCIC NSOR) checks for all employees.
Criteria: States must have requirements, policies, and procedures in place to conduct comprehensive
criminal background checks and monitoring policies and procedures to ensure compliance from all
childcare providers and facilities; 45 CFR section 98.16(o) and 45 CFR section 98.43(a)(1)(i).
Condition: In August 2020, the Office of Inspector General (OIG) issued a report on their analysis of
Rhode Island’s monitoring of childcare provider compliance with applicable criminal background check
requirements. The OIG determined that Rhode Island’s monitoring did not ensure provider compliance.
Specifically, the OIG made four recommendations. The Department has resolved the instances of
noncompliance with background check requirements for individuals found during the OIG audit and has
also hired an additional inspector for the licensing unit.
The Department has not fully implemented the following recommendations:
•
Determine whether it is feasible to develop a centralized process to monitor both family homes and
childcare centers; and
•
Require the State licensing agency to increase the number of current employees it reviews at all
childcare centers to ensure childcare provider compliance with criminal background check
requirements.
Cause: The Department of Human Services (DHS) has different monitoring processes for family home
providers and childcare centers. DHS maintains all background check documentation in the providers
licensing file for family home providers, however it requires licensed childcare centers to be responsible
for maintaining all relevant background check documentation in employee personnel files at their facilities.
DHS reviews a small sample of personnel files during their unannounced monitoring visits (at least once a
year) to determine provider compliance. If noncompliance is noted, then a more comprehensive review is
conducted to ensure the provider is brought back into compliance.
DHS existing licensing system does not offer the functionality to review an active/current registry of
provider employees to cross reference to completed and submitted background check documentation.
Effect: Potential non-compliance with requirements relating to health and safety.
Questioned Costs: None
Controls over the monitoring of
background check requirements for
licensed childcare centers requires
strengthening.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-89
Valid Statistical Sampling: Not Applicable
RECOMMENDATIONS
2021-067a
Modify policies to create uniform procedures for both family home providers and
childcare centers. Implement a system that allows DHS to facilitate an active and
continuous monitoring process of childcare provider compliance with relevant
background check requirements.
2021-067b
Increase the number of current employees reviewed during onsite inspections at
all childcare centers to ensure childcare provider compliance with criminal
background checks.
Auditee views: The auditee disagrees with this finding – see Corrective Action Plan in Section E.
Auditor response: While the auditee disagrees with the finding, the Department’s corrective
action plan describes that development of a centralized registry is possible and has begun the
process of creating a workforce registry.
Finding 2021-068
(material noncompliance / material weakness – repeat finding – 2020-053)
CHILDREN’S HEALTH INSURANCE PROGRAM – 93.767
Federal Award Agency: Department of Health and Human Services (HHS)
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: 2005RI5021 and 2105RI5021
Administered by: Executive Office of Health and Human Services (EOHHS)
Compliance Requirement: Eligibility
CONTROLS OVER ELIGIBILITY DETERMINATIONS WITHIN THE CHILDREN’S HEALTH
INSURANCE PROGRAM (CHIP) – MATERIAL NONCOMPLIANCE
Background: RIBridges, the State’s computer system used to
manage multiple federally funded human service programs,
determines eligibility for CHIP. During fiscal 2021, in
response to the COVID-19 public health emergency (PHE),
federal guidance and temporary changes to the State Plan
limited the State’s data verification procedures when
evaluating eligibility of new program applicants and
prohibited modifying recipient eligibility of existing recipients during the PHE. This finding focuses on
the results from testing the more limited controls in place during fiscal 2021.
Criteria: Eligibility requirements for CHIP are detailed in the State Plan. Recipient eligibility requirements
generally include children under age 19 with household income less than 261% of the federal poverty limit
(FPL). Coverage of pregnant women and unborn children of non-citizens is also available under CHIP for
individuals with household income less than 253% of FPL. Enhanced funding under CHIP is available only
for children without existing health coverage. Children with existing health coverage would be eligible for
Medical Assistance.
The State did not materially comply
with CHIP eligibility requirements
during fiscal 2021. RIBridges is not
fully evaluating all eligibility criteria to
ensure
compliance
with
federal
regulations.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-90
Condition: Controls over CHIP eligibility determinations, except for the limitations described above, were
largely unchanged during fiscal 2021. While most CHIP eligibility was identified through RIBridges,
EOHHS identified additional CHIP claiming (approximately $3.3 million) through querying the MMIS for
individuals meeting CHIP characteristics but not coded as CHIP eligible by RIBridges. Utilizing two
separate claiming mechanisms continues to weaken controls over CHIP eligibility.
For fiscal 2021, we tested a sample of 40 capitation payments (total population of 1.5 million payments
totaling $87.7 million, federal share - $65.8 million) claimed to CHIP for limited eligibility requirements
deemed applicable during the PHE. Operational and control deficiencies during fiscal 2021 resulted in
material noncompliance with eligibility requirements for CHIP. For all exceptions, the State did not
consider the existence of third-party health coverage when determining eligibility for CHIP. We found that
four individuals out of the 40 tested were covered by existing health coverage at the time of the claim for a
10% error rate. Capitation paid in relation to these individuals totaled $8,681 during fiscal 2021 (federal
questioned costs = $6,511). These costs would be eligible for claiming to Medicaid.
RIBridges is not currently evaluating existing health coverage in conjunction with determining CHIP
eligibility, a practice inconsistent with the CHIP State Plan. The State’s most effective data source for
identifying third-party insurance (automated TPL data match with private insurers) is utilized in the MMIS
but is not interfacing with RIBridges at this time.
Cause: Noncompliance with CHIP eligibility requirements is caused by CHIP specific programming
deficiencies within RIBridges, most notably, the lack of functionality to consider the availability of existing
health coverage at the time of application.
Effect: Material noncompliance with federal requirements relating to recipient eligibility for CHIP.
Questioned Costs: $6,511
Valid Statistical Sampling: Yes
RECOMMENDATIONS
2021-068a
Address and correct the RIBridges system deficiencies which weaken controls and
result in material noncompliance with federal regulations regarding CHIP
eligibility.
2021-068b
Identify ineligible CHIP costs and return to the federal grantor.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
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Finding 2021-069
(material noncompliance / material weakness – new finding)
CHILDREN’S HEALTH INSURANCE PROGRAM – 93.767
Federal Award Agency: Department of Health and Human Services (HHS)
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: 2005RI5021 and 2105RI5021
Administered by: Executive Office of Health and Human Services (EOHHS)
MEDICAID CLUSTER – 93.775, 93.777, 93.778
Federal Award Agency: Department of Health and Human Services (HHS)
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: 2005RI5MAP and 2105RI5MAP
Administered by: Executive Office of Health and Human Services (EOHHS)
Compliance Requirement: Special Tests and Provisions – Managed Care Financial Audit
MANAGED CARE FINANCIAL AUDIT
Criteria: Federal regulations require States to comply with
the following contract and program integrity safeguards when
administering Medicaid managed care programs:
•
42 CFR 438.3(m) Audited financial reports. “The
contract must require MCOs, PIHPs, and PAHPs to
submit audited financial reports specific to the
Medicaid contract on an annual basis. The audit must
be conducted in accordance with generally accepted accounting principles and generally accepted
auditing standards.”
•
42 CFR 438.602(e) Periodic audits. “The State must periodically, but no less frequently than once
every 3 years, conduct, or contract for the conduct of, an independent audit of the accuracy,
truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of,
each MCO, PIHP or PAHP.”
Condition: Federal program integrity requirements including required audits of MCO financial and
encounter data have not been implemented by the State. These requirements are effective for MCO contract
periods on or after July 1, 2017 (Fiscal 2018). While the State has included language for audit requirements
within recent MCO contracts, the requirements have not been complied with and policies and procedures
specifically outlining the scope of the audits to be performed has not been documented.
Cause: Failure to implement federal requirements for stated effective date.
Effect: Material noncompliance with federal regulations relating to managed care financial audit
requirements.
Questioned Costs: None
Valid Statistical Sampling: Not Applicable
The
State
is
not
currently
in
compliance with federal regulations
requiring States to implement certain
program integrity safeguards when
administering Medicaid managed care
programs.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
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RECOMMENDATIONS
2021-069a
Improve required contract language for required MCO financial audits to ensure
compliance with federal requirements.
2021-069b
Implement procedures to comply with federal regulations for MCO financial
audits.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-070
(material noncompliance / material weakness – repeat finding – 2020-063)
CHILDREN’S HEALTH INSURANCE PROGRAM – 93.767
Federal Award Agency: Department of Health and Human Services (HHS)
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: 2005RI5021 and 2105RI5021
Administered by: Executive Office of Health and Human Services (EOHHS)
MEDICAID CLUSTER – 93.775, 93.777, 93.778
Federal Award Agency: Department of Health and Human Services (HHS)
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: 2005RI5MAP and 2105RI5MAP
Administered by: Executive Office of Health and Human Services (EOHHS)
Compliance Requirement: Special Tests and Provisions – Provider Eligibility
MEDICAID MANAGED CARE ORGANIZATIONS – PROVIDER ELIGIBILITY
Criteria: 42 CFR Section 438.602, titled Managed Care,
Additional
Program
Integrity
Safeguards,
State
Responsibilities requires the State to comply with the
following sections relating to provider eligibility:
“(b) Screening and enrollment and revalidation providers.
(1) The State must screen and enroll, and periodically
revalidate, all network providers of MCOs, PIHPs, and
PAHPs, in accordance with the requirements of part
455, subparts B and E of this chapter. This requirement
extends to PCCMs and PCCM entities to the extent the
primary care case manager is not otherwise enrolled
with the State to provide services to FFS beneficiaries.
This provision does not require the network provider to render services to FFS beneficiaries.
(2) MCOs, PIHPs, and PAHPs may execute network provider agreements pending the outcome of
the process in paragraph (b)(1) of this section for up to 120 days but must terminate a network
provider immediately upon notification from the State that the network provider cannot be enrolled,
or the expiration of one 120-day period without enrollment of the provider, and notify affected
enrollees.
(c) Ownership and control information. The State must review the ownership and control disclosures
submitted by the MCO, PIHP, PAHP, PCCM or PCCM entity, and any subcontractors as required in
§438.608(c).
The
State
is
not
currently
in
compliance with federal regulations for
the
screening,
enrollment,
and
revalidation of providers used in
managed care organization (MCO)
networks. Although many of these
providers are also enrolled as Medical
Assistance
providers,
the
new
regulations mandate that States screen,
enroll, and periodically revalidate all
managed care network providers.
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(d) Federal database checks. Consistent with the requirements at §455.436 of this chapter, the State
must confirm the identity and determine the exclusion status of the MCO, PIHP, PAHP, PCCM or
PCCM entity, any subcontractor, as well as any person with an ownership or control interest, or who is
an agent or managing employee of the MCO, PIHP, PAHP, PCCM or PCCM entity through routine
checks of Federal databases. This includes the Social Security Administration's Death Master File, the
National Plan and Provider Enumeration System (NPPES), the List of Excluded Individuals/Entities
(LEIE), the System for Award Management (SAM), and any other databases as the State or Secretary
may prescribe. These databases must be consulted upon contracting and no less frequently than monthly
thereafter. If the State finds a party that is excluded, it must promptly notify the MCO, PIHP, PAHP,
PCCM, or PCCM entity and take action consistent with §438.610(c).”
Condition: The Medicaid and CHIP Managed Care Final Rule implemented new screening, enrollment,
and revalidation requirements for providers of managed care organizations operating within these federal
programs. These requirements became effective for fiscal 2019, however, EOHHS had not yet complied
with these new regulations as of fiscal 2021.
Cause: Failure to implement federal requirements by the required effective date. EOHHS has implemented
new procedures and begun enrollment in fiscal 2022.
Effect: Potential federal noncompliance with federal regulations relating to eligibility of providers in
managed care networks.
Questioned Costs: None
Valid Statistical Sampling: Not Applicable
RECOMMENDATION
2021-070
Expedite implementation of procedures to comply with federal regulations for the
screening, enrollment and revalidation of providers used in managed care
organization networks.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
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Finding 2021-071
(material weakness – repeat finding – 2020-062)
CHILDREN’S HEALTH INSURANCE PROGRAM – 93.767
Federal Award Agency: Department of Health and Human Services (HHS)
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: 2005RI5021 and 2105RI5021
Administered by: Executive Office of Health and Human Services (EOHHS)
MEDICAID CLUSTER – 93.775, 93.777, 93.778
Federal Award Agency: Department of Health and Human Services (HHS)
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: 2005RI5MAP and 2105RI5MAP
Administered by: Executive Office of Health and Human Services (EOHHS)
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles
CONTROLS
OVER
MANAGED
CARE
CAPITATION
PAYMENTS
AND
CONTRACT
SETTLEMENTS
See related Financial Statement Findings 2021-003 and 2021-004.
Background: Medicaid expenditures for individuals enrolled
in managed care during fiscal 2021 approximated $1.8 billion
(monthly capitation payments paid to participating MCOs).
This comprised managed care coverage for 299,378 Medicaid
eligible individuals - approximately 88% of total Medicaid
enrollees at June 30, 2021. These capitation payments related
to the following managed care programs within the State’s
Medicaid program:
Program Name
Enrollment
(June 2021)
Expenditures
(Capitation in
millions)
Rite Care (Core, CSHCN, Foster Care)
175,605
$744
Rhody Health Partners (certain adults with disabilities)
14,731
$314
Integrated Care Initiatives (Medicare/ Medicaid Dual Eligibles)
12,754
$121
Medicaid Expansion (low-income adults under 138% FPL)
96,288
$652
Total
299,378
$1,831
Each of these programs has different population eligibility characteristics, capitation rate structures, and
covered in-plan services. These programs, however, operate under similar contract structures for purposes
of financial settlement with Medicaid.
Recognizing the significance of managed care services within the Medicaid program and the need to
strengthen fiscal integrity and accountability controls over these services, the Center for Medicare &
Medicaid Services overhauled managed care regulations in fiscal 2020. The revised regulations are
designed to strengthen fiscal transparency and integrity of managed care services provided in the Medicaid
and CHIP programs.
Since managed care services provided within the RI Medicaid and CHIP programs involve complex rate
setting and contract settlement provisions, the reliability and completeness of the mandated data provided
by managed care organizations to the State is vital to fiscal integrity and accountability controls.
Capitation
payments
to
MCOs
represent
approximately
64%
of
Medicaid
benefit
expenditures.
EOHHS needs to improve controls
over managed care financial activity to
ensure compliance with allowable cost
principles
for
related
program
expenditures.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
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Criteria: As allowed under federal regulations, the State administers its managed care programs through
contracts with MCOs which share the risk regarding financial gain or loss derived from the final contract
settlements for the fiscal year. Contract settlements represent significant financial transactions within the
Medicaid and CHIP programs and are impacted by the control deficiencies described in Finding 2021-003
and 2021-004 relating to the State’s financial reporting and Finding 2021-069 relating to noncompliance
with the federal requirements for MCO audit provisions. These deficiencies also impact controls over
federal compliance with allowable cost principles in relation to managed care contract settlements.
Condition: The following findings document control deficiencies and noncompliance with federal
requirements which contribute to weakened controls over the allowability of managed care expenditures
within Medicaid and CHIP:
Finding 2021-003, Medicaid Program Complexity Affects Financial Reporting and Overall Program
Controls – Highlights the need for system improvements to allow better financial accountability for
managed care premiums and to enhance the processing of encounter data in support of the managed care
contract settlement process.
Finding 2021-004, System Payouts and Manual Disbursements by the Medicaid Fiscal Agent - The State
conducts most contract settlement activities with its managed care providers through system payout
transactions, thus control deficiencies relating to system payouts also weaken controls over compliance
relating to the allowability of the underlying Medicaid expenditures.
Finding 2021-069, Managed Care Financial Audit – CMS inclusion of managed care financial audit
requirements relating to managed care were designed to improve controls over financial activity and the
underlying data reported by managed care organizations which become the basis for contract settlements
with the Medicaid and CHIP programs. The State’s noncompliance with these federal requirements results
in weakened controls over the administration of managed care activity.
Addressing the above findings will improve (1) final contract settlements with the MCOs and (2) the
reliability of data utilized in developing prospective capitation rates.
We also assessed controls to ensure the timely termination of eligibility for deceased individuals to prevent
continued payment of managed care capitation after death. We found that the State had not ended eligibility
in the MMIS for 321 individuals within 90 days of the date of death. This control deficiency resulted in
managed care capitation totaling $941,583 (federal share - $680,491) paid for individuals who had been
deceased for more than 90 days. Of that group, 163 individuals remained Medicaid active with capitation
paid to the managed care organization for more than 180 days after death. While the State can recoup the
capitation once the individual’s death is recorded and eligibility is ended, the delay in termination for
deceased individuals further weakens overall controls relating to managed care contract settlements. The
State should improve controls to ensure that capitation payments are not continued for Medicaid recipients
after death.
Cause: Control deficiencies exist relating to final contract settlements with managed care organizations
(MCOs) and managed care capitation payments.
Effect: Potential for inaccurate reimbursements to MCOs for contract services provided to Medicaid
enrollees.
Questioned Costs: $680,491
Valid Statistical Sampling: Not Applicable
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-96
RECOMMENDATIONS
2021-071a
Improve controls over compliance requirements for the allowability of federal
expenditures by addressing related internal control deficiencies over financial
reporting and federal noncompliance that specifically impacts financial settlements
with managed care organizations.
2021-071b
Improve controls to ensure the timely termination of Medicaid eligibility for
deceased individuals to prevent continued payment of managed care capitation
after death.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-072
(significant deficiency – repeat finding – 2020-064)
CHILDREN’S HEALTH INSURANCE PROGRAM – 93.767
Federal Award Agency: Department of Health and Human Services (HHS)
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: 2005RI5021 and 2105RI5021
Administered by: Executive Office of Health and Human Services (EOHHS)
MEDICAID CLUSTER – 93.775, 93.777, 93.778
Federal Award Agency: Department of Health and Human Services (HHS)
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: 2005RI5MAP and 2105RI5MAP
Administered by: Executive Office of Health and Human Services (EOHHS)
Compliance Requirement: Reporting
FEDERAL REPORTING
Criteria: Federal regulations require that expenditures for
federal programs be accurately reported on Form CMS 64. The
State’s RIFANS accounting system is the official record of
federal program expenditures and therefore should be the basis
for federal reports. Forms CMS 64 and CMS 21 are required for the quarterly filing of benefit and
administrative expenditures for the Medicaid and CHIP programs. Additionally, the CMS 425 Report is
required quarterly to reflect the cumulative disbursement of program expenditures to authorized grant
awards (by federal fiscal year) for the respective programs.
Condition: Reviews of federal reports for fiscal 2021 noted the following reporting deficiencies:
•
Approximately $3.3 million in CHIP expenditures were claimed to Medicaid initially and
determined retroactively to be CHIP eligible and reclassified on federal reports between the two
federal programs. The untimely adjustment of expenditures between the Medicaid and CHIP
programs results in timing differences and reporting adjustments that complicate the reconciliation
of federal reporting to RIFANS for both programs.
•
Reconciling administrative expenditures to the State Accounting System was not performed
consistently by the State’s other health and human service (HHS) agencies charging administrative
expenditures to Medicaid. Various HHS agencies utilize six separate and distinct cost allocation
plans to allocate administrative expenditures to Medicaid.
Controls should be improved over the
quarterly reporting of expenditures for
the Medicaid and CHIP programs.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
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•
Nursing facility taxes and hospital licensing fees were reported inconsistently between cash and
accrual basis on a quarter-to-quarter basis. The CMS-64 Report information should be consistently
reported on a cash basis to prevent misstatement. In addition, EOHHS should consider whether
other healthcare related taxes meet the requirements for reporting on the CMS-64 Report to ensure
the completeness of reports filed.
Cause: Untimely adjustments of expenditures between the Medicaid and CHIP programs weaken controls
over federal reporting for both programs. Lack of complete reconciliation of Medicaid administrative
expenditures to the State Accounting System represents a weakness in internal control over federal
reporting. Procedures to ensure the consistent and complete reporting of healthcare-related taxes and fees
on the CMS-64 Report are lacking.
Effect: Increased risk of inaccurate federal reporting.
Questioned Costs: None
Valid Statistical Sampling: Not Applicable
RECOMMENDATIONS
2021-072a
Eliminate untimely adjustment of expenditures between Medicaid and CHIP by
addressing RIBridges programming deficiencies which prevent CHIP eligibility
from being completely determined and coded through the State’s integrated
eligibility system.
2021-072b
Require all HHS agencies to submit reconciliations of their quarterly
administrative claiming (as determined through approved cost allocation
methodologies) to reported expenditures in RIFANS on a quarterly basis.
2021-072c
Conduct an analysis of healthcare related fees and taxes levied by the State to
determine if other healthcare related taxes require reporting in the CMS-64 Report.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
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Finding 2021-073
(significant deficiency – repeat finding – 2020-055)
CHILDREN’S HEALTH INSURANCE PROGRAM – 93.767
Federal Award Agency: Department of Health and Human Services (HHS)
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: 2005RI5021 and 2105RI5021
Administered by: Executive Office of Health and Human Services (EOHHS)
MEDICAID CLUSTER – 93.775, 93.777, 93.778
Federal Award Agency: Department of Health and Human Services (HHS)
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: 2005RI5MAP and 2105RI5MAP
Administered by: Executive Office of Health and Human Services (EOHHS)
Compliance Requirement: Allowable Costs/Cost Principles
CONTROLS OVER THIRD-PARTY LIABILITY (TPL) IDENTIFICATION FOR INDIVIDUALS
COVERED UNDER MANAGED CARE
Background: The State utilizes a vendor in conjunction with
its MMIS operations to identify TPL coverage for Medicaid
(and CHIP) eligible individuals. For individuals enrolled in
managed care, the managed care organizations (MCOs) are
responsible for identifying TPL coverage. By contract, MCOs
must notify the State of identified TPL within 5 business days
of discovery. The State does not share identified TPL
information with the MCOs.
Criteria: 42 CFR section 433.138 requires that States (as
defined in their approved State Plan) must take reasonable
measures to determine the legal liability of the third parties who are liable to pay for services furnished
under the State plan. Federal regulations indicate the minimum required measures that the State must
include in their State Plan. Rhode Island’s State Plan TPL procedures are largely focused on TPL
identification processes for fee-for-service claiming within the Medicaid Program.
With most Medicaid beneficiaries enrolled in managed care, ensuring the completeness and effectiveness
of TPL identification by the MCOs is important to ensure compliance with federal regulations. Actual
claims paid by the MCOs become the basis for final contract settlements, therefore failure to identify other
responsible insurance (TPL) prevents timely cost avoidance during claims processing and increases overall
contract costs for the Medicaid program.
Condition: During fiscal 2021, we performed certain analytical procedures on MCO encounter data to
identify instances where Medicaid recipients (individuals with Medicaid eligibility for entire year) had
verified TPL coverage that was similar to their Medicaid managed care coverage to determine the extent to
which MCOs were paying for claims that possibly could have been cost avoided. We identified 10,239
Medicaid recipients covered under managed care that had verified TPL coverage applicable to service dates
of claims paid by the MCOs during fiscal 2021. Claims paid for these individuals totaled $31 million that
were paid on behalf of Medicaid recipients with verified third party health insurance coverage (policies
with coverage types akin to Medicaid MCO coverage). While the actual amount of questioned costs could
not be determined accurately without additional follow-up with the MCOs, the results continue to further
support our 2020 findings and the need for improved controls relating to TPL identification by the MCOs.
The State should improve controls to
ensure
that
its
managed
care
organizations (MCOs) are effectively
identifying TPL insurance coverage for
Medicaid recipients and cost avoiding
for claims covered by other insurance.
Medicaid should be the payor of last
resort when processing medical claims
for individual covered by other
insurance.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
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This analysis highlighted potential weaknesses in the uniform identification of TPL coverage for all
Medicaid beneficiaries. We identified the following procedures that should be considered by the State to
improve TPL identification and cost avoidance by the State’s MCOs:
a. The State should share identified TPL coverage with the MCOs upon enrollment and as an
individual’s TPL status changes.
b. The State should match MCO TPL data for Medicaid recipients periodically with the TPL data
maintained in the MMIS to identify differences in identified coverage.
c. The State can enhance oversight of the MCOs TPL identification procedures to ensure that the
MCOs are in compliance with contract provisions. MCO contract provisions can be strengthened
to specify the required frequency and data sources to be utilized by the MCOs for TPL
identification.
d. The State should match encounter data submitted by the MCOs against identified TPL coverage
and disallow claims from the contract settlement process when TPL coverage is responsible for the
claim.
e. EOHHS should explore implementing TPL identification functionality at the beginning of the
RIBridges eligibility determination process rather than after Medicaid eligibility has been
established within the MMIS.
Cause: Oversight of TPL identification and cost avoidance by managed care organizations and the sharing
of verified TPL data by the State is lacking to ensure that required cost avoidance is being performed by
managed care organizations in accordance with contract requirements and federal regulations.
Effect: Possible noncompliance with federal regulations requiring cost avoidance or recovery of costs when
third-party liability coverage is available. Overpayment of capitation and MCO contract settlement costs.
Questioned Costs: Unknown
Valid Statistical Sampling: Not applicable
RECOMMENDATIONS
2021-073a
Share and match identified TPL coverage with the MCOs upon enrollment and as
an individual’s TPL status changes. Periodic matching with MCO enrollment files
would ensure that TPL coverage is consistently being applied throughout the
Medicaid and CHIP programs.
2021-073b
Explore the other TPL process recommendations above to further improve controls
over TPL identification and cost avoidance.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
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Finding 2021-074
(significant deficiency – repeat finding – 2020-054)
MEDICAID CLUSTER – 93.775, 93.777, 93.778
Federal Award Agency: Department of Health and Human Services (HHS)
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: 2005RI5MAP and 2105RI5MAP
Administered by: Executive Office of Health and Human Services (EOHHS)
Compliance Requirement: Special Tests and Provisions – Inpatient Hospital and Long-Term Care
Facility Audits
CONTROLS OVER INPATIENT HOSPITAL AND LONG-TERM CARE FACILITY RATE SETTING
Background: Inpatient Hospital Reimbursement - EOHHS
reimburses hospitals using a Diagnosis Related Groups (DRG)
methodology. This methodology produces a fixed
reimbursement rate by applying multipliers to an approved
base rate. The multipliers applied depend upon diagnosis,
acuity, and other factors. The DRG payment methodology
serves to reimburse hospitals based on the underlying illness
rather than the length of the patient stay to promote efficient
and effective patient treatment.
The State Plan relating to the DRG reimbursement methodology includes a requirement for annual reviews
of the payment method. This requirement indicates that the “scope of the annual review will include at
least the DRG algorithm version, the DRG relative weights, the DRG Base Price(s), the outlier thresholds,
outlier payment parameters, policy adjustors, and the age adjustors. With respect to the DRG Base Price,
the department will take into consideration at least the following factors in deciding what change, if any, to
implement: changes or levels of beneficiary access to quality care; the Centers for Medicare and Medicaid
Services National CMS Prospective Payment System (IPPS) Hospital Input Price Index; technical
corrections to offset changes to DRG Relative Weights or policy adjustors; changes in how hospitals
provide diagnosis and procedure codes on claims; and budget allocations.”
Nursing Facility Reimbursement - EOHHS reimburses long-term care providers using a full Resource
Utilization Groups (“RUG”) system. Under the RUG system, each long-term care facility has a base per
diem rate that applies to all residents that is comprised of direct nursing care and other direct care costs,
indirect care, fair rental value, property taxes, direct care and gain/loss policy adjustors, and a provider
assessment. Each long-term care resident is assigned a RUG score that reflects the individual’s expected
resource utilization. A RUG score multiplier adjusts the provider base rate to a recipient-specific per diem
rate to reflect the anticipated costs of caring for each resident.
The CMS-approved RUG methodology requires that EOHHS conduct a rate review every three years (at a
minimum) to determine if the original cost components used to establish the base rates are still appropriate.
The State Plan also requires audits of the financial and statistical records of each participating provider.
Criteria: 42 CFR section 447.250 requires that the State Plan provide for payment of hospital and long-
term care facility services through rates that the State determines are reasonable and adequate to meet the
costs that must be incurred by efficiently and economically operated facilities to provide services in
conformity with State and Federal laws, regulations, and quality and safety standards.
Condition: Inpatient Hospital Reimbursement - Although EOHHS has made annual adjustments to the
base DRG rate for inflation and State budget factors and has updated the DRG software for new releases,
it has not formally documented an annual comprehensive review as detailed by the State plan.
The State’s current practices for
inpatient hospital and long-term care
facility rate setting do not fully comply
with its State plan provisions requiring
an annual review of inpatient hospital
rate components and nursing facility
audit requirements.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
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Nursing Facility Reimbursement – EOHHS has not formalized its triennial rate review required by CMS in
its approval of the RUG methodology. EOHHS has also not complied with the periodic audit requirements
of the financial records of providers as required by the CMS-approved State Plan.
Rate Setting for Public Inpatient Hospital – The State Plan requires EOHHS to conduct an annual review
of the cost-based payment method annually. EOHHS has not implemented procedures to define the annual
review process.
Cause: EOHHS has not documented its compliance with annual rate review procedures detailed in its
approved State Plan for inpatient hospital and long-term care facility rate setting. The State has also not
performed nursing facility audits detailed in the State Plan.
Effect: Rate setting procedures for inpatient hospital and long-term care providers do not fully comply with
approved State Plan requirements.
Questioned Costs: None
Valid Statistical Sampling: Not Applicable
RECOMMENDATION
2021-074
Document compliance with the Federal and State plan rate review and periodic
audit requirements for both inpatient and long-term care providers or amend the
State Plan with CMS approval to align to current practices.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-075
(significant deficiency – repeat finding – 2020-058)
MEDICAID CLUSTER – 93.775, 93.777, 93.778
Federal Award Agency: Department of Health and Human Services (HHS)
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: 2005RI5MAP and 2105RI5MAP
Administered by: Executive Office of Health and Human Services (EOHHS)
Compliance Requirement: Special Tests and Provisions – Medicaid National Correct Coding Initiative
MEDICAID NATIONAL CORRECT CODING INITIATIVE (NCCI)
Criteria: Federal regulations (Section 1903(r) of the Social
Security Act) requires State Medicaid agencies to incorporate
NCCI methodologies into State Medicaid programs.
Application of the NCCI methodologies to fee-for-service
claims processed by the State Medicaid Agency (SMA) are
required. Fee-for-service claims processed by other entities,
such as managed care organizations are applicable only if required by the SMA.
Controls to ensure NCCI claims
processing edits are functioning over
Medicaid activity require improvement
to ensure compliance with federal
regulations.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
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Condition: While our test claim procedures found the NCCI edits to be operating as designed in the MMIS,
our review of the State’s application of NCCI edit methodologies noted the following areas for program
improvements:
a. The State should consider incorporating review of the application of NCCI edits into the scope of
the Service Organization Control Review conducted annually of the State’s claims processing
system and related fiscal agent controls to ensure continued operation of the NCCI federal
requirements within the MMIS. The NCCI edits were reviewed upon initial implementation and
found to be operational; however, controls should be improved to ensure that those edits remain
operational on an annual basis.
b. It was unclear whether Medicaid claims processing by the State’s MCOs applied the NCCI
methodologies. Claims processed by MCOs represent the majority of program expenditures within
the State Medicaid program. Managed care contracts did not specifically require application of
NCCI edits within the MCO claims processing systems. EOHHS should consider whether to
formalize this requirement going forward to apply these edits to a material segment of Medicaid
expenditures.
c. We noted that the NCCI edits were not applied in the MMIS in the order specified by the federal
regulations; however, we do not believe this had a significant impact on compliance.
Cause: Lack of NCCI edit monitoring procedures by EOHHS and limited instances of noncompliance with
the NCCI Medicaid Technical Guidance.
Effect: Potential noncompliance with NCCI special test and provision federal requirements.
Questioned Costs: None
Valid Statistical Sampling: Not Applicable
RECOMMENDATIONS
2021-075a
Include review of the application of NCCI edits into the scope of the Service
Organization Control Review conducted annually of the State’s claims processing
system and related fiscal agent controls to ensure continued operation of the NCCI
federal requirements within the MMIS.
2021-075b
Ensure that the State’s procurement of a new Medicaid Management Information
System includes the requirements outlined in the NCCI Medicaid Technical
Guidance issued by CMS.
2021-075c
Consider in future MCO contract procurements, the benefits of mandating MCOs
to implement NCCI edits within their claim processing systems to enhance
program integrity over managed care claiming.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-103
Finding 2021-076
(significant deficiency – repeat finding – 2020-057)
MEDICAID CLUSTER – 93.775, 93.777, 93.778
Federal Award Agency: Department of Health and Human Services (HHS)
Federal Award Fiscal Years: 2020 and 2021
Federal Award Numbers: 2005RI5MAP and 2105RI5MAP
Administered by: Executive Office of Health and Human Services (EOHHS)
Compliance Requirement: Allowable Costs/Cost Principles
SERVICES PROVIDED TO CHILDREN IN THE STATE’S CUSTODY BY THE DEPARTMENT OF
CHILDREN, YOUTH, AND FAMILIES (DCYF) BILLED TO MEDICAID
Background: EOHHS, the Single State Medicaid Agency,
administers claiming to Medicaid from other health and
human service State agencies (such as DCYF) through the
execution of Interagency Service Agreements (ISAs). The
ISA provides approval by the Single State Medicaid Agency
that the proposed services are allowable and the necessary
requirements that the other agency must comply with to
support the allowability of the claims to Medicaid. Services
authorized by the ISAs should be claimed in accordance with
approved State Plan requirements. PRTF services (which
began in fiscal 2020) claimed by DCYF to Medicaid are an
identified service within the ISA. The approval to claim these
services based on an all-inclusive rate determined through a
cost-based methodology is still pending with the Centers for
Medicare and Medicaid Services (CMS). In fiscal 2021, the reimbursement rate was established based on
a budget submitted by the service provider.
Criteria: Federal approval to reimburse PRTF service providers based on a cost reimbursement
methodology is currently pending with CMS. Reimbursing providers in accordance with an approved State
Plan methodology is a requirement for considering the allowability of federal expenditures.
Condition: DCYF implemented psychiatric residential treatment facility (PRTF) services during fiscal
2020 to provide a current level of service to children in the State’s custody that was previously lacking.
Previously, DCYF allocated claiming for all contracted youth placement providers to Medicaid based on a
time study methodology (partial charging, previously based on underlying time study allocation for
treatment and assessment component of service provided). PRTF placements were a change in that certified
and licensed facilities would be charged at 100% of the contracted per diem rate (set based on a cost
reimbursement methodology) to Medicaid. Medicaid reimbursements have been made to DCYF since
inception based on the new methodology, even though State Plan approval of that cost reimbursement
methodology is still pending. DCYF was reimbursed approximately $4.8 million for PRTF services
provided to children in the State’s custody during fiscal 2021. In addition, controls over PRTF services
would be substantially improved if the providers submitted claiming directly to the MMIS which would
subject them to the claims processing, recipient eligibility, and provider eligibility controls designed in the
system.
During our audit, we also noted that approximately $16 million in other services to children in the State’s
custody are being claimed to Medicaid through journal entries in the State Accounting System. As is the
case for the PRTF services, controls over these services would also be greatly enhanced if these providers
submitted claims to the MMIS directly for reimbursement. Allowing fee-for-service claiming to be
reimbursed by Medicaid external to the MMIS significantly weakens program controls.
Certain
psychiatric
residential
treatment facility (PRTF) services
provided to children in the State’s
custody have been charged to Medicaid
in fiscal 2021 in accordance with a
methodology that is pending State Plan
Approval. Controls over other services
provided to children in the State’s
custody
would
be
improved
if
processed
through
the
Medicaid
Management
Information
System
(MMIS).
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-104
Cause: Medicaid reimbursements of PRTF services to DCYF during fiscal 2021 were based on a
reimbursement methodology which is pending State Plan Amendment approval by CMS. Control
weaknesses exist when Medicaid claiming is not processed through the MMIS.
Effect: Potential noncompliance with federal regulations for allowable costs/cost principles.
Questioned Costs: Unknown
Valid Statistical Sampling: Not Applicable
RECOMMENDATIONS
2021-076a
Ensure that PRTF services are reimbursed to DCYF in accordance with the
currently approved Medicaid State Plan.
2021-076b
Ensure that allowable medical services provided by DCYF providers are billed
directly to the MMIS and subject to all designed claims processing, recipient
eligibility, and provider eligibility controls.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-077
(significant deficiency – new finding)
DISASTER GRANTS – PUBLIC ASSISTANCE (PRESIDENTIALLY DECLARED DISASTERS) – 97.036
Federal Award Agency: U.S. Department of Homeland Security (DHS), Federal Emergency Management Agency
(FEMA)
Federal Award Fiscal Year: Not Applicable
Federal Award Number: Not Applicable
Administered by: Rhode Island Emergency Management Agency (RIEMA)
Compliance Requirement: Reporting
FEDERAL FINANCIAL REPORTS
Criteria: Consistent with Uniform Guidance requirements,
the State is required to complete the SF-425, Federal Financial
Report, quarterly for the grant.
44 CFR 206.204(f) requires that progress reports be submitted
by grant recipients quarterly. The reports are to describe “the
status of those projects on which a final payment of the Federal
share has not been made to the recipient and outline any problems or circumstances expected to result in
noncompliance with the approved grant conditions.”
Condition: Expenditures reported on the quarterly SF-425 reports were not adequately supported, resulting
from numerous adjustments subsequently made in the accounting system. We were unable to match
expenditures reported on two of the four quarterly SF-425 reports for fiscal 2021 to amounts included in
the RIFANS accounting system.
We separately performed testing of the quarterly progress reports for fiscal 2021. For one large project
under the grant, grantee drawdowns were overstated by $7.8 million.
RIEMA can improve its reporting
function. Required federal financial
reports for fiscal 2021 were not
properly supported by the State
accounting system.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-105
Cause: RIEMA did not maintain adequate documentation for amounts reported on the SF-425 federal
reports. Due to the nature of the COVID related federal assistance program, there was an unusual amount
of accounting adjustments between various federal programs with similar objectives.
Effect: Expenditures reported on the SF-425 for this program were overstated. Drawdowns on the
quarterly progress reports were overstated by $7.8 million for one quarter.
Questioned Costs: None
Valid Statistical Sampling: Not Applicable
RECOMMENDATIONS
2021-077a
Strengthen procedures for preparing federal financial reports to ensure that
information reported is adequately supported and consistent with amounts
included in the RIFANS accounting system.
2021-077b
Submit revised SF-425 and quarterly progress reports to reflect corrected
expenditures and drawdowns for fiscal 2021, as necessary.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
Finding 2021-078
(material weakness – new finding)
PRESIDENTIAL DECLARED DISASTER ASSISTANCE TO INDIVIDUALS AND HOUSEHOLDS – OTHER
NEEDS – 97.050
Federal Award Agency: U.S. Department of Homeland Security (DHS), Federal Emergency Management Agency
(FEMA)
Federal Award Fiscal Year: 2020
Federal Award Numbers: 4505LOSTWAGESBENEFIT
Administered by: Department of Labor and Training (DLT)
Compliance Requirement: Eligibility
FEMA SUPPLEMENTAL UNEMPLOYMENT BENEFITS
Criteria: On August 8, 2020, the President signed a
memorandum “Authorizing the Other Needs Assistance
Program for Major Disaster Declarations Related to
Coronavirus Disease 2019.” This allowed an additional
payment of $300 to all eligible claimants, which was defined
as any claimant who received at least $100 per week from any of the federal unemployment programs. This
benefit was to be paid for five weeks beginning August 1, 2020.
Condition: In order to qualify all claimants for the supplemental payment, the Governor issued Executive
Order 20-68, which declared that the minimum base rate for unemployment insurance benefits shall be
$100. DLT did not increase the minimum payment for claimants with a base payment of less than $100
but did pay these claimants the enhanced $300 for the five weeks of the program.
Cause: DLT did not implement State of Rhode Island Executive Order 20-68 to ensure all claimants met
the minimum benefit provision required for this program.
Supplemental unemployment benefits
were paid to claimants that did not
meet the minimum benefit threshold
required for eligibility.
State of Rhode Island – Fiscal 2021 Single Audit Report - Schedule of Findings and Questioned Costs
Section III – Federal Award Findings and Questioned Costs
Office of the Auditor General
D-106
Effect: Benefits were paid to ineligible claimants.
Questioned Costs: $6,303,300 (representing ineligible payments to claimants with base payments less
than $100)
Valid Statistical Sampling: Not Applicable
RECOMMENDATION
2021-078
Resolve the noncompliance with the minimum benefit provision by retroactive
implementation of the Rhode Island Executive Order or return federal funds drawn
for the ineligible benefits.
Auditee views: The auditee concurs with this finding – see Corrective Action Plan in Section E.
State of Rhode Island
Single Audit Report
For the Fiscal Year Ended June 30, 2021
Office of the Auditor General
General Assembly
Corrective Action Plans
(prepared by the State’s management)
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-1
Finding 2021-001 – Corrective Action Plan
Division of Information Technology leadership agrees with the need to implement a software-as-a-service
(SaaS) enterprise resource planning (ERP) system in a comprehensive and strategic manner. The
Enterprise Applications Strategic Plan is the foundation for Rhode Island’s multi-year effort to transform its
enterprise technology and business processes to better meet the needs of the State, its residents, and its
partners. The State wants to improve efficiencies, integrate multiple systems, automate manual processes,
increase the quality and timeliness of data to decision makers and replace and modernize its current
enterprise technologies. The objectives of modernizing obsolete enterprise applications will:
•
Address audit findings
•
Reduce risk
•
Enable business improvements, provide expanded functionality, and information for managing
•
Address manual processes that are more prone to errors
Anticipated Completion Date:
In November of 2021, the State released a request for proposal
(RFP22000809) seeking “qualified firms to serve as the systems integrator
(SI) and provide SaaS (Software as a Service) ERP (Enterprise Resource
Planning) software for the implementation, support and license of a SaaS
ERP solution.” The procurement process is currently in-progress and the
State anticipates selection and contract negotiation to complete in or
around April 2022. The RFP calls for the following go-live dates which will
be confirmed or updated once the SI/software vendor are selected and a
comprehensive project plan is created:
•
HR/Payroll Go-Live on 12/31/2023
•
Finance Go-Live on 6/30/2025
Contact Person:
Jim Ritter, Chief of Information Technology: Agencies and Enterprise Applications
Department of Administration, Division of Information Technology
jim.ritter@doit.ri.gov
Finding 2021-002 – Corrective Action Plan
2021-002a – UI leadership, along with our Legal Unit and Department of Information Technology, work
continuously to identify opportunities for enhancements within our current systems to identify potential fraud
and to detect emerging fraud patterns. We partner with various vendors and federal partners to incorporate
identity validation tools, pattern-based impostor fraud identifiers, and fraud intel received from other external
sources.
In addition, our Fraud team works in partnership with Federal and State law enforcement to share data
and identify potential fraudulent activity.
As the department moves forward toward modernizing our UI claims system, fraud detection strategies will
be a priority while building requirements for system operation.
In late January 2021, additional auto-stops were added to the UI claims system addressing trends identified
by both KGS and DLT staff. These stops include targeting certain characteristics associated with fraudulent
claims to meet newly recognized identity fraud activity.
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-2
Anticipated Completion Date:
This work is continuous and ongoing.
Contact Person:
Michael White, Legal Counsel
Department of Labor & Training
michael.white@dlt.ri.gov
2021-002b – The RI DLT and Division of Information Technology are developing a Request for Proposal
(RFP) to identify a vendor who will create a strategic plan to address the modernization of DLT’s systems,
including the UI Benefit Claims processing system. The selected vendor will provide a strategy based on
analysis of each system that will inform a larger project to complete the actual modernization and upgrading
of the systems. It is anticipated that the draft version of the Strategic Planning RFP will be ready for internal
distribution and revision, allowing for the final document to be submitted to State Purchases for publication
in March or April 2022.
The future modernization project will include requirements to build in fraud detection safeguards and system
capacities that will protect the integrity of the system as it accommodates mass unemployment events,
which could result in previously unimaginable claims volume.
Anticipated Completion Date:
December 31, 2022
Contact Person:
Kathy Catanzaro, Administrator, Operations Management - Income Support Unit
Department of Labor and Training
kathy.catanzaro@dlt.ri.gov
2021-002c – Business Affairs is currently working with UI Administration to review financial transactions
which result from recoveries from fraudulent payments. The divisions will work collaboratively to create
procedures to accurately categorize these recovered funds and record within the RIFANS accounting
system.
Anticipated Completion Date:
September 30, 2022
Contact Persons:
Kathy Catanzaro, Administrator, Operations Management - Income Support Unit
Department of Labor and Training
kathy.catanzaro@dlt.ri.gov
2021-002d – The department will work with US Department of Labor to determine the appropriate process
for returning funds recovered in each of the CARES, CAA, and ARPA programs.
Anticipated Completion Date:
September 30, 2022
Contact Persons:
Kathy Catanzaro, Administrator, Operations Management - Income Support Unit
Department of Labor and Training
kathy.catanzaro@dlt.ri.gov
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-3
Finding 2020-003 – Corrective Action Plan
2021-003a – The agency will work with the Office of the Auditor General to gain a more detailed
understanding of the finding to conduct a more targeted formal risk assessment process to determine where
additional controls and other data validation procedures could be used in contract settlement procedures.
EOHHS has already engaged with the Managed Care vendors to ask for examples of data sources that
could be used.
2021-003b – The MES Planning Vendor (contract to begin ~4/1/22) will be tasked with evaluating the
existing MMIS processing for premium payments, capitations and encounters and will be conducting
business needs assessments. These details will be incorporated into the RFPs for replacement systems
that will perform in alignment with Rhode Island-specific needs and/or have the flexibility to achieve the
Programs’ objectives in these areas.
2021-003c – EOHHS acknowledges the complexity of the Medicaid program and our financial activities.
EOHHS is aware of many of the risks facing the program’s financial reporting, including manual payments,
and has already taken steps to simplify Medicaid-related financial activities and improve oversight as
outlined below. The steps taken to-date to improve oversight are outlined below:
1. Risk Share Settlements
a. MCO risk share settlements are based on MCO submitted reporting and validated against
accepted encounter claims in the MMIS. EOHHS recognizes that for this reason MCO reporting
would ideally be validated against other sources. This is why, in FY20, the state implemented
a requirement that the MCOs report quarterly through a new “Financial Data Cost Report”
(FDCR) their membership, benefit expenses, including general ledger adjustments, sub-
capitated arrangements, reinsurance arrangements, reserves, benefit expense recoveries and
administrative costs for each Premium Rating Group. These expenses are reported at either
the rate cell and category of service level, or at the product level (Rite Care/Expansion, etc.).
Annually, the MCOs must reconcile the information in its FDCR to their NAIC financial
statements.
EOHHS utilizes this FDCR data in rate setting as well as to monitor MCO financial performance
throughout the year.
EOHHS began utilizing the FDCR reporting for risk share settlement beginning with the final
reconciliation for FY 2019. This allows for the risk share reporting to be validated against other
financial reporting and in alignment with rate setting activities.
b. In addition, in our RFP for MCO vendors, EOHHS proposed eliminating risk corridors which
would have eliminated the need for risk share settlements entirely.
2. Stop Loss Programs
c. EOHHS recognizes that the stop loss payments resulted in additional manual payments,
creating risk of error. As a result, in FY22, EOHHS eliminated its Hepatitis C stop loss program
and its organ transplant stop loss program eliminating manual payments made by the state to
the MCOs. However, stop loss programs will remain where necessary; specifically, there will
be a COVID vaccine “non-risk” stop loss program where the state pays the full amount of
vaccine administration reimbursement back to the MCO.
3. Limiting Manual Capitation Payments
d. EOHHS recognizes that retroactive capitation payments can result in additional manual
payments, creating risk of error. For premiums paid monthly, the MMIS can systematically
correct payments made within a three-month window – retroactively for the prior month, the
current month, and prospectively for the future month. For capitation paid daily (RiteCare),
corrections can only be systematically made within a two-month window – for the current month
and prospectively for the future month. However, within the last year for both program types
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-4
(daily and monthly) new processes have been incorporated into the MMIS to allow for
systematic adjustments to payments retroactively in two scenarios; 1) based on a Newborns
Date of Birth and; 2) based on a recipients Date of Death. These two scenarios contributed to
the highest number of retroactive adjustments aside from rate changes. Any corrections
outside of the systematic adjustment windows or aside from the Newborn and Death causes
still must be processed manually unless additional system modifications are done.
In an effort to limit system modifications but further reduce manual payments, throughout FY20,
EOHHS developed an internal MCO contract project charter and workgroup with the express
goal of ensuring that our contract amendments and MCO capitation rates would be completed
timely and ensure that MCO rates are in the system at the start of the year, or soon thereafter
to minimize any manual payments.
However, in FY21, there was a delay in the state budget enactment that led to a delay in the
final FY21 rates that was out of EOHHS’ control and resulted in large manual payments.
Note that some states input new fiscal year rates without final state budgets or signed contracts,
but EOHHS has assessed that this creates its own risk and that the current approach is
preferred.
Anticipated Completion Date:
Ongoing
Contact Person:
Katie Alijewicz, Deputy Medicaid Program Director, Finance
Executive Office of Health and Human Services
katie.alijewicz@ohhs.ri.gov
Finding 2021-004 – Corrective Action Plan
2021-004a – EOHHS will create a Manual of Standard Operating Procedures that crosswalks the list of
financial transaction types and reason codes with scenarios when they should be used. EOHHS will also
create new financial transaction and reason codes for scenarios where a transaction or reason code doesn't
yet exist.
2021-004b – EOHHS and the fiscal agent implemented in December 2019 a monthly report recapping all
Fiscal Agent Control Notes (FACNs) processed that month. EOHHS Finance also maintains a monthly log
of all FACNs it approves, capturing all pertinent data, and reconciles this log with the fiscal agent’s monthly
FACN report. Any discrepancy is promptly researched and resolved.
EOHHS intends to implement “ServiceNow” with their fiscal agent for the purpose of more formally tracking
FACN type requests in addition to system issues, incidents, modifications and other types of requests. This
tool will eliminate the FACN process as it is defined presently. To the extent that additional codes are
needed to clarify the nature of various transactions, EOHHS will work with the fiscal agent to establish and
utilize these new codes on a go-forward basis within the new ServiceNow tool.
2021-004c – The MES Planning Vendor (contract to begin ~4/1/22) will be tasked with evaluating the
existing MMIS processing financial transactions and reason codes and will be conducting business needs
assessments. These details will be incorporated into the RFPs for replacement systems that will perform
in alignment with Rhode Island-specific needs and/or have the flexibility to achieve the Programs’ objectives
in these areas.
Anticipated Completion Date:
Ongoing
Contact Person:
Katie Alijewicz, Deputy Medicaid Program Director, Finance
Executive Office of Health and Human Services
katie.alijewicz@ohhs.ri.gov
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-5
Finding 2020-005 – Corrective Action Plan
Management agrees the state lacks formalized documentation and a comprehensive internal control
structure statewide that complies with an accepted framework. The Office of Accounts & Control (A&C)
has hired an Administrator, Financial Management to commit resources to training and developing
implementation (“best-practice”) materials to be communicated to departments and agencies. Further, the
ERP system is moving forward, with a vendor scheduled to be selected before fiscal year end, which brings
the opportunity to embed internal controls within the software applications. A&C is exploring the use of an
RFI to determine if assistance from an outside firm is a viable option to onboard for expertise with
documenting the entity’s internal control structure. In addition to developing training materials and
potentially implementation resources, A&C will be requesting management to commit time and resources
to assist in designing, implementing, and maintaining an effective internal control system at each respective
agency.
Anticipated Completion Date:
Ongoing
Contact Person:
Alex Herald, Administrator of Financial Management
Department of Administration, Office of Accounts & Control
alexander.herald@doa.ri.gov
Finding 2021-006 – Corrective Action Plan
2021-006a – A&C is developing a refresher to the training and guidance provided to agencies during June
2021. The June 2021 training was comprehensive to the SOC reporting process and we believe it can be
utilized again in conjunction with an updated assessment tool and detailed instructions to improve the
overall state agency evaluation and compliance of SOC reports. A&C is working to finalize a new
assessment tool entitled “SOC Report Review” which will replace the current checklist. The SOC Report
Review will improve upon the current checklist by expanding the key information areas to a more detailed
documentation of the review of SOC reports by the agencies. The SOC Report Review is the responsibility
of the applicable agency CFO and must be completed and returned to A&C along with the relevant SOC
Report.
In addition to the above, A&C has designated an FTE to be a resource to the agencies throughout the year
regarding SOC training, evaluation requirements, and comments and questions. This will help ensure
agencies have an appropriate resource available.
2021-006b – Within the new SOC Report Review tool and its related training, there is detailed instructions
and information to assist agencies in documenting their responses to complimentary user entity (State)
controls listed in the SOC report. This tool includes a section titled Complimentary User Entity Controls
that requires the CFO to list each complimentary user entity (State) control and respond with the agency’s
relevant controls and/or processes.
2021-006c – As in prior year training, the new SOC Report Review training will include information to assist
agencies with their review of exceptions and/or modifications noted in the SOC reports. The sections of
the SOC Report Review dealing with auditor report modifications (titled ‘Qualifications on Control
Objectives’) and/or exceptions (titled ‘Deviations noted’) will assist the CFO reviewer by providing guidance
to ensure they review any exceptions or modifications and appropriately respond to each one. The
completed SOC Report Review will provide the A&C assurance the CFOs are reviewing the SOC report
appropriately and timely.
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-6
To further ensure the SOC reports are evaluated in a timely fashion and that proper documentation is
provided regarding the impact on the State’s control process, agencies are encouraged to request and
review SOC reports as soon as they are available and to reach out to A&C with any questions and
comments as they prepare their SOC Report Review. As mentioned above, A&C has designated an FTE
position to be a resource to the agencies for any questions, comments, etc. that may arise in their review
of their relevant SOC Report.
Anticipated Completion Date:
September 30, 2022
Contact Person:
Alex Herald, Administrator of Financial Management
Department of Administration, Office of Accounts & Control
alexander.herald@doa.ri.gov
Finding 2021-007 – Corrective Action Plan
2021-007a – Procedures were implemented during FY 2021 to address this issue by the Office of Accounts
and Control (A&C) and the Division of Information Technology (DOIT); additional reporting was
implemented at this time. The Rhode Island Access Auditing (audit trail) and General Ledger (GL)
Authorization Limits Report is reviewed by A&C staff monthly. DOIT also purchased monitoring software
which is used for software systems with critical data. This was to be tested on RIFANS. However, due to
incompatibility with our version of the RIFANS OS, the software was not implemented. DOIT is looking at
upgrading the OS to a compatible level with this software.
Anticipated Completion Date:
December 2022
2021-007b – The selected software will be a cloud hosted SaaS solution which will have enhanced security
features. The RFP for the ERP solution is expected to be awarded May 2022.
Anticipated Completion Date:
May 2022
Contact Persons:
Alan Dias, Assistant Director of Information Technology
Department of Administration, Division of Information Technology
alan.dias@doit.ri.gov
Michelle Goncalo, Supervising Accountant
Department of Administration, Office of Accounts & Control
michelle.goncalo@doa.ri.gov
Finding 2021-008 – Corrective Action Plan
Management agrees with this finding. The requirements noted in the RFP for the new integrated ERP
system requires a financial system which includes a receivable module which will account for all non-tax
related receivables.
Anticipated Completion Date:
June 30, 2025
Contact Person:
Sandra Morgan, Assistant Director for Special Projects
Department of Administration, Office of Accounts & Control
sandra.morgan@doa.ri.gov
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-7
Finding 2021-009 – Corrective Action Plan
Management agrees with this finding. The ERP strategic plan includes both a Grants Management System
and a Time & Attendance Module as part of a larger ERP system. These components, along with the other
functionality in the ERP and Grants Management System, will address the control weaknesses discussed
above. The Grant Management System component is currently under development and the larger ERP
project is anticipated to begin June 2022.
Anticipated Completion Date:
January 2023 for Grants Management System and TBD for Time and
Attendance Module as part of the larger ERP system.
Contact Persons:
Dorothy Pascale, State Controller
Department of Administration, Office of Accounts and Control
dorothy.z.pascale@doa.ri.gov
Steve Thompson, Director, Grants Management Office
Department of Administration, Office of Management & Budget
steve.thompson@omb.ri.gov
Finding 2021-010 – Corrective Action Plan
The Office of Accounts and Control (A&C) agrees with the findings. A&C will ensure all DBC reports used
for year-end debt entries will be as of June 30th. A&C also reached out to DBC regarding additional
reporting available within the system. A report does exist for a summary of premiums and discounts;
however, A&C will need to add in additional information from past bond issuances to make it complete.
Currently DBC does not have the capability to calculate and report on the gain or loss from refunding, but
with improved reporting for premiums and discounts, the risk of calculation error is minimized.
Anticipated Completion Date:
June 30, 2022
Contact Person:
Susan DeStefanis, Supervisor, Financial Management & Reporting
Department of Administration, Office of Accounts and Control
susan.destefanis@doa.ri.gov
Finding 2021-011 – Corrective Action Plan
During State fiscal year 2021, the Division of Purchases shifted to a full telework model for a period of
several months in accordance with guidelines and recommendations in relation to the COVID-19 pandemic.
Prior to the pandemic, the majority of centralized procurement processes in the Division of Purchases were
paper-based (including documentation and file-related recordkeeping); out of necessity and due to the
emergency circumstances, the Division shifted to a hybrid electronic/paper file model as an interim
measure. Accordingly, the Division instituted short-term policies and procedures with respect to
documentation and electronic signature requirements for procurement files, including an approach by which
the Purchasing Agent/Deputy Purchasing Agent would record their review and approval of procurement
requests in the electronic audit trail in RIFANS instead of via hard copy or electronic signature.
CORRECTIVE ACTIONS: The State’s eProcurement system, Ocean State Procures, now serves as the
primary recordkeeping and file management system for all State Master Price Agreements and centralized
procurements during a transitional period in which we are shifting from the previous paper-based
recordkeeping system. The Division of Purchases has implemented an electronic documentation process
and structure to align with the requirements of the State Purchases Act and ensure that files are complete
and appropriately documented, including an internal practice requiring verified electronic signatures on all
procurement determination forms and related documentation.
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-8
There is a multi-layered approach to file handling and management in the Division of Purchases that
includes at least two separate staff positions who are responsible for verifying completeness and accuracy
of documentation prior to processing final requests in the respective procurement systems. Additionally,
Division staff utilize a file maintenance checklist to ensure that all documentation is complete and accounted
for with respect to individual contracts and procurements. As a last step to ensure compliance with all
policies, procedures and applicable authority, the Purchasing Agent/Deputy Purchasing Agent performs a
final review of all procurement requests and corresponding files prior to issuing approval of documentation
and separately, approval of the electronic request in RIFANS. This multi-pronged review process continues
with all Ocean State Procures files.
Anticipated Completion Date:
Current state solutions described above have been fully implemented.
The only ongoing component with respect to identified corrective actions
is transitioning over to a fully electronic recordkeeping process. As this is
heavily dependent upon Statewide agency adoption of the eProcurement
system, a fully realized transition may take up to several years.
Contact Person:
Amanda Rivers, Deputy Purchasing Agent
Department of Administration, Division of Purchases
amanda.m.rivers@purchasing.ri.gov
Finding 2021-012 – Corrective Action Plan
The Office of Accounts and Control (A&C) agrees with the finding and will improve the process and review
of the Entity-Wide Financial Statements. Additionally, A&C will review the newer process during the
implementation of ERP with the intent to further improve controls and accuracy of conversion methods.
Anticipated Completion Date:
December 31, 2022 and June 30, 2026
Contact Persons:
Tara Mello, Associate Controller
Department of Administration, Office of Accounts & Control
tara.m.mello@doa.ri.gov
Dorothy Pascale, State Controller
Department of Administration, Office of Accounts and Control
dorothy.z.pascale@doa.ri.gov
Finding 2021-013 – Corrective Action Plan
The Office of Accounts and Control (A&C) agrees with the finding. Agencies along with a third-party
consultant are reviewing and reconciling COVID stimulus grant transactional data to ensure eligibility and
recording of expenditures were proper. The resulting adjusting entries and supporting documentation of
this exercise will be provided to A&C and shared with the Office of Auditor General. A&C has also identified
transactions causing differences between CRF expenditures and the unearned revenue account. These
transactions will be adjusted and properly reflected in the FY22 financial statements.
Anticipated Completion Date:
June 30, 2022
Contact Person:
Dorothy Pascale, State Controller
Department of Administration, Office of Accounts and Control
dorothy.z.pascale@doa.ri.gov
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
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Finding 2021-014 – Corrective Action Plan
2021-014a – Management disagrees with this finding. The use of estimates is an allowable computation
for compensated absences. Management’s comparison of prior year calculations using actual versus
estimate did not result in a material variance for financial statement presentation purpose. The
recommendation above will put an administrative burden upon the staff and not result in a material
difference in the presentation of the information.
2021-014b – Management agrees with this finding and will segregate vacation and sick leave compensated
absence liabilities. The calculation of information for vacation and sick leave will be improved with the ERP
system implementation.
Anticipated Completion Date:
June 30, 2022
Contact Person:
Susan DeStefanis, Supervisor, Financial Management & Reporting
Department of Administration, Office of Accounts and Control
susan.destefanis@doa.ri.gov
Finding 2021-015 – Corrective Action Plan
2021-015a – Management agrees with the finding. The recommendation regarding system capabilities to
allocate costs will be addressed with the implementation of a new ERP system. The new system will be
required to have functionality to allocate costs.
2021-015b – Management disagrees with this finding. The increase to the number of journal entries was a
direct result of changing federal guidance and not related to payroll allocations. Although FY21 had an
unusually large amount of adjusting journal entries due to the changing federal guidance about the use of
and eligibility of stimulus funds, the controls over these entries were adequate. To further improve controls,
Office of Accounts and Control created a specific methodology and process to address the movement of
transactions between federal funding sources to allow the financial system to move the transactional level
detail (not including payroll costs) in the financial system to improve oversight over these adjusting entries.
Anticipated Completion Date:
June 30, 2025 for ERP system
Contact Person:
Dorothy Pascale, State Controller
Department of Administration, Office of Accounts and Control
dorothy.z.pascale@doa.ri.gov
Finding 2021-016 – Corrective Action Plan
In late 2020 when the State realized that COVID 19 tests were eligible for health insurance reimbursement,
RIDOH approved a retroactive (Retro) billing effort to bill health insurers for tests performed between
inception of COVID testing and January 31, 2021 – the date at which testing laboratories would directly bill
insurers for all tests. Prior to January 31, 2021, the State paid the labs for the costs of the tests and then
claimed FEMA reimbursement for those payments.
Retro billing for tests performed between inception and July 31, 2020, occurred in March 2021 with
reimbursements for those billings starting in May 2021 (the billing for this time period was termed “Retro 1”).
Since the response to COVID necessitated an immediate and unprecedented effort outside and in addition
to business as usual with little augmentation of RIDOH Finance staff, RIDOH leadership continually
prioritized the level of effort to devote to issues throughout the pandemic. For the Retro effort, RIDOH
prioritized that the immediate, critical control necessary was to establish proper accounting for the
reimbursement receipts. RIDOH worked with Accounts and Controls to establish an escrow account and
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-10
the related procedures necessary to ensure that all reimbursement receipts were recorded to the escrow
account.
Additionally in September 2021, RIDOH established a dedicated effort to monitor and establish further
procedures and controls over the retroactive insurance reimbursement process and initiated the preparation
of a white paper to document it from Retro inception to date and established processes to reconcile the
Retro 1 billing effort and the escrow account. The initial white paper was issued to RIDOH leadership in
late October 2021; subsequent addenda will include discussions of the reconciliation of Retro 1, the escrow
account, the payback to FEMA and the Retro 2 effort (for tests performed between August 1, 2021, and
January 31, 2022, for which the billings are expected to commence March 2022).
The final reconciliation of Retro 1 was completed in January 2022 at which time it was determined that
$101k of additional reimbursement was due to the State. As noted above, the majority of the retro receipts
from the retro billing would be a return to FEMA for those testing costs paid by State to the labs for
performing the tests and also reimbursed by Health Insurers (approximately 90% of the reimbursements).
The remaining 10% would be revenue to the State. Thus, as of June 30, 2021, a receivable for $101k
should have been recorded with the offset 90% to the escrow account and 10% to revenue.
RIDOH believes that now, control has been established over the Retro effort with procedures in place and
regular management oversight.
COVID vaccine administration that has occurred to date has been provided by several providers. Only one
vaccine provider has billed, and is authorized by RIDOH to bill health insurance companies for
reimbursement: Doctor’s Test Center (Covid Medical Solutions Illinois LLC dba Primary & Immediate Care
Solutions LLC Doctors Test Centers). Per our contract with them, they are required to remit ten percent of
insurance collections to RIDOH.
To date, we haven’t received any payment or statement credits from Doctor’s Test Center (DTC) for this
reimbursement. DTC has already indicated they will be sending us checks for the reimbursement, rather
than statement credits, and we expect to start receiving them in the next few weeks. Once received, we will
credit the applicable COVID Vaccine federal grant (line sequence 4675624.02) as program income.
Anticipated Completion Date:
Ongoing
Contact Person:
Sarah Parker, Assistant Administrator, Financial Management
Department of Health
sarah.parker@health.ri.gov
Finding 2021-017 – Corrective Action Plan
Management agrees with the finding and will implement new procedures to enhance the review of
adjustments to mitigate risk of material misstatements of the financial statements. These procedures
include:
•
Meeting with high-risk agencies to review preliminary and expected results
•
Implementing and enforcing a policy for audits adjustments to be signed off by agency CFO and
the Office of Accounts and Control (A&C).
Additionally, the last two years has seen a significant turnover in high-level finance position at agencies.
A&C will be involved in the hiring process to advice on candidates.
Anticipated Completion Date:
December 31, 2022
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
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Contact Persons:
Dorothy Pascale, State Controller
Department of Administration, Office of Accounts & Control
dorothy.z.pascale@doa.ri.gov
Tara Mello, Associate Controller
Department of Administration, Office of Accounts and Control
tara.m.mello@doa.ri.gov
Finding 2021-018 – Corrective Action Plan
Management respectfully disagrees with this finding. Management notes that 89% of the subject filings are
filed electronically, which means only 11% of the filings are “manually” filed (i.e., paper filings) and at issue
in the finding; this equates to 32,912 electronic filings and 4,045 paper filings. The high number of electronic
filings is due to the Division’s efforts in highlighting the advantages of electronic filing and the Division of
Taxation has attempted over the years to mandate electronic filing, which requires statutory changes.
The background statement that the receivable for tax is likely “inappropriately” due is a mischaracterization
because based on the information, or lack of information, provided in the filings, the tax is due.
All large balances for all taxes are reviewed every three (3) business days throughout the year, and each
day towards the end of each month, to confirm that no invalid receivables are established. The Division of
Taxation creates initial receivables based on the filed information provided by the taxpayer via the tax
return.
Occasionally, a taxpayer may have made a mistake on the return, at which point the Division would review
to identify and correct prior to issuing a bill. In some cases, the information provided by the taxpayer may
be incomplete, as such, the tax is calculated based on the best information available and in accordance
with Rhode Island law. In situations where there is additional information subsequently provided by the
taxpayer, the existing tax return is amended or adjusted, which may remove an existing receivable. This
change occurs not because the original receivable was incorrect, but because the taxpayer supplied
information that altered tax due calculated on their tax return.
The non-filing of an apportionment schedule where the taxpayer has apportioned income to Rhode Island
may result in a receivable as described above. When subsequent supporting apportionment information is
provided by the taxpayer, based on proactive, systematic written communication from the Division of
Taxation, the tax due is recalculated based only on the apportioned income. The Division of Taxation
reviews all available information prior to billing and will attempt to contact the taxpayer and/or reconstruct
the apportionment schedule. If neither endeavor is successful, the tax will be billed based on best
information available.
Management agrees that mandated electronic filing will enhance control over the completeness of a filed
return and proposed draft legislation again in FY2023 to impose such a mandate.
Anticipated Completion Date:
Ongoing
Contact Person:
Neena Savage, Tax Administrator
Department of Revenue, Division of Taxation
neena.savage@tax.ri.gov
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
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Finding 2021-019 – Corrective Action Plan
2021-019a – RIFANS enhancements in 2021 included integration with Ocean State Procures and the new
grants management system. Updates now require additional testing resources due to the additional
integration. In FY22 DOIT will be posting a managed service RFP to procure additional staff, in addition to
the current contractors, to assist in the testing, patching of RIFANS and assistance with new ERP system.
This will allow for timely updates of RIFANS. RFP to be posted in March 2022 with award by May of 2022
Anticipated Completion Date:
May 2022 for RFP
2021-019b – The State will work with our Oracle vendor to identify the impact of uninstalled updates and
communicate the risk with system users. A mitigation plan will be developed in partnership with the vendor
to resolve upgrade issues.
Anticipated Completion Date:
December 2022
Contact Persons:
Cesar Mendoza, Chief of Information Technology, Infrastructure & Operations
Department of Administration, Division of Information Technology
cesar.mendoza@doit.ri.gov
Alan Dias, Assistant Director of Information Technology
Department of Administration, Division of Information Technology
alan.dias@doit.ri.gov
Finding 2021-020 – Corrective Action Plan
Management disagrees with these findings. Office of Accounts and Control (A&C) has implemented a
number of steps to increase accuracy of the physical inventory process. A staff member of A&C is in
constant contact with agency personnel throughout their inventory process. Once initial responses have
been received, they are reconciled to the Fixed Asset database. From there, A&C staff sends an updated
listing of all assets that need additional research. Once the agency believes they have exhausted all
research options, A&C staff member will meet with the agency for final responses; the details of assets
remaining to be located will determine what position in the agency hierarchy A&C request in the meeting.
Additionally, write-off thresholds have been established based on asset category. If an asset meets the
established threshold, additional documentation would be required to illustrate the disposition of the asset.
For laptops, A&C will confirm the assignment of the asset with DoIT staff. For vehicles, A&C will confirm
the whereabouts of the asset with State Fleet staff. Finally, all assets deemed unable to be located will be
included in a write off document that must be approved by the agency’s Director or Deputy Directory. A&C
will evaluate the necessity to be physically present for each inventory.
Anticipated Completion Date:
Ongoing
Contact Person:
Sandra Morgan, Assistant Director of Special Projects
Department of Administration, Office of Accounts & Control
sandra.morgan@doa.ri.gov
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
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Finding 2021-021 – Corrective Action Plan
2021-021a – DOIT took tremendous strides in 2021 with a major investment and RFP award to modernize
our extremely old foundational infrastructure and to optimize on premises operations. The DOIT DR
Scoping project was also completed in 2021, with all major servers / applications identified for the Enterprise
and agency teams, as well as the Application Development tower providing an order of restoration for the
16 primary groups that DOIT supports. To mature this process further, DoIT will be seeking Agency
business leadership guidance on the routine identification and prioritization of their specific server and
application stacks on an annual basis at a minimum. This will result in a more comprehensive enterprise-
wide understanding of the critical business processes and technology that will then be prioritized for order
of recovery by the Application Development tower, the CIO, as well as the Director of the Department of
Administration.
2021-021b – DOIT successfully executed a Disaster Recovery (DR) test in October of 2020 of Agency IT
Manager (AIM) defined critical applications. Documentation of this exercise and related recovery
procedures are now stored in a Secure SharePoint Online location which is accessible by authorized users
from anywhere with an internet connection to provide location independence and maximum resiliency.
DOIT regularly plans to perform an annual Disaster Recovery (DR) test and will again be scheduling a test
in Q4 of 2022 upon the completion of the major Datacenter modernization project, which will position us to
recover more of our constantly growing environment than ever before, in a more timely and efficient manner
as well. To go along with a newly awarded Backup, Recovery and DR solution that is being implemented
now, a template for high level server stack and application testing across all agencies will be developed
and maintained to support a standardized, repeatable process for our annually scheduled DR testing.
Agency business leadership collaboration is required to define business critical processes, the applications
that support those processes, and the Agency plan for business continuity requiring technology support
from DoIT. This collaboration will be worked on together by the I&O and Application Development towers
in DoIT, applying stringent project governance and tracking for success.
Anticipated Completion Date:
Ongoing
Contact Person:
Cesar Mendoza, Chief of Information Technology, Infrastructure & Operations
Department of Administration, Division of Information Technology
cesar.mendoza@doit.ri.gov
Finding 2021-022 – Corrective Action Plan
DoIT has deployed the ITSM Service Delivery Tool, Service Now. The Change Management Process
Module has been used to formalize and train staff on a Change Management Process, with establishment
of a Change Advisory Board. All submitted changes with operational impact are reviewed and approved
during the weekly CAB meeting. The application teams are involved in the CAB’s; with enterprise level
software and application changes being integrated into the CAB process. DoIT will continue to mature this
process by inventorying vendor and Agency change management processes.
In addition, DOIT is currently evaluating a change management/version control software environment for
use in the enterprise. The Department of Transportation rolled out Microsoft Azure DevOps for version
control. The Department of Labor and Training has implemented JIRA for application fix and
change/enhancement tracking as well as release planning. DoIT is currently evaluating both tools as well
as needs across agencies and will make a recommendation for use as our enterprise change management
and version control process. This will be implemented for existing code base and future code base where
system replacements are not eminent. When implementing SAS solutions to replace older applications
those applications will undergo the best practice as provided by the vendor for change management.
Anticipated Completion Date:
Cross agency evaluation and recommendation by June 30, 2022
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-14
Contact Persons:
Cesar Mendoza, Chief of Information Technology, Infrastructure & Operations
Department of Administration, Division of Information Technology
cesar.mendoza@doit.ri.gov
Alan Dias, Assistant Director of Information Technology
Department of Administration, Division of Information Technology
alan.dias@doit.ri.gov
Finding 2021-023 – Corrective Action Plan
2021-023a – The enterprise IT policies, procedures, and system security plans (SSP’s) are in a continuous
cycle of publish, review, and update. These policies are built upon the (National Institute of Standards and
Technology) NIST 800-53 family of controls and are tailored to the IT systems operated and maintained
within the enterprise domain. All policies are published, up to date, and reviewed annually. Procedures for
compliance and systems security plans are in development.
Anticipated Completion Date:
September 2022
2021-023b – With the adoption of the NIST Risk Management Framework (RMF), DoIT is building a
system(s) risk assessment program for all enterprise operated platforms. This assessment process will be
executed in a cyclical fashion; utilizing inputs from audits (internal, and external) and State hosted
vulnerability and risk measuring technology and processes. External assessments will be scheduled and
conducted on State critical systems. The successful execution of a defined risk assessment process is
dependent on defined security policies and procedures to assess against.
Anticipated Completion Date:
January 2023
2021-023c – The categorization of systems through the implementation of the RMF will provide the ability
to prioritize mitigation of identified security risks. A running risk register is maintained at the enterprise level
and will be created for all assessed systems; with plans of actions and milestones (POAM’s) and corrective
action plan’s (CAP’s) developed for each system after the initial, and each recurring system assessment.
This completion of this recommendation is dependent upon completion of 2021-023a, b.
Anticipated Completion Date:
July 2023
Contact Person:
Brian Tardiff, Chief Information Security Officer
Department of Administration, Division of Information Technology
brian.tardiff@doit.ri.gov
Finding 2021-024 – Corrective Action Plan
2021-024a – The DMV agrees that a reconciliation of the revenues collected is needed and will work to
reconcile the revenues collected on an annual basis. The DMV expects to begin this annual reconciliation
of all funds collected with the FY 2023 revenues.
2021-024b – The DMV agrees that a crosswalk is a beneficial document to have. The DMV expects to
begin working on creating a crosswalk in June or July 2022 with completion by December 2022.
2021-024c – The DMV does not agree with recommendation 2021-024c, there are too many variables
outside of the DMV’s control that effect the deposit date(s). As previously stated, there are three separate
deposits for each day’s work, one for cash, checks and credit cards. The deposit of cash and credit cards
are out of the DMV’s control. The DMV relies on an armored car service (Service) to transport the cash to
the bank and are subject to the Service’s schedule. Any disruption to the Service’s schedule impacts when
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-15
the cash is recorded by the bank. Similarly, the funds transfer from credit card sales is handled by the
processing company. Any disruption to the to the processing company’s operations will affect the date the
funds are recorded by the bank.
RIMS records the deposit date as the date that the branch was balanced and verified. RIMS is programmed
so that once a branch has been balanced and verified corrections cannot be made. The DMV proposes to
add a field on the Excel spreadsheet used for balancing to record the anticipated deposit date for each
funding source. This proposal can be implemented immediately and can be edited to reflect any unforeseen
disruptions that may cause a delay in the actual deposit date.
Anticipated Completion Date:
June 30, 2022
Contact Person:
Paul Dombrowski, Administrator, Financial Management
Department of Revenue, Division of Motor Vehicles
paul.dombrowski@dmv.ri.gov
Finding 2021-025 – Corrective Action Plan
2021-025a – Sensitive data and systems inventory will be conducted jointly with the DoIT enterprise team
through the documentation of systems within System Security Plans (SSP). Additionally, technology such
as database protection (Guardium) will assist in this line of effort, enterprise implementation is in progress.
Anticipated Completion Date:
July 31, 2022
2021-025b – Access to Sensitive data and systems inventory will be monitored jointly with the DoIT
enterprise team through the documentation of systems within System Security Plans (SSP). Additionally,
technology such as database protection (Guardium) will assist in this line of effort, enterprise
implementation is in progress.
Anticipated Completion Date:
July 31, 2022
2021-025c – Incident response process and management is actively executed with the enterprise incident
response plan and program. DMV staff, DMV application partners, and DMV IT staff are trained and
participate in real world incident response frequently. COOP training has also been administered. Planning
for a tabletop exercise is in progress.
Anticipated Completion Date:
August 31, 2022
2021-025d – Initiated a service request process to address. DMV staff submits a service request upon
employee termination, the active directory account is then terminated. In addition, a DMV IT staff member
conducts quarterly reviews of the RIMS users to terminate from the RIMS system. An enhancement to this
current process is being reviewed to provide notification to the DMV IT staff member when the service
request is submitted so the access to RIMS will be terminated once notification is received.
Anticipated Completion Date:
July 31, 2022
Contact Person:
Clare S. Sedlock, Deputy Administrator
Department of Revenue, Division of Motor Vehicles
clare.sedlock@dmv.ri.gov
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-16
Finding 2021-026 – Corrective Action Plan
2021-026a
Short Term – During FY 2021, RIDOT has worked to improve the fund balance procedure. During the fiscal
year the fund activity was reconciled by RIFANS line items for all Federal accounts to ensure accuracy and
consistency. Any inconsistencies found are adjusted at that time. During FY 2022, the focus will be to
implement policies and procedures to improve the fund balance reconciliation and ensure the process is
compliant with GASB 54 standards. DOT is also working with IT to develop reports to assist in reconciling
fund balance.
Long Term – Once the adopted policies and procedures have been implemented for all Federal fund
balance accounts, RIDOT will expand the reconciliation to include all State fund balance accounts. This
expansion of the process will ensure all fund balance accounts regardless of funding source are being
reconciled monthly.
Anticipated Completion Date:
Short Term – December 31, 2022
Long Term – June 30, 2023
2021-026b
Short Term – RIDOT has evaluated its policies and procedures to identify where additional controls can be
put in place to ensure accurate identification of accounts payable at fiscal close. RIDOT has enhanced its
policies and procedures to include the fiscal year field for an invoice be filled out all year round instead of
just at fiscal close time. In addition, DOT will extend the accrual period through September with a third and
fourth run of the fiscal close reports which will result in further accrual entries.
Long Term – RIDOT will research the use of estimates with regards to the fiscal close process. This will
take time as it will consist of analysis and research.
Anticipated Completion Date:
Short Term – June 30, 2022
Long Term – To Be Determined
2021-026c – RIDOT will revise the fiscal close procedures to ensure transferred to the General Fund and
RIPTA accounts are reevaluated at various points throughout the close process including after all accrual
entries are posted and after audit adjustments are posted. RIDOT will post one final accrual entry to capture
many adjustments based on the be postings during the fiscal close period.
Anticipated Completion Date:
August 31, 2022
Contact Person:
Loren Doyle, Acting Chief Operating Officer / Chief Financial Officer
Department of Transportation
loren.doyle@dot.ri.gov
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
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Finding 2021-027 – Corrective Action Plan
2021-027a – RIDOT Finance is working with Scoping and Project Management to develop a standard form
for infrastructure code verification. The Grants section will also make sure that policies and procedures are
updated to ensure there is management concurrence once entered into FMS.
Anticipated Completion Date:
December 31, 2022
2021-027b – RIDOT will develop policies and procedures to formalize the review of the capital asset portrait.
The procedures will ensure the review of the capital asset portrait is documented and posted correctly.
Anticipated Completion Date:
December 31, 2022
2021-027c – RIDOT will review the criteria for impairment of assets and from there develop a policy and a
procedure for determining if any of the State’s transportation infrastructure assets have been impaired.
Finance will coordinate with the necessary sections to develop and implement this policy.
Anticipated Completion Date:
June 30, 2023
2021-027d – RIDOT will work develop a policy and a procedure for removing infrastructure assets that have
been replaced or taken out of service. RIDOT will work with Accounts and Control to ensure the appropriate
amounts are removed.
Anticipated Completion Date:
June 30, 2023
Contact Person:
Loren Doyle, Acting Chief Operating Officer / Chief Financial Officer
Department of Transportation
loren.doyle@dot.ri.gov
Finding 2021-028 – Corrective Action Plan
RIDOT is working with the vendor to modify the contract to include the results of the annual SOC testing.
Anticipated Completion Date:
December 31, 2022
Contact Person:
John-Paul Verducci, Chief, Economic and Policy Analyst
Department of Transportation
johnpaul.verducci@dot.ri.gov
Finding 2021-029 – Corrective Action Plan
The OPEB Board agrees with the recommendations presented by the Auditor General. In fiscal year 2022,
the OPEB Board hired a full-time staff to be responsible for key functions of the OPEB system. This
resource, who is part of Office of Accounts and Control, will coordinate with the appropriate parties for the
development of procedures related to identification of deceased plan members and timely termination of
their coverage.
The OPEB Board believes that implementing a stand-alone software application to accumulate and manage
plan membership data will be extremely costly for the system to finance with authorized administrative
funding. However, to address this recommendation, the OPEB Board requested this functionality be
included in the RFP for the new Enterprise Resource Planning (ERP) system being pursued by the
Department of Administration, which is to include a full-service Human Capital Management module.
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
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Anticipated Completion Date:
June 30, 2025 for ERP/OPEB Implementation
Contact Persons:
Xiomara Soto, Financial Reporting Manager
Department of Administration, Office of Accounts & Control
xiomara.soto@doa.ri.gov
Joseph Codega, State Budget Officer
Department of Administration, Office of Management & Budget
joseph.codega@omb.ri.gov
Dorothy Pascale, State Controller
Department of Administration, Office of Accounts and Control
dorothy.z.pascale@doa.ri.gov
Finding 2021-030 – Corrective Action Plan
The Authority will fund the Operating Reserve provided there is sufficient cash flow.
Given that the Authority continues to make timely and complete debt service payments, it would make little
sense for the trustee to declare a default for reserve fund noncompliance. In fact, this has been the practical
practice over several years as the Authority has failed to maintain adequate reserves due to insufficient
State appropriations. If a default was declared, the Authority would have 90 days to cure and would seek
a legislative appropriation to remedy the default. Of course, annual appropriations in excess of debt service
requirements would assist in building reserves and reaching the requirements.
Anticipated Completion Date:
Undetermined
Contact Person:
Daniel McConaughy, Executive Director
Rhode Island Convention Center Authority
daniel.mcconaghy@riccauth.com
Finding 2021-031 – Corrective Action Plan
The District agrees with the finding. The District also agrees with the recommendation.
Management will correct the material weakness by ensuring adequate staffing including training the
processes and software involved, appropriate controls related to authorization and review of recorded
transactions, and timely recording of transactions and reconciliations.
Anticipated Completion Date:
Ongoing
Contact Person:
Keree J. Simmons, Director of Finance
Central Falls School District
simmonsk@cfschools.net
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-19
Finding 2021-032 – Corrective Action Plan
The District agrees with the finding. The District also agrees with the recommendation.
Management will correct the noted significant deficiencies by hiring a third party to complete an inventory
of all capital assets. Management will then incorporate this information into the financial software system.
Anticipated Completion Date:
Ongoing
Contact Person:
Keree J. Simmons, Director of Finance
Central Falls School District
simmonsk@cfschools.net
Finding 2021-033 – Corrective Action Plan
Prior period adjustments were made to restate the financial statements as of June 30, 2020, for two
purposes. Adjustments were made to the final total of accrued building permit fees and permit fee income,
in addition misclassifications were identified and corrected in the Project Fund Account.
Building Permit Fee Adjustment
During a reconciliation of building permit fee collection with the State Building Commission, it was brought
to the District’s attention that credit card fees had been collected by the State without the District’s
knowledge. With this and some other minor findings, the District had to adjust the final amounts for the
period ended June 30, 2020 to accurately reflect building permit revenue and the amount due to the City of
Providence.
Corrective Actions
The District has worked closely with the State to develop a streamlined communication strategy on any new
fees collected. In addition, the Director of Operations has been given access to review new permits that
are issued. The State has also incorporated some changes to the building permit fee online portal regarding
District issued permits. This includes incorporating some GIS integration, disabling the use of credit card
for District fees, and an additional payment instruction page with the online portal. Internally, the District
has worked with its Accounting Firm to set into place additional controls and improved bookkeeping.
Project Fund Misclassifications
Several misclassifications were discovered in the Project Fund account during the transition to a third-party
accounting firm.
Correction Actions
The District and Accounting Firm will continue to review prior year financials to ensure there are no other
misclassifications in addition to incorporating semi-annual General Ledger reviews to avoid any future
issues.
Anticipated Completion Date:
Ongoing
Contact Person:
Amber Ilsisko, Director of Operations
I-195 Redevelopment District
ailcisko@195district.com
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-20
Finding 2021-034 – Corrective Action Plan
During the year, the District was the target of a phishing attack where the perpetrator portrayed an
employee, successfully instructed management to amend payroll direct deposit information, and
fraudulently obtained an employee’s net pay for two payroll cycles totaling $6,599.
Corrective Actions
The District has taken a number of measures to prevent this from occurring again in consultation with its IT
consultant, including adding an external tag to all emails stating it is coming from the outside, adding an
extra security filter system, and enabling a multi-factor authentication on all accounts. Finally, management
has also taken a cybersecurity training course.
Anticipated Completion Date:
Ongoing
Contact Person:
Amber Ilsisko, Director of Operations
I-195 Redevelopment District
ailcisko@195district.com
Finding 2021-035 – Corrective Action Plan
In the last quarter of the fiscal year, it is part of the MET’s annual procedures to review all balance sheet
accounts in greater detail prior to fiscal year end. For the fiscal year in question, the chief accountant
position was vacant due to a resignation in May of 2021 that was not filled until the following month. Given
the temporary reduction in staffing and the time necessary to onboard a new employee, this procedure was
delayed.
The MET has filled the chief accountant role with an extremely experienced individual who holds a Certified
Public Accountant (CPA) license. The MET views this as a singular occurrence do to a change in staffing
and not a failure of controls that will be repeated.
Anticipated Completion Date:
Ongoing
Contact Person:
Lucas Lussier, Chief Financial Officer / Business Manager
The Metropolitan Regional Career and Technical School
llussier@metmail.org
Finding 2021-036 – Corrective Action Plan
Due to significant turnover at the CFO position, the relative inexperience of staff accountants, the
considerable increase in transactions for federal grant programs, and new programs related to the ongoing
pandemic, a cutoff transaction was not accounted for properly at year-end by the accounting staff. Rhode
Island Commerce Corporation has since hired a full-time CFO staring in early October 2021. Having a full-
time CFO will provide consistent management oversight and experience to ensure the accounting staff
manages revenue recognition appropriately at critical cut off points for reporting purposes.
Anticipated Completion Date:
Ongoing
Contact Person:
Justin Medeiros, Chief Financial Officer
Rhode Island Commerce Corporation
justin.medeiros@commerceri.com
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-21
Finding 2021-037 – Corrective Action Plan
We agree with this recommendation. The implementation of the Grants Management System will
standardize and enforce UG requirements. The system will be implemented by December 31, 2022.
Anticipated Completion Date:
December 31, 2022
Contact Person:
Steve Thompson, Chief Strategy and Monitoring, Grants Management Office
Department of Administration, Office of Management and Budget
steve.thompson@omb.ri.gov
Finding 2021-038 – Corrective Action Plan
We agree with the recommendations. The Grant Management System will enforce statewide policies and
procedures to standardize and require timely FFATA reporting. The system is designed to include a FFATA
information section at the subrecipient organizational level with the information agencies need for FSRS.
Training functionality for the GMS is part of the project plan.
Anticipated Completion Date:
July 2022
Contact Person:
Steve Thompson, Chief Strategy and Monitoring, Grants Management Office
Department of Administration, Office of Management and Budget
steve.thompson@omb.ri.gov
Finding 2021-039 – Corrective Action Plan
User access is managed by a centralized group for DHS and EOHHS workers and privileged staff. HSRI
customer support staff user access is separately managed by the customer support security manager with
HSRI oversight. The HSRI customer support security manager and the state’s centralized security
management team effectively uses active user reports and each organization’s HR records to confirm
access is granted with the appropriate privilege and terminated in a timely manner. The metrics on users
inactive for >90 days has been significantly reduced after a cleanup of old expired accounts in late 2021.
Even though the manual process is currently effective, the MARSE-2 requirement for auto disabling of
60-day inactive accounts will be implemented in the security runway for SFY 23.
Automatic password expiration is fully functional for both privileged and the client user base as of June
2021.
Privilege access control edits are currently captured in a report and circulated for periodic review by the
agency security managers to assure that changes to the user privileges are authorized. System level
access is monitored and reviewed by the state UHIP security team. System level access reports are
included in the monthly security scanning deliverables.
Anticipated Completion Date:
Ongoing
Contact Person:
Nicole Nelson, Interdepartmental Project Manager
Executive Office of Health and Human Services
nicole.nelson@ohhs.ri.gov
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-22
Finding 2021-040 – Corrective Action Plan
The DoIT policy for Information Technology Security and Risk Program Management, PM-1 has been
implemented for RIBridges. This policy is in alignment with the CMS MARS-E v2 security and privacy
framework requirements that are mandated for the RIBridges system. A team of dedicated state and
contractor staff are on board full time to implement, monitor and assess controls and then correct
deficiencies through continuous monitoring on the system to manage risk. Inputs to the comprehensive
system risk evaluation include: (1) third party vendor annual testing of the MARSE-v2 controls; (2) Soc2
Type2 audit report; (3) system security scanning; (4) continuous monitoring of system components, threats
and required upgrades. The risk assessments are used for annual planning and security budget
requirements. All identified risks are tracked and managed on a Corrective Action Plan until the risk is
eliminated or reduced to an acceptable level.
Anticipated Completion Date:
Ongoing
Contact Person:
Nicole Nelson, Interdepartmental Project Manager
Executive Office of Health and Human Services
nicole.nelson@ohhs.ri.gov
Finding 2021-041 – Corrective Action Plan
The Department of Corrections plans to implement an upgrade to the current inventory system that will
allow barcode scanning. The Department is working with DoIT on Wi-Fi issues as well as Atlantic Business
Systems on implementation of the scanners into the inventory system. The target date for that upgrade is
January 2023.
Anticipated Completion Date:
January 2023
Contact Person:
Brenda Brodeur, Chief Financial Officer
Department of Corrections
brenda.brodeur@doc.ri.gov
Finding 2021-042 – Corrective Action Plan
2021-042a – DEM has implemented a centralized contract and subrecipient process. Each new vendor
and subrecipient contract include a Subrecipient Determination Tool that is completed and reviewed by the
Chief Financial Officer’s designee. This form is currently included in all newly created contracts.
The determination tool is used to review vendor and subrecipient characteristics. Vendor match is just one
characteristic that may be indicative of a subrecipient relationship. In some cases, the work performed may
still classify the relationship as contractual even when match is provided. In these cases, the justification
will include greater detail related to the determination. The Office of Management and Budget created the
current tool found here: https://accountscontrol.ecms.ri.gov/media/5646/download.
Additionally, DEM will enhance communication between the Contract Coordinator and accounting staff in
order to record and track each individual subrecipient agreement. The Contract Coordinator will provide
an electronic file of the fully executed subcontract agreement to the accounting staff for inclusion within the
electronic grant file.
The statewide Grant Management System is currently in the process of rolling out a subrecipient module.
In the future state, there will be a centralized submission and application process for subrecipients through
this system. Subrecipients will be required to register centrally.
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-23
Anticipated Completion Date:
All new vendor and subrecipient contracts will have this determination tool
effective immediately. The enhanced tracking excel database will be
available by June 30, 2022.
2021-042b – DEM will centralize and formalize the review process for relevant audit reports and will file this
documentation in a subrecipient electronic file. An employee will be identified to obtain relevant single audit
reports and review any findings to determine subrecipient risk. Site visits will be scheduled when it is
determined that audit findings pose a risk to the specific program.
Anticipated Completion Date:
DEM will commence review on or after September 30, 2022 for all
subrecipient audits filed for fiscal year ending June 30, 2022.
Contact Person:
Emily Cahoon, Assistant Director, Financial and Contract Management
Department of Environmental Management
emily.cahoon@dem.ri.gov
Finding 2021-043 – Corrective Action Plan
2021-043a – Since 2021, DEM has worked to transition to a standard grant management spreadsheet that
assures all grant matching requirements are met prior to submitting a drawdown for the federal funding.
This grant tracking tool traces the detailed expenditures for both federal and matching funds.
DEM has also enhanced drawdown policies and procedures to incorporate an additional review and
centralized approval prior to completing any drawdowns. Each drawdown identifies not only the federal
funds but the associated matching expenses. Federal funds are not drawn unless the match has been met.
As the State of Rhode Island continues to move forward with the Grant Management System there will be
further enhancements and improvements. The Grant Management System will also have an option to
associate in kind and other expenses that occur outside of the state accounting system to the federal
awards thereby reducing the amount of manual tracking required.
2021-043b – DEM currently requests new unique RIFANS line sequences for all new federal grant awards.
Establishing a unique federal line sequence and with the additional requirement for the RIGID tagging within
the Grant Management System, DEM will be able to trace not only the federal expenses to the award level
but also the matching expenses.
Anticipated Completion Date:
DEM has completed this enhanced tracking and transition prior to
December 31, 2021.
Contact Person:
Emily Cahoon, Assistant Director, Financial and Contract Management
Department of Environmental Management
emily.cahoon@dem.ri.gov
Finding 2021-044 – Corrective Action Plan
DEM will develop a plan to ensure that all properties acquired with federal funds are adequately maintained,
consistent with all applicable federal program requirements. The property noted in the findings at Round
Top Management area was purchased to provide access to fishing and while the headquarters building has
been closed and is not currently in use, the property remains an active access point for fishing.
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-24
Anticipated Completion Date:
DEM anticipates a plan for this property to be developed by June 30, 2023.
Contact Person:
Emily Cahoon, Assistant Director, Financial and Contract Management
Department of Environmental Management
emily.cahoon@dem.ri.gov
Finding 2021-045 – Corrective Action Plan
Beginning in October of 2020, the Department of Justices’ Office of Justice Programs rolled out a new
grants management portal called JustGrants. The transition to this new platform was rife with obstacles
and technical problems, several of which still exist today.
Among other features, this portal included a new method for completing the quarterly financial SF-425
report. The new method does not present the fields in the same manner as the previous reporting portal.
Reporting fields do not cleanly line up with their requested information. It is likely that this led to the
identified errors, where local matching funds were reported in the wrong spot.
Grantees must report “Total recipient share required, recipient share of expenditures, and remaining
recipient share to be provided.” In this case, the figures were entered into the incorrect field by the
Administrative Manager, resulting in inaccurate reporting of matching expenditures.
PSGAO policies and procedures related to the preparation of quarterly financial reports will be modified in
such a way to add a step wherein the “fiscal assistant” grant manager will compile the information for the
Administrative Manager. The Administrative Manager will then review the compiled data for accuracy
before it is entered into the JustGrants portal.
Anticipated Completion Date:
September 30, 2022
Contact Person:
Michael J. Hogan, Administrative Manager
Department of Public Safety, Public Safety Grant Administration Office
michael.hogan@ripsga.gov
Finding 2021-046 – Corrective Action Plan
Some of the agencies that PSGAO subgrants to meet the Single Audit requirement (when an agency
spends more than $750,000 of federal funds in one year). PSGAO requires that those agencies provide a
copy of their audit results. PSGAO agrees that some agencies that are required to submit the results of
their Single Audit Act have instead submitted results of internal audits that was not strictly compliant with
the “Single Audit” requirement.
PSGAO believes that this finding is related to subrecipient risk assessment, not monitoring. The Office has
a very robust subgrant monitoring program up to and including regular desk audits and a line-item review
of every dollar requested for reimbursement.
In response to the needs of agencies around the country to adapt to the workplace realities of COVID-19,
the Office for Victims of Crime requested modified subgrant monitoring plans that considered the nature of
social distance guidance and remote work. The OVC approved a schedule of virtual site visits for 2021 that
were conducted by PSGAO VOCA staff throughout the year.
PSGAO policies and procedures related to risk assessment of potential grant award subrecipients will be
modified to ensure that agencies required to submit their Single Audit reports do so. Review of Single Audit
reports and use of the Federal Audit Clearinghouse will be incorporated in the pre-award risk assessment
process and will be reflected in the PSGAO’s policies and procedures manual. This will include whether
VOCA was tested as a major program and review of any audit findings.
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-25
PSGAO will be conducting in person site visits to all agencies over the summer and fall. PSGAO anticipates
releasing an online sign-up form shortly and will submit documentation regarding the process and calendar
of visits. PSGAO anticipates most site visits being conducted by 9/30/2022, but due to the number of
agencies and potential scheduling conflicts some will occur throughout Fall 2022.
Anticipated Completion Date:
September 30, 2022
Contact Person:
Michael J. Hogan, Administrative Manager
Department of Public Safety, Public Safety Grant Administration Office
michael.hogan@ripsga.gov
Finding 2021-047 – Corrective Action Plan
The state’s Information Technology team has been working with the UI Administrative Benefits team to
address this repeat finding. The Purchase Requisition (1758379) has been created for the DLT Strategic
Plan RFP Posting. As of June 9, 2022, the requisition showing approved in RIFANS and the DoIT Vendor
Management Office has been in contact with State Purchases for the assignment of a buyer and posting of
the RFP. No vendor award will occur until after the new fiscal year starting in July. We are hopeful to have
this completed by July 1, 2023.
Anticipated Completion Date:
July 1, 2023
Contact Person:
Kathy Catanzaro, Administrator, Operations Management
Department of Labor and Training
kathy.catanzaro@dlt.ri.gov
Finding 2021-048 – Corrective Action Plan
The state’s Information Technology team has been working with the UI Administrative Benefits team to
address this repeat finding. A path is being set to address movement on the 15% project with a phased
approach. We have a business analyst gathering requirements and asked for an approach that would
provide a process to at least allow for 15% assessments first, even if manual at first, the focus will be on a
more automated solution. Discussions on Non-Relief of charges will begin when programming for the 15%
project is complete. We are hopeful to have the 15% penalty completed by July 1, 2023, and the non-relief
of charges project completed by January 1, 2024.
Anticipated Completion Date:
July 1, 2023: 15% Project
January 1, 2024: Non-Relief of Charges
Contact Person:
Kathy Catanzaro, Administrator, Operations Management
Department of Labor and Training
kathy.catanzaro@dlt.ri.gov
Finding 2021-049 – Corrective Action Plan
2021-049a – The Department received approval in 2016 for the revised quality assurance program. The
CFR requires approval of the plan, it does not call out written approval. The approval was verbal which
conforms to the regulation. However, the Department continues to work with Federal Highway to update
the over 100 templates and once that process is complete the Department will request Federal Highway to
formally approve in writing.
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-26
2021-049b – The enhanced coordination has already begun to be put in place with the implementation of
headlight, regularly scheduled meetings, staff reorganization, and the move from manual process to
electronic process.
Anticipated Completion Date:
December 31, 2022
Contact Person:
Loren Doyle, Acting Chief Operating Officer / Chief Financial Officer
Department of Transportation
loren.doyle@dot.ri.gov
Finding 2021-050 – Corrective Action Plan
2021-050a – On Monday June 12, 2022, the Department was notified by email by Federal Highway that
the Consultant Service Manual was approved. Federal highway indicated an approval letter would be
coming shortly.
Anticipated Completion Date:
Completed
2021-050b – RIDOT will work with the Bureau of Audits to see how the indirect cost rate reviews can be
accomplished. The Department will also research to determine if there are Federally approved indirect cost
rates for utility companies.
Anticipated Completion Date:
December 31, 2022
Contact Person:
Loren Doyle, Acting Chief Operating Officer / Chief Financial Officer
Department of Transportation
loren.doyle@dot.ri.gov
Finding 2021-051 – Corrective Action Plan
RIDOT Finance and Transit sections are working together to put processes in place to address period of
performance. The Department understands period of performance and compliance. The Department
updated the period of performance dates on the quarterly milestone reports that are submitted to and
approved by FTA on a quarterly basis. FTA did not indicate the original grant agreement required
amendments also and they continued to reimburse expenses therefore the Department felt updating the
period of performance on the milestone reports that are approved by FTA was sufficient. While the audit
lists questioned costs, the Department has spoken with FTA and they agree no funds will be requested to
be paid back. Going forward, as the milestone reports update the period of performance, the Department
will also submit grant amendments to update the original grant agreements.
Anticipated Completion Date:
Implemented for FY 2022
Contact Person:
Loren Doyle, Acting Chief Operating Officer / Chief Financial Officer
Department of Transportation
loren.doyle@dot.ri.gov
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-27
Finding 2021-052 – Corrective Action Plan
RIPTA going forward will use actual allowable expenses incurred during the period of eligibility.
Anticipated Completion Date:
Completed
Contact Person:
Paul DiIorio, Director of Accounting
Rhode Island Public Transit Authority
pdiiorio@ripta.com
Finding 2021-053 – Corrective Action Plan
RIPTA will ensure all requisitions are written and approved prior to any draw down is made.
Anticipated Completion Date:
Completed
Contact Person:
Paul DiIorio, Director of Accounting
Rhode Island Public Transit Authority
pdiiorio@ripta.com
Finding 2021-054 – Corrective Action Plan
RIPTA obtained the signed Subrecipient Agreement on February 11, 2021 for the subaward active during
the 2021 fiscal year. Going forward, RIPTA will follow its subrecipient policies and procedures, including
obtaining timely executed grant award notices and subrecipient agreements, as well as keeping well-
documented subrecipient monitoring files. The monitoring files will include a reporting schedule and
itemized invoices to properly track spending.
Anticipated Completion Date:
Completed
Contact Person:
Paul DiIorio, Director of Accounting
Rhode Island Public Transit Authority
pdiiorio@ripta.com
Finding 2021-055 – Corrective Action Plan
RIPTA has not kept all documentation with the Echo where in the past it was separated. This will ensure
that no documentation will be misplaced.
Anticipated Completion Date:
Completed
Contact Person:
Paul DiIorio, Director of Accounting
Rhode Island Public Transit Authority
pdiiorio@ripta.com
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-28
Finding 2021-056 – Corrective Action Plan
RIPTA will review all documentation prior to reimbursement to make sure all detail backup is attached.
Anticipated Completion Date:
Completed
Contact Person:
Paul DiIorio, Director of Accounting
Rhode Island Public Transit Authority
pdiiorio@ripta.com
Finding 2021-057 – Corrective Action Plan
RIPTA after discussions with FTA was recommended not to be specific on the type of buses being bought,
but just to say the number of buses and dollar amount. We do not need to put the size of the bus in the
grant write up. Any open grants for buses will be amended to take out the size of the buses.
Anticipated Completion Date:
Completed
Contact Person:
Paul DiIorio, Director of Accounting
Rhode Island Public Transit Authority
pdiiorio@ripta.com
Finding 2021-058 – Corrective Action Plan
A reconciliation of CRF expenditures and activities begun during FY22. This reconciliation validated the
use of CRF to PRO approved activity and corrected the posting of CRF expenditures to the proper accounts.
Anticipated Completion Date:
September 30, 2022
Contact Person:
Dorothy Pascale, State Controller
Department of Administration, Office of Accounts and Control
dorothy.z.pascale@doa.ri.gov
Finding 2021-059 – Corrective Action Plan
We disagree with classifying the costs as questionable. The costs for the legal case management software
were not budgeted during FY21 and therefore, although the project was considered, it was not slated to
move forward. The pandemic forced attorneys to work remotely with no access to paper files and calendars.
There was a new need to suddenly calendar remote hearings and deadlines (not a thing pre-COVID). Also,
attorneys from different agencies collaborated on legal COVID work (i.e. RIDOH and DBR) which
necessitated sharing legal calendars, documents and deadlines inter-agency which had not been
contemplated prior to COVID, and did not happen pre-COVID. Due to these extenuating circumstances
and the fact that the project was not budgeted allows for CRF use.
Anticipated Completion Date:
To Be Determined
Contact Person:
Dorothy Pascale, State Controller
Department of Administration, Office of Accounts and Control
dorothy.z.pascale@doa.ri.gov
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-29
Finding 2021-060 – Corrective Action Plan
The implementation of the Grants Management System (GMS) at end of calendar year 2022 will address
this finding as it improves agency subrecipient monitoring. Agency training will include the need to collect
single audit reports.
Anticipated Completion Date:
January 2, 2023
Contact Person:
Steve Thompson, Director, Grants Management Office
Department of Administration, Office of Management & Budget
steve.thompson@omb.ri.gov
Finding 2021-061 – Corrective Action Plan
A reconciliation of CRF expenditures and activities begun during FY22. This reconciliation validated the
use of CRF to PRO approved activity and corrected the posting of CRF expenditures to the proper accounts.
Anticipated Completion Date:
September 30, 2022
Contact Person:
Dorothy Pascale, State Controller
Department of Administration, Office of Accounts and Control
dorothy.z.pascale@doa.ri.gov
Finding 2021-062 – Corrective Action Plan
RIDOH agrees with the finding and recommendations. Deficiencies and a lack of controls around a State
of Rhode Island integrated time and effort reporting system had been identified as a priority prior to RIDOH’s
FY2021 audit. The RFP for the Enterprise Resource Program (ERP) will completely correct this deficiency
at RIDOH. The Human Resources/Payroll module is set to go live in December 2023 and as such, a short-
term corrective action has been identified.
•
RIDOH has worked with DoIT to set up a dedicated SharePoint site (via Microsoft Teams) for
centralized storage of timesheets. Folders will be created for the different divisions and centers for
file upload with access limited to those identified by RIDOH leadership and finance. Master Time
Sheet Coordinators will be given access to the relevant folders, and training to assure that all
submitted and signed time sheets are appropriately stored with standard naming conventions,
including clearly identified amended time sheets. Some Divisions/Centers at RIDOH have existing
MS Teams storage of weekly time sheets; the Master Time Sheet Coordinators for these areas
also will be trained to assure consistency across the Department.
•
The list of Programs/Activities and associated RIFANS account numbers included in the RIDOH
Time Sheet Workbooks will be reviewed and edited to assure that no expired awards/accounts are
available for selection by staff. Training will be provided to staff and supervisors so all individuals
submitting time sheets and supervisors approving time sheets are aware of their appropriate
accounts and allocations. Programs/Activities for COVID work will be updated to clearly indicate
the Workstream supported and charge account(s), both for regular worked hours and any
necessary Overtime, Compensatory Time, or Holiday Worked time.
Anticipated Completion Date:
September 30, 2022
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-30
Contact Persons:
Lisa Morris, Chief Financial Officer
Rhode Island Department of Health
lisa.morris@health.ri.gov
Carla Lundquist, Deputy Chief Financial Officer, Grants Management
Rhode Island Department of Health
carla.lundquist@health.ri.gov
Finding 2021-063 – Corrective Action Plan
RIDOH agrees with the finding and recommendation. Full implementation of the statewide Grants
Management System (eCivis) will provide a coordinated system to identify and monitor subrecipients
statewide. This will reduce replication of effort between state agencies for single audit reports review.
Pending full implementation (which may take several years due to the varied renewal schedules for
subaward RFPs and contract authorizations), RIDOH will develop and implement an interim process to
assure that all subrecipients are identified promptly and single audit reports are reviewed at least annually.
The Purchasing staff at RIDOH maintains a master list of all contracts issued, differentiated between
vendors and subrecipients. All subrecipients will be assigned to a calendar quarter for single audit review.
The contract list will be reviewed quarterly for any changes, and subrecipients will be added/removed from
the quarterly review schedule as needed. Staff will be trained to retrieve reports from the Federal Audit
Clearinghouse, review reports, and record the review results.
Anticipated Completion Date:
June 30, 2023
Contact Persons:
Lisa Morris, Chief Financial Officer
Rhode Island Department of Health
lisa.morris@health.ri.gov
Dorinda Keene, Deputy Chief Financial Officer, Purchasing
Rhode Island Department of Health
dorinda.l.keene@health.ri.gov
Carla Lundquist, Deputy Chief Financial Officer, Grants Management
Rhode Island Department of Health
carla.lundquist@health.ri.gov
Finding 2021-064 – Corrective Action Plan
The State and the Systems Integrator have a continued to provide clarification for the field workers to ensure
that all required documents are requested and scanned into the system. Document verification and use of
available resources like SSA, new hire, SWICA and the Work Number are available for the field staff to use.
Additional training for the field staff is continuously being conducted to ensure that both documentation and
resources are utilized for TANF. Field staff will be asked to verify all documentation during interim and
recertifications. Specialized meetings with ECAs occur quarterly, document review is discussed regularly.
Anticipated Completion Date:
June 2023
Contact Person:
Kimberly Rauch, RI Works/TANF Administrator
Department of Human Services
kimberly.rauch@dhs.ri.gov
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-31
Finding 2021-065 – Corrective Action Plan
Review training and support materials related to co-share calculation, collection and documentation of
payroll information related to CCAP eligibility. System update to stop negative impact/denial of eligibility
when initial pay date is after the employment start date. Review training and support materials related to
residency verification and required documentation. Work with CSDL team on refresher training and/or
updates to support materials related to documentation and co-share calculation.
Anticipated Completion Date:
June 2023
Contact Person:
Sharon Fitzgerald, Assistant Administrator, CCAP
Department of Human Services
sharon.fitzgerald@dhs.ri.gov
Finding 2021-066 – Corrective Action Plan
Report instructions have been revised to include completion of reconciliation between reports and the state
accounting system (RIFANS). Requirements to reconcile adjustments that cross federal fiscal years will
be prioritized. Management will ensure reconciliations occur timely and reports are accurate
Anticipated Completion Date:
June 2022
Contact Person:
Eileen Asselin, Assistant Director, Contract and Financial Management
Department of Human Services
eileen.asselin@dhs.ri.gov
Finding 2021-067 – Corrective Action Plan
The Department disagrees with the finding. The Department has determined the feasibility to develop a
centralized process to monitor both family homes and childcare centers and has concluded it is possible
with the development of a workforce registry. It is anticipated that the RFP process for the creation of a
workforce registry will begin at the end of the month. Once a workforce registry has been created, center
staff will be required to upload their most recent comprehensive background checks. However, the
Department’s current requirements are in compliance with ACF and are not required to be in the file at the
Department. It is important to note that the OIG monitoring and subsequent findings and report we based
on an audit at DCYF which was the Child Care Licensing agency at that time. It was DCYF that the OIG
found was non-complaint with their comprehensive background checks, in that the background did not meet
ACF standards at that time. Upon DHS assuming the Licensing of Child Care from DCYF, DHS completed
an initial audit of all child care staff to ensure every staff member in October 2019 completed and passed
the comprehensive background check. In addition, the Department increased the number of employees
from 5 to 6 once licensing transferred to DHS in late 2020. Since the completion of DHS’ audit at the end
of 2019, DHS continues to ensure compliance for all new staff every year at renewal. DHS also selects
three random staff files at each center visit for compliance. If a non-compliant comprehensive background
is found during the yearly renewal visit, DHS will review all center employees for compliance at that time.
Anticipated Completion Date:
Completed – anticipated Workforce registry completion - 2023
Contact Person:
Nicole Chiello, Child Care Administrator
Department of Human Services
nicole.chiello@dhs.ri.gov
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-32
Finding 2021-068 – Corrective Action Plan
The State recognizes this issue for FY 21. Medicaid identified a coding issue within RIBridges that resulted
in the system not recognizing active TPL when evaluating eligibility for CHIP/non-CHIP Medicaid. The code
was fixed in the May 19, 2022, system release. A one-time eligibility correction will be executed to ensure
existing cases are evaluated with the updated logic. EOHHS will identify ineligible CHIP costs and return
them to the federal grantor.
Anticipated Completion Date:
December 2022
Contact Person:
Nicole Nelson, Interdepartmental Project Manager
Executive Office of Health and Human Services
nicole.nelson@ohhs.ri.gov
Finding 2021-069 – Corrective Action Plan
For finding regarding 42 CFR 438.602(e) Periodic audits, EOHHS has contracted with its External Quality
Review Organization (EQRO) to conduct an audit of encounter data claims starting in May 2022. This will
be conducted every three years per requirements.
EOHHS will modify its contract to ensure compliance with annual audited financial reports specific to the
Medicaid contract on an annual basis.
Anticipated Completion Date:
January 2023
Contact Person:
Mark Kraics, Project Manager Consultant
Executive Office of Health and Human Services
mark.kraics@ohhs.ri.gov
Finding 2021-070 – Corrective Action Plan
EOHHS has implemented the necessary functionality to screen and enroll Managed Care providers in
accordance with the 21st Century Cures Act requirements. Working collaboratively with the Medicaid
MCOs, the State has set forth a schedule that will enroll providers based on provider type, in waves through
February 2023.
Anticipated Completion Date:
February 2023
Contact Person:
Nicole Nelson, Interdepartmental Project Manager
Executive Office of Health and Human Services
nicole.nelson@ohhs.ri.gov
Finding 2021-071 – Corrective Action Plan
EOHHS is working with the MCOs in the FY21 contract settlement to review records substantiating financial
settlements with the OAGs support to improve controls. In addition, in the modularization of MMIS, EOHHS
aims to have the system better able to accommodate system-based payouts. Relatedly, in the FY23
contract amendment for MCOs, EOHHS intends to include encounter data quality requirements with
penalties for non-compliance.
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-33
Anticipated Completion Date:
Ongoing
Contact Person:
Katie Alijewicz, Medicaid CFO
Executive Office of Health and Human Services
katie.alijewicz@ohhs.ri.gov
Finding 2021-072 – Corrective Action Plan
2021-072a – The State recognizes this issue for FY 21. Medicaid identified a coding issue within RIBridges
that resulted in the system not recognizing active TPL when evaluating eligibility for CHIP/non-CHIP
Medicaid. The code was fixed in the May 19, 2022, system release. A one-time eligibility correction will be
executed to ensure existing cases are evaluated with the updated logic.
2021-072b – EOHHS will require HHS agencies to submit the reconciliations of their quarterly reports now
that all agencies except RIDOH have cost allocation plans from PCG. In addition, EOHHS will implement
earlier deadlines from the other agencies to ensure we are reporting what has been drawn down to avoid
potential reporting issues at the end of the FFY.
2021-072c – EOHHS will conduct this analysis.
Anticipated Completion Date:
December 2022
Contact Person:
Katie Alijewicz, Medicaid CFO
Executive Office of Health and Human Services
katie.alijewicz@ohhs.ri.gov
Finding 2021-073 – Corrective Action Plan
EOHHS has spent a considerable amount of time defining the future-state of TPL data exchanged between
Medicaid (MMIS) and the MCOs. Language was included in the (now cancelled) MCO RFQ with MCOs to
share TPL files with EOHHS. Future contract language given collineation of RFQ will include requirements
to better identify TPL by the MCOS and ensure that Medicaid is payor of last resort. EOHHS will amend
its contract to reflect updates practices regarding TPL identification and the FDCR will account for TPL
claims.
Anticipated Completion Date:
Ongoing
Contact Person:
Mark Kraics, Project Manager Consultant
Executive Office of Health and Human Services
mark.kraics@ohhs.ri.gov
Finding 2021-074 – Corrective Action Plan
Inpatient Hospital Reimbursement – EOHHS created an annual review template that EOHHS staff can use
to conduct the annual rate review as required in the State Plan. The template includes a check of any
changes to the DRG algorithm version, the DRG relative weights, the DRG Base Price(s), the outlier
thresholds, outlier payment parameters, policy adjustors, and the age adjustors. EOHHS shared a draft of
the template with OAG staff members who noted it was adequate and will meet the requirements of the
State Plan. The template was used beginning with SFY 22 rate changes; therefore, EOHHS does not
anticipate a repeat audit finding for inpatient hospital reimbursement in SFY 22.
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-34
Nursing Facility Reimbursement – This finding includes two components: (1) Periodic audit of financial
records and (2) triennial rate review. Both require a State Plan Amendment which must be authorized by
the General Assembly. EOHHS requested that the General Assembly authorize EOHHS to remove this
language from its State Plan or to allocate the administrative funding necessary for EOHHS to comply. No
authorization was given to EOHHS in SFY21, but we expect the SFY23 budget will have the authorization
to remove the language from the State Plan.
Anticipated Completion Date:
December 2022
Contact Person:
Katie Alijewicz, Medicaid CFO
Executive Office of Health and Human Services
katie.alijewicz@ohhs.ri.gov
Finding 2021-075 – Corrective Action Plan
2021-075a – Industry standards do not include NCCI edit reviews in SOC auditing. EOHHS/Medicaid is
exploring alternative methods for validation to satisfy this audit.
2021-075b – MES (Medicaid Enterprise System) procurement planning is active and ongoing. EOHHS will
ensure inclusion of NCCI edit requirements.
2021-075c – NCCI editing has been included in the (now cancelled) MCO RFQ. Future RFQ material will
likewise include language for NCCI editing compliance with specific regarding EOHHS’ oversight of NCCI
requirements
Anticipated Completion Date:
Ongoing
Contact Person:
Nicole Nelson, Interdepartmental Project Manager
Executive Office of Health and Human Services
nicole.nelson@ohhs.ri.gov
Finding 2021-076 – Corrective Action Plan
2021-076a – As of June 13, 2022, the PRTF State Plan Amendment is pending CMS Approval. EOHHS
continues to work CMS to address its questions, specifically on the PRTF Upper Payment Limit
Demonstration, which was required to be submitted along with the State Plan Amendment. Once the State
Plan Amendment is approved, EOHHS will have a State Plan Amendment which will codify the PRTF
reimbursement process, thereby avoiding a repeat finding.
2021-076b – EOHHS will continue to work to ensure that allowable medical services provided by DCYF
providers are billed directly to the MMIS and subject to all designed claims processing, recipient eligibility,
and provider eligibility controls.
Anticipated Completion Date:
Ongoing
Contact Person:
Nicole Nelson, Interdepartmental Project Manager
Executive Office of Health and Human Services
nicole.nelson@ohhs.ri.gov
State of Rhode Island
Corrective Action Plans – Fiscal 2021 Findings
E-35
Finding 2021-077 – Corrective Action Plan
2021-077a – The Agency concurs with this recommendation. The reporting error was a manual error and
clerical in nature. The causation was attributable to the unprecedented size and scope of the COVID 19
disaster event. The Agency is in the process of assimilating all of the grant accounting records into the new
statewide Grants Management System (GMS). The internal controls and standardized and automated
reporting features of this system will mitigate the prospect of another occurrence of such an event.
2021-077b – The Agency concurs with this recommendation. The Agency has already contacted the
federal award agency and disclosed the finding. It should be noted that the federal award agency had not
identified the error prior to Agency contact. The Agency is preparing revised SF-425 reports for state fiscal
year 2021 to reflect corrected expenditures and drawdowns for the period.
Anticipated Completion Date:
June 30, 2022
Contact Person:
Therese Chalko, Chief Financial Officer
Rhode Island Emergency Management Agency
therese.chalko@ema.ri.gov
Finding 2021-078 – Corrective Action Plan
The Department will work with our IT department to resolve the issue of supplementing the minimum weekly
benefit amount to accommodate the Executive Order.
Anticipated Completion Date:
December 31, 2022
Contact Person:
Kathy Catanzaro, Administrator, Operations Management
Department of Labor and Training
kathy.catanzaro@dlt.ri.gov
State of Rhode Island
Single Audit Report
For the Fiscal Year Ended June 30, 2021
Office of the Auditor General
General Assembly
Summary Schedule
of Prior Audit Findings
(prepared by the State’s management)
State of Rhode Island
Single Audit Report
For the Fiscal Year Ended June 30, 2021
F-i
Summary Schedule of Prior Audit Findings
Table of Prior Findings by Federal Program
Program Title
Assistance
Listing
Number
Findings included in Previous
Single Audit Reports
Financial Statements
N/A
2019-006, 2019-009, 2019-012,
2019-035, 2020-001, 2020-002,
2020-003, 2020-004, 2020-005,
2020-006, 2020-007, 2020-008,
2020-009, 2020-010, 2020-011,
2020-012, 2020-013, 2020-014,
2020-015, 2020-016, 2020-017,
2020-018 2020-019, 2020-020,
2020-021, 2020-022, 2020-023,
2020-024, 2020-025
Supplemental Nutrition Assistance Program
(SNAP) Cluster:
2020-026, 2020-027, 2020-028
Supplemental Nutrition Assistance Program
(SNAP)
10.551
State Administrative Matching Grants for SNAP
10.561
Child Nutrition Cluster:
2018-044
School Breakfast Program
10.553
National School Lunch Program
10.555
Special Milk Program for Children
10.556
Summer Food Service Program for Children
10.559
WIC Supplemental Nutrition Program for Women,
Infants, and Children
10.557
2020-029
Community Development Block Grants/State’s
Program and Non-Entitlement Grants in Hawaii
14.228
2019-041, 2019-042
Unemployment Insurance
17.225
2020-030, 2020-031, 2020-032
Federal Transit Cluster:
2019-044, 2020-035, 2020-036
Federal Transit Capital Investment Grants
20.500
Federal Transit Formula Grants
20.507
State of Good Repair Grants Program
20.525
Bus and Bus Facilities Formula Program
20.526
Coronavirus Relief Fund
21.019
2020-033, 2020-034
Student Financial Assistance Cluster:
2020-037, 2020-038, 2020-039,
2020-040
Federal Supplemental Education Opportunity
Grants
84.007
Federal Work-Study Program
84.033
Federal Perkins Loan Program – Federal Capital
Contributions
84.038
Federal Pell Grant Program
84.063
Federal Direct Student Loans
84.268
Teacher Education Assistance for College and
Higher Education Grants (TEACH Grants)
84.379
Health Professions Student Loans, Including
Primary Care Loans/Loans for Disadvantaged
Students
93.342
Nursing Student Loans
93.364
State of Rhode Island
Single Audit Report
For the Fiscal Year Ended June 30, 2021
F-ii
Summary Schedule of Prior Audit Findings
Table of Prior Findings by Federal Program
Program Title
Assistance
Listing
Number
Findings included in Previous
Single Audit Reports
Temporary Assistance for Needy Families
93.558
2020-026, 2020-027, 2020-041,
2020-042, 2020-043, 2020-044
Low-Income Home Energy Assistance Program
93.568
2020-045, 2020-046, 2020-047,
2020-048
CCDF Cluster:
2020-026, 2020-027, 2020-044,
2020-049
Child Care and Development Block Grant
93.575
Child Care Mandatory and Matching Funds of the
Child Care and Development Fund
93.596
Foster Care Title IV-E
93.658
2020-050, 2020-051
Adoption Assistance
93.659
2020-050, 2020-051, 2020-052,
Children’s Health Insurance Program
93.767
2020-026, 2020-027, 2020-053,
2020-055, 2020-060, 2020-061,
2020-062, 2020-063, 2020-064
Medicaid Cluster:
2018-069, 2019-066, 2020-026,
2020-027, 2020-054, 2020-055,
2020-056, 2020-057, 2020-058,
2020-059, 2020-060, 2020-061,
2020-062, 2020-063, 2020-064,
2020-065
State Medicaid Fraud Control Units
93.775
State Survey and Certification of Health Care
Providers and Suppliers (Title XVIII) Medicare
93.777
Medical Assistance Program
93.778
Opioid STR
93.788
2020-065, 2020-066, 2020-067,
2020-068
HIV Care Formula Grants
93.917
2020-069, 2020-070, 2020-071,
2020-072
State of Rhode Island – Fiscal Year Ended June 30, 2021
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
F-1
Finding 2018-044 – CFDA 10.553; 10.555; 10.556; 10.559
(Reported Initially in Finding 2013-030)
The Department of Corrections needs to ensure that it complies with federal regulations governing the receipt, distribution and
inventory of USDA-Donated Foods.
2018-044
Improve the functionality of the software used to account for USDA-Donated Foods to ensure compliance
with federal regulations.
Status: Partially Implemented. See Finding 2021-041 for current year update and recommendation.
Finding 2018-069 – CFDA 93.775; 93.777; 93.778
(Reported Initially in Finding 2017-074)
EOHHS made advance payments totaling $154,322 to home care providers in fiscal 2018 due to delays in processing eligibility for
individuals in need of long-term care services and supports. These advances were federally reimbursed (at the applicable federal
financial participation rate) but did not meet criteria for reimbursement.
2018-069
Recoup the advances to providers and credit the federal grantor for their portion of advances made.
Status: Not Implemented. As the State recoups amounts from these providers as outstanding claims are processed, advances
charged to Medicaid will be credited back to the federal grantor. Questioned Cost finding applicable to 2018.
Finding 2019-006 – Financial Statement Finding
The processes followed for periodic physical inventories of capital assets and the evaluation of inventory results can be enhanced
to ensure that accurate capital asset records are maintained.
2019-006a
Include staff from Office of Accounts and Control on the team performing each cyclical, departmental capital
asset inventory.
2019-006b
Enhance review and inquiry for material capital assets reported as not found before assets are removed from
the State’s capital asset inventory records.
Status: Partially Implemented. See Finding 2021-020 for current year update and recommendation.
Finding 2019-009 – Financial Statement Finding
(Reported Initially in Finding 2018-007)
Policies need to be further enhanced to guide the manner in which costs are charged to and reimbursed from the Information
Technology internal service fund.
2019-009
Develop policies consistent with the State’s accounting policies and generally accepted accounting principles
to provide for consistent recognition of revenue and expense to ensure the internal service fund operates on
as close to a break-even model as possible.
Status: Implemented.
Finding 2019-012 – Financial Statement Finding
(Reported Initially in Finding 2017-007)
The form and content of the State’s annual operating budget should be enhanced to facilitate alignment with the specific funds
used to account for activities and to provide more effective planning, management and monitoring tools.
2019-012a
Improve the presentation of the budget amounts for transportation activities. Consider changes in the level of
detail and include all transportation activity.
2019-012b
Modify how the Lottery operations are included in the annual budget by including a separate pro forma
operating statement supporting the net transfer to the General Fund.
2019-012c
Include fund information within the budget to facilitate recording the budget in the accounting system and
preparing budget-to-actual comparisons.
Status: Partially Implemented. Issue not reported as a significant deficiency in internal control for fiscal year 2021.
State of Rhode Island – Fiscal Year Ended June 30, 2021
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
F-2
Finding 2019-035 – Financial Statement Finding
(Reported Initially in Finding 2018-031)
The Employees’ Retirement System can improve accounting for investment expenses.
2019-035a
Formalize the investment income and expense processes that are external to the investment custodian and
result in amounts recorded on the financial statements. Enhance monitoring and review of these processes.
2019-035b
Integrate certain investment accounting functions that are now external to oversight of the System’s Chief
Financial Officer with the System’s other accounting functions.
Status: Implemented.
Finding 2019-041 – CFDA 14.228
The Office of Housing and Community Development (OHCD) should improve procedures to ensure federal reports are retained
and adequately supported by underlying records.
2019-041
Enhance procedures for maintaining adequate documentation to ensure that federal reports are properly
submitted and accurately reflect underlying information.
Status: Partially Implemented. Implementation continues with completion in fiscal 2022.
Finding 2019-042 – CFDA 14.228
Tracking and monitoring of locally-held program income generated by Community Development Block Grants (CDBG) activities
should be enhanced by OHCD.
2019-042
Strengthen procedures for tracking program income generated and retained by CDBG subrecipients sufficient
to ensure that amounts are used in accordance with federal regulations.
Status: Partially Implemented. Implementation continues with completion in fiscal 2022.
Finding 2019-044 – CFDA 20.500; 20.507; 20.525; 20.526
RIDOT subrecipient monitoring procedures need to be enhanced to ensure that funds are used by subrecipients in compliance
with FTA program laws and regulations.
2019-044a
Obtain and review Federal Transit Cluster subrecipient audit reports and issue management decisions, as
applicable, for findings related to pass-through awards to the subrecipient.
2019-044b
Ensure contracts and subaward documentation contain all the required elements at the time of award to
ensure compliance with subgrantees.
Status: Implemented.
Finding 2019-066 – CFDA 93.775; 93.777; 93.778
Improvements in policies and procedures related to Medicaid claiming for patients at Eleanor Slater Hospital are needed to ensure
compliance with federal requirements.
2019-066a
Conclude the external review of BHDDH billing practices with respect to compliance with the IMD exclusion
and services provided to forensic patients.
2019-066b
Adopt a policy, for inclusion in the Medicaid State Plan, regarding the frequency of measurement of the IMD
exclusion ratio and related policies for determining the primary diagnosis of patients at the Eleanor Slater
Hospital. Include applicable monitoring procedures to be employed by EOHHS, as the State Medicaid agency,
to ensure the allowability of Medicaid reimbursement.
Status: Implemented.
State of Rhode Island – Fiscal Year Ended June 30, 2021
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
F-3
Finding 2020-001 – Financial Statement Finding
(Reported Initially in Findings 2016-001 and 2016-021)
The State completed a strategic plan to coordinate needed replacements/enhancements to its key statewide financial and
administrative systems. Implementation and funding of the strategic plan is essential to ensure that critical legacy financial
systems, such as the payroll system, which pose a business continuity risk, will be available to support State operations.
2020-001a
Implement the comprehensive strategic plan to address the business continuity risks, deficiencies in controls
over financial reporting and operational inefficiencies identified in the State’s current financial systems.
2020-001b
Secure a consistent funding stream to ensure resources are available for the project through completion.
Status: Partially Implemented. See Finding 2021-001 for current year update and recommendation.
Finding 2020-002 – Financial Statement Finding
Controls over the processing of unemployment insurance claims are ineffective to sufficiently prevent fraudulent unemployment
insurance benefit payments. The State’s system used to process unemployment insurance claims utilizes outdated technology.
Recent efforts to develop a new system remain incomplete.
2020-002a
Continue to enhance procedures to timely identify fraudulent claims by strengthening controls within the
legacy claims processing system as well as those newly implemented processing functionalities employed to
meet the increase in claims activity.
2020-002b
Implement a strategic plan to address the required modernization of the unemployment benefit claims
processing system which addresses the State’s investment to date in the multi-state consortium project.
Status: Partially Implemented. See Finding 2021-002 for current year update and recommendation.
Finding 2020-003 – Financial Statement Finding
The State does not have a process to quantify unemployment insurance benefits approved but unpaid at fiscal year end.
2020-003
Enhance Employment Security Fund fiscal closing procedures to identify and accrue benefits approved and
unpaid at year-end.
Status: Implemented.
Finding 2020-004 – Financial Statement Finding
(Reported Initially in Finding 2016-010)
The continued and growing complexity of Medicaid program operations adds to the challenge of accurately accounting for all
Medicaid program related financial activity within the State’s financial statements.
2020-004a
formalize a risk assessment process for significant Medicaid related activities to determine where controls
and other data validation procedures are required. Delineate those control responsibilities delegated to
contractors, the source and reliability of the data utilized in those processes, and whether those processes
are sufficient to ensure accurate financial reporting of these Medicaid activities.
2020-004b
Utilize managed care contract audit provisions to validate data provided by managed care organizations for
significant financial program activities.
2020-004c
Minimize instances where material financial activities are reliant on manual processes to ensure proper
financial reporting.
Status: Partially Implemented. See Finding 2021-003 for current year update and recommendation.
State of Rhode Island – Fiscal Year Ended June 30, 2021
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
F-4
Finding 2020-005 – Financial Statement Finding
(Reported Initially in Finding 2017-008)
The Executive Office of Health and Human Services (EOHHS) authorized more than $190 million in disbursements (system
payouts and manual payments) and $100 million in system recoupments during fiscal 2020. This financial activity represents
transactions outside of the normal claims processing functionality of the Medicaid Management Information System (MMIS). While
these types of payments are necessary within Medicaid, the reporting and internal control processes relating to these types of
disbursements and recoupments are manual and external to other established control procedures. Such amounts are not easily
identified or quantified by the MMIS.
2020-005a
Adopt policies that formalize the financial transaction type that best aligns with the nature of the transaction.
2020-005b
Develop comprehensive reporting for system payouts, manual disbursements, and system recoupments to
improve the transparency of these transactions processed by the Medicaid fiscal agent.
Status: Partially Implemented. See Finding 2021-004 for current year update and recommendation.
Finding 2020-006 – Financial Statement Finding
(Reported Initially in Finding 2016-002)
Management focus, training and implementation resources have been insufficient to ensure that departments and agencies are
assessing and documenting internal control consistent with management’s overall responsibility for the adequacy of the design
and operation of internal control. Internal controls safeguard public resources and support accurate financial reporting.
2020-006a
Commit additional resources to training and implementation materials to ensure that departments and
agencies are adequately documenting their internal controls to reflect an understanding of its required
elements in accordance with an acceptable framework such as COSO or the Green Book.
2020-006b
Implement an internal control assessment and documentation effort to coincide with the implementation of a
fully integrated ERP system.
Status: Not Implemented. See Finding 2021-005 for current year update and recommendation.
Finding 2020-007 – Financial Statement Finding
(Reported Initially in Findings 2018-033 and 2019-005)
The State can continue to improve its consideration of controls over functions performed by external parties by enhancing use and
documentation of Service Organization Control (SOC) reports provided by the external parties. These improvements are necessary
and consistent with management’s responsibility for the overall adequacy of the design and operation of internal control.
2020-007a
Enhance training and monitoring to ensure compliance with newly implemented SOC report evaluation
procedures.
2020-007b
Ensure that relevant complimentary user entity (State) controls identified by service organizations are also in
place and operating effectively.
2020-007c
Ensure expectations and auditor report modifications included in SOC reports are evaluated timely and
documented regarding the impact on the State’s overall control procedures.
Status: Partially Implemented. See Finding 2021-006 for current year update and recommendation.
Finding 2020-008 – Financial Statement Finding
(Reported Initially in Finding 2015-008)
The State can enhance certain system access controls within the RIFANS statewide accounting system.
2020-008a
Enhance current procedures for reviewing the activities of “super users” (including system administrators) on
a scheduled basis to ensure that additions, modifications, and deletions initiated by them are appropriate.
Assess the potential for systemic changes when completing the State’s strategic plan for designing and
implementing a fully integrated ERP system.
2020-008b
Implement policies regarding “super users” modifications of their own access and authorization.
2020-008c
Improve controls over RIFANS access by ensuring consistent use of the reporting functions and by modifying
existing procedures to ensure that all changes are being properly authorized and documented and reflected
accurately in agency hierarchies and system workflows.
Status: Partially Implemented. See Finding 2021-007 for current year update and recommendation.
State of Rhode Island – Fiscal Year Ended June 30, 2021
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
F-5
Finding 2020-009 – Financial Statement Finding
(Reported Initially in Finding 2015-003)
Statewide accounting controls over receivables should be enhanced.
2020-009a
Explore options to enhance statewide general ledger controls over receivables. Ensure all balances referred
to the CCU for collection have been reflected in the RIFANS general ledger and financial statements.
2020-009b
Improve accounting controls over COVID-19 testing receivables to ensure completeness of billing and
collections and appropriate crediting to the original funding source, where applicable.
Status: Not Implemented. See Finding 2021-008 for current year update and recommendation.
Finding 2020-010 – Financial Statement Finding
(Reported Initially in Finding 2015-004)
The State can improve controls over recording federal revenue to ensure (1) amounts are consistent with the limitations of grant
awards from the federal government and (2) claimed expenditures on federal reports are consistent with amounts recorded in the
State’s accounting system.
2020-010
Implement controls to ensure that the allocable share of federal program expenditures is consistent with grant
award limitations. Reassess the current FGIS process with the goal of enhancing compliance and
effectiveness.
Status: Partially Implemented. See Finding 2021-009 for current year update and recommendation.
Finding 2020-011 – Financial Statement Finding
(Reported Initially in Finding 2017-010)
Responsibility for monitoring the investment activity and other compliance aspects of funds on deposit with a fiscal agent (trustee)
should be vested with the Office of the General Treasurer.
2020-011
Complete implementation of effective oversight and monitoring responsibilities for funds on deposit with fiscal
agents.
Status: Implemented.
Finding 2020-012 – Financial Statement Finding
(Reported Initially in Findings 2015-006 and 2015-012)
The State should formalize identification of major systems, standardize application testing, and incorporate business continuity
planning within its overall disaster recovery testing.
2020-012a
Formalize and communicate the restoration priority of major applications and communicate the priority order
with the affected State agencies within disaster recovery tests at the State’s designated disaster recovery
site.
2020-012b
Establish a repeatable level of application testing and incorporate business continuity planning within periodic
disaster recovery testing.
Status: Partially Implemented. See Finding 2021-021 for current year update and recommendation.
Finding 2020-013 – Financial Statement Finding
(Reported Initially in Finding 2015-007)
The State does not follow uniform enterprise-wide program change control procedures for the various IT applications operating
within State government. This increases the risk that unauthorized or inappropriate changes could be made to IT applications
without detection.
2020-013a
Develop and implement procedures detailing specific requirements for program change control and
disseminate and train DoIT support staff in its proper execution.
2020-013b
Determine the appropriate combination of operational, procedural and/or technical adjustments required to
use change management software to result in adequate program change control for the entire enterprise.
Status: Not Implemented. See Finding 2021-022 for current year update and recommendation.
State of Rhode Island – Fiscal Year Ended June 30, 2021
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
F-6
Finding 2020-014 – Financial Statement Finding
(Reported Initially in Findings 2016-011, 2017-019, 2017-020 and 2018-026)
The State can enhance its enterprise-wide security policies and procedures and communication of these policies and procedures
with State agencies. Additionally, the State can enhance its ongoing security posture by periodically performing risk assessments
to identify if mission critical systems comply with IT policies and procedures.
2020-014a
Continue to update IT security policies and procedures to ensure such policies and procedures conform to
current standards and address all critical systems security vulnerabilities with particular emphasis on keeping
patches and versioning current to minimize cybersecurity risk.
2020-014b
Perform risk assessments at least once every three years with the results documented and communicated to
management for action. Contract for the performance of IT security compliance reviews and make use of
available Service Organization Control reports to extend IT security monitoring of critical systems.
2020-014c
Prepare a plan that prioritizes significant system security risks with the goal of achieving compliance with
DoIT’s formalized system security standards for all significant State systems.
Status: Partially Implemented. See Finding 2021-023 for current year update and recommendation.
Finding 2020-015 – Financial Statement Finding
(Reported Initially in Finding 2017-018)
Controls should be improved over the counter tax collections accepted at the Division of Taxation by upgrading the cashiering
technology and integrating that functionality into the Division’s STAARS system.
2020-015
Complete the planned application implementation and related technology upgrades used to process counter
payments at the Division of Taxation and ensure the cashiering application is integrated with the Division’s
STAARS system.
Status: Partially Implemented. Issue not reported as a significant deficiency in internal control for fiscal year 2021.
Finding 2020-016 – Financial Statement Finding
(Reported Initially in Finding 2015-015)
Controls can be improved over the recording of license, registration and surcharge fees collected by the Division of Motor Vehicles
(DMV) and deposited in the IST Fund.
2020-016a
Strengthen and document control procedures over the fees collected by the Division of Motor Vehicles (DMV)
and transferred to RIDOT to ensure compliance with RI General Law Chapter 39-18.1. Implement monitoring
procedures to assess the reasonableness of revenue amounts collected by the DMV for deposit in the IST
Fund.
2020-016b
Perform a reconciliation between RIFANS and RIMS on a monthly and annual basis to ensure the data in
RIMS supports the revenue recorded in RIFANS.
2020-016c
Establish a process and control structure to document the DMV’s review of the General Laws related to
changes in its fee structure and ensure any changes are properly made to RIMS and any relevant excel files
used to support the recording of revenue into RIFANS.
2020-016d
Establish new accounts to record overages and shortages. Record the actual deposit date in the RIMS
deposit date field.
Status: Partially Implemented. See Finding 2021-024 for current year update and recommendation.
State of Rhode Island – Fiscal Year Ended June 30, 2021
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
F-7
Finding 2020-017 – Financial Statement Finding
(Reported Initially in Finding 2018-028)
The Division’s system security approach can be further improved by including additional critical system security requirements.
2020-017a
Establish a senior information security officer function to manage security oversight.
2020-017b
Develop a sensitive data inventory for the RIMS system to identify sensitive data elements needing greater
protection.
2020-017c
Database logging and monitoring should be implemented for access to sensitive data in the RIMS database.
2020-017d
Conduct formal incident response training for DMV staff.
2020-017e
Enhance controls and timeframes to ensure prompt termination of system access when employees leave or
change functions. Document timely reviews of access privileges.
Status: Partially Implemented. See Finding 2021-025 for current year update and recommendation.
Finding 2020-018 – Financial Statement Finding
(Reported Initially in Finding 2015-015)
Controls can be enhanced over financial reporting to ensure consistent and accurate reporting of IST Fund activity in accordance
with generally accepted accounting principles.
2020-018a
Ensure the transactions identified through the analysis of each activity and/or funding source within the IST
Fund result in the appropriate categorization and reporting of fund balance components. Ensure a complete
reconciliation of activity by funding source to the fund balance components included on the financial
statements is performed.
2020-018b
Re-assess policies, procedures, and controls to identify and record accounts payable at fiscal close with the
aim of streamlining and simplifying where possible. Consider increased use of estimates where appropriate.
2020-018c
Enhance fiscal closing procedures to ensure all expenditures recorded in clearing accounts are properly
allocated to the correct accounts by fiscal year-end. Consider whether recording accrual entries to the
clearing accounts is appropriate.
2020-018d
Improve controls over the FMS to RIFANS mapping table by ensuring all FMS accounts have an associated
RIFANS account.
2020-018e
Formalize the review of RIDOT’s financial closing procedures and preparation of the draft financial statements
to enhance control over financial reporting for the IST Fund.
Status: Partially Implemented. See Finding 2021-026 for current year update and recommendation.
Finding 2020-019 – Financial Statement Finding
(Reported Initially in Finding 2015-016)
Controls over the identification of transportation infrastructure assets need further improvement to ensure the accuracy of reported
amounts. Controls should be improved to identify impaired infrastructure assets as well as removing infrastructure costs when
assets are retired or replaced.
2020-019a
Enhance controls over the assignment of the project infrastructure code by creating a standard form to
document the proper infrastructure code to be entered into FMS and management’s concurrence and
verification of the infrastructure code entered into FMS.
2020-019b
Enhance controls over the identification of projects determined to be substantially complete to include a
verification that the correct date is entered into FMS. Enhance controls over the maintenance of RIDOT’s
Schedule of Construction in Progress to ensure the information maintained in the schedule agrees to FMS
and the financial statements.
2020-019c
Document consideration of transportation infrastructure impairment as required by generally accepted
accounting principles.
2020-019d
Implement a process to remove estimated infrastructure assets and related accumulated depreciation when
assets have been replaced or taken out of service.
Status: Partially Implemented. See Finding 2021-027 for current year update and recommendation.
State of Rhode Island – Fiscal Year Ended June 30, 2021
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
F-8
Finding 2020-020 – Financial Statement Finding
(Reported Initially in 2018-032)
The resources necessary to effectively manage and administer the OPEB System to ensure all System functions are met and
adequately controlled should be assessed. A unified database or computer application is needed to maintain membership data
for each of the State’s OPEB plans. This would improve controls over the administration of the benefit programs and the process
to accumulate data necessary for periodic actuarial valuations of the OPEB plans for both funding and accounting purposes.
2020-020a
Assess the resources necessary to effectively manage and administer the OPEB System to ensure all System
functions are met and adequately controlled.
2020-020b
Implement a member benefit computer application to accumulate and manage plan membership data to
support the overall administration of the OPEB System with enhanced controls.
2020-020c
Evaluate assigned responsibilities for key functions and segregate certain responsibilities for incompatible
functions to enhance controls over critical plan administrative functions.
2020-020d
Establish consistent procedures to identify deceased plan members and prompt timely termination of
coverage.
Status: Not Implemented. See Finding 2021-029 for current year update and recommendation.
Finding 2020-021 – Financial Statement Finding
Rhode Island Lottery – The Lottery’s controls and monitoring processes to address the unique operational characteristics and
related risks of the mobile sportsbook and iLottery gaming options need further enhancement.
2020-021a
Develop a comprehensive “internal audit” functionality appropriate for sportsbook gaming and iLottery
activities. Consider engaging a consultant to guide the development of this process.
2020-021b
Continue with the planned transition of the custodianship of sportsbook eWallets to the sportsbook host, Twin
River, to streamline and enhance controls over the mobile sportsbook cash settlement process.
Status: Implemented.
Finding 2020-022 – Financial Statement Finding
(Reported Initially in Finding 2015-026)
Rhode Island Convention Center Authority – During the year ended June 30, 2020, the Authority was unable to fund the Operating
Reserve requirement of the restrictive covenants for the RICC and the DDC pursuant to the indentures.
2020-022
We recommend that the Authority fund the Operating Reserve.
Status: Not Implemented. See Finding 2021-030 for current year update and recommendation.
Finding 2020-023 – Financial Statement Finding
(Reported Initially in Findings 2015-021 and 2015-022)
Central Falls School District – Material adjustments to year-end balances and current year activity were necessary for the financial
statements to be fairly presented in accordance with generally accepted accounting principles.
2020-023
A comprehensive plan to coordinate all District financial accounting recording and reporting activities is in the
process of being developed and implemented. This plan should include the development of a comprehensive
policies and procedures manual; adequate staffing including training of all staff as to both the processes and
the software involved; appropriate controls related to authorization and review of recorded transactions; timely
recording of transactions, reconciliations and reviews of reconciliations so as to detect and correct errors in a
timely manner, and a comprehensive review of the District’s organizational structure to ensure adequate
levels of supervision and clear reporting paths for all staff involved.
Status: Partially Implemented. Improvements have been made, but not totally resolved. See Finding 2021-031 for current year
update and recommendation.
State of Rhode Island – Fiscal Year Ended June 30, 2021
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
F-9
Finding 2020-024 – Financial Statement Finding
(Reported Initially in Finding 2015-025)
Central Falls School District – The District does not have procedures for maintaining the capital asset records on a perpetual basis
or for taking a physical inventory of these assets. In addition, the District does not have a system in place for identifying capital
assets acquired with federal grant funds.
2020-024
We recommend that the District implement an integrated software package that will enable capital assets to
be recorded when the asset is acquired rather than being captured at year end. We further recommend that
the capital asset inventory be updated to include the location of the asset and a code to identify all assets
that are acquired with federal funds. Management should utilize this capital asset inventory listing, as well as
the controllable asset listing, to conduct periodic inventories of the assets.
Status: Partially Implemented. Improvements have been made, but not totally resolved. See Finding 2021-032 for current year
update and recommendation.
Finding 2020-025 – Financial Statement Finding
Rhode Island Higher Education Savings Trust – A daily reconciliation process between the Program Manager and custodian occurs
for all RIHEST balances and transactions, including omnibus level balances and transactions. However, this reconciliation process
will not detect errors in data exchanged between the Program Manager and the omnibus partners, nor will it detect missing or
incomplete information.
2020-025
This matter was identified during our audit of RIHEST’s basic financial statements as of and for the fiscal year
ended June 30, 2019, when there was only one omnibus partner, and was not corrected during the year
ended June 30, 2020. We recommend that the Program Manager develop control processes to ensure
periodic reconciliations of balances and transactions on its recordkeeping platform with those on the
recordkeeping platforms of the omnibus partners. This reconciliation process should also include a verification
of the accuracy of financial reports that are critical to plan wide financial reporting.
Status: Implemented.
Finding 2020-026 – CFDA 10.551, 10.561; 93.558; 93.575, 93.596; 93.767; 93.775, 93.777, 93.778
(Reported Initially in Finding 2019-037)
Controls over the RIBridges eligibility and benefit system are inadequate to ensure that user access is limited to only authorized
individuals and such access is consistent with each user’s specific scope of duties. Additionally, automated password change
controls were not operational; and therefore, users were not required to change passwords at required intervals.
2020-026a
Ensure the automatic system prompt for password reset functionality is operational to require password resets
at intervals consistent with State and federal policy.
2020-026b
Strengthen and formalize the overall monitoring of RIBridges access to ensure access is granted
appropriately, terminated timely, and consistent with each individual’s scope of duties.
2020-026c
Evaluate the access control management process and the report elements so that privilege changes and
attempted changes are captured and evaluated for appropriateness. In addition, implement a process by
which the State can periodically check that the Deloitte Security Administrator and Deloitte employee privilege
changes and actions are appropriate.
Status: Partially Implemented. See Finding 2021-039 for current year update and recommendations.
State of Rhode Island – Fiscal Year Ended June 30, 2021
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
F-10
Finding 2020-027 – CFDA 10.551, 10.561; 93.558; 93.575, 93.596; 93.767; 93.775, 93.777, 93.778
(Reported Initially in Finding 2015-069)
EOHHS, DHS and the Division of Information Technology must enhance systems security oversight over systems used to
administer multiple federally funded programs to fully comply with federal regulations relating to ADP risk and system security
review. The plan must be sufficiently comprehensive and include timely reaction to and consideration of identified security issues
and risk factors.
2020-027a
Enhance compliance with federal ADP Risk Analysis and System Security Review requirements by creating
a comprehensive, integrated plan for RIBridges and the MMIS. Coordinate the efforts of EOHHS, DHS, DoIT,
and contractors in meeting these objectives.
2020-027b
Ensure that the formalized plan includes a comprehensive risk assessment for both systems (RIBridges and
MMIIS), critical controls deemed effective in mitigating those risks, and specific monitoring procedures to
ensure the effective operation of those policies and procedures, including reliance on external contract
services when required.
Status: Partially Implemented. See Finding 2021-040 for current year update and recommendations.
Finding 2020-028 – CFDA 10.551, 10.561
(Reported Initially in Finding 2017-043)
DHS can improve its review and consideration of service organization control reports for vendors performing elements of the EBT
process.
2020-028
Enhance review and follow-up, as necessary, on SOC reports provided by vendors to evaluate the
effectiveness of controls over external components of the EBT systems. Document consideration of relevant
user entity controls identified within the SOC reports.
Status: Implemented.
Finding 2020-029 – CFDA 10.557
DOH needs to review all Service Organization Control (SOC) reports for the WIC program to assess the sufficiency of controls in
place at the service organizations relevant to program compliance requirements.
2020-029a
Review all SOC reports to determine if the service organizations have appropriate control procedures in place
to obtain reasonable assurance of compliance with federal laws and regulations.
2020-029b
Require service organizations, where possible, to provide SOC reports detailing those relevant controls have
been suitably designed and are operating effectively.
Status: Implemented.
Finding 2020-030 – CFDA 17.225
Controls over the processing of unemployment insurance claims are ineffective to sufficiently prevent fraudulent unemployment
insurance benefit payments.
2020-030a
Continue to enhance procedures to timely identify fraudulent claims by strengthening controls within the
legacy claims processing system as well as those newly implemented processing functionalities employed to
meet the increase in claims activity.
2020-030b
Implement a strategic plan to address the required modernization of the unemployment claims processing
system.
Status: Partially Implemented. See Finding 2021-047 for current year update and recommendation.
State of Rhode Island – Fiscal Year Ended June 30, 2021
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
F-11
Finding 2020-031 – CFDA 17.225
(Reported Initially in Finding 2015-032)
The Department of Labor and Training (DLT) did not make the necessary changes to its system to allow for the imposition of
penalties on overpayments due to fraud, and to prohibit relief from charges to an employer’s Unemployment Compensation (UC)
account when the overpayment was the result of the employer’s failure to respond timely or adequately to a request for information.
2020-031
Adopt procedures to: (1) impose and collect a 15% penalty on benefit overpayments of claimants who commit
fraud (RIGL 28-42-62.1(a)(4)) and (2) prohibit providing relief to an employer account when an overpayment
is the result of the employer’s failure to respond timely or adequately to a request for information by the State
agency (RIGL 28-43-3(2)(viii)).
Status: Not Implemented. See Finding 2021-048 for current year update and recommendation.
Finding 2020-032 – CFDA 17.225
The ETA (Employment and Training Administration) 227 report filed by Department of Labor and Training (DLT) for the quarter
ended June 30, 2020, significantly under-reported fraudulent claim activity.
2020-032
Ensure ETA 227 reports detailing overpayment detection and collection activities are accurate and complete
and amounts owed are reflected on the financial statements.
Status: Not Implemented. The Department is in the process of assessing and preparing to implement new ETA requirements
regarding the reporting of fraudulent claim activity.
Finding 2020-033 – CFDA 21.019
Controls over final centralized approval of expenditures funded by the Coronavirus Relief Fund (CRF) should be improved.
2020-033a
Ensure that all expenditures and activities are reviewed and approved for allowability criteria through the
centralized review process and that those approvals are documented for each phase of the review.
2020-033b
Review State payroll adjustments to CRF to ensure that the expenditures meet the allowability criteria as
determined by the US Treasury.
Status: Partially Implemented. See Finding 2021-058 for current year update and recommendation.
Finding 2020-034 – CFDA 21.019
Questioned costs were identified for Workforce Stabilization Loans made to congregate care providers who could not demonstrate
the funds were used in accordance with loan agreements.
2020-034
Conclude repayment of remaining loans to congregate care providers who did not comply with or could not
demonstrate compliance with Workforce Stabilization Loan agreements.
Status: Implemented.
Finding 2020-035 – CFDA 20.500, 20.507, 20.525, 20.526
Rhode Island Public Transit Authority – One purchase over $5,000 that was not competitively bid, and the Authority had no
documentation on file substantiating the reasons why the purchase was not competitively bid. This purchase was also more than
$25,000 and the Authority had no documentation on file verifying that the vendor was not suspended, debarred or otherwise
excluded from participating in the transaction.
2020-035
We recommend that the Rhode Island Public Transit Authority adhere to its established procurement,
suspension and debarment policies and procedures and ensure that non-competitive procurements and
covered transactions are properly documented.
Status: Implemented.
State of Rhode Island – Fiscal Year Ended June 30, 2021
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
F-12
Finding 2020-036 – CFDA 20.500, 20.507, 20.525, 20.526
Rhode Island Public Transit Authority – The Rhode Island Public Transit Authority has established policies and procedures for
subrecipient monitoring in accordance with Uniform Guidance. These policies and procedures, however, were not properly adhered
to for a subaward that was active during the 2020 fiscal year. The grant award notice and subrecipient agreement were not
executed in a timely manner and formal monitoring was not performed during the 2020 fiscal year.
2020-036
We recommend that the Rhode Island Public Transit Authority ensure its established policies and procedures
are followed and that subaward activities not begin until the grant award notice and subrecipient agreement
have been properly executed. We also recommend that the formal monitoring procedures described in its
subrecipient policy be performed and documented.
Status: Partially Implemented. See Finding 2021-054 for current year update and recommendation.
Finding 2020-037 – CFDA 84.007, 84.033, 84.038, 84.063, 84.268, 84.379, 93.342, 93.364
University of Rhode Island – Federal regulations require the University to notify students, within the required timeframe, of credits
to the student’s account of any Direct Loan. During our testing, we noted one student, out of a sample of 40, who was not notified.
2020-037
The University should create a process to ensure that notifications go to all applicable students.
Status: Implemented.
Finding 2020-038 – CFDA 84.007, 84.033, 84.038, 84.063, 84.268, 84.379, 93.342, 93.364
Rhode Island College – The Federal government requires the College to report student enrollment changes to the National Student
Loan Data System (“NSLDS”) within sixty days. In a sample of forty students who either graduated, withdrew from the institution,
or became enrolled on less than half-time basis, we noted the following:
•
Three students that graduated were never reported to NSLDS.
•
One student that graduated was not reported to NSLDS within the required time frame. The time frame to report the
status change was 147 days, which was 87 days late.
2020-038
The College should provide training to employees responsible for processing information for the NSLDS and
ensure that they have adequate knowledge in the related rules and regulations. This training should include
an explanation of the College’s date of determination of withdrawal, the importance of reporting timely, and
the consequences of late reporting. Additionally, this should include an explanation of the status changes,
the importance of reporting the correct status changes and the consequences of incorrect reporting.
Additionally, submission of additional rosters may reduce the likelihood of the finding in the future.
Status: Implemented.
Finding 2020-039 – CFDA 84.007, 84.033, 84.038, 84.063, 84.268, 84.379, 93.342, 93.364
(Reported Initially in Finding 2015-046)
Community College of Rhode Island – The Federal government requires the College to report student enrollment changes to the
National Student Loan Data System (“NSLDS”) within sixty days. During our testing, we noted four students, out of a sample of
forty, were not reported to NSDLS within the required timeframe.
•
Three students that withdrew were not reported to NSLDS.
•
One student that withdrew was not reported to NSLDS within the required timeframe. The status change was reported
at 69 days, which was 9 days late.
2020-039
The Community College should provide training to employees responsible for processing information for the
NSLDS and ensure that they have adequate knowledge in the related rules and regulations. This training
should include an explanation of the Community College’s date of determination of withdrawal, the importance
of reporting timely, and the consequences of late reporting. Additionally, submission of additional rosters may
reduce the likelihood of the finding in the future.
Status: Implemented.
State of Rhode Island – Fiscal Year Ended June 30, 2021
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
F-13
Finding 2020-040 – CFDA 84.007, 84.033, 84.038, 84.063, 84.268, 84.379, 93.342, 93.364
Community College of Rhode Island – Federal regulations state that any unearned Title IV grant or loan assistance received by a
student must be refunded to the Title IV programs upon a student’s withdrawal from the institution. The Community College has
45 days from the date they determined the student withdrew to return any unearned portions of Title IV funds. During our testing,
we noted four students, out of a sample of forty, had unearned Title IV aid that was not returned to the Federal Government within
45 days of the determined withdrawal date by 93 - 99 days.
2020-040
The Community College should strengthen their controls surrounding the timely review of student withdrawals
to ensure Return of Title IV calculations are completed in a timely manner and refunds are returned to the
Department of Education within the required timeframe.
Status: Implemented.
Finding 2020-041 – CFDA 93.558
(Reported Initially in Finding 2017-064)
The State can improve compliance with TANF eligibility requirements specifically by ensuring consistent documentation of eligibility
components within RIBridges.
2020-041a
Continue efforts to ensure that all required eligibility compliance requirements are operational within
RIBridges.
2020-041b
Enhance controls to ensure all required documentation to support eligibility determination, including sufficient
historical case data, is retained in the electronic case record and/or supported by scanned documentation.
Status: Partially Implemented. See Finding 2021-064 for current year update and recommendation.
Finding 2020-042 – CFDA 93.558
(Reported Initially in Finding 2017-066)
DHS can improve the timely update and/or development of new employment plans for clients upon the expiration of an existing
plan.
2020-042
Improve the timeliness of updating or establishing new employment plans upon the expiration of an existing
plan. Sanction clients not in compliance with their employment plans, and close cases after three months of
non-compliance.
Status: Partially Implemented. The State and Systems Integrator continue to make system & staffing improvements to ensure
TANF regulations are followed. Staffing was specifically addressed during the FY2022. The RIW report, DQ-003, was
implemented in FY2019, and is utilized regularly to reduce cases without an existing employment plan. RI Works / TANF
training for staff has been revised and implemented, training is for both Eligibility Technicians and Employment & Career
Advisors (ECAs) cover the employment plan requirements. Supervisors continue to review cases during supervisor
approvals. The system requires that supervisors review all “other” hardship cases. Additionally, supervisors have to
assign task/cases for workers out of the Worker Inbox (WIB). Each supervisor reviews these cases thoroughly to ensure
accuracy.
Finding 2020-043 – CFDA 93.558
(Reported Initially in Finding 2017-067)
The State began to meet the required Income Eligibility and Verification System requirements in fiscal 2020.
2020-043
Complete implementation of the federally required data interfaces within the RIBridges eligibility system to
meet the IEVS TANF program requirement.
Status: Partially Implemented. The State and Systems Integrator teams have operationalized income verification for RI Works /
TANF during FFY 2022. The immigration status information maintained by the INS interfaces was previously in
production. The SSA and SWICA interfaces was previously implemented. Furthermore, TANF staff and eligibility staff
have had access to “The Work Number” throughout the year for the purpose of additional wage verification. Additional
training for the field staff is continuous to ensure that both documentation and resources are utilized for TANF.
State of Rhode Island – Fiscal Year Ended June 30, 2021
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
F-14
Finding 2020-044 – CFDA 93.558; 93.575, 93.596
(Reported Initially in Finding 2019-051)
DHS subrecipient monitoring procedures need to be enhanced to ensure that funds are expended by subrecipients in compliance
with applicable program laws and regulations.
2020-044a
Modify subrecipient risk assessment procedures to include consideration of whether program was tested as
a major program in subrecipient Single Audits and other factors such as the continuity and capability of
subrecipient management and volume of program activity.
2020-044b
Issue management decisions on subrecipient audit findings within six months as required by federal
regulation.
Status: Partially Implemented. Financial management has been revising our subrecipient risk assessment procedures with the
goal of incorporating consideration of major programs in subrecipient Single Audits and other factors. Due to pandemic-
related staff shortages, we were not able to fully communicate new procedures throughout our division, but plan to have
the new process implemented by the end of SFY22. Going forward, DHS will assemble a list of all subrecipients and
verify that management decision letters are issued to all subrecipients. Each year, DHS has been making progress
toward this goal and will continue to improve this process.
Finding 2020-045 – CFDA 93.568
(Reported Initially in Finding 2018-063)
DHS subrecipient monitoring procedures need to be enhanced to ensure that funds are expended by subrecipients in compliance
with LIHEAP laws and regulations. Timely management decisions must be made on subrecipient audit findings.
2020-045a
Modify subrecipient risk assessment procedures to include consideration of whether LIHEAP was tested as
a major program in subrecipient Single Audits and other factors such as the continuity and capability of
subrecipient management and volume of program activity.
2020-045b
Issue management decisions on LIHEAP subrecipient audit findings within six months as required by federal
regulation.
Status: Implemented.
Finding 2020-046 – CFDA 93.568
(Reported Initially in Finding 2019-053)
DHS must enhance controls regarding the allocation of expenditures to multiple available grant awards/periods to ensure
compliance with earmarking, period of performance and reporting compliance requirements for LIHEAP.
2020-046
Implement a combination of unique RIFANS accounts (line sequences) to identify/track LIHEAP expenditure
categories and utilize cost centers to differentiate grant award sources, to enhance controls overs compliance
with earmarking, period of performance and reporting requirements.
Status: Implemented.
Finding 2020-047 – CFDA 93.568
(Reported Initially in Findings 2015-053 and 2017-063)
Available documentation was insufficient to adequately support the data cited within the Annual Report on Households and the
LIHEAP Performance Data Form. Review of required reports is inadequate to prevent or detect potential misstatements within the
inputs of the report figures.
2020-047a
Ensure the data in the Hancock LIHEAP system is complete and accurate.
2020-047b
Ensure the federal reports are supported by the reporting from the Hancock LIHEAP system.
2020-047c
Enhance the review process in place over all federal reports to prevent or detect misstatements prior to
submission.
Status: Implemented.
State of Rhode Island – Fiscal Year Ended June 30, 2021
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
F-15
Finding 2020-048 – CFDA 93.568
(Reported Initially in Finding 2019-055)
DHS should ensure controls are adequately designed and operational within the computer application utilized by the State to
administer LIHEAP at local community action agencies.
2020-048a
Require the vendor supporting the LIHEAP computer application to have a SOC examination performed to
provide assurance on the operating effectiveness and data integrity of the application. Alternatively,
monitoring and assessment procedures could be performed by DHS and the State’s Division of Information
Technology. Look for other states that utilize the Hancock System and inquire as to how they gain comfort
over the system controls and whether a collaboration between the states would speed the process of
obtaining a SOC report.
2020-048b
Adhere to the State's Enterprise-wide guidelines and require individuals with access to LIHEAP's Hancock
system to change their passwords every 90 days. Employees with privileged access to the system should
change their password every 60 days.
Status: Partially Implemented. Password update frequency has been updated. DHS is awaiting a SOC report from the software
vendor, but award calculations are monitored and verified by LIHEAP.
Finding 2020-049 – CFDA 93.575, 93.596
(Reported Initially in Finding 2017-068)
RIBridges controls over eligibility determinations, income validation and calculation of required parent cost-sharing amounts require
strengthening for the CCDF Cluster programs.
2020-049a
Complete a plan to improve controls over CCDF eligibility, including parent earnings information for parent
co-shares.
2020-049b
Perform recertifications at least every twelve months.
Status: Partially Implemented. See Finding 2021-065 for current year update and recommendation.
Finding 2020-050 – CFDA 93.658; 93.659
The Department of Children, Youth and Families can improve controls over the monitoring of its cost allocation plan, which is
administered by a vendor, to ensure that costs distributed to various programs are appropriate and consistent with the federally
approved plan.
2020-050a
Perform more consistent and comprehensive reconciliation of all cost allocation system inputs.
2020-050b
Ensure certain department personnel have a sufficient understanding to oversee the cost allocation process
and adequately review the cost allocation results.
2020-050c
Ensure the cost allocation plan, allocation techniques and narratives are current and consistent with the actual
process and documentation has been updated when changes are made.
2020-050d
Adjust the State’s accounting system timely to reflect the result of the cost allocation process.
Status: Implemented.
Finding 2020-051 – CFDA 93.658; 93.659
DCYF can enhance controls over the Foster Care and Adoptions Assistance eligibility determination process by requiring the
vendor to complete their eligibility quality control reviews on a timely basis.
2020-051
Ensure reports provided by the vendor performing eligibility quality control reviews are timely.
Status: Implemented.
State of Rhode Island – Fiscal Year Ended June 30, 2021
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
F-16
Finding 2020-052 – CFDA 93.659
DCYF can enhance its processes for retention of critical documentation that supports Adoption Assistance eligibility to ensure
federal reimbursement of adoption subsidy payments in accordance with applicable laws and regulations.
2020-052a
Adjust federal reports to reimburse the federal government for the unallowable adoption subsidy charges.
2020-052b
Create a central repository for all records that support the Adoption Assistance eligibility determination.
Consider electronic imaging of these critical documents to facilitate storage and retrieval.
Status: Partially Implemented. DCYF added Adoption Decrees to centralized electronic Title IV-E Adoption Eligibility Records
following Audit after working with Family Court to receive documents electronically. DCYF plans to enhance electronic
Title IV-E Adoption eligibility records to include criminal and background checks-licensing information- ultimately as part
of a new system design.
Finding 2020-053 – CFDA 93.767
(Reported Initially in Finding 2014-067)
The State did not materially comply with CHIP eligibility requirements during fiscal 2020. RIBridges is not fully evaluating all
eligibility criteria to ensure compliance with federal regulations.
2020-053a
Address and correct the RIBridges system deficiencies which result in material noncompliance with federal
regulations regarding CHIP eligibility.
2020-053b
Improve documentation requirements over critical applicant data not currently validated through electronic
interfaces.
2020-053c
Identify ineligible CHIP costs and return to the federal grantor.
Status: Partially Implemented. See Finding 2021-068 for current year update and recommendations.
Finding 2020-054 – CFDA 93.775, 93.777, 93.778
The State’s current practices for inpatient hospital and long-term care facility rate setting do not fully comply with its State plan
provisions requiring an annual review of inpatient hospital rate components and nursing facility audit requirements.
2020-054
Document compliance with the Federal and State plan rate review and periodic audit requirements for both
inpatient and long-term care providers or amend the State Plan with CMS approval to align to current
practices.
Status: Partially Implemented. See Finding 2021-074 for current year update and recommendations.
Finding 2020-055 – CFDA 93.767; 93.775, 93.777, 93.778
The State should improve controls to ensure that its managed care organizations (MCOs) are maximizing TPL recoveries for
Medicaid recipients.
2020-055a
Share and match identified TPL coverage with the MCOs upon enrollment and as an individual’s TPL status
changes. Periodic matching with MCO enrollment files would ensure that TPL coverage is consistently being
applied throughout the Medicaid and CHIP programs.
2020-055b
Explore the other TPL process recommendations above to further improve controls over TPL identification
and cost avoidance.
Status: Not Implemented. See Finding 2021-075 for current year update and recommendations.
Finding 2020-056 – CFDA 93.775, 93.777, 93.778
BHDDH did not comply with Medicaid State Plan requirements for retainer payments made to certain providers.
2020-056
Credit the federal government for the questioned costs identified for ineligible retainer payments.
Status: Not Implemented. Questioned cost finding relating to fiscal 2020.
State of Rhode Island – Fiscal Year Ended June 30, 2021
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
F-17
Finding 2020-057 – CFDA 93.775, 93.777, 93.778
Certain psychiatric residential treatment facility services provided to children in the State’s custody that were charged to Medicaid
required formalization in the Interagency Services Agreement between DCYF and EOHHS, the Single State Medicaid Agency.
Controls over other services provided to children in the State’s custody would be improved if processed through the Medicaid
Management Information System (MMIS).
2020-057a
Formalize the requirements for PRTF services being provided to children in the State’s custody within the ISA
between EOHHS and DCYF to be allowable for Medicaid reimbursement.
2020-057b
Ensure that allowable medical services provided by DCYF providers are billed directly to the MMIS and
subject to all designed claims processing, recipient eligibility, and provider eligibility controls.
Status: Partially Implemented. See Finding 2021-076 for current year update and recommendations.
Finding 2020-058 – CFDA 93.775, 93.777, 93.778
Controls to ensure NCCI claims processing edits are functioning over Medicaid activity require improvement to ensure compliance
with federal regulations.
2020-058a
Include review of the application of NCCI edits into the scope of the Service Organization Control Review
conducted annually of the State’s claims processing system and related fiscal agent controls to ensure
continued operation of the NCCI federal requirements within the MMIS.
2020-058b
Address other NCCI requirements (e.g., order of edits, confidentiality agreement) in accordance with NCCI
Medicaid Technical Guidance.
Status: Partially Implemented. See Finding 2021-075 for current year update and recommendations.
Finding 2020-059 – CFDA 93.775, 93.777, 93.778
(Reported Initially in Findings 2014-067 and 2015-060)
The State did not materially comply with Medicaid eligibility requirements due to control deficiencies relating to the processing and
documentation of recipient eligibility.
2020-059a
Address and correct the RIBridges system deficiencies which result in material noncompliance with federal
regulations regarding Medicaid eligibility.
2020-059b
Formalize and implement a plan to ensure all designated system controls (PEV and redetermination) over
eligibility are fully operational and well documented in the system.
2020-059c
Improve RIBridges’ documentation of critical eligibility components to ensure that it can adequately document
federal compliance with recipient eligibility requirements (including better case history supporting eligibility
determinations made over time).
2020-059d
Continue system modifications to address remaining MAGI determination requirements in accordance with
State Health Official guidance provided in 2019.
2020-059e
Identify ineligible Medicaid program costs and return to the federal grantor.
Status: Partially Implemented. Due to temporary changes in eligibility determination processes during fiscal 2021 approved by
CMS in response to the on-going public health emergency (PHE), many of the previous federal requirements relating to
eligibility for Medical Assistance (i.e., validation of income, periodic redeterminations) have been suspended during the
PHE. EOHHS believes that RI Medicaid is compliant with the limited eligibility requirements applicable in fiscal 2021.
Finding 2020-060 – CFDA 93.767; 93.775, 93.777, 93.778
(Reported Initially in Finding 2017-073)
Timely processing of Medicaid applications in RIBridges continues to be problematic resulting in delays in determining eligibility
particularly for applicants requiring long-term care services.
2020-060
Continue efforts to implement RIBridges functionality improvements to ensure compliance with federal
regulations governing the timely determination of Medicaid eligibility.
Status: Implemented.
State of Rhode Island – Fiscal Year Ended June 30, 2021
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
F-18
Finding 2020-061 – CFDA 93.767; 93.775, 93.777, 93.778
(Reported Initially in Finding 2016-063)
Data discrepancies exist between the systems used to determine Medicaid and CHIP eligibility (RIBridges) and the
claims/capitation payment system (MMIS). This impacts controls to ensure payments are only made on behalf of eligible individuals
and has resulted in duplicate capitation payments to managed care organizations.
2020-061a
Identify and resolve the underlying causes of eligibility data discrepancies between the MMIS and RIBridges
systems.
2020-061b
Determine the necessary corrective action and resources needed to eliminate the current backlog of system
exceptions and future mismatches between the two systems.
Status: Partially Implemented. Federal requirements prevented States from changing the eligibility status of Medicaid recipients
during the on-going public health emergency, except for in certain situations. This requirement was designed to ensure
the continuity of medical coverage for recipients during the PHE. This requirement has resulted in a significant amount
of eligibility discrepancies between the RIBridges eligibility system and the MMIS claims payment system as the State
has prevented terminations and changes in eligibility status from communicating to the MMIS. This has allowed on-
going Medicaid coverage and claims payments to continue as required by federal PHE requirements. Upon the end of
the PHE designation by the federal government, the State will recertify all applicants and ensure that eligibility data
between these two critical Medicaid systems is consistent.
Finding 2020-062 – CFDA 93.767; 93.775, 93.777, 93.778
(Reported Initially in Finding 2009-086)
EOHHS should adopt stricter settlement requirements when performing contract settlement for its managed care organizations
(MCOs). Capitation payments to MCOs represent approximately 55% of Medicaid benefit expenditures. EOHHS needs to develop
a comprehensive risk assessment and monitoring plan to ensure that managed care expenditures are validated and settled each
contract period.
2020-062a
Formalize a comprehensive risk assessment and monitoring plan to ensure that managed care expenditures
are validated and settled each contract period.
2020-062b
Adopt a strict contract settlement based on submitted and accepted encounter data. Improve the adjudication
of MCO encounter data to provide a more complete determination of the medical expenditures incurred during
managed care contract periods.
2020-062c
Require an independent audit of selected controls employed by the MCOs as well as the overall medical and
administrative costs measured under the contracts. At a minimum, utilize contract audit provisions to validate
contract settlement components for MCO expenditures not represented by encounter data.
2020-062d
Enforce a consistent contract settlement calculation protocol for all MCOs.
Status: Partially Implemented. See Finding 2021-071 for current year update and recommendations.
Finding 2020-063 – CFDA 93.767; 93.775, 93.777, 93.778
(Reported Initially in Finding 2019-064)
The State is not currently in compliance with federal regulations for the screening, enrollment, and revalidation of providers used
in managed care organization (MCO) networks. Although many of these providers are also enrolled as Medical Assistance
providers, the new regulations mandate that States screen, enroll, and periodically revalidate all managed care network providers.
2020-063
Implement procedures to comply with federal regulations for the screening, employment and revalidation of
providers used in managed care organization networks.
Status: Partially Implemented. See Finding 2021-070 for current year update and recommendations.
Finding 2020-064 – CFDA 93.767; 93.775, 93.777, 93.778
(Reported Initially in Finding 2019-068)
Controls should be improved over the quarterly reporting of expenditures for the Medicaid and CHIP programs.
2020-064a
Eliminate untimely adjustment of expenditures between Medicaid and CHIP by increasing direct allocation of
expenditures to the proper program when distributed.
2020-064b
Ensure that all HHS agencies can reconcile their administrative claiming determined through cost allocation
to the State Accounting System on a quarterly basis.
Status: Partially Implemented. See Finding 2021-072 for current year update and recommendations.
State of Rhode Island – Fiscal Year Ended June 30, 2021
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
F-19
Finding 2020-065 – CFDA 93.775, 93.777, 93.778; 93.788
(Reported Initially in Finding 2019-065)
Department of Behavioral Healthcare, Developmental Disabilities and Hospitals administration costs were allocated to the Medicaid
and Opioid STR programs through a departmental cost allocation plan that was not federally approved.
2020-065
Redetermine administrative costs for periods allocated through unapproved methodologies using the plan
submitted to the DHHS Division of Cost Allocation (once formally approved). Credit the federal programs for
excess administrative costs identified for those periods.
Status: Not Implemented. Questioned cost finding relating to fiscal 2020.
Finding 2020-066 – CFDA 93.788
BHDDH can enhance its monitoring of subrecipients as required by federal program requirements.
2020-066a
Coordinate with EOHHS to ensure all subrecipients are identified to allow collection and review of applicable
single audit reports.
2020-066b
Clarify the Department’s understandings with other State departments and agencies to validate that those
agencies are aware of federal requirements under the Opioid STR grant award and that appropriate
subrecipient monitoring procedures are to be properly performed for all subawards.
2020-066c
Perform on-site monitoring of providers, including eligibility testing, to ensure that subrecipients are properly
complying with contract requirements and federal regulations.
Status: Partially Implemented. Full implementation in fiscal 2022.
Finding 2020-067 – CFDA 93.788
BHDDH did not have a procedure in place to ensure compliance with the five percent limit on administrative and infrastructure
development expenditures.
2020-067
Develop a process to monitor for compliance with the limit on administrative and infrastructure development
costs. Consider modifying existing expenditure tracking to include the calculation of these costs.
Status: Partially Implemented. Full implementation in fiscal 2022.
Finding 2020-068 – CFDA 93.788
Expenditures were overstated in the Opioid STR program.
2020-068
Correct the overstatement of Opioid STR grant expenditures – modify federal financial reports as needed.
Status: Partially Implemented. Full implementation in fiscal 2022.
Finding 2020-069 – CFDA 93.917
Pharmacy rebates and related expenditures should be accounted for as federal funds consistent with program guidelines and
requirements.
2020-069a
Recode the established rebate account to a federal account source code and link (by CFDA number) to other
program activity
2020-069b
Enhance controls over cash management to ensure rebate funds are used prior to any drawdown of federal
awards.
Status: Implemented.
State of Rhode Island – Fiscal Year Ended June 30, 2021
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
F-20
Finding 2020-070 – CFDA 93.917
Claims for HIV drugs were paid through the AIDS Drug Assistance Program (ADAP) rather than Medicaid when the program
participant had established Medicaid eligibility.
2020-070a
Explore options with the Medicaid fiscal agent operating the MMIS to link ADAP and Medicaid profiles to
ensure the intended payment hierarchy is observed when both ADAP and Medicaid eligibility profiles exist.
Status: Partially Implemented. Via our Pharmacy Benefits Manager (PBM) we have established two significant preventive
measures. The first is ADAP staff access to MMIS so that clients can be checked as the system allows for other
insurance, particularly Medicaid. As noted, we do accept, and it is allowable to accept, dually eligible individuals with
Medicaid and Medicare. The goal is to intercept any active, solo, Medicaid clients at the point where the current data
allows. If the system is not updated the review will be compromised. Next, the PBM sends a weekly query that designates
Medicaid solos and duals. The staff reviews this and checks to the eligible ADAP list.
2020-070b
Determine the amount of pharmacy claims paid through ADAP (and related pharmacy rebates) that should
have been paid through Medicaid.
Status: Implemented.
2020-070c
Enhance controls to only establish ADAP eligibility profiles within the MMIS when indicated by consideration
of all health insurance available to the program participant.
Status: Partially Implemented. Current more sophisticated adjustments to the third liability and “other insurance claims” is being
done. A meeting was held with PBM and a new business plan and statement of work is currently underway to be finalized
by July 2022.
Finding 2020-071 – CFDA 93.917
EOHHS lacks a comprehensive database of program participant information to effectively manage specific compliance activities
for the HIV Care Formula Grant.
2020-071
Continue implementation of a comprehensive database (Lifia) of program participant information to effectively
manage various interdependent compliance objectives.
Status: Implemented.
Finding 2020-072 – CFDA 93.917
EOHHS can improve its monitoring of subrecipient agencies which provide direct services to program participants.
2020-072a
Resume on-site monitoring of subrecipient activities when permitted and include review of current
subrecipient activities during on-site reviews.
2020-072b
Enhance timely review of subrecipient audit reports.
Status: Partially Implemented. Ongoing virtual monitoring. As note, as a result of COVID agencies are not back full time as of
yet, However, program staff regularly are in touch with agencies from both a fiscal/program management and services
monitoring perspective. Performance measures are reviewed quarterly, and staff discuss monitoring concerns and
accomplishments each week. Annually, we have site visits that are composed of a long review (monitoring standards
from an administrative, fiscal, budget and services perspective . The program held virtual site visits last year and are in
the process of its annual site visits now.