September 28, 2002

 

 

 

The Honorable Mike Johanns, Governor

Members of the Legislature

Citizens of the State of Nebraska

 

I am pleased to submit the Annual Budgetary Report for the year ended June 30, 2002.

 

The budgetary report contains detailed budget and accounting information based on the State's programmatic budgeting system.  This report does not provide financial information in accordance with Generally Accepted Accounting Principles (GAAP) since the State's budgetary system differs significantly from GAAP.  A Comprehensive Annual Financial Report (CAFR) will be prepared in a format prescribed by the Governmental Accounting Standards Board (GASB), GAAP, and other authoritative sources.

 

The purpose of the Annual Budgetary Report is to show compliance with the Legislature's appropriation mandates at the program level and to provide additional information on revenues and expenditures that are not generally presented in the State's CAFR.  We have included many schedules, most of them detailing how Nebraska spent its financial resources.  Such schedules are listed in the table of contents.

 

Basis of Accounting and Budgetary Control

 

The Nebraska Accounting System (NAS) is an automated, centralized accounting system that was developed and implemented beginning with fiscal year 1983.  NAS and the budgetary system are essentially on a cash basis in which revenues are recognized when received rather than when earned and expenditures recognized when paid rather than when incurred. 

 

The State's budgetary control is maintained at the program level.  A program is an activity or goal to be accomplished with the resources provided.  Resources for a program will frequently be derived from more than one fund type as indicated in the Schedule of Budgeted and Actual Expenditures Paid by Program on pages 14 to 43 of this report.

 

 

 

 

 

Summary of 2002 Financial Operations

 

The State utilizes eight fund types that define the general nature of the accounting activity being conducted.  The eight fund types are:

 

GENERAL FUND – Used to account for activities funded by general tax dollars, primarily sales and income taxes, and related expenditures and transfers.  During fiscal year 2002, the State's General Fund balance decreased by $179,993,638 (see page 12) resulting in a fund balance of $54,042,053 and a cash balance of $55,733,722 at June 30, 2002 (see page 10).

 

 

Summarized comparison of General Fund revenues (net of refunds):

 

 

 

           The individual income tax rate ranges from 2.51% to 6.68% of Nebraska income.  Nebraska income is based on federal adjusted gross income minus a standard deduction or itemized deductions.  There was a personal exemption credit of $94 for calendar year 2001.  The credit is phased out as federal adjusted gross income increases for higher-income taxpayers.  The Corporate Income Tax Rate is 5.58% of the first $50,000 of taxable income and 7.81% of the excess.  Since July 1, 1999, the Nebraska sales tax rate has been 5%.

 

 

Summarized comparison of General Fund expenditures:

 

 

 

 

CASH RESERVE FUND – Used to account for cash held as a reserve (“rainy day” fund) for the General Fund should the General Fund balance become insufficient to meet current obligations.

 

 

Summarized activity in the Cash Reserve Fund:

 

 

 

CASH FUNDS – Used to account for revenues and expenditures that are directly related to specific activities with sources outside of state government.  This excludes activities with the federal government, which are accounted for in federal funds.  $771,425,960 was receipted in the Cash Funds during fiscal year 2002.

 

CONSTRUCTION FUNDS – Used to account for the financial activities related to the acquisition or construction of major capital facilities.  Construction projects totaled $39,369,293 for fiscal year 2002, funded almost entirely from the General Fund. The fund balance as of June 30, 2002, was $1,124,241.  Unspent General Fund appropriations totaled $15,503,002 as of June 30, 2002.

 

FEDERAL FUNDS – Used to account for the financial activities related to the receipt and disbursement of funds generated from the federal government as a result of grants or contracts.  Federal Funds totaling $1,748,702,835 were received from various federal agencies and spent on Medicaid, aid to education, and other smaller projects and programs.

 

REVOLVING FUNDS – Used to account for the financing of goods or services provided by one state agency to another state agency on a cost-reimbursement basis.  In fiscal year 2002, $469,856,547 was transferred between state agencies for goods and services and for building and equipment (including motor pool) rentals.  The goods and services provided included data processing, accounting, communication, and purchasing.

 

TRUST FUNDS -  Used to account for assets held in a trustee capacity. The Trust Funds had a balance of $5,324,383,537 on June 30, 2002, which largely consists of retirement funds for schools, judges, and the Nebraska State Patrol.

 

DISTRIBUTIVE FUNDS – Used to account for assets held as an agent for individuals, private organizations, and other governments and/or other funds.  Since by definition Distributive Fund receipts and disbursements are reported directly into asset or liability accounts, the Distributive Fund type is shown only on the State’s Schedule of Assets, Liabilities, and Fund Equity arising from Cash Transactions.  As of June 30, 2002, the State held $83,955,901 in Distributive Funds.

 

 

 

Respectfully Submitted,

 

 

 

Paul R. Carlson

State Accounting Administrator