COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2003 Commonwealth of Pennsylvania Edward G. Rendell Governor Prepared By: Office of the Budget Michael J. Masch, Secretary Comptroller Operations Harvey C. Eckert, Deputy Secretary This document is available on the Office of the Budget homepage on the World Wide Web: http://www.budget.state.pa.us Commonwealth of Pennsylvania Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2003 TABLE OF CONTENTS Page INTRODUCTORY SECTION Title Page .................................................................................................................................................. 1 Table of Contents ...................................................................................................................................... 2 Letter of Transmittal ................................................................................................................................. 4 Certificate of Achievement ....................................................................................................................... 11 FINANCIAL SECTION INDEPENDENT AUDITORS’ REPORT ............................................................................................ 14 MANAGEMENT’S DISCUSSION AND ANALYSIS ......................................................................... 18 BASIC FINANCIAL STATEMENTS: Government-Wide Financial Statements: Statement of Net Assets ......................................................................................................................... 38 Statement of Activities........................................................................................................................... 40 Fund Financial Statements: Balance Sheet-Governmental Funds ...................................................................................................... 42 Reconciliation of the Balance Sheet-Governmental Funds to the Statement of Net Assets................... 43 Statement of Revenues, Expenditures and Changes in Fund Balances-Governmental Funds ............... 44 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances- Governmental Funds to the Statement of Activities............................................................................ 45 Statement of Net Assets-Proprietary Funds ........................................................................................... 46 Statement of Revenues, Expenses and Changes in Fund Net Assets-Proprietary Funds ....................... 47 Statement of Cash Flows-Proprietary Funds.......................................................................................... 48 Statement of Fiduciary Net Assets-Fiduciary Funds and Similar Component Units ............................. 49 Statement of Changes in Fiduciary Net Assets-Fiduciary Funds and Similar Component Units........... 50 Statement of Net Assets-Discretely Presented Nonfiduciary Component Units .................................... 52 Statement of Activities-Discretely Presented Nonfiduciary Component Units...................................... 54 Notes to Financial Statements............................................................................................................... 56 REQUIRED SUPPLEMENTARY INFORMATION: Budgetary Comparison Schedule-Budgeted Major Funds-General Fund ............................................. 116 Budgetary Comparison Schedule-Budgeted Major Funds-Special Revenue Fund-Motor License ....... 117 Budgetary Comparison Schedule-Budgeted Nonmajor Funds-Special Revenue Fund- Banking Department ........................................................................................................................... 118 Budgetary Comparison Schedule-Budgeted Nonmajor Funds-Special Revenue Fund- Milk Marketing .................................................................................................................................. 119 Budgetary Comparison Schedule-Budgeted Nonmajor Funds-Special Revenue Fund- Workmen’s Compensation Administration......................................................................................... 120 Notes to Required Supplementary Information...................................................................................... 121 COMBINING FINANCIAL STATEMENTS: Nonmajor Governmental Funds-Combining Financial Statements: Combining Balance Sheet-Nonmajor Governmental Funds .................................................................. 126 Combining Statement of Revenues, Expenditures and Changes in Fund Balances- Nonmajor Governmental Funds ........................................................................................................... 127 Nonmajor Special Revenue Funds-Combining Financial Statements: Special Revenue Funds-Description ...................................................................................................... 130 Combining Balance Sheet-Nonmajor Governmental Funds-Special Revenue Funds............................ 131 Combining Statement of Revenues, Expenditures and Changes in Fund Balances- Nonmajor Governmental Funds-Special Revenue Funds .................................................................... 132 2 Nonmajor Debt Service Funds-Combining Financial Statements: Debt Service Funds-Description ............................................................................................................ 134 Combining Balance Sheet-Nonmajor Governmental Funds-Debt Service Funds.................................. 135 Combining Statement of Revenues, Expenditures and Changes in Fund Balances- Nonmajor Governmental Funds-Debt Service Funds .......................................................................... 136 Nonmajor Capital Projects Funds-Combining Financial Statements: Capital Projects Funds-Description........................................................................................................ 138 Combining Balance Sheet-Nonmajor Governmental Funds-Capital Projects Funds............................. 139 Combining Statement of Revenues, Expenditures and Changes in Fund Balances- Nonmajor Governmental Funds-Capital Projects Funds...................................................................... 140 Nonmajor Proprietary Funds-Combining Financial Statements-Enterprise Funds: Enterprise Funds-Description................................................................................................................. 142 Combining Statement of Net Assets-Nonmajor Proprietary Funds-Enterprise Funds ........................... 143 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets- Nonmajor Proprietary Funds-Enterprise Funds.................................................................................... 144 Combining Statement of Cash Flows-Nonmajor Proprietary Funds-Enterprise Funds.......................... 145 Nonmajor Proprietary Funds-Combining Financial Statements-Internal Service Funds: Internal Service Funds-Description........................................................................................................ 148 Combining Statement of Net Assets-Nonmajor Proprietary Funds-Internal Service Funds .................. 149 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets- Nonmajor Proprietary Funds-Internal Service Funds........................................................................... 150 Combining Statement of Cash Flows-Nonmajor Proprietary Funds-Internal Service Funds................. 151 Fiduciary Funds-Combining Financial Statements-Pension (and Other Employee Benefit) Trust Funds: Pension (and Other Employee Benefit) Trust Funds-Description.......................................................... 154 Combining Statement of Fiduciary Net Assets-Pension (and Other Employee Benefit) Trust Funds ... 155 Combining Statement of Changes in Fiduciary Net Assets- Pension (and Other Employee Benefit) Trust Funds............................................................................ 156 Fiduciary Funds-Combining Financial Statements-Agency Funds: Agency Funds-Description..................................................................................................................... 158 Combining Statement of Fiduciary Net Assets-Agency Funds.............................................................. 159 Combining Statement of Changes in Fiduciary Net Assets-Agency Funds ........................................... 160 Combining Statement of Changes in Fiduciary Net Assets-Discretely Presented Component Units .... 163 STATISTICAL SECTION Table Page Revenues by Source and Expenditures by Function—All Governmental Fund Types ................. 1 166 Net Bonded Debt Per Capita.......................................................................................................... 2 167 Ratio of Annual Debt Service Requirements for General Obligation Bonded Debt to Total General Fund Expenditures ......................................................................................................... 3 167 Computation of Legal Debt Margin............................................................................................... 4 168 Schedule of Revenue Bond Coverage............................................................................................ 5 169 Annual Estimates of the Resident Population—Pennsylvania Compared to the United States..... 6 170 State Banking Institutions Demand Deposits and Time and Savings Deposits