OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http: //www.cga.ct.gov/ofa

sSB-404

AN ACT CONCERNING THE MINIMUM BUDGET REQUIREMENT, THE CARRY-OVER OF EDUCATION COST SHARING ACCOUNTABILITY FUNDS AND THE REPEAL OF AN OBSOLETE PUBLIC ACT SECTION.

AMENDMENT

LCO No.: 4529

File Copy No.: 645

Senate Calendar No.: 414

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 09 $

FY 10 $

Auditors

GF - Cost

Significant

Significant

Note: GF=General Fund

Municipal Impact: None

Explanation

The amendment requires the Auditors of Public Accounts to establish a municipal finance assistance program and allows the Auditors to audit any municipality that receives over 35% of its annual operating funds from the state.

The amendment will result in a significant cost to the Auditors of Public Accounts as the Auditors may have to offer financial management assistance1 to all 169 municipalities and audit the estimated 35 municipalities that receive more than 35% of their annual operating budget from the state.

There are two approaches to establishing a municipal finance assistance program and auditing municipalities that receive over 35% of their annual operating funds from the state: 1) hire additional full-time staff, or 2) contract with a certified public accounting (CPA) firm to perform this work.

If the Auditors have to provide financial management assistance to numerous municipalities and have to biennially audit approximately 35 municipalities, the agency would need to create a Municipal Unit. This unit would employ 14 new positions; 13 auditors and accountants and one supervisor. The annualized cost for these 14 employees is $1, 120, 000, plus fringe benefits. The FY 09 cost is estimated to be $560, 000 (plus fringe benefits) based on half-year funding.

If the Auditors do not receive many municipal requests for financial management assistance and also determine that biennial audits are not warranted, it is anticipated that they would contract a CPA firm to perform this work. Depending on the size of the municipality and the complexity of the audit or financial management assistance, the costs will vary. The costs for one large city could range from $750, 000 - $1.5 million. The cost for a small town could range from $25, 000 - $150, 000. In 2000, the Auditors contracted a CPA firm to conduct a performance audit of the University of Connecticut Health Center at a cost of $582, 000.

The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely for the purposes of information, summarization and explanation and does not represent the intent of the General Assembly or either chamber thereof for any purpose.

1 The amendment is unclear as to what type of “financial management assistance” the Auditors are expected to provide.