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.: 4530

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 allows the Auditors of Public Accounts to audit any municipality that receives over 35% of its annual operating funds from the state. The Auditors must prepare a report with recommendations on programmatic savings, efficiencies, and financial improvements.

The amendment will result in a significant cost to the Auditors of Public Accounts. It is estimated that 35 municipalities receive more than 35% of their annual operating budget from the state.

There are two approaches to performing an audit of these cities: 1) hire additional full-time staff, or 2) contract with a certified public accounting (CPA) firm to perform this work. Both approaches will result in a significant cost to the Auditors of Public Accounts.

If the Auditors biennially audited the municipalities, the agency would need to hire 11 accountants, plus a municipal audit supervisor. The annualized cost to hire 12 new accountants would be approximately $980, 000, plus fringe benefits. The FY 09 cost is estimated to be $490, 000, plus fringe benefits, based on half-year funding of the Municipal Audit Unit.

If the Auditors determine that biennial audits of these cities are not warranted, it is expected that they would contract a CPA firm to perform periodic city audits. Depending on the size of the municipality and the complexity of the audit, the costs will vary. The costs to audit 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.