Fund Balance Report as of June 30, Stephen M. Eells State Auditor

Fund Balance Report as of June 30, 2017 Stephen M. Eells State Auditor

Table of Contents Purpose, Methodology, and Scope... 1 Fund Balance Basics... 1 Overview of Funds... 4 Historical Fund Balance Analysis... 7 Ten Largest Fund Balances or Net Positions... 9 Stagnant Fund Balances... 12 Funds with Increasing Fund Balance or Net Position... 18 Funds with Declining Fund Balance... 21 Unexpended Carry Forward Appropriations... 23 Component Units... 26 Appendix A General Funds... 28 Appendix B Special Revenue Funds... 30 Appendix C Capital Projects Funds and Propriety Funds... 32 Appendix D Component Units... 33

Purpose, Methodology, and Scope Purpose As a result of legislation enacted in 2017, N.J.S.A. 52:24-6.1 requires the State Auditor to report, in writing, to the Legislature on unspent state account balances. This report summarizes fund balances and net positions and provides various analyses that are not presented in the State of New Jersey Comprehensive Annual Financial Report (CAFR). It will allow legislators to determine which funds need to be further researched for necessity and effectiveness. Methodology and Scope The fund balances and net positions for each fund were reported in the CAFR at June 30 of fiscal years 2015, 2016, and 2017. The amounts in this report pertaining to fiscal year 2015 and fiscal year 2016 may in some cases differ from those in the respective CAFRs due to restatements. These restatements are identified in this report with asterisks. We compared the balances by classification over the past three fiscal years. We also reported the unexpended carry forward appropriation balances, by department at June 30, 2017, for the state s budgetary General Fund. We reviewed balances of 144 funds as well as the net position of 11 colleges/universities and 15 authorities. We excluded fiduciary funds (agency funds, private purpose trust funds, pension and other employee benefit trust funds, and the investment trust fund), which are held by the state for the benefit of parties outside of state government, therefore, the assets cannot be used for general state spending. Fund Types Fund Balance Basics General Funds There are 60 funds classified as general in accordance with Governmental Accounting Standards Board (GASB) reporting standards. This includes in the state s budgetary General Fund, which is the fund most commonly associated with the state s budget (Appendix A). Special Revenue Funds These funds are used to account for the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes other than debt service or capital projects. The state has 73 special revenue funds (Appendix B). Capital Projects Funds These funds are used to account for financial resources which are restricted, committed, or assigned to expenditures for capital outlays including the acquisition Page 1

or construction of capital facilities and other capital assets. There are 9 capital projects funds (Appendix C). Proprietary Funds These funds are used to account for business-type transactions. Enterprise funds are one type of propriety fund that reports any activity for which a fee is charged to external users for goods or services. The state has 2 enterprise funds (Appendix C). Component Units These are legally separate organizations for which the state is financially accountable, and have a financial benefit or burden relationship. There are currently 11 colleges/universities and 15 authorities the state recognizes in the CAFR as component units (Appendix D). Measurement Focus and Basis of Accounting Governmental Funds The general, special revenue, and capital projects funds are reported as governmental funds. Those financial statements are prepared on a modified accrual basis of accounting and focus on current resources. Only current assets and liabilities are reflected. Revenues are recognized when they become both measurable and collectible within the current period or soon enough thereafter to pay for current period liabilities. Proprietary Funds The financial statements of these funds are prepared using an accrual basis of accounting and focus on all economic resources. Long-term assets and long-term liabilities are recorded along with current financial resources. Revenues are recognized when earned, and expenses are recorded when the liability is incurred, regardless of the timing of related cash flow. Component units Component units are presented similar to proprietary funds. Their financial statements reflect an accrual basis of accounting and an economic resources measurement focus. Fund Balance Classifications GASB Statement No. 54 defines the following fund balance classifications. Nonspendable fund balance includes amounts that are not in a spendable form or are legally or contractually required to be maintained intact. Restricted fund balance includes amounts that can be spent only for the specific purposes stipulated by external resource providers, constitutionally, or through enabling legislation. Restrictions may be changed or lifted only with the consent of resource providers. Committed fund balance includes amounts that can be used only for the specific purposes determined by a formal action of the government s highest level of decision-making authority. Commitments may be changed or lifted only by the government taking the same formal action that imposed the constraint originally. Page 2

Assigned fund balance comprises amounts intended to be used by the government for specific purposes. Intent can be expressed by the governing body or by an official or body to which the governing body delegates the authority. In governmental funds other than the general fund, assigned fund balance represents the amount that is not restricted or committed. This indicates that resources in other governmental funds are, at a minimum, intended to be used for the purpose of that fund. The state does not use this classification. Unassigned fund balance is the residual classification for the general fund and includes all amounts not contained in the other classifications. Unassigned amounts are technically available for any purpose. If another governmental fund has a fund balance deficit, then it will be reported as a negative amount in the unassigned classification in that fund. Positive unassigned amounts will be reported only in the budgetary General Fund. Page 3

Overview of Funds We reviewed 144 funds as well as 26 component units. The majority of the funds are general or special revenue funds. The chart below shows fund balance or net position of the funds and component units reviewed. Dollar Value of Funds, by Fund Type as of June 30, 2017 Component Units $17,129,797,343 General (Including Budgetary General Fund) $4,715,999,948 Special Revenue $7,095,840,319 Proprietary $2,743,189,177 Capital Projects $47,428,765 General (Including Budgetary General Fund) Capital Projects Component Units Special Revenue Proprietary Page 4

Governmental Funds Fund Balance Classifications by Fund Type as of June 30, 2017 Governmental funds report fund balances which present the fund s liquidity based on what is available within the scope of the modified accrual timeframe. As shown below, the majority of the fund balance reviewed is restricted (66.83 percent), the remaining fund balance is primarily committed (26.39 percent). It should be noted only the budgetary General Fund has an unassigned fund balance. Fund Type Non-Spendable Restricted Committed Unassigned Grand Total General $ 20,416,073 $ 1,135,591,636 $ 2,776,250,720 $ 783,741,519 $ 4,715,999,948 Special Revenue - 6,770,389,484 325,450,835-7,095,840,319 Capital Projects - 19,182,531 28,246,234-47,428,765 Totals $ 20,416,073 $ 7,925,163,651 $ 3,129,947,789 $ 783,741,519 $ 11,859,269,032 Percentage 0.17% 66.83% 26.39% 6.61% 100.00% Proprietary Funds Proprietary funds report financial information on a full accrual basis to present net worth, therefore net position is reported instead of fund balance. There are two proprietary funds; Unemployment Compensation Fund and State Lottery Fund. The Unemployment Compensation Fund had a restricted net position of $2,743,189,177. These funds are restricted by the state constitution to pay only unemployment benefits. Page 5

Component Units Component Unit balances are referred to as Net Position instead of Fund Balance. Net position is presented using a full accrual basis to provide the net worth of the component unit. The component units consist of 11 colleges/universities and 15 authorities. The total net position for the 26 component units as of June 30, 2017 was $17,129,797,343. Net Position as presented in the CAFR (including Net Pension Liability) as of 6/30/2017 Net Investment in Capital Assets $10,796,276,844 Capital Projects 200,918,747 Debt Services 1,063,604,664 Other Purposes 7,474,701,054 Unrestricted (2,405,703,966) Total $17,129,797,343 The total net position, excluding the net pension liability is $23,294,479,543, and is restricted primarily for net investment in capital assets and for other purposes. See pages 26 and 27 for further analysis. Net Position (excluding Net Pension Liability) as of 6/30/2017 Net Investment in Capital Assets $10,796,276,844 46% Capital Projects 200,918,747 1% Debt Services 1,063,604,664 5% Other Purposes 7,474,701,054 32% Unrestricted (excluding Net Pension Liability) 3,758,978,234 16% Total $23,294,479,543 100% Page 6

Historical Fund Balance Analysis Governmental Funds We analyzed the fund balances for the general, special revenue, and capital projects funds. The general funds balances had relatively minor fluctuation between fiscal years 2015 and 2016, and a 20 percent increase between fiscal years 2016 and 2017. We noted the special revenue funds balances increased by 53 percent from June 30, 2016 to June 30, 2017. This increase was due to legislative changes that affected the New Jersey Transportation Trust Fund Authority (TTFA). A constitutional amendment dedicated all motor fuels tax revenue and petroleum products gross receipts tax to the state transportation system. Moreover, as of November 1, 2016, a petroleum products gross receipts tax increase was implemented. The amendment authorized $12.0 billion of bonding capacity to cover project costs. The capital projects funds decreased by 82 percent from June 30, 2015 to June 30, 2016. This decrease was due to a loan receivable recorded in 2015 that was paid from the TTFA to the Special Transportation Fund in the amount of $242 million and subsequently expended in 2016. Proprietary Funds We analyzed the net position for the proprietary funds which is made up almost entirely of the Unemployment Compensation Fund. The increase of net position for the proprietary funds was due to a decrease in unemployment. Component Units We also analyzed the net position for the component units. The aggregate net position of the component units had minimal fluctuation from year to year. Fund Balance or Net Position from June 30, 2015 to June 30, 2017, by Fund Type Fund Balance at June 30, 2015 at June 30, 2016 at June 30, 2017 Percent Change 2015 to 2016 Percent Change 2016 to 2017 General $ 4,454,849,016 $ 3,924,011,879 $ 4,715,999,948-11.9% 20.2% Special Revenue * 4,618,722,844 4,645,482,369 7,095,840,319 0.6% 52.7% Capital Projects 301,499,904 55,672,218 47,428,765-81.5% -14.8% Net Position Proprietary 1,698,862,422 2,461,066,658 2,743,189,177 44.9% 11.5% Component Units * 16,306,177,751 16,372,710,287 17,129,797,343 0.4% 4.6% * Restatements occurred in the special revenue funds and in the component units at June 30, 2015 and June 30, 2016. Page 7

Combined Fund Balance or Net Position as of June 30, 2015 to June 30, 2017, by Fund Type * Restatements occurred in the special revenue funds and in the component units at June 30, 2015 and June 30, 2016. Page 8

Ten Largest Fund Balances or Net Positions (Excluding the Budgetary General Fund) as of: Fund Name June 30, 2015 June 30, 2016 June 30, 2017 Proprietary June 30, 2017 Balance as a Percentage of Total Fund Type Unemployment Compensation Fund New Jersey Transportation Trust Fund Authority Wastewater Treatment Fund Contributory Group Insurance Premium Fund * New Jersey Schools Development Authority Drinking Water State Revolving Fund Clean Water State Revolving Fund Hazardous Discharge Site Cleanup Fund State Disability Benefit Fund Tobacco Settlement Financing Corporation $ 1,697,063,741 $ 2,449,619,665 $ 2,743,189,177 100.00% Special Revenue 238,474,628 107,483,831 2,572,266,930 36.25% 1,256,146,021 1,220,295,565 1,163,937,654 16.40% 564,732,790 584,852,889 592,026,125 8.34% 505,985,612 548,282,101 492,414,783 6.94% 350,354,685 344,016,034 365,178,416 5.15% 225,865,842 274,446,933 334,700,679 4.72% 204,912,340 233,810,962 278,541,412 3.93% 285,760,429 245,334,661 264,097,830 3.72% 253,200,000 262,734,000 260,773,000 3.68% * The Contributory Group Insurance Premium Fund was restated at June 30, 2015. Page 9

Description of Funds with Largest Fund Balances or Net Positions as of June 30, 2017 Unemployment Compensation Fund Accounts for monies deposited from contributions by employers and employees for unemployment compensation as well as amounts credited or advances made by the federal government. These funds are restricted by the state constitution to pay only unemployment benefits. New Jersey Transportation Trust Fund Authority Provides payment for and financing of all, or a portion of, the cost incurred by the Department of Transportation and New Jersey Transit Corporation, for the planning, acquisition, engineering, construction, reconstruction, repair, and rehabilitation of the state s transportation system. Wastewater Treatment Fund Through General Obligation bonds, this fund initially received $190 million to finance the construction of wastewater treatment systems. Of the total authorized, $145 million is allocated for the purpose of making grants and low or zero-interest loans to local government units for financing the cost of the construction of wastewater treatment systems. In addition, this fund is the depository for the receipt of federal capitalization grants made available to the state for the purpose of financing wastewater treatment systems. At June 30, 2017, assets consisted of loans receivable in the amount of $752 million and $412 million of investments. Contributory Group Insurance Premium Fund Represents the accumulation of the member group contributions in excess of premiums disbursed to the insurance carrier since the inception of the contributory death benefit program plus reserves held by the carriers. The fund is constitutionally restricted for payment of benefits only. New Jersey Schools Development Authority A statutory program created to function solely for the construction of schools in the areas formerly known as Abbott Districts. The authority is financed by the New Jersey Economic Development Authority, which has been legislatively authorized to issue $12.5 billion of bonds on behalf of the New Jersey Schools Development Authority. Full funding for approved projects was authorized for 31 special-needs districts, known as Abbotts. Grants totaling 40 percent of eligible costs were made available to the remaining districts, known as Regular Operating Districts. Overall, the act authorized $8.9 billion in funding for the Abbott Districts, $3.5 billion for Regular Operating Districts, and $150 million for vocational districts. Drinking Water State Revolving Fund A depository for the receipt of federal capitalization grants and other funds made available to the state for drinking water projects and set-asides pursuant to the Federal Safe Drinking Water Act. Clean Water State Revolving Fund A depository for the receipt of federal capitalization grants and other funds made available to the state for clean water projects and set-asides pursuant to the Water Quality Act of 1987 and any amendatory and supplementary acts thereto. Page 10

Description of Funds with Largest Fund Balances or Net Positions as of June 30, 2017 (continued) Hazardous Discharge Site Cleanup Fund Created for preparing feasibility studies, engineering designs, and undertaking other work necessary for the cleanup or mitigation of hazardous discharge sites in the state. State Disability Benefit Fund A depository of worker and employer deposits subject to the contribution section on the taxable wages under the state s unemployment compensation law. Deposits are also made from special assessments, fines, penalties, and investment earnings. Payments from the fund may be made to persons entitled to disability benefits, family leave benefits, and benefits not covered by the Workers Compensation Law, for authorized refunds of contributions, and for administrative expenses. Tobacco Settlement Financing Corporation The state sold to the corporation, rights, title, and interest in, and the right to receive 76.26 percent of the amounts payable under the 1998 Master Settlement Agreement reached between 47 states and the major tobacco companies. The 76.25 percent are pledged to the bondholders. The remaining 23.74 percent as well as any unpledged revenue are available to the state. On March 7, 2017, the corporation entered into a bond enhancement transaction in which the corporation received a premium of $96.5 million of which $91.6 million was paid to the state. In exchange, the corporation retains all 1998 Master Settlement Agreement receipts beginning after July 1, 2016. Page 11

Stagnant Fund Balances We reviewed the committed and restricted fund balance for general, special revenue and capital projects funds and the net position for proprietary funds. There were 35 funds with positive year-end balances and a 1 percent or less change between 2015 and 2016, and 2016 and 2017. A total of 33 of these funds with an aggregate fund balance of $198.2 million appear to be stagnant, while the remaining 2 funds did have significant revenue and expenditure activity. A total of 19 of the 33 funds that appear stagnant had fund balances less than $1.0 million (aggregate total of $6.5 million), and were not analyzed further. These funds are listed on page 17. The remaining 14 funds had fund balances in excess of $1.0 million and had an aggregate balance of $191.7 million. These funds are listed on page 13. These 14 funds maintained investment accounts with an aggregate total of $114.9 million. Page 12

Largest Stagnant Fund Balance more than $1 million as of June 30, 2017 (Excludes the Budgetary General Fund) Fund Name at June 30, 2015 at June 30, 2016 at June 30, 2017 Restricted Fund Balance Percent Change 2015 to 2016 Percent Change 2016 to 2017 Investments (in Millions) as of 6/30/17 1992 Wastewater Treatment Fund $ 43,072,855 $ 43,117,318 $ 43,211,787 0% 0% $ 17.40 2003 Water Resources and Wastewater Treatment Fund 42,463,098 42,474,032 42,513,952 0% 0% 8.80 Hazardous Discharge Fund of 1986 30,034,352 30,132,556 30,149,620 0% 0% 30.20 Urban and Rural Ctrs Unsafe Bldgs Demo Revolv Loan Fd 1992 Dam Restoration and Clean Waters Trust Fund 22,109,082 22,165,931 22,246,617 0% 0% 12.60 17,539,042 17,516,690 17,682,650 0% 1% 12.80 Pinelands Infrastructure Trust Fund 9,024,135 9,064,354 9,124,185 0% 1% 8.90 Housing Assistance Fund 6,312,984 6,312,984 6,312,984 0% 0% 4.10 1995 New Jersey Coastal Blue Acres Trust Fund Historic Preservation Revolving Loan Fund 1999 Statewide Transportation and Local Bridge Fund New Jersey Bridge Rehab and Improve and RR ROW Preserv Fund 5,704,128 5,725,382 5,763,474 0% 1% 5.50 4,470,853 4,483,534 4,509,317 0% 1% 4.50 3,985,626 3,985,626 3,985,626 0% 0% 3.90 2,374,581 2,374,581 2,357,503 0% -1% 2.40 1996 Lake Restoration Fund 1,459,664 1,466,108 1,473,472 0% 1% 1.50 1995 Farmland Preservation Fund 1,048,543 1,051,667 1,054,059 0% 0% 1.10 Boarding House Rental Assistance Fund Committed Fund Balance 1,282,584 1,285,345 1,290,263 0% 0% 1.20 Total Restricted and Committed $ 190,881,527 $ 191,156,108 $ 191,675,509 0% 0% $ 114.90 Page 13

Description of Largest Stagnant Fund Balances more than $1 million as of June 30, 2017 1992 Wastewater Treatment Fund The fund originally received $45.0 million for interest free loans to local government entities for wastewater treatment system projects in order to bring such systems into full compliance with permits issued pursuant to the Water Pollution Control Act and to provide adequate wastewater treatment in areas where large numbers of septic systems have malfunctioned or become obsolete. A total of $25.8 million ($18.7 million from federal funds and $7.1 million from state) is shown on the balance sheet as loans receivable, and $17.4 million as investments. The restricted fund balance was $43.2 million at June 30, 2017. The change in the fund balance was solely due to investment earnings. 2003 Water Resources and Wastewater Treatment Fund The fund originally received $45.0 million from General Obligation bonds issued to provide loans to local government entities or public water utilities to finance the cost of water resources projects or to make improvements to water supply facilities, or to finance the cost of wastewater treatment system projects. A total of $33.6 million ($26.8 million from federal funds and $6.8 million from state) is shown on the balance sheet as loans receivable, and $8.8 million as investments. The restricted fund balance was $42.5 million at June 30, 2017. The change in the fund balance was solely due to investment earnings. Hazardous Discharge Fund of 1986 An amount of $200 million of General Obligation bonds was authorized for the purpose of financing the cost of identification, cleanup, and removal of hazardous discharges. Urban and Rural Centers Unsafe Buildings Demolition Revolving Loan Fund The fund originally was established through the authorization of $20.0 million from General Obligation bonds issued for demolition and disposal of unsafe buildings. The restricted fund balance at June 30, 2017 was $22.2 million, consisting primarily of investments of $12.6 million and loans receivable of $9.5 million. This fund is used as a revolving fund and has minimal activity. 1992 Dam Restoration and Clean Waters Trust Fund An amount of $20.0 million of General Obligation bonds was authorized from the Green Acres, Clean Water, Farmland, and Historic Preservation Bond Act of 1992 to finance dam restoration and inland water projects and loans. Pinelands Infrastructure Trust Fund An amount of $30.0 million of General Obligation bonds was authorized for the purpose of providing grants and loans to local governmental entities for transportation, wastewater treatment, water supply, and other infrastructure capital projects necessary to accommodate development in the pinelands area. 1995 New Jersey Coastal Blue Acres Trust Fund An amount of $15.0 million of General Obligation bonds was authorized from the Green Acres, Farmland and Historic Preservation, and Blue Acres Bond Act of 1995 for the purpose of providing state grants and loans to assist local government units to meet the coastal blue acres cost of acquiring, for recreation and conservation purposes, lands in the coastal area that have been damaged by, or may be prone to Page 14

Description of Largest Stagnant Fund Balances more than $1 million as of June 30, 2017 (continued) incurring damage caused by, storms or storm-related flooding, or may buffer or protect other lands from such damage. Housing Assistance Fund An amount of $12.5 million was authorized for interest rate subsidies on contracts and agreements with qualified mortgagors and mortgagees of housing developments to decrease rental and carrying charges to low and moderate income occupants. It also provides financial assistance to developments that were constructed, financed or rehabilitated under federal law and moderate income financing programs. Historic Preservation Revolving Loan Fund The fund received $3.0 million in state appropriations for making low interest loans to counties, municipalities, or tax-exempt, nonprofit organizations to finance the costs of acquiring, restoring, repairing, or rehabilitating historic structures. 1999 Statewide Transportation and Local Bridge Fund An amount of $500 million of General Obligation bonds was authorized for the purpose of rehabilitating and improving state transportation, including local bridges. Of this sum, $250 million was reserved for grants to county and municipal governments for the cost of rehabilitation and improvement of structurally deficient bridges carrying county and municipal roads including railroad overhead bridges. The remaining is for transportation projects. We noted the investment amount remained fairly constant from fiscal year 2015 to fiscal year 2017. The state reported restricted fund balance of $4.0 million at June 30, 2017. New Jersey Bridge Rehabilitation and Improvement and Railroad Right-of-Way Preservation Fund An amount of $115 million of General Obligation bonds was authorized for the purpose of improving bridges in the state and the preservation and acquisition of railroad right-of-ways. The investment account has maintained a balance of $2.37 million since fiscal year 2015. During the period ending June 30, 2017, the fund had earnings of $14,000 from investments, and total expenditures of $17,000. This resulted in no significant change to the fund balance. 1996 Lake Restoration Fund An amount of $5.0 million of General Obligation bonds was authorized for the removal of sand, silt, mud sediment, rocks, stumps, vegetation, algae blooms, or other material from lakes, or the abatement and control of pollution caused by storm water runoff, soil erosion, or other types of non-point source or point source pollution. We noted there were loans in prior years, however, in fiscal year 2017, there were no outstanding loans. During the period ending June 30, 2017, the fund had revenue of $7,000 generated primarily from investments and there were no expenses. The state reported a restricted fund balance of $1.5 million. 1995 Farmland Preservation Fund An amount of $50.0 million of General Obligation bonds was authorized from the Green Acres, Farmland and Historic Preservation, and Blue Page 15

Description of Largest Stagnant Fund Balances more than $1 million as of June 30, 2017 (continued) Acres Bond Act of 1995 for the purpose of farmland preservation and agricultural use. In fiscal year 2017, the sole revenue source was investment earnings totaling $6,000, and total expenditures were $4,000. Total investments have been $1.0 million since fiscal year 2015. The restricted fund balance was $1.05 million at June 30, 2017. Boarding House Rental Assistance Fund The fund initially received $1.0 million in appropriated funds ($750,000 from the Casino Revenue Fund and $250,000 from the budgetary General Fund). This fund finances and accounts for the repayment of life safety improvement loans by the New Jersey Housing and Mortgage Finance Agency for the benefit of residents of boarding homes. The cash balance was $1.0 million in fiscal year 2015 and fiscal year 2016 and was transferred in fiscal year 2017 to investments, bringing the investment balance to $1.2 million. During the period ending June 30, 2017 the fund had investment earnings and no expenditures. The state reported a committed fund balance of $1.3 million. Page 16

Fund Balances with minimal annual change and less than $1 million as of June 30, 2017 (Excludes the Budgetary General Fund) Fund Name at June 30, 2015 at June 30, 2016 at June 30, 2017 Restricted Fund Balance Percent Change 2015 to 2016 Percent Change 2016 to 2015 Beaches and Harbor Fund $ 912,353 $ 912,353 $ 912,353 0.0% 0.0% 1989 New Jersey Green Acres Fund 868,615 871,261 876,593 0.3% 0.6% Natural Resources Fund 835,680 835,680 835,680 0.0% 0.0% Water Conservation Fund 791,573 791,573 791,573 0.0% 0.0% Resource Recovery and Solid Waste Disp Fac Fd 496,311 497,725 500,731 0.3% 0.6% Emergency Flood Control Fund 284,111 284,111 284,111 0.0% 0.0% Energy Conservation Fund 279,694 279,694 279,694 0.0% 0.0% Public Purpose Bldg Comm Based Facil. Constr. Fd. 251,071 251,071 251,071 0.0% 0.0% 1989 Farmland Preservation Fund 231,543 232,061 233,485 0.2% 0.6% State Land Acquisition and Development Fund 203,906 204,539 204,539 0.3% 0.0% Hazardous Discharge Fund of 1981 180,949 180,949 180,949 0.0% 0.0% Higher Education Facility Renov. Rehab. Fund 138,066 138,438 139,262 0.3% 0.6% 1995 New Jersey Green Acres Fund 100,685 100,984 101,587 0.3% 0.6% Clean Waters Fund 63,471 63,471 63,471 0.0% 0.0% 1995 Historic Preservation Fund 56,522 56,613 56,842 0.2% 0.4% 1992 Farmland Preservation Fund 48,858 48,962 49,262 0.2% 0.6% Jobs Education and Competitiveness Fund 37,859 37,859 37,859 0.0% 0.0% 1992 Historic Preservation Fund 30,596 30,630 30,698 0.1% 0.2% New Jersey Federal-State Rural Rehabilitation Fund Committed Fund Balance 702,058 704,202 708,524 0.3% 0.6% Total Restricted and Committed $ 6,513,921 $ 6,522,176 $ 6,538,284 0.1% 0.2% Page 17

Funds with Increasing Fund Balance or Net Position We analyzed 144 funds for fiscal years 2014 to 2017 to identify those with consistent growth of 5 percent or greater in each of the past 3 years. We identified 12 funds that met this criteria. There were one proprietary, one capital projects, and 10 special revenue funds that met this criterion. Fund Name at June 30, 2014 at June 30, 2015 at June 30, 2016 at June 30, 2017 Superior Court of New Jersey Trust Fund Supplemental Workforce Fund for Basic Skills Clean Water State Revolving Fund Emergency Medical Technician Training Fund Hazardous Discharge Site Cleanup Fund Mandatory Continuing Legal Education Fund Pollution Prevention Fund Special Revenue Increase 2014 to 2015 Increase 2015 to 2016 Increase 2016 to 2017 $ 105,001 $ 115,391 $ 266,471 $ 1,057,376 10% 131% 297% 8,763,655 10,420,824 13,445,764 19,857,759 19% 29% 48% 177,323,016 225,865,842 274,446,933 334,700,679 27% 22% 22% 2,903,544 3,247,492 3,420,050 3,915,190 12% 5% 14% 175,468,359 204,912,340 233,810,962 278,541,412 17% 14% 19% 551,947 902,000 1,185,428 1,635,448 63% 31% 38% 562,782 918,625 1,235,683 1,768,577 63% 35% 43% Trial Attorney Certification Program Remediation Guarantee Fund Unemployment Compensation Interest Repay. Fund 2007 Blue Acres Fund Unemployment Compensation Fund 10,630 48,699 132,151 233,358 358% 171% 77% 17,402,461 22,088,654 27,464,277 30,429,916 27% 24% 11% 1,262,066 1,818,102 2,548,191 3,111,215 44% 40% 22% Capital Projects 1,524,830 3,190,698 3,829,807 4,182,841 109% 20% 9% Proprietary 1,066,720,937 1,697,063,741 2,449,619,665 2,743,189,177 59% 44% 12% Page 18

Description of Funds with Increasing Fund Balance or Net Position as of June 30, 2017 Superior Court of New Jersey Trust Fund This fund accounts for monies representing deposits made in court as a result of litigation, including foreclosures, condemnations, liquidations, dissolutions, good faith deposits by liability insurers, sale of infants' lands, insolvencies, receiverships, and interpleaders. Disbursements from the fund are authorized only by court order. Supplemental Workforce Fund for Basic Skills The monies in this fund are used for basic skills training, reemployment services, and training programs for displaced and disadvantaged workers. Each worker shall contribute.0175 percent of their wages based on an annual wage limit to the fund. Clean Water State Revolving Fund This fund is the depository for the receipt of federal capitalization grants and other funds made available to the state for clean water projects and setasides pursuant to the "Water Quality Act of 1987" and any mandatory and supplementary acts thereto. Emergency Medical Technician Training Fund An amount of $1.00 is added to each fine, penalty, and forfeiture imposed and collected under authority of law for any violation of the provisions of Title 39 of the revised statutes or any other motor vehicle or traffic violation is deposited in this fund. This fund annually reimburses any private agency, organization, or entity which is certified by the Commissioner of Health to provide training and testing for volunteer ambulance, first aid, and rescue squad personnel who are seeking emergency medical technician-ambulance (EMT-A) or emergency medical technician-defibrillation (EMT-D) certification and/or recertification that are not otherwise reimbursed. Hazardous Discharge Site Cleanup Fund This fund was established for the purposes of preparing feasibility studies, engineering designs, and undertaking other work necessary for the cleanup or mitigation of hazardous discharge sites in the state. An amount of $100 million was appropriated from the Hazardous Discharge Fund of 1981. Sources of revenue are comprised of collections for Natural Resources Damages (NRD or past costs in site cleanups) and Responsible Party (RP or future site cleanup costs). Collections also include oversight bills for cleanup as well as legal settlements for past costs of cleanup. Mandatory Continuing Legal Education Fund The fund was established to assist the Supreme Court of New Jersey in the administration of the continuing legal education of attorneys holding license to practice in the State of New Jersey. Revenues are generated by payments made by continuing legal education providers and attorneys. Pollution Prevention Fund This fund was established to fund the implementation of a comprehensive pollution prevention program which integrates the air pollution, water pollution, and hazardous waste management programs. The fund is credited with a $2 per employee fee imposed upon employers and collected by the New Jersey Department of Labor and Workforce Development. Page 19

Description of Funds with Increasing Fund Balance or Net Position as of June 30, 2017 (continued) Trial Attorney Certification Program This fund was established to assist the New Jersey Supreme Court in the administration of the certification function for civil or criminal trial attorneys. Revenues are generated by payments made by members of the Bar of the State of New Jersey and sponsors of Continuing Legal Education (CLE) programs. Remediation Guarantee Fund The fund was established in order to remediate, or contract for the remediation of, any real property for which a person was required to establish a remediation funding source pursuant to section 25 of P.L. 1993, c. 139, and where that person fails to conduct or properly conduct that remediation. The remediation funding source surcharge shall be in an amount equal to 1 percent of the required amount of the remediation funding source required to be maintained. An amount of $5 million was appropriated from the Hazardous Discharge Fund of 1986. Unemployment Compensation Interest Repayment Fund This fund shall be used solely for the purpose of paying interest due on advances made by the federal government to the State of New Jersey Unemployment Trust Fund. A special assessment on applicable employers shall be deposited into this fund and used to pay interest expenses. Any residual balances may be transferred to the Unemployment Compensation Auxiliary Fund. 2007 Blue Acres Fund An amount of $12 million of General Obligation bonds was authorized from the Green Acres, Farmland, Blue Acres, and Historic Preservation Bond Act of 2007 for the purpose of acquiring land by the State for recreation and conservation purposes in the floodways of the Delaware River, Passaic River, or Raritan River and their respective tributaries. Unemployment Compensation Fund Accounts for monies deposited from contributions by employers and employees for unemployment compensation as well as amounts credited or advances made by the federal government. These funds are restricted by the state constitution to pay only unemployment benefits. Page 20

Funds with Declining Fund Balance We analyzed 144 fund balances for fiscal years 2014 to 2017 to identify any funds with consistent reduction of 5 percent or greater in each of the past three years. There are three general and six special revenue funds that met this criteria. Fund at June 30, 2014 at June 30, 2015 at June 30, 2016 at June 30, 2017 General 2007 Historic Preservation Fund Decrease 2014 to 2015 Decrease 2015 to 2016 Decrease 2016 to 2017 $ 3,602,047 $ 2,551,128 $ 1,931,481 $ 1,655,752-29% -24% -14% 1992 New Jersey Green Trust Fund 25,625,898 22,884,352 21,225,070 19,037,351-11% -7% -10% 2007 Farmland Preservation Fund Board of Bar Examiners Garden State Farmland PreservationTrust Fund Garden State Green Acres PreservationTrust Fund Garden State Historic PreservationTrust Fund New Jersey Building Authority Petroleum Overcharge Reimbursement Fund 18,378,040 14,499,189 12,787,033 11,776,604-21% -12% -8% Special Revenue 5,014,641 4,369,168 2,717,541 1,279,535-13% -38% -53% 26,287,619 19,665,691 10,170,941 8,079,972-25% -48% -21% 100,565,966 92,006,248 79,542,977 70,143,141-9% -14% -12% 7,287,661 5,181,426 3,878,487 2,898,941-29% -25% -25% 38,605,122 33,363,133 29,089,502 26,036,078-14% -13% -10% 2,820,038 2,506,642 2,113,356 1,789,382-11% -16% -15% Page 21

Description of Funds with Declining Fund Balance 2007 Historic Preservation Fund An amount of $6.0 million of General Obligation bonds was authorized from the Green Acres, Farmland, Blue Acres, and the Historic Preservation Bond Act of 2007. This fund provides matching grants to assist state agencies or entities, local government units, and qualified tax-exempt, non-profit organizations to meet the cost of preservation of historic properties. 1992 New Jersey Green Trust Fund An amount of $120 million of General Obligation bonds was authorized from the Green Acres, Clean Water, Farmland and Historic Preservation Bond Act of 1992 for the purpose of providing state grants and loans to assist local governmental entities to acquire and develop land for recreation and conservation purposes. 2007 Farmland Preservation Fund An amount of $73.0 million of General Obligation bonds was authorized from the Green Acres, Farmland, Blue Acres, and Historic Preservation Bond Act of 2007 for the purpose of farmland preservation. Of the amount authorized pursuant to this act, not more than 5 percent shall be utilized for administrative costs for the fund. Board of Bar Examiners This fund was established for drafting bar essay examination questions, reviewing applications, and preparing, administering, and grading bar examinations. Revenues, including fees and certificate charges, are generated by payments made by candidates for admission to the Bar of the State of New Jersey. Garden State Farmland Preservation Trust This fund is for the preservation of farmland for agricultural use and production. It receives funding from the Garden State Preservation Trust. Garden State Green Acres Preservation Trust Fund This fund was authorized for the acquisition and development of lands by the state for recreation and conservation purposes. It receives funding from the Garden State Preservation Trust. Garden State Historic Preservation Trust Fund This fund was authorized for the work relating to the conservation, improvement, repair, restoration, or stabilization of historic property. It receives funding from the Garden State Preservation Trust. New Jersey Building Authority This fund is authorized to construct and rehabilitate office buildings and related facilities for use by state agencies. The Authority is authorized to issue bonds and notes to provide funds for the construction and the rehabilitation of the projects. Debt service on outstanding bonds is paid through lease agreements with the state. Petroleum Overcharge Reimbursement Fund This fund accounts for monies received by the state from the federal government pursuant to court settlements with various petroleum companies and distributors as payments for overcharges for petroleum products. Appropriations are made from the fund for energy efficiency and conservation programs. Page 22

Unexpended Carry Forward Appropriations Unexpended carry forward appropriations are the unused balances of previously appropriated funds retained by the agency at the end of the fiscal year and are automatically re-appropriated for use in the next budget fiscal year. Unexpended carry forward appropriations are state funded accounts with carry forward language in the Appropriations Act. The schedule below shows the unexpended carry forward appropriations for the state s budgetary General Fund by department, which summarizes the monies available to be spent by each department. We excluded federal accounts, revolving funds, and funds from appropriation use all other since they cannot be reappropriated for other purposes. Unexpended Carry Forward Appropriations as of June 30, 2017 State s Budgetary General Fund Direct State Services Grants-In-Aid State Aid Capital Construction Total Legislative Branch $ 18,861,485 $ - $ - $ - $ 18,861,485 Executive Branch Chief Executive's Office 2,009,001 - - - 2,009,001 Agriculture 582,382 627,363 - - 1,209,745 Banking and Insurance 1,098,967 - - - 1,098,967 Children and Families - - - - - Community Affairs 1,082,397 914,518 49,231-2,046,146 Corrections 2,970,949 - - 4,544,945 7,515,894 Education 3,839,732-13,139 193,219 4,046,090 Environmental Protection 26,377,141 50,963,237 961,672 138,247,318 216,549,368 Health 807,277 104,446 - - 911,723 Human Services 15,907,342 53,573,322 658,208 221,948 70,360,820 Labor and Workforce Development 3,598,533 - - - 3,598,533 Law and Public Safety 51,801,272 74,890 1,000,000 2,025,164 54,901,326 Military and Veterans' Affairs 5,022,239 - - 1,368,903 6,391,142 State 383,193 3,988,504 - - 4,371,697 Transportation 4,386,183 486,877 - - 4,873,060 Treasury 18,799,015 7,053,886 392,991 5,566 26,251,458 Miscellaneous Executive Commissions 16,291 - - - 16,291 Interdepartmental Accounts 23,180,922 - - 31,595,239 54,776,161 Total Executive Branch $ 161,862,836 $ 117,787,043 $ 3,075,241 $ 178,202,302 $ 460,927,422 Judicial Branch $ 18,121,710 - - - $ 18,121,710 TOTAL $ 198,846,031 $ 117,787,043 $ 3,075,241 $ 178,202,302 $ 497,910,617 Page 23

Top Five Programs for each Agency with over $5 million of Unexpended Carry Forward Appropriations as of June 30, 2017 To identify the programs with the largest unexpended carry forward budgetary General Fund appropriations as of June 30, 2017, we analyzed any agency carrying $5 million or more into budget fiscal year 2018. Detailed below are the top five programs within each appropriation account for these agencies. DIRECT STATE SERVICES Total Carry Forward as Program Carry Forward to Agency / Program of June 30, 2017 2018 Budget Fiscal Year Legislature $ 18,861,485 EXPENSES OF STATE COMMISSION ON INVESTIGATION $ 8,487,163 GENERAL ASSEMBLY 5,151,199 SENATE 2,435,071 LEGISLATIVE SUPPORT SERVICES 2,272,983 CONTINUATION AND EXPANSION OF DATA PROCESSING SYSTEMS 205,933 Environmental Protection $ 26,377,141 WATER RESOURCES MONITORING AND PLANNING-CONSTITUTIONAL DEDICATION $ 7,075,541 HAZARDOUS WASTE MANAGEMENT 2,862,685 WATER POLLUTION CONTROL 2,322,375 PARKS MANAGEMENT 2,063,295 CONTROL-HUNTERS' AND ANGLERS' LICENSE FUND 1,753,492 Human Services $ 15,907,342 WORK FIRST NEW JERSEY - TECHNOLOGY INVESTMENT $ 6,415,732 DRUG COURT SUBSTANCE ABUSE TREATMENT PROGRAMS 6,235,977 PAYMENTS TO FISCAL AGENTS 1,974,309 INTERIM ASSISTANCE 345,512 PATIENT CARE AND HEALTH SERVICES 308,952 Law and Public Safety $ 51,801,272 OPERATION OF STATE PROFESSIONAL BOARDS $ 31,519,353 NON-CRIMINAL RECORD CHECKS 4,302,745 CONSUMER AFFAIRS 3,908,306 144 BED SECURE FACILITY 1,921,589 CLAIMS - VICTIMS OF VIOLENT CRIMES 1,483,318 Military and Veterans Affairs $ 5,022,239 NEW JERSEY NATIONAL GUARD SUPPORT SERVICES $ 2,024,227 MANAGEMENT AND ADMINISTRATION 1,798,184 BURIAL SERVICES 572,594 VETERANS' OUTREACH AND ASSISTANCE 178,551 JOINT TRAINING CENTER MANAGEMENT AND OPERATIONS 129,373 Treasury $ 18,799,015 MANAGEMENT AND ADMINISTRATIVE SERVICES $ 5,472,411 UTILITY REGULATION 3,878,931 RATE COUNSEL 3,117,168 REGULATORY SUPPORT SERVICES 1,762,336 REGULATION OF CABLE TELEVISION 1,617,245 Judiciary $ 18,121,710 CHILD SUPPORT AND PATERNITY PROGRAM TITLE IV-D (STATE MATCH) $ 8,356,076 CHILD SUPPORT AND PATERNITY PROGRAM (FAMILY COURT STATE MATCH) 3,817,613 CIVIL ARBITRATION PROGRAM 3,325,672 DRUG COURT OPERATIONS 1,423,426 CHILD SUPP ENFORCE PROG-TCS 1,062,891 Page 24

Top Five Programs for each Agency with over $5 million of Unexpended Carry Forward Appropriations as of June 30, 2017 (continued) GRANTS IN-AID Total Carry Forward as Program Carry Forward to Agency / Program of June 30, 2017 2018 Budget Fiscal Year Environmental Protection $ 50,963,237 DIESEL RISK MITIGATION FUND $ 49,641,401 WATERSHED RESTORATION PROJECTS 784,234 SIGNIFICANT HAZARD DAMS GRANTS/LOANS 394,098 STORMWATER MANAGEMENT GRANTS 143,563 Human Services $ 53,573,322 MEDICAL COVERAGE - AGED, BLIND AND DISABLED $ 46,659,673 COMMUNITY BASED SUBSTANCE ABUSE TREATMENT AND PREV- STATE SHARE 5,858,487 MEDICATION ASSISTED TREATMENT INTITATIVE 1,055,161 Treasury $ 7,053,886 ECONOMIC REDEVELOPMENT AND GROWTH GRANTS, EDA $ 4,737,748 BROWNFIELDS SITE REIMBURSEMENT FUND 2,304,464 BUSINESS EMPLOYMENT INCENT 11,674 CAPITAL CONSTRUCTION Total Carry Forward as Program Carry Forward to Agency / Program of June 30, 2017 2018 Budget Fiscal Year Environmental Protection $ 138,247,318 GREEN ACRES - PRESERVE NJ ACQUISITION $ 26,548,000 GREEN ACRES - PRESERVE NJ DEVELOPMENT 25,895,306 HAZARDOUS SUBSTANCE REMEDIATION - CONSTITUTIONAL DEDICATION 19,298,036 SHORE PROTECTION FUND PROJECTS - HR-6 FLOOD CONTROL 19,141,212 SHORE PROTECTION FUND PROJECTS 17,477,542 Page 25

Component Units Net Position Classifications Net investment in capital assets The amount invested in capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. Restricted The amount of net position is reported when constraints placed on its use are either externally imposed by creditors, grantors, contributors, or laws or regulations of the other governments or imposed by law through constitutional provisions or enabling legislation. Unrestricted The amount of net position consists of assets that do not meet the definition of restricted or invested in capital assets. In order to provide a thorough analysis, we are presenting the unrestricted net position with and without net pension liability. The Higher Education Student Assistance Authority is not included because both its unrestricted net position balance and net pension liability were zero at June 30, 2017. Component Units Authorities Unrestricted Net Position with and without Net Pension Liability as of June 30, 2017 Authority Unrestricted Net Pension Liability Total New Jersey Housing and Mortgage Finance Agency $ 453,102,000 $ 87,342,000 $ 540,444,000 New Jersey Economic Development Authority 433,002,090 67,068,246 500,070,336 New Jersey Environmental Infrastructure Trust 23,484,411-23,484,411 New Jersey Redevelopment Authority 18,029,441 4,588,296 22,617,737 New Jersey Water Supply Authority 12,094,532 29,886,847 41,981,379 New Jersey Health Care Facilities Financing Authority 5,871,000 6,498,000 12,369,000 New Jersey Educational Facilities Authority 5,895,322 4,200,640 10,095,962 South Jersey Port Corporation 2,550,700 23,837,140 26,387,840 Casino Reinvestment Development Authority (33,168,525) 19,420,368 (13,748,157) South Jersey Transportation Authority (87,699,681) 71,025,524 (16,674,157) New Jersey Sports and Exposition Authority (115,863,315) 40,755,248 (75,108,067) University Hospital (340,741,000) 552,097,000 211,356,000 New Jersey Transit Corporation (1,107,212,754) 765,288,176 (341,924,578) New Jersey Turnpike Authority (367,622,570) 561,453,166 193,830,596 Total $ (1,098,278,349) $ 2,233,460,651 $ 1,135,182,302 Page 26

Component Units Colleges and Universities Unrestricted Net Position with and without Net Pension Liability as of June 30, 2017 College/University Unrestricted Net Pension Liability Total Rutgers, The State University of New Jersey $ (788,136,000) $ 2,057,977,000 $ 1,269,841,000 Rowan University (91,271,652) 355,619,853 264,348,201 Montclair State University (6,353,631) 236,776,033 230,422,369 New Jersey Institute of Technology (17,690,000) 162,353,000 144,663,000 Kean University (45,868,433) 179,202,732 133,334,567 Stockton University (69,490,270) 205,993,729 136,503,459 (The) College of New Jersey (31,047,000) 180,206,000 149,159,000 Ramapo College of New Jersey (66,378,000) 105,486,000 39,108,000 (The) William Paterson University of New Jersey (62,388,763) 194,675,849 132,287,086 New Jersey City University (96,538,002) 169,295,597 72,757,595 Thomas Edison State University (32,263,866) 83,635,756 51,371,890 Total $ (1,307,425,617) $ 3,931,221,549 $ 2,623,795,932 Net Pension Authorities and Colleges / Universities Unrestricted Liability Total TOTALS $ (2,405,703,966) $ 6,164,682,200 $ 3,758,978,234 Page 27

APPENDIX A General Funds Total Fund Balances as of June 30 Fund 2015 2016 2017 Budgetary General Fund $ 3,143,455,244 $ 2,901,028,744 $ 3,648,139,530 Building Our Future Fund 369,441,790 166,853,369 170,259,381 Water Supply Fund 156,432,435 152,394,433 148,748,589 Unclaimed Personal Property Trust Fund 91,104,272 80,063,260 97,860,526 2003 Dam, Lake, and Stream Project Revolving Loan Fund 83,818,958 84,593,502 85,672,282 New Jersey Local Development Financing Fund 49,795,253 49,631,977 50,114,681 1989 New Jersey Green Trust Fund 49,253,644 47,148,434 46,464,369 1992 Wastewater Treatment Fund 43,072,855 43,117,318 43,211,787 2003 Water Resources and Wastewater Treatment Fund 42,463,098 42,474,032 42,513,952 Green Trust Fund 56,859,823 52,472,215 41,940,155 2009 Green Acres Fund 15,917,466 (6,935,328) 37,686,310 1995 New Jersey Green Trust Fund 35,100,543 35,217,008 30,869,539 Hazardous Discharge Fund of 1986 30,034,352 30,132,556 30,149,620 2007 Green Acres Fund 21,796,113 14,287,131 24,987,441 2009 Farm Preservation Fund 55,719,483 31,052,988 24,794,885 New Jersey Cultural Trust Fund 21,940,932 22,626,065 22,806,163 Urban and Rural Ctrs Unsafe Bldgs Demo Revolv Loan Fd 22,109,082 22,165,931 22,246,617 1996 Environmental Cleanup Fund 20,169,256 19,759,693 19,290,659 1992 New Jersey Green Trust Fund 22,884,352 21,225,070 19,037,351 1992 Dam Restoration and Clean Waters Trust Fund 17,539,042 17,516,690 17,682,650 2007 Farmland Preservation Fund 14,499,189 12,787,033 11,776,604 Pinelands Infrastructure Trust Fund 9,024,135 9,064,354 9,124,185 Dredging and Containment Facility Fund 17,005,484 13,192,775 7,615,048 2003 Dam, Lake, Stream, and Flood Control Project Fund 9,078,126 8,178,700 7,251,179 Mortgage Assistance Fund 6,483,483 6,483,815 6,483,815 Housing Assistance Fund 6,312,984 6,312,984 6,312,984 Shore Protection Fund 5,953,809 5,802,112 5,915,600 1995 New Jersey Coastal Blue Acres Trust Fund 5,704,128 5,725,382 5,763,474 Storm Mgmt Comb Sewer Overflow Abatement Fund 5,863,696 5,874,533 5,546,254 2009 Historic Preservation Fund 3,111,929 2,052,483 4,599,464 Historic Preservation Revolving Loan Fund 4,470,853 4,483,534 4,509,317 Emergency Services Fund 2,233,089 2,237,305 2,211,267 2007 Historic Preservation Fund 2,551,128 1,931,481 1,655,752 1996 Lake Restoration Fund 1,459,664 1,466,108 1,473,472 Long Term Obligation and Capital Expenditure Fund 1,908,732 1,334,356 1,334,356 Developmental DisabilitiesWaiting List Reduction Fund 998,385 1,093,939 1,086,543 1995 Farmland Preservation Fund 1,048,543 1,051,667 1,054,059 Beaches and Harbor Fund 912,353 912,353 912,353 1989 New Jersey Green Acres Fund 868,615 871,261 876,593 Natural Resources Fund 835,680 835,680 835,680 Water Conservation Fund 791,573 791,573 791,573 New Jersey Federal-State Rural Rehabilitation Fund 702,058 704,202 708,524 Page 28