Notes to the Financial Statements
June 30, 1995
(Amounts in thousands unless otherwise stated)
Note 23
COMMITMENTS AND CONTINGENCIES
- Commitments
At June 30, 1995, the State, including its component units, had the
following outstanding commitments:
- Infrastructure (highways, roads, etc.) and other construction contracts
and miscellaneous con-tracts with various vendors totaling approximately $1,273 million of which $825 million is expected to be
reimbursed by Federal grants.
- School construction and alteration grants with various towns for
$787 million and interest costs of $351 million for a total of $1,138
million. Funding for these projects is expected to come from bond
sales.
- Loan commitments, mortgage and grant programs, and loan guarantees
totaling approximately $254 million. Funding for these programs is
expected to come from bond sales.
- Contingent Liabilities
The Division of Special Revenue, the agency responsible for the Lottery
Fund, has entered into agreements with insurance companies under
which the Lottery Fund purchases annuities under group contracts which
provide payments corresponding to the State's obligation to prize winners.
Not withstanding these annuity contracts, the State of Connecticut is
contingently liable for the prize payments due lottery winners. At
June 30, 1995, amounts due lottery winners totaled $956 million.
The State has enacted legislation to assist the City of Bridgeport in
issuing bonds to fund the city's cumulative June 30, 1988 General Fund
deficit. The State is contingently liable for amounts needed annually to
maintain a capital reserve fund in an amount equal to the required
minimum capital reserve of such fund. The maximum principal amount
authorized to be secured by the capital reserve fund is $35 million and
the amount outstanding is $26 million.
The Legislature has also enacted legislation to assist the City of West
Haven by authorizing the State to guarantee debt issued by the City in
an amount up to $35 million. At year end, the debt outstanding
guaranteed by the State was $26 million.
The State has entered into a contractual agreement with H.N.S. Management Company, Inc. and ATE Management and Service Company, Inc.
to manage and operate the bus transportation system for the State. The
State shall pay all expenses of the system including all past, present and
future pension plan liabilities of the personnel employed by the system and any other fees as agreed upon. When the agreement is terminated the State shall assume or make arrangements for the assumption of all the
existing obligations of the management companies including but not limited
to all past, present and future pension plan liabilities and obligations.
At year end, one of the State's self-insured health benefit plans was
underfunded in the amount of $20.3 million. Currently, the State is
negotiating a new contract with the administrator of such plan because
the plan administrator wants to change the existing plan from a self-
insured plan to a fully insured plan. If the State and the plan administrator agree to a new contract, it is probable that the plan
administrator will relieve the State from any obligations under the
existing contract.
- Litigation
The State, its units and employees are parties to numerous legal
proceedings many of which normally occur in governmental operations.
Most of these legal proceedings are not, in the opinion of the Attorney
General, likely to have a material adverse impact on the State's financial
position.
There are however, several legal proceedings which, if decided adversely
to the State, may require the State to make material future expenditure
for expanded services or capital facilities or may impair future revenue
sources. It is neither possible to determine the outcome of these
proceedings nor to estimate the possible effects adverse decisions
may have on the future expenditures or revenue sources of the State.
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