$689 million surplus in State's General Fund and Property Tax Replacement Fund
results from transfers, delays, and $65 million from COIT earning account

INDIANAPOLIS - The Auditor of State's office has officially closed the State's books for Fiscal Year 2003. Indiana government's fiscal year ended June 30, 2003. The State's General and Property Tax Replacement Fund Surplus is $689,706,127.*

This $690 million balance is $168 million more than the surplus at the end of fiscal year 2002, which was $522,005,889. Education payment delays of $373.7 million and $386.2 million** were included in the FY2002 and FY2003 surpluses, respectively.

Moreover, three specific items were used to increase the FY2003 surplus:

1. $42,909,960 was transferred from non-reverting accounts to the General Fund pursuant to an April 2002 State Board of Finance order.
2. $275,551,526*** in payments of property tax replacement and homestead tax credits to counties were shifted from May to July under the budget signed by the Governor, pushing these payments into FY2004.
3. $65,000,000 was moved by the State Budget Agency from a non-reverting General Fund trust account titled "COIT 1984 Earning" to a General Fund account titled "Adjustment to Surplus", allowing that money to be included in the Surplus calculation.

FY 2002 and 2003 General and Property Tax Replacement Fund Surpluses, Compared
	FY2002		FY2003	Difference
Calculated Surplus (General Fund)-	$	0	$136,564,535	$136,564.535
Reserve for Tuition Support -	265,000,000		305,000,000	40,000,000
Rainy Day Fund -	257,005,889		248,141,592	(8,864,297)
	__________		__________	__________
TOTAL STATE SURPLUS -	$522,005,889		$689,706,127	$167,700,238

"I have always favored transferring idle monies from non-reverting accounts to prevent the state from stashing away the tax dollars of hard-working Hoosiers. But this cycle of extremely large annual payment delays is a disturbing tradition which we must break if we are ever to rid Indiana government of its structural deficit," stated Auditor Nass.

Nass continued, "I am also extremely troubled, and I have let the Budget Agency know this, by the $65 million COIT transfer. At a time when numerous counties are questioning the accuracy of the state's handling of COIT revenues, it would have been better to keep that money in trust until a satisfactory resolution has been reached. If it is ultimately determined that the counties were entitled to this money, I trust that the Governor and the Budget Agency will return it to the counties."

"I am particularly annoyed that a transfer like this would be made in an area of dispute between local and state government when it serves no other apparent purpose than to create a $690 million surplus instead of a $625 million surplus."

The Auditor of State's office keeps the State's financial records through three functions: (1) the payment system, (2) the payroll system and (3) the State's general ledger system, which is the official financial record for all of State government. As a part of the responsibility of maintaining the general ledger, the Auditor of State's office annually closes the financial records of the State.

* The $720.1 million surplus announced earlier today by the Governor includes $30,368,212 in loans to local subdivisions payable over a number of years. Those loans are therefore not properly included in the Surplus.
** From Minutes of State Bd of Finance, 6/23/03, and 6/25/03 Higher Ed Operating Draws per Budget Agency.
*** Actual July 2003 payment.