State Annual Financial Report Finally Made Available

One of the state's primary financial reports is "exceptionally late," the comptroller said Wednesday, pinning the problem on tardy reporting from the State College Building Authority and the Department of Unemployment Assistance.

The Annual Comprehensive Financial Report "gives residents, taxpayers, bondholders, the federal government, all interested parties, a consistent way to look at the state's finances," Comptroller William McNamara said at Comptroller Advisory Board meeting.

The chronically delayed portrait of Massachusetts' fiscal picture -- it hasn't been filed on time in around eight years -- is meant to be filed each December, his office said. Such reports, known as ACFRs, are required for all 50 states.

Vermont and New Hampshire reported theirs in December, Rhode Island in January, and Connecticut in February. New York's comptroller issued the report last September, though New York's fiscal year ends three months earlier than Massachusetts'.

Prior to this year, according to data that dates back to fiscal 1995, the most overdue Comprehensive Financial Report in recent decades was the one for the fiscal year that ended June 30, 2015, which was finally released on May 18, 2016.

The report is separate from another report, the Statutory Basis Financial Report, that has also been filed late year after year in Massachusetts, largely due to the Legislature's habit of making spending decisions well after the ends of fiscal years.

As for the "main drivers of the timing" of the six-months-late report, he pointed to two government entities.

At the State College Building Authority, which finances and plans buildings for state universities and community colleges, McNamara said in fiscal 2022 there was a "sort of a special storm, perfect storm, of events coming together and causing delay there."

Those problems included "financial staffing issues," adapting to new requirements for lease reporting, and "the ongoing impact of COVID on the sort of complexity and nature of work during fiscal '22," McNamara said.

The comptroller's office is working with the authority, he said, to "ensure that this won't be repeated, and I feel confident saying it can be a first-time, only-time occurrence."

And at the Department of Unemployment Assistance, which during the pandemic saw billions of dollars in unemployment benefit overpayments and thousands of fraudulent claims, McNamara said the fiscal 2022 reporting was a "difficult and time-consuming process."

The issues with unemployment insurance reporting stemmed from the agency's customized accounting system and "weaknesses in financial controls" involving the ability to report transaction-level records in "a clear and consistent way," he said.

The issues were identified a year ago, according to the comptroller, and the Executive Branch was working to "get to the fix" under both Govs. Charlie Baker and Maura Healey, ultimately seeing a "breakthrough" in "the last several weeks" to resolve outstanding data issues.

McNamara said he's hopeful the recent resolution at DUA means there will be timely reporting for fiscal 2023 once his office moves on to the next ACFR.

"We chose to continue working with these entities -- in what ended up being weeks past our normal timing -- to produce an ACFR that is accurate and complete in all its parts, as opposed to releasing a sort of 95 percent version of it. I think that was the right decision. It was certainly taken in concert with partners across state government," McNamara told the Advisory Board.

There were some other issues with this year's report, the board heard, including missing documentation from two regional transit authorities.

Chris Rogers of CliftonLarsonAllen -- the outside firm that audited the report -- said MassDOT auditors had recorded a "modified opinion" because two of the state's 15 RTAs did not submit audited financial statements for fiscal 2022. A comptroller spokesman identified those RTAs as the Cape Ann Transportation Authority and the MetroWest Regional Transit Authority.

But, Rogers added, "the dollars and materiality" of the RTA data change when it's folded into the statewide report and "it's our judgement that from a commonwealth perspective, we do not need to modify the opinion of MassDOT."

After a probe of the MBTA Retirement Fund slowed progress on the fiscal 2015 ACFR, then-Comptroller Thomas Shack chose to release an interim version and then a draft unaudited report, which was followed by ripples in the investment market.

Fiscal 2023 winds to a close on June 30, and staring down this December's ACFR filing timeline, McNamara said he thinks "we're very much on the right track to once again ... produce an accurate report, but to produce it in a more timely way."