New York City, through its General Fund, spent a total of $40.860 billion in fiscal year 2002, an increase of $633 million (1.6 percent) over fiscal year 2001, according to the Comprehensive Annual Financial Report (CAFR) issued today by Comptroller William C. Thompson, Jr. The report, the first CAFR issued by Comptroller Thompson, contains New York City's official independently audited financial statements.

"In fiscal year 2002 the City met its legal requirements to maintain its General Fund revenues and expenditures in balance, reporting a $5 million surplus in its General Fund as determined under the Generally Accepted Accounting Principles (GAAP) for the 22nd consecutive year," Thompson said.

"However, the government-wide financial statements prepared under a new financial reporting model adopted by the City last year show that the City's overall liabilities continue to exceed its assets and that this gap widened by $3.852 billion during the year. Thus the fiscal year 2002 financial statements illustrate that the City is managing its current operations to properly meet its legal requirements, but the overall financial health of the City has weakened."

The City's independent auditors, Deloitte & Touche LLP, who audited the City's financial statements for the first time, gave the City's financial statements an "unqualified" opinion. This opinion means the statements are fairly presented in accordance with GAAP.

Among the results of operations reported in the Financial Report are the following:

BUDGET: Additional resources in FY 2002 include nearly $1.6 billion in Federal Aid, and $465 million in greater than expected miscellaneous revenues. These resources were offset by expenditures above budget including $721 million to offset lower than expected tax revenue collections, $616 million in higher than expected overtime costs, $588 million in increased contractual services expenses, $315 million in greater Medicaid expenditures, and $318 million to provide for future General Obligation debt service costs.

The City had capital expenditures of about $6.3 billion in FY 2002, the majority of which were attributable to the following major program areas: Education $1.8 billion (29 percent); Environmental Protection $1.2 billion (19 percent); Transportation $915 million (14 percent); Public Safety and Judicial $828 million (13 percent); and Housing $380 million (6 percent).

PENSION FUNDS: The City's five major pension funds have been affected by the broad negative market trends of the past year. As a result, the asset allocation followed by the funds produced a return of negative 8.3%. Our investment costs continue to remain lower than those of other large public funds.

DEBT MANAGEMENT: The City issued approximately $3.657 billion in general obligation bonds of which approximately $1.007 billion were issued to refund certain outstanding bonds and $2.65 billion were issued for capital purposes. The refundings will provide the City with about $204 million in debt service savings in FY 2003.

The New York City Transitional Finance Authority (TFA) sold $250 million of bonds during FY 2002. Initially, TFA received the authority to issue up to $7.5 billion of debt. However, legislation increased the debt incurring capacity of TFA by another $4 billion to $11.5 billion in FY 2000. In September 2001, the State Legislature approved a special TFA authorization of $2.5 billion to fund capital and operating costs relating to or arising from the events of September 11, 2001.

The State Legislature also authorized the TFA to issue debt, without limit as to principal amount, that is secured solely by State or Federal Aid received because of the disaster. In October 2001, the TFA issued $1 billion of TFA Recovery Notes, which were redeemed in October 2002 with the issuance of $1 billion of TFA Recovery Bonds. In addition, the City sold $1.5 billion of Revenue Anticipation Notes (RANs), which were backed by State education aid revenue. These RANs matured and were repaid in April 2002.

NEW FINANCIAL REPORTING MODEL: The fiscal year 2002 financial statements reflect the second year of implementation of a new financial accounting and reporting model for state and local governments. The new financial reporting model is the result of a new accounting standard (Statement No. 34) issued by the Governmental Accounting Standards Board.

An electronic copy of the Comptroller's Comprehensive Annual Financial Report will be available soon. Those requiring a hard copy should submit their request in writing to the following address: Office of the Comptroller, Bureau of Accountancy - Room 800, 1 Centre Street, New York, NY 10007.

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