LEGISLATIVE DEPARTMENT, STATE OF COLORADO
BUDGETARY COMPARISON SCHEDULE - SPECIAL REVENUE FUNDS (BUDGET BASIS)
YEAR ENDED JUNE 30, 2002
Legislative Long Favorable
Appropriations Appropriations Roll Forward Supplemental (Unfavorable)
Bill Bill Appropriations Appropriations Transfers Budget Actual Variance
APPROPRIATIONS AND REVENUES
Appropriation
Ballot Information and Publication Fund
429,443$ 429,443$ -$
Augmenting revenue
Sale of State Capitol history memorabilia
- 3,110 3,110
Miscellaneous revenue
Interest income
- 41,475 41,475
Miscellaneous
- 15 15
TOTAL APPROPRIATIONS AND REVENUES
429,443 474,043 44,600
EXPENDITURES BY APPROPRIATION
Ballot analysis - operating transfer in
-$ 952,000$ -$ (522,557)$ -$ 429,443 400,972 28,471
Public building
- - - - - - 194 (194)
TOTAL EXPENDITURES BY APPROPRIATION
- 952,000 - (522,557) - 429,443 401,166 28,277
EXCESS OF APPROPRIATIONS AND REVENUES
OVER EXPENDITURES AND TRANSFERS
- 72,877 72,877
FUND BALANCE, BEGINNING OF YEAR

- 147,619 147,619
FUND BALANCE, END OF YEAR
-$ 220,496$ 220,496$
The accompanying notes are an integral part of these financial statements.
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LEGISLATIVE DEPARTMENT, STATE OF COLORADO

NOTES TO FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2003 AND 2002

18

NOTE 1 - DEFINITION OF REPORTING ENTITY:

The Legislative Department (the “Department”) is a sub-entity of the State of Colorado. The State of
Colorado is the oversight entity that has the responsibility for primary reporting of the State’s financial
activities. The accompanying financial statements present only that portion of the State of Colorado’s
financial position and activity which pertains to the Department. The Department’s primary activities are
included in the General Fund of the State of Colorado basic financial statements. The Department consists
of six agencies: General Assembly, Joint Budget Committee, Legislative Council, Office of the State
Auditor, Office of Legislative Legal Services, and Reapportionment Commission, when active. The
Department does not exercise oversight responsibility over any other entity.

The Department follows the Governmental Accounting Standards Board (GASB) accounting
pronouncements which provide guidance for determining which governmental activities, organizations,
and functions should be included within the financial reporting entity. GASB pronouncements set forth
the financial accountability of a governmental organization’s elected body as the basic criterion for

including a possible component governmental organization in a primary government’s legal entity.
Financial accountability includes, but is not limited to, appointment of a voting majority of the
organization’s governing body, ability to impose its will on the organization, a potential for the
organization to provide specific financial benefits or burdens, and fiscal dependency.

The Department is not financially accountable for any other organization.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The more significant accounting policies of the Department are described as follows:

A. Measurement Focus, Basis of Accounting, and Financial Statement Presentation:

Fund financial statements are reported using the current financial resources measurement focus and the
modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and
available. Revenues are considered to be available when they are collectible within the current period or
soon enough thereafter to pay liabilities of the current period. Expenditures are recorded when a liability is
incurred, as under accrual accounting. However, expenditures related to compensated absences are
recorded only when payment is due and payable.

The financial activities of the Department are recorded in individual funds, each of which is deemed to be
a separate accounting entity. The Department uses fund accounting to report on its financial position and
results of operations. Fund accounting is designed to demonstrate legal compliance and to aid financial
management by segregating transactions related to certain government functions or activities. A fund is a
separate accounting entity with a self-balancing set of accounts.

The Department reports the following major governmental fund:

The General Fund is the principal operating fund of the Department. It accounts for all financial
resources except those required to be accounted for in another fund.


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LEGISLATIVE DEPARTMENT, STATE OF COLORADO

NOTES TO FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2003 AND 2002

19

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

A. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (continued):

Special Revenue Funds include fund activities financed by specific revenue sources that are legally
restricted for specified purposes.

The Department has the following two special revenue funds:

The Ballot Information Publication and Distribution Revolving Fund was created by Senate Bill
97-204 to pay the costs of publishing the text and title of each constitutional amendment and initiated
or referred measure in every legal newspaper in the State as required by Section 1-40-124, C.R.S., and
to pay the costs of distributing the ballot information booklet as required by subsection (2) of Section
1-40-124.5, C.R.S. Any monies credited to the revolving fund and unexpended at the end of any
given Fiscal Year will remain in the fund. Monies in the revolving fund are continuously
appropriated.

The Public Buildings Trust Fund was created for the purpose of promoting historical interest in the
State Capitol Building. Receipts from gifts, grants, or donations and sales to the public of publications

on the history of the State Capitol Building and other State Capitol memorabilia and associated
disbursements are accounted for in this fund. Transactions recorded in this fund on these financial
statements reflect only the activity of this special account of the Department within the State’s Other
Special Revenue Fund.

B. Budgets:

Expenditures of the Department are authorized under annual appropriations and supplemental
appropriations made by the General Assembly. The legislative appropriation is constitutionally limited to
the unrestricted funds held by the State at the beginning of the year as determined by the modified accrual
basis of accounting.

Expenditures are controlled through the use of encumbrances. Monies are reserved for satisfaction of
obligations incurred under contracts and purchase orders. Encumbrances outstanding at year-end are not
reported as a reservation of fund balance, but rather become a commitment against resources that will
become available in future periods.

The State Controller has the authority to approve the carryover of unexpended appropriations to the
subsequent Fiscal Year under circumstances described in the State Fiscal Rules.

The budget for all funds is adopted on a basis consistent with Generally Accepted Accounting Principles
(GAAP) except as follows:

• Expenditures for budgetary purposes exclude amounts for June 2003 salaries and benefits incurred but
unpaid at year end.

• Expenditures for budgetary purposes exclude amounts for capital assets acquired under a capital lease.

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LEGISLATIVE DEPARTMENT, STATE OF COLORADO

NOTES TO FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2003 AND 2002

20

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

B. Budgets (continued):

• Payments from the General Fund to the Ballot Information Publication and Distribution Revolving
Fund (Ballot Revolving Fund) are treated as expenditures for budgetary purposes and as operating
transfers for GAAP purposes.

Budget to GAAP differences for General Fund expenditures for the Fiscal Years ending June 30, 2003 and
2002 are as follows:


C. Cash:

The balances in cash at June 30, 2003 and 2002 represent the net year-end effect of transactions between
the Legislative Department and the State’s General Fund. The balance can be an asset, in which case it
represents a claim against the unrestricted fund balance of the State General Fund, or a liability, in which
case it represents the amount to be provided by the Department appropriations to the unrestricted fund
balance of the State General Fund.

The Department deposits cash with the Colorado State Treasurer as required by Colorado Revised Statutes
(C.R.S.). The State Treasurer pools these deposits and invests them in securities approved by Section 24-

75-601.1, C.R.S. The Department reports its share of the unrealized gains/losses on the basis of its
participation in the State Treasurer’s pool. All of the Treasurer’s investments are reported at fair value,
which is determined on the basis of quoted market prices at June 30, 2003 and 2002. The State Treasurer
does not invest in any external investment pool, and there is no assignment of income related to
participation in the pool. Unrealized gains are included in “Interest Income” and reflect only the change in
fair value during the current Fiscal Year. Additional information on the Treasurer's pool may be obtained
in the State of Colorado’s Comprehensive Annual Financial Report.

D. Capital Assets:

Capital assets are stated at cost, except for those assets contributed, which are stated at the estimated fair
market value at the date of contribution. Capital assets are recorded as expenditures in the year of
acquisition.






2003 2002
Total expenditures, GAAP Basis $ 27,423,767 $ 29,013,240
Salaries incurred but unpaid (1,517,614) -
Capital lease expenditures (40,500) -
Transfers to Ballot Revolving Fund 1,953,000 429,443
Total expenditures, Budgetary Basis $ 27,818,653 $ 29,442,683
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LEGISLATIVE DEPARTMENT, STATE OF COLORADO

NOTES TO FINANCIAL STATEMENTS


YEARS ENDED JUNE 30, 2003 AND 2002

21




NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

E. Compensated Absences:

The Department has a policy that allows employees to accumulate unused vacation benefits and sick leave
up to certain maximums. Compensated absences are recognized as current salary costs only when paid.
As such, none of the accrued vacation or sick leave benefits would normally be liquidated with expendable
available financial resources.

F. Fund Balance:

In the financial statements, a portion of the fund balance has been reserved for amounts that are legally
segregated or are not subject to future appropriation. The reserved fund balance in the Ballot Information
Publication and Distribution Revolving Fund is to be used exclusively for the printing and distribution of
annual ballot information and was $734,581 at June 30, 2003 and $214,695 at June 30, 2002. The
reserved fund balance in the Public Buildings Trust Fund is to be used exclusively for the promotion of
history publications and memorabilia related to the Capitol Building and was $13,255 at June 30, 2003
and $5,801 at June 30, 2002.

At June 30, 2003, the General Fund had an unreserved deficit fund balance of $1,517,614. This deficit
fund balance was due to June 2003 salaries and benefits that were incurred but unpaid at Fiscal Year end
as discussed in Note 3. The Department received the appropriation to pay those salaries and benefits on

July 1, 2003.

NOTE 3 - ACCRUED SALARIES AND BENEFITS:

Senate Bill 03-197 requires employee salaries to be paid on a monthly basis as of the last working day of
the month, except that salaries for the month of June shall be paid on the first working day of July. The
salaries and benefits earned, but unpaid, as of June 30, 2003, were $1,517,614. Accordingly, the accrued
compensation is reflected as a liability in the accompanying financial statements.

NOTE 4 - FULL ACCRUAL ACCOUNTING:

Effective July 1, 2001, the Department, in conjunction with the State of Colorado, adopted Governmental
Accounting Standards Board (“GASB”) Statement No. 34, Basic Financial Statements – and
Management’s Discussion and Analysis – for State and Local Governments and Statement No. 37, Basic
Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments:
Omnibus Statement No. 38, Certain Financial Statement Disclosure, Statement No. 41, Budgetary
Comparison Schedules – Perspective Differences and Interpretation No. 6, Recognition and Measurement
of Certain Liabilities and Expenditures in Governmental Fund Financial Statements. These statements
establish new financial reporting requirements for state and local governments throughout the United
States of America. These statements require new information and restructure much of the information that
governments have presented in the past. Comparability with reports issued in all prior years is affected.
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LEGISLATIVE DEPARTMENT, STATE OF COLORADO

NOTES TO FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2003 AND 2002

22


NOTE 4 - FULL ACCRUAL ACCOUNTING (CONTINUED):

As noted earlier, the fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they
are both measurable and available. Expenditures are recorded when a liability is incurred except
expenditures related to compensated absences which are recorded only when payment is due. In addition,
capital assets are recorded as expenditures.

Under full accrual accounting, revenues are recorded when earned and expenses are recorded when a
liability is incurred, regardless of the timing of the related cash flows. The cost of accumulated
compensated absences is recorded as a liability and capital assets are recorded as assets, net of accumulated
depreciation. Depreciation expense is also recorded.

For purposes of full accrual accounting, capital assets of the Department are depreciated using the straight-
line method, with a half-year’s depreciation charged in the year of acquisition and in the year of disposal.
Agencies within the Department assigned useful lives that were most suitable for the particular assets.
Estimated useful lives for equipment range from 3 to 40 years.

If the Department had prepared its financial statements using full accrual accounting, its net assets
(liabilities) as of the Fiscal Years ended June 30, 2003 and 2002 would have been as shown below.


2003 2002
Current assets $ 1
,
413
,
730 $ 2
,

236
,
397
Ca
p
ital assets 410,667 454,518
Total assets
1
,
824
,
397 2
,
690
,
915


Current liabilities (including accounts payable, deferred
revenue, and other accrued liabilities)


2,364,069


2,107,072
Long-term liabilities 1,601,745 1,654,284
Total liabilities 3,965,814 3,761,356
Net assets:
Invested in capital assets, net of related debt 410,667 454,518

Restricted for specific purpose 747,836 220,496
Unrestricted (3,299,920) (1,745,455)
Total net assets (liabilities) $ (2,141,417) $ (1,070,441)
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LEGISLATIVE DEPARTMENT, STATE OF COLORADO

NOTES TO FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2003 AND 2002

23

NOTE 4 - FULL ACCRUAL ACCOUNTING (CONTINUED):

Adjustments to reconcile the governmental fund balance sheet to net assets shown above are as follows:


2003 2002
(Deficit) fund balances as reported on the governmental fund
balance sheets $ (769,778) $ 220,496
Capital assets used in governmental activities are not current
financial resources and therefore are not reported in the fund balance
sheets


410,667

454,518
Capital leases are not due and payable in the current period and therefore

are not reported in the fund balance sheets

(38,856)

-
Compensated absences are not due and payable in the current period and
therefore are not reported in the fund balance sheets

(1,743,450)

(1,745,455)
Net assets (liabilities) $ (2,141,417) $ (1,070,441)

If the Department had prepared its financial statements using full accrual accounting, its activities for the
Fiscal Years ended June 30, 2003 and 2002 would have been as shown below.


2003 2002
Revenues:
Program revenues, charges for services $ 998,038 $ 919,534
General revenues, interest income 71,627 41,475
Miscellaneous revenue 306,999 62,992
Total revenues 1,376,664 1,024,001

Expenses:
Compensation 20,110,568 19,568,669
Purchased services 5,089,753 5,609,667
Operating expenses 2,933,755 3,151,675
Travel and subsistence 718,177 912,902
Debt service 849 -

Depreciation expense 115,832 95,270
Total expenses 28,968,934 29,338,183
Deficiency of revenues over expense (27,592,270) (28,314,182)
State appropriations 29,708,034 31,443,860
Reversions to State General Fund (3,186,740) (2,980,578)
Changes in net assets $ (1,070,976) $ 149,100
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LEGISLATIVE DEPARTMENT, STATE OF COLORADO

NOTES TO FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2003 AND 2002

24

NOTE 4 - FULL ACCRUAL ACCOUNTING (CONTINUED):

The following reconciliations are provided to explain the differences between the governmental fund’s
excess of appropriations and revenue over expenditures and other financing sources (uses) and the changes
in net assets reported under full accrual accounting.


2003 2002
Excess (deficiency) of appropriations and revenues
over expenditures and other financing sources (uses) $ (990,274) $ 72,877

Compensated absences reported in the Department’s activities do
not require the use of current financial resources and therefore are
not reported as expenditures in governmental funds. 2,004


(96,266)

Governmental funds report lease proceeds as an other financing
source. However, in the Department’s activities, the lease proceeds
are reported as liabilities. (40,500)

-

Governmental funds report payments on principal as expenditures.
However, in the Department’s activities, payments on principal are
not reported. They are reported as reductions in the related liability
reported in net assets. 1,644

-

Governmental funds report capital outlay as expenditures. However,
in the Department's activities the cost of those assets is allocated over
their estimated useful lives and reported as depreciation expense:


Capital outlay
71,982

267,759
Depreciation
(115,832)

(95,270)
Changes in net assets $ (1,070,976) $ 149,100


NOTE 5 - APPROPRIATIONS AND REVENUE:

The Department’s primary funding source consists of an appropriation from the State’s General Fund.
This appropriation is supplemented by appropriations from cash funds and cash exempt funds. The cash
funds appropriated to the Department are from sales of publications. Cash exempt funds are transfers from
other agencies within the State. These funds are designated as “exempt” because they are exempt from the
Taxpayer’s Bill of Rights (TABOR) calculations discussed in Note 7. The unspent appropriations are
either rolled forward to the next fiscal year with the approval of the State Controller’s Office or reverted to
the State’s General Fund.

For Fiscal Years ended June 30, 2003 and 2002, the Department appropriations specified that $90,000 of
revenue earned by the sale of bill copies was available for expenditure by the General Assembly. Receipts
for sales in excess of that amount each year, as well as receipts for sales of Colorado Revised Statutes and
supplements, were not available for expenditure by the Department. The Department appropriations also
specified that $500,000 of audit revenue was available for expenditure by the Office of the State Auditor.
Receipts in excess of that amount were not available for expenditure.

Miscellaneous revenue consists of charges in excess of $500,000 for audit services performed by the
Office of the State Auditor for certain non state-appropriated activities of the State, the sale of bill copies
in excess of $90,000, and other miscellaneous amounts.

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LEGISLATIVE DEPARTMENT, STATE OF COLORADO

NOTES TO FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2003 AND 2002


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NOTE 6 - AUDIT CONTRACTS:

The Office of the State Auditor contracts with private firms to perform audits of various state agencies and
authorities. In situations where the state agency or authority is required by law to pay for audit costs, the
Office of the State Auditor acts as agent and offsets the amounts paid to the private firms by the amounts
reimbursed by the auditee agency or authority. The amounts received for these audits for Fiscal Year 2003
was $870,628 and for Fiscal Year 2002 was $994,267. These amounts are not reflected in expenditures or
audit reimbursement revenue.

As of June 30, 2003 and 2002, the Office of the State Auditor had contract commitments of $554,688 and
$495,538, respectively, with private firms to perform audit and consulting services.

NOTE 7 - TAX, SPENDING, AND DEBT LIMITATIONS:

In November 1992, the voters of Colorado approved Amendment 1, commonly known as the Taxpayer's
Bill of Rights (TABOR), which added a new Section 20 to Article X of the Colorado Constitution.
TABOR contains tax, spending, revenue, and debt limitations.

The Department’s financial activity, as part of the State of Colorado’s budget for Fiscal Year 1993,
provided the basis for calculation of future limitations at the state level adjusted for allowable increases
tied to inflation and population. Subsequent to 1993, revenue in excess of the State's “spending limit”
must be refunded unless voters approve the retainage of such excess revenue. TABOR generally requires
voter approval for any new tax, tax increases, and new debt.

TABOR does not affect the Department’s Fiscal Year 2003 and 2002 financial statements; however, the

limitations contained in TABOR may impact future financial activity of the State of Colorado and the
Department.

NOTE 8 - RELATED PARTY TRANSACTIONS:

The Department is a branch of Colorado State Government and, as such, receives many services from
other state agencies, many of which are not billed to the Department. The most significant of these are
accounting support and review services provided by the State Controller’s Office.
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LEGISLATIVE DEPARTMENT, STATE OF COLORADO

NOTES TO FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2003 AND 2002

26

NOTE 9 - OPERATING LEASES:

The Department has several operating leases for equipment and pays rent for the capitol complex building
space used by the Department service agencies. Total rent expense for Fiscal Years 2003 and 2002 was
$1,188,190 and $1,235,963, respectively. Future minimum commitments for the capitol complex lease do
not exceed one year. Operating leases for equipment expire September 2003 through December 2007, and
the future minimum annual rental commitments are as follows:

Year ending June 30,
Minimum
lease
payments

2004 $ 150,228
2005

64,173
2006

59,454
2007

48,283
2008

18,605
Total
$
340,743

NOTE 10 - CAPITAL ASSETS:

Capital asset activity for the Fiscal Year ended June 30, 2003 was as follows:

Balances at
July 1, 2002 Increases Decreases
Balances at
June 30, 2003
Cost of capital assets,
equipment $ 998,788 $ 71,982 $ (41,408) $ 1,029,362

Less accumulated depreciation,
equipment 544,270 111,029 (36,604) 618,695


Total capital assets, net of
accumulated depreciation $ 454,518 $ (39,047) $ (4,804) $ 410,667

Capital asset activity for the Fiscal Year ended June 30, 2002 was as follows:

Balances at
July 1, 2001 Increases Decreases
Balances at
June 30, 2002
Cost of capital assets:
Equipment
$ 833,177 $ 268,259 $ (102,648) $ 998,788
Library books 100,361 - (100,361) -
Total cost of capital assets 933,538 268,259 (203,009) 998,788

Less accumulated depreciation 551,647 90,240 (97,617) 544,270

Total capital assets, net of
accumulated depreciation $ 381,891 $ 178,019 $ (105,392) $ 454,518
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