HIS EXCELLENCY, AUGUSTUS E. WILLSON
GOVERNOR OF KENTUCKY
I'P(N I If E
FINANCIAL CONDITION OF THE STATE
IMPROVED METHIODS OF ACCOUNTING
HARVEY S. CHA,SE AND COMPANY
Certified Public Accountants
84 STATE STREET. BOSTON. MASS.
This page in the original text is blank.
HARVEY S. CHASE COMPANY
PUBLIC ACCOUNTANTS AND AUDITORS
84 State Street, Boston, Masi.
December 23, 1909.
To His EXCELLENCY, AUGUSTUS E. WILLSON,
GOVERNOR OF KENTTUCKY,
STATE HOUSE, FRANKFORT:
Dear Sir,-In accordance with your instructions, we have
made an examination of the methods of accounting in the
office of the Auditor of Public Accounts and elsewhere,
and have prepared a table showling the revenues and ex-
penditures in the various funds of the State during the
past five fiscal years. In this table we have separated the
total revenues and expenditures into four principal tunds,
namely, General Expenditure Fund, School Fund, Sinking
Fund, and State University Fund. In the books of the
Au(litor the latter fund is included in the figures of the
General Expenditure Fund, but we have taken these items
out fromn the General Expenditure Fund, so that the Uni-
versity Funcl may be separately set up. Otherwise, the
figures are identical with those on the Auditor's books. We
have verified the results on this table by a series of proofs
which exhibit the actual increases and decreases in the cash
balances from year to year, and thereby verify the totals
of all of the figures given.
GENERAL EXPENDITURE FUND.
We have further separated the General Expenditure Fund
into two parts: "Ordinary," which includes only current
expenses of the year which have been paid, and "Extraor-
dinary," which includes only expenditures for the erection
of the New Capitol, for the Normal Schools, and also the
exceptional expenditures on account of the employment of
military force in aid of civil power, which occurred in
1908-09, and which amounted to over 150,000.00.
Referring to the table, you will note that in each year,
except the first year (1904-05), there has been a surplus
of revenue receipts over ordinary expenses paid. This
surplus, however, has been sufficient in none of the years to
provide for the extraordinary expenditures (i.e., for the New
Capitol, for the Normal Schools, and for the Militia). When
the extraordinary expenditures are contrasted with the
receipts available to pay for them, we are confronted with
a deficiency in each year.
Surphts .f Rccdipls aser Ordinary Expenses, together with
Deficits caused by Ex.,-aarainawy Expenditures.
(Cents havse blen io.nitted to save space.)
I Supllc.' l'ezipts. . 4Defieienci,-s of Re-
Yea:. Ord 1.eeiptsExtraordinaryecipts caused by
lFx,.eises. l;Expenditures. Extraordinary
1904-5 32,613. 34,885. 67,498.
1905-6 . 25,954. 130,116. 104,162.
1906-7 363,508. 573,551. 210,043.
1907-8 . 198,439. 451,107. 252,668.
1908-9 . . 120,545. 619,834. 499,289.
675,833. 1,809,493. 1,133,660.
On August 31, 1907, 500,000. was transferred from the
Sinking Fund to the General Expenditure Fund. This
transfer was made for the reason, apparently, that the
sinking fund did not need this money, as its annual revenue
from taxation is more than enough to pay the interest
charges (all outstanding bonds of the State having been
paid, except the irredeemable debt), while the General
Expenditure Fund was badly in arrears.
If this transfer is included, the apparent deficiency of the
General Expenditure Fund is reduced to 633,660 for the
The Auditor's report shows that at the beginning of the
five years above summarized, there was a deficit in the Gen-
eral Expenditure Fund of 98,103.97, to which we must add
1,115.58 due to the University Fund, which is separately
stated in the Auditor's report, making the deficit carried
over at the beginning of the five-year period the sum of
99,219.55, so that the total excess of expenditure over the
total receipts of the General Expenditure Fund, beginning
with the deficit carried over in 1904-5, is as follows:--
Deficit carried over 1904-5
Excess of General Fund Expenditure
over receil)ts during the five-years
Other transfers and corrections
Total Deficit in general fund June
30, 1909 ..
Transfer from sinking fund, August 31,
Net Deficit in general fund June 30,
Comparing this net deficit with the Akuditor's statement
as of June 30, 1909, the figures are the same, as follows:-
Auditor's statement of deficiency, page
252 his report.
Add: Balance due University Fund
Total as above.
SCHOOL FUND, SINKING FUND AND STATE
The School Fund has had a surplus of revenue each year,
except 1905-6, when there was a deficiency of revenue of
The Sinking Fund has had a surplus of revenue each year,
except the first year (1904-5), when there was a deficiency
of revenue of 3,997. If the transfer of the 500,000. be
taken into consideration in 1907-8, the surplus revenue
in the Sinking Fund of that year, which amounted to
844., is transformed into a deficiency of revenue for that
year of 8499,956.
In the State University Funid there has been a surplus
every year, except the last two years, when the expend-
itures exceeded the revenues.
On June 30, 1904, there was a deficiency
in the School Fund of .98,324.
During the five years to June 30, 1909,
there should have been a net surplus of
receipts over expenditures of .534,074.
Leaving a net surplus on June 30, 1909, of 435,750.
On June 30. 1904, there was a
surplus of. .546,444.
During the five years there
should have been a sur-
plus of .62,726.
Total surplus. .609,170.
Less transfer of August 31,
Leaving a net surplus June 30, 1909 . . . 109,170.
On June 30, 1904, there was a
surplus of. . . . . . .
During the five years there
should have been a sur-
plus of . . . . . . . . 1,864.
leaving a net surplus on June 30, 1909 .
TOTAL DUE TO THESE FUNDS.
Total surplus which should have existed in
these funds June 30, 1909.
The facts, however, were these: that if
all outstall(Iinlg warrants had been presented
for payment on June 30, 1909, it would