I need to do PPT slides about 3 different topics in Government accounting. My Project is aboutWashington CAFR reports 2015. I have already donethereport about that as you cansee it in the attachments word file and CAFR PDF file for Washington to help you doing the slides. Each topic should be from 2 to 3 slides.

The topics are

1- Contributions. the pages talked about this topic in PDF file are132-150.

2- Gain \ Loss on investments.the pages talked about this topic in PDF file are80-87.

3- Plant fund.the pages talked about this topic in PDF file are 78-79.

Also I am attaching PPT file with three deferent topics as an example this part for other student so you could see what she has done and then you could add the my slides which are contrebutions , gain \ loss on investment, and plant fundon the same file.

- In addition to preparing the slides I do need some notes on each slide so I could read it to present my presentation to the audience.

- The most important thing is ? When you preparing the PPT you must rely on the information about Washington CAFR Reports 2015 in the PDF file . Not just the world Document I am attaching. This world document is for illustrating the topics, but you could still take advantage of the information in this file if you see it more suitable for presentation.

thank you

STATE OF WASHINGTON OFFICE OF FINANCIAL MANAGEMENT Comprehensive Annual Financial Report F OR THE F ISCAL Y EAR E NDED J UNE 30, 2015 OCTOBER 2015 WASHINGTON STATE OFFICE OF FINANCIAL MANAGEMENT INSURANCE BUILDING PO BOX 43113 OLYMPIA, WA 98504-3113 (360) 902-0555 FAX (360) 664-2832 STATE OF WASHINGTON OFFICE OF FINANCIAL MANAGEMENT Comprehensive Annual Financial Report FOR OCTOBER 2015 THE F ISCAL YEAR E NDED J UNE 30, 2015 State of Washington Report Prepared by Office of Financial Management David Schumacher, Director Accounting Division Wendy Jarrett, Assistant Director Statewide Accounting Heidi Algiere Bret Brodersen Don Charlton, CPA Julie Chiapetta Suzanne Coit, CPA Cheryl Hainje Lee A. Hall, CPA Sandy McGough Steve Nielson Sara Rupe Patricia Sanborn, CPA Michael Schaub Kim Thompson, CPA Brian Tinney Anwar Wilson Additional assistance provided by Office of the State Treasurer Office of the State Actuary Office of the State Auditor State Investment Board Department of Retirement Systems Department of Transportation State Health Care Authority University of Washington All state fiscal personnel State of Washington Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2015 Table of Contents INTRODUCTORY SECTION Letter of Transmittal .......................................................................................................................................................... 3 Certificate of Achievement for Excellence in Financial Reporting .......................................................................... 10 Statewide Elected Officials .............................................................................................................................................. 11 State Organization Chart ................................................................................................................................................. 12 FINANCIAL SECTION Independent Auditor's Report ........................................................................................................................................ 15 Management's Discussion and Analysis .................................................................................................... 21 Basic Financial Statements Government-wide Financial Statements Statement of Net Position........................................................................................................................................ 36 Statement of Activities.............................................................................................................................................. 38 Governmental Fund Financial Statements Balance Sheet ............................................................................................................................................................. 42 Reconciliation of the Balance Sheet to the Statement of Net Position ............................................................ 43 Statement of Revenues, Expenditures, and Changes in Fund Balances ........................................................... 44 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities............................................................................................ 45 Proprietary Fund Financial Statements Statement of Net Position........................................................................................................................................ 46 Statement of Revenues, Expenses, and Changes in Net Position ..................................................................... 50 Statement of Cash Flows.......................................................................................................................................... 52 Fiduciary Fund Financial Statements Statement of Net Position........................................................................................................................................ 56 Statement of Changes in Net Position ................................................................................................................... 57 Component Unit Financial Statements Statement of Net Position........................................................................................................................................ 58 Statement of Revenues, Expenses, and Changes in Net Position ..................................................................... 62 Notes to the Financial Statements ................................................................................................................................. 65 Table of Contents i State of Washington Required Supplementary Information Budgetary Comparison Schedules and Information General Fund ........................................................................................................................................................... 167 General Fund - Budget to GAAP Reconciliation .............................................................................................. 168 Higher Education Special Revenue Fund............................................................................................................ 169 Higher Education Special Revenue Fund - Budget to GAAP Reconciliation .............................................. 170 Notes to Required Supplementary Information................................................................................................. 171 Pension Plan Information Single Employer Plans Schedules of Changes in Net Pension Liability and Related Ratios ........................................................... 173 Schedules of Contributions ............................................................................................................................... 176 Notes to Required Supplementary Information ............................................................................................ 178 Cost Sharing Employer Plans Schedules of the State's Proportionate Share of Net Pension Liability .................................................... 179 Schedules of Contributions .............................................................................................................................. 183 Volunteer Fire Fighters' and Reserve Officers' Relief and Pension Fund Schedule of Change in Net Pension Liability ................................................................................................. 184 Schedule of Net Pension Liability .................................................................................................................... 185 Schedule of Contributions................................................................................................................................. 185 Schedule of Investment Returns ...................................................................................................................... 186 Notes to Required Supplementary Information ............................................................................................ 186 Other Postemployment Benefits Information Schedule of Funding Progress ............................................................................................................................... 186 Infrastructure Assets Reported Using the Modified Approach Condition Assessment ............................................................................................................................................ 187 Other Supplementary Information Combining Financial Statements Governmental Funds Nonmajor Governmental Funds .................................................................................................................................. 193 Combining Balance Sheet - by Fund Type.......................................................................................................... 194 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - by Fund Type ............................................................................................................................................. 195 Nonmajor Special Revenue Funds ............................................................................................................................... 197 Combining Balance Sheet ...................................................................................................................................... 198 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances.................................... 200 Combining Schedule of Revenues, Expenditures, and Other Financing Sources (Uses) - Budget and Actual ..................................................................................................................................... 202 Nonmajor Debt Service Funds..................................................................................................................................... 207 Combining Balance Sheet ...................................................................................................................................... 208 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances.................................... 209 ii Table of Contents State of Washington Combining Schedule of Revenues, Expenditures, and Other Financing Sources (Uses) - Budget and Actual ..................................................................................................................................... 210 Nonmajor Capital Projects Funds................................................................................................................................ 213 Combining Balance Sheet ...................................................................................................................................... 214 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances.................................... 215 Combining Schedule of Revenues, Expenditures, and Other Financing Sources (Uses) - Budget and Actual ..................................................................................................................................... 216 Proprietary Funds Nonmajor Enterprise Funds ......................................................................................................................................... 219 Combining Statement of Net Position ................................................................................................................ 220 Combining Statement of Revenues, Expenses, and Changes in Net Position .............................................. 222 Combining Statement of Cash Flows .................................................................................................................. 223 Internal Service Funds ................................................................................................................................................... 225 Combining Statement of Net Position ................................................................................................................ 226 Combining Statement of Revenues, Expenses, and Changes in Net Position .............................................. 230 Combining Statement of Cash Flows .................................................................................................................. 232 Fiduciary Funds Pension Funds ................................................................................................................................................................. 235 Combining Statement of Plan Net Position ....................................................................................................... 237 Combining Statement of Changes in Plan Net Position ................................................................................... 241 Agency Funds .................................................................................................................................................................. 236 Combining Statement of Assets and Liabilities .................................................................................................. 245 Combining Statement of Changes in Assets and Liabilities ............................................................................. 246 Component Units Nonmajor Component Units ........................................................................................................................................ 249 Combining Statement of Net Position ................................................................................................................ 250 Combining Statement of Revenues, Expenses, and Changes in Net Position .............................................. 251 Individual Fund Schedules Combining Schedules for General Fund Accounts Balance Sheet ........................................................................................................................................................... 254 Schedule of Revenues, Expenditures, and Changes in Fund Balances........................................................... 255 Schedule of Revenues, Expenditures, and Other Financing Sources (Uses) - Budget and Actual ..................................................................................................................................... 256 STATISTICAL SECTION Narrative ........................................................................................................................................................................... 261 Financial Trends Schedule 1 - Net Position by Component........................................................................................................... 262 Schedule 2 - Changes in Net Position .................................................................................................................. 264 Schedule 3 - Fund Balances, Governmental Funds ........................................................................................... 268 Table of Contents iii State of Washington Schedule 4 - Revenues, Expenditures, and Other Financing Sources (Uses), All Governmental Fund Types .................................................................................................................. 270 Schedule 5 - Revenues, Expenditures, and Other Financing Sources (Uses), General Fund ................................................................................................................................................ 272 Revenue Capacity Schedule 6 - Sales Subject to Retail Sales Tax by Industry ............................................................................... 274 Schedule 7 - Number of Retail Sales Taxpayers by Industry ........................................................................... 276 Schedule 8 - Number of Business and Occupation Taxpayers by Industry .................................................. 277 Schedule 9 - Taxable Sales by Business and Occupation Tax Classification ................................................. 278 Debt Capacity Schedule 10 - Ratios of Outstanding Debt by Type .......................................................................................... 280 Schedule 11 - Legal Debt Margin Information................................................................................................... 282 Schedule 12 - Revenue Bond Coverage ............................................................................................................... 284 Demographic Information Schedule 13 - Personal Income Comparison, Washington State vs. United States ...................................... 285 Schedule 14 - Population and Components of Change, Washington State vs. United States .................... 285 Schedule 15 - Annual Average Civilian Labor Force Unemployment Rates, Washington State vs. United States ................................................................................................................................................. 286 Schedule 16 - Annual Average Wage Rates by Industry ................................................................................... 288 Schedule 17 - Principal Employers by Industry ................................................................................................. 290 Schedule 18 - Fortune 500 Companies Headquartered in Washington ......................................................... 291 Schedule 19 - Principal Agricultural Commodities Value ................................................................................. 291 Schedule 20 - International Trade Facts (All Washington Ports) .................................................................... 292 Schedule 21 - Value of Trade with Major Export Trading Partners ............................................................... 292 Schedule 22 - Value of Trade with Major Import Trading Partners ............................................................... 292 Schedule 23 - Property Value and Construction ................................................................................................ 293 Schedule 24 - Residential Building Activity......................................................................................................... 293 Operating Information Schedule 25 - Full-Time Equivalent Staff Comparison (Budgeted Funds) ................................................... 294 Schedule 26 - Full-Time Equivalent Staff Comparison (General Fund State) .............................................. 295 Schedule 27 - Operating and Capital Asset Indicators by Function - General Government ..................... 296 Schedule 28 - Operating and Capital Asset Indicators by Function - Human Services............................... 298 Schedule 29 - Operating and Capital Asset Indicators by Function - Transportation ................................. 300 Schedule 30 - Operating and Capital Asset Indicators by Function - Natural Resources and Recreation .............................................................................................................................................. 302 Schedule 31 - Operating and Capital Asset Indicators by Function - Education ........................................ 304 iv Table of Contents State of Washington INTRODUCTORY SECTION 1 State of Washington This page intentionally left blank. 2 STATE OF WASHINGTON OFFICE OF FINANCIAL MANAGEMENT Insurance Building, PO Box 43113 Olympia, Washington 98504-3113 (360) 902-0555 October 30, 2015 The Honorable Jay Inslee, Governor Honorable Members of the Legislature Citizens of the State State of Washington Olympia, WA 98504 In accordance with Revised Code of Washington 43.88.027, the Office of Financial Management has prepared this Comprehensive Annual Financial Report (CAFR) of the state of Washington for the fiscal year ended June 30, 2015. Full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control established for this purpose, rests with the state. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. The State Auditor has issued an unmodified (\"clean\") opinion on the Washington State financial statements for the fiscal year ended June 30, 2015. The independent auditor's report is located at the front of the financial section of this report. Management's Discussion and Analysis (MD&A) immediately follows the independent auditor's report and provides a narrative introduction, overview and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. Following the MD&A are the basic financial statements, including the government-wide financial statements, the fund financial statements and the notes to the financial statements. The required supplementary information, combining financial statements, individual fund schedules and the statistical section, complete the CAFR. Profile of Washington State Washington State was created in 1889 by an enabling act of Congress. The state is located on the Pacific Coast, in the northwestern corner of the continental United States, and comprises 71,303 square miles. Its current population is 7.1 million. Washington is famous for its breathtakingly beautiful scenery and sharp contrasts. On the west side of the state, high mountains rise above coastal waters. The forests of the Olympic Peninsula are among the world's rainiest places. The state's coastline has hundreds of bays and inlets that make excellent harbors, while in the eastern part, flat semi-desert land stretches for long distances without a single tree. Letter of Transmittal 3 State of Washington Washington's location makes it a gateway for land, sea, and air travel to Alaska and Pacific Rim countries. Ships from all parts of the world dock at Washington ports. Costco Wholesale Corporation, headquartered in Issaquah, operates an international chain of membership warehouses. Microsoft, a global leader in the computer software industry, makes its home in Redmond. Major internet retailer, Amazon.com, and worldwide renowned coffee company, Starbucks, are both headquartered in Seattle. The Weyerhaeuser Company, a major producer of wood and related products, is headquartered in Federal Way. East of the Cascade Mountain range, farmers raise livestock and grow a variety of crops such as wheat, potatoes, and tree fruits. Washington leads the nation in apple and hops production, makes world-class wine, and produces large amounts of lumber, pulp, paper, and other wood products. Western Washington's mild, moist climate makes that region excellent for dairy farming and the production of flower bulbs. GOVERNMENTAL STRUCTURE As established in the State Constitution, Washington State has Executive, Legislative, and Judicial branches of government. The Executive Branch has nine elected officials: the Governor, Lieutenant Governor, Secretary of State, State Treasurer, State Auditor, Attorney General, Superintendent of Public Instruction, Insurance Commissioner, and Commissioner of Public Lands. Thirty-nine agency heads are appointed by, and report to, the Governor. Seventy-eight agency heads report to boards appointed, in whole or in part, by the Governor. The Legislative Branch consists of the Senate (with forty-nine members) and the House of Representatives (with ninetyeight members). The Judicial Branch consists of the State Supreme Court, the highest court in the state, which has nine Justices. Every two years, three Justices are elected for six-year terms. A Chief Justice is chosen from among the most senior Justices. The Judicial Branch also includes the state's superior courts, justices of the peace, and such inferior courts as the Legislature may provide. TYPES OF SERVICES PROVIDED AND REPORTING ENTITY The state provides a wide range of services that include education, transportation, environment and natural resource protection, and social and health services. The accompanying report includes all funds and subsidiary accounts of the primary government, Washington State as legally defined, as well as its component units. Component units are legally separate entities for which the primary government is financially accountable or ones that have relationships with the state such that exclusion would cause the state's financial statements to be misleading or incomplete. The determination of \"financial accountability\" is based on criteria established in Governmental Accounting Standards Board Statements No. 14 and No. 61. Note 1.A to the financial statements explains more fully component units that are included in the reporting entity. THE BUDGET CYCLE Washington enacts budgets for a two-year cycle, beginning on July 1 of each odd-numbered year. By law, the Governor must propose a biennial budget in December, the month before the Legislature convenes in regular session. The biennial budget enacted by the Legislature can be modified in any legislative session through changes to the original appropriations. Since the inception of annual legislative sessions in 1979, it has become common for the Legislature to enact 4 Letter of Transmittal State of Washington annual revisions to the state's biennial budget. These revisions are referred to as supplemental budgets. Operating appropriations are generally made at the fund/account and agency level; however, in a few cases, appropriations are made at the fund/account and agency/program level. Operating appropriations cover either the entire biennium or a single fiscal year within the biennium. Capital appropriations are biennial and are generally made at the fund/account, agency and project level. The legal level of budgetary control is at the fund/account, agency and appropriation level, with administrative controls established at lower levels of detail in certain instances. Washington State's Economy and Revenue Outlook Washington's economy has been a step ahead of the nation's during this period of recovery. Recent economic performance has narrowed that gap, but Washington should still maintain an advantage during the next biennium. Washington's jobless rate remained lower than the national rate for much of the past two years. This was unusual: Washington's rate has traditionally been above the national norm due to the state's outsized share of seasonal industries. More recent figures show Washington's jobless rate edging above the national average, likely the result of an increase in workforce participation. In fundamental ways, that is good news as it reflects an increase in workers' confidence in finding gainful employment. By the end of the next biennium, Washington's unemployment rate is projected to fall to 5.2 percent, down from the current 5.3 percent. Personal income in Washington is expected to make above-average gains over the next biennium. Real personal income should gain 3.9 percent in fiscal year 2016 and 3.6 percent in fiscal year 2017, slightly higher than projections for the nation. On a per-capita basis, Washington's real personal income should reach $49,017 at the end of the biennium, more than $3,500 above the U.S. average. These gains in Washington's personal income will occur notwithstanding declines in aerospace employment, which is expected to fall by 2.9 percent in fiscal year 2016 and 2.6 percent in fiscal year 2017. Though this places a drag on overall nonfarm employment growth, Washington will still net a 2.4 percent increase in total payroll jobs in fiscal year 2016 and a 1.6 percent increase in fiscal year 2017, again slightly better than projections for the nation. Construction activity in Washington is expected to increase at a healthy rate during the 2015-17 biennium. While multi-family construction growth was prompted by demand for rental units in the aftermath of the recession, income gains should renew demand for single-family housing. Building permits should surpass 36,900 in fiscal year 2016 and 41,200 in fiscal year 2017. As a result, construction employment should jump by 4.8 percent and 3.0 percent, respectively. That should boost construction jobs to 5.5 percent of total nonfarm employment, close to historic averages and reflective of a sound housing market. General Fund-State revenues are forecasted to grow at a 10.2 percent rate across the 2015-17 biennium compared to the 9.8 percent gain in the 2013-15 biennium. The expanding economy, accelerated gains in hiring, and recovering housing markets have had a positive effect on revenue growth. Further economic growth and a continued expansion in the housing and commercial building markets should keep revenues growing at a sound pace. Letter of Transmittal 5 State of Washington Major Initiatives Heading into the 2015-17 budget cycle, Washington Governor Jay Inslee and the Legislature faced enormous fiscal challenges. After more than a half decade of cutting vital services, the Governor argued that it was time to start reinvesting in Washington. After spending a record 176 days in session including three special sessions the Legislature approved historic spending increases on several fronts. The state's 2015-17 operating budget includes an additional $1.3 billion to meet the state's K-12 basic education obligation; makes another large investment in early learning; cuts tuition and expands financial aid for students at public colleges and universities; adds child protective and child welfare service workers; and makes important investments in mental health services. The Legislature approved a $16 billion transportation investment package to address critical statewide maintenance and safety needs, relieve congestion, and improve freight mobility. Lawmakers also approved a $3.9 billion capital budget that will support 21,000 jobs and that includes more than $800 million for school construction and K-3 class-size reduction. EDUCATION Under the state Supreme Court's 2012 McCleary v. State of Washington decision, the state is under court order to meet its constitutional obligation to adequately fund basic education. The state made progress in the 2013-15 budget toward meeting this obligation, but not enough progress to satisfy the court. In September 2014, the court found the state in contempt for failing to produce a longterm basic education funding plan, and threatened sanctions if such a plan was not in place by the end of the 2015 legislative session. To continue meeting the state's obligations under the McCleary decision, the Governor and the Legislature increased funding for basic education by about $1.3 billion for the 2015-17 biennium. The state's two-year budget: Increased funding to school districts for materials, supplies and operating costs by $741 million. Added $350 million to reduce class sizes in kindergarten through third grade, which will then add an estimated 5,000 teachers statewide. Included $180 million to fund full-day kindergarten for all students offering 1,000 hours of instruction a year one year ahead of schedule. In the 2014-15 school year, fewer than half the state's kindergartners participate in a state-funded, full-day program. In July 2015, shortly after the legislative session concluded, the Legislature submitted a progress report to the court. But, again, the court was not satisfied and on August 13, 2015, it imposed penalties totaling $100,000 per day until the Legislature adopts a complete plan for complying with the state's constitutional obligation. 6 Letter of Transmittal State of Washington The 2015-17 biennial budget also invests $95 million in early learning, including $24 million to add 1,600 new spaces in the Early Childhood Education and Assistance Program, the state's preschool program for children from low-income families. In addition, the budget includes $169 million to shrink tuition at the state's colleges and universities. Tuition rates for the public colleges and universities have steadily increased since the early 1990s, spiking sharply from 2009 to 2013, the result of the state's effort to balance the budget during the Great Recession. Tuition for resident undergraduate students at the public baccalaureate colleges and community and technical colleges is cut by 5 percent in the first year of the biennium. In the second year, tuition is reduced by an additional 10 percent at the research institutions, reduced 15 percent at the regional universities, and frozen at the community and technical colleges. HEALTH CARE Access to health care has increased dramatically in Washington since the 2010 passage of the federal Patient Protection and Affordable Care Act (ACA), which gave Washingtonians the unprecedented opportunity to choose affordable, high-quality health insurance coverage. More than 170,000 people have been enrolled for private insurance through the state's health insurance exchange, the Washington Healthplanfinder. Washington also opted to expand its Medicaid program under the ACA, providing coverage to more than 534,000 newly eligible adults. As a result, during a sixmonth span, the percentage of Washington residents without health insurance fell from 16 percent to 6 percent. Besides improving access to health care, the state has undertaken a number of initiatives to drive down costs and improve the health of its citizens. For example, the state's Plan for a Healthier Washington will transform health care so people experience better health during their lives by receiving better care when they need it and finding care that is more affordable and accessible. As part of this effort, the state is integrating mental health and substance abuse treatment with primary medical care. And, under legislation passed in 2014, the state is implementing an all-payer claims database that will significantly improve the transparency of health care costs and quality, which will help purchasers and patients make more informed health care choices. The Governor also launched his Healthiest Next Generation initiative, a public-private partnership that will develop strategies to ensure healthy weight in children through such actions as promoting breastfeeding, supporting child care providers and schools by providing more nutritious meal and drink options, and encouraging children to be more active. The initiative also supports youth substance use prevention and education efforts such as regulating e-cigarettes. The Governor convened an Aging Summit to help the state prepare for the needs of an aging population. The summit generated a number of policy recommendations, such as the need for key investments in long-term care and nursing homes. The summit also resulted in a joint legislative and executive branch committee, as well as legislation to implement the Community First Choice Option and to develop an Alzheimer's Disease Plan for Washington State. Letter of Transmittal 7 State of Washington TRANSPORTATION The Governor and the Legislature this year adopted the largest transportation revenue package in state history to provide jobs, safety and critically needed traffic relief. It's estimated that this $16 billion state investment, coupled with its $15 billion authorization for Sound Transit light rail expansion, will support more than 200,000 family-wage jobs across our state. More than $1.4 billion is provided for maintenance, operations and preservation to fix bridges and promote safety. And $1 billion is earmarked for clean transportation elements that help relieve traffic congestion and reduce emissions, including bicycle and pedestrian projects, vanpools, fish culverts and transit. Further funding is provided for important road projects; ferry operations, vessels and terminals; freight and rail projects; the Washington State Patrol; and local transportation improvements. The package also provides incentives for electric vehicle sales, use of alternative fuels in commercial vehicles and commute trip reduction credits. RESULTS WASHINGTON Washington is fast becoming a national leader in adapting proven private-sector principles to state government. Governor Inslee's innovative Results Washington initiative, launched in 2013, brings together multi-agency teams around dozens of complex goals in education, the economy, the environment, health and safety and effective government. By focusing on measurable results, enterprise-wide strategies and grassroots innovation, state government and its partners are building a healthier, better-educated and more prosperous Washington. Lean is a management philosophy that has proven highly effective at driving customer-focused improvements in health care, aerospace, retail and other industry sectors. Lean principles are increasingly being put to use in the public sector. Lean stresses cycles of continuous improvement led by front-line staff closest to the work. Problem solving and solutions using Lean principles address root causes, rather than treatment of symptoms. A key tenet of this effort is transparency and accountability. Governor Inslee meets monthly with teams of state agency directors to discuss progress, challenges and next steps. These meetings are streamed live over the Internet and posted online. Goals, improvement strategies and metrics are also posted online at www.results.wa.gov. ENVIRONMENT AND ENERGY Governor Inslee continues to engage lawmakers in a bipartisan discussion on how to tackle the issue of carbon pollution, a cornerstone of his agenda. In April 2014, he signed Executive Order 14-04 - \"Washington Carbon Pollution Reduction and Clean Energy Action.\" A key component of the executive order was the creation of the Carbon Emission Reduction Taskforce (CERT) to give recommendations on the design and implementation of a carbon emission limits and market mechanisms program for Washington. The CERT completed its work in November 2014. Governor Inslee introduced legislation in January 2015 that would have established a carbon market (cap and trade) program. Program revenue would have helped pay for education and transportation programs as well as to mitigate potential impacts to low-income communities and energy-intensive businesses. This legislation received several hearings but ultimately did not pass in the Legislature. 8 Letter of Transmittal State of Washington At the urging of the Governor, the budget included $40.4 million for programs to support research institutions, utilities and businesses as they develop, demonstrate and deploy new renewable, cleanenergy and energy-efficiency programs. The sum of $25 million was provided for grants to state agencies, school districts, universities and local governments to improve the energy efficiency of public facilities and street lighting, and to install solar energy systems to cut energy demand and costs. Washington is experiencing rapid changes in how crude oil is moving through rail corridors and over its waters, which creates rising safety and environmental risks. As petroleum shipments from Alaska decline, transport of crude oil from the Bakken region via rail is increasing. To address these risks, Governor Inslee introduced legislation (House Bill 1449), later signed into law, that expands the state oil spill tax to oil transported by rail. The law also strengthens oil spill contingency planning requirements. Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Washington State for its CAFR for the fiscal year ended June 30, 2014. The Certificate of Achievement is a prestigious national award, recognizing conformance with the highest standards for preparation of state and local government financial reports. To be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized CAFR, with contents conforming to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. Washington State has received a Certificate of Achievement for the past 28 years. The Office of Financial Management considers this report to be in conformity with the Certificate of Achievement Program requirements, and will submit it to the GFOA. The preparation of this report could not have been accomplished without the professionalism and dedication demonstrated by the financial and management personnel of each state agency and the Office of Financial Management. This CAFR reflects the Governor's commitment to the Legislature, the citizens of Washington State, and the financial community to maintain financial statements in conformance with the highest standards of financial accountability. Sincerely, David Schumacher Director Letter of Transmittal 9 State of Washington 10 State of Washington Statewide Elected Officials As of June 30, 2015 Governor Jay Inslee Lieutenant Governor Brad Owen Secretary of State Kim Wyman Treasurer Jim McIntire Acting State Auditor Jan Jutte Attorney General Bob Ferguson Superintendent of Public Instruction Randy Dorn Commissioner of Public Lands Peter J. Goldmark Insurance Commissioner Mike Kreidler 11 State of Washington 12 State of Washington FINANCIAL SECTION 13 State of Washington This page intentionally left blank. 14 Washington State Auditor's Office INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS October 30, 2015 The Honorable Jay Inslee Governor, State of Washington REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund and the aggregate discretely presented component units and remaining fund information of the State of Washington, as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the State's basic financial statements as listed in the table of contents. Management's Responsibility for the Fina ncial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Department of Retirement Systems, Local Government Investment Pool, University of Washington, and the funds managed by the State Investment Board. Those financial statements represent part or all of the total assets, net position, and revenues or additions of the governmental activities, the business-type activities, each major fund, and the aggregate discretely presented component units and remaining fund information as follows: Opinion Unit Governmental Activities Business-Type Activities Higher Education Special Revenue Fund Higher Education Endowment Fund Higher Education Student Services Fund Workers' Compensation Fund Guaranteed Education Tuition Program Fund Aggregate Discretely Presented Component Units and Remaining Fund Information Percent of Total Assets 13.6% 75.0% 55.5% 96.7% 77.0% 94.7% 88.8% Percent of Net Position 26.1% 100.0% 57.7% 96.7% 92.3% 100.0% 100.0% Percent of Total Revenues/ Additions 8.3% 28.8% 51.5% 100.0% 84.6% 8.2% 28.3% 92.6% 94.4% 64.3% Those statements were audited by other auditors, whose reports thereon have been furnished to us, and our opinion, insofar as it relates to the amounts included for the above mentioned entities and funds, is based solely on the reports of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. The financial statements of the Department of Retirement Systems, Local Government Investment Pool, University of Washington, and the funds managed by the State Investment Board were not audited in accordance with Government Auditing Standards. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the State's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the State's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinion In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund and the aggregate discretely presented component units and remaining fund information of the State of Washington, as of June 30, 2015, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Matters of Emphasis As explained in Note 1.D.1, the financial statements include pension trust fund investments valued at $32.06 billion, which comprise 28.2 percent of total assets and 30.6 percent of net position of the aggregate discretely presented component units and remaining fund information. The fair values of these investments have been estimated by management in the absence of readily determinable fair values. Management's estimates are based on information provided by the fund managers or, in the case of investments in partnerships, the general partners. Our opinion was not modified with respect to this matter. As described in Note 2, during the year ended June 30, 2015, the State has implemented the Governmental Accounting Standards Board Statement No. 68, Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No. 27. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, budgetary comparison schedules and information, pension plan information, other postemployment benefits information and infrastructure assets reported using the modified approach be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We and the other auditors have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the State's basic financial statements. The accompanying information listed as combining financial statements and individual fund schedules is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. This information has been subjected to auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America by us and other auditors. In our opinion, based on our audit, the procedures performed as described above, and the reports of other auditors, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. The information identified in the table of contents as the introductory and statistical sections is presented for purposes of additional analysis and is not a required part of the basic financial statements of the State. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we will also issue our report dated October 30, 2015, on our consideration of the State's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. That report will be issued under separate cover in the State's Single Audit Report. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the State's internal control over financial reporting and compliance. Sincerely, JAN M. JUTTE, CPA, CGFM ACTING STATE AUDITOR OLYMPIA, WA State of Washington MD&A Management's Discussion and Analysis Management's Discussion and Analysis 19 State of Washington This page intentionally left blank. 20 Management's Discussion and Analysis State of Washington MD&A Management's Discussion & Analysis As managers of the state of Washington, we offer this narrative overview and analysis of the financial activities for the fiscal year ended June 30, 2015. We present this information in conjunction with the information included in our letter of transmittal, which can be found preceding this narrative, and with the state's financial statements, which follow. All amounts, unless otherwise indicated, are expressed in thousands of dollars. Financial Highlights Total assets and deferred outflows of the state of Washington exceeded its liabilities and deferred inflows by $20.60 billion (reported as net position). Of this amount, $(12.89) billion was reported as "unrestricted net position." A negative balance indicates that no funds were available for discretionary purposes. The state of Washington's governmental funds reported a combined ending fund balance of $14.70 billion, an increase of 2.4 percent compared with the prior year as restated. The state implemented Statement No. 68 of the Governmental Accounting Standards Board (GASB) Accounting and Financial Reporting for Pensions for fiscal year 2015 financial reporting which resulted in a decrease in the beginning balance of net position of $3.04 billion in Governmental Activities and a decrease of $474.2 million for Business-Type Activities. The state's capital assets increased by $1.39 billion, total bond debt increased by $670.1 million, and the state's net investment in capital assets is $20.93 billion. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the state of Washington's basic financial statements, which include three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. The focus is on both the state as a whole (government-wide) and the major individual funds. The dual perspectives allow the reader to address relevant questions, broaden a basis for comparison (year-to-year or government-togovernment), and enhance the state's accountability. Management's Discussion and Analysis GOVERNMENT-WIDE FINANCIAL STATEMENTS The government-wide financial statements are designed to provide readers with a broad overview of the state of Washington's finances, in a manner similar to a private sector business. Statement of Net Position. The Statement of Net Position presents information on all of the state of Washington's assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the state of Washington is improving or deteriorating. Statement of Activities. The Statement of Activities presents information showing how the state's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). The Statement of Activities is focused on both the gross and net cost of various activities (including governmental, business-type, and component unit). This is intended to summarize and simplify the reader's analysis of the revenues and costs of various state activities and the degree to which activities are subsidized by general revenues. Both of these government-wide financial statements distinguish functions of the state of Washington that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the state of Washington include education, human services, transportation, natural resources, adult corrections, and general government. The business-type activities of the state of Washington include the workers' compensation and unemployment compensation programs, as well as Washington's lottery, the Guaranteed Education Tuition Program (GET), and various higher education student services such as housing and dining. The government-wide financial statements can be found on pages 36-39 of this report. 21 State of Washington FUND FINANCIAL STATEMENTS A fund is a group of related accounts used to maintain control over resources that are segregated for specific activities or objectives. The state of Washington, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the state can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on fund balances at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for three major funds and an aggregate total for all nonmajor funds. The state's major governmental funds are the General Fund, Higher Education Special Revenue Fund, and the Higher Education Endowment Fund. Individual fund data for the state's nonmajor governmental funds are provided in the form of combining statements elsewhere in this report. The governmental fund financial statements can be found on pages 42-45 of this report. Proprietary Funds. The state of Washington maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Internal service funds represent an accounting device used to accumulate and allocate costs internally among the state of Washington's various functions. The 22 state of Washington uses internal service funds to account for general services such as motor pool, central stores, data processing services, risk management, employee health insurance, and printing services. Because internal service funds predominately benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary fund financial statements provide the same type of information as the government-wide financial statements, but in greater detail. The proprietary fund financial statements provide separate information for the Workers' Compensation Fund, Unemployment Compensation Fund, the Higher Education Student Services Fund, and the Guaranteed Education Tuition Program Fund, which are considered to be major funds, as well as an aggregated total for all nonmajor enterprise funds. The internal service funds are combined for presentation purposes. Individual fund data for the state's nonmajor proprietary funds are provided in the form of combining statements elsewhere in this report. The proprietary fund financial statements can be found on pages 46-55 of this report. Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the state of Washington's own programs. Washington's fiduciary funds include state administered pension plans. The accounting used for fiduciary funds is much like that used for proprietary funds. Individual fund data for the state's fiduciary funds are provided in the form of combining statements elsewhere in this report. The fiduciary fund financial statements can be found on pages 56-57 of this report. Component Units. Component units that are legally separate from the state and primarily serve or benefit those outside the state are discretely presented. They are either financially accountable to the state, or have relationships with the state such that exclusion would cause the state's financial statements to be misleading or incomplete. The state discretely reports four major component units, the Valley Medical Center, Northwest Hospital, the Washington State Public Stadium Authority and the Health Benefit Exchange, as well as four nonmajor component units. Refer to Note 1 on pages 67-68 for more detailed information. Individual fund data for the state's nonmajor component units are provided in the form of combining statements elsewhere in this report. The component unit financial statements can be found on pages 58-63 of this report. Management's Discussion and Analysis State of Washington benefits information, and infrastructure assets reported using the modified approach. NOTES TO THE FINANCIAL STATEMENTS The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 65-164 of this report. Required supplementary information can be found on pages 167-190 of this report. The combining statements referred to earlier are presented immediately following the required supplementary information. Combining financial statements and individual fund schedules can be found on pages 193-257 of this report. OTHER INFORMATION In addition to this discussion and analysis, this report also presents required supplementary information on budgetary comparisons, pension plans and other postemployment STATE OF WASHINGTON Statement of Net Position (in millions of dollars) Governmental Activities 2015 ASSETS Current and other assets Capital assets $ Total assets DEFERRED OUTFLOWS OF RESOURCES LIABILITIES Current and other liabilities Long-term liabilities outstanding Total liabilities DEFERRED INFLOWS OF RESOURCES NET POSITION Net investment in capital assets Restricted Unrestricted Total net position 23,812 37,783 $ 2015 21,468 36,375 $ 2014 24,557 2,925 $ 2015 24,394 2,850 $ 48,369 40,708 2014 $ 45,862 39,225 61,595 57,843 27,482 27,244 89,077 85,087 481 - 83 15 564 15 5,339 30,459 5,043 25,994 1,035 30,104 1,190 29,947 6,374 60,563 6,233 55,941 35,798 31,037 31,139 31,137 66,937 62,174 1,944 2 158 - 2,102 2 19,816 6,589 399 973 4,240 (8,945) 20,931 12,560 (12,889) 20,441 10,404 (7,919) 24,334 $ 26,804 Government-wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government's financial position. For the state of Washington, total assets and deferred outflows of resources exceed liabilities and deferred inflows of resources by $20.60 billion at June 30, 2015, as compared to $22.93 billion as reported at June 30, 2014. Management's Discussion and Analysis Total Activities 2014 19,958 8,320 (3,944) $ Business-Type $ (3,732) 625 3,815 (8,318) $ (3,878) $ 20,602 $ 22,926 The largest portion of the state's net position (101.6 percent for fiscal year 2015 as compared to 89.2 percent for fiscal year 2014) reflects its net investment in capital assets (e.g., land, buildings, equipment, and intangible assets), less any related debt used to acquire those assets that is still outstanding. The state of Washington uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the state of Washington's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be 23 State of Washington provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. A portion of the state of Washington's net position (61.0 perce