Question Set A

New York Citys financial statements for the year ended June 30, 2016 report a relatively large number of component units. Among them are the New York City Health and Hospitals Corporation (HHC) and the New York City School Construction Authority (SCA). One of these component units is blended with the fund statements and the other is reported discretely in the government-wide financial statements.

According to the reporting entity note to the financial statements, the City appoints a voting majority of the HHCs board members. The note also says: HHC, a public benefit corporation provides the full continuum of care including primary and specialty care, inpatient acute, outpatient long-term care, and home health services. HHC mainly provides on behalf of the City, comprehensive medical and mental health services to City residents regardless of ability to pay. The note also indicates that the City appropriates funds directly or indirectly to HHC for various purposes, including for patient care rendered to prisoners, for variously discretely funded facility-specific programs for interest on City Obligation Debt that funded HHC capital acquisitions, for funding for collective bargaining agreements, and for settlements of claims for medical malpractice; reimbursement by HHC is negotiated annually with the City.

The reporting entity note regarding SCA says: SCA is a public benefit corporation created in 1988. SCAs responsibilities are the design, construction, reconstruction, improvement, rehabilitation, and repair of the Citys public schools. SCA is governed by a three-member Board of Trustees all of who are appointed by the Mayor, which includes the Schools Chancellor of the City, who serves as the Chairman. SCAs operations are funded y appropriations made by the City, which are based on a five-year capital plan The Citys appropriation for the five-year capital plan for the fiscal years 2015 through 2019 is $14.11 billion, (Note: The New York City Department of Education is a department of the City. Its Chancellor is appointed by the Mayor and its budget is part of the regular City budget.)

Required:

1. State which of the criteria are met for the legally separate entities (HHC and SCA) to be reported as a component unit of New York City, and discuss why they are met.
2. What does it mean for a component unit to be blended versus discretely presented?
3. Determine which one of the two entities (HHC or SCA) is reported as a blended component unit of the City and state why that entity is blended.