payments are to be primarily financed using the Gaming Fund. The Gaming Fund is used to finance a variety of programs and/or projects and the Gaming Fund itself may be unable to finance all of the PCCA operating deficits during the term of the Operating Agreement, which expires in 2039. In that event, primary government payments to the PCCA based on the Operating Agreement must be financed using funds separate from the Gaming Fund; such amounts are subject to annual appropriation by the General Assembly.
Commitment for the CFA: According to a contractual arrangement (Service Agreement) among the Department of
Community and Economic Development, the Office of the Budget and the CFA, the primary government is required to request sufficient annual appropriations from the General Assembly (to be funded by the General Fund and the Gaming Fund) to finance the Service Fee established in the Service Agreement. The service fee is the only significant source of funds the CFA has to pay its debt service obligations. The amount of such Service Fee is to be requested by October 1, each year, for the succeeding fiscal year budget effective July 1 of the following year. During the term of the Service Agreement, there can be no assurance that 1) the General Assembly will annually appropriate sufficient amounts to fund the annual Service Fee, or 2) funds will be available to finance such annual appropriations. During the fiscal year ended June 30, 2013 the primary government paid a Service Fee in the amount of $119,534; also, during the fiscal year the CFA used $20,000 of proceeds from bonds it issued during previous fiscal years to pay the Department of Environmental Protection ($14,000) and the Ben Franklin Technology Development Authority ($6,000), a discretely presented component unit, as prescribed by applicable legislation. Disclosures related to the CFA’s $1,713,927 of revenue bonds payable are provided in Note F to the basic financial statements.
Primary Government Commitment for the Pittsburgh Penguins Arena: A lease agreement between the Commonwealth and
the Sports and Exhibition Authority of Pittsburgh and Allegheny County (SEA), created a ‘subject to appropriation’ obligation of the Commonwealth. In October 2007, the SEA issued $313,300 of Commonwealth Lease Revenue Bonds (the Arena Bonds) to finance a multi‐purpose arena to serve as home of the Pittsburgh Penguins (the Penguins), a hockey team in the National Hockey League. The Arena Bonds are not debt of the Commonwealth but are limited obligations of the SEA payable solely from the Special Revenues pledged. These Special Revenues include annually (1) $4,100 from a lease with the Penguins, (2) not less than $7,500 from the operator of a casino located in the City of Pittsburgh, and (3) $7,500 from the Commonwealth’s Gaming and Economic Development and Tourism Fund. While the Special Revenues currently are projected to be adequate to pay all debt service on the Arena Bonds, to the extent such revenues are in any year inadequate to cover debt service, the Commonwealth is obligated under the Arena Lease to fund such deficiency, subject in all cases to appropriation by the General Assembly. The maximum annual amount payable by the Commonwealth under the Arena Lease is $19,100.
In April 2010, the SEA issued $17,360 in additional Commonwealth Lease Revenue Bonds (the Supplemental Arena Bonds). The Supplemental Arena Bonds do not constitute debt of the Commonwealth but are limited obligations of the SEA payable solely from the Special Revenues pledged therefor. The Commonwealth is obligated under the Arena Lease to fund any deficiency in Special Revenues necessary to pay debt service; subject in all cases to appropriation by the General Assembly. For fiscal year ended June 30, 2013 the actual amount appropriated to support the SEA debt service was $96.
Commonwealth of Pennsylvania www.pa.gov
130 Governor's Office of the Budget
NOTES TO FINANCIAL STATEMENTS (amounts in thousands) June 30, 2013
NOTE O ‐ CERTAIN AGENCY FUND CLAIMS LIABILITIES
The Pennsylvania Medical Care Availability and Reduction of Error Fund, an Agency Fund, acts as a service agent to facilitate the payment of medical malpractice claims to claimants which exceed basic liability coverage carried by healthcare providers practicing in the Commonwealth. The Fund collects statutory healthcare provider surcharges, as a percentage of insurance premiums for basic liability coverage; in turn, the Fund pays claimants on behalf of healthcare providers. The Fund has assets of $219,814 at June 30, 2013. The actuarially computed liability for outstanding claims for injuries caused by alleged negligence by certain healthcare providers totaled $1,250,000 at June 30, 2013. The claims will be funded exclusively through statutory surcharge assessments in future years as claims are settled and paid.
The Underground Storage Tank Indemnification Fund (the Fund), an Agency Fund, is used to collect fees from underground storage tank owners and operators sufficient to pay owners and operators for costs associated with corrective actions or for bodily injury or property damage caused by underground tank leaks and other releases. Owners and operators are assessed actuarially determined amounts to accumulate sufficient assets to pay claims. The estimated actuarial liability for existing and potential future claims total $434,585 and $1,445,312 respectively, at June 30, 2013. There are statutory limits on the extent of the Fund’s liability to participating owners and operators; the Fund is not obligated beyond assets held at June 30, 2013. The fund has assets of $259,851 at June 30, 2013. Owners and operators will be assessed for any claims exceeding Fund assets and no financial liability is reported for those claims. Commonwealth of Pennsylvania www.pa.gov
131 Governor's Office of the Budget