INTRODUCTION

STATE AUDITORS' FINDINGS AND RECOMMENDATIONS

Inaccurate Retroactive Payment Calculations

Internally Generated Software

STATUS OF PRIOR AUDIT RECOMMENDATIONS

OBJECTIVES, SCOPE, AND METHODOLOGY

ABOUT THE AGENCY

April 21, 2026

INTRODUCTION

We are pleased to submit this audit of the Office of the Treasurer (OTT) for the fiscal years ended June 30, 2023 and 2024 in accordance with the provisions of Section 2-90 of the Connecticut General Statutes. Our audit identified internal control deficiencies and instances of noncompliance with laws, regulations, or policies.

The Auditors of Public Accounts wish to express our appreciation for the courtesies and cooperation extended to our representatives by the personnel of the Office of the Treasurer during our examination.

The Auditors of Public Accounts also would like to acknowledge the auditors who contributed to this report:

Stephanie Jackie
Jessica Longobardi
Ramiz Mehmedovic
Matthew Wood

Approved:

Our examination of the records of the Office of the Treasurer disclosed the following two recommendations, which were not repeated from the previous audit.

Our prior audit report on the Office of the Treasurer contained three recommendations. All three have been implemented or otherwise resolved.

We have audited certain operations of the Office of the Treasurer in fulfillment of our duties under Section 2-90 of the Connecticut General Statutes. The scope of our audit included, but was not necessarily limited to, the fiscal years ended June 30, 2023 and 2024. The objectives of our audit were to evaluate the:

In planning and conducting our audit, we focused on areas of operations based on assessments of risk and significance. We considered the significant internal controls, compliance requirements, or management practices that in our professional judgment would be important to report users. The areas addressed by the audit included payroll and personnel, revenue and cash receipts, purchasing and expenditures, asset management, reporting systems, information technology, cash management, unclaimed property, and the Second Injury Fund. We also determined the status of the findings and recommendations in our prior audit report. Our audit did not include review of the Treasurer's Annual Report, as we completed a separate audit of the financial statements included within the Treasurer's annual report.

Our methodology included reviewing written policies and procedures, financial records, meeting minutes, and other pertinent documents. We interviewed various personnel of the office and certain external parties. We also tested selected transactions. This testing was not designed to project to a population unless specifically stated. We obtained an understanding of internal controls that we deemed significant within the context of the audit objectives and assessed whether such controls have been properly designed and placed in operation. We tested certain of those controls to obtain evidence regarding the effectiveness of their design and operation. We also obtained an understanding of legal provisions that are significant within the context of the audit objectives, and we assessed the risk that illegal acts, including fraud, and violations of contracts, grant agreements, or other legal provisions could occur. Based on that risk assessment, we designed and performed procedures to provide reasonable assurance of detecting instances of noncompliance significant to those provisions.

We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

The accompanying financial information is presented for informational purposes. We obtained this information from various available sources including the office's management and state information systems. It was not subject to our audit procedures. For the areas audited, we:

The State Auditors' Findings and Recommendations section of this report presents findings arising from our audit of the Office of the Treasurer.

Overview

The Office of the Treasurer operates primarily under the provisions of Article Four of the State Constitution and Title 3, Chapter 32 of the General Statutes. The mission of the Office of the Treasurer is to perform in the highest professional and ethical manner to safeguard the state's public resources. The Office of the Treasurer's policy, investment, and borrowing decisions encourage greater financial literacy, education, job and economic growth, and equal opportunity for all who call Connecticut home, a place to do business, and invest.

Organizational Structure

During the audited period, the office consisted of six divisions: Cash Management, Debt Management, Strategic Planning and Management Services, Pension Funds, Second Injury Fund, and Unclaimed Property.

There are three advisory organizations made up of members outside the Treasurer's office that assist the Treasurer in making prudent decisions.

Shawn Wooden served as State Treasurer during the audited period until January 4, 2023. Erick Russell was elected State Treasurer in November of 2022 and was sworn in on January 4, 2023.

Significant Legislative Changes

Notable legislative changes that took effect during the audited period are presented below:

Financial Information

Office Revenues

A summary of revenues of the Office of the Treasurer by fund for the fiscal years under review and the preceding year follows:

Revenues from the Federal and Other Restricted Accounts Fund represent deposits of funds associated with the operating expenses of the Pension Funds Management Division, Short-Term Investment Fund, and the Debt Management Division. Unclaimed property receipts vary from year to year based on the type of escheats received, as well as the value of the escheated securities. The growth in General Fund receipts was due to the increase in investment interest from substantially higher interest rates during the audited period.

The Office of the Treasurer also takes in revenue for the Second Injury Fund and the Workers' Compensation Administration Fund (WCAF). The Second Injury Fund's revenues consisted primarily of assessments levied against self-insured employers and companies writing workers' compensation or employers' liability insurance, and totaled $28,231,088 and $27,864,837, for the fiscal years 2023 and 2024, respectively. WCAF assessment receipts totaled $24,126,012 and $26,246,856, for the fiscal years 2023 and 2024, respectively.

Office Expenditures

A summary of expenditures of the Office of the Treasurer by fund for the fiscal years under review and the preceding year follows:

The largest General Fund expense is debt service on general obligation bonds. This expense varies from year to year based on the total bonds outstanding. Non-General Fund debt service fund expenses were mostly related to transportation bonds. These amounts totaled $810,726,881 and $862,969,139 for the fiscal years 2023 and 2024, respectively. The Federal and Other Restricted Accounts Fund expenditures include operating expenses for the Office of the Treasurer's Pension Funds Management Division and the Unclaimed Property Division.

A summary of expenditures of the Office of the Treasurer by account for the fiscal years under review and the preceding year follows:

Contractual and personal services are the major expenditures of the Office of the Treasurer, other than debt service costs. The most significant items included in contractual services are the payments of investment advisor fees by the Pension Funds Management Division.

Unclaimed Property

Sections 3-56a to 3-74a of the General Statutes provide for the administration and disposition of property held by banking and other organizations for the benefit of owners who cannot be located. In accordance with these statutes, the Office of the Treasure is required to deposit all escheat cash receipts in the General Fund, except for periodic transfers to the Citizens' Election Fund and a restricted unclaimed property account within the General Fund. The cost of the Unclaimed Property Division's administrative expense is borne by the Federal and Other Restricted Accounts Fund. These administrative costs totaled $6,285,243 and $7,346,930 for the fiscal years 2023 and 2024, respectively. Data processing costs increased in fiscal year 2024 due to implementation of a new claims tracking system.

Unclaimed property includes unclaimed bank accounts, insurance policies, stock, customer overpayments held by businesses, and various court deposits. A comparison of unclaimed property receipts as presented in the Treasurer's Annual Report for the fiscal years 2022, 2023, and 2024, is as follows:

The Unclaimed Property Division's claim payments made in cash, transfers to the Citizens' Election Fund to support the State Elections Enforcement Commission, and administrative expenses as reported in the Treasurer's Annual Report are as follows:

Section 3-69a of the General Statutes provides for the allocation of a portion of escheat revenues to the Citizens' Election Fund. Transfer amounts are determined based on the prior year amount, adjusted by changes in the consumer price index. Since its inception, the office has transferred $259,998,010 to the Citizens' Election Fund. The State Elections Enforcement Commission administers this fund, which grants public financing to participating candidates for state office. The amounts for the Citizens' Election Fund, as well as administrative expenses for the Unclaimed Property Program, were deducted from the General Fund - Unclaimed Property amounts noted above. Although amounts are distributed to various funds, the full value of escheated property can always be claimed by the rightful owner. The Office of the Treasurer also receives non-cash (unclaimed) property, including shares of stocks and mutual funds. General Fund activity does not include non-cash property such as stocks until sold. As of June 30, 2023 and 2024, the Treasury estimated the market value of unclaimed securities to be $9,442,314 and $2,190,891, respectively. Market conditions at the time of sale primarily impact revenue from escheated security sales.

Second Injury Fund

The Second Injury Fund (SIF) is a state operated workers' compensation fund. The state created the fund in 1945 to prevent employer discrimination against returning injured World War 2 veterans. The fund's primary current purpose shifted to providing benefits for injured workers of uninsured employers. Various statutes of the Workers' Compensation Act and Chapter 568 of the General Statutes dictate SIF operations. These statutes provide protections for employees suffering occupational injuries or diseases and establish criteria to determine whether the employer or SIF is responsible for paying employee benefits. The Office of the Treasurer is the SIF custodian. Per Section 31-349e of the General Statutes, there is an advisory board to advise the SIF custodian on matters concerning administration, operation, claim handling, and finances of the fund.

Fund revenues consisted mainly of assessments levied against self-insured employers and companies writing workers' compensation or employers' liability insurance and totaled $28,787,082 and $28,540,318 for the fiscal years 2023 and 2024, respectively.