STATE OF TENNESSEE COMPTROLLER OF THE TREASURY

OFFICE OF THE COMPTROLLER OF THE TREASURY

Performance Audit Report

February 2018

Justin P. Wilson, Comptroller

Division of State Audit Performance and Compliance Section

DEBORAH V. LOVELESS, CPA, CGFM, CGMA Director KANDI B. THOMAS, CPA, CFE, CGFM, CGMA Assistant Director JENNIFER WHITSEL, CPA, CFE, CGMA Audit Manager Lindsey Stadterman, CFE In-Charge Auditor Landon Myers Staff Auditor

Amy Brack Editor Amanda Adams Assistant Editor

Comptroller of the Treasury, Division of State Audit

Cordell Hull Building 425 Fifth Avenue North

Nashville, TN 37243 (615) 401-7897

Reports are available at

www.comptroller.tn.gov/sa/AuditReportCategories.asp

Mission Statement The mission of the Comptroller’s Office is

to make government work better.

Comptroller Website www.comptroller.tn.gov

February 20, 2018 The Honorable Randy McNally

Speaker of the Senate The Honorable Beth Harwell Speaker of the House of Representatives

and Members of the General Assembly State Capitol Nashville, Tennessee 37243

and The Honorable Justin P. Wilson Comptroller of the Treasury State Capitol Nashville, Tennessee 37243 Ladies and Gentlemen: We have conducted a performance audit of selected programs and activities of the Office of the

Comptroller of the Treasury for the period July 1, 2016, through June 30, 2017.1

Since we are not independent with respect to the Office of the Comptroller of the Treasury, we do not express any assurance on internal control and on compliance.

Our audit resulted in no audit findings.

We have reported a less significant matter involving internal controls to the Office of the Comptroller’s management in a separate letter.

Sincerely,

Deborah V. Loveless, CPA, Director Division of State Audit

DVL/jw 18/011

1 Our base audit period was July 1, 2016, through June 30, 2017. In certain instances, we expanded our scope beyond this period. See the Audit Conclusions section for more information.

AUDIT SCOPE

AUDIT HIGHLIGHTS  We have audited the following areas of the Office of the Comptroller of the Treasury:

the Division of Technology Solutions’ information systems services;

the Office of Open Records Counsel’s inquiries backlog, statutory exceptions, and understandability of its website; and

the Office of State and Local Finance’s controls over state bonds and state debt.

The audit report contains no findings.

The audit report contains no observations.

Division of State Audit

Office of the Comptroller of the Treasury Performance Audit February 2018

Our mission is to make government work better.

KEY CONCLUSIONS 

Findings

Observations

Performance Audit Office of the Comptroller of the Treasury

TABLE OF CONTENTS

Page

INTRODUCTION 1

Audit Authority 1

Background 1 AUDIT SCOPE 6 PRIOR AUDIT FINDINGS 6 AUDIT CONCLUSIONS 6

Division of Technology Solutions 6

Office of Open Records Counsel 8

Office of State and Local Finance 10 APPENDICES 13

Appendix 1 – Business Unit Codes 13

Appendix 2 – Boards, Commissions, and Committees 13

Appendix 3 – Revenues and Expenditures 15

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Performance Audit Office of the Comptroller of the Treasury

INTRODUCTION

AUDIT AUTHORITY This is the report on the performance audit of the Office of the Comptroller of the Treasury. Section 8-4-109, Tennessee Code Annotated, states the following:

The comptroller of the treasury is hereby authorized to audit any books and records of any governmental entity created under and by virtue of the statutes of the state which handles public funds when such audit is deemed necessary or appropriate by the comptroller of the treasury. The comptroller of the treasury shall have the full cooperation of officials of the governmental entity in the performance of such audit or audits. The audit was conducted pursuant to Section 4-3-304, Tennessee Code Annotated, which

requires the Department of Audit to audit all accounts and financial records of any state department, institution, office, or agency in accordance with both generally accepted auditing standards and procedures established by the Comptroller. An audit may include any or all of the following elements: financial, compliance, economy and efficiency, program results, and program evaluations. BACKGROUND

The Comptroller of the Treasury is a constitutional officer elected by a joint vote of both houses of the General Assembly for a two-year term. The functions and duties of the office are assigned through various legislative enactments. The mission of the Comptroller’s Office is to make government work better. The Office of the Comptroller of the Treasury is organized into several divisions and offices to discharge its statutory duties. The basic functions of the divisions and offices are described below.

The Division of Administration provides direction, coordination, and supervision to the divisions and offices within the Comptroller’s Office and represents the Comptroller on various boards and commissions. The Chief of Staff, who heads the division, is responsible for the overall management of the Comptroller’s Office and acts as a liaison to the General Assembly and their constituents. Attached to the Division of Administration is the Office of General Counsel, the Office of Open Records Counsel, the Office of Small Business Advocate, the Water and Wastewater Financing Board, and the Utility Management Review Board.

The organizational chart can be found on page 5. 

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The Office of General Counsel provides legal guidance to all the divisions in the Comptroller’s Office, serves as the liaison with the Office of the Attorney General and Reporter, and provides legal representation in judicial and administrative litigation.

The Office of Open Records Counsel gives information and advice to citizens, media, and local government officials regarding the Tennessee Public Records Act; collects data regarding Open Meetings Law inquiries and problems; and offers educational programs on public records and open meetings.

The Office of Small Business Advocate serves as a point of contact to state government for owners of businesses with 50 or fewer employees. The office responds to questions from Tennesseans who have a small business or who are starting a small business. The office also assists in resolving issues involving small businesses and state departments and agencies.

The Water and Wastewater Financing Board supports water and sewer enterprises by determining if public water and wastewater systems are self-sufficient. The Utility Management Review Board supports natural gas, water, and wastewater public utility districts by making sure they have financial stability. If deficiencies are identified, both boards can take the necessary steps for corrective action. Both boards also establish parameters for water accountability.

The Office of Management Services provides administrative and support services to the

divisions and offices of the Comptroller’s Office in the areas of budgetary and financial management, facilities management, and human resources management. The office assists the Comptroller in policy and contract matters, supplies staff support for several boards and commissions, and provides procurement oversight services to other state agencies.

The Division of Technology Solutions centralizes the office’s information technology resources and provides business solutions in the areas of systems analysis and development; workstation support; infrastructure operations, including server and network support; and product management. This division also prepares the annual Three-Year Information Systems Plan.

The Office of Research and Education Accountability prepares reports at the request of the

Comptroller and the General Assembly on various state and local government issues. The office monitors the performance of Tennessee’s elementary and secondary school systems and presents the General Assembly with reports on selected education topics. Included in the Office of Research and Education Accountability is the Higher Education Resource Officer, who answers questions and provides information to faculty, staff, and employees of Tennessee’s higher education systems. The Higher Education Resource Officer also reviews and evaluates higher education policies. In addition, the Higher Education Resource Officer serves as an informal mediator to help resolve issues between higher education systems and institutions and their faculty, staff, and employees.

The Office of State and Local Finance manages various financial functions for state and

local governments. The office serves as staff to the Tennessee State Funding Board, the Tennessee Local Development Authority, and the Tennessee State School Bond Authority. Additionally, the office issues and manages the state’s debt for these entities. The office aids local governments in

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implementing financial stability plans and also provides statutorily mandated oversight, review, and approval of

annual budgets,

certain debt issues,

plans to issue balloon indebtedness, and

various investments. The office’s other responsibilities include reviewing and maintaining a file of debt information forms submitted by the State of Tennessee and its political subdivisions; performing feasibility reviews of financial plans for various local government activities; and overseeing the repayment of improperly used restricted monies by local governments. The Division of State Audit conducts financial and compliance audits, performance audits, information systems audits, attestation engagements, and special studies to provide objective information about the state’s financial condition and the performance of state agencies and programs. The division also audits the state’s Comprehensive Annual Financial Report and performs the annual Single Audit of the State of Tennessee.

The Division of Local Government Audit executes the annual audits for 90 of the state’s

95 counties and ensures the performance of over 1,600 audits for the state’s remaining counties, municipalities, public internal school funds, charter schools, utility districts, housing authorities, local government created entities, quasi-governmental organizations, and other government-funded agencies. The division establishes standards for local government audits conducted by public accounting firms and assists local governments with financial administration questions.

The Division of Investigations supports the audit divisions by investigating allegations of fraud, waste, and abuse in government and publicly funded entities. The division also works with law enforcement and prosecutors on criminal allegations.

The Division of Property Assessments ensures effective administration of Tennessee’s property taxes. The division offers local governmental officials assistance in reappraisal programs; data processing services; and administration of the Property Tax Relief Program, which distributes tax relief to low-income elderly or disabled homeowners and disabled veteran homeowners or their surviving spouses. The division manages property tax billing services for 84 counties whose tax records are maintained on the state’s computer system. It also administers the Assessment Certification and Education Program. Included in the division is the Office of Local Government, which develops and uses Geographic Information Systems (GIS) technology to help the Division of Property Assessment and local property assessors in day-to-day operations. The office also serves as a liaison to the U.S. Census Bureau’s Local Redistricting Data Program. By using census data, the office produces local maps and publishes county commission district and voting precinct maps.

The Office of State Assessed Properties conducts annual appraisals, assessments, and

audits of public utility and transportation properties as prescribed in Section 67-5-1301, Tennessee

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Code Annotated. These assessments are certified to counties, cities, and other taxing jurisdictions for billing and collection of property taxes. Furthermore, this office administers the Telecommunications Ad Valorem Tax Reduction Fund, a special fund to make ad valorem tax equity payments to reimburse telecommunication providers as detailed in Section 67-6-222, Tennessee Code Annotated.

The State Board of Equalization, which is housed within the Comptroller’s Office for administrative purposes, is responsible for assuring constitutional and statutory compliance in assessments of property for ad valorem taxes. In addition to establishing rules and hearing county and public utility assessment appeals, the board reviews applications for religious, charitable, and related property tax exemptions; reviews certified tax rate calculations from jurisdictions undergoing revaluation; and regulates property tax appeals agents and agent practices. The board consists of the Governor, the State Treasurer, the Secretary of State, the Comptroller of the Treasury, the Commissioner of Revenue, one person named by the Governor at the city level, and one person named by the Governor at the county level.

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AUDIT SCOPE

We have audited the Office of the Comptroller of the Treasury for the period July 1, 2016,

through June 30, 2017.2 Our audit scope included a review of internal control and compliance

with laws, regulations, policies, and procedures in the areas of the Division of Technology Solutions’ information systems services; the Office of Open Records Counsel’s inquiries backlog, statutory exceptions, and understandability of its website; and the Office of State and Local Finance’s controls over state bonds and state debt.

Management of the Office of the Comptroller of the Treasury is responsible for establishing

and maintaining effective internal control and for complying with applicable laws, regulations, and provisions of contracts and grant agreements.

We conducted our 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.

PRIOR AUDIT FINDINGS

There were no audit findings in the prior audit report dated January 2017.

AUDIT CONCLUSIONS

Established in March 2015, the Division of Technology Solutions (DoTS) provides

services in systems analysis and development, computer operations, personal computer support, network support, security, backups, and restoration backups, as well as other information technology (IT) services in a centralized manner for all divisions and boards of the Comptroller’s Office. 2 See footnote 1.

DIVISION OF TECHNOLOGY SOLUTIONS 

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Security DoTS is responsible for providing cyber security to the Comptroller’s information systems.

Cyber security includes taking steps to guard against crimes that involve the Internet, especially unauthorized access to computer systems and data connected to the Internet. The National Institute

of Standards and Technology’s3 framework for improving critical infrastructure related to cyber

security recommends developing functions to

identify – gain an understanding of the organization to manage cyber security risks in the systems, assets, data, and capabilities;

protect – develop and implement safeguards to ensure delivery of infrastructure services;

detect – develop and implement activities to identify that a cyber security event has happened;

respond – develop and implement activities to complete when a cyber security incident has occurred; and

recover – develop and implement activities to restore any capabilities or services that were impacted due to a cyber security incident.

Information Technology Services

When Comptroller employees experience IT issues or request an IT-related service,

employees send DoTS an email describing their needs. DoTS uses Zendesk, an incident and service request management system, to track IT issues and service requests by generating tickets to address the matters and ensure the employee is satisfied. DoTS classifies these tickets as either incidents (for example, a loss or degradation of service access to an application that renders it unavailable) or services (for example, printer access, password reset, or an IT equipment purchase request).

DoTS provided us the following three categories of tickets:

endpoint – related to new equipment purchases, access requests to servers or email, and software requests;

ITS – related to network connectivity issues, firewall, and adding fiber optics in the county assessor’s offices; and

service desk – involving issues such as workstation migration, password resets, and equipment issues.

3 The National Institute of Standards and Technology is part of the U.S. Department of Commerce.

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Audit Results 1. Audit Objective: Did DoTS comply with state information systems security policies?

Conclusion: DoTS complied with state information systems security policies.

2. Audit Objective: Does DoTS have a process in place to resolve employees’ tickets in a reasonable amount of time?

Conclusion: With minor exceptions, DoTS has a process in place to resolve tickets in

a reasonable amount of time. Methodologies to Achieve Objectives We interviewed DoTS management to gain an understanding of the division’s processes, and we reviewed management’s internal control activities to assess adherence to state information systems security policies. We reviewed the Zendesk endpoint, ITS, and service desk tickets that were closed between February 2017 and October 2017. We identified 101 tickets that were open for 10 days or longer (48 endpoint tickets, 13 ITS tickets, and 40 service desk tickets) and tested this population to determine if DoTS staff provided a remedy to the employees’ service requests. Based on our testwork, we could not determine if DoTS successfully completed and resolved the tickets for 4 of the 40 service desk tickets (10%), which was 4% of the total tested. For the remaining 97 tickets (48 endpoint tickets, 13 ITS tickets, and 36 service desk tickets), we reviewed documentation in Zendesk to determine why the ticket remained open for 10 days or longer.

As required by Section 8-4-601 et seq., Tennessee Code Annotated, the Office of Open

Records Counsel answers questions, issues informal advisory opinions, and provides information

to public officials and the public regarding public records4 and open meetings laws.

5 As a part of

its enabling legislation, the Advisory Committee on Open Government, composed of 14 appointed persons and 3 ex-officio members, was created to provide guidance and advice to the office.

4 Section 10-7-503(a)(1)(A), Tennessee Code Annotated, defines “public records” as “all documents, papers, letters, maps, books, photographs, microfilms, electronic data processing files and output, films, sound recordings or other material, regardless of physical form or characteristics, made or received pursuant to law or ordinance or in connection with the transaction of official business by any governmental agency.” The Office of Open Records Counsel does not serve as a clearinghouse for all public record requests or make public record requests on behalf of others. 5 The Tennessee Open Meetings Act (Section 8-44-101 et seq., Tennessee Code Annotated) prohibits multiple members of a governing body from meeting, deliberating on, and/or making decisions on public business, unless the public receives adequate notice of the meeting. The governing body must open meetings to the public and record accurate minutes of the meetings.

OFFICE OF OPEN RECORDS COUNSEL 

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The goals of the Office of Open Records Counsel include the following:

serve as a point of contact for questions and concerns regarding access to public records and open meetings;

assist citizens in obtaining public records;

promote education and awareness of the Tennessee public records and open meetings laws;

collect data on open meeting inquiries and problems;

issue informal advisory opinions on open records and open meeting issues; and

develop forms, schedules, policies, and guidelines for open public record requests. The office uses a web-based open records database that tracks all inquiries using four

distinct statuses: 1. Open – an inquiry that has been entered into the database and needs an initial review;

2. Pending - Internal Review – an inquiry that is waiting on the Office of Open Records Counsel to perform an action, such as research;

3. Pending - External Review – an inquiry that is waiting on an outside party to perform an action, such as research or calling the Office of Open Records Counsel back to give additional information for the inquiry; and

4. Resolved – an inquiry that is complete, and the results are shared with the parties involved.

The Tennessee General Assembly directed the office on March 14, 2017, to prepare a list

of all the statutory exceptions to the Tennessee Public Records Act. Some examples of statutory exceptions include medical records, criminal history background checks, records involved in an investigation, and records demonstrating attorney-client privilege. To manage this data easily in real time, management enhanced the Office of Open Records’ web-based database to accommodate statutory exceptions in an “exception database.” The office must provide the list of statutory exceptions to the Tennessee General Assembly in January of the 2018 legislative session.

Audit Results

1. Audit Objective: Did the Office of Open Records Counsel eliminate the backlog of

unresolved inquiries noted in prior audits?

Conclusion: The office eliminated the backlog of unresolved inquiries noted in prior audits.

2. Audit Objective: Did the office prepare a list of statutory exceptions to the Tennessee

Public Records Act?

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Conclusion: The office did prepare a list of statutory exceptions to the Tennessee Public Records Act.

3. Audit Objective: Is the office’s website easily accessible and understandable to the general

public?

Conclusion: The office’s website is easily accessible and understandable to the general public.

Methodologies to Achieve Objectives

To gain an understanding of the office’s responsibilities, we interviewed the Open Records Counsel and the office’s Attorney 4. We obtained the fiscal year 2017 inquiry report to determine the number of inquiries in each status (Open, Pending - Internal Review, Pending - External Review, and Resolved) and to calculate the number of days for each status. The fiscal year 2017 inquiry report showed all 854 inquiries as resolved.

We obtained a report of 541 statutory exceptions as of October 3, 2017. We tested a

nonstatistical random sample of 25 exceptions to determine if the exceptions were listed in state

statute as an exception to the Tennessee Open Records Act.6 We reviewed the letter from the

Lieutenant Governor and the Speaker of the House sent to the Office of Open Records Counsel, dated March 14, 2017, requesting a report of exceptions to the Tennessee Open Records Act. We also reviewed the letter the office sent back to the Lieutenant Governor and the Speaker acknowledging the request, dated March 21, 2017.

We reviewed the office’s website to determine if it is easily accessible and understandable

to the general public. We also reviewed the office’s Frequently Asked Questions to determine if it is easily understandable to the general public.

The Office of State and Local Finance handles debt issuances, loans, bonds, and notes as

applicable for the Tennessee State Funding Board, the Tennessee Local Development Authority, and the Tennessee State School Bond Authority. The Office of State and Local Finance also serves as staff to these boards. 6 For our sample design, we used nonstatistical audit sampling, which was the most appropriate and cost-effective method for concluding on our audit objective. Based on our professional judgment, review of authoritative sampling guidance, and careful consideration of underlying statistical concepts, we believe that nonstatistical sampling provides sufficient appropriate audit evidence to support the conclusions in our report. Our sample results may provide perspective; however, because the sample is nonstatistical, the sample results should not be projected to determine the likely impact on the population.

OFFICE OF STATE AND LOCAL FINANCE 

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Tennessee State Funding Board

The Tennessee State Funding Board is the entity authorized to issue all general obligation debt that has been approved by the General Assembly. As a part of the state’s budget process, the Tennessee State Funding Board develops consensus ranges of estimates of state revenue for the current fiscal year and the next succeeding fiscal year to be presented to the Governor and the Chairs of the Senate and House Finance, Ways and Means Committees. The Tennessee State Funding Board is also charged with establishing policy guidelines for the investment of state funds. In addition, the Tennessee State Funding Board approves other post-employment benefit trust agreements for local governments.

Tennessee Local Development Authority

The Tennessee Local Development Authority is authorized to issue bonds and provide loans to the following entities:

local governments for sewage treatment, waterworks and capital projects, firefighting

equipment, and airport facilities;

certain small businesses for pollution control equipment or agricultural enterprises;

nonprofit organizations that provide certain intellectual disability, alcohol, and drug services; and

local government units for financing construction of capital outlay projects for K-12 educational facilities.

The Tennessee Local Development Authority also approves loans through the State Revolving Fund loan program for the Clean Water and Drinking Water State Revolving Fund loan programs. Loans from the State Revolving Fund program are administered in conjunction with the Department of Environment and Conservation. The State Revolving Fund loan program administers Tennessee’s Clean Water State Revolving Fund and Tennessee’s Drinking Water State Revolving Fund loan program. The Clean Water State Revolving Fund program was created to provide low-interest loans to cities, counties, utility districts, and water/wastewater authorities for the planning, design, and construction of wastewater facilities. The Drinking Water State Revolving Fund program was created to provide low-interest loans to cities, counties, utility districts, and water/wastewater authorities for the planning, design, and construction of drinking water facilities.

Additionally, the Tennessee Local Development Authority is responsible for approving loans to local governments from the Transportation State Infrastructure Fund, a $2 million revolving loan fund for transportation infrastructure projects throughout the state. Loans from the State Infrastructure Fund are administered in conjunction with the Tennessee Department of Transportation.

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Tennessee State School Bond Authority

The Tennessee State School Bond Authority is authorized to issue bonds and notes to finance higher education facilities projects for the universities under the University of Tennessee system; for the six state universities; and for the state community colleges and colleges of applied technology under the governance of the Tennessee Board of Regents. In addition, the Tennessee State School Bond Authority is authorized to issue debt to provide funds for the making of student loans by the Tennessee Student Assistance Corporation.

Audit Results 1. Audit Objective: Does the Office of State and Local Finance have key controls in place to

mitigate the risks associated with debt issuance, loans, bonds, and notes?

Conclusion: The office did have key controls in place to mitigate the risks associated with debt issuance, loans, bonds, and notes.

2. Audit Objective: Did the financial and compliance audits verify that the key controls were

in place to mitigate the risks associated with debt issuance, loans, bonds, and notes?

Conclusion: The financial and compliance audits did verify that the key controls were

in place to mitigate the risks associated with debt issuance, loans, bonds, and notes.

Methodologies to Achieve Objectives We interviewed the Director of the Office of State and Local Finance and the Audit Manager, Division of State Audit. We obtained the office’s risk assessment to determine the key internal controls over state bonds and state debts. We reviewed documentation of the internal control process for state bonds and state debts in the following financial and compliance audits: Tennessee Local Development Authority for fiscal year 2016, Tennessee State School Bond Authority for fiscal years 2015 and 2016, and Clean Water State Revolving Fund for fiscal year 2016.

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APPENDICES

APPENDIX 1 Business Unit Codes

Business Unit Code Division/Office 307.01 Division of Administration 307.02 Office of Management Services 307.04 Division of State Audit 307.05 Division of Local Government Audit 307.06 Legal, Investigations, and Public Affairs 307.07 Office of State and Local Finance 307.09 Division of Property Assessments 307.10 Tax Relief Program 307.11 State Board of Equalization 307.14 Office of Research and Education Accountability 307.15 Office of State Assessed Properties 307.16 Division of Technology Solutions 307.50 Telecommunications Ad Valorem Tax Equity

Source: Office of the Comptroller of the Treasury, Assistant Director for Fiscal Services.

APPENDIX 2 Boards, Commissions, and Committees

The Comptroller of the Treasury is by statute a member of the following boards, commissions, and committees:

Board, Commission, or Committee Tennessee Code

Annotated Section Advisory Council on State Procurement* 4-56-106 Basic Education Program Review Committee 49-1-302 Board of Claims 9-8-101 Chairs of Excellence Endowment Fund 49-7-501 Council on Children’s Mental Health [Care]* 37-3-111 Council on Pension and Insurance** 3-9-101 Emergency Communications Board 7-86-302 Health Services and Development Agency 68-11-1604 Information Systems Council** 4-3-5501 Local Education Insurance Committee 8-27-301 Local Government Insurance Committee 8-27-701 Pension Stabilization Reserve Trust***** 9-4-1002 Procurement Commission** 4-56-102 Public Records Commission 10-7-302 State Board of Equalization** 4-3-5101 State Building Commission** 4-15-101

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Board, Commission, or Committee Tennessee Code

Annotated Section State Capitol Commission 4-8-301 State Funding Board** 9-9-101 State Insurance Committee 8-27-201 State Trust of Tennessee**** 9-4-806 Tennessee Advisory Commission on Intergovernmental Relations** 4-10-103 Tennessee Baccalaureate Education System Trust 49-7-804 Tennessee Consolidated Retirement System Board of Trustees** 8-34-302 Tennessee Higher Education Commission** 49-7-204 Tennessee Highway Officials Certification Board* 54-7-104 Tennessee Housing Development Agency 13-23-106 Tennessee Interagency Cash Flow Committee 9-4-610 Tennessee Local Development Authority 4-31-103 Tennessee State School Bond Authority 49-3-1204 Tennessee Student Assistance Corporation 49-4-202 TRICOR Board Certification Committee* 41-22-119 Tuition Guaranty Fund Board 49-7-2018 Utility Management Review Board 7-82-701 Water and Wastewater Financing Board 68-221-1008 Workers Compensation Insurance Fund Board Review Committee*** 50-6-623 * The Comptroller does not serve but appoints staff representative(s). ** Comptroller only, no proxy. *** Inactive. **** The committee was terminated as of March 31, 2017. ***** The trust was created in 2017, and as of January 24, 2018, the trustees have not scheduled their first meeting. Source: Office of the Comptroller of the Treasury, Assistant to the Comptroller for Public Finance. Additionally, the Comptroller appoints a director for the nonprofit Local Government Data Processing Corporation pursuant to terms of its charter.

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APPENDIX 3 Revenues and Expenditures

Office of the Comptroller of the Treasury Revenues by Source

For the Fiscal Year Ended June 30, 2016

Function and Division State Federal Other* Total Division of Administration $1,450,400 $ - $112,400 $1,562,800 Office of Management Services 842,000 - 1,990,000 2,832,000 Division of Investigations - - - - Division of Technology Solutions 8,703,400 - 214,900 8,918,300 Office of Research and Education Accountability 526,900 - 498,000 1,024,900 Division of State Audit 10,813,000 - 6,222,3000 17,035,300 Division of Local Government Audit 6,413,900 - 2,676,100 9,090,000 Legal and Public Affairs 1,573,000 - 699,500 2,272,500 Office of State and Local Finance 318,700 - 1,184,400 1,503,100 Division of Property Assessments 2,988,000 - 6,649,100 9,637,100 Tax Relief 22,783,700 - - 22,783,700 State Board of Equalization 396,400 - 674,700 1,071,100 Office of State Assessed Properties 824,900 - 265,000 1,089,900 Telecommunications Ad Valorem Tax Equity Payments 6,984,100 - 2,263,600 9,247,700 Function and Division Total $60,027,700 - $28,040,700 $88,068,400 Percentage Total 68% - 32% 100%

* Other sources vary based on division and include interdepartmental revenue, cities, counties, and current services. Source: State of Tennessee, The Budget, Fiscal Year 2017-2018.

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Office of the Comptroller of the Treasury Expenditures by Category

For the Fiscal Year Ended June 30, 2016

Function and Division Payroll Operational Total Division of Administration $1,319,400 $243,400 $1,562,800 Office of Management Services 2,253,100 578,900 2,832,000 Division of Investigations - - - Division of Technology Solutions 2,727,100 6,191,200 8,918,300 Office of Research and Education Accountability 940,900 84,000 1,024,900 Division of State Audit 15,618,700 1,416,600 17,035,300 Division of Local Government Audit 8,441,800 648,200 9,090,000 Legal and Public Affairs 2,005,500 267,000 2,272,500 Office of State and Local Finance 1,398,600 104,500 1,503,100 Division of Property Assessments 7,956,100 1,681,000 9,637,100 Tax Relief - 22,783,700 22,783,700 State Board of Equalization 837,700 233,400 1,071,100 Office of State Assessed Properties 982,300 107,600 1,089,900 Telecommunications Ad Valorem Tax Equity Payments - 9,247,700 Function and Division Total $44,481,200 $43,587,200 $88,068,400 Percentage Total 51% 49% 100%

Source: State of Tennessee, The Budget, Fiscal Year 2017-2018.