PeopleSoft Common Question:

A state record is a People Soft record that must be created and maintained by the Application Engine developer. This record defines the fields a program uses to pass values from one action to another.Think of the fields of the Application Engine state record as the working storage for your Application Engine program.
An Application Engine state record can be either a physical record or a work record, and any number of state records can be associated with a program. Physical state records must be keyed by process instance.