Report of State Auditor 1998 - Laserfiche WebLink

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Report of The Colorado State Auditor 15 Management of Construction Funds Needs Improvement The Construction Fund(Fund)has maintained a large cash balance for the last five fiscal years. The majority of the cash balance is earmarked for specific projects; however, most of the cash balance is not immediately needed. We estimate that if all Fund receipts stopped as of June 30, 1997, (except for principal and interest payments on existing loans), and the Board maintained the spending rate observed over the four previous years, the Fund would still remain solvent for over seven years. Cash balances for the five previous fiscal years are shown in the following table: Construction Fund Cash Balance I Date Balance June 30, 1994 $ 82,400,000 June 30, 1995 $ 100,200,000 June 30, 1996 $ 90,000,000 June 30, 1997 $ 89,700,000 June 30, 1998 $ 95,100,000 Average $ 91,500,000 Source: COFRS reports. Since this is a revolving fund that has both cash inflows and outflows, the level of cash in the Fund should be maintained so that it is high enough to absorb fluctuating receipts and disbursements but low enough to minimize the possibility of excessive amounts of idle funds. In order to determine the balance needed to pay for the day- to-day operations of the Program, we used the following assumptions: • Cash in the Fund is earmarked upon approval of a project by the Board. • Projects take an average of 3.3 years to complete from the date they are ' approved. (This estimate was derived from our review of.all the projects authorized and completed since the Program's inception.) • Average annual disbursements (including administrative costs) for the last four fiscal years were $17.4 million. • Average annual receipts for the last four fiscal years were $18.6 million. I