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1 <br /> 16 Construction Fund Loan Program Performance Audit-September 1998 <br /> Using these assumptions, we multiplied the average disbursements ($17.4 million) 1 <br /> by the average time to complete a project (3.3 years) to arrive at a total of <br /> $57.4 million. This represents the maximum amount of disbursements that the Fund <br /> could incur at any point in time. We reduced the $57.4 million by the average <br /> receipts ($18.6 million) to arrive at a final balance of$38.8 million. This figure <br /> represents the amount needed to pay for any anticipated disbursements on a day-to- <br /> day basis. Thus, given the Fund's $89.7 million balance at June 30, 1997, we <br /> estimate that the Fund has about$50.9 million that could be used for other purposes. <br /> This amount may be even higher given the increase in the cash balances as of <br /> June 30, 1998 shown above. <br /> The Board Has Additional Funding Available for Water <br /> Projects <br /> Not only is there more money in the Fund than is being used, the Board has <br /> additional funding available for financing water projects. Statutes establish the <br /> Severance Tax Perpetual Base Fund that receives a portion of state severance tax <br /> receipts. These monies are also available to the Board for making loans for water <br /> projects. As of the end of Fiscal Year 1997,the Perpetual Base Fund had a balance <br /> of$9.9 million, bringing the total funding now available for loans to almost $100 <br /> million. On the basis of projections made by the Department of Local Affairs, by <br /> Fiscal Year 2006 the Board will have over$55 million of additional severance tax <br /> receipts to spend on water projects. I <br /> Resources May Exceed Demand Given <br /> Current Statutory Spending Priorities <br /> Between Fiscal Year 1994 and 1997, the Fund received about $74.3 million and <br /> spent about$69.6 million. Given the sizeable nature of the Fund's cash balance, it <br /> may be prudent for the Board to either increase its rate of disbursements or free up <br /> funds for other purposes authorized by the General Assembly in order to decrease the <br /> size of the Fund's cash balance. We believe increasing disbursements may be <br /> difficult,however,because evidence suggests that the Board's current disbursement <br /> levels may be in excess of the demand for project funding. For example, as stated <br /> previously, the Board has set aside funding for projects that were never constructed <br /> and others that did not meet statutory spending priorities. We also could not find any <br /> evidence of a borrower's ever being denied funding for a water project that met the <br /> statutory funding parameters. In addition, there is no evidence of a potential <br /> borrower's applying for a loan and not receiving one because there were insufficient <br /> funds available. <br /> 1 <br />