Report of the State Auditor 1993

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19 FINANCIAL MANAGEMENT OF THE CONSTRUCTION FUND Chapter 2 Introduction The General Assembly established the Colorado Water Conservation Board Construction Fund to help finance "projects that will increase the beneficial consumptive use of Colorado's undeveloped compact entitled waters." The fund finances the development and maintenance of the State's water resources through loans. grants, and studies. The financial demands on the Construction Fund have increased over the past few , years. Before FY 1992, the Board received General Fund monies towards part of its operating and administrative expenses, For example, in FY 1991, the Board received almost $700,000 from the General Fund. However, in FY 1992, the Legislature required that the Board fund all of these expenses out of the Construction Fund. These expenses were about $1.6 million in FY 1991 and $1.8 million in FY 1992. In addition, the Construction Fund is used for loans, grants. and studies. The Board reports that the complexity of future water projects and the restoration of the State's infrastructure will increase the demand on Construction Fund monies. Financial planning is a critical component of long-term planning for the Construction Fund. Planning is a dynamic process. It involves the setting of priorities based on available resources and monitoring the financial position of the fund. Also, the allocation of financial resources may be changed based on shifts in prioritie~ or financial conditions. Financial planning is a critical part of long-term planning. We reviewed how the Board monitors and manages the Construction Fund. We found that: · A long~term financial plan for the Construction Fund has not been developed. As a consequence, the Board cannot ensure funds will he available when needed or used for the most important projects or activities in the future.