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<br />Report of The Colorado State Auditor <br /> <br />21 <br /> <br />Sufficient Construction Funds Were Available in the Past <br /> <br />Generally, there were sufficient monies in the Construction Fund to finance <br />projects. Also, the Board did not actively seek out projects. As a result, on a <br />short-term basis, financial planning may not have been critical. <br /> <br />However, water resource development is a long-term effort. In the future, it will <br />be particularly important to focus resources on the most important projects and <br />activities. <br /> <br />Need To Ensure That the Construction Fund Can <br />Meet Future Demands <br /> <br />The Construction Fund represents a limited amount of 'monies for water <br />development projects and activities. However, as noted above, water development <br />financing needs over the next 10 years are considerable. Also, the Board has used <br />Construction Fund monies to finance its operations and nonrecoverable studies. <br />Therefore. it is important to ensure funds are available when needed. <br /> <br />The Construction' Fund has some <br />continuing sources of funds, such as <br />interest income, repayment of loans, and <br />mineral royalty income. Many of the <br />Board's loans will be repaid over a forty- <br />year period. which makes projecting some cash inflows fairly easy. However, the <br />Board has not developed long-term projections of cash inflows and outflows for <br />the fund. These projections could influence which projects are funded, effect the <br />level of interest rates on Board loans, or indicate the need for additional general <br />fund transfers to the Construction Fund. <br /> <br />Long-term financial projections <br />could impact project selection <br />and interest rates. <br /> <br />The Board plays a c@ntributing role in the water resource management area. Also, <br />the General Assembly continues to recognize the importance of this role by <br />authorizing most Board-recommended projects each year. The Board needs to <br />continue these efforts and help facilitate the development of water resources <br />through the Construction Fund. <br /> <br />Recommendation No.' 2: <br /> <br />The Board should develop and implement an effective process for long-term <br />financial planning of Construction Fund monies. This process should include: <br />