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    Document Summary
    - Report Published -

    Report Document No. 62

    Document Title
    Review of Capital Project Cash Flow Requirements - January 2015

    Auditor of Public Accounts

    Enabling Authority
    HB 5001 Item C-39.40.A.12. (Special Session I, 2014)

    Executive Summary
    Acts of Assembly Chapter 806 of the 2013 Session of the General Assembly required the Auditor of Public Accounts to report on the adherence to the cash flow requirements for each capital project funded in Chapter 806, Item C-39.40 and any deviation in necessary project appropriation and allotment, which creates a delay in the progress of the projects. This report reviews these capital projects and their related cash flows. It also reviews the involvement of the Departments of Planning and Budget, General Services, and Treasury and the role that the Six-Year Capital Outlay Advisory Committee plays in these processes to determine where delays occurred.

    The capital project cash flow requirements process is effective; however, projects experienced occasional delays in obtaining planning funds from the Central Capital Planning Fund, getting approval to move to construction from the Advisory Committee, and getting approval to access construction funding. Agencies are submitting cash flow requirements to Treasury for determining bond issuance timing while General Services uses GCPay to forecast cash flow needs for the Advisory Committee. Planning and Budget, General Services, and Treasury are monitoring the $250 million annual debt limit, and to date Chapter 806 capital project expenditures have not exceeded the limit.

    Key Recommendations:

    The General Assembly may wish to consolidate the three project pools (pre-planning, detailed planning, and construction) into two pools (planning and construction) to reduce the time it can take a project to move through the three phases and potentially result in costs savings through timelier project schedules.

    The General Assembly may wish to consider infusing additional funds into the Central Capital Planning Fund to prevent future delays in starting project planning because all planning funds are in use.

    The General Assembly may wish to consider eliminating the $250 million dollar limit over Chapter 806 projects as it is redundant of the Commonwealth’s debt capacity limit.

    If the annual limit remains in place, the Advisory Committee should develop a process to evaluate the forecasted project expenditures, used to monitor the $250 million annual limit, against actual expenditures to prevent projects from potentially stopping due to the estimates being much more conservative than actual expenditures.

    To prevent delays in the progress of capital projects, in areas such as reimbursing and allocating Central Capital Planning Funds and approving access to construction funding, Planning and Budget should consider options as to how they can accomplish all of their responsibilities timely. This could include expanding their budget staff permanently or temporarily during certain times of the year. In addition, Planning and Budget should consider establishing pre-determined time frames in which certain transactions or approvals will occur.