INTRODUCTION

The financial audit of capital improvement projects financed by King County general obligation bonds was included in the 1998 County Auditor's Office work program adopted by the Metropolitan King County Council.

King County has authority to issue general obligation bonds to fund capital improvement projects and other public-purpose programs. General obligation bonds represent issuance of public debt guaranteed by the county's potential tax collections and its credit. King County issues unlimited and limited tax general obligation bonds. Issuance of unlimited tax general obligation bonds is approved by voters of the county while issuance of limited tax general obligation bonds is approved by the Metropolitan King County Council. The county pledges its full faith, credit ,and resources to the annual levy and collection of such tax for the prompt payment of the bond principal and interest.

The audit objective was to review the status of various capital improvement projects that were funded by proceeds of King County general obligation bonds to determine if the projects that were undertaken and/or completed including project scope, budget, and schedule were consistent with the mandates of the county voters and ordinances adopted by the Metropolitan King County Council.

GENERAL CONCLUSION

Capital improvement and other projects funded by the proceeds of unlimited and limited tax general obligation bonds generally met the mandates contained in the ballot propositions and ordinances approved by the voters of King County and Metropolitan King County Council, respectively. Some bond funds still maintained cash balances totaling about $3,850,000 after approved capital projects had been completed. These funds could be made available for reprogramming or for transfer to the general obligation bond redemption funds. The audit report contained findings and recommendations relating to some project expenditures exceeding the budgeted amounts, project schedules not met, and deficiencies in accounting and reporting of capital project costs.

MAJOR FINDINGS AND RECOMMENDATIONS

Our review noted five capital funds with excess fund balances totaling about $3,500,000.

The audit recommended that the Department of Public Health, Department of Natural Resources, suburban cities, and the Budget Office should review their capital improvement needs and submit their recommendations for how the excess funds should be used or reprogrammed to the Metropolitan King County Council.

Finding 3   Seventeen CIP funds met the criteria for fund closure resulting in about $352,000 being available for reprogramming.

The county had funds that were candidates for fund closure.

The audit recommended the agencies concerned should submit their recommendations on how excess fund balances should be appropriated and to abolish unneeded CIP funds to the Metropolitan King County Council. .

Finding 4   The facility to house public safety laboratories and marine patrol, a capital project approved to be funded with $1,605,000 from the bond proceeds of the 1993 Limited Tax General Obligation Bonds Series B, remained unacquired.

One approved project identified in the county's ordinance was for the acquisition and renovation of a facility to house public safety laboratories and marine patrol. A total amount of $1,605,000 was allocated. The facility had not been acquired, and there was no other cost incurred relevant to completing the approved capital project. However, there was an ordinance authorizing the cancellation of the capital project. In 1995, the County Council appropriated $1,358,727 to Courthouse Building Security Phase 1 modifications. The legislative staff report showed that the source of funding was the bond proceeds earmarked for the Public Safety (Sheriff's Office) facility.

The audit recommended that the Budget Office and Sheriff's Office should submit to the Metropolitan King County Council their recommendation(s) to either pursue or abandon the currently approved project or transfer the unspent amount to the limited general obligation bond redemption fund.

Finding 5   Expenditures for the Geographic Information System (GIS) and Wide Area Network (WAN) capital projects exceeded the budgeted amounts without County Council approval.

The 1994 budget ordinance included an allocation of $6,830,000 for the GIS Core Project (Project No. 343101) and $150,000 for the Wide Area Network (Project No. 343301). Our review of the CIP funds indicated that as of December 31, 1998, total expenditures related to the GIS Core Project and the Wide Area Network amounted to $7,379,117 and $159,195, respectively, which exceeded the budgeted amount by $549,117 and $9,195, respectively.

The audit recommended that the Department of Information and Administrative Services and the Budget Office should send details and an explanation of the GIS Core Project and Wide Area Network expenditures budget overruns to the Metropolitan King County Council and request the council to adopt an appropriation ordinance. The Department of Information and Administrative services and Budget Office should monitor capital projects expenditures to ensure that they do not exceed the Metropolitan King County Council approved budgets.

Finding 6   Some capital projects under the Conservation Futures Acquisition Program were not completed by the deadline date established by county ordinances.

In 1993, the Metropolitan King County Council allocated $60,000,000 to various capital projects undertaken by King County, the city of Seattle, and suburban cities. The ordinance required that in cases where substantial progress to complete the projects could not be demonstrated and/or project funds were not expended within two years from the date the ordinance was adopted, funds would be reprogrammed to other projects or an extension date for project completion would be provided. Exhibit E on page 16 shows capital projects covered by the Conservation Futures Acquisition Program that were not fully completed as of September 30, 1997, and bond proceeds were not fully expended within the two-year period from the adoption of the ordinance.

The audit recommended that the cities of Seattle, Auburn, and Bellevue and the King County Department of Natural Resources should submit a request to the Metropolitan King Council to adopt an ordinance to re-extend the deadline date to reasonably certain date by which to complete the capital projects.

Finding 7   Expenditures for Bond-Funded Capital Projects were not clearly accounted for in the established funds.

The county's accounting system included CIP funds that were established to account for all receipts and disbursements relating to authorized capital improvement projects. Our review noted, however, that some detailed project costs of bond-funded capital projects were instead reported in other non-bond funds.