State loan/grant programs, Department of Agriculture, Department of Natural Resources and Conservation, Department of Commerce ; State bond authorities, Department of Administration, Department of Commerce, Department of Natural Resources and Conservation

104 Pages·1991·2.7 MB·English

by  Montana. Legislature. Office of the Legislative Auditor

s
336.185
L72SLG S)rTtthhie Legislative Auditor
1991
tana
Report to the Legislature
March 1991 Performance Audit Report
State Loan/Grant Programs
Department of Agriculture
Department of Natural Resources and Conservation
Department of Commerce
Bond
State Authorities
Department of Administration
Department of Commerce
Department of Natural Resources and Conservation
Department of Highways
University System ^^^
DOCUMENTS COLLECTION
OCT OP
1997
WONTANA STATE LIBRARY
1515 E. 6th AVE.
HELENA, MONTANA 59620
This report provides:
Information and conclusions regarding Senate Joint
Resolution 20 passed in 1989 by the 51st Legislature.
Information and a recommendation regarding state bonding
activity.
Information and conclusions regarding Board of Housing
bond reserves.
Direct comments/inquiries to:
OfTice of the Legislative Auditor
Room 135, State Capitol
Helena, Montana 59620 90P-30.2
If -
MONTANASTATEUBRARY
3 0864 0009 8035 2
PERFORMANCE AUDITS
Performance audits conducted by the Office of the Legislative Auditor are designed to assess
state government operations. From the audit work, a determination is made as to whether
agencies and programs are accomplishing their purposes, and whether they can do so with
greater efficiency and economy. In performing the audit work, the audit staff uses audit
standards set forth by the United States General Accounting Office.
Members of the performance audit staff hold degrees in disciplines appropriate to the audit
process. Areas ofexpertise include business and public administration, statistics, economics,
computer science, communications, and engineering.
Performance audits are performed at the request of the Legislative Audit Committee which
is a bicameral and bipartisan standing committee of the Montana Legislature. The committee
consists of four members of the Senate and four members of the House of Representatives.
MEMBERS OF THE LEGISLATIVE AUDIT COMMITTEE
Senator Greg Jergeson, Vice Chairman Representative John Cobb, Chairman
Senator Tom Keating Representative Larry Grinde
Senator Paul Svrcek Representative Mike Kadas
Representative Robert Pavlovich
STATE OF MONTANA
STATE CAPITOL
HELENA. MONTANA 59620
406/444-3122
DEPUTY LEGISLATIVEAUDITORS:
MARY BRYSON
Operationsand EDPAudit
LEGISLATIVEAUDITOR: JAMESGILLETT
SCOTTA. SEACAT Financial-ComplianceAudit
LEGALCOUNSEL: JIM PELLEGRINI
JOHN W. NORTHEY PerformanceAudit
March 1991
The Legislative Audit Committee
of the Montana State Legislature:
This performance audit is in response to Senate Joint Resolution 20 of the
51st Legislature. The Resolution requested the Legislative Audit Committee study
the need for certain state loan/grant programs. This report contains information
concerning potential for consolidation, modification, or elimination of certain state
loan/grant programs, centralization of bond issuance activity, and Board of
Mousing bond reserves. Department responses are contained at the end of the
report.
We wish to express our appreciation to the staff of each department for
their cooperation and assistance.
Resoectfully submi
Scott A. Seac
Legislative Auditor

Office of the Legislative Auditor
Performance Audit
Loan/Grant Programs
State
Department of Agriculture
Department of Natural Resources and Conservation
Department of Commerce
State Bond Authorities
Department of Administration
Department of Commerce
Department of Natural Resources and Conservation
Department of Highways
University System
Members of the audit staff involved in this audit were: Dave Gould,
Kent Rice, Maureen Rude, C. Susan Jensen, and Pamela M. Boggs.

Tabic of (.\)iileiils
List of Figures v
Appointed and Administrative Officials v
Report Summary S-
Chapter I Introduction
Intntduclion
Report Organization
Audit Objectives
Scope of Audit 2
Compliance 3
Chapter II Introduction 5
SJR 20 - lutan and
Grant Pnigrams Department of Agriculture 5
Montana Growth Through Agriculture Program 6
Agricultural Finance Program 7
Montana Agricultural Loan Authority (MALA) 8
Montana Noxious Weed Trust Fund Grant Program ... 8
Department of Natural Resources and Conservation 9
Water Development Program 10
Renewable Resource Development Program 12
Reclamation and Development Grant Program 13
Rangeland Improvement Loan Program 13
Conservation District Grant Program 14
Department of Commerce 15
Board of Housing 17
Single Family Bond Program 17
Mortgage Credit Certificate Program 17
MultiFamily Bond Program 18
Low Income Housing Tax Credit Program 19
Reverse Annuity Mortgage Loan Program 19
Board of Investments 20
Mortgage Loan Program 20
Coal Tax Loan Program 20
Montana Capital Company Act 21
Municipal Consolidation Finance Act 21
Economic Development Bond Act 22
Health Facility Authority 24
F'ooled Loan Program 24
Single Project Financing Program 24
Community Provider Pooled Loan Program 25
Page
i
Table of Contents
Montana Science and Technology Alliance 25
Seed Capital Program 26
Research and Development Program 26
Local Government Assistance Division/Business
Development Division 27
Community Development Block Grant
Program 27
Aeronautics Division 28
Airport Lending Program 29
Summary 29
Chapter HI Introduction 31
SJR 20 - Evaluation of
Programs Department of Agriculture 31
Montana Grovkfth Through Agriculture Program 32
Montana Agricultural Loan Authority 32
Department of Natural Resources and Conservation 33
Rangeland Improvement Loan Program 34
Water Development Private Loan Program 35
Department of Commerce 36
Local Government Assistance Division/Business
Development Division 36
Aeronautics Division 36
Airport Lending Program 37
Board of Investments (BOI) 38
Pooled Economic Development Bond
Program 38
Coal Tax Loan Program 39
Montana Capital Company Act (MCCA) 39
Mortgage Loan Programs 40
Irrigation District Pooled Loan Program 41
Conservation Reserve Payment
Enhancement Program 41
Health Facility Authority 42
Montana Science and Technology Alliance 43
Board of Housing (BOH) 44
Tax Credit Programs 44
Mortgage Sales 46
Multifamily Bond Program 47
Summary 48
Page
ii
Table of Contents
Chapter IV Introduction 51
Backgn>und - State
Bond Activity Types of Bonds Issued 51
Bond Issuance Process 53
Financial Services Used By Issuance Authorities 53
Financial Team Members 54
Bondholder Reserve Requirements 55
Statewide Bond Issuance Activity 57
Montana's Issuance Authorities 58
Department of Administration (DofA) 58
Board of Regents and Commissioner of Higher
Education 58
Department of Natural Resources and
Conservation (DNRC) 58
Department of Commerce 59
Board of Investments (BOl) 59
Health Facility Authority (UFA) 59
Board of Housing (BOH) 59
Department of Highways 59
Comparison of Agency Bond Issuance 60
Chapter V Introduction 63
Bond Issuance Consoli-
dation/C(Mirdination Bond Issuance in Other States 63
Possibilities for Consolidation/Coordination 63
Past and Current Coordination Activity 64
Montana Issuance Authorities Would Benefit From
Coordination 64
Chapter Vi Introduction 67
Board of Housing Bond
Reserves Appropriateness of Board of Housing Bond Reserves 67
Reserve Balances in Other States 68
Calculation of Required Reserve Amounts 69
Alternative Reserve Use in Other Slates 70
Page
ill
Table of Contents
Conclusion 71
Agency Responses Department of Administration 75
Montana Board of Housing 76
Department of Agriculture 77
Appendix A Senate Joint Resolution Number 20 A-1
Page iv